Datasets:

mtc

/

DUC2004

like 1

After a day of fighting, Congolese rebels said Sunday they had entered Kindu, the strategic town and airbase in eastern Congo used by the government to halt their advances. Etienne Ngangura, a rebel spokesman, said the rebel fighters were inside Kindu and had taken the adjacent, large airbase, 380 kilometers (235 miles) west of Goma, the rebel stronghold. ``We're in the town and the airport,'' Ngangura said. He offered no details and the report could not be confirmed independently. Rebel military sources said the fighting continued inside Kindu where the rebels were apparently meeting stiff resistance. The rebels _ ethnic Tutsis, disenchanted members of President Laurent Kabila's army and opposition politicians _ took up arms Aug. 2 accusing Kabila of mismanagement, corruption and creating division among Congo's 400 tribes. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of the capital, Kinshasa, after troops from Angola and Zimbabwe came to Kabila's aid. Troops moving south from Kisangani, the largest city under rebel control, and moving west, had made steady gains against Kindu, which the government apparently used to build up force for a planned counter-offensive. Apart from Kindu, Ngangura said rebel fighters took Buta, 120 kilometers (75 miles) north of Kisangani and on the main road in northern Congo that links Sudan and the Central African Republic. Also on Sunday, Ngangura said the rebels took Bumba, 400 kilometers (250 miles) northwest of Kisangani. These reports could not be confirmed independently either. Rebel leaders said a victory at Kindu would confirm rebel strength, boost fighters' morale and perhaps persuade others to join them. The rebels want direct negotiations with Kabila. But the president has so far refused, accusing the rebels of being puppets of Rwanda and Uganda, which Kabila has accused of orchestrating the rebellion. The conflict in Central Africa has drawn in most of Congo's nine neighbors, and regional diplomatic initiatives have so far failed to stop it. ||||| The bloody bandages of injured rebels trucked back to this rear base Wednesday offered evidence that the three-day battle for the strategic air base at Kindu was not going well for those fighting to oust Congolese President Laurent Kabila. It was impossible to say who had the upper hand in the battle for Kindu and its air base, which government forces have been using to launch airstrikes on eastern towns and to assemble ground troops. Rebel commander Richard Mondo said shelling and ground attacks, which began Monday, continued on Wednesday. Mondo said he was expecting air shipments of munitions to bolster the rebel offensive. On Wednesday, a truck unloaded a dozen wounded rebel fighters at Kalima, a small town 80 kilometers (50 miles) northeast of Kindu, serving as a rear base for the attack. Sweaty and weary, some limping and others bandaged, they waited to be airlifted to a hospital in Goma, the rebel stronghold 380 kilometers (235 miles) east, on the Rwandan border. The rebels _ a coalition of ethnic Tutsis, disenchanted soldiers in Kabila's army and opposition politicians _ faced stiff resistance. In Kinshasa, the Ministry of Defense said Tuesday that the Congolese Armed Forces, known as the FAC, had killed 18 rebels in warding off the attacks. ``Kindu is effectively in the hands of the FAC, which has now launched an offensive after defending its positions,'' said a ministry statement broadcast on state-run television. ``The civilians there are cooperating fully with the FAC as their counterparts did previously in Kinshasa,'' the capital. Rebel leaders hope the capture of Kindu will boost morale and demonstrate can carry their two-month rebellion into the rest of Congo, Africa's third-largest nation. The rebel victory would also open routes to Katanga and Eastern Kasai provinces, rich in copper and diamonds. The rebels targeted Kindu since late August, when they were forced to retreat their march from extreme western Congo to the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebel commanders say their 2,000 fighters face an estimated 5,000 government troops, apparently reinforced by Sudanese soldiers. Sudan denies involvement in Congo. The rebels accuse Kabila of betraying the eight-month rebellion that brought him to power in May 1997 through mismanagement and creating divisions among Congo's 400 tribes. ||||| Back in the golden years, Kasuku wa Ngeyo had a farm and was the head of a 25,000-strong farmers organization in the northeastern breadbasket of this central African nation. A quarter of a century later, the 56-year-old businessman who also ran hotels and a tourist camp is broke; the farmers group is a memory. Inter-tribal rivalry, looting soldiers, Rwandan refugees and two rebellions in as many years have wiped out half a million head of cattle here, slashed coffee and tea exports in half and turned Congo's bucolic eastern region of green pastures, sparkling volcanic lakes and snow-capped mountains into a war zone. ``Nobody is making money any more. People are surviving on a sack of beans. They are tired of insecurity and have little hope things will get better,'' said Kasuku, the son of an Italian settler and a Rwandan Tutsi refugee mother. On Aug. 2, Tutsis, political opponents, and disenchanted members of President Laurent Kabila's army took up arms, accusing Kabila of corruption, nepotism and fostering tribal strife. The war has split Africa's third-largest nation between the government-held west and south and rebel-controlled east, and no political settlement is in sight. Goma, a small trading post at the head of Lake Kivu in eastern Congo, is no longer the starting point for tourists trekking to see mountain gorillas. Today, its decaying buildings, empty shops and crumbling guest houses are home to rebel leaders, soldiers and people displaced by violence. The rebels have promised to revitalize the economy by reducing taxes to boost investment. They also say they will pay civil servants _ who haven't seen a paycheck in months or years _ and invite investors to buy tea and coffee farms and gold and diamond-mining concessions. But the war has also increased tribal animosity _ especially toward ethnic Tutsis, a tiny but highly successful minority in the eastern region. In 1990, the liberating effect of early political freedoms revived unresolved land disputes and led to clashes between the Rwandan Tutsis and Hutus _ who had settled in eastern Congo since the 1930s. Mai-Mai warriors _ armed youths from the Hunde and Nande tribes who accuse Tutsis of stealing their land, also joined the fighting. In 1994, nearly 1 million Rwandan refugees engulfed Goma, a town of 30,000. Among them were former Hutu soldiers and militiamen who took part in a 1994 genocide in neighboring Rwanda in which more than half a million Tutsis were killed. They brought anti-Tutsi ideology with them and sold weapons to Congolese tribes, who then joined in the persecution of Tutsi landowners and ranchers. ``People misunderstood political freedoms for anarchy,'' said Safari Ngezayo, a farmer and hotel owner. ``We tried to mediate between Tutsis and Hutus and other tribes, but how can you talk to people who have blood on their hands and genocide in their heads?'' In late 1996, Congolese Tutsis backed by Rwanda attacked the refugee camps, dislodged the Hutu fighters and forced most of the refugees back home across the border. After an eight-month rebellion backed by Rwanda and Uganda, dictator Mobutu Sese Seko fled in May 1997, and Kabila took power. He quickly changed the name of the country to Congo, from Zaire. Few people in northeastern Congo expected another rebellion so soon. ``I blame our politicians. Then I blame the foreign powers who kept meddling in our affairs. It is they who supported Mobutu and Kabila, and we are paying the interest,'' Kasuku said. ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| Rebels attacked a village in western Uganda and killed six civilians before soldiers drove them off, a military spokesman said Thursday. The attack occurred overnight Wednesday in the village of Chiondo near Kasese, 270 kilometers (170 miles) west of the capital Kampala, said the spokesman, who identified himself only as Lt. Majera. Majera said the attackers were believed to be rebels of the Allied Democratic Forces who operate from bases in the foothills of the Rwenzori Mountains that straddle the Uganda-Congolese border. He said the rebels likely fled back to their bases after the attack. Majera said the attackers avoided a nearby army post when they shot up the village. It was the gunfire that alerted the soldiers, he said, adding that they killed two of the assailants. The various rebel groups operating in the region often attack with knives or machetes, either to save on ammunition or because they don't have guns. He had no further details. Under an agreement earlier this year with Congo, Uganda sent troops into the neighboring country to flush out the ADF fighters. President Yoweri Museveni insists they will remain there until Ugandan security is guaranteed, despite Congolese President Laurent Kabila's protests that Uganda is backing Congolese rebels attempting to topple him. The anti-Kabila rebels claim the Ugandan rebel Lord's Resistance Army, which operates in northern Uganda and enjoys support from Sudan, is fighting alongside Kabila's forces together with Sudanese soldiers. The government-owned daily New Vision reported Thursday that LRA leader Joseph Kony was badly wounded last week and is in hospital in Juba, the largest town still under government control in southern Sudan. The Sudan People's Liberation Army, which is fighting the government in Khartoum for autonomy for southern Sudan, has waged pitched battles with government troops in the past week as it moves on Juba, spokesmen for both sides say. New Vision quoted Ugandan Minister of State for Security Muruli Mukasa as saying Kony's largest camp at al-Gabelain, 38 kilometers (24 miles) south of Juba, was destroyed last week when the SPLA took control. Muruli said the LRA had been planning to bomb several sites in the Ugandan capital, including the Parliament building, state-run Radio Uganda, unidentified embassies and other public sites, the newspaper said. ||||| A day after shooting down a jetliner, Congolese rebels and their Rwandan allies pushed Sunday through government defense lines, showing the confidence of a victor in a week-old battle for a strategic air base. Fighting in Kindu, 32 kilometers (20 miles) northeast of the Elila River bridge, died down after the rebels fired a barrage of artillery into the government-held quarters and the air base, four kilometers (two miles) away. Rebel commander Fino Kabangu Kalunga said the government forces, surrounded by 3,500 rebel troops from three directions, failed to respond to Sunday's attacks. Some troops reportedly retreated through a single road corridor leading out of the town. On Saturday, the rebels said they shot down a Congolese Boeing 727 which was attempting to land at Kindu air base with 40 troops and ammunition. In Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm independently either claim. Kalunga said the airport, although still under government control, was in effect unoperational because of the rebel surface-to-air-missiles deployed nearby. War-weary, physically exhausted and sweaty, hundreds of rebel troops and Rwandan soldiers marched through dense tropical forest went to reinforce their comrades at Kindu. After a week of battling for Kindu, rebel fighters had made little progress and failed to capture the town outright. The rebels see Kindu as a major prize in their two-month revolt against President Laurent Kabila, whom they accuse of mismanagement, corruption and warmongering among Congo's 400 tribes. Kabila has turned Kindu into a launching pad for a counteroffensive against rebel positions in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the new fighting. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. Tanks, aircraft and troops from Angola, Zimbabwe and Namibia are supporting Kabila. The assistance was essential in routing an early rebel offensive in the west that had reached the outskirts of Kinshasa in mid-August. The rebels say they now control one-third of Kindu and are poised to overrun the rest of the town. Under a scorching sun, the column of rebel reinforcements heading to Kindu sneaked through abandoned roadside hamlets. The silence of their march was interrupted only by the singing of crickets and the clanging of the bullet belts hanging around the soldiers' necks. Soldiers walked by empty huts made of mud and palm leaves. Some rested in the shade of the umbrella-shaped acacia trees. The soldiers stopped for the night at the bridge over the chocolate-colored Elila River, which guards the path to Kindu. There was no immediate comment on the latest developments from the government in Kinshasa, which claimed earlier in the week it was in control of the tarmac bridge. ||||| Rebels in eastern Congo on Saturday said they shot down a passenger jet ferrying 40 government soldiers into a strategic airport facing a rebel assault. A Congo Airlines executive said the victims were civilians being evacuated from Kindu, about 1,000 kilometers (620 miles) east of the capital, Kinshasa. Neither claim could be confirmed independently. Stavros Papaioannou, the president of the airline's management committee, said a missile hit the rear engine of the Boeing jet after the aircraft took off from Kindu airport. A rebel military commander, who requested anonymity, said the plane was carrying troops, although he did not explain how he knew this. He said the plane was shot down while approaching Kindu air base, where the rebels had deployed at least two surface-to-air missiles and more than 3,500 troops in preparation for a final assault on the government-held town. Alexis Tambwe Mwamba, one of rebel leaders, said from the rebel stronghold at Goma, 380 kilometers (235 miles) northeast of Kalima, that fighters had intercepted government radio messages in Kindu and knew in advance of the arrival of the aircraft. He said the government had been using the Boeing 727 to fly in troops and ammunition in Kindu for several days. Papaioannou, citing, 6th graf pvs ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| A day after shooting down a jetliner carrying 40 people, rebels clashed with government troops near a strategic airstrip in eastern Congo on Sunday. Fighting for the town of Kindu in this vast West African nation subsided after rebels launched an artillery barrage into government-held buildings and the airfield, two miles (three kilometers) away. On Saturday, the rebels shot down a Congolese Boeing 727 over the Kindu airport. Rescue workers said there were no survivors from the downed plane, the British Broadcasting Corp. reported Sunday. Rebels said the airplane was carrying 40 troops and ammunition. In the capital, Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm either claim independently. Rebel commander Fino Kabangu Kalunga said surface-to-air missiles in the arsenal of his Congolese Democratic Coalition had prevented the government from landing aircraft at the airport. Kabangu Kalunga said 3,500 rebel troops and their Rwandan allies had closed in on government forces from three directions after a week of fighting. He said government troops did not launch a counterattack to Sunday's barrage, and some reportedly retreated on the one road leading out of town. The rebels say they now control one-third of Kindu, which the government has used as a staging area for a counteroffensive against rebel positions in the east. Rebels, who began their insurgency more than two months ago, accuse President Laurent Kabila of corruption, failing to carry out promised democratic reforms, and stirring up hatred among Congo's 400 tribes. Early in the conflict, rebels pushed far into the west, to the outskirts of Congo's capital. Then Angola, Zimbabwe and Namibia intervened to help Kabila and drove the rebels back to their bases in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the rebels. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. ||||| Rebel commanders said Tuesday they were poised to overrun an important government-held air base in eastern Congo _ a battle that could determine the future of the two-month Congolese war. After trekking several hundred kilometers (miles) through dense tropical forest, thousands of rebel fighters have gathered 19 kilometers (11 miles) outside Kindu, where troops loyal to President Laurent Kabila have used an air base as a launching pad for offensives. If the rebels succeed in capturing Kindu, 380 kilometers (235 miles) west of Goma, the rebel headquarters, this will remove the last government stronghold in eastern Congo and pave the way for rebel advance into the mineral-rich southwest. A rebel defeat, on the other hand, would put the coalition of ethnic Tutsis, disenchanted members of the Congolese army and opposition politicians on the defensive and give a boost to Kabila's efforts to fend off the rebellion launched Aug. 2. Rebel commander Richard Mondo said troops had fired artillery rounds into Kindu Monday and early Tuesday, sending the population fleeing out of town. Advance units had crossed the Lualaba River from the north and were meeting stiff resistance in the town, he said. Since the assault on the town began at 3 a.m. (0100 GMT), at least 18 enemy soldiers were killed and 40 taken prisoner, Mondo said, adding the number was expected to rise. The rebels took casualties, too, but the number was not known. One rebel soldier was wounded in the stomach, he said. He said the large Kindu air base, 4 kilometers (2 miles) outside town, was deserted and no one appeared to be in control. ``Our soldiers are in the town and the fighting is continuing,'' rebel battalion commander Arthur Mulunda said in Kalima, 80 kilometers (50 miles) northeast of Kindu. There was no independent confirmation of the rebel claims. On Sunday, a spokesman in Goma boasted that Kindu was already under rebel control. In Kinshasa, government spokesman Didier Mumengi said Monday the Congolese army was firmly in control of Kindu. Mulunda's 1,500-strong battalion walked 240 kilometers (150 miles) Bukavu at the southern end of Lake Kivu to Kalima, which fell to the rebels Saturday with little resistance. The rebel fighters, clad in brand-new Rwandan-made dark green uniforms, rubber rain boots and toting Kalashnikov assault rifles and rocket-propelled grenade launchers, said they were advancing slowly through the lush forest of palm trees and razor-sharp tall grass. ``We've been resting a lot. It took us two weeks to get here,'' Mondo said. The rebels are now using Kalima, a town with one main street, scattered houses and mud-and-brick huts, to supply troops with rice, cooking oil, drinking water and ammunition. A small, grass airstrip 8 kilometers (5 miles) away from Kalima is just barely long enough for the rebels' Russian-built Antonov AN-72 transport aircraft. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebels still control a string of towns in eastern Congo, including Kisangani, the country's third-largest city.

After years of civil war, Congo in October 1998 was again in turmoil as rebel forces fought to overthrow the government of President Kabila. The rebels, ethnic Tutsis, disenchanted members of Kabila's army and his political opponents, were said to be supported by Rwandan and Ugandan forces while Kabila was backed by Angola, Zimbabwe, Namibia, Sudan and Ugandan rebels. At first the rebels advanced to the outskirts of the capital, Kinshasa, but foreign troops pushed them back to the extreme eastern part of the country. The rebels then launched a counter offensive but by mid-October it was not clear who would prevail.

After a day of fighting, Congolese rebels said Sunday they had entered Kindu, the strategic town and airbase in eastern Congo used by the government to halt their advances. Etienne Ngangura, a rebel spokesman, said the rebel fighters were inside Kindu and had taken the adjacent, large airbase, 380 kilometers (235 miles) west of Goma, the rebel stronghold. ``We're in the town and the airport,'' Ngangura said. He offered no details and the report could not be confirmed independently. Rebel military sources said the fighting continued inside Kindu where the rebels were apparently meeting stiff resistance. The rebels _ ethnic Tutsis, disenchanted members of President Laurent Kabila's army and opposition politicians _ took up arms Aug. 2 accusing Kabila of mismanagement, corruption and creating division among Congo's 400 tribes. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of the capital, Kinshasa, after troops from Angola and Zimbabwe came to Kabila's aid. Troops moving south from Kisangani, the largest city under rebel control, and moving west, had made steady gains against Kindu, which the government apparently used to build up force for a planned counter-offensive. Apart from Kindu, Ngangura said rebel fighters took Buta, 120 kilometers (75 miles) north of Kisangani and on the main road in northern Congo that links Sudan and the Central African Republic. Also on Sunday, Ngangura said the rebels took Bumba, 400 kilometers (250 miles) northwest of Kisangani. These reports could not be confirmed independently either. Rebel leaders said a victory at Kindu would confirm rebel strength, boost fighters' morale and perhaps persuade others to join them. The rebels want direct negotiations with Kabila. But the president has so far refused, accusing the rebels of being puppets of Rwanda and Uganda, which Kabila has accused of orchestrating the rebellion. The conflict in Central Africa has drawn in most of Congo's nine neighbors, and regional diplomatic initiatives have so far failed to stop it. ||||| The bloody bandages of injured rebels trucked back to this rear base Wednesday offered evidence that the three-day battle for the strategic air base at Kindu was not going well for those fighting to oust Congolese President Laurent Kabila. It was impossible to say who had the upper hand in the battle for Kindu and its air base, which government forces have been using to launch airstrikes on eastern towns and to assemble ground troops. Rebel commander Richard Mondo said shelling and ground attacks, which began Monday, continued on Wednesday. Mondo said he was expecting air shipments of munitions to bolster the rebel offensive. On Wednesday, a truck unloaded a dozen wounded rebel fighters at Kalima, a small town 80 kilometers (50 miles) northeast of Kindu, serving as a rear base for the attack. Sweaty and weary, some limping and others bandaged, they waited to be airlifted to a hospital in Goma, the rebel stronghold 380 kilometers (235 miles) east, on the Rwandan border. The rebels _ a coalition of ethnic Tutsis, disenchanted soldiers in Kabila's army and opposition politicians _ faced stiff resistance. In Kinshasa, the Ministry of Defense said Tuesday that the Congolese Armed Forces, known as the FAC, had killed 18 rebels in warding off the attacks. ``Kindu is effectively in the hands of the FAC, which has now launched an offensive after defending its positions,'' said a ministry statement broadcast on state-run television. ``The civilians there are cooperating fully with the FAC as their counterparts did previously in Kinshasa,'' the capital. Rebel leaders hope the capture of Kindu will boost morale and demonstrate can carry their two-month rebellion into the rest of Congo, Africa's third-largest nation. The rebel victory would also open routes to Katanga and Eastern Kasai provinces, rich in copper and diamonds. The rebels targeted Kindu since late August, when they were forced to retreat their march from extreme western Congo to the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebel commanders say their 2,000 fighters face an estimated 5,000 government troops, apparently reinforced by Sudanese soldiers. Sudan denies involvement in Congo. The rebels accuse Kabila of betraying the eight-month rebellion that brought him to power in May 1997 through mismanagement and creating divisions among Congo's 400 tribes. ||||| Back in the golden years, Kasuku wa Ngeyo had a farm and was the head of a 25,000-strong farmers organization in the northeastern breadbasket of this central African nation. A quarter of a century later, the 56-year-old businessman who also ran hotels and a tourist camp is broke; the farmers group is a memory. Inter-tribal rivalry, looting soldiers, Rwandan refugees and two rebellions in as many years have wiped out half a million head of cattle here, slashed coffee and tea exports in half and turned Congo's bucolic eastern region of green pastures, sparkling volcanic lakes and snow-capped mountains into a war zone. ``Nobody is making money any more. People are surviving on a sack of beans. They are tired of insecurity and have little hope things will get better,'' said Kasuku, the son of an Italian settler and a Rwandan Tutsi refugee mother. On Aug. 2, Tutsis, political opponents, and disenchanted members of President Laurent Kabila's army took up arms, accusing Kabila of corruption, nepotism and fostering tribal strife. The war has split Africa's third-largest nation between the government-held west and south and rebel-controlled east, and no political settlement is in sight. Goma, a small trading post at the head of Lake Kivu in eastern Congo, is no longer the starting point for tourists trekking to see mountain gorillas. Today, its decaying buildings, empty shops and crumbling guest houses are home to rebel leaders, soldiers and people displaced by violence. The rebels have promised to revitalize the economy by reducing taxes to boost investment. They also say they will pay civil servants _ who haven't seen a paycheck in months or years _ and invite investors to buy tea and coffee farms and gold and diamond-mining concessions. But the war has also increased tribal animosity _ especially toward ethnic Tutsis, a tiny but highly successful minority in the eastern region. In 1990, the liberating effect of early political freedoms revived unresolved land disputes and led to clashes between the Rwandan Tutsis and Hutus _ who had settled in eastern Congo since the 1930s. Mai-Mai warriors _ armed youths from the Hunde and Nande tribes who accuse Tutsis of stealing their land, also joined the fighting. In 1994, nearly 1 million Rwandan refugees engulfed Goma, a town of 30,000. Among them were former Hutu soldiers and militiamen who took part in a 1994 genocide in neighboring Rwanda in which more than half a million Tutsis were killed. They brought anti-Tutsi ideology with them and sold weapons to Congolese tribes, who then joined in the persecution of Tutsi landowners and ranchers. ``People misunderstood political freedoms for anarchy,'' said Safari Ngezayo, a farmer and hotel owner. ``We tried to mediate between Tutsis and Hutus and other tribes, but how can you talk to people who have blood on their hands and genocide in their heads?'' In late 1996, Congolese Tutsis backed by Rwanda attacked the refugee camps, dislodged the Hutu fighters and forced most of the refugees back home across the border. After an eight-month rebellion backed by Rwanda and Uganda, dictator Mobutu Sese Seko fled in May 1997, and Kabila took power. He quickly changed the name of the country to Congo, from Zaire. Few people in northeastern Congo expected another rebellion so soon. ``I blame our politicians. Then I blame the foreign powers who kept meddling in our affairs. It is they who supported Mobutu and Kabila, and we are paying the interest,'' Kasuku said. ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| Rebels attacked a village in western Uganda and killed six civilians before soldiers drove them off, a military spokesman said Thursday. The attack occurred overnight Wednesday in the village of Chiondo near Kasese, 270 kilometers (170 miles) west of the capital Kampala, said the spokesman, who identified himself only as Lt. Majera. Majera said the attackers were believed to be rebels of the Allied Democratic Forces who operate from bases in the foothills of the Rwenzori Mountains that straddle the Uganda-Congolese border. He said the rebels likely fled back to their bases after the attack. Majera said the attackers avoided a nearby army post when they shot up the village. It was the gunfire that alerted the soldiers, he said, adding that they killed two of the assailants. The various rebel groups operating in the region often attack with knives or machetes, either to save on ammunition or because they don't have guns. He had no further details. Under an agreement earlier this year with Congo, Uganda sent troops into the neighboring country to flush out the ADF fighters. President Yoweri Museveni insists they will remain there until Ugandan security is guaranteed, despite Congolese President Laurent Kabila's protests that Uganda is backing Congolese rebels attempting to topple him. The anti-Kabila rebels claim the Ugandan rebel Lord's Resistance Army, which operates in northern Uganda and enjoys support from Sudan, is fighting alongside Kabila's forces together with Sudanese soldiers. The government-owned daily New Vision reported Thursday that LRA leader Joseph Kony was badly wounded last week and is in hospital in Juba, the largest town still under government control in southern Sudan. The Sudan People's Liberation Army, which is fighting the government in Khartoum for autonomy for southern Sudan, has waged pitched battles with government troops in the past week as it moves on Juba, spokesmen for both sides say. New Vision quoted Ugandan Minister of State for Security Muruli Mukasa as saying Kony's largest camp at al-Gabelain, 38 kilometers (24 miles) south of Juba, was destroyed last week when the SPLA took control. Muruli said the LRA had been planning to bomb several sites in the Ugandan capital, including the Parliament building, state-run Radio Uganda, unidentified embassies and other public sites, the newspaper said. ||||| A day after shooting down a jetliner, Congolese rebels and their Rwandan allies pushed Sunday through government defense lines, showing the confidence of a victor in a week-old battle for a strategic air base. Fighting in Kindu, 32 kilometers (20 miles) northeast of the Elila River bridge, died down after the rebels fired a barrage of artillery into the government-held quarters and the air base, four kilometers (two miles) away. Rebel commander Fino Kabangu Kalunga said the government forces, surrounded by 3,500 rebel troops from three directions, failed to respond to Sunday's attacks. Some troops reportedly retreated through a single road corridor leading out of the town. On Saturday, the rebels said they shot down a Congolese Boeing 727 which was attempting to land at Kindu air base with 40 troops and ammunition. In Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm independently either claim. Kalunga said the airport, although still under government control, was in effect unoperational because of the rebel surface-to-air-missiles deployed nearby. War-weary, physically exhausted and sweaty, hundreds of rebel troops and Rwandan soldiers marched through dense tropical forest went to reinforce their comrades at Kindu. After a week of battling for Kindu, rebel fighters had made little progress and failed to capture the town outright. The rebels see Kindu as a major prize in their two-month revolt against President Laurent Kabila, whom they accuse of mismanagement, corruption and warmongering among Congo's 400 tribes. Kabila has turned Kindu into a launching pad for a counteroffensive against rebel positions in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the new fighting. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. Tanks, aircraft and troops from Angola, Zimbabwe and Namibia are supporting Kabila. The assistance was essential in routing an early rebel offensive in the west that had reached the outskirts of Kinshasa in mid-August. The rebels say they now control one-third of Kindu and are poised to overrun the rest of the town. Under a scorching sun, the column of rebel reinforcements heading to Kindu sneaked through abandoned roadside hamlets. The silence of their march was interrupted only by the singing of crickets and the clanging of the bullet belts hanging around the soldiers' necks. Soldiers walked by empty huts made of mud and palm leaves. Some rested in the shade of the umbrella-shaped acacia trees. The soldiers stopped for the night at the bridge over the chocolate-colored Elila River, which guards the path to Kindu. There was no immediate comment on the latest developments from the government in Kinshasa, which claimed earlier in the week it was in control of the tarmac bridge. ||||| Rebels in eastern Congo on Saturday said they shot down a passenger jet ferrying 40 government soldiers into a strategic airport facing a rebel assault. A Congo Airlines executive said the victims were civilians being evacuated from Kindu, about 1,000 kilometers (620 miles) east of the capital, Kinshasa. Neither claim could be confirmed independently. Stavros Papaioannou, the president of the airline's management committee, said a missile hit the rear engine of the Boeing jet after the aircraft took off from Kindu airport. A rebel military commander, who requested anonymity, said the plane was carrying troops, although he did not explain how he knew this. He said the plane was shot down while approaching Kindu air base, where the rebels had deployed at least two surface-to-air missiles and more than 3,500 troops in preparation for a final assault on the government-held town. Alexis Tambwe Mwamba, one of rebel leaders, said from the rebel stronghold at Goma, 380 kilometers (235 miles) northeast of Kalima, that fighters had intercepted government radio messages in Kindu and knew in advance of the arrival of the aircraft. He said the government had been using the Boeing 727 to fly in troops and ammunition in Kindu for several days. Papaioannou, citing, 6th graf pvs ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| A day after shooting down a jetliner carrying 40 people, rebels clashed with government troops near a strategic airstrip in eastern Congo on Sunday. Fighting for the town of Kindu in this vast West African nation subsided after rebels launched an artillery barrage into government-held buildings and the airfield, two miles (three kilometers) away. On Saturday, the rebels shot down a Congolese Boeing 727 over the Kindu airport. Rescue workers said there were no survivors from the downed plane, the British Broadcasting Corp. reported Sunday. Rebels said the airplane was carrying 40 troops and ammunition. In the capital, Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm either claim independently. Rebel commander Fino Kabangu Kalunga said surface-to-air missiles in the arsenal of his Congolese Democratic Coalition had prevented the government from landing aircraft at the airport. Kabangu Kalunga said 3,500 rebel troops and their Rwandan allies had closed in on government forces from three directions after a week of fighting. He said government troops did not launch a counterattack to Sunday's barrage, and some reportedly retreated on the one road leading out of town. The rebels say they now control one-third of Kindu, which the government has used as a staging area for a counteroffensive against rebel positions in the east. Rebels, who began their insurgency more than two months ago, accuse President Laurent Kabila of corruption, failing to carry out promised democratic reforms, and stirring up hatred among Congo's 400 tribes. Early in the conflict, rebels pushed far into the west, to the outskirts of Congo's capital. Then Angola, Zimbabwe and Namibia intervened to help Kabila and drove the rebels back to their bases in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the rebels. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. ||||| Rebel commanders said Tuesday they were poised to overrun an important government-held air base in eastern Congo _ a battle that could determine the future of the two-month Congolese war. After trekking several hundred kilometers (miles) through dense tropical forest, thousands of rebel fighters have gathered 19 kilometers (11 miles) outside Kindu, where troops loyal to President Laurent Kabila have used an air base as a launching pad for offensives. If the rebels succeed in capturing Kindu, 380 kilometers (235 miles) west of Goma, the rebel headquarters, this will remove the last government stronghold in eastern Congo and pave the way for rebel advance into the mineral-rich southwest. A rebel defeat, on the other hand, would put the coalition of ethnic Tutsis, disenchanted members of the Congolese army and opposition politicians on the defensive and give a boost to Kabila's efforts to fend off the rebellion launched Aug. 2. Rebel commander Richard Mondo said troops had fired artillery rounds into Kindu Monday and early Tuesday, sending the population fleeing out of town. Advance units had crossed the Lualaba River from the north and were meeting stiff resistance in the town, he said. Since the assault on the town began at 3 a.m. (0100 GMT), at least 18 enemy soldiers were killed and 40 taken prisoner, Mondo said, adding the number was expected to rise. The rebels took casualties, too, but the number was not known. One rebel soldier was wounded in the stomach, he said. He said the large Kindu air base, 4 kilometers (2 miles) outside town, was deserted and no one appeared to be in control. ``Our soldiers are in the town and the fighting is continuing,'' rebel battalion commander Arthur Mulunda said in Kalima, 80 kilometers (50 miles) northeast of Kindu. There was no independent confirmation of the rebel claims. On Sunday, a spokesman in Goma boasted that Kindu was already under rebel control. In Kinshasa, government spokesman Didier Mumengi said Monday the Congolese army was firmly in control of Kindu. Mulunda's 1,500-strong battalion walked 240 kilometers (150 miles) Bukavu at the southern end of Lake Kivu to Kalima, which fell to the rebels Saturday with little resistance. The rebel fighters, clad in brand-new Rwandan-made dark green uniforms, rubber rain boots and toting Kalashnikov assault rifles and rocket-propelled grenade launchers, said they were advancing slowly through the lush forest of palm trees and razor-sharp tall grass. ``We've been resting a lot. It took us two weeks to get here,'' Mondo said. The rebels are now using Kalima, a town with one main street, scattered houses and mud-and-brick huts, to supply troops with rice, cooking oil, drinking water and ammunition. A small, grass airstrip 8 kilometers (5 miles) away from Kalima is just barely long enough for the rebels' Russian-built Antonov AN-72 transport aircraft. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebels still control a string of towns in eastern Congo, including Kisangani, the country's third-largest city.

Likely ADF rebels attack Chiondo, Uganda, killing 6 civilians. Soldiers repel attack, killing 2 rebels. Anti-Kabila rebels start a web-site and post their mission statement in a media campaign. Congo Tutsi rebels meet resistance as they enter Kindu and adjacent strategic government airbase. Thousands of rebels in place for battle. After 3 days, battle not going well for rebels. Rebels shoot down jet; say soldiers on board. Government claims Kindu refugees on board; unconfirmed. Rebels and Rwandan allies push through government defenses at Kindu. Fighting subsides after rebel artillery strikes. Population suffers from rebellions and tribal conflict.

After a day of fighting, Congolese rebels said Sunday they had entered Kindu, the strategic town and airbase in eastern Congo used by the government to halt their advances. Etienne Ngangura, a rebel spokesman, said the rebel fighters were inside Kindu and had taken the adjacent, large airbase, 380 kilometers (235 miles) west of Goma, the rebel stronghold. ``We're in the town and the airport,'' Ngangura said. He offered no details and the report could not be confirmed independently. Rebel military sources said the fighting continued inside Kindu where the rebels were apparently meeting stiff resistance. The rebels _ ethnic Tutsis, disenchanted members of President Laurent Kabila's army and opposition politicians _ took up arms Aug. 2 accusing Kabila of mismanagement, corruption and creating division among Congo's 400 tribes. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of the capital, Kinshasa, after troops from Angola and Zimbabwe came to Kabila's aid. Troops moving south from Kisangani, the largest city under rebel control, and moving west, had made steady gains against Kindu, which the government apparently used to build up force for a planned counter-offensive. Apart from Kindu, Ngangura said rebel fighters took Buta, 120 kilometers (75 miles) north of Kisangani and on the main road in northern Congo that links Sudan and the Central African Republic. Also on Sunday, Ngangura said the rebels took Bumba, 400 kilometers (250 miles) northwest of Kisangani. These reports could not be confirmed independently either. Rebel leaders said a victory at Kindu would confirm rebel strength, boost fighters' morale and perhaps persuade others to join them. The rebels want direct negotiations with Kabila. But the president has so far refused, accusing the rebels of being puppets of Rwanda and Uganda, which Kabila has accused of orchestrating the rebellion. The conflict in Central Africa has drawn in most of Congo's nine neighbors, and regional diplomatic initiatives have so far failed to stop it. ||||| The bloody bandages of injured rebels trucked back to this rear base Wednesday offered evidence that the three-day battle for the strategic air base at Kindu was not going well for those fighting to oust Congolese President Laurent Kabila. It was impossible to say who had the upper hand in the battle for Kindu and its air base, which government forces have been using to launch airstrikes on eastern towns and to assemble ground troops. Rebel commander Richard Mondo said shelling and ground attacks, which began Monday, continued on Wednesday. Mondo said he was expecting air shipments of munitions to bolster the rebel offensive. On Wednesday, a truck unloaded a dozen wounded rebel fighters at Kalima, a small town 80 kilometers (50 miles) northeast of Kindu, serving as a rear base for the attack. Sweaty and weary, some limping and others bandaged, they waited to be airlifted to a hospital in Goma, the rebel stronghold 380 kilometers (235 miles) east, on the Rwandan border. The rebels _ a coalition of ethnic Tutsis, disenchanted soldiers in Kabila's army and opposition politicians _ faced stiff resistance. In Kinshasa, the Ministry of Defense said Tuesday that the Congolese Armed Forces, known as the FAC, had killed 18 rebels in warding off the attacks. ``Kindu is effectively in the hands of the FAC, which has now launched an offensive after defending its positions,'' said a ministry statement broadcast on state-run television. ``The civilians there are cooperating fully with the FAC as their counterparts did previously in Kinshasa,'' the capital. Rebel leaders hope the capture of Kindu will boost morale and demonstrate can carry their two-month rebellion into the rest of Congo, Africa's third-largest nation. The rebel victory would also open routes to Katanga and Eastern Kasai provinces, rich in copper and diamonds. The rebels targeted Kindu since late August, when they were forced to retreat their march from extreme western Congo to the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebel commanders say their 2,000 fighters face an estimated 5,000 government troops, apparently reinforced by Sudanese soldiers. Sudan denies involvement in Congo. The rebels accuse Kabila of betraying the eight-month rebellion that brought him to power in May 1997 through mismanagement and creating divisions among Congo's 400 tribes. ||||| Back in the golden years, Kasuku wa Ngeyo had a farm and was the head of a 25,000-strong farmers organization in the northeastern breadbasket of this central African nation. A quarter of a century later, the 56-year-old businessman who also ran hotels and a tourist camp is broke; the farmers group is a memory. Inter-tribal rivalry, looting soldiers, Rwandan refugees and two rebellions in as many years have wiped out half a million head of cattle here, slashed coffee and tea exports in half and turned Congo's bucolic eastern region of green pastures, sparkling volcanic lakes and snow-capped mountains into a war zone. ``Nobody is making money any more. People are surviving on a sack of beans. They are tired of insecurity and have little hope things will get better,'' said Kasuku, the son of an Italian settler and a Rwandan Tutsi refugee mother. On Aug. 2, Tutsis, political opponents, and disenchanted members of President Laurent Kabila's army took up arms, accusing Kabila of corruption, nepotism and fostering tribal strife. The war has split Africa's third-largest nation between the government-held west and south and rebel-controlled east, and no political settlement is in sight. Goma, a small trading post at the head of Lake Kivu in eastern Congo, is no longer the starting point for tourists trekking to see mountain gorillas. Today, its decaying buildings, empty shops and crumbling guest houses are home to rebel leaders, soldiers and people displaced by violence. The rebels have promised to revitalize the economy by reducing taxes to boost investment. They also say they will pay civil servants _ who haven't seen a paycheck in months or years _ and invite investors to buy tea and coffee farms and gold and diamond-mining concessions. But the war has also increased tribal animosity _ especially toward ethnic Tutsis, a tiny but highly successful minority in the eastern region. In 1990, the liberating effect of early political freedoms revived unresolved land disputes and led to clashes between the Rwandan Tutsis and Hutus _ who had settled in eastern Congo since the 1930s. Mai-Mai warriors _ armed youths from the Hunde and Nande tribes who accuse Tutsis of stealing their land, also joined the fighting. In 1994, nearly 1 million Rwandan refugees engulfed Goma, a town of 30,000. Among them were former Hutu soldiers and militiamen who took part in a 1994 genocide in neighboring Rwanda in which more than half a million Tutsis were killed. They brought anti-Tutsi ideology with them and sold weapons to Congolese tribes, who then joined in the persecution of Tutsi landowners and ranchers. ``People misunderstood political freedoms for anarchy,'' said Safari Ngezayo, a farmer and hotel owner. ``We tried to mediate between Tutsis and Hutus and other tribes, but how can you talk to people who have blood on their hands and genocide in their heads?'' In late 1996, Congolese Tutsis backed by Rwanda attacked the refugee camps, dislodged the Hutu fighters and forced most of the refugees back home across the border. After an eight-month rebellion backed by Rwanda and Uganda, dictator Mobutu Sese Seko fled in May 1997, and Kabila took power. He quickly changed the name of the country to Congo, from Zaire. Few people in northeastern Congo expected another rebellion so soon. ``I blame our politicians. Then I blame the foreign powers who kept meddling in our affairs. It is they who supported Mobutu and Kabila, and we are paying the interest,'' Kasuku said. ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| Rebels attacked a village in western Uganda and killed six civilians before soldiers drove them off, a military spokesman said Thursday. The attack occurred overnight Wednesday in the village of Chiondo near Kasese, 270 kilometers (170 miles) west of the capital Kampala, said the spokesman, who identified himself only as Lt. Majera. Majera said the attackers were believed to be rebels of the Allied Democratic Forces who operate from bases in the foothills of the Rwenzori Mountains that straddle the Uganda-Congolese border. He said the rebels likely fled back to their bases after the attack. Majera said the attackers avoided a nearby army post when they shot up the village. It was the gunfire that alerted the soldiers, he said, adding that they killed two of the assailants. The various rebel groups operating in the region often attack with knives or machetes, either to save on ammunition or because they don't have guns. He had no further details. Under an agreement earlier this year with Congo, Uganda sent troops into the neighboring country to flush out the ADF fighters. President Yoweri Museveni insists they will remain there until Ugandan security is guaranteed, despite Congolese President Laurent Kabila's protests that Uganda is backing Congolese rebels attempting to topple him. The anti-Kabila rebels claim the Ugandan rebel Lord's Resistance Army, which operates in northern Uganda and enjoys support from Sudan, is fighting alongside Kabila's forces together with Sudanese soldiers. The government-owned daily New Vision reported Thursday that LRA leader Joseph Kony was badly wounded last week and is in hospital in Juba, the largest town still under government control in southern Sudan. The Sudan People's Liberation Army, which is fighting the government in Khartoum for autonomy for southern Sudan, has waged pitched battles with government troops in the past week as it moves on Juba, spokesmen for both sides say. New Vision quoted Ugandan Minister of State for Security Muruli Mukasa as saying Kony's largest camp at al-Gabelain, 38 kilometers (24 miles) south of Juba, was destroyed last week when the SPLA took control. Muruli said the LRA had been planning to bomb several sites in the Ugandan capital, including the Parliament building, state-run Radio Uganda, unidentified embassies and other public sites, the newspaper said. ||||| A day after shooting down a jetliner, Congolese rebels and their Rwandan allies pushed Sunday through government defense lines, showing the confidence of a victor in a week-old battle for a strategic air base. Fighting in Kindu, 32 kilometers (20 miles) northeast of the Elila River bridge, died down after the rebels fired a barrage of artillery into the government-held quarters and the air base, four kilometers (two miles) away. Rebel commander Fino Kabangu Kalunga said the government forces, surrounded by 3,500 rebel troops from three directions, failed to respond to Sunday's attacks. Some troops reportedly retreated through a single road corridor leading out of the town. On Saturday, the rebels said they shot down a Congolese Boeing 727 which was attempting to land at Kindu air base with 40 troops and ammunition. In Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm independently either claim. Kalunga said the airport, although still under government control, was in effect unoperational because of the rebel surface-to-air-missiles deployed nearby. War-weary, physically exhausted and sweaty, hundreds of rebel troops and Rwandan soldiers marched through dense tropical forest went to reinforce their comrades at Kindu. After a week of battling for Kindu, rebel fighters had made little progress and failed to capture the town outright. The rebels see Kindu as a major prize in their two-month revolt against President Laurent Kabila, whom they accuse of mismanagement, corruption and warmongering among Congo's 400 tribes. Kabila has turned Kindu into a launching pad for a counteroffensive against rebel positions in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the new fighting. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. Tanks, aircraft and troops from Angola, Zimbabwe and Namibia are supporting Kabila. The assistance was essential in routing an early rebel offensive in the west that had reached the outskirts of Kinshasa in mid-August. The rebels say they now control one-third of Kindu and are poised to overrun the rest of the town. Under a scorching sun, the column of rebel reinforcements heading to Kindu sneaked through abandoned roadside hamlets. The silence of their march was interrupted only by the singing of crickets and the clanging of the bullet belts hanging around the soldiers' necks. Soldiers walked by empty huts made of mud and palm leaves. Some rested in the shade of the umbrella-shaped acacia trees. The soldiers stopped for the night at the bridge over the chocolate-colored Elila River, which guards the path to Kindu. There was no immediate comment on the latest developments from the government in Kinshasa, which claimed earlier in the week it was in control of the tarmac bridge. ||||| Rebels in eastern Congo on Saturday said they shot down a passenger jet ferrying 40 government soldiers into a strategic airport facing a rebel assault. A Congo Airlines executive said the victims were civilians being evacuated from Kindu, about 1,000 kilometers (620 miles) east of the capital, Kinshasa. Neither claim could be confirmed independently. Stavros Papaioannou, the president of the airline's management committee, said a missile hit the rear engine of the Boeing jet after the aircraft took off from Kindu airport. A rebel military commander, who requested anonymity, said the plane was carrying troops, although he did not explain how he knew this. He said the plane was shot down while approaching Kindu air base, where the rebels had deployed at least two surface-to-air missiles and more than 3,500 troops in preparation for a final assault on the government-held town. Alexis Tambwe Mwamba, one of rebel leaders, said from the rebel stronghold at Goma, 380 kilometers (235 miles) northeast of Kalima, that fighters had intercepted government radio messages in Kindu and knew in advance of the arrival of the aircraft. He said the government had been using the Boeing 727 to fly in troops and ammunition in Kindu for several days. Papaioannou, citing, 6th graf pvs ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| A day after shooting down a jetliner carrying 40 people, rebels clashed with government troops near a strategic airstrip in eastern Congo on Sunday. Fighting for the town of Kindu in this vast West African nation subsided after rebels launched an artillery barrage into government-held buildings and the airfield, two miles (three kilometers) away. On Saturday, the rebels shot down a Congolese Boeing 727 over the Kindu airport. Rescue workers said there were no survivors from the downed plane, the British Broadcasting Corp. reported Sunday. Rebels said the airplane was carrying 40 troops and ammunition. In the capital, Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm either claim independently. Rebel commander Fino Kabangu Kalunga said surface-to-air missiles in the arsenal of his Congolese Democratic Coalition had prevented the government from landing aircraft at the airport. Kabangu Kalunga said 3,500 rebel troops and their Rwandan allies had closed in on government forces from three directions after a week of fighting. He said government troops did not launch a counterattack to Sunday's barrage, and some reportedly retreated on the one road leading out of town. The rebels say they now control one-third of Kindu, which the government has used as a staging area for a counteroffensive against rebel positions in the east. Rebels, who began their insurgency more than two months ago, accuse President Laurent Kabila of corruption, failing to carry out promised democratic reforms, and stirring up hatred among Congo's 400 tribes. Early in the conflict, rebels pushed far into the west, to the outskirts of Congo's capital. Then Angola, Zimbabwe and Namibia intervened to help Kabila and drove the rebels back to their bases in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the rebels. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. ||||| Rebel commanders said Tuesday they were poised to overrun an important government-held air base in eastern Congo _ a battle that could determine the future of the two-month Congolese war. After trekking several hundred kilometers (miles) through dense tropical forest, thousands of rebel fighters have gathered 19 kilometers (11 miles) outside Kindu, where troops loyal to President Laurent Kabila have used an air base as a launching pad for offensives. If the rebels succeed in capturing Kindu, 380 kilometers (235 miles) west of Goma, the rebel headquarters, this will remove the last government stronghold in eastern Congo and pave the way for rebel advance into the mineral-rich southwest. A rebel defeat, on the other hand, would put the coalition of ethnic Tutsis, disenchanted members of the Congolese army and opposition politicians on the defensive and give a boost to Kabila's efforts to fend off the rebellion launched Aug. 2. Rebel commander Richard Mondo said troops had fired artillery rounds into Kindu Monday and early Tuesday, sending the population fleeing out of town. Advance units had crossed the Lualaba River from the north and were meeting stiff resistance in the town, he said. Since the assault on the town began at 3 a.m. (0100 GMT), at least 18 enemy soldiers were killed and 40 taken prisoner, Mondo said, adding the number was expected to rise. The rebels took casualties, too, but the number was not known. One rebel soldier was wounded in the stomach, he said. He said the large Kindu air base, 4 kilometers (2 miles) outside town, was deserted and no one appeared to be in control. ``Our soldiers are in the town and the fighting is continuing,'' rebel battalion commander Arthur Mulunda said in Kalima, 80 kilometers (50 miles) northeast of Kindu. There was no independent confirmation of the rebel claims. On Sunday, a spokesman in Goma boasted that Kindu was already under rebel control. In Kinshasa, government spokesman Didier Mumengi said Monday the Congolese army was firmly in control of Kindu. Mulunda's 1,500-strong battalion walked 240 kilometers (150 miles) Bukavu at the southern end of Lake Kivu to Kalima, which fell to the rebels Saturday with little resistance. The rebel fighters, clad in brand-new Rwandan-made dark green uniforms, rubber rain boots and toting Kalashnikov assault rifles and rocket-propelled grenade launchers, said they were advancing slowly through the lush forest of palm trees and razor-sharp tall grass. ``We've been resting a lot. It took us two weeks to get here,'' Mondo said. The rebels are now using Kalima, a town with one main street, scattered houses and mud-and-brick huts, to supply troops with rice, cooking oil, drinking water and ammunition. A small, grass airstrip 8 kilometers (5 miles) away from Kalima is just barely long enough for the rebels' Russian-built Antonov AN-72 transport aircraft. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebels still control a string of towns in eastern Congo, including Kisangani, the country's third-largest city.

Rebel groups, mostly Tutsis, but backed by Rawandas and Ugandans are fighting the Congolese government of President Kabila, who is accused of corruption and sowing dissent among Congo's 400 tribes. The government controls the western part of the country but the rebels are gaining in the east. Heavy fighting has occurred near the village of Kindu, which has an airfield critical for supplying government troops. Rebels shot down an airliner near there, killing all 40 aboard, which they say were soldiers but the airline says were civilians. The rebels have promised reforms and a revitalization of the economy; however, the war has increased tribal animosity.

After a day of fighting, Congolese rebels said Sunday they had entered Kindu, the strategic town and airbase in eastern Congo used by the government to halt their advances. Etienne Ngangura, a rebel spokesman, said the rebel fighters were inside Kindu and had taken the adjacent, large airbase, 380 kilometers (235 miles) west of Goma, the rebel stronghold. ``We're in the town and the airport,'' Ngangura said. He offered no details and the report could not be confirmed independently. Rebel military sources said the fighting continued inside Kindu where the rebels were apparently meeting stiff resistance. The rebels _ ethnic Tutsis, disenchanted members of President Laurent Kabila's army and opposition politicians _ took up arms Aug. 2 accusing Kabila of mismanagement, corruption and creating division among Congo's 400 tribes. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of the capital, Kinshasa, after troops from Angola and Zimbabwe came to Kabila's aid. Troops moving south from Kisangani, the largest city under rebel control, and moving west, had made steady gains against Kindu, which the government apparently used to build up force for a planned counter-offensive. Apart from Kindu, Ngangura said rebel fighters took Buta, 120 kilometers (75 miles) north of Kisangani and on the main road in northern Congo that links Sudan and the Central African Republic. Also on Sunday, Ngangura said the rebels took Bumba, 400 kilometers (250 miles) northwest of Kisangani. These reports could not be confirmed independently either. Rebel leaders said a victory at Kindu would confirm rebel strength, boost fighters' morale and perhaps persuade others to join them. The rebels want direct negotiations with Kabila. But the president has so far refused, accusing the rebels of being puppets of Rwanda and Uganda, which Kabila has accused of orchestrating the rebellion. The conflict in Central Africa has drawn in most of Congo's nine neighbors, and regional diplomatic initiatives have so far failed to stop it. ||||| The bloody bandages of injured rebels trucked back to this rear base Wednesday offered evidence that the three-day battle for the strategic air base at Kindu was not going well for those fighting to oust Congolese President Laurent Kabila. It was impossible to say who had the upper hand in the battle for Kindu and its air base, which government forces have been using to launch airstrikes on eastern towns and to assemble ground troops. Rebel commander Richard Mondo said shelling and ground attacks, which began Monday, continued on Wednesday. Mondo said he was expecting air shipments of munitions to bolster the rebel offensive. On Wednesday, a truck unloaded a dozen wounded rebel fighters at Kalima, a small town 80 kilometers (50 miles) northeast of Kindu, serving as a rear base for the attack. Sweaty and weary, some limping and others bandaged, they waited to be airlifted to a hospital in Goma, the rebel stronghold 380 kilometers (235 miles) east, on the Rwandan border. The rebels _ a coalition of ethnic Tutsis, disenchanted soldiers in Kabila's army and opposition politicians _ faced stiff resistance. In Kinshasa, the Ministry of Defense said Tuesday that the Congolese Armed Forces, known as the FAC, had killed 18 rebels in warding off the attacks. ``Kindu is effectively in the hands of the FAC, which has now launched an offensive after defending its positions,'' said a ministry statement broadcast on state-run television. ``The civilians there are cooperating fully with the FAC as their counterparts did previously in Kinshasa,'' the capital. Rebel leaders hope the capture of Kindu will boost morale and demonstrate can carry their two-month rebellion into the rest of Congo, Africa's third-largest nation. The rebel victory would also open routes to Katanga and Eastern Kasai provinces, rich in copper and diamonds. The rebels targeted Kindu since late August, when they were forced to retreat their march from extreme western Congo to the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebel commanders say their 2,000 fighters face an estimated 5,000 government troops, apparently reinforced by Sudanese soldiers. Sudan denies involvement in Congo. The rebels accuse Kabila of betraying the eight-month rebellion that brought him to power in May 1997 through mismanagement and creating divisions among Congo's 400 tribes. ||||| Back in the golden years, Kasuku wa Ngeyo had a farm and was the head of a 25,000-strong farmers organization in the northeastern breadbasket of this central African nation. A quarter of a century later, the 56-year-old businessman who also ran hotels and a tourist camp is broke; the farmers group is a memory. Inter-tribal rivalry, looting soldiers, Rwandan refugees and two rebellions in as many years have wiped out half a million head of cattle here, slashed coffee and tea exports in half and turned Congo's bucolic eastern region of green pastures, sparkling volcanic lakes and snow-capped mountains into a war zone. ``Nobody is making money any more. People are surviving on a sack of beans. They are tired of insecurity and have little hope things will get better,'' said Kasuku, the son of an Italian settler and a Rwandan Tutsi refugee mother. On Aug. 2, Tutsis, political opponents, and disenchanted members of President Laurent Kabila's army took up arms, accusing Kabila of corruption, nepotism and fostering tribal strife. The war has split Africa's third-largest nation between the government-held west and south and rebel-controlled east, and no political settlement is in sight. Goma, a small trading post at the head of Lake Kivu in eastern Congo, is no longer the starting point for tourists trekking to see mountain gorillas. Today, its decaying buildings, empty shops and crumbling guest houses are home to rebel leaders, soldiers and people displaced by violence. The rebels have promised to revitalize the economy by reducing taxes to boost investment. They also say they will pay civil servants _ who haven't seen a paycheck in months or years _ and invite investors to buy tea and coffee farms and gold and diamond-mining concessions. But the war has also increased tribal animosity _ especially toward ethnic Tutsis, a tiny but highly successful minority in the eastern region. In 1990, the liberating effect of early political freedoms revived unresolved land disputes and led to clashes between the Rwandan Tutsis and Hutus _ who had settled in eastern Congo since the 1930s. Mai-Mai warriors _ armed youths from the Hunde and Nande tribes who accuse Tutsis of stealing their land, also joined the fighting. In 1994, nearly 1 million Rwandan refugees engulfed Goma, a town of 30,000. Among them were former Hutu soldiers and militiamen who took part in a 1994 genocide in neighboring Rwanda in which more than half a million Tutsis were killed. They brought anti-Tutsi ideology with them and sold weapons to Congolese tribes, who then joined in the persecution of Tutsi landowners and ranchers. ``People misunderstood political freedoms for anarchy,'' said Safari Ngezayo, a farmer and hotel owner. ``We tried to mediate between Tutsis and Hutus and other tribes, but how can you talk to people who have blood on their hands and genocide in their heads?'' In late 1996, Congolese Tutsis backed by Rwanda attacked the refugee camps, dislodged the Hutu fighters and forced most of the refugees back home across the border. After an eight-month rebellion backed by Rwanda and Uganda, dictator Mobutu Sese Seko fled in May 1997, and Kabila took power. He quickly changed the name of the country to Congo, from Zaire. Few people in northeastern Congo expected another rebellion so soon. ``I blame our politicians. Then I blame the foreign powers who kept meddling in our affairs. It is they who supported Mobutu and Kabila, and we are paying the interest,'' Kasuku said. ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| Rebels attacked a village in western Uganda and killed six civilians before soldiers drove them off, a military spokesman said Thursday. The attack occurred overnight Wednesday in the village of Chiondo near Kasese, 270 kilometers (170 miles) west of the capital Kampala, said the spokesman, who identified himself only as Lt. Majera. Majera said the attackers were believed to be rebels of the Allied Democratic Forces who operate from bases in the foothills of the Rwenzori Mountains that straddle the Uganda-Congolese border. He said the rebels likely fled back to their bases after the attack. Majera said the attackers avoided a nearby army post when they shot up the village. It was the gunfire that alerted the soldiers, he said, adding that they killed two of the assailants. The various rebel groups operating in the region often attack with knives or machetes, either to save on ammunition or because they don't have guns. He had no further details. Under an agreement earlier this year with Congo, Uganda sent troops into the neighboring country to flush out the ADF fighters. President Yoweri Museveni insists they will remain there until Ugandan security is guaranteed, despite Congolese President Laurent Kabila's protests that Uganda is backing Congolese rebels attempting to topple him. The anti-Kabila rebels claim the Ugandan rebel Lord's Resistance Army, which operates in northern Uganda and enjoys support from Sudan, is fighting alongside Kabila's forces together with Sudanese soldiers. The government-owned daily New Vision reported Thursday that LRA leader Joseph Kony was badly wounded last week and is in hospital in Juba, the largest town still under government control in southern Sudan. The Sudan People's Liberation Army, which is fighting the government in Khartoum for autonomy for southern Sudan, has waged pitched battles with government troops in the past week as it moves on Juba, spokesmen for both sides say. New Vision quoted Ugandan Minister of State for Security Muruli Mukasa as saying Kony's largest camp at al-Gabelain, 38 kilometers (24 miles) south of Juba, was destroyed last week when the SPLA took control. Muruli said the LRA had been planning to bomb several sites in the Ugandan capital, including the Parliament building, state-run Radio Uganda, unidentified embassies and other public sites, the newspaper said. ||||| A day after shooting down a jetliner, Congolese rebels and their Rwandan allies pushed Sunday through government defense lines, showing the confidence of a victor in a week-old battle for a strategic air base. Fighting in Kindu, 32 kilometers (20 miles) northeast of the Elila River bridge, died down after the rebels fired a barrage of artillery into the government-held quarters and the air base, four kilometers (two miles) away. Rebel commander Fino Kabangu Kalunga said the government forces, surrounded by 3,500 rebel troops from three directions, failed to respond to Sunday's attacks. Some troops reportedly retreated through a single road corridor leading out of the town. On Saturday, the rebels said they shot down a Congolese Boeing 727 which was attempting to land at Kindu air base with 40 troops and ammunition. In Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm independently either claim. Kalunga said the airport, although still under government control, was in effect unoperational because of the rebel surface-to-air-missiles deployed nearby. War-weary, physically exhausted and sweaty, hundreds of rebel troops and Rwandan soldiers marched through dense tropical forest went to reinforce their comrades at Kindu. After a week of battling for Kindu, rebel fighters had made little progress and failed to capture the town outright. The rebels see Kindu as a major prize in their two-month revolt against President Laurent Kabila, whom they accuse of mismanagement, corruption and warmongering among Congo's 400 tribes. Kabila has turned Kindu into a launching pad for a counteroffensive against rebel positions in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the new fighting. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. Tanks, aircraft and troops from Angola, Zimbabwe and Namibia are supporting Kabila. The assistance was essential in routing an early rebel offensive in the west that had reached the outskirts of Kinshasa in mid-August. The rebels say they now control one-third of Kindu and are poised to overrun the rest of the town. Under a scorching sun, the column of rebel reinforcements heading to Kindu sneaked through abandoned roadside hamlets. The silence of their march was interrupted only by the singing of crickets and the clanging of the bullet belts hanging around the soldiers' necks. Soldiers walked by empty huts made of mud and palm leaves. Some rested in the shade of the umbrella-shaped acacia trees. The soldiers stopped for the night at the bridge over the chocolate-colored Elila River, which guards the path to Kindu. There was no immediate comment on the latest developments from the government in Kinshasa, which claimed earlier in the week it was in control of the tarmac bridge. ||||| Rebels in eastern Congo on Saturday said they shot down a passenger jet ferrying 40 government soldiers into a strategic airport facing a rebel assault. A Congo Airlines executive said the victims were civilians being evacuated from Kindu, about 1,000 kilometers (620 miles) east of the capital, Kinshasa. Neither claim could be confirmed independently. Stavros Papaioannou, the president of the airline's management committee, said a missile hit the rear engine of the Boeing jet after the aircraft took off from Kindu airport. A rebel military commander, who requested anonymity, said the plane was carrying troops, although he did not explain how he knew this. He said the plane was shot down while approaching Kindu air base, where the rebels had deployed at least two surface-to-air missiles and more than 3,500 troops in preparation for a final assault on the government-held town. Alexis Tambwe Mwamba, one of rebel leaders, said from the rebel stronghold at Goma, 380 kilometers (235 miles) northeast of Kalima, that fighters had intercepted government radio messages in Kindu and knew in advance of the arrival of the aircraft. He said the government had been using the Boeing 727 to fly in troops and ammunition in Kindu for several days. Papaioannou, citing, 6th graf pvs ||||| Congolese rebels have taken their two-month campaign to oust President Laurent Kabila to the Internet. ``We have to explain to the world audience who we are and what we're fighting for,'' rebel leader Ernest Wamba dia Wamba said on Friday. ``Besides, the (Kabila) government has been using the Internet to tell their side of the story.'' The 56-year-old history professor at the University of Dar es Salaam in Tanzania said supporters of the Congolese Rally for Democracy in the United States have created a web site for the rebellion. The site _ www.prairienet.org/panafrican/cdm _ has been set up on the donor-supported Prairenet Community Network in eastern Illinois. The rebels are a coalition of ethnic Tutsis, disenchanted members of Kabila's army and political opponents who accuse Kabila of power-grabbing, mismanagement, corruption and sowing dissent among Congo's 400 tribes. After an initial lightning advance in the far west of Africa's third-largest nation, the rebels were stopped at the outskirts of the capital, Kinshasa, by troops from Angola, Zimbabwe and Namibia, who are backing Kabila. Since then, the rebels have been confined to a chunk of territory in the extreme eastern part of the country where their rebellion was declared Aug. 2. Wamba said the rebels control 40 percent of Congo, an area of 15 million people. So far, Kabila has refused to negotiate with the rebels, accusing them of being the puppets of neighboring Rwanda and Uganda. Posting the rebel mission statement on the Internet is just part of the media campaign. Last week, Wamba dispatched two of his top aides to the United States and Europe to lobby for political support and raise public awareness about the conflict in Congo. ``World leaders, diplomats and are not familiar enough with our cause. They still talk about Tutsis leading the rebellion. Well, I'm not a Tutsi,'' Wamba said. Jacques Depelchin, the movement's vice president and a former lecturer at the University of California at Berkeley, met in Washington earlier this week with the U.S. special envoy in the Great Lakes region of Central Africa, Howard Wolpe and with congressmen, Wamba said. ||||| A day after shooting down a jetliner carrying 40 people, rebels clashed with government troops near a strategic airstrip in eastern Congo on Sunday. Fighting for the town of Kindu in this vast West African nation subsided after rebels launched an artillery barrage into government-held buildings and the airfield, two miles (three kilometers) away. On Saturday, the rebels shot down a Congolese Boeing 727 over the Kindu airport. Rescue workers said there were no survivors from the downed plane, the British Broadcasting Corp. reported Sunday. Rebels said the airplane was carrying 40 troops and ammunition. In the capital, Kinshasa, the private Congolese Airlines, which owned the aircraft, said the victims were civilians fleeing fighting in Kindu. It was not possible to confirm either claim independently. Rebel commander Fino Kabangu Kalunga said surface-to-air missiles in the arsenal of his Congolese Democratic Coalition had prevented the government from landing aircraft at the airport. Kabangu Kalunga said 3,500 rebel troops and their Rwandan allies had closed in on government forces from three directions after a week of fighting. He said government troops did not launch a counterattack to Sunday's barrage, and some reportedly retreated on the one road leading out of town. The rebels say they now control one-third of Kindu, which the government has used as a staging area for a counteroffensive against rebel positions in the east. Rebels, who began their insurgency more than two months ago, accuse President Laurent Kabila of corruption, failing to carry out promised democratic reforms, and stirring up hatred among Congo's 400 tribes. Early in the conflict, rebels pushed far into the west, to the outskirts of Congo's capital. Then Angola, Zimbabwe and Namibia intervened to help Kabila and drove the rebels back to their bases in eastern Congo. The conflict has drawn in many of Congo's neighbors. There are unconfirmed reports that troops from Chad and the Sudan are involved in defending Kindu. Kabila accuses Rwanda and Uganda _ former allies who installed him in power in May 1997 after an eight-month rebellion _ of sponsoring the rebels. Both countries say they have legitimate security interests in eastern Congo and accuse Kabila of failing to rid the common border area of Rwandan and Ugandan rebels. ||||| Rebel commanders said Tuesday they were poised to overrun an important government-held air base in eastern Congo _ a battle that could determine the future of the two-month Congolese war. After trekking several hundred kilometers (miles) through dense tropical forest, thousands of rebel fighters have gathered 19 kilometers (11 miles) outside Kindu, where troops loyal to President Laurent Kabila have used an air base as a launching pad for offensives. If the rebels succeed in capturing Kindu, 380 kilometers (235 miles) west of Goma, the rebel headquarters, this will remove the last government stronghold in eastern Congo and pave the way for rebel advance into the mineral-rich southwest. A rebel defeat, on the other hand, would put the coalition of ethnic Tutsis, disenchanted members of the Congolese army and opposition politicians on the defensive and give a boost to Kabila's efforts to fend off the rebellion launched Aug. 2. Rebel commander Richard Mondo said troops had fired artillery rounds into Kindu Monday and early Tuesday, sending the population fleeing out of town. Advance units had crossed the Lualaba River from the north and were meeting stiff resistance in the town, he said. Since the assault on the town began at 3 a.m. (0100 GMT), at least 18 enemy soldiers were killed and 40 taken prisoner, Mondo said, adding the number was expected to rise. The rebels took casualties, too, but the number was not known. One rebel soldier was wounded in the stomach, he said. He said the large Kindu air base, 4 kilometers (2 miles) outside town, was deserted and no one appeared to be in control. ``Our soldiers are in the town and the fighting is continuing,'' rebel battalion commander Arthur Mulunda said in Kalima, 80 kilometers (50 miles) northeast of Kindu. There was no independent confirmation of the rebel claims. On Sunday, a spokesman in Goma boasted that Kindu was already under rebel control. In Kinshasa, government spokesman Didier Mumengi said Monday the Congolese army was firmly in control of Kindu. Mulunda's 1,500-strong battalion walked 240 kilometers (150 miles) Bukavu at the southern end of Lake Kivu to Kalima, which fell to the rebels Saturday with little resistance. The rebel fighters, clad in brand-new Rwandan-made dark green uniforms, rubber rain boots and toting Kalashnikov assault rifles and rocket-propelled grenade launchers, said they were advancing slowly through the lush forest of palm trees and razor-sharp tall grass. ``We've been resting a lot. It took us two weeks to get here,'' Mondo said. The rebels are now using Kalima, a town with one main street, scattered houses and mud-and-brick huts, to supply troops with rice, cooking oil, drinking water and ammunition. A small, grass airstrip 8 kilometers (5 miles) away from Kalima is just barely long enough for the rebels' Russian-built Antonov AN-72 transport aircraft. The rebels have targeted Kindu since late August, when they were forced to retreat from the outskirts of Kinshasa after Angola and Zimbabwe sent troops to bail out Kabila. Rebels still control a string of towns in eastern Congo, including Kisangani, the country's third-largest city.

Civil strife, tribal rivalry and rebellion has given Congolese rebels control of 40 percent of Congo. The rebels are ethnic Tutsis, disenchanted members of President Kabila's army and opposition politicians. They are accused of being puppets to Uganda and Rwanda. They launched an attack in Kindu, the strategic town and airbase in eastern Congo used by government to halt their advances. Rebels downed a jetliner carrying 40 people from Kindu but fighting has subsided. They have taken their two-month campaign to the Internet to tell their side of the story. Kabila, refusing to negotiate with them, is accused of mismanagement and causing tribal divisiveness.

A panel investigating apartheid-era atrocities said Wednesday it will not implicate the last apartheid president, F.W. de Klerk, in human rights abuses after he threatened a court challenge. De Klerk said he would sue to block the long-awaited final report of the Truth and Reconciliation Commission, which was due for release Thursday. The man who helped negotiate the end of apartheid objected to a finding by the commission that he was ``an accessory after the fact'' to bombings in the 1980s of the headquarters of a church group and of a labor federation. Former Archbishop Desmond Tutu, the truth panel's chairman, said the commission needed time to prepare to fight the legal challenge, and would ``excise'' de Klerk's name from the report to avoid delaying its release. ``It upsets me deeply,'' Tutu said. ``We have been scrupulously fair to Mr. de Klerk and we reject the contention that we have been engaged in a vendetta against him. ``But we must and will respect the courts and his rights under the constitution. We fought hard for those rights and we can be proud in South Africa that Mr. de Klerk now shares in them,'' he said in a statement. ``All we are doing is postponing dealing with the matter,'' Tutu later told The Associated Press. ``The name will eventually appear after all the hoo-ha has died down.'' De Klerk, reached in London, said he could not comment before speaking with his lawyers because the matter was in the courts. The commission was charged with promoting reconciliation by laying bare apartheid's horrors. It has held hearings around the country for more than two years, listening to victims and perpetrators seeking amnesty. The release of the 3,500-page report represents a milestone for South Africa's transformation from white minority rule to democracy. De Klerk's challenge was only part of the storm of criticism prompted by leaks of the report. The African National Congress, the liberation movement that helped defeat apartheid and now runs the country, on Tuesday angrily rejected a finding that it too was guilty of human rights violations in its armed struggle. The report will be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when all-race elections ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. Other threatened legal challenges have led to fewer individuals being named as rights violators than planned, The Star of Johannesburg reported Wednesday. In commenting on the newspaper report, Tutu said that more than 400 people had been notified they would be implicated to give them a chance to respond. Only 15 successfully argued themselves out of the report, he said. ||||| Criminal prosecutions for atrocities committed during the war against white rule could drag on for at least six years, a top prosecutor said Monday. Key figures implicated in human rights abuses by the Truth and Reconciliation Commission already are under investigation, the official, Jan d'Oliveira, told reporters. They include two unnamed generals in the apartheid state's security apparatus, President Nelson Mandela's ex-wife Winnie Madikizela-Mandela and officials of the African National Congress, he said. The remarks by d'Oliveira, who recently was appointed a deputy national director of prosecutions, were the clearest signal yet that criminal cases would be brought against figures accused by the commission of gross human rights violations. The commission released its report Oct. 30. It chronicles the human rights abuses committed by apartheid governments and their operatives as well as by the African National Congress and others fighting the racist system. The issue of continuing prosecutions is significant. Many feel that dragging on criminal reckonings of the horrors of the apartheid era will only prolong bitterness and delay reconciliation. But supporters of prosecution feel that denying justice to the victims is a worse evil. On a practical level, highly public prosecutions of ANC figures could have an impact on national elections next year, when the party will seek to consolidate its hold on power. The panel's chairman, Archbishop Desmond Tutu, has called for a two-year time limit on prosecutions; d'Oliveira called the period ``wholly impractical.'' The prosecutor did not name the other targets. ``We have always worked on the principle of that we will prosecute the highest rank,'' he said. The commission has the ability to grant amnesty to those who admit their misdeeds and are found to have acted with political motives. The report said individuals who have not sought amnesty should be prosecuted. Madikizela-Mandela has not sought amnesty. The commission found her accountable for human rights violations committed by her bodyguards, who the report said killed and tortured suspected opponents. Madikizela-Mandela was convicted in 1991 of kidnapping and being an accessory to an assault on four young men. She was sentenced to six years in jail, but paid a dlrs 3,200 fine on appeal. The ANC official was among the most prominent anti-apartheid activists. The two generals were implicated during Truth Commission testimony. Prosecutors are ready to move forward pending the amnesty application of one. ||||| The deal that South Africa's Truth and Reconciliation Commission offered was simple enough: Confess your crimes, apply for amnesty and you will go free. If you don't come forward, you will be prosecuted. After more than two years of hearings into apartheid-era atrocities, the commission last week unveiled a 3,500-page report naming dozens of people it believes were up to their elbows in the gore but never applied for amnesty. So the prosecutions should begin soon, right? Not so fast. The study was barely in the hands of President Nelson Mandela before talk of new amnesty deals had begun. It seems that nearly all of South Africa's political parties _ including the ruling African National Congress _ have key officials who could end up in the dock because of the report. Suddenly, there is lots of talk about how the country can't withstand a round of politically divisive trials, and many political analysts here are betting that an agreement ``of mutual benefit'' is in the offing. Already, three major political parties are calling for some kind of new amnesty, and the ANC isn't closing the door. ANC spokesman Thabo Masebe said it was ``premature'' to talk of a general amnesty, but he acknowledged that the party was discussing an amnesty specifically tailored to violence by black South Africans against other blacks that littered the KwaZulu/Natal province with bodies during the late '80s and into the '90s. In choosing a truth commission rather than a Nuremberg-style trial with which to close out its brutal past, South Africa hoped for an idealistic reconciliation. People would come clean and receive true forgiveness. Society would then be able to move on, its wounds cleansed and healed. It was a model watched closely around the world by other societies wondering how to disentangle themselves from the grudges of a brutal past. But given the chance, hundreds of South Africa's perpetrators did not come forward. Commission officials themselves say they were frustrated by the lack of cooperation, however exhaustive their report may seem. It is perhaps too late, however, to press for more. Today's South Africa has urgent new problems to deal with _ unemployment, crime, white flight, too few schools and hospitals. So it may wind up settling for a more pragmatic reconciliation _ one that gives amnesty to the unrepentant simply because it's more practical for all concerned to move on. In recent years, truth commissions have gained popularity in many places, notably Chile, Argentina and El Salvador. But South Africa's _ the biggest and most powerful, able to grant amnesty and to subpoena witnesses _ was supposed to be the real test. Certainly the commission forced the nation to see the gruesome details of its past, as sobbing survivors and stone-faced torturers told of smashed genitals and near suffocations. And the commission's work added much to the knowledge about what happened in South Africa between 1960 and 1994. But it will be years before the effect of the commission can truly be judged. Has anyone really forgiven anyone else? Will vendettas persist? No one can answer. One thing seems clear, however: Four years after South Africa held its first non-racial elections, a growing number of South Africans want to be done with the past. Raymond Louw, the publisher of a respected weekly newsletter, Southern Africa Report, says a new amnesty proposal could come up during the February session of Parliament, in time to remove the issue from next year's election campaigns. ``You simply can't have this country torn apart by prosecutions,'' he says. ``Everybody is going to be howling for an amnesty. They already are.'' Even as Archbishop Desmond Tutu, the commission's chairman, delivered the report, he seemed to be anticipating a push for a new amnesty and arguing against it. He said such a move would be highly unfair to those who came forward. He suggested instead that there be a two-year time limit, after which anyone not indicted would in effect get amnesty. To be sure, there will be opposition to any proposals to limit prosecutions. More than a dozen human rights and victims advocacy groups have already banded together to condemn such proposals as ``unconscionable.'' The idea for a Truth Commission emerged as a compromise from the long negotiations that brought about South Africa's peaceful transition from a white supremacist state to a non-racial democracy. During the talks, the white National Party government pushed for a blanket amnesty, and the ANC refused. In the end, only about 250 former police officers came forward, most of them foot soldiers. And only two high National Party officials, former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe, confessed _ to roles in ordering bombings. In its report, the commission called the apartheid state the ``primary perpetrator'' of gross human rights violations and held such high ranking former officials as former President P.W. Botha, his former army chief, Georg Meiring, and the former intelligence chief, Niel Barnard, responsible. These men, and others of lower rank, have not applied for amnesty For the ANC, the most embarrassing prospect is the possible prosecution of Mandela's former wife, Winnie Madikizela-Mandela, who is accused in the report of taking part in a number of assaults and abductions. Lesser-known officials could face charges too. The ANC is held responsible for at least 76 deaths in KwaZulu/Natal. The ANC's problems are further complicated by its efforts to make peace with the largely Zulu-based Inkatha Freedom Party. Virtually no one from that party came forward to ask for amnesty. Yet the report found that Inkatha, working with the white government, was responsible for widespread slaughter in KwaZulu/Natal and in the townships around Johannesburg. Inkatha's leader, Chief Mangosuthu Buthelezi, and many key party officials stand accused of fomenting a wide range of abuses. But prosecuting Chief Buthelezi could lead to new warfare in KwaZulu. Part of the reluctance to go forward with prosecutions may be the result of still another factor: The judicial system is already overwhelmed with rising crime and the evidence from the apartheid era is old. So why spend the time and the money? At the moment, only one political party is opposed to any form of new amnesty _ the tiny but influential Democratic Party, a liberal group that was not involved in the violence. Its head, Tony Leon, says a new amnesty would only prove that ``the more thuglike your behavior, the more you get away with.'' But he concedes that his is a lonely voice. ``At this point,'' he says, ``there is little enthusiasm for anything but closing the book on the past.'' ||||| A panel probing apartheid-era abuses has accused the African National Congress of human rights violations, including torture and bomb attacks, the state broadcaster said Monday. The ANC, which led the struggle against white rule and now is in power, previously has acknowledged it was told to expect implication in right violations. The Truth and Reconciliation Commission will release its final report on 2 1-2 years of investigation on Thursday. The report was expected to place overwhelming blame for the era's abuses on white governments and their brutal security services. President Nelson Mandela's office received an advance copy on Monday ahead of the handover ceremony, when retired Archbishop Desmond Tutu, who chaired the comission, will present Mandela with the report. South African Broadcasting Corp. radio said it had been leaked a ``preliminary document'' which condemns the ANC as politically and morally responsible for gross human rights violations during and after the fall of apartheid. An ANC spokesman, Thabo Masebe, said he believed the news report referred to a commission letter sent in advance ``informing us of its intention to implicate the ANC in gross human rights violations.'' Commission officials could not immediately be reached for comment. Justice Minister Dullah Omar told journalists in Pretoria he had heard the news report, but would not comment. Former President F.W. de Klerk, meanwhile, plans to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing embarrassed. The party says the accusations against it likely would center on the planting of land mines on border farms, abuses at its military camps in Angola and bombings. Omar said he expected the report's conclusions to set off debate but added it would ``lay the basis for reconciliation.'' ||||| Torturers and bombers who carried out atrocities defending or fighting apartheid need counseling to ensure they do not repeat their crimes, an expert for South Africa's reconciliation body said Thursday. Addressing local and international experts, Charles Villa-Vicencio, research head of the Truth and Reconciliation Commission, said ignoring the psychological needs of those who carried out human rights abuses could alienate a potentially dangerous sector of society. ``We must give attention to the healing of perpetrators, not just for the sake of perpetrators, but for the sake of the nation as a whole,'' he said. The conference, organized by the Medical Research Council, is examining mental health issues raised by the Truth Commission, which is charged with probing crimes committed by all sides in the anti-apartheid struggle. As the commission prepares to hand over its final report at the end of the month, South Africans are examining its painful and traumatic exploration of their bloody past. With the power to grant amnesty to many who tortured, bombed or maimed innocent civilians, the process has at some stage angered people in nearly all walks of life. Many whites see the panel as favoring the black liberation movements, while many blacks accuse it of being too soft on former state officials, especially top ranking ministers. However, Villa-Vicencio appealed for tolerance in dealing with all those who have committed crimes, saying that the potential for wrongdoing existed in everyone. ``We all, the entire human race, carry with us the capacity for evil,'' he said. Many of Thursday's speakers touched on the figure of police death squad leader Eugene de Kock, who was given jail terms totaling more than 200 years after a killing spree that costs dozens of lives. De Kock has applied for amnesty for his crimes. Dan Stein, a specialist in neurobiology and stress disorders, said de Kock typified many killers from all sides in the conflict by his sheer ``banality of evil''. ``Many people have found him in interviews to be an ordinary, even likeable person,'' he said about the man whom subordinates dubbed ``Prime Evil.'' Ginn Fourie, a physiotherapist whose student daughter was gunned down by black activists in a 1993 attack on a Cape Town bar, said it was necessary to help those whose circumstances compelled them to do wrong. Struggling to control her tears, Fourie told delegates she had attended the amnesty hearings of her daughter's killers and supported their successful bid to be freed from long jail sentences. After describing how she hugged the three members of the black nationalist Pan-Africanist Congress and urged them to seek counseling together with their victims, Fourie earned a standing ovation from the 50-strong audience. ``We must take the initiative in understanding others and start the process of reconciliation and healing our broken land,'' she said, her voice shaking with emotion. ||||| Following are excerpts from the final report issued by South Africa's Truth and Reconciliation Commission on Thursday: PRIMARY FINDING On the basis of the evidence available to it, the primary finding of the Commission is that: The predominant portion of gross violations of human rights was committed by the former state through its security and law-enforcement agencies. Moreover, the South African state in the period from the late 1970's to early 1990's became involved in activities of a criminal nature when, amongst other things, it knowingly planned, undertook, condoned and covered up the commission of unlawful acts, including the extrajudicial killing of political opponents and others, inside and outside South Africa. In pursuit of these unlawful activities, the state acted in collusion with certain other political groupings, most notably the Inkatha Freedom Party (I.F.P.). . . . Certain members of the State Security Council (the state President, Minister of Defense, Minister of Law and Order, and heads of security forces) did foresee that the use of words such as ``take out,'' ``wipe out,'' ``eradicate,'' and ``eliminate'' would result in the killing of political opponents. They are therefore responsible for deliberate planning which caused gross violations of human rights. P.W. BOTHA During the period that he presided as head of state (1978-1989) according to submissions made to and findings made by the Commission, gross violations of human rights and other unlawful acts were perpetrated on a wide scale by members of the South African Defense Force, including: The deliberate unlawful killing and attempted killing of persons opposed to the policies of the Government, within and outside South Africa. The widespread use of torture and other forms of severe ill treatment against such persons. The forcible abduction of such persons where were resident in neighboring countries. Covert logistical and financial assistance to organizations opposed to the ideology of the A.N.C. and other liberation movements. . . . INKATHA The Commission finds that in 1986, the South African Defense Forces (S.A.D.F.) conspired with Inkatha to provide the latter with a covert, offensive paramilitary unit (or ``hit squad'') to be deployed illegally against persons and organizations perceived to be opposed to both the South African Government and Inkatha. The S.A.D.F. provided training, financial and logistical management and behind the scenes supervision of the trainees, who were trained by the Special Forces unit of the S.A.D.F. in the Caprivi Strip. The Commission finds furthermore that the deployment of the paramilitary unit in KwaZulu led to gross violations of human rights, including killing, attempted killing and severe ill treatment. The Commission finds the following people, among others, accountable for such violations: Mr. P. W. Botha, Gen. Magnus Malan, Chief Mangosuthu Buthelezi. . . . The A.N.C. While it was A.N.C. policy that the loss of civilian life should be ``avoided,'' there were instances where members of its security forces perpetrated gross violations of human rights in that the distinction between military and civilian targets was blurred in certain armed actions, such as the 1983 Church Street bombing of the South African Air Force headquarters. . . . In the course of the armed struggle, the A.N.C., through its security forces, undertook military operations which, though intended for military or security force targets, sometimes went awry for a variety of reasons, including poor intelligence and reconnaissance. The consequences in these cases, such as the Magoo's Bar and Durban Esplanade bombings, were gross violations of human rights in respect of the injuries to and loss of lives of civilians. Individuals who defected to the state and became informers and/or members who became state witnesses in political trials . . . were often labeled by the A.N.C. as collaborators and regarded as legitimate targets to be killed. The commission does not condone the legitimization of such individuals as military targets and finds that the extrajudicial killings of such individuals constituted gross violations of human rights. The commission finds that, in the 1980's in particular, a number of gross violations were perpetrated not by direct members of the A.N.C. or those operating under its formal command, but by civilians who saw themselves as A.N.C. supporters. In this regard, the Commission finds that the A.N.C. is morally and politically accountable for creating a climate in which such supporters believed their actions to be legitimate and carried out within the broad parameters of a ``people's war'' as enunciated by the A.N.C. A.N.C. CAMPS The Commission finds that suspected ``agents'' were routinely subjected to torture and other forms of severe ill treatment and that there were cases of such individuals being charged and convicted by tribunals without proper regard to due process, sentenced to death and executed. WINNIE MADIKIZELA-MANDELA The Commission finds that Ms. Madikizela-Mandela was central to the establishment and formation of the Mandela United Football Club, which later developed into a private vigilante unit. It is the Commission's view that Ms. Madikizela-Mandela was aware of the criminal activity and the disquiet it caused in the community, but chose deliberately not to address the problems emanating from the football club. The Commission finds that those who opposed Ms. Madikizela-Mandela and the Mandela United Football Club, or dissented from them, were branded as informers and killed. The Commission finds that Ms. Madikizela-Mandela . . . is accountable, politically and morally for the gross violations of human rights committed by the Mandela United Football Club. The Commission finds further that Mrs. Madikizela-Mandela herself was responsible for committing such gross violations of human rights. . . . BUSINESS Business was central to the economy that sustained the South African state during the apartheid years. Certain businesses, especially the mining industry, were involved in helping design and implement apartheid policies. The white agriculture industry benefited from its privileged access to land. ||||| Facing a court challenge, the Truth and Reconciliation Commission said Wednesday that it would withhold, at least temporarily, the parts of its final report that implicate South Africa's last apartheid-era president, F.W. de Klerk, in illegal acts. De Klerk, 62, who helped negotiate the end of South Africa's white supremacist government and shared the 1993 Nobel Peace Prize with President Nelson Mandela for that work, had objected to a finding by the commission that he was ``an accessory after the fact'' in the bombings of the headquarters of a church group and of a labor federation in the 1980s. The chairman of the 17-member panel, Archbishop Desmond Tutu, said that although he took such action with ``great reluctance,'' the commission needed time to prepare to fight the legal challenge. He said it would take de Klerk's name out of 3,500-page report to avoid delaying its release Thursday. ``It upsets me deeply,'' he said in a statement. ``We have been scrupulously fair to de Klerk, and we reject the contention that we have been engaged in a vendetta against him.'' De Klerk's challenge was only part of the storm of criticism prompted by leaks about the report in the last few days. Within hours of the commission decision to withdraw its findings on de Klerk, it was facing the possibility of a new suit _ this time from the ruling African National Congress. The ANC also wants to block the commission findings about its conduct during the liberation struggle. A spokesman for the party, Thabo Masebe, said the party would seek an injunction in the morning before the report is officially handed over to Mandela. While the commission's report is expected to lay overwhelming blame on the former white government for atrocities, it has also found the ANC responsible for human-rights violations, including the torture and killing of spying suspects, bombings in civilian areas and the killing of political enemies, including members of the rival Zulu-based Inkhata Freedom Party. The decision on de Klerk seems certain to damage the commission's credibility. The panel, created as a way of putting South Africa's brutal past to rest without the expense and political divisiveness of trials, has caused controversy from the start. It has held more than 160 hearings throughout the country, listening to both victims and to perpetrators seeking amnesty. But many whites say the commission is on a witch hunt aiming to humiliate former government officials and Afrikaners in general. De Klerk has once before forced the commission officials to court and won an apology from them for calling him a liar. Some political analysts said Wednesday's events would only further the belief that the panel lacks impartiality. ``The withdrawal of the findings can't help but be seen as a lack of certainty on their side,'' said Sampie Terreblanche, an economist and political analyst at the University of Stellenbosch, who has supported the commission. ``Whether we like it or not, the whole report gets a knock from this.'' De Klerk's spokesman, David Steward, said the former president ``was very confident'' that he would win when the case goes to trial in March. ``He is very happy to be in the courts now rather than dealing with the Truth Commission,'' Steward said. ``The fact that they agreed to withdraw creates the definite impression that they specifically concocted a case to involve Mr. de Klerk in a negative finding.'' The ANC has accused the commission of trying to ``criminalize'' the liberation struggle. ``Whatever the efforts to besmirch our struggle by denouncing it as a gross violation of human rights,'' the congress said in a statement. ``The ANC and the millions of people who were part of this struggle will always be proud of what they did to insure that, in the process of the destruction of a vile system, they did not themselves resort to vile methods of struggle on the basis that the means justified the end.'' There are probably few subjects that get South Africans more excited than the issue of the Truth Commission and whether it is a worthy cause or a waste of money. The events of the last few days have only added to the debate. For some, like Pal Martins, 34, a former member of the ANC's armed wing, the fact all sides of the political spectrum are in an uproar is a good thing. ``The mere fact that everyone is complaining means that the Truth Commission has done its work,'' he said. But others say that too many questions are being raised about the panel's competence. ``The whole affair is beyond the pale, a mockery of justice,'' said Roboy Vonholdt, a 56-year-old sheep and ostrich farmer who believes that the commission has been a theatrical act. ``We should all turn our backs on the past and move forward. We need them and they need us. Let's all make money and let good economic conditions prevail.'' The commission's report is supposed to be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when elections open to all races ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. While de Klerk was alone in court Wednesday challenging the commission, Tutu said Wednesday that other threatened legal challenges had led to fewer individuals being named as rights violators than originally planned. Tutu said that more than 400 people had been notified that they would be implicated to give them a chance to respond. Some 15 successfully argued themselves out of the report or could not be reached and were therefore deleted from the report, he said. The commission is required by law to give advance notification to anyone it intends to implicate in its report. The commission had been expected to say that although de Klerk did not order the bombings, he subsequently came to know that former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe had been involved, but failed to report his knowledge to the police. This could open him up to a criminal prosecution. De Klerk has not applied for amnesty in this matter or any other. de Klerk has said that when he learned about the bombings, Vlok and Van der Merwe were already in the process of applying for amnesty, and he did not think it was necessary to report the matter. ||||| The institution exploring apartheid's horrors will issue a report that finds the African National Congress shares blame for human rights violations as it struggled to overcome white rule. The 3,500-page report by the Truth and Reconciliation Commission culminates more than two years of nationwide hearings. South African media released preliminary findings on Monday, three days before its official release on Thursday in Pretoria, the capital. The release of the document is a milestone in South Africa's transformation from white minority rule to democracy. The commission, which has the power to grant amnesty, was tasked with promoting reconciliation by laying bare the what and why of apartheid-era atrocities. With the ANC now in power and facing an election in mid-1999, a condemnation by the commission could prove damaging both to its electoral chances and moral standing. There has been no doubt that the report's overwhelming blame would be laid on white governments and their security forces during the years under scrutiny, 1960-1994. Indeed, news reports Monday said the Truth Commission would declare apartheid a crime against humanity and acknowledge that the ANC and the more radical Pan Africanist Congress were conducting a legitimate struggle against the former apartheid state. But in preliminary findings sent to the parties last month, the commission also said the two movements were ``morally and politically accountable'' for gross rights violations, South African Press Association and South African Broadcasting Corp. said. The preliminary finding said that despite ANC policy against killing civilians, the line between military and civilian targets had been blurred, SAPA said. It condemned the planting of landmines in rural areas, the execution of enemy agents, torture and mistreatment of ANC members in its exile camps and for killing political opponents. It said the party must accept responsibility for the activities of ANC Women's League president Winnie Madikizela-Mandela, Nelson Mandela's former wife, and her Mandela United Football Club, accused of killings, torture and kidnappings. The commission also said the PAC was guilty of the deaths of civilians in its strategy in 1993 to drive white farmers off their land so it could be reclaimed by blacks. Justice Minister Dullah Omar, meeting journalists in Pretoria, would not comment on the news reports about condemnation of the ANC. ``I do expect various responses (to the report). I do not expect everyone to agree. It will lead to healthy debate,'' he said. He said that if the commissioners recommends prosecutions against anyone for abuses, it will be up to the national director of prosecutions to decide whether to proceed. The director is appointed by the government. The commission's work is designed ``to help us establish the rule of law in South Africa, and to establish the principle of accountability,'' Omar said. The ANC already has prepared the ground for a negative finding, saying weeks ago that the commission had warned that harsh judgments were in the offing. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing biased. On Monday, it rejected ``with contempt'' suggestions ANC officials themselves had leaked the findings. Constand Viljoen, leader of the tiny right-wing Freedom Front, said the ANC had done so to give the commission credibility by making it more even-handed. Publicly, the party has long defended its actions as those committed during a ``just war.'' F.W. de Klerk, the last apartheid-era president, meanwhile, planned to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. ||||| The New York Times said in an editorial on Sunday, Nov. 1: The 3,500-page report of the South African Truth and Reconciliation Commission, released on Thursday, is the most comprehensive and unsparing examination of a nation's ugly past that any such commission has yet produced. Drawing from the commission's own investigations and the testimony of hundreds of applicants for amnesty and 20,000 victims, the report is a detailed look at the crimes of the apartheid era, and blames successive white governments for the vast majority. It has fulfilled its mandate of telling the fullest truth possible, which is one reason that every political party in South Africa has denounced it. Besides accusing the government of assassinations and bombings, the report criticizes the Inkatha Freedom Party for its massacres and collaboration with security forces, and blames the African National Congress for the murder of civilians and other crimes. It singles out former President P.W. Botha, Chief Mangosuthu Buthelezi, the Inkatha leader, and Winnie Mandela, among others, for detailed treatment of their roles in political crimes. One major flaw in the report is the absence of a section accusing F.W. de Klerk, the last apartheid president, of knowing about several bombings after the fact and keeping silent. It was excised because de Klerk is suing the commission. The ANC also sued, unsuccessfully, to stop publication. The lawsuits are a disappointing sign that South Africa's political parties are not interested in an honest look at their past, nor in the free flow of information. The controversy has added to widespread complaints that the commission has not helped the process of reconciliation. This is wrong. True reconciliation _ which occurs when a society is no longer paralyzed by the past and people can work and live together _ cannot be based on silence. No society can be restored to health by papering over as much pain as South Africans have suffered. A noisy and informed debate about complicity in the crimes of the apartheid era is necessary, if uncomfortable. The report is only part of the Truth Commission's contribution to the healing process. The hearings themselves, which allowed victims of human rights violations to tell their stories in public, helped the country heal and opened the eyes of many whites to the unpleasant truth about apartheid. The amnesty process, while permitting many important criminals to escape justice, is allowing families to know exactly what happened to their loved ones in dozens of cases that would likely have never gone to trial in South Africa's fragile judicial system. The process of helping the victims with scholarships and other necessary aid goes on, although it will not be enough. No commission can transform a society as twisted as South Africa's was. But the Truth Commission is the best effort the world has seen, and South Africa is the better for it. ||||| President Nelson Mandela acknowledged Saturday the African National Congress violated human rights during apartheid, setting him at odds with his deputy president over a report that has divided much of South Africa. The disagreement stems from Thursday's release of the report by the Truth and Reconciliation Commission on horrors committed during apartheid. Rather than act as a salve and an aid to reconciliation, the report has caused divisiveness, even among former comrades-in-arms who fought apartheid. As expected, the report called apartheid a ``crime against humanity.'' But it also blamed the ANC for gross human rights violations during its anti-apartheid struggle, saying the group tortured suspected spies and dissidents and killed innocent civilians with land mines and bombs. Some suspected traitors were killed in the ANC's camps abroad. Mbeki _ who became ANC president last year and will likely be elected South Africa's next president in 1999 when Mandela retires _ took a hard line Saturday against the report, and indicated all ANC members must do the same. ``No member, 5th graf, 1st Ld-Writethru

The Truth and Reconciliation Commission, which was established to look into the human rights violations committed during the long struggle against white rule, released its final report. In what has been described as one of the most complete reports of its kind, the commission blames most of the atrocities on the former South African government. The ANC also came under fire for committing some atrocities during the struggle. Nelson Mandella's ex-wife, Winnie could be prosecuted for the part she played in such violations. Missing from the report was De Klerk, who threatened to sue if he was mentioned in connection with the atrocities.

A panel investigating apartheid-era atrocities said Wednesday it will not implicate the last apartheid president, F.W. de Klerk, in human rights abuses after he threatened a court challenge. De Klerk said he would sue to block the long-awaited final report of the Truth and Reconciliation Commission, which was due for release Thursday. The man who helped negotiate the end of apartheid objected to a finding by the commission that he was ``an accessory after the fact'' to bombings in the 1980s of the headquarters of a church group and of a labor federation. Former Archbishop Desmond Tutu, the truth panel's chairman, said the commission needed time to prepare to fight the legal challenge, and would ``excise'' de Klerk's name from the report to avoid delaying its release. ``It upsets me deeply,'' Tutu said. ``We have been scrupulously fair to Mr. de Klerk and we reject the contention that we have been engaged in a vendetta against him. ``But we must and will respect the courts and his rights under the constitution. We fought hard for those rights and we can be proud in South Africa that Mr. de Klerk now shares in them,'' he said in a statement. ``All we are doing is postponing dealing with the matter,'' Tutu later told The Associated Press. ``The name will eventually appear after all the hoo-ha has died down.'' De Klerk, reached in London, said he could not comment before speaking with his lawyers because the matter was in the courts. The commission was charged with promoting reconciliation by laying bare apartheid's horrors. It has held hearings around the country for more than two years, listening to victims and perpetrators seeking amnesty. The release of the 3,500-page report represents a milestone for South Africa's transformation from white minority rule to democracy. De Klerk's challenge was only part of the storm of criticism prompted by leaks of the report. The African National Congress, the liberation movement that helped defeat apartheid and now runs the country, on Tuesday angrily rejected a finding that it too was guilty of human rights violations in its armed struggle. The report will be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when all-race elections ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. Other threatened legal challenges have led to fewer individuals being named as rights violators than planned, The Star of Johannesburg reported Wednesday. In commenting on the newspaper report, Tutu said that more than 400 people had been notified they would be implicated to give them a chance to respond. Only 15 successfully argued themselves out of the report, he said. ||||| Criminal prosecutions for atrocities committed during the war against white rule could drag on for at least six years, a top prosecutor said Monday. Key figures implicated in human rights abuses by the Truth and Reconciliation Commission already are under investigation, the official, Jan d'Oliveira, told reporters. They include two unnamed generals in the apartheid state's security apparatus, President Nelson Mandela's ex-wife Winnie Madikizela-Mandela and officials of the African National Congress, he said. The remarks by d'Oliveira, who recently was appointed a deputy national director of prosecutions, were the clearest signal yet that criminal cases would be brought against figures accused by the commission of gross human rights violations. The commission released its report Oct. 30. It chronicles the human rights abuses committed by apartheid governments and their operatives as well as by the African National Congress and others fighting the racist system. The issue of continuing prosecutions is significant. Many feel that dragging on criminal reckonings of the horrors of the apartheid era will only prolong bitterness and delay reconciliation. But supporters of prosecution feel that denying justice to the victims is a worse evil. On a practical level, highly public prosecutions of ANC figures could have an impact on national elections next year, when the party will seek to consolidate its hold on power. The panel's chairman, Archbishop Desmond Tutu, has called for a two-year time limit on prosecutions; d'Oliveira called the period ``wholly impractical.'' The prosecutor did not name the other targets. ``We have always worked on the principle of that we will prosecute the highest rank,'' he said. The commission has the ability to grant amnesty to those who admit their misdeeds and are found to have acted with political motives. The report said individuals who have not sought amnesty should be prosecuted. Madikizela-Mandela has not sought amnesty. The commission found her accountable for human rights violations committed by her bodyguards, who the report said killed and tortured suspected opponents. Madikizela-Mandela was convicted in 1991 of kidnapping and being an accessory to an assault on four young men. She was sentenced to six years in jail, but paid a dlrs 3,200 fine on appeal. The ANC official was among the most prominent anti-apartheid activists. The two generals were implicated during Truth Commission testimony. Prosecutors are ready to move forward pending the amnesty application of one. ||||| The deal that South Africa's Truth and Reconciliation Commission offered was simple enough: Confess your crimes, apply for amnesty and you will go free. If you don't come forward, you will be prosecuted. After more than two years of hearings into apartheid-era atrocities, the commission last week unveiled a 3,500-page report naming dozens of people it believes were up to their elbows in the gore but never applied for amnesty. So the prosecutions should begin soon, right? Not so fast. The study was barely in the hands of President Nelson Mandela before talk of new amnesty deals had begun. It seems that nearly all of South Africa's political parties _ including the ruling African National Congress _ have key officials who could end up in the dock because of the report. Suddenly, there is lots of talk about how the country can't withstand a round of politically divisive trials, and many political analysts here are betting that an agreement ``of mutual benefit'' is in the offing. Already, three major political parties are calling for some kind of new amnesty, and the ANC isn't closing the door. ANC spokesman Thabo Masebe said it was ``premature'' to talk of a general amnesty, but he acknowledged that the party was discussing an amnesty specifically tailored to violence by black South Africans against other blacks that littered the KwaZulu/Natal province with bodies during the late '80s and into the '90s. In choosing a truth commission rather than a Nuremberg-style trial with which to close out its brutal past, South Africa hoped for an idealistic reconciliation. People would come clean and receive true forgiveness. Society would then be able to move on, its wounds cleansed and healed. It was a model watched closely around the world by other societies wondering how to disentangle themselves from the grudges of a brutal past. But given the chance, hundreds of South Africa's perpetrators did not come forward. Commission officials themselves say they were frustrated by the lack of cooperation, however exhaustive their report may seem. It is perhaps too late, however, to press for more. Today's South Africa has urgent new problems to deal with _ unemployment, crime, white flight, too few schools and hospitals. So it may wind up settling for a more pragmatic reconciliation _ one that gives amnesty to the unrepentant simply because it's more practical for all concerned to move on. In recent years, truth commissions have gained popularity in many places, notably Chile, Argentina and El Salvador. But South Africa's _ the biggest and most powerful, able to grant amnesty and to subpoena witnesses _ was supposed to be the real test. Certainly the commission forced the nation to see the gruesome details of its past, as sobbing survivors and stone-faced torturers told of smashed genitals and near suffocations. And the commission's work added much to the knowledge about what happened in South Africa between 1960 and 1994. But it will be years before the effect of the commission can truly be judged. Has anyone really forgiven anyone else? Will vendettas persist? No one can answer. One thing seems clear, however: Four years after South Africa held its first non-racial elections, a growing number of South Africans want to be done with the past. Raymond Louw, the publisher of a respected weekly newsletter, Southern Africa Report, says a new amnesty proposal could come up during the February session of Parliament, in time to remove the issue from next year's election campaigns. ``You simply can't have this country torn apart by prosecutions,'' he says. ``Everybody is going to be howling for an amnesty. They already are.'' Even as Archbishop Desmond Tutu, the commission's chairman, delivered the report, he seemed to be anticipating a push for a new amnesty and arguing against it. He said such a move would be highly unfair to those who came forward. He suggested instead that there be a two-year time limit, after which anyone not indicted would in effect get amnesty. To be sure, there will be opposition to any proposals to limit prosecutions. More than a dozen human rights and victims advocacy groups have already banded together to condemn such proposals as ``unconscionable.'' The idea for a Truth Commission emerged as a compromise from the long negotiations that brought about South Africa's peaceful transition from a white supremacist state to a non-racial democracy. During the talks, the white National Party government pushed for a blanket amnesty, and the ANC refused. In the end, only about 250 former police officers came forward, most of them foot soldiers. And only two high National Party officials, former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe, confessed _ to roles in ordering bombings. In its report, the commission called the apartheid state the ``primary perpetrator'' of gross human rights violations and held such high ranking former officials as former President P.W. Botha, his former army chief, Georg Meiring, and the former intelligence chief, Niel Barnard, responsible. These men, and others of lower rank, have not applied for amnesty For the ANC, the most embarrassing prospect is the possible prosecution of Mandela's former wife, Winnie Madikizela-Mandela, who is accused in the report of taking part in a number of assaults and abductions. Lesser-known officials could face charges too. The ANC is held responsible for at least 76 deaths in KwaZulu/Natal. The ANC's problems are further complicated by its efforts to make peace with the largely Zulu-based Inkatha Freedom Party. Virtually no one from that party came forward to ask for amnesty. Yet the report found that Inkatha, working with the white government, was responsible for widespread slaughter in KwaZulu/Natal and in the townships around Johannesburg. Inkatha's leader, Chief Mangosuthu Buthelezi, and many key party officials stand accused of fomenting a wide range of abuses. But prosecuting Chief Buthelezi could lead to new warfare in KwaZulu. Part of the reluctance to go forward with prosecutions may be the result of still another factor: The judicial system is already overwhelmed with rising crime and the evidence from the apartheid era is old. So why spend the time and the money? At the moment, only one political party is opposed to any form of new amnesty _ the tiny but influential Democratic Party, a liberal group that was not involved in the violence. Its head, Tony Leon, says a new amnesty would only prove that ``the more thuglike your behavior, the more you get away with.'' But he concedes that his is a lonely voice. ``At this point,'' he says, ``there is little enthusiasm for anything but closing the book on the past.'' ||||| A panel probing apartheid-era abuses has accused the African National Congress of human rights violations, including torture and bomb attacks, the state broadcaster said Monday. The ANC, which led the struggle against white rule and now is in power, previously has acknowledged it was told to expect implication in right violations. The Truth and Reconciliation Commission will release its final report on 2 1-2 years of investigation on Thursday. The report was expected to place overwhelming blame for the era's abuses on white governments and their brutal security services. President Nelson Mandela's office received an advance copy on Monday ahead of the handover ceremony, when retired Archbishop Desmond Tutu, who chaired the comission, will present Mandela with the report. South African Broadcasting Corp. radio said it had been leaked a ``preliminary document'' which condemns the ANC as politically and morally responsible for gross human rights violations during and after the fall of apartheid. An ANC spokesman, Thabo Masebe, said he believed the news report referred to a commission letter sent in advance ``informing us of its intention to implicate the ANC in gross human rights violations.'' Commission officials could not immediately be reached for comment. Justice Minister Dullah Omar told journalists in Pretoria he had heard the news report, but would not comment. Former President F.W. de Klerk, meanwhile, plans to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing embarrassed. The party says the accusations against it likely would center on the planting of land mines on border farms, abuses at its military camps in Angola and bombings. Omar said he expected the report's conclusions to set off debate but added it would ``lay the basis for reconciliation.'' ||||| Torturers and bombers who carried out atrocities defending or fighting apartheid need counseling to ensure they do not repeat their crimes, an expert for South Africa's reconciliation body said Thursday. Addressing local and international experts, Charles Villa-Vicencio, research head of the Truth and Reconciliation Commission, said ignoring the psychological needs of those who carried out human rights abuses could alienate a potentially dangerous sector of society. ``We must give attention to the healing of perpetrators, not just for the sake of perpetrators, but for the sake of the nation as a whole,'' he said. The conference, organized by the Medical Research Council, is examining mental health issues raised by the Truth Commission, which is charged with probing crimes committed by all sides in the anti-apartheid struggle. As the commission prepares to hand over its final report at the end of the month, South Africans are examining its painful and traumatic exploration of their bloody past. With the power to grant amnesty to many who tortured, bombed or maimed innocent civilians, the process has at some stage angered people in nearly all walks of life. Many whites see the panel as favoring the black liberation movements, while many blacks accuse it of being too soft on former state officials, especially top ranking ministers. However, Villa-Vicencio appealed for tolerance in dealing with all those who have committed crimes, saying that the potential for wrongdoing existed in everyone. ``We all, the entire human race, carry with us the capacity for evil,'' he said. Many of Thursday's speakers touched on the figure of police death squad leader Eugene de Kock, who was given jail terms totaling more than 200 years after a killing spree that costs dozens of lives. De Kock has applied for amnesty for his crimes. Dan Stein, a specialist in neurobiology and stress disorders, said de Kock typified many killers from all sides in the conflict by his sheer ``banality of evil''. ``Many people have found him in interviews to be an ordinary, even likeable person,'' he said about the man whom subordinates dubbed ``Prime Evil.'' Ginn Fourie, a physiotherapist whose student daughter was gunned down by black activists in a 1993 attack on a Cape Town bar, said it was necessary to help those whose circumstances compelled them to do wrong. Struggling to control her tears, Fourie told delegates she had attended the amnesty hearings of her daughter's killers and supported their successful bid to be freed from long jail sentences. After describing how she hugged the three members of the black nationalist Pan-Africanist Congress and urged them to seek counseling together with their victims, Fourie earned a standing ovation from the 50-strong audience. ``We must take the initiative in understanding others and start the process of reconciliation and healing our broken land,'' she said, her voice shaking with emotion. ||||| Following are excerpts from the final report issued by South Africa's Truth and Reconciliation Commission on Thursday: PRIMARY FINDING On the basis of the evidence available to it, the primary finding of the Commission is that: The predominant portion of gross violations of human rights was committed by the former state through its security and law-enforcement agencies. Moreover, the South African state in the period from the late 1970's to early 1990's became involved in activities of a criminal nature when, amongst other things, it knowingly planned, undertook, condoned and covered up the commission of unlawful acts, including the extrajudicial killing of political opponents and others, inside and outside South Africa. In pursuit of these unlawful activities, the state acted in collusion with certain other political groupings, most notably the Inkatha Freedom Party (I.F.P.). . . . Certain members of the State Security Council (the state President, Minister of Defense, Minister of Law and Order, and heads of security forces) did foresee that the use of words such as ``take out,'' ``wipe out,'' ``eradicate,'' and ``eliminate'' would result in the killing of political opponents. They are therefore responsible for deliberate planning which caused gross violations of human rights. P.W. BOTHA During the period that he presided as head of state (1978-1989) according to submissions made to and findings made by the Commission, gross violations of human rights and other unlawful acts were perpetrated on a wide scale by members of the South African Defense Force, including: The deliberate unlawful killing and attempted killing of persons opposed to the policies of the Government, within and outside South Africa. The widespread use of torture and other forms of severe ill treatment against such persons. The forcible abduction of such persons where were resident in neighboring countries. Covert logistical and financial assistance to organizations opposed to the ideology of the A.N.C. and other liberation movements. . . . INKATHA The Commission finds that in 1986, the South African Defense Forces (S.A.D.F.) conspired with Inkatha to provide the latter with a covert, offensive paramilitary unit (or ``hit squad'') to be deployed illegally against persons and organizations perceived to be opposed to both the South African Government and Inkatha. The S.A.D.F. provided training, financial and logistical management and behind the scenes supervision of the trainees, who were trained by the Special Forces unit of the S.A.D.F. in the Caprivi Strip. The Commission finds furthermore that the deployment of the paramilitary unit in KwaZulu led to gross violations of human rights, including killing, attempted killing and severe ill treatment. The Commission finds the following people, among others, accountable for such violations: Mr. P. W. Botha, Gen. Magnus Malan, Chief Mangosuthu Buthelezi. . . . The A.N.C. While it was A.N.C. policy that the loss of civilian life should be ``avoided,'' there were instances where members of its security forces perpetrated gross violations of human rights in that the distinction between military and civilian targets was blurred in certain armed actions, such as the 1983 Church Street bombing of the South African Air Force headquarters. . . . In the course of the armed struggle, the A.N.C., through its security forces, undertook military operations which, though intended for military or security force targets, sometimes went awry for a variety of reasons, including poor intelligence and reconnaissance. The consequences in these cases, such as the Magoo's Bar and Durban Esplanade bombings, were gross violations of human rights in respect of the injuries to and loss of lives of civilians. Individuals who defected to the state and became informers and/or members who became state witnesses in political trials . . . were often labeled by the A.N.C. as collaborators and regarded as legitimate targets to be killed. The commission does not condone the legitimization of such individuals as military targets and finds that the extrajudicial killings of such individuals constituted gross violations of human rights. The commission finds that, in the 1980's in particular, a number of gross violations were perpetrated not by direct members of the A.N.C. or those operating under its formal command, but by civilians who saw themselves as A.N.C. supporters. In this regard, the Commission finds that the A.N.C. is morally and politically accountable for creating a climate in which such supporters believed their actions to be legitimate and carried out within the broad parameters of a ``people's war'' as enunciated by the A.N.C. A.N.C. CAMPS The Commission finds that suspected ``agents'' were routinely subjected to torture and other forms of severe ill treatment and that there were cases of such individuals being charged and convicted by tribunals without proper regard to due process, sentenced to death and executed. WINNIE MADIKIZELA-MANDELA The Commission finds that Ms. Madikizela-Mandela was central to the establishment and formation of the Mandela United Football Club, which later developed into a private vigilante unit. It is the Commission's view that Ms. Madikizela-Mandela was aware of the criminal activity and the disquiet it caused in the community, but chose deliberately not to address the problems emanating from the football club. The Commission finds that those who opposed Ms. Madikizela-Mandela and the Mandela United Football Club, or dissented from them, were branded as informers and killed. The Commission finds that Ms. Madikizela-Mandela . . . is accountable, politically and morally for the gross violations of human rights committed by the Mandela United Football Club. The Commission finds further that Mrs. Madikizela-Mandela herself was responsible for committing such gross violations of human rights. . . . BUSINESS Business was central to the economy that sustained the South African state during the apartheid years. Certain businesses, especially the mining industry, were involved in helping design and implement apartheid policies. The white agriculture industry benefited from its privileged access to land. ||||| Facing a court challenge, the Truth and Reconciliation Commission said Wednesday that it would withhold, at least temporarily, the parts of its final report that implicate South Africa's last apartheid-era president, F.W. de Klerk, in illegal acts. De Klerk, 62, who helped negotiate the end of South Africa's white supremacist government and shared the 1993 Nobel Peace Prize with President Nelson Mandela for that work, had objected to a finding by the commission that he was ``an accessory after the fact'' in the bombings of the headquarters of a church group and of a labor federation in the 1980s. The chairman of the 17-member panel, Archbishop Desmond Tutu, said that although he took such action with ``great reluctance,'' the commission needed time to prepare to fight the legal challenge. He said it would take de Klerk's name out of 3,500-page report to avoid delaying its release Thursday. ``It upsets me deeply,'' he said in a statement. ``We have been scrupulously fair to de Klerk, and we reject the contention that we have been engaged in a vendetta against him.'' De Klerk's challenge was only part of the storm of criticism prompted by leaks about the report in the last few days. Within hours of the commission decision to withdraw its findings on de Klerk, it was facing the possibility of a new suit _ this time from the ruling African National Congress. The ANC also wants to block the commission findings about its conduct during the liberation struggle. A spokesman for the party, Thabo Masebe, said the party would seek an injunction in the morning before the report is officially handed over to Mandela. While the commission's report is expected to lay overwhelming blame on the former white government for atrocities, it has also found the ANC responsible for human-rights violations, including the torture and killing of spying suspects, bombings in civilian areas and the killing of political enemies, including members of the rival Zulu-based Inkhata Freedom Party. The decision on de Klerk seems certain to damage the commission's credibility. The panel, created as a way of putting South Africa's brutal past to rest without the expense and political divisiveness of trials, has caused controversy from the start. It has held more than 160 hearings throughout the country, listening to both victims and to perpetrators seeking amnesty. But many whites say the commission is on a witch hunt aiming to humiliate former government officials and Afrikaners in general. De Klerk has once before forced the commission officials to court and won an apology from them for calling him a liar. Some political analysts said Wednesday's events would only further the belief that the panel lacks impartiality. ``The withdrawal of the findings can't help but be seen as a lack of certainty on their side,'' said Sampie Terreblanche, an economist and political analyst at the University of Stellenbosch, who has supported the commission. ``Whether we like it or not, the whole report gets a knock from this.'' De Klerk's spokesman, David Steward, said the former president ``was very confident'' that he would win when the case goes to trial in March. ``He is very happy to be in the courts now rather than dealing with the Truth Commission,'' Steward said. ``The fact that they agreed to withdraw creates the definite impression that they specifically concocted a case to involve Mr. de Klerk in a negative finding.'' The ANC has accused the commission of trying to ``criminalize'' the liberation struggle. ``Whatever the efforts to besmirch our struggle by denouncing it as a gross violation of human rights,'' the congress said in a statement. ``The ANC and the millions of people who were part of this struggle will always be proud of what they did to insure that, in the process of the destruction of a vile system, they did not themselves resort to vile methods of struggle on the basis that the means justified the end.'' There are probably few subjects that get South Africans more excited than the issue of the Truth Commission and whether it is a worthy cause or a waste of money. The events of the last few days have only added to the debate. For some, like Pal Martins, 34, a former member of the ANC's armed wing, the fact all sides of the political spectrum are in an uproar is a good thing. ``The mere fact that everyone is complaining means that the Truth Commission has done its work,'' he said. But others say that too many questions are being raised about the panel's competence. ``The whole affair is beyond the pale, a mockery of justice,'' said Roboy Vonholdt, a 56-year-old sheep and ostrich farmer who believes that the commission has been a theatrical act. ``We should all turn our backs on the past and move forward. We need them and they need us. Let's all make money and let good economic conditions prevail.'' The commission's report is supposed to be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when elections open to all races ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. While de Klerk was alone in court Wednesday challenging the commission, Tutu said Wednesday that other threatened legal challenges had led to fewer individuals being named as rights violators than originally planned. Tutu said that more than 400 people had been notified that they would be implicated to give them a chance to respond. Some 15 successfully argued themselves out of the report or could not be reached and were therefore deleted from the report, he said. The commission is required by law to give advance notification to anyone it intends to implicate in its report. The commission had been expected to say that although de Klerk did not order the bombings, he subsequently came to know that former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe had been involved, but failed to report his knowledge to the police. This could open him up to a criminal prosecution. De Klerk has not applied for amnesty in this matter or any other. de Klerk has said that when he learned about the bombings, Vlok and Van der Merwe were already in the process of applying for amnesty, and he did not think it was necessary to report the matter. ||||| The institution exploring apartheid's horrors will issue a report that finds the African National Congress shares blame for human rights violations as it struggled to overcome white rule. The 3,500-page report by the Truth and Reconciliation Commission culminates more than two years of nationwide hearings. South African media released preliminary findings on Monday, three days before its official release on Thursday in Pretoria, the capital. The release of the document is a milestone in South Africa's transformation from white minority rule to democracy. The commission, which has the power to grant amnesty, was tasked with promoting reconciliation by laying bare the what and why of apartheid-era atrocities. With the ANC now in power and facing an election in mid-1999, a condemnation by the commission could prove damaging both to its electoral chances and moral standing. There has been no doubt that the report's overwhelming blame would be laid on white governments and their security forces during the years under scrutiny, 1960-1994. Indeed, news reports Monday said the Truth Commission would declare apartheid a crime against humanity and acknowledge that the ANC and the more radical Pan Africanist Congress were conducting a legitimate struggle against the former apartheid state. But in preliminary findings sent to the parties last month, the commission also said the two movements were ``morally and politically accountable'' for gross rights violations, South African Press Association and South African Broadcasting Corp. said. The preliminary finding said that despite ANC policy against killing civilians, the line between military and civilian targets had been blurred, SAPA said. It condemned the planting of landmines in rural areas, the execution of enemy agents, torture and mistreatment of ANC members in its exile camps and for killing political opponents. It said the party must accept responsibility for the activities of ANC Women's League president Winnie Madikizela-Mandela, Nelson Mandela's former wife, and her Mandela United Football Club, accused of killings, torture and kidnappings. The commission also said the PAC was guilty of the deaths of civilians in its strategy in 1993 to drive white farmers off their land so it could be reclaimed by blacks. Justice Minister Dullah Omar, meeting journalists in Pretoria, would not comment on the news reports about condemnation of the ANC. ``I do expect various responses (to the report). I do not expect everyone to agree. It will lead to healthy debate,'' he said. He said that if the commissioners recommends prosecutions against anyone for abuses, it will be up to the national director of prosecutions to decide whether to proceed. The director is appointed by the government. The commission's work is designed ``to help us establish the rule of law in South Africa, and to establish the principle of accountability,'' Omar said. The ANC already has prepared the ground for a negative finding, saying weeks ago that the commission had warned that harsh judgments were in the offing. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing biased. On Monday, it rejected ``with contempt'' suggestions ANC officials themselves had leaked the findings. Constand Viljoen, leader of the tiny right-wing Freedom Front, said the ANC had done so to give the commission credibility by making it more even-handed. Publicly, the party has long defended its actions as those committed during a ``just war.'' F.W. de Klerk, the last apartheid-era president, meanwhile, planned to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. ||||| The New York Times said in an editorial on Sunday, Nov. 1: The 3,500-page report of the South African Truth and Reconciliation Commission, released on Thursday, is the most comprehensive and unsparing examination of a nation's ugly past that any such commission has yet produced. Drawing from the commission's own investigations and the testimony of hundreds of applicants for amnesty and 20,000 victims, the report is a detailed look at the crimes of the apartheid era, and blames successive white governments for the vast majority. It has fulfilled its mandate of telling the fullest truth possible, which is one reason that every political party in South Africa has denounced it. Besides accusing the government of assassinations and bombings, the report criticizes the Inkatha Freedom Party for its massacres and collaboration with security forces, and blames the African National Congress for the murder of civilians and other crimes. It singles out former President P.W. Botha, Chief Mangosuthu Buthelezi, the Inkatha leader, and Winnie Mandela, among others, for detailed treatment of their roles in political crimes. One major flaw in the report is the absence of a section accusing F.W. de Klerk, the last apartheid president, of knowing about several bombings after the fact and keeping silent. It was excised because de Klerk is suing the commission. The ANC also sued, unsuccessfully, to stop publication. The lawsuits are a disappointing sign that South Africa's political parties are not interested in an honest look at their past, nor in the free flow of information. The controversy has added to widespread complaints that the commission has not helped the process of reconciliation. This is wrong. True reconciliation _ which occurs when a society is no longer paralyzed by the past and people can work and live together _ cannot be based on silence. No society can be restored to health by papering over as much pain as South Africans have suffered. A noisy and informed debate about complicity in the crimes of the apartheid era is necessary, if uncomfortable. The report is only part of the Truth Commission's contribution to the healing process. The hearings themselves, which allowed victims of human rights violations to tell their stories in public, helped the country heal and opened the eyes of many whites to the unpleasant truth about apartheid. The amnesty process, while permitting many important criminals to escape justice, is allowing families to know exactly what happened to their loved ones in dozens of cases that would likely have never gone to trial in South Africa's fragile judicial system. The process of helping the victims with scholarships and other necessary aid goes on, although it will not be enough. No commission can transform a society as twisted as South Africa's was. But the Truth Commission is the best effort the world has seen, and South Africa is the better for it. ||||| President Nelson Mandela acknowledged Saturday the African National Congress violated human rights during apartheid, setting him at odds with his deputy president over a report that has divided much of South Africa. The disagreement stems from Thursday's release of the report by the Truth and Reconciliation Commission on horrors committed during apartheid. Rather than act as a salve and an aid to reconciliation, the report has caused divisiveness, even among former comrades-in-arms who fought apartheid. As expected, the report called apartheid a ``crime against humanity.'' But it also blamed the ANC for gross human rights violations during its anti-apartheid struggle, saying the group tortured suspected spies and dissidents and killed innocent civilians with land mines and bombs. Some suspected traitors were killed in the ANC's camps abroad. Mbeki _ who became ANC president last year and will likely be elected South Africa's next president in 1999 when Mandela retires _ took a hard line Saturday against the report, and indicated all ANC members must do the same. ``No member, 5th graf, 1st Ld-Writethru

South Africa's Truth and Reconciliation Commission headed by Desmond Tutu proposes amnesty to heal the wounds of the apartheid era. If those accused of atrocities confess, they will be given amnesty, if not, they will be prosecuted. The Commission's report said most human rights violations were by the former state through security and law enforcement agencies. The African National Congress, Inkatha Freedom Party, and Winnie Mandela's United Football Club also shared guilt. Former president de Klerk, who shared the Nobel Peace Prize with Nelson Mandela, was not named as an accessory after the fact, since his threatened lawsuit would delay the report.

A panel investigating apartheid-era atrocities said Wednesday it will not implicate the last apartheid president, F.W. de Klerk, in human rights abuses after he threatened a court challenge. De Klerk said he would sue to block the long-awaited final report of the Truth and Reconciliation Commission, which was due for release Thursday. The man who helped negotiate the end of apartheid objected to a finding by the commission that he was ``an accessory after the fact'' to bombings in the 1980s of the headquarters of a church group and of a labor federation. Former Archbishop Desmond Tutu, the truth panel's chairman, said the commission needed time to prepare to fight the legal challenge, and would ``excise'' de Klerk's name from the report to avoid delaying its release. ``It upsets me deeply,'' Tutu said. ``We have been scrupulously fair to Mr. de Klerk and we reject the contention that we have been engaged in a vendetta against him. ``But we must and will respect the courts and his rights under the constitution. We fought hard for those rights and we can be proud in South Africa that Mr. de Klerk now shares in them,'' he said in a statement. ``All we are doing is postponing dealing with the matter,'' Tutu later told The Associated Press. ``The name will eventually appear after all the hoo-ha has died down.'' De Klerk, reached in London, said he could not comment before speaking with his lawyers because the matter was in the courts. The commission was charged with promoting reconciliation by laying bare apartheid's horrors. It has held hearings around the country for more than two years, listening to victims and perpetrators seeking amnesty. The release of the 3,500-page report represents a milestone for South Africa's transformation from white minority rule to democracy. De Klerk's challenge was only part of the storm of criticism prompted by leaks of the report. The African National Congress, the liberation movement that helped defeat apartheid and now runs the country, on Tuesday angrily rejected a finding that it too was guilty of human rights violations in its armed struggle. The report will be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when all-race elections ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. Other threatened legal challenges have led to fewer individuals being named as rights violators than planned, The Star of Johannesburg reported Wednesday. In commenting on the newspaper report, Tutu said that more than 400 people had been notified they would be implicated to give them a chance to respond. Only 15 successfully argued themselves out of the report, he said. ||||| Criminal prosecutions for atrocities committed during the war against white rule could drag on for at least six years, a top prosecutor said Monday. Key figures implicated in human rights abuses by the Truth and Reconciliation Commission already are under investigation, the official, Jan d'Oliveira, told reporters. They include two unnamed generals in the apartheid state's security apparatus, President Nelson Mandela's ex-wife Winnie Madikizela-Mandela and officials of the African National Congress, he said. The remarks by d'Oliveira, who recently was appointed a deputy national director of prosecutions, were the clearest signal yet that criminal cases would be brought against figures accused by the commission of gross human rights violations. The commission released its report Oct. 30. It chronicles the human rights abuses committed by apartheid governments and their operatives as well as by the African National Congress and others fighting the racist system. The issue of continuing prosecutions is significant. Many feel that dragging on criminal reckonings of the horrors of the apartheid era will only prolong bitterness and delay reconciliation. But supporters of prosecution feel that denying justice to the victims is a worse evil. On a practical level, highly public prosecutions of ANC figures could have an impact on national elections next year, when the party will seek to consolidate its hold on power. The panel's chairman, Archbishop Desmond Tutu, has called for a two-year time limit on prosecutions; d'Oliveira called the period ``wholly impractical.'' The prosecutor did not name the other targets. ``We have always worked on the principle of that we will prosecute the highest rank,'' he said. The commission has the ability to grant amnesty to those who admit their misdeeds and are found to have acted with political motives. The report said individuals who have not sought amnesty should be prosecuted. Madikizela-Mandela has not sought amnesty. The commission found her accountable for human rights violations committed by her bodyguards, who the report said killed and tortured suspected opponents. Madikizela-Mandela was convicted in 1991 of kidnapping and being an accessory to an assault on four young men. She was sentenced to six years in jail, but paid a dlrs 3,200 fine on appeal. The ANC official was among the most prominent anti-apartheid activists. The two generals were implicated during Truth Commission testimony. Prosecutors are ready to move forward pending the amnesty application of one. ||||| The deal that South Africa's Truth and Reconciliation Commission offered was simple enough: Confess your crimes, apply for amnesty and you will go free. If you don't come forward, you will be prosecuted. After more than two years of hearings into apartheid-era atrocities, the commission last week unveiled a 3,500-page report naming dozens of people it believes were up to their elbows in the gore but never applied for amnesty. So the prosecutions should begin soon, right? Not so fast. The study was barely in the hands of President Nelson Mandela before talk of new amnesty deals had begun. It seems that nearly all of South Africa's political parties _ including the ruling African National Congress _ have key officials who could end up in the dock because of the report. Suddenly, there is lots of talk about how the country can't withstand a round of politically divisive trials, and many political analysts here are betting that an agreement ``of mutual benefit'' is in the offing. Already, three major political parties are calling for some kind of new amnesty, and the ANC isn't closing the door. ANC spokesman Thabo Masebe said it was ``premature'' to talk of a general amnesty, but he acknowledged that the party was discussing an amnesty specifically tailored to violence by black South Africans against other blacks that littered the KwaZulu/Natal province with bodies during the late '80s and into the '90s. In choosing a truth commission rather than a Nuremberg-style trial with which to close out its brutal past, South Africa hoped for an idealistic reconciliation. People would come clean and receive true forgiveness. Society would then be able to move on, its wounds cleansed and healed. It was a model watched closely around the world by other societies wondering how to disentangle themselves from the grudges of a brutal past. But given the chance, hundreds of South Africa's perpetrators did not come forward. Commission officials themselves say they were frustrated by the lack of cooperation, however exhaustive their report may seem. It is perhaps too late, however, to press for more. Today's South Africa has urgent new problems to deal with _ unemployment, crime, white flight, too few schools and hospitals. So it may wind up settling for a more pragmatic reconciliation _ one that gives amnesty to the unrepentant simply because it's more practical for all concerned to move on. In recent years, truth commissions have gained popularity in many places, notably Chile, Argentina and El Salvador. But South Africa's _ the biggest and most powerful, able to grant amnesty and to subpoena witnesses _ was supposed to be the real test. Certainly the commission forced the nation to see the gruesome details of its past, as sobbing survivors and stone-faced torturers told of smashed genitals and near suffocations. And the commission's work added much to the knowledge about what happened in South Africa between 1960 and 1994. But it will be years before the effect of the commission can truly be judged. Has anyone really forgiven anyone else? Will vendettas persist? No one can answer. One thing seems clear, however: Four years after South Africa held its first non-racial elections, a growing number of South Africans want to be done with the past. Raymond Louw, the publisher of a respected weekly newsletter, Southern Africa Report, says a new amnesty proposal could come up during the February session of Parliament, in time to remove the issue from next year's election campaigns. ``You simply can't have this country torn apart by prosecutions,'' he says. ``Everybody is going to be howling for an amnesty. They already are.'' Even as Archbishop Desmond Tutu, the commission's chairman, delivered the report, he seemed to be anticipating a push for a new amnesty and arguing against it. He said such a move would be highly unfair to those who came forward. He suggested instead that there be a two-year time limit, after which anyone not indicted would in effect get amnesty. To be sure, there will be opposition to any proposals to limit prosecutions. More than a dozen human rights and victims advocacy groups have already banded together to condemn such proposals as ``unconscionable.'' The idea for a Truth Commission emerged as a compromise from the long negotiations that brought about South Africa's peaceful transition from a white supremacist state to a non-racial democracy. During the talks, the white National Party government pushed for a blanket amnesty, and the ANC refused. In the end, only about 250 former police officers came forward, most of them foot soldiers. And only two high National Party officials, former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe, confessed _ to roles in ordering bombings. In its report, the commission called the apartheid state the ``primary perpetrator'' of gross human rights violations and held such high ranking former officials as former President P.W. Botha, his former army chief, Georg Meiring, and the former intelligence chief, Niel Barnard, responsible. These men, and others of lower rank, have not applied for amnesty For the ANC, the most embarrassing prospect is the possible prosecution of Mandela's former wife, Winnie Madikizela-Mandela, who is accused in the report of taking part in a number of assaults and abductions. Lesser-known officials could face charges too. The ANC is held responsible for at least 76 deaths in KwaZulu/Natal. The ANC's problems are further complicated by its efforts to make peace with the largely Zulu-based Inkatha Freedom Party. Virtually no one from that party came forward to ask for amnesty. Yet the report found that Inkatha, working with the white government, was responsible for widespread slaughter in KwaZulu/Natal and in the townships around Johannesburg. Inkatha's leader, Chief Mangosuthu Buthelezi, and many key party officials stand accused of fomenting a wide range of abuses. But prosecuting Chief Buthelezi could lead to new warfare in KwaZulu. Part of the reluctance to go forward with prosecutions may be the result of still another factor: The judicial system is already overwhelmed with rising crime and the evidence from the apartheid era is old. So why spend the time and the money? At the moment, only one political party is opposed to any form of new amnesty _ the tiny but influential Democratic Party, a liberal group that was not involved in the violence. Its head, Tony Leon, says a new amnesty would only prove that ``the more thuglike your behavior, the more you get away with.'' But he concedes that his is a lonely voice. ``At this point,'' he says, ``there is little enthusiasm for anything but closing the book on the past.'' ||||| A panel probing apartheid-era abuses has accused the African National Congress of human rights violations, including torture and bomb attacks, the state broadcaster said Monday. The ANC, which led the struggle against white rule and now is in power, previously has acknowledged it was told to expect implication in right violations. The Truth and Reconciliation Commission will release its final report on 2 1-2 years of investigation on Thursday. The report was expected to place overwhelming blame for the era's abuses on white governments and their brutal security services. President Nelson Mandela's office received an advance copy on Monday ahead of the handover ceremony, when retired Archbishop Desmond Tutu, who chaired the comission, will present Mandela with the report. South African Broadcasting Corp. radio said it had been leaked a ``preliminary document'' which condemns the ANC as politically and morally responsible for gross human rights violations during and after the fall of apartheid. An ANC spokesman, Thabo Masebe, said he believed the news report referred to a commission letter sent in advance ``informing us of its intention to implicate the ANC in gross human rights violations.'' Commission officials could not immediately be reached for comment. Justice Minister Dullah Omar told journalists in Pretoria he had heard the news report, but would not comment. Former President F.W. de Klerk, meanwhile, plans to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing embarrassed. The party says the accusations against it likely would center on the planting of land mines on border farms, abuses at its military camps in Angola and bombings. Omar said he expected the report's conclusions to set off debate but added it would ``lay the basis for reconciliation.'' ||||| Torturers and bombers who carried out atrocities defending or fighting apartheid need counseling to ensure they do not repeat their crimes, an expert for South Africa's reconciliation body said Thursday. Addressing local and international experts, Charles Villa-Vicencio, research head of the Truth and Reconciliation Commission, said ignoring the psychological needs of those who carried out human rights abuses could alienate a potentially dangerous sector of society. ``We must give attention to the healing of perpetrators, not just for the sake of perpetrators, but for the sake of the nation as a whole,'' he said. The conference, organized by the Medical Research Council, is examining mental health issues raised by the Truth Commission, which is charged with probing crimes committed by all sides in the anti-apartheid struggle. As the commission prepares to hand over its final report at the end of the month, South Africans are examining its painful and traumatic exploration of their bloody past. With the power to grant amnesty to many who tortured, bombed or maimed innocent civilians, the process has at some stage angered people in nearly all walks of life. Many whites see the panel as favoring the black liberation movements, while many blacks accuse it of being too soft on former state officials, especially top ranking ministers. However, Villa-Vicencio appealed for tolerance in dealing with all those who have committed crimes, saying that the potential for wrongdoing existed in everyone. ``We all, the entire human race, carry with us the capacity for evil,'' he said. Many of Thursday's speakers touched on the figure of police death squad leader Eugene de Kock, who was given jail terms totaling more than 200 years after a killing spree that costs dozens of lives. De Kock has applied for amnesty for his crimes. Dan Stein, a specialist in neurobiology and stress disorders, said de Kock typified many killers from all sides in the conflict by his sheer ``banality of evil''. ``Many people have found him in interviews to be an ordinary, even likeable person,'' he said about the man whom subordinates dubbed ``Prime Evil.'' Ginn Fourie, a physiotherapist whose student daughter was gunned down by black activists in a 1993 attack on a Cape Town bar, said it was necessary to help those whose circumstances compelled them to do wrong. Struggling to control her tears, Fourie told delegates she had attended the amnesty hearings of her daughter's killers and supported their successful bid to be freed from long jail sentences. After describing how she hugged the three members of the black nationalist Pan-Africanist Congress and urged them to seek counseling together with their victims, Fourie earned a standing ovation from the 50-strong audience. ``We must take the initiative in understanding others and start the process of reconciliation and healing our broken land,'' she said, her voice shaking with emotion. ||||| Following are excerpts from the final report issued by South Africa's Truth and Reconciliation Commission on Thursday: PRIMARY FINDING On the basis of the evidence available to it, the primary finding of the Commission is that: The predominant portion of gross violations of human rights was committed by the former state through its security and law-enforcement agencies. Moreover, the South African state in the period from the late 1970's to early 1990's became involved in activities of a criminal nature when, amongst other things, it knowingly planned, undertook, condoned and covered up the commission of unlawful acts, including the extrajudicial killing of political opponents and others, inside and outside South Africa. In pursuit of these unlawful activities, the state acted in collusion with certain other political groupings, most notably the Inkatha Freedom Party (I.F.P.). . . . Certain members of the State Security Council (the state President, Minister of Defense, Minister of Law and Order, and heads of security forces) did foresee that the use of words such as ``take out,'' ``wipe out,'' ``eradicate,'' and ``eliminate'' would result in the killing of political opponents. They are therefore responsible for deliberate planning which caused gross violations of human rights. P.W. BOTHA During the period that he presided as head of state (1978-1989) according to submissions made to and findings made by the Commission, gross violations of human rights and other unlawful acts were perpetrated on a wide scale by members of the South African Defense Force, including: The deliberate unlawful killing and attempted killing of persons opposed to the policies of the Government, within and outside South Africa. The widespread use of torture and other forms of severe ill treatment against such persons. The forcible abduction of such persons where were resident in neighboring countries. Covert logistical and financial assistance to organizations opposed to the ideology of the A.N.C. and other liberation movements. . . . INKATHA The Commission finds that in 1986, the South African Defense Forces (S.A.D.F.) conspired with Inkatha to provide the latter with a covert, offensive paramilitary unit (or ``hit squad'') to be deployed illegally against persons and organizations perceived to be opposed to both the South African Government and Inkatha. The S.A.D.F. provided training, financial and logistical management and behind the scenes supervision of the trainees, who were trained by the Special Forces unit of the S.A.D.F. in the Caprivi Strip. The Commission finds furthermore that the deployment of the paramilitary unit in KwaZulu led to gross violations of human rights, including killing, attempted killing and severe ill treatment. The Commission finds the following people, among others, accountable for such violations: Mr. P. W. Botha, Gen. Magnus Malan, Chief Mangosuthu Buthelezi. . . . The A.N.C. While it was A.N.C. policy that the loss of civilian life should be ``avoided,'' there were instances where members of its security forces perpetrated gross violations of human rights in that the distinction between military and civilian targets was blurred in certain armed actions, such as the 1983 Church Street bombing of the South African Air Force headquarters. . . . In the course of the armed struggle, the A.N.C., through its security forces, undertook military operations which, though intended for military or security force targets, sometimes went awry for a variety of reasons, including poor intelligence and reconnaissance. The consequences in these cases, such as the Magoo's Bar and Durban Esplanade bombings, were gross violations of human rights in respect of the injuries to and loss of lives of civilians. Individuals who defected to the state and became informers and/or members who became state witnesses in political trials . . . were often labeled by the A.N.C. as collaborators and regarded as legitimate targets to be killed. The commission does not condone the legitimization of such individuals as military targets and finds that the extrajudicial killings of such individuals constituted gross violations of human rights. The commission finds that, in the 1980's in particular, a number of gross violations were perpetrated not by direct members of the A.N.C. or those operating under its formal command, but by civilians who saw themselves as A.N.C. supporters. In this regard, the Commission finds that the A.N.C. is morally and politically accountable for creating a climate in which such supporters believed their actions to be legitimate and carried out within the broad parameters of a ``people's war'' as enunciated by the A.N.C. A.N.C. CAMPS The Commission finds that suspected ``agents'' were routinely subjected to torture and other forms of severe ill treatment and that there were cases of such individuals being charged and convicted by tribunals without proper regard to due process, sentenced to death and executed. WINNIE MADIKIZELA-MANDELA The Commission finds that Ms. Madikizela-Mandela was central to the establishment and formation of the Mandela United Football Club, which later developed into a private vigilante unit. It is the Commission's view that Ms. Madikizela-Mandela was aware of the criminal activity and the disquiet it caused in the community, but chose deliberately not to address the problems emanating from the football club. The Commission finds that those who opposed Ms. Madikizela-Mandela and the Mandela United Football Club, or dissented from them, were branded as informers and killed. The Commission finds that Ms. Madikizela-Mandela . . . is accountable, politically and morally for the gross violations of human rights committed by the Mandela United Football Club. The Commission finds further that Mrs. Madikizela-Mandela herself was responsible for committing such gross violations of human rights. . . . BUSINESS Business was central to the economy that sustained the South African state during the apartheid years. Certain businesses, especially the mining industry, were involved in helping design and implement apartheid policies. The white agriculture industry benefited from its privileged access to land. ||||| Facing a court challenge, the Truth and Reconciliation Commission said Wednesday that it would withhold, at least temporarily, the parts of its final report that implicate South Africa's last apartheid-era president, F.W. de Klerk, in illegal acts. De Klerk, 62, who helped negotiate the end of South Africa's white supremacist government and shared the 1993 Nobel Peace Prize with President Nelson Mandela for that work, had objected to a finding by the commission that he was ``an accessory after the fact'' in the bombings of the headquarters of a church group and of a labor federation in the 1980s. The chairman of the 17-member panel, Archbishop Desmond Tutu, said that although he took such action with ``great reluctance,'' the commission needed time to prepare to fight the legal challenge. He said it would take de Klerk's name out of 3,500-page report to avoid delaying its release Thursday. ``It upsets me deeply,'' he said in a statement. ``We have been scrupulously fair to de Klerk, and we reject the contention that we have been engaged in a vendetta against him.'' De Klerk's challenge was only part of the storm of criticism prompted by leaks about the report in the last few days. Within hours of the commission decision to withdraw its findings on de Klerk, it was facing the possibility of a new suit _ this time from the ruling African National Congress. The ANC also wants to block the commission findings about its conduct during the liberation struggle. A spokesman for the party, Thabo Masebe, said the party would seek an injunction in the morning before the report is officially handed over to Mandela. While the commission's report is expected to lay overwhelming blame on the former white government for atrocities, it has also found the ANC responsible for human-rights violations, including the torture and killing of spying suspects, bombings in civilian areas and the killing of political enemies, including members of the rival Zulu-based Inkhata Freedom Party. The decision on de Klerk seems certain to damage the commission's credibility. The panel, created as a way of putting South Africa's brutal past to rest without the expense and political divisiveness of trials, has caused controversy from the start. It has held more than 160 hearings throughout the country, listening to both victims and to perpetrators seeking amnesty. But many whites say the commission is on a witch hunt aiming to humiliate former government officials and Afrikaners in general. De Klerk has once before forced the commission officials to court and won an apology from them for calling him a liar. Some political analysts said Wednesday's events would only further the belief that the panel lacks impartiality. ``The withdrawal of the findings can't help but be seen as a lack of certainty on their side,'' said Sampie Terreblanche, an economist and political analyst at the University of Stellenbosch, who has supported the commission. ``Whether we like it or not, the whole report gets a knock from this.'' De Klerk's spokesman, David Steward, said the former president ``was very confident'' that he would win when the case goes to trial in March. ``He is very happy to be in the courts now rather than dealing with the Truth Commission,'' Steward said. ``The fact that they agreed to withdraw creates the definite impression that they specifically concocted a case to involve Mr. de Klerk in a negative finding.'' The ANC has accused the commission of trying to ``criminalize'' the liberation struggle. ``Whatever the efforts to besmirch our struggle by denouncing it as a gross violation of human rights,'' the congress said in a statement. ``The ANC and the millions of people who were part of this struggle will always be proud of what they did to insure that, in the process of the destruction of a vile system, they did not themselves resort to vile methods of struggle on the basis that the means justified the end.'' There are probably few subjects that get South Africans more excited than the issue of the Truth Commission and whether it is a worthy cause or a waste of money. The events of the last few days have only added to the debate. For some, like Pal Martins, 34, a former member of the ANC's armed wing, the fact all sides of the political spectrum are in an uproar is a good thing. ``The mere fact that everyone is complaining means that the Truth Commission has done its work,'' he said. But others say that too many questions are being raised about the panel's competence. ``The whole affair is beyond the pale, a mockery of justice,'' said Roboy Vonholdt, a 56-year-old sheep and ostrich farmer who believes that the commission has been a theatrical act. ``We should all turn our backs on the past and move forward. We need them and they need us. Let's all make money and let good economic conditions prevail.'' The commission's report is supposed to be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when elections open to all races ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. While de Klerk was alone in court Wednesday challenging the commission, Tutu said Wednesday that other threatened legal challenges had led to fewer individuals being named as rights violators than originally planned. Tutu said that more than 400 people had been notified that they would be implicated to give them a chance to respond. Some 15 successfully argued themselves out of the report or could not be reached and were therefore deleted from the report, he said. The commission is required by law to give advance notification to anyone it intends to implicate in its report. The commission had been expected to say that although de Klerk did not order the bombings, he subsequently came to know that former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe had been involved, but failed to report his knowledge to the police. This could open him up to a criminal prosecution. De Klerk has not applied for amnesty in this matter or any other. de Klerk has said that when he learned about the bombings, Vlok and Van der Merwe were already in the process of applying for amnesty, and he did not think it was necessary to report the matter. ||||| The institution exploring apartheid's horrors will issue a report that finds the African National Congress shares blame for human rights violations as it struggled to overcome white rule. The 3,500-page report by the Truth and Reconciliation Commission culminates more than two years of nationwide hearings. South African media released preliminary findings on Monday, three days before its official release on Thursday in Pretoria, the capital. The release of the document is a milestone in South Africa's transformation from white minority rule to democracy. The commission, which has the power to grant amnesty, was tasked with promoting reconciliation by laying bare the what and why of apartheid-era atrocities. With the ANC now in power and facing an election in mid-1999, a condemnation by the commission could prove damaging both to its electoral chances and moral standing. There has been no doubt that the report's overwhelming blame would be laid on white governments and their security forces during the years under scrutiny, 1960-1994. Indeed, news reports Monday said the Truth Commission would declare apartheid a crime against humanity and acknowledge that the ANC and the more radical Pan Africanist Congress were conducting a legitimate struggle against the former apartheid state. But in preliminary findings sent to the parties last month, the commission also said the two movements were ``morally and politically accountable'' for gross rights violations, South African Press Association and South African Broadcasting Corp. said. The preliminary finding said that despite ANC policy against killing civilians, the line between military and civilian targets had been blurred, SAPA said. It condemned the planting of landmines in rural areas, the execution of enemy agents, torture and mistreatment of ANC members in its exile camps and for killing political opponents. It said the party must accept responsibility for the activities of ANC Women's League president Winnie Madikizela-Mandela, Nelson Mandela's former wife, and her Mandela United Football Club, accused of killings, torture and kidnappings. The commission also said the PAC was guilty of the deaths of civilians in its strategy in 1993 to drive white farmers off their land so it could be reclaimed by blacks. Justice Minister Dullah Omar, meeting journalists in Pretoria, would not comment on the news reports about condemnation of the ANC. ``I do expect various responses (to the report). I do not expect everyone to agree. It will lead to healthy debate,'' he said. He said that if the commissioners recommends prosecutions against anyone for abuses, it will be up to the national director of prosecutions to decide whether to proceed. The director is appointed by the government. The commission's work is designed ``to help us establish the rule of law in South Africa, and to establish the principle of accountability,'' Omar said. The ANC already has prepared the ground for a negative finding, saying weeks ago that the commission had warned that harsh judgments were in the offing. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing biased. On Monday, it rejected ``with contempt'' suggestions ANC officials themselves had leaked the findings. Constand Viljoen, leader of the tiny right-wing Freedom Front, said the ANC had done so to give the commission credibility by making it more even-handed. Publicly, the party has long defended its actions as those committed during a ``just war.'' F.W. de Klerk, the last apartheid-era president, meanwhile, planned to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. ||||| The New York Times said in an editorial on Sunday, Nov. 1: The 3,500-page report of the South African Truth and Reconciliation Commission, released on Thursday, is the most comprehensive and unsparing examination of a nation's ugly past that any such commission has yet produced. Drawing from the commission's own investigations and the testimony of hundreds of applicants for amnesty and 20,000 victims, the report is a detailed look at the crimes of the apartheid era, and blames successive white governments for the vast majority. It has fulfilled its mandate of telling the fullest truth possible, which is one reason that every political party in South Africa has denounced it. Besides accusing the government of assassinations and bombings, the report criticizes the Inkatha Freedom Party for its massacres and collaboration with security forces, and blames the African National Congress for the murder of civilians and other crimes. It singles out former President P.W. Botha, Chief Mangosuthu Buthelezi, the Inkatha leader, and Winnie Mandela, among others, for detailed treatment of their roles in political crimes. One major flaw in the report is the absence of a section accusing F.W. de Klerk, the last apartheid president, of knowing about several bombings after the fact and keeping silent. It was excised because de Klerk is suing the commission. The ANC also sued, unsuccessfully, to stop publication. The lawsuits are a disappointing sign that South Africa's political parties are not interested in an honest look at their past, nor in the free flow of information. The controversy has added to widespread complaints that the commission has not helped the process of reconciliation. This is wrong. True reconciliation _ which occurs when a society is no longer paralyzed by the past and people can work and live together _ cannot be based on silence. No society can be restored to health by papering over as much pain as South Africans have suffered. A noisy and informed debate about complicity in the crimes of the apartheid era is necessary, if uncomfortable. The report is only part of the Truth Commission's contribution to the healing process. The hearings themselves, which allowed victims of human rights violations to tell their stories in public, helped the country heal and opened the eyes of many whites to the unpleasant truth about apartheid. The amnesty process, while permitting many important criminals to escape justice, is allowing families to know exactly what happened to their loved ones in dozens of cases that would likely have never gone to trial in South Africa's fragile judicial system. The process of helping the victims with scholarships and other necessary aid goes on, although it will not be enough. No commission can transform a society as twisted as South Africa's was. But the Truth Commission is the best effort the world has seen, and South Africa is the better for it. ||||| President Nelson Mandela acknowledged Saturday the African National Congress violated human rights during apartheid, setting him at odds with his deputy president over a report that has divided much of South Africa. The disagreement stems from Thursday's release of the report by the Truth and Reconciliation Commission on horrors committed during apartheid. Rather than act as a salve and an aid to reconciliation, the report has caused divisiveness, even among former comrades-in-arms who fought apartheid. As expected, the report called apartheid a ``crime against humanity.'' But it also blamed the ANC for gross human rights violations during its anti-apartheid struggle, saying the group tortured suspected spies and dissidents and killed innocent civilians with land mines and bombs. Some suspected traitors were killed in the ANC's camps abroad. Mbeki _ who became ANC president last year and will likely be elected South Africa's next president in 1999 when Mandela retires _ took a hard line Saturday against the report, and indicated all ANC members must do the same. ``No member, 5th graf, 1st Ld-Writethru

South Africa's Truth and Reconciliation Commission, appointed to reconcile the sides involved in the crimes of the apartheid era, is releasing its final 2.5- year report. Its purpose is to identify those who committed gross violations of human rights. The report is to lay most of the blame for the violations on the State, but the ANC also shares blame. The program offers amnesty to the accused if they confess but execution if they refuse. The process has angered many people of all walks of life. De Klerk, Apartheid's last president, is not being implicated but he is suing to stop publication. Criminal cases are nonetheless expected to go on for six years.

A panel investigating apartheid-era atrocities said Wednesday it will not implicate the last apartheid president, F.W. de Klerk, in human rights abuses after he threatened a court challenge. De Klerk said he would sue to block the long-awaited final report of the Truth and Reconciliation Commission, which was due for release Thursday. The man who helped negotiate the end of apartheid objected to a finding by the commission that he was ``an accessory after the fact'' to bombings in the 1980s of the headquarters of a church group and of a labor federation. Former Archbishop Desmond Tutu, the truth panel's chairman, said the commission needed time to prepare to fight the legal challenge, and would ``excise'' de Klerk's name from the report to avoid delaying its release. ``It upsets me deeply,'' Tutu said. ``We have been scrupulously fair to Mr. de Klerk and we reject the contention that we have been engaged in a vendetta against him. ``But we must and will respect the courts and his rights under the constitution. We fought hard for those rights and we can be proud in South Africa that Mr. de Klerk now shares in them,'' he said in a statement. ``All we are doing is postponing dealing with the matter,'' Tutu later told The Associated Press. ``The name will eventually appear after all the hoo-ha has died down.'' De Klerk, reached in London, said he could not comment before speaking with his lawyers because the matter was in the courts. The commission was charged with promoting reconciliation by laying bare apartheid's horrors. It has held hearings around the country for more than two years, listening to victims and perpetrators seeking amnesty. The release of the 3,500-page report represents a milestone for South Africa's transformation from white minority rule to democracy. De Klerk's challenge was only part of the storm of criticism prompted by leaks of the report. The African National Congress, the liberation movement that helped defeat apartheid and now runs the country, on Tuesday angrily rejected a finding that it too was guilty of human rights violations in its armed struggle. The report will be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when all-race elections ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. Other threatened legal challenges have led to fewer individuals being named as rights violators than planned, The Star of Johannesburg reported Wednesday. In commenting on the newspaper report, Tutu said that more than 400 people had been notified they would be implicated to give them a chance to respond. Only 15 successfully argued themselves out of the report, he said. ||||| Criminal prosecutions for atrocities committed during the war against white rule could drag on for at least six years, a top prosecutor said Monday. Key figures implicated in human rights abuses by the Truth and Reconciliation Commission already are under investigation, the official, Jan d'Oliveira, told reporters. They include two unnamed generals in the apartheid state's security apparatus, President Nelson Mandela's ex-wife Winnie Madikizela-Mandela and officials of the African National Congress, he said. The remarks by d'Oliveira, who recently was appointed a deputy national director of prosecutions, were the clearest signal yet that criminal cases would be brought against figures accused by the commission of gross human rights violations. The commission released its report Oct. 30. It chronicles the human rights abuses committed by apartheid governments and their operatives as well as by the African National Congress and others fighting the racist system. The issue of continuing prosecutions is significant. Many feel that dragging on criminal reckonings of the horrors of the apartheid era will only prolong bitterness and delay reconciliation. But supporters of prosecution feel that denying justice to the victims is a worse evil. On a practical level, highly public prosecutions of ANC figures could have an impact on national elections next year, when the party will seek to consolidate its hold on power. The panel's chairman, Archbishop Desmond Tutu, has called for a two-year time limit on prosecutions; d'Oliveira called the period ``wholly impractical.'' The prosecutor did not name the other targets. ``We have always worked on the principle of that we will prosecute the highest rank,'' he said. The commission has the ability to grant amnesty to those who admit their misdeeds and are found to have acted with political motives. The report said individuals who have not sought amnesty should be prosecuted. Madikizela-Mandela has not sought amnesty. The commission found her accountable for human rights violations committed by her bodyguards, who the report said killed and tortured suspected opponents. Madikizela-Mandela was convicted in 1991 of kidnapping and being an accessory to an assault on four young men. She was sentenced to six years in jail, but paid a dlrs 3,200 fine on appeal. The ANC official was among the most prominent anti-apartheid activists. The two generals were implicated during Truth Commission testimony. Prosecutors are ready to move forward pending the amnesty application of one. ||||| The deal that South Africa's Truth and Reconciliation Commission offered was simple enough: Confess your crimes, apply for amnesty and you will go free. If you don't come forward, you will be prosecuted. After more than two years of hearings into apartheid-era atrocities, the commission last week unveiled a 3,500-page report naming dozens of people it believes were up to their elbows in the gore but never applied for amnesty. So the prosecutions should begin soon, right? Not so fast. The study was barely in the hands of President Nelson Mandela before talk of new amnesty deals had begun. It seems that nearly all of South Africa's political parties _ including the ruling African National Congress _ have key officials who could end up in the dock because of the report. Suddenly, there is lots of talk about how the country can't withstand a round of politically divisive trials, and many political analysts here are betting that an agreement ``of mutual benefit'' is in the offing. Already, three major political parties are calling for some kind of new amnesty, and the ANC isn't closing the door. ANC spokesman Thabo Masebe said it was ``premature'' to talk of a general amnesty, but he acknowledged that the party was discussing an amnesty specifically tailored to violence by black South Africans against other blacks that littered the KwaZulu/Natal province with bodies during the late '80s and into the '90s. In choosing a truth commission rather than a Nuremberg-style trial with which to close out its brutal past, South Africa hoped for an idealistic reconciliation. People would come clean and receive true forgiveness. Society would then be able to move on, its wounds cleansed and healed. It was a model watched closely around the world by other societies wondering how to disentangle themselves from the grudges of a brutal past. But given the chance, hundreds of South Africa's perpetrators did not come forward. Commission officials themselves say they were frustrated by the lack of cooperation, however exhaustive their report may seem. It is perhaps too late, however, to press for more. Today's South Africa has urgent new problems to deal with _ unemployment, crime, white flight, too few schools and hospitals. So it may wind up settling for a more pragmatic reconciliation _ one that gives amnesty to the unrepentant simply because it's more practical for all concerned to move on. In recent years, truth commissions have gained popularity in many places, notably Chile, Argentina and El Salvador. But South Africa's _ the biggest and most powerful, able to grant amnesty and to subpoena witnesses _ was supposed to be the real test. Certainly the commission forced the nation to see the gruesome details of its past, as sobbing survivors and stone-faced torturers told of smashed genitals and near suffocations. And the commission's work added much to the knowledge about what happened in South Africa between 1960 and 1994. But it will be years before the effect of the commission can truly be judged. Has anyone really forgiven anyone else? Will vendettas persist? No one can answer. One thing seems clear, however: Four years after South Africa held its first non-racial elections, a growing number of South Africans want to be done with the past. Raymond Louw, the publisher of a respected weekly newsletter, Southern Africa Report, says a new amnesty proposal could come up during the February session of Parliament, in time to remove the issue from next year's election campaigns. ``You simply can't have this country torn apart by prosecutions,'' he says. ``Everybody is going to be howling for an amnesty. They already are.'' Even as Archbishop Desmond Tutu, the commission's chairman, delivered the report, he seemed to be anticipating a push for a new amnesty and arguing against it. He said such a move would be highly unfair to those who came forward. He suggested instead that there be a two-year time limit, after which anyone not indicted would in effect get amnesty. To be sure, there will be opposition to any proposals to limit prosecutions. More than a dozen human rights and victims advocacy groups have already banded together to condemn such proposals as ``unconscionable.'' The idea for a Truth Commission emerged as a compromise from the long negotiations that brought about South Africa's peaceful transition from a white supremacist state to a non-racial democracy. During the talks, the white National Party government pushed for a blanket amnesty, and the ANC refused. In the end, only about 250 former police officers came forward, most of them foot soldiers. And only two high National Party officials, former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe, confessed _ to roles in ordering bombings. In its report, the commission called the apartheid state the ``primary perpetrator'' of gross human rights violations and held such high ranking former officials as former President P.W. Botha, his former army chief, Georg Meiring, and the former intelligence chief, Niel Barnard, responsible. These men, and others of lower rank, have not applied for amnesty For the ANC, the most embarrassing prospect is the possible prosecution of Mandela's former wife, Winnie Madikizela-Mandela, who is accused in the report of taking part in a number of assaults and abductions. Lesser-known officials could face charges too. The ANC is held responsible for at least 76 deaths in KwaZulu/Natal. The ANC's problems are further complicated by its efforts to make peace with the largely Zulu-based Inkatha Freedom Party. Virtually no one from that party came forward to ask for amnesty. Yet the report found that Inkatha, working with the white government, was responsible for widespread slaughter in KwaZulu/Natal and in the townships around Johannesburg. Inkatha's leader, Chief Mangosuthu Buthelezi, and many key party officials stand accused of fomenting a wide range of abuses. But prosecuting Chief Buthelezi could lead to new warfare in KwaZulu. Part of the reluctance to go forward with prosecutions may be the result of still another factor: The judicial system is already overwhelmed with rising crime and the evidence from the apartheid era is old. So why spend the time and the money? At the moment, only one political party is opposed to any form of new amnesty _ the tiny but influential Democratic Party, a liberal group that was not involved in the violence. Its head, Tony Leon, says a new amnesty would only prove that ``the more thuglike your behavior, the more you get away with.'' But he concedes that his is a lonely voice. ``At this point,'' he says, ``there is little enthusiasm for anything but closing the book on the past.'' ||||| A panel probing apartheid-era abuses has accused the African National Congress of human rights violations, including torture and bomb attacks, the state broadcaster said Monday. The ANC, which led the struggle against white rule and now is in power, previously has acknowledged it was told to expect implication in right violations. The Truth and Reconciliation Commission will release its final report on 2 1-2 years of investigation on Thursday. The report was expected to place overwhelming blame for the era's abuses on white governments and their brutal security services. President Nelson Mandela's office received an advance copy on Monday ahead of the handover ceremony, when retired Archbishop Desmond Tutu, who chaired the comission, will present Mandela with the report. South African Broadcasting Corp. radio said it had been leaked a ``preliminary document'' which condemns the ANC as politically and morally responsible for gross human rights violations during and after the fall of apartheid. An ANC spokesman, Thabo Masebe, said he believed the news report referred to a commission letter sent in advance ``informing us of its intention to implicate the ANC in gross human rights violations.'' Commission officials could not immediately be reached for comment. Justice Minister Dullah Omar told journalists in Pretoria he had heard the news report, but would not comment. Former President F.W. de Klerk, meanwhile, plans to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing embarrassed. The party says the accusations against it likely would center on the planting of land mines on border farms, abuses at its military camps in Angola and bombings. Omar said he expected the report's conclusions to set off debate but added it would ``lay the basis for reconciliation.'' ||||| Torturers and bombers who carried out atrocities defending or fighting apartheid need counseling to ensure they do not repeat their crimes, an expert for South Africa's reconciliation body said Thursday. Addressing local and international experts, Charles Villa-Vicencio, research head of the Truth and Reconciliation Commission, said ignoring the psychological needs of those who carried out human rights abuses could alienate a potentially dangerous sector of society. ``We must give attention to the healing of perpetrators, not just for the sake of perpetrators, but for the sake of the nation as a whole,'' he said. The conference, organized by the Medical Research Council, is examining mental health issues raised by the Truth Commission, which is charged with probing crimes committed by all sides in the anti-apartheid struggle. As the commission prepares to hand over its final report at the end of the month, South Africans are examining its painful and traumatic exploration of their bloody past. With the power to grant amnesty to many who tortured, bombed or maimed innocent civilians, the process has at some stage angered people in nearly all walks of life. Many whites see the panel as favoring the black liberation movements, while many blacks accuse it of being too soft on former state officials, especially top ranking ministers. However, Villa-Vicencio appealed for tolerance in dealing with all those who have committed crimes, saying that the potential for wrongdoing existed in everyone. ``We all, the entire human race, carry with us the capacity for evil,'' he said. Many of Thursday's speakers touched on the figure of police death squad leader Eugene de Kock, who was given jail terms totaling more than 200 years after a killing spree that costs dozens of lives. De Kock has applied for amnesty for his crimes. Dan Stein, a specialist in neurobiology and stress disorders, said de Kock typified many killers from all sides in the conflict by his sheer ``banality of evil''. ``Many people have found him in interviews to be an ordinary, even likeable person,'' he said about the man whom subordinates dubbed ``Prime Evil.'' Ginn Fourie, a physiotherapist whose student daughter was gunned down by black activists in a 1993 attack on a Cape Town bar, said it was necessary to help those whose circumstances compelled them to do wrong. Struggling to control her tears, Fourie told delegates she had attended the amnesty hearings of her daughter's killers and supported their successful bid to be freed from long jail sentences. After describing how she hugged the three members of the black nationalist Pan-Africanist Congress and urged them to seek counseling together with their victims, Fourie earned a standing ovation from the 50-strong audience. ``We must take the initiative in understanding others and start the process of reconciliation and healing our broken land,'' she said, her voice shaking with emotion. ||||| Following are excerpts from the final report issued by South Africa's Truth and Reconciliation Commission on Thursday: PRIMARY FINDING On the basis of the evidence available to it, the primary finding of the Commission is that: The predominant portion of gross violations of human rights was committed by the former state through its security and law-enforcement agencies. Moreover, the South African state in the period from the late 1970's to early 1990's became involved in activities of a criminal nature when, amongst other things, it knowingly planned, undertook, condoned and covered up the commission of unlawful acts, including the extrajudicial killing of political opponents and others, inside and outside South Africa. In pursuit of these unlawful activities, the state acted in collusion with certain other political groupings, most notably the Inkatha Freedom Party (I.F.P.). . . . Certain members of the State Security Council (the state President, Minister of Defense, Minister of Law and Order, and heads of security forces) did foresee that the use of words such as ``take out,'' ``wipe out,'' ``eradicate,'' and ``eliminate'' would result in the killing of political opponents. They are therefore responsible for deliberate planning which caused gross violations of human rights. P.W. BOTHA During the period that he presided as head of state (1978-1989) according to submissions made to and findings made by the Commission, gross violations of human rights and other unlawful acts were perpetrated on a wide scale by members of the South African Defense Force, including: The deliberate unlawful killing and attempted killing of persons opposed to the policies of the Government, within and outside South Africa. The widespread use of torture and other forms of severe ill treatment against such persons. The forcible abduction of such persons where were resident in neighboring countries. Covert logistical and financial assistance to organizations opposed to the ideology of the A.N.C. and other liberation movements. . . . INKATHA The Commission finds that in 1986, the South African Defense Forces (S.A.D.F.) conspired with Inkatha to provide the latter with a covert, offensive paramilitary unit (or ``hit squad'') to be deployed illegally against persons and organizations perceived to be opposed to both the South African Government and Inkatha. The S.A.D.F. provided training, financial and logistical management and behind the scenes supervision of the trainees, who were trained by the Special Forces unit of the S.A.D.F. in the Caprivi Strip. The Commission finds furthermore that the deployment of the paramilitary unit in KwaZulu led to gross violations of human rights, including killing, attempted killing and severe ill treatment. The Commission finds the following people, among others, accountable for such violations: Mr. P. W. Botha, Gen. Magnus Malan, Chief Mangosuthu Buthelezi. . . . The A.N.C. While it was A.N.C. policy that the loss of civilian life should be ``avoided,'' there were instances where members of its security forces perpetrated gross violations of human rights in that the distinction between military and civilian targets was blurred in certain armed actions, such as the 1983 Church Street bombing of the South African Air Force headquarters. . . . In the course of the armed struggle, the A.N.C., through its security forces, undertook military operations which, though intended for military or security force targets, sometimes went awry for a variety of reasons, including poor intelligence and reconnaissance. The consequences in these cases, such as the Magoo's Bar and Durban Esplanade bombings, were gross violations of human rights in respect of the injuries to and loss of lives of civilians. Individuals who defected to the state and became informers and/or members who became state witnesses in political trials . . . were often labeled by the A.N.C. as collaborators and regarded as legitimate targets to be killed. The commission does not condone the legitimization of such individuals as military targets and finds that the extrajudicial killings of such individuals constituted gross violations of human rights. The commission finds that, in the 1980's in particular, a number of gross violations were perpetrated not by direct members of the A.N.C. or those operating under its formal command, but by civilians who saw themselves as A.N.C. supporters. In this regard, the Commission finds that the A.N.C. is morally and politically accountable for creating a climate in which such supporters believed their actions to be legitimate and carried out within the broad parameters of a ``people's war'' as enunciated by the A.N.C. A.N.C. CAMPS The Commission finds that suspected ``agents'' were routinely subjected to torture and other forms of severe ill treatment and that there were cases of such individuals being charged and convicted by tribunals without proper regard to due process, sentenced to death and executed. WINNIE MADIKIZELA-MANDELA The Commission finds that Ms. Madikizela-Mandela was central to the establishment and formation of the Mandela United Football Club, which later developed into a private vigilante unit. It is the Commission's view that Ms. Madikizela-Mandela was aware of the criminal activity and the disquiet it caused in the community, but chose deliberately not to address the problems emanating from the football club. The Commission finds that those who opposed Ms. Madikizela-Mandela and the Mandela United Football Club, or dissented from them, were branded as informers and killed. The Commission finds that Ms. Madikizela-Mandela . . . is accountable, politically and morally for the gross violations of human rights committed by the Mandela United Football Club. The Commission finds further that Mrs. Madikizela-Mandela herself was responsible for committing such gross violations of human rights. . . . BUSINESS Business was central to the economy that sustained the South African state during the apartheid years. Certain businesses, especially the mining industry, were involved in helping design and implement apartheid policies. The white agriculture industry benefited from its privileged access to land. ||||| Facing a court challenge, the Truth and Reconciliation Commission said Wednesday that it would withhold, at least temporarily, the parts of its final report that implicate South Africa's last apartheid-era president, F.W. de Klerk, in illegal acts. De Klerk, 62, who helped negotiate the end of South Africa's white supremacist government and shared the 1993 Nobel Peace Prize with President Nelson Mandela for that work, had objected to a finding by the commission that he was ``an accessory after the fact'' in the bombings of the headquarters of a church group and of a labor federation in the 1980s. The chairman of the 17-member panel, Archbishop Desmond Tutu, said that although he took such action with ``great reluctance,'' the commission needed time to prepare to fight the legal challenge. He said it would take de Klerk's name out of 3,500-page report to avoid delaying its release Thursday. ``It upsets me deeply,'' he said in a statement. ``We have been scrupulously fair to de Klerk, and we reject the contention that we have been engaged in a vendetta against him.'' De Klerk's challenge was only part of the storm of criticism prompted by leaks about the report in the last few days. Within hours of the commission decision to withdraw its findings on de Klerk, it was facing the possibility of a new suit _ this time from the ruling African National Congress. The ANC also wants to block the commission findings about its conduct during the liberation struggle. A spokesman for the party, Thabo Masebe, said the party would seek an injunction in the morning before the report is officially handed over to Mandela. While the commission's report is expected to lay overwhelming blame on the former white government for atrocities, it has also found the ANC responsible for human-rights violations, including the torture and killing of spying suspects, bombings in civilian areas and the killing of political enemies, including members of the rival Zulu-based Inkhata Freedom Party. The decision on de Klerk seems certain to damage the commission's credibility. The panel, created as a way of putting South Africa's brutal past to rest without the expense and political divisiveness of trials, has caused controversy from the start. It has held more than 160 hearings throughout the country, listening to both victims and to perpetrators seeking amnesty. But many whites say the commission is on a witch hunt aiming to humiliate former government officials and Afrikaners in general. De Klerk has once before forced the commission officials to court and won an apology from them for calling him a liar. Some political analysts said Wednesday's events would only further the belief that the panel lacks impartiality. ``The withdrawal of the findings can't help but be seen as a lack of certainty on their side,'' said Sampie Terreblanche, an economist and political analyst at the University of Stellenbosch, who has supported the commission. ``Whether we like it or not, the whole report gets a knock from this.'' De Klerk's spokesman, David Steward, said the former president ``was very confident'' that he would win when the case goes to trial in March. ``He is very happy to be in the courts now rather than dealing with the Truth Commission,'' Steward said. ``The fact that they agreed to withdraw creates the definite impression that they specifically concocted a case to involve Mr. de Klerk in a negative finding.'' The ANC has accused the commission of trying to ``criminalize'' the liberation struggle. ``Whatever the efforts to besmirch our struggle by denouncing it as a gross violation of human rights,'' the congress said in a statement. ``The ANC and the millions of people who were part of this struggle will always be proud of what they did to insure that, in the process of the destruction of a vile system, they did not themselves resort to vile methods of struggle on the basis that the means justified the end.'' There are probably few subjects that get South Africans more excited than the issue of the Truth Commission and whether it is a worthy cause or a waste of money. The events of the last few days have only added to the debate. For some, like Pal Martins, 34, a former member of the ANC's armed wing, the fact all sides of the political spectrum are in an uproar is a good thing. ``The mere fact that everyone is complaining means that the Truth Commission has done its work,'' he said. But others say that too many questions are being raised about the panel's competence. ``The whole affair is beyond the pale, a mockery of justice,'' said Roboy Vonholdt, a 56-year-old sheep and ostrich farmer who believes that the commission has been a theatrical act. ``We should all turn our backs on the past and move forward. We need them and they need us. Let's all make money and let good economic conditions prevail.'' The commission's report is supposed to be a broad and detailed summary of South Africa's human rights history, from 1960 to 1994, when elections open to all races ended white minority rule. It will parcel out moral condemnations and recommend individual prosecutions. While de Klerk was alone in court Wednesday challenging the commission, Tutu said Wednesday that other threatened legal challenges had led to fewer individuals being named as rights violators than originally planned. Tutu said that more than 400 people had been notified that they would be implicated to give them a chance to respond. Some 15 successfully argued themselves out of the report or could not be reached and were therefore deleted from the report, he said. The commission is required by law to give advance notification to anyone it intends to implicate in its report. The commission had been expected to say that although de Klerk did not order the bombings, he subsequently came to know that former Law and Order Minister Adriaan Vlok and Police Commissioner Johan van der Merwe had been involved, but failed to report his knowledge to the police. This could open him up to a criminal prosecution. De Klerk has not applied for amnesty in this matter or any other. de Klerk has said that when he learned about the bombings, Vlok and Van der Merwe were already in the process of applying for amnesty, and he did not think it was necessary to report the matter. ||||| The institution exploring apartheid's horrors will issue a report that finds the African National Congress shares blame for human rights violations as it struggled to overcome white rule. The 3,500-page report by the Truth and Reconciliation Commission culminates more than two years of nationwide hearings. South African media released preliminary findings on Monday, three days before its official release on Thursday in Pretoria, the capital. The release of the document is a milestone in South Africa's transformation from white minority rule to democracy. The commission, which has the power to grant amnesty, was tasked with promoting reconciliation by laying bare the what and why of apartheid-era atrocities. With the ANC now in power and facing an election in mid-1999, a condemnation by the commission could prove damaging both to its electoral chances and moral standing. There has been no doubt that the report's overwhelming blame would be laid on white governments and their security forces during the years under scrutiny, 1960-1994. Indeed, news reports Monday said the Truth Commission would declare apartheid a crime against humanity and acknowledge that the ANC and the more radical Pan Africanist Congress were conducting a legitimate struggle against the former apartheid state. But in preliminary findings sent to the parties last month, the commission also said the two movements were ``morally and politically accountable'' for gross rights violations, South African Press Association and South African Broadcasting Corp. said. The preliminary finding said that despite ANC policy against killing civilians, the line between military and civilian targets had been blurred, SAPA said. It condemned the planting of landmines in rural areas, the execution of enemy agents, torture and mistreatment of ANC members in its exile camps and for killing political opponents. It said the party must accept responsibility for the activities of ANC Women's League president Winnie Madikizela-Mandela, Nelson Mandela's former wife, and her Mandela United Football Club, accused of killings, torture and kidnappings. The commission also said the PAC was guilty of the deaths of civilians in its strategy in 1993 to drive white farmers off their land so it could be reclaimed by blacks. Justice Minister Dullah Omar, meeting journalists in Pretoria, would not comment on the news reports about condemnation of the ANC. ``I do expect various responses (to the report). I do not expect everyone to agree. It will lead to healthy debate,'' he said. He said that if the commissioners recommends prosecutions against anyone for abuses, it will be up to the national director of prosecutions to decide whether to proceed. The director is appointed by the government. The commission's work is designed ``to help us establish the rule of law in South Africa, and to establish the principle of accountability,'' Omar said. The ANC already has prepared the ground for a negative finding, saying weeks ago that the commission had warned that harsh judgments were in the offing. The ANC was nervous enough about the report to request a meeting with commissioners earlier this month. The panel refused, to avoid appearing biased. On Monday, it rejected ``with contempt'' suggestions ANC officials themselves had leaked the findings. Constand Viljoen, leader of the tiny right-wing Freedom Front, said the ANC had done so to give the commission credibility by making it more even-handed. Publicly, the party has long defended its actions as those committed during a ``just war.'' F.W. de Klerk, the last apartheid-era president, meanwhile, planned to ask a court to prevent the Truth Commission report from implicating him in covering up state-sponsored terror. ``Obviously we will comply with the ruling of a court,'' Omar said, but added he would ``regret'' any court-ordered delay. ||||| The New York Times said in an editorial on Sunday, Nov. 1: The 3,500-page report of the South African Truth and Reconciliation Commission, released on Thursday, is the most comprehensive and unsparing examination of a nation's ugly past that any such commission has yet produced. Drawing from the commission's own investigations and the testimony of hundreds of applicants for amnesty and 20,000 victims, the report is a detailed look at the crimes of the apartheid era, and blames successive white governments for the vast majority. It has fulfilled its mandate of telling the fullest truth possible, which is one reason that every political party in South Africa has denounced it. Besides accusing the government of assassinations and bombings, the report criticizes the Inkatha Freedom Party for its massacres and collaboration with security forces, and blames the African National Congress for the murder of civilians and other crimes. It singles out former President P.W. Botha, Chief Mangosuthu Buthelezi, the Inkatha leader, and Winnie Mandela, among others, for detailed treatment of their roles in political crimes. One major flaw in the report is the absence of a section accusing F.W. de Klerk, the last apartheid president, of knowing about several bombings after the fact and keeping silent. It was excised because de Klerk is suing the commission. The ANC also sued, unsuccessfully, to stop publication. The lawsuits are a disappointing sign that South Africa's political parties are not interested in an honest look at their past, nor in the free flow of information. The controversy has added to widespread complaints that the commission has not helped the process of reconciliation. This is wrong. True reconciliation _ which occurs when a society is no longer paralyzed by the past and people can work and live together _ cannot be based on silence. No society can be restored to health by papering over as much pain as South Africans have suffered. A noisy and informed debate about complicity in the crimes of the apartheid era is necessary, if uncomfortable. The report is only part of the Truth Commission's contribution to the healing process. The hearings themselves, which allowed victims of human rights violations to tell their stories in public, helped the country heal and opened the eyes of many whites to the unpleasant truth about apartheid. The amnesty process, while permitting many important criminals to escape justice, is allowing families to know exactly what happened to their loved ones in dozens of cases that would likely have never gone to trial in South Africa's fragile judicial system. The process of helping the victims with scholarships and other necessary aid goes on, although it will not be enough. No commission can transform a society as twisted as South Africa's was. But the Truth Commission is the best effort the world has seen, and South Africa is the better for it. ||||| President Nelson Mandela acknowledged Saturday the African National Congress violated human rights during apartheid, setting him at odds with his deputy president over a report that has divided much of South Africa. The disagreement stems from Thursday's release of the report by the Truth and Reconciliation Commission on horrors committed during apartheid. Rather than act as a salve and an aid to reconciliation, the report has caused divisiveness, even among former comrades-in-arms who fought apartheid. As expected, the report called apartheid a ``crime against humanity.'' But it also blamed the ANC for gross human rights violations during its anti-apartheid struggle, saying the group tortured suspected spies and dissidents and killed innocent civilians with land mines and bombs. Some suspected traitors were killed in the ANC's camps abroad. Mbeki _ who became ANC president last year and will likely be elected South Africa's next president in 1999 when Mandela retires _ took a hard line Saturday against the report, and indicated all ANC members must do the same. ``No member, 5th graf, 1st Ld-Writethru

South Africa Truth and Reconciliation Commission's 3,500-page report on apartheid-era atrocities was issued on Oct 30. This report was intended to clear the air, grant amnesty to those who confessed, and begin the healing process. Those named for prosecution were warned before the release. Ex-prime minister de Klerk's name was removed. The ruling African National Congress remained. While the white government bore the brunt of the blame, several black movements were included. After the release many talked of a new amnesty period or a limited time to prosecute. Prosecutions could take 6 years; diverting judges, threatening elections, and slowing recovery.

China made trading in the euro official Monday, announcing authorization for the European common currency's use in trade and financial dealings starting Jan. 1. The expected announcement from the central People's Bank of China and the State Administration of Foreign Exchange, carried by the official Xinhua News Agency, also authorized the opening of euro accounts. ``Financial institutions, enterprises and individuals in China can accept and use the euro in economic, trade and financial exchanges with 11 members of the European Union effective January 1, 1999,'' Xinhua reported. ``In addition, they can convert, use and open the euro accounts,'' it said. Chinese officials have said the government may convert a proportion of its dlrs 145 billion worth of foreign exchange reserves into the euro after the currency's Jan. 1 debut. The 11 countries launching the common currency are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| The annual inflation rate in the 11 nations that adopt the euro as their shared currency on Jan. 1 fell to 0.9 percent in November, the European Union's statistics agency reported Wednesday. The fall continued the steady decline of inflation in the euro-zone over the past year. Annual inflation stood at 1 percent in October and 1.6 percent in November 1997, according to Eurostat's monthly report. In the 15 nation EU as a whole, inflation fell to 1 percent in November compared to 1.5 percent in the United States and 0.8 percent in Japan. Germany, France, Italy, Spain, the Netherlands, Belgium, Austria, Portugal, Finland, Ireland and Luxembourg are set to adopt the euro as a common currency at midnight on New Year's Eve. The latest figures may hint at trouble ahead for the euro-zone with significant increases over the year in Portugal and Ireland. With the European Central Bank setting a common interest rate for the whole bloc, some economists fear the low rate designed to boost core EU economies like France and Germany may bring overheating in smaller nations with faster growth. There was good news for Greece which was kept out of the euro-zone for failing to meet economic conditions for joining, including low inflation. It's rate was 3.9 percent in November down from 5 percent a year before. Greece hops to join the euro-zone in 2001. Denmark, Sweden and Britain decided to stay out of the euro for political reasons. Eurostat gave the following rates for November 1998, with November 1997 in brackets: Sweden, 0.1 (2.7); France, 0.2 (1.4); Germany, 0.6 (1.4); Austria, 0.5 (1.1); Luxembourg, 0.5 (1.5); Belgium, 0.6 (1.3 percent); Denmark, 1.1 (1.6); Netherlands, 1.5 (2.5); Finland, 0.9 (1.8); Britain, 1.4 (1.9); Spain, 1.4 (1.9); Italy, 1.7 (1.8); Portugal, 2.6 (1.9); Ireland, 2.2 (1.1); Greece, 3.9 (5). ||||| Palm Pilot in one hand, cellular phone in the other, Jean-Marc Routiers, 26, was juggling business calls halfway between London and Paris. When his phone went dead as the high-speed Eurostar train pulled into the underwater tunnel that links England to the Continent, the London-based French banker loosened his Italian silk tie and introduced himself. ``I definitely describe myself as a European,'' he said in the fluent English he perfected working at an Australian bank. ``I may get sentimental when they play the Marseillaise, but for all the practical things, I see myself as a citizen of Europe. I like the lifestyle in France, but I don't make my living there.'' The year 1999 is the official start-up date of the euro, the common European currency that will unite 11 countries monetarily. But throughout Europe, a different kind of integration has already taken root. Routiers, who was spending a day in Paris to meet with his bank's French clients, is at the vanguard of a new generation of Europeans who do not have to brace themselves for a shock in the new year. Mobile, fluent in several languages and aggressively non-nationalistic, they are already living the kind of borderless, cosmopolitan existence that the single European currency is supposed to advance. They do not share their parents' memories of World War II or their parents' sense of national identity. ``People worry when they hear talk of a common European defense policy because it suggests that at the end of the day, we have one government,'' said Kleon Papadopoulos, a Greek banker based in London. ``Countries are afraid to lose their sovereignty, but I don't see it as a bad thing. If a government is good, stable and efficient, who cares if it is based in Berlin or Athens?'' Papadopoulos, 36, who studied business in the United States and Britain, could serve as a model for the new Europeans. He works for a Swiss bank in London, speaks Greek, English and French, and in the past year has traveled, among other places, to Belgium, the United States, Cuba, Switzerland and Italy. Like hundreds of thousands of other Europeans, he chose London _ and its busy financial markets _ as the best place to work. He said he does not feel as if he lives in England. He lives in London, the clubhouse of financial Europe. And membership has its privileges. Papadopoulos lives in the fashionable Knightsbridge area, drives a Porsche he bought in Brussels, and works out at the fashionable gym of the Carleton Towers. ``I went to the London School of Economics in 1984, and the only other `foreigners' I met were from the Middle East,'' he says. ``Now friends and co-workers are Italian, French, Greek, Spanish, German, even Russian. You feel it everywhere. The streets are jammed with foreigners. Not tourists _ people who live and work here.'' Baby-boomers in Europe often describe themselves as the 1968 generation, weaned on the protest and social turmoil that convulsed European societies 30 years ago. Less dramatic but equally significant was a 1968 law guaranteeing freedom of movement within what were then the six countries of the Common Market. A Frenchman could work in Holland, an Italian could work in Germany without a permit. Back then some economists dourly predicted huge migrations, particularly of unskilled laborers moving from southern countries to the more prosperous north. Actually, as huge industries like steel shrank in the 1970s and '80s, so did the job opportunities for working-class Europeans. There are 15 countries within what is now the European Union, but only a small percentage of their citizens have moved to other countries, according to estimates prepared by Eurostat. Those who do mostly find jobs in the service industry as waiters, maids or garbage collectors. There are still legal barriers preventing most doctors, lawyers and academics from finding work in other countries. So far the European Union has been most profitably put to use by white-collar business executives who eagerly followed career opportunities across national borders, time zones and language barriers. Twenty-five years ago that kind of mobility was the preserve of a far smaller elite, the top executives of major companies or multinational corporations. Technology, from high-speed trains to the ever-evolving apparatus of business _ lap-top computers, cell phones, fax machines _ has made European mobility accessible to mid-level managers, young entrepreneurs and even students. Cable television, which allows Germans to watch Italian game shows or Swedes to watch French news programs, has spread the Zeitgeist to the masses. This year Superga, an Italian brand of sports clothes and shoes, opened a major advertising campaign with a series of magazine ads that show fashionable young people saucily cavorting with European leaders _ a leggy young woman pushes her bicycle up the steps of the Elysee Palace to greet President Jacques Chirac, a young man playfully sticks his tongue out the window of the plane of the former German chancellor, Helmut Kohl. ``This kind of ad would not have been possible five or 10 years ago,'' said Aldo Cernuto, executive creative director of the Milan office of Pirella Gottsche Lowe, an international advertising agency. ``Now European unification is on the TV all the time; it has seeped into people's unconscious. Even people who do not care about politics recognize the faces of a Tony Blair or Jacques Chirac. Ten years ago, very few people did.'' According to the European Union, Britain has twice as many EU citizens as France, but it is not the country with the highest concentration of residents from other European countries. According to estimates based on surveys prepared by Eurostat, nearly a third of the residents of tiny Luxembourg, which has low unemployment and a high standard of living, are from other European countries. Belgium, which has the European Commission and NATO headquarters, is second, with 5.4 percent. Paradoxically, perhaps, Britain, the one major European nation that has held off from joining the euro, is widely viewed as the nerve center of the new cosmopolitanism, headquarters for the New Europeans _ bankers and business executives drawn by London's financial district, a more flexible bureaucracy and the universality of the English language. Perhaps just as surprisingly, London also serves as an example of another less obvious aspect of European cosmopolitanism _ the breakdown of certain social barriers. Studying abroad was once a privilege reserved to the sons and daughters of Europe's elite. Now the European Union has a 12-year-old scholarship program, called Socrates-Erasmus, that this year allowed 200,000 European university students _ 5 percent of the EU's entire university population _ to study in other countries within the Union for up to a year, free. In the last 20 years, business schools in Europe have multiplied, and most offer U.S.-style MBA programs that teach an American approach to business. This too has allowed a measure of meritocracy to creep into European business. ``Juergen Schrempp, the head of Daimler, started as a car mechanic,'' noted Stephen Szabo, a professor of European Affairs at the Johns Hopkins University School for International Studies in Washington. ``That would have been unthinkable in Germany 20 years ago.'' Social mobility, moreover, is fueled by movement. When people transfer to another country, they find it easier to shed the psychological or cultural trappings of home. ``I could never have the kind of job I have had I stayed in Paris,'' Routier explained. ``France is still very hierarchical. Bosses want to know where you went to school, what your father does. In London, none of that matters as long as you make money.'' Many Britons still view their country as weighed down by heavy class distinctions. For example, Tony Smith, 36, editor of several Portuguese magazines in Lisbon, seized an opportunity to study in Vienna 14 years ago, and never looked back. He has lived all over Europe, and is fluent in Portuguese, Spanish, German, French and Serbo-Croatian. His father, a car mechanic, had not traveled out of Britain until 1992. Smith said he could never have succeeded as well had he stayed home. ``I didn't go to public schools or Oxbridge,'' he explained. ``I'm not saying its impossible, but it would have been much more difficult in England.'' Yet Continental Europeans who flock to London find themselves bypassing English society and joining a cosmopolitan world where birth and breeding do not matter as much. Ildiko Iliffe, 30, chose to work in London to escape the sexism she encountered on the Continent. Mrs. Iliffe, who is Hungarian, speaks fluent English, German, French and Italian, and met her Canadian husband, Roger Iliffe, 30, while both were attending the University of Bocconi business school in Milan in 1995. Like his wife, Iliffe speaks four languages and has lived and traveled all over the world. She works on the Eastern European desk of a British bank; he works for a major international consulting firm. Originally they planned to work in Italy, but Mrs. Iliffe said the prevailing attitude towards working women there made it impossible for her to find as good a job. ``I went to job interviews at Italian banks and they only asked me about my husband's job,'' she said with a grimace. ``And they made it clear that they were afraid I would get pregnant and ask for maternity leave.'' Philippe Haspeslagh, 48, a professor at Insead, the prestigious international business school in Fontainebleau, outside Paris, called Mrs. Iliffe's choices cherry-picking _ choosing the best deal for herself. As he put it, ``If they cannot find what they want in one country, they can pick up and seek it elsewhere.'' Twenty-five years ago, Haspeslagh was a pioneer when he did the same thing. A Belgian who studied business at Harvard, he lives and teaches in France and does consulting work all over Europe, from Sweden to the Czech Republic. The message on his cell phone is in three languages _ French, Flemish and English. His students, a generation behind him, see nothing exceptional in his transnationalism. These Europeans form an advance guard that is still relatively small in numbers, but experts say they carry a disproportionate influence on their societies. ``In Germany, for example, it is the business people who are pushing ahead with change and pulling politicians along behind them kicking and screaming,'' Szabo said. ``They are looking at a larger market and feel the competitive pressures of globalization. Politicians are responding to a domestic constituency. They are answering to an international one.'' ||||| In a surprise move, nations adopting the new European currency, the euro, dropped key interest rates Thursday, effectively setting the rate that will be adopted throughout the euro zone on Jan. 1. Ten of the 11 countries adopting the euro dropped their interest rate to 3 percent. Italy dropped to 3.5 percent from 4 percent. The coordinated move was a key step in preparing for economic union. Setting a common interest rates had been a particularly contentious issue as center-left governments in Germany and France pressed for lower rates to help boost growth and cut unemployment, a stubborn 10.9 percent in the euro zone. European Central Bank chief, Wim Duisenberg, gave no hint of the rate cuts during a speech in Brussels earlier Thursday, instead suggesting that governments should reform rigid labor markets to create jobs. In Germany, the biggest economy in the future euro-zone, central bankers cut the key interest rate to 3 percent from 3.3 percent. Rates before the cuts had varied throughout the future currency zone, from 3.69 percent in Ireland to 3.2 percent in Austria. The European Central Bank said in a statement from its Frankfurt headquarters that the move was decided during a meeting Tuesday of its the policy-making governing council. The governing council comprises the 11 heads of national central banks plus a six-member directorate, including the bank president Duisenberg. ``The joint reduction in interest rates has to be seen as a de facto decision on the level of interest rates with which the (bank) will start ... monetary union,'' the statement said, adding the 3-percent rate would be maintained ``for the foreseeable future.'' In Germany, central bank president Hans Tietmeyer said the move reflected the worsening outlook for European economies, and wasn't a capitulation to political pressure Finance Minister Oskar Lafontaine. ``It's not a dramatic step. It wasn't in response to political pressure,'' Tietmeyer said, referring to Germany's cut. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' he said. But Tietmeyer, head of the bank on which the ECB is modeled, promised that the rate cut does not signal the start of a volatile monetary policy. ``It's not a shift from the Bundesbank's steady-hand policy,'' he said. Growth in Europe has been hit by the Asian and Russian economic crises and turbulence on international financial markets. Duisenberg has said growth in the euro area countries next year will be about 2.5 percent, lower than the 3 percent predicted earlier. ||||| In his most candid remarks yet on the economy, European Central Bank President Wim Duisenberg said Friday that growth appears to be slowing in the 11 countries adopting the EU common currency _ or euro _ on Jan. 1. Despite an area-wide survey that suggested ``a moderation in the pace of growth,'' Duisenberg said domestic demand will continue to boost the economy. He pointed also to a gradual improvement in labor market conditions as supporting growth, as well as interest-rate cuts toward the 3.3 percent level of the euro-zone's lowest rate countries. Duisenberg, who spoke at an event in London, said the Dec. 1 and Dec. 22 meetings of the Central Bank's policy-making body will gauge the outlook for inflation and the EU economy. The bank, which will set monetary policy for the currency bloc, has been under pressure from politicians to keep interest rates low to help boost growth and create jobs. While inflation is at its lowest levels in decades _ just 1 percent in the euro-zone _ unemployment in the 11 nations remains stubbornly high at 10.9 percent. ||||| Europe's dream of monetary union becomes reality Thursday when 11 nations irrevocably lock their currencies together to form the euro and create an economic giant whose boundaries stretch from beyond the Arctic Circle to the shores of the Mediterranean. The euro's birth is being hailed as a historic turning point in international finance and is arguably the greatest single step in the drive to create a united Europe from the ruins of World War II. ``This Dec. 31, 1998, will be one of the great dates in the history of the 20th century,'' French Finance Minister Dominique Strauss-Kahn, told France Info radio. ``It's the beginning of a new era.'' On what Europeans are calling ``E-day,'' economic and finance ministers from the 11 nations will huddle at European Union headquarters to agree to the rates at which German marks, Italian lire and the rest are absorbed into euro. Strauss-Kahn said the euro would likely be worth 6.56 to 6.57 French francs. ||||| Wim Duisenberg, the head of the new European Central Bank, said in an interview published Wednesday that he won't step down after completing half his term as earlier agreed. ``I had hoped you wouldn't ask me that question. The answer is no,'' Duisenberg told the Le Monde daily, which had asked him if he would step down after four years on the job. Duisenberg was named this spring as head of the new European Central Bank, which will govern the policies of the euro, the new single currency which goes into effect Jan. 1. France surprised its euro partners by proposing its central banker, Jean-Claude Trichet, at the last minute for the job Duisenberg was expected to secure easily. Although he was elected easily, Duisenberg agreed to step down after four years of his eight year term although he has since said no such ``gentleman's agreement'' exists. Duisenberg told Le Monde, a newspaper that fervently has backed the euro, that the the introduction of the new currency is the most ``significant'' step so far toward European unification. However, he said that he would like to see further political integration, especially in the area of foreign tax and social policies. ||||| Making their first collective decision about monetary policy, the 11 European nations launching a common currency on Jan. 1 cut interest rates Thursday in a surprise move that won market confidence. Ten of the 11 countries joining European economic union dropped their key interest rate to 3 percent, with Portugal making the most significant plunge, from 3.75 percent. Austria made the smallest cut, from 3.2 percent. The exception was Italy, which cut from 4 to 3.5 percent. It is expected to drop to the common rate by the time the euro is launched. Unifying the interest rate is a critical step in laying the groundwork for monetary union, and analysts generally expected rates to settle at around the level of Germany's, 3.3 percent before the cut, now 3 percent. However, interest rate levels had become a contentious political issue with center-left governments in Germany and France pushing for rate cuts to help spur growth and combat unemployment, stuck at 10.9 percent in the nations adopting the euro. The head of the European Central Bank that will set monetary policy for the euro nations, Wim Duisenberg, again on Thursday suggested governments should reform rigid labor markets to create jobs, and not pressure him to cut rates. The remarks in Brussels _ before the cuts were made _ gave no hint that a rate drop was imminent, but made clear his resistance to political pressure was as strong as ever. So strong, in fact, that Dutch Finance Minister Gerrit Zalm said he had feared the bank would delay the decision. ``What had been feared was that, in order to prove its independence, the ECB would go against its own analysis and would wait longer, which would have been nonsensical,'' Zalm said. Hans Tietmeyer, who runs the German Bundesbank on which the ECB is modeled, hinted the rate cut was designed to boost confidence in the new currency, dampened by global economic crises and Europe's worsening outlook. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' Tietmeyer said. The cuts seemed to have the desired impact. Frankfurt's main index closed up 2.1 percent, while France's was up 1.8 percent. The cuts also boosted markets in Spain, Belgium, Italy and even Britain, which is not among the nations launching the euro. ``The reaction is, `Oh good, they're doing a little bit to prop up the euro economy.' But confidence has taken quite a hit across Europe recently, and I think further action from the ECB will be needed next year, maybe down to 2.5 percent,'' James Mitchell, senior London-based strategist with Nomura. An economist at the Banque Bruxelles Lambert, Liesbeth Van de Craen, said the cuts were timely. ``We are clearly headed for a slowdown,'' she said. Until recently, Europe's economies had held out relatively well against damage from Asia and Russia's economic crises and unstable financial markets. But just two days ago, Duisenberg painted the bleakest picture yet of Europe's economies, warning growth will likely slow to 2.5 percent next year from earlier expectations of 3 percent. The rate cuts may help. By making it cheaper to borrow money, rate cuts can lead to more investment and new businesses, making it less worthwhile to save and inducing people to spend. That expands the economy. The 11 countries launching the euro are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| Struggling to avoid being sidelined in the Continent-wide equities market promised by Europe's soon-to-be-introduced single currency, French authorities said Thursday that the Paris stock exchange would join an alliance between London and Frankfurt that is seen as the precursor of a pan-European market. The Bourse in Paris also announced that it would play host to a meeting Nov. 27 of nine other European exchanges to discuss ``the steps and conditions needed to create a unifying and competitive pan-European equity market.'' The two announcements show how the introduction of the currency, the euro, is reshaping Europe's financial landscape, requiring Europeans to think in Continental rather than national terms in finance and business. And it suggested that exchange authorities in Paris, ruffled by the announcement in July of a ``strategic alliance'' between the London Stock Exchange and the Deutsche Borse in Frankfurt, had not only abandoned an effort to set up a rival market but were also seeking to gain the initiative by organizing the Nov. 27 gathering. Some doubt remained, however, about the timing and technicalities of the French entry into the alliance. Foreign Minister Dominique Strauss-Kahn said, ``Paris is joining this alliance with the creation from January 1999 of a joint company.'' However, officials in London and Frankfurt _ who welcomed the idea in principle _ declined to say whether the timing and the arrangements were as far advanced as Strauss-Kahn implied. ``I'm afraid I can't confirm anything like that,'' a spokeswoman at the London Stock Exchange said. ``The appearances are well ahead of the reality at this point,'' said an American banker, who spoke on the condition of anonymity. Not only that, the notion of a Europe-wide exchange raises technical questions about the compatibility not just of trading systems but also of the regulations governing stock market operations in the countries that will use the euro beginning in January. That has led some analysts to forecast that a pan-European exchange could not be up and running before 2000. ``There are an awful lot of issues to be resolved,'' the American banker said. The euro is to be introduced for electronic trading of equities, bonds and futures and for intergovernmental transfers. Notes and coins _ the pocket money that shoppers and travelers will carry _ will be introduced only in 2002. Initially, the currency will group 11 European nations in a euro zone, leaving Britain, Denmark, Sweden and Greece on the outside. With its concentration of banking and trading, however, London is expected to continue as the main market center. The prospect has heightened pressure for consolidation among exchanges. Stock market officials in Milan, Madrid, Amsterdam and Brussels have indicated they would be interested in joining the London-Frankfurt alliance, which will initially create a single point of liquidity for trading in British and German blue-chip issues. The London exchange estimates that a pan-European stock exchange would group together companies with a market capitalization of $5.5 trillion, compared with $8.7 trillion on the New York Stock Exchange. The Paris Bourse, the third largest of the European exchanges and the last major holdout toward a pan-European market, said that it had also invited officials from exchanges in Zurich and Stockholm to attend the Nov. 27 meeting. A spokeswoman said officials from the London Stock Exchange would be at the meeting. Also Thursday, the New York Mercantile Exchange and the International Petroleum Exchange here acknowledged that they were considering a merger that would bring together the two biggest energy futures markets. Discussions began in July, and the exchanges have formed a working group to study a merger. They already cooperate in the development of a system intended to coordinate after-hours electronic trading. ||||| Two days before the new euro currency goes into effect for 11 European Union members, a growing number of Danes believe their country should take part, according to a poll published Tuesday. The survey by the Megaphone polling institute said 54 percent of the 1,009 people surveyed favor Denmark's participation, while 36 percent oppose that. The remaining 10 percent were undecided. The poll, conducted Dec. 18-22, was broadcast by TV2 channel. Denmark is one of four EU countries staying out of the monetary union for the time being. After voters in 1992 rejected the Maastricht treaty that established the system, Denmark won opt-out clauses. The treaty then was approved. Danish voters traditionally have been lukewarm supporters of the EU. Although many politicians support the unified currency, they have been wary about bringing the issue to voters again. A poll published last October showed 46 percent of Danes favored the single currency, while 44 percent were opposed. It would take another national referendum for Denmark to adopt the new currency. The government has said it has no plans to hold a referendum before the year 2001.

Eleven countries were to adopt a common European currency, the euro, on Dec. 31, 1998. In November and December there were various reactions. France made moves toward a pan-European equity market. Ten of the countries quickly cut interest rates causing fear of overheating in some economies. In Denmark, which had earlier rejected the euro, a majority was now in favor. And in faraway China, the euro was permitted in financial exchanges. Whatever the outcome, the euro's birthday, Dec. 31, 1998, would be an historical date. Some saw it as a step towards political union while others already considered themselves as citizens of Europe.

China made trading in the euro official Monday, announcing authorization for the European common currency's use in trade and financial dealings starting Jan. 1. The expected announcement from the central People's Bank of China and the State Administration of Foreign Exchange, carried by the official Xinhua News Agency, also authorized the opening of euro accounts. ``Financial institutions, enterprises and individuals in China can accept and use the euro in economic, trade and financial exchanges with 11 members of the European Union effective January 1, 1999,'' Xinhua reported. ``In addition, they can convert, use and open the euro accounts,'' it said. Chinese officials have said the government may convert a proportion of its dlrs 145 billion worth of foreign exchange reserves into the euro after the currency's Jan. 1 debut. The 11 countries launching the common currency are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| The annual inflation rate in the 11 nations that adopt the euro as their shared currency on Jan. 1 fell to 0.9 percent in November, the European Union's statistics agency reported Wednesday. The fall continued the steady decline of inflation in the euro-zone over the past year. Annual inflation stood at 1 percent in October and 1.6 percent in November 1997, according to Eurostat's monthly report. In the 15 nation EU as a whole, inflation fell to 1 percent in November compared to 1.5 percent in the United States and 0.8 percent in Japan. Germany, France, Italy, Spain, the Netherlands, Belgium, Austria, Portugal, Finland, Ireland and Luxembourg are set to adopt the euro as a common currency at midnight on New Year's Eve. The latest figures may hint at trouble ahead for the euro-zone with significant increases over the year in Portugal and Ireland. With the European Central Bank setting a common interest rate for the whole bloc, some economists fear the low rate designed to boost core EU economies like France and Germany may bring overheating in smaller nations with faster growth. There was good news for Greece which was kept out of the euro-zone for failing to meet economic conditions for joining, including low inflation. It's rate was 3.9 percent in November down from 5 percent a year before. Greece hops to join the euro-zone in 2001. Denmark, Sweden and Britain decided to stay out of the euro for political reasons. Eurostat gave the following rates for November 1998, with November 1997 in brackets: Sweden, 0.1 (2.7); France, 0.2 (1.4); Germany, 0.6 (1.4); Austria, 0.5 (1.1); Luxembourg, 0.5 (1.5); Belgium, 0.6 (1.3 percent); Denmark, 1.1 (1.6); Netherlands, 1.5 (2.5); Finland, 0.9 (1.8); Britain, 1.4 (1.9); Spain, 1.4 (1.9); Italy, 1.7 (1.8); Portugal, 2.6 (1.9); Ireland, 2.2 (1.1); Greece, 3.9 (5). ||||| Palm Pilot in one hand, cellular phone in the other, Jean-Marc Routiers, 26, was juggling business calls halfway between London and Paris. When his phone went dead as the high-speed Eurostar train pulled into the underwater tunnel that links England to the Continent, the London-based French banker loosened his Italian silk tie and introduced himself. ``I definitely describe myself as a European,'' he said in the fluent English he perfected working at an Australian bank. ``I may get sentimental when they play the Marseillaise, but for all the practical things, I see myself as a citizen of Europe. I like the lifestyle in France, but I don't make my living there.'' The year 1999 is the official start-up date of the euro, the common European currency that will unite 11 countries monetarily. But throughout Europe, a different kind of integration has already taken root. Routiers, who was spending a day in Paris to meet with his bank's French clients, is at the vanguard of a new generation of Europeans who do not have to brace themselves for a shock in the new year. Mobile, fluent in several languages and aggressively non-nationalistic, they are already living the kind of borderless, cosmopolitan existence that the single European currency is supposed to advance. They do not share their parents' memories of World War II or their parents' sense of national identity. ``People worry when they hear talk of a common European defense policy because it suggests that at the end of the day, we have one government,'' said Kleon Papadopoulos, a Greek banker based in London. ``Countries are afraid to lose their sovereignty, but I don't see it as a bad thing. If a government is good, stable and efficient, who cares if it is based in Berlin or Athens?'' Papadopoulos, 36, who studied business in the United States and Britain, could serve as a model for the new Europeans. He works for a Swiss bank in London, speaks Greek, English and French, and in the past year has traveled, among other places, to Belgium, the United States, Cuba, Switzerland and Italy. Like hundreds of thousands of other Europeans, he chose London _ and its busy financial markets _ as the best place to work. He said he does not feel as if he lives in England. He lives in London, the clubhouse of financial Europe. And membership has its privileges. Papadopoulos lives in the fashionable Knightsbridge area, drives a Porsche he bought in Brussels, and works out at the fashionable gym of the Carleton Towers. ``I went to the London School of Economics in 1984, and the only other `foreigners' I met were from the Middle East,'' he says. ``Now friends and co-workers are Italian, French, Greek, Spanish, German, even Russian. You feel it everywhere. The streets are jammed with foreigners. Not tourists _ people who live and work here.'' Baby-boomers in Europe often describe themselves as the 1968 generation, weaned on the protest and social turmoil that convulsed European societies 30 years ago. Less dramatic but equally significant was a 1968 law guaranteeing freedom of movement within what were then the six countries of the Common Market. A Frenchman could work in Holland, an Italian could work in Germany without a permit. Back then some economists dourly predicted huge migrations, particularly of unskilled laborers moving from southern countries to the more prosperous north. Actually, as huge industries like steel shrank in the 1970s and '80s, so did the job opportunities for working-class Europeans. There are 15 countries within what is now the European Union, but only a small percentage of their citizens have moved to other countries, according to estimates prepared by Eurostat. Those who do mostly find jobs in the service industry as waiters, maids or garbage collectors. There are still legal barriers preventing most doctors, lawyers and academics from finding work in other countries. So far the European Union has been most profitably put to use by white-collar business executives who eagerly followed career opportunities across national borders, time zones and language barriers. Twenty-five years ago that kind of mobility was the preserve of a far smaller elite, the top executives of major companies or multinational corporations. Technology, from high-speed trains to the ever-evolving apparatus of business _ lap-top computers, cell phones, fax machines _ has made European mobility accessible to mid-level managers, young entrepreneurs and even students. Cable television, which allows Germans to watch Italian game shows or Swedes to watch French news programs, has spread the Zeitgeist to the masses. This year Superga, an Italian brand of sports clothes and shoes, opened a major advertising campaign with a series of magazine ads that show fashionable young people saucily cavorting with European leaders _ a leggy young woman pushes her bicycle up the steps of the Elysee Palace to greet President Jacques Chirac, a young man playfully sticks his tongue out the window of the plane of the former German chancellor, Helmut Kohl. ``This kind of ad would not have been possible five or 10 years ago,'' said Aldo Cernuto, executive creative director of the Milan office of Pirella Gottsche Lowe, an international advertising agency. ``Now European unification is on the TV all the time; it has seeped into people's unconscious. Even people who do not care about politics recognize the faces of a Tony Blair or Jacques Chirac. Ten years ago, very few people did.'' According to the European Union, Britain has twice as many EU citizens as France, but it is not the country with the highest concentration of residents from other European countries. According to estimates based on surveys prepared by Eurostat, nearly a third of the residents of tiny Luxembourg, which has low unemployment and a high standard of living, are from other European countries. Belgium, which has the European Commission and NATO headquarters, is second, with 5.4 percent. Paradoxically, perhaps, Britain, the one major European nation that has held off from joining the euro, is widely viewed as the nerve center of the new cosmopolitanism, headquarters for the New Europeans _ bankers and business executives drawn by London's financial district, a more flexible bureaucracy and the universality of the English language. Perhaps just as surprisingly, London also serves as an example of another less obvious aspect of European cosmopolitanism _ the breakdown of certain social barriers. Studying abroad was once a privilege reserved to the sons and daughters of Europe's elite. Now the European Union has a 12-year-old scholarship program, called Socrates-Erasmus, that this year allowed 200,000 European university students _ 5 percent of the EU's entire university population _ to study in other countries within the Union for up to a year, free. In the last 20 years, business schools in Europe have multiplied, and most offer U.S.-style MBA programs that teach an American approach to business. This too has allowed a measure of meritocracy to creep into European business. ``Juergen Schrempp, the head of Daimler, started as a car mechanic,'' noted Stephen Szabo, a professor of European Affairs at the Johns Hopkins University School for International Studies in Washington. ``That would have been unthinkable in Germany 20 years ago.'' Social mobility, moreover, is fueled by movement. When people transfer to another country, they find it easier to shed the psychological or cultural trappings of home. ``I could never have the kind of job I have had I stayed in Paris,'' Routier explained. ``France is still very hierarchical. Bosses want to know where you went to school, what your father does. In London, none of that matters as long as you make money.'' Many Britons still view their country as weighed down by heavy class distinctions. For example, Tony Smith, 36, editor of several Portuguese magazines in Lisbon, seized an opportunity to study in Vienna 14 years ago, and never looked back. He has lived all over Europe, and is fluent in Portuguese, Spanish, German, French and Serbo-Croatian. His father, a car mechanic, had not traveled out of Britain until 1992. Smith said he could never have succeeded as well had he stayed home. ``I didn't go to public schools or Oxbridge,'' he explained. ``I'm not saying its impossible, but it would have been much more difficult in England.'' Yet Continental Europeans who flock to London find themselves bypassing English society and joining a cosmopolitan world where birth and breeding do not matter as much. Ildiko Iliffe, 30, chose to work in London to escape the sexism she encountered on the Continent. Mrs. Iliffe, who is Hungarian, speaks fluent English, German, French and Italian, and met her Canadian husband, Roger Iliffe, 30, while both were attending the University of Bocconi business school in Milan in 1995. Like his wife, Iliffe speaks four languages and has lived and traveled all over the world. She works on the Eastern European desk of a British bank; he works for a major international consulting firm. Originally they planned to work in Italy, but Mrs. Iliffe said the prevailing attitude towards working women there made it impossible for her to find as good a job. ``I went to job interviews at Italian banks and they only asked me about my husband's job,'' she said with a grimace. ``And they made it clear that they were afraid I would get pregnant and ask for maternity leave.'' Philippe Haspeslagh, 48, a professor at Insead, the prestigious international business school in Fontainebleau, outside Paris, called Mrs. Iliffe's choices cherry-picking _ choosing the best deal for herself. As he put it, ``If they cannot find what they want in one country, they can pick up and seek it elsewhere.'' Twenty-five years ago, Haspeslagh was a pioneer when he did the same thing. A Belgian who studied business at Harvard, he lives and teaches in France and does consulting work all over Europe, from Sweden to the Czech Republic. The message on his cell phone is in three languages _ French, Flemish and English. His students, a generation behind him, see nothing exceptional in his transnationalism. These Europeans form an advance guard that is still relatively small in numbers, but experts say they carry a disproportionate influence on their societies. ``In Germany, for example, it is the business people who are pushing ahead with change and pulling politicians along behind them kicking and screaming,'' Szabo said. ``They are looking at a larger market and feel the competitive pressures of globalization. Politicians are responding to a domestic constituency. They are answering to an international one.'' ||||| In a surprise move, nations adopting the new European currency, the euro, dropped key interest rates Thursday, effectively setting the rate that will be adopted throughout the euro zone on Jan. 1. Ten of the 11 countries adopting the euro dropped their interest rate to 3 percent. Italy dropped to 3.5 percent from 4 percent. The coordinated move was a key step in preparing for economic union. Setting a common interest rates had been a particularly contentious issue as center-left governments in Germany and France pressed for lower rates to help boost growth and cut unemployment, a stubborn 10.9 percent in the euro zone. European Central Bank chief, Wim Duisenberg, gave no hint of the rate cuts during a speech in Brussels earlier Thursday, instead suggesting that governments should reform rigid labor markets to create jobs. In Germany, the biggest economy in the future euro-zone, central bankers cut the key interest rate to 3 percent from 3.3 percent. Rates before the cuts had varied throughout the future currency zone, from 3.69 percent in Ireland to 3.2 percent in Austria. The European Central Bank said in a statement from its Frankfurt headquarters that the move was decided during a meeting Tuesday of its the policy-making governing council. The governing council comprises the 11 heads of national central banks plus a six-member directorate, including the bank president Duisenberg. ``The joint reduction in interest rates has to be seen as a de facto decision on the level of interest rates with which the (bank) will start ... monetary union,'' the statement said, adding the 3-percent rate would be maintained ``for the foreseeable future.'' In Germany, central bank president Hans Tietmeyer said the move reflected the worsening outlook for European economies, and wasn't a capitulation to political pressure Finance Minister Oskar Lafontaine. ``It's not a dramatic step. It wasn't in response to political pressure,'' Tietmeyer said, referring to Germany's cut. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' he said. But Tietmeyer, head of the bank on which the ECB is modeled, promised that the rate cut does not signal the start of a volatile monetary policy. ``It's not a shift from the Bundesbank's steady-hand policy,'' he said. Growth in Europe has been hit by the Asian and Russian economic crises and turbulence on international financial markets. Duisenberg has said growth in the euro area countries next year will be about 2.5 percent, lower than the 3 percent predicted earlier. ||||| In his most candid remarks yet on the economy, European Central Bank President Wim Duisenberg said Friday that growth appears to be slowing in the 11 countries adopting the EU common currency _ or euro _ on Jan. 1. Despite an area-wide survey that suggested ``a moderation in the pace of growth,'' Duisenberg said domestic demand will continue to boost the economy. He pointed also to a gradual improvement in labor market conditions as supporting growth, as well as interest-rate cuts toward the 3.3 percent level of the euro-zone's lowest rate countries. Duisenberg, who spoke at an event in London, said the Dec. 1 and Dec. 22 meetings of the Central Bank's policy-making body will gauge the outlook for inflation and the EU economy. The bank, which will set monetary policy for the currency bloc, has been under pressure from politicians to keep interest rates low to help boost growth and create jobs. While inflation is at its lowest levels in decades _ just 1 percent in the euro-zone _ unemployment in the 11 nations remains stubbornly high at 10.9 percent. ||||| Europe's dream of monetary union becomes reality Thursday when 11 nations irrevocably lock their currencies together to form the euro and create an economic giant whose boundaries stretch from beyond the Arctic Circle to the shores of the Mediterranean. The euro's birth is being hailed as a historic turning point in international finance and is arguably the greatest single step in the drive to create a united Europe from the ruins of World War II. ``This Dec. 31, 1998, will be one of the great dates in the history of the 20th century,'' French Finance Minister Dominique Strauss-Kahn, told France Info radio. ``It's the beginning of a new era.'' On what Europeans are calling ``E-day,'' economic and finance ministers from the 11 nations will huddle at European Union headquarters to agree to the rates at which German marks, Italian lire and the rest are absorbed into euro. Strauss-Kahn said the euro would likely be worth 6.56 to 6.57 French francs. ||||| Wim Duisenberg, the head of the new European Central Bank, said in an interview published Wednesday that he won't step down after completing half his term as earlier agreed. ``I had hoped you wouldn't ask me that question. The answer is no,'' Duisenberg told the Le Monde daily, which had asked him if he would step down after four years on the job. Duisenberg was named this spring as head of the new European Central Bank, which will govern the policies of the euro, the new single currency which goes into effect Jan. 1. France surprised its euro partners by proposing its central banker, Jean-Claude Trichet, at the last minute for the job Duisenberg was expected to secure easily. Although he was elected easily, Duisenberg agreed to step down after four years of his eight year term although he has since said no such ``gentleman's agreement'' exists. Duisenberg told Le Monde, a newspaper that fervently has backed the euro, that the the introduction of the new currency is the most ``significant'' step so far toward European unification. However, he said that he would like to see further political integration, especially in the area of foreign tax and social policies. ||||| Making their first collective decision about monetary policy, the 11 European nations launching a common currency on Jan. 1 cut interest rates Thursday in a surprise move that won market confidence. Ten of the 11 countries joining European economic union dropped their key interest rate to 3 percent, with Portugal making the most significant plunge, from 3.75 percent. Austria made the smallest cut, from 3.2 percent. The exception was Italy, which cut from 4 to 3.5 percent. It is expected to drop to the common rate by the time the euro is launched. Unifying the interest rate is a critical step in laying the groundwork for monetary union, and analysts generally expected rates to settle at around the level of Germany's, 3.3 percent before the cut, now 3 percent. However, interest rate levels had become a contentious political issue with center-left governments in Germany and France pushing for rate cuts to help spur growth and combat unemployment, stuck at 10.9 percent in the nations adopting the euro. The head of the European Central Bank that will set monetary policy for the euro nations, Wim Duisenberg, again on Thursday suggested governments should reform rigid labor markets to create jobs, and not pressure him to cut rates. The remarks in Brussels _ before the cuts were made _ gave no hint that a rate drop was imminent, but made clear his resistance to political pressure was as strong as ever. So strong, in fact, that Dutch Finance Minister Gerrit Zalm said he had feared the bank would delay the decision. ``What had been feared was that, in order to prove its independence, the ECB would go against its own analysis and would wait longer, which would have been nonsensical,'' Zalm said. Hans Tietmeyer, who runs the German Bundesbank on which the ECB is modeled, hinted the rate cut was designed to boost confidence in the new currency, dampened by global economic crises and Europe's worsening outlook. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' Tietmeyer said. The cuts seemed to have the desired impact. Frankfurt's main index closed up 2.1 percent, while France's was up 1.8 percent. The cuts also boosted markets in Spain, Belgium, Italy and even Britain, which is not among the nations launching the euro. ``The reaction is, `Oh good, they're doing a little bit to prop up the euro economy.' But confidence has taken quite a hit across Europe recently, and I think further action from the ECB will be needed next year, maybe down to 2.5 percent,'' James Mitchell, senior London-based strategist with Nomura. An economist at the Banque Bruxelles Lambert, Liesbeth Van de Craen, said the cuts were timely. ``We are clearly headed for a slowdown,'' she said. Until recently, Europe's economies had held out relatively well against damage from Asia and Russia's economic crises and unstable financial markets. But just two days ago, Duisenberg painted the bleakest picture yet of Europe's economies, warning growth will likely slow to 2.5 percent next year from earlier expectations of 3 percent. The rate cuts may help. By making it cheaper to borrow money, rate cuts can lead to more investment and new businesses, making it less worthwhile to save and inducing people to spend. That expands the economy. The 11 countries launching the euro are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| Struggling to avoid being sidelined in the Continent-wide equities market promised by Europe's soon-to-be-introduced single currency, French authorities said Thursday that the Paris stock exchange would join an alliance between London and Frankfurt that is seen as the precursor of a pan-European market. The Bourse in Paris also announced that it would play host to a meeting Nov. 27 of nine other European exchanges to discuss ``the steps and conditions needed to create a unifying and competitive pan-European equity market.'' The two announcements show how the introduction of the currency, the euro, is reshaping Europe's financial landscape, requiring Europeans to think in Continental rather than national terms in finance and business. And it suggested that exchange authorities in Paris, ruffled by the announcement in July of a ``strategic alliance'' between the London Stock Exchange and the Deutsche Borse in Frankfurt, had not only abandoned an effort to set up a rival market but were also seeking to gain the initiative by organizing the Nov. 27 gathering. Some doubt remained, however, about the timing and technicalities of the French entry into the alliance. Foreign Minister Dominique Strauss-Kahn said, ``Paris is joining this alliance with the creation from January 1999 of a joint company.'' However, officials in London and Frankfurt _ who welcomed the idea in principle _ declined to say whether the timing and the arrangements were as far advanced as Strauss-Kahn implied. ``I'm afraid I can't confirm anything like that,'' a spokeswoman at the London Stock Exchange said. ``The appearances are well ahead of the reality at this point,'' said an American banker, who spoke on the condition of anonymity. Not only that, the notion of a Europe-wide exchange raises technical questions about the compatibility not just of trading systems but also of the regulations governing stock market operations in the countries that will use the euro beginning in January. That has led some analysts to forecast that a pan-European exchange could not be up and running before 2000. ``There are an awful lot of issues to be resolved,'' the American banker said. The euro is to be introduced for electronic trading of equities, bonds and futures and for intergovernmental transfers. Notes and coins _ the pocket money that shoppers and travelers will carry _ will be introduced only in 2002. Initially, the currency will group 11 European nations in a euro zone, leaving Britain, Denmark, Sweden and Greece on the outside. With its concentration of banking and trading, however, London is expected to continue as the main market center. The prospect has heightened pressure for consolidation among exchanges. Stock market officials in Milan, Madrid, Amsterdam and Brussels have indicated they would be interested in joining the London-Frankfurt alliance, which will initially create a single point of liquidity for trading in British and German blue-chip issues. The London exchange estimates that a pan-European stock exchange would group together companies with a market capitalization of $5.5 trillion, compared with $8.7 trillion on the New York Stock Exchange. The Paris Bourse, the third largest of the European exchanges and the last major holdout toward a pan-European market, said that it had also invited officials from exchanges in Zurich and Stockholm to attend the Nov. 27 meeting. A spokeswoman said officials from the London Stock Exchange would be at the meeting. Also Thursday, the New York Mercantile Exchange and the International Petroleum Exchange here acknowledged that they were considering a merger that would bring together the two biggest energy futures markets. Discussions began in July, and the exchanges have formed a working group to study a merger. They already cooperate in the development of a system intended to coordinate after-hours electronic trading. ||||| Two days before the new euro currency goes into effect for 11 European Union members, a growing number of Danes believe their country should take part, according to a poll published Tuesday. The survey by the Megaphone polling institute said 54 percent of the 1,009 people surveyed favor Denmark's participation, while 36 percent oppose that. The remaining 10 percent were undecided. The poll, conducted Dec. 18-22, was broadcast by TV2 channel. Denmark is one of four EU countries staying out of the monetary union for the time being. After voters in 1992 rejected the Maastricht treaty that established the system, Denmark won opt-out clauses. The treaty then was approved. Danish voters traditionally have been lukewarm supporters of the EU. Although many politicians support the unified currency, they have been wary about bringing the issue to voters again. A poll published last October showed 46 percent of Danes favored the single currency, while 44 percent were opposed. It would take another national referendum for Denmark to adopt the new currency. The government has said it has no plans to hold a referendum before the year 2001.

Eleven European nations are forming a "Euro zone". Britain, Denmark, Sweden, and Greece are not part of it. Danes favor joining. The Euro became official for intergovernmental transfers on Dec 31, 1998, but bills and coins will not come until 2002. The Paris, London, and Frankfurt stock exchanges have formed an alliance. Euro nations cut interest rates and inflation fell to an average 0.9%. China has authorized use of the Euro in trade. The president of the European Central Bank warns that growth is slowing and that he plans to complete his term. The EU monetary action has given rise to the new mobile, multi-lingual, non-nationalistic European.

China made trading in the euro official Monday, announcing authorization for the European common currency's use in trade and financial dealings starting Jan. 1. The expected announcement from the central People's Bank of China and the State Administration of Foreign Exchange, carried by the official Xinhua News Agency, also authorized the opening of euro accounts. ``Financial institutions, enterprises and individuals in China can accept and use the euro in economic, trade and financial exchanges with 11 members of the European Union effective January 1, 1999,'' Xinhua reported. ``In addition, they can convert, use and open the euro accounts,'' it said. Chinese officials have said the government may convert a proportion of its dlrs 145 billion worth of foreign exchange reserves into the euro after the currency's Jan. 1 debut. The 11 countries launching the common currency are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| The annual inflation rate in the 11 nations that adopt the euro as their shared currency on Jan. 1 fell to 0.9 percent in November, the European Union's statistics agency reported Wednesday. The fall continued the steady decline of inflation in the euro-zone over the past year. Annual inflation stood at 1 percent in October and 1.6 percent in November 1997, according to Eurostat's monthly report. In the 15 nation EU as a whole, inflation fell to 1 percent in November compared to 1.5 percent in the United States and 0.8 percent in Japan. Germany, France, Italy, Spain, the Netherlands, Belgium, Austria, Portugal, Finland, Ireland and Luxembourg are set to adopt the euro as a common currency at midnight on New Year's Eve. The latest figures may hint at trouble ahead for the euro-zone with significant increases over the year in Portugal and Ireland. With the European Central Bank setting a common interest rate for the whole bloc, some economists fear the low rate designed to boost core EU economies like France and Germany may bring overheating in smaller nations with faster growth. There was good news for Greece which was kept out of the euro-zone for failing to meet economic conditions for joining, including low inflation. It's rate was 3.9 percent in November down from 5 percent a year before. Greece hops to join the euro-zone in 2001. Denmark, Sweden and Britain decided to stay out of the euro for political reasons. Eurostat gave the following rates for November 1998, with November 1997 in brackets: Sweden, 0.1 (2.7); France, 0.2 (1.4); Germany, 0.6 (1.4); Austria, 0.5 (1.1); Luxembourg, 0.5 (1.5); Belgium, 0.6 (1.3 percent); Denmark, 1.1 (1.6); Netherlands, 1.5 (2.5); Finland, 0.9 (1.8); Britain, 1.4 (1.9); Spain, 1.4 (1.9); Italy, 1.7 (1.8); Portugal, 2.6 (1.9); Ireland, 2.2 (1.1); Greece, 3.9 (5). ||||| Palm Pilot in one hand, cellular phone in the other, Jean-Marc Routiers, 26, was juggling business calls halfway between London and Paris. When his phone went dead as the high-speed Eurostar train pulled into the underwater tunnel that links England to the Continent, the London-based French banker loosened his Italian silk tie and introduced himself. ``I definitely describe myself as a European,'' he said in the fluent English he perfected working at an Australian bank. ``I may get sentimental when they play the Marseillaise, but for all the practical things, I see myself as a citizen of Europe. I like the lifestyle in France, but I don't make my living there.'' The year 1999 is the official start-up date of the euro, the common European currency that will unite 11 countries monetarily. But throughout Europe, a different kind of integration has already taken root. Routiers, who was spending a day in Paris to meet with his bank's French clients, is at the vanguard of a new generation of Europeans who do not have to brace themselves for a shock in the new year. Mobile, fluent in several languages and aggressively non-nationalistic, they are already living the kind of borderless, cosmopolitan existence that the single European currency is supposed to advance. They do not share their parents' memories of World War II or their parents' sense of national identity. ``People worry when they hear talk of a common European defense policy because it suggests that at the end of the day, we have one government,'' said Kleon Papadopoulos, a Greek banker based in London. ``Countries are afraid to lose their sovereignty, but I don't see it as a bad thing. If a government is good, stable and efficient, who cares if it is based in Berlin or Athens?'' Papadopoulos, 36, who studied business in the United States and Britain, could serve as a model for the new Europeans. He works for a Swiss bank in London, speaks Greek, English and French, and in the past year has traveled, among other places, to Belgium, the United States, Cuba, Switzerland and Italy. Like hundreds of thousands of other Europeans, he chose London _ and its busy financial markets _ as the best place to work. He said he does not feel as if he lives in England. He lives in London, the clubhouse of financial Europe. And membership has its privileges. Papadopoulos lives in the fashionable Knightsbridge area, drives a Porsche he bought in Brussels, and works out at the fashionable gym of the Carleton Towers. ``I went to the London School of Economics in 1984, and the only other `foreigners' I met were from the Middle East,'' he says. ``Now friends and co-workers are Italian, French, Greek, Spanish, German, even Russian. You feel it everywhere. The streets are jammed with foreigners. Not tourists _ people who live and work here.'' Baby-boomers in Europe often describe themselves as the 1968 generation, weaned on the protest and social turmoil that convulsed European societies 30 years ago. Less dramatic but equally significant was a 1968 law guaranteeing freedom of movement within what were then the six countries of the Common Market. A Frenchman could work in Holland, an Italian could work in Germany without a permit. Back then some economists dourly predicted huge migrations, particularly of unskilled laborers moving from southern countries to the more prosperous north. Actually, as huge industries like steel shrank in the 1970s and '80s, so did the job opportunities for working-class Europeans. There are 15 countries within what is now the European Union, but only a small percentage of their citizens have moved to other countries, according to estimates prepared by Eurostat. Those who do mostly find jobs in the service industry as waiters, maids or garbage collectors. There are still legal barriers preventing most doctors, lawyers and academics from finding work in other countries. So far the European Union has been most profitably put to use by white-collar business executives who eagerly followed career opportunities across national borders, time zones and language barriers. Twenty-five years ago that kind of mobility was the preserve of a far smaller elite, the top executives of major companies or multinational corporations. Technology, from high-speed trains to the ever-evolving apparatus of business _ lap-top computers, cell phones, fax machines _ has made European mobility accessible to mid-level managers, young entrepreneurs and even students. Cable television, which allows Germans to watch Italian game shows or Swedes to watch French news programs, has spread the Zeitgeist to the masses. This year Superga, an Italian brand of sports clothes and shoes, opened a major advertising campaign with a series of magazine ads that show fashionable young people saucily cavorting with European leaders _ a leggy young woman pushes her bicycle up the steps of the Elysee Palace to greet President Jacques Chirac, a young man playfully sticks his tongue out the window of the plane of the former German chancellor, Helmut Kohl. ``This kind of ad would not have been possible five or 10 years ago,'' said Aldo Cernuto, executive creative director of the Milan office of Pirella Gottsche Lowe, an international advertising agency. ``Now European unification is on the TV all the time; it has seeped into people's unconscious. Even people who do not care about politics recognize the faces of a Tony Blair or Jacques Chirac. Ten years ago, very few people did.'' According to the European Union, Britain has twice as many EU citizens as France, but it is not the country with the highest concentration of residents from other European countries. According to estimates based on surveys prepared by Eurostat, nearly a third of the residents of tiny Luxembourg, which has low unemployment and a high standard of living, are from other European countries. Belgium, which has the European Commission and NATO headquarters, is second, with 5.4 percent. Paradoxically, perhaps, Britain, the one major European nation that has held off from joining the euro, is widely viewed as the nerve center of the new cosmopolitanism, headquarters for the New Europeans _ bankers and business executives drawn by London's financial district, a more flexible bureaucracy and the universality of the English language. Perhaps just as surprisingly, London also serves as an example of another less obvious aspect of European cosmopolitanism _ the breakdown of certain social barriers. Studying abroad was once a privilege reserved to the sons and daughters of Europe's elite. Now the European Union has a 12-year-old scholarship program, called Socrates-Erasmus, that this year allowed 200,000 European university students _ 5 percent of the EU's entire university population _ to study in other countries within the Union for up to a year, free. In the last 20 years, business schools in Europe have multiplied, and most offer U.S.-style MBA programs that teach an American approach to business. This too has allowed a measure of meritocracy to creep into European business. ``Juergen Schrempp, the head of Daimler, started as a car mechanic,'' noted Stephen Szabo, a professor of European Affairs at the Johns Hopkins University School for International Studies in Washington. ``That would have been unthinkable in Germany 20 years ago.'' Social mobility, moreover, is fueled by movement. When people transfer to another country, they find it easier to shed the psychological or cultural trappings of home. ``I could never have the kind of job I have had I stayed in Paris,'' Routier explained. ``France is still very hierarchical. Bosses want to know where you went to school, what your father does. In London, none of that matters as long as you make money.'' Many Britons still view their country as weighed down by heavy class distinctions. For example, Tony Smith, 36, editor of several Portuguese magazines in Lisbon, seized an opportunity to study in Vienna 14 years ago, and never looked back. He has lived all over Europe, and is fluent in Portuguese, Spanish, German, French and Serbo-Croatian. His father, a car mechanic, had not traveled out of Britain until 1992. Smith said he could never have succeeded as well had he stayed home. ``I didn't go to public schools or Oxbridge,'' he explained. ``I'm not saying its impossible, but it would have been much more difficult in England.'' Yet Continental Europeans who flock to London find themselves bypassing English society and joining a cosmopolitan world where birth and breeding do not matter as much. Ildiko Iliffe, 30, chose to work in London to escape the sexism she encountered on the Continent. Mrs. Iliffe, who is Hungarian, speaks fluent English, German, French and Italian, and met her Canadian husband, Roger Iliffe, 30, while both were attending the University of Bocconi business school in Milan in 1995. Like his wife, Iliffe speaks four languages and has lived and traveled all over the world. She works on the Eastern European desk of a British bank; he works for a major international consulting firm. Originally they planned to work in Italy, but Mrs. Iliffe said the prevailing attitude towards working women there made it impossible for her to find as good a job. ``I went to job interviews at Italian banks and they only asked me about my husband's job,'' she said with a grimace. ``And they made it clear that they were afraid I would get pregnant and ask for maternity leave.'' Philippe Haspeslagh, 48, a professor at Insead, the prestigious international business school in Fontainebleau, outside Paris, called Mrs. Iliffe's choices cherry-picking _ choosing the best deal for herself. As he put it, ``If they cannot find what they want in one country, they can pick up and seek it elsewhere.'' Twenty-five years ago, Haspeslagh was a pioneer when he did the same thing. A Belgian who studied business at Harvard, he lives and teaches in France and does consulting work all over Europe, from Sweden to the Czech Republic. The message on his cell phone is in three languages _ French, Flemish and English. His students, a generation behind him, see nothing exceptional in his transnationalism. These Europeans form an advance guard that is still relatively small in numbers, but experts say they carry a disproportionate influence on their societies. ``In Germany, for example, it is the business people who are pushing ahead with change and pulling politicians along behind them kicking and screaming,'' Szabo said. ``They are looking at a larger market and feel the competitive pressures of globalization. Politicians are responding to a domestic constituency. They are answering to an international one.'' ||||| In a surprise move, nations adopting the new European currency, the euro, dropped key interest rates Thursday, effectively setting the rate that will be adopted throughout the euro zone on Jan. 1. Ten of the 11 countries adopting the euro dropped their interest rate to 3 percent. Italy dropped to 3.5 percent from 4 percent. The coordinated move was a key step in preparing for economic union. Setting a common interest rates had been a particularly contentious issue as center-left governments in Germany and France pressed for lower rates to help boost growth and cut unemployment, a stubborn 10.9 percent in the euro zone. European Central Bank chief, Wim Duisenberg, gave no hint of the rate cuts during a speech in Brussels earlier Thursday, instead suggesting that governments should reform rigid labor markets to create jobs. In Germany, the biggest economy in the future euro-zone, central bankers cut the key interest rate to 3 percent from 3.3 percent. Rates before the cuts had varied throughout the future currency zone, from 3.69 percent in Ireland to 3.2 percent in Austria. The European Central Bank said in a statement from its Frankfurt headquarters that the move was decided during a meeting Tuesday of its the policy-making governing council. The governing council comprises the 11 heads of national central banks plus a six-member directorate, including the bank president Duisenberg. ``The joint reduction in interest rates has to be seen as a de facto decision on the level of interest rates with which the (bank) will start ... monetary union,'' the statement said, adding the 3-percent rate would be maintained ``for the foreseeable future.'' In Germany, central bank president Hans Tietmeyer said the move reflected the worsening outlook for European economies, and wasn't a capitulation to political pressure Finance Minister Oskar Lafontaine. ``It's not a dramatic step. It wasn't in response to political pressure,'' Tietmeyer said, referring to Germany's cut. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' he said. But Tietmeyer, head of the bank on which the ECB is modeled, promised that the rate cut does not signal the start of a volatile monetary policy. ``It's not a shift from the Bundesbank's steady-hand policy,'' he said. Growth in Europe has been hit by the Asian and Russian economic crises and turbulence on international financial markets. Duisenberg has said growth in the euro area countries next year will be about 2.5 percent, lower than the 3 percent predicted earlier. ||||| In his most candid remarks yet on the economy, European Central Bank President Wim Duisenberg said Friday that growth appears to be slowing in the 11 countries adopting the EU common currency _ or euro _ on Jan. 1. Despite an area-wide survey that suggested ``a moderation in the pace of growth,'' Duisenberg said domestic demand will continue to boost the economy. He pointed also to a gradual improvement in labor market conditions as supporting growth, as well as interest-rate cuts toward the 3.3 percent level of the euro-zone's lowest rate countries. Duisenberg, who spoke at an event in London, said the Dec. 1 and Dec. 22 meetings of the Central Bank's policy-making body will gauge the outlook for inflation and the EU economy. The bank, which will set monetary policy for the currency bloc, has been under pressure from politicians to keep interest rates low to help boost growth and create jobs. While inflation is at its lowest levels in decades _ just 1 percent in the euro-zone _ unemployment in the 11 nations remains stubbornly high at 10.9 percent. ||||| Europe's dream of monetary union becomes reality Thursday when 11 nations irrevocably lock their currencies together to form the euro and create an economic giant whose boundaries stretch from beyond the Arctic Circle to the shores of the Mediterranean. The euro's birth is being hailed as a historic turning point in international finance and is arguably the greatest single step in the drive to create a united Europe from the ruins of World War II. ``This Dec. 31, 1998, will be one of the great dates in the history of the 20th century,'' French Finance Minister Dominique Strauss-Kahn, told France Info radio. ``It's the beginning of a new era.'' On what Europeans are calling ``E-day,'' economic and finance ministers from the 11 nations will huddle at European Union headquarters to agree to the rates at which German marks, Italian lire and the rest are absorbed into euro. Strauss-Kahn said the euro would likely be worth 6.56 to 6.57 French francs. ||||| Wim Duisenberg, the head of the new European Central Bank, said in an interview published Wednesday that he won't step down after completing half his term as earlier agreed. ``I had hoped you wouldn't ask me that question. The answer is no,'' Duisenberg told the Le Monde daily, which had asked him if he would step down after four years on the job. Duisenberg was named this spring as head of the new European Central Bank, which will govern the policies of the euro, the new single currency which goes into effect Jan. 1. France surprised its euro partners by proposing its central banker, Jean-Claude Trichet, at the last minute for the job Duisenberg was expected to secure easily. Although he was elected easily, Duisenberg agreed to step down after four years of his eight year term although he has since said no such ``gentleman's agreement'' exists. Duisenberg told Le Monde, a newspaper that fervently has backed the euro, that the the introduction of the new currency is the most ``significant'' step so far toward European unification. However, he said that he would like to see further political integration, especially in the area of foreign tax and social policies. ||||| Making their first collective decision about monetary policy, the 11 European nations launching a common currency on Jan. 1 cut interest rates Thursday in a surprise move that won market confidence. Ten of the 11 countries joining European economic union dropped their key interest rate to 3 percent, with Portugal making the most significant plunge, from 3.75 percent. Austria made the smallest cut, from 3.2 percent. The exception was Italy, which cut from 4 to 3.5 percent. It is expected to drop to the common rate by the time the euro is launched. Unifying the interest rate is a critical step in laying the groundwork for monetary union, and analysts generally expected rates to settle at around the level of Germany's, 3.3 percent before the cut, now 3 percent. However, interest rate levels had become a contentious political issue with center-left governments in Germany and France pushing for rate cuts to help spur growth and combat unemployment, stuck at 10.9 percent in the nations adopting the euro. The head of the European Central Bank that will set monetary policy for the euro nations, Wim Duisenberg, again on Thursday suggested governments should reform rigid labor markets to create jobs, and not pressure him to cut rates. The remarks in Brussels _ before the cuts were made _ gave no hint that a rate drop was imminent, but made clear his resistance to political pressure was as strong as ever. So strong, in fact, that Dutch Finance Minister Gerrit Zalm said he had feared the bank would delay the decision. ``What had been feared was that, in order to prove its independence, the ECB would go against its own analysis and would wait longer, which would have been nonsensical,'' Zalm said. Hans Tietmeyer, who runs the German Bundesbank on which the ECB is modeled, hinted the rate cut was designed to boost confidence in the new currency, dampened by global economic crises and Europe's worsening outlook. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' Tietmeyer said. The cuts seemed to have the desired impact. Frankfurt's main index closed up 2.1 percent, while France's was up 1.8 percent. The cuts also boosted markets in Spain, Belgium, Italy and even Britain, which is not among the nations launching the euro. ``The reaction is, `Oh good, they're doing a little bit to prop up the euro economy.' But confidence has taken quite a hit across Europe recently, and I think further action from the ECB will be needed next year, maybe down to 2.5 percent,'' James Mitchell, senior London-based strategist with Nomura. An economist at the Banque Bruxelles Lambert, Liesbeth Van de Craen, said the cuts were timely. ``We are clearly headed for a slowdown,'' she said. Until recently, Europe's economies had held out relatively well against damage from Asia and Russia's economic crises and unstable financial markets. But just two days ago, Duisenberg painted the bleakest picture yet of Europe's economies, warning growth will likely slow to 2.5 percent next year from earlier expectations of 3 percent. The rate cuts may help. By making it cheaper to borrow money, rate cuts can lead to more investment and new businesses, making it less worthwhile to save and inducing people to spend. That expands the economy. The 11 countries launching the euro are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| Struggling to avoid being sidelined in the Continent-wide equities market promised by Europe's soon-to-be-introduced single currency, French authorities said Thursday that the Paris stock exchange would join an alliance between London and Frankfurt that is seen as the precursor of a pan-European market. The Bourse in Paris also announced that it would play host to a meeting Nov. 27 of nine other European exchanges to discuss ``the steps and conditions needed to create a unifying and competitive pan-European equity market.'' The two announcements show how the introduction of the currency, the euro, is reshaping Europe's financial landscape, requiring Europeans to think in Continental rather than national terms in finance and business. And it suggested that exchange authorities in Paris, ruffled by the announcement in July of a ``strategic alliance'' between the London Stock Exchange and the Deutsche Borse in Frankfurt, had not only abandoned an effort to set up a rival market but were also seeking to gain the initiative by organizing the Nov. 27 gathering. Some doubt remained, however, about the timing and technicalities of the French entry into the alliance. Foreign Minister Dominique Strauss-Kahn said, ``Paris is joining this alliance with the creation from January 1999 of a joint company.'' However, officials in London and Frankfurt _ who welcomed the idea in principle _ declined to say whether the timing and the arrangements were as far advanced as Strauss-Kahn implied. ``I'm afraid I can't confirm anything like that,'' a spokeswoman at the London Stock Exchange said. ``The appearances are well ahead of the reality at this point,'' said an American banker, who spoke on the condition of anonymity. Not only that, the notion of a Europe-wide exchange raises technical questions about the compatibility not just of trading systems but also of the regulations governing stock market operations in the countries that will use the euro beginning in January. That has led some analysts to forecast that a pan-European exchange could not be up and running before 2000. ``There are an awful lot of issues to be resolved,'' the American banker said. The euro is to be introduced for electronic trading of equities, bonds and futures and for intergovernmental transfers. Notes and coins _ the pocket money that shoppers and travelers will carry _ will be introduced only in 2002. Initially, the currency will group 11 European nations in a euro zone, leaving Britain, Denmark, Sweden and Greece on the outside. With its concentration of banking and trading, however, London is expected to continue as the main market center. The prospect has heightened pressure for consolidation among exchanges. Stock market officials in Milan, Madrid, Amsterdam and Brussels have indicated they would be interested in joining the London-Frankfurt alliance, which will initially create a single point of liquidity for trading in British and German blue-chip issues. The London exchange estimates that a pan-European stock exchange would group together companies with a market capitalization of $5.5 trillion, compared with $8.7 trillion on the New York Stock Exchange. The Paris Bourse, the third largest of the European exchanges and the last major holdout toward a pan-European market, said that it had also invited officials from exchanges in Zurich and Stockholm to attend the Nov. 27 meeting. A spokeswoman said officials from the London Stock Exchange would be at the meeting. Also Thursday, the New York Mercantile Exchange and the International Petroleum Exchange here acknowledged that they were considering a merger that would bring together the two biggest energy futures markets. Discussions began in July, and the exchanges have formed a working group to study a merger. They already cooperate in the development of a system intended to coordinate after-hours electronic trading. ||||| Two days before the new euro currency goes into effect for 11 European Union members, a growing number of Danes believe their country should take part, according to a poll published Tuesday. The survey by the Megaphone polling institute said 54 percent of the 1,009 people surveyed favor Denmark's participation, while 36 percent oppose that. The remaining 10 percent were undecided. The poll, conducted Dec. 18-22, was broadcast by TV2 channel. Denmark is one of four EU countries staying out of the monetary union for the time being. After voters in 1992 rejected the Maastricht treaty that established the system, Denmark won opt-out clauses. The treaty then was approved. Danish voters traditionally have been lukewarm supporters of the EU. Although many politicians support the unified currency, they have been wary about bringing the issue to voters again. A poll published last October showed 46 percent of Danes favored the single currency, while 44 percent were opposed. It would take another national referendum for Denmark to adopt the new currency. The government has said it has no plans to hold a referendum before the year 2001.

France's offer to host a financial meeting for nine other European nations is seen as a precursor to a pan-European market. It shows how the new currency, the euro, is reshaping Europe financially. Eleven European nations lowered key interest rates in preparation for the conversion. China made trading in euro official Monday when it accepted its use in trade and finance starting Jan. 1. Denmark and Sweden may not join the euro for political reasons. Some smaller nations may become unstable from a growing inflation decline. A new generation, already cosmopolitan, won't be shocked. The head of the new European Central Bank will not step down at half term.

China made trading in the euro official Monday, announcing authorization for the European common currency's use in trade and financial dealings starting Jan. 1. The expected announcement from the central People's Bank of China and the State Administration of Foreign Exchange, carried by the official Xinhua News Agency, also authorized the opening of euro accounts. ``Financial institutions, enterprises and individuals in China can accept and use the euro in economic, trade and financial exchanges with 11 members of the European Union effective January 1, 1999,'' Xinhua reported. ``In addition, they can convert, use and open the euro accounts,'' it said. Chinese officials have said the government may convert a proportion of its dlrs 145 billion worth of foreign exchange reserves into the euro after the currency's Jan. 1 debut. The 11 countries launching the common currency are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| The annual inflation rate in the 11 nations that adopt the euro as their shared currency on Jan. 1 fell to 0.9 percent in November, the European Union's statistics agency reported Wednesday. The fall continued the steady decline of inflation in the euro-zone over the past year. Annual inflation stood at 1 percent in October and 1.6 percent in November 1997, according to Eurostat's monthly report. In the 15 nation EU as a whole, inflation fell to 1 percent in November compared to 1.5 percent in the United States and 0.8 percent in Japan. Germany, France, Italy, Spain, the Netherlands, Belgium, Austria, Portugal, Finland, Ireland and Luxembourg are set to adopt the euro as a common currency at midnight on New Year's Eve. The latest figures may hint at trouble ahead for the euro-zone with significant increases over the year in Portugal and Ireland. With the European Central Bank setting a common interest rate for the whole bloc, some economists fear the low rate designed to boost core EU economies like France and Germany may bring overheating in smaller nations with faster growth. There was good news for Greece which was kept out of the euro-zone for failing to meet economic conditions for joining, including low inflation. It's rate was 3.9 percent in November down from 5 percent a year before. Greece hops to join the euro-zone in 2001. Denmark, Sweden and Britain decided to stay out of the euro for political reasons. Eurostat gave the following rates for November 1998, with November 1997 in brackets: Sweden, 0.1 (2.7); France, 0.2 (1.4); Germany, 0.6 (1.4); Austria, 0.5 (1.1); Luxembourg, 0.5 (1.5); Belgium, 0.6 (1.3 percent); Denmark, 1.1 (1.6); Netherlands, 1.5 (2.5); Finland, 0.9 (1.8); Britain, 1.4 (1.9); Spain, 1.4 (1.9); Italy, 1.7 (1.8); Portugal, 2.6 (1.9); Ireland, 2.2 (1.1); Greece, 3.9 (5). ||||| Palm Pilot in one hand, cellular phone in the other, Jean-Marc Routiers, 26, was juggling business calls halfway between London and Paris. When his phone went dead as the high-speed Eurostar train pulled into the underwater tunnel that links England to the Continent, the London-based French banker loosened his Italian silk tie and introduced himself. ``I definitely describe myself as a European,'' he said in the fluent English he perfected working at an Australian bank. ``I may get sentimental when they play the Marseillaise, but for all the practical things, I see myself as a citizen of Europe. I like the lifestyle in France, but I don't make my living there.'' The year 1999 is the official start-up date of the euro, the common European currency that will unite 11 countries monetarily. But throughout Europe, a different kind of integration has already taken root. Routiers, who was spending a day in Paris to meet with his bank's French clients, is at the vanguard of a new generation of Europeans who do not have to brace themselves for a shock in the new year. Mobile, fluent in several languages and aggressively non-nationalistic, they are already living the kind of borderless, cosmopolitan existence that the single European currency is supposed to advance. They do not share their parents' memories of World War II or their parents' sense of national identity. ``People worry when they hear talk of a common European defense policy because it suggests that at the end of the day, we have one government,'' said Kleon Papadopoulos, a Greek banker based in London. ``Countries are afraid to lose their sovereignty, but I don't see it as a bad thing. If a government is good, stable and efficient, who cares if it is based in Berlin or Athens?'' Papadopoulos, 36, who studied business in the United States and Britain, could serve as a model for the new Europeans. He works for a Swiss bank in London, speaks Greek, English and French, and in the past year has traveled, among other places, to Belgium, the United States, Cuba, Switzerland and Italy. Like hundreds of thousands of other Europeans, he chose London _ and its busy financial markets _ as the best place to work. He said he does not feel as if he lives in England. He lives in London, the clubhouse of financial Europe. And membership has its privileges. Papadopoulos lives in the fashionable Knightsbridge area, drives a Porsche he bought in Brussels, and works out at the fashionable gym of the Carleton Towers. ``I went to the London School of Economics in 1984, and the only other `foreigners' I met were from the Middle East,'' he says. ``Now friends and co-workers are Italian, French, Greek, Spanish, German, even Russian. You feel it everywhere. The streets are jammed with foreigners. Not tourists _ people who live and work here.'' Baby-boomers in Europe often describe themselves as the 1968 generation, weaned on the protest and social turmoil that convulsed European societies 30 years ago. Less dramatic but equally significant was a 1968 law guaranteeing freedom of movement within what were then the six countries of the Common Market. A Frenchman could work in Holland, an Italian could work in Germany without a permit. Back then some economists dourly predicted huge migrations, particularly of unskilled laborers moving from southern countries to the more prosperous north. Actually, as huge industries like steel shrank in the 1970s and '80s, so did the job opportunities for working-class Europeans. There are 15 countries within what is now the European Union, but only a small percentage of their citizens have moved to other countries, according to estimates prepared by Eurostat. Those who do mostly find jobs in the service industry as waiters, maids or garbage collectors. There are still legal barriers preventing most doctors, lawyers and academics from finding work in other countries. So far the European Union has been most profitably put to use by white-collar business executives who eagerly followed career opportunities across national borders, time zones and language barriers. Twenty-five years ago that kind of mobility was the preserve of a far smaller elite, the top executives of major companies or multinational corporations. Technology, from high-speed trains to the ever-evolving apparatus of business _ lap-top computers, cell phones, fax machines _ has made European mobility accessible to mid-level managers, young entrepreneurs and even students. Cable television, which allows Germans to watch Italian game shows or Swedes to watch French news programs, has spread the Zeitgeist to the masses. This year Superga, an Italian brand of sports clothes and shoes, opened a major advertising campaign with a series of magazine ads that show fashionable young people saucily cavorting with European leaders _ a leggy young woman pushes her bicycle up the steps of the Elysee Palace to greet President Jacques Chirac, a young man playfully sticks his tongue out the window of the plane of the former German chancellor, Helmut Kohl. ``This kind of ad would not have been possible five or 10 years ago,'' said Aldo Cernuto, executive creative director of the Milan office of Pirella Gottsche Lowe, an international advertising agency. ``Now European unification is on the TV all the time; it has seeped into people's unconscious. Even people who do not care about politics recognize the faces of a Tony Blair or Jacques Chirac. Ten years ago, very few people did.'' According to the European Union, Britain has twice as many EU citizens as France, but it is not the country with the highest concentration of residents from other European countries. According to estimates based on surveys prepared by Eurostat, nearly a third of the residents of tiny Luxembourg, which has low unemployment and a high standard of living, are from other European countries. Belgium, which has the European Commission and NATO headquarters, is second, with 5.4 percent. Paradoxically, perhaps, Britain, the one major European nation that has held off from joining the euro, is widely viewed as the nerve center of the new cosmopolitanism, headquarters for the New Europeans _ bankers and business executives drawn by London's financial district, a more flexible bureaucracy and the universality of the English language. Perhaps just as surprisingly, London also serves as an example of another less obvious aspect of European cosmopolitanism _ the breakdown of certain social barriers. Studying abroad was once a privilege reserved to the sons and daughters of Europe's elite. Now the European Union has a 12-year-old scholarship program, called Socrates-Erasmus, that this year allowed 200,000 European university students _ 5 percent of the EU's entire university population _ to study in other countries within the Union for up to a year, free. In the last 20 years, business schools in Europe have multiplied, and most offer U.S.-style MBA programs that teach an American approach to business. This too has allowed a measure of meritocracy to creep into European business. ``Juergen Schrempp, the head of Daimler, started as a car mechanic,'' noted Stephen Szabo, a professor of European Affairs at the Johns Hopkins University School for International Studies in Washington. ``That would have been unthinkable in Germany 20 years ago.'' Social mobility, moreover, is fueled by movement. When people transfer to another country, they find it easier to shed the psychological or cultural trappings of home. ``I could never have the kind of job I have had I stayed in Paris,'' Routier explained. ``France is still very hierarchical. Bosses want to know where you went to school, what your father does. In London, none of that matters as long as you make money.'' Many Britons still view their country as weighed down by heavy class distinctions. For example, Tony Smith, 36, editor of several Portuguese magazines in Lisbon, seized an opportunity to study in Vienna 14 years ago, and never looked back. He has lived all over Europe, and is fluent in Portuguese, Spanish, German, French and Serbo-Croatian. His father, a car mechanic, had not traveled out of Britain until 1992. Smith said he could never have succeeded as well had he stayed home. ``I didn't go to public schools or Oxbridge,'' he explained. ``I'm not saying its impossible, but it would have been much more difficult in England.'' Yet Continental Europeans who flock to London find themselves bypassing English society and joining a cosmopolitan world where birth and breeding do not matter as much. Ildiko Iliffe, 30, chose to work in London to escape the sexism she encountered on the Continent. Mrs. Iliffe, who is Hungarian, speaks fluent English, German, French and Italian, and met her Canadian husband, Roger Iliffe, 30, while both were attending the University of Bocconi business school in Milan in 1995. Like his wife, Iliffe speaks four languages and has lived and traveled all over the world. She works on the Eastern European desk of a British bank; he works for a major international consulting firm. Originally they planned to work in Italy, but Mrs. Iliffe said the prevailing attitude towards working women there made it impossible for her to find as good a job. ``I went to job interviews at Italian banks and they only asked me about my husband's job,'' she said with a grimace. ``And they made it clear that they were afraid I would get pregnant and ask for maternity leave.'' Philippe Haspeslagh, 48, a professor at Insead, the prestigious international business school in Fontainebleau, outside Paris, called Mrs. Iliffe's choices cherry-picking _ choosing the best deal for herself. As he put it, ``If they cannot find what they want in one country, they can pick up and seek it elsewhere.'' Twenty-five years ago, Haspeslagh was a pioneer when he did the same thing. A Belgian who studied business at Harvard, he lives and teaches in France and does consulting work all over Europe, from Sweden to the Czech Republic. The message on his cell phone is in three languages _ French, Flemish and English. His students, a generation behind him, see nothing exceptional in his transnationalism. These Europeans form an advance guard that is still relatively small in numbers, but experts say they carry a disproportionate influence on their societies. ``In Germany, for example, it is the business people who are pushing ahead with change and pulling politicians along behind them kicking and screaming,'' Szabo said. ``They are looking at a larger market and feel the competitive pressures of globalization. Politicians are responding to a domestic constituency. They are answering to an international one.'' ||||| In a surprise move, nations adopting the new European currency, the euro, dropped key interest rates Thursday, effectively setting the rate that will be adopted throughout the euro zone on Jan. 1. Ten of the 11 countries adopting the euro dropped their interest rate to 3 percent. Italy dropped to 3.5 percent from 4 percent. The coordinated move was a key step in preparing for economic union. Setting a common interest rates had been a particularly contentious issue as center-left governments in Germany and France pressed for lower rates to help boost growth and cut unemployment, a stubborn 10.9 percent in the euro zone. European Central Bank chief, Wim Duisenberg, gave no hint of the rate cuts during a speech in Brussels earlier Thursday, instead suggesting that governments should reform rigid labor markets to create jobs. In Germany, the biggest economy in the future euro-zone, central bankers cut the key interest rate to 3 percent from 3.3 percent. Rates before the cuts had varied throughout the future currency zone, from 3.69 percent in Ireland to 3.2 percent in Austria. The European Central Bank said in a statement from its Frankfurt headquarters that the move was decided during a meeting Tuesday of its the policy-making governing council. The governing council comprises the 11 heads of national central banks plus a six-member directorate, including the bank president Duisenberg. ``The joint reduction in interest rates has to be seen as a de facto decision on the level of interest rates with which the (bank) will start ... monetary union,'' the statement said, adding the 3-percent rate would be maintained ``for the foreseeable future.'' In Germany, central bank president Hans Tietmeyer said the move reflected the worsening outlook for European economies, and wasn't a capitulation to political pressure Finance Minister Oskar Lafontaine. ``It's not a dramatic step. It wasn't in response to political pressure,'' Tietmeyer said, referring to Germany's cut. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' he said. But Tietmeyer, head of the bank on which the ECB is modeled, promised that the rate cut does not signal the start of a volatile monetary policy. ``It's not a shift from the Bundesbank's steady-hand policy,'' he said. Growth in Europe has been hit by the Asian and Russian economic crises and turbulence on international financial markets. Duisenberg has said growth in the euro area countries next year will be about 2.5 percent, lower than the 3 percent predicted earlier. ||||| In his most candid remarks yet on the economy, European Central Bank President Wim Duisenberg said Friday that growth appears to be slowing in the 11 countries adopting the EU common currency _ or euro _ on Jan. 1. Despite an area-wide survey that suggested ``a moderation in the pace of growth,'' Duisenberg said domestic demand will continue to boost the economy. He pointed also to a gradual improvement in labor market conditions as supporting growth, as well as interest-rate cuts toward the 3.3 percent level of the euro-zone's lowest rate countries. Duisenberg, who spoke at an event in London, said the Dec. 1 and Dec. 22 meetings of the Central Bank's policy-making body will gauge the outlook for inflation and the EU economy. The bank, which will set monetary policy for the currency bloc, has been under pressure from politicians to keep interest rates low to help boost growth and create jobs. While inflation is at its lowest levels in decades _ just 1 percent in the euro-zone _ unemployment in the 11 nations remains stubbornly high at 10.9 percent. ||||| Europe's dream of monetary union becomes reality Thursday when 11 nations irrevocably lock their currencies together to form the euro and create an economic giant whose boundaries stretch from beyond the Arctic Circle to the shores of the Mediterranean. The euro's birth is being hailed as a historic turning point in international finance and is arguably the greatest single step in the drive to create a united Europe from the ruins of World War II. ``This Dec. 31, 1998, will be one of the great dates in the history of the 20th century,'' French Finance Minister Dominique Strauss-Kahn, told France Info radio. ``It's the beginning of a new era.'' On what Europeans are calling ``E-day,'' economic and finance ministers from the 11 nations will huddle at European Union headquarters to agree to the rates at which German marks, Italian lire and the rest are absorbed into euro. Strauss-Kahn said the euro would likely be worth 6.56 to 6.57 French francs. ||||| Wim Duisenberg, the head of the new European Central Bank, said in an interview published Wednesday that he won't step down after completing half his term as earlier agreed. ``I had hoped you wouldn't ask me that question. The answer is no,'' Duisenberg told the Le Monde daily, which had asked him if he would step down after four years on the job. Duisenberg was named this spring as head of the new European Central Bank, which will govern the policies of the euro, the new single currency which goes into effect Jan. 1. France surprised its euro partners by proposing its central banker, Jean-Claude Trichet, at the last minute for the job Duisenberg was expected to secure easily. Although he was elected easily, Duisenberg agreed to step down after four years of his eight year term although he has since said no such ``gentleman's agreement'' exists. Duisenberg told Le Monde, a newspaper that fervently has backed the euro, that the the introduction of the new currency is the most ``significant'' step so far toward European unification. However, he said that he would like to see further political integration, especially in the area of foreign tax and social policies. ||||| Making their first collective decision about monetary policy, the 11 European nations launching a common currency on Jan. 1 cut interest rates Thursday in a surprise move that won market confidence. Ten of the 11 countries joining European economic union dropped their key interest rate to 3 percent, with Portugal making the most significant plunge, from 3.75 percent. Austria made the smallest cut, from 3.2 percent. The exception was Italy, which cut from 4 to 3.5 percent. It is expected to drop to the common rate by the time the euro is launched. Unifying the interest rate is a critical step in laying the groundwork for monetary union, and analysts generally expected rates to settle at around the level of Germany's, 3.3 percent before the cut, now 3 percent. However, interest rate levels had become a contentious political issue with center-left governments in Germany and France pushing for rate cuts to help spur growth and combat unemployment, stuck at 10.9 percent in the nations adopting the euro. The head of the European Central Bank that will set monetary policy for the euro nations, Wim Duisenberg, again on Thursday suggested governments should reform rigid labor markets to create jobs, and not pressure him to cut rates. The remarks in Brussels _ before the cuts were made _ gave no hint that a rate drop was imminent, but made clear his resistance to political pressure was as strong as ever. So strong, in fact, that Dutch Finance Minister Gerrit Zalm said he had feared the bank would delay the decision. ``What had been feared was that, in order to prove its independence, the ECB would go against its own analysis and would wait longer, which would have been nonsensical,'' Zalm said. Hans Tietmeyer, who runs the German Bundesbank on which the ECB is modeled, hinted the rate cut was designed to boost confidence in the new currency, dampened by global economic crises and Europe's worsening outlook. ``The coordinated rate cut could lead to a reduction in the current pessimism and a reduction in financial market turbulence,'' Tietmeyer said. The cuts seemed to have the desired impact. Frankfurt's main index closed up 2.1 percent, while France's was up 1.8 percent. The cuts also boosted markets in Spain, Belgium, Italy and even Britain, which is not among the nations launching the euro. ``The reaction is, `Oh good, they're doing a little bit to prop up the euro economy.' But confidence has taken quite a hit across Europe recently, and I think further action from the ECB will be needed next year, maybe down to 2.5 percent,'' James Mitchell, senior London-based strategist with Nomura. An economist at the Banque Bruxelles Lambert, Liesbeth Van de Craen, said the cuts were timely. ``We are clearly headed for a slowdown,'' she said. Until recently, Europe's economies had held out relatively well against damage from Asia and Russia's economic crises and unstable financial markets. But just two days ago, Duisenberg painted the bleakest picture yet of Europe's economies, warning growth will likely slow to 2.5 percent next year from earlier expectations of 3 percent. The rate cuts may help. By making it cheaper to borrow money, rate cuts can lead to more investment and new businesses, making it less worthwhile to save and inducing people to spend. That expands the economy. The 11 countries launching the euro are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. ||||| Struggling to avoid being sidelined in the Continent-wide equities market promised by Europe's soon-to-be-introduced single currency, French authorities said Thursday that the Paris stock exchange would join an alliance between London and Frankfurt that is seen as the precursor of a pan-European market. The Bourse in Paris also announced that it would play host to a meeting Nov. 27 of nine other European exchanges to discuss ``the steps and conditions needed to create a unifying and competitive pan-European equity market.'' The two announcements show how the introduction of the currency, the euro, is reshaping Europe's financial landscape, requiring Europeans to think in Continental rather than national terms in finance and business. And it suggested that exchange authorities in Paris, ruffled by the announcement in July of a ``strategic alliance'' between the London Stock Exchange and the Deutsche Borse in Frankfurt, had not only abandoned an effort to set up a rival market but were also seeking to gain the initiative by organizing the Nov. 27 gathering. Some doubt remained, however, about the timing and technicalities of the French entry into the alliance. Foreign Minister Dominique Strauss-Kahn said, ``Paris is joining this alliance with the creation from January 1999 of a joint company.'' However, officials in London and Frankfurt _ who welcomed the idea in principle _ declined to say whether the timing and the arrangements were as far advanced as Strauss-Kahn implied. ``I'm afraid I can't confirm anything like that,'' a spokeswoman at the London Stock Exchange said. ``The appearances are well ahead of the reality at this point,'' said an American banker, who spoke on the condition of anonymity. Not only that, the notion of a Europe-wide exchange raises technical questions about the compatibility not just of trading systems but also of the regulations governing stock market operations in the countries that will use the euro beginning in January. That has led some analysts to forecast that a pan-European exchange could not be up and running before 2000. ``There are an awful lot of issues to be resolved,'' the American banker said. The euro is to be introduced for electronic trading of equities, bonds and futures and for intergovernmental transfers. Notes and coins _ the pocket money that shoppers and travelers will carry _ will be introduced only in 2002. Initially, the currency will group 11 European nations in a euro zone, leaving Britain, Denmark, Sweden and Greece on the outside. With its concentration of banking and trading, however, London is expected to continue as the main market center. The prospect has heightened pressure for consolidation among exchanges. Stock market officials in Milan, Madrid, Amsterdam and Brussels have indicated they would be interested in joining the London-Frankfurt alliance, which will initially create a single point of liquidity for trading in British and German blue-chip issues. The London exchange estimates that a pan-European stock exchange would group together companies with a market capitalization of $5.5 trillion, compared with $8.7 trillion on the New York Stock Exchange. The Paris Bourse, the third largest of the European exchanges and the last major holdout toward a pan-European market, said that it had also invited officials from exchanges in Zurich and Stockholm to attend the Nov. 27 meeting. A spokeswoman said officials from the London Stock Exchange would be at the meeting. Also Thursday, the New York Mercantile Exchange and the International Petroleum Exchange here acknowledged that they were considering a merger that would bring together the two biggest energy futures markets. Discussions began in July, and the exchanges have formed a working group to study a merger. They already cooperate in the development of a system intended to coordinate after-hours electronic trading. ||||| Two days before the new euro currency goes into effect for 11 European Union members, a growing number of Danes believe their country should take part, according to a poll published Tuesday. The survey by the Megaphone polling institute said 54 percent of the 1,009 people surveyed favor Denmark's participation, while 36 percent oppose that. The remaining 10 percent were undecided. The poll, conducted Dec. 18-22, was broadcast by TV2 channel. Denmark is one of four EU countries staying out of the monetary union for the time being. After voters in 1992 rejected the Maastricht treaty that established the system, Denmark won opt-out clauses. The treaty then was approved. Danish voters traditionally have been lukewarm supporters of the EU. Although many politicians support the unified currency, they have been wary about bringing the issue to voters again. A poll published last October showed 46 percent of Danes favored the single currency, while 44 percent were opposed. It would take another national referendum for Denmark to adopt the new currency. The government has said it has no plans to hold a referendum before the year 2001.

On 1 Jan 1999, the euro, a currency serving 11 European nations, entered the world financial market. As time grew short, questions remained over the pan-European market. When the head--serving an 8-year term--of the European Central Bank, which governs the euro, expressed fear of a slowing economy, the nations simultaneously dropped interest rates, spurring the market. Annual inflation rates also were encouraging. Denmark, who along with Sweden and Britain eschewed the euro, was becoming interested. As a step to a unified Europe, the euro will well serve the new, mobile, multi-lingual, business generation and could portend an economic giant.

TUNIS, Tunisia (AP) _ U.N. Secretary-General Kofi Annan left for Libya Saturday to hold talks aimed at putting two suspects on trial for the 1988 Pan Am bombing over Lockerbie. Annan's one-day, 2nd graf pvs ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. On Sunday, state-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying that ``a solution to this crisis is within reach.'' He credited Annan's talks with Omar al-Muntasser, Libya's foreign minister, who met with Annan in Sirte before Annan went on to talks with Gadhafi. Sirte is 400 kilometers (250 miles) east of the Libyan capital Tripoli. The official spoke of ``fruitful talks'' but gave no details. The broadcast was monitored by the British Broadcasting Corp. Also Sunday, British Foreign Secretary Robin Cook said in an interview with the BBC that he had spoken with Annan on Sunday and was ``very encouraged by what he tells me.'' He added: ``I think you could sum up our mood as one of qualified optimism.'' Britain would like to see the two suspects in custody by Dec. 21, the 10th anniversary of the Pan Am bombing. But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Libya has asked that any prison terms be served in the Netherlands or Libya. Annan spoke to reporters in Tripoli after the meeting with Gadhafi and later when he arrived back at this Tunisian island, where he had begun the day of diplomacy that lasted nearly 15 hours. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the 1988 bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. Annan left Jerba on Sunday for the United Arab Emirates, where he will attend a summit of the Gulf Cooperation Council, a federation of six Arab Gulf states. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' The meeting with Gadhafi took place after Libya's official news agency, JANA, reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the desert in a four-wheel drive vehicle to meet with Gadhafi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. ||||| With the mournful lament of bagpipes and prayers of healing, the people of Lockerbie paid tribute to the 270 people killed when a bomb brought Pan Am Flight 103 crashing down on this tiny town 10 years ago Monday. The hundreds who packed Dryfesdale Parish Church heard messages from British Prime Minister Tony Blair and U.S. President Bill Clinton, who renewed their vows to punish the culprits who hid the bomb in a suitcase on Dec. 21, 1988. But they also heard quiet sobs that echoed throughout the century-old church as a few moments of silence were observed before the bagpiper blew her lament. ``In the lives that were lost, some very young, there was meaning and achievement,'' the Rev. David Almond told the gathering of about 600 people, which included 60 family members of those who perished. ``Our task in commemoration is to continue that meaning and to build on that achievement.'' The congregation heard the children of the local elementary school sing a tribute, ``Let There be Love,'' as well as a message from the queen. ``We pray on this anniversary that the families will find solace together in quiet remembrance across the world,'' the queen's message said. In a separate service in London's Westminster Abbey, attended by Blair, Foreign Secretary Robin Cook and Prince Andrew, the second son of Queen Elizabeth II, hundreds listened as one-by-one the names of the 259 passengers and 11 of Lockerbie's own residents were read out as a candle was lit for each. Simultaneous services were also held at Arlington National Cemetery in Virginia and in Syracuse, New York, which lost 35 college students in the crash. Each service began at 7:03 p.m. (1903 GMT), the moment when the plane disappeared from the radar screen above Scotland. ``This was a very positive, emotional day,'' Bert Ammerman of River Vale, New Jersey, whose brother Thomas died in the crash, said after the service. He said the people of Lockerbie have ``proven over the past 10 years that good intentions can overcome evil.'' Earlier in the day, Prince Philip, the queen's husband, laid a wreath in Lockerbie's cemetery, where the town's Roman Catholic parish priest at the time of the crash spoke to about 200 victims' relatives and townspeople about the ``ticking bomb'' of justice. ``Ten years ago, for you and for us, a bomb was ticking,'' the Rev. Pat Keegans told the crowd, many of them visibly moved. ``Be assured of this _ there is another bomb ticking _ the irresistible bomb of justice and truth. ``Be certain that our wreath-laying today is not a symbolic gesture. It is a declaration that we will not rest until we have justice and truth, until all who are responsible for your deaths are held accountable,'' he said. Two Libyan suspects have been indicted in connection with the bombing, but have not yet been turned over for trial. Last week, Libya's Parliament gave its conditional approval for a trial in the Netherlands by a Scottish court, but said some obstacles remained. The plane had just reached its cruising altitude of 31,000 feet (9,400 kms), 42 minutes after taking off from London's Heathrow Airport for New York, when it exploded in the night sky. The aircraft was felled by a small amount of high explosives smuggled on in a portable radio hidden inside a suitcase, which made its way as checked baggage from Malta to Frankfurt, Germany, and then to London. ||||| Louis Farrakhan, the leader of a U.S. Muslim group, met with Libyan leader Moammar Gadhafi on Sunday and congratulated him on his recovery from a hip injury, state-run Libyan radio reported. Improved health will enable Gadhafi to ``carry on his leading role in the service of Islamic causes in the world,'' Farrakhan was quoted as saying by the radio, monitored by the British Broadcasting Corp. Later, state-run television showed Gadhafi _ dressed in a brown robe and holding a cane _ meeting Farrakhan at his ceremonial tent in the Libyan capital, Tripoli. The broadcast was monitored in Cairo. Gadhafi underwent surgery last July after injuring his hip, reportedly while exercising. The visit was Farrakhan's fifth to Libya in the past three years. The leader of the U.S.-based Nation of Islam most recently visited in December 1997. It was not immediately clear how Farrakhan arrived in Libya or how long he would stay. Most visitors arrive by ferry from Malta or travel overland from Egypt or Tunisia; U.N. sanctions imposed in 1992 ban air travel to and from the country. Farrakhan repeatedly has urged an end to the sanctions, which were imposed to try to force Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am jetliner over Lockerbie, Scotland, that killed 270 people. Citing the sanctions and U.S. regulations, the Treasury Department prohibited Farrakhan from accepting a dlrs 250,000 prize he was awarded by Gadhafi in September 1996 for human rights work. The Treasury also barred his group from accepting Gadhafi's offer of a dlrs 1 billion gift for Nation of Islam activities. His Nation of Islam is a black nationalist group that says it is guided by the Koran. It is not considered a true Muslim sect by others who practice Islam. Farrakhan's message to America's black community is one of self-reliance, discipline, spirituality and separatism. Over the years, he has said that whites and blacks should live separately, that Jews are ``bloodsuckers'' who have a ``gutter religion,'' and that whites are ``subhuman.'' He accuses news media of taking his comments out of context. ||||| Libyan leader Moammar Gadhafi began a surprise visit to neighboring Tunisia on Monday, his first known trip since injuring his hip in July. Col. Gadhafi, whose country is under a U.N. air embargo, arrived by land for ``a visit of brotherhood and rest'' at the invitation of President Zine El Abidine Ben Ali, an official statement said. Tunisian television did not show the Libyan leader but said he met with Ben Ali and several government ministers in a desert oasis at Tozeur, 400 kms (240 miles) south of Tunis, where foreign leaders are entertained. Officials, however, did not give the duration or full itinerary of Gadhafi's visit. The trip was not announced in advance, though Ben Ali extended the invitation to Gadhafi when he visited Libya in August. Gadhafi was first driven to Gabes, 365 kms (200 miles) south of Tunis, after crossing the border at Ras Jedir where he was met by Interior Minister Ali Chaouch, officials said. It was Gadhafi's first known trip abroad since he broke a bone near his hip while exercising and underwent surgery in July, officials have said. The Libyan leader last visited Tunisia in January 1996, when he met Ban Ali in the southern town of Medenine. Since 1992, Libya has struggled with U.N. Security Council sanctions that ban direct flights to and from the country. The move was aimed at forcing Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am passenger plane over Lockerbie, Scotland, that killed 270 people. The council has agreed to suspend the sanctions once Libya turns the men over for a trial by Scottish judges according to Scottish law in the Netherlands, under a U.S.-British proposal. Gadhafi has offered to hand them over but demands any sentences be served in Dutch or Libyan prisons. ||||| Libya's justice minister on Wednesday said the two suspects in the 1988 bombing of a Pan Am jetliner should not become victims of Western politics when they go on trial. ``We want to be sure that the only aim of the trial is to show the truth ... and that it is held without a political or security background,'' Justice Minister Mohammed Belgasim al-Zuwiy said. He was addressing the General People's Congress, or Parliament, which opened a debate that will decide the fate of the two men who are wanted in connection with the Dec. 21, 1988 bombing. A total of 270 people on board and on ground were killed when the jetliner blew up over the Scottish town of Lockerbie. Libya has accepted in principle to a trial before a panel of Scottish judges in the Netherlands. But the hand over of the suspects has been held up over Libya's demand for a guarantee that the two men, if convicted, will be jailed in Libya. The United States and Britain insist that the two suspects serve their prison term in Britain. The Parliament meeting, expected to last five days, is being held in the northern coastal town of Sirte and was broadcast live on national television. Libyan media have suggested that Libyan leader Moammar Gadhafi does not have the authority to hand over the suspects and that any decision would have to be approved by the Congress. ``Our argument is that since this is an exceptional trial, therefore this exception should include serving the jail term in Libya, maybe under U.N. supervision,'' al-Zuwiy said. He said Libya is seeking the guarantees from the West to ensure that the trial will be ``honest, just .. and without loopholes that (would) leave our citizens in illegal, unjust and inappropriate circumstances.'' Opening the debate, Foreign Minister Omar al-Muntasser gave the background to the controversy since the Security Council imposed sanctions on Libya in 1992 to force it to hand over the Lockerbie suspects for trial. The sanctions include a ban on air travel from and to Libya, restricting diplomatic personnel and banning the purchase of oil equipment. Al-Zuwiy, the justice minister, said the two suspects will have the right to an appeal in the same court if it finds them guilty. On Saturday, U.N. Secretary-General Kofi Annan met with Gadhafi to iron out the details. No agreement was reached but Annan said Libya is expected to reach a decision soon. ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. Annan spoke to reporters in the Libyan capital of Tripoli after the meeting and again later when he arrived back at this Tunisian island, where he had begun his 15-hour stretch of diplomacy. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the Dec. 21, 1988, bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. On Sunday, British Foreign Secretary Robin Cook said in an interview with the British Broadcasting Corp. that ``I think you could sum up our mood as one of qualified optimism.'' He said he spoke with Annan on Sunday and was ``very encouraged by what he tells me.'' But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Annan said he was tired after arriving back in Jerba. He left Sunday for a summit of the Gulf Cooperation Council, a federation of six Gulf states, which begins Monday in the United Arab Emirates. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' State-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying Sunday that ``a solution to this crisis is within reach.'' Annan's meeting with Gadhafi took place after Libya's official news agency, JANA, initially reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the Libyan desert in a four-wheel drive vehicle to meet with Gadhadi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte, 250 miles (400 kilometers) east of Tripoli, but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. The Netherlands was chosen as a venue after Libya proposed a trial in a neutral country. But a disagreement has arisen because Libya wants the suspects jailed in the Netherlands or Libya if convicted, but the United States and Britain insist they be imprisoned in Scotland. ||||| Secretary General Kofi Annan said Wednesday he was extending his North African tour to include talks with Libyan authorities. The remark was made without elaboration at a news conference in Algiers hours before his arrival in Tunis, his final scheduled stop on a tour aimed at unblocking plans for a U.N. referendum on the disputed Western Sahara. During his visit to Tunis, Annan is to meet with authorities here to discuss ``major regional and international issues and the various initiatives aimed at solving unresolved problems,'' according to the local press. A Western diplomat, speaking in Algiers on condition of anonymity, said Annan would travel to Libya on Saturday to meet with authorities there on the 1988 Pan Am bombing that has led to U.N. sanctions against Libya. Annan's trip to Tunisia is scheduled to end Friday, according to the official program. The discrepancy in the timing could not be immediately clarified. The U.N. Security Council imposed sanctions in 1992, including a flight ban, to try to force Libya to hand over two suspects in the bombing that killed 270 people. The sanctions ban flights to and from the country. Neighboring Tunisia provides a land route for those traveling to Libya from the region. A week ago, before leaving for North Africa, Annan held out the possibility of a Libyan trip -- but only to help close a deal to try the two suspects. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Annan had said last week that he had hoped for a breakthrough in the case by the end of November. He said then that a trip to Libya ``to bring the issue finally to closure ... has not been excluded.'' During his Algerian stay, ||||| Qatar's foreign minister, Sheik Hamad bin Jassem bin Jaber Al Thani, met Libyan leader Moammar Gadhafi in the desert on Saturday, Libya's official television reported. The television, monitored in Cairo, did not say where the meeting took place, but it showed Gadhafi, dressed in a muddy brown gown and matching cap, receiving the Qatari minister in a tent. Al Thani handed Gadhafi a letter that reaffirmed Qatar's support for Libya ``in its just position toward the so-called Lockerbie case,'' the television said, referring to Libya's objections to the U.N. sanctions imposed in 1992 to press it to hand over two Libyans wanted for the 1988 bombing of a Pan Am airliner over the Scottish town of Lockerbie that left 270 people dead. The television gave no other details about the visit. ||||| TRIPOLI, Libya (AP) _ U.N. Secretary-General Kofi Annan arrived in Libya Saturday for talks aimed at bringing to trial two Libyan suspects in the 1988 Pan Am bombing over Lockerbie, Scotland. Annan's one-day visit to meet with Libyan leader Col. Moammar Gadhafi followed reports in the Libyan media that Gadhafi had no authority to hand over the suspects. This position would indicate that Gadhafi is giving himself enough diplomatic room in the event he decides against giving up the suspects. Annan flew aboard a special plane from the Tunisian resort island of Jerba after receiving a clearance from the U.N. Sanctions Committee to make the flight. A Libyan official, speaking on condition of anonymity, said Annan had arrived in the country but refused to give details. Libyan media, controlled by the government, did not report on the visit in a sign that the subject is of great sensitivity. It was not known where Annan will meet with Gadhafi but diplomats said Friday the meeting will likely take place in the northern coastal town of Sirte, 400 kilometers (250 miles) east of the Libyan capital of Tripoli. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two alleged intelligence agents, Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah. They are accused by the United States and Britain of blowing up a Pan Am airliner over the Scottish village of Lockerbie on Dec. 21, 1988. All 259 people aboard the Boeing 747 and 11 people on ground were killed. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Dutch authorities say they have made arrangements to hold the trial at Camp Zeist, a former air force base near Utrecht. On Friday, Annan said the U.N. team ``has done some good work on the Lockerbie dossier.'' ``We will try to resolve some problems and to find solutions together _ once and for all,'' Annan said. But in an apparent bid to distance the Libyan leader from a decision on the suspects, Libya's official news agency JANA said Friday that Gadhafi ``is neither president nor prime minister nor foreign minister, but only the leader of the Libyan revolution.'' ``As such, Col. Gadhafi is not empowered to sign an agreement,'' the report said. JANA suggested that a decision on handing over the suspects would have to be approved by some 500 grassroots national committees before being decided by the Parliament. The Netherlands was chosen as a venue for the trial after Libya itself proposed the trial be held in a third country. Since then a new hurdle has cropped up over the imprisonment of the suspects, if convicted. Libya wants them jailed in the Netherlands or Libya, but the United States and Britain say they should be imprisoned in Scotland and refuse to negotiate the issue. The U.N. sanctions on Libya do not cover oil exports, Libya's economic lifeblood. They ban air travel to and from the country and arms sales. Some Libyan assets abroad have also been frozen. But many African countries have defied the air ban and their leaders have flown in and out of Libya.

Kofi Annan talked with Gadhafi in Libya on bringing the 1988 Pan Am bombing suspects to trial. He thinks it will happen soon. Libya agrees to a trial in a 3rd country. The West demands any sentence be served in Scotland. Libya insists on a Libyan jail. Libya claims Gadhafi doesn't have authority to give up the suspects. The UN bans air travel to and from Libya to force the turning over of the suspects. Gadhafi traveled by car to visited Tunisia. Annan had UN clearance to fly to Libya. Qatar reaffirms its support for Libya. Louis Farrakhan visits Libya but the US bars him from accepting Libyan money. Ceremonies were held on the bombing's 10th anniversary.

TUNIS, Tunisia (AP) _ U.N. Secretary-General Kofi Annan left for Libya Saturday to hold talks aimed at putting two suspects on trial for the 1988 Pan Am bombing over Lockerbie. Annan's one-day, 2nd graf pvs ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. On Sunday, state-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying that ``a solution to this crisis is within reach.'' He credited Annan's talks with Omar al-Muntasser, Libya's foreign minister, who met with Annan in Sirte before Annan went on to talks with Gadhafi. Sirte is 400 kilometers (250 miles) east of the Libyan capital Tripoli. The official spoke of ``fruitful talks'' but gave no details. The broadcast was monitored by the British Broadcasting Corp. Also Sunday, British Foreign Secretary Robin Cook said in an interview with the BBC that he had spoken with Annan on Sunday and was ``very encouraged by what he tells me.'' He added: ``I think you could sum up our mood as one of qualified optimism.'' Britain would like to see the two suspects in custody by Dec. 21, the 10th anniversary of the Pan Am bombing. But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Libya has asked that any prison terms be served in the Netherlands or Libya. Annan spoke to reporters in Tripoli after the meeting with Gadhafi and later when he arrived back at this Tunisian island, where he had begun the day of diplomacy that lasted nearly 15 hours. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the 1988 bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. Annan left Jerba on Sunday for the United Arab Emirates, where he will attend a summit of the Gulf Cooperation Council, a federation of six Arab Gulf states. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' The meeting with Gadhafi took place after Libya's official news agency, JANA, reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the desert in a four-wheel drive vehicle to meet with Gadhafi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. ||||| With the mournful lament of bagpipes and prayers of healing, the people of Lockerbie paid tribute to the 270 people killed when a bomb brought Pan Am Flight 103 crashing down on this tiny town 10 years ago Monday. The hundreds who packed Dryfesdale Parish Church heard messages from British Prime Minister Tony Blair and U.S. President Bill Clinton, who renewed their vows to punish the culprits who hid the bomb in a suitcase on Dec. 21, 1988. But they also heard quiet sobs that echoed throughout the century-old church as a few moments of silence were observed before the bagpiper blew her lament. ``In the lives that were lost, some very young, there was meaning and achievement,'' the Rev. David Almond told the gathering of about 600 people, which included 60 family members of those who perished. ``Our task in commemoration is to continue that meaning and to build on that achievement.'' The congregation heard the children of the local elementary school sing a tribute, ``Let There be Love,'' as well as a message from the queen. ``We pray on this anniversary that the families will find solace together in quiet remembrance across the world,'' the queen's message said. In a separate service in London's Westminster Abbey, attended by Blair, Foreign Secretary Robin Cook and Prince Andrew, the second son of Queen Elizabeth II, hundreds listened as one-by-one the names of the 259 passengers and 11 of Lockerbie's own residents were read out as a candle was lit for each. Simultaneous services were also held at Arlington National Cemetery in Virginia and in Syracuse, New York, which lost 35 college students in the crash. Each service began at 7:03 p.m. (1903 GMT), the moment when the plane disappeared from the radar screen above Scotland. ``This was a very positive, emotional day,'' Bert Ammerman of River Vale, New Jersey, whose brother Thomas died in the crash, said after the service. He said the people of Lockerbie have ``proven over the past 10 years that good intentions can overcome evil.'' Earlier in the day, Prince Philip, the queen's husband, laid a wreath in Lockerbie's cemetery, where the town's Roman Catholic parish priest at the time of the crash spoke to about 200 victims' relatives and townspeople about the ``ticking bomb'' of justice. ``Ten years ago, for you and for us, a bomb was ticking,'' the Rev. Pat Keegans told the crowd, many of them visibly moved. ``Be assured of this _ there is another bomb ticking _ the irresistible bomb of justice and truth. ``Be certain that our wreath-laying today is not a symbolic gesture. It is a declaration that we will not rest until we have justice and truth, until all who are responsible for your deaths are held accountable,'' he said. Two Libyan suspects have been indicted in connection with the bombing, but have not yet been turned over for trial. Last week, Libya's Parliament gave its conditional approval for a trial in the Netherlands by a Scottish court, but said some obstacles remained. The plane had just reached its cruising altitude of 31,000 feet (9,400 kms), 42 minutes after taking off from London's Heathrow Airport for New York, when it exploded in the night sky. The aircraft was felled by a small amount of high explosives smuggled on in a portable radio hidden inside a suitcase, which made its way as checked baggage from Malta to Frankfurt, Germany, and then to London. ||||| Louis Farrakhan, the leader of a U.S. Muslim group, met with Libyan leader Moammar Gadhafi on Sunday and congratulated him on his recovery from a hip injury, state-run Libyan radio reported. Improved health will enable Gadhafi to ``carry on his leading role in the service of Islamic causes in the world,'' Farrakhan was quoted as saying by the radio, monitored by the British Broadcasting Corp. Later, state-run television showed Gadhafi _ dressed in a brown robe and holding a cane _ meeting Farrakhan at his ceremonial tent in the Libyan capital, Tripoli. The broadcast was monitored in Cairo. Gadhafi underwent surgery last July after injuring his hip, reportedly while exercising. The visit was Farrakhan's fifth to Libya in the past three years. The leader of the U.S.-based Nation of Islam most recently visited in December 1997. It was not immediately clear how Farrakhan arrived in Libya or how long he would stay. Most visitors arrive by ferry from Malta or travel overland from Egypt or Tunisia; U.N. sanctions imposed in 1992 ban air travel to and from the country. Farrakhan repeatedly has urged an end to the sanctions, which were imposed to try to force Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am jetliner over Lockerbie, Scotland, that killed 270 people. Citing the sanctions and U.S. regulations, the Treasury Department prohibited Farrakhan from accepting a dlrs 250,000 prize he was awarded by Gadhafi in September 1996 for human rights work. The Treasury also barred his group from accepting Gadhafi's offer of a dlrs 1 billion gift for Nation of Islam activities. His Nation of Islam is a black nationalist group that says it is guided by the Koran. It is not considered a true Muslim sect by others who practice Islam. Farrakhan's message to America's black community is one of self-reliance, discipline, spirituality and separatism. Over the years, he has said that whites and blacks should live separately, that Jews are ``bloodsuckers'' who have a ``gutter religion,'' and that whites are ``subhuman.'' He accuses news media of taking his comments out of context. ||||| Libyan leader Moammar Gadhafi began a surprise visit to neighboring Tunisia on Monday, his first known trip since injuring his hip in July. Col. Gadhafi, whose country is under a U.N. air embargo, arrived by land for ``a visit of brotherhood and rest'' at the invitation of President Zine El Abidine Ben Ali, an official statement said. Tunisian television did not show the Libyan leader but said he met with Ben Ali and several government ministers in a desert oasis at Tozeur, 400 kms (240 miles) south of Tunis, where foreign leaders are entertained. Officials, however, did not give the duration or full itinerary of Gadhafi's visit. The trip was not announced in advance, though Ben Ali extended the invitation to Gadhafi when he visited Libya in August. Gadhafi was first driven to Gabes, 365 kms (200 miles) south of Tunis, after crossing the border at Ras Jedir where he was met by Interior Minister Ali Chaouch, officials said. It was Gadhafi's first known trip abroad since he broke a bone near his hip while exercising and underwent surgery in July, officials have said. The Libyan leader last visited Tunisia in January 1996, when he met Ban Ali in the southern town of Medenine. Since 1992, Libya has struggled with U.N. Security Council sanctions that ban direct flights to and from the country. The move was aimed at forcing Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am passenger plane over Lockerbie, Scotland, that killed 270 people. The council has agreed to suspend the sanctions once Libya turns the men over for a trial by Scottish judges according to Scottish law in the Netherlands, under a U.S.-British proposal. Gadhafi has offered to hand them over but demands any sentences be served in Dutch or Libyan prisons. ||||| Libya's justice minister on Wednesday said the two suspects in the 1988 bombing of a Pan Am jetliner should not become victims of Western politics when they go on trial. ``We want to be sure that the only aim of the trial is to show the truth ... and that it is held without a political or security background,'' Justice Minister Mohammed Belgasim al-Zuwiy said. He was addressing the General People's Congress, or Parliament, which opened a debate that will decide the fate of the two men who are wanted in connection with the Dec. 21, 1988 bombing. A total of 270 people on board and on ground were killed when the jetliner blew up over the Scottish town of Lockerbie. Libya has accepted in principle to a trial before a panel of Scottish judges in the Netherlands. But the hand over of the suspects has been held up over Libya's demand for a guarantee that the two men, if convicted, will be jailed in Libya. The United States and Britain insist that the two suspects serve their prison term in Britain. The Parliament meeting, expected to last five days, is being held in the northern coastal town of Sirte and was broadcast live on national television. Libyan media have suggested that Libyan leader Moammar Gadhafi does not have the authority to hand over the suspects and that any decision would have to be approved by the Congress. ``Our argument is that since this is an exceptional trial, therefore this exception should include serving the jail term in Libya, maybe under U.N. supervision,'' al-Zuwiy said. He said Libya is seeking the guarantees from the West to ensure that the trial will be ``honest, just .. and without loopholes that (would) leave our citizens in illegal, unjust and inappropriate circumstances.'' Opening the debate, Foreign Minister Omar al-Muntasser gave the background to the controversy since the Security Council imposed sanctions on Libya in 1992 to force it to hand over the Lockerbie suspects for trial. The sanctions include a ban on air travel from and to Libya, restricting diplomatic personnel and banning the purchase of oil equipment. Al-Zuwiy, the justice minister, said the two suspects will have the right to an appeal in the same court if it finds them guilty. On Saturday, U.N. Secretary-General Kofi Annan met with Gadhafi to iron out the details. No agreement was reached but Annan said Libya is expected to reach a decision soon. ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. Annan spoke to reporters in the Libyan capital of Tripoli after the meeting and again later when he arrived back at this Tunisian island, where he had begun his 15-hour stretch of diplomacy. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the Dec. 21, 1988, bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. On Sunday, British Foreign Secretary Robin Cook said in an interview with the British Broadcasting Corp. that ``I think you could sum up our mood as one of qualified optimism.'' He said he spoke with Annan on Sunday and was ``very encouraged by what he tells me.'' But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Annan said he was tired after arriving back in Jerba. He left Sunday for a summit of the Gulf Cooperation Council, a federation of six Gulf states, which begins Monday in the United Arab Emirates. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' State-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying Sunday that ``a solution to this crisis is within reach.'' Annan's meeting with Gadhafi took place after Libya's official news agency, JANA, initially reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the Libyan desert in a four-wheel drive vehicle to meet with Gadhadi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte, 250 miles (400 kilometers) east of Tripoli, but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. The Netherlands was chosen as a venue after Libya proposed a trial in a neutral country. But a disagreement has arisen because Libya wants the suspects jailed in the Netherlands or Libya if convicted, but the United States and Britain insist they be imprisoned in Scotland. ||||| Secretary General Kofi Annan said Wednesday he was extending his North African tour to include talks with Libyan authorities. The remark was made without elaboration at a news conference in Algiers hours before his arrival in Tunis, his final scheduled stop on a tour aimed at unblocking plans for a U.N. referendum on the disputed Western Sahara. During his visit to Tunis, Annan is to meet with authorities here to discuss ``major regional and international issues and the various initiatives aimed at solving unresolved problems,'' according to the local press. A Western diplomat, speaking in Algiers on condition of anonymity, said Annan would travel to Libya on Saturday to meet with authorities there on the 1988 Pan Am bombing that has led to U.N. sanctions against Libya. Annan's trip to Tunisia is scheduled to end Friday, according to the official program. The discrepancy in the timing could not be immediately clarified. The U.N. Security Council imposed sanctions in 1992, including a flight ban, to try to force Libya to hand over two suspects in the bombing that killed 270 people. The sanctions ban flights to and from the country. Neighboring Tunisia provides a land route for those traveling to Libya from the region. A week ago, before leaving for North Africa, Annan held out the possibility of a Libyan trip -- but only to help close a deal to try the two suspects. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Annan had said last week that he had hoped for a breakthrough in the case by the end of November. He said then that a trip to Libya ``to bring the issue finally to closure ... has not been excluded.'' During his Algerian stay, ||||| Qatar's foreign minister, Sheik Hamad bin Jassem bin Jaber Al Thani, met Libyan leader Moammar Gadhafi in the desert on Saturday, Libya's official television reported. The television, monitored in Cairo, did not say where the meeting took place, but it showed Gadhafi, dressed in a muddy brown gown and matching cap, receiving the Qatari minister in a tent. Al Thani handed Gadhafi a letter that reaffirmed Qatar's support for Libya ``in its just position toward the so-called Lockerbie case,'' the television said, referring to Libya's objections to the U.N. sanctions imposed in 1992 to press it to hand over two Libyans wanted for the 1988 bombing of a Pan Am airliner over the Scottish town of Lockerbie that left 270 people dead. The television gave no other details about the visit. ||||| TRIPOLI, Libya (AP) _ U.N. Secretary-General Kofi Annan arrived in Libya Saturday for talks aimed at bringing to trial two Libyan suspects in the 1988 Pan Am bombing over Lockerbie, Scotland. Annan's one-day visit to meet with Libyan leader Col. Moammar Gadhafi followed reports in the Libyan media that Gadhafi had no authority to hand over the suspects. This position would indicate that Gadhafi is giving himself enough diplomatic room in the event he decides against giving up the suspects. Annan flew aboard a special plane from the Tunisian resort island of Jerba after receiving a clearance from the U.N. Sanctions Committee to make the flight. A Libyan official, speaking on condition of anonymity, said Annan had arrived in the country but refused to give details. Libyan media, controlled by the government, did not report on the visit in a sign that the subject is of great sensitivity. It was not known where Annan will meet with Gadhafi but diplomats said Friday the meeting will likely take place in the northern coastal town of Sirte, 400 kilometers (250 miles) east of the Libyan capital of Tripoli. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two alleged intelligence agents, Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah. They are accused by the United States and Britain of blowing up a Pan Am airliner over the Scottish village of Lockerbie on Dec. 21, 1988. All 259 people aboard the Boeing 747 and 11 people on ground were killed. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Dutch authorities say they have made arrangements to hold the trial at Camp Zeist, a former air force base near Utrecht. On Friday, Annan said the U.N. team ``has done some good work on the Lockerbie dossier.'' ``We will try to resolve some problems and to find solutions together _ once and for all,'' Annan said. But in an apparent bid to distance the Libyan leader from a decision on the suspects, Libya's official news agency JANA said Friday that Gadhafi ``is neither president nor prime minister nor foreign minister, but only the leader of the Libyan revolution.'' ``As such, Col. Gadhafi is not empowered to sign an agreement,'' the report said. JANA suggested that a decision on handing over the suspects would have to be approved by some 500 grassroots national committees before being decided by the Parliament. The Netherlands was chosen as a venue for the trial after Libya itself proposed the trial be held in a third country. Since then a new hurdle has cropped up over the imprisonment of the suspects, if convicted. Libya wants them jailed in the Netherlands or Libya, but the United States and Britain say they should be imprisoned in Scotland and refuse to negotiate the issue. The U.N. sanctions on Libya do not cover oil exports, Libya's economic lifeblood. They ban air travel to and from the country and arms sales. Some Libyan assets abroad have also been frozen. But many African countries have defied the air ban and their leaders have flown in and out of Libya.

UN sanctions barring air travel force Gadhafi to travel by land to visit Tunisia. Farrakhan visits Gadhafi and urges the UN to lift sanctions imposed to force the hand over of 2 1988 Pan Am bombing suspects. UN Secretary General Annan goes to Libya for talks aimed at bringing the suspects to trial. Annan thinks an arrangement could be made soon. Libya is serious and ready to find a solution. Libya agrees to the suspects being tried by Scottish judges in the Netherlands, but wants them jailed in Libya if convicted. The U.S. and Britain insist on British prison. Qatar supports Libya's position. U.S. and British leaders vow to bring the suspects to justice.

TUNIS, Tunisia (AP) _ U.N. Secretary-General Kofi Annan left for Libya Saturday to hold talks aimed at putting two suspects on trial for the 1988 Pan Am bombing over Lockerbie. Annan's one-day, 2nd graf pvs ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. On Sunday, state-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying that ``a solution to this crisis is within reach.'' He credited Annan's talks with Omar al-Muntasser, Libya's foreign minister, who met with Annan in Sirte before Annan went on to talks with Gadhafi. Sirte is 400 kilometers (250 miles) east of the Libyan capital Tripoli. The official spoke of ``fruitful talks'' but gave no details. The broadcast was monitored by the British Broadcasting Corp. Also Sunday, British Foreign Secretary Robin Cook said in an interview with the BBC that he had spoken with Annan on Sunday and was ``very encouraged by what he tells me.'' He added: ``I think you could sum up our mood as one of qualified optimism.'' Britain would like to see the two suspects in custody by Dec. 21, the 10th anniversary of the Pan Am bombing. But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Libya has asked that any prison terms be served in the Netherlands or Libya. Annan spoke to reporters in Tripoli after the meeting with Gadhafi and later when he arrived back at this Tunisian island, where he had begun the day of diplomacy that lasted nearly 15 hours. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the 1988 bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. Annan left Jerba on Sunday for the United Arab Emirates, where he will attend a summit of the Gulf Cooperation Council, a federation of six Arab Gulf states. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' The meeting with Gadhafi took place after Libya's official news agency, JANA, reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the desert in a four-wheel drive vehicle to meet with Gadhafi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. ||||| With the mournful lament of bagpipes and prayers of healing, the people of Lockerbie paid tribute to the 270 people killed when a bomb brought Pan Am Flight 103 crashing down on this tiny town 10 years ago Monday. The hundreds who packed Dryfesdale Parish Church heard messages from British Prime Minister Tony Blair and U.S. President Bill Clinton, who renewed their vows to punish the culprits who hid the bomb in a suitcase on Dec. 21, 1988. But they also heard quiet sobs that echoed throughout the century-old church as a few moments of silence were observed before the bagpiper blew her lament. ``In the lives that were lost, some very young, there was meaning and achievement,'' the Rev. David Almond told the gathering of about 600 people, which included 60 family members of those who perished. ``Our task in commemoration is to continue that meaning and to build on that achievement.'' The congregation heard the children of the local elementary school sing a tribute, ``Let There be Love,'' as well as a message from the queen. ``We pray on this anniversary that the families will find solace together in quiet remembrance across the world,'' the queen's message said. In a separate service in London's Westminster Abbey, attended by Blair, Foreign Secretary Robin Cook and Prince Andrew, the second son of Queen Elizabeth II, hundreds listened as one-by-one the names of the 259 passengers and 11 of Lockerbie's own residents were read out as a candle was lit for each. Simultaneous services were also held at Arlington National Cemetery in Virginia and in Syracuse, New York, which lost 35 college students in the crash. Each service began at 7:03 p.m. (1903 GMT), the moment when the plane disappeared from the radar screen above Scotland. ``This was a very positive, emotional day,'' Bert Ammerman of River Vale, New Jersey, whose brother Thomas died in the crash, said after the service. He said the people of Lockerbie have ``proven over the past 10 years that good intentions can overcome evil.'' Earlier in the day, Prince Philip, the queen's husband, laid a wreath in Lockerbie's cemetery, where the town's Roman Catholic parish priest at the time of the crash spoke to about 200 victims' relatives and townspeople about the ``ticking bomb'' of justice. ``Ten years ago, for you and for us, a bomb was ticking,'' the Rev. Pat Keegans told the crowd, many of them visibly moved. ``Be assured of this _ there is another bomb ticking _ the irresistible bomb of justice and truth. ``Be certain that our wreath-laying today is not a symbolic gesture. It is a declaration that we will not rest until we have justice and truth, until all who are responsible for your deaths are held accountable,'' he said. Two Libyan suspects have been indicted in connection with the bombing, but have not yet been turned over for trial. Last week, Libya's Parliament gave its conditional approval for a trial in the Netherlands by a Scottish court, but said some obstacles remained. The plane had just reached its cruising altitude of 31,000 feet (9,400 kms), 42 minutes after taking off from London's Heathrow Airport for New York, when it exploded in the night sky. The aircraft was felled by a small amount of high explosives smuggled on in a portable radio hidden inside a suitcase, which made its way as checked baggage from Malta to Frankfurt, Germany, and then to London. ||||| Louis Farrakhan, the leader of a U.S. Muslim group, met with Libyan leader Moammar Gadhafi on Sunday and congratulated him on his recovery from a hip injury, state-run Libyan radio reported. Improved health will enable Gadhafi to ``carry on his leading role in the service of Islamic causes in the world,'' Farrakhan was quoted as saying by the radio, monitored by the British Broadcasting Corp. Later, state-run television showed Gadhafi _ dressed in a brown robe and holding a cane _ meeting Farrakhan at his ceremonial tent in the Libyan capital, Tripoli. The broadcast was monitored in Cairo. Gadhafi underwent surgery last July after injuring his hip, reportedly while exercising. The visit was Farrakhan's fifth to Libya in the past three years. The leader of the U.S.-based Nation of Islam most recently visited in December 1997. It was not immediately clear how Farrakhan arrived in Libya or how long he would stay. Most visitors arrive by ferry from Malta or travel overland from Egypt or Tunisia; U.N. sanctions imposed in 1992 ban air travel to and from the country. Farrakhan repeatedly has urged an end to the sanctions, which were imposed to try to force Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am jetliner over Lockerbie, Scotland, that killed 270 people. Citing the sanctions and U.S. regulations, the Treasury Department prohibited Farrakhan from accepting a dlrs 250,000 prize he was awarded by Gadhafi in September 1996 for human rights work. The Treasury also barred his group from accepting Gadhafi's offer of a dlrs 1 billion gift for Nation of Islam activities. His Nation of Islam is a black nationalist group that says it is guided by the Koran. It is not considered a true Muslim sect by others who practice Islam. Farrakhan's message to America's black community is one of self-reliance, discipline, spirituality and separatism. Over the years, he has said that whites and blacks should live separately, that Jews are ``bloodsuckers'' who have a ``gutter religion,'' and that whites are ``subhuman.'' He accuses news media of taking his comments out of context. ||||| Libyan leader Moammar Gadhafi began a surprise visit to neighboring Tunisia on Monday, his first known trip since injuring his hip in July. Col. Gadhafi, whose country is under a U.N. air embargo, arrived by land for ``a visit of brotherhood and rest'' at the invitation of President Zine El Abidine Ben Ali, an official statement said. Tunisian television did not show the Libyan leader but said he met with Ben Ali and several government ministers in a desert oasis at Tozeur, 400 kms (240 miles) south of Tunis, where foreign leaders are entertained. Officials, however, did not give the duration or full itinerary of Gadhafi's visit. The trip was not announced in advance, though Ben Ali extended the invitation to Gadhafi when he visited Libya in August. Gadhafi was first driven to Gabes, 365 kms (200 miles) south of Tunis, after crossing the border at Ras Jedir where he was met by Interior Minister Ali Chaouch, officials said. It was Gadhafi's first known trip abroad since he broke a bone near his hip while exercising and underwent surgery in July, officials have said. The Libyan leader last visited Tunisia in January 1996, when he met Ban Ali in the southern town of Medenine. Since 1992, Libya has struggled with U.N. Security Council sanctions that ban direct flights to and from the country. The move was aimed at forcing Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am passenger plane over Lockerbie, Scotland, that killed 270 people. The council has agreed to suspend the sanctions once Libya turns the men over for a trial by Scottish judges according to Scottish law in the Netherlands, under a U.S.-British proposal. Gadhafi has offered to hand them over but demands any sentences be served in Dutch or Libyan prisons. ||||| Libya's justice minister on Wednesday said the two suspects in the 1988 bombing of a Pan Am jetliner should not become victims of Western politics when they go on trial. ``We want to be sure that the only aim of the trial is to show the truth ... and that it is held without a political or security background,'' Justice Minister Mohammed Belgasim al-Zuwiy said. He was addressing the General People's Congress, or Parliament, which opened a debate that will decide the fate of the two men who are wanted in connection with the Dec. 21, 1988 bombing. A total of 270 people on board and on ground were killed when the jetliner blew up over the Scottish town of Lockerbie. Libya has accepted in principle to a trial before a panel of Scottish judges in the Netherlands. But the hand over of the suspects has been held up over Libya's demand for a guarantee that the two men, if convicted, will be jailed in Libya. The United States and Britain insist that the two suspects serve their prison term in Britain. The Parliament meeting, expected to last five days, is being held in the northern coastal town of Sirte and was broadcast live on national television. Libyan media have suggested that Libyan leader Moammar Gadhafi does not have the authority to hand over the suspects and that any decision would have to be approved by the Congress. ``Our argument is that since this is an exceptional trial, therefore this exception should include serving the jail term in Libya, maybe under U.N. supervision,'' al-Zuwiy said. He said Libya is seeking the guarantees from the West to ensure that the trial will be ``honest, just .. and without loopholes that (would) leave our citizens in illegal, unjust and inappropriate circumstances.'' Opening the debate, Foreign Minister Omar al-Muntasser gave the background to the controversy since the Security Council imposed sanctions on Libya in 1992 to force it to hand over the Lockerbie suspects for trial. The sanctions include a ban on air travel from and to Libya, restricting diplomatic personnel and banning the purchase of oil equipment. Al-Zuwiy, the justice minister, said the two suspects will have the right to an appeal in the same court if it finds them guilty. On Saturday, U.N. Secretary-General Kofi Annan met with Gadhafi to iron out the details. No agreement was reached but Annan said Libya is expected to reach a decision soon. ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. Annan spoke to reporters in the Libyan capital of Tripoli after the meeting and again later when he arrived back at this Tunisian island, where he had begun his 15-hour stretch of diplomacy. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the Dec. 21, 1988, bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. On Sunday, British Foreign Secretary Robin Cook said in an interview with the British Broadcasting Corp. that ``I think you could sum up our mood as one of qualified optimism.'' He said he spoke with Annan on Sunday and was ``very encouraged by what he tells me.'' But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Annan said he was tired after arriving back in Jerba. He left Sunday for a summit of the Gulf Cooperation Council, a federation of six Gulf states, which begins Monday in the United Arab Emirates. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' State-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying Sunday that ``a solution to this crisis is within reach.'' Annan's meeting with Gadhafi took place after Libya's official news agency, JANA, initially reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the Libyan desert in a four-wheel drive vehicle to meet with Gadhadi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte, 250 miles (400 kilometers) east of Tripoli, but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. The Netherlands was chosen as a venue after Libya proposed a trial in a neutral country. But a disagreement has arisen because Libya wants the suspects jailed in the Netherlands or Libya if convicted, but the United States and Britain insist they be imprisoned in Scotland. ||||| Secretary General Kofi Annan said Wednesday he was extending his North African tour to include talks with Libyan authorities. The remark was made without elaboration at a news conference in Algiers hours before his arrival in Tunis, his final scheduled stop on a tour aimed at unblocking plans for a U.N. referendum on the disputed Western Sahara. During his visit to Tunis, Annan is to meet with authorities here to discuss ``major regional and international issues and the various initiatives aimed at solving unresolved problems,'' according to the local press. A Western diplomat, speaking in Algiers on condition of anonymity, said Annan would travel to Libya on Saturday to meet with authorities there on the 1988 Pan Am bombing that has led to U.N. sanctions against Libya. Annan's trip to Tunisia is scheduled to end Friday, according to the official program. The discrepancy in the timing could not be immediately clarified. The U.N. Security Council imposed sanctions in 1992, including a flight ban, to try to force Libya to hand over two suspects in the bombing that killed 270 people. The sanctions ban flights to and from the country. Neighboring Tunisia provides a land route for those traveling to Libya from the region. A week ago, before leaving for North Africa, Annan held out the possibility of a Libyan trip -- but only to help close a deal to try the two suspects. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Annan had said last week that he had hoped for a breakthrough in the case by the end of November. He said then that a trip to Libya ``to bring the issue finally to closure ... has not been excluded.'' During his Algerian stay, ||||| Qatar's foreign minister, Sheik Hamad bin Jassem bin Jaber Al Thani, met Libyan leader Moammar Gadhafi in the desert on Saturday, Libya's official television reported. The television, monitored in Cairo, did not say where the meeting took place, but it showed Gadhafi, dressed in a muddy brown gown and matching cap, receiving the Qatari minister in a tent. Al Thani handed Gadhafi a letter that reaffirmed Qatar's support for Libya ``in its just position toward the so-called Lockerbie case,'' the television said, referring to Libya's objections to the U.N. sanctions imposed in 1992 to press it to hand over two Libyans wanted for the 1988 bombing of a Pan Am airliner over the Scottish town of Lockerbie that left 270 people dead. The television gave no other details about the visit. ||||| TRIPOLI, Libya (AP) _ U.N. Secretary-General Kofi Annan arrived in Libya Saturday for talks aimed at bringing to trial two Libyan suspects in the 1988 Pan Am bombing over Lockerbie, Scotland. Annan's one-day visit to meet with Libyan leader Col. Moammar Gadhafi followed reports in the Libyan media that Gadhafi had no authority to hand over the suspects. This position would indicate that Gadhafi is giving himself enough diplomatic room in the event he decides against giving up the suspects. Annan flew aboard a special plane from the Tunisian resort island of Jerba after receiving a clearance from the U.N. Sanctions Committee to make the flight. A Libyan official, speaking on condition of anonymity, said Annan had arrived in the country but refused to give details. Libyan media, controlled by the government, did not report on the visit in a sign that the subject is of great sensitivity. It was not known where Annan will meet with Gadhafi but diplomats said Friday the meeting will likely take place in the northern coastal town of Sirte, 400 kilometers (250 miles) east of the Libyan capital of Tripoli. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two alleged intelligence agents, Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah. They are accused by the United States and Britain of blowing up a Pan Am airliner over the Scottish village of Lockerbie on Dec. 21, 1988. All 259 people aboard the Boeing 747 and 11 people on ground were killed. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Dutch authorities say they have made arrangements to hold the trial at Camp Zeist, a former air force base near Utrecht. On Friday, Annan said the U.N. team ``has done some good work on the Lockerbie dossier.'' ``We will try to resolve some problems and to find solutions together _ once and for all,'' Annan said. But in an apparent bid to distance the Libyan leader from a decision on the suspects, Libya's official news agency JANA said Friday that Gadhafi ``is neither president nor prime minister nor foreign minister, but only the leader of the Libyan revolution.'' ``As such, Col. Gadhafi is not empowered to sign an agreement,'' the report said. JANA suggested that a decision on handing over the suspects would have to be approved by some 500 grassroots national committees before being decided by the Parliament. The Netherlands was chosen as a venue for the trial after Libya itself proposed the trial be held in a third country. Since then a new hurdle has cropped up over the imprisonment of the suspects, if convicted. Libya wants them jailed in the Netherlands or Libya, but the United States and Britain say they should be imprisoned in Scotland and refuse to negotiate the issue. The U.N. sanctions on Libya do not cover oil exports, Libya's economic lifeblood. They ban air travel to and from the country and arms sales. Some Libyan assets abroad have also been frozen. But many African countries have defied the air ban and their leaders have flown in and out of Libya.

On the eve of the 10th anniversary of the 1988 downing of Pan Am 103 over Lockerbie, Scotland, there is hope that the Libya suspects might soon be brought to trial. UN General Secretary Kofi Annan has met with Libyan officials and an agreement in principle has been reached on the need for a trial. Libya seeks assurances that the trial will not be politicized. Libya has been under a UN flight ban since 1992 in an effort to get them to turn over the suspected bombers for trial by Scottish authorities. The citizens of Lockerbie marked the anniversary of the bombing with a memorial service.

TUNIS, Tunisia (AP) _ U.N. Secretary-General Kofi Annan left for Libya Saturday to hold talks aimed at putting two suspects on trial for the 1988 Pan Am bombing over Lockerbie. Annan's one-day, 2nd graf pvs ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. On Sunday, state-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying that ``a solution to this crisis is within reach.'' He credited Annan's talks with Omar al-Muntasser, Libya's foreign minister, who met with Annan in Sirte before Annan went on to talks with Gadhafi. Sirte is 400 kilometers (250 miles) east of the Libyan capital Tripoli. The official spoke of ``fruitful talks'' but gave no details. The broadcast was monitored by the British Broadcasting Corp. Also Sunday, British Foreign Secretary Robin Cook said in an interview with the BBC that he had spoken with Annan on Sunday and was ``very encouraged by what he tells me.'' He added: ``I think you could sum up our mood as one of qualified optimism.'' Britain would like to see the two suspects in custody by Dec. 21, the 10th anniversary of the Pan Am bombing. But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Libya has asked that any prison terms be served in the Netherlands or Libya. Annan spoke to reporters in Tripoli after the meeting with Gadhafi and later when he arrived back at this Tunisian island, where he had begun the day of diplomacy that lasted nearly 15 hours. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the 1988 bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. Annan left Jerba on Sunday for the United Arab Emirates, where he will attend a summit of the Gulf Cooperation Council, a federation of six Arab Gulf states. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' The meeting with Gadhafi took place after Libya's official news agency, JANA, reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the desert in a four-wheel drive vehicle to meet with Gadhafi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. ||||| With the mournful lament of bagpipes and prayers of healing, the people of Lockerbie paid tribute to the 270 people killed when a bomb brought Pan Am Flight 103 crashing down on this tiny town 10 years ago Monday. The hundreds who packed Dryfesdale Parish Church heard messages from British Prime Minister Tony Blair and U.S. President Bill Clinton, who renewed their vows to punish the culprits who hid the bomb in a suitcase on Dec. 21, 1988. But they also heard quiet sobs that echoed throughout the century-old church as a few moments of silence were observed before the bagpiper blew her lament. ``In the lives that were lost, some very young, there was meaning and achievement,'' the Rev. David Almond told the gathering of about 600 people, which included 60 family members of those who perished. ``Our task in commemoration is to continue that meaning and to build on that achievement.'' The congregation heard the children of the local elementary school sing a tribute, ``Let There be Love,'' as well as a message from the queen. ``We pray on this anniversary that the families will find solace together in quiet remembrance across the world,'' the queen's message said. In a separate service in London's Westminster Abbey, attended by Blair, Foreign Secretary Robin Cook and Prince Andrew, the second son of Queen Elizabeth II, hundreds listened as one-by-one the names of the 259 passengers and 11 of Lockerbie's own residents were read out as a candle was lit for each. Simultaneous services were also held at Arlington National Cemetery in Virginia and in Syracuse, New York, which lost 35 college students in the crash. Each service began at 7:03 p.m. (1903 GMT), the moment when the plane disappeared from the radar screen above Scotland. ``This was a very positive, emotional day,'' Bert Ammerman of River Vale, New Jersey, whose brother Thomas died in the crash, said after the service. He said the people of Lockerbie have ``proven over the past 10 years that good intentions can overcome evil.'' Earlier in the day, Prince Philip, the queen's husband, laid a wreath in Lockerbie's cemetery, where the town's Roman Catholic parish priest at the time of the crash spoke to about 200 victims' relatives and townspeople about the ``ticking bomb'' of justice. ``Ten years ago, for you and for us, a bomb was ticking,'' the Rev. Pat Keegans told the crowd, many of them visibly moved. ``Be assured of this _ there is another bomb ticking _ the irresistible bomb of justice and truth. ``Be certain that our wreath-laying today is not a symbolic gesture. It is a declaration that we will not rest until we have justice and truth, until all who are responsible for your deaths are held accountable,'' he said. Two Libyan suspects have been indicted in connection with the bombing, but have not yet been turned over for trial. Last week, Libya's Parliament gave its conditional approval for a trial in the Netherlands by a Scottish court, but said some obstacles remained. The plane had just reached its cruising altitude of 31,000 feet (9,400 kms), 42 minutes after taking off from London's Heathrow Airport for New York, when it exploded in the night sky. The aircraft was felled by a small amount of high explosives smuggled on in a portable radio hidden inside a suitcase, which made its way as checked baggage from Malta to Frankfurt, Germany, and then to London. ||||| Louis Farrakhan, the leader of a U.S. Muslim group, met with Libyan leader Moammar Gadhafi on Sunday and congratulated him on his recovery from a hip injury, state-run Libyan radio reported. Improved health will enable Gadhafi to ``carry on his leading role in the service of Islamic causes in the world,'' Farrakhan was quoted as saying by the radio, monitored by the British Broadcasting Corp. Later, state-run television showed Gadhafi _ dressed in a brown robe and holding a cane _ meeting Farrakhan at his ceremonial tent in the Libyan capital, Tripoli. The broadcast was monitored in Cairo. Gadhafi underwent surgery last July after injuring his hip, reportedly while exercising. The visit was Farrakhan's fifth to Libya in the past three years. The leader of the U.S.-based Nation of Islam most recently visited in December 1997. It was not immediately clear how Farrakhan arrived in Libya or how long he would stay. Most visitors arrive by ferry from Malta or travel overland from Egypt or Tunisia; U.N. sanctions imposed in 1992 ban air travel to and from the country. Farrakhan repeatedly has urged an end to the sanctions, which were imposed to try to force Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am jetliner over Lockerbie, Scotland, that killed 270 people. Citing the sanctions and U.S. regulations, the Treasury Department prohibited Farrakhan from accepting a dlrs 250,000 prize he was awarded by Gadhafi in September 1996 for human rights work. The Treasury also barred his group from accepting Gadhafi's offer of a dlrs 1 billion gift for Nation of Islam activities. His Nation of Islam is a black nationalist group that says it is guided by the Koran. It is not considered a true Muslim sect by others who practice Islam. Farrakhan's message to America's black community is one of self-reliance, discipline, spirituality and separatism. Over the years, he has said that whites and blacks should live separately, that Jews are ``bloodsuckers'' who have a ``gutter religion,'' and that whites are ``subhuman.'' He accuses news media of taking his comments out of context. ||||| Libyan leader Moammar Gadhafi began a surprise visit to neighboring Tunisia on Monday, his first known trip since injuring his hip in July. Col. Gadhafi, whose country is under a U.N. air embargo, arrived by land for ``a visit of brotherhood and rest'' at the invitation of President Zine El Abidine Ben Ali, an official statement said. Tunisian television did not show the Libyan leader but said he met with Ben Ali and several government ministers in a desert oasis at Tozeur, 400 kms (240 miles) south of Tunis, where foreign leaders are entertained. Officials, however, did not give the duration or full itinerary of Gadhafi's visit. The trip was not announced in advance, though Ben Ali extended the invitation to Gadhafi when he visited Libya in August. Gadhafi was first driven to Gabes, 365 kms (200 miles) south of Tunis, after crossing the border at Ras Jedir where he was met by Interior Minister Ali Chaouch, officials said. It was Gadhafi's first known trip abroad since he broke a bone near his hip while exercising and underwent surgery in July, officials have said. The Libyan leader last visited Tunisia in January 1996, when he met Ban Ali in the southern town of Medenine. Since 1992, Libya has struggled with U.N. Security Council sanctions that ban direct flights to and from the country. The move was aimed at forcing Gadhafi to surrender two Libyans wanted in the 1988 bombing of a Pan Am passenger plane over Lockerbie, Scotland, that killed 270 people. The council has agreed to suspend the sanctions once Libya turns the men over for a trial by Scottish judges according to Scottish law in the Netherlands, under a U.S.-British proposal. Gadhafi has offered to hand them over but demands any sentences be served in Dutch or Libyan prisons. ||||| Libya's justice minister on Wednesday said the two suspects in the 1988 bombing of a Pan Am jetliner should not become victims of Western politics when they go on trial. ``We want to be sure that the only aim of the trial is to show the truth ... and that it is held without a political or security background,'' Justice Minister Mohammed Belgasim al-Zuwiy said. He was addressing the General People's Congress, or Parliament, which opened a debate that will decide the fate of the two men who are wanted in connection with the Dec. 21, 1988 bombing. A total of 270 people on board and on ground were killed when the jetliner blew up over the Scottish town of Lockerbie. Libya has accepted in principle to a trial before a panel of Scottish judges in the Netherlands. But the hand over of the suspects has been held up over Libya's demand for a guarantee that the two men, if convicted, will be jailed in Libya. The United States and Britain insist that the two suspects serve their prison term in Britain. The Parliament meeting, expected to last five days, is being held in the northern coastal town of Sirte and was broadcast live on national television. Libyan media have suggested that Libyan leader Moammar Gadhafi does not have the authority to hand over the suspects and that any decision would have to be approved by the Congress. ``Our argument is that since this is an exceptional trial, therefore this exception should include serving the jail term in Libya, maybe under U.N. supervision,'' al-Zuwiy said. He said Libya is seeking the guarantees from the West to ensure that the trial will be ``honest, just .. and without loopholes that (would) leave our citizens in illegal, unjust and inappropriate circumstances.'' Opening the debate, Foreign Minister Omar al-Muntasser gave the background to the controversy since the Security Council imposed sanctions on Libya in 1992 to force it to hand over the Lockerbie suspects for trial. The sanctions include a ban on air travel from and to Libya, restricting diplomatic personnel and banning the purchase of oil equipment. Al-Zuwiy, the justice minister, said the two suspects will have the right to an appeal in the same court if it finds them guilty. On Saturday, U.N. Secretary-General Kofi Annan met with Gadhafi to iron out the details. No agreement was reached but Annan said Libya is expected to reach a decision soon. ||||| After meeting Libyan leader Moammar Gadhafi in a desert tent, U.N. Secretary-General Kofi Annan said he thinks an arrangement for bringing two suspects to trial in the bombing of a Pan Am airliner could be secured in the ``not too distant future.'' Annan's comments came Saturday after he and Gadhafi failed to agree on handing over Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah, who are suspected in the 1988 bombing that killed 270 people. Annan spoke to reporters in the Libyan capital of Tripoli after the meeting and again later when he arrived back at this Tunisian island, where he had begun his 15-hour stretch of diplomacy. The 60-year-old Annan is trying to get Libya to go along with a U.S.-British plan to try the two suspects before a panel of Scottish judges in the Netherlands for the Dec. 21, 1988, bombing over Lockerbie, Scotland. ``The talks have been fruitful and positive,'' Annan said in Tripoli. ``Libya has confirmed its seriousness and readiness to find a solution to the Lockerbie problem. ``Libya has also agreed to a trial in a third country and believes that it ought to be possible to find answers to all other outstanding issues,'' he said. ``So I hope that in the not too distant future we will be able to give the families good news,'' he added, referring to the relatives of victims who have lobbied extensively for a trial. On Sunday, British Foreign Secretary Robin Cook said in an interview with the British Broadcasting Corp. that ``I think you could sum up our mood as one of qualified optimism.'' He said he spoke with Annan on Sunday and was ``very encouraged by what he tells me.'' But Cook said Britain will not budge on the demand by Washington and London that the suspects serve any sentence in a Scottish jail. Annan said he was tired after arriving back in Jerba. He left Sunday for a summit of the Gulf Cooperation Council, a federation of six Gulf states, which begins Monday in the United Arab Emirates. In Washington, James Foley, a State Department spokesman, said the United States is awaiting a briefing from Annan but is ``disappointed'' that Libya has not complied with U.N. Security Council resolutions. ``Compliance means turnover of the two suspects for trial,'' Foley said. ``It's been almost 10 years since the Pan Am 103 tragedy, this has gone on for far too long.'' State-run Libyan Radio quoted an unnamed official in the Foreign Liaison Secretariat, which is the equivalent of a foreign ministry, as saying Sunday that ``a solution to this crisis is within reach.'' Annan's meeting with Gadhafi took place after Libya's official news agency, JANA, initially reported that Annan might not be able to meet with the Libyan leader because Gadhafi was ``in the desert.'' U.N. spokesman Fred Eckhard said Annan was taken on an hour's trip into the Libyan desert in a four-wheel drive vehicle to meet with Gadhadi in a tent with a roaring fire outside. Earlier, Libyan media suggested that Gadhafi had no authority to hand over the suspects _ an indication he was giving himself room in case he decides against giving up the two men wanted by the United States and Britain. JANA indicated a decision on handing over the two suspects would have to be approved by some 500 grassroots national committees before being considered by the Parliament. Libyan radio reported that the Parliament had been called to meet Tuesday in Sirte, 250 miles (400 kilometers) east of Tripoli, but did not say whether the Lockerbie issue would be discussed. Annan flew into Libya aboard a special plane from Jerba after receiving clearance from the U.N. Sanctions Committee. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two suspects. The U.N. sanctions ban air travel in and out of the country but do not cover oil exports, Libya's economic lifeblood. The Netherlands was chosen as a venue after Libya proposed a trial in a neutral country. But a disagreement has arisen because Libya wants the suspects jailed in the Netherlands or Libya if convicted, but the United States and Britain insist they be imprisoned in Scotland. ||||| Secretary General Kofi Annan said Wednesday he was extending his North African tour to include talks with Libyan authorities. The remark was made without elaboration at a news conference in Algiers hours before his arrival in Tunis, his final scheduled stop on a tour aimed at unblocking plans for a U.N. referendum on the disputed Western Sahara. During his visit to Tunis, Annan is to meet with authorities here to discuss ``major regional and international issues and the various initiatives aimed at solving unresolved problems,'' according to the local press. A Western diplomat, speaking in Algiers on condition of anonymity, said Annan would travel to Libya on Saturday to meet with authorities there on the 1988 Pan Am bombing that has led to U.N. sanctions against Libya. Annan's trip to Tunisia is scheduled to end Friday, according to the official program. The discrepancy in the timing could not be immediately clarified. The U.N. Security Council imposed sanctions in 1992, including a flight ban, to try to force Libya to hand over two suspects in the bombing that killed 270 people. The sanctions ban flights to and from the country. Neighboring Tunisia provides a land route for those traveling to Libya from the region. A week ago, before leaving for North Africa, Annan held out the possibility of a Libyan trip -- but only to help close a deal to try the two suspects. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Annan had said last week that he had hoped for a breakthrough in the case by the end of November. He said then that a trip to Libya ``to bring the issue finally to closure ... has not been excluded.'' During his Algerian stay, ||||| Qatar's foreign minister, Sheik Hamad bin Jassem bin Jaber Al Thani, met Libyan leader Moammar Gadhafi in the desert on Saturday, Libya's official television reported. The television, monitored in Cairo, did not say where the meeting took place, but it showed Gadhafi, dressed in a muddy brown gown and matching cap, receiving the Qatari minister in a tent. Al Thani handed Gadhafi a letter that reaffirmed Qatar's support for Libya ``in its just position toward the so-called Lockerbie case,'' the television said, referring to Libya's objections to the U.N. sanctions imposed in 1992 to press it to hand over two Libyans wanted for the 1988 bombing of a Pan Am airliner over the Scottish town of Lockerbie that left 270 people dead. The television gave no other details about the visit. ||||| TRIPOLI, Libya (AP) _ U.N. Secretary-General Kofi Annan arrived in Libya Saturday for talks aimed at bringing to trial two Libyan suspects in the 1988 Pan Am bombing over Lockerbie, Scotland. Annan's one-day visit to meet with Libyan leader Col. Moammar Gadhafi followed reports in the Libyan media that Gadhafi had no authority to hand over the suspects. This position would indicate that Gadhafi is giving himself enough diplomatic room in the event he decides against giving up the suspects. Annan flew aboard a special plane from the Tunisian resort island of Jerba after receiving a clearance from the U.N. Sanctions Committee to make the flight. A Libyan official, speaking on condition of anonymity, said Annan had arrived in the country but refused to give details. Libyan media, controlled by the government, did not report on the visit in a sign that the subject is of great sensitivity. It was not known where Annan will meet with Gadhafi but diplomats said Friday the meeting will likely take place in the northern coastal town of Sirte, 400 kilometers (250 miles) east of the Libyan capital of Tripoli. Libya has been under U.N. sanctions since 1992 for its refusal to hand over the two alleged intelligence agents, Abdel Basset Ali al-Megrahi and Lamen Khalifa Fhimah. They are accused by the United States and Britain of blowing up a Pan Am airliner over the Scottish village of Lockerbie on Dec. 21, 1988. All 259 people aboard the Boeing 747 and 11 people on ground were killed. A Libyan legal team has been meeting regularly with Annan's legal counsel to discuss a U.S.-British proposal to try the suspects in the Netherlands according to Scottish law and using Scottish judges. Dutch authorities say they have made arrangements to hold the trial at Camp Zeist, a former air force base near Utrecht. On Friday, Annan said the U.N. team ``has done some good work on the Lockerbie dossier.'' ``We will try to resolve some problems and to find solutions together _ once and for all,'' Annan said. But in an apparent bid to distance the Libyan leader from a decision on the suspects, Libya's official news agency JANA said Friday that Gadhafi ``is neither president nor prime minister nor foreign minister, but only the leader of the Libyan revolution.'' ``As such, Col. Gadhafi is not empowered to sign an agreement,'' the report said. JANA suggested that a decision on handing over the suspects would have to be approved by some 500 grassroots national committees before being decided by the Parliament. The Netherlands was chosen as a venue for the trial after Libya itself proposed the trial be held in a third country. Since then a new hurdle has cropped up over the imprisonment of the suspects, if convicted. Libya wants them jailed in the Netherlands or Libya, but the United States and Britain say they should be imprisoned in Scotland and refuse to negotiate the issue. The U.N. sanctions on Libya do not cover oil exports, Libya's economic lifeblood. They ban air travel to and from the country and arms sales. Some Libyan assets abroad have also been frozen. But many African countries have defied the air ban and their leaders have flown in and out of Libya.

The UN, US,and Britain continue to press Libya to turn over the two Libyans accused of the Pan Am bombing over Lockerbie, Scotland. Libya has agreed to a trial for the two by a Scottish court in the Netherlands, but if found guilty, insists they be jailed in Libya, not Scotland as Britain wants. UN Secretary General Kofi Annan has visited Libya to urge the turnover of the two. Libyan leader Moammar Qadhafi feels the pressure of sanctions against his country, but has the support of neighboring Tunisia, Qatar, and US Muslim leader Louis Farrakhan. People in the US and British Isles attended special services marking the 10th anniversary of the bombing.

At least 231 people have been confirmed dead in Honduras from former-hurricane Mitch, bringing the storm's death toll in the region to 357, the National Emergency Commission said Saturday. Mitch _ once, 2nd graf pvs ||||| Nicaraguan Vice President Enrique Bolanos said Sunday night that between 1,000 and 1,500 people were buried in a 32-square mile (82.88 square-kilometer) area below the slopes of the Casita volcano in northern Nicaragua. That is in addition to least another 600 people elsewhere in the country, Bolanos said. ||||| Aid workers struggled Friday to reach survivors of Hurricane Mitch, who are in danger of dying from starvation and disease in the wake of the storm that officials estimate killed more than 10,000 people. Foreign aid and pledges of assistance poured into Central America, but damage to roads and bridges reduced the amount of supplies reaching hundreds of isolated communities to a trickle: only as much as could be dropped from a helicopter, when the aircraft can get through. In the Aguan River Valley in northern Honduras, floodwaters have receded, leaving a carpet of mud over hundreds of acres (hectares). In many nearby villages, residents have gone days without potable water or food. A 7-month-old baby died in the village of Olvido after three days without food. Residents feared more children would die. ``The worst thing, the saddest thing, are the children. The children are suffering, even dying,'' said the Rev. Cecilio Escobar Gallindo, the parish priest. A score of cargo aircraft landed Thursday at the normally quiet Toncontin airport in the Honduran capital of Tegucigalpa, delivering aid from Mexico, the United States, Japan and Argentina. Former U.S. President Jimmy Carter and his wife, Rosalynn, intended to visit Nicaragua on Friday to learn more about the hurricane's impact, The Carter Center in Atlanta announced. ``We hope this visit will help call attention to the suffering and humanitarian need this disaster has created,'' Carter said in a statement. U.S. President Bill Clinton requested a ``global relief effort'' to help Central America and boosted U.S. emergency aid to dlrs 70 million. Clinton is dispatching a delegation next week led by Tipper Gore, wife of Vice President Al Gore, to deliver some of the supplies destined for Honduras, Nicaragua, El Salvador and Guatemala. First lady Hillary Rodham Clinton added Nicaragua and Honduras to a trip she plans to the region beginning Nov. 16. Taiwan said today it will donate dlrs 2.6 million in relief to Honduras, Nicaragua, El Salvador and Guatemala. The four countries are among a dwindling number of nations that recognize Taiwan, which China claims is a breakaway province. Two British ships that were in the area on an exercise were on their way to Honduras to join relief efforts, the Defense Ministry said Friday. ``It's a coincidence that the ships are there but they've got men and equipment that can be put to work in an organized way,'' said International Development Secretary Clare Short. Nicaragua said Friday it will accept Cuba's offer to send doctors as long as the communist nation flies them in on its own helicopters and with their own supplies. Nicaraguan leaders previously had refused Cuba's offer of medical help, saying it did not have the means to transport or support the doctors. Nicaragua's leftist Sandinistas, who maintained close relations with Fidel Castro during their 1979-90 rule, had criticized the refusal by President Arnoldo Aleman's administration. ||||| Hurricane Mitch paused in its whirl through the western Caribbean on Wednesday to punish Honduras with 120-mph (205-kph) winds, topping trees, sweeping away bridges, flooding neighborhoods and killing at least 32 people. Mitch was drifting west at only 2 mph (3 kph) over the Bay Islands, Honduras' most popular tourist area. It also was only 30 miles (50 kms) off the coast, and hurricane-force winds stretched outward 105 miles (165 kms); tropical storm-force winds 175 miles (280 kms). That meant the Honduran coast had been under hurricane conditions for more than a day. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island which was within miles (kms) of the eye of the hurricane. ``Few houses have remained standing.'' At its, 4th graf pvs ||||| Honduras braced for potential catastrophe Tuesday as Hurricane Mitch roared through the northwest Caribbean, churning up high waves and intense rain that sent coastal residents scurrying for safer ground. President Carlos Flores Facusse declared a state of maximum alert and the Honduran military sent planes to pluck residents from their homes on islands near the coast. At 0900 GMT Tuesday, Mitch was 95 miles (152 kilometers) north of Honduras, near the Swan Islands. With winds near 180 mph (289 kph), and even higher gusts, it was a Category 5 monster _ the highest, most dangerous rating for a storm. The 350-mile (560-kilometer) wide hurricane was moving west at 8 mph (12 kph). ``Mitch is closing in,'' said Monterrey Cardenas, mayor of Utila, an island 20 miles (32 kilometers) off the Honduran coast. ``And God help us.'' Mitch posed no immediate threat to the United States, forecasters said, but was expected to remain in the northwest Caribbean for five days. The U.S. National Weather Service in Miami said Mitch could weaken somewhat, but warned it would still remain ``a very dangerous hurricane capable of causing catastrophic damage.'' The entire coast of Honduras was under a hurricane warning and up to 15 inches (38 centimeters) of rain was forecast in mountain areas. The Honduran president closed schools and public offices on the coast Monday and ordered all air force planes and helicopters to evacuate people from the Islas de la Bahia, a string of small islands off the country's central coast. The head of the Honduran armed forces, Gen. Mario Hung Pacheco, said 5,000 soldiers were standing by to help victims of the storm, but he warned the military could not reach everyone. ``For that humanitarian work, we would need more than 300 Hercules C-137 planes,'' he said. ``Honduras doesn't have them.'' A hurricane warning was also in effect for the Caribbean coast of Guatemala. In Belize, a hurricane watch was in place and the government also closed schools and sent workers home early Monday. Panic buying stripped bread from the shelves of some stores and some gasoline stations ran dry. Coastal Belize City was hit so hard by Hurricane Hattie in 1961 that the country built a new capital inland at Belmopan. Mexico mobilized troops and emergency workers Monday on the east coast of the Yucatan peninsula, which was also under a hurricane watch, and Cuba said it had evacuated 600 vacationers from the Island of Youth. Jerry Jarrell, the weather center director, said Mitch was the strongest hurricane to strike the Caribbean since 1988, when Gilbert killed more than 300 people. In La Ceiba, on Honduras' northern coast, people stood in long lines at filling stations Monday to buy gasoline under a steady rain. Maria Gonzalez said she needed the gas to cook with when her firewood gets wet. Still, she bought only 37 cents worth _ all she could afford. ``I have six children, and we live in a riverbed,'' she said. ``If it gets really bad, we'll go to the church and see what the architect of the world has in store for us.'' Swinwick Jackson, a fisherman on Utila, had tied up his boats and was taking his family to stay with a relative on higher ground. National police spokesman Ivan Mejia said the Coco, Segovia and Cruta rivers all overflowed their banks Monday along Honduras' eastern coast. ``Frightened people are moving into the mountains to search for shelter,'' he said. In El Progreso, 100 miles (160 kilometers) north of the Honduran capital of Tegucigalpa, the army evacuated more than 5,000 people who live in low-lying banana plantations along the Ulua River, said Nolly Soliman, a resident. Before bearing down on Honduras, Mitch swept past Jamaica and the Cayman Islands. Rain squalls flooded streets in the Jamaican capital, Kingston, and government offices and schools closed in the Caymans, a British colony of 28,000 people. The strongest hurricane to hit Honduras in recent memory was Fifi in 1974, which ravaged Honduras' Caribbean coast, killing at least 2,000 people. ||||| Pope John Paul II appealed for aid Wednesday for the Central American countries stricken by hurricane Mitch and said he feels close to the thousands who are suffering. Speaking during his general audience, the pope urged ``all public and private institutions and all men of good will'' to do all they can ``in this grave moment of destruction and death.'' Hurricane Mitch killed an estimated 9,000 people throughout Central America in a disaster of such proportions that relief agencies have been overwhelmed. Among those attending the audience were six Russian cosmonauts taking a special course in Italy. As a gift, they gave John Paul a spacesuit. ||||| BRUSSELS, Belgium (AP) - The European Union on Tuesday approved 6.4 million European currency units (dlrs 7.7 million) in aid for thousands of victims of the devastation caused by Hurricane Mitch in Central America. EU spokesman Pietro Petrucci said the funds will be used to provide basic care such as medicine, food, water sanitation and blankets to thousands of people whose homes were destroyed by torrential rains and mudslides. The aid will be distributed in Nicaragua, El Salvador, Honduras and Guatemala which have most suffered from Mitch's deadly passage, the EU executive Commission said in a statement. Officials in Central America estimated Tuesday that about 7,000 people have died in the region. The greatest losses were reported in Honduras, where an estimated 5,000 people died and 600,000 people _ 10 percent of the population _ were forced to flee their homes after last week's storm. El Salvador's National Emergency Committee listed 174 dead, 96 missing and 27,000 homeless. But its own regional affiliate in San Miguel province reported 125 dead there alone. Guatemala reported 100 storm-related deaths. The latest EU aid follows an initial 400,000 ecu (dlrs 480,000). the EU approved for the region on Friday. The full 6.8 million ecu (dlrs 8.18 million) will be channeled through humanitarian groups working in the region. ||||| Hurricane Mitch cut through the Honduran coast like a ripsaw Thursday, its devastating winds whirling for a third day through resort islands and mainland communities. At least 32 people were killed and widespread flooding prompted more than 150,000 to seek higher ground. Mitch, once among the century's most powerful hurricanes, weakened today as it blasted this Central American nation, bringing downpours that flooded at least 50 rivers. It also kicked up huge waves that pounded seaside communities. The storm's power was easing and by 1200 GMT, it had sustained winds of 80 mph (130 kph), down from 100 mph (160 kph) around midnight and well below its 180 mph (290 kph) peak of early Tuesday. After remaining virtually stationary for more than a day, the U.S. National Hurricane Center said Thursday the center of the 350-mile-wide (560-kilometer-wide) storm had moved slightly to the south but remained just off the Honduran coast. Hurricane-force winds whirled up to 30 miles (50 kilometers) from the center, with rain-laden tropical storm winds extending well beyond that. Caught near the heart of the storm were the Bay Islands, about 25 miles (40 kilometers) off Honduras' coast and popular with divers and beachcombers. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island, 20 miles (32 kilometers) off the coast. ``Few houses have remained standing.'' Honduran officials said 14 people had died on that small island alone, and at least nine had died elsewhere in the country. More than 72,000 people had been evacuated to shelters. Nine other deaths had been reported elsewhere in the region by early Thursday _ more than a day after Mitch drifted to just off the coast and seemed to park there. An American was thrown from his boat south of Cancun, Mexico, on Monday and was presumed dead. Eight others died in Nicaragua in flooding. Honduran officials said more than 200 towns and villages had been isolated by the storm, left without power, telephones or clean drinking water. Agriculture Minister Pedro Arturo Sevilla said crucial grain, citrus and banana crops had been damaged ``and the economic future of Honduras is uncertain.'' Rain-swollen rivers knocked out bridges and roads, isolating La Ceiba, a coastal city of 40,000 people located 80 miles (128 kilometers) from the Bay Islands. About 10,000 residents fled to crowded shelters in schools, churches and firehouses. While supplies of food and gasoline seemed to hold up, drivers worried about the coming days formed long lines to fill their tanks at gas stations and some supermarkets took measures to limit panic buying. La Ceiba officials appealed for pure water for those in shelters and some residents set out plastic buckets to collect rainwater. Only a few hotels and offices with their own generators had electricity. Wind-whipped waves almost buried some houses near the shore. People evacuated low-lying houses by wading through chest-deep water with sodden bags of belongings on their heads. In neighboring Belize, most of the 75,000 residents of coastal Belize City had left by Wednesday, turning the country's largest city into a ghost town. Police and soldiers patrolled the streets, and a few people wandered amid the boarded-up houses. The cable television company was broadcasting only The Weather Channel. With the storm seemingly anchored off Honduras, officials in Mexico to the north eased emergency measures on the Caribbean coast of the Yucatan Peninsula, where hundreds of people remained in shelters as a precaution Wednesday night. More than 20,000 tourists had abandoned Cancun and nearby resort areas, leaving hotels at about 20 percent of capacity. Houston accountant Kathy Montgomery said that she and her friend Nina Devries had tried to leave Cancun but found all the flights full. ``It's been horrible,'' said Montgomery, as she and her friend drank cocktails at an outdoor restaurant. ``We couldn't go out on a boat, we couldn't go snorkeling. ``Even Carlos' N Charlie's and Senor Frog's are closed,'' she said dejectedly, referring to two restaurants. ``Some vacation.'' The U.S. Agency for International Development sent two helicopters each to Belize and Honduras to help in search, rescue and relief efforts. At its peak, Mitch was the fourth-strongest Caribbean hurricane in this century, behind Gilbert in 1988, Allen in 1980 and the Labor Day hurricane of 1935. ||||| Better information from Honduras' ravaged countryside enabled officials to lower the confirmed death toll from Hurricane Mitch from 7,000 to about 6,100 on Thursday, but leaders insisted the need for help was growing. President Carlos Flores declared Hurricane Mitch had set back Honduras' development by 50 years. He urged the more than 1.5 million Hondurans affected by the storm to help with the recovery effort. ``The county is semi-destroyed and awaits the maximum effort and most fervent and constant work of every one of its children,'' he said. In the capital, Tegucigalpa, Mexican rescue teams began searching for avalanche victims. Honduran doctors dispensed vaccinations to prevent disease outbreaks in shelters crammed with refugees. As of Thursday, Mitch had killed 6,076 people in Honduras _ down from officials' earlier estimate of 7,000. The numbers of missing dropped from an estimated 11,000 to 4,621, Government Minister Delmer Urbizo said. ``We have more access to places affected by the storm,'' Urbizo explained. ``Until now, we have had a short amount of time and few resources to get reliable information.'' In Nicaragua, around 2,000 people were killed, most of those swept away when a volcano crater lake collapsed a week ago. El Salvador reported 239 dead; Guatemala said 194 of its people had been killed. Six people died in southern Mexico and seven in Costa Rica. Aid groups and governments have called for other countries to send medicine, water, canned food, roofing materials and equipment to help deliver supplies. In Washington on Thursday, President Bill Clinton ordered dlrs 30 million in Defense Department equipment and services and dlrs 36 million in food, fuel and other aid be sent to Honduras, Nicaragua, El Salvador and Guatemala. The White House also said Clinton was dispatching Tipper Gore, wife of Vice President Al Gore, to Central America on a mission to show the U.S. commitment to providing humanitarian relief. Hillary Rodham Clinton also will travel to the region, visiting Nicaragua and Honduras on Nov. 16. She later will stop in El Salvador and Guatemala before continuing on to Haiti and the Dominican Republic for a visit that had been canceled due to Hurricane Georges, which struck the Caribbean in October. Mitch, which sat off the Honduran coast for several days last week, destroyed scores of Central American communities before moving northwest. The weakened storm crossed southern Florida on Thursday, damaging mobile homes and buildings and injuring at least seven people. Countries overwhelmed by the storm's devastation have only just begun to calculate the damage. Honduran authorities still don't know how many shelters have been set up across the Central American country. Surveyors have yet to evaluate roughly 10 percent of the most affected areas _ the departments of Cortes, Atlantida, Colon and Yoro in the north, southern Choluteca and Valle, and the central department of Francisco Morazan, which includes the capital. Numbers still can vary wildly. The estimated number of homeless dropped from 580,000 to 569,000 Thursday. Mitch damaged or destroyed at least 90 bridges on major highways, including most spans on Highway 5, the main north-south route, officials said. Urbizo said Honduran officials hoped the scale of need in next-door Nicaragua wouldn't overshadow Honduras' plight. ``Our problem is that all of the country has been affected,'' he said. Thursday's relief operations paled in comparison to the scope of the disaster. A total of 14 helicopter relief missions were delivering aid to stricken towns, said Col. Roger Antonio Caceres of the government's Operation Mitch emergency response task force. ``We can manage with the number of aircraft we have because there is little to distribute,'' Caceres said. More help was on the way. Mexico was sending 700 tons of food, 11 tons of medicine, at least 12 helicopters, four cargo planes and 475 soldiers to help in relief operations. The United States committed 19 Blackhawk and Chinook helicopters, two C-27 aircraft and one C-130 cargo plane. France said it was sending 250 rescue workers to Central America, along with a ship loaded with construction material and equipment. The U.N. World Food Program said Thursday it was diverting ships, some already at sea, to rush their cargoes of donated food to Central America. It also was pulling food from warehouses at its base in Rome, probably for delivery by emergency relief flights, spokesman Trevor Rowe said. ``We're trying to move food as fast as possible to help people as soon as possible,'' Rowe said. Searches for the missing continued, and some decomposed bodies, once found, were being buried in common graves. About 100 victims had been buried around Tegucigalpa, Mayor Nahum Valladeres said. In the flood-ravaged Tegucigalpa neighborhood of Nueva Esperanza, Mexican military rescuers loaded search dogs on their backs and forded a muddy river to look for people believed buried in a 200-foot (60-meter) avalanche that occurred last Friday. Dozens of homes were swept into the river. ``This is the first place we've been'' with the dogs, Honduran army Maj. Freddy Diaz Celaya said. ``From here we'll continue searching downriver.'' Concerned that crowded shelter conditions could produce outbreaks of hepatitis, respiratory infections and other ailments, the Health Ministry announced an inoculation campaign, especially for children. Doctors volunteering at a shelter housing 4,000 people at Tegucigalpa's Polytechnic Development Institute said they'd heard of the campaign but had yet to receive word or medicines from the Health Ministry. ``We have to vaccinate the children,'' said Dr. Mario Soto, who has treated at least 300 children at the shelter for diarrhea, conjunctivitis and bacterial infections. ||||| In Honduras, at least 231 deaths have been blamed on Mitch, the National Emergency Commission said Saturday. El Salvador _ where 140 people died in flash floods _ declared a state of emergency Saturday, as did Guatemala, where 21 people died when floods swept away their homes. Mexico reported one death from Mitch last Monday. In the Caribbean, the U.S. Coast Guard widened a search for a tourist schooner with 31 people aboard that hasn't been heard from since Tuesday. By late Sunday, Mitch's winds, once near 180 mph (290 kph), had dropped to near 30 mph (50 kph), and the storm _ now classified as a tropical depression _ was near Tapachula, on Mexico's southern Pacific coast near the Guatemalan border. Mitch was moving west at 8 mph (13 kph) and was dissipating but threatened to strengthen again if it moved back out to sea.

Hurricane Mitch approached Honduras on Oct. 27, 1998 with winds up to 180mph a Category 5 storm. It hit the Honduran coast on Oct. 28 bringing downpours that forced large-scale evacuations. On Nov. 1 Nicaragua announced collapse of a drenched volcano crater killing about 2,000. By then Mitch's winds were down to 30mph, but as disaster reports poured in the death toll finally exceeded 10,000 and half a million left homeless. The European Union, international relief agencies, Mexico, the U.S., Japan, Taiwan, the U.K. and U.N. sent financial aid, relief workers and supplies. Pope John Paul II appealed to "all public and private institutions" to help.

At least 231 people have been confirmed dead in Honduras from former-hurricane Mitch, bringing the storm's death toll in the region to 357, the National Emergency Commission said Saturday. Mitch _ once, 2nd graf pvs ||||| Nicaraguan Vice President Enrique Bolanos said Sunday night that between 1,000 and 1,500 people were buried in a 32-square mile (82.88 square-kilometer) area below the slopes of the Casita volcano in northern Nicaragua. That is in addition to least another 600 people elsewhere in the country, Bolanos said. ||||| Aid workers struggled Friday to reach survivors of Hurricane Mitch, who are in danger of dying from starvation and disease in the wake of the storm that officials estimate killed more than 10,000 people. Foreign aid and pledges of assistance poured into Central America, but damage to roads and bridges reduced the amount of supplies reaching hundreds of isolated communities to a trickle: only as much as could be dropped from a helicopter, when the aircraft can get through. In the Aguan River Valley in northern Honduras, floodwaters have receded, leaving a carpet of mud over hundreds of acres (hectares). In many nearby villages, residents have gone days without potable water or food. A 7-month-old baby died in the village of Olvido after three days without food. Residents feared more children would die. ``The worst thing, the saddest thing, are the children. The children are suffering, even dying,'' said the Rev. Cecilio Escobar Gallindo, the parish priest. A score of cargo aircraft landed Thursday at the normally quiet Toncontin airport in the Honduran capital of Tegucigalpa, delivering aid from Mexico, the United States, Japan and Argentina. Former U.S. President Jimmy Carter and his wife, Rosalynn, intended to visit Nicaragua on Friday to learn more about the hurricane's impact, The Carter Center in Atlanta announced. ``We hope this visit will help call attention to the suffering and humanitarian need this disaster has created,'' Carter said in a statement. U.S. President Bill Clinton requested a ``global relief effort'' to help Central America and boosted U.S. emergency aid to dlrs 70 million. Clinton is dispatching a delegation next week led by Tipper Gore, wife of Vice President Al Gore, to deliver some of the supplies destined for Honduras, Nicaragua, El Salvador and Guatemala. First lady Hillary Rodham Clinton added Nicaragua and Honduras to a trip she plans to the region beginning Nov. 16. Taiwan said today it will donate dlrs 2.6 million in relief to Honduras, Nicaragua, El Salvador and Guatemala. The four countries are among a dwindling number of nations that recognize Taiwan, which China claims is a breakaway province. Two British ships that were in the area on an exercise were on their way to Honduras to join relief efforts, the Defense Ministry said Friday. ``It's a coincidence that the ships are there but they've got men and equipment that can be put to work in an organized way,'' said International Development Secretary Clare Short. Nicaragua said Friday it will accept Cuba's offer to send doctors as long as the communist nation flies them in on its own helicopters and with their own supplies. Nicaraguan leaders previously had refused Cuba's offer of medical help, saying it did not have the means to transport or support the doctors. Nicaragua's leftist Sandinistas, who maintained close relations with Fidel Castro during their 1979-90 rule, had criticized the refusal by President Arnoldo Aleman's administration. ||||| Hurricane Mitch paused in its whirl through the western Caribbean on Wednesday to punish Honduras with 120-mph (205-kph) winds, topping trees, sweeping away bridges, flooding neighborhoods and killing at least 32 people. Mitch was drifting west at only 2 mph (3 kph) over the Bay Islands, Honduras' most popular tourist area. It also was only 30 miles (50 kms) off the coast, and hurricane-force winds stretched outward 105 miles (165 kms); tropical storm-force winds 175 miles (280 kms). That meant the Honduran coast had been under hurricane conditions for more than a day. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island which was within miles (kms) of the eye of the hurricane. ``Few houses have remained standing.'' At its, 4th graf pvs ||||| Honduras braced for potential catastrophe Tuesday as Hurricane Mitch roared through the northwest Caribbean, churning up high waves and intense rain that sent coastal residents scurrying for safer ground. President Carlos Flores Facusse declared a state of maximum alert and the Honduran military sent planes to pluck residents from their homes on islands near the coast. At 0900 GMT Tuesday, Mitch was 95 miles (152 kilometers) north of Honduras, near the Swan Islands. With winds near 180 mph (289 kph), and even higher gusts, it was a Category 5 monster _ the highest, most dangerous rating for a storm. The 350-mile (560-kilometer) wide hurricane was moving west at 8 mph (12 kph). ``Mitch is closing in,'' said Monterrey Cardenas, mayor of Utila, an island 20 miles (32 kilometers) off the Honduran coast. ``And God help us.'' Mitch posed no immediate threat to the United States, forecasters said, but was expected to remain in the northwest Caribbean for five days. The U.S. National Weather Service in Miami said Mitch could weaken somewhat, but warned it would still remain ``a very dangerous hurricane capable of causing catastrophic damage.'' The entire coast of Honduras was under a hurricane warning and up to 15 inches (38 centimeters) of rain was forecast in mountain areas. The Honduran president closed schools and public offices on the coast Monday and ordered all air force planes and helicopters to evacuate people from the Islas de la Bahia, a string of small islands off the country's central coast. The head of the Honduran armed forces, Gen. Mario Hung Pacheco, said 5,000 soldiers were standing by to help victims of the storm, but he warned the military could not reach everyone. ``For that humanitarian work, we would need more than 300 Hercules C-137 planes,'' he said. ``Honduras doesn't have them.'' A hurricane warning was also in effect for the Caribbean coast of Guatemala. In Belize, a hurricane watch was in place and the government also closed schools and sent workers home early Monday. Panic buying stripped bread from the shelves of some stores and some gasoline stations ran dry. Coastal Belize City was hit so hard by Hurricane Hattie in 1961 that the country built a new capital inland at Belmopan. Mexico mobilized troops and emergency workers Monday on the east coast of the Yucatan peninsula, which was also under a hurricane watch, and Cuba said it had evacuated 600 vacationers from the Island of Youth. Jerry Jarrell, the weather center director, said Mitch was the strongest hurricane to strike the Caribbean since 1988, when Gilbert killed more than 300 people. In La Ceiba, on Honduras' northern coast, people stood in long lines at filling stations Monday to buy gasoline under a steady rain. Maria Gonzalez said she needed the gas to cook with when her firewood gets wet. Still, she bought only 37 cents worth _ all she could afford. ``I have six children, and we live in a riverbed,'' she said. ``If it gets really bad, we'll go to the church and see what the architect of the world has in store for us.'' Swinwick Jackson, a fisherman on Utila, had tied up his boats and was taking his family to stay with a relative on higher ground. National police spokesman Ivan Mejia said the Coco, Segovia and Cruta rivers all overflowed their banks Monday along Honduras' eastern coast. ``Frightened people are moving into the mountains to search for shelter,'' he said. In El Progreso, 100 miles (160 kilometers) north of the Honduran capital of Tegucigalpa, the army evacuated more than 5,000 people who live in low-lying banana plantations along the Ulua River, said Nolly Soliman, a resident. Before bearing down on Honduras, Mitch swept past Jamaica and the Cayman Islands. Rain squalls flooded streets in the Jamaican capital, Kingston, and government offices and schools closed in the Caymans, a British colony of 28,000 people. The strongest hurricane to hit Honduras in recent memory was Fifi in 1974, which ravaged Honduras' Caribbean coast, killing at least 2,000 people. ||||| Pope John Paul II appealed for aid Wednesday for the Central American countries stricken by hurricane Mitch and said he feels close to the thousands who are suffering. Speaking during his general audience, the pope urged ``all public and private institutions and all men of good will'' to do all they can ``in this grave moment of destruction and death.'' Hurricane Mitch killed an estimated 9,000 people throughout Central America in a disaster of such proportions that relief agencies have been overwhelmed. Among those attending the audience were six Russian cosmonauts taking a special course in Italy. As a gift, they gave John Paul a spacesuit. ||||| BRUSSELS, Belgium (AP) - The European Union on Tuesday approved 6.4 million European currency units (dlrs 7.7 million) in aid for thousands of victims of the devastation caused by Hurricane Mitch in Central America. EU spokesman Pietro Petrucci said the funds will be used to provide basic care such as medicine, food, water sanitation and blankets to thousands of people whose homes were destroyed by torrential rains and mudslides. The aid will be distributed in Nicaragua, El Salvador, Honduras and Guatemala which have most suffered from Mitch's deadly passage, the EU executive Commission said in a statement. Officials in Central America estimated Tuesday that about 7,000 people have died in the region. The greatest losses were reported in Honduras, where an estimated 5,000 people died and 600,000 people _ 10 percent of the population _ were forced to flee their homes after last week's storm. El Salvador's National Emergency Committee listed 174 dead, 96 missing and 27,000 homeless. But its own regional affiliate in San Miguel province reported 125 dead there alone. Guatemala reported 100 storm-related deaths. The latest EU aid follows an initial 400,000 ecu (dlrs 480,000). the EU approved for the region on Friday. The full 6.8 million ecu (dlrs 8.18 million) will be channeled through humanitarian groups working in the region. ||||| Hurricane Mitch cut through the Honduran coast like a ripsaw Thursday, its devastating winds whirling for a third day through resort islands and mainland communities. At least 32 people were killed and widespread flooding prompted more than 150,000 to seek higher ground. Mitch, once among the century's most powerful hurricanes, weakened today as it blasted this Central American nation, bringing downpours that flooded at least 50 rivers. It also kicked up huge waves that pounded seaside communities. The storm's power was easing and by 1200 GMT, it had sustained winds of 80 mph (130 kph), down from 100 mph (160 kph) around midnight and well below its 180 mph (290 kph) peak of early Tuesday. After remaining virtually stationary for more than a day, the U.S. National Hurricane Center said Thursday the center of the 350-mile-wide (560-kilometer-wide) storm had moved slightly to the south but remained just off the Honduran coast. Hurricane-force winds whirled up to 30 miles (50 kilometers) from the center, with rain-laden tropical storm winds extending well beyond that. Caught near the heart of the storm were the Bay Islands, about 25 miles (40 kilometers) off Honduras' coast and popular with divers and beachcombers. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island, 20 miles (32 kilometers) off the coast. ``Few houses have remained standing.'' Honduran officials said 14 people had died on that small island alone, and at least nine had died elsewhere in the country. More than 72,000 people had been evacuated to shelters. Nine other deaths had been reported elsewhere in the region by early Thursday _ more than a day after Mitch drifted to just off the coast and seemed to park there. An American was thrown from his boat south of Cancun, Mexico, on Monday and was presumed dead. Eight others died in Nicaragua in flooding. Honduran officials said more than 200 towns and villages had been isolated by the storm, left without power, telephones or clean drinking water. Agriculture Minister Pedro Arturo Sevilla said crucial grain, citrus and banana crops had been damaged ``and the economic future of Honduras is uncertain.'' Rain-swollen rivers knocked out bridges and roads, isolating La Ceiba, a coastal city of 40,000 people located 80 miles (128 kilometers) from the Bay Islands. About 10,000 residents fled to crowded shelters in schools, churches and firehouses. While supplies of food and gasoline seemed to hold up, drivers worried about the coming days formed long lines to fill their tanks at gas stations and some supermarkets took measures to limit panic buying. La Ceiba officials appealed for pure water for those in shelters and some residents set out plastic buckets to collect rainwater. Only a few hotels and offices with their own generators had electricity. Wind-whipped waves almost buried some houses near the shore. People evacuated low-lying houses by wading through chest-deep water with sodden bags of belongings on their heads. In neighboring Belize, most of the 75,000 residents of coastal Belize City had left by Wednesday, turning the country's largest city into a ghost town. Police and soldiers patrolled the streets, and a few people wandered amid the boarded-up houses. The cable television company was broadcasting only The Weather Channel. With the storm seemingly anchored off Honduras, officials in Mexico to the north eased emergency measures on the Caribbean coast of the Yucatan Peninsula, where hundreds of people remained in shelters as a precaution Wednesday night. More than 20,000 tourists had abandoned Cancun and nearby resort areas, leaving hotels at about 20 percent of capacity. Houston accountant Kathy Montgomery said that she and her friend Nina Devries had tried to leave Cancun but found all the flights full. ``It's been horrible,'' said Montgomery, as she and her friend drank cocktails at an outdoor restaurant. ``We couldn't go out on a boat, we couldn't go snorkeling. ``Even Carlos' N Charlie's and Senor Frog's are closed,'' she said dejectedly, referring to two restaurants. ``Some vacation.'' The U.S. Agency for International Development sent two helicopters each to Belize and Honduras to help in search, rescue and relief efforts. At its peak, Mitch was the fourth-strongest Caribbean hurricane in this century, behind Gilbert in 1988, Allen in 1980 and the Labor Day hurricane of 1935. ||||| Better information from Honduras' ravaged countryside enabled officials to lower the confirmed death toll from Hurricane Mitch from 7,000 to about 6,100 on Thursday, but leaders insisted the need for help was growing. President Carlos Flores declared Hurricane Mitch had set back Honduras' development by 50 years. He urged the more than 1.5 million Hondurans affected by the storm to help with the recovery effort. ``The county is semi-destroyed and awaits the maximum effort and most fervent and constant work of every one of its children,'' he said. In the capital, Tegucigalpa, Mexican rescue teams began searching for avalanche victims. Honduran doctors dispensed vaccinations to prevent disease outbreaks in shelters crammed with refugees. As of Thursday, Mitch had killed 6,076 people in Honduras _ down from officials' earlier estimate of 7,000. The numbers of missing dropped from an estimated 11,000 to 4,621, Government Minister Delmer Urbizo said. ``We have more access to places affected by the storm,'' Urbizo explained. ``Until now, we have had a short amount of time and few resources to get reliable information.'' In Nicaragua, around 2,000 people were killed, most of those swept away when a volcano crater lake collapsed a week ago. El Salvador reported 239 dead; Guatemala said 194 of its people had been killed. Six people died in southern Mexico and seven in Costa Rica. Aid groups and governments have called for other countries to send medicine, water, canned food, roofing materials and equipment to help deliver supplies. In Washington on Thursday, President Bill Clinton ordered dlrs 30 million in Defense Department equipment and services and dlrs 36 million in food, fuel and other aid be sent to Honduras, Nicaragua, El Salvador and Guatemala. The White House also said Clinton was dispatching Tipper Gore, wife of Vice President Al Gore, to Central America on a mission to show the U.S. commitment to providing humanitarian relief. Hillary Rodham Clinton also will travel to the region, visiting Nicaragua and Honduras on Nov. 16. She later will stop in El Salvador and Guatemala before continuing on to Haiti and the Dominican Republic for a visit that had been canceled due to Hurricane Georges, which struck the Caribbean in October. Mitch, which sat off the Honduran coast for several days last week, destroyed scores of Central American communities before moving northwest. The weakened storm crossed southern Florida on Thursday, damaging mobile homes and buildings and injuring at least seven people. Countries overwhelmed by the storm's devastation have only just begun to calculate the damage. Honduran authorities still don't know how many shelters have been set up across the Central American country. Surveyors have yet to evaluate roughly 10 percent of the most affected areas _ the departments of Cortes, Atlantida, Colon and Yoro in the north, southern Choluteca and Valle, and the central department of Francisco Morazan, which includes the capital. Numbers still can vary wildly. The estimated number of homeless dropped from 580,000 to 569,000 Thursday. Mitch damaged or destroyed at least 90 bridges on major highways, including most spans on Highway 5, the main north-south route, officials said. Urbizo said Honduran officials hoped the scale of need in next-door Nicaragua wouldn't overshadow Honduras' plight. ``Our problem is that all of the country has been affected,'' he said. Thursday's relief operations paled in comparison to the scope of the disaster. A total of 14 helicopter relief missions were delivering aid to stricken towns, said Col. Roger Antonio Caceres of the government's Operation Mitch emergency response task force. ``We can manage with the number of aircraft we have because there is little to distribute,'' Caceres said. More help was on the way. Mexico was sending 700 tons of food, 11 tons of medicine, at least 12 helicopters, four cargo planes and 475 soldiers to help in relief operations. The United States committed 19 Blackhawk and Chinook helicopters, two C-27 aircraft and one C-130 cargo plane. France said it was sending 250 rescue workers to Central America, along with a ship loaded with construction material and equipment. The U.N. World Food Program said Thursday it was diverting ships, some already at sea, to rush their cargoes of donated food to Central America. It also was pulling food from warehouses at its base in Rome, probably for delivery by emergency relief flights, spokesman Trevor Rowe said. ``We're trying to move food as fast as possible to help people as soon as possible,'' Rowe said. Searches for the missing continued, and some decomposed bodies, once found, were being buried in common graves. About 100 victims had been buried around Tegucigalpa, Mayor Nahum Valladeres said. In the flood-ravaged Tegucigalpa neighborhood of Nueva Esperanza, Mexican military rescuers loaded search dogs on their backs and forded a muddy river to look for people believed buried in a 200-foot (60-meter) avalanche that occurred last Friday. Dozens of homes were swept into the river. ``This is the first place we've been'' with the dogs, Honduran army Maj. Freddy Diaz Celaya said. ``From here we'll continue searching downriver.'' Concerned that crowded shelter conditions could produce outbreaks of hepatitis, respiratory infections and other ailments, the Health Ministry announced an inoculation campaign, especially for children. Doctors volunteering at a shelter housing 4,000 people at Tegucigalpa's Polytechnic Development Institute said they'd heard of the campaign but had yet to receive word or medicines from the Health Ministry. ``We have to vaccinate the children,'' said Dr. Mario Soto, who has treated at least 300 children at the shelter for diarrhea, conjunctivitis and bacterial infections. ||||| In Honduras, at least 231 deaths have been blamed on Mitch, the National Emergency Commission said Saturday. El Salvador _ where 140 people died in flash floods _ declared a state of emergency Saturday, as did Guatemala, where 21 people died when floods swept away their homes. Mexico reported one death from Mitch last Monday. In the Caribbean, the U.S. Coast Guard widened a search for a tourist schooner with 31 people aboard that hasn't been heard from since Tuesday. By late Sunday, Mitch's winds, once near 180 mph (290 kph), had dropped to near 30 mph (50 kph), and the storm _ now classified as a tropical depression _ was near Tapachula, on Mexico's southern Pacific coast near the Guatemalan border. Mitch was moving west at 8 mph (13 kph) and was dissipating but threatened to strengthen again if it moved back out to sea.

Honduras braced as category 5 Hurricane Mitch approached. Slow-moving Mitch battered the Honduran coast for 3 days. Honduran death estimates grew from 32 to 231 in the first days, to 6,076, with 4,621 missing. About 2,000 were killed in Nicaragua, 239 in El Salvador, 194 in Guatemala, 6 in southern Mexico and 7 in Costa Rica. The EU approved 6.4 million ecu in aid to Mitch's victims. The Pope appealed for aid. The US boosted aid to $70 million. A id workers struggled to reach survivors in danger. Hurricane winds, rain and floods caused massive damage to homes, businesses, roads and bridges. Latest reports estimate over 10,000 killed in Central America.

At least 231 people have been confirmed dead in Honduras from former-hurricane Mitch, bringing the storm's death toll in the region to 357, the National Emergency Commission said Saturday. Mitch _ once, 2nd graf pvs ||||| Nicaraguan Vice President Enrique Bolanos said Sunday night that between 1,000 and 1,500 people were buried in a 32-square mile (82.88 square-kilometer) area below the slopes of the Casita volcano in northern Nicaragua. That is in addition to least another 600 people elsewhere in the country, Bolanos said. ||||| Aid workers struggled Friday to reach survivors of Hurricane Mitch, who are in danger of dying from starvation and disease in the wake of the storm that officials estimate killed more than 10,000 people. Foreign aid and pledges of assistance poured into Central America, but damage to roads and bridges reduced the amount of supplies reaching hundreds of isolated communities to a trickle: only as much as could be dropped from a helicopter, when the aircraft can get through. In the Aguan River Valley in northern Honduras, floodwaters have receded, leaving a carpet of mud over hundreds of acres (hectares). In many nearby villages, residents have gone days without potable water or food. A 7-month-old baby died in the village of Olvido after three days without food. Residents feared more children would die. ``The worst thing, the saddest thing, are the children. The children are suffering, even dying,'' said the Rev. Cecilio Escobar Gallindo, the parish priest. A score of cargo aircraft landed Thursday at the normally quiet Toncontin airport in the Honduran capital of Tegucigalpa, delivering aid from Mexico, the United States, Japan and Argentina. Former U.S. President Jimmy Carter and his wife, Rosalynn, intended to visit Nicaragua on Friday to learn more about the hurricane's impact, The Carter Center in Atlanta announced. ``We hope this visit will help call attention to the suffering and humanitarian need this disaster has created,'' Carter said in a statement. U.S. President Bill Clinton requested a ``global relief effort'' to help Central America and boosted U.S. emergency aid to dlrs 70 million. Clinton is dispatching a delegation next week led by Tipper Gore, wife of Vice President Al Gore, to deliver some of the supplies destined for Honduras, Nicaragua, El Salvador and Guatemala. First lady Hillary Rodham Clinton added Nicaragua and Honduras to a trip she plans to the region beginning Nov. 16. Taiwan said today it will donate dlrs 2.6 million in relief to Honduras, Nicaragua, El Salvador and Guatemala. The four countries are among a dwindling number of nations that recognize Taiwan, which China claims is a breakaway province. Two British ships that were in the area on an exercise were on their way to Honduras to join relief efforts, the Defense Ministry said Friday. ``It's a coincidence that the ships are there but they've got men and equipment that can be put to work in an organized way,'' said International Development Secretary Clare Short. Nicaragua said Friday it will accept Cuba's offer to send doctors as long as the communist nation flies them in on its own helicopters and with their own supplies. Nicaraguan leaders previously had refused Cuba's offer of medical help, saying it did not have the means to transport or support the doctors. Nicaragua's leftist Sandinistas, who maintained close relations with Fidel Castro during their 1979-90 rule, had criticized the refusal by President Arnoldo Aleman's administration. ||||| Hurricane Mitch paused in its whirl through the western Caribbean on Wednesday to punish Honduras with 120-mph (205-kph) winds, topping trees, sweeping away bridges, flooding neighborhoods and killing at least 32 people. Mitch was drifting west at only 2 mph (3 kph) over the Bay Islands, Honduras' most popular tourist area. It also was only 30 miles (50 kms) off the coast, and hurricane-force winds stretched outward 105 miles (165 kms); tropical storm-force winds 175 miles (280 kms). That meant the Honduran coast had been under hurricane conditions for more than a day. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island which was within miles (kms) of the eye of the hurricane. ``Few houses have remained standing.'' At its, 4th graf pvs ||||| Honduras braced for potential catastrophe Tuesday as Hurricane Mitch roared through the northwest Caribbean, churning up high waves and intense rain that sent coastal residents scurrying for safer ground. President Carlos Flores Facusse declared a state of maximum alert and the Honduran military sent planes to pluck residents from their homes on islands near the coast. At 0900 GMT Tuesday, Mitch was 95 miles (152 kilometers) north of Honduras, near the Swan Islands. With winds near 180 mph (289 kph), and even higher gusts, it was a Category 5 monster _ the highest, most dangerous rating for a storm. The 350-mile (560-kilometer) wide hurricane was moving west at 8 mph (12 kph). ``Mitch is closing in,'' said Monterrey Cardenas, mayor of Utila, an island 20 miles (32 kilometers) off the Honduran coast. ``And God help us.'' Mitch posed no immediate threat to the United States, forecasters said, but was expected to remain in the northwest Caribbean for five days. The U.S. National Weather Service in Miami said Mitch could weaken somewhat, but warned it would still remain ``a very dangerous hurricane capable of causing catastrophic damage.'' The entire coast of Honduras was under a hurricane warning and up to 15 inches (38 centimeters) of rain was forecast in mountain areas. The Honduran president closed schools and public offices on the coast Monday and ordered all air force planes and helicopters to evacuate people from the Islas de la Bahia, a string of small islands off the country's central coast. The head of the Honduran armed forces, Gen. Mario Hung Pacheco, said 5,000 soldiers were standing by to help victims of the storm, but he warned the military could not reach everyone. ``For that humanitarian work, we would need more than 300 Hercules C-137 planes,'' he said. ``Honduras doesn't have them.'' A hurricane warning was also in effect for the Caribbean coast of Guatemala. In Belize, a hurricane watch was in place and the government also closed schools and sent workers home early Monday. Panic buying stripped bread from the shelves of some stores and some gasoline stations ran dry. Coastal Belize City was hit so hard by Hurricane Hattie in 1961 that the country built a new capital inland at Belmopan. Mexico mobilized troops and emergency workers Monday on the east coast of the Yucatan peninsula, which was also under a hurricane watch, and Cuba said it had evacuated 600 vacationers from the Island of Youth. Jerry Jarrell, the weather center director, said Mitch was the strongest hurricane to strike the Caribbean since 1988, when Gilbert killed more than 300 people. In La Ceiba, on Honduras' northern coast, people stood in long lines at filling stations Monday to buy gasoline under a steady rain. Maria Gonzalez said she needed the gas to cook with when her firewood gets wet. Still, she bought only 37 cents worth _ all she could afford. ``I have six children, and we live in a riverbed,'' she said. ``If it gets really bad, we'll go to the church and see what the architect of the world has in store for us.'' Swinwick Jackson, a fisherman on Utila, had tied up his boats and was taking his family to stay with a relative on higher ground. National police spokesman Ivan Mejia said the Coco, Segovia and Cruta rivers all overflowed their banks Monday along Honduras' eastern coast. ``Frightened people are moving into the mountains to search for shelter,'' he said. In El Progreso, 100 miles (160 kilometers) north of the Honduran capital of Tegucigalpa, the army evacuated more than 5,000 people who live in low-lying banana plantations along the Ulua River, said Nolly Soliman, a resident. Before bearing down on Honduras, Mitch swept past Jamaica and the Cayman Islands. Rain squalls flooded streets in the Jamaican capital, Kingston, and government offices and schools closed in the Caymans, a British colony of 28,000 people. The strongest hurricane to hit Honduras in recent memory was Fifi in 1974, which ravaged Honduras' Caribbean coast, killing at least 2,000 people. ||||| Pope John Paul II appealed for aid Wednesday for the Central American countries stricken by hurricane Mitch and said he feels close to the thousands who are suffering. Speaking during his general audience, the pope urged ``all public and private institutions and all men of good will'' to do all they can ``in this grave moment of destruction and death.'' Hurricane Mitch killed an estimated 9,000 people throughout Central America in a disaster of such proportions that relief agencies have been overwhelmed. Among those attending the audience were six Russian cosmonauts taking a special course in Italy. As a gift, they gave John Paul a spacesuit. ||||| BRUSSELS, Belgium (AP) - The European Union on Tuesday approved 6.4 million European currency units (dlrs 7.7 million) in aid for thousands of victims of the devastation caused by Hurricane Mitch in Central America. EU spokesman Pietro Petrucci said the funds will be used to provide basic care such as medicine, food, water sanitation and blankets to thousands of people whose homes were destroyed by torrential rains and mudslides. The aid will be distributed in Nicaragua, El Salvador, Honduras and Guatemala which have most suffered from Mitch's deadly passage, the EU executive Commission said in a statement. Officials in Central America estimated Tuesday that about 7,000 people have died in the region. The greatest losses were reported in Honduras, where an estimated 5,000 people died and 600,000 people _ 10 percent of the population _ were forced to flee their homes after last week's storm. El Salvador's National Emergency Committee listed 174 dead, 96 missing and 27,000 homeless. But its own regional affiliate in San Miguel province reported 125 dead there alone. Guatemala reported 100 storm-related deaths. The latest EU aid follows an initial 400,000 ecu (dlrs 480,000). the EU approved for the region on Friday. The full 6.8 million ecu (dlrs 8.18 million) will be channeled through humanitarian groups working in the region. ||||| Hurricane Mitch cut through the Honduran coast like a ripsaw Thursday, its devastating winds whirling for a third day through resort islands and mainland communities. At least 32 people were killed and widespread flooding prompted more than 150,000 to seek higher ground. Mitch, once among the century's most powerful hurricanes, weakened today as it blasted this Central American nation, bringing downpours that flooded at least 50 rivers. It also kicked up huge waves that pounded seaside communities. The storm's power was easing and by 1200 GMT, it had sustained winds of 80 mph (130 kph), down from 100 mph (160 kph) around midnight and well below its 180 mph (290 kph) peak of early Tuesday. After remaining virtually stationary for more than a day, the U.S. National Hurricane Center said Thursday the center of the 350-mile-wide (560-kilometer-wide) storm had moved slightly to the south but remained just off the Honduran coast. Hurricane-force winds whirled up to 30 miles (50 kilometers) from the center, with rain-laden tropical storm winds extending well beyond that. Caught near the heart of the storm were the Bay Islands, about 25 miles (40 kilometers) off Honduras' coast and popular with divers and beachcombers. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island, 20 miles (32 kilometers) off the coast. ``Few houses have remained standing.'' Honduran officials said 14 people had died on that small island alone, and at least nine had died elsewhere in the country. More than 72,000 people had been evacuated to shelters. Nine other deaths had been reported elsewhere in the region by early Thursday _ more than a day after Mitch drifted to just off the coast and seemed to park there. An American was thrown from his boat south of Cancun, Mexico, on Monday and was presumed dead. Eight others died in Nicaragua in flooding. Honduran officials said more than 200 towns and villages had been isolated by the storm, left without power, telephones or clean drinking water. Agriculture Minister Pedro Arturo Sevilla said crucial grain, citrus and banana crops had been damaged ``and the economic future of Honduras is uncertain.'' Rain-swollen rivers knocked out bridges and roads, isolating La Ceiba, a coastal city of 40,000 people located 80 miles (128 kilometers) from the Bay Islands. About 10,000 residents fled to crowded shelters in schools, churches and firehouses. While supplies of food and gasoline seemed to hold up, drivers worried about the coming days formed long lines to fill their tanks at gas stations and some supermarkets took measures to limit panic buying. La Ceiba officials appealed for pure water for those in shelters and some residents set out plastic buckets to collect rainwater. Only a few hotels and offices with their own generators had electricity. Wind-whipped waves almost buried some houses near the shore. People evacuated low-lying houses by wading through chest-deep water with sodden bags of belongings on their heads. In neighboring Belize, most of the 75,000 residents of coastal Belize City had left by Wednesday, turning the country's largest city into a ghost town. Police and soldiers patrolled the streets, and a few people wandered amid the boarded-up houses. The cable television company was broadcasting only The Weather Channel. With the storm seemingly anchored off Honduras, officials in Mexico to the north eased emergency measures on the Caribbean coast of the Yucatan Peninsula, where hundreds of people remained in shelters as a precaution Wednesday night. More than 20,000 tourists had abandoned Cancun and nearby resort areas, leaving hotels at about 20 percent of capacity. Houston accountant Kathy Montgomery said that she and her friend Nina Devries had tried to leave Cancun but found all the flights full. ``It's been horrible,'' said Montgomery, as she and her friend drank cocktails at an outdoor restaurant. ``We couldn't go out on a boat, we couldn't go snorkeling. ``Even Carlos' N Charlie's and Senor Frog's are closed,'' she said dejectedly, referring to two restaurants. ``Some vacation.'' The U.S. Agency for International Development sent two helicopters each to Belize and Honduras to help in search, rescue and relief efforts. At its peak, Mitch was the fourth-strongest Caribbean hurricane in this century, behind Gilbert in 1988, Allen in 1980 and the Labor Day hurricane of 1935. ||||| Better information from Honduras' ravaged countryside enabled officials to lower the confirmed death toll from Hurricane Mitch from 7,000 to about 6,100 on Thursday, but leaders insisted the need for help was growing. President Carlos Flores declared Hurricane Mitch had set back Honduras' development by 50 years. He urged the more than 1.5 million Hondurans affected by the storm to help with the recovery effort. ``The county is semi-destroyed and awaits the maximum effort and most fervent and constant work of every one of its children,'' he said. In the capital, Tegucigalpa, Mexican rescue teams began searching for avalanche victims. Honduran doctors dispensed vaccinations to prevent disease outbreaks in shelters crammed with refugees. As of Thursday, Mitch had killed 6,076 people in Honduras _ down from officials' earlier estimate of 7,000. The numbers of missing dropped from an estimated 11,000 to 4,621, Government Minister Delmer Urbizo said. ``We have more access to places affected by the storm,'' Urbizo explained. ``Until now, we have had a short amount of time and few resources to get reliable information.'' In Nicaragua, around 2,000 people were killed, most of those swept away when a volcano crater lake collapsed a week ago. El Salvador reported 239 dead; Guatemala said 194 of its people had been killed. Six people died in southern Mexico and seven in Costa Rica. Aid groups and governments have called for other countries to send medicine, water, canned food, roofing materials and equipment to help deliver supplies. In Washington on Thursday, President Bill Clinton ordered dlrs 30 million in Defense Department equipment and services and dlrs 36 million in food, fuel and other aid be sent to Honduras, Nicaragua, El Salvador and Guatemala. The White House also said Clinton was dispatching Tipper Gore, wife of Vice President Al Gore, to Central America on a mission to show the U.S. commitment to providing humanitarian relief. Hillary Rodham Clinton also will travel to the region, visiting Nicaragua and Honduras on Nov. 16. She later will stop in El Salvador and Guatemala before continuing on to Haiti and the Dominican Republic for a visit that had been canceled due to Hurricane Georges, which struck the Caribbean in October. Mitch, which sat off the Honduran coast for several days last week, destroyed scores of Central American communities before moving northwest. The weakened storm crossed southern Florida on Thursday, damaging mobile homes and buildings and injuring at least seven people. Countries overwhelmed by the storm's devastation have only just begun to calculate the damage. Honduran authorities still don't know how many shelters have been set up across the Central American country. Surveyors have yet to evaluate roughly 10 percent of the most affected areas _ the departments of Cortes, Atlantida, Colon and Yoro in the north, southern Choluteca and Valle, and the central department of Francisco Morazan, which includes the capital. Numbers still can vary wildly. The estimated number of homeless dropped from 580,000 to 569,000 Thursday. Mitch damaged or destroyed at least 90 bridges on major highways, including most spans on Highway 5, the main north-south route, officials said. Urbizo said Honduran officials hoped the scale of need in next-door Nicaragua wouldn't overshadow Honduras' plight. ``Our problem is that all of the country has been affected,'' he said. Thursday's relief operations paled in comparison to the scope of the disaster. A total of 14 helicopter relief missions were delivering aid to stricken towns, said Col. Roger Antonio Caceres of the government's Operation Mitch emergency response task force. ``We can manage with the number of aircraft we have because there is little to distribute,'' Caceres said. More help was on the way. Mexico was sending 700 tons of food, 11 tons of medicine, at least 12 helicopters, four cargo planes and 475 soldiers to help in relief operations. The United States committed 19 Blackhawk and Chinook helicopters, two C-27 aircraft and one C-130 cargo plane. France said it was sending 250 rescue workers to Central America, along with a ship loaded with construction material and equipment. The U.N. World Food Program said Thursday it was diverting ships, some already at sea, to rush their cargoes of donated food to Central America. It also was pulling food from warehouses at its base in Rome, probably for delivery by emergency relief flights, spokesman Trevor Rowe said. ``We're trying to move food as fast as possible to help people as soon as possible,'' Rowe said. Searches for the missing continued, and some decomposed bodies, once found, were being buried in common graves. About 100 victims had been buried around Tegucigalpa, Mayor Nahum Valladeres said. In the flood-ravaged Tegucigalpa neighborhood of Nueva Esperanza, Mexican military rescuers loaded search dogs on their backs and forded a muddy river to look for people believed buried in a 200-foot (60-meter) avalanche that occurred last Friday. Dozens of homes were swept into the river. ``This is the first place we've been'' with the dogs, Honduran army Maj. Freddy Diaz Celaya said. ``From here we'll continue searching downriver.'' Concerned that crowded shelter conditions could produce outbreaks of hepatitis, respiratory infections and other ailments, the Health Ministry announced an inoculation campaign, especially for children. Doctors volunteering at a shelter housing 4,000 people at Tegucigalpa's Polytechnic Development Institute said they'd heard of the campaign but had yet to receive word or medicines from the Health Ministry. ``We have to vaccinate the children,'' said Dr. Mario Soto, who has treated at least 300 children at the shelter for diarrhea, conjunctivitis and bacterial infections. ||||| In Honduras, at least 231 deaths have been blamed on Mitch, the National Emergency Commission said Saturday. El Salvador _ where 140 people died in flash floods _ declared a state of emergency Saturday, as did Guatemala, where 21 people died when floods swept away their homes. Mexico reported one death from Mitch last Monday. In the Caribbean, the U.S. Coast Guard widened a search for a tourist schooner with 31 people aboard that hasn't been heard from since Tuesday. By late Sunday, Mitch's winds, once near 180 mph (290 kph), had dropped to near 30 mph (50 kph), and the storm _ now classified as a tropical depression _ was near Tapachula, on Mexico's southern Pacific coast near the Guatemalan border. Mitch was moving west at 8 mph (13 kph) and was dissipating but threatened to strengthen again if it moved back out to sea.

Hurricane Mitch, category 5 hurricane, brought widespread death and destruction to Central American. Especially hard hit was Honduras where an estimated 6,076 people lost their lives. The hurricane, which lingered off the coast of Honduras for 3 days before moving off, flooded large areas, destroying crops and property. The U.S. and European Union were joined by Pope John Paul II in a call for money and workers to help the stricken area. President Clinton sent Tipper Gore, wife of Vice President Gore to the area to deliver much needed supplies to the area, demonstrating U.S. commitment to the recovery of the region.

At least 231 people have been confirmed dead in Honduras from former-hurricane Mitch, bringing the storm's death toll in the region to 357, the National Emergency Commission said Saturday. Mitch _ once, 2nd graf pvs ||||| Nicaraguan Vice President Enrique Bolanos said Sunday night that between 1,000 and 1,500 people were buried in a 32-square mile (82.88 square-kilometer) area below the slopes of the Casita volcano in northern Nicaragua. That is in addition to least another 600 people elsewhere in the country, Bolanos said. ||||| Aid workers struggled Friday to reach survivors of Hurricane Mitch, who are in danger of dying from starvation and disease in the wake of the storm that officials estimate killed more than 10,000 people. Foreign aid and pledges of assistance poured into Central America, but damage to roads and bridges reduced the amount of supplies reaching hundreds of isolated communities to a trickle: only as much as could be dropped from a helicopter, when the aircraft can get through. In the Aguan River Valley in northern Honduras, floodwaters have receded, leaving a carpet of mud over hundreds of acres (hectares). In many nearby villages, residents have gone days without potable water or food. A 7-month-old baby died in the village of Olvido after three days without food. Residents feared more children would die. ``The worst thing, the saddest thing, are the children. The children are suffering, even dying,'' said the Rev. Cecilio Escobar Gallindo, the parish priest. A score of cargo aircraft landed Thursday at the normally quiet Toncontin airport in the Honduran capital of Tegucigalpa, delivering aid from Mexico, the United States, Japan and Argentina. Former U.S. President Jimmy Carter and his wife, Rosalynn, intended to visit Nicaragua on Friday to learn more about the hurricane's impact, The Carter Center in Atlanta announced. ``We hope this visit will help call attention to the suffering and humanitarian need this disaster has created,'' Carter said in a statement. U.S. President Bill Clinton requested a ``global relief effort'' to help Central America and boosted U.S. emergency aid to dlrs 70 million. Clinton is dispatching a delegation next week led by Tipper Gore, wife of Vice President Al Gore, to deliver some of the supplies destined for Honduras, Nicaragua, El Salvador and Guatemala. First lady Hillary Rodham Clinton added Nicaragua and Honduras to a trip she plans to the region beginning Nov. 16. Taiwan said today it will donate dlrs 2.6 million in relief to Honduras, Nicaragua, El Salvador and Guatemala. The four countries are among a dwindling number of nations that recognize Taiwan, which China claims is a breakaway province. Two British ships that were in the area on an exercise were on their way to Honduras to join relief efforts, the Defense Ministry said Friday. ``It's a coincidence that the ships are there but they've got men and equipment that can be put to work in an organized way,'' said International Development Secretary Clare Short. Nicaragua said Friday it will accept Cuba's offer to send doctors as long as the communist nation flies them in on its own helicopters and with their own supplies. Nicaraguan leaders previously had refused Cuba's offer of medical help, saying it did not have the means to transport or support the doctors. Nicaragua's leftist Sandinistas, who maintained close relations with Fidel Castro during their 1979-90 rule, had criticized the refusal by President Arnoldo Aleman's administration. ||||| Hurricane Mitch paused in its whirl through the western Caribbean on Wednesday to punish Honduras with 120-mph (205-kph) winds, topping trees, sweeping away bridges, flooding neighborhoods and killing at least 32 people. Mitch was drifting west at only 2 mph (3 kph) over the Bay Islands, Honduras' most popular tourist area. It also was only 30 miles (50 kms) off the coast, and hurricane-force winds stretched outward 105 miles (165 kms); tropical storm-force winds 175 miles (280 kms). That meant the Honduran coast had been under hurricane conditions for more than a day. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island which was within miles (kms) of the eye of the hurricane. ``Few houses have remained standing.'' At its, 4th graf pvs ||||| Honduras braced for potential catastrophe Tuesday as Hurricane Mitch roared through the northwest Caribbean, churning up high waves and intense rain that sent coastal residents scurrying for safer ground. President Carlos Flores Facusse declared a state of maximum alert and the Honduran military sent planes to pluck residents from their homes on islands near the coast. At 0900 GMT Tuesday, Mitch was 95 miles (152 kilometers) north of Honduras, near the Swan Islands. With winds near 180 mph (289 kph), and even higher gusts, it was a Category 5 monster _ the highest, most dangerous rating for a storm. The 350-mile (560-kilometer) wide hurricane was moving west at 8 mph (12 kph). ``Mitch is closing in,'' said Monterrey Cardenas, mayor of Utila, an island 20 miles (32 kilometers) off the Honduran coast. ``And God help us.'' Mitch posed no immediate threat to the United States, forecasters said, but was expected to remain in the northwest Caribbean for five days. The U.S. National Weather Service in Miami said Mitch could weaken somewhat, but warned it would still remain ``a very dangerous hurricane capable of causing catastrophic damage.'' The entire coast of Honduras was under a hurricane warning and up to 15 inches (38 centimeters) of rain was forecast in mountain areas. The Honduran president closed schools and public offices on the coast Monday and ordered all air force planes and helicopters to evacuate people from the Islas de la Bahia, a string of small islands off the country's central coast. The head of the Honduran armed forces, Gen. Mario Hung Pacheco, said 5,000 soldiers were standing by to help victims of the storm, but he warned the military could not reach everyone. ``For that humanitarian work, we would need more than 300 Hercules C-137 planes,'' he said. ``Honduras doesn't have them.'' A hurricane warning was also in effect for the Caribbean coast of Guatemala. In Belize, a hurricane watch was in place and the government also closed schools and sent workers home early Monday. Panic buying stripped bread from the shelves of some stores and some gasoline stations ran dry. Coastal Belize City was hit so hard by Hurricane Hattie in 1961 that the country built a new capital inland at Belmopan. Mexico mobilized troops and emergency workers Monday on the east coast of the Yucatan peninsula, which was also under a hurricane watch, and Cuba said it had evacuated 600 vacationers from the Island of Youth. Jerry Jarrell, the weather center director, said Mitch was the strongest hurricane to strike the Caribbean since 1988, when Gilbert killed more than 300 people. In La Ceiba, on Honduras' northern coast, people stood in long lines at filling stations Monday to buy gasoline under a steady rain. Maria Gonzalez said she needed the gas to cook with when her firewood gets wet. Still, she bought only 37 cents worth _ all she could afford. ``I have six children, and we live in a riverbed,'' she said. ``If it gets really bad, we'll go to the church and see what the architect of the world has in store for us.'' Swinwick Jackson, a fisherman on Utila, had tied up his boats and was taking his family to stay with a relative on higher ground. National police spokesman Ivan Mejia said the Coco, Segovia and Cruta rivers all overflowed their banks Monday along Honduras' eastern coast. ``Frightened people are moving into the mountains to search for shelter,'' he said. In El Progreso, 100 miles (160 kilometers) north of the Honduran capital of Tegucigalpa, the army evacuated more than 5,000 people who live in low-lying banana plantations along the Ulua River, said Nolly Soliman, a resident. Before bearing down on Honduras, Mitch swept past Jamaica and the Cayman Islands. Rain squalls flooded streets in the Jamaican capital, Kingston, and government offices and schools closed in the Caymans, a British colony of 28,000 people. The strongest hurricane to hit Honduras in recent memory was Fifi in 1974, which ravaged Honduras' Caribbean coast, killing at least 2,000 people. ||||| Pope John Paul II appealed for aid Wednesday for the Central American countries stricken by hurricane Mitch and said he feels close to the thousands who are suffering. Speaking during his general audience, the pope urged ``all public and private institutions and all men of good will'' to do all they can ``in this grave moment of destruction and death.'' Hurricane Mitch killed an estimated 9,000 people throughout Central America in a disaster of such proportions that relief agencies have been overwhelmed. Among those attending the audience were six Russian cosmonauts taking a special course in Italy. As a gift, they gave John Paul a spacesuit. ||||| BRUSSELS, Belgium (AP) - The European Union on Tuesday approved 6.4 million European currency units (dlrs 7.7 million) in aid for thousands of victims of the devastation caused by Hurricane Mitch in Central America. EU spokesman Pietro Petrucci said the funds will be used to provide basic care such as medicine, food, water sanitation and blankets to thousands of people whose homes were destroyed by torrential rains and mudslides. The aid will be distributed in Nicaragua, El Salvador, Honduras and Guatemala which have most suffered from Mitch's deadly passage, the EU executive Commission said in a statement. Officials in Central America estimated Tuesday that about 7,000 people have died in the region. The greatest losses were reported in Honduras, where an estimated 5,000 people died and 600,000 people _ 10 percent of the population _ were forced to flee their homes after last week's storm. El Salvador's National Emergency Committee listed 174 dead, 96 missing and 27,000 homeless. But its own regional affiliate in San Miguel province reported 125 dead there alone. Guatemala reported 100 storm-related deaths. The latest EU aid follows an initial 400,000 ecu (dlrs 480,000). the EU approved for the region on Friday. The full 6.8 million ecu (dlrs 8.18 million) will be channeled through humanitarian groups working in the region. ||||| Hurricane Mitch cut through the Honduran coast like a ripsaw Thursday, its devastating winds whirling for a third day through resort islands and mainland communities. At least 32 people were killed and widespread flooding prompted more than 150,000 to seek higher ground. Mitch, once among the century's most powerful hurricanes, weakened today as it blasted this Central American nation, bringing downpours that flooded at least 50 rivers. It also kicked up huge waves that pounded seaside communities. The storm's power was easing and by 1200 GMT, it had sustained winds of 80 mph (130 kph), down from 100 mph (160 kph) around midnight and well below its 180 mph (290 kph) peak of early Tuesday. After remaining virtually stationary for more than a day, the U.S. National Hurricane Center said Thursday the center of the 350-mile-wide (560-kilometer-wide) storm had moved slightly to the south but remained just off the Honduran coast. Hurricane-force winds whirled up to 30 miles (50 kilometers) from the center, with rain-laden tropical storm winds extending well beyond that. Caught near the heart of the storm were the Bay Islands, about 25 miles (40 kilometers) off Honduras' coast and popular with divers and beachcombers. ``The hurricane has destroyed almost everything,'' said Mike Brown, a resident of Guanaja Island, 20 miles (32 kilometers) off the coast. ``Few houses have remained standing.'' Honduran officials said 14 people had died on that small island alone, and at least nine had died elsewhere in the country. More than 72,000 people had been evacuated to shelters. Nine other deaths had been reported elsewhere in the region by early Thursday _ more than a day after Mitch drifted to just off the coast and seemed to park there. An American was thrown from his boat south of Cancun, Mexico, on Monday and was presumed dead. Eight others died in Nicaragua in flooding. Honduran officials said more than 200 towns and villages had been isolated by the storm, left without power, telephones or clean drinking water. Agriculture Minister Pedro Arturo Sevilla said crucial grain, citrus and banana crops had been damaged ``and the economic future of Honduras is uncertain.'' Rain-swollen rivers knocked out bridges and roads, isolating La Ceiba, a coastal city of 40,000 people located 80 miles (128 kilometers) from the Bay Islands. About 10,000 residents fled to crowded shelters in schools, churches and firehouses. While supplies of food and gasoline seemed to hold up, drivers worried about the coming days formed long lines to fill their tanks at gas stations and some supermarkets took measures to limit panic buying. La Ceiba officials appealed for pure water for those in shelters and some residents set out plastic buckets to collect rainwater. Only a few hotels and offices with their own generators had electricity. Wind-whipped waves almost buried some houses near the shore. People evacuated low-lying houses by wading through chest-deep water with sodden bags of belongings on their heads. In neighboring Belize, most of the 75,000 residents of coastal Belize City had left by Wednesday, turning the country's largest city into a ghost town. Police and soldiers patrolled the streets, and a few people wandered amid the boarded-up houses. The cable television company was broadcasting only The Weather Channel. With the storm seemingly anchored off Honduras, officials in Mexico to the north eased emergency measures on the Caribbean coast of the Yucatan Peninsula, where hundreds of people remained in shelters as a precaution Wednesday night. More than 20,000 tourists had abandoned Cancun and nearby resort areas, leaving hotels at about 20 percent of capacity. Houston accountant Kathy Montgomery said that she and her friend Nina Devries had tried to leave Cancun but found all the flights full. ``It's been horrible,'' said Montgomery, as she and her friend drank cocktails at an outdoor restaurant. ``We couldn't go out on a boat, we couldn't go snorkeling. ``Even Carlos' N Charlie's and Senor Frog's are closed,'' she said dejectedly, referring to two restaurants. ``Some vacation.'' The U.S. Agency for International Development sent two helicopters each to Belize and Honduras to help in search, rescue and relief efforts. At its peak, Mitch was the fourth-strongest Caribbean hurricane in this century, behind Gilbert in 1988, Allen in 1980 and the Labor Day hurricane of 1935. ||||| Better information from Honduras' ravaged countryside enabled officials to lower the confirmed death toll from Hurricane Mitch from 7,000 to about 6,100 on Thursday, but leaders insisted the need for help was growing. President Carlos Flores declared Hurricane Mitch had set back Honduras' development by 50 years. He urged the more than 1.5 million Hondurans affected by the storm to help with the recovery effort. ``The county is semi-destroyed and awaits the maximum effort and most fervent and constant work of every one of its children,'' he said. In the capital, Tegucigalpa, Mexican rescue teams began searching for avalanche victims. Honduran doctors dispensed vaccinations to prevent disease outbreaks in shelters crammed with refugees. As of Thursday, Mitch had killed 6,076 people in Honduras _ down from officials' earlier estimate of 7,000. The numbers of missing dropped from an estimated 11,000 to 4,621, Government Minister Delmer Urbizo said. ``We have more access to places affected by the storm,'' Urbizo explained. ``Until now, we have had a short amount of time and few resources to get reliable information.'' In Nicaragua, around 2,000 people were killed, most of those swept away when a volcano crater lake collapsed a week ago. El Salvador reported 239 dead; Guatemala said 194 of its people had been killed. Six people died in southern Mexico and seven in Costa Rica. Aid groups and governments have called for other countries to send medicine, water, canned food, roofing materials and equipment to help deliver supplies. In Washington on Thursday, President Bill Clinton ordered dlrs 30 million in Defense Department equipment and services and dlrs 36 million in food, fuel and other aid be sent to Honduras, Nicaragua, El Salvador and Guatemala. The White House also said Clinton was dispatching Tipper Gore, wife of Vice President Al Gore, to Central America on a mission to show the U.S. commitment to providing humanitarian relief. Hillary Rodham Clinton also will travel to the region, visiting Nicaragua and Honduras on Nov. 16. She later will stop in El Salvador and Guatemala before continuing on to Haiti and the Dominican Republic for a visit that had been canceled due to Hurricane Georges, which struck the Caribbean in October. Mitch, which sat off the Honduran coast for several days last week, destroyed scores of Central American communities before moving northwest. The weakened storm crossed southern Florida on Thursday, damaging mobile homes and buildings and injuring at least seven people. Countries overwhelmed by the storm's devastation have only just begun to calculate the damage. Honduran authorities still don't know how many shelters have been set up across the Central American country. Surveyors have yet to evaluate roughly 10 percent of the most affected areas _ the departments of Cortes, Atlantida, Colon and Yoro in the north, southern Choluteca and Valle, and the central department of Francisco Morazan, which includes the capital. Numbers still can vary wildly. The estimated number of homeless dropped from 580,000 to 569,000 Thursday. Mitch damaged or destroyed at least 90 bridges on major highways, including most spans on Highway 5, the main north-south route, officials said. Urbizo said Honduran officials hoped the scale of need in next-door Nicaragua wouldn't overshadow Honduras' plight. ``Our problem is that all of the country has been affected,'' he said. Thursday's relief operations paled in comparison to the scope of the disaster. A total of 14 helicopter relief missions were delivering aid to stricken towns, said Col. Roger Antonio Caceres of the government's Operation Mitch emergency response task force. ``We can manage with the number of aircraft we have because there is little to distribute,'' Caceres said. More help was on the way. Mexico was sending 700 tons of food, 11 tons of medicine, at least 12 helicopters, four cargo planes and 475 soldiers to help in relief operations. The United States committed 19 Blackhawk and Chinook helicopters, two C-27 aircraft and one C-130 cargo plane. France said it was sending 250 rescue workers to Central America, along with a ship loaded with construction material and equipment. The U.N. World Food Program said Thursday it was diverting ships, some already at sea, to rush their cargoes of donated food to Central America. It also was pulling food from warehouses at its base in Rome, probably for delivery by emergency relief flights, spokesman Trevor Rowe said. ``We're trying to move food as fast as possible to help people as soon as possible,'' Rowe said. Searches for the missing continued, and some decomposed bodies, once found, were being buried in common graves. About 100 victims had been buried around Tegucigalpa, Mayor Nahum Valladeres said. In the flood-ravaged Tegucigalpa neighborhood of Nueva Esperanza, Mexican military rescuers loaded search dogs on their backs and forded a muddy river to look for people believed buried in a 200-foot (60-meter) avalanche that occurred last Friday. Dozens of homes were swept into the river. ``This is the first place we've been'' with the dogs, Honduran army Maj. Freddy Diaz Celaya said. ``From here we'll continue searching downriver.'' Concerned that crowded shelter conditions could produce outbreaks of hepatitis, respiratory infections and other ailments, the Health Ministry announced an inoculation campaign, especially for children. Doctors volunteering at a shelter housing 4,000 people at Tegucigalpa's Polytechnic Development Institute said they'd heard of the campaign but had yet to receive word or medicines from the Health Ministry. ``We have to vaccinate the children,'' said Dr. Mario Soto, who has treated at least 300 children at the shelter for diarrhea, conjunctivitis and bacterial infections. ||||| In Honduras, at least 231 deaths have been blamed on Mitch, the National Emergency Commission said Saturday. El Salvador _ where 140 people died in flash floods _ declared a state of emergency Saturday, as did Guatemala, where 21 people died when floods swept away their homes. Mexico reported one death from Mitch last Monday. In the Caribbean, the U.S. Coast Guard widened a search for a tourist schooner with 31 people aboard that hasn't been heard from since Tuesday. By late Sunday, Mitch's winds, once near 180 mph (290 kph), had dropped to near 30 mph (50 kph), and the storm _ now classified as a tropical depression _ was near Tapachula, on Mexico's southern Pacific coast near the Guatemalan border. Mitch was moving west at 8 mph (13 kph) and was dissipating but threatened to strengthen again if it moved back out to sea.

A category 5 storm, Hurricane Mitch roared across the northwest Caribbean with 180 mph winds across a 350-mile front that devastated the mainland and islands of Central America. Although the force of the storm diminished, at least 8,000 people died from wind, waves and flood damage. The greatest losses were in Honduras where some 6,076 people perished. Around 2,000 people were killed in Nicaragua, 239 in El Salvador, 194 in Guatemala, seven in Costa Rica and six in Mexico. At least 569,000 people were homeless across Central America. Aid was sent from many sources (European Union, the UN, US and Mexico). Relief efforts are hampered by extensive damage.

Cambodia's ruling party responded Tuesday to criticisms of its leader in the U.S. Congress with a lengthy defense of strongman Hun Sen's human rights record. The Cambodian People's Party criticized a non-binding resolution passed earlier this month by the U.S. House of Representatives calling for an investigation into violations of international humanitarian law allegedly committed by Hun Sen. Events mentioned in the resolution include Hun Sen's coup last year against his co-prime minister, Prince Norodom Ranariddh, and his violent crackdown in September against anti-government demonstrations. A copy of the resolution has since been submitted to the U.S. Senate Committee on Foreign Relations. ``The CPP would like to launch an appeal to U.S. senators to wisely and realistically consider this draft resolution and give justice to the CPP, Hun Sen and the Cambodian people by not approving it,'' the party said in a statement. It defended Hun Sen's ouster of Ranariddh as a proper response to the prince's attempts at the time to negotiate the defections of senior Khmer Rouge rebels. It also repeated claims that the prince's party had moved rebel soldiers into Phnom Penh, a contention that remains unproved. The killings of nearly 100 of Ranariddh's supporters documented by U.N. human rights workers in the aftermath of the coup were dismissed by the CPP as mostly fabrications meant to distort the political situation. Ranariddh and his core supporters did not return to Cambodia until a few months before an election in July this year that the ruling party narrowly won. Ranariddh and his opposition ally, Sam Rainsy, refused to accept the election results, alleging widespread intimidation and fraud by the CPP. When their claims were dismissed by a Hun Sen-friendly court, they rallied their supporters into the streets of Phnom Penh. After two weeks of tolerating the demonstrations, Hun Sen ordered a violent crackdown that resulted in the deaths of at least four protesters. U.N. human rights workers later discovered more than 20 bodies _ many bearing signs of torture _ in and around the capital, prompting speculation that the death toll could be much higher. The ruling party supported the police action in its statement, noting that public property was damaged by protesters and that grenades were thrown at Hun Sen's home after Sam Rainsy suggested in a speech that the U.S. government should fire cruise missiles at Hun Sen. The opposition claims the grenade attack was staged as an excuse to begin the crackdown. ``The leaders of illegal demonstrations are the ones who must bear responsibility for the consequences deriving from the protest,'' the CPP said Tuesday, referring to the deadly violence as ``minor incidents.'' The ruling party also reminded the United States that Washington supported a Cambodian exile government dominated by the brutal Khmer Rouge in the 1980s. The Khmer Rouge was responsible for the deaths of as many as 2 million people during the guerrilla group's 1975-79 rule of Cambodia. After a series of border clashes, the Khmer Rouge was ousted from power by an invading Vietnamese army that set up a surrogate Cambodian communist government later led by Hun Sen. The ruling party accused U.S. policy-makers of not taking timely action to save the Cambodian people from the Khmer Rouge. ``They must not make unjust accusations against those who led the struggle to liberate the people from genocide,'' it added. ||||| Cambodia's bickering political parties broke a three-month deadlock Friday and agreed to a coalition government leaving strongman Hun Sen as sole prime minister, King Norodom Sihanouk announced. In a long-elusive compromise, opposition leader Prince Norodom Ranariddh will become president of the National Assembly resulting from disputed elections in July, even though Hun Sen's party holds a majority of 64 seats in the 122-member chamber. Hun Sen's Cambodian People's Party dropped insistence on a joint assembly chairmanship shared by Ranariddh and party boss Chea Sim, the current speaker. It was one of the main stumbling blocks in months of discord. Instead, Sihanouk announced, the constitution will be modified to create a new Senate, which Chea Sim will head. Chea Sim will still serve as acting head of state during the king's frequent absences from the country. ``The major political crisis in the country has been resolved and the political deadlock facing the nation has also come to an end,'' the king said in his statement. The Senate will initially be appointed by the king. The agreement did not say how many seats there would be, nor how they would be divided. The parties will hammer out details later. Pok Than, one of Ranariddh's negotiators, said the Senate would serve a mostly advisory role to the assembly. The senior Senate leaders will join those of the assembly, the prime minister and the country's top two Buddhist monks in a delicate balance of power on the council that will choose Cambodia's next king after Sihanouk dies. The two parties said that the assembly would convene again Nov. 25. The agreement came surprisingly quickly following Ranariddh's return Thursday from Thailand, where he had been holed up with other opposition figures for weeks amid fears for their safety if they stayed in Cambodia. The deal should allow rapid formation of a government between the CPP and Ranariddh's royalist FUNCINPEC to allow international donors and businesses to again operate in the poverty-stricken country, which is in desperate need of aid. It could also hasten Cambodia's entry into the Association of Southeast Asian Nations, put on hold last year after Hun Sen deposed Ranariddh as co-prime minister in a bloody coup. Earlier, as both sides arrived at the Royal Palace for a second day of meetings, Sihanouk said they had agreed in principle to form a coalition and made ``important concessions.'' The king, the sole force in Cambodian politics able to broker a deal, pressured both sides to reach agreement before he leaves Saturday for medical treatment in Beijing. Sihanouk reported that Hun Sen responded positively to a request by Ranariddh for five of his key supporters to receive political pardons. All five were convicted of political crimes by courts that are widely seen as loyal to Hun Sen. The king has powers to grant pardons, but has awaited agreement from Hun Sen in politically sensitive cases. Former battlefield enemies, the CPP and FUNCINPEC have been at loggerheads since the CPP narrowly won parliamentary elections in July. The vote failed to put an end to instability that followed last year's coup. The CPP fell short of the two-thirds majority needed to form a government alone. Ranariddh's party and opposition ally Sam Rainsy held back their support, claiming the CPP won due to fraud and intimidation. The opposition organized protests in Phnom Penh seeking Hun Sen's ouster that were violently dispersed. Sam Rainsy, under investigation by a Phnom Penh court for his role in the demonstrations, has remained abroad. His 15 seats in the 122-seat assembly are irrelevant to forming a working government. ||||| King Norodom Sihanouk on Tuesday praised agreements by Cambodia's top two political parties _ previously bitter rivals _ to form a coalition government led by strongman Hun Sen. In a short letter sent to news agencies, the king said he had received copies of cooperation agreements signed Monday that will place Hun Sen and his Cambodian People's Party in firm control of fiscal and administrative functions in the government. ``The protocol on cooperation between the CPP and FUNCINPEC will certainly bring peace and progress to our nation and people,'' Sihanouk wrote. Uncompromising enemies just a few months ago, Hun Sen and FUNCINPEC President Prince Norodom Ranariddh agreed Nov. 13 to form a government at a summit convened by Sihanouk. The deal, which will make Hun Sen prime minister and Ranariddh president of the National Assembly, ended more than three months of political deadlock that followed a July election narrowly won by Hun Sen. Key to the agreement was the formation of a Senate as the upper house of Parliament, to be led by CPP President Chea Sim, the outgoing head of the National Assembly. Sihanouk, recalling procedures used in a past government, suggested Tuesday that he should appoint the first two members of the upper house. The remaining senators, he said, should be selected by a method agreed upon by the new government and the National Assembly. Hun Sen said Monday that the CPP and FUNCINPEC had agreed that the Senate would be half as large as the 122-seat National Assembly. Other details of the Senate, including how much power it will be given in the promulgation of legislation, have yet to be ironed out by the two parties. ||||| King Norodom Sihanouk has declined requests to chair a summit of Cambodia's top political leaders, saying the meeting would not bring any progress in deadlocked negotiations to form a government. Cambodian leader Hun Sen's ruling party and the two-party opposition had called on the monarch to lead top-level talks, but disagreed on its location. ``Papa will not preside over any summit meeting between the three parties, whether it is held in Phnom Penh or Beijing, because such a meeting will certainly achieve no result,'' Sihanouk wrote in an Oct. 17 letter to his son, Prince Norodom Ranariddh, leader of the senior opposition FUNCINPEC party. A copy of the letter was obtained Thursday. In it, the king called on the three parties to make compromises to end the stalemate: ``Papa would like to ask all three parties to take responsibility before the nation and the people.'' Hun Sen used Thursday's anniversary of a peace agreement ending the country's civil war to pressure the opposition to form a coalition government with his party. ``Only those who want to prolong the anarchy and instability prevent efforts to set up a new government,'' Hun Sen said in a televised speech marking the anniversary of the 1991 Paris Peace Accords. Hun Sen's party won 64 of the 122 seats in parliament in July's national election, but not the two-thirds majority necessary to form a government on its own. Opposition parties led by Ranariddh and former finance minister Sam Ram Rainsy have refused to enter into a coalition with Hun Sen until their allegations of election fraud have been thoroughly investigated. International monitors said the election was relatively free and fair. Hun Sen said his current government would remain in power as long as the opposition refused to form a new one. Ranariddh and Sam Rainsy have remained outside the country since the Sept. 24 ceremonial convening of parliament. Citing Hun Sen's threats to arrest opposition politicians following two alleged attempts on his life, Ranariddh and Sam Rainsy have said they do not feel safe negotiating inside the country and asked the king to chair the summit at his residence in Beijing. Hun Sen has rejected the opposition's reservations, saying it would be inappropriate to hold a summit outside the country. Negotiations so far have proved fruitless except for the opening of parliament after a Sept. 22 summit led by the king. Hun Sen implied Thursday that the opposition failed to follow through on promises made at the summit. ``If those results are strictly respected, there seems no reason to hold another summit,'' Hun Sen said in a speech on the anniversary of the 1991 Paris Peace Accords. Sihanouk is reportedly set to fly to Beijing next month to receive medical treatment from his Chinese doctors. The 75-year-old monarch suffers from a variety ailments and periodically makes extended trips to Beijing. He was diagnosed with colon cancer in 1993, but it has since gone into remission. In September, thousands of people filled the streets of Phnom Penh to protest against the alleged election fraud. Hun Sen ordered police to break up the demonstrations. At least four demonstrators were killed by police, but the discovery of more than 20 bodies in the aftermath has prompted speculation that the death tally could be much higher. In his speech, Hun Sen blamed the violence on opposition leaders, saying the demonstrations instigated social and economic chaos. ||||| Cambodian leader Hun Sen on Friday rejected opposition parties' demands for talks outside the country, accusing them of trying to ``internationalize'' the political crisis. Government and opposition parties have asked King Norodom Sihanouk to host a summit meeting after a series of post-election negotiations between the two opposition groups and Hun Sen's party to form a new government failed. Opposition leaders Prince Norodom Ranariddh and Sam Rainsy, citing Hun Sen's threats to arrest opposition figures after two alleged attempts on his life, said they could not negotiate freely in Cambodia and called for talks at Sihanouk's residence in Beijing. Hun Sen, however, rejected that. ``I would like to make it clear that all meetings related to Cambodian affairs must be conducted in the Kingdom of Cambodia,'' Hun Sen told reporters after a Cabinet meeting on Friday. ``No-one should internationalize Cambodian affairs. It is detrimental to the sovereignty of Cambodia,'' he said. Hun Sen's Cambodian People's Party won 64 of the 122 parliamentary seats in July's elections, short of the two-thirds majority needed to form a government on its own. Ranariddh and Sam Rainsy have charged that Hun Sen's victory in the elections was achieved through widespread fraud. They have demanded a thorough investigation into their election complaints as a precondition for their cooperation in getting the national assembly moving and a new government formed. Hun Sen said on Friday that the opposition concerns over their safety in the country was ``just an excuse for them to stay abroad.'' Both Ranariddh and Sam Rainsy have been outside the country since parliament was ceremonially opened on Sep. 24. Sam Rainsy and a number of opposition figures have been under court investigation for a grenade attack on Hun Sen's Phnom Penh residence on Sep. 7. Hun Sen was not home at the time of the attack, which was followed by a police crackdown on demonstrators contesting Hun Sen's election victory. The Sam Rainsy Party, in a statement released Friday, accused Hun Sen of being ``unwilling to make any compromise'' on negotiations to break the deadlock. ``A meeting outside Cambodia, as suggested by the opposition, could place all parties on more equal footing,'' said the statement. ``But the ruling party refuses to negotiate unless it is able to threaten its negotiating partners with arrest or worse.'' ||||| Cambodian leader Hun Sen has guaranteed the safety and political freedom of all politicians, trying to ease the fears of his rivals that they will be arrested or killed if they return to the country. The assurances were aimed especially at Sam Rainsy, leader of a vocally anti-Hun Sen opposition party, who was forced to take refuge in the U.N. offices in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. Sam Rainsy and the 14 members of parliament from his party have been holed up overseas for two months. But a deal reached between Hun Sen and his chief rival, Prince Norodom Ranariddh, on forming a new government last week has opened the door for their return. In a letter to King Norodom Sihanouk _ the prince's father and Cambodia's head of state _ that was broadcast on television Tuesday, Hun Sen said that guarantees of safety extended to Ranariddh applied to all politicians. His assurances come a week before the first session of Cambodia's new parliament, the National Assembly. Sam Rainsy said Wednesday that he was unsatisfied with the guarantee. He said it contained indirect language and loopholes that suggest he and his Sam Rainsy Party members are still under threat of arrest from Hun Sen's ruling party. ``It should be easy for them to say, `Rainsy and the SRP members of the assembly have no charges against them and will not be arrested,''' the opposition leader said in a statement. ``But instead they make roundabout statements, full of loopholes that can easily be exploited by a legal system that is completely in their control.'' Ranariddh told reporters Wednesday that he believed it was safe for Sam Rainsy in Cambodia. Speaking upon his return from a brief stay in Bangkok, the prince said he would soon meet with Hun Sen to discuss the apportioning of ministries in the new coalition government. Last week, Hun Sen's Cambodian People's Party and Ranariddh's FUNCINPEC party agreed to form a coalition that would leave Hun Sen as sole prime minister and make the prince president of the National Assembly. The deal assures the two-thirds vote in parliament needed to approve a new government. The men served as co-prime ministers until Hun Sen overthrew Ranariddh in a coup last year. ``I think Hun Sen has got everything. He's got the premiership and legitimacy through the election and recognition from his majesty the king. I don't think there is any benefit for Hun Sen to cause instability for our country,'' Ranariddh said. The prince also said that his top general, Nhek Bunchhay, would not be given back his previous position as the second-ranking general in the Cambodian military's general staff. Nhek Bunchhay's outnumbered forces in the capital put up tough but unsuccessful resistance to last year's coup. ||||| Cambodian politicians expressed hope Monday that a new partnership between the parties of strongman Hun Sen and his rival, Prince Norodom Ranariddh, in a coalition government would not end in more violence. Hun Sen and Ranariddh, co-prime ministers in a coalition formed in 1993 after a landmark U.N.-sponsored election, often clashed over power-sharing and the integration of guerrilla fighters from the crumbling Khmer Rouge. Their arguments turned bloody last year when Hun Sen ousted Ranariddh in a coup. The prince fled Cambodia and did not return until a few months before elections in July. Hun Sen's Cambodian People's Party narrowly won the polls, but a strong second-place finish by Ranariddh's FUNCINPEC gave the royalist party leverage in post-election negotiations. After a three-month impasse, they agreed last week to a coalition deal that will make Hun Sen sole prime minister and Ranariddh president of the National Assembly. ``This will not be a repetition of 1993 because there will not be two prime ministers,'' said Hun Sen aide Prak Sokhon, who attended last week's summit. ``When we had two prime ministers, everything moved very slowly and decisions were made more politically than technically.'' Ranariddh said Saturday that the two parties agreed to keep the ministries of interior and defense under co-ministers. Senior FUNCINPEC official Ahmad Yahya revealed Monday that it was also agreed that the CPP would control the foreign affairs and finance portfolios. FUNCINPEC will take justice and information. The parties are to form working groups this week to divide remaining government posts and draft a constitutional amendment to form a new Senate. Hun Sen and Ranariddh are scheduled to meet Nov. 23 _ two days before parliament reopens _ to review the results of the working groups and give their final approval, Ahmad Yahya said. Their ability to repair their relationship and work together will be the key to a stable coalition. ``I consider this a remarriage,'' Ahmad Yahya said. ``They have to be careful with the way they work and what they say. They will have to compromise to achieve results.'' Ranariddh's ally, Sam Rainsy, whose party placed a distant third in the election, was left out of last week's deal. Sam Rainsy, a virulent critic of Hun Sen, and his party's 14 other members of parliament have remained outside Cambodia since September amid fears for their security. In a letter to King Norodom Sihanouk released Monday, Sam Rainsy complained that Hun Sen had not responded to his queries on security, making it unsafe for his people to return for the reconvening of parliament. Sam Rainsy said he had been told by Ranariddh that his party and former Khmer Rouge guerrillas had been implicated by Hun Sen in a rocket attack on the Sept. 24 opening of parliament. Authorities have called it an assassination attempt on Hun Sen. A police general investigating the attack said Monday that likely suspects have been identified, but he would not reveal names or their political affiliation. ||||| Cambodia's two-party opposition asked the Asian Development Bank Monday to stop providing loans to the incumbent government, which it calls illegal. Negotiations to form the next government have become deadlocked, and opposition party leaders Prince Norodom Ranariddh and Sam Rainsy are out of the country following threats of arrest from strongman Hun Sen. Hun Sen complained Monday that the opposition was trying to make its members' return an international issue. Hun Sen's ruling party narrowly won a majority in elections in July, but the opposition _ claiming widespread intimidation and fraud _ has denied Hun Sen the two-thirds vote in parliament required to approve the next government. Meanwhile, it says, the old government is holding power illegally. Ranariddh and Sam Rainsy renewed their international lobbying campaign against the old government Monday in a letter to ADB President Mitsuo Sato calling for the bank to stop lending money to it. ``We respectfully advise the Asian Development Bank not to provide any new loans to the current regime in Cambodia,'' the two party leaders wrote. ``At best the current regime could be considered a caretaker government as it has not been approved by the National Assembly.'' After a meeting between Hun Sen and the new French ambassador to Cambodia, Hun Sen aide Prak Sokhonn said the Cambodian leader had repeated calls for the opposition to return, but expressed concern that the international community may be asked for security guarantees. ``There have been reports that there is an attempt to internationalize the return of those members of parliament on the excuse of security problems,'' Prak Sokhonn said. ``Some (opposition politicians) have wanted the United Nations to help guarantee a safe return for them.'' The U.N. secretary-general's representative office in Phnom Penh provided monitors to opposition politicians after they returned to Cambodia to participate in the July election. The monitoring ended Sept. 30. ``Our office has not received any official request for that operation to be started up again,'' U.N. diplomat Jonathan Prentice said Monday in reaction to Prak Sokhonn's statement. The opposition has insisted that any further talks on the next government must take place outside the country, but the ruling party has rejected allegations of intimidation and recently guaranteed opposition members' safety inside the country. Diplomatic efforts to revive the stalled talks appeared to bear fruit Monday as Japanese Foreign Affairs Secretary of State Nobutaka Machimura said King Norodom Sihanouk has called on Ranariddh and Sam Rainsy to return to Cambodia. Less than two weeks after abandoning hope that he could influence the parties to reach a compromise, Sihanouk is now ``strongly interested'' in presiding over a summit meeting of the three party leaders in Cambodia, Machimura said. ||||| Worried that party colleagues still face arrest for their politics, opposition leader Sam Rainsy sought further clarification Friday of security guarantees promised by strongman Hun Sen. Sam Rainsy wrote in a letter to King Norodom Sihanouk that he was eager to attend the first session of the new National Assembly on Nov. 25, but complained that Hun Sen's assurances were not strong enough to ease concerns his party members may be arrested upon their return to Cambodia. Hun Sen announced a government guarantee Wednesday of all politicians' safety and their right to conduct political activities ``in accordance with the laws in force.'' Sam Rainsy, who earlier called Hun Sen's statement ``full of loopholes,'' asked Sihanouk for his help in obtaining a promise from Hun Sen that all members of the Sam Rainsy Party were free from prosecution for their political activities during and after last July's election. Sam Rainsy, a staunch critic of Hun Sen, was forced to take refuge in a U.N. office in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. The alleged assassination attempt came during massive street demonstrations organized by the opposition after Hun Sen's Cambodian People's Party narrowly won the election. The opposition, alleging widespread fraud and intimidation, refused to accept the results of the polls. Fearing for their safety, Sam Rainsy and his then-ally Prince Norodom Ranariddh led an exodus of opposition lawmakers out of Cambodia after parliament was ceremonially opened in late September. Ranariddh, whose FUNCINPEC party finished a close second in the election, returned last week and struck a deal with Hun Sen to form a coalition government. The agreement will make Hun Sen prime minister and Ranariddh president of the National Assembly. The two parties have formed three working groups to hammer out details of the agreement, including the establishment of a Senate to be the upper house of parliament. Sok An, representing Hun Sen's party, said Friday that one working group had completed its work on a joint political platform to be implemented by the new government. The platform is said to emphasize administrative, economic and judicial reforms, but Sok An would not reveal details, saying Hun Sen would announce it when he presents his Cabinet choices to the National Assembly. ||||| Cambodia's leading opposition party ruled out sharing the presidency of Parliament with its arch foe Saturday, insisting it alone must occupy the top position in the legislative body. Disputes over the presidency have been a major stumbling block in talks between the two-party opposition bloc and the Cambodian People's Party to form a new government. Cambodian leader Hun Sen, who heads the CPP, has offered to share the legislature's top job with the royalist FUNCINPEC party of Prince Norodom Ranariddh in order to break the impasse. The prince's party, in a statement dated Friday and seen Saturday, said such a scenario was unconstitutional. ``Co-sharing anything with the CPP means surrendering full power to them. Furthermore, such a proposal is unconstitutional,'' the faxed statement said. The royalist party also rejected Hun Sen's calls to hold bilateral talks, insisting that Ranariddh's main ally Sam Rainsy also be included. ``No party with seats at the National Assembly should be left out if transparency and a check and balance system is to be used in government,'' the statement said, adding that the Sam Rainsy Party should also be given chairmanship of one of the national assembly's nine commissions. Noting that FUNCINPEC allowed the CPP to hold the presidency despite its win in the 1993 general elections, the statement said it was now its turn to take the post. In the most recent elections, held in July, Hun Sen's party collected 64 of the 122 parliamentary seats, but was short of the two-thirds majority needed to set up a new government. Fearing arrest, many opposition members of Parliament left Cambodia after the ceremonial opening of the National Assembly on Sep. 24. A series of negotiations to forge a new government have failed. The talks have been complicated by the CPP-FUNCINPEC quarrel over the Parliament's top job. Hun Sen's party recently called on Ranariddh to return to the negotiation table and said it was willing to make an ``appropriate concession'' to break the deadlock over forming a government. FUNCINPEC has demanded from Hun Sen written guarantees for the safety of its members and activities as a precondition for re-entering negotiations.

Prospects were dim for resolution of the political crisis in Cambodia in October 1998. Prime Minister Hun Sen insisted that talks take place in Cambodia while opposition leaders Ranariddh and Sam Rainsy, fearing arrest at home, wanted them abroad. King Sihanouk declined to chair talks in either place. A U.S. House resolution criticized Hun Sen's regime while the opposition tried to cut off his access to loans. But in November the King announced a coalition government with Hun Sen heading the executive and Ranariddh leading the parliament. Left out, Sam Rainsy sought the King's assurance of Hun Sen's promise of safety and freedom for all politicians.

Cambodia's ruling party responded Tuesday to criticisms of its leader in the U.S. Congress with a lengthy defense of strongman Hun Sen's human rights record. The Cambodian People's Party criticized a non-binding resolution passed earlier this month by the U.S. House of Representatives calling for an investigation into violations of international humanitarian law allegedly committed by Hun Sen. Events mentioned in the resolution include Hun Sen's coup last year against his co-prime minister, Prince Norodom Ranariddh, and his violent crackdown in September against anti-government demonstrations. A copy of the resolution has since been submitted to the U.S. Senate Committee on Foreign Relations. ``The CPP would like to launch an appeal to U.S. senators to wisely and realistically consider this draft resolution and give justice to the CPP, Hun Sen and the Cambodian people by not approving it,'' the party said in a statement. It defended Hun Sen's ouster of Ranariddh as a proper response to the prince's attempts at the time to negotiate the defections of senior Khmer Rouge rebels. It also repeated claims that the prince's party had moved rebel soldiers into Phnom Penh, a contention that remains unproved. The killings of nearly 100 of Ranariddh's supporters documented by U.N. human rights workers in the aftermath of the coup were dismissed by the CPP as mostly fabrications meant to distort the political situation. Ranariddh and his core supporters did not return to Cambodia until a few months before an election in July this year that the ruling party narrowly won. Ranariddh and his opposition ally, Sam Rainsy, refused to accept the election results, alleging widespread intimidation and fraud by the CPP. When their claims were dismissed by a Hun Sen-friendly court, they rallied their supporters into the streets of Phnom Penh. After two weeks of tolerating the demonstrations, Hun Sen ordered a violent crackdown that resulted in the deaths of at least four protesters. U.N. human rights workers later discovered more than 20 bodies _ many bearing signs of torture _ in and around the capital, prompting speculation that the death toll could be much higher. The ruling party supported the police action in its statement, noting that public property was damaged by protesters and that grenades were thrown at Hun Sen's home after Sam Rainsy suggested in a speech that the U.S. government should fire cruise missiles at Hun Sen. The opposition claims the grenade attack was staged as an excuse to begin the crackdown. ``The leaders of illegal demonstrations are the ones who must bear responsibility for the consequences deriving from the protest,'' the CPP said Tuesday, referring to the deadly violence as ``minor incidents.'' The ruling party also reminded the United States that Washington supported a Cambodian exile government dominated by the brutal Khmer Rouge in the 1980s. The Khmer Rouge was responsible for the deaths of as many as 2 million people during the guerrilla group's 1975-79 rule of Cambodia. After a series of border clashes, the Khmer Rouge was ousted from power by an invading Vietnamese army that set up a surrogate Cambodian communist government later led by Hun Sen. The ruling party accused U.S. policy-makers of not taking timely action to save the Cambodian people from the Khmer Rouge. ``They must not make unjust accusations against those who led the struggle to liberate the people from genocide,'' it added. ||||| Cambodia's bickering political parties broke a three-month deadlock Friday and agreed to a coalition government leaving strongman Hun Sen as sole prime minister, King Norodom Sihanouk announced. In a long-elusive compromise, opposition leader Prince Norodom Ranariddh will become president of the National Assembly resulting from disputed elections in July, even though Hun Sen's party holds a majority of 64 seats in the 122-member chamber. Hun Sen's Cambodian People's Party dropped insistence on a joint assembly chairmanship shared by Ranariddh and party boss Chea Sim, the current speaker. It was one of the main stumbling blocks in months of discord. Instead, Sihanouk announced, the constitution will be modified to create a new Senate, which Chea Sim will head. Chea Sim will still serve as acting head of state during the king's frequent absences from the country. ``The major political crisis in the country has been resolved and the political deadlock facing the nation has also come to an end,'' the king said in his statement. The Senate will initially be appointed by the king. The agreement did not say how many seats there would be, nor how they would be divided. The parties will hammer out details later. Pok Than, one of Ranariddh's negotiators, said the Senate would serve a mostly advisory role to the assembly. The senior Senate leaders will join those of the assembly, the prime minister and the country's top two Buddhist monks in a delicate balance of power on the council that will choose Cambodia's next king after Sihanouk dies. The two parties said that the assembly would convene again Nov. 25. The agreement came surprisingly quickly following Ranariddh's return Thursday from Thailand, where he had been holed up with other opposition figures for weeks amid fears for their safety if they stayed in Cambodia. The deal should allow rapid formation of a government between the CPP and Ranariddh's royalist FUNCINPEC to allow international donors and businesses to again operate in the poverty-stricken country, which is in desperate need of aid. It could also hasten Cambodia's entry into the Association of Southeast Asian Nations, put on hold last year after Hun Sen deposed Ranariddh as co-prime minister in a bloody coup. Earlier, as both sides arrived at the Royal Palace for a second day of meetings, Sihanouk said they had agreed in principle to form a coalition and made ``important concessions.'' The king, the sole force in Cambodian politics able to broker a deal, pressured both sides to reach agreement before he leaves Saturday for medical treatment in Beijing. Sihanouk reported that Hun Sen responded positively to a request by Ranariddh for five of his key supporters to receive political pardons. All five were convicted of political crimes by courts that are widely seen as loyal to Hun Sen. The king has powers to grant pardons, but has awaited agreement from Hun Sen in politically sensitive cases. Former battlefield enemies, the CPP and FUNCINPEC have been at loggerheads since the CPP narrowly won parliamentary elections in July. The vote failed to put an end to instability that followed last year's coup. The CPP fell short of the two-thirds majority needed to form a government alone. Ranariddh's party and opposition ally Sam Rainsy held back their support, claiming the CPP won due to fraud and intimidation. The opposition organized protests in Phnom Penh seeking Hun Sen's ouster that were violently dispersed. Sam Rainsy, under investigation by a Phnom Penh court for his role in the demonstrations, has remained abroad. His 15 seats in the 122-seat assembly are irrelevant to forming a working government. ||||| King Norodom Sihanouk on Tuesday praised agreements by Cambodia's top two political parties _ previously bitter rivals _ to form a coalition government led by strongman Hun Sen. In a short letter sent to news agencies, the king said he had received copies of cooperation agreements signed Monday that will place Hun Sen and his Cambodian People's Party in firm control of fiscal and administrative functions in the government. ``The protocol on cooperation between the CPP and FUNCINPEC will certainly bring peace and progress to our nation and people,'' Sihanouk wrote. Uncompromising enemies just a few months ago, Hun Sen and FUNCINPEC President Prince Norodom Ranariddh agreed Nov. 13 to form a government at a summit convened by Sihanouk. The deal, which will make Hun Sen prime minister and Ranariddh president of the National Assembly, ended more than three months of political deadlock that followed a July election narrowly won by Hun Sen. Key to the agreement was the formation of a Senate as the upper house of Parliament, to be led by CPP President Chea Sim, the outgoing head of the National Assembly. Sihanouk, recalling procedures used in a past government, suggested Tuesday that he should appoint the first two members of the upper house. The remaining senators, he said, should be selected by a method agreed upon by the new government and the National Assembly. Hun Sen said Monday that the CPP and FUNCINPEC had agreed that the Senate would be half as large as the 122-seat National Assembly. Other details of the Senate, including how much power it will be given in the promulgation of legislation, have yet to be ironed out by the two parties. ||||| King Norodom Sihanouk has declined requests to chair a summit of Cambodia's top political leaders, saying the meeting would not bring any progress in deadlocked negotiations to form a government. Cambodian leader Hun Sen's ruling party and the two-party opposition had called on the monarch to lead top-level talks, but disagreed on its location. ``Papa will not preside over any summit meeting between the three parties, whether it is held in Phnom Penh or Beijing, because such a meeting will certainly achieve no result,'' Sihanouk wrote in an Oct. 17 letter to his son, Prince Norodom Ranariddh, leader of the senior opposition FUNCINPEC party. A copy of the letter was obtained Thursday. In it, the king called on the three parties to make compromises to end the stalemate: ``Papa would like to ask all three parties to take responsibility before the nation and the people.'' Hun Sen used Thursday's anniversary of a peace agreement ending the country's civil war to pressure the opposition to form a coalition government with his party. ``Only those who want to prolong the anarchy and instability prevent efforts to set up a new government,'' Hun Sen said in a televised speech marking the anniversary of the 1991 Paris Peace Accords. Hun Sen's party won 64 of the 122 seats in parliament in July's national election, but not the two-thirds majority necessary to form a government on its own. Opposition parties led by Ranariddh and former finance minister Sam Ram Rainsy have refused to enter into a coalition with Hun Sen until their allegations of election fraud have been thoroughly investigated. International monitors said the election was relatively free and fair. Hun Sen said his current government would remain in power as long as the opposition refused to form a new one. Ranariddh and Sam Rainsy have remained outside the country since the Sept. 24 ceremonial convening of parliament. Citing Hun Sen's threats to arrest opposition politicians following two alleged attempts on his life, Ranariddh and Sam Rainsy have said they do not feel safe negotiating inside the country and asked the king to chair the summit at his residence in Beijing. Hun Sen has rejected the opposition's reservations, saying it would be inappropriate to hold a summit outside the country. Negotiations so far have proved fruitless except for the opening of parliament after a Sept. 22 summit led by the king. Hun Sen implied Thursday that the opposition failed to follow through on promises made at the summit. ``If those results are strictly respected, there seems no reason to hold another summit,'' Hun Sen said in a speech on the anniversary of the 1991 Paris Peace Accords. Sihanouk is reportedly set to fly to Beijing next month to receive medical treatment from his Chinese doctors. The 75-year-old monarch suffers from a variety ailments and periodically makes extended trips to Beijing. He was diagnosed with colon cancer in 1993, but it has since gone into remission. In September, thousands of people filled the streets of Phnom Penh to protest against the alleged election fraud. Hun Sen ordered police to break up the demonstrations. At least four demonstrators were killed by police, but the discovery of more than 20 bodies in the aftermath has prompted speculation that the death tally could be much higher. In his speech, Hun Sen blamed the violence on opposition leaders, saying the demonstrations instigated social and economic chaos. ||||| Cambodian leader Hun Sen on Friday rejected opposition parties' demands for talks outside the country, accusing them of trying to ``internationalize'' the political crisis. Government and opposition parties have asked King Norodom Sihanouk to host a summit meeting after a series of post-election negotiations between the two opposition groups and Hun Sen's party to form a new government failed. Opposition leaders Prince Norodom Ranariddh and Sam Rainsy, citing Hun Sen's threats to arrest opposition figures after two alleged attempts on his life, said they could not negotiate freely in Cambodia and called for talks at Sihanouk's residence in Beijing. Hun Sen, however, rejected that. ``I would like to make it clear that all meetings related to Cambodian affairs must be conducted in the Kingdom of Cambodia,'' Hun Sen told reporters after a Cabinet meeting on Friday. ``No-one should internationalize Cambodian affairs. It is detrimental to the sovereignty of Cambodia,'' he said. Hun Sen's Cambodian People's Party won 64 of the 122 parliamentary seats in July's elections, short of the two-thirds majority needed to form a government on its own. Ranariddh and Sam Rainsy have charged that Hun Sen's victory in the elections was achieved through widespread fraud. They have demanded a thorough investigation into their election complaints as a precondition for their cooperation in getting the national assembly moving and a new government formed. Hun Sen said on Friday that the opposition concerns over their safety in the country was ``just an excuse for them to stay abroad.'' Both Ranariddh and Sam Rainsy have been outside the country since parliament was ceremonially opened on Sep. 24. Sam Rainsy and a number of opposition figures have been under court investigation for a grenade attack on Hun Sen's Phnom Penh residence on Sep. 7. Hun Sen was not home at the time of the attack, which was followed by a police crackdown on demonstrators contesting Hun Sen's election victory. The Sam Rainsy Party, in a statement released Friday, accused Hun Sen of being ``unwilling to make any compromise'' on negotiations to break the deadlock. ``A meeting outside Cambodia, as suggested by the opposition, could place all parties on more equal footing,'' said the statement. ``But the ruling party refuses to negotiate unless it is able to threaten its negotiating partners with arrest or worse.'' ||||| Cambodian leader Hun Sen has guaranteed the safety and political freedom of all politicians, trying to ease the fears of his rivals that they will be arrested or killed if they return to the country. The assurances were aimed especially at Sam Rainsy, leader of a vocally anti-Hun Sen opposition party, who was forced to take refuge in the U.N. offices in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. Sam Rainsy and the 14 members of parliament from his party have been holed up overseas for two months. But a deal reached between Hun Sen and his chief rival, Prince Norodom Ranariddh, on forming a new government last week has opened the door for their return. In a letter to King Norodom Sihanouk _ the prince's father and Cambodia's head of state _ that was broadcast on television Tuesday, Hun Sen said that guarantees of safety extended to Ranariddh applied to all politicians. His assurances come a week before the first session of Cambodia's new parliament, the National Assembly. Sam Rainsy said Wednesday that he was unsatisfied with the guarantee. He said it contained indirect language and loopholes that suggest he and his Sam Rainsy Party members are still under threat of arrest from Hun Sen's ruling party. ``It should be easy for them to say, `Rainsy and the SRP members of the assembly have no charges against them and will not be arrested,''' the opposition leader said in a statement. ``But instead they make roundabout statements, full of loopholes that can easily be exploited by a legal system that is completely in their control.'' Ranariddh told reporters Wednesday that he believed it was safe for Sam Rainsy in Cambodia. Speaking upon his return from a brief stay in Bangkok, the prince said he would soon meet with Hun Sen to discuss the apportioning of ministries in the new coalition government. Last week, Hun Sen's Cambodian People's Party and Ranariddh's FUNCINPEC party agreed to form a coalition that would leave Hun Sen as sole prime minister and make the prince president of the National Assembly. The deal assures the two-thirds vote in parliament needed to approve a new government. The men served as co-prime ministers until Hun Sen overthrew Ranariddh in a coup last year. ``I think Hun Sen has got everything. He's got the premiership and legitimacy through the election and recognition from his majesty the king. I don't think there is any benefit for Hun Sen to cause instability for our country,'' Ranariddh said. The prince also said that his top general, Nhek Bunchhay, would not be given back his previous position as the second-ranking general in the Cambodian military's general staff. Nhek Bunchhay's outnumbered forces in the capital put up tough but unsuccessful resistance to last year's coup. ||||| Cambodian politicians expressed hope Monday that a new partnership between the parties of strongman Hun Sen and his rival, Prince Norodom Ranariddh, in a coalition government would not end in more violence. Hun Sen and Ranariddh, co-prime ministers in a coalition formed in 1993 after a landmark U.N.-sponsored election, often clashed over power-sharing and the integration of guerrilla fighters from the crumbling Khmer Rouge. Their arguments turned bloody last year when Hun Sen ousted Ranariddh in a coup. The prince fled Cambodia and did not return until a few months before elections in July. Hun Sen's Cambodian People's Party narrowly won the polls, but a strong second-place finish by Ranariddh's FUNCINPEC gave the royalist party leverage in post-election negotiations. After a three-month impasse, they agreed last week to a coalition deal that will make Hun Sen sole prime minister and Ranariddh president of the National Assembly. ``This will not be a repetition of 1993 because there will not be two prime ministers,'' said Hun Sen aide Prak Sokhon, who attended last week's summit. ``When we had two prime ministers, everything moved very slowly and decisions were made more politically than technically.'' Ranariddh said Saturday that the two parties agreed to keep the ministries of interior and defense under co-ministers. Senior FUNCINPEC official Ahmad Yahya revealed Monday that it was also agreed that the CPP would control the foreign affairs and finance portfolios. FUNCINPEC will take justice and information. The parties are to form working groups this week to divide remaining government posts and draft a constitutional amendment to form a new Senate. Hun Sen and Ranariddh are scheduled to meet Nov. 23 _ two days before parliament reopens _ to review the results of the working groups and give their final approval, Ahmad Yahya said. Their ability to repair their relationship and work together will be the key to a stable coalition. ``I consider this a remarriage,'' Ahmad Yahya said. ``They have to be careful with the way they work and what they say. They will have to compromise to achieve results.'' Ranariddh's ally, Sam Rainsy, whose party placed a distant third in the election, was left out of last week's deal. Sam Rainsy, a virulent critic of Hun Sen, and his party's 14 other members of parliament have remained outside Cambodia since September amid fears for their security. In a letter to King Norodom Sihanouk released Monday, Sam Rainsy complained that Hun Sen had not responded to his queries on security, making it unsafe for his people to return for the reconvening of parliament. Sam Rainsy said he had been told by Ranariddh that his party and former Khmer Rouge guerrillas had been implicated by Hun Sen in a rocket attack on the Sept. 24 opening of parliament. Authorities have called it an assassination attempt on Hun Sen. A police general investigating the attack said Monday that likely suspects have been identified, but he would not reveal names or their political affiliation. ||||| Cambodia's two-party opposition asked the Asian Development Bank Monday to stop providing loans to the incumbent government, which it calls illegal. Negotiations to form the next government have become deadlocked, and opposition party leaders Prince Norodom Ranariddh and Sam Rainsy are out of the country following threats of arrest from strongman Hun Sen. Hun Sen complained Monday that the opposition was trying to make its members' return an international issue. Hun Sen's ruling party narrowly won a majority in elections in July, but the opposition _ claiming widespread intimidation and fraud _ has denied Hun Sen the two-thirds vote in parliament required to approve the next government. Meanwhile, it says, the old government is holding power illegally. Ranariddh and Sam Rainsy renewed their international lobbying campaign against the old government Monday in a letter to ADB President Mitsuo Sato calling for the bank to stop lending money to it. ``We respectfully advise the Asian Development Bank not to provide any new loans to the current regime in Cambodia,'' the two party leaders wrote. ``At best the current regime could be considered a caretaker government as it has not been approved by the National Assembly.'' After a meeting between Hun Sen and the new French ambassador to Cambodia, Hun Sen aide Prak Sokhonn said the Cambodian leader had repeated calls for the opposition to return, but expressed concern that the international community may be asked for security guarantees. ``There have been reports that there is an attempt to internationalize the return of those members of parliament on the excuse of security problems,'' Prak Sokhonn said. ``Some (opposition politicians) have wanted the United Nations to help guarantee a safe return for them.'' The U.N. secretary-general's representative office in Phnom Penh provided monitors to opposition politicians after they returned to Cambodia to participate in the July election. The monitoring ended Sept. 30. ``Our office has not received any official request for that operation to be started up again,'' U.N. diplomat Jonathan Prentice said Monday in reaction to Prak Sokhonn's statement. The opposition has insisted that any further talks on the next government must take place outside the country, but the ruling party has rejected allegations of intimidation and recently guaranteed opposition members' safety inside the country. Diplomatic efforts to revive the stalled talks appeared to bear fruit Monday as Japanese Foreign Affairs Secretary of State Nobutaka Machimura said King Norodom Sihanouk has called on Ranariddh and Sam Rainsy to return to Cambodia. Less than two weeks after abandoning hope that he could influence the parties to reach a compromise, Sihanouk is now ``strongly interested'' in presiding over a summit meeting of the three party leaders in Cambodia, Machimura said. ||||| Worried that party colleagues still face arrest for their politics, opposition leader Sam Rainsy sought further clarification Friday of security guarantees promised by strongman Hun Sen. Sam Rainsy wrote in a letter to King Norodom Sihanouk that he was eager to attend the first session of the new National Assembly on Nov. 25, but complained that Hun Sen's assurances were not strong enough to ease concerns his party members may be arrested upon their return to Cambodia. Hun Sen announced a government guarantee Wednesday of all politicians' safety and their right to conduct political activities ``in accordance with the laws in force.'' Sam Rainsy, who earlier called Hun Sen's statement ``full of loopholes,'' asked Sihanouk for his help in obtaining a promise from Hun Sen that all members of the Sam Rainsy Party were free from prosecution for their political activities during and after last July's election. Sam Rainsy, a staunch critic of Hun Sen, was forced to take refuge in a U.N. office in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. The alleged assassination attempt came during massive street demonstrations organized by the opposition after Hun Sen's Cambodian People's Party narrowly won the election. The opposition, alleging widespread fraud and intimidation, refused to accept the results of the polls. Fearing for their safety, Sam Rainsy and his then-ally Prince Norodom Ranariddh led an exodus of opposition lawmakers out of Cambodia after parliament was ceremonially opened in late September. Ranariddh, whose FUNCINPEC party finished a close second in the election, returned last week and struck a deal with Hun Sen to form a coalition government. The agreement will make Hun Sen prime minister and Ranariddh president of the National Assembly. The two parties have formed three working groups to hammer out details of the agreement, including the establishment of a Senate to be the upper house of parliament. Sok An, representing Hun Sen's party, said Friday that one working group had completed its work on a joint political platform to be implemented by the new government. The platform is said to emphasize administrative, economic and judicial reforms, but Sok An would not reveal details, saying Hun Sen would announce it when he presents his Cabinet choices to the National Assembly. ||||| Cambodia's leading opposition party ruled out sharing the presidency of Parliament with its arch foe Saturday, insisting it alone must occupy the top position in the legislative body. Disputes over the presidency have been a major stumbling block in talks between the two-party opposition bloc and the Cambodian People's Party to form a new government. Cambodian leader Hun Sen, who heads the CPP, has offered to share the legislature's top job with the royalist FUNCINPEC party of Prince Norodom Ranariddh in order to break the impasse. The prince's party, in a statement dated Friday and seen Saturday, said such a scenario was unconstitutional. ``Co-sharing anything with the CPP means surrendering full power to them. Furthermore, such a proposal is unconstitutional,'' the faxed statement said. The royalist party also rejected Hun Sen's calls to hold bilateral talks, insisting that Ranariddh's main ally Sam Rainsy also be included. ``No party with seats at the National Assembly should be left out if transparency and a check and balance system is to be used in government,'' the statement said, adding that the Sam Rainsy Party should also be given chairmanship of one of the national assembly's nine commissions. Noting that FUNCINPEC allowed the CPP to hold the presidency despite its win in the 1993 general elections, the statement said it was now its turn to take the post. In the most recent elections, held in July, Hun Sen's party collected 64 of the 122 parliamentary seats, but was short of the two-thirds majority needed to set up a new government. Fearing arrest, many opposition members of Parliament left Cambodia after the ceremonial opening of the National Assembly on Sep. 24. A series of negotiations to forge a new government have failed. The talks have been complicated by the CPP-FUNCINPEC quarrel over the Parliament's top job. Hun Sen's party recently called on Ranariddh to return to the negotiation table and said it was willing to make an ``appropriate concession'' to break the deadlock over forming a government. FUNCINPEC has demanded from Hun Sen written guarantees for the safety of its members and activities as a precondition for re-entering negotiations.

Cambodian prime minister Hun Sen rejects demands of 2 opposition parties for talks in Beijing after failing to win a 2/3 majority in recent elections. Sihanouk refuses to host talks in Beijing. Opposition parties ask the Asian Development Bank to stop loans to Hun Sen's government. CCP defends Hun Sen to the US Senate. FUNCINPEC refuses to share the presidency. Hun Sen and Ranariddh eventually form a coalition at summit convened by Sihanouk. Hun Sen remains prime minister, Ranariddh is president of the national assembly, and a new senate will be formed. Opposition leader Rainsy left out. He seeks strong assurance of safety should he return to Cambodia.

Cambodia's ruling party responded Tuesday to criticisms of its leader in the U.S. Congress with a lengthy defense of strongman Hun Sen's human rights record. The Cambodian People's Party criticized a non-binding resolution passed earlier this month by the U.S. House of Representatives calling for an investigation into violations of international humanitarian law allegedly committed by Hun Sen. Events mentioned in the resolution include Hun Sen's coup last year against his co-prime minister, Prince Norodom Ranariddh, and his violent crackdown in September against anti-government demonstrations. A copy of the resolution has since been submitted to the U.S. Senate Committee on Foreign Relations. ``The CPP would like to launch an appeal to U.S. senators to wisely and realistically consider this draft resolution and give justice to the CPP, Hun Sen and the Cambodian people by not approving it,'' the party said in a statement. It defended Hun Sen's ouster of Ranariddh as a proper response to the prince's attempts at the time to negotiate the defections of senior Khmer Rouge rebels. It also repeated claims that the prince's party had moved rebel soldiers into Phnom Penh, a contention that remains unproved. The killings of nearly 100 of Ranariddh's supporters documented by U.N. human rights workers in the aftermath of the coup were dismissed by the CPP as mostly fabrications meant to distort the political situation. Ranariddh and his core supporters did not return to Cambodia until a few months before an election in July this year that the ruling party narrowly won. Ranariddh and his opposition ally, Sam Rainsy, refused to accept the election results, alleging widespread intimidation and fraud by the CPP. When their claims were dismissed by a Hun Sen-friendly court, they rallied their supporters into the streets of Phnom Penh. After two weeks of tolerating the demonstrations, Hun Sen ordered a violent crackdown that resulted in the deaths of at least four protesters. U.N. human rights workers later discovered more than 20 bodies _ many bearing signs of torture _ in and around the capital, prompting speculation that the death toll could be much higher. The ruling party supported the police action in its statement, noting that public property was damaged by protesters and that grenades were thrown at Hun Sen's home after Sam Rainsy suggested in a speech that the U.S. government should fire cruise missiles at Hun Sen. The opposition claims the grenade attack was staged as an excuse to begin the crackdown. ``The leaders of illegal demonstrations are the ones who must bear responsibility for the consequences deriving from the protest,'' the CPP said Tuesday, referring to the deadly violence as ``minor incidents.'' The ruling party also reminded the United States that Washington supported a Cambodian exile government dominated by the brutal Khmer Rouge in the 1980s. The Khmer Rouge was responsible for the deaths of as many as 2 million people during the guerrilla group's 1975-79 rule of Cambodia. After a series of border clashes, the Khmer Rouge was ousted from power by an invading Vietnamese army that set up a surrogate Cambodian communist government later led by Hun Sen. The ruling party accused U.S. policy-makers of not taking timely action to save the Cambodian people from the Khmer Rouge. ``They must not make unjust accusations against those who led the struggle to liberate the people from genocide,'' it added. ||||| Cambodia's bickering political parties broke a three-month deadlock Friday and agreed to a coalition government leaving strongman Hun Sen as sole prime minister, King Norodom Sihanouk announced. In a long-elusive compromise, opposition leader Prince Norodom Ranariddh will become president of the National Assembly resulting from disputed elections in July, even though Hun Sen's party holds a majority of 64 seats in the 122-member chamber. Hun Sen's Cambodian People's Party dropped insistence on a joint assembly chairmanship shared by Ranariddh and party boss Chea Sim, the current speaker. It was one of the main stumbling blocks in months of discord. Instead, Sihanouk announced, the constitution will be modified to create a new Senate, which Chea Sim will head. Chea Sim will still serve as acting head of state during the king's frequent absences from the country. ``The major political crisis in the country has been resolved and the political deadlock facing the nation has also come to an end,'' the king said in his statement. The Senate will initially be appointed by the king. The agreement did not say how many seats there would be, nor how they would be divided. The parties will hammer out details later. Pok Than, one of Ranariddh's negotiators, said the Senate would serve a mostly advisory role to the assembly. The senior Senate leaders will join those of the assembly, the prime minister and the country's top two Buddhist monks in a delicate balance of power on the council that will choose Cambodia's next king after Sihanouk dies. The two parties said that the assembly would convene again Nov. 25. The agreement came surprisingly quickly following Ranariddh's return Thursday from Thailand, where he had been holed up with other opposition figures for weeks amid fears for their safety if they stayed in Cambodia. The deal should allow rapid formation of a government between the CPP and Ranariddh's royalist FUNCINPEC to allow international donors and businesses to again operate in the poverty-stricken country, which is in desperate need of aid. It could also hasten Cambodia's entry into the Association of Southeast Asian Nations, put on hold last year after Hun Sen deposed Ranariddh as co-prime minister in a bloody coup. Earlier, as both sides arrived at the Royal Palace for a second day of meetings, Sihanouk said they had agreed in principle to form a coalition and made ``important concessions.'' The king, the sole force in Cambodian politics able to broker a deal, pressured both sides to reach agreement before he leaves Saturday for medical treatment in Beijing. Sihanouk reported that Hun Sen responded positively to a request by Ranariddh for five of his key supporters to receive political pardons. All five were convicted of political crimes by courts that are widely seen as loyal to Hun Sen. The king has powers to grant pardons, but has awaited agreement from Hun Sen in politically sensitive cases. Former battlefield enemies, the CPP and FUNCINPEC have been at loggerheads since the CPP narrowly won parliamentary elections in July. The vote failed to put an end to instability that followed last year's coup. The CPP fell short of the two-thirds majority needed to form a government alone. Ranariddh's party and opposition ally Sam Rainsy held back their support, claiming the CPP won due to fraud and intimidation. The opposition organized protests in Phnom Penh seeking Hun Sen's ouster that were violently dispersed. Sam Rainsy, under investigation by a Phnom Penh court for his role in the demonstrations, has remained abroad. His 15 seats in the 122-seat assembly are irrelevant to forming a working government. ||||| King Norodom Sihanouk on Tuesday praised agreements by Cambodia's top two political parties _ previously bitter rivals _ to form a coalition government led by strongman Hun Sen. In a short letter sent to news agencies, the king said he had received copies of cooperation agreements signed Monday that will place Hun Sen and his Cambodian People's Party in firm control of fiscal and administrative functions in the government. ``The protocol on cooperation between the CPP and FUNCINPEC will certainly bring peace and progress to our nation and people,'' Sihanouk wrote. Uncompromising enemies just a few months ago, Hun Sen and FUNCINPEC President Prince Norodom Ranariddh agreed Nov. 13 to form a government at a summit convened by Sihanouk. The deal, which will make Hun Sen prime minister and Ranariddh president of the National Assembly, ended more than three months of political deadlock that followed a July election narrowly won by Hun Sen. Key to the agreement was the formation of a Senate as the upper house of Parliament, to be led by CPP President Chea Sim, the outgoing head of the National Assembly. Sihanouk, recalling procedures used in a past government, suggested Tuesday that he should appoint the first two members of the upper house. The remaining senators, he said, should be selected by a method agreed upon by the new government and the National Assembly. Hun Sen said Monday that the CPP and FUNCINPEC had agreed that the Senate would be half as large as the 122-seat National Assembly. Other details of the Senate, including how much power it will be given in the promulgation of legislation, have yet to be ironed out by the two parties. ||||| King Norodom Sihanouk has declined requests to chair a summit of Cambodia's top political leaders, saying the meeting would not bring any progress in deadlocked negotiations to form a government. Cambodian leader Hun Sen's ruling party and the two-party opposition had called on the monarch to lead top-level talks, but disagreed on its location. ``Papa will not preside over any summit meeting between the three parties, whether it is held in Phnom Penh or Beijing, because such a meeting will certainly achieve no result,'' Sihanouk wrote in an Oct. 17 letter to his son, Prince Norodom Ranariddh, leader of the senior opposition FUNCINPEC party. A copy of the letter was obtained Thursday. In it, the king called on the three parties to make compromises to end the stalemate: ``Papa would like to ask all three parties to take responsibility before the nation and the people.'' Hun Sen used Thursday's anniversary of a peace agreement ending the country's civil war to pressure the opposition to form a coalition government with his party. ``Only those who want to prolong the anarchy and instability prevent efforts to set up a new government,'' Hun Sen said in a televised speech marking the anniversary of the 1991 Paris Peace Accords. Hun Sen's party won 64 of the 122 seats in parliament in July's national election, but not the two-thirds majority necessary to form a government on its own. Opposition parties led by Ranariddh and former finance minister Sam Ram Rainsy have refused to enter into a coalition with Hun Sen until their allegations of election fraud have been thoroughly investigated. International monitors said the election was relatively free and fair. Hun Sen said his current government would remain in power as long as the opposition refused to form a new one. Ranariddh and Sam Rainsy have remained outside the country since the Sept. 24 ceremonial convening of parliament. Citing Hun Sen's threats to arrest opposition politicians following two alleged attempts on his life, Ranariddh and Sam Rainsy have said they do not feel safe negotiating inside the country and asked the king to chair the summit at his residence in Beijing. Hun Sen has rejected the opposition's reservations, saying it would be inappropriate to hold a summit outside the country. Negotiations so far have proved fruitless except for the opening of parliament after a Sept. 22 summit led by the king. Hun Sen implied Thursday that the opposition failed to follow through on promises made at the summit. ``If those results are strictly respected, there seems no reason to hold another summit,'' Hun Sen said in a speech on the anniversary of the 1991 Paris Peace Accords. Sihanouk is reportedly set to fly to Beijing next month to receive medical treatment from his Chinese doctors. The 75-year-old monarch suffers from a variety ailments and periodically makes extended trips to Beijing. He was diagnosed with colon cancer in 1993, but it has since gone into remission. In September, thousands of people filled the streets of Phnom Penh to protest against the alleged election fraud. Hun Sen ordered police to break up the demonstrations. At least four demonstrators were killed by police, but the discovery of more than 20 bodies in the aftermath has prompted speculation that the death tally could be much higher. In his speech, Hun Sen blamed the violence on opposition leaders, saying the demonstrations instigated social and economic chaos. ||||| Cambodian leader Hun Sen on Friday rejected opposition parties' demands for talks outside the country, accusing them of trying to ``internationalize'' the political crisis. Government and opposition parties have asked King Norodom Sihanouk to host a summit meeting after a series of post-election negotiations between the two opposition groups and Hun Sen's party to form a new government failed. Opposition leaders Prince Norodom Ranariddh and Sam Rainsy, citing Hun Sen's threats to arrest opposition figures after two alleged attempts on his life, said they could not negotiate freely in Cambodia and called for talks at Sihanouk's residence in Beijing. Hun Sen, however, rejected that. ``I would like to make it clear that all meetings related to Cambodian affairs must be conducted in the Kingdom of Cambodia,'' Hun Sen told reporters after a Cabinet meeting on Friday. ``No-one should internationalize Cambodian affairs. It is detrimental to the sovereignty of Cambodia,'' he said. Hun Sen's Cambodian People's Party won 64 of the 122 parliamentary seats in July's elections, short of the two-thirds majority needed to form a government on its own. Ranariddh and Sam Rainsy have charged that Hun Sen's victory in the elections was achieved through widespread fraud. They have demanded a thorough investigation into their election complaints as a precondition for their cooperation in getting the national assembly moving and a new government formed. Hun Sen said on Friday that the opposition concerns over their safety in the country was ``just an excuse for them to stay abroad.'' Both Ranariddh and Sam Rainsy have been outside the country since parliament was ceremonially opened on Sep. 24. Sam Rainsy and a number of opposition figures have been under court investigation for a grenade attack on Hun Sen's Phnom Penh residence on Sep. 7. Hun Sen was not home at the time of the attack, which was followed by a police crackdown on demonstrators contesting Hun Sen's election victory. The Sam Rainsy Party, in a statement released Friday, accused Hun Sen of being ``unwilling to make any compromise'' on negotiations to break the deadlock. ``A meeting outside Cambodia, as suggested by the opposition, could place all parties on more equal footing,'' said the statement. ``But the ruling party refuses to negotiate unless it is able to threaten its negotiating partners with arrest or worse.'' ||||| Cambodian leader Hun Sen has guaranteed the safety and political freedom of all politicians, trying to ease the fears of his rivals that they will be arrested or killed if they return to the country. The assurances were aimed especially at Sam Rainsy, leader of a vocally anti-Hun Sen opposition party, who was forced to take refuge in the U.N. offices in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. Sam Rainsy and the 14 members of parliament from his party have been holed up overseas for two months. But a deal reached between Hun Sen and his chief rival, Prince Norodom Ranariddh, on forming a new government last week has opened the door for their return. In a letter to King Norodom Sihanouk _ the prince's father and Cambodia's head of state _ that was broadcast on television Tuesday, Hun Sen said that guarantees of safety extended to Ranariddh applied to all politicians. His assurances come a week before the first session of Cambodia's new parliament, the National Assembly. Sam Rainsy said Wednesday that he was unsatisfied with the guarantee. He said it contained indirect language and loopholes that suggest he and his Sam Rainsy Party members are still under threat of arrest from Hun Sen's ruling party. ``It should be easy for them to say, `Rainsy and the SRP members of the assembly have no charges against them and will not be arrested,''' the opposition leader said in a statement. ``But instead they make roundabout statements, full of loopholes that can easily be exploited by a legal system that is completely in their control.'' Ranariddh told reporters Wednesday that he believed it was safe for Sam Rainsy in Cambodia. Speaking upon his return from a brief stay in Bangkok, the prince said he would soon meet with Hun Sen to discuss the apportioning of ministries in the new coalition government. Last week, Hun Sen's Cambodian People's Party and Ranariddh's FUNCINPEC party agreed to form a coalition that would leave Hun Sen as sole prime minister and make the prince president of the National Assembly. The deal assures the two-thirds vote in parliament needed to approve a new government. The men served as co-prime ministers until Hun Sen overthrew Ranariddh in a coup last year. ``I think Hun Sen has got everything. He's got the premiership and legitimacy through the election and recognition from his majesty the king. I don't think there is any benefit for Hun Sen to cause instability for our country,'' Ranariddh said. The prince also said that his top general, Nhek Bunchhay, would not be given back his previous position as the second-ranking general in the Cambodian military's general staff. Nhek Bunchhay's outnumbered forces in the capital put up tough but unsuccessful resistance to last year's coup. ||||| Cambodian politicians expressed hope Monday that a new partnership between the parties of strongman Hun Sen and his rival, Prince Norodom Ranariddh, in a coalition government would not end in more violence. Hun Sen and Ranariddh, co-prime ministers in a coalition formed in 1993 after a landmark U.N.-sponsored election, often clashed over power-sharing and the integration of guerrilla fighters from the crumbling Khmer Rouge. Their arguments turned bloody last year when Hun Sen ousted Ranariddh in a coup. The prince fled Cambodia and did not return until a few months before elections in July. Hun Sen's Cambodian People's Party narrowly won the polls, but a strong second-place finish by Ranariddh's FUNCINPEC gave the royalist party leverage in post-election negotiations. After a three-month impasse, they agreed last week to a coalition deal that will make Hun Sen sole prime minister and Ranariddh president of the National Assembly. ``This will not be a repetition of 1993 because there will not be two prime ministers,'' said Hun Sen aide Prak Sokhon, who attended last week's summit. ``When we had two prime ministers, everything moved very slowly and decisions were made more politically than technically.'' Ranariddh said Saturday that the two parties agreed to keep the ministries of interior and defense under co-ministers. Senior FUNCINPEC official Ahmad Yahya revealed Monday that it was also agreed that the CPP would control the foreign affairs and finance portfolios. FUNCINPEC will take justice and information. The parties are to form working groups this week to divide remaining government posts and draft a constitutional amendment to form a new Senate. Hun Sen and Ranariddh are scheduled to meet Nov. 23 _ two days before parliament reopens _ to review the results of the working groups and give their final approval, Ahmad Yahya said. Their ability to repair their relationship and work together will be the key to a stable coalition. ``I consider this a remarriage,'' Ahmad Yahya said. ``They have to be careful with the way they work and what they say. They will have to compromise to achieve results.'' Ranariddh's ally, Sam Rainsy, whose party placed a distant third in the election, was left out of last week's deal. Sam Rainsy, a virulent critic of Hun Sen, and his party's 14 other members of parliament have remained outside Cambodia since September amid fears for their security. In a letter to King Norodom Sihanouk released Monday, Sam Rainsy complained that Hun Sen had not responded to his queries on security, making it unsafe for his people to return for the reconvening of parliament. Sam Rainsy said he had been told by Ranariddh that his party and former Khmer Rouge guerrillas had been implicated by Hun Sen in a rocket attack on the Sept. 24 opening of parliament. Authorities have called it an assassination attempt on Hun Sen. A police general investigating the attack said Monday that likely suspects have been identified, but he would not reveal names or their political affiliation. ||||| Cambodia's two-party opposition asked the Asian Development Bank Monday to stop providing loans to the incumbent government, which it calls illegal. Negotiations to form the next government have become deadlocked, and opposition party leaders Prince Norodom Ranariddh and Sam Rainsy are out of the country following threats of arrest from strongman Hun Sen. Hun Sen complained Monday that the opposition was trying to make its members' return an international issue. Hun Sen's ruling party narrowly won a majority in elections in July, but the opposition _ claiming widespread intimidation and fraud _ has denied Hun Sen the two-thirds vote in parliament required to approve the next government. Meanwhile, it says, the old government is holding power illegally. Ranariddh and Sam Rainsy renewed their international lobbying campaign against the old government Monday in a letter to ADB President Mitsuo Sato calling for the bank to stop lending money to it. ``We respectfully advise the Asian Development Bank not to provide any new loans to the current regime in Cambodia,'' the two party leaders wrote. ``At best the current regime could be considered a caretaker government as it has not been approved by the National Assembly.'' After a meeting between Hun Sen and the new French ambassador to Cambodia, Hun Sen aide Prak Sokhonn said the Cambodian leader had repeated calls for the opposition to return, but expressed concern that the international community may be asked for security guarantees. ``There have been reports that there is an attempt to internationalize the return of those members of parliament on the excuse of security problems,'' Prak Sokhonn said. ``Some (opposition politicians) have wanted the United Nations to help guarantee a safe return for them.'' The U.N. secretary-general's representative office in Phnom Penh provided monitors to opposition politicians after they returned to Cambodia to participate in the July election. The monitoring ended Sept. 30. ``Our office has not received any official request for that operation to be started up again,'' U.N. diplomat Jonathan Prentice said Monday in reaction to Prak Sokhonn's statement. The opposition has insisted that any further talks on the next government must take place outside the country, but the ruling party has rejected allegations of intimidation and recently guaranteed opposition members' safety inside the country. Diplomatic efforts to revive the stalled talks appeared to bear fruit Monday as Japanese Foreign Affairs Secretary of State Nobutaka Machimura said King Norodom Sihanouk has called on Ranariddh and Sam Rainsy to return to Cambodia. Less than two weeks after abandoning hope that he could influence the parties to reach a compromise, Sihanouk is now ``strongly interested'' in presiding over a summit meeting of the three party leaders in Cambodia, Machimura said. ||||| Worried that party colleagues still face arrest for their politics, opposition leader Sam Rainsy sought further clarification Friday of security guarantees promised by strongman Hun Sen. Sam Rainsy wrote in a letter to King Norodom Sihanouk that he was eager to attend the first session of the new National Assembly on Nov. 25, but complained that Hun Sen's assurances were not strong enough to ease concerns his party members may be arrested upon their return to Cambodia. Hun Sen announced a government guarantee Wednesday of all politicians' safety and their right to conduct political activities ``in accordance with the laws in force.'' Sam Rainsy, who earlier called Hun Sen's statement ``full of loopholes,'' asked Sihanouk for his help in obtaining a promise from Hun Sen that all members of the Sam Rainsy Party were free from prosecution for their political activities during and after last July's election. Sam Rainsy, a staunch critic of Hun Sen, was forced to take refuge in a U.N. office in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. The alleged assassination attempt came during massive street demonstrations organized by the opposition after Hun Sen's Cambodian People's Party narrowly won the election. The opposition, alleging widespread fraud and intimidation, refused to accept the results of the polls. Fearing for their safety, Sam Rainsy and his then-ally Prince Norodom Ranariddh led an exodus of opposition lawmakers out of Cambodia after parliament was ceremonially opened in late September. Ranariddh, whose FUNCINPEC party finished a close second in the election, returned last week and struck a deal with Hun Sen to form a coalition government. The agreement will make Hun Sen prime minister and Ranariddh president of the National Assembly. The two parties have formed three working groups to hammer out details of the agreement, including the establishment of a Senate to be the upper house of parliament. Sok An, representing Hun Sen's party, said Friday that one working group had completed its work on a joint political platform to be implemented by the new government. The platform is said to emphasize administrative, economic and judicial reforms, but Sok An would not reveal details, saying Hun Sen would announce it when he presents his Cabinet choices to the National Assembly. ||||| Cambodia's leading opposition party ruled out sharing the presidency of Parliament with its arch foe Saturday, insisting it alone must occupy the top position in the legislative body. Disputes over the presidency have been a major stumbling block in talks between the two-party opposition bloc and the Cambodian People's Party to form a new government. Cambodian leader Hun Sen, who heads the CPP, has offered to share the legislature's top job with the royalist FUNCINPEC party of Prince Norodom Ranariddh in order to break the impasse. The prince's party, in a statement dated Friday and seen Saturday, said such a scenario was unconstitutional. ``Co-sharing anything with the CPP means surrendering full power to them. Furthermore, such a proposal is unconstitutional,'' the faxed statement said. The royalist party also rejected Hun Sen's calls to hold bilateral talks, insisting that Ranariddh's main ally Sam Rainsy also be included. ``No party with seats at the National Assembly should be left out if transparency and a check and balance system is to be used in government,'' the statement said, adding that the Sam Rainsy Party should also be given chairmanship of one of the national assembly's nine commissions. Noting that FUNCINPEC allowed the CPP to hold the presidency despite its win in the 1993 general elections, the statement said it was now its turn to take the post. In the most recent elections, held in July, Hun Sen's party collected 64 of the 122 parliamentary seats, but was short of the two-thirds majority needed to set up a new government. Fearing arrest, many opposition members of Parliament left Cambodia after the ceremonial opening of the National Assembly on Sep. 24. A series of negotiations to forge a new government have failed. The talks have been complicated by the CPP-FUNCINPEC quarrel over the Parliament's top job. Hun Sen's party recently called on Ranariddh to return to the negotiation table and said it was willing to make an ``appropriate concession'' to break the deadlock over forming a government. FUNCINPEC has demanded from Hun Sen written guarantees for the safety of its members and activities as a precondition for re-entering negotiations.

Cambodia King Norodom Sihanouk praised formation of a coalition of the Countries top two political parties, leaving strongman Hun Sen as Prime Minister and opposition leader Prince Norodom Ranariddh president of the National Assembly. The announcement comes after months of bitter argument following the failure of any party to attain the required quota to form a government. Opposition leader Sam Rainey was seeking assurances that he and his party members would not be arrested if they return to Cambodia. Rainey had been accused by Hun Sen of being behind an assassination attempt against him during massive street demonstrations in September.

Cambodia's ruling party responded Tuesday to criticisms of its leader in the U.S. Congress with a lengthy defense of strongman Hun Sen's human rights record. The Cambodian People's Party criticized a non-binding resolution passed earlier this month by the U.S. House of Representatives calling for an investigation into violations of international humanitarian law allegedly committed by Hun Sen. Events mentioned in the resolution include Hun Sen's coup last year against his co-prime minister, Prince Norodom Ranariddh, and his violent crackdown in September against anti-government demonstrations. A copy of the resolution has since been submitted to the U.S. Senate Committee on Foreign Relations. ``The CPP would like to launch an appeal to U.S. senators to wisely and realistically consider this draft resolution and give justice to the CPP, Hun Sen and the Cambodian people by not approving it,'' the party said in a statement. It defended Hun Sen's ouster of Ranariddh as a proper response to the prince's attempts at the time to negotiate the defections of senior Khmer Rouge rebels. It also repeated claims that the prince's party had moved rebel soldiers into Phnom Penh, a contention that remains unproved. The killings of nearly 100 of Ranariddh's supporters documented by U.N. human rights workers in the aftermath of the coup were dismissed by the CPP as mostly fabrications meant to distort the political situation. Ranariddh and his core supporters did not return to Cambodia until a few months before an election in July this year that the ruling party narrowly won. Ranariddh and his opposition ally, Sam Rainsy, refused to accept the election results, alleging widespread intimidation and fraud by the CPP. When their claims were dismissed by a Hun Sen-friendly court, they rallied their supporters into the streets of Phnom Penh. After two weeks of tolerating the demonstrations, Hun Sen ordered a violent crackdown that resulted in the deaths of at least four protesters. U.N. human rights workers later discovered more than 20 bodies _ many bearing signs of torture _ in and around the capital, prompting speculation that the death toll could be much higher. The ruling party supported the police action in its statement, noting that public property was damaged by protesters and that grenades were thrown at Hun Sen's home after Sam Rainsy suggested in a speech that the U.S. government should fire cruise missiles at Hun Sen. The opposition claims the grenade attack was staged as an excuse to begin the crackdown. ``The leaders of illegal demonstrations are the ones who must bear responsibility for the consequences deriving from the protest,'' the CPP said Tuesday, referring to the deadly violence as ``minor incidents.'' The ruling party also reminded the United States that Washington supported a Cambodian exile government dominated by the brutal Khmer Rouge in the 1980s. The Khmer Rouge was responsible for the deaths of as many as 2 million people during the guerrilla group's 1975-79 rule of Cambodia. After a series of border clashes, the Khmer Rouge was ousted from power by an invading Vietnamese army that set up a surrogate Cambodian communist government later led by Hun Sen. The ruling party accused U.S. policy-makers of not taking timely action to save the Cambodian people from the Khmer Rouge. ``They must not make unjust accusations against those who led the struggle to liberate the people from genocide,'' it added. ||||| Cambodia's bickering political parties broke a three-month deadlock Friday and agreed to a coalition government leaving strongman Hun Sen as sole prime minister, King Norodom Sihanouk announced. In a long-elusive compromise, opposition leader Prince Norodom Ranariddh will become president of the National Assembly resulting from disputed elections in July, even though Hun Sen's party holds a majority of 64 seats in the 122-member chamber. Hun Sen's Cambodian People's Party dropped insistence on a joint assembly chairmanship shared by Ranariddh and party boss Chea Sim, the current speaker. It was one of the main stumbling blocks in months of discord. Instead, Sihanouk announced, the constitution will be modified to create a new Senate, which Chea Sim will head. Chea Sim will still serve as acting head of state during the king's frequent absences from the country. ``The major political crisis in the country has been resolved and the political deadlock facing the nation has also come to an end,'' the king said in his statement. The Senate will initially be appointed by the king. The agreement did not say how many seats there would be, nor how they would be divided. The parties will hammer out details later. Pok Than, one of Ranariddh's negotiators, said the Senate would serve a mostly advisory role to the assembly. The senior Senate leaders will join those of the assembly, the prime minister and the country's top two Buddhist monks in a delicate balance of power on the council that will choose Cambodia's next king after Sihanouk dies. The two parties said that the assembly would convene again Nov. 25. The agreement came surprisingly quickly following Ranariddh's return Thursday from Thailand, where he had been holed up with other opposition figures for weeks amid fears for their safety if they stayed in Cambodia. The deal should allow rapid formation of a government between the CPP and Ranariddh's royalist FUNCINPEC to allow international donors and businesses to again operate in the poverty-stricken country, which is in desperate need of aid. It could also hasten Cambodia's entry into the Association of Southeast Asian Nations, put on hold last year after Hun Sen deposed Ranariddh as co-prime minister in a bloody coup. Earlier, as both sides arrived at the Royal Palace for a second day of meetings, Sihanouk said they had agreed in principle to form a coalition and made ``important concessions.'' The king, the sole force in Cambodian politics able to broker a deal, pressured both sides to reach agreement before he leaves Saturday for medical treatment in Beijing. Sihanouk reported that Hun Sen responded positively to a request by Ranariddh for five of his key supporters to receive political pardons. All five were convicted of political crimes by courts that are widely seen as loyal to Hun Sen. The king has powers to grant pardons, but has awaited agreement from Hun Sen in politically sensitive cases. Former battlefield enemies, the CPP and FUNCINPEC have been at loggerheads since the CPP narrowly won parliamentary elections in July. The vote failed to put an end to instability that followed last year's coup. The CPP fell short of the two-thirds majority needed to form a government alone. Ranariddh's party and opposition ally Sam Rainsy held back their support, claiming the CPP won due to fraud and intimidation. The opposition organized protests in Phnom Penh seeking Hun Sen's ouster that were violently dispersed. Sam Rainsy, under investigation by a Phnom Penh court for his role in the demonstrations, has remained abroad. His 15 seats in the 122-seat assembly are irrelevant to forming a working government. ||||| King Norodom Sihanouk on Tuesday praised agreements by Cambodia's top two political parties _ previously bitter rivals _ to form a coalition government led by strongman Hun Sen. In a short letter sent to news agencies, the king said he had received copies of cooperation agreements signed Monday that will place Hun Sen and his Cambodian People's Party in firm control of fiscal and administrative functions in the government. ``The protocol on cooperation between the CPP and FUNCINPEC will certainly bring peace and progress to our nation and people,'' Sihanouk wrote. Uncompromising enemies just a few months ago, Hun Sen and FUNCINPEC President Prince Norodom Ranariddh agreed Nov. 13 to form a government at a summit convened by Sihanouk. The deal, which will make Hun Sen prime minister and Ranariddh president of the National Assembly, ended more than three months of political deadlock that followed a July election narrowly won by Hun Sen. Key to the agreement was the formation of a Senate as the upper house of Parliament, to be led by CPP President Chea Sim, the outgoing head of the National Assembly. Sihanouk, recalling procedures used in a past government, suggested Tuesday that he should appoint the first two members of the upper house. The remaining senators, he said, should be selected by a method agreed upon by the new government and the National Assembly. Hun Sen said Monday that the CPP and FUNCINPEC had agreed that the Senate would be half as large as the 122-seat National Assembly. Other details of the Senate, including how much power it will be given in the promulgation of legislation, have yet to be ironed out by the two parties. ||||| King Norodom Sihanouk has declined requests to chair a summit of Cambodia's top political leaders, saying the meeting would not bring any progress in deadlocked negotiations to form a government. Cambodian leader Hun Sen's ruling party and the two-party opposition had called on the monarch to lead top-level talks, but disagreed on its location. ``Papa will not preside over any summit meeting between the three parties, whether it is held in Phnom Penh or Beijing, because such a meeting will certainly achieve no result,'' Sihanouk wrote in an Oct. 17 letter to his son, Prince Norodom Ranariddh, leader of the senior opposition FUNCINPEC party. A copy of the letter was obtained Thursday. In it, the king called on the three parties to make compromises to end the stalemate: ``Papa would like to ask all three parties to take responsibility before the nation and the people.'' Hun Sen used Thursday's anniversary of a peace agreement ending the country's civil war to pressure the opposition to form a coalition government with his party. ``Only those who want to prolong the anarchy and instability prevent efforts to set up a new government,'' Hun Sen said in a televised speech marking the anniversary of the 1991 Paris Peace Accords. Hun Sen's party won 64 of the 122 seats in parliament in July's national election, but not the two-thirds majority necessary to form a government on its own. Opposition parties led by Ranariddh and former finance minister Sam Ram Rainsy have refused to enter into a coalition with Hun Sen until their allegations of election fraud have been thoroughly investigated. International monitors said the election was relatively free and fair. Hun Sen said his current government would remain in power as long as the opposition refused to form a new one. Ranariddh and Sam Rainsy have remained outside the country since the Sept. 24 ceremonial convening of parliament. Citing Hun Sen's threats to arrest opposition politicians following two alleged attempts on his life, Ranariddh and Sam Rainsy have said they do not feel safe negotiating inside the country and asked the king to chair the summit at his residence in Beijing. Hun Sen has rejected the opposition's reservations, saying it would be inappropriate to hold a summit outside the country. Negotiations so far have proved fruitless except for the opening of parliament after a Sept. 22 summit led by the king. Hun Sen implied Thursday that the opposition failed to follow through on promises made at the summit. ``If those results are strictly respected, there seems no reason to hold another summit,'' Hun Sen said in a speech on the anniversary of the 1991 Paris Peace Accords. Sihanouk is reportedly set to fly to Beijing next month to receive medical treatment from his Chinese doctors. The 75-year-old monarch suffers from a variety ailments and periodically makes extended trips to Beijing. He was diagnosed with colon cancer in 1993, but it has since gone into remission. In September, thousands of people filled the streets of Phnom Penh to protest against the alleged election fraud. Hun Sen ordered police to break up the demonstrations. At least four demonstrators were killed by police, but the discovery of more than 20 bodies in the aftermath has prompted speculation that the death tally could be much higher. In his speech, Hun Sen blamed the violence on opposition leaders, saying the demonstrations instigated social and economic chaos. ||||| Cambodian leader Hun Sen on Friday rejected opposition parties' demands for talks outside the country, accusing them of trying to ``internationalize'' the political crisis. Government and opposition parties have asked King Norodom Sihanouk to host a summit meeting after a series of post-election negotiations between the two opposition groups and Hun Sen's party to form a new government failed. Opposition leaders Prince Norodom Ranariddh and Sam Rainsy, citing Hun Sen's threats to arrest opposition figures after two alleged attempts on his life, said they could not negotiate freely in Cambodia and called for talks at Sihanouk's residence in Beijing. Hun Sen, however, rejected that. ``I would like to make it clear that all meetings related to Cambodian affairs must be conducted in the Kingdom of Cambodia,'' Hun Sen told reporters after a Cabinet meeting on Friday. ``No-one should internationalize Cambodian affairs. It is detrimental to the sovereignty of Cambodia,'' he said. Hun Sen's Cambodian People's Party won 64 of the 122 parliamentary seats in July's elections, short of the two-thirds majority needed to form a government on its own. Ranariddh and Sam Rainsy have charged that Hun Sen's victory in the elections was achieved through widespread fraud. They have demanded a thorough investigation into their election complaints as a precondition for their cooperation in getting the national assembly moving and a new government formed. Hun Sen said on Friday that the opposition concerns over their safety in the country was ``just an excuse for them to stay abroad.'' Both Ranariddh and Sam Rainsy have been outside the country since parliament was ceremonially opened on Sep. 24. Sam Rainsy and a number of opposition figures have been under court investigation for a grenade attack on Hun Sen's Phnom Penh residence on Sep. 7. Hun Sen was not home at the time of the attack, which was followed by a police crackdown on demonstrators contesting Hun Sen's election victory. The Sam Rainsy Party, in a statement released Friday, accused Hun Sen of being ``unwilling to make any compromise'' on negotiations to break the deadlock. ``A meeting outside Cambodia, as suggested by the opposition, could place all parties on more equal footing,'' said the statement. ``But the ruling party refuses to negotiate unless it is able to threaten its negotiating partners with arrest or worse.'' ||||| Cambodian leader Hun Sen has guaranteed the safety and political freedom of all politicians, trying to ease the fears of his rivals that they will be arrested or killed if they return to the country. The assurances were aimed especially at Sam Rainsy, leader of a vocally anti-Hun Sen opposition party, who was forced to take refuge in the U.N. offices in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. Sam Rainsy and the 14 members of parliament from his party have been holed up overseas for two months. But a deal reached between Hun Sen and his chief rival, Prince Norodom Ranariddh, on forming a new government last week has opened the door for their return. In a letter to King Norodom Sihanouk _ the prince's father and Cambodia's head of state _ that was broadcast on television Tuesday, Hun Sen said that guarantees of safety extended to Ranariddh applied to all politicians. His assurances come a week before the first session of Cambodia's new parliament, the National Assembly. Sam Rainsy said Wednesday that he was unsatisfied with the guarantee. He said it contained indirect language and loopholes that suggest he and his Sam Rainsy Party members are still under threat of arrest from Hun Sen's ruling party. ``It should be easy for them to say, `Rainsy and the SRP members of the assembly have no charges against them and will not be arrested,''' the opposition leader said in a statement. ``But instead they make roundabout statements, full of loopholes that can easily be exploited by a legal system that is completely in their control.'' Ranariddh told reporters Wednesday that he believed it was safe for Sam Rainsy in Cambodia. Speaking upon his return from a brief stay in Bangkok, the prince said he would soon meet with Hun Sen to discuss the apportioning of ministries in the new coalition government. Last week, Hun Sen's Cambodian People's Party and Ranariddh's FUNCINPEC party agreed to form a coalition that would leave Hun Sen as sole prime minister and make the prince president of the National Assembly. The deal assures the two-thirds vote in parliament needed to approve a new government. The men served as co-prime ministers until Hun Sen overthrew Ranariddh in a coup last year. ``I think Hun Sen has got everything. He's got the premiership and legitimacy through the election and recognition from his majesty the king. I don't think there is any benefit for Hun Sen to cause instability for our country,'' Ranariddh said. The prince also said that his top general, Nhek Bunchhay, would not be given back his previous position as the second-ranking general in the Cambodian military's general staff. Nhek Bunchhay's outnumbered forces in the capital put up tough but unsuccessful resistance to last year's coup. ||||| Cambodian politicians expressed hope Monday that a new partnership between the parties of strongman Hun Sen and his rival, Prince Norodom Ranariddh, in a coalition government would not end in more violence. Hun Sen and Ranariddh, co-prime ministers in a coalition formed in 1993 after a landmark U.N.-sponsored election, often clashed over power-sharing and the integration of guerrilla fighters from the crumbling Khmer Rouge. Their arguments turned bloody last year when Hun Sen ousted Ranariddh in a coup. The prince fled Cambodia and did not return until a few months before elections in July. Hun Sen's Cambodian People's Party narrowly won the polls, but a strong second-place finish by Ranariddh's FUNCINPEC gave the royalist party leverage in post-election negotiations. After a three-month impasse, they agreed last week to a coalition deal that will make Hun Sen sole prime minister and Ranariddh president of the National Assembly. ``This will not be a repetition of 1993 because there will not be two prime ministers,'' said Hun Sen aide Prak Sokhon, who attended last week's summit. ``When we had two prime ministers, everything moved very slowly and decisions were made more politically than technically.'' Ranariddh said Saturday that the two parties agreed to keep the ministries of interior and defense under co-ministers. Senior FUNCINPEC official Ahmad Yahya revealed Monday that it was also agreed that the CPP would control the foreign affairs and finance portfolios. FUNCINPEC will take justice and information. The parties are to form working groups this week to divide remaining government posts and draft a constitutional amendment to form a new Senate. Hun Sen and Ranariddh are scheduled to meet Nov. 23 _ two days before parliament reopens _ to review the results of the working groups and give their final approval, Ahmad Yahya said. Their ability to repair their relationship and work together will be the key to a stable coalition. ``I consider this a remarriage,'' Ahmad Yahya said. ``They have to be careful with the way they work and what they say. They will have to compromise to achieve results.'' Ranariddh's ally, Sam Rainsy, whose party placed a distant third in the election, was left out of last week's deal. Sam Rainsy, a virulent critic of Hun Sen, and his party's 14 other members of parliament have remained outside Cambodia since September amid fears for their security. In a letter to King Norodom Sihanouk released Monday, Sam Rainsy complained that Hun Sen had not responded to his queries on security, making it unsafe for his people to return for the reconvening of parliament. Sam Rainsy said he had been told by Ranariddh that his party and former Khmer Rouge guerrillas had been implicated by Hun Sen in a rocket attack on the Sept. 24 opening of parliament. Authorities have called it an assassination attempt on Hun Sen. A police general investigating the attack said Monday that likely suspects have been identified, but he would not reveal names or their political affiliation. ||||| Cambodia's two-party opposition asked the Asian Development Bank Monday to stop providing loans to the incumbent government, which it calls illegal. Negotiations to form the next government have become deadlocked, and opposition party leaders Prince Norodom Ranariddh and Sam Rainsy are out of the country following threats of arrest from strongman Hun Sen. Hun Sen complained Monday that the opposition was trying to make its members' return an international issue. Hun Sen's ruling party narrowly won a majority in elections in July, but the opposition _ claiming widespread intimidation and fraud _ has denied Hun Sen the two-thirds vote in parliament required to approve the next government. Meanwhile, it says, the old government is holding power illegally. Ranariddh and Sam Rainsy renewed their international lobbying campaign against the old government Monday in a letter to ADB President Mitsuo Sato calling for the bank to stop lending money to it. ``We respectfully advise the Asian Development Bank not to provide any new loans to the current regime in Cambodia,'' the two party leaders wrote. ``At best the current regime could be considered a caretaker government as it has not been approved by the National Assembly.'' After a meeting between Hun Sen and the new French ambassador to Cambodia, Hun Sen aide Prak Sokhonn said the Cambodian leader had repeated calls for the opposition to return, but expressed concern that the international community may be asked for security guarantees. ``There have been reports that there is an attempt to internationalize the return of those members of parliament on the excuse of security problems,'' Prak Sokhonn said. ``Some (opposition politicians) have wanted the United Nations to help guarantee a safe return for them.'' The U.N. secretary-general's representative office in Phnom Penh provided monitors to opposition politicians after they returned to Cambodia to participate in the July election. The monitoring ended Sept. 30. ``Our office has not received any official request for that operation to be started up again,'' U.N. diplomat Jonathan Prentice said Monday in reaction to Prak Sokhonn's statement. The opposition has insisted that any further talks on the next government must take place outside the country, but the ruling party has rejected allegations of intimidation and recently guaranteed opposition members' safety inside the country. Diplomatic efforts to revive the stalled talks appeared to bear fruit Monday as Japanese Foreign Affairs Secretary of State Nobutaka Machimura said King Norodom Sihanouk has called on Ranariddh and Sam Rainsy to return to Cambodia. Less than two weeks after abandoning hope that he could influence the parties to reach a compromise, Sihanouk is now ``strongly interested'' in presiding over a summit meeting of the three party leaders in Cambodia, Machimura said. ||||| Worried that party colleagues still face arrest for their politics, opposition leader Sam Rainsy sought further clarification Friday of security guarantees promised by strongman Hun Sen. Sam Rainsy wrote in a letter to King Norodom Sihanouk that he was eager to attend the first session of the new National Assembly on Nov. 25, but complained that Hun Sen's assurances were not strong enough to ease concerns his party members may be arrested upon their return to Cambodia. Hun Sen announced a government guarantee Wednesday of all politicians' safety and their right to conduct political activities ``in accordance with the laws in force.'' Sam Rainsy, who earlier called Hun Sen's statement ``full of loopholes,'' asked Sihanouk for his help in obtaining a promise from Hun Sen that all members of the Sam Rainsy Party were free from prosecution for their political activities during and after last July's election. Sam Rainsy, a staunch critic of Hun Sen, was forced to take refuge in a U.N. office in September to avoid arrest after Hun Sen accused him of being behind a plot against his life. The alleged assassination attempt came during massive street demonstrations organized by the opposition after Hun Sen's Cambodian People's Party narrowly won the election. The opposition, alleging widespread fraud and intimidation, refused to accept the results of the polls. Fearing for their safety, Sam Rainsy and his then-ally Prince Norodom Ranariddh led an exodus of opposition lawmakers out of Cambodia after parliament was ceremonially opened in late September. Ranariddh, whose FUNCINPEC party finished a close second in the election, returned last week and struck a deal with Hun Sen to form a coalition government. The agreement will make Hun Sen prime minister and Ranariddh president of the National Assembly. The two parties have formed three working groups to hammer out details of the agreement, including the establishment of a Senate to be the upper house of parliament. Sok An, representing Hun Sen's party, said Friday that one working group had completed its work on a joint political platform to be implemented by the new government. The platform is said to emphasize administrative, economic and judicial reforms, but Sok An would not reveal details, saying Hun Sen would announce it when he presents his Cabinet choices to the National Assembly. ||||| Cambodia's leading opposition party ruled out sharing the presidency of Parliament with its arch foe Saturday, insisting it alone must occupy the top position in the legislative body. Disputes over the presidency have been a major stumbling block in talks between the two-party opposition bloc and the Cambodian People's Party to form a new government. Cambodian leader Hun Sen, who heads the CPP, has offered to share the legislature's top job with the royalist FUNCINPEC party of Prince Norodom Ranariddh in order to break the impasse. The prince's party, in a statement dated Friday and seen Saturday, said such a scenario was unconstitutional. ``Co-sharing anything with the CPP means surrendering full power to them. Furthermore, such a proposal is unconstitutional,'' the faxed statement said. The royalist party also rejected Hun Sen's calls to hold bilateral talks, insisting that Ranariddh's main ally Sam Rainsy also be included. ``No party with seats at the National Assembly should be left out if transparency and a check and balance system is to be used in government,'' the statement said, adding that the Sam Rainsy Party should also be given chairmanship of one of the national assembly's nine commissions. Noting that FUNCINPEC allowed the CPP to hold the presidency despite its win in the 1993 general elections, the statement said it was now its turn to take the post. In the most recent elections, held in July, Hun Sen's party collected 64 of the 122 parliamentary seats, but was short of the two-thirds majority needed to set up a new government. Fearing arrest, many opposition members of Parliament left Cambodia after the ceremonial opening of the National Assembly on Sep. 24. A series of negotiations to forge a new government have failed. The talks have been complicated by the CPP-FUNCINPEC quarrel over the Parliament's top job. Hun Sen's party recently called on Ranariddh to return to the negotiation table and said it was willing to make an ``appropriate concession'' to break the deadlock over forming a government. FUNCINPEC has demanded from Hun Sen written guarantees for the safety of its members and activities as a precondition for re-entering negotiations.

Cambodian elections, fraudulent according to opposition parties, gave the CPP of Hun Sen a scant majority but not enough to form its own government. Opposition leaders fearing arrest, or worse, fled and asked for talks outside the country. Han Sen refused. The UN found evidence of rights violations by Hun Sen prompting the US House to call for an investigation. The three-month governmental deadlock ended with Han Sen and his chief rival, Prince Norodom Ranariddh sharing power. Han Sen guaranteed safe return to Cambodia for all opponents but his strongest critic, Sam Rainsy, remained wary. Chief of State King Norodom Sihanouk praised the agreement.

Bulent Ecevit, who was asked to form a new government Wednesday, is a former prime minister best remembered for ordering an invasion of Cyprus in 1974 that made him an overnight hero at home. The invasion, after a short-lived coup by supporters of union with Greece, has led to the division of the island. Throughout the years, Ecevit, 73, has remained a strong defender of the cause of the Turkish Cypriots ``As long as Turkey lives, we won't allow the oppression and subordination of Turkish Cypriots at the hands of Greek Cypriots,'' he said in July 1997 during the 23rd anniversary celebrations of the invasion. Ecevit, who was prime minister three times since 1974, has over the years shed some of the socialist idealism he was known for in the 70s. During his tenure as deputy prime minister in a 17-month government that was toppled last week over a corruption scandal, he gave his backing to the liberal policies of the center-right-led coalition. He often said he was carrying out a duty to bring a stable government and spare Turkey from crisis - a reference to tensions between a previous Islamic-led government and the secular military. Though never a Marxist, Ecevit was in his early years viewed with suspicion by big business for espousing socialism based on heavy government social benefits and a strong role for the state sector in the economy. Recently, however, he has helped the government keep on good terms with the IMF, which ordered a strict curb on public spending, and approved a number of state sell-offs. Under his leadership in the 70's, ties with the United States were tense. He has also expressed concern over a U.S.-led multinational force based in Turkey that monitors a no-fly zone over Kurdish-controlled northern Iraq. He argues it it is helping create a Kurdish state. His frequent visits to Iraq to meet with President Saddam Hussein have in turn raised suspicion in Washington. Despite a short alliance with an Islamic party in 1974, he is a staunch defender of Turkey's secular traditions and pushed for a crackdown on Islamic radicalism. Ecevit was born in Istanbul in 1925, to an intellectual family and studied literature at a prestigious American-run high school. He has taken some courses at Harvard University. A former journalist, he entered politics in 1957, rising to the leadership of the Republican People's Party in 1972, becoming prime minister in 1974, briefly in 1977 and again in 1978-79. He was barred from politics in the years that followed a 1980 military coup. He was imprisoned three times for carrying on with political activities despite the ban, mainly through his wife of 51 years, Rahsan, who formed the Democratic Left Party in 1985 and led it until a democratic reform in 1987 allowed Ecevit back into politics. In corruption-tainted Turkish politics, he remains known as the leader with the cleanest slate. Not even his alliance with Yilmaz who was ousted for alleged ties to the mob and rigging the privatization of a bank, tarnished his image. ||||| The chances for a new, strictly secular government in Turkey faded Wednesday when a potential coalition partner insisted on giving the Islamic party a share of power. The military, self-appointed guardians of Turkey's secular system, is adamantly opposed to the inclusion of Islamic Virtue, the largest party in parliament. Premier-designate Bulent Ecevit needs Turkey's two-center right parties to hammer together a secular coalition, but Tansu Ciller, the ex-premier who commands 99 votes in parliament, rebuffed him Wednesday. Ecevit already has the support of her arch-rival, outgoing Premier Mesut Yilmaz, head of the other center-right party. But Mrs. Ciller said Wednesday she would not join forces with Yilmaz, whose government collapsed Nov. 25 over a mafia scandal. Instead, she reiterated her demand for a government that would include Virtue. ``We do not oppose Mr. Ecevit's premiership. We will support him, but only if all parties represented in Parliament are included,'' Mrs. Ciller said. It was not clear what Ecevit's next move would be. He might try to form a fragile minority coalition. He might also admit defeat and return the task of forming the government to President Suleyman Demirel. Demirel could then choose any member of parliament to head the government until elections in April. ||||| A week after the Turkish government fell in a corruption scandal, President Suleyman Demirel on Wednesday asked a veteran left-wing politician known for his personal honesty, Bulent Ecevit, to form a new government. Ecevit, who served as prime minister three times in the 1970s, said he would immediately begin working to fashion a government that could command a majority in the faction-ridden Parliament. He also suggested that although Parliament has set April 18 as the date for a new election, he might seek to remain in power for a longer period. ``It is wrong to see this government as simply an election government,'' he said. ``There are problems that will not wait until an election.'' Military commanders, who hold ultimate power in Turkey, have quietly told senior political figures, including Demirel, that they do not want a quick election. They fear it will produce a Parliament just as divided as the present one, perhaps with the Islamic-oriented Virtue Party as the largest bloc. The commanders are also hoping to exclude two of the country's leading politicians, outgoing Prime Minister Mesut Yilmaz and former Prime Minister Tansu Ciller, neither of whom they trust, from posts in the new government. Ecevit must now try to build a government that includes their center-right parties but not them as individuals. In a meeting this week the country's senior policy-making body, the National Security Council, in which military officers have a strong say, set three priorities for the coming months. It said that whatever government emerges from forthcoming negotiations should dedicate itself to fighting religious fundamentalism, Kurdish nationalism and criminal gangs that have infiltrated the state apparatus. Among Ecevit's immediate challenges will be to resolve a political crisis with Italy that broke out last month when the Kurdish rebel leader Abdullah Ocalan was arrested in Rome and then asked for political asylum there. Turkey wants Ocalan sent here for trial, but Italy says it cannot extradite him as long as Turkey retains the death penalty. Ecevit (pronounced EH-che-vit) is among the few senior Turkish politicians who favors the abolition of capital punishment. Together with Demirel, Ecevit is often cited by Turks who complain about the continued dominance of a geriatric political elite here. He is 73 and has been in politics for most of his adult life. Early in his career Ecevit emerged as a spokesman for Turkey's downtrodden masses. Perhaps more than any other figure, he legitimized social democratic ideology in a climate where leftist sympathies were often considered subversive. At the same time, however, he has shown himself to be a fierce nationalist. He was prime minister when Turkey sent troops to occupy northern Cyprus in 1974 and is still considered a hard-liner on Cyprus. He is also uncompromising in his opposition to Kurdish nationalism. During his terms as prime minister in the 1970s, Ecevit successfully undermined efforts to move Turkey toward membership in the European Union, then called the European Economic Community. He considered it an instrument of capitalist exploitation. Ecevit has also disturbed the United States by flirting with anti-Western ideologies. In the early 1990s, during an interval when he worked as a journalist, he traveled to Iraq and wrote a series of articles favorable to Saddam Hussein. He recently called for better relations between Turkey and Iraq, and maintains some of the anti-imperialist positions and suspicion of capitalism that he developed in the 1960s. The Democratic Socialist Party, which Ecevit heads, is a closely held family fiefdom. He and his wife carefully screen applicants for membership and veto those whose personal loyalty to Ecevit is suspect. ``During his terms as prime minister in the '70s, Ecevit did not appear to be a consensus builder,'' said Ilter Turan, a professor of political science at Bilgi University in Istanbul. ``It seems that nowadays he is more accommodating, so from that perspective he may not be bad choice.'' ``On many issues that Turkish society is encountering now, he represents an orientation which does not seem to be totally in tune with the times,'' Turan said. ``That would include his position on issues like privatization, integrating Turkey more fully into the international system, and the devolution of central authority. He has failed to grasp where the world is heading. He looks at and analyzes the world in categories that are no longer useful or appropriate.'' Almost alone among Turkish politicians, Ecevit lives modestly and has avoided any hint of personal or financial scandal. He speaks fluent English, and his reading tastes run to poetry and intellectual journals such as The New York Review of Books. He has translated the works of T.S. Eliot into Turkish and published several volumes of his own poems. ||||| Opposition parties lodged no-confidence motions Wednesday against Prime Minister Mesut Yilmaz after allegations he interfered in the privatization of a bank and helped a businessman linked to a mobster. Yilmaz' minority government could go down if the the small, center-left Republican Party, which usually gives him the majority he needs in parliament, votes against him. The leader of the Republicans, Deniz Baykal, urged Yilmaz to resign. But the premier vowed Wednesday to stay on, saying he was the victim of a conspiracy. ``This is a plot and it can't be a reason for a resignation,'' Yilmaz said, adding that he intended to continue the ``struggle against organized crime.'' Afterward, Baykal said the Republicans would support a no-confidence motion. The leader of the Democratic Turkey Party, Husamettin Cindoruk, said his party might withdraw from the governing coalition. He said the party would announce its decision Thursday. The political turmoil sent the Istanbul stock market plunging 14.9 percent. ||||| ANKARA, Turkey (AP) - Prime Minister Mesut Yilmaz on Wednesday faced intense pressure to step down after allegations that he interfered in a privatization contract and helped a businessman linked to a mobster secure loans. Deniz Baykal, leader of the center-left Republican party whose backing in parliament helps Yilmaz's minority government, said he would withdraw his support unless the premier resigned immediately. Two opposition parties threatened to press for a motion to censure the government. The allegations were made by businessman Korkmaz Yigit, who claimed that Yilmaz and Gunes Taner, the economy minister, had encouraged him to buy the state-run bank Turkbank, offering him loans from other state banks to ensure that his offer was the highest bid. Yigit's allegations were carried Tuesday night on two of his TV channels which showed a videotape he had made to explain his version of the story before his detention Monday evening for questioning about the bidding. Yigit bought the bank at a public auction in August for dlrs 600 million. The government suspended the privatization last month after a lawmaker released an audio tape of a conversation supposedly between Yigit and mobster Alaattin Cakici. On that earlier tape, Cakici was heard assuring Yigit that he will fend off rival bidders. It was not clear who made the tape, which got into the hands of an opposition deputy. Yigit claimed Yilmaz and Taner were aware of Cakici's involvement in the bidding for the bank but urged him nevertheless to go ahead with the bidding. Yilmaz has said that an intelligence report revealing Yigit's ties with Cakici only reached him after Yigit won the tender. Yigit said the premier had also encouraged him to buy mass-circulation national newspaper Milliyet, apparently to ensure the paper's backing to his center-right Motherland party in elections next year. Milliyet's sale to Yigit was canceled after the scandal. Cakici was arrested in France in August. Turkey has requested his extradition. Last month State Minister Eyup Asik resigned after allegations he had been in close contact with Cakici. ||||| President Suleyman Demirel appeared likely to turn to some widely trusted lawmaker to form Turkey's next government, after a veteran politician abandoned efforts Monday to persuade bickering political leaders to support him in a pro-secular coalition. Bulent Ecevit of the Democratic Left Party failed in a 3-week-old attempt to form a government that could command a majority of votes in Parliament. ``It is now clear that no party leader can form a government that can win a vote of confidence,'' former Premier Mesut Yilmaz said after talks with Demirel. ``We have told the president that we will not hamper the appointment of a deputy of Parliament.'' With party leaders unable to overcome differences, the new premier-designate would most probably be affiliated to a party but be trusted enough by other parties to follow an independent line. Parliament Speaker Hikmet Cetin has been suggested as a likely candidate. The new appointment would be made within days, Yilmaz told reporters. Demirel consulted Turkey's party leaders immediately after Ecevit gave up. Most declared themselves in favor of a government led by a lawmaker. Only center-right leader Tansu Ciller said she wanted a government led by a party leader, and made clear she was willing to take on the task. Turkey's parliament is split by longstanding animosity between its center-left and center-right parties. Yilmaz led the last government, which collapsed in November amid allegations he had ties to organized crime and interfered with the sale of a state bank. By tradition, Demirel should then have asked the leader of Parliament's largest party to form a new government. But Demirel broke with custom to keep the Islamic-oriented Virtue Party from power. Turkey's staunchly secular military opposes the return of an Islamic-led government. Modern Turkey has had only one Islamic-led government, formed after 1995 elections, and the military pressured it from power for failing to stick to the country's secular traditions. Ecevit refused even to consult with the leader of the Virtue Party during his efforts to form a government. ||||| After failing to bring together political rivals in a coalition, Premier-designate Bulent Ecevit announced Saturday that he was returning his mandate to the Turkish president. In a statement reported by the Anatolia news agency, Ecevit said he would see President Suleyman Demirel Monday morning. Ecevit, a veteran leftist, was called on to form a cabinet over two weeks ago after Mesut Yilmaz' coalition government collapsed in a no-confidence vote in Parliament. Deputies accused Yilmaz, who has since been serving as acting premier, of entertaining ties with the mob and tampering with the sale of a state bank. Refusing any alliance with the pro-Islamic Virtue Party, Turkey's largest party in Parliament, Ecevit was unable to create a political alliance strong enough to survive a confidence vote in the deeply divided legislature. Ecevit tried in vain to form a coalition government with two rival center-right wing parties -- one led by Yilmaz, the other by former Prime Minister Tansu Ciller. Ecevut's alternate efforts to make a minority coalition with outside backing for his Democratic Left Party from Parliament also failed. Demirel will now have to either ask someone else to try to form a government or wait until Jan. 10, when the constitution allows him to appoint a caretaker cabinet to lead the country to parliamentary elections, now scheduled for April. Such a cabinet would not have to face a confidence vote. Or Demirel could choose to leave the current caretaker government, headed by Yilmaz, in power until the elections. ||||| Parliament convened Thursday to vote on whether to move toward a no-confidence motion that could bring down the government over an organized crime scandal. Thursday's vote to put the motion on the agenda will be an indication of the government's chances of survival, which are said to be extremely slim. If approved, the legislature will debate the motions on Monday and hold the no-confidence vote Wednesday. The opposition accuses Prime Minister Mesut Yilmaz of having ties to organized crime and tampering with the privatization of a state bank. He denies the charges. ``Ousting the government from power will open the way for the struggle against gangs,'' said Lutfu Esengun, a deputy from the Islamic Virtue Party, which presented one of the three no-confidence motions to Parliament. On Wednesday, 6th graf pvs ||||| Turkey's latest premier-designate got the backing of two key secular parties Monday in his efforts to form a broad-based, coalition government, on condition that his government stick to Turkey's secular principles. The Islamic-oriented Virtue Party, however, withheld immediate support for Yalim Erez. News reports said Virtue was holding out for a number of Cabinet seats that reflected its standing as the largest party in parliament. ``We are neither saying `yes' nor saying `no' at this point,'' Virtue leader Recai Kutan said. Erez denied that the two had discussed Cabinet posts. Erez, an independent lawmaker, is trying to form a coalition government that would include Cabinet members from several parties, including Virtue. The coalition would run the country only until parliamentary elections set for April. Erez took over efforts to form a government last week after veteran leftist Bulent Ecevit gave up, unable to convince Turkey's bickering center-left and center-right parties to join him in a coalition that excluded the Islamic-oriented party. Erez opened talks with various party leaders on Monday. He got support from center-right leader Mesut Yilmaz, who said his party supported Erez as long as he had Ecevit's backing. ``As long as our sensitivity toward the secular, democratic regime is taken into account, we will do our best to help form the new government and ensure it gets a vote of confidence,'' Ecevit said after his own talks with Erez. Turkey's strongly secular military is opposed to any deal that would bring Virtue to power. It pressured Virtue's predecessor, the Welfare Party, out of power last year. Erez is supposed to talk Tuesday to center-right Tansu Ciller and to Deniz Baykal, who leads a center-left party. ``I am more and more optimistic after every meeting,'' Erez told reporters after meeting with the party leaders. Turkey has been trying to form a new government since a coalition government led by Yilmaz collapsed last month over allegations that he rigged the sale of a bank. Yilmaz is now acting premier. ||||| Premier-designate Bulent Ecevit said Thursday he would persist in the difficult task of convincing a key party leader to join forces in a secular coalition. Ecevit, who was asked to form a new government Wednesday, desperately needs the support of the 99 deputies of ex-premier Tansu Ciller's center-right party. Ecevit, a veteran leftist, already has the support of another center-right party led by Mesut Yilmaz, whose government collapsed last week under the weight of a mafia scandal. Mrs. Ciller has not said if she would back an Ecevit-led government and her long-standing rivalry with Yilmaz makes Ecevit's job of coalition-building difficult. ``I don't give up that easily, neither do I lose hope that easily,'' Ecevit told his parliamentary group Thursday. Mrs. Ciller could lose grassroot support if she stands in the way of a new government, political columnist Ertugrul Ozkok wrote Thursday in daily Hurriyet. ``This could put her at odds with her classic support base.'' Ecevit was expected to meet with Yilmaz on Thursday, and other party leaders Friday. Turkey's secular parties are under pressure to join forces to keep the Islamic Virtue Party out of power. Virtue is the largest party in Parliament, but the all-powerful military is fiercely opposed to an Islamic-led government.

Turkey's Prime Minister Yilmaz was ousted by a no-confidence vote in Parliament over allegations of interfering in a bank privatization and having mob ties. Ecevit, a former prime minister, was asked to form a new government. He was unable to win the support of Ciller for a secular coalition. Refusing any alliance with the Islamic Virtue Party, Ecevit turned to President Demirel to find another solution. Demirel was expected to turn to a widely trusted lawmaker to form Turkey's next government. New premier-designate Erez got backing from 2 key secular parties as he tried to form a broad-based secular coalition that would include some from the Virtue Party.

Bulent Ecevit, who was asked to form a new government Wednesday, is a former prime minister best remembered for ordering an invasion of Cyprus in 1974 that made him an overnight hero at home. The invasion, after a short-lived coup by supporters of union with Greece, has led to the division of the island. Throughout the years, Ecevit, 73, has remained a strong defender of the cause of the Turkish Cypriots ``As long as Turkey lives, we won't allow the oppression and subordination of Turkish Cypriots at the hands of Greek Cypriots,'' he said in July 1997 during the 23rd anniversary celebrations of the invasion. Ecevit, who was prime minister three times since 1974, has over the years shed some of the socialist idealism he was known for in the 70s. During his tenure as deputy prime minister in a 17-month government that was toppled last week over a corruption scandal, he gave his backing to the liberal policies of the center-right-led coalition. He often said he was carrying out a duty to bring a stable government and spare Turkey from crisis - a reference to tensions between a previous Islamic-led government and the secular military. Though never a Marxist, Ecevit was in his early years viewed with suspicion by big business for espousing socialism based on heavy government social benefits and a strong role for the state sector in the economy. Recently, however, he has helped the government keep on good terms with the IMF, which ordered a strict curb on public spending, and approved a number of state sell-offs. Under his leadership in the 70's, ties with the United States were tense. He has also expressed concern over a U.S.-led multinational force based in Turkey that monitors a no-fly zone over Kurdish-controlled northern Iraq. He argues it it is helping create a Kurdish state. His frequent visits to Iraq to meet with President Saddam Hussein have in turn raised suspicion in Washington. Despite a short alliance with an Islamic party in 1974, he is a staunch defender of Turkey's secular traditions and pushed for a crackdown on Islamic radicalism. Ecevit was born in Istanbul in 1925, to an intellectual family and studied literature at a prestigious American-run high school. He has taken some courses at Harvard University. A former journalist, he entered politics in 1957, rising to the leadership of the Republican People's Party in 1972, becoming prime minister in 1974, briefly in 1977 and again in 1978-79. He was barred from politics in the years that followed a 1980 military coup. He was imprisoned three times for carrying on with political activities despite the ban, mainly through his wife of 51 years, Rahsan, who formed the Democratic Left Party in 1985 and led it until a democratic reform in 1987 allowed Ecevit back into politics. In corruption-tainted Turkish politics, he remains known as the leader with the cleanest slate. Not even his alliance with Yilmaz who was ousted for alleged ties to the mob and rigging the privatization of a bank, tarnished his image. ||||| The chances for a new, strictly secular government in Turkey faded Wednesday when a potential coalition partner insisted on giving the Islamic party a share of power. The military, self-appointed guardians of Turkey's secular system, is adamantly opposed to the inclusion of Islamic Virtue, the largest party in parliament. Premier-designate Bulent Ecevit needs Turkey's two-center right parties to hammer together a secular coalition, but Tansu Ciller, the ex-premier who commands 99 votes in parliament, rebuffed him Wednesday. Ecevit already has the support of her arch-rival, outgoing Premier Mesut Yilmaz, head of the other center-right party. But Mrs. Ciller said Wednesday she would not join forces with Yilmaz, whose government collapsed Nov. 25 over a mafia scandal. Instead, she reiterated her demand for a government that would include Virtue. ``We do not oppose Mr. Ecevit's premiership. We will support him, but only if all parties represented in Parliament are included,'' Mrs. Ciller said. It was not clear what Ecevit's next move would be. He might try to form a fragile minority coalition. He might also admit defeat and return the task of forming the government to President Suleyman Demirel. Demirel could then choose any member of parliament to head the government until elections in April. ||||| A week after the Turkish government fell in a corruption scandal, President Suleyman Demirel on Wednesday asked a veteran left-wing politician known for his personal honesty, Bulent Ecevit, to form a new government. Ecevit, who served as prime minister three times in the 1970s, said he would immediately begin working to fashion a government that could command a majority in the faction-ridden Parliament. He also suggested that although Parliament has set April 18 as the date for a new election, he might seek to remain in power for a longer period. ``It is wrong to see this government as simply an election government,'' he said. ``There are problems that will not wait until an election.'' Military commanders, who hold ultimate power in Turkey, have quietly told senior political figures, including Demirel, that they do not want a quick election. They fear it will produce a Parliament just as divided as the present one, perhaps with the Islamic-oriented Virtue Party as the largest bloc. The commanders are also hoping to exclude two of the country's leading politicians, outgoing Prime Minister Mesut Yilmaz and former Prime Minister Tansu Ciller, neither of whom they trust, from posts in the new government. Ecevit must now try to build a government that includes their center-right parties but not them as individuals. In a meeting this week the country's senior policy-making body, the National Security Council, in which military officers have a strong say, set three priorities for the coming months. It said that whatever government emerges from forthcoming negotiations should dedicate itself to fighting religious fundamentalism, Kurdish nationalism and criminal gangs that have infiltrated the state apparatus. Among Ecevit's immediate challenges will be to resolve a political crisis with Italy that broke out last month when the Kurdish rebel leader Abdullah Ocalan was arrested in Rome and then asked for political asylum there. Turkey wants Ocalan sent here for trial, but Italy says it cannot extradite him as long as Turkey retains the death penalty. Ecevit (pronounced EH-che-vit) is among the few senior Turkish politicians who favors the abolition of capital punishment. Together with Demirel, Ecevit is often cited by Turks who complain about the continued dominance of a geriatric political elite here. He is 73 and has been in politics for most of his adult life. Early in his career Ecevit emerged as a spokesman for Turkey's downtrodden masses. Perhaps more than any other figure, he legitimized social democratic ideology in a climate where leftist sympathies were often considered subversive. At the same time, however, he has shown himself to be a fierce nationalist. He was prime minister when Turkey sent troops to occupy northern Cyprus in 1974 and is still considered a hard-liner on Cyprus. He is also uncompromising in his opposition to Kurdish nationalism. During his terms as prime minister in the 1970s, Ecevit successfully undermined efforts to move Turkey toward membership in the European Union, then called the European Economic Community. He considered it an instrument of capitalist exploitation. Ecevit has also disturbed the United States by flirting with anti-Western ideologies. In the early 1990s, during an interval when he worked as a journalist, he traveled to Iraq and wrote a series of articles favorable to Saddam Hussein. He recently called for better relations between Turkey and Iraq, and maintains some of the anti-imperialist positions and suspicion of capitalism that he developed in the 1960s. The Democratic Socialist Party, which Ecevit heads, is a closely held family fiefdom. He and his wife carefully screen applicants for membership and veto those whose personal loyalty to Ecevit is suspect. ``During his terms as prime minister in the '70s, Ecevit did not appear to be a consensus builder,'' said Ilter Turan, a professor of political science at Bilgi University in Istanbul. ``It seems that nowadays he is more accommodating, so from that perspective he may not be bad choice.'' ``On many issues that Turkish society is encountering now, he represents an orientation which does not seem to be totally in tune with the times,'' Turan said. ``That would include his position on issues like privatization, integrating Turkey more fully into the international system, and the devolution of central authority. He has failed to grasp where the world is heading. He looks at and analyzes the world in categories that are no longer useful or appropriate.'' Almost alone among Turkish politicians, Ecevit lives modestly and has avoided any hint of personal or financial scandal. He speaks fluent English, and his reading tastes run to poetry and intellectual journals such as The New York Review of Books. He has translated the works of T.S. Eliot into Turkish and published several volumes of his own poems. ||||| Opposition parties lodged no-confidence motions Wednesday against Prime Minister Mesut Yilmaz after allegations he interfered in the privatization of a bank and helped a businessman linked to a mobster. Yilmaz' minority government could go down if the the small, center-left Republican Party, which usually gives him the majority he needs in parliament, votes against him. The leader of the Republicans, Deniz Baykal, urged Yilmaz to resign. But the premier vowed Wednesday to stay on, saying he was the victim of a conspiracy. ``This is a plot and it can't be a reason for a resignation,'' Yilmaz said, adding that he intended to continue the ``struggle against organized crime.'' Afterward, Baykal said the Republicans would support a no-confidence motion. The leader of the Democratic Turkey Party, Husamettin Cindoruk, said his party might withdraw from the governing coalition. He said the party would announce its decision Thursday. The political turmoil sent the Istanbul stock market plunging 14.9 percent. ||||| ANKARA, Turkey (AP) - Prime Minister Mesut Yilmaz on Wednesday faced intense pressure to step down after allegations that he interfered in a privatization contract and helped a businessman linked to a mobster secure loans. Deniz Baykal, leader of the center-left Republican party whose backing in parliament helps Yilmaz's minority government, said he would withdraw his support unless the premier resigned immediately. Two opposition parties threatened to press for a motion to censure the government. The allegations were made by businessman Korkmaz Yigit, who claimed that Yilmaz and Gunes Taner, the economy minister, had encouraged him to buy the state-run bank Turkbank, offering him loans from other state banks to ensure that his offer was the highest bid. Yigit's allegations were carried Tuesday night on two of his TV channels which showed a videotape he had made to explain his version of the story before his detention Monday evening for questioning about the bidding. Yigit bought the bank at a public auction in August for dlrs 600 million. The government suspended the privatization last month after a lawmaker released an audio tape of a conversation supposedly between Yigit and mobster Alaattin Cakici. On that earlier tape, Cakici was heard assuring Yigit that he will fend off rival bidders. It was not clear who made the tape, which got into the hands of an opposition deputy. Yigit claimed Yilmaz and Taner were aware of Cakici's involvement in the bidding for the bank but urged him nevertheless to go ahead with the bidding. Yilmaz has said that an intelligence report revealing Yigit's ties with Cakici only reached him after Yigit won the tender. Yigit said the premier had also encouraged him to buy mass-circulation national newspaper Milliyet, apparently to ensure the paper's backing to his center-right Motherland party in elections next year. Milliyet's sale to Yigit was canceled after the scandal. Cakici was arrested in France in August. Turkey has requested his extradition. Last month State Minister Eyup Asik resigned after allegations he had been in close contact with Cakici. ||||| President Suleyman Demirel appeared likely to turn to some widely trusted lawmaker to form Turkey's next government, after a veteran politician abandoned efforts Monday to persuade bickering political leaders to support him in a pro-secular coalition. Bulent Ecevit of the Democratic Left Party failed in a 3-week-old attempt to form a government that could command a majority of votes in Parliament. ``It is now clear that no party leader can form a government that can win a vote of confidence,'' former Premier Mesut Yilmaz said after talks with Demirel. ``We have told the president that we will not hamper the appointment of a deputy of Parliament.'' With party leaders unable to overcome differences, the new premier-designate would most probably be affiliated to a party but be trusted enough by other parties to follow an independent line. Parliament Speaker Hikmet Cetin has been suggested as a likely candidate. The new appointment would be made within days, Yilmaz told reporters. Demirel consulted Turkey's party leaders immediately after Ecevit gave up. Most declared themselves in favor of a government led by a lawmaker. Only center-right leader Tansu Ciller said she wanted a government led by a party leader, and made clear she was willing to take on the task. Turkey's parliament is split by longstanding animosity between its center-left and center-right parties. Yilmaz led the last government, which collapsed in November amid allegations he had ties to organized crime and interfered with the sale of a state bank. By tradition, Demirel should then have asked the leader of Parliament's largest party to form a new government. But Demirel broke with custom to keep the Islamic-oriented Virtue Party from power. Turkey's staunchly secular military opposes the return of an Islamic-led government. Modern Turkey has had only one Islamic-led government, formed after 1995 elections, and the military pressured it from power for failing to stick to the country's secular traditions. Ecevit refused even to consult with the leader of the Virtue Party during his efforts to form a government. ||||| After failing to bring together political rivals in a coalition, Premier-designate Bulent Ecevit announced Saturday that he was returning his mandate to the Turkish president. In a statement reported by the Anatolia news agency, Ecevit said he would see President Suleyman Demirel Monday morning. Ecevit, a veteran leftist, was called on to form a cabinet over two weeks ago after Mesut Yilmaz' coalition government collapsed in a no-confidence vote in Parliament. Deputies accused Yilmaz, who has since been serving as acting premier, of entertaining ties with the mob and tampering with the sale of a state bank. Refusing any alliance with the pro-Islamic Virtue Party, Turkey's largest party in Parliament, Ecevit was unable to create a political alliance strong enough to survive a confidence vote in the deeply divided legislature. Ecevit tried in vain to form a coalition government with two rival center-right wing parties -- one led by Yilmaz, the other by former Prime Minister Tansu Ciller. Ecevut's alternate efforts to make a minority coalition with outside backing for his Democratic Left Party from Parliament also failed. Demirel will now have to either ask someone else to try to form a government or wait until Jan. 10, when the constitution allows him to appoint a caretaker cabinet to lead the country to parliamentary elections, now scheduled for April. Such a cabinet would not have to face a confidence vote. Or Demirel could choose to leave the current caretaker government, headed by Yilmaz, in power until the elections. ||||| Parliament convened Thursday to vote on whether to move toward a no-confidence motion that could bring down the government over an organized crime scandal. Thursday's vote to put the motion on the agenda will be an indication of the government's chances of survival, which are said to be extremely slim. If approved, the legislature will debate the motions on Monday and hold the no-confidence vote Wednesday. The opposition accuses Prime Minister Mesut Yilmaz of having ties to organized crime and tampering with the privatization of a state bank. He denies the charges. ``Ousting the government from power will open the way for the struggle against gangs,'' said Lutfu Esengun, a deputy from the Islamic Virtue Party, which presented one of the three no-confidence motions to Parliament. On Wednesday, 6th graf pvs ||||| Turkey's latest premier-designate got the backing of two key secular parties Monday in his efforts to form a broad-based, coalition government, on condition that his government stick to Turkey's secular principles. The Islamic-oriented Virtue Party, however, withheld immediate support for Yalim Erez. News reports said Virtue was holding out for a number of Cabinet seats that reflected its standing as the largest party in parliament. ``We are neither saying `yes' nor saying `no' at this point,'' Virtue leader Recai Kutan said. Erez denied that the two had discussed Cabinet posts. Erez, an independent lawmaker, is trying to form a coalition government that would include Cabinet members from several parties, including Virtue. The coalition would run the country only until parliamentary elections set for April. Erez took over efforts to form a government last week after veteran leftist Bulent Ecevit gave up, unable to convince Turkey's bickering center-left and center-right parties to join him in a coalition that excluded the Islamic-oriented party. Erez opened talks with various party leaders on Monday. He got support from center-right leader Mesut Yilmaz, who said his party supported Erez as long as he had Ecevit's backing. ``As long as our sensitivity toward the secular, democratic regime is taken into account, we will do our best to help form the new government and ensure it gets a vote of confidence,'' Ecevit said after his own talks with Erez. Turkey's strongly secular military is opposed to any deal that would bring Virtue to power. It pressured Virtue's predecessor, the Welfare Party, out of power last year. Erez is supposed to talk Tuesday to center-right Tansu Ciller and to Deniz Baykal, who leads a center-left party. ``I am more and more optimistic after every meeting,'' Erez told reporters after meeting with the party leaders. Turkey has been trying to form a new government since a coalition government led by Yilmaz collapsed last month over allegations that he rigged the sale of a bank. Yilmaz is now acting premier. ||||| Premier-designate Bulent Ecevit said Thursday he would persist in the difficult task of convincing a key party leader to join forces in a secular coalition. Ecevit, who was asked to form a new government Wednesday, desperately needs the support of the 99 deputies of ex-premier Tansu Ciller's center-right party. Ecevit, a veteran leftist, already has the support of another center-right party led by Mesut Yilmaz, whose government collapsed last week under the weight of a mafia scandal. Mrs. Ciller has not said if she would back an Ecevit-led government and her long-standing rivalry with Yilmaz makes Ecevit's job of coalition-building difficult. ``I don't give up that easily, neither do I lose hope that easily,'' Ecevit told his parliamentary group Thursday. Mrs. Ciller could lose grassroot support if she stands in the way of a new government, political columnist Ertugrul Ozkok wrote Thursday in daily Hurriyet. ``This could put her at odds with her classic support base.'' Ecevit was expected to meet with Yilmaz on Thursday, and other party leaders Friday. Turkey's secular parties are under pressure to join forces to keep the Islamic Virtue Party out of power. Virtue is the largest party in Parliament, but the all-powerful military is fiercely opposed to an Islamic-led government.

Following charges that he interfered in a privatization contract and helped a businessman with mob ties, Turkish Prime Minister Mesut Yilmaz was forced to resign. President Demeril asked Bulent Ecevit, former three-time prime minister from the 1970s and champion of Turkish Cypriot rights, to form a new government. After three weeks, Ecevit was unable to secure the support of the Center-Right Party. At issue was the participation of the Islamic Virtue Part in the secular government, Ecevit returned his mandate and Demeril named Valim Erez as prime minister designate. Erez was in talks with the Virtue Party over possible cabinet seats.

Bulent Ecevit, who was asked to form a new government Wednesday, is a former prime minister best remembered for ordering an invasion of Cyprus in 1974 that made him an overnight hero at home. The invasion, after a short-lived coup by supporters of union with Greece, has led to the division of the island. Throughout the years, Ecevit, 73, has remained a strong defender of the cause of the Turkish Cypriots ``As long as Turkey lives, we won't allow the oppression and subordination of Turkish Cypriots at the hands of Greek Cypriots,'' he said in July 1997 during the 23rd anniversary celebrations of the invasion. Ecevit, who was prime minister three times since 1974, has over the years shed some of the socialist idealism he was known for in the 70s. During his tenure as deputy prime minister in a 17-month government that was toppled last week over a corruption scandal, he gave his backing to the liberal policies of the center-right-led coalition. He often said he was carrying out a duty to bring a stable government and spare Turkey from crisis - a reference to tensions between a previous Islamic-led government and the secular military. Though never a Marxist, Ecevit was in his early years viewed with suspicion by big business for espousing socialism based on heavy government social benefits and a strong role for the state sector in the economy. Recently, however, he has helped the government keep on good terms with the IMF, which ordered a strict curb on public spending, and approved a number of state sell-offs. Under his leadership in the 70's, ties with the United States were tense. He has also expressed concern over a U.S.-led multinational force based in Turkey that monitors a no-fly zone over Kurdish-controlled northern Iraq. He argues it it is helping create a Kurdish state. His frequent visits to Iraq to meet with President Saddam Hussein have in turn raised suspicion in Washington. Despite a short alliance with an Islamic party in 1974, he is a staunch defender of Turkey's secular traditions and pushed for a crackdown on Islamic radicalism. Ecevit was born in Istanbul in 1925, to an intellectual family and studied literature at a prestigious American-run high school. He has taken some courses at Harvard University. A former journalist, he entered politics in 1957, rising to the leadership of the Republican People's Party in 1972, becoming prime minister in 1974, briefly in 1977 and again in 1978-79. He was barred from politics in the years that followed a 1980 military coup. He was imprisoned three times for carrying on with political activities despite the ban, mainly through his wife of 51 years, Rahsan, who formed the Democratic Left Party in 1985 and led it until a democratic reform in 1987 allowed Ecevit back into politics. In corruption-tainted Turkish politics, he remains known as the leader with the cleanest slate. Not even his alliance with Yilmaz who was ousted for alleged ties to the mob and rigging the privatization of a bank, tarnished his image. ||||| The chances for a new, strictly secular government in Turkey faded Wednesday when a potential coalition partner insisted on giving the Islamic party a share of power. The military, self-appointed guardians of Turkey's secular system, is adamantly opposed to the inclusion of Islamic Virtue, the largest party in parliament. Premier-designate Bulent Ecevit needs Turkey's two-center right parties to hammer together a secular coalition, but Tansu Ciller, the ex-premier who commands 99 votes in parliament, rebuffed him Wednesday. Ecevit already has the support of her arch-rival, outgoing Premier Mesut Yilmaz, head of the other center-right party. But Mrs. Ciller said Wednesday she would not join forces with Yilmaz, whose government collapsed Nov. 25 over a mafia scandal. Instead, she reiterated her demand for a government that would include Virtue. ``We do not oppose Mr. Ecevit's premiership. We will support him, but only if all parties represented in Parliament are included,'' Mrs. Ciller said. It was not clear what Ecevit's next move would be. He might try to form a fragile minority coalition. He might also admit defeat and return the task of forming the government to President Suleyman Demirel. Demirel could then choose any member of parliament to head the government until elections in April. ||||| A week after the Turkish government fell in a corruption scandal, President Suleyman Demirel on Wednesday asked a veteran left-wing politician known for his personal honesty, Bulent Ecevit, to form a new government. Ecevit, who served as prime minister three times in the 1970s, said he would immediately begin working to fashion a government that could command a majority in the faction-ridden Parliament. He also suggested that although Parliament has set April 18 as the date for a new election, he might seek to remain in power for a longer period. ``It is wrong to see this government as simply an election government,'' he said. ``There are problems that will not wait until an election.'' Military commanders, who hold ultimate power in Turkey, have quietly told senior political figures, including Demirel, that they do not want a quick election. They fear it will produce a Parliament just as divided as the present one, perhaps with the Islamic-oriented Virtue Party as the largest bloc. The commanders are also hoping to exclude two of the country's leading politicians, outgoing Prime Minister Mesut Yilmaz and former Prime Minister Tansu Ciller, neither of whom they trust, from posts in the new government. Ecevit must now try to build a government that includes their center-right parties but not them as individuals. In a meeting this week the country's senior policy-making body, the National Security Council, in which military officers have a strong say, set three priorities for the coming months. It said that whatever government emerges from forthcoming negotiations should dedicate itself to fighting religious fundamentalism, Kurdish nationalism and criminal gangs that have infiltrated the state apparatus. Among Ecevit's immediate challenges will be to resolve a political crisis with Italy that broke out last month when the Kurdish rebel leader Abdullah Ocalan was arrested in Rome and then asked for political asylum there. Turkey wants Ocalan sent here for trial, but Italy says it cannot extradite him as long as Turkey retains the death penalty. Ecevit (pronounced EH-che-vit) is among the few senior Turkish politicians who favors the abolition of capital punishment. Together with Demirel, Ecevit is often cited by Turks who complain about the continued dominance of a geriatric political elite here. He is 73 and has been in politics for most of his adult life. Early in his career Ecevit emerged as a spokesman for Turkey's downtrodden masses. Perhaps more than any other figure, he legitimized social democratic ideology in a climate where leftist sympathies were often considered subversive. At the same time, however, he has shown himself to be a fierce nationalist. He was prime minister when Turkey sent troops to occupy northern Cyprus in 1974 and is still considered a hard-liner on Cyprus. He is also uncompromising in his opposition to Kurdish nationalism. During his terms as prime minister in the 1970s, Ecevit successfully undermined efforts to move Turkey toward membership in the European Union, then called the European Economic Community. He considered it an instrument of capitalist exploitation. Ecevit has also disturbed the United States by flirting with anti-Western ideologies. In the early 1990s, during an interval when he worked as a journalist, he traveled to Iraq and wrote a series of articles favorable to Saddam Hussein. He recently called for better relations between Turkey and Iraq, and maintains some of the anti-imperialist positions and suspicion of capitalism that he developed in the 1960s. The Democratic Socialist Party, which Ecevit heads, is a closely held family fiefdom. He and his wife carefully screen applicants for membership and veto those whose personal loyalty to Ecevit is suspect. ``During his terms as prime minister in the '70s, Ecevit did not appear to be a consensus builder,'' said Ilter Turan, a professor of political science at Bilgi University in Istanbul. ``It seems that nowadays he is more accommodating, so from that perspective he may not be bad choice.'' ``On many issues that Turkish society is encountering now, he represents an orientation which does not seem to be totally in tune with the times,'' Turan said. ``That would include his position on issues like privatization, integrating Turkey more fully into the international system, and the devolution of central authority. He has failed to grasp where the world is heading. He looks at and analyzes the world in categories that are no longer useful or appropriate.'' Almost alone among Turkish politicians, Ecevit lives modestly and has avoided any hint of personal or financial scandal. He speaks fluent English, and his reading tastes run to poetry and intellectual journals such as The New York Review of Books. He has translated the works of T.S. Eliot into Turkish and published several volumes of his own poems. ||||| Opposition parties lodged no-confidence motions Wednesday against Prime Minister Mesut Yilmaz after allegations he interfered in the privatization of a bank and helped a businessman linked to a mobster. Yilmaz' minority government could go down if the the small, center-left Republican Party, which usually gives him the majority he needs in parliament, votes against him. The leader of the Republicans, Deniz Baykal, urged Yilmaz to resign. But the premier vowed Wednesday to stay on, saying he was the victim of a conspiracy. ``This is a plot and it can't be a reason for a resignation,'' Yilmaz said, adding that he intended to continue the ``struggle against organized crime.'' Afterward, Baykal said the Republicans would support a no-confidence motion. The leader of the Democratic Turkey Party, Husamettin Cindoruk, said his party might withdraw from the governing coalition. He said the party would announce its decision Thursday. The political turmoil sent the Istanbul stock market plunging 14.9 percent. ||||| ANKARA, Turkey (AP) - Prime Minister Mesut Yilmaz on Wednesday faced intense pressure to step down after allegations that he interfered in a privatization contract and helped a businessman linked to a mobster secure loans. Deniz Baykal, leader of the center-left Republican party whose backing in parliament helps Yilmaz's minority government, said he would withdraw his support unless the premier resigned immediately. Two opposition parties threatened to press for a motion to censure the government. The allegations were made by businessman Korkmaz Yigit, who claimed that Yilmaz and Gunes Taner, the economy minister, had encouraged him to buy the state-run bank Turkbank, offering him loans from other state banks to ensure that his offer was the highest bid. Yigit's allegations were carried Tuesday night on two of his TV channels which showed a videotape he had made to explain his version of the story before his detention Monday evening for questioning about the bidding. Yigit bought the bank at a public auction in August for dlrs 600 million. The government suspended the privatization last month after a lawmaker released an audio tape of a conversation supposedly between Yigit and mobster Alaattin Cakici. On that earlier tape, Cakici was heard assuring Yigit that he will fend off rival bidders. It was not clear who made the tape, which got into the hands of an opposition deputy. Yigit claimed Yilmaz and Taner were aware of Cakici's involvement in the bidding for the bank but urged him nevertheless to go ahead with the bidding. Yilmaz has said that an intelligence report revealing Yigit's ties with Cakici only reached him after Yigit won the tender. Yigit said the premier had also encouraged him to buy mass-circulation national newspaper Milliyet, apparently to ensure the paper's backing to his center-right Motherland party in elections next year. Milliyet's sale to Yigit was canceled after the scandal. Cakici was arrested in France in August. Turkey has requested his extradition. Last month State Minister Eyup Asik resigned after allegations he had been in close contact with Cakici. ||||| President Suleyman Demirel appeared likely to turn to some widely trusted lawmaker to form Turkey's next government, after a veteran politician abandoned efforts Monday to persuade bickering political leaders to support him in a pro-secular coalition. Bulent Ecevit of the Democratic Left Party failed in a 3-week-old attempt to form a government that could command a majority of votes in Parliament. ``It is now clear that no party leader can form a government that can win a vote of confidence,'' former Premier Mesut Yilmaz said after talks with Demirel. ``We have told the president that we will not hamper the appointment of a deputy of Parliament.'' With party leaders unable to overcome differences, the new premier-designate would most probably be affiliated to a party but be trusted enough by other parties to follow an independent line. Parliament Speaker Hikmet Cetin has been suggested as a likely candidate. The new appointment would be made within days, Yilmaz told reporters. Demirel consulted Turkey's party leaders immediately after Ecevit gave up. Most declared themselves in favor of a government led by a lawmaker. Only center-right leader Tansu Ciller said she wanted a government led by a party leader, and made clear she was willing to take on the task. Turkey's parliament is split by longstanding animosity between its center-left and center-right parties. Yilmaz led the last government, which collapsed in November amid allegations he had ties to organized crime and interfered with the sale of a state bank. By tradition, Demirel should then have asked the leader of Parliament's largest party to form a new government. But Demirel broke with custom to keep the Islamic-oriented Virtue Party from power. Turkey's staunchly secular military opposes the return of an Islamic-led government. Modern Turkey has had only one Islamic-led government, formed after 1995 elections, and the military pressured it from power for failing to stick to the country's secular traditions. Ecevit refused even to consult with the leader of the Virtue Party during his efforts to form a government. ||||| After failing to bring together political rivals in a coalition, Premier-designate Bulent Ecevit announced Saturday that he was returning his mandate to the Turkish president. In a statement reported by the Anatolia news agency, Ecevit said he would see President Suleyman Demirel Monday morning. Ecevit, a veteran leftist, was called on to form a cabinet over two weeks ago after Mesut Yilmaz' coalition government collapsed in a no-confidence vote in Parliament. Deputies accused Yilmaz, who has since been serving as acting premier, of entertaining ties with the mob and tampering with the sale of a state bank. Refusing any alliance with the pro-Islamic Virtue Party, Turkey's largest party in Parliament, Ecevit was unable to create a political alliance strong enough to survive a confidence vote in the deeply divided legislature. Ecevit tried in vain to form a coalition government with two rival center-right wing parties -- one led by Yilmaz, the other by former Prime Minister Tansu Ciller. Ecevut's alternate efforts to make a minority coalition with outside backing for his Democratic Left Party from Parliament also failed. Demirel will now have to either ask someone else to try to form a government or wait until Jan. 10, when the constitution allows him to appoint a caretaker cabinet to lead the country to parliamentary elections, now scheduled for April. Such a cabinet would not have to face a confidence vote. Or Demirel could choose to leave the current caretaker government, headed by Yilmaz, in power until the elections. ||||| Parliament convened Thursday to vote on whether to move toward a no-confidence motion that could bring down the government over an organized crime scandal. Thursday's vote to put the motion on the agenda will be an indication of the government's chances of survival, which are said to be extremely slim. If approved, the legislature will debate the motions on Monday and hold the no-confidence vote Wednesday. The opposition accuses Prime Minister Mesut Yilmaz of having ties to organized crime and tampering with the privatization of a state bank. He denies the charges. ``Ousting the government from power will open the way for the struggle against gangs,'' said Lutfu Esengun, a deputy from the Islamic Virtue Party, which presented one of the three no-confidence motions to Parliament. On Wednesday, 6th graf pvs ||||| Turkey's latest premier-designate got the backing of two key secular parties Monday in his efforts to form a broad-based, coalition government, on condition that his government stick to Turkey's secular principles. The Islamic-oriented Virtue Party, however, withheld immediate support for Yalim Erez. News reports said Virtue was holding out for a number of Cabinet seats that reflected its standing as the largest party in parliament. ``We are neither saying `yes' nor saying `no' at this point,'' Virtue leader Recai Kutan said. Erez denied that the two had discussed Cabinet posts. Erez, an independent lawmaker, is trying to form a coalition government that would include Cabinet members from several parties, including Virtue. The coalition would run the country only until parliamentary elections set for April. Erez took over efforts to form a government last week after veteran leftist Bulent Ecevit gave up, unable to convince Turkey's bickering center-left and center-right parties to join him in a coalition that excluded the Islamic-oriented party. Erez opened talks with various party leaders on Monday. He got support from center-right leader Mesut Yilmaz, who said his party supported Erez as long as he had Ecevit's backing. ``As long as our sensitivity toward the secular, democratic regime is taken into account, we will do our best to help form the new government and ensure it gets a vote of confidence,'' Ecevit said after his own talks with Erez. Turkey's strongly secular military is opposed to any deal that would bring Virtue to power. It pressured Virtue's predecessor, the Welfare Party, out of power last year. Erez is supposed to talk Tuesday to center-right Tansu Ciller and to Deniz Baykal, who leads a center-left party. ``I am more and more optimistic after every meeting,'' Erez told reporters after meeting with the party leaders. Turkey has been trying to form a new government since a coalition government led by Yilmaz collapsed last month over allegations that he rigged the sale of a bank. Yilmaz is now acting premier. ||||| Premier-designate Bulent Ecevit said Thursday he would persist in the difficult task of convincing a key party leader to join forces in a secular coalition. Ecevit, who was asked to form a new government Wednesday, desperately needs the support of the 99 deputies of ex-premier Tansu Ciller's center-right party. Ecevit, a veteran leftist, already has the support of another center-right party led by Mesut Yilmaz, whose government collapsed last week under the weight of a mafia scandal. Mrs. Ciller has not said if she would back an Ecevit-led government and her long-standing rivalry with Yilmaz makes Ecevit's job of coalition-building difficult. ``I don't give up that easily, neither do I lose hope that easily,'' Ecevit told his parliamentary group Thursday. Mrs. Ciller could lose grassroot support if she stands in the way of a new government, political columnist Ertugrul Ozkok wrote Thursday in daily Hurriyet. ``This could put her at odds with her classic support base.'' Ecevit was expected to meet with Yilmaz on Thursday, and other party leaders Friday. Turkey's secular parties are under pressure to join forces to keep the Islamic Virtue Party out of power. Virtue is the largest party in Parliament, but the all-powerful military is fiercely opposed to an Islamic-led government.

Turkish PM Yilmaz was forced to step down due to mob ties and claims of state bank privatization tampering. President Demirel asked highly respected 3-time former PM Bulent Ecevit to form a new majority government. A split between parliament's center left and right is longstanding. Ecevit distrusted Yilmaz and Ciller but brought in Yilmaz's party and wooed Ciller's. She wouldn't join unless Islamic Virtue were included, which the secular parties resisted. After a 3-week effort, Ecevit gave up rather than include Virtue. Yalim Erez tried next and won the backing of 2 key secular parties. He will talk to Ciller and run Turkey until the April 18 election.

Bulent Ecevit, who was asked to form a new government Wednesday, is a former prime minister best remembered for ordering an invasion of Cyprus in 1974 that made him an overnight hero at home. The invasion, after a short-lived coup by supporters of union with Greece, has led to the division of the island. Throughout the years, Ecevit, 73, has remained a strong defender of the cause of the Turkish Cypriots ``As long as Turkey lives, we won't allow the oppression and subordination of Turkish Cypriots at the hands of Greek Cypriots,'' he said in July 1997 during the 23rd anniversary celebrations of the invasion. Ecevit, who was prime minister three times since 1974, has over the years shed some of the socialist idealism he was known for in the 70s. During his tenure as deputy prime minister in a 17-month government that was toppled last week over a corruption scandal, he gave his backing to the liberal policies of the center-right-led coalition. He often said he was carrying out a duty to bring a stable government and spare Turkey from crisis - a reference to tensions between a previous Islamic-led government and the secular military. Though never a Marxist, Ecevit was in his early years viewed with suspicion by big business for espousing socialism based on heavy government social benefits and a strong role for the state sector in the economy. Recently, however, he has helped the government keep on good terms with the IMF, which ordered a strict curb on public spending, and approved a number of state sell-offs. Under his leadership in the 70's, ties with the United States were tense. He has also expressed concern over a U.S.-led multinational force based in Turkey that monitors a no-fly zone over Kurdish-controlled northern Iraq. He argues it it is helping create a Kurdish state. His frequent visits to Iraq to meet with President Saddam Hussein have in turn raised suspicion in Washington. Despite a short alliance with an Islamic party in 1974, he is a staunch defender of Turkey's secular traditions and pushed for a crackdown on Islamic radicalism. Ecevit was born in Istanbul in 1925, to an intellectual family and studied literature at a prestigious American-run high school. He has taken some courses at Harvard University. A former journalist, he entered politics in 1957, rising to the leadership of the Republican People's Party in 1972, becoming prime minister in 1974, briefly in 1977 and again in 1978-79. He was barred from politics in the years that followed a 1980 military coup. He was imprisoned three times for carrying on with political activities despite the ban, mainly through his wife of 51 years, Rahsan, who formed the Democratic Left Party in 1985 and led it until a democratic reform in 1987 allowed Ecevit back into politics. In corruption-tainted Turkish politics, he remains known as the leader with the cleanest slate. Not even his alliance with Yilmaz who was ousted for alleged ties to the mob and rigging the privatization of a bank, tarnished his image. ||||| The chances for a new, strictly secular government in Turkey faded Wednesday when a potential coalition partner insisted on giving the Islamic party a share of power. The military, self-appointed guardians of Turkey's secular system, is adamantly opposed to the inclusion of Islamic Virtue, the largest party in parliament. Premier-designate Bulent Ecevit needs Turkey's two-center right parties to hammer together a secular coalition, but Tansu Ciller, the ex-premier who commands 99 votes in parliament, rebuffed him Wednesday. Ecevit already has the support of her arch-rival, outgoing Premier Mesut Yilmaz, head of the other center-right party. But Mrs. Ciller said Wednesday she would not join forces with Yilmaz, whose government collapsed Nov. 25 over a mafia scandal. Instead, she reiterated her demand for a government that would include Virtue. ``We do not oppose Mr. Ecevit's premiership. We will support him, but only if all parties represented in Parliament are included,'' Mrs. Ciller said. It was not clear what Ecevit's next move would be. He might try to form a fragile minority coalition. He might also admit defeat and return the task of forming the government to President Suleyman Demirel. Demirel could then choose any member of parliament to head the government until elections in April. ||||| A week after the Turkish government fell in a corruption scandal, President Suleyman Demirel on Wednesday asked a veteran left-wing politician known for his personal honesty, Bulent Ecevit, to form a new government. Ecevit, who served as prime minister three times in the 1970s, said he would immediately begin working to fashion a government that could command a majority in the faction-ridden Parliament. He also suggested that although Parliament has set April 18 as the date for a new election, he might seek to remain in power for a longer period. ``It is wrong to see this government as simply an election government,'' he said. ``There are problems that will not wait until an election.'' Military commanders, who hold ultimate power in Turkey, have quietly told senior political figures, including Demirel, that they do not want a quick election. They fear it will produce a Parliament just as divided as the present one, perhaps with the Islamic-oriented Virtue Party as the largest bloc. The commanders are also hoping to exclude two of the country's leading politicians, outgoing Prime Minister Mesut Yilmaz and former Prime Minister Tansu Ciller, neither of whom they trust, from posts in the new government. Ecevit must now try to build a government that includes their center-right parties but not them as individuals. In a meeting this week the country's senior policy-making body, the National Security Council, in which military officers have a strong say, set three priorities for the coming months. It said that whatever government emerges from forthcoming negotiations should dedicate itself to fighting religious fundamentalism, Kurdish nationalism and criminal gangs that have infiltrated the state apparatus. Among Ecevit's immediate challenges will be to resolve a political crisis with Italy that broke out last month when the Kurdish rebel leader Abdullah Ocalan was arrested in Rome and then asked for political asylum there. Turkey wants Ocalan sent here for trial, but Italy says it cannot extradite him as long as Turkey retains the death penalty. Ecevit (pronounced EH-che-vit) is among the few senior Turkish politicians who favors the abolition of capital punishment. Together with Demirel, Ecevit is often cited by Turks who complain about the continued dominance of a geriatric political elite here. He is 73 and has been in politics for most of his adult life. Early in his career Ecevit emerged as a spokesman for Turkey's downtrodden masses. Perhaps more than any other figure, he legitimized social democratic ideology in a climate where leftist sympathies were often considered subversive. At the same time, however, he has shown himself to be a fierce nationalist. He was prime minister when Turkey sent troops to occupy northern Cyprus in 1974 and is still considered a hard-liner on Cyprus. He is also uncompromising in his opposition to Kurdish nationalism. During his terms as prime minister in the 1970s, Ecevit successfully undermined efforts to move Turkey toward membership in the European Union, then called the European Economic Community. He considered it an instrument of capitalist exploitation. Ecevit has also disturbed the United States by flirting with anti-Western ideologies. In the early 1990s, during an interval when he worked as a journalist, he traveled to Iraq and wrote a series of articles favorable to Saddam Hussein. He recently called for better relations between Turkey and Iraq, and maintains some of the anti-imperialist positions and suspicion of capitalism that he developed in the 1960s. The Democratic Socialist Party, which Ecevit heads, is a closely held family fiefdom. He and his wife carefully screen applicants for membership and veto those whose personal loyalty to Ecevit is suspect. ``During his terms as prime minister in the '70s, Ecevit did not appear to be a consensus builder,'' said Ilter Turan, a professor of political science at Bilgi University in Istanbul. ``It seems that nowadays he is more accommodating, so from that perspective he may not be bad choice.'' ``On many issues that Turkish society is encountering now, he represents an orientation which does not seem to be totally in tune with the times,'' Turan said. ``That would include his position on issues like privatization, integrating Turkey more fully into the international system, and the devolution of central authority. He has failed to grasp where the world is heading. He looks at and analyzes the world in categories that are no longer useful or appropriate.'' Almost alone among Turkish politicians, Ecevit lives modestly and has avoided any hint of personal or financial scandal. He speaks fluent English, and his reading tastes run to poetry and intellectual journals such as The New York Review of Books. He has translated the works of T.S. Eliot into Turkish and published several volumes of his own poems. ||||| Opposition parties lodged no-confidence motions Wednesday against Prime Minister Mesut Yilmaz after allegations he interfered in the privatization of a bank and helped a businessman linked to a mobster. Yilmaz' minority government could go down if the the small, center-left Republican Party, which usually gives him the majority he needs in parliament, votes against him. The leader of the Republicans, Deniz Baykal, urged Yilmaz to resign. But the premier vowed Wednesday to stay on, saying he was the victim of a conspiracy. ``This is a plot and it can't be a reason for a resignation,'' Yilmaz said, adding that he intended to continue the ``struggle against organized crime.'' Afterward, Baykal said the Republicans would support a no-confidence motion. The leader of the Democratic Turkey Party, Husamettin Cindoruk, said his party might withdraw from the governing coalition. He said the party would announce its decision Thursday. The political turmoil sent the Istanbul stock market plunging 14.9 percent. ||||| ANKARA, Turkey (AP) - Prime Minister Mesut Yilmaz on Wednesday faced intense pressure to step down after allegations that he interfered in a privatization contract and helped a businessman linked to a mobster secure loans. Deniz Baykal, leader of the center-left Republican party whose backing in parliament helps Yilmaz's minority government, said he would withdraw his support unless the premier resigned immediately. Two opposition parties threatened to press for a motion to censure the government. The allegations were made by businessman Korkmaz Yigit, who claimed that Yilmaz and Gunes Taner, the economy minister, had encouraged him to buy the state-run bank Turkbank, offering him loans from other state banks to ensure that his offer was the highest bid. Yigit's allegations were carried Tuesday night on two of his TV channels which showed a videotape he had made to explain his version of the story before his detention Monday evening for questioning about the bidding. Yigit bought the bank at a public auction in August for dlrs 600 million. The government suspended the privatization last month after a lawmaker released an audio tape of a conversation supposedly between Yigit and mobster Alaattin Cakici. On that earlier tape, Cakici was heard assuring Yigit that he will fend off rival bidders. It was not clear who made the tape, which got into the hands of an opposition deputy. Yigit claimed Yilmaz and Taner were aware of Cakici's involvement in the bidding for the bank but urged him nevertheless to go ahead with the bidding. Yilmaz has said that an intelligence report revealing Yigit's ties with Cakici only reached him after Yigit won the tender. Yigit said the premier had also encouraged him to buy mass-circulation national newspaper Milliyet, apparently to ensure the paper's backing to his center-right Motherland party in elections next year. Milliyet's sale to Yigit was canceled after the scandal. Cakici was arrested in France in August. Turkey has requested his extradition. Last month State Minister Eyup Asik resigned after allegations he had been in close contact with Cakici. ||||| President Suleyman Demirel appeared likely to turn to some widely trusted lawmaker to form Turkey's next government, after a veteran politician abandoned efforts Monday to persuade bickering political leaders to support him in a pro-secular coalition. Bulent Ecevit of the Democratic Left Party failed in a 3-week-old attempt to form a government that could command a majority of votes in Parliament. ``It is now clear that no party leader can form a government that can win a vote of confidence,'' former Premier Mesut Yilmaz said after talks with Demirel. ``We have told the president that we will not hamper the appointment of a deputy of Parliament.'' With party leaders unable to overcome differences, the new premier-designate would most probably be affiliated to a party but be trusted enough by other parties to follow an independent line. Parliament Speaker Hikmet Cetin has been suggested as a likely candidate. The new appointment would be made within days, Yilmaz told reporters. Demirel consulted Turkey's party leaders immediately after Ecevit gave up. Most declared themselves in favor of a government led by a lawmaker. Only center-right leader Tansu Ciller said she wanted a government led by a party leader, and made clear she was willing to take on the task. Turkey's parliament is split by longstanding animosity between its center-left and center-right parties. Yilmaz led the last government, which collapsed in November amid allegations he had ties to organized crime and interfered with the sale of a state bank. By tradition, Demirel should then have asked the leader of Parliament's largest party to form a new government. But Demirel broke with custom to keep the Islamic-oriented Virtue Party from power. Turkey's staunchly secular military opposes the return of an Islamic-led government. Modern Turkey has had only one Islamic-led government, formed after 1995 elections, and the military pressured it from power for failing to stick to the country's secular traditions. Ecevit refused even to consult with the leader of the Virtue Party during his efforts to form a government. ||||| After failing to bring together political rivals in a coalition, Premier-designate Bulent Ecevit announced Saturday that he was returning his mandate to the Turkish president. In a statement reported by the Anatolia news agency, Ecevit said he would see President Suleyman Demirel Monday morning. Ecevit, a veteran leftist, was called on to form a cabinet over two weeks ago after Mesut Yilmaz' coalition government collapsed in a no-confidence vote in Parliament. Deputies accused Yilmaz, who has since been serving as acting premier, of entertaining ties with the mob and tampering with the sale of a state bank. Refusing any alliance with the pro-Islamic Virtue Party, Turkey's largest party in Parliament, Ecevit was unable to create a political alliance strong enough to survive a confidence vote in the deeply divided legislature. Ecevit tried in vain to form a coalition government with two rival center-right wing parties -- one led by Yilmaz, the other by former Prime Minister Tansu Ciller. Ecevut's alternate efforts to make a minority coalition with outside backing for his Democratic Left Party from Parliament also failed. Demirel will now have to either ask someone else to try to form a government or wait until Jan. 10, when the constitution allows him to appoint a caretaker cabinet to lead the country to parliamentary elections, now scheduled for April. Such a cabinet would not have to face a confidence vote. Or Demirel could choose to leave the current caretaker government, headed by Yilmaz, in power until the elections. ||||| Parliament convened Thursday to vote on whether to move toward a no-confidence motion that could bring down the government over an organized crime scandal. Thursday's vote to put the motion on the agenda will be an indication of the government's chances of survival, which are said to be extremely slim. If approved, the legislature will debate the motions on Monday and hold the no-confidence vote Wednesday. The opposition accuses Prime Minister Mesut Yilmaz of having ties to organized crime and tampering with the privatization of a state bank. He denies the charges. ``Ousting the government from power will open the way for the struggle against gangs,'' said Lutfu Esengun, a deputy from the Islamic Virtue Party, which presented one of the three no-confidence motions to Parliament. On Wednesday, 6th graf pvs ||||| Turkey's latest premier-designate got the backing of two key secular parties Monday in his efforts to form a broad-based, coalition government, on condition that his government stick to Turkey's secular principles. The Islamic-oriented Virtue Party, however, withheld immediate support for Yalim Erez. News reports said Virtue was holding out for a number of Cabinet seats that reflected its standing as the largest party in parliament. ``We are neither saying `yes' nor saying `no' at this point,'' Virtue leader Recai Kutan said. Erez denied that the two had discussed Cabinet posts. Erez, an independent lawmaker, is trying to form a coalition government that would include Cabinet members from several parties, including Virtue. The coalition would run the country only until parliamentary elections set for April. Erez took over efforts to form a government last week after veteran leftist Bulent Ecevit gave up, unable to convince Turkey's bickering center-left and center-right parties to join him in a coalition that excluded the Islamic-oriented party. Erez opened talks with various party leaders on Monday. He got support from center-right leader Mesut Yilmaz, who said his party supported Erez as long as he had Ecevit's backing. ``As long as our sensitivity toward the secular, democratic regime is taken into account, we will do our best to help form the new government and ensure it gets a vote of confidence,'' Ecevit said after his own talks with Erez. Turkey's strongly secular military is opposed to any deal that would bring Virtue to power. It pressured Virtue's predecessor, the Welfare Party, out of power last year. Erez is supposed to talk Tuesday to center-right Tansu Ciller and to Deniz Baykal, who leads a center-left party. ``I am more and more optimistic after every meeting,'' Erez told reporters after meeting with the party leaders. Turkey has been trying to form a new government since a coalition government led by Yilmaz collapsed last month over allegations that he rigged the sale of a bank. Yilmaz is now acting premier. ||||| Premier-designate Bulent Ecevit said Thursday he would persist in the difficult task of convincing a key party leader to join forces in a secular coalition. Ecevit, who was asked to form a new government Wednesday, desperately needs the support of the 99 deputies of ex-premier Tansu Ciller's center-right party. Ecevit, a veteran leftist, already has the support of another center-right party led by Mesut Yilmaz, whose government collapsed last week under the weight of a mafia scandal. Mrs. Ciller has not said if she would back an Ecevit-led government and her long-standing rivalry with Yilmaz makes Ecevit's job of coalition-building difficult. ``I don't give up that easily, neither do I lose hope that easily,'' Ecevit told his parliamentary group Thursday. Mrs. Ciller could lose grassroot support if she stands in the way of a new government, political columnist Ertugrul Ozkok wrote Thursday in daily Hurriyet. ``This could put her at odds with her classic support base.'' Ecevit was expected to meet with Yilmaz on Thursday, and other party leaders Friday. Turkey's secular parties are under pressure to join forces to keep the Islamic Virtue Party out of power. Virtue is the largest party in Parliament, but the all-powerful military is fiercely opposed to an Islamic-led government.

For more than a month, Turkish politicians have been trying to form a new government. The last prime minister was voted out after charges of corruption and mob ties. Longtime politician and three-time prime minister, Ecevit, tried for two weeks to form a coalition, which would satisfy the staunchly secular military. He failed when he could not get the support of both center-right parties. The president then asked a member of Parliament to form an interim coalition government to serve until the April election. Erez attained center-right support if he sticks to secular principles, but he may be forced to give some Cabinet seats to the Islamic Virtue Party.

The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law. ||||| The legal tool that the government is using in its assault on Microsoft Corp. _ the Sherman Antitrust Act of 1890 _ is brief, vague and malleable. The combination has meant that this bedrock statute of antitrust policy has been at turns toothless and powerful over the years, depending on the politics and economics of the day as interpreted by the courts. Sponsored by Sen. John Sherman, an Ohio Republican who was the younger brother of the Civil War general William Tecumseh Sherman, the act was passed as a nod to a popular backlash against the rise of the industrial trusts in oil, steel and railroads. Farmers, laborers and small-business owners _ sizable voting groups _ resented the trusts as vehicles of concentrated power. But the trusts, large national holding corporations, were viewed by many others as engines of modernization and industrialization. Economists at the time opposed the Sherman Act, and the law that Congress passed was a vaguely worded compromise. No one knew what impact it would have, but one senator, quoted in Matthew Josephson's ``The Robber Barons,'' explained that nearly everyone agreed that ``something must be flung out to appease the restive masses.'' The act's two key provisions, Sections 1 and 2, mention ``conspiracy,'' ``restraint of trade'' and ``attempt to monopolize.'' Yet while the Sherman Act is now interpreted as the Magna Carta of competition, it never uses the term. After it was passed, critics of the trusts derided the ``impenetrable'' language of the Sherman Act and called it the Swiss Cheese Act. But by the early 1900s, the political climate had changed. The growing antagonism for the trusts, especially as income gaps widened, was tapped by an avowed trustbuster, Theodore Roosevelt, who became president in 1901. ``The Sherman Act has always been an elastic piece of social legislation, used to attack perceived exploitation and the aggregation of power,'' said Eleanor Fox, a professor at the New York University Law School. The model trust _ and the principal target of the trustbusters _ was Standard Oil. Shrewdly, Roosevelt made a distinction between good trusts, which thrived because of their superior efficiency, and bad trusts, which grew not as the result of inevitable economic forces but because of unfair business practices. Throughout the 1880s and '90s, Standard Oil's rivals had complained about the company and the business practices of its founder, John D. Rockefeller. But during those years, the price of kerosene _ burned to light the nation's homes _declined steadily. So Standard Oil, it could could reasonably be argued, was an ``enterprising monopoly.'' In the early 1900s, though, Standard Oil raised prices in the United States to prop up its profits at a time it was engaged in a price war against Royal Dutch/Shell in Europe, where Standard Oil did face genuine competition. When consumers were hurt by the Standard Oil monopoly, popular support for antitrust action against the company swelled, encouraged by Roosevelt and his successor, William Howard Taft. The federal suit against Standard Oil was filed in 1906, and the Supreme Court approved the breakup of the company in 1911. Standard Oil and the Microsoft case, historians observe, have some common themes. Both were dominant companies of their day, and Bill Gates, the Microsoft chairman, has been called a modern Rockefeller. ``But there is no presidential involvement and there is no real consumer dissatisfaction in the Microsoft case,'' said Ron Chernow, author of ``Titan,'' a best-selling biography of Rockefeller. ``And Rockefeller,'' Chernow added, ``never went through the kind of honeymoon period of widespread public adulation and favorable press coverage as Bill Gates has had.'' ||||| Will it matter to consumers that Bill Gates isn't a nice guy? Until last week, most Americans thought of Gates, the chairman of the Microsoft Corp., as a genius and innovator. A nerd perhaps _ but also a self-styled visionary who almost single-handedly unlocked the power of the personal computer. Monday, however, in a Washington courtroom, the Justice Department began painting a different, darker portrait of Gates. In an antitrust suit brought by the department and 20 states, the man whose company commands a 97 percent share of the market for personal computer operating systems is being depicted as a Nixonian schemer who will go to almost any length to crush his competition. Product innovation, the suit argues, is not a sufficient weapon for Gates. Flashing back and forth between snippets of Gates' videotaped deposition and e-mail messages he had sent that contradicted his testimony, the government sought to establish a pattern of threats and offers of payments by the Microsoft chairman. It also sought to cast Gates as an obsessed man who feared the tiny Netscape Communications Corp. and its potential threat to his domination of the market for Internet browsers, the software used to navigate the World Wide Web. Gates was portrayed by Justice Department litigator David Boies as a schoolyard bully who rides roughshod over the computer industry with a crudeness that is in stark contrast to his popular image as a benevolent dictator and high-technology guru. According to a document presented by Boies, for example, Gates asked America Online executives in 1996: ``How much do we need to pay you'' to damage Netscape? ``This is your lucky day.'' The implication, Boies said, was that the amount was irrelevant, and that Microsoft, with its deep pockets and market dominance, makes as many ``offers you can't refuse'' as needed to achieve its goals. Microsoft officials are closely watching market surveys for any hint that the new image of a bare-knuckled Gates might be detracting from the company's world-famous brand name, but they insist that the public will continue to draw a distinction between allegations of anticompetitive business tactics and the company's software. ``Despite what you're reading in the press, people judge us by our products,'' said Mich Matthews, head of Microsoft's corporate public-relations office. ``Our experience is that people vote with their pocketbooks.'' So far, consumers are casting positive votes. Last week Microsoft reported quarterly profits of $1.52 billion, a stunning 58 percent increase over the level a year earlier. Despite the record profits, some marketing experts say that if the public comes to view Gates as a Rockefeller-style robber baron, his company and its brand name may suffer. ``When you have a company with such a visible chief executive, the CEO is really the driver of the brand,'' said David Aaker, a brand marketing expert at the Haas School of Business at the University of California at Berkeley. ``There is no question this is going to affect Microsoft's brand recognition.'' Already there are early warning signals, as political cartoons in newspapers across the country bashed Gates last week. One showed him holding a globe and saying, ``If you don't play my way, I'll take my ball and go home''; another portrayed the Microsoft chairman standing next to a henchman dangling someone from a window while a Microsoft secretary says to a caller, ``I'm sorry, but Mr. Gates is busy teaching a competitor about Windows.'' But some industry analysts believe the new view of a Bill Gates who knows how to play hardball may not be such a bad thing for his company. The he-said, she-said round of e-mail messages being dragged out in court cases both in Washington and in Silicon Valley, where Microsoft is locked in a legal battle with its archrival, Sun Microsystems Inc., is viewed by some as little different from the exaggerated trash talking that goes on in professional sports. ``It's like taking what Charles Barkley and Michael Jordan say to each other on the ball court'' and turning it into something more sinister than it really is, said Paul Andrews, co-author with Stephen Manes of ``Gates'' (Doubleday, 1993). Indeed, there is evidence that the darker view of Gates and his company has so far taken root only in the District of Columbia and in Silicon Valley, where the computer industry has long felt the impact of Gates' tactics, and where bitterness and distrust of Microsoft are deep. In the rest of the country, Gates continues to enjoy great popularity. Two weeks ago, while speaking before a crowd of almost 7,000 students at Indiana University, a questioner who asked about the Justice Department's suit was roundly booed. BILL GATES, WHIPPING BOY c.1998 N.Y. Times News Service Is Bill Gates a high-tech Machiavelli, Public Enemy No. 1 or a threat to the known universe? All three, judging from the numerous political cartoons that popped up in newspapers across the country last week. From Chattanooga to Boston, cartoonists took delight in demonizing Gates, who is facing an unexpected public relations challenge as Microsoft's antitrust trial unfolds in Washington. Other cartoons ran the gamut from the predictable (a worker, pointing to an aquarium in which a large fish is gobbling up smaller ones, saying to some visitors, ``Welcome to Microsoft's research and development department'') to the weird (a dweebish man hunched in front of a computer screen staring at the words: ``Our beloved leader, Mr. Gates, is under attack. Leave your possessions. Go to the desert. Await the spaceship''). And that was just Week One of the trial. Stay tuned. ||||| A federal judge Friday pushed back the starting date of the antitrust trial against Microsoft Corp. by four days, to Oct. 19, while also ordering the company to comply with the Justice Department's request to examine Microsoft's financial records. Microsoft argued that allowing ``an army of government attorneys to come in and make demands will make it very difficult for us to remain in business.'' But after winning assurances from government lawyers that they would make only narrow, targeted searches of the records, Judge Thomas Penfield Jackson of the U.S. District Court for the District of Columbia ordered Microsoft to open the database for perusal. Microsoft had asked that the trial be delayed several more months to prepare a defense against what it said was a last minute broadening of the case by the Justice Department, which had added new evidence. Last month, the government said that in the process of preparing for the trial it had discovered that Microsoft tried to persuade Apple Computer not to market its Quicktime multimedia software to Windows customers. On Thursday, the Justice Department and 20 states added two new people to their witness list to testify about Microsoft dealings with Apple and with Sun Microsystems. Avi Tevanian, a former Apple executive, was added to the witness list in part to describe Microsoft's proposal, which Microsoft denies ever having made. The other new witness was James Gosling, a Sun executive who led the development of Java, an Internet programming language that Microsoft sees as a potential threat to the company's dominance of the software market. The government is charging that Microsoft took illegal steps to prevent Java from gaining wide acceptance. To counter that, Microsoft named two new witnesses Friday, Robert Muglia, a senior Microsoft executive who has worked with Sun, and Chris Engstrom, an executive who handled some of Microsoft's dealings with Apple. At the same time, John Warden, Microsoft's lawyer, argued that the new allegations had no place in the case. The Justice Department, Warden told the judge, was ``trying to turn this into something approximating a plenary monopoly case like the IBM case.'' ``It becomes clearer and clearer and clearer with each new filing that they are trying to turn this into a broader case,'' he said. ``You can't have this bait-and-switch in which they file a complaint alleging A, B, C, and then talk about the whole alphabet three times over.'' As a result, Warden said, Microsoft wanted, at a minimum, another two-week delay, even though ``a more normal schedule'' would have the trial start next year. The judge did not respond. Instead he entered an order setting the Oct. 19 trial date. Late Friday, Microsoft entered a formal motion asking for another two-week delay. A response is expected next week. ||||| In the summer of 1995, a whiff of revolution was in the air in Silicon Valley. The Internet offered a new deal in computing, a fresh opportunity for entrepreneurs to try to break Microsoft Corp.'s firm grip on the personal computer software business. Leading the challenge was Netscape Communications Corp., whose software for browsing the World Wide Web had ignited the Internet boom. Netscape chairman James Clark spoke boldly of attacking Microsoft head-on. He borrowed imagery from the movie ``Star Wars,'' referring to Microsoft as the Death Star and Netscape as the leader of a rebel alliance. Microsoft answered with a vengeance. It dispatched hundreds of programmers to work on a competing browser and poured many millions of dollars into marketing it. It prodded computer makers and others to distribute its browser, folded the browser into its industry-dominant Windows operating system and gave the browser away free _ a campaign intended to ``cut off their air supply,'' as a senior Microsoft executive described it. But not only competitors like Netscape have encountered Microsoft's force. Microsoft's partners, its corporate customers and professional investors who finance new ventures have all collided with it. A close look at Microsoft's no-holds-barred push into the Internet software business offers a window into the ways the company uses its market muscle to influence the behavior of virtually every player in the industry. Some of the cases recounted here figure prominently in the suit brought by the Justice Department and 20 states, scheduled to go to trial this month, charging that Microsoft at times went too far _ and violated antitrust laws. Regardless of the legal outcome, previously unreported details about incidents in the suit and the other examples provide a more complete picture of Microsoft in action. _ When Compaq Computer Corp. considered loading Netscape's browser instead of Microsoft's on its personal computers, Microsoft threatened to stop selling its Windows operating system to Compaq. The company quickly changed its mind. _ After Spyglass Inc. began supplying Microsoft with its early browser technology, Microsoft announced that it would give away its browser free. The timing came as a rude surprise to its partner Spyglass. The company lost most of its revenues almost overnight, as the technology, which it had also been licensing to companies besides Microsoft, suddenly became available free. _ When America Online Inc., which competes fiercely with Microsoft's online service and electronic commerce divisions, went shopping for browser technology, Microsoft made an offer that was too good to pass up: If America Online used Microsoft's browser as the main one for its millions of subscribers, Microsoft would give America Online prime placement on the desktop screen of all personal computers using Windows. _ When Intel Corp. began developing its own Internet software, Microsoft complained. Intel, the leading maker of the microprocessors that serve as the electronic brains on most personal computers running Windows, pulled back. The chip maker decided that its lucrative hand-in-glove partnership with Microsoft took priority. _ Microsoft's reach in computing has become so pervasive that nearly every year now, Silicon Valley's top venture capitalists meet privately with a team of top Microsoft executives to learn about the company's plans. The goal, one venture investor observed, was to ``stay out of the way of the steamroller.'' Microsoft adamantly denies that it has broken any laws in these or similar situations. The company plays the game of business hard, and its executives acknowledge that without apology. Yes, Microsoft says, rivals may suffer and partners may be irritated occasionally. But the company insists its actions are guided by its main corporate goal of bringing new technology inexpensively and conveniently to the millions of people who use its software. Most people in the computer industry say that living in Microsoft's world means routinely making accommodations to it. Microsoft's power emanates from its near-monopoly on the market for personal computer operating systems, the master control programs that run computers. ``Because it owns the operating system, Microsoft is the essential utility of the information age,'' said James Moore, president of Geopartners Research Inc., a technology consulting firm. ``It acts as a kind of gatekeeper to the pipeline of computing innovation, sitting there and deciding whether to help some innovation or slow it down.'' For months, Microsoft and Netscape had talked on and off, circling each other warily. But the event that would define them as unflinching rivals was a meeting on June 21, 1995, in a second-floor conference room at Netscape's headquarters in Mountain View, Calif. That meeting, according to the Justice Department and 20 states suing Microsoft, was the high-tech equivalent of the storied gatherings in smoke-filled railroad cars that inspired passage of the nation's antitrust laws a century ago. On that day, they say, Microsoft made Netscape an illegal offer to divvy up the market for Internet browsing software, a collusion pact that Netscape rejected. Microsoft replies that the prosecutors are misinterpreting a routine meeting in the software business and that the company has never tried to divide the browser market. Bill Gates, Microsoft's chairman and principal strategist, did not attend the Mountain View gathering, but he consulted by telephone with the Microsoft team. Two people who did attend that June meeting have been named as witnesses in the trial scheduled to begin next week: Netscape president James Barksdale and Daniel Rosen, Microsoft's general manager of new technology. In the trial, the government will contend that Microsoft presented Netscape with an all-or-nothing offer, according to people who have been questioned in the federal investigation. Relying heavily on notes taken in the meeting by Netscape executive vice president Marc Andreessen and on the testimony of Barksdale, prosecutors are expected to assert that the Microsoft proposal had several elements, both incentives and requirements. Microsoft, according to the people questioned by the government, would invest in Netscape, taking a 15 to 20 percent stake, give Netscape technical information and fine-tune Microsoft's operating systems so that Netscape's software would run better on Windows. In return, the people say, Netscape would give Microsoft a seat on its board, license its technology to Microsoft, give Microsoft advance knowledge of its product-development efforts and not make a browser for the next generation of the Microsoft operating system, Windows 95, which was shipped two months after the June 1995 meeting. And Microsoft, the people added, did what it has always denied it does _ used access to its technology as a powerful lever in business negotiations, by offering Netscape preferential access to the Windows ``application program interfaces,'' or APIs, the links that enable other companies' programs to run smoothly on the Windows operating system. By turning down the deal, Netscape, they say, would not have that preferred access to Microsoft technology _ a threat that Microsoft fiercely denies making. Barksdale, Netscape's 55-year-old chief executive, told a colleague that the encounter with Microsoft in June 1995 was ``the damnedest meeting I've ever attended in 35 years in business.'' Had Netscape accepted Microsoft's offer, it would have had Microsoft's money and its endorsement. Netscape would have also been free to sell its browser for use in earlier versions of Windows and for use on other operating systems like Apple's Macintosh and Unix, a powerful system used mainly in corporations and research labs. ``But if we had licensed our technology to Microsoft and stepped aside, the best we could have hoped for was becoming a company with sales of $100 million or so and hoping to be bought out by Microsoft,'' said Clark, a former computer scientist at Stanford University who founded Silicon Graphics Inc., a computer graphics pioneer, before starting Netscape. ``We didn't start Netscape for that.'' For any company, a meeting with Microsoft is often a charged affair. Every computing device from keyboards to disk drives, and every software program from games to browsers, must mesh smoothly with Microsoft's Windows operating system. This is necessary to make computers reliable and easier to use, but it also gives Microsoft its role as the industry's gatekeeper. And since Microsoft itself makes all manner of software products beyond the operating system, other companies are put in the uneasy position of requiring Microsoft's cooperation to be able to compete against it. And in the software industry, where every program is rendered in the digital code of 1's and 0's, the lines that divide competition and cooperation are often blurred. The talk about that line at the Microsoft-Netscape meeting focused on the division between the operating system _ the ``platform,'' in computer terms _ and the application programs, sometimes called ``solutions,'' that run on top of the operating system. The government suit states that in sworn testimony, Chris Jones, a Microsoft manager who attended the meeting, ``admitted that Microsoft `absolutely' intended to persuade Netscape not to compete.'' Microsoft reads Jones' testimony very differently, as evidence mainly of the company's clarifying its position. If Netscape stayed on the applications or solutions side of the operating system, the two companies could be partners, Microsoft said. But if Netscape tried to become a player in the platform space, they would compete. Microsoft released portions of the Jones deposition in September as evidence that the government had quoted the Microsoft manager out of context. Q. Do you recall any discussion about a desire of anybody on the part of Microsoft who was participating to be able to persuade or influence Netscape not to compete? A. Absolutely. But again, persuade in the sense of force or persuade in the sense of, hey, we think we can have a great business relationship together. Later in the deposition, a Justice Department lawyer asked Jones whether any of the Microsoft executives intended to suggest that ``there would be any consequences to Netscape or its business if Netscape chose to go in the platform direction you've described earlier as opposed to the solutions direction.'' Jones replied: ``The conversation was something like the following: `We're in the platform business. We're going to invest heavily in this part of the platform because we feel it's critical to our technologies. That's a done deal.' And we're asking them: `What is your business? Is your business platforms or solutions? If it's platforms, we're in the platforms business. We're competing.''' Microsoft portrays such comments as innocuous statements of fact. But to Netscape, the same remarks could be taken as a warning, if not a threat. This is because Internet browsing software had the potential to become an alternative platform to the Windows operating system. The browser, sitting on top of the operating system, could supplant Windows as the main desktop screen on users' machines and the main layer of programming for starting other software applications. In addition, Netscape's browser could serve as a powerful platform for distributing and running Java, an Internet programming language developed by Sun Microsystems Inc., a Microsoft rival. In technical terms, Netscape's upstart platform could replace Microsoft's APIs as the essential utility of computing. Indeed, Andreessen had boasted in public of Netscape's ambition to relegate Microsoft's Windows to so much software plumbing underneath the browser. By the June meeting, Microsoft certainly viewed Netscape as a serious potential challenger to Windows, the corporate crown jewel. On May 26, 1995, in an internal memo, ``The Internet Tidal Wave,'' Gates wrote: ``A new competitor `born' on the Internet is Netscape. Their browser is dominant with 70 percent usage share, allowing them to determine which network extensions will catch on.'' Netscape's strategy, Gates wrote, was to ``move the key API'' into the browser ``to commoditize the underlying operating system.'' THE BROADER INQUIRY: GOVERNMENT SEES ARM-TWISTING The federal government and the states have recently broadened their allegations against Microsoft by adding evidence that it tried to bully Intel, Apple Computer Inc. and other companies to squelch competition. They say that like the Netscape meeting the new evidence fits a pattern of behavior by Microsoft, which has repeatedly tried to limit competition by strong-arming competitors and partners. One episode that fits the pattern, the prosecutors contend, was an effort by Microsoft to pressure Intel to shelve the development of multimedia and Internet software and to limit its cooperation with Netscape. Intel's main business is making the microprocessor chips that act as the electronic brains of most of the computers that run the Windows operating system. Indeed, the fortunes of Intel and Microsoft are so closely aligned that the two companies are sometimes referred to as a single, powerful entity, ``Wintel.'' But Intel also employs hundreds of software engineers, mainly at its Intel Architecture Labs in Hillsboro, Ore. And while Intel and Microsoft are partners, they have also had their conflicts, typically over the direction and pace at which certain innovations should be introduced into the personal computer industry, which they dominate together. Federal and state investigators have focused on Microsoft's strong reaction to work being done by Intel's software engineers _ a sentiment expressed in no uncertain terms during a meeting at Intel's Santa Clara, Calif., headquarters on Aug. 2, 1995. The contentious session was attended by several executives from Intel and Microsoft, including Gates and Intel chairman Andrew Grove. An internal Intel memo stated that Gates made ``vague threats'' about supporting Intel's competitors and that he was ``livid'' about Intel's ``investments in the Internet and wanted them stopped.'' Later, Intel did pull back from its multimedia and Internet software development. Steven McGeady, an Intel vice president who attended the August 1995 meeting, is scheduled to appear as a witness for the government. Microsoft replies that the government's accounts of meetings like those with Netscape and Intel are fanciful distortions, created by using a biased selection of documents and witnesses. The government's case, Microsoft asserts, betrays an utter failure to accept the computer-industry reality that Microsoft routinely meets with companies to make sure their software and equipment will work well with Windows. Sometimes the talks, Microsoft says, go on to include further levels of cooperation like licensing technology or a Microsoft investment, as the company discussed with Netscape. In the trial, Microsoft is expected to argue its advance in the browser market was the result of its own business acumen and Netscape's missteps. To document Netscape's errors, Microsoft issued a subpoena last month and obtained the unpublished manuscript of a new book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft,'' which is based on hundreds of interviews with current and former Netscape executives. The book does chronicle the mistakes made by Netscape. But its authors, Michael Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David Yoffie of the Harvard Business School, think Microsoft is hardly blameless. ``Microsoft's take-no-prisoners strategy backfired, all but inviting retaliation from competitors, the government and even customers,'' Yoffie said. Emphasizing that he was offering no legal judgment, Yoffie added, ``I think Microsoft could have achieved 90 percent of what it did without crossing the line as much as it did.'' THE SPYGLASS LINK: REWARDS AND PERILS OF A PARTNERSHIP On April 6, 1994, Gates and 20 Microsoft executives gathered for a daylong retreat not far from the company's headquarters in Redmond, Wash. The subject was the Internet and how it might revolutionize the computer software business. Few concrete plans were made that day, but Microsoft executives insist that a direction was set. ``Our vision from the outset was to unite the two worlds of the Windows desktop and the Internet,'' said Steven Sinofsky, a Microsoft executive who attended the meeting. Yet Microsoft badly trailed Netscape in the browser field. To hasten its entry, Microsoft licensed its early browsing software from Spyglass Inc. of Naperville, Ill. The first meeting between the two companies was initiated by Spyglass in April 1994. At the time, it was a tiny company and eager to do a deal with Microsoft. Spyglass was selected as the commercial licensee for browser technology developed by the National Center for Supercomputing at the University of Illinois. In the summer of 1994, Douglas Colbeth, president of Spyglass, met with Clark of Netscape at O'Hare International Airport in Chicago. The two men talked in the United Airlines Red Carpet Room, reserved for business-class passengers, and Colbeth recalled Clark telling him, ``We're going to take Microsoft head-on.'' At the time, Colbeth recalled thinking to himself, ``Great, now Microsoft will really want to license from me.'' Today, he noted: ``Remember, we were a company with a couple dozen people and almost no money in the bank. Netscape had Jim Clark, with his money and reputation, and big-time venture capital backing from Silicon Valley. Netscape had a very different agenda.'' By July 1994, Microsoft had become quite interested in the Spyglass technology, Colbeth says, and the two companies signed their first licensing agreement the following December. Microsoft, Colbeth recalls, always told him that it would eventually fold browser technology into its operating system, but its timing was accelerated by Netscape's rapid rise. ``Microsoft was initially hoping to charge for the browser,'' Colbeth said. But on Dec. 7, 1995, Gates declared that Microsoft would not only deeply integrate its browser into Windows but would give it away. The announcement caught the industry, even Colbeth, by surprise. At the time, Spyglass had licensed its technology to 82 other companies, including IBM and Digital Equipment, for use in their software products _ a licensing revenue stream of about $20 million a year. As a result of Microsoft's move, Spyglass saw those revenues vanish within a year, as smaller Internet software companies went out of business and big customers shifted to Microsoft's free browser. Spyglass slashed its payroll and scrambled into new niches of the software industry to replace its lost sales, which it succeeded in doing eventually. ``Whenever you license technology to Microsoft, you have to understand it can someday build it itself, drop it into the operating system and put you out of that business,'' Colbeth said. THE NONOPTION COMPAQ: SUDDENLY SEES THE LIGHT Well into 1996, Netscape's share of the browser market continued to rise, while Microsoft made little headway, even though its browser was free. Industry analysts and trade magazines agreed that Netscape's browser was the clear technical leader. In April 1996, Netscape's Navigator was used by 87 percent of people browsing the Web, compared with 4 percent using Microsoft's Internet Explorer, according to Zona Research. So the biggest personal computer maker, Compaq, thought it made sense to give customers Netscape's browser instead of Microsoft's. But Microsoft would not stand for that _ and Compaq had no choice but to give in. In June 1996, Compaq wanted not only to load the more popular Netscape browser on its machines but also to remove the icon for Microsoft's Internet Explorer, which was delivered to the computer maker with Windows 95. Microsoft informed Compaq that if it removed Internet Explorer, the computer maker would lose its license for Windows, said Stephen Decker, Compaq's director of software procurement, in testimony to federal investigators. The ultimatum from Microsoft was delivered bluntly in a letter headed, ``Notice of Intent to Terminate License Agreement.'' Faced with being denied the essential operating system, Compaq quickly reversed course and kept the Internet Explorer icon. Microsoft asserts that Windows and Internet Explorer are a single product and that Microsoft alone defines what is in the product. Nothing in its contracts, Microsoft adds, prohibits computer makers from including competing technologies. While the cutoff letter Microsoft sent to Compaq seems an unnecessarily hardball tactic when dealing with its largest corporate customer, Microsoft chief operating officer Bob Herbold insists that ``to take one letter here or one snippet of e-mail there to try to portray Microsoft as an arrogant company is unfair.'' Noting that a Compaq executive is a witness for Microsoft, Herbold said, ``We are totally dependent on tremendous relationships with key companies like Compaq.'' At Netscape, however, the Compaq episode was a watershed. ``That was the singular act that got me going to the Justice Department,'' Barksdale recalled. Barksdale said he regarded Microsoft's tactic of forcing Compaq to buy its browser as a condition of obtaining an essential product, the Windows operating system, as ``an illegal act and absolute proof that Microsoft was a monopolist.'' After investigating the incident, the Justice Department and the states agreed with Barksdale that Microsoft was illegally tying the sale of one product to another. Microsoft replies that it has a long history of adding new features to its operating system. And from the outset, Microsoft says, it intended that Windows and its Internet Explorer browser would be seamlessly integrated, as they are now in Windows 98. Thus, Microsoft insists, there is no product-tying violation of antitrust laws. In a separate case, a federal appeals court sided with Microsoft, upholding the principle that the company could put whatever it wanted to in its operating system and declare it a single product. But in June 1996, when Compaq wanted to offer the Netscape product instead of Microsoft's browser, most industry experts viewed the browser and operating system as two different software programs. ``It took a long time for the integration strategy to play out,'' said a former senior Microsoft researcher. ``Back then, integration was basically bolting a browser onto Windows.'' THE `BALANCING ACT': AMERICA ONLINE TOSSES IN TOWEL America Online chairman Stephen Case refers to dealing with Microsoft as ``a delicate balancing act.'' That balance swung sharply from the fall of 1995 to the spring of 1996, when Microsoft used the lure of giving America Online a featured place on the Windows desktop as the ultimate bargaining chip. To gain access to computing's most coveted real estate, America Online agreed to make Microsoft's Internet Explorer the main browser for its online subscribers, who now number more than 13 million. Yet throughout 1995, as Microsoft prepared to introduce Windows 95, the most significant improvement ever in its operating system, Case was knocking on the door of the Justice Department. His complaint was that Microsoft was going to place its new online service, Microsoft Network, a direct competitor to America Online, prominently on the desktop screen of Windows 95, which was introduced in August. This bundling tactic of using the industry-dominant operating system to market Microsoft Network, or MSN, Case argued, gave Microsoft an unfair advantage in the young but fast-growing online business. The Justice Department listened and investigated. But ultimately, the government decided against taking any action. At America Online's headquarters in Vienna, Va., Microsoft was both feared and loathed at the time. America Online had a designated ``Microsoft watcher,'' a young M.B.A. who tracked its adversary's every move. Above the desk in his small, windowless office was a picture of Gates. Beneath the picture, in large block letters, were the words ``THE ENEMY.'' Though America Online was the clear leader in the online services business, it had ample reason to worry about an all-out assault by a rival as rich and aggressive as Microsoft. When he had visited the Microsoft headquarters a couple of years earlier, Case recalled, Gates had bluntly assessed Microsoft's options by saying he could buy 20 percent of America Online, all of it or enter the online business on his own and ``bury you.'' A threat or merely a statement of the facts? ``A bit of both,'' Case said recently. ``But he was mainly articulating what everybody at that meeting kind of intuitively understood.'' Yet by 1996, Microsoft and America Online found they had reason to cooperate. With the exploding popularity of the Internet's World Wide Web, the conventional online companies, like America Online and Compuserve, had to provide their customers Internet access as well as their own services. America Online had its own browser, but to keep pace with the rapidly advancing technology it made sense to do a deal with Netscape or Microsoft. For both software companies, a deal with America Online, which had 5 million subscribers at the time, could mean a big surge in browser use and market share. Netscape seemed the natural partner for America Online, since both companies were Microsoft rivals. On March 11, America Online did announce that it would buy Netscape technology, but it was a standard licensing deal based on a payment-for-use formula. The next day, America Online announced a more significant deal with Microsoft making its browser the default technology _ the browser America Online subscribers would use unless they specifically asked for Netscape's Navigator. To win the deal, Microsoft offered to give America Online a start-up icon on the Windows desktop _ precisely the kind of equal treatment on the main Windows screen that Case had asked the Justice Department to require of Microsoft. ``After we agreed to its Internet Explorer browser, Microsoft allowed us to be bundled on the Windows desktop,'' Case said. ``It was an example of Microsoft's pragmatic side.'' The pragmatic decision was that the paramount corporate goal was to increase browser market share to protect the mainstay software business. As a result, its new online service, MSN, would have to sacrifice an important marketing advantage over its main rival, America Online. ``It was Bill's decision,'' said former MSN general manager Russell Siegelman, referring to Gates. ``He sent me e-mail on it. He said he didn't think it would hurt MSN that much. I disagreed with him.'' To other Microsoft executives, Gates expressed a different view of the likely impact on MSN. He told senior vice president Brad Silverberg that putting America Online on the Windows desktop would amount to ``putting a bullet through MSN's head,'' according to a deposition taken by the Justice Department. In the antitrust suit, the government asserts that the America Online deal shows how Microsoft used the power of its Windows monopoly to give it an edge in the browser war against Netscape. David Colburn, a senior vice president of America Online who took part in the browser negotiations with Microsoft, is a witness for the government. Today, Microsoft has overhauled its Internet strategy to focus mainly on building popular special-interest Web sites in fields like travel, personal finance, automobile retailing and news. And it is putting these sites, along with e-mail and search features, in an all-in-one site that uses the name MSN.com. ``I still regard Microsoft as a primary threat,'' Case observed. ``Microsoft has a history of getting it right in the long run, and there's no reason to think it won't in this business as well. We will always be in Microsoft's cross hairs.'' THE LESSON: DON'T CONFRONT A STEAMROLLER At Netscape's headquarters in Silicon Valley, the strategy today is one of avoiding head-to-head competition with Microsoft whenever possible. ``Don't do something that is in Microsoft's path _ that's the lesson learned,'' observed Clark, the Netscape chairman. Silicon Valley's venture capitalists, the investors who finance so many of the nation's high-tech startups, generally follow the Netscape formula these days. Yet that still leaves ample room to prosper. For while competing directly with Microsoft is dangerous, the software industry as a whole is an engine of wealth creation, job generation and technical innovation. And there is an ambivalent side to the venture community's relationship with Microsoft. For if a start-up cannot steer clear of Microsoft entirely, the favored option is to be bought out by Microsoft, which has scooped up many fledgling companies as a way of acquiring promising technology and people. ``Microsoft understands start-up innovation and how to co-opt start-up innovation better than any other high-tech company,'' said James Breyer, managing partner of Accel Partners, a venture capital firm. As Microsoft has grown, it has come to be seen not merely as a competitor but as a force of nature that shapes the business environment, like a weather front. ``Microsoft is incredibly pervasive,'' said Stewart Alsop, a partner with New Enterprise Associates, a venture capital firm in Menlo Park, Calif. At the board meetings of the companies in which his firm has invested, two issues always come up, he said: ``One is the price of the company's stock, and the other is what Microsoft is going to do.'' In the last few years, Microsoft has offered its guidance during almost yearly meetings between senior Microsoft executives and leading venture capitalists. The meetings are part of Microsoft's effort to improve its sometimes prickly relations with Silicon Valley. ``We work hard to provide clarity about where we're going and where we're not going,'' said Greg Maffei, Microsoft's chief financial officer. Last year's conference took place in October at the Quadrus office building on Sand Hill Road in Menlo Park, the Wall Street of high-tech venture investing. Maffei led a team of five Microsoft executives who appeared before a group of 40 venture capitalists, one of whom stood and asked the question that seemed to be on the minds of many of his peers: ``How do I invest in a company that stays out of the way of the steamroller?'' Maffei, recalled one person who attended the meeting, stood up and delivered a brief lecture on businesses that Microsoft was likely to avoid. His list included specialized software for manufacturing, human resources management, computer-aided design and others. But, this person noted, broad swaths of the industry appeared to be designated as off limits _ including new software platforms that might compete with Microsoft's personal computer operating system. At one point, Ruthann Quindlen, a partner with Institutional Venture Partners, leaned over to Vinod Khosla, a co-founder of Sun Microsystems and a partner at the venture capital firm Kleiner Perkins Caufield & Byers, and said quietly, ``I guess that leaves us washing machines and toasters.'' ||||| Shortly before the government filed its antitrust suit against Microsoft Corp. in May, Joel Klein, the assistant attorney general in charge of the Justice Department's antitrust division, met with a Silicon Valley executive. The executive recalls telling Klein that unless a case went beyond the Internet browser market, it would have little effect on Microsoft's power to stifle competition across the computer industry. Klein replied that he understood the computer executive's concerns. But he said time was running short and the strongest evidence in hand involved Microsoft's battle against Netscape Communications Corp. in the market for the so-called browser software used for navigating the Internet. ``This is a Netscape case,'' the executive recalls Klein saying. But five months later, the case that the government is bringing to trial on Monday extends well beyond Netscape and the browser war to embrace what it described in a recent court filing as ``a broad pattern of anti-competitive conduct'' by Microsoft. Netscape, the government insists, is still a prime example of the pattern _ but only one of several examples. The 12-person witness list for the Justice Department and 20 states suing Microsoft reflects the new evidence added to the case since May. James Barksdale, Netscape's president and chief executive, will appear first, but he will be followed by executives representing a cross section of the nation's high-technology companies including Intel, IBM, Sun Microsystems, Apple Computer, America Online and Intuit. In bringing a more ambitious, complicated case to trial than the one it filed in May, the government has chosen a high-risk strategy. The law states that new evidence can be added to a suit after it is filed, but not new charges. And so, in his federal courtroom in Washington, U.S.District Judge Thomas Penfield Jackson could decide to rule out some of the new evidence as ranging too far afield from the original suit. But if the government wins its broadened case, the court-ordered remedies would no doubt be far tougher on Microsoft. In May, the government's suggested steps amounted to equal treatment for Netscape's browser and Microsoft's browser. But the government recently asked that the judge hold a separate hearing on remedies, if it wins the case. The remedies under consideration now include more basic changes in Microsoft's business practices _ perhaps even a breakup of the company _ intended to loosen Microsoft's grip on computing. That would be precisely the kind of sweeping reform that Microsoft's foes would applaud. ``The government has doubled the bet and doubled the stakes,'' said David Yoffie, a professor at the Harvard business school who is co-author of the book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft.'' Meanwhile, in the Microsoft camp, the government's strategy is dismissed as a desperate act _ taken after a court ruling in June that threatened to undermine the antitrust suit. That ruling came in a separate case, involving the interpretation of the consent decree that Microsoft signed with the Justice Department in 1995. In the June ruling, a federal appeals court said that Microsoft could bundle its browser with its industry-standard Windows operating system and call them one product. The appeals-court ruling would seem to undercut the assertion in the government's current antitrust case that the browser and the operating system were two separate products, bundled together and given away in an effort to thwart competition in the browser market. ``With the appeals-court ruling in June, the government lost the heart of its case,'' said Charles Rule, a former senior official in the Justice Department, who is now a consultant to Microsoft. ``So it has taken a blunderbuss approach of scrambling to throw everything it can find _ even evidence the Justice Department has had for years _ into the gun barrel and see what hits.'' The June appellate ruling did shake the prosecution team. But mostly it strengthened the hand of those within the Justice Department who had been urging that the case be broadened, according to people who have worked on the investigation. At the same time, they say, new evidence was coming in as the investigation moved ahead and prosecutors raced to meet the accelerated trial schedule approved by the court. Speed was a priority from the outset, they say. The Justice Department and the states filed their suit in May to move before Microsoft's new operating system, Windows 98, was introduced in June. While not seeking to block the release of Windows 98, government lawyers wanted to get to the the courtroom as early as possible as PC makers and computer users adopt this latest version of Microsoft's Windows operating system, which functions as the central nervous system for more than 90 percent of personal computers sold. The key allegations, government lawyers note, have not changed since May _ namely, that Microsoft illegally used its market power in operating systems to defend its monopoly position and to try to extend into new markets. ``But the only thing that was wrapped up in a bow in time for the May filing was the browser,'' said one person who worked on the case. ``The real game plan was always to get a broader case.'' What is more, one person noted, the prosecution team was not at full strength until shortly before the suit was filed. David Boies, a renowned courtroom litigator and a former partner at Cravath, Swaine & Moore who successfully defended IBM in its 13-year confrontation with the government, was named as special counsel for the Justice Department last December. But Boies, who left Cravath last year, did not start working full-time for the Justice Department until mid-April, because he was still finishing private cases for his own firm, Boies & Schiller. The antitrust suit filed in May leaned heavily on the Netscape story, mentioning Microsoft's main rival in the browser market some 130 times in the complaint and a supporting memorandum. But it also prominently mentioned Microsoft's tactics against Sun Microsystems, creator of Java, an Internet programming language, and cited it as an ``example'' of Microsoft's behavior. ``It was crafted as a template that could be added to without much stretching,'' one person involved in the case said. And so, as new evidence piled up and seemed to fit into a pattern, Klein step by step approved the widening of the case, the person said. And that explains, the person continued, how it is that evidence that has been in the hands of the Justice Department for years has been added to the case since May; only after gathering new evidence did it become apparent that the older material fit the pattern of the current case. For example, the government has added the contention that Microsoft pressured Intel Corp., the big microchip maker and a close partner of Microsoft, to curb its development efforts in multimedia and Internet software because they might conflict with Microsoft's plans. The government contends that the arm-twisting occurred at meetings between the two companies three years ago, especially one on Aug. 2, 1995, which was attended by Andrew Grove, the Intel chairman, and Bill Gates, the Microsoft chairman. Part of the government's evidence in the Intel-Microsoft episode is copies of the handwritten notes taken by Steven McGeady, an Intel vice president who attended the meetings, and a memo written by him on Aug. 28, 1995. The memo, still under court seal, said that Gates ``made vague threats'' and was ``livid'' about Intel's investments in the Internet ``and wanted them stopped.'' A handwritten note, also under court seal, quotes Paul Maritz, a Microsoft executive, as saying that Netscape is their ``common enemy'' and that Intel's role should be to ``fill in stuff in and around Microsoft's strategy.'' These documents were sent by Intel to the Justice Department's office in San Francisco in November 1995, in response to a Civil Investigative Demand _ a civil subpoena _ served on Intel on Nov. 10, 1995. On its own, the Intel material was intriguing, but it became part of the antitrust suit only as other evidence surfaced, one person close to the case said. The government is contending that Microsoft also tried to urge Apple to stop selling its Quicktime multimedia software in the Windows market and tried to convince Real Networks Inc. to pull back in the market for so-called streaming software. The government case has also broadened, people involved in the case say, as more witnesses from the industry have been increasingly willing to testify. ``In the beginning, most people in the industry believed that the government would lose and Microsoft would retaliate if they came forward,'' one person said. ``But as the strength of our case was perceived to improve, more people were willing to come forward, and things snowballed. You get Intel, it's easier to get Apple and so on.'' ||||| The government's antitrust scrutiny of Microsoft, the world's largest independent software company, has spanned Republican and Democratic administrations and involved hundreds of government lawyers and investigators. But it has by no means been an example of consistent, coordinated public policy. Nor, by all accounts, of politics. Instead, like the software industry itself, the government's pursuit of Microsoft has taken leaps, hit dead ends and evolved in ways no one could have controlled or predicted back when it started in 1989. It was in November of that year, on a hot afternoon at a computer-industry convention in Las Vegas, Nev., that Bill Gates, Microsoft's chairman, looked like he'd been dragged to the news conference with a senior executive from IBM _ which at the time dominated Microsoft and the entire computer industry. The two companies _ IBM, then the leading maker of personal computers and Microsoft, the leader in PC operating system software _ were collaborating on the design and marketing of a new operating system called OS/2. But Microsoft was also beginning to sell a competing product, Windows. The industry trade press was full of worried articles: which system was going to become the new standard? With Gates standing uncomfortably at his side, James Cannavino, an IBM divisional president, said that the two companies wanted to ``clear the air.'' OS/2 was the future, he said. As for Windows, he added, it would remain a niche product for under-equipped computers. Windows, he asserted, would never receive all the advanced features of OS/2. Gates certainly did not look happy. But he did not disagree. The news conference got little attention, just a few articles deep inside newspapers and trade publications. But a few weeks later, Norris Washington, a senior antitrust lawyer with the Federal Trade Commission, happened to read one of those articles, in Byte magazine. ``IBM and Microsoft have now defined their unified vision of graphical operating environments,'' the article said, ``and it looks sort of like a U.S. economic model,'' divided into lower-, middle- and upper-class products. As Washington saw it, IBM and Microsoft were colluding to divide the operating-system market _ a potential violation of antitrust law. Soon the FTC staff opened an investigation of Microsoft and IBM And since that small first step, Microsoft has been under unrelenting scrutiny from federal antitrust investigators for a constantly evolving series of allegations and charges, month after month, year after year, for the last nine years. Now comes the antitrust trial scheduled to begin on Monday, with a multiplicity of charges woven of threads drawn from more than a dozen different investigative inquiries during that nine-year span. Microsoft, today the most feared company in the software business and carrying a stock-market value of nearly $234 billion, presents a huge and highly visible antitrust target. Yet, while the company's allies ask, ``What is the Clinton administration's political agenda in going after Microsoft?'' the answer seems to be there is none. In interviews, more than a dozen current and former senior antitrust officials _ whether friends of the government or of Microsoft _ all say the Justice Department's antitrust suit is a natural outgrowth of the previous investigations. As for politics, all the officials agreed that the antitrust division operates independent of the administration's political considerations. Charles Rule was the assistant attorney general who headed the antitrust division during the Bush administration, and he is now a Washington lawyer who serves as an adviser and advocate for Microsoft. ``When I was there,'' Rule said of his Justice days, ``the White House was punctilious in terms of never getting involved in whatever we decided to do. There was no communication between antitrust and other branches of government.'' Asked if he believed that policy had changed under the Clinton administration, he said: ``Not really. I've seen nothing to suggest it.'' Joel Klein heads the antitrust division now, and in an interview dealing with his division's role in the Clinton administration's technology policy, not specifically relating to the Microsoft case, he said: ``There is no statutory restriction, but as a practical matter, civil and criminal prosecutions are invariably carried out without any political contact.'' Klein said, by way of examples, that he might discuss merger cases involving military or aviation industries with the Defense Department or Transportation Department. ``But never the White House,'' he said. ``For a significant case, we might call the White House and say `An hour from now we are going to hold a press conference.' '' ``The last time there was any interference,'' he added, ``was the Dita Beard-ITT case.'' Mrs. Beard, a lobbyist for ITT Corp., was accused in 1972 of having written a memo saying that a $400,000 donation to the Republican National Convention had ``gone a long way'' toward settling antitrust suits brought against the company by the Nixon administration's Justice Department. The authenticity of the memo was never proved, and Mrs. Beard always denied writing it. In any case, Klein says, ``since Watergate, it's been immaculate.'' In the case of Microsoft, neither President Clinton nor Vice President Al Gore has ever volunteered a comment. In answer to a question during a news conference in May, just before the suit was filed, Clinton said: ``I have taken the view that I should not comment on matters within the Justice Department. At this time, I do not think I should depart from that policy on this case, even though it obviously will have a big impact on an important sector of our economy. But I have to say, based on what I know to date, I have confidence in the way the antitrust division in the Justice Department has handled the matter.'' Since then, Clinton has said nothing else about the case, publicly at least. And Gore, who generally represents the administration on technology issues, has never commented at all. In Rule's opinion, the administration would be foolish to involve itself, even if it were politically acceptable to do so. ``It would be a little odd for the administration to push the Justice Department in this suit,'' he said. ``It would be a policy mistake and a political mistake. I would be hard pressed to explain why they would do that.'' Taking sides in the highly charged technology world is dangerous, particularly since the Democrats rely on Silicon Valley companies for political donations and support. In fact, the present and former government officials all said the suit was simply a natural extension of the inquiries conducted during the last nine years. They began at the FTC. Soon after Washington read that article in Byte, the FTC staff opened an investigation of the Windows-OS/2 question. But as has happened so often in the following years, turns in the market made the initial inquiry irrelevant. Microsoft abandoned its agreement with IBM, and Windows quickly grew to be the industry standard, while OS/2 remained a cipher. But as that issue faded, once government investigators began looking at Microsoft they found other things that troubled them. In 1991 Washington, who still works for the FTC, informed Microsoft that the investigation was being expanded. The agency, his letter said, was now trying to determine whether Microsoft was using its dominant position in operating-systems software to stifle competition in other areas. That general idea lies at the heart of the present suit. One former senior FTC official said the commission staff had confidence in the case but realized that the Reagan-era commissioners, who had to approve any suit, might have a different view. ``We knew the commission might have difficulty with a monopolization case,'' the former official said. ``They hadn't brought a case in years.'' And in fact, in 1993 the commission voted 2-2 on the question of whether to file formal charges. The deadlock served as a dismissal. Then, a few months later, the Justice Department decided to pick up the case. ``It was farther along than most cases we got,'' recalled Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. ``Usually a case would be two or three people complaining and a few documents,'' he said. ``But this was a fully researched record. They gave us the files and briefed us on what they had done.'' The Justice Department lawyers picked up the same thread. ``The general idea behind our inquiry,'' Litan said, ``was that they should not be allowed to use their monopoly in operating systems to cement a monopoly in other areas.'' In 1995, Microsoft and the government reached a consent agreement in which the company promised to stop forcing PC makers to buy one copy of a Microsoft operating system for every computer sold _ instead of one for every computer on which the operating system, MS-DOS or Windows, was installed. The company also agreed to stop tying the sale of one software product to the sale of another. The charges in the present suit are similar in many ways. Even with the agreement, the government investigations continued. That same year, Justice Department investigators showed up at the offices of Netscape Communications Corp. for the first time to ask questions about their next line of inquiry. ``America Online had been complaining,'' a senior Netscape executive recalled, ``because Microsoft was bundling the Microsoft Network,'' a competing online service, ``with Windows.'' Once more, market forces overtook the investigation. The Microsoft Network never grew particularly popular while America Online prospered and grew. But, not surprisingly, new complaints filled the void. In May 1995, Anne Bingaman, the assistant attorney general who headed the antitrust division, remarked: ``We get complaints about Microsoft all the time. We have become a kind of Microsoft complaints center. And we take them very seriously.'' In 1996, Netscape's first complaint arrived. In a letter to the Justice Department, Netscape said that Microsoft was using its dominance in personal-computer operating systems to force or persuade computer makers to favor Microsoft's browser, used to explore the World Wide Web, over the one marketed by Netscape. The next year the Justice Department formally charged Microsoft with violating the consent agreement by tying sales of Windows to installation of the company's Web browser on new computers. ``It seemed like a slam-dunk violation of the consent decree,'' a natural extension of that case, recalled Litan, who had left the department by then. A Federal District Court judge agreed, but an Appeals Court panel overturned that ruling this summer. In the meantime, last May the Justice Department and 20 state attorneys general filed their new suit against Microsoft, which is scheduled for trial on Monday. It contends that Microsoft has engaged in bundling, tying and other predatory behavior similar in many ways to the numerous previous allegations and investigations of the last nine years. ``A good part of this case is just Round II of the case we dealt with in Round I,'' in the early in the 1990s, Litan said. Or, as the former senior FTC official put it, ``there's certainly a common thread that runs all the way through here.'' But through the years that thread has been twisted, pulled and spun by hundreds of different hands. ||||| Microsoft Corp. has said that material in an unpublished book by two business school professors will be a crucial part of its defense in the antitrust trial scheduled to begin next week. But judging from an advance copy of the manuscript, the Justice Department and 20 states that are suing the software giant will find support for their arguments in the book as well. To cite one example, Microsoft contends that its industry-standard Windows operating system and its Internet Explorer browser are a single integrated product. In its suit, the government asserts that they are two separate products that Microsoft bundled together to get an unfair edge over its rival, Netscape Communications Corp., in the market for software used to browse the Internet's World Wide Web. In ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft,'' the authors, Michael A. Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David B. Yoffie of the Harvard business school, quote a Microsoft executive as saying that only with the third version of Microsoft's browser was it integrated with Windows. Microsoft hurried its first browser offerings into the market, the book says, in its race to catch up with Netscape, then took a more ambitious approach with Internet Explorer 3.0, which was introduced in August 1996. In that version it changed its software design to use programming modules, or components, that could be put together and rearragned like building blocks. In the book, Ben Slivka, a Microsoft general manager, is quoted as saying, ``IE 3.0 was the key thing because we did the componentized browser,'' He added, ``We really made Internet Explorer part of the Windows platform.'' The timing could be legally significant because in its suit the government cites as evidence requests before August 1996 by personal computer makers that wanted to load Netscape's browser on their machines instead of Microsoft's browser. Microsoft denied the requests, insisting its browers and Windows were a single, integrated product. Microsoft's legal team obtained an early manuscript of the new book last month, by issuing a subpoena to a Netscape executive who was given a confidential copy by the authors to review. Microsoft has also sought the transcripts of 44 current and former Netscape employees interviewed by the authors. A federal judge in Boston last week denied Microsoft access to that research materials, but the company may appeal the ruling. The new book, published by the Free Press imprint of Simon & Schuster, is being hurried into print so it can be shipped within days of the start of the Microsoft trial on Oct. 19. But already, a few quotes from Netscape executives have leaked out. The authors decided to send the complete manuscript to The New York Times and three other news organizations Monday, so that the material could be read in context. Microsoft intends to use material from the book as evidence that Netscape's troubles resulted largely from its own missteps rather than from any alleged predatory practices by Microsoft. The book does detail where Netscape stumbled, shifting its strategy too often and running into obstacles in its software development efforts. In private antitrust suits, the argument that the competitor was his own worst enemy is an established defense. But legal experts say that defense may well be far less effective in a federal case in which the government is seeking court-mandated changes in Microsoft's business practices rather than the monetary damages that are the goal of plaintiffs in private cases. ``It seems to me that this debate over Netscape's mistakes is a total sideshow,'' said Robert Litan, a former senior official in the Justice Department's antitrust division, who is now at the Brookings Institution. ``But Microsoft has a big legal team, and it seems they are working on every defense they can find.'' The book quotes a former Netscape executive, Ram Shriram, as saying the company bungled a chance to win a sizable share of the browser business from America Online Inc. But that was a second-chance to do a deal with America Online, the leading online service. The government's case focuses on an earlier deal in March 1996, when America Online chose Internet Explorer as its preferred browser; in that bargain Microsoft agreed to place a startup icon for the online service on the main Windows desktop screen _ the prime real estate in computing. For a book entitled ``Competing on Internet Time,'' it is intriguing that one of its central themes is that Netcape got too wedded to the notion that the Internet revolution would change everything quickly. Microsoft, by contrast, stuck to its three-year planning horizon that enabled the company, the authors write, to ``mesh its short-run tactical plans with a broader strategic view of how to win the war.'' The book quotes Steve Ballmer, Microsoft's president, as saying, ``The fact of the matter is that customers can't take cataclysmic change every three months. The organization also can't. You can ship products quickly. But you can't say, `Oh, we have a radically new strategy' every three months.'' ||||| Following is the text of the first two sections of the Sherman Act, as passed by Congress in 1890. As the foundation on which federal antitrust law has been built, the act has been amended several times _ elevating the crime to a felony, increasing the fines and prison terms for individuals and setting fines for corporations convicted of violating it. In the case of Microsoft, the government has invoked the Sherman Act to file a civil suit that seeks to change the company's business practices, not a criminal suit that seeks financial penalties. An Act to Protect Trade And Commerce Against Unlawful Restraints and Monopolies: Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. Section 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade of commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. ||||| The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law.

The government suit against Microsoft is the most aggressive antitrust case in a quarter century. The heart of the case is the Internet browser battle between Microsoft and Netscape. Microsoft says that its Internet Explorer is an integral part of its Windows system, the industry dominant operating system. Microsoft, it is argued, has told computer manufacturers that if they want Windows, they must forgo Netscape. The Justice Department and 20 states are joined in the action brought under the Sherman Antitrust Act. Microsoft's chairman, Bill Gates, usually seen as a visionary is portrayed in much darker tones in the trial.

The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law. ||||| The legal tool that the government is using in its assault on Microsoft Corp. _ the Sherman Antitrust Act of 1890 _ is brief, vague and malleable. The combination has meant that this bedrock statute of antitrust policy has been at turns toothless and powerful over the years, depending on the politics and economics of the day as interpreted by the courts. Sponsored by Sen. John Sherman, an Ohio Republican who was the younger brother of the Civil War general William Tecumseh Sherman, the act was passed as a nod to a popular backlash against the rise of the industrial trusts in oil, steel and railroads. Farmers, laborers and small-business owners _ sizable voting groups _ resented the trusts as vehicles of concentrated power. But the trusts, large national holding corporations, were viewed by many others as engines of modernization and industrialization. Economists at the time opposed the Sherman Act, and the law that Congress passed was a vaguely worded compromise. No one knew what impact it would have, but one senator, quoted in Matthew Josephson's ``The Robber Barons,'' explained that nearly everyone agreed that ``something must be flung out to appease the restive masses.'' The act's two key provisions, Sections 1 and 2, mention ``conspiracy,'' ``restraint of trade'' and ``attempt to monopolize.'' Yet while the Sherman Act is now interpreted as the Magna Carta of competition, it never uses the term. After it was passed, critics of the trusts derided the ``impenetrable'' language of the Sherman Act and called it the Swiss Cheese Act. But by the early 1900s, the political climate had changed. The growing antagonism for the trusts, especially as income gaps widened, was tapped by an avowed trustbuster, Theodore Roosevelt, who became president in 1901. ``The Sherman Act has always been an elastic piece of social legislation, used to attack perceived exploitation and the aggregation of power,'' said Eleanor Fox, a professor at the New York University Law School. The model trust _ and the principal target of the trustbusters _ was Standard Oil. Shrewdly, Roosevelt made a distinction between good trusts, which thrived because of their superior efficiency, and bad trusts, which grew not as the result of inevitable economic forces but because of unfair business practices. Throughout the 1880s and '90s, Standard Oil's rivals had complained about the company and the business practices of its founder, John D. Rockefeller. But during those years, the price of kerosene _ burned to light the nation's homes _declined steadily. So Standard Oil, it could could reasonably be argued, was an ``enterprising monopoly.'' In the early 1900s, though, Standard Oil raised prices in the United States to prop up its profits at a time it was engaged in a price war against Royal Dutch/Shell in Europe, where Standard Oil did face genuine competition. When consumers were hurt by the Standard Oil monopoly, popular support for antitrust action against the company swelled, encouraged by Roosevelt and his successor, William Howard Taft. The federal suit against Standard Oil was filed in 1906, and the Supreme Court approved the breakup of the company in 1911. Standard Oil and the Microsoft case, historians observe, have some common themes. Both were dominant companies of their day, and Bill Gates, the Microsoft chairman, has been called a modern Rockefeller. ``But there is no presidential involvement and there is no real consumer dissatisfaction in the Microsoft case,'' said Ron Chernow, author of ``Titan,'' a best-selling biography of Rockefeller. ``And Rockefeller,'' Chernow added, ``never went through the kind of honeymoon period of widespread public adulation and favorable press coverage as Bill Gates has had.'' ||||| Will it matter to consumers that Bill Gates isn't a nice guy? Until last week, most Americans thought of Gates, the chairman of the Microsoft Corp., as a genius and innovator. A nerd perhaps _ but also a self-styled visionary who almost single-handedly unlocked the power of the personal computer. Monday, however, in a Washington courtroom, the Justice Department began painting a different, darker portrait of Gates. In an antitrust suit brought by the department and 20 states, the man whose company commands a 97 percent share of the market for personal computer operating systems is being depicted as a Nixonian schemer who will go to almost any length to crush his competition. Product innovation, the suit argues, is not a sufficient weapon for Gates. Flashing back and forth between snippets of Gates' videotaped deposition and e-mail messages he had sent that contradicted his testimony, the government sought to establish a pattern of threats and offers of payments by the Microsoft chairman. It also sought to cast Gates as an obsessed man who feared the tiny Netscape Communications Corp. and its potential threat to his domination of the market for Internet browsers, the software used to navigate the World Wide Web. Gates was portrayed by Justice Department litigator David Boies as a schoolyard bully who rides roughshod over the computer industry with a crudeness that is in stark contrast to his popular image as a benevolent dictator and high-technology guru. According to a document presented by Boies, for example, Gates asked America Online executives in 1996: ``How much do we need to pay you'' to damage Netscape? ``This is your lucky day.'' The implication, Boies said, was that the amount was irrelevant, and that Microsoft, with its deep pockets and market dominance, makes as many ``offers you can't refuse'' as needed to achieve its goals. Microsoft officials are closely watching market surveys for any hint that the new image of a bare-knuckled Gates might be detracting from the company's world-famous brand name, but they insist that the public will continue to draw a distinction between allegations of anticompetitive business tactics and the company's software. ``Despite what you're reading in the press, people judge us by our products,'' said Mich Matthews, head of Microsoft's corporate public-relations office. ``Our experience is that people vote with their pocketbooks.'' So far, consumers are casting positive votes. Last week Microsoft reported quarterly profits of $1.52 billion, a stunning 58 percent increase over the level a year earlier. Despite the record profits, some marketing experts say that if the public comes to view Gates as a Rockefeller-style robber baron, his company and its brand name may suffer. ``When you have a company with such a visible chief executive, the CEO is really the driver of the brand,'' said David Aaker, a brand marketing expert at the Haas School of Business at the University of California at Berkeley. ``There is no question this is going to affect Microsoft's brand recognition.'' Already there are early warning signals, as political cartoons in newspapers across the country bashed Gates last week. One showed him holding a globe and saying, ``If you don't play my way, I'll take my ball and go home''; another portrayed the Microsoft chairman standing next to a henchman dangling someone from a window while a Microsoft secretary says to a caller, ``I'm sorry, but Mr. Gates is busy teaching a competitor about Windows.'' But some industry analysts believe the new view of a Bill Gates who knows how to play hardball may not be such a bad thing for his company. The he-said, she-said round of e-mail messages being dragged out in court cases both in Washington and in Silicon Valley, where Microsoft is locked in a legal battle with its archrival, Sun Microsystems Inc., is viewed by some as little different from the exaggerated trash talking that goes on in professional sports. ``It's like taking what Charles Barkley and Michael Jordan say to each other on the ball court'' and turning it into something more sinister than it really is, said Paul Andrews, co-author with Stephen Manes of ``Gates'' (Doubleday, 1993). Indeed, there is evidence that the darker view of Gates and his company has so far taken root only in the District of Columbia and in Silicon Valley, where the computer industry has long felt the impact of Gates' tactics, and where bitterness and distrust of Microsoft are deep. In the rest of the country, Gates continues to enjoy great popularity. Two weeks ago, while speaking before a crowd of almost 7,000 students at Indiana University, a questioner who asked about the Justice Department's suit was roundly booed. BILL GATES, WHIPPING BOY c.1998 N.Y. Times News Service Is Bill Gates a high-tech Machiavelli, Public Enemy No. 1 or a threat to the known universe? All three, judging from the numerous political cartoons that popped up in newspapers across the country last week. From Chattanooga to Boston, cartoonists took delight in demonizing Gates, who is facing an unexpected public relations challenge as Microsoft's antitrust trial unfolds in Washington. Other cartoons ran the gamut from the predictable (a worker, pointing to an aquarium in which a large fish is gobbling up smaller ones, saying to some visitors, ``Welcome to Microsoft's research and development department'') to the weird (a dweebish man hunched in front of a computer screen staring at the words: ``Our beloved leader, Mr. Gates, is under attack. Leave your possessions. Go to the desert. Await the spaceship''). And that was just Week One of the trial. Stay tuned. ||||| A federal judge Friday pushed back the starting date of the antitrust trial against Microsoft Corp. by four days, to Oct. 19, while also ordering the company to comply with the Justice Department's request to examine Microsoft's financial records. Microsoft argued that allowing ``an army of government attorneys to come in and make demands will make it very difficult for us to remain in business.'' But after winning assurances from government lawyers that they would make only narrow, targeted searches of the records, Judge Thomas Penfield Jackson of the U.S. District Court for the District of Columbia ordered Microsoft to open the database for perusal. Microsoft had asked that the trial be delayed several more months to prepare a defense against what it said was a last minute broadening of the case by the Justice Department, which had added new evidence. Last month, the government said that in the process of preparing for the trial it had discovered that Microsoft tried to persuade Apple Computer not to market its Quicktime multimedia software to Windows customers. On Thursday, the Justice Department and 20 states added two new people to their witness list to testify about Microsoft dealings with Apple and with Sun Microsystems. Avi Tevanian, a former Apple executive, was added to the witness list in part to describe Microsoft's proposal, which Microsoft denies ever having made. The other new witness was James Gosling, a Sun executive who led the development of Java, an Internet programming language that Microsoft sees as a potential threat to the company's dominance of the software market. The government is charging that Microsoft took illegal steps to prevent Java from gaining wide acceptance. To counter that, Microsoft named two new witnesses Friday, Robert Muglia, a senior Microsoft executive who has worked with Sun, and Chris Engstrom, an executive who handled some of Microsoft's dealings with Apple. At the same time, John Warden, Microsoft's lawyer, argued that the new allegations had no place in the case. The Justice Department, Warden told the judge, was ``trying to turn this into something approximating a plenary monopoly case like the IBM case.'' ``It becomes clearer and clearer and clearer with each new filing that they are trying to turn this into a broader case,'' he said. ``You can't have this bait-and-switch in which they file a complaint alleging A, B, C, and then talk about the whole alphabet three times over.'' As a result, Warden said, Microsoft wanted, at a minimum, another two-week delay, even though ``a more normal schedule'' would have the trial start next year. The judge did not respond. Instead he entered an order setting the Oct. 19 trial date. Late Friday, Microsoft entered a formal motion asking for another two-week delay. A response is expected next week. ||||| In the summer of 1995, a whiff of revolution was in the air in Silicon Valley. The Internet offered a new deal in computing, a fresh opportunity for entrepreneurs to try to break Microsoft Corp.'s firm grip on the personal computer software business. Leading the challenge was Netscape Communications Corp., whose software for browsing the World Wide Web had ignited the Internet boom. Netscape chairman James Clark spoke boldly of attacking Microsoft head-on. He borrowed imagery from the movie ``Star Wars,'' referring to Microsoft as the Death Star and Netscape as the leader of a rebel alliance. Microsoft answered with a vengeance. It dispatched hundreds of programmers to work on a competing browser and poured many millions of dollars into marketing it. It prodded computer makers and others to distribute its browser, folded the browser into its industry-dominant Windows operating system and gave the browser away free _ a campaign intended to ``cut off their air supply,'' as a senior Microsoft executive described it. But not only competitors like Netscape have encountered Microsoft's force. Microsoft's partners, its corporate customers and professional investors who finance new ventures have all collided with it. A close look at Microsoft's no-holds-barred push into the Internet software business offers a window into the ways the company uses its market muscle to influence the behavior of virtually every player in the industry. Some of the cases recounted here figure prominently in the suit brought by the Justice Department and 20 states, scheduled to go to trial this month, charging that Microsoft at times went too far _ and violated antitrust laws. Regardless of the legal outcome, previously unreported details about incidents in the suit and the other examples provide a more complete picture of Microsoft in action. _ When Compaq Computer Corp. considered loading Netscape's browser instead of Microsoft's on its personal computers, Microsoft threatened to stop selling its Windows operating system to Compaq. The company quickly changed its mind. _ After Spyglass Inc. began supplying Microsoft with its early browser technology, Microsoft announced that it would give away its browser free. The timing came as a rude surprise to its partner Spyglass. The company lost most of its revenues almost overnight, as the technology, which it had also been licensing to companies besides Microsoft, suddenly became available free. _ When America Online Inc., which competes fiercely with Microsoft's online service and electronic commerce divisions, went shopping for browser technology, Microsoft made an offer that was too good to pass up: If America Online used Microsoft's browser as the main one for its millions of subscribers, Microsoft would give America Online prime placement on the desktop screen of all personal computers using Windows. _ When Intel Corp. began developing its own Internet software, Microsoft complained. Intel, the leading maker of the microprocessors that serve as the electronic brains on most personal computers running Windows, pulled back. The chip maker decided that its lucrative hand-in-glove partnership with Microsoft took priority. _ Microsoft's reach in computing has become so pervasive that nearly every year now, Silicon Valley's top venture capitalists meet privately with a team of top Microsoft executives to learn about the company's plans. The goal, one venture investor observed, was to ``stay out of the way of the steamroller.'' Microsoft adamantly denies that it has broken any laws in these or similar situations. The company plays the game of business hard, and its executives acknowledge that without apology. Yes, Microsoft says, rivals may suffer and partners may be irritated occasionally. But the company insists its actions are guided by its main corporate goal of bringing new technology inexpensively and conveniently to the millions of people who use its software. Most people in the computer industry say that living in Microsoft's world means routinely making accommodations to it. Microsoft's power emanates from its near-monopoly on the market for personal computer operating systems, the master control programs that run computers. ``Because it owns the operating system, Microsoft is the essential utility of the information age,'' said James Moore, president of Geopartners Research Inc., a technology consulting firm. ``It acts as a kind of gatekeeper to the pipeline of computing innovation, sitting there and deciding whether to help some innovation or slow it down.'' For months, Microsoft and Netscape had talked on and off, circling each other warily. But the event that would define them as unflinching rivals was a meeting on June 21, 1995, in a second-floor conference room at Netscape's headquarters in Mountain View, Calif. That meeting, according to the Justice Department and 20 states suing Microsoft, was the high-tech equivalent of the storied gatherings in smoke-filled railroad cars that inspired passage of the nation's antitrust laws a century ago. On that day, they say, Microsoft made Netscape an illegal offer to divvy up the market for Internet browsing software, a collusion pact that Netscape rejected. Microsoft replies that the prosecutors are misinterpreting a routine meeting in the software business and that the company has never tried to divide the browser market. Bill Gates, Microsoft's chairman and principal strategist, did not attend the Mountain View gathering, but he consulted by telephone with the Microsoft team. Two people who did attend that June meeting have been named as witnesses in the trial scheduled to begin next week: Netscape president James Barksdale and Daniel Rosen, Microsoft's general manager of new technology. In the trial, the government will contend that Microsoft presented Netscape with an all-or-nothing offer, according to people who have been questioned in the federal investigation. Relying heavily on notes taken in the meeting by Netscape executive vice president Marc Andreessen and on the testimony of Barksdale, prosecutors are expected to assert that the Microsoft proposal had several elements, both incentives and requirements. Microsoft, according to the people questioned by the government, would invest in Netscape, taking a 15 to 20 percent stake, give Netscape technical information and fine-tune Microsoft's operating systems so that Netscape's software would run better on Windows. In return, the people say, Netscape would give Microsoft a seat on its board, license its technology to Microsoft, give Microsoft advance knowledge of its product-development efforts and not make a browser for the next generation of the Microsoft operating system, Windows 95, which was shipped two months after the June 1995 meeting. And Microsoft, the people added, did what it has always denied it does _ used access to its technology as a powerful lever in business negotiations, by offering Netscape preferential access to the Windows ``application program interfaces,'' or APIs, the links that enable other companies' programs to run smoothly on the Windows operating system. By turning down the deal, Netscape, they say, would not have that preferred access to Microsoft technology _ a threat that Microsoft fiercely denies making. Barksdale, Netscape's 55-year-old chief executive, told a colleague that the encounter with Microsoft in June 1995 was ``the damnedest meeting I've ever attended in 35 years in business.'' Had Netscape accepted Microsoft's offer, it would have had Microsoft's money and its endorsement. Netscape would have also been free to sell its browser for use in earlier versions of Windows and for use on other operating systems like Apple's Macintosh and Unix, a powerful system used mainly in corporations and research labs. ``But if we had licensed our technology to Microsoft and stepped aside, the best we could have hoped for was becoming a company with sales of $100 million or so and hoping to be bought out by Microsoft,'' said Clark, a former computer scientist at Stanford University who founded Silicon Graphics Inc., a computer graphics pioneer, before starting Netscape. ``We didn't start Netscape for that.'' For any company, a meeting with Microsoft is often a charged affair. Every computing device from keyboards to disk drives, and every software program from games to browsers, must mesh smoothly with Microsoft's Windows operating system. This is necessary to make computers reliable and easier to use, but it also gives Microsoft its role as the industry's gatekeeper. And since Microsoft itself makes all manner of software products beyond the operating system, other companies are put in the uneasy position of requiring Microsoft's cooperation to be able to compete against it. And in the software industry, where every program is rendered in the digital code of 1's and 0's, the lines that divide competition and cooperation are often blurred. The talk about that line at the Microsoft-Netscape meeting focused on the division between the operating system _ the ``platform,'' in computer terms _ and the application programs, sometimes called ``solutions,'' that run on top of the operating system. The government suit states that in sworn testimony, Chris Jones, a Microsoft manager who attended the meeting, ``admitted that Microsoft `absolutely' intended to persuade Netscape not to compete.'' Microsoft reads Jones' testimony very differently, as evidence mainly of the company's clarifying its position. If Netscape stayed on the applications or solutions side of the operating system, the two companies could be partners, Microsoft said. But if Netscape tried to become a player in the platform space, they would compete. Microsoft released portions of the Jones deposition in September as evidence that the government had quoted the Microsoft manager out of context. Q. Do you recall any discussion about a desire of anybody on the part of Microsoft who was participating to be able to persuade or influence Netscape not to compete? A. Absolutely. But again, persuade in the sense of force or persuade in the sense of, hey, we think we can have a great business relationship together. Later in the deposition, a Justice Department lawyer asked Jones whether any of the Microsoft executives intended to suggest that ``there would be any consequences to Netscape or its business if Netscape chose to go in the platform direction you've described earlier as opposed to the solutions direction.'' Jones replied: ``The conversation was something like the following: `We're in the platform business. We're going to invest heavily in this part of the platform because we feel it's critical to our technologies. That's a done deal.' And we're asking them: `What is your business? Is your business platforms or solutions? If it's platforms, we're in the platforms business. We're competing.''' Microsoft portrays such comments as innocuous statements of fact. But to Netscape, the same remarks could be taken as a warning, if not a threat. This is because Internet browsing software had the potential to become an alternative platform to the Windows operating system. The browser, sitting on top of the operating system, could supplant Windows as the main desktop screen on users' machines and the main layer of programming for starting other software applications. In addition, Netscape's browser could serve as a powerful platform for distributing and running Java, an Internet programming language developed by Sun Microsystems Inc., a Microsoft rival. In technical terms, Netscape's upstart platform could replace Microsoft's APIs as the essential utility of computing. Indeed, Andreessen had boasted in public of Netscape's ambition to relegate Microsoft's Windows to so much software plumbing underneath the browser. By the June meeting, Microsoft certainly viewed Netscape as a serious potential challenger to Windows, the corporate crown jewel. On May 26, 1995, in an internal memo, ``The Internet Tidal Wave,'' Gates wrote: ``A new competitor `born' on the Internet is Netscape. Their browser is dominant with 70 percent usage share, allowing them to determine which network extensions will catch on.'' Netscape's strategy, Gates wrote, was to ``move the key API'' into the browser ``to commoditize the underlying operating system.'' THE BROADER INQUIRY: GOVERNMENT SEES ARM-TWISTING The federal government and the states have recently broadened their allegations against Microsoft by adding evidence that it tried to bully Intel, Apple Computer Inc. and other companies to squelch competition. They say that like the Netscape meeting the new evidence fits a pattern of behavior by Microsoft, which has repeatedly tried to limit competition by strong-arming competitors and partners. One episode that fits the pattern, the prosecutors contend, was an effort by Microsoft to pressure Intel to shelve the development of multimedia and Internet software and to limit its cooperation with Netscape. Intel's main business is making the microprocessor chips that act as the electronic brains of most of the computers that run the Windows operating system. Indeed, the fortunes of Intel and Microsoft are so closely aligned that the two companies are sometimes referred to as a single, powerful entity, ``Wintel.'' But Intel also employs hundreds of software engineers, mainly at its Intel Architecture Labs in Hillsboro, Ore. And while Intel and Microsoft are partners, they have also had their conflicts, typically over the direction and pace at which certain innovations should be introduced into the personal computer industry, which they dominate together. Federal and state investigators have focused on Microsoft's strong reaction to work being done by Intel's software engineers _ a sentiment expressed in no uncertain terms during a meeting at Intel's Santa Clara, Calif., headquarters on Aug. 2, 1995. The contentious session was attended by several executives from Intel and Microsoft, including Gates and Intel chairman Andrew Grove. An internal Intel memo stated that Gates made ``vague threats'' about supporting Intel's competitors and that he was ``livid'' about Intel's ``investments in the Internet and wanted them stopped.'' Later, Intel did pull back from its multimedia and Internet software development. Steven McGeady, an Intel vice president who attended the August 1995 meeting, is scheduled to appear as a witness for the government. Microsoft replies that the government's accounts of meetings like those with Netscape and Intel are fanciful distortions, created by using a biased selection of documents and witnesses. The government's case, Microsoft asserts, betrays an utter failure to accept the computer-industry reality that Microsoft routinely meets with companies to make sure their software and equipment will work well with Windows. Sometimes the talks, Microsoft says, go on to include further levels of cooperation like licensing technology or a Microsoft investment, as the company discussed with Netscape. In the trial, Microsoft is expected to argue its advance in the browser market was the result of its own business acumen and Netscape's missteps. To document Netscape's errors, Microsoft issued a subpoena last month and obtained the unpublished manuscript of a new book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft,'' which is based on hundreds of interviews with current and former Netscape executives. The book does chronicle the mistakes made by Netscape. But its authors, Michael Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David Yoffie of the Harvard Business School, think Microsoft is hardly blameless. ``Microsoft's take-no-prisoners strategy backfired, all but inviting retaliation from competitors, the government and even customers,'' Yoffie said. Emphasizing that he was offering no legal judgment, Yoffie added, ``I think Microsoft could have achieved 90 percent of what it did without crossing the line as much as it did.'' THE SPYGLASS LINK: REWARDS AND PERILS OF A PARTNERSHIP On April 6, 1994, Gates and 20 Microsoft executives gathered for a daylong retreat not far from the company's headquarters in Redmond, Wash. The subject was the Internet and how it might revolutionize the computer software business. Few concrete plans were made that day, but Microsoft executives insist that a direction was set. ``Our vision from the outset was to unite the two worlds of the Windows desktop and the Internet,'' said Steven Sinofsky, a Microsoft executive who attended the meeting. Yet Microsoft badly trailed Netscape in the browser field. To hasten its entry, Microsoft licensed its early browsing software from Spyglass Inc. of Naperville, Ill. The first meeting between the two companies was initiated by Spyglass in April 1994. At the time, it was a tiny company and eager to do a deal with Microsoft. Spyglass was selected as the commercial licensee for browser technology developed by the National Center for Supercomputing at the University of Illinois. In the summer of 1994, Douglas Colbeth, president of Spyglass, met with Clark of Netscape at O'Hare International Airport in Chicago. The two men talked in the United Airlines Red Carpet Room, reserved for business-class passengers, and Colbeth recalled Clark telling him, ``We're going to take Microsoft head-on.'' At the time, Colbeth recalled thinking to himself, ``Great, now Microsoft will really want to license from me.'' Today, he noted: ``Remember, we were a company with a couple dozen people and almost no money in the bank. Netscape had Jim Clark, with his money and reputation, and big-time venture capital backing from Silicon Valley. Netscape had a very different agenda.'' By July 1994, Microsoft had become quite interested in the Spyglass technology, Colbeth says, and the two companies signed their first licensing agreement the following December. Microsoft, Colbeth recalls, always told him that it would eventually fold browser technology into its operating system, but its timing was accelerated by Netscape's rapid rise. ``Microsoft was initially hoping to charge for the browser,'' Colbeth said. But on Dec. 7, 1995, Gates declared that Microsoft would not only deeply integrate its browser into Windows but would give it away. The announcement caught the industry, even Colbeth, by surprise. At the time, Spyglass had licensed its technology to 82 other companies, including IBM and Digital Equipment, for use in their software products _ a licensing revenue stream of about $20 million a year. As a result of Microsoft's move, Spyglass saw those revenues vanish within a year, as smaller Internet software companies went out of business and big customers shifted to Microsoft's free browser. Spyglass slashed its payroll and scrambled into new niches of the software industry to replace its lost sales, which it succeeded in doing eventually. ``Whenever you license technology to Microsoft, you have to understand it can someday build it itself, drop it into the operating system and put you out of that business,'' Colbeth said. THE NONOPTION COMPAQ: SUDDENLY SEES THE LIGHT Well into 1996, Netscape's share of the browser market continued to rise, while Microsoft made little headway, even though its browser was free. Industry analysts and trade magazines agreed that Netscape's browser was the clear technical leader. In April 1996, Netscape's Navigator was used by 87 percent of people browsing the Web, compared with 4 percent using Microsoft's Internet Explorer, according to Zona Research. So the biggest personal computer maker, Compaq, thought it made sense to give customers Netscape's browser instead of Microsoft's. But Microsoft would not stand for that _ and Compaq had no choice but to give in. In June 1996, Compaq wanted not only to load the more popular Netscape browser on its machines but also to remove the icon for Microsoft's Internet Explorer, which was delivered to the computer maker with Windows 95. Microsoft informed Compaq that if it removed Internet Explorer, the computer maker would lose its license for Windows, said Stephen Decker, Compaq's director of software procurement, in testimony to federal investigators. The ultimatum from Microsoft was delivered bluntly in a letter headed, ``Notice of Intent to Terminate License Agreement.'' Faced with being denied the essential operating system, Compaq quickly reversed course and kept the Internet Explorer icon. Microsoft asserts that Windows and Internet Explorer are a single product and that Microsoft alone defines what is in the product. Nothing in its contracts, Microsoft adds, prohibits computer makers from including competing technologies. While the cutoff letter Microsoft sent to Compaq seems an unnecessarily hardball tactic when dealing with its largest corporate customer, Microsoft chief operating officer Bob Herbold insists that ``to take one letter here or one snippet of e-mail there to try to portray Microsoft as an arrogant company is unfair.'' Noting that a Compaq executive is a witness for Microsoft, Herbold said, ``We are totally dependent on tremendous relationships with key companies like Compaq.'' At Netscape, however, the Compaq episode was a watershed. ``That was the singular act that got me going to the Justice Department,'' Barksdale recalled. Barksdale said he regarded Microsoft's tactic of forcing Compaq to buy its browser as a condition of obtaining an essential product, the Windows operating system, as ``an illegal act and absolute proof that Microsoft was a monopolist.'' After investigating the incident, the Justice Department and the states agreed with Barksdale that Microsoft was illegally tying the sale of one product to another. Microsoft replies that it has a long history of adding new features to its operating system. And from the outset, Microsoft says, it intended that Windows and its Internet Explorer browser would be seamlessly integrated, as they are now in Windows 98. Thus, Microsoft insists, there is no product-tying violation of antitrust laws. In a separate case, a federal appeals court sided with Microsoft, upholding the principle that the company could put whatever it wanted to in its operating system and declare it a single product. But in June 1996, when Compaq wanted to offer the Netscape product instead of Microsoft's browser, most industry experts viewed the browser and operating system as two different software programs. ``It took a long time for the integration strategy to play out,'' said a former senior Microsoft researcher. ``Back then, integration was basically bolting a browser onto Windows.'' THE `BALANCING ACT': AMERICA ONLINE TOSSES IN TOWEL America Online chairman Stephen Case refers to dealing with Microsoft as ``a delicate balancing act.'' That balance swung sharply from the fall of 1995 to the spring of 1996, when Microsoft used the lure of giving America Online a featured place on the Windows desktop as the ultimate bargaining chip. To gain access to computing's most coveted real estate, America Online agreed to make Microsoft's Internet Explorer the main browser for its online subscribers, who now number more than 13 million. Yet throughout 1995, as Microsoft prepared to introduce Windows 95, the most significant improvement ever in its operating system, Case was knocking on the door of the Justice Department. His complaint was that Microsoft was going to place its new online service, Microsoft Network, a direct competitor to America Online, prominently on the desktop screen of Windows 95, which was introduced in August. This bundling tactic of using the industry-dominant operating system to market Microsoft Network, or MSN, Case argued, gave Microsoft an unfair advantage in the young but fast-growing online business. The Justice Department listened and investigated. But ultimately, the government decided against taking any action. At America Online's headquarters in Vienna, Va., Microsoft was both feared and loathed at the time. America Online had a designated ``Microsoft watcher,'' a young M.B.A. who tracked its adversary's every move. Above the desk in his small, windowless office was a picture of Gates. Beneath the picture, in large block letters, were the words ``THE ENEMY.'' Though America Online was the clear leader in the online services business, it had ample reason to worry about an all-out assault by a rival as rich and aggressive as Microsoft. When he had visited the Microsoft headquarters a couple of years earlier, Case recalled, Gates had bluntly assessed Microsoft's options by saying he could buy 20 percent of America Online, all of it or enter the online business on his own and ``bury you.'' A threat or merely a statement of the facts? ``A bit of both,'' Case said recently. ``But he was mainly articulating what everybody at that meeting kind of intuitively understood.'' Yet by 1996, Microsoft and America Online found they had reason to cooperate. With the exploding popularity of the Internet's World Wide Web, the conventional online companies, like America Online and Compuserve, had to provide their customers Internet access as well as their own services. America Online had its own browser, but to keep pace with the rapidly advancing technology it made sense to do a deal with Netscape or Microsoft. For both software companies, a deal with America Online, which had 5 million subscribers at the time, could mean a big surge in browser use and market share. Netscape seemed the natural partner for America Online, since both companies were Microsoft rivals. On March 11, America Online did announce that it would buy Netscape technology, but it was a standard licensing deal based on a payment-for-use formula. The next day, America Online announced a more significant deal with Microsoft making its browser the default technology _ the browser America Online subscribers would use unless they specifically asked for Netscape's Navigator. To win the deal, Microsoft offered to give America Online a start-up icon on the Windows desktop _ precisely the kind of equal treatment on the main Windows screen that Case had asked the Justice Department to require of Microsoft. ``After we agreed to its Internet Explorer browser, Microsoft allowed us to be bundled on the Windows desktop,'' Case said. ``It was an example of Microsoft's pragmatic side.'' The pragmatic decision was that the paramount corporate goal was to increase browser market share to protect the mainstay software business. As a result, its new online service, MSN, would have to sacrifice an important marketing advantage over its main rival, America Online. ``It was Bill's decision,'' said former MSN general manager Russell Siegelman, referring to Gates. ``He sent me e-mail on it. He said he didn't think it would hurt MSN that much. I disagreed with him.'' To other Microsoft executives, Gates expressed a different view of the likely impact on MSN. He told senior vice president Brad Silverberg that putting America Online on the Windows desktop would amount to ``putting a bullet through MSN's head,'' according to a deposition taken by the Justice Department. In the antitrust suit, the government asserts that the America Online deal shows how Microsoft used the power of its Windows monopoly to give it an edge in the browser war against Netscape. David Colburn, a senior vice president of America Online who took part in the browser negotiations with Microsoft, is a witness for the government. Today, Microsoft has overhauled its Internet strategy to focus mainly on building popular special-interest Web sites in fields like travel, personal finance, automobile retailing and news. And it is putting these sites, along with e-mail and search features, in an all-in-one site that uses the name MSN.com. ``I still regard Microsoft as a primary threat,'' Case observed. ``Microsoft has a history of getting it right in the long run, and there's no reason to think it won't in this business as well. We will always be in Microsoft's cross hairs.'' THE LESSON: DON'T CONFRONT A STEAMROLLER At Netscape's headquarters in Silicon Valley, the strategy today is one of avoiding head-to-head competition with Microsoft whenever possible. ``Don't do something that is in Microsoft's path _ that's the lesson learned,'' observed Clark, the Netscape chairman. Silicon Valley's venture capitalists, the investors who finance so many of the nation's high-tech startups, generally follow the Netscape formula these days. Yet that still leaves ample room to prosper. For while competing directly with Microsoft is dangerous, the software industry as a whole is an engine of wealth creation, job generation and technical innovation. And there is an ambivalent side to the venture community's relationship with Microsoft. For if a start-up cannot steer clear of Microsoft entirely, the favored option is to be bought out by Microsoft, which has scooped up many fledgling companies as a way of acquiring promising technology and people. ``Microsoft understands start-up innovation and how to co-opt start-up innovation better than any other high-tech company,'' said James Breyer, managing partner of Accel Partners, a venture capital firm. As Microsoft has grown, it has come to be seen not merely as a competitor but as a force of nature that shapes the business environment, like a weather front. ``Microsoft is incredibly pervasive,'' said Stewart Alsop, a partner with New Enterprise Associates, a venture capital firm in Menlo Park, Calif. At the board meetings of the companies in which his firm has invested, two issues always come up, he said: ``One is the price of the company's stock, and the other is what Microsoft is going to do.'' In the last few years, Microsoft has offered its guidance during almost yearly meetings between senior Microsoft executives and leading venture capitalists. The meetings are part of Microsoft's effort to improve its sometimes prickly relations with Silicon Valley. ``We work hard to provide clarity about where we're going and where we're not going,'' said Greg Maffei, Microsoft's chief financial officer. Last year's conference took place in October at the Quadrus office building on Sand Hill Road in Menlo Park, the Wall Street of high-tech venture investing. Maffei led a team of five Microsoft executives who appeared before a group of 40 venture capitalists, one of whom stood and asked the question that seemed to be on the minds of many of his peers: ``How do I invest in a company that stays out of the way of the steamroller?'' Maffei, recalled one person who attended the meeting, stood up and delivered a brief lecture on businesses that Microsoft was likely to avoid. His list included specialized software for manufacturing, human resources management, computer-aided design and others. But, this person noted, broad swaths of the industry appeared to be designated as off limits _ including new software platforms that might compete with Microsoft's personal computer operating system. At one point, Ruthann Quindlen, a partner with Institutional Venture Partners, leaned over to Vinod Khosla, a co-founder of Sun Microsystems and a partner at the venture capital firm Kleiner Perkins Caufield & Byers, and said quietly, ``I guess that leaves us washing machines and toasters.'' ||||| Shortly before the government filed its antitrust suit against Microsoft Corp. in May, Joel Klein, the assistant attorney general in charge of the Justice Department's antitrust division, met with a Silicon Valley executive. The executive recalls telling Klein that unless a case went beyond the Internet browser market, it would have little effect on Microsoft's power to stifle competition across the computer industry. Klein replied that he understood the computer executive's concerns. But he said time was running short and the strongest evidence in hand involved Microsoft's battle against Netscape Communications Corp. in the market for the so-called browser software used for navigating the Internet. ``This is a Netscape case,'' the executive recalls Klein saying. But five months later, the case that the government is bringing to trial on Monday extends well beyond Netscape and the browser war to embrace what it described in a recent court filing as ``a broad pattern of anti-competitive conduct'' by Microsoft. Netscape, the government insists, is still a prime example of the pattern _ but only one of several examples. The 12-person witness list for the Justice Department and 20 states suing Microsoft reflects the new evidence added to the case since May. James Barksdale, Netscape's president and chief executive, will appear first, but he will be followed by executives representing a cross section of the nation's high-technology companies including Intel, IBM, Sun Microsystems, Apple Computer, America Online and Intuit. In bringing a more ambitious, complicated case to trial than the one it filed in May, the government has chosen a high-risk strategy. The law states that new evidence can be added to a suit after it is filed, but not new charges. And so, in his federal courtroom in Washington, U.S.District Judge Thomas Penfield Jackson could decide to rule out some of the new evidence as ranging too far afield from the original suit. But if the government wins its broadened case, the court-ordered remedies would no doubt be far tougher on Microsoft. In May, the government's suggested steps amounted to equal treatment for Netscape's browser and Microsoft's browser. But the government recently asked that the judge hold a separate hearing on remedies, if it wins the case. The remedies under consideration now include more basic changes in Microsoft's business practices _ perhaps even a breakup of the company _ intended to loosen Microsoft's grip on computing. That would be precisely the kind of sweeping reform that Microsoft's foes would applaud. ``The government has doubled the bet and doubled the stakes,'' said David Yoffie, a professor at the Harvard business school who is co-author of the book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft.'' Meanwhile, in the Microsoft camp, the government's strategy is dismissed as a desperate act _ taken after a court ruling in June that threatened to undermine the antitrust suit. That ruling came in a separate case, involving the interpretation of the consent decree that Microsoft signed with the Justice Department in 1995. In the June ruling, a federal appeals court said that Microsoft could bundle its browser with its industry-standard Windows operating system and call them one product. The appeals-court ruling would seem to undercut the assertion in the government's current antitrust case that the browser and the operating system were two separate products, bundled together and given away in an effort to thwart competition in the browser market. ``With the appeals-court ruling in June, the government lost the heart of its case,'' said Charles Rule, a former senior official in the Justice Department, who is now a consultant to Microsoft. ``So it has taken a blunderbuss approach of scrambling to throw everything it can find _ even evidence the Justice Department has had for years _ into the gun barrel and see what hits.'' The June appellate ruling did shake the prosecution team. But mostly it strengthened the hand of those within the Justice Department who had been urging that the case be broadened, according to people who have worked on the investigation. At the same time, they say, new evidence was coming in as the investigation moved ahead and prosecutors raced to meet the accelerated trial schedule approved by the court. Speed was a priority from the outset, they say. The Justice Department and the states filed their suit in May to move before Microsoft's new operating system, Windows 98, was introduced in June. While not seeking to block the release of Windows 98, government lawyers wanted to get to the the courtroom as early as possible as PC makers and computer users adopt this latest version of Microsoft's Windows operating system, which functions as the central nervous system for more than 90 percent of personal computers sold. The key allegations, government lawyers note, have not changed since May _ namely, that Microsoft illegally used its market power in operating systems to defend its monopoly position and to try to extend into new markets. ``But the only thing that was wrapped up in a bow in time for the May filing was the browser,'' said one person who worked on the case. ``The real game plan was always to get a broader case.'' What is more, one person noted, the prosecution team was not at full strength until shortly before the suit was filed. David Boies, a renowned courtroom litigator and a former partner at Cravath, Swaine & Moore who successfully defended IBM in its 13-year confrontation with the government, was named as special counsel for the Justice Department last December. But Boies, who left Cravath last year, did not start working full-time for the Justice Department until mid-April, because he was still finishing private cases for his own firm, Boies & Schiller. The antitrust suit filed in May leaned heavily on the Netscape story, mentioning Microsoft's main rival in the browser market some 130 times in the complaint and a supporting memorandum. But it also prominently mentioned Microsoft's tactics against Sun Microsystems, creator of Java, an Internet programming language, and cited it as an ``example'' of Microsoft's behavior. ``It was crafted as a template that could be added to without much stretching,'' one person involved in the case said. And so, as new evidence piled up and seemed to fit into a pattern, Klein step by step approved the widening of the case, the person said. And that explains, the person continued, how it is that evidence that has been in the hands of the Justice Department for years has been added to the case since May; only after gathering new evidence did it become apparent that the older material fit the pattern of the current case. For example, the government has added the contention that Microsoft pressured Intel Corp., the big microchip maker and a close partner of Microsoft, to curb its development efforts in multimedia and Internet software because they might conflict with Microsoft's plans. The government contends that the arm-twisting occurred at meetings between the two companies three years ago, especially one on Aug. 2, 1995, which was attended by Andrew Grove, the Intel chairman, and Bill Gates, the Microsoft chairman. Part of the government's evidence in the Intel-Microsoft episode is copies of the handwritten notes taken by Steven McGeady, an Intel vice president who attended the meetings, and a memo written by him on Aug. 28, 1995. The memo, still under court seal, said that Gates ``made vague threats'' and was ``livid'' about Intel's investments in the Internet ``and wanted them stopped.'' A handwritten note, also under court seal, quotes Paul Maritz, a Microsoft executive, as saying that Netscape is their ``common enemy'' and that Intel's role should be to ``fill in stuff in and around Microsoft's strategy.'' These documents were sent by Intel to the Justice Department's office in San Francisco in November 1995, in response to a Civil Investigative Demand _ a civil subpoena _ served on Intel on Nov. 10, 1995. On its own, the Intel material was intriguing, but it became part of the antitrust suit only as other evidence surfaced, one person close to the case said. The government is contending that Microsoft also tried to urge Apple to stop selling its Quicktime multimedia software in the Windows market and tried to convince Real Networks Inc. to pull back in the market for so-called streaming software. The government case has also broadened, people involved in the case say, as more witnesses from the industry have been increasingly willing to testify. ``In the beginning, most people in the industry believed that the government would lose and Microsoft would retaliate if they came forward,'' one person said. ``But as the strength of our case was perceived to improve, more people were willing to come forward, and things snowballed. You get Intel, it's easier to get Apple and so on.'' ||||| The government's antitrust scrutiny of Microsoft, the world's largest independent software company, has spanned Republican and Democratic administrations and involved hundreds of government lawyers and investigators. But it has by no means been an example of consistent, coordinated public policy. Nor, by all accounts, of politics. Instead, like the software industry itself, the government's pursuit of Microsoft has taken leaps, hit dead ends and evolved in ways no one could have controlled or predicted back when it started in 1989. It was in November of that year, on a hot afternoon at a computer-industry convention in Las Vegas, Nev., that Bill Gates, Microsoft's chairman, looked like he'd been dragged to the news conference with a senior executive from IBM _ which at the time dominated Microsoft and the entire computer industry. The two companies _ IBM, then the leading maker of personal computers and Microsoft, the leader in PC operating system software _ were collaborating on the design and marketing of a new operating system called OS/2. But Microsoft was also beginning to sell a competing product, Windows. The industry trade press was full of worried articles: which system was going to become the new standard? With Gates standing uncomfortably at his side, James Cannavino, an IBM divisional president, said that the two companies wanted to ``clear the air.'' OS/2 was the future, he said. As for Windows, he added, it would remain a niche product for under-equipped computers. Windows, he asserted, would never receive all the advanced features of OS/2. Gates certainly did not look happy. But he did not disagree. The news conference got little attention, just a few articles deep inside newspapers and trade publications. But a few weeks later, Norris Washington, a senior antitrust lawyer with the Federal Trade Commission, happened to read one of those articles, in Byte magazine. ``IBM and Microsoft have now defined their unified vision of graphical operating environments,'' the article said, ``and it looks sort of like a U.S. economic model,'' divided into lower-, middle- and upper-class products. As Washington saw it, IBM and Microsoft were colluding to divide the operating-system market _ a potential violation of antitrust law. Soon the FTC staff opened an investigation of Microsoft and IBM And since that small first step, Microsoft has been under unrelenting scrutiny from federal antitrust investigators for a constantly evolving series of allegations and charges, month after month, year after year, for the last nine years. Now comes the antitrust trial scheduled to begin on Monday, with a multiplicity of charges woven of threads drawn from more than a dozen different investigative inquiries during that nine-year span. Microsoft, today the most feared company in the software business and carrying a stock-market value of nearly $234 billion, presents a huge and highly visible antitrust target. Yet, while the company's allies ask, ``What is the Clinton administration's political agenda in going after Microsoft?'' the answer seems to be there is none. In interviews, more than a dozen current and former senior antitrust officials _ whether friends of the government or of Microsoft _ all say the Justice Department's antitrust suit is a natural outgrowth of the previous investigations. As for politics, all the officials agreed that the antitrust division operates independent of the administration's political considerations. Charles Rule was the assistant attorney general who headed the antitrust division during the Bush administration, and he is now a Washington lawyer who serves as an adviser and advocate for Microsoft. ``When I was there,'' Rule said of his Justice days, ``the White House was punctilious in terms of never getting involved in whatever we decided to do. There was no communication between antitrust and other branches of government.'' Asked if he believed that policy had changed under the Clinton administration, he said: ``Not really. I've seen nothing to suggest it.'' Joel Klein heads the antitrust division now, and in an interview dealing with his division's role in the Clinton administration's technology policy, not specifically relating to the Microsoft case, he said: ``There is no statutory restriction, but as a practical matter, civil and criminal prosecutions are invariably carried out without any political contact.'' Klein said, by way of examples, that he might discuss merger cases involving military or aviation industries with the Defense Department or Transportation Department. ``But never the White House,'' he said. ``For a significant case, we might call the White House and say `An hour from now we are going to hold a press conference.' '' ``The last time there was any interference,'' he added, ``was the Dita Beard-ITT case.'' Mrs. Beard, a lobbyist for ITT Corp., was accused in 1972 of having written a memo saying that a $400,000 donation to the Republican National Convention had ``gone a long way'' toward settling antitrust suits brought against the company by the Nixon administration's Justice Department. The authenticity of the memo was never proved, and Mrs. Beard always denied writing it. In any case, Klein says, ``since Watergate, it's been immaculate.'' In the case of Microsoft, neither President Clinton nor Vice President Al Gore has ever volunteered a comment. In answer to a question during a news conference in May, just before the suit was filed, Clinton said: ``I have taken the view that I should not comment on matters within the Justice Department. At this time, I do not think I should depart from that policy on this case, even though it obviously will have a big impact on an important sector of our economy. But I have to say, based on what I know to date, I have confidence in the way the antitrust division in the Justice Department has handled the matter.'' Since then, Clinton has said nothing else about the case, publicly at least. And Gore, who generally represents the administration on technology issues, has never commented at all. In Rule's opinion, the administration would be foolish to involve itself, even if it were politically acceptable to do so. ``It would be a little odd for the administration to push the Justice Department in this suit,'' he said. ``It would be a policy mistake and a political mistake. I would be hard pressed to explain why they would do that.'' Taking sides in the highly charged technology world is dangerous, particularly since the Democrats rely on Silicon Valley companies for political donations and support. In fact, the present and former government officials all said the suit was simply a natural extension of the inquiries conducted during the last nine years. They began at the FTC. Soon after Washington read that article in Byte, the FTC staff opened an investigation of the Windows-OS/2 question. But as has happened so often in the following years, turns in the market made the initial inquiry irrelevant. Microsoft abandoned its agreement with IBM, and Windows quickly grew to be the industry standard, while OS/2 remained a cipher. But as that issue faded, once government investigators began looking at Microsoft they found other things that troubled them. In 1991 Washington, who still works for the FTC, informed Microsoft that the investigation was being expanded. The agency, his letter said, was now trying to determine whether Microsoft was using its dominant position in operating-systems software to stifle competition in other areas. That general idea lies at the heart of the present suit. One former senior FTC official said the commission staff had confidence in the case but realized that the Reagan-era commissioners, who had to approve any suit, might have a different view. ``We knew the commission might have difficulty with a monopolization case,'' the former official said. ``They hadn't brought a case in years.'' And in fact, in 1993 the commission voted 2-2 on the question of whether to file formal charges. The deadlock served as a dismissal. Then, a few months later, the Justice Department decided to pick up the case. ``It was farther along than most cases we got,'' recalled Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. ``Usually a case would be two or three people complaining and a few documents,'' he said. ``But this was a fully researched record. They gave us the files and briefed us on what they had done.'' The Justice Department lawyers picked up the same thread. ``The general idea behind our inquiry,'' Litan said, ``was that they should not be allowed to use their monopoly in operating systems to cement a monopoly in other areas.'' In 1995, Microsoft and the government reached a consent agreement in which the company promised to stop forcing PC makers to buy one copy of a Microsoft operating system for every computer sold _ instead of one for every computer on which the operating system, MS-DOS or Windows, was installed. The company also agreed to stop tying the sale of one software product to the sale of another. The charges in the present suit are similar in many ways. Even with the agreement, the government investigations continued. That same year, Justice Department investigators showed up at the offices of Netscape Communications Corp. for the first time to ask questions about their next line of inquiry. ``America Online had been complaining,'' a senior Netscape executive recalled, ``because Microsoft was bundling the Microsoft Network,'' a competing online service, ``with Windows.'' Once more, market forces overtook the investigation. The Microsoft Network never grew particularly popular while America Online prospered and grew. But, not surprisingly, new complaints filled the void. In May 1995, Anne Bingaman, the assistant attorney general who headed the antitrust division, remarked: ``We get complaints about Microsoft all the time. We have become a kind of Microsoft complaints center. And we take them very seriously.'' In 1996, Netscape's first complaint arrived. In a letter to the Justice Department, Netscape said that Microsoft was using its dominance in personal-computer operating systems to force or persuade computer makers to favor Microsoft's browser, used to explore the World Wide Web, over the one marketed by Netscape. The next year the Justice Department formally charged Microsoft with violating the consent agreement by tying sales of Windows to installation of the company's Web browser on new computers. ``It seemed like a slam-dunk violation of the consent decree,'' a natural extension of that case, recalled Litan, who had left the department by then. A Federal District Court judge agreed, but an Appeals Court panel overturned that ruling this summer. In the meantime, last May the Justice Department and 20 state attorneys general filed their new suit against Microsoft, which is scheduled for trial on Monday. It contends that Microsoft has engaged in bundling, tying and other predatory behavior similar in many ways to the numerous previous allegations and investigations of the last nine years. ``A good part of this case is just Round II of the case we dealt with in Round I,'' in the early in the 1990s, Litan said. Or, as the former senior FTC official put it, ``there's certainly a common thread that runs all the way through here.'' But through the years that thread has been twisted, pulled and spun by hundreds of different hands. ||||| Microsoft Corp. has said that material in an unpublished book by two business school professors will be a crucial part of its defense in the antitrust trial scheduled to begin next week. But judging from an advance copy of the manuscript, the Justice Department and 20 states that are suing the software giant will find support for their arguments in the book as well. To cite one example, Microsoft contends that its industry-standard Windows operating system and its Internet Explorer browser are a single integrated product. In its suit, the government asserts that they are two separate products that Microsoft bundled together to get an unfair edge over its rival, Netscape Communications Corp., in the market for software used to browse the Internet's World Wide Web. In ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft,'' the authors, Michael A. Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David B. Yoffie of the Harvard business school, quote a Microsoft executive as saying that only with the third version of Microsoft's browser was it integrated with Windows. Microsoft hurried its first browser offerings into the market, the book says, in its race to catch up with Netscape, then took a more ambitious approach with Internet Explorer 3.0, which was introduced in August 1996. In that version it changed its software design to use programming modules, or components, that could be put together and rearragned like building blocks. In the book, Ben Slivka, a Microsoft general manager, is quoted as saying, ``IE 3.0 was the key thing because we did the componentized browser,'' He added, ``We really made Internet Explorer part of the Windows platform.'' The timing could be legally significant because in its suit the government cites as evidence requests before August 1996 by personal computer makers that wanted to load Netscape's browser on their machines instead of Microsoft's browser. Microsoft denied the requests, insisting its browers and Windows were a single, integrated product. Microsoft's legal team obtained an early manuscript of the new book last month, by issuing a subpoena to a Netscape executive who was given a confidential copy by the authors to review. Microsoft has also sought the transcripts of 44 current and former Netscape employees interviewed by the authors. A federal judge in Boston last week denied Microsoft access to that research materials, but the company may appeal the ruling. The new book, published by the Free Press imprint of Simon & Schuster, is being hurried into print so it can be shipped within days of the start of the Microsoft trial on Oct. 19. But already, a few quotes from Netscape executives have leaked out. The authors decided to send the complete manuscript to The New York Times and three other news organizations Monday, so that the material could be read in context. Microsoft intends to use material from the book as evidence that Netscape's troubles resulted largely from its own missteps rather than from any alleged predatory practices by Microsoft. The book does detail where Netscape stumbled, shifting its strategy too often and running into obstacles in its software development efforts. In private antitrust suits, the argument that the competitor was his own worst enemy is an established defense. But legal experts say that defense may well be far less effective in a federal case in which the government is seeking court-mandated changes in Microsoft's business practices rather than the monetary damages that are the goal of plaintiffs in private cases. ``It seems to me that this debate over Netscape's mistakes is a total sideshow,'' said Robert Litan, a former senior official in the Justice Department's antitrust division, who is now at the Brookings Institution. ``But Microsoft has a big legal team, and it seems they are working on every defense they can find.'' The book quotes a former Netscape executive, Ram Shriram, as saying the company bungled a chance to win a sizable share of the browser business from America Online Inc. But that was a second-chance to do a deal with America Online, the leading online service. The government's case focuses on an earlier deal in March 1996, when America Online chose Internet Explorer as its preferred browser; in that bargain Microsoft agreed to place a startup icon for the online service on the main Windows desktop screen _ the prime real estate in computing. For a book entitled ``Competing on Internet Time,'' it is intriguing that one of its central themes is that Netcape got too wedded to the notion that the Internet revolution would change everything quickly. Microsoft, by contrast, stuck to its three-year planning horizon that enabled the company, the authors write, to ``mesh its short-run tactical plans with a broader strategic view of how to win the war.'' The book quotes Steve Ballmer, Microsoft's president, as saying, ``The fact of the matter is that customers can't take cataclysmic change every three months. The organization also can't. You can ship products quickly. But you can't say, `Oh, we have a radically new strategy' every three months.'' ||||| Following is the text of the first two sections of the Sherman Act, as passed by Congress in 1890. As the foundation on which federal antitrust law has been built, the act has been amended several times _ elevating the crime to a felony, increasing the fines and prison terms for individuals and setting fines for corporations convicted of violating it. In the case of Microsoft, the government has invoked the Sherman Act to file a civil suit that seeks to change the company's business practices, not a criminal suit that seeks financial penalties. An Act to Protect Trade And Commerce Against Unlawful Restraints and Monopolies: Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. Section 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade of commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. ||||| The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law.

Business rivals are seeking to break Microsoft Corp.'s monopoly on computer operating systems. The Government and 20 states have filed an anti-trust suit against Microsoft, invoking the Sherman Anti-trust Act of 1890. The suit began with a Microsoft vs Netscape battle over browser software but now extends far beyond that aiming at Microsoft's overall aggressive anti-competitive conduct. The effort is extensive but inconsistent because of the ambiguity of anti-trust laws, especially the Sherman Act. The Government is examining Microsoft's financial records and painting a dark image of its Chairman Bill Gates. An unpublished book may be crucial to the trial.

The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law. ||||| The legal tool that the government is using in its assault on Microsoft Corp. _ the Sherman Antitrust Act of 1890 _ is brief, vague and malleable. The combination has meant that this bedrock statute of antitrust policy has been at turns toothless and powerful over the years, depending on the politics and economics of the day as interpreted by the courts. Sponsored by Sen. John Sherman, an Ohio Republican who was the younger brother of the Civil War general William Tecumseh Sherman, the act was passed as a nod to a popular backlash against the rise of the industrial trusts in oil, steel and railroads. Farmers, laborers and small-business owners _ sizable voting groups _ resented the trusts as vehicles of concentrated power. But the trusts, large national holding corporations, were viewed by many others as engines of modernization and industrialization. Economists at the time opposed the Sherman Act, and the law that Congress passed was a vaguely worded compromise. No one knew what impact it would have, but one senator, quoted in Matthew Josephson's ``The Robber Barons,'' explained that nearly everyone agreed that ``something must be flung out to appease the restive masses.'' The act's two key provisions, Sections 1 and 2, mention ``conspiracy,'' ``restraint of trade'' and ``attempt to monopolize.'' Yet while the Sherman Act is now interpreted as the Magna Carta of competition, it never uses the term. After it was passed, critics of the trusts derided the ``impenetrable'' language of the Sherman Act and called it the Swiss Cheese Act. But by the early 1900s, the political climate had changed. The growing antagonism for the trusts, especially as income gaps widened, was tapped by an avowed trustbuster, Theodore Roosevelt, who became president in 1901. ``The Sherman Act has always been an elastic piece of social legislation, used to attack perceived exploitation and the aggregation of power,'' said Eleanor Fox, a professor at the New York University Law School. The model trust _ and the principal target of the trustbusters _ was Standard Oil. Shrewdly, Roosevelt made a distinction between good trusts, which thrived because of their superior efficiency, and bad trusts, which grew not as the result of inevitable economic forces but because of unfair business practices. Throughout the 1880s and '90s, Standard Oil's rivals had complained about the company and the business practices of its founder, John D. Rockefeller. But during those years, the price of kerosene _ burned to light the nation's homes _declined steadily. So Standard Oil, it could could reasonably be argued, was an ``enterprising monopoly.'' In the early 1900s, though, Standard Oil raised prices in the United States to prop up its profits at a time it was engaged in a price war against Royal Dutch/Shell in Europe, where Standard Oil did face genuine competition. When consumers were hurt by the Standard Oil monopoly, popular support for antitrust action against the company swelled, encouraged by Roosevelt and his successor, William Howard Taft. The federal suit against Standard Oil was filed in 1906, and the Supreme Court approved the breakup of the company in 1911. Standard Oil and the Microsoft case, historians observe, have some common themes. Both were dominant companies of their day, and Bill Gates, the Microsoft chairman, has been called a modern Rockefeller. ``But there is no presidential involvement and there is no real consumer dissatisfaction in the Microsoft case,'' said Ron Chernow, author of ``Titan,'' a best-selling biography of Rockefeller. ``And Rockefeller,'' Chernow added, ``never went through the kind of honeymoon period of widespread public adulation and favorable press coverage as Bill Gates has had.'' ||||| Will it matter to consumers that Bill Gates isn't a nice guy? Until last week, most Americans thought of Gates, the chairman of the Microsoft Corp., as a genius and innovator. A nerd perhaps _ but also a self-styled visionary who almost single-handedly unlocked the power of the personal computer. Monday, however, in a Washington courtroom, the Justice Department began painting a different, darker portrait of Gates. In an antitrust suit brought by the department and 20 states, the man whose company commands a 97 percent share of the market for personal computer operating systems is being depicted as a Nixonian schemer who will go to almost any length to crush his competition. Product innovation, the suit argues, is not a sufficient weapon for Gates. Flashing back and forth between snippets of Gates' videotaped deposition and e-mail messages he had sent that contradicted his testimony, the government sought to establish a pattern of threats and offers of payments by the Microsoft chairman. It also sought to cast Gates as an obsessed man who feared the tiny Netscape Communications Corp. and its potential threat to his domination of the market for Internet browsers, the software used to navigate the World Wide Web. Gates was portrayed by Justice Department litigator David Boies as a schoolyard bully who rides roughshod over the computer industry with a crudeness that is in stark contrast to his popular image as a benevolent dictator and high-technology guru. According to a document presented by Boies, for example, Gates asked America Online executives in 1996: ``How much do we need to pay you'' to damage Netscape? ``This is your lucky day.'' The implication, Boies said, was that the amount was irrelevant, and that Microsoft, with its deep pockets and market dominance, makes as many ``offers you can't refuse'' as needed to achieve its goals. Microsoft officials are closely watching market surveys for any hint that the new image of a bare-knuckled Gates might be detracting from the company's world-famous brand name, but they insist that the public will continue to draw a distinction between allegations of anticompetitive business tactics and the company's software. ``Despite what you're reading in the press, people judge us by our products,'' said Mich Matthews, head of Microsoft's corporate public-relations office. ``Our experience is that people vote with their pocketbooks.'' So far, consumers are casting positive votes. Last week Microsoft reported quarterly profits of $1.52 billion, a stunning 58 percent increase over the level a year earlier. Despite the record profits, some marketing experts say that if the public comes to view Gates as a Rockefeller-style robber baron, his company and its brand name may suffer. ``When you have a company with such a visible chief executive, the CEO is really the driver of the brand,'' said David Aaker, a brand marketing expert at the Haas School of Business at the University of California at Berkeley. ``There is no question this is going to affect Microsoft's brand recognition.'' Already there are early warning signals, as political cartoons in newspapers across the country bashed Gates last week. One showed him holding a globe and saying, ``If you don't play my way, I'll take my ball and go home''; another portrayed the Microsoft chairman standing next to a henchman dangling someone from a window while a Microsoft secretary says to a caller, ``I'm sorry, but Mr. Gates is busy teaching a competitor about Windows.'' But some industry analysts believe the new view of a Bill Gates who knows how to play hardball may not be such a bad thing for his company. The he-said, she-said round of e-mail messages being dragged out in court cases both in Washington and in Silicon Valley, where Microsoft is locked in a legal battle with its archrival, Sun Microsystems Inc., is viewed by some as little different from the exaggerated trash talking that goes on in professional sports. ``It's like taking what Charles Barkley and Michael Jordan say to each other on the ball court'' and turning it into something more sinister than it really is, said Paul Andrews, co-author with Stephen Manes of ``Gates'' (Doubleday, 1993). Indeed, there is evidence that the darker view of Gates and his company has so far taken root only in the District of Columbia and in Silicon Valley, where the computer industry has long felt the impact of Gates' tactics, and where bitterness and distrust of Microsoft are deep. In the rest of the country, Gates continues to enjoy great popularity. Two weeks ago, while speaking before a crowd of almost 7,000 students at Indiana University, a questioner who asked about the Justice Department's suit was roundly booed. BILL GATES, WHIPPING BOY c.1998 N.Y. Times News Service Is Bill Gates a high-tech Machiavelli, Public Enemy No. 1 or a threat to the known universe? All three, judging from the numerous political cartoons that popped up in newspapers across the country last week. From Chattanooga to Boston, cartoonists took delight in demonizing Gates, who is facing an unexpected public relations challenge as Microsoft's antitrust trial unfolds in Washington. Other cartoons ran the gamut from the predictable (a worker, pointing to an aquarium in which a large fish is gobbling up smaller ones, saying to some visitors, ``Welcome to Microsoft's research and development department'') to the weird (a dweebish man hunched in front of a computer screen staring at the words: ``Our beloved leader, Mr. Gates, is under attack. Leave your possessions. Go to the desert. Await the spaceship''). And that was just Week One of the trial. Stay tuned. ||||| A federal judge Friday pushed back the starting date of the antitrust trial against Microsoft Corp. by four days, to Oct. 19, while also ordering the company to comply with the Justice Department's request to examine Microsoft's financial records. Microsoft argued that allowing ``an army of government attorneys to come in and make demands will make it very difficult for us to remain in business.'' But after winning assurances from government lawyers that they would make only narrow, targeted searches of the records, Judge Thomas Penfield Jackson of the U.S. District Court for the District of Columbia ordered Microsoft to open the database for perusal. Microsoft had asked that the trial be delayed several more months to prepare a defense against what it said was a last minute broadening of the case by the Justice Department, which had added new evidence. Last month, the government said that in the process of preparing for the trial it had discovered that Microsoft tried to persuade Apple Computer not to market its Quicktime multimedia software to Windows customers. On Thursday, the Justice Department and 20 states added two new people to their witness list to testify about Microsoft dealings with Apple and with Sun Microsystems. Avi Tevanian, a former Apple executive, was added to the witness list in part to describe Microsoft's proposal, which Microsoft denies ever having made. The other new witness was James Gosling, a Sun executive who led the development of Java, an Internet programming language that Microsoft sees as a potential threat to the company's dominance of the software market. The government is charging that Microsoft took illegal steps to prevent Java from gaining wide acceptance. To counter that, Microsoft named two new witnesses Friday, Robert Muglia, a senior Microsoft executive who has worked with Sun, and Chris Engstrom, an executive who handled some of Microsoft's dealings with Apple. At the same time, John Warden, Microsoft's lawyer, argued that the new allegations had no place in the case. The Justice Department, Warden told the judge, was ``trying to turn this into something approximating a plenary monopoly case like the IBM case.'' ``It becomes clearer and clearer and clearer with each new filing that they are trying to turn this into a broader case,'' he said. ``You can't have this bait-and-switch in which they file a complaint alleging A, B, C, and then talk about the whole alphabet three times over.'' As a result, Warden said, Microsoft wanted, at a minimum, another two-week delay, even though ``a more normal schedule'' would have the trial start next year. The judge did not respond. Instead he entered an order setting the Oct. 19 trial date. Late Friday, Microsoft entered a formal motion asking for another two-week delay. A response is expected next week. ||||| In the summer of 1995, a whiff of revolution was in the air in Silicon Valley. The Internet offered a new deal in computing, a fresh opportunity for entrepreneurs to try to break Microsoft Corp.'s firm grip on the personal computer software business. Leading the challenge was Netscape Communications Corp., whose software for browsing the World Wide Web had ignited the Internet boom. Netscape chairman James Clark spoke boldly of attacking Microsoft head-on. He borrowed imagery from the movie ``Star Wars,'' referring to Microsoft as the Death Star and Netscape as the leader of a rebel alliance. Microsoft answered with a vengeance. It dispatched hundreds of programmers to work on a competing browser and poured many millions of dollars into marketing it. It prodded computer makers and others to distribute its browser, folded the browser into its industry-dominant Windows operating system and gave the browser away free _ a campaign intended to ``cut off their air supply,'' as a senior Microsoft executive described it. But not only competitors like Netscape have encountered Microsoft's force. Microsoft's partners, its corporate customers and professional investors who finance new ventures have all collided with it. A close look at Microsoft's no-holds-barred push into the Internet software business offers a window into the ways the company uses its market muscle to influence the behavior of virtually every player in the industry. Some of the cases recounted here figure prominently in the suit brought by the Justice Department and 20 states, scheduled to go to trial this month, charging that Microsoft at times went too far _ and violated antitrust laws. Regardless of the legal outcome, previously unreported details about incidents in the suit and the other examples provide a more complete picture of Microsoft in action. _ When Compaq Computer Corp. considered loading Netscape's browser instead of Microsoft's on its personal computers, Microsoft threatened to stop selling its Windows operating system to Compaq. The company quickly changed its mind. _ After Spyglass Inc. began supplying Microsoft with its early browser technology, Microsoft announced that it would give away its browser free. The timing came as a rude surprise to its partner Spyglass. The company lost most of its revenues almost overnight, as the technology, which it had also been licensing to companies besides Microsoft, suddenly became available free. _ When America Online Inc., which competes fiercely with Microsoft's online service and electronic commerce divisions, went shopping for browser technology, Microsoft made an offer that was too good to pass up: If America Online used Microsoft's browser as the main one for its millions of subscribers, Microsoft would give America Online prime placement on the desktop screen of all personal computers using Windows. _ When Intel Corp. began developing its own Internet software, Microsoft complained. Intel, the leading maker of the microprocessors that serve as the electronic brains on most personal computers running Windows, pulled back. The chip maker decided that its lucrative hand-in-glove partnership with Microsoft took priority. _ Microsoft's reach in computing has become so pervasive that nearly every year now, Silicon Valley's top venture capitalists meet privately with a team of top Microsoft executives to learn about the company's plans. The goal, one venture investor observed, was to ``stay out of the way of the steamroller.'' Microsoft adamantly denies that it has broken any laws in these or similar situations. The company plays the game of business hard, and its executives acknowledge that without apology. Yes, Microsoft says, rivals may suffer and partners may be irritated occasionally. But the company insists its actions are guided by its main corporate goal of bringing new technology inexpensively and conveniently to the millions of people who use its software. Most people in the computer industry say that living in Microsoft's world means routinely making accommodations to it. Microsoft's power emanates from its near-monopoly on the market for personal computer operating systems, the master control programs that run computers. ``Because it owns the operating system, Microsoft is the essential utility of the information age,'' said James Moore, president of Geopartners Research Inc., a technology consulting firm. ``It acts as a kind of gatekeeper to the pipeline of computing innovation, sitting there and deciding whether to help some innovation or slow it down.'' For months, Microsoft and Netscape had talked on and off, circling each other warily. But the event that would define them as unflinching rivals was a meeting on June 21, 1995, in a second-floor conference room at Netscape's headquarters in Mountain View, Calif. That meeting, according to the Justice Department and 20 states suing Microsoft, was the high-tech equivalent of the storied gatherings in smoke-filled railroad cars that inspired passage of the nation's antitrust laws a century ago. On that day, they say, Microsoft made Netscape an illegal offer to divvy up the market for Internet browsing software, a collusion pact that Netscape rejected. Microsoft replies that the prosecutors are misinterpreting a routine meeting in the software business and that the company has never tried to divide the browser market. Bill Gates, Microsoft's chairman and principal strategist, did not attend the Mountain View gathering, but he consulted by telephone with the Microsoft team. Two people who did attend that June meeting have been named as witnesses in the trial scheduled to begin next week: Netscape president James Barksdale and Daniel Rosen, Microsoft's general manager of new technology. In the trial, the government will contend that Microsoft presented Netscape with an all-or-nothing offer, according to people who have been questioned in the federal investigation. Relying heavily on notes taken in the meeting by Netscape executive vice president Marc Andreessen and on the testimony of Barksdale, prosecutors are expected to assert that the Microsoft proposal had several elements, both incentives and requirements. Microsoft, according to the people questioned by the government, would invest in Netscape, taking a 15 to 20 percent stake, give Netscape technical information and fine-tune Microsoft's operating systems so that Netscape's software would run better on Windows. In return, the people say, Netscape would give Microsoft a seat on its board, license its technology to Microsoft, give Microsoft advance knowledge of its product-development efforts and not make a browser for the next generation of the Microsoft operating system, Windows 95, which was shipped two months after the June 1995 meeting. And Microsoft, the people added, did what it has always denied it does _ used access to its technology as a powerful lever in business negotiations, by offering Netscape preferential access to the Windows ``application program interfaces,'' or APIs, the links that enable other companies' programs to run smoothly on the Windows operating system. By turning down the deal, Netscape, they say, would not have that preferred access to Microsoft technology _ a threat that Microsoft fiercely denies making. Barksdale, Netscape's 55-year-old chief executive, told a colleague that the encounter with Microsoft in June 1995 was ``the damnedest meeting I've ever attended in 35 years in business.'' Had Netscape accepted Microsoft's offer, it would have had Microsoft's money and its endorsement. Netscape would have also been free to sell its browser for use in earlier versions of Windows and for use on other operating systems like Apple's Macintosh and Unix, a powerful system used mainly in corporations and research labs. ``But if we had licensed our technology to Microsoft and stepped aside, the best we could have hoped for was becoming a company with sales of $100 million or so and hoping to be bought out by Microsoft,'' said Clark, a former computer scientist at Stanford University who founded Silicon Graphics Inc., a computer graphics pioneer, before starting Netscape. ``We didn't start Netscape for that.'' For any company, a meeting with Microsoft is often a charged affair. Every computing device from keyboards to disk drives, and every software program from games to browsers, must mesh smoothly with Microsoft's Windows operating system. This is necessary to make computers reliable and easier to use, but it also gives Microsoft its role as the industry's gatekeeper. And since Microsoft itself makes all manner of software products beyond the operating system, other companies are put in the uneasy position of requiring Microsoft's cooperation to be able to compete against it. And in the software industry, where every program is rendered in the digital code of 1's and 0's, the lines that divide competition and cooperation are often blurred. The talk about that line at the Microsoft-Netscape meeting focused on the division between the operating system _ the ``platform,'' in computer terms _ and the application programs, sometimes called ``solutions,'' that run on top of the operating system. The government suit states that in sworn testimony, Chris Jones, a Microsoft manager who attended the meeting, ``admitted that Microsoft `absolutely' intended to persuade Netscape not to compete.'' Microsoft reads Jones' testimony very differently, as evidence mainly of the company's clarifying its position. If Netscape stayed on the applications or solutions side of the operating system, the two companies could be partners, Microsoft said. But if Netscape tried to become a player in the platform space, they would compete. Microsoft released portions of the Jones deposition in September as evidence that the government had quoted the Microsoft manager out of context. Q. Do you recall any discussion about a desire of anybody on the part of Microsoft who was participating to be able to persuade or influence Netscape not to compete? A. Absolutely. But again, persuade in the sense of force or persuade in the sense of, hey, we think we can have a great business relationship together. Later in the deposition, a Justice Department lawyer asked Jones whether any of the Microsoft executives intended to suggest that ``there would be any consequences to Netscape or its business if Netscape chose to go in the platform direction you've described earlier as opposed to the solutions direction.'' Jones replied: ``The conversation was something like the following: `We're in the platform business. We're going to invest heavily in this part of the platform because we feel it's critical to our technologies. That's a done deal.' And we're asking them: `What is your business? Is your business platforms or solutions? If it's platforms, we're in the platforms business. We're competing.''' Microsoft portrays such comments as innocuous statements of fact. But to Netscape, the same remarks could be taken as a warning, if not a threat. This is because Internet browsing software had the potential to become an alternative platform to the Windows operating system. The browser, sitting on top of the operating system, could supplant Windows as the main desktop screen on users' machines and the main layer of programming for starting other software applications. In addition, Netscape's browser could serve as a powerful platform for distributing and running Java, an Internet programming language developed by Sun Microsystems Inc., a Microsoft rival. In technical terms, Netscape's upstart platform could replace Microsoft's APIs as the essential utility of computing. Indeed, Andreessen had boasted in public of Netscape's ambition to relegate Microsoft's Windows to so much software plumbing underneath the browser. By the June meeting, Microsoft certainly viewed Netscape as a serious potential challenger to Windows, the corporate crown jewel. On May 26, 1995, in an internal memo, ``The Internet Tidal Wave,'' Gates wrote: ``A new competitor `born' on the Internet is Netscape. Their browser is dominant with 70 percent usage share, allowing them to determine which network extensions will catch on.'' Netscape's strategy, Gates wrote, was to ``move the key API'' into the browser ``to commoditize the underlying operating system.'' THE BROADER INQUIRY: GOVERNMENT SEES ARM-TWISTING The federal government and the states have recently broadened their allegations against Microsoft by adding evidence that it tried to bully Intel, Apple Computer Inc. and other companies to squelch competition. They say that like the Netscape meeting the new evidence fits a pattern of behavior by Microsoft, which has repeatedly tried to limit competition by strong-arming competitors and partners. One episode that fits the pattern, the prosecutors contend, was an effort by Microsoft to pressure Intel to shelve the development of multimedia and Internet software and to limit its cooperation with Netscape. Intel's main business is making the microprocessor chips that act as the electronic brains of most of the computers that run the Windows operating system. Indeed, the fortunes of Intel and Microsoft are so closely aligned that the two companies are sometimes referred to as a single, powerful entity, ``Wintel.'' But Intel also employs hundreds of software engineers, mainly at its Intel Architecture Labs in Hillsboro, Ore. And while Intel and Microsoft are partners, they have also had their conflicts, typically over the direction and pace at which certain innovations should be introduced into the personal computer industry, which they dominate together. Federal and state investigators have focused on Microsoft's strong reaction to work being done by Intel's software engineers _ a sentiment expressed in no uncertain terms during a meeting at Intel's Santa Clara, Calif., headquarters on Aug. 2, 1995. The contentious session was attended by several executives from Intel and Microsoft, including Gates and Intel chairman Andrew Grove. An internal Intel memo stated that Gates made ``vague threats'' about supporting Intel's competitors and that he was ``livid'' about Intel's ``investments in the Internet and wanted them stopped.'' Later, Intel did pull back from its multimedia and Internet software development. Steven McGeady, an Intel vice president who attended the August 1995 meeting, is scheduled to appear as a witness for the government. Microsoft replies that the government's accounts of meetings like those with Netscape and Intel are fanciful distortions, created by using a biased selection of documents and witnesses. The government's case, Microsoft asserts, betrays an utter failure to accept the computer-industry reality that Microsoft routinely meets with companies to make sure their software and equipment will work well with Windows. Sometimes the talks, Microsoft says, go on to include further levels of cooperation like licensing technology or a Microsoft investment, as the company discussed with Netscape. In the trial, Microsoft is expected to argue its advance in the browser market was the result of its own business acumen and Netscape's missteps. To document Netscape's errors, Microsoft issued a subpoena last month and obtained the unpublished manuscript of a new book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft,'' which is based on hundreds of interviews with current and former Netscape executives. The book does chronicle the mistakes made by Netscape. But its authors, Michael Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David Yoffie of the Harvard Business School, think Microsoft is hardly blameless. ``Microsoft's take-no-prisoners strategy backfired, all but inviting retaliation from competitors, the government and even customers,'' Yoffie said. Emphasizing that he was offering no legal judgment, Yoffie added, ``I think Microsoft could have achieved 90 percent of what it did without crossing the line as much as it did.'' THE SPYGLASS LINK: REWARDS AND PERILS OF A PARTNERSHIP On April 6, 1994, Gates and 20 Microsoft executives gathered for a daylong retreat not far from the company's headquarters in Redmond, Wash. The subject was the Internet and how it might revolutionize the computer software business. Few concrete plans were made that day, but Microsoft executives insist that a direction was set. ``Our vision from the outset was to unite the two worlds of the Windows desktop and the Internet,'' said Steven Sinofsky, a Microsoft executive who attended the meeting. Yet Microsoft badly trailed Netscape in the browser field. To hasten its entry, Microsoft licensed its early browsing software from Spyglass Inc. of Naperville, Ill. The first meeting between the two companies was initiated by Spyglass in April 1994. At the time, it was a tiny company and eager to do a deal with Microsoft. Spyglass was selected as the commercial licensee for browser technology developed by the National Center for Supercomputing at the University of Illinois. In the summer of 1994, Douglas Colbeth, president of Spyglass, met with Clark of Netscape at O'Hare International Airport in Chicago. The two men talked in the United Airlines Red Carpet Room, reserved for business-class passengers, and Colbeth recalled Clark telling him, ``We're going to take Microsoft head-on.'' At the time, Colbeth recalled thinking to himself, ``Great, now Microsoft will really want to license from me.'' Today, he noted: ``Remember, we were a company with a couple dozen people and almost no money in the bank. Netscape had Jim Clark, with his money and reputation, and big-time venture capital backing from Silicon Valley. Netscape had a very different agenda.'' By July 1994, Microsoft had become quite interested in the Spyglass technology, Colbeth says, and the two companies signed their first licensing agreement the following December. Microsoft, Colbeth recalls, always told him that it would eventually fold browser technology into its operating system, but its timing was accelerated by Netscape's rapid rise. ``Microsoft was initially hoping to charge for the browser,'' Colbeth said. But on Dec. 7, 1995, Gates declared that Microsoft would not only deeply integrate its browser into Windows but would give it away. The announcement caught the industry, even Colbeth, by surprise. At the time, Spyglass had licensed its technology to 82 other companies, including IBM and Digital Equipment, for use in their software products _ a licensing revenue stream of about $20 million a year. As a result of Microsoft's move, Spyglass saw those revenues vanish within a year, as smaller Internet software companies went out of business and big customers shifted to Microsoft's free browser. Spyglass slashed its payroll and scrambled into new niches of the software industry to replace its lost sales, which it succeeded in doing eventually. ``Whenever you license technology to Microsoft, you have to understand it can someday build it itself, drop it into the operating system and put you out of that business,'' Colbeth said. THE NONOPTION COMPAQ: SUDDENLY SEES THE LIGHT Well into 1996, Netscape's share of the browser market continued to rise, while Microsoft made little headway, even though its browser was free. Industry analysts and trade magazines agreed that Netscape's browser was the clear technical leader. In April 1996, Netscape's Navigator was used by 87 percent of people browsing the Web, compared with 4 percent using Microsoft's Internet Explorer, according to Zona Research. So the biggest personal computer maker, Compaq, thought it made sense to give customers Netscape's browser instead of Microsoft's. But Microsoft would not stand for that _ and Compaq had no choice but to give in. In June 1996, Compaq wanted not only to load the more popular Netscape browser on its machines but also to remove the icon for Microsoft's Internet Explorer, which was delivered to the computer maker with Windows 95. Microsoft informed Compaq that if it removed Internet Explorer, the computer maker would lose its license for Windows, said Stephen Decker, Compaq's director of software procurement, in testimony to federal investigators. The ultimatum from Microsoft was delivered bluntly in a letter headed, ``Notice of Intent to Terminate License Agreement.'' Faced with being denied the essential operating system, Compaq quickly reversed course and kept the Internet Explorer icon. Microsoft asserts that Windows and Internet Explorer are a single product and that Microsoft alone defines what is in the product. Nothing in its contracts, Microsoft adds, prohibits computer makers from including competing technologies. While the cutoff letter Microsoft sent to Compaq seems an unnecessarily hardball tactic when dealing with its largest corporate customer, Microsoft chief operating officer Bob Herbold insists that ``to take one letter here or one snippet of e-mail there to try to portray Microsoft as an arrogant company is unfair.'' Noting that a Compaq executive is a witness for Microsoft, Herbold said, ``We are totally dependent on tremendous relationships with key companies like Compaq.'' At Netscape, however, the Compaq episode was a watershed. ``That was the singular act that got me going to the Justice Department,'' Barksdale recalled. Barksdale said he regarded Microsoft's tactic of forcing Compaq to buy its browser as a condition of obtaining an essential product, the Windows operating system, as ``an illegal act and absolute proof that Microsoft was a monopolist.'' After investigating the incident, the Justice Department and the states agreed with Barksdale that Microsoft was illegally tying the sale of one product to another. Microsoft replies that it has a long history of adding new features to its operating system. And from the outset, Microsoft says, it intended that Windows and its Internet Explorer browser would be seamlessly integrated, as they are now in Windows 98. Thus, Microsoft insists, there is no product-tying violation of antitrust laws. In a separate case, a federal appeals court sided with Microsoft, upholding the principle that the company could put whatever it wanted to in its operating system and declare it a single product. But in June 1996, when Compaq wanted to offer the Netscape product instead of Microsoft's browser, most industry experts viewed the browser and operating system as two different software programs. ``It took a long time for the integration strategy to play out,'' said a former senior Microsoft researcher. ``Back then, integration was basically bolting a browser onto Windows.'' THE `BALANCING ACT': AMERICA ONLINE TOSSES IN TOWEL America Online chairman Stephen Case refers to dealing with Microsoft as ``a delicate balancing act.'' That balance swung sharply from the fall of 1995 to the spring of 1996, when Microsoft used the lure of giving America Online a featured place on the Windows desktop as the ultimate bargaining chip. To gain access to computing's most coveted real estate, America Online agreed to make Microsoft's Internet Explorer the main browser for its online subscribers, who now number more than 13 million. Yet throughout 1995, as Microsoft prepared to introduce Windows 95, the most significant improvement ever in its operating system, Case was knocking on the door of the Justice Department. His complaint was that Microsoft was going to place its new online service, Microsoft Network, a direct competitor to America Online, prominently on the desktop screen of Windows 95, which was introduced in August. This bundling tactic of using the industry-dominant operating system to market Microsoft Network, or MSN, Case argued, gave Microsoft an unfair advantage in the young but fast-growing online business. The Justice Department listened and investigated. But ultimately, the government decided against taking any action. At America Online's headquarters in Vienna, Va., Microsoft was both feared and loathed at the time. America Online had a designated ``Microsoft watcher,'' a young M.B.A. who tracked its adversary's every move. Above the desk in his small, windowless office was a picture of Gates. Beneath the picture, in large block letters, were the words ``THE ENEMY.'' Though America Online was the clear leader in the online services business, it had ample reason to worry about an all-out assault by a rival as rich and aggressive as Microsoft. When he had visited the Microsoft headquarters a couple of years earlier, Case recalled, Gates had bluntly assessed Microsoft's options by saying he could buy 20 percent of America Online, all of it or enter the online business on his own and ``bury you.'' A threat or merely a statement of the facts? ``A bit of both,'' Case said recently. ``But he was mainly articulating what everybody at that meeting kind of intuitively understood.'' Yet by 1996, Microsoft and America Online found they had reason to cooperate. With the exploding popularity of the Internet's World Wide Web, the conventional online companies, like America Online and Compuserve, had to provide their customers Internet access as well as their own services. America Online had its own browser, but to keep pace with the rapidly advancing technology it made sense to do a deal with Netscape or Microsoft. For both software companies, a deal with America Online, which had 5 million subscribers at the time, could mean a big surge in browser use and market share. Netscape seemed the natural partner for America Online, since both companies were Microsoft rivals. On March 11, America Online did announce that it would buy Netscape technology, but it was a standard licensing deal based on a payment-for-use formula. The next day, America Online announced a more significant deal with Microsoft making its browser the default technology _ the browser America Online subscribers would use unless they specifically asked for Netscape's Navigator. To win the deal, Microsoft offered to give America Online a start-up icon on the Windows desktop _ precisely the kind of equal treatment on the main Windows screen that Case had asked the Justice Department to require of Microsoft. ``After we agreed to its Internet Explorer browser, Microsoft allowed us to be bundled on the Windows desktop,'' Case said. ``It was an example of Microsoft's pragmatic side.'' The pragmatic decision was that the paramount corporate goal was to increase browser market share to protect the mainstay software business. As a result, its new online service, MSN, would have to sacrifice an important marketing advantage over its main rival, America Online. ``It was Bill's decision,'' said former MSN general manager Russell Siegelman, referring to Gates. ``He sent me e-mail on it. He said he didn't think it would hurt MSN that much. I disagreed with him.'' To other Microsoft executives, Gates expressed a different view of the likely impact on MSN. He told senior vice president Brad Silverberg that putting America Online on the Windows desktop would amount to ``putting a bullet through MSN's head,'' according to a deposition taken by the Justice Department. In the antitrust suit, the government asserts that the America Online deal shows how Microsoft used the power of its Windows monopoly to give it an edge in the browser war against Netscape. David Colburn, a senior vice president of America Online who took part in the browser negotiations with Microsoft, is a witness for the government. Today, Microsoft has overhauled its Internet strategy to focus mainly on building popular special-interest Web sites in fields like travel, personal finance, automobile retailing and news. And it is putting these sites, along with e-mail and search features, in an all-in-one site that uses the name MSN.com. ``I still regard Microsoft as a primary threat,'' Case observed. ``Microsoft has a history of getting it right in the long run, and there's no reason to think it won't in this business as well. We will always be in Microsoft's cross hairs.'' THE LESSON: DON'T CONFRONT A STEAMROLLER At Netscape's headquarters in Silicon Valley, the strategy today is one of avoiding head-to-head competition with Microsoft whenever possible. ``Don't do something that is in Microsoft's path _ that's the lesson learned,'' observed Clark, the Netscape chairman. Silicon Valley's venture capitalists, the investors who finance so many of the nation's high-tech startups, generally follow the Netscape formula these days. Yet that still leaves ample room to prosper. For while competing directly with Microsoft is dangerous, the software industry as a whole is an engine of wealth creation, job generation and technical innovation. And there is an ambivalent side to the venture community's relationship with Microsoft. For if a start-up cannot steer clear of Microsoft entirely, the favored option is to be bought out by Microsoft, which has scooped up many fledgling companies as a way of acquiring promising technology and people. ``Microsoft understands start-up innovation and how to co-opt start-up innovation better than any other high-tech company,'' said James Breyer, managing partner of Accel Partners, a venture capital firm. As Microsoft has grown, it has come to be seen not merely as a competitor but as a force of nature that shapes the business environment, like a weather front. ``Microsoft is incredibly pervasive,'' said Stewart Alsop, a partner with New Enterprise Associates, a venture capital firm in Menlo Park, Calif. At the board meetings of the companies in which his firm has invested, two issues always come up, he said: ``One is the price of the company's stock, and the other is what Microsoft is going to do.'' In the last few years, Microsoft has offered its guidance during almost yearly meetings between senior Microsoft executives and leading venture capitalists. The meetings are part of Microsoft's effort to improve its sometimes prickly relations with Silicon Valley. ``We work hard to provide clarity about where we're going and where we're not going,'' said Greg Maffei, Microsoft's chief financial officer. Last year's conference took place in October at the Quadrus office building on Sand Hill Road in Menlo Park, the Wall Street of high-tech venture investing. Maffei led a team of five Microsoft executives who appeared before a group of 40 venture capitalists, one of whom stood and asked the question that seemed to be on the minds of many of his peers: ``How do I invest in a company that stays out of the way of the steamroller?'' Maffei, recalled one person who attended the meeting, stood up and delivered a brief lecture on businesses that Microsoft was likely to avoid. His list included specialized software for manufacturing, human resources management, computer-aided design and others. But, this person noted, broad swaths of the industry appeared to be designated as off limits _ including new software platforms that might compete with Microsoft's personal computer operating system. At one point, Ruthann Quindlen, a partner with Institutional Venture Partners, leaned over to Vinod Khosla, a co-founder of Sun Microsystems and a partner at the venture capital firm Kleiner Perkins Caufield & Byers, and said quietly, ``I guess that leaves us washing machines and toasters.'' ||||| Shortly before the government filed its antitrust suit against Microsoft Corp. in May, Joel Klein, the assistant attorney general in charge of the Justice Department's antitrust division, met with a Silicon Valley executive. The executive recalls telling Klein that unless a case went beyond the Internet browser market, it would have little effect on Microsoft's power to stifle competition across the computer industry. Klein replied that he understood the computer executive's concerns. But he said time was running short and the strongest evidence in hand involved Microsoft's battle against Netscape Communications Corp. in the market for the so-called browser software used for navigating the Internet. ``This is a Netscape case,'' the executive recalls Klein saying. But five months later, the case that the government is bringing to trial on Monday extends well beyond Netscape and the browser war to embrace what it described in a recent court filing as ``a broad pattern of anti-competitive conduct'' by Microsoft. Netscape, the government insists, is still a prime example of the pattern _ but only one of several examples. The 12-person witness list for the Justice Department and 20 states suing Microsoft reflects the new evidence added to the case since May. James Barksdale, Netscape's president and chief executive, will appear first, but he will be followed by executives representing a cross section of the nation's high-technology companies including Intel, IBM, Sun Microsystems, Apple Computer, America Online and Intuit. In bringing a more ambitious, complicated case to trial than the one it filed in May, the government has chosen a high-risk strategy. The law states that new evidence can be added to a suit after it is filed, but not new charges. And so, in his federal courtroom in Washington, U.S.District Judge Thomas Penfield Jackson could decide to rule out some of the new evidence as ranging too far afield from the original suit. But if the government wins its broadened case, the court-ordered remedies would no doubt be far tougher on Microsoft. In May, the government's suggested steps amounted to equal treatment for Netscape's browser and Microsoft's browser. But the government recently asked that the judge hold a separate hearing on remedies, if it wins the case. The remedies under consideration now include more basic changes in Microsoft's business practices _ perhaps even a breakup of the company _ intended to loosen Microsoft's grip on computing. That would be precisely the kind of sweeping reform that Microsoft's foes would applaud. ``The government has doubled the bet and doubled the stakes,'' said David Yoffie, a professor at the Harvard business school who is co-author of the book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft.'' Meanwhile, in the Microsoft camp, the government's strategy is dismissed as a desperate act _ taken after a court ruling in June that threatened to undermine the antitrust suit. That ruling came in a separate case, involving the interpretation of the consent decree that Microsoft signed with the Justice Department in 1995. In the June ruling, a federal appeals court said that Microsoft could bundle its browser with its industry-standard Windows operating system and call them one product. The appeals-court ruling would seem to undercut the assertion in the government's current antitrust case that the browser and the operating system were two separate products, bundled together and given away in an effort to thwart competition in the browser market. ``With the appeals-court ruling in June, the government lost the heart of its case,'' said Charles Rule, a former senior official in the Justice Department, who is now a consultant to Microsoft. ``So it has taken a blunderbuss approach of scrambling to throw everything it can find _ even evidence the Justice Department has had for years _ into the gun barrel and see what hits.'' The June appellate ruling did shake the prosecution team. But mostly it strengthened the hand of those within the Justice Department who had been urging that the case be broadened, according to people who have worked on the investigation. At the same time, they say, new evidence was coming in as the investigation moved ahead and prosecutors raced to meet the accelerated trial schedule approved by the court. Speed was a priority from the outset, they say. The Justice Department and the states filed their suit in May to move before Microsoft's new operating system, Windows 98, was introduced in June. While not seeking to block the release of Windows 98, government lawyers wanted to get to the the courtroom as early as possible as PC makers and computer users adopt this latest version of Microsoft's Windows operating system, which functions as the central nervous system for more than 90 percent of personal computers sold. The key allegations, government lawyers note, have not changed since May _ namely, that Microsoft illegally used its market power in operating systems to defend its monopoly position and to try to extend into new markets. ``But the only thing that was wrapped up in a bow in time for the May filing was the browser,'' said one person who worked on the case. ``The real game plan was always to get a broader case.'' What is more, one person noted, the prosecution team was not at full strength until shortly before the suit was filed. David Boies, a renowned courtroom litigator and a former partner at Cravath, Swaine & Moore who successfully defended IBM in its 13-year confrontation with the government, was named as special counsel for the Justice Department last December. But Boies, who left Cravath last year, did not start working full-time for the Justice Department until mid-April, because he was still finishing private cases for his own firm, Boies & Schiller. The antitrust suit filed in May leaned heavily on the Netscape story, mentioning Microsoft's main rival in the browser market some 130 times in the complaint and a supporting memorandum. But it also prominently mentioned Microsoft's tactics against Sun Microsystems, creator of Java, an Internet programming language, and cited it as an ``example'' of Microsoft's behavior. ``It was crafted as a template that could be added to without much stretching,'' one person involved in the case said. And so, as new evidence piled up and seemed to fit into a pattern, Klein step by step approved the widening of the case, the person said. And that explains, the person continued, how it is that evidence that has been in the hands of the Justice Department for years has been added to the case since May; only after gathering new evidence did it become apparent that the older material fit the pattern of the current case. For example, the government has added the contention that Microsoft pressured Intel Corp., the big microchip maker and a close partner of Microsoft, to curb its development efforts in multimedia and Internet software because they might conflict with Microsoft's plans. The government contends that the arm-twisting occurred at meetings between the two companies three years ago, especially one on Aug. 2, 1995, which was attended by Andrew Grove, the Intel chairman, and Bill Gates, the Microsoft chairman. Part of the government's evidence in the Intel-Microsoft episode is copies of the handwritten notes taken by Steven McGeady, an Intel vice president who attended the meetings, and a memo written by him on Aug. 28, 1995. The memo, still under court seal, said that Gates ``made vague threats'' and was ``livid'' about Intel's investments in the Internet ``and wanted them stopped.'' A handwritten note, also under court seal, quotes Paul Maritz, a Microsoft executive, as saying that Netscape is their ``common enemy'' and that Intel's role should be to ``fill in stuff in and around Microsoft's strategy.'' These documents were sent by Intel to the Justice Department's office in San Francisco in November 1995, in response to a Civil Investigative Demand _ a civil subpoena _ served on Intel on Nov. 10, 1995. On its own, the Intel material was intriguing, but it became part of the antitrust suit only as other evidence surfaced, one person close to the case said. The government is contending that Microsoft also tried to urge Apple to stop selling its Quicktime multimedia software in the Windows market and tried to convince Real Networks Inc. to pull back in the market for so-called streaming software. The government case has also broadened, people involved in the case say, as more witnesses from the industry have been increasingly willing to testify. ``In the beginning, most people in the industry believed that the government would lose and Microsoft would retaliate if they came forward,'' one person said. ``But as the strength of our case was perceived to improve, more people were willing to come forward, and things snowballed. You get Intel, it's easier to get Apple and so on.'' ||||| The government's antitrust scrutiny of Microsoft, the world's largest independent software company, has spanned Republican and Democratic administrations and involved hundreds of government lawyers and investigators. But it has by no means been an example of consistent, coordinated public policy. Nor, by all accounts, of politics. Instead, like the software industry itself, the government's pursuit of Microsoft has taken leaps, hit dead ends and evolved in ways no one could have controlled or predicted back when it started in 1989. It was in November of that year, on a hot afternoon at a computer-industry convention in Las Vegas, Nev., that Bill Gates, Microsoft's chairman, looked like he'd been dragged to the news conference with a senior executive from IBM _ which at the time dominated Microsoft and the entire computer industry. The two companies _ IBM, then the leading maker of personal computers and Microsoft, the leader in PC operating system software _ were collaborating on the design and marketing of a new operating system called OS/2. But Microsoft was also beginning to sell a competing product, Windows. The industry trade press was full of worried articles: which system was going to become the new standard? With Gates standing uncomfortably at his side, James Cannavino, an IBM divisional president, said that the two companies wanted to ``clear the air.'' OS/2 was the future, he said. As for Windows, he added, it would remain a niche product for under-equipped computers. Windows, he asserted, would never receive all the advanced features of OS/2. Gates certainly did not look happy. But he did not disagree. The news conference got little attention, just a few articles deep inside newspapers and trade publications. But a few weeks later, Norris Washington, a senior antitrust lawyer with the Federal Trade Commission, happened to read one of those articles, in Byte magazine. ``IBM and Microsoft have now defined their unified vision of graphical operating environments,'' the article said, ``and it looks sort of like a U.S. economic model,'' divided into lower-, middle- and upper-class products. As Washington saw it, IBM and Microsoft were colluding to divide the operating-system market _ a potential violation of antitrust law. Soon the FTC staff opened an investigation of Microsoft and IBM And since that small first step, Microsoft has been under unrelenting scrutiny from federal antitrust investigators for a constantly evolving series of allegations and charges, month after month, year after year, for the last nine years. Now comes the antitrust trial scheduled to begin on Monday, with a multiplicity of charges woven of threads drawn from more than a dozen different investigative inquiries during that nine-year span. Microsoft, today the most feared company in the software business and carrying a stock-market value of nearly $234 billion, presents a huge and highly visible antitrust target. Yet, while the company's allies ask, ``What is the Clinton administration's political agenda in going after Microsoft?'' the answer seems to be there is none. In interviews, more than a dozen current and former senior antitrust officials _ whether friends of the government or of Microsoft _ all say the Justice Department's antitrust suit is a natural outgrowth of the previous investigations. As for politics, all the officials agreed that the antitrust division operates independent of the administration's political considerations. Charles Rule was the assistant attorney general who headed the antitrust division during the Bush administration, and he is now a Washington lawyer who serves as an adviser and advocate for Microsoft. ``When I was there,'' Rule said of his Justice days, ``the White House was punctilious in terms of never getting involved in whatever we decided to do. There was no communication between antitrust and other branches of government.'' Asked if he believed that policy had changed under the Clinton administration, he said: ``Not really. I've seen nothing to suggest it.'' Joel Klein heads the antitrust division now, and in an interview dealing with his division's role in the Clinton administration's technology policy, not specifically relating to the Microsoft case, he said: ``There is no statutory restriction, but as a practical matter, civil and criminal prosecutions are invariably carried out without any political contact.'' Klein said, by way of examples, that he might discuss merger cases involving military or aviation industries with the Defense Department or Transportation Department. ``But never the White House,'' he said. ``For a significant case, we might call the White House and say `An hour from now we are going to hold a press conference.' '' ``The last time there was any interference,'' he added, ``was the Dita Beard-ITT case.'' Mrs. Beard, a lobbyist for ITT Corp., was accused in 1972 of having written a memo saying that a $400,000 donation to the Republican National Convention had ``gone a long way'' toward settling antitrust suits brought against the company by the Nixon administration's Justice Department. The authenticity of the memo was never proved, and Mrs. Beard always denied writing it. In any case, Klein says, ``since Watergate, it's been immaculate.'' In the case of Microsoft, neither President Clinton nor Vice President Al Gore has ever volunteered a comment. In answer to a question during a news conference in May, just before the suit was filed, Clinton said: ``I have taken the view that I should not comment on matters within the Justice Department. At this time, I do not think I should depart from that policy on this case, even though it obviously will have a big impact on an important sector of our economy. But I have to say, based on what I know to date, I have confidence in the way the antitrust division in the Justice Department has handled the matter.'' Since then, Clinton has said nothing else about the case, publicly at least. And Gore, who generally represents the administration on technology issues, has never commented at all. In Rule's opinion, the administration would be foolish to involve itself, even if it were politically acceptable to do so. ``It would be a little odd for the administration to push the Justice Department in this suit,'' he said. ``It would be a policy mistake and a political mistake. I would be hard pressed to explain why they would do that.'' Taking sides in the highly charged technology world is dangerous, particularly since the Democrats rely on Silicon Valley companies for political donations and support. In fact, the present and former government officials all said the suit was simply a natural extension of the inquiries conducted during the last nine years. They began at the FTC. Soon after Washington read that article in Byte, the FTC staff opened an investigation of the Windows-OS/2 question. But as has happened so often in the following years, turns in the market made the initial inquiry irrelevant. Microsoft abandoned its agreement with IBM, and Windows quickly grew to be the industry standard, while OS/2 remained a cipher. But as that issue faded, once government investigators began looking at Microsoft they found other things that troubled them. In 1991 Washington, who still works for the FTC, informed Microsoft that the investigation was being expanded. The agency, his letter said, was now trying to determine whether Microsoft was using its dominant position in operating-systems software to stifle competition in other areas. That general idea lies at the heart of the present suit. One former senior FTC official said the commission staff had confidence in the case but realized that the Reagan-era commissioners, who had to approve any suit, might have a different view. ``We knew the commission might have difficulty with a monopolization case,'' the former official said. ``They hadn't brought a case in years.'' And in fact, in 1993 the commission voted 2-2 on the question of whether to file formal charges. The deadlock served as a dismissal. Then, a few months later, the Justice Department decided to pick up the case. ``It was farther along than most cases we got,'' recalled Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. ``Usually a case would be two or three people complaining and a few documents,'' he said. ``But this was a fully researched record. They gave us the files and briefed us on what they had done.'' The Justice Department lawyers picked up the same thread. ``The general idea behind our inquiry,'' Litan said, ``was that they should not be allowed to use their monopoly in operating systems to cement a monopoly in other areas.'' In 1995, Microsoft and the government reached a consent agreement in which the company promised to stop forcing PC makers to buy one copy of a Microsoft operating system for every computer sold _ instead of one for every computer on which the operating system, MS-DOS or Windows, was installed. The company also agreed to stop tying the sale of one software product to the sale of another. The charges in the present suit are similar in many ways. Even with the agreement, the government investigations continued. That same year, Justice Department investigators showed up at the offices of Netscape Communications Corp. for the first time to ask questions about their next line of inquiry. ``America Online had been complaining,'' a senior Netscape executive recalled, ``because Microsoft was bundling the Microsoft Network,'' a competing online service, ``with Windows.'' Once more, market forces overtook the investigation. The Microsoft Network never grew particularly popular while America Online prospered and grew. But, not surprisingly, new complaints filled the void. In May 1995, Anne Bingaman, the assistant attorney general who headed the antitrust division, remarked: ``We get complaints about Microsoft all the time. We have become a kind of Microsoft complaints center. And we take them very seriously.'' In 1996, Netscape's first complaint arrived. In a letter to the Justice Department, Netscape said that Microsoft was using its dominance in personal-computer operating systems to force or persuade computer makers to favor Microsoft's browser, used to explore the World Wide Web, over the one marketed by Netscape. The next year the Justice Department formally charged Microsoft with violating the consent agreement by tying sales of Windows to installation of the company's Web browser on new computers. ``It seemed like a slam-dunk violation of the consent decree,'' a natural extension of that case, recalled Litan, who had left the department by then. A Federal District Court judge agreed, but an Appeals Court panel overturned that ruling this summer. In the meantime, last May the Justice Department and 20 state attorneys general filed their new suit against Microsoft, which is scheduled for trial on Monday. It contends that Microsoft has engaged in bundling, tying and other predatory behavior similar in many ways to the numerous previous allegations and investigations of the last nine years. ``A good part of this case is just Round II of the case we dealt with in Round I,'' in the early in the 1990s, Litan said. Or, as the former senior FTC official put it, ``there's certainly a common thread that runs all the way through here.'' But through the years that thread has been twisted, pulled and spun by hundreds of different hands. ||||| Microsoft Corp. has said that material in an unpublished book by two business school professors will be a crucial part of its defense in the antitrust trial scheduled to begin next week. But judging from an advance copy of the manuscript, the Justice Department and 20 states that are suing the software giant will find support for their arguments in the book as well. To cite one example, Microsoft contends that its industry-standard Windows operating system and its Internet Explorer browser are a single integrated product. In its suit, the government asserts that they are two separate products that Microsoft bundled together to get an unfair edge over its rival, Netscape Communications Corp., in the market for software used to browse the Internet's World Wide Web. In ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft,'' the authors, Michael A. Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David B. Yoffie of the Harvard business school, quote a Microsoft executive as saying that only with the third version of Microsoft's browser was it integrated with Windows. Microsoft hurried its first browser offerings into the market, the book says, in its race to catch up with Netscape, then took a more ambitious approach with Internet Explorer 3.0, which was introduced in August 1996. In that version it changed its software design to use programming modules, or components, that could be put together and rearragned like building blocks. In the book, Ben Slivka, a Microsoft general manager, is quoted as saying, ``IE 3.0 was the key thing because we did the componentized browser,'' He added, ``We really made Internet Explorer part of the Windows platform.'' The timing could be legally significant because in its suit the government cites as evidence requests before August 1996 by personal computer makers that wanted to load Netscape's browser on their machines instead of Microsoft's browser. Microsoft denied the requests, insisting its browers and Windows were a single, integrated product. Microsoft's legal team obtained an early manuscript of the new book last month, by issuing a subpoena to a Netscape executive who was given a confidential copy by the authors to review. Microsoft has also sought the transcripts of 44 current and former Netscape employees interviewed by the authors. A federal judge in Boston last week denied Microsoft access to that research materials, but the company may appeal the ruling. The new book, published by the Free Press imprint of Simon & Schuster, is being hurried into print so it can be shipped within days of the start of the Microsoft trial on Oct. 19. But already, a few quotes from Netscape executives have leaked out. The authors decided to send the complete manuscript to The New York Times and three other news organizations Monday, so that the material could be read in context. Microsoft intends to use material from the book as evidence that Netscape's troubles resulted largely from its own missteps rather than from any alleged predatory practices by Microsoft. The book does detail where Netscape stumbled, shifting its strategy too often and running into obstacles in its software development efforts. In private antitrust suits, the argument that the competitor was his own worst enemy is an established defense. But legal experts say that defense may well be far less effective in a federal case in which the government is seeking court-mandated changes in Microsoft's business practices rather than the monetary damages that are the goal of plaintiffs in private cases. ``It seems to me that this debate over Netscape's mistakes is a total sideshow,'' said Robert Litan, a former senior official in the Justice Department's antitrust division, who is now at the Brookings Institution. ``But Microsoft has a big legal team, and it seems they are working on every defense they can find.'' The book quotes a former Netscape executive, Ram Shriram, as saying the company bungled a chance to win a sizable share of the browser business from America Online Inc. But that was a second-chance to do a deal with America Online, the leading online service. The government's case focuses on an earlier deal in March 1996, when America Online chose Internet Explorer as its preferred browser; in that bargain Microsoft agreed to place a startup icon for the online service on the main Windows desktop screen _ the prime real estate in computing. For a book entitled ``Competing on Internet Time,'' it is intriguing that one of its central themes is that Netcape got too wedded to the notion that the Internet revolution would change everything quickly. Microsoft, by contrast, stuck to its three-year planning horizon that enabled the company, the authors write, to ``mesh its short-run tactical plans with a broader strategic view of how to win the war.'' The book quotes Steve Ballmer, Microsoft's president, as saying, ``The fact of the matter is that customers can't take cataclysmic change every three months. The organization also can't. You can ship products quickly. But you can't say, `Oh, we have a radically new strategy' every three months.'' ||||| Following is the text of the first two sections of the Sherman Act, as passed by Congress in 1890. As the foundation on which federal antitrust law has been built, the act has been amended several times _ elevating the crime to a felony, increasing the fines and prison terms for individuals and setting fines for corporations convicted of violating it. In the case of Microsoft, the government has invoked the Sherman Act to file a civil suit that seeks to change the company's business practices, not a criminal suit that seeks financial penalties. An Act to Protect Trade And Commerce Against Unlawful Restraints and Monopolies: Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. Section 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade of commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. ||||| The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law.

In 1998 the Justice Department filed a civil suit against Microsoft to change its 9-year pattern of anti-competitive conduct. Bill Gates appears a schemer ready to crush competitors by any means. He uses Microsoft's clout to squelch internet competition. A 1996 Netscape complaint over browsers was central to the case, which grew to include Intel, IBM, Sun, Apple, AOL, and Intuit. Microsoft was ordered to let Justice examine its records and sought a trial delay. An unpublished book provided evidence. The 1890 Sherman Anti-Trust Act centered on Standard Oil and was intended to protect consumers, but its wording is broad and rulings have been ambiguous.

The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law. ||||| The legal tool that the government is using in its assault on Microsoft Corp. _ the Sherman Antitrust Act of 1890 _ is brief, vague and malleable. The combination has meant that this bedrock statute of antitrust policy has been at turns toothless and powerful over the years, depending on the politics and economics of the day as interpreted by the courts. Sponsored by Sen. John Sherman, an Ohio Republican who was the younger brother of the Civil War general William Tecumseh Sherman, the act was passed as a nod to a popular backlash against the rise of the industrial trusts in oil, steel and railroads. Farmers, laborers and small-business owners _ sizable voting groups _ resented the trusts as vehicles of concentrated power. But the trusts, large national holding corporations, were viewed by many others as engines of modernization and industrialization. Economists at the time opposed the Sherman Act, and the law that Congress passed was a vaguely worded compromise. No one knew what impact it would have, but one senator, quoted in Matthew Josephson's ``The Robber Barons,'' explained that nearly everyone agreed that ``something must be flung out to appease the restive masses.'' The act's two key provisions, Sections 1 and 2, mention ``conspiracy,'' ``restraint of trade'' and ``attempt to monopolize.'' Yet while the Sherman Act is now interpreted as the Magna Carta of competition, it never uses the term. After it was passed, critics of the trusts derided the ``impenetrable'' language of the Sherman Act and called it the Swiss Cheese Act. But by the early 1900s, the political climate had changed. The growing antagonism for the trusts, especially as income gaps widened, was tapped by an avowed trustbuster, Theodore Roosevelt, who became president in 1901. ``The Sherman Act has always been an elastic piece of social legislation, used to attack perceived exploitation and the aggregation of power,'' said Eleanor Fox, a professor at the New York University Law School. The model trust _ and the principal target of the trustbusters _ was Standard Oil. Shrewdly, Roosevelt made a distinction between good trusts, which thrived because of their superior efficiency, and bad trusts, which grew not as the result of inevitable economic forces but because of unfair business practices. Throughout the 1880s and '90s, Standard Oil's rivals had complained about the company and the business practices of its founder, John D. Rockefeller. But during those years, the price of kerosene _ burned to light the nation's homes _declined steadily. So Standard Oil, it could could reasonably be argued, was an ``enterprising monopoly.'' In the early 1900s, though, Standard Oil raised prices in the United States to prop up its profits at a time it was engaged in a price war against Royal Dutch/Shell in Europe, where Standard Oil did face genuine competition. When consumers were hurt by the Standard Oil monopoly, popular support for antitrust action against the company swelled, encouraged by Roosevelt and his successor, William Howard Taft. The federal suit against Standard Oil was filed in 1906, and the Supreme Court approved the breakup of the company in 1911. Standard Oil and the Microsoft case, historians observe, have some common themes. Both were dominant companies of their day, and Bill Gates, the Microsoft chairman, has been called a modern Rockefeller. ``But there is no presidential involvement and there is no real consumer dissatisfaction in the Microsoft case,'' said Ron Chernow, author of ``Titan,'' a best-selling biography of Rockefeller. ``And Rockefeller,'' Chernow added, ``never went through the kind of honeymoon period of widespread public adulation and favorable press coverage as Bill Gates has had.'' ||||| Will it matter to consumers that Bill Gates isn't a nice guy? Until last week, most Americans thought of Gates, the chairman of the Microsoft Corp., as a genius and innovator. A nerd perhaps _ but also a self-styled visionary who almost single-handedly unlocked the power of the personal computer. Monday, however, in a Washington courtroom, the Justice Department began painting a different, darker portrait of Gates. In an antitrust suit brought by the department and 20 states, the man whose company commands a 97 percent share of the market for personal computer operating systems is being depicted as a Nixonian schemer who will go to almost any length to crush his competition. Product innovation, the suit argues, is not a sufficient weapon for Gates. Flashing back and forth between snippets of Gates' videotaped deposition and e-mail messages he had sent that contradicted his testimony, the government sought to establish a pattern of threats and offers of payments by the Microsoft chairman. It also sought to cast Gates as an obsessed man who feared the tiny Netscape Communications Corp. and its potential threat to his domination of the market for Internet browsers, the software used to navigate the World Wide Web. Gates was portrayed by Justice Department litigator David Boies as a schoolyard bully who rides roughshod over the computer industry with a crudeness that is in stark contrast to his popular image as a benevolent dictator and high-technology guru. According to a document presented by Boies, for example, Gates asked America Online executives in 1996: ``How much do we need to pay you'' to damage Netscape? ``This is your lucky day.'' The implication, Boies said, was that the amount was irrelevant, and that Microsoft, with its deep pockets and market dominance, makes as many ``offers you can't refuse'' as needed to achieve its goals. Microsoft officials are closely watching market surveys for any hint that the new image of a bare-knuckled Gates might be detracting from the company's world-famous brand name, but they insist that the public will continue to draw a distinction between allegations of anticompetitive business tactics and the company's software. ``Despite what you're reading in the press, people judge us by our products,'' said Mich Matthews, head of Microsoft's corporate public-relations office. ``Our experience is that people vote with their pocketbooks.'' So far, consumers are casting positive votes. Last week Microsoft reported quarterly profits of $1.52 billion, a stunning 58 percent increase over the level a year earlier. Despite the record profits, some marketing experts say that if the public comes to view Gates as a Rockefeller-style robber baron, his company and its brand name may suffer. ``When you have a company with such a visible chief executive, the CEO is really the driver of the brand,'' said David Aaker, a brand marketing expert at the Haas School of Business at the University of California at Berkeley. ``There is no question this is going to affect Microsoft's brand recognition.'' Already there are early warning signals, as political cartoons in newspapers across the country bashed Gates last week. One showed him holding a globe and saying, ``If you don't play my way, I'll take my ball and go home''; another portrayed the Microsoft chairman standing next to a henchman dangling someone from a window while a Microsoft secretary says to a caller, ``I'm sorry, but Mr. Gates is busy teaching a competitor about Windows.'' But some industry analysts believe the new view of a Bill Gates who knows how to play hardball may not be such a bad thing for his company. The he-said, she-said round of e-mail messages being dragged out in court cases both in Washington and in Silicon Valley, where Microsoft is locked in a legal battle with its archrival, Sun Microsystems Inc., is viewed by some as little different from the exaggerated trash talking that goes on in professional sports. ``It's like taking what Charles Barkley and Michael Jordan say to each other on the ball court'' and turning it into something more sinister than it really is, said Paul Andrews, co-author with Stephen Manes of ``Gates'' (Doubleday, 1993). Indeed, there is evidence that the darker view of Gates and his company has so far taken root only in the District of Columbia and in Silicon Valley, where the computer industry has long felt the impact of Gates' tactics, and where bitterness and distrust of Microsoft are deep. In the rest of the country, Gates continues to enjoy great popularity. Two weeks ago, while speaking before a crowd of almost 7,000 students at Indiana University, a questioner who asked about the Justice Department's suit was roundly booed. BILL GATES, WHIPPING BOY c.1998 N.Y. Times News Service Is Bill Gates a high-tech Machiavelli, Public Enemy No. 1 or a threat to the known universe? All three, judging from the numerous political cartoons that popped up in newspapers across the country last week. From Chattanooga to Boston, cartoonists took delight in demonizing Gates, who is facing an unexpected public relations challenge as Microsoft's antitrust trial unfolds in Washington. Other cartoons ran the gamut from the predictable (a worker, pointing to an aquarium in which a large fish is gobbling up smaller ones, saying to some visitors, ``Welcome to Microsoft's research and development department'') to the weird (a dweebish man hunched in front of a computer screen staring at the words: ``Our beloved leader, Mr. Gates, is under attack. Leave your possessions. Go to the desert. Await the spaceship''). And that was just Week One of the trial. Stay tuned. ||||| A federal judge Friday pushed back the starting date of the antitrust trial against Microsoft Corp. by four days, to Oct. 19, while also ordering the company to comply with the Justice Department's request to examine Microsoft's financial records. Microsoft argued that allowing ``an army of government attorneys to come in and make demands will make it very difficult for us to remain in business.'' But after winning assurances from government lawyers that they would make only narrow, targeted searches of the records, Judge Thomas Penfield Jackson of the U.S. District Court for the District of Columbia ordered Microsoft to open the database for perusal. Microsoft had asked that the trial be delayed several more months to prepare a defense against what it said was a last minute broadening of the case by the Justice Department, which had added new evidence. Last month, the government said that in the process of preparing for the trial it had discovered that Microsoft tried to persuade Apple Computer not to market its Quicktime multimedia software to Windows customers. On Thursday, the Justice Department and 20 states added two new people to their witness list to testify about Microsoft dealings with Apple and with Sun Microsystems. Avi Tevanian, a former Apple executive, was added to the witness list in part to describe Microsoft's proposal, which Microsoft denies ever having made. The other new witness was James Gosling, a Sun executive who led the development of Java, an Internet programming language that Microsoft sees as a potential threat to the company's dominance of the software market. The government is charging that Microsoft took illegal steps to prevent Java from gaining wide acceptance. To counter that, Microsoft named two new witnesses Friday, Robert Muglia, a senior Microsoft executive who has worked with Sun, and Chris Engstrom, an executive who handled some of Microsoft's dealings with Apple. At the same time, John Warden, Microsoft's lawyer, argued that the new allegations had no place in the case. The Justice Department, Warden told the judge, was ``trying to turn this into something approximating a plenary monopoly case like the IBM case.'' ``It becomes clearer and clearer and clearer with each new filing that they are trying to turn this into a broader case,'' he said. ``You can't have this bait-and-switch in which they file a complaint alleging A, B, C, and then talk about the whole alphabet three times over.'' As a result, Warden said, Microsoft wanted, at a minimum, another two-week delay, even though ``a more normal schedule'' would have the trial start next year. The judge did not respond. Instead he entered an order setting the Oct. 19 trial date. Late Friday, Microsoft entered a formal motion asking for another two-week delay. A response is expected next week. ||||| In the summer of 1995, a whiff of revolution was in the air in Silicon Valley. The Internet offered a new deal in computing, a fresh opportunity for entrepreneurs to try to break Microsoft Corp.'s firm grip on the personal computer software business. Leading the challenge was Netscape Communications Corp., whose software for browsing the World Wide Web had ignited the Internet boom. Netscape chairman James Clark spoke boldly of attacking Microsoft head-on. He borrowed imagery from the movie ``Star Wars,'' referring to Microsoft as the Death Star and Netscape as the leader of a rebel alliance. Microsoft answered with a vengeance. It dispatched hundreds of programmers to work on a competing browser and poured many millions of dollars into marketing it. It prodded computer makers and others to distribute its browser, folded the browser into its industry-dominant Windows operating system and gave the browser away free _ a campaign intended to ``cut off their air supply,'' as a senior Microsoft executive described it. But not only competitors like Netscape have encountered Microsoft's force. Microsoft's partners, its corporate customers and professional investors who finance new ventures have all collided with it. A close look at Microsoft's no-holds-barred push into the Internet software business offers a window into the ways the company uses its market muscle to influence the behavior of virtually every player in the industry. Some of the cases recounted here figure prominently in the suit brought by the Justice Department and 20 states, scheduled to go to trial this month, charging that Microsoft at times went too far _ and violated antitrust laws. Regardless of the legal outcome, previously unreported details about incidents in the suit and the other examples provide a more complete picture of Microsoft in action. _ When Compaq Computer Corp. considered loading Netscape's browser instead of Microsoft's on its personal computers, Microsoft threatened to stop selling its Windows operating system to Compaq. The company quickly changed its mind. _ After Spyglass Inc. began supplying Microsoft with its early browser technology, Microsoft announced that it would give away its browser free. The timing came as a rude surprise to its partner Spyglass. The company lost most of its revenues almost overnight, as the technology, which it had also been licensing to companies besides Microsoft, suddenly became available free. _ When America Online Inc., which competes fiercely with Microsoft's online service and electronic commerce divisions, went shopping for browser technology, Microsoft made an offer that was too good to pass up: If America Online used Microsoft's browser as the main one for its millions of subscribers, Microsoft would give America Online prime placement on the desktop screen of all personal computers using Windows. _ When Intel Corp. began developing its own Internet software, Microsoft complained. Intel, the leading maker of the microprocessors that serve as the electronic brains on most personal computers running Windows, pulled back. The chip maker decided that its lucrative hand-in-glove partnership with Microsoft took priority. _ Microsoft's reach in computing has become so pervasive that nearly every year now, Silicon Valley's top venture capitalists meet privately with a team of top Microsoft executives to learn about the company's plans. The goal, one venture investor observed, was to ``stay out of the way of the steamroller.'' Microsoft adamantly denies that it has broken any laws in these or similar situations. The company plays the game of business hard, and its executives acknowledge that without apology. Yes, Microsoft says, rivals may suffer and partners may be irritated occasionally. But the company insists its actions are guided by its main corporate goal of bringing new technology inexpensively and conveniently to the millions of people who use its software. Most people in the computer industry say that living in Microsoft's world means routinely making accommodations to it. Microsoft's power emanates from its near-monopoly on the market for personal computer operating systems, the master control programs that run computers. ``Because it owns the operating system, Microsoft is the essential utility of the information age,'' said James Moore, president of Geopartners Research Inc., a technology consulting firm. ``It acts as a kind of gatekeeper to the pipeline of computing innovation, sitting there and deciding whether to help some innovation or slow it down.'' For months, Microsoft and Netscape had talked on and off, circling each other warily. But the event that would define them as unflinching rivals was a meeting on June 21, 1995, in a second-floor conference room at Netscape's headquarters in Mountain View, Calif. That meeting, according to the Justice Department and 20 states suing Microsoft, was the high-tech equivalent of the storied gatherings in smoke-filled railroad cars that inspired passage of the nation's antitrust laws a century ago. On that day, they say, Microsoft made Netscape an illegal offer to divvy up the market for Internet browsing software, a collusion pact that Netscape rejected. Microsoft replies that the prosecutors are misinterpreting a routine meeting in the software business and that the company has never tried to divide the browser market. Bill Gates, Microsoft's chairman and principal strategist, did not attend the Mountain View gathering, but he consulted by telephone with the Microsoft team. Two people who did attend that June meeting have been named as witnesses in the trial scheduled to begin next week: Netscape president James Barksdale and Daniel Rosen, Microsoft's general manager of new technology. In the trial, the government will contend that Microsoft presented Netscape with an all-or-nothing offer, according to people who have been questioned in the federal investigation. Relying heavily on notes taken in the meeting by Netscape executive vice president Marc Andreessen and on the testimony of Barksdale, prosecutors are expected to assert that the Microsoft proposal had several elements, both incentives and requirements. Microsoft, according to the people questioned by the government, would invest in Netscape, taking a 15 to 20 percent stake, give Netscape technical information and fine-tune Microsoft's operating systems so that Netscape's software would run better on Windows. In return, the people say, Netscape would give Microsoft a seat on its board, license its technology to Microsoft, give Microsoft advance knowledge of its product-development efforts and not make a browser for the next generation of the Microsoft operating system, Windows 95, which was shipped two months after the June 1995 meeting. And Microsoft, the people added, did what it has always denied it does _ used access to its technology as a powerful lever in business negotiations, by offering Netscape preferential access to the Windows ``application program interfaces,'' or APIs, the links that enable other companies' programs to run smoothly on the Windows operating system. By turning down the deal, Netscape, they say, would not have that preferred access to Microsoft technology _ a threat that Microsoft fiercely denies making. Barksdale, Netscape's 55-year-old chief executive, told a colleague that the encounter with Microsoft in June 1995 was ``the damnedest meeting I've ever attended in 35 years in business.'' Had Netscape accepted Microsoft's offer, it would have had Microsoft's money and its endorsement. Netscape would have also been free to sell its browser for use in earlier versions of Windows and for use on other operating systems like Apple's Macintosh and Unix, a powerful system used mainly in corporations and research labs. ``But if we had licensed our technology to Microsoft and stepped aside, the best we could have hoped for was becoming a company with sales of $100 million or so and hoping to be bought out by Microsoft,'' said Clark, a former computer scientist at Stanford University who founded Silicon Graphics Inc., a computer graphics pioneer, before starting Netscape. ``We didn't start Netscape for that.'' For any company, a meeting with Microsoft is often a charged affair. Every computing device from keyboards to disk drives, and every software program from games to browsers, must mesh smoothly with Microsoft's Windows operating system. This is necessary to make computers reliable and easier to use, but it also gives Microsoft its role as the industry's gatekeeper. And since Microsoft itself makes all manner of software products beyond the operating system, other companies are put in the uneasy position of requiring Microsoft's cooperation to be able to compete against it. And in the software industry, where every program is rendered in the digital code of 1's and 0's, the lines that divide competition and cooperation are often blurred. The talk about that line at the Microsoft-Netscape meeting focused on the division between the operating system _ the ``platform,'' in computer terms _ and the application programs, sometimes called ``solutions,'' that run on top of the operating system. The government suit states that in sworn testimony, Chris Jones, a Microsoft manager who attended the meeting, ``admitted that Microsoft `absolutely' intended to persuade Netscape not to compete.'' Microsoft reads Jones' testimony very differently, as evidence mainly of the company's clarifying its position. If Netscape stayed on the applications or solutions side of the operating system, the two companies could be partners, Microsoft said. But if Netscape tried to become a player in the platform space, they would compete. Microsoft released portions of the Jones deposition in September as evidence that the government had quoted the Microsoft manager out of context. Q. Do you recall any discussion about a desire of anybody on the part of Microsoft who was participating to be able to persuade or influence Netscape not to compete? A. Absolutely. But again, persuade in the sense of force or persuade in the sense of, hey, we think we can have a great business relationship together. Later in the deposition, a Justice Department lawyer asked Jones whether any of the Microsoft executives intended to suggest that ``there would be any consequences to Netscape or its business if Netscape chose to go in the platform direction you've described earlier as opposed to the solutions direction.'' Jones replied: ``The conversation was something like the following: `We're in the platform business. We're going to invest heavily in this part of the platform because we feel it's critical to our technologies. That's a done deal.' And we're asking them: `What is your business? Is your business platforms or solutions? If it's platforms, we're in the platforms business. We're competing.''' Microsoft portrays such comments as innocuous statements of fact. But to Netscape, the same remarks could be taken as a warning, if not a threat. This is because Internet browsing software had the potential to become an alternative platform to the Windows operating system. The browser, sitting on top of the operating system, could supplant Windows as the main desktop screen on users' machines and the main layer of programming for starting other software applications. In addition, Netscape's browser could serve as a powerful platform for distributing and running Java, an Internet programming language developed by Sun Microsystems Inc., a Microsoft rival. In technical terms, Netscape's upstart platform could replace Microsoft's APIs as the essential utility of computing. Indeed, Andreessen had boasted in public of Netscape's ambition to relegate Microsoft's Windows to so much software plumbing underneath the browser. By the June meeting, Microsoft certainly viewed Netscape as a serious potential challenger to Windows, the corporate crown jewel. On May 26, 1995, in an internal memo, ``The Internet Tidal Wave,'' Gates wrote: ``A new competitor `born' on the Internet is Netscape. Their browser is dominant with 70 percent usage share, allowing them to determine which network extensions will catch on.'' Netscape's strategy, Gates wrote, was to ``move the key API'' into the browser ``to commoditize the underlying operating system.'' THE BROADER INQUIRY: GOVERNMENT SEES ARM-TWISTING The federal government and the states have recently broadened their allegations against Microsoft by adding evidence that it tried to bully Intel, Apple Computer Inc. and other companies to squelch competition. They say that like the Netscape meeting the new evidence fits a pattern of behavior by Microsoft, which has repeatedly tried to limit competition by strong-arming competitors and partners. One episode that fits the pattern, the prosecutors contend, was an effort by Microsoft to pressure Intel to shelve the development of multimedia and Internet software and to limit its cooperation with Netscape. Intel's main business is making the microprocessor chips that act as the electronic brains of most of the computers that run the Windows operating system. Indeed, the fortunes of Intel and Microsoft are so closely aligned that the two companies are sometimes referred to as a single, powerful entity, ``Wintel.'' But Intel also employs hundreds of software engineers, mainly at its Intel Architecture Labs in Hillsboro, Ore. And while Intel and Microsoft are partners, they have also had their conflicts, typically over the direction and pace at which certain innovations should be introduced into the personal computer industry, which they dominate together. Federal and state investigators have focused on Microsoft's strong reaction to work being done by Intel's software engineers _ a sentiment expressed in no uncertain terms during a meeting at Intel's Santa Clara, Calif., headquarters on Aug. 2, 1995. The contentious session was attended by several executives from Intel and Microsoft, including Gates and Intel chairman Andrew Grove. An internal Intel memo stated that Gates made ``vague threats'' about supporting Intel's competitors and that he was ``livid'' about Intel's ``investments in the Internet and wanted them stopped.'' Later, Intel did pull back from its multimedia and Internet software development. Steven McGeady, an Intel vice president who attended the August 1995 meeting, is scheduled to appear as a witness for the government. Microsoft replies that the government's accounts of meetings like those with Netscape and Intel are fanciful distortions, created by using a biased selection of documents and witnesses. The government's case, Microsoft asserts, betrays an utter failure to accept the computer-industry reality that Microsoft routinely meets with companies to make sure their software and equipment will work well with Windows. Sometimes the talks, Microsoft says, go on to include further levels of cooperation like licensing technology or a Microsoft investment, as the company discussed with Netscape. In the trial, Microsoft is expected to argue its advance in the browser market was the result of its own business acumen and Netscape's missteps. To document Netscape's errors, Microsoft issued a subpoena last month and obtained the unpublished manuscript of a new book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft,'' which is based on hundreds of interviews with current and former Netscape executives. The book does chronicle the mistakes made by Netscape. But its authors, Michael Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David Yoffie of the Harvard Business School, think Microsoft is hardly blameless. ``Microsoft's take-no-prisoners strategy backfired, all but inviting retaliation from competitors, the government and even customers,'' Yoffie said. Emphasizing that he was offering no legal judgment, Yoffie added, ``I think Microsoft could have achieved 90 percent of what it did without crossing the line as much as it did.'' THE SPYGLASS LINK: REWARDS AND PERILS OF A PARTNERSHIP On April 6, 1994, Gates and 20 Microsoft executives gathered for a daylong retreat not far from the company's headquarters in Redmond, Wash. The subject was the Internet and how it might revolutionize the computer software business. Few concrete plans were made that day, but Microsoft executives insist that a direction was set. ``Our vision from the outset was to unite the two worlds of the Windows desktop and the Internet,'' said Steven Sinofsky, a Microsoft executive who attended the meeting. Yet Microsoft badly trailed Netscape in the browser field. To hasten its entry, Microsoft licensed its early browsing software from Spyglass Inc. of Naperville, Ill. The first meeting between the two companies was initiated by Spyglass in April 1994. At the time, it was a tiny company and eager to do a deal with Microsoft. Spyglass was selected as the commercial licensee for browser technology developed by the National Center for Supercomputing at the University of Illinois. In the summer of 1994, Douglas Colbeth, president of Spyglass, met with Clark of Netscape at O'Hare International Airport in Chicago. The two men talked in the United Airlines Red Carpet Room, reserved for business-class passengers, and Colbeth recalled Clark telling him, ``We're going to take Microsoft head-on.'' At the time, Colbeth recalled thinking to himself, ``Great, now Microsoft will really want to license from me.'' Today, he noted: ``Remember, we were a company with a couple dozen people and almost no money in the bank. Netscape had Jim Clark, with his money and reputation, and big-time venture capital backing from Silicon Valley. Netscape had a very different agenda.'' By July 1994, Microsoft had become quite interested in the Spyglass technology, Colbeth says, and the two companies signed their first licensing agreement the following December. Microsoft, Colbeth recalls, always told him that it would eventually fold browser technology into its operating system, but its timing was accelerated by Netscape's rapid rise. ``Microsoft was initially hoping to charge for the browser,'' Colbeth said. But on Dec. 7, 1995, Gates declared that Microsoft would not only deeply integrate its browser into Windows but would give it away. The announcement caught the industry, even Colbeth, by surprise. At the time, Spyglass had licensed its technology to 82 other companies, including IBM and Digital Equipment, for use in their software products _ a licensing revenue stream of about $20 million a year. As a result of Microsoft's move, Spyglass saw those revenues vanish within a year, as smaller Internet software companies went out of business and big customers shifted to Microsoft's free browser. Spyglass slashed its payroll and scrambled into new niches of the software industry to replace its lost sales, which it succeeded in doing eventually. ``Whenever you license technology to Microsoft, you have to understand it can someday build it itself, drop it into the operating system and put you out of that business,'' Colbeth said. THE NONOPTION COMPAQ: SUDDENLY SEES THE LIGHT Well into 1996, Netscape's share of the browser market continued to rise, while Microsoft made little headway, even though its browser was free. Industry analysts and trade magazines agreed that Netscape's browser was the clear technical leader. In April 1996, Netscape's Navigator was used by 87 percent of people browsing the Web, compared with 4 percent using Microsoft's Internet Explorer, according to Zona Research. So the biggest personal computer maker, Compaq, thought it made sense to give customers Netscape's browser instead of Microsoft's. But Microsoft would not stand for that _ and Compaq had no choice but to give in. In June 1996, Compaq wanted not only to load the more popular Netscape browser on its machines but also to remove the icon for Microsoft's Internet Explorer, which was delivered to the computer maker with Windows 95. Microsoft informed Compaq that if it removed Internet Explorer, the computer maker would lose its license for Windows, said Stephen Decker, Compaq's director of software procurement, in testimony to federal investigators. The ultimatum from Microsoft was delivered bluntly in a letter headed, ``Notice of Intent to Terminate License Agreement.'' Faced with being denied the essential operating system, Compaq quickly reversed course and kept the Internet Explorer icon. Microsoft asserts that Windows and Internet Explorer are a single product and that Microsoft alone defines what is in the product. Nothing in its contracts, Microsoft adds, prohibits computer makers from including competing technologies. While the cutoff letter Microsoft sent to Compaq seems an unnecessarily hardball tactic when dealing with its largest corporate customer, Microsoft chief operating officer Bob Herbold insists that ``to take one letter here or one snippet of e-mail there to try to portray Microsoft as an arrogant company is unfair.'' Noting that a Compaq executive is a witness for Microsoft, Herbold said, ``We are totally dependent on tremendous relationships with key companies like Compaq.'' At Netscape, however, the Compaq episode was a watershed. ``That was the singular act that got me going to the Justice Department,'' Barksdale recalled. Barksdale said he regarded Microsoft's tactic of forcing Compaq to buy its browser as a condition of obtaining an essential product, the Windows operating system, as ``an illegal act and absolute proof that Microsoft was a monopolist.'' After investigating the incident, the Justice Department and the states agreed with Barksdale that Microsoft was illegally tying the sale of one product to another. Microsoft replies that it has a long history of adding new features to its operating system. And from the outset, Microsoft says, it intended that Windows and its Internet Explorer browser would be seamlessly integrated, as they are now in Windows 98. Thus, Microsoft insists, there is no product-tying violation of antitrust laws. In a separate case, a federal appeals court sided with Microsoft, upholding the principle that the company could put whatever it wanted to in its operating system and declare it a single product. But in June 1996, when Compaq wanted to offer the Netscape product instead of Microsoft's browser, most industry experts viewed the browser and operating system as two different software programs. ``It took a long time for the integration strategy to play out,'' said a former senior Microsoft researcher. ``Back then, integration was basically bolting a browser onto Windows.'' THE `BALANCING ACT': AMERICA ONLINE TOSSES IN TOWEL America Online chairman Stephen Case refers to dealing with Microsoft as ``a delicate balancing act.'' That balance swung sharply from the fall of 1995 to the spring of 1996, when Microsoft used the lure of giving America Online a featured place on the Windows desktop as the ultimate bargaining chip. To gain access to computing's most coveted real estate, America Online agreed to make Microsoft's Internet Explorer the main browser for its online subscribers, who now number more than 13 million. Yet throughout 1995, as Microsoft prepared to introduce Windows 95, the most significant improvement ever in its operating system, Case was knocking on the door of the Justice Department. His complaint was that Microsoft was going to place its new online service, Microsoft Network, a direct competitor to America Online, prominently on the desktop screen of Windows 95, which was introduced in August. This bundling tactic of using the industry-dominant operating system to market Microsoft Network, or MSN, Case argued, gave Microsoft an unfair advantage in the young but fast-growing online business. The Justice Department listened and investigated. But ultimately, the government decided against taking any action. At America Online's headquarters in Vienna, Va., Microsoft was both feared and loathed at the time. America Online had a designated ``Microsoft watcher,'' a young M.B.A. who tracked its adversary's every move. Above the desk in his small, windowless office was a picture of Gates. Beneath the picture, in large block letters, were the words ``THE ENEMY.'' Though America Online was the clear leader in the online services business, it had ample reason to worry about an all-out assault by a rival as rich and aggressive as Microsoft. When he had visited the Microsoft headquarters a couple of years earlier, Case recalled, Gates had bluntly assessed Microsoft's options by saying he could buy 20 percent of America Online, all of it or enter the online business on his own and ``bury you.'' A threat or merely a statement of the facts? ``A bit of both,'' Case said recently. ``But he was mainly articulating what everybody at that meeting kind of intuitively understood.'' Yet by 1996, Microsoft and America Online found they had reason to cooperate. With the exploding popularity of the Internet's World Wide Web, the conventional online companies, like America Online and Compuserve, had to provide their customers Internet access as well as their own services. America Online had its own browser, but to keep pace with the rapidly advancing technology it made sense to do a deal with Netscape or Microsoft. For both software companies, a deal with America Online, which had 5 million subscribers at the time, could mean a big surge in browser use and market share. Netscape seemed the natural partner for America Online, since both companies were Microsoft rivals. On March 11, America Online did announce that it would buy Netscape technology, but it was a standard licensing deal based on a payment-for-use formula. The next day, America Online announced a more significant deal with Microsoft making its browser the default technology _ the browser America Online subscribers would use unless they specifically asked for Netscape's Navigator. To win the deal, Microsoft offered to give America Online a start-up icon on the Windows desktop _ precisely the kind of equal treatment on the main Windows screen that Case had asked the Justice Department to require of Microsoft. ``After we agreed to its Internet Explorer browser, Microsoft allowed us to be bundled on the Windows desktop,'' Case said. ``It was an example of Microsoft's pragmatic side.'' The pragmatic decision was that the paramount corporate goal was to increase browser market share to protect the mainstay software business. As a result, its new online service, MSN, would have to sacrifice an important marketing advantage over its main rival, America Online. ``It was Bill's decision,'' said former MSN general manager Russell Siegelman, referring to Gates. ``He sent me e-mail on it. He said he didn't think it would hurt MSN that much. I disagreed with him.'' To other Microsoft executives, Gates expressed a different view of the likely impact on MSN. He told senior vice president Brad Silverberg that putting America Online on the Windows desktop would amount to ``putting a bullet through MSN's head,'' according to a deposition taken by the Justice Department. In the antitrust suit, the government asserts that the America Online deal shows how Microsoft used the power of its Windows monopoly to give it an edge in the browser war against Netscape. David Colburn, a senior vice president of America Online who took part in the browser negotiations with Microsoft, is a witness for the government. Today, Microsoft has overhauled its Internet strategy to focus mainly on building popular special-interest Web sites in fields like travel, personal finance, automobile retailing and news. And it is putting these sites, along with e-mail and search features, in an all-in-one site that uses the name MSN.com. ``I still regard Microsoft as a primary threat,'' Case observed. ``Microsoft has a history of getting it right in the long run, and there's no reason to think it won't in this business as well. We will always be in Microsoft's cross hairs.'' THE LESSON: DON'T CONFRONT A STEAMROLLER At Netscape's headquarters in Silicon Valley, the strategy today is one of avoiding head-to-head competition with Microsoft whenever possible. ``Don't do something that is in Microsoft's path _ that's the lesson learned,'' observed Clark, the Netscape chairman. Silicon Valley's venture capitalists, the investors who finance so many of the nation's high-tech startups, generally follow the Netscape formula these days. Yet that still leaves ample room to prosper. For while competing directly with Microsoft is dangerous, the software industry as a whole is an engine of wealth creation, job generation and technical innovation. And there is an ambivalent side to the venture community's relationship with Microsoft. For if a start-up cannot steer clear of Microsoft entirely, the favored option is to be bought out by Microsoft, which has scooped up many fledgling companies as a way of acquiring promising technology and people. ``Microsoft understands start-up innovation and how to co-opt start-up innovation better than any other high-tech company,'' said James Breyer, managing partner of Accel Partners, a venture capital firm. As Microsoft has grown, it has come to be seen not merely as a competitor but as a force of nature that shapes the business environment, like a weather front. ``Microsoft is incredibly pervasive,'' said Stewart Alsop, a partner with New Enterprise Associates, a venture capital firm in Menlo Park, Calif. At the board meetings of the companies in which his firm has invested, two issues always come up, he said: ``One is the price of the company's stock, and the other is what Microsoft is going to do.'' In the last few years, Microsoft has offered its guidance during almost yearly meetings between senior Microsoft executives and leading venture capitalists. The meetings are part of Microsoft's effort to improve its sometimes prickly relations with Silicon Valley. ``We work hard to provide clarity about where we're going and where we're not going,'' said Greg Maffei, Microsoft's chief financial officer. Last year's conference took place in October at the Quadrus office building on Sand Hill Road in Menlo Park, the Wall Street of high-tech venture investing. Maffei led a team of five Microsoft executives who appeared before a group of 40 venture capitalists, one of whom stood and asked the question that seemed to be on the minds of many of his peers: ``How do I invest in a company that stays out of the way of the steamroller?'' Maffei, recalled one person who attended the meeting, stood up and delivered a brief lecture on businesses that Microsoft was likely to avoid. His list included specialized software for manufacturing, human resources management, computer-aided design and others. But, this person noted, broad swaths of the industry appeared to be designated as off limits _ including new software platforms that might compete with Microsoft's personal computer operating system. At one point, Ruthann Quindlen, a partner with Institutional Venture Partners, leaned over to Vinod Khosla, a co-founder of Sun Microsystems and a partner at the venture capital firm Kleiner Perkins Caufield & Byers, and said quietly, ``I guess that leaves us washing machines and toasters.'' ||||| Shortly before the government filed its antitrust suit against Microsoft Corp. in May, Joel Klein, the assistant attorney general in charge of the Justice Department's antitrust division, met with a Silicon Valley executive. The executive recalls telling Klein that unless a case went beyond the Internet browser market, it would have little effect on Microsoft's power to stifle competition across the computer industry. Klein replied that he understood the computer executive's concerns. But he said time was running short and the strongest evidence in hand involved Microsoft's battle against Netscape Communications Corp. in the market for the so-called browser software used for navigating the Internet. ``This is a Netscape case,'' the executive recalls Klein saying. But five months later, the case that the government is bringing to trial on Monday extends well beyond Netscape and the browser war to embrace what it described in a recent court filing as ``a broad pattern of anti-competitive conduct'' by Microsoft. Netscape, the government insists, is still a prime example of the pattern _ but only one of several examples. The 12-person witness list for the Justice Department and 20 states suing Microsoft reflects the new evidence added to the case since May. James Barksdale, Netscape's president and chief executive, will appear first, but he will be followed by executives representing a cross section of the nation's high-technology companies including Intel, IBM, Sun Microsystems, Apple Computer, America Online and Intuit. In bringing a more ambitious, complicated case to trial than the one it filed in May, the government has chosen a high-risk strategy. The law states that new evidence can be added to a suit after it is filed, but not new charges. And so, in his federal courtroom in Washington, U.S.District Judge Thomas Penfield Jackson could decide to rule out some of the new evidence as ranging too far afield from the original suit. But if the government wins its broadened case, the court-ordered remedies would no doubt be far tougher on Microsoft. In May, the government's suggested steps amounted to equal treatment for Netscape's browser and Microsoft's browser. But the government recently asked that the judge hold a separate hearing on remedies, if it wins the case. The remedies under consideration now include more basic changes in Microsoft's business practices _ perhaps even a breakup of the company _ intended to loosen Microsoft's grip on computing. That would be precisely the kind of sweeping reform that Microsoft's foes would applaud. ``The government has doubled the bet and doubled the stakes,'' said David Yoffie, a professor at the Harvard business school who is co-author of the book, ``Competing on Internet Time: Lessons From Netscape and Its Battle With Microsoft.'' Meanwhile, in the Microsoft camp, the government's strategy is dismissed as a desperate act _ taken after a court ruling in June that threatened to undermine the antitrust suit. That ruling came in a separate case, involving the interpretation of the consent decree that Microsoft signed with the Justice Department in 1995. In the June ruling, a federal appeals court said that Microsoft could bundle its browser with its industry-standard Windows operating system and call them one product. The appeals-court ruling would seem to undercut the assertion in the government's current antitrust case that the browser and the operating system were two separate products, bundled together and given away in an effort to thwart competition in the browser market. ``With the appeals-court ruling in June, the government lost the heart of its case,'' said Charles Rule, a former senior official in the Justice Department, who is now a consultant to Microsoft. ``So it has taken a blunderbuss approach of scrambling to throw everything it can find _ even evidence the Justice Department has had for years _ into the gun barrel and see what hits.'' The June appellate ruling did shake the prosecution team. But mostly it strengthened the hand of those within the Justice Department who had been urging that the case be broadened, according to people who have worked on the investigation. At the same time, they say, new evidence was coming in as the investigation moved ahead and prosecutors raced to meet the accelerated trial schedule approved by the court. Speed was a priority from the outset, they say. The Justice Department and the states filed their suit in May to move before Microsoft's new operating system, Windows 98, was introduced in June. While not seeking to block the release of Windows 98, government lawyers wanted to get to the the courtroom as early as possible as PC makers and computer users adopt this latest version of Microsoft's Windows operating system, which functions as the central nervous system for more than 90 percent of personal computers sold. The key allegations, government lawyers note, have not changed since May _ namely, that Microsoft illegally used its market power in operating systems to defend its monopoly position and to try to extend into new markets. ``But the only thing that was wrapped up in a bow in time for the May filing was the browser,'' said one person who worked on the case. ``The real game plan was always to get a broader case.'' What is more, one person noted, the prosecution team was not at full strength until shortly before the suit was filed. David Boies, a renowned courtroom litigator and a former partner at Cravath, Swaine & Moore who successfully defended IBM in its 13-year confrontation with the government, was named as special counsel for the Justice Department last December. But Boies, who left Cravath last year, did not start working full-time for the Justice Department until mid-April, because he was still finishing private cases for his own firm, Boies & Schiller. The antitrust suit filed in May leaned heavily on the Netscape story, mentioning Microsoft's main rival in the browser market some 130 times in the complaint and a supporting memorandum. But it also prominently mentioned Microsoft's tactics against Sun Microsystems, creator of Java, an Internet programming language, and cited it as an ``example'' of Microsoft's behavior. ``It was crafted as a template that could be added to without much stretching,'' one person involved in the case said. And so, as new evidence piled up and seemed to fit into a pattern, Klein step by step approved the widening of the case, the person said. And that explains, the person continued, how it is that evidence that has been in the hands of the Justice Department for years has been added to the case since May; only after gathering new evidence did it become apparent that the older material fit the pattern of the current case. For example, the government has added the contention that Microsoft pressured Intel Corp., the big microchip maker and a close partner of Microsoft, to curb its development efforts in multimedia and Internet software because they might conflict with Microsoft's plans. The government contends that the arm-twisting occurred at meetings between the two companies three years ago, especially one on Aug. 2, 1995, which was attended by Andrew Grove, the Intel chairman, and Bill Gates, the Microsoft chairman. Part of the government's evidence in the Intel-Microsoft episode is copies of the handwritten notes taken by Steven McGeady, an Intel vice president who attended the meetings, and a memo written by him on Aug. 28, 1995. The memo, still under court seal, said that Gates ``made vague threats'' and was ``livid'' about Intel's investments in the Internet ``and wanted them stopped.'' A handwritten note, also under court seal, quotes Paul Maritz, a Microsoft executive, as saying that Netscape is their ``common enemy'' and that Intel's role should be to ``fill in stuff in and around Microsoft's strategy.'' These documents were sent by Intel to the Justice Department's office in San Francisco in November 1995, in response to a Civil Investigative Demand _ a civil subpoena _ served on Intel on Nov. 10, 1995. On its own, the Intel material was intriguing, but it became part of the antitrust suit only as other evidence surfaced, one person close to the case said. The government is contending that Microsoft also tried to urge Apple to stop selling its Quicktime multimedia software in the Windows market and tried to convince Real Networks Inc. to pull back in the market for so-called streaming software. The government case has also broadened, people involved in the case say, as more witnesses from the industry have been increasingly willing to testify. ``In the beginning, most people in the industry believed that the government would lose and Microsoft would retaliate if they came forward,'' one person said. ``But as the strength of our case was perceived to improve, more people were willing to come forward, and things snowballed. You get Intel, it's easier to get Apple and so on.'' ||||| The government's antitrust scrutiny of Microsoft, the world's largest independent software company, has spanned Republican and Democratic administrations and involved hundreds of government lawyers and investigators. But it has by no means been an example of consistent, coordinated public policy. Nor, by all accounts, of politics. Instead, like the software industry itself, the government's pursuit of Microsoft has taken leaps, hit dead ends and evolved in ways no one could have controlled or predicted back when it started in 1989. It was in November of that year, on a hot afternoon at a computer-industry convention in Las Vegas, Nev., that Bill Gates, Microsoft's chairman, looked like he'd been dragged to the news conference with a senior executive from IBM _ which at the time dominated Microsoft and the entire computer industry. The two companies _ IBM, then the leading maker of personal computers and Microsoft, the leader in PC operating system software _ were collaborating on the design and marketing of a new operating system called OS/2. But Microsoft was also beginning to sell a competing product, Windows. The industry trade press was full of worried articles: which system was going to become the new standard? With Gates standing uncomfortably at his side, James Cannavino, an IBM divisional president, said that the two companies wanted to ``clear the air.'' OS/2 was the future, he said. As for Windows, he added, it would remain a niche product for under-equipped computers. Windows, he asserted, would never receive all the advanced features of OS/2. Gates certainly did not look happy. But he did not disagree. The news conference got little attention, just a few articles deep inside newspapers and trade publications. But a few weeks later, Norris Washington, a senior antitrust lawyer with the Federal Trade Commission, happened to read one of those articles, in Byte magazine. ``IBM and Microsoft have now defined their unified vision of graphical operating environments,'' the article said, ``and it looks sort of like a U.S. economic model,'' divided into lower-, middle- and upper-class products. As Washington saw it, IBM and Microsoft were colluding to divide the operating-system market _ a potential violation of antitrust law. Soon the FTC staff opened an investigation of Microsoft and IBM And since that small first step, Microsoft has been under unrelenting scrutiny from federal antitrust investigators for a constantly evolving series of allegations and charges, month after month, year after year, for the last nine years. Now comes the antitrust trial scheduled to begin on Monday, with a multiplicity of charges woven of threads drawn from more than a dozen different investigative inquiries during that nine-year span. Microsoft, today the most feared company in the software business and carrying a stock-market value of nearly $234 billion, presents a huge and highly visible antitrust target. Yet, while the company's allies ask, ``What is the Clinton administration's political agenda in going after Microsoft?'' the answer seems to be there is none. In interviews, more than a dozen current and former senior antitrust officials _ whether friends of the government or of Microsoft _ all say the Justice Department's antitrust suit is a natural outgrowth of the previous investigations. As for politics, all the officials agreed that the antitrust division operates independent of the administration's political considerations. Charles Rule was the assistant attorney general who headed the antitrust division during the Bush administration, and he is now a Washington lawyer who serves as an adviser and advocate for Microsoft. ``When I was there,'' Rule said of his Justice days, ``the White House was punctilious in terms of never getting involved in whatever we decided to do. There was no communication between antitrust and other branches of government.'' Asked if he believed that policy had changed under the Clinton administration, he said: ``Not really. I've seen nothing to suggest it.'' Joel Klein heads the antitrust division now, and in an interview dealing with his division's role in the Clinton administration's technology policy, not specifically relating to the Microsoft case, he said: ``There is no statutory restriction, but as a practical matter, civil and criminal prosecutions are invariably carried out without any political contact.'' Klein said, by way of examples, that he might discuss merger cases involving military or aviation industries with the Defense Department or Transportation Department. ``But never the White House,'' he said. ``For a significant case, we might call the White House and say `An hour from now we are going to hold a press conference.' '' ``The last time there was any interference,'' he added, ``was the Dita Beard-ITT case.'' Mrs. Beard, a lobbyist for ITT Corp., was accused in 1972 of having written a memo saying that a $400,000 donation to the Republican National Convention had ``gone a long way'' toward settling antitrust suits brought against the company by the Nixon administration's Justice Department. The authenticity of the memo was never proved, and Mrs. Beard always denied writing it. In any case, Klein says, ``since Watergate, it's been immaculate.'' In the case of Microsoft, neither President Clinton nor Vice President Al Gore has ever volunteered a comment. In answer to a question during a news conference in May, just before the suit was filed, Clinton said: ``I have taken the view that I should not comment on matters within the Justice Department. At this time, I do not think I should depart from that policy on this case, even though it obviously will have a big impact on an important sector of our economy. But I have to say, based on what I know to date, I have confidence in the way the antitrust division in the Justice Department has handled the matter.'' Since then, Clinton has said nothing else about the case, publicly at least. And Gore, who generally represents the administration on technology issues, has never commented at all. In Rule's opinion, the administration would be foolish to involve itself, even if it were politically acceptable to do so. ``It would be a little odd for the administration to push the Justice Department in this suit,'' he said. ``It would be a policy mistake and a political mistake. I would be hard pressed to explain why they would do that.'' Taking sides in the highly charged technology world is dangerous, particularly since the Democrats rely on Silicon Valley companies for political donations and support. In fact, the present and former government officials all said the suit was simply a natural extension of the inquiries conducted during the last nine years. They began at the FTC. Soon after Washington read that article in Byte, the FTC staff opened an investigation of the Windows-OS/2 question. But as has happened so often in the following years, turns in the market made the initial inquiry irrelevant. Microsoft abandoned its agreement with IBM, and Windows quickly grew to be the industry standard, while OS/2 remained a cipher. But as that issue faded, once government investigators began looking at Microsoft they found other things that troubled them. In 1991 Washington, who still works for the FTC, informed Microsoft that the investigation was being expanded. The agency, his letter said, was now trying to determine whether Microsoft was using its dominant position in operating-systems software to stifle competition in other areas. That general idea lies at the heart of the present suit. One former senior FTC official said the commission staff had confidence in the case but realized that the Reagan-era commissioners, who had to approve any suit, might have a different view. ``We knew the commission might have difficulty with a monopolization case,'' the former official said. ``They hadn't brought a case in years.'' And in fact, in 1993 the commission voted 2-2 on the question of whether to file formal charges. The deadlock served as a dismissal. Then, a few months later, the Justice Department decided to pick up the case. ``It was farther along than most cases we got,'' recalled Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. ``Usually a case would be two or three people complaining and a few documents,'' he said. ``But this was a fully researched record. They gave us the files and briefed us on what they had done.'' The Justice Department lawyers picked up the same thread. ``The general idea behind our inquiry,'' Litan said, ``was that they should not be allowed to use their monopoly in operating systems to cement a monopoly in other areas.'' In 1995, Microsoft and the government reached a consent agreement in which the company promised to stop forcing PC makers to buy one copy of a Microsoft operating system for every computer sold _ instead of one for every computer on which the operating system, MS-DOS or Windows, was installed. The company also agreed to stop tying the sale of one software product to the sale of another. The charges in the present suit are similar in many ways. Even with the agreement, the government investigations continued. That same year, Justice Department investigators showed up at the offices of Netscape Communications Corp. for the first time to ask questions about their next line of inquiry. ``America Online had been complaining,'' a senior Netscape executive recalled, ``because Microsoft was bundling the Microsoft Network,'' a competing online service, ``with Windows.'' Once more, market forces overtook the investigation. The Microsoft Network never grew particularly popular while America Online prospered and grew. But, not surprisingly, new complaints filled the void. In May 1995, Anne Bingaman, the assistant attorney general who headed the antitrust division, remarked: ``We get complaints about Microsoft all the time. We have become a kind of Microsoft complaints center. And we take them very seriously.'' In 1996, Netscape's first complaint arrived. In a letter to the Justice Department, Netscape said that Microsoft was using its dominance in personal-computer operating systems to force or persuade computer makers to favor Microsoft's browser, used to explore the World Wide Web, over the one marketed by Netscape. The next year the Justice Department formally charged Microsoft with violating the consent agreement by tying sales of Windows to installation of the company's Web browser on new computers. ``It seemed like a slam-dunk violation of the consent decree,'' a natural extension of that case, recalled Litan, who had left the department by then. A Federal District Court judge agreed, but an Appeals Court panel overturned that ruling this summer. In the meantime, last May the Justice Department and 20 state attorneys general filed their new suit against Microsoft, which is scheduled for trial on Monday. It contends that Microsoft has engaged in bundling, tying and other predatory behavior similar in many ways to the numerous previous allegations and investigations of the last nine years. ``A good part of this case is just Round II of the case we dealt with in Round I,'' in the early in the 1990s, Litan said. Or, as the former senior FTC official put it, ``there's certainly a common thread that runs all the way through here.'' But through the years that thread has been twisted, pulled and spun by hundreds of different hands. ||||| Microsoft Corp. has said that material in an unpublished book by two business school professors will be a crucial part of its defense in the antitrust trial scheduled to begin next week. But judging from an advance copy of the manuscript, the Justice Department and 20 states that are suing the software giant will find support for their arguments in the book as well. To cite one example, Microsoft contends that its industry-standard Windows operating system and its Internet Explorer browser are a single integrated product. In its suit, the government asserts that they are two separate products that Microsoft bundled together to get an unfair edge over its rival, Netscape Communications Corp., in the market for software used to browse the Internet's World Wide Web. In ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft,'' the authors, Michael A. Cusumano of the Massachusetts Institute of Technology's Sloan School of Management and David B. Yoffie of the Harvard business school, quote a Microsoft executive as saying that only with the third version of Microsoft's browser was it integrated with Windows. Microsoft hurried its first browser offerings into the market, the book says, in its race to catch up with Netscape, then took a more ambitious approach with Internet Explorer 3.0, which was introduced in August 1996. In that version it changed its software design to use programming modules, or components, that could be put together and rearragned like building blocks. In the book, Ben Slivka, a Microsoft general manager, is quoted as saying, ``IE 3.0 was the key thing because we did the componentized browser,'' He added, ``We really made Internet Explorer part of the Windows platform.'' The timing could be legally significant because in its suit the government cites as evidence requests before August 1996 by personal computer makers that wanted to load Netscape's browser on their machines instead of Microsoft's browser. Microsoft denied the requests, insisting its browers and Windows were a single, integrated product. Microsoft's legal team obtained an early manuscript of the new book last month, by issuing a subpoena to a Netscape executive who was given a confidential copy by the authors to review. Microsoft has also sought the transcripts of 44 current and former Netscape employees interviewed by the authors. A federal judge in Boston last week denied Microsoft access to that research materials, but the company may appeal the ruling. The new book, published by the Free Press imprint of Simon & Schuster, is being hurried into print so it can be shipped within days of the start of the Microsoft trial on Oct. 19. But already, a few quotes from Netscape executives have leaked out. The authors decided to send the complete manuscript to The New York Times and three other news organizations Monday, so that the material could be read in context. Microsoft intends to use material from the book as evidence that Netscape's troubles resulted largely from its own missteps rather than from any alleged predatory practices by Microsoft. The book does detail where Netscape stumbled, shifting its strategy too often and running into obstacles in its software development efforts. In private antitrust suits, the argument that the competitor was his own worst enemy is an established defense. But legal experts say that defense may well be far less effective in a federal case in which the government is seeking court-mandated changes in Microsoft's business practices rather than the monetary damages that are the goal of plaintiffs in private cases. ``It seems to me that this debate over Netscape's mistakes is a total sideshow,'' said Robert Litan, a former senior official in the Justice Department's antitrust division, who is now at the Brookings Institution. ``But Microsoft has a big legal team, and it seems they are working on every defense they can find.'' The book quotes a former Netscape executive, Ram Shriram, as saying the company bungled a chance to win a sizable share of the browser business from America Online Inc. But that was a second-chance to do a deal with America Online, the leading online service. The government's case focuses on an earlier deal in March 1996, when America Online chose Internet Explorer as its preferred browser; in that bargain Microsoft agreed to place a startup icon for the online service on the main Windows desktop screen _ the prime real estate in computing. For a book entitled ``Competing on Internet Time,'' it is intriguing that one of its central themes is that Netcape got too wedded to the notion that the Internet revolution would change everything quickly. Microsoft, by contrast, stuck to its three-year planning horizon that enabled the company, the authors write, to ``mesh its short-run tactical plans with a broader strategic view of how to win the war.'' The book quotes Steve Ballmer, Microsoft's president, as saying, ``The fact of the matter is that customers can't take cataclysmic change every three months. The organization also can't. You can ship products quickly. But you can't say, `Oh, we have a radically new strategy' every three months.'' ||||| Following is the text of the first two sections of the Sherman Act, as passed by Congress in 1890. As the foundation on which federal antitrust law has been built, the act has been amended several times _ elevating the crime to a felony, increasing the fines and prison terms for individuals and setting fines for corporations convicted of violating it. In the case of Microsoft, the government has invoked the Sherman Act to file a civil suit that seeks to change the company's business practices, not a criminal suit that seeks financial penalties. An Act to Protect Trade And Commerce Against Unlawful Restraints and Monopolies: Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. Section 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade of commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. ||||| The case of United States vs. Microsoft Corp., the government's most aggressive move against a monopolist in almost 25 years, is playing out against a century of antitrust laws so broadly worded and court rulings so ambiguous that both sides are citing the same rulings to support their opposing arguments. Whatever the outcome of the trial, scheduled to begin Monday in U.S. District Court in Washington, an almost certain appeal will leave to the Supreme Court the task of bringing legal order to 100 years of clashing antitrust doctrines. The case focuses on Microsoft's Windows, the operating system that controls about 90 percent of all personal computers sold today. The government says its objective is to curb illegal monopolistic business practices that threaten to render large parts of the economy vulnerable to the vicissitudes of a single company. Microsoft asserts that the case is intended to give the government control over which features can be added to Windows. However grand the economic stakes, the legal dispute is narrow. The government says that Microsoft's contracts with computer manufacturers and with companies that provide access to the Internet illegally stifle competition. The contracts prohibit manufacturers from substituting Netscape Communications Corp.'s Navigator browser for Microsoft's Internet Explorer. They also prohibit them from removing from the Windows main screen, or desktop, links to sites on the World Wide Web run by Microsoft or its partners. Microsoft's contracts with companies that connect people to the Internet and with businesses that sell goods and services on the Web require favored treatment for Internet Explorer over Navigator in exchange for links on the Windows desktop. In the wake of the lawsuit, Microsoft has voluntarily dropped some of these requirements, though it could reinstate them at will. Microsoft says that its contracts are legal because they produce tangible benefits for customers, including easier Internet access. The Justice Department says that the bundling of Explorer with Windows 95 and the inclusion of the browser as part of Windows 98 amount to ``tying,'' an illegal practice that forces customers of one product to purchase another. The contracts with manufacturers and Internet services are illegal, the government says, because they are intended not only to create a monopoly in the browser market but to protect Microsoft's existing monopoly in operating systems. The latter threat is key, according to the Justice Department. Browsers have the potential, like an operating system, to act as a software platform on which other programs run. So contracts intended to drive browsers out of the market would also insulate the Windows monopoly. Many antitrust experts say the problem facing the Justice Department is that the courts have provided no clear definition of tying and no clear guidelines for determining when contracts are illegally exclusionary. Professor Lawrence White of New York University, who was chief economist of the Justice Department's antitrust division in the early 1980s, says that the courts treat tying as an unusual practice when in fact it is ubiquitous. No one, he said, ``would challenge the right of manufacturers to tie erasers to the tip of pencils, tires to an automobile or buttons to shirts.'' His point, shared widely among economists, is that some tying benefits consumers if, for example, it results in products that are easier to use or enables a company to recover development costs. But tying can be bad if it locks in monopoly power. The courts, White says, have not offered enough guidance for distinguishing good tying from bad, which is the nub of the legal dispute. Microsoft says it needs only to show that bundling Windows and Explorer passes what might be called a ``gross'' consumer benefits test _ that it offers an immediate benefit, whether or not it causes long-term damage to competition and, therefore, ultimately to consumers. The Justice Department says that Microsoft's practices must clear a higher hurdle: yielding ``net'' consumer benefits that are immediate and large enough to balance possible long-term harm to competition. So which test of consumer benefits satisfies antitrust laws? The simple answer is that no one knows for sure, which is why both sides can reasonably cite the same cases without fear of embarrassment. Consider a 1985 case, Aspen Skiing Co. vs. Aspen Highlands Skiing Corp., and a 1951 case, Lorain Journal Co. vs. United States. In the first, Aspen Skiing, the owner of three major ski runs in Aspen, Colo. _ the monopolist _ had for years sold a ticket in cooperation with Aspen Highlands, a competitor, that gave skiers access to both companies' runs. When Aspen Skiing unilaterally canceled the agreement, its rival's revenues shriveled and the rival sued. The Supreme Court ruled that Aspen Skiing had violated antitrust laws because there was no evidence its action helped consumers. In the Lorain Journal case, the only local newspaper in Lorain, Ohio, refused to sell advertising to companies that advertised on a new radio station. Here, too, the Supreme Court ruled that the exclusionary practice did nothing to benefit consumers. Indeed, in Aspen Skiing, the court even forced the monopolist to do business with its rival, a precedent that augurs well for the Justice Department, which seeks to force Microsoft to install Netscape's browser alongside its own. But Charles Rule, a legal consultant to Microsoft, says that in both cases the courts threw out exclusionary practices only because they offered no consumer benefit. The courts, he argues, never pounced on practices that resulted in lower prices or better products or service. Nor did the courts in either case call for balancing immediate benefits against hypothetical long-term harm. Rule argues that Microsoft's practices produce demonstrable consumer benefits. Besides, he says, unlike the actions taken by The Lorain Journal or Aspen Skiing, Microsoft's contracts do not prevent consumers from installing Netscape's browser or from using the Web sites of Microsoft's rivals. In truth, though, neither case answered what consumer benefit test should apply to product design. In Jefferson Parish Hospital District No. 2 et al. vs. Hyde, another case cited by both sides, the Supreme Court in 1984 recognized that surgeons and anesthesiologists provide an integrated service. Yet, the court said, a hospital with monopoly power would still not be allowed to force surgical patients to use its panel of anesthesiologists if consumers wanted to purchase the two services separately. That principle could undercut Microsoft's defense that the functional interdependence of Windows and Explorer requires bundling. But Microsoft will point to a strong concurring opinion that called for a tougher standard for the government to meet when it alleges tying. Microsoft will also draw support from several court rulings that allowed IBM to change the design of its computers in ways that made it hard for vendors to attach peripheral equipment. But perhaps Microsoft's best argument is that nowhere has the government identified a single case in which the courts explicitly called for throwing out a tied product on the basis of a balancing test. The courts, Microsoft will emphasize, steer clear of redesigning technically sophisticated products. The Justice Department's rejoinder is to note that the sole purpose of antitrust law is to protect consumers, so it makes no sense to bless practices that provide a dollar's worth of benefits today but, by stamping out competition, drive prices up by $1,000 tomorrow. The Justice Department will ask the court to at least insist that monopolists use the least exclusionary means possible to achieve whatever services they provide customers. Experts agree that the courts will subject Microsoft's restrictive contracts with Internet companies to a balancing test. But exactly how the court will decide whether consumers are helped or hurt is up for grabs. A balancing test would have the courts weigh the immediate benefits to consumers of one-click access to Internet sites and of features of a bundled Windows-Explorer package versus the harm over time of diminished competition in the markets for browsers and operating systems. But a test that makes good sense in theory can prove fiendishly difficult to use in practice. ``Balancing tests are impossibly difficult and arbitrary,'' said Rep. Thomas Campbell, R-Calif., who is a former law professor at Stanford University. ``The practical effect of balancing is to hand defendants like Microsoft almost certain victory.'' Microsoft argues _ and many antitrust experts agree _ that the courts have in fact gravitated away from a balancing test toward a simpler ``predation'' test for exclusionary contracts. Under this standard, a contract is illegal only if it is intended to drive out competition and thus to pave the way for a monopolist to raise prices later. Microsoft will have an easier time defending itself against a charge of predation, which amounts to victimizing its customers, than it would defending itself against a charge that its bundled product does consumers slightly more harm than good. The antitrust record, says William Baxter, who headed the antitrust division under President Reagan, is littered with ``contradictory, ambiguous and sometimes nonsensical'' verdicts. He and other legal experts agree that if nothing else, that record leaves plenty of legal leeway for the Supreme Court, should it hear the Microsoft case, to stiffen the spine of the antitrust law.

The Justice Department and 20 states filed a suit against Microsoft for violation of the Sherman Act, charging it illegally tried to use its dominance as the provider of Windows, the industry standard operating system, to stifle competition in other areas. At the heart of the case are Microsoft's contracts with computer manufacturers that prohibit them from substituting Netscape's Navigator browser for Microsoft's Internet Explorer, but Justice also alleges Microsoft exhibited a broad pattern of anti-competitive conduct with numerous other software companies. Microsoft says that Windows and its browser is one tool that offers immediate consumer benefit.

Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never formalized. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as asking, ``Does the Israeli government really want peace as it is trying to delude the world?'' In a front page comment, Sahar Baasiri, said ``The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ||||| The New York Times said in an editorial on Saturday, Oct. 10: Just days before heading to the United States for critical negotiations with Palestinian leaders, Prime Minister Benjamin Netanyahu jolted the Middle East peace effort with the appointment of Ariel Sharon as Israeli foreign minister. The most optimistic reading is that Sharon, long an implacable foe of the Palestinians, is prepared to make peace with them and then sell it to the Israelis who are most opposed. Unfortunately, he is also capable of wrecking the entire peace effort. Much will depend on whether Netanyahu can control his strong-willed aide, a goal that has eluded other Israeli leaders. Like a political typhoon, Sharon has roared across Israeli life for better than three decades as a brilliant military commander, a reckless defense minister and an ardent conservative, often leaving destruction in his wake. He still bears the burden of his role in the massacre of hundreds of Palestinians by Christian militiamen in Lebanon in 1982. An Israeli inquiry found he was indirectly responsible for the killings at the Sabra and Shatila refugee camps. As a leader of the most conservative wing of the Likud party, Sharon can help Netanyahu hold together his shaky Cabinet during potentially decisive negotiations with Yasser Arafat, the Palestinian leader. That will be fine if Sharon is willing to play a constructive role in the peace talks himself. But such behavior is not likely to be the first impulse of a man who has famously said he would never shake hands with Arafat. Since Netanyahu has designated Sharon as his chief negotiator, the new foreign minister will soon have the opportunity to act more responsibly. The first order of business when the two sides get together next week outside Washington is to wrap up negotiations over the further withdrawal of Israeli forces from the West Bank coupled with security guarantees from the Palestinians. Sharon can show statesmanship by helping Netanyahu close this deal, even though it is opposed by the Israeli settlers whose cause Sharon has long championed. Success in these talks would clear the way for the last and most difficult negotiations about a permanent settlement, including the shape and status of a Palestinian state and the future of Jerusalem. If Sharon ever hopes to overcome the shame of Sabra and Shatila, he must become a force for peace in the Middle East. ||||| Brief biography of Ariel Sharon, named Israel's foreign minister: ___ 1928: Born in Kfar Mallal in British-ruled Palestine. 1948 Mideast war: Fights as junior officer, wounded three times. 1953: Forms elite commando unit ``101'' and leads it on raids against Palestinian guerrillas who had been attacking Israeli border villages. 1956 Sinai campaign: Commands a parachute brigade that is dropped behind enemy lines, captures a key pass and cuts off Egyptian army's retreat. 1967 Mideast war: Commands an armored division that breaks through into central Sinai Peninsula. 1973 Mideast war: Commands a division that crosses the Suez Canal, turning the tide of the war on the Egyptian front. 1977: Elected to parliament and appointed minister of agriculture in the government of Menachem Begin. 1981: Defense minister in Begin government. 1982-83: Invades Lebanon in June 1982 to drive out PLO guerrillas, but is held indirectly responsible for Lebanese Christian militiamen's September 1982 massacre of hundreds of Palestinian civilians in the Sabra and Shatilla refugee camps south of Beirut. As a result, Sharon resigns as defense minister and holds only second-rank posts for next 15 years. 1984-90: Serves as trade minister in national unity government headed by Yitzhak Shamir of Likud and Shimon Peres of Labor. 1990-92: Serves as housing minister, presiding over settlement drive in the West Bank and Gaza Strip. 1996: Named infrastructure minister in Netanyahu government. Oct. 9, 1998: Netanyahu appoints him foreign minister, places him in charge of negotiations with the Palestinians, marking his return to the center of Israeli politics and world political arena. ||||| Ariel Sharon, the hawkish former general tipped to be Israel's next foreign minister, said in an interview published Sunday that if he gets the job, he won't shake the hand of Palestinian leader Yasser Arafat. Sharon, who opposes ceding West Bank land to the Palestinians, is being considered for the government's No. 2 post. In it, he would be a pivotal figure in reaching a final peace settlement with the Palestinians. ``Even if I will be appointed foreign minister and run the negotiations, I won't shake Yasser Arafat's hand,'' Sharon was quoted as saying in the Yediot Ahronot daily. The newspaper said Prime Minister Benjamin Netanyahu is close to making a decision on the appointment. Netanyahu himself has been acting foreign minister since the post was vacated in January by David Levy, a moderate who opposed Netanyahu's hardline negotiating strategy with the Palestinians. Sharon's appointment would signal a toughening of Israel's positions and could further strain relations with Arab neighbors. Sharon is the general who led Israel's 1982 invasion of Lebanon, and a former housing minister who strengthened Jewish settlement in territories Israel captured from Syria, Jordan and Egypt in the 1967 Mideast war. Sharon told the Haaretz newspaper he would accept the foreign minister's job if he were allowed to ``act to strengthen the country.'' ||||| Ariel Sharon has a law degree, and fancies himself a farmer. But for more than three decades his role in Israeli public life has been that of an unapologetic warrior, first on the battlefield and later in the bare-knuckled combat of domestic partisan politics. With his blunt tongue, barrel chest and bar-scrapper's demeanor, Sharon at 70 is to his many critics here a caricature of right-wing intransigence. To his equally numerous admirers he is a living symbol of unrelenting dedication to Israel's national survival. Still conveying physical vigor within an impressively expanding frame, he remains pugnacious to a fault. Both his friends and foes would agree that the new foreign minister is not a natural diplomat. A Zionist underground operative as a teen-ager and an infantry commander wounded in the 1948 war of independence, Sharon has fought, and fought memorably, in virtually every major military engagement in his country's history. He commanded the legendary armored division that crossed and seized control of the Sinai in the 1967 Arab-Israeli war. He returned to active service after a three-month retirement to lead Israel's badly outgunned armored divisions to victory, again in the Sinai, in the war of 1973. As defense minister in 982, Sharon led Israel's invasion of Lebanon, defying international condemnation with unrelenting artillery assaults on Beirut neighborhoods and Palestinian refugee camps believed by the Israeli high command to be Palestine Liberation Organization redoubts. To some, both in Israel and abroad, Sharon's Lebanese incursion will forever be associated with the massacres by Lebanese Christian Phalangists, allies of the Israelis, of a reported 460 unarmed Palestinians in the Sabra and Shatila refugee camps. In an official inquiry in Jerusalem and in a subsequent libel trial he brought in New York, Sharon was seen to have effectively refuted charges that he knew of and condoned the Phalangists' attacks beforehand. But the government investigating commission held that his failure to prevent the killings constituted grounds for his dismissal from the Defense Ministry. Since the 1982 invasion, Israel has been mired in an unpopular open-ended occupation of southern Lebanon, an operation with constant casualties among young inductees for which Sharon is still often blamed. To many Israelis, however, the Lebanese incursion was ultimately a risk worth taking, as it succeeded in crushing the PLO militarily and driving its forces far from Israel's borders. The PLO's defeat at Sharon's hands in Lebanon led eventually to its renunciation of armed warfare against Israel and embrace of the peace negotiation process for which Sharon as Foreign Minister will now be responsible. In civilian life he proved as savvy a political operator as he was a military strategist, helping to break Labor's hold on the Knesset and making himself an indispensable binding force within successive fractious Likud coalitions. His investiture as foreign minister next week will mark his sixth Cabinet appointment in 21 years. He previously held the agriculture and defense portfolios under Prime Minister Menachem Begin, trade and housing in Yitzhak Shamir's government, and national infrastructure _ essentially, a settlements support directorate _ in the administration of Benjamin Netanyahu. As a key member of the ``inner cabinet'' in Begin's first government, Sharon began the construction and systematic expansion of new Israeli housing developments throughout the West Bank, Gaza Strip and Galilee area territories occupied by Israel since 1967, a policy that he and his opponents alike would agree remains his signal domestic political achievement. At 70, Sharon remains one of the great polarizing fixtures of Israeli political life. An acerbic critic of the other leading soldier-politician of his generation, Yitzhak Rabin, Sharon attacked the Oslo peace accords as ``terrible and dangerous'' and condemned Rabin's negotiating partner, Yasser Arafat, as a ``war criminal.'' He angrily opposed any diplomatic discussions of the return of even an internationally demilitarized Golan Heights to Syria. A secular Jew in the manner typical of his generation of native-born Israelis, Sharon became an outspoken and effective defender of new Orthodox Jewish settlements in the predominantly Palestinian areas of the West Bank, cementing his position as a bridge between the traditional secular right and the new militant religious factions within the Likud coalition. ||||| A senior Palestinian negotiator says the success of a peace summit this week near Washington depends on a clear-cut ``yes'' from Israeli Prime Minister Benjamin Netanyahu to an American initiative. ``It is time to deliver,'' Saeb Erekat told reporters Sunday night after a meeting of the Palestinian Cabinet. Palestinian leader Yasser Arafat met Jordan's Crown Prince Hassan in Amman Monday to brief him on talks with U.S. officials on breaking the deadlock in the negotiations with Israel. Palestinians also were expressing growing unease over the naming of hawkish former Israeli general Ariel Sharon as Netanyahu's foreign minister. Sharon, whose appointment last week was widely seen as a bid to keep far-right allies from toppling Netanyahu's government, has been quoted as saying he would refuse to shake the hand of Palestinian leader Yasser Arafat. ``It's worrisome,'' Erekat said. Previously, the Palestinian leadership had said the appointment was an internal Israeli affair. Monday was a Jewish holiday and there was no immediate Israeli comment on summit prospects. However, the Israeli newspaper Yediot Aharonot said over the weekend that Netanyahu's hard-line Cabinet, due to meet Tuesday, was balking at agreeing to an American-authored plan for an Israeli pullback in the West Bank. Erekat said the Palestinians hope the four-day summit, set to begin Thursday outside the U.S. capital, would mark the end of a long round of meetings and the start of implementation of accords. ``It depends on Mr. Netanyahu. If he says `yes' to the American initiative and stops attempts to change the references of the interim agreement, we will reach an agreement in no time,'' Erekat said. At the table is a U.S plan for an Israeli troop withdrawal from 13 percent from the West Bank. The Palestinians accepted the plan, which includes security conditions they must fulfill. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Syrian-Israel peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Prime Minister Benjamin Netanyahu appointed Ariel Sharon, a hawkish former defense minister, to be Israeli foreign minister on Friday in an effort to placate the far right as he moves closer to turning over more West Bank land to the Palestinians. With his appointment, Sharon, 70, an ardent advocate for Jewish settlements in the West Bank, is expected to quell domestic opposition to the concessions that Netanyahu is supposedly prepared to make at a peace summit conference in the Washington area next week. For months, Sharon, who is currently the minister of national infrastructures, has maintained that redeploying Israeli troops from more than an additional 9 percent of the West Bank would be a ``national disaster.'' In assuming the role of foreign minister, however, he would be forced to abandon his public opposition to Netanyahu's decision to withdraw from another 13 percent of the Palestinian territory _ even if he votes against the accord. Sharon will be drawn directly into the issue, since Netanyahu has appointed him to direct the final status talks with the Palestinians, which would follow the signing of an interim peace agreement. Last week Sharon told an Israeli newspaper that, negotiations or not, he would never shake the hand of Yasser Arafat, the Palestinian leader, whom he has long disdained. Palestinian leaders and Israeli leftists were divided in their reactions, in similar ways. Some professed to be aghast, and some, like Nabil Sha'ath, the Palestinian transportation minister, said they were willing to ``forget history'' if Sharon's appointment provided Netanyahu the political backbone to sign a deal. In Washington, White House and State Department officials pledged to work closely with Sharon and emphasized that the personnel in an Israeli government are an internal affair. ``Arik Sharon is the most fitting person in the state of Israel for the position of foreign minister,'' Netanyahu said, using his nickname. ``He brings with him rich experience, creativity, proven working ability and I think that he well knows both the wounds and damages of war as well as the fruits of peace. ``Sharon has never hidden his beliefs,'' he continued, ``and his words have influenced the way that the redeployment will be carried out if not its extent.'' In a nod to Sharon, Netanyahu has decided on a new location for the nature reserve that would constitute 3 percent of the West Bank land. It was supposed to be in the Judean desert near Israel's eastern border, which Sharon argued would pose a strategic security risk. Instead, it was decided on Thursday that the nature reserve would instead be on the slopes of the Hebron hills, much closer to existing Jewish settlements. Many Israeli political observers believe that Netanyahu has eviscerated his right-wing opposition with this appointment, signaling that he genuinely intends to bring home a peace agreement. ``Who is the right wing now if Sharon is in the foreign ministry and negotiating with the Palestinians?'' asked Uzi Benziman, an editorial board member of the newspaper Haaretz and author of a critical biography of Sharon. ``It will be just the settlers and some real hard-liners who don't comprise more than 15 percent of public opinion. So it's really quite an intelligent move, suggesting that Netanyahu means business in trying to get an agreement.'' But the Palestinians took the news hard, and read it differently. ``I think it's a clear-cut message from Bibi,'' Saeb Erekat, a lead negotiator for the Palestinians, said, using Netanyahu's nickname. ``I imagine people will try to explain Netanyahu's intentions as trying to get the support of the right. What he is trying to do is make peace with the right wing at the expense of making peace with us. It means he wants to continue on the path of non-negotiations, because he wants to continue to be prime minister at any cost.'' Sharon declined to be interviewed Friday because his appointment must still be approved by the Cabinet on Tuesday, an approval that is expected. An aide, Raanan Gisin, said Sharon accepted the position so that he could ``stem the tide of dangerous developments and contribute to fighting the risks facing Israel.'' A retired general who fought in every Israeli war, Sharon, 70, is a leading figure of the Likud Party who has done much battle with the Likud prime minister. At the most recent party convention, he said that Netanyahu didn't know his right hand from his left, which the prime minister dismissed Friday as a comment made ``in the height of political arguments.'' And when Netanyahu first formed his Cabinet in 1996, the fact that he did not give Sharon a senior position caused an 11th-hour crisis before the swearing-in ceremony. Sharon retreated to his family farm in the Negev, and David Levy, who had been named foreign minister, said he would not serve unless Sharon was given a post. Netanyahu then created a Cabinet job, the minister of infrastructures, especially for Sharon. Levy resigned in January after a lengthy power struggle with the prime minister, and since then Netanyahu has been serving as his own foreign minister. Sharon, a member of the old guard, has a complicated political past, highlighted by a string of military victories, and checkered, to many, by his indirect role, as defense minister, in the Lebanese Christian Phalangist massacre of unarmed civilians in the Sabra and Shatila refugee camps in Lebanon in 1982. Many Israelis, even those who despise his politics, see him as a strong, experienced figure who knows his mind and who is capable of being moderate when he has power. Friday afternoon, the right-wing political establishment nearly universally applauded the appointment. Uzi Landau, who is a Likud hard-liner, said he was relieved to hear confirmed what has been a rumor for weeks. ``I feel more safe about the negotiations if Minister Sharon is directly involved,'' said Landau, who heads the Parliament's security and foreign affairs committee. ``Undoubtedly it will facilitate the situation for the prime minister to show the right that Arik Sharon is identified with the program, so therefore they can live with it.'' Right before the announcement was made, leaders of the National Religious Party, who had threatened to bring down the government, changed their combative tone. They emerged mollified from meetings with Netanyahu late Thursday, saying they would leave the government intact. Still, they would not connect their change of heart to the nomination of Sharon. ``Appointing Sharon is a political step we like very much,'' said Shaul Yahalom, the minister of transportation and a leader of the National Religious Party. ``But it will have no effect on how we see the peace agreement. Our concern there is on whether any of the 160 Jewish settlements are endangered.'' The appointment of Sharon comes against a backdrop of violence that has erupted this week. Friday, a 19-year-old Israeli soldier, Michal Adato, was stabbed to death by a Palestinian man as she got off a bus in her hometown, the settlement of Tomer in the Jordan Valley. Netanyahu reported that he had received a sympathy note from Arafat, who condemned the attack. Also Friday, in the continuing clashes between Palestinian youths and soldiers in the divided city of Hebron, 32 Palestinians were lightly injured by rubber bullets after the funeral of a Palestinian protester shot dead on Thursday. After Netanyahu made the announcement Friday, an Israeli reporter introduced a question by stating that Netanyahu had diminished the political threat from the right wing by appointing Sharon. ``Are you willing to sign on that?'' Netanyahu said. ``I do not know that. I do know one thing that when you are dependent on the vote of one or two people you can never know what will be.'' He was referring to his razor-thin majority in parliament _ which some analysts perceive to be his key motivator in appointing Sharon. ``More than anything else, this reflects the political weakness of Netanyahu,'' said Yaron Ezrahi, a leading intellectual and critic of the prime minister. ``He has recognized that the next redeployment is inevitable if he doesn't want to be seen as contributing to the wave of political violence that would follow a failure. But he doesn't have the domestic political power to carry out the big decision on his own.'' ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by pro-Israeli Christian Lebanese militiamen at two Beirut camps. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. The appointment ``is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin newspaper, which often speaks for the Syrian government. It said Netanyahu has sent ``a clear message to all those who are deluding themselves'' into thinking that Israel will change its anti-peace stand. Syrian-Israeli peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as saying: Sharon's appointment makes Lebanon and most world states ask: ``Does the Israeli government really want peace as it is trying to delude the world?'' An-Nahar's columnist, Sahar Baasiri, said in a front-page comment: `The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ``The man is a hero of Arab defeats; he is the firmest believer in the expansion of the land of Israel and in resolving the Palestinian problem at the expense of Jordan. He is a liar,'' Baasiri wrote. The conservative Ad-Diyar newspaper said in a front-page comment: ``The history of Ariel Sharon is known. He has called for burning Beirut, annexing the Golan, occupying the (West) Bank and slaughtering and displacing the Arabs everywhere.''

Prior to his appointment as foreign minister by Israeli Prime Minister Natanyahu in 1998, seasoned warrior Ariel Sharon announced that if appointed, he would not shake hands with Palestinian leader Yasser Arafat. The remark fit Sharon's long history of unyielding bellicosity towards Palestine. When he was appointed some thought that Netanyahu was placating Israel's far right wing while striving for peace. Others saw it as a move to scuttle the peace effort. Arab commentary deemed the appointment "tantamount to disaster" and "the bullet of mercy" to the peace process. Peace talks in the U.S. were in the offing with the outcome in doubt.

Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never formalized. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as asking, ``Does the Israeli government really want peace as it is trying to delude the world?'' In a front page comment, Sahar Baasiri, said ``The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ||||| The New York Times said in an editorial on Saturday, Oct. 10: Just days before heading to the United States for critical negotiations with Palestinian leaders, Prime Minister Benjamin Netanyahu jolted the Middle East peace effort with the appointment of Ariel Sharon as Israeli foreign minister. The most optimistic reading is that Sharon, long an implacable foe of the Palestinians, is prepared to make peace with them and then sell it to the Israelis who are most opposed. Unfortunately, he is also capable of wrecking the entire peace effort. Much will depend on whether Netanyahu can control his strong-willed aide, a goal that has eluded other Israeli leaders. Like a political typhoon, Sharon has roared across Israeli life for better than three decades as a brilliant military commander, a reckless defense minister and an ardent conservative, often leaving destruction in his wake. He still bears the burden of his role in the massacre of hundreds of Palestinians by Christian militiamen in Lebanon in 1982. An Israeli inquiry found he was indirectly responsible for the killings at the Sabra and Shatila refugee camps. As a leader of the most conservative wing of the Likud party, Sharon can help Netanyahu hold together his shaky Cabinet during potentially decisive negotiations with Yasser Arafat, the Palestinian leader. That will be fine if Sharon is willing to play a constructive role in the peace talks himself. But such behavior is not likely to be the first impulse of a man who has famously said he would never shake hands with Arafat. Since Netanyahu has designated Sharon as his chief negotiator, the new foreign minister will soon have the opportunity to act more responsibly. The first order of business when the two sides get together next week outside Washington is to wrap up negotiations over the further withdrawal of Israeli forces from the West Bank coupled with security guarantees from the Palestinians. Sharon can show statesmanship by helping Netanyahu close this deal, even though it is opposed by the Israeli settlers whose cause Sharon has long championed. Success in these talks would clear the way for the last and most difficult negotiations about a permanent settlement, including the shape and status of a Palestinian state and the future of Jerusalem. If Sharon ever hopes to overcome the shame of Sabra and Shatila, he must become a force for peace in the Middle East. ||||| Brief biography of Ariel Sharon, named Israel's foreign minister: ___ 1928: Born in Kfar Mallal in British-ruled Palestine. 1948 Mideast war: Fights as junior officer, wounded three times. 1953: Forms elite commando unit ``101'' and leads it on raids against Palestinian guerrillas who had been attacking Israeli border villages. 1956 Sinai campaign: Commands a parachute brigade that is dropped behind enemy lines, captures a key pass and cuts off Egyptian army's retreat. 1967 Mideast war: Commands an armored division that breaks through into central Sinai Peninsula. 1973 Mideast war: Commands a division that crosses the Suez Canal, turning the tide of the war on the Egyptian front. 1977: Elected to parliament and appointed minister of agriculture in the government of Menachem Begin. 1981: Defense minister in Begin government. 1982-83: Invades Lebanon in June 1982 to drive out PLO guerrillas, but is held indirectly responsible for Lebanese Christian militiamen's September 1982 massacre of hundreds of Palestinian civilians in the Sabra and Shatilla refugee camps south of Beirut. As a result, Sharon resigns as defense minister and holds only second-rank posts for next 15 years. 1984-90: Serves as trade minister in national unity government headed by Yitzhak Shamir of Likud and Shimon Peres of Labor. 1990-92: Serves as housing minister, presiding over settlement drive in the West Bank and Gaza Strip. 1996: Named infrastructure minister in Netanyahu government. Oct. 9, 1998: Netanyahu appoints him foreign minister, places him in charge of negotiations with the Palestinians, marking his return to the center of Israeli politics and world political arena. ||||| Ariel Sharon, the hawkish former general tipped to be Israel's next foreign minister, said in an interview published Sunday that if he gets the job, he won't shake the hand of Palestinian leader Yasser Arafat. Sharon, who opposes ceding West Bank land to the Palestinians, is being considered for the government's No. 2 post. In it, he would be a pivotal figure in reaching a final peace settlement with the Palestinians. ``Even if I will be appointed foreign minister and run the negotiations, I won't shake Yasser Arafat's hand,'' Sharon was quoted as saying in the Yediot Ahronot daily. The newspaper said Prime Minister Benjamin Netanyahu is close to making a decision on the appointment. Netanyahu himself has been acting foreign minister since the post was vacated in January by David Levy, a moderate who opposed Netanyahu's hardline negotiating strategy with the Palestinians. Sharon's appointment would signal a toughening of Israel's positions and could further strain relations with Arab neighbors. Sharon is the general who led Israel's 1982 invasion of Lebanon, and a former housing minister who strengthened Jewish settlement in territories Israel captured from Syria, Jordan and Egypt in the 1967 Mideast war. Sharon told the Haaretz newspaper he would accept the foreign minister's job if he were allowed to ``act to strengthen the country.'' ||||| Ariel Sharon has a law degree, and fancies himself a farmer. But for more than three decades his role in Israeli public life has been that of an unapologetic warrior, first on the battlefield and later in the bare-knuckled combat of domestic partisan politics. With his blunt tongue, barrel chest and bar-scrapper's demeanor, Sharon at 70 is to his many critics here a caricature of right-wing intransigence. To his equally numerous admirers he is a living symbol of unrelenting dedication to Israel's national survival. Still conveying physical vigor within an impressively expanding frame, he remains pugnacious to a fault. Both his friends and foes would agree that the new foreign minister is not a natural diplomat. A Zionist underground operative as a teen-ager and an infantry commander wounded in the 1948 war of independence, Sharon has fought, and fought memorably, in virtually every major military engagement in his country's history. He commanded the legendary armored division that crossed and seized control of the Sinai in the 1967 Arab-Israeli war. He returned to active service after a three-month retirement to lead Israel's badly outgunned armored divisions to victory, again in the Sinai, in the war of 1973. As defense minister in 982, Sharon led Israel's invasion of Lebanon, defying international condemnation with unrelenting artillery assaults on Beirut neighborhoods and Palestinian refugee camps believed by the Israeli high command to be Palestine Liberation Organization redoubts. To some, both in Israel and abroad, Sharon's Lebanese incursion will forever be associated with the massacres by Lebanese Christian Phalangists, allies of the Israelis, of a reported 460 unarmed Palestinians in the Sabra and Shatila refugee camps. In an official inquiry in Jerusalem and in a subsequent libel trial he brought in New York, Sharon was seen to have effectively refuted charges that he knew of and condoned the Phalangists' attacks beforehand. But the government investigating commission held that his failure to prevent the killings constituted grounds for his dismissal from the Defense Ministry. Since the 1982 invasion, Israel has been mired in an unpopular open-ended occupation of southern Lebanon, an operation with constant casualties among young inductees for which Sharon is still often blamed. To many Israelis, however, the Lebanese incursion was ultimately a risk worth taking, as it succeeded in crushing the PLO militarily and driving its forces far from Israel's borders. The PLO's defeat at Sharon's hands in Lebanon led eventually to its renunciation of armed warfare against Israel and embrace of the peace negotiation process for which Sharon as Foreign Minister will now be responsible. In civilian life he proved as savvy a political operator as he was a military strategist, helping to break Labor's hold on the Knesset and making himself an indispensable binding force within successive fractious Likud coalitions. His investiture as foreign minister next week will mark his sixth Cabinet appointment in 21 years. He previously held the agriculture and defense portfolios under Prime Minister Menachem Begin, trade and housing in Yitzhak Shamir's government, and national infrastructure _ essentially, a settlements support directorate _ in the administration of Benjamin Netanyahu. As a key member of the ``inner cabinet'' in Begin's first government, Sharon began the construction and systematic expansion of new Israeli housing developments throughout the West Bank, Gaza Strip and Galilee area territories occupied by Israel since 1967, a policy that he and his opponents alike would agree remains his signal domestic political achievement. At 70, Sharon remains one of the great polarizing fixtures of Israeli political life. An acerbic critic of the other leading soldier-politician of his generation, Yitzhak Rabin, Sharon attacked the Oslo peace accords as ``terrible and dangerous'' and condemned Rabin's negotiating partner, Yasser Arafat, as a ``war criminal.'' He angrily opposed any diplomatic discussions of the return of even an internationally demilitarized Golan Heights to Syria. A secular Jew in the manner typical of his generation of native-born Israelis, Sharon became an outspoken and effective defender of new Orthodox Jewish settlements in the predominantly Palestinian areas of the West Bank, cementing his position as a bridge between the traditional secular right and the new militant religious factions within the Likud coalition. ||||| A senior Palestinian negotiator says the success of a peace summit this week near Washington depends on a clear-cut ``yes'' from Israeli Prime Minister Benjamin Netanyahu to an American initiative. ``It is time to deliver,'' Saeb Erekat told reporters Sunday night after a meeting of the Palestinian Cabinet. Palestinian leader Yasser Arafat met Jordan's Crown Prince Hassan in Amman Monday to brief him on talks with U.S. officials on breaking the deadlock in the negotiations with Israel. Palestinians also were expressing growing unease over the naming of hawkish former Israeli general Ariel Sharon as Netanyahu's foreign minister. Sharon, whose appointment last week was widely seen as a bid to keep far-right allies from toppling Netanyahu's government, has been quoted as saying he would refuse to shake the hand of Palestinian leader Yasser Arafat. ``It's worrisome,'' Erekat said. Previously, the Palestinian leadership had said the appointment was an internal Israeli affair. Monday was a Jewish holiday and there was no immediate Israeli comment on summit prospects. However, the Israeli newspaper Yediot Aharonot said over the weekend that Netanyahu's hard-line Cabinet, due to meet Tuesday, was balking at agreeing to an American-authored plan for an Israeli pullback in the West Bank. Erekat said the Palestinians hope the four-day summit, set to begin Thursday outside the U.S. capital, would mark the end of a long round of meetings and the start of implementation of accords. ``It depends on Mr. Netanyahu. If he says `yes' to the American initiative and stops attempts to change the references of the interim agreement, we will reach an agreement in no time,'' Erekat said. At the table is a U.S plan for an Israeli troop withdrawal from 13 percent from the West Bank. The Palestinians accepted the plan, which includes security conditions they must fulfill. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Syrian-Israel peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Prime Minister Benjamin Netanyahu appointed Ariel Sharon, a hawkish former defense minister, to be Israeli foreign minister on Friday in an effort to placate the far right as he moves closer to turning over more West Bank land to the Palestinians. With his appointment, Sharon, 70, an ardent advocate for Jewish settlements in the West Bank, is expected to quell domestic opposition to the concessions that Netanyahu is supposedly prepared to make at a peace summit conference in the Washington area next week. For months, Sharon, who is currently the minister of national infrastructures, has maintained that redeploying Israeli troops from more than an additional 9 percent of the West Bank would be a ``national disaster.'' In assuming the role of foreign minister, however, he would be forced to abandon his public opposition to Netanyahu's decision to withdraw from another 13 percent of the Palestinian territory _ even if he votes against the accord. Sharon will be drawn directly into the issue, since Netanyahu has appointed him to direct the final status talks with the Palestinians, which would follow the signing of an interim peace agreement. Last week Sharon told an Israeli newspaper that, negotiations or not, he would never shake the hand of Yasser Arafat, the Palestinian leader, whom he has long disdained. Palestinian leaders and Israeli leftists were divided in their reactions, in similar ways. Some professed to be aghast, and some, like Nabil Sha'ath, the Palestinian transportation minister, said they were willing to ``forget history'' if Sharon's appointment provided Netanyahu the political backbone to sign a deal. In Washington, White House and State Department officials pledged to work closely with Sharon and emphasized that the personnel in an Israeli government are an internal affair. ``Arik Sharon is the most fitting person in the state of Israel for the position of foreign minister,'' Netanyahu said, using his nickname. ``He brings with him rich experience, creativity, proven working ability and I think that he well knows both the wounds and damages of war as well as the fruits of peace. ``Sharon has never hidden his beliefs,'' he continued, ``and his words have influenced the way that the redeployment will be carried out if not its extent.'' In a nod to Sharon, Netanyahu has decided on a new location for the nature reserve that would constitute 3 percent of the West Bank land. It was supposed to be in the Judean desert near Israel's eastern border, which Sharon argued would pose a strategic security risk. Instead, it was decided on Thursday that the nature reserve would instead be on the slopes of the Hebron hills, much closer to existing Jewish settlements. Many Israeli political observers believe that Netanyahu has eviscerated his right-wing opposition with this appointment, signaling that he genuinely intends to bring home a peace agreement. ``Who is the right wing now if Sharon is in the foreign ministry and negotiating with the Palestinians?'' asked Uzi Benziman, an editorial board member of the newspaper Haaretz and author of a critical biography of Sharon. ``It will be just the settlers and some real hard-liners who don't comprise more than 15 percent of public opinion. So it's really quite an intelligent move, suggesting that Netanyahu means business in trying to get an agreement.'' But the Palestinians took the news hard, and read it differently. ``I think it's a clear-cut message from Bibi,'' Saeb Erekat, a lead negotiator for the Palestinians, said, using Netanyahu's nickname. ``I imagine people will try to explain Netanyahu's intentions as trying to get the support of the right. What he is trying to do is make peace with the right wing at the expense of making peace with us. It means he wants to continue on the path of non-negotiations, because he wants to continue to be prime minister at any cost.'' Sharon declined to be interviewed Friday because his appointment must still be approved by the Cabinet on Tuesday, an approval that is expected. An aide, Raanan Gisin, said Sharon accepted the position so that he could ``stem the tide of dangerous developments and contribute to fighting the risks facing Israel.'' A retired general who fought in every Israeli war, Sharon, 70, is a leading figure of the Likud Party who has done much battle with the Likud prime minister. At the most recent party convention, he said that Netanyahu didn't know his right hand from his left, which the prime minister dismissed Friday as a comment made ``in the height of political arguments.'' And when Netanyahu first formed his Cabinet in 1996, the fact that he did not give Sharon a senior position caused an 11th-hour crisis before the swearing-in ceremony. Sharon retreated to his family farm in the Negev, and David Levy, who had been named foreign minister, said he would not serve unless Sharon was given a post. Netanyahu then created a Cabinet job, the minister of infrastructures, especially for Sharon. Levy resigned in January after a lengthy power struggle with the prime minister, and since then Netanyahu has been serving as his own foreign minister. Sharon, a member of the old guard, has a complicated political past, highlighted by a string of military victories, and checkered, to many, by his indirect role, as defense minister, in the Lebanese Christian Phalangist massacre of unarmed civilians in the Sabra and Shatila refugee camps in Lebanon in 1982. Many Israelis, even those who despise his politics, see him as a strong, experienced figure who knows his mind and who is capable of being moderate when he has power. Friday afternoon, the right-wing political establishment nearly universally applauded the appointment. Uzi Landau, who is a Likud hard-liner, said he was relieved to hear confirmed what has been a rumor for weeks. ``I feel more safe about the negotiations if Minister Sharon is directly involved,'' said Landau, who heads the Parliament's security and foreign affairs committee. ``Undoubtedly it will facilitate the situation for the prime minister to show the right that Arik Sharon is identified with the program, so therefore they can live with it.'' Right before the announcement was made, leaders of the National Religious Party, who had threatened to bring down the government, changed their combative tone. They emerged mollified from meetings with Netanyahu late Thursday, saying they would leave the government intact. Still, they would not connect their change of heart to the nomination of Sharon. ``Appointing Sharon is a political step we like very much,'' said Shaul Yahalom, the minister of transportation and a leader of the National Religious Party. ``But it will have no effect on how we see the peace agreement. Our concern there is on whether any of the 160 Jewish settlements are endangered.'' The appointment of Sharon comes against a backdrop of violence that has erupted this week. Friday, a 19-year-old Israeli soldier, Michal Adato, was stabbed to death by a Palestinian man as she got off a bus in her hometown, the settlement of Tomer in the Jordan Valley. Netanyahu reported that he had received a sympathy note from Arafat, who condemned the attack. Also Friday, in the continuing clashes between Palestinian youths and soldiers in the divided city of Hebron, 32 Palestinians were lightly injured by rubber bullets after the funeral of a Palestinian protester shot dead on Thursday. After Netanyahu made the announcement Friday, an Israeli reporter introduced a question by stating that Netanyahu had diminished the political threat from the right wing by appointing Sharon. ``Are you willing to sign on that?'' Netanyahu said. ``I do not know that. I do know one thing that when you are dependent on the vote of one or two people you can never know what will be.'' He was referring to his razor-thin majority in parliament _ which some analysts perceive to be his key motivator in appointing Sharon. ``More than anything else, this reflects the political weakness of Netanyahu,'' said Yaron Ezrahi, a leading intellectual and critic of the prime minister. ``He has recognized that the next redeployment is inevitable if he doesn't want to be seen as contributing to the wave of political violence that would follow a failure. But he doesn't have the domestic political power to carry out the big decision on his own.'' ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by pro-Israeli Christian Lebanese militiamen at two Beirut camps. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. The appointment ``is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin newspaper, which often speaks for the Syrian government. It said Netanyahu has sent ``a clear message to all those who are deluding themselves'' into thinking that Israel will change its anti-peace stand. Syrian-Israeli peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as saying: Sharon's appointment makes Lebanon and most world states ask: ``Does the Israeli government really want peace as it is trying to delude the world?'' An-Nahar's columnist, Sahar Baasiri, said in a front-page comment: `The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ``The man is a hero of Arab defeats; he is the firmest believer in the expansion of the land of Israel and in resolving the Palestinian problem at the expense of Jordan. He is a liar,'' Baasiri wrote. The conservative Ad-Diyar newspaper said in a front-page comment: ``The history of Ariel Sharon is known. He has called for burning Beirut, annexing the Golan, occupying the (West) Bank and slaughtering and displacing the Arabs everywhere.''

Appointment of Ariel Sharon as Foreign Minister by PM Netanyahu does not bode well for the peace process. His appointment is surprising in that the two have differed on withdrawal from Palestinian territory and is seen as an effort to placate the right. Sharon, 70, is an unapologetic warrior on the battlefield and in partisan politics. He brings heavy baggage: right-wing intransigence and responsibility for failing to prevent the killings of 460 unarmed Palestinians in refugee camps during the Lebanon incursion. Sharon has said that he will not shake Arafat's hand and his appointment is seen as a "bullet of mercy" for the Middle East peace process.

Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never formalized. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as asking, ``Does the Israeli government really want peace as it is trying to delude the world?'' In a front page comment, Sahar Baasiri, said ``The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ||||| The New York Times said in an editorial on Saturday, Oct. 10: Just days before heading to the United States for critical negotiations with Palestinian leaders, Prime Minister Benjamin Netanyahu jolted the Middle East peace effort with the appointment of Ariel Sharon as Israeli foreign minister. The most optimistic reading is that Sharon, long an implacable foe of the Palestinians, is prepared to make peace with them and then sell it to the Israelis who are most opposed. Unfortunately, he is also capable of wrecking the entire peace effort. Much will depend on whether Netanyahu can control his strong-willed aide, a goal that has eluded other Israeli leaders. Like a political typhoon, Sharon has roared across Israeli life for better than three decades as a brilliant military commander, a reckless defense minister and an ardent conservative, often leaving destruction in his wake. He still bears the burden of his role in the massacre of hundreds of Palestinians by Christian militiamen in Lebanon in 1982. An Israeli inquiry found he was indirectly responsible for the killings at the Sabra and Shatila refugee camps. As a leader of the most conservative wing of the Likud party, Sharon can help Netanyahu hold together his shaky Cabinet during potentially decisive negotiations with Yasser Arafat, the Palestinian leader. That will be fine if Sharon is willing to play a constructive role in the peace talks himself. But such behavior is not likely to be the first impulse of a man who has famously said he would never shake hands with Arafat. Since Netanyahu has designated Sharon as his chief negotiator, the new foreign minister will soon have the opportunity to act more responsibly. The first order of business when the two sides get together next week outside Washington is to wrap up negotiations over the further withdrawal of Israeli forces from the West Bank coupled with security guarantees from the Palestinians. Sharon can show statesmanship by helping Netanyahu close this deal, even though it is opposed by the Israeli settlers whose cause Sharon has long championed. Success in these talks would clear the way for the last and most difficult negotiations about a permanent settlement, including the shape and status of a Palestinian state and the future of Jerusalem. If Sharon ever hopes to overcome the shame of Sabra and Shatila, he must become a force for peace in the Middle East. ||||| Brief biography of Ariel Sharon, named Israel's foreign minister: ___ 1928: Born in Kfar Mallal in British-ruled Palestine. 1948 Mideast war: Fights as junior officer, wounded three times. 1953: Forms elite commando unit ``101'' and leads it on raids against Palestinian guerrillas who had been attacking Israeli border villages. 1956 Sinai campaign: Commands a parachute brigade that is dropped behind enemy lines, captures a key pass and cuts off Egyptian army's retreat. 1967 Mideast war: Commands an armored division that breaks through into central Sinai Peninsula. 1973 Mideast war: Commands a division that crosses the Suez Canal, turning the tide of the war on the Egyptian front. 1977: Elected to parliament and appointed minister of agriculture in the government of Menachem Begin. 1981: Defense minister in Begin government. 1982-83: Invades Lebanon in June 1982 to drive out PLO guerrillas, but is held indirectly responsible for Lebanese Christian militiamen's September 1982 massacre of hundreds of Palestinian civilians in the Sabra and Shatilla refugee camps south of Beirut. As a result, Sharon resigns as defense minister and holds only second-rank posts for next 15 years. 1984-90: Serves as trade minister in national unity government headed by Yitzhak Shamir of Likud and Shimon Peres of Labor. 1990-92: Serves as housing minister, presiding over settlement drive in the West Bank and Gaza Strip. 1996: Named infrastructure minister in Netanyahu government. Oct. 9, 1998: Netanyahu appoints him foreign minister, places him in charge of negotiations with the Palestinians, marking his return to the center of Israeli politics and world political arena. ||||| Ariel Sharon, the hawkish former general tipped to be Israel's next foreign minister, said in an interview published Sunday that if he gets the job, he won't shake the hand of Palestinian leader Yasser Arafat. Sharon, who opposes ceding West Bank land to the Palestinians, is being considered for the government's No. 2 post. In it, he would be a pivotal figure in reaching a final peace settlement with the Palestinians. ``Even if I will be appointed foreign minister and run the negotiations, I won't shake Yasser Arafat's hand,'' Sharon was quoted as saying in the Yediot Ahronot daily. The newspaper said Prime Minister Benjamin Netanyahu is close to making a decision on the appointment. Netanyahu himself has been acting foreign minister since the post was vacated in January by David Levy, a moderate who opposed Netanyahu's hardline negotiating strategy with the Palestinians. Sharon's appointment would signal a toughening of Israel's positions and could further strain relations with Arab neighbors. Sharon is the general who led Israel's 1982 invasion of Lebanon, and a former housing minister who strengthened Jewish settlement in territories Israel captured from Syria, Jordan and Egypt in the 1967 Mideast war. Sharon told the Haaretz newspaper he would accept the foreign minister's job if he were allowed to ``act to strengthen the country.'' ||||| Ariel Sharon has a law degree, and fancies himself a farmer. But for more than three decades his role in Israeli public life has been that of an unapologetic warrior, first on the battlefield and later in the bare-knuckled combat of domestic partisan politics. With his blunt tongue, barrel chest and bar-scrapper's demeanor, Sharon at 70 is to his many critics here a caricature of right-wing intransigence. To his equally numerous admirers he is a living symbol of unrelenting dedication to Israel's national survival. Still conveying physical vigor within an impressively expanding frame, he remains pugnacious to a fault. Both his friends and foes would agree that the new foreign minister is not a natural diplomat. A Zionist underground operative as a teen-ager and an infantry commander wounded in the 1948 war of independence, Sharon has fought, and fought memorably, in virtually every major military engagement in his country's history. He commanded the legendary armored division that crossed and seized control of the Sinai in the 1967 Arab-Israeli war. He returned to active service after a three-month retirement to lead Israel's badly outgunned armored divisions to victory, again in the Sinai, in the war of 1973. As defense minister in 982, Sharon led Israel's invasion of Lebanon, defying international condemnation with unrelenting artillery assaults on Beirut neighborhoods and Palestinian refugee camps believed by the Israeli high command to be Palestine Liberation Organization redoubts. To some, both in Israel and abroad, Sharon's Lebanese incursion will forever be associated with the massacres by Lebanese Christian Phalangists, allies of the Israelis, of a reported 460 unarmed Palestinians in the Sabra and Shatila refugee camps. In an official inquiry in Jerusalem and in a subsequent libel trial he brought in New York, Sharon was seen to have effectively refuted charges that he knew of and condoned the Phalangists' attacks beforehand. But the government investigating commission held that his failure to prevent the killings constituted grounds for his dismissal from the Defense Ministry. Since the 1982 invasion, Israel has been mired in an unpopular open-ended occupation of southern Lebanon, an operation with constant casualties among young inductees for which Sharon is still often blamed. To many Israelis, however, the Lebanese incursion was ultimately a risk worth taking, as it succeeded in crushing the PLO militarily and driving its forces far from Israel's borders. The PLO's defeat at Sharon's hands in Lebanon led eventually to its renunciation of armed warfare against Israel and embrace of the peace negotiation process for which Sharon as Foreign Minister will now be responsible. In civilian life he proved as savvy a political operator as he was a military strategist, helping to break Labor's hold on the Knesset and making himself an indispensable binding force within successive fractious Likud coalitions. His investiture as foreign minister next week will mark his sixth Cabinet appointment in 21 years. He previously held the agriculture and defense portfolios under Prime Minister Menachem Begin, trade and housing in Yitzhak Shamir's government, and national infrastructure _ essentially, a settlements support directorate _ in the administration of Benjamin Netanyahu. As a key member of the ``inner cabinet'' in Begin's first government, Sharon began the construction and systematic expansion of new Israeli housing developments throughout the West Bank, Gaza Strip and Galilee area territories occupied by Israel since 1967, a policy that he and his opponents alike would agree remains his signal domestic political achievement. At 70, Sharon remains one of the great polarizing fixtures of Israeli political life. An acerbic critic of the other leading soldier-politician of his generation, Yitzhak Rabin, Sharon attacked the Oslo peace accords as ``terrible and dangerous'' and condemned Rabin's negotiating partner, Yasser Arafat, as a ``war criminal.'' He angrily opposed any diplomatic discussions of the return of even an internationally demilitarized Golan Heights to Syria. A secular Jew in the manner typical of his generation of native-born Israelis, Sharon became an outspoken and effective defender of new Orthodox Jewish settlements in the predominantly Palestinian areas of the West Bank, cementing his position as a bridge between the traditional secular right and the new militant religious factions within the Likud coalition. ||||| A senior Palestinian negotiator says the success of a peace summit this week near Washington depends on a clear-cut ``yes'' from Israeli Prime Minister Benjamin Netanyahu to an American initiative. ``It is time to deliver,'' Saeb Erekat told reporters Sunday night after a meeting of the Palestinian Cabinet. Palestinian leader Yasser Arafat met Jordan's Crown Prince Hassan in Amman Monday to brief him on talks with U.S. officials on breaking the deadlock in the negotiations with Israel. Palestinians also were expressing growing unease over the naming of hawkish former Israeli general Ariel Sharon as Netanyahu's foreign minister. Sharon, whose appointment last week was widely seen as a bid to keep far-right allies from toppling Netanyahu's government, has been quoted as saying he would refuse to shake the hand of Palestinian leader Yasser Arafat. ``It's worrisome,'' Erekat said. Previously, the Palestinian leadership had said the appointment was an internal Israeli affair. Monday was a Jewish holiday and there was no immediate Israeli comment on summit prospects. However, the Israeli newspaper Yediot Aharonot said over the weekend that Netanyahu's hard-line Cabinet, due to meet Tuesday, was balking at agreeing to an American-authored plan for an Israeli pullback in the West Bank. Erekat said the Palestinians hope the four-day summit, set to begin Thursday outside the U.S. capital, would mark the end of a long round of meetings and the start of implementation of accords. ``It depends on Mr. Netanyahu. If he says `yes' to the American initiative and stops attempts to change the references of the interim agreement, we will reach an agreement in no time,'' Erekat said. At the table is a U.S plan for an Israeli troop withdrawal from 13 percent from the West Bank. The Palestinians accepted the plan, which includes security conditions they must fulfill. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Syrian-Israel peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Prime Minister Benjamin Netanyahu appointed Ariel Sharon, a hawkish former defense minister, to be Israeli foreign minister on Friday in an effort to placate the far right as he moves closer to turning over more West Bank land to the Palestinians. With his appointment, Sharon, 70, an ardent advocate for Jewish settlements in the West Bank, is expected to quell domestic opposition to the concessions that Netanyahu is supposedly prepared to make at a peace summit conference in the Washington area next week. For months, Sharon, who is currently the minister of national infrastructures, has maintained that redeploying Israeli troops from more than an additional 9 percent of the West Bank would be a ``national disaster.'' In assuming the role of foreign minister, however, he would be forced to abandon his public opposition to Netanyahu's decision to withdraw from another 13 percent of the Palestinian territory _ even if he votes against the accord. Sharon will be drawn directly into the issue, since Netanyahu has appointed him to direct the final status talks with the Palestinians, which would follow the signing of an interim peace agreement. Last week Sharon told an Israeli newspaper that, negotiations or not, he would never shake the hand of Yasser Arafat, the Palestinian leader, whom he has long disdained. Palestinian leaders and Israeli leftists were divided in their reactions, in similar ways. Some professed to be aghast, and some, like Nabil Sha'ath, the Palestinian transportation minister, said they were willing to ``forget history'' if Sharon's appointment provided Netanyahu the political backbone to sign a deal. In Washington, White House and State Department officials pledged to work closely with Sharon and emphasized that the personnel in an Israeli government are an internal affair. ``Arik Sharon is the most fitting person in the state of Israel for the position of foreign minister,'' Netanyahu said, using his nickname. ``He brings with him rich experience, creativity, proven working ability and I think that he well knows both the wounds and damages of war as well as the fruits of peace. ``Sharon has never hidden his beliefs,'' he continued, ``and his words have influenced the way that the redeployment will be carried out if not its extent.'' In a nod to Sharon, Netanyahu has decided on a new location for the nature reserve that would constitute 3 percent of the West Bank land. It was supposed to be in the Judean desert near Israel's eastern border, which Sharon argued would pose a strategic security risk. Instead, it was decided on Thursday that the nature reserve would instead be on the slopes of the Hebron hills, much closer to existing Jewish settlements. Many Israeli political observers believe that Netanyahu has eviscerated his right-wing opposition with this appointment, signaling that he genuinely intends to bring home a peace agreement. ``Who is the right wing now if Sharon is in the foreign ministry and negotiating with the Palestinians?'' asked Uzi Benziman, an editorial board member of the newspaper Haaretz and author of a critical biography of Sharon. ``It will be just the settlers and some real hard-liners who don't comprise more than 15 percent of public opinion. So it's really quite an intelligent move, suggesting that Netanyahu means business in trying to get an agreement.'' But the Palestinians took the news hard, and read it differently. ``I think it's a clear-cut message from Bibi,'' Saeb Erekat, a lead negotiator for the Palestinians, said, using Netanyahu's nickname. ``I imagine people will try to explain Netanyahu's intentions as trying to get the support of the right. What he is trying to do is make peace with the right wing at the expense of making peace with us. It means he wants to continue on the path of non-negotiations, because he wants to continue to be prime minister at any cost.'' Sharon declined to be interviewed Friday because his appointment must still be approved by the Cabinet on Tuesday, an approval that is expected. An aide, Raanan Gisin, said Sharon accepted the position so that he could ``stem the tide of dangerous developments and contribute to fighting the risks facing Israel.'' A retired general who fought in every Israeli war, Sharon, 70, is a leading figure of the Likud Party who has done much battle with the Likud prime minister. At the most recent party convention, he said that Netanyahu didn't know his right hand from his left, which the prime minister dismissed Friday as a comment made ``in the height of political arguments.'' And when Netanyahu first formed his Cabinet in 1996, the fact that he did not give Sharon a senior position caused an 11th-hour crisis before the swearing-in ceremony. Sharon retreated to his family farm in the Negev, and David Levy, who had been named foreign minister, said he would not serve unless Sharon was given a post. Netanyahu then created a Cabinet job, the minister of infrastructures, especially for Sharon. Levy resigned in January after a lengthy power struggle with the prime minister, and since then Netanyahu has been serving as his own foreign minister. Sharon, a member of the old guard, has a complicated political past, highlighted by a string of military victories, and checkered, to many, by his indirect role, as defense minister, in the Lebanese Christian Phalangist massacre of unarmed civilians in the Sabra and Shatila refugee camps in Lebanon in 1982. Many Israelis, even those who despise his politics, see him as a strong, experienced figure who knows his mind and who is capable of being moderate when he has power. Friday afternoon, the right-wing political establishment nearly universally applauded the appointment. Uzi Landau, who is a Likud hard-liner, said he was relieved to hear confirmed what has been a rumor for weeks. ``I feel more safe about the negotiations if Minister Sharon is directly involved,'' said Landau, who heads the Parliament's security and foreign affairs committee. ``Undoubtedly it will facilitate the situation for the prime minister to show the right that Arik Sharon is identified with the program, so therefore they can live with it.'' Right before the announcement was made, leaders of the National Religious Party, who had threatened to bring down the government, changed their combative tone. They emerged mollified from meetings with Netanyahu late Thursday, saying they would leave the government intact. Still, they would not connect their change of heart to the nomination of Sharon. ``Appointing Sharon is a political step we like very much,'' said Shaul Yahalom, the minister of transportation and a leader of the National Religious Party. ``But it will have no effect on how we see the peace agreement. Our concern there is on whether any of the 160 Jewish settlements are endangered.'' The appointment of Sharon comes against a backdrop of violence that has erupted this week. Friday, a 19-year-old Israeli soldier, Michal Adato, was stabbed to death by a Palestinian man as she got off a bus in her hometown, the settlement of Tomer in the Jordan Valley. Netanyahu reported that he had received a sympathy note from Arafat, who condemned the attack. Also Friday, in the continuing clashes between Palestinian youths and soldiers in the divided city of Hebron, 32 Palestinians were lightly injured by rubber bullets after the funeral of a Palestinian protester shot dead on Thursday. After Netanyahu made the announcement Friday, an Israeli reporter introduced a question by stating that Netanyahu had diminished the political threat from the right wing by appointing Sharon. ``Are you willing to sign on that?'' Netanyahu said. ``I do not know that. I do know one thing that when you are dependent on the vote of one or two people you can never know what will be.'' He was referring to his razor-thin majority in parliament _ which some analysts perceive to be his key motivator in appointing Sharon. ``More than anything else, this reflects the political weakness of Netanyahu,'' said Yaron Ezrahi, a leading intellectual and critic of the prime minister. ``He has recognized that the next redeployment is inevitable if he doesn't want to be seen as contributing to the wave of political violence that would follow a failure. But he doesn't have the domestic political power to carry out the big decision on his own.'' ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by pro-Israeli Christian Lebanese militiamen at two Beirut camps. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. The appointment ``is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin newspaper, which often speaks for the Syrian government. It said Netanyahu has sent ``a clear message to all those who are deluding themselves'' into thinking that Israel will change its anti-peace stand. Syrian-Israeli peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as saying: Sharon's appointment makes Lebanon and most world states ask: ``Does the Israeli government really want peace as it is trying to delude the world?'' An-Nahar's columnist, Sahar Baasiri, said in a front-page comment: `The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ``The man is a hero of Arab defeats; he is the firmest believer in the expansion of the land of Israel and in resolving the Palestinian problem at the expense of Jordan. He is a liar,'' Baasiri wrote. The conservative Ad-Diyar newspaper said in a front-page comment: ``The history of Ariel Sharon is known. He has called for burning Beirut, annexing the Golan, occupying the (West) Bank and slaughtering and displacing the Arabs everywhere.''

Ariel Sharon was named Israeli foreign minister just weeks before a scheduled peace summit in the US, aimed at negotiating an Israeli withdrawal from 13% of the West Bank. Arabs reacted strongly and said the hard-line, right-wing, warrior and former defense minister would kill any progress for a settlement in the mid-East. Many blame Sharon for a 1982 massacre of Palestinian civilians at refugee camps in Lebanon. Others believed his appointment was an effort to placate the far right and gain their support for the Netanyahu government and the concessions necessary for the peace process. Sharon vowed not to shake Yasser Arafat's hand.

Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Peace talks between Syria and Israel broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never formalized. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as asking, ``Does the Israeli government really want peace as it is trying to delude the world?'' In a front page comment, Sahar Baasiri, said ``The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ||||| The New York Times said in an editorial on Saturday, Oct. 10: Just days before heading to the United States for critical negotiations with Palestinian leaders, Prime Minister Benjamin Netanyahu jolted the Middle East peace effort with the appointment of Ariel Sharon as Israeli foreign minister. The most optimistic reading is that Sharon, long an implacable foe of the Palestinians, is prepared to make peace with them and then sell it to the Israelis who are most opposed. Unfortunately, he is also capable of wrecking the entire peace effort. Much will depend on whether Netanyahu can control his strong-willed aide, a goal that has eluded other Israeli leaders. Like a political typhoon, Sharon has roared across Israeli life for better than three decades as a brilliant military commander, a reckless defense minister and an ardent conservative, often leaving destruction in his wake. He still bears the burden of his role in the massacre of hundreds of Palestinians by Christian militiamen in Lebanon in 1982. An Israeli inquiry found he was indirectly responsible for the killings at the Sabra and Shatila refugee camps. As a leader of the most conservative wing of the Likud party, Sharon can help Netanyahu hold together his shaky Cabinet during potentially decisive negotiations with Yasser Arafat, the Palestinian leader. That will be fine if Sharon is willing to play a constructive role in the peace talks himself. But such behavior is not likely to be the first impulse of a man who has famously said he would never shake hands with Arafat. Since Netanyahu has designated Sharon as his chief negotiator, the new foreign minister will soon have the opportunity to act more responsibly. The first order of business when the two sides get together next week outside Washington is to wrap up negotiations over the further withdrawal of Israeli forces from the West Bank coupled with security guarantees from the Palestinians. Sharon can show statesmanship by helping Netanyahu close this deal, even though it is opposed by the Israeli settlers whose cause Sharon has long championed. Success in these talks would clear the way for the last and most difficult negotiations about a permanent settlement, including the shape and status of a Palestinian state and the future of Jerusalem. If Sharon ever hopes to overcome the shame of Sabra and Shatila, he must become a force for peace in the Middle East. ||||| Brief biography of Ariel Sharon, named Israel's foreign minister: ___ 1928: Born in Kfar Mallal in British-ruled Palestine. 1948 Mideast war: Fights as junior officer, wounded three times. 1953: Forms elite commando unit ``101'' and leads it on raids against Palestinian guerrillas who had been attacking Israeli border villages. 1956 Sinai campaign: Commands a parachute brigade that is dropped behind enemy lines, captures a key pass and cuts off Egyptian army's retreat. 1967 Mideast war: Commands an armored division that breaks through into central Sinai Peninsula. 1973 Mideast war: Commands a division that crosses the Suez Canal, turning the tide of the war on the Egyptian front. 1977: Elected to parliament and appointed minister of agriculture in the government of Menachem Begin. 1981: Defense minister in Begin government. 1982-83: Invades Lebanon in June 1982 to drive out PLO guerrillas, but is held indirectly responsible for Lebanese Christian militiamen's September 1982 massacre of hundreds of Palestinian civilians in the Sabra and Shatilla refugee camps south of Beirut. As a result, Sharon resigns as defense minister and holds only second-rank posts for next 15 years. 1984-90: Serves as trade minister in national unity government headed by Yitzhak Shamir of Likud and Shimon Peres of Labor. 1990-92: Serves as housing minister, presiding over settlement drive in the West Bank and Gaza Strip. 1996: Named infrastructure minister in Netanyahu government. Oct. 9, 1998: Netanyahu appoints him foreign minister, places him in charge of negotiations with the Palestinians, marking his return to the center of Israeli politics and world political arena. ||||| Ariel Sharon, the hawkish former general tipped to be Israel's next foreign minister, said in an interview published Sunday that if he gets the job, he won't shake the hand of Palestinian leader Yasser Arafat. Sharon, who opposes ceding West Bank land to the Palestinians, is being considered for the government's No. 2 post. In it, he would be a pivotal figure in reaching a final peace settlement with the Palestinians. ``Even if I will be appointed foreign minister and run the negotiations, I won't shake Yasser Arafat's hand,'' Sharon was quoted as saying in the Yediot Ahronot daily. The newspaper said Prime Minister Benjamin Netanyahu is close to making a decision on the appointment. Netanyahu himself has been acting foreign minister since the post was vacated in January by David Levy, a moderate who opposed Netanyahu's hardline negotiating strategy with the Palestinians. Sharon's appointment would signal a toughening of Israel's positions and could further strain relations with Arab neighbors. Sharon is the general who led Israel's 1982 invasion of Lebanon, and a former housing minister who strengthened Jewish settlement in territories Israel captured from Syria, Jordan and Egypt in the 1967 Mideast war. Sharon told the Haaretz newspaper he would accept the foreign minister's job if he were allowed to ``act to strengthen the country.'' ||||| Ariel Sharon has a law degree, and fancies himself a farmer. But for more than three decades his role in Israeli public life has been that of an unapologetic warrior, first on the battlefield and later in the bare-knuckled combat of domestic partisan politics. With his blunt tongue, barrel chest and bar-scrapper's demeanor, Sharon at 70 is to his many critics here a caricature of right-wing intransigence. To his equally numerous admirers he is a living symbol of unrelenting dedication to Israel's national survival. Still conveying physical vigor within an impressively expanding frame, he remains pugnacious to a fault. Both his friends and foes would agree that the new foreign minister is not a natural diplomat. A Zionist underground operative as a teen-ager and an infantry commander wounded in the 1948 war of independence, Sharon has fought, and fought memorably, in virtually every major military engagement in his country's history. He commanded the legendary armored division that crossed and seized control of the Sinai in the 1967 Arab-Israeli war. He returned to active service after a three-month retirement to lead Israel's badly outgunned armored divisions to victory, again in the Sinai, in the war of 1973. As defense minister in 982, Sharon led Israel's invasion of Lebanon, defying international condemnation with unrelenting artillery assaults on Beirut neighborhoods and Palestinian refugee camps believed by the Israeli high command to be Palestine Liberation Organization redoubts. To some, both in Israel and abroad, Sharon's Lebanese incursion will forever be associated with the massacres by Lebanese Christian Phalangists, allies of the Israelis, of a reported 460 unarmed Palestinians in the Sabra and Shatila refugee camps. In an official inquiry in Jerusalem and in a subsequent libel trial he brought in New York, Sharon was seen to have effectively refuted charges that he knew of and condoned the Phalangists' attacks beforehand. But the government investigating commission held that his failure to prevent the killings constituted grounds for his dismissal from the Defense Ministry. Since the 1982 invasion, Israel has been mired in an unpopular open-ended occupation of southern Lebanon, an operation with constant casualties among young inductees for which Sharon is still often blamed. To many Israelis, however, the Lebanese incursion was ultimately a risk worth taking, as it succeeded in crushing the PLO militarily and driving its forces far from Israel's borders. The PLO's defeat at Sharon's hands in Lebanon led eventually to its renunciation of armed warfare against Israel and embrace of the peace negotiation process for which Sharon as Foreign Minister will now be responsible. In civilian life he proved as savvy a political operator as he was a military strategist, helping to break Labor's hold on the Knesset and making himself an indispensable binding force within successive fractious Likud coalitions. His investiture as foreign minister next week will mark his sixth Cabinet appointment in 21 years. He previously held the agriculture and defense portfolios under Prime Minister Menachem Begin, trade and housing in Yitzhak Shamir's government, and national infrastructure _ essentially, a settlements support directorate _ in the administration of Benjamin Netanyahu. As a key member of the ``inner cabinet'' in Begin's first government, Sharon began the construction and systematic expansion of new Israeli housing developments throughout the West Bank, Gaza Strip and Galilee area territories occupied by Israel since 1967, a policy that he and his opponents alike would agree remains his signal domestic political achievement. At 70, Sharon remains one of the great polarizing fixtures of Israeli political life. An acerbic critic of the other leading soldier-politician of his generation, Yitzhak Rabin, Sharon attacked the Oslo peace accords as ``terrible and dangerous'' and condemned Rabin's negotiating partner, Yasser Arafat, as a ``war criminal.'' He angrily opposed any diplomatic discussions of the return of even an internationally demilitarized Golan Heights to Syria. A secular Jew in the manner typical of his generation of native-born Israelis, Sharon became an outspoken and effective defender of new Orthodox Jewish settlements in the predominantly Palestinian areas of the West Bank, cementing his position as a bridge between the traditional secular right and the new militant religious factions within the Likud coalition. ||||| A senior Palestinian negotiator says the success of a peace summit this week near Washington depends on a clear-cut ``yes'' from Israeli Prime Minister Benjamin Netanyahu to an American initiative. ``It is time to deliver,'' Saeb Erekat told reporters Sunday night after a meeting of the Palestinian Cabinet. Palestinian leader Yasser Arafat met Jordan's Crown Prince Hassan in Amman Monday to brief him on talks with U.S. officials on breaking the deadlock in the negotiations with Israel. Palestinians also were expressing growing unease over the naming of hawkish former Israeli general Ariel Sharon as Netanyahu's foreign minister. Sharon, whose appointment last week was widely seen as a bid to keep far-right allies from toppling Netanyahu's government, has been quoted as saying he would refuse to shake the hand of Palestinian leader Yasser Arafat. ``It's worrisome,'' Erekat said. Previously, the Palestinian leadership had said the appointment was an internal Israeli affair. Monday was a Jewish holiday and there was no immediate Israeli comment on summit prospects. However, the Israeli newspaper Yediot Aharonot said over the weekend that Netanyahu's hard-line Cabinet, due to meet Tuesday, was balking at agreeing to an American-authored plan for an Israeli pullback in the West Bank. Erekat said the Palestinians hope the four-day summit, set to begin Thursday outside the U.S. capital, would mark the end of a long round of meetings and the start of implementation of accords. ``It depends on Mr. Netanyahu. If he says `yes' to the American initiative and stops attempts to change the references of the interim agreement, we will reach an agreement in no time,'' Erekat said. At the table is a U.S plan for an Israeli troop withdrawal from 13 percent from the West Bank. The Palestinians accepted the plan, which includes security conditions they must fulfill. ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by Christian Lebanese militiamen at two Beirut camps. ``Sharon's appointment as foreign minister is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin, which often speaks for the Syrian government. Syrian-Israel peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Netanyahu has sent ``a clear message to all those who are deluding themselves _ and betting on Israel (to) change its anti-peace stand _ to give up their illusions,'' the paper said. ||||| Prime Minister Benjamin Netanyahu appointed Ariel Sharon, a hawkish former defense minister, to be Israeli foreign minister on Friday in an effort to placate the far right as he moves closer to turning over more West Bank land to the Palestinians. With his appointment, Sharon, 70, an ardent advocate for Jewish settlements in the West Bank, is expected to quell domestic opposition to the concessions that Netanyahu is supposedly prepared to make at a peace summit conference in the Washington area next week. For months, Sharon, who is currently the minister of national infrastructures, has maintained that redeploying Israeli troops from more than an additional 9 percent of the West Bank would be a ``national disaster.'' In assuming the role of foreign minister, however, he would be forced to abandon his public opposition to Netanyahu's decision to withdraw from another 13 percent of the Palestinian territory _ even if he votes against the accord. Sharon will be drawn directly into the issue, since Netanyahu has appointed him to direct the final status talks with the Palestinians, which would follow the signing of an interim peace agreement. Last week Sharon told an Israeli newspaper that, negotiations or not, he would never shake the hand of Yasser Arafat, the Palestinian leader, whom he has long disdained. Palestinian leaders and Israeli leftists were divided in their reactions, in similar ways. Some professed to be aghast, and some, like Nabil Sha'ath, the Palestinian transportation minister, said they were willing to ``forget history'' if Sharon's appointment provided Netanyahu the political backbone to sign a deal. In Washington, White House and State Department officials pledged to work closely with Sharon and emphasized that the personnel in an Israeli government are an internal affair. ``Arik Sharon is the most fitting person in the state of Israel for the position of foreign minister,'' Netanyahu said, using his nickname. ``He brings with him rich experience, creativity, proven working ability and I think that he well knows both the wounds and damages of war as well as the fruits of peace. ``Sharon has never hidden his beliefs,'' he continued, ``and his words have influenced the way that the redeployment will be carried out if not its extent.'' In a nod to Sharon, Netanyahu has decided on a new location for the nature reserve that would constitute 3 percent of the West Bank land. It was supposed to be in the Judean desert near Israel's eastern border, which Sharon argued would pose a strategic security risk. Instead, it was decided on Thursday that the nature reserve would instead be on the slopes of the Hebron hills, much closer to existing Jewish settlements. Many Israeli political observers believe that Netanyahu has eviscerated his right-wing opposition with this appointment, signaling that he genuinely intends to bring home a peace agreement. ``Who is the right wing now if Sharon is in the foreign ministry and negotiating with the Palestinians?'' asked Uzi Benziman, an editorial board member of the newspaper Haaretz and author of a critical biography of Sharon. ``It will be just the settlers and some real hard-liners who don't comprise more than 15 percent of public opinion. So it's really quite an intelligent move, suggesting that Netanyahu means business in trying to get an agreement.'' But the Palestinians took the news hard, and read it differently. ``I think it's a clear-cut message from Bibi,'' Saeb Erekat, a lead negotiator for the Palestinians, said, using Netanyahu's nickname. ``I imagine people will try to explain Netanyahu's intentions as trying to get the support of the right. What he is trying to do is make peace with the right wing at the expense of making peace with us. It means he wants to continue on the path of non-negotiations, because he wants to continue to be prime minister at any cost.'' Sharon declined to be interviewed Friday because his appointment must still be approved by the Cabinet on Tuesday, an approval that is expected. An aide, Raanan Gisin, said Sharon accepted the position so that he could ``stem the tide of dangerous developments and contribute to fighting the risks facing Israel.'' A retired general who fought in every Israeli war, Sharon, 70, is a leading figure of the Likud Party who has done much battle with the Likud prime minister. At the most recent party convention, he said that Netanyahu didn't know his right hand from his left, which the prime minister dismissed Friday as a comment made ``in the height of political arguments.'' And when Netanyahu first formed his Cabinet in 1996, the fact that he did not give Sharon a senior position caused an 11th-hour crisis before the swearing-in ceremony. Sharon retreated to his family farm in the Negev, and David Levy, who had been named foreign minister, said he would not serve unless Sharon was given a post. Netanyahu then created a Cabinet job, the minister of infrastructures, especially for Sharon. Levy resigned in January after a lengthy power struggle with the prime minister, and since then Netanyahu has been serving as his own foreign minister. Sharon, a member of the old guard, has a complicated political past, highlighted by a string of military victories, and checkered, to many, by his indirect role, as defense minister, in the Lebanese Christian Phalangist massacre of unarmed civilians in the Sabra and Shatila refugee camps in Lebanon in 1982. Many Israelis, even those who despise his politics, see him as a strong, experienced figure who knows his mind and who is capable of being moderate when he has power. Friday afternoon, the right-wing political establishment nearly universally applauded the appointment. Uzi Landau, who is a Likud hard-liner, said he was relieved to hear confirmed what has been a rumor for weeks. ``I feel more safe about the negotiations if Minister Sharon is directly involved,'' said Landau, who heads the Parliament's security and foreign affairs committee. ``Undoubtedly it will facilitate the situation for the prime minister to show the right that Arik Sharon is identified with the program, so therefore they can live with it.'' Right before the announcement was made, leaders of the National Religious Party, who had threatened to bring down the government, changed their combative tone. They emerged mollified from meetings with Netanyahu late Thursday, saying they would leave the government intact. Still, they would not connect their change of heart to the nomination of Sharon. ``Appointing Sharon is a political step we like very much,'' said Shaul Yahalom, the minister of transportation and a leader of the National Religious Party. ``But it will have no effect on how we see the peace agreement. Our concern there is on whether any of the 160 Jewish settlements are endangered.'' The appointment of Sharon comes against a backdrop of violence that has erupted this week. Friday, a 19-year-old Israeli soldier, Michal Adato, was stabbed to death by a Palestinian man as she got off a bus in her hometown, the settlement of Tomer in the Jordan Valley. Netanyahu reported that he had received a sympathy note from Arafat, who condemned the attack. Also Friday, in the continuing clashes between Palestinian youths and soldiers in the divided city of Hebron, 32 Palestinians were lightly injured by rubber bullets after the funeral of a Palestinian protester shot dead on Thursday. After Netanyahu made the announcement Friday, an Israeli reporter introduced a question by stating that Netanyahu had diminished the political threat from the right wing by appointing Sharon. ``Are you willing to sign on that?'' Netanyahu said. ``I do not know that. I do know one thing that when you are dependent on the vote of one or two people you can never know what will be.'' He was referring to his razor-thin majority in parliament _ which some analysts perceive to be his key motivator in appointing Sharon. ``More than anything else, this reflects the political weakness of Netanyahu,'' said Yaron Ezrahi, a leading intellectual and critic of the prime minister. ``He has recognized that the next redeployment is inevitable if he doesn't want to be seen as contributing to the wave of political violence that would follow a failure. But he doesn't have the domestic political power to carry out the big decision on his own.'' ||||| Ariel Sharon's appointment as the Israeli foreign minister serves as ``the bullet of mercy'' for the Middle East peace process, an official Syrian newspaper said Saturday. In Beirut, Lebanese newspapers denounced the appointment as a ``disaster'' for peace. Many Arabs know Sharon for his role in Israel's 1982 invasion of Lebanon. An Israeli tribunal looking into the invasion found him indirectly responsible for the massacre of hundreds of Palestinian refugees by pro-Israeli Christian Lebanese militiamen at two Beirut camps. Prime Minister Benjamin Netanyahu named Sharon foreign minister on Friday, effectively putting the hard-liner in charge of negotiating Israel's final borders with the Palestinians. The appointment ``is a bullet of mercy to the (peace) process, which has stopped on all tracks,'' said Tishrin newspaper, which often speaks for the Syrian government. It said Netanyahu has sent ``a clear message to all those who are deluding themselves'' into thinking that Israel will change its anti-peace stand. Syrian-Israeli peace talks broke off more than two years ago. Syria and the previous Israeli government had reached an informal agreement on a full withdrawal from the Golan Heights, which Israel captured from Syria in 1967. But Netanyahu's government rejected that agreement, saying it was never completed. Lebanon's peace talks with Israel also have been suspended for more than two years pending progress in Syrian-Israeli negotiations. The independent An-Nahar newspaper quoted Lebanese Prime Minister Rafik Hariri as saying: Sharon's appointment makes Lebanon and most world states ask: ``Does the Israeli government really want peace as it is trying to delude the world?'' An-Nahar's columnist, Sahar Baasiri, said in a front-page comment: `The mere announcement that he (Sharon) will lead negotiations (with Arabs) is tantamount to disaster.'' ``The man is a hero of Arab defeats; he is the firmest believer in the expansion of the land of Israel and in resolving the Palestinian problem at the expense of Jordan. He is a liar,'' Baasiri wrote. The conservative Ad-Diyar newspaper said in a front-page comment: ``The history of Ariel Sharon is known. He has called for burning Beirut, annexing the Golan, occupying the (West) Bank and slaughtering and displacing the Arabs everywhere.''

In a move widely viewed as an effort to placate the far right as he moves to withdraw from more West Bank land, Israeli Prime Minister Netanyahu named hardliner Ariel Sharon foreign minister and chief peace negotiator. Sharon, a military leader with legendary victories in the 1967 and 1973 Mideast wars, is infamous in the Arab world as the defense minister in the 1982 invasion of Lebanon during which Lebanese Christian militiamen, Israeli allies, slaughtered hundreds of unarmed Palestinians. His appointment as lead negotiator was denounced as a "disaster" in the Lebanese press and "a bullet of mercy to the peace process" in a Syrian paper.

America Online Inc. wants to become the ``next Microsoft'' in two promising information-age fields where Microsoft Corp. is just another company _ the Internet media business and electronic commerce. With its proposed purchase of Netscape Communications Corp., AOL, the nation's largest dial-up online service with more than 14 million subscribers, hopes to take a significant step toward that ambitious goal. If the $4 billion deal is completed _ the companies had not reached a final agreement as of Monday night _ AOL would acquire a leading Internet brand and enlarge its wired audience by absorbing the millions who regularly visit Netscape's popular NetCenter site on the World Wide Web. ``Acquiring Netscape would really enhance America Online's role as the premier Internet media company,'' said James F. Moore, president of Geopartners Inc., a consulting firm. ``America Online is assembling the kind of audience numbers that will convince people the Internet is becoming a mainstream media.'' In the new media business, as in traditional media like television or newspapers, eyeballs translate into advertising revenue. But what really intrigues media executives and consumer marketers about the new media _ news, entertainment and services rendered in computer code _ is that it is inherently a two-way medium with which people can interact with the tap of a key or the click of a mouse button The interaction that advertisers and marketers want to see, of course, is buying. And it is the potential for exploiting an instant, direct connection to consumers that has fueled all the recent optimism about electronic commerce. Today, companies are selling everything from books to baby clothes over the Internet. Most companies have not progressed beyond the experimentation stage, but there are a handful of encouraging success stories like Amazon.com, the on-line bookstore. By 2003, Forrester Research Inc., whose business is analyzing trends in cyberspace, projects that Internet commerce could reach $3.2 trillion, or 5 percent of all sales worldwide. AOL is at the forefront of this convergence of media and commerce converge, and integration reflected in the lineage of its leaders. Steve Case, the chairman, was once a new-product manager for Pepsico's Pizza Hut chain, while Robert Pittman, the president, is a former MTV executive. Microsoft is also investing heavily in new media and electronic commerce. It has an online service, MSN, which competes with AOL, as well as information-and commerce Web sites that focus on travel, cars and real estate. It also owns Sidewalk, a network of local sites that list movies, restaurants and stores in cities around the country including Seattle and New York. Its MSNBC Internet news service is half of a joint venture with NBC. Microsoft is expected to be a formidable competitor in the media-and-commerce business. It has no shortage of bright people and it has more money than any rival. Besides deep pockets, Microsoft has the built-in advantage in any computer-based medium because its Windows operating system runs more than 90 percent of personal computers sold today. Its control of the Windows desktop gives it the most valuable piece of commercial real estate in the information age. In theory, at least, owning that desktop screen should help Microsoft steer consumers to its online offerings _ an issue that is key to the government's antitrust suit against Microsoft. But so far, Microsoft has started slowly in the fields of Internet media and electronic commerce. ``Microsoft may want to, but it does not dominate these new markets,'' said Richard Shaffer, a principal of Technologic Partners, a research firm. ``America Online recognizes that the big opportunity is in these emerging growth businesses like electronic commerce instead of trying to take Microsoft on head-on.'' Still, if the Netscape deal is completed, AOL will also find itself in the software business in a way it has never been in the past. Netscape is known as the pioneer in the commercial development of software used to navigate the World Wide Web. Microsoft saw the browser software as a direct threat to its industry dominance and pursued that market aggressively, bundling its own browser with its Windows and giving it away free _ tactics that have been challenged by the government. But Netscape no longer generates revenues from its browser, which it now also distributes for free, but from the sale of heavy-duty software sold to corporations. Much of this software is used as the technological ``back office'' for electronic commerce _ used in building Web sites and processing transactions. A surprising element in the proposed deal is that AOL intends to hold onto Netscape's corporate software business instead of selling it off to an established software company. ``America Online just doesn't have credibility in that market,'' observed Michael A. Cusumano, a professor at the Massachusetts Institute of Technology's Sloan School of Management. Executives close to AOL explain the decision as the need to provide full-line offerings for electronic commerce, from corporate Web site to the computer screens of consumers. But AOL has decided it needs help to preserve and strengthen Netscape's corporate software business. To do that, it has brought in Sun Microsystems Inc. in a side deal, which has complicated the transaction considerably. AOL, according to executives close to the proposed deal, will own Netscape, but it will have a joint marketing and development partnership with Sun. As part of the deal, AOL will agree to purchase about $300 million worth of Sun's computers for its service, while Sun will apparently agree to purchase sizeable amounts of Netscape software, which Sun's sales force must sell. Still, AOL and Sun have a longer-term objective as well _ one that promises to place them in more direct conflict with Microsoft. For nearly a year, William J. Raduchel, Sun's chief strategist, has been working closely with AOL, according to Sun executives. A former Harvard economics professor who taught Scott McNealy, the Sun chairman, Raduchel has focused on Sun's Internet programming technologies, called Java and Jini, both of which are seen as potential threats to Microsoft's dominance. By combining Sun's technology prowess with AOL's powerful consumer brand, the Sun executives say, there is the potential for a kind end-run around Microsoft's grip on desktop computing. In its research laboratories, Sun has been working on a stripped-down network computer _ a simple-to-use information appliance, which could cost as little as $200 or be given away as part of a subscription service. The concept is that AOL's Internet media and electronic commerce services could be delivered to many more homes than today because many people still shun the expense and difficulty of using a personal computer. The appliance would be mainly a receiver and screen, with most of the computing power residing on vast central computers serving up information as users request by tapping a few buttons. Sun's technological specialty is this kind of centralized ``network'' computing. If the long-term AOL-Sun vision ever materialized _ certainly a three-to-five year bet, at the least _ it could give both companies a boost and technological independence from Microsoft. ||||| Microsoft Corp. argued in federal court Monday that the proposed acquisition of Netscape Communications Corp. by America Online seriously undermined the government's antitrust suit against the software giant. ``From a legal standpoint, this proposed deal pulls the rug out from under the government,'' William Neukom, Microsoft's senior vice president for legal affairs, said Monday morning on the courthouse steps. The reasoning behind this assertion, Microsoft says, is that the proposed deal demonstrates that Netscape and the larger software industry are healthy and vibrant _ even with all of the illegal and anti-competitive practices alleged in the government's suit. But David Boies, the government's lead attorney, said all of that was irrelevant. ``Whatever the deal ends up being _ if there ends up being a deal _ is not going to remove any of the obstacles that Microsoft has placed in the path of competition in this industry,'' he said. Michael Lacovara, a Microsoft lawyer who was questioning a government witness, economist Frederick Warren-Boulton, suggested to him during the trial Monday that the proposed acquisition undermined Warren-Boulton's argument, that Microsoft seems headed toward obtaining a monopoly in Internet browser software to match the one it apparently holds in operating systems. After all, about 22 percent of Americans who use the Internet reach it through America Online. And at present AOL uses Microsoft's Web browser, Internet Explorer, as the service's default choice. In exchange for that, Microsoft places an AOL advertisement and Internet link in Windows 98. Lacovara asked the witness whether, once AOL's service contract expires in January, he would ``expect AOL to continue to distribute Microsoft software.'' Yes, Warren-Boulton responded. ``It is not at all clear to me that AOL's incentive to do this is changed by this proposed merger with Netscape.'' He noted that America Online officials had said their need to be among the online services featured in Windows forced them to accept Microsoft terms _ establishing Internet Explorer as the default choice. Lacovara then asked Warren-Boulton the question that lay under his entire cross-examination of the witness _ and Microsoft's larger assertion Monday about the proposed Netscape-AOL deal. ``Surely this combination,'' he asked, ``tells you something about the nature of competition in the software industry?'' Warren-Boulton's answer was probably not the one Lacovara had been after. ``To the extent that this potential merger is the result of Microsoft's actions with these exclusive contracts and other actions,'' he said, ``it is unfortunate to see the disappearance of a firm like Netscape, the brightest, newest star.'' Warren-Boulton's purpose on the stand for the government is to establish that Microsoft does have a monopoly in operating-system software; more than 90 percent of the world's computers use a Microsoft operating system. That is the foundation under most of the government's case since federal antitrust law forbids certain behavior by a monopolist that would be legal for a firm that faces healthy competition. Through repeated, often circumlocutious questioning, Lacovara tried to make the case that Microsoft's overwhelming market share was ephemeral. The software industry is so vibrant and fast moving, he suggested, that Microsoft could be toppled from its position at any moment _ a point of view the company encourages among its employees. On Friday and Monday, Lacovara repeatedly pointed out that other companies are placing other operating systems on the market, and some software companies _ principally Microsoft's greatest rivals _ are writing software for these new systems. But Warren-Boulton argued that ``the existence of these fringe competitors in the operating system market does not mean in any way that Microsoft does not have monopoly power.'' On Monday afternoon, Lacovara made an issue of the success Apple Computer Co. is having selling its new iMac computer. He entered into evidence an Apple news release issued last month showing, among other things, that 12.5 percent of the people buying Apple's new iMac computer had previously owned a Windows machine. Apple computers use a different operating system, Mac-OS. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. But as part of the deal, AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would subsume Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Sun's version of Unix, Solaris, is among the most popular operating systems for the large, powerful computers that run Netscape's server software. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. ||||| The outcome of the Microsoft antitrust case may be a long way off, but one thing is already clear: This is the first major e-mail trial. The government's prosecution and Microsoft Corp.'s defense, to a striking degree, are legal campaigns waged with electronic messages. The human testimony often pales next to the e-mail evidence. On the stand or in videotaped testimony, the people being questioned shrug, mumble and forget. The e-mail is alive with ideas and competitive zeal, punctuated with profanity and exclamation points. The second week of the trial ended with the prosecutors being frustrated because a lengthy cross-examination by Microsoft's lead lawyer left no time for the government to show several hours of a videotaped deposition of Bill Gates, the Microsoft chairman. With a new witness, an executive of Apple Computer Inc., taking the stand Monday, it is uncertain when the Gates tape will be played. The Justice Department and the 20 states suing Microsoft believe that the tape will strengthen their case because it shows Gates saying he was not involved in plans to take what the government alleges were illegal steps to stifle competition in the Internet software market. The Gates videotape, said David Boies, the Justice Department's trial lawyer, offers an ``opportunity to judge Gates' credibility.'' But the Gates credibility gap, if there is one, becomes an issue not because of the videotape but because his taped remarks can be compared and contrasted with the e-mail he wrote and received. The e-mail record, the government insists, shows Gates waist-deep in plotting the anti-competitive deals and bullying tactics that he denies or professes to have never heard of in his taped deposition. If his machinations are central to the government's case, why not summon Gates to the trial? ``The government does not need to put Gates on the stand, because we have his e-mail and memoranda,'' Stephen Houck, a lawyer for the states, told the court. The Microsoft legal team has for months been preparing its e-mail defense. First, Microsoft argues, anything that looks damaging is taken out of context. ``I urge your honor,'' John Warden, Microsoft's lead lawyer, told Judge Thomas Penfield Jackson, ``to view with considerable skepticism the crazy quilt of e-mail fragments that seem to form the core of the government's case.'' But Microsoft has also mounted an e-mail counterattack, culled from the millions of messages it obtained by subpoena from competitors in pretrial discovery. Warden's cross-examination ritual is to present a government witness with an internal e-mail from his company and then pose a declaration as a question. These interrogations have two refrains: Isn't it true your company does exactly what you are accusing Microsoft of doing, and isn't it true that Microsoft prevailed not because it is a predatory monopolist but because of its superior technology? Microsoft is accused of trying to prod companies to stay out of its way. So last week, for example, Warden produced e-mail from Stephen Case, the chairman of America Online, suggesting a partnership with Netscape Communications Corp. in which both companies would focus on their respective strengths. That division of labor, Case wrote, would be the best way to achieve the goal that Marc Andreessen, Netscape's cofounder, described in an earlier e-mail as beating ``the Beast From Redmond that wants to see us both dead'' _ a reference to Microsoft's headquarters in Redmond, Wash. Printouts of e-mail are just another form of written communication. By the 1920s, as typewriters became common, typed memoranda started to be used in court cases. From the 1950s through the 1980s, legal experts say, there was an explosion of documentation fueled by the new technologies of electric typewriters, photocopying and fax machines, and then personal computers. And e-mail, they add, has played an important role in legal inquiries for years, like the Iran-contra case in the 1980s when e-mail found in Oliver North's computer proved crucial. But the Microsoft case is the result of a sweeping government antitrust investigation of a high-technology company where e-mail has supplanted the telephone as the most common instrument of communication. ``E-mail has just revolutionized investigations of this kind,'' one senior Justice Department official said. While under investigation, Microsoft has handed over to the government an estimated 30 million documents, mostly e-mail. In the trial, the two sides have submitted about 3,000 exhibits, mainly e-mail. And in their e-mail, people often communicate more frankly and informally than when writing a letter or a report _ tap it out, punch a button and it's gone into cyberspace. But e-mail communication is documentary evidence, which in legal cases provides a rich, contemporaneous record of what people were thinking and planning at the time. It can be a sharp contrast to formal oral testimony, so often coached by lawyers and crafted by selective memory. ``The e-mail record certainly makes the I-don't-recall line of response harder to sustain,'' said Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. It can also be powerful ammunition for pointing to contradictions in testimony. And that is what the government will do in attacking Gates' credibility with his videotaped deposition, taken over three days in August. The government offered a glimpse of that strategy on the first day of the trial. It showed a few brief clips of a point in the deposition when Gates was asked about a meeting on June 21, 1995, at which, the government alleges, Microsoft offered to divide the browser market with Netscape and to make an investment in the company, which is its chief rival in that market. In the taped deposition, Gates says he recalled being asked by one of his subordinates whether he thought it made sense to invest in Netscape. He said that he was asked about it after the June 1995 meeting and replied, ``I didn't see that as something that made sense.'' But in an e-mail on May 31, 1995, Gates urged an alliance with Netscape. ``We could even pay them money as part of the deal,'' he wrote, ``buying a piece of them or something.'' The contradiction between Gates' deposition and his e-mail, though, does not of itself speak to the issue of whether Microsoft made an illegal offer to Netscape. To be sure, it is what Microsoft did _ not what it said in e-mail communications _ that counts most. ``But once the e-mail that looks bad gets in the record, you end up doing what Microsoft's lawyers are going to spend much of this trial doing _ trying to explain it away,'' said Stephen Axinn, a leading antitrust litigator with the firm Axinn, Veltrop & Harkrider in New York. ||||| The New York Times said in an editorial for Wednesday, Nov. 25: America Online's effort to acquire Netscape and set up a partnership with Sun Microsystems is a reminder of how rapidly the corporate landscape can change in fast-moving technical fields. But it does not lessen the need for the Justice Department to vigorously pursue its antitrust suit against Microsoft, the dominant player in software. The department has presented solid evidence that Microsoft has used its monopoly in operating systems to muscle rivals and partners so as to head off competition in other software realms. The Internet has risen so quickly as an information medium that only four years ago, in his book ``The Road Ahead,'' Bill Gates scarcely mentions it. In addition, only a couple of years ago America Online, the world's biggest online service, was having so much trouble getting rid of the bugs in the system it was widely derided as ``America On Hold.'' Now Microsoft has moved so aggressively into the Internet that the Justice Department is accusing it of predatory behavior, and America Online has rocketed forward to make deals with other Internet players. In its antitrust suit against Microsoft, the federal government charges that the company has illegally bundled its own browser with its Windows operating system to smother Netscape's chances of marketing its browser. Now in the corridors outside the antitrust trial Microsoft's lawyers maintain that Netscape has found a new partner in America Online and has no need of protection from the government. But it could be as easily argued that Microsoft has bludgeoned Netscape into dissolution, forcing a distress sale to America Online. Nor is it clear that customers of America Online will choose Netscape's browser as a vehicle for buying and selling on the Internet. Even in its newly musclebound form, America Online remains dependent on Microsoft's good will for favorable placement of an AOL icon on the main desktop screen. It may be that, years hence, America Online, Netscape and Sun will put together an alternative means to the Internet through telephone lines, cables or the like. But until that day, fairness requires Justice Department action to insure that Microsoft not use its current position to thwart consumer choice. Only when companies know they can get their products to the consumer will they have the incentive to innovate and turn the Internet into the revolutionary medium it promises to be. ||||| Envisioning a thoroughly networked world in which the World Wide Web is a limitless marketplace of information, entertainment, products and services, America Online Inc. Tuesday laid out the details of its agreement to buy the Netscape Communications Corporation for $4.2 billion. By moving quickly toward what both companies have recently come to see as the inevitable convergence of technology and media, America Online hopes that it will secure a solid lead in a battle already joined by giants like the Microsoft Corp. and the International Business Machines Corp. to transform the greater part of cyberspace into a vast virtual mall. Part of that vision rests on an alliance with Sun Microsystems that America Online negotiated as part of the deal. Sun not only brings a cyber-savvy sales force to the effort but, even more importantly, a strong technology partner in developing Netscape's industrial-strength software for running Internet sites. Sun is indeed a technology heavyweight. It owns the Java programming language specially designed for Internet applications, and Solaris, among the most popular commercial operating systems for the powerful computers that big corporations use to serve up Internet services like the World Wide Web, e-mail and retail transactions. It also manufactures a highly respected line of powerful computers based on its own microprocessor chips. But for America Online _ and for the big Internet players against which it will compete _ the real potential gold mine lies further down the road, perhaps five years away, when people will venture on line for information or shopping not only from personal computers but from inexpensive Internet appliances costing $200 each, or maybe included free as part of a subscription service, just as some cellular phones are now. Today, being wired remains a comparatively elitist activity _ an estimated 25 percent of American households had access to the Internet last year, and 5 percent of households bought merchandise on line. But the executives at America Online and Netscape hope that their deal will accelerate the timetable for the day when the Net is ubiquitous, when people will tap into the World Wide Web from appliance-like devices, pagers, cell phones, television set-top boxes or computers as routinely as they use the telephone today. ``A new generation of Internet devices to be able to deliver our service anywhere is a key part of what this deal is about in the long run,'' said Stephen M. Case, 40, the chairman of America Online. For the present, however, the idea is to make America Online, the nation's leading online service, the standard way to get onto the Internet, the executives explained. Netscape, the Internet pioneer, is a crucial part of that effort, they said. There is no assurance that this vision of the technological future will prove accurate or, even if it does, that the America Online-Netscape combination will lead the way. Still, the long-range game plan helps explain what brought America Online and Netscape together. And the ability of the companies' executives to sell that vision to Netscape's whiz-kid programmers in particular will determine whether the merger succeeds. Netscape's headquarters in Mountain View, Calif., is likely become a prime target for Silicon Valley headhunters. As is the case with any software company, Netscape's key asset is its talented programmers, and many of these code hackers may be reluctant to work for America Online, which still has a reputation as a middle-brow service catering to online newcomers, known derisively as ``newbies.'' Stock options and other financial incentives will be tailored to try to keep Netscape employees on board. ``But these people want to change the world, and we've got to be clear that joining with America Online, along with the Sun component, really is a bigger opportunity for us,'' said Marc Andreessen, the 26-year-old cofounder of Netscape who led a team of young programmers from the supercomputing center at the University of Illinois to Silicon Valley to start the Internet software company in 1994. ``This ought to be the preeminent Internet company over the next decade,'' Andreessen declared, speaking from a cell phone on a streetcorner in Palo Alto, Calif. For his part, Andreessen, a Netscape executive vice president, will become Netscape's chief technology officer for the next three or four months, until the merger is completed. His new job at America Online has not yet been determined, but it is likely to be chief technology officer of the combined company as well, an America Online executive said. Already, according to one Netscape board member, Andreessen has delivered a 12-page single-spaced memorandum to Case, setting out his view of the technological road map the new company should follow into the future, emphasizing the opportunities for electronic commerce in an environment in which most people are linked to the Internet. Netscape, populated with computing sophisticates, and America Online, known as an on-ramp to the Internet for the technologically challenged, seem a corporate odd couple. But the two companies, its executives explained, had been evolving toward each other for more than a year. In a telephone interview from America Online's headquarters in Dulles, Va., Case described Netscape as an enterprise that had ``morphed itself'' from a company dependent on sales of its software used to browse the World Wide Web _ and ``in Microsoft's cross-hairs'' _ into a business that relied on advertising and other revenues from its popular Netcenter Web site and from selling software to corporations to handle electronic commerce. The Netscape transformation was largely a reaction to Microsoft's competitive assault on its browser business _ a central element in the government's antitrust suit against Microsoft. Microsoft bundled its browser into its industry-standard Windows operating system, and gave away the browser for free. The government alleges these steps were part of a pattern of anticompetitive practices, while Microsoft maintains the moves were intended mainly to benefit consumers. Early this year, after laying off workers and suffering a large loss last year, Netscape announced that it would also distribute its browser for free. It seems to have stabilized its business around its new model. Netscape announced Tuesday that it earned $2.7 million on revenues of $162 million in its fourth fiscal quarter, which ended in September. Yet America Online has also changed in the last couple of years, moving well beyond its reputation as an online service for beginners. It now has an Internet chat service and runs its own all-in-one site on the Web, known as a ``portal,'' which includes e-mail, Internet searching, news, entertainment and online shopping. ``America Online has really changed from a closed online service for novice users to an Internet media and technology company with a diverse set of brands,'' Andreessen said. ``These two companies have been moving in the same direction, and the fit is a good one.'' ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would end the independent existence of Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Eventually, Microsoft's browser technology caught up to Netscape's. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Among large corporations, Sun's version of Unix, Solaris, is among the most popular operating systems for the powerful computers that run Netscape's server software. The much smaller Netscape would be placed under the wing of AOL and Sun Microsystems. The three companies had combined revenues of more than $12.4 billion last year. Microsoft, by comparison, had revenues of more than $14 billion. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. Still, executives involved in the talks said that the timing of the proposed deal was unrelated to the antitrust trial. Nor should it, one person noted, be regarded as ``a single-minded attempt to circle the wagons against Microsoft.'' Indeed, AOL, according to one person close to the talks, plans to keep Microsoft's Internet Explorer browser as the default choice on its on-line service. One of the government's allegations in the antitrust suit is that Microsoft won out over Netscape as the main browser for AOL because Microsoft used its Windows monopoly as a bargaining chip. To win the browser deal, Microsoft offered AOL prime real estate on the Windows desktop, the main screen on more than 90 percent of personal computers sold today. Staying with Microsoft's browser can be seen as proof that AOL still regards placement on the Windows desktop as crucial, as well as a careful step to avoid undermining one of the allegations in the government's case. For AOL, the Netscape purchase would accelerate its evolution toward the Internet. At present, its flagship on-line service is a hybrid _ to its own proprietary service, it has added a gateway to the World Wide Web. In addition, for consumers who do not subscribe to AOL's dial-up service, it also has its own Web site, aol.com, which attracts about 24 million visitors a month, according to Media Metrix/Relevant Knowledge, a market research firm. Its big Web site offers a wide range of information, entertainment, Internet chat and e-mail, a leading example of the all-in-one sites that have become known as portals. Netscape's Netcenter traffic has slipped a bit in recent months, to under 16 million visitors a month, but it, too, is a major portal. Together, they should be a huge player in the intensifying portal battle for viewers and resulting advertising revenues. Yahoo is the current leader among portal sites with more than 25 million monthly visitors, while Microsoft's site attracts more than 20 million a month. Though known as a new-media company for consumers, AOL is also interested in boosting its electronic commerce business with the Netscape purchase. AOL has recently done work with Eastman Kodak, American Greetings and other companies, not only promoting their products to on-line subscribers but also building the Internet infrastructure of software to conduct electronic commerce. AOL notes projections like a recent one from Forrester Research Inc., which predicted that worldwide Internet commerce could reach as high as $3.2 trillion by 2003, or 5 percent of global sales. Sun Microsystems, analysts say, could be a strong partner for AOL in the market for Internet commerce software. Sun is a corporate software company with a sales force of several thousand. As it moves increasingly to Internet technology, AOL should prove an excellent partner for Sun in terms of developing and using Sun's Java, an Internet programming language. And while Netscape's browser no longer generates revenue on its own, it is a distribution channel for Java technology. Having Netscape's browser safely in the hands of a friendly company is of strategic importance for Sun, since Microsoft owns the alternative in the browser market. AOL is expected pay little, if any, premium over Netscape's stock price on Friday, executives close to the deal said, since Netscape shares have more than doubled in the last month. In the last week alone, Netscape's stock has jumped about $12, or nearly 45 percent, following reports that it was discussing a possible partnership with AOL. The stock closed Friday at $39.1875, up $2.625. AOL's shares gained $1.50 Friday, closing at $84.875. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. There are creative services that include graphic design, media buying, customer list analysis and other marketing and promotional efforts. And there are operational services that involve actually maintaining the big servers that users connect to when they use the online stores that display catalogs, take orders and process payments. America Online, Schuler said, will emphasize services that relate to marketing rather than back-office functions. ``We will consult on how to merchandise and sell online,'' he said. ``We understand the consumer piece of the puzzle.'' Some competitors worry that America Online's electronic commerce services may simply be a device to sell its software and hardware. ``The challenge is to prove that clients are getting the best possible solution for their business,'' said Robert Gett, the chief executive of Viant. ``If they offer AOL and Netscape and Sun, their answer is a bit tainted.'' Netscape does have an expanding force of about 700 people who provide consulting and custom programming. But they have been most competitive, Gett said, in competing for nuts-and-bolts projects rather than the more lucrative assignments to develop and carry out a full-fledged strategy on the Web. ``They say, `Who knows our software better than Netscape?''' Gett said. ``We help customers decide which platform is best for them.'' But America Online argues that the combined might of it, Netscape and Sun is just what the business needs. ``We always believed that commerce, that is buying goods and services, is the huge revenue stream of the future,'' Schuler said. ``We have only seen the tiniest tip of the iceberg.'' ||||| Stock prices vaulted to record levels Monday, furthering a recovery that as recently as two months ago seemed nearly unthinkable. ``I thought we were in the most serious correction since 1990, but I never thought or wrote that the bull market was over,'' said Byron Wien, U.S. equity strategist at Morgan Stanley Dean Witter & Co. ``Now it seems all of that is behind us.'' The Dow Jones industrial average rose 214.72 points, or 2.34 percent, to 9,374.27. The record is the first since July 17, when the Dow closed at 9,337.97. Since Aug. 31, when the Dow stood at 7,539.07 after a steep slide, the blue-chip gauge has risen more than 24 percent. For the year, the Dow is up 18.54 percent and has a chance of rising more than 20 percent for a fourth consecutive year, something never accomplished before. Broader averages also climbed. The Standard & Poor's 500-stock index set a record, rising 24.66 points, or 2.12 percent, to 1,188.21. The Nasdaq composite index did not reach a new high but posted the biggest percentage gain Monday, rising 49.21 points, or 2.55 percent, to 1,977.42. And the Russell 2000 index of smaller-company issues gained 3.86 points, or nearly 1 percent, to 398.15. Monday's action was energized by a daily record for the number of mergers and acquisitions valued at $1 billion or more. The merger announcements not only prompted investors to change estimates of how much companies were worth but also indicated coming declines in the outstanding shares of stock. ``This may be a supply-demand story, where demand for stocks is rising and the supply of stock is reduced as one company after another merges,'' said Hugh Johnson, chief investment officer at First Albany Corp. ``The flow of money into mutual funds is fairly strong, and there is pressure on managers to put that money to work.'' Two deals seemed to be catalysts for broad swaths of stocks. News that Bankers Trust may be close to accepting an $8.9 billion offer from Deutsche Bank of Germany heightened interest in financial-services and bank stocks. And word that America Online may acquire Netscape Communications for $4 billion in stock powered Internet and other technology stocks to even loftier valuations. Among financial companies, J.P. Morgan gained 6 1/16, to 115 11/16. American Express was up 4 3/8, to 108 15/16. Merrill Lynch jumped 4 3/8, to 76. And Donaldson, Lufkin & Jenrette rose 3 9/16, to 42}. Netscape was the most active stock Monday, gaining 2}, to 41 15/16. America Online gained 4 3/8, to 89\. Other Internet stocks also surged, and analysts said the group, which has seen meteoric gains in recent weeks, was ripe for a steep correction. Yahoo and Amazon.com both became $200 stocks on Monday. Yahoo rose 30 7/16, to 221 7/16. And Amazon.com gained 37 3/8, to 218. ``The performance of the Internet stocks is an unsettling sign,'' Wien said. Still, more-established technology shares also had a very good day. IBM rose 7, to 166 5/8. Microsoft jumped 5 9/16, to 119 3/16. And Intel closed at 113 9/16, up 1{. After Monday's big price moves, Wien said that according to his calculations, stocks were about 10 percent overvalued. By contrast, in the middle of July the market was 20 percent overvalued, he said. Nonetheless, the market's recovery, which has been buttressed by three cuts in interest rates by the Federal Reserve Board, has left many longtime Wall Street hands grasping for historical parallels. ``At this point we are in new ground,'' said Laszlo Birinyi, who heads his own market research firm. ``At the beginning of the year, I said my target for the Dow was 10,000 by the end of 1998. If anyone had asked when the market went through what now looks like a corrective blip, I would have said my new target would have been about 9,000. I am surprised the 10,000 figure came back on the table'' for this year.

As the U.S. government pressed its antitrust case against Microsoft Corp. in November 1998, America Online (AOL) proposed an alliance with Netscape Communications and Sun Microsystems. The three-pronged deal promised to provide on-line services, Internet software and electronic commerce. AOL was to buy Netscape and forge a partnership with Sun, benefiting all three and giving technological independence from Microsoft. Microsoft lawyers argued unconvincingly that AOL's purchase of Netscape would undermine the government's antitrust case, based in large part on Netscape's complaint. It remained to be seen whether AOL could achieve a vast virtual mall.

America Online Inc. wants to become the ``next Microsoft'' in two promising information-age fields where Microsoft Corp. is just another company _ the Internet media business and electronic commerce. With its proposed purchase of Netscape Communications Corp., AOL, the nation's largest dial-up online service with more than 14 million subscribers, hopes to take a significant step toward that ambitious goal. If the $4 billion deal is completed _ the companies had not reached a final agreement as of Monday night _ AOL would acquire a leading Internet brand and enlarge its wired audience by absorbing the millions who regularly visit Netscape's popular NetCenter site on the World Wide Web. ``Acquiring Netscape would really enhance America Online's role as the premier Internet media company,'' said James F. Moore, president of Geopartners Inc., a consulting firm. ``America Online is assembling the kind of audience numbers that will convince people the Internet is becoming a mainstream media.'' In the new media business, as in traditional media like television or newspapers, eyeballs translate into advertising revenue. But what really intrigues media executives and consumer marketers about the new media _ news, entertainment and services rendered in computer code _ is that it is inherently a two-way medium with which people can interact with the tap of a key or the click of a mouse button The interaction that advertisers and marketers want to see, of course, is buying. And it is the potential for exploiting an instant, direct connection to consumers that has fueled all the recent optimism about electronic commerce. Today, companies are selling everything from books to baby clothes over the Internet. Most companies have not progressed beyond the experimentation stage, but there are a handful of encouraging success stories like Amazon.com, the on-line bookstore. By 2003, Forrester Research Inc., whose business is analyzing trends in cyberspace, projects that Internet commerce could reach $3.2 trillion, or 5 percent of all sales worldwide. AOL is at the forefront of this convergence of media and commerce converge, and integration reflected in the lineage of its leaders. Steve Case, the chairman, was once a new-product manager for Pepsico's Pizza Hut chain, while Robert Pittman, the president, is a former MTV executive. Microsoft is also investing heavily in new media and electronic commerce. It has an online service, MSN, which competes with AOL, as well as information-and commerce Web sites that focus on travel, cars and real estate. It also owns Sidewalk, a network of local sites that list movies, restaurants and stores in cities around the country including Seattle and New York. Its MSNBC Internet news service is half of a joint venture with NBC. Microsoft is expected to be a formidable competitor in the media-and-commerce business. It has no shortage of bright people and it has more money than any rival. Besides deep pockets, Microsoft has the built-in advantage in any computer-based medium because its Windows operating system runs more than 90 percent of personal computers sold today. Its control of the Windows desktop gives it the most valuable piece of commercial real estate in the information age. In theory, at least, owning that desktop screen should help Microsoft steer consumers to its online offerings _ an issue that is key to the government's antitrust suit against Microsoft. But so far, Microsoft has started slowly in the fields of Internet media and electronic commerce. ``Microsoft may want to, but it does not dominate these new markets,'' said Richard Shaffer, a principal of Technologic Partners, a research firm. ``America Online recognizes that the big opportunity is in these emerging growth businesses like electronic commerce instead of trying to take Microsoft on head-on.'' Still, if the Netscape deal is completed, AOL will also find itself in the software business in a way it has never been in the past. Netscape is known as the pioneer in the commercial development of software used to navigate the World Wide Web. Microsoft saw the browser software as a direct threat to its industry dominance and pursued that market aggressively, bundling its own browser with its Windows and giving it away free _ tactics that have been challenged by the government. But Netscape no longer generates revenues from its browser, which it now also distributes for free, but from the sale of heavy-duty software sold to corporations. Much of this software is used as the technological ``back office'' for electronic commerce _ used in building Web sites and processing transactions. A surprising element in the proposed deal is that AOL intends to hold onto Netscape's corporate software business instead of selling it off to an established software company. ``America Online just doesn't have credibility in that market,'' observed Michael A. Cusumano, a professor at the Massachusetts Institute of Technology's Sloan School of Management. Executives close to AOL explain the decision as the need to provide full-line offerings for electronic commerce, from corporate Web site to the computer screens of consumers. But AOL has decided it needs help to preserve and strengthen Netscape's corporate software business. To do that, it has brought in Sun Microsystems Inc. in a side deal, which has complicated the transaction considerably. AOL, according to executives close to the proposed deal, will own Netscape, but it will have a joint marketing and development partnership with Sun. As part of the deal, AOL will agree to purchase about $300 million worth of Sun's computers for its service, while Sun will apparently agree to purchase sizeable amounts of Netscape software, which Sun's sales force must sell. Still, AOL and Sun have a longer-term objective as well _ one that promises to place them in more direct conflict with Microsoft. For nearly a year, William J. Raduchel, Sun's chief strategist, has been working closely with AOL, according to Sun executives. A former Harvard economics professor who taught Scott McNealy, the Sun chairman, Raduchel has focused on Sun's Internet programming technologies, called Java and Jini, both of which are seen as potential threats to Microsoft's dominance. By combining Sun's technology prowess with AOL's powerful consumer brand, the Sun executives say, there is the potential for a kind end-run around Microsoft's grip on desktop computing. In its research laboratories, Sun has been working on a stripped-down network computer _ a simple-to-use information appliance, which could cost as little as $200 or be given away as part of a subscription service. The concept is that AOL's Internet media and electronic commerce services could be delivered to many more homes than today because many people still shun the expense and difficulty of using a personal computer. The appliance would be mainly a receiver and screen, with most of the computing power residing on vast central computers serving up information as users request by tapping a few buttons. Sun's technological specialty is this kind of centralized ``network'' computing. If the long-term AOL-Sun vision ever materialized _ certainly a three-to-five year bet, at the least _ it could give both companies a boost and technological independence from Microsoft. ||||| Microsoft Corp. argued in federal court Monday that the proposed acquisition of Netscape Communications Corp. by America Online seriously undermined the government's antitrust suit against the software giant. ``From a legal standpoint, this proposed deal pulls the rug out from under the government,'' William Neukom, Microsoft's senior vice president for legal affairs, said Monday morning on the courthouse steps. The reasoning behind this assertion, Microsoft says, is that the proposed deal demonstrates that Netscape and the larger software industry are healthy and vibrant _ even with all of the illegal and anti-competitive practices alleged in the government's suit. But David Boies, the government's lead attorney, said all of that was irrelevant. ``Whatever the deal ends up being _ if there ends up being a deal _ is not going to remove any of the obstacles that Microsoft has placed in the path of competition in this industry,'' he said. Michael Lacovara, a Microsoft lawyer who was questioning a government witness, economist Frederick Warren-Boulton, suggested to him during the trial Monday that the proposed acquisition undermined Warren-Boulton's argument, that Microsoft seems headed toward obtaining a monopoly in Internet browser software to match the one it apparently holds in operating systems. After all, about 22 percent of Americans who use the Internet reach it through America Online. And at present AOL uses Microsoft's Web browser, Internet Explorer, as the service's default choice. In exchange for that, Microsoft places an AOL advertisement and Internet link in Windows 98. Lacovara asked the witness whether, once AOL's service contract expires in January, he would ``expect AOL to continue to distribute Microsoft software.'' Yes, Warren-Boulton responded. ``It is not at all clear to me that AOL's incentive to do this is changed by this proposed merger with Netscape.'' He noted that America Online officials had said their need to be among the online services featured in Windows forced them to accept Microsoft terms _ establishing Internet Explorer as the default choice. Lacovara then asked Warren-Boulton the question that lay under his entire cross-examination of the witness _ and Microsoft's larger assertion Monday about the proposed Netscape-AOL deal. ``Surely this combination,'' he asked, ``tells you something about the nature of competition in the software industry?'' Warren-Boulton's answer was probably not the one Lacovara had been after. ``To the extent that this potential merger is the result of Microsoft's actions with these exclusive contracts and other actions,'' he said, ``it is unfortunate to see the disappearance of a firm like Netscape, the brightest, newest star.'' Warren-Boulton's purpose on the stand for the government is to establish that Microsoft does have a monopoly in operating-system software; more than 90 percent of the world's computers use a Microsoft operating system. That is the foundation under most of the government's case since federal antitrust law forbids certain behavior by a monopolist that would be legal for a firm that faces healthy competition. Through repeated, often circumlocutious questioning, Lacovara tried to make the case that Microsoft's overwhelming market share was ephemeral. The software industry is so vibrant and fast moving, he suggested, that Microsoft could be toppled from its position at any moment _ a point of view the company encourages among its employees. On Friday and Monday, Lacovara repeatedly pointed out that other companies are placing other operating systems on the market, and some software companies _ principally Microsoft's greatest rivals _ are writing software for these new systems. But Warren-Boulton argued that ``the existence of these fringe competitors in the operating system market does not mean in any way that Microsoft does not have monopoly power.'' On Monday afternoon, Lacovara made an issue of the success Apple Computer Co. is having selling its new iMac computer. He entered into evidence an Apple news release issued last month showing, among other things, that 12.5 percent of the people buying Apple's new iMac computer had previously owned a Windows machine. Apple computers use a different operating system, Mac-OS. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. But as part of the deal, AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would subsume Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Sun's version of Unix, Solaris, is among the most popular operating systems for the large, powerful computers that run Netscape's server software. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. ||||| The outcome of the Microsoft antitrust case may be a long way off, but one thing is already clear: This is the first major e-mail trial. The government's prosecution and Microsoft Corp.'s defense, to a striking degree, are legal campaigns waged with electronic messages. The human testimony often pales next to the e-mail evidence. On the stand or in videotaped testimony, the people being questioned shrug, mumble and forget. The e-mail is alive with ideas and competitive zeal, punctuated with profanity and exclamation points. The second week of the trial ended with the prosecutors being frustrated because a lengthy cross-examination by Microsoft's lead lawyer left no time for the government to show several hours of a videotaped deposition of Bill Gates, the Microsoft chairman. With a new witness, an executive of Apple Computer Inc., taking the stand Monday, it is uncertain when the Gates tape will be played. The Justice Department and the 20 states suing Microsoft believe that the tape will strengthen their case because it shows Gates saying he was not involved in plans to take what the government alleges were illegal steps to stifle competition in the Internet software market. The Gates videotape, said David Boies, the Justice Department's trial lawyer, offers an ``opportunity to judge Gates' credibility.'' But the Gates credibility gap, if there is one, becomes an issue not because of the videotape but because his taped remarks can be compared and contrasted with the e-mail he wrote and received. The e-mail record, the government insists, shows Gates waist-deep in plotting the anti-competitive deals and bullying tactics that he denies or professes to have never heard of in his taped deposition. If his machinations are central to the government's case, why not summon Gates to the trial? ``The government does not need to put Gates on the stand, because we have his e-mail and memoranda,'' Stephen Houck, a lawyer for the states, told the court. The Microsoft legal team has for months been preparing its e-mail defense. First, Microsoft argues, anything that looks damaging is taken out of context. ``I urge your honor,'' John Warden, Microsoft's lead lawyer, told Judge Thomas Penfield Jackson, ``to view with considerable skepticism the crazy quilt of e-mail fragments that seem to form the core of the government's case.'' But Microsoft has also mounted an e-mail counterattack, culled from the millions of messages it obtained by subpoena from competitors in pretrial discovery. Warden's cross-examination ritual is to present a government witness with an internal e-mail from his company and then pose a declaration as a question. These interrogations have two refrains: Isn't it true your company does exactly what you are accusing Microsoft of doing, and isn't it true that Microsoft prevailed not because it is a predatory monopolist but because of its superior technology? Microsoft is accused of trying to prod companies to stay out of its way. So last week, for example, Warden produced e-mail from Stephen Case, the chairman of America Online, suggesting a partnership with Netscape Communications Corp. in which both companies would focus on their respective strengths. That division of labor, Case wrote, would be the best way to achieve the goal that Marc Andreessen, Netscape's cofounder, described in an earlier e-mail as beating ``the Beast From Redmond that wants to see us both dead'' _ a reference to Microsoft's headquarters in Redmond, Wash. Printouts of e-mail are just another form of written communication. By the 1920s, as typewriters became common, typed memoranda started to be used in court cases. From the 1950s through the 1980s, legal experts say, there was an explosion of documentation fueled by the new technologies of electric typewriters, photocopying and fax machines, and then personal computers. And e-mail, they add, has played an important role in legal inquiries for years, like the Iran-contra case in the 1980s when e-mail found in Oliver North's computer proved crucial. But the Microsoft case is the result of a sweeping government antitrust investigation of a high-technology company where e-mail has supplanted the telephone as the most common instrument of communication. ``E-mail has just revolutionized investigations of this kind,'' one senior Justice Department official said. While under investigation, Microsoft has handed over to the government an estimated 30 million documents, mostly e-mail. In the trial, the two sides have submitted about 3,000 exhibits, mainly e-mail. And in their e-mail, people often communicate more frankly and informally than when writing a letter or a report _ tap it out, punch a button and it's gone into cyberspace. But e-mail communication is documentary evidence, which in legal cases provides a rich, contemporaneous record of what people were thinking and planning at the time. It can be a sharp contrast to formal oral testimony, so often coached by lawyers and crafted by selective memory. ``The e-mail record certainly makes the I-don't-recall line of response harder to sustain,'' said Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. It can also be powerful ammunition for pointing to contradictions in testimony. And that is what the government will do in attacking Gates' credibility with his videotaped deposition, taken over three days in August. The government offered a glimpse of that strategy on the first day of the trial. It showed a few brief clips of a point in the deposition when Gates was asked about a meeting on June 21, 1995, at which, the government alleges, Microsoft offered to divide the browser market with Netscape and to make an investment in the company, which is its chief rival in that market. In the taped deposition, Gates says he recalled being asked by one of his subordinates whether he thought it made sense to invest in Netscape. He said that he was asked about it after the June 1995 meeting and replied, ``I didn't see that as something that made sense.'' But in an e-mail on May 31, 1995, Gates urged an alliance with Netscape. ``We could even pay them money as part of the deal,'' he wrote, ``buying a piece of them or something.'' The contradiction between Gates' deposition and his e-mail, though, does not of itself speak to the issue of whether Microsoft made an illegal offer to Netscape. To be sure, it is what Microsoft did _ not what it said in e-mail communications _ that counts most. ``But once the e-mail that looks bad gets in the record, you end up doing what Microsoft's lawyers are going to spend much of this trial doing _ trying to explain it away,'' said Stephen Axinn, a leading antitrust litigator with the firm Axinn, Veltrop & Harkrider in New York. ||||| The New York Times said in an editorial for Wednesday, Nov. 25: America Online's effort to acquire Netscape and set up a partnership with Sun Microsystems is a reminder of how rapidly the corporate landscape can change in fast-moving technical fields. But it does not lessen the need for the Justice Department to vigorously pursue its antitrust suit against Microsoft, the dominant player in software. The department has presented solid evidence that Microsoft has used its monopoly in operating systems to muscle rivals and partners so as to head off competition in other software realms. The Internet has risen so quickly as an information medium that only four years ago, in his book ``The Road Ahead,'' Bill Gates scarcely mentions it. In addition, only a couple of years ago America Online, the world's biggest online service, was having so much trouble getting rid of the bugs in the system it was widely derided as ``America On Hold.'' Now Microsoft has moved so aggressively into the Internet that the Justice Department is accusing it of predatory behavior, and America Online has rocketed forward to make deals with other Internet players. In its antitrust suit against Microsoft, the federal government charges that the company has illegally bundled its own browser with its Windows operating system to smother Netscape's chances of marketing its browser. Now in the corridors outside the antitrust trial Microsoft's lawyers maintain that Netscape has found a new partner in America Online and has no need of protection from the government. But it could be as easily argued that Microsoft has bludgeoned Netscape into dissolution, forcing a distress sale to America Online. Nor is it clear that customers of America Online will choose Netscape's browser as a vehicle for buying and selling on the Internet. Even in its newly musclebound form, America Online remains dependent on Microsoft's good will for favorable placement of an AOL icon on the main desktop screen. It may be that, years hence, America Online, Netscape and Sun will put together an alternative means to the Internet through telephone lines, cables or the like. But until that day, fairness requires Justice Department action to insure that Microsoft not use its current position to thwart consumer choice. Only when companies know they can get their products to the consumer will they have the incentive to innovate and turn the Internet into the revolutionary medium it promises to be. ||||| Envisioning a thoroughly networked world in which the World Wide Web is a limitless marketplace of information, entertainment, products and services, America Online Inc. Tuesday laid out the details of its agreement to buy the Netscape Communications Corporation for $4.2 billion. By moving quickly toward what both companies have recently come to see as the inevitable convergence of technology and media, America Online hopes that it will secure a solid lead in a battle already joined by giants like the Microsoft Corp. and the International Business Machines Corp. to transform the greater part of cyberspace into a vast virtual mall. Part of that vision rests on an alliance with Sun Microsystems that America Online negotiated as part of the deal. Sun not only brings a cyber-savvy sales force to the effort but, even more importantly, a strong technology partner in developing Netscape's industrial-strength software for running Internet sites. Sun is indeed a technology heavyweight. It owns the Java programming language specially designed for Internet applications, and Solaris, among the most popular commercial operating systems for the powerful computers that big corporations use to serve up Internet services like the World Wide Web, e-mail and retail transactions. It also manufactures a highly respected line of powerful computers based on its own microprocessor chips. But for America Online _ and for the big Internet players against which it will compete _ the real potential gold mine lies further down the road, perhaps five years away, when people will venture on line for information or shopping not only from personal computers but from inexpensive Internet appliances costing $200 each, or maybe included free as part of a subscription service, just as some cellular phones are now. Today, being wired remains a comparatively elitist activity _ an estimated 25 percent of American households had access to the Internet last year, and 5 percent of households bought merchandise on line. But the executives at America Online and Netscape hope that their deal will accelerate the timetable for the day when the Net is ubiquitous, when people will tap into the World Wide Web from appliance-like devices, pagers, cell phones, television set-top boxes or computers as routinely as they use the telephone today. ``A new generation of Internet devices to be able to deliver our service anywhere is a key part of what this deal is about in the long run,'' said Stephen M. Case, 40, the chairman of America Online. For the present, however, the idea is to make America Online, the nation's leading online service, the standard way to get onto the Internet, the executives explained. Netscape, the Internet pioneer, is a crucial part of that effort, they said. There is no assurance that this vision of the technological future will prove accurate or, even if it does, that the America Online-Netscape combination will lead the way. Still, the long-range game plan helps explain what brought America Online and Netscape together. And the ability of the companies' executives to sell that vision to Netscape's whiz-kid programmers in particular will determine whether the merger succeeds. Netscape's headquarters in Mountain View, Calif., is likely become a prime target for Silicon Valley headhunters. As is the case with any software company, Netscape's key asset is its talented programmers, and many of these code hackers may be reluctant to work for America Online, which still has a reputation as a middle-brow service catering to online newcomers, known derisively as ``newbies.'' Stock options and other financial incentives will be tailored to try to keep Netscape employees on board. ``But these people want to change the world, and we've got to be clear that joining with America Online, along with the Sun component, really is a bigger opportunity for us,'' said Marc Andreessen, the 26-year-old cofounder of Netscape who led a team of young programmers from the supercomputing center at the University of Illinois to Silicon Valley to start the Internet software company in 1994. ``This ought to be the preeminent Internet company over the next decade,'' Andreessen declared, speaking from a cell phone on a streetcorner in Palo Alto, Calif. For his part, Andreessen, a Netscape executive vice president, will become Netscape's chief technology officer for the next three or four months, until the merger is completed. His new job at America Online has not yet been determined, but it is likely to be chief technology officer of the combined company as well, an America Online executive said. Already, according to one Netscape board member, Andreessen has delivered a 12-page single-spaced memorandum to Case, setting out his view of the technological road map the new company should follow into the future, emphasizing the opportunities for electronic commerce in an environment in which most people are linked to the Internet. Netscape, populated with computing sophisticates, and America Online, known as an on-ramp to the Internet for the technologically challenged, seem a corporate odd couple. But the two companies, its executives explained, had been evolving toward each other for more than a year. In a telephone interview from America Online's headquarters in Dulles, Va., Case described Netscape as an enterprise that had ``morphed itself'' from a company dependent on sales of its software used to browse the World Wide Web _ and ``in Microsoft's cross-hairs'' _ into a business that relied on advertising and other revenues from its popular Netcenter Web site and from selling software to corporations to handle electronic commerce. The Netscape transformation was largely a reaction to Microsoft's competitive assault on its browser business _ a central element in the government's antitrust suit against Microsoft. Microsoft bundled its browser into its industry-standard Windows operating system, and gave away the browser for free. The government alleges these steps were part of a pattern of anticompetitive practices, while Microsoft maintains the moves were intended mainly to benefit consumers. Early this year, after laying off workers and suffering a large loss last year, Netscape announced that it would also distribute its browser for free. It seems to have stabilized its business around its new model. Netscape announced Tuesday that it earned $2.7 million on revenues of $162 million in its fourth fiscal quarter, which ended in September. Yet America Online has also changed in the last couple of years, moving well beyond its reputation as an online service for beginners. It now has an Internet chat service and runs its own all-in-one site on the Web, known as a ``portal,'' which includes e-mail, Internet searching, news, entertainment and online shopping. ``America Online has really changed from a closed online service for novice users to an Internet media and technology company with a diverse set of brands,'' Andreessen said. ``These two companies have been moving in the same direction, and the fit is a good one.'' ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would end the independent existence of Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Eventually, Microsoft's browser technology caught up to Netscape's. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Among large corporations, Sun's version of Unix, Solaris, is among the most popular operating systems for the powerful computers that run Netscape's server software. The much smaller Netscape would be placed under the wing of AOL and Sun Microsystems. The three companies had combined revenues of more than $12.4 billion last year. Microsoft, by comparison, had revenues of more than $14 billion. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. Still, executives involved in the talks said that the timing of the proposed deal was unrelated to the antitrust trial. Nor should it, one person noted, be regarded as ``a single-minded attempt to circle the wagons against Microsoft.'' Indeed, AOL, according to one person close to the talks, plans to keep Microsoft's Internet Explorer browser as the default choice on its on-line service. One of the government's allegations in the antitrust suit is that Microsoft won out over Netscape as the main browser for AOL because Microsoft used its Windows monopoly as a bargaining chip. To win the browser deal, Microsoft offered AOL prime real estate on the Windows desktop, the main screen on more than 90 percent of personal computers sold today. Staying with Microsoft's browser can be seen as proof that AOL still regards placement on the Windows desktop as crucial, as well as a careful step to avoid undermining one of the allegations in the government's case. For AOL, the Netscape purchase would accelerate its evolution toward the Internet. At present, its flagship on-line service is a hybrid _ to its own proprietary service, it has added a gateway to the World Wide Web. In addition, for consumers who do not subscribe to AOL's dial-up service, it also has its own Web site, aol.com, which attracts about 24 million visitors a month, according to Media Metrix/Relevant Knowledge, a market research firm. Its big Web site offers a wide range of information, entertainment, Internet chat and e-mail, a leading example of the all-in-one sites that have become known as portals. Netscape's Netcenter traffic has slipped a bit in recent months, to under 16 million visitors a month, but it, too, is a major portal. Together, they should be a huge player in the intensifying portal battle for viewers and resulting advertising revenues. Yahoo is the current leader among portal sites with more than 25 million monthly visitors, while Microsoft's site attracts more than 20 million a month. Though known as a new-media company for consumers, AOL is also interested in boosting its electronic commerce business with the Netscape purchase. AOL has recently done work with Eastman Kodak, American Greetings and other companies, not only promoting their products to on-line subscribers but also building the Internet infrastructure of software to conduct electronic commerce. AOL notes projections like a recent one from Forrester Research Inc., which predicted that worldwide Internet commerce could reach as high as $3.2 trillion by 2003, or 5 percent of global sales. Sun Microsystems, analysts say, could be a strong partner for AOL in the market for Internet commerce software. Sun is a corporate software company with a sales force of several thousand. As it moves increasingly to Internet technology, AOL should prove an excellent partner for Sun in terms of developing and using Sun's Java, an Internet programming language. And while Netscape's browser no longer generates revenue on its own, it is a distribution channel for Java technology. Having Netscape's browser safely in the hands of a friendly company is of strategic importance for Sun, since Microsoft owns the alternative in the browser market. AOL is expected pay little, if any, premium over Netscape's stock price on Friday, executives close to the deal said, since Netscape shares have more than doubled in the last month. In the last week alone, Netscape's stock has jumped about $12, or nearly 45 percent, following reports that it was discussing a possible partnership with AOL. The stock closed Friday at $39.1875, up $2.625. AOL's shares gained $1.50 Friday, closing at $84.875. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. There are creative services that include graphic design, media buying, customer list analysis and other marketing and promotional efforts. And there are operational services that involve actually maintaining the big servers that users connect to when they use the online stores that display catalogs, take orders and process payments. America Online, Schuler said, will emphasize services that relate to marketing rather than back-office functions. ``We will consult on how to merchandise and sell online,'' he said. ``We understand the consumer piece of the puzzle.'' Some competitors worry that America Online's electronic commerce services may simply be a device to sell its software and hardware. ``The challenge is to prove that clients are getting the best possible solution for their business,'' said Robert Gett, the chief executive of Viant. ``If they offer AOL and Netscape and Sun, their answer is a bit tainted.'' Netscape does have an expanding force of about 700 people who provide consulting and custom programming. But they have been most competitive, Gett said, in competing for nuts-and-bolts projects rather than the more lucrative assignments to develop and carry out a full-fledged strategy on the Web. ``They say, `Who knows our software better than Netscape?''' Gett said. ``We help customers decide which platform is best for them.'' But America Online argues that the combined might of it, Netscape and Sun is just what the business needs. ``We always believed that commerce, that is buying goods and services, is the huge revenue stream of the future,'' Schuler said. ``We have only seen the tiniest tip of the iceberg.'' ||||| Stock prices vaulted to record levels Monday, furthering a recovery that as recently as two months ago seemed nearly unthinkable. ``I thought we were in the most serious correction since 1990, but I never thought or wrote that the bull market was over,'' said Byron Wien, U.S. equity strategist at Morgan Stanley Dean Witter & Co. ``Now it seems all of that is behind us.'' The Dow Jones industrial average rose 214.72 points, or 2.34 percent, to 9,374.27. The record is the first since July 17, when the Dow closed at 9,337.97. Since Aug. 31, when the Dow stood at 7,539.07 after a steep slide, the blue-chip gauge has risen more than 24 percent. For the year, the Dow is up 18.54 percent and has a chance of rising more than 20 percent for a fourth consecutive year, something never accomplished before. Broader averages also climbed. The Standard & Poor's 500-stock index set a record, rising 24.66 points, or 2.12 percent, to 1,188.21. The Nasdaq composite index did not reach a new high but posted the biggest percentage gain Monday, rising 49.21 points, or 2.55 percent, to 1,977.42. And the Russell 2000 index of smaller-company issues gained 3.86 points, or nearly 1 percent, to 398.15. Monday's action was energized by a daily record for the number of mergers and acquisitions valued at $1 billion or more. The merger announcements not only prompted investors to change estimates of how much companies were worth but also indicated coming declines in the outstanding shares of stock. ``This may be a supply-demand story, where demand for stocks is rising and the supply of stock is reduced as one company after another merges,'' said Hugh Johnson, chief investment officer at First Albany Corp. ``The flow of money into mutual funds is fairly strong, and there is pressure on managers to put that money to work.'' Two deals seemed to be catalysts for broad swaths of stocks. News that Bankers Trust may be close to accepting an $8.9 billion offer from Deutsche Bank of Germany heightened interest in financial-services and bank stocks. And word that America Online may acquire Netscape Communications for $4 billion in stock powered Internet and other technology stocks to even loftier valuations. Among financial companies, J.P. Morgan gained 6 1/16, to 115 11/16. American Express was up 4 3/8, to 108 15/16. Merrill Lynch jumped 4 3/8, to 76. And Donaldson, Lufkin & Jenrette rose 3 9/16, to 42}. Netscape was the most active stock Monday, gaining 2}, to 41 15/16. America Online gained 4 3/8, to 89\. Other Internet stocks also surged, and analysts said the group, which has seen meteoric gains in recent weeks, was ripe for a steep correction. Yahoo and Amazon.com both became $200 stocks on Monday. Yahoo rose 30 7/16, to 221 7/16. And Amazon.com gained 37 3/8, to 218. ``The performance of the Internet stocks is an unsettling sign,'' Wien said. Still, more-established technology shares also had a very good day. IBM rose 7, to 166 5/8. Microsoft jumped 5 9/16, to 119 3/16. And Intel closed at 113 9/16, up 1{. After Monday's big price moves, Wien said that according to his calculations, stocks were about 10 percent overvalued. By contrast, in the middle of July the market was 20 percent overvalued, he said. Nonetheless, the market's recovery, which has been buttressed by three cuts in interest rates by the Federal Reserve Board, has left many longtime Wall Street hands grasping for historical parallels. ``At this point we are in new ground,'' said Laszlo Birinyi, who heads his own market research firm. ``At the beginning of the year, I said my target for the Dow was 10,000 by the end of 1998. If anyone had asked when the market went through what now looks like a corrective blip, I would have said my new target would have been about 9,000. I am surprised the 10,000 figure came back on the table'' for this year.

As the government continued to press its anti-trust suit against Microsoft, AOL has begun negotiations to purchase Netscape. Netscape is at the heart of the antitrust suit. Netscape alleges that Microsoft marketing practices, packaging its Internet Explorer in its operating system denied market opportunities to Netscape. The AOL deal, a three-way negotiation between AOL, Sun Microsystems and Netscape, would combined three Microsoft rivals. AOL is counting on the Netscape purchase to allow it to expand its internet Market by helping business operate on the internet in an effort to join Media and technology.

America Online Inc. wants to become the ``next Microsoft'' in two promising information-age fields where Microsoft Corp. is just another company _ the Internet media business and electronic commerce. With its proposed purchase of Netscape Communications Corp., AOL, the nation's largest dial-up online service with more than 14 million subscribers, hopes to take a significant step toward that ambitious goal. If the $4 billion deal is completed _ the companies had not reached a final agreement as of Monday night _ AOL would acquire a leading Internet brand and enlarge its wired audience by absorbing the millions who regularly visit Netscape's popular NetCenter site on the World Wide Web. ``Acquiring Netscape would really enhance America Online's role as the premier Internet media company,'' said James F. Moore, president of Geopartners Inc., a consulting firm. ``America Online is assembling the kind of audience numbers that will convince people the Internet is becoming a mainstream media.'' In the new media business, as in traditional media like television or newspapers, eyeballs translate into advertising revenue. But what really intrigues media executives and consumer marketers about the new media _ news, entertainment and services rendered in computer code _ is that it is inherently a two-way medium with which people can interact with the tap of a key or the click of a mouse button The interaction that advertisers and marketers want to see, of course, is buying. And it is the potential for exploiting an instant, direct connection to consumers that has fueled all the recent optimism about electronic commerce. Today, companies are selling everything from books to baby clothes over the Internet. Most companies have not progressed beyond the experimentation stage, but there are a handful of encouraging success stories like Amazon.com, the on-line bookstore. By 2003, Forrester Research Inc., whose business is analyzing trends in cyberspace, projects that Internet commerce could reach $3.2 trillion, or 5 percent of all sales worldwide. AOL is at the forefront of this convergence of media and commerce converge, and integration reflected in the lineage of its leaders. Steve Case, the chairman, was once a new-product manager for Pepsico's Pizza Hut chain, while Robert Pittman, the president, is a former MTV executive. Microsoft is also investing heavily in new media and electronic commerce. It has an online service, MSN, which competes with AOL, as well as information-and commerce Web sites that focus on travel, cars and real estate. It also owns Sidewalk, a network of local sites that list movies, restaurants and stores in cities around the country including Seattle and New York. Its MSNBC Internet news service is half of a joint venture with NBC. Microsoft is expected to be a formidable competitor in the media-and-commerce business. It has no shortage of bright people and it has more money than any rival. Besides deep pockets, Microsoft has the built-in advantage in any computer-based medium because its Windows operating system runs more than 90 percent of personal computers sold today. Its control of the Windows desktop gives it the most valuable piece of commercial real estate in the information age. In theory, at least, owning that desktop screen should help Microsoft steer consumers to its online offerings _ an issue that is key to the government's antitrust suit against Microsoft. But so far, Microsoft has started slowly in the fields of Internet media and electronic commerce. ``Microsoft may want to, but it does not dominate these new markets,'' said Richard Shaffer, a principal of Technologic Partners, a research firm. ``America Online recognizes that the big opportunity is in these emerging growth businesses like electronic commerce instead of trying to take Microsoft on head-on.'' Still, if the Netscape deal is completed, AOL will also find itself in the software business in a way it has never been in the past. Netscape is known as the pioneer in the commercial development of software used to navigate the World Wide Web. Microsoft saw the browser software as a direct threat to its industry dominance and pursued that market aggressively, bundling its own browser with its Windows and giving it away free _ tactics that have been challenged by the government. But Netscape no longer generates revenues from its browser, which it now also distributes for free, but from the sale of heavy-duty software sold to corporations. Much of this software is used as the technological ``back office'' for electronic commerce _ used in building Web sites and processing transactions. A surprising element in the proposed deal is that AOL intends to hold onto Netscape's corporate software business instead of selling it off to an established software company. ``America Online just doesn't have credibility in that market,'' observed Michael A. Cusumano, a professor at the Massachusetts Institute of Technology's Sloan School of Management. Executives close to AOL explain the decision as the need to provide full-line offerings for electronic commerce, from corporate Web site to the computer screens of consumers. But AOL has decided it needs help to preserve and strengthen Netscape's corporate software business. To do that, it has brought in Sun Microsystems Inc. in a side deal, which has complicated the transaction considerably. AOL, according to executives close to the proposed deal, will own Netscape, but it will have a joint marketing and development partnership with Sun. As part of the deal, AOL will agree to purchase about $300 million worth of Sun's computers for its service, while Sun will apparently agree to purchase sizeable amounts of Netscape software, which Sun's sales force must sell. Still, AOL and Sun have a longer-term objective as well _ one that promises to place them in more direct conflict with Microsoft. For nearly a year, William J. Raduchel, Sun's chief strategist, has been working closely with AOL, according to Sun executives. A former Harvard economics professor who taught Scott McNealy, the Sun chairman, Raduchel has focused on Sun's Internet programming technologies, called Java and Jini, both of which are seen as potential threats to Microsoft's dominance. By combining Sun's technology prowess with AOL's powerful consumer brand, the Sun executives say, there is the potential for a kind end-run around Microsoft's grip on desktop computing. In its research laboratories, Sun has been working on a stripped-down network computer _ a simple-to-use information appliance, which could cost as little as $200 or be given away as part of a subscription service. The concept is that AOL's Internet media and electronic commerce services could be delivered to many more homes than today because many people still shun the expense and difficulty of using a personal computer. The appliance would be mainly a receiver and screen, with most of the computing power residing on vast central computers serving up information as users request by tapping a few buttons. Sun's technological specialty is this kind of centralized ``network'' computing. If the long-term AOL-Sun vision ever materialized _ certainly a three-to-five year bet, at the least _ it could give both companies a boost and technological independence from Microsoft. ||||| Microsoft Corp. argued in federal court Monday that the proposed acquisition of Netscape Communications Corp. by America Online seriously undermined the government's antitrust suit against the software giant. ``From a legal standpoint, this proposed deal pulls the rug out from under the government,'' William Neukom, Microsoft's senior vice president for legal affairs, said Monday morning on the courthouse steps. The reasoning behind this assertion, Microsoft says, is that the proposed deal demonstrates that Netscape and the larger software industry are healthy and vibrant _ even with all of the illegal and anti-competitive practices alleged in the government's suit. But David Boies, the government's lead attorney, said all of that was irrelevant. ``Whatever the deal ends up being _ if there ends up being a deal _ is not going to remove any of the obstacles that Microsoft has placed in the path of competition in this industry,'' he said. Michael Lacovara, a Microsoft lawyer who was questioning a government witness, economist Frederick Warren-Boulton, suggested to him during the trial Monday that the proposed acquisition undermined Warren-Boulton's argument, that Microsoft seems headed toward obtaining a monopoly in Internet browser software to match the one it apparently holds in operating systems. After all, about 22 percent of Americans who use the Internet reach it through America Online. And at present AOL uses Microsoft's Web browser, Internet Explorer, as the service's default choice. In exchange for that, Microsoft places an AOL advertisement and Internet link in Windows 98. Lacovara asked the witness whether, once AOL's service contract expires in January, he would ``expect AOL to continue to distribute Microsoft software.'' Yes, Warren-Boulton responded. ``It is not at all clear to me that AOL's incentive to do this is changed by this proposed merger with Netscape.'' He noted that America Online officials had said their need to be among the online services featured in Windows forced them to accept Microsoft terms _ establishing Internet Explorer as the default choice. Lacovara then asked Warren-Boulton the question that lay under his entire cross-examination of the witness _ and Microsoft's larger assertion Monday about the proposed Netscape-AOL deal. ``Surely this combination,'' he asked, ``tells you something about the nature of competition in the software industry?'' Warren-Boulton's answer was probably not the one Lacovara had been after. ``To the extent that this potential merger is the result of Microsoft's actions with these exclusive contracts and other actions,'' he said, ``it is unfortunate to see the disappearance of a firm like Netscape, the brightest, newest star.'' Warren-Boulton's purpose on the stand for the government is to establish that Microsoft does have a monopoly in operating-system software; more than 90 percent of the world's computers use a Microsoft operating system. That is the foundation under most of the government's case since federal antitrust law forbids certain behavior by a monopolist that would be legal for a firm that faces healthy competition. Through repeated, often circumlocutious questioning, Lacovara tried to make the case that Microsoft's overwhelming market share was ephemeral. The software industry is so vibrant and fast moving, he suggested, that Microsoft could be toppled from its position at any moment _ a point of view the company encourages among its employees. On Friday and Monday, Lacovara repeatedly pointed out that other companies are placing other operating systems on the market, and some software companies _ principally Microsoft's greatest rivals _ are writing software for these new systems. But Warren-Boulton argued that ``the existence of these fringe competitors in the operating system market does not mean in any way that Microsoft does not have monopoly power.'' On Monday afternoon, Lacovara made an issue of the success Apple Computer Co. is having selling its new iMac computer. He entered into evidence an Apple news release issued last month showing, among other things, that 12.5 percent of the people buying Apple's new iMac computer had previously owned a Windows machine. Apple computers use a different operating system, Mac-OS. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. But as part of the deal, AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would subsume Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Sun's version of Unix, Solaris, is among the most popular operating systems for the large, powerful computers that run Netscape's server software. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. ||||| The outcome of the Microsoft antitrust case may be a long way off, but one thing is already clear: This is the first major e-mail trial. The government's prosecution and Microsoft Corp.'s defense, to a striking degree, are legal campaigns waged with electronic messages. The human testimony often pales next to the e-mail evidence. On the stand or in videotaped testimony, the people being questioned shrug, mumble and forget. The e-mail is alive with ideas and competitive zeal, punctuated with profanity and exclamation points. The second week of the trial ended with the prosecutors being frustrated because a lengthy cross-examination by Microsoft's lead lawyer left no time for the government to show several hours of a videotaped deposition of Bill Gates, the Microsoft chairman. With a new witness, an executive of Apple Computer Inc., taking the stand Monday, it is uncertain when the Gates tape will be played. The Justice Department and the 20 states suing Microsoft believe that the tape will strengthen their case because it shows Gates saying he was not involved in plans to take what the government alleges were illegal steps to stifle competition in the Internet software market. The Gates videotape, said David Boies, the Justice Department's trial lawyer, offers an ``opportunity to judge Gates' credibility.'' But the Gates credibility gap, if there is one, becomes an issue not because of the videotape but because his taped remarks can be compared and contrasted with the e-mail he wrote and received. The e-mail record, the government insists, shows Gates waist-deep in plotting the anti-competitive deals and bullying tactics that he denies or professes to have never heard of in his taped deposition. If his machinations are central to the government's case, why not summon Gates to the trial? ``The government does not need to put Gates on the stand, because we have his e-mail and memoranda,'' Stephen Houck, a lawyer for the states, told the court. The Microsoft legal team has for months been preparing its e-mail defense. First, Microsoft argues, anything that looks damaging is taken out of context. ``I urge your honor,'' John Warden, Microsoft's lead lawyer, told Judge Thomas Penfield Jackson, ``to view with considerable skepticism the crazy quilt of e-mail fragments that seem to form the core of the government's case.'' But Microsoft has also mounted an e-mail counterattack, culled from the millions of messages it obtained by subpoena from competitors in pretrial discovery. Warden's cross-examination ritual is to present a government witness with an internal e-mail from his company and then pose a declaration as a question. These interrogations have two refrains: Isn't it true your company does exactly what you are accusing Microsoft of doing, and isn't it true that Microsoft prevailed not because it is a predatory monopolist but because of its superior technology? Microsoft is accused of trying to prod companies to stay out of its way. So last week, for example, Warden produced e-mail from Stephen Case, the chairman of America Online, suggesting a partnership with Netscape Communications Corp. in which both companies would focus on their respective strengths. That division of labor, Case wrote, would be the best way to achieve the goal that Marc Andreessen, Netscape's cofounder, described in an earlier e-mail as beating ``the Beast From Redmond that wants to see us both dead'' _ a reference to Microsoft's headquarters in Redmond, Wash. Printouts of e-mail are just another form of written communication. By the 1920s, as typewriters became common, typed memoranda started to be used in court cases. From the 1950s through the 1980s, legal experts say, there was an explosion of documentation fueled by the new technologies of electric typewriters, photocopying and fax machines, and then personal computers. And e-mail, they add, has played an important role in legal inquiries for years, like the Iran-contra case in the 1980s when e-mail found in Oliver North's computer proved crucial. But the Microsoft case is the result of a sweeping government antitrust investigation of a high-technology company where e-mail has supplanted the telephone as the most common instrument of communication. ``E-mail has just revolutionized investigations of this kind,'' one senior Justice Department official said. While under investigation, Microsoft has handed over to the government an estimated 30 million documents, mostly e-mail. In the trial, the two sides have submitted about 3,000 exhibits, mainly e-mail. And in their e-mail, people often communicate more frankly and informally than when writing a letter or a report _ tap it out, punch a button and it's gone into cyberspace. But e-mail communication is documentary evidence, which in legal cases provides a rich, contemporaneous record of what people were thinking and planning at the time. It can be a sharp contrast to formal oral testimony, so often coached by lawyers and crafted by selective memory. ``The e-mail record certainly makes the I-don't-recall line of response harder to sustain,'' said Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. It can also be powerful ammunition for pointing to contradictions in testimony. And that is what the government will do in attacking Gates' credibility with his videotaped deposition, taken over three days in August. The government offered a glimpse of that strategy on the first day of the trial. It showed a few brief clips of a point in the deposition when Gates was asked about a meeting on June 21, 1995, at which, the government alleges, Microsoft offered to divide the browser market with Netscape and to make an investment in the company, which is its chief rival in that market. In the taped deposition, Gates says he recalled being asked by one of his subordinates whether he thought it made sense to invest in Netscape. He said that he was asked about it after the June 1995 meeting and replied, ``I didn't see that as something that made sense.'' But in an e-mail on May 31, 1995, Gates urged an alliance with Netscape. ``We could even pay them money as part of the deal,'' he wrote, ``buying a piece of them or something.'' The contradiction between Gates' deposition and his e-mail, though, does not of itself speak to the issue of whether Microsoft made an illegal offer to Netscape. To be sure, it is what Microsoft did _ not what it said in e-mail communications _ that counts most. ``But once the e-mail that looks bad gets in the record, you end up doing what Microsoft's lawyers are going to spend much of this trial doing _ trying to explain it away,'' said Stephen Axinn, a leading antitrust litigator with the firm Axinn, Veltrop & Harkrider in New York. ||||| The New York Times said in an editorial for Wednesday, Nov. 25: America Online's effort to acquire Netscape and set up a partnership with Sun Microsystems is a reminder of how rapidly the corporate landscape can change in fast-moving technical fields. But it does not lessen the need for the Justice Department to vigorously pursue its antitrust suit against Microsoft, the dominant player in software. The department has presented solid evidence that Microsoft has used its monopoly in operating systems to muscle rivals and partners so as to head off competition in other software realms. The Internet has risen so quickly as an information medium that only four years ago, in his book ``The Road Ahead,'' Bill Gates scarcely mentions it. In addition, only a couple of years ago America Online, the world's biggest online service, was having so much trouble getting rid of the bugs in the system it was widely derided as ``America On Hold.'' Now Microsoft has moved so aggressively into the Internet that the Justice Department is accusing it of predatory behavior, and America Online has rocketed forward to make deals with other Internet players. In its antitrust suit against Microsoft, the federal government charges that the company has illegally bundled its own browser with its Windows operating system to smother Netscape's chances of marketing its browser. Now in the corridors outside the antitrust trial Microsoft's lawyers maintain that Netscape has found a new partner in America Online and has no need of protection from the government. But it could be as easily argued that Microsoft has bludgeoned Netscape into dissolution, forcing a distress sale to America Online. Nor is it clear that customers of America Online will choose Netscape's browser as a vehicle for buying and selling on the Internet. Even in its newly musclebound form, America Online remains dependent on Microsoft's good will for favorable placement of an AOL icon on the main desktop screen. It may be that, years hence, America Online, Netscape and Sun will put together an alternative means to the Internet through telephone lines, cables or the like. But until that day, fairness requires Justice Department action to insure that Microsoft not use its current position to thwart consumer choice. Only when companies know they can get their products to the consumer will they have the incentive to innovate and turn the Internet into the revolutionary medium it promises to be. ||||| Envisioning a thoroughly networked world in which the World Wide Web is a limitless marketplace of information, entertainment, products and services, America Online Inc. Tuesday laid out the details of its agreement to buy the Netscape Communications Corporation for $4.2 billion. By moving quickly toward what both companies have recently come to see as the inevitable convergence of technology and media, America Online hopes that it will secure a solid lead in a battle already joined by giants like the Microsoft Corp. and the International Business Machines Corp. to transform the greater part of cyberspace into a vast virtual mall. Part of that vision rests on an alliance with Sun Microsystems that America Online negotiated as part of the deal. Sun not only brings a cyber-savvy sales force to the effort but, even more importantly, a strong technology partner in developing Netscape's industrial-strength software for running Internet sites. Sun is indeed a technology heavyweight. It owns the Java programming language specially designed for Internet applications, and Solaris, among the most popular commercial operating systems for the powerful computers that big corporations use to serve up Internet services like the World Wide Web, e-mail and retail transactions. It also manufactures a highly respected line of powerful computers based on its own microprocessor chips. But for America Online _ and for the big Internet players against which it will compete _ the real potential gold mine lies further down the road, perhaps five years away, when people will venture on line for information or shopping not only from personal computers but from inexpensive Internet appliances costing $200 each, or maybe included free as part of a subscription service, just as some cellular phones are now. Today, being wired remains a comparatively elitist activity _ an estimated 25 percent of American households had access to the Internet last year, and 5 percent of households bought merchandise on line. But the executives at America Online and Netscape hope that their deal will accelerate the timetable for the day when the Net is ubiquitous, when people will tap into the World Wide Web from appliance-like devices, pagers, cell phones, television set-top boxes or computers as routinely as they use the telephone today. ``A new generation of Internet devices to be able to deliver our service anywhere is a key part of what this deal is about in the long run,'' said Stephen M. Case, 40, the chairman of America Online. For the present, however, the idea is to make America Online, the nation's leading online service, the standard way to get onto the Internet, the executives explained. Netscape, the Internet pioneer, is a crucial part of that effort, they said. There is no assurance that this vision of the technological future will prove accurate or, even if it does, that the America Online-Netscape combination will lead the way. Still, the long-range game plan helps explain what brought America Online and Netscape together. And the ability of the companies' executives to sell that vision to Netscape's whiz-kid programmers in particular will determine whether the merger succeeds. Netscape's headquarters in Mountain View, Calif., is likely become a prime target for Silicon Valley headhunters. As is the case with any software company, Netscape's key asset is its talented programmers, and many of these code hackers may be reluctant to work for America Online, which still has a reputation as a middle-brow service catering to online newcomers, known derisively as ``newbies.'' Stock options and other financial incentives will be tailored to try to keep Netscape employees on board. ``But these people want to change the world, and we've got to be clear that joining with America Online, along with the Sun component, really is a bigger opportunity for us,'' said Marc Andreessen, the 26-year-old cofounder of Netscape who led a team of young programmers from the supercomputing center at the University of Illinois to Silicon Valley to start the Internet software company in 1994. ``This ought to be the preeminent Internet company over the next decade,'' Andreessen declared, speaking from a cell phone on a streetcorner in Palo Alto, Calif. For his part, Andreessen, a Netscape executive vice president, will become Netscape's chief technology officer for the next three or four months, until the merger is completed. His new job at America Online has not yet been determined, but it is likely to be chief technology officer of the combined company as well, an America Online executive said. Already, according to one Netscape board member, Andreessen has delivered a 12-page single-spaced memorandum to Case, setting out his view of the technological road map the new company should follow into the future, emphasizing the opportunities for electronic commerce in an environment in which most people are linked to the Internet. Netscape, populated with computing sophisticates, and America Online, known as an on-ramp to the Internet for the technologically challenged, seem a corporate odd couple. But the two companies, its executives explained, had been evolving toward each other for more than a year. In a telephone interview from America Online's headquarters in Dulles, Va., Case described Netscape as an enterprise that had ``morphed itself'' from a company dependent on sales of its software used to browse the World Wide Web _ and ``in Microsoft's cross-hairs'' _ into a business that relied on advertising and other revenues from its popular Netcenter Web site and from selling software to corporations to handle electronic commerce. The Netscape transformation was largely a reaction to Microsoft's competitive assault on its browser business _ a central element in the government's antitrust suit against Microsoft. Microsoft bundled its browser into its industry-standard Windows operating system, and gave away the browser for free. The government alleges these steps were part of a pattern of anticompetitive practices, while Microsoft maintains the moves were intended mainly to benefit consumers. Early this year, after laying off workers and suffering a large loss last year, Netscape announced that it would also distribute its browser for free. It seems to have stabilized its business around its new model. Netscape announced Tuesday that it earned $2.7 million on revenues of $162 million in its fourth fiscal quarter, which ended in September. Yet America Online has also changed in the last couple of years, moving well beyond its reputation as an online service for beginners. It now has an Internet chat service and runs its own all-in-one site on the Web, known as a ``portal,'' which includes e-mail, Internet searching, news, entertainment and online shopping. ``America Online has really changed from a closed online service for novice users to an Internet media and technology company with a diverse set of brands,'' Andreessen said. ``These two companies have been moving in the same direction, and the fit is a good one.'' ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would end the independent existence of Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Eventually, Microsoft's browser technology caught up to Netscape's. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Among large corporations, Sun's version of Unix, Solaris, is among the most popular operating systems for the powerful computers that run Netscape's server software. The much smaller Netscape would be placed under the wing of AOL and Sun Microsystems. The three companies had combined revenues of more than $12.4 billion last year. Microsoft, by comparison, had revenues of more than $14 billion. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. Still, executives involved in the talks said that the timing of the proposed deal was unrelated to the antitrust trial. Nor should it, one person noted, be regarded as ``a single-minded attempt to circle the wagons against Microsoft.'' Indeed, AOL, according to one person close to the talks, plans to keep Microsoft's Internet Explorer browser as the default choice on its on-line service. One of the government's allegations in the antitrust suit is that Microsoft won out over Netscape as the main browser for AOL because Microsoft used its Windows monopoly as a bargaining chip. To win the browser deal, Microsoft offered AOL prime real estate on the Windows desktop, the main screen on more than 90 percent of personal computers sold today. Staying with Microsoft's browser can be seen as proof that AOL still regards placement on the Windows desktop as crucial, as well as a careful step to avoid undermining one of the allegations in the government's case. For AOL, the Netscape purchase would accelerate its evolution toward the Internet. At present, its flagship on-line service is a hybrid _ to its own proprietary service, it has added a gateway to the World Wide Web. In addition, for consumers who do not subscribe to AOL's dial-up service, it also has its own Web site, aol.com, which attracts about 24 million visitors a month, according to Media Metrix/Relevant Knowledge, a market research firm. Its big Web site offers a wide range of information, entertainment, Internet chat and e-mail, a leading example of the all-in-one sites that have become known as portals. Netscape's Netcenter traffic has slipped a bit in recent months, to under 16 million visitors a month, but it, too, is a major portal. Together, they should be a huge player in the intensifying portal battle for viewers and resulting advertising revenues. Yahoo is the current leader among portal sites with more than 25 million monthly visitors, while Microsoft's site attracts more than 20 million a month. Though known as a new-media company for consumers, AOL is also interested in boosting its electronic commerce business with the Netscape purchase. AOL has recently done work with Eastman Kodak, American Greetings and other companies, not only promoting their products to on-line subscribers but also building the Internet infrastructure of software to conduct electronic commerce. AOL notes projections like a recent one from Forrester Research Inc., which predicted that worldwide Internet commerce could reach as high as $3.2 trillion by 2003, or 5 percent of global sales. Sun Microsystems, analysts say, could be a strong partner for AOL in the market for Internet commerce software. Sun is a corporate software company with a sales force of several thousand. As it moves increasingly to Internet technology, AOL should prove an excellent partner for Sun in terms of developing and using Sun's Java, an Internet programming language. And while Netscape's browser no longer generates revenue on its own, it is a distribution channel for Java technology. Having Netscape's browser safely in the hands of a friendly company is of strategic importance for Sun, since Microsoft owns the alternative in the browser market. AOL is expected pay little, if any, premium over Netscape's stock price on Friday, executives close to the deal said, since Netscape shares have more than doubled in the last month. In the last week alone, Netscape's stock has jumped about $12, or nearly 45 percent, following reports that it was discussing a possible partnership with AOL. The stock closed Friday at $39.1875, up $2.625. AOL's shares gained $1.50 Friday, closing at $84.875. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. There are creative services that include graphic design, media buying, customer list analysis and other marketing and promotional efforts. And there are operational services that involve actually maintaining the big servers that users connect to when they use the online stores that display catalogs, take orders and process payments. America Online, Schuler said, will emphasize services that relate to marketing rather than back-office functions. ``We will consult on how to merchandise and sell online,'' he said. ``We understand the consumer piece of the puzzle.'' Some competitors worry that America Online's electronic commerce services may simply be a device to sell its software and hardware. ``The challenge is to prove that clients are getting the best possible solution for their business,'' said Robert Gett, the chief executive of Viant. ``If they offer AOL and Netscape and Sun, their answer is a bit tainted.'' Netscape does have an expanding force of about 700 people who provide consulting and custom programming. But they have been most competitive, Gett said, in competing for nuts-and-bolts projects rather than the more lucrative assignments to develop and carry out a full-fledged strategy on the Web. ``They say, `Who knows our software better than Netscape?''' Gett said. ``We help customers decide which platform is best for them.'' But America Online argues that the combined might of it, Netscape and Sun is just what the business needs. ``We always believed that commerce, that is buying goods and services, is the huge revenue stream of the future,'' Schuler said. ``We have only seen the tiniest tip of the iceberg.'' ||||| Stock prices vaulted to record levels Monday, furthering a recovery that as recently as two months ago seemed nearly unthinkable. ``I thought we were in the most serious correction since 1990, but I never thought or wrote that the bull market was over,'' said Byron Wien, U.S. equity strategist at Morgan Stanley Dean Witter & Co. ``Now it seems all of that is behind us.'' The Dow Jones industrial average rose 214.72 points, or 2.34 percent, to 9,374.27. The record is the first since July 17, when the Dow closed at 9,337.97. Since Aug. 31, when the Dow stood at 7,539.07 after a steep slide, the blue-chip gauge has risen more than 24 percent. For the year, the Dow is up 18.54 percent and has a chance of rising more than 20 percent for a fourth consecutive year, something never accomplished before. Broader averages also climbed. The Standard & Poor's 500-stock index set a record, rising 24.66 points, or 2.12 percent, to 1,188.21. The Nasdaq composite index did not reach a new high but posted the biggest percentage gain Monday, rising 49.21 points, or 2.55 percent, to 1,977.42. And the Russell 2000 index of smaller-company issues gained 3.86 points, or nearly 1 percent, to 398.15. Monday's action was energized by a daily record for the number of mergers and acquisitions valued at $1 billion or more. The merger announcements not only prompted investors to change estimates of how much companies were worth but also indicated coming declines in the outstanding shares of stock. ``This may be a supply-demand story, where demand for stocks is rising and the supply of stock is reduced as one company after another merges,'' said Hugh Johnson, chief investment officer at First Albany Corp. ``The flow of money into mutual funds is fairly strong, and there is pressure on managers to put that money to work.'' Two deals seemed to be catalysts for broad swaths of stocks. News that Bankers Trust may be close to accepting an $8.9 billion offer from Deutsche Bank of Germany heightened interest in financial-services and bank stocks. And word that America Online may acquire Netscape Communications for $4 billion in stock powered Internet and other technology stocks to even loftier valuations. Among financial companies, J.P. Morgan gained 6 1/16, to 115 11/16. American Express was up 4 3/8, to 108 15/16. Merrill Lynch jumped 4 3/8, to 76. And Donaldson, Lufkin & Jenrette rose 3 9/16, to 42}. Netscape was the most active stock Monday, gaining 2}, to 41 15/16. America Online gained 4 3/8, to 89\. Other Internet stocks also surged, and analysts said the group, which has seen meteoric gains in recent weeks, was ripe for a steep correction. Yahoo and Amazon.com both became $200 stocks on Monday. Yahoo rose 30 7/16, to 221 7/16. And Amazon.com gained 37 3/8, to 218. ``The performance of the Internet stocks is an unsettling sign,'' Wien said. Still, more-established technology shares also had a very good day. IBM rose 7, to 166 5/8. Microsoft jumped 5 9/16, to 119 3/16. And Intel closed at 113 9/16, up 1{. After Monday's big price moves, Wien said that according to his calculations, stocks were about 10 percent overvalued. By contrast, in the middle of July the market was 20 percent overvalued, he said. Nonetheless, the market's recovery, which has been buttressed by three cuts in interest rates by the Federal Reserve Board, has left many longtime Wall Street hands grasping for historical parallels. ``At this point we are in new ground,'' said Laszlo Birinyi, who heads his own market research firm. ``At the beginning of the year, I said my target for the Dow was 10,000 by the end of 1998. If anyone had asked when the market went through what now looks like a corrective blip, I would have said my new target would have been about 9,000. I am surprised the 10,000 figure came back on the table'' for this year.

America Online became the leading force in cyberspace for individuals to exchange e-mail and check the latest news. AOL saw a bright day ahead as a company that could provide online services, Internet software, and electronic commerce. To position itself better in this growing market, AOL sought to buy Netscape and work an alliance with Sun Microsystems. Netscape has faltered because of the ubiquity of the Microsoft Windows operating system requiring its browser. Microsoft argued that a vibrant technology market and rising stock prices undercut antitrust charges against it. At the trial the government presented thousands of e-mails supporting its case.

America Online Inc. wants to become the ``next Microsoft'' in two promising information-age fields where Microsoft Corp. is just another company _ the Internet media business and electronic commerce. With its proposed purchase of Netscape Communications Corp., AOL, the nation's largest dial-up online service with more than 14 million subscribers, hopes to take a significant step toward that ambitious goal. If the $4 billion deal is completed _ the companies had not reached a final agreement as of Monday night _ AOL would acquire a leading Internet brand and enlarge its wired audience by absorbing the millions who regularly visit Netscape's popular NetCenter site on the World Wide Web. ``Acquiring Netscape would really enhance America Online's role as the premier Internet media company,'' said James F. Moore, president of Geopartners Inc., a consulting firm. ``America Online is assembling the kind of audience numbers that will convince people the Internet is becoming a mainstream media.'' In the new media business, as in traditional media like television or newspapers, eyeballs translate into advertising revenue. But what really intrigues media executives and consumer marketers about the new media _ news, entertainment and services rendered in computer code _ is that it is inherently a two-way medium with which people can interact with the tap of a key or the click of a mouse button The interaction that advertisers and marketers want to see, of course, is buying. And it is the potential for exploiting an instant, direct connection to consumers that has fueled all the recent optimism about electronic commerce. Today, companies are selling everything from books to baby clothes over the Internet. Most companies have not progressed beyond the experimentation stage, but there are a handful of encouraging success stories like Amazon.com, the on-line bookstore. By 2003, Forrester Research Inc., whose business is analyzing trends in cyberspace, projects that Internet commerce could reach $3.2 trillion, or 5 percent of all sales worldwide. AOL is at the forefront of this convergence of media and commerce converge, and integration reflected in the lineage of its leaders. Steve Case, the chairman, was once a new-product manager for Pepsico's Pizza Hut chain, while Robert Pittman, the president, is a former MTV executive. Microsoft is also investing heavily in new media and electronic commerce. It has an online service, MSN, which competes with AOL, as well as information-and commerce Web sites that focus on travel, cars and real estate. It also owns Sidewalk, a network of local sites that list movies, restaurants and stores in cities around the country including Seattle and New York. Its MSNBC Internet news service is half of a joint venture with NBC. Microsoft is expected to be a formidable competitor in the media-and-commerce business. It has no shortage of bright people and it has more money than any rival. Besides deep pockets, Microsoft has the built-in advantage in any computer-based medium because its Windows operating system runs more than 90 percent of personal computers sold today. Its control of the Windows desktop gives it the most valuable piece of commercial real estate in the information age. In theory, at least, owning that desktop screen should help Microsoft steer consumers to its online offerings _ an issue that is key to the government's antitrust suit against Microsoft. But so far, Microsoft has started slowly in the fields of Internet media and electronic commerce. ``Microsoft may want to, but it does not dominate these new markets,'' said Richard Shaffer, a principal of Technologic Partners, a research firm. ``America Online recognizes that the big opportunity is in these emerging growth businesses like electronic commerce instead of trying to take Microsoft on head-on.'' Still, if the Netscape deal is completed, AOL will also find itself in the software business in a way it has never been in the past. Netscape is known as the pioneer in the commercial development of software used to navigate the World Wide Web. Microsoft saw the browser software as a direct threat to its industry dominance and pursued that market aggressively, bundling its own browser with its Windows and giving it away free _ tactics that have been challenged by the government. But Netscape no longer generates revenues from its browser, which it now also distributes for free, but from the sale of heavy-duty software sold to corporations. Much of this software is used as the technological ``back office'' for electronic commerce _ used in building Web sites and processing transactions. A surprising element in the proposed deal is that AOL intends to hold onto Netscape's corporate software business instead of selling it off to an established software company. ``America Online just doesn't have credibility in that market,'' observed Michael A. Cusumano, a professor at the Massachusetts Institute of Technology's Sloan School of Management. Executives close to AOL explain the decision as the need to provide full-line offerings for electronic commerce, from corporate Web site to the computer screens of consumers. But AOL has decided it needs help to preserve and strengthen Netscape's corporate software business. To do that, it has brought in Sun Microsystems Inc. in a side deal, which has complicated the transaction considerably. AOL, according to executives close to the proposed deal, will own Netscape, but it will have a joint marketing and development partnership with Sun. As part of the deal, AOL will agree to purchase about $300 million worth of Sun's computers for its service, while Sun will apparently agree to purchase sizeable amounts of Netscape software, which Sun's sales force must sell. Still, AOL and Sun have a longer-term objective as well _ one that promises to place them in more direct conflict with Microsoft. For nearly a year, William J. Raduchel, Sun's chief strategist, has been working closely with AOL, according to Sun executives. A former Harvard economics professor who taught Scott McNealy, the Sun chairman, Raduchel has focused on Sun's Internet programming technologies, called Java and Jini, both of which are seen as potential threats to Microsoft's dominance. By combining Sun's technology prowess with AOL's powerful consumer brand, the Sun executives say, there is the potential for a kind end-run around Microsoft's grip on desktop computing. In its research laboratories, Sun has been working on a stripped-down network computer _ a simple-to-use information appliance, which could cost as little as $200 or be given away as part of a subscription service. The concept is that AOL's Internet media and electronic commerce services could be delivered to many more homes than today because many people still shun the expense and difficulty of using a personal computer. The appliance would be mainly a receiver and screen, with most of the computing power residing on vast central computers serving up information as users request by tapping a few buttons. Sun's technological specialty is this kind of centralized ``network'' computing. If the long-term AOL-Sun vision ever materialized _ certainly a three-to-five year bet, at the least _ it could give both companies a boost and technological independence from Microsoft. ||||| Microsoft Corp. argued in federal court Monday that the proposed acquisition of Netscape Communications Corp. by America Online seriously undermined the government's antitrust suit against the software giant. ``From a legal standpoint, this proposed deal pulls the rug out from under the government,'' William Neukom, Microsoft's senior vice president for legal affairs, said Monday morning on the courthouse steps. The reasoning behind this assertion, Microsoft says, is that the proposed deal demonstrates that Netscape and the larger software industry are healthy and vibrant _ even with all of the illegal and anti-competitive practices alleged in the government's suit. But David Boies, the government's lead attorney, said all of that was irrelevant. ``Whatever the deal ends up being _ if there ends up being a deal _ is not going to remove any of the obstacles that Microsoft has placed in the path of competition in this industry,'' he said. Michael Lacovara, a Microsoft lawyer who was questioning a government witness, economist Frederick Warren-Boulton, suggested to him during the trial Monday that the proposed acquisition undermined Warren-Boulton's argument, that Microsoft seems headed toward obtaining a monopoly in Internet browser software to match the one it apparently holds in operating systems. After all, about 22 percent of Americans who use the Internet reach it through America Online. And at present AOL uses Microsoft's Web browser, Internet Explorer, as the service's default choice. In exchange for that, Microsoft places an AOL advertisement and Internet link in Windows 98. Lacovara asked the witness whether, once AOL's service contract expires in January, he would ``expect AOL to continue to distribute Microsoft software.'' Yes, Warren-Boulton responded. ``It is not at all clear to me that AOL's incentive to do this is changed by this proposed merger with Netscape.'' He noted that America Online officials had said their need to be among the online services featured in Windows forced them to accept Microsoft terms _ establishing Internet Explorer as the default choice. Lacovara then asked Warren-Boulton the question that lay under his entire cross-examination of the witness _ and Microsoft's larger assertion Monday about the proposed Netscape-AOL deal. ``Surely this combination,'' he asked, ``tells you something about the nature of competition in the software industry?'' Warren-Boulton's answer was probably not the one Lacovara had been after. ``To the extent that this potential merger is the result of Microsoft's actions with these exclusive contracts and other actions,'' he said, ``it is unfortunate to see the disappearance of a firm like Netscape, the brightest, newest star.'' Warren-Boulton's purpose on the stand for the government is to establish that Microsoft does have a monopoly in operating-system software; more than 90 percent of the world's computers use a Microsoft operating system. That is the foundation under most of the government's case since federal antitrust law forbids certain behavior by a monopolist that would be legal for a firm that faces healthy competition. Through repeated, often circumlocutious questioning, Lacovara tried to make the case that Microsoft's overwhelming market share was ephemeral. The software industry is so vibrant and fast moving, he suggested, that Microsoft could be toppled from its position at any moment _ a point of view the company encourages among its employees. On Friday and Monday, Lacovara repeatedly pointed out that other companies are placing other operating systems on the market, and some software companies _ principally Microsoft's greatest rivals _ are writing software for these new systems. But Warren-Boulton argued that ``the existence of these fringe competitors in the operating system market does not mean in any way that Microsoft does not have monopoly power.'' On Monday afternoon, Lacovara made an issue of the success Apple Computer Co. is having selling its new iMac computer. He entered into evidence an Apple news release issued last month showing, among other things, that 12.5 percent of the people buying Apple's new iMac computer had previously owned a Windows machine. Apple computers use a different operating system, Mac-OS. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. But as part of the deal, AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would subsume Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Sun's version of Unix, Solaris, is among the most popular operating systems for the large, powerful computers that run Netscape's server software. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. ||||| The outcome of the Microsoft antitrust case may be a long way off, but one thing is already clear: This is the first major e-mail trial. The government's prosecution and Microsoft Corp.'s defense, to a striking degree, are legal campaigns waged with electronic messages. The human testimony often pales next to the e-mail evidence. On the stand or in videotaped testimony, the people being questioned shrug, mumble and forget. The e-mail is alive with ideas and competitive zeal, punctuated with profanity and exclamation points. The second week of the trial ended with the prosecutors being frustrated because a lengthy cross-examination by Microsoft's lead lawyer left no time for the government to show several hours of a videotaped deposition of Bill Gates, the Microsoft chairman. With a new witness, an executive of Apple Computer Inc., taking the stand Monday, it is uncertain when the Gates tape will be played. The Justice Department and the 20 states suing Microsoft believe that the tape will strengthen their case because it shows Gates saying he was not involved in plans to take what the government alleges were illegal steps to stifle competition in the Internet software market. The Gates videotape, said David Boies, the Justice Department's trial lawyer, offers an ``opportunity to judge Gates' credibility.'' But the Gates credibility gap, if there is one, becomes an issue not because of the videotape but because his taped remarks can be compared and contrasted with the e-mail he wrote and received. The e-mail record, the government insists, shows Gates waist-deep in plotting the anti-competitive deals and bullying tactics that he denies or professes to have never heard of in his taped deposition. If his machinations are central to the government's case, why not summon Gates to the trial? ``The government does not need to put Gates on the stand, because we have his e-mail and memoranda,'' Stephen Houck, a lawyer for the states, told the court. The Microsoft legal team has for months been preparing its e-mail defense. First, Microsoft argues, anything that looks damaging is taken out of context. ``I urge your honor,'' John Warden, Microsoft's lead lawyer, told Judge Thomas Penfield Jackson, ``to view with considerable skepticism the crazy quilt of e-mail fragments that seem to form the core of the government's case.'' But Microsoft has also mounted an e-mail counterattack, culled from the millions of messages it obtained by subpoena from competitors in pretrial discovery. Warden's cross-examination ritual is to present a government witness with an internal e-mail from his company and then pose a declaration as a question. These interrogations have two refrains: Isn't it true your company does exactly what you are accusing Microsoft of doing, and isn't it true that Microsoft prevailed not because it is a predatory monopolist but because of its superior technology? Microsoft is accused of trying to prod companies to stay out of its way. So last week, for example, Warden produced e-mail from Stephen Case, the chairman of America Online, suggesting a partnership with Netscape Communications Corp. in which both companies would focus on their respective strengths. That division of labor, Case wrote, would be the best way to achieve the goal that Marc Andreessen, Netscape's cofounder, described in an earlier e-mail as beating ``the Beast From Redmond that wants to see us both dead'' _ a reference to Microsoft's headquarters in Redmond, Wash. Printouts of e-mail are just another form of written communication. By the 1920s, as typewriters became common, typed memoranda started to be used in court cases. From the 1950s through the 1980s, legal experts say, there was an explosion of documentation fueled by the new technologies of electric typewriters, photocopying and fax machines, and then personal computers. And e-mail, they add, has played an important role in legal inquiries for years, like the Iran-contra case in the 1980s when e-mail found in Oliver North's computer proved crucial. But the Microsoft case is the result of a sweeping government antitrust investigation of a high-technology company where e-mail has supplanted the telephone as the most common instrument of communication. ``E-mail has just revolutionized investigations of this kind,'' one senior Justice Department official said. While under investigation, Microsoft has handed over to the government an estimated 30 million documents, mostly e-mail. In the trial, the two sides have submitted about 3,000 exhibits, mainly e-mail. And in their e-mail, people often communicate more frankly and informally than when writing a letter or a report _ tap it out, punch a button and it's gone into cyberspace. But e-mail communication is documentary evidence, which in legal cases provides a rich, contemporaneous record of what people were thinking and planning at the time. It can be a sharp contrast to formal oral testimony, so often coached by lawyers and crafted by selective memory. ``The e-mail record certainly makes the I-don't-recall line of response harder to sustain,'' said Robert Litan, a former senior official in the Justice Department's antitrust division who is now at the Brookings Institution. It can also be powerful ammunition for pointing to contradictions in testimony. And that is what the government will do in attacking Gates' credibility with his videotaped deposition, taken over three days in August. The government offered a glimpse of that strategy on the first day of the trial. It showed a few brief clips of a point in the deposition when Gates was asked about a meeting on June 21, 1995, at which, the government alleges, Microsoft offered to divide the browser market with Netscape and to make an investment in the company, which is its chief rival in that market. In the taped deposition, Gates says he recalled being asked by one of his subordinates whether he thought it made sense to invest in Netscape. He said that he was asked about it after the June 1995 meeting and replied, ``I didn't see that as something that made sense.'' But in an e-mail on May 31, 1995, Gates urged an alliance with Netscape. ``We could even pay them money as part of the deal,'' he wrote, ``buying a piece of them or something.'' The contradiction between Gates' deposition and his e-mail, though, does not of itself speak to the issue of whether Microsoft made an illegal offer to Netscape. To be sure, it is what Microsoft did _ not what it said in e-mail communications _ that counts most. ``But once the e-mail that looks bad gets in the record, you end up doing what Microsoft's lawyers are going to spend much of this trial doing _ trying to explain it away,'' said Stephen Axinn, a leading antitrust litigator with the firm Axinn, Veltrop & Harkrider in New York. ||||| The New York Times said in an editorial for Wednesday, Nov. 25: America Online's effort to acquire Netscape and set up a partnership with Sun Microsystems is a reminder of how rapidly the corporate landscape can change in fast-moving technical fields. But it does not lessen the need for the Justice Department to vigorously pursue its antitrust suit against Microsoft, the dominant player in software. The department has presented solid evidence that Microsoft has used its monopoly in operating systems to muscle rivals and partners so as to head off competition in other software realms. The Internet has risen so quickly as an information medium that only four years ago, in his book ``The Road Ahead,'' Bill Gates scarcely mentions it. In addition, only a couple of years ago America Online, the world's biggest online service, was having so much trouble getting rid of the bugs in the system it was widely derided as ``America On Hold.'' Now Microsoft has moved so aggressively into the Internet that the Justice Department is accusing it of predatory behavior, and America Online has rocketed forward to make deals with other Internet players. In its antitrust suit against Microsoft, the federal government charges that the company has illegally bundled its own browser with its Windows operating system to smother Netscape's chances of marketing its browser. Now in the corridors outside the antitrust trial Microsoft's lawyers maintain that Netscape has found a new partner in America Online and has no need of protection from the government. But it could be as easily argued that Microsoft has bludgeoned Netscape into dissolution, forcing a distress sale to America Online. Nor is it clear that customers of America Online will choose Netscape's browser as a vehicle for buying and selling on the Internet. Even in its newly musclebound form, America Online remains dependent on Microsoft's good will for favorable placement of an AOL icon on the main desktop screen. It may be that, years hence, America Online, Netscape and Sun will put together an alternative means to the Internet through telephone lines, cables or the like. But until that day, fairness requires Justice Department action to insure that Microsoft not use its current position to thwart consumer choice. Only when companies know they can get their products to the consumer will they have the incentive to innovate and turn the Internet into the revolutionary medium it promises to be. ||||| Envisioning a thoroughly networked world in which the World Wide Web is a limitless marketplace of information, entertainment, products and services, America Online Inc. Tuesday laid out the details of its agreement to buy the Netscape Communications Corporation for $4.2 billion. By moving quickly toward what both companies have recently come to see as the inevitable convergence of technology and media, America Online hopes that it will secure a solid lead in a battle already joined by giants like the Microsoft Corp. and the International Business Machines Corp. to transform the greater part of cyberspace into a vast virtual mall. Part of that vision rests on an alliance with Sun Microsystems that America Online negotiated as part of the deal. Sun not only brings a cyber-savvy sales force to the effort but, even more importantly, a strong technology partner in developing Netscape's industrial-strength software for running Internet sites. Sun is indeed a technology heavyweight. It owns the Java programming language specially designed for Internet applications, and Solaris, among the most popular commercial operating systems for the powerful computers that big corporations use to serve up Internet services like the World Wide Web, e-mail and retail transactions. It also manufactures a highly respected line of powerful computers based on its own microprocessor chips. But for America Online _ and for the big Internet players against which it will compete _ the real potential gold mine lies further down the road, perhaps five years away, when people will venture on line for information or shopping not only from personal computers but from inexpensive Internet appliances costing $200 each, or maybe included free as part of a subscription service, just as some cellular phones are now. Today, being wired remains a comparatively elitist activity _ an estimated 25 percent of American households had access to the Internet last year, and 5 percent of households bought merchandise on line. But the executives at America Online and Netscape hope that their deal will accelerate the timetable for the day when the Net is ubiquitous, when people will tap into the World Wide Web from appliance-like devices, pagers, cell phones, television set-top boxes or computers as routinely as they use the telephone today. ``A new generation of Internet devices to be able to deliver our service anywhere is a key part of what this deal is about in the long run,'' said Stephen M. Case, 40, the chairman of America Online. For the present, however, the idea is to make America Online, the nation's leading online service, the standard way to get onto the Internet, the executives explained. Netscape, the Internet pioneer, is a crucial part of that effort, they said. There is no assurance that this vision of the technological future will prove accurate or, even if it does, that the America Online-Netscape combination will lead the way. Still, the long-range game plan helps explain what brought America Online and Netscape together. And the ability of the companies' executives to sell that vision to Netscape's whiz-kid programmers in particular will determine whether the merger succeeds. Netscape's headquarters in Mountain View, Calif., is likely become a prime target for Silicon Valley headhunters. As is the case with any software company, Netscape's key asset is its talented programmers, and many of these code hackers may be reluctant to work for America Online, which still has a reputation as a middle-brow service catering to online newcomers, known derisively as ``newbies.'' Stock options and other financial incentives will be tailored to try to keep Netscape employees on board. ``But these people want to change the world, and we've got to be clear that joining with America Online, along with the Sun component, really is a bigger opportunity for us,'' said Marc Andreessen, the 26-year-old cofounder of Netscape who led a team of young programmers from the supercomputing center at the University of Illinois to Silicon Valley to start the Internet software company in 1994. ``This ought to be the preeminent Internet company over the next decade,'' Andreessen declared, speaking from a cell phone on a streetcorner in Palo Alto, Calif. For his part, Andreessen, a Netscape executive vice president, will become Netscape's chief technology officer for the next three or four months, until the merger is completed. His new job at America Online has not yet been determined, but it is likely to be chief technology officer of the combined company as well, an America Online executive said. Already, according to one Netscape board member, Andreessen has delivered a 12-page single-spaced memorandum to Case, setting out his view of the technological road map the new company should follow into the future, emphasizing the opportunities for electronic commerce in an environment in which most people are linked to the Internet. Netscape, populated with computing sophisticates, and America Online, known as an on-ramp to the Internet for the technologically challenged, seem a corporate odd couple. But the two companies, its executives explained, had been evolving toward each other for more than a year. In a telephone interview from America Online's headquarters in Dulles, Va., Case described Netscape as an enterprise that had ``morphed itself'' from a company dependent on sales of its software used to browse the World Wide Web _ and ``in Microsoft's cross-hairs'' _ into a business that relied on advertising and other revenues from its popular Netcenter Web site and from selling software to corporations to handle electronic commerce. The Netscape transformation was largely a reaction to Microsoft's competitive assault on its browser business _ a central element in the government's antitrust suit against Microsoft. Microsoft bundled its browser into its industry-standard Windows operating system, and gave away the browser for free. The government alleges these steps were part of a pattern of anticompetitive practices, while Microsoft maintains the moves were intended mainly to benefit consumers. Early this year, after laying off workers and suffering a large loss last year, Netscape announced that it would also distribute its browser for free. It seems to have stabilized its business around its new model. Netscape announced Tuesday that it earned $2.7 million on revenues of $162 million in its fourth fiscal quarter, which ended in September. Yet America Online has also changed in the last couple of years, moving well beyond its reputation as an online service for beginners. It now has an Internet chat service and runs its own all-in-one site on the Web, known as a ``portal,'' which includes e-mail, Internet searching, news, entertainment and online shopping. ``America Online has really changed from a closed online service for novice users to an Internet media and technology company with a diverse set of brands,'' Andreessen said. ``These two companies have been moving in the same direction, and the fit is a good one.'' ||||| America Online is on the verge of agreeing to purchase Netscape Communications Corp., the Internet pioneer at the center of the government's antitrust suit against Microsoft Corp., executives involved in the talks said Sunday. The proposed deal is a complex, three-way transaction involving AOL, Netscape and Sun Microsystems Inc. AOL, the leading on-line service with more than 14 million subscribers, would acquire Netscape's popular site on the World Wide Web and its software business. AOL would also enter into a joint marketing and development partnership with Sun Microsystems to strengthen Netscape's other business of selling to large corporations the heavy-duty software needed to serve up Web pages and other Internet technologies to many thousands of users at the same time. The purchase, an exchange of AOL shares for Netscape stock, is valued at roughly $4 billion. A completed deal could be announced as soon as Monday morning. But executives involved in the talks cautioned Sunday night that some details remained to be negotiated. The Netscape deal, if consummated, would realign three businesses at the forefront of the modern economy _ on-line services, Internet software and electronic commerce. It would strengthen two of Microsoft's leading rivals, AOL and Sun Microsystems. At the same time, however, it would end the independent existence of Netscape, an Internet software maker once regarded as the most serious challenger to Microsoft's dominance of the personal computer software market. Netscape, founded in 1994, has struggled over the last 18 months under an assault from Microsoft. Its Navigator was the runaway leader in the market for the browser software used to navigate the World Wide Web. But Microsoft, responding to the Internet revolution, entered the market aggressively, quickly matching the quality of Netscape's technology and then bundling the Microsoft browser, Internet Explorer, into its industry-standard Windows operating system and giving it away free. Eventually, Microsoft's browser technology caught up to Netscape's. Earlier this year, Netscape announced layoffs and started distributing Navigator for free as well, as Microsoft steadily gained in the browser market. Since then, Netscape has focused mainly on two businesses _ advertising and transaction fees from its Netcenter Web site and selling industrial-strength software to corporations that are building their own Internet sites on which to conduct electronic commerce. AOL believes it has the expertise to increase revenues from Netscape's Web site and, helped by Sun's programmers and vast corporate sales force, to accelerate Netscape's software sales as well, executives involved in the negotiations said. Among large corporations, Sun's version of Unix, Solaris, is among the most popular operating systems for the powerful computers that run Netscape's server software. The much smaller Netscape would be placed under the wing of AOL and Sun Microsystems. The three companies had combined revenues of more than $12.4 billion last year. Microsoft, by comparison, had revenues of more than $14 billion. ``This deal would insure that the fundamental elements of Netscape survive within bigger companies that can drive its technologies forward,'' said David B. Yoffie, a professor at the Harvard business school and co-author with Michael A. Cusumano of the Massachusetts Institute of Technology of a recent book, ``Competing on Internet Time: Lessons from Netscape and Its Battle with Microsoft.'' The impact of the deal, if any, on the government's antitrust suit against Microsoft is uncertain. It does appear to support a key theme of Microsoft's defense _ namely, that it operates in a fast-moving industry where corporate alliances shift all the time. Thus, Microsoft argues, antitrust policy should tread gently. But the deal, government officials insist, should have no direct effect on the current case. ``No matter how much the alliances shift, it doesn't affect the central fact of Microsoft's monopoly and how it has used and abused its market power to protect its monopoly,'' said David Boies, the Justice Department's lead trial lawyer in the Microsoft case. Executives representing Netscape, AOL and Sun Microsystems are government witnesses at the Microsoft trial. And the serious merger talks between Netscape Chief Executive Officer James Barksdale and AOL Chairman Steve Case began about a month ago, or just after the start of the Microsoft trial, according to people close to the talks. Industry analysts suggest that the companies may have been emboldened to take stronger anti-Microsoft steps based partly on the perception that the antitrust case would weaken Microsoft. And representatives of Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm regarded as a power broker among Microsoft's rivals, sit on the boards of Netscape, Sun and AOL. Still, executives involved in the talks said that the timing of the proposed deal was unrelated to the antitrust trial. Nor should it, one person noted, be regarded as ``a single-minded attempt to circle the wagons against Microsoft.'' Indeed, AOL, according to one person close to the talks, plans to keep Microsoft's Internet Explorer browser as the default choice on its on-line service. One of the government's allegations in the antitrust suit is that Microsoft won out over Netscape as the main browser for AOL because Microsoft used its Windows monopoly as a bargaining chip. To win the browser deal, Microsoft offered AOL prime real estate on the Windows desktop, the main screen on more than 90 percent of personal computers sold today. Staying with Microsoft's browser can be seen as proof that AOL still regards placement on the Windows desktop as crucial, as well as a careful step to avoid undermining one of the allegations in the government's case. For AOL, the Netscape purchase would accelerate its evolution toward the Internet. At present, its flagship on-line service is a hybrid _ to its own proprietary service, it has added a gateway to the World Wide Web. In addition, for consumers who do not subscribe to AOL's dial-up service, it also has its own Web site, aol.com, which attracts about 24 million visitors a month, according to Media Metrix/Relevant Knowledge, a market research firm. Its big Web site offers a wide range of information, entertainment, Internet chat and e-mail, a leading example of the all-in-one sites that have become known as portals. Netscape's Netcenter traffic has slipped a bit in recent months, to under 16 million visitors a month, but it, too, is a major portal. Together, they should be a huge player in the intensifying portal battle for viewers and resulting advertising revenues. Yahoo is the current leader among portal sites with more than 25 million monthly visitors, while Microsoft's site attracts more than 20 million a month. Though known as a new-media company for consumers, AOL is also interested in boosting its electronic commerce business with the Netscape purchase. AOL has recently done work with Eastman Kodak, American Greetings and other companies, not only promoting their products to on-line subscribers but also building the Internet infrastructure of software to conduct electronic commerce. AOL notes projections like a recent one from Forrester Research Inc., which predicted that worldwide Internet commerce could reach as high as $3.2 trillion by 2003, or 5 percent of global sales. Sun Microsystems, analysts say, could be a strong partner for AOL in the market for Internet commerce software. Sun is a corporate software company with a sales force of several thousand. As it moves increasingly to Internet technology, AOL should prove an excellent partner for Sun in terms of developing and using Sun's Java, an Internet programming language. And while Netscape's browser no longer generates revenue on its own, it is a distribution channel for Java technology. Having Netscape's browser safely in the hands of a friendly company is of strategic importance for Sun, since Microsoft owns the alternative in the browser market. AOL is expected pay little, if any, premium over Netscape's stock price on Friday, executives close to the deal said, since Netscape shares have more than doubled in the last month. In the last week alone, Netscape's stock has jumped about $12, or nearly 45 percent, following reports that it was discussing a possible partnership with AOL. The stock closed Friday at $39.1875, up $2.625. AOL's shares gained $1.50 Friday, closing at $84.875. ||||| America Online built itself into the most potent force in cyberspace largely by appealing to families with chatty teen-agers who want to flirt online and adults looking for an easy way to send electronic mail while checking the weather and sports scores. Now, the company has to get serious if it is to win the hearts and minds of corporate executives in pin-stripe suits. Nearly lost in the complexity of America Online's deal to buy Netscape Communication Corp. is America Online's announcement that it will enter an entirely new market: working behind the computer screen to help companies open and operate online stores. Netscape already has created software that made it a player in providing support for what is already known as electronic commerce. But America Online now says it has ambitions to offer a much wider array of software, consulting and services for online merchants. ``Most companies that sell to consumers realize that they need to get into the e-commerce space,'' said America Online president Robert Pittman in a news conference Tuesday. ``We see a major business in offering them an end-to-end solution.'' The market is big and growing bigger by the day. Forrester Research estimates that $325 million will be spent this year on electronic commerce software and another $5.3 billion on services that range from graphic design to the turn-key operation of entire online stores. By 2002, Forrester estimates, the combined market for electronic commerce services and software should top $35 billion. ``E-commerce services are the silver bullet that will enable companies to be able to take advantage of the true business opportunities on the Web,'' said Traci Gere, an analyst at International Data Corp. ``The market is growing very rapidly, but it is very fragmented.'' Analysts say the leader today in e-commerce services is IBM, which has a full line of offerings from sophisticated software products to hand-holding consulting. Other competitors include well-known information technology consulting companies such as Andersen Consulting, the spin-off from the Arthur Andersen accounting firm; Electronic Data Systems, which runs computer systems for big companies, and PricewaterhouseCoopers, which offers accounting and consulting separately but under one umbrella. Software companies like Microsoft and Netscape sell packaged programs, typically with little or no consulting to help customers use them. There are also plenty of new companies that have sprouted up to provide electronic commerce services. Some, like Agency.Com and Organic Online, started basically as advertising and design firms. Others, including U S Web and Viant, have emphasized programming and consulting. In fact, those two strains are blurring together, as exemplified by U S Web's pending merger with CKS Group. America Online argues that its advantage in this increasingly crowded bazaar is its ability to combine a broad subscriber base of about 15 million customers with Netscape software, plus hardware from Sun Microsystems, which has joined in America Online's venture into electronic commerce engineering. ``This is the first time anyone has put a true end-to-end solution that starts with the silicon and ends with the audience,'' said Barry Schuler, America Online's president for interactive services. ``We start with Sun's line of servers, then the commerce tools to build a store, the support services to process orders and then a deal for online real estate that can drive the traffic.'' Despite the advantages Netscape and Sun bring, analysts say that America Online faces a variety of problems in its new quest. Chief among them is whether it can appear to have the consistency, focus and follow-through that corporate customers demand. ``AOL is not the first company that comes to my mind when it comes to business-quality software,'' said Robert Chatham, a senior analyst with Forrester Research. Its decision to keep Netscape as a separate unit and offer electronic commerce services in partnership with Sun will not enhance its credibility, Chatham said. ``America Online doesn't look like a homogenous vendor,'' he added. ``It looks like customers will have to tangle with a menage a trois of AOL, Netscape and Sun.'' Nor have Internet service providers and other telecommunications-oriented companies shown much evidence, Ms. Gere of International Data said, that they are capable of offering the highly specific customized services that big corporate clients demand. ``Telecommunications companies that try to do things efficiently for a large number of customers have not been able to offer customized one-to-one relationships,'' she said. Pittman said that America Online had been driven to the e-commerce business because companies that approached it wanting to sell their goods needed more help than simply advertising online. ``We are finding people who are expert in running bricks-and-mortar stores are limited by their infrastructure,'' he said. ``They have an online store, but their square footage is too small.'' Even before the Netscape deal, America Online was moving to provide some electronic commerce software and services. It has been rewriting the software that lets companies open online stores to be based on universally accepted Internet standards rather than the specific computer language used only on America Online. This new software, which now will be combined with Netscape's online store services, will be available for companies to use both on America Online and on the Internet. Similarly, it has developed a service that lets users create a file with their credit card numbers and shipping address so they can make online purchases without retyping all that information each time. America Online is working to offer it _ for a fee _ to stores on the broader Internet. There is a wide range of services that are incorporated in electronic commerce. These include high-end strategy consulting to help companies decide whether and how to sell online without hurting their traditional sale in stores. There are all sorts of computer systems to be developed, ranging from the online stores themselves to connecting those sites to a company's existing inventory and accounting systems. There are creative services that include graphic design, media buying, customer list analysis and other marketing and promotional efforts. And there are operational services that involve actually maintaining the big servers that users connect to when they use the online stores that display catalogs, take orders and process payments. America Online, Schuler said, will emphasize services that relate to marketing rather than back-office functions. ``We will consult on how to merchandise and sell online,'' he said. ``We understand the consumer piece of the puzzle.'' Some competitors worry that America Online's electronic commerce services may simply be a device to sell its software and hardware. ``The challenge is to prove that clients are getting the best possible solution for their business,'' said Robert Gett, the chief executive of Viant. ``If they offer AOL and Netscape and Sun, their answer is a bit tainted.'' Netscape does have an expanding force of about 700 people who provide consulting and custom programming. But they have been most competitive, Gett said, in competing for nuts-and-bolts projects rather than the more lucrative assignments to develop and carry out a full-fledged strategy on the Web. ``They say, `Who knows our software better than Netscape?''' Gett said. ``We help customers decide which platform is best for them.'' But America Online argues that the combined might of it, Netscape and Sun is just what the business needs. ``We always believed that commerce, that is buying goods and services, is the huge revenue stream of the future,'' Schuler said. ``We have only seen the tiniest tip of the iceberg.'' ||||| Stock prices vaulted to record levels Monday, furthering a recovery that as recently as two months ago seemed nearly unthinkable. ``I thought we were in the most serious correction since 1990, but I never thought or wrote that the bull market was over,'' said Byron Wien, U.S. equity strategist at Morgan Stanley Dean Witter & Co. ``Now it seems all of that is behind us.'' The Dow Jones industrial average rose 214.72 points, or 2.34 percent, to 9,374.27. The record is the first since July 17, when the Dow closed at 9,337.97. Since Aug. 31, when the Dow stood at 7,539.07 after a steep slide, the blue-chip gauge has risen more than 24 percent. For the year, the Dow is up 18.54 percent and has a chance of rising more than 20 percent for a fourth consecutive year, something never accomplished before. Broader averages also climbed. The Standard & Poor's 500-stock index set a record, rising 24.66 points, or 2.12 percent, to 1,188.21. The Nasdaq composite index did not reach a new high but posted the biggest percentage gain Monday, rising 49.21 points, or 2.55 percent, to 1,977.42. And the Russell 2000 index of smaller-company issues gained 3.86 points, or nearly 1 percent, to 398.15. Monday's action was energized by a daily record for the number of mergers and acquisitions valued at $1 billion or more. The merger announcements not only prompted investors to change estimates of how much companies were worth but also indicated coming declines in the outstanding shares of stock. ``This may be a supply-demand story, where demand for stocks is rising and the supply of stock is reduced as one company after another merges,'' said Hugh Johnson, chief investment officer at First Albany Corp. ``The flow of money into mutual funds is fairly strong, and there is pressure on managers to put that money to work.'' Two deals seemed to be catalysts for broad swaths of stocks. News that Bankers Trust may be close to accepting an $8.9 billion offer from Deutsche Bank of Germany heightened interest in financial-services and bank stocks. And word that America Online may acquire Netscape Communications for $4 billion in stock powered Internet and other technology stocks to even loftier valuations. Among financial companies, J.P. Morgan gained 6 1/16, to 115 11/16. American Express was up 4 3/8, to 108 15/16. Merrill Lynch jumped 4 3/8, to 76. And Donaldson, Lufkin & Jenrette rose 3 9/16, to 42}. Netscape was the most active stock Monday, gaining 2}, to 41 15/16. America Online gained 4 3/8, to 89\. Other Internet stocks also surged, and analysts said the group, which has seen meteoric gains in recent weeks, was ripe for a steep correction. Yahoo and Amazon.com both became $200 stocks on Monday. Yahoo rose 30 7/16, to 221 7/16. And Amazon.com gained 37 3/8, to 218. ``The performance of the Internet stocks is an unsettling sign,'' Wien said. Still, more-established technology shares also had a very good day. IBM rose 7, to 166 5/8. Microsoft jumped 5 9/16, to 119 3/16. And Intel closed at 113 9/16, up 1{. After Monday's big price moves, Wien said that according to his calculations, stocks were about 10 percent overvalued. By contrast, in the middle of July the market was 20 percent overvalued, he said. Nonetheless, the market's recovery, which has been buttressed by three cuts in interest rates by the Federal Reserve Board, has left many longtime Wall Street hands grasping for historical parallels. ``At this point we are in new ground,'' said Laszlo Birinyi, who heads his own market research firm. ``At the beginning of the year, I said my target for the Dow was 10,000 by the end of 1998. If anyone had asked when the market went through what now looks like a corrective blip, I would have said my new target would have been about 9,000. I am surprised the 10,000 figure came back on the table'' for this year.

In a bid to become a leader in the lucrative cyberspace economy, AOL will buy Netscape and set up a partnership with Sun. The venture will let AOL offer corporations end-to-end services, including servers, software, and accessibility to consumers. Eventually, AOL hopes to capitalize on the production of cheap devices offering Internet access to more homes. News of the deal helped push the Dow Jones to a new high. Meanwhile, Microsoft, accused by the Justice Department of using its operating system dominance to squelch competition in the browser market, claims the deal shows the software industry is healthy and that Netscape needs no government protection.

A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| In modern Russia, the crime was so common as to be mundane. Two thugs, armed with machine pistols and silencers, stalked and killed a powerful figure, then slipped away into the night. Police vowed to catch them and politicians expressed outrage. Usually, that would be the end of the story. This time, though, the figure shot was one of the most prominent and popular women in Russian politics, a prospective presidential candidate with friends in the highest reaches of the Kremlin. As outrage mounted Sunday, it seemed clear that the killing of Galina Starovoitova was not going to be treated as a routine crime, and some said it might turn out to be a watershed event in Russian politics. ``This is impossible to tolerate any longer,'' said Grigory Yavlinsky, the leader of Yabloko, another reform-oriented party. ``We must stop feeling powerless before the increasingly cheeky scum. We cannot go on living as though everything is running as usual.'' Starovoitova, a member of parliament and a leader of the liberal Russia's Democratic Choice party, was walking up the stairs of her apartment building in St. Petersburg with a young aide Friday evening. A team of assailants _ police believe it was a man and a woman _ appeared behind them and opened fire. Starovoitova, shot three times in the head, collapsed and died instantly, authorities said. The aide, 27-year-old Ruslan Linkov, was critically wounded, but managed to telephone a news agency reporter before losing consciousness. Police have recovered two guns, and are hoping that Linkov can provide a description of the killers. He had regained consciousness but still could not speak Sunday. Although it was still not clear who killed Starovoitova or why, the killing had all the earmarkings of a contract hit _ a remarkably common crime in post-Soviet Russia. Most of the killings involve business deals and the corruption that has swamped the government and the economy. Until now, the most notorious of the killings was that of popular television host Vladislav Litsyev, who was shot outside his Moscow home in 1995. But there have been hundreds of others. St. Petersburg has been especially plagued. Last year, the city's deputy governor was gunned down on a central St. Petersburg street. In the past two months alone, hitmen have claimed the lives of a legislative aide, a high-ranking city official and a prominent banker. So deeply has the toxin infected Russian society that President Boris Yeltsin ordered an investigation last week into reports that his Federal Security Service _ the domestic successor to the KGB _ had ordered the death of Boris Berezovsky, the nation's most prominent businessman and the head of the Commonwealth of Independent States. There is no indication that anyone attempted to carry out an assassination of Berezovsky. But Yeltsin's order was the equivalent of U.S. President Bill Clinton ordering an investigation into whether the FBI was plotting to kill Microsoft chairman Bill Gates. Yet, as remarkable as that news was, it has been vastly overshadowed by the death of Starovoitova. Television news since her death has carried reports of little else. Reaction has poured in from virtually every important figure in the country, and from surrounding nations. Yeltsin, calling her ``my comrade,'' declared that he would personally oversee the investigation into her death. There was, in much of the reaction to Starovoitova's death, the sense that a line had been crossed. Perhaps it was because she was a woman, perhaps because she elicited impassioned support, or perhaps because people are simply fed up. But, in more characteristic fashion, her death also led to a round of political finger-pointing. Colleagues of Starovoitova declared _ without any apparent evidence _ that her Communist foes in the Duma, the lower house of parliament, were the most likely culprits in her death. Historian Dmitry Likachyov, one of the nation's most revered and trusted figures, said her killing seemed to signal the ``outburst of a new Red Terror.'' By late Saturday, the name-calling had gone so far that Interior Minister Sergei Stepashin called a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov went on television to say he was saddened by her death. ``But,'' he added, ``I would not like the deputies who sat on the same bench with Galina Starovoitova in the State Duma ... to turn this into a political show.'' It is too early to know where the recriminations and political maneuvering will lead. For now, the only thing certain is the Starovoitova has become the latest in a long line of Russian martyrs. ||||| The New York Times said in an editorial on Monday, Nov. 23: The Russian reform movement has produced few leaders with an uncompromising dedication to democracy. Galina Starovoitova was one, and her murder in St. Petersburg on Friday was a terrible loss for Russia. In a bleak season of economic collapse and political timidity, the killing can only heighten fears that Russia is slipping into an ugly era of intolerance and political violence. Initial evidence suggests that the killing was a political assassination. Ms. Starovoitova was gunned down in the lobby of her apartment building, shot three times in the head, typical of Russian contract killings. She was a member of the Russian parliament and a recently declared candidate for governor of the region around St. Petersburg. In recent weeks she had spoken out forcefully against political extremism, denounced the anti-Semitic statements of a Communist parliamentarian and was campaigning aggressively against financial corruption in the St. Petersburg municipal government. Ms. Starovoitova's activities were fully in character with a career built around principles of liberty, tolerance and the rule of law. She championed democracy and human rights long before they became politically acceptable in Moscow, and courageously stood by Boris Yeltsin and other reformers as Russia struggled to find a new political course when the Soviet Union disintegrated. An ethnographer by training, Ms. Starovoitova proved to be a skillful and effective politician. She first gained national attention a decade ago when she set aside her academic work about the ethnic history of Leningrad and ran successfully for a seat in the Soviet parliament from Armenia, a startling victory for a Russian. She later represented St. Petersburg in the Russian legislature. Ms. Starovoitova was a woman of irrepressible energy and infectious enthusiasm. But her good humor and quick smile belied a steely commitment to combat the corruption and ethnic divisions that she correctly considered to be the enemies of Russian democracy. The least Yeltsin can do is to hunt down her killers and bring them to trial. That would be the exception in a nation where political violence is rarely prosecuted. Her countrymen can honor her memory by following her example. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, Ruslan Linkov, the Interfax news agency reported. Linkov was seriously injured, it said. The report gave no other details. A police spokesman in St. Petersburg would not comment on the report. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, the Interfax news agency reported. It gave no other details. Starovoitova tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. There have been several attacks on prominent figures in St. Petersburg in recent months. ||||| A slain Russian lawmaker was honored Tuesday as a martyr to democratic ideals in a stately funeral service in which anger mingled freely with tears. Afterward, Galina Starovoitova was to be buried alongside some of Russia's greatest national heroes. The stirring tribute to Starovoitova, a feisty liberal whose killing remains a mystery, was indicative of the depth of national feeling over her death. ``To stop us, they want to scare us. They will never succeed,'' former Deputy Prime Minister Anatoly Chubais said at the funeral for Starovoitova. ``We will fulfill the goals she sacrificed her life for.'' Hundreds of people, including many of the country's most prominent political figures, packed the grand Marble Hall of St. Petersburg's Ethnography Museum for the funeral. An open casket, cloaked with black ribbons and flanked by a military honor guard, stood at the head of the hall. At the end of the service, mourners passed grimly past it as classical music played. Outside, several thousand more mourners stood in the cold, waiting for the service to end so they could file in and pay their respects. ``Ordinary people should honor her memory, and make sure this never happens again,'' said one man, Vadim Olshevsky, the manager of a construction company. But, he added bitterly, ``There's little hope of that in our country.'' Among speakers at the service were former Prime Minister Viktor Chernomyrdin and Yuri Yarov, President Boris Yeltsin's first deputy chief of staff, who represented the president at the service. Former Prime Minister Sergei Kiriyenko was also present. Yeltsin, who has said he will personally oversee the investigation into Starovoitova's killing, was in a Moscow hospital, recovering from pneumonia. ``The shooting in St. Petersburg is a grim lesson for the whole of Russia,'' Yarov said. ``Irrespective of real motives for that murder, a crime of this magnitude is a political act, and society should know all the truth about it.'' One national television channel turned over its daylong programming to funeral coverage and a memorial tribute. Newspapers carried page after page of coverage of her death. Her political party, Russia's Democratic Choice, called on all Russians to turn out their lights in her memory for three minutes at 8 p.m. Tuesday. Starovoitova was initially going to be buried in a simple cemetery in the St. Petersburg suburb where her family lives. But as outrage mounted over her killing, the government announced that she would be interred in the Alexander Nevsky Monastery in the city's center following the funeral at the Ethnography Museum. Among those buried at the Alexander Nevsky Monastery are the composers Peter Tchaikovsky and Modest Mussorgsky and the author Fyodor Dostoevsky. Starovoitova was shot to death Friday evening as she and an aide scaled the stairs to her apartment in St. Petersburg. The aide, 27-year-old Ruslan Linkov, was seriously wounded, but has been able to provide some description of the shooting to police. Acting on his information, investigators rounded up several suspects, officials said Monday. But a detective later said that investigators had learned nothing ``serious'' from Linkov, according to the Interfax news agency, and there were no further details about whether the suspects were still in custody. Igor Kozhevnikov, head of investigations for the Interior Ministry, told Interfax on Tuesday that he was confident the case would be solved. ``It will take time,'' he said, but added that investigators ``have tips, they have something to work on.'' Authorities are acting on the assumption that Starovoitova's death was a contract hit, a common event in post-Soviet Russia. Russian politicians and newspapers have speculated wildly about political motives for the killing, but police have said they have no idea why someone would have wanted her dead. Police said someone fired shots at the apartment of a member of the St. Petersburg legislature Monday night, Interfax said. No one was hurt. It was not clear whether the shooting was related to Starovoitova's death. ||||| A badly wounded aide to a murdered lawmaker regained consciousness Monday and was talking to police, who later arrested several suspects in raids around the city, officials said. Galina Starovoitova, 52, a leader of the liberal Russia's Democratic Choice party, was shot dead by unidentified assailants on the stairs of her apartment building in St. Petersburg on Friday night. The killing of such a prominent politician has caused an uproar in Russia and prompted calls from all sides for a crackdown on the country's growing lawlessness. Scores of business leaders and others have been gunned down in recent years in contract killings that are almost never solved. The lawmaker's aide, 27-year-old Ruslan Linkov, was in a ``clear'' mind Monday, testifying to investigators, the ITAR-Tass news agency reported. Special police armed with assault rifles were standing guard at the door of his hospital room. Acting on information from the aide, police carried out raids and rounded up several suspects, officials said. There were no further details. Linkov was critically wounded in the head during the attack and later rushed to a hospital where he underwent surgery during the weekend. Liberal leaders charged _ without any concrete evidence _ that Starovoitova's Communist foes in the Duma, the lower house of parliament, were the most likely culprits. Over the weekend, Interior Minister Sergei Stepashin even had to call a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov responded in kind on Monday, suggesting that the ``extremists from democratic organizations'' might have staged the murder in order to win local elections set for Dec. 6, the Interfax news agency reported. The speaker also threatened to file a libel suit against a St. Petersburg newspaper, which Starovoitova edited. The newspaper recently accused Seleznyov of setting up an illegal fund to finance a presidential bid and other shady activities. Seleznyov, who has said he might run for president in 2000, denied the newspaper's allegations on Friday, calling them an ``outright slander.'' Starovoitova's murder had all the traits of a contract murder, an increasingly common crime in Russia. Communist leader Gennady Zyuganov on Monday used Starovoitova's killing as an occasion to lambast the government for its inability to contain soaring crime. ``That's a result of the (government's) catastrophic policy aimed at the destruction of the state and the nation,'' he said. Starovoitova, of the reformist party Democratic Russia, tried to run for president in 1996 but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues in 1991-92 _ the only woman in his immediate circle _ and later joined the Russian parliament as one of the most vocal defenders of liberal reforms. Yeltsin called Starovoitova a ``comrade'' and said he would personally monitor the investigation into her killing. Starovoitova remarried earlier this year and had one son and a grandson. She is scheduled to be buried on Tuesday at the Nikolskoye cemetery in St. Petersburg. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| Mourners bearing flowers and candles gathered Sunday outside the house on Griboyedova Canal where a Russian legislator, Galina Staravoitova, was shot to death on Friday night. A key witness, Ruslan Linkov, 27, Mrs. Staravoitova's press aide, was reported to be regaining consciousness in a heavily guarded hospital ward where he was taken with gunshot wounds to the head and neck. The police say the two were attacked in the stairwell of Mrs. Staravoitova's building by two assailants, one of them a young woman. The attackers reportedly fled through a back entrance to a waiting car. Two guns were found at the scene. Friends and relatives say Mrs. Staravoitova, a founder of Russia's democratic movement, had received death threats, but the motive for the killing remains unclear. ``The choice of the target suggests a well-thought out plan,'' said Sergei Kozyrev, vice president of the Russian Association of Scientific Societies and a Staravoitova supporter. ``To kill a woman _ a woman in politics _ that has not happened in Russia since Stalin's time.'' Setting aside past feuds, local democratic groups said Sunday that they would unite in coming elections to the St. Petersburg city council, combining their forces against what they say are criminals who have invaded local politics. At a gathering Sunday night in Moscow, Yegor Gaidar, a former Russian prime minister and a close ally of Mrs. Staravoitova, bitterly rejected suggestions that Russia should adopt extraordinary security measures to stem the rise in political crime. ||||| Hundreds of people gathered Saturday to mourn the shooting death of one of Russia's most prominent women, a potential presidential candidate whose killing was widely considered to be politically motivated. President Boris Yeltsin said he would personally assume control over the investigation into the killing of Galina Starovoitova, who was gunned down Friday night as she climbed the stairs to her apartment. An aide was also shot and critically wounded. The shooting occurred in a building along St. Petersburg's atmospheric Griboedova Canal, site of another notorious Russian crime _ the murder that was the central event in Fyodor Dostoevsky's 19th century masterpiece, ``Crime and Punishment.'' Like that fictional crime, which shone a light on social ferment in the St. Petersburg of its day, the death of Starovoitova was immediately seized upon as a seminal event in the Russia of the late 1990s. ``It is one of the black pages in our modern history,'' Vladimir Putin, director of the Federal Security Service (FSB) told the Interfax news agency. ``It doesn't do much to improve our reputation, the reputation of the country as a whole.'' Starovoitova, 52, was an outspoken deputy in the lower house of parliament who inspired strong feelings from both her friends and enemies. A leader of the liberal Russia's Democratic Choice party, she was planning to run for president in 2000. Those close to her speculated about who might have wanted her dead, with some naming various prominent politicians as potential culprits. ``Whose path did she cross? The answer is simple: communists and gangsters,'' said former Deputy Prime Minister Anatoly Chubais. ``These are the two kinds of people in whose way she was standing.'' Putin, whose agency is in charge of the investigation, cautioned that there was still no evidence that her death was a political assassination. Interior Minister Sergei Stepashin did not speculate about the motive for the crime, but told reporters that it was being investigated under a criminal code section that covers terrorism. Arriving at the St. Petersburg airport from Moscow, he said: ``I brought with me a team of experienced investigators. I think we will clear it up soon.'' Yeltsin sent a telegram to Gennady Seleznyov, chairman of parliament's lower house, the State Duma, promising that the ``contractors and executors of the murder will be found and severely punished,'' The president also sent a telegram to Starovoitova's family, in which he called her ``one of the most vivid figures in Russian politics,'' who ``consistently upheld the lofty ideals of freedom and democracy.'' More than 200 people gathered in St. Petersburg's Palace Square to remember Starovoitova. People hugged quietly as they listened to speeches by her fellow politicians and friends. The small stage was adorned with red roses, yellow carnations and photographs of the deputy with various people, including the late Russian physicist and dissident, Andrei Sakharov. ``We are united today by pain, which is bigger than politics,'' said Viktor Krivulin, a poet and candidate for the regional legislature. ``Politics, as I felt during the past night, has become the art of spitting on the soul.'' Others at the gathering said they were sure that Starovoitova was killed by those who disliked her outspoken views. ``She had too many enemies,'' said Galina Markelova, an aide to the lawmaker. She said Starovoitova had received many threats in the past. ``It was doubtless a political murder,'' added Vitaly Milonov, the chairman of the Young Christian Democrats. Police said two men followed Starovoitova and her aide, Ruslan Linkov, 27, and shot them on the stairs of her building Friday evening. Linkov was shot twice. He regained consciousness after a five-hour operation at the Military Medical Academy, but remained in critical condition in intensive care. A pistol with a silencer and and automatic rifle were found at the scene, ITAR-Tass said. A funeral is scheduled for Tuesday in the settlement of Gorelovo, near St. Petersburg.

Liberal Russian lawmaker Galina Starovoitova was gunned down in St. Petersburg. Her aide was seriously wounded. She was a parliament member, aide to Yeltsin and Democratic Choice party leader. She was to run for president in 2000. She is the 1st woman politician killed since Stalin's time. Her slaying may be a watershed event. Yeltsin will run the investigation. She was said to have had uncompromising dedication to democracy. Police found some evidence, but after the aide regained consciousness and talked, several suspects were arrested in raids. Hundreds mourned her. She was honored as a martyr at her funeral and was to be buried alongside Russian heroes.

A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| In modern Russia, the crime was so common as to be mundane. Two thugs, armed with machine pistols and silencers, stalked and killed a powerful figure, then slipped away into the night. Police vowed to catch them and politicians expressed outrage. Usually, that would be the end of the story. This time, though, the figure shot was one of the most prominent and popular women in Russian politics, a prospective presidential candidate with friends in the highest reaches of the Kremlin. As outrage mounted Sunday, it seemed clear that the killing of Galina Starovoitova was not going to be treated as a routine crime, and some said it might turn out to be a watershed event in Russian politics. ``This is impossible to tolerate any longer,'' said Grigory Yavlinsky, the leader of Yabloko, another reform-oriented party. ``We must stop feeling powerless before the increasingly cheeky scum. We cannot go on living as though everything is running as usual.'' Starovoitova, a member of parliament and a leader of the liberal Russia's Democratic Choice party, was walking up the stairs of her apartment building in St. Petersburg with a young aide Friday evening. A team of assailants _ police believe it was a man and a woman _ appeared behind them and opened fire. Starovoitova, shot three times in the head, collapsed and died instantly, authorities said. The aide, 27-year-old Ruslan Linkov, was critically wounded, but managed to telephone a news agency reporter before losing consciousness. Police have recovered two guns, and are hoping that Linkov can provide a description of the killers. He had regained consciousness but still could not speak Sunday. Although it was still not clear who killed Starovoitova or why, the killing had all the earmarkings of a contract hit _ a remarkably common crime in post-Soviet Russia. Most of the killings involve business deals and the corruption that has swamped the government and the economy. Until now, the most notorious of the killings was that of popular television host Vladislav Litsyev, who was shot outside his Moscow home in 1995. But there have been hundreds of others. St. Petersburg has been especially plagued. Last year, the city's deputy governor was gunned down on a central St. Petersburg street. In the past two months alone, hitmen have claimed the lives of a legislative aide, a high-ranking city official and a prominent banker. So deeply has the toxin infected Russian society that President Boris Yeltsin ordered an investigation last week into reports that his Federal Security Service _ the domestic successor to the KGB _ had ordered the death of Boris Berezovsky, the nation's most prominent businessman and the head of the Commonwealth of Independent States. There is no indication that anyone attempted to carry out an assassination of Berezovsky. But Yeltsin's order was the equivalent of U.S. President Bill Clinton ordering an investigation into whether the FBI was plotting to kill Microsoft chairman Bill Gates. Yet, as remarkable as that news was, it has been vastly overshadowed by the death of Starovoitova. Television news since her death has carried reports of little else. Reaction has poured in from virtually every important figure in the country, and from surrounding nations. Yeltsin, calling her ``my comrade,'' declared that he would personally oversee the investigation into her death. There was, in much of the reaction to Starovoitova's death, the sense that a line had been crossed. Perhaps it was because she was a woman, perhaps because she elicited impassioned support, or perhaps because people are simply fed up. But, in more characteristic fashion, her death also led to a round of political finger-pointing. Colleagues of Starovoitova declared _ without any apparent evidence _ that her Communist foes in the Duma, the lower house of parliament, were the most likely culprits in her death. Historian Dmitry Likachyov, one of the nation's most revered and trusted figures, said her killing seemed to signal the ``outburst of a new Red Terror.'' By late Saturday, the name-calling had gone so far that Interior Minister Sergei Stepashin called a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov went on television to say he was saddened by her death. ``But,'' he added, ``I would not like the deputies who sat on the same bench with Galina Starovoitova in the State Duma ... to turn this into a political show.'' It is too early to know where the recriminations and political maneuvering will lead. For now, the only thing certain is the Starovoitova has become the latest in a long line of Russian martyrs. ||||| The New York Times said in an editorial on Monday, Nov. 23: The Russian reform movement has produced few leaders with an uncompromising dedication to democracy. Galina Starovoitova was one, and her murder in St. Petersburg on Friday was a terrible loss for Russia. In a bleak season of economic collapse and political timidity, the killing can only heighten fears that Russia is slipping into an ugly era of intolerance and political violence. Initial evidence suggests that the killing was a political assassination. Ms. Starovoitova was gunned down in the lobby of her apartment building, shot three times in the head, typical of Russian contract killings. She was a member of the Russian parliament and a recently declared candidate for governor of the region around St. Petersburg. In recent weeks she had spoken out forcefully against political extremism, denounced the anti-Semitic statements of a Communist parliamentarian and was campaigning aggressively against financial corruption in the St. Petersburg municipal government. Ms. Starovoitova's activities were fully in character with a career built around principles of liberty, tolerance and the rule of law. She championed democracy and human rights long before they became politically acceptable in Moscow, and courageously stood by Boris Yeltsin and other reformers as Russia struggled to find a new political course when the Soviet Union disintegrated. An ethnographer by training, Ms. Starovoitova proved to be a skillful and effective politician. She first gained national attention a decade ago when she set aside her academic work about the ethnic history of Leningrad and ran successfully for a seat in the Soviet parliament from Armenia, a startling victory for a Russian. She later represented St. Petersburg in the Russian legislature. Ms. Starovoitova was a woman of irrepressible energy and infectious enthusiasm. But her good humor and quick smile belied a steely commitment to combat the corruption and ethnic divisions that she correctly considered to be the enemies of Russian democracy. The least Yeltsin can do is to hunt down her killers and bring them to trial. That would be the exception in a nation where political violence is rarely prosecuted. Her countrymen can honor her memory by following her example. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, Ruslan Linkov, the Interfax news agency reported. Linkov was seriously injured, it said. The report gave no other details. A police spokesman in St. Petersburg would not comment on the report. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, the Interfax news agency reported. It gave no other details. Starovoitova tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. There have been several attacks on prominent figures in St. Petersburg in recent months. ||||| A slain Russian lawmaker was honored Tuesday as a martyr to democratic ideals in a stately funeral service in which anger mingled freely with tears. Afterward, Galina Starovoitova was to be buried alongside some of Russia's greatest national heroes. The stirring tribute to Starovoitova, a feisty liberal whose killing remains a mystery, was indicative of the depth of national feeling over her death. ``To stop us, they want to scare us. They will never succeed,'' former Deputy Prime Minister Anatoly Chubais said at the funeral for Starovoitova. ``We will fulfill the goals she sacrificed her life for.'' Hundreds of people, including many of the country's most prominent political figures, packed the grand Marble Hall of St. Petersburg's Ethnography Museum for the funeral. An open casket, cloaked with black ribbons and flanked by a military honor guard, stood at the head of the hall. At the end of the service, mourners passed grimly past it as classical music played. Outside, several thousand more mourners stood in the cold, waiting for the service to end so they could file in and pay their respects. ``Ordinary people should honor her memory, and make sure this never happens again,'' said one man, Vadim Olshevsky, the manager of a construction company. But, he added bitterly, ``There's little hope of that in our country.'' Among speakers at the service were former Prime Minister Viktor Chernomyrdin and Yuri Yarov, President Boris Yeltsin's first deputy chief of staff, who represented the president at the service. Former Prime Minister Sergei Kiriyenko was also present. Yeltsin, who has said he will personally oversee the investigation into Starovoitova's killing, was in a Moscow hospital, recovering from pneumonia. ``The shooting in St. Petersburg is a grim lesson for the whole of Russia,'' Yarov said. ``Irrespective of real motives for that murder, a crime of this magnitude is a political act, and society should know all the truth about it.'' One national television channel turned over its daylong programming to funeral coverage and a memorial tribute. Newspapers carried page after page of coverage of her death. Her political party, Russia's Democratic Choice, called on all Russians to turn out their lights in her memory for three minutes at 8 p.m. Tuesday. Starovoitova was initially going to be buried in a simple cemetery in the St. Petersburg suburb where her family lives. But as outrage mounted over her killing, the government announced that she would be interred in the Alexander Nevsky Monastery in the city's center following the funeral at the Ethnography Museum. Among those buried at the Alexander Nevsky Monastery are the composers Peter Tchaikovsky and Modest Mussorgsky and the author Fyodor Dostoevsky. Starovoitova was shot to death Friday evening as she and an aide scaled the stairs to her apartment in St. Petersburg. The aide, 27-year-old Ruslan Linkov, was seriously wounded, but has been able to provide some description of the shooting to police. Acting on his information, investigators rounded up several suspects, officials said Monday. But a detective later said that investigators had learned nothing ``serious'' from Linkov, according to the Interfax news agency, and there were no further details about whether the suspects were still in custody. Igor Kozhevnikov, head of investigations for the Interior Ministry, told Interfax on Tuesday that he was confident the case would be solved. ``It will take time,'' he said, but added that investigators ``have tips, they have something to work on.'' Authorities are acting on the assumption that Starovoitova's death was a contract hit, a common event in post-Soviet Russia. Russian politicians and newspapers have speculated wildly about political motives for the killing, but police have said they have no idea why someone would have wanted her dead. Police said someone fired shots at the apartment of a member of the St. Petersburg legislature Monday night, Interfax said. No one was hurt. It was not clear whether the shooting was related to Starovoitova's death. ||||| A badly wounded aide to a murdered lawmaker regained consciousness Monday and was talking to police, who later arrested several suspects in raids around the city, officials said. Galina Starovoitova, 52, a leader of the liberal Russia's Democratic Choice party, was shot dead by unidentified assailants on the stairs of her apartment building in St. Petersburg on Friday night. The killing of such a prominent politician has caused an uproar in Russia and prompted calls from all sides for a crackdown on the country's growing lawlessness. Scores of business leaders and others have been gunned down in recent years in contract killings that are almost never solved. The lawmaker's aide, 27-year-old Ruslan Linkov, was in a ``clear'' mind Monday, testifying to investigators, the ITAR-Tass news agency reported. Special police armed with assault rifles were standing guard at the door of his hospital room. Acting on information from the aide, police carried out raids and rounded up several suspects, officials said. There were no further details. Linkov was critically wounded in the head during the attack and later rushed to a hospital where he underwent surgery during the weekend. Liberal leaders charged _ without any concrete evidence _ that Starovoitova's Communist foes in the Duma, the lower house of parliament, were the most likely culprits. Over the weekend, Interior Minister Sergei Stepashin even had to call a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov responded in kind on Monday, suggesting that the ``extremists from democratic organizations'' might have staged the murder in order to win local elections set for Dec. 6, the Interfax news agency reported. The speaker also threatened to file a libel suit against a St. Petersburg newspaper, which Starovoitova edited. The newspaper recently accused Seleznyov of setting up an illegal fund to finance a presidential bid and other shady activities. Seleznyov, who has said he might run for president in 2000, denied the newspaper's allegations on Friday, calling them an ``outright slander.'' Starovoitova's murder had all the traits of a contract murder, an increasingly common crime in Russia. Communist leader Gennady Zyuganov on Monday used Starovoitova's killing as an occasion to lambast the government for its inability to contain soaring crime. ``That's a result of the (government's) catastrophic policy aimed at the destruction of the state and the nation,'' he said. Starovoitova, of the reformist party Democratic Russia, tried to run for president in 1996 but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues in 1991-92 _ the only woman in his immediate circle _ and later joined the Russian parliament as one of the most vocal defenders of liberal reforms. Yeltsin called Starovoitova a ``comrade'' and said he would personally monitor the investigation into her killing. Starovoitova remarried earlier this year and had one son and a grandson. She is scheduled to be buried on Tuesday at the Nikolskoye cemetery in St. Petersburg. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| Mourners bearing flowers and candles gathered Sunday outside the house on Griboyedova Canal where a Russian legislator, Galina Staravoitova, was shot to death on Friday night. A key witness, Ruslan Linkov, 27, Mrs. Staravoitova's press aide, was reported to be regaining consciousness in a heavily guarded hospital ward where he was taken with gunshot wounds to the head and neck. The police say the two were attacked in the stairwell of Mrs. Staravoitova's building by two assailants, one of them a young woman. The attackers reportedly fled through a back entrance to a waiting car. Two guns were found at the scene. Friends and relatives say Mrs. Staravoitova, a founder of Russia's democratic movement, had received death threats, but the motive for the killing remains unclear. ``The choice of the target suggests a well-thought out plan,'' said Sergei Kozyrev, vice president of the Russian Association of Scientific Societies and a Staravoitova supporter. ``To kill a woman _ a woman in politics _ that has not happened in Russia since Stalin's time.'' Setting aside past feuds, local democratic groups said Sunday that they would unite in coming elections to the St. Petersburg city council, combining their forces against what they say are criminals who have invaded local politics. At a gathering Sunday night in Moscow, Yegor Gaidar, a former Russian prime minister and a close ally of Mrs. Staravoitova, bitterly rejected suggestions that Russia should adopt extraordinary security measures to stem the rise in political crime. ||||| Hundreds of people gathered Saturday to mourn the shooting death of one of Russia's most prominent women, a potential presidential candidate whose killing was widely considered to be politically motivated. President Boris Yeltsin said he would personally assume control over the investigation into the killing of Galina Starovoitova, who was gunned down Friday night as she climbed the stairs to her apartment. An aide was also shot and critically wounded. The shooting occurred in a building along St. Petersburg's atmospheric Griboedova Canal, site of another notorious Russian crime _ the murder that was the central event in Fyodor Dostoevsky's 19th century masterpiece, ``Crime and Punishment.'' Like that fictional crime, which shone a light on social ferment in the St. Petersburg of its day, the death of Starovoitova was immediately seized upon as a seminal event in the Russia of the late 1990s. ``It is one of the black pages in our modern history,'' Vladimir Putin, director of the Federal Security Service (FSB) told the Interfax news agency. ``It doesn't do much to improve our reputation, the reputation of the country as a whole.'' Starovoitova, 52, was an outspoken deputy in the lower house of parliament who inspired strong feelings from both her friends and enemies. A leader of the liberal Russia's Democratic Choice party, she was planning to run for president in 2000. Those close to her speculated about who might have wanted her dead, with some naming various prominent politicians as potential culprits. ``Whose path did she cross? The answer is simple: communists and gangsters,'' said former Deputy Prime Minister Anatoly Chubais. ``These are the two kinds of people in whose way she was standing.'' Putin, whose agency is in charge of the investigation, cautioned that there was still no evidence that her death was a political assassination. Interior Minister Sergei Stepashin did not speculate about the motive for the crime, but told reporters that it was being investigated under a criminal code section that covers terrorism. Arriving at the St. Petersburg airport from Moscow, he said: ``I brought with me a team of experienced investigators. I think we will clear it up soon.'' Yeltsin sent a telegram to Gennady Seleznyov, chairman of parliament's lower house, the State Duma, promising that the ``contractors and executors of the murder will be found and severely punished,'' The president also sent a telegram to Starovoitova's family, in which he called her ``one of the most vivid figures in Russian politics,'' who ``consistently upheld the lofty ideals of freedom and democracy.'' More than 200 people gathered in St. Petersburg's Palace Square to remember Starovoitova. People hugged quietly as they listened to speeches by her fellow politicians and friends. The small stage was adorned with red roses, yellow carnations and photographs of the deputy with various people, including the late Russian physicist and dissident, Andrei Sakharov. ``We are united today by pain, which is bigger than politics,'' said Viktor Krivulin, a poet and candidate for the regional legislature. ``Politics, as I felt during the past night, has become the art of spitting on the soul.'' Others at the gathering said they were sure that Starovoitova was killed by those who disliked her outspoken views. ``She had too many enemies,'' said Galina Markelova, an aide to the lawmaker. She said Starovoitova had received many threats in the past. ``It was doubtless a political murder,'' added Vitaly Milonov, the chairman of the Young Christian Democrats. Police said two men followed Starovoitova and her aide, Ruslan Linkov, 27, and shot them on the stairs of her building Friday evening. Linkov was shot twice. He regained consciousness after a five-hour operation at the Military Medical Academy, but remained in critical condition in intensive care. A pistol with a silencer and and automatic rifle were found at the scene, ITAR-Tass said. A funeral is scheduled for Tuesday in the settlement of Gorelovo, near St. Petersburg.

Galina Starovoitova, founder of Russia's democratic movement and outspoken reformist member of parliament's lower house, was murdered and her press aide injured. She tried to run for president in 1996 but was barred on technicalities. She planned to run again in 2000. Her death appeared a contract killing. She campaigned against corruption and had many enemies. The hundreds of political killings in Russia are rarely prosecuted. Other St. Petersburg figures attacked recently include a banker, finance official, and parliamentary aide. Her killing brought outrage and wide mourning Yeltsin led the investigation. She was buried among Russia's national heroes.

A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| In modern Russia, the crime was so common as to be mundane. Two thugs, armed with machine pistols and silencers, stalked and killed a powerful figure, then slipped away into the night. Police vowed to catch them and politicians expressed outrage. Usually, that would be the end of the story. This time, though, the figure shot was one of the most prominent and popular women in Russian politics, a prospective presidential candidate with friends in the highest reaches of the Kremlin. As outrage mounted Sunday, it seemed clear that the killing of Galina Starovoitova was not going to be treated as a routine crime, and some said it might turn out to be a watershed event in Russian politics. ``This is impossible to tolerate any longer,'' said Grigory Yavlinsky, the leader of Yabloko, another reform-oriented party. ``We must stop feeling powerless before the increasingly cheeky scum. We cannot go on living as though everything is running as usual.'' Starovoitova, a member of parliament and a leader of the liberal Russia's Democratic Choice party, was walking up the stairs of her apartment building in St. Petersburg with a young aide Friday evening. A team of assailants _ police believe it was a man and a woman _ appeared behind them and opened fire. Starovoitova, shot three times in the head, collapsed and died instantly, authorities said. The aide, 27-year-old Ruslan Linkov, was critically wounded, but managed to telephone a news agency reporter before losing consciousness. Police have recovered two guns, and are hoping that Linkov can provide a description of the killers. He had regained consciousness but still could not speak Sunday. Although it was still not clear who killed Starovoitova or why, the killing had all the earmarkings of a contract hit _ a remarkably common crime in post-Soviet Russia. Most of the killings involve business deals and the corruption that has swamped the government and the economy. Until now, the most notorious of the killings was that of popular television host Vladislav Litsyev, who was shot outside his Moscow home in 1995. But there have been hundreds of others. St. Petersburg has been especially plagued. Last year, the city's deputy governor was gunned down on a central St. Petersburg street. In the past two months alone, hitmen have claimed the lives of a legislative aide, a high-ranking city official and a prominent banker. So deeply has the toxin infected Russian society that President Boris Yeltsin ordered an investigation last week into reports that his Federal Security Service _ the domestic successor to the KGB _ had ordered the death of Boris Berezovsky, the nation's most prominent businessman and the head of the Commonwealth of Independent States. There is no indication that anyone attempted to carry out an assassination of Berezovsky. But Yeltsin's order was the equivalent of U.S. President Bill Clinton ordering an investigation into whether the FBI was plotting to kill Microsoft chairman Bill Gates. Yet, as remarkable as that news was, it has been vastly overshadowed by the death of Starovoitova. Television news since her death has carried reports of little else. Reaction has poured in from virtually every important figure in the country, and from surrounding nations. Yeltsin, calling her ``my comrade,'' declared that he would personally oversee the investigation into her death. There was, in much of the reaction to Starovoitova's death, the sense that a line had been crossed. Perhaps it was because she was a woman, perhaps because she elicited impassioned support, or perhaps because people are simply fed up. But, in more characteristic fashion, her death also led to a round of political finger-pointing. Colleagues of Starovoitova declared _ without any apparent evidence _ that her Communist foes in the Duma, the lower house of parliament, were the most likely culprits in her death. Historian Dmitry Likachyov, one of the nation's most revered and trusted figures, said her killing seemed to signal the ``outburst of a new Red Terror.'' By late Saturday, the name-calling had gone so far that Interior Minister Sergei Stepashin called a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov went on television to say he was saddened by her death. ``But,'' he added, ``I would not like the deputies who sat on the same bench with Galina Starovoitova in the State Duma ... to turn this into a political show.'' It is too early to know where the recriminations and political maneuvering will lead. For now, the only thing certain is the Starovoitova has become the latest in a long line of Russian martyrs. ||||| The New York Times said in an editorial on Monday, Nov. 23: The Russian reform movement has produced few leaders with an uncompromising dedication to democracy. Galina Starovoitova was one, and her murder in St. Petersburg on Friday was a terrible loss for Russia. In a bleak season of economic collapse and political timidity, the killing can only heighten fears that Russia is slipping into an ugly era of intolerance and political violence. Initial evidence suggests that the killing was a political assassination. Ms. Starovoitova was gunned down in the lobby of her apartment building, shot three times in the head, typical of Russian contract killings. She was a member of the Russian parliament and a recently declared candidate for governor of the region around St. Petersburg. In recent weeks she had spoken out forcefully against political extremism, denounced the anti-Semitic statements of a Communist parliamentarian and was campaigning aggressively against financial corruption in the St. Petersburg municipal government. Ms. Starovoitova's activities were fully in character with a career built around principles of liberty, tolerance and the rule of law. She championed democracy and human rights long before they became politically acceptable in Moscow, and courageously stood by Boris Yeltsin and other reformers as Russia struggled to find a new political course when the Soviet Union disintegrated. An ethnographer by training, Ms. Starovoitova proved to be a skillful and effective politician. She first gained national attention a decade ago when she set aside her academic work about the ethnic history of Leningrad and ran successfully for a seat in the Soviet parliament from Armenia, a startling victory for a Russian. She later represented St. Petersburg in the Russian legislature. Ms. Starovoitova was a woman of irrepressible energy and infectious enthusiasm. But her good humor and quick smile belied a steely commitment to combat the corruption and ethnic divisions that she correctly considered to be the enemies of Russian democracy. The least Yeltsin can do is to hunt down her killers and bring them to trial. That would be the exception in a nation where political violence is rarely prosecuted. Her countrymen can honor her memory by following her example. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, Ruslan Linkov, the Interfax news agency reported. Linkov was seriously injured, it said. The report gave no other details. A police spokesman in St. Petersburg would not comment on the report. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, the Interfax news agency reported. It gave no other details. Starovoitova tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. There have been several attacks on prominent figures in St. Petersburg in recent months. ||||| A slain Russian lawmaker was honored Tuesday as a martyr to democratic ideals in a stately funeral service in which anger mingled freely with tears. Afterward, Galina Starovoitova was to be buried alongside some of Russia's greatest national heroes. The stirring tribute to Starovoitova, a feisty liberal whose killing remains a mystery, was indicative of the depth of national feeling over her death. ``To stop us, they want to scare us. They will never succeed,'' former Deputy Prime Minister Anatoly Chubais said at the funeral for Starovoitova. ``We will fulfill the goals she sacrificed her life for.'' Hundreds of people, including many of the country's most prominent political figures, packed the grand Marble Hall of St. Petersburg's Ethnography Museum for the funeral. An open casket, cloaked with black ribbons and flanked by a military honor guard, stood at the head of the hall. At the end of the service, mourners passed grimly past it as classical music played. Outside, several thousand more mourners stood in the cold, waiting for the service to end so they could file in and pay their respects. ``Ordinary people should honor her memory, and make sure this never happens again,'' said one man, Vadim Olshevsky, the manager of a construction company. But, he added bitterly, ``There's little hope of that in our country.'' Among speakers at the service were former Prime Minister Viktor Chernomyrdin and Yuri Yarov, President Boris Yeltsin's first deputy chief of staff, who represented the president at the service. Former Prime Minister Sergei Kiriyenko was also present. Yeltsin, who has said he will personally oversee the investigation into Starovoitova's killing, was in a Moscow hospital, recovering from pneumonia. ``The shooting in St. Petersburg is a grim lesson for the whole of Russia,'' Yarov said. ``Irrespective of real motives for that murder, a crime of this magnitude is a political act, and society should know all the truth about it.'' One national television channel turned over its daylong programming to funeral coverage and a memorial tribute. Newspapers carried page after page of coverage of her death. Her political party, Russia's Democratic Choice, called on all Russians to turn out their lights in her memory for three minutes at 8 p.m. Tuesday. Starovoitova was initially going to be buried in a simple cemetery in the St. Petersburg suburb where her family lives. But as outrage mounted over her killing, the government announced that she would be interred in the Alexander Nevsky Monastery in the city's center following the funeral at the Ethnography Museum. Among those buried at the Alexander Nevsky Monastery are the composers Peter Tchaikovsky and Modest Mussorgsky and the author Fyodor Dostoevsky. Starovoitova was shot to death Friday evening as she and an aide scaled the stairs to her apartment in St. Petersburg. The aide, 27-year-old Ruslan Linkov, was seriously wounded, but has been able to provide some description of the shooting to police. Acting on his information, investigators rounded up several suspects, officials said Monday. But a detective later said that investigators had learned nothing ``serious'' from Linkov, according to the Interfax news agency, and there were no further details about whether the suspects were still in custody. Igor Kozhevnikov, head of investigations for the Interior Ministry, told Interfax on Tuesday that he was confident the case would be solved. ``It will take time,'' he said, but added that investigators ``have tips, they have something to work on.'' Authorities are acting on the assumption that Starovoitova's death was a contract hit, a common event in post-Soviet Russia. Russian politicians and newspapers have speculated wildly about political motives for the killing, but police have said they have no idea why someone would have wanted her dead. Police said someone fired shots at the apartment of a member of the St. Petersburg legislature Monday night, Interfax said. No one was hurt. It was not clear whether the shooting was related to Starovoitova's death. ||||| A badly wounded aide to a murdered lawmaker regained consciousness Monday and was talking to police, who later arrested several suspects in raids around the city, officials said. Galina Starovoitova, 52, a leader of the liberal Russia's Democratic Choice party, was shot dead by unidentified assailants on the stairs of her apartment building in St. Petersburg on Friday night. The killing of such a prominent politician has caused an uproar in Russia and prompted calls from all sides for a crackdown on the country's growing lawlessness. Scores of business leaders and others have been gunned down in recent years in contract killings that are almost never solved. The lawmaker's aide, 27-year-old Ruslan Linkov, was in a ``clear'' mind Monday, testifying to investigators, the ITAR-Tass news agency reported. Special police armed with assault rifles were standing guard at the door of his hospital room. Acting on information from the aide, police carried out raids and rounded up several suspects, officials said. There were no further details. Linkov was critically wounded in the head during the attack and later rushed to a hospital where he underwent surgery during the weekend. Liberal leaders charged _ without any concrete evidence _ that Starovoitova's Communist foes in the Duma, the lower house of parliament, were the most likely culprits. Over the weekend, Interior Minister Sergei Stepashin even had to call a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov responded in kind on Monday, suggesting that the ``extremists from democratic organizations'' might have staged the murder in order to win local elections set for Dec. 6, the Interfax news agency reported. The speaker also threatened to file a libel suit against a St. Petersburg newspaper, which Starovoitova edited. The newspaper recently accused Seleznyov of setting up an illegal fund to finance a presidential bid and other shady activities. Seleznyov, who has said he might run for president in 2000, denied the newspaper's allegations on Friday, calling them an ``outright slander.'' Starovoitova's murder had all the traits of a contract murder, an increasingly common crime in Russia. Communist leader Gennady Zyuganov on Monday used Starovoitova's killing as an occasion to lambast the government for its inability to contain soaring crime. ``That's a result of the (government's) catastrophic policy aimed at the destruction of the state and the nation,'' he said. Starovoitova, of the reformist party Democratic Russia, tried to run for president in 1996 but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues in 1991-92 _ the only woman in his immediate circle _ and later joined the Russian parliament as one of the most vocal defenders of liberal reforms. Yeltsin called Starovoitova a ``comrade'' and said he would personally monitor the investigation into her killing. Starovoitova remarried earlier this year and had one son and a grandson. She is scheduled to be buried on Tuesday at the Nikolskoye cemetery in St. Petersburg. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| Mourners bearing flowers and candles gathered Sunday outside the house on Griboyedova Canal where a Russian legislator, Galina Staravoitova, was shot to death on Friday night. A key witness, Ruslan Linkov, 27, Mrs. Staravoitova's press aide, was reported to be regaining consciousness in a heavily guarded hospital ward where he was taken with gunshot wounds to the head and neck. The police say the two were attacked in the stairwell of Mrs. Staravoitova's building by two assailants, one of them a young woman. The attackers reportedly fled through a back entrance to a waiting car. Two guns were found at the scene. Friends and relatives say Mrs. Staravoitova, a founder of Russia's democratic movement, had received death threats, but the motive for the killing remains unclear. ``The choice of the target suggests a well-thought out plan,'' said Sergei Kozyrev, vice president of the Russian Association of Scientific Societies and a Staravoitova supporter. ``To kill a woman _ a woman in politics _ that has not happened in Russia since Stalin's time.'' Setting aside past feuds, local democratic groups said Sunday that they would unite in coming elections to the St. Petersburg city council, combining their forces against what they say are criminals who have invaded local politics. At a gathering Sunday night in Moscow, Yegor Gaidar, a former Russian prime minister and a close ally of Mrs. Staravoitova, bitterly rejected suggestions that Russia should adopt extraordinary security measures to stem the rise in political crime. ||||| Hundreds of people gathered Saturday to mourn the shooting death of one of Russia's most prominent women, a potential presidential candidate whose killing was widely considered to be politically motivated. President Boris Yeltsin said he would personally assume control over the investigation into the killing of Galina Starovoitova, who was gunned down Friday night as she climbed the stairs to her apartment. An aide was also shot and critically wounded. The shooting occurred in a building along St. Petersburg's atmospheric Griboedova Canal, site of another notorious Russian crime _ the murder that was the central event in Fyodor Dostoevsky's 19th century masterpiece, ``Crime and Punishment.'' Like that fictional crime, which shone a light on social ferment in the St. Petersburg of its day, the death of Starovoitova was immediately seized upon as a seminal event in the Russia of the late 1990s. ``It is one of the black pages in our modern history,'' Vladimir Putin, director of the Federal Security Service (FSB) told the Interfax news agency. ``It doesn't do much to improve our reputation, the reputation of the country as a whole.'' Starovoitova, 52, was an outspoken deputy in the lower house of parliament who inspired strong feelings from both her friends and enemies. A leader of the liberal Russia's Democratic Choice party, she was planning to run for president in 2000. Those close to her speculated about who might have wanted her dead, with some naming various prominent politicians as potential culprits. ``Whose path did she cross? The answer is simple: communists and gangsters,'' said former Deputy Prime Minister Anatoly Chubais. ``These are the two kinds of people in whose way she was standing.'' Putin, whose agency is in charge of the investigation, cautioned that there was still no evidence that her death was a political assassination. Interior Minister Sergei Stepashin did not speculate about the motive for the crime, but told reporters that it was being investigated under a criminal code section that covers terrorism. Arriving at the St. Petersburg airport from Moscow, he said: ``I brought with me a team of experienced investigators. I think we will clear it up soon.'' Yeltsin sent a telegram to Gennady Seleznyov, chairman of parliament's lower house, the State Duma, promising that the ``contractors and executors of the murder will be found and severely punished,'' The president also sent a telegram to Starovoitova's family, in which he called her ``one of the most vivid figures in Russian politics,'' who ``consistently upheld the lofty ideals of freedom and democracy.'' More than 200 people gathered in St. Petersburg's Palace Square to remember Starovoitova. People hugged quietly as they listened to speeches by her fellow politicians and friends. The small stage was adorned with red roses, yellow carnations and photographs of the deputy with various people, including the late Russian physicist and dissident, Andrei Sakharov. ``We are united today by pain, which is bigger than politics,'' said Viktor Krivulin, a poet and candidate for the regional legislature. ``Politics, as I felt during the past night, has become the art of spitting on the soul.'' Others at the gathering said they were sure that Starovoitova was killed by those who disliked her outspoken views. ``She had too many enemies,'' said Galina Markelova, an aide to the lawmaker. She said Starovoitova had received many threats in the past. ``It was doubtless a political murder,'' added Vitaly Milonov, the chairman of the Young Christian Democrats. Police said two men followed Starovoitova and her aide, Ruslan Linkov, 27, and shot them on the stairs of her building Friday evening. Linkov was shot twice. He regained consciousness after a five-hour operation at the Military Medical Academy, but remained in critical condition in intensive care. A pistol with a silencer and and automatic rifle were found at the scene, ITAR-Tass said. A funeral is scheduled for Tuesday in the settlement of Gorelovo, near St. Petersburg.

Galina Starovoitova, a liberal Russian lawmaker, doctor, mother, grandmother and Presidential hopeful, was mourned as a martyr and buried beside other heroes in St. Petersburg. She had been shot four days earlier by two, still unknown, assailants. Her press aide, also shot, was recovering under heavy guard. The death looked like a contract killing, all too common now in Russia. Yeltsin said he would lead the investigation. Suspects were taken in, but none has been arrested. A champion of democracy, her allies feared she had too many enemies, both Communists and gangsters, and blamed her foes in the Duma. Her death brought outrage in Russia and the world.

A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| In modern Russia, the crime was so common as to be mundane. Two thugs, armed with machine pistols and silencers, stalked and killed a powerful figure, then slipped away into the night. Police vowed to catch them and politicians expressed outrage. Usually, that would be the end of the story. This time, though, the figure shot was one of the most prominent and popular women in Russian politics, a prospective presidential candidate with friends in the highest reaches of the Kremlin. As outrage mounted Sunday, it seemed clear that the killing of Galina Starovoitova was not going to be treated as a routine crime, and some said it might turn out to be a watershed event in Russian politics. ``This is impossible to tolerate any longer,'' said Grigory Yavlinsky, the leader of Yabloko, another reform-oriented party. ``We must stop feeling powerless before the increasingly cheeky scum. We cannot go on living as though everything is running as usual.'' Starovoitova, a member of parliament and a leader of the liberal Russia's Democratic Choice party, was walking up the stairs of her apartment building in St. Petersburg with a young aide Friday evening. A team of assailants _ police believe it was a man and a woman _ appeared behind them and opened fire. Starovoitova, shot three times in the head, collapsed and died instantly, authorities said. The aide, 27-year-old Ruslan Linkov, was critically wounded, but managed to telephone a news agency reporter before losing consciousness. Police have recovered two guns, and are hoping that Linkov can provide a description of the killers. He had regained consciousness but still could not speak Sunday. Although it was still not clear who killed Starovoitova or why, the killing had all the earmarkings of a contract hit _ a remarkably common crime in post-Soviet Russia. Most of the killings involve business deals and the corruption that has swamped the government and the economy. Until now, the most notorious of the killings was that of popular television host Vladislav Litsyev, who was shot outside his Moscow home in 1995. But there have been hundreds of others. St. Petersburg has been especially plagued. Last year, the city's deputy governor was gunned down on a central St. Petersburg street. In the past two months alone, hitmen have claimed the lives of a legislative aide, a high-ranking city official and a prominent banker. So deeply has the toxin infected Russian society that President Boris Yeltsin ordered an investigation last week into reports that his Federal Security Service _ the domestic successor to the KGB _ had ordered the death of Boris Berezovsky, the nation's most prominent businessman and the head of the Commonwealth of Independent States. There is no indication that anyone attempted to carry out an assassination of Berezovsky. But Yeltsin's order was the equivalent of U.S. President Bill Clinton ordering an investigation into whether the FBI was plotting to kill Microsoft chairman Bill Gates. Yet, as remarkable as that news was, it has been vastly overshadowed by the death of Starovoitova. Television news since her death has carried reports of little else. Reaction has poured in from virtually every important figure in the country, and from surrounding nations. Yeltsin, calling her ``my comrade,'' declared that he would personally oversee the investigation into her death. There was, in much of the reaction to Starovoitova's death, the sense that a line had been crossed. Perhaps it was because she was a woman, perhaps because she elicited impassioned support, or perhaps because people are simply fed up. But, in more characteristic fashion, her death also led to a round of political finger-pointing. Colleagues of Starovoitova declared _ without any apparent evidence _ that her Communist foes in the Duma, the lower house of parliament, were the most likely culprits in her death. Historian Dmitry Likachyov, one of the nation's most revered and trusted figures, said her killing seemed to signal the ``outburst of a new Red Terror.'' By late Saturday, the name-calling had gone so far that Interior Minister Sergei Stepashin called a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov went on television to say he was saddened by her death. ``But,'' he added, ``I would not like the deputies who sat on the same bench with Galina Starovoitova in the State Duma ... to turn this into a political show.'' It is too early to know where the recriminations and political maneuvering will lead. For now, the only thing certain is the Starovoitova has become the latest in a long line of Russian martyrs. ||||| The New York Times said in an editorial on Monday, Nov. 23: The Russian reform movement has produced few leaders with an uncompromising dedication to democracy. Galina Starovoitova was one, and her murder in St. Petersburg on Friday was a terrible loss for Russia. In a bleak season of economic collapse and political timidity, the killing can only heighten fears that Russia is slipping into an ugly era of intolerance and political violence. Initial evidence suggests that the killing was a political assassination. Ms. Starovoitova was gunned down in the lobby of her apartment building, shot three times in the head, typical of Russian contract killings. She was a member of the Russian parliament and a recently declared candidate for governor of the region around St. Petersburg. In recent weeks she had spoken out forcefully against political extremism, denounced the anti-Semitic statements of a Communist parliamentarian and was campaigning aggressively against financial corruption in the St. Petersburg municipal government. Ms. Starovoitova's activities were fully in character with a career built around principles of liberty, tolerance and the rule of law. She championed democracy and human rights long before they became politically acceptable in Moscow, and courageously stood by Boris Yeltsin and other reformers as Russia struggled to find a new political course when the Soviet Union disintegrated. An ethnographer by training, Ms. Starovoitova proved to be a skillful and effective politician. She first gained national attention a decade ago when she set aside her academic work about the ethnic history of Leningrad and ran successfully for a seat in the Soviet parliament from Armenia, a startling victory for a Russian. She later represented St. Petersburg in the Russian legislature. Ms. Starovoitova was a woman of irrepressible energy and infectious enthusiasm. But her good humor and quick smile belied a steely commitment to combat the corruption and ethnic divisions that she correctly considered to be the enemies of Russian democracy. The least Yeltsin can do is to hunt down her killers and bring them to trial. That would be the exception in a nation where political violence is rarely prosecuted. Her countrymen can honor her memory by following her example. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, Ruslan Linkov, the Interfax news agency reported. Linkov was seriously injured, it said. The report gave no other details. A police spokesman in St. Petersburg would not comment on the report. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was killed Friday in St. Petersburg, a news report said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked in an apartment building along with her aide, the Interfax news agency reported. It gave no other details. Starovoitova tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. There have been several attacks on prominent figures in St. Petersburg in recent months. ||||| A slain Russian lawmaker was honored Tuesday as a martyr to democratic ideals in a stately funeral service in which anger mingled freely with tears. Afterward, Galina Starovoitova was to be buried alongside some of Russia's greatest national heroes. The stirring tribute to Starovoitova, a feisty liberal whose killing remains a mystery, was indicative of the depth of national feeling over her death. ``To stop us, they want to scare us. They will never succeed,'' former Deputy Prime Minister Anatoly Chubais said at the funeral for Starovoitova. ``We will fulfill the goals she sacrificed her life for.'' Hundreds of people, including many of the country's most prominent political figures, packed the grand Marble Hall of St. Petersburg's Ethnography Museum for the funeral. An open casket, cloaked with black ribbons and flanked by a military honor guard, stood at the head of the hall. At the end of the service, mourners passed grimly past it as classical music played. Outside, several thousand more mourners stood in the cold, waiting for the service to end so they could file in and pay their respects. ``Ordinary people should honor her memory, and make sure this never happens again,'' said one man, Vadim Olshevsky, the manager of a construction company. But, he added bitterly, ``There's little hope of that in our country.'' Among speakers at the service were former Prime Minister Viktor Chernomyrdin and Yuri Yarov, President Boris Yeltsin's first deputy chief of staff, who represented the president at the service. Former Prime Minister Sergei Kiriyenko was also present. Yeltsin, who has said he will personally oversee the investigation into Starovoitova's killing, was in a Moscow hospital, recovering from pneumonia. ``The shooting in St. Petersburg is a grim lesson for the whole of Russia,'' Yarov said. ``Irrespective of real motives for that murder, a crime of this magnitude is a political act, and society should know all the truth about it.'' One national television channel turned over its daylong programming to funeral coverage and a memorial tribute. Newspapers carried page after page of coverage of her death. Her political party, Russia's Democratic Choice, called on all Russians to turn out their lights in her memory for three minutes at 8 p.m. Tuesday. Starovoitova was initially going to be buried in a simple cemetery in the St. Petersburg suburb where her family lives. But as outrage mounted over her killing, the government announced that she would be interred in the Alexander Nevsky Monastery in the city's center following the funeral at the Ethnography Museum. Among those buried at the Alexander Nevsky Monastery are the composers Peter Tchaikovsky and Modest Mussorgsky and the author Fyodor Dostoevsky. Starovoitova was shot to death Friday evening as she and an aide scaled the stairs to her apartment in St. Petersburg. The aide, 27-year-old Ruslan Linkov, was seriously wounded, but has been able to provide some description of the shooting to police. Acting on his information, investigators rounded up several suspects, officials said Monday. But a detective later said that investigators had learned nothing ``serious'' from Linkov, according to the Interfax news agency, and there were no further details about whether the suspects were still in custody. Igor Kozhevnikov, head of investigations for the Interior Ministry, told Interfax on Tuesday that he was confident the case would be solved. ``It will take time,'' he said, but added that investigators ``have tips, they have something to work on.'' Authorities are acting on the assumption that Starovoitova's death was a contract hit, a common event in post-Soviet Russia. Russian politicians and newspapers have speculated wildly about political motives for the killing, but police have said they have no idea why someone would have wanted her dead. Police said someone fired shots at the apartment of a member of the St. Petersburg legislature Monday night, Interfax said. No one was hurt. It was not clear whether the shooting was related to Starovoitova's death. ||||| A badly wounded aide to a murdered lawmaker regained consciousness Monday and was talking to police, who later arrested several suspects in raids around the city, officials said. Galina Starovoitova, 52, a leader of the liberal Russia's Democratic Choice party, was shot dead by unidentified assailants on the stairs of her apartment building in St. Petersburg on Friday night. The killing of such a prominent politician has caused an uproar in Russia and prompted calls from all sides for a crackdown on the country's growing lawlessness. Scores of business leaders and others have been gunned down in recent years in contract killings that are almost never solved. The lawmaker's aide, 27-year-old Ruslan Linkov, was in a ``clear'' mind Monday, testifying to investigators, the ITAR-Tass news agency reported. Special police armed with assault rifles were standing guard at the door of his hospital room. Acting on information from the aide, police carried out raids and rounded up several suspects, officials said. There were no further details. Linkov was critically wounded in the head during the attack and later rushed to a hospital where he underwent surgery during the weekend. Liberal leaders charged _ without any concrete evidence _ that Starovoitova's Communist foes in the Duma, the lower house of parliament, were the most likely culprits. Over the weekend, Interior Minister Sergei Stepashin even had to call a news conference to say there was no evidence that the Communist speaker of the Duma, Gennady Seleznyov, was involved in the killing. Seleznyov responded in kind on Monday, suggesting that the ``extremists from democratic organizations'' might have staged the murder in order to win local elections set for Dec. 6, the Interfax news agency reported. The speaker also threatened to file a libel suit against a St. Petersburg newspaper, which Starovoitova edited. The newspaper recently accused Seleznyov of setting up an illegal fund to finance a presidential bid and other shady activities. Seleznyov, who has said he might run for president in 2000, denied the newspaper's allegations on Friday, calling them an ``outright slander.'' Starovoitova's murder had all the traits of a contract murder, an increasingly common crime in Russia. Communist leader Gennady Zyuganov on Monday used Starovoitova's killing as an occasion to lambast the government for its inability to contain soaring crime. ``That's a result of the (government's) catastrophic policy aimed at the destruction of the state and the nation,'' he said. Starovoitova, of the reformist party Democratic Russia, tried to run for president in 1996 but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues in 1991-92 _ the only woman in his immediate circle _ and later joined the Russian parliament as one of the most vocal defenders of liberal reforms. Yeltsin called Starovoitova a ``comrade'' and said he would personally monitor the investigation into her killing. Starovoitova remarried earlier this year and had one son and a grandson. She is scheduled to be buried on Tuesday at the Nikolskoye cemetery in St. Petersburg. ||||| A liberal lawmaker who planned to run for president in Russia's next elections was shot to death Friday in St. Petersburg, police said. Galina Starovoitova, a member of the lower house of Russia's parliament from the reformist party Democratic Russia, was attacked the entry way of an apartment building, police said. A neighbor found the body in a pool of blood late Friday night and called an ambulance, they said. The Interfax news agency said her aide, Ruslan Linkov, was also seriously injured. Starovoitova, 52, tried to run for president in the 1996 elections but her registration was turned down for technical reasons. She had said she would run again in 2000. She served as President Boris Yeltsin's aide on ethnic issues and was on the human rights committee of the USSR's Supreme Soviet. Born in the Ural Mountains city of Chelyabinsk, Starovoitova was trained as a psychologist and later received a doctorate in history. She was divorced and had one son, according to Who's Who in Russia. There have been several attacks on prominent figures in St. Petersburg recently. A finance official was attacked earlier this week, a top banker was killed last week, and an aide to Russia's parliament speaker was shot in the head last month. ||||| Mourners bearing flowers and candles gathered Sunday outside the house on Griboyedova Canal where a Russian legislator, Galina Staravoitova, was shot to death on Friday night. A key witness, Ruslan Linkov, 27, Mrs. Staravoitova's press aide, was reported to be regaining consciousness in a heavily guarded hospital ward where he was taken with gunshot wounds to the head and neck. The police say the two were attacked in the stairwell of Mrs. Staravoitova's building by two assailants, one of them a young woman. The attackers reportedly fled through a back entrance to a waiting car. Two guns were found at the scene. Friends and relatives say Mrs. Staravoitova, a founder of Russia's democratic movement, had received death threats, but the motive for the killing remains unclear. ``The choice of the target suggests a well-thought out plan,'' said Sergei Kozyrev, vice president of the Russian Association of Scientific Societies and a Staravoitova supporter. ``To kill a woman _ a woman in politics _ that has not happened in Russia since Stalin's time.'' Setting aside past feuds, local democratic groups said Sunday that they would unite in coming elections to the St. Petersburg city council, combining their forces against what they say are criminals who have invaded local politics. At a gathering Sunday night in Moscow, Yegor Gaidar, a former Russian prime minister and a close ally of Mrs. Staravoitova, bitterly rejected suggestions that Russia should adopt extraordinary security measures to stem the rise in political crime. ||||| Hundreds of people gathered Saturday to mourn the shooting death of one of Russia's most prominent women, a potential presidential candidate whose killing was widely considered to be politically motivated. President Boris Yeltsin said he would personally assume control over the investigation into the killing of Galina Starovoitova, who was gunned down Friday night as she climbed the stairs to her apartment. An aide was also shot and critically wounded. The shooting occurred in a building along St. Petersburg's atmospheric Griboedova Canal, site of another notorious Russian crime _ the murder that was the central event in Fyodor Dostoevsky's 19th century masterpiece, ``Crime and Punishment.'' Like that fictional crime, which shone a light on social ferment in the St. Petersburg of its day, the death of Starovoitova was immediately seized upon as a seminal event in the Russia of the late 1990s. ``It is one of the black pages in our modern history,'' Vladimir Putin, director of the Federal Security Service (FSB) told the Interfax news agency. ``It doesn't do much to improve our reputation, the reputation of the country as a whole.'' Starovoitova, 52, was an outspoken deputy in the lower house of parliament who inspired strong feelings from both her friends and enemies. A leader of the liberal Russia's Democratic Choice party, she was planning to run for president in 2000. Those close to her speculated about who might have wanted her dead, with some naming various prominent politicians as potential culprits. ``Whose path did she cross? The answer is simple: communists and gangsters,'' said former Deputy Prime Minister Anatoly Chubais. ``These are the two kinds of people in whose way she was standing.'' Putin, whose agency is in charge of the investigation, cautioned that there was still no evidence that her death was a political assassination. Interior Minister Sergei Stepashin did not speculate about the motive for the crime, but told reporters that it was being investigated under a criminal code section that covers terrorism. Arriving at the St. Petersburg airport from Moscow, he said: ``I brought with me a team of experienced investigators. I think we will clear it up soon.'' Yeltsin sent a telegram to Gennady Seleznyov, chairman of parliament's lower house, the State Duma, promising that the ``contractors and executors of the murder will be found and severely punished,'' The president also sent a telegram to Starovoitova's family, in which he called her ``one of the most vivid figures in Russian politics,'' who ``consistently upheld the lofty ideals of freedom and democracy.'' More than 200 people gathered in St. Petersburg's Palace Square to remember Starovoitova. People hugged quietly as they listened to speeches by her fellow politicians and friends. The small stage was adorned with red roses, yellow carnations and photographs of the deputy with various people, including the late Russian physicist and dissident, Andrei Sakharov. ``We are united today by pain, which is bigger than politics,'' said Viktor Krivulin, a poet and candidate for the regional legislature. ``Politics, as I felt during the past night, has become the art of spitting on the soul.'' Others at the gathering said they were sure that Starovoitova was killed by those who disliked her outspoken views. ``She had too many enemies,'' said Galina Markelova, an aide to the lawmaker. She said Starovoitova had received many threats in the past. ``It was doubtless a political murder,'' added Vitaly Milonov, the chairman of the Young Christian Democrats. Police said two men followed Starovoitova and her aide, Ruslan Linkov, 27, and shot them on the stairs of her building Friday evening. Linkov was shot twice. He regained consciousness after a five-hour operation at the Military Medical Academy, but remained in critical condition in intensive care. A pistol with a silencer and and automatic rifle were found at the scene, ITAR-Tass said. A funeral is scheduled for Tuesday in the settlement of Gorelovo, near St. Petersburg.

Galina Starovoitova, a leader of the reformist Russian's Democratic Choice party and a member of the Duma, was killed and an aide, Ruslan Linkov, wounded in an attack in St. Petersburg. Several suspects were arrested; however, the murder is still unsolved. Ms. Starovoitova, a Yeltsin ally and a champion of democracy, had said that she would run for president in 2000. The crime appears to have been a contract killing, the latest of many in St. Petersburg. Anatoly Chubais and other supporters have charged the Communists were behind the attack, but without evidence. Former Russian prime ministers as well as commoners attended Ms. Starovoitova's funeral.

Doctors ordered Russian President Boris Yeltsin to cut short his Central Asian trip because of a respiratory infection and he agreed to return home Monday, a day earlier than planned, officials said. Yeltsin was suffering from tracheobronchitis, had a fever of 37.4 Celsius (99.3 Fahrenheit) and was being treated with antibiotics, the president's doctors told the Interfax news agency. Yeltsin was to fly back to Moscow late Monday, rather than on Tuesday as scheduled, but was going ahead with talks, including a meeting with Kazak President Nursultan Nazarbayev. He planned to move up all his scheduled meetings before returning home, aides said. The 67-year-old, 3rd graf pvs ||||| President Boris Yeltsin stayed home Tuesday, nursing a respiratory infection that forced him to cut short a foreign trip and revived concerns about his ability to govern. Yeltsin was spending the day at his Gorky-9 country residence just outside Moscow, and will probably not go into the office all week, his spokesman, Dmitry Yakushkin, told reporters. However, Yeltsin's condition was stable, Yakushkin said. Doctors insisted Monday that Yeltsin fly home from Central Asia a day ahead of schedule because he was suffering from an upper respiratory infection and had a mild fever of 37.4 Celsius (99.3 F). They said Yeltsin was being treated with antibiotics and there were no plans to hospitalize him. Yeltsin, 67, has a history of health problems, including quintuple heart bypass surgery two years ago, so whenever he gets sick there is a flurry of speculation about his ability to function. Yeltsin insists he has no major illness and plans to serve out the remaining two years of his term. Yakushkin, his spokesman, reiterated Tuesday there was no talk about an early resignation. ``It's not being discussed,'' he said. ``I am personally against such a resignation because I think it would only bring peril to the nation.'' Yakushkin and other aides sought to play down the seriousness of Yeltsin's illness. ``Don't panic, Dad is OK,'' Yeltsin's daughter Tatiana Dyachenko, who is his official image adviser, told the Kommersant business newspaper. Yakushkin said Yeltsin's personal doctor, Sergei Mironov, confirmed that the president was suffering from a respiratory infection known as tracheal bronchitis and that ``his condition is stable.'' ``He must stay in bed like any other person,'' Yakushkin said. ``However, knowing the president's character, he is certain to start working with documents and making phone calls to Russian politicians as well as foreign leaders in view of the current situation in Kosovo.'' But the Nezavisimaya Gazeta newspaper said in a front-page editorial Tuesday that Yeltsin's condition suggests he is suffering from something worse than a cold. It said his absence from the Kremlin during the current economic crisis ``amounts to a state catastrophe'' and called on Yeltsin to immediately surrender most of his powers to Prime Minister Yevgeny Primakov. A Communist lawmaker also called for ``an urgent medical check ... on the Russian president's health'' to determine whether he is fit to remain in office, the Interfax news agency said. ``Yeltsin's obvious inability to perform his functions is damaging Russian state authority, as power is being misused by the clique close to the president,'' said Viktor Ilyukhin, chairman of parliament's security committee. The health of the president, who is also commander-in-chief of the Russian military, ``is a direct threat to the country's national security and a factor of serious concern regarding Russia's nuclear weapons,'' he said. Other newspapers gave a detailed description of Yeltsin's weaknesses and his erratic behavior on the trip to the former Soviet republics of Uzbekistan and Kazakstan _ his first foray abroad since a visit to Britain in May. The president appeared stiff and stumbled when he arrived Sunday in Uzbekistan's capital of Tashkent. He had to be supported by Uzbek President Islam Karimov and canceled his other public events. At a state dinner on Sunday, Yeltsin made rambling remarks, expressing his satisfaction with local ``facilities and stores'' he never inspected, the daily Kommersant reported. On Monday, ``the president didn't seem to understand that he wasn't in Moscow,'' Kommersant said, saying he called aides and spoke as though they were late for work at the Kremlin. He turned up more than an hour late for talks with Uzbek officials, making some incoherent remarks interrupted by a bad cough and abruptly cutting short a scheduled news conference. ||||| Russian President Boris Yeltsin, who is still recuperating from his latest illness, has canceled a trip to an Asian summit next month, his office said Friday. Government sources said the president has also called off a visit to Austria later this month, but the Kremlin said those plans were still going forward. Yeltsin has decided to send Prime Minister Yevgeny Primakov to the November summit of the Asia-Pacific Economic Forum in Kuala Lumpur because it deals mostly with financial issues, Yeltsin's office said. But sources in Primakov's office said the cancellation was due to concerns about how the long flight might effect the president's health. The president has been suffering from bronchitis and a cold this week, which forced him to cut short a visit to Central Asia on Monday. He was spending Friday at a country home outside Moscow after defying the orders of his doctors and working in the Kremlin for the past two days. Aides said the president's condition was ``satisfactory.'' Yeltsin is still planning to go to Vienna for an Oct. 27-28 summit of European nations, the president's office said. In another development, Moscow Mayor Yuri Luzhkov, considered a potential presidential candidate, said Thursday that he wouldn't exclude the possibility of Yeltsin's resignation for health reasons. In an interview with the British Broadcasting Corp., he stopped short of calling on Yeltsin to step down. But Luzhkov has always been supportive of Yeltsin and had never before questioned the president's health or ability to govern. ``According to our constitution, the president himself has to say he is not able to work,'' Luzhkov said in an interview with the BBC in Moscow. ``And because of (Yeltsin's) poor health, he is no longer able to give the country as much time as it demands.'' Luzhkov's spokesman Mikhail Solomentsev refused to elaborate on the statement. Yeltsin has a long history of health problems, including a heart bypass surgery two years ago. Each new ailment rekindles speculation about his fitness to govern. The president and his doctors say Yeltsin has no serious health problems and will serve out the final two years of his term. ||||| President Boris Yeltsin's doctors have pronounced his health ``more or less normal,'' his wife Naina said in an interview published Wednesday. Mrs. Yeltsin told the Argumenty i Fakty weekly that she hesitated even to touch on her husband's health ``when there is so much conjecture on this topic.'' Still, she noted that he had regular medical check-ups. ``The doctors say now: Everything is more or less normal,'' Mrs. Yeltsin declared. The 67-year-old Yeltsin's health has long been a concern, and the worry has been amplified by the secrecy surrounding his condition. Yeltsin suffered from heart disease during the 1996 presidential election and had a heart attack, followed by multiple bypass surgery, in the months after his victory. Mrs. Yeltsin expressed understanding for Russians who took part Wednesday in protests for unpaid wages. She also said that criticism of the president was normal, though it was offensive when it focused on anything other than his professional performance, such as his age. ``It seems to me ... that people expected a miracle from him,'' Mrs. Yeltsin said. ``But surely you can't curse a person for not being a magician.'' Mrs. Yeltsin refuted rumors that her family would leave Russia after Yeltsin leaves office in 2000 as ``absolute nonsense.'' ``I think we'll live like all normal people. At least it will be calmer than it is now.'' ||||| President Boris Yeltsin has suffered minor burns on his right hand, his press office said Thursday. Asked about small bandages that were visible on Yeltsin's hand during an awards ceremony, the press office said the president had sustained small burns. It did not say what had caused them. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to the Interfax news agency. ||||| Weakened by a cold yet animated, President Boris Yeltsin defied doctors' orders and quashed rumors he is seriously ill by showing up unexpectedly at the Kremlin on Wednesday. Still, his appearance didn't silence the growing number of calls for his resignation. Hours after he returned to work, the generally pro-Yeltsin upper house of parliament fell just 11 votes short of passing a motion urging him to step down over his social welfare policies. Yeltsin, 67, has a respiratory infection that forced him to cut short his first foreign visit in months on Monday. Whenever Yeltsin falls ill, speculation arises about his ability to govern. This time, however, the prospect of him leaving office has aroused less panic, since he has largely faded from the limelight in recent months and left his government to grapple with Russia's economic crisis. ``There will be no turmoil if Yeltsin leaves the political arena. The government is already in charge, (Prime Minister Yevgeny) Primakov is strong enough and has the support of the security services,'' said Yevgeny Volk, director of the Moscow office of the U.S.-based Heritage Foundation. ``Everyone knows Yeltsin is ailing and is politically weakened,'' he said. Yeltsin has a history of health problems, and underwent heart bypass surgery in 1996. Still, he insists he has no major illnesses and plans to serve out the remaining two years of his term. ``I can't even sneeze'' without someone making a fuss about it, he joked with Primakov during a meeting Wednesday. In the Kremlin, Yeltsin discussed developments in Kosovo with Primakov, Foreign Minister Igor Ivanov and Defense Minister Igor Sergeyev, Russian news agencies said. Yeltsin looked wan and tired and walked stiffly, but he was smiling, gesturing animatedly and joking with his ministers. The start of the meeting was shown on Russian television. Primakov said afterward that Yeltsin waved his hand dismissively ``when we reminded him that he should stay in bed during his illness'' and said of his doctors: ``Don't listen to them.'' The upper house of parliament was busy voting on a motion saying he should resign. The vote in the Federation Council, which is made up of regional leaders, was 79 to 18 in favor, Russian news agencies reported. It did not pass because it required a simple majority of 90 votes. The motion carries no legal weight, but it reflects growing anti-Yeltsin sentiment in a chamber that has generally supported him. The prime minister reiterated Wednesday that Yeltsin has no plans to resign or call early elections. ``There is no reason for rocking the boat and demanding anyone's resignation,'' Primakov said, according to the Interfax news agency. ``What happens to the anti-crisis steps if elections are held now?'' Yeltsin's resignation is highly unlikely. If he were to step down or die, Primakov would take power and elections would have to be held within three months. Many Russians view Yeltsin with increasing pity. ``I feel for him. He's clearly not a healthy person,'' film director Vladimir Khotinenko was quoted as saying by the daily Kommersant. ``It's time for him to step aside.'' Doctors ordered the president to stay in bed Tuesday and his spokesman, Dmitry Yakushkin, had said Yeltsin would not be in the office all week. Yeltsin stumbled and had to be supported during his visit to Central Asia on Sunday and Monday. He canceled most of his public engagements, except for a state dinner at which he made rambling remarks and a news conference that he abruptly cut short. ||||| President Boris Yeltsin, on his first trip out of Russia since this spring, canceled a welcoming ceremony in Uzbekistan on Sunday because he wasn't feeling well, his spokesman said. Yeltsin appeared stiff and stumbled during another public ceremony after he arrived in Tashkent, the capital of this Central Asian nation, and had to be supported by Uzbek President Islam Karimov. But the two later held a one-on-one summit as scheduled. The trip is Yeltsin's first high-profile foray since an economic crisis swamped his country in August. The 67-year-old president, whose health has often sidelined him during his seven years in power, has spent most of the last two months out of the limelight and out of the Kremlin, holding meetings in his country home outside Moscow. His last foreign trip was to Britain in May, when he attended a summit of the Group of Seven leading industrial nations. During his visits to Uzbekistan and Kazakstan this week, Yeltsin is expected to discuss improving Russia's relations with the two former Soviet republics, whose economies have suffered residual effects of the crisis that hit Russia after it devalued its currency in August and defaulted on some of its debt. On Sunday, Yeltsin had been scheduled to lay wreaths at a monument to Alisher Naboi, an 16th century Uzbek poet, and salute an Uzbek honor guard, but both ceremonies were canceled. ``This week was extremely tense. (Yeltsin) was affected by a difficult flight and the end of a difficult week,'' Yeltsin's chief spokesman, Dmitry Yakushkin, told a news conference. ``He has a cold. He was coughing when we spoke.'' It was sunny and about 14 degrees C (57 degrees F) in Tashkent on Sunday. Yakushkin said Yeltsin's schedule Monday may also change depending on how he feels. Yeltsin and Karimov later met at a government residence outside Tashkent and signed several agreements on fighting smuggling and other crime and expanding cultural ties. The two sides are expected to sign economic agreements Monday. Later Monday, Yeltsin is to go to Kazakstan, where he and Kazak President Nursultan Nazarbayev are expected to sign agreements on economic, science and technical cooperation and on combating drug trafficking. Last week, Yeltsin said he also planned to discuss the situation in Afghanistan with his Uzbek and Kazak counterparts. Russia and the two republics fear an influx of refugees and weapons from Afghanistan, and possibly a spillover of fighting that has wracked the country. Yeltsin was accompanied by Foreign Minister Igor Ivanov, Defense Minister Igor Sergeyev, Finance Minister Mikhail Zadornov, officials from the Federal Border Guard Service, the State Customs Committee, the Defense Ministry, and the Russian Academy of Sciences. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The court will take at least a week to consider the issue, the Interfax news agency reported. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to Interfax. ||||| Russian President Boris Yeltsin cut short a trip to Central Asia on Monday due to a respiratory infection that revived questions about his overall health and ability to lead Russia through a sustained economic crisis. Yeltsin's premature return to Moscow also prompted doubts about his capacity to respond decisively in the Kosovo crisis, in which Russia has been leading a campaign to forestall airstrikes. Moscow's NTV station said it was a crucial time for Russia, when ``presidential decisions'' are needed. There was no indication that Yeltsin's illness would sideline him for any length of time, and aides said the president would maintain his schedule for the rest of the week. But after a series of health problems in recent years, including heart bypass surgery in 1996, every new ailment unleashes a flurry of speculation about the president's ability to function. The president insists he has no major health problems and will serve out the remaining two years of his term. Yeltsin's aides said the president was taking antibiotics to ward off a bout of bronchitis and a mild fever of 37.4 Celsius (99.3 Fahrenheit). There were no plans to hospitalize Yeltsin, who arrived in Moscow late Monday night from Almaty, Kazakstan, a day earlier than planned.

Concern over the health of President Boris Yeltsin has led many Russians to question his ability to govern. He has had multiple bypass surgery and is susceptible to respiratory ailments. Periods of illness have caused him to cancel foreign trips and on some travels, he was unable to attend all official functions. He is politically weakened, leaving others to grapple with Russia's economic crisis. Russia's constitutional court was to hold hearings on whether Yeltsin could seek a third term under their two term limitations since part of his first term was under the Soviet constitution. That appears to be moot point since he has said he will not run again.

Doctors ordered Russian President Boris Yeltsin to cut short his Central Asian trip because of a respiratory infection and he agreed to return home Monday, a day earlier than planned, officials said. Yeltsin was suffering from tracheobronchitis, had a fever of 37.4 Celsius (99.3 Fahrenheit) and was being treated with antibiotics, the president's doctors told the Interfax news agency. Yeltsin was to fly back to Moscow late Monday, rather than on Tuesday as scheduled, but was going ahead with talks, including a meeting with Kazak President Nursultan Nazarbayev. He planned to move up all his scheduled meetings before returning home, aides said. The 67-year-old, 3rd graf pvs ||||| President Boris Yeltsin stayed home Tuesday, nursing a respiratory infection that forced him to cut short a foreign trip and revived concerns about his ability to govern. Yeltsin was spending the day at his Gorky-9 country residence just outside Moscow, and will probably not go into the office all week, his spokesman, Dmitry Yakushkin, told reporters. However, Yeltsin's condition was stable, Yakushkin said. Doctors insisted Monday that Yeltsin fly home from Central Asia a day ahead of schedule because he was suffering from an upper respiratory infection and had a mild fever of 37.4 Celsius (99.3 F). They said Yeltsin was being treated with antibiotics and there were no plans to hospitalize him. Yeltsin, 67, has a history of health problems, including quintuple heart bypass surgery two years ago, so whenever he gets sick there is a flurry of speculation about his ability to function. Yeltsin insists he has no major illness and plans to serve out the remaining two years of his term. Yakushkin, his spokesman, reiterated Tuesday there was no talk about an early resignation. ``It's not being discussed,'' he said. ``I am personally against such a resignation because I think it would only bring peril to the nation.'' Yakushkin and other aides sought to play down the seriousness of Yeltsin's illness. ``Don't panic, Dad is OK,'' Yeltsin's daughter Tatiana Dyachenko, who is his official image adviser, told the Kommersant business newspaper. Yakushkin said Yeltsin's personal doctor, Sergei Mironov, confirmed that the president was suffering from a respiratory infection known as tracheal bronchitis and that ``his condition is stable.'' ``He must stay in bed like any other person,'' Yakushkin said. ``However, knowing the president's character, he is certain to start working with documents and making phone calls to Russian politicians as well as foreign leaders in view of the current situation in Kosovo.'' But the Nezavisimaya Gazeta newspaper said in a front-page editorial Tuesday that Yeltsin's condition suggests he is suffering from something worse than a cold. It said his absence from the Kremlin during the current economic crisis ``amounts to a state catastrophe'' and called on Yeltsin to immediately surrender most of his powers to Prime Minister Yevgeny Primakov. A Communist lawmaker also called for ``an urgent medical check ... on the Russian president's health'' to determine whether he is fit to remain in office, the Interfax news agency said. ``Yeltsin's obvious inability to perform his functions is damaging Russian state authority, as power is being misused by the clique close to the president,'' said Viktor Ilyukhin, chairman of parliament's security committee. The health of the president, who is also commander-in-chief of the Russian military, ``is a direct threat to the country's national security and a factor of serious concern regarding Russia's nuclear weapons,'' he said. Other newspapers gave a detailed description of Yeltsin's weaknesses and his erratic behavior on the trip to the former Soviet republics of Uzbekistan and Kazakstan _ his first foray abroad since a visit to Britain in May. The president appeared stiff and stumbled when he arrived Sunday in Uzbekistan's capital of Tashkent. He had to be supported by Uzbek President Islam Karimov and canceled his other public events. At a state dinner on Sunday, Yeltsin made rambling remarks, expressing his satisfaction with local ``facilities and stores'' he never inspected, the daily Kommersant reported. On Monday, ``the president didn't seem to understand that he wasn't in Moscow,'' Kommersant said, saying he called aides and spoke as though they were late for work at the Kremlin. He turned up more than an hour late for talks with Uzbek officials, making some incoherent remarks interrupted by a bad cough and abruptly cutting short a scheduled news conference. ||||| Russian President Boris Yeltsin, who is still recuperating from his latest illness, has canceled a trip to an Asian summit next month, his office said Friday. Government sources said the president has also called off a visit to Austria later this month, but the Kremlin said those plans were still going forward. Yeltsin has decided to send Prime Minister Yevgeny Primakov to the November summit of the Asia-Pacific Economic Forum in Kuala Lumpur because it deals mostly with financial issues, Yeltsin's office said. But sources in Primakov's office said the cancellation was due to concerns about how the long flight might effect the president's health. The president has been suffering from bronchitis and a cold this week, which forced him to cut short a visit to Central Asia on Monday. He was spending Friday at a country home outside Moscow after defying the orders of his doctors and working in the Kremlin for the past two days. Aides said the president's condition was ``satisfactory.'' Yeltsin is still planning to go to Vienna for an Oct. 27-28 summit of European nations, the president's office said. In another development, Moscow Mayor Yuri Luzhkov, considered a potential presidential candidate, said Thursday that he wouldn't exclude the possibility of Yeltsin's resignation for health reasons. In an interview with the British Broadcasting Corp., he stopped short of calling on Yeltsin to step down. But Luzhkov has always been supportive of Yeltsin and had never before questioned the president's health or ability to govern. ``According to our constitution, the president himself has to say he is not able to work,'' Luzhkov said in an interview with the BBC in Moscow. ``And because of (Yeltsin's) poor health, he is no longer able to give the country as much time as it demands.'' Luzhkov's spokesman Mikhail Solomentsev refused to elaborate on the statement. Yeltsin has a long history of health problems, including a heart bypass surgery two years ago. Each new ailment rekindles speculation about his fitness to govern. The president and his doctors say Yeltsin has no serious health problems and will serve out the final two years of his term. ||||| President Boris Yeltsin's doctors have pronounced his health ``more or less normal,'' his wife Naina said in an interview published Wednesday. Mrs. Yeltsin told the Argumenty i Fakty weekly that she hesitated even to touch on her husband's health ``when there is so much conjecture on this topic.'' Still, she noted that he had regular medical check-ups. ``The doctors say now: Everything is more or less normal,'' Mrs. Yeltsin declared. The 67-year-old Yeltsin's health has long been a concern, and the worry has been amplified by the secrecy surrounding his condition. Yeltsin suffered from heart disease during the 1996 presidential election and had a heart attack, followed by multiple bypass surgery, in the months after his victory. Mrs. Yeltsin expressed understanding for Russians who took part Wednesday in protests for unpaid wages. She also said that criticism of the president was normal, though it was offensive when it focused on anything other than his professional performance, such as his age. ``It seems to me ... that people expected a miracle from him,'' Mrs. Yeltsin said. ``But surely you can't curse a person for not being a magician.'' Mrs. Yeltsin refuted rumors that her family would leave Russia after Yeltsin leaves office in 2000 as ``absolute nonsense.'' ``I think we'll live like all normal people. At least it will be calmer than it is now.'' ||||| President Boris Yeltsin has suffered minor burns on his right hand, his press office said Thursday. Asked about small bandages that were visible on Yeltsin's hand during an awards ceremony, the press office said the president had sustained small burns. It did not say what had caused them. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to the Interfax news agency. ||||| Weakened by a cold yet animated, President Boris Yeltsin defied doctors' orders and quashed rumors he is seriously ill by showing up unexpectedly at the Kremlin on Wednesday. Still, his appearance didn't silence the growing number of calls for his resignation. Hours after he returned to work, the generally pro-Yeltsin upper house of parliament fell just 11 votes short of passing a motion urging him to step down over his social welfare policies. Yeltsin, 67, has a respiratory infection that forced him to cut short his first foreign visit in months on Monday. Whenever Yeltsin falls ill, speculation arises about his ability to govern. This time, however, the prospect of him leaving office has aroused less panic, since he has largely faded from the limelight in recent months and left his government to grapple with Russia's economic crisis. ``There will be no turmoil if Yeltsin leaves the political arena. The government is already in charge, (Prime Minister Yevgeny) Primakov is strong enough and has the support of the security services,'' said Yevgeny Volk, director of the Moscow office of the U.S.-based Heritage Foundation. ``Everyone knows Yeltsin is ailing and is politically weakened,'' he said. Yeltsin has a history of health problems, and underwent heart bypass surgery in 1996. Still, he insists he has no major illnesses and plans to serve out the remaining two years of his term. ``I can't even sneeze'' without someone making a fuss about it, he joked with Primakov during a meeting Wednesday. In the Kremlin, Yeltsin discussed developments in Kosovo with Primakov, Foreign Minister Igor Ivanov and Defense Minister Igor Sergeyev, Russian news agencies said. Yeltsin looked wan and tired and walked stiffly, but he was smiling, gesturing animatedly and joking with his ministers. The start of the meeting was shown on Russian television. Primakov said afterward that Yeltsin waved his hand dismissively ``when we reminded him that he should stay in bed during his illness'' and said of his doctors: ``Don't listen to them.'' The upper house of parliament was busy voting on a motion saying he should resign. The vote in the Federation Council, which is made up of regional leaders, was 79 to 18 in favor, Russian news agencies reported. It did not pass because it required a simple majority of 90 votes. The motion carries no legal weight, but it reflects growing anti-Yeltsin sentiment in a chamber that has generally supported him. The prime minister reiterated Wednesday that Yeltsin has no plans to resign or call early elections. ``There is no reason for rocking the boat and demanding anyone's resignation,'' Primakov said, according to the Interfax news agency. ``What happens to the anti-crisis steps if elections are held now?'' Yeltsin's resignation is highly unlikely. If he were to step down or die, Primakov would take power and elections would have to be held within three months. Many Russians view Yeltsin with increasing pity. ``I feel for him. He's clearly not a healthy person,'' film director Vladimir Khotinenko was quoted as saying by the daily Kommersant. ``It's time for him to step aside.'' Doctors ordered the president to stay in bed Tuesday and his spokesman, Dmitry Yakushkin, had said Yeltsin would not be in the office all week. Yeltsin stumbled and had to be supported during his visit to Central Asia on Sunday and Monday. He canceled most of his public engagements, except for a state dinner at which he made rambling remarks and a news conference that he abruptly cut short. ||||| President Boris Yeltsin, on his first trip out of Russia since this spring, canceled a welcoming ceremony in Uzbekistan on Sunday because he wasn't feeling well, his spokesman said. Yeltsin appeared stiff and stumbled during another public ceremony after he arrived in Tashkent, the capital of this Central Asian nation, and had to be supported by Uzbek President Islam Karimov. But the two later held a one-on-one summit as scheduled. The trip is Yeltsin's first high-profile foray since an economic crisis swamped his country in August. The 67-year-old president, whose health has often sidelined him during his seven years in power, has spent most of the last two months out of the limelight and out of the Kremlin, holding meetings in his country home outside Moscow. His last foreign trip was to Britain in May, when he attended a summit of the Group of Seven leading industrial nations. During his visits to Uzbekistan and Kazakstan this week, Yeltsin is expected to discuss improving Russia's relations with the two former Soviet republics, whose economies have suffered residual effects of the crisis that hit Russia after it devalued its currency in August and defaulted on some of its debt. On Sunday, Yeltsin had been scheduled to lay wreaths at a monument to Alisher Naboi, an 16th century Uzbek poet, and salute an Uzbek honor guard, but both ceremonies were canceled. ``This week was extremely tense. (Yeltsin) was affected by a difficult flight and the end of a difficult week,'' Yeltsin's chief spokesman, Dmitry Yakushkin, told a news conference. ``He has a cold. He was coughing when we spoke.'' It was sunny and about 14 degrees C (57 degrees F) in Tashkent on Sunday. Yakushkin said Yeltsin's schedule Monday may also change depending on how he feels. Yeltsin and Karimov later met at a government residence outside Tashkent and signed several agreements on fighting smuggling and other crime and expanding cultural ties. The two sides are expected to sign economic agreements Monday. Later Monday, Yeltsin is to go to Kazakstan, where he and Kazak President Nursultan Nazarbayev are expected to sign agreements on economic, science and technical cooperation and on combating drug trafficking. Last week, Yeltsin said he also planned to discuss the situation in Afghanistan with his Uzbek and Kazak counterparts. Russia and the two republics fear an influx of refugees and weapons from Afghanistan, and possibly a spillover of fighting that has wracked the country. Yeltsin was accompanied by Foreign Minister Igor Ivanov, Defense Minister Igor Sergeyev, Finance Minister Mikhail Zadornov, officials from the Federal Border Guard Service, the State Customs Committee, the Defense Ministry, and the Russian Academy of Sciences. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The court will take at least a week to consider the issue, the Interfax news agency reported. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to Interfax. ||||| Russian President Boris Yeltsin cut short a trip to Central Asia on Monday due to a respiratory infection that revived questions about his overall health and ability to lead Russia through a sustained economic crisis. Yeltsin's premature return to Moscow also prompted doubts about his capacity to respond decisively in the Kosovo crisis, in which Russia has been leading a campaign to forestall airstrikes. Moscow's NTV station said it was a crucial time for Russia, when ``presidential decisions'' are needed. There was no indication that Yeltsin's illness would sideline him for any length of time, and aides said the president would maintain his schedule for the rest of the week. But after a series of health problems in recent years, including heart bypass surgery in 1996, every new ailment unleashes a flurry of speculation about the president's ability to function. The president insists he has no major health problems and will serve out the remaining two years of his term. Yeltsin's aides said the president was taking antibiotics to ward off a bout of bronchitis and a mild fever of 37.4 Celsius (99.3 Fahrenheit). There were no plans to hospitalize Yeltsin, who arrived in Moscow late Monday night from Almaty, Kazakstan, a day earlier than planned.

President Boris Yeltsin's health has become a matter of great concern to the Russian leadership. The concern began in 1996 when he had a heart attack followed by bypass surgery. Illness has often sidelined him during his seven years in power. He recently cut short a trip to Central Asia because of a respiratory infection and he later canceled two out-of-country summits. This revived questions about his ability to lead Russia through any crisis. Yeltsin refuses to admit he is seriously ill and his condition is kept secret, even the cause for burns on his hands. Russia's leaders are calling for his resignation and question his legal right to seek reelection.

Doctors ordered Russian President Boris Yeltsin to cut short his Central Asian trip because of a respiratory infection and he agreed to return home Monday, a day earlier than planned, officials said. Yeltsin was suffering from tracheobronchitis, had a fever of 37.4 Celsius (99.3 Fahrenheit) and was being treated with antibiotics, the president's doctors told the Interfax news agency. Yeltsin was to fly back to Moscow late Monday, rather than on Tuesday as scheduled, but was going ahead with talks, including a meeting with Kazak President Nursultan Nazarbayev. He planned to move up all his scheduled meetings before returning home, aides said. The 67-year-old, 3rd graf pvs ||||| President Boris Yeltsin stayed home Tuesday, nursing a respiratory infection that forced him to cut short a foreign trip and revived concerns about his ability to govern. Yeltsin was spending the day at his Gorky-9 country residence just outside Moscow, and will probably not go into the office all week, his spokesman, Dmitry Yakushkin, told reporters. However, Yeltsin's condition was stable, Yakushkin said. Doctors insisted Monday that Yeltsin fly home from Central Asia a day ahead of schedule because he was suffering from an upper respiratory infection and had a mild fever of 37.4 Celsius (99.3 F). They said Yeltsin was being treated with antibiotics and there were no plans to hospitalize him. Yeltsin, 67, has a history of health problems, including quintuple heart bypass surgery two years ago, so whenever he gets sick there is a flurry of speculation about his ability to function. Yeltsin insists he has no major illness and plans to serve out the remaining two years of his term. Yakushkin, his spokesman, reiterated Tuesday there was no talk about an early resignation. ``It's not being discussed,'' he said. ``I am personally against such a resignation because I think it would only bring peril to the nation.'' Yakushkin and other aides sought to play down the seriousness of Yeltsin's illness. ``Don't panic, Dad is OK,'' Yeltsin's daughter Tatiana Dyachenko, who is his official image adviser, told the Kommersant business newspaper. Yakushkin said Yeltsin's personal doctor, Sergei Mironov, confirmed that the president was suffering from a respiratory infection known as tracheal bronchitis and that ``his condition is stable.'' ``He must stay in bed like any other person,'' Yakushkin said. ``However, knowing the president's character, he is certain to start working with documents and making phone calls to Russian politicians as well as foreign leaders in view of the current situation in Kosovo.'' But the Nezavisimaya Gazeta newspaper said in a front-page editorial Tuesday that Yeltsin's condition suggests he is suffering from something worse than a cold. It said his absence from the Kremlin during the current economic crisis ``amounts to a state catastrophe'' and called on Yeltsin to immediately surrender most of his powers to Prime Minister Yevgeny Primakov. A Communist lawmaker also called for ``an urgent medical check ... on the Russian president's health'' to determine whether he is fit to remain in office, the Interfax news agency said. ``Yeltsin's obvious inability to perform his functions is damaging Russian state authority, as power is being misused by the clique close to the president,'' said Viktor Ilyukhin, chairman of parliament's security committee. The health of the president, who is also commander-in-chief of the Russian military, ``is a direct threat to the country's national security and a factor of serious concern regarding Russia's nuclear weapons,'' he said. Other newspapers gave a detailed description of Yeltsin's weaknesses and his erratic behavior on the trip to the former Soviet republics of Uzbekistan and Kazakstan _ his first foray abroad since a visit to Britain in May. The president appeared stiff and stumbled when he arrived Sunday in Uzbekistan's capital of Tashkent. He had to be supported by Uzbek President Islam Karimov and canceled his other public events. At a state dinner on Sunday, Yeltsin made rambling remarks, expressing his satisfaction with local ``facilities and stores'' he never inspected, the daily Kommersant reported. On Monday, ``the president didn't seem to understand that he wasn't in Moscow,'' Kommersant said, saying he called aides and spoke as though they were late for work at the Kremlin. He turned up more than an hour late for talks with Uzbek officials, making some incoherent remarks interrupted by a bad cough and abruptly cutting short a scheduled news conference. ||||| Russian President Boris Yeltsin, who is still recuperating from his latest illness, has canceled a trip to an Asian summit next month, his office said Friday. Government sources said the president has also called off a visit to Austria later this month, but the Kremlin said those plans were still going forward. Yeltsin has decided to send Prime Minister Yevgeny Primakov to the November summit of the Asia-Pacific Economic Forum in Kuala Lumpur because it deals mostly with financial issues, Yeltsin's office said. But sources in Primakov's office said the cancellation was due to concerns about how the long flight might effect the president's health. The president has been suffering from bronchitis and a cold this week, which forced him to cut short a visit to Central Asia on Monday. He was spending Friday at a country home outside Moscow after defying the orders of his doctors and working in the Kremlin for the past two days. Aides said the president's condition was ``satisfactory.'' Yeltsin is still planning to go to Vienna for an Oct. 27-28 summit of European nations, the president's office said. In another development, Moscow Mayor Yuri Luzhkov, considered a potential presidential candidate, said Thursday that he wouldn't exclude the possibility of Yeltsin's resignation for health reasons. In an interview with the British Broadcasting Corp., he stopped short of calling on Yeltsin to step down. But Luzhkov has always been supportive of Yeltsin and had never before questioned the president's health or ability to govern. ``According to our constitution, the president himself has to say he is not able to work,'' Luzhkov said in an interview with the BBC in Moscow. ``And because of (Yeltsin's) poor health, he is no longer able to give the country as much time as it demands.'' Luzhkov's spokesman Mikhail Solomentsev refused to elaborate on the statement. Yeltsin has a long history of health problems, including a heart bypass surgery two years ago. Each new ailment rekindles speculation about his fitness to govern. The president and his doctors say Yeltsin has no serious health problems and will serve out the final two years of his term. ||||| President Boris Yeltsin's doctors have pronounced his health ``more or less normal,'' his wife Naina said in an interview published Wednesday. Mrs. Yeltsin told the Argumenty i Fakty weekly that she hesitated even to touch on her husband's health ``when there is so much conjecture on this topic.'' Still, she noted that he had regular medical check-ups. ``The doctors say now: Everything is more or less normal,'' Mrs. Yeltsin declared. The 67-year-old Yeltsin's health has long been a concern, and the worry has been amplified by the secrecy surrounding his condition. Yeltsin suffered from heart disease during the 1996 presidential election and had a heart attack, followed by multiple bypass surgery, in the months after his victory. Mrs. Yeltsin expressed understanding for Russians who took part Wednesday in protests for unpaid wages. She also said that criticism of the president was normal, though it was offensive when it focused on anything other than his professional performance, such as his age. ``It seems to me ... that people expected a miracle from him,'' Mrs. Yeltsin said. ``But surely you can't curse a person for not being a magician.'' Mrs. Yeltsin refuted rumors that her family would leave Russia after Yeltsin leaves office in 2000 as ``absolute nonsense.'' ``I think we'll live like all normal people. At least it will be calmer than it is now.'' ||||| President Boris Yeltsin has suffered minor burns on his right hand, his press office said Thursday. Asked about small bandages that were visible on Yeltsin's hand during an awards ceremony, the press office said the president had sustained small burns. It did not say what had caused them. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to the Interfax news agency. ||||| Weakened by a cold yet animated, President Boris Yeltsin defied doctors' orders and quashed rumors he is seriously ill by showing up unexpectedly at the Kremlin on Wednesday. Still, his appearance didn't silence the growing number of calls for his resignation. Hours after he returned to work, the generally pro-Yeltsin upper house of parliament fell just 11 votes short of passing a motion urging him to step down over his social welfare policies. Yeltsin, 67, has a respiratory infection that forced him to cut short his first foreign visit in months on Monday. Whenever Yeltsin falls ill, speculation arises about his ability to govern. This time, however, the prospect of him leaving office has aroused less panic, since he has largely faded from the limelight in recent months and left his government to grapple with Russia's economic crisis. ``There will be no turmoil if Yeltsin leaves the political arena. The government is already in charge, (Prime Minister Yevgeny) Primakov is strong enough and has the support of the security services,'' said Yevgeny Volk, director of the Moscow office of the U.S.-based Heritage Foundation. ``Everyone knows Yeltsin is ailing and is politically weakened,'' he said. Yeltsin has a history of health problems, and underwent heart bypass surgery in 1996. Still, he insists he has no major illnesses and plans to serve out the remaining two years of his term. ``I can't even sneeze'' without someone making a fuss about it, he joked with Primakov during a meeting Wednesday. In the Kremlin, Yeltsin discussed developments in Kosovo with Primakov, Foreign Minister Igor Ivanov and Defense Minister Igor Sergeyev, Russian news agencies said. Yeltsin looked wan and tired and walked stiffly, but he was smiling, gesturing animatedly and joking with his ministers. The start of the meeting was shown on Russian television. Primakov said afterward that Yeltsin waved his hand dismissively ``when we reminded him that he should stay in bed during his illness'' and said of his doctors: ``Don't listen to them.'' The upper house of parliament was busy voting on a motion saying he should resign. The vote in the Federation Council, which is made up of regional leaders, was 79 to 18 in favor, Russian news agencies reported. It did not pass because it required a simple majority of 90 votes. The motion carries no legal weight, but it reflects growing anti-Yeltsin sentiment in a chamber that has generally supported him. The prime minister reiterated Wednesday that Yeltsin has no plans to resign or call early elections. ``There is no reason for rocking the boat and demanding anyone's resignation,'' Primakov said, according to the Interfax news agency. ``What happens to the anti-crisis steps if elections are held now?'' Yeltsin's resignation is highly unlikely. If he were to step down or die, Primakov would take power and elections would have to be held within three months. Many Russians view Yeltsin with increasing pity. ``I feel for him. He's clearly not a healthy person,'' film director Vladimir Khotinenko was quoted as saying by the daily Kommersant. ``It's time for him to step aside.'' Doctors ordered the president to stay in bed Tuesday and his spokesman, Dmitry Yakushkin, had said Yeltsin would not be in the office all week. Yeltsin stumbled and had to be supported during his visit to Central Asia on Sunday and Monday. He canceled most of his public engagements, except for a state dinner at which he made rambling remarks and a news conference that he abruptly cut short. ||||| President Boris Yeltsin, on his first trip out of Russia since this spring, canceled a welcoming ceremony in Uzbekistan on Sunday because he wasn't feeling well, his spokesman said. Yeltsin appeared stiff and stumbled during another public ceremony after he arrived in Tashkent, the capital of this Central Asian nation, and had to be supported by Uzbek President Islam Karimov. But the two later held a one-on-one summit as scheduled. The trip is Yeltsin's first high-profile foray since an economic crisis swamped his country in August. The 67-year-old president, whose health has often sidelined him during his seven years in power, has spent most of the last two months out of the limelight and out of the Kremlin, holding meetings in his country home outside Moscow. His last foreign trip was to Britain in May, when he attended a summit of the Group of Seven leading industrial nations. During his visits to Uzbekistan and Kazakstan this week, Yeltsin is expected to discuss improving Russia's relations with the two former Soviet republics, whose economies have suffered residual effects of the crisis that hit Russia after it devalued its currency in August and defaulted on some of its debt. On Sunday, Yeltsin had been scheduled to lay wreaths at a monument to Alisher Naboi, an 16th century Uzbek poet, and salute an Uzbek honor guard, but both ceremonies were canceled. ``This week was extremely tense. (Yeltsin) was affected by a difficult flight and the end of a difficult week,'' Yeltsin's chief spokesman, Dmitry Yakushkin, told a news conference. ``He has a cold. He was coughing when we spoke.'' It was sunny and about 14 degrees C (57 degrees F) in Tashkent on Sunday. Yakushkin said Yeltsin's schedule Monday may also change depending on how he feels. Yeltsin and Karimov later met at a government residence outside Tashkent and signed several agreements on fighting smuggling and other crime and expanding cultural ties. The two sides are expected to sign economic agreements Monday. Later Monday, Yeltsin is to go to Kazakstan, where he and Kazak President Nursultan Nazarbayev are expected to sign agreements on economic, science and technical cooperation and on combating drug trafficking. Last week, Yeltsin said he also planned to discuss the situation in Afghanistan with his Uzbek and Kazak counterparts. Russia and the two republics fear an influx of refugees and weapons from Afghanistan, and possibly a spillover of fighting that has wracked the country. Yeltsin was accompanied by Foreign Minister Igor Ivanov, Defense Minister Igor Sergeyev, Finance Minister Mikhail Zadornov, officials from the Federal Border Guard Service, the State Customs Committee, the Defense Ministry, and the Russian Academy of Sciences. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The court will take at least a week to consider the issue, the Interfax news agency reported. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to Interfax. ||||| Russian President Boris Yeltsin cut short a trip to Central Asia on Monday due to a respiratory infection that revived questions about his overall health and ability to lead Russia through a sustained economic crisis. Yeltsin's premature return to Moscow also prompted doubts about his capacity to respond decisively in the Kosovo crisis, in which Russia has been leading a campaign to forestall airstrikes. Moscow's NTV station said it was a crucial time for Russia, when ``presidential decisions'' are needed. There was no indication that Yeltsin's illness would sideline him for any length of time, and aides said the president would maintain his schedule for the rest of the week. But after a series of health problems in recent years, including heart bypass surgery in 1996, every new ailment unleashes a flurry of speculation about the president's ability to function. The president insists he has no major health problems and will serve out the remaining two years of his term. Yeltsin's aides said the president was taking antibiotics to ward off a bout of bronchitis and a mild fever of 37.4 Celsius (99.3 Fahrenheit). There were no plans to hospitalize Yeltsin, who arrived in Moscow late Monday night from Almaty, Kazakstan, a day earlier than planned.

President Boris Yeltsin had a heart attack in 1996, followed by multiple bypass surgery. Doctors say his health is more or less normal but secrecy increases conjecture. The cause of minor burns on his hand were not disclosed. On a trip to Uzbekistan he walked stiffly, stumbled, rambled and seemed confused. Ceremonies were canceled and the trip ended a day early because of his bronchitis and a 99.3F fever. He was treated with antibiotics and ordered to bed but went to the office anyway. Calls that he turn over power were revived. He says he will not run again. He canceled an upcoming trip to Austria and sent PM Primakov in his place to an Asian summit.

Doctors ordered Russian President Boris Yeltsin to cut short his Central Asian trip because of a respiratory infection and he agreed to return home Monday, a day earlier than planned, officials said. Yeltsin was suffering from tracheobronchitis, had a fever of 37.4 Celsius (99.3 Fahrenheit) and was being treated with antibiotics, the president's doctors told the Interfax news agency. Yeltsin was to fly back to Moscow late Monday, rather than on Tuesday as scheduled, but was going ahead with talks, including a meeting with Kazak President Nursultan Nazarbayev. He planned to move up all his scheduled meetings before returning home, aides said. The 67-year-old, 3rd graf pvs ||||| President Boris Yeltsin stayed home Tuesday, nursing a respiratory infection that forced him to cut short a foreign trip and revived concerns about his ability to govern. Yeltsin was spending the day at his Gorky-9 country residence just outside Moscow, and will probably not go into the office all week, his spokesman, Dmitry Yakushkin, told reporters. However, Yeltsin's condition was stable, Yakushkin said. Doctors insisted Monday that Yeltsin fly home from Central Asia a day ahead of schedule because he was suffering from an upper respiratory infection and had a mild fever of 37.4 Celsius (99.3 F). They said Yeltsin was being treated with antibiotics and there were no plans to hospitalize him. Yeltsin, 67, has a history of health problems, including quintuple heart bypass surgery two years ago, so whenever he gets sick there is a flurry of speculation about his ability to function. Yeltsin insists he has no major illness and plans to serve out the remaining two years of his term. Yakushkin, his spokesman, reiterated Tuesday there was no talk about an early resignation. ``It's not being discussed,'' he said. ``I am personally against such a resignation because I think it would only bring peril to the nation.'' Yakushkin and other aides sought to play down the seriousness of Yeltsin's illness. ``Don't panic, Dad is OK,'' Yeltsin's daughter Tatiana Dyachenko, who is his official image adviser, told the Kommersant business newspaper. Yakushkin said Yeltsin's personal doctor, Sergei Mironov, confirmed that the president was suffering from a respiratory infection known as tracheal bronchitis and that ``his condition is stable.'' ``He must stay in bed like any other person,'' Yakushkin said. ``However, knowing the president's character, he is certain to start working with documents and making phone calls to Russian politicians as well as foreign leaders in view of the current situation in Kosovo.'' But the Nezavisimaya Gazeta newspaper said in a front-page editorial Tuesday that Yeltsin's condition suggests he is suffering from something worse than a cold. It said his absence from the Kremlin during the current economic crisis ``amounts to a state catastrophe'' and called on Yeltsin to immediately surrender most of his powers to Prime Minister Yevgeny Primakov. A Communist lawmaker also called for ``an urgent medical check ... on the Russian president's health'' to determine whether he is fit to remain in office, the Interfax news agency said. ``Yeltsin's obvious inability to perform his functions is damaging Russian state authority, as power is being misused by the clique close to the president,'' said Viktor Ilyukhin, chairman of parliament's security committee. The health of the president, who is also commander-in-chief of the Russian military, ``is a direct threat to the country's national security and a factor of serious concern regarding Russia's nuclear weapons,'' he said. Other newspapers gave a detailed description of Yeltsin's weaknesses and his erratic behavior on the trip to the former Soviet republics of Uzbekistan and Kazakstan _ his first foray abroad since a visit to Britain in May. The president appeared stiff and stumbled when he arrived Sunday in Uzbekistan's capital of Tashkent. He had to be supported by Uzbek President Islam Karimov and canceled his other public events. At a state dinner on Sunday, Yeltsin made rambling remarks, expressing his satisfaction with local ``facilities and stores'' he never inspected, the daily Kommersant reported. On Monday, ``the president didn't seem to understand that he wasn't in Moscow,'' Kommersant said, saying he called aides and spoke as though they were late for work at the Kremlin. He turned up more than an hour late for talks with Uzbek officials, making some incoherent remarks interrupted by a bad cough and abruptly cutting short a scheduled news conference. ||||| Russian President Boris Yeltsin, who is still recuperating from his latest illness, has canceled a trip to an Asian summit next month, his office said Friday. Government sources said the president has also called off a visit to Austria later this month, but the Kremlin said those plans were still going forward. Yeltsin has decided to send Prime Minister Yevgeny Primakov to the November summit of the Asia-Pacific Economic Forum in Kuala Lumpur because it deals mostly with financial issues, Yeltsin's office said. But sources in Primakov's office said the cancellation was due to concerns about how the long flight might effect the president's health. The president has been suffering from bronchitis and a cold this week, which forced him to cut short a visit to Central Asia on Monday. He was spending Friday at a country home outside Moscow after defying the orders of his doctors and working in the Kremlin for the past two days. Aides said the president's condition was ``satisfactory.'' Yeltsin is still planning to go to Vienna for an Oct. 27-28 summit of European nations, the president's office said. In another development, Moscow Mayor Yuri Luzhkov, considered a potential presidential candidate, said Thursday that he wouldn't exclude the possibility of Yeltsin's resignation for health reasons. In an interview with the British Broadcasting Corp., he stopped short of calling on Yeltsin to step down. But Luzhkov has always been supportive of Yeltsin and had never before questioned the president's health or ability to govern. ``According to our constitution, the president himself has to say he is not able to work,'' Luzhkov said in an interview with the BBC in Moscow. ``And because of (Yeltsin's) poor health, he is no longer able to give the country as much time as it demands.'' Luzhkov's spokesman Mikhail Solomentsev refused to elaborate on the statement. Yeltsin has a long history of health problems, including a heart bypass surgery two years ago. Each new ailment rekindles speculation about his fitness to govern. The president and his doctors say Yeltsin has no serious health problems and will serve out the final two years of his term. ||||| President Boris Yeltsin's doctors have pronounced his health ``more or less normal,'' his wife Naina said in an interview published Wednesday. Mrs. Yeltsin told the Argumenty i Fakty weekly that she hesitated even to touch on her husband's health ``when there is so much conjecture on this topic.'' Still, she noted that he had regular medical check-ups. ``The doctors say now: Everything is more or less normal,'' Mrs. Yeltsin declared. The 67-year-old Yeltsin's health has long been a concern, and the worry has been amplified by the secrecy surrounding his condition. Yeltsin suffered from heart disease during the 1996 presidential election and had a heart attack, followed by multiple bypass surgery, in the months after his victory. Mrs. Yeltsin expressed understanding for Russians who took part Wednesday in protests for unpaid wages. She also said that criticism of the president was normal, though it was offensive when it focused on anything other than his professional performance, such as his age. ``It seems to me ... that people expected a miracle from him,'' Mrs. Yeltsin said. ``But surely you can't curse a person for not being a magician.'' Mrs. Yeltsin refuted rumors that her family would leave Russia after Yeltsin leaves office in 2000 as ``absolute nonsense.'' ``I think we'll live like all normal people. At least it will be calmer than it is now.'' ||||| President Boris Yeltsin has suffered minor burns on his right hand, his press office said Thursday. Asked about small bandages that were visible on Yeltsin's hand during an awards ceremony, the press office said the president had sustained small burns. It did not say what had caused them. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to the Interfax news agency. ||||| Weakened by a cold yet animated, President Boris Yeltsin defied doctors' orders and quashed rumors he is seriously ill by showing up unexpectedly at the Kremlin on Wednesday. Still, his appearance didn't silence the growing number of calls for his resignation. Hours after he returned to work, the generally pro-Yeltsin upper house of parliament fell just 11 votes short of passing a motion urging him to step down over his social welfare policies. Yeltsin, 67, has a respiratory infection that forced him to cut short his first foreign visit in months on Monday. Whenever Yeltsin falls ill, speculation arises about his ability to govern. This time, however, the prospect of him leaving office has aroused less panic, since he has largely faded from the limelight in recent months and left his government to grapple with Russia's economic crisis. ``There will be no turmoil if Yeltsin leaves the political arena. The government is already in charge, (Prime Minister Yevgeny) Primakov is strong enough and has the support of the security services,'' said Yevgeny Volk, director of the Moscow office of the U.S.-based Heritage Foundation. ``Everyone knows Yeltsin is ailing and is politically weakened,'' he said. Yeltsin has a history of health problems, and underwent heart bypass surgery in 1996. Still, he insists he has no major illnesses and plans to serve out the remaining two years of his term. ``I can't even sneeze'' without someone making a fuss about it, he joked with Primakov during a meeting Wednesday. In the Kremlin, Yeltsin discussed developments in Kosovo with Primakov, Foreign Minister Igor Ivanov and Defense Minister Igor Sergeyev, Russian news agencies said. Yeltsin looked wan and tired and walked stiffly, but he was smiling, gesturing animatedly and joking with his ministers. The start of the meeting was shown on Russian television. Primakov said afterward that Yeltsin waved his hand dismissively ``when we reminded him that he should stay in bed during his illness'' and said of his doctors: ``Don't listen to them.'' The upper house of parliament was busy voting on a motion saying he should resign. The vote in the Federation Council, which is made up of regional leaders, was 79 to 18 in favor, Russian news agencies reported. It did not pass because it required a simple majority of 90 votes. The motion carries no legal weight, but it reflects growing anti-Yeltsin sentiment in a chamber that has generally supported him. The prime minister reiterated Wednesday that Yeltsin has no plans to resign or call early elections. ``There is no reason for rocking the boat and demanding anyone's resignation,'' Primakov said, according to the Interfax news agency. ``What happens to the anti-crisis steps if elections are held now?'' Yeltsin's resignation is highly unlikely. If he were to step down or die, Primakov would take power and elections would have to be held within three months. Many Russians view Yeltsin with increasing pity. ``I feel for him. He's clearly not a healthy person,'' film director Vladimir Khotinenko was quoted as saying by the daily Kommersant. ``It's time for him to step aside.'' Doctors ordered the president to stay in bed Tuesday and his spokesman, Dmitry Yakushkin, had said Yeltsin would not be in the office all week. Yeltsin stumbled and had to be supported during his visit to Central Asia on Sunday and Monday. He canceled most of his public engagements, except for a state dinner at which he made rambling remarks and a news conference that he abruptly cut short. ||||| President Boris Yeltsin, on his first trip out of Russia since this spring, canceled a welcoming ceremony in Uzbekistan on Sunday because he wasn't feeling well, his spokesman said. Yeltsin appeared stiff and stumbled during another public ceremony after he arrived in Tashkent, the capital of this Central Asian nation, and had to be supported by Uzbek President Islam Karimov. But the two later held a one-on-one summit as scheduled. The trip is Yeltsin's first high-profile foray since an economic crisis swamped his country in August. The 67-year-old president, whose health has often sidelined him during his seven years in power, has spent most of the last two months out of the limelight and out of the Kremlin, holding meetings in his country home outside Moscow. His last foreign trip was to Britain in May, when he attended a summit of the Group of Seven leading industrial nations. During his visits to Uzbekistan and Kazakstan this week, Yeltsin is expected to discuss improving Russia's relations with the two former Soviet republics, whose economies have suffered residual effects of the crisis that hit Russia after it devalued its currency in August and defaulted on some of its debt. On Sunday, Yeltsin had been scheduled to lay wreaths at a monument to Alisher Naboi, an 16th century Uzbek poet, and salute an Uzbek honor guard, but both ceremonies were canceled. ``This week was extremely tense. (Yeltsin) was affected by a difficult flight and the end of a difficult week,'' Yeltsin's chief spokesman, Dmitry Yakushkin, told a news conference. ``He has a cold. He was coughing when we spoke.'' It was sunny and about 14 degrees C (57 degrees F) in Tashkent on Sunday. Yakushkin said Yeltsin's schedule Monday may also change depending on how he feels. Yeltsin and Karimov later met at a government residence outside Tashkent and signed several agreements on fighting smuggling and other crime and expanding cultural ties. The two sides are expected to sign economic agreements Monday. Later Monday, Yeltsin is to go to Kazakstan, where he and Kazak President Nursultan Nazarbayev are expected to sign agreements on economic, science and technical cooperation and on combating drug trafficking. Last week, Yeltsin said he also planned to discuss the situation in Afghanistan with his Uzbek and Kazak counterparts. Russia and the two republics fear an influx of refugees and weapons from Afghanistan, and possibly a spillover of fighting that has wracked the country. Yeltsin was accompanied by Foreign Minister Igor Ivanov, Defense Minister Igor Sergeyev, Finance Minister Mikhail Zadornov, officials from the Federal Border Guard Service, the State Customs Committee, the Defense Ministry, and the Russian Academy of Sciences. ||||| Russia's Constitutional Court opened hearings Thursday on whether Boris Yeltsin can seek a third term. The issue was controversial earlier this year when Yeltsin refused to spell out his intentions and his aides insisted he had the legal right to seek re-election. It has lost some of its urgency, as Yeltsin has grown physically and politically weaker and has said he will not run again. The court will take at least a week to consider the issue, the Interfax news agency reported. The Russian Constitution has a two-term limit for presidents. But Yeltsin's aides say his first term, from 1991 to 1996, does not count because it began six months before the Soviet Union collapsed and before the current constitution took effect. Communists and other Yeltsin opponents in parliament's lower house, the State Duma, disagreed and appealed to the Constitutional Court in February. While the case has been waiting to be heard, events have overtaken it. Yeltsin has flatly said he will not seek another term, and the opposition has concentrated its efforts on demanding an early resignation, riding a wave of popular discontent over the economic crisis. The call for Yeltsin to step down was backed by many participants in a nationwide labor action earlier this month that attracted about 1 million people. Yeltsin's growing health problems would also seem to rule out another election campaign. A respiratory infection forced him to cut short a trip to Central Asia earlier this week. On Wednesday, parliament's upper chamber, the Federation Council, voted on a resolution calling on Yeltsin to resign, but it failed narrowly. Even if had passed, the move would have had no legal consequences, but it highlighted growing anti-Yeltsin sentiments in the chamber made up of powerful regional leaders, most of whom have been loyal to the president. Mikhail Mityukov, the presidential representative on the Constitutional Court, said Thursday that Yeltsin would ignore calls for an early resignation. ``The president is a strong person, and he has been through far more difficult political situations,'' Mityukov said, according to Interfax. ||||| Russian President Boris Yeltsin cut short a trip to Central Asia on Monday due to a respiratory infection that revived questions about his overall health and ability to lead Russia through a sustained economic crisis. Yeltsin's premature return to Moscow also prompted doubts about his capacity to respond decisively in the Kosovo crisis, in which Russia has been leading a campaign to forestall airstrikes. Moscow's NTV station said it was a crucial time for Russia, when ``presidential decisions'' are needed. There was no indication that Yeltsin's illness would sideline him for any length of time, and aides said the president would maintain his schedule for the rest of the week. But after a series of health problems in recent years, including heart bypass surgery in 1996, every new ailment unleashes a flurry of speculation about the president's ability to function. The president insists he has no major health problems and will serve out the remaining two years of his term. Yeltsin's aides said the president was taking antibiotics to ward off a bout of bronchitis and a mild fever of 37.4 Celsius (99.3 Fahrenheit). There were no plans to hospitalize Yeltsin, who arrived in Moscow late Monday night from Almaty, Kazakstan, a day earlier than planned.

Russian President Yeltsin's health was a hot topic in October. First he burned his hand. Next, in Central Asia, he cancelled public appearances and appeared disoriented. The trip was shortened due to a "respiratory infection". He was ordered to rest and take antibiotics. He then cancelled his trip to the Asian Summit. Although stoutly defended by his family, many Russians, including former supporters, suspect he is sicker, question his ability to do his job, and want him to resign. He has a history of health problems including heart bypass surgery. The court was to judge on whether he could serve a third term, but he already has said he will not run.

Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement claimed. Jose Pau Lelo, 38, Rosito Borges, 35, and Leao Soares, 50, were in a coma due to injuries they sustained in the attack, according to the statement which cited resistance sources in East Timor's capital Dili. The statement, released in the Portuguese capital Lisbon, also said 19 men were wounded, eight seriously, and 26 others were missing. The names, ages and occupations of the villagers were listed. There was no independent confirmation of the attack, and Indonesian officials were was not immediately available for comment. Indonesia invaded East Timor in Dec. 1975, following Portugal's colonial rule, and annexed it a month later. Indonesian troops have since then been fighting a small band of pro-independence guerillas. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, said he also had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| JAKARTA, Indonesia (AP) - As a U.N. envoy trotted toward an Indonesian army helicopter, East Timorese protesters spilled onto the runway tarmac and shouted their anger at nervous soldiers. Sent to make peace in Indonesian-controlled East Timor, Jamsheed Marker's recent hasty departure from the troubled territory signaled how easily tensions there can boil over. Yet Marker, who is visiting Indonesia to promote a U.N.-designed blueprint for autonomy in the former Portuguese colony, said Monday that both sides in the bitter conflict were displaying a newfound taste for compromise. In an interview with The Associated Press, Marker admitted that a peaceful solution remains distant. But in a big step forward, he said, many separatist activists were no longer pressing for an immediate vote on independence. ``They don't want independence tomorrow,'' said Marker, who was interviewed in a Jakarta hotel suite after his trip to East Timor. In other progress, Indonesia and Portugal will send diplomats to open ``interest'' sections in each other's capitals next month. Formal diplomatic relations, however, will not be resumed. Also in January, the two countries are scheduled to embark on a new round of U.N.-sponsored peace talks in New York. Turmoil has plagued East Timor ever since Indonesian troops invaded in 1975, unleashing a separatist rebel war and the resentment of a population pummeled by human rights abuses. Talks were revived earlier this year after the ouster of authoritarian President Suharto, but differences remain over a definition of autonomy that would suit all parties. Separatists want it to be transitional, while Indonesia is offering East Timorese partial control of their affairs in exchange for international recognition of its sovereignty. Jakarta wants to handle foreign, defense and financial affairs. Fears are widespread that more unrest in East Timor could derail the negotiations. On Monday, Marker voiced his concern in a meeting with East Timor's jailed rebel chief, Xanana Gusmao. ``I said there was a lot of tension in East Timor and that he and his people ought to do everything they can to reduce it,'' said Marker, a former Pakistani ambassador to the United Nations. Tempers flared but there was no violence during protests timed for Marker's weekend trip to Dili, the seaside capital of the half-island territory of 800,000 people. On Sunday, separatist protesters tore down a fence at the commercial airport and pushed past soldiers with automatic rifles as they tried in vain to speak to Marker as he left. During a visit last year, Indonesian soldiers killed two pro-independence demonstrators outside a hotel where Marker was staying. Activists have alleged that Indonesia secretly ferried troops into East Timor in spite of pledges to reduce the number. Marker said Jakarta had advised him of troop rotations and that U.N. staff were monitoring the situation. Marker was scheduled to talk with Indonesian President B.J. Habibie on Tuesday and will leave Indonesia on Wednesday to prepare for another batch of meetings in the New Year. ``If you ask me... `Do you have a solution?' then the answer is, `I don't,''' he said. ``But I think there are ways of getting there and the first thing is to have peace and quiet.'' ||||| Taiwan's Foreign Ministry on Thursday blamed ``administrative negligence'' for an incident in which Nobel Peace Prize winner Josi Ramos-Horta was left stranded at the airport for hours after being refused entry. Opposition supporters alleged the incident Wednesday night was politically motivated. Ramos-Horta is an advocate of independence for Indonesian-controlled East Timor, and newspapers reported Taiwan had formerly barred him to avoid antagonizing Indonesia. But Ramos-Horta's previous persona non grata status had been ordered lifted by the Foreign Ministry in August, leaving no reason why he should have been refused entry by airport immigration when he came to town Wednesday night, ministry spokesman Roy Wu told a news conference. ``This incident accentuated the problem with administrative relations, it needs to be improved. ... It's a fact,'' Wu told a news conference. Ramos-Horta had a rough time Wednesday night. Immigration officials would not let him in, then he tried to catch a flight out but missed the plane. Eventually, the Foreign Ministry intervened and let Ramos-Horta enter Taiwan. He went only as far as the airport hotel. Conflicting reports indicate Ramos-Horta was stuck at the airport for between four and seven hours. Ramos-Horta was carrying a Portuguese passport, which should have permitted him visa-free entry to Taiwan for up to 14 days, newspapers said. The opposition Democratic Progressive Party alleged Ramos-Horta had been refused entry because he planned to speak on behalf of Chen Shui-bian's campaign to be re-elected as mayor of Taipei. Chen is Taiwan's most prominent DPP politician. ``This sort of incident shows that Taiwan is just not qualified to be called a democratic nation,'' DPP Secretary-General Chiu Yi-jen told a news conference. Ramos-Horta sought to play down the incident before leaving town Thursday. ``I don't want to make a big problem out of it. I have been to many countries. The only countries that don't allow me in would be countries like Iraq, Iran,'' he told reporters before catching an afternoon flight to attend a conference in Australia. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations does not recognize Indonesian claims to East Timor. ||||| Indonesia on Tuesday denied claims that its troops massacred more than 40 East Timorese recently, and criticized Portugal for suspending U.N.-sponsored talks over the future of the troubled territory. Foreign Minister Ali Alatas questioned whether Portugal truly wanted to settle the problem of East Timor, a former Portuguese colony, the official Antara news agency reported. Portugal suspended the talks with Indonesia in New York last week following reports of a massacre of dozens of East Timorese rebels in a series of clashes with Indonesian troops. East Timor's spiritual leader, Roman Catholic Bishop Carlos Belo, has said that between 30 and 40 people were reportedly killed near the villages of Alas and Same, 40 kilometers (25 miles) southeast of Dili, East Timor capital. The 1996 Nobel Peace Prize winner said that so far, only 11 bodies had been identified. Alatas said the claims of a massacre were not true. ``The Portuguese delegation, without checking the truth of the information, decided to temporarily suspend the ongoing dialogue,'' Antara quoted Alatas as saying. The New York-based group Human Rights Watch said some deaths had occurred in fights between rebels and Indonesian forces. However, it could not confirm claims that dozens of people had been killed. Alatas said it was the third time that Portugal had unilaterally suspended talks over East Timor since 1986. Based on this, Alatas said, Indonesia was skeptical about Portugal's sincerity, Antara reported. In response, Portugal's Foreign Ministry accused Indonesia of breaking promises to reduce its military presence in East Timor and called for a permanent U.N. mission in the disputed territory. ``Unfortunately, Indonesia has increased its deployment and the brutality of its military actions in East Timor,'' said ministry spokesman Horacio Cesar. Meanwhile, about 500 students ended their noisy but peaceful rally outside the office of East Timor's governor in Dili Tuesday after receiving promises that the reported killings would be investigated. In a dialogue with the students' representatives, Governor Abilio Osorio Soares and military chief Col. Suhartono Suratman agreed to set up a team to make a thorough investigation. The group earlier had spent one night occupying the provincial Parliament and vowed to stay at the governor's office. The students also demanded a total withdrawal of Indonesian soldiers from East Timor. Meanwhile, an unidentified man, believed to be a rebel, was reported to have shot and wounded Izildo Pereira, a civilian, in Baucau, 100 kilometers (62 miles) east of Dili. Izildo, 30, who was shot Sunday, was being treated at a military hospital in Dili. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations, however, does not recognize Indonesia's claim. Before being suspended, the talks centered on an Indonesian offer to give East Timor autonomy in return for international recognition of Indonesian sovereignty there. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the Socialist Party of Timor, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Bent on revenge for earlier attacks on churches, mobs set fire to four mosques in West Timor Monday after a protest and strike by thousands of Christians degenerated into a riot, the military and a Muslim leader said. A rampaging crowd also burned down a market and a Muslim school. Troops and riot police patrolled the streets. There were no immediate reports of serious injuries or arrests as fighting between Muslims and Christians continued after dark, said a military officer who spoke by telephone on condition of anonymity. The violence in the Christian-dominated city of Kupang was in retaliation for the burning and ransacking of 22 churches by Muslim mobs in the capital, Jakarta, on Nov. 22, when 14 people were killed. Islamic leaders urged Indonesia's Muslim majority not to retaliate with more violence. Adurrahman Wahid, head of Indonesia's largest Muslim grouping, the 30 million-member Nahdlatul Ulama, accused provocateurs of whipping up religious strife when the sprawling Southeast Asian nation is trying to head toward democracy. ``I hope Muslims ... are not deceived by such provocations,'' said Wahid, who has been pushing for religious unity. West Timor shares the same island as troubled East Timor, a former Portuguese territory dominated by Roman Catholicism and invaded by Indonesia in 1975. Christians, mostly Protestants, dominate Kupang, about 1,875 kilometers (1,172 miles) southeast of the Indonesian capital. However, a sizable Muslim minority also lives there. The Kupang riot broke out after thousands of Christians staged a peaceful strike and street protest against the Jakarta church attacks. Most offices and shops were closed in the city of 120,000, the capital of East Nusa Tenggara province, whose governor called for calm. Organizers of Monday's strike had called for a non-violent ``day of mourning.'' However, residents said fires broke out in three mosques after rival gangs pelted each other with rocks. Indonesia is the world's most populous Islamic nation. About 90 percent of Indonesia's 202 million people are Muslims, with the rest following Christian, Hindu, Buddhist or other faiths. Religious diversity based on a belief in God is enshrined in the national philosophy, known as Pancasila, adopted when Indonesia declared independence from Dutch colonial rule in 1945. The upsurge in religious violence follows months of riots and protests in many parts of Indonesia. Social tensions in the sprawling Southeast Asian nation have intensified as it grapples with its worst economic crisis in decades. There is also political turmoil as students protesters demand greater democracy after 32 years of authoritarian rule by former President Suharto, who was forced to quit following deadly riots in May. Ismalil Hasan Metareum, head of the Muslim-dominated opposition United Development Party, urged his followers not to hit back. More than 100,000 party supporters filled a sports stadium in Jakarta Sunday at the opening of a four-day convention. Religious strife erupted recently in the eastern part of the main island of Java, where more than 150 people, many of them Islamic clerics, have been murdered, apparently by rival Muslim groups. Many of the dead were accused of practicing black magic. ||||| In a decision welcomed as a landmark by Portugal, European Union leaders Saturday backed calls for a referendum to decide the fate of East Timor, the former Portuguese colony occupied by Indonesia since 1975. ``A definitive solution to the East Timor question will not be possible without free consultation to establish the real will of the East Timorese people,'' the 15 EU leaders said in statement after their year-end summit. Portuguese Foreign Minister Jaime Gama said the statement marked the first time the EU had backed Lisbon's call for the East Timorese to vote on whether to opt for independence or remain under Indonesian rule. Indonesia has resisted such calls for a referendum and maintains thousands of troops to keep order in the half-island territory. The EU statement also urged Indonesia to bring about a ``real and substantial reduction'' in troop levels and called for the establishment of a permanent U.N. presence in East Timor. The leaders repeated a demand that Indonesia release jailed Timorese rebel leader Xanana Gusmao, and all political prisoners. Indonesia invaded East Timor in 1975 as Portugal prepared to grant independence, and annexed it the following year. The United Nations does not recognize Indonesian rule. ||||| Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor.

Indonesia invaded the former Portuguese territory of East Timor in 1975 and annexed it in 1976. By late 1998 while East Timorese called for independence and accused Indonesian troops of yet another massacre of civilians, Portugal cut off talks with Indonesia. Internationally, Taiwan was timid fearing antagonizing Indonesia, Australians protested against training Indonesian military who might be assigned to East Timor, and fifteen European Union leaders endorsed Portugal's call for a referendum on East Timor's future. A U.N. enjoy saw a peaceful solution as distant, but sensed a "newfound taste for compromise."

Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement claimed. Jose Pau Lelo, 38, Rosito Borges, 35, and Leao Soares, 50, were in a coma due to injuries they sustained in the attack, according to the statement which cited resistance sources in East Timor's capital Dili. The statement, released in the Portuguese capital Lisbon, also said 19 men were wounded, eight seriously, and 26 others were missing. The names, ages and occupations of the villagers were listed. There was no independent confirmation of the attack, and Indonesian officials were was not immediately available for comment. Indonesia invaded East Timor in Dec. 1975, following Portugal's colonial rule, and annexed it a month later. Indonesian troops have since then been fighting a small band of pro-independence guerillas. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, said he also had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| JAKARTA, Indonesia (AP) - As a U.N. envoy trotted toward an Indonesian army helicopter, East Timorese protesters spilled onto the runway tarmac and shouted their anger at nervous soldiers. Sent to make peace in Indonesian-controlled East Timor, Jamsheed Marker's recent hasty departure from the troubled territory signaled how easily tensions there can boil over. Yet Marker, who is visiting Indonesia to promote a U.N.-designed blueprint for autonomy in the former Portuguese colony, said Monday that both sides in the bitter conflict were displaying a newfound taste for compromise. In an interview with The Associated Press, Marker admitted that a peaceful solution remains distant. But in a big step forward, he said, many separatist activists were no longer pressing for an immediate vote on independence. ``They don't want independence tomorrow,'' said Marker, who was interviewed in a Jakarta hotel suite after his trip to East Timor. In other progress, Indonesia and Portugal will send diplomats to open ``interest'' sections in each other's capitals next month. Formal diplomatic relations, however, will not be resumed. Also in January, the two countries are scheduled to embark on a new round of U.N.-sponsored peace talks in New York. Turmoil has plagued East Timor ever since Indonesian troops invaded in 1975, unleashing a separatist rebel war and the resentment of a population pummeled by human rights abuses. Talks were revived earlier this year after the ouster of authoritarian President Suharto, but differences remain over a definition of autonomy that would suit all parties. Separatists want it to be transitional, while Indonesia is offering East Timorese partial control of their affairs in exchange for international recognition of its sovereignty. Jakarta wants to handle foreign, defense and financial affairs. Fears are widespread that more unrest in East Timor could derail the negotiations. On Monday, Marker voiced his concern in a meeting with East Timor's jailed rebel chief, Xanana Gusmao. ``I said there was a lot of tension in East Timor and that he and his people ought to do everything they can to reduce it,'' said Marker, a former Pakistani ambassador to the United Nations. Tempers flared but there was no violence during protests timed for Marker's weekend trip to Dili, the seaside capital of the half-island territory of 800,000 people. On Sunday, separatist protesters tore down a fence at the commercial airport and pushed past soldiers with automatic rifles as they tried in vain to speak to Marker as he left. During a visit last year, Indonesian soldiers killed two pro-independence demonstrators outside a hotel where Marker was staying. Activists have alleged that Indonesia secretly ferried troops into East Timor in spite of pledges to reduce the number. Marker said Jakarta had advised him of troop rotations and that U.N. staff were monitoring the situation. Marker was scheduled to talk with Indonesian President B.J. Habibie on Tuesday and will leave Indonesia on Wednesday to prepare for another batch of meetings in the New Year. ``If you ask me... `Do you have a solution?' then the answer is, `I don't,''' he said. ``But I think there are ways of getting there and the first thing is to have peace and quiet.'' ||||| Taiwan's Foreign Ministry on Thursday blamed ``administrative negligence'' for an incident in which Nobel Peace Prize winner Josi Ramos-Horta was left stranded at the airport for hours after being refused entry. Opposition supporters alleged the incident Wednesday night was politically motivated. Ramos-Horta is an advocate of independence for Indonesian-controlled East Timor, and newspapers reported Taiwan had formerly barred him to avoid antagonizing Indonesia. But Ramos-Horta's previous persona non grata status had been ordered lifted by the Foreign Ministry in August, leaving no reason why he should have been refused entry by airport immigration when he came to town Wednesday night, ministry spokesman Roy Wu told a news conference. ``This incident accentuated the problem with administrative relations, it needs to be improved. ... It's a fact,'' Wu told a news conference. Ramos-Horta had a rough time Wednesday night. Immigration officials would not let him in, then he tried to catch a flight out but missed the plane. Eventually, the Foreign Ministry intervened and let Ramos-Horta enter Taiwan. He went only as far as the airport hotel. Conflicting reports indicate Ramos-Horta was stuck at the airport for between four and seven hours. Ramos-Horta was carrying a Portuguese passport, which should have permitted him visa-free entry to Taiwan for up to 14 days, newspapers said. The opposition Democratic Progressive Party alleged Ramos-Horta had been refused entry because he planned to speak on behalf of Chen Shui-bian's campaign to be re-elected as mayor of Taipei. Chen is Taiwan's most prominent DPP politician. ``This sort of incident shows that Taiwan is just not qualified to be called a democratic nation,'' DPP Secretary-General Chiu Yi-jen told a news conference. Ramos-Horta sought to play down the incident before leaving town Thursday. ``I don't want to make a big problem out of it. I have been to many countries. The only countries that don't allow me in would be countries like Iraq, Iran,'' he told reporters before catching an afternoon flight to attend a conference in Australia. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations does not recognize Indonesian claims to East Timor. ||||| Indonesia on Tuesday denied claims that its troops massacred more than 40 East Timorese recently, and criticized Portugal for suspending U.N.-sponsored talks over the future of the troubled territory. Foreign Minister Ali Alatas questioned whether Portugal truly wanted to settle the problem of East Timor, a former Portuguese colony, the official Antara news agency reported. Portugal suspended the talks with Indonesia in New York last week following reports of a massacre of dozens of East Timorese rebels in a series of clashes with Indonesian troops. East Timor's spiritual leader, Roman Catholic Bishop Carlos Belo, has said that between 30 and 40 people were reportedly killed near the villages of Alas and Same, 40 kilometers (25 miles) southeast of Dili, East Timor capital. The 1996 Nobel Peace Prize winner said that so far, only 11 bodies had been identified. Alatas said the claims of a massacre were not true. ``The Portuguese delegation, without checking the truth of the information, decided to temporarily suspend the ongoing dialogue,'' Antara quoted Alatas as saying. The New York-based group Human Rights Watch said some deaths had occurred in fights between rebels and Indonesian forces. However, it could not confirm claims that dozens of people had been killed. Alatas said it was the third time that Portugal had unilaterally suspended talks over East Timor since 1986. Based on this, Alatas said, Indonesia was skeptical about Portugal's sincerity, Antara reported. In response, Portugal's Foreign Ministry accused Indonesia of breaking promises to reduce its military presence in East Timor and called for a permanent U.N. mission in the disputed territory. ``Unfortunately, Indonesia has increased its deployment and the brutality of its military actions in East Timor,'' said ministry spokesman Horacio Cesar. Meanwhile, about 500 students ended their noisy but peaceful rally outside the office of East Timor's governor in Dili Tuesday after receiving promises that the reported killings would be investigated. In a dialogue with the students' representatives, Governor Abilio Osorio Soares and military chief Col. Suhartono Suratman agreed to set up a team to make a thorough investigation. The group earlier had spent one night occupying the provincial Parliament and vowed to stay at the governor's office. The students also demanded a total withdrawal of Indonesian soldiers from East Timor. Meanwhile, an unidentified man, believed to be a rebel, was reported to have shot and wounded Izildo Pereira, a civilian, in Baucau, 100 kilometers (62 miles) east of Dili. Izildo, 30, who was shot Sunday, was being treated at a military hospital in Dili. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations, however, does not recognize Indonesia's claim. Before being suspended, the talks centered on an Indonesian offer to give East Timor autonomy in return for international recognition of Indonesian sovereignty there. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the Socialist Party of Timor, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Bent on revenge for earlier attacks on churches, mobs set fire to four mosques in West Timor Monday after a protest and strike by thousands of Christians degenerated into a riot, the military and a Muslim leader said. A rampaging crowd also burned down a market and a Muslim school. Troops and riot police patrolled the streets. There were no immediate reports of serious injuries or arrests as fighting between Muslims and Christians continued after dark, said a military officer who spoke by telephone on condition of anonymity. The violence in the Christian-dominated city of Kupang was in retaliation for the burning and ransacking of 22 churches by Muslim mobs in the capital, Jakarta, on Nov. 22, when 14 people were killed. Islamic leaders urged Indonesia's Muslim majority not to retaliate with more violence. Adurrahman Wahid, head of Indonesia's largest Muslim grouping, the 30 million-member Nahdlatul Ulama, accused provocateurs of whipping up religious strife when the sprawling Southeast Asian nation is trying to head toward democracy. ``I hope Muslims ... are not deceived by such provocations,'' said Wahid, who has been pushing for religious unity. West Timor shares the same island as troubled East Timor, a former Portuguese territory dominated by Roman Catholicism and invaded by Indonesia in 1975. Christians, mostly Protestants, dominate Kupang, about 1,875 kilometers (1,172 miles) southeast of the Indonesian capital. However, a sizable Muslim minority also lives there. The Kupang riot broke out after thousands of Christians staged a peaceful strike and street protest against the Jakarta church attacks. Most offices and shops were closed in the city of 120,000, the capital of East Nusa Tenggara province, whose governor called for calm. Organizers of Monday's strike had called for a non-violent ``day of mourning.'' However, residents said fires broke out in three mosques after rival gangs pelted each other with rocks. Indonesia is the world's most populous Islamic nation. About 90 percent of Indonesia's 202 million people are Muslims, with the rest following Christian, Hindu, Buddhist or other faiths. Religious diversity based on a belief in God is enshrined in the national philosophy, known as Pancasila, adopted when Indonesia declared independence from Dutch colonial rule in 1945. The upsurge in religious violence follows months of riots and protests in many parts of Indonesia. Social tensions in the sprawling Southeast Asian nation have intensified as it grapples with its worst economic crisis in decades. There is also political turmoil as students protesters demand greater democracy after 32 years of authoritarian rule by former President Suharto, who was forced to quit following deadly riots in May. Ismalil Hasan Metareum, head of the Muslim-dominated opposition United Development Party, urged his followers not to hit back. More than 100,000 party supporters filled a sports stadium in Jakarta Sunday at the opening of a four-day convention. Religious strife erupted recently in the eastern part of the main island of Java, where more than 150 people, many of them Islamic clerics, have been murdered, apparently by rival Muslim groups. Many of the dead were accused of practicing black magic. ||||| In a decision welcomed as a landmark by Portugal, European Union leaders Saturday backed calls for a referendum to decide the fate of East Timor, the former Portuguese colony occupied by Indonesia since 1975. ``A definitive solution to the East Timor question will not be possible without free consultation to establish the real will of the East Timorese people,'' the 15 EU leaders said in statement after their year-end summit. Portuguese Foreign Minister Jaime Gama said the statement marked the first time the EU had backed Lisbon's call for the East Timorese to vote on whether to opt for independence or remain under Indonesian rule. Indonesia has resisted such calls for a referendum and maintains thousands of troops to keep order in the half-island territory. The EU statement also urged Indonesia to bring about a ``real and substantial reduction'' in troop levels and called for the establishment of a permanent U.N. presence in East Timor. The leaders repeated a demand that Indonesia release jailed Timorese rebel leader Xanana Gusmao, and all political prisoners. Indonesia invaded East Timor in 1975 as Portugal prepared to grant independence, and annexed it the following year. The United Nations does not recognize Indonesian rule. ||||| Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor.

The future of the former Portuguese island colony East Timor is in doubt. Indonesia invaded it in 1975 and later annexed it, but not recognized by the UN. East Timor's spiritual leader, Bishop Carlos Belok the 1996 Nobel Peace laureate, has reported killings by Indonesian troops. Portugal has accused Indonesia of failing to reduce its military presence in East Timor. Australia and Taiwan are reluctant to antagonize Indonesia on this issue. Violence has also occurred in Jakarta and west Timor. The UN has a plan for East Timor and Indonesia is offering a small measure of autonomy, but few observers express hope for a favorable outcome for the talks.

Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement claimed. Jose Pau Lelo, 38, Rosito Borges, 35, and Leao Soares, 50, were in a coma due to injuries they sustained in the attack, according to the statement which cited resistance sources in East Timor's capital Dili. The statement, released in the Portuguese capital Lisbon, also said 19 men were wounded, eight seriously, and 26 others were missing. The names, ages and occupations of the villagers were listed. There was no independent confirmation of the attack, and Indonesian officials were was not immediately available for comment. Indonesia invaded East Timor in Dec. 1975, following Portugal's colonial rule, and annexed it a month later. Indonesian troops have since then been fighting a small band of pro-independence guerillas. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, said he also had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| JAKARTA, Indonesia (AP) - As a U.N. envoy trotted toward an Indonesian army helicopter, East Timorese protesters spilled onto the runway tarmac and shouted their anger at nervous soldiers. Sent to make peace in Indonesian-controlled East Timor, Jamsheed Marker's recent hasty departure from the troubled territory signaled how easily tensions there can boil over. Yet Marker, who is visiting Indonesia to promote a U.N.-designed blueprint for autonomy in the former Portuguese colony, said Monday that both sides in the bitter conflict were displaying a newfound taste for compromise. In an interview with The Associated Press, Marker admitted that a peaceful solution remains distant. But in a big step forward, he said, many separatist activists were no longer pressing for an immediate vote on independence. ``They don't want independence tomorrow,'' said Marker, who was interviewed in a Jakarta hotel suite after his trip to East Timor. In other progress, Indonesia and Portugal will send diplomats to open ``interest'' sections in each other's capitals next month. Formal diplomatic relations, however, will not be resumed. Also in January, the two countries are scheduled to embark on a new round of U.N.-sponsored peace talks in New York. Turmoil has plagued East Timor ever since Indonesian troops invaded in 1975, unleashing a separatist rebel war and the resentment of a population pummeled by human rights abuses. Talks were revived earlier this year after the ouster of authoritarian President Suharto, but differences remain over a definition of autonomy that would suit all parties. Separatists want it to be transitional, while Indonesia is offering East Timorese partial control of their affairs in exchange for international recognition of its sovereignty. Jakarta wants to handle foreign, defense and financial affairs. Fears are widespread that more unrest in East Timor could derail the negotiations. On Monday, Marker voiced his concern in a meeting with East Timor's jailed rebel chief, Xanana Gusmao. ``I said there was a lot of tension in East Timor and that he and his people ought to do everything they can to reduce it,'' said Marker, a former Pakistani ambassador to the United Nations. Tempers flared but there was no violence during protests timed for Marker's weekend trip to Dili, the seaside capital of the half-island territory of 800,000 people. On Sunday, separatist protesters tore down a fence at the commercial airport and pushed past soldiers with automatic rifles as they tried in vain to speak to Marker as he left. During a visit last year, Indonesian soldiers killed two pro-independence demonstrators outside a hotel where Marker was staying. Activists have alleged that Indonesia secretly ferried troops into East Timor in spite of pledges to reduce the number. Marker said Jakarta had advised him of troop rotations and that U.N. staff were monitoring the situation. Marker was scheduled to talk with Indonesian President B.J. Habibie on Tuesday and will leave Indonesia on Wednesday to prepare for another batch of meetings in the New Year. ``If you ask me... `Do you have a solution?' then the answer is, `I don't,''' he said. ``But I think there are ways of getting there and the first thing is to have peace and quiet.'' ||||| Taiwan's Foreign Ministry on Thursday blamed ``administrative negligence'' for an incident in which Nobel Peace Prize winner Josi Ramos-Horta was left stranded at the airport for hours after being refused entry. Opposition supporters alleged the incident Wednesday night was politically motivated. Ramos-Horta is an advocate of independence for Indonesian-controlled East Timor, and newspapers reported Taiwan had formerly barred him to avoid antagonizing Indonesia. But Ramos-Horta's previous persona non grata status had been ordered lifted by the Foreign Ministry in August, leaving no reason why he should have been refused entry by airport immigration when he came to town Wednesday night, ministry spokesman Roy Wu told a news conference. ``This incident accentuated the problem with administrative relations, it needs to be improved. ... It's a fact,'' Wu told a news conference. Ramos-Horta had a rough time Wednesday night. Immigration officials would not let him in, then he tried to catch a flight out but missed the plane. Eventually, the Foreign Ministry intervened and let Ramos-Horta enter Taiwan. He went only as far as the airport hotel. Conflicting reports indicate Ramos-Horta was stuck at the airport for between four and seven hours. Ramos-Horta was carrying a Portuguese passport, which should have permitted him visa-free entry to Taiwan for up to 14 days, newspapers said. The opposition Democratic Progressive Party alleged Ramos-Horta had been refused entry because he planned to speak on behalf of Chen Shui-bian's campaign to be re-elected as mayor of Taipei. Chen is Taiwan's most prominent DPP politician. ``This sort of incident shows that Taiwan is just not qualified to be called a democratic nation,'' DPP Secretary-General Chiu Yi-jen told a news conference. Ramos-Horta sought to play down the incident before leaving town Thursday. ``I don't want to make a big problem out of it. I have been to many countries. The only countries that don't allow me in would be countries like Iraq, Iran,'' he told reporters before catching an afternoon flight to attend a conference in Australia. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations does not recognize Indonesian claims to East Timor. ||||| Indonesia on Tuesday denied claims that its troops massacred more than 40 East Timorese recently, and criticized Portugal for suspending U.N.-sponsored talks over the future of the troubled territory. Foreign Minister Ali Alatas questioned whether Portugal truly wanted to settle the problem of East Timor, a former Portuguese colony, the official Antara news agency reported. Portugal suspended the talks with Indonesia in New York last week following reports of a massacre of dozens of East Timorese rebels in a series of clashes with Indonesian troops. East Timor's spiritual leader, Roman Catholic Bishop Carlos Belo, has said that between 30 and 40 people were reportedly killed near the villages of Alas and Same, 40 kilometers (25 miles) southeast of Dili, East Timor capital. The 1996 Nobel Peace Prize winner said that so far, only 11 bodies had been identified. Alatas said the claims of a massacre were not true. ``The Portuguese delegation, without checking the truth of the information, decided to temporarily suspend the ongoing dialogue,'' Antara quoted Alatas as saying. The New York-based group Human Rights Watch said some deaths had occurred in fights between rebels and Indonesian forces. However, it could not confirm claims that dozens of people had been killed. Alatas said it was the third time that Portugal had unilaterally suspended talks over East Timor since 1986. Based on this, Alatas said, Indonesia was skeptical about Portugal's sincerity, Antara reported. In response, Portugal's Foreign Ministry accused Indonesia of breaking promises to reduce its military presence in East Timor and called for a permanent U.N. mission in the disputed territory. ``Unfortunately, Indonesia has increased its deployment and the brutality of its military actions in East Timor,'' said ministry spokesman Horacio Cesar. Meanwhile, about 500 students ended their noisy but peaceful rally outside the office of East Timor's governor in Dili Tuesday after receiving promises that the reported killings would be investigated. In a dialogue with the students' representatives, Governor Abilio Osorio Soares and military chief Col. Suhartono Suratman agreed to set up a team to make a thorough investigation. The group earlier had spent one night occupying the provincial Parliament and vowed to stay at the governor's office. The students also demanded a total withdrawal of Indonesian soldiers from East Timor. Meanwhile, an unidentified man, believed to be a rebel, was reported to have shot and wounded Izildo Pereira, a civilian, in Baucau, 100 kilometers (62 miles) east of Dili. Izildo, 30, who was shot Sunday, was being treated at a military hospital in Dili. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations, however, does not recognize Indonesia's claim. Before being suspended, the talks centered on an Indonesian offer to give East Timor autonomy in return for international recognition of Indonesian sovereignty there. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the Socialist Party of Timor, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Bent on revenge for earlier attacks on churches, mobs set fire to four mosques in West Timor Monday after a protest and strike by thousands of Christians degenerated into a riot, the military and a Muslim leader said. A rampaging crowd also burned down a market and a Muslim school. Troops and riot police patrolled the streets. There were no immediate reports of serious injuries or arrests as fighting between Muslims and Christians continued after dark, said a military officer who spoke by telephone on condition of anonymity. The violence in the Christian-dominated city of Kupang was in retaliation for the burning and ransacking of 22 churches by Muslim mobs in the capital, Jakarta, on Nov. 22, when 14 people were killed. Islamic leaders urged Indonesia's Muslim majority not to retaliate with more violence. Adurrahman Wahid, head of Indonesia's largest Muslim grouping, the 30 million-member Nahdlatul Ulama, accused provocateurs of whipping up religious strife when the sprawling Southeast Asian nation is trying to head toward democracy. ``I hope Muslims ... are not deceived by such provocations,'' said Wahid, who has been pushing for religious unity. West Timor shares the same island as troubled East Timor, a former Portuguese territory dominated by Roman Catholicism and invaded by Indonesia in 1975. Christians, mostly Protestants, dominate Kupang, about 1,875 kilometers (1,172 miles) southeast of the Indonesian capital. However, a sizable Muslim minority also lives there. The Kupang riot broke out after thousands of Christians staged a peaceful strike and street protest against the Jakarta church attacks. Most offices and shops were closed in the city of 120,000, the capital of East Nusa Tenggara province, whose governor called for calm. Organizers of Monday's strike had called for a non-violent ``day of mourning.'' However, residents said fires broke out in three mosques after rival gangs pelted each other with rocks. Indonesia is the world's most populous Islamic nation. About 90 percent of Indonesia's 202 million people are Muslims, with the rest following Christian, Hindu, Buddhist or other faiths. Religious diversity based on a belief in God is enshrined in the national philosophy, known as Pancasila, adopted when Indonesia declared independence from Dutch colonial rule in 1945. The upsurge in religious violence follows months of riots and protests in many parts of Indonesia. Social tensions in the sprawling Southeast Asian nation have intensified as it grapples with its worst economic crisis in decades. There is also political turmoil as students protesters demand greater democracy after 32 years of authoritarian rule by former President Suharto, who was forced to quit following deadly riots in May. Ismalil Hasan Metareum, head of the Muslim-dominated opposition United Development Party, urged his followers not to hit back. More than 100,000 party supporters filled a sports stadium in Jakarta Sunday at the opening of a four-day convention. Religious strife erupted recently in the eastern part of the main island of Java, where more than 150 people, many of them Islamic clerics, have been murdered, apparently by rival Muslim groups. Many of the dead were accused of practicing black magic. ||||| In a decision welcomed as a landmark by Portugal, European Union leaders Saturday backed calls for a referendum to decide the fate of East Timor, the former Portuguese colony occupied by Indonesia since 1975. ``A definitive solution to the East Timor question will not be possible without free consultation to establish the real will of the East Timorese people,'' the 15 EU leaders said in statement after their year-end summit. Portuguese Foreign Minister Jaime Gama said the statement marked the first time the EU had backed Lisbon's call for the East Timorese to vote on whether to opt for independence or remain under Indonesian rule. Indonesia has resisted such calls for a referendum and maintains thousands of troops to keep order in the half-island territory. The EU statement also urged Indonesia to bring about a ``real and substantial reduction'' in troop levels and called for the establishment of a permanent U.N. presence in East Timor. The leaders repeated a demand that Indonesia release jailed Timorese rebel leader Xanana Gusmao, and all political prisoners. Indonesia invaded East Timor in 1975 as Portugal prepared to grant independence, and annexed it the following year. The United Nations does not recognize Indonesian rule. ||||| Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor.

After Portugal left East Timor, Indonesia invaded and annexed it. Rebels have waged a small war since 1975. The UN doesn't recognize Indonesian claims. UN talks, suspended by Portugal, were revived after Suharto's ouster. The EU urges a permanent UN presence and an E. Timor referendum on its future. Taiwan denied entry to an E. Timor Nobelist independence advocate. E. Timor mosques were set fire to avenge attacks on majority Christian churches. Australia trained Indonesian officers to monitor human rights. Indonesian troop attacks on unarmed E. Timor civilians are claimed. Indonesia and E. Timor are said to be compromising but a solution is still distant.

Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement claimed. Jose Pau Lelo, 38, Rosito Borges, 35, and Leao Soares, 50, were in a coma due to injuries they sustained in the attack, according to the statement which cited resistance sources in East Timor's capital Dili. The statement, released in the Portuguese capital Lisbon, also said 19 men were wounded, eight seriously, and 26 others were missing. The names, ages and occupations of the villagers were listed. There was no independent confirmation of the attack, and Indonesian officials were was not immediately available for comment. Indonesia invaded East Timor in Dec. 1975, following Portugal's colonial rule, and annexed it a month later. Indonesian troops have since then been fighting a small band of pro-independence guerillas. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, said he also had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| JAKARTA, Indonesia (AP) - As a U.N. envoy trotted toward an Indonesian army helicopter, East Timorese protesters spilled onto the runway tarmac and shouted their anger at nervous soldiers. Sent to make peace in Indonesian-controlled East Timor, Jamsheed Marker's recent hasty departure from the troubled territory signaled how easily tensions there can boil over. Yet Marker, who is visiting Indonesia to promote a U.N.-designed blueprint for autonomy in the former Portuguese colony, said Monday that both sides in the bitter conflict were displaying a newfound taste for compromise. In an interview with The Associated Press, Marker admitted that a peaceful solution remains distant. But in a big step forward, he said, many separatist activists were no longer pressing for an immediate vote on independence. ``They don't want independence tomorrow,'' said Marker, who was interviewed in a Jakarta hotel suite after his trip to East Timor. In other progress, Indonesia and Portugal will send diplomats to open ``interest'' sections in each other's capitals next month. Formal diplomatic relations, however, will not be resumed. Also in January, the two countries are scheduled to embark on a new round of U.N.-sponsored peace talks in New York. Turmoil has plagued East Timor ever since Indonesian troops invaded in 1975, unleashing a separatist rebel war and the resentment of a population pummeled by human rights abuses. Talks were revived earlier this year after the ouster of authoritarian President Suharto, but differences remain over a definition of autonomy that would suit all parties. Separatists want it to be transitional, while Indonesia is offering East Timorese partial control of their affairs in exchange for international recognition of its sovereignty. Jakarta wants to handle foreign, defense and financial affairs. Fears are widespread that more unrest in East Timor could derail the negotiations. On Monday, Marker voiced his concern in a meeting with East Timor's jailed rebel chief, Xanana Gusmao. ``I said there was a lot of tension in East Timor and that he and his people ought to do everything they can to reduce it,'' said Marker, a former Pakistani ambassador to the United Nations. Tempers flared but there was no violence during protests timed for Marker's weekend trip to Dili, the seaside capital of the half-island territory of 800,000 people. On Sunday, separatist protesters tore down a fence at the commercial airport and pushed past soldiers with automatic rifles as they tried in vain to speak to Marker as he left. During a visit last year, Indonesian soldiers killed two pro-independence demonstrators outside a hotel where Marker was staying. Activists have alleged that Indonesia secretly ferried troops into East Timor in spite of pledges to reduce the number. Marker said Jakarta had advised him of troop rotations and that U.N. staff were monitoring the situation. Marker was scheduled to talk with Indonesian President B.J. Habibie on Tuesday and will leave Indonesia on Wednesday to prepare for another batch of meetings in the New Year. ``If you ask me... `Do you have a solution?' then the answer is, `I don't,''' he said. ``But I think there are ways of getting there and the first thing is to have peace and quiet.'' ||||| Taiwan's Foreign Ministry on Thursday blamed ``administrative negligence'' for an incident in which Nobel Peace Prize winner Josi Ramos-Horta was left stranded at the airport for hours after being refused entry. Opposition supporters alleged the incident Wednesday night was politically motivated. Ramos-Horta is an advocate of independence for Indonesian-controlled East Timor, and newspapers reported Taiwan had formerly barred him to avoid antagonizing Indonesia. But Ramos-Horta's previous persona non grata status had been ordered lifted by the Foreign Ministry in August, leaving no reason why he should have been refused entry by airport immigration when he came to town Wednesday night, ministry spokesman Roy Wu told a news conference. ``This incident accentuated the problem with administrative relations, it needs to be improved. ... It's a fact,'' Wu told a news conference. Ramos-Horta had a rough time Wednesday night. Immigration officials would not let him in, then he tried to catch a flight out but missed the plane. Eventually, the Foreign Ministry intervened and let Ramos-Horta enter Taiwan. He went only as far as the airport hotel. Conflicting reports indicate Ramos-Horta was stuck at the airport for between four and seven hours. Ramos-Horta was carrying a Portuguese passport, which should have permitted him visa-free entry to Taiwan for up to 14 days, newspapers said. The opposition Democratic Progressive Party alleged Ramos-Horta had been refused entry because he planned to speak on behalf of Chen Shui-bian's campaign to be re-elected as mayor of Taipei. Chen is Taiwan's most prominent DPP politician. ``This sort of incident shows that Taiwan is just not qualified to be called a democratic nation,'' DPP Secretary-General Chiu Yi-jen told a news conference. Ramos-Horta sought to play down the incident before leaving town Thursday. ``I don't want to make a big problem out of it. I have been to many countries. The only countries that don't allow me in would be countries like Iraq, Iran,'' he told reporters before catching an afternoon flight to attend a conference in Australia. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations does not recognize Indonesian claims to East Timor. ||||| Indonesia on Tuesday denied claims that its troops massacred more than 40 East Timorese recently, and criticized Portugal for suspending U.N.-sponsored talks over the future of the troubled territory. Foreign Minister Ali Alatas questioned whether Portugal truly wanted to settle the problem of East Timor, a former Portuguese colony, the official Antara news agency reported. Portugal suspended the talks with Indonesia in New York last week following reports of a massacre of dozens of East Timorese rebels in a series of clashes with Indonesian troops. East Timor's spiritual leader, Roman Catholic Bishop Carlos Belo, has said that between 30 and 40 people were reportedly killed near the villages of Alas and Same, 40 kilometers (25 miles) southeast of Dili, East Timor capital. The 1996 Nobel Peace Prize winner said that so far, only 11 bodies had been identified. Alatas said the claims of a massacre were not true. ``The Portuguese delegation, without checking the truth of the information, decided to temporarily suspend the ongoing dialogue,'' Antara quoted Alatas as saying. The New York-based group Human Rights Watch said some deaths had occurred in fights between rebels and Indonesian forces. However, it could not confirm claims that dozens of people had been killed. Alatas said it was the third time that Portugal had unilaterally suspended talks over East Timor since 1986. Based on this, Alatas said, Indonesia was skeptical about Portugal's sincerity, Antara reported. In response, Portugal's Foreign Ministry accused Indonesia of breaking promises to reduce its military presence in East Timor and called for a permanent U.N. mission in the disputed territory. ``Unfortunately, Indonesia has increased its deployment and the brutality of its military actions in East Timor,'' said ministry spokesman Horacio Cesar. Meanwhile, about 500 students ended their noisy but peaceful rally outside the office of East Timor's governor in Dili Tuesday after receiving promises that the reported killings would be investigated. In a dialogue with the students' representatives, Governor Abilio Osorio Soares and military chief Col. Suhartono Suratman agreed to set up a team to make a thorough investigation. The group earlier had spent one night occupying the provincial Parliament and vowed to stay at the governor's office. The students also demanded a total withdrawal of Indonesian soldiers from East Timor. Meanwhile, an unidentified man, believed to be a rebel, was reported to have shot and wounded Izildo Pereira, a civilian, in Baucau, 100 kilometers (62 miles) east of Dili. Izildo, 30, who was shot Sunday, was being treated at a military hospital in Dili. Indonesia invaded East Timor in 1975 and annexed it the following year. The United Nations, however, does not recognize Indonesia's claim. Before being suspended, the talks centered on an Indonesian offer to give East Timor autonomy in return for international recognition of Indonesian sovereignty there. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the National Council of Timorese Resistance, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Representatives of exiled East Timorese pro-independence groups said Friday that Indonesian troops attacked unarmed civilians in a village in the disputed Southeast Asian territory, killing one East Timorese and wounding 22 others. The report could not be independently confirmed, and Indonesian officials were not immediately available for comment. The attack took place Tuesday near Cailaco in East Timor, a former Portuguese colony, according to a statement issued by the pro-independence Christian Democratic Union of East Timor. Placido dos Santos, a 28-year-old farmer, was tortured and killed by the Indonesian military during the attack, the statement, which cited resistance sources in East Timor's capital, Dili. The statement, released in the Portuguese capital of Lisbon, also said that 22 people were injured and 26 were missing. The names, ages and occupations of the villagers were listed. Roque Rodrigues, a Lisbon spokesman for the Socialist Party of Timor, another pro-independence group, said he had corroborated the report with six sources inside East Timor and said he had ``no reasons to doubt the truth'' of the statement. The United Nations, which is brokering talks between Lisbon and Jakarta over the territory's political future, still regards Portugal as the administering power in East Timor. The half-island territory lies some 2,000 kilometers (1,200 miles) southeast of Jakarta. ||||| Bent on revenge for earlier attacks on churches, mobs set fire to four mosques in West Timor Monday after a protest and strike by thousands of Christians degenerated into a riot, the military and a Muslim leader said. A rampaging crowd also burned down a market and a Muslim school. Troops and riot police patrolled the streets. There were no immediate reports of serious injuries or arrests as fighting between Muslims and Christians continued after dark, said a military officer who spoke by telephone on condition of anonymity. The violence in the Christian-dominated city of Kupang was in retaliation for the burning and ransacking of 22 churches by Muslim mobs in the capital, Jakarta, on Nov. 22, when 14 people were killed. Islamic leaders urged Indonesia's Muslim majority not to retaliate with more violence. Adurrahman Wahid, head of Indonesia's largest Muslim grouping, the 30 million-member Nahdlatul Ulama, accused provocateurs of whipping up religious strife when the sprawling Southeast Asian nation is trying to head toward democracy. ``I hope Muslims ... are not deceived by such provocations,'' said Wahid, who has been pushing for religious unity. West Timor shares the same island as troubled East Timor, a former Portuguese territory dominated by Roman Catholicism and invaded by Indonesia in 1975. Christians, mostly Protestants, dominate Kupang, about 1,875 kilometers (1,172 miles) southeast of the Indonesian capital. However, a sizable Muslim minority also lives there. The Kupang riot broke out after thousands of Christians staged a peaceful strike and street protest against the Jakarta church attacks. Most offices and shops were closed in the city of 120,000, the capital of East Nusa Tenggara province, whose governor called for calm. Organizers of Monday's strike had called for a non-violent ``day of mourning.'' However, residents said fires broke out in three mosques after rival gangs pelted each other with rocks. Indonesia is the world's most populous Islamic nation. About 90 percent of Indonesia's 202 million people are Muslims, with the rest following Christian, Hindu, Buddhist or other faiths. Religious diversity based on a belief in God is enshrined in the national philosophy, known as Pancasila, adopted when Indonesia declared independence from Dutch colonial rule in 1945. The upsurge in religious violence follows months of riots and protests in many parts of Indonesia. Social tensions in the sprawling Southeast Asian nation have intensified as it grapples with its worst economic crisis in decades. There is also political turmoil as students protesters demand greater democracy after 32 years of authoritarian rule by former President Suharto, who was forced to quit following deadly riots in May. Ismalil Hasan Metareum, head of the Muslim-dominated opposition United Development Party, urged his followers not to hit back. More than 100,000 party supporters filled a sports stadium in Jakarta Sunday at the opening of a four-day convention. Religious strife erupted recently in the eastern part of the main island of Java, where more than 150 people, many of them Islamic clerics, have been murdered, apparently by rival Muslim groups. Many of the dead were accused of practicing black magic. ||||| In a decision welcomed as a landmark by Portugal, European Union leaders Saturday backed calls for a referendum to decide the fate of East Timor, the former Portuguese colony occupied by Indonesia since 1975. ``A definitive solution to the East Timor question will not be possible without free consultation to establish the real will of the East Timorese people,'' the 15 EU leaders said in statement after their year-end summit. Portuguese Foreign Minister Jaime Gama said the statement marked the first time the EU had backed Lisbon's call for the East Timorese to vote on whether to opt for independence or remain under Indonesian rule. Indonesia has resisted such calls for a referendum and maintains thousands of troops to keep order in the half-island territory. The EU statement also urged Indonesia to bring about a ``real and substantial reduction'' in troop levels and called for the establishment of a permanent U.N. presence in East Timor. The leaders repeated a demand that Indonesia release jailed Timorese rebel leader Xanana Gusmao, and all political prisoners. Indonesia invaded East Timor in 1975 as Portugal prepared to grant independence, and annexed it the following year. The United Nations does not recognize Indonesian rule. ||||| Protesters on Sunday urged Australian military leaders to identify Indonesian army officers trained here to allow closer monitoring of human rights abuses in East Timor. The Australian military holds joint training exercises with Indonesian troops, including the elite commando units accused ot atrocities in East Timor. In Queensland, about 100 activists gathered outside the Canungra Land Warfare Center, south of Brisbane, to mark the 23rd anniversary of the Indonesian invasion of East Timor. ``It is a peaceful protest against Australia training Indonesian soldiers,'' spokesman Jason McLeod said. The protesters wanted Australia to cut all military ties with Indonesia despite Defence Minister John Moore's recent announcement that joint exercises would resume, he said. ``The Australian government has repeatedly refused to allow the Indonesians trained here to be identified,'' McLeod said. ``But we are demanding they be named along with their unit and battalion number because this will allow closer monitoring of human rights issues,'' he said. McLeod said 40,000 East Timorese were killed by Japanese soldiers for protecting Australian commandos during World War II. ``When they finally left the country the Australians distributed leaflets saying they would never forget the people of East Timor,'' he said. The protesters wanted to remind Australia's current soldiers of that pledge. After Portugal abandoned its former colony in East Timor in 1975, Indonesia invaded it and annexed it the following year. The United Nations refuses to recognize the annexation as legitimate; Australia is one of the few nations that recognizes Indonesian sovereignty over East Timor.

The UN envoy, brokering a solution for the fate of East Timor, is hopeful that both sides have softened their positions and Indonesia and Portugal will resume talks. Debate centers on having a referendum and the extent of final Timorese control. Talks had ended last month and several incidents have occurred, with dead, wounded and missing reported, and mosques and churches destroyed. Since 1975, East Timor, a mainly Christian, former Portuguese colony, has been occupied by, the mostly Muslim, Indonesia. Recently the European Union supported Portugal's position, while Pacific nations, especially, Australia and Taiwan, try not to antagonize Indonesia.

Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. Egyptian Foreign Minister Amr Moussa said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and plans to dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkish allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the offer of mediation in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, on Sunday, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not allow its neighbor to continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. He called for a ``diplomatic dialogue'' to defuse the tension, said Assad's spokesman Jubran Kourieh. Prime Minister Rafik Hariri said his country backs Syria in the dispute, which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday hat Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz denied Monday that Kurdish rebels were based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than 1 1/2 years ago to stop the activities of any PKK member,'' Bweiz said at a news conference. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' the Lebanese prime minister said in an interview with An-Nahar daily. Hariri said Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. Israeli officials had no immediate comment because it is the Sukkot holiday and all government offices are closed. Since the Syrian-Turkish crisis began, Israeli defense minister Yitzhak Mordechai has said Israel is not a party to it and that the Israeli-Turkish military coooperation is not directed against any third state. Meanwhile, Syria's Assad received messages of support from Saudi Crown Prince Abdullah bin Abdel-Aziz and from the leaders of Yemen and Sudan, said Syria's official news agency, SANA. The Arab leaders called for diplomatic solution to the crisis. ||||| Signaling it does not want to be involved in any potential military confrontation between Syria and Turkey, Israel is limiting routine exercises along its own border with Syria. Prime Minister Benjamin Netanyahu also stressed Israel's hands-off approach to the escalating dispute between Damascus and Ankara. ``We have no part in this tension,'' Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' Defense Minister Yitzhak Mordechai instructed the army to limit military maneuvers along Israel's border with Syria to avoid giving any impression Israel is poised to act. ``Israel is not interested in confrontation with Syria, but rather in finding ways to renew talks,'' Mordechai's office quoted him Sunday as saying. Turkey amassed, 4th graf pvs ||||| Turkey has sent 10,000 troops to its southeastern border with Syria amid growing tensions between the two neighbors, newspapers reported Thursday. The daily Milliyet quoted eyewitnesses as saying they saw convoys of armored vehicles approaching the 600-kilometer (375-mile) border; the daily Cumhuriyet said around 10,000 troops were being deployed. Defense Minister Ismet Sezgin denied any troop movement along the border, but said Turkey's patience was running out. President Suleyman Demirel was harsher during parliament's opening session Thursday. ``I declare to the world that we retain our right to counter Syria, which has not given up its hostile attitude despite all our warnings and peaceful approaches,'' he said. Turkey accuses Syria of harboring Turkish Kurdish rebels fighting for autonomy in Turkey's southeast; it says rebel leader Abdullah Ocalan lives in Damascus. Relations are also strained by the growing military and diplomatic ties between Turkey and Israel, which Damascus claims destabilizes the region. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. Prime Minister Rafik Hariri said his country backs Syria in the dispute which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz said Monday there were no Kurdish rebels based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than a 1{ ago to stop the activities of any PKK member,'' Bweiz told a news conference. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' He said. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. Hariri said in an interview with An-Nahar daily that Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and will dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkey's allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the mediation offer Sunday in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not let its neighbor continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. In Jordan, Crown Prince Hassan urged Demirel in a telephone call to ``exert all efforts to resolve the crisis without resorting to military confrontation,'' said Information Minister Nasser Judeh. Judeh said Hassan, who is acting as regent in King Hussein's absence, also told Demirel that Jordan was ``ready to provide any assistance'' to help resolve the dispute. ||||| Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. But Egyptian Foreign Minister Amr Moussa, who accompanied him on the trip, said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Greece on Monday warned that mounting tension between Turkey and Syria could lead to ``tragic results'' if not dealt with in its early stages. ``Sources of tension are being created in our region,'' government spokesman Dimitris Reppas said. ``We will have to deal with these sources from their birth, because they may develop out of control and we will be led to tragic results.'' Greece accused Turkey of undermining the whole region's stability through its stand-off with Syria over the alleged harboring of Kurdish rebels. ``Sadly, the tone of certain countries is not constructive,'' Reppas said. ``Turkey in particular ... repeatedly dynamites every effort'' for the creation of a climate of regional stability. Turkish troops have reportedly massed on the frontier with Syria, while Ankara has indicated its readiness for cross-border raids to eradicate what it claims are guerrilla bases harboring Kurdish rebels. Syria has denied the charge. In the past, Turkish officials have also accused Greece of harboring Kurdish rebels and running guerrilla training camps. Athens denied the charge, and no evidence has been found to support the accusations. Relations between Greece and neighboring Turkey are rarely cordial. The two NATO allies are at odds over a variety of issues, and have twice reached the brink of war in the past 11 years over the Aegean Sea. But as neighbors, countries in the region must learn to get along, Reppas stressed. ``No one can change geographical facts,'' he said. ``As we live in this region of the world ... we have to strive for good friendly relations and cooperation.'' ||||| As Turkey kept up warlike rhetoric against Damascus, Egypt on Sunday began shuttle democracy between the two neighbors to avoid a military confrontation over Turkish Kurdish bases in Syria. Turkish President Suleyman Demirel said that Turkey was in a position of self-defense and had suffered for many years from Damascus' sheltering of the autonomy-seeking rebels. Some 10,000 Turkish troops were deployed this week on the Turkish-Syrian border, news reports said. Damascus denies that it is supporting the rebels, who wage cross-border raids from camps in Iraq, Iran and Syria. ``This situation is serious,'' Demirel said. ``I am not only warning Syria, I am warning the world. This cannot continue.'' He did not elaborate and it was unclear whether Demirel was warning of a possible military confrontation. But several military and civilian leaders here have said that if diplomacy fails, the military would be charged with solving the issue. ``Our patience has run out. We are determined to take all necessary measures if we don't see any response to our goodwill,'' the commander of Turkish land forces, Gen. Atilla Ates, said last week. Milliyet daily speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa valley of Lebanon, where Turkey says the rebels have bases. Another report claimed the Turkish army had been put on alert. But Defense Minister Ismet Sezgin insisted Sunday that war was the last resort. ``I don't believe it will come to that,'' he said. The war in Turkey's southeast waged by rebels seeking autonomy for the country's large Kurdish minority, has killed some 37,000 people since 1984. In an attempt to the ease tension that many fear may spill over into the entire Middle East, Egyptian President Hosni Mubarak met with his Syrian counterpart Hafez Assad in Damascus. Egypt's Middle East News Agency quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey this week would be fruitful. Jordan, which cautioned Syria and Turkey to take into consideration the higher interests of the region, offered to mediate. Fueling tension between the two countries are Turkey and Israel's expanding military and diplomatic ties. Syria claims the ties are a threat to the Arab world, and on Saturday, Damascus again accused Turkey of plotting with Israel to undermine Syria. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu said Sunday. ``We have taken steps to reassure Syria.'' Israel has also instructed its army to limit military maneuvers along its border with Syria to avoid giving any impression that Israel is poised to act. On Sunday, the Arab League called on Turkey to end its military cooperation with Israel. Syria and Turkey have a long history of disagreements. Damascus is concerned by Ankara's plans to build dams on the Euphrates River, a key source of water for Syria, while Turkey accuses Syria of having aspirations over a Turkish border province, Hatay, which has a sizable Arab population.

In early October 1998 Turkey moved 10,000 troops to the Syrian border accusing its neighbor of harboring Kurdish rebels and their leader Abdullah Ocalan. Syria denied the charges and blamed Turkey's belligerence on its military alliance with Israel. As the dispute threatened to ignite the whole volatile region, Egypt's President Mubarak launched a mediation effort soon joined by Iran and Jordan. Saudi Arabia, Yemen, Sudan, Lebanon and Greece voiced support for Syria, but all called for a diplomatic solution. Israel did not take sides urging diplomatic talks and insisting that Israeli-Turkish military cooperation played no role in the crisis.

Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. Egyptian Foreign Minister Amr Moussa said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and plans to dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkish allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the offer of mediation in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, on Sunday, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not allow its neighbor to continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. He called for a ``diplomatic dialogue'' to defuse the tension, said Assad's spokesman Jubran Kourieh. Prime Minister Rafik Hariri said his country backs Syria in the dispute, which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday hat Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz denied Monday that Kurdish rebels were based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than 1 1/2 years ago to stop the activities of any PKK member,'' Bweiz said at a news conference. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' the Lebanese prime minister said in an interview with An-Nahar daily. Hariri said Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. Israeli officials had no immediate comment because it is the Sukkot holiday and all government offices are closed. Since the Syrian-Turkish crisis began, Israeli defense minister Yitzhak Mordechai has said Israel is not a party to it and that the Israeli-Turkish military coooperation is not directed against any third state. Meanwhile, Syria's Assad received messages of support from Saudi Crown Prince Abdullah bin Abdel-Aziz and from the leaders of Yemen and Sudan, said Syria's official news agency, SANA. The Arab leaders called for diplomatic solution to the crisis. ||||| Signaling it does not want to be involved in any potential military confrontation between Syria and Turkey, Israel is limiting routine exercises along its own border with Syria. Prime Minister Benjamin Netanyahu also stressed Israel's hands-off approach to the escalating dispute between Damascus and Ankara. ``We have no part in this tension,'' Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' Defense Minister Yitzhak Mordechai instructed the army to limit military maneuvers along Israel's border with Syria to avoid giving any impression Israel is poised to act. ``Israel is not interested in confrontation with Syria, but rather in finding ways to renew talks,'' Mordechai's office quoted him Sunday as saying. Turkey amassed, 4th graf pvs ||||| Turkey has sent 10,000 troops to its southeastern border with Syria amid growing tensions between the two neighbors, newspapers reported Thursday. The daily Milliyet quoted eyewitnesses as saying they saw convoys of armored vehicles approaching the 600-kilometer (375-mile) border; the daily Cumhuriyet said around 10,000 troops were being deployed. Defense Minister Ismet Sezgin denied any troop movement along the border, but said Turkey's patience was running out. President Suleyman Demirel was harsher during parliament's opening session Thursday. ``I declare to the world that we retain our right to counter Syria, which has not given up its hostile attitude despite all our warnings and peaceful approaches,'' he said. Turkey accuses Syria of harboring Turkish Kurdish rebels fighting for autonomy in Turkey's southeast; it says rebel leader Abdullah Ocalan lives in Damascus. Relations are also strained by the growing military and diplomatic ties between Turkey and Israel, which Damascus claims destabilizes the region. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. Prime Minister Rafik Hariri said his country backs Syria in the dispute which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz said Monday there were no Kurdish rebels based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than a 1{ ago to stop the activities of any PKK member,'' Bweiz told a news conference. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' He said. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. Hariri said in an interview with An-Nahar daily that Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and will dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkey's allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the mediation offer Sunday in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not let its neighbor continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. In Jordan, Crown Prince Hassan urged Demirel in a telephone call to ``exert all efforts to resolve the crisis without resorting to military confrontation,'' said Information Minister Nasser Judeh. Judeh said Hassan, who is acting as regent in King Hussein's absence, also told Demirel that Jordan was ``ready to provide any assistance'' to help resolve the dispute. ||||| Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. But Egyptian Foreign Minister Amr Moussa, who accompanied him on the trip, said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Greece on Monday warned that mounting tension between Turkey and Syria could lead to ``tragic results'' if not dealt with in its early stages. ``Sources of tension are being created in our region,'' government spokesman Dimitris Reppas said. ``We will have to deal with these sources from their birth, because they may develop out of control and we will be led to tragic results.'' Greece accused Turkey of undermining the whole region's stability through its stand-off with Syria over the alleged harboring of Kurdish rebels. ``Sadly, the tone of certain countries is not constructive,'' Reppas said. ``Turkey in particular ... repeatedly dynamites every effort'' for the creation of a climate of regional stability. Turkish troops have reportedly massed on the frontier with Syria, while Ankara has indicated its readiness for cross-border raids to eradicate what it claims are guerrilla bases harboring Kurdish rebels. Syria has denied the charge. In the past, Turkish officials have also accused Greece of harboring Kurdish rebels and running guerrilla training camps. Athens denied the charge, and no evidence has been found to support the accusations. Relations between Greece and neighboring Turkey are rarely cordial. The two NATO allies are at odds over a variety of issues, and have twice reached the brink of war in the past 11 years over the Aegean Sea. But as neighbors, countries in the region must learn to get along, Reppas stressed. ``No one can change geographical facts,'' he said. ``As we live in this region of the world ... we have to strive for good friendly relations and cooperation.'' ||||| As Turkey kept up warlike rhetoric against Damascus, Egypt on Sunday began shuttle democracy between the two neighbors to avoid a military confrontation over Turkish Kurdish bases in Syria. Turkish President Suleyman Demirel said that Turkey was in a position of self-defense and had suffered for many years from Damascus' sheltering of the autonomy-seeking rebels. Some 10,000 Turkish troops were deployed this week on the Turkish-Syrian border, news reports said. Damascus denies that it is supporting the rebels, who wage cross-border raids from camps in Iraq, Iran and Syria. ``This situation is serious,'' Demirel said. ``I am not only warning Syria, I am warning the world. This cannot continue.'' He did not elaborate and it was unclear whether Demirel was warning of a possible military confrontation. But several military and civilian leaders here have said that if diplomacy fails, the military would be charged with solving the issue. ``Our patience has run out. We are determined to take all necessary measures if we don't see any response to our goodwill,'' the commander of Turkish land forces, Gen. Atilla Ates, said last week. Milliyet daily speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa valley of Lebanon, where Turkey says the rebels have bases. Another report claimed the Turkish army had been put on alert. But Defense Minister Ismet Sezgin insisted Sunday that war was the last resort. ``I don't believe it will come to that,'' he said. The war in Turkey's southeast waged by rebels seeking autonomy for the country's large Kurdish minority, has killed some 37,000 people since 1984. In an attempt to the ease tension that many fear may spill over into the entire Middle East, Egyptian President Hosni Mubarak met with his Syrian counterpart Hafez Assad in Damascus. Egypt's Middle East News Agency quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey this week would be fruitful. Jordan, which cautioned Syria and Turkey to take into consideration the higher interests of the region, offered to mediate. Fueling tension between the two countries are Turkey and Israel's expanding military and diplomatic ties. Syria claims the ties are a threat to the Arab world, and on Saturday, Damascus again accused Turkey of plotting with Israel to undermine Syria. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu said Sunday. ``We have taken steps to reassure Syria.'' Israel has also instructed its army to limit military maneuvers along its border with Syria to avoid giving any impression that Israel is poised to act. On Sunday, the Arab League called on Turkey to end its military cooperation with Israel. Syria and Turkey have a long history of disagreements. Damascus is concerned by Ankara's plans to build dams on the Euphrates River, a key source of water for Syria, while Turkey accuses Syria of having aspirations over a Turkish border province, Hatay, which has a sizable Arab population.

Tensions between Syria and Turkey increased as Turkey sent 10,000 troops to its border with Syria. The dispute comes amid accusations by Turkey that Syria helping Kurdish rebels based in Syria. Kurdish rebels have been conducting cross border raids into Turkey in an effort to gain Kurdish autonomy in the region. Egyptian President Mubarek has been involved in shuttle diplomacy to the two states in an effort to defuse the situation and Iraq also has offered to mediate the dispute between the two countries. Although Israel has tried to demonstrate its neutrality, Lebanon has charged That Israel is the cause of the tensions between Syria and Turkey.

Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. Egyptian Foreign Minister Amr Moussa said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and plans to dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkish allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the offer of mediation in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, on Sunday, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not allow its neighbor to continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. He called for a ``diplomatic dialogue'' to defuse the tension, said Assad's spokesman Jubran Kourieh. Prime Minister Rafik Hariri said his country backs Syria in the dispute, which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday hat Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz denied Monday that Kurdish rebels were based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than 1 1/2 years ago to stop the activities of any PKK member,'' Bweiz said at a news conference. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' the Lebanese prime minister said in an interview with An-Nahar daily. Hariri said Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. Israeli officials had no immediate comment because it is the Sukkot holiday and all government offices are closed. Since the Syrian-Turkish crisis began, Israeli defense minister Yitzhak Mordechai has said Israel is not a party to it and that the Israeli-Turkish military coooperation is not directed against any third state. Meanwhile, Syria's Assad received messages of support from Saudi Crown Prince Abdullah bin Abdel-Aziz and from the leaders of Yemen and Sudan, said Syria's official news agency, SANA. The Arab leaders called for diplomatic solution to the crisis. ||||| Signaling it does not want to be involved in any potential military confrontation between Syria and Turkey, Israel is limiting routine exercises along its own border with Syria. Prime Minister Benjamin Netanyahu also stressed Israel's hands-off approach to the escalating dispute between Damascus and Ankara. ``We have no part in this tension,'' Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' Defense Minister Yitzhak Mordechai instructed the army to limit military maneuvers along Israel's border with Syria to avoid giving any impression Israel is poised to act. ``Israel is not interested in confrontation with Syria, but rather in finding ways to renew talks,'' Mordechai's office quoted him Sunday as saying. Turkey amassed, 4th graf pvs ||||| Turkey has sent 10,000 troops to its southeastern border with Syria amid growing tensions between the two neighbors, newspapers reported Thursday. The daily Milliyet quoted eyewitnesses as saying they saw convoys of armored vehicles approaching the 600-kilometer (375-mile) border; the daily Cumhuriyet said around 10,000 troops were being deployed. Defense Minister Ismet Sezgin denied any troop movement along the border, but said Turkey's patience was running out. President Suleyman Demirel was harsher during parliament's opening session Thursday. ``I declare to the world that we retain our right to counter Syria, which has not given up its hostile attitude despite all our warnings and peaceful approaches,'' he said. Turkey accuses Syria of harboring Turkish Kurdish rebels fighting for autonomy in Turkey's southeast; it says rebel leader Abdullah Ocalan lives in Damascus. Relations are also strained by the growing military and diplomatic ties between Turkey and Israel, which Damascus claims destabilizes the region. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. Prime Minister Rafik Hariri said his country backs Syria in the dispute which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz said Monday there were no Kurdish rebels based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than a 1{ ago to stop the activities of any PKK member,'' Bweiz told a news conference. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' He said. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. Hariri said in an interview with An-Nahar daily that Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and will dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkey's allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the mediation offer Sunday in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not let its neighbor continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. In Jordan, Crown Prince Hassan urged Demirel in a telephone call to ``exert all efforts to resolve the crisis without resorting to military confrontation,'' said Information Minister Nasser Judeh. Judeh said Hassan, who is acting as regent in King Hussein's absence, also told Demirel that Jordan was ``ready to provide any assistance'' to help resolve the dispute. ||||| Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. But Egyptian Foreign Minister Amr Moussa, who accompanied him on the trip, said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Greece on Monday warned that mounting tension between Turkey and Syria could lead to ``tragic results'' if not dealt with in its early stages. ``Sources of tension are being created in our region,'' government spokesman Dimitris Reppas said. ``We will have to deal with these sources from their birth, because they may develop out of control and we will be led to tragic results.'' Greece accused Turkey of undermining the whole region's stability through its stand-off with Syria over the alleged harboring of Kurdish rebels. ``Sadly, the tone of certain countries is not constructive,'' Reppas said. ``Turkey in particular ... repeatedly dynamites every effort'' for the creation of a climate of regional stability. Turkish troops have reportedly massed on the frontier with Syria, while Ankara has indicated its readiness for cross-border raids to eradicate what it claims are guerrilla bases harboring Kurdish rebels. Syria has denied the charge. In the past, Turkish officials have also accused Greece of harboring Kurdish rebels and running guerrilla training camps. Athens denied the charge, and no evidence has been found to support the accusations. Relations between Greece and neighboring Turkey are rarely cordial. The two NATO allies are at odds over a variety of issues, and have twice reached the brink of war in the past 11 years over the Aegean Sea. But as neighbors, countries in the region must learn to get along, Reppas stressed. ``No one can change geographical facts,'' he said. ``As we live in this region of the world ... we have to strive for good friendly relations and cooperation.'' ||||| As Turkey kept up warlike rhetoric against Damascus, Egypt on Sunday began shuttle democracy between the two neighbors to avoid a military confrontation over Turkish Kurdish bases in Syria. Turkish President Suleyman Demirel said that Turkey was in a position of self-defense and had suffered for many years from Damascus' sheltering of the autonomy-seeking rebels. Some 10,000 Turkish troops were deployed this week on the Turkish-Syrian border, news reports said. Damascus denies that it is supporting the rebels, who wage cross-border raids from camps in Iraq, Iran and Syria. ``This situation is serious,'' Demirel said. ``I am not only warning Syria, I am warning the world. This cannot continue.'' He did not elaborate and it was unclear whether Demirel was warning of a possible military confrontation. But several military and civilian leaders here have said that if diplomacy fails, the military would be charged with solving the issue. ``Our patience has run out. We are determined to take all necessary measures if we don't see any response to our goodwill,'' the commander of Turkish land forces, Gen. Atilla Ates, said last week. Milliyet daily speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa valley of Lebanon, where Turkey says the rebels have bases. Another report claimed the Turkish army had been put on alert. But Defense Minister Ismet Sezgin insisted Sunday that war was the last resort. ``I don't believe it will come to that,'' he said. The war in Turkey's southeast waged by rebels seeking autonomy for the country's large Kurdish minority, has killed some 37,000 people since 1984. In an attempt to the ease tension that many fear may spill over into the entire Middle East, Egyptian President Hosni Mubarak met with his Syrian counterpart Hafez Assad in Damascus. Egypt's Middle East News Agency quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey this week would be fruitful. Jordan, which cautioned Syria and Turkey to take into consideration the higher interests of the region, offered to mediate. Fueling tension between the two countries are Turkey and Israel's expanding military and diplomatic ties. Syria claims the ties are a threat to the Arab world, and on Saturday, Damascus again accused Turkey of plotting with Israel to undermine Syria. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu said Sunday. ``We have taken steps to reassure Syria.'' Israel has also instructed its army to limit military maneuvers along its border with Syria to avoid giving any impression that Israel is poised to act. On Sunday, the Arab League called on Turkey to end its military cooperation with Israel. Syria and Turkey have a long history of disagreements. Damascus is concerned by Ankara's plans to build dams on the Euphrates River, a key source of water for Syria, while Turkey accuses Syria of having aspirations over a Turkish border province, Hatay, which has a sizable Arab population.

Tensions rose between Syria and Turkey over claims that Syria harbored Kurdish rebels, Turkey's growing ties with Israel, and Turkish dams on the Euphrates. Turkey sent 10,000 troops to the Syrian border. Israel declared non-involvement and limited border exercises. Egypt's President traveled to Syria and Turkey to mediate. Jordan urged the interests of the region and offered to mediate, as did Iran. Lebanon denied harboring Kurds, sided with Syria and blamed Israel for tensions, but urged peace. Greece said Turkey undermined stability but urged neighbors to get along. The Saudis, Yemen and Sudan supported Syria but urged peace. Assad was to visit Turkey.

Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. Egyptian Foreign Minister Amr Moussa said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and plans to dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkish allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the offer of mediation in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, on Sunday, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not allow its neighbor to continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. He called for a ``diplomatic dialogue'' to defuse the tension, said Assad's spokesman Jubran Kourieh. Prime Minister Rafik Hariri said his country backs Syria in the dispute, which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday hat Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz denied Monday that Kurdish rebels were based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than 1 1/2 years ago to stop the activities of any PKK member,'' Bweiz said at a news conference. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' the Lebanese prime minister said in an interview with An-Nahar daily. Hariri said Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. Israeli officials had no immediate comment because it is the Sukkot holiday and all government offices are closed. Since the Syrian-Turkish crisis began, Israeli defense minister Yitzhak Mordechai has said Israel is not a party to it and that the Israeli-Turkish military coooperation is not directed against any third state. Meanwhile, Syria's Assad received messages of support from Saudi Crown Prince Abdullah bin Abdel-Aziz and from the leaders of Yemen and Sudan, said Syria's official news agency, SANA. The Arab leaders called for diplomatic solution to the crisis. ||||| Signaling it does not want to be involved in any potential military confrontation between Syria and Turkey, Israel is limiting routine exercises along its own border with Syria. Prime Minister Benjamin Netanyahu also stressed Israel's hands-off approach to the escalating dispute between Damascus and Ankara. ``We have no part in this tension,'' Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' Defense Minister Yitzhak Mordechai instructed the army to limit military maneuvers along Israel's border with Syria to avoid giving any impression Israel is poised to act. ``Israel is not interested in confrontation with Syria, but rather in finding ways to renew talks,'' Mordechai's office quoted him Sunday as saying. Turkey amassed, 4th graf pvs ||||| Turkey has sent 10,000 troops to its southeastern border with Syria amid growing tensions between the two neighbors, newspapers reported Thursday. The daily Milliyet quoted eyewitnesses as saying they saw convoys of armored vehicles approaching the 600-kilometer (375-mile) border; the daily Cumhuriyet said around 10,000 troops were being deployed. Defense Minister Ismet Sezgin denied any troop movement along the border, but said Turkey's patience was running out. President Suleyman Demirel was harsher during parliament's opening session Thursday. ``I declare to the world that we retain our right to counter Syria, which has not given up its hostile attitude despite all our warnings and peaceful approaches,'' he said. Turkey accuses Syria of harboring Turkish Kurdish rebels fighting for autonomy in Turkey's southeast; it says rebel leader Abdullah Ocalan lives in Damascus. Relations are also strained by the growing military and diplomatic ties between Turkey and Israel, which Damascus claims destabilizes the region. ||||| Lebanon on Monday denied it is harboring Kurdish rebels and blamed Israel for the rising tension between Syria and Turkey. President Elias Hrawi traveled to Damascus Monday for a summit meeting with President Hafez Assad to show Lebanon's support for Syria. Prime Minister Rafik Hariri said his country backs Syria in the dispute which was triggered Sunday when Turkish President Suleyman Demirel warned Damascus that his country would not allow its neighbor to continue sheltering Kurdish rebels. Syria denied the allegation. Ankara has sent troops to its border with Syria, prompting fears of an attack. The Turkish daily Milliyet speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa Valley of eastern Lebanon, where Turkey says rebels of Abdullah Ocalan's Kurdish Workers Party, or PKK, maintain camps. Lebanese Foreign Minister Faris Bweiz said Monday there were no Kurdish rebels based in his country. ``The Turkish authorities fully know that measures had been taken in Syria and Lebanon more than a 1{ ago to stop the activities of any PKK member,'' Bweiz told a news conference. ``We stand by Syria's side, especially in its call for resolving disputes with Turkey in the framework of a peaceful dialogue,'' He said. Ocalan in recent years was believed to shuttle between the Bekaa Valley and neighboring Syria. Hariri said in an interview with An-Nahar daily that Turkey's military moves were the product of its newly forged military alliance with Israel. ``The Turkish threats are the first outcome of the Turkish-Israeli strategic alliance,'' Hariri was quoted as saying. The Lebanese press also accused Israel of inflaming the tensions. ``It is brilliant Israeli intelligence versus absolute Turkish folly,'' wrote Talal Salman, publisher of the leftist newspaper As-Safir. ||||| Iran has offered to mediate between Syria and Turkey in the deepening dispute over Kurdish rebel bases and will dispatch envoys to the two countries, the Tehran Times reported Monday. Egypt already has launched a mediation effort to try to prevent a military confrontation over Turkey's allegations that Syria is harboring Turkish Kurdish rebels. Egyptian President Hosni Mubarak held talks Sunday with Syrian President Hafez Assad in Damascus and was expected to visit Turkey later this week. Iranian Foreign Minister Kamal Kharrazi made the mediation offer Sunday in a telephone conversation with his Syrian counterpart, Farouk al-Sharaa, said the paper, which is close to the Foreign Ministry. It did not say when Iran planned to send its emissaries. Tensions between Turkey and Syria, Iran's closest Arab ally, have escalated in recent days. Ankara has sent troops to its border with Syria, prompting fears of an attack. There have been unconfirmed reports of Turkish jets violating Syria airspace near the border. Turkish President Suleyman Demirel warned Damascus on Sunday that Turkey would not let its neighbor continue sheltering Kurdish rebels. Syria denies the allegation. Turkey long has accused Syria of providing refuge to Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Turkey's military alliance with Israel has been condemned by Iran. Syria also has accused Turkey of threatening its supply of water by building dams on the Euphrates River. In Jordan, Crown Prince Hassan urged Demirel in a telephone call to ``exert all efforts to resolve the crisis without resorting to military confrontation,'' said Information Minister Nasser Judeh. Judeh said Hassan, who is acting as regent in King Hussein's absence, also told Demirel that Jordan was ``ready to provide any assistance'' to help resolve the dispute. ||||| Egyptian President Hosni Mubarak met here Sunday with Syrian President Hafez Assad to try to defuse growing tension between Syria and Turkey. Mubarak left after the two-hour meeting without speaking to reporters. But Egyptian Foreign Minister Amr Moussa, who accompanied him on the trip, said before their departure that Mubarak ``backs dialogue for solving disputes and not military power and threats.'' Egypt's Middle East News Agency quoted Moussa as saying that Arab support for Syria should not be read in Ankara as animosity toward Turkey. The agency also quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey would achieve results. Turkey's Foreign Ministry said Mubarak was expected in Ankara, possibly on Monday. The talks in Damascus came as Turkey has massed forces near the border with Syria after threatening to eradicate Kurdish rebel bases in the neighboring country. In a show of force on Friday, Turkish jets buzzed the Syrian frontier, a Turkish daily reported. Mubarak had made an unannounced trip to Riyadh on Saturday to get backing from King Fahd of Saudi Arabia for his mediation efforts. Egypt, the Arab world's largest country with 60 million people, frequently tries to mediate Arab and Muslim disputes. ``We have to stop the tension and contain it, and military threats should stop,'' Mubarak told Egyptian reporters on Saturday. ``I am ready to exert every effort in this direction in Damascus and Ankara.'' Moussa said Mubarak had consulted by phone on Saturday with Assad and also conveyed a message to Turkish President Suleyman Demirel through Turkey's ambassador to Egypt, Yasser Yakis. Turkey long has accused Syria of sheltering Kurdish rebels, who have been fighting since 1984 for more autonomy for the Kurdish population in southeastern Turkey. Syria denies sheltering Kurdish fighters. Late last week, Turkey sent 10,000 troops into northern Iraq to hit bases that Turkish Kurds use for their uprising. For its part, Syria has accused Turkey of forming military alliances with Israel that threaten Arab security and undermine Syria's bargaining position in peace talks with the Jewish state. Damascus also accuses Turkey of building a series of dams on the Euphrates River that threaten to reduce Syria's water supply. Editorials in the Arab world called on both sides to show restraint. In Baghdad, the newspaper Babil, published by Iraqi leader Saddam Hussein's son Odai, reported the Turkish incursion into Iraq. ``The region cannot bear another conflict nor an increase in the present tensions,'' Babil said in an editorial. ``The Turkish buildup does not serve anybody as much as it will harm Turkey and Syria and other parties in the region.'' The English-language Egyptian Gazette said in an editorial on Sunday that ``the Syrians, understandably, harbor the belief that Turkey is being manipulated by its new-found ally, Israel, to pounce,'' with the dispute over Kurdish rebels being a pretext. Israel, for its part, said it does not want to become involved in any military confrontation between Syria and Turkey. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu told reporters in Jerusalem on Sunday. ``We have taken steps to reassure Syria.'' ||||| Greece on Monday warned that mounting tension between Turkey and Syria could lead to ``tragic results'' if not dealt with in its early stages. ``Sources of tension are being created in our region,'' government spokesman Dimitris Reppas said. ``We will have to deal with these sources from their birth, because they may develop out of control and we will be led to tragic results.'' Greece accused Turkey of undermining the whole region's stability through its stand-off with Syria over the alleged harboring of Kurdish rebels. ``Sadly, the tone of certain countries is not constructive,'' Reppas said. ``Turkey in particular ... repeatedly dynamites every effort'' for the creation of a climate of regional stability. Turkish troops have reportedly massed on the frontier with Syria, while Ankara has indicated its readiness for cross-border raids to eradicate what it claims are guerrilla bases harboring Kurdish rebels. Syria has denied the charge. In the past, Turkish officials have also accused Greece of harboring Kurdish rebels and running guerrilla training camps. Athens denied the charge, and no evidence has been found to support the accusations. Relations between Greece and neighboring Turkey are rarely cordial. The two NATO allies are at odds over a variety of issues, and have twice reached the brink of war in the past 11 years over the Aegean Sea. But as neighbors, countries in the region must learn to get along, Reppas stressed. ``No one can change geographical facts,'' he said. ``As we live in this region of the world ... we have to strive for good friendly relations and cooperation.'' ||||| As Turkey kept up warlike rhetoric against Damascus, Egypt on Sunday began shuttle democracy between the two neighbors to avoid a military confrontation over Turkish Kurdish bases in Syria. Turkish President Suleyman Demirel said that Turkey was in a position of self-defense and had suffered for many years from Damascus' sheltering of the autonomy-seeking rebels. Some 10,000 Turkish troops were deployed this week on the Turkish-Syrian border, news reports said. Damascus denies that it is supporting the rebels, who wage cross-border raids from camps in Iraq, Iran and Syria. ``This situation is serious,'' Demirel said. ``I am not only warning Syria, I am warning the world. This cannot continue.'' He did not elaborate and it was unclear whether Demirel was warning of a possible military confrontation. But several military and civilian leaders here have said that if diplomacy fails, the military would be charged with solving the issue. ``Our patience has run out. We are determined to take all necessary measures if we don't see any response to our goodwill,'' the commander of Turkish land forces, Gen. Atilla Ates, said last week. Milliyet daily speculated Sunday that Turkey could stage pinpoint attacks in the Syrian-controlled Bekaa valley of Lebanon, where Turkey says the rebels have bases. Another report claimed the Turkish army had been put on alert. But Defense Minister Ismet Sezgin insisted Sunday that war was the last resort. ``I don't believe it will come to that,'' he said. The war in Turkey's southeast waged by rebels seeking autonomy for the country's large Kurdish minority, has killed some 37,000 people since 1984. In an attempt to the ease tension that many fear may spill over into the entire Middle East, Egyptian President Hosni Mubarak met with his Syrian counterpart Hafez Assad in Damascus. Egypt's Middle East News Agency quoted Syrian Foreign Minister Farouq al-Sharaa as saying that Egypt and Syria ``agreed on the graveness of the situation and that it should be dealt with diplomatically and not through confrontation or threats.'' Al-Sharaa said he hoped Mubarak's trip to Turkey this week would be fruitful. Jordan, which cautioned Syria and Turkey to take into consideration the higher interests of the region, offered to mediate. Fueling tension between the two countries are Turkey and Israel's expanding military and diplomatic ties. Syria claims the ties are a threat to the Arab world, and on Saturday, Damascus again accused Turkey of plotting with Israel to undermine Syria. ``We have no part in this tension,'' Israeli Prime Minister Benjamin Netanyahu said Sunday. ``We have taken steps to reassure Syria.'' Israel has also instructed its army to limit military maneuvers along its border with Syria to avoid giving any impression that Israel is poised to act. On Sunday, the Arab League called on Turkey to end its military cooperation with Israel. Syria and Turkey have a long history of disagreements. Damascus is concerned by Ankara's plans to build dams on the Euphrates River, a key source of water for Syria, while Turkey accuses Syria of having aspirations over a Turkish border province, Hatay, which has a sizable Arab population.

On October 1, Turkey moved 10,000 troops toward the Syrian border, and later sent jets along--possibly across--the border. Turkey warned Syria it could no longer tolerate Syria's sheltering Kurdish rebels in Syria and Lebanon's Bekaa Valley. Fighting with Kurdish rebels began in 1984. The Syrian denial included claims that Turkey was taking water and had a strategic alliance with Israel. Egypt, then Iran and Jordan, sought to defuse the situation and find a diplomatic solution for the two Muslim nations. Greece, predictably, chided Turkey, while Israel denied involvement and limited its military activities along the Syrian border.

Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the messag e of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constituional duty to complete its work in a fair and expeditious manner. Our duty has not changed becasue the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with a 228-207 majority and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conserative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former Congressman and Secretary of the Interior, and Charlie Gonzalez, who o won the Texas seat of his father, Henry. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry. ||||| House Speaker Newt Gingrich, who orchestrated the Republican revolution of recent years and is overseeing the impeachment inquiry into President Clinton, was driven from office Friday by a party that swiftly turned on him after its unexpected losses in Tuesday's midterm elections. Catching virtually everyone on Capitol Hill by surprise, Gingrich announced Friday night in two conference calls to other Republicans that he would not seek re-election as Speaker in the Nov. 18 vote and would leave Congress altogether when his term expires in January. ``This will give us a chance to purge some of the poison that is in the system,'' Gingrich said, according to a party aide who listened to one of the calls. Gingrich's resignation was a stunning reversal for one of the most combative and personally confrontational politicians in America. He made his name a decade ago by bringing down one Democratic speaker, Jim Wright, and continued his assaultive style through Tuesday's elections with last-minute commercials reminding voters of the Clinton scandal. His reflexive pugilistic response was evident even Friday night. In his second conference call, according to several people who listened, Gingrich blamed House conservatives for his downfall. Although it was their revolutionary zeal he harnessed to take control of Congress in 1994, they have become his most bitter critics in the last two years of his tumultuous speakership. Friday night he called them cannibals who had ``blackmailed'' him into quitting. Rep. Michael P. Forbes, R-N.Y., said: ``Newt said all those who had marginalized the Republican Party had engaged in cannibalism. He said, `Refer to the clips.' He's blaming others.'' Another Republican described the conference call this way: ``He started off very statesmanlike, but then you could see the anger building. When someone asked him why he was leaving, he said, `A handful of members have blackmailed the conference.' He said, `They're hateful.' And he said, `They're cannibals.''' Gingrich announced his move just hours after Rep. Robert L. Livingston of Louisiana announced he was running for speaker, putting himself forward as a pragmatist and a manager. After the Gingrich calls, Rep. Bill Archer of Texas announced he was considering his own run for speaker. Livingston and Archer are chairmen of the two most powerful committees in the House. In a statement Gingrich said, ``The Republican conference needs to be unified, and it is time for me to move forward.'' He said he hoped his colleagues would pick a successor ``who can both reconcile and discipline, who can work together and communicate effectively.'' Referring to his wife, he told his colleagues he was resigning from Congress because ``Marianne and I are tired. We need time off to get to know each other again.'' He also acknowledged his own knack for bringing negative attention to himself and his party. ``If I stay,'' he told his colleagues Friday night, ``my controversial nature would overshadow any successes we might have,'' an understatement to those who recalled his suggestion two years ago that he forced a shutdown of the government because he was miffed about having to sit in the back of Air Force One on a trip with President Clinton. According to another Republican who took notes, Gingrich said of his resignation: ``There is a lot of bitterness amongst some of the members. So long as I am around, I will always be a target in the news media, which would mean we would never be able to get our message out.'' Clinton said: ``Newt Gingrich has been a worthy adversary leading the Republican Party to a majority in the House and joining me in a great national debate over how best to prepare America for the 21st century. Despite our profound differences, I appreciate those times we were able to work together in the national interest, especially Speaker Gingrich's strong support for America's continuing leadership for freedom, peace and prosperity in the world.'' Many Republicans took the opportunity to portray Gingrich as a visionary. Rep. Sherwood Boehlert of New York said that during the first conference call, ``there was shock and surprise and strong expressions of appreciation for leading us to the Promised Land.'' His supporters said Gingrich had the votes to win the election to nominate a speaker, which is to be conducted by secret ballot. But, they agreed, the party's slim, six-vote majority meant every vote would be a battle. Kenneth Duberstein, a former official in the Reagan administration, said, ``I have no doubt he had the votes to be speaker, but I'm not sure he had the votes to govern.'' He said that because of the deep rifts in the party, Gingrich would not have been able to implement his plans. In an unusually biting reaction, Rep. Dick Gephardt of Missouri, the Democratic leader, said he hoped that Gingrich's resignation would clear the fierce partisan air that he had fostered. ``I hope that whoever succeeds Newt Gingrich as speaker will immediately begin the process of repairing the damage that was wrought on this institution over the last four years,'' Gephardt said. House Republicans predicted that Gingrich's resignation would set off a more wide-ranging and hectic scramble to replace him than had been anticipated. ``There will be a lot of pretenders to the throne who will test the waters,'' said Boehlert, who had supported Gingrich for re-election as speaker. ``There won't be any shortage of candidates.'' ||||| The presidential campaign of 2000 began Wednesday, like it or not. The millennial election will be fought on a political playing field whose rough outlines, if not its exact boundaries, were drawn by the voters in Tuesday's elections, which delivered a crushing disappointment to the giddy hopes of the Republicans and an unexpected elixir to the recently ailing Democrats. President Clinton called it an ``astonishing'' triumph of issues over investigations and said the Democrats had won so many major victories ``because they had a clear message.'' Republicans agreed. Of course the next 18 months will bring many surprises and many reversals of fortune. But the election results offered important guidelines. Tuesday was a great day for Vice President Al Gore, for at least three reasons. He worked furiously and successfully in the last ten days before the balloting to persuade Democratic loyalists not to stay home and sulk, appearing on behalf of no fewer than 224 candidates, according to his office. A moderate within the spectrum of his own party, he watched moderates win crucial elections, notably in the California gubernatorial race, where Lt. Gov. Gray Davis, a cautious pragmatist like Gore, won a smashing victory. The returns _ an even break in the Senate and a Democratic gain of five in the House of Representatives _ also made the impeachment of President Clinton less likely. And the better shape Clinton is in as his term ends, the better chance Gore, his sidekick for six years now, stands in the presidential nomination process and, ultimately, the election. But California voters also complicated the nominating process and set Gore strategists to work on tactics to uncomplicate it, because he and they consider the state absolutely central to his presidential aspirations. In a referendum in 1996, California adopted a primary system under which Republicans, Democrats and independent voters would all receive the same ballot, with candidates of all parties listed. That violates the rules of both major parties, and a measure on the ballot Tuesday, Proposition 3, would have rescinded the 1996 change. But it failed, raising the possibility that California's March 7 primary will be a mere political popularity poll, with convention delegates chosen in caucus or convention _ a nightmare. Tuesday was a bad day for the Republican right. High-profile right-wingers lost across the country, from Attorney General Dan Lungren in the California governor's race to Sen. Lauch Faircloth, denied re-election in North Carolina, to Rep. Mark Neumann of Wisconsin, who failed in a Senate race despite a huge spending advantage over Sen. Russell Feingold, to Ellen Sauerbrey in Maryland, who proved unable on her second try to prevail over an unpopular Democratic governor, Parris Glendening. Both conservatives and moderates in the party said the Republicans had to get back to basics. Even Speaker Newt Gingrich conceded that the results ``should sober every Republican'' and called for new strategic thinking. ``If you make it a referendum on a president with a 67 per cent approval rating, as they tried to do, you shouldn't be surprised if the election goes against you,'' said Gov. Tom Ridge of Pennsylvania, a moderate whose promoters mention him weekly as a possible vice-presidential nominee. Sen. John McCain of Arizona, a conservative who tends to steer away from divisive social issues, won re-election with 68 per cent of the vote. He is studying the possibility of a presidential race, but before he or any other Republican nominee can hope to win, he said in an interview Wednesday, congressional Republicans and their leaders need to learn some lessons. ``I just hope this debacle is a wake-up call for our people,'' he said. ``You've got to be for something _ smaller government, better education, something. We're seen as the party that's against everything.'' Polls taken late in this year's campaign bore McCain out. They showed that the Republicans are no longer identified with issues that were once their electoral bread and butter, such as low taxes and law and order. Tuesday was also a fresh demonstration, for anyone who needed one, of the political utility of pitching a tent big enough for almost everyone. Black politicians in North Carolina, Maryland and California reported that their fears of an indifferent black turnout had proved groundless. Black votes proved indispensable to a considerable number of hard-pressed Democratic candidates, especially where they felt their interests directly threatened. The figures on Hispanic voting, assembled from exit polls and from the candidates' own precinct analyses, showed dramatic differences. In California, where the outgoing Republican governor, Pete Wilson, had played the anti-immigration card with a vengeance, both major Democratic candidates _ Davis and Sen. Barbara Boxer, who won re-election after trailing in early polls _ cleaned up among Hispanic voters. He took 78 percent, she 72. But both of the Bush brothers, Jeb in Florida and George W. in Texas, took more than half the Hispanic vote in their highly successful gubernatorial campaigns. So did McCain. Jeb Bush is married to a Hispanic woman, he and his brother both speak Spanish fluently and frequently, and Senator McCain has long espoused Hispanic causes. Both George W. Bush and McCain will draw strength, if they decide to run, from their proven ability to appeal to Hispanic voters, as well as their general electoral strength. George W. Bush took 69 percent of the vote in Texas, where a Democrat sat in the governor's chair only four years ago, and which has the second-largest bloc of electoral votes. Florida has the fourth-largest. Governor Bush of Texas uttered a rallying cry for the moderates. ``A leader who is compassionate and conservative,'' he said in his victory speech, ``can erase the gender gap and open the Republican party to new faces and new voices.'' But figures on the right saw things differently. James Dobson, a leading religious broadcaster, said that Republicans had fared poorly because Gingrich and Sen. Trent Lott of Mississippi, the majority leader, had caved in to the president on the budget and de-emphasized social issues such as abortion and flag desecration. He called all but explicitly for the ouster of Gingrich. Likewise, the millionaire publisher Steve Forbes, another probable candidate in 2000, said the leadership ``will have a lot to answer for.'' Tuesday proved the potency of education as an issue, and suggested that it will emerge as a major theme of the 2000 campaign. Clinton, in his limited involvement in the campaign, and Gore, in his extensive participation, both stressed Democratic programs to build more schools and hire more teachers. Almost a quarter of California voters _ and there are now almost twice as many voters in California as in any other state _ named education as their most pressing concern. Elsewhere, Democrats won the governorships of Alabama and South Carolina against the odds, partly by emphasizing their rivals' opposition to lotteries that will help to pay for schools. In Iowa, a Democrat was elected governor for the first time since 1969 on a platform that featured the dilapidated condition of the state's schools and a promise to remedy it. Tuesday demonstrated the overriding importance of money in modern American politics. Feingold, one of the principal backers of campaign-finance reform, survived to fight another day, but so did opponents of reform. And the returns in House races, showing that all but six of 401 members who sought re-election had won, underlined once again how hard it is, under the present system, for a challenger to raise enough money to compete effectively. The difficulties of raising money may doom many would-be presidential candidacies. Gore will have what he needs, as will Bush, Forbes and former Gov. Lamar Alexander of Tennessee. But how many others will? Finally, Tuesday delivered an indecisive message about impeachment. Close to two-thirds of voters nationwide told exit pollsters that they intended to send no message about Clinton, but they made it clear in response to other questions that they disliked the House inquiry into the president's alleged misdeeds and wanted to see it end. In only two states, Kansas and Nebraska, did a majority of voters say they favored even a congressional censure of Clinton, a much milder form of punishment advocated by many Clinton backers. Some Republicans said privately that there should be no hearings at all in the Clinton matter, and some Democrats began talking about a deal, the equivalent of a plea bargain that would bring the matter to an early close. Nevertheless, Republican members of the House Judiciary Committee said they needed to press ahead with the Constitutional process that the House has set in motion. Among those taking that view were Rep. Bob Barr of Georgia, a fierce foe of the president, and Rep. Mary Bono of California, whose tone has been more muted. But Rep. David Dreier of California, the incoming Rules Committee chairman, said that ``the election has played a role in ensuring that one of us has a desire to drag that out.'' ||||| A week after the White House and congressional Democrats disavowed his ``war'' on Speaker Newt Gingrich, James Carville, President Clinton's former campaign strategist and chief outside defender, put forth a new battle cry Wednesday: He will not be muzzled. Not only that, but Carville went beyond his customary denunciations of Gingrich and the Republicans and, in an interview, trained his fire on leaders in his own party for not being sufficiently aggressive four weeks before Election Day. ``My sense of frustration is that I believe the Democrats have a much better chance of doing much better than anyone expects,'' Carville said. ``And I don't think anyone's emerging to try to pull it together. Everybody ought to be pushing, the leadership in the Congress, the White House, the DNC. We ought to hammer Gingrich every day. How can you take the Congress back if you don't make a case against the people who are running it? I have never heard of a strategy like that.'' Sounding increasingly agitated, he went on: ``The only people left to be activated in this election are Democrats. The right wing, they're bouncing off the walls. They're going out to vote.'' Rep. Dick Gephardt, the minority leader, complained to Erskine Bowles, the White House chief of staff, after Carville appeared on the NBC News program ``Meet the Press'' on Sept. 27 and declared, ``Cpl. Cue Ball Carville will be rolling into battle against Newt Gingrich.'' The concern among House Democrats, one expressed by some White House officials as well, was that Carville's vitriol would make the Democrats appear overly partisan and could be especially damaging to Democrats in marginal districts who do not want to appear too easy on the president. But on Wednesday, Carville was anything but timid. ``If Gephardt people think they've quieted me down,'' he said, ``I'm not quieted.'' Carville said he told officials at the White House, ``Don't waste your breath about calling me and telling me not to say this.'' Carville insisted that he would rather do battle with Republicans than with his fellow Democrats. ``If they want to fight with me, they can,'' he said. ``I'm going to fight with the Republicans.'' Yet he could not help but ridicule his party. Asked to describe the Democrats' strategy for the election, Carville said, ``If there is one, no one's shared it with me.'' ||||| A struggle for control of the House is under way, with Rep. Robert Livingston conducting a telephone campaign that could lead to him running against Newt Gingrich as speaker. But Gingrich's counter-campaign has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of spending for local projects. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the Republican nomination for speaker must stand for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, Republican officials said. The officials said that Livingston spoke to Gingrich shortly after the election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, only after he had determined if he could win. Rep. Peter King, R-N.Y., was one of several members who spoke with Livingston on Thursday. ``He told me he's making a number of phone calls, that he's gotten a very positive response about running for speaker, and he'll decide within the next 48 hours,'' King said. ``He won't do it till he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. Many Republicans immediately blamed Gingrich for the party's losses on Tuesday. Talk quickly emerged the next day of a slate of candidates to oppose Gingrich and his lieutenants. The list of possible candidates for leadership positions included Rep.e Steve Largent of Oklahoma, who talked with Livingston on Thursday about challenging Gingrich, Republican officials said, speaking on the condition that their names not be reported. Those officials said that Largent told Livingston that he wanted to run with him on a ticket and that he would challenge Rep. Dick Armey, the majority leader. But, these officials said that if Livingston did not challenge Gingrich, Largent would run for speaker instead. Other names were floated Wednesday for leadership posts. They included Reps. David McIntosh of Indiana for speaker and Jennifer Dunn of Washington as conference chairman. Added to the mix on Thursday was the name of Rep. Christopher Cox, a California conservative. As a sign of the uncertainty prevailing among House members on Thursday, Rep. Henry Hyde, the chairman of the Judiciary Committee and one of the House's most venerable members, rebuffed a chance to endorse Gingrich as speaker. Hyde said that Gingrich bore responsibility for the party's losses Tuesday. ``Leadership takes credit when things go right,'' he said. ``They ought to take the blame when things go wrong.'' Asked if Gingrich should remain speaker, Hyde said: ``I rather think he will, but that remains to be seen.'' The energy that many vented publicly on Wednesday as anger toward Gingrich seemed devoted on Thursday to intense internal political calculations about whether Livingston could succeed in toppling Gingrich and whether he should succeed. While many support him as a veteran who understands the House and has shown shrewd political skills in managing the massive federal budget, others are reviving images of the Louisianan as a hot-head who gave the party a bad name during the government shutdown two years ago and who tends toward arm-flailing in heated moments. One conservative leader said that he and his allies had reservations about Livingston because he was ``obsessed'' about trying to keep social issues out of the budget process. The budget, he said, ``has been a vehicle for conservatives over the years to add restrictions on federal money for abortion and other things you can't get through the Senate or past a presidential veto. If Livingston is the challenger, I doubt that will cause a rallying of the real conservatives in Congress.'' Some moderates said they were prepared to support him. Rep. Marge Roukema, R-N.J., said, ``I would be amenable to Livingston.'' Still, she cautioned, ``I'm not after Newt. But it's wrong not to sit down and seriously look at our options.'' Ken Johnson, an aide to Rep. W.J. (Billy) Tauzin, R-La., said that his boss was ``emblematic'' of the confusion among the broad base of House Republicans. ``Billy has been loyal to both Speaker Gingrich and Dick Armey, and he's still loyal to them, but he also wants to hear what they have to say before committing to them in the next election,'' Johnson said. ``Everyone is asking the same question: Can we refocus the message and re-energize our base without re-aligning the leadership?'' Salmon said his refusal to support Gingrich no matter what was based on Gingrich's track record of ``one failed strategy after another,'' including the impeachment process and the pork-laden budget. With the challenge under way, Gingrich has been trying to show members that he is responsive to their concerns. After an election night in which he portrayed the Republicans as victorious even as they lost seats, the next day he took ``responsibility'' for the losses. In another move, Gingrich has indicated that he is willing to cede control over the party's congressional campaign committee, allowing the whole House to select its members. Gingrich is also making strong personal appeals to Republicans. Said one top House aide: ``He'll get support. How much? Only his own vote-counters know.'' ||||| An intense struggle for control of the House is underway, with Rep. Bob Livingston conducting a telephone campaign to replace Rep. Newt Gingrich as speaker and Gingrich fighting with a counter-campaign that has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months because it could throw the speakership to a Democrat. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of pork spending. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the party's nomination for speaker then stands for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority and allow Democrats to potentially elect one of their own as speaker. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, according to Republican officials. The officials said that Livingston spoke to Gingrich shortly after the disastrous election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, after he had determined if he could win. ``He won't do it 'til he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. ||||| This is what Newt Gingrich is supposed to do well. The planning. The strategy. The big picture. The vision. His vision brought the GOP to the majority in Congress in 1994 and made him the first Republican House Speaker in 40 years. But by his own admission, Gingrich's vision seems to have blurred this time around, costing Republicans a net of five seats in Tuesday's election and leaving the party's narrow governing majority even narrower. The disappointing election results also left Gingrich open to a fractious challenge for his post as speaker. Members and aides said Wednesday that a fury at the speaker had bubbled up overnight and that some members were trying to organize a slate of candidates to replace Gingrich and his leadership team when House Republicans convene on Nov. 18 to select their leaders for next year. As Rep. Mark Sanford, R-S.C., put it, ``When a company's stock price goes down, it's usually the CEO who gets fired.'' Top Republican aides, speaking anonymously, were even blunter. ``People were very angry last night,'' one aide said. ``Today it's a mixture of seething and dismay. It's just ugly. And Newt knows it. His career is on the line.'' Another aide said, ``Most people are really angry with Newt, and no one knows what to do with it. But some are dipping their toe in the water and seeing what the temperature is.'' A possible slate could contain the names of Reps. Robert L. Livingston of Louisiana to replace Gingrich, Steve Largent of Oklahoma to replace Dick Armey of Texas as majority leader, and Jennifer Dunn of Washington to replace John A. Boehner of Ohio as conference chairman. Rep. David M. McIntosh of Indiana is also said to be considering a run for speaker, but it was not clear whether he would be part of any slate. Rep. Tom DeLay of Texas, the majority whip, was said to be secure. Armey bluntly acknowledged the scramble going on in the wings to oust the leadership. Told on ``Nightline'' that there were Republicans after his head, Armey replied: ``They're welcome to it if they're big enough to take it.'' Publicly, Gingrich has expressed confidence about keeping his job as speaker. But he has been grim-faced over the last 24 hours and closeted himself Wednesday with his top strategists making calls to shore up his support among members. ``He looks like the victim of an accident,'' said Rep. Peter King, R-N.Y., who supports Gingrich. ``He's very somber in tone.'' The question, as it always is with Gingrich, is how many members are prepared to rebel against his leadership. In the past, no more than a couple of dozen members have openly expressed their dissatisfaction with him, and a coup attempt last year fizzled for lack of support. ``I'm hoping more people will understand the need for a serious reassessment this year,'' said Rep. Charles T. Canady, R-Fla., who said he had hoped for a challenge to the speaker after the 1996 elections, when the Republicans also lost seats. ``The reality is this: Our majority keeps shrinking,'' Canady said. ``If it shrinks any more, it will be gone.'' But Gingrich has built support among moderates, and some perceived the election as a repudiation of the conservatives. Rep. Sherwood L. Boehlert, R-Utah, said the results showed that this was the right direction for the party. ``To maintain our majority, we've got to moderate some of our views,'' Boehlert said. Thomas Mann, a Congressional scholar at the Brookings Institution, said that moderates supported Gingrich in part because no appealing alternative had emerged. ``They know he sees the broader world and is prepared to moderate if it makes sense,'' Mann said. ``Newt's gone out of his way to support the moderates. He's nurtured a relationship with them.'' But Mann and others said that anger has been building at Gingrich for several reasons, including his signing on to a budget deal last month that seemed to capitulate to President Clinton, not offering a clear legislative agenda for Republicans and not communicating a clear political message. ``We are most defined by who we hate'' said Rep. Mark Souder, R-Ind. ``But voters are more sophisticated than that, and Republicans better have something to say about where we're going.'' The anger grew in the last few days when the speaker approved a $10-million anti-Clinton advertising campaign that allowed Democrats to turn the election into a referendum on Gingrich, who has never been nearly as popular with the public as Clinton has been. As if only slowly absorbing the implications of the loss, the speaker seemed unable at a news conference here Wednesday morning to pinpoint why the party suffered a net drop of five seats in the House. As late as Tuesday afternoon, he was predicting a net pickup of between 10 and 30. ``Until we look at it better, I frankly don't understand all the things that happened yesterday,'' he said, ``and I'm not sure anybody else in the country does either.'' But he said Republicans should have ``maniacally focused'' on a basic message of cutting taxes, saving Social Security and preventing drug abuse, and campaigned aggressively on those themes. He contrasted the lack of focus this year with the Contract With America that proved so successful in 1994. ``People thought we stood for something pretty big,'' he said. But Gingrich also seemed aware of the mounting concern about his leadership, repeatedly casting the election results as a victory for his leadership team because Republicans had stayed in the majority for three elections in a row for the first time in 70 years. He also suggested that those who would challenge him have little support. ``The people who normally are quoted on this are people who would in fact take the party to a narrower base,'' Gingrich said, referring to the periodic eruptions of concern among conservatives about his leadership. ``I'd like to see who it was that had a plan that they were confident over the last 60 days would have been more successful and why they didn't share it.'' ||||| Just four years ago, it was a good bet that Newt Gingrich would be the pivotal figure in U.S. politics at the turn of the millennium. Seemingly overnight he had taken a moribund minority party and turned it into a pumped-up, issue-driven House majority. With a promise to balance the budget, end welfare and represent more conservative social values, he appeared to have rearranged the political map for Congress just as Ronald Reagan had done for the presidency. But Gingrich's leadership is now so shaky that even if he maintains his hold on the speaker's office, he is in danger of marginalization. A change this dramatic suggests something far more profound than a miscalculation about election tactics. What looked like one of the major realignments in U.S. political history might turn out to have been nothing but a temporary shift. The Gingrich revolution was fueled by anger, a revolt of white working-class Americans against what they perceived as a Democratic bias in favor of blacks and other minorities, and a middle-class rejection of the politics of big government and big deficits. They were the same resentments that Ronald Reagan had exploited so successfully. But old political habits and a moribund Republican leadership allowed the Democrats to retain control of Congress throughout the 1980s, and turned Reagan's economic program into an undisciplined tax-cutting spree that created prosperity along with huge budget gaps. Gingrich's attention-grabbing rhetoric, energy and talent for political organization finally took Reagan's formula for success to the congressional elections in 1994. But once in power, he ran head on into Bill Clinton, whose political instincts were even better. The president co-opted parts of the Contract With America, particularly the balanced budget and welfare reform. He adapted the Republican social message into a call for things like school uniforms and television rating systems, which symbolized more responsibility and parental control without supporting government intrusion into private lives. The Republican right's genuine contempt for Clinton was based in part on the well-known flaws in the president's character. But it was mainly a reaction to the ease with which he had diverted what was supposed to be the flood tide of their revolution. They expected that the genuine successes of Gingrich's first year in office would lead to still larger victories for minimal government and taxes, unfettered free enterprise and a return to conservative Christian values. But the public was happy to be led in another direction, and focus on the concerns of aging baby boomers about health care and Social Security. The government that was seen as the enemy when the issues were budgetary once again looked like a potential ally. Back in 1994, both parties were so stunned by the sudden change in their congressional fortunes that they may have overestimated what it all meant. In particular they may not have realized how quickly good economic times, a drop in crime and national welfare reform could blunt the power of race in U.S. politics. The Democrats had become literally a minority party as white voters resentfully identified their policies with cities, blacks and immigrants. But last week union workers and Catholics returned to the Democratic fold. Without race as a wedge issue, the solid black Democratic vote became a powerful advantage in key states. Blacks, women and Latinos angry at Republican anti-immigration initiatives were the winning coalition in California, North Carolina and New York. The speaker was right to say this was ``not the election we expected.'' There may indeed be a Republican majority in America, but it appears to resemble the Republicanism of Dwight Eisenhower rather than Newt Gingrich _ pro-business, wary of debt and with an inherent distaste for bringing up messy social issues like abortion. The Republicans who have begun talking about ``compassionate conservatism'' and ``the politics of inclusion'' may be peddling political mush, but they peddled it to victory on Tuesday. The congressional Republican Party's long sojourn in the wilderness of the House minority may have left it too accustomed to opposition to figure out what it can be for, and too attached to the politics of anger to make sense of a nation in the mood for moderation. Gingrich has suggested that his mistake was to let the Republicans drift along on the politics of impeachment when they should have been ``almost maniacally focused'' on things like tax cuts. But looking maniacal is what got them into trouble in the first place. Winning control of Congress after so many years was very tough for Gingrich in 1994. But it will be ten times tougher to forge a politics that does not depend on rage. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry.

James Carville complained that fellow Democrats didn't join his war against Speaker Newt Gingrich leading up to the congressional elections of 1998. Gingrich had led the impeachment inquiry against President Clinton in the House. When, contrary to all predictions, the Democrats gained five seats in the House and held their own in the Senate, Republicans enlisted in Carville's cause, blaming Gingrich for the election results. Gingrich battled fiercely as Rep. Livingston rallied forces against him, but ultimately Gingrich accepted defeat agreeing to cede the speakership and his seat in the House. He blamed his defeat on blackmail by Republican cannibals.

Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the messag e of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constituional duty to complete its work in a fair and expeditious manner. Our duty has not changed becasue the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with a 228-207 majority and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conserative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former Congressman and Secretary of the Interior, and Charlie Gonzalez, who o won the Texas seat of his father, Henry. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry. ||||| House Speaker Newt Gingrich, who orchestrated the Republican revolution of recent years and is overseeing the impeachment inquiry into President Clinton, was driven from office Friday by a party that swiftly turned on him after its unexpected losses in Tuesday's midterm elections. Catching virtually everyone on Capitol Hill by surprise, Gingrich announced Friday night in two conference calls to other Republicans that he would not seek re-election as Speaker in the Nov. 18 vote and would leave Congress altogether when his term expires in January. ``This will give us a chance to purge some of the poison that is in the system,'' Gingrich said, according to a party aide who listened to one of the calls. Gingrich's resignation was a stunning reversal for one of the most combative and personally confrontational politicians in America. He made his name a decade ago by bringing down one Democratic speaker, Jim Wright, and continued his assaultive style through Tuesday's elections with last-minute commercials reminding voters of the Clinton scandal. His reflexive pugilistic response was evident even Friday night. In his second conference call, according to several people who listened, Gingrich blamed House conservatives for his downfall. Although it was their revolutionary zeal he harnessed to take control of Congress in 1994, they have become his most bitter critics in the last two years of his tumultuous speakership. Friday night he called them cannibals who had ``blackmailed'' him into quitting. Rep. Michael P. Forbes, R-N.Y., said: ``Newt said all those who had marginalized the Republican Party had engaged in cannibalism. He said, `Refer to the clips.' He's blaming others.'' Another Republican described the conference call this way: ``He started off very statesmanlike, but then you could see the anger building. When someone asked him why he was leaving, he said, `A handful of members have blackmailed the conference.' He said, `They're hateful.' And he said, `They're cannibals.''' Gingrich announced his move just hours after Rep. Robert L. Livingston of Louisiana announced he was running for speaker, putting himself forward as a pragmatist and a manager. After the Gingrich calls, Rep. Bill Archer of Texas announced he was considering his own run for speaker. Livingston and Archer are chairmen of the two most powerful committees in the House. In a statement Gingrich said, ``The Republican conference needs to be unified, and it is time for me to move forward.'' He said he hoped his colleagues would pick a successor ``who can both reconcile and discipline, who can work together and communicate effectively.'' Referring to his wife, he told his colleagues he was resigning from Congress because ``Marianne and I are tired. We need time off to get to know each other again.'' He also acknowledged his own knack for bringing negative attention to himself and his party. ``If I stay,'' he told his colleagues Friday night, ``my controversial nature would overshadow any successes we might have,'' an understatement to those who recalled his suggestion two years ago that he forced a shutdown of the government because he was miffed about having to sit in the back of Air Force One on a trip with President Clinton. According to another Republican who took notes, Gingrich said of his resignation: ``There is a lot of bitterness amongst some of the members. So long as I am around, I will always be a target in the news media, which would mean we would never be able to get our message out.'' Clinton said: ``Newt Gingrich has been a worthy adversary leading the Republican Party to a majority in the House and joining me in a great national debate over how best to prepare America for the 21st century. Despite our profound differences, I appreciate those times we were able to work together in the national interest, especially Speaker Gingrich's strong support for America's continuing leadership for freedom, peace and prosperity in the world.'' Many Republicans took the opportunity to portray Gingrich as a visionary. Rep. Sherwood Boehlert of New York said that during the first conference call, ``there was shock and surprise and strong expressions of appreciation for leading us to the Promised Land.'' His supporters said Gingrich had the votes to win the election to nominate a speaker, which is to be conducted by secret ballot. But, they agreed, the party's slim, six-vote majority meant every vote would be a battle. Kenneth Duberstein, a former official in the Reagan administration, said, ``I have no doubt he had the votes to be speaker, but I'm not sure he had the votes to govern.'' He said that because of the deep rifts in the party, Gingrich would not have been able to implement his plans. In an unusually biting reaction, Rep. Dick Gephardt of Missouri, the Democratic leader, said he hoped that Gingrich's resignation would clear the fierce partisan air that he had fostered. ``I hope that whoever succeeds Newt Gingrich as speaker will immediately begin the process of repairing the damage that was wrought on this institution over the last four years,'' Gephardt said. House Republicans predicted that Gingrich's resignation would set off a more wide-ranging and hectic scramble to replace him than had been anticipated. ``There will be a lot of pretenders to the throne who will test the waters,'' said Boehlert, who had supported Gingrich for re-election as speaker. ``There won't be any shortage of candidates.'' ||||| The presidential campaign of 2000 began Wednesday, like it or not. The millennial election will be fought on a political playing field whose rough outlines, if not its exact boundaries, were drawn by the voters in Tuesday's elections, which delivered a crushing disappointment to the giddy hopes of the Republicans and an unexpected elixir to the recently ailing Democrats. President Clinton called it an ``astonishing'' triumph of issues over investigations and said the Democrats had won so many major victories ``because they had a clear message.'' Republicans agreed. Of course the next 18 months will bring many surprises and many reversals of fortune. But the election results offered important guidelines. Tuesday was a great day for Vice President Al Gore, for at least three reasons. He worked furiously and successfully in the last ten days before the balloting to persuade Democratic loyalists not to stay home and sulk, appearing on behalf of no fewer than 224 candidates, according to his office. A moderate within the spectrum of his own party, he watched moderates win crucial elections, notably in the California gubernatorial race, where Lt. Gov. Gray Davis, a cautious pragmatist like Gore, won a smashing victory. The returns _ an even break in the Senate and a Democratic gain of five in the House of Representatives _ also made the impeachment of President Clinton less likely. And the better shape Clinton is in as his term ends, the better chance Gore, his sidekick for six years now, stands in the presidential nomination process and, ultimately, the election. But California voters also complicated the nominating process and set Gore strategists to work on tactics to uncomplicate it, because he and they consider the state absolutely central to his presidential aspirations. In a referendum in 1996, California adopted a primary system under which Republicans, Democrats and independent voters would all receive the same ballot, with candidates of all parties listed. That violates the rules of both major parties, and a measure on the ballot Tuesday, Proposition 3, would have rescinded the 1996 change. But it failed, raising the possibility that California's March 7 primary will be a mere political popularity poll, with convention delegates chosen in caucus or convention _ a nightmare. Tuesday was a bad day for the Republican right. High-profile right-wingers lost across the country, from Attorney General Dan Lungren in the California governor's race to Sen. Lauch Faircloth, denied re-election in North Carolina, to Rep. Mark Neumann of Wisconsin, who failed in a Senate race despite a huge spending advantage over Sen. Russell Feingold, to Ellen Sauerbrey in Maryland, who proved unable on her second try to prevail over an unpopular Democratic governor, Parris Glendening. Both conservatives and moderates in the party said the Republicans had to get back to basics. Even Speaker Newt Gingrich conceded that the results ``should sober every Republican'' and called for new strategic thinking. ``If you make it a referendum on a president with a 67 per cent approval rating, as they tried to do, you shouldn't be surprised if the election goes against you,'' said Gov. Tom Ridge of Pennsylvania, a moderate whose promoters mention him weekly as a possible vice-presidential nominee. Sen. John McCain of Arizona, a conservative who tends to steer away from divisive social issues, won re-election with 68 per cent of the vote. He is studying the possibility of a presidential race, but before he or any other Republican nominee can hope to win, he said in an interview Wednesday, congressional Republicans and their leaders need to learn some lessons. ``I just hope this debacle is a wake-up call for our people,'' he said. ``You've got to be for something _ smaller government, better education, something. We're seen as the party that's against everything.'' Polls taken late in this year's campaign bore McCain out. They showed that the Republicans are no longer identified with issues that were once their electoral bread and butter, such as low taxes and law and order. Tuesday was also a fresh demonstration, for anyone who needed one, of the political utility of pitching a tent big enough for almost everyone. Black politicians in North Carolina, Maryland and California reported that their fears of an indifferent black turnout had proved groundless. Black votes proved indispensable to a considerable number of hard-pressed Democratic candidates, especially where they felt their interests directly threatened. The figures on Hispanic voting, assembled from exit polls and from the candidates' own precinct analyses, showed dramatic differences. In California, where the outgoing Republican governor, Pete Wilson, had played the anti-immigration card with a vengeance, both major Democratic candidates _ Davis and Sen. Barbara Boxer, who won re-election after trailing in early polls _ cleaned up among Hispanic voters. He took 78 percent, she 72. But both of the Bush brothers, Jeb in Florida and George W. in Texas, took more than half the Hispanic vote in their highly successful gubernatorial campaigns. So did McCain. Jeb Bush is married to a Hispanic woman, he and his brother both speak Spanish fluently and frequently, and Senator McCain has long espoused Hispanic causes. Both George W. Bush and McCain will draw strength, if they decide to run, from their proven ability to appeal to Hispanic voters, as well as their general electoral strength. George W. Bush took 69 percent of the vote in Texas, where a Democrat sat in the governor's chair only four years ago, and which has the second-largest bloc of electoral votes. Florida has the fourth-largest. Governor Bush of Texas uttered a rallying cry for the moderates. ``A leader who is compassionate and conservative,'' he said in his victory speech, ``can erase the gender gap and open the Republican party to new faces and new voices.'' But figures on the right saw things differently. James Dobson, a leading religious broadcaster, said that Republicans had fared poorly because Gingrich and Sen. Trent Lott of Mississippi, the majority leader, had caved in to the president on the budget and de-emphasized social issues such as abortion and flag desecration. He called all but explicitly for the ouster of Gingrich. Likewise, the millionaire publisher Steve Forbes, another probable candidate in 2000, said the leadership ``will have a lot to answer for.'' Tuesday proved the potency of education as an issue, and suggested that it will emerge as a major theme of the 2000 campaign. Clinton, in his limited involvement in the campaign, and Gore, in his extensive participation, both stressed Democratic programs to build more schools and hire more teachers. Almost a quarter of California voters _ and there are now almost twice as many voters in California as in any other state _ named education as their most pressing concern. Elsewhere, Democrats won the governorships of Alabama and South Carolina against the odds, partly by emphasizing their rivals' opposition to lotteries that will help to pay for schools. In Iowa, a Democrat was elected governor for the first time since 1969 on a platform that featured the dilapidated condition of the state's schools and a promise to remedy it. Tuesday demonstrated the overriding importance of money in modern American politics. Feingold, one of the principal backers of campaign-finance reform, survived to fight another day, but so did opponents of reform. And the returns in House races, showing that all but six of 401 members who sought re-election had won, underlined once again how hard it is, under the present system, for a challenger to raise enough money to compete effectively. The difficulties of raising money may doom many would-be presidential candidacies. Gore will have what he needs, as will Bush, Forbes and former Gov. Lamar Alexander of Tennessee. But how many others will? Finally, Tuesday delivered an indecisive message about impeachment. Close to two-thirds of voters nationwide told exit pollsters that they intended to send no message about Clinton, but they made it clear in response to other questions that they disliked the House inquiry into the president's alleged misdeeds and wanted to see it end. In only two states, Kansas and Nebraska, did a majority of voters say they favored even a congressional censure of Clinton, a much milder form of punishment advocated by many Clinton backers. Some Republicans said privately that there should be no hearings at all in the Clinton matter, and some Democrats began talking about a deal, the equivalent of a plea bargain that would bring the matter to an early close. Nevertheless, Republican members of the House Judiciary Committee said they needed to press ahead with the Constitutional process that the House has set in motion. Among those taking that view were Rep. Bob Barr of Georgia, a fierce foe of the president, and Rep. Mary Bono of California, whose tone has been more muted. But Rep. David Dreier of California, the incoming Rules Committee chairman, said that ``the election has played a role in ensuring that one of us has a desire to drag that out.'' ||||| A week after the White House and congressional Democrats disavowed his ``war'' on Speaker Newt Gingrich, James Carville, President Clinton's former campaign strategist and chief outside defender, put forth a new battle cry Wednesday: He will not be muzzled. Not only that, but Carville went beyond his customary denunciations of Gingrich and the Republicans and, in an interview, trained his fire on leaders in his own party for not being sufficiently aggressive four weeks before Election Day. ``My sense of frustration is that I believe the Democrats have a much better chance of doing much better than anyone expects,'' Carville said. ``And I don't think anyone's emerging to try to pull it together. Everybody ought to be pushing, the leadership in the Congress, the White House, the DNC. We ought to hammer Gingrich every day. How can you take the Congress back if you don't make a case against the people who are running it? I have never heard of a strategy like that.'' Sounding increasingly agitated, he went on: ``The only people left to be activated in this election are Democrats. The right wing, they're bouncing off the walls. They're going out to vote.'' Rep. Dick Gephardt, the minority leader, complained to Erskine Bowles, the White House chief of staff, after Carville appeared on the NBC News program ``Meet the Press'' on Sept. 27 and declared, ``Cpl. Cue Ball Carville will be rolling into battle against Newt Gingrich.'' The concern among House Democrats, one expressed by some White House officials as well, was that Carville's vitriol would make the Democrats appear overly partisan and could be especially damaging to Democrats in marginal districts who do not want to appear too easy on the president. But on Wednesday, Carville was anything but timid. ``If Gephardt people think they've quieted me down,'' he said, ``I'm not quieted.'' Carville said he told officials at the White House, ``Don't waste your breath about calling me and telling me not to say this.'' Carville insisted that he would rather do battle with Republicans than with his fellow Democrats. ``If they want to fight with me, they can,'' he said. ``I'm going to fight with the Republicans.'' Yet he could not help but ridicule his party. Asked to describe the Democrats' strategy for the election, Carville said, ``If there is one, no one's shared it with me.'' ||||| A struggle for control of the House is under way, with Rep. Robert Livingston conducting a telephone campaign that could lead to him running against Newt Gingrich as speaker. But Gingrich's counter-campaign has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of spending for local projects. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the Republican nomination for speaker must stand for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, Republican officials said. The officials said that Livingston spoke to Gingrich shortly after the election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, only after he had determined if he could win. Rep. Peter King, R-N.Y., was one of several members who spoke with Livingston on Thursday. ``He told me he's making a number of phone calls, that he's gotten a very positive response about running for speaker, and he'll decide within the next 48 hours,'' King said. ``He won't do it till he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. Many Republicans immediately blamed Gingrich for the party's losses on Tuesday. Talk quickly emerged the next day of a slate of candidates to oppose Gingrich and his lieutenants. The list of possible candidates for leadership positions included Rep.e Steve Largent of Oklahoma, who talked with Livingston on Thursday about challenging Gingrich, Republican officials said, speaking on the condition that their names not be reported. Those officials said that Largent told Livingston that he wanted to run with him on a ticket and that he would challenge Rep. Dick Armey, the majority leader. But, these officials said that if Livingston did not challenge Gingrich, Largent would run for speaker instead. Other names were floated Wednesday for leadership posts. They included Reps. David McIntosh of Indiana for speaker and Jennifer Dunn of Washington as conference chairman. Added to the mix on Thursday was the name of Rep. Christopher Cox, a California conservative. As a sign of the uncertainty prevailing among House members on Thursday, Rep. Henry Hyde, the chairman of the Judiciary Committee and one of the House's most venerable members, rebuffed a chance to endorse Gingrich as speaker. Hyde said that Gingrich bore responsibility for the party's losses Tuesday. ``Leadership takes credit when things go right,'' he said. ``They ought to take the blame when things go wrong.'' Asked if Gingrich should remain speaker, Hyde said: ``I rather think he will, but that remains to be seen.'' The energy that many vented publicly on Wednesday as anger toward Gingrich seemed devoted on Thursday to intense internal political calculations about whether Livingston could succeed in toppling Gingrich and whether he should succeed. While many support him as a veteran who understands the House and has shown shrewd political skills in managing the massive federal budget, others are reviving images of the Louisianan as a hot-head who gave the party a bad name during the government shutdown two years ago and who tends toward arm-flailing in heated moments. One conservative leader said that he and his allies had reservations about Livingston because he was ``obsessed'' about trying to keep social issues out of the budget process. The budget, he said, ``has been a vehicle for conservatives over the years to add restrictions on federal money for abortion and other things you can't get through the Senate or past a presidential veto. If Livingston is the challenger, I doubt that will cause a rallying of the real conservatives in Congress.'' Some moderates said they were prepared to support him. Rep. Marge Roukema, R-N.J., said, ``I would be amenable to Livingston.'' Still, she cautioned, ``I'm not after Newt. But it's wrong not to sit down and seriously look at our options.'' Ken Johnson, an aide to Rep. W.J. (Billy) Tauzin, R-La., said that his boss was ``emblematic'' of the confusion among the broad base of House Republicans. ``Billy has been loyal to both Speaker Gingrich and Dick Armey, and he's still loyal to them, but he also wants to hear what they have to say before committing to them in the next election,'' Johnson said. ``Everyone is asking the same question: Can we refocus the message and re-energize our base without re-aligning the leadership?'' Salmon said his refusal to support Gingrich no matter what was based on Gingrich's track record of ``one failed strategy after another,'' including the impeachment process and the pork-laden budget. With the challenge under way, Gingrich has been trying to show members that he is responsive to their concerns. After an election night in which he portrayed the Republicans as victorious even as they lost seats, the next day he took ``responsibility'' for the losses. In another move, Gingrich has indicated that he is willing to cede control over the party's congressional campaign committee, allowing the whole House to select its members. Gingrich is also making strong personal appeals to Republicans. Said one top House aide: ``He'll get support. How much? Only his own vote-counters know.'' ||||| An intense struggle for control of the House is underway, with Rep. Bob Livingston conducting a telephone campaign to replace Rep. Newt Gingrich as speaker and Gingrich fighting with a counter-campaign that has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months because it could throw the speakership to a Democrat. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of pork spending. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the party's nomination for speaker then stands for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority and allow Democrats to potentially elect one of their own as speaker. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, according to Republican officials. The officials said that Livingston spoke to Gingrich shortly after the disastrous election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, after he had determined if he could win. ``He won't do it 'til he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. ||||| This is what Newt Gingrich is supposed to do well. The planning. The strategy. The big picture. The vision. His vision brought the GOP to the majority in Congress in 1994 and made him the first Republican House Speaker in 40 years. But by his own admission, Gingrich's vision seems to have blurred this time around, costing Republicans a net of five seats in Tuesday's election and leaving the party's narrow governing majority even narrower. The disappointing election results also left Gingrich open to a fractious challenge for his post as speaker. Members and aides said Wednesday that a fury at the speaker had bubbled up overnight and that some members were trying to organize a slate of candidates to replace Gingrich and his leadership team when House Republicans convene on Nov. 18 to select their leaders for next year. As Rep. Mark Sanford, R-S.C., put it, ``When a company's stock price goes down, it's usually the CEO who gets fired.'' Top Republican aides, speaking anonymously, were even blunter. ``People were very angry last night,'' one aide said. ``Today it's a mixture of seething and dismay. It's just ugly. And Newt knows it. His career is on the line.'' Another aide said, ``Most people are really angry with Newt, and no one knows what to do with it. But some are dipping their toe in the water and seeing what the temperature is.'' A possible slate could contain the names of Reps. Robert L. Livingston of Louisiana to replace Gingrich, Steve Largent of Oklahoma to replace Dick Armey of Texas as majority leader, and Jennifer Dunn of Washington to replace John A. Boehner of Ohio as conference chairman. Rep. David M. McIntosh of Indiana is also said to be considering a run for speaker, but it was not clear whether he would be part of any slate. Rep. Tom DeLay of Texas, the majority whip, was said to be secure. Armey bluntly acknowledged the scramble going on in the wings to oust the leadership. Told on ``Nightline'' that there were Republicans after his head, Armey replied: ``They're welcome to it if they're big enough to take it.'' Publicly, Gingrich has expressed confidence about keeping his job as speaker. But he has been grim-faced over the last 24 hours and closeted himself Wednesday with his top strategists making calls to shore up his support among members. ``He looks like the victim of an accident,'' said Rep. Peter King, R-N.Y., who supports Gingrich. ``He's very somber in tone.'' The question, as it always is with Gingrich, is how many members are prepared to rebel against his leadership. In the past, no more than a couple of dozen members have openly expressed their dissatisfaction with him, and a coup attempt last year fizzled for lack of support. ``I'm hoping more people will understand the need for a serious reassessment this year,'' said Rep. Charles T. Canady, R-Fla., who said he had hoped for a challenge to the speaker after the 1996 elections, when the Republicans also lost seats. ``The reality is this: Our majority keeps shrinking,'' Canady said. ``If it shrinks any more, it will be gone.'' But Gingrich has built support among moderates, and some perceived the election as a repudiation of the conservatives. Rep. Sherwood L. Boehlert, R-Utah, said the results showed that this was the right direction for the party. ``To maintain our majority, we've got to moderate some of our views,'' Boehlert said. Thomas Mann, a Congressional scholar at the Brookings Institution, said that moderates supported Gingrich in part because no appealing alternative had emerged. ``They know he sees the broader world and is prepared to moderate if it makes sense,'' Mann said. ``Newt's gone out of his way to support the moderates. He's nurtured a relationship with them.'' But Mann and others said that anger has been building at Gingrich for several reasons, including his signing on to a budget deal last month that seemed to capitulate to President Clinton, not offering a clear legislative agenda for Republicans and not communicating a clear political message. ``We are most defined by who we hate'' said Rep. Mark Souder, R-Ind. ``But voters are more sophisticated than that, and Republicans better have something to say about where we're going.'' The anger grew in the last few days when the speaker approved a $10-million anti-Clinton advertising campaign that allowed Democrats to turn the election into a referendum on Gingrich, who has never been nearly as popular with the public as Clinton has been. As if only slowly absorbing the implications of the loss, the speaker seemed unable at a news conference here Wednesday morning to pinpoint why the party suffered a net drop of five seats in the House. As late as Tuesday afternoon, he was predicting a net pickup of between 10 and 30. ``Until we look at it better, I frankly don't understand all the things that happened yesterday,'' he said, ``and I'm not sure anybody else in the country does either.'' But he said Republicans should have ``maniacally focused'' on a basic message of cutting taxes, saving Social Security and preventing drug abuse, and campaigned aggressively on those themes. He contrasted the lack of focus this year with the Contract With America that proved so successful in 1994. ``People thought we stood for something pretty big,'' he said. But Gingrich also seemed aware of the mounting concern about his leadership, repeatedly casting the election results as a victory for his leadership team because Republicans had stayed in the majority for three elections in a row for the first time in 70 years. He also suggested that those who would challenge him have little support. ``The people who normally are quoted on this are people who would in fact take the party to a narrower base,'' Gingrich said, referring to the periodic eruptions of concern among conservatives about his leadership. ``I'd like to see who it was that had a plan that they were confident over the last 60 days would have been more successful and why they didn't share it.'' ||||| Just four years ago, it was a good bet that Newt Gingrich would be the pivotal figure in U.S. politics at the turn of the millennium. Seemingly overnight he had taken a moribund minority party and turned it into a pumped-up, issue-driven House majority. With a promise to balance the budget, end welfare and represent more conservative social values, he appeared to have rearranged the political map for Congress just as Ronald Reagan had done for the presidency. But Gingrich's leadership is now so shaky that even if he maintains his hold on the speaker's office, he is in danger of marginalization. A change this dramatic suggests something far more profound than a miscalculation about election tactics. What looked like one of the major realignments in U.S. political history might turn out to have been nothing but a temporary shift. The Gingrich revolution was fueled by anger, a revolt of white working-class Americans against what they perceived as a Democratic bias in favor of blacks and other minorities, and a middle-class rejection of the politics of big government and big deficits. They were the same resentments that Ronald Reagan had exploited so successfully. But old political habits and a moribund Republican leadership allowed the Democrats to retain control of Congress throughout the 1980s, and turned Reagan's economic program into an undisciplined tax-cutting spree that created prosperity along with huge budget gaps. Gingrich's attention-grabbing rhetoric, energy and talent for political organization finally took Reagan's formula for success to the congressional elections in 1994. But once in power, he ran head on into Bill Clinton, whose political instincts were even better. The president co-opted parts of the Contract With America, particularly the balanced budget and welfare reform. He adapted the Republican social message into a call for things like school uniforms and television rating systems, which symbolized more responsibility and parental control without supporting government intrusion into private lives. The Republican right's genuine contempt for Clinton was based in part on the well-known flaws in the president's character. But it was mainly a reaction to the ease with which he had diverted what was supposed to be the flood tide of their revolution. They expected that the genuine successes of Gingrich's first year in office would lead to still larger victories for minimal government and taxes, unfettered free enterprise and a return to conservative Christian values. But the public was happy to be led in another direction, and focus on the concerns of aging baby boomers about health care and Social Security. The government that was seen as the enemy when the issues were budgetary once again looked like a potential ally. Back in 1994, both parties were so stunned by the sudden change in their congressional fortunes that they may have overestimated what it all meant. In particular they may not have realized how quickly good economic times, a drop in crime and national welfare reform could blunt the power of race in U.S. politics. The Democrats had become literally a minority party as white voters resentfully identified their policies with cities, blacks and immigrants. But last week union workers and Catholics returned to the Democratic fold. Without race as a wedge issue, the solid black Democratic vote became a powerful advantage in key states. Blacks, women and Latinos angry at Republican anti-immigration initiatives were the winning coalition in California, North Carolina and New York. The speaker was right to say this was ``not the election we expected.'' There may indeed be a Republican majority in America, but it appears to resemble the Republicanism of Dwight Eisenhower rather than Newt Gingrich _ pro-business, wary of debt and with an inherent distaste for bringing up messy social issues like abortion. The Republicans who have begun talking about ``compassionate conservatism'' and ``the politics of inclusion'' may be peddling political mush, but they peddled it to victory on Tuesday. The congressional Republican Party's long sojourn in the wilderness of the House minority may have left it too accustomed to opposition to figure out what it can be for, and too attached to the politics of anger to make sense of a nation in the mood for moderation. Gingrich has suggested that his mistake was to let the Republicans drift along on the politics of impeachment when they should have been ``almost maniacally focused'' on things like tax cuts. But looking maniacal is what got them into trouble in the first place. Winning control of Congress after so many years was very tough for Gingrich in 1994. But it will be ten times tougher to forge a politics that does not depend on rage. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry.

Speaker of the House Newt Gingrich has announced that he will not seek re-election to the post when the vote comes up on November 18th. He also announced that he would be leaving the House when his current term as Speaker expires in January. This announcement comes on the heels of a poor Republican showing in the mid-term elections. Although the Republicans retained a majority in the House, the Margin of Republican control shrank in the face of Democratic gains. Gingrich had been seen as the man who led the Republicans our of the doldrums into control of the House and the Senate.

Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the messag e of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constituional duty to complete its work in a fair and expeditious manner. Our duty has not changed becasue the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with a 228-207 majority and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conserative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former Congressman and Secretary of the Interior, and Charlie Gonzalez, who o won the Texas seat of his father, Henry. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry. ||||| House Speaker Newt Gingrich, who orchestrated the Republican revolution of recent years and is overseeing the impeachment inquiry into President Clinton, was driven from office Friday by a party that swiftly turned on him after its unexpected losses in Tuesday's midterm elections. Catching virtually everyone on Capitol Hill by surprise, Gingrich announced Friday night in two conference calls to other Republicans that he would not seek re-election as Speaker in the Nov. 18 vote and would leave Congress altogether when his term expires in January. ``This will give us a chance to purge some of the poison that is in the system,'' Gingrich said, according to a party aide who listened to one of the calls. Gingrich's resignation was a stunning reversal for one of the most combative and personally confrontational politicians in America. He made his name a decade ago by bringing down one Democratic speaker, Jim Wright, and continued his assaultive style through Tuesday's elections with last-minute commercials reminding voters of the Clinton scandal. His reflexive pugilistic response was evident even Friday night. In his second conference call, according to several people who listened, Gingrich blamed House conservatives for his downfall. Although it was their revolutionary zeal he harnessed to take control of Congress in 1994, they have become his most bitter critics in the last two years of his tumultuous speakership. Friday night he called them cannibals who had ``blackmailed'' him into quitting. Rep. Michael P. Forbes, R-N.Y., said: ``Newt said all those who had marginalized the Republican Party had engaged in cannibalism. He said, `Refer to the clips.' He's blaming others.'' Another Republican described the conference call this way: ``He started off very statesmanlike, but then you could see the anger building. When someone asked him why he was leaving, he said, `A handful of members have blackmailed the conference.' He said, `They're hateful.' And he said, `They're cannibals.''' Gingrich announced his move just hours after Rep. Robert L. Livingston of Louisiana announced he was running for speaker, putting himself forward as a pragmatist and a manager. After the Gingrich calls, Rep. Bill Archer of Texas announced he was considering his own run for speaker. Livingston and Archer are chairmen of the two most powerful committees in the House. In a statement Gingrich said, ``The Republican conference needs to be unified, and it is time for me to move forward.'' He said he hoped his colleagues would pick a successor ``who can both reconcile and discipline, who can work together and communicate effectively.'' Referring to his wife, he told his colleagues he was resigning from Congress because ``Marianne and I are tired. We need time off to get to know each other again.'' He also acknowledged his own knack for bringing negative attention to himself and his party. ``If I stay,'' he told his colleagues Friday night, ``my controversial nature would overshadow any successes we might have,'' an understatement to those who recalled his suggestion two years ago that he forced a shutdown of the government because he was miffed about having to sit in the back of Air Force One on a trip with President Clinton. According to another Republican who took notes, Gingrich said of his resignation: ``There is a lot of bitterness amongst some of the members. So long as I am around, I will always be a target in the news media, which would mean we would never be able to get our message out.'' Clinton said: ``Newt Gingrich has been a worthy adversary leading the Republican Party to a majority in the House and joining me in a great national debate over how best to prepare America for the 21st century. Despite our profound differences, I appreciate those times we were able to work together in the national interest, especially Speaker Gingrich's strong support for America's continuing leadership for freedom, peace and prosperity in the world.'' Many Republicans took the opportunity to portray Gingrich as a visionary. Rep. Sherwood Boehlert of New York said that during the first conference call, ``there was shock and surprise and strong expressions of appreciation for leading us to the Promised Land.'' His supporters said Gingrich had the votes to win the election to nominate a speaker, which is to be conducted by secret ballot. But, they agreed, the party's slim, six-vote majority meant every vote would be a battle. Kenneth Duberstein, a former official in the Reagan administration, said, ``I have no doubt he had the votes to be speaker, but I'm not sure he had the votes to govern.'' He said that because of the deep rifts in the party, Gingrich would not have been able to implement his plans. In an unusually biting reaction, Rep. Dick Gephardt of Missouri, the Democratic leader, said he hoped that Gingrich's resignation would clear the fierce partisan air that he had fostered. ``I hope that whoever succeeds Newt Gingrich as speaker will immediately begin the process of repairing the damage that was wrought on this institution over the last four years,'' Gephardt said. House Republicans predicted that Gingrich's resignation would set off a more wide-ranging and hectic scramble to replace him than had been anticipated. ``There will be a lot of pretenders to the throne who will test the waters,'' said Boehlert, who had supported Gingrich for re-election as speaker. ``There won't be any shortage of candidates.'' ||||| The presidential campaign of 2000 began Wednesday, like it or not. The millennial election will be fought on a political playing field whose rough outlines, if not its exact boundaries, were drawn by the voters in Tuesday's elections, which delivered a crushing disappointment to the giddy hopes of the Republicans and an unexpected elixir to the recently ailing Democrats. President Clinton called it an ``astonishing'' triumph of issues over investigations and said the Democrats had won so many major victories ``because they had a clear message.'' Republicans agreed. Of course the next 18 months will bring many surprises and many reversals of fortune. But the election results offered important guidelines. Tuesday was a great day for Vice President Al Gore, for at least three reasons. He worked furiously and successfully in the last ten days before the balloting to persuade Democratic loyalists not to stay home and sulk, appearing on behalf of no fewer than 224 candidates, according to his office. A moderate within the spectrum of his own party, he watched moderates win crucial elections, notably in the California gubernatorial race, where Lt. Gov. Gray Davis, a cautious pragmatist like Gore, won a smashing victory. The returns _ an even break in the Senate and a Democratic gain of five in the House of Representatives _ also made the impeachment of President Clinton less likely. And the better shape Clinton is in as his term ends, the better chance Gore, his sidekick for six years now, stands in the presidential nomination process and, ultimately, the election. But California voters also complicated the nominating process and set Gore strategists to work on tactics to uncomplicate it, because he and they consider the state absolutely central to his presidential aspirations. In a referendum in 1996, California adopted a primary system under which Republicans, Democrats and independent voters would all receive the same ballot, with candidates of all parties listed. That violates the rules of both major parties, and a measure on the ballot Tuesday, Proposition 3, would have rescinded the 1996 change. But it failed, raising the possibility that California's March 7 primary will be a mere political popularity poll, with convention delegates chosen in caucus or convention _ a nightmare. Tuesday was a bad day for the Republican right. High-profile right-wingers lost across the country, from Attorney General Dan Lungren in the California governor's race to Sen. Lauch Faircloth, denied re-election in North Carolina, to Rep. Mark Neumann of Wisconsin, who failed in a Senate race despite a huge spending advantage over Sen. Russell Feingold, to Ellen Sauerbrey in Maryland, who proved unable on her second try to prevail over an unpopular Democratic governor, Parris Glendening. Both conservatives and moderates in the party said the Republicans had to get back to basics. Even Speaker Newt Gingrich conceded that the results ``should sober every Republican'' and called for new strategic thinking. ``If you make it a referendum on a president with a 67 per cent approval rating, as they tried to do, you shouldn't be surprised if the election goes against you,'' said Gov. Tom Ridge of Pennsylvania, a moderate whose promoters mention him weekly as a possible vice-presidential nominee. Sen. John McCain of Arizona, a conservative who tends to steer away from divisive social issues, won re-election with 68 per cent of the vote. He is studying the possibility of a presidential race, but before he or any other Republican nominee can hope to win, he said in an interview Wednesday, congressional Republicans and their leaders need to learn some lessons. ``I just hope this debacle is a wake-up call for our people,'' he said. ``You've got to be for something _ smaller government, better education, something. We're seen as the party that's against everything.'' Polls taken late in this year's campaign bore McCain out. They showed that the Republicans are no longer identified with issues that were once their electoral bread and butter, such as low taxes and law and order. Tuesday was also a fresh demonstration, for anyone who needed one, of the political utility of pitching a tent big enough for almost everyone. Black politicians in North Carolina, Maryland and California reported that their fears of an indifferent black turnout had proved groundless. Black votes proved indispensable to a considerable number of hard-pressed Democratic candidates, especially where they felt their interests directly threatened. The figures on Hispanic voting, assembled from exit polls and from the candidates' own precinct analyses, showed dramatic differences. In California, where the outgoing Republican governor, Pete Wilson, had played the anti-immigration card with a vengeance, both major Democratic candidates _ Davis and Sen. Barbara Boxer, who won re-election after trailing in early polls _ cleaned up among Hispanic voters. He took 78 percent, she 72. But both of the Bush brothers, Jeb in Florida and George W. in Texas, took more than half the Hispanic vote in their highly successful gubernatorial campaigns. So did McCain. Jeb Bush is married to a Hispanic woman, he and his brother both speak Spanish fluently and frequently, and Senator McCain has long espoused Hispanic causes. Both George W. Bush and McCain will draw strength, if they decide to run, from their proven ability to appeal to Hispanic voters, as well as their general electoral strength. George W. Bush took 69 percent of the vote in Texas, where a Democrat sat in the governor's chair only four years ago, and which has the second-largest bloc of electoral votes. Florida has the fourth-largest. Governor Bush of Texas uttered a rallying cry for the moderates. ``A leader who is compassionate and conservative,'' he said in his victory speech, ``can erase the gender gap and open the Republican party to new faces and new voices.'' But figures on the right saw things differently. James Dobson, a leading religious broadcaster, said that Republicans had fared poorly because Gingrich and Sen. Trent Lott of Mississippi, the majority leader, had caved in to the president on the budget and de-emphasized social issues such as abortion and flag desecration. He called all but explicitly for the ouster of Gingrich. Likewise, the millionaire publisher Steve Forbes, another probable candidate in 2000, said the leadership ``will have a lot to answer for.'' Tuesday proved the potency of education as an issue, and suggested that it will emerge as a major theme of the 2000 campaign. Clinton, in his limited involvement in the campaign, and Gore, in his extensive participation, both stressed Democratic programs to build more schools and hire more teachers. Almost a quarter of California voters _ and there are now almost twice as many voters in California as in any other state _ named education as their most pressing concern. Elsewhere, Democrats won the governorships of Alabama and South Carolina against the odds, partly by emphasizing their rivals' opposition to lotteries that will help to pay for schools. In Iowa, a Democrat was elected governor for the first time since 1969 on a platform that featured the dilapidated condition of the state's schools and a promise to remedy it. Tuesday demonstrated the overriding importance of money in modern American politics. Feingold, one of the principal backers of campaign-finance reform, survived to fight another day, but so did opponents of reform. And the returns in House races, showing that all but six of 401 members who sought re-election had won, underlined once again how hard it is, under the present system, for a challenger to raise enough money to compete effectively. The difficulties of raising money may doom many would-be presidential candidacies. Gore will have what he needs, as will Bush, Forbes and former Gov. Lamar Alexander of Tennessee. But how many others will? Finally, Tuesday delivered an indecisive message about impeachment. Close to two-thirds of voters nationwide told exit pollsters that they intended to send no message about Clinton, but they made it clear in response to other questions that they disliked the House inquiry into the president's alleged misdeeds and wanted to see it end. In only two states, Kansas and Nebraska, did a majority of voters say they favored even a congressional censure of Clinton, a much milder form of punishment advocated by many Clinton backers. Some Republicans said privately that there should be no hearings at all in the Clinton matter, and some Democrats began talking about a deal, the equivalent of a plea bargain that would bring the matter to an early close. Nevertheless, Republican members of the House Judiciary Committee said they needed to press ahead with the Constitutional process that the House has set in motion. Among those taking that view were Rep. Bob Barr of Georgia, a fierce foe of the president, and Rep. Mary Bono of California, whose tone has been more muted. But Rep. David Dreier of California, the incoming Rules Committee chairman, said that ``the election has played a role in ensuring that one of us has a desire to drag that out.'' ||||| A week after the White House and congressional Democrats disavowed his ``war'' on Speaker Newt Gingrich, James Carville, President Clinton's former campaign strategist and chief outside defender, put forth a new battle cry Wednesday: He will not be muzzled. Not only that, but Carville went beyond his customary denunciations of Gingrich and the Republicans and, in an interview, trained his fire on leaders in his own party for not being sufficiently aggressive four weeks before Election Day. ``My sense of frustration is that I believe the Democrats have a much better chance of doing much better than anyone expects,'' Carville said. ``And I don't think anyone's emerging to try to pull it together. Everybody ought to be pushing, the leadership in the Congress, the White House, the DNC. We ought to hammer Gingrich every day. How can you take the Congress back if you don't make a case against the people who are running it? I have never heard of a strategy like that.'' Sounding increasingly agitated, he went on: ``The only people left to be activated in this election are Democrats. The right wing, they're bouncing off the walls. They're going out to vote.'' Rep. Dick Gephardt, the minority leader, complained to Erskine Bowles, the White House chief of staff, after Carville appeared on the NBC News program ``Meet the Press'' on Sept. 27 and declared, ``Cpl. Cue Ball Carville will be rolling into battle against Newt Gingrich.'' The concern among House Democrats, one expressed by some White House officials as well, was that Carville's vitriol would make the Democrats appear overly partisan and could be especially damaging to Democrats in marginal districts who do not want to appear too easy on the president. But on Wednesday, Carville was anything but timid. ``If Gephardt people think they've quieted me down,'' he said, ``I'm not quieted.'' Carville said he told officials at the White House, ``Don't waste your breath about calling me and telling me not to say this.'' Carville insisted that he would rather do battle with Republicans than with his fellow Democrats. ``If they want to fight with me, they can,'' he said. ``I'm going to fight with the Republicans.'' Yet he could not help but ridicule his party. Asked to describe the Democrats' strategy for the election, Carville said, ``If there is one, no one's shared it with me.'' ||||| A struggle for control of the House is under way, with Rep. Robert Livingston conducting a telephone campaign that could lead to him running against Newt Gingrich as speaker. But Gingrich's counter-campaign has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of spending for local projects. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the Republican nomination for speaker must stand for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, Republican officials said. The officials said that Livingston spoke to Gingrich shortly after the election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, only after he had determined if he could win. Rep. Peter King, R-N.Y., was one of several members who spoke with Livingston on Thursday. ``He told me he's making a number of phone calls, that he's gotten a very positive response about running for speaker, and he'll decide within the next 48 hours,'' King said. ``He won't do it till he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. Many Republicans immediately blamed Gingrich for the party's losses on Tuesday. Talk quickly emerged the next day of a slate of candidates to oppose Gingrich and his lieutenants. The list of possible candidates for leadership positions included Rep.e Steve Largent of Oklahoma, who talked with Livingston on Thursday about challenging Gingrich, Republican officials said, speaking on the condition that their names not be reported. Those officials said that Largent told Livingston that he wanted to run with him on a ticket and that he would challenge Rep. Dick Armey, the majority leader. But, these officials said that if Livingston did not challenge Gingrich, Largent would run for speaker instead. Other names were floated Wednesday for leadership posts. They included Reps. David McIntosh of Indiana for speaker and Jennifer Dunn of Washington as conference chairman. Added to the mix on Thursday was the name of Rep. Christopher Cox, a California conservative. As a sign of the uncertainty prevailing among House members on Thursday, Rep. Henry Hyde, the chairman of the Judiciary Committee and one of the House's most venerable members, rebuffed a chance to endorse Gingrich as speaker. Hyde said that Gingrich bore responsibility for the party's losses Tuesday. ``Leadership takes credit when things go right,'' he said. ``They ought to take the blame when things go wrong.'' Asked if Gingrich should remain speaker, Hyde said: ``I rather think he will, but that remains to be seen.'' The energy that many vented publicly on Wednesday as anger toward Gingrich seemed devoted on Thursday to intense internal political calculations about whether Livingston could succeed in toppling Gingrich and whether he should succeed. While many support him as a veteran who understands the House and has shown shrewd political skills in managing the massive federal budget, others are reviving images of the Louisianan as a hot-head who gave the party a bad name during the government shutdown two years ago and who tends toward arm-flailing in heated moments. One conservative leader said that he and his allies had reservations about Livingston because he was ``obsessed'' about trying to keep social issues out of the budget process. The budget, he said, ``has been a vehicle for conservatives over the years to add restrictions on federal money for abortion and other things you can't get through the Senate or past a presidential veto. If Livingston is the challenger, I doubt that will cause a rallying of the real conservatives in Congress.'' Some moderates said they were prepared to support him. Rep. Marge Roukema, R-N.J., said, ``I would be amenable to Livingston.'' Still, she cautioned, ``I'm not after Newt. But it's wrong not to sit down and seriously look at our options.'' Ken Johnson, an aide to Rep. W.J. (Billy) Tauzin, R-La., said that his boss was ``emblematic'' of the confusion among the broad base of House Republicans. ``Billy has been loyal to both Speaker Gingrich and Dick Armey, and he's still loyal to them, but he also wants to hear what they have to say before committing to them in the next election,'' Johnson said. ``Everyone is asking the same question: Can we refocus the message and re-energize our base without re-aligning the leadership?'' Salmon said his refusal to support Gingrich no matter what was based on Gingrich's track record of ``one failed strategy after another,'' including the impeachment process and the pork-laden budget. With the challenge under way, Gingrich has been trying to show members that he is responsive to their concerns. After an election night in which he portrayed the Republicans as victorious even as they lost seats, the next day he took ``responsibility'' for the losses. In another move, Gingrich has indicated that he is willing to cede control over the party's congressional campaign committee, allowing the whole House to select its members. Gingrich is also making strong personal appeals to Republicans. Said one top House aide: ``He'll get support. How much? Only his own vote-counters know.'' ||||| An intense struggle for control of the House is underway, with Rep. Bob Livingston conducting a telephone campaign to replace Rep. Newt Gingrich as speaker and Gingrich fighting with a counter-campaign that has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months because it could throw the speakership to a Democrat. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of pork spending. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the party's nomination for speaker then stands for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority and allow Democrats to potentially elect one of their own as speaker. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, according to Republican officials. The officials said that Livingston spoke to Gingrich shortly after the disastrous election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, after he had determined if he could win. ``He won't do it 'til he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. ||||| This is what Newt Gingrich is supposed to do well. The planning. The strategy. The big picture. The vision. His vision brought the GOP to the majority in Congress in 1994 and made him the first Republican House Speaker in 40 years. But by his own admission, Gingrich's vision seems to have blurred this time around, costing Republicans a net of five seats in Tuesday's election and leaving the party's narrow governing majority even narrower. The disappointing election results also left Gingrich open to a fractious challenge for his post as speaker. Members and aides said Wednesday that a fury at the speaker had bubbled up overnight and that some members were trying to organize a slate of candidates to replace Gingrich and his leadership team when House Republicans convene on Nov. 18 to select their leaders for next year. As Rep. Mark Sanford, R-S.C., put it, ``When a company's stock price goes down, it's usually the CEO who gets fired.'' Top Republican aides, speaking anonymously, were even blunter. ``People were very angry last night,'' one aide said. ``Today it's a mixture of seething and dismay. It's just ugly. And Newt knows it. His career is on the line.'' Another aide said, ``Most people are really angry with Newt, and no one knows what to do with it. But some are dipping their toe in the water and seeing what the temperature is.'' A possible slate could contain the names of Reps. Robert L. Livingston of Louisiana to replace Gingrich, Steve Largent of Oklahoma to replace Dick Armey of Texas as majority leader, and Jennifer Dunn of Washington to replace John A. Boehner of Ohio as conference chairman. Rep. David M. McIntosh of Indiana is also said to be considering a run for speaker, but it was not clear whether he would be part of any slate. Rep. Tom DeLay of Texas, the majority whip, was said to be secure. Armey bluntly acknowledged the scramble going on in the wings to oust the leadership. Told on ``Nightline'' that there were Republicans after his head, Armey replied: ``They're welcome to it if they're big enough to take it.'' Publicly, Gingrich has expressed confidence about keeping his job as speaker. But he has been grim-faced over the last 24 hours and closeted himself Wednesday with his top strategists making calls to shore up his support among members. ``He looks like the victim of an accident,'' said Rep. Peter King, R-N.Y., who supports Gingrich. ``He's very somber in tone.'' The question, as it always is with Gingrich, is how many members are prepared to rebel against his leadership. In the past, no more than a couple of dozen members have openly expressed their dissatisfaction with him, and a coup attempt last year fizzled for lack of support. ``I'm hoping more people will understand the need for a serious reassessment this year,'' said Rep. Charles T. Canady, R-Fla., who said he had hoped for a challenge to the speaker after the 1996 elections, when the Republicans also lost seats. ``The reality is this: Our majority keeps shrinking,'' Canady said. ``If it shrinks any more, it will be gone.'' But Gingrich has built support among moderates, and some perceived the election as a repudiation of the conservatives. Rep. Sherwood L. Boehlert, R-Utah, said the results showed that this was the right direction for the party. ``To maintain our majority, we've got to moderate some of our views,'' Boehlert said. Thomas Mann, a Congressional scholar at the Brookings Institution, said that moderates supported Gingrich in part because no appealing alternative had emerged. ``They know he sees the broader world and is prepared to moderate if it makes sense,'' Mann said. ``Newt's gone out of his way to support the moderates. He's nurtured a relationship with them.'' But Mann and others said that anger has been building at Gingrich for several reasons, including his signing on to a budget deal last month that seemed to capitulate to President Clinton, not offering a clear legislative agenda for Republicans and not communicating a clear political message. ``We are most defined by who we hate'' said Rep. Mark Souder, R-Ind. ``But voters are more sophisticated than that, and Republicans better have something to say about where we're going.'' The anger grew in the last few days when the speaker approved a $10-million anti-Clinton advertising campaign that allowed Democrats to turn the election into a referendum on Gingrich, who has never been nearly as popular with the public as Clinton has been. As if only slowly absorbing the implications of the loss, the speaker seemed unable at a news conference here Wednesday morning to pinpoint why the party suffered a net drop of five seats in the House. As late as Tuesday afternoon, he was predicting a net pickup of between 10 and 30. ``Until we look at it better, I frankly don't understand all the things that happened yesterday,'' he said, ``and I'm not sure anybody else in the country does either.'' But he said Republicans should have ``maniacally focused'' on a basic message of cutting taxes, saving Social Security and preventing drug abuse, and campaigned aggressively on those themes. He contrasted the lack of focus this year with the Contract With America that proved so successful in 1994. ``People thought we stood for something pretty big,'' he said. But Gingrich also seemed aware of the mounting concern about his leadership, repeatedly casting the election results as a victory for his leadership team because Republicans had stayed in the majority for three elections in a row for the first time in 70 years. He also suggested that those who would challenge him have little support. ``The people who normally are quoted on this are people who would in fact take the party to a narrower base,'' Gingrich said, referring to the periodic eruptions of concern among conservatives about his leadership. ``I'd like to see who it was that had a plan that they were confident over the last 60 days would have been more successful and why they didn't share it.'' ||||| Just four years ago, it was a good bet that Newt Gingrich would be the pivotal figure in U.S. politics at the turn of the millennium. Seemingly overnight he had taken a moribund minority party and turned it into a pumped-up, issue-driven House majority. With a promise to balance the budget, end welfare and represent more conservative social values, he appeared to have rearranged the political map for Congress just as Ronald Reagan had done for the presidency. But Gingrich's leadership is now so shaky that even if he maintains his hold on the speaker's office, he is in danger of marginalization. A change this dramatic suggests something far more profound than a miscalculation about election tactics. What looked like one of the major realignments in U.S. political history might turn out to have been nothing but a temporary shift. The Gingrich revolution was fueled by anger, a revolt of white working-class Americans against what they perceived as a Democratic bias in favor of blacks and other minorities, and a middle-class rejection of the politics of big government and big deficits. They were the same resentments that Ronald Reagan had exploited so successfully. But old political habits and a moribund Republican leadership allowed the Democrats to retain control of Congress throughout the 1980s, and turned Reagan's economic program into an undisciplined tax-cutting spree that created prosperity along with huge budget gaps. Gingrich's attention-grabbing rhetoric, energy and talent for political organization finally took Reagan's formula for success to the congressional elections in 1994. But once in power, he ran head on into Bill Clinton, whose political instincts were even better. The president co-opted parts of the Contract With America, particularly the balanced budget and welfare reform. He adapted the Republican social message into a call for things like school uniforms and television rating systems, which symbolized more responsibility and parental control without supporting government intrusion into private lives. The Republican right's genuine contempt for Clinton was based in part on the well-known flaws in the president's character. But it was mainly a reaction to the ease with which he had diverted what was supposed to be the flood tide of their revolution. They expected that the genuine successes of Gingrich's first year in office would lead to still larger victories for minimal government and taxes, unfettered free enterprise and a return to conservative Christian values. But the public was happy to be led in another direction, and focus on the concerns of aging baby boomers about health care and Social Security. The government that was seen as the enemy when the issues were budgetary once again looked like a potential ally. Back in 1994, both parties were so stunned by the sudden change in their congressional fortunes that they may have overestimated what it all meant. In particular they may not have realized how quickly good economic times, a drop in crime and national welfare reform could blunt the power of race in U.S. politics. The Democrats had become literally a minority party as white voters resentfully identified their policies with cities, blacks and immigrants. But last week union workers and Catholics returned to the Democratic fold. Without race as a wedge issue, the solid black Democratic vote became a powerful advantage in key states. Blacks, women and Latinos angry at Republican anti-immigration initiatives were the winning coalition in California, North Carolina and New York. The speaker was right to say this was ``not the election we expected.'' There may indeed be a Republican majority in America, but it appears to resemble the Republicanism of Dwight Eisenhower rather than Newt Gingrich _ pro-business, wary of debt and with an inherent distaste for bringing up messy social issues like abortion. The Republicans who have begun talking about ``compassionate conservatism'' and ``the politics of inclusion'' may be peddling political mush, but they peddled it to victory on Tuesday. The congressional Republican Party's long sojourn in the wilderness of the House minority may have left it too accustomed to opposition to figure out what it can be for, and too attached to the politics of anger to make sense of a nation in the mood for moderation. Gingrich has suggested that his mistake was to let the Republicans drift along on the politics of impeachment when they should have been ``almost maniacally focused'' on things like tax cuts. But looking maniacal is what got them into trouble in the first place. Winning control of Congress after so many years was very tough for Gingrich in 1994. But it will be ten times tougher to forge a politics that does not depend on rage. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry.

Most Democrats, except for former Clinton strategist James Carville, were hesitant to attack Speaker Newt Gingrich as the 1998 elections approached. Republicans were expected to add to their majority in Congress. However, Republicans lost seats in both the House and Senate. Republicans became disenchanted with the Gingrich "vision" and blamed him for the losses. An active campaign began to replace Gingrich as Speaker with Louisiana Congressman Robert Livingston as the main actor. After a losing struggle to maintain his position, Gingrich resigned as Speaker. House Republicans then turned their attention to impeachment proceedings of President Clinton.

Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the messag e of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constituional duty to complete its work in a fair and expeditious manner. Our duty has not changed becasue the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with a 228-207 majority and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conserative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former Congressman and Secretary of the Interior, and Charlie Gonzalez, who o won the Texas seat of his father, Henry. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry. ||||| House Speaker Newt Gingrich, who orchestrated the Republican revolution of recent years and is overseeing the impeachment inquiry into President Clinton, was driven from office Friday by a party that swiftly turned on him after its unexpected losses in Tuesday's midterm elections. Catching virtually everyone on Capitol Hill by surprise, Gingrich announced Friday night in two conference calls to other Republicans that he would not seek re-election as Speaker in the Nov. 18 vote and would leave Congress altogether when his term expires in January. ``This will give us a chance to purge some of the poison that is in the system,'' Gingrich said, according to a party aide who listened to one of the calls. Gingrich's resignation was a stunning reversal for one of the most combative and personally confrontational politicians in America. He made his name a decade ago by bringing down one Democratic speaker, Jim Wright, and continued his assaultive style through Tuesday's elections with last-minute commercials reminding voters of the Clinton scandal. His reflexive pugilistic response was evident even Friday night. In his second conference call, according to several people who listened, Gingrich blamed House conservatives for his downfall. Although it was their revolutionary zeal he harnessed to take control of Congress in 1994, they have become his most bitter critics in the last two years of his tumultuous speakership. Friday night he called them cannibals who had ``blackmailed'' him into quitting. Rep. Michael P. Forbes, R-N.Y., said: ``Newt said all those who had marginalized the Republican Party had engaged in cannibalism. He said, `Refer to the clips.' He's blaming others.'' Another Republican described the conference call this way: ``He started off very statesmanlike, but then you could see the anger building. When someone asked him why he was leaving, he said, `A handful of members have blackmailed the conference.' He said, `They're hateful.' And he said, `They're cannibals.''' Gingrich announced his move just hours after Rep. Robert L. Livingston of Louisiana announced he was running for speaker, putting himself forward as a pragmatist and a manager. After the Gingrich calls, Rep. Bill Archer of Texas announced he was considering his own run for speaker. Livingston and Archer are chairmen of the two most powerful committees in the House. In a statement Gingrich said, ``The Republican conference needs to be unified, and it is time for me to move forward.'' He said he hoped his colleagues would pick a successor ``who can both reconcile and discipline, who can work together and communicate effectively.'' Referring to his wife, he told his colleagues he was resigning from Congress because ``Marianne and I are tired. We need time off to get to know each other again.'' He also acknowledged his own knack for bringing negative attention to himself and his party. ``If I stay,'' he told his colleagues Friday night, ``my controversial nature would overshadow any successes we might have,'' an understatement to those who recalled his suggestion two years ago that he forced a shutdown of the government because he was miffed about having to sit in the back of Air Force One on a trip with President Clinton. According to another Republican who took notes, Gingrich said of his resignation: ``There is a lot of bitterness amongst some of the members. So long as I am around, I will always be a target in the news media, which would mean we would never be able to get our message out.'' Clinton said: ``Newt Gingrich has been a worthy adversary leading the Republican Party to a majority in the House and joining me in a great national debate over how best to prepare America for the 21st century. Despite our profound differences, I appreciate those times we were able to work together in the national interest, especially Speaker Gingrich's strong support for America's continuing leadership for freedom, peace and prosperity in the world.'' Many Republicans took the opportunity to portray Gingrich as a visionary. Rep. Sherwood Boehlert of New York said that during the first conference call, ``there was shock and surprise and strong expressions of appreciation for leading us to the Promised Land.'' His supporters said Gingrich had the votes to win the election to nominate a speaker, which is to be conducted by secret ballot. But, they agreed, the party's slim, six-vote majority meant every vote would be a battle. Kenneth Duberstein, a former official in the Reagan administration, said, ``I have no doubt he had the votes to be speaker, but I'm not sure he had the votes to govern.'' He said that because of the deep rifts in the party, Gingrich would not have been able to implement his plans. In an unusually biting reaction, Rep. Dick Gephardt of Missouri, the Democratic leader, said he hoped that Gingrich's resignation would clear the fierce partisan air that he had fostered. ``I hope that whoever succeeds Newt Gingrich as speaker will immediately begin the process of repairing the damage that was wrought on this institution over the last four years,'' Gephardt said. House Republicans predicted that Gingrich's resignation would set off a more wide-ranging and hectic scramble to replace him than had been anticipated. ``There will be a lot of pretenders to the throne who will test the waters,'' said Boehlert, who had supported Gingrich for re-election as speaker. ``There won't be any shortage of candidates.'' ||||| The presidential campaign of 2000 began Wednesday, like it or not. The millennial election will be fought on a political playing field whose rough outlines, if not its exact boundaries, were drawn by the voters in Tuesday's elections, which delivered a crushing disappointment to the giddy hopes of the Republicans and an unexpected elixir to the recently ailing Democrats. President Clinton called it an ``astonishing'' triumph of issues over investigations and said the Democrats had won so many major victories ``because they had a clear message.'' Republicans agreed. Of course the next 18 months will bring many surprises and many reversals of fortune. But the election results offered important guidelines. Tuesday was a great day for Vice President Al Gore, for at least three reasons. He worked furiously and successfully in the last ten days before the balloting to persuade Democratic loyalists not to stay home and sulk, appearing on behalf of no fewer than 224 candidates, according to his office. A moderate within the spectrum of his own party, he watched moderates win crucial elections, notably in the California gubernatorial race, where Lt. Gov. Gray Davis, a cautious pragmatist like Gore, won a smashing victory. The returns _ an even break in the Senate and a Democratic gain of five in the House of Representatives _ also made the impeachment of President Clinton less likely. And the better shape Clinton is in as his term ends, the better chance Gore, his sidekick for six years now, stands in the presidential nomination process and, ultimately, the election. But California voters also complicated the nominating process and set Gore strategists to work on tactics to uncomplicate it, because he and they consider the state absolutely central to his presidential aspirations. In a referendum in 1996, California adopted a primary system under which Republicans, Democrats and independent voters would all receive the same ballot, with candidates of all parties listed. That violates the rules of both major parties, and a measure on the ballot Tuesday, Proposition 3, would have rescinded the 1996 change. But it failed, raising the possibility that California's March 7 primary will be a mere political popularity poll, with convention delegates chosen in caucus or convention _ a nightmare. Tuesday was a bad day for the Republican right. High-profile right-wingers lost across the country, from Attorney General Dan Lungren in the California governor's race to Sen. Lauch Faircloth, denied re-election in North Carolina, to Rep. Mark Neumann of Wisconsin, who failed in a Senate race despite a huge spending advantage over Sen. Russell Feingold, to Ellen Sauerbrey in Maryland, who proved unable on her second try to prevail over an unpopular Democratic governor, Parris Glendening. Both conservatives and moderates in the party said the Republicans had to get back to basics. Even Speaker Newt Gingrich conceded that the results ``should sober every Republican'' and called for new strategic thinking. ``If you make it a referendum on a president with a 67 per cent approval rating, as they tried to do, you shouldn't be surprised if the election goes against you,'' said Gov. Tom Ridge of Pennsylvania, a moderate whose promoters mention him weekly as a possible vice-presidential nominee. Sen. John McCain of Arizona, a conservative who tends to steer away from divisive social issues, won re-election with 68 per cent of the vote. He is studying the possibility of a presidential race, but before he or any other Republican nominee can hope to win, he said in an interview Wednesday, congressional Republicans and their leaders need to learn some lessons. ``I just hope this debacle is a wake-up call for our people,'' he said. ``You've got to be for something _ smaller government, better education, something. We're seen as the party that's against everything.'' Polls taken late in this year's campaign bore McCain out. They showed that the Republicans are no longer identified with issues that were once their electoral bread and butter, such as low taxes and law and order. Tuesday was also a fresh demonstration, for anyone who needed one, of the political utility of pitching a tent big enough for almost everyone. Black politicians in North Carolina, Maryland and California reported that their fears of an indifferent black turnout had proved groundless. Black votes proved indispensable to a considerable number of hard-pressed Democratic candidates, especially where they felt their interests directly threatened. The figures on Hispanic voting, assembled from exit polls and from the candidates' own precinct analyses, showed dramatic differences. In California, where the outgoing Republican governor, Pete Wilson, had played the anti-immigration card with a vengeance, both major Democratic candidates _ Davis and Sen. Barbara Boxer, who won re-election after trailing in early polls _ cleaned up among Hispanic voters. He took 78 percent, she 72. But both of the Bush brothers, Jeb in Florida and George W. in Texas, took more than half the Hispanic vote in their highly successful gubernatorial campaigns. So did McCain. Jeb Bush is married to a Hispanic woman, he and his brother both speak Spanish fluently and frequently, and Senator McCain has long espoused Hispanic causes. Both George W. Bush and McCain will draw strength, if they decide to run, from their proven ability to appeal to Hispanic voters, as well as their general electoral strength. George W. Bush took 69 percent of the vote in Texas, where a Democrat sat in the governor's chair only four years ago, and which has the second-largest bloc of electoral votes. Florida has the fourth-largest. Governor Bush of Texas uttered a rallying cry for the moderates. ``A leader who is compassionate and conservative,'' he said in his victory speech, ``can erase the gender gap and open the Republican party to new faces and new voices.'' But figures on the right saw things differently. James Dobson, a leading religious broadcaster, said that Republicans had fared poorly because Gingrich and Sen. Trent Lott of Mississippi, the majority leader, had caved in to the president on the budget and de-emphasized social issues such as abortion and flag desecration. He called all but explicitly for the ouster of Gingrich. Likewise, the millionaire publisher Steve Forbes, another probable candidate in 2000, said the leadership ``will have a lot to answer for.'' Tuesday proved the potency of education as an issue, and suggested that it will emerge as a major theme of the 2000 campaign. Clinton, in his limited involvement in the campaign, and Gore, in his extensive participation, both stressed Democratic programs to build more schools and hire more teachers. Almost a quarter of California voters _ and there are now almost twice as many voters in California as in any other state _ named education as their most pressing concern. Elsewhere, Democrats won the governorships of Alabama and South Carolina against the odds, partly by emphasizing their rivals' opposition to lotteries that will help to pay for schools. In Iowa, a Democrat was elected governor for the first time since 1969 on a platform that featured the dilapidated condition of the state's schools and a promise to remedy it. Tuesday demonstrated the overriding importance of money in modern American politics. Feingold, one of the principal backers of campaign-finance reform, survived to fight another day, but so did opponents of reform. And the returns in House races, showing that all but six of 401 members who sought re-election had won, underlined once again how hard it is, under the present system, for a challenger to raise enough money to compete effectively. The difficulties of raising money may doom many would-be presidential candidacies. Gore will have what he needs, as will Bush, Forbes and former Gov. Lamar Alexander of Tennessee. But how many others will? Finally, Tuesday delivered an indecisive message about impeachment. Close to two-thirds of voters nationwide told exit pollsters that they intended to send no message about Clinton, but they made it clear in response to other questions that they disliked the House inquiry into the president's alleged misdeeds and wanted to see it end. In only two states, Kansas and Nebraska, did a majority of voters say they favored even a congressional censure of Clinton, a much milder form of punishment advocated by many Clinton backers. Some Republicans said privately that there should be no hearings at all in the Clinton matter, and some Democrats began talking about a deal, the equivalent of a plea bargain that would bring the matter to an early close. Nevertheless, Republican members of the House Judiciary Committee said they needed to press ahead with the Constitutional process that the House has set in motion. Among those taking that view were Rep. Bob Barr of Georgia, a fierce foe of the president, and Rep. Mary Bono of California, whose tone has been more muted. But Rep. David Dreier of California, the incoming Rules Committee chairman, said that ``the election has played a role in ensuring that one of us has a desire to drag that out.'' ||||| A week after the White House and congressional Democrats disavowed his ``war'' on Speaker Newt Gingrich, James Carville, President Clinton's former campaign strategist and chief outside defender, put forth a new battle cry Wednesday: He will not be muzzled. Not only that, but Carville went beyond his customary denunciations of Gingrich and the Republicans and, in an interview, trained his fire on leaders in his own party for not being sufficiently aggressive four weeks before Election Day. ``My sense of frustration is that I believe the Democrats have a much better chance of doing much better than anyone expects,'' Carville said. ``And I don't think anyone's emerging to try to pull it together. Everybody ought to be pushing, the leadership in the Congress, the White House, the DNC. We ought to hammer Gingrich every day. How can you take the Congress back if you don't make a case against the people who are running it? I have never heard of a strategy like that.'' Sounding increasingly agitated, he went on: ``The only people left to be activated in this election are Democrats. The right wing, they're bouncing off the walls. They're going out to vote.'' Rep. Dick Gephardt, the minority leader, complained to Erskine Bowles, the White House chief of staff, after Carville appeared on the NBC News program ``Meet the Press'' on Sept. 27 and declared, ``Cpl. Cue Ball Carville will be rolling into battle against Newt Gingrich.'' The concern among House Democrats, one expressed by some White House officials as well, was that Carville's vitriol would make the Democrats appear overly partisan and could be especially damaging to Democrats in marginal districts who do not want to appear too easy on the president. But on Wednesday, Carville was anything but timid. ``If Gephardt people think they've quieted me down,'' he said, ``I'm not quieted.'' Carville said he told officials at the White House, ``Don't waste your breath about calling me and telling me not to say this.'' Carville insisted that he would rather do battle with Republicans than with his fellow Democrats. ``If they want to fight with me, they can,'' he said. ``I'm going to fight with the Republicans.'' Yet he could not help but ridicule his party. Asked to describe the Democrats' strategy for the election, Carville said, ``If there is one, no one's shared it with me.'' ||||| A struggle for control of the House is under way, with Rep. Robert Livingston conducting a telephone campaign that could lead to him running against Newt Gingrich as speaker. But Gingrich's counter-campaign has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of spending for local projects. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the Republican nomination for speaker must stand for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, Republican officials said. The officials said that Livingston spoke to Gingrich shortly after the election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, only after he had determined if he could win. Rep. Peter King, R-N.Y., was one of several members who spoke with Livingston on Thursday. ``He told me he's making a number of phone calls, that he's gotten a very positive response about running for speaker, and he'll decide within the next 48 hours,'' King said. ``He won't do it till he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. Many Republicans immediately blamed Gingrich for the party's losses on Tuesday. Talk quickly emerged the next day of a slate of candidates to oppose Gingrich and his lieutenants. The list of possible candidates for leadership positions included Rep.e Steve Largent of Oklahoma, who talked with Livingston on Thursday about challenging Gingrich, Republican officials said, speaking on the condition that their names not be reported. Those officials said that Largent told Livingston that he wanted to run with him on a ticket and that he would challenge Rep. Dick Armey, the majority leader. But, these officials said that if Livingston did not challenge Gingrich, Largent would run for speaker instead. Other names were floated Wednesday for leadership posts. They included Reps. David McIntosh of Indiana for speaker and Jennifer Dunn of Washington as conference chairman. Added to the mix on Thursday was the name of Rep. Christopher Cox, a California conservative. As a sign of the uncertainty prevailing among House members on Thursday, Rep. Henry Hyde, the chairman of the Judiciary Committee and one of the House's most venerable members, rebuffed a chance to endorse Gingrich as speaker. Hyde said that Gingrich bore responsibility for the party's losses Tuesday. ``Leadership takes credit when things go right,'' he said. ``They ought to take the blame when things go wrong.'' Asked if Gingrich should remain speaker, Hyde said: ``I rather think he will, but that remains to be seen.'' The energy that many vented publicly on Wednesday as anger toward Gingrich seemed devoted on Thursday to intense internal political calculations about whether Livingston could succeed in toppling Gingrich and whether he should succeed. While many support him as a veteran who understands the House and has shown shrewd political skills in managing the massive federal budget, others are reviving images of the Louisianan as a hot-head who gave the party a bad name during the government shutdown two years ago and who tends toward arm-flailing in heated moments. One conservative leader said that he and his allies had reservations about Livingston because he was ``obsessed'' about trying to keep social issues out of the budget process. The budget, he said, ``has been a vehicle for conservatives over the years to add restrictions on federal money for abortion and other things you can't get through the Senate or past a presidential veto. If Livingston is the challenger, I doubt that will cause a rallying of the real conservatives in Congress.'' Some moderates said they were prepared to support him. Rep. Marge Roukema, R-N.J., said, ``I would be amenable to Livingston.'' Still, she cautioned, ``I'm not after Newt. But it's wrong not to sit down and seriously look at our options.'' Ken Johnson, an aide to Rep. W.J. (Billy) Tauzin, R-La., said that his boss was ``emblematic'' of the confusion among the broad base of House Republicans. ``Billy has been loyal to both Speaker Gingrich and Dick Armey, and he's still loyal to them, but he also wants to hear what they have to say before committing to them in the next election,'' Johnson said. ``Everyone is asking the same question: Can we refocus the message and re-energize our base without re-aligning the leadership?'' Salmon said his refusal to support Gingrich no matter what was based on Gingrich's track record of ``one failed strategy after another,'' including the impeachment process and the pork-laden budget. With the challenge under way, Gingrich has been trying to show members that he is responsive to their concerns. After an election night in which he portrayed the Republicans as victorious even as they lost seats, the next day he took ``responsibility'' for the losses. In another move, Gingrich has indicated that he is willing to cede control over the party's congressional campaign committee, allowing the whole House to select its members. Gingrich is also making strong personal appeals to Republicans. Said one top House aide: ``He'll get support. How much? Only his own vote-counters know.'' ||||| An intense struggle for control of the House is underway, with Rep. Bob Livingston conducting a telephone campaign to replace Rep. Newt Gingrich as speaker and Gingrich fighting with a counter-campaign that has given some members pause about ousting him. At the same time, a small band of Republicans vowed on Thursday that they would not vote to re-elect Gingrich under any circumstances, a move that, because of the Republicans' shrunken House majority, could tie the party in knots for months because it could throw the speakership to a Democrat. Rep. Matt Salmon, R-Ariz., said: ``I personally have made the decision that I cannot vote for Newt Gingrich for speaker in January, and there are six others who have told me they feel the same way, seven people who just will not, and it takes six to deadlock the vote.'' Fury at the speaker has boiled over since Tuesday's elections, when Republicans suffered a net loss of five seats in the House. They blamed Gingrich, the party's chief strategist. But many were already angry at him for what they said was his failure to articulate a clear message for the party going into the elections and for a messy budget process that gave President Clinton a political edge and contradicted Republican principles of fiscal conservativism by containing massive amounts of pork spending. House Republicans are to meet Nov. 18 to vote by secret ballot for their leaders. Whoever wins the party's nomination for speaker then stands for election by the full House in January. Even if Gingrich wins the secret ballot, he could be denied re-election as speaker in January if Salmon and at least five others refuse to vote for him. Because the Republicans now control the House by only 12 seats, it would take just six votes against Gingrich to deny him a majority and allow Democrats to potentially elect one of their own as speaker. With such a chaotic and unacceptable prospect looming, Livingston told Gingrich that he should step aside for the good of the party, according to Republican officials. The officials said that Livingston spoke to Gingrich shortly after the disastrous election returns but also before the election, reflecting Livingston's earlier displeasure with the speaker over the budget process. Several Republicans said that both Livingston, the chairman of the Appropriations Committee and one of the few members with the stature to stand for speaker, and Gingrich were working the phones on Thursday in a struggle for votes. Livingston has said nothing publicly about a challenge to Gingrich, but several members and aides said on Thursday that he would announce his intentions, possibly as soon as Friday, after he had determined if he could win. ``He won't do it 'til he has his ducks in a row, and right now a lot of people are still loyal to the speaker,'' said an aide to a Republican who, like many others, is trying to straddle the line between fealty to a speaker who may retain power and encouragement to a challenger who offers a salve to an embattled party. ||||| This is what Newt Gingrich is supposed to do well. The planning. The strategy. The big picture. The vision. His vision brought the GOP to the majority in Congress in 1994 and made him the first Republican House Speaker in 40 years. But by his own admission, Gingrich's vision seems to have blurred this time around, costing Republicans a net of five seats in Tuesday's election and leaving the party's narrow governing majority even narrower. The disappointing election results also left Gingrich open to a fractious challenge for his post as speaker. Members and aides said Wednesday that a fury at the speaker had bubbled up overnight and that some members were trying to organize a slate of candidates to replace Gingrich and his leadership team when House Republicans convene on Nov. 18 to select their leaders for next year. As Rep. Mark Sanford, R-S.C., put it, ``When a company's stock price goes down, it's usually the CEO who gets fired.'' Top Republican aides, speaking anonymously, were even blunter. ``People were very angry last night,'' one aide said. ``Today it's a mixture of seething and dismay. It's just ugly. And Newt knows it. His career is on the line.'' Another aide said, ``Most people are really angry with Newt, and no one knows what to do with it. But some are dipping their toe in the water and seeing what the temperature is.'' A possible slate could contain the names of Reps. Robert L. Livingston of Louisiana to replace Gingrich, Steve Largent of Oklahoma to replace Dick Armey of Texas as majority leader, and Jennifer Dunn of Washington to replace John A. Boehner of Ohio as conference chairman. Rep. David M. McIntosh of Indiana is also said to be considering a run for speaker, but it was not clear whether he would be part of any slate. Rep. Tom DeLay of Texas, the majority whip, was said to be secure. Armey bluntly acknowledged the scramble going on in the wings to oust the leadership. Told on ``Nightline'' that there were Republicans after his head, Armey replied: ``They're welcome to it if they're big enough to take it.'' Publicly, Gingrich has expressed confidence about keeping his job as speaker. But he has been grim-faced over the last 24 hours and closeted himself Wednesday with his top strategists making calls to shore up his support among members. ``He looks like the victim of an accident,'' said Rep. Peter King, R-N.Y., who supports Gingrich. ``He's very somber in tone.'' The question, as it always is with Gingrich, is how many members are prepared to rebel against his leadership. In the past, no more than a couple of dozen members have openly expressed their dissatisfaction with him, and a coup attempt last year fizzled for lack of support. ``I'm hoping more people will understand the need for a serious reassessment this year,'' said Rep. Charles T. Canady, R-Fla., who said he had hoped for a challenge to the speaker after the 1996 elections, when the Republicans also lost seats. ``The reality is this: Our majority keeps shrinking,'' Canady said. ``If it shrinks any more, it will be gone.'' But Gingrich has built support among moderates, and some perceived the election as a repudiation of the conservatives. Rep. Sherwood L. Boehlert, R-Utah, said the results showed that this was the right direction for the party. ``To maintain our majority, we've got to moderate some of our views,'' Boehlert said. Thomas Mann, a Congressional scholar at the Brookings Institution, said that moderates supported Gingrich in part because no appealing alternative had emerged. ``They know he sees the broader world and is prepared to moderate if it makes sense,'' Mann said. ``Newt's gone out of his way to support the moderates. He's nurtured a relationship with them.'' But Mann and others said that anger has been building at Gingrich for several reasons, including his signing on to a budget deal last month that seemed to capitulate to President Clinton, not offering a clear legislative agenda for Republicans and not communicating a clear political message. ``We are most defined by who we hate'' said Rep. Mark Souder, R-Ind. ``But voters are more sophisticated than that, and Republicans better have something to say about where we're going.'' The anger grew in the last few days when the speaker approved a $10-million anti-Clinton advertising campaign that allowed Democrats to turn the election into a referendum on Gingrich, who has never been nearly as popular with the public as Clinton has been. As if only slowly absorbing the implications of the loss, the speaker seemed unable at a news conference here Wednesday morning to pinpoint why the party suffered a net drop of five seats in the House. As late as Tuesday afternoon, he was predicting a net pickup of between 10 and 30. ``Until we look at it better, I frankly don't understand all the things that happened yesterday,'' he said, ``and I'm not sure anybody else in the country does either.'' But he said Republicans should have ``maniacally focused'' on a basic message of cutting taxes, saving Social Security and preventing drug abuse, and campaigned aggressively on those themes. He contrasted the lack of focus this year with the Contract With America that proved so successful in 1994. ``People thought we stood for something pretty big,'' he said. But Gingrich also seemed aware of the mounting concern about his leadership, repeatedly casting the election results as a victory for his leadership team because Republicans had stayed in the majority for three elections in a row for the first time in 70 years. He also suggested that those who would challenge him have little support. ``The people who normally are quoted on this are people who would in fact take the party to a narrower base,'' Gingrich said, referring to the periodic eruptions of concern among conservatives about his leadership. ``I'd like to see who it was that had a plan that they were confident over the last 60 days would have been more successful and why they didn't share it.'' ||||| Just four years ago, it was a good bet that Newt Gingrich would be the pivotal figure in U.S. politics at the turn of the millennium. Seemingly overnight he had taken a moribund minority party and turned it into a pumped-up, issue-driven House majority. With a promise to balance the budget, end welfare and represent more conservative social values, he appeared to have rearranged the political map for Congress just as Ronald Reagan had done for the presidency. But Gingrich's leadership is now so shaky that even if he maintains his hold on the speaker's office, he is in danger of marginalization. A change this dramatic suggests something far more profound than a miscalculation about election tactics. What looked like one of the major realignments in U.S. political history might turn out to have been nothing but a temporary shift. The Gingrich revolution was fueled by anger, a revolt of white working-class Americans against what they perceived as a Democratic bias in favor of blacks and other minorities, and a middle-class rejection of the politics of big government and big deficits. They were the same resentments that Ronald Reagan had exploited so successfully. But old political habits and a moribund Republican leadership allowed the Democrats to retain control of Congress throughout the 1980s, and turned Reagan's economic program into an undisciplined tax-cutting spree that created prosperity along with huge budget gaps. Gingrich's attention-grabbing rhetoric, energy and talent for political organization finally took Reagan's formula for success to the congressional elections in 1994. But once in power, he ran head on into Bill Clinton, whose political instincts were even better. The president co-opted parts of the Contract With America, particularly the balanced budget and welfare reform. He adapted the Republican social message into a call for things like school uniforms and television rating systems, which symbolized more responsibility and parental control without supporting government intrusion into private lives. The Republican right's genuine contempt for Clinton was based in part on the well-known flaws in the president's character. But it was mainly a reaction to the ease with which he had diverted what was supposed to be the flood tide of their revolution. They expected that the genuine successes of Gingrich's first year in office would lead to still larger victories for minimal government and taxes, unfettered free enterprise and a return to conservative Christian values. But the public was happy to be led in another direction, and focus on the concerns of aging baby boomers about health care and Social Security. The government that was seen as the enemy when the issues were budgetary once again looked like a potential ally. Back in 1994, both parties were so stunned by the sudden change in their congressional fortunes that they may have overestimated what it all meant. In particular they may not have realized how quickly good economic times, a drop in crime and national welfare reform could blunt the power of race in U.S. politics. The Democrats had become literally a minority party as white voters resentfully identified their policies with cities, blacks and immigrants. But last week union workers and Catholics returned to the Democratic fold. Without race as a wedge issue, the solid black Democratic vote became a powerful advantage in key states. Blacks, women and Latinos angry at Republican anti-immigration initiatives were the winning coalition in California, North Carolina and New York. The speaker was right to say this was ``not the election we expected.'' There may indeed be a Republican majority in America, but it appears to resemble the Republicanism of Dwight Eisenhower rather than Newt Gingrich _ pro-business, wary of debt and with an inherent distaste for bringing up messy social issues like abortion. The Republicans who have begun talking about ``compassionate conservatism'' and ``the politics of inclusion'' may be peddling political mush, but they peddled it to victory on Tuesday. The congressional Republican Party's long sojourn in the wilderness of the House minority may have left it too accustomed to opposition to figure out what it can be for, and too attached to the politics of anger to make sense of a nation in the mood for moderation. Gingrich has suggested that his mistake was to let the Republicans drift along on the politics of impeachment when they should have been ``almost maniacally focused'' on things like tax cuts. But looking maniacal is what got them into trouble in the first place. Winning control of Congress after so many years was very tough for Gingrich in 1994. But it will be ten times tougher to forge a politics that does not depend on rage. ||||| Stunned by the Democratic resurgence in the mid-term elections, congressional Republicans tore into each other Wednesday over who was to blame for their failure to make the traditional opposition party gains in an off-year election. The soul-searching and recriminations _ and a possibility of congressional leadership challenges _ came as election results showed that Republicans had been unable to increase their 55-45 hold over the Senate and that Democrats had picked up five seats in the House. The Democratic surge marked the first time since 1934 that the president's party had gained seats in a midterm election, and it whittled the Republican House majority down to a mere six votes. The Democratic victories were even more remarkable in a political year marked by the months-long scandal over President Clinton's affair with Monica Lewinsky. The Republicans' new 223-211 majority (assuming a Democrat leading in Oregon holds on to win), with one independent, amounted to the smallest congressional majority since the Republican-controlled Congress of 1953, the last time Republicans controlled the House until they captured it again in 1994. With attention now shifting to the House Judiciary Committee and its impeachment inquiry, Rep. Henry Hyde told fellow Republicans on the panel in a conference call Wednesday that the only witness Republicans were likely to call would be the independent counsel, Kenneth Starr. Hyde, the chairman, told lawmakers he hoped to have the committee vote on possible articles of impeachment by Thanksgiving, an act that would take the issue out of his hands and put it into Gingrich's. Committee Democrats declined comment Wednesday until they could discuss Hyde's plan among themselves. Trying to put the best face on the results, Speaker Newt Gingrich said in Marietta, Ga., that the Republicans still held onto the House for three elections in a row for the first time since the election of 1932. But furious rank and file Republicans burned up the phone lines to each other, discussing whether to mount leadership challenges in both chambers in the next few weeks. ``We've got to reach out and have more than southern white males running the Washington Republican Party,'' said Rep. Joe Scarborough, a conservative from Florida. He said that Republicans this year had been left without any accomplishments to run on. ``We need an agenda first of all,'' he said. ``We went an entire calendar year without an agenda.'' Rep. Chris Shays, a moderate from Connecticut called the election a devastating loss and said simply, ``There are going to be major changes in our leadership. All segments of our party want to see change.'' At the White House, Clinton called the election results a vindication of his party's policies. ``If you look at all the results,'' he said, ``they are clear and unambiguous. The American people want their business, their concerns, their children, their families, their future addressed here. That's what the message of the election was.'' One of the first difficult questions now facing Congress is how to proceed with the impeachment inquiry in the face of public resistance to removing Clinton from office, and with a Republican majority now so slim that it is almost certain that the 218 votes required for impeachment cannot be assembled. In a public statement released Wednesday, Hyde said ``The Committee continues to have a clear constitutional duty to complete its work in a fair and expeditious manner. Our duty has not changed because the constitution has not changed.'' But Sen. Robert Torricelli, D-N.J., said the election results guaranteed that impeachment will fail. ``I think any serious effort to remove President Clinton from office is effectively over,'' he said. ``It is simply for Newt Gingrich and Trent Lott to decide on an exit strategy.'' From the other side of the aisle, Rep. Rick Lazio, a Long Island Republican, said, ``The inquiry should be wrapped up expeditiously, fairly and it ought to be resolved in the immediate future.'' For the past year, Republicans struggled to keep control of the House with 228 seats and to find consensus among their party's competing factions. With their numbers reduced, the Republican leadership will need to carry out a tortuous balancing act to unite a hard-core conservative faction that wants a more aggressive social agenda with a bloc of moderates who want their party to return to the center. The Democrats held 206 seats, and one was held by an indepenndent. Any small Republican faction will now have enormous leverage. The new arithmetic of the House may even lead to Democrats' and moderate Republicans' forming ad hoc majorities on issues, taking control away from Republican leaders. Already seeing some of the possibilities, Rep. Peter King of Long Island, N.Y., said northeastern Republicans would be strengthened. ``It gives us much more leverage with the leadership and makes it easier to protect New York,'' he said. ``It's going to weaken the position of the strident conservatives and the anti-northeast conservatives.'' Just two weeks ago, Gingrich had foreseen election gains ranging from 10 seats to more than 40. Seeming uncharacteristically uncertain Wednesday, he said he had trouble accounting for the results. ``Things were happening out there that none of us fully understand--neither party in my judgment,'' he said. Taking his share of the blame for his party's losses, the Georgia Republican said he had misjudged how the public would recoil from the Clinton scandal as amplified in the modern media world and how the scandal would drown out other Republican themes. ``I mean I totally underestimated the degree to which people would just get sick of 24-hour-a day talk television and talk radio and then the degree to which this whole scandal became just sort of disgusting by sheer repetition,'' he said. ``And as a result I think we probably underestimated the need to really aggressively push a much stronger message about cutting taxes and saving Social Security, winning the war on drugs, reforming education and national defense.'' Majority Leader Sen. Trent Lott of Mississippi also admitted mistakes, saying his party had not presented a clear enough message in the final 96 hours of the campaign. He also conceded that Congress' final scramble to pass a $500 billion budget bill hurt his party. ``One of this lessons for Republicans out of this is that we need to listen more carefully to the people and we need to have a clear understanding and concise message that we do apply across the nation,'' he said in Washington. Both Lott and Gingrich said Republicans would put an emphasis next year on tax-cutting and shoring up the Social Security system. Even as the two leaders spoke, their angry rank-and-file lawmakers were making phone calls trying to assess whether to mount challenges against the Republican leaders who have steered the Congress since the Republican's assumed control four years ago. One senior Republican staffer said the House had become a ``tinderbox'' of intrigue. Scarborough said, ``The long distance charges in Washington offices probably are going through the roof today. Everybody's calling everybody. Everybody recognizes that something's terribly wrong with the direction of Washington Republicans when Republican governors are doing so well in New York, Massachusetts, Florida and Texas.'' And while Gingrich has not gone out of his way to identify himself with the Republican campaign's last-minute ad blitz attacking President Clinton, his caucus knows he is responsible. Gingrich has faced down an uprising before, foiling a coup attempt against him by disgruntled conservatives and some of his own leadership team in the summer of 1997. Any move to remove him remains a long-shot. But with House leadership elections now set for mid-November, Republicans said this time the dissatisfaction in their caucus had crossed ideological lines to moderates like Shays as well. ``We got shellacked,'' said Rep. Christopher Cannon, a conservative from Utah. ``We beat ourselves because we had no agenda.'' Republicans were discussing possible challenges to Gingrich, his second-in-command, Rep. Dick Armey, and other members of the senior leadership team. Some were envisioning trying to run an entire new ticket headed by Rep. Bob Livingston, the Appropriations Committee chairman from Louisiana and including Rep. Steve Largent, an Oklahoma conservative. Asked whether Tuesday's election results could cost him the speakership, Gingrich said, ``I'm not particularly concerned.'' Republicans close to him said they expected the anger to dissipate. In the Senate, where leadership races take place in early December, some Republicans were talking of mounting challenges against mid-level leadership figures. Several senators expressed particular pique toward the re-election chairman, Senator Mitch McConnell of Kentucky, who poured party dollars and much of his own time into trying to defeat the Democratic champion of campaign finance overhaul, Russell Feingold of Wisconsin. Feingold won in a close race. Some lawmakers on Wednesday approached Sen. Chuck Hagel of Nebraska to see if he would replace McConnell. Hagel confirmed he had talked to more than eight senators, and was considering whether to challenge McConnell. Hagel lambasted the Republican leadership for the election outcome. ``This is a big loss for us,'' he said. ``We squandered a very historic opportunity last night. To just break even is a loss.'' Most incumbents coasted to victory Tuesday night. But some will not be returning. Five House Republicans were defeated: Vince Snowbarger of Kansas, Bill Redmond of New Mexico, Jon Fox of Pennsylvania, Mike Pappas of New Jersey, and Rick White of Washington. One Democrat also lost his re-election bid _ Rep. Jay Johnson of Wisconsin. The new House members include 17 Republicans and at least 22 Democrats. David Wu, a Democrat was leading Molly Bordonaro, a Republican in the race for one House seat in Oregon, but the final victory announcement was not expected until Friday after absentee ballots are counted. Unlike the self-proclaimed ``revolutionaries'' of the Republican class of 1994, many of the newly elected members are career politicians who rose through the ranks of local and state government. Three of the Democrats are the sons of former lawmakers, Mark Udall of Colorado, son of Morris Udall who represented Arizona; Tom Udall of New Mexico, son of the other Udall brother, Stewart, a former congressman and secretary of the Interior, and Charlie Gonzalez, who won the Texas seat of his father, Henry.

The 1998 election ended the political career of Newt Gingrich, who had become Speaker in 1994, leading a conservative, issue-driven, GOP majority. In Oct Democrats were urged to go after him. Although both houses retained a narrowed GOP majority, Newt, with his combativeness and Impeachment-fixation, was blamed for the failures by both wings of his party. The 1998 winners were Gore, Clinton, and moderates. Newt's issues seemed dead in the booming economy and old Democratic loyalists ignored Clinton's morals and returned to the fold. As fellow Republicans jockeyed for his positions, Newt resigned as Speaker on Nov 6 and also decided to leave his House seat.

North Korean news media on Thursday said the communist nation's military is on full alert for war with the United States if a dispute over nuclear inspections comes to blows. The North's official Korean Central News Agency reported that North Korean soldiers and people of all walks of life were ``on full alert for war.'' North Korea typically sends out belligerent rhetoric, especially when it enters high-stake talks with Washington. The United States and North Korea are set to resume talks Friday about inspections of an underground North Korean site suspected of being used to produce nuclear weapons. KCNA broadcasts brimmed with anti-American saber-rattling. ``Our People's Army will blow up the U.S. territory as a whole'' if the United States starts a war on the divided Korean Peninsula, Vice Defense Minister Jong Chang Ryol was quoted as saying Thursday. The general staff of the North Korean military accused Washington on Wednesday of pushing the situation in Korea to the ``brink of war'' by demanding inspections and talks aimed at preventing Pyongyang from developing nuclear weapons and long-range missiles. ``Under the prevailing touch-and-go situation, the Korean People's Army is now bracing itself for a fight against the U.S. imperialist aggressors,'' KCNA quoted Jong as saying. The agency also quoted various party officials, plant managers, even museum curators as pledging a ``thousandfold revenge'' or vowing to arm themselves with the ``spirit of human bombs and of suicidal attack.'' Washington demands unconditional inspections of the North's underground project. But North Korea asked Washington to pay dlrs 300 million for the right to inspect the site. Concerns that North Korea was developing long-range missiles capable of striking all of Japan and parts of the United States escalated when North Korea fired a rocket on Aug. 31. Believed to be a test of its Taepo Dong missile, the rocket flew over Japan and landed in the Pacific Ocean. The North's 1.1 million-strong military is the world's fifth largest. It forms the backbone of the North Korean government, with leader Kim Jong Il ruling the country as the head of the military. ||||| A congressman who visited remote parts of North Korea last week said Saturday that the food and health situation there was desperate and deteriorating, and that millions of North Koreans might have starved to death in the last few years. The congressman, Tony Hall, D-Ohio, who has had a longtime interest in world hunger, passed through Tokyo on his return to the United States and showed photographs he had taken of North Korean children with patchy hair, protruding bones, open sores and other signs of severe malnutrition. Hall also brought back a bag of what officials called ``substitute food'' being distributed by a government food station: dried leaves and straw, so coarse that even cattle would normally turn away. ``They grind it into powder and make it into noodles,'' Hall said. The noodles have no nutrition and are indigestible, leaving people holding their aching stomachs, he said. North Korea has admitted that it is facing serious economic difficulties, but there have been sharply diverging assessments of how serious these are. Some visitors with the United Nations and other organizations have said that the food situation seems to be a bit better now than a year or two ago. Hall said that the divergence might have arisen because in the North Korean capital, Pyongyang, life did seem to be slightly better than during his three previous trips to North Korea. But in rural areas where foreigners are not often allowed to visit, he added, the overall situation is worse than ever. Based on visits to four hospitals, Hall also emphasized that public health care had declined sharply. In one hospital, assistants were holding down a patient while surgeons conducted a stomach operation without electric lights or anesthesia. Ordinary North Koreans are suffering, in part, because their government's hard-line policies have alienated would-be donors and aid agencies. The United Nations has repeatedly appealed for relief aid for North Korea, but the latest appeal has raised less than one-third of the target. In September, Doctors Without Borders announced that it was pulling its staff of 13 from North Korea because it feared that its aid was going to the politically connected rather than to the most needy. North Korea does not release mortality figures or health statistics, but Hall said that the United Nations had gathered and would soon release data indicating that 30 percent of North Korean children under age 2 are acutely malnourished and that 67 percent of all children are physically stunted. Hall said he thought that overall at least 1 million people had died and that the total was probably closer to 3 million. In an indication of the seriousness with which professional demographers view the situation, the U.S. Bureau of the Census recently published estimates suggesting that North Korea's population peaked in 1995 at 21.55 million and has since fallen to 21.23 million this year. That would be a decline of 320,000 over three years, a period when North Korea's population would have been expected to grow by about 925,000 people, based on the population growth rate of the early 1990s. Nicholas Eberstadt, an American specialist on North Korean population figures, says that there simply is not enough hard information for him to estimate the death toll from the famine. But he notes one political tidbit: North Korea's constitution stipulates that there should be one delegate to the country's ``people's assembly'' for every 30,000 citizens. This year's assembly did not expand as previous ones did, but rather had just 687 delegates, the same as the previous assembly held in 1990. While Eberstadt counsels caution, that could mean that North Korea's population, after eight years in which it had been expected to add several million people, is now back to 20.6 million people or fewer. The United States has been supplying grain to North Korea, but strains are growing over a secret underground complex in the North that some experts worry may be the heart of a new nuclear weapons program. The United States warned last week that the ``agreed framework'' that is the basis for its relations with North Korea will be in jeopardy unless the North lets American experts visit the underground complex and resolve their doubts. North Korea has said that it will show off the complex only if Washington promises that if the complex is not a nuclear one, it will pay for ``vilifying us and impairing our prestige.'' Washington refuses to pay, and North Korea is warning that the standoff could lead the agreement to fall apart. ``Their shameless and wicked demand is an open infringement upon our sovereignty and wanton interference in our internal affairs,'' declared North Korea's leading newspaper, Rodong Sinmun. ||||| In a green aviator jacket and black cap, President Clinton spent Sunday visiting American troops stationed in South Korea. He promoted a private, sang birthday greetings to a sergeant major and described the threats to his hopes for peaceful engagement with North Korea. ``Lately, signs of danger have intensified,'' Clinton said in an address to airmen here, standing before a gunmetal gray F-16 and A-10 parked nose-to-nose. ``So we must remain vigilant. And thanks to you, we are.'' For all his eagerness to talk about information-age economic dangers like quicksilver currency flows, Clinton has returned again and again during his five-day trip to Japan and South Korea to the old-style regional military threat posed by North Korea. The subject consumed most of his meetings with President Kim Dae-jung of South Korea on Saturday and formed the backdrop for his visits with the troops Sunday. ``It's kind of tense around here,'' said John Kelley, a 26-year-old airman from Wisconsin, describing life on this base. ``You know you're only four minutes away from a missile.'' In his speech, Clinton pointed to recent North Korean missile tests, incursions into the south and a mysterious underground site that may be a nuclear weapons installation as signs of the potential threat. And he compared North Korea to Iraq, saying that North Korea was ``also a major concern'' because of its chemical and biological weapons. Until North Korea ``fully commits itself to a constructive role on this peninsula,'' he said, ``we must remain ready.'' Clinton restated his support for Kim's policy of engagement with North Korea, though, saying that there were ``some hopeful signs'' to justify it. He pointed to talks that began over the summer between the American military command in Korea and the North Korean military to prevent problems along the demilitarized zone between the south and north. Clinton planned to leave South Korea early Monday and return to Washington Monday night, after paying a visit to Guam. On a bright but icy afternoon, Clinton was warmly received here by soldiers in camouflage and black boots, some of whom waited almost three hours, shifting from foot to foot and rubbing their hands. The official crowd estimate was only 3,500, but the turnout seemed even smaller. The base, about 30 miles south of Seoul, is one of two major American airfields in Korea, housing 7,500 airmen. Others who wanted to see the president were bused in from sites that are hours away. Before flying here by helicopter, Clinton attended church on an Army base in Seoul, then visited a firing range just 12 miles from the demilitarized zone. In a brief ceremony there, he promoted Matt Prickett of West Liberty, Ohio, from private first class to specialist. And he led the troops in a round of ``Happy Birthday'' for Sgt. Maj. Charles Thomas of Wilson, N.C., who turned 45 on Sunday. ``It definitely caught me off guard,'' Thomas said. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander a chance to achieve lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged to ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must not develop missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, was firm in saying his government supports Clinton on the nuclear issue. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman on Friday retracted an assessment he made Thursday that there was ``compelling evidence'' that North Korea is building an underground nuclear facility. In a statement distributed by the U.S. embassy here today, Kartman said instead, ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be.'' Kim said his government would support U.S. efforts to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and have proposed a dlrs 300 million payment for allowing inspections. Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. In his meeting with Korean community and business leaders at Seoul's National Folklore Museum, Clinton praised South Korea's progress in recovering from its financial crisis. On a darker note, he mentioned recent tensions over Asian steel exports to the United States, which have skyrocketed this year at great cost to the domestic U.S. steelmakers. Japanese steel is the biggest problem, but South Korean steel exports also are on the rise. Clinton said the U.S. economy could tolerate increased imports _ if they are not concentrated in just a few industries, and if the result is that the Asian economies begin to recover. ``We have to be sensitive if the price of doing that is to basically erase'' an entire sector of the U.S. economy, Clinton said. ||||| A South Korean lawmaker said Friday communist North Korea could be producing plutonium and could have more secret underground nuclear facilities than already feared. Without naming his source, Rep. Kim Deog-ryong of the Parliament's Foreign Affairs Committee said he had ``information'' that two underground facilities captured on U.S. spy satellite photos may be nuclear plants. He said in a Parliament session that one of them is believed to already be producing plutonium and the other would be able to produce enough for 10 nuclear bombs starting around 2004. If true, the assertion paints a worse picture of suspected North Korean nuclear activity than already made public. Kim said he asked the government's Unification Ministry about the issue earlier this week and was suspicious of its answer. ``It was not sufficient or sincere, so I came to suspect that the government is trying to hide the truth,'' Kim said in a seven-page press release. U.S. and South Korean officials said in August they had detected a huge underground construction site on a mountainside 40 kilometers (25 miles) northeast of Yongbyon, the country's main nuclear complex. The United States has said it suspects the construction is nuclear-related, though it has no evidence. North Korea has denied it. Kim, a lawmaker from the main opposition Grand National Party, said there may actually be two underground facilities not far from the Yongbyon complex. It was activity at Yongbyon that prompted the United States to negotiate a 1994 accord promising development of two light-water reactors and fuel-oil shipments if North Korea would halt nuclear weapons development. At the time, North Korea was believed to have made enough plutonium for one or two atomic bombs. The Yongbyon complex, which houses a 500-megawatt laboratory nuclear reactor, has been frozen under the 1994 accord. Kim said Friday that one new facility is already operating and the other is under construction and will be operational in four to six years. ``We estimate that the reactor will go on-line in 2002 or 2003, enabling the production of enough plutonium to build one nuclear weapon within six to 12 months,'' Kim said. ``North Korea would be able to make sufficient plutonium to make eight to 10 nuclear weapons every year after that.'' North Korea has said the underground construction is for civilian use and not nuclear-related. It has offered to open the facility to U.S. inspectors, but says Washington must pay compensation if the facility is been proven to be for civilian use. ||||| This city has always kept an unwritten list of foreign leaders _ dictators, unfriendly authoritarians and consistently annoying allies _ who it thinks can make an enormous contribution to peace, security or America's agenda by taking early retirement, at a minimum. In the 1950s, the leftist leaders of Iran and Guatamala made the Top 10, in the '60s it was populated by Diem and Sukarno and other Southeast Asians. President Richard M. Nixon and his advisers infamously agreed at a secret meeting in the '70s that the best way to deal with the government of Salvador Allende Gossens in Chile was to ``make the economy scream.'' Diplomatic etiquette, though, has usually discouraged shouting America's enemies list from the White House rooftop. After all, foreign policy isn't about personalities, right? But last week, driven by frustration, or anxiety, or perhaps the lure of sounding tough for cameras, the Clinton administration piped up, twice. In very different situations, in opposite corners of the world, the United States spoke loudly because it can't find a stick. Sunday, hours after he called off an attack on Iraq, Clinton finally volunteered the obvious, that the focus of U.S. policy toward Iraq is the removal of President Saddam Hussein _ what Clinton called supporting the ``forces of change in Iraq.'' No matter that covert efforts to do just that have failed miserably. The bigger surprise came Monday, when polite-to-a-fault Al Gore used his visit to Malaysia for an Asian economic summit meeting to throw U.S. support behind protesters calling for ``reformasi,'' the code word on the streets of Kuala Lumpur for dumping Prime Minister Mahathir Mohamed. He has long been a burr in Washington's side, denouncing America, its currency traders and its Jews. He recently imprisoned his Western-thinking finance minister, Anwar Ibrahim, who has suddenly become Asia's most visible jailed dissident. But Mahathir is no Saddam, not by a long shot. Gore's aides insist that his speech was a call for reform, not a demand that Mahathir step down. But it wasn't interpreted that way. The New Zealanders called it ``megaphone diplomacy.'' The Malaysian government called it ``disgusting'' and an ``interference in internal affairs.'' Predictably, executives of several U.S. companies that have flocked to Kuala Lumpur told the Malaysians that Gore was rude, while assuring Washington that he had uttered words that needed to be said. Whatever the wisdom of the Gore's words, they raised the question of what it takes these days for the world's most powerful nation to begin publicly suggesting that it's time for a nettlesome leader to go. Because there is no official list, there are no real criteria for getting on it. Some leaders mysteriously escape mention, like Kim Jong Il of North Korea. President Clinton is spending the weekend on the Korean Peninsula, staring across the demilitarized zone at a dangerous state that everyone suspects is attempting to break out of its 1994 agreement to freeze its nuclear weapons projects, in return for billions in Western energy aid. Yet Washington has never called on the starving North Koreans to revolt against Kim's repressive regime. His government, taking a page out of the Saddam playbook, suggested last week that if the United States really wants to look at a mountain tunnel that the Pentagon believes is a nuclear installation in the making, it should write a check for another $300 million. No one even called for Kim's removal when, a few months ago, he lobbed a three-stage missile over Japan just to show he knew how. ``The rules for calling for the end of a regime are pretty murky,'' said Richard Feinberg, a professor at the University of California at San Diego who served in the Clinton administration's first term. ``When they really want to push someone out, it is because that country is part of a larger strategic concern at the time. But the country itself usually doesn't have great strategic weight'' _ it's another matter to call for a change of leadership in Beijing or Moscow _ ``and it helps if there is some kind of domestic opposition that we can point to.'' Clinton's call for Saddam's ouster last weekend created barely a ripple because, after all, he is a proven murderer and an avid stockpiler of anthrax and plutonium (even if Brent Scowcroft, who was President George Bush's national security adviser, insisted last week that Saddam nowadays is simply ``an irritant, an annoyance, a pest and a problem, but not a threat to the region at the moment''). Mahathir, however, is far more complex case. He's a prime example of how opposing Washington's political and economic agenda for an interconnected world can move a leader from the list of authoritarians whom Washington tolerates to the list of authoritarians who have outlived their usefulness. Like other Asian strongmen _ Ferdinand Marcos of the Philippines and Suharto of Indonesia come to mind _ he was useful when the fear was that Malaysia would become a communist domino. But he also seemed eminently tolerable long after the Cold War was over. He has never been accused of enormous corruption. He turned his country into a model of competitiveness, and Malaysia became the exemplar of the ``big emerging markets'' that Clinton's Commerce Department touted until things went sour last year. Sure, he was always prickly. But he is no terrorist or killer _ U.S. companies have flocked to his country, and say they want to stay _ and his iron control over political discourse is no stronger than in neighboring Singapore. Just this summer, U.S. Treasury Secretary Robert Rubin paid him an ostensibly friendly, if strained, visit and made no reference to human rights. That all changed when Ibrahim was arrested and beaten in jail. He has long been an advocate of the Western-style solutions to economic turmoil _ more openness, more freedom _ and the protest movement against Mahathir only surfaced once he was in jail. Gore leapt on that opportunity _ particularly striking because, in the case of Indonesia earlier this year, it took the administration months to come to the conclusion that President Suharto had to go. He went. ||||| North Korea has demanded that the United States pay hundreds of millions of dollars for the right to inspect a huge underground center that U.S. intelligence analysts fear houses a nuclear-weapons program, Clinton administration officials said Wednesday. The United States rejected the request during meetings this week in Pyongyang, the North Korean capital, between North Korean officials and a U.S. government delegation. ``As we expected, the North Koreans brought up the issue of compensation, and we flatly rejected it,'' said State Department Spokesman James Rubin. Asked how much money the North Koreans had demanded, Rubin said payment of the fee was ``so not on as a possibility that I don't care to get into the figures.'' Other administration officials said the fee would have been hundreds of millions of dollars; one put it at $300 million. The North Koreans have denied that the complex, which is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center, is intended to be used for a nuclear weapons program. They have repeatedly said U.S. inspectors could visit the site as long as Washington agreed to pay a large fee in compensation for what the North Koreans describe as the administration's slander. The North Korean representative at the United Nations, Kim Chang Guk, said last week that the United States could inspect the site ``on condition that when it is confirmed not to be a nuclear facility, the United States should pay compensation for slandering and defaming my country.'' U.S. intelligence agencies fear that by building the complex, North Korea may have decided to abandon a four-year-old agreement with the United States in which North Korea pledged to give up its nuclear weapons program in exchange for billions of dollars in aid. The U.S. delegation, led by Charles Kartman, President Clinton's special envoy on North Korean issues, left Pyongyang on Wednesday after 12 hours of negotiations over three days with a team from the North Korean Foreign Ministry. The talks ended as Clinton began a trip to Asia that will include a visit to South Korea, where the issue of the North Korean construction site is expected to be among the major topics discussed with President Kim Dae-jung. Rubin said the U.S. delegation to North Korea had pressed for access to the site. ``We told them that access to the site is essential,'' he said. ``We've expected that this would be difficult, and we told the North Koreans, as we've said before, that verbal assurances, as they are wont to give, are simply unacceptable.'' U.S. officials have said the construction of the underground site may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium. But if the United States determines that North Korea has revived its nuclear program, Rubin said, ``it would go against the entire letter and spirit of the objectives of the agreement, and it would affect the viability of the agreement.'' The administration has expressed growing concern over North Korea's intentions after several provocative acts, including the underground construction near Yongbyon and the test firing last August of a missile over Japan. Last week Clinton named former Defense Secretary William Perry to review U.S. policy toward North Korea. Administration officials say Perry is being asked to study ways to salvage the 1994 nuclear agreement with North Korea, which had been among the administration's proudest achievements in foreign policy. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander an historic chance to make a lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged that his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must constrain its development and exports of missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. And that, in turn, would jeopardize preliminary North-South peace talks that could produce a treaty to replace the shaky armistice that ended the Korean War in 1953. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, firmly said his government supports Clinton on the nuclear issue. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. In a dinner toast, Kim said that despite tensions, ``North Korea is cautiously but noticeably taking measures to increase interaction and cooperation between the South and the North.'' And Clinton saluted Seoul's battle against Asia's economic woes. ``I believe Asia will emerge from this present crisis more prosperous, more stable, more democratic _ thanks in no small measure to Korea's example.'' After the state dinner, Clinton made a surprise late-night stop at a concert at the Sejong Culture Center where his younger brother, Roger, and his band were performing. The president listened to songs off stage before his brother introduced the president as ``a very special person.'' The audience of 2,000 people stood and applauded. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious underground site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman said Thursday after the Pyongyang talks that there was ``compelling evidence'' of an underground nuclear facility. But in a statement distributed by the U.S. Embassy here Saturday, Kartman backtracked, saying instead that the United States lacks ``conclusive evidence'' the site is a nuclear facility. ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be,'' Kartman said, offering a ``clarification'' of his earlier remarks. Kim said his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and it has demanded a dlrs 300 million payment for proving that. In remarks in Tokyo on Friday, Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. To risk that kind of cooperation _ and progress with America on other issues _ by stonewalling on the suspected nuclear site is contrary to the North's long-term interests, he said. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. To underscore the U.S. military commitment to South Korea, Clinton was scheduled to venture out of the capital on Sunday to visit U.S. Army troops at a training range north of Seoul. He also planned to address American troops at Osan Air Base from a U-2 spy plane hangar. ||||| President Clinton made an unusual, direct appeal to North Korea on Saturday to set aside any nuclear ambitions in favor of strengthening ties to South Korea and the United States. The appeal came during a meeting with reporters at which he also counseled patience over Iraq's refusal to comply with a request from weapons inspectors. ``I think it's important that we not overreact here on the first day,'' Clinton said in response to reports that Iraq had balked at a request by U.N. inspectors for documents on its weapons program. But, speaking at a joint appearance with South Korean President Kim Dae Jung, Clinton called the requested documents ``quite important'' and said Iraq had ``some affirmative obligations'' to help weapons inspectors. Aides to Clinton denied that his comments represented any softening toward Iraq. They said that because the situation was still developing and the president was preparing for meetings with Kim he had not been briefed in detail on Iraq's resistance when he appeared before reporters Saturday. National Security Adviser Sandy Berger said the administration was consulting with other members of the U.N. Security Council about the matter. If Iraq fails to meet its obligations under U.N. resolutions, he said, ``We obviously are prepared to act.'' Last weekend, Clinton called off a strike against Iraq minutes before it was to begin, delayed his departure for Asia to monitor the crisis and said that U.S. forces remained poised to strike if Iraq reneged on its agreement to let U.N. weapons inspectors do their work. In his appearance with Kim, the president addressed a handful of questions that ranged from North Korea to Indonesia to whether the Congress should punish him over the Lewinsky scandal. Before leaving Washington for this five-day trip to Japan, Korea and Guam, he drew a parallel between the governments of Iraq and North Korea, saying, ``We must be no less concerned by North Korea's weapons activities.'' The Clinton administration is urgently seeking to inspect a vast construction site in North Korea that it believes may be the beginnings of a nuclear weapons plant. Saturday, Clinton called that site, together with North Korea's test firing in August of a missile over Japan, ``cause for deep concern.'' But the Clinton administration is trying a very different approach toward North Korea than toward Iraq, partly at the urging of Kim, who is pursuing a ``sunshine policy'' of engagement with the North. As Clinton and Kim delivered prepared statements and answered questions Saturday, Clinton became most animated in describing what he called ``a very beautiful picture'' that he happened to spot after turning on his hotel television on arriving in Seoul on Friday night: film of a cruise ship recently permitted to carry South Koreans on a tour into the North. ``I ask the North Koreans to think about this,'' he said, arguing that Kim's policy of engagement with the North presented them with a great opportunity. ``Nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness as more of those ships going up there full of people from here.'' The Clinton administration fears that the construction site may be evidence that North Korea has abandoned a 1994 pledge to the United States to give up its nuclear weapons program in exchange for billions of dollars in aid. The North Koreans have denied that the complex is intended to help build nuclear weapons. But they have demanded that the United States pay $300 million to inspect it, a request rejected this week by a U.S. delegation to Pyongyang, the North Korean capital. The new complex is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center. Kim continued Saturday to emphasize his hopes for a new opening toward North Korea. But he said, ``We will not tolerate any possible attempt of North Korea to proliferate nuclear weapons, missiles and other weapons of mass destruction.'' The Clinton administration plans to resume negotiating with North Korea over inspecting the site in December. In addition to strategies for easing the Asian financial crisis, Clinton discussed North Korea during a visit to Tokyo on Thursday and Friday. The subject of North Korea consumed most of his two hours of meetings with Kim here Saturday at the Blue House, which contains the Korean president's office and home. The administration has been criticized in Congress and in this region for letting its policy on North Korea drift, but Clinton called that policy a ``clear-eyed mix'' of diplomacy and deterrence. He said that so far the 1994 agreement had worked, because without it ``North Korea already would have produced a sizable amount of weapons-grade plutonium.'' Under pressure from congressional critics, Clinton last week appointed William Perry, his former defense secretary, to review his policy on North Korea. On other matters, Clinton declined to criticize the government of Indonesia for using force to crack down on protesters there, saying that he did not ``have enough facts at this moment to give you the right answer.'' But he said he hoped there would be ``no backsliding'' in Indonesia. Clinton followed his appearance with Kim with a visit to the National Folk Museum here, where he conducted an hourlong conversation with six Korean academics, businessmen and union leaders about the troubled state of Korea's economy and its impact on the society. He attended a state dinner Saturday night, before stopping by a concert where his brother, Roger, a musician, happened to be performing. Clinton repeatedly congratulated Kim for his efforts at economic reform, noting that interest rates had fallen here and the currency had stabilized. But he also pressed Kim during their private meetings to restructure the five huge conglomerates, or chaebols, that account for some 40 percent of the Korean economy. In describing the leaders' conversation, Berger called restructuring the chaebols ``perhaps the most serious remaining problem in the South Korean economy.'' Clinton said during the economic forum Saturday afternoon that he felt impatient about South Korea's failure to act on the chaebols. It may be necessary to proceed slowly with the restructuring, he said, ``but they should begin.'' On Sunday, Clinton plans to visit some of the 37,000 American troops stationed here. ||||| North Korea has agreed to receive a U.S. delegation next month to discuss American concerns about the construction of a vast underground complex that is widely feared to house a nuclear weapons program, the State Department said on Wednesday. The delegation, led by Charles Kartman, will press for access to the site, which American intelligence agencies believe could be the centerpiece of an effort to revive a frozen nuclear arms program. ``We've made clear to the North Koreans that any attempt by North Korea to pursue a nuclear weapons development program would be unacceptable,'' the State Department spokesman, James Rubin, said. The talks in Pyongyang, the capital, he added, ``are aimed at completely satisfying U.S. concerns about the suspect construction.'' American intelligence agencies fear that building the complex could be an effort to break out of a four-year-old pact in which North Korea pledged to give up its nuclear-weapons program in exchange for billions of dollars in aid from the United States, South Korea and Japan. American officials have said spy satellites have recently photographed thousands of North Koreans around the huge site 25 miles northeast of Yongbyon, the nuclear center where North Korea was believed to have stockpiled enough plutonium before the 1994 accords to build six or more bombs. Although they have not explained exactly why the government is building the complex, North Korean officials have denied that it would be used to develop nuclear weapons. The official North Korean press agency said last week that the government was building ``civilian underground structures on which any `doubt' cannot be cast'' and suggested that American officials would be allowed to inspect the complex if they pressed for access. ``If the U.S. side persists in inspecting our underground structures,'' the press agency said, ``we can show it to them.'' Rubin said the United States had received no formal assurances that Kartman, the American special envoy for Korean nuclear issues, and his delegation would be allowed to inspect the site on the trip, which is to begin on Nov. 16. ``We are beginning a discussion with them in which we will demand access,'' Rubin said. ``The history of the U.S.-North Korea discussions involves usually a lengthy discussion process before there is agreement to our requirements. So we are not expecting to walk in one day and be able to have access the next.'' The trip was announced as signs grow about a relative warming of relations between the United States and North Korea. Representatives of the United States, China and the two Koreas met recently in Geneva and agreed to steps to reduce tension on the Korean Peninsula. In September the United States pledged to provide an additional 300,000 tons of grain to North Korea, which has for years been crippled by severe food shortages. In addition the White House disclosed that the United States would provide more heavy fuel oil promised to North Korea under the 1994 agreement, despite concerns that North Korea may intend to revive its nuclear program. American officials have said the activity near Yongbyon may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium.

S. Korea says N. Korea may be producing plutonium in at least one underground site. Satellite photos show a possible nuclear complex. If it is, it will strain U.S.-N. Korean relations and stop aid. The U.S. wants a delegation to check the site. N. Korea wants huge payment for inspection. A recent missile test firing over Japan, N. Korean incursions into the south, and the suspicious site are major causes for concern. The U.S. demands full access to the site and warns N. Korea not to waste a chance for lasting peace on the peninsula. N. Korea says the U.S. is pushing it to the brink of war over demands for inspections and talks.

North Korean news media on Thursday said the communist nation's military is on full alert for war with the United States if a dispute over nuclear inspections comes to blows. The North's official Korean Central News Agency reported that North Korean soldiers and people of all walks of life were ``on full alert for war.'' North Korea typically sends out belligerent rhetoric, especially when it enters high-stake talks with Washington. The United States and North Korea are set to resume talks Friday about inspections of an underground North Korean site suspected of being used to produce nuclear weapons. KCNA broadcasts brimmed with anti-American saber-rattling. ``Our People's Army will blow up the U.S. territory as a whole'' if the United States starts a war on the divided Korean Peninsula, Vice Defense Minister Jong Chang Ryol was quoted as saying Thursday. The general staff of the North Korean military accused Washington on Wednesday of pushing the situation in Korea to the ``brink of war'' by demanding inspections and talks aimed at preventing Pyongyang from developing nuclear weapons and long-range missiles. ``Under the prevailing touch-and-go situation, the Korean People's Army is now bracing itself for a fight against the U.S. imperialist aggressors,'' KCNA quoted Jong as saying. The agency also quoted various party officials, plant managers, even museum curators as pledging a ``thousandfold revenge'' or vowing to arm themselves with the ``spirit of human bombs and of suicidal attack.'' Washington demands unconditional inspections of the North's underground project. But North Korea asked Washington to pay dlrs 300 million for the right to inspect the site. Concerns that North Korea was developing long-range missiles capable of striking all of Japan and parts of the United States escalated when North Korea fired a rocket on Aug. 31. Believed to be a test of its Taepo Dong missile, the rocket flew over Japan and landed in the Pacific Ocean. The North's 1.1 million-strong military is the world's fifth largest. It forms the backbone of the North Korean government, with leader Kim Jong Il ruling the country as the head of the military. ||||| A congressman who visited remote parts of North Korea last week said Saturday that the food and health situation there was desperate and deteriorating, and that millions of North Koreans might have starved to death in the last few years. The congressman, Tony Hall, D-Ohio, who has had a longtime interest in world hunger, passed through Tokyo on his return to the United States and showed photographs he had taken of North Korean children with patchy hair, protruding bones, open sores and other signs of severe malnutrition. Hall also brought back a bag of what officials called ``substitute food'' being distributed by a government food station: dried leaves and straw, so coarse that even cattle would normally turn away. ``They grind it into powder and make it into noodles,'' Hall said. The noodles have no nutrition and are indigestible, leaving people holding their aching stomachs, he said. North Korea has admitted that it is facing serious economic difficulties, but there have been sharply diverging assessments of how serious these are. Some visitors with the United Nations and other organizations have said that the food situation seems to be a bit better now than a year or two ago. Hall said that the divergence might have arisen because in the North Korean capital, Pyongyang, life did seem to be slightly better than during his three previous trips to North Korea. But in rural areas where foreigners are not often allowed to visit, he added, the overall situation is worse than ever. Based on visits to four hospitals, Hall also emphasized that public health care had declined sharply. In one hospital, assistants were holding down a patient while surgeons conducted a stomach operation without electric lights or anesthesia. Ordinary North Koreans are suffering, in part, because their government's hard-line policies have alienated would-be donors and aid agencies. The United Nations has repeatedly appealed for relief aid for North Korea, but the latest appeal has raised less than one-third of the target. In September, Doctors Without Borders announced that it was pulling its staff of 13 from North Korea because it feared that its aid was going to the politically connected rather than to the most needy. North Korea does not release mortality figures or health statistics, but Hall said that the United Nations had gathered and would soon release data indicating that 30 percent of North Korean children under age 2 are acutely malnourished and that 67 percent of all children are physically stunted. Hall said he thought that overall at least 1 million people had died and that the total was probably closer to 3 million. In an indication of the seriousness with which professional demographers view the situation, the U.S. Bureau of the Census recently published estimates suggesting that North Korea's population peaked in 1995 at 21.55 million and has since fallen to 21.23 million this year. That would be a decline of 320,000 over three years, a period when North Korea's population would have been expected to grow by about 925,000 people, based on the population growth rate of the early 1990s. Nicholas Eberstadt, an American specialist on North Korean population figures, says that there simply is not enough hard information for him to estimate the death toll from the famine. But he notes one political tidbit: North Korea's constitution stipulates that there should be one delegate to the country's ``people's assembly'' for every 30,000 citizens. This year's assembly did not expand as previous ones did, but rather had just 687 delegates, the same as the previous assembly held in 1990. While Eberstadt counsels caution, that could mean that North Korea's population, after eight years in which it had been expected to add several million people, is now back to 20.6 million people or fewer. The United States has been supplying grain to North Korea, but strains are growing over a secret underground complex in the North that some experts worry may be the heart of a new nuclear weapons program. The United States warned last week that the ``agreed framework'' that is the basis for its relations with North Korea will be in jeopardy unless the North lets American experts visit the underground complex and resolve their doubts. North Korea has said that it will show off the complex only if Washington promises that if the complex is not a nuclear one, it will pay for ``vilifying us and impairing our prestige.'' Washington refuses to pay, and North Korea is warning that the standoff could lead the agreement to fall apart. ``Their shameless and wicked demand is an open infringement upon our sovereignty and wanton interference in our internal affairs,'' declared North Korea's leading newspaper, Rodong Sinmun. ||||| In a green aviator jacket and black cap, President Clinton spent Sunday visiting American troops stationed in South Korea. He promoted a private, sang birthday greetings to a sergeant major and described the threats to his hopes for peaceful engagement with North Korea. ``Lately, signs of danger have intensified,'' Clinton said in an address to airmen here, standing before a gunmetal gray F-16 and A-10 parked nose-to-nose. ``So we must remain vigilant. And thanks to you, we are.'' For all his eagerness to talk about information-age economic dangers like quicksilver currency flows, Clinton has returned again and again during his five-day trip to Japan and South Korea to the old-style regional military threat posed by North Korea. The subject consumed most of his meetings with President Kim Dae-jung of South Korea on Saturday and formed the backdrop for his visits with the troops Sunday. ``It's kind of tense around here,'' said John Kelley, a 26-year-old airman from Wisconsin, describing life on this base. ``You know you're only four minutes away from a missile.'' In his speech, Clinton pointed to recent North Korean missile tests, incursions into the south and a mysterious underground site that may be a nuclear weapons installation as signs of the potential threat. And he compared North Korea to Iraq, saying that North Korea was ``also a major concern'' because of its chemical and biological weapons. Until North Korea ``fully commits itself to a constructive role on this peninsula,'' he said, ``we must remain ready.'' Clinton restated his support for Kim's policy of engagement with North Korea, though, saying that there were ``some hopeful signs'' to justify it. He pointed to talks that began over the summer between the American military command in Korea and the North Korean military to prevent problems along the demilitarized zone between the south and north. Clinton planned to leave South Korea early Monday and return to Washington Monday night, after paying a visit to Guam. On a bright but icy afternoon, Clinton was warmly received here by soldiers in camouflage and black boots, some of whom waited almost three hours, shifting from foot to foot and rubbing their hands. The official crowd estimate was only 3,500, but the turnout seemed even smaller. The base, about 30 miles south of Seoul, is one of two major American airfields in Korea, housing 7,500 airmen. Others who wanted to see the president were bused in from sites that are hours away. Before flying here by helicopter, Clinton attended church on an Army base in Seoul, then visited a firing range just 12 miles from the demilitarized zone. In a brief ceremony there, he promoted Matt Prickett of West Liberty, Ohio, from private first class to specialist. And he led the troops in a round of ``Happy Birthday'' for Sgt. Maj. Charles Thomas of Wilson, N.C., who turned 45 on Sunday. ``It definitely caught me off guard,'' Thomas said. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander a chance to achieve lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged to ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must not develop missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, was firm in saying his government supports Clinton on the nuclear issue. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman on Friday retracted an assessment he made Thursday that there was ``compelling evidence'' that North Korea is building an underground nuclear facility. In a statement distributed by the U.S. embassy here today, Kartman said instead, ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be.'' Kim said his government would support U.S. efforts to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and have proposed a dlrs 300 million payment for allowing inspections. Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. In his meeting with Korean community and business leaders at Seoul's National Folklore Museum, Clinton praised South Korea's progress in recovering from its financial crisis. On a darker note, he mentioned recent tensions over Asian steel exports to the United States, which have skyrocketed this year at great cost to the domestic U.S. steelmakers. Japanese steel is the biggest problem, but South Korean steel exports also are on the rise. Clinton said the U.S. economy could tolerate increased imports _ if they are not concentrated in just a few industries, and if the result is that the Asian economies begin to recover. ``We have to be sensitive if the price of doing that is to basically erase'' an entire sector of the U.S. economy, Clinton said. ||||| A South Korean lawmaker said Friday communist North Korea could be producing plutonium and could have more secret underground nuclear facilities than already feared. Without naming his source, Rep. Kim Deog-ryong of the Parliament's Foreign Affairs Committee said he had ``information'' that two underground facilities captured on U.S. spy satellite photos may be nuclear plants. He said in a Parliament session that one of them is believed to already be producing plutonium and the other would be able to produce enough for 10 nuclear bombs starting around 2004. If true, the assertion paints a worse picture of suspected North Korean nuclear activity than already made public. Kim said he asked the government's Unification Ministry about the issue earlier this week and was suspicious of its answer. ``It was not sufficient or sincere, so I came to suspect that the government is trying to hide the truth,'' Kim said in a seven-page press release. U.S. and South Korean officials said in August they had detected a huge underground construction site on a mountainside 40 kilometers (25 miles) northeast of Yongbyon, the country's main nuclear complex. The United States has said it suspects the construction is nuclear-related, though it has no evidence. North Korea has denied it. Kim, a lawmaker from the main opposition Grand National Party, said there may actually be two underground facilities not far from the Yongbyon complex. It was activity at Yongbyon that prompted the United States to negotiate a 1994 accord promising development of two light-water reactors and fuel-oil shipments if North Korea would halt nuclear weapons development. At the time, North Korea was believed to have made enough plutonium for one or two atomic bombs. The Yongbyon complex, which houses a 500-megawatt laboratory nuclear reactor, has been frozen under the 1994 accord. Kim said Friday that one new facility is already operating and the other is under construction and will be operational in four to six years. ``We estimate that the reactor will go on-line in 2002 or 2003, enabling the production of enough plutonium to build one nuclear weapon within six to 12 months,'' Kim said. ``North Korea would be able to make sufficient plutonium to make eight to 10 nuclear weapons every year after that.'' North Korea has said the underground construction is for civilian use and not nuclear-related. It has offered to open the facility to U.S. inspectors, but says Washington must pay compensation if the facility is been proven to be for civilian use. ||||| This city has always kept an unwritten list of foreign leaders _ dictators, unfriendly authoritarians and consistently annoying allies _ who it thinks can make an enormous contribution to peace, security or America's agenda by taking early retirement, at a minimum. In the 1950s, the leftist leaders of Iran and Guatamala made the Top 10, in the '60s it was populated by Diem and Sukarno and other Southeast Asians. President Richard M. Nixon and his advisers infamously agreed at a secret meeting in the '70s that the best way to deal with the government of Salvador Allende Gossens in Chile was to ``make the economy scream.'' Diplomatic etiquette, though, has usually discouraged shouting America's enemies list from the White House rooftop. After all, foreign policy isn't about personalities, right? But last week, driven by frustration, or anxiety, or perhaps the lure of sounding tough for cameras, the Clinton administration piped up, twice. In very different situations, in opposite corners of the world, the United States spoke loudly because it can't find a stick. Sunday, hours after he called off an attack on Iraq, Clinton finally volunteered the obvious, that the focus of U.S. policy toward Iraq is the removal of President Saddam Hussein _ what Clinton called supporting the ``forces of change in Iraq.'' No matter that covert efforts to do just that have failed miserably. The bigger surprise came Monday, when polite-to-a-fault Al Gore used his visit to Malaysia for an Asian economic summit meeting to throw U.S. support behind protesters calling for ``reformasi,'' the code word on the streets of Kuala Lumpur for dumping Prime Minister Mahathir Mohamed. He has long been a burr in Washington's side, denouncing America, its currency traders and its Jews. He recently imprisoned his Western-thinking finance minister, Anwar Ibrahim, who has suddenly become Asia's most visible jailed dissident. But Mahathir is no Saddam, not by a long shot. Gore's aides insist that his speech was a call for reform, not a demand that Mahathir step down. But it wasn't interpreted that way. The New Zealanders called it ``megaphone diplomacy.'' The Malaysian government called it ``disgusting'' and an ``interference in internal affairs.'' Predictably, executives of several U.S. companies that have flocked to Kuala Lumpur told the Malaysians that Gore was rude, while assuring Washington that he had uttered words that needed to be said. Whatever the wisdom of the Gore's words, they raised the question of what it takes these days for the world's most powerful nation to begin publicly suggesting that it's time for a nettlesome leader to go. Because there is no official list, there are no real criteria for getting on it. Some leaders mysteriously escape mention, like Kim Jong Il of North Korea. President Clinton is spending the weekend on the Korean Peninsula, staring across the demilitarized zone at a dangerous state that everyone suspects is attempting to break out of its 1994 agreement to freeze its nuclear weapons projects, in return for billions in Western energy aid. Yet Washington has never called on the starving North Koreans to revolt against Kim's repressive regime. His government, taking a page out of the Saddam playbook, suggested last week that if the United States really wants to look at a mountain tunnel that the Pentagon believes is a nuclear installation in the making, it should write a check for another $300 million. No one even called for Kim's removal when, a few months ago, he lobbed a three-stage missile over Japan just to show he knew how. ``The rules for calling for the end of a regime are pretty murky,'' said Richard Feinberg, a professor at the University of California at San Diego who served in the Clinton administration's first term. ``When they really want to push someone out, it is because that country is part of a larger strategic concern at the time. But the country itself usually doesn't have great strategic weight'' _ it's another matter to call for a change of leadership in Beijing or Moscow _ ``and it helps if there is some kind of domestic opposition that we can point to.'' Clinton's call for Saddam's ouster last weekend created barely a ripple because, after all, he is a proven murderer and an avid stockpiler of anthrax and plutonium (even if Brent Scowcroft, who was President George Bush's national security adviser, insisted last week that Saddam nowadays is simply ``an irritant, an annoyance, a pest and a problem, but not a threat to the region at the moment''). Mahathir, however, is far more complex case. He's a prime example of how opposing Washington's political and economic agenda for an interconnected world can move a leader from the list of authoritarians whom Washington tolerates to the list of authoritarians who have outlived their usefulness. Like other Asian strongmen _ Ferdinand Marcos of the Philippines and Suharto of Indonesia come to mind _ he was useful when the fear was that Malaysia would become a communist domino. But he also seemed eminently tolerable long after the Cold War was over. He has never been accused of enormous corruption. He turned his country into a model of competitiveness, and Malaysia became the exemplar of the ``big emerging markets'' that Clinton's Commerce Department touted until things went sour last year. Sure, he was always prickly. But he is no terrorist or killer _ U.S. companies have flocked to his country, and say they want to stay _ and his iron control over political discourse is no stronger than in neighboring Singapore. Just this summer, U.S. Treasury Secretary Robert Rubin paid him an ostensibly friendly, if strained, visit and made no reference to human rights. That all changed when Ibrahim was arrested and beaten in jail. He has long been an advocate of the Western-style solutions to economic turmoil _ more openness, more freedom _ and the protest movement against Mahathir only surfaced once he was in jail. Gore leapt on that opportunity _ particularly striking because, in the case of Indonesia earlier this year, it took the administration months to come to the conclusion that President Suharto had to go. He went. ||||| North Korea has demanded that the United States pay hundreds of millions of dollars for the right to inspect a huge underground center that U.S. intelligence analysts fear houses a nuclear-weapons program, Clinton administration officials said Wednesday. The United States rejected the request during meetings this week in Pyongyang, the North Korean capital, between North Korean officials and a U.S. government delegation. ``As we expected, the North Koreans brought up the issue of compensation, and we flatly rejected it,'' said State Department Spokesman James Rubin. Asked how much money the North Koreans had demanded, Rubin said payment of the fee was ``so not on as a possibility that I don't care to get into the figures.'' Other administration officials said the fee would have been hundreds of millions of dollars; one put it at $300 million. The North Koreans have denied that the complex, which is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center, is intended to be used for a nuclear weapons program. They have repeatedly said U.S. inspectors could visit the site as long as Washington agreed to pay a large fee in compensation for what the North Koreans describe as the administration's slander. The North Korean representative at the United Nations, Kim Chang Guk, said last week that the United States could inspect the site ``on condition that when it is confirmed not to be a nuclear facility, the United States should pay compensation for slandering and defaming my country.'' U.S. intelligence agencies fear that by building the complex, North Korea may have decided to abandon a four-year-old agreement with the United States in which North Korea pledged to give up its nuclear weapons program in exchange for billions of dollars in aid. The U.S. delegation, led by Charles Kartman, President Clinton's special envoy on North Korean issues, left Pyongyang on Wednesday after 12 hours of negotiations over three days with a team from the North Korean Foreign Ministry. The talks ended as Clinton began a trip to Asia that will include a visit to South Korea, where the issue of the North Korean construction site is expected to be among the major topics discussed with President Kim Dae-jung. Rubin said the U.S. delegation to North Korea had pressed for access to the site. ``We told them that access to the site is essential,'' he said. ``We've expected that this would be difficult, and we told the North Koreans, as we've said before, that verbal assurances, as they are wont to give, are simply unacceptable.'' U.S. officials have said the construction of the underground site may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium. But if the United States determines that North Korea has revived its nuclear program, Rubin said, ``it would go against the entire letter and spirit of the objectives of the agreement, and it would affect the viability of the agreement.'' The administration has expressed growing concern over North Korea's intentions after several provocative acts, including the underground construction near Yongbyon and the test firing last August of a missile over Japan. Last week Clinton named former Defense Secretary William Perry to review U.S. policy toward North Korea. Administration officials say Perry is being asked to study ways to salvage the 1994 nuclear agreement with North Korea, which had been among the administration's proudest achievements in foreign policy. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander an historic chance to make a lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged that his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must constrain its development and exports of missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. And that, in turn, would jeopardize preliminary North-South peace talks that could produce a treaty to replace the shaky armistice that ended the Korean War in 1953. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, firmly said his government supports Clinton on the nuclear issue. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. In a dinner toast, Kim said that despite tensions, ``North Korea is cautiously but noticeably taking measures to increase interaction and cooperation between the South and the North.'' And Clinton saluted Seoul's battle against Asia's economic woes. ``I believe Asia will emerge from this present crisis more prosperous, more stable, more democratic _ thanks in no small measure to Korea's example.'' After the state dinner, Clinton made a surprise late-night stop at a concert at the Sejong Culture Center where his younger brother, Roger, and his band were performing. The president listened to songs off stage before his brother introduced the president as ``a very special person.'' The audience of 2,000 people stood and applauded. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious underground site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman said Thursday after the Pyongyang talks that there was ``compelling evidence'' of an underground nuclear facility. But in a statement distributed by the U.S. Embassy here Saturday, Kartman backtracked, saying instead that the United States lacks ``conclusive evidence'' the site is a nuclear facility. ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be,'' Kartman said, offering a ``clarification'' of his earlier remarks. Kim said his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and it has demanded a dlrs 300 million payment for proving that. In remarks in Tokyo on Friday, Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. To risk that kind of cooperation _ and progress with America on other issues _ by stonewalling on the suspected nuclear site is contrary to the North's long-term interests, he said. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. To underscore the U.S. military commitment to South Korea, Clinton was scheduled to venture out of the capital on Sunday to visit U.S. Army troops at a training range north of Seoul. He also planned to address American troops at Osan Air Base from a U-2 spy plane hangar. ||||| President Clinton made an unusual, direct appeal to North Korea on Saturday to set aside any nuclear ambitions in favor of strengthening ties to South Korea and the United States. The appeal came during a meeting with reporters at which he also counseled patience over Iraq's refusal to comply with a request from weapons inspectors. ``I think it's important that we not overreact here on the first day,'' Clinton said in response to reports that Iraq had balked at a request by U.N. inspectors for documents on its weapons program. But, speaking at a joint appearance with South Korean President Kim Dae Jung, Clinton called the requested documents ``quite important'' and said Iraq had ``some affirmative obligations'' to help weapons inspectors. Aides to Clinton denied that his comments represented any softening toward Iraq. They said that because the situation was still developing and the president was preparing for meetings with Kim he had not been briefed in detail on Iraq's resistance when he appeared before reporters Saturday. National Security Adviser Sandy Berger said the administration was consulting with other members of the U.N. Security Council about the matter. If Iraq fails to meet its obligations under U.N. resolutions, he said, ``We obviously are prepared to act.'' Last weekend, Clinton called off a strike against Iraq minutes before it was to begin, delayed his departure for Asia to monitor the crisis and said that U.S. forces remained poised to strike if Iraq reneged on its agreement to let U.N. weapons inspectors do their work. In his appearance with Kim, the president addressed a handful of questions that ranged from North Korea to Indonesia to whether the Congress should punish him over the Lewinsky scandal. Before leaving Washington for this five-day trip to Japan, Korea and Guam, he drew a parallel between the governments of Iraq and North Korea, saying, ``We must be no less concerned by North Korea's weapons activities.'' The Clinton administration is urgently seeking to inspect a vast construction site in North Korea that it believes may be the beginnings of a nuclear weapons plant. Saturday, Clinton called that site, together with North Korea's test firing in August of a missile over Japan, ``cause for deep concern.'' But the Clinton administration is trying a very different approach toward North Korea than toward Iraq, partly at the urging of Kim, who is pursuing a ``sunshine policy'' of engagement with the North. As Clinton and Kim delivered prepared statements and answered questions Saturday, Clinton became most animated in describing what he called ``a very beautiful picture'' that he happened to spot after turning on his hotel television on arriving in Seoul on Friday night: film of a cruise ship recently permitted to carry South Koreans on a tour into the North. ``I ask the North Koreans to think about this,'' he said, arguing that Kim's policy of engagement with the North presented them with a great opportunity. ``Nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness as more of those ships going up there full of people from here.'' The Clinton administration fears that the construction site may be evidence that North Korea has abandoned a 1994 pledge to the United States to give up its nuclear weapons program in exchange for billions of dollars in aid. The North Koreans have denied that the complex is intended to help build nuclear weapons. But they have demanded that the United States pay $300 million to inspect it, a request rejected this week by a U.S. delegation to Pyongyang, the North Korean capital. The new complex is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center. Kim continued Saturday to emphasize his hopes for a new opening toward North Korea. But he said, ``We will not tolerate any possible attempt of North Korea to proliferate nuclear weapons, missiles and other weapons of mass destruction.'' The Clinton administration plans to resume negotiating with North Korea over inspecting the site in December. In addition to strategies for easing the Asian financial crisis, Clinton discussed North Korea during a visit to Tokyo on Thursday and Friday. The subject of North Korea consumed most of his two hours of meetings with Kim here Saturday at the Blue House, which contains the Korean president's office and home. The administration has been criticized in Congress and in this region for letting its policy on North Korea drift, but Clinton called that policy a ``clear-eyed mix'' of diplomacy and deterrence. He said that so far the 1994 agreement had worked, because without it ``North Korea already would have produced a sizable amount of weapons-grade plutonium.'' Under pressure from congressional critics, Clinton last week appointed William Perry, his former defense secretary, to review his policy on North Korea. On other matters, Clinton declined to criticize the government of Indonesia for using force to crack down on protesters there, saying that he did not ``have enough facts at this moment to give you the right answer.'' But he said he hoped there would be ``no backsliding'' in Indonesia. Clinton followed his appearance with Kim with a visit to the National Folk Museum here, where he conducted an hourlong conversation with six Korean academics, businessmen and union leaders about the troubled state of Korea's economy and its impact on the society. He attended a state dinner Saturday night, before stopping by a concert where his brother, Roger, a musician, happened to be performing. Clinton repeatedly congratulated Kim for his efforts at economic reform, noting that interest rates had fallen here and the currency had stabilized. But he also pressed Kim during their private meetings to restructure the five huge conglomerates, or chaebols, that account for some 40 percent of the Korean economy. In describing the leaders' conversation, Berger called restructuring the chaebols ``perhaps the most serious remaining problem in the South Korean economy.'' Clinton said during the economic forum Saturday afternoon that he felt impatient about South Korea's failure to act on the chaebols. It may be necessary to proceed slowly with the restructuring, he said, ``but they should begin.'' On Sunday, Clinton plans to visit some of the 37,000 American troops stationed here. ||||| North Korea has agreed to receive a U.S. delegation next month to discuss American concerns about the construction of a vast underground complex that is widely feared to house a nuclear weapons program, the State Department said on Wednesday. The delegation, led by Charles Kartman, will press for access to the site, which American intelligence agencies believe could be the centerpiece of an effort to revive a frozen nuclear arms program. ``We've made clear to the North Koreans that any attempt by North Korea to pursue a nuclear weapons development program would be unacceptable,'' the State Department spokesman, James Rubin, said. The talks in Pyongyang, the capital, he added, ``are aimed at completely satisfying U.S. concerns about the suspect construction.'' American intelligence agencies fear that building the complex could be an effort to break out of a four-year-old pact in which North Korea pledged to give up its nuclear-weapons program in exchange for billions of dollars in aid from the United States, South Korea and Japan. American officials have said spy satellites have recently photographed thousands of North Koreans around the huge site 25 miles northeast of Yongbyon, the nuclear center where North Korea was believed to have stockpiled enough plutonium before the 1994 accords to build six or more bombs. Although they have not explained exactly why the government is building the complex, North Korean officials have denied that it would be used to develop nuclear weapons. The official North Korean press agency said last week that the government was building ``civilian underground structures on which any `doubt' cannot be cast'' and suggested that American officials would be allowed to inspect the complex if they pressed for access. ``If the U.S. side persists in inspecting our underground structures,'' the press agency said, ``we can show it to them.'' Rubin said the United States had received no formal assurances that Kartman, the American special envoy for Korean nuclear issues, and his delegation would be allowed to inspect the site on the trip, which is to begin on Nov. 16. ``We are beginning a discussion with them in which we will demand access,'' Rubin said. ``The history of the U.S.-North Korea discussions involves usually a lengthy discussion process before there is agreement to our requirements. So we are not expecting to walk in one day and be able to have access the next.'' The trip was announced as signs grow about a relative warming of relations between the United States and North Korea. Representatives of the United States, China and the two Koreas met recently in Geneva and agreed to steps to reduce tension on the Korean Peninsula. In September the United States pledged to provide an additional 300,000 tons of grain to North Korea, which has for years been crippled by severe food shortages. In addition the White House disclosed that the United States would provide more heavy fuel oil promised to North Korea under the 1994 agreement, despite concerns that North Korea may intend to revive its nuclear program. American officials have said the activity near Yongbyon may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium.

The meeting of the US, China, and the two Koreas in Geneva appeared to ease tension on that Asian peninsula. However, indications of a revived North Korean nuclear program clouded President Clinton's "economics and security" Asian trip. North Korea's economy is bad, malnutrition widespread, yet the country maintains a 1.1 million military force. Past US food and fuel aid to that country has been based on it not promoting a nuclear program. The US policy on Iraq is the removal of Saddam Hussein. Now, apparently the US supports dumping PM Mahathir Mohamed in Malaysia. President Clinton visited US troops at Osan Air Base in South Korea on his Asian trip.

North Korean news media on Thursday said the communist nation's military is on full alert for war with the United States if a dispute over nuclear inspections comes to blows. The North's official Korean Central News Agency reported that North Korean soldiers and people of all walks of life were ``on full alert for war.'' North Korea typically sends out belligerent rhetoric, especially when it enters high-stake talks with Washington. The United States and North Korea are set to resume talks Friday about inspections of an underground North Korean site suspected of being used to produce nuclear weapons. KCNA broadcasts brimmed with anti-American saber-rattling. ``Our People's Army will blow up the U.S. territory as a whole'' if the United States starts a war on the divided Korean Peninsula, Vice Defense Minister Jong Chang Ryol was quoted as saying Thursday. The general staff of the North Korean military accused Washington on Wednesday of pushing the situation in Korea to the ``brink of war'' by demanding inspections and talks aimed at preventing Pyongyang from developing nuclear weapons and long-range missiles. ``Under the prevailing touch-and-go situation, the Korean People's Army is now bracing itself for a fight against the U.S. imperialist aggressors,'' KCNA quoted Jong as saying. The agency also quoted various party officials, plant managers, even museum curators as pledging a ``thousandfold revenge'' or vowing to arm themselves with the ``spirit of human bombs and of suicidal attack.'' Washington demands unconditional inspections of the North's underground project. But North Korea asked Washington to pay dlrs 300 million for the right to inspect the site. Concerns that North Korea was developing long-range missiles capable of striking all of Japan and parts of the United States escalated when North Korea fired a rocket on Aug. 31. Believed to be a test of its Taepo Dong missile, the rocket flew over Japan and landed in the Pacific Ocean. The North's 1.1 million-strong military is the world's fifth largest. It forms the backbone of the North Korean government, with leader Kim Jong Il ruling the country as the head of the military. ||||| A congressman who visited remote parts of North Korea last week said Saturday that the food and health situation there was desperate and deteriorating, and that millions of North Koreans might have starved to death in the last few years. The congressman, Tony Hall, D-Ohio, who has had a longtime interest in world hunger, passed through Tokyo on his return to the United States and showed photographs he had taken of North Korean children with patchy hair, protruding bones, open sores and other signs of severe malnutrition. Hall also brought back a bag of what officials called ``substitute food'' being distributed by a government food station: dried leaves and straw, so coarse that even cattle would normally turn away. ``They grind it into powder and make it into noodles,'' Hall said. The noodles have no nutrition and are indigestible, leaving people holding their aching stomachs, he said. North Korea has admitted that it is facing serious economic difficulties, but there have been sharply diverging assessments of how serious these are. Some visitors with the United Nations and other organizations have said that the food situation seems to be a bit better now than a year or two ago. Hall said that the divergence might have arisen because in the North Korean capital, Pyongyang, life did seem to be slightly better than during his three previous trips to North Korea. But in rural areas where foreigners are not often allowed to visit, he added, the overall situation is worse than ever. Based on visits to four hospitals, Hall also emphasized that public health care had declined sharply. In one hospital, assistants were holding down a patient while surgeons conducted a stomach operation without electric lights or anesthesia. Ordinary North Koreans are suffering, in part, because their government's hard-line policies have alienated would-be donors and aid agencies. The United Nations has repeatedly appealed for relief aid for North Korea, but the latest appeal has raised less than one-third of the target. In September, Doctors Without Borders announced that it was pulling its staff of 13 from North Korea because it feared that its aid was going to the politically connected rather than to the most needy. North Korea does not release mortality figures or health statistics, but Hall said that the United Nations had gathered and would soon release data indicating that 30 percent of North Korean children under age 2 are acutely malnourished and that 67 percent of all children are physically stunted. Hall said he thought that overall at least 1 million people had died and that the total was probably closer to 3 million. In an indication of the seriousness with which professional demographers view the situation, the U.S. Bureau of the Census recently published estimates suggesting that North Korea's population peaked in 1995 at 21.55 million and has since fallen to 21.23 million this year. That would be a decline of 320,000 over three years, a period when North Korea's population would have been expected to grow by about 925,000 people, based on the population growth rate of the early 1990s. Nicholas Eberstadt, an American specialist on North Korean population figures, says that there simply is not enough hard information for him to estimate the death toll from the famine. But he notes one political tidbit: North Korea's constitution stipulates that there should be one delegate to the country's ``people's assembly'' for every 30,000 citizens. This year's assembly did not expand as previous ones did, but rather had just 687 delegates, the same as the previous assembly held in 1990. While Eberstadt counsels caution, that could mean that North Korea's population, after eight years in which it had been expected to add several million people, is now back to 20.6 million people or fewer. The United States has been supplying grain to North Korea, but strains are growing over a secret underground complex in the North that some experts worry may be the heart of a new nuclear weapons program. The United States warned last week that the ``agreed framework'' that is the basis for its relations with North Korea will be in jeopardy unless the North lets American experts visit the underground complex and resolve their doubts. North Korea has said that it will show off the complex only if Washington promises that if the complex is not a nuclear one, it will pay for ``vilifying us and impairing our prestige.'' Washington refuses to pay, and North Korea is warning that the standoff could lead the agreement to fall apart. ``Their shameless and wicked demand is an open infringement upon our sovereignty and wanton interference in our internal affairs,'' declared North Korea's leading newspaper, Rodong Sinmun. ||||| In a green aviator jacket and black cap, President Clinton spent Sunday visiting American troops stationed in South Korea. He promoted a private, sang birthday greetings to a sergeant major and described the threats to his hopes for peaceful engagement with North Korea. ``Lately, signs of danger have intensified,'' Clinton said in an address to airmen here, standing before a gunmetal gray F-16 and A-10 parked nose-to-nose. ``So we must remain vigilant. And thanks to you, we are.'' For all his eagerness to talk about information-age economic dangers like quicksilver currency flows, Clinton has returned again and again during his five-day trip to Japan and South Korea to the old-style regional military threat posed by North Korea. The subject consumed most of his meetings with President Kim Dae-jung of South Korea on Saturday and formed the backdrop for his visits with the troops Sunday. ``It's kind of tense around here,'' said John Kelley, a 26-year-old airman from Wisconsin, describing life on this base. ``You know you're only four minutes away from a missile.'' In his speech, Clinton pointed to recent North Korean missile tests, incursions into the south and a mysterious underground site that may be a nuclear weapons installation as signs of the potential threat. And he compared North Korea to Iraq, saying that North Korea was ``also a major concern'' because of its chemical and biological weapons. Until North Korea ``fully commits itself to a constructive role on this peninsula,'' he said, ``we must remain ready.'' Clinton restated his support for Kim's policy of engagement with North Korea, though, saying that there were ``some hopeful signs'' to justify it. He pointed to talks that began over the summer between the American military command in Korea and the North Korean military to prevent problems along the demilitarized zone between the south and north. Clinton planned to leave South Korea early Monday and return to Washington Monday night, after paying a visit to Guam. On a bright but icy afternoon, Clinton was warmly received here by soldiers in camouflage and black boots, some of whom waited almost three hours, shifting from foot to foot and rubbing their hands. The official crowd estimate was only 3,500, but the turnout seemed even smaller. The base, about 30 miles south of Seoul, is one of two major American airfields in Korea, housing 7,500 airmen. Others who wanted to see the president were bused in from sites that are hours away. Before flying here by helicopter, Clinton attended church on an Army base in Seoul, then visited a firing range just 12 miles from the demilitarized zone. In a brief ceremony there, he promoted Matt Prickett of West Liberty, Ohio, from private first class to specialist. And he led the troops in a round of ``Happy Birthday'' for Sgt. Maj. Charles Thomas of Wilson, N.C., who turned 45 on Sunday. ``It definitely caught me off guard,'' Thomas said. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander a chance to achieve lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged to ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must not develop missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, was firm in saying his government supports Clinton on the nuclear issue. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman on Friday retracted an assessment he made Thursday that there was ``compelling evidence'' that North Korea is building an underground nuclear facility. In a statement distributed by the U.S. embassy here today, Kartman said instead, ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be.'' Kim said his government would support U.S. efforts to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and have proposed a dlrs 300 million payment for allowing inspections. Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. In his meeting with Korean community and business leaders at Seoul's National Folklore Museum, Clinton praised South Korea's progress in recovering from its financial crisis. On a darker note, he mentioned recent tensions over Asian steel exports to the United States, which have skyrocketed this year at great cost to the domestic U.S. steelmakers. Japanese steel is the biggest problem, but South Korean steel exports also are on the rise. Clinton said the U.S. economy could tolerate increased imports _ if they are not concentrated in just a few industries, and if the result is that the Asian economies begin to recover. ``We have to be sensitive if the price of doing that is to basically erase'' an entire sector of the U.S. economy, Clinton said. ||||| A South Korean lawmaker said Friday communist North Korea could be producing plutonium and could have more secret underground nuclear facilities than already feared. Without naming his source, Rep. Kim Deog-ryong of the Parliament's Foreign Affairs Committee said he had ``information'' that two underground facilities captured on U.S. spy satellite photos may be nuclear plants. He said in a Parliament session that one of them is believed to already be producing plutonium and the other would be able to produce enough for 10 nuclear bombs starting around 2004. If true, the assertion paints a worse picture of suspected North Korean nuclear activity than already made public. Kim said he asked the government's Unification Ministry about the issue earlier this week and was suspicious of its answer. ``It was not sufficient or sincere, so I came to suspect that the government is trying to hide the truth,'' Kim said in a seven-page press release. U.S. and South Korean officials said in August they had detected a huge underground construction site on a mountainside 40 kilometers (25 miles) northeast of Yongbyon, the country's main nuclear complex. The United States has said it suspects the construction is nuclear-related, though it has no evidence. North Korea has denied it. Kim, a lawmaker from the main opposition Grand National Party, said there may actually be two underground facilities not far from the Yongbyon complex. It was activity at Yongbyon that prompted the United States to negotiate a 1994 accord promising development of two light-water reactors and fuel-oil shipments if North Korea would halt nuclear weapons development. At the time, North Korea was believed to have made enough plutonium for one or two atomic bombs. The Yongbyon complex, which houses a 500-megawatt laboratory nuclear reactor, has been frozen under the 1994 accord. Kim said Friday that one new facility is already operating and the other is under construction and will be operational in four to six years. ``We estimate that the reactor will go on-line in 2002 or 2003, enabling the production of enough plutonium to build one nuclear weapon within six to 12 months,'' Kim said. ``North Korea would be able to make sufficient plutonium to make eight to 10 nuclear weapons every year after that.'' North Korea has said the underground construction is for civilian use and not nuclear-related. It has offered to open the facility to U.S. inspectors, but says Washington must pay compensation if the facility is been proven to be for civilian use. ||||| This city has always kept an unwritten list of foreign leaders _ dictators, unfriendly authoritarians and consistently annoying allies _ who it thinks can make an enormous contribution to peace, security or America's agenda by taking early retirement, at a minimum. In the 1950s, the leftist leaders of Iran and Guatamala made the Top 10, in the '60s it was populated by Diem and Sukarno and other Southeast Asians. President Richard M. Nixon and his advisers infamously agreed at a secret meeting in the '70s that the best way to deal with the government of Salvador Allende Gossens in Chile was to ``make the economy scream.'' Diplomatic etiquette, though, has usually discouraged shouting America's enemies list from the White House rooftop. After all, foreign policy isn't about personalities, right? But last week, driven by frustration, or anxiety, or perhaps the lure of sounding tough for cameras, the Clinton administration piped up, twice. In very different situations, in opposite corners of the world, the United States spoke loudly because it can't find a stick. Sunday, hours after he called off an attack on Iraq, Clinton finally volunteered the obvious, that the focus of U.S. policy toward Iraq is the removal of President Saddam Hussein _ what Clinton called supporting the ``forces of change in Iraq.'' No matter that covert efforts to do just that have failed miserably. The bigger surprise came Monday, when polite-to-a-fault Al Gore used his visit to Malaysia for an Asian economic summit meeting to throw U.S. support behind protesters calling for ``reformasi,'' the code word on the streets of Kuala Lumpur for dumping Prime Minister Mahathir Mohamed. He has long been a burr in Washington's side, denouncing America, its currency traders and its Jews. He recently imprisoned his Western-thinking finance minister, Anwar Ibrahim, who has suddenly become Asia's most visible jailed dissident. But Mahathir is no Saddam, not by a long shot. Gore's aides insist that his speech was a call for reform, not a demand that Mahathir step down. But it wasn't interpreted that way. The New Zealanders called it ``megaphone diplomacy.'' The Malaysian government called it ``disgusting'' and an ``interference in internal affairs.'' Predictably, executives of several U.S. companies that have flocked to Kuala Lumpur told the Malaysians that Gore was rude, while assuring Washington that he had uttered words that needed to be said. Whatever the wisdom of the Gore's words, they raised the question of what it takes these days for the world's most powerful nation to begin publicly suggesting that it's time for a nettlesome leader to go. Because there is no official list, there are no real criteria for getting on it. Some leaders mysteriously escape mention, like Kim Jong Il of North Korea. President Clinton is spending the weekend on the Korean Peninsula, staring across the demilitarized zone at a dangerous state that everyone suspects is attempting to break out of its 1994 agreement to freeze its nuclear weapons projects, in return for billions in Western energy aid. Yet Washington has never called on the starving North Koreans to revolt against Kim's repressive regime. His government, taking a page out of the Saddam playbook, suggested last week that if the United States really wants to look at a mountain tunnel that the Pentagon believes is a nuclear installation in the making, it should write a check for another $300 million. No one even called for Kim's removal when, a few months ago, he lobbed a three-stage missile over Japan just to show he knew how. ``The rules for calling for the end of a regime are pretty murky,'' said Richard Feinberg, a professor at the University of California at San Diego who served in the Clinton administration's first term. ``When they really want to push someone out, it is because that country is part of a larger strategic concern at the time. But the country itself usually doesn't have great strategic weight'' _ it's another matter to call for a change of leadership in Beijing or Moscow _ ``and it helps if there is some kind of domestic opposition that we can point to.'' Clinton's call for Saddam's ouster last weekend created barely a ripple because, after all, he is a proven murderer and an avid stockpiler of anthrax and plutonium (even if Brent Scowcroft, who was President George Bush's national security adviser, insisted last week that Saddam nowadays is simply ``an irritant, an annoyance, a pest and a problem, but not a threat to the region at the moment''). Mahathir, however, is far more complex case. He's a prime example of how opposing Washington's political and economic agenda for an interconnected world can move a leader from the list of authoritarians whom Washington tolerates to the list of authoritarians who have outlived their usefulness. Like other Asian strongmen _ Ferdinand Marcos of the Philippines and Suharto of Indonesia come to mind _ he was useful when the fear was that Malaysia would become a communist domino. But he also seemed eminently tolerable long after the Cold War was over. He has never been accused of enormous corruption. He turned his country into a model of competitiveness, and Malaysia became the exemplar of the ``big emerging markets'' that Clinton's Commerce Department touted until things went sour last year. Sure, he was always prickly. But he is no terrorist or killer _ U.S. companies have flocked to his country, and say they want to stay _ and his iron control over political discourse is no stronger than in neighboring Singapore. Just this summer, U.S. Treasury Secretary Robert Rubin paid him an ostensibly friendly, if strained, visit and made no reference to human rights. That all changed when Ibrahim was arrested and beaten in jail. He has long been an advocate of the Western-style solutions to economic turmoil _ more openness, more freedom _ and the protest movement against Mahathir only surfaced once he was in jail. Gore leapt on that opportunity _ particularly striking because, in the case of Indonesia earlier this year, it took the administration months to come to the conclusion that President Suharto had to go. He went. ||||| North Korea has demanded that the United States pay hundreds of millions of dollars for the right to inspect a huge underground center that U.S. intelligence analysts fear houses a nuclear-weapons program, Clinton administration officials said Wednesday. The United States rejected the request during meetings this week in Pyongyang, the North Korean capital, between North Korean officials and a U.S. government delegation. ``As we expected, the North Koreans brought up the issue of compensation, and we flatly rejected it,'' said State Department Spokesman James Rubin. Asked how much money the North Koreans had demanded, Rubin said payment of the fee was ``so not on as a possibility that I don't care to get into the figures.'' Other administration officials said the fee would have been hundreds of millions of dollars; one put it at $300 million. The North Koreans have denied that the complex, which is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center, is intended to be used for a nuclear weapons program. They have repeatedly said U.S. inspectors could visit the site as long as Washington agreed to pay a large fee in compensation for what the North Koreans describe as the administration's slander. The North Korean representative at the United Nations, Kim Chang Guk, said last week that the United States could inspect the site ``on condition that when it is confirmed not to be a nuclear facility, the United States should pay compensation for slandering and defaming my country.'' U.S. intelligence agencies fear that by building the complex, North Korea may have decided to abandon a four-year-old agreement with the United States in which North Korea pledged to give up its nuclear weapons program in exchange for billions of dollars in aid. The U.S. delegation, led by Charles Kartman, President Clinton's special envoy on North Korean issues, left Pyongyang on Wednesday after 12 hours of negotiations over three days with a team from the North Korean Foreign Ministry. The talks ended as Clinton began a trip to Asia that will include a visit to South Korea, where the issue of the North Korean construction site is expected to be among the major topics discussed with President Kim Dae-jung. Rubin said the U.S. delegation to North Korea had pressed for access to the site. ``We told them that access to the site is essential,'' he said. ``We've expected that this would be difficult, and we told the North Koreans, as we've said before, that verbal assurances, as they are wont to give, are simply unacceptable.'' U.S. officials have said the construction of the underground site may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium. But if the United States determines that North Korea has revived its nuclear program, Rubin said, ``it would go against the entire letter and spirit of the objectives of the agreement, and it would affect the viability of the agreement.'' The administration has expressed growing concern over North Korea's intentions after several provocative acts, including the underground construction near Yongbyon and the test firing last August of a missile over Japan. Last week Clinton named former Defense Secretary William Perry to review U.S. policy toward North Korea. Administration officials say Perry is being asked to study ways to salvage the 1994 nuclear agreement with North Korea, which had been among the administration's proudest achievements in foreign policy. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander an historic chance to make a lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged that his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must constrain its development and exports of missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. And that, in turn, would jeopardize preliminary North-South peace talks that could produce a treaty to replace the shaky armistice that ended the Korean War in 1953. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, firmly said his government supports Clinton on the nuclear issue. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. In a dinner toast, Kim said that despite tensions, ``North Korea is cautiously but noticeably taking measures to increase interaction and cooperation between the South and the North.'' And Clinton saluted Seoul's battle against Asia's economic woes. ``I believe Asia will emerge from this present crisis more prosperous, more stable, more democratic _ thanks in no small measure to Korea's example.'' After the state dinner, Clinton made a surprise late-night stop at a concert at the Sejong Culture Center where his younger brother, Roger, and his band were performing. The president listened to songs off stage before his brother introduced the president as ``a very special person.'' The audience of 2,000 people stood and applauded. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious underground site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman said Thursday after the Pyongyang talks that there was ``compelling evidence'' of an underground nuclear facility. But in a statement distributed by the U.S. Embassy here Saturday, Kartman backtracked, saying instead that the United States lacks ``conclusive evidence'' the site is a nuclear facility. ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be,'' Kartman said, offering a ``clarification'' of his earlier remarks. Kim said his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and it has demanded a dlrs 300 million payment for proving that. In remarks in Tokyo on Friday, Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. To risk that kind of cooperation _ and progress with America on other issues _ by stonewalling on the suspected nuclear site is contrary to the North's long-term interests, he said. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. To underscore the U.S. military commitment to South Korea, Clinton was scheduled to venture out of the capital on Sunday to visit U.S. Army troops at a training range north of Seoul. He also planned to address American troops at Osan Air Base from a U-2 spy plane hangar. ||||| President Clinton made an unusual, direct appeal to North Korea on Saturday to set aside any nuclear ambitions in favor of strengthening ties to South Korea and the United States. The appeal came during a meeting with reporters at which he also counseled patience over Iraq's refusal to comply with a request from weapons inspectors. ``I think it's important that we not overreact here on the first day,'' Clinton said in response to reports that Iraq had balked at a request by U.N. inspectors for documents on its weapons program. But, speaking at a joint appearance with South Korean President Kim Dae Jung, Clinton called the requested documents ``quite important'' and said Iraq had ``some affirmative obligations'' to help weapons inspectors. Aides to Clinton denied that his comments represented any softening toward Iraq. They said that because the situation was still developing and the president was preparing for meetings with Kim he had not been briefed in detail on Iraq's resistance when he appeared before reporters Saturday. National Security Adviser Sandy Berger said the administration was consulting with other members of the U.N. Security Council about the matter. If Iraq fails to meet its obligations under U.N. resolutions, he said, ``We obviously are prepared to act.'' Last weekend, Clinton called off a strike against Iraq minutes before it was to begin, delayed his departure for Asia to monitor the crisis and said that U.S. forces remained poised to strike if Iraq reneged on its agreement to let U.N. weapons inspectors do their work. In his appearance with Kim, the president addressed a handful of questions that ranged from North Korea to Indonesia to whether the Congress should punish him over the Lewinsky scandal. Before leaving Washington for this five-day trip to Japan, Korea and Guam, he drew a parallel between the governments of Iraq and North Korea, saying, ``We must be no less concerned by North Korea's weapons activities.'' The Clinton administration is urgently seeking to inspect a vast construction site in North Korea that it believes may be the beginnings of a nuclear weapons plant. Saturday, Clinton called that site, together with North Korea's test firing in August of a missile over Japan, ``cause for deep concern.'' But the Clinton administration is trying a very different approach toward North Korea than toward Iraq, partly at the urging of Kim, who is pursuing a ``sunshine policy'' of engagement with the North. As Clinton and Kim delivered prepared statements and answered questions Saturday, Clinton became most animated in describing what he called ``a very beautiful picture'' that he happened to spot after turning on his hotel television on arriving in Seoul on Friday night: film of a cruise ship recently permitted to carry South Koreans on a tour into the North. ``I ask the North Koreans to think about this,'' he said, arguing that Kim's policy of engagement with the North presented them with a great opportunity. ``Nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness as more of those ships going up there full of people from here.'' The Clinton administration fears that the construction site may be evidence that North Korea has abandoned a 1994 pledge to the United States to give up its nuclear weapons program in exchange for billions of dollars in aid. The North Koreans have denied that the complex is intended to help build nuclear weapons. But they have demanded that the United States pay $300 million to inspect it, a request rejected this week by a U.S. delegation to Pyongyang, the North Korean capital. The new complex is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center. Kim continued Saturday to emphasize his hopes for a new opening toward North Korea. But he said, ``We will not tolerate any possible attempt of North Korea to proliferate nuclear weapons, missiles and other weapons of mass destruction.'' The Clinton administration plans to resume negotiating with North Korea over inspecting the site in December. In addition to strategies for easing the Asian financial crisis, Clinton discussed North Korea during a visit to Tokyo on Thursday and Friday. The subject of North Korea consumed most of his two hours of meetings with Kim here Saturday at the Blue House, which contains the Korean president's office and home. The administration has been criticized in Congress and in this region for letting its policy on North Korea drift, but Clinton called that policy a ``clear-eyed mix'' of diplomacy and deterrence. He said that so far the 1994 agreement had worked, because without it ``North Korea already would have produced a sizable amount of weapons-grade plutonium.'' Under pressure from congressional critics, Clinton last week appointed William Perry, his former defense secretary, to review his policy on North Korea. On other matters, Clinton declined to criticize the government of Indonesia for using force to crack down on protesters there, saying that he did not ``have enough facts at this moment to give you the right answer.'' But he said he hoped there would be ``no backsliding'' in Indonesia. Clinton followed his appearance with Kim with a visit to the National Folk Museum here, where he conducted an hourlong conversation with six Korean academics, businessmen and union leaders about the troubled state of Korea's economy and its impact on the society. He attended a state dinner Saturday night, before stopping by a concert where his brother, Roger, a musician, happened to be performing. Clinton repeatedly congratulated Kim for his efforts at economic reform, noting that interest rates had fallen here and the currency had stabilized. But he also pressed Kim during their private meetings to restructure the five huge conglomerates, or chaebols, that account for some 40 percent of the Korean economy. In describing the leaders' conversation, Berger called restructuring the chaebols ``perhaps the most serious remaining problem in the South Korean economy.'' Clinton said during the economic forum Saturday afternoon that he felt impatient about South Korea's failure to act on the chaebols. It may be necessary to proceed slowly with the restructuring, he said, ``but they should begin.'' On Sunday, Clinton plans to visit some of the 37,000 American troops stationed here. ||||| North Korea has agreed to receive a U.S. delegation next month to discuss American concerns about the construction of a vast underground complex that is widely feared to house a nuclear weapons program, the State Department said on Wednesday. The delegation, led by Charles Kartman, will press for access to the site, which American intelligence agencies believe could be the centerpiece of an effort to revive a frozen nuclear arms program. ``We've made clear to the North Koreans that any attempt by North Korea to pursue a nuclear weapons development program would be unacceptable,'' the State Department spokesman, James Rubin, said. The talks in Pyongyang, the capital, he added, ``are aimed at completely satisfying U.S. concerns about the suspect construction.'' American intelligence agencies fear that building the complex could be an effort to break out of a four-year-old pact in which North Korea pledged to give up its nuclear-weapons program in exchange for billions of dollars in aid from the United States, South Korea and Japan. American officials have said spy satellites have recently photographed thousands of North Koreans around the huge site 25 miles northeast of Yongbyon, the nuclear center where North Korea was believed to have stockpiled enough plutonium before the 1994 accords to build six or more bombs. Although they have not explained exactly why the government is building the complex, North Korean officials have denied that it would be used to develop nuclear weapons. The official North Korean press agency said last week that the government was building ``civilian underground structures on which any `doubt' cannot be cast'' and suggested that American officials would be allowed to inspect the complex if they pressed for access. ``If the U.S. side persists in inspecting our underground structures,'' the press agency said, ``we can show it to them.'' Rubin said the United States had received no formal assurances that Kartman, the American special envoy for Korean nuclear issues, and his delegation would be allowed to inspect the site on the trip, which is to begin on Nov. 16. ``We are beginning a discussion with them in which we will demand access,'' Rubin said. ``The history of the U.S.-North Korea discussions involves usually a lengthy discussion process before there is agreement to our requirements. So we are not expecting to walk in one day and be able to have access the next.'' The trip was announced as signs grow about a relative warming of relations between the United States and North Korea. Representatives of the United States, China and the two Koreas met recently in Geneva and agreed to steps to reduce tension on the Korean Peninsula. In September the United States pledged to provide an additional 300,000 tons of grain to North Korea, which has for years been crippled by severe food shortages. In addition the White House disclosed that the United States would provide more heavy fuel oil promised to North Korea under the 1994 agreement, despite concerns that North Korea may intend to revive its nuclear program. American officials have said the activity near Yongbyon may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium.

North Korea agreed to receive a U.S. delegation to discuss concerns about an underground site feared to house a nuclear weapons program. South Korea supports the U.S. and calls for full access to the site by U.S. inspectors. North Korea denies the concerns and proposes a $300 mil payment to visit the site. President Clinton in Seoul cautioned North Korea to focus on diplomacy, not nuclear ambitions. North Korea has threatened war against U.S. if the dispute comes to blows. The issue threatens to jeopardize North and South Korean peace talks to improve relations. A recent U.S. official's visit toi North Korea revealed serious economic problems.

North Korean news media on Thursday said the communist nation's military is on full alert for war with the United States if a dispute over nuclear inspections comes to blows. The North's official Korean Central News Agency reported that North Korean soldiers and people of all walks of life were ``on full alert for war.'' North Korea typically sends out belligerent rhetoric, especially when it enters high-stake talks with Washington. The United States and North Korea are set to resume talks Friday about inspections of an underground North Korean site suspected of being used to produce nuclear weapons. KCNA broadcasts brimmed with anti-American saber-rattling. ``Our People's Army will blow up the U.S. territory as a whole'' if the United States starts a war on the divided Korean Peninsula, Vice Defense Minister Jong Chang Ryol was quoted as saying Thursday. The general staff of the North Korean military accused Washington on Wednesday of pushing the situation in Korea to the ``brink of war'' by demanding inspections and talks aimed at preventing Pyongyang from developing nuclear weapons and long-range missiles. ``Under the prevailing touch-and-go situation, the Korean People's Army is now bracing itself for a fight against the U.S. imperialist aggressors,'' KCNA quoted Jong as saying. The agency also quoted various party officials, plant managers, even museum curators as pledging a ``thousandfold revenge'' or vowing to arm themselves with the ``spirit of human bombs and of suicidal attack.'' Washington demands unconditional inspections of the North's underground project. But North Korea asked Washington to pay dlrs 300 million for the right to inspect the site. Concerns that North Korea was developing long-range missiles capable of striking all of Japan and parts of the United States escalated when North Korea fired a rocket on Aug. 31. Believed to be a test of its Taepo Dong missile, the rocket flew over Japan and landed in the Pacific Ocean. The North's 1.1 million-strong military is the world's fifth largest. It forms the backbone of the North Korean government, with leader Kim Jong Il ruling the country as the head of the military. ||||| A congressman who visited remote parts of North Korea last week said Saturday that the food and health situation there was desperate and deteriorating, and that millions of North Koreans might have starved to death in the last few years. The congressman, Tony Hall, D-Ohio, who has had a longtime interest in world hunger, passed through Tokyo on his return to the United States and showed photographs he had taken of North Korean children with patchy hair, protruding bones, open sores and other signs of severe malnutrition. Hall also brought back a bag of what officials called ``substitute food'' being distributed by a government food station: dried leaves and straw, so coarse that even cattle would normally turn away. ``They grind it into powder and make it into noodles,'' Hall said. The noodles have no nutrition and are indigestible, leaving people holding their aching stomachs, he said. North Korea has admitted that it is facing serious economic difficulties, but there have been sharply diverging assessments of how serious these are. Some visitors with the United Nations and other organizations have said that the food situation seems to be a bit better now than a year or two ago. Hall said that the divergence might have arisen because in the North Korean capital, Pyongyang, life did seem to be slightly better than during his three previous trips to North Korea. But in rural areas where foreigners are not often allowed to visit, he added, the overall situation is worse than ever. Based on visits to four hospitals, Hall also emphasized that public health care had declined sharply. In one hospital, assistants were holding down a patient while surgeons conducted a stomach operation without electric lights or anesthesia. Ordinary North Koreans are suffering, in part, because their government's hard-line policies have alienated would-be donors and aid agencies. The United Nations has repeatedly appealed for relief aid for North Korea, but the latest appeal has raised less than one-third of the target. In September, Doctors Without Borders announced that it was pulling its staff of 13 from North Korea because it feared that its aid was going to the politically connected rather than to the most needy. North Korea does not release mortality figures or health statistics, but Hall said that the United Nations had gathered and would soon release data indicating that 30 percent of North Korean children under age 2 are acutely malnourished and that 67 percent of all children are physically stunted. Hall said he thought that overall at least 1 million people had died and that the total was probably closer to 3 million. In an indication of the seriousness with which professional demographers view the situation, the U.S. Bureau of the Census recently published estimates suggesting that North Korea's population peaked in 1995 at 21.55 million and has since fallen to 21.23 million this year. That would be a decline of 320,000 over three years, a period when North Korea's population would have been expected to grow by about 925,000 people, based on the population growth rate of the early 1990s. Nicholas Eberstadt, an American specialist on North Korean population figures, says that there simply is not enough hard information for him to estimate the death toll from the famine. But he notes one political tidbit: North Korea's constitution stipulates that there should be one delegate to the country's ``people's assembly'' for every 30,000 citizens. This year's assembly did not expand as previous ones did, but rather had just 687 delegates, the same as the previous assembly held in 1990. While Eberstadt counsels caution, that could mean that North Korea's population, after eight years in which it had been expected to add several million people, is now back to 20.6 million people or fewer. The United States has been supplying grain to North Korea, but strains are growing over a secret underground complex in the North that some experts worry may be the heart of a new nuclear weapons program. The United States warned last week that the ``agreed framework'' that is the basis for its relations with North Korea will be in jeopardy unless the North lets American experts visit the underground complex and resolve their doubts. North Korea has said that it will show off the complex only if Washington promises that if the complex is not a nuclear one, it will pay for ``vilifying us and impairing our prestige.'' Washington refuses to pay, and North Korea is warning that the standoff could lead the agreement to fall apart. ``Their shameless and wicked demand is an open infringement upon our sovereignty and wanton interference in our internal affairs,'' declared North Korea's leading newspaper, Rodong Sinmun. ||||| In a green aviator jacket and black cap, President Clinton spent Sunday visiting American troops stationed in South Korea. He promoted a private, sang birthday greetings to a sergeant major and described the threats to his hopes for peaceful engagement with North Korea. ``Lately, signs of danger have intensified,'' Clinton said in an address to airmen here, standing before a gunmetal gray F-16 and A-10 parked nose-to-nose. ``So we must remain vigilant. And thanks to you, we are.'' For all his eagerness to talk about information-age economic dangers like quicksilver currency flows, Clinton has returned again and again during his five-day trip to Japan and South Korea to the old-style regional military threat posed by North Korea. The subject consumed most of his meetings with President Kim Dae-jung of South Korea on Saturday and formed the backdrop for his visits with the troops Sunday. ``It's kind of tense around here,'' said John Kelley, a 26-year-old airman from Wisconsin, describing life on this base. ``You know you're only four minutes away from a missile.'' In his speech, Clinton pointed to recent North Korean missile tests, incursions into the south and a mysterious underground site that may be a nuclear weapons installation as signs of the potential threat. And he compared North Korea to Iraq, saying that North Korea was ``also a major concern'' because of its chemical and biological weapons. Until North Korea ``fully commits itself to a constructive role on this peninsula,'' he said, ``we must remain ready.'' Clinton restated his support for Kim's policy of engagement with North Korea, though, saying that there were ``some hopeful signs'' to justify it. He pointed to talks that began over the summer between the American military command in Korea and the North Korean military to prevent problems along the demilitarized zone between the south and north. Clinton planned to leave South Korea early Monday and return to Washington Monday night, after paying a visit to Guam. On a bright but icy afternoon, Clinton was warmly received here by soldiers in camouflage and black boots, some of whom waited almost three hours, shifting from foot to foot and rubbing their hands. The official crowd estimate was only 3,500, but the turnout seemed even smaller. The base, about 30 miles south of Seoul, is one of two major American airfields in Korea, housing 7,500 airmen. Others who wanted to see the president were bused in from sites that are hours away. Before flying here by helicopter, Clinton attended church on an Army base in Seoul, then visited a firing range just 12 miles from the demilitarized zone. In a brief ceremony there, he promoted Matt Prickett of West Liberty, Ohio, from private first class to specialist. And he led the troops in a round of ``Happy Birthday'' for Sgt. Maj. Charles Thomas of Wilson, N.C., who turned 45 on Sunday. ``It definitely caught me off guard,'' Thomas said. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander a chance to achieve lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged to ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must not develop missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, was firm in saying his government supports Clinton on the nuclear issue. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman on Friday retracted an assessment he made Thursday that there was ``compelling evidence'' that North Korea is building an underground nuclear facility. In a statement distributed by the U.S. embassy here today, Kartman said instead, ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be.'' Kim said his government would support U.S. efforts to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and have proposed a dlrs 300 million payment for allowing inspections. Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. In his meeting with Korean community and business leaders at Seoul's National Folklore Museum, Clinton praised South Korea's progress in recovering from its financial crisis. On a darker note, he mentioned recent tensions over Asian steel exports to the United States, which have skyrocketed this year at great cost to the domestic U.S. steelmakers. Japanese steel is the biggest problem, but South Korean steel exports also are on the rise. Clinton said the U.S. economy could tolerate increased imports _ if they are not concentrated in just a few industries, and if the result is that the Asian economies begin to recover. ``We have to be sensitive if the price of doing that is to basically erase'' an entire sector of the U.S. economy, Clinton said. ||||| A South Korean lawmaker said Friday communist North Korea could be producing plutonium and could have more secret underground nuclear facilities than already feared. Without naming his source, Rep. Kim Deog-ryong of the Parliament's Foreign Affairs Committee said he had ``information'' that two underground facilities captured on U.S. spy satellite photos may be nuclear plants. He said in a Parliament session that one of them is believed to already be producing plutonium and the other would be able to produce enough for 10 nuclear bombs starting around 2004. If true, the assertion paints a worse picture of suspected North Korean nuclear activity than already made public. Kim said he asked the government's Unification Ministry about the issue earlier this week and was suspicious of its answer. ``It was not sufficient or sincere, so I came to suspect that the government is trying to hide the truth,'' Kim said in a seven-page press release. U.S. and South Korean officials said in August they had detected a huge underground construction site on a mountainside 40 kilometers (25 miles) northeast of Yongbyon, the country's main nuclear complex. The United States has said it suspects the construction is nuclear-related, though it has no evidence. North Korea has denied it. Kim, a lawmaker from the main opposition Grand National Party, said there may actually be two underground facilities not far from the Yongbyon complex. It was activity at Yongbyon that prompted the United States to negotiate a 1994 accord promising development of two light-water reactors and fuel-oil shipments if North Korea would halt nuclear weapons development. At the time, North Korea was believed to have made enough plutonium for one or two atomic bombs. The Yongbyon complex, which houses a 500-megawatt laboratory nuclear reactor, has been frozen under the 1994 accord. Kim said Friday that one new facility is already operating and the other is under construction and will be operational in four to six years. ``We estimate that the reactor will go on-line in 2002 or 2003, enabling the production of enough plutonium to build one nuclear weapon within six to 12 months,'' Kim said. ``North Korea would be able to make sufficient plutonium to make eight to 10 nuclear weapons every year after that.'' North Korea has said the underground construction is for civilian use and not nuclear-related. It has offered to open the facility to U.S. inspectors, but says Washington must pay compensation if the facility is been proven to be for civilian use. ||||| This city has always kept an unwritten list of foreign leaders _ dictators, unfriendly authoritarians and consistently annoying allies _ who it thinks can make an enormous contribution to peace, security or America's agenda by taking early retirement, at a minimum. In the 1950s, the leftist leaders of Iran and Guatamala made the Top 10, in the '60s it was populated by Diem and Sukarno and other Southeast Asians. President Richard M. Nixon and his advisers infamously agreed at a secret meeting in the '70s that the best way to deal with the government of Salvador Allende Gossens in Chile was to ``make the economy scream.'' Diplomatic etiquette, though, has usually discouraged shouting America's enemies list from the White House rooftop. After all, foreign policy isn't about personalities, right? But last week, driven by frustration, or anxiety, or perhaps the lure of sounding tough for cameras, the Clinton administration piped up, twice. In very different situations, in opposite corners of the world, the United States spoke loudly because it can't find a stick. Sunday, hours after he called off an attack on Iraq, Clinton finally volunteered the obvious, that the focus of U.S. policy toward Iraq is the removal of President Saddam Hussein _ what Clinton called supporting the ``forces of change in Iraq.'' No matter that covert efforts to do just that have failed miserably. The bigger surprise came Monday, when polite-to-a-fault Al Gore used his visit to Malaysia for an Asian economic summit meeting to throw U.S. support behind protesters calling for ``reformasi,'' the code word on the streets of Kuala Lumpur for dumping Prime Minister Mahathir Mohamed. He has long been a burr in Washington's side, denouncing America, its currency traders and its Jews. He recently imprisoned his Western-thinking finance minister, Anwar Ibrahim, who has suddenly become Asia's most visible jailed dissident. But Mahathir is no Saddam, not by a long shot. Gore's aides insist that his speech was a call for reform, not a demand that Mahathir step down. But it wasn't interpreted that way. The New Zealanders called it ``megaphone diplomacy.'' The Malaysian government called it ``disgusting'' and an ``interference in internal affairs.'' Predictably, executives of several U.S. companies that have flocked to Kuala Lumpur told the Malaysians that Gore was rude, while assuring Washington that he had uttered words that needed to be said. Whatever the wisdom of the Gore's words, they raised the question of what it takes these days for the world's most powerful nation to begin publicly suggesting that it's time for a nettlesome leader to go. Because there is no official list, there are no real criteria for getting on it. Some leaders mysteriously escape mention, like Kim Jong Il of North Korea. President Clinton is spending the weekend on the Korean Peninsula, staring across the demilitarized zone at a dangerous state that everyone suspects is attempting to break out of its 1994 agreement to freeze its nuclear weapons projects, in return for billions in Western energy aid. Yet Washington has never called on the starving North Koreans to revolt against Kim's repressive regime. His government, taking a page out of the Saddam playbook, suggested last week that if the United States really wants to look at a mountain tunnel that the Pentagon believes is a nuclear installation in the making, it should write a check for another $300 million. No one even called for Kim's removal when, a few months ago, he lobbed a three-stage missile over Japan just to show he knew how. ``The rules for calling for the end of a regime are pretty murky,'' said Richard Feinberg, a professor at the University of California at San Diego who served in the Clinton administration's first term. ``When they really want to push someone out, it is because that country is part of a larger strategic concern at the time. But the country itself usually doesn't have great strategic weight'' _ it's another matter to call for a change of leadership in Beijing or Moscow _ ``and it helps if there is some kind of domestic opposition that we can point to.'' Clinton's call for Saddam's ouster last weekend created barely a ripple because, after all, he is a proven murderer and an avid stockpiler of anthrax and plutonium (even if Brent Scowcroft, who was President George Bush's national security adviser, insisted last week that Saddam nowadays is simply ``an irritant, an annoyance, a pest and a problem, but not a threat to the region at the moment''). Mahathir, however, is far more complex case. He's a prime example of how opposing Washington's political and economic agenda for an interconnected world can move a leader from the list of authoritarians whom Washington tolerates to the list of authoritarians who have outlived their usefulness. Like other Asian strongmen _ Ferdinand Marcos of the Philippines and Suharto of Indonesia come to mind _ he was useful when the fear was that Malaysia would become a communist domino. But he also seemed eminently tolerable long after the Cold War was over. He has never been accused of enormous corruption. He turned his country into a model of competitiveness, and Malaysia became the exemplar of the ``big emerging markets'' that Clinton's Commerce Department touted until things went sour last year. Sure, he was always prickly. But he is no terrorist or killer _ U.S. companies have flocked to his country, and say they want to stay _ and his iron control over political discourse is no stronger than in neighboring Singapore. Just this summer, U.S. Treasury Secretary Robert Rubin paid him an ostensibly friendly, if strained, visit and made no reference to human rights. That all changed when Ibrahim was arrested and beaten in jail. He has long been an advocate of the Western-style solutions to economic turmoil _ more openness, more freedom _ and the protest movement against Mahathir only surfaced once he was in jail. Gore leapt on that opportunity _ particularly striking because, in the case of Indonesia earlier this year, it took the administration months to come to the conclusion that President Suharto had to go. He went. ||||| North Korea has demanded that the United States pay hundreds of millions of dollars for the right to inspect a huge underground center that U.S. intelligence analysts fear houses a nuclear-weapons program, Clinton administration officials said Wednesday. The United States rejected the request during meetings this week in Pyongyang, the North Korean capital, between North Korean officials and a U.S. government delegation. ``As we expected, the North Koreans brought up the issue of compensation, and we flatly rejected it,'' said State Department Spokesman James Rubin. Asked how much money the North Koreans had demanded, Rubin said payment of the fee was ``so not on as a possibility that I don't care to get into the figures.'' Other administration officials said the fee would have been hundreds of millions of dollars; one put it at $300 million. The North Koreans have denied that the complex, which is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center, is intended to be used for a nuclear weapons program. They have repeatedly said U.S. inspectors could visit the site as long as Washington agreed to pay a large fee in compensation for what the North Koreans describe as the administration's slander. The North Korean representative at the United Nations, Kim Chang Guk, said last week that the United States could inspect the site ``on condition that when it is confirmed not to be a nuclear facility, the United States should pay compensation for slandering and defaming my country.'' U.S. intelligence agencies fear that by building the complex, North Korea may have decided to abandon a four-year-old agreement with the United States in which North Korea pledged to give up its nuclear weapons program in exchange for billions of dollars in aid. The U.S. delegation, led by Charles Kartman, President Clinton's special envoy on North Korean issues, left Pyongyang on Wednesday after 12 hours of negotiations over three days with a team from the North Korean Foreign Ministry. The talks ended as Clinton began a trip to Asia that will include a visit to South Korea, where the issue of the North Korean construction site is expected to be among the major topics discussed with President Kim Dae-jung. Rubin said the U.S. delegation to North Korea had pressed for access to the site. ``We told them that access to the site is essential,'' he said. ``We've expected that this would be difficult, and we told the North Koreans, as we've said before, that verbal assurances, as they are wont to give, are simply unacceptable.'' U.S. officials have said the construction of the underground site may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium. But if the United States determines that North Korea has revived its nuclear program, Rubin said, ``it would go against the entire letter and spirit of the objectives of the agreement, and it would affect the viability of the agreement.'' The administration has expressed growing concern over North Korea's intentions after several provocative acts, including the underground construction near Yongbyon and the test firing last August of a missile over Japan. Last week Clinton named former Defense Secretary William Perry to review U.S. policy toward North Korea. Administration officials say Perry is being asked to study ways to salvage the 1994 nuclear agreement with North Korea, which had been among the administration's proudest achievements in foreign policy. ||||| SEOUL, South Korea (AP) _ U.S. President Bill Clinton won South Korea's support Saturday for confronting North Korea over a suspected nuclear site, and he warned the North's communist leaders not to squander an historic chance to make a lasting peace on the peninsula. President Kim Dae-jung, appearing with Clinton at a news conference, pledged that his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. He called for full access for U.S. inspectors at a North Korean underground facility and said the North must constrain its development and exports of missiles. On the first of two days in South Korea, Clinton also held a roundtable discussion with business leaders to hear their prescriptions for putting the nation's economy back on track. Economics and security are Clinton's twin themes on a five-day Asia trip that began in Japan. Clinton acknowledged that U.S. intelligence officials are not yet certain that the suspicious underground construction project in North Korea is nuclear related. But he said the North risks closing the door on cooperation if it refuses a U.S. inspection of the site. ``It raises a strong suspicion,'' Clinton said at a joint news conference with Kim at the Blue House, the presidential mansion overlooking the capital. ``We need access to it.'' The foundation of U.S. efforts to ease North Korea's decades-long hostility toward the South is a 1994 ``agreed framework'' in which the North halted its nuclear weapons program in exchange for a Western commitment to build modern nuclear energy sources there. That deal would be shattered if the suspect site turned out to be a clandestine nuclear project. And that, in turn, would jeopardize preliminary North-South peace talks that could produce a treaty to replace the shaky armistice that ended the Korean War in 1953. Kim, who has moved South Korea to a ``sunshine'' policy of engaging North Korea on cultural and economic fronts, firmly said his government supports Clinton on the nuclear issue. ``We must require full access and ways to ascertain the nature and the purposes of the construction site,'' Kim said. ``If it is, in fact, proven that it is nuclear related, we should demand immediate close down.'' He also said the North must limit its missile development, citing the ``great shock'' in Japan when the North Koreans test-fired a missile its way Aug. 31. In a dinner toast, Kim said that despite tensions, ``North Korea is cautiously but noticeably taking measures to increase interaction and cooperation between the South and the North.'' And Clinton saluted Seoul's battle against Asia's economic woes. ``I believe Asia will emerge from this present crisis more prosperous, more stable, more democratic _ thanks in no small measure to Korea's example.'' After the state dinner, Clinton made a surprise late-night stop at a concert at the Sejong Culture Center where his younger brother, Roger, and his band were performing. The president listened to songs off stage before his brother introduced the president as ``a very special person.'' The audience of 2,000 people stood and applauded. In meetings this week in Pyongyang, the North Korean capital, U.S. officials were rebuffed in their request to see the suspicious underground site, which American intelligence officials fear could be a secret effort to revive the North's nuclear weapons program. U.S. spy satellite photos show thousands of workers digging a massive complex. U.S. special envoy Charles Kartman said Thursday after the Pyongyang talks that there was ``compelling evidence'' of an underground nuclear facility. But in a statement distributed by the U.S. Embassy here Saturday, Kartman backtracked, saying instead that the United States lacks ``conclusive evidence'' the site is a nuclear facility. ``There is strong information that makes us suspicious, but we lack conclusive evidence that the intended purpose of the underground site is nuclear related and, if so, what type of nuclear facility it might be,'' Kartman said, offering a ``clarification'' of his earlier remarks. Kim said his government would ``spare no effort in supporting the U.S. endeavor'' to resolve the nuclear question. The North Koreans have denied the underground construction site has any nuclear purpose, and it has demanded a dlrs 300 million payment for proving that. In remarks in Tokyo on Friday, Clinton rejected the idea of compensation. Directing his remarks at North Korea, Clinton noted the significance of a new tourism deal that is bringing South Koreans to the North on cruise ships _ an arrangement touted by Kim as a sign the North may be opening up to its 1950s Korean War enemy. To risk that kind of cooperation _ and progress with America on other issues _ by stonewalling on the suspected nuclear site is contrary to the North's long-term interests, he said. ``Nothing could ever be put into that hole in the ground, given our defense partnership here, nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness, as more of those ships going up there full of people from here,'' Clinton said. To underscore the U.S. military commitment to South Korea, Clinton was scheduled to venture out of the capital on Sunday to visit U.S. Army troops at a training range north of Seoul. He also planned to address American troops at Osan Air Base from a U-2 spy plane hangar. ||||| President Clinton made an unusual, direct appeal to North Korea on Saturday to set aside any nuclear ambitions in favor of strengthening ties to South Korea and the United States. The appeal came during a meeting with reporters at which he also counseled patience over Iraq's refusal to comply with a request from weapons inspectors. ``I think it's important that we not overreact here on the first day,'' Clinton said in response to reports that Iraq had balked at a request by U.N. inspectors for documents on its weapons program. But, speaking at a joint appearance with South Korean President Kim Dae Jung, Clinton called the requested documents ``quite important'' and said Iraq had ``some affirmative obligations'' to help weapons inspectors. Aides to Clinton denied that his comments represented any softening toward Iraq. They said that because the situation was still developing and the president was preparing for meetings with Kim he had not been briefed in detail on Iraq's resistance when he appeared before reporters Saturday. National Security Adviser Sandy Berger said the administration was consulting with other members of the U.N. Security Council about the matter. If Iraq fails to meet its obligations under U.N. resolutions, he said, ``We obviously are prepared to act.'' Last weekend, Clinton called off a strike against Iraq minutes before it was to begin, delayed his departure for Asia to monitor the crisis and said that U.S. forces remained poised to strike if Iraq reneged on its agreement to let U.N. weapons inspectors do their work. In his appearance with Kim, the president addressed a handful of questions that ranged from North Korea to Indonesia to whether the Congress should punish him over the Lewinsky scandal. Before leaving Washington for this five-day trip to Japan, Korea and Guam, he drew a parallel between the governments of Iraq and North Korea, saying, ``We must be no less concerned by North Korea's weapons activities.'' The Clinton administration is urgently seeking to inspect a vast construction site in North Korea that it believes may be the beginnings of a nuclear weapons plant. Saturday, Clinton called that site, together with North Korea's test firing in August of a missile over Japan, ``cause for deep concern.'' But the Clinton administration is trying a very different approach toward North Korea than toward Iraq, partly at the urging of Kim, who is pursuing a ``sunshine policy'' of engagement with the North. As Clinton and Kim delivered prepared statements and answered questions Saturday, Clinton became most animated in describing what he called ``a very beautiful picture'' that he happened to spot after turning on his hotel television on arriving in Seoul on Friday night: film of a cruise ship recently permitted to carry South Koreans on a tour into the North. ``I ask the North Koreans to think about this,'' he said, arguing that Kim's policy of engagement with the North presented them with a great opportunity. ``Nothing could ever be put in that hole in the ground that would give the North Koreans as much advantage, as much power, as much wealth, as much happiness as more of those ships going up there full of people from here.'' The Clinton administration fears that the construction site may be evidence that North Korea has abandoned a 1994 pledge to the United States to give up its nuclear weapons program in exchange for billions of dollars in aid. The North Koreans have denied that the complex is intended to help build nuclear weapons. But they have demanded that the United States pay $300 million to inspect it, a request rejected this week by a U.S. delegation to Pyongyang, the North Korean capital. The new complex is being built on a mountainside about 25 miles northeast of Yongbyon, the former North Korean nuclear research center. Kim continued Saturday to emphasize his hopes for a new opening toward North Korea. But he said, ``We will not tolerate any possible attempt of North Korea to proliferate nuclear weapons, missiles and other weapons of mass destruction.'' The Clinton administration plans to resume negotiating with North Korea over inspecting the site in December. In addition to strategies for easing the Asian financial crisis, Clinton discussed North Korea during a visit to Tokyo on Thursday and Friday. The subject of North Korea consumed most of his two hours of meetings with Kim here Saturday at the Blue House, which contains the Korean president's office and home. The administration has been criticized in Congress and in this region for letting its policy on North Korea drift, but Clinton called that policy a ``clear-eyed mix'' of diplomacy and deterrence. He said that so far the 1994 agreement had worked, because without it ``North Korea already would have produced a sizable amount of weapons-grade plutonium.'' Under pressure from congressional critics, Clinton last week appointed William Perry, his former defense secretary, to review his policy on North Korea. On other matters, Clinton declined to criticize the government of Indonesia for using force to crack down on protesters there, saying that he did not ``have enough facts at this moment to give you the right answer.'' But he said he hoped there would be ``no backsliding'' in Indonesia. Clinton followed his appearance with Kim with a visit to the National Folk Museum here, where he conducted an hourlong conversation with six Korean academics, businessmen and union leaders about the troubled state of Korea's economy and its impact on the society. He attended a state dinner Saturday night, before stopping by a concert where his brother, Roger, a musician, happened to be performing. Clinton repeatedly congratulated Kim for his efforts at economic reform, noting that interest rates had fallen here and the currency had stabilized. But he also pressed Kim during their private meetings to restructure the five huge conglomerates, or chaebols, that account for some 40 percent of the Korean economy. In describing the leaders' conversation, Berger called restructuring the chaebols ``perhaps the most serious remaining problem in the South Korean economy.'' Clinton said during the economic forum Saturday afternoon that he felt impatient about South Korea's failure to act on the chaebols. It may be necessary to proceed slowly with the restructuring, he said, ``but they should begin.'' On Sunday, Clinton plans to visit some of the 37,000 American troops stationed here. ||||| North Korea has agreed to receive a U.S. delegation next month to discuss American concerns about the construction of a vast underground complex that is widely feared to house a nuclear weapons program, the State Department said on Wednesday. The delegation, led by Charles Kartman, will press for access to the site, which American intelligence agencies believe could be the centerpiece of an effort to revive a frozen nuclear arms program. ``We've made clear to the North Koreans that any attempt by North Korea to pursue a nuclear weapons development program would be unacceptable,'' the State Department spokesman, James Rubin, said. The talks in Pyongyang, the capital, he added, ``are aimed at completely satisfying U.S. concerns about the suspect construction.'' American intelligence agencies fear that building the complex could be an effort to break out of a four-year-old pact in which North Korea pledged to give up its nuclear-weapons program in exchange for billions of dollars in aid from the United States, South Korea and Japan. American officials have said spy satellites have recently photographed thousands of North Koreans around the huge site 25 miles northeast of Yongbyon, the nuclear center where North Korea was believed to have stockpiled enough plutonium before the 1994 accords to build six or more bombs. Although they have not explained exactly why the government is building the complex, North Korean officials have denied that it would be used to develop nuclear weapons. The official North Korean press agency said last week that the government was building ``civilian underground structures on which any `doubt' cannot be cast'' and suggested that American officials would be allowed to inspect the complex if they pressed for access. ``If the U.S. side persists in inspecting our underground structures,'' the press agency said, ``we can show it to them.'' Rubin said the United States had received no formal assurances that Kartman, the American special envoy for Korean nuclear issues, and his delegation would be allowed to inspect the site on the trip, which is to begin on Nov. 16. ``We are beginning a discussion with them in which we will demand access,'' Rubin said. ``The history of the U.S.-North Korea discussions involves usually a lengthy discussion process before there is agreement to our requirements. So we are not expecting to walk in one day and be able to have access the next.'' The trip was announced as signs grow about a relative warming of relations between the United States and North Korea. Representatives of the United States, China and the two Koreas met recently in Geneva and agreed to steps to reduce tension on the Korean Peninsula. In September the United States pledged to provide an additional 300,000 tons of grain to North Korea, which has for years been crippled by severe food shortages. In addition the White House disclosed that the United States would provide more heavy fuel oil promised to North Korea under the 1994 agreement, despite concerns that North Korea may intend to revive its nuclear program. American officials have said the activity near Yongbyon may not yet have technically violated the accord, because there is no evidence that North Korea has begun pouring cement for a new reactor or a reprocessing plant to convert nuclear waste to bomb-grade plutonium.

In August, US intelligence found a underground construction site near North Korea's nuclear complex. North Korea, suffering a devastating famine, claims the site is civilian and offered an inspection for a $300 million payment. This follows their August missile launch and suggests they are reneging on the 1994 agreement to end nuclear development in exchange for US aid. Clinton discussed these developments with allies during his November trip to Asia. He warned US troops in South Korea of increased danger, but has not directly attacked Kim Chong-il. North Korea has begun its militant posturing as the date to discuss this construction with the US nears.

By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv ||||| By one vote, a defector from its own ranks, Premier Romano Prodi's center-left coalition, Italy's second-longest serving government since World War II, lost a confidence vote Friday in the Chamber of Deputies. Prodi immediately offered his resignation to President Oscar Luigi Scalfaro, who asked him to stay on as caretaker premier while the head of state decides whether to call early elections or ask someone else to be premier. The vote, 3rd graf prv ||||| By only one vote, the center-left prime minister of Italy, Romano Prodi, lost a confidence vote in Parliament Friday and was toppled from power. The collapse of his government after two and a half years, the second-longest tenure since World War II, suggested that the chronic political instability that marked Italy for decades had sprung back to life. Though obliged to tender his resignation, Prodi will remain in charge as a caretaker prime minister until a new government is formed. He may get a second chance to form a new majority, but even if he does, negotiations to that end could take days and even weeks, clouding decisions on such urgent issues as the crisis in Kosovo. NATO military planners preparing for possible air strikes against Yugoslavia had expected to use key air bases in Italy. In his weakened position, Prodi will have difficulty persuading Parliament to approve NATO strikes. He will have similar problems passing the 1999 budget, which is necessary before Italy can cut its lending rates, a requirement for joining the single European monetary unit, the euro, on Jan. 1. Immediately after Friday's vote of 313-312, in a tense and at times raucous session, Prodi met with President Oscar Luigi Scalfaro to submit his resignation and discuss his options. In the coming days Scalfaro will consult with dozens of other leaders to ascertain whether Prodi has enough lingering support to try to form a new government. If not, the president is expected to turn to another political leader. If no compromise is found, Italy could be plunged into early elections. But parties of all political stripes may be reluctant to push things that far, for opinion polls suggest that voters are no more enamored of the center-right opposition parties than they are of the governing majority. Prodi, an economist, is admired by his Western allies as a down-to-earth leader who vowed to tame Italy's bloated economy and reckless government borrowing and actually lived up to his pledge. By raising taxes, lowering interest rates and reducing the deficit, Italy met the requirements for membership in the euro last spring, a feat that only a year before was considered impossible by German and French economists. Prodi was helped by a healthy global economy and a rare consensus among industrialists, labor unions and taxpayers, who feared that exclusion from the euro would condemn Italy to Third World status. But his fiscal discipline was not followed by reform of a political system that is inherently fragile. There are more than 40 parties in Italy, and the government's efforts to amend the constitution to introduce a two-party system failed. ``Unless the Italian political system changes, Italy is condemned to political instability,'' said Sergio Romano, a former diplomat and political science professor. ``The country needs stability and credibility, and that will never happen as long as the government is hanging from a thread.'' In 1996 Prodi won with a patchwork quilt of center-left factions mostly made up of Catholic moderates and leftists. He relied on a fringe Marxist group, the Communist Refounding Party, for a majority in the lower house. And that alliance, fragile from the beginning, finally frayed to the breaking point this week. The hard-line leader of Communist Refounding, Fausto Bertinotti, said his party would vote against the 1999 budget and would also end its 28-month-old pact with the center-left coalition. That position drove the moderate wing of Communist Refounding, worried that a vote against Prodi would open the doors to a center-right government, to split away. But the 20-odd deputies who defied Bertinotti were not enough to squeeze Prodi through. ``I am not bitter,'' Prodi said moments after his defeat. ``Even today I received a lot of support.'' In the end the coup de grace was delivered by one of his own, a member of the coalition. ``They have won by the treachery of one single person,'' Sergio Mattarella, a deputy in Prodi's coalition, angrily told reporters, referring to Silvio Liotta, a member of the Italian Renewal Party. Foreign Minister Lamberto Dini, who heads that party, said Liotta would be expelled. Prodi has often said he would not govern with any other majority than the center-left one that elected him in 1996. But throughout his tenure, he was forced to seek temporary alliances to push through major policy decisions. He struggled to the last to try to keep his original majority intact. On Thursday, in an effort to woo more moderate Communists to his side, the prime minister, a staunch ally of the United States, warned that he would oppose a NATO strike aimed at stopping Serbian violence in Kosovo unless the U.N. Security Council approved the attack. Washington maintains that NATO does not need a new U.N. resolution to order a strike. ||||| Premier Romano Prodi said Monday he would appeal directly to Parliament to save Italy's second-longest government since World War II, threatened with collapse by the defection of its Communist ally. The address to Parliament was expected Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether Prodi's 2 1/2-year-old, center-left alliance stands or falls. Prodi's far-left ally, the Communist Refoundation Party, provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget, which is key to Italy's participation in the European common currency. Prodi has said he would call a confidence vote if he lost the Communists' support. ``I've always acted with coherence,'' Prodi said before a morning meeting with President Oscar Luigi Scalfaro on the crisis. ``I've never changed strategy and I don't want to do political gymnastics.'' The break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday. He said the party's desertion of Prodi was ``wrong and dangerous,'' but at the same time promised to follow the party line. ``We are in a very complicated political crisis which could lead to early elections,'' Cossutta told reporters Monday. ``And with the divisions in the left, this would mean a victory for the right.'' If the crisis comes to a confidence vote and Prodi loses, he would offer his resignation. Once he does that, it is up to Scalfaro to decide what to do. He could ask Prodi or someone else to form a new government or he could call elections 2 1/2 years early, something most analysts think unlikely. Working in Prodi's favor is the fact that few parties think they would stand to gain by early elections, including the Communist Refoundation. There was speculation Prodi would reopen negotiations that would win back the communists' grudging support, as he has managed to do in the past. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for participation in the 1999 debut of Europe's common currency, the euro. That happened earlier this year _ leaving the disparate allies without so clear a reason to stay together. Prodi leads Italy's 55th government since World War II. He has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Refoundation is not part of Prodi's center-left coalition, but the government needs its 34 votes to muster a majority in the lower house. It has been a difficult ally from the outset. It broke with Prodi over NATO expansion earlier this year and on sending troops into Albania last year. Prodi was even forced to resign a year ago after a bitter battle over spending cuts linked to the euro. The crisis was resolved, and Prodi returned to work, after he made steep concessions and promised a 35-hour work week. ||||| Italy's Communists on Sunday voted to withdraw support for Premier Romano Prodi's 2 1-2-year-old coalition, a move expected to trigger the collapse of one of the country's longest-lived postwar governments. Prodi had said he would call a confidence vote if the Communists yanked support. The coalition has a majority without the Communists in the Senate, but has depended on them for passage of key legislation in the Chamber. MORE ||||| It is autumn in Italy, the birds are going south, and so it seems could the Italian government, as the bonds of compromise and political opportunism that bind a small leftist party to the government came undone Sunday. The latest threat to the government of Prime Minister Romano Prodi came after delegates to a two-day conference of the Communist Refounding Party voted to reject the government's proposed 1999 budget, imperiling the future of the center-left coalition. Officials in the prime minister's office said Sunday night that Prodi would meet on Monday with President Oskar Luigi Scalfaro to discuss the political turbulence, though not to offer his resignation. If the Communist Refounding's parliamentary deputies abide by the resolution, which passed by a vote of 188-112, it will destabilize Italy's government at a time when the outcome of the recent election in Germany has already injected a note of uncertainty into the future of European economic and fiscal policy. Mauro Zani, a spokesman for the Democratic Party of the Left, the main party in Prodi's coalition, called the decision by Communist Refounding a ``misfortune for the entire country.'' Passage of the budget, he said, is essential ``to avoid disaster.'' Prodi's coalition is a loose alliance of the former Communists, known as the Democratic Party of the Left, and Prodi's moderate Catholic-oriented followers. It is supported by Communist Refounding, a fringe group of hard-line leftists who broke with the mainstream Communists after they overhauled the party following the collapse of Communism in Eastern Europe. Despite frequent shocks, the alliance has held since 1996, glued together mainly by the desire to meet the fiscal requirements to allow Italy to adopt the single European currency. As the Jan. 1 date approaches for the introduction of the new money, the euro, Italy must cut its key lending rates to bring them in line with those of bigger European neighbors, like Germany. A rate cut by the Italian central bank is generally thought to hinge on passage of the budget bill. If the bill is not passed, negative signals would be sent to global financial markets that are already upset because of the financial crises in Asia, Russia and Latin America. On Sunday, Prodi's backers were still hoping that a sufficient number of Communist Refounding deputies would break ranks and back the budget when it comes up for a vote in Parliament later this week. If that fails, a centrist group that rescued Prodi in June under similar circumstances and that is led by former President Francesco Cossiga announced it would support the budget, thus at least assuring parliamentary passage. Communist Refounding and its mercurial leader, Fausto Bertinotti, have pushed Prodi to the brink twice before. The party forced him to offer his resignation last year over proposed budget cuts, but then backpeddled after the party's rank and file protested. In June, the hard-line leftists again refused to follow the prime minister, that time in a Parliament vote for NATO expansion, but the government muddled through with the help of Cossiga's party. But one of the leaders of that centrist group, Clemente Mastella, said Sunday that it would not support the government generally, leaving the future of Prodi's coalition highly uncertain. ||||| Three days after the collapse of Premier Romano Prodi's center-left government, Italy's president began calling in political leaders Monday to try to reach a consensus on a new government. Following the talks, which are expected to last several days, President Oscar Luigi Scalfaro could ask Prodi to try again with a new majority. He could also name a new premier, or appoint a government of technocrats. If Scalfaro feels no candidate is capable of mustering a majority, he could call early elections. Because the president cannot dissolve Parliament during the last six weeks of his term, elections would have to be scheduled by December. Scalfaro has named Prodi as caretaker premier for the interim. Prodi's far-left ally, Communist Refoundation, provoked the crisis when it withdrew support for the government over the 1999 deficit-cutting budget, which it said did not do enough to stimulate job creation. Despite help from a breakaway faction of the Communists, who on Sunday formed a new party, Prodi lost Friday's vote of confidence by a single vote. Prodi has said he won't take the job back unless his new government could stick to the policies of its old one, an unlikely scenario given the divided Parliament. An alternative to Prodi could be Massimo D'Alema, leader of the Democrats of the Left, the largest party in Prodi's coalition. In the case of a so-called ``technical'' government, the names of Treasury Minister Carlo Azeglio Ciampi and Foreign Minister Lamberto Dini have been circulated. A government of technicians would get Italy through the volatile period of approving the 1999 budget and the launch of the common European currency, the euro, in January 1999. Prodi presided over cost cuts that got Italy into the debut of the European Monetary Union, outlasting all but one other post-World War II Italian government in the process. ||||| Premier Romano Prodi battled Tuesday for any votes freed up from a split in a far-left party, but said he will resign if he loses a confidence vote expected later this week. ``We must respect the will of the voters. If we win the confidence vote, we will go ahead, otherwise we will pass the baton,'' Prodi told a news conference closing a two-day French-Italian summit in Florence. Prodi's center-left government, Italy's second-longest since World War II, was threatened with collapse by the defection of its Communist ally. The premier will address Parliament Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether the 2 1/2-year-old, center-left alliance stands or falls. The Communist Refoundation Party provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget. But the break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday, saying the party's hardline stance was ``wrong and dangerous.'' Prodi was hoping to profit from the break. Politicians have said Prodi is now four votes short of the 316 votes needed for a majority in the Chamber of Deputies, the lower house. The government has a majority in the Senate even without Refoundation's support. After his meetings with French leaders, Prodi warned that the political difficulties threaten the progress the country is making in cleaning up its public finances. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for the 1999 debut of Europe's common currency, the euro. It qualified earlier this year _ leaving the disparate allies without so clear a reason to stay together. As it is, Prodi has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Prodi's is Italy's 55th government since World War II. ||||| Italian politics have long been enlivened by baroque feuds and shifting alliances. And that time-honored tradition may have won the embattled government of Prime Minister Romano Prodi a momentary reprieve. A leader of Italy's hard-line Marxist faction, known as the Communist Refounding Party, resigned Monday in protest over his party's decision to reject the government's 1999 budget and imperil Prodi's slender majority in Parliament. ``Prodi must realize that his majority no longer exists,'' said Armando Cossuta, chairman of the Communist Refounding Party, a fringe group that broke with mainstream Communists after they overhauled the party following the collapse of the Soviet Union in 1991. ``Nevertheless we should do everything possible, until the last minute, to save this government and avoid this crisis.'' Cossuta was clearly unwilling to join the most hard-line wing of his party in withdrawing support from Prodi and risk being branded as having torpedoed the first leftist Italian government in 50 years. But the leader of the Communist Refounding Party in Parliament, Fausto Bertinotti, seems to have no such compunctions. On Friday, he told journalists that he was not worried about forcing new elections that could return the right to power. ``Sometimes you have to take one step back in order to take two steps forward,'' he said with a shrug. Until now, however, the communist rank and file have disagreed with that view. When Bertinotti forced Prodi to offer his resignation last year over proposed budget cuts, the rank and file protested, and he was forced to backpedal. Prodi met Monday with President Oscar Luigi Scalfaro and coalition leaders to devise a strategy. He is expected to go to Parliament on Wednesday to open debate on the crisis and seek enough votes for the budget. Without it, the Italian central bank is unlikely to cut its key lending rates, something Italy must do to get in line with Germany and other bigger European neighbors before the introduction Jan. 1 of the single European currency, the euro. But even if he gathers enough votes to pass the budget, Prodi could still be left without a majority. After two and a half years in office, his government is the second-longest in the postwar era. But the fragile center-left coalition has held together mostly because Italians were united for the last two years in an effort to reduce spending, inflation and government borrowing to meet the requirements for membership in the euro plan. Once that goal was achieved last spring, dissension quickly revived. Prodi's backers are hoping that enough members of the Communist Refounding Party will break ranks and follow Cossutta to save the coalition. If not, Prodi is faced with two unappetizing choices. He can resign and seek new elections, which carry the risk of bringing the opposition to power. Or he could seek to form a new majority without the Communists by seeking an alliance with the small center-right party of Francesco Cossiga. Cossiga's party came to Prodi's rescue in June, when the hard-line leftists refused to back Prodi on NATO expansion. But Prodi has repeatedly said he will govern only with the center-left majority that elected him in 1996. Cossiga also suggested to reporters Monday that he would not welcome any invitations to join a coalition led by Prodi. ``We wouldn't want this majority to get stained like Monica Lewinsky's dress,'' he said. ||||| By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv

Italy's Communist Refounding Party rejected Prime Minister Prodi's proposed 1999 budget. Loss of the party's support put his 2.5-year coalition at risk. The proposed budget was needed to meet terms for the Jan. 1 switch to the euro currency. Prodi met with President Scalfaro and Parliament, trying to save his government. The break with Prodi divided the Refounding party. Prodi lost a confidence vote and was toppled from power. He will stay as caretaker until a new government is formed. Scalfaro must decide whether to hold new elections or to ask Prodi or someone else to forge a new majority. He is talking with political leaders, trying to reach a consensus.

By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv ||||| By one vote, a defector from its own ranks, Premier Romano Prodi's center-left coalition, Italy's second-longest serving government since World War II, lost a confidence vote Friday in the Chamber of Deputies. Prodi immediately offered his resignation to President Oscar Luigi Scalfaro, who asked him to stay on as caretaker premier while the head of state decides whether to call early elections or ask someone else to be premier. The vote, 3rd graf prv ||||| By only one vote, the center-left prime minister of Italy, Romano Prodi, lost a confidence vote in Parliament Friday and was toppled from power. The collapse of his government after two and a half years, the second-longest tenure since World War II, suggested that the chronic political instability that marked Italy for decades had sprung back to life. Though obliged to tender his resignation, Prodi will remain in charge as a caretaker prime minister until a new government is formed. He may get a second chance to form a new majority, but even if he does, negotiations to that end could take days and even weeks, clouding decisions on such urgent issues as the crisis in Kosovo. NATO military planners preparing for possible air strikes against Yugoslavia had expected to use key air bases in Italy. In his weakened position, Prodi will have difficulty persuading Parliament to approve NATO strikes. He will have similar problems passing the 1999 budget, which is necessary before Italy can cut its lending rates, a requirement for joining the single European monetary unit, the euro, on Jan. 1. Immediately after Friday's vote of 313-312, in a tense and at times raucous session, Prodi met with President Oscar Luigi Scalfaro to submit his resignation and discuss his options. In the coming days Scalfaro will consult with dozens of other leaders to ascertain whether Prodi has enough lingering support to try to form a new government. If not, the president is expected to turn to another political leader. If no compromise is found, Italy could be plunged into early elections. But parties of all political stripes may be reluctant to push things that far, for opinion polls suggest that voters are no more enamored of the center-right opposition parties than they are of the governing majority. Prodi, an economist, is admired by his Western allies as a down-to-earth leader who vowed to tame Italy's bloated economy and reckless government borrowing and actually lived up to his pledge. By raising taxes, lowering interest rates and reducing the deficit, Italy met the requirements for membership in the euro last spring, a feat that only a year before was considered impossible by German and French economists. Prodi was helped by a healthy global economy and a rare consensus among industrialists, labor unions and taxpayers, who feared that exclusion from the euro would condemn Italy to Third World status. But his fiscal discipline was not followed by reform of a political system that is inherently fragile. There are more than 40 parties in Italy, and the government's efforts to amend the constitution to introduce a two-party system failed. ``Unless the Italian political system changes, Italy is condemned to political instability,'' said Sergio Romano, a former diplomat and political science professor. ``The country needs stability and credibility, and that will never happen as long as the government is hanging from a thread.'' In 1996 Prodi won with a patchwork quilt of center-left factions mostly made up of Catholic moderates and leftists. He relied on a fringe Marxist group, the Communist Refounding Party, for a majority in the lower house. And that alliance, fragile from the beginning, finally frayed to the breaking point this week. The hard-line leader of Communist Refounding, Fausto Bertinotti, said his party would vote against the 1999 budget and would also end its 28-month-old pact with the center-left coalition. That position drove the moderate wing of Communist Refounding, worried that a vote against Prodi would open the doors to a center-right government, to split away. But the 20-odd deputies who defied Bertinotti were not enough to squeeze Prodi through. ``I am not bitter,'' Prodi said moments after his defeat. ``Even today I received a lot of support.'' In the end the coup de grace was delivered by one of his own, a member of the coalition. ``They have won by the treachery of one single person,'' Sergio Mattarella, a deputy in Prodi's coalition, angrily told reporters, referring to Silvio Liotta, a member of the Italian Renewal Party. Foreign Minister Lamberto Dini, who heads that party, said Liotta would be expelled. Prodi has often said he would not govern with any other majority than the center-left one that elected him in 1996. But throughout his tenure, he was forced to seek temporary alliances to push through major policy decisions. He struggled to the last to try to keep his original majority intact. On Thursday, in an effort to woo more moderate Communists to his side, the prime minister, a staunch ally of the United States, warned that he would oppose a NATO strike aimed at stopping Serbian violence in Kosovo unless the U.N. Security Council approved the attack. Washington maintains that NATO does not need a new U.N. resolution to order a strike. ||||| Premier Romano Prodi said Monday he would appeal directly to Parliament to save Italy's second-longest government since World War II, threatened with collapse by the defection of its Communist ally. The address to Parliament was expected Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether Prodi's 2 1/2-year-old, center-left alliance stands or falls. Prodi's far-left ally, the Communist Refoundation Party, provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget, which is key to Italy's participation in the European common currency. Prodi has said he would call a confidence vote if he lost the Communists' support. ``I've always acted with coherence,'' Prodi said before a morning meeting with President Oscar Luigi Scalfaro on the crisis. ``I've never changed strategy and I don't want to do political gymnastics.'' The break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday. He said the party's desertion of Prodi was ``wrong and dangerous,'' but at the same time promised to follow the party line. ``We are in a very complicated political crisis which could lead to early elections,'' Cossutta told reporters Monday. ``And with the divisions in the left, this would mean a victory for the right.'' If the crisis comes to a confidence vote and Prodi loses, he would offer his resignation. Once he does that, it is up to Scalfaro to decide what to do. He could ask Prodi or someone else to form a new government or he could call elections 2 1/2 years early, something most analysts think unlikely. Working in Prodi's favor is the fact that few parties think they would stand to gain by early elections, including the Communist Refoundation. There was speculation Prodi would reopen negotiations that would win back the communists' grudging support, as he has managed to do in the past. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for participation in the 1999 debut of Europe's common currency, the euro. That happened earlier this year _ leaving the disparate allies without so clear a reason to stay together. Prodi leads Italy's 55th government since World War II. He has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Refoundation is not part of Prodi's center-left coalition, but the government needs its 34 votes to muster a majority in the lower house. It has been a difficult ally from the outset. It broke with Prodi over NATO expansion earlier this year and on sending troops into Albania last year. Prodi was even forced to resign a year ago after a bitter battle over spending cuts linked to the euro. The crisis was resolved, and Prodi returned to work, after he made steep concessions and promised a 35-hour work week. ||||| Italy's Communists on Sunday voted to withdraw support for Premier Romano Prodi's 2 1-2-year-old coalition, a move expected to trigger the collapse of one of the country's longest-lived postwar governments. Prodi had said he would call a confidence vote if the Communists yanked support. The coalition has a majority without the Communists in the Senate, but has depended on them for passage of key legislation in the Chamber. MORE ||||| It is autumn in Italy, the birds are going south, and so it seems could the Italian government, as the bonds of compromise and political opportunism that bind a small leftist party to the government came undone Sunday. The latest threat to the government of Prime Minister Romano Prodi came after delegates to a two-day conference of the Communist Refounding Party voted to reject the government's proposed 1999 budget, imperiling the future of the center-left coalition. Officials in the prime minister's office said Sunday night that Prodi would meet on Monday with President Oskar Luigi Scalfaro to discuss the political turbulence, though not to offer his resignation. If the Communist Refounding's parliamentary deputies abide by the resolution, which passed by a vote of 188-112, it will destabilize Italy's government at a time when the outcome of the recent election in Germany has already injected a note of uncertainty into the future of European economic and fiscal policy. Mauro Zani, a spokesman for the Democratic Party of the Left, the main party in Prodi's coalition, called the decision by Communist Refounding a ``misfortune for the entire country.'' Passage of the budget, he said, is essential ``to avoid disaster.'' Prodi's coalition is a loose alliance of the former Communists, known as the Democratic Party of the Left, and Prodi's moderate Catholic-oriented followers. It is supported by Communist Refounding, a fringe group of hard-line leftists who broke with the mainstream Communists after they overhauled the party following the collapse of Communism in Eastern Europe. Despite frequent shocks, the alliance has held since 1996, glued together mainly by the desire to meet the fiscal requirements to allow Italy to adopt the single European currency. As the Jan. 1 date approaches for the introduction of the new money, the euro, Italy must cut its key lending rates to bring them in line with those of bigger European neighbors, like Germany. A rate cut by the Italian central bank is generally thought to hinge on passage of the budget bill. If the bill is not passed, negative signals would be sent to global financial markets that are already upset because of the financial crises in Asia, Russia and Latin America. On Sunday, Prodi's backers were still hoping that a sufficient number of Communist Refounding deputies would break ranks and back the budget when it comes up for a vote in Parliament later this week. If that fails, a centrist group that rescued Prodi in June under similar circumstances and that is led by former President Francesco Cossiga announced it would support the budget, thus at least assuring parliamentary passage. Communist Refounding and its mercurial leader, Fausto Bertinotti, have pushed Prodi to the brink twice before. The party forced him to offer his resignation last year over proposed budget cuts, but then backpeddled after the party's rank and file protested. In June, the hard-line leftists again refused to follow the prime minister, that time in a Parliament vote for NATO expansion, but the government muddled through with the help of Cossiga's party. But one of the leaders of that centrist group, Clemente Mastella, said Sunday that it would not support the government generally, leaving the future of Prodi's coalition highly uncertain. ||||| Three days after the collapse of Premier Romano Prodi's center-left government, Italy's president began calling in political leaders Monday to try to reach a consensus on a new government. Following the talks, which are expected to last several days, President Oscar Luigi Scalfaro could ask Prodi to try again with a new majority. He could also name a new premier, or appoint a government of technocrats. If Scalfaro feels no candidate is capable of mustering a majority, he could call early elections. Because the president cannot dissolve Parliament during the last six weeks of his term, elections would have to be scheduled by December. Scalfaro has named Prodi as caretaker premier for the interim. Prodi's far-left ally, Communist Refoundation, provoked the crisis when it withdrew support for the government over the 1999 deficit-cutting budget, which it said did not do enough to stimulate job creation. Despite help from a breakaway faction of the Communists, who on Sunday formed a new party, Prodi lost Friday's vote of confidence by a single vote. Prodi has said he won't take the job back unless his new government could stick to the policies of its old one, an unlikely scenario given the divided Parliament. An alternative to Prodi could be Massimo D'Alema, leader of the Democrats of the Left, the largest party in Prodi's coalition. In the case of a so-called ``technical'' government, the names of Treasury Minister Carlo Azeglio Ciampi and Foreign Minister Lamberto Dini have been circulated. A government of technicians would get Italy through the volatile period of approving the 1999 budget and the launch of the common European currency, the euro, in January 1999. Prodi presided over cost cuts that got Italy into the debut of the European Monetary Union, outlasting all but one other post-World War II Italian government in the process. ||||| Premier Romano Prodi battled Tuesday for any votes freed up from a split in a far-left party, but said he will resign if he loses a confidence vote expected later this week. ``We must respect the will of the voters. If we win the confidence vote, we will go ahead, otherwise we will pass the baton,'' Prodi told a news conference closing a two-day French-Italian summit in Florence. Prodi's center-left government, Italy's second-longest since World War II, was threatened with collapse by the defection of its Communist ally. The premier will address Parliament Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether the 2 1/2-year-old, center-left alliance stands or falls. The Communist Refoundation Party provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget. But the break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday, saying the party's hardline stance was ``wrong and dangerous.'' Prodi was hoping to profit from the break. Politicians have said Prodi is now four votes short of the 316 votes needed for a majority in the Chamber of Deputies, the lower house. The government has a majority in the Senate even without Refoundation's support. After his meetings with French leaders, Prodi warned that the political difficulties threaten the progress the country is making in cleaning up its public finances. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for the 1999 debut of Europe's common currency, the euro. It qualified earlier this year _ leaving the disparate allies without so clear a reason to stay together. As it is, Prodi has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Prodi's is Italy's 55th government since World War II. ||||| Italian politics have long been enlivened by baroque feuds and shifting alliances. And that time-honored tradition may have won the embattled government of Prime Minister Romano Prodi a momentary reprieve. A leader of Italy's hard-line Marxist faction, known as the Communist Refounding Party, resigned Monday in protest over his party's decision to reject the government's 1999 budget and imperil Prodi's slender majority in Parliament. ``Prodi must realize that his majority no longer exists,'' said Armando Cossuta, chairman of the Communist Refounding Party, a fringe group that broke with mainstream Communists after they overhauled the party following the collapse of the Soviet Union in 1991. ``Nevertheless we should do everything possible, until the last minute, to save this government and avoid this crisis.'' Cossuta was clearly unwilling to join the most hard-line wing of his party in withdrawing support from Prodi and risk being branded as having torpedoed the first leftist Italian government in 50 years. But the leader of the Communist Refounding Party in Parliament, Fausto Bertinotti, seems to have no such compunctions. On Friday, he told journalists that he was not worried about forcing new elections that could return the right to power. ``Sometimes you have to take one step back in order to take two steps forward,'' he said with a shrug. Until now, however, the communist rank and file have disagreed with that view. When Bertinotti forced Prodi to offer his resignation last year over proposed budget cuts, the rank and file protested, and he was forced to backpedal. Prodi met Monday with President Oscar Luigi Scalfaro and coalition leaders to devise a strategy. He is expected to go to Parliament on Wednesday to open debate on the crisis and seek enough votes for the budget. Without it, the Italian central bank is unlikely to cut its key lending rates, something Italy must do to get in line with Germany and other bigger European neighbors before the introduction Jan. 1 of the single European currency, the euro. But even if he gathers enough votes to pass the budget, Prodi could still be left without a majority. After two and a half years in office, his government is the second-longest in the postwar era. But the fragile center-left coalition has held together mostly because Italians were united for the last two years in an effort to reduce spending, inflation and government borrowing to meet the requirements for membership in the euro plan. Once that goal was achieved last spring, dissension quickly revived. Prodi's backers are hoping that enough members of the Communist Refounding Party will break ranks and follow Cossutta to save the coalition. If not, Prodi is faced with two unappetizing choices. He can resign and seek new elections, which carry the risk of bringing the opposition to power. Or he could seek to form a new majority without the Communists by seeking an alliance with the small center-right party of Francesco Cossiga. Cossiga's party came to Prodi's rescue in June, when the hard-line leftists refused to back Prodi on NATO expansion. But Prodi has repeatedly said he will govern only with the center-left majority that elected him in 1996. Cossiga also suggested to reporters Monday that he would not welcome any invitations to join a coalition led by Prodi. ``We wouldn't want this majority to get stained like Monica Lewinsky's dress,'' he said. ||||| By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv

Communist Refounding Party vote against proposed deficit-cutting 1999 budget in Italy's Parliament could destabilize the government. The defection imperils the future of the center-left coalition led by Premier Prodi. His 2-1/2-year-old alliance was the longest serving of 55 governments in Italy since WWII. Prodi. who appealed to Parliament to save the government with a confidence vote, lost the vote and fell from power. The break with Prodi's party also divided Refounding. Prodi stays as caretaker premier while President Scalfaro decides either to hold new elections or to force Prodi or someone else to form a new coalition out of the 40 parties in Italy.

By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv ||||| By one vote, a defector from its own ranks, Premier Romano Prodi's center-left coalition, Italy's second-longest serving government since World War II, lost a confidence vote Friday in the Chamber of Deputies. Prodi immediately offered his resignation to President Oscar Luigi Scalfaro, who asked him to stay on as caretaker premier while the head of state decides whether to call early elections or ask someone else to be premier. The vote, 3rd graf prv ||||| By only one vote, the center-left prime minister of Italy, Romano Prodi, lost a confidence vote in Parliament Friday and was toppled from power. The collapse of his government after two and a half years, the second-longest tenure since World War II, suggested that the chronic political instability that marked Italy for decades had sprung back to life. Though obliged to tender his resignation, Prodi will remain in charge as a caretaker prime minister until a new government is formed. He may get a second chance to form a new majority, but even if he does, negotiations to that end could take days and even weeks, clouding decisions on such urgent issues as the crisis in Kosovo. NATO military planners preparing for possible air strikes against Yugoslavia had expected to use key air bases in Italy. In his weakened position, Prodi will have difficulty persuading Parliament to approve NATO strikes. He will have similar problems passing the 1999 budget, which is necessary before Italy can cut its lending rates, a requirement for joining the single European monetary unit, the euro, on Jan. 1. Immediately after Friday's vote of 313-312, in a tense and at times raucous session, Prodi met with President Oscar Luigi Scalfaro to submit his resignation and discuss his options. In the coming days Scalfaro will consult with dozens of other leaders to ascertain whether Prodi has enough lingering support to try to form a new government. If not, the president is expected to turn to another political leader. If no compromise is found, Italy could be plunged into early elections. But parties of all political stripes may be reluctant to push things that far, for opinion polls suggest that voters are no more enamored of the center-right opposition parties than they are of the governing majority. Prodi, an economist, is admired by his Western allies as a down-to-earth leader who vowed to tame Italy's bloated economy and reckless government borrowing and actually lived up to his pledge. By raising taxes, lowering interest rates and reducing the deficit, Italy met the requirements for membership in the euro last spring, a feat that only a year before was considered impossible by German and French economists. Prodi was helped by a healthy global economy and a rare consensus among industrialists, labor unions and taxpayers, who feared that exclusion from the euro would condemn Italy to Third World status. But his fiscal discipline was not followed by reform of a political system that is inherently fragile. There are more than 40 parties in Italy, and the government's efforts to amend the constitution to introduce a two-party system failed. ``Unless the Italian political system changes, Italy is condemned to political instability,'' said Sergio Romano, a former diplomat and political science professor. ``The country needs stability and credibility, and that will never happen as long as the government is hanging from a thread.'' In 1996 Prodi won with a patchwork quilt of center-left factions mostly made up of Catholic moderates and leftists. He relied on a fringe Marxist group, the Communist Refounding Party, for a majority in the lower house. And that alliance, fragile from the beginning, finally frayed to the breaking point this week. The hard-line leader of Communist Refounding, Fausto Bertinotti, said his party would vote against the 1999 budget and would also end its 28-month-old pact with the center-left coalition. That position drove the moderate wing of Communist Refounding, worried that a vote against Prodi would open the doors to a center-right government, to split away. But the 20-odd deputies who defied Bertinotti were not enough to squeeze Prodi through. ``I am not bitter,'' Prodi said moments after his defeat. ``Even today I received a lot of support.'' In the end the coup de grace was delivered by one of his own, a member of the coalition. ``They have won by the treachery of one single person,'' Sergio Mattarella, a deputy in Prodi's coalition, angrily told reporters, referring to Silvio Liotta, a member of the Italian Renewal Party. Foreign Minister Lamberto Dini, who heads that party, said Liotta would be expelled. Prodi has often said he would not govern with any other majority than the center-left one that elected him in 1996. But throughout his tenure, he was forced to seek temporary alliances to push through major policy decisions. He struggled to the last to try to keep his original majority intact. On Thursday, in an effort to woo more moderate Communists to his side, the prime minister, a staunch ally of the United States, warned that he would oppose a NATO strike aimed at stopping Serbian violence in Kosovo unless the U.N. Security Council approved the attack. Washington maintains that NATO does not need a new U.N. resolution to order a strike. ||||| Premier Romano Prodi said Monday he would appeal directly to Parliament to save Italy's second-longest government since World War II, threatened with collapse by the defection of its Communist ally. The address to Parliament was expected Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether Prodi's 2 1/2-year-old, center-left alliance stands or falls. Prodi's far-left ally, the Communist Refoundation Party, provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget, which is key to Italy's participation in the European common currency. Prodi has said he would call a confidence vote if he lost the Communists' support. ``I've always acted with coherence,'' Prodi said before a morning meeting with President Oscar Luigi Scalfaro on the crisis. ``I've never changed strategy and I don't want to do political gymnastics.'' The break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday. He said the party's desertion of Prodi was ``wrong and dangerous,'' but at the same time promised to follow the party line. ``We are in a very complicated political crisis which could lead to early elections,'' Cossutta told reporters Monday. ``And with the divisions in the left, this would mean a victory for the right.'' If the crisis comes to a confidence vote and Prodi loses, he would offer his resignation. Once he does that, it is up to Scalfaro to decide what to do. He could ask Prodi or someone else to form a new government or he could call elections 2 1/2 years early, something most analysts think unlikely. Working in Prodi's favor is the fact that few parties think they would stand to gain by early elections, including the Communist Refoundation. There was speculation Prodi would reopen negotiations that would win back the communists' grudging support, as he has managed to do in the past. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for participation in the 1999 debut of Europe's common currency, the euro. That happened earlier this year _ leaving the disparate allies without so clear a reason to stay together. Prodi leads Italy's 55th government since World War II. He has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Refoundation is not part of Prodi's center-left coalition, but the government needs its 34 votes to muster a majority in the lower house. It has been a difficult ally from the outset. It broke with Prodi over NATO expansion earlier this year and on sending troops into Albania last year. Prodi was even forced to resign a year ago after a bitter battle over spending cuts linked to the euro. The crisis was resolved, and Prodi returned to work, after he made steep concessions and promised a 35-hour work week. ||||| Italy's Communists on Sunday voted to withdraw support for Premier Romano Prodi's 2 1-2-year-old coalition, a move expected to trigger the collapse of one of the country's longest-lived postwar governments. Prodi had said he would call a confidence vote if the Communists yanked support. The coalition has a majority without the Communists in the Senate, but has depended on them for passage of key legislation in the Chamber. MORE ||||| It is autumn in Italy, the birds are going south, and so it seems could the Italian government, as the bonds of compromise and political opportunism that bind a small leftist party to the government came undone Sunday. The latest threat to the government of Prime Minister Romano Prodi came after delegates to a two-day conference of the Communist Refounding Party voted to reject the government's proposed 1999 budget, imperiling the future of the center-left coalition. Officials in the prime minister's office said Sunday night that Prodi would meet on Monday with President Oskar Luigi Scalfaro to discuss the political turbulence, though not to offer his resignation. If the Communist Refounding's parliamentary deputies abide by the resolution, which passed by a vote of 188-112, it will destabilize Italy's government at a time when the outcome of the recent election in Germany has already injected a note of uncertainty into the future of European economic and fiscal policy. Mauro Zani, a spokesman for the Democratic Party of the Left, the main party in Prodi's coalition, called the decision by Communist Refounding a ``misfortune for the entire country.'' Passage of the budget, he said, is essential ``to avoid disaster.'' Prodi's coalition is a loose alliance of the former Communists, known as the Democratic Party of the Left, and Prodi's moderate Catholic-oriented followers. It is supported by Communist Refounding, a fringe group of hard-line leftists who broke with the mainstream Communists after they overhauled the party following the collapse of Communism in Eastern Europe. Despite frequent shocks, the alliance has held since 1996, glued together mainly by the desire to meet the fiscal requirements to allow Italy to adopt the single European currency. As the Jan. 1 date approaches for the introduction of the new money, the euro, Italy must cut its key lending rates to bring them in line with those of bigger European neighbors, like Germany. A rate cut by the Italian central bank is generally thought to hinge on passage of the budget bill. If the bill is not passed, negative signals would be sent to global financial markets that are already upset because of the financial crises in Asia, Russia and Latin America. On Sunday, Prodi's backers were still hoping that a sufficient number of Communist Refounding deputies would break ranks and back the budget when it comes up for a vote in Parliament later this week. If that fails, a centrist group that rescued Prodi in June under similar circumstances and that is led by former President Francesco Cossiga announced it would support the budget, thus at least assuring parliamentary passage. Communist Refounding and its mercurial leader, Fausto Bertinotti, have pushed Prodi to the brink twice before. The party forced him to offer his resignation last year over proposed budget cuts, but then backpeddled after the party's rank and file protested. In June, the hard-line leftists again refused to follow the prime minister, that time in a Parliament vote for NATO expansion, but the government muddled through with the help of Cossiga's party. But one of the leaders of that centrist group, Clemente Mastella, said Sunday that it would not support the government generally, leaving the future of Prodi's coalition highly uncertain. ||||| Three days after the collapse of Premier Romano Prodi's center-left government, Italy's president began calling in political leaders Monday to try to reach a consensus on a new government. Following the talks, which are expected to last several days, President Oscar Luigi Scalfaro could ask Prodi to try again with a new majority. He could also name a new premier, or appoint a government of technocrats. If Scalfaro feels no candidate is capable of mustering a majority, he could call early elections. Because the president cannot dissolve Parliament during the last six weeks of his term, elections would have to be scheduled by December. Scalfaro has named Prodi as caretaker premier for the interim. Prodi's far-left ally, Communist Refoundation, provoked the crisis when it withdrew support for the government over the 1999 deficit-cutting budget, which it said did not do enough to stimulate job creation. Despite help from a breakaway faction of the Communists, who on Sunday formed a new party, Prodi lost Friday's vote of confidence by a single vote. Prodi has said he won't take the job back unless his new government could stick to the policies of its old one, an unlikely scenario given the divided Parliament. An alternative to Prodi could be Massimo D'Alema, leader of the Democrats of the Left, the largest party in Prodi's coalition. In the case of a so-called ``technical'' government, the names of Treasury Minister Carlo Azeglio Ciampi and Foreign Minister Lamberto Dini have been circulated. A government of technicians would get Italy through the volatile period of approving the 1999 budget and the launch of the common European currency, the euro, in January 1999. Prodi presided over cost cuts that got Italy into the debut of the European Monetary Union, outlasting all but one other post-World War II Italian government in the process. ||||| Premier Romano Prodi battled Tuesday for any votes freed up from a split in a far-left party, but said he will resign if he loses a confidence vote expected later this week. ``We must respect the will of the voters. If we win the confidence vote, we will go ahead, otherwise we will pass the baton,'' Prodi told a news conference closing a two-day French-Italian summit in Florence. Prodi's center-left government, Italy's second-longest since World War II, was threatened with collapse by the defection of its Communist ally. The premier will address Parliament Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether the 2 1/2-year-old, center-left alliance stands or falls. The Communist Refoundation Party provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget. But the break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday, saying the party's hardline stance was ``wrong and dangerous.'' Prodi was hoping to profit from the break. Politicians have said Prodi is now four votes short of the 316 votes needed for a majority in the Chamber of Deputies, the lower house. The government has a majority in the Senate even without Refoundation's support. After his meetings with French leaders, Prodi warned that the political difficulties threaten the progress the country is making in cleaning up its public finances. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for the 1999 debut of Europe's common currency, the euro. It qualified earlier this year _ leaving the disparate allies without so clear a reason to stay together. As it is, Prodi has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Prodi's is Italy's 55th government since World War II. ||||| Italian politics have long been enlivened by baroque feuds and shifting alliances. And that time-honored tradition may have won the embattled government of Prime Minister Romano Prodi a momentary reprieve. A leader of Italy's hard-line Marxist faction, known as the Communist Refounding Party, resigned Monday in protest over his party's decision to reject the government's 1999 budget and imperil Prodi's slender majority in Parliament. ``Prodi must realize that his majority no longer exists,'' said Armando Cossuta, chairman of the Communist Refounding Party, a fringe group that broke with mainstream Communists after they overhauled the party following the collapse of the Soviet Union in 1991. ``Nevertheless we should do everything possible, until the last minute, to save this government and avoid this crisis.'' Cossuta was clearly unwilling to join the most hard-line wing of his party in withdrawing support from Prodi and risk being branded as having torpedoed the first leftist Italian government in 50 years. But the leader of the Communist Refounding Party in Parliament, Fausto Bertinotti, seems to have no such compunctions. On Friday, he told journalists that he was not worried about forcing new elections that could return the right to power. ``Sometimes you have to take one step back in order to take two steps forward,'' he said with a shrug. Until now, however, the communist rank and file have disagreed with that view. When Bertinotti forced Prodi to offer his resignation last year over proposed budget cuts, the rank and file protested, and he was forced to backpedal. Prodi met Monday with President Oscar Luigi Scalfaro and coalition leaders to devise a strategy. He is expected to go to Parliament on Wednesday to open debate on the crisis and seek enough votes for the budget. Without it, the Italian central bank is unlikely to cut its key lending rates, something Italy must do to get in line with Germany and other bigger European neighbors before the introduction Jan. 1 of the single European currency, the euro. But even if he gathers enough votes to pass the budget, Prodi could still be left without a majority. After two and a half years in office, his government is the second-longest in the postwar era. But the fragile center-left coalition has held together mostly because Italians were united for the last two years in an effort to reduce spending, inflation and government borrowing to meet the requirements for membership in the euro plan. Once that goal was achieved last spring, dissension quickly revived. Prodi's backers are hoping that enough members of the Communist Refounding Party will break ranks and follow Cossutta to save the coalition. If not, Prodi is faced with two unappetizing choices. He can resign and seek new elections, which carry the risk of bringing the opposition to power. Or he could seek to form a new majority without the Communists by seeking an alliance with the small center-right party of Francesco Cossiga. Cossiga's party came to Prodi's rescue in June, when the hard-line leftists refused to back Prodi on NATO expansion. But Prodi has repeatedly said he will govern only with the center-left majority that elected him in 1996. Cossiga also suggested to reporters Monday that he would not welcome any invitations to join a coalition led by Prodi. ``We wouldn't want this majority to get stained like Monica Lewinsky's dress,'' he said. ||||| By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv

Italy's Communist Refoundation Party rejected PM Prodi's deficit-cutting budget for insufficient job stimulation. Italy needed to reduce its deficit to participate in the euro, a unifying desire that largely held together Prodi's 2.5-year gov't, the 55th since WWII. The rejection divided communists, whose 34 votes Prodi's coalition needed for a majority. A confidence vote lost by 1 vote, from a member of Prodi's own party. Italy's political instability clouded decisions on NATO's use of Italian air bases in strikes on Kosovo. Prodi resigned but Italy's president asked him to stay as caretaker until either early elections were called or he named a new PM.

By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv ||||| By one vote, a defector from its own ranks, Premier Romano Prodi's center-left coalition, Italy's second-longest serving government since World War II, lost a confidence vote Friday in the Chamber of Deputies. Prodi immediately offered his resignation to President Oscar Luigi Scalfaro, who asked him to stay on as caretaker premier while the head of state decides whether to call early elections or ask someone else to be premier. The vote, 3rd graf prv ||||| By only one vote, the center-left prime minister of Italy, Romano Prodi, lost a confidence vote in Parliament Friday and was toppled from power. The collapse of his government after two and a half years, the second-longest tenure since World War II, suggested that the chronic political instability that marked Italy for decades had sprung back to life. Though obliged to tender his resignation, Prodi will remain in charge as a caretaker prime minister until a new government is formed. He may get a second chance to form a new majority, but even if he does, negotiations to that end could take days and even weeks, clouding decisions on such urgent issues as the crisis in Kosovo. NATO military planners preparing for possible air strikes against Yugoslavia had expected to use key air bases in Italy. In his weakened position, Prodi will have difficulty persuading Parliament to approve NATO strikes. He will have similar problems passing the 1999 budget, which is necessary before Italy can cut its lending rates, a requirement for joining the single European monetary unit, the euro, on Jan. 1. Immediately after Friday's vote of 313-312, in a tense and at times raucous session, Prodi met with President Oscar Luigi Scalfaro to submit his resignation and discuss his options. In the coming days Scalfaro will consult with dozens of other leaders to ascertain whether Prodi has enough lingering support to try to form a new government. If not, the president is expected to turn to another political leader. If no compromise is found, Italy could be plunged into early elections. But parties of all political stripes may be reluctant to push things that far, for opinion polls suggest that voters are no more enamored of the center-right opposition parties than they are of the governing majority. Prodi, an economist, is admired by his Western allies as a down-to-earth leader who vowed to tame Italy's bloated economy and reckless government borrowing and actually lived up to his pledge. By raising taxes, lowering interest rates and reducing the deficit, Italy met the requirements for membership in the euro last spring, a feat that only a year before was considered impossible by German and French economists. Prodi was helped by a healthy global economy and a rare consensus among industrialists, labor unions and taxpayers, who feared that exclusion from the euro would condemn Italy to Third World status. But his fiscal discipline was not followed by reform of a political system that is inherently fragile. There are more than 40 parties in Italy, and the government's efforts to amend the constitution to introduce a two-party system failed. ``Unless the Italian political system changes, Italy is condemned to political instability,'' said Sergio Romano, a former diplomat and political science professor. ``The country needs stability and credibility, and that will never happen as long as the government is hanging from a thread.'' In 1996 Prodi won with a patchwork quilt of center-left factions mostly made up of Catholic moderates and leftists. He relied on a fringe Marxist group, the Communist Refounding Party, for a majority in the lower house. And that alliance, fragile from the beginning, finally frayed to the breaking point this week. The hard-line leader of Communist Refounding, Fausto Bertinotti, said his party would vote against the 1999 budget and would also end its 28-month-old pact with the center-left coalition. That position drove the moderate wing of Communist Refounding, worried that a vote against Prodi would open the doors to a center-right government, to split away. But the 20-odd deputies who defied Bertinotti were not enough to squeeze Prodi through. ``I am not bitter,'' Prodi said moments after his defeat. ``Even today I received a lot of support.'' In the end the coup de grace was delivered by one of his own, a member of the coalition. ``They have won by the treachery of one single person,'' Sergio Mattarella, a deputy in Prodi's coalition, angrily told reporters, referring to Silvio Liotta, a member of the Italian Renewal Party. Foreign Minister Lamberto Dini, who heads that party, said Liotta would be expelled. Prodi has often said he would not govern with any other majority than the center-left one that elected him in 1996. But throughout his tenure, he was forced to seek temporary alliances to push through major policy decisions. He struggled to the last to try to keep his original majority intact. On Thursday, in an effort to woo more moderate Communists to his side, the prime minister, a staunch ally of the United States, warned that he would oppose a NATO strike aimed at stopping Serbian violence in Kosovo unless the U.N. Security Council approved the attack. Washington maintains that NATO does not need a new U.N. resolution to order a strike. ||||| Premier Romano Prodi said Monday he would appeal directly to Parliament to save Italy's second-longest government since World War II, threatened with collapse by the defection of its Communist ally. The address to Parliament was expected Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether Prodi's 2 1/2-year-old, center-left alliance stands or falls. Prodi's far-left ally, the Communist Refoundation Party, provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget, which is key to Italy's participation in the European common currency. Prodi has said he would call a confidence vote if he lost the Communists' support. ``I've always acted with coherence,'' Prodi said before a morning meeting with President Oscar Luigi Scalfaro on the crisis. ``I've never changed strategy and I don't want to do political gymnastics.'' The break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday. He said the party's desertion of Prodi was ``wrong and dangerous,'' but at the same time promised to follow the party line. ``We are in a very complicated political crisis which could lead to early elections,'' Cossutta told reporters Monday. ``And with the divisions in the left, this would mean a victory for the right.'' If the crisis comes to a confidence vote and Prodi loses, he would offer his resignation. Once he does that, it is up to Scalfaro to decide what to do. He could ask Prodi or someone else to form a new government or he could call elections 2 1/2 years early, something most analysts think unlikely. Working in Prodi's favor is the fact that few parties think they would stand to gain by early elections, including the Communist Refoundation. There was speculation Prodi would reopen negotiations that would win back the communists' grudging support, as he has managed to do in the past. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for participation in the 1999 debut of Europe's common currency, the euro. That happened earlier this year _ leaving the disparate allies without so clear a reason to stay together. Prodi leads Italy's 55th government since World War II. He has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Refoundation is not part of Prodi's center-left coalition, but the government needs its 34 votes to muster a majority in the lower house. It has been a difficult ally from the outset. It broke with Prodi over NATO expansion earlier this year and on sending troops into Albania last year. Prodi was even forced to resign a year ago after a bitter battle over spending cuts linked to the euro. The crisis was resolved, and Prodi returned to work, after he made steep concessions and promised a 35-hour work week. ||||| Italy's Communists on Sunday voted to withdraw support for Premier Romano Prodi's 2 1-2-year-old coalition, a move expected to trigger the collapse of one of the country's longest-lived postwar governments. Prodi had said he would call a confidence vote if the Communists yanked support. The coalition has a majority without the Communists in the Senate, but has depended on them for passage of key legislation in the Chamber. MORE ||||| It is autumn in Italy, the birds are going south, and so it seems could the Italian government, as the bonds of compromise and political opportunism that bind a small leftist party to the government came undone Sunday. The latest threat to the government of Prime Minister Romano Prodi came after delegates to a two-day conference of the Communist Refounding Party voted to reject the government's proposed 1999 budget, imperiling the future of the center-left coalition. Officials in the prime minister's office said Sunday night that Prodi would meet on Monday with President Oskar Luigi Scalfaro to discuss the political turbulence, though not to offer his resignation. If the Communist Refounding's parliamentary deputies abide by the resolution, which passed by a vote of 188-112, it will destabilize Italy's government at a time when the outcome of the recent election in Germany has already injected a note of uncertainty into the future of European economic and fiscal policy. Mauro Zani, a spokesman for the Democratic Party of the Left, the main party in Prodi's coalition, called the decision by Communist Refounding a ``misfortune for the entire country.'' Passage of the budget, he said, is essential ``to avoid disaster.'' Prodi's coalition is a loose alliance of the former Communists, known as the Democratic Party of the Left, and Prodi's moderate Catholic-oriented followers. It is supported by Communist Refounding, a fringe group of hard-line leftists who broke with the mainstream Communists after they overhauled the party following the collapse of Communism in Eastern Europe. Despite frequent shocks, the alliance has held since 1996, glued together mainly by the desire to meet the fiscal requirements to allow Italy to adopt the single European currency. As the Jan. 1 date approaches for the introduction of the new money, the euro, Italy must cut its key lending rates to bring them in line with those of bigger European neighbors, like Germany. A rate cut by the Italian central bank is generally thought to hinge on passage of the budget bill. If the bill is not passed, negative signals would be sent to global financial markets that are already upset because of the financial crises in Asia, Russia and Latin America. On Sunday, Prodi's backers were still hoping that a sufficient number of Communist Refounding deputies would break ranks and back the budget when it comes up for a vote in Parliament later this week. If that fails, a centrist group that rescued Prodi in June under similar circumstances and that is led by former President Francesco Cossiga announced it would support the budget, thus at least assuring parliamentary passage. Communist Refounding and its mercurial leader, Fausto Bertinotti, have pushed Prodi to the brink twice before. The party forced him to offer his resignation last year over proposed budget cuts, but then backpeddled after the party's rank and file protested. In June, the hard-line leftists again refused to follow the prime minister, that time in a Parliament vote for NATO expansion, but the government muddled through with the help of Cossiga's party. But one of the leaders of that centrist group, Clemente Mastella, said Sunday that it would not support the government generally, leaving the future of Prodi's coalition highly uncertain. ||||| Three days after the collapse of Premier Romano Prodi's center-left government, Italy's president began calling in political leaders Monday to try to reach a consensus on a new government. Following the talks, which are expected to last several days, President Oscar Luigi Scalfaro could ask Prodi to try again with a new majority. He could also name a new premier, or appoint a government of technocrats. If Scalfaro feels no candidate is capable of mustering a majority, he could call early elections. Because the president cannot dissolve Parliament during the last six weeks of his term, elections would have to be scheduled by December. Scalfaro has named Prodi as caretaker premier for the interim. Prodi's far-left ally, Communist Refoundation, provoked the crisis when it withdrew support for the government over the 1999 deficit-cutting budget, which it said did not do enough to stimulate job creation. Despite help from a breakaway faction of the Communists, who on Sunday formed a new party, Prodi lost Friday's vote of confidence by a single vote. Prodi has said he won't take the job back unless his new government could stick to the policies of its old one, an unlikely scenario given the divided Parliament. An alternative to Prodi could be Massimo D'Alema, leader of the Democrats of the Left, the largest party in Prodi's coalition. In the case of a so-called ``technical'' government, the names of Treasury Minister Carlo Azeglio Ciampi and Foreign Minister Lamberto Dini have been circulated. A government of technicians would get Italy through the volatile period of approving the 1999 budget and the launch of the common European currency, the euro, in January 1999. Prodi presided over cost cuts that got Italy into the debut of the European Monetary Union, outlasting all but one other post-World War II Italian government in the process. ||||| Premier Romano Prodi battled Tuesday for any votes freed up from a split in a far-left party, but said he will resign if he loses a confidence vote expected later this week. ``We must respect the will of the voters. If we win the confidence vote, we will go ahead, otherwise we will pass the baton,'' Prodi told a news conference closing a two-day French-Italian summit in Florence. Prodi's center-left government, Italy's second-longest since World War II, was threatened with collapse by the defection of its Communist ally. The premier will address Parliament Wednesday, followed perhaps by Friday by the vote of confidence that will determine whether the 2 1/2-year-old, center-left alliance stands or falls. The Communist Refoundation Party provoked the crisis by withdrawing its support over the weekend and saying it would not vote for his deficit-cutting 1999 budget. But the break with Prodi's government divided Refoundation. Armando Cossutta, leader of the moderate wing, resigned as party president Monday, saying the party's hardline stance was ``wrong and dangerous.'' Prodi was hoping to profit from the break. Politicians have said Prodi is now four votes short of the 316 votes needed for a majority in the Chamber of Deputies, the lower house. The government has a majority in the Senate even without Refoundation's support. After his meetings with French leaders, Prodi warned that the political difficulties threaten the progress the country is making in cleaning up its public finances. Prodi's government has held together this long in large part because of the widely shared desire to see Italy qualify for the 1999 debut of Europe's common currency, the euro. It qualified earlier this year _ leaving the disparate allies without so clear a reason to stay together. As it is, Prodi has outlasted all but Bettino Craxi, who served 3{ years in two back-to-back stints from 1983 to 1987. Prodi's is Italy's 55th government since World War II. ||||| Italian politics have long been enlivened by baroque feuds and shifting alliances. And that time-honored tradition may have won the embattled government of Prime Minister Romano Prodi a momentary reprieve. A leader of Italy's hard-line Marxist faction, known as the Communist Refounding Party, resigned Monday in protest over his party's decision to reject the government's 1999 budget and imperil Prodi's slender majority in Parliament. ``Prodi must realize that his majority no longer exists,'' said Armando Cossuta, chairman of the Communist Refounding Party, a fringe group that broke with mainstream Communists after they overhauled the party following the collapse of the Soviet Union in 1991. ``Nevertheless we should do everything possible, until the last minute, to save this government and avoid this crisis.'' Cossuta was clearly unwilling to join the most hard-line wing of his party in withdrawing support from Prodi and risk being branded as having torpedoed the first leftist Italian government in 50 years. But the leader of the Communist Refounding Party in Parliament, Fausto Bertinotti, seems to have no such compunctions. On Friday, he told journalists that he was not worried about forcing new elections that could return the right to power. ``Sometimes you have to take one step back in order to take two steps forward,'' he said with a shrug. Until now, however, the communist rank and file have disagreed with that view. When Bertinotti forced Prodi to offer his resignation last year over proposed budget cuts, the rank and file protested, and he was forced to backpedal. Prodi met Monday with President Oscar Luigi Scalfaro and coalition leaders to devise a strategy. He is expected to go to Parliament on Wednesday to open debate on the crisis and seek enough votes for the budget. Without it, the Italian central bank is unlikely to cut its key lending rates, something Italy must do to get in line with Germany and other bigger European neighbors before the introduction Jan. 1 of the single European currency, the euro. But even if he gathers enough votes to pass the budget, Prodi could still be left without a majority. After two and a half years in office, his government is the second-longest in the postwar era. But the fragile center-left coalition has held together mostly because Italians were united for the last two years in an effort to reduce spending, inflation and government borrowing to meet the requirements for membership in the euro plan. Once that goal was achieved last spring, dissension quickly revived. Prodi's backers are hoping that enough members of the Communist Refounding Party will break ranks and follow Cossutta to save the coalition. If not, Prodi is faced with two unappetizing choices. He can resign and seek new elections, which carry the risk of bringing the opposition to power. Or he could seek to form a new majority without the Communists by seeking an alliance with the small center-right party of Francesco Cossiga. Cossiga's party came to Prodi's rescue in June, when the hard-line leftists refused to back Prodi on NATO expansion. But Prodi has repeatedly said he will govern only with the center-left majority that elected him in 1996. Cossiga also suggested to reporters Monday that he would not welcome any invitations to join a coalition led by Prodi. ``We wouldn't want this majority to get stained like Monica Lewinsky's dress,'' he said. ||||| By one vote, Premier Romano Prodi's center-left coalition lost a confidence vote in the Chamber of Deputies Friday, and he went to the presidential palace to resign. President Oscar Luigi Scalfaro must now decide whether to call early elections or to ask Prodi or someone else to try to forge a new majority. The vote in the lower chamber of Parliament 313 against the confidence motion brought by the government to 312 in favor. ``I'm not bitter,'' Prodi said immediately after his government went down. The swing vote came from Prodi's own coalition, a defecting deputy from Foreign Minister Lamberto Dini's tiny Italian Renewal party. The Communist, 6th graf prv

Despite support from a breakaway faction of the far-left Communist Refounding Party, Italy's Prime Minister Romano Prodi lost a vote of confidence in Parliament, 313 - 312. The crisis was triggered when the Refounding Party rejected the government's 1999 budget. A respected economist with a fragile center-left coalition, Prodi was in office for 30 months, instituting fiscal reforms that qualified Italy for membership in the euro plan. Prodi was asked to remain as caretaker prime minister; however, as such, he will have difficulty passing the budget (necessary before joining the euro on 1 Jan.) or getting approval for actions related to the Kosovo crisis.

News that Exxon and Mobil, two giants in the energy patch, were in merger talks last week is the biggest sign yet that corporate marriages are back in vogue. Even before that combination came to light, deal-making was fast and furious. On Monday alone, $40.4 billion in corporate acquisitions were either announced or declared imminent. Driving the resurgence in mergers is a roaring stock market, the recognition by major corporations that it is getting harder to increase revenues internally and growing confidence among market players that the economy will not plunge into a recession next year. There are also industry-specific issues, like low crude-oil prices that are driving oil giants into one another's arms. But for investors, mega-marriages are not where the real money is to be made. Rather, it is among smaller companies, whose still-depressed stock prices are luring bigger acquirers with stocks that again are near their peaks. If Exxon buys Mobil at close to current prices, deals this month will have a total value of more than $140 billion _ off from April's peak of $244 billion but three times the volume in September, when the stock market was falling. Which industries are likely to witness the most mergers? Tom Burnett, director of Merger Insight, an institutional investment advisory firm in New York, says more deals are a certainty in energy, which is suffering from low crude-oil prices. Burnett also says health care executives are finding it tougher than ever to lift earnings. But smaller companies may be a better way to play the takeover game. Charles LaLoggia, editor of the Special Situation Investor newsletter in Potomac, Md., said: ``Some of the premiums in high-profile mergers aren't so great anymore. The values are in small-cap stocks.'' Another reason is that deals involving smaller-cap candidates are less likely to incur the wrath of antitrust regulators. LaLoggia reckons that the odds of picking takeover winners increase if an investor focuses on companies already partially owned by another. In the energy sector, Houston Exploration qualifies, he says; the oil and gas driller is 66 percent owned by Keyspan Energy. He also believes more deals are imminent among drug chains and supermarkets. Longs Drug Stores and Drug Emporium, he says, remain acquisition candidates, though neither is controlled by another concern. In supermarkets, LaLoggia likes the Great Atlantic & Pacific Tea Co., 55 percent owned by Tengelmann Group of Germany. Another pick is Smart and Final, an operator of warehouse-style stores that is 55 percent owned by the U.S. subsidiary of Groupe Casino, France's largest supermarket chain. ``Both A&P and Smart and Final are trading at just about book value,'' LaLoggia said. Takeovers typically occur above book value. Finally, he recommends National Presto Industries, a maker of housewares and electrical appliances, which is trading near $39, close to its low for the year. The company has $30 a share in cash on its balance sheet, no debt and a dividend yield of 5 percent. After last month's announced acquisition of Rubbermaid by the Newell Co., LaLoggia thinks National Presto could find itself in an acquirer's cross-hairs. ||||| It was new highs again for the Standard & Poor's 500-stock and Nasdaq composite indexes Friday as anticipation of a new wave of mergers and a general rush by investors to join the equity rebound pushed stocks up. Oil stocks led the way as investors soaked up the news of continuing talks between Exxon and Mobil on a merger that would create the world's largest oil company. Internet and computer stocks also rallied, helped in part by the announcement on Tuesday of America Online's purchase of Netscape Communications in a three-way deal involving Sun Microsystems. At the same time, Germany's Deutsche Bank and Bankers Trust are scheduled to formally announce their merger on Monday. ``There is no question that the merger euphoria is the headline,'' said Hugh Johnson, chief investment officer at the First Albany Corp. ``But the flow into mutual funds is also strong.'' Exxon rose 1 11/16, to 74], while Mobil jumped 7|, to 86. Chevron, reflecting the bounce that other oil companies got from the merger news, climbed 5\, to 85|. Exxon and Chevron, along with IBM, which rose 3\, to 170, were the main drivers of the Dow Jones industrial average. It climbed 18.80 points, or two-tenths of a percent, to 9,333.08. It now stands just 41 points short of the record it set Monday and up 1.9 percent for the week. Mobil, along with Exxon, Chevron, IBM and Microsoft, which rose 3 13/16, to 128 1/16, were the power behind the S & P. It climbed 5.46 points, or five-tenths of a percent, to 1,192.33, a new high, the second of the week. It jumped 2.5 percent in the last five trading days. Cisco Systems, up 2 15/16, to 80; MCI Worldcom, up 1 11/16, to 62 7/16; Sun Microsystems, up 4|, to 80], and Microsoft pushed the Nasdaq index to its first new high since July 20. The technology-heavy index finished 31.23 points, or 1.57 percent, higher, at 2,016.44. It was up 4.6 percent for the week. Whether Friday's gains will stick will not be known before Monday. It was a shortened trading session, with the New York Stock Exchange closing at 1 p.m., and trading volume, at 257 million shares, made it the lightest day of the year. In the bond market, which also closed early because of the Thanksgiving weekend, the price of the 30-year Treasury bond rose 11/32, to 101 12/32. The bond's yield, which moves in the opposite direction from the price, fell to 5.16 percent from 5.18 percent on Wednesday. Long-term and short-term yields all slipped lower this week despite new economic data that indicated the economy was stronger in the third quarter than expected and seems to be moving along at a good pace in the current quarter. This small recovery in the face of stronger growth is probably because new inflation numbers show that prices are in check and analysts are still forecasting that the economy will begin to slow down next year. Many analysts have noted during the eight-week stock market rally, in which the Nasdaq composite index jumped 42 percent, that investors were buying again even though major financial problems around the world _ including a slumping Asia, a weakening Latin America and a troubled Russia _ have not been resolved. Johnson said he thought that investors, inspired by the Federal Reserve's three interest rate cuts in two months and by the new stimulus package in Japan, assume that these problems will be solved. ``Investors are looking over the valley and they like what they see,'' he said. But he worries that the financial crisis, which began in Thailand in July 1997 and was intensified by the effective default of Russia in August, will not go away quickly. ``It seems that in every financial crisis, everybody gets the impression that the storm has passed,'' Johnson said. ``But it is never that easy.'' ||||| They have been downsized, cut back and re-engineered. So when the 900 or so remaining blue-collar workers here at Mobil's largest domestic refinery, out of about 1,500 a decade ago, heard last week that their company was discussing a possible merger with Exxon, it was like a siren warning them that an already suspect valve might be about to blow. ``I think it's a terrible thing,'' said Dick Mabry, a refinery operator, as he emerged in the plant's artificial twilight from the main gate after his 12-hour shift ended at 4:30 on Sunday morning. He stopped to rub eyes rimmed with red, but on this topic his bedtime could be delayed. ``It's a revival of the Standard Oil Company. It's going to put 20 or 30 thousand people out of work. I think the Justice Department should step in and stop it.'' Ernest Lewis, whose overalls bore a ``Big E'' patch appropriate to his scale, added his uh-huh's. The latest evidence of where things were heading hulked right nearby, he said, glancing over at a new power plant likely to be operated by an outside company without the unions that now man the refinery's generators. But if the Mobil Corp. has to be sold, Lewis said, noting the gains in his company stock holdings, a buyer as solid and large as the Exxon Corp. might be the least of all evils. ``If we merged with Chevron, we'd be Moron,'' he added. A growing American economy that can make a billionaire out of someone with an unproven idea for Internet marketing is still sloughing off workers in older industries, in petroleum as much as any. Those here point to the tote board by the Beaumont plant's brick headquarters, that they say shows they have already handled 171 million barrels out of 130 million planned for the full year. But the numbers that matter even more are the ones like 89.9, 88.9, even 81.9, on nearby gas stations _ the lowest prices, after inflation, since the Depression. Which is why Mobil and Exxon are considering combining into the world's largest oil company. Some people close to the talks cautioned that no deal would be considered by their boards until at least Tuesday, maybe Wednesday. And that is why, beginning last Wednesday evening, the phone at the home of Jimmy Herrington, the president of the Oil, Chemical and Atomic Workers Local 4-243 rang without stop. No, he didn't know about that merger talk on television, said Herrington, who also works full-time producing lubricants. He had asked some Mobil managers, in a meeting earlier this month, about all the rumors, but they said they had heard nothing. Oil industry analysts say that the first targets of a combined company's efforts to cut billions of dollars in annual costs would be the office staff and the professionals, like geologists and engineers, in the field. One company's accountants could almost do the work for two. But the crews here fully expect that an Exxon or any other buyer would ask yet again whether the refinery could turn more crude oil into gasoline, motor oil and other products with even fewer people. Union leaders raise the prospect that Exxon would have to sell the refinery. Antitrust regulators, they say, are bound to notice that Exxon has refineries an hour's drive in one direction and three hours in the other, along a Gulf of Mexico crescent that forms the petrochemical industry's home. The Beaumont plant, a steaming, humming chemistry set lining the Neches River off the Gulf, has become the prime provider of livelihoods here since it was built almost under the spray of the nearby Spindletop gusher. With mounting overtime that can stretch a shift to 16 hours or more, workers regularly make $55,000 or $65,000 a year. ``People go there to retire there,'' Herrington said, as he drove around the plant's fenced periphery. Lewis, in his 17th year, is a third-generation employee. But his nephew laboring here too is the exception. The workers streaming to and from the plant before dawn are mostly balding or going gray, a sign that for a full generation the refinery has been more concerned about how to get rid of workers than how to attract them. The cutbacks have, so far, come through attrition, with retirements often encouraged by incentives. But the plywood sheets covering the windows of most of the fast food places and gas stations around Herrington's union hall advertise that the best times are long gone. His members chafe at the experts who come in from Wall Street to question the justification for every person's job. In tiring and dangerous tasks, they question the elimination of most relief laborers in favor of covering vacations and sickness with overtime (although some like the extra pay, and they say the plant has become safer over the years). They complain about the growing numbers of outside contractors taking over formerly unionized tasks. But with many workers choosing to invest at least some retirement savings in Mobil stock, a 1990s ethos is gaining. Some share credit with the plant's management for the efficiency measures they agree are necessary for true job security. Some take the attitude that every company is always for sale. ``They will not be too concerned about what we feel about it,'' said Sam Salim, one of the electrical plant workers whose future is uncertain. ``But if they fork out $60 billion? I'd look it over.'' With most Mobil executives saying as little as possible for now, calls on Sunday to the local plant manager and a company spokesman did not elicit a peep. Union leaders, however, are already squawking. ''I don't believe creating new monopolies is the way to prop up the industry,'' said Robert Wages, a former refinery operator himself and now the union's president, by telephone Saturday. Nevertheless, with admirable foresight the union negotiated a clause in last November's three-year contract extension guaranteeing that any company buyer would have to keep to its terms. Many members, who typically came to work after high school, are already molding the oil companies' latest exploits into case studies fit for rapacious MBA's. ``They're the biggest,'' said Bobby Whisneant, an assistant operator in the gasoline and lubrication oil units, referring to Exxon. He was coming, early on Sunday morning, through a plant gate whose white canopy seems borrowed from a self-service station. ``So they go buy the second biggest. That's one way to get rid of the competition. I just hope it's not something like the 80s _ buying companies and scrapping them.'' Or something like the Robber Baron era a century before, said Mabry, another operator. ``Didn't the teachers teach us all through school that the Standard Oil Company would never come back? Remember that?'' he said, looking to his friend, Lewis, the Big E, for agreement. ``But I better shut up. I still work for Mobil.'' ``Used to,'' Lewis said. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of General Electric Co., and Mobil, the No. 2 U.S. oil company, came as oil prices sank to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. As oil prices have plummeted to levels last seen in the mid-1980s, oil companies have been under pressure to cut costs. Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, both have histories of being fiercely independent, and both have already cut back on staff and made themselves lean to survive even during a prolonged period of low oil prices. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced an agreement to buy Amoco Corp. for $48.2 million, creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that any combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well-run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on exploration areas of their own such as the deep waters in the Gulf of Mexico as well as West Africa and parts of Asia. Such exploration is very expensive, and even when a big field is discovered, platforms costing $1 billion or more are required to bring the it into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry the combined company would control. Analysts and investment bankers were split about the logic of a potential deal. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for development projects in the Middle East. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' Ms. Jaffe said the proposed deal would provide each company with assets in areas where it had little influence. ``There are a lot of complementary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of Wal-Mart and General Electric, and Mobil, the No. 2 U.S. oil company, come as oil prices have sunk to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. Both Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, have a history of being fiercely independence. Both have already cut back on staff and made themselves lean in order to survive long periods when oil prices are low. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced a $48.2 billion agreement to buy Amoco Corp., creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that a combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on their own exploration areas such as the deep waters in the Gulf of Mexico and West Africa. Such exploration is very expensive, and even when large fields are found it often takes platforms costing $1 billion to bring the oil into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry such a merger would control. Analysts and investment bankers were split about the logic of the possible merger. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for projects in Middle Eastern countries. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' In addition, Ms. Jaffe said, the merger would provide each company with new oil and gas assets in areas of the world where they had little influence. ``There are a lot of complimentary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Oil companies of all stripes are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet that oil won't be selling for $100 a barrel by the turn of the century _ something analysts were predicting during the oil price run-up of the early 1980s. Philip Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems? A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. Why are you skeptical about the deal? A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger? A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. That suggests Mobil has been harder hit than Exxon by the downturn in prices. A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to the price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree? A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again, that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. The number of oil companies is going to shrink in coming years, regardless, isn't it? A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. Do you think oil stocks are a good investment? A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies. ||||| The boards of Exxon Corp. and Mobil Corp. are expected to meet Tuesday to consider a possible merger agreement that would form the world's largest oil company, a source close to the negotiations said Friday. The source, who spoke on condition of anonymity, said ``the prospects were good'' for completing an agreement. Exxon and Mobil confirmed Friday that they were discussing ways to combine. They cautioned, however, that no agreement had been reached and there was no assurance they would reach one. The statement sent the stock of both companies surging, suggesting investors believe the companies will combine. Shares of Exxon, the biggest U.S. oil company, rose $1.6875, or 2.3 percent, to $74.375. Shares of Mobil, the No. 2 U.S. oil company, rose $7.625, or 9.7 percent, to $86. Some analysts said that if the two giants reached an agreement, it was likely to be in the form of a takeover by Exxon of Mobil. Exxon is far larger and financially stronger. Analysts predicted that there would be huge cuts in duplicate staff from both companies, which employ 122,700 people. Adam Sieminski, an oil analyst for BT Alex. Brown, said that the companies would probably make cuts to save about $3 billion to $5 billion a year. Sieminski and other analysts said Exxon would have to offer a premium of about 15 to 20 percent over its price prior to Monday, when serious speculation of an Exxon takeover of Mobil first circulated and sent Mobil shares up sharply. They said the transaction would probably be an exchange of Mobil shares for Exxon shares. Based on Mobil's $75.25 share price a week ago, a takeover of the company would be worth about $70 billion. The merger discussions come against a backdrop of particularly severe pressure on Lucio Noto, the chairman, president and chief executive of Mobil, to find new reserves of oil and natural gas and to keep big projects profitable at a time of a deep decline in crude oil prices. ``This is one of the most intelligent chief executives in the business and a man of considerable ability but he inherited some serious structural problems in his company,'' said J. Robin West, the chairman of Petroleum Finance Co., a consulting group to the energy industry based in Washington. He said that Mobil's prime assets include the Arun natural gas field in Indonesia, one of the largest in the world, which has contributed up to one-third of Mobil's profits for years but is beginning to run down. The field, in production since 1977, supplies liquefied natural gas to Japan and Korea. Although Mobil under Noto has moved quickly to cut costs and muscle its way into promising new areas such as Kazakhstan, where it is a partner in a joint venture to develop the huge Tengiz oil field, the payoff from such ventures is many years away. Other companies face similar strains. ``The challenge is to replace their crown jewels and grow in an increasingly competitive environment,'' West said. Noto has not been shy about sitting down with other companies such as British Petroleum and Amoco this year to see if a combination made sense. Although Exxon chairman Lee Raymond heads a much stronger and bigger company than Mobil, he has not been immune to the strains on the global petroleum business. Those strains intensified this year when Russia's economic collapse raised the risks of Exxon's extensive exploration venture in that country. Exxon has also been more of a follower than a leader in huge projects in the deep offshore fields, where major finds have been made near West Africa and in the Gulf of Mexico. ||||| Whether or not the talks between Exxon and Mobil lead to a merger or some other business combination, America's economic history is already being rewritten. In energy as in businesses like financial services, telecommunications and automobiles, global competition and technology have made unthinkable combinations practical, even necessary. Oil companies like Exxon Corp. and Mobil Corp. have an additional pressure, one unthinkable less than two decades ago. Crude oil prices have fallen sharply, plunging 40 percent just this year to levels, adjusted for inflation, not seen since before the first oil embargo 25 years ago. As such, the oil companies, having spent years cutting their costs, are desperate for further savings in order to continue operating profitably with such low prices. Exxon and Mobil are the two largest, strongest competitors to emerge from the nation's most famous antitrust case, the 1911 breakup of John D. Rockefeller's Standard Oil Trust. Now they face a Royal Dutch/Shell Group that is larger than either of them. They will also confront a British Petroleum PLC made far more potent in the United States by its agreement this summer to buy Amoco Corp. for $48.2 billion. Industry executives say further deals on this scale are inevitable. Executives at both companies did not return calls Thursday for comment on the talks, and it was unclear Thursday night what the outcome might be. But if Exxon and Mobil agree to become one, antitrust regulators are likely to be cautious about putting back together much of what they long ago broke apart. Even so, most oil industry analysts contend that improved efficiency from combining giant energy companies would do more to lower costs than the more concentrated ownership of gas stations and refineries would do to raise them. ``The ultimate beneficiary of all this will be the consumer,'' said Daniel Yergin, the chairman of Cambridge Energy Research Associates. If Exxon and Mobil ultimately do combine, the costs could prove heaviest for energy industry employees. Analysts say that of the about 80,000 global employees at Exxon, based in Irving, Texas, and the more than 40,000 at Mobil, in Fairfax, Va., thousands would be likely to lose their jobs. Exxon, with Lee R. Raymond, and Mobil, with Lucio A. Noto, both have chief executives who have been preoccupied with the humbling accommodations that low oil prices have made necessary. Oil companies were everybody's favorite targets during the trust-busting era early this century and again during the Arab oil embargoes of the 1970s. Now they seem especially vulnerable as demand weakens in much of the world, especially in economically troubled Asia, weighing further on already depressed prices. ``They're pitiful, helpless giants,'' said Ronald Chernow, the author of ``Titan,'' a biography of John D. Rockefeller, Standard Oil's founder. As such, these giants are compelled to continue cutting costs and spreading the risks of their huge, expensive international projects that are needed to develop oil reserves needed for the next century. Mobil, with $58.4 billion in sales last year, might seem large enough to undertake anything. But in competing for rights to develop huge natural gas fields in Turkmenistan, a former Soviet republic, Mobil was unable to match Shell's offer to build a pipeline for $1 billion or more. Oil companies have decided that they cannot count on a rebound in oil prices to revive their fortunes any time soon. Earlier this month, the Energy Department predicted that the collapse of Asian demand would continue to depress oil prices for nearly a decade, and by as much as $5.50 a barrel in the year 2000. And Thursday, the Organization of Petroleum Exporting Countries put off until March any decision on extending their oil production cutbacks to prop up prices. Moreover, improving technology for exploration and production and the opening of new regions to development have added to the already huge supply of oil that is on hand now. In response, many energy companies have already begun a new wave of cutbacks in their staffs and operations. To further reduce costs, companies like Mobil are forming partnerships that stop short of full mergers. Two years ago, Mobil agreed to combine its European refining and marketing operations with British Petroleum's, resulting in annual savings of about $500 million. Shell and Texaco then formed a refining partnership in the United States. In the face of these partnerships, said Amy Jaffe, an energy analysts with the James A. Baker III Institute for Public Policy in Houston, ``if you're an Exxon, how do you compete?'' Though Mobil and Exxon might have high concentrations of gas stations in certain areas of the United States, analysts say they have far more competition at the pump than before oil prices collapsed in the 1980s. Thousands of convenience stores now also sell gasoline produced by a variety of refining companies, and foreign national oil companies, like Venezuela's, sell their supplies through acquired companies like Citgo. Under Noto, Mobil has been hunting for ways of becoming large and lean enough to survive. He took the lead in the deal with British Petroleum and has considered buying up smaller companies. And he has made it clear that corporate or personal pride would never block a deal. In the European agreement with British Petroleum, Mobil's red flying horses have come down from the fronts of many gas stations, while the green and yellow BP logos have gone up. As major oil companies team up, said John Hervey, an analyst with Donaldson Lufkin & Jenrette, ``If the price is right, egos will not get in the way.'' In the past, Mobil reportedly had further talks with British Petroleum about other combinations, as well as talks with Amoco about forming an American refining venture. The company was also interested in Conoco Inc. when DuPont Co. began looking to divest itself of that oil and gas business. But no deals were reached. More recently, there was speculation on Wall Street that Mobil had been talking with Chevron Corp. British Petroleum purchase of Amoco put more pressure on Noto to seek a deal, Hervey said. ``I don't think this whole thing would have started if British Petroleum had not pulled the trigger,'' he said. The British Petroleum-Amoco deal, progressing quickly since the August announcement towards an expected $2 billion in annual savings, has put even companies as large as Exxon on the spot. There, Raymond has so far concentrated more on making his operations more efficient than on finding allies. Though Royal Dutch/Shell's financial resources are greater than Exxon's, some analysts say Exxon still has the size and soundness to absorb a company of Mobil's size. Only the largest oil companies can afford to take advantage of today's best opportunities. Finding new fields in the deep waters off the coast of West Africa or in the Gulf of Mexico can require platforms costing $1 billion or more. Producing oil in the states of the former Soviet Union has taken more time and money than many investors anticipated. In September, Noto was among the American executives invited by a Saudi leader visiting Washington to greatly step up investments in his country, too. Noto spent from 1977 to 1985 in Saudi Arabia himself, building up Mobil operations including a huge refinery. But any new partnerships with the Saudis might require both Mobil's connections and Exxon's capital. Back when Standard Oil organized its operations by state, Exxon was Standard Oil of New Jersey, while Mobil was Standard Oil of New York. Even after the Standard Oil monopoly was broken up, they remained for several years in the same building in Manhattan. Chernow, the Rockefeller biographer, noted that two pieces of the Standard Oil trust are already likely to be united. British Petroleum bought Standard Oil of Ohio in the 1970s, and Amoco was once Standard Oil of Indiana. The break-up of Standard Oil and the resulting competition has often been cited as a precedent for the current antitrust action against Microsoft. Chernow sees no reason why allowing an Exxon acquisition of Mobil to go through should suggest more leniency for Microsoft. ``Exxon would not be obviously larger than its leading competitors, the way Microsoft is,'' he said. In the energy business today, he added, ``there are other large dinosaurs that stalk that particular jungle.'' ||||| Exxon and Mobil, the nation's two largest oil companies, confirmed Friday that they were discussing a possible merger, and antitrust lawyers, industry analysts and government officials predicted that any deal would require the sale of important large pieces of such a new corporate behemoth. Those divestitures would further reshape an industry already undergoing a broad transformation because of the low price of oil. But the mergers and other corporate combinations are also beginning to create a new regulatory climate among antitrust officials, one that may prove particularly challenging to Exxon and Mobil. Although the companies only confirmed that they were discussing the possibility of a merger, a person close to the discussions said the boards of both Exxon and Mobil were expected to meet Tuesday to consider an agreement. Shares of both surged on the New York Stock Exchange. Oil exploration and drilling interests would not necessarily present antitrust problems in an Exxon-Mobil merger because competition in those areas is brisk. But in retailing and marketing operations, an Exxon-Mobil combination would be ``like Ford merging with General Motors, Macy's with Gimbels,'' said Stephen Axinn, an antitrust lawyer in New York who represented Texaco in its acquisition of Getty more than a decade ago. In the United States, the deal would come under the purview of the Federal Trade Commission, which under the Clinton administration has examined large corporate mergers with a vigor not seen since the 1970s. The agency has blocked a number of proposed mergers, such as the $4 billion combination of Staples and Office Depot, the two largest office supply discounters, and two deals involving the four largest drug wholesalers. On the other hand it has approved other big mergers, such as Boeing's $14 billion acquisition of McDonnell Douglas. The agency's analysis of an Exxon-Mobil combination, a senior official said Friday, will turn on how it might resemble John D. Rockefeller's Standard Oil trust before it was dismantled by the Supreme Court in 1911. ``The big antitrust issue is whether, by a merger or alliance, they will be able to get the competition of one another off their backs, particularly against the background of BP-Amoco and Shell-Texaco,'' said Eleanor M. Fox, a professor at the New York University School of Law and an antitrust expert. ``It may be that we are looking at a consolidation on the world level that looked like the consolidation on the national level 100 years ago.'' The Federal Trade Commission recently approved a significant joint venture between Shell and Texaco after the venture agreed to sell a refinery and divest some retailing operations in Hawaii and California. It is also considering the proposed $54 billion merger of British Petroleum and Amoco and will now have to re-examine that combination in light of the new talks between Exxon and Mobil. ``In the past, when there have been two mergers involving the same industry, the government has considered them together in deciding how to deal with them,'' said Terry Calvani, a former commissioner at the Federal Trade Commission whose clients now include Chevron. But coming in the aftermath of the Shell-Texaco and BP-Amoco deals, a combination of Exxon and Mobil, which have significantly overlapping retail and refinery businesses in the United States and Europe, poses questions that antitrust officials have not confronted since the 1980s. ``It's a real test case,'' said Frederick Leuffer, a senior energy analyst at Bear Stearns. ``If the FTC let this one go through without major divesting, then everything would be fair game. Why couldn't GM merge with Ford?'' While the 1911 breakup of Standard Oil is viewed by Washington officials and industry executives as ancient history, Exxon and Mobil have become the dominant rivals in some retailing and refining markets, and in the production of lubricants and petrochemicals. Leuffer said he believed divestitures necessary in this case ``could be so large that they are deal-breakers.'' Other analysts and lawyers, while disagreeing that the required divestitures could kill the deal, said the companies would nonetheless have to shed significant operations and that they expected challenges to be raised by a broad spectrum of constituents, including competitors, customers and state officials. ``These are not absolute obstacles,'' said John Hervey, an analyst at Donaldson Lufkin & Jenrette. In the past, when two big oil companies have merged, aggressive attorneys general from the states have almost always become involved in raising questions because of the high visibility of the local gas station. ``When a state attorney general drives by and sees four stations on a corner and two of them are Mobil and Exxon, they are certain to raise questions,'' Axinn said. Exxon and Mobil have significant concentrations of retailing and marketing concerns in the Northeast, the Southwest and the West Coast, where they also have big refining operations. Because the two companies are involved in everything from exploration and shipping to refining and retailing, the meaning of the deal for consumers will take months for the regulators to sort out. The regulators examining such a transaction would dissect each business, determine whether its market is global, national or more local, and determine whether the combined entity has too high a concentration of the business in those areas. Experts agreed that the regulators are most likely to permit Exxon and Mobil to keep their exploratory and oil production businesses because those areas are already highly competitive and a merger would not result in higher prices. Hervey said those markets are already so fragmented that the combined market share of major American and European oil companies is only 17 percent. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Still, Big Oil and small oil are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising, untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet oil that won't be selling for $100 a barrel by the turn of the century _ a price some analysts in the early 1980s were predicting it would reach. Philip K. Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. (italics)There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems?(end italics) A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. (italics)Why are you skeptical about the deal?(end italics) A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. (italics)Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger?(end italics) A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. (italics)That suggests Mobil has been harder hit than Exxon by the downturn in prices.(end italics) A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. (italics)Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree?(end italics) A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. (italics)The number of oil companies is going to shrink in coming years, regardless, isn't it?(end italics) A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. (italics)Do you think oil stocks are a good investment?(end italics) A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies.

Exxon and Mobil consider merger. Partnerships already formed. Oil prices are lowest in 12 years and future exploration will be costly. The new company would be largest in the US and put back together pieces of Standard Oil, a monopoly broken up by courts. Experts mixed on merger's advantages. It would be an anti-trust test, since companies are involved in many facets of the business, require the sale of large units. Refinery workers, others would lose jobs. There is an upswing in corporate mergers, pushed by bull market and recognition that it's hard to increase revenue internally. Merger anticipation sent stocks higher in oil, internet and computers.

News that Exxon and Mobil, two giants in the energy patch, were in merger talks last week is the biggest sign yet that corporate marriages are back in vogue. Even before that combination came to light, deal-making was fast and furious. On Monday alone, $40.4 billion in corporate acquisitions were either announced or declared imminent. Driving the resurgence in mergers is a roaring stock market, the recognition by major corporations that it is getting harder to increase revenues internally and growing confidence among market players that the economy will not plunge into a recession next year. There are also industry-specific issues, like low crude-oil prices that are driving oil giants into one another's arms. But for investors, mega-marriages are not where the real money is to be made. Rather, it is among smaller companies, whose still-depressed stock prices are luring bigger acquirers with stocks that again are near their peaks. If Exxon buys Mobil at close to current prices, deals this month will have a total value of more than $140 billion _ off from April's peak of $244 billion but three times the volume in September, when the stock market was falling. Which industries are likely to witness the most mergers? Tom Burnett, director of Merger Insight, an institutional investment advisory firm in New York, says more deals are a certainty in energy, which is suffering from low crude-oil prices. Burnett also says health care executives are finding it tougher than ever to lift earnings. But smaller companies may be a better way to play the takeover game. Charles LaLoggia, editor of the Special Situation Investor newsletter in Potomac, Md., said: ``Some of the premiums in high-profile mergers aren't so great anymore. The values are in small-cap stocks.'' Another reason is that deals involving smaller-cap candidates are less likely to incur the wrath of antitrust regulators. LaLoggia reckons that the odds of picking takeover winners increase if an investor focuses on companies already partially owned by another. In the energy sector, Houston Exploration qualifies, he says; the oil and gas driller is 66 percent owned by Keyspan Energy. He also believes more deals are imminent among drug chains and supermarkets. Longs Drug Stores and Drug Emporium, he says, remain acquisition candidates, though neither is controlled by another concern. In supermarkets, LaLoggia likes the Great Atlantic & Pacific Tea Co., 55 percent owned by Tengelmann Group of Germany. Another pick is Smart and Final, an operator of warehouse-style stores that is 55 percent owned by the U.S. subsidiary of Groupe Casino, France's largest supermarket chain. ``Both A&P and Smart and Final are trading at just about book value,'' LaLoggia said. Takeovers typically occur above book value. Finally, he recommends National Presto Industries, a maker of housewares and electrical appliances, which is trading near $39, close to its low for the year. The company has $30 a share in cash on its balance sheet, no debt and a dividend yield of 5 percent. After last month's announced acquisition of Rubbermaid by the Newell Co., LaLoggia thinks National Presto could find itself in an acquirer's cross-hairs. ||||| It was new highs again for the Standard & Poor's 500-stock and Nasdaq composite indexes Friday as anticipation of a new wave of mergers and a general rush by investors to join the equity rebound pushed stocks up. Oil stocks led the way as investors soaked up the news of continuing talks between Exxon and Mobil on a merger that would create the world's largest oil company. Internet and computer stocks also rallied, helped in part by the announcement on Tuesday of America Online's purchase of Netscape Communications in a three-way deal involving Sun Microsystems. At the same time, Germany's Deutsche Bank and Bankers Trust are scheduled to formally announce their merger on Monday. ``There is no question that the merger euphoria is the headline,'' said Hugh Johnson, chief investment officer at the First Albany Corp. ``But the flow into mutual funds is also strong.'' Exxon rose 1 11/16, to 74], while Mobil jumped 7|, to 86. Chevron, reflecting the bounce that other oil companies got from the merger news, climbed 5\, to 85|. Exxon and Chevron, along with IBM, which rose 3\, to 170, were the main drivers of the Dow Jones industrial average. It climbed 18.80 points, or two-tenths of a percent, to 9,333.08. It now stands just 41 points short of the record it set Monday and up 1.9 percent for the week. Mobil, along with Exxon, Chevron, IBM and Microsoft, which rose 3 13/16, to 128 1/16, were the power behind the S & P. It climbed 5.46 points, or five-tenths of a percent, to 1,192.33, a new high, the second of the week. It jumped 2.5 percent in the last five trading days. Cisco Systems, up 2 15/16, to 80; MCI Worldcom, up 1 11/16, to 62 7/16; Sun Microsystems, up 4|, to 80], and Microsoft pushed the Nasdaq index to its first new high since July 20. The technology-heavy index finished 31.23 points, or 1.57 percent, higher, at 2,016.44. It was up 4.6 percent for the week. Whether Friday's gains will stick will not be known before Monday. It was a shortened trading session, with the New York Stock Exchange closing at 1 p.m., and trading volume, at 257 million shares, made it the lightest day of the year. In the bond market, which also closed early because of the Thanksgiving weekend, the price of the 30-year Treasury bond rose 11/32, to 101 12/32. The bond's yield, which moves in the opposite direction from the price, fell to 5.16 percent from 5.18 percent on Wednesday. Long-term and short-term yields all slipped lower this week despite new economic data that indicated the economy was stronger in the third quarter than expected and seems to be moving along at a good pace in the current quarter. This small recovery in the face of stronger growth is probably because new inflation numbers show that prices are in check and analysts are still forecasting that the economy will begin to slow down next year. Many analysts have noted during the eight-week stock market rally, in which the Nasdaq composite index jumped 42 percent, that investors were buying again even though major financial problems around the world _ including a slumping Asia, a weakening Latin America and a troubled Russia _ have not been resolved. Johnson said he thought that investors, inspired by the Federal Reserve's three interest rate cuts in two months and by the new stimulus package in Japan, assume that these problems will be solved. ``Investors are looking over the valley and they like what they see,'' he said. But he worries that the financial crisis, which began in Thailand in July 1997 and was intensified by the effective default of Russia in August, will not go away quickly. ``It seems that in every financial crisis, everybody gets the impression that the storm has passed,'' Johnson said. ``But it is never that easy.'' ||||| They have been downsized, cut back and re-engineered. So when the 900 or so remaining blue-collar workers here at Mobil's largest domestic refinery, out of about 1,500 a decade ago, heard last week that their company was discussing a possible merger with Exxon, it was like a siren warning them that an already suspect valve might be about to blow. ``I think it's a terrible thing,'' said Dick Mabry, a refinery operator, as he emerged in the plant's artificial twilight from the main gate after his 12-hour shift ended at 4:30 on Sunday morning. He stopped to rub eyes rimmed with red, but on this topic his bedtime could be delayed. ``It's a revival of the Standard Oil Company. It's going to put 20 or 30 thousand people out of work. I think the Justice Department should step in and stop it.'' Ernest Lewis, whose overalls bore a ``Big E'' patch appropriate to his scale, added his uh-huh's. The latest evidence of where things were heading hulked right nearby, he said, glancing over at a new power plant likely to be operated by an outside company without the unions that now man the refinery's generators. But if the Mobil Corp. has to be sold, Lewis said, noting the gains in his company stock holdings, a buyer as solid and large as the Exxon Corp. might be the least of all evils. ``If we merged with Chevron, we'd be Moron,'' he added. A growing American economy that can make a billionaire out of someone with an unproven idea for Internet marketing is still sloughing off workers in older industries, in petroleum as much as any. Those here point to the tote board by the Beaumont plant's brick headquarters, that they say shows they have already handled 171 million barrels out of 130 million planned for the full year. But the numbers that matter even more are the ones like 89.9, 88.9, even 81.9, on nearby gas stations _ the lowest prices, after inflation, since the Depression. Which is why Mobil and Exxon are considering combining into the world's largest oil company. Some people close to the talks cautioned that no deal would be considered by their boards until at least Tuesday, maybe Wednesday. And that is why, beginning last Wednesday evening, the phone at the home of Jimmy Herrington, the president of the Oil, Chemical and Atomic Workers Local 4-243 rang without stop. No, he didn't know about that merger talk on television, said Herrington, who also works full-time producing lubricants. He had asked some Mobil managers, in a meeting earlier this month, about all the rumors, but they said they had heard nothing. Oil industry analysts say that the first targets of a combined company's efforts to cut billions of dollars in annual costs would be the office staff and the professionals, like geologists and engineers, in the field. One company's accountants could almost do the work for two. But the crews here fully expect that an Exxon or any other buyer would ask yet again whether the refinery could turn more crude oil into gasoline, motor oil and other products with even fewer people. Union leaders raise the prospect that Exxon would have to sell the refinery. Antitrust regulators, they say, are bound to notice that Exxon has refineries an hour's drive in one direction and three hours in the other, along a Gulf of Mexico crescent that forms the petrochemical industry's home. The Beaumont plant, a steaming, humming chemistry set lining the Neches River off the Gulf, has become the prime provider of livelihoods here since it was built almost under the spray of the nearby Spindletop gusher. With mounting overtime that can stretch a shift to 16 hours or more, workers regularly make $55,000 or $65,000 a year. ``People go there to retire there,'' Herrington said, as he drove around the plant's fenced periphery. Lewis, in his 17th year, is a third-generation employee. But his nephew laboring here too is the exception. The workers streaming to and from the plant before dawn are mostly balding or going gray, a sign that for a full generation the refinery has been more concerned about how to get rid of workers than how to attract them. The cutbacks have, so far, come through attrition, with retirements often encouraged by incentives. But the plywood sheets covering the windows of most of the fast food places and gas stations around Herrington's union hall advertise that the best times are long gone. His members chafe at the experts who come in from Wall Street to question the justification for every person's job. In tiring and dangerous tasks, they question the elimination of most relief laborers in favor of covering vacations and sickness with overtime (although some like the extra pay, and they say the plant has become safer over the years). They complain about the growing numbers of outside contractors taking over formerly unionized tasks. But with many workers choosing to invest at least some retirement savings in Mobil stock, a 1990s ethos is gaining. Some share credit with the plant's management for the efficiency measures they agree are necessary for true job security. Some take the attitude that every company is always for sale. ``They will not be too concerned about what we feel about it,'' said Sam Salim, one of the electrical plant workers whose future is uncertain. ``But if they fork out $60 billion? I'd look it over.'' With most Mobil executives saying as little as possible for now, calls on Sunday to the local plant manager and a company spokesman did not elicit a peep. Union leaders, however, are already squawking. ''I don't believe creating new monopolies is the way to prop up the industry,'' said Robert Wages, a former refinery operator himself and now the union's president, by telephone Saturday. Nevertheless, with admirable foresight the union negotiated a clause in last November's three-year contract extension guaranteeing that any company buyer would have to keep to its terms. Many members, who typically came to work after high school, are already molding the oil companies' latest exploits into case studies fit for rapacious MBA's. ``They're the biggest,'' said Bobby Whisneant, an assistant operator in the gasoline and lubrication oil units, referring to Exxon. He was coming, early on Sunday morning, through a plant gate whose white canopy seems borrowed from a self-service station. ``So they go buy the second biggest. That's one way to get rid of the competition. I just hope it's not something like the 80s _ buying companies and scrapping them.'' Or something like the Robber Baron era a century before, said Mabry, another operator. ``Didn't the teachers teach us all through school that the Standard Oil Company would never come back? Remember that?'' he said, looking to his friend, Lewis, the Big E, for agreement. ``But I better shut up. I still work for Mobil.'' ``Used to,'' Lewis said. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of General Electric Co., and Mobil, the No. 2 U.S. oil company, came as oil prices sank to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. As oil prices have plummeted to levels last seen in the mid-1980s, oil companies have been under pressure to cut costs. Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, both have histories of being fiercely independent, and both have already cut back on staff and made themselves lean to survive even during a prolonged period of low oil prices. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced an agreement to buy Amoco Corp. for $48.2 million, creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that any combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well-run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on exploration areas of their own such as the deep waters in the Gulf of Mexico as well as West Africa and parts of Asia. Such exploration is very expensive, and even when a big field is discovered, platforms costing $1 billion or more are required to bring the it into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry the combined company would control. Analysts and investment bankers were split about the logic of a potential deal. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for development projects in the Middle East. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' Ms. Jaffe said the proposed deal would provide each company with assets in areas where it had little influence. ``There are a lot of complementary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of Wal-Mart and General Electric, and Mobil, the No. 2 U.S. oil company, come as oil prices have sunk to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. Both Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, have a history of being fiercely independence. Both have already cut back on staff and made themselves lean in order to survive long periods when oil prices are low. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced a $48.2 billion agreement to buy Amoco Corp., creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that a combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on their own exploration areas such as the deep waters in the Gulf of Mexico and West Africa. Such exploration is very expensive, and even when large fields are found it often takes platforms costing $1 billion to bring the oil into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry such a merger would control. Analysts and investment bankers were split about the logic of the possible merger. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for projects in Middle Eastern countries. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' In addition, Ms. Jaffe said, the merger would provide each company with new oil and gas assets in areas of the world where they had little influence. ``There are a lot of complimentary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Oil companies of all stripes are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet that oil won't be selling for $100 a barrel by the turn of the century _ something analysts were predicting during the oil price run-up of the early 1980s. Philip Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems? A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. Why are you skeptical about the deal? A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger? A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. That suggests Mobil has been harder hit than Exxon by the downturn in prices. A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to the price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree? A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again, that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. The number of oil companies is going to shrink in coming years, regardless, isn't it? A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. Do you think oil stocks are a good investment? A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies. ||||| The boards of Exxon Corp. and Mobil Corp. are expected to meet Tuesday to consider a possible merger agreement that would form the world's largest oil company, a source close to the negotiations said Friday. The source, who spoke on condition of anonymity, said ``the prospects were good'' for completing an agreement. Exxon and Mobil confirmed Friday that they were discussing ways to combine. They cautioned, however, that no agreement had been reached and there was no assurance they would reach one. The statement sent the stock of both companies surging, suggesting investors believe the companies will combine. Shares of Exxon, the biggest U.S. oil company, rose $1.6875, or 2.3 percent, to $74.375. Shares of Mobil, the No. 2 U.S. oil company, rose $7.625, or 9.7 percent, to $86. Some analysts said that if the two giants reached an agreement, it was likely to be in the form of a takeover by Exxon of Mobil. Exxon is far larger and financially stronger. Analysts predicted that there would be huge cuts in duplicate staff from both companies, which employ 122,700 people. Adam Sieminski, an oil analyst for BT Alex. Brown, said that the companies would probably make cuts to save about $3 billion to $5 billion a year. Sieminski and other analysts said Exxon would have to offer a premium of about 15 to 20 percent over its price prior to Monday, when serious speculation of an Exxon takeover of Mobil first circulated and sent Mobil shares up sharply. They said the transaction would probably be an exchange of Mobil shares for Exxon shares. Based on Mobil's $75.25 share price a week ago, a takeover of the company would be worth about $70 billion. The merger discussions come against a backdrop of particularly severe pressure on Lucio Noto, the chairman, president and chief executive of Mobil, to find new reserves of oil and natural gas and to keep big projects profitable at a time of a deep decline in crude oil prices. ``This is one of the most intelligent chief executives in the business and a man of considerable ability but he inherited some serious structural problems in his company,'' said J. Robin West, the chairman of Petroleum Finance Co., a consulting group to the energy industry based in Washington. He said that Mobil's prime assets include the Arun natural gas field in Indonesia, one of the largest in the world, which has contributed up to one-third of Mobil's profits for years but is beginning to run down. The field, in production since 1977, supplies liquefied natural gas to Japan and Korea. Although Mobil under Noto has moved quickly to cut costs and muscle its way into promising new areas such as Kazakhstan, where it is a partner in a joint venture to develop the huge Tengiz oil field, the payoff from such ventures is many years away. Other companies face similar strains. ``The challenge is to replace their crown jewels and grow in an increasingly competitive environment,'' West said. Noto has not been shy about sitting down with other companies such as British Petroleum and Amoco this year to see if a combination made sense. Although Exxon chairman Lee Raymond heads a much stronger and bigger company than Mobil, he has not been immune to the strains on the global petroleum business. Those strains intensified this year when Russia's economic collapse raised the risks of Exxon's extensive exploration venture in that country. Exxon has also been more of a follower than a leader in huge projects in the deep offshore fields, where major finds have been made near West Africa and in the Gulf of Mexico. ||||| Whether or not the talks between Exxon and Mobil lead to a merger or some other business combination, America's economic history is already being rewritten. In energy as in businesses like financial services, telecommunications and automobiles, global competition and technology have made unthinkable combinations practical, even necessary. Oil companies like Exxon Corp. and Mobil Corp. have an additional pressure, one unthinkable less than two decades ago. Crude oil prices have fallen sharply, plunging 40 percent just this year to levels, adjusted for inflation, not seen since before the first oil embargo 25 years ago. As such, the oil companies, having spent years cutting their costs, are desperate for further savings in order to continue operating profitably with such low prices. Exxon and Mobil are the two largest, strongest competitors to emerge from the nation's most famous antitrust case, the 1911 breakup of John D. Rockefeller's Standard Oil Trust. Now they face a Royal Dutch/Shell Group that is larger than either of them. They will also confront a British Petroleum PLC made far more potent in the United States by its agreement this summer to buy Amoco Corp. for $48.2 billion. Industry executives say further deals on this scale are inevitable. Executives at both companies did not return calls Thursday for comment on the talks, and it was unclear Thursday night what the outcome might be. But if Exxon and Mobil agree to become one, antitrust regulators are likely to be cautious about putting back together much of what they long ago broke apart. Even so, most oil industry analysts contend that improved efficiency from combining giant energy companies would do more to lower costs than the more concentrated ownership of gas stations and refineries would do to raise them. ``The ultimate beneficiary of all this will be the consumer,'' said Daniel Yergin, the chairman of Cambridge Energy Research Associates. If Exxon and Mobil ultimately do combine, the costs could prove heaviest for energy industry employees. Analysts say that of the about 80,000 global employees at Exxon, based in Irving, Texas, and the more than 40,000 at Mobil, in Fairfax, Va., thousands would be likely to lose their jobs. Exxon, with Lee R. Raymond, and Mobil, with Lucio A. Noto, both have chief executives who have been preoccupied with the humbling accommodations that low oil prices have made necessary. Oil companies were everybody's favorite targets during the trust-busting era early this century and again during the Arab oil embargoes of the 1970s. Now they seem especially vulnerable as demand weakens in much of the world, especially in economically troubled Asia, weighing further on already depressed prices. ``They're pitiful, helpless giants,'' said Ronald Chernow, the author of ``Titan,'' a biography of John D. Rockefeller, Standard Oil's founder. As such, these giants are compelled to continue cutting costs and spreading the risks of their huge, expensive international projects that are needed to develop oil reserves needed for the next century. Mobil, with $58.4 billion in sales last year, might seem large enough to undertake anything. But in competing for rights to develop huge natural gas fields in Turkmenistan, a former Soviet republic, Mobil was unable to match Shell's offer to build a pipeline for $1 billion or more. Oil companies have decided that they cannot count on a rebound in oil prices to revive their fortunes any time soon. Earlier this month, the Energy Department predicted that the collapse of Asian demand would continue to depress oil prices for nearly a decade, and by as much as $5.50 a barrel in the year 2000. And Thursday, the Organization of Petroleum Exporting Countries put off until March any decision on extending their oil production cutbacks to prop up prices. Moreover, improving technology for exploration and production and the opening of new regions to development have added to the already huge supply of oil that is on hand now. In response, many energy companies have already begun a new wave of cutbacks in their staffs and operations. To further reduce costs, companies like Mobil are forming partnerships that stop short of full mergers. Two years ago, Mobil agreed to combine its European refining and marketing operations with British Petroleum's, resulting in annual savings of about $500 million. Shell and Texaco then formed a refining partnership in the United States. In the face of these partnerships, said Amy Jaffe, an energy analysts with the James A. Baker III Institute for Public Policy in Houston, ``if you're an Exxon, how do you compete?'' Though Mobil and Exxon might have high concentrations of gas stations in certain areas of the United States, analysts say they have far more competition at the pump than before oil prices collapsed in the 1980s. Thousands of convenience stores now also sell gasoline produced by a variety of refining companies, and foreign national oil companies, like Venezuela's, sell their supplies through acquired companies like Citgo. Under Noto, Mobil has been hunting for ways of becoming large and lean enough to survive. He took the lead in the deal with British Petroleum and has considered buying up smaller companies. And he has made it clear that corporate or personal pride would never block a deal. In the European agreement with British Petroleum, Mobil's red flying horses have come down from the fronts of many gas stations, while the green and yellow BP logos have gone up. As major oil companies team up, said John Hervey, an analyst with Donaldson Lufkin & Jenrette, ``If the price is right, egos will not get in the way.'' In the past, Mobil reportedly had further talks with British Petroleum about other combinations, as well as talks with Amoco about forming an American refining venture. The company was also interested in Conoco Inc. when DuPont Co. began looking to divest itself of that oil and gas business. But no deals were reached. More recently, there was speculation on Wall Street that Mobil had been talking with Chevron Corp. British Petroleum purchase of Amoco put more pressure on Noto to seek a deal, Hervey said. ``I don't think this whole thing would have started if British Petroleum had not pulled the trigger,'' he said. The British Petroleum-Amoco deal, progressing quickly since the August announcement towards an expected $2 billion in annual savings, has put even companies as large as Exxon on the spot. There, Raymond has so far concentrated more on making his operations more efficient than on finding allies. Though Royal Dutch/Shell's financial resources are greater than Exxon's, some analysts say Exxon still has the size and soundness to absorb a company of Mobil's size. Only the largest oil companies can afford to take advantage of today's best opportunities. Finding new fields in the deep waters off the coast of West Africa or in the Gulf of Mexico can require platforms costing $1 billion or more. Producing oil in the states of the former Soviet Union has taken more time and money than many investors anticipated. In September, Noto was among the American executives invited by a Saudi leader visiting Washington to greatly step up investments in his country, too. Noto spent from 1977 to 1985 in Saudi Arabia himself, building up Mobil operations including a huge refinery. But any new partnerships with the Saudis might require both Mobil's connections and Exxon's capital. Back when Standard Oil organized its operations by state, Exxon was Standard Oil of New Jersey, while Mobil was Standard Oil of New York. Even after the Standard Oil monopoly was broken up, they remained for several years in the same building in Manhattan. Chernow, the Rockefeller biographer, noted that two pieces of the Standard Oil trust are already likely to be united. British Petroleum bought Standard Oil of Ohio in the 1970s, and Amoco was once Standard Oil of Indiana. The break-up of Standard Oil and the resulting competition has often been cited as a precedent for the current antitrust action against Microsoft. Chernow sees no reason why allowing an Exxon acquisition of Mobil to go through should suggest more leniency for Microsoft. ``Exxon would not be obviously larger than its leading competitors, the way Microsoft is,'' he said. In the energy business today, he added, ``there are other large dinosaurs that stalk that particular jungle.'' ||||| Exxon and Mobil, the nation's two largest oil companies, confirmed Friday that they were discussing a possible merger, and antitrust lawyers, industry analysts and government officials predicted that any deal would require the sale of important large pieces of such a new corporate behemoth. Those divestitures would further reshape an industry already undergoing a broad transformation because of the low price of oil. But the mergers and other corporate combinations are also beginning to create a new regulatory climate among antitrust officials, one that may prove particularly challenging to Exxon and Mobil. Although the companies only confirmed that they were discussing the possibility of a merger, a person close to the discussions said the boards of both Exxon and Mobil were expected to meet Tuesday to consider an agreement. Shares of both surged on the New York Stock Exchange. Oil exploration and drilling interests would not necessarily present antitrust problems in an Exxon-Mobil merger because competition in those areas is brisk. But in retailing and marketing operations, an Exxon-Mobil combination would be ``like Ford merging with General Motors, Macy's with Gimbels,'' said Stephen Axinn, an antitrust lawyer in New York who represented Texaco in its acquisition of Getty more than a decade ago. In the United States, the deal would come under the purview of the Federal Trade Commission, which under the Clinton administration has examined large corporate mergers with a vigor not seen since the 1970s. The agency has blocked a number of proposed mergers, such as the $4 billion combination of Staples and Office Depot, the two largest office supply discounters, and two deals involving the four largest drug wholesalers. On the other hand it has approved other big mergers, such as Boeing's $14 billion acquisition of McDonnell Douglas. The agency's analysis of an Exxon-Mobil combination, a senior official said Friday, will turn on how it might resemble John D. Rockefeller's Standard Oil trust before it was dismantled by the Supreme Court in 1911. ``The big antitrust issue is whether, by a merger or alliance, they will be able to get the competition of one another off their backs, particularly against the background of BP-Amoco and Shell-Texaco,'' said Eleanor M. Fox, a professor at the New York University School of Law and an antitrust expert. ``It may be that we are looking at a consolidation on the world level that looked like the consolidation on the national level 100 years ago.'' The Federal Trade Commission recently approved a significant joint venture between Shell and Texaco after the venture agreed to sell a refinery and divest some retailing operations in Hawaii and California. It is also considering the proposed $54 billion merger of British Petroleum and Amoco and will now have to re-examine that combination in light of the new talks between Exxon and Mobil. ``In the past, when there have been two mergers involving the same industry, the government has considered them together in deciding how to deal with them,'' said Terry Calvani, a former commissioner at the Federal Trade Commission whose clients now include Chevron. But coming in the aftermath of the Shell-Texaco and BP-Amoco deals, a combination of Exxon and Mobil, which have significantly overlapping retail and refinery businesses in the United States and Europe, poses questions that antitrust officials have not confronted since the 1980s. ``It's a real test case,'' said Frederick Leuffer, a senior energy analyst at Bear Stearns. ``If the FTC let this one go through without major divesting, then everything would be fair game. Why couldn't GM merge with Ford?'' While the 1911 breakup of Standard Oil is viewed by Washington officials and industry executives as ancient history, Exxon and Mobil have become the dominant rivals in some retailing and refining markets, and in the production of lubricants and petrochemicals. Leuffer said he believed divestitures necessary in this case ``could be so large that they are deal-breakers.'' Other analysts and lawyers, while disagreeing that the required divestitures could kill the deal, said the companies would nonetheless have to shed significant operations and that they expected challenges to be raised by a broad spectrum of constituents, including competitors, customers and state officials. ``These are not absolute obstacles,'' said John Hervey, an analyst at Donaldson Lufkin & Jenrette. In the past, when two big oil companies have merged, aggressive attorneys general from the states have almost always become involved in raising questions because of the high visibility of the local gas station. ``When a state attorney general drives by and sees four stations on a corner and two of them are Mobil and Exxon, they are certain to raise questions,'' Axinn said. Exxon and Mobil have significant concentrations of retailing and marketing concerns in the Northeast, the Southwest and the West Coast, where they also have big refining operations. Because the two companies are involved in everything from exploration and shipping to refining and retailing, the meaning of the deal for consumers will take months for the regulators to sort out. The regulators examining such a transaction would dissect each business, determine whether its market is global, national or more local, and determine whether the combined entity has too high a concentration of the business in those areas. Experts agreed that the regulators are most likely to permit Exxon and Mobil to keep their exploratory and oil production businesses because those areas are already highly competitive and a merger would not result in higher prices. Hervey said those markets are already so fragmented that the combined market share of major American and European oil companies is only 17 percent. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Still, Big Oil and small oil are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising, untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet oil that won't be selling for $100 a barrel by the turn of the century _ a price some analysts in the early 1980s were predicting it would reach. Philip K. Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. (italics)There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems?(end italics) A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. (italics)Why are you skeptical about the deal?(end italics) A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. (italics)Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger?(end italics) A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. (italics)That suggests Mobil has been harder hit than Exxon by the downturn in prices.(end italics) A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. (italics)Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree?(end italics) A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. (italics)The number of oil companies is going to shrink in coming years, regardless, isn't it?(end italics) A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. (italics)Do you think oil stocks are a good investment?(end italics) A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies.

Exxon and Mobil discuss combining business operations. A possible Exxon-Mobil merger would reunite 2 parts of Standard Oil broken up by the Supreme Court in 1911. Low crude oil prices and the high cost of exploration are motives for a merger that would create the world's largest oil company. As Exxon-Mobil merger talks continue, stocks of both companies surge. The merger talks show that corporate mergers are back in vogue. Antitrust lawyers, industry analysts, and government officials say a merger would require divestitures. A Mobil employee worries that a merger would put thousands out of work, but notes that his company's stock would go up.

News that Exxon and Mobil, two giants in the energy patch, were in merger talks last week is the biggest sign yet that corporate marriages are back in vogue. Even before that combination came to light, deal-making was fast and furious. On Monday alone, $40.4 billion in corporate acquisitions were either announced or declared imminent. Driving the resurgence in mergers is a roaring stock market, the recognition by major corporations that it is getting harder to increase revenues internally and growing confidence among market players that the economy will not plunge into a recession next year. There are also industry-specific issues, like low crude-oil prices that are driving oil giants into one another's arms. But for investors, mega-marriages are not where the real money is to be made. Rather, it is among smaller companies, whose still-depressed stock prices are luring bigger acquirers with stocks that again are near their peaks. If Exxon buys Mobil at close to current prices, deals this month will have a total value of more than $140 billion _ off from April's peak of $244 billion but three times the volume in September, when the stock market was falling. Which industries are likely to witness the most mergers? Tom Burnett, director of Merger Insight, an institutional investment advisory firm in New York, says more deals are a certainty in energy, which is suffering from low crude-oil prices. Burnett also says health care executives are finding it tougher than ever to lift earnings. But smaller companies may be a better way to play the takeover game. Charles LaLoggia, editor of the Special Situation Investor newsletter in Potomac, Md., said: ``Some of the premiums in high-profile mergers aren't so great anymore. The values are in small-cap stocks.'' Another reason is that deals involving smaller-cap candidates are less likely to incur the wrath of antitrust regulators. LaLoggia reckons that the odds of picking takeover winners increase if an investor focuses on companies already partially owned by another. In the energy sector, Houston Exploration qualifies, he says; the oil and gas driller is 66 percent owned by Keyspan Energy. He also believes more deals are imminent among drug chains and supermarkets. Longs Drug Stores and Drug Emporium, he says, remain acquisition candidates, though neither is controlled by another concern. In supermarkets, LaLoggia likes the Great Atlantic & Pacific Tea Co., 55 percent owned by Tengelmann Group of Germany. Another pick is Smart and Final, an operator of warehouse-style stores that is 55 percent owned by the U.S. subsidiary of Groupe Casino, France's largest supermarket chain. ``Both A&P and Smart and Final are trading at just about book value,'' LaLoggia said. Takeovers typically occur above book value. Finally, he recommends National Presto Industries, a maker of housewares and electrical appliances, which is trading near $39, close to its low for the year. The company has $30 a share in cash on its balance sheet, no debt and a dividend yield of 5 percent. After last month's announced acquisition of Rubbermaid by the Newell Co., LaLoggia thinks National Presto could find itself in an acquirer's cross-hairs. ||||| It was new highs again for the Standard & Poor's 500-stock and Nasdaq composite indexes Friday as anticipation of a new wave of mergers and a general rush by investors to join the equity rebound pushed stocks up. Oil stocks led the way as investors soaked up the news of continuing talks between Exxon and Mobil on a merger that would create the world's largest oil company. Internet and computer stocks also rallied, helped in part by the announcement on Tuesday of America Online's purchase of Netscape Communications in a three-way deal involving Sun Microsystems. At the same time, Germany's Deutsche Bank and Bankers Trust are scheduled to formally announce their merger on Monday. ``There is no question that the merger euphoria is the headline,'' said Hugh Johnson, chief investment officer at the First Albany Corp. ``But the flow into mutual funds is also strong.'' Exxon rose 1 11/16, to 74], while Mobil jumped 7|, to 86. Chevron, reflecting the bounce that other oil companies got from the merger news, climbed 5\, to 85|. Exxon and Chevron, along with IBM, which rose 3\, to 170, were the main drivers of the Dow Jones industrial average. It climbed 18.80 points, or two-tenths of a percent, to 9,333.08. It now stands just 41 points short of the record it set Monday and up 1.9 percent for the week. Mobil, along with Exxon, Chevron, IBM and Microsoft, which rose 3 13/16, to 128 1/16, were the power behind the S & P. It climbed 5.46 points, or five-tenths of a percent, to 1,192.33, a new high, the second of the week. It jumped 2.5 percent in the last five trading days. Cisco Systems, up 2 15/16, to 80; MCI Worldcom, up 1 11/16, to 62 7/16; Sun Microsystems, up 4|, to 80], and Microsoft pushed the Nasdaq index to its first new high since July 20. The technology-heavy index finished 31.23 points, or 1.57 percent, higher, at 2,016.44. It was up 4.6 percent for the week. Whether Friday's gains will stick will not be known before Monday. It was a shortened trading session, with the New York Stock Exchange closing at 1 p.m., and trading volume, at 257 million shares, made it the lightest day of the year. In the bond market, which also closed early because of the Thanksgiving weekend, the price of the 30-year Treasury bond rose 11/32, to 101 12/32. The bond's yield, which moves in the opposite direction from the price, fell to 5.16 percent from 5.18 percent on Wednesday. Long-term and short-term yields all slipped lower this week despite new economic data that indicated the economy was stronger in the third quarter than expected and seems to be moving along at a good pace in the current quarter. This small recovery in the face of stronger growth is probably because new inflation numbers show that prices are in check and analysts are still forecasting that the economy will begin to slow down next year. Many analysts have noted during the eight-week stock market rally, in which the Nasdaq composite index jumped 42 percent, that investors were buying again even though major financial problems around the world _ including a slumping Asia, a weakening Latin America and a troubled Russia _ have not been resolved. Johnson said he thought that investors, inspired by the Federal Reserve's three interest rate cuts in two months and by the new stimulus package in Japan, assume that these problems will be solved. ``Investors are looking over the valley and they like what they see,'' he said. But he worries that the financial crisis, which began in Thailand in July 1997 and was intensified by the effective default of Russia in August, will not go away quickly. ``It seems that in every financial crisis, everybody gets the impression that the storm has passed,'' Johnson said. ``But it is never that easy.'' ||||| They have been downsized, cut back and re-engineered. So when the 900 or so remaining blue-collar workers here at Mobil's largest domestic refinery, out of about 1,500 a decade ago, heard last week that their company was discussing a possible merger with Exxon, it was like a siren warning them that an already suspect valve might be about to blow. ``I think it's a terrible thing,'' said Dick Mabry, a refinery operator, as he emerged in the plant's artificial twilight from the main gate after his 12-hour shift ended at 4:30 on Sunday morning. He stopped to rub eyes rimmed with red, but on this topic his bedtime could be delayed. ``It's a revival of the Standard Oil Company. It's going to put 20 or 30 thousand people out of work. I think the Justice Department should step in and stop it.'' Ernest Lewis, whose overalls bore a ``Big E'' patch appropriate to his scale, added his uh-huh's. The latest evidence of where things were heading hulked right nearby, he said, glancing over at a new power plant likely to be operated by an outside company without the unions that now man the refinery's generators. But if the Mobil Corp. has to be sold, Lewis said, noting the gains in his company stock holdings, a buyer as solid and large as the Exxon Corp. might be the least of all evils. ``If we merged with Chevron, we'd be Moron,'' he added. A growing American economy that can make a billionaire out of someone with an unproven idea for Internet marketing is still sloughing off workers in older industries, in petroleum as much as any. Those here point to the tote board by the Beaumont plant's brick headquarters, that they say shows they have already handled 171 million barrels out of 130 million planned for the full year. But the numbers that matter even more are the ones like 89.9, 88.9, even 81.9, on nearby gas stations _ the lowest prices, after inflation, since the Depression. Which is why Mobil and Exxon are considering combining into the world's largest oil company. Some people close to the talks cautioned that no deal would be considered by their boards until at least Tuesday, maybe Wednesday. And that is why, beginning last Wednesday evening, the phone at the home of Jimmy Herrington, the president of the Oil, Chemical and Atomic Workers Local 4-243 rang without stop. No, he didn't know about that merger talk on television, said Herrington, who also works full-time producing lubricants. He had asked some Mobil managers, in a meeting earlier this month, about all the rumors, but they said they had heard nothing. Oil industry analysts say that the first targets of a combined company's efforts to cut billions of dollars in annual costs would be the office staff and the professionals, like geologists and engineers, in the field. One company's accountants could almost do the work for two. But the crews here fully expect that an Exxon or any other buyer would ask yet again whether the refinery could turn more crude oil into gasoline, motor oil and other products with even fewer people. Union leaders raise the prospect that Exxon would have to sell the refinery. Antitrust regulators, they say, are bound to notice that Exxon has refineries an hour's drive in one direction and three hours in the other, along a Gulf of Mexico crescent that forms the petrochemical industry's home. The Beaumont plant, a steaming, humming chemistry set lining the Neches River off the Gulf, has become the prime provider of livelihoods here since it was built almost under the spray of the nearby Spindletop gusher. With mounting overtime that can stretch a shift to 16 hours or more, workers regularly make $55,000 or $65,000 a year. ``People go there to retire there,'' Herrington said, as he drove around the plant's fenced periphery. Lewis, in his 17th year, is a third-generation employee. But his nephew laboring here too is the exception. The workers streaming to and from the plant before dawn are mostly balding or going gray, a sign that for a full generation the refinery has been more concerned about how to get rid of workers than how to attract them. The cutbacks have, so far, come through attrition, with retirements often encouraged by incentives. But the plywood sheets covering the windows of most of the fast food places and gas stations around Herrington's union hall advertise that the best times are long gone. His members chafe at the experts who come in from Wall Street to question the justification for every person's job. In tiring and dangerous tasks, they question the elimination of most relief laborers in favor of covering vacations and sickness with overtime (although some like the extra pay, and they say the plant has become safer over the years). They complain about the growing numbers of outside contractors taking over formerly unionized tasks. But with many workers choosing to invest at least some retirement savings in Mobil stock, a 1990s ethos is gaining. Some share credit with the plant's management for the efficiency measures they agree are necessary for true job security. Some take the attitude that every company is always for sale. ``They will not be too concerned about what we feel about it,'' said Sam Salim, one of the electrical plant workers whose future is uncertain. ``But if they fork out $60 billion? I'd look it over.'' With most Mobil executives saying as little as possible for now, calls on Sunday to the local plant manager and a company spokesman did not elicit a peep. Union leaders, however, are already squawking. ''I don't believe creating new monopolies is the way to prop up the industry,'' said Robert Wages, a former refinery operator himself and now the union's president, by telephone Saturday. Nevertheless, with admirable foresight the union negotiated a clause in last November's three-year contract extension guaranteeing that any company buyer would have to keep to its terms. Many members, who typically came to work after high school, are already molding the oil companies' latest exploits into case studies fit for rapacious MBA's. ``They're the biggest,'' said Bobby Whisneant, an assistant operator in the gasoline and lubrication oil units, referring to Exxon. He was coming, early on Sunday morning, through a plant gate whose white canopy seems borrowed from a self-service station. ``So they go buy the second biggest. That's one way to get rid of the competition. I just hope it's not something like the 80s _ buying companies and scrapping them.'' Or something like the Robber Baron era a century before, said Mabry, another operator. ``Didn't the teachers teach us all through school that the Standard Oil Company would never come back? Remember that?'' he said, looking to his friend, Lewis, the Big E, for agreement. ``But I better shut up. I still work for Mobil.'' ``Used to,'' Lewis said. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of General Electric Co., and Mobil, the No. 2 U.S. oil company, came as oil prices sank to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. As oil prices have plummeted to levels last seen in the mid-1980s, oil companies have been under pressure to cut costs. Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, both have histories of being fiercely independent, and both have already cut back on staff and made themselves lean to survive even during a prolonged period of low oil prices. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced an agreement to buy Amoco Corp. for $48.2 million, creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that any combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well-run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on exploration areas of their own such as the deep waters in the Gulf of Mexico as well as West Africa and parts of Asia. Such exploration is very expensive, and even when a big field is discovered, platforms costing $1 billion or more are required to bring the it into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry the combined company would control. Analysts and investment bankers were split about the logic of a potential deal. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for development projects in the Middle East. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' Ms. Jaffe said the proposed deal would provide each company with assets in areas where it had little influence. ``There are a lot of complementary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of Wal-Mart and General Electric, and Mobil, the No. 2 U.S. oil company, come as oil prices have sunk to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. Both Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, have a history of being fiercely independence. Both have already cut back on staff and made themselves lean in order to survive long periods when oil prices are low. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced a $48.2 billion agreement to buy Amoco Corp., creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that a combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on their own exploration areas such as the deep waters in the Gulf of Mexico and West Africa. Such exploration is very expensive, and even when large fields are found it often takes platforms costing $1 billion to bring the oil into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry such a merger would control. Analysts and investment bankers were split about the logic of the possible merger. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for projects in Middle Eastern countries. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' In addition, Ms. Jaffe said, the merger would provide each company with new oil and gas assets in areas of the world where they had little influence. ``There are a lot of complimentary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Oil companies of all stripes are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet that oil won't be selling for $100 a barrel by the turn of the century _ something analysts were predicting during the oil price run-up of the early 1980s. Philip Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems? A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. Why are you skeptical about the deal? A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger? A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. That suggests Mobil has been harder hit than Exxon by the downturn in prices. A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to the price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree? A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again, that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. The number of oil companies is going to shrink in coming years, regardless, isn't it? A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. Do you think oil stocks are a good investment? A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies. ||||| The boards of Exxon Corp. and Mobil Corp. are expected to meet Tuesday to consider a possible merger agreement that would form the world's largest oil company, a source close to the negotiations said Friday. The source, who spoke on condition of anonymity, said ``the prospects were good'' for completing an agreement. Exxon and Mobil confirmed Friday that they were discussing ways to combine. They cautioned, however, that no agreement had been reached and there was no assurance they would reach one. The statement sent the stock of both companies surging, suggesting investors believe the companies will combine. Shares of Exxon, the biggest U.S. oil company, rose $1.6875, or 2.3 percent, to $74.375. Shares of Mobil, the No. 2 U.S. oil company, rose $7.625, or 9.7 percent, to $86. Some analysts said that if the two giants reached an agreement, it was likely to be in the form of a takeover by Exxon of Mobil. Exxon is far larger and financially stronger. Analysts predicted that there would be huge cuts in duplicate staff from both companies, which employ 122,700 people. Adam Sieminski, an oil analyst for BT Alex. Brown, said that the companies would probably make cuts to save about $3 billion to $5 billion a year. Sieminski and other analysts said Exxon would have to offer a premium of about 15 to 20 percent over its price prior to Monday, when serious speculation of an Exxon takeover of Mobil first circulated and sent Mobil shares up sharply. They said the transaction would probably be an exchange of Mobil shares for Exxon shares. Based on Mobil's $75.25 share price a week ago, a takeover of the company would be worth about $70 billion. The merger discussions come against a backdrop of particularly severe pressure on Lucio Noto, the chairman, president and chief executive of Mobil, to find new reserves of oil and natural gas and to keep big projects profitable at a time of a deep decline in crude oil prices. ``This is one of the most intelligent chief executives in the business and a man of considerable ability but he inherited some serious structural problems in his company,'' said J. Robin West, the chairman of Petroleum Finance Co., a consulting group to the energy industry based in Washington. He said that Mobil's prime assets include the Arun natural gas field in Indonesia, one of the largest in the world, which has contributed up to one-third of Mobil's profits for years but is beginning to run down. The field, in production since 1977, supplies liquefied natural gas to Japan and Korea. Although Mobil under Noto has moved quickly to cut costs and muscle its way into promising new areas such as Kazakhstan, where it is a partner in a joint venture to develop the huge Tengiz oil field, the payoff from such ventures is many years away. Other companies face similar strains. ``The challenge is to replace their crown jewels and grow in an increasingly competitive environment,'' West said. Noto has not been shy about sitting down with other companies such as British Petroleum and Amoco this year to see if a combination made sense. Although Exxon chairman Lee Raymond heads a much stronger and bigger company than Mobil, he has not been immune to the strains on the global petroleum business. Those strains intensified this year when Russia's economic collapse raised the risks of Exxon's extensive exploration venture in that country. Exxon has also been more of a follower than a leader in huge projects in the deep offshore fields, where major finds have been made near West Africa and in the Gulf of Mexico. ||||| Whether or not the talks between Exxon and Mobil lead to a merger or some other business combination, America's economic history is already being rewritten. In energy as in businesses like financial services, telecommunications and automobiles, global competition and technology have made unthinkable combinations practical, even necessary. Oil companies like Exxon Corp. and Mobil Corp. have an additional pressure, one unthinkable less than two decades ago. Crude oil prices have fallen sharply, plunging 40 percent just this year to levels, adjusted for inflation, not seen since before the first oil embargo 25 years ago. As such, the oil companies, having spent years cutting their costs, are desperate for further savings in order to continue operating profitably with such low prices. Exxon and Mobil are the two largest, strongest competitors to emerge from the nation's most famous antitrust case, the 1911 breakup of John D. Rockefeller's Standard Oil Trust. Now they face a Royal Dutch/Shell Group that is larger than either of them. They will also confront a British Petroleum PLC made far more potent in the United States by its agreement this summer to buy Amoco Corp. for $48.2 billion. Industry executives say further deals on this scale are inevitable. Executives at both companies did not return calls Thursday for comment on the talks, and it was unclear Thursday night what the outcome might be. But if Exxon and Mobil agree to become one, antitrust regulators are likely to be cautious about putting back together much of what they long ago broke apart. Even so, most oil industry analysts contend that improved efficiency from combining giant energy companies would do more to lower costs than the more concentrated ownership of gas stations and refineries would do to raise them. ``The ultimate beneficiary of all this will be the consumer,'' said Daniel Yergin, the chairman of Cambridge Energy Research Associates. If Exxon and Mobil ultimately do combine, the costs could prove heaviest for energy industry employees. Analysts say that of the about 80,000 global employees at Exxon, based in Irving, Texas, and the more than 40,000 at Mobil, in Fairfax, Va., thousands would be likely to lose their jobs. Exxon, with Lee R. Raymond, and Mobil, with Lucio A. Noto, both have chief executives who have been preoccupied with the humbling accommodations that low oil prices have made necessary. Oil companies were everybody's favorite targets during the trust-busting era early this century and again during the Arab oil embargoes of the 1970s. Now they seem especially vulnerable as demand weakens in much of the world, especially in economically troubled Asia, weighing further on already depressed prices. ``They're pitiful, helpless giants,'' said Ronald Chernow, the author of ``Titan,'' a biography of John D. Rockefeller, Standard Oil's founder. As such, these giants are compelled to continue cutting costs and spreading the risks of their huge, expensive international projects that are needed to develop oil reserves needed for the next century. Mobil, with $58.4 billion in sales last year, might seem large enough to undertake anything. But in competing for rights to develop huge natural gas fields in Turkmenistan, a former Soviet republic, Mobil was unable to match Shell's offer to build a pipeline for $1 billion or more. Oil companies have decided that they cannot count on a rebound in oil prices to revive their fortunes any time soon. Earlier this month, the Energy Department predicted that the collapse of Asian demand would continue to depress oil prices for nearly a decade, and by as much as $5.50 a barrel in the year 2000. And Thursday, the Organization of Petroleum Exporting Countries put off until March any decision on extending their oil production cutbacks to prop up prices. Moreover, improving technology for exploration and production and the opening of new regions to development have added to the already huge supply of oil that is on hand now. In response, many energy companies have already begun a new wave of cutbacks in their staffs and operations. To further reduce costs, companies like Mobil are forming partnerships that stop short of full mergers. Two years ago, Mobil agreed to combine its European refining and marketing operations with British Petroleum's, resulting in annual savings of about $500 million. Shell and Texaco then formed a refining partnership in the United States. In the face of these partnerships, said Amy Jaffe, an energy analysts with the James A. Baker III Institute for Public Policy in Houston, ``if you're an Exxon, how do you compete?'' Though Mobil and Exxon might have high concentrations of gas stations in certain areas of the United States, analysts say they have far more competition at the pump than before oil prices collapsed in the 1980s. Thousands of convenience stores now also sell gasoline produced by a variety of refining companies, and foreign national oil companies, like Venezuela's, sell their supplies through acquired companies like Citgo. Under Noto, Mobil has been hunting for ways of becoming large and lean enough to survive. He took the lead in the deal with British Petroleum and has considered buying up smaller companies. And he has made it clear that corporate or personal pride would never block a deal. In the European agreement with British Petroleum, Mobil's red flying horses have come down from the fronts of many gas stations, while the green and yellow BP logos have gone up. As major oil companies team up, said John Hervey, an analyst with Donaldson Lufkin & Jenrette, ``If the price is right, egos will not get in the way.'' In the past, Mobil reportedly had further talks with British Petroleum about other combinations, as well as talks with Amoco about forming an American refining venture. The company was also interested in Conoco Inc. when DuPont Co. began looking to divest itself of that oil and gas business. But no deals were reached. More recently, there was speculation on Wall Street that Mobil had been talking with Chevron Corp. British Petroleum purchase of Amoco put more pressure on Noto to seek a deal, Hervey said. ``I don't think this whole thing would have started if British Petroleum had not pulled the trigger,'' he said. The British Petroleum-Amoco deal, progressing quickly since the August announcement towards an expected $2 billion in annual savings, has put even companies as large as Exxon on the spot. There, Raymond has so far concentrated more on making his operations more efficient than on finding allies. Though Royal Dutch/Shell's financial resources are greater than Exxon's, some analysts say Exxon still has the size and soundness to absorb a company of Mobil's size. Only the largest oil companies can afford to take advantage of today's best opportunities. Finding new fields in the deep waters off the coast of West Africa or in the Gulf of Mexico can require platforms costing $1 billion or more. Producing oil in the states of the former Soviet Union has taken more time and money than many investors anticipated. In September, Noto was among the American executives invited by a Saudi leader visiting Washington to greatly step up investments in his country, too. Noto spent from 1977 to 1985 in Saudi Arabia himself, building up Mobil operations including a huge refinery. But any new partnerships with the Saudis might require both Mobil's connections and Exxon's capital. Back when Standard Oil organized its operations by state, Exxon was Standard Oil of New Jersey, while Mobil was Standard Oil of New York. Even after the Standard Oil monopoly was broken up, they remained for several years in the same building in Manhattan. Chernow, the Rockefeller biographer, noted that two pieces of the Standard Oil trust are already likely to be united. British Petroleum bought Standard Oil of Ohio in the 1970s, and Amoco was once Standard Oil of Indiana. The break-up of Standard Oil and the resulting competition has often been cited as a precedent for the current antitrust action against Microsoft. Chernow sees no reason why allowing an Exxon acquisition of Mobil to go through should suggest more leniency for Microsoft. ``Exxon would not be obviously larger than its leading competitors, the way Microsoft is,'' he said. In the energy business today, he added, ``there are other large dinosaurs that stalk that particular jungle.'' ||||| Exxon and Mobil, the nation's two largest oil companies, confirmed Friday that they were discussing a possible merger, and antitrust lawyers, industry analysts and government officials predicted that any deal would require the sale of important large pieces of such a new corporate behemoth. Those divestitures would further reshape an industry already undergoing a broad transformation because of the low price of oil. But the mergers and other corporate combinations are also beginning to create a new regulatory climate among antitrust officials, one that may prove particularly challenging to Exxon and Mobil. Although the companies only confirmed that they were discussing the possibility of a merger, a person close to the discussions said the boards of both Exxon and Mobil were expected to meet Tuesday to consider an agreement. Shares of both surged on the New York Stock Exchange. Oil exploration and drilling interests would not necessarily present antitrust problems in an Exxon-Mobil merger because competition in those areas is brisk. But in retailing and marketing operations, an Exxon-Mobil combination would be ``like Ford merging with General Motors, Macy's with Gimbels,'' said Stephen Axinn, an antitrust lawyer in New York who represented Texaco in its acquisition of Getty more than a decade ago. In the United States, the deal would come under the purview of the Federal Trade Commission, which under the Clinton administration has examined large corporate mergers with a vigor not seen since the 1970s. The agency has blocked a number of proposed mergers, such as the $4 billion combination of Staples and Office Depot, the two largest office supply discounters, and two deals involving the four largest drug wholesalers. On the other hand it has approved other big mergers, such as Boeing's $14 billion acquisition of McDonnell Douglas. The agency's analysis of an Exxon-Mobil combination, a senior official said Friday, will turn on how it might resemble John D. Rockefeller's Standard Oil trust before it was dismantled by the Supreme Court in 1911. ``The big antitrust issue is whether, by a merger or alliance, they will be able to get the competition of one another off their backs, particularly against the background of BP-Amoco and Shell-Texaco,'' said Eleanor M. Fox, a professor at the New York University School of Law and an antitrust expert. ``It may be that we are looking at a consolidation on the world level that looked like the consolidation on the national level 100 years ago.'' The Federal Trade Commission recently approved a significant joint venture between Shell and Texaco after the venture agreed to sell a refinery and divest some retailing operations in Hawaii and California. It is also considering the proposed $54 billion merger of British Petroleum and Amoco and will now have to re-examine that combination in light of the new talks between Exxon and Mobil. ``In the past, when there have been two mergers involving the same industry, the government has considered them together in deciding how to deal with them,'' said Terry Calvani, a former commissioner at the Federal Trade Commission whose clients now include Chevron. But coming in the aftermath of the Shell-Texaco and BP-Amoco deals, a combination of Exxon and Mobil, which have significantly overlapping retail and refinery businesses in the United States and Europe, poses questions that antitrust officials have not confronted since the 1980s. ``It's a real test case,'' said Frederick Leuffer, a senior energy analyst at Bear Stearns. ``If the FTC let this one go through without major divesting, then everything would be fair game. Why couldn't GM merge with Ford?'' While the 1911 breakup of Standard Oil is viewed by Washington officials and industry executives as ancient history, Exxon and Mobil have become the dominant rivals in some retailing and refining markets, and in the production of lubricants and petrochemicals. Leuffer said he believed divestitures necessary in this case ``could be so large that they are deal-breakers.'' Other analysts and lawyers, while disagreeing that the required divestitures could kill the deal, said the companies would nonetheless have to shed significant operations and that they expected challenges to be raised by a broad spectrum of constituents, including competitors, customers and state officials. ``These are not absolute obstacles,'' said John Hervey, an analyst at Donaldson Lufkin & Jenrette. In the past, when two big oil companies have merged, aggressive attorneys general from the states have almost always become involved in raising questions because of the high visibility of the local gas station. ``When a state attorney general drives by and sees four stations on a corner and two of them are Mobil and Exxon, they are certain to raise questions,'' Axinn said. Exxon and Mobil have significant concentrations of retailing and marketing concerns in the Northeast, the Southwest and the West Coast, where they also have big refining operations. Because the two companies are involved in everything from exploration and shipping to refining and retailing, the meaning of the deal for consumers will take months for the regulators to sort out. The regulators examining such a transaction would dissect each business, determine whether its market is global, national or more local, and determine whether the combined entity has too high a concentration of the business in those areas. Experts agreed that the regulators are most likely to permit Exxon and Mobil to keep their exploratory and oil production businesses because those areas are already highly competitive and a merger would not result in higher prices. Hervey said those markets are already so fragmented that the combined market share of major American and European oil companies is only 17 percent. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Still, Big Oil and small oil are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising, untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet oil that won't be selling for $100 a barrel by the turn of the century _ a price some analysts in the early 1980s were predicting it would reach. Philip K. Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. (italics)There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems?(end italics) A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. (italics)Why are you skeptical about the deal?(end italics) A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. (italics)Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger?(end italics) A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. (italics)That suggests Mobil has been harder hit than Exxon by the downturn in prices.(end italics) A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. (italics)Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree?(end italics) A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. (italics)The number of oil companies is going to shrink in coming years, regardless, isn't it?(end italics) A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. (italics)Do you think oil stocks are a good investment?(end italics) A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies.

In a move considered unthinkable a few years ago, Exxon Corp. and Mobile Corp, have entered into negotiations which could result in a merger of the two companies. Such a merger, should it occur, would form the world's largest oil company and the largest U.S. company, placing it above Wal-Mart. The merger, and talks like it among other oil companies, is being prompted By low petroleum prices and high production costs. Talks of a merger have sent the price of stocks of both companies soaring. The merger could prompt anti-trust action and the merging companies would have to divest themselves of some interests. Mobile workers fear a merger will cost them jobs.

News that Exxon and Mobil, two giants in the energy patch, were in merger talks last week is the biggest sign yet that corporate marriages are back in vogue. Even before that combination came to light, deal-making was fast and furious. On Monday alone, $40.4 billion in corporate acquisitions were either announced or declared imminent. Driving the resurgence in mergers is a roaring stock market, the recognition by major corporations that it is getting harder to increase revenues internally and growing confidence among market players that the economy will not plunge into a recession next year. There are also industry-specific issues, like low crude-oil prices that are driving oil giants into one another's arms. But for investors, mega-marriages are not where the real money is to be made. Rather, it is among smaller companies, whose still-depressed stock prices are luring bigger acquirers with stocks that again are near their peaks. If Exxon buys Mobil at close to current prices, deals this month will have a total value of more than $140 billion _ off from April's peak of $244 billion but three times the volume in September, when the stock market was falling. Which industries are likely to witness the most mergers? Tom Burnett, director of Merger Insight, an institutional investment advisory firm in New York, says more deals are a certainty in energy, which is suffering from low crude-oil prices. Burnett also says health care executives are finding it tougher than ever to lift earnings. But smaller companies may be a better way to play the takeover game. Charles LaLoggia, editor of the Special Situation Investor newsletter in Potomac, Md., said: ``Some of the premiums in high-profile mergers aren't so great anymore. The values are in small-cap stocks.'' Another reason is that deals involving smaller-cap candidates are less likely to incur the wrath of antitrust regulators. LaLoggia reckons that the odds of picking takeover winners increase if an investor focuses on companies already partially owned by another. In the energy sector, Houston Exploration qualifies, he says; the oil and gas driller is 66 percent owned by Keyspan Energy. He also believes more deals are imminent among drug chains and supermarkets. Longs Drug Stores and Drug Emporium, he says, remain acquisition candidates, though neither is controlled by another concern. In supermarkets, LaLoggia likes the Great Atlantic & Pacific Tea Co., 55 percent owned by Tengelmann Group of Germany. Another pick is Smart and Final, an operator of warehouse-style stores that is 55 percent owned by the U.S. subsidiary of Groupe Casino, France's largest supermarket chain. ``Both A&P and Smart and Final are trading at just about book value,'' LaLoggia said. Takeovers typically occur above book value. Finally, he recommends National Presto Industries, a maker of housewares and electrical appliances, which is trading near $39, close to its low for the year. The company has $30 a share in cash on its balance sheet, no debt and a dividend yield of 5 percent. After last month's announced acquisition of Rubbermaid by the Newell Co., LaLoggia thinks National Presto could find itself in an acquirer's cross-hairs. ||||| It was new highs again for the Standard & Poor's 500-stock and Nasdaq composite indexes Friday as anticipation of a new wave of mergers and a general rush by investors to join the equity rebound pushed stocks up. Oil stocks led the way as investors soaked up the news of continuing talks between Exxon and Mobil on a merger that would create the world's largest oil company. Internet and computer stocks also rallied, helped in part by the announcement on Tuesday of America Online's purchase of Netscape Communications in a three-way deal involving Sun Microsystems. At the same time, Germany's Deutsche Bank and Bankers Trust are scheduled to formally announce their merger on Monday. ``There is no question that the merger euphoria is the headline,'' said Hugh Johnson, chief investment officer at the First Albany Corp. ``But the flow into mutual funds is also strong.'' Exxon rose 1 11/16, to 74], while Mobil jumped 7|, to 86. Chevron, reflecting the bounce that other oil companies got from the merger news, climbed 5\, to 85|. Exxon and Chevron, along with IBM, which rose 3\, to 170, were the main drivers of the Dow Jones industrial average. It climbed 18.80 points, or two-tenths of a percent, to 9,333.08. It now stands just 41 points short of the record it set Monday and up 1.9 percent for the week. Mobil, along with Exxon, Chevron, IBM and Microsoft, which rose 3 13/16, to 128 1/16, were the power behind the S & P. It climbed 5.46 points, or five-tenths of a percent, to 1,192.33, a new high, the second of the week. It jumped 2.5 percent in the last five trading days. Cisco Systems, up 2 15/16, to 80; MCI Worldcom, up 1 11/16, to 62 7/16; Sun Microsystems, up 4|, to 80], and Microsoft pushed the Nasdaq index to its first new high since July 20. The technology-heavy index finished 31.23 points, or 1.57 percent, higher, at 2,016.44. It was up 4.6 percent for the week. Whether Friday's gains will stick will not be known before Monday. It was a shortened trading session, with the New York Stock Exchange closing at 1 p.m., and trading volume, at 257 million shares, made it the lightest day of the year. In the bond market, which also closed early because of the Thanksgiving weekend, the price of the 30-year Treasury bond rose 11/32, to 101 12/32. The bond's yield, which moves in the opposite direction from the price, fell to 5.16 percent from 5.18 percent on Wednesday. Long-term and short-term yields all slipped lower this week despite new economic data that indicated the economy was stronger in the third quarter than expected and seems to be moving along at a good pace in the current quarter. This small recovery in the face of stronger growth is probably because new inflation numbers show that prices are in check and analysts are still forecasting that the economy will begin to slow down next year. Many analysts have noted during the eight-week stock market rally, in which the Nasdaq composite index jumped 42 percent, that investors were buying again even though major financial problems around the world _ including a slumping Asia, a weakening Latin America and a troubled Russia _ have not been resolved. Johnson said he thought that investors, inspired by the Federal Reserve's three interest rate cuts in two months and by the new stimulus package in Japan, assume that these problems will be solved. ``Investors are looking over the valley and they like what they see,'' he said. But he worries that the financial crisis, which began in Thailand in July 1997 and was intensified by the effective default of Russia in August, will not go away quickly. ``It seems that in every financial crisis, everybody gets the impression that the storm has passed,'' Johnson said. ``But it is never that easy.'' ||||| They have been downsized, cut back and re-engineered. So when the 900 or so remaining blue-collar workers here at Mobil's largest domestic refinery, out of about 1,500 a decade ago, heard last week that their company was discussing a possible merger with Exxon, it was like a siren warning them that an already suspect valve might be about to blow. ``I think it's a terrible thing,'' said Dick Mabry, a refinery operator, as he emerged in the plant's artificial twilight from the main gate after his 12-hour shift ended at 4:30 on Sunday morning. He stopped to rub eyes rimmed with red, but on this topic his bedtime could be delayed. ``It's a revival of the Standard Oil Company. It's going to put 20 or 30 thousand people out of work. I think the Justice Department should step in and stop it.'' Ernest Lewis, whose overalls bore a ``Big E'' patch appropriate to his scale, added his uh-huh's. The latest evidence of where things were heading hulked right nearby, he said, glancing over at a new power plant likely to be operated by an outside company without the unions that now man the refinery's generators. But if the Mobil Corp. has to be sold, Lewis said, noting the gains in his company stock holdings, a buyer as solid and large as the Exxon Corp. might be the least of all evils. ``If we merged with Chevron, we'd be Moron,'' he added. A growing American economy that can make a billionaire out of someone with an unproven idea for Internet marketing is still sloughing off workers in older industries, in petroleum as much as any. Those here point to the tote board by the Beaumont plant's brick headquarters, that they say shows they have already handled 171 million barrels out of 130 million planned for the full year. But the numbers that matter even more are the ones like 89.9, 88.9, even 81.9, on nearby gas stations _ the lowest prices, after inflation, since the Depression. Which is why Mobil and Exxon are considering combining into the world's largest oil company. Some people close to the talks cautioned that no deal would be considered by their boards until at least Tuesday, maybe Wednesday. And that is why, beginning last Wednesday evening, the phone at the home of Jimmy Herrington, the president of the Oil, Chemical and Atomic Workers Local 4-243 rang without stop. No, he didn't know about that merger talk on television, said Herrington, who also works full-time producing lubricants. He had asked some Mobil managers, in a meeting earlier this month, about all the rumors, but they said they had heard nothing. Oil industry analysts say that the first targets of a combined company's efforts to cut billions of dollars in annual costs would be the office staff and the professionals, like geologists and engineers, in the field. One company's accountants could almost do the work for two. But the crews here fully expect that an Exxon or any other buyer would ask yet again whether the refinery could turn more crude oil into gasoline, motor oil and other products with even fewer people. Union leaders raise the prospect that Exxon would have to sell the refinery. Antitrust regulators, they say, are bound to notice that Exxon has refineries an hour's drive in one direction and three hours in the other, along a Gulf of Mexico crescent that forms the petrochemical industry's home. The Beaumont plant, a steaming, humming chemistry set lining the Neches River off the Gulf, has become the prime provider of livelihoods here since it was built almost under the spray of the nearby Spindletop gusher. With mounting overtime that can stretch a shift to 16 hours or more, workers regularly make $55,000 or $65,000 a year. ``People go there to retire there,'' Herrington said, as he drove around the plant's fenced periphery. Lewis, in his 17th year, is a third-generation employee. But his nephew laboring here too is the exception. The workers streaming to and from the plant before dawn are mostly balding or going gray, a sign that for a full generation the refinery has been more concerned about how to get rid of workers than how to attract them. The cutbacks have, so far, come through attrition, with retirements often encouraged by incentives. But the plywood sheets covering the windows of most of the fast food places and gas stations around Herrington's union hall advertise that the best times are long gone. His members chafe at the experts who come in from Wall Street to question the justification for every person's job. In tiring and dangerous tasks, they question the elimination of most relief laborers in favor of covering vacations and sickness with overtime (although some like the extra pay, and they say the plant has become safer over the years). They complain about the growing numbers of outside contractors taking over formerly unionized tasks. But with many workers choosing to invest at least some retirement savings in Mobil stock, a 1990s ethos is gaining. Some share credit with the plant's management for the efficiency measures they agree are necessary for true job security. Some take the attitude that every company is always for sale. ``They will not be too concerned about what we feel about it,'' said Sam Salim, one of the electrical plant workers whose future is uncertain. ``But if they fork out $60 billion? I'd look it over.'' With most Mobil executives saying as little as possible for now, calls on Sunday to the local plant manager and a company spokesman did not elicit a peep. Union leaders, however, are already squawking. ''I don't believe creating new monopolies is the way to prop up the industry,'' said Robert Wages, a former refinery operator himself and now the union's president, by telephone Saturday. Nevertheless, with admirable foresight the union negotiated a clause in last November's three-year contract extension guaranteeing that any company buyer would have to keep to its terms. Many members, who typically came to work after high school, are already molding the oil companies' latest exploits into case studies fit for rapacious MBA's. ``They're the biggest,'' said Bobby Whisneant, an assistant operator in the gasoline and lubrication oil units, referring to Exxon. He was coming, early on Sunday morning, through a plant gate whose white canopy seems borrowed from a self-service station. ``So they go buy the second biggest. That's one way to get rid of the competition. I just hope it's not something like the 80s _ buying companies and scrapping them.'' Or something like the Robber Baron era a century before, said Mabry, another operator. ``Didn't the teachers teach us all through school that the Standard Oil Company would never come back? Remember that?'' he said, looking to his friend, Lewis, the Big E, for agreement. ``But I better shut up. I still work for Mobil.'' ``Used to,'' Lewis said. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of General Electric Co., and Mobil, the No. 2 U.S. oil company, came as oil prices sank to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. As oil prices have plummeted to levels last seen in the mid-1980s, oil companies have been under pressure to cut costs. Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, both have histories of being fiercely independent, and both have already cut back on staff and made themselves lean to survive even during a prolonged period of low oil prices. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced an agreement to buy Amoco Corp. for $48.2 million, creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that any combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well-run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on exploration areas of their own such as the deep waters in the Gulf of Mexico as well as West Africa and parts of Asia. Such exploration is very expensive, and even when a big field is discovered, platforms costing $1 billion or more are required to bring the it into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry the combined company would control. Analysts and investment bankers were split about the logic of a potential deal. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for development projects in the Middle East. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' Ms. Jaffe said the proposed deal would provide each company with assets in areas where it had little influence. ``There are a lot of complementary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Exxon Corp. and Mobil Corp. have held discussions about combining their business operations, a person involved in the talks said Wednesday. It was unclear Wednesday whether talks were continuing. If the companies were to merge, it would create the largest U.S. company in terms of revenue. A possible merger was reported separately by both The Financial Times of London and Bloomberg News. The reported talks between Exxon, whose annual revenue exceeds that of Wal-Mart and General Electric, and Mobil, the No. 2 U.S. oil company, come as oil prices have sunk to their lowest in almost 12 years. A combined company would be bigger than Royal Dutch/Shell Group, the world's largest oil company by revenue. Financial terms of the discussions could not be determined Wednesday. Neither Exxon or Mobil would comment. Any union would reunite two parts of John D. Rockefeller's Standard Oil Trust, which was broken up by the Supreme Court in 1911. Exxon was then known as Standard Oil of New Jersey, and Mobil consisted of two companies: Standard Oil of New York and Vacuum Oil. Both Exxon, which has a market value of $176.7 billion, and Mobil, which has a market value of $61.1 billion, have a history of being fiercely independence. Both have already cut back on staff and made themselves lean in order to survive long periods when oil prices are low. But this has been a particularly unsettling year for the oil industry, and there is little prospect that crude oil prices will recover soon. Consequently, chief executives of most oil companies have had to swallow their pride and look for suitable partners. This summer, British Petroleum announced a $48.2 billion agreement to buy Amoco Corp., creating the world's third-largest oil company and prompting analysts to predict even more widespread consolidation. ``It showed that megamergers are doable,'' said Adam Sieminski, an analyst for BT Alex. Brown. He added, however, that a combination between Exxon and Mobil would not be an easy match because Mobil has been known for being a proud company that has said in the past that it would not want to merge. Exxon, he added, is a ``well run company that likes to grow its own businesses.'' He added that the heads of both companies, Lee Raymond, the chairman of Exxon, which is based in Irving, Texas, and Lucio Noto, the chairman, president and chief executive of Mobil, which is based in Fairfax, Va., are different personalities. ``It will not be easy,'' he said of combining the two far-flung companies, which have vast networks of refineries and gas stations that overlap in the United States and Europe. ``If you offer enough money you can make anything happen,'' he added. Both companies are under pressure to find new fields of oil to help them survive in the long term. Like other oil companies, they had hoped to quickly tap into the vast reserves of Russia. Even though they were prepared to spend billions, they have held back because of the political and economic crisis in Russia and great reluctance by Russian officials and oil companies to give up control of vast fields. Thus they have had to fall back on their own exploration areas such as the deep waters in the Gulf of Mexico and West Africa. Such exploration is very expensive, and even when large fields are found it often takes platforms costing $1 billion to bring the oil into production. Oil prices have been under pressure for more than a year, falling more than 40 percent from the $20-a-barrel level because of growing inventories of petroleum and declining Asian demand caused by the economic crisis there. On Wednesday, crude oil for January delivery fell 29 cents, or 2.6 percent, to $11.86 a barrel on the New York Mercantile Exchange, close to the 12-year low of $11.42 reached on June 15. Members of the Organization of Petroleum Exporting Countries and some other oil-producing nations, notably Mexico, have tried to stem the price drops with pledges to cut back on production. But those pledges have not always been honored, and rallies in the oil market this year have proven short-lived. OPEC members on Wednesday continued their discussion on extending their production cutbacks, and an agreement is expected as early as Thursday. In the spring, OPEC agreed to reduce production by 2.6 million barrels a day, about 3 percent of the daily world supply of 74 million barrels. The main result of that agreement appears to have been to keep oil prices from falling below $10 a barrel. Washington regulators said Wednesday that they had not been notified about the Exxon-Mobil discussions. The Federal Trade Commission is still reviewing British Petroleum's pending purchase of Amoco. An Exxon-Mobil deal would be certain to receive several months' worth of scrutiny by the commission, which would review how much of the industry such a merger would control. Analysts and investment bankers were split about the logic of the possible merger. Some pointed to difficulties that the companies could face if they were combined. ``If you asked me if Exxon needed to be bigger, the answer is probably no,'' said Garfield Miller, president of Aegis Energy Advisors Corp., a small independent investment bank based in New York. ``It is hard to say that there is anything in particular to gain.'' In particular, Miller said, the two companies have enormous similarities in their domestic refining and marketing businesses. ``They really do overlap quite a bit,'' he said. ``You really do wonder what is the benefit of all that redundancy.'' Another investment banker in the energy business, speaking on the condition of anonymity, also questioned the rationale for the discussed merger. ``When you look at the BP-Amoco deal, you can rationalize it,'' the banker said. ``But none of those reasons apply to an Exxon-Mobil deal.'' But Amy Jaffe, an energy research analyst with the James A. Baker III Institute for Public Policy, said the combination of the two companies would be logical, in part because it would give them greater influence in bidding for projects in Middle Eastern countries. ``This is a deal that makes sense,'' Ms. Jaffe said. ``With this combined company, there is no project that would be too big.'' In addition, Ms. Jaffe said, the merger would provide each company with new oil and gas assets in areas of the world where they had little influence. ``There are a lot of complimentary assets where they are not redundant,'' she said. She said that Exxon, for example, has a strong presence in Angola, while Mobil does not. And Mobil has significant assets in the Caspian Sea and Nigeria, where Exxon is weak. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Oil companies of all stripes are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet that oil won't be selling for $100 a barrel by the turn of the century _ something analysts were predicting during the oil price run-up of the early 1980s. Philip Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems? A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. Why are you skeptical about the deal? A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger? A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. That suggests Mobil has been harder hit than Exxon by the downturn in prices. A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to the price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree? A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again, that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. The number of oil companies is going to shrink in coming years, regardless, isn't it? A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. Do you think oil stocks are a good investment? A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies. ||||| The boards of Exxon Corp. and Mobil Corp. are expected to meet Tuesday to consider a possible merger agreement that would form the world's largest oil company, a source close to the negotiations said Friday. The source, who spoke on condition of anonymity, said ``the prospects were good'' for completing an agreement. Exxon and Mobil confirmed Friday that they were discussing ways to combine. They cautioned, however, that no agreement had been reached and there was no assurance they would reach one. The statement sent the stock of both companies surging, suggesting investors believe the companies will combine. Shares of Exxon, the biggest U.S. oil company, rose $1.6875, or 2.3 percent, to $74.375. Shares of Mobil, the No. 2 U.S. oil company, rose $7.625, or 9.7 percent, to $86. Some analysts said that if the two giants reached an agreement, it was likely to be in the form of a takeover by Exxon of Mobil. Exxon is far larger and financially stronger. Analysts predicted that there would be huge cuts in duplicate staff from both companies, which employ 122,700 people. Adam Sieminski, an oil analyst for BT Alex. Brown, said that the companies would probably make cuts to save about $3 billion to $5 billion a year. Sieminski and other analysts said Exxon would have to offer a premium of about 15 to 20 percent over its price prior to Monday, when serious speculation of an Exxon takeover of Mobil first circulated and sent Mobil shares up sharply. They said the transaction would probably be an exchange of Mobil shares for Exxon shares. Based on Mobil's $75.25 share price a week ago, a takeover of the company would be worth about $70 billion. The merger discussions come against a backdrop of particularly severe pressure on Lucio Noto, the chairman, president and chief executive of Mobil, to find new reserves of oil and natural gas and to keep big projects profitable at a time of a deep decline in crude oil prices. ``This is one of the most intelligent chief executives in the business and a man of considerable ability but he inherited some serious structural problems in his company,'' said J. Robin West, the chairman of Petroleum Finance Co., a consulting group to the energy industry based in Washington. He said that Mobil's prime assets include the Arun natural gas field in Indonesia, one of the largest in the world, which has contributed up to one-third of Mobil's profits for years but is beginning to run down. The field, in production since 1977, supplies liquefied natural gas to Japan and Korea. Although Mobil under Noto has moved quickly to cut costs and muscle its way into promising new areas such as Kazakhstan, where it is a partner in a joint venture to develop the huge Tengiz oil field, the payoff from such ventures is many years away. Other companies face similar strains. ``The challenge is to replace their crown jewels and grow in an increasingly competitive environment,'' West said. Noto has not been shy about sitting down with other companies such as British Petroleum and Amoco this year to see if a combination made sense. Although Exxon chairman Lee Raymond heads a much stronger and bigger company than Mobil, he has not been immune to the strains on the global petroleum business. Those strains intensified this year when Russia's economic collapse raised the risks of Exxon's extensive exploration venture in that country. Exxon has also been more of a follower than a leader in huge projects in the deep offshore fields, where major finds have been made near West Africa and in the Gulf of Mexico. ||||| Whether or not the talks between Exxon and Mobil lead to a merger or some other business combination, America's economic history is already being rewritten. In energy as in businesses like financial services, telecommunications and automobiles, global competition and technology have made unthinkable combinations practical, even necessary. Oil companies like Exxon Corp. and Mobil Corp. have an additional pressure, one unthinkable less than two decades ago. Crude oil prices have fallen sharply, plunging 40 percent just this year to levels, adjusted for inflation, not seen since before the first oil embargo 25 years ago. As such, the oil companies, having spent years cutting their costs, are desperate for further savings in order to continue operating profitably with such low prices. Exxon and Mobil are the two largest, strongest competitors to emerge from the nation's most famous antitrust case, the 1911 breakup of John D. Rockefeller's Standard Oil Trust. Now they face a Royal Dutch/Shell Group that is larger than either of them. They will also confront a British Petroleum PLC made far more potent in the United States by its agreement this summer to buy Amoco Corp. for $48.2 billion. Industry executives say further deals on this scale are inevitable. Executives at both companies did not return calls Thursday for comment on the talks, and it was unclear Thursday night what the outcome might be. But if Exxon and Mobil agree to become one, antitrust regulators are likely to be cautious about putting back together much of what they long ago broke apart. Even so, most oil industry analysts contend that improved efficiency from combining giant energy companies would do more to lower costs than the more concentrated ownership of gas stations and refineries would do to raise them. ``The ultimate beneficiary of all this will be the consumer,'' said Daniel Yergin, the chairman of Cambridge Energy Research Associates. If Exxon and Mobil ultimately do combine, the costs could prove heaviest for energy industry employees. Analysts say that of the about 80,000 global employees at Exxon, based in Irving, Texas, and the more than 40,000 at Mobil, in Fairfax, Va., thousands would be likely to lose their jobs. Exxon, with Lee R. Raymond, and Mobil, with Lucio A. Noto, both have chief executives who have been preoccupied with the humbling accommodations that low oil prices have made necessary. Oil companies were everybody's favorite targets during the trust-busting era early this century and again during the Arab oil embargoes of the 1970s. Now they seem especially vulnerable as demand weakens in much of the world, especially in economically troubled Asia, weighing further on already depressed prices. ``They're pitiful, helpless giants,'' said Ronald Chernow, the author of ``Titan,'' a biography of John D. Rockefeller, Standard Oil's founder. As such, these giants are compelled to continue cutting costs and spreading the risks of their huge, expensive international projects that are needed to develop oil reserves needed for the next century. Mobil, with $58.4 billion in sales last year, might seem large enough to undertake anything. But in competing for rights to develop huge natural gas fields in Turkmenistan, a former Soviet republic, Mobil was unable to match Shell's offer to build a pipeline for $1 billion or more. Oil companies have decided that they cannot count on a rebound in oil prices to revive their fortunes any time soon. Earlier this month, the Energy Department predicted that the collapse of Asian demand would continue to depress oil prices for nearly a decade, and by as much as $5.50 a barrel in the year 2000. And Thursday, the Organization of Petroleum Exporting Countries put off until March any decision on extending their oil production cutbacks to prop up prices. Moreover, improving technology for exploration and production and the opening of new regions to development have added to the already huge supply of oil that is on hand now. In response, many energy companies have already begun a new wave of cutbacks in their staffs and operations. To further reduce costs, companies like Mobil are forming partnerships that stop short of full mergers. Two years ago, Mobil agreed to combine its European refining and marketing operations with British Petroleum's, resulting in annual savings of about $500 million. Shell and Texaco then formed a refining partnership in the United States. In the face of these partnerships, said Amy Jaffe, an energy analysts with the James A. Baker III Institute for Public Policy in Houston, ``if you're an Exxon, how do you compete?'' Though Mobil and Exxon might have high concentrations of gas stations in certain areas of the United States, analysts say they have far more competition at the pump than before oil prices collapsed in the 1980s. Thousands of convenience stores now also sell gasoline produced by a variety of refining companies, and foreign national oil companies, like Venezuela's, sell their supplies through acquired companies like Citgo. Under Noto, Mobil has been hunting for ways of becoming large and lean enough to survive. He took the lead in the deal with British Petroleum and has considered buying up smaller companies. And he has made it clear that corporate or personal pride would never block a deal. In the European agreement with British Petroleum, Mobil's red flying horses have come down from the fronts of many gas stations, while the green and yellow BP logos have gone up. As major oil companies team up, said John Hervey, an analyst with Donaldson Lufkin & Jenrette, ``If the price is right, egos will not get in the way.'' In the past, Mobil reportedly had further talks with British Petroleum about other combinations, as well as talks with Amoco about forming an American refining venture. The company was also interested in Conoco Inc. when DuPont Co. began looking to divest itself of that oil and gas business. But no deals were reached. More recently, there was speculation on Wall Street that Mobil had been talking with Chevron Corp. British Petroleum purchase of Amoco put more pressure on Noto to seek a deal, Hervey said. ``I don't think this whole thing would have started if British Petroleum had not pulled the trigger,'' he said. The British Petroleum-Amoco deal, progressing quickly since the August announcement towards an expected $2 billion in annual savings, has put even companies as large as Exxon on the spot. There, Raymond has so far concentrated more on making his operations more efficient than on finding allies. Though Royal Dutch/Shell's financial resources are greater than Exxon's, some analysts say Exxon still has the size and soundness to absorb a company of Mobil's size. Only the largest oil companies can afford to take advantage of today's best opportunities. Finding new fields in the deep waters off the coast of West Africa or in the Gulf of Mexico can require platforms costing $1 billion or more. Producing oil in the states of the former Soviet Union has taken more time and money than many investors anticipated. In September, Noto was among the American executives invited by a Saudi leader visiting Washington to greatly step up investments in his country, too. Noto spent from 1977 to 1985 in Saudi Arabia himself, building up Mobil operations including a huge refinery. But any new partnerships with the Saudis might require both Mobil's connections and Exxon's capital. Back when Standard Oil organized its operations by state, Exxon was Standard Oil of New Jersey, while Mobil was Standard Oil of New York. Even after the Standard Oil monopoly was broken up, they remained for several years in the same building in Manhattan. Chernow, the Rockefeller biographer, noted that two pieces of the Standard Oil trust are already likely to be united. British Petroleum bought Standard Oil of Ohio in the 1970s, and Amoco was once Standard Oil of Indiana. The break-up of Standard Oil and the resulting competition has often been cited as a precedent for the current antitrust action against Microsoft. Chernow sees no reason why allowing an Exxon acquisition of Mobil to go through should suggest more leniency for Microsoft. ``Exxon would not be obviously larger than its leading competitors, the way Microsoft is,'' he said. In the energy business today, he added, ``there are other large dinosaurs that stalk that particular jungle.'' ||||| Exxon and Mobil, the nation's two largest oil companies, confirmed Friday that they were discussing a possible merger, and antitrust lawyers, industry analysts and government officials predicted that any deal would require the sale of important large pieces of such a new corporate behemoth. Those divestitures would further reshape an industry already undergoing a broad transformation because of the low price of oil. But the mergers and other corporate combinations are also beginning to create a new regulatory climate among antitrust officials, one that may prove particularly challenging to Exxon and Mobil. Although the companies only confirmed that they were discussing the possibility of a merger, a person close to the discussions said the boards of both Exxon and Mobil were expected to meet Tuesday to consider an agreement. Shares of both surged on the New York Stock Exchange. Oil exploration and drilling interests would not necessarily present antitrust problems in an Exxon-Mobil merger because competition in those areas is brisk. But in retailing and marketing operations, an Exxon-Mobil combination would be ``like Ford merging with General Motors, Macy's with Gimbels,'' said Stephen Axinn, an antitrust lawyer in New York who represented Texaco in its acquisition of Getty more than a decade ago. In the United States, the deal would come under the purview of the Federal Trade Commission, which under the Clinton administration has examined large corporate mergers with a vigor not seen since the 1970s. The agency has blocked a number of proposed mergers, such as the $4 billion combination of Staples and Office Depot, the two largest office supply discounters, and two deals involving the four largest drug wholesalers. On the other hand it has approved other big mergers, such as Boeing's $14 billion acquisition of McDonnell Douglas. The agency's analysis of an Exxon-Mobil combination, a senior official said Friday, will turn on how it might resemble John D. Rockefeller's Standard Oil trust before it was dismantled by the Supreme Court in 1911. ``The big antitrust issue is whether, by a merger or alliance, they will be able to get the competition of one another off their backs, particularly against the background of BP-Amoco and Shell-Texaco,'' said Eleanor M. Fox, a professor at the New York University School of Law and an antitrust expert. ``It may be that we are looking at a consolidation on the world level that looked like the consolidation on the national level 100 years ago.'' The Federal Trade Commission recently approved a significant joint venture between Shell and Texaco after the venture agreed to sell a refinery and divest some retailing operations in Hawaii and California. It is also considering the proposed $54 billion merger of British Petroleum and Amoco and will now have to re-examine that combination in light of the new talks between Exxon and Mobil. ``In the past, when there have been two mergers involving the same industry, the government has considered them together in deciding how to deal with them,'' said Terry Calvani, a former commissioner at the Federal Trade Commission whose clients now include Chevron. But coming in the aftermath of the Shell-Texaco and BP-Amoco deals, a combination of Exxon and Mobil, which have significantly overlapping retail and refinery businesses in the United States and Europe, poses questions that antitrust officials have not confronted since the 1980s. ``It's a real test case,'' said Frederick Leuffer, a senior energy analyst at Bear Stearns. ``If the FTC let this one go through without major divesting, then everything would be fair game. Why couldn't GM merge with Ford?'' While the 1911 breakup of Standard Oil is viewed by Washington officials and industry executives as ancient history, Exxon and Mobil have become the dominant rivals in some retailing and refining markets, and in the production of lubricants and petrochemicals. Leuffer said he believed divestitures necessary in this case ``could be so large that they are deal-breakers.'' Other analysts and lawyers, while disagreeing that the required divestitures could kill the deal, said the companies would nonetheless have to shed significant operations and that they expected challenges to be raised by a broad spectrum of constituents, including competitors, customers and state officials. ``These are not absolute obstacles,'' said John Hervey, an analyst at Donaldson Lufkin & Jenrette. In the past, when two big oil companies have merged, aggressive attorneys general from the states have almost always become involved in raising questions because of the high visibility of the local gas station. ``When a state attorney general drives by and sees four stations on a corner and two of them are Mobil and Exxon, they are certain to raise questions,'' Axinn said. Exxon and Mobil have significant concentrations of retailing and marketing concerns in the Northeast, the Southwest and the West Coast, where they also have big refining operations. Because the two companies are involved in everything from exploration and shipping to refining and retailing, the meaning of the deal for consumers will take months for the regulators to sort out. The regulators examining such a transaction would dissect each business, determine whether its market is global, national or more local, and determine whether the combined entity has too high a concentration of the business in those areas. Experts agreed that the regulators are most likely to permit Exxon and Mobil to keep their exploratory and oil production businesses because those areas are already highly competitive and a merger would not result in higher prices. Hervey said those markets are already so fragmented that the combined market share of major American and European oil companies is only 17 percent. ||||| Times are tough in the oil patch. Still, it boggles the mind to accept the notion that hardship is driving profitable Big Oil to either merge, as British Petroleum and Amoco have already agreed to do, or at least to consider the prospect, as Exxon and Mobil are doing. Still, Big Oil and small oil are getting squeezed by low petroleum prices and the high capital costs of exploration. Given the exotic locales of the most promising, untapped fields, it seems unlikely that exploration will get cheaper. And with West Texas crude trading at around $12 a barrel, it seems a safe bet oil that won't be selling for $100 a barrel by the turn of the century _ a price some analysts in the early 1980s were predicting it would reach. Philip K. Verleger Jr., publisher of Petroleum Economics Monthly and a senior adviser to the Brattle Group, a Cambridge, Mass., consulting firm, spent some time late last week talking about Mobil, Exxon and the changing dynamics of the oil business. Following are excerpts from the conversation: Q. (italics)There is a lot of focus on the antitrust aspects of an Exxon-Mobil deal. Do you see any problems?(end italics) A. Let me say right off that I don't think this is a done deal. I think it is far from that. But if it were to happen, I don't see many problems. BP Amoco is the perfect end-to-end merger, one in which there is little or no overlap with the company you are merging with. Exxon-Mobil comes close. The first issue is competition in local markets. The only possible problem area there is on the West Coast, but both companies are pretty small players there. If there is a reason this merger might get extra attention, it will be because Exxon and Mobil have not been terribly friendly toward either the Clinton administration's or the European Union's positions on global warming. Q. (italics)Why are you skeptical about the deal?(end italics) A. Well, Mobil has been trying to get bigger. They had talks with Amoco. They wanted to buy Conoco. But I don't understand where Lucio Noto, Mobil's chief executive, fits into this. That could be an impediment to an agreement, because in a merger I don't think he has a place, and he has been a very strong leader. Q. (italics)Mobil is the country's second-biggest oil company, behind Exxon. Why do they need to get bigger?(end italics) A. In the first decade of the next century, the really big exploration opportunities will be very capital intensive, and only companies with the deepest pockets will be able to stay in the game: Royal Dutch, Exxon and BP Amoco. Companies of Mobil's size are probably marginal players. Q. (italics)That suggests Mobil has been harder hit than Exxon by the downturn in prices.(end italics) A. From 1988 to 1996, Exxon's exploration and production expenditures rose 8 percent. Mobil's rose 14 percent. But Mobil's expenditures were much more sensitive to price elasticities of oil than Exxon's. They were pushing the envelope, and when prices fell they had to cut back. Exxon has tried to build a very large presence systematically, without paying much attention to month-to-month or even year-to-year fluctuations in oil prices. They are brutally efficient. Q. (italics)Earlier this month the Energy Department said oil prices would stay soft for nearly a decade. Do you agree?(end italics) A. You know, every time I see forecasts that go out that far I want to go out and buy stock in oil companies. I think we are going to see low oil prices for six months to a year. It is conceivable we could go into the next century with oil at $5 a barrel, depending on what happens to the world economy. During that period, we are going to see a substantial reduction in investment in exploration and production, leading to a reduction in supply coming out of non-OPEC countries. That will strengthen the hands of the OPEC countries. And when the Asian economies start growing again that will lead to a good deal higher oil prices, say $20 a barrel, in the next 18 months. Q. (italics)The number of oil companies is going to shrink in coming years, regardless, isn't it?(end italics) A. We are probably heading toward a world in which there are no more than five or six big oil companies, possibly eight. There is really no precedent for having as many big players as we have in the oil business in this modern society. Q. (italics)Do you think oil stocks are a good investment?(end italics) A. I think oil companies are still a worthwhile investment, but it is not a place where an investor should plan on making money over the next 9 to 12 months. And it is an area where investors need to be careful, because in that period there will be a good deal of consolidation among smaller companies.

Exxon Corp and Mobil Corp are reported to be discussing a business merger. Other oil companies have merged to compensate for low oil prices and increasing costs of oil exploration in more remote areas. The mergers are consistent with a trend in corporate marriages that is changing U.S. economic history. The mergers are pushing stocks up and the Exxon-Mobil merger could benefit consumers and lead to further savings. Some people believe the merger would require selling of large corporate pieces and put thousands out of work. If the companies merge, it would be the largest U.S. company and bigger than the world's largest oil company, Royal Dutch/Shell Group.

Police arrested two journalists and charged them with writing articles to encourage Muslim youths to stage an Islamic revolution in Bangladesh after the Taliban model in Afghanistan, a police officer said Thursday. Mufti Abdul Hye and Manzoor Ahmed, editors at ``Jago Mujahid'' or ``Wake Up Mujahid,'' a monthy magazine published from Dhaka, the Bangladeshi capital, were jailed for a month shortly after their arrest on Wednesday. They were arrested under a 1974 law that allows police to detain any one for offenses related to national security, the officer said on condition of anonymity. Those arrested need not be taken to court for trial for up to three months. Police seized copies of the newspaper for reproducing a foreign newspaper interview of Afghanistan-based Saudi billionaire Osama Bin Laden, who has been accused by the United States of masterminding bombing attacks on the U.S. embassies in Kenya and Tanzania in August. Under Taliban rules women may not study or work outside their houses, and all kinds of light entertainment including music are banned. Men must grow beards of a certain length and criminals are subjected to amputations and public executions Even though Bangladesh is a predominantly Muslim country, it is governed by secular laws. Prime Minister Sheikh Hasina's liberal government hasn't recognized the Taliban government in Afghanistan. ||||| Albania says it has uncovered a terrorist network operated by Osama Bin Laden, the Islamic fundamentalist accused of masterminding the August embassy bombings in Africa, and that it's members have infiltrated other parts of Europe, The Sunday Times reported. The newspaper quoted Fatos Klosi, the head of Shik, the Albanian intelligence service, as saying that Bin Laden's network had sent units to fight in Kosovo, the neighboring Serbian province. ``Egyptians, Saudi Arabians, Algerians, Tunisians, Sudanese and Kuwaitis _ they come from several different organizations,'' Klosi was quoted as telling The Sunday Times. He said he believed terrorists had already infiltrated other parts of Europe from bases in Albania through a traffic in illegal immigrants, who have been smuggled across the Mediterranean to Italy in huge numbers. Interpol believes more than 100,000 blank Albanian passports were stolen in riots last year, providing ample opportunity for terrorists to acquire false papers, the newspaper said. Apparent confirmation of the Bin Laden's activities came earlier this month during the murder trial of Claude Kader, 27, a French national and self-confessed member of Bin Laden's Albanian network, the newspaper said. Kader claimed during the trial that he had visited Albania to recruit and arm fighters for Kosovo, and that four of his associates were still at large. Bin Laden is believed to have established an Albanian operation in 1994 after telling the government that he was head of a wealthy Saudi humanitarian agency wishing to help in Albania, the newspaper reported. ||||| If Osama bin Laden ever stands trial in New York for the bombings of the U.S. embassies in Africa and other acts of terror, it is already clear who prosecutors will call as a chief witness: One of his senior aides who has been talking to U.S. investigators for two years. The government has identified the aide in court papers with the pseudonym CS-1, saying the person pleaded guilty to terrorism charges in a secret proceeding in U.S. district court in Manhattan. According to the government, the informant worked closely with bin Laden from 1989 to 1996, a period when prosecutors assert that bin Laden was ordering deadly attacks on U.S. soldiers in Somalia and elsewhere. From the court papers filed in the investigation of the embassy bombings in East Africa in August, it is clear that the informant has provided crucial information to federal investigators. They have cited the source in the papers filed to support the extradition of two associates of bin Laden who are under arrest in Germany and Britain. Bin Laden, a Saudi exile, is thought to be living in Afghanistan. The source is also the basis for many of the significant charges in the indictment against bin Laden himself, including the assertion that he directed the attacks on U.S. soldiers in Somalia and that he attempted to obtain nuclear weapons. It is not known whether the source is in custody somewhere, or hiding under government protection. As recently as 11 days ago, records show, the source swore to a 5-page affidavit before a New York notary summarizing his allegations against bin Laden. Government officials adamantly declined to say anything about the identity of CS-1, which stands for ``confidential source.'' But at least one operative of bin Laden's group in East Africa concluded more than a year ago that he knew the identity of a crucial turncoat: Sidi Tayyib, a businessman who was married to one of bin Laden's relatives. The operative's concerns were inflamed by a report in a British newspaper that Tayyib was cooperating with Saudi and U.S. authorities. In an August, 1997 article, The Daily Telegraph said Tayyib had been in custody in Saudi Arabia since May and had given intelligence officials details of bin Laden's bank accounts and businesses. The news of Tayyib's possible defection, the East African operative wrote in a report apparently intended for the group's commanders, ``almost made me explode. ``An important man with close links to'' bin Laden ``seems to have fallen into the enemy's hands, and we have to take all the appropriate security precautions against that,'' the operative, Haroun Fazil, wrote in his summary of security concerns. Fazil has since been charged in the embassy attacks and remains at large. The report was typed on a computer seized last year by Kenyan authorities, according to a government filing last week in U.S. district court in Manhattan. Thus far, U.S. prosecutors have charged at least six members of bin Laden's organization with terrorist activities or conspiracy. In one recent filing, they said their case will in part be ``based on the testimony'' of the confidential source, suggesting that the informant has agreed to testify at any trial of bin Laden or his associates. The arrangement appears to have resulted from a plea bargain in which the source is cooperating in hopes of receiving a lesser sentence. There is no indication that the source has yet been sentenced and it seems likely that sentencing would take place after the investigation and ensuing trials are complete. In the affidavit prepared last week, the source acknowledged pleading guilty to terrorism charges in the United States and said they stemmed from attacks on U.S. targets, which were not specifically identified. The source described taking ``an oath of allegiance'' to follow bin Laden's orders, and gave a detailed account of bin Laden's group, including its history and inner workings. The source told of private statements by bin Laden to other al Qaeda members, encouraging them to attack U.S. troops and other citizens stationed in the Middle East and Africa. ``I either heard these statements myself,'' the source said, ``or I read them or learned of them from other al Qaeda members.'' The government has also said in other court papers that the source helped identify bin Laden's signature on a 1996 document urging Muslims to kill Americans. Tayyib's whereabouts are unknown and he could not be reached for comment. ||||| The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| MUNICH, Germany (AP) _ U.S. prosecutors have asked for a 20-day extension to provide Germany with paperwork necessary to extradite a top lieutenant of Saudi terrorist suspect Osama bin Laden, officials said Saturday. Mamdouh Mahmud Salim, 40, of Sudan, has been jailed since his arrest near Munich on Sept. 16 by Bavarian authorities acting on a U.S. warrant. Under German law, U.S. officials have 40 days after the arrest to turn over supporting evidence so a German court can rule on their extradition request. A Bavarian Justice Ministry spokesman, Gerhard Zierl, said U.S. authorities a few days ago asked the court hearing the case for an extra 20 days to provide the necessary material. Quoting unidentified Bavarian law enforcement sources, Focus newsmagazine reported Saturday that the evidence turned over so far was not very strong. The magazine said much of it was based on the testimony of an FBI informant, a former bin Laden associate, who made only vague connections between Salim and terrorist activities. Zierl declined to comment on the report, but said U.S. authorities probably asked for more time just a precautionary measure. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. A criminal complaint unsealed Sept. 25 in U.S. District Court in New York charges him with murder conspiracy and use of weapons of mass destruction. ||||| One of the clear but unstated objectives of last August's raid on Afghanistan was to kill Osama bin Laden and as many of his lieutenants as possible, administration officials now acknowledge. According to the officials, White House lawyers conducted a secret review in the months before the attack and concluded that such operations are legal under U.S. and international law. The officials said the raid was timed so that more than 70 cruise missiles would hit bin Laden's camps at the moment when the Central Intelligence Agency believed he would be meeting there with his chief operatives. A 1976 executive order bars anyone working for the U.S. government from plotting or carrying out assassinations. But officials said the White House legal opinion drafted before the Afghan strike asserts that the president has authority to target the ``infrastructure'' of terrorist groups that are attacking Americans. A top U.S. counterterrorism official said this week that the infrastructure of bin Laden's group is mostly ``human.'' ``As we said from the time of the Aug. 20 strike, the objective was to disrupt the training, organization and infrastructure of the bin Laden terrorist network at the Khost camps,'' said David C. Leavy, a spokesman for the National Security Council at the White House. Targeting infrastructure, officials acknowledged, can also mean destroying the leadership of a terrorist group. ``Command and control of an enemy is a justifiable target,'' Leavy said. Senior administration officials said they never discussed killing bin Laden in their planning sessions. His death, they said in interviews after the attack, would simply have been a side benefit. U.S. intelligence officials say they now believe that bin Laden was in the camp on the day of the attack, but he appears to have left unscathed before the missiles hit. Officials said there were reports that at least one of his senior lieutenants may have died in the attack, and that total casualties in the complex were between 50 and 100. Administration spokesmen have drawn a distinction between attempting to kill a specific person like bin Laden and attacking a group of people who command a terrorist organization. Administration officials have denied since August that the raid was intended to kill bin Laden, a Saudi exile who has been charged by federal prosecutors with leading a global war against U.S. interests. He has been linked to the Aug. 7 bombing of two U.S. embassies in East Africa. But a less subtle explanation was offered on Oct. 13 by Defense Secretary William Cohen, who said during a visit to Saudi Arabia that the United States had been ``going after'' bin Laden and his colleagues. ``We weren't quite successful,'' Cohen continued, ``but we sent a message.'' Kenneth Bacon, the Pentagon spokesman, said the secretary had not retracted his statements. The Los Angeles Times recently reported that the administration believed that it had a legal right to use deadly force against terrorist leaders. Bin Laden's organization was a significant concern for the Clinton administration even before the bombing of the U.S. embassies in East Africa. Last spring, officials said, U.S. intelligence considered a daring raid into Afghanistan to capture the Saudi exile. Officials said that at roughly the same time, the White House drafted the legal justification for military attacks against a terrorist leadership. That review, officials said, provided the legal basis in August to fire cruise missiles into the meeting at which it was believed bin Laden and his lieutenants would be gathered. The review, by the National Security Council, was the basis for saying this operation did not violate the presidential order banning assassinations. That ban was imposed by President Ford in 1975, after congressional investigators uncovered evidence that the CIA had plotted to assassinate Fidel Castro, the Cuban leader, and others. The order said: ``No person employed by, or acting on behalf of the United States government shall engage in, or conspire to engage in, assassination.'' While it is, on its face, a sweeping and unqualified ban, it has been subject to interpretation and intense debate over the years. In 1986, the Reagan administration responded to a terrorist attack against U.S. soldiers in Germany with a bombing raid on Libya. The targets included the residence of the Libyan leader, Moammar Gadhafi. And in the Gulf War, U.S. forces used powerful bombs in an attempt to kill Saddam Hussein, the president of Iraq. The legal review conducted by the White House would appear to provide a precedent for future operations in similar circumstances. ||||| The United States has obtained new evidence to link the owner of a Sudanese factory destroyed in a U.S. cruise missile strike last month to a terrorist group backed by Osama bin Laden, the suspected mastermind of the bombings of two U.S. embassies in East Africa, according to U.S. intelligence officials. The evidence, the officials said last week, shows that Salih Idris, the owner of Al Shifa pharmaceutical plant in Khartoum, has had financial dealings with members of Islamic Jihad, an Egypt-based group responsible for the assassination there of President Anwar Sadat in 1981. Islamic Jihad, in turn, receives money and sponsorship from bin Laden and has been absorbed into his terror network, the officials added. This evidence was uncovered after the United States destroyed Idris' factory in a missile attack following the bombing of the U.S. embassies, the officials said. A spokesman for Idris denied the accusations, saying Idris had no ties either to bin Laden or to any Islamic terrorist groups. In a statement provided by Tim Pendry, his London-based adviser, Idris said: ``I have absolutely no relationship with any Islamic terrorist organization anywhere in the world. I have never met Mr. bin Laden, I have never spoken with him, I have never had any financial or business relationship with him, nor knowingly with anyone acting as his agent.'' U.S. officials say they have also received new reports of an increase in the Iraqi presence in Sudan since the missile attack. Officials said they were not certain what the Iraqis were now doing in Khartoum. But intelligence agents previously obtained evidence that the manager of the Shifa plant made frequent trips to Iraq, where he visited the head of the chemical weapons program. In addition, a soil sample that the CIA clandestinely took at the Shifa plant showed the presence of a chemical used in the production of VX nerve gas, a process used only by Iraq. The new evidence comes as President Clinton faces attack over his decision to strike the Shifa plant. Some State Department and CIA officials have objected to the decision, arguing that it was based on tenuous evidence of a connection between the plant and bin Laden. The criticism is also based on the suspicion that the United States has poor data on Sudan, as the CIA station there has been closed since 1995 and the entire U.S. Embassy since 1996. In addition, more than 100 intelligence reports from a CIA informer in Sudan were withdrawn in January 1996 because they proved to be fabrications. That year a second informer warned of several terrorist threats, including one against Anthony Lake, then the national security adviser, but his reports proved impossible to confirm. Senior administration officials say that at the time of the cruise missile strike they had evidence of Sudan's involvement with bin Laden in a chemical weapons program, but no direct evidence linking the Shifa plant directly to that effort. Now they say that the new evidence against Idris has confirmed their initial suspicions about Al Shifa. At the time of the Aug. 20 cruise missile attack, Clinton administration officials acknowledge, they did not know that Idris owned the Shifa factory. The CIA, which had begun to scrutinize the plant 18 months earlier, believed the plant's ownership was irrelevant. ``What we knew about the ownership was that a lot of it couldn't be reliably established,'' said one senior U.S. intelligence official. Still, after the missile strike, when Idris was publicly identified as the owner, U.S. intelligence began to investigate his possible connections to chemical weapons and terrorism. A Sudanese expatriate who now lives in Jidda, Saudi Arabia, Idris, 46, was previously a senior manager of the National Commercial Bank of Saudi Arabia. He bought the Shifa plant in March. Officials say U.S. intelligence has received reports that Idris launders money for international Islamic groups, and that he also has a stake in a company in Sudan that is 40 percent owned by the Military Industrial Corporation, a government entity that the United States says controls Sudanese chemical weapons development. Bin Laden has helped finance the Military Industrial Corp. in his effort to use Sudan as a base for chemical weapons production, and talked to Sudanese leaders about testing poisonous gases against U.S. troops in Saudi Arabia, according to U.S. intelligence. But Pendry denied that Idris owned any businesses with the Military Industrial Corp. U.S. intelligence officials declined to provide details about the reports of Idris' financial dealings with members of Islamic Jihad. But they said that Islamic Jihad had now been consolidated into bin Laden's terrorist campaign. ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil. ||||| Sometime in the summer of 1997, an operative for Osama bin Laden sat down at his personal computer in a hideaway in Kenya. He was worried, he wrote in an angry dispatch, about the security of the ``East Africa network'' of bin Laden, the Saudi exile accused of masterminding a worldwide terrorist conspiracy against Americans. The organization, the author complained, had declared war against the United States, yet he had learned of that only from the news media. The writer, who federal authorities believe was Haroun Fazil, who was to become one of the central suspects in the bombing of the U.S. Embassy in Nairobi a year later, noted with alarm British press reports about the arrest of an aide to bin Laden. Striking almost bureaucratic tones, he said he was worried that ``an important man with close links'' to bin Laden, seemed to have ``fallen into the enemy's hands.'' He said the Americans were breathing down the necks of his associates in Nairobi and that he had to take precautions. ``The cell is at 100 percent danger,'' the operative warned. The letter, an extraordinary bit of digital evidence in a cloak-and-dagger case, was retrieved from a computer in a house where Fazil had been staying, according to papers filed in U.S. District Court in New York City. The papers said the computer was seized in August 1997 in a raid by Kenyan authorities that was attended by an FBI agent. The documents did not make clear whether the FBI had translated and read the document before or after the bombings of the U.S. Embassies in Nairobi and Dar es Salaam, Tanzania, on Aug. 7 of this year. The timing is potentially important because there have been mounting questions since the bombings about whether the United States adequately followed up warnings of a possible terrorist attack on American targets in Kenya. Officials of the FBI and the U.S. attorney's office in New York City refused to say Tuesday night at what point FBI agents learned of the computer file, nor would they make any other comment. Fazil eluded American investigators after the bombing as he traveled from Kenya to his home in the Comoros Islands and then to the Middle East. He remains a fugitive. The dispatch provides a remarkable insight into the workings of a terrorist network in the twilight of the 20th century. The author talks of how he and his fellow operatives follow events on CNN and use the Internet to communicate. He refers to himself as the media information officer of the East Africa cell and complains that he is not being kept in the loop on big decisions. Along the way, in an almost casual fashion, the document seems to confirm two of the central charges of the federal case against bin Laden: That he had planted a terrorist cell in Nairobi and that his operatives carried out another of the crimes laid at bin Laden's door by federal authorities _ the attacks on American soldiers in Somalia in 1993 and 1994. The writer of the document warned that the followers of bin Laden, whom he referred to as ``the sheik,'' had ``become America's primary target.'' He said his comrades in East Africa ``should know that there is an American-Kenyan-Egyptian intelligence activity in Nairobi aiming to identify the names and residences of the members who are associated with the sheik since America knows well that the youth who lived in Somalia and were members of the sheik's cell are the ones who killed Americans in Somalia.'' ``They know that since Kenya was the main gateway for those members, there must be a center in Kenya,'' he wrote, concluding: ``We are really in danger.'' The government has asserted that one of Fazil's duties was to prepare and transmit reports to bin Laden and his top lieutenants. Federal authorities said that Khalid al Fawwaz, a London-based associate of bin Laden, directed Fazil to ``report periodically to bin Laden about the ``security'' situation of the cell. Fawwaz, who served as an informal press spokesman for bin Laden in London, was arrested by British authorities in September after the embassy bombings. He has denied any connection to terrorist activities. A translation of the report was part of a package of documents American prosecutors have sent to Britain to support the extradition of Fawwaz for trial in New York. It is not clear from the materials whether the report in the computer was forwarded to bin Laden. The documents, which were initially filed in secret, include a federal complaint that accuses Fawwaz of conspiring with bin Laden to kill Americans overseas. A second count charges him with soliciting others to do so. The report made clear that the organization was being run on a shoestring. Its author wrote that his mother has fallen ill, and that he would like to return to his homeland for a visit. ``What do you think? Keep in mind we only have $500.'' He repeatedly expressed his fears of American intelligence, which he believed was in the midst of a worldwide search for bin Laden and his associates. ``There is a war and the situation is dangerous,'' he said. He wrote that American forces kidnapped anyone who threatened the national security or American citizens. The author noted with alarm a recent CIA operation in which a man accused of shooting agency employees had been lured across the border in Pakistan and returned to the United States for trial. According to federal authorities, Fazil went on to play a pivotal role in the bombing of the Nairobi embassy. Prosecutors assert that he rented the villa where the bomb was assembled and surveyed the embassy's security precautions. On Aug. 7, they charge, Fazil drove a pickup truck to the embassy, leading the way for a vehicle carrying the bomb that killed more than 200 people, including 12 Americans. The author of the report said that he stood ready to ``fight the forces of atheism and dictators who wreaked havoc on earth.'' He said that the group did not have to inform its Nairobi-based operatives of all its global plans, but they needed enough warning to go ``underground for a while'' if authorities intensified the pressure in Nairobi. ``We, the East Africa cell members, do not want to know about the operations plans,'' he wrote, `` since we are just implementers.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated.

After the bombing of U.S. embassies in East Africa the U.S. on Aug. 20, 1998 made missile attacks on an Al-Qaeda training camp in Afghanistan and on a pharmaceutical plant in Sudan tenuously linked to Osama bin Laden. In September the U.S. initiated legal action against a Sudanese arrested in Germany and in November charges were prepared against six men including bin Laden. The U.S. had, in support of its case, documentary evidence and a cooperative former senior aide of bin Laden. Meanwhile, authorities reported bin Laden agents active in Bangladesh and the Balkans and the Taliban government of Afghanistan proclaimed bin Laden "a man without sin.

Police arrested two journalists and charged them with writing articles to encourage Muslim youths to stage an Islamic revolution in Bangladesh after the Taliban model in Afghanistan, a police officer said Thursday. Mufti Abdul Hye and Manzoor Ahmed, editors at ``Jago Mujahid'' or ``Wake Up Mujahid,'' a monthy magazine published from Dhaka, the Bangladeshi capital, were jailed for a month shortly after their arrest on Wednesday. They were arrested under a 1974 law that allows police to detain any one for offenses related to national security, the officer said on condition of anonymity. Those arrested need not be taken to court for trial for up to three months. Police seized copies of the newspaper for reproducing a foreign newspaper interview of Afghanistan-based Saudi billionaire Osama Bin Laden, who has been accused by the United States of masterminding bombing attacks on the U.S. embassies in Kenya and Tanzania in August. Under Taliban rules women may not study or work outside their houses, and all kinds of light entertainment including music are banned. Men must grow beards of a certain length and criminals are subjected to amputations and public executions Even though Bangladesh is a predominantly Muslim country, it is governed by secular laws. Prime Minister Sheikh Hasina's liberal government hasn't recognized the Taliban government in Afghanistan. ||||| Albania says it has uncovered a terrorist network operated by Osama Bin Laden, the Islamic fundamentalist accused of masterminding the August embassy bombings in Africa, and that it's members have infiltrated other parts of Europe, The Sunday Times reported. The newspaper quoted Fatos Klosi, the head of Shik, the Albanian intelligence service, as saying that Bin Laden's network had sent units to fight in Kosovo, the neighboring Serbian province. ``Egyptians, Saudi Arabians, Algerians, Tunisians, Sudanese and Kuwaitis _ they come from several different organizations,'' Klosi was quoted as telling The Sunday Times. He said he believed terrorists had already infiltrated other parts of Europe from bases in Albania through a traffic in illegal immigrants, who have been smuggled across the Mediterranean to Italy in huge numbers. Interpol believes more than 100,000 blank Albanian passports were stolen in riots last year, providing ample opportunity for terrorists to acquire false papers, the newspaper said. Apparent confirmation of the Bin Laden's activities came earlier this month during the murder trial of Claude Kader, 27, a French national and self-confessed member of Bin Laden's Albanian network, the newspaper said. Kader claimed during the trial that he had visited Albania to recruit and arm fighters for Kosovo, and that four of his associates were still at large. Bin Laden is believed to have established an Albanian operation in 1994 after telling the government that he was head of a wealthy Saudi humanitarian agency wishing to help in Albania, the newspaper reported. ||||| If Osama bin Laden ever stands trial in New York for the bombings of the U.S. embassies in Africa and other acts of terror, it is already clear who prosecutors will call as a chief witness: One of his senior aides who has been talking to U.S. investigators for two years. The government has identified the aide in court papers with the pseudonym CS-1, saying the person pleaded guilty to terrorism charges in a secret proceeding in U.S. district court in Manhattan. According to the government, the informant worked closely with bin Laden from 1989 to 1996, a period when prosecutors assert that bin Laden was ordering deadly attacks on U.S. soldiers in Somalia and elsewhere. From the court papers filed in the investigation of the embassy bombings in East Africa in August, it is clear that the informant has provided crucial information to federal investigators. They have cited the source in the papers filed to support the extradition of two associates of bin Laden who are under arrest in Germany and Britain. Bin Laden, a Saudi exile, is thought to be living in Afghanistan. The source is also the basis for many of the significant charges in the indictment against bin Laden himself, including the assertion that he directed the attacks on U.S. soldiers in Somalia and that he attempted to obtain nuclear weapons. It is not known whether the source is in custody somewhere, or hiding under government protection. As recently as 11 days ago, records show, the source swore to a 5-page affidavit before a New York notary summarizing his allegations against bin Laden. Government officials adamantly declined to say anything about the identity of CS-1, which stands for ``confidential source.'' But at least one operative of bin Laden's group in East Africa concluded more than a year ago that he knew the identity of a crucial turncoat: Sidi Tayyib, a businessman who was married to one of bin Laden's relatives. The operative's concerns were inflamed by a report in a British newspaper that Tayyib was cooperating with Saudi and U.S. authorities. In an August, 1997 article, The Daily Telegraph said Tayyib had been in custody in Saudi Arabia since May and had given intelligence officials details of bin Laden's bank accounts and businesses. The news of Tayyib's possible defection, the East African operative wrote in a report apparently intended for the group's commanders, ``almost made me explode. ``An important man with close links to'' bin Laden ``seems to have fallen into the enemy's hands, and we have to take all the appropriate security precautions against that,'' the operative, Haroun Fazil, wrote in his summary of security concerns. Fazil has since been charged in the embassy attacks and remains at large. The report was typed on a computer seized last year by Kenyan authorities, according to a government filing last week in U.S. district court in Manhattan. Thus far, U.S. prosecutors have charged at least six members of bin Laden's organization with terrorist activities or conspiracy. In one recent filing, they said their case will in part be ``based on the testimony'' of the confidential source, suggesting that the informant has agreed to testify at any trial of bin Laden or his associates. The arrangement appears to have resulted from a plea bargain in which the source is cooperating in hopes of receiving a lesser sentence. There is no indication that the source has yet been sentenced and it seems likely that sentencing would take place after the investigation and ensuing trials are complete. In the affidavit prepared last week, the source acknowledged pleading guilty to terrorism charges in the United States and said they stemmed from attacks on U.S. targets, which were not specifically identified. The source described taking ``an oath of allegiance'' to follow bin Laden's orders, and gave a detailed account of bin Laden's group, including its history and inner workings. The source told of private statements by bin Laden to other al Qaeda members, encouraging them to attack U.S. troops and other citizens stationed in the Middle East and Africa. ``I either heard these statements myself,'' the source said, ``or I read them or learned of them from other al Qaeda members.'' The government has also said in other court papers that the source helped identify bin Laden's signature on a 1996 document urging Muslims to kill Americans. Tayyib's whereabouts are unknown and he could not be reached for comment. ||||| The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| MUNICH, Germany (AP) _ U.S. prosecutors have asked for a 20-day extension to provide Germany with paperwork necessary to extradite a top lieutenant of Saudi terrorist suspect Osama bin Laden, officials said Saturday. Mamdouh Mahmud Salim, 40, of Sudan, has been jailed since his arrest near Munich on Sept. 16 by Bavarian authorities acting on a U.S. warrant. Under German law, U.S. officials have 40 days after the arrest to turn over supporting evidence so a German court can rule on their extradition request. A Bavarian Justice Ministry spokesman, Gerhard Zierl, said U.S. authorities a few days ago asked the court hearing the case for an extra 20 days to provide the necessary material. Quoting unidentified Bavarian law enforcement sources, Focus newsmagazine reported Saturday that the evidence turned over so far was not very strong. The magazine said much of it was based on the testimony of an FBI informant, a former bin Laden associate, who made only vague connections between Salim and terrorist activities. Zierl declined to comment on the report, but said U.S. authorities probably asked for more time just a precautionary measure. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. A criminal complaint unsealed Sept. 25 in U.S. District Court in New York charges him with murder conspiracy and use of weapons of mass destruction. ||||| One of the clear but unstated objectives of last August's raid on Afghanistan was to kill Osama bin Laden and as many of his lieutenants as possible, administration officials now acknowledge. According to the officials, White House lawyers conducted a secret review in the months before the attack and concluded that such operations are legal under U.S. and international law. The officials said the raid was timed so that more than 70 cruise missiles would hit bin Laden's camps at the moment when the Central Intelligence Agency believed he would be meeting there with his chief operatives. A 1976 executive order bars anyone working for the U.S. government from plotting or carrying out assassinations. But officials said the White House legal opinion drafted before the Afghan strike asserts that the president has authority to target the ``infrastructure'' of terrorist groups that are attacking Americans. A top U.S. counterterrorism official said this week that the infrastructure of bin Laden's group is mostly ``human.'' ``As we said from the time of the Aug. 20 strike, the objective was to disrupt the training, organization and infrastructure of the bin Laden terrorist network at the Khost camps,'' said David C. Leavy, a spokesman for the National Security Council at the White House. Targeting infrastructure, officials acknowledged, can also mean destroying the leadership of a terrorist group. ``Command and control of an enemy is a justifiable target,'' Leavy said. Senior administration officials said they never discussed killing bin Laden in their planning sessions. His death, they said in interviews after the attack, would simply have been a side benefit. U.S. intelligence officials say they now believe that bin Laden was in the camp on the day of the attack, but he appears to have left unscathed before the missiles hit. Officials said there were reports that at least one of his senior lieutenants may have died in the attack, and that total casualties in the complex were between 50 and 100. Administration spokesmen have drawn a distinction between attempting to kill a specific person like bin Laden and attacking a group of people who command a terrorist organization. Administration officials have denied since August that the raid was intended to kill bin Laden, a Saudi exile who has been charged by federal prosecutors with leading a global war against U.S. interests. He has been linked to the Aug. 7 bombing of two U.S. embassies in East Africa. But a less subtle explanation was offered on Oct. 13 by Defense Secretary William Cohen, who said during a visit to Saudi Arabia that the United States had been ``going after'' bin Laden and his colleagues. ``We weren't quite successful,'' Cohen continued, ``but we sent a message.'' Kenneth Bacon, the Pentagon spokesman, said the secretary had not retracted his statements. The Los Angeles Times recently reported that the administration believed that it had a legal right to use deadly force against terrorist leaders. Bin Laden's organization was a significant concern for the Clinton administration even before the bombing of the U.S. embassies in East Africa. Last spring, officials said, U.S. intelligence considered a daring raid into Afghanistan to capture the Saudi exile. Officials said that at roughly the same time, the White House drafted the legal justification for military attacks against a terrorist leadership. That review, officials said, provided the legal basis in August to fire cruise missiles into the meeting at which it was believed bin Laden and his lieutenants would be gathered. The review, by the National Security Council, was the basis for saying this operation did not violate the presidential order banning assassinations. That ban was imposed by President Ford in 1975, after congressional investigators uncovered evidence that the CIA had plotted to assassinate Fidel Castro, the Cuban leader, and others. The order said: ``No person employed by, or acting on behalf of the United States government shall engage in, or conspire to engage in, assassination.'' While it is, on its face, a sweeping and unqualified ban, it has been subject to interpretation and intense debate over the years. In 1986, the Reagan administration responded to a terrorist attack against U.S. soldiers in Germany with a bombing raid on Libya. The targets included the residence of the Libyan leader, Moammar Gadhafi. And in the Gulf War, U.S. forces used powerful bombs in an attempt to kill Saddam Hussein, the president of Iraq. The legal review conducted by the White House would appear to provide a precedent for future operations in similar circumstances. ||||| The United States has obtained new evidence to link the owner of a Sudanese factory destroyed in a U.S. cruise missile strike last month to a terrorist group backed by Osama bin Laden, the suspected mastermind of the bombings of two U.S. embassies in East Africa, according to U.S. intelligence officials. The evidence, the officials said last week, shows that Salih Idris, the owner of Al Shifa pharmaceutical plant in Khartoum, has had financial dealings with members of Islamic Jihad, an Egypt-based group responsible for the assassination there of President Anwar Sadat in 1981. Islamic Jihad, in turn, receives money and sponsorship from bin Laden and has been absorbed into his terror network, the officials added. This evidence was uncovered after the United States destroyed Idris' factory in a missile attack following the bombing of the U.S. embassies, the officials said. A spokesman for Idris denied the accusations, saying Idris had no ties either to bin Laden or to any Islamic terrorist groups. In a statement provided by Tim Pendry, his London-based adviser, Idris said: ``I have absolutely no relationship with any Islamic terrorist organization anywhere in the world. I have never met Mr. bin Laden, I have never spoken with him, I have never had any financial or business relationship with him, nor knowingly with anyone acting as his agent.'' U.S. officials say they have also received new reports of an increase in the Iraqi presence in Sudan since the missile attack. Officials said they were not certain what the Iraqis were now doing in Khartoum. But intelligence agents previously obtained evidence that the manager of the Shifa plant made frequent trips to Iraq, where he visited the head of the chemical weapons program. In addition, a soil sample that the CIA clandestinely took at the Shifa plant showed the presence of a chemical used in the production of VX nerve gas, a process used only by Iraq. The new evidence comes as President Clinton faces attack over his decision to strike the Shifa plant. Some State Department and CIA officials have objected to the decision, arguing that it was based on tenuous evidence of a connection between the plant and bin Laden. The criticism is also based on the suspicion that the United States has poor data on Sudan, as the CIA station there has been closed since 1995 and the entire U.S. Embassy since 1996. In addition, more than 100 intelligence reports from a CIA informer in Sudan were withdrawn in January 1996 because they proved to be fabrications. That year a second informer warned of several terrorist threats, including one against Anthony Lake, then the national security adviser, but his reports proved impossible to confirm. Senior administration officials say that at the time of the cruise missile strike they had evidence of Sudan's involvement with bin Laden in a chemical weapons program, but no direct evidence linking the Shifa plant directly to that effort. Now they say that the new evidence against Idris has confirmed their initial suspicions about Al Shifa. At the time of the Aug. 20 cruise missile attack, Clinton administration officials acknowledge, they did not know that Idris owned the Shifa factory. The CIA, which had begun to scrutinize the plant 18 months earlier, believed the plant's ownership was irrelevant. ``What we knew about the ownership was that a lot of it couldn't be reliably established,'' said one senior U.S. intelligence official. Still, after the missile strike, when Idris was publicly identified as the owner, U.S. intelligence began to investigate his possible connections to chemical weapons and terrorism. A Sudanese expatriate who now lives in Jidda, Saudi Arabia, Idris, 46, was previously a senior manager of the National Commercial Bank of Saudi Arabia. He bought the Shifa plant in March. Officials say U.S. intelligence has received reports that Idris launders money for international Islamic groups, and that he also has a stake in a company in Sudan that is 40 percent owned by the Military Industrial Corporation, a government entity that the United States says controls Sudanese chemical weapons development. Bin Laden has helped finance the Military Industrial Corp. in his effort to use Sudan as a base for chemical weapons production, and talked to Sudanese leaders about testing poisonous gases against U.S. troops in Saudi Arabia, according to U.S. intelligence. But Pendry denied that Idris owned any businesses with the Military Industrial Corp. U.S. intelligence officials declined to provide details about the reports of Idris' financial dealings with members of Islamic Jihad. But they said that Islamic Jihad had now been consolidated into bin Laden's terrorist campaign. ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil. ||||| Sometime in the summer of 1997, an operative for Osama bin Laden sat down at his personal computer in a hideaway in Kenya. He was worried, he wrote in an angry dispatch, about the security of the ``East Africa network'' of bin Laden, the Saudi exile accused of masterminding a worldwide terrorist conspiracy against Americans. The organization, the author complained, had declared war against the United States, yet he had learned of that only from the news media. The writer, who federal authorities believe was Haroun Fazil, who was to become one of the central suspects in the bombing of the U.S. Embassy in Nairobi a year later, noted with alarm British press reports about the arrest of an aide to bin Laden. Striking almost bureaucratic tones, he said he was worried that ``an important man with close links'' to bin Laden, seemed to have ``fallen into the enemy's hands.'' He said the Americans were breathing down the necks of his associates in Nairobi and that he had to take precautions. ``The cell is at 100 percent danger,'' the operative warned. The letter, an extraordinary bit of digital evidence in a cloak-and-dagger case, was retrieved from a computer in a house where Fazil had been staying, according to papers filed in U.S. District Court in New York City. The papers said the computer was seized in August 1997 in a raid by Kenyan authorities that was attended by an FBI agent. The documents did not make clear whether the FBI had translated and read the document before or after the bombings of the U.S. Embassies in Nairobi and Dar es Salaam, Tanzania, on Aug. 7 of this year. The timing is potentially important because there have been mounting questions since the bombings about whether the United States adequately followed up warnings of a possible terrorist attack on American targets in Kenya. Officials of the FBI and the U.S. attorney's office in New York City refused to say Tuesday night at what point FBI agents learned of the computer file, nor would they make any other comment. Fazil eluded American investigators after the bombing as he traveled from Kenya to his home in the Comoros Islands and then to the Middle East. He remains a fugitive. The dispatch provides a remarkable insight into the workings of a terrorist network in the twilight of the 20th century. The author talks of how he and his fellow operatives follow events on CNN and use the Internet to communicate. He refers to himself as the media information officer of the East Africa cell and complains that he is not being kept in the loop on big decisions. Along the way, in an almost casual fashion, the document seems to confirm two of the central charges of the federal case against bin Laden: That he had planted a terrorist cell in Nairobi and that his operatives carried out another of the crimes laid at bin Laden's door by federal authorities _ the attacks on American soldiers in Somalia in 1993 and 1994. The writer of the document warned that the followers of bin Laden, whom he referred to as ``the sheik,'' had ``become America's primary target.'' He said his comrades in East Africa ``should know that there is an American-Kenyan-Egyptian intelligence activity in Nairobi aiming to identify the names and residences of the members who are associated with the sheik since America knows well that the youth who lived in Somalia and were members of the sheik's cell are the ones who killed Americans in Somalia.'' ``They know that since Kenya was the main gateway for those members, there must be a center in Kenya,'' he wrote, concluding: ``We are really in danger.'' The government has asserted that one of Fazil's duties was to prepare and transmit reports to bin Laden and his top lieutenants. Federal authorities said that Khalid al Fawwaz, a London-based associate of bin Laden, directed Fazil to ``report periodically to bin Laden about the ``security'' situation of the cell. Fawwaz, who served as an informal press spokesman for bin Laden in London, was arrested by British authorities in September after the embassy bombings. He has denied any connection to terrorist activities. A translation of the report was part of a package of documents American prosecutors have sent to Britain to support the extradition of Fawwaz for trial in New York. It is not clear from the materials whether the report in the computer was forwarded to bin Laden. The documents, which were initially filed in secret, include a federal complaint that accuses Fawwaz of conspiring with bin Laden to kill Americans overseas. A second count charges him with soliciting others to do so. The report made clear that the organization was being run on a shoestring. Its author wrote that his mother has fallen ill, and that he would like to return to his homeland for a visit. ``What do you think? Keep in mind we only have $500.'' He repeatedly expressed his fears of American intelligence, which he believed was in the midst of a worldwide search for bin Laden and his associates. ``There is a war and the situation is dangerous,'' he said. He wrote that American forces kidnapped anyone who threatened the national security or American citizens. The author noted with alarm a recent CIA operation in which a man accused of shooting agency employees had been lured across the border in Pakistan and returned to the United States for trial. According to federal authorities, Fazil went on to play a pivotal role in the bombing of the Nairobi embassy. Prosecutors assert that he rented the villa where the bomb was assembled and surveyed the embassy's security precautions. On Aug. 7, they charge, Fazil drove a pickup truck to the embassy, leading the way for a vehicle carrying the bomb that killed more than 200 people, including 12 Americans. The author of the report said that he stood ready to ``fight the forces of atheism and dictators who wreaked havoc on earth.'' He said that the group did not have to inform its Nairobi-based operatives of all its global plans, but they needed enough warning to go ``underground for a while'' if authorities intensified the pressure in Nairobi. ``We, the East Africa cell members, do not want to know about the operations plans,'' he wrote, `` since we are just implementers.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated.

Evidence shows Sudanese factory bombed by US is linked to bin Laden. US prosecutors ask for an extension to extradite a bin Laden lieutenant. FBI questions witnesses of Nairobi embassy blast, preparing for trial of 6 suspects. The Taliban says the US is using bin Laden as an excuse to attack Afghanistan. Goal of US August raid there was to kill bin Laden and his aides. The Taliban declares bin Laden a free man, with no proof of anti-US terror. 2 arrested for articles inciting Taliban-style revolt in Bangladesh. Bin Laden cell is in Albania and elsewhere in Europe. Bin Laden aide informs for the US. East African bin Laden cell has security woes in '97.

Police arrested two journalists and charged them with writing articles to encourage Muslim youths to stage an Islamic revolution in Bangladesh after the Taliban model in Afghanistan, a police officer said Thursday. Mufti Abdul Hye and Manzoor Ahmed, editors at ``Jago Mujahid'' or ``Wake Up Mujahid,'' a monthy magazine published from Dhaka, the Bangladeshi capital, were jailed for a month shortly after their arrest on Wednesday. They were arrested under a 1974 law that allows police to detain any one for offenses related to national security, the officer said on condition of anonymity. Those arrested need not be taken to court for trial for up to three months. Police seized copies of the newspaper for reproducing a foreign newspaper interview of Afghanistan-based Saudi billionaire Osama Bin Laden, who has been accused by the United States of masterminding bombing attacks on the U.S. embassies in Kenya and Tanzania in August. Under Taliban rules women may not study or work outside their houses, and all kinds of light entertainment including music are banned. Men must grow beards of a certain length and criminals are subjected to amputations and public executions Even though Bangladesh is a predominantly Muslim country, it is governed by secular laws. Prime Minister Sheikh Hasina's liberal government hasn't recognized the Taliban government in Afghanistan. ||||| Albania says it has uncovered a terrorist network operated by Osama Bin Laden, the Islamic fundamentalist accused of masterminding the August embassy bombings in Africa, and that it's members have infiltrated other parts of Europe, The Sunday Times reported. The newspaper quoted Fatos Klosi, the head of Shik, the Albanian intelligence service, as saying that Bin Laden's network had sent units to fight in Kosovo, the neighboring Serbian province. ``Egyptians, Saudi Arabians, Algerians, Tunisians, Sudanese and Kuwaitis _ they come from several different organizations,'' Klosi was quoted as telling The Sunday Times. He said he believed terrorists had already infiltrated other parts of Europe from bases in Albania through a traffic in illegal immigrants, who have been smuggled across the Mediterranean to Italy in huge numbers. Interpol believes more than 100,000 blank Albanian passports were stolen in riots last year, providing ample opportunity for terrorists to acquire false papers, the newspaper said. Apparent confirmation of the Bin Laden's activities came earlier this month during the murder trial of Claude Kader, 27, a French national and self-confessed member of Bin Laden's Albanian network, the newspaper said. Kader claimed during the trial that he had visited Albania to recruit and arm fighters for Kosovo, and that four of his associates were still at large. Bin Laden is believed to have established an Albanian operation in 1994 after telling the government that he was head of a wealthy Saudi humanitarian agency wishing to help in Albania, the newspaper reported. ||||| If Osama bin Laden ever stands trial in New York for the bombings of the U.S. embassies in Africa and other acts of terror, it is already clear who prosecutors will call as a chief witness: One of his senior aides who has been talking to U.S. investigators for two years. The government has identified the aide in court papers with the pseudonym CS-1, saying the person pleaded guilty to terrorism charges in a secret proceeding in U.S. district court in Manhattan. According to the government, the informant worked closely with bin Laden from 1989 to 1996, a period when prosecutors assert that bin Laden was ordering deadly attacks on U.S. soldiers in Somalia and elsewhere. From the court papers filed in the investigation of the embassy bombings in East Africa in August, it is clear that the informant has provided crucial information to federal investigators. They have cited the source in the papers filed to support the extradition of two associates of bin Laden who are under arrest in Germany and Britain. Bin Laden, a Saudi exile, is thought to be living in Afghanistan. The source is also the basis for many of the significant charges in the indictment against bin Laden himself, including the assertion that he directed the attacks on U.S. soldiers in Somalia and that he attempted to obtain nuclear weapons. It is not known whether the source is in custody somewhere, or hiding under government protection. As recently as 11 days ago, records show, the source swore to a 5-page affidavit before a New York notary summarizing his allegations against bin Laden. Government officials adamantly declined to say anything about the identity of CS-1, which stands for ``confidential source.'' But at least one operative of bin Laden's group in East Africa concluded more than a year ago that he knew the identity of a crucial turncoat: Sidi Tayyib, a businessman who was married to one of bin Laden's relatives. The operative's concerns were inflamed by a report in a British newspaper that Tayyib was cooperating with Saudi and U.S. authorities. In an August, 1997 article, The Daily Telegraph said Tayyib had been in custody in Saudi Arabia since May and had given intelligence officials details of bin Laden's bank accounts and businesses. The news of Tayyib's possible defection, the East African operative wrote in a report apparently intended for the group's commanders, ``almost made me explode. ``An important man with close links to'' bin Laden ``seems to have fallen into the enemy's hands, and we have to take all the appropriate security precautions against that,'' the operative, Haroun Fazil, wrote in his summary of security concerns. Fazil has since been charged in the embassy attacks and remains at large. The report was typed on a computer seized last year by Kenyan authorities, according to a government filing last week in U.S. district court in Manhattan. Thus far, U.S. prosecutors have charged at least six members of bin Laden's organization with terrorist activities or conspiracy. In one recent filing, they said their case will in part be ``based on the testimony'' of the confidential source, suggesting that the informant has agreed to testify at any trial of bin Laden or his associates. The arrangement appears to have resulted from a plea bargain in which the source is cooperating in hopes of receiving a lesser sentence. There is no indication that the source has yet been sentenced and it seems likely that sentencing would take place after the investigation and ensuing trials are complete. In the affidavit prepared last week, the source acknowledged pleading guilty to terrorism charges in the United States and said they stemmed from attacks on U.S. targets, which were not specifically identified. The source described taking ``an oath of allegiance'' to follow bin Laden's orders, and gave a detailed account of bin Laden's group, including its history and inner workings. The source told of private statements by bin Laden to other al Qaeda members, encouraging them to attack U.S. troops and other citizens stationed in the Middle East and Africa. ``I either heard these statements myself,'' the source said, ``or I read them or learned of them from other al Qaeda members.'' The government has also said in other court papers that the source helped identify bin Laden's signature on a 1996 document urging Muslims to kill Americans. Tayyib's whereabouts are unknown and he could not be reached for comment. ||||| The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| MUNICH, Germany (AP) _ U.S. prosecutors have asked for a 20-day extension to provide Germany with paperwork necessary to extradite a top lieutenant of Saudi terrorist suspect Osama bin Laden, officials said Saturday. Mamdouh Mahmud Salim, 40, of Sudan, has been jailed since his arrest near Munich on Sept. 16 by Bavarian authorities acting on a U.S. warrant. Under German law, U.S. officials have 40 days after the arrest to turn over supporting evidence so a German court can rule on their extradition request. A Bavarian Justice Ministry spokesman, Gerhard Zierl, said U.S. authorities a few days ago asked the court hearing the case for an extra 20 days to provide the necessary material. Quoting unidentified Bavarian law enforcement sources, Focus newsmagazine reported Saturday that the evidence turned over so far was not very strong. The magazine said much of it was based on the testimony of an FBI informant, a former bin Laden associate, who made only vague connections between Salim and terrorist activities. Zierl declined to comment on the report, but said U.S. authorities probably asked for more time just a precautionary measure. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. A criminal complaint unsealed Sept. 25 in U.S. District Court in New York charges him with murder conspiracy and use of weapons of mass destruction. ||||| One of the clear but unstated objectives of last August's raid on Afghanistan was to kill Osama bin Laden and as many of his lieutenants as possible, administration officials now acknowledge. According to the officials, White House lawyers conducted a secret review in the months before the attack and concluded that such operations are legal under U.S. and international law. The officials said the raid was timed so that more than 70 cruise missiles would hit bin Laden's camps at the moment when the Central Intelligence Agency believed he would be meeting there with his chief operatives. A 1976 executive order bars anyone working for the U.S. government from plotting or carrying out assassinations. But officials said the White House legal opinion drafted before the Afghan strike asserts that the president has authority to target the ``infrastructure'' of terrorist groups that are attacking Americans. A top U.S. counterterrorism official said this week that the infrastructure of bin Laden's group is mostly ``human.'' ``As we said from the time of the Aug. 20 strike, the objective was to disrupt the training, organization and infrastructure of the bin Laden terrorist network at the Khost camps,'' said David C. Leavy, a spokesman for the National Security Council at the White House. Targeting infrastructure, officials acknowledged, can also mean destroying the leadership of a terrorist group. ``Command and control of an enemy is a justifiable target,'' Leavy said. Senior administration officials said they never discussed killing bin Laden in their planning sessions. His death, they said in interviews after the attack, would simply have been a side benefit. U.S. intelligence officials say they now believe that bin Laden was in the camp on the day of the attack, but he appears to have left unscathed before the missiles hit. Officials said there were reports that at least one of his senior lieutenants may have died in the attack, and that total casualties in the complex were between 50 and 100. Administration spokesmen have drawn a distinction between attempting to kill a specific person like bin Laden and attacking a group of people who command a terrorist organization. Administration officials have denied since August that the raid was intended to kill bin Laden, a Saudi exile who has been charged by federal prosecutors with leading a global war against U.S. interests. He has been linked to the Aug. 7 bombing of two U.S. embassies in East Africa. But a less subtle explanation was offered on Oct. 13 by Defense Secretary William Cohen, who said during a visit to Saudi Arabia that the United States had been ``going after'' bin Laden and his colleagues. ``We weren't quite successful,'' Cohen continued, ``but we sent a message.'' Kenneth Bacon, the Pentagon spokesman, said the secretary had not retracted his statements. The Los Angeles Times recently reported that the administration believed that it had a legal right to use deadly force against terrorist leaders. Bin Laden's organization was a significant concern for the Clinton administration even before the bombing of the U.S. embassies in East Africa. Last spring, officials said, U.S. intelligence considered a daring raid into Afghanistan to capture the Saudi exile. Officials said that at roughly the same time, the White House drafted the legal justification for military attacks against a terrorist leadership. That review, officials said, provided the legal basis in August to fire cruise missiles into the meeting at which it was believed bin Laden and his lieutenants would be gathered. The review, by the National Security Council, was the basis for saying this operation did not violate the presidential order banning assassinations. That ban was imposed by President Ford in 1975, after congressional investigators uncovered evidence that the CIA had plotted to assassinate Fidel Castro, the Cuban leader, and others. The order said: ``No person employed by, or acting on behalf of the United States government shall engage in, or conspire to engage in, assassination.'' While it is, on its face, a sweeping and unqualified ban, it has been subject to interpretation and intense debate over the years. In 1986, the Reagan administration responded to a terrorist attack against U.S. soldiers in Germany with a bombing raid on Libya. The targets included the residence of the Libyan leader, Moammar Gadhafi. And in the Gulf War, U.S. forces used powerful bombs in an attempt to kill Saddam Hussein, the president of Iraq. The legal review conducted by the White House would appear to provide a precedent for future operations in similar circumstances. ||||| The United States has obtained new evidence to link the owner of a Sudanese factory destroyed in a U.S. cruise missile strike last month to a terrorist group backed by Osama bin Laden, the suspected mastermind of the bombings of two U.S. embassies in East Africa, according to U.S. intelligence officials. The evidence, the officials said last week, shows that Salih Idris, the owner of Al Shifa pharmaceutical plant in Khartoum, has had financial dealings with members of Islamic Jihad, an Egypt-based group responsible for the assassination there of President Anwar Sadat in 1981. Islamic Jihad, in turn, receives money and sponsorship from bin Laden and has been absorbed into his terror network, the officials added. This evidence was uncovered after the United States destroyed Idris' factory in a missile attack following the bombing of the U.S. embassies, the officials said. A spokesman for Idris denied the accusations, saying Idris had no ties either to bin Laden or to any Islamic terrorist groups. In a statement provided by Tim Pendry, his London-based adviser, Idris said: ``I have absolutely no relationship with any Islamic terrorist organization anywhere in the world. I have never met Mr. bin Laden, I have never spoken with him, I have never had any financial or business relationship with him, nor knowingly with anyone acting as his agent.'' U.S. officials say they have also received new reports of an increase in the Iraqi presence in Sudan since the missile attack. Officials said they were not certain what the Iraqis were now doing in Khartoum. But intelligence agents previously obtained evidence that the manager of the Shifa plant made frequent trips to Iraq, where he visited the head of the chemical weapons program. In addition, a soil sample that the CIA clandestinely took at the Shifa plant showed the presence of a chemical used in the production of VX nerve gas, a process used only by Iraq. The new evidence comes as President Clinton faces attack over his decision to strike the Shifa plant. Some State Department and CIA officials have objected to the decision, arguing that it was based on tenuous evidence of a connection between the plant and bin Laden. The criticism is also based on the suspicion that the United States has poor data on Sudan, as the CIA station there has been closed since 1995 and the entire U.S. Embassy since 1996. In addition, more than 100 intelligence reports from a CIA informer in Sudan were withdrawn in January 1996 because they proved to be fabrications. That year a second informer warned of several terrorist threats, including one against Anthony Lake, then the national security adviser, but his reports proved impossible to confirm. Senior administration officials say that at the time of the cruise missile strike they had evidence of Sudan's involvement with bin Laden in a chemical weapons program, but no direct evidence linking the Shifa plant directly to that effort. Now they say that the new evidence against Idris has confirmed their initial suspicions about Al Shifa. At the time of the Aug. 20 cruise missile attack, Clinton administration officials acknowledge, they did not know that Idris owned the Shifa factory. The CIA, which had begun to scrutinize the plant 18 months earlier, believed the plant's ownership was irrelevant. ``What we knew about the ownership was that a lot of it couldn't be reliably established,'' said one senior U.S. intelligence official. Still, after the missile strike, when Idris was publicly identified as the owner, U.S. intelligence began to investigate his possible connections to chemical weapons and terrorism. A Sudanese expatriate who now lives in Jidda, Saudi Arabia, Idris, 46, was previously a senior manager of the National Commercial Bank of Saudi Arabia. He bought the Shifa plant in March. Officials say U.S. intelligence has received reports that Idris launders money for international Islamic groups, and that he also has a stake in a company in Sudan that is 40 percent owned by the Military Industrial Corporation, a government entity that the United States says controls Sudanese chemical weapons development. Bin Laden has helped finance the Military Industrial Corp. in his effort to use Sudan as a base for chemical weapons production, and talked to Sudanese leaders about testing poisonous gases against U.S. troops in Saudi Arabia, according to U.S. intelligence. But Pendry denied that Idris owned any businesses with the Military Industrial Corp. U.S. intelligence officials declined to provide details about the reports of Idris' financial dealings with members of Islamic Jihad. But they said that Islamic Jihad had now been consolidated into bin Laden's terrorist campaign. ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil. ||||| Sometime in the summer of 1997, an operative for Osama bin Laden sat down at his personal computer in a hideaway in Kenya. He was worried, he wrote in an angry dispatch, about the security of the ``East Africa network'' of bin Laden, the Saudi exile accused of masterminding a worldwide terrorist conspiracy against Americans. The organization, the author complained, had declared war against the United States, yet he had learned of that only from the news media. The writer, who federal authorities believe was Haroun Fazil, who was to become one of the central suspects in the bombing of the U.S. Embassy in Nairobi a year later, noted with alarm British press reports about the arrest of an aide to bin Laden. Striking almost bureaucratic tones, he said he was worried that ``an important man with close links'' to bin Laden, seemed to have ``fallen into the enemy's hands.'' He said the Americans were breathing down the necks of his associates in Nairobi and that he had to take precautions. ``The cell is at 100 percent danger,'' the operative warned. The letter, an extraordinary bit of digital evidence in a cloak-and-dagger case, was retrieved from a computer in a house where Fazil had been staying, according to papers filed in U.S. District Court in New York City. The papers said the computer was seized in August 1997 in a raid by Kenyan authorities that was attended by an FBI agent. The documents did not make clear whether the FBI had translated and read the document before or after the bombings of the U.S. Embassies in Nairobi and Dar es Salaam, Tanzania, on Aug. 7 of this year. The timing is potentially important because there have been mounting questions since the bombings about whether the United States adequately followed up warnings of a possible terrorist attack on American targets in Kenya. Officials of the FBI and the U.S. attorney's office in New York City refused to say Tuesday night at what point FBI agents learned of the computer file, nor would they make any other comment. Fazil eluded American investigators after the bombing as he traveled from Kenya to his home in the Comoros Islands and then to the Middle East. He remains a fugitive. The dispatch provides a remarkable insight into the workings of a terrorist network in the twilight of the 20th century. The author talks of how he and his fellow operatives follow events on CNN and use the Internet to communicate. He refers to himself as the media information officer of the East Africa cell and complains that he is not being kept in the loop on big decisions. Along the way, in an almost casual fashion, the document seems to confirm two of the central charges of the federal case against bin Laden: That he had planted a terrorist cell in Nairobi and that his operatives carried out another of the crimes laid at bin Laden's door by federal authorities _ the attacks on American soldiers in Somalia in 1993 and 1994. The writer of the document warned that the followers of bin Laden, whom he referred to as ``the sheik,'' had ``become America's primary target.'' He said his comrades in East Africa ``should know that there is an American-Kenyan-Egyptian intelligence activity in Nairobi aiming to identify the names and residences of the members who are associated with the sheik since America knows well that the youth who lived in Somalia and were members of the sheik's cell are the ones who killed Americans in Somalia.'' ``They know that since Kenya was the main gateway for those members, there must be a center in Kenya,'' he wrote, concluding: ``We are really in danger.'' The government has asserted that one of Fazil's duties was to prepare and transmit reports to bin Laden and his top lieutenants. Federal authorities said that Khalid al Fawwaz, a London-based associate of bin Laden, directed Fazil to ``report periodically to bin Laden about the ``security'' situation of the cell. Fawwaz, who served as an informal press spokesman for bin Laden in London, was arrested by British authorities in September after the embassy bombings. He has denied any connection to terrorist activities. A translation of the report was part of a package of documents American prosecutors have sent to Britain to support the extradition of Fawwaz for trial in New York. It is not clear from the materials whether the report in the computer was forwarded to bin Laden. The documents, which were initially filed in secret, include a federal complaint that accuses Fawwaz of conspiring with bin Laden to kill Americans overseas. A second count charges him with soliciting others to do so. The report made clear that the organization was being run on a shoestring. Its author wrote that his mother has fallen ill, and that he would like to return to his homeland for a visit. ``What do you think? Keep in mind we only have $500.'' He repeatedly expressed his fears of American intelligence, which he believed was in the midst of a worldwide search for bin Laden and his associates. ``There is a war and the situation is dangerous,'' he said. He wrote that American forces kidnapped anyone who threatened the national security or American citizens. The author noted with alarm a recent CIA operation in which a man accused of shooting agency employees had been lured across the border in Pakistan and returned to the United States for trial. According to federal authorities, Fazil went on to play a pivotal role in the bombing of the Nairobi embassy. Prosecutors assert that he rented the villa where the bomb was assembled and surveyed the embassy's security precautions. On Aug. 7, they charge, Fazil drove a pickup truck to the embassy, leading the way for a vehicle carrying the bomb that killed more than 200 people, including 12 Americans. The author of the report said that he stood ready to ``fight the forces of atheism and dictators who wreaked havoc on earth.'' He said that the group did not have to inform its Nairobi-based operatives of all its global plans, but they needed enough warning to go ``underground for a while'' if authorities intensified the pressure in Nairobi. ``We, the East Africa cell members, do not want to know about the operations plans,'' he wrote, `` since we are just implementers.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated.

In the aftermath of the almost simultaneous bombings of U.S. embassies in East Africa, much has been learned of the terrorist network put together and financed by Saudi billionaire Osama bin Laden. Osama bin Laden, the mastermind of the bombings and U.S. cruise missile attack against a supposed terrorist camp in Afghanistan shortly after the bombings was an attempt not only to disrupt the terrorist network but to get bin Laden himself. As the investigation into the bombings continues, more is being learned from seized computers and top aides turned informants. Bin Laden remains in Afghanistan by permission of the Taliban.

Police arrested two journalists and charged them with writing articles to encourage Muslim youths to stage an Islamic revolution in Bangladesh after the Taliban model in Afghanistan, a police officer said Thursday. Mufti Abdul Hye and Manzoor Ahmed, editors at ``Jago Mujahid'' or ``Wake Up Mujahid,'' a monthy magazine published from Dhaka, the Bangladeshi capital, were jailed for a month shortly after their arrest on Wednesday. They were arrested under a 1974 law that allows police to detain any one for offenses related to national security, the officer said on condition of anonymity. Those arrested need not be taken to court for trial for up to three months. Police seized copies of the newspaper for reproducing a foreign newspaper interview of Afghanistan-based Saudi billionaire Osama Bin Laden, who has been accused by the United States of masterminding bombing attacks on the U.S. embassies in Kenya and Tanzania in August. Under Taliban rules women may not study or work outside their houses, and all kinds of light entertainment including music are banned. Men must grow beards of a certain length and criminals are subjected to amputations and public executions Even though Bangladesh is a predominantly Muslim country, it is governed by secular laws. Prime Minister Sheikh Hasina's liberal government hasn't recognized the Taliban government in Afghanistan. ||||| Albania says it has uncovered a terrorist network operated by Osama Bin Laden, the Islamic fundamentalist accused of masterminding the August embassy bombings in Africa, and that it's members have infiltrated other parts of Europe, The Sunday Times reported. The newspaper quoted Fatos Klosi, the head of Shik, the Albanian intelligence service, as saying that Bin Laden's network had sent units to fight in Kosovo, the neighboring Serbian province. ``Egyptians, Saudi Arabians, Algerians, Tunisians, Sudanese and Kuwaitis _ they come from several different organizations,'' Klosi was quoted as telling The Sunday Times. He said he believed terrorists had already infiltrated other parts of Europe from bases in Albania through a traffic in illegal immigrants, who have been smuggled across the Mediterranean to Italy in huge numbers. Interpol believes more than 100,000 blank Albanian passports were stolen in riots last year, providing ample opportunity for terrorists to acquire false papers, the newspaper said. Apparent confirmation of the Bin Laden's activities came earlier this month during the murder trial of Claude Kader, 27, a French national and self-confessed member of Bin Laden's Albanian network, the newspaper said. Kader claimed during the trial that he had visited Albania to recruit and arm fighters for Kosovo, and that four of his associates were still at large. Bin Laden is believed to have established an Albanian operation in 1994 after telling the government that he was head of a wealthy Saudi humanitarian agency wishing to help in Albania, the newspaper reported. ||||| If Osama bin Laden ever stands trial in New York for the bombings of the U.S. embassies in Africa and other acts of terror, it is already clear who prosecutors will call as a chief witness: One of his senior aides who has been talking to U.S. investigators for two years. The government has identified the aide in court papers with the pseudonym CS-1, saying the person pleaded guilty to terrorism charges in a secret proceeding in U.S. district court in Manhattan. According to the government, the informant worked closely with bin Laden from 1989 to 1996, a period when prosecutors assert that bin Laden was ordering deadly attacks on U.S. soldiers in Somalia and elsewhere. From the court papers filed in the investigation of the embassy bombings in East Africa in August, it is clear that the informant has provided crucial information to federal investigators. They have cited the source in the papers filed to support the extradition of two associates of bin Laden who are under arrest in Germany and Britain. Bin Laden, a Saudi exile, is thought to be living in Afghanistan. The source is also the basis for many of the significant charges in the indictment against bin Laden himself, including the assertion that he directed the attacks on U.S. soldiers in Somalia and that he attempted to obtain nuclear weapons. It is not known whether the source is in custody somewhere, or hiding under government protection. As recently as 11 days ago, records show, the source swore to a 5-page affidavit before a New York notary summarizing his allegations against bin Laden. Government officials adamantly declined to say anything about the identity of CS-1, which stands for ``confidential source.'' But at least one operative of bin Laden's group in East Africa concluded more than a year ago that he knew the identity of a crucial turncoat: Sidi Tayyib, a businessman who was married to one of bin Laden's relatives. The operative's concerns were inflamed by a report in a British newspaper that Tayyib was cooperating with Saudi and U.S. authorities. In an August, 1997 article, The Daily Telegraph said Tayyib had been in custody in Saudi Arabia since May and had given intelligence officials details of bin Laden's bank accounts and businesses. The news of Tayyib's possible defection, the East African operative wrote in a report apparently intended for the group's commanders, ``almost made me explode. ``An important man with close links to'' bin Laden ``seems to have fallen into the enemy's hands, and we have to take all the appropriate security precautions against that,'' the operative, Haroun Fazil, wrote in his summary of security concerns. Fazil has since been charged in the embassy attacks and remains at large. The report was typed on a computer seized last year by Kenyan authorities, according to a government filing last week in U.S. district court in Manhattan. Thus far, U.S. prosecutors have charged at least six members of bin Laden's organization with terrorist activities or conspiracy. In one recent filing, they said their case will in part be ``based on the testimony'' of the confidential source, suggesting that the informant has agreed to testify at any trial of bin Laden or his associates. The arrangement appears to have resulted from a plea bargain in which the source is cooperating in hopes of receiving a lesser sentence. There is no indication that the source has yet been sentenced and it seems likely that sentencing would take place after the investigation and ensuing trials are complete. In the affidavit prepared last week, the source acknowledged pleading guilty to terrorism charges in the United States and said they stemmed from attacks on U.S. targets, which were not specifically identified. The source described taking ``an oath of allegiance'' to follow bin Laden's orders, and gave a detailed account of bin Laden's group, including its history and inner workings. The source told of private statements by bin Laden to other al Qaeda members, encouraging them to attack U.S. troops and other citizens stationed in the Middle East and Africa. ``I either heard these statements myself,'' the source said, ``or I read them or learned of them from other al Qaeda members.'' The government has also said in other court papers that the source helped identify bin Laden's signature on a 1996 document urging Muslims to kill Americans. Tayyib's whereabouts are unknown and he could not be reached for comment. ||||| The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| MUNICH, Germany (AP) _ U.S. prosecutors have asked for a 20-day extension to provide Germany with paperwork necessary to extradite a top lieutenant of Saudi terrorist suspect Osama bin Laden, officials said Saturday. Mamdouh Mahmud Salim, 40, of Sudan, has been jailed since his arrest near Munich on Sept. 16 by Bavarian authorities acting on a U.S. warrant. Under German law, U.S. officials have 40 days after the arrest to turn over supporting evidence so a German court can rule on their extradition request. A Bavarian Justice Ministry spokesman, Gerhard Zierl, said U.S. authorities a few days ago asked the court hearing the case for an extra 20 days to provide the necessary material. Quoting unidentified Bavarian law enforcement sources, Focus newsmagazine reported Saturday that the evidence turned over so far was not very strong. The magazine said much of it was based on the testimony of an FBI informant, a former bin Laden associate, who made only vague connections between Salim and terrorist activities. Zierl declined to comment on the report, but said U.S. authorities probably asked for more time just a precautionary measure. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. A criminal complaint unsealed Sept. 25 in U.S. District Court in New York charges him with murder conspiracy and use of weapons of mass destruction. ||||| One of the clear but unstated objectives of last August's raid on Afghanistan was to kill Osama bin Laden and as many of his lieutenants as possible, administration officials now acknowledge. According to the officials, White House lawyers conducted a secret review in the months before the attack and concluded that such operations are legal under U.S. and international law. The officials said the raid was timed so that more than 70 cruise missiles would hit bin Laden's camps at the moment when the Central Intelligence Agency believed he would be meeting there with his chief operatives. A 1976 executive order bars anyone working for the U.S. government from plotting or carrying out assassinations. But officials said the White House legal opinion drafted before the Afghan strike asserts that the president has authority to target the ``infrastructure'' of terrorist groups that are attacking Americans. A top U.S. counterterrorism official said this week that the infrastructure of bin Laden's group is mostly ``human.'' ``As we said from the time of the Aug. 20 strike, the objective was to disrupt the training, organization and infrastructure of the bin Laden terrorist network at the Khost camps,'' said David C. Leavy, a spokesman for the National Security Council at the White House. Targeting infrastructure, officials acknowledged, can also mean destroying the leadership of a terrorist group. ``Command and control of an enemy is a justifiable target,'' Leavy said. Senior administration officials said they never discussed killing bin Laden in their planning sessions. His death, they said in interviews after the attack, would simply have been a side benefit. U.S. intelligence officials say they now believe that bin Laden was in the camp on the day of the attack, but he appears to have left unscathed before the missiles hit. Officials said there were reports that at least one of his senior lieutenants may have died in the attack, and that total casualties in the complex were between 50 and 100. Administration spokesmen have drawn a distinction between attempting to kill a specific person like bin Laden and attacking a group of people who command a terrorist organization. Administration officials have denied since August that the raid was intended to kill bin Laden, a Saudi exile who has been charged by federal prosecutors with leading a global war against U.S. interests. He has been linked to the Aug. 7 bombing of two U.S. embassies in East Africa. But a less subtle explanation was offered on Oct. 13 by Defense Secretary William Cohen, who said during a visit to Saudi Arabia that the United States had been ``going after'' bin Laden and his colleagues. ``We weren't quite successful,'' Cohen continued, ``but we sent a message.'' Kenneth Bacon, the Pentagon spokesman, said the secretary had not retracted his statements. The Los Angeles Times recently reported that the administration believed that it had a legal right to use deadly force against terrorist leaders. Bin Laden's organization was a significant concern for the Clinton administration even before the bombing of the U.S. embassies in East Africa. Last spring, officials said, U.S. intelligence considered a daring raid into Afghanistan to capture the Saudi exile. Officials said that at roughly the same time, the White House drafted the legal justification for military attacks against a terrorist leadership. That review, officials said, provided the legal basis in August to fire cruise missiles into the meeting at which it was believed bin Laden and his lieutenants would be gathered. The review, by the National Security Council, was the basis for saying this operation did not violate the presidential order banning assassinations. That ban was imposed by President Ford in 1975, after congressional investigators uncovered evidence that the CIA had plotted to assassinate Fidel Castro, the Cuban leader, and others. The order said: ``No person employed by, or acting on behalf of the United States government shall engage in, or conspire to engage in, assassination.'' While it is, on its face, a sweeping and unqualified ban, it has been subject to interpretation and intense debate over the years. In 1986, the Reagan administration responded to a terrorist attack against U.S. soldiers in Germany with a bombing raid on Libya. The targets included the residence of the Libyan leader, Moammar Gadhafi. And in the Gulf War, U.S. forces used powerful bombs in an attempt to kill Saddam Hussein, the president of Iraq. The legal review conducted by the White House would appear to provide a precedent for future operations in similar circumstances. ||||| The United States has obtained new evidence to link the owner of a Sudanese factory destroyed in a U.S. cruise missile strike last month to a terrorist group backed by Osama bin Laden, the suspected mastermind of the bombings of two U.S. embassies in East Africa, according to U.S. intelligence officials. The evidence, the officials said last week, shows that Salih Idris, the owner of Al Shifa pharmaceutical plant in Khartoum, has had financial dealings with members of Islamic Jihad, an Egypt-based group responsible for the assassination there of President Anwar Sadat in 1981. Islamic Jihad, in turn, receives money and sponsorship from bin Laden and has been absorbed into his terror network, the officials added. This evidence was uncovered after the United States destroyed Idris' factory in a missile attack following the bombing of the U.S. embassies, the officials said. A spokesman for Idris denied the accusations, saying Idris had no ties either to bin Laden or to any Islamic terrorist groups. In a statement provided by Tim Pendry, his London-based adviser, Idris said: ``I have absolutely no relationship with any Islamic terrorist organization anywhere in the world. I have never met Mr. bin Laden, I have never spoken with him, I have never had any financial or business relationship with him, nor knowingly with anyone acting as his agent.'' U.S. officials say they have also received new reports of an increase in the Iraqi presence in Sudan since the missile attack. Officials said they were not certain what the Iraqis were now doing in Khartoum. But intelligence agents previously obtained evidence that the manager of the Shifa plant made frequent trips to Iraq, where he visited the head of the chemical weapons program. In addition, a soil sample that the CIA clandestinely took at the Shifa plant showed the presence of a chemical used in the production of VX nerve gas, a process used only by Iraq. The new evidence comes as President Clinton faces attack over his decision to strike the Shifa plant. Some State Department and CIA officials have objected to the decision, arguing that it was based on tenuous evidence of a connection between the plant and bin Laden. The criticism is also based on the suspicion that the United States has poor data on Sudan, as the CIA station there has been closed since 1995 and the entire U.S. Embassy since 1996. In addition, more than 100 intelligence reports from a CIA informer in Sudan were withdrawn in January 1996 because they proved to be fabrications. That year a second informer warned of several terrorist threats, including one against Anthony Lake, then the national security adviser, but his reports proved impossible to confirm. Senior administration officials say that at the time of the cruise missile strike they had evidence of Sudan's involvement with bin Laden in a chemical weapons program, but no direct evidence linking the Shifa plant directly to that effort. Now they say that the new evidence against Idris has confirmed their initial suspicions about Al Shifa. At the time of the Aug. 20 cruise missile attack, Clinton administration officials acknowledge, they did not know that Idris owned the Shifa factory. The CIA, which had begun to scrutinize the plant 18 months earlier, believed the plant's ownership was irrelevant. ``What we knew about the ownership was that a lot of it couldn't be reliably established,'' said one senior U.S. intelligence official. Still, after the missile strike, when Idris was publicly identified as the owner, U.S. intelligence began to investigate his possible connections to chemical weapons and terrorism. A Sudanese expatriate who now lives in Jidda, Saudi Arabia, Idris, 46, was previously a senior manager of the National Commercial Bank of Saudi Arabia. He bought the Shifa plant in March. Officials say U.S. intelligence has received reports that Idris launders money for international Islamic groups, and that he also has a stake in a company in Sudan that is 40 percent owned by the Military Industrial Corporation, a government entity that the United States says controls Sudanese chemical weapons development. Bin Laden has helped finance the Military Industrial Corp. in his effort to use Sudan as a base for chemical weapons production, and talked to Sudanese leaders about testing poisonous gases against U.S. troops in Saudi Arabia, according to U.S. intelligence. But Pendry denied that Idris owned any businesses with the Military Industrial Corp. U.S. intelligence officials declined to provide details about the reports of Idris' financial dealings with members of Islamic Jihad. But they said that Islamic Jihad had now been consolidated into bin Laden's terrorist campaign. ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil. ||||| Sometime in the summer of 1997, an operative for Osama bin Laden sat down at his personal computer in a hideaway in Kenya. He was worried, he wrote in an angry dispatch, about the security of the ``East Africa network'' of bin Laden, the Saudi exile accused of masterminding a worldwide terrorist conspiracy against Americans. The organization, the author complained, had declared war against the United States, yet he had learned of that only from the news media. The writer, who federal authorities believe was Haroun Fazil, who was to become one of the central suspects in the bombing of the U.S. Embassy in Nairobi a year later, noted with alarm British press reports about the arrest of an aide to bin Laden. Striking almost bureaucratic tones, he said he was worried that ``an important man with close links'' to bin Laden, seemed to have ``fallen into the enemy's hands.'' He said the Americans were breathing down the necks of his associates in Nairobi and that he had to take precautions. ``The cell is at 100 percent danger,'' the operative warned. The letter, an extraordinary bit of digital evidence in a cloak-and-dagger case, was retrieved from a computer in a house where Fazil had been staying, according to papers filed in U.S. District Court in New York City. The papers said the computer was seized in August 1997 in a raid by Kenyan authorities that was attended by an FBI agent. The documents did not make clear whether the FBI had translated and read the document before or after the bombings of the U.S. Embassies in Nairobi and Dar es Salaam, Tanzania, on Aug. 7 of this year. The timing is potentially important because there have been mounting questions since the bombings about whether the United States adequately followed up warnings of a possible terrorist attack on American targets in Kenya. Officials of the FBI and the U.S. attorney's office in New York City refused to say Tuesday night at what point FBI agents learned of the computer file, nor would they make any other comment. Fazil eluded American investigators after the bombing as he traveled from Kenya to his home in the Comoros Islands and then to the Middle East. He remains a fugitive. The dispatch provides a remarkable insight into the workings of a terrorist network in the twilight of the 20th century. The author talks of how he and his fellow operatives follow events on CNN and use the Internet to communicate. He refers to himself as the media information officer of the East Africa cell and complains that he is not being kept in the loop on big decisions. Along the way, in an almost casual fashion, the document seems to confirm two of the central charges of the federal case against bin Laden: That he had planted a terrorist cell in Nairobi and that his operatives carried out another of the crimes laid at bin Laden's door by federal authorities _ the attacks on American soldiers in Somalia in 1993 and 1994. The writer of the document warned that the followers of bin Laden, whom he referred to as ``the sheik,'' had ``become America's primary target.'' He said his comrades in East Africa ``should know that there is an American-Kenyan-Egyptian intelligence activity in Nairobi aiming to identify the names and residences of the members who are associated with the sheik since America knows well that the youth who lived in Somalia and were members of the sheik's cell are the ones who killed Americans in Somalia.'' ``They know that since Kenya was the main gateway for those members, there must be a center in Kenya,'' he wrote, concluding: ``We are really in danger.'' The government has asserted that one of Fazil's duties was to prepare and transmit reports to bin Laden and his top lieutenants. Federal authorities said that Khalid al Fawwaz, a London-based associate of bin Laden, directed Fazil to ``report periodically to bin Laden about the ``security'' situation of the cell. Fawwaz, who served as an informal press spokesman for bin Laden in London, was arrested by British authorities in September after the embassy bombings. He has denied any connection to terrorist activities. A translation of the report was part of a package of documents American prosecutors have sent to Britain to support the extradition of Fawwaz for trial in New York. It is not clear from the materials whether the report in the computer was forwarded to bin Laden. The documents, which were initially filed in secret, include a federal complaint that accuses Fawwaz of conspiring with bin Laden to kill Americans overseas. A second count charges him with soliciting others to do so. The report made clear that the organization was being run on a shoestring. Its author wrote that his mother has fallen ill, and that he would like to return to his homeland for a visit. ``What do you think? Keep in mind we only have $500.'' He repeatedly expressed his fears of American intelligence, which he believed was in the midst of a worldwide search for bin Laden and his associates. ``There is a war and the situation is dangerous,'' he said. He wrote that American forces kidnapped anyone who threatened the national security or American citizens. The author noted with alarm a recent CIA operation in which a man accused of shooting agency employees had been lured across the border in Pakistan and returned to the United States for trial. According to federal authorities, Fazil went on to play a pivotal role in the bombing of the Nairobi embassy. Prosecutors assert that he rented the villa where the bomb was assembled and surveyed the embassy's security precautions. On Aug. 7, they charge, Fazil drove a pickup truck to the embassy, leading the way for a vehicle carrying the bomb that killed more than 200 people, including 12 Americans. The author of the report said that he stood ready to ``fight the forces of atheism and dictators who wreaked havoc on earth.'' He said that the group did not have to inform its Nairobi-based operatives of all its global plans, but they needed enough warning to go ``underground for a while'' if authorities intensified the pressure in Nairobi. ``We, the East Africa cell members, do not want to know about the operations plans,'' he wrote, `` since we are just implementers.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated.

Following the bombings of the embassies in Africa, the US began a full-scale assault on Osama bin Laden. Attacked were a chemical plant in the Sudan and a camp in Afghanistan where he was believed to be, creating an assassination opportunity. Evidence was gathered from a captured computer and an in-law who defected. Suspects were identified and the FBI began to build a case in New York. Extradition of a suspect from Germany was sought. Reactions from Islamic nations varied: Afghanistan promised him safe haven; more liberal Bandladesh arrested pro-Taliban reporters; Albania feared it was an infiltration center for the rest of Europe, including Kosovo.

The Spanish and British governments appeared Wednesday to be seeking shelter from the political storm brewing over the possible extradition of former Chilean dictator Augusto Pinochet to Spain. ``Despite everything that has been written, this is not a decision for the British government or the Spanish government,'' British Prime Minister Tony Blair said in an interview published by a Spanish newspaper on Wednesday. In a similar vein, Spanish Foreign Ministry spokesman Joaquin Perez said Wednesday: ``The government should not have any opinion about the extradition.'' British police, acting on an international arrest warrant from Spanish judge Baltasar Garzon on Friday, detained the ailing general in the London clinic where he was recovering from back surgery. The detention and the possible extradition of Pinochet to Spain to stand trial for genocide, terrorism and torture during his 17-year dictatorship was warmly welcomed by human rights activists worldwide. But it sparked protests from the Chilean government, and fears it could damage economic relations. In 1997, seven years after Pinochet left power, Spain was the biggest single investor in Chile, followed closely by Britain. Blair quoted in the El Mundo newspaper said that Pinochet's detention was unrelated to his government's so-called Ethical Foreign Policy, apparently ignoring pressure from leftists within his Labor party to support moves to prosecute the former dictator. ``This is about two legal systems united by an extradition treaty but nobody seems to understand this,'' he said. Blair added that should Home Secretary Jack Straw would use only strictly legal criteria and act ``as if he were a judge,'' should he be required to make a decision on an extradition request from Spain. The tone of the British Prime Minister's first public comment on the issue contrasted sharply with Sunday's emotional statement from influential Trade Secretary Peter Mandelson who said most Britons would find diplomatic immunity for Pinochet ``gut-wrenching.'' The European extradition convention gives Garzon 40 days to present a formal extradition request to the British authorities via the Spanish government. But while Spanish Prime Minister Jose Maria Aznar has promised his government would rubber stamp the process if it reaches his desk, he appears to be hoping he will never have to do so. Public prosecutors from Spain's National Court have appealed the judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. ``Depending on the result of the appeals it is possible that it (the extradition request) will never reach the government so perhaps the government will never have to pronounce on it,'' Aznar was quoted as saying in Wednesday's edition of the Madrid newspaper El Pais. The appeals argue that crimes committed during Pinochet's 1973-1990 dictatorship are none of Spain's business, and should be left to the Chilean or international courts. A ruling on the appeals is expected next week, and a decision in their favor would nullify Garzon's extradition attempt. ||||| Europe's top official said Friday that he hoped former Chilean dictator Augusto Pinochet would be extradited to Spain to be tried for crimes committed during his 17-year rule. ``Sometimes it should be made clear that crimes, wherever they take place, cannot be left unpunished,'' European Commission President Jacques Santer said. Pinochet was detained by British police in London on Oct. 16 by request of a Spanish magistrate as a first step toward his extradition to stand trial for genocide and terrorism. ``The dictatorship caused great suffering and sent many citizens into exile,'' Santer said, referring to the 1973-90 Pinochet regime. Santer was speaking to reporters in the northern Spanish city of Oviedo where he was due to receive the Prince of Asturias Prize for social science _ one of the eight annual prizes named after the heir to the Spanish throne. Meanwhile, a Spanish newspaper reported Friday that Pinochet is not fully aware of his predicament. Daily El Mundo said the ailing retired general's family and aides have been shielding him from the details for fear he would fly into a rage that would kill him. Pinochet was detained in the London clinic while recovering from back surgery. El Mundo said its reporter accompanied Chilean politicians seeking his release during a visit to the clinic Thursday. The reporter said he talked briefly to Pinochet's wife, Lucia Hiriart, and daughter Veronica. ``If Augusto knew the truth, he would have an attack of rage and die,'' El Mundo quoted Hiriart as saying to others while waiting for permission from Scotland Yard to visit her husband on the eighth floor of the clinic. She said she was particularly concerned because he is also suffering from a urinary infection, heart problems and diabetes, the newspaper reported. El Mundo reported that the family had asked police guards to stand outside the former dictator's room and keep out of sight. The paper said the room lacked television, radio or telephone. According to the report Pinochet was informed of the arrest order from two policemen, but is convinced it was a mistake and that he is protected by diplomatic immunity. Meanwhile, a Chilean television station reported Friday that a Chilean army officer close to Pinochet told the former military chief about his situation after flying to London Thursday. TV13 reported that the unidentified officer said Pinochet reacted calmly to the news imparted ``as one soldier to another.'' ||||| As his lawyers in London tried to quash a Spanish arrest warrant for Gen. Augusto Pinochet, the former Chilean dictator, efforts began in Geneva and Paris to have him extradited. In London, where Pinochet has been under arrest in a clinic for the last 10 days, a phalanx of British lawyers argued before the High Court of Justice that the arrest order sent from Spain was illegal because the general, 82, is not a Spanish citizen. They also maintained that as a former head of state, the general had diplomatic immunity for actions taken while in office. His lawyer, Clive Nicholls, said that if a bid to extradite the general succeeded, by the same token Queen Elizabeth II could be extradited to Argentina to face trial for the death of Argentine soldiers in the Falklands war in 1982. On the opposing side, Alun Jones, a British government lawyer acting as prosecutor in the case, defended the Spanish warrant, which led to the general's detention in London. The prosecutor argued that the the right-wing general was responsible for killing at least 4,000 people and had set out ``to destroy a national group _ Chilean nationals who did not share his ideological values.'' After hearing the arguments in a court crowded with Chilean exiles in the public gallery, Lord Bingham, Britain's senior judge, said the court was expected to decide the matter on Tuesday. The Chilean air force has sent an ambulance plane to Britain in hope of the general's early release. But efforts to prevent that gathered strength elsewhere in Europe. In Geneva, a public prosecutor, Bernard Bertossa, said Monday that he had issued a warrant for Pinochet's arrest in connection with the kidnapping and presumed death of a Swiss-Chilean citizen in 1977. Bertossa said he had opened a judicial investigation in response to a complaint by the widow of the victim, Alexei Jaccard, who was 25 when he was tortured in Chile and subsequently disappeared. The prosecutor said he was asking the Swiss federal government to seek Pinochet's extradition from Britain to face trial in Geneva. At the same time in Paris Monday, the families of three French citizens, of whom two disappeared and one was killed in Chile during the 1973-90 dictatorship, filed suit in a French court. In addition, a human rights group in Paris said Monday that it had filed a suit with a Paris court on behalf of Anne Marie Pesle, whose father, Etienne Pesle, disappeared in Chile in 1973. In Madrid, Baltasar Garzon, the Spanish investigating magistrate who first obtained Pinochet's arrest in London, said he had formally requested the governments of Switzerland and Luxemburg to block bank accounts held by the general. Court officials in Madrid said Garzon wanted any accounts blocked with a view to their possible use later as compensation to relatives of victims. In London, British officials keep insisting that Pinochet's case will be decided by the courts and not politically, yet the issue has stirred intense political activity both in Britain and in Chile. Supporters and opponents of the dictator have traveled to the London clinic where he is being held. From Chile have come six right-wing senators, the deputy foreign minister, aides and legal experts who file in and out of the private clinic in central London. From Europe have come dozens of longtime opponents of the general who were forced into exile after his 1973 coup against the elected Socialist president, Salvador Allende Gossens. The exiles, along with others, stand daily outside the clinic holding up photographs of missing relatives and shouting anti-Pinochet slogans. On occasion there have been shouting matches between the two sides. ``He is ill, and in a few days he will be 83,'' Mariano Fernandez, Chile's deputy foreign minister, said after visiting Pinochet who had minor surgery for a back ailment. After his surgery on Oct. 9, the general was arrested by Scotland Yard during the night of Oct. 16. The diplomatic and judicial entanglements that ensued now involve at least five governments. The political and legal imbroglio could end if Britain's home secretary, Jack Straw, decides that the general should be released on ``compassionate grounds'' because of his age and failing health. Last week he said that in exercising his powers under the 1989 Extradition Act, he would consider whether the offenses are of a ``political character'' and he would take into account ``any compassionate circumstances.'' ||||| Britain has defended its arrest of Gen. Augusto Pinochet, with one lawmaker saying that Chile's claim that the former Chilean dictator has diplomatic immunity is ridiculous. Chilean officials, meanwhile, issued strong protests and sent a delegation to London on Sunday to argue for Pinochet's release. The former strongman's son vowed to hire top attorneys to defend his 82-year-old father, who ruled Chile with an iron fist for 17 years. British police arrested Pinochet in his bed Friday at a private London hospital in response to a request from Spain, which wants to question Pinochet about allegations of murder during the decade after he seized power in 1973. Pinochet had gone to the hospital to have a back operation Oct. 9. ``The idea that such a brutal dictator as Pinochet should be claiming diplomatic immunity I think for most people in this country would be pretty gut-wrenching stuff,'' Trade Secretary Peter Mandelson said in a British Broadcasting Corp. television interview Sunday. Home Office Minister Alun Michael acknowledged Sunday that Pinochet entered Britain on a diplomatic passport, but said, ``That does not necessarily convey diplomatic immunity.'' The Foreign Office said only government officials visiting on official business and accredited diplomats have immunity. Pinochet has been a regular visitor to Britain, generally without publicity. His arrest this time appeared to reflect a tougher attitude toward right-wing dictators by Prime Minister Tony Blair's Labor Party government, which replaced a Conservative Party administration 18 months ago and promised an ``ethical'' foreign policy. However, Michael Howard, a Conservative spokesman and former Cabinet minister, said he was concerned that Pinochet was arrested as a result of pressure from Labor lawmakers and lobby groups. Chilean President Eduardo Frei criticized the arrest, saying the Spanish magistrate's arrest order was tantamount to not recognizing Chile's institutions. ``Spain also lived under an authoritarian for 40 years and many of its present institutions are inherited from that regime,'' Frei said in Porto, Portugal, where he was attending the Ibero-American Summit. ``Would a Chilean court be allowed to start a trial for abuses that occurred under the Spanish authoritarian regime (of Francisco Franco)?'' Frei asked. ``It is only for Chilean courts to try events that occurred in Chile.'' Franco's reign ended in 1975. Pinochet's family issued a statement Sunday calling the arrest ``an insult'' and thanking the Chilean government, rightist politicians and the military for their support. In London, police guards were deployed Sunday outside the London Clinic, where Pinochet is believed to still be a patient. About 100 Chilean demonstrators pleased with the arrest gathered outside, chanting and waving placards bearing faded black and white portraits with the caption ``Disappeared in Chile.'' Across the Atlantic, the Chilean capital of Santiago was the scene of dueling demonstrations Sunday, reflecting the long-standing division of public opinion over Pinochet. The rallies were mostly peaceful, although riot police used tear gas and water cannons on some pro-Pinochet protesters trying to break through police lines into the British embassy on Sunday evening. No arrests or injuries were reported. The envoy sent to London to argue for Pinochet's release, Santiago Benadava, would offer only diplomatic advice, said Chilean Foreign Minister Jose Miguel Insulza. Any legal defense would be up to Pinochet's family. Pinochet's son, Augusto, said the family would hire ``the best legal team available in London.'' Several right-wing Chilean politicians, including some who held posts in the Pinochet regime, also were flying to London to show their support to their former boss. Under extradition laws, Spain has 40 days from last Friday to formally apply for extradition. The final decision lies with British Home Secretary Jack Straw. There was no immediate word on when Pinochet would be questioned. But police sources, speaking on condition of anonymity, said questioning was not expected for a week or two. Pinochet has been widely accused of running a ruthless regime marked by disappearances and deaths of political opponents. His arrest was prompted by applications last week to question him by two Spanish judges investigating human rights violations. One of them, Baltasar Garzon, also wants to question Pinochet about the disappearances of Chilean dissidents in Argentina. The arrest warrant, however, referred only to questioning about allegations that he killed Spaniards in Chile between 1973 and 1983. In Chile, seven Spaniards have been identified as missing or dead under the Pinochet regime, including two Catholic priests and a U.N. official. According to a Chilean government report, a total of 4,299 political opponents died or disappeared during Pinochet's term. Pinochet, commander-in-chief of the Chilean army until March, has immunity from prosecution in Chile as a senator-for-life under a new constitution that his government crafted. He is also covered under an amnesty for crimes committed before 1978 _ when most of the human rights abuses took place. ||||| Cuban President Fidel Castro said Sunday he disagreed with the arrest in London of former Chilean dictator Augusto Pinochet, calling it a case of ``international meddling.'' ``It seems to me that what has happened there (in London) is universal meddling,'' Castro told reporters covering the Ibero-American summit being held here Sunday. Castro had just finished breakfast with King Juan Carlos of Spain in a city hotel. He said the case seemed to be ``unprecedented and unusual.'' Pinochet, 82, was placed under arrest in London Friday by British police acting on a warrant issued by a Spanish judge. The judge is probing Pinochet's role in the death of Spaniards in Chile under his rule in the 1970s and 80s. The Chilean government has protested Pinochet's arrest, insisting that as a senator he was traveling on a diplomatic passport and had immunity from arrest. Castro, Latin America's only remaining authoritarian leader, said he lacked details on the case against Pinochet, but said he thought it placed the government of Chile and President Eduardo Frei in an uncomfortable position while Frei is attending the summit. Castro compared the action with the establishment in Rome in August of an International Criminal Court, a move Cuba has expressed reservations about. Castro said the court ought to be independent of the U.N. Security Council, because ``we already know who commands there,'' an apparent reference to the United States. The United States was one of only seven countries that voted against creating the court. ``The (Pinochet) case is serious ... the problem is delicate'' and the reactions of the Chilean Parliament and armed forces bear watching, Castro said. He expressed surprise that the British had arrested Pinochet, especially since he had provided support to England during its 1982 war with Argentina over the Falkland Islands. Although Chile maintained neutrality during the war, it was accused of providing military intelligence to the British. Castro joked that he would have thought police could have waited another 24 hours to avoid having the arrest of Pinochet overshadow the summit being held here. ``Now they are talking about the arrest of Pinochet instead of the summit,'' he said. Pinochet left government in 1990, but remained as army chief until March when he became a senator-for-life. ||||| The British and Spanish prime ministers said Sunday that the fate of former Chilean dictator Gen. Augusto Pinochet is in the hands of their judicial authorities and they will not interfere. ``Both myself and Mr. Aznar agree this is not a matter for us to discuss,'' British Prime Minister Tony Blair said, referring to Spanish leader Jose Maria Aznar. ``I've avoided commenting on that judicial process and I don't intend to do so.'' Aznar made similar comments when he meet journalists on the margin of a European Union summit in this Alpine lakeside resort. Pinochet is under arrest in a London hospital where he'd gone for back surgery. He was detained on a warrant from a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture during his 1973-90 rule. The Chilean government has urged Britain to release Pinochet on humanitarian grounds, and argued that as a senator, he is entitled to diplomatic immunity. Aznar dismissed reports that the bid to try Pinochet will damage Spain's relations with Latin America. ``It's important we don't talk nonsense about this issue. This is stupid.'' ||||| The wife of former Chilean dictator Augusto Pinochet appealed for his release, saying he is too sick to be extradited to Spain to face charges of genocide. ''This is very painful for our family,'' a tearful Lucia Pinochet told reporters late Friday outside the private London Clinic, where her husband is under arrest as he recuperates from back surgery. 'I would like to ask for compassion for a person who is very, very, very, ill.'' Pinochet, 82, had surgery Oct. 9 for a herniated disc, a painful spinal disorder which had hindered his movement. He was arrested Oct. 16 at the instigation of a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture. The Spanish warrant cited 94 victims, but could be broadened to include some 3,000 people who were killed or disappeared during his 17-year-rule. Chile argues that Pinochet must be released because as a senator he enjoys diplomatic immunity _ and because he is in poor health. Unconfirmed media reports in Chile this week indicated that Pinochet, who has worn a pacemaker for years and is diabetic, also has a urinary tract infection. There have also been reports that he is suffering from depression. In a separate attempt to block his extradition, lawyers for the former strongman went to court Friday to argue that British police acted illegally in accepting the Spanish warrant. The case resumes Monday. Pinochet ruled from 1973 until 1990 but remained army commander until last March. Then, he moved to congress as a senator for life, as permitted by the constitution his regime drafted. ||||| Margaret Thatcher entertained former Children dictator Gen. Augusto Pinochet at her home two weeks before he was arrested in his bed in a London hospital, the ex-prime minister's office said Tuesday, amid growing diplomatic and domestic controversy over the move. Pinochet, who has vowed to fight attempts to extradite him to Spain on allegations of murder, genocide and torture, had drinks with Lady Thatcher and her husband, Denis, in their home in London's elite Belgravia district four days before he was hospitalized for back surgery performed Oct. 9. ``She regarded it as a private meeting,'' said Mark Worthington, spokesman for the Lady Thatcher, Conservative Party prime minister from 1979-90. The 82-year-old Pinochet was arrested Friday at a Spanish magistrate's request. In Conservative government days, Pinochet was welcomed on regular visits that included tea with the prime minister. He was the only Latin American leader to support Britain in its 1982 war against Argentina to reclaim the Falkland Islands. Pinochet and Lady Thatcher also implemented similar brands of right-wing economics. The current visit is Pincohet's first since Prime Minister Tony Blair's Labor Party administration was elected 18 months ago, ending 18 years of Conservative Party rule. Chile's ambassador delivered a formal protest to the Foreign Office on Monday, saying Britain has violated Pinochet's diplomatic immunity. He arrived last month on a diplomatic passport and is also a senator-for-life in Chile, which protects him from prosecution there. Pinochet's 17-year-rule was marked by torture and other human rights abuses against political opponents in which, the Chilean government has said, 4,299 people were killed or vanished. He remained Chilean army commander-in-chief until March. The magistrate broadened his charges Monday to include killings of Chileans as well as Spaniards, and genocide _ for which there is no diplomatic immunity. Chilean Ambassador Mario Artaza, himself an exile during Pinochet's rule, said Chile had a duty to protect a citizen with diplomatic immunity and senator status. ``We are not protecting the dictator of the '70s,'' Artaza said in a British Broadcasting Corp. radio interview Tuesday. ``What we are fighting for and discussing with the (British) government is the special situation of a senator in our transition who many people do not understand and many people don't like.'' ``We're not discussing his record during his period of dictatorship, that the present government does not support at all,'' added the ambassador. A Chilean specialist in international law was traveling to London for further meetings with British officials, Artaza said. Pinochet, expected to be hospitalized for perhaps two more weeks faces a long battle through British courts to avoid extradition, questioning by two Spanish judges who instigated the proceedings, and an appearance at London's Bow Street magistrate's court. British Conservative Party lawmakers accuse the Labor government of ``gesture'' politics and pandering to the party's left-wing. ||||| The Swiss government has ordered no investigation of possible bank accounts belonging to former Chilean dictator Augusto Pinochet, a spokesman said Wednesday. Weekend newspaper reports in Spain said a Spanish judge who ordered Pinochet's arrest has issued a petition aimed at freezing any accounts the 82-year-old general might have in Luxembourg and Switzerland. But government spokesman Achille Casanova said no accounts have so far been frozen in Switzerland and no investigation order has been given to federal banking authorities. Pinochet has been held at a London clinic since his arrest earlier this month. Spanish magistrate Baltasar Garzon is seeking his extradition on charges of genocide, torture and terrorism during his 17-year rule which ended 1990. On Monday, Switzerland also requested Pinochet's arrest and extradition on charges of murder, kidnapping and torture. The move followed a criminal complaint filed in Geneva last week by the widow of Alexis Jaccard, a student of Swiss-Chilean dual nationality who disappeared in May 1977. Swiss authorities said the Spanish effort to extradite Pinochet should be given priority. A Spanish request for legal assistance from Switzerland, made Friday, has been passed on to Geneva authorities. No details have been given of the content of the Spanish request. ||||| A delegation of Chilean legislators lobbying against the possible extradition of Augusto Pinochet to Spain to face trial, warned Thursday that Chile was on the brink of political turmoil. ``There is a climate of division, confrontation and instability in Chile,'' parliamentary deputy Alberto Espina told reporters in Madrid after meeting the Chilean ambassador. Pinochet was arrested in London on Oct. 16 at the instigation of Spanish magistrate Baltasar Garzon who is seeking to extradite the former dictator on charges of genocide, terrorism and torture. In Chile, the detention triggered both celebrations by relatives of victims of Pinochet's 1973-1990 regime and protests from the retired general's supporters. Espina also warned that the issue was damaging relations between Chile Spain and Britain. Spain was the biggest single investor in Chile last year, followed closely by Britain. The deputy arrived in Madrid late Wednesday accompanied by the senators Jovino Movoa and Julio Lagos. The delegation is an offshoot of a larger group of Chilean parliamentarians currently protesting the detention in London on behalf of the opposition parties Independent Democratic Union and the National Renovation Party. Espina, Movoa and Lagos were hoping to talk to officials from the Spanish Foreign Ministry and other government representatives. ``All we ask is that Spain stops meddling in our internal affairs,'' Espina said, arguing that Chilean problems should be dealt with by Chilean courts. ``We stopped being a Spanish colony 188 years ago and we have no intention of becoming one again,'' he added. Government spokesman Josep Pique said Prime Minister Jose Maria Aznar had no plans to meet the delegation, the state-owned news agency EFE reported. Aznar has promised his government will rubber stamp a formal extradition request to the British government if asked to do so by the judicial authorities. But the extradition attempt could be annulled by legal challenges in Spain well before the deadline for presenting it in Britain. The deadline is set for November 25th _ coincidentally Pinochet's 83rd birthday. On Thursday the head prosecutor from the National Court set in motion appeals against several rulings made by Judge Garzon related to Pinochet's detention in the London clinic where he was recovering from back surgery. The court's plenary is expected to meet next week to decide on an earlier challenge of the Spanish judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. A ruling that the investigations are outside the jurisdiction of Spanish law would made any extradition request difficult. The decision is likely to hang on how genocide and terrorism are interpreted, as these crimes are specifically mentioned in the Spanish legal code.

Britain caused international controversy and Chilean turmoil by arresting former Chilean dictator Pinochet in London for Spain's investigation of Spanish citizen deaths under Pinochet's 17-year rule of torture and political murder. Claims are Pinochet had diplomatic immunity, extradition is international meddling or illegal because Pinochet is not a Spanish citizen, also his crimes should be punished. Spain and Britain, big Chilean investors, fear damage to economic relations and let courts decide extradition. The Swiss haven't investigated Pinochet accounts despite a Spanish request. Pinochet is shielded from details, said too sick to be extradited.

The Spanish and British governments appeared Wednesday to be seeking shelter from the political storm brewing over the possible extradition of former Chilean dictator Augusto Pinochet to Spain. ``Despite everything that has been written, this is not a decision for the British government or the Spanish government,'' British Prime Minister Tony Blair said in an interview published by a Spanish newspaper on Wednesday. In a similar vein, Spanish Foreign Ministry spokesman Joaquin Perez said Wednesday: ``The government should not have any opinion about the extradition.'' British police, acting on an international arrest warrant from Spanish judge Baltasar Garzon on Friday, detained the ailing general in the London clinic where he was recovering from back surgery. The detention and the possible extradition of Pinochet to Spain to stand trial for genocide, terrorism and torture during his 17-year dictatorship was warmly welcomed by human rights activists worldwide. But it sparked protests from the Chilean government, and fears it could damage economic relations. In 1997, seven years after Pinochet left power, Spain was the biggest single investor in Chile, followed closely by Britain. Blair quoted in the El Mundo newspaper said that Pinochet's detention was unrelated to his government's so-called Ethical Foreign Policy, apparently ignoring pressure from leftists within his Labor party to support moves to prosecute the former dictator. ``This is about two legal systems united by an extradition treaty but nobody seems to understand this,'' he said. Blair added that should Home Secretary Jack Straw would use only strictly legal criteria and act ``as if he were a judge,'' should he be required to make a decision on an extradition request from Spain. The tone of the British Prime Minister's first public comment on the issue contrasted sharply with Sunday's emotional statement from influential Trade Secretary Peter Mandelson who said most Britons would find diplomatic immunity for Pinochet ``gut-wrenching.'' The European extradition convention gives Garzon 40 days to present a formal extradition request to the British authorities via the Spanish government. But while Spanish Prime Minister Jose Maria Aznar has promised his government would rubber stamp the process if it reaches his desk, he appears to be hoping he will never have to do so. Public prosecutors from Spain's National Court have appealed the judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. ``Depending on the result of the appeals it is possible that it (the extradition request) will never reach the government so perhaps the government will never have to pronounce on it,'' Aznar was quoted as saying in Wednesday's edition of the Madrid newspaper El Pais. The appeals argue that crimes committed during Pinochet's 1973-1990 dictatorship are none of Spain's business, and should be left to the Chilean or international courts. A ruling on the appeals is expected next week, and a decision in their favor would nullify Garzon's extradition attempt. ||||| Europe's top official said Friday that he hoped former Chilean dictator Augusto Pinochet would be extradited to Spain to be tried for crimes committed during his 17-year rule. ``Sometimes it should be made clear that crimes, wherever they take place, cannot be left unpunished,'' European Commission President Jacques Santer said. Pinochet was detained by British police in London on Oct. 16 by request of a Spanish magistrate as a first step toward his extradition to stand trial for genocide and terrorism. ``The dictatorship caused great suffering and sent many citizens into exile,'' Santer said, referring to the 1973-90 Pinochet regime. Santer was speaking to reporters in the northern Spanish city of Oviedo where he was due to receive the Prince of Asturias Prize for social science _ one of the eight annual prizes named after the heir to the Spanish throne. Meanwhile, a Spanish newspaper reported Friday that Pinochet is not fully aware of his predicament. Daily El Mundo said the ailing retired general's family and aides have been shielding him from the details for fear he would fly into a rage that would kill him. Pinochet was detained in the London clinic while recovering from back surgery. El Mundo said its reporter accompanied Chilean politicians seeking his release during a visit to the clinic Thursday. The reporter said he talked briefly to Pinochet's wife, Lucia Hiriart, and daughter Veronica. ``If Augusto knew the truth, he would have an attack of rage and die,'' El Mundo quoted Hiriart as saying to others while waiting for permission from Scotland Yard to visit her husband on the eighth floor of the clinic. She said she was particularly concerned because he is also suffering from a urinary infection, heart problems and diabetes, the newspaper reported. El Mundo reported that the family had asked police guards to stand outside the former dictator's room and keep out of sight. The paper said the room lacked television, radio or telephone. According to the report Pinochet was informed of the arrest order from two policemen, but is convinced it was a mistake and that he is protected by diplomatic immunity. Meanwhile, a Chilean television station reported Friday that a Chilean army officer close to Pinochet told the former military chief about his situation after flying to London Thursday. TV13 reported that the unidentified officer said Pinochet reacted calmly to the news imparted ``as one soldier to another.'' ||||| As his lawyers in London tried to quash a Spanish arrest warrant for Gen. Augusto Pinochet, the former Chilean dictator, efforts began in Geneva and Paris to have him extradited. In London, where Pinochet has been under arrest in a clinic for the last 10 days, a phalanx of British lawyers argued before the High Court of Justice that the arrest order sent from Spain was illegal because the general, 82, is not a Spanish citizen. They also maintained that as a former head of state, the general had diplomatic immunity for actions taken while in office. His lawyer, Clive Nicholls, said that if a bid to extradite the general succeeded, by the same token Queen Elizabeth II could be extradited to Argentina to face trial for the death of Argentine soldiers in the Falklands war in 1982. On the opposing side, Alun Jones, a British government lawyer acting as prosecutor in the case, defended the Spanish warrant, which led to the general's detention in London. The prosecutor argued that the the right-wing general was responsible for killing at least 4,000 people and had set out ``to destroy a national group _ Chilean nationals who did not share his ideological values.'' After hearing the arguments in a court crowded with Chilean exiles in the public gallery, Lord Bingham, Britain's senior judge, said the court was expected to decide the matter on Tuesday. The Chilean air force has sent an ambulance plane to Britain in hope of the general's early release. But efforts to prevent that gathered strength elsewhere in Europe. In Geneva, a public prosecutor, Bernard Bertossa, said Monday that he had issued a warrant for Pinochet's arrest in connection with the kidnapping and presumed death of a Swiss-Chilean citizen in 1977. Bertossa said he had opened a judicial investigation in response to a complaint by the widow of the victim, Alexei Jaccard, who was 25 when he was tortured in Chile and subsequently disappeared. The prosecutor said he was asking the Swiss federal government to seek Pinochet's extradition from Britain to face trial in Geneva. At the same time in Paris Monday, the families of three French citizens, of whom two disappeared and one was killed in Chile during the 1973-90 dictatorship, filed suit in a French court. In addition, a human rights group in Paris said Monday that it had filed a suit with a Paris court on behalf of Anne Marie Pesle, whose father, Etienne Pesle, disappeared in Chile in 1973. In Madrid, Baltasar Garzon, the Spanish investigating magistrate who first obtained Pinochet's arrest in London, said he had formally requested the governments of Switzerland and Luxemburg to block bank accounts held by the general. Court officials in Madrid said Garzon wanted any accounts blocked with a view to their possible use later as compensation to relatives of victims. In London, British officials keep insisting that Pinochet's case will be decided by the courts and not politically, yet the issue has stirred intense political activity both in Britain and in Chile. Supporters and opponents of the dictator have traveled to the London clinic where he is being held. From Chile have come six right-wing senators, the deputy foreign minister, aides and legal experts who file in and out of the private clinic in central London. From Europe have come dozens of longtime opponents of the general who were forced into exile after his 1973 coup against the elected Socialist president, Salvador Allende Gossens. The exiles, along with others, stand daily outside the clinic holding up photographs of missing relatives and shouting anti-Pinochet slogans. On occasion there have been shouting matches between the two sides. ``He is ill, and in a few days he will be 83,'' Mariano Fernandez, Chile's deputy foreign minister, said after visiting Pinochet who had minor surgery for a back ailment. After his surgery on Oct. 9, the general was arrested by Scotland Yard during the night of Oct. 16. The diplomatic and judicial entanglements that ensued now involve at least five governments. The political and legal imbroglio could end if Britain's home secretary, Jack Straw, decides that the general should be released on ``compassionate grounds'' because of his age and failing health. Last week he said that in exercising his powers under the 1989 Extradition Act, he would consider whether the offenses are of a ``political character'' and he would take into account ``any compassionate circumstances.'' ||||| Britain has defended its arrest of Gen. Augusto Pinochet, with one lawmaker saying that Chile's claim that the former Chilean dictator has diplomatic immunity is ridiculous. Chilean officials, meanwhile, issued strong protests and sent a delegation to London on Sunday to argue for Pinochet's release. The former strongman's son vowed to hire top attorneys to defend his 82-year-old father, who ruled Chile with an iron fist for 17 years. British police arrested Pinochet in his bed Friday at a private London hospital in response to a request from Spain, which wants to question Pinochet about allegations of murder during the decade after he seized power in 1973. Pinochet had gone to the hospital to have a back operation Oct. 9. ``The idea that such a brutal dictator as Pinochet should be claiming diplomatic immunity I think for most people in this country would be pretty gut-wrenching stuff,'' Trade Secretary Peter Mandelson said in a British Broadcasting Corp. television interview Sunday. Home Office Minister Alun Michael acknowledged Sunday that Pinochet entered Britain on a diplomatic passport, but said, ``That does not necessarily convey diplomatic immunity.'' The Foreign Office said only government officials visiting on official business and accredited diplomats have immunity. Pinochet has been a regular visitor to Britain, generally without publicity. His arrest this time appeared to reflect a tougher attitude toward right-wing dictators by Prime Minister Tony Blair's Labor Party government, which replaced a Conservative Party administration 18 months ago and promised an ``ethical'' foreign policy. However, Michael Howard, a Conservative spokesman and former Cabinet minister, said he was concerned that Pinochet was arrested as a result of pressure from Labor lawmakers and lobby groups. Chilean President Eduardo Frei criticized the arrest, saying the Spanish magistrate's arrest order was tantamount to not recognizing Chile's institutions. ``Spain also lived under an authoritarian for 40 years and many of its present institutions are inherited from that regime,'' Frei said in Porto, Portugal, where he was attending the Ibero-American Summit. ``Would a Chilean court be allowed to start a trial for abuses that occurred under the Spanish authoritarian regime (of Francisco Franco)?'' Frei asked. ``It is only for Chilean courts to try events that occurred in Chile.'' Franco's reign ended in 1975. Pinochet's family issued a statement Sunday calling the arrest ``an insult'' and thanking the Chilean government, rightist politicians and the military for their support. In London, police guards were deployed Sunday outside the London Clinic, where Pinochet is believed to still be a patient. About 100 Chilean demonstrators pleased with the arrest gathered outside, chanting and waving placards bearing faded black and white portraits with the caption ``Disappeared in Chile.'' Across the Atlantic, the Chilean capital of Santiago was the scene of dueling demonstrations Sunday, reflecting the long-standing division of public opinion over Pinochet. The rallies were mostly peaceful, although riot police used tear gas and water cannons on some pro-Pinochet protesters trying to break through police lines into the British embassy on Sunday evening. No arrests or injuries were reported. The envoy sent to London to argue for Pinochet's release, Santiago Benadava, would offer only diplomatic advice, said Chilean Foreign Minister Jose Miguel Insulza. Any legal defense would be up to Pinochet's family. Pinochet's son, Augusto, said the family would hire ``the best legal team available in London.'' Several right-wing Chilean politicians, including some who held posts in the Pinochet regime, also were flying to London to show their support to their former boss. Under extradition laws, Spain has 40 days from last Friday to formally apply for extradition. The final decision lies with British Home Secretary Jack Straw. There was no immediate word on when Pinochet would be questioned. But police sources, speaking on condition of anonymity, said questioning was not expected for a week or two. Pinochet has been widely accused of running a ruthless regime marked by disappearances and deaths of political opponents. His arrest was prompted by applications last week to question him by two Spanish judges investigating human rights violations. One of them, Baltasar Garzon, also wants to question Pinochet about the disappearances of Chilean dissidents in Argentina. The arrest warrant, however, referred only to questioning about allegations that he killed Spaniards in Chile between 1973 and 1983. In Chile, seven Spaniards have been identified as missing or dead under the Pinochet regime, including two Catholic priests and a U.N. official. According to a Chilean government report, a total of 4,299 political opponents died or disappeared during Pinochet's term. Pinochet, commander-in-chief of the Chilean army until March, has immunity from prosecution in Chile as a senator-for-life under a new constitution that his government crafted. He is also covered under an amnesty for crimes committed before 1978 _ when most of the human rights abuses took place. ||||| Cuban President Fidel Castro said Sunday he disagreed with the arrest in London of former Chilean dictator Augusto Pinochet, calling it a case of ``international meddling.'' ``It seems to me that what has happened there (in London) is universal meddling,'' Castro told reporters covering the Ibero-American summit being held here Sunday. Castro had just finished breakfast with King Juan Carlos of Spain in a city hotel. He said the case seemed to be ``unprecedented and unusual.'' Pinochet, 82, was placed under arrest in London Friday by British police acting on a warrant issued by a Spanish judge. The judge is probing Pinochet's role in the death of Spaniards in Chile under his rule in the 1970s and 80s. The Chilean government has protested Pinochet's arrest, insisting that as a senator he was traveling on a diplomatic passport and had immunity from arrest. Castro, Latin America's only remaining authoritarian leader, said he lacked details on the case against Pinochet, but said he thought it placed the government of Chile and President Eduardo Frei in an uncomfortable position while Frei is attending the summit. Castro compared the action with the establishment in Rome in August of an International Criminal Court, a move Cuba has expressed reservations about. Castro said the court ought to be independent of the U.N. Security Council, because ``we already know who commands there,'' an apparent reference to the United States. The United States was one of only seven countries that voted against creating the court. ``The (Pinochet) case is serious ... the problem is delicate'' and the reactions of the Chilean Parliament and armed forces bear watching, Castro said. He expressed surprise that the British had arrested Pinochet, especially since he had provided support to England during its 1982 war with Argentina over the Falkland Islands. Although Chile maintained neutrality during the war, it was accused of providing military intelligence to the British. Castro joked that he would have thought police could have waited another 24 hours to avoid having the arrest of Pinochet overshadow the summit being held here. ``Now they are talking about the arrest of Pinochet instead of the summit,'' he said. Pinochet left government in 1990, but remained as army chief until March when he became a senator-for-life. ||||| The British and Spanish prime ministers said Sunday that the fate of former Chilean dictator Gen. Augusto Pinochet is in the hands of their judicial authorities and they will not interfere. ``Both myself and Mr. Aznar agree this is not a matter for us to discuss,'' British Prime Minister Tony Blair said, referring to Spanish leader Jose Maria Aznar. ``I've avoided commenting on that judicial process and I don't intend to do so.'' Aznar made similar comments when he meet journalists on the margin of a European Union summit in this Alpine lakeside resort. Pinochet is under arrest in a London hospital where he'd gone for back surgery. He was detained on a warrant from a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture during his 1973-90 rule. The Chilean government has urged Britain to release Pinochet on humanitarian grounds, and argued that as a senator, he is entitled to diplomatic immunity. Aznar dismissed reports that the bid to try Pinochet will damage Spain's relations with Latin America. ``It's important we don't talk nonsense about this issue. This is stupid.'' ||||| The wife of former Chilean dictator Augusto Pinochet appealed for his release, saying he is too sick to be extradited to Spain to face charges of genocide. ''This is very painful for our family,'' a tearful Lucia Pinochet told reporters late Friday outside the private London Clinic, where her husband is under arrest as he recuperates from back surgery. 'I would like to ask for compassion for a person who is very, very, very, ill.'' Pinochet, 82, had surgery Oct. 9 for a herniated disc, a painful spinal disorder which had hindered his movement. He was arrested Oct. 16 at the instigation of a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture. The Spanish warrant cited 94 victims, but could be broadened to include some 3,000 people who were killed or disappeared during his 17-year-rule. Chile argues that Pinochet must be released because as a senator he enjoys diplomatic immunity _ and because he is in poor health. Unconfirmed media reports in Chile this week indicated that Pinochet, who has worn a pacemaker for years and is diabetic, also has a urinary tract infection. There have also been reports that he is suffering from depression. In a separate attempt to block his extradition, lawyers for the former strongman went to court Friday to argue that British police acted illegally in accepting the Spanish warrant. The case resumes Monday. Pinochet ruled from 1973 until 1990 but remained army commander until last March. Then, he moved to congress as a senator for life, as permitted by the constitution his regime drafted. ||||| Margaret Thatcher entertained former Children dictator Gen. Augusto Pinochet at her home two weeks before he was arrested in his bed in a London hospital, the ex-prime minister's office said Tuesday, amid growing diplomatic and domestic controversy over the move. Pinochet, who has vowed to fight attempts to extradite him to Spain on allegations of murder, genocide and torture, had drinks with Lady Thatcher and her husband, Denis, in their home in London's elite Belgravia district four days before he was hospitalized for back surgery performed Oct. 9. ``She regarded it as a private meeting,'' said Mark Worthington, spokesman for the Lady Thatcher, Conservative Party prime minister from 1979-90. The 82-year-old Pinochet was arrested Friday at a Spanish magistrate's request. In Conservative government days, Pinochet was welcomed on regular visits that included tea with the prime minister. He was the only Latin American leader to support Britain in its 1982 war against Argentina to reclaim the Falkland Islands. Pinochet and Lady Thatcher also implemented similar brands of right-wing economics. The current visit is Pincohet's first since Prime Minister Tony Blair's Labor Party administration was elected 18 months ago, ending 18 years of Conservative Party rule. Chile's ambassador delivered a formal protest to the Foreign Office on Monday, saying Britain has violated Pinochet's diplomatic immunity. He arrived last month on a diplomatic passport and is also a senator-for-life in Chile, which protects him from prosecution there. Pinochet's 17-year-rule was marked by torture and other human rights abuses against political opponents in which, the Chilean government has said, 4,299 people were killed or vanished. He remained Chilean army commander-in-chief until March. The magistrate broadened his charges Monday to include killings of Chileans as well as Spaniards, and genocide _ for which there is no diplomatic immunity. Chilean Ambassador Mario Artaza, himself an exile during Pinochet's rule, said Chile had a duty to protect a citizen with diplomatic immunity and senator status. ``We are not protecting the dictator of the '70s,'' Artaza said in a British Broadcasting Corp. radio interview Tuesday. ``What we are fighting for and discussing with the (British) government is the special situation of a senator in our transition who many people do not understand and many people don't like.'' ``We're not discussing his record during his period of dictatorship, that the present government does not support at all,'' added the ambassador. A Chilean specialist in international law was traveling to London for further meetings with British officials, Artaza said. Pinochet, expected to be hospitalized for perhaps two more weeks faces a long battle through British courts to avoid extradition, questioning by two Spanish judges who instigated the proceedings, and an appearance at London's Bow Street magistrate's court. British Conservative Party lawmakers accuse the Labor government of ``gesture'' politics and pandering to the party's left-wing. ||||| The Swiss government has ordered no investigation of possible bank accounts belonging to former Chilean dictator Augusto Pinochet, a spokesman said Wednesday. Weekend newspaper reports in Spain said a Spanish judge who ordered Pinochet's arrest has issued a petition aimed at freezing any accounts the 82-year-old general might have in Luxembourg and Switzerland. But government spokesman Achille Casanova said no accounts have so far been frozen in Switzerland and no investigation order has been given to federal banking authorities. Pinochet has been held at a London clinic since his arrest earlier this month. Spanish magistrate Baltasar Garzon is seeking his extradition on charges of genocide, torture and terrorism during his 17-year rule which ended 1990. On Monday, Switzerland also requested Pinochet's arrest and extradition on charges of murder, kidnapping and torture. The move followed a criminal complaint filed in Geneva last week by the widow of Alexis Jaccard, a student of Swiss-Chilean dual nationality who disappeared in May 1977. Swiss authorities said the Spanish effort to extradite Pinochet should be given priority. A Spanish request for legal assistance from Switzerland, made Friday, has been passed on to Geneva authorities. No details have been given of the content of the Spanish request. ||||| A delegation of Chilean legislators lobbying against the possible extradition of Augusto Pinochet to Spain to face trial, warned Thursday that Chile was on the brink of political turmoil. ``There is a climate of division, confrontation and instability in Chile,'' parliamentary deputy Alberto Espina told reporters in Madrid after meeting the Chilean ambassador. Pinochet was arrested in London on Oct. 16 at the instigation of Spanish magistrate Baltasar Garzon who is seeking to extradite the former dictator on charges of genocide, terrorism and torture. In Chile, the detention triggered both celebrations by relatives of victims of Pinochet's 1973-1990 regime and protests from the retired general's supporters. Espina also warned that the issue was damaging relations between Chile Spain and Britain. Spain was the biggest single investor in Chile last year, followed closely by Britain. The deputy arrived in Madrid late Wednesday accompanied by the senators Jovino Movoa and Julio Lagos. The delegation is an offshoot of a larger group of Chilean parliamentarians currently protesting the detention in London on behalf of the opposition parties Independent Democratic Union and the National Renovation Party. Espina, Movoa and Lagos were hoping to talk to officials from the Spanish Foreign Ministry and other government representatives. ``All we ask is that Spain stops meddling in our internal affairs,'' Espina said, arguing that Chilean problems should be dealt with by Chilean courts. ``We stopped being a Spanish colony 188 years ago and we have no intention of becoming one again,'' he added. Government spokesman Josep Pique said Prime Minister Jose Maria Aznar had no plans to meet the delegation, the state-owned news agency EFE reported. Aznar has promised his government will rubber stamp a formal extradition request to the British government if asked to do so by the judicial authorities. But the extradition attempt could be annulled by legal challenges in Spain well before the deadline for presenting it in Britain. The deadline is set for November 25th _ coincidentally Pinochet's 83rd birthday. On Thursday the head prosecutor from the National Court set in motion appeals against several rulings made by Judge Garzon related to Pinochet's detention in the London clinic where he was recovering from back surgery. The court's plenary is expected to meet next week to decide on an earlier challenge of the Spanish judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. A ruling that the investigations are outside the jurisdiction of Spanish law would made any extradition request difficult. The decision is likely to hang on how genocide and terrorism are interpreted, as these crimes are specifically mentioned in the Spanish legal code.

Former Chilean dictator Augusto Pinochet has been arrested in London at the request of the Spanish government. Pinochet, in London for back surgery, was arrested in his hospital room. Spain is seeking extradition of Pinochet from London to Spain to face charges of murder in the deaths of Spanish citizens in Chile under Pinochet's rule in the 1970s and 80s. The arrest raised confusion in the international community as the legality of the move is debated. Pinochet supporters say that Pinochet's arrest is illegal, claiming he has diplomatic immunity. The final outcome of the extradition request lies with the Spanish courts.

The Spanish and British governments appeared Wednesday to be seeking shelter from the political storm brewing over the possible extradition of former Chilean dictator Augusto Pinochet to Spain. ``Despite everything that has been written, this is not a decision for the British government or the Spanish government,'' British Prime Minister Tony Blair said in an interview published by a Spanish newspaper on Wednesday. In a similar vein, Spanish Foreign Ministry spokesman Joaquin Perez said Wednesday: ``The government should not have any opinion about the extradition.'' British police, acting on an international arrest warrant from Spanish judge Baltasar Garzon on Friday, detained the ailing general in the London clinic where he was recovering from back surgery. The detention and the possible extradition of Pinochet to Spain to stand trial for genocide, terrorism and torture during his 17-year dictatorship was warmly welcomed by human rights activists worldwide. But it sparked protests from the Chilean government, and fears it could damage economic relations. In 1997, seven years after Pinochet left power, Spain was the biggest single investor in Chile, followed closely by Britain. Blair quoted in the El Mundo newspaper said that Pinochet's detention was unrelated to his government's so-called Ethical Foreign Policy, apparently ignoring pressure from leftists within his Labor party to support moves to prosecute the former dictator. ``This is about two legal systems united by an extradition treaty but nobody seems to understand this,'' he said. Blair added that should Home Secretary Jack Straw would use only strictly legal criteria and act ``as if he were a judge,'' should he be required to make a decision on an extradition request from Spain. The tone of the British Prime Minister's first public comment on the issue contrasted sharply with Sunday's emotional statement from influential Trade Secretary Peter Mandelson who said most Britons would find diplomatic immunity for Pinochet ``gut-wrenching.'' The European extradition convention gives Garzon 40 days to present a formal extradition request to the British authorities via the Spanish government. But while Spanish Prime Minister Jose Maria Aznar has promised his government would rubber stamp the process if it reaches his desk, he appears to be hoping he will never have to do so. Public prosecutors from Spain's National Court have appealed the judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. ``Depending on the result of the appeals it is possible that it (the extradition request) will never reach the government so perhaps the government will never have to pronounce on it,'' Aznar was quoted as saying in Wednesday's edition of the Madrid newspaper El Pais. The appeals argue that crimes committed during Pinochet's 1973-1990 dictatorship are none of Spain's business, and should be left to the Chilean or international courts. A ruling on the appeals is expected next week, and a decision in their favor would nullify Garzon's extradition attempt. ||||| Europe's top official said Friday that he hoped former Chilean dictator Augusto Pinochet would be extradited to Spain to be tried for crimes committed during his 17-year rule. ``Sometimes it should be made clear that crimes, wherever they take place, cannot be left unpunished,'' European Commission President Jacques Santer said. Pinochet was detained by British police in London on Oct. 16 by request of a Spanish magistrate as a first step toward his extradition to stand trial for genocide and terrorism. ``The dictatorship caused great suffering and sent many citizens into exile,'' Santer said, referring to the 1973-90 Pinochet regime. Santer was speaking to reporters in the northern Spanish city of Oviedo where he was due to receive the Prince of Asturias Prize for social science _ one of the eight annual prizes named after the heir to the Spanish throne. Meanwhile, a Spanish newspaper reported Friday that Pinochet is not fully aware of his predicament. Daily El Mundo said the ailing retired general's family and aides have been shielding him from the details for fear he would fly into a rage that would kill him. Pinochet was detained in the London clinic while recovering from back surgery. El Mundo said its reporter accompanied Chilean politicians seeking his release during a visit to the clinic Thursday. The reporter said he talked briefly to Pinochet's wife, Lucia Hiriart, and daughter Veronica. ``If Augusto knew the truth, he would have an attack of rage and die,'' El Mundo quoted Hiriart as saying to others while waiting for permission from Scotland Yard to visit her husband on the eighth floor of the clinic. She said she was particularly concerned because he is also suffering from a urinary infection, heart problems and diabetes, the newspaper reported. El Mundo reported that the family had asked police guards to stand outside the former dictator's room and keep out of sight. The paper said the room lacked television, radio or telephone. According to the report Pinochet was informed of the arrest order from two policemen, but is convinced it was a mistake and that he is protected by diplomatic immunity. Meanwhile, a Chilean television station reported Friday that a Chilean army officer close to Pinochet told the former military chief about his situation after flying to London Thursday. TV13 reported that the unidentified officer said Pinochet reacted calmly to the news imparted ``as one soldier to another.'' ||||| As his lawyers in London tried to quash a Spanish arrest warrant for Gen. Augusto Pinochet, the former Chilean dictator, efforts began in Geneva and Paris to have him extradited. In London, where Pinochet has been under arrest in a clinic for the last 10 days, a phalanx of British lawyers argued before the High Court of Justice that the arrest order sent from Spain was illegal because the general, 82, is not a Spanish citizen. They also maintained that as a former head of state, the general had diplomatic immunity for actions taken while in office. His lawyer, Clive Nicholls, said that if a bid to extradite the general succeeded, by the same token Queen Elizabeth II could be extradited to Argentina to face trial for the death of Argentine soldiers in the Falklands war in 1982. On the opposing side, Alun Jones, a British government lawyer acting as prosecutor in the case, defended the Spanish warrant, which led to the general's detention in London. The prosecutor argued that the the right-wing general was responsible for killing at least 4,000 people and had set out ``to destroy a national group _ Chilean nationals who did not share his ideological values.'' After hearing the arguments in a court crowded with Chilean exiles in the public gallery, Lord Bingham, Britain's senior judge, said the court was expected to decide the matter on Tuesday. The Chilean air force has sent an ambulance plane to Britain in hope of the general's early release. But efforts to prevent that gathered strength elsewhere in Europe. In Geneva, a public prosecutor, Bernard Bertossa, said Monday that he had issued a warrant for Pinochet's arrest in connection with the kidnapping and presumed death of a Swiss-Chilean citizen in 1977. Bertossa said he had opened a judicial investigation in response to a complaint by the widow of the victim, Alexei Jaccard, who was 25 when he was tortured in Chile and subsequently disappeared. The prosecutor said he was asking the Swiss federal government to seek Pinochet's extradition from Britain to face trial in Geneva. At the same time in Paris Monday, the families of three French citizens, of whom two disappeared and one was killed in Chile during the 1973-90 dictatorship, filed suit in a French court. In addition, a human rights group in Paris said Monday that it had filed a suit with a Paris court on behalf of Anne Marie Pesle, whose father, Etienne Pesle, disappeared in Chile in 1973. In Madrid, Baltasar Garzon, the Spanish investigating magistrate who first obtained Pinochet's arrest in London, said he had formally requested the governments of Switzerland and Luxemburg to block bank accounts held by the general. Court officials in Madrid said Garzon wanted any accounts blocked with a view to their possible use later as compensation to relatives of victims. In London, British officials keep insisting that Pinochet's case will be decided by the courts and not politically, yet the issue has stirred intense political activity both in Britain and in Chile. Supporters and opponents of the dictator have traveled to the London clinic where he is being held. From Chile have come six right-wing senators, the deputy foreign minister, aides and legal experts who file in and out of the private clinic in central London. From Europe have come dozens of longtime opponents of the general who were forced into exile after his 1973 coup against the elected Socialist president, Salvador Allende Gossens. The exiles, along with others, stand daily outside the clinic holding up photographs of missing relatives and shouting anti-Pinochet slogans. On occasion there have been shouting matches between the two sides. ``He is ill, and in a few days he will be 83,'' Mariano Fernandez, Chile's deputy foreign minister, said after visiting Pinochet who had minor surgery for a back ailment. After his surgery on Oct. 9, the general was arrested by Scotland Yard during the night of Oct. 16. The diplomatic and judicial entanglements that ensued now involve at least five governments. The political and legal imbroglio could end if Britain's home secretary, Jack Straw, decides that the general should be released on ``compassionate grounds'' because of his age and failing health. Last week he said that in exercising his powers under the 1989 Extradition Act, he would consider whether the offenses are of a ``political character'' and he would take into account ``any compassionate circumstances.'' ||||| Britain has defended its arrest of Gen. Augusto Pinochet, with one lawmaker saying that Chile's claim that the former Chilean dictator has diplomatic immunity is ridiculous. Chilean officials, meanwhile, issued strong protests and sent a delegation to London on Sunday to argue for Pinochet's release. The former strongman's son vowed to hire top attorneys to defend his 82-year-old father, who ruled Chile with an iron fist for 17 years. British police arrested Pinochet in his bed Friday at a private London hospital in response to a request from Spain, which wants to question Pinochet about allegations of murder during the decade after he seized power in 1973. Pinochet had gone to the hospital to have a back operation Oct. 9. ``The idea that such a brutal dictator as Pinochet should be claiming diplomatic immunity I think for most people in this country would be pretty gut-wrenching stuff,'' Trade Secretary Peter Mandelson said in a British Broadcasting Corp. television interview Sunday. Home Office Minister Alun Michael acknowledged Sunday that Pinochet entered Britain on a diplomatic passport, but said, ``That does not necessarily convey diplomatic immunity.'' The Foreign Office said only government officials visiting on official business and accredited diplomats have immunity. Pinochet has been a regular visitor to Britain, generally without publicity. His arrest this time appeared to reflect a tougher attitude toward right-wing dictators by Prime Minister Tony Blair's Labor Party government, which replaced a Conservative Party administration 18 months ago and promised an ``ethical'' foreign policy. However, Michael Howard, a Conservative spokesman and former Cabinet minister, said he was concerned that Pinochet was arrested as a result of pressure from Labor lawmakers and lobby groups. Chilean President Eduardo Frei criticized the arrest, saying the Spanish magistrate's arrest order was tantamount to not recognizing Chile's institutions. ``Spain also lived under an authoritarian for 40 years and many of its present institutions are inherited from that regime,'' Frei said in Porto, Portugal, where he was attending the Ibero-American Summit. ``Would a Chilean court be allowed to start a trial for abuses that occurred under the Spanish authoritarian regime (of Francisco Franco)?'' Frei asked. ``It is only for Chilean courts to try events that occurred in Chile.'' Franco's reign ended in 1975. Pinochet's family issued a statement Sunday calling the arrest ``an insult'' and thanking the Chilean government, rightist politicians and the military for their support. In London, police guards were deployed Sunday outside the London Clinic, where Pinochet is believed to still be a patient. About 100 Chilean demonstrators pleased with the arrest gathered outside, chanting and waving placards bearing faded black and white portraits with the caption ``Disappeared in Chile.'' Across the Atlantic, the Chilean capital of Santiago was the scene of dueling demonstrations Sunday, reflecting the long-standing division of public opinion over Pinochet. The rallies were mostly peaceful, although riot police used tear gas and water cannons on some pro-Pinochet protesters trying to break through police lines into the British embassy on Sunday evening. No arrests or injuries were reported. The envoy sent to London to argue for Pinochet's release, Santiago Benadava, would offer only diplomatic advice, said Chilean Foreign Minister Jose Miguel Insulza. Any legal defense would be up to Pinochet's family. Pinochet's son, Augusto, said the family would hire ``the best legal team available in London.'' Several right-wing Chilean politicians, including some who held posts in the Pinochet regime, also were flying to London to show their support to their former boss. Under extradition laws, Spain has 40 days from last Friday to formally apply for extradition. The final decision lies with British Home Secretary Jack Straw. There was no immediate word on when Pinochet would be questioned. But police sources, speaking on condition of anonymity, said questioning was not expected for a week or two. Pinochet has been widely accused of running a ruthless regime marked by disappearances and deaths of political opponents. His arrest was prompted by applications last week to question him by two Spanish judges investigating human rights violations. One of them, Baltasar Garzon, also wants to question Pinochet about the disappearances of Chilean dissidents in Argentina. The arrest warrant, however, referred only to questioning about allegations that he killed Spaniards in Chile between 1973 and 1983. In Chile, seven Spaniards have been identified as missing or dead under the Pinochet regime, including two Catholic priests and a U.N. official. According to a Chilean government report, a total of 4,299 political opponents died or disappeared during Pinochet's term. Pinochet, commander-in-chief of the Chilean army until March, has immunity from prosecution in Chile as a senator-for-life under a new constitution that his government crafted. He is also covered under an amnesty for crimes committed before 1978 _ when most of the human rights abuses took place. ||||| Cuban President Fidel Castro said Sunday he disagreed with the arrest in London of former Chilean dictator Augusto Pinochet, calling it a case of ``international meddling.'' ``It seems to me that what has happened there (in London) is universal meddling,'' Castro told reporters covering the Ibero-American summit being held here Sunday. Castro had just finished breakfast with King Juan Carlos of Spain in a city hotel. He said the case seemed to be ``unprecedented and unusual.'' Pinochet, 82, was placed under arrest in London Friday by British police acting on a warrant issued by a Spanish judge. The judge is probing Pinochet's role in the death of Spaniards in Chile under his rule in the 1970s and 80s. The Chilean government has protested Pinochet's arrest, insisting that as a senator he was traveling on a diplomatic passport and had immunity from arrest. Castro, Latin America's only remaining authoritarian leader, said he lacked details on the case against Pinochet, but said he thought it placed the government of Chile and President Eduardo Frei in an uncomfortable position while Frei is attending the summit. Castro compared the action with the establishment in Rome in August of an International Criminal Court, a move Cuba has expressed reservations about. Castro said the court ought to be independent of the U.N. Security Council, because ``we already know who commands there,'' an apparent reference to the United States. The United States was one of only seven countries that voted against creating the court. ``The (Pinochet) case is serious ... the problem is delicate'' and the reactions of the Chilean Parliament and armed forces bear watching, Castro said. He expressed surprise that the British had arrested Pinochet, especially since he had provided support to England during its 1982 war with Argentina over the Falkland Islands. Although Chile maintained neutrality during the war, it was accused of providing military intelligence to the British. Castro joked that he would have thought police could have waited another 24 hours to avoid having the arrest of Pinochet overshadow the summit being held here. ``Now they are talking about the arrest of Pinochet instead of the summit,'' he said. Pinochet left government in 1990, but remained as army chief until March when he became a senator-for-life. ||||| The British and Spanish prime ministers said Sunday that the fate of former Chilean dictator Gen. Augusto Pinochet is in the hands of their judicial authorities and they will not interfere. ``Both myself and Mr. Aznar agree this is not a matter for us to discuss,'' British Prime Minister Tony Blair said, referring to Spanish leader Jose Maria Aznar. ``I've avoided commenting on that judicial process and I don't intend to do so.'' Aznar made similar comments when he meet journalists on the margin of a European Union summit in this Alpine lakeside resort. Pinochet is under arrest in a London hospital where he'd gone for back surgery. He was detained on a warrant from a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture during his 1973-90 rule. The Chilean government has urged Britain to release Pinochet on humanitarian grounds, and argued that as a senator, he is entitled to diplomatic immunity. Aznar dismissed reports that the bid to try Pinochet will damage Spain's relations with Latin America. ``It's important we don't talk nonsense about this issue. This is stupid.'' ||||| The wife of former Chilean dictator Augusto Pinochet appealed for his release, saying he is too sick to be extradited to Spain to face charges of genocide. ''This is very painful for our family,'' a tearful Lucia Pinochet told reporters late Friday outside the private London Clinic, where her husband is under arrest as he recuperates from back surgery. 'I would like to ask for compassion for a person who is very, very, very, ill.'' Pinochet, 82, had surgery Oct. 9 for a herniated disc, a painful spinal disorder which had hindered his movement. He was arrested Oct. 16 at the instigation of a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture. The Spanish warrant cited 94 victims, but could be broadened to include some 3,000 people who were killed or disappeared during his 17-year-rule. Chile argues that Pinochet must be released because as a senator he enjoys diplomatic immunity _ and because he is in poor health. Unconfirmed media reports in Chile this week indicated that Pinochet, who has worn a pacemaker for years and is diabetic, also has a urinary tract infection. There have also been reports that he is suffering from depression. In a separate attempt to block his extradition, lawyers for the former strongman went to court Friday to argue that British police acted illegally in accepting the Spanish warrant. The case resumes Monday. Pinochet ruled from 1973 until 1990 but remained army commander until last March. Then, he moved to congress as a senator for life, as permitted by the constitution his regime drafted. ||||| Margaret Thatcher entertained former Children dictator Gen. Augusto Pinochet at her home two weeks before he was arrested in his bed in a London hospital, the ex-prime minister's office said Tuesday, amid growing diplomatic and domestic controversy over the move. Pinochet, who has vowed to fight attempts to extradite him to Spain on allegations of murder, genocide and torture, had drinks with Lady Thatcher and her husband, Denis, in their home in London's elite Belgravia district four days before he was hospitalized for back surgery performed Oct. 9. ``She regarded it as a private meeting,'' said Mark Worthington, spokesman for the Lady Thatcher, Conservative Party prime minister from 1979-90. The 82-year-old Pinochet was arrested Friday at a Spanish magistrate's request. In Conservative government days, Pinochet was welcomed on regular visits that included tea with the prime minister. He was the only Latin American leader to support Britain in its 1982 war against Argentina to reclaim the Falkland Islands. Pinochet and Lady Thatcher also implemented similar brands of right-wing economics. The current visit is Pincohet's first since Prime Minister Tony Blair's Labor Party administration was elected 18 months ago, ending 18 years of Conservative Party rule. Chile's ambassador delivered a formal protest to the Foreign Office on Monday, saying Britain has violated Pinochet's diplomatic immunity. He arrived last month on a diplomatic passport and is also a senator-for-life in Chile, which protects him from prosecution there. Pinochet's 17-year-rule was marked by torture and other human rights abuses against political opponents in which, the Chilean government has said, 4,299 people were killed or vanished. He remained Chilean army commander-in-chief until March. The magistrate broadened his charges Monday to include killings of Chileans as well as Spaniards, and genocide _ for which there is no diplomatic immunity. Chilean Ambassador Mario Artaza, himself an exile during Pinochet's rule, said Chile had a duty to protect a citizen with diplomatic immunity and senator status. ``We are not protecting the dictator of the '70s,'' Artaza said in a British Broadcasting Corp. radio interview Tuesday. ``What we are fighting for and discussing with the (British) government is the special situation of a senator in our transition who many people do not understand and many people don't like.'' ``We're not discussing his record during his period of dictatorship, that the present government does not support at all,'' added the ambassador. A Chilean specialist in international law was traveling to London for further meetings with British officials, Artaza said. Pinochet, expected to be hospitalized for perhaps two more weeks faces a long battle through British courts to avoid extradition, questioning by two Spanish judges who instigated the proceedings, and an appearance at London's Bow Street magistrate's court. British Conservative Party lawmakers accuse the Labor government of ``gesture'' politics and pandering to the party's left-wing. ||||| The Swiss government has ordered no investigation of possible bank accounts belonging to former Chilean dictator Augusto Pinochet, a spokesman said Wednesday. Weekend newspaper reports in Spain said a Spanish judge who ordered Pinochet's arrest has issued a petition aimed at freezing any accounts the 82-year-old general might have in Luxembourg and Switzerland. But government spokesman Achille Casanova said no accounts have so far been frozen in Switzerland and no investigation order has been given to federal banking authorities. Pinochet has been held at a London clinic since his arrest earlier this month. Spanish magistrate Baltasar Garzon is seeking his extradition on charges of genocide, torture and terrorism during his 17-year rule which ended 1990. On Monday, Switzerland also requested Pinochet's arrest and extradition on charges of murder, kidnapping and torture. The move followed a criminal complaint filed in Geneva last week by the widow of Alexis Jaccard, a student of Swiss-Chilean dual nationality who disappeared in May 1977. Swiss authorities said the Spanish effort to extradite Pinochet should be given priority. A Spanish request for legal assistance from Switzerland, made Friday, has been passed on to Geneva authorities. No details have been given of the content of the Spanish request. ||||| A delegation of Chilean legislators lobbying against the possible extradition of Augusto Pinochet to Spain to face trial, warned Thursday that Chile was on the brink of political turmoil. ``There is a climate of division, confrontation and instability in Chile,'' parliamentary deputy Alberto Espina told reporters in Madrid after meeting the Chilean ambassador. Pinochet was arrested in London on Oct. 16 at the instigation of Spanish magistrate Baltasar Garzon who is seeking to extradite the former dictator on charges of genocide, terrorism and torture. In Chile, the detention triggered both celebrations by relatives of victims of Pinochet's 1973-1990 regime and protests from the retired general's supporters. Espina also warned that the issue was damaging relations between Chile Spain and Britain. Spain was the biggest single investor in Chile last year, followed closely by Britain. The deputy arrived in Madrid late Wednesday accompanied by the senators Jovino Movoa and Julio Lagos. The delegation is an offshoot of a larger group of Chilean parliamentarians currently protesting the detention in London on behalf of the opposition parties Independent Democratic Union and the National Renovation Party. Espina, Movoa and Lagos were hoping to talk to officials from the Spanish Foreign Ministry and other government representatives. ``All we ask is that Spain stops meddling in our internal affairs,'' Espina said, arguing that Chilean problems should be dealt with by Chilean courts. ``We stopped being a Spanish colony 188 years ago and we have no intention of becoming one again,'' he added. Government spokesman Josep Pique said Prime Minister Jose Maria Aznar had no plans to meet the delegation, the state-owned news agency EFE reported. Aznar has promised his government will rubber stamp a formal extradition request to the British government if asked to do so by the judicial authorities. But the extradition attempt could be annulled by legal challenges in Spain well before the deadline for presenting it in Britain. The deadline is set for November 25th _ coincidentally Pinochet's 83rd birthday. On Thursday the head prosecutor from the National Court set in motion appeals against several rulings made by Judge Garzon related to Pinochet's detention in the London clinic where he was recovering from back surgery. The court's plenary is expected to meet next week to decide on an earlier challenge of the Spanish judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. A ruling that the investigations are outside the jurisdiction of Spanish law would made any extradition request difficult. The decision is likely to hang on how genocide and terrorism are interpreted, as these crimes are specifically mentioned in the Spanish legal code.

Pinochet arrested in London on Oct. 16 at a Spanish judge's request for atrocities against Spaniards in Chile during his rule. Castro, Chilean legislators and Pinochet's lawyers protested and claimed he had diplomatic immunity. His wife asked for his release because he was recovering from recent back surgery. Pinochet visited Thatcher before his surgery. The British and Spanish governments defended the arrest, saying it was strictly a legal matter. The EC president hoped Pinochet would stand trial. None of his Swiss accounts have been frozen yet. The Swiss government also asked for his arrest for the 1977 disappearance of a Swiss-Chilean student.

The Spanish and British governments appeared Wednesday to be seeking shelter from the political storm brewing over the possible extradition of former Chilean dictator Augusto Pinochet to Spain. ``Despite everything that has been written, this is not a decision for the British government or the Spanish government,'' British Prime Minister Tony Blair said in an interview published by a Spanish newspaper on Wednesday. In a similar vein, Spanish Foreign Ministry spokesman Joaquin Perez said Wednesday: ``The government should not have any opinion about the extradition.'' British police, acting on an international arrest warrant from Spanish judge Baltasar Garzon on Friday, detained the ailing general in the London clinic where he was recovering from back surgery. The detention and the possible extradition of Pinochet to Spain to stand trial for genocide, terrorism and torture during his 17-year dictatorship was warmly welcomed by human rights activists worldwide. But it sparked protests from the Chilean government, and fears it could damage economic relations. In 1997, seven years after Pinochet left power, Spain was the biggest single investor in Chile, followed closely by Britain. Blair quoted in the El Mundo newspaper said that Pinochet's detention was unrelated to his government's so-called Ethical Foreign Policy, apparently ignoring pressure from leftists within his Labor party to support moves to prosecute the former dictator. ``This is about two legal systems united by an extradition treaty but nobody seems to understand this,'' he said. Blair added that should Home Secretary Jack Straw would use only strictly legal criteria and act ``as if he were a judge,'' should he be required to make a decision on an extradition request from Spain. The tone of the British Prime Minister's first public comment on the issue contrasted sharply with Sunday's emotional statement from influential Trade Secretary Peter Mandelson who said most Britons would find diplomatic immunity for Pinochet ``gut-wrenching.'' The European extradition convention gives Garzon 40 days to present a formal extradition request to the British authorities via the Spanish government. But while Spanish Prime Minister Jose Maria Aznar has promised his government would rubber stamp the process if it reaches his desk, he appears to be hoping he will never have to do so. Public prosecutors from Spain's National Court have appealed the judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. ``Depending on the result of the appeals it is possible that it (the extradition request) will never reach the government so perhaps the government will never have to pronounce on it,'' Aznar was quoted as saying in Wednesday's edition of the Madrid newspaper El Pais. The appeals argue that crimes committed during Pinochet's 1973-1990 dictatorship are none of Spain's business, and should be left to the Chilean or international courts. A ruling on the appeals is expected next week, and a decision in their favor would nullify Garzon's extradition attempt. ||||| Europe's top official said Friday that he hoped former Chilean dictator Augusto Pinochet would be extradited to Spain to be tried for crimes committed during his 17-year rule. ``Sometimes it should be made clear that crimes, wherever they take place, cannot be left unpunished,'' European Commission President Jacques Santer said. Pinochet was detained by British police in London on Oct. 16 by request of a Spanish magistrate as a first step toward his extradition to stand trial for genocide and terrorism. ``The dictatorship caused great suffering and sent many citizens into exile,'' Santer said, referring to the 1973-90 Pinochet regime. Santer was speaking to reporters in the northern Spanish city of Oviedo where he was due to receive the Prince of Asturias Prize for social science _ one of the eight annual prizes named after the heir to the Spanish throne. Meanwhile, a Spanish newspaper reported Friday that Pinochet is not fully aware of his predicament. Daily El Mundo said the ailing retired general's family and aides have been shielding him from the details for fear he would fly into a rage that would kill him. Pinochet was detained in the London clinic while recovering from back surgery. El Mundo said its reporter accompanied Chilean politicians seeking his release during a visit to the clinic Thursday. The reporter said he talked briefly to Pinochet's wife, Lucia Hiriart, and daughter Veronica. ``If Augusto knew the truth, he would have an attack of rage and die,'' El Mundo quoted Hiriart as saying to others while waiting for permission from Scotland Yard to visit her husband on the eighth floor of the clinic. She said she was particularly concerned because he is also suffering from a urinary infection, heart problems and diabetes, the newspaper reported. El Mundo reported that the family had asked police guards to stand outside the former dictator's room and keep out of sight. The paper said the room lacked television, radio or telephone. According to the report Pinochet was informed of the arrest order from two policemen, but is convinced it was a mistake and that he is protected by diplomatic immunity. Meanwhile, a Chilean television station reported Friday that a Chilean army officer close to Pinochet told the former military chief about his situation after flying to London Thursday. TV13 reported that the unidentified officer said Pinochet reacted calmly to the news imparted ``as one soldier to another.'' ||||| As his lawyers in London tried to quash a Spanish arrest warrant for Gen. Augusto Pinochet, the former Chilean dictator, efforts began in Geneva and Paris to have him extradited. In London, where Pinochet has been under arrest in a clinic for the last 10 days, a phalanx of British lawyers argued before the High Court of Justice that the arrest order sent from Spain was illegal because the general, 82, is not a Spanish citizen. They also maintained that as a former head of state, the general had diplomatic immunity for actions taken while in office. His lawyer, Clive Nicholls, said that if a bid to extradite the general succeeded, by the same token Queen Elizabeth II could be extradited to Argentina to face trial for the death of Argentine soldiers in the Falklands war in 1982. On the opposing side, Alun Jones, a British government lawyer acting as prosecutor in the case, defended the Spanish warrant, which led to the general's detention in London. The prosecutor argued that the the right-wing general was responsible for killing at least 4,000 people and had set out ``to destroy a national group _ Chilean nationals who did not share his ideological values.'' After hearing the arguments in a court crowded with Chilean exiles in the public gallery, Lord Bingham, Britain's senior judge, said the court was expected to decide the matter on Tuesday. The Chilean air force has sent an ambulance plane to Britain in hope of the general's early release. But efforts to prevent that gathered strength elsewhere in Europe. In Geneva, a public prosecutor, Bernard Bertossa, said Monday that he had issued a warrant for Pinochet's arrest in connection with the kidnapping and presumed death of a Swiss-Chilean citizen in 1977. Bertossa said he had opened a judicial investigation in response to a complaint by the widow of the victim, Alexei Jaccard, who was 25 when he was tortured in Chile and subsequently disappeared. The prosecutor said he was asking the Swiss federal government to seek Pinochet's extradition from Britain to face trial in Geneva. At the same time in Paris Monday, the families of three French citizens, of whom two disappeared and one was killed in Chile during the 1973-90 dictatorship, filed suit in a French court. In addition, a human rights group in Paris said Monday that it had filed a suit with a Paris court on behalf of Anne Marie Pesle, whose father, Etienne Pesle, disappeared in Chile in 1973. In Madrid, Baltasar Garzon, the Spanish investigating magistrate who first obtained Pinochet's arrest in London, said he had formally requested the governments of Switzerland and Luxemburg to block bank accounts held by the general. Court officials in Madrid said Garzon wanted any accounts blocked with a view to their possible use later as compensation to relatives of victims. In London, British officials keep insisting that Pinochet's case will be decided by the courts and not politically, yet the issue has stirred intense political activity both in Britain and in Chile. Supporters and opponents of the dictator have traveled to the London clinic where he is being held. From Chile have come six right-wing senators, the deputy foreign minister, aides and legal experts who file in and out of the private clinic in central London. From Europe have come dozens of longtime opponents of the general who were forced into exile after his 1973 coup against the elected Socialist president, Salvador Allende Gossens. The exiles, along with others, stand daily outside the clinic holding up photographs of missing relatives and shouting anti-Pinochet slogans. On occasion there have been shouting matches between the two sides. ``He is ill, and in a few days he will be 83,'' Mariano Fernandez, Chile's deputy foreign minister, said after visiting Pinochet who had minor surgery for a back ailment. After his surgery on Oct. 9, the general was arrested by Scotland Yard during the night of Oct. 16. The diplomatic and judicial entanglements that ensued now involve at least five governments. The political and legal imbroglio could end if Britain's home secretary, Jack Straw, decides that the general should be released on ``compassionate grounds'' because of his age and failing health. Last week he said that in exercising his powers under the 1989 Extradition Act, he would consider whether the offenses are of a ``political character'' and he would take into account ``any compassionate circumstances.'' ||||| Britain has defended its arrest of Gen. Augusto Pinochet, with one lawmaker saying that Chile's claim that the former Chilean dictator has diplomatic immunity is ridiculous. Chilean officials, meanwhile, issued strong protests and sent a delegation to London on Sunday to argue for Pinochet's release. The former strongman's son vowed to hire top attorneys to defend his 82-year-old father, who ruled Chile with an iron fist for 17 years. British police arrested Pinochet in his bed Friday at a private London hospital in response to a request from Spain, which wants to question Pinochet about allegations of murder during the decade after he seized power in 1973. Pinochet had gone to the hospital to have a back operation Oct. 9. ``The idea that such a brutal dictator as Pinochet should be claiming diplomatic immunity I think for most people in this country would be pretty gut-wrenching stuff,'' Trade Secretary Peter Mandelson said in a British Broadcasting Corp. television interview Sunday. Home Office Minister Alun Michael acknowledged Sunday that Pinochet entered Britain on a diplomatic passport, but said, ``That does not necessarily convey diplomatic immunity.'' The Foreign Office said only government officials visiting on official business and accredited diplomats have immunity. Pinochet has been a regular visitor to Britain, generally without publicity. His arrest this time appeared to reflect a tougher attitude toward right-wing dictators by Prime Minister Tony Blair's Labor Party government, which replaced a Conservative Party administration 18 months ago and promised an ``ethical'' foreign policy. However, Michael Howard, a Conservative spokesman and former Cabinet minister, said he was concerned that Pinochet was arrested as a result of pressure from Labor lawmakers and lobby groups. Chilean President Eduardo Frei criticized the arrest, saying the Spanish magistrate's arrest order was tantamount to not recognizing Chile's institutions. ``Spain also lived under an authoritarian for 40 years and many of its present institutions are inherited from that regime,'' Frei said in Porto, Portugal, where he was attending the Ibero-American Summit. ``Would a Chilean court be allowed to start a trial for abuses that occurred under the Spanish authoritarian regime (of Francisco Franco)?'' Frei asked. ``It is only for Chilean courts to try events that occurred in Chile.'' Franco's reign ended in 1975. Pinochet's family issued a statement Sunday calling the arrest ``an insult'' and thanking the Chilean government, rightist politicians and the military for their support. In London, police guards were deployed Sunday outside the London Clinic, where Pinochet is believed to still be a patient. About 100 Chilean demonstrators pleased with the arrest gathered outside, chanting and waving placards bearing faded black and white portraits with the caption ``Disappeared in Chile.'' Across the Atlantic, the Chilean capital of Santiago was the scene of dueling demonstrations Sunday, reflecting the long-standing division of public opinion over Pinochet. The rallies were mostly peaceful, although riot police used tear gas and water cannons on some pro-Pinochet protesters trying to break through police lines into the British embassy on Sunday evening. No arrests or injuries were reported. The envoy sent to London to argue for Pinochet's release, Santiago Benadava, would offer only diplomatic advice, said Chilean Foreign Minister Jose Miguel Insulza. Any legal defense would be up to Pinochet's family. Pinochet's son, Augusto, said the family would hire ``the best legal team available in London.'' Several right-wing Chilean politicians, including some who held posts in the Pinochet regime, also were flying to London to show their support to their former boss. Under extradition laws, Spain has 40 days from last Friday to formally apply for extradition. The final decision lies with British Home Secretary Jack Straw. There was no immediate word on when Pinochet would be questioned. But police sources, speaking on condition of anonymity, said questioning was not expected for a week or two. Pinochet has been widely accused of running a ruthless regime marked by disappearances and deaths of political opponents. His arrest was prompted by applications last week to question him by two Spanish judges investigating human rights violations. One of them, Baltasar Garzon, also wants to question Pinochet about the disappearances of Chilean dissidents in Argentina. The arrest warrant, however, referred only to questioning about allegations that he killed Spaniards in Chile between 1973 and 1983. In Chile, seven Spaniards have been identified as missing or dead under the Pinochet regime, including two Catholic priests and a U.N. official. According to a Chilean government report, a total of 4,299 political opponents died or disappeared during Pinochet's term. Pinochet, commander-in-chief of the Chilean army until March, has immunity from prosecution in Chile as a senator-for-life under a new constitution that his government crafted. He is also covered under an amnesty for crimes committed before 1978 _ when most of the human rights abuses took place. ||||| Cuban President Fidel Castro said Sunday he disagreed with the arrest in London of former Chilean dictator Augusto Pinochet, calling it a case of ``international meddling.'' ``It seems to me that what has happened there (in London) is universal meddling,'' Castro told reporters covering the Ibero-American summit being held here Sunday. Castro had just finished breakfast with King Juan Carlos of Spain in a city hotel. He said the case seemed to be ``unprecedented and unusual.'' Pinochet, 82, was placed under arrest in London Friday by British police acting on a warrant issued by a Spanish judge. The judge is probing Pinochet's role in the death of Spaniards in Chile under his rule in the 1970s and 80s. The Chilean government has protested Pinochet's arrest, insisting that as a senator he was traveling on a diplomatic passport and had immunity from arrest. Castro, Latin America's only remaining authoritarian leader, said he lacked details on the case against Pinochet, but said he thought it placed the government of Chile and President Eduardo Frei in an uncomfortable position while Frei is attending the summit. Castro compared the action with the establishment in Rome in August of an International Criminal Court, a move Cuba has expressed reservations about. Castro said the court ought to be independent of the U.N. Security Council, because ``we already know who commands there,'' an apparent reference to the United States. The United States was one of only seven countries that voted against creating the court. ``The (Pinochet) case is serious ... the problem is delicate'' and the reactions of the Chilean Parliament and armed forces bear watching, Castro said. He expressed surprise that the British had arrested Pinochet, especially since he had provided support to England during its 1982 war with Argentina over the Falkland Islands. Although Chile maintained neutrality during the war, it was accused of providing military intelligence to the British. Castro joked that he would have thought police could have waited another 24 hours to avoid having the arrest of Pinochet overshadow the summit being held here. ``Now they are talking about the arrest of Pinochet instead of the summit,'' he said. Pinochet left government in 1990, but remained as army chief until March when he became a senator-for-life. ||||| The British and Spanish prime ministers said Sunday that the fate of former Chilean dictator Gen. Augusto Pinochet is in the hands of their judicial authorities and they will not interfere. ``Both myself and Mr. Aznar agree this is not a matter for us to discuss,'' British Prime Minister Tony Blair said, referring to Spanish leader Jose Maria Aznar. ``I've avoided commenting on that judicial process and I don't intend to do so.'' Aznar made similar comments when he meet journalists on the margin of a European Union summit in this Alpine lakeside resort. Pinochet is under arrest in a London hospital where he'd gone for back surgery. He was detained on a warrant from a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture during his 1973-90 rule. The Chilean government has urged Britain to release Pinochet on humanitarian grounds, and argued that as a senator, he is entitled to diplomatic immunity. Aznar dismissed reports that the bid to try Pinochet will damage Spain's relations with Latin America. ``It's important we don't talk nonsense about this issue. This is stupid.'' ||||| The wife of former Chilean dictator Augusto Pinochet appealed for his release, saying he is too sick to be extradited to Spain to face charges of genocide. ''This is very painful for our family,'' a tearful Lucia Pinochet told reporters late Friday outside the private London Clinic, where her husband is under arrest as he recuperates from back surgery. 'I would like to ask for compassion for a person who is very, very, very, ill.'' Pinochet, 82, had surgery Oct. 9 for a herniated disc, a painful spinal disorder which had hindered his movement. He was arrested Oct. 16 at the instigation of a Spanish magistrate seeking to extradite him on charges of genocide, terrorism and torture. The Spanish warrant cited 94 victims, but could be broadened to include some 3,000 people who were killed or disappeared during his 17-year-rule. Chile argues that Pinochet must be released because as a senator he enjoys diplomatic immunity _ and because he is in poor health. Unconfirmed media reports in Chile this week indicated that Pinochet, who has worn a pacemaker for years and is diabetic, also has a urinary tract infection. There have also been reports that he is suffering from depression. In a separate attempt to block his extradition, lawyers for the former strongman went to court Friday to argue that British police acted illegally in accepting the Spanish warrant. The case resumes Monday. Pinochet ruled from 1973 until 1990 but remained army commander until last March. Then, he moved to congress as a senator for life, as permitted by the constitution his regime drafted. ||||| Margaret Thatcher entertained former Children dictator Gen. Augusto Pinochet at her home two weeks before he was arrested in his bed in a London hospital, the ex-prime minister's office said Tuesday, amid growing diplomatic and domestic controversy over the move. Pinochet, who has vowed to fight attempts to extradite him to Spain on allegations of murder, genocide and torture, had drinks with Lady Thatcher and her husband, Denis, in their home in London's elite Belgravia district four days before he was hospitalized for back surgery performed Oct. 9. ``She regarded it as a private meeting,'' said Mark Worthington, spokesman for the Lady Thatcher, Conservative Party prime minister from 1979-90. The 82-year-old Pinochet was arrested Friday at a Spanish magistrate's request. In Conservative government days, Pinochet was welcomed on regular visits that included tea with the prime minister. He was the only Latin American leader to support Britain in its 1982 war against Argentina to reclaim the Falkland Islands. Pinochet and Lady Thatcher also implemented similar brands of right-wing economics. The current visit is Pincohet's first since Prime Minister Tony Blair's Labor Party administration was elected 18 months ago, ending 18 years of Conservative Party rule. Chile's ambassador delivered a formal protest to the Foreign Office on Monday, saying Britain has violated Pinochet's diplomatic immunity. He arrived last month on a diplomatic passport and is also a senator-for-life in Chile, which protects him from prosecution there. Pinochet's 17-year-rule was marked by torture and other human rights abuses against political opponents in which, the Chilean government has said, 4,299 people were killed or vanished. He remained Chilean army commander-in-chief until March. The magistrate broadened his charges Monday to include killings of Chileans as well as Spaniards, and genocide _ for which there is no diplomatic immunity. Chilean Ambassador Mario Artaza, himself an exile during Pinochet's rule, said Chile had a duty to protect a citizen with diplomatic immunity and senator status. ``We are not protecting the dictator of the '70s,'' Artaza said in a British Broadcasting Corp. radio interview Tuesday. ``What we are fighting for and discussing with the (British) government is the special situation of a senator in our transition who many people do not understand and many people don't like.'' ``We're not discussing his record during his period of dictatorship, that the present government does not support at all,'' added the ambassador. A Chilean specialist in international law was traveling to London for further meetings with British officials, Artaza said. Pinochet, expected to be hospitalized for perhaps two more weeks faces a long battle through British courts to avoid extradition, questioning by two Spanish judges who instigated the proceedings, and an appearance at London's Bow Street magistrate's court. British Conservative Party lawmakers accuse the Labor government of ``gesture'' politics and pandering to the party's left-wing. ||||| The Swiss government has ordered no investigation of possible bank accounts belonging to former Chilean dictator Augusto Pinochet, a spokesman said Wednesday. Weekend newspaper reports in Spain said a Spanish judge who ordered Pinochet's arrest has issued a petition aimed at freezing any accounts the 82-year-old general might have in Luxembourg and Switzerland. But government spokesman Achille Casanova said no accounts have so far been frozen in Switzerland and no investigation order has been given to federal banking authorities. Pinochet has been held at a London clinic since his arrest earlier this month. Spanish magistrate Baltasar Garzon is seeking his extradition on charges of genocide, torture and terrorism during his 17-year rule which ended 1990. On Monday, Switzerland also requested Pinochet's arrest and extradition on charges of murder, kidnapping and torture. The move followed a criminal complaint filed in Geneva last week by the widow of Alexis Jaccard, a student of Swiss-Chilean dual nationality who disappeared in May 1977. Swiss authorities said the Spanish effort to extradite Pinochet should be given priority. A Spanish request for legal assistance from Switzerland, made Friday, has been passed on to Geneva authorities. No details have been given of the content of the Spanish request. ||||| A delegation of Chilean legislators lobbying against the possible extradition of Augusto Pinochet to Spain to face trial, warned Thursday that Chile was on the brink of political turmoil. ``There is a climate of division, confrontation and instability in Chile,'' parliamentary deputy Alberto Espina told reporters in Madrid after meeting the Chilean ambassador. Pinochet was arrested in London on Oct. 16 at the instigation of Spanish magistrate Baltasar Garzon who is seeking to extradite the former dictator on charges of genocide, terrorism and torture. In Chile, the detention triggered both celebrations by relatives of victims of Pinochet's 1973-1990 regime and protests from the retired general's supporters. Espina also warned that the issue was damaging relations between Chile Spain and Britain. Spain was the biggest single investor in Chile last year, followed closely by Britain. The deputy arrived in Madrid late Wednesday accompanied by the senators Jovino Movoa and Julio Lagos. The delegation is an offshoot of a larger group of Chilean parliamentarians currently protesting the detention in London on behalf of the opposition parties Independent Democratic Union and the National Renovation Party. Espina, Movoa and Lagos were hoping to talk to officials from the Spanish Foreign Ministry and other government representatives. ``All we ask is that Spain stops meddling in our internal affairs,'' Espina said, arguing that Chilean problems should be dealt with by Chilean courts. ``We stopped being a Spanish colony 188 years ago and we have no intention of becoming one again,'' he added. Government spokesman Josep Pique said Prime Minister Jose Maria Aznar had no plans to meet the delegation, the state-owned news agency EFE reported. Aznar has promised his government will rubber stamp a formal extradition request to the British government if asked to do so by the judicial authorities. But the extradition attempt could be annulled by legal challenges in Spain well before the deadline for presenting it in Britain. The deadline is set for November 25th _ coincidentally Pinochet's 83rd birthday. On Thursday the head prosecutor from the National Court set in motion appeals against several rulings made by Judge Garzon related to Pinochet's detention in the London clinic where he was recovering from back surgery. The court's plenary is expected to meet next week to decide on an earlier challenge of the Spanish judicial investigations into human rights abuses in Chile and Argentina that underpin Garzon's arrest warrant. A ruling that the investigations are outside the jurisdiction of Spanish law would made any extradition request difficult. The decision is likely to hang on how genocide and terrorism are interpreted, as these crimes are specifically mentioned in the Spanish legal code.

On Oct. 16, 1998 British police arrested former Chilean dictator Pinochet on a Spanish warrant charging murder of Spaniards in Chile, 1973-1983. Fidel Castro denounced the arrest. The Chilean government protested strongly. While the British government defended the arrest, it and the Spanish government took no stand on extradition of Pinochet to Spain, leaving it to the courts. Chilean legislators lobbied in Madrid against extradition, while others endorsed it. Then new charges were filed for crimes against Swiss and French citizens. Pinochet's wife and family pleaded that he was too sick to face extradition. As of Oct. 28 the matter was not resolved.

The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated. ||||| A federal district judge agreed Tuesday to review complaints by lawyers for three men arrested after the bombings of two U.S. embassies in Africa that their jail conditions in Manhattan are unconstitutional and inhumane. Judge Leonard Sand of U.S. District Court in Manhattan said he had received an eight-page letter from lawyers for two of three defendants in custody in Manhattan. The lawyers complained that their clients were being held in total isolation for almost 24 hours a day in a unit called 10 South, the most restrictive holding area in the Metropolitan Correctional Center in lower Manhattan. The defendants are allowed only brief periods of exercise in a barren room, called the rat cage, a defense lawyer, Michael Young, wrote in the letter. A second lawyer, Leonard Joy, concurred with the views in the letter, which was made public Tuesday. In agreeing to review the conditions, Sand said, ``Certainly it has to be addressed, that is, the condition of confinement for all of the defendants.'' The judge made his comments in the first hearing in the bombing case since last week's indictment by a federal grand jury of Osama bin Laden, who the authorities believe was the mastermind of the embassy attacks. Bin Laden remains at large and is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. In discussing conditions at the Manhattan jail, the lawyers said that two of the defendants have not been able to call their families, while the third has been allowed to make only one phone call. The lawyers added that the defendants cannot have visitors, write letters, or receive mail or books. The skirmishing continued in court. ``I cannot give my client a dictionary,'' a third lawyer, Bruce McIntyre, who represents Wadih el Hage, told the judge. El Hage has been charged with conspiring to kill Americans abroad and has been described by the government as a former personal secretary to bin Laden. The two other defendants in court Tuesday _ Mohammed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali _ have each been charged with separate counts of murder in the deaths of more than 200 people in the embassy attacks in Kenya and Tanzania on August 7. All three men have pleaded not guilty. Patrick Fitzgerald, an assistant U.S. attorney, told the judge that the government would have a response by Friday, and his comments suggested that the government will be prepared to make some modifications in the restrictions. ||||| German police raided several locations near Bonn after receiving word of a terrorist threat against the U.S. Embassy, but no evidence of a planned attack was found, officials said Wednesday. Police, including agents of an elite anti-terrorist unit, checked several suspects during raids in an industrial zone and other sites Tuesday, but no arrests were made, said Eva Schuebel, spokeswoman for the Federal Prosecutor's Office in Karlsruhe. The agency said it had received ``credible information'' that Middle East terrorists had stockpiled arms and explosives at the sites, but none were found. The agency's investigation is continuing, Schuebel said. ``For now, we can no longer speak of an immediate threat to the U.S. Embassy,'' she said. The embassy had no comment. Security was tightened at U.S. installations worldwide after the Aug. 7 bombings of the U.S. embassies in Kenya and Tanzania. Saudi dissident Osama Bin Laden is wanted by U.S. officials for those attacks. A suspected top aide of bin Laden, Mamdouh Mahmud Salim, is jailed in Germany pending a U.S. extradition request, raising concern about reprisals on German soil. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. In September, German police stepped up security at the U.S. consulate in Hamburg after receiving a tip about a possible threat. ||||| Police and soldiers on Friday blocked off the street in front of a house where members of a terrorist gang are believed to have assembled the bomb that blew up the U.S. Embassy, killing 11 people. Wearing gloves and masks, detectives from the Tanzanian Criminal Investigation Division could be seen searching the yard of the house that is surrounded by a high fence. Residents, who were questioned Thursday by Tanzanian police and FBI agents, told reporters Friday there were four regular visitors to the house. They all came at night and used a white 1989 Suzuki Samuri, which is in police custody. Two men, Tanzanian Rashid Saleh Hemed and Egyptian Mustafa Mahmoud Said Ahmed, have been formally charged by a Tanzanian magistrate in the Aug. 7 embassy bombing. Police are looking for two other suspects identified Ahmad Khalfan, a Tanzanian of Omani origin and Fahad, a Kenyan of Yemeni origin. A relative of Hemed told The Associated Press the house in the Bungoni neighborhood of Ilala district had been rented by Ahmad Khalfan. The house is south of the center of Dar es Salaam and about 6.5 kilometers (4 miles) southwest of the embassy building. The relative, who spoke on condition of anonymity, said in addition to Khalfan, the three other visitors to the house were Fahad, Ahmed and Hussein. He did not furnish second names for them, and it was not clear whether Ahmed was the same Egyptian charged in the Dar es Salaam bombing. Residents said police showed them photographs, but they were not able to identify them because it was always dark when they arrived and left. But all were able to identify the Suzuki vehicle. Officials believe a 1987 Nissan Atlas refrigerator truck actually carried the bomb into the embassy compound. It has been identified by its chassis, all that remains. There has been speculation that two men in the Suzuiki used a remote control device to detonate the bomb. A nearly simultaneous attack in neighboring Kenya killed 213 people, including 12 Americans, at the U.S. Embassy in Nairobi. U.S. authorities have charged four people in connection with the Nairobi blast. Three are in custody in New York, and a fourth is a fugitive. Mohamed Sadeek Odeh, one of the three men in custody in the United States for the Nairobi bombing, told police in Pakistan where he was arrested after arriving from Nairobi Aug. 7 that Ahmad Khalfan was a member of the group responsible for the bombing in Dar es Salaam. According to the same Pakistani police sources, Odeh identified Fahad as being involved in the Nairobi embassy bombing. ||||| Federal prison officials have cut off virtually all communications for two men being held in Manhattan in the bombings of the U.S. embassies in Kenya and Tanzania. A federal prison official said Monday that the government moved under a rarely used federal rule that allows prison officials to limit an inmate's contacts to prevent future ``acts of violence and terrorism.'' A spokesman for the federal prosecutor's office declined to say whether the authorities foresaw further threats of terrorism. But the law allows officials to impose restrictions where they believe there is ``a substantial risk'' that an inmate's communications ``could result in death or serious bodily injury.'' Under the provision, approved by the Justice Department, prison officials may segregate prisoners from other inmates, and cut off their correspondence, visits, interviews with the news media and use of the telephone. It was not clear yesterday which of these restrictions would be applied to the two bombing suspects, Mohamed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali. The rule does permit communications with their lawyers. A Bureau of Prisons official in Washington confirmed that the two men are joining a group of about six inmates throughout the country being held under the restrictions. The total population of federal prisons exceeds 108,000 inmates. Others similarly restricted include Sheik Omar Abdel Rahman, the Egyptian cleric convicted in the conspiracy to blow up landmarks in New York, and Ramzi Ahmed Yousef, convicted of masterminding the World Trade Center bombings in 1993. Michael A. Young, the lawyer representing Odeh, said he was ``somewhat concerned because these are pretrial defendants, after all.'' ``You can't punish them in advance of any determination of whether they are guilty or innocent,'' he said. Leonard F. Joy, al-'Owhali's lawyer, said his initial impression is that some of the restrictions could hinder his ability to represent his client. ||||| The New York Times said in an editorial on Monday, Oct. 26: Since the deadly bombing of two American embassies in Africa in August, there has been a troubling accumulation of evidence that the State Department inexplicably ignored warnings of possible terrorist attacks against the installations. The latest and most disturbing account suggests that nine months before the truck bombing in Kenya, the department received a detailed description of the planned attack but did little to strengthen security at the embassy. The pattern of negligence demands examination by the Clinton administration and Congress. Shortly after the bombing, the department acknowledged that the American ambassador in Kenya, Prudence Bushnell, had earlier recommended that the embassy be moved to a safer location. Her advice was rejected. On Friday, Raymond Bonner and James Risen of The New York Times reported that an Egyptian now believed to have been directly involved in the bombings outlined the Kenya plot to American intelligence officials last November. Mustafa Mahmoud Said Ahmed's account was so specific _ he said terrorists were planning to detonate a truck bomb in the embassy's underground garage _ that it called for more than a temporary increase in security. Unhappily, it was discounted, even thought to be a ruse to lure the embassy into new security measures that terrorists could monitor and defeat. The logic of this is hard to fathom, and harder still to explain to relatives of the Americans and Kenyans killed in an attack nearly identical to the plan Ahmed described. Since the bombings, the department has been quick to close embassies temporarily if attacks seem imminent. It would be interesting to know if the intelligence behind those decisions was any more credible than Ahmed's warning. No one at the State Department is happy with the department's handling of security matters, but the tendency to blame limited funding and bureaucratic inertia is disheartening. Of course, additional money would have made it possible to harden defenses at more embassies, and Congress has now added to the security budget. But more decisive leadership in the department could have assured preventive steps were taken in East Africa. ||||| An Islamic militant group on Thursday threatened to retaliate if Saudi dissident Osama bin Laden is arrested, and described Washington's No. 1 enemy as a ``hero'' to Muslims worldwide. Bin Laden, believed to be in Afghanistan, and a top aide were indicted Wednesday by a U.S. District Court in the U.S. embassy bombings in Africa and are accused of conspiring to kill Americans outside the United States. The State Department also announced a reward of up to dlrs 5 million for bin Laden's capture. ``It is a challenge to the entire Muslim world ... Bin Laden is a hero of the Muslim world,'' said Omar Warsi, a leader of Pakistan's militant Sunni Muslim group, Sipah-e-Sahaba, or Guardians of the Friends of the Prophet. ``If anything happens to him, America will be responsible.'' Many Sipah-e-Sahaba followers are fighting in neighboring Afghanistan alongside the Taliban army, which rules 90 percent of Afghanistan and has imposed a strict version of Islamic law in those areas. Warsi's group is well-armed with everything from machine guns to rocket launchers. In Pakistan, it has been blamed in killings of hundreds of Shiite Muslims, whom the group reviles as non-Muslims based on a centuries-old dispute over who was the proper successor to the Prophet Mohammed. Harakat-ul-Ansar, a Pakistan-based organization labeled a terrorist group by the United States, said, however, that foreigners in Pakistan ``have nothing to fear from us.'' Harakat is considered a strong supporter of bin Laden, and several Harakat followers were killed in the U.S. missile attack on alleged bin Laden terror sites in Afghanistan. ``What the United States does is their business,'' said Abdul Bassit, a Harakat follower. He added, however, that the United States should know bin Laden ``is a good Muslim, and all the Muslim world thinks he is a good Muslim.'' The Taliban say bin Laden is a respected guest who will not be extradited. However, they have set up a judicial inquiry to accept evidence of bin Laden's involvement in terrorist activity and have promised to prosecute him if the evidence warrants it. Washington blames bin Laden's group, al Qaeda, for the Aug. 7 bombings of U.S. embassies in Kenya and Tanzania that killed 224 people, including 12 Americans, and injured an estimated 5,000 people. The United States retaliated Aug. 20, firing Tomahawk cruise missiles at suspected bin Laden training camps in eastern Afghanistan. At least 26 people were killed, but damage to the area was not considered extensive. The U.S. Embassy in Pakistan evacuated nonessential staff and family members prior to the August bombing of Afghanistan, fearing retaliation. While some embassy workers are back, their dependents and about 30 percent of the staff have not been allowed to return. Embassy officials said no fresh security warnings followed Wednesday's indictment. Security measures already in place include cement barricades blocking the road leading to the U.S. Embassy in Islamabad and razor-sharp barbed wire topping the brick-walled compound. In the northwestern Pakistani city of Peshawar, on the border with Afghanistan, the U.S. consulate is surrounded by barbed wire and protected by an armored personnel carrier and dozens of armed police. ||||| A federal grand jury in Manhattan returned a 238-count indictment Wednesday charging the Saudi exile Osama bin Laden with conspiring to bomb two U.S. embassies in Africa in August and with committing acts of terrorism against Americans abroad. Government officials immediately announced that they were offering two rewards of $5 million each for information leading to the arrest or conviction of bin Laden and another man charged Wednesday, Muhammad Atef, who was described as bin Laden's chief military commander. Bin Laden is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. Atef's whereabouts are unknown. Prosecutors also unsealed an earlier indictment, issued in June, that included similar but less detailed charges against bin Laden. That indictment was returned before the embassy bombings and was the result of a two-year investigation into his activities in Somalia and Saudi Arabia, as well as reports that he had connections to a circle of Islamic militants in Brooklyn. The new indictment, which supersedes the June action, accused bin Laden of leading a vast terrorist conspiracy from 1989 to the present, in which he was said to be working in concert with governments, including those of Sudan, Iraq and Iran, and terrorist groups, to build weapons and attack American military installations. But the indictment gives few details of bin Laden's alleged involvement in the embassy attacks. The indictment does not, for example, specify whether prosecutors have evidence that bin Laden gave direct orders to those who carried out the attacks. Nothing in the document indicates why the original indictment was kept secret for months, but the secret charges were returned about the time that American officials were plotting a possible raid into Afghanistan to arrest bin Laden. Mary Jo White, the U.S. attorney in Manhattan, said, ``It's very common to have sealed indictments when you're trying to apprehend those who are indicted.'' Both indictments offer new information about bin Laden's operations, including one deal he is said to have struck with Iraq to cooperate in the development of weapons in return for bin Laden's agreeing not to work against that country. No details were given about whether the alleged deal with Iraq led to the development of actual weapons for bin Laden's group, which is called Al Qaeda. The government said Wednesday that bin Laden's group had used private relief groups ``as conduits for transmitting funds'' for Al Qaeda. The groups were not identified. Prosecutors also said bin Laden's group had conducted internal investigations of its members and their associates, trying to detect who might be acting as informants, and had killed those who had been suspected of collaborating with ``enemies of the organization.'' The government indicated earlier that its knowledge of bin Laden's activities stemmed in part from the cooperation of one such informant, who it said Wednesday had worked for bin Laden, transporting weapons and explosives, helping to buy land for his training camps and assisting in running his finances. While the June indictment against bin Laden suggested that the government had a great deal of knowledge of his dealings in the months before the embassy attacks, the new charges are an indication of how quickly the government has worked to solve the embassy attacks, which occurred just three months ago. Ms. White said bin Laden was charged with ``plotting and carrying out the most heinous acts of international terrorism and murder.'' Citing the more than 250 people killed in the embassy attacks and the more than 1,000 wounded, she added, ``In a greater sense, all of the citizens of the world are also victims whenever and wherever the cruel and cowardly acts of international terrorism strike.'' The investigation of bin Laden is continuing, said Ms. White and Lewis D. Schiliro, assistant director of the FBI in New York, whose agents have fanned out around the world to look into the embassy attacks. ``Our investigative strategy is clear,'' Schiliro said. ``We will identify, locate and prosecute all those responsible, right up the line, from those who constructed and delivered the bombs to those who paid for them and ordered it done.'' ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil.

Terrorists bombed the US embassy in Nairobi, killing 213, 12 of them Americans. A near simultaneous bombing of the embassy in Dar es Salaam killed 11, but no Americans. An editorial accused the State Department of ignoring threat warnings. Three suspects in custody in New York have been denied outside contact and their lawyers charge that the jail conditions are inhumane. A federal grand jury has indicted Osama bin Laden with conspiracy in the bombings. Bin Laden is in Afghanistan, out of the reach of US authorities and protected by the Taliban. German police receive d possible threat against the US embassy there.

The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated. ||||| A federal district judge agreed Tuesday to review complaints by lawyers for three men arrested after the bombings of two U.S. embassies in Africa that their jail conditions in Manhattan are unconstitutional and inhumane. Judge Leonard Sand of U.S. District Court in Manhattan said he had received an eight-page letter from lawyers for two of three defendants in custody in Manhattan. The lawyers complained that their clients were being held in total isolation for almost 24 hours a day in a unit called 10 South, the most restrictive holding area in the Metropolitan Correctional Center in lower Manhattan. The defendants are allowed only brief periods of exercise in a barren room, called the rat cage, a defense lawyer, Michael Young, wrote in the letter. A second lawyer, Leonard Joy, concurred with the views in the letter, which was made public Tuesday. In agreeing to review the conditions, Sand said, ``Certainly it has to be addressed, that is, the condition of confinement for all of the defendants.'' The judge made his comments in the first hearing in the bombing case since last week's indictment by a federal grand jury of Osama bin Laden, who the authorities believe was the mastermind of the embassy attacks. Bin Laden remains at large and is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. In discussing conditions at the Manhattan jail, the lawyers said that two of the defendants have not been able to call their families, while the third has been allowed to make only one phone call. The lawyers added that the defendants cannot have visitors, write letters, or receive mail or books. The skirmishing continued in court. ``I cannot give my client a dictionary,'' a third lawyer, Bruce McIntyre, who represents Wadih el Hage, told the judge. El Hage has been charged with conspiring to kill Americans abroad and has been described by the government as a former personal secretary to bin Laden. The two other defendants in court Tuesday _ Mohammed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali _ have each been charged with separate counts of murder in the deaths of more than 200 people in the embassy attacks in Kenya and Tanzania on August 7. All three men have pleaded not guilty. Patrick Fitzgerald, an assistant U.S. attorney, told the judge that the government would have a response by Friday, and his comments suggested that the government will be prepared to make some modifications in the restrictions. ||||| German police raided several locations near Bonn after receiving word of a terrorist threat against the U.S. Embassy, but no evidence of a planned attack was found, officials said Wednesday. Police, including agents of an elite anti-terrorist unit, checked several suspects during raids in an industrial zone and other sites Tuesday, but no arrests were made, said Eva Schuebel, spokeswoman for the Federal Prosecutor's Office in Karlsruhe. The agency said it had received ``credible information'' that Middle East terrorists had stockpiled arms and explosives at the sites, but none were found. The agency's investigation is continuing, Schuebel said. ``For now, we can no longer speak of an immediate threat to the U.S. Embassy,'' she said. The embassy had no comment. Security was tightened at U.S. installations worldwide after the Aug. 7 bombings of the U.S. embassies in Kenya and Tanzania. Saudi dissident Osama Bin Laden is wanted by U.S. officials for those attacks. A suspected top aide of bin Laden, Mamdouh Mahmud Salim, is jailed in Germany pending a U.S. extradition request, raising concern about reprisals on German soil. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. In September, German police stepped up security at the U.S. consulate in Hamburg after receiving a tip about a possible threat. ||||| Police and soldiers on Friday blocked off the street in front of a house where members of a terrorist gang are believed to have assembled the bomb that blew up the U.S. Embassy, killing 11 people. Wearing gloves and masks, detectives from the Tanzanian Criminal Investigation Division could be seen searching the yard of the house that is surrounded by a high fence. Residents, who were questioned Thursday by Tanzanian police and FBI agents, told reporters Friday there were four regular visitors to the house. They all came at night and used a white 1989 Suzuki Samuri, which is in police custody. Two men, Tanzanian Rashid Saleh Hemed and Egyptian Mustafa Mahmoud Said Ahmed, have been formally charged by a Tanzanian magistrate in the Aug. 7 embassy bombing. Police are looking for two other suspects identified Ahmad Khalfan, a Tanzanian of Omani origin and Fahad, a Kenyan of Yemeni origin. A relative of Hemed told The Associated Press the house in the Bungoni neighborhood of Ilala district had been rented by Ahmad Khalfan. The house is south of the center of Dar es Salaam and about 6.5 kilometers (4 miles) southwest of the embassy building. The relative, who spoke on condition of anonymity, said in addition to Khalfan, the three other visitors to the house were Fahad, Ahmed and Hussein. He did not furnish second names for them, and it was not clear whether Ahmed was the same Egyptian charged in the Dar es Salaam bombing. Residents said police showed them photographs, but they were not able to identify them because it was always dark when they arrived and left. But all were able to identify the Suzuki vehicle. Officials believe a 1987 Nissan Atlas refrigerator truck actually carried the bomb into the embassy compound. It has been identified by its chassis, all that remains. There has been speculation that two men in the Suzuiki used a remote control device to detonate the bomb. A nearly simultaneous attack in neighboring Kenya killed 213 people, including 12 Americans, at the U.S. Embassy in Nairobi. U.S. authorities have charged four people in connection with the Nairobi blast. Three are in custody in New York, and a fourth is a fugitive. Mohamed Sadeek Odeh, one of the three men in custody in the United States for the Nairobi bombing, told police in Pakistan where he was arrested after arriving from Nairobi Aug. 7 that Ahmad Khalfan was a member of the group responsible for the bombing in Dar es Salaam. According to the same Pakistani police sources, Odeh identified Fahad as being involved in the Nairobi embassy bombing. ||||| Federal prison officials have cut off virtually all communications for two men being held in Manhattan in the bombings of the U.S. embassies in Kenya and Tanzania. A federal prison official said Monday that the government moved under a rarely used federal rule that allows prison officials to limit an inmate's contacts to prevent future ``acts of violence and terrorism.'' A spokesman for the federal prosecutor's office declined to say whether the authorities foresaw further threats of terrorism. But the law allows officials to impose restrictions where they believe there is ``a substantial risk'' that an inmate's communications ``could result in death or serious bodily injury.'' Under the provision, approved by the Justice Department, prison officials may segregate prisoners from other inmates, and cut off their correspondence, visits, interviews with the news media and use of the telephone. It was not clear yesterday which of these restrictions would be applied to the two bombing suspects, Mohamed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali. The rule does permit communications with their lawyers. A Bureau of Prisons official in Washington confirmed that the two men are joining a group of about six inmates throughout the country being held under the restrictions. The total population of federal prisons exceeds 108,000 inmates. Others similarly restricted include Sheik Omar Abdel Rahman, the Egyptian cleric convicted in the conspiracy to blow up landmarks in New York, and Ramzi Ahmed Yousef, convicted of masterminding the World Trade Center bombings in 1993. Michael A. Young, the lawyer representing Odeh, said he was ``somewhat concerned because these are pretrial defendants, after all.'' ``You can't punish them in advance of any determination of whether they are guilty or innocent,'' he said. Leonard F. Joy, al-'Owhali's lawyer, said his initial impression is that some of the restrictions could hinder his ability to represent his client. ||||| The New York Times said in an editorial on Monday, Oct. 26: Since the deadly bombing of two American embassies in Africa in August, there has been a troubling accumulation of evidence that the State Department inexplicably ignored warnings of possible terrorist attacks against the installations. The latest and most disturbing account suggests that nine months before the truck bombing in Kenya, the department received a detailed description of the planned attack but did little to strengthen security at the embassy. The pattern of negligence demands examination by the Clinton administration and Congress. Shortly after the bombing, the department acknowledged that the American ambassador in Kenya, Prudence Bushnell, had earlier recommended that the embassy be moved to a safer location. Her advice was rejected. On Friday, Raymond Bonner and James Risen of The New York Times reported that an Egyptian now believed to have been directly involved in the bombings outlined the Kenya plot to American intelligence officials last November. Mustafa Mahmoud Said Ahmed's account was so specific _ he said terrorists were planning to detonate a truck bomb in the embassy's underground garage _ that it called for more than a temporary increase in security. Unhappily, it was discounted, even thought to be a ruse to lure the embassy into new security measures that terrorists could monitor and defeat. The logic of this is hard to fathom, and harder still to explain to relatives of the Americans and Kenyans killed in an attack nearly identical to the plan Ahmed described. Since the bombings, the department has been quick to close embassies temporarily if attacks seem imminent. It would be interesting to know if the intelligence behind those decisions was any more credible than Ahmed's warning. No one at the State Department is happy with the department's handling of security matters, but the tendency to blame limited funding and bureaucratic inertia is disheartening. Of course, additional money would have made it possible to harden defenses at more embassies, and Congress has now added to the security budget. But more decisive leadership in the department could have assured preventive steps were taken in East Africa. ||||| An Islamic militant group on Thursday threatened to retaliate if Saudi dissident Osama bin Laden is arrested, and described Washington's No. 1 enemy as a ``hero'' to Muslims worldwide. Bin Laden, believed to be in Afghanistan, and a top aide were indicted Wednesday by a U.S. District Court in the U.S. embassy bombings in Africa and are accused of conspiring to kill Americans outside the United States. The State Department also announced a reward of up to dlrs 5 million for bin Laden's capture. ``It is a challenge to the entire Muslim world ... Bin Laden is a hero of the Muslim world,'' said Omar Warsi, a leader of Pakistan's militant Sunni Muslim group, Sipah-e-Sahaba, or Guardians of the Friends of the Prophet. ``If anything happens to him, America will be responsible.'' Many Sipah-e-Sahaba followers are fighting in neighboring Afghanistan alongside the Taliban army, which rules 90 percent of Afghanistan and has imposed a strict version of Islamic law in those areas. Warsi's group is well-armed with everything from machine guns to rocket launchers. In Pakistan, it has been blamed in killings of hundreds of Shiite Muslims, whom the group reviles as non-Muslims based on a centuries-old dispute over who was the proper successor to the Prophet Mohammed. Harakat-ul-Ansar, a Pakistan-based organization labeled a terrorist group by the United States, said, however, that foreigners in Pakistan ``have nothing to fear from us.'' Harakat is considered a strong supporter of bin Laden, and several Harakat followers were killed in the U.S. missile attack on alleged bin Laden terror sites in Afghanistan. ``What the United States does is their business,'' said Abdul Bassit, a Harakat follower. He added, however, that the United States should know bin Laden ``is a good Muslim, and all the Muslim world thinks he is a good Muslim.'' The Taliban say bin Laden is a respected guest who will not be extradited. However, they have set up a judicial inquiry to accept evidence of bin Laden's involvement in terrorist activity and have promised to prosecute him if the evidence warrants it. Washington blames bin Laden's group, al Qaeda, for the Aug. 7 bombings of U.S. embassies in Kenya and Tanzania that killed 224 people, including 12 Americans, and injured an estimated 5,000 people. The United States retaliated Aug. 20, firing Tomahawk cruise missiles at suspected bin Laden training camps in eastern Afghanistan. At least 26 people were killed, but damage to the area was not considered extensive. The U.S. Embassy in Pakistan evacuated nonessential staff and family members prior to the August bombing of Afghanistan, fearing retaliation. While some embassy workers are back, their dependents and about 30 percent of the staff have not been allowed to return. Embassy officials said no fresh security warnings followed Wednesday's indictment. Security measures already in place include cement barricades blocking the road leading to the U.S. Embassy in Islamabad and razor-sharp barbed wire topping the brick-walled compound. In the northwestern Pakistani city of Peshawar, on the border with Afghanistan, the U.S. consulate is surrounded by barbed wire and protected by an armored personnel carrier and dozens of armed police. ||||| A federal grand jury in Manhattan returned a 238-count indictment Wednesday charging the Saudi exile Osama bin Laden with conspiring to bomb two U.S. embassies in Africa in August and with committing acts of terrorism against Americans abroad. Government officials immediately announced that they were offering two rewards of $5 million each for information leading to the arrest or conviction of bin Laden and another man charged Wednesday, Muhammad Atef, who was described as bin Laden's chief military commander. Bin Laden is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. Atef's whereabouts are unknown. Prosecutors also unsealed an earlier indictment, issued in June, that included similar but less detailed charges against bin Laden. That indictment was returned before the embassy bombings and was the result of a two-year investigation into his activities in Somalia and Saudi Arabia, as well as reports that he had connections to a circle of Islamic militants in Brooklyn. The new indictment, which supersedes the June action, accused bin Laden of leading a vast terrorist conspiracy from 1989 to the present, in which he was said to be working in concert with governments, including those of Sudan, Iraq and Iran, and terrorist groups, to build weapons and attack American military installations. But the indictment gives few details of bin Laden's alleged involvement in the embassy attacks. The indictment does not, for example, specify whether prosecutors have evidence that bin Laden gave direct orders to those who carried out the attacks. Nothing in the document indicates why the original indictment was kept secret for months, but the secret charges were returned about the time that American officials were plotting a possible raid into Afghanistan to arrest bin Laden. Mary Jo White, the U.S. attorney in Manhattan, said, ``It's very common to have sealed indictments when you're trying to apprehend those who are indicted.'' Both indictments offer new information about bin Laden's operations, including one deal he is said to have struck with Iraq to cooperate in the development of weapons in return for bin Laden's agreeing not to work against that country. No details were given about whether the alleged deal with Iraq led to the development of actual weapons for bin Laden's group, which is called Al Qaeda. The government said Wednesday that bin Laden's group had used private relief groups ``as conduits for transmitting funds'' for Al Qaeda. The groups were not identified. Prosecutors also said bin Laden's group had conducted internal investigations of its members and their associates, trying to detect who might be acting as informants, and had killed those who had been suspected of collaborating with ``enemies of the organization.'' The government indicated earlier that its knowledge of bin Laden's activities stemmed in part from the cooperation of one such informant, who it said Wednesday had worked for bin Laden, transporting weapons and explosives, helping to buy land for his training camps and assisting in running his finances. While the June indictment against bin Laden suggested that the government had a great deal of knowledge of his dealings in the months before the embassy attacks, the new charges are an indication of how quickly the government has worked to solve the embassy attacks, which occurred just three months ago. Ms. White said bin Laden was charged with ``plotting and carrying out the most heinous acts of international terrorism and murder.'' Citing the more than 250 people killed in the embassy attacks and the more than 1,000 wounded, she added, ``In a greater sense, all of the citizens of the world are also victims whenever and wherever the cruel and cowardly acts of international terrorism strike.'' The investigation of bin Laden is continuing, said Ms. White and Lewis D. Schiliro, assistant director of the FBI in New York, whose agents have fanned out around the world to look into the embassy attacks. ``Our investigative strategy is clear,'' Schiliro said. ``We will identify, locate and prosecute all those responsible, right up the line, from those who constructed and delivered the bombs to those who paid for them and ordered it done.'' ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil.

Local and U.S. authorities who are questioning victims for evidence are investigating terrorist bombings of U.S. embassies in Kenya and Tanzania. Three suspects are in custody in New York. They have filed complaints about restrictions and about unsatisfactory conditions in the jail. There is evidence that the State Department ignored warnings. Osama bin Laden was indicted for terrorism and for conspiring in the bombings. The Taliban has declared him a free man in Afghanistan and says the U.S. is using him as an excuse for missile attacks. An Islamic group threatens retaliation if he is arrested. A threat against the U.S. embassy in Bonn seems unfounded.

The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated. ||||| A federal district judge agreed Tuesday to review complaints by lawyers for three men arrested after the bombings of two U.S. embassies in Africa that their jail conditions in Manhattan are unconstitutional and inhumane. Judge Leonard Sand of U.S. District Court in Manhattan said he had received an eight-page letter from lawyers for two of three defendants in custody in Manhattan. The lawyers complained that their clients were being held in total isolation for almost 24 hours a day in a unit called 10 South, the most restrictive holding area in the Metropolitan Correctional Center in lower Manhattan. The defendants are allowed only brief periods of exercise in a barren room, called the rat cage, a defense lawyer, Michael Young, wrote in the letter. A second lawyer, Leonard Joy, concurred with the views in the letter, which was made public Tuesday. In agreeing to review the conditions, Sand said, ``Certainly it has to be addressed, that is, the condition of confinement for all of the defendants.'' The judge made his comments in the first hearing in the bombing case since last week's indictment by a federal grand jury of Osama bin Laden, who the authorities believe was the mastermind of the embassy attacks. Bin Laden remains at large and is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. In discussing conditions at the Manhattan jail, the lawyers said that two of the defendants have not been able to call their families, while the third has been allowed to make only one phone call. The lawyers added that the defendants cannot have visitors, write letters, or receive mail or books. The skirmishing continued in court. ``I cannot give my client a dictionary,'' a third lawyer, Bruce McIntyre, who represents Wadih el Hage, told the judge. El Hage has been charged with conspiring to kill Americans abroad and has been described by the government as a former personal secretary to bin Laden. The two other defendants in court Tuesday _ Mohammed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali _ have each been charged with separate counts of murder in the deaths of more than 200 people in the embassy attacks in Kenya and Tanzania on August 7. All three men have pleaded not guilty. Patrick Fitzgerald, an assistant U.S. attorney, told the judge that the government would have a response by Friday, and his comments suggested that the government will be prepared to make some modifications in the restrictions. ||||| German police raided several locations near Bonn after receiving word of a terrorist threat against the U.S. Embassy, but no evidence of a planned attack was found, officials said Wednesday. Police, including agents of an elite anti-terrorist unit, checked several suspects during raids in an industrial zone and other sites Tuesday, but no arrests were made, said Eva Schuebel, spokeswoman for the Federal Prosecutor's Office in Karlsruhe. The agency said it had received ``credible information'' that Middle East terrorists had stockpiled arms and explosives at the sites, but none were found. The agency's investigation is continuing, Schuebel said. ``For now, we can no longer speak of an immediate threat to the U.S. Embassy,'' she said. The embassy had no comment. Security was tightened at U.S. installations worldwide after the Aug. 7 bombings of the U.S. embassies in Kenya and Tanzania. Saudi dissident Osama Bin Laden is wanted by U.S. officials for those attacks. A suspected top aide of bin Laden, Mamdouh Mahmud Salim, is jailed in Germany pending a U.S. extradition request, raising concern about reprisals on German soil. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. In September, German police stepped up security at the U.S. consulate in Hamburg after receiving a tip about a possible threat. ||||| Police and soldiers on Friday blocked off the street in front of a house where members of a terrorist gang are believed to have assembled the bomb that blew up the U.S. Embassy, killing 11 people. Wearing gloves and masks, detectives from the Tanzanian Criminal Investigation Division could be seen searching the yard of the house that is surrounded by a high fence. Residents, who were questioned Thursday by Tanzanian police and FBI agents, told reporters Friday there were four regular visitors to the house. They all came at night and used a white 1989 Suzuki Samuri, which is in police custody. Two men, Tanzanian Rashid Saleh Hemed and Egyptian Mustafa Mahmoud Said Ahmed, have been formally charged by a Tanzanian magistrate in the Aug. 7 embassy bombing. Police are looking for two other suspects identified Ahmad Khalfan, a Tanzanian of Omani origin and Fahad, a Kenyan of Yemeni origin. A relative of Hemed told The Associated Press the house in the Bungoni neighborhood of Ilala district had been rented by Ahmad Khalfan. The house is south of the center of Dar es Salaam and about 6.5 kilometers (4 miles) southwest of the embassy building. The relative, who spoke on condition of anonymity, said in addition to Khalfan, the three other visitors to the house were Fahad, Ahmed and Hussein. He did not furnish second names for them, and it was not clear whether Ahmed was the same Egyptian charged in the Dar es Salaam bombing. Residents said police showed them photographs, but they were not able to identify them because it was always dark when they arrived and left. But all were able to identify the Suzuki vehicle. Officials believe a 1987 Nissan Atlas refrigerator truck actually carried the bomb into the embassy compound. It has been identified by its chassis, all that remains. There has been speculation that two men in the Suzuiki used a remote control device to detonate the bomb. A nearly simultaneous attack in neighboring Kenya killed 213 people, including 12 Americans, at the U.S. Embassy in Nairobi. U.S. authorities have charged four people in connection with the Nairobi blast. Three are in custody in New York, and a fourth is a fugitive. Mohamed Sadeek Odeh, one of the three men in custody in the United States for the Nairobi bombing, told police in Pakistan where he was arrested after arriving from Nairobi Aug. 7 that Ahmad Khalfan was a member of the group responsible for the bombing in Dar es Salaam. According to the same Pakistani police sources, Odeh identified Fahad as being involved in the Nairobi embassy bombing. ||||| Federal prison officials have cut off virtually all communications for two men being held in Manhattan in the bombings of the U.S. embassies in Kenya and Tanzania. A federal prison official said Monday that the government moved under a rarely used federal rule that allows prison officials to limit an inmate's contacts to prevent future ``acts of violence and terrorism.'' A spokesman for the federal prosecutor's office declined to say whether the authorities foresaw further threats of terrorism. But the law allows officials to impose restrictions where they believe there is ``a substantial risk'' that an inmate's communications ``could result in death or serious bodily injury.'' Under the provision, approved by the Justice Department, prison officials may segregate prisoners from other inmates, and cut off their correspondence, visits, interviews with the news media and use of the telephone. It was not clear yesterday which of these restrictions would be applied to the two bombing suspects, Mohamed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali. The rule does permit communications with their lawyers. A Bureau of Prisons official in Washington confirmed that the two men are joining a group of about six inmates throughout the country being held under the restrictions. The total population of federal prisons exceeds 108,000 inmates. Others similarly restricted include Sheik Omar Abdel Rahman, the Egyptian cleric convicted in the conspiracy to blow up landmarks in New York, and Ramzi Ahmed Yousef, convicted of masterminding the World Trade Center bombings in 1993. Michael A. Young, the lawyer representing Odeh, said he was ``somewhat concerned because these are pretrial defendants, after all.'' ``You can't punish them in advance of any determination of whether they are guilty or innocent,'' he said. Leonard F. Joy, al-'Owhali's lawyer, said his initial impression is that some of the restrictions could hinder his ability to represent his client. ||||| The New York Times said in an editorial on Monday, Oct. 26: Since the deadly bombing of two American embassies in Africa in August, there has been a troubling accumulation of evidence that the State Department inexplicably ignored warnings of possible terrorist attacks against the installations. The latest and most disturbing account suggests that nine months before the truck bombing in Kenya, the department received a detailed description of the planned attack but did little to strengthen security at the embassy. The pattern of negligence demands examination by the Clinton administration and Congress. Shortly after the bombing, the department acknowledged that the American ambassador in Kenya, Prudence Bushnell, had earlier recommended that the embassy be moved to a safer location. Her advice was rejected. On Friday, Raymond Bonner and James Risen of The New York Times reported that an Egyptian now believed to have been directly involved in the bombings outlined the Kenya plot to American intelligence officials last November. Mustafa Mahmoud Said Ahmed's account was so specific _ he said terrorists were planning to detonate a truck bomb in the embassy's underground garage _ that it called for more than a temporary increase in security. Unhappily, it was discounted, even thought to be a ruse to lure the embassy into new security measures that terrorists could monitor and defeat. The logic of this is hard to fathom, and harder still to explain to relatives of the Americans and Kenyans killed in an attack nearly identical to the plan Ahmed described. Since the bombings, the department has been quick to close embassies temporarily if attacks seem imminent. It would be interesting to know if the intelligence behind those decisions was any more credible than Ahmed's warning. No one at the State Department is happy with the department's handling of security matters, but the tendency to blame limited funding and bureaucratic inertia is disheartening. Of course, additional money would have made it possible to harden defenses at more embassies, and Congress has now added to the security budget. But more decisive leadership in the department could have assured preventive steps were taken in East Africa. ||||| An Islamic militant group on Thursday threatened to retaliate if Saudi dissident Osama bin Laden is arrested, and described Washington's No. 1 enemy as a ``hero'' to Muslims worldwide. Bin Laden, believed to be in Afghanistan, and a top aide were indicted Wednesday by a U.S. District Court in the U.S. embassy bombings in Africa and are accused of conspiring to kill Americans outside the United States. The State Department also announced a reward of up to dlrs 5 million for bin Laden's capture. ``It is a challenge to the entire Muslim world ... Bin Laden is a hero of the Muslim world,'' said Omar Warsi, a leader of Pakistan's militant Sunni Muslim group, Sipah-e-Sahaba, or Guardians of the Friends of the Prophet. ``If anything happens to him, America will be responsible.'' Many Sipah-e-Sahaba followers are fighting in neighboring Afghanistan alongside the Taliban army, which rules 90 percent of Afghanistan and has imposed a strict version of Islamic law in those areas. Warsi's group is well-armed with everything from machine guns to rocket launchers. In Pakistan, it has been blamed in killings of hundreds of Shiite Muslims, whom the group reviles as non-Muslims based on a centuries-old dispute over who was the proper successor to the Prophet Mohammed. Harakat-ul-Ansar, a Pakistan-based organization labeled a terrorist group by the United States, said, however, that foreigners in Pakistan ``have nothing to fear from us.'' Harakat is considered a strong supporter of bin Laden, and several Harakat followers were killed in the U.S. missile attack on alleged bin Laden terror sites in Afghanistan. ``What the United States does is their business,'' said Abdul Bassit, a Harakat follower. He added, however, that the United States should know bin Laden ``is a good Muslim, and all the Muslim world thinks he is a good Muslim.'' The Taliban say bin Laden is a respected guest who will not be extradited. However, they have set up a judicial inquiry to accept evidence of bin Laden's involvement in terrorist activity and have promised to prosecute him if the evidence warrants it. Washington blames bin Laden's group, al Qaeda, for the Aug. 7 bombings of U.S. embassies in Kenya and Tanzania that killed 224 people, including 12 Americans, and injured an estimated 5,000 people. The United States retaliated Aug. 20, firing Tomahawk cruise missiles at suspected bin Laden training camps in eastern Afghanistan. At least 26 people were killed, but damage to the area was not considered extensive. The U.S. Embassy in Pakistan evacuated nonessential staff and family members prior to the August bombing of Afghanistan, fearing retaliation. While some embassy workers are back, their dependents and about 30 percent of the staff have not been allowed to return. Embassy officials said no fresh security warnings followed Wednesday's indictment. Security measures already in place include cement barricades blocking the road leading to the U.S. Embassy in Islamabad and razor-sharp barbed wire topping the brick-walled compound. In the northwestern Pakistani city of Peshawar, on the border with Afghanistan, the U.S. consulate is surrounded by barbed wire and protected by an armored personnel carrier and dozens of armed police. ||||| A federal grand jury in Manhattan returned a 238-count indictment Wednesday charging the Saudi exile Osama bin Laden with conspiring to bomb two U.S. embassies in Africa in August and with committing acts of terrorism against Americans abroad. Government officials immediately announced that they were offering two rewards of $5 million each for information leading to the arrest or conviction of bin Laden and another man charged Wednesday, Muhammad Atef, who was described as bin Laden's chief military commander. Bin Laden is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. Atef's whereabouts are unknown. Prosecutors also unsealed an earlier indictment, issued in June, that included similar but less detailed charges against bin Laden. That indictment was returned before the embassy bombings and was the result of a two-year investigation into his activities in Somalia and Saudi Arabia, as well as reports that he had connections to a circle of Islamic militants in Brooklyn. The new indictment, which supersedes the June action, accused bin Laden of leading a vast terrorist conspiracy from 1989 to the present, in which he was said to be working in concert with governments, including those of Sudan, Iraq and Iran, and terrorist groups, to build weapons and attack American military installations. But the indictment gives few details of bin Laden's alleged involvement in the embassy attacks. The indictment does not, for example, specify whether prosecutors have evidence that bin Laden gave direct orders to those who carried out the attacks. Nothing in the document indicates why the original indictment was kept secret for months, but the secret charges were returned about the time that American officials were plotting a possible raid into Afghanistan to arrest bin Laden. Mary Jo White, the U.S. attorney in Manhattan, said, ``It's very common to have sealed indictments when you're trying to apprehend those who are indicted.'' Both indictments offer new information about bin Laden's operations, including one deal he is said to have struck with Iraq to cooperate in the development of weapons in return for bin Laden's agreeing not to work against that country. No details were given about whether the alleged deal with Iraq led to the development of actual weapons for bin Laden's group, which is called Al Qaeda. The government said Wednesday that bin Laden's group had used private relief groups ``as conduits for transmitting funds'' for Al Qaeda. The groups were not identified. Prosecutors also said bin Laden's group had conducted internal investigations of its members and their associates, trying to detect who might be acting as informants, and had killed those who had been suspected of collaborating with ``enemies of the organization.'' The government indicated earlier that its knowledge of bin Laden's activities stemmed in part from the cooperation of one such informant, who it said Wednesday had worked for bin Laden, transporting weapons and explosives, helping to buy land for his training camps and assisting in running his finances. While the June indictment against bin Laden suggested that the government had a great deal of knowledge of his dealings in the months before the embassy attacks, the new charges are an indication of how quickly the government has worked to solve the embassy attacks, which occurred just three months ago. Ms. White said bin Laden was charged with ``plotting and carrying out the most heinous acts of international terrorism and murder.'' Citing the more than 250 people killed in the embassy attacks and the more than 1,000 wounded, she added, ``In a greater sense, all of the citizens of the world are also victims whenever and wherever the cruel and cowardly acts of international terrorism strike.'' The investigation of bin Laden is continuing, said Ms. White and Lewis D. Schiliro, assistant director of the FBI in New York, whose agents have fanned out around the world to look into the embassy attacks. ``Our investigative strategy is clear,'' Schiliro said. ``We will identify, locate and prosecute all those responsible, right up the line, from those who constructed and delivered the bombs to those who paid for them and ordered it done.'' ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil.

In Oct and Nov 1998, the US was pursuing Osama bin Laden and his associates as suspects in the Aug bombing of US embassies in Kenya and Tanzania. The attacks killed 224 and injured 5,485. The US had ignored a warning of the Kenya attack 9 months earlier. Two men were arrested in Tanzania. One was under arrest in Germany. Two were in a New York City jail, virtually held incommunicado, awaiting trial. Bin Laden and his military commander also were indicted. Two $5 million rewards were offered. Bin Laden was believed to be in Afghanistan where the Taliban government called him an honored guest and said the US presented no proof that he was a terrorist.

The Taliban's chief justice accused the United States on Wednesday of looking for an ``excuse'' to launch another missile attack on his war-shattered homeland. And that excuse is Osama bin Laden, the man Washington calls Enemy No. 1 and blames for the Aug. 7 bombings of U.S. embassies in East Africa, Justice Noor Mohammed Saqib said an interview with The Associated Press. On Aug. 20 the United States retaliated by firing Tomahawk missiles at suspected terrorist camps in eastern Afghanistan, killing 26 people. According to U.S. intelligence sources, the camps were being used to train members of bin Laden's al Qaeda terrorist group. ``America is looking for an excuse to fire more rockets on our dear Afghanistan and that excuse is bin Laden,'' Saqib said. Washington, which has posted a dlrs 5 million reward for bin Laden's arrest, hasn't ruled out further attacks on Afghanistan. Saqib, who heads a judicial inquiry established by the Taliban to investigate the terrorism charges against bin Laden, says the United States has become insecure. ``America fears its shadow ... in every part of the world it is afraid and sees every danger connected to bin Laden,'' he said in an interview in the Afghan capital of Kabul. In Afghanistan, bin Laden is considered an honored guest by his Taliban hosts. They cite Afghan tradition, which demands the host guarantee his guest protection. So far Saqib says he has no evidence of bin Laden's involvement in terrorist activities. The Taliban have refused to turn over bin Laden to the United States, but they say if there is evidence they will try him under Islamic law. In the 90 percent of Afghanistan ruled by the Taliban a harsh brand of Islamic justice has been imposed, including the death penalty. ``We want good relations with the United States and all Muslim and non-Muslim countries, but they have to respect our ways,'' he said. Saqib said his inquiry will wind up on Nov. 20 and if there is no evidence against bin Laden the case will be closed _ at least for the Taliban. ``Bin Laden is not a sinful man ... America has been silent ... they have given no evidence,'' he said. ``It is too shameful for America who is now seen by all that world to have no reason to go after bin Laden.'' ||||| The man accused of orchestrating the U.S. embassy bombings in Tanzania and Kenya was declared a free man Friday in Afghanistan, where he has lived for years with the permission of the hard-line Islamic Taliban militia. The Taliban, who control about 90 percent of Afghanistan, on Friday closed their three-week inquiry into allegations that Osama bin Laden is waging a war of terror against the United States. ``It's over, and America has not presented any evidence,'' Afghanistan's chief justice, Noor Mohammed Saqib, told The Associated Press in an interview at the Supreme Court building in the Afghan capital, Kabul. ``Without any evidence, bin Laden is a man without sin. ... He is a free man.'' The Taliban have told bin Laden, however, that political activity is banned and he has agreed to respect that, the Taliban information minister said in a statement Friday. The minister, Amir Khan Muttaqi, also disputed U.S. assertions that bin Laden is a rich man, saying the Saudi dissident has had his foreign assets frozen, a claim not immediately corroborated. ||||| A federal district judge agreed Tuesday to review complaints by lawyers for three men arrested after the bombings of two U.S. embassies in Africa that their jail conditions in Manhattan are unconstitutional and inhumane. Judge Leonard Sand of U.S. District Court in Manhattan said he had received an eight-page letter from lawyers for two of three defendants in custody in Manhattan. The lawyers complained that their clients were being held in total isolation for almost 24 hours a day in a unit called 10 South, the most restrictive holding area in the Metropolitan Correctional Center in lower Manhattan. The defendants are allowed only brief periods of exercise in a barren room, called the rat cage, a defense lawyer, Michael Young, wrote in the letter. A second lawyer, Leonard Joy, concurred with the views in the letter, which was made public Tuesday. In agreeing to review the conditions, Sand said, ``Certainly it has to be addressed, that is, the condition of confinement for all of the defendants.'' The judge made his comments in the first hearing in the bombing case since last week's indictment by a federal grand jury of Osama bin Laden, who the authorities believe was the mastermind of the embassy attacks. Bin Laden remains at large and is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. In discussing conditions at the Manhattan jail, the lawyers said that two of the defendants have not been able to call their families, while the third has been allowed to make only one phone call. The lawyers added that the defendants cannot have visitors, write letters, or receive mail or books. The skirmishing continued in court. ``I cannot give my client a dictionary,'' a third lawyer, Bruce McIntyre, who represents Wadih el Hage, told the judge. El Hage has been charged with conspiring to kill Americans abroad and has been described by the government as a former personal secretary to bin Laden. The two other defendants in court Tuesday _ Mohammed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali _ have each been charged with separate counts of murder in the deaths of more than 200 people in the embassy attacks in Kenya and Tanzania on August 7. All three men have pleaded not guilty. Patrick Fitzgerald, an assistant U.S. attorney, told the judge that the government would have a response by Friday, and his comments suggested that the government will be prepared to make some modifications in the restrictions. ||||| German police raided several locations near Bonn after receiving word of a terrorist threat against the U.S. Embassy, but no evidence of a planned attack was found, officials said Wednesday. Police, including agents of an elite anti-terrorist unit, checked several suspects during raids in an industrial zone and other sites Tuesday, but no arrests were made, said Eva Schuebel, spokeswoman for the Federal Prosecutor's Office in Karlsruhe. The agency said it had received ``credible information'' that Middle East terrorists had stockpiled arms and explosives at the sites, but none were found. The agency's investigation is continuing, Schuebel said. ``For now, we can no longer speak of an immediate threat to the U.S. Embassy,'' she said. The embassy had no comment. Security was tightened at U.S. installations worldwide after the Aug. 7 bombings of the U.S. embassies in Kenya and Tanzania. Saudi dissident Osama Bin Laden is wanted by U.S. officials for those attacks. A suspected top aide of bin Laden, Mamdouh Mahmud Salim, is jailed in Germany pending a U.S. extradition request, raising concern about reprisals on German soil. U.S. authorities charge Salim helped finance, train and arm members of a terrorist organization, including the alleged bombers of the U.S. embassies in Kenya and Tanzania. In September, German police stepped up security at the U.S. consulate in Hamburg after receiving a tip about a possible threat. ||||| Police and soldiers on Friday blocked off the street in front of a house where members of a terrorist gang are believed to have assembled the bomb that blew up the U.S. Embassy, killing 11 people. Wearing gloves and masks, detectives from the Tanzanian Criminal Investigation Division could be seen searching the yard of the house that is surrounded by a high fence. Residents, who were questioned Thursday by Tanzanian police and FBI agents, told reporters Friday there were four regular visitors to the house. They all came at night and used a white 1989 Suzuki Samuri, which is in police custody. Two men, Tanzanian Rashid Saleh Hemed and Egyptian Mustafa Mahmoud Said Ahmed, have been formally charged by a Tanzanian magistrate in the Aug. 7 embassy bombing. Police are looking for two other suspects identified Ahmad Khalfan, a Tanzanian of Omani origin and Fahad, a Kenyan of Yemeni origin. A relative of Hemed told The Associated Press the house in the Bungoni neighborhood of Ilala district had been rented by Ahmad Khalfan. The house is south of the center of Dar es Salaam and about 6.5 kilometers (4 miles) southwest of the embassy building. The relative, who spoke on condition of anonymity, said in addition to Khalfan, the three other visitors to the house were Fahad, Ahmed and Hussein. He did not furnish second names for them, and it was not clear whether Ahmed was the same Egyptian charged in the Dar es Salaam bombing. Residents said police showed them photographs, but they were not able to identify them because it was always dark when they arrived and left. But all were able to identify the Suzuki vehicle. Officials believe a 1987 Nissan Atlas refrigerator truck actually carried the bomb into the embassy compound. It has been identified by its chassis, all that remains. There has been speculation that two men in the Suzuiki used a remote control device to detonate the bomb. A nearly simultaneous attack in neighboring Kenya killed 213 people, including 12 Americans, at the U.S. Embassy in Nairobi. U.S. authorities have charged four people in connection with the Nairobi blast. Three are in custody in New York, and a fourth is a fugitive. Mohamed Sadeek Odeh, one of the three men in custody in the United States for the Nairobi bombing, told police in Pakistan where he was arrested after arriving from Nairobi Aug. 7 that Ahmad Khalfan was a member of the group responsible for the bombing in Dar es Salaam. According to the same Pakistani police sources, Odeh identified Fahad as being involved in the Nairobi embassy bombing. ||||| Federal prison officials have cut off virtually all communications for two men being held in Manhattan in the bombings of the U.S. embassies in Kenya and Tanzania. A federal prison official said Monday that the government moved under a rarely used federal rule that allows prison officials to limit an inmate's contacts to prevent future ``acts of violence and terrorism.'' A spokesman for the federal prosecutor's office declined to say whether the authorities foresaw further threats of terrorism. But the law allows officials to impose restrictions where they believe there is ``a substantial risk'' that an inmate's communications ``could result in death or serious bodily injury.'' Under the provision, approved by the Justice Department, prison officials may segregate prisoners from other inmates, and cut off their correspondence, visits, interviews with the news media and use of the telephone. It was not clear yesterday which of these restrictions would be applied to the two bombing suspects, Mohamed Saddiq Odeh and Mohamed Rashed Daoud al-'Owhali. The rule does permit communications with their lawyers. A Bureau of Prisons official in Washington confirmed that the two men are joining a group of about six inmates throughout the country being held under the restrictions. The total population of federal prisons exceeds 108,000 inmates. Others similarly restricted include Sheik Omar Abdel Rahman, the Egyptian cleric convicted in the conspiracy to blow up landmarks in New York, and Ramzi Ahmed Yousef, convicted of masterminding the World Trade Center bombings in 1993. Michael A. Young, the lawyer representing Odeh, said he was ``somewhat concerned because these are pretrial defendants, after all.'' ``You can't punish them in advance of any determination of whether they are guilty or innocent,'' he said. Leonard F. Joy, al-'Owhali's lawyer, said his initial impression is that some of the restrictions could hinder his ability to represent his client. ||||| The New York Times said in an editorial on Monday, Oct. 26: Since the deadly bombing of two American embassies in Africa in August, there has been a troubling accumulation of evidence that the State Department inexplicably ignored warnings of possible terrorist attacks against the installations. The latest and most disturbing account suggests that nine months before the truck bombing in Kenya, the department received a detailed description of the planned attack but did little to strengthen security at the embassy. The pattern of negligence demands examination by the Clinton administration and Congress. Shortly after the bombing, the department acknowledged that the American ambassador in Kenya, Prudence Bushnell, had earlier recommended that the embassy be moved to a safer location. Her advice was rejected. On Friday, Raymond Bonner and James Risen of The New York Times reported that an Egyptian now believed to have been directly involved in the bombings outlined the Kenya plot to American intelligence officials last November. Mustafa Mahmoud Said Ahmed's account was so specific _ he said terrorists were planning to detonate a truck bomb in the embassy's underground garage _ that it called for more than a temporary increase in security. Unhappily, it was discounted, even thought to be a ruse to lure the embassy into new security measures that terrorists could monitor and defeat. The logic of this is hard to fathom, and harder still to explain to relatives of the Americans and Kenyans killed in an attack nearly identical to the plan Ahmed described. Since the bombings, the department has been quick to close embassies temporarily if attacks seem imminent. It would be interesting to know if the intelligence behind those decisions was any more credible than Ahmed's warning. No one at the State Department is happy with the department's handling of security matters, but the tendency to blame limited funding and bureaucratic inertia is disheartening. Of course, additional money would have made it possible to harden defenses at more embassies, and Congress has now added to the security budget. But more decisive leadership in the department could have assured preventive steps were taken in East Africa. ||||| An Islamic militant group on Thursday threatened to retaliate if Saudi dissident Osama bin Laden is arrested, and described Washington's No. 1 enemy as a ``hero'' to Muslims worldwide. Bin Laden, believed to be in Afghanistan, and a top aide were indicted Wednesday by a U.S. District Court in the U.S. embassy bombings in Africa and are accused of conspiring to kill Americans outside the United States. The State Department also announced a reward of up to dlrs 5 million for bin Laden's capture. ``It is a challenge to the entire Muslim world ... Bin Laden is a hero of the Muslim world,'' said Omar Warsi, a leader of Pakistan's militant Sunni Muslim group, Sipah-e-Sahaba, or Guardians of the Friends of the Prophet. ``If anything happens to him, America will be responsible.'' Many Sipah-e-Sahaba followers are fighting in neighboring Afghanistan alongside the Taliban army, which rules 90 percent of Afghanistan and has imposed a strict version of Islamic law in those areas. Warsi's group is well-armed with everything from machine guns to rocket launchers. In Pakistan, it has been blamed in killings of hundreds of Shiite Muslims, whom the group reviles as non-Muslims based on a centuries-old dispute over who was the proper successor to the Prophet Mohammed. Harakat-ul-Ansar, a Pakistan-based organization labeled a terrorist group by the United States, said, however, that foreigners in Pakistan ``have nothing to fear from us.'' Harakat is considered a strong supporter of bin Laden, and several Harakat followers were killed in the U.S. missile attack on alleged bin Laden terror sites in Afghanistan. ``What the United States does is their business,'' said Abdul Bassit, a Harakat follower. He added, however, that the United States should know bin Laden ``is a good Muslim, and all the Muslim world thinks he is a good Muslim.'' The Taliban say bin Laden is a respected guest who will not be extradited. However, they have set up a judicial inquiry to accept evidence of bin Laden's involvement in terrorist activity and have promised to prosecute him if the evidence warrants it. Washington blames bin Laden's group, al Qaeda, for the Aug. 7 bombings of U.S. embassies in Kenya and Tanzania that killed 224 people, including 12 Americans, and injured an estimated 5,000 people. The United States retaliated Aug. 20, firing Tomahawk cruise missiles at suspected bin Laden training camps in eastern Afghanistan. At least 26 people were killed, but damage to the area was not considered extensive. The U.S. Embassy in Pakistan evacuated nonessential staff and family members prior to the August bombing of Afghanistan, fearing retaliation. While some embassy workers are back, their dependents and about 30 percent of the staff have not been allowed to return. Embassy officials said no fresh security warnings followed Wednesday's indictment. Security measures already in place include cement barricades blocking the road leading to the U.S. Embassy in Islamabad and razor-sharp barbed wire topping the brick-walled compound. In the northwestern Pakistani city of Peshawar, on the border with Afghanistan, the U.S. consulate is surrounded by barbed wire and protected by an armored personnel carrier and dozens of armed police. ||||| A federal grand jury in Manhattan returned a 238-count indictment Wednesday charging the Saudi exile Osama bin Laden with conspiring to bomb two U.S. embassies in Africa in August and with committing acts of terrorism against Americans abroad. Government officials immediately announced that they were offering two rewards of $5 million each for information leading to the arrest or conviction of bin Laden and another man charged Wednesday, Muhammad Atef, who was described as bin Laden's chief military commander. Bin Laden is believed to be living in Afghanistan under the protection of the Taliban, the Islamic fundamentalist movement that rules that country. Atef's whereabouts are unknown. Prosecutors also unsealed an earlier indictment, issued in June, that included similar but less detailed charges against bin Laden. That indictment was returned before the embassy bombings and was the result of a two-year investigation into his activities in Somalia and Saudi Arabia, as well as reports that he had connections to a circle of Islamic militants in Brooklyn. The new indictment, which supersedes the June action, accused bin Laden of leading a vast terrorist conspiracy from 1989 to the present, in which he was said to be working in concert with governments, including those of Sudan, Iraq and Iran, and terrorist groups, to build weapons and attack American military installations. But the indictment gives few details of bin Laden's alleged involvement in the embassy attacks. The indictment does not, for example, specify whether prosecutors have evidence that bin Laden gave direct orders to those who carried out the attacks. Nothing in the document indicates why the original indictment was kept secret for months, but the secret charges were returned about the time that American officials were plotting a possible raid into Afghanistan to arrest bin Laden. Mary Jo White, the U.S. attorney in Manhattan, said, ``It's very common to have sealed indictments when you're trying to apprehend those who are indicted.'' Both indictments offer new information about bin Laden's operations, including one deal he is said to have struck with Iraq to cooperate in the development of weapons in return for bin Laden's agreeing not to work against that country. No details were given about whether the alleged deal with Iraq led to the development of actual weapons for bin Laden's group, which is called Al Qaeda. The government said Wednesday that bin Laden's group had used private relief groups ``as conduits for transmitting funds'' for Al Qaeda. The groups were not identified. Prosecutors also said bin Laden's group had conducted internal investigations of its members and their associates, trying to detect who might be acting as informants, and had killed those who had been suspected of collaborating with ``enemies of the organization.'' The government indicated earlier that its knowledge of bin Laden's activities stemmed in part from the cooperation of one such informant, who it said Wednesday had worked for bin Laden, transporting weapons and explosives, helping to buy land for his training camps and assisting in running his finances. While the June indictment against bin Laden suggested that the government had a great deal of knowledge of his dealings in the months before the embassy attacks, the new charges are an indication of how quickly the government has worked to solve the embassy attacks, which occurred just three months ago. Ms. White said bin Laden was charged with ``plotting and carrying out the most heinous acts of international terrorism and murder.'' Citing the more than 250 people killed in the embassy attacks and the more than 1,000 wounded, she added, ``In a greater sense, all of the citizens of the world are also victims whenever and wherever the cruel and cowardly acts of international terrorism strike.'' The investigation of bin Laden is continuing, said Ms. White and Lewis D. Schiliro, assistant director of the FBI in New York, whose agents have fanned out around the world to look into the embassy attacks. ``Our investigative strategy is clear,'' Schiliro said. ``We will identify, locate and prosecute all those responsible, right up the line, from those who constructed and delivered the bombs to those who paid for them and ordered it done.'' ||||| NAIROBI, Kenya (AP) _ FBI agents this week began questioning relatives of the victims of the Aug. 7 U.S. Embassy bombing as well as the seriously injured on request of the U.S. Attorney's office for the Southern District of New York, a U.S. official said Thursday. The blast at the embassy building in downtown Nairobi killed 213 people, 12 of them Americans, and injured 5,400. In an nearly simultaneous bombing of the U.S. Embassy in Dar es Salaam in neighboring Tanzania, 11 people were killed and 85 were injured, none of them Americans. The official, who could not be further identified, said the questioning was aimed at gathering recorded testimony to be used by the prosecution in the pre-sentencing phase of the trials of the six men indicted in connection with the attack. Wadih El Hage, Mohamed Sadeek Odeh and Mohamed Rashed Daoud Al-'Owhali are being held by the U.S. District Court in the Southern District of New York. All three have pleaded innocent. Fazul Abdullah Mohammed is a fugitive. Saudi exile Osama bin Laden, the alleged mastermind of a conspiracy to attack U.S. targets around the world, and Muhammad Atef, the alleged military commander of bin Laden's terrorist organization, Al-Qaeda, were charged in a separate 238-page indictment with murder and conspiracy in the bombings. Bin Laden is believed to be living in Afghanistan. U.S. law provides for the trial in the United States of those charged in terror attacks against American citizens, even if carried out on foreign soil.

Seven men have been arrested for the Aug. 7 bombings of the U.S. embassies in Kenya and Tanzania. Two, Rashid Saleh Hemed and Mustafa Mahmoud Said Ahmed, are in jail in Tanzania. Mohammed Saddiq Odeh and Mohamed Rashed Daoud al' Owhali are being held in isolation in a facility in New York. Three other suspects are being sought. Osama bin Laden was indicted on 238 counts in connection with the blasts that killed over 200 people and wounded over 5400. The U.S. announced a $5 million reward each for information leading to the capture or conviction of bin Laden, who is living in Afghanistan under Taliban protection, and Muhammed Atef, a chief lieutenant.

The New York Times said in an editorial on Saturday, Oct. 17: It is fitting that this most memorable of baseball seasons should conclude with a World Series that opens Saturday night in Yankee Stadium, the aging but still grand cathedral of the sport. Bedecked in bunting and banners, the revered ballpark always elevates the game with its aura of history and accomplishment. That makes it the perfect venue for part of a championship series that will determine whether the 1998 Yankees are one of the greatest teams of the modern era, or just a talented squad that owned the regular season but folded in the World Series. New Yorkers are a boisterous, boastful bunch, and the patter of the city this week has been loud and arrogant, or so it must seem to anyone venturing here from San Diego to root for the Padres. The word on the sidewalks and in the subways is that the Padres don't measure up against the Yankees. Sure, they have lethal starting pitchers in Kevin Brown and Andy Ashby, and one of the game's best closers in Trevor Hoffman, not to mention prolific hitters like Tony Gwynn and Greg Vaughn, who is hobbling but still dangerous. But how is that a match for the Yankees' World Series starting rotation of David Wells, Orlando Hernandez, David Cone and Andy Pettitte, bullpen flamethrower Mariano Rivera, plus the deepest batting order in baseball? Yet the truth is that Yankees fans are terrified the team will crumple. Baseball fans, even Yankee fans, can spend a lifetime waiting to see a home team of historic caliber, and this Yankee team will not reach that sanctified status unless it ends its record-setting season by winning the World Series. The doubts keep creeping up. The team was pitiful at the plate through most of the playoffs. Tino Martinez, the top run producer, has been in a numbing slump. Bernie Williams, the American League batting champ, hit well in the pennant series against the Cleveland Indians, but has seemed distracted by personal matters. Shane Spencer, the rookie slugging sensation of September, hasn't turned out to be the new Mr. October. Pettitte has been struggling since August. The curious thing about this team, which won more games during the regular season than any team in American League history, is how quiet and unobtrusive it can be. It sports no dominant superstar, no swaggering clubhouse leader, no one who seems to belong in New York. So when the Yankees start to drift on the field, fans tend to fear the team might simply fade away. Until the Indians surged temporarily ahead in the playoffs, the Yankees had faced no serious test of resiliency all season. New Yorkers can already taste that ticker-tape parade up Broadway. But behind every mighty cheer at the stadium Saturday night will lurk the fear that when the curtain falls on the season, an unheralded and unlegendary team from San Diego will be the one that is remembered. ||||| The last time they were seen on the field at Yankee Stadium, they were inadvertently influencing the outcome of the game that sent the Cleveland Indians home and the Yankees to the World Series. That's not to say the umpires will mess up in the World Series, but they have shown they are eminently capable of interfering with the natural progression of postseason games. All right, so Ted Hendry won't be in the World Series; the umpires' collective bargaining agreement with the leagues does not allow an umpire to work both a league championship series and the World Series. Joe Brinkman won't be here either, even though the agreement does allow for an umpire to work both a division series and the World Series. The three American League umpires who are on the six-man World Series crew did work in the first round of the playoffs. One of them, Richie Garcia, will be the crew chief and behind the plate in Saturday night's opener at Yankee Stadium. Gene Budig, the AL president, Friday called Garcia, a 24-year veteran, one of the league's ``most respected umpires.'' But after Saturday night, Garcia will move to right field Sunday night for Game 2. Now why does that combination sound familiar, Richie Garcia and right field? Ah yes, the last time Garcia worked a post-season series at Yankee Stadium, he was the umpire in Game 1 of the league championship series two years ago when a young fan from New Jersey _ no name, please; he has been over-glorified enough _ reached over the fence and caught Derek Jeter's fly ball just as Tony Tarasco, Baltimore's right fielder, prepared to catch it. Garcia ruled no interference, that it was a home run, then said oops after watching a television replay clearly showing interference. Too late. The call helped the Yankees win the first game and set the tone for the series. ``Even though he made a mistake, you know you have the best out there,'' a baseball official, speaking on the condition of anonymity, said. That knowledge comes as small consolation to the Orioles. Budig, too, acknowledged that umpires, like players and managers, aren't perfect. ``Major league umpires are skilled at what they do, but they are human,'' he said in a telephone interview. ``Day in and day out they do a very good job for Major League Baseball. Rounds one and two have been difficult, but that happens from time to time.'' The umpires were so human in the American League playoffs that it happened from time to time to time to time. The Cleveland Indians suffered the brunt of the fallibility of the umpires. ``We had a highlight reel of umpires getting knocked down by baseballs,'' general manager John Hart said after the Indians' final game against the Yankees. ``The umpires didn't lose the game for us, but we had our share of controversies in two playoff series with umpires.'' In the division series against Boston, Brinkman, the plate umpire, was so bad with his calls on pitches and plays at the plate that he immediately provoked disputes that led to his ejecting of Mike Hargrove, the Indians' manager, three pitches into Game 2, and Dwight Gooden, their starting pitcher, 19 pitches later. Hendry was right or wrong, depending on one's point of view, for his noncall of interference on Travis Fryman in the 12th inning of Game 2 of the ALCS. That ruling went in favor of the Indians. Little else did. In Game 4, Jeter was stealing second in the fifth inning when the on-target throw from Sandy Alomar Jr. hit Jim McKean, who jumped to try to get out of the way but instead kicked the ball into right field. A batted ball, Omar Vizquel's line drive, struck Hendry in Game 6. But the worst call of Game 6 was Hendry's on a force play at second base. Hendry called Bernie Williams safe, ruling that Vizquel's foot came off the base before he caught the ball. Members of the Yankees indicated Friday that they, too, thought the call was wrong. ``I don't know,'' Williams said when asked what he thought, ``but I'll take it. It was a big play.'' But did he think he was out? ``I'd rather not comment about that,'' he said. ``It will stir a lot of controversy. I don't want to get into that.'' When a player believes he was safe, he says so and doesn't worry about any subsequent controversy. If Williams was implying that he thought he was out, another member of the Yankees said he had no doubt that Williams was out. ``I wasn't sure at first,'' this uniformed member of the team said, ``but when I saw it was Hendry, I said uh-oh. I also thought Omar is so smooth you'd think he wouldn't come off the bag. Then I saw the replay. He was out.'' The game today is faster than it used to be, this observer said. The umpires have to be sharper. Maybe Garcia, Dale Scott and Tim Tschida from the American League, and Jerry Crawford, Dana DeMuth and Mark Hirschbeck from the National League, will be as sharp as an 18th century French guillotine in these four to seven games. Leonard Coleman, the NL president, said he thought his umpires were first-rate in the division and league series and added that he has ``three splendid umpires'' working the World Series. Budig said: ``The World Series crew is proven and first-rate. We have total confidence in them.'' The umpires should let the players make the errors and the managers the bad decisions. Then everyone will talk about the players and managers and not the umpires. ||||| Chuck Knoblauch and Tino Martinez were as popular as squeegee men a week ago, the speculation rampant that one or the other or both might be exiled if the Yankees' historic year crumbled in the post-season. Two big hits in the midst of a big inning changed all that Saturday night in Game 1 of the World Series. The Yankees trailed San Diego, 5-2, in the seventh inning, but Knoblauch hit a three-run home run to tie the score, and five batters later, Martinez smashed a grand slam. The seven-run explosion rocketed the Yankees to a 9-6 victory in the opener of the four-of-seven-game series, before 56,712 at Yankee Stadium. Orlando Hernandez will pitch against Andy Ashby in Game 2 Sunday night at the Stadium. Beyond seizing the advantage in the series, the Yankees were able to neutralize the Padres' ace, Kevin Brown, driving him from the mound in the seventh. Brown, seen by many as San Diego's best hope for a World Series upset, will not pitch again until Game 4, at the earliest. Brown was pitching with a three-run lead after the top of the fifth, when Tony Gwynn and Greg Vaughn banged back-to-back homers. One out into the seventh, however, Jorge Posada hit a single, and Brown walked Ricky Ledee. Brown, who had thrown a whopping 64 pitches in the first three innings, went out, and the reliever Donne Wall came in to face Knoblauch. This is what the Yankees have done all season, force a starter from the game in the middle innings, before exploiting a middle reliever. Knoblauch, of course, had earned notoriety for his gaffe in the Game 2 of the American League Championship Series against Cleveland, standing and waiting for an interference call as the ball rolled to a stop behind him and the decisive run scored. The Yankees came back to win the series, however; Knoblauch got a reprieve and talked about how much the experience had helped him. Facing Wall with a one-ball, no-strike count, Knoblauch had to duck under a runaway fastball. Two balls, no strikes. Wall had to throw a strike, Knoblauch swung hard and lifted a high fly down the left-field line. Off the bat, it did not look like much. But it kept carrying, Vaughn drifting back in left and looking up, to see the ball disappear into the stands. Tie game. Yankee Stadium shook. Knoblauch rounded the bases, crossed home plate and thrust both arms into the air, yelling to the crowd, like a hyped Olympic weightlifter who had just successfully hoisted a half-ton. He stomped around the dugout, his helmet on, teammates banging on him happily. When Derek Jeter singled, nobody really noticed. Wall left the game, and Mark Langston took over. Paul O'Neill flied out, and after Jeter advanced on a wild pitch, Bernie Williams was intentionally walked. Chili Davis drew a walk. Bases loaded, once more, with Martinez coming to the plate, with exactly one run batted in in his first 76 career at-bats in league championship and World Series games. With the count two balls and two strikes, Langston threw a pitch near the outside corner that he thought should have been a strike. Instead, Garcia called it a ball. Langston glared, snapping at the return throw. Langston and Martinez and everyone on the field now understood that with the bases loaded and a 3-2 count, Langston would have to throw what players refer to as a cookie _ a tasty pitch over the middle. Martinez ate up this cookie. The ball soared into the upper deck in right field, lifting three years of post-season misery off the back of the Yankees' first baseman, a grand slam. The crowd called out Martinez from the dugout again. Like Knoblauch, Martinez pumped both arms, and later the crowd would chant his name, and Martinez would wave his cap. San Diego's lead was long gone. The Yankees had taken a 2-0 lead over Brown in the second inning, forcing him to throw 32 pitches in the second. They loaded the bases with a single and two walks, and Ledee, the rookie left fielder who is playing because none of Torre's left fielders have been hitting, pulled a sinking fastball down the right field line with two outs. The fans along the foul line stood, some waving to push the ball fair with the body English, and the ball landed on the line, skipping off the wall as two runners scored. The Yankees had the early edge, they had jumped on Brown, and they had their best pitcher on the mound. San Diego's Chris Gomez led off the second inning with a blooper over shortstop, the ball falling in for a single. Quilvio Veras flied to right, Gwynn grounded out and Gomez took second, bringing Vaughn to the plate. David Wells got ahead in the count, no balls and two strikes, with a change-up and a fastball, before trying to run a fastball inside on Vaughn, who hit 50 home runs during the regular season. Vaughn attacked the pitch: a line drive that landed in the second deck, foul all the way, but a frightening mistake. Jorge Posada, the Yankees' catcher, jogged to the mound to re-think the strategy, perhaps to remind Wells of the conventional wisdom: you must pitch Vaughn on the outer edge of the plate. Posada returned to the plate, called for an outside fastball, Wells threw. Vaughn's swing was short and quick, the ball making a click sound off the bat, like a well-struck golf ball, before carrying over the wall in right-center field. Tie game. Wells retired the first two batters in the fifth inning, before jamming Veras with an inside fastball. Veras' bat snapped on contact, but it was enough to send a looper into short center field, a single. Gwynn stepped in, having hit a single in his first two at-bats, and looked for a sign from the third base coach Tim Flannery. With a runner on first, he likes to try to pull a ball through the right side of the infield. Wells fired a fastball, Gwynn turned on the pitch and ripped it, a line drive that crashed off the facing of the upper deck in right field. The Padres jumped from the dugout, celebrating, as Wells turned away, disgusted, asking for a new baseball. He got one, delivered another fastball, and Vaughn slugged this deep into the left field stands. Two pitches, two home runs, the first back-to-back home runs allowed by Wells since April 30. San Diego led, 5-2, and Yankee Stadium was silent. It would not stay that way. ||||| The moment of truth for Chuck Knoblauch came in the bottom of the first inning when his name was announced at Yankee Stadium for the first time since he neglected to chase down that memorable loose ball last Wednesday. There were no boos. It was a very warm ovation. They liked him. They really liked him. Knoblauch exhaled. Knoblauch had emphasized before the game that he was concerned about winning and rumbling into the World Series, not about the fans. But it surely made Knoblauch feel at home when he realized that the fans had forgiven him. Victories, more than time, had healed the malice toward Knoblauch and he could play second base without earplugs. When the Yankees defeated the Indians, 9-5, in Game 6 on Tuesday night to advance to their second World Series in three years, Knoblauch was easily the most relieved player on the field. The awful mistake that he had made in Game 2 would be forgotten. The Yankees had won the pennant, and Knoblauch was celebrating as much as anyone. ``To have them act like that toward me was tremendous,'' said Knoblauch, about the response that he received. ``It was a great feeling, and it really helped me out.'' Knoblauch was wearing a cap that declared the Yankees champions of the American League in 1998; Champagne dripped off the brim as he spoke. He did not look up, but continued to talk about how he had learned a lot by being vilified after making a mistake that Little Leaguers are expected not to make. ``Just to face things and take it like a man and answer all the questions, although they're tough,'' Knoblauch said. ``You see what you're made of when you have to bounce back from something like that. That's basically what I learned.'' If the Yankees had lost the ALCS, even some of Knoblauch's teammates had said that he would be branded as the villain for failing to pursue the ball that glanced off Travis Fryman's back while he was running outside the baseline. Knoblauch had argued with the umpire while the go ahead run scored from first and the Indians won, 4-1. Now Knoblauch can watch television and read the newspapers again without getting queasy. ``That's huge for him,'' David Cone said. ``That's huge for me. I let them back into the game, and that would have been a tough one if they would have come back and beat us. And Knobbie, I'm sure he's feeling a lot better now.'' Knoblauch, who had two hits in five at-bats, was working on his second bottle of Champagne five minutes after reporters were allowed into the clubhouse. He flashed the sort of smile that he had not shown too much recently and, now that the Yankees are in the World Series, Knoblauch should expect to be teased often about his mistake. ``Maybe if we go all the way, we'll do that,'' Derek Jeter said. ``I don't know what I'll say, but I'll think of something good.'' ||||| A strong sign that this city is going bonkers for the Padres came Friday morning when 680 fans agreed to shave their heads for a radio promotion raffle in return for a 1-in-680 chance at skybox tickets for post-season play. ``This was more a show of support for the team than it was for the one ticket,'' said Tommy Sablan, producer of the ``Jeff and Jer'' show. ``It was symbolic of the efforts of the bald Padres _ Tony Gwynn, Wally Joyner, Greg Vaughn, Jim Leyritz. About a thousand people showed up _ men, women and children. We had 10 barbers and 20 hairdressers and it took six hours for the lines to either get buzzed or straight-razored. ``We were shocked at the turnout. But this is a bandwagon town. `Buy the ticket on the day of the concert' type public. You'll see an even bigger bandwagon on Monday when they've won and then hopefully we play the Yankees and it's a real World Series.'' After the Padres beat the Braves, 3-0, in Game 2 of the National League Championship Series on Thursday night in Atlanta to take a two-game lead in the four-of-seven-game series, San Diego fans began gearing up for a shot at the World Series in more traditional ways. It would be the team's first World Series appearance since 1984, and in the downtown business district Friday, marquees and banners read ``Go Padres'' and a lunch-hour rally was attended by several hundred fans. The Padres set an attendance record of 2,555,901 this season, up a half-million from last year and nearly a million and a half from three years ago. It stemmed in part from an effort by John Moores, the Padres owner, and Larry Lucchino, the team's president, to put family entertainment in the park after they bought the team in December 1994. ``This is a more diversified group of fans than I saw in Atlanta,'' Lucchino said. ``Their crowd seemed yuppified. We're proud of our three generations of families who come to the games.'' Donna McMahon, a 63-year-old homemaker from La Jolla, has been a fan since she was 10 and the Pacific Coast League Padres played at Lane Field near the harbor. She would take a streetcar after school to meet her father, and he would buy bleacher seats. Later, she brought her four children to Jack Murphy Stadium for the National League Padres when 2,500 people was a crowd. Now, she brings her grandchildren to a sold-out Qualcomm Stadium. ``There are different groups in the stands,'' she said, ``the upper class, the middle class, the business person, the beer-drinking fan, the children, all of the Mexican fans from across the border. We are true fans _ all of us.'' San Diego Mayor Susan Golding agrees, while also giving credit to the balmy weather. ``Padre fans are a cross-section from all over the county,'' she said. ``Downtown, suburban, rural, east, north, ranchers and farmers to high-tech engineers, yuppies to the new kids _ the X generation. A lot from across the border. The Padres are extremely popular in Tijuana. We do have the perfect weather for a long baseball season. Playing in the World Series in October has got to be better than in New York.'' Carlos Carrion, who was born in San Diego and has been a baseball fan for 25 years, brings his 10- and 8-year-old sons to the stadium. ``This is a great chance to let my children see the players work,'' Carrion said. ``They can look up to these guys and understand their character and their work ethic.'' The Padres ticket office estimates that on average, more than 15,000 fans in the 65,000-seat stadium are Latin Americans from San Diego, Baja California or the state of Sonora. The Padres have the first major league baseball souvenir store in Tijuana. ||||| Talk about high expectations. It's not just the man from Tampa who has them anymore. Knowing their baseball as well as they do, everybody in the Joe Torre family passed up tickets for the divisional series and the league championship series as just so much parsley on the plate of life. ``The pressure was on to get to the World Series, so I can see all those people,'' Torre, the Yankees' manager, was saying before New York went out to play the here-we-are, let's-go-for-it San Diego Padres in the Stadium Saturday night. Now that the Yankees are in the Series, their Florida-based owner and their fans and they themselves can see nothing more appropriate than four more victories. Anything less than 125 would feel like emptiness. But why should the Yankees be any different from the six teams that already fell off the bus to this World Series? The gloom and doom in the six other cities will not compare to the letdown that would grip New York and the owner's insatiable little heart should the Yanks come up short. The three-tiered playoff system has practically turned baseball into football, where the survival-of-the-fittest mentality produces one exalted Super Bowl champion and a league full of chumps and losers, condemned to a nether world of Parcells-like demons kicking them in their sore spots for eternity. The World Series used to be a short and sweet reward for excellence, but that was when there were eight teams per league, and the winners met in daylight in early October. Even if the Yankees clubbed my poor Brooklyn Dodgers into submission once again, well, there was always next year. But in 1969, baseball began league championship series, and in 1995 it began a two-layered playoff system. The World Series is still different, which is why we should all resist the babble of ``post-season records'' flung at us by the hyperactive computers and the hyperactive broadcasters from the dozens of different networks that carry baseball. The World Series is still a competition between one league that encourages pitchers to be athletes and another league relatively devoid of strategy. Somehow the ``playoffs'' leave just about everybody feeling inadequate. Think about it. The Houston Astros are going around feeling they cannot perform in the post-season. The Texas Rangers are sulking because they had the best hitting in the league and could hardly touch Yankee pitching when it counted. In Chicago, the glory of winning a special playoff for the wild-card spot and Sammy Sosa's 66 home runs has been pre-empted. The very city that beat the Cubs for the 1969 eastern title held a parade for Sosa Saturday in the canyons where Lindbergh and John Glenn and the 1969 Mets were once hailed. Speaking of indignity, there are the Red Sox, whose occasional qualification for the playoffs is merely a signal that nothing good can come of it. In Atlanta, the team of the '90s has won exactly one World Series, and now it is up to management to keep repeating that: ``The main goal is to get to the Series. This is a recorded announcement. This is a recorded announcement. This is a recorded announcement.'' In Cleveland, the fans had to live with the phrase ``Nineteen forty-eight!'' being chanted at the Indians in the Bronx as the Yankees put the Indians out of misery. That leaves the Padres as the only team with virtually nothing to lose. This can be good, or it can be bad. Bruce Bochy, the manager, a reserve on the 1984 San Diego World Series team, has said: ``A lot of the players on that team said, looking back, we wish we would have had a little different attitude instead of just saying, `Hey, we are in the World Series.' And this year, I think you will see the players out there playing to win.'' Torre recalled being the underdog in 1996, but he said his Yankees felt they could beat the Braves. ``I am sure that is the way the Padres feel right now, that maybe other people aren't predicting a lot for them, but I am sure they are for themselves,'' Torre said. ``I think getting here is where the pressure is,'' Torre added. ``You want to win, but getting to the World Series is so tough after playing 162 games and getting into post-season and then having to fight, bite and scratch and everything else to get here.'' Torre continued: ``You don't think about in spring training that we want to go and win the World Series. You want to get to the World Series. Then you get there, well, you have played well enough and won enough games, then of course, we want to win. ``As far as legitimizing our season _ I hate to even think in negative terms, but if San Diego happens to win the World Series, sure it takes a little bit of the luster off what we have accomplished by getting here, but I think that was our goal, initially.'' The key word in that sentence is ``initially.'' The Yankees built an insatiable demand for more victories _ and World Series tickets in the Torre family. While they're at it, the Yankees had better win the whole thing. They are a victim of their own excellence. ||||| As Bernie Williams starts what could be his final series with the Yankees in Game 1 of the World Series at Yankee Stadium Saturday night, he wants to do it with a free mind. Free of worrying about his extremely uncertain future and an undisclosed personal matter that has made this post-season as perplexing as it has been pleasing. But it is not easy to keep the mind uncluttered. Williams does not know if he will sign with the Yankees and return to center field next season, because he wants to test free agency. There is a good chance the Yankees will not offer him the most lavish contract, so Williams might be forced to decide between the fattest paycheck and a new situation in the baseball city of his choice or a pretty fat paycheck and a familiar situation in the Bronx. Scott Boras, Williams' agent, compared his client with players in the $10 million-a-year bracket last season, so that price tag has surely escalated after Williams won the American League batting title with a .339 average while drilling 26 homers and knocking in 97 runs. Williams was asked if he agreed with the theory that other teams will outbid the Yankees. ``I do not know,'' said Williams, who has been aloof during this post-season, but has declined to discuss why. ``And I'm thinking about this a little more than I would like to. I would like to keep my focus on the series.'' It is not an issue Williams or the Yankees wants to study Saturday or in the coming days, because the team is four victories away from a championship. Still, it is an issue that hovers over the Yankees as ominously as the owner George Steinbrenner hovers over general manager Brian Cashman. ``It's a tough thing,'' Cashman said about balancing the excitement of being in the World Series with the reality of trying to re-sign Williams. ``You know the ugliness of the future is right in front of you.'' Although Williams has been adamant about not discussing the future, he relented slightly Friday. When a reporter asked him what the reasons would be for staying with the Yankees, Williams' answer included an escape clause. ``Just the fact that I've been here my whole career,'' Williams said. ``That has a lot to do with it. The relationships that I've come to know during the years, I think it would be very hard, but not impossible, to start from scratch somewhere else.'' Williams continued: ``But I think the reality of the game in this day and age is things happen. You can't really write things in stone that they're going to happen. People get traded. People become free agents and go to other teams. I have to make a decision really thinking about all the people I'm accountable for.'' When Williams was asked what better situation could a player have than being the center fielder for the Yankees, winning a batting crown and being in the World Series, the 30-year-old was stumped. ``Wow, that's pretty good right there,'' Williams said. ``It's funny you mention that, because I really haven't thought about any of that. I think, at some point in the off season, I was going to sit down and think, wow, it wasn't a bad year at all.'' While Cashman would not discuss financial matters, another Yankee official said the team will not offer Williams as much as $12 million a year _ unless Steinbrenner gets generous after a possible championship. It is more likely that the Yanks would offer Williams in the $10 million-a-year range. ``I'd hate to have to speculate on something at this point,'' Cashman said. ``We'll give it our best effort to sign him at a level that we're comfortable with. Hopefully, that will be enough. Then we'll have a marriage. If not, we'll have a divorce.'' While Williams has earned the right to become a free agent and pursue the contract he wants in the city he wants, he has interesting choices to make. When a reporter asked Williams how he would respond to someone who suggested that he accept less from the Yankees to remain in a city where he is popular, where he likes his teammates and manager, and where the team has been in the post-season for four straight years, he did not hesitate to answer. ``My response to that would be it's not the time right now to start thinking about that,'' Williams said. ``If I start thinking about that, it'll distract me to what I need to do in the World Series.'' Williams then talked about how the Yankees are at the end of a remarkable season and how he did not want his situation to disrupt that. But, with Williams' status uncertain, he was asked if the next four to seven games would be bittersweet, since he could be ending a 13-year association with the Yankees. ``I don't want to talk about that,'' Williams said. ``I'm going to have a lot of fun out there. I'm going to go all out.'' Then Williams walked away from the interview. ||||| Hours after Darryl Strawberry was released from Columbia Presbyterian Medical Center Friday, he spoke happily about being able to play with his two young children, joked about eating a small amount of chicken and potatoes and sounded relieved to be at home in Fort Lee, N.J., instead of in a hospital. ``I'm really feeling good,'' said Strawberry, in a telephone interview. ``It's nice to be home with the kids and to just kick back. That's all that I'm going to do. This feels good.'' Strawberry, who underwent surgery to remove a cancer from his colon on Oct. 3, said he will remain in New Jersey for another 10 or 12 days before returning home to Rancho Mirage, Calif. The 36-year old outfielder, who lost a significant amount of weight from his 215-pound frame, said he does not have enough strength to attend any of the World Series games and is content watching his teammates play the Padres on television. ``My heart is with them,'' said Strawberry, who spoke to several Yankees after they won the American League championship. ``I'm just going to relax at home and watch the game. I'm looking forward to it. I may not be there, but it'll feel like I am.'' Paul O'Neill echoed the sentiments of many Yankees by saying, ``Everything we're going through is game. This is his life. Any time we get some good news about Darryl it's uplifting. We're all praying for him.'' Since cancerous cells were found in one of the 36 lymph nodes removed from his abdomen during the operation, Strawberry said doctors told him he will need six months of chemotherapy treatment once he returns to California. The 36-year-old outfielder said doctors told him he will need one treatment of at least one hour a week. ``I was never scared,'' said Strawberry. ``I was more emotional than anything. At the time of it, I had played for a while with this. I wanted to keep playing because I knew we were going to get into the World Series.'' At that point, Strawberry stopped and laughed, probably because the Yankees had made it to the World Series as he expected. ``I wanted to be there because that's what you play for,'' said Strawberry. ``I don't think that I was ever scared. It's something that I wanted to deal with head on. I talked to Eric Davis about the chemo. He said it's not as bad as some people say.'' Although the discovery of cancer in one lymph node proved that the cancer had spread, Strawberry remained optimistic about his future and said, ``It didn't worry me. I got all the information from the doctors. One out of 36 is good. It wasn't spreading. It didn't run off and get crazy like cancer can.'' When Strawberry was released from the hospital in a wheelchair Friday, a few hundred fans who had congregated chanted, ``Darryl, Darryl.'' Strawberry, who struggled not to cry, hugged a few nurses, thanked everyone for supporting him, then rose from the wheelchair and carefully entered a car. ``Wow, I never thought this day would come,'' Strawberry said. ``But it has.'' Unlike David Wells, Saturday night's starter in the World Series who predicted the Yankees would throttle the Padres in five games, Strawberry refused to make a prediction about whether he will soon be getting his third World Series ring. But Strawberry, who is still hopeful about returning to play in 1999, sounded very confident in the 1998 Yankees, who are wearing his number 39 on the back of their caps as inspiration. ``They look really good,'' said Strawberry.'' It's not going to be easy, but I think they're ready. The best thing about making it to the World Series is you know you don't have to go anywhere else after that. You've made it to that point and then you go do the best you can do. That's what it's all about.'' ||||| A new shipment of bats arrived for Tino Martinez on Friday, and he massaged the handles to make sure they were thin enough, knocked on the barrels and listened for a certain sound and swung them slowly again and again. Martinez was so excited about the fresh bats, he reacted like a Little Leaguer who was wielding an aluminum bat for the first time. ``You were saving the World Series trees until now, right?'' Martinez said to the representative from the bat company. ``These are from World Series trees, aren't they?'' Martinez could joke about the bats being specially designed for the World Series because the Yankees began their quest for a second title in the past three years when they play host to the San Diego Padres in Game 1 at Yankee Stadium Saturday night. Major leaguer players who were watching on television could not imitate David Letterman and joke about World Series wood. Even though Martinez has struggled with numerous bats during the post-season, he could joke because the Yankees are still alive for the title. Martinez is still alive. For now, Martinez, the power hitter who has mostly been missing in action, could joke around. For now. ``You always get a fresh start in the post-season because it's game to game,'' said Martinez. ``If you win, you've got another game the next day so you forget about the bad at-bats. It's easier to do that in post-season because your next at-bat could be the biggest at-bat of the season.'' Normally, having Martinez at the plate for the biggest at-bat of the season would be a pleasing sight to the Yankees. But not when the calendar flips to October. Martinez has experienced another frustrating post-season. He is 5 for 30 with 10 strikeouts, no homers and only 1 run batted in for a hitting-starved team that has batted .229 while still winning 7 of 9 post-season games because of superior pitching. Can the Yankees continue to win if Martinez, their most valuable run producer, is a sometime singles hitter? ``We've just gotten through two good series,'' said Paul O'Neill. ``The Yankees won those series. You don't focus on one guy. You focus on winning. The whole team won.'' As much as Joe Torre talked about Martinez needing one line-drive hit to get him in a groove, the 30-year-old first baseman is in a career drought in the post-season. Since joining the Yankees, Martinez is 20 for 107 (.187) with one homer and 4 RBI in 29 post-season games. Those are puny statistics, especially for a player who has driven in 381 runs in 455 regular season games over the last three years. ``I would guess that Tino would have a great series,'' O'Neill said. ``Baseball has a way of evening things out. You have a bad series, you come back and have a great series. In the season, that's easier to do. In the post-season, it gets tougher.'' It cannot get much tougher for Martinez, who was dropped from fifth to sixth in the order during the American League Championship Series against the Cleveland Indians and will remain in that spot until further notice. Martinez has blamed his paucity of production on impatience and on trying to do too much. He has sometimes flailed at poor pitches during hitter's counts of 3-1 and 2-0, instead of working the count, and he has admitted that his previous failures in the post-season have caused him to pursue the obviously unattainable five-run homer. Actually, Martinez has already made some alterations, and he has reached base 7 times in his last 10 plates appearances on a double, a single, a hit-by-pitch and 4 walks. It is not enough to pacify George Steinbrenner, but it is something for him to cling to. Until last night, anyway, when Martinez had to face Kevin Brown, a nasty right-hander who had retired him in 30 of 34 career at-bats. ``If I was getting good pitches and missing them, then I'd say I have a bad swing working,'' said Martinez. ``But I've been swinging at bad pitches. Right now, I've just got to be patient and wait.'' The Yankees will wait with him. They have to. In the 1996 World Series, Torre started Cecil Fielder over Martinez at first in Games 3, 4 and 5. It was a difficult decision because Martinez had paced the team in RBI while Fielder did not join the Yankees until July 31. But the Yankees grabbed all three games so it worked. Torre does not have such an attractive replacement this season in Luis Sojo. So the Yankees will stay with Martinez, for better or worse, while he tries to stay positive and finally produce. ``It's the World Series,'' said Martinez. ``You got to go out there and have fun with it. Big games are all big games. You want to go out there and enjoy that game and try to do your best to win that game. You don't think that you might lose that day.'' ||||| YANKEES Pitching The starting pitching enabled the Yankees to advance past Cleveland in the American League Championship Series. David Wells is 7-1 in his career in the postseason and he should have an additional edge against a Padres' lineup that is generally less effective against left-handed pitching. Orlando Hernandez has four terrific pitches, pitched seven shutout innings in the pivotal Game 4 of the ALCS and earned the start in Game 2 of this series. David Cone should benefit from six days' worth of rest when he starts Game 3, as well as being able to pitch in warm Southern California. Mariano Rivera's stuff might be as good as it has been all year, and Mike Stanton continues to be a dominant postseason pitcher. Reasons for concern: the erratic Andy Pettitte, who needs a home-plate umpire to call strikes on pitches low and away, and Jeff Nelson, who lost his command in his last brief outing. Offense There were signs in the ALCS that the offense is coming out of its collective slump _ Chuck Knoblauch is getting on base consistently, Derek Jeter is back to driving the ball to right field and through the middle, Bernie Williams had three hits in Game 6, and Scott Brosius has been a consistent force at the bottom of the lineup. But the Yankees do have holes: Chili Davis will be hard-pressed to catch up to the fastballs of Kevin Brown and Andy Ashby, and Tino Martinez's postseason funk is a problem. The Yankees could use a contribution from Jorge Posada, who will start in Games 1 and 2 and may get a chance to drive pitches low in the strike zone, where he can hit with power. Defense The Yankees have the best defense in baseball, excellent up the middle with Jeter and Knoblauch, and at third with Brosius. Nobody's really taken advantage of the fact that Williams has a poor arm in center field, but rest assured that Ken Caminiti, Steve Finley and Greg Vaughn will try. The Indians did expose the fact that the Yankees' pitchers have trouble preventing baserunners from stealing from second to third base. Baserunning The Yankees run well as they take extra bases, particularly Paul O'Neill, Brosius, Jeter and Knoblauch going first-to-third; Williams can make mistakes. The Yankees probably won't be able to steal against Kevin Brown, who has an effective slide step, but they could be aggressive against Andy Ashby, or the combination of Sterling Hitchcock and Jim Leyritz. PADRES Hitting Except for Jim Leyritz, no one in the San Diego lineup is particularly hot or particularly frightening at the moment. Tony Gwynn hasn't been as consistent as he usually is, Ken Caminiti and Greg Vaughn have been streaky. But the Padres are a veteran team capable of putting the ball in play, getting runners on base and then moving them along, and so long as they are getting exceptional pitching, that's all they really need. Quilvio Veras, the leadoff hitter, is adept at drawing walks and Steve Finley, who has become more pull conscious in the last two years, could try to take aim at the right field stands in Yankee Stadium. Vaughn's power could be a factor if the Yankees' pitchers don't jam him enough to keep him from leaning over the plate. Pitching Kevin Brown is the best pitcher in this series, capable of winning three games if necessary, should Padres manager Bruce Bochy choose to start him in Games 1, 4 and 7. But at some point, San Diego will need a big outing from either Andy Ashby or Sterling Hitchcock. When Ashby's right, he's hitting the corners with his sinking fastball and his slider, and when his command is suspect, he gets pounded. Hitchcock used his split-fingered fastball to great effectiveness against right-handed batters in the first two rounds of the playoffs, but the Yankees' left-handed hitters may cause him some concern. San Diego's middle relief is the weakest aspect of the team, with Randy Myers and Mark Langston from the left side (the stuff of each has waned). But if a lead can be delivered into the hands of closer Trevor Hoffman, he'll keep it. Defense They mostly catch the ball and avoid mistakes, though they are unspectacular. Shortstop Chris Gomez and the second baseman Veras are adept at turning double plays, and Caminiti won a Gold Glove at third base last year; Wally Joyner has good hands at first; the center fielder Steve Finley is extremely quick in tracking down base hits and returning the ball to the infield. Tony Gwynn's range is better toward the right field line, not nearly as good on balls hit in the gaps. The Yankees will be able to run on the arm of Vaughn in left field. Baserunning Veras can steal bases (24) this year, and Finley can in a tight spot, as well. In general, however, the Padres are a slow, plodding team, though Caminiti and Vaughn are good at going first-to-third, and Gwynn won't make mistakes on the bases. PITCHING TO THE PADRES Quilvio Veras: A switch-hitter who has more power right-handed; should try to pitch him down-and-in with breaking balls when he's hitting right-handed, jam him with fastballs when he's batting left-handed. Steve Finley: A left-handed hitter who likes to pull the ball. Left-handers like David Wells can beat him with breaking balls low and outside. Tony Gwynn: When he's hot, he's impossible. When he's not hitting well, he can be anxious early in the count, and he should be fed breaking balls out of the strike zone. Greg Vaughn: Big-time power on anything high and over the plate. Because he likes to pull the ball, you must pitch him on the outer edge, occasionally jamming him to keep him honest. Ken Caminiti: More power right-handed, a better hitter left-handed. These days, he's a good lowball hitter and can be beat by fastballs up in the zone. Wally Joyner: With runners on base, he'll try to jump on a fastball early in the count. Is not a strong hitter and can be jammed. Chris Gomez: Like Derek Jeter, likes to hit pitches inside out, to right field and through the middle. He can hit with power if you make a mistake with a breaking ball. Ruben Rivera: An impatient hitter who will chase pitches out of the strike zone. Carlos Hernandez: Looks for the first-pitch fastball in the upper half of the strike zone. Can struggle against breaking balls. Jim Leyritz: No apparent holes right now, can hit fastballs in and away. Best bet is to get ahead in the count and try to get him to chase breaking balls. PITCHING TO THE YANKEES Chuck Knoblauch: Hard throwers like to jam him with fastballs because he stands on top of the plate, which is why he gets hit so often. Derek Jeter: Sometimes he has a tendency to chase pitches at his feet, but if you don't get the ball in far enough, he can hammer the ball over the wall in right. Paul O'Neill: The Yankees' best pure hitter, he sometimes will chase fastballs up and away, particularly after there is one strike. Bernie Williams: A switch-hitter who has trouble resisting chest-high fastballs. When he lays off them, he is a much better hitter, and he did this in the last game of the Cleveland series. Chili Davis: Has a great eye and will work a pitcher deep into a count, but he can be overpowered with fastballs above his belt. Cheats some now to get his bat started, making him vulnerable to off-speed pitches. Tino Martinez: Nothing seems right at the moment. Is anxious and chases pitches out of the strike zone when he falls behind in the count, and isn't taking advantage of mistakes when they're made. Scott Brosius: A great breaking ball hitter, but he can also drive a fastball a long way when he anticipates, as Cleveland's Charles Nagy now knows. Jorge Posada: When batting left-handed, he fares very poorly against splitters, curveballs and sliders. Ricky Ledee: Like all young hitters, he has a tendency to expand the strike zone and chase pitches out of the strike zone after falling behind in the count. Kevin Brown likely will attack him aggressively. SATURDAY'S PITCHERS Kevin Brown: Best sinking fastball in the game (91-93) mph, a four-seam fastball of 95-97 mph to throw high in the strike zone, a slider that breaks down and away from right-handed batters, and a forkball that dives at 88-89 mph. Holds runners well. David Wells: Aggressive, aggressive, aggressive, challenging hitters with fastballs. His curveball can be exceptional, and his changeup has improved. Throw strikes: Allowed as many home runs (29) as walks (29), but has not allowed a three-run homer or a grand slam all year.

The New York Yankees prevailed in the sixth game of the American League playoffs to win over the Cleveland Indians and advanced to their second World Series play in three years. In the National League, the San Diego Padres won its series over the Atlanta Braves to ensure its place in the World Series. Enthusiasm is high on both sides as 650 padres fans shaved their heads in a radio promotion raffle for a ticket to the games. Yankees Chuck Knoblauch, worried about errors in the playoffs, was greeted with a standing ovation as the first game opened. Knoblauch, along with teammate Martinez cinched the first game with homerun hits in the 7th inning.

The New York Times said in an editorial on Saturday, Oct. 17: It is fitting that this most memorable of baseball seasons should conclude with a World Series that opens Saturday night in Yankee Stadium, the aging but still grand cathedral of the sport. Bedecked in bunting and banners, the revered ballpark always elevates the game with its aura of history and accomplishment. That makes it the perfect venue for part of a championship series that will determine whether the 1998 Yankees are one of the greatest teams of the modern era, or just a talented squad that owned the regular season but folded in the World Series. New Yorkers are a boisterous, boastful bunch, and the patter of the city this week has been loud and arrogant, or so it must seem to anyone venturing here from San Diego to root for the Padres. The word on the sidewalks and in the subways is that the Padres don't measure up against the Yankees. Sure, they have lethal starting pitchers in Kevin Brown and Andy Ashby, and one of the game's best closers in Trevor Hoffman, not to mention prolific hitters like Tony Gwynn and Greg Vaughn, who is hobbling but still dangerous. But how is that a match for the Yankees' World Series starting rotation of David Wells, Orlando Hernandez, David Cone and Andy Pettitte, bullpen flamethrower Mariano Rivera, plus the deepest batting order in baseball? Yet the truth is that Yankees fans are terrified the team will crumple. Baseball fans, even Yankee fans, can spend a lifetime waiting to see a home team of historic caliber, and this Yankee team will not reach that sanctified status unless it ends its record-setting season by winning the World Series. The doubts keep creeping up. The team was pitiful at the plate through most of the playoffs. Tino Martinez, the top run producer, has been in a numbing slump. Bernie Williams, the American League batting champ, hit well in the pennant series against the Cleveland Indians, but has seemed distracted by personal matters. Shane Spencer, the rookie slugging sensation of September, hasn't turned out to be the new Mr. October. Pettitte has been struggling since August. The curious thing about this team, which won more games during the regular season than any team in American League history, is how quiet and unobtrusive it can be. It sports no dominant superstar, no swaggering clubhouse leader, no one who seems to belong in New York. So when the Yankees start to drift on the field, fans tend to fear the team might simply fade away. Until the Indians surged temporarily ahead in the playoffs, the Yankees had faced no serious test of resiliency all season. New Yorkers can already taste that ticker-tape parade up Broadway. But behind every mighty cheer at the stadium Saturday night will lurk the fear that when the curtain falls on the season, an unheralded and unlegendary team from San Diego will be the one that is remembered. ||||| The last time they were seen on the field at Yankee Stadium, they were inadvertently influencing the outcome of the game that sent the Cleveland Indians home and the Yankees to the World Series. That's not to say the umpires will mess up in the World Series, but they have shown they are eminently capable of interfering with the natural progression of postseason games. All right, so Ted Hendry won't be in the World Series; the umpires' collective bargaining agreement with the leagues does not allow an umpire to work both a league championship series and the World Series. Joe Brinkman won't be here either, even though the agreement does allow for an umpire to work both a division series and the World Series. The three American League umpires who are on the six-man World Series crew did work in the first round of the playoffs. One of them, Richie Garcia, will be the crew chief and behind the plate in Saturday night's opener at Yankee Stadium. Gene Budig, the AL president, Friday called Garcia, a 24-year veteran, one of the league's ``most respected umpires.'' But after Saturday night, Garcia will move to right field Sunday night for Game 2. Now why does that combination sound familiar, Richie Garcia and right field? Ah yes, the last time Garcia worked a post-season series at Yankee Stadium, he was the umpire in Game 1 of the league championship series two years ago when a young fan from New Jersey _ no name, please; he has been over-glorified enough _ reached over the fence and caught Derek Jeter's fly ball just as Tony Tarasco, Baltimore's right fielder, prepared to catch it. Garcia ruled no interference, that it was a home run, then said oops after watching a television replay clearly showing interference. Too late. The call helped the Yankees win the first game and set the tone for the series. ``Even though he made a mistake, you know you have the best out there,'' a baseball official, speaking on the condition of anonymity, said. That knowledge comes as small consolation to the Orioles. Budig, too, acknowledged that umpires, like players and managers, aren't perfect. ``Major league umpires are skilled at what they do, but they are human,'' he said in a telephone interview. ``Day in and day out they do a very good job for Major League Baseball. Rounds one and two have been difficult, but that happens from time to time.'' The umpires were so human in the American League playoffs that it happened from time to time to time to time. The Cleveland Indians suffered the brunt of the fallibility of the umpires. ``We had a highlight reel of umpires getting knocked down by baseballs,'' general manager John Hart said after the Indians' final game against the Yankees. ``The umpires didn't lose the game for us, but we had our share of controversies in two playoff series with umpires.'' In the division series against Boston, Brinkman, the plate umpire, was so bad with his calls on pitches and plays at the plate that he immediately provoked disputes that led to his ejecting of Mike Hargrove, the Indians' manager, three pitches into Game 2, and Dwight Gooden, their starting pitcher, 19 pitches later. Hendry was right or wrong, depending on one's point of view, for his noncall of interference on Travis Fryman in the 12th inning of Game 2 of the ALCS. That ruling went in favor of the Indians. Little else did. In Game 4, Jeter was stealing second in the fifth inning when the on-target throw from Sandy Alomar Jr. hit Jim McKean, who jumped to try to get out of the way but instead kicked the ball into right field. A batted ball, Omar Vizquel's line drive, struck Hendry in Game 6. But the worst call of Game 6 was Hendry's on a force play at second base. Hendry called Bernie Williams safe, ruling that Vizquel's foot came off the base before he caught the ball. Members of the Yankees indicated Friday that they, too, thought the call was wrong. ``I don't know,'' Williams said when asked what he thought, ``but I'll take it. It was a big play.'' But did he think he was out? ``I'd rather not comment about that,'' he said. ``It will stir a lot of controversy. I don't want to get into that.'' When a player believes he was safe, he says so and doesn't worry about any subsequent controversy. If Williams was implying that he thought he was out, another member of the Yankees said he had no doubt that Williams was out. ``I wasn't sure at first,'' this uniformed member of the team said, ``but when I saw it was Hendry, I said uh-oh. I also thought Omar is so smooth you'd think he wouldn't come off the bag. Then I saw the replay. He was out.'' The game today is faster than it used to be, this observer said. The umpires have to be sharper. Maybe Garcia, Dale Scott and Tim Tschida from the American League, and Jerry Crawford, Dana DeMuth and Mark Hirschbeck from the National League, will be as sharp as an 18th century French guillotine in these four to seven games. Leonard Coleman, the NL president, said he thought his umpires were first-rate in the division and league series and added that he has ``three splendid umpires'' working the World Series. Budig said: ``The World Series crew is proven and first-rate. We have total confidence in them.'' The umpires should let the players make the errors and the managers the bad decisions. Then everyone will talk about the players and managers and not the umpires. ||||| Chuck Knoblauch and Tino Martinez were as popular as squeegee men a week ago, the speculation rampant that one or the other or both might be exiled if the Yankees' historic year crumbled in the post-season. Two big hits in the midst of a big inning changed all that Saturday night in Game 1 of the World Series. The Yankees trailed San Diego, 5-2, in the seventh inning, but Knoblauch hit a three-run home run to tie the score, and five batters later, Martinez smashed a grand slam. The seven-run explosion rocketed the Yankees to a 9-6 victory in the opener of the four-of-seven-game series, before 56,712 at Yankee Stadium. Orlando Hernandez will pitch against Andy Ashby in Game 2 Sunday night at the Stadium. Beyond seizing the advantage in the series, the Yankees were able to neutralize the Padres' ace, Kevin Brown, driving him from the mound in the seventh. Brown, seen by many as San Diego's best hope for a World Series upset, will not pitch again until Game 4, at the earliest. Brown was pitching with a three-run lead after the top of the fifth, when Tony Gwynn and Greg Vaughn banged back-to-back homers. One out into the seventh, however, Jorge Posada hit a single, and Brown walked Ricky Ledee. Brown, who had thrown a whopping 64 pitches in the first three innings, went out, and the reliever Donne Wall came in to face Knoblauch. This is what the Yankees have done all season, force a starter from the game in the middle innings, before exploiting a middle reliever. Knoblauch, of course, had earned notoriety for his gaffe in the Game 2 of the American League Championship Series against Cleveland, standing and waiting for an interference call as the ball rolled to a stop behind him and the decisive run scored. The Yankees came back to win the series, however; Knoblauch got a reprieve and talked about how much the experience had helped him. Facing Wall with a one-ball, no-strike count, Knoblauch had to duck under a runaway fastball. Two balls, no strikes. Wall had to throw a strike, Knoblauch swung hard and lifted a high fly down the left-field line. Off the bat, it did not look like much. But it kept carrying, Vaughn drifting back in left and looking up, to see the ball disappear into the stands. Tie game. Yankee Stadium shook. Knoblauch rounded the bases, crossed home plate and thrust both arms into the air, yelling to the crowd, like a hyped Olympic weightlifter who had just successfully hoisted a half-ton. He stomped around the dugout, his helmet on, teammates banging on him happily. When Derek Jeter singled, nobody really noticed. Wall left the game, and Mark Langston took over. Paul O'Neill flied out, and after Jeter advanced on a wild pitch, Bernie Williams was intentionally walked. Chili Davis drew a walk. Bases loaded, once more, with Martinez coming to the plate, with exactly one run batted in in his first 76 career at-bats in league championship and World Series games. With the count two balls and two strikes, Langston threw a pitch near the outside corner that he thought should have been a strike. Instead, Garcia called it a ball. Langston glared, snapping at the return throw. Langston and Martinez and everyone on the field now understood that with the bases loaded and a 3-2 count, Langston would have to throw what players refer to as a cookie _ a tasty pitch over the middle. Martinez ate up this cookie. The ball soared into the upper deck in right field, lifting three years of post-season misery off the back of the Yankees' first baseman, a grand slam. The crowd called out Martinez from the dugout again. Like Knoblauch, Martinez pumped both arms, and later the crowd would chant his name, and Martinez would wave his cap. San Diego's lead was long gone. The Yankees had taken a 2-0 lead over Brown in the second inning, forcing him to throw 32 pitches in the second. They loaded the bases with a single and two walks, and Ledee, the rookie left fielder who is playing because none of Torre's left fielders have been hitting, pulled a sinking fastball down the right field line with two outs. The fans along the foul line stood, some waving to push the ball fair with the body English, and the ball landed on the line, skipping off the wall as two runners scored. The Yankees had the early edge, they had jumped on Brown, and they had their best pitcher on the mound. San Diego's Chris Gomez led off the second inning with a blooper over shortstop, the ball falling in for a single. Quilvio Veras flied to right, Gwynn grounded out and Gomez took second, bringing Vaughn to the plate. David Wells got ahead in the count, no balls and two strikes, with a change-up and a fastball, before trying to run a fastball inside on Vaughn, who hit 50 home runs during the regular season. Vaughn attacked the pitch: a line drive that landed in the second deck, foul all the way, but a frightening mistake. Jorge Posada, the Yankees' catcher, jogged to the mound to re-think the strategy, perhaps to remind Wells of the conventional wisdom: you must pitch Vaughn on the outer edge of the plate. Posada returned to the plate, called for an outside fastball, Wells threw. Vaughn's swing was short and quick, the ball making a click sound off the bat, like a well-struck golf ball, before carrying over the wall in right-center field. Tie game. Wells retired the first two batters in the fifth inning, before jamming Veras with an inside fastball. Veras' bat snapped on contact, but it was enough to send a looper into short center field, a single. Gwynn stepped in, having hit a single in his first two at-bats, and looked for a sign from the third base coach Tim Flannery. With a runner on first, he likes to try to pull a ball through the right side of the infield. Wells fired a fastball, Gwynn turned on the pitch and ripped it, a line drive that crashed off the facing of the upper deck in right field. The Padres jumped from the dugout, celebrating, as Wells turned away, disgusted, asking for a new baseball. He got one, delivered another fastball, and Vaughn slugged this deep into the left field stands. Two pitches, two home runs, the first back-to-back home runs allowed by Wells since April 30. San Diego led, 5-2, and Yankee Stadium was silent. It would not stay that way. ||||| The moment of truth for Chuck Knoblauch came in the bottom of the first inning when his name was announced at Yankee Stadium for the first time since he neglected to chase down that memorable loose ball last Wednesday. There were no boos. It was a very warm ovation. They liked him. They really liked him. Knoblauch exhaled. Knoblauch had emphasized before the game that he was concerned about winning and rumbling into the World Series, not about the fans. But it surely made Knoblauch feel at home when he realized that the fans had forgiven him. Victories, more than time, had healed the malice toward Knoblauch and he could play second base without earplugs. When the Yankees defeated the Indians, 9-5, in Game 6 on Tuesday night to advance to their second World Series in three years, Knoblauch was easily the most relieved player on the field. The awful mistake that he had made in Game 2 would be forgotten. The Yankees had won the pennant, and Knoblauch was celebrating as much as anyone. ``To have them act like that toward me was tremendous,'' said Knoblauch, about the response that he received. ``It was a great feeling, and it really helped me out.'' Knoblauch was wearing a cap that declared the Yankees champions of the American League in 1998; Champagne dripped off the brim as he spoke. He did not look up, but continued to talk about how he had learned a lot by being vilified after making a mistake that Little Leaguers are expected not to make. ``Just to face things and take it like a man and answer all the questions, although they're tough,'' Knoblauch said. ``You see what you're made of when you have to bounce back from something like that. That's basically what I learned.'' If the Yankees had lost the ALCS, even some of Knoblauch's teammates had said that he would be branded as the villain for failing to pursue the ball that glanced off Travis Fryman's back while he was running outside the baseline. Knoblauch had argued with the umpire while the go ahead run scored from first and the Indians won, 4-1. Now Knoblauch can watch television and read the newspapers again without getting queasy. ``That's huge for him,'' David Cone said. ``That's huge for me. I let them back into the game, and that would have been a tough one if they would have come back and beat us. And Knobbie, I'm sure he's feeling a lot better now.'' Knoblauch, who had two hits in five at-bats, was working on his second bottle of Champagne five minutes after reporters were allowed into the clubhouse. He flashed the sort of smile that he had not shown too much recently and, now that the Yankees are in the World Series, Knoblauch should expect to be teased often about his mistake. ``Maybe if we go all the way, we'll do that,'' Derek Jeter said. ``I don't know what I'll say, but I'll think of something good.'' ||||| A strong sign that this city is going bonkers for the Padres came Friday morning when 680 fans agreed to shave their heads for a radio promotion raffle in return for a 1-in-680 chance at skybox tickets for post-season play. ``This was more a show of support for the team than it was for the one ticket,'' said Tommy Sablan, producer of the ``Jeff and Jer'' show. ``It was symbolic of the efforts of the bald Padres _ Tony Gwynn, Wally Joyner, Greg Vaughn, Jim Leyritz. About a thousand people showed up _ men, women and children. We had 10 barbers and 20 hairdressers and it took six hours for the lines to either get buzzed or straight-razored. ``We were shocked at the turnout. But this is a bandwagon town. `Buy the ticket on the day of the concert' type public. You'll see an even bigger bandwagon on Monday when they've won and then hopefully we play the Yankees and it's a real World Series.'' After the Padres beat the Braves, 3-0, in Game 2 of the National League Championship Series on Thursday night in Atlanta to take a two-game lead in the four-of-seven-game series, San Diego fans began gearing up for a shot at the World Series in more traditional ways. It would be the team's first World Series appearance since 1984, and in the downtown business district Friday, marquees and banners read ``Go Padres'' and a lunch-hour rally was attended by several hundred fans. The Padres set an attendance record of 2,555,901 this season, up a half-million from last year and nearly a million and a half from three years ago. It stemmed in part from an effort by John Moores, the Padres owner, and Larry Lucchino, the team's president, to put family entertainment in the park after they bought the team in December 1994. ``This is a more diversified group of fans than I saw in Atlanta,'' Lucchino said. ``Their crowd seemed yuppified. We're proud of our three generations of families who come to the games.'' Donna McMahon, a 63-year-old homemaker from La Jolla, has been a fan since she was 10 and the Pacific Coast League Padres played at Lane Field near the harbor. She would take a streetcar after school to meet her father, and he would buy bleacher seats. Later, she brought her four children to Jack Murphy Stadium for the National League Padres when 2,500 people was a crowd. Now, she brings her grandchildren to a sold-out Qualcomm Stadium. ``There are different groups in the stands,'' she said, ``the upper class, the middle class, the business person, the beer-drinking fan, the children, all of the Mexican fans from across the border. We are true fans _ all of us.'' San Diego Mayor Susan Golding agrees, while also giving credit to the balmy weather. ``Padre fans are a cross-section from all over the county,'' she said. ``Downtown, suburban, rural, east, north, ranchers and farmers to high-tech engineers, yuppies to the new kids _ the X generation. A lot from across the border. The Padres are extremely popular in Tijuana. We do have the perfect weather for a long baseball season. Playing in the World Series in October has got to be better than in New York.'' Carlos Carrion, who was born in San Diego and has been a baseball fan for 25 years, brings his 10- and 8-year-old sons to the stadium. ``This is a great chance to let my children see the players work,'' Carrion said. ``They can look up to these guys and understand their character and their work ethic.'' The Padres ticket office estimates that on average, more than 15,000 fans in the 65,000-seat stadium are Latin Americans from San Diego, Baja California or the state of Sonora. The Padres have the first major league baseball souvenir store in Tijuana. ||||| Talk about high expectations. It's not just the man from Tampa who has them anymore. Knowing their baseball as well as they do, everybody in the Joe Torre family passed up tickets for the divisional series and the league championship series as just so much parsley on the plate of life. ``The pressure was on to get to the World Series, so I can see all those people,'' Torre, the Yankees' manager, was saying before New York went out to play the here-we-are, let's-go-for-it San Diego Padres in the Stadium Saturday night. Now that the Yankees are in the Series, their Florida-based owner and their fans and they themselves can see nothing more appropriate than four more victories. Anything less than 125 would feel like emptiness. But why should the Yankees be any different from the six teams that already fell off the bus to this World Series? The gloom and doom in the six other cities will not compare to the letdown that would grip New York and the owner's insatiable little heart should the Yanks come up short. The three-tiered playoff system has practically turned baseball into football, where the survival-of-the-fittest mentality produces one exalted Super Bowl champion and a league full of chumps and losers, condemned to a nether world of Parcells-like demons kicking them in their sore spots for eternity. The World Series used to be a short and sweet reward for excellence, but that was when there were eight teams per league, and the winners met in daylight in early October. Even if the Yankees clubbed my poor Brooklyn Dodgers into submission once again, well, there was always next year. But in 1969, baseball began league championship series, and in 1995 it began a two-layered playoff system. The World Series is still different, which is why we should all resist the babble of ``post-season records'' flung at us by the hyperactive computers and the hyperactive broadcasters from the dozens of different networks that carry baseball. The World Series is still a competition between one league that encourages pitchers to be athletes and another league relatively devoid of strategy. Somehow the ``playoffs'' leave just about everybody feeling inadequate. Think about it. The Houston Astros are going around feeling they cannot perform in the post-season. The Texas Rangers are sulking because they had the best hitting in the league and could hardly touch Yankee pitching when it counted. In Chicago, the glory of winning a special playoff for the wild-card spot and Sammy Sosa's 66 home runs has been pre-empted. The very city that beat the Cubs for the 1969 eastern title held a parade for Sosa Saturday in the canyons where Lindbergh and John Glenn and the 1969 Mets were once hailed. Speaking of indignity, there are the Red Sox, whose occasional qualification for the playoffs is merely a signal that nothing good can come of it. In Atlanta, the team of the '90s has won exactly one World Series, and now it is up to management to keep repeating that: ``The main goal is to get to the Series. This is a recorded announcement. This is a recorded announcement. This is a recorded announcement.'' In Cleveland, the fans had to live with the phrase ``Nineteen forty-eight!'' being chanted at the Indians in the Bronx as the Yankees put the Indians out of misery. That leaves the Padres as the only team with virtually nothing to lose. This can be good, or it can be bad. Bruce Bochy, the manager, a reserve on the 1984 San Diego World Series team, has said: ``A lot of the players on that team said, looking back, we wish we would have had a little different attitude instead of just saying, `Hey, we are in the World Series.' And this year, I think you will see the players out there playing to win.'' Torre recalled being the underdog in 1996, but he said his Yankees felt they could beat the Braves. ``I am sure that is the way the Padres feel right now, that maybe other people aren't predicting a lot for them, but I am sure they are for themselves,'' Torre said. ``I think getting here is where the pressure is,'' Torre added. ``You want to win, but getting to the World Series is so tough after playing 162 games and getting into post-season and then having to fight, bite and scratch and everything else to get here.'' Torre continued: ``You don't think about in spring training that we want to go and win the World Series. You want to get to the World Series. Then you get there, well, you have played well enough and won enough games, then of course, we want to win. ``As far as legitimizing our season _ I hate to even think in negative terms, but if San Diego happens to win the World Series, sure it takes a little bit of the luster off what we have accomplished by getting here, but I think that was our goal, initially.'' The key word in that sentence is ``initially.'' The Yankees built an insatiable demand for more victories _ and World Series tickets in the Torre family. While they're at it, the Yankees had better win the whole thing. They are a victim of their own excellence. ||||| As Bernie Williams starts what could be his final series with the Yankees in Game 1 of the World Series at Yankee Stadium Saturday night, he wants to do it with a free mind. Free of worrying about his extremely uncertain future and an undisclosed personal matter that has made this post-season as perplexing as it has been pleasing. But it is not easy to keep the mind uncluttered. Williams does not know if he will sign with the Yankees and return to center field next season, because he wants to test free agency. There is a good chance the Yankees will not offer him the most lavish contract, so Williams might be forced to decide between the fattest paycheck and a new situation in the baseball city of his choice or a pretty fat paycheck and a familiar situation in the Bronx. Scott Boras, Williams' agent, compared his client with players in the $10 million-a-year bracket last season, so that price tag has surely escalated after Williams won the American League batting title with a .339 average while drilling 26 homers and knocking in 97 runs. Williams was asked if he agreed with the theory that other teams will outbid the Yankees. ``I do not know,'' said Williams, who has been aloof during this post-season, but has declined to discuss why. ``And I'm thinking about this a little more than I would like to. I would like to keep my focus on the series.'' It is not an issue Williams or the Yankees wants to study Saturday or in the coming days, because the team is four victories away from a championship. Still, it is an issue that hovers over the Yankees as ominously as the owner George Steinbrenner hovers over general manager Brian Cashman. ``It's a tough thing,'' Cashman said about balancing the excitement of being in the World Series with the reality of trying to re-sign Williams. ``You know the ugliness of the future is right in front of you.'' Although Williams has been adamant about not discussing the future, he relented slightly Friday. When a reporter asked him what the reasons would be for staying with the Yankees, Williams' answer included an escape clause. ``Just the fact that I've been here my whole career,'' Williams said. ``That has a lot to do with it. The relationships that I've come to know during the years, I think it would be very hard, but not impossible, to start from scratch somewhere else.'' Williams continued: ``But I think the reality of the game in this day and age is things happen. You can't really write things in stone that they're going to happen. People get traded. People become free agents and go to other teams. I have to make a decision really thinking about all the people I'm accountable for.'' When Williams was asked what better situation could a player have than being the center fielder for the Yankees, winning a batting crown and being in the World Series, the 30-year-old was stumped. ``Wow, that's pretty good right there,'' Williams said. ``It's funny you mention that, because I really haven't thought about any of that. I think, at some point in the off season, I was going to sit down and think, wow, it wasn't a bad year at all.'' While Cashman would not discuss financial matters, another Yankee official said the team will not offer Williams as much as $12 million a year _ unless Steinbrenner gets generous after a possible championship. It is more likely that the Yanks would offer Williams in the $10 million-a-year range. ``I'd hate to have to speculate on something at this point,'' Cashman said. ``We'll give it our best effort to sign him at a level that we're comfortable with. Hopefully, that will be enough. Then we'll have a marriage. If not, we'll have a divorce.'' While Williams has earned the right to become a free agent and pursue the contract he wants in the city he wants, he has interesting choices to make. When a reporter asked Williams how he would respond to someone who suggested that he accept less from the Yankees to remain in a city where he is popular, where he likes his teammates and manager, and where the team has been in the post-season for four straight years, he did not hesitate to answer. ``My response to that would be it's not the time right now to start thinking about that,'' Williams said. ``If I start thinking about that, it'll distract me to what I need to do in the World Series.'' Williams then talked about how the Yankees are at the end of a remarkable season and how he did not want his situation to disrupt that. But, with Williams' status uncertain, he was asked if the next four to seven games would be bittersweet, since he could be ending a 13-year association with the Yankees. ``I don't want to talk about that,'' Williams said. ``I'm going to have a lot of fun out there. I'm going to go all out.'' Then Williams walked away from the interview. ||||| Hours after Darryl Strawberry was released from Columbia Presbyterian Medical Center Friday, he spoke happily about being able to play with his two young children, joked about eating a small amount of chicken and potatoes and sounded relieved to be at home in Fort Lee, N.J., instead of in a hospital. ``I'm really feeling good,'' said Strawberry, in a telephone interview. ``It's nice to be home with the kids and to just kick back. That's all that I'm going to do. This feels good.'' Strawberry, who underwent surgery to remove a cancer from his colon on Oct. 3, said he will remain in New Jersey for another 10 or 12 days before returning home to Rancho Mirage, Calif. The 36-year old outfielder, who lost a significant amount of weight from his 215-pound frame, said he does not have enough strength to attend any of the World Series games and is content watching his teammates play the Padres on television. ``My heart is with them,'' said Strawberry, who spoke to several Yankees after they won the American League championship. ``I'm just going to relax at home and watch the game. I'm looking forward to it. I may not be there, but it'll feel like I am.'' Paul O'Neill echoed the sentiments of many Yankees by saying, ``Everything we're going through is game. This is his life. Any time we get some good news about Darryl it's uplifting. We're all praying for him.'' Since cancerous cells were found in one of the 36 lymph nodes removed from his abdomen during the operation, Strawberry said doctors told him he will need six months of chemotherapy treatment once he returns to California. The 36-year-old outfielder said doctors told him he will need one treatment of at least one hour a week. ``I was never scared,'' said Strawberry. ``I was more emotional than anything. At the time of it, I had played for a while with this. I wanted to keep playing because I knew we were going to get into the World Series.'' At that point, Strawberry stopped and laughed, probably because the Yankees had made it to the World Series as he expected. ``I wanted to be there because that's what you play for,'' said Strawberry. ``I don't think that I was ever scared. It's something that I wanted to deal with head on. I talked to Eric Davis about the chemo. He said it's not as bad as some people say.'' Although the discovery of cancer in one lymph node proved that the cancer had spread, Strawberry remained optimistic about his future and said, ``It didn't worry me. I got all the information from the doctors. One out of 36 is good. It wasn't spreading. It didn't run off and get crazy like cancer can.'' When Strawberry was released from the hospital in a wheelchair Friday, a few hundred fans who had congregated chanted, ``Darryl, Darryl.'' Strawberry, who struggled not to cry, hugged a few nurses, thanked everyone for supporting him, then rose from the wheelchair and carefully entered a car. ``Wow, I never thought this day would come,'' Strawberry said. ``But it has.'' Unlike David Wells, Saturday night's starter in the World Series who predicted the Yankees would throttle the Padres in five games, Strawberry refused to make a prediction about whether he will soon be getting his third World Series ring. But Strawberry, who is still hopeful about returning to play in 1999, sounded very confident in the 1998 Yankees, who are wearing his number 39 on the back of their caps as inspiration. ``They look really good,'' said Strawberry.'' It's not going to be easy, but I think they're ready. The best thing about making it to the World Series is you know you don't have to go anywhere else after that. You've made it to that point and then you go do the best you can do. That's what it's all about.'' ||||| A new shipment of bats arrived for Tino Martinez on Friday, and he massaged the handles to make sure they were thin enough, knocked on the barrels and listened for a certain sound and swung them slowly again and again. Martinez was so excited about the fresh bats, he reacted like a Little Leaguer who was wielding an aluminum bat for the first time. ``You were saving the World Series trees until now, right?'' Martinez said to the representative from the bat company. ``These are from World Series trees, aren't they?'' Martinez could joke about the bats being specially designed for the World Series because the Yankees began their quest for a second title in the past three years when they play host to the San Diego Padres in Game 1 at Yankee Stadium Saturday night. Major leaguer players who were watching on television could not imitate David Letterman and joke about World Series wood. Even though Martinez has struggled with numerous bats during the post-season, he could joke because the Yankees are still alive for the title. Martinez is still alive. For now, Martinez, the power hitter who has mostly been missing in action, could joke around. For now. ``You always get a fresh start in the post-season because it's game to game,'' said Martinez. ``If you win, you've got another game the next day so you forget about the bad at-bats. It's easier to do that in post-season because your next at-bat could be the biggest at-bat of the season.'' Normally, having Martinez at the plate for the biggest at-bat of the season would be a pleasing sight to the Yankees. But not when the calendar flips to October. Martinez has experienced another frustrating post-season. He is 5 for 30 with 10 strikeouts, no homers and only 1 run batted in for a hitting-starved team that has batted .229 while still winning 7 of 9 post-season games because of superior pitching. Can the Yankees continue to win if Martinez, their most valuable run producer, is a sometime singles hitter? ``We've just gotten through two good series,'' said Paul O'Neill. ``The Yankees won those series. You don't focus on one guy. You focus on winning. The whole team won.'' As much as Joe Torre talked about Martinez needing one line-drive hit to get him in a groove, the 30-year-old first baseman is in a career drought in the post-season. Since joining the Yankees, Martinez is 20 for 107 (.187) with one homer and 4 RBI in 29 post-season games. Those are puny statistics, especially for a player who has driven in 381 runs in 455 regular season games over the last three years. ``I would guess that Tino would have a great series,'' O'Neill said. ``Baseball has a way of evening things out. You have a bad series, you come back and have a great series. In the season, that's easier to do. In the post-season, it gets tougher.'' It cannot get much tougher for Martinez, who was dropped from fifth to sixth in the order during the American League Championship Series against the Cleveland Indians and will remain in that spot until further notice. Martinez has blamed his paucity of production on impatience and on trying to do too much. He has sometimes flailed at poor pitches during hitter's counts of 3-1 and 2-0, instead of working the count, and he has admitted that his previous failures in the post-season have caused him to pursue the obviously unattainable five-run homer. Actually, Martinez has already made some alterations, and he has reached base 7 times in his last 10 plates appearances on a double, a single, a hit-by-pitch and 4 walks. It is not enough to pacify George Steinbrenner, but it is something for him to cling to. Until last night, anyway, when Martinez had to face Kevin Brown, a nasty right-hander who had retired him in 30 of 34 career at-bats. ``If I was getting good pitches and missing them, then I'd say I have a bad swing working,'' said Martinez. ``But I've been swinging at bad pitches. Right now, I've just got to be patient and wait.'' The Yankees will wait with him. They have to. In the 1996 World Series, Torre started Cecil Fielder over Martinez at first in Games 3, 4 and 5. It was a difficult decision because Martinez had paced the team in RBI while Fielder did not join the Yankees until July 31. But the Yankees grabbed all three games so it worked. Torre does not have such an attractive replacement this season in Luis Sojo. So the Yankees will stay with Martinez, for better or worse, while he tries to stay positive and finally produce. ``It's the World Series,'' said Martinez. ``You got to go out there and have fun with it. Big games are all big games. You want to go out there and enjoy that game and try to do your best to win that game. You don't think that you might lose that day.'' ||||| YANKEES Pitching The starting pitching enabled the Yankees to advance past Cleveland in the American League Championship Series. David Wells is 7-1 in his career in the postseason and he should have an additional edge against a Padres' lineup that is generally less effective against left-handed pitching. Orlando Hernandez has four terrific pitches, pitched seven shutout innings in the pivotal Game 4 of the ALCS and earned the start in Game 2 of this series. David Cone should benefit from six days' worth of rest when he starts Game 3, as well as being able to pitch in warm Southern California. Mariano Rivera's stuff might be as good as it has been all year, and Mike Stanton continues to be a dominant postseason pitcher. Reasons for concern: the erratic Andy Pettitte, who needs a home-plate umpire to call strikes on pitches low and away, and Jeff Nelson, who lost his command in his last brief outing. Offense There were signs in the ALCS that the offense is coming out of its collective slump _ Chuck Knoblauch is getting on base consistently, Derek Jeter is back to driving the ball to right field and through the middle, Bernie Williams had three hits in Game 6, and Scott Brosius has been a consistent force at the bottom of the lineup. But the Yankees do have holes: Chili Davis will be hard-pressed to catch up to the fastballs of Kevin Brown and Andy Ashby, and Tino Martinez's postseason funk is a problem. The Yankees could use a contribution from Jorge Posada, who will start in Games 1 and 2 and may get a chance to drive pitches low in the strike zone, where he can hit with power. Defense The Yankees have the best defense in baseball, excellent up the middle with Jeter and Knoblauch, and at third with Brosius. Nobody's really taken advantage of the fact that Williams has a poor arm in center field, but rest assured that Ken Caminiti, Steve Finley and Greg Vaughn will try. The Indians did expose the fact that the Yankees' pitchers have trouble preventing baserunners from stealing from second to third base. Baserunning The Yankees run well as they take extra bases, particularly Paul O'Neill, Brosius, Jeter and Knoblauch going first-to-third; Williams can make mistakes. The Yankees probably won't be able to steal against Kevin Brown, who has an effective slide step, but they could be aggressive against Andy Ashby, or the combination of Sterling Hitchcock and Jim Leyritz. PADRES Hitting Except for Jim Leyritz, no one in the San Diego lineup is particularly hot or particularly frightening at the moment. Tony Gwynn hasn't been as consistent as he usually is, Ken Caminiti and Greg Vaughn have been streaky. But the Padres are a veteran team capable of putting the ball in play, getting runners on base and then moving them along, and so long as they are getting exceptional pitching, that's all they really need. Quilvio Veras, the leadoff hitter, is adept at drawing walks and Steve Finley, who has become more pull conscious in the last two years, could try to take aim at the right field stands in Yankee Stadium. Vaughn's power could be a factor if the Yankees' pitchers don't jam him enough to keep him from leaning over the plate. Pitching Kevin Brown is the best pitcher in this series, capable of winning three games if necessary, should Padres manager Bruce Bochy choose to start him in Games 1, 4 and 7. But at some point, San Diego will need a big outing from either Andy Ashby or Sterling Hitchcock. When Ashby's right, he's hitting the corners with his sinking fastball and his slider, and when his command is suspect, he gets pounded. Hitchcock used his split-fingered fastball to great effectiveness against right-handed batters in the first two rounds of the playoffs, but the Yankees' left-handed hitters may cause him some concern. San Diego's middle relief is the weakest aspect of the team, with Randy Myers and Mark Langston from the left side (the stuff of each has waned). But if a lead can be delivered into the hands of closer Trevor Hoffman, he'll keep it. Defense They mostly catch the ball and avoid mistakes, though they are unspectacular. Shortstop Chris Gomez and the second baseman Veras are adept at turning double plays, and Caminiti won a Gold Glove at third base last year; Wally Joyner has good hands at first; the center fielder Steve Finley is extremely quick in tracking down base hits and returning the ball to the infield. Tony Gwynn's range is better toward the right field line, not nearly as good on balls hit in the gaps. The Yankees will be able to run on the arm of Vaughn in left field. Baserunning Veras can steal bases (24) this year, and Finley can in a tight spot, as well. In general, however, the Padres are a slow, plodding team, though Caminiti and Vaughn are good at going first-to-third, and Gwynn won't make mistakes on the bases. PITCHING TO THE PADRES Quilvio Veras: A switch-hitter who has more power right-handed; should try to pitch him down-and-in with breaking balls when he's hitting right-handed, jam him with fastballs when he's batting left-handed. Steve Finley: A left-handed hitter who likes to pull the ball. Left-handers like David Wells can beat him with breaking balls low and outside. Tony Gwynn: When he's hot, he's impossible. When he's not hitting well, he can be anxious early in the count, and he should be fed breaking balls out of the strike zone. Greg Vaughn: Big-time power on anything high and over the plate. Because he likes to pull the ball, you must pitch him on the outer edge, occasionally jamming him to keep him honest. Ken Caminiti: More power right-handed, a better hitter left-handed. These days, he's a good lowball hitter and can be beat by fastballs up in the zone. Wally Joyner: With runners on base, he'll try to jump on a fastball early in the count. Is not a strong hitter and can be jammed. Chris Gomez: Like Derek Jeter, likes to hit pitches inside out, to right field and through the middle. He can hit with power if you make a mistake with a breaking ball. Ruben Rivera: An impatient hitter who will chase pitches out of the strike zone. Carlos Hernandez: Looks for the first-pitch fastball in the upper half of the strike zone. Can struggle against breaking balls. Jim Leyritz: No apparent holes right now, can hit fastballs in and away. Best bet is to get ahead in the count and try to get him to chase breaking balls. PITCHING TO THE YANKEES Chuck Knoblauch: Hard throwers like to jam him with fastballs because he stands on top of the plate, which is why he gets hit so often. Derek Jeter: Sometimes he has a tendency to chase pitches at his feet, but if you don't get the ball in far enough, he can hammer the ball over the wall in right. Paul O'Neill: The Yankees' best pure hitter, he sometimes will chase fastballs up and away, particularly after there is one strike. Bernie Williams: A switch-hitter who has trouble resisting chest-high fastballs. When he lays off them, he is a much better hitter, and he did this in the last game of the Cleveland series. Chili Davis: Has a great eye and will work a pitcher deep into a count, but he can be overpowered with fastballs above his belt. Cheats some now to get his bat started, making him vulnerable to off-speed pitches. Tino Martinez: Nothing seems right at the moment. Is anxious and chases pitches out of the strike zone when he falls behind in the count, and isn't taking advantage of mistakes when they're made. Scott Brosius: A great breaking ball hitter, but he can also drive a fastball a long way when he anticipates, as Cleveland's Charles Nagy now knows. Jorge Posada: When batting left-handed, he fares very poorly against splitters, curveballs and sliders. Ricky Ledee: Like all young hitters, he has a tendency to expand the strike zone and chase pitches out of the strike zone after falling behind in the count. Kevin Brown likely will attack him aggressively. SATURDAY'S PITCHERS Kevin Brown: Best sinking fastball in the game (91-93) mph, a four-seam fastball of 95-97 mph to throw high in the strike zone, a slider that breaks down and away from right-handed batters, and a forkball that dives at 88-89 mph. Holds runners well. David Wells: Aggressive, aggressive, aggressive, challenging hitters with fastballs. His curveball can be exceptional, and his changeup has improved. Throw strikes: Allowed as many home runs (29) as walks (29), but has not allowed a three-run homer or a grand slam all year.

The San Diego Padres, excited about the prospect of winning the NLCS playoff and of playing the Yankees in the World Series, have gone bonkers. Some 680 shaved their heads for a raffle to win playoff skybox seats. NY fans, however, are subdued about the Yankees prospects of a collective batting slump (namely by Knoblauch and Martinez), Strawberry's surgery recovery, record-setter Williams' team loyalty, and the memory of the fallibility of umpires. The Yankees have a edge in pitching and defense, and their record of excellence encouraged everyone to expect victory. In fact in the Series opener, Knoblauch and Martinez power-hit the Yankees to a win.

The New York Times said in an editorial on Saturday, Oct. 17: It is fitting that this most memorable of baseball seasons should conclude with a World Series that opens Saturday night in Yankee Stadium, the aging but still grand cathedral of the sport. Bedecked in bunting and banners, the revered ballpark always elevates the game with its aura of history and accomplishment. That makes it the perfect venue for part of a championship series that will determine whether the 1998 Yankees are one of the greatest teams of the modern era, or just a talented squad that owned the regular season but folded in the World Series. New Yorkers are a boisterous, boastful bunch, and the patter of the city this week has been loud and arrogant, or so it must seem to anyone venturing here from San Diego to root for the Padres. The word on the sidewalks and in the subways is that the Padres don't measure up against the Yankees. Sure, they have lethal starting pitchers in Kevin Brown and Andy Ashby, and one of the game's best closers in Trevor Hoffman, not to mention prolific hitters like Tony Gwynn and Greg Vaughn, who is hobbling but still dangerous. But how is that a match for the Yankees' World Series starting rotation of David Wells, Orlando Hernandez, David Cone and Andy Pettitte, bullpen flamethrower Mariano Rivera, plus the deepest batting order in baseball? Yet the truth is that Yankees fans are terrified the team will crumple. Baseball fans, even Yankee fans, can spend a lifetime waiting to see a home team of historic caliber, and this Yankee team will not reach that sanctified status unless it ends its record-setting season by winning the World Series. The doubts keep creeping up. The team was pitiful at the plate through most of the playoffs. Tino Martinez, the top run producer, has been in a numbing slump. Bernie Williams, the American League batting champ, hit well in the pennant series against the Cleveland Indians, but has seemed distracted by personal matters. Shane Spencer, the rookie slugging sensation of September, hasn't turned out to be the new Mr. October. Pettitte has been struggling since August. The curious thing about this team, which won more games during the regular season than any team in American League history, is how quiet and unobtrusive it can be. It sports no dominant superstar, no swaggering clubhouse leader, no one who seems to belong in New York. So when the Yankees start to drift on the field, fans tend to fear the team might simply fade away. Until the Indians surged temporarily ahead in the playoffs, the Yankees had faced no serious test of resiliency all season. New Yorkers can already taste that ticker-tape parade up Broadway. But behind every mighty cheer at the stadium Saturday night will lurk the fear that when the curtain falls on the season, an unheralded and unlegendary team from San Diego will be the one that is remembered. ||||| The last time they were seen on the field at Yankee Stadium, they were inadvertently influencing the outcome of the game that sent the Cleveland Indians home and the Yankees to the World Series. That's not to say the umpires will mess up in the World Series, but they have shown they are eminently capable of interfering with the natural progression of postseason games. All right, so Ted Hendry won't be in the World Series; the umpires' collective bargaining agreement with the leagues does not allow an umpire to work both a league championship series and the World Series. Joe Brinkman won't be here either, even though the agreement does allow for an umpire to work both a division series and the World Series. The three American League umpires who are on the six-man World Series crew did work in the first round of the playoffs. One of them, Richie Garcia, will be the crew chief and behind the plate in Saturday night's opener at Yankee Stadium. Gene Budig, the AL president, Friday called Garcia, a 24-year veteran, one of the league's ``most respected umpires.'' But after Saturday night, Garcia will move to right field Sunday night for Game 2. Now why does that combination sound familiar, Richie Garcia and right field? Ah yes, the last time Garcia worked a post-season series at Yankee Stadium, he was the umpire in Game 1 of the league championship series two years ago when a young fan from New Jersey _ no name, please; he has been over-glorified enough _ reached over the fence and caught Derek Jeter's fly ball just as Tony Tarasco, Baltimore's right fielder, prepared to catch it. Garcia ruled no interference, that it was a home run, then said oops after watching a television replay clearly showing interference. Too late. The call helped the Yankees win the first game and set the tone for the series. ``Even though he made a mistake, you know you have the best out there,'' a baseball official, speaking on the condition of anonymity, said. That knowledge comes as small consolation to the Orioles. Budig, too, acknowledged that umpires, like players and managers, aren't perfect. ``Major league umpires are skilled at what they do, but they are human,'' he said in a telephone interview. ``Day in and day out they do a very good job for Major League Baseball. Rounds one and two have been difficult, but that happens from time to time.'' The umpires were so human in the American League playoffs that it happened from time to time to time to time. The Cleveland Indians suffered the brunt of the fallibility of the umpires. ``We had a highlight reel of umpires getting knocked down by baseballs,'' general manager John Hart said after the Indians' final game against the Yankees. ``The umpires didn't lose the game for us, but we had our share of controversies in two playoff series with umpires.'' In the division series against Boston, Brinkman, the plate umpire, was so bad with his calls on pitches and plays at the plate that he immediately provoked disputes that led to his ejecting of Mike Hargrove, the Indians' manager, three pitches into Game 2, and Dwight Gooden, their starting pitcher, 19 pitches later. Hendry was right or wrong, depending on one's point of view, for his noncall of interference on Travis Fryman in the 12th inning of Game 2 of the ALCS. That ruling went in favor of the Indians. Little else did. In Game 4, Jeter was stealing second in the fifth inning when the on-target throw from Sandy Alomar Jr. hit Jim McKean, who jumped to try to get out of the way but instead kicked the ball into right field. A batted ball, Omar Vizquel's line drive, struck Hendry in Game 6. But the worst call of Game 6 was Hendry's on a force play at second base. Hendry called Bernie Williams safe, ruling that Vizquel's foot came off the base before he caught the ball. Members of the Yankees indicated Friday that they, too, thought the call was wrong. ``I don't know,'' Williams said when asked what he thought, ``but I'll take it. It was a big play.'' But did he think he was out? ``I'd rather not comment about that,'' he said. ``It will stir a lot of controversy. I don't want to get into that.'' When a player believes he was safe, he says so and doesn't worry about any subsequent controversy. If Williams was implying that he thought he was out, another member of the Yankees said he had no doubt that Williams was out. ``I wasn't sure at first,'' this uniformed member of the team said, ``but when I saw it was Hendry, I said uh-oh. I also thought Omar is so smooth you'd think he wouldn't come off the bag. Then I saw the replay. He was out.'' The game today is faster than it used to be, this observer said. The umpires have to be sharper. Maybe Garcia, Dale Scott and Tim Tschida from the American League, and Jerry Crawford, Dana DeMuth and Mark Hirschbeck from the National League, will be as sharp as an 18th century French guillotine in these four to seven games. Leonard Coleman, the NL president, said he thought his umpires were first-rate in the division and league series and added that he has ``three splendid umpires'' working the World Series. Budig said: ``The World Series crew is proven and first-rate. We have total confidence in them.'' The umpires should let the players make the errors and the managers the bad decisions. Then everyone will talk about the players and managers and not the umpires. ||||| Chuck Knoblauch and Tino Martinez were as popular as squeegee men a week ago, the speculation rampant that one or the other or both might be exiled if the Yankees' historic year crumbled in the post-season. Two big hits in the midst of a big inning changed all that Saturday night in Game 1 of the World Series. The Yankees trailed San Diego, 5-2, in the seventh inning, but Knoblauch hit a three-run home run to tie the score, and five batters later, Martinez smashed a grand slam. The seven-run explosion rocketed the Yankees to a 9-6 victory in the opener of the four-of-seven-game series, before 56,712 at Yankee Stadium. Orlando Hernandez will pitch against Andy Ashby in Game 2 Sunday night at the Stadium. Beyond seizing the advantage in the series, the Yankees were able to neutralize the Padres' ace, Kevin Brown, driving him from the mound in the seventh. Brown, seen by many as San Diego's best hope for a World Series upset, will not pitch again until Game 4, at the earliest. Brown was pitching with a three-run lead after the top of the fifth, when Tony Gwynn and Greg Vaughn banged back-to-back homers. One out into the seventh, however, Jorge Posada hit a single, and Brown walked Ricky Ledee. Brown, who had thrown a whopping 64 pitches in the first three innings, went out, and the reliever Donne Wall came in to face Knoblauch. This is what the Yankees have done all season, force a starter from the game in the middle innings, before exploiting a middle reliever. Knoblauch, of course, had earned notoriety for his gaffe in the Game 2 of the American League Championship Series against Cleveland, standing and waiting for an interference call as the ball rolled to a stop behind him and the decisive run scored. The Yankees came back to win the series, however; Knoblauch got a reprieve and talked about how much the experience had helped him. Facing Wall with a one-ball, no-strike count, Knoblauch had to duck under a runaway fastball. Two balls, no strikes. Wall had to throw a strike, Knoblauch swung hard and lifted a high fly down the left-field line. Off the bat, it did not look like much. But it kept carrying, Vaughn drifting back in left and looking up, to see the ball disappear into the stands. Tie game. Yankee Stadium shook. Knoblauch rounded the bases, crossed home plate and thrust both arms into the air, yelling to the crowd, like a hyped Olympic weightlifter who had just successfully hoisted a half-ton. He stomped around the dugout, his helmet on, teammates banging on him happily. When Derek Jeter singled, nobody really noticed. Wall left the game, and Mark Langston took over. Paul O'Neill flied out, and after Jeter advanced on a wild pitch, Bernie Williams was intentionally walked. Chili Davis drew a walk. Bases loaded, once more, with Martinez coming to the plate, with exactly one run batted in in his first 76 career at-bats in league championship and World Series games. With the count two balls and two strikes, Langston threw a pitch near the outside corner that he thought should have been a strike. Instead, Garcia called it a ball. Langston glared, snapping at the return throw. Langston and Martinez and everyone on the field now understood that with the bases loaded and a 3-2 count, Langston would have to throw what players refer to as a cookie _ a tasty pitch over the middle. Martinez ate up this cookie. The ball soared into the upper deck in right field, lifting three years of post-season misery off the back of the Yankees' first baseman, a grand slam. The crowd called out Martinez from the dugout again. Like Knoblauch, Martinez pumped both arms, and later the crowd would chant his name, and Martinez would wave his cap. San Diego's lead was long gone. The Yankees had taken a 2-0 lead over Brown in the second inning, forcing him to throw 32 pitches in the second. They loaded the bases with a single and two walks, and Ledee, the rookie left fielder who is playing because none of Torre's left fielders have been hitting, pulled a sinking fastball down the right field line with two outs. The fans along the foul line stood, some waving to push the ball fair with the body English, and the ball landed on the line, skipping off the wall as two runners scored. The Yankees had the early edge, they had jumped on Brown, and they had their best pitcher on the mound. San Diego's Chris Gomez led off the second inning with a blooper over shortstop, the ball falling in for a single. Quilvio Veras flied to right, Gwynn grounded out and Gomez took second, bringing Vaughn to the plate. David Wells got ahead in the count, no balls and two strikes, with a change-up and a fastball, before trying to run a fastball inside on Vaughn, who hit 50 home runs during the regular season. Vaughn attacked the pitch: a line drive that landed in the second deck, foul all the way, but a frightening mistake. Jorge Posada, the Yankees' catcher, jogged to the mound to re-think the strategy, perhaps to remind Wells of the conventional wisdom: you must pitch Vaughn on the outer edge of the plate. Posada returned to the plate, called for an outside fastball, Wells threw. Vaughn's swing was short and quick, the ball making a click sound off the bat, like a well-struck golf ball, before carrying over the wall in right-center field. Tie game. Wells retired the first two batters in the fifth inning, before jamming Veras with an inside fastball. Veras' bat snapped on contact, but it was enough to send a looper into short center field, a single. Gwynn stepped in, having hit a single in his first two at-bats, and looked for a sign from the third base coach Tim Flannery. With a runner on first, he likes to try to pull a ball through the right side of the infield. Wells fired a fastball, Gwynn turned on the pitch and ripped it, a line drive that crashed off the facing of the upper deck in right field. The Padres jumped from the dugout, celebrating, as Wells turned away, disgusted, asking for a new baseball. He got one, delivered another fastball, and Vaughn slugged this deep into the left field stands. Two pitches, two home runs, the first back-to-back home runs allowed by Wells since April 30. San Diego led, 5-2, and Yankee Stadium was silent. It would not stay that way. ||||| The moment of truth for Chuck Knoblauch came in the bottom of the first inning when his name was announced at Yankee Stadium for the first time since he neglected to chase down that memorable loose ball last Wednesday. There were no boos. It was a very warm ovation. They liked him. They really liked him. Knoblauch exhaled. Knoblauch had emphasized before the game that he was concerned about winning and rumbling into the World Series, not about the fans. But it surely made Knoblauch feel at home when he realized that the fans had forgiven him. Victories, more than time, had healed the malice toward Knoblauch and he could play second base without earplugs. When the Yankees defeated the Indians, 9-5, in Game 6 on Tuesday night to advance to their second World Series in three years, Knoblauch was easily the most relieved player on the field. The awful mistake that he had made in Game 2 would be forgotten. The Yankees had won the pennant, and Knoblauch was celebrating as much as anyone. ``To have them act like that toward me was tremendous,'' said Knoblauch, about the response that he received. ``It was a great feeling, and it really helped me out.'' Knoblauch was wearing a cap that declared the Yankees champions of the American League in 1998; Champagne dripped off the brim as he spoke. He did not look up, but continued to talk about how he had learned a lot by being vilified after making a mistake that Little Leaguers are expected not to make. ``Just to face things and take it like a man and answer all the questions, although they're tough,'' Knoblauch said. ``You see what you're made of when you have to bounce back from something like that. That's basically what I learned.'' If the Yankees had lost the ALCS, even some of Knoblauch's teammates had said that he would be branded as the villain for failing to pursue the ball that glanced off Travis Fryman's back while he was running outside the baseline. Knoblauch had argued with the umpire while the go ahead run scored from first and the Indians won, 4-1. Now Knoblauch can watch television and read the newspapers again without getting queasy. ``That's huge for him,'' David Cone said. ``That's huge for me. I let them back into the game, and that would have been a tough one if they would have come back and beat us. And Knobbie, I'm sure he's feeling a lot better now.'' Knoblauch, who had two hits in five at-bats, was working on his second bottle of Champagne five minutes after reporters were allowed into the clubhouse. He flashed the sort of smile that he had not shown too much recently and, now that the Yankees are in the World Series, Knoblauch should expect to be teased often about his mistake. ``Maybe if we go all the way, we'll do that,'' Derek Jeter said. ``I don't know what I'll say, but I'll think of something good.'' ||||| A strong sign that this city is going bonkers for the Padres came Friday morning when 680 fans agreed to shave their heads for a radio promotion raffle in return for a 1-in-680 chance at skybox tickets for post-season play. ``This was more a show of support for the team than it was for the one ticket,'' said Tommy Sablan, producer of the ``Jeff and Jer'' show. ``It was symbolic of the efforts of the bald Padres _ Tony Gwynn, Wally Joyner, Greg Vaughn, Jim Leyritz. About a thousand people showed up _ men, women and children. We had 10 barbers and 20 hairdressers and it took six hours for the lines to either get buzzed or straight-razored. ``We were shocked at the turnout. But this is a bandwagon town. `Buy the ticket on the day of the concert' type public. You'll see an even bigger bandwagon on Monday when they've won and then hopefully we play the Yankees and it's a real World Series.'' After the Padres beat the Braves, 3-0, in Game 2 of the National League Championship Series on Thursday night in Atlanta to take a two-game lead in the four-of-seven-game series, San Diego fans began gearing up for a shot at the World Series in more traditional ways. It would be the team's first World Series appearance since 1984, and in the downtown business district Friday, marquees and banners read ``Go Padres'' and a lunch-hour rally was attended by several hundred fans. The Padres set an attendance record of 2,555,901 this season, up a half-million from last year and nearly a million and a half from three years ago. It stemmed in part from an effort by John Moores, the Padres owner, and Larry Lucchino, the team's president, to put family entertainment in the park after they bought the team in December 1994. ``This is a more diversified group of fans than I saw in Atlanta,'' Lucchino said. ``Their crowd seemed yuppified. We're proud of our three generations of families who come to the games.'' Donna McMahon, a 63-year-old homemaker from La Jolla, has been a fan since she was 10 and the Pacific Coast League Padres played at Lane Field near the harbor. She would take a streetcar after school to meet her father, and he would buy bleacher seats. Later, she brought her four children to Jack Murphy Stadium for the National League Padres when 2,500 people was a crowd. Now, she brings her grandchildren to a sold-out Qualcomm Stadium. ``There are different groups in the stands,'' she said, ``the upper class, the middle class, the business person, the beer-drinking fan, the children, all of the Mexican fans from across the border. We are true fans _ all of us.'' San Diego Mayor Susan Golding agrees, while also giving credit to the balmy weather. ``Padre fans are a cross-section from all over the county,'' she said. ``Downtown, suburban, rural, east, north, ranchers and farmers to high-tech engineers, yuppies to the new kids _ the X generation. A lot from across the border. The Padres are extremely popular in Tijuana. We do have the perfect weather for a long baseball season. Playing in the World Series in October has got to be better than in New York.'' Carlos Carrion, who was born in San Diego and has been a baseball fan for 25 years, brings his 10- and 8-year-old sons to the stadium. ``This is a great chance to let my children see the players work,'' Carrion said. ``They can look up to these guys and understand their character and their work ethic.'' The Padres ticket office estimates that on average, more than 15,000 fans in the 65,000-seat stadium are Latin Americans from San Diego, Baja California or the state of Sonora. The Padres have the first major league baseball souvenir store in Tijuana. ||||| Talk about high expectations. It's not just the man from Tampa who has them anymore. Knowing their baseball as well as they do, everybody in the Joe Torre family passed up tickets for the divisional series and the league championship series as just so much parsley on the plate of life. ``The pressure was on to get to the World Series, so I can see all those people,'' Torre, the Yankees' manager, was saying before New York went out to play the here-we-are, let's-go-for-it San Diego Padres in the Stadium Saturday night. Now that the Yankees are in the Series, their Florida-based owner and their fans and they themselves can see nothing more appropriate than four more victories. Anything less than 125 would feel like emptiness. But why should the Yankees be any different from the six teams that already fell off the bus to this World Series? The gloom and doom in the six other cities will not compare to the letdown that would grip New York and the owner's insatiable little heart should the Yanks come up short. The three-tiered playoff system has practically turned baseball into football, where the survival-of-the-fittest mentality produces one exalted Super Bowl champion and a league full of chumps and losers, condemned to a nether world of Parcells-like demons kicking them in their sore spots for eternity. The World Series used to be a short and sweet reward for excellence, but that was when there were eight teams per league, and the winners met in daylight in early October. Even if the Yankees clubbed my poor Brooklyn Dodgers into submission once again, well, there was always next year. But in 1969, baseball began league championship series, and in 1995 it began a two-layered playoff system. The World Series is still different, which is why we should all resist the babble of ``post-season records'' flung at us by the hyperactive computers and the hyperactive broadcasters from the dozens of different networks that carry baseball. The World Series is still a competition between one league that encourages pitchers to be athletes and another league relatively devoid of strategy. Somehow the ``playoffs'' leave just about everybody feeling inadequate. Think about it. The Houston Astros are going around feeling they cannot perform in the post-season. The Texas Rangers are sulking because they had the best hitting in the league and could hardly touch Yankee pitching when it counted. In Chicago, the glory of winning a special playoff for the wild-card spot and Sammy Sosa's 66 home runs has been pre-empted. The very city that beat the Cubs for the 1969 eastern title held a parade for Sosa Saturday in the canyons where Lindbergh and John Glenn and the 1969 Mets were once hailed. Speaking of indignity, there are the Red Sox, whose occasional qualification for the playoffs is merely a signal that nothing good can come of it. In Atlanta, the team of the '90s has won exactly one World Series, and now it is up to management to keep repeating that: ``The main goal is to get to the Series. This is a recorded announcement. This is a recorded announcement. This is a recorded announcement.'' In Cleveland, the fans had to live with the phrase ``Nineteen forty-eight!'' being chanted at the Indians in the Bronx as the Yankees put the Indians out of misery. That leaves the Padres as the only team with virtually nothing to lose. This can be good, or it can be bad. Bruce Bochy, the manager, a reserve on the 1984 San Diego World Series team, has said: ``A lot of the players on that team said, looking back, we wish we would have had a little different attitude instead of just saying, `Hey, we are in the World Series.' And this year, I think you will see the players out there playing to win.'' Torre recalled being the underdog in 1996, but he said his Yankees felt they could beat the Braves. ``I am sure that is the way the Padres feel right now, that maybe other people aren't predicting a lot for them, but I am sure they are for themselves,'' Torre said. ``I think getting here is where the pressure is,'' Torre added. ``You want to win, but getting to the World Series is so tough after playing 162 games and getting into post-season and then having to fight, bite and scratch and everything else to get here.'' Torre continued: ``You don't think about in spring training that we want to go and win the World Series. You want to get to the World Series. Then you get there, well, you have played well enough and won enough games, then of course, we want to win. ``As far as legitimizing our season _ I hate to even think in negative terms, but if San Diego happens to win the World Series, sure it takes a little bit of the luster off what we have accomplished by getting here, but I think that was our goal, initially.'' The key word in that sentence is ``initially.'' The Yankees built an insatiable demand for more victories _ and World Series tickets in the Torre family. While they're at it, the Yankees had better win the whole thing. They are a victim of their own excellence. ||||| As Bernie Williams starts what could be his final series with the Yankees in Game 1 of the World Series at Yankee Stadium Saturday night, he wants to do it with a free mind. Free of worrying about his extremely uncertain future and an undisclosed personal matter that has made this post-season as perplexing as it has been pleasing. But it is not easy to keep the mind uncluttered. Williams does not know if he will sign with the Yankees and return to center field next season, because he wants to test free agency. There is a good chance the Yankees will not offer him the most lavish contract, so Williams might be forced to decide between the fattest paycheck and a new situation in the baseball city of his choice or a pretty fat paycheck and a familiar situation in the Bronx. Scott Boras, Williams' agent, compared his client with players in the $10 million-a-year bracket last season, so that price tag has surely escalated after Williams won the American League batting title with a .339 average while drilling 26 homers and knocking in 97 runs. Williams was asked if he agreed with the theory that other teams will outbid the Yankees. ``I do not know,'' said Williams, who has been aloof during this post-season, but has declined to discuss why. ``And I'm thinking about this a little more than I would like to. I would like to keep my focus on the series.'' It is not an issue Williams or the Yankees wants to study Saturday or in the coming days, because the team is four victories away from a championship. Still, it is an issue that hovers over the Yankees as ominously as the owner George Steinbrenner hovers over general manager Brian Cashman. ``It's a tough thing,'' Cashman said about balancing the excitement of being in the World Series with the reality of trying to re-sign Williams. ``You know the ugliness of the future is right in front of you.'' Although Williams has been adamant about not discussing the future, he relented slightly Friday. When a reporter asked him what the reasons would be for staying with the Yankees, Williams' answer included an escape clause. ``Just the fact that I've been here my whole career,'' Williams said. ``That has a lot to do with it. The relationships that I've come to know during the years, I think it would be very hard, but not impossible, to start from scratch somewhere else.'' Williams continued: ``But I think the reality of the game in this day and age is things happen. You can't really write things in stone that they're going to happen. People get traded. People become free agents and go to other teams. I have to make a decision really thinking about all the people I'm accountable for.'' When Williams was asked what better situation could a player have than being the center fielder for the Yankees, winning a batting crown and being in the World Series, the 30-year-old was stumped. ``Wow, that's pretty good right there,'' Williams said. ``It's funny you mention that, because I really haven't thought about any of that. I think, at some point in the off season, I was going to sit down and think, wow, it wasn't a bad year at all.'' While Cashman would not discuss financial matters, another Yankee official said the team will not offer Williams as much as $12 million a year _ unless Steinbrenner gets generous after a possible championship. It is more likely that the Yanks would offer Williams in the $10 million-a-year range. ``I'd hate to have to speculate on something at this point,'' Cashman said. ``We'll give it our best effort to sign him at a level that we're comfortable with. Hopefully, that will be enough. Then we'll have a marriage. If not, we'll have a divorce.'' While Williams has earned the right to become a free agent and pursue the contract he wants in the city he wants, he has interesting choices to make. When a reporter asked Williams how he would respond to someone who suggested that he accept less from the Yankees to remain in a city where he is popular, where he likes his teammates and manager, and where the team has been in the post-season for four straight years, he did not hesitate to answer. ``My response to that would be it's not the time right now to start thinking about that,'' Williams said. ``If I start thinking about that, it'll distract me to what I need to do in the World Series.'' Williams then talked about how the Yankees are at the end of a remarkable season and how he did not want his situation to disrupt that. But, with Williams' status uncertain, he was asked if the next four to seven games would be bittersweet, since he could be ending a 13-year association with the Yankees. ``I don't want to talk about that,'' Williams said. ``I'm going to have a lot of fun out there. I'm going to go all out.'' Then Williams walked away from the interview. ||||| Hours after Darryl Strawberry was released from Columbia Presbyterian Medical Center Friday, he spoke happily about being able to play with his two young children, joked about eating a small amount of chicken and potatoes and sounded relieved to be at home in Fort Lee, N.J., instead of in a hospital. ``I'm really feeling good,'' said Strawberry, in a telephone interview. ``It's nice to be home with the kids and to just kick back. That's all that I'm going to do. This feels good.'' Strawberry, who underwent surgery to remove a cancer from his colon on Oct. 3, said he will remain in New Jersey for another 10 or 12 days before returning home to Rancho Mirage, Calif. The 36-year old outfielder, who lost a significant amount of weight from his 215-pound frame, said he does not have enough strength to attend any of the World Series games and is content watching his teammates play the Padres on television. ``My heart is with them,'' said Strawberry, who spoke to several Yankees after they won the American League championship. ``I'm just going to relax at home and watch the game. I'm looking forward to it. I may not be there, but it'll feel like I am.'' Paul O'Neill echoed the sentiments of many Yankees by saying, ``Everything we're going through is game. This is his life. Any time we get some good news about Darryl it's uplifting. We're all praying for him.'' Since cancerous cells were found in one of the 36 lymph nodes removed from his abdomen during the operation, Strawberry said doctors told him he will need six months of chemotherapy treatment once he returns to California. The 36-year-old outfielder said doctors told him he will need one treatment of at least one hour a week. ``I was never scared,'' said Strawberry. ``I was more emotional than anything. At the time of it, I had played for a while with this. I wanted to keep playing because I knew we were going to get into the World Series.'' At that point, Strawberry stopped and laughed, probably because the Yankees had made it to the World Series as he expected. ``I wanted to be there because that's what you play for,'' said Strawberry. ``I don't think that I was ever scared. It's something that I wanted to deal with head on. I talked to Eric Davis about the chemo. He said it's not as bad as some people say.'' Although the discovery of cancer in one lymph node proved that the cancer had spread, Strawberry remained optimistic about his future and said, ``It didn't worry me. I got all the information from the doctors. One out of 36 is good. It wasn't spreading. It didn't run off and get crazy like cancer can.'' When Strawberry was released from the hospital in a wheelchair Friday, a few hundred fans who had congregated chanted, ``Darryl, Darryl.'' Strawberry, who struggled not to cry, hugged a few nurses, thanked everyone for supporting him, then rose from the wheelchair and carefully entered a car. ``Wow, I never thought this day would come,'' Strawberry said. ``But it has.'' Unlike David Wells, Saturday night's starter in the World Series who predicted the Yankees would throttle the Padres in five games, Strawberry refused to make a prediction about whether he will soon be getting his third World Series ring. But Strawberry, who is still hopeful about returning to play in 1999, sounded very confident in the 1998 Yankees, who are wearing his number 39 on the back of their caps as inspiration. ``They look really good,'' said Strawberry.'' It's not going to be easy, but I think they're ready. The best thing about making it to the World Series is you know you don't have to go anywhere else after that. You've made it to that point and then you go do the best you can do. That's what it's all about.'' ||||| A new shipment of bats arrived for Tino Martinez on Friday, and he massaged the handles to make sure they were thin enough, knocked on the barrels and listened for a certain sound and swung them slowly again and again. Martinez was so excited about the fresh bats, he reacted like a Little Leaguer who was wielding an aluminum bat for the first time. ``You were saving the World Series trees until now, right?'' Martinez said to the representative from the bat company. ``These are from World Series trees, aren't they?'' Martinez could joke about the bats being specially designed for the World Series because the Yankees began their quest for a second title in the past three years when they play host to the San Diego Padres in Game 1 at Yankee Stadium Saturday night. Major leaguer players who were watching on television could not imitate David Letterman and joke about World Series wood. Even though Martinez has struggled with numerous bats during the post-season, he could joke because the Yankees are still alive for the title. Martinez is still alive. For now, Martinez, the power hitter who has mostly been missing in action, could joke around. For now. ``You always get a fresh start in the post-season because it's game to game,'' said Martinez. ``If you win, you've got another game the next day so you forget about the bad at-bats. It's easier to do that in post-season because your next at-bat could be the biggest at-bat of the season.'' Normally, having Martinez at the plate for the biggest at-bat of the season would be a pleasing sight to the Yankees. But not when the calendar flips to October. Martinez has experienced another frustrating post-season. He is 5 for 30 with 10 strikeouts, no homers and only 1 run batted in for a hitting-starved team that has batted .229 while still winning 7 of 9 post-season games because of superior pitching. Can the Yankees continue to win if Martinez, their most valuable run producer, is a sometime singles hitter? ``We've just gotten through two good series,'' said Paul O'Neill. ``The Yankees won those series. You don't focus on one guy. You focus on winning. The whole team won.'' As much as Joe Torre talked about Martinez needing one line-drive hit to get him in a groove, the 30-year-old first baseman is in a career drought in the post-season. Since joining the Yankees, Martinez is 20 for 107 (.187) with one homer and 4 RBI in 29 post-season games. Those are puny statistics, especially for a player who has driven in 381 runs in 455 regular season games over the last three years. ``I would guess that Tino would have a great series,'' O'Neill said. ``Baseball has a way of evening things out. You have a bad series, you come back and have a great series. In the season, that's easier to do. In the post-season, it gets tougher.'' It cannot get much tougher for Martinez, who was dropped from fifth to sixth in the order during the American League Championship Series against the Cleveland Indians and will remain in that spot until further notice. Martinez has blamed his paucity of production on impatience and on trying to do too much. He has sometimes flailed at poor pitches during hitter's counts of 3-1 and 2-0, instead of working the count, and he has admitted that his previous failures in the post-season have caused him to pursue the obviously unattainable five-run homer. Actually, Martinez has already made some alterations, and he has reached base 7 times in his last 10 plates appearances on a double, a single, a hit-by-pitch and 4 walks. It is not enough to pacify George Steinbrenner, but it is something for him to cling to. Until last night, anyway, when Martinez had to face Kevin Brown, a nasty right-hander who had retired him in 30 of 34 career at-bats. ``If I was getting good pitches and missing them, then I'd say I have a bad swing working,'' said Martinez. ``But I've been swinging at bad pitches. Right now, I've just got to be patient and wait.'' The Yankees will wait with him. They have to. In the 1996 World Series, Torre started Cecil Fielder over Martinez at first in Games 3, 4 and 5. It was a difficult decision because Martinez had paced the team in RBI while Fielder did not join the Yankees until July 31. But the Yankees grabbed all three games so it worked. Torre does not have such an attractive replacement this season in Luis Sojo. So the Yankees will stay with Martinez, for better or worse, while he tries to stay positive and finally produce. ``It's the World Series,'' said Martinez. ``You got to go out there and have fun with it. Big games are all big games. You want to go out there and enjoy that game and try to do your best to win that game. You don't think that you might lose that day.'' ||||| YANKEES Pitching The starting pitching enabled the Yankees to advance past Cleveland in the American League Championship Series. David Wells is 7-1 in his career in the postseason and he should have an additional edge against a Padres' lineup that is generally less effective against left-handed pitching. Orlando Hernandez has four terrific pitches, pitched seven shutout innings in the pivotal Game 4 of the ALCS and earned the start in Game 2 of this series. David Cone should benefit from six days' worth of rest when he starts Game 3, as well as being able to pitch in warm Southern California. Mariano Rivera's stuff might be as good as it has been all year, and Mike Stanton continues to be a dominant postseason pitcher. Reasons for concern: the erratic Andy Pettitte, who needs a home-plate umpire to call strikes on pitches low and away, and Jeff Nelson, who lost his command in his last brief outing. Offense There were signs in the ALCS that the offense is coming out of its collective slump _ Chuck Knoblauch is getting on base consistently, Derek Jeter is back to driving the ball to right field and through the middle, Bernie Williams had three hits in Game 6, and Scott Brosius has been a consistent force at the bottom of the lineup. But the Yankees do have holes: Chili Davis will be hard-pressed to catch up to the fastballs of Kevin Brown and Andy Ashby, and Tino Martinez's postseason funk is a problem. The Yankees could use a contribution from Jorge Posada, who will start in Games 1 and 2 and may get a chance to drive pitches low in the strike zone, where he can hit with power. Defense The Yankees have the best defense in baseball, excellent up the middle with Jeter and Knoblauch, and at third with Brosius. Nobody's really taken advantage of the fact that Williams has a poor arm in center field, but rest assured that Ken Caminiti, Steve Finley and Greg Vaughn will try. The Indians did expose the fact that the Yankees' pitchers have trouble preventing baserunners from stealing from second to third base. Baserunning The Yankees run well as they take extra bases, particularly Paul O'Neill, Brosius, Jeter and Knoblauch going first-to-third; Williams can make mistakes. The Yankees probably won't be able to steal against Kevin Brown, who has an effective slide step, but they could be aggressive against Andy Ashby, or the combination of Sterling Hitchcock and Jim Leyritz. PADRES Hitting Except for Jim Leyritz, no one in the San Diego lineup is particularly hot or particularly frightening at the moment. Tony Gwynn hasn't been as consistent as he usually is, Ken Caminiti and Greg Vaughn have been streaky. But the Padres are a veteran team capable of putting the ball in play, getting runners on base and then moving them along, and so long as they are getting exceptional pitching, that's all they really need. Quilvio Veras, the leadoff hitter, is adept at drawing walks and Steve Finley, who has become more pull conscious in the last two years, could try to take aim at the right field stands in Yankee Stadium. Vaughn's power could be a factor if the Yankees' pitchers don't jam him enough to keep him from leaning over the plate. Pitching Kevin Brown is the best pitcher in this series, capable of winning three games if necessary, should Padres manager Bruce Bochy choose to start him in Games 1, 4 and 7. But at some point, San Diego will need a big outing from either Andy Ashby or Sterling Hitchcock. When Ashby's right, he's hitting the corners with his sinking fastball and his slider, and when his command is suspect, he gets pounded. Hitchcock used his split-fingered fastball to great effectiveness against right-handed batters in the first two rounds of the playoffs, but the Yankees' left-handed hitters may cause him some concern. San Diego's middle relief is the weakest aspect of the team, with Randy Myers and Mark Langston from the left side (the stuff of each has waned). But if a lead can be delivered into the hands of closer Trevor Hoffman, he'll keep it. Defense They mostly catch the ball and avoid mistakes, though they are unspectacular. Shortstop Chris Gomez and the second baseman Veras are adept at turning double plays, and Caminiti won a Gold Glove at third base last year; Wally Joyner has good hands at first; the center fielder Steve Finley is extremely quick in tracking down base hits and returning the ball to the infield. Tony Gwynn's range is better toward the right field line, not nearly as good on balls hit in the gaps. The Yankees will be able to run on the arm of Vaughn in left field. Baserunning Veras can steal bases (24) this year, and Finley can in a tight spot, as well. In general, however, the Padres are a slow, plodding team, though Caminiti and Vaughn are good at going first-to-third, and Gwynn won't make mistakes on the bases. PITCHING TO THE PADRES Quilvio Veras: A switch-hitter who has more power right-handed; should try to pitch him down-and-in with breaking balls when he's hitting right-handed, jam him with fastballs when he's batting left-handed. Steve Finley: A left-handed hitter who likes to pull the ball. Left-handers like David Wells can beat him with breaking balls low and outside. Tony Gwynn: When he's hot, he's impossible. When he's not hitting well, he can be anxious early in the count, and he should be fed breaking balls out of the strike zone. Greg Vaughn: Big-time power on anything high and over the plate. Because he likes to pull the ball, you must pitch him on the outer edge, occasionally jamming him to keep him honest. Ken Caminiti: More power right-handed, a better hitter left-handed. These days, he's a good lowball hitter and can be beat by fastballs up in the zone. Wally Joyner: With runners on base, he'll try to jump on a fastball early in the count. Is not a strong hitter and can be jammed. Chris Gomez: Like Derek Jeter, likes to hit pitches inside out, to right field and through the middle. He can hit with power if you make a mistake with a breaking ball. Ruben Rivera: An impatient hitter who will chase pitches out of the strike zone. Carlos Hernandez: Looks for the first-pitch fastball in the upper half of the strike zone. Can struggle against breaking balls. Jim Leyritz: No apparent holes right now, can hit fastballs in and away. Best bet is to get ahead in the count and try to get him to chase breaking balls. PITCHING TO THE YANKEES Chuck Knoblauch: Hard throwers like to jam him with fastballs because he stands on top of the plate, which is why he gets hit so often. Derek Jeter: Sometimes he has a tendency to chase pitches at his feet, but if you don't get the ball in far enough, he can hammer the ball over the wall in right. Paul O'Neill: The Yankees' best pure hitter, he sometimes will chase fastballs up and away, particularly after there is one strike. Bernie Williams: A switch-hitter who has trouble resisting chest-high fastballs. When he lays off them, he is a much better hitter, and he did this in the last game of the Cleveland series. Chili Davis: Has a great eye and will work a pitcher deep into a count, but he can be overpowered with fastballs above his belt. Cheats some now to get his bat started, making him vulnerable to off-speed pitches. Tino Martinez: Nothing seems right at the moment. Is anxious and chases pitches out of the strike zone when he falls behind in the count, and isn't taking advantage of mistakes when they're made. Scott Brosius: A great breaking ball hitter, but he can also drive a fastball a long way when he anticipates, as Cleveland's Charles Nagy now knows. Jorge Posada: When batting left-handed, he fares very poorly against splitters, curveballs and sliders. Ricky Ledee: Like all young hitters, he has a tendency to expand the strike zone and chase pitches out of the strike zone after falling behind in the count. Kevin Brown likely will attack him aggressively. SATURDAY'S PITCHERS Kevin Brown: Best sinking fastball in the game (91-93) mph, a four-seam fastball of 95-97 mph to throw high in the strike zone, a slider that breaks down and away from right-handed batters, and a forkball that dives at 88-89 mph. Holds runners well. David Wells: Aggressive, aggressive, aggressive, challenging hitters with fastballs. His curveball can be exceptional, and his changeup has improved. Throw strikes: Allowed as many home runs (29) as walks (29), but has not allowed a three-run homer or a grand slam all year.

The Yankees won the 1st game of the 1998 World Series when Chuck Knoblauch and Tino Martinez redeemed themselves after an early error and a bad batting season. The Yankees had the best defense in baseball and set a League record for season wins. Among Yankee players, Darryl Strawberry sat out after cancer surgery and best League batter Bernie Williams considered leaving the team next year. The World Series' importance grew after the introduction of league championships and 2-layered playoffs. Imperfect umpires can get in the way of play and make wrong calls. Widely diverse San Diego fans were excited to have the Padres in the first World Series since 1984.

The New York Times said in an editorial on Saturday, Oct. 17: It is fitting that this most memorable of baseball seasons should conclude with a World Series that opens Saturday night in Yankee Stadium, the aging but still grand cathedral of the sport. Bedecked in bunting and banners, the revered ballpark always elevates the game with its aura of history and accomplishment. That makes it the perfect venue for part of a championship series that will determine whether the 1998 Yankees are one of the greatest teams of the modern era, or just a talented squad that owned the regular season but folded in the World Series. New Yorkers are a boisterous, boastful bunch, and the patter of the city this week has been loud and arrogant, or so it must seem to anyone venturing here from San Diego to root for the Padres. The word on the sidewalks and in the subways is that the Padres don't measure up against the Yankees. Sure, they have lethal starting pitchers in Kevin Brown and Andy Ashby, and one of the game's best closers in Trevor Hoffman, not to mention prolific hitters like Tony Gwynn and Greg Vaughn, who is hobbling but still dangerous. But how is that a match for the Yankees' World Series starting rotation of David Wells, Orlando Hernandez, David Cone and Andy Pettitte, bullpen flamethrower Mariano Rivera, plus the deepest batting order in baseball? Yet the truth is that Yankees fans are terrified the team will crumple. Baseball fans, even Yankee fans, can spend a lifetime waiting to see a home team of historic caliber, and this Yankee team will not reach that sanctified status unless it ends its record-setting season by winning the World Series. The doubts keep creeping up. The team was pitiful at the plate through most of the playoffs. Tino Martinez, the top run producer, has been in a numbing slump. Bernie Williams, the American League batting champ, hit well in the pennant series against the Cleveland Indians, but has seemed distracted by personal matters. Shane Spencer, the rookie slugging sensation of September, hasn't turned out to be the new Mr. October. Pettitte has been struggling since August. The curious thing about this team, which won more games during the regular season than any team in American League history, is how quiet and unobtrusive it can be. It sports no dominant superstar, no swaggering clubhouse leader, no one who seems to belong in New York. So when the Yankees start to drift on the field, fans tend to fear the team might simply fade away. Until the Indians surged temporarily ahead in the playoffs, the Yankees had faced no serious test of resiliency all season. New Yorkers can already taste that ticker-tape parade up Broadway. But behind every mighty cheer at the stadium Saturday night will lurk the fear that when the curtain falls on the season, an unheralded and unlegendary team from San Diego will be the one that is remembered. ||||| The last time they were seen on the field at Yankee Stadium, they were inadvertently influencing the outcome of the game that sent the Cleveland Indians home and the Yankees to the World Series. That's not to say the umpires will mess up in the World Series, but they have shown they are eminently capable of interfering with the natural progression of postseason games. All right, so Ted Hendry won't be in the World Series; the umpires' collective bargaining agreement with the leagues does not allow an umpire to work both a league championship series and the World Series. Joe Brinkman won't be here either, even though the agreement does allow for an umpire to work both a division series and the World Series. The three American League umpires who are on the six-man World Series crew did work in the first round of the playoffs. One of them, Richie Garcia, will be the crew chief and behind the plate in Saturday night's opener at Yankee Stadium. Gene Budig, the AL president, Friday called Garcia, a 24-year veteran, one of the league's ``most respected umpires.'' But after Saturday night, Garcia will move to right field Sunday night for Game 2. Now why does that combination sound familiar, Richie Garcia and right field? Ah yes, the last time Garcia worked a post-season series at Yankee Stadium, he was the umpire in Game 1 of the league championship series two years ago when a young fan from New Jersey _ no name, please; he has been over-glorified enough _ reached over the fence and caught Derek Jeter's fly ball just as Tony Tarasco, Baltimore's right fielder, prepared to catch it. Garcia ruled no interference, that it was a home run, then said oops after watching a television replay clearly showing interference. Too late. The call helped the Yankees win the first game and set the tone for the series. ``Even though he made a mistake, you know you have the best out there,'' a baseball official, speaking on the condition of anonymity, said. That knowledge comes as small consolation to the Orioles. Budig, too, acknowledged that umpires, like players and managers, aren't perfect. ``Major league umpires are skilled at what they do, but they are human,'' he said in a telephone interview. ``Day in and day out they do a very good job for Major League Baseball. Rounds one and two have been difficult, but that happens from time to time.'' The umpires were so human in the American League playoffs that it happened from time to time to time to time. The Cleveland Indians suffered the brunt of the fallibility of the umpires. ``We had a highlight reel of umpires getting knocked down by baseballs,'' general manager John Hart said after the Indians' final game against the Yankees. ``The umpires didn't lose the game for us, but we had our share of controversies in two playoff series with umpires.'' In the division series against Boston, Brinkman, the plate umpire, was so bad with his calls on pitches and plays at the plate that he immediately provoked disputes that led to his ejecting of Mike Hargrove, the Indians' manager, three pitches into Game 2, and Dwight Gooden, their starting pitcher, 19 pitches later. Hendry was right or wrong, depending on one's point of view, for his noncall of interference on Travis Fryman in the 12th inning of Game 2 of the ALCS. That ruling went in favor of the Indians. Little else did. In Game 4, Jeter was stealing second in the fifth inning when the on-target throw from Sandy Alomar Jr. hit Jim McKean, who jumped to try to get out of the way but instead kicked the ball into right field. A batted ball, Omar Vizquel's line drive, struck Hendry in Game 6. But the worst call of Game 6 was Hendry's on a force play at second base. Hendry called Bernie Williams safe, ruling that Vizquel's foot came off the base before he caught the ball. Members of the Yankees indicated Friday that they, too, thought the call was wrong. ``I don't know,'' Williams said when asked what he thought, ``but I'll take it. It was a big play.'' But did he think he was out? ``I'd rather not comment about that,'' he said. ``It will stir a lot of controversy. I don't want to get into that.'' When a player believes he was safe, he says so and doesn't worry about any subsequent controversy. If Williams was implying that he thought he was out, another member of the Yankees said he had no doubt that Williams was out. ``I wasn't sure at first,'' this uniformed member of the team said, ``but when I saw it was Hendry, I said uh-oh. I also thought Omar is so smooth you'd think he wouldn't come off the bag. Then I saw the replay. He was out.'' The game today is faster than it used to be, this observer said. The umpires have to be sharper. Maybe Garcia, Dale Scott and Tim Tschida from the American League, and Jerry Crawford, Dana DeMuth and Mark Hirschbeck from the National League, will be as sharp as an 18th century French guillotine in these four to seven games. Leonard Coleman, the NL president, said he thought his umpires were first-rate in the division and league series and added that he has ``three splendid umpires'' working the World Series. Budig said: ``The World Series crew is proven and first-rate. We have total confidence in them.'' The umpires should let the players make the errors and the managers the bad decisions. Then everyone will talk about the players and managers and not the umpires. ||||| Chuck Knoblauch and Tino Martinez were as popular as squeegee men a week ago, the speculation rampant that one or the other or both might be exiled if the Yankees' historic year crumbled in the post-season. Two big hits in the midst of a big inning changed all that Saturday night in Game 1 of the World Series. The Yankees trailed San Diego, 5-2, in the seventh inning, but Knoblauch hit a three-run home run to tie the score, and five batters later, Martinez smashed a grand slam. The seven-run explosion rocketed the Yankees to a 9-6 victory in the opener of the four-of-seven-game series, before 56,712 at Yankee Stadium. Orlando Hernandez will pitch against Andy Ashby in Game 2 Sunday night at the Stadium. Beyond seizing the advantage in the series, the Yankees were able to neutralize the Padres' ace, Kevin Brown, driving him from the mound in the seventh. Brown, seen by many as San Diego's best hope for a World Series upset, will not pitch again until Game 4, at the earliest. Brown was pitching with a three-run lead after the top of the fifth, when Tony Gwynn and Greg Vaughn banged back-to-back homers. One out into the seventh, however, Jorge Posada hit a single, and Brown walked Ricky Ledee. Brown, who had thrown a whopping 64 pitches in the first three innings, went out, and the reliever Donne Wall came in to face Knoblauch. This is what the Yankees have done all season, force a starter from the game in the middle innings, before exploiting a middle reliever. Knoblauch, of course, had earned notoriety for his gaffe in the Game 2 of the American League Championship Series against Cleveland, standing and waiting for an interference call as the ball rolled to a stop behind him and the decisive run scored. The Yankees came back to win the series, however; Knoblauch got a reprieve and talked about how much the experience had helped him. Facing Wall with a one-ball, no-strike count, Knoblauch had to duck under a runaway fastball. Two balls, no strikes. Wall had to throw a strike, Knoblauch swung hard and lifted a high fly down the left-field line. Off the bat, it did not look like much. But it kept carrying, Vaughn drifting back in left and looking up, to see the ball disappear into the stands. Tie game. Yankee Stadium shook. Knoblauch rounded the bases, crossed home plate and thrust both arms into the air, yelling to the crowd, like a hyped Olympic weightlifter who had just successfully hoisted a half-ton. He stomped around the dugout, his helmet on, teammates banging on him happily. When Derek Jeter singled, nobody really noticed. Wall left the game, and Mark Langston took over. Paul O'Neill flied out, and after Jeter advanced on a wild pitch, Bernie Williams was intentionally walked. Chili Davis drew a walk. Bases loaded, once more, with Martinez coming to the plate, with exactly one run batted in in his first 76 career at-bats in league championship and World Series games. With the count two balls and two strikes, Langston threw a pitch near the outside corner that he thought should have been a strike. Instead, Garcia called it a ball. Langston glared, snapping at the return throw. Langston and Martinez and everyone on the field now understood that with the bases loaded and a 3-2 count, Langston would have to throw what players refer to as a cookie _ a tasty pitch over the middle. Martinez ate up this cookie. The ball soared into the upper deck in right field, lifting three years of post-season misery off the back of the Yankees' first baseman, a grand slam. The crowd called out Martinez from the dugout again. Like Knoblauch, Martinez pumped both arms, and later the crowd would chant his name, and Martinez would wave his cap. San Diego's lead was long gone. The Yankees had taken a 2-0 lead over Brown in the second inning, forcing him to throw 32 pitches in the second. They loaded the bases with a single and two walks, and Ledee, the rookie left fielder who is playing because none of Torre's left fielders have been hitting, pulled a sinking fastball down the right field line with two outs. The fans along the foul line stood, some waving to push the ball fair with the body English, and the ball landed on the line, skipping off the wall as two runners scored. The Yankees had the early edge, they had jumped on Brown, and they had their best pitcher on the mound. San Diego's Chris Gomez led off the second inning with a blooper over shortstop, the ball falling in for a single. Quilvio Veras flied to right, Gwynn grounded out and Gomez took second, bringing Vaughn to the plate. David Wells got ahead in the count, no balls and two strikes, with a change-up and a fastball, before trying to run a fastball inside on Vaughn, who hit 50 home runs during the regular season. Vaughn attacked the pitch: a line drive that landed in the second deck, foul all the way, but a frightening mistake. Jorge Posada, the Yankees' catcher, jogged to the mound to re-think the strategy, perhaps to remind Wells of the conventional wisdom: you must pitch Vaughn on the outer edge of the plate. Posada returned to the plate, called for an outside fastball, Wells threw. Vaughn's swing was short and quick, the ball making a click sound off the bat, like a well-struck golf ball, before carrying over the wall in right-center field. Tie game. Wells retired the first two batters in the fifth inning, before jamming Veras with an inside fastball. Veras' bat snapped on contact, but it was enough to send a looper into short center field, a single. Gwynn stepped in, having hit a single in his first two at-bats, and looked for a sign from the third base coach Tim Flannery. With a runner on first, he likes to try to pull a ball through the right side of the infield. Wells fired a fastball, Gwynn turned on the pitch and ripped it, a line drive that crashed off the facing of the upper deck in right field. The Padres jumped from the dugout, celebrating, as Wells turned away, disgusted, asking for a new baseball. He got one, delivered another fastball, and Vaughn slugged this deep into the left field stands. Two pitches, two home runs, the first back-to-back home runs allowed by Wells since April 30. San Diego led, 5-2, and Yankee Stadium was silent. It would not stay that way. ||||| The moment of truth for Chuck Knoblauch came in the bottom of the first inning when his name was announced at Yankee Stadium for the first time since he neglected to chase down that memorable loose ball last Wednesday. There were no boos. It was a very warm ovation. They liked him. They really liked him. Knoblauch exhaled. Knoblauch had emphasized before the game that he was concerned about winning and rumbling into the World Series, not about the fans. But it surely made Knoblauch feel at home when he realized that the fans had forgiven him. Victories, more than time, had healed the malice toward Knoblauch and he could play second base without earplugs. When the Yankees defeated the Indians, 9-5, in Game 6 on Tuesday night to advance to their second World Series in three years, Knoblauch was easily the most relieved player on the field. The awful mistake that he had made in Game 2 would be forgotten. The Yankees had won the pennant, and Knoblauch was celebrating as much as anyone. ``To have them act like that toward me was tremendous,'' said Knoblauch, about the response that he received. ``It was a great feeling, and it really helped me out.'' Knoblauch was wearing a cap that declared the Yankees champions of the American League in 1998; Champagne dripped off the brim as he spoke. He did not look up, but continued to talk about how he had learned a lot by being vilified after making a mistake that Little Leaguers are expected not to make. ``Just to face things and take it like a man and answer all the questions, although they're tough,'' Knoblauch said. ``You see what you're made of when you have to bounce back from something like that. That's basically what I learned.'' If the Yankees had lost the ALCS, even some of Knoblauch's teammates had said that he would be branded as the villain for failing to pursue the ball that glanced off Travis Fryman's back while he was running outside the baseline. Knoblauch had argued with the umpire while the go ahead run scored from first and the Indians won, 4-1. Now Knoblauch can watch television and read the newspapers again without getting queasy. ``That's huge for him,'' David Cone said. ``That's huge for me. I let them back into the game, and that would have been a tough one if they would have come back and beat us. And Knobbie, I'm sure he's feeling a lot better now.'' Knoblauch, who had two hits in five at-bats, was working on his second bottle of Champagne five minutes after reporters were allowed into the clubhouse. He flashed the sort of smile that he had not shown too much recently and, now that the Yankees are in the World Series, Knoblauch should expect to be teased often about his mistake. ``Maybe if we go all the way, we'll do that,'' Derek Jeter said. ``I don't know what I'll say, but I'll think of something good.'' ||||| A strong sign that this city is going bonkers for the Padres came Friday morning when 680 fans agreed to shave their heads for a radio promotion raffle in return for a 1-in-680 chance at skybox tickets for post-season play. ``This was more a show of support for the team than it was for the one ticket,'' said Tommy Sablan, producer of the ``Jeff and Jer'' show. ``It was symbolic of the efforts of the bald Padres _ Tony Gwynn, Wally Joyner, Greg Vaughn, Jim Leyritz. About a thousand people showed up _ men, women and children. We had 10 barbers and 20 hairdressers and it took six hours for the lines to either get buzzed or straight-razored. ``We were shocked at the turnout. But this is a bandwagon town. `Buy the ticket on the day of the concert' type public. You'll see an even bigger bandwagon on Monday when they've won and then hopefully we play the Yankees and it's a real World Series.'' After the Padres beat the Braves, 3-0, in Game 2 of the National League Championship Series on Thursday night in Atlanta to take a two-game lead in the four-of-seven-game series, San Diego fans began gearing up for a shot at the World Series in more traditional ways. It would be the team's first World Series appearance since 1984, and in the downtown business district Friday, marquees and banners read ``Go Padres'' and a lunch-hour rally was attended by several hundred fans. The Padres set an attendance record of 2,555,901 this season, up a half-million from last year and nearly a million and a half from three years ago. It stemmed in part from an effort by John Moores, the Padres owner, and Larry Lucchino, the team's president, to put family entertainment in the park after they bought the team in December 1994. ``This is a more diversified group of fans than I saw in Atlanta,'' Lucchino said. ``Their crowd seemed yuppified. We're proud of our three generations of families who come to the games.'' Donna McMahon, a 63-year-old homemaker from La Jolla, has been a fan since she was 10 and the Pacific Coast League Padres played at Lane Field near the harbor. She would take a streetcar after school to meet her father, and he would buy bleacher seats. Later, she brought her four children to Jack Murphy Stadium for the National League Padres when 2,500 people was a crowd. Now, she brings her grandchildren to a sold-out Qualcomm Stadium. ``There are different groups in the stands,'' she said, ``the upper class, the middle class, the business person, the beer-drinking fan, the children, all of the Mexican fans from across the border. We are true fans _ all of us.'' San Diego Mayor Susan Golding agrees, while also giving credit to the balmy weather. ``Padre fans are a cross-section from all over the county,'' she said. ``Downtown, suburban, rural, east, north, ranchers and farmers to high-tech engineers, yuppies to the new kids _ the X generation. A lot from across the border. The Padres are extremely popular in Tijuana. We do have the perfect weather for a long baseball season. Playing in the World Series in October has got to be better than in New York.'' Carlos Carrion, who was born in San Diego and has been a baseball fan for 25 years, brings his 10- and 8-year-old sons to the stadium. ``This is a great chance to let my children see the players work,'' Carrion said. ``They can look up to these guys and understand their character and their work ethic.'' The Padres ticket office estimates that on average, more than 15,000 fans in the 65,000-seat stadium are Latin Americans from San Diego, Baja California or the state of Sonora. The Padres have the first major league baseball souvenir store in Tijuana. ||||| Talk about high expectations. It's not just the man from Tampa who has them anymore. Knowing their baseball as well as they do, everybody in the Joe Torre family passed up tickets for the divisional series and the league championship series as just so much parsley on the plate of life. ``The pressure was on to get to the World Series, so I can see all those people,'' Torre, the Yankees' manager, was saying before New York went out to play the here-we-are, let's-go-for-it San Diego Padres in the Stadium Saturday night. Now that the Yankees are in the Series, their Florida-based owner and their fans and they themselves can see nothing more appropriate than four more victories. Anything less than 125 would feel like emptiness. But why should the Yankees be any different from the six teams that already fell off the bus to this World Series? The gloom and doom in the six other cities will not compare to the letdown that would grip New York and the owner's insatiable little heart should the Yanks come up short. The three-tiered playoff system has practically turned baseball into football, where the survival-of-the-fittest mentality produces one exalted Super Bowl champion and a league full of chumps and losers, condemned to a nether world of Parcells-like demons kicking them in their sore spots for eternity. The World Series used to be a short and sweet reward for excellence, but that was when there were eight teams per league, and the winners met in daylight in early October. Even if the Yankees clubbed my poor Brooklyn Dodgers into submission once again, well, there was always next year. But in 1969, baseball began league championship series, and in 1995 it began a two-layered playoff system. The World Series is still different, which is why we should all resist the babble of ``post-season records'' flung at us by the hyperactive computers and the hyperactive broadcasters from the dozens of different networks that carry baseball. The World Series is still a competition between one league that encourages pitchers to be athletes and another league relatively devoid of strategy. Somehow the ``playoffs'' leave just about everybody feeling inadequate. Think about it. The Houston Astros are going around feeling they cannot perform in the post-season. The Texas Rangers are sulking because they had the best hitting in the league and could hardly touch Yankee pitching when it counted. In Chicago, the glory of winning a special playoff for the wild-card spot and Sammy Sosa's 66 home runs has been pre-empted. The very city that beat the Cubs for the 1969 eastern title held a parade for Sosa Saturday in the canyons where Lindbergh and John Glenn and the 1969 Mets were once hailed. Speaking of indignity, there are the Red Sox, whose occasional qualification for the playoffs is merely a signal that nothing good can come of it. In Atlanta, the team of the '90s has won exactly one World Series, and now it is up to management to keep repeating that: ``The main goal is to get to the Series. This is a recorded announcement. This is a recorded announcement. This is a recorded announcement.'' In Cleveland, the fans had to live with the phrase ``Nineteen forty-eight!'' being chanted at the Indians in the Bronx as the Yankees put the Indians out of misery. That leaves the Padres as the only team with virtually nothing to lose. This can be good, or it can be bad. Bruce Bochy, the manager, a reserve on the 1984 San Diego World Series team, has said: ``A lot of the players on that team said, looking back, we wish we would have had a little different attitude instead of just saying, `Hey, we are in the World Series.' And this year, I think you will see the players out there playing to win.'' Torre recalled being the underdog in 1996, but he said his Yankees felt they could beat the Braves. ``I am sure that is the way the Padres feel right now, that maybe other people aren't predicting a lot for them, but I am sure they are for themselves,'' Torre said. ``I think getting here is where the pressure is,'' Torre added. ``You want to win, but getting to the World Series is so tough after playing 162 games and getting into post-season and then having to fight, bite and scratch and everything else to get here.'' Torre continued: ``You don't think about in spring training that we want to go and win the World Series. You want to get to the World Series. Then you get there, well, you have played well enough and won enough games, then of course, we want to win. ``As far as legitimizing our season _ I hate to even think in negative terms, but if San Diego happens to win the World Series, sure it takes a little bit of the luster off what we have accomplished by getting here, but I think that was our goal, initially.'' The key word in that sentence is ``initially.'' The Yankees built an insatiable demand for more victories _ and World Series tickets in the Torre family. While they're at it, the Yankees had better win the whole thing. They are a victim of their own excellence. ||||| As Bernie Williams starts what could be his final series with the Yankees in Game 1 of the World Series at Yankee Stadium Saturday night, he wants to do it with a free mind. Free of worrying about his extremely uncertain future and an undisclosed personal matter that has made this post-season as perplexing as it has been pleasing. But it is not easy to keep the mind uncluttered. Williams does not know if he will sign with the Yankees and return to center field next season, because he wants to test free agency. There is a good chance the Yankees will not offer him the most lavish contract, so Williams might be forced to decide between the fattest paycheck and a new situation in the baseball city of his choice or a pretty fat paycheck and a familiar situation in the Bronx. Scott Boras, Williams' agent, compared his client with players in the $10 million-a-year bracket last season, so that price tag has surely escalated after Williams won the American League batting title with a .339 average while drilling 26 homers and knocking in 97 runs. Williams was asked if he agreed with the theory that other teams will outbid the Yankees. ``I do not know,'' said Williams, who has been aloof during this post-season, but has declined to discuss why. ``And I'm thinking about this a little more than I would like to. I would like to keep my focus on the series.'' It is not an issue Williams or the Yankees wants to study Saturday or in the coming days, because the team is four victories away from a championship. Still, it is an issue that hovers over the Yankees as ominously as the owner George Steinbrenner hovers over general manager Brian Cashman. ``It's a tough thing,'' Cashman said about balancing the excitement of being in the World Series with the reality of trying to re-sign Williams. ``You know the ugliness of the future is right in front of you.'' Although Williams has been adamant about not discussing the future, he relented slightly Friday. When a reporter asked him what the reasons would be for staying with the Yankees, Williams' answer included an escape clause. ``Just the fact that I've been here my whole career,'' Williams said. ``That has a lot to do with it. The relationships that I've come to know during the years, I think it would be very hard, but not impossible, to start from scratch somewhere else.'' Williams continued: ``But I think the reality of the game in this day and age is things happen. You can't really write things in stone that they're going to happen. People get traded. People become free agents and go to other teams. I have to make a decision really thinking about all the people I'm accountable for.'' When Williams was asked what better situation could a player have than being the center fielder for the Yankees, winning a batting crown and being in the World Series, the 30-year-old was stumped. ``Wow, that's pretty good right there,'' Williams said. ``It's funny you mention that, because I really haven't thought about any of that. I think, at some point in the off season, I was going to sit down and think, wow, it wasn't a bad year at all.'' While Cashman would not discuss financial matters, another Yankee official said the team will not offer Williams as much as $12 million a year _ unless Steinbrenner gets generous after a possible championship. It is more likely that the Yanks would offer Williams in the $10 million-a-year range. ``I'd hate to have to speculate on something at this point,'' Cashman said. ``We'll give it our best effort to sign him at a level that we're comfortable with. Hopefully, that will be enough. Then we'll have a marriage. If not, we'll have a divorce.'' While Williams has earned the right to become a free agent and pursue the contract he wants in the city he wants, he has interesting choices to make. When a reporter asked Williams how he would respond to someone who suggested that he accept less from the Yankees to remain in a city where he is popular, where he likes his teammates and manager, and where the team has been in the post-season for four straight years, he did not hesitate to answer. ``My response to that would be it's not the time right now to start thinking about that,'' Williams said. ``If I start thinking about that, it'll distract me to what I need to do in the World Series.'' Williams then talked about how the Yankees are at the end of a remarkable season and how he did not want his situation to disrupt that. But, with Williams' status uncertain, he was asked if the next four to seven games would be bittersweet, since he could be ending a 13-year association with the Yankees. ``I don't want to talk about that,'' Williams said. ``I'm going to have a lot of fun out there. I'm going to go all out.'' Then Williams walked away from the interview. ||||| Hours after Darryl Strawberry was released from Columbia Presbyterian Medical Center Friday, he spoke happily about being able to play with his two young children, joked about eating a small amount of chicken and potatoes and sounded relieved to be at home in Fort Lee, N.J., instead of in a hospital. ``I'm really feeling good,'' said Strawberry, in a telephone interview. ``It's nice to be home with the kids and to just kick back. That's all that I'm going to do. This feels good.'' Strawberry, who underwent surgery to remove a cancer from his colon on Oct. 3, said he will remain in New Jersey for another 10 or 12 days before returning home to Rancho Mirage, Calif. The 36-year old outfielder, who lost a significant amount of weight from his 215-pound frame, said he does not have enough strength to attend any of the World Series games and is content watching his teammates play the Padres on television. ``My heart is with them,'' said Strawberry, who spoke to several Yankees after they won the American League championship. ``I'm just going to relax at home and watch the game. I'm looking forward to it. I may not be there, but it'll feel like I am.'' Paul O'Neill echoed the sentiments of many Yankees by saying, ``Everything we're going through is game. This is his life. Any time we get some good news about Darryl it's uplifting. We're all praying for him.'' Since cancerous cells were found in one of the 36 lymph nodes removed from his abdomen during the operation, Strawberry said doctors told him he will need six months of chemotherapy treatment once he returns to California. The 36-year-old outfielder said doctors told him he will need one treatment of at least one hour a week. ``I was never scared,'' said Strawberry. ``I was more emotional than anything. At the time of it, I had played for a while with this. I wanted to keep playing because I knew we were going to get into the World Series.'' At that point, Strawberry stopped and laughed, probably because the Yankees had made it to the World Series as he expected. ``I wanted to be there because that's what you play for,'' said Strawberry. ``I don't think that I was ever scared. It's something that I wanted to deal with head on. I talked to Eric Davis about the chemo. He said it's not as bad as some people say.'' Although the discovery of cancer in one lymph node proved that the cancer had spread, Strawberry remained optimistic about his future and said, ``It didn't worry me. I got all the information from the doctors. One out of 36 is good. It wasn't spreading. It didn't run off and get crazy like cancer can.'' When Strawberry was released from the hospital in a wheelchair Friday, a few hundred fans who had congregated chanted, ``Darryl, Darryl.'' Strawberry, who struggled not to cry, hugged a few nurses, thanked everyone for supporting him, then rose from the wheelchair and carefully entered a car. ``Wow, I never thought this day would come,'' Strawberry said. ``But it has.'' Unlike David Wells, Saturday night's starter in the World Series who predicted the Yankees would throttle the Padres in five games, Strawberry refused to make a prediction about whether he will soon be getting his third World Series ring. But Strawberry, who is still hopeful about returning to play in 1999, sounded very confident in the 1998 Yankees, who are wearing his number 39 on the back of their caps as inspiration. ``They look really good,'' said Strawberry.'' It's not going to be easy, but I think they're ready. The best thing about making it to the World Series is you know you don't have to go anywhere else after that. You've made it to that point and then you go do the best you can do. That's what it's all about.'' ||||| A new shipment of bats arrived for Tino Martinez on Friday, and he massaged the handles to make sure they were thin enough, knocked on the barrels and listened for a certain sound and swung them slowly again and again. Martinez was so excited about the fresh bats, he reacted like a Little Leaguer who was wielding an aluminum bat for the first time. ``You were saving the World Series trees until now, right?'' Martinez said to the representative from the bat company. ``These are from World Series trees, aren't they?'' Martinez could joke about the bats being specially designed for the World Series because the Yankees began their quest for a second title in the past three years when they play host to the San Diego Padres in Game 1 at Yankee Stadium Saturday night. Major leaguer players who were watching on television could not imitate David Letterman and joke about World Series wood. Even though Martinez has struggled with numerous bats during the post-season, he could joke because the Yankees are still alive for the title. Martinez is still alive. For now, Martinez, the power hitter who has mostly been missing in action, could joke around. For now. ``You always get a fresh start in the post-season because it's game to game,'' said Martinez. ``If you win, you've got another game the next day so you forget about the bad at-bats. It's easier to do that in post-season because your next at-bat could be the biggest at-bat of the season.'' Normally, having Martinez at the plate for the biggest at-bat of the season would be a pleasing sight to the Yankees. But not when the calendar flips to October. Martinez has experienced another frustrating post-season. He is 5 for 30 with 10 strikeouts, no homers and only 1 run batted in for a hitting-starved team that has batted .229 while still winning 7 of 9 post-season games because of superior pitching. Can the Yankees continue to win if Martinez, their most valuable run producer, is a sometime singles hitter? ``We've just gotten through two good series,'' said Paul O'Neill. ``The Yankees won those series. You don't focus on one guy. You focus on winning. The whole team won.'' As much as Joe Torre talked about Martinez needing one line-drive hit to get him in a groove, the 30-year-old first baseman is in a career drought in the post-season. Since joining the Yankees, Martinez is 20 for 107 (.187) with one homer and 4 RBI in 29 post-season games. Those are puny statistics, especially for a player who has driven in 381 runs in 455 regular season games over the last three years. ``I would guess that Tino would have a great series,'' O'Neill said. ``Baseball has a way of evening things out. You have a bad series, you come back and have a great series. In the season, that's easier to do. In the post-season, it gets tougher.'' It cannot get much tougher for Martinez, who was dropped from fifth to sixth in the order during the American League Championship Series against the Cleveland Indians and will remain in that spot until further notice. Martinez has blamed his paucity of production on impatience and on trying to do too much. He has sometimes flailed at poor pitches during hitter's counts of 3-1 and 2-0, instead of working the count, and he has admitted that his previous failures in the post-season have caused him to pursue the obviously unattainable five-run homer. Actually, Martinez has already made some alterations, and he has reached base 7 times in his last 10 plates appearances on a double, a single, a hit-by-pitch and 4 walks. It is not enough to pacify George Steinbrenner, but it is something for him to cling to. Until last night, anyway, when Martinez had to face Kevin Brown, a nasty right-hander who had retired him in 30 of 34 career at-bats. ``If I was getting good pitches and missing them, then I'd say I have a bad swing working,'' said Martinez. ``But I've been swinging at bad pitches. Right now, I've just got to be patient and wait.'' The Yankees will wait with him. They have to. In the 1996 World Series, Torre started Cecil Fielder over Martinez at first in Games 3, 4 and 5. It was a difficult decision because Martinez had paced the team in RBI while Fielder did not join the Yankees until July 31. But the Yankees grabbed all three games so it worked. Torre does not have such an attractive replacement this season in Luis Sojo. So the Yankees will stay with Martinez, for better or worse, while he tries to stay positive and finally produce. ``It's the World Series,'' said Martinez. ``You got to go out there and have fun with it. Big games are all big games. You want to go out there and enjoy that game and try to do your best to win that game. You don't think that you might lose that day.'' ||||| YANKEES Pitching The starting pitching enabled the Yankees to advance past Cleveland in the American League Championship Series. David Wells is 7-1 in his career in the postseason and he should have an additional edge against a Padres' lineup that is generally less effective against left-handed pitching. Orlando Hernandez has four terrific pitches, pitched seven shutout innings in the pivotal Game 4 of the ALCS and earned the start in Game 2 of this series. David Cone should benefit from six days' worth of rest when he starts Game 3, as well as being able to pitch in warm Southern California. Mariano Rivera's stuff might be as good as it has been all year, and Mike Stanton continues to be a dominant postseason pitcher. Reasons for concern: the erratic Andy Pettitte, who needs a home-plate umpire to call strikes on pitches low and away, and Jeff Nelson, who lost his command in his last brief outing. Offense There were signs in the ALCS that the offense is coming out of its collective slump _ Chuck Knoblauch is getting on base consistently, Derek Jeter is back to driving the ball to right field and through the middle, Bernie Williams had three hits in Game 6, and Scott Brosius has been a consistent force at the bottom of the lineup. But the Yankees do have holes: Chili Davis will be hard-pressed to catch up to the fastballs of Kevin Brown and Andy Ashby, and Tino Martinez's postseason funk is a problem. The Yankees could use a contribution from Jorge Posada, who will start in Games 1 and 2 and may get a chance to drive pitches low in the strike zone, where he can hit with power. Defense The Yankees have the best defense in baseball, excellent up the middle with Jeter and Knoblauch, and at third with Brosius. Nobody's really taken advantage of the fact that Williams has a poor arm in center field, but rest assured that Ken Caminiti, Steve Finley and Greg Vaughn will try. The Indians did expose the fact that the Yankees' pitchers have trouble preventing baserunners from stealing from second to third base. Baserunning The Yankees run well as they take extra bases, particularly Paul O'Neill, Brosius, Jeter and Knoblauch going first-to-third; Williams can make mistakes. The Yankees probably won't be able to steal against Kevin Brown, who has an effective slide step, but they could be aggressive against Andy Ashby, or the combination of Sterling Hitchcock and Jim Leyritz. PADRES Hitting Except for Jim Leyritz, no one in the San Diego lineup is particularly hot or particularly frightening at the moment. Tony Gwynn hasn't been as consistent as he usually is, Ken Caminiti and Greg Vaughn have been streaky. But the Padres are a veteran team capable of putting the ball in play, getting runners on base and then moving them along, and so long as they are getting exceptional pitching, that's all they really need. Quilvio Veras, the leadoff hitter, is adept at drawing walks and Steve Finley, who has become more pull conscious in the last two years, could try to take aim at the right field stands in Yankee Stadium. Vaughn's power could be a factor if the Yankees' pitchers don't jam him enough to keep him from leaning over the plate. Pitching Kevin Brown is the best pitcher in this series, capable of winning three games if necessary, should Padres manager Bruce Bochy choose to start him in Games 1, 4 and 7. But at some point, San Diego will need a big outing from either Andy Ashby or Sterling Hitchcock. When Ashby's right, he's hitting the corners with his sinking fastball and his slider, and when his command is suspect, he gets pounded. Hitchcock used his split-fingered fastball to great effectiveness against right-handed batters in the first two rounds of the playoffs, but the Yankees' left-handed hitters may cause him some concern. San Diego's middle relief is the weakest aspect of the team, with Randy Myers and Mark Langston from the left side (the stuff of each has waned). But if a lead can be delivered into the hands of closer Trevor Hoffman, he'll keep it. Defense They mostly catch the ball and avoid mistakes, though they are unspectacular. Shortstop Chris Gomez and the second baseman Veras are adept at turning double plays, and Caminiti won a Gold Glove at third base last year; Wally Joyner has good hands at first; the center fielder Steve Finley is extremely quick in tracking down base hits and returning the ball to the infield. Tony Gwynn's range is better toward the right field line, not nearly as good on balls hit in the gaps. The Yankees will be able to run on the arm of Vaughn in left field. Baserunning Veras can steal bases (24) this year, and Finley can in a tight spot, as well. In general, however, the Padres are a slow, plodding team, though Caminiti and Vaughn are good at going first-to-third, and Gwynn won't make mistakes on the bases. PITCHING TO THE PADRES Quilvio Veras: A switch-hitter who has more power right-handed; should try to pitch him down-and-in with breaking balls when he's hitting right-handed, jam him with fastballs when he's batting left-handed. Steve Finley: A left-handed hitter who likes to pull the ball. Left-handers like David Wells can beat him with breaking balls low and outside. Tony Gwynn: When he's hot, he's impossible. When he's not hitting well, he can be anxious early in the count, and he should be fed breaking balls out of the strike zone. Greg Vaughn: Big-time power on anything high and over the plate. Because he likes to pull the ball, you must pitch him on the outer edge, occasionally jamming him to keep him honest. Ken Caminiti: More power right-handed, a better hitter left-handed. These days, he's a good lowball hitter and can be beat by fastballs up in the zone. Wally Joyner: With runners on base, he'll try to jump on a fastball early in the count. Is not a strong hitter and can be jammed. Chris Gomez: Like Derek Jeter, likes to hit pitches inside out, to right field and through the middle. He can hit with power if you make a mistake with a breaking ball. Ruben Rivera: An impatient hitter who will chase pitches out of the strike zone. Carlos Hernandez: Looks for the first-pitch fastball in the upper half of the strike zone. Can struggle against breaking balls. Jim Leyritz: No apparent holes right now, can hit fastballs in and away. Best bet is to get ahead in the count and try to get him to chase breaking balls. PITCHING TO THE YANKEES Chuck Knoblauch: Hard throwers like to jam him with fastballs because he stands on top of the plate, which is why he gets hit so often. Derek Jeter: Sometimes he has a tendency to chase pitches at his feet, but if you don't get the ball in far enough, he can hammer the ball over the wall in right. Paul O'Neill: The Yankees' best pure hitter, he sometimes will chase fastballs up and away, particularly after there is one strike. Bernie Williams: A switch-hitter who has trouble resisting chest-high fastballs. When he lays off them, he is a much better hitter, and he did this in the last game of the Cleveland series. Chili Davis: Has a great eye and will work a pitcher deep into a count, but he can be overpowered with fastballs above his belt. Cheats some now to get his bat started, making him vulnerable to off-speed pitches. Tino Martinez: Nothing seems right at the moment. Is anxious and chases pitches out of the strike zone when he falls behind in the count, and isn't taking advantage of mistakes when they're made. Scott Brosius: A great breaking ball hitter, but he can also drive a fastball a long way when he anticipates, as Cleveland's Charles Nagy now knows. Jorge Posada: When batting left-handed, he fares very poorly against splitters, curveballs and sliders. Ricky Ledee: Like all young hitters, he has a tendency to expand the strike zone and chase pitches out of the strike zone after falling behind in the count. Kevin Brown likely will attack him aggressively. SATURDAY'S PITCHERS Kevin Brown: Best sinking fastball in the game (91-93) mph, a four-seam fastball of 95-97 mph to throw high in the strike zone, a slider that breaks down and away from right-handed batters, and a forkball that dives at 88-89 mph. Holds runners well. David Wells: Aggressive, aggressive, aggressive, challenging hitters with fastballs. His curveball can be exceptional, and his changeup has improved. Throw strikes: Allowed as many home runs (29) as walks (29), but has not allowed a three-run homer or a grand slam all year.

Star second baseman Chuck Knoblauch and power hitter Tino Martinez were the heroes in the Yankees' win over the Padres in Game 1 of the 1998 World Series. Knoblauch, who had made a game-losing error in Game 2 of the ALCS, hit a three-run homer off reliever Donne Wall in the seventh inning to tie the score, 5-5. Martinez, who is batting a puny.187 in post-season play with the Yankees, later hit a grand slam. Ace pitcher Kevin Brown, viewed by many as the Padres' best hope for a series upset, had started the game. The Yanks, hoping for a second title in the last three years, are playing without Darryl Strawberry who underwent cancer surgery on Oct. 3 .

Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs ||||| One of four foreigners beheaded by kidnappers in Chechnya claimed in a videotape shown today that he and his fellow hostages were British spies. The tape was played by Chechen Vice President Vakha Arsanov at a news conference in Grozny. He refused to answer questions about it, including where or when it was filmed and how or why the government had it. The four men, all wearing heavy beards, looked haggard. One, Peter Kennedy, claimed they had been sent to Chechnya by the British secret service to monitor telephone conversations. Their mission was to gather information to stop the spread of Islamic extremism in the region, he said in Russian. It was not known whether he was speaking under duress. The severed heads of the four hostages were found lined up Tuesday along a highway outside Chechnya's capital, Grozny. Chechen security forces were still searching today for the bodies. The government has said it was trying to rescue the men at the time of their deaths, which have outraged Britain and Russia. But its possession of the tape was likely to increase suspicions of a government link in the frequent kidnappings in Chechnya since it won de facto independence from Russia in a 1994-96 war. Most hostages have been released unharmed, though dozens remain in captivity. Kennedy and his three colleagues _ Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were employees of Britain's Granger Telecom. They were reportedly setting up a mobile phone network in Chechnya when they were abducted by unidentified gunmen Oct. 3 in Grozny. In the tape, Kennedy claimed they were using the equipment to monitor phone calls. Asked about the spying allegation, British Ambassador to Russia Andrew Wood said, ``We don't comment on these things in general but any reasonable analysis would show we have no wish to spy on Chechen territory.'' ||||| A French United Nations official who was kidnapped in southern Russia more than 10 months ago was set free Saturday and flown to U.N. headquarters in Geneva. Vincent Cochetel, 37, who headed the office of the U.N. High Commissioner for Refugees in the North Ossetia region, was seized by three masked gunmen in the regional capital Vladikavkaz on Jan. 29. Cochetel was freed about two minutes into the predawn operation on the border between the republics of Chechnya and Ingushetia, but a longer firefight broke out between the kidnappers and Russian security forces, the Interfax news agency said. Cochetel was unharmed, but he said three of the kidnappers had been killed. In footage of the operation broadcast by Russia's NTV television station, Cochetel was shown lying face-down, hand-cuffed, behind a white van. Russian security officers in masks and camouflage stood over him protectively, then dragged him away as gunfire erupted and bullets bounced off the van. Two security officers were slightly injured during the operation, Interior Ministry spokesman Alexander Mikhailov said, according to the ITAR-Tass news agency. No ransom was paid for Cochetel's release, Mikhailov said. Cochetel was flown aboard a chartered jet to Moscow, where he was met by French Ambassador Hubert Colin de Verdiere and U.N. officials. He left Saturday evening for Geneva, where his family and colleagues were awaiting him at U.N. headquarters, said Vera Sobolyeva, UNHCR spokeswoman in Moscow. Speaking briefly, 6th graf pvs ||||| Chechen authorities found the decapitated heads of four kidnapped foreigners Tuesday along a highway near a remote village after a two-month search in the breakaway region in southern Russia. An Associated Press reporter saw the severed heads near the village of Assinovskaya, about 40 kilometers (25 miles) west of Grozny, the Chechen capital. He did not see any sign of the bodies. The heads were lined up on a piece of cloth along a main highway across southern Russia, NTV television reported. The heads were identified as those of the four abducted foreigners by Umar Makhauri, who had been a bodyguard assigned to the four when they were abducted Oct. 3 by unidentified gunmen in Grozny. He said the bodies had not been found. But Chechen government officials at the scene said four bodies had been found without giving further details. Chechen President Aslan Maskhadov said in Grozny that the bodies of four men had been recovered. The hostages _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were engineers. They were working for Granger Telecom, a British telephone company, installing 300,000 telephone lines across Chechnya. Maskhadov said Chechen officials had caught one of the captors Monday and he told police where the hostages were being held. But that information reached the other captors, who decided to kill their captives, the ITAR-Tass news agency quoted Maskhadov as saying. The chief executive of Granger Telecom, Ray Verth, said Tuesday that Chechen authorities had mounted a rescue attempt Monday night that went ``tragically wrong.'' No other details were available. He said the company had ``opened a dialogue with the kidnappers and received confirmation that the hostages were alive as recently as last week.'' ``Their murder is an appalling and barbaric act and our thoughts go out to the families to whom we offer our deepest condolences. We are a small tightly-knit company and everyone here is in a state of shock,'' Verth said outside company headquarters in Weybridge, south of London, where flags were flying at half-mast. Spokesmen at the British and New Zealand embassies in Moscow said they were checking on reports the four men had been killed, but could not comment. The British Foreign Ministry in London said it was investigating urgently reports that bodies had been found. Chechen acting First Vice Premier Turpal Atgeriyev, who is heading the investigation into the killings, said authorities had several suspects in the abduction, but have failed to make any progress, according to the ITAR-Tass news agency. Eamon Hickey, the father of one of the missing men, said he heard the news and was hoping it would not be confirmed. ``There is so much rumor and counter-rumor coming from out there that we don't know what to think. Obviously we are hoping and praying that it does not turn out to be true,'' he said at his home in England. Chechen authorities had been searching for the missing men for the past two months. British officials said they had not received any ransom demand for the missing men. Maskhadov said the deaths of the four men were a major blow to Chechnya and its efforts to gain international recognition of its independence. He blamed the rash of abductions in Chechnya to unidentified ``outside forces'' and their Chechen henchmen. ``I am ready to answer before my people and the whole world for what happened,'' he was quoted as saying by the Interfax news agency. Hostage-takings, usually for ransom, have become common in Chechnya since the end of the breakaway republic's two-year war for independence from Russia in 1996. But victims are rarely killed. Since the beginning of 1998, 176 people have been kidnapped in the North Caucasus region of Russia, including dozens of foreigners, and 90 of them released, officials have said. ||||| A truck blew up when it drove over a land mine in breakaway Chechnya on Friday, killing two people and injuring two others, a news agency said. In another mine explosion, a tractor driver was killed Thursday in the republic, the Interfax news agency reported, citing Chechnya's security officials. Chechnya's ambulance service said that three to five people are hospitalized every week with injuries from mine explosions, Interfax reported. It did not say how many people are killed. Many of the victims are children, who dig the ground to look for ammunition left over from Chechnya's two-year independence war against Moscow. Russia withdrew its troops in 1996. Chechnya considers itself an independent state, although no country, including Russia, has recognized its independence. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Assailants have abducted Chechnya's top prosecutor, who was investigating the killings of four kidnapped foreigners, officials said Friday. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Officials at the prosecutor's office said unidentified attackers seized Tagirov, and authorities speculated it was the work of an armed band seeking the release of one of its members from prison. Tagirov was investigating the deaths of four foreigners whose severed heads were found Tuesday lined up by a roadside in the breakaway Russian republic. The victims _ Peter Kennedy, Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were abducted Oct. 3 by unidentified gunmen in Grozny. It was not clear if there was any link between Tagirov's abduction and his investigation into the killings of the four men. Meanwhile, Chechen Deputy Prime Minister Turpal Atgeriyev said authorities had arrested a man who confessed to kidnapping the four foreigners. The suspect was identified as Apti Abitayev, the ITAR-Tass news agency said. Chechen security forces were searching Friday for additional suspects as well as the bodies of the four foreigners. Atgeriyev said he did not place any value in a videotape that showed one of the four victims saying he was spying for Britain. ``There are certain methods that might force a person to confess to any crime,'' Atgeriyev said. The videotape, shown Thursday by Chechnya's vice president, showed hostage Peter Kennedy claiming that the four men had been sent to Chechnya to listen in on phone conversations in the breakaway republic. Chechen officials refused to answer any questions about the tape, including where or when it was filmed and how the government got it. It was not known if Kennedy spoke under duress. Britain's Embassy in Moscow was trying to obtain the tape, spokesman Michael Haddock said Friday. Chechen President Aslan Maskhadov will allow British government agents to come to Chechnya to investigate the killing, Atgeriyev said, according to the Interfax news agency. Since Chechnya's two-year independence war with Russia ended in 1996, feuding gangs have waged bloody turf wars. Hundreds of people have been kidnapped, mostly for ransom. Meanwhile, a Russian soldier taken hostage during the war was released after a year of efforts to free him, ITAR-Tass said Friday. Alexei Novikov was seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. The report gave no details of his release. ||||| The European Union Wednesday condemned the slaying of four foreign hostages in Chechnya and said it would raise the issue with Russia's foreign minister. In a statement, EU Foreign Affairs Commissioner Hans van den Broek ``condemned in the strongest terms the senseless killing of the four hostages.'' Van den Broek said the EU was determined to see remaining hostages in Chechnya released unharmed. He planned to discuss the killings with Russian Foreign Minister Igor Ivanov, who is in Brussels for talks at NATO. The severed heads of the hostages _ three Britons and a New Zealander _ were found Tuesday. The men, who were working to restore phone services in the breakaway Russian republic, had been abducted by gunmen in October. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs

In Chechnya, 3-5 people a week, many of them children, are hurt by land mines. The heads of 4 kidnapped foreign telephone engineers were found in Chechnya. The hostages were decapitated during a failed rescue attempt. Their bodies are missing. One kidnapper was arrested. The EU condemned the slayings. The Chechen vice president showed a video of 1 of the hostages saying they all were British spies. He refused to answer questions about the video. A Chechen prosecutor investigating the kidnappings was himself abducted. A French UN official, held hostage for 10 months, was freed unharmed in an operation at the Chechen border in which 3 kidnappers were killed.

Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs ||||| One of four foreigners beheaded by kidnappers in Chechnya claimed in a videotape shown today that he and his fellow hostages were British spies. The tape was played by Chechen Vice President Vakha Arsanov at a news conference in Grozny. He refused to answer questions about it, including where or when it was filmed and how or why the government had it. The four men, all wearing heavy beards, looked haggard. One, Peter Kennedy, claimed they had been sent to Chechnya by the British secret service to monitor telephone conversations. Their mission was to gather information to stop the spread of Islamic extremism in the region, he said in Russian. It was not known whether he was speaking under duress. The severed heads of the four hostages were found lined up Tuesday along a highway outside Chechnya's capital, Grozny. Chechen security forces were still searching today for the bodies. The government has said it was trying to rescue the men at the time of their deaths, which have outraged Britain and Russia. But its possession of the tape was likely to increase suspicions of a government link in the frequent kidnappings in Chechnya since it won de facto independence from Russia in a 1994-96 war. Most hostages have been released unharmed, though dozens remain in captivity. Kennedy and his three colleagues _ Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were employees of Britain's Granger Telecom. They were reportedly setting up a mobile phone network in Chechnya when they were abducted by unidentified gunmen Oct. 3 in Grozny. In the tape, Kennedy claimed they were using the equipment to monitor phone calls. Asked about the spying allegation, British Ambassador to Russia Andrew Wood said, ``We don't comment on these things in general but any reasonable analysis would show we have no wish to spy on Chechen territory.'' ||||| A French United Nations official who was kidnapped in southern Russia more than 10 months ago was set free Saturday and flown to U.N. headquarters in Geneva. Vincent Cochetel, 37, who headed the office of the U.N. High Commissioner for Refugees in the North Ossetia region, was seized by three masked gunmen in the regional capital Vladikavkaz on Jan. 29. Cochetel was freed about two minutes into the predawn operation on the border between the republics of Chechnya and Ingushetia, but a longer firefight broke out between the kidnappers and Russian security forces, the Interfax news agency said. Cochetel was unharmed, but he said three of the kidnappers had been killed. In footage of the operation broadcast by Russia's NTV television station, Cochetel was shown lying face-down, hand-cuffed, behind a white van. Russian security officers in masks and camouflage stood over him protectively, then dragged him away as gunfire erupted and bullets bounced off the van. Two security officers were slightly injured during the operation, Interior Ministry spokesman Alexander Mikhailov said, according to the ITAR-Tass news agency. No ransom was paid for Cochetel's release, Mikhailov said. Cochetel was flown aboard a chartered jet to Moscow, where he was met by French Ambassador Hubert Colin de Verdiere and U.N. officials. He left Saturday evening for Geneva, where his family and colleagues were awaiting him at U.N. headquarters, said Vera Sobolyeva, UNHCR spokeswoman in Moscow. Speaking briefly, 6th graf pvs ||||| Chechen authorities found the decapitated heads of four kidnapped foreigners Tuesday along a highway near a remote village after a two-month search in the breakaway region in southern Russia. An Associated Press reporter saw the severed heads near the village of Assinovskaya, about 40 kilometers (25 miles) west of Grozny, the Chechen capital. He did not see any sign of the bodies. The heads were lined up on a piece of cloth along a main highway across southern Russia, NTV television reported. The heads were identified as those of the four abducted foreigners by Umar Makhauri, who had been a bodyguard assigned to the four when they were abducted Oct. 3 by unidentified gunmen in Grozny. He said the bodies had not been found. But Chechen government officials at the scene said four bodies had been found without giving further details. Chechen President Aslan Maskhadov said in Grozny that the bodies of four men had been recovered. The hostages _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were engineers. They were working for Granger Telecom, a British telephone company, installing 300,000 telephone lines across Chechnya. Maskhadov said Chechen officials had caught one of the captors Monday and he told police where the hostages were being held. But that information reached the other captors, who decided to kill their captives, the ITAR-Tass news agency quoted Maskhadov as saying. The chief executive of Granger Telecom, Ray Verth, said Tuesday that Chechen authorities had mounted a rescue attempt Monday night that went ``tragically wrong.'' No other details were available. He said the company had ``opened a dialogue with the kidnappers and received confirmation that the hostages were alive as recently as last week.'' ``Their murder is an appalling and barbaric act and our thoughts go out to the families to whom we offer our deepest condolences. We are a small tightly-knit company and everyone here is in a state of shock,'' Verth said outside company headquarters in Weybridge, south of London, where flags were flying at half-mast. Spokesmen at the British and New Zealand embassies in Moscow said they were checking on reports the four men had been killed, but could not comment. The British Foreign Ministry in London said it was investigating urgently reports that bodies had been found. Chechen acting First Vice Premier Turpal Atgeriyev, who is heading the investigation into the killings, said authorities had several suspects in the abduction, but have failed to make any progress, according to the ITAR-Tass news agency. Eamon Hickey, the father of one of the missing men, said he heard the news and was hoping it would not be confirmed. ``There is so much rumor and counter-rumor coming from out there that we don't know what to think. Obviously we are hoping and praying that it does not turn out to be true,'' he said at his home in England. Chechen authorities had been searching for the missing men for the past two months. British officials said they had not received any ransom demand for the missing men. Maskhadov said the deaths of the four men were a major blow to Chechnya and its efforts to gain international recognition of its independence. He blamed the rash of abductions in Chechnya to unidentified ``outside forces'' and their Chechen henchmen. ``I am ready to answer before my people and the whole world for what happened,'' he was quoted as saying by the Interfax news agency. Hostage-takings, usually for ransom, have become common in Chechnya since the end of the breakaway republic's two-year war for independence from Russia in 1996. But victims are rarely killed. Since the beginning of 1998, 176 people have been kidnapped in the North Caucasus region of Russia, including dozens of foreigners, and 90 of them released, officials have said. ||||| A truck blew up when it drove over a land mine in breakaway Chechnya on Friday, killing two people and injuring two others, a news agency said. In another mine explosion, a tractor driver was killed Thursday in the republic, the Interfax news agency reported, citing Chechnya's security officials. Chechnya's ambulance service said that three to five people are hospitalized every week with injuries from mine explosions, Interfax reported. It did not say how many people are killed. Many of the victims are children, who dig the ground to look for ammunition left over from Chechnya's two-year independence war against Moscow. Russia withdrew its troops in 1996. Chechnya considers itself an independent state, although no country, including Russia, has recognized its independence. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Assailants have abducted Chechnya's top prosecutor, who was investigating the killings of four kidnapped foreigners, officials said Friday. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Officials at the prosecutor's office said unidentified attackers seized Tagirov, and authorities speculated it was the work of an armed band seeking the release of one of its members from prison. Tagirov was investigating the deaths of four foreigners whose severed heads were found Tuesday lined up by a roadside in the breakaway Russian republic. The victims _ Peter Kennedy, Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were abducted Oct. 3 by unidentified gunmen in Grozny. It was not clear if there was any link between Tagirov's abduction and his investigation into the killings of the four men. Meanwhile, Chechen Deputy Prime Minister Turpal Atgeriyev said authorities had arrested a man who confessed to kidnapping the four foreigners. The suspect was identified as Apti Abitayev, the ITAR-Tass news agency said. Chechen security forces were searching Friday for additional suspects as well as the bodies of the four foreigners. Atgeriyev said he did not place any value in a videotape that showed one of the four victims saying he was spying for Britain. ``There are certain methods that might force a person to confess to any crime,'' Atgeriyev said. The videotape, shown Thursday by Chechnya's vice president, showed hostage Peter Kennedy claiming that the four men had been sent to Chechnya to listen in on phone conversations in the breakaway republic. Chechen officials refused to answer any questions about the tape, including where or when it was filmed and how the government got it. It was not known if Kennedy spoke under duress. Britain's Embassy in Moscow was trying to obtain the tape, spokesman Michael Haddock said Friday. Chechen President Aslan Maskhadov will allow British government agents to come to Chechnya to investigate the killing, Atgeriyev said, according to the Interfax news agency. Since Chechnya's two-year independence war with Russia ended in 1996, feuding gangs have waged bloody turf wars. Hundreds of people have been kidnapped, mostly for ransom. Meanwhile, a Russian soldier taken hostage during the war was released after a year of efforts to free him, ITAR-Tass said Friday. Alexei Novikov was seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. The report gave no details of his release. ||||| The European Union Wednesday condemned the slaying of four foreign hostages in Chechnya and said it would raise the issue with Russia's foreign minister. In a statement, EU Foreign Affairs Commissioner Hans van den Broek ``condemned in the strongest terms the senseless killing of the four hostages.'' Van den Broek said the EU was determined to see remaining hostages in Chechnya released unharmed. He planned to discuss the killings with Russian Foreign Minister Igor Ivanov, who is in Brussels for talks at NATO. The severed heads of the hostages _ three Britons and a New Zealander _ were found Tuesday. The men, who were working to restore phone services in the breakaway Russian republic, had been abducted by gunmen in October. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs

Chechnya's independence war against Moscow has caused the death of innocent people. Many died accidentally from explosives left behind by the Russians. Hundreds, mostly foreigners, are being taken for ransom, some of whom have been killed. The European Union is condemning the deaths of four kidnapped foreigners, three Briton, one New Zealander, whose heads were found near a remote village. Chechen police are searching for the beheaded bodies. A Chechen tape earlier showed one of the men admitting he was a British spy. Rebels also kidnapped the Chechen prosecutor investigating the deaths. He was later freed, as was a UN official and a Russian soldier.

Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs ||||| One of four foreigners beheaded by kidnappers in Chechnya claimed in a videotape shown today that he and his fellow hostages were British spies. The tape was played by Chechen Vice President Vakha Arsanov at a news conference in Grozny. He refused to answer questions about it, including where or when it was filmed and how or why the government had it. The four men, all wearing heavy beards, looked haggard. One, Peter Kennedy, claimed they had been sent to Chechnya by the British secret service to monitor telephone conversations. Their mission was to gather information to stop the spread of Islamic extremism in the region, he said in Russian. It was not known whether he was speaking under duress. The severed heads of the four hostages were found lined up Tuesday along a highway outside Chechnya's capital, Grozny. Chechen security forces were still searching today for the bodies. The government has said it was trying to rescue the men at the time of their deaths, which have outraged Britain and Russia. But its possession of the tape was likely to increase suspicions of a government link in the frequent kidnappings in Chechnya since it won de facto independence from Russia in a 1994-96 war. Most hostages have been released unharmed, though dozens remain in captivity. Kennedy and his three colleagues _ Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were employees of Britain's Granger Telecom. They were reportedly setting up a mobile phone network in Chechnya when they were abducted by unidentified gunmen Oct. 3 in Grozny. In the tape, Kennedy claimed they were using the equipment to monitor phone calls. Asked about the spying allegation, British Ambassador to Russia Andrew Wood said, ``We don't comment on these things in general but any reasonable analysis would show we have no wish to spy on Chechen territory.'' ||||| A French United Nations official who was kidnapped in southern Russia more than 10 months ago was set free Saturday and flown to U.N. headquarters in Geneva. Vincent Cochetel, 37, who headed the office of the U.N. High Commissioner for Refugees in the North Ossetia region, was seized by three masked gunmen in the regional capital Vladikavkaz on Jan. 29. Cochetel was freed about two minutes into the predawn operation on the border between the republics of Chechnya and Ingushetia, but a longer firefight broke out between the kidnappers and Russian security forces, the Interfax news agency said. Cochetel was unharmed, but he said three of the kidnappers had been killed. In footage of the operation broadcast by Russia's NTV television station, Cochetel was shown lying face-down, hand-cuffed, behind a white van. Russian security officers in masks and camouflage stood over him protectively, then dragged him away as gunfire erupted and bullets bounced off the van. Two security officers were slightly injured during the operation, Interior Ministry spokesman Alexander Mikhailov said, according to the ITAR-Tass news agency. No ransom was paid for Cochetel's release, Mikhailov said. Cochetel was flown aboard a chartered jet to Moscow, where he was met by French Ambassador Hubert Colin de Verdiere and U.N. officials. He left Saturday evening for Geneva, where his family and colleagues were awaiting him at U.N. headquarters, said Vera Sobolyeva, UNHCR spokeswoman in Moscow. Speaking briefly, 6th graf pvs ||||| Chechen authorities found the decapitated heads of four kidnapped foreigners Tuesday along a highway near a remote village after a two-month search in the breakaway region in southern Russia. An Associated Press reporter saw the severed heads near the village of Assinovskaya, about 40 kilometers (25 miles) west of Grozny, the Chechen capital. He did not see any sign of the bodies. The heads were lined up on a piece of cloth along a main highway across southern Russia, NTV television reported. The heads were identified as those of the four abducted foreigners by Umar Makhauri, who had been a bodyguard assigned to the four when they were abducted Oct. 3 by unidentified gunmen in Grozny. He said the bodies had not been found. But Chechen government officials at the scene said four bodies had been found without giving further details. Chechen President Aslan Maskhadov said in Grozny that the bodies of four men had been recovered. The hostages _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were engineers. They were working for Granger Telecom, a British telephone company, installing 300,000 telephone lines across Chechnya. Maskhadov said Chechen officials had caught one of the captors Monday and he told police where the hostages were being held. But that information reached the other captors, who decided to kill their captives, the ITAR-Tass news agency quoted Maskhadov as saying. The chief executive of Granger Telecom, Ray Verth, said Tuesday that Chechen authorities had mounted a rescue attempt Monday night that went ``tragically wrong.'' No other details were available. He said the company had ``opened a dialogue with the kidnappers and received confirmation that the hostages were alive as recently as last week.'' ``Their murder is an appalling and barbaric act and our thoughts go out to the families to whom we offer our deepest condolences. We are a small tightly-knit company and everyone here is in a state of shock,'' Verth said outside company headquarters in Weybridge, south of London, where flags were flying at half-mast. Spokesmen at the British and New Zealand embassies in Moscow said they were checking on reports the four men had been killed, but could not comment. The British Foreign Ministry in London said it was investigating urgently reports that bodies had been found. Chechen acting First Vice Premier Turpal Atgeriyev, who is heading the investigation into the killings, said authorities had several suspects in the abduction, but have failed to make any progress, according to the ITAR-Tass news agency. Eamon Hickey, the father of one of the missing men, said he heard the news and was hoping it would not be confirmed. ``There is so much rumor and counter-rumor coming from out there that we don't know what to think. Obviously we are hoping and praying that it does not turn out to be true,'' he said at his home in England. Chechen authorities had been searching for the missing men for the past two months. British officials said they had not received any ransom demand for the missing men. Maskhadov said the deaths of the four men were a major blow to Chechnya and its efforts to gain international recognition of its independence. He blamed the rash of abductions in Chechnya to unidentified ``outside forces'' and their Chechen henchmen. ``I am ready to answer before my people and the whole world for what happened,'' he was quoted as saying by the Interfax news agency. Hostage-takings, usually for ransom, have become common in Chechnya since the end of the breakaway republic's two-year war for independence from Russia in 1996. But victims are rarely killed. Since the beginning of 1998, 176 people have been kidnapped in the North Caucasus region of Russia, including dozens of foreigners, and 90 of them released, officials have said. ||||| A truck blew up when it drove over a land mine in breakaway Chechnya on Friday, killing two people and injuring two others, a news agency said. In another mine explosion, a tractor driver was killed Thursday in the republic, the Interfax news agency reported, citing Chechnya's security officials. Chechnya's ambulance service said that three to five people are hospitalized every week with injuries from mine explosions, Interfax reported. It did not say how many people are killed. Many of the victims are children, who dig the ground to look for ammunition left over from Chechnya's two-year independence war against Moscow. Russia withdrew its troops in 1996. Chechnya considers itself an independent state, although no country, including Russia, has recognized its independence. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Assailants have abducted Chechnya's top prosecutor, who was investigating the killings of four kidnapped foreigners, officials said Friday. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Officials at the prosecutor's office said unidentified attackers seized Tagirov, and authorities speculated it was the work of an armed band seeking the release of one of its members from prison. Tagirov was investigating the deaths of four foreigners whose severed heads were found Tuesday lined up by a roadside in the breakaway Russian republic. The victims _ Peter Kennedy, Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were abducted Oct. 3 by unidentified gunmen in Grozny. It was not clear if there was any link between Tagirov's abduction and his investigation into the killings of the four men. Meanwhile, Chechen Deputy Prime Minister Turpal Atgeriyev said authorities had arrested a man who confessed to kidnapping the four foreigners. The suspect was identified as Apti Abitayev, the ITAR-Tass news agency said. Chechen security forces were searching Friday for additional suspects as well as the bodies of the four foreigners. Atgeriyev said he did not place any value in a videotape that showed one of the four victims saying he was spying for Britain. ``There are certain methods that might force a person to confess to any crime,'' Atgeriyev said. The videotape, shown Thursday by Chechnya's vice president, showed hostage Peter Kennedy claiming that the four men had been sent to Chechnya to listen in on phone conversations in the breakaway republic. Chechen officials refused to answer any questions about the tape, including where or when it was filmed and how the government got it. It was not known if Kennedy spoke under duress. Britain's Embassy in Moscow was trying to obtain the tape, spokesman Michael Haddock said Friday. Chechen President Aslan Maskhadov will allow British government agents to come to Chechnya to investigate the killing, Atgeriyev said, according to the Interfax news agency. Since Chechnya's two-year independence war with Russia ended in 1996, feuding gangs have waged bloody turf wars. Hundreds of people have been kidnapped, mostly for ransom. Meanwhile, a Russian soldier taken hostage during the war was released after a year of efforts to free him, ITAR-Tass said Friday. Alexei Novikov was seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. The report gave no details of his release. ||||| The European Union Wednesday condemned the slaying of four foreign hostages in Chechnya and said it would raise the issue with Russia's foreign minister. In a statement, EU Foreign Affairs Commissioner Hans van den Broek ``condemned in the strongest terms the senseless killing of the four hostages.'' Van den Broek said the EU was determined to see remaining hostages in Chechnya released unharmed. He planned to discuss the killings with Russian Foreign Minister Igor Ivanov, who is in Brussels for talks at NATO. The severed heads of the hostages _ three Britons and a New Zealander _ were found Tuesday. The men, who were working to restore phone services in the breakaway Russian republic, had been abducted by gunmen in October. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs

Violence, deaths and kidnappings continue to plague the former Russian state of Chechnya two years after its independence. Exploding landmines are a weekly occurrence. Criminal bands are blamed for the kidnappings, usually for ransom and rarely deadly. However, four UK Telecom engineers, hinted to be spies, were beheaded during a botched Chechen rescue attempt and their heads displayed along a road. Britain and the European Union expressed outrage and sought Russian intervention. The Chechen prosecutor was then abducted. The prosecutor and a Russian soldier were subsequently freed and the Russians rescued a French UN official at the border with Chechnya.

Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs ||||| One of four foreigners beheaded by kidnappers in Chechnya claimed in a videotape shown today that he and his fellow hostages were British spies. The tape was played by Chechen Vice President Vakha Arsanov at a news conference in Grozny. He refused to answer questions about it, including where or when it was filmed and how or why the government had it. The four men, all wearing heavy beards, looked haggard. One, Peter Kennedy, claimed they had been sent to Chechnya by the British secret service to monitor telephone conversations. Their mission was to gather information to stop the spread of Islamic extremism in the region, he said in Russian. It was not known whether he was speaking under duress. The severed heads of the four hostages were found lined up Tuesday along a highway outside Chechnya's capital, Grozny. Chechen security forces were still searching today for the bodies. The government has said it was trying to rescue the men at the time of their deaths, which have outraged Britain and Russia. But its possession of the tape was likely to increase suspicions of a government link in the frequent kidnappings in Chechnya since it won de facto independence from Russia in a 1994-96 war. Most hostages have been released unharmed, though dozens remain in captivity. Kennedy and his three colleagues _ Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were employees of Britain's Granger Telecom. They were reportedly setting up a mobile phone network in Chechnya when they were abducted by unidentified gunmen Oct. 3 in Grozny. In the tape, Kennedy claimed they were using the equipment to monitor phone calls. Asked about the spying allegation, British Ambassador to Russia Andrew Wood said, ``We don't comment on these things in general but any reasonable analysis would show we have no wish to spy on Chechen territory.'' ||||| A French United Nations official who was kidnapped in southern Russia more than 10 months ago was set free Saturday and flown to U.N. headquarters in Geneva. Vincent Cochetel, 37, who headed the office of the U.N. High Commissioner for Refugees in the North Ossetia region, was seized by three masked gunmen in the regional capital Vladikavkaz on Jan. 29. Cochetel was freed about two minutes into the predawn operation on the border between the republics of Chechnya and Ingushetia, but a longer firefight broke out between the kidnappers and Russian security forces, the Interfax news agency said. Cochetel was unharmed, but he said three of the kidnappers had been killed. In footage of the operation broadcast by Russia's NTV television station, Cochetel was shown lying face-down, hand-cuffed, behind a white van. Russian security officers in masks and camouflage stood over him protectively, then dragged him away as gunfire erupted and bullets bounced off the van. Two security officers were slightly injured during the operation, Interior Ministry spokesman Alexander Mikhailov said, according to the ITAR-Tass news agency. No ransom was paid for Cochetel's release, Mikhailov said. Cochetel was flown aboard a chartered jet to Moscow, where he was met by French Ambassador Hubert Colin de Verdiere and U.N. officials. He left Saturday evening for Geneva, where his family and colleagues were awaiting him at U.N. headquarters, said Vera Sobolyeva, UNHCR spokeswoman in Moscow. Speaking briefly, 6th graf pvs ||||| Chechen authorities found the decapitated heads of four kidnapped foreigners Tuesday along a highway near a remote village after a two-month search in the breakaway region in southern Russia. An Associated Press reporter saw the severed heads near the village of Assinovskaya, about 40 kilometers (25 miles) west of Grozny, the Chechen capital. He did not see any sign of the bodies. The heads were lined up on a piece of cloth along a main highway across southern Russia, NTV television reported. The heads were identified as those of the four abducted foreigners by Umar Makhauri, who had been a bodyguard assigned to the four when they were abducted Oct. 3 by unidentified gunmen in Grozny. He said the bodies had not been found. But Chechen government officials at the scene said four bodies had been found without giving further details. Chechen President Aslan Maskhadov said in Grozny that the bodies of four men had been recovered. The hostages _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were engineers. They were working for Granger Telecom, a British telephone company, installing 300,000 telephone lines across Chechnya. Maskhadov said Chechen officials had caught one of the captors Monday and he told police where the hostages were being held. But that information reached the other captors, who decided to kill their captives, the ITAR-Tass news agency quoted Maskhadov as saying. The chief executive of Granger Telecom, Ray Verth, said Tuesday that Chechen authorities had mounted a rescue attempt Monday night that went ``tragically wrong.'' No other details were available. He said the company had ``opened a dialogue with the kidnappers and received confirmation that the hostages were alive as recently as last week.'' ``Their murder is an appalling and barbaric act and our thoughts go out to the families to whom we offer our deepest condolences. We are a small tightly-knit company and everyone here is in a state of shock,'' Verth said outside company headquarters in Weybridge, south of London, where flags were flying at half-mast. Spokesmen at the British and New Zealand embassies in Moscow said they were checking on reports the four men had been killed, but could not comment. The British Foreign Ministry in London said it was investigating urgently reports that bodies had been found. Chechen acting First Vice Premier Turpal Atgeriyev, who is heading the investigation into the killings, said authorities had several suspects in the abduction, but have failed to make any progress, according to the ITAR-Tass news agency. Eamon Hickey, the father of one of the missing men, said he heard the news and was hoping it would not be confirmed. ``There is so much rumor and counter-rumor coming from out there that we don't know what to think. Obviously we are hoping and praying that it does not turn out to be true,'' he said at his home in England. Chechen authorities had been searching for the missing men for the past two months. British officials said they had not received any ransom demand for the missing men. Maskhadov said the deaths of the four men were a major blow to Chechnya and its efforts to gain international recognition of its independence. He blamed the rash of abductions in Chechnya to unidentified ``outside forces'' and their Chechen henchmen. ``I am ready to answer before my people and the whole world for what happened,'' he was quoted as saying by the Interfax news agency. Hostage-takings, usually for ransom, have become common in Chechnya since the end of the breakaway republic's two-year war for independence from Russia in 1996. But victims are rarely killed. Since the beginning of 1998, 176 people have been kidnapped in the North Caucasus region of Russia, including dozens of foreigners, and 90 of them released, officials have said. ||||| A truck blew up when it drove over a land mine in breakaway Chechnya on Friday, killing two people and injuring two others, a news agency said. In another mine explosion, a tractor driver was killed Thursday in the republic, the Interfax news agency reported, citing Chechnya's security officials. Chechnya's ambulance service said that three to five people are hospitalized every week with injuries from mine explosions, Interfax reported. It did not say how many people are killed. Many of the victims are children, who dig the ground to look for ammunition left over from Chechnya's two-year independence war against Moscow. Russia withdrew its troops in 1996. Chechnya considers itself an independent state, although no country, including Russia, has recognized its independence. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Assailants have abducted Chechnya's top prosecutor, who was investigating the killings of four kidnapped foreigners, officials said Friday. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Officials at the prosecutor's office said unidentified attackers seized Tagirov, and authorities speculated it was the work of an armed band seeking the release of one of its members from prison. Tagirov was investigating the deaths of four foreigners whose severed heads were found Tuesday lined up by a roadside in the breakaway Russian republic. The victims _ Peter Kennedy, Darren Hickey and Rudolf Petschi of Britain and Stanley Shaw of New Zealand _ were abducted Oct. 3 by unidentified gunmen in Grozny. It was not clear if there was any link between Tagirov's abduction and his investigation into the killings of the four men. Meanwhile, Chechen Deputy Prime Minister Turpal Atgeriyev said authorities had arrested a man who confessed to kidnapping the four foreigners. The suspect was identified as Apti Abitayev, the ITAR-Tass news agency said. Chechen security forces were searching Friday for additional suspects as well as the bodies of the four foreigners. Atgeriyev said he did not place any value in a videotape that showed one of the four victims saying he was spying for Britain. ``There are certain methods that might force a person to confess to any crime,'' Atgeriyev said. The videotape, shown Thursday by Chechnya's vice president, showed hostage Peter Kennedy claiming that the four men had been sent to Chechnya to listen in on phone conversations in the breakaway republic. Chechen officials refused to answer any questions about the tape, including where or when it was filmed and how the government got it. It was not known if Kennedy spoke under duress. Britain's Embassy in Moscow was trying to obtain the tape, spokesman Michael Haddock said Friday. Chechen President Aslan Maskhadov will allow British government agents to come to Chechnya to investigate the killing, Atgeriyev said, according to the Interfax news agency. Since Chechnya's two-year independence war with Russia ended in 1996, feuding gangs have waged bloody turf wars. Hundreds of people have been kidnapped, mostly for ransom. Meanwhile, a Russian soldier taken hostage during the war was released after a year of efforts to free him, ITAR-Tass said Friday. Alexei Novikov was seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. The report gave no details of his release. ||||| The European Union Wednesday condemned the slaying of four foreign hostages in Chechnya and said it would raise the issue with Russia's foreign minister. In a statement, EU Foreign Affairs Commissioner Hans van den Broek ``condemned in the strongest terms the senseless killing of the four hostages.'' Van den Broek said the EU was determined to see remaining hostages in Chechnya released unharmed. He planned to discuss the killings with Russian Foreign Minister Igor Ivanov, who is in Brussels for talks at NATO. The severed heads of the hostages _ three Britons and a New Zealander _ were found Tuesday. The men, who were working to restore phone services in the breakaway Russian republic, had been abducted by gunmen in October. ||||| A French United Nations official kidnapped in southern Russia more than 10 months ago has been freed and was flown to Moscow Saturday, news reports reported. Vincent Cochetel, 37, who headed the regional office of the U.N. High Commissioner for Refugees in North Ossetia, was seized by three masked gunmen in the region's capital of Vladikavkaz on Jan. 29. According to the Interfax news agency, Cochetel was freed early Saturday in an operation conducted by the Russian Interior Ministry and the regional security forces of the north Caucasus. He was flown to Moscow and was waiting for a special plane to take him to Geneva, Switzerland, NTV television news said. It was unclear where Cochetel was held, in the breakaway republic of Chechnya or in North Ossetia. ``He was liberated on the border,'' Alexander Dzasokhov, the president of North Ossetia, told NTV. French President Jacques Chirac spoke to President Boris Yeltsin by telephone and thanked him for Russia's part in freeing Cochetel, the Kremlin press service said. His release came four days after the severed heads of four foreign hostages were found in Chechnya when a government rescue attempt apparently went wrong. Chechen security forces are still searching for the men's bodies. Chechnya's top prosecutor, who was investigating the killings and was apparently kidnapped Thursday, was also released Saturday, Interfax said. Mansur Tagirov vanished Thursday evening while returning to Chechnya's capital city Grozny from a small village nearby, news reports said. Tagirov was investigating the deaths Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and Stanley Shaw of New Zealand. They had been abducted by unidentified gunmen Oct. 3 in Grozny. Their heads were found Tuesday on a highway about 40 kilometers (25 miles) west of Grozny. Since Chechnya's two-year war of independence against Russia ended in 1996, hundreds of people have been kidnapped in the breakaway republic and neighboring regions by armed gangs who are mostly motivated by ransom. Dozens of people are currently held captive. A Russian soldier taken hostage during the war was released Friday after a year of efforts to free him, the ITAR-Tass news agency reported. Alexei Novikov had been seized in February 1996. Only a handful of soldiers kidnapped during the war are still in captivity. ||||| Chechen police were searching Wednesday for the bodies of four kidnapped foreigners who were beheaded during a botched attempt to free them. The deaths _ and the ostentatious display of the heads by killers _ prompted neighboring Russian regions to close off roads into Chechnya, and caused an outpouring of outrage and lament from Russian and foreign officials. Chechen President Aslan Maskhadov said Wednesday that one alleged kidnapper had been arrested and authorities gleaned enough information to launch a rescue operation for the hostages, three Britons and a New Zealander. But during the rescue attempt the kidnappers panicked and decapitated the captives, Maskhadov said, according to Russian media reports. ``A concrete criminal group was identified, an organizer of the abductions was arrested and an approximate location of the hostages was determined,'' Maskhadov said in a statement. The severed heads of the four men were found lined up along a highway Tuesday outside Chechnya's capital Grozny, and hundreds of Chechen law enforcement officers were searching for the bodies Wednesday. ``We will take all necessary steps to solve this horrible crime,'' said Maskhadov, who has been unable to restore law and order in Chechnya since being elected last year. The victims _ Britons Peter Kennedy, Darren Hickey, and Rudolf Petschi, and New Zealand's Stanley Shaw _ were identified by their former bodyguard. They had been abducted by unidentified gunmen Oct. 3 in Grozny. ``He was just making a career for himself,'' Hickey's sister Deborah, 21, said Wednesday, fighting back tears. ``He was fantastic with electrics and all that sort of stuff.'' The family had expected 26-year-old Hickey to be back at his parents' pub in Thames Ditton, England, by Christmas. ``Everything was going right, everyone was very optimistic'' that the hostages would be rescued, she told Britain's ITV. ``The people that have done this to him, they deserve exactly the same back.'' The men, pickup 9th pvs

Chechnya's top prosecutor, Mansur Tagirov, was abducted from Grozny, but released the next day. Tagirov was investigating the slaying of four kidnapped foreigners. The victims, all telephone linemen employed by the British firm Granger Telecom, were beheaded in a bungled rescue attempt. Their heads were found near the city; the search for the bodies continues. The Chechen Vice President showed a tape of one of the hostages, Peter Kennedy, during a news conference in which he claimed they were spies sent to Chechnya by the British to monitor phone calls; however, another official discounted the tape's value. Kidnapping for ransom is common in Chechnya.

China's government said Thursday that two prominent dissidents arrested this week are suspected of endangering national security _ the clearest sign yet Chinese leaders plan to quash a would-be opposition party. Foreign Ministry spokesman Zhu Bangzao refused to specify what laws were broken or how Xu Wenli and Qin Yongmin endangered the state. A third leading advocate of the China Democracy Party who has been in custody for a month, Wang Youcai, was accused of ``inciting the overthrow of the government,'' the Hong Kong-based Information Center of Human Rights and Democratic Movement in China reported. All three men could face up to life in prison if convicted of the harshest measures under China's vague state security law. The ruling Communist Party has resorted to the law to silence dissent since it went into effect last year. The arrests of Xu and Qin at their homes Monday night and the accusations against them and Wang were the sharpest action Chinese leaders have taken since dissidents began pushing to set up and legally register the China Democracy Party in June. Xu and Qin were ``suspected of involvement in activities endangering state security'' and their ``behavior breached relevant provisions of the criminal laws of the People's Republic of China,'' Zhu said at a twice-weekly briefing. Police in Hangzhou city notified Wang's wife Wednesday that charges have already been submitted to prosecutors, bringing him a step closer to trial, the Information Center said. Xu and Qin are influential figures in the dissident community, having started their campaign for change 20 years ago in the seminal Democracy Wall movement. Wang was a student leader in the 1989 Tiananmen Square democracy demonstrations. Both have served time in prison. Xu spent 12 years in jail, much of it in solitary confinement. Since dissidents began organizing and trying to legally register the China Democracy Party, police have harassed and briefly detained more than two dozen members, but until now the government had not leveled such politically charged allegations. The Communist Party has never allowed another political party to form since it took power in 1949. In Washington on Wednesday, White House spokesman Joe Lockhart said the United States deplored the arrests and said the dissidents' peaceful political activities were fundamental human rights that all governments should protect. U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu and Qin be released immediately. Zhu criticized the United States for condemning the arrests, saying that ``no country, including the United States, should interfere in China's internal affairs.'' China in October signed a key U.N. treaty on civil and political rights that guarantees freedom of expression and freedom of association. It was the 17th international human rights treaty China has signed. Zhu told reporters there was ``absolutely no contradiction at all'' between China's support for these treaties and its arrests of the two dissidents. ||||| In response to criticism from home and abroad, Chinese officials broke their silence Wednesday to defend their arrest this week of a prominent dissident who was trying to form an opposition political party. ``Xu Wenli is suspected of involvement in activities damaging to national security and has violated relevant criminal codes of the People's Republic of China,'' said a statement from the Foreign Ministry, which on Tuesday declined to comment on the arrest. The sudden arrest on Monday night of Xu, as well as several other activists involved with him in trying to form the China Democratic Party, set off strong protests from human rights groups, other Chinese dissidents and Washington. ``We view his detention for peacefully exercising fundamental freedoms guaranteed by international human rights instruments as a serious step in the wrong direction,'' State Department spokesman James P. Rubin said in Washington on Tuesday. U.S. officials in Beijing urged the government to release Xu and asked for clarification as to the exact nature of his crime. China signed the International Covenant of Civil and Political Rights with great fanfare in October, and Xu's arrest is seen by human rights groups as a test of the nation's commitment to its tenets. Dissidents in and out of China rose to Xu's defense, with more than a dozen activists around the country announcing that they would begin fasts in support of Xu and another leader of the China Democratic Party, Qin Yongmin, who was arrested in his home in Wuhan on Monday. Almost 200 dissidents signed a letter to the Chinese government protesting the detentions, said the Information Center for Human Rights and Democratic Movement in Hong Kong. Three other Democratic Party organizers were also detained on Monday, although two of them were released early Wednesday. But the two more prominent dissidents, Xu and Qin, are likely to face a much longer haul since both have been charged with ``criminal acts.'' Xu's wife, He Xintong, said Wednesday night that she had still not been informed of the specific charge against her husband, although she surmised from the aggressive behavior of the arresting officers that the sentence ``could be long.'' Qin's family was told that he was charged with ``plotting to subvert the government,'' a crime that for serious offenses commands sentences of three years to life. In the Chinese criminal code, this charge comes under a grab-bag section called ``threatening state security,'' which makes almost any political activity that questions or hampers the authority of the Communist Party illegal, from ``violent or nonviolent activities aimed at overthrowing the government authorities,'' to ``activities designed to change the basic nature of the state.'' Xu's and Qin's trouble almost certainly stems from their efforts to gain recognition for the China Democratic Party, a loose network of pro-democracy activists in more than a dozen cities around China that was formed this year. In the last six months they have become increasingly aggressive and defiant in their attempts to register the party with the government, submitting repeated applications even after local authorities had declared the concept of an opposition party illegal. They say the Chinese Constitution does not specifically forbid the formation of new political parties, although there have been no new parties since the founding of the People's Republic in 1949. In fact, the by-laws of the China Democratic Party are fairly tame; they carefully acknowledge the central role of the Communist Party, but also support free speech and free elections for public officials. ``My husband thought the time was right to begin working to form a new party, since China recently signed the covenant on human rights,'' Ms. He said. In September, a few Democratic Party members got some slightly encouraging signals from local governments, which initially accepted their applications to form a social organization to develop a party. But in recent weeks, as organizers like Xu became more insistent and defiant, harassment by the police increased. ``All this past week we felt something was going to happen,'' Ms. He said. ``It seemed that anyone who came to visit us was later detained for a while. And there have been a lot more cars from the Public Security Bureau parked outside than is usual.'' ||||| The separate trials of two prominent democracy advocates for inciting subversion of the state opened Thursday morning, with the families of both defendants protesting their inability to hire defense lawyers. The trial in the eastern city of Hangzhou of Wang Youcai, 32, founder of the China Democracy Party, which is now suppressed, was in session for just two hours and 10 minutes. It appears to be finished, although the court did not announce a decision or say when it would. ``I don't know what happens from here,'' said Wang's wife, Hu Jiangxia, who was one of three relatives allowed to attend the trial. ``I don't hold much hope,'' she added in a telephone interview. Wang, who spent two years in prison after the 1989 student demonstrations in Tiananmen Square, was accused of organizing a political party that sought to overturn Communist Party rule and of colluding with foreign enemies of the state. He could face five years or more in prison. Since all the lawyers his family approached were intimidated by security agents, Ms. Hu said, Wang tried to mount his own defense Thursday morning after prosecutors laid out their case. But the judge frequently interrupted him and cut him off after half an hour, saying he was not responding to the specific facts of the case, she added. Wang argued that his activities were legal under China's constitution and under an international covenant on political rights that China has signed, Ms. Hu said. In the central city of Wuhan, the trial on similar charges of Qin Yongmin, 45, a veteran dissident, also continued for something over two hours. It will apparently be continued, said Qin's father, Qin Qingguo, since the session ended after the prosecution presented its charges. In that case, too, prospective lawyers had been intimidated or detained, family members said. The elderly father's request to the court Thursday morning for a postponement was ignored, so he and one of the defendant's brothers stayed outside the court building in protest, leaving another brother inside. ``We didn't feel there was any reason to observe the trial because if Qin Yongmin did not have a defense attorney, then as far as we were concerned the proceedings were meaningless,'' the father said by telephone. The U.S. Embassy asked to observe the trials. When an embassy official arrived at the court in Hangzhou Thursday morning, he was told that there were no seats available and instead waited outside, greeting Ms. Hu when she emerged, shaken, from the brief trial. ||||| Police detained and questioned the organizer of a group set up by dissidents to monitor official corruption and told him the group's activities must cease, a human rights group said Thursday. Police in Xinyang, in central China's Henan province, took An Jun away Wednesday afternoon and held him until past midnight for questioning about the group's members, said the Information Center of Human Rights and Democratic Movement in China. Police wanted a list of members with their work and home addresses, a demand An Jun refused for fear of getting them into trouble, the Hong Kong-based Information Center said. Corruption Watch, founded by nine dissidents in seven provinces, now has nearly 100 members, the center said. It applied last month to the government to register officially, but received no response, the center added. The police officers who questioned An Jun said that without official permission, the group must cease its activities, the center said. Rampant official corruption is a major public gripe in China. The Information Center said Corruption Watch had already received reports of graft in its first month of operation. In a separate report, the center said that an official in the Sichuan provincial government refused Thursday to accept an application by three dissidents to form a branch of a would-be opposition group, the China Democracy Party. Groups of dissidents in cities across China have attempted to register the group, as required by law, but authorities have rejected those applications. Signaling that the Communist Party's 49-year-old ban on opposition groups remains intact, police have detained and questioned many dissidents associated with the group. ||||| Hours before China was expected to sign a key U.N. human rights treaty and host British Prime Minister Tony Blair, police hauled a prominent human rights campaigner in for questioning Monday. Qin Yongmin's latest run-in with the authorities came as he tried for the second time in a week to legally register a human rights monitoring group. Qin said a civil affairs official in the Hubei provincial capital of Wuhan accused him of engaging in illegal activities. The police came soon after he returned home. ``As I'm sending this statement, the Wuhan Public Security Bureau is again taking me away,'' Qin said in a hastily scrawled message on the bottom of the typed statement faxed to reporters. Qin, detained briefly two weeks ago, was questioned for about three hours before being released and threatened with prosecution if he persisted in trying to set up his China Human Rights Observer. Qin hoped the harassment would stop after China signs the International Covenant on Civil and Political Rights, but he said if local authorities don't observe the treaty ``we will unswervingly push ahead with protecting human rights to the last.'' China plans to sign the International Covenant on Civil and Political Rights on Monday at the United Nations. By the time the ink is dry, Blair should be landing in Beijing on Tuesday morning for the first visit by a British prime minister in seven years. The treaty is supposed to guarantee freedoms of speech and assembly. But even after China signs, the treaty would not come into force until ratified by the legislature, which may attach reservations effectively nullifying some provisions. Blair has vowed to discuss differences over human rights with Chinese leaders. His visit has drawn appeals from dissidents and an international press freedom group urging him to persuade Chinese leaders to free political prisoners. In an open letter, three dissident said that while Chinese leaders say they respect human rights principles, in law and practice the government allows rights abuses and persecution of dissidents. Thousands of political prisoners are believed to remain in Chinese prisons, labor camps or detention centers, said the letter, a copy of which was released by the Hong Kong-based Information Center of Human Rights and Democratic Movement in China. The letter called for the release of Shi Binhai, a journalist who compiled a popular book on political change; Fang Jue, a businessman who called openly for political reform; and other imprisoned activists. Paris-based Reporters Without Borders urged Blair to call for the release of Gao Yu, Liu Xiaobo and Liu Jingsheng. The three are among 13 journalists imprisoned ``simply for attempting to practice their profession,'' it said in a statement. ||||| A Chinese dissident fleeing a new round of arrests of democracy activists in Shanghai arrived here Wednesday and announced that he and other opponents of the Chinese government plan a demonstration Thursday at the United Nations to protest the crackdown. The dissident, Yao Zhenxian, who was released in April from a Chinese labor camp, is a leader of the China Democracy Party, which was formed in June during President Clinton's visit to China. Speaking through an interpreter at Kennedy International Airport, Yao, 44, said little about why he had left Shanghai, except that he and his younger brother, Yao Zhenxiang, 38, had been sent to a labor camp in 1996 on a ``trumped-up charge'' of publishing pornography. The younger Yao, who is also a prominent figure in the China Democracy Party, is scheduled for release in April. Last week the Chinese government arrested 10 members and sympathizers of the China Democracy Party, one of whom, Wang Youcai, is to go on trial Dec. 17. ``The Chinese government feels it expanded too quickly,'' Yao said at the airport, referring to his party. Washington gave Yao a special visa, which expires in February. Dr. Wang Bingzhang, 50, an adviser to the overseas committee of the party, said later that Yao had left China for personal and political reasons. ``They were scared all the time,'' he said, referring to Yao's wife, Yu Yingzhang, and daughter, Yao Yiting, 14, who accompanied him. ``The family had a terrible life, especially the daughter. Secret agents followed them all the time.'' The family trading business, which was 12 years old, was shuttered by the government in 1996, said Wang, a former surgeon in Beijing, ``so they had no way of living.'' In addition, after Yao made organizational trips to several provinces, democracy activists urged him to go abroad, Wang said. ``They wanted him to tell the truth about what is really happening in China and to call on the whole world to pay attention,'' Wang said. Beatrice Laroche, liaison at the United Nations for Human Rights in China, a New York-based group, said the China Democracy Party was a growing presence in some of China's most populous provinces, including Sichuan. ``But their most vocal leaders have all recently been detained,'' she added. Ms. Laroche said the Yao brothers, especially the younger man, won prominence by helping to finance predecessors of the China Democracy Party with money from the family business before it was closed by the government. ||||| One leader of a suppressed new political party will be tried on Dec. 17 on a charge of colluding with foreign enemies of China ``to incite the subversion of state power,'' according to court documents given to his wife on Monday. The decision to try the leader, Wang Youcai, a founder of the China Democracy Party, with unusual speed suggests how serious the Communist authorities are in their campaign to destroy the fledgling party and silence dissidents who had begun to speak out over the last year. The charges that Wang faces, in a trial that will almost certainly be secret and quick, could bring a sentence of five years or more. Wang, 32, has been imprisoned in his home city, Hangzhou in eastern China, for a month, but was not formally arrested until Nov. 30. On that day two prominent dissidents, both promoters of the new party, were detained. One, Qin Yongmin, 45, of the central city of Wuhan, and the other, Xu Wenli, 55, of Beijing, are being held on suspicion of subversive activities. Detailed charges have not been filed. Wang was a student leader in the pro-democracy demonstrations in Tiananmen Square in 1989. After the army had crushed the movement, Wang was arrested and served two years in prison. Qin and Xu became known as democracy advocates in the late 1970s. Qin was imprisoned for eight years. In 1993 he was put in a labor camp for two years. Xu spent 12 years in prison. When President Clinton visited in the spring, Wang announced the formation of the Democracy Party. He and other dissidents hoped that China's new friendship with the United States and its decision to sign a global covenant on political and civil rights would give them room to promote political alternatives. After Clinton returned home Wang was detained, warned and released, only to be re-arrested as authorities began what now appears to be a major crackdown on dissent. Monday, Wang's wife, Hu Jiangxia, was handed the bill of prosecution, according to the Information Center of Human Rights and Democratic Movement in Hong Kong. Wang is charged with helping draft a party manifesto that states, in part, ``Only by establishing an opposition party can we be rid of this despotism.'' That is cited as grounds for the subversion charge, the information center said. In addition to detailing Wang's organizing activities, the prosecutors charge that he colluded with enemies of the state abroad, making his crime far more serious under Chinese law. He used e-mail to send 18 copies of the party's founding documents abroad, met with a member of a subversive foreign organization and received money from foreign sources to buy a computer, the indictment reportedly says. ||||| China's central government ordered the arrest of a prominent democracy campaigner and may use his contacts with exiled Chinese dissidents to charge him with harming national security, a colleague said Wednesday. Two Beijing police officers spent 30 minutes telling Zha Jianguo to stop trying to set up a political opposition party. Underscoring the warning, they said his colleague, Xu Wenli, won't be released soon and may be charged for having links to ``reactionary groups,'' Zha said. Xu and another influential dissident, Qin Yongmin, were arrested Monday night in police raids in two cities that delivered the sternest blow so far to a five-month campaign to establish the China Democracy Party and challenge the ruling Communist Party's monopoly on power. Qin was arrested for plotting to overthrow the government, a crime that could land him in jail for life. A third Democracy Party advocate, Wang Youcai, already in custody for a month, was also formally arrested Monday although his family has not been informed of the charges. Zha, who helped Xu organize would-be party members in Beijing and the nearby port of Tianjin, said police officers told him Xu's arrest was ordered by the central government, not Beijing police. He took the police reference to ``reactionary groups'' to mean exiled dissidents in the United States. Under China's vague State Security Law, such links may also be punishable by up to life in prison. Zha pledged to work with dissidents in China and exiles in the United States to campaign ``to save Xu Wenli.'' On Wednesday, 190 dissidents from around the country demanded in an open letter that the government release Xu, Qin and Wang Youcai, saying the arrests run counter to U.N. human rights treaties China has signed over the past 14 months. The authorities ``are deceiving and cheating international public opinion while on the other hand they are suppressing and persecuting domestic political dissidents,'' said the letter faxed to foreign news agencies. In Washington, White House spokesman Joe Lockhart said the United States deplored the detention and arrests of Xu and Qin. ``We believe the peaceful political activities of this kind and other forms of peaceful expression that they've been involved in are fundamental human rights that should be protected by all governments,'' Lockart said. ``We call on the Chinese government to assure the protection in these cases of Mr. Xu and Mr. Qin.'' State Department spokesman James P. Rubin said U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu be released immediately. U.S. officials received confirmation Wednesday that Xu is being detained on suspicion of ``having conducted activities damaging to China's national security,'' Rubin said. He said he had no information from Chinese authorities about Qin or Wang. Two other democracy party supporters taken into custody in central Wuhan city along with Qin _ Chen Zhonghe and Xiao Shichang _ were released Wednesday morning, said He Xintong, Xu Wenli's wife. She added that police questioned the pair about the party as well as Qin's human rights monitoring organizations. Qin and Xu are towering figures in China's persecuted dissident community. Their activism dates to the seminal Democracy Wall movement of the 1970s. Wang was a student leader in 1989's influential Tiananmen Square democracy movement. All have spent time in prison, Xu for 12 years, much of it in solitary confinement. Xu's wife said she does not know where he is being held and, in her 20-year experience with the authorities, believes they are unlikely to tell her. Released in 1993, Xu picked up his campaigning for political change soon after his parole ended last year. He has tried to use China's nascent legal system and the international treaties it signed to push for reform. ``My husband is innocent and there's nothing he can be criticized for,'' said his wife, He Xintong. ``They're going to have to expend a lot of effort to make him a criminal.'' ||||| Protesting the lack of a defense lawyer, the father of a prominent dissident is to seek a delay in his son's subversion trial, scheduled to start on Thursday in the central city of Wuhan. The defendant is Qin Yongmin, 45, a democracy advocate who has spent 10 years in prison and labor camps and has recently promoted an alternative, non-Communist political party. In a telephone interview Wednesday evening, his father, Qin Qinguo, 76, said that before the trial begins, he plans to hand the court a written plea for postponement. If the plea is ignored, he said he will walk out. ``I wouldn't be able to stand it,'' the father, a retired steelworker, said, citing his frail health and high blood pressure. Under China's code of criminal procedure, a defendant has the right to a defense lawyer. But in this case, the elder Qin said, some lawyers he approached declined to take the case, while others were warned by security officials not to get involved. The father said he did not agree with his son's political tactics but now he felt he had no choice but to protest his treatment. Qin Yongmin was arrested on Nov. 30, only hours after his mother died of a stroke. ``He wasn't even allowed to attend the funeral,'' Qin Qinguo said. ``And now he's not allowed to find a lawyer.'' On Thursday morning, a few hundred miles to the east in the city of Hangzhou, Wang Youcai, 33, is to go on trial on similar charges of inciting subversion. He, too, has no defense lawyer. Wang was a leader of student demonstrations in Tiananmen Square in 1989 and served two years in prison after they were put down by military force. As the founder of the suppressed new political party, the China Democracy Party, he publicly announced its charter in June during President Clinton's visit to China. Scores of people around the country began to champion the new party, hopeful that closer ties between China and the United States, and China's signing of the international covenant on political and civil rights, would mean a looser political climate. But the party was soon declared illegal and many adherents were detained, at least temporarily. Wang now faces charges that could land him in prison for five years or more. A third veteran dissident and promoter of the new party, Xu Wenli, has been detained for weeks in Beijing and is expected to face similar subversion charges. In the last two days, at least 10 Democracy Party members or supporters in the Hangzhou area have been detained by the police and others have had their phone lines cut, reported the Information Center of Human Rights and Democratic Movement in China, based in Hong Kong. ||||| With attorneys locked up, harassed or plain scared, two prominent dissidents will defend themselves against charges of subversion Thursday in China's highest-profile dissident trials in two years. Qin Yongmin's and Wang Youcai's families were running out of options Wednesday to help the pair, leading organizers of a budding opposition political party. Qin's family pleaded for a postponement at Wuhan's Intermediate People's Court, but court officials denied the request. Police have detained one lawyer and threatened another, and subtler pressures have been used on others, family members said. Given the interference, Wang Youcai's wife assumes he will be convicted. ``Whether he has a lawyer or not, whatever he says, the government has already decided,'' Hu Jiangxia said. Qin and Wang will be tried separately, in cities 500 kilometers (300 miles) apart and in proceedings attended only by family and a few observers selected by the courts. Qin, 44, and Wang, 31, are accused of inciting the subversion of state power, apparently for helping to organize the China Democracy Party. They face from 10 years to life imprisonment if convicted under the harshest aspects of the law. By moving against Qin, Wang and the China Democracy Party, the ruling Communist Party appears to be signaling its determination to crush challenges to its monopoly on power. Authorities have detained or questioned more than 30 people associated with the party in a 17-day-old crackdown. Qin, a democracy campaigner for 20 years, and Wang, a student leader of the 1989 Tiananmen Square democracy movement, are among the most active and influential members of China's dissident community. A third prominent member of the dissident community, Xu Wenli, was also arrested in the crackdown, but not yet charged. To prevent displays of solidarity outside Wang's trial, police have detained at least ten dissidents in the eastern city of Hangzhou, a Hong Kong-based rights group reported. The Information Center of Human Rights and Democratic Movement in China said many more are missing and believed to be in custody. To prosecute Wang, authorities violated the minimal rights guaranteed suspects under Chinese law and ignored court orders, his wife said. ``Even the judge asked me to hire a lawyer, but while I was doing this, some people were doing things to stop me,'' Hu Jiangxia said. During one meeting with a potential defense attorney, a police official stormed in and said, ```Don't do anything for them. Don't take this case. Whoever takes the case, you can't win,''' Hu recounted. Four law firms refused to take Qin's case, his brother Qin Xiaoguang said. The Information Center said one lawyer who initially agreed to represent Qin on Monday went missing for four hours and then called Qin's family to withdraw. Dispirited by the harsh treatment, Qin's family argued over whether to attend the trial. Qin Xiaoguang said he and his father have decided to stay away to protest the unfairness, but another brother will go. Three dissidents from northeastern China sent an open letter to China's legislature and the Supreme People's Court appealing for fair trials, the Information Center said. It added that authorities violated China's own laws by not ensuring Wang and Qin have adequate representation. The letter was the latest in a string of petitions demonstrating the appeal of both Wang and Qin and the idea of the China Democracy Party. Since Wang publicly announced in June that he and others in Hangzhou were setting up the party, dissidents in at least 14 provinces and cities have set up party branches. Authorities have refused their applications to register the party as required by law. Wang and Qin are the most well-known dissidents China has put on trial since Tiananmen Square student leader Wang Dan in 1996. He was convicted of subversion and served less than two of an 11-year sentence. In return for his release, he agreed to go into exile.

On the eve of China's signing the International Covenant of Civil and Political Rights (ICCPR) in October 1998, police detained Chinese human rights advocate Qin Yongmin for questioning. Eight weeks after signing the ICCPR, Chinese police arrested Qin and an associate in the China Democracy Party (CDP), Xu Wenli, without stating charges. Another CDP leader already in custody, Wang Youcai, was accused of "inciting the overthrow of the government". Qin and Wang went to trial in December for inciting subversion. Police pressure on potential defense attorneys forced the accused to mount their own defenses. Xu Wenli had not yet been charged.

China's government said Thursday that two prominent dissidents arrested this week are suspected of endangering national security _ the clearest sign yet Chinese leaders plan to quash a would-be opposition party. Foreign Ministry spokesman Zhu Bangzao refused to specify what laws were broken or how Xu Wenli and Qin Yongmin endangered the state. A third leading advocate of the China Democracy Party who has been in custody for a month, Wang Youcai, was accused of ``inciting the overthrow of the government,'' the Hong Kong-based Information Center of Human Rights and Democratic Movement in China reported. All three men could face up to life in prison if convicted of the harshest measures under China's vague state security law. The ruling Communist Party has resorted to the law to silence dissent since it went into effect last year. The arrests of Xu and Qin at their homes Monday night and the accusations against them and Wang were the sharpest action Chinese leaders have taken since dissidents began pushing to set up and legally register the China Democracy Party in June. Xu and Qin were ``suspected of involvement in activities endangering state security'' and their ``behavior breached relevant provisions of the criminal laws of the People's Republic of China,'' Zhu said at a twice-weekly briefing. Police in Hangzhou city notified Wang's wife Wednesday that charges have already been submitted to prosecutors, bringing him a step closer to trial, the Information Center said. Xu and Qin are influential figures in the dissident community, having started their campaign for change 20 years ago in the seminal Democracy Wall movement. Wang was a student leader in the 1989 Tiananmen Square democracy demonstrations. Both have served time in prison. Xu spent 12 years in jail, much of it in solitary confinement. Since dissidents began organizing and trying to legally register the China Democracy Party, police have harassed and briefly detained more than two dozen members, but until now the government had not leveled such politically charged allegations. The Communist Party has never allowed another political party to form since it took power in 1949. In Washington on Wednesday, White House spokesman Joe Lockhart said the United States deplored the arrests and said the dissidents' peaceful political activities were fundamental human rights that all governments should protect. U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu and Qin be released immediately. Zhu criticized the United States for condemning the arrests, saying that ``no country, including the United States, should interfere in China's internal affairs.'' China in October signed a key U.N. treaty on civil and political rights that guarantees freedom of expression and freedom of association. It was the 17th international human rights treaty China has signed. Zhu told reporters there was ``absolutely no contradiction at all'' between China's support for these treaties and its arrests of the two dissidents. ||||| In response to criticism from home and abroad, Chinese officials broke their silence Wednesday to defend their arrest this week of a prominent dissident who was trying to form an opposition political party. ``Xu Wenli is suspected of involvement in activities damaging to national security and has violated relevant criminal codes of the People's Republic of China,'' said a statement from the Foreign Ministry, which on Tuesday declined to comment on the arrest. The sudden arrest on Monday night of Xu, as well as several other activists involved with him in trying to form the China Democratic Party, set off strong protests from human rights groups, other Chinese dissidents and Washington. ``We view his detention for peacefully exercising fundamental freedoms guaranteed by international human rights instruments as a serious step in the wrong direction,'' State Department spokesman James P. Rubin said in Washington on Tuesday. U.S. officials in Beijing urged the government to release Xu and asked for clarification as to the exact nature of his crime. China signed the International Covenant of Civil and Political Rights with great fanfare in October, and Xu's arrest is seen by human rights groups as a test of the nation's commitment to its tenets. Dissidents in and out of China rose to Xu's defense, with more than a dozen activists around the country announcing that they would begin fasts in support of Xu and another leader of the China Democratic Party, Qin Yongmin, who was arrested in his home in Wuhan on Monday. Almost 200 dissidents signed a letter to the Chinese government protesting the detentions, said the Information Center for Human Rights and Democratic Movement in Hong Kong. Three other Democratic Party organizers were also detained on Monday, although two of them were released early Wednesday. But the two more prominent dissidents, Xu and Qin, are likely to face a much longer haul since both have been charged with ``criminal acts.'' Xu's wife, He Xintong, said Wednesday night that she had still not been informed of the specific charge against her husband, although she surmised from the aggressive behavior of the arresting officers that the sentence ``could be long.'' Qin's family was told that he was charged with ``plotting to subvert the government,'' a crime that for serious offenses commands sentences of three years to life. In the Chinese criminal code, this charge comes under a grab-bag section called ``threatening state security,'' which makes almost any political activity that questions or hampers the authority of the Communist Party illegal, from ``violent or nonviolent activities aimed at overthrowing the government authorities,'' to ``activities designed to change the basic nature of the state.'' Xu's and Qin's trouble almost certainly stems from their efforts to gain recognition for the China Democratic Party, a loose network of pro-democracy activists in more than a dozen cities around China that was formed this year. In the last six months they have become increasingly aggressive and defiant in their attempts to register the party with the government, submitting repeated applications even after local authorities had declared the concept of an opposition party illegal. They say the Chinese Constitution does not specifically forbid the formation of new political parties, although there have been no new parties since the founding of the People's Republic in 1949. In fact, the by-laws of the China Democratic Party are fairly tame; they carefully acknowledge the central role of the Communist Party, but also support free speech and free elections for public officials. ``My husband thought the time was right to begin working to form a new party, since China recently signed the covenant on human rights,'' Ms. He said. In September, a few Democratic Party members got some slightly encouraging signals from local governments, which initially accepted their applications to form a social organization to develop a party. But in recent weeks, as organizers like Xu became more insistent and defiant, harassment by the police increased. ``All this past week we felt something was going to happen,'' Ms. He said. ``It seemed that anyone who came to visit us was later detained for a while. And there have been a lot more cars from the Public Security Bureau parked outside than is usual.'' ||||| The separate trials of two prominent democracy advocates for inciting subversion of the state opened Thursday morning, with the families of both defendants protesting their inability to hire defense lawyers. The trial in the eastern city of Hangzhou of Wang Youcai, 32, founder of the China Democracy Party, which is now suppressed, was in session for just two hours and 10 minutes. It appears to be finished, although the court did not announce a decision or say when it would. ``I don't know what happens from here,'' said Wang's wife, Hu Jiangxia, who was one of three relatives allowed to attend the trial. ``I don't hold much hope,'' she added in a telephone interview. Wang, who spent two years in prison after the 1989 student demonstrations in Tiananmen Square, was accused of organizing a political party that sought to overturn Communist Party rule and of colluding with foreign enemies of the state. He could face five years or more in prison. Since all the lawyers his family approached were intimidated by security agents, Ms. Hu said, Wang tried to mount his own defense Thursday morning after prosecutors laid out their case. But the judge frequently interrupted him and cut him off after half an hour, saying he was not responding to the specific facts of the case, she added. Wang argued that his activities were legal under China's constitution and under an international covenant on political rights that China has signed, Ms. Hu said. In the central city of Wuhan, the trial on similar charges of Qin Yongmin, 45, a veteran dissident, also continued for something over two hours. It will apparently be continued, said Qin's father, Qin Qingguo, since the session ended after the prosecution presented its charges. In that case, too, prospective lawyers had been intimidated or detained, family members said. The elderly father's request to the court Thursday morning for a postponement was ignored, so he and one of the defendant's brothers stayed outside the court building in protest, leaving another brother inside. ``We didn't feel there was any reason to observe the trial because if Qin Yongmin did not have a defense attorney, then as far as we were concerned the proceedings were meaningless,'' the father said by telephone. The U.S. Embassy asked to observe the trials. When an embassy official arrived at the court in Hangzhou Thursday morning, he was told that there were no seats available and instead waited outside, greeting Ms. Hu when she emerged, shaken, from the brief trial. ||||| Police detained and questioned the organizer of a group set up by dissidents to monitor official corruption and told him the group's activities must cease, a human rights group said Thursday. Police in Xinyang, in central China's Henan province, took An Jun away Wednesday afternoon and held him until past midnight for questioning about the group's members, said the Information Center of Human Rights and Democratic Movement in China. Police wanted a list of members with their work and home addresses, a demand An Jun refused for fear of getting them into trouble, the Hong Kong-based Information Center said. Corruption Watch, founded by nine dissidents in seven provinces, now has nearly 100 members, the center said. It applied last month to the government to register officially, but received no response, the center added. The police officers who questioned An Jun said that without official permission, the group must cease its activities, the center said. Rampant official corruption is a major public gripe in China. The Information Center said Corruption Watch had already received reports of graft in its first month of operation. In a separate report, the center said that an official in the Sichuan provincial government refused Thursday to accept an application by three dissidents to form a branch of a would-be opposition group, the China Democracy Party. Groups of dissidents in cities across China have attempted to register the group, as required by law, but authorities have rejected those applications. Signaling that the Communist Party's 49-year-old ban on opposition groups remains intact, police have detained and questioned many dissidents associated with the group. ||||| Hours before China was expected to sign a key U.N. human rights treaty and host British Prime Minister Tony Blair, police hauled a prominent human rights campaigner in for questioning Monday. Qin Yongmin's latest run-in with the authorities came as he tried for the second time in a week to legally register a human rights monitoring group. Qin said a civil affairs official in the Hubei provincial capital of Wuhan accused him of engaging in illegal activities. The police came soon after he returned home. ``As I'm sending this statement, the Wuhan Public Security Bureau is again taking me away,'' Qin said in a hastily scrawled message on the bottom of the typed statement faxed to reporters. Qin, detained briefly two weeks ago, was questioned for about three hours before being released and threatened with prosecution if he persisted in trying to set up his China Human Rights Observer. Qin hoped the harassment would stop after China signs the International Covenant on Civil and Political Rights, but he said if local authorities don't observe the treaty ``we will unswervingly push ahead with protecting human rights to the last.'' China plans to sign the International Covenant on Civil and Political Rights on Monday at the United Nations. By the time the ink is dry, Blair should be landing in Beijing on Tuesday morning for the first visit by a British prime minister in seven years. The treaty is supposed to guarantee freedoms of speech and assembly. But even after China signs, the treaty would not come into force until ratified by the legislature, which may attach reservations effectively nullifying some provisions. Blair has vowed to discuss differences over human rights with Chinese leaders. His visit has drawn appeals from dissidents and an international press freedom group urging him to persuade Chinese leaders to free political prisoners. In an open letter, three dissident said that while Chinese leaders say they respect human rights principles, in law and practice the government allows rights abuses and persecution of dissidents. Thousands of political prisoners are believed to remain in Chinese prisons, labor camps or detention centers, said the letter, a copy of which was released by the Hong Kong-based Information Center of Human Rights and Democratic Movement in China. The letter called for the release of Shi Binhai, a journalist who compiled a popular book on political change; Fang Jue, a businessman who called openly for political reform; and other imprisoned activists. Paris-based Reporters Without Borders urged Blair to call for the release of Gao Yu, Liu Xiaobo and Liu Jingsheng. The three are among 13 journalists imprisoned ``simply for attempting to practice their profession,'' it said in a statement. ||||| A Chinese dissident fleeing a new round of arrests of democracy activists in Shanghai arrived here Wednesday and announced that he and other opponents of the Chinese government plan a demonstration Thursday at the United Nations to protest the crackdown. The dissident, Yao Zhenxian, who was released in April from a Chinese labor camp, is a leader of the China Democracy Party, which was formed in June during President Clinton's visit to China. Speaking through an interpreter at Kennedy International Airport, Yao, 44, said little about why he had left Shanghai, except that he and his younger brother, Yao Zhenxiang, 38, had been sent to a labor camp in 1996 on a ``trumped-up charge'' of publishing pornography. The younger Yao, who is also a prominent figure in the China Democracy Party, is scheduled for release in April. Last week the Chinese government arrested 10 members and sympathizers of the China Democracy Party, one of whom, Wang Youcai, is to go on trial Dec. 17. ``The Chinese government feels it expanded too quickly,'' Yao said at the airport, referring to his party. Washington gave Yao a special visa, which expires in February. Dr. Wang Bingzhang, 50, an adviser to the overseas committee of the party, said later that Yao had left China for personal and political reasons. ``They were scared all the time,'' he said, referring to Yao's wife, Yu Yingzhang, and daughter, Yao Yiting, 14, who accompanied him. ``The family had a terrible life, especially the daughter. Secret agents followed them all the time.'' The family trading business, which was 12 years old, was shuttered by the government in 1996, said Wang, a former surgeon in Beijing, ``so they had no way of living.'' In addition, after Yao made organizational trips to several provinces, democracy activists urged him to go abroad, Wang said. ``They wanted him to tell the truth about what is really happening in China and to call on the whole world to pay attention,'' Wang said. Beatrice Laroche, liaison at the United Nations for Human Rights in China, a New York-based group, said the China Democracy Party was a growing presence in some of China's most populous provinces, including Sichuan. ``But their most vocal leaders have all recently been detained,'' she added. Ms. Laroche said the Yao brothers, especially the younger man, won prominence by helping to finance predecessors of the China Democracy Party with money from the family business before it was closed by the government. ||||| One leader of a suppressed new political party will be tried on Dec. 17 on a charge of colluding with foreign enemies of China ``to incite the subversion of state power,'' according to court documents given to his wife on Monday. The decision to try the leader, Wang Youcai, a founder of the China Democracy Party, with unusual speed suggests how serious the Communist authorities are in their campaign to destroy the fledgling party and silence dissidents who had begun to speak out over the last year. The charges that Wang faces, in a trial that will almost certainly be secret and quick, could bring a sentence of five years or more. Wang, 32, has been imprisoned in his home city, Hangzhou in eastern China, for a month, but was not formally arrested until Nov. 30. On that day two prominent dissidents, both promoters of the new party, were detained. One, Qin Yongmin, 45, of the central city of Wuhan, and the other, Xu Wenli, 55, of Beijing, are being held on suspicion of subversive activities. Detailed charges have not been filed. Wang was a student leader in the pro-democracy demonstrations in Tiananmen Square in 1989. After the army had crushed the movement, Wang was arrested and served two years in prison. Qin and Xu became known as democracy advocates in the late 1970s. Qin was imprisoned for eight years. In 1993 he was put in a labor camp for two years. Xu spent 12 years in prison. When President Clinton visited in the spring, Wang announced the formation of the Democracy Party. He and other dissidents hoped that China's new friendship with the United States and its decision to sign a global covenant on political and civil rights would give them room to promote political alternatives. After Clinton returned home Wang was detained, warned and released, only to be re-arrested as authorities began what now appears to be a major crackdown on dissent. Monday, Wang's wife, Hu Jiangxia, was handed the bill of prosecution, according to the Information Center of Human Rights and Democratic Movement in Hong Kong. Wang is charged with helping draft a party manifesto that states, in part, ``Only by establishing an opposition party can we be rid of this despotism.'' That is cited as grounds for the subversion charge, the information center said. In addition to detailing Wang's organizing activities, the prosecutors charge that he colluded with enemies of the state abroad, making his crime far more serious under Chinese law. He used e-mail to send 18 copies of the party's founding documents abroad, met with a member of a subversive foreign organization and received money from foreign sources to buy a computer, the indictment reportedly says. ||||| China's central government ordered the arrest of a prominent democracy campaigner and may use his contacts with exiled Chinese dissidents to charge him with harming national security, a colleague said Wednesday. Two Beijing police officers spent 30 minutes telling Zha Jianguo to stop trying to set up a political opposition party. Underscoring the warning, they said his colleague, Xu Wenli, won't be released soon and may be charged for having links to ``reactionary groups,'' Zha said. Xu and another influential dissident, Qin Yongmin, were arrested Monday night in police raids in two cities that delivered the sternest blow so far to a five-month campaign to establish the China Democracy Party and challenge the ruling Communist Party's monopoly on power. Qin was arrested for plotting to overthrow the government, a crime that could land him in jail for life. A third Democracy Party advocate, Wang Youcai, already in custody for a month, was also formally arrested Monday although his family has not been informed of the charges. Zha, who helped Xu organize would-be party members in Beijing and the nearby port of Tianjin, said police officers told him Xu's arrest was ordered by the central government, not Beijing police. He took the police reference to ``reactionary groups'' to mean exiled dissidents in the United States. Under China's vague State Security Law, such links may also be punishable by up to life in prison. Zha pledged to work with dissidents in China and exiles in the United States to campaign ``to save Xu Wenli.'' On Wednesday, 190 dissidents from around the country demanded in an open letter that the government release Xu, Qin and Wang Youcai, saying the arrests run counter to U.N. human rights treaties China has signed over the past 14 months. The authorities ``are deceiving and cheating international public opinion while on the other hand they are suppressing and persecuting domestic political dissidents,'' said the letter faxed to foreign news agencies. In Washington, White House spokesman Joe Lockhart said the United States deplored the detention and arrests of Xu and Qin. ``We believe the peaceful political activities of this kind and other forms of peaceful expression that they've been involved in are fundamental human rights that should be protected by all governments,'' Lockart said. ``We call on the Chinese government to assure the protection in these cases of Mr. Xu and Mr. Qin.'' State Department spokesman James P. Rubin said U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu be released immediately. U.S. officials received confirmation Wednesday that Xu is being detained on suspicion of ``having conducted activities damaging to China's national security,'' Rubin said. He said he had no information from Chinese authorities about Qin or Wang. Two other democracy party supporters taken into custody in central Wuhan city along with Qin _ Chen Zhonghe and Xiao Shichang _ were released Wednesday morning, said He Xintong, Xu Wenli's wife. She added that police questioned the pair about the party as well as Qin's human rights monitoring organizations. Qin and Xu are towering figures in China's persecuted dissident community. Their activism dates to the seminal Democracy Wall movement of the 1970s. Wang was a student leader in 1989's influential Tiananmen Square democracy movement. All have spent time in prison, Xu for 12 years, much of it in solitary confinement. Xu's wife said she does not know where he is being held and, in her 20-year experience with the authorities, believes they are unlikely to tell her. Released in 1993, Xu picked up his campaigning for political change soon after his parole ended last year. He has tried to use China's nascent legal system and the international treaties it signed to push for reform. ``My husband is innocent and there's nothing he can be criticized for,'' said his wife, He Xintong. ``They're going to have to expend a lot of effort to make him a criminal.'' ||||| Protesting the lack of a defense lawyer, the father of a prominent dissident is to seek a delay in his son's subversion trial, scheduled to start on Thursday in the central city of Wuhan. The defendant is Qin Yongmin, 45, a democracy advocate who has spent 10 years in prison and labor camps and has recently promoted an alternative, non-Communist political party. In a telephone interview Wednesday evening, his father, Qin Qinguo, 76, said that before the trial begins, he plans to hand the court a written plea for postponement. If the plea is ignored, he said he will walk out. ``I wouldn't be able to stand it,'' the father, a retired steelworker, said, citing his frail health and high blood pressure. Under China's code of criminal procedure, a defendant has the right to a defense lawyer. But in this case, the elder Qin said, some lawyers he approached declined to take the case, while others were warned by security officials not to get involved. The father said he did not agree with his son's political tactics but now he felt he had no choice but to protest his treatment. Qin Yongmin was arrested on Nov. 30, only hours after his mother died of a stroke. ``He wasn't even allowed to attend the funeral,'' Qin Qinguo said. ``And now he's not allowed to find a lawyer.'' On Thursday morning, a few hundred miles to the east in the city of Hangzhou, Wang Youcai, 33, is to go on trial on similar charges of inciting subversion. He, too, has no defense lawyer. Wang was a leader of student demonstrations in Tiananmen Square in 1989 and served two years in prison after they were put down by military force. As the founder of the suppressed new political party, the China Democracy Party, he publicly announced its charter in June during President Clinton's visit to China. Scores of people around the country began to champion the new party, hopeful that closer ties between China and the United States, and China's signing of the international covenant on political and civil rights, would mean a looser political climate. But the party was soon declared illegal and many adherents were detained, at least temporarily. Wang now faces charges that could land him in prison for five years or more. A third veteran dissident and promoter of the new party, Xu Wenli, has been detained for weeks in Beijing and is expected to face similar subversion charges. In the last two days, at least 10 Democracy Party members or supporters in the Hangzhou area have been detained by the police and others have had their phone lines cut, reported the Information Center of Human Rights and Democratic Movement in China, based in Hong Kong. ||||| With attorneys locked up, harassed or plain scared, two prominent dissidents will defend themselves against charges of subversion Thursday in China's highest-profile dissident trials in two years. Qin Yongmin's and Wang Youcai's families were running out of options Wednesday to help the pair, leading organizers of a budding opposition political party. Qin's family pleaded for a postponement at Wuhan's Intermediate People's Court, but court officials denied the request. Police have detained one lawyer and threatened another, and subtler pressures have been used on others, family members said. Given the interference, Wang Youcai's wife assumes he will be convicted. ``Whether he has a lawyer or not, whatever he says, the government has already decided,'' Hu Jiangxia said. Qin and Wang will be tried separately, in cities 500 kilometers (300 miles) apart and in proceedings attended only by family and a few observers selected by the courts. Qin, 44, and Wang, 31, are accused of inciting the subversion of state power, apparently for helping to organize the China Democracy Party. They face from 10 years to life imprisonment if convicted under the harshest aspects of the law. By moving against Qin, Wang and the China Democracy Party, the ruling Communist Party appears to be signaling its determination to crush challenges to its monopoly on power. Authorities have detained or questioned more than 30 people associated with the party in a 17-day-old crackdown. Qin, a democracy campaigner for 20 years, and Wang, a student leader of the 1989 Tiananmen Square democracy movement, are among the most active and influential members of China's dissident community. A third prominent member of the dissident community, Xu Wenli, was also arrested in the crackdown, but not yet charged. To prevent displays of solidarity outside Wang's trial, police have detained at least ten dissidents in the eastern city of Hangzhou, a Hong Kong-based rights group reported. The Information Center of Human Rights and Democratic Movement in China said many more are missing and believed to be in custody. To prosecute Wang, authorities violated the minimal rights guaranteed suspects under Chinese law and ignored court orders, his wife said. ``Even the judge asked me to hire a lawyer, but while I was doing this, some people were doing things to stop me,'' Hu Jiangxia said. During one meeting with a potential defense attorney, a police official stormed in and said, ```Don't do anything for them. Don't take this case. Whoever takes the case, you can't win,''' Hu recounted. Four law firms refused to take Qin's case, his brother Qin Xiaoguang said. The Information Center said one lawyer who initially agreed to represent Qin on Monday went missing for four hours and then called Qin's family to withdraw. Dispirited by the harsh treatment, Qin's family argued over whether to attend the trial. Qin Xiaoguang said he and his father have decided to stay away to protest the unfairness, but another brother will go. Three dissidents from northeastern China sent an open letter to China's legislature and the Supreme People's Court appealing for fair trials, the Information Center said. It added that authorities violated China's own laws by not ensuring Wang and Qin have adequate representation. The letter was the latest in a string of petitions demonstrating the appeal of both Wang and Qin and the idea of the China Democracy Party. Since Wang publicly announced in June that he and others in Hangzhou were setting up the party, dissidents in at least 14 provinces and cities have set up party branches. Authorities have refused their applications to register the party as required by law. Wang and Qin are the most well-known dissidents China has put on trial since Tiananmen Square student leader Wang Dan in 1996. He was convicted of subversion and served less than two of an 11-year sentence. In return for his release, he agreed to go into exile.

Although China was expected to sign a key U.N. human rights treaty, it continues to question and arrest political dissidents. Qin Yongmin was arrested following his attempt to form a human rights monitoring group. Fellow dissident Xu Wenli was arrested for trying to form an opposition party. Another dissident flew China for the U.S. to avoid arrest. In making the arrests, China has charged that the dissidents have threatened national security. Facing trial, Xu Wenli and Qin Yongmin were unable to obtain legal counsel. Qin Youngmin, attempting to defend himself, was cut off several times by the judge in a trial lasting just over two hours.

China's government said Thursday that two prominent dissidents arrested this week are suspected of endangering national security _ the clearest sign yet Chinese leaders plan to quash a would-be opposition party. Foreign Ministry spokesman Zhu Bangzao refused to specify what laws were broken or how Xu Wenli and Qin Yongmin endangered the state. A third leading advocate of the China Democracy Party who has been in custody for a month, Wang Youcai, was accused of ``inciting the overthrow of the government,'' the Hong Kong-based Information Center of Human Rights and Democratic Movement in China reported. All three men could face up to life in prison if convicted of the harshest measures under China's vague state security law. The ruling Communist Party has resorted to the law to silence dissent since it went into effect last year. The arrests of Xu and Qin at their homes Monday night and the accusations against them and Wang were the sharpest action Chinese leaders have taken since dissidents began pushing to set up and legally register the China Democracy Party in June. Xu and Qin were ``suspected of involvement in activities endangering state security'' and their ``behavior breached relevant provisions of the criminal laws of the People's Republic of China,'' Zhu said at a twice-weekly briefing. Police in Hangzhou city notified Wang's wife Wednesday that charges have already been submitted to prosecutors, bringing him a step closer to trial, the Information Center said. Xu and Qin are influential figures in the dissident community, having started their campaign for change 20 years ago in the seminal Democracy Wall movement. Wang was a student leader in the 1989 Tiananmen Square democracy demonstrations. Both have served time in prison. Xu spent 12 years in jail, much of it in solitary confinement. Since dissidents began organizing and trying to legally register the China Democracy Party, police have harassed and briefly detained more than two dozen members, but until now the government had not leveled such politically charged allegations. The Communist Party has never allowed another political party to form since it took power in 1949. In Washington on Wednesday, White House spokesman Joe Lockhart said the United States deplored the arrests and said the dissidents' peaceful political activities were fundamental human rights that all governments should protect. U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu and Qin be released immediately. Zhu criticized the United States for condemning the arrests, saying that ``no country, including the United States, should interfere in China's internal affairs.'' China in October signed a key U.N. treaty on civil and political rights that guarantees freedom of expression and freedom of association. It was the 17th international human rights treaty China has signed. Zhu told reporters there was ``absolutely no contradiction at all'' between China's support for these treaties and its arrests of the two dissidents. ||||| In response to criticism from home and abroad, Chinese officials broke their silence Wednesday to defend their arrest this week of a prominent dissident who was trying to form an opposition political party. ``Xu Wenli is suspected of involvement in activities damaging to national security and has violated relevant criminal codes of the People's Republic of China,'' said a statement from the Foreign Ministry, which on Tuesday declined to comment on the arrest. The sudden arrest on Monday night of Xu, as well as several other activists involved with him in trying to form the China Democratic Party, set off strong protests from human rights groups, other Chinese dissidents and Washington. ``We view his detention for peacefully exercising fundamental freedoms guaranteed by international human rights instruments as a serious step in the wrong direction,'' State Department spokesman James P. Rubin said in Washington on Tuesday. U.S. officials in Beijing urged the government to release Xu and asked for clarification as to the exact nature of his crime. China signed the International Covenant of Civil and Political Rights with great fanfare in October, and Xu's arrest is seen by human rights groups as a test of the nation's commitment to its tenets. Dissidents in and out of China rose to Xu's defense, with more than a dozen activists around the country announcing that they would begin fasts in support of Xu and another leader of the China Democratic Party, Qin Yongmin, who was arrested in his home in Wuhan on Monday. Almost 200 dissidents signed a letter to the Chinese government protesting the detentions, said the Information Center for Human Rights and Democratic Movement in Hong Kong. Three other Democratic Party organizers were also detained on Monday, although two of them were released early Wednesday. But the two more prominent dissidents, Xu and Qin, are likely to face a much longer haul since both have been charged with ``criminal acts.'' Xu's wife, He Xintong, said Wednesday night that she had still not been informed of the specific charge against her husband, although she surmised from the aggressive behavior of the arresting officers that the sentence ``could be long.'' Qin's family was told that he was charged with ``plotting to subvert the government,'' a crime that for serious offenses commands sentences of three years to life. In the Chinese criminal code, this charge comes under a grab-bag section called ``threatening state security,'' which makes almost any political activity that questions or hampers the authority of the Communist Party illegal, from ``violent or nonviolent activities aimed at overthrowing the government authorities,'' to ``activities designed to change the basic nature of the state.'' Xu's and Qin's trouble almost certainly stems from their efforts to gain recognition for the China Democratic Party, a loose network of pro-democracy activists in more than a dozen cities around China that was formed this year. In the last six months they have become increasingly aggressive and defiant in their attempts to register the party with the government, submitting repeated applications even after local authorities had declared the concept of an opposition party illegal. They say the Chinese Constitution does not specifically forbid the formation of new political parties, although there have been no new parties since the founding of the People's Republic in 1949. In fact, the by-laws of the China Democratic Party are fairly tame; they carefully acknowledge the central role of the Communist Party, but also support free speech and free elections for public officials. ``My husband thought the time was right to begin working to form a new party, since China recently signed the covenant on human rights,'' Ms. He said. In September, a few Democratic Party members got some slightly encouraging signals from local governments, which initially accepted their applications to form a social organization to develop a party. But in recent weeks, as organizers like Xu became more insistent and defiant, harassment by the police increased. ``All this past week we felt something was going to happen,'' Ms. He said. ``It seemed that anyone who came to visit us was later detained for a while. And there have been a lot more cars from the Public Security Bureau parked outside than is usual.'' ||||| The separate trials of two prominent democracy advocates for inciting subversion of the state opened Thursday morning, with the families of both defendants protesting their inability to hire defense lawyers. The trial in the eastern city of Hangzhou of Wang Youcai, 32, founder of the China Democracy Party, which is now suppressed, was in session for just two hours and 10 minutes. It appears to be finished, although the court did not announce a decision or say when it would. ``I don't know what happens from here,'' said Wang's wife, Hu Jiangxia, who was one of three relatives allowed to attend the trial. ``I don't hold much hope,'' she added in a telephone interview. Wang, who spent two years in prison after the 1989 student demonstrations in Tiananmen Square, was accused of organizing a political party that sought to overturn Communist Party rule and of colluding with foreign enemies of the state. He could face five years or more in prison. Since all the lawyers his family approached were intimidated by security agents, Ms. Hu said, Wang tried to mount his own defense Thursday morning after prosecutors laid out their case. But the judge frequently interrupted him and cut him off after half an hour, saying he was not responding to the specific facts of the case, she added. Wang argued that his activities were legal under China's constitution and under an international covenant on political rights that China has signed, Ms. Hu said. In the central city of Wuhan, the trial on similar charges of Qin Yongmin, 45, a veteran dissident, also continued for something over two hours. It will apparently be continued, said Qin's father, Qin Qingguo, since the session ended after the prosecution presented its charges. In that case, too, prospective lawyers had been intimidated or detained, family members said. The elderly father's request to the court Thursday morning for a postponement was ignored, so he and one of the defendant's brothers stayed outside the court building in protest, leaving another brother inside. ``We didn't feel there was any reason to observe the trial because if Qin Yongmin did not have a defense attorney, then as far as we were concerned the proceedings were meaningless,'' the father said by telephone. The U.S. Embassy asked to observe the trials. When an embassy official arrived at the court in Hangzhou Thursday morning, he was told that there were no seats available and instead waited outside, greeting Ms. Hu when she emerged, shaken, from the brief trial. ||||| Police detained and questioned the organizer of a group set up by dissidents to monitor official corruption and told him the group's activities must cease, a human rights group said Thursday. Police in Xinyang, in central China's Henan province, took An Jun away Wednesday afternoon and held him until past midnight for questioning about the group's members, said the Information Center of Human Rights and Democratic Movement in China. Police wanted a list of members with their work and home addresses, a demand An Jun refused for fear of getting them into trouble, the Hong Kong-based Information Center said. Corruption Watch, founded by nine dissidents in seven provinces, now has nearly 100 members, the center said. It applied last month to the government to register officially, but received no response, the center added. The police officers who questioned An Jun said that without official permission, the group must cease its activities, the center said. Rampant official corruption is a major public gripe in China. The Information Center said Corruption Watch had already received reports of graft in its first month of operation. In a separate report, the center said that an official in the Sichuan provincial government refused Thursday to accept an application by three dissidents to form a branch of a would-be opposition group, the China Democracy Party. Groups of dissidents in cities across China have attempted to register the group, as required by law, but authorities have rejected those applications. Signaling that the Communist Party's 49-year-old ban on opposition groups remains intact, police have detained and questioned many dissidents associated with the group. ||||| Hours before China was expected to sign a key U.N. human rights treaty and host British Prime Minister Tony Blair, police hauled a prominent human rights campaigner in for questioning Monday. Qin Yongmin's latest run-in with the authorities came as he tried for the second time in a week to legally register a human rights monitoring group. Qin said a civil affairs official in the Hubei provincial capital of Wuhan accused him of engaging in illegal activities. The police came soon after he returned home. ``As I'm sending this statement, the Wuhan Public Security Bureau is again taking me away,'' Qin said in a hastily scrawled message on the bottom of the typed statement faxed to reporters. Qin, detained briefly two weeks ago, was questioned for about three hours before being released and threatened with prosecution if he persisted in trying to set up his China Human Rights Observer. Qin hoped the harassment would stop after China signs the International Covenant on Civil and Political Rights, but he said if local authorities don't observe the treaty ``we will unswervingly push ahead with protecting human rights to the last.'' China plans to sign the International Covenant on Civil and Political Rights on Monday at the United Nations. By the time the ink is dry, Blair should be landing in Beijing on Tuesday morning for the first visit by a British prime minister in seven years. The treaty is supposed to guarantee freedoms of speech and assembly. But even after China signs, the treaty would not come into force until ratified by the legislature, which may attach reservations effectively nullifying some provisions. Blair has vowed to discuss differences over human rights with Chinese leaders. His visit has drawn appeals from dissidents and an international press freedom group urging him to persuade Chinese leaders to free political prisoners. In an open letter, three dissident said that while Chinese leaders say they respect human rights principles, in law and practice the government allows rights abuses and persecution of dissidents. Thousands of political prisoners are believed to remain in Chinese prisons, labor camps or detention centers, said the letter, a copy of which was released by the Hong Kong-based Information Center of Human Rights and Democratic Movement in China. The letter called for the release of Shi Binhai, a journalist who compiled a popular book on political change; Fang Jue, a businessman who called openly for political reform; and other imprisoned activists. Paris-based Reporters Without Borders urged Blair to call for the release of Gao Yu, Liu Xiaobo and Liu Jingsheng. The three are among 13 journalists imprisoned ``simply for attempting to practice their profession,'' it said in a statement. ||||| A Chinese dissident fleeing a new round of arrests of democracy activists in Shanghai arrived here Wednesday and announced that he and other opponents of the Chinese government plan a demonstration Thursday at the United Nations to protest the crackdown. The dissident, Yao Zhenxian, who was released in April from a Chinese labor camp, is a leader of the China Democracy Party, which was formed in June during President Clinton's visit to China. Speaking through an interpreter at Kennedy International Airport, Yao, 44, said little about why he had left Shanghai, except that he and his younger brother, Yao Zhenxiang, 38, had been sent to a labor camp in 1996 on a ``trumped-up charge'' of publishing pornography. The younger Yao, who is also a prominent figure in the China Democracy Party, is scheduled for release in April. Last week the Chinese government arrested 10 members and sympathizers of the China Democracy Party, one of whom, Wang Youcai, is to go on trial Dec. 17. ``The Chinese government feels it expanded too quickly,'' Yao said at the airport, referring to his party. Washington gave Yao a special visa, which expires in February. Dr. Wang Bingzhang, 50, an adviser to the overseas committee of the party, said later that Yao had left China for personal and political reasons. ``They were scared all the time,'' he said, referring to Yao's wife, Yu Yingzhang, and daughter, Yao Yiting, 14, who accompanied him. ``The family had a terrible life, especially the daughter. Secret agents followed them all the time.'' The family trading business, which was 12 years old, was shuttered by the government in 1996, said Wang, a former surgeon in Beijing, ``so they had no way of living.'' In addition, after Yao made organizational trips to several provinces, democracy activists urged him to go abroad, Wang said. ``They wanted him to tell the truth about what is really happening in China and to call on the whole world to pay attention,'' Wang said. Beatrice Laroche, liaison at the United Nations for Human Rights in China, a New York-based group, said the China Democracy Party was a growing presence in some of China's most populous provinces, including Sichuan. ``But their most vocal leaders have all recently been detained,'' she added. Ms. Laroche said the Yao brothers, especially the younger man, won prominence by helping to finance predecessors of the China Democracy Party with money from the family business before it was closed by the government. ||||| One leader of a suppressed new political party will be tried on Dec. 17 on a charge of colluding with foreign enemies of China ``to incite the subversion of state power,'' according to court documents given to his wife on Monday. The decision to try the leader, Wang Youcai, a founder of the China Democracy Party, with unusual speed suggests how serious the Communist authorities are in their campaign to destroy the fledgling party and silence dissidents who had begun to speak out over the last year. The charges that Wang faces, in a trial that will almost certainly be secret and quick, could bring a sentence of five years or more. Wang, 32, has been imprisoned in his home city, Hangzhou in eastern China, for a month, but was not formally arrested until Nov. 30. On that day two prominent dissidents, both promoters of the new party, were detained. One, Qin Yongmin, 45, of the central city of Wuhan, and the other, Xu Wenli, 55, of Beijing, are being held on suspicion of subversive activities. Detailed charges have not been filed. Wang was a student leader in the pro-democracy demonstrations in Tiananmen Square in 1989. After the army had crushed the movement, Wang was arrested and served two years in prison. Qin and Xu became known as democracy advocates in the late 1970s. Qin was imprisoned for eight years. In 1993 he was put in a labor camp for two years. Xu spent 12 years in prison. When President Clinton visited in the spring, Wang announced the formation of the Democracy Party. He and other dissidents hoped that China's new friendship with the United States and its decision to sign a global covenant on political and civil rights would give them room to promote political alternatives. After Clinton returned home Wang was detained, warned and released, only to be re-arrested as authorities began what now appears to be a major crackdown on dissent. Monday, Wang's wife, Hu Jiangxia, was handed the bill of prosecution, according to the Information Center of Human Rights and Democratic Movement in Hong Kong. Wang is charged with helping draft a party manifesto that states, in part, ``Only by establishing an opposition party can we be rid of this despotism.'' That is cited as grounds for the subversion charge, the information center said. In addition to detailing Wang's organizing activities, the prosecutors charge that he colluded with enemies of the state abroad, making his crime far more serious under Chinese law. He used e-mail to send 18 copies of the party's founding documents abroad, met with a member of a subversive foreign organization and received money from foreign sources to buy a computer, the indictment reportedly says. ||||| China's central government ordered the arrest of a prominent democracy campaigner and may use his contacts with exiled Chinese dissidents to charge him with harming national security, a colleague said Wednesday. Two Beijing police officers spent 30 minutes telling Zha Jianguo to stop trying to set up a political opposition party. Underscoring the warning, they said his colleague, Xu Wenli, won't be released soon and may be charged for having links to ``reactionary groups,'' Zha said. Xu and another influential dissident, Qin Yongmin, were arrested Monday night in police raids in two cities that delivered the sternest blow so far to a five-month campaign to establish the China Democracy Party and challenge the ruling Communist Party's monopoly on power. Qin was arrested for plotting to overthrow the government, a crime that could land him in jail for life. A third Democracy Party advocate, Wang Youcai, already in custody for a month, was also formally arrested Monday although his family has not been informed of the charges. Zha, who helped Xu organize would-be party members in Beijing and the nearby port of Tianjin, said police officers told him Xu's arrest was ordered by the central government, not Beijing police. He took the police reference to ``reactionary groups'' to mean exiled dissidents in the United States. Under China's vague State Security Law, such links may also be punishable by up to life in prison. Zha pledged to work with dissidents in China and exiles in the United States to campaign ``to save Xu Wenli.'' On Wednesday, 190 dissidents from around the country demanded in an open letter that the government release Xu, Qin and Wang Youcai, saying the arrests run counter to U.N. human rights treaties China has signed over the past 14 months. The authorities ``are deceiving and cheating international public opinion while on the other hand they are suppressing and persecuting domestic political dissidents,'' said the letter faxed to foreign news agencies. In Washington, White House spokesman Joe Lockhart said the United States deplored the detention and arrests of Xu and Qin. ``We believe the peaceful political activities of this kind and other forms of peaceful expression that they've been involved in are fundamental human rights that should be protected by all governments,'' Lockart said. ``We call on the Chinese government to assure the protection in these cases of Mr. Xu and Mr. Qin.'' State Department spokesman James P. Rubin said U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu be released immediately. U.S. officials received confirmation Wednesday that Xu is being detained on suspicion of ``having conducted activities damaging to China's national security,'' Rubin said. He said he had no information from Chinese authorities about Qin or Wang. Two other democracy party supporters taken into custody in central Wuhan city along with Qin _ Chen Zhonghe and Xiao Shichang _ were released Wednesday morning, said He Xintong, Xu Wenli's wife. She added that police questioned the pair about the party as well as Qin's human rights monitoring organizations. Qin and Xu are towering figures in China's persecuted dissident community. Their activism dates to the seminal Democracy Wall movement of the 1970s. Wang was a student leader in 1989's influential Tiananmen Square democracy movement. All have spent time in prison, Xu for 12 years, much of it in solitary confinement. Xu's wife said she does not know where he is being held and, in her 20-year experience with the authorities, believes they are unlikely to tell her. Released in 1993, Xu picked up his campaigning for political change soon after his parole ended last year. He has tried to use China's nascent legal system and the international treaties it signed to push for reform. ``My husband is innocent and there's nothing he can be criticized for,'' said his wife, He Xintong. ``They're going to have to expend a lot of effort to make him a criminal.'' ||||| Protesting the lack of a defense lawyer, the father of a prominent dissident is to seek a delay in his son's subversion trial, scheduled to start on Thursday in the central city of Wuhan. The defendant is Qin Yongmin, 45, a democracy advocate who has spent 10 years in prison and labor camps and has recently promoted an alternative, non-Communist political party. In a telephone interview Wednesday evening, his father, Qin Qinguo, 76, said that before the trial begins, he plans to hand the court a written plea for postponement. If the plea is ignored, he said he will walk out. ``I wouldn't be able to stand it,'' the father, a retired steelworker, said, citing his frail health and high blood pressure. Under China's code of criminal procedure, a defendant has the right to a defense lawyer. But in this case, the elder Qin said, some lawyers he approached declined to take the case, while others were warned by security officials not to get involved. The father said he did not agree with his son's political tactics but now he felt he had no choice but to protest his treatment. Qin Yongmin was arrested on Nov. 30, only hours after his mother died of a stroke. ``He wasn't even allowed to attend the funeral,'' Qin Qinguo said. ``And now he's not allowed to find a lawyer.'' On Thursday morning, a few hundred miles to the east in the city of Hangzhou, Wang Youcai, 33, is to go on trial on similar charges of inciting subversion. He, too, has no defense lawyer. Wang was a leader of student demonstrations in Tiananmen Square in 1989 and served two years in prison after they were put down by military force. As the founder of the suppressed new political party, the China Democracy Party, he publicly announced its charter in June during President Clinton's visit to China. Scores of people around the country began to champion the new party, hopeful that closer ties between China and the United States, and China's signing of the international covenant on political and civil rights, would mean a looser political climate. But the party was soon declared illegal and many adherents were detained, at least temporarily. Wang now faces charges that could land him in prison for five years or more. A third veteran dissident and promoter of the new party, Xu Wenli, has been detained for weeks in Beijing and is expected to face similar subversion charges. In the last two days, at least 10 Democracy Party members or supporters in the Hangzhou area have been detained by the police and others have had their phone lines cut, reported the Information Center of Human Rights and Democratic Movement in China, based in Hong Kong. ||||| With attorneys locked up, harassed or plain scared, two prominent dissidents will defend themselves against charges of subversion Thursday in China's highest-profile dissident trials in two years. Qin Yongmin's and Wang Youcai's families were running out of options Wednesday to help the pair, leading organizers of a budding opposition political party. Qin's family pleaded for a postponement at Wuhan's Intermediate People's Court, but court officials denied the request. Police have detained one lawyer and threatened another, and subtler pressures have been used on others, family members said. Given the interference, Wang Youcai's wife assumes he will be convicted. ``Whether he has a lawyer or not, whatever he says, the government has already decided,'' Hu Jiangxia said. Qin and Wang will be tried separately, in cities 500 kilometers (300 miles) apart and in proceedings attended only by family and a few observers selected by the courts. Qin, 44, and Wang, 31, are accused of inciting the subversion of state power, apparently for helping to organize the China Democracy Party. They face from 10 years to life imprisonment if convicted under the harshest aspects of the law. By moving against Qin, Wang and the China Democracy Party, the ruling Communist Party appears to be signaling its determination to crush challenges to its monopoly on power. Authorities have detained or questioned more than 30 people associated with the party in a 17-day-old crackdown. Qin, a democracy campaigner for 20 years, and Wang, a student leader of the 1989 Tiananmen Square democracy movement, are among the most active and influential members of China's dissident community. A third prominent member of the dissident community, Xu Wenli, was also arrested in the crackdown, but not yet charged. To prevent displays of solidarity outside Wang's trial, police have detained at least ten dissidents in the eastern city of Hangzhou, a Hong Kong-based rights group reported. The Information Center of Human Rights and Democratic Movement in China said many more are missing and believed to be in custody. To prosecute Wang, authorities violated the minimal rights guaranteed suspects under Chinese law and ignored court orders, his wife said. ``Even the judge asked me to hire a lawyer, but while I was doing this, some people were doing things to stop me,'' Hu Jiangxia said. During one meeting with a potential defense attorney, a police official stormed in and said, ```Don't do anything for them. Don't take this case. Whoever takes the case, you can't win,''' Hu recounted. Four law firms refused to take Qin's case, his brother Qin Xiaoguang said. The Information Center said one lawyer who initially agreed to represent Qin on Monday went missing for four hours and then called Qin's family to withdraw. Dispirited by the harsh treatment, Qin's family argued over whether to attend the trial. Qin Xiaoguang said he and his father have decided to stay away to protest the unfairness, but another brother will go. Three dissidents from northeastern China sent an open letter to China's legislature and the Supreme People's Court appealing for fair trials, the Information Center said. It added that authorities violated China's own laws by not ensuring Wang and Qin have adequate representation. The letter was the latest in a string of petitions demonstrating the appeal of both Wang and Qin and the idea of the China Democracy Party. Since Wang publicly announced in June that he and others in Hangzhou were setting up the party, dissidents in at least 14 provinces and cities have set up party branches. Authorities have refused their applications to register the party as required by law. Wang and Qin are the most well-known dissidents China has put on trial since Tiananmen Square student leader Wang Dan in 1996. He was convicted of subversion and served less than two of an 11-year sentence. In return for his release, he agreed to go into exile.

China continues to arrest dissidents even as it prepares to sign a UN human rights treaty and to host the first visit by a British PM in seven years. The dissident China Democracy Party believes it is legal to challenge the communists' power monopoly, but the PRC cites a "grab-bag" section of the criminal code making almost any political activity illegal. The US has protested the arrests. Two dissidents, Qin Yongmin and Wang Youcai must defend themselves at trail since lawyers have been dissuaded from assisting them. Other dissidents continue to be harassed and arrested. One dissident, Yao Zhenxian, was released from a labor camp and fled to New York.

China's government said Thursday that two prominent dissidents arrested this week are suspected of endangering national security _ the clearest sign yet Chinese leaders plan to quash a would-be opposition party. Foreign Ministry spokesman Zhu Bangzao refused to specify what laws were broken or how Xu Wenli and Qin Yongmin endangered the state. A third leading advocate of the China Democracy Party who has been in custody for a month, Wang Youcai, was accused of ``inciting the overthrow of the government,'' the Hong Kong-based Information Center of Human Rights and Democratic Movement in China reported. All three men could face up to life in prison if convicted of the harshest measures under China's vague state security law. The ruling Communist Party has resorted to the law to silence dissent since it went into effect last year. The arrests of Xu and Qin at their homes Monday night and the accusations against them and Wang were the sharpest action Chinese leaders have taken since dissidents began pushing to set up and legally register the China Democracy Party in June. Xu and Qin were ``suspected of involvement in activities endangering state security'' and their ``behavior breached relevant provisions of the criminal laws of the People's Republic of China,'' Zhu said at a twice-weekly briefing. Police in Hangzhou city notified Wang's wife Wednesday that charges have already been submitted to prosecutors, bringing him a step closer to trial, the Information Center said. Xu and Qin are influential figures in the dissident community, having started their campaign for change 20 years ago in the seminal Democracy Wall movement. Wang was a student leader in the 1989 Tiananmen Square democracy demonstrations. Both have served time in prison. Xu spent 12 years in jail, much of it in solitary confinement. Since dissidents began organizing and trying to legally register the China Democracy Party, police have harassed and briefly detained more than two dozen members, but until now the government had not leveled such politically charged allegations. The Communist Party has never allowed another political party to form since it took power in 1949. In Washington on Wednesday, White House spokesman Joe Lockhart said the United States deplored the arrests and said the dissidents' peaceful political activities were fundamental human rights that all governments should protect. U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu and Qin be released immediately. Zhu criticized the United States for condemning the arrests, saying that ``no country, including the United States, should interfere in China's internal affairs.'' China in October signed a key U.N. treaty on civil and political rights that guarantees freedom of expression and freedom of association. It was the 17th international human rights treaty China has signed. Zhu told reporters there was ``absolutely no contradiction at all'' between China's support for these treaties and its arrests of the two dissidents. ||||| In response to criticism from home and abroad, Chinese officials broke their silence Wednesday to defend their arrest this week of a prominent dissident who was trying to form an opposition political party. ``Xu Wenli is suspected of involvement in activities damaging to national security and has violated relevant criminal codes of the People's Republic of China,'' said a statement from the Foreign Ministry, which on Tuesday declined to comment on the arrest. The sudden arrest on Monday night of Xu, as well as several other activists involved with him in trying to form the China Democratic Party, set off strong protests from human rights groups, other Chinese dissidents and Washington. ``We view his detention for peacefully exercising fundamental freedoms guaranteed by international human rights instruments as a serious step in the wrong direction,'' State Department spokesman James P. Rubin said in Washington on Tuesday. U.S. officials in Beijing urged the government to release Xu and asked for clarification as to the exact nature of his crime. China signed the International Covenant of Civil and Political Rights with great fanfare in October, and Xu's arrest is seen by human rights groups as a test of the nation's commitment to its tenets. Dissidents in and out of China rose to Xu's defense, with more than a dozen activists around the country announcing that they would begin fasts in support of Xu and another leader of the China Democratic Party, Qin Yongmin, who was arrested in his home in Wuhan on Monday. Almost 200 dissidents signed a letter to the Chinese government protesting the detentions, said the Information Center for Human Rights and Democratic Movement in Hong Kong. Three other Democratic Party organizers were also detained on Monday, although two of them were released early Wednesday. But the two more prominent dissidents, Xu and Qin, are likely to face a much longer haul since both have been charged with ``criminal acts.'' Xu's wife, He Xintong, said Wednesday night that she had still not been informed of the specific charge against her husband, although she surmised from the aggressive behavior of the arresting officers that the sentence ``could be long.'' Qin's family was told that he was charged with ``plotting to subvert the government,'' a crime that for serious offenses commands sentences of three years to life. In the Chinese criminal code, this charge comes under a grab-bag section called ``threatening state security,'' which makes almost any political activity that questions or hampers the authority of the Communist Party illegal, from ``violent or nonviolent activities aimed at overthrowing the government authorities,'' to ``activities designed to change the basic nature of the state.'' Xu's and Qin's trouble almost certainly stems from their efforts to gain recognition for the China Democratic Party, a loose network of pro-democracy activists in more than a dozen cities around China that was formed this year. In the last six months they have become increasingly aggressive and defiant in their attempts to register the party with the government, submitting repeated applications even after local authorities had declared the concept of an opposition party illegal. They say the Chinese Constitution does not specifically forbid the formation of new political parties, although there have been no new parties since the founding of the People's Republic in 1949. In fact, the by-laws of the China Democratic Party are fairly tame; they carefully acknowledge the central role of the Communist Party, but also support free speech and free elections for public officials. ``My husband thought the time was right to begin working to form a new party, since China recently signed the covenant on human rights,'' Ms. He said. In September, a few Democratic Party members got some slightly encouraging signals from local governments, which initially accepted their applications to form a social organization to develop a party. But in recent weeks, as organizers like Xu became more insistent and defiant, harassment by the police increased. ``All this past week we felt something was going to happen,'' Ms. He said. ``It seemed that anyone who came to visit us was later detained for a while. And there have been a lot more cars from the Public Security Bureau parked outside than is usual.'' ||||| The separate trials of two prominent democracy advocates for inciting subversion of the state opened Thursday morning, with the families of both defendants protesting their inability to hire defense lawyers. The trial in the eastern city of Hangzhou of Wang Youcai, 32, founder of the China Democracy Party, which is now suppressed, was in session for just two hours and 10 minutes. It appears to be finished, although the court did not announce a decision or say when it would. ``I don't know what happens from here,'' said Wang's wife, Hu Jiangxia, who was one of three relatives allowed to attend the trial. ``I don't hold much hope,'' she added in a telephone interview. Wang, who spent two years in prison after the 1989 student demonstrations in Tiananmen Square, was accused of organizing a political party that sought to overturn Communist Party rule and of colluding with foreign enemies of the state. He could face five years or more in prison. Since all the lawyers his family approached were intimidated by security agents, Ms. Hu said, Wang tried to mount his own defense Thursday morning after prosecutors laid out their case. But the judge frequently interrupted him and cut him off after half an hour, saying he was not responding to the specific facts of the case, she added. Wang argued that his activities were legal under China's constitution and under an international covenant on political rights that China has signed, Ms. Hu said. In the central city of Wuhan, the trial on similar charges of Qin Yongmin, 45, a veteran dissident, also continued for something over two hours. It will apparently be continued, said Qin's father, Qin Qingguo, since the session ended after the prosecution presented its charges. In that case, too, prospective lawyers had been intimidated or detained, family members said. The elderly father's request to the court Thursday morning for a postponement was ignored, so he and one of the defendant's brothers stayed outside the court building in protest, leaving another brother inside. ``We didn't feel there was any reason to observe the trial because if Qin Yongmin did not have a defense attorney, then as far as we were concerned the proceedings were meaningless,'' the father said by telephone. The U.S. Embassy asked to observe the trials. When an embassy official arrived at the court in Hangzhou Thursday morning, he was told that there were no seats available and instead waited outside, greeting Ms. Hu when she emerged, shaken, from the brief trial. ||||| Police detained and questioned the organizer of a group set up by dissidents to monitor official corruption and told him the group's activities must cease, a human rights group said Thursday. Police in Xinyang, in central China's Henan province, took An Jun away Wednesday afternoon and held him until past midnight for questioning about the group's members, said the Information Center of Human Rights and Democratic Movement in China. Police wanted a list of members with their work and home addresses, a demand An Jun refused for fear of getting them into trouble, the Hong Kong-based Information Center said. Corruption Watch, founded by nine dissidents in seven provinces, now has nearly 100 members, the center said. It applied last month to the government to register officially, but received no response, the center added. The police officers who questioned An Jun said that without official permission, the group must cease its activities, the center said. Rampant official corruption is a major public gripe in China. The Information Center said Corruption Watch had already received reports of graft in its first month of operation. In a separate report, the center said that an official in the Sichuan provincial government refused Thursday to accept an application by three dissidents to form a branch of a would-be opposition group, the China Democracy Party. Groups of dissidents in cities across China have attempted to register the group, as required by law, but authorities have rejected those applications. Signaling that the Communist Party's 49-year-old ban on opposition groups remains intact, police have detained and questioned many dissidents associated with the group. ||||| Hours before China was expected to sign a key U.N. human rights treaty and host British Prime Minister Tony Blair, police hauled a prominent human rights campaigner in for questioning Monday. Qin Yongmin's latest run-in with the authorities came as he tried for the second time in a week to legally register a human rights monitoring group. Qin said a civil affairs official in the Hubei provincial capital of Wuhan accused him of engaging in illegal activities. The police came soon after he returned home. ``As I'm sending this statement, the Wuhan Public Security Bureau is again taking me away,'' Qin said in a hastily scrawled message on the bottom of the typed statement faxed to reporters. Qin, detained briefly two weeks ago, was questioned for about three hours before being released and threatened with prosecution if he persisted in trying to set up his China Human Rights Observer. Qin hoped the harassment would stop after China signs the International Covenant on Civil and Political Rights, but he said if local authorities don't observe the treaty ``we will unswervingly push ahead with protecting human rights to the last.'' China plans to sign the International Covenant on Civil and Political Rights on Monday at the United Nations. By the time the ink is dry, Blair should be landing in Beijing on Tuesday morning for the first visit by a British prime minister in seven years. The treaty is supposed to guarantee freedoms of speech and assembly. But even after China signs, the treaty would not come into force until ratified by the legislature, which may attach reservations effectively nullifying some provisions. Blair has vowed to discuss differences over human rights with Chinese leaders. His visit has drawn appeals from dissidents and an international press freedom group urging him to persuade Chinese leaders to free political prisoners. In an open letter, three dissident said that while Chinese leaders say they respect human rights principles, in law and practice the government allows rights abuses and persecution of dissidents. Thousands of political prisoners are believed to remain in Chinese prisons, labor camps or detention centers, said the letter, a copy of which was released by the Hong Kong-based Information Center of Human Rights and Democratic Movement in China. The letter called for the release of Shi Binhai, a journalist who compiled a popular book on political change; Fang Jue, a businessman who called openly for political reform; and other imprisoned activists. Paris-based Reporters Without Borders urged Blair to call for the release of Gao Yu, Liu Xiaobo and Liu Jingsheng. The three are among 13 journalists imprisoned ``simply for attempting to practice their profession,'' it said in a statement. ||||| A Chinese dissident fleeing a new round of arrests of democracy activists in Shanghai arrived here Wednesday and announced that he and other opponents of the Chinese government plan a demonstration Thursday at the United Nations to protest the crackdown. The dissident, Yao Zhenxian, who was released in April from a Chinese labor camp, is a leader of the China Democracy Party, which was formed in June during President Clinton's visit to China. Speaking through an interpreter at Kennedy International Airport, Yao, 44, said little about why he had left Shanghai, except that he and his younger brother, Yao Zhenxiang, 38, had been sent to a labor camp in 1996 on a ``trumped-up charge'' of publishing pornography. The younger Yao, who is also a prominent figure in the China Democracy Party, is scheduled for release in April. Last week the Chinese government arrested 10 members and sympathizers of the China Democracy Party, one of whom, Wang Youcai, is to go on trial Dec. 17. ``The Chinese government feels it expanded too quickly,'' Yao said at the airport, referring to his party. Washington gave Yao a special visa, which expires in February. Dr. Wang Bingzhang, 50, an adviser to the overseas committee of the party, said later that Yao had left China for personal and political reasons. ``They were scared all the time,'' he said, referring to Yao's wife, Yu Yingzhang, and daughter, Yao Yiting, 14, who accompanied him. ``The family had a terrible life, especially the daughter. Secret agents followed them all the time.'' The family trading business, which was 12 years old, was shuttered by the government in 1996, said Wang, a former surgeon in Beijing, ``so they had no way of living.'' In addition, after Yao made organizational trips to several provinces, democracy activists urged him to go abroad, Wang said. ``They wanted him to tell the truth about what is really happening in China and to call on the whole world to pay attention,'' Wang said. Beatrice Laroche, liaison at the United Nations for Human Rights in China, a New York-based group, said the China Democracy Party was a growing presence in some of China's most populous provinces, including Sichuan. ``But their most vocal leaders have all recently been detained,'' she added. Ms. Laroche said the Yao brothers, especially the younger man, won prominence by helping to finance predecessors of the China Democracy Party with money from the family business before it was closed by the government. ||||| One leader of a suppressed new political party will be tried on Dec. 17 on a charge of colluding with foreign enemies of China ``to incite the subversion of state power,'' according to court documents given to his wife on Monday. The decision to try the leader, Wang Youcai, a founder of the China Democracy Party, with unusual speed suggests how serious the Communist authorities are in their campaign to destroy the fledgling party and silence dissidents who had begun to speak out over the last year. The charges that Wang faces, in a trial that will almost certainly be secret and quick, could bring a sentence of five years or more. Wang, 32, has been imprisoned in his home city, Hangzhou in eastern China, for a month, but was not formally arrested until Nov. 30. On that day two prominent dissidents, both promoters of the new party, were detained. One, Qin Yongmin, 45, of the central city of Wuhan, and the other, Xu Wenli, 55, of Beijing, are being held on suspicion of subversive activities. Detailed charges have not been filed. Wang was a student leader in the pro-democracy demonstrations in Tiananmen Square in 1989. After the army had crushed the movement, Wang was arrested and served two years in prison. Qin and Xu became known as democracy advocates in the late 1970s. Qin was imprisoned for eight years. In 1993 he was put in a labor camp for two years. Xu spent 12 years in prison. When President Clinton visited in the spring, Wang announced the formation of the Democracy Party. He and other dissidents hoped that China's new friendship with the United States and its decision to sign a global covenant on political and civil rights would give them room to promote political alternatives. After Clinton returned home Wang was detained, warned and released, only to be re-arrested as authorities began what now appears to be a major crackdown on dissent. Monday, Wang's wife, Hu Jiangxia, was handed the bill of prosecution, according to the Information Center of Human Rights and Democratic Movement in Hong Kong. Wang is charged with helping draft a party manifesto that states, in part, ``Only by establishing an opposition party can we be rid of this despotism.'' That is cited as grounds for the subversion charge, the information center said. In addition to detailing Wang's organizing activities, the prosecutors charge that he colluded with enemies of the state abroad, making his crime far more serious under Chinese law. He used e-mail to send 18 copies of the party's founding documents abroad, met with a member of a subversive foreign organization and received money from foreign sources to buy a computer, the indictment reportedly says. ||||| China's central government ordered the arrest of a prominent democracy campaigner and may use his contacts with exiled Chinese dissidents to charge him with harming national security, a colleague said Wednesday. Two Beijing police officers spent 30 minutes telling Zha Jianguo to stop trying to set up a political opposition party. Underscoring the warning, they said his colleague, Xu Wenli, won't be released soon and may be charged for having links to ``reactionary groups,'' Zha said. Xu and another influential dissident, Qin Yongmin, were arrested Monday night in police raids in two cities that delivered the sternest blow so far to a five-month campaign to establish the China Democracy Party and challenge the ruling Communist Party's monopoly on power. Qin was arrested for plotting to overthrow the government, a crime that could land him in jail for life. A third Democracy Party advocate, Wang Youcai, already in custody for a month, was also formally arrested Monday although his family has not been informed of the charges. Zha, who helped Xu organize would-be party members in Beijing and the nearby port of Tianjin, said police officers told him Xu's arrest was ordered by the central government, not Beijing police. He took the police reference to ``reactionary groups'' to mean exiled dissidents in the United States. Under China's vague State Security Law, such links may also be punishable by up to life in prison. Zha pledged to work with dissidents in China and exiles in the United States to campaign ``to save Xu Wenli.'' On Wednesday, 190 dissidents from around the country demanded in an open letter that the government release Xu, Qin and Wang Youcai, saying the arrests run counter to U.N. human rights treaties China has signed over the past 14 months. The authorities ``are deceiving and cheating international public opinion while on the other hand they are suppressing and persecuting domestic political dissidents,'' said the letter faxed to foreign news agencies. In Washington, White House spokesman Joe Lockhart said the United States deplored the detention and arrests of Xu and Qin. ``We believe the peaceful political activities of this kind and other forms of peaceful expression that they've been involved in are fundamental human rights that should be protected by all governments,'' Lockart said. ``We call on the Chinese government to assure the protection in these cases of Mr. Xu and Mr. Qin.'' State Department spokesman James P. Rubin said U.S. officials conveyed their concerns to the Chinese Ministry of Foreign Affairs and urged that Xu be released immediately. U.S. officials received confirmation Wednesday that Xu is being detained on suspicion of ``having conducted activities damaging to China's national security,'' Rubin said. He said he had no information from Chinese authorities about Qin or Wang. Two other democracy party supporters taken into custody in central Wuhan city along with Qin _ Chen Zhonghe and Xiao Shichang _ were released Wednesday morning, said He Xintong, Xu Wenli's wife. She added that police questioned the pair about the party as well as Qin's human rights monitoring organizations. Qin and Xu are towering figures in China's persecuted dissident community. Their activism dates to the seminal Democracy Wall movement of the 1970s. Wang was a student leader in 1989's influential Tiananmen Square democracy movement. All have spent time in prison, Xu for 12 years, much of it in solitary confinement. Xu's wife said she does not know where he is being held and, in her 20-year experience with the authorities, believes they are unlikely to tell her. Released in 1993, Xu picked up his campaigning for political change soon after his parole ended last year. He has tried to use China's nascent legal system and the international treaties it signed to push for reform. ``My husband is innocent and there's nothing he can be criticized for,'' said his wife, He Xintong. ``They're going to have to expend a lot of effort to make him a criminal.'' ||||| Protesting the lack of a defense lawyer, the father of a prominent dissident is to seek a delay in his son's subversion trial, scheduled to start on Thursday in the central city of Wuhan. The defendant is Qin Yongmin, 45, a democracy advocate who has spent 10 years in prison and labor camps and has recently promoted an alternative, non-Communist political party. In a telephone interview Wednesday evening, his father, Qin Qinguo, 76, said that before the trial begins, he plans to hand the court a written plea for postponement. If the plea is ignored, he said he will walk out. ``I wouldn't be able to stand it,'' the father, a retired steelworker, said, citing his frail health and high blood pressure. Under China's code of criminal procedure, a defendant has the right to a defense lawyer. But in this case, the elder Qin said, some lawyers he approached declined to take the case, while others were warned by security officials not to get involved. The father said he did not agree with his son's political tactics but now he felt he had no choice but to protest his treatment. Qin Yongmin was arrested on Nov. 30, only hours after his mother died of a stroke. ``He wasn't even allowed to attend the funeral,'' Qin Qinguo said. ``And now he's not allowed to find a lawyer.'' On Thursday morning, a few hundred miles to the east in the city of Hangzhou, Wang Youcai, 33, is to go on trial on similar charges of inciting subversion. He, too, has no defense lawyer. Wang was a leader of student demonstrations in Tiananmen Square in 1989 and served two years in prison after they were put down by military force. As the founder of the suppressed new political party, the China Democracy Party, he publicly announced its charter in June during President Clinton's visit to China. Scores of people around the country began to champion the new party, hopeful that closer ties between China and the United States, and China's signing of the international covenant on political and civil rights, would mean a looser political climate. But the party was soon declared illegal and many adherents were detained, at least temporarily. Wang now faces charges that could land him in prison for five years or more. A third veteran dissident and promoter of the new party, Xu Wenli, has been detained for weeks in Beijing and is expected to face similar subversion charges. In the last two days, at least 10 Democracy Party members or supporters in the Hangzhou area have been detained by the police and others have had their phone lines cut, reported the Information Center of Human Rights and Democratic Movement in China, based in Hong Kong. ||||| With attorneys locked up, harassed or plain scared, two prominent dissidents will defend themselves against charges of subversion Thursday in China's highest-profile dissident trials in two years. Qin Yongmin's and Wang Youcai's families were running out of options Wednesday to help the pair, leading organizers of a budding opposition political party. Qin's family pleaded for a postponement at Wuhan's Intermediate People's Court, but court officials denied the request. Police have detained one lawyer and threatened another, and subtler pressures have been used on others, family members said. Given the interference, Wang Youcai's wife assumes he will be convicted. ``Whether he has a lawyer or not, whatever he says, the government has already decided,'' Hu Jiangxia said. Qin and Wang will be tried separately, in cities 500 kilometers (300 miles) apart and in proceedings attended only by family and a few observers selected by the courts. Qin, 44, and Wang, 31, are accused of inciting the subversion of state power, apparently for helping to organize the China Democracy Party. They face from 10 years to life imprisonment if convicted under the harshest aspects of the law. By moving against Qin, Wang and the China Democracy Party, the ruling Communist Party appears to be signaling its determination to crush challenges to its monopoly on power. Authorities have detained or questioned more than 30 people associated with the party in a 17-day-old crackdown. Qin, a democracy campaigner for 20 years, and Wang, a student leader of the 1989 Tiananmen Square democracy movement, are among the most active and influential members of China's dissident community. A third prominent member of the dissident community, Xu Wenli, was also arrested in the crackdown, but not yet charged. To prevent displays of solidarity outside Wang's trial, police have detained at least ten dissidents in the eastern city of Hangzhou, a Hong Kong-based rights group reported. The Information Center of Human Rights and Democratic Movement in China said many more are missing and believed to be in custody. To prosecute Wang, authorities violated the minimal rights guaranteed suspects under Chinese law and ignored court orders, his wife said. ``Even the judge asked me to hire a lawyer, but while I was doing this, some people were doing things to stop me,'' Hu Jiangxia said. During one meeting with a potential defense attorney, a police official stormed in and said, ```Don't do anything for them. Don't take this case. Whoever takes the case, you can't win,''' Hu recounted. Four law firms refused to take Qin's case, his brother Qin Xiaoguang said. The Information Center said one lawyer who initially agreed to represent Qin on Monday went missing for four hours and then called Qin's family to withdraw. Dispirited by the harsh treatment, Qin's family argued over whether to attend the trial. Qin Xiaoguang said he and his father have decided to stay away to protest the unfairness, but another brother will go. Three dissidents from northeastern China sent an open letter to China's legislature and the Supreme People's Court appealing for fair trials, the Information Center said. It added that authorities violated China's own laws by not ensuring Wang and Qin have adequate representation. The letter was the latest in a string of petitions demonstrating the appeal of both Wang and Qin and the idea of the China Democracy Party. Since Wang publicly announced in June that he and others in Hangzhou were setting up the party, dissidents in at least 14 provinces and cities have set up party branches. Authorities have refused their applications to register the party as required by law. Wang and Qin are the most well-known dissidents China has put on trial since Tiananmen Square student leader Wang Dan in 1996. He was convicted of subversion and served less than two of an 11-year sentence. In return for his release, he agreed to go into exile.

China arrested an activist on the eve of signing an international human rights agreement. It arrested an activist against official corruption and refused a monitoring group permission to operate. The China Democracy Party was founded during Clinton's visit to China. Founders were arrested for harming national security, sparking protests. One activist fled to NY. The arrests and speedy trials showed China's resolve to prevent opposition to the Communist Party. Defendents were prevented from getting lawyers so defended themselves. Their trials lasted only two hours each. The judge cut off one defendent's arguments and a US official was barred from a trial.

Ukraine's parliament on Friday refused to approve President Leonid Kuchma's decree establishing a state fund to compensate people for savings lost in banks. Deputies voted 240-47 to prepare a revised version of the decree and debate it later in the month. They must consider the decree by Oct. 10, or else it automatically takes effect under the constitution. Leftist factions, which voted against the proposed legislation, said it would not fully guarantee the return of savings lost during the financial instability that has recently hit Ukraine. The fund Kuchma proposed to establish would have accumulated money in a special National Bank account and repay people in case the bank they kept their savings in went bankrupt or became insolvent. Although the decree provided for compensation of deposits amounting only to 500 hryvna (dlrs 147 at the current exchange rate), its authors said it would cover more than 90 percent of Ukrainians who keep their money in banks. The measure was meant to prevent mass withdrawals of deposits that most Ukrainian banks have already experienced as people, scared by the fall of the national currency and the turmoil in neighboring Russia, started to stock up on food, clothing and household goods. Government officials say that Ukrainians have recently withdrawn at least 10 percent of the 3 billion hryvna (dlrs 882 million) they deposited in banks. ||||| Russia's new prime minister picked an unusual way to reassure the nation Thursday. After two weeks of deliberations he announced that he still had no plan to rescue the country from its economic crisis. ``I want to repeat once more _ there is no program,'' Prime Minister Yevgeny Primakov said. ``It has yet to be worked out.'' In most nations such a statement might provoke alarm. But Primakov was seeking to calm an anxious public that was worried that the Kremlin's cure could be worse than the disease. It is not as if Russians do not have something to be concerned about. Thursday Primakov convened a meeting of top aides to try to hammer out a strategy for overcoming the economic woes. A main item on the agenda was the plan drafted by Yuri Maslyukov, a Communist and the government's senior policy maker on economic issues. It did not take long for Maslyukov's plan to hit the street. A newspaper, Kommersant Daily, published it in full Thursday morning. Not surprisingly Maslyukov's plan calls for a greater state role in the economy, including controls on hard currency. A new State Bank for Reconstruction and Development would be established using the ``nationalized assets'' of failed commercial banks. Wages and pensions would be paid in two months, and the minimum wage would be indexed to inflation. There would be huge tax cuts, a combination that suggested that the government was committed to printing additional money. The exchange rate of the ruble would be set by the central bank, based on changes in inflation and the balance of payments. Maslyukov's plan also implies that Russians would be able to buy dollars at exchanges through the country. It stipulates that hard currency could enter the country only with special authorization. Exporters would be required to sell most of their hard currency reserves. That is an allusion to currency controls that sent shock waves through the Russian public. Russians have come to treat the dollar as a second currency, and many people have squirreled away dollars as a hedge against inflation. ``It is an obvious stupidity,'' Otto Latsis, a commentator with the newspaper Noviye Izvestiya, said. ``People won't give their dollars away. They will go to the black market if they need to.'' Yegor Gaidar, the former prime minister who favors free markets, said the plan was a ``war against the dollar'' and predicted that it would lead to a shortage of imports. As the criticism grew, Primakov rushed to distance himself from the talk of currency controls. ``The rumors of the state's becoming a monopolist on the inflow of hard currency into the country is nonsense,'' he said, asserting that the document published by Kommersant Daily was just one of six possible plans. Primakov may be opposed to wildly unpopular currency controls. He may be worried that the plan would would set off the panic buying of dollars, further depressing the ruble. Or he may simply be trying to keep his distance from Maslyukov's plan while Russia tries to wrangle its next disbursement, $4.3 billion, from the International Monetary Fund. The particulars could be modified, but many people following the maneuvering say they believe that it represents the basic thrust of the government's thinking. Primakov has called for greater state regulation and an expansion of the money supply, two themes of Maslyukov's plan. The plan also has many similarities with the plan presented to the government by Gorbachev-era advisers. ``We think it is close to being a final document,'' said the United Financial Group, a Russian investment business. It is unclear how long Primakov can carry on without spelling out a detailed strategy. The ousted tax chief, Boris Fyodorov, has argued that the IMF should not provide further aid until Primakov has taken tough measures to build a free market. Primakov has, however, sought to turn that logic on its head, arguing that his government's economic strategy will depend on the fund's willingness to provide aid. His aim appears to be to pressure the fund by implying that it will be the fund's fault if Russia is forced to default on its loans or take draconian measures at home. Or as Primakov put it Thursday, without the fund's money, Russia will have to impose ``unpopular measures.'' ||||| If the Communist Party has its way _ and it has been planning for months _ millions of Russians will take to the streets on Wednesday for some of the biggest demonstrations in years. But now that Communists or politicians with the Communist stamp of approval are running the country and its economy the question is what the marchers will be demonstrating against. President Boris Yeltsin and his economic advisers were easy targets two months ago. But Yeltsin seems but a shadow of himself today, and his advisers are gone. The Communists, who have undergone a sort of resurgence by playing on the discontent, are working hard to cast themselves as outsiders in the government that they help run _ and to keep the focus of the protests on Wednesday on Yeltsin and his policies. Even that strategy may backfire, however, because discontent over Yeltsin does not necessarily translate into support for his predecessors. An adviser to the Communist Party leader, Gennadi Zyuganov, made headlines not long ago when he called the new government bourgeois. The characterization was striking, because the new prime minister, Yevgeny Primakov, was one of Zyuganov's top choices for the post. The deputy prime minister in charge of the economy, Yuri Maslyukov, is a Communist Party figure who once headed Gosplan, the infamous central-planning program that helped bring the Soviet Union to ruin. ``We don't have slogans that are aimed against the government,'' the first secretary of the Moscow Communist Party committee, Alexander Kuvayev, said in a recent interview. ``All the slogans are aimed against the president and the economic course of the country. Only the president can fully be blamed for the course that has brought the country to this situation.'' Anger over Russia's fate, and their own, is drawing some Russians back to Soviet-style slogans and old-style hostility toward capitalism. The ardently pro-Communist newspaper Sovietskaya Rossiya devoted most of its front page on Thursday to what it said were the results of a contest among readers for protest slogans. The entries ranged from catchy to kitschy, from, ``Legislator, official, banker _ study the Constitution; the exam is Oct. 7,'' to, `` Imperialist! Help Russia return the exported capital, and we will pay the debts at once.'' Russia has seen nothing approaching this sort of economic chaos and despair since 1993, when hyperinflation swept the economy. There is no real way of knowing whether the latest travails will produce huge and ugly crowds or small, peaceful ones. A deputy editor and political analyst at a newsweekly, Itogi, Masha Lipman, said the situation was not unlike that of 1993, when Yeltsin sought, and won, a popular mandate in a referendum. He used it to dissolve the Communist-dominated Parliament and increase his own power. That led to an autumn showdown, the shelling of Parliament by tanks and the total defeat, for the time being, of Yeltsin's legislative opponents. ``You can interpret this demonstration as a Communist mandate, but I don't think they will act like Yeltsin,'' Ms. Lipman said. ``Support for the Communists is at its smallest level, maybe 20 percent.'' In a survey of 1,714 people that was released last week the All-Russian Public Opinion Center said that nearly half the population supported the idea of demonstrations against Yeltsin, but that barely one-tenth were likely to participate in any way. ``Nobody is interested in any sort of struggle,'' Yuri Levada, who heads the center, said in an interview. ``This is mainly a general expression of a great wave of distrust of authorities, mainly the president. He's the great scapegoat for all our sins.'' There seems to be little enthusiasm for demonstrations of any sort. Only a few thousand people turned out Sunday for the fifth anniversary of the shelling of Parliament and Yeltsin's subsequent triumph over the Communists. The Communist Party and the Federation of Independent Russian Unions, a leftist organization that says it is the main sponsor of the protests, predict that 9 million Russians will participate on Wednesday. The government has vowed to keep order without resorting to force. But it is concerned enough that it has summoned 11,000 police officers to patrol Moscow and 6,000 military troops to intervene if violence erupts. Protests since 1993 have generally been tepid, a deep-seated feeling here. Some demonstrations last week, more or less practice runs, hinted at similarly dampened marches this year. ||||| President Boris Yeltsin would respond strongly to any effort to prohibit Russians from buying foreign currencies, believing the move would be like bringing another Iron Curtain down on the country, his spokesman said Friday. ``The president clearly understands that such a ban would be a clear violation of our rights ... that would mean a return to the Iron Curtain in everyday life,'' said presidential spokesman Dmitry Yakushin. The remarks came after media reports of a government economic plan in the works that would prohibit Russians from buying U.S. dollars and other foreign currencies, and institute other strict economic controls, rolling back seven years of reforms. Though government officials say such a plan is only one of six possibilities, Prime Minister Yevgeny Primakov warned Thursday that he might be forced to take ``unpopular'' measures to rescue the Russian economy if it does not receive the next installment in a dlrs 22.6 billion loan from the International Monetary Fund. Central Bank Chairman Viktor Gerashchenko and Finance Minister Mikhail Zadornov flew to Washington on Friday for negotiations with the IMF over the dlrs 4.3 billion installment. IMF officials have said they want the Russian government to come up with a sound economic program before the loan is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable. But Primakov said that the country's plan would be dependent on the IMF loan, not the other way around. No short-term economic plan will be known for another three weeks, long after the IMF is set to make its decision, said First Deputy Prime Minister Vadim Gustov. A draft version of the government's fourth-quarter budget would rely heavily on the IMF loan, the Kommersant newspaper said. Without the loan, the government would have to engage in major deficit spending. Calls for Soviet-style controls _ part of the plan drafted by First Deputy Prime Minister Yuri Maslyukov and leaked to the press _ have apparently created a rift within the Cabinet. The plan drew heavy criticism from Zadornov, and Gerashchenko called the idea of banning foreign currency sales ``a mad idea.'' Meanwhile, Russia's stock market dropped by 5 percent to 38.8 Friday, but trading was so light the downward move meant little. The stock market has continued to fall since the crisis hit Aug. 17. And tax collection was down in September, the result of the collapse in Russia's banking system, said Alexander Pochinok, head of the government's finance and credit department. Revenues totaled 14.3 billion rubles (dlrs 875 million), 700 million rubles (dlrs 43 million) less than expected. The government wants to reverse this trend by raising taxes for oil and gas companies, but the idea is expected to meet sharp resistance in the lower house of Russia's parliament, which wants to cut tax rates, Pochinok said. ||||| Wall Street extended a global stock selloff Thursday with the Dow industrials tumbling more than 200 points for a second straight day. The Dow Jones industrial average, which plunged 237.90 points on Wednesday, fell an additional 210.09, or by 2.7 percent, to close at 7,632.53. Broader market indicators also sank sharply in heavy trading. Bank and technology stocks were particularly hard hit. The selling spree, amid worries about shrinking corporate profits and fears of new financial crises, left the Dow 18.3 percent, or more than 1,700 points, below the all-time high of 9,337.97 reached on July 17. It was getting closer to the low of 7,400 that was reached during trading Sept. 1, before Wall Street's best-known indicator began a comeback bid that brought it above 8,100 as recently as Monday. The Dow's 12.4 percent slide in the third quarter, which ended Wednesday, was its worst quarterly performance in eight years. It now is 3.5 percent below where it began this year. Stock prices earlier plunged in Asia, with Tokyo shares falling 1.6 percent to a new 12-year low, and shares were falling sharply in Europe, where Germany's central bank left interest rates unchanged. Blue chips in London sank 3.1 percent to close at new lows for the year, while the key index in Frankfurt, Germany, closed down 5.5 percent and the main indicator in Paris was off 5 percent. The selloff in stocks has sent a flood of money into U.S. Treasury securities, a traditional haven in times of uncertainty. Yields on 30-year Treasury bonds fell further below 5 percent Thursday, reaching levels unseen for long-term government bonds since 1967. Traders were alarmed to see prices on the New York Stock Exchange nosedive 2.9 percent on Wednesday, even though the Federal Reserve had lowered a key interest rate one-quarter percentage point on Tuesday. Some traders were disappointed that the cut was not deeper amid fears a go-slow approach would not do enough to counter the economic crises that have swept through Asia and Russia and are threatening Latin America. ``The smaller-than-expected lowering of interest rates by the U.S. Federal Reserve has a chain reaction,'' said Lee Won-ho, an analyst at Samsung Securities Co. in Seoul, South Korea, where the main stock index fell by 1.5 percent. ``It is affecting Wall Street, the Japanese market, ours and others.'' The managing director of the International Monetary Fund, Michel Camdessus, on Thursday said the Fed made the right decision in cutting rates and that global powers now must push for stronger growth to offset steep recessions in Asia and Russia. Asked why stock markets, particularly in the United States, have reacted so negatively to the Fed rate cut, Camdessus said he believed confidence will soon be restored, especially if financial leaders show resolve in their discussions over the next week. There also are worries about where the next financial market crisis may erupt after last week's dlrs 3.6 billion private bailout of Long-Term Capital Management LP of Greenwich, Connecticut. In addition, investors worldwide worry that the downturn on Wall Street could signal a possible slowdown in economic growth _ a bad omen for the many foreign companies dependent on exports to the huge U.S. market. ``There's a psychological impact overall, but there's also a direct impact on companies like Sony and TDK which derive a high percentage of their earnings from overseas markets,'' said Pelham Smithers, a stock strategist in Tokyo at ING Baring Securities (Japan) Ltd. A new survey in Japan said confidence among small- and medium-sized businesses about the economy plunged to its worst level since the Bank of Japan began the quarterly samplings in 1967. ||||| In a season of crashing banks, plunging rubles, bouncing paychecks, failing cropsand rotating governments, maybe it is not the ultimate insult. But the nation that bore Tolstoy and Chekhov, and still regards a well-written letter as a labor of love, is buckling a little this week, because it can no longer wish good health to Baba Anya in Omsk. The Post Office is broke. In 60 of the country's 89 statelike regions, more than 1,000 mail cars have been sidetracked, many stuffed with up to 18 tons of letters, newspapers and parcels. The state Railway Ministry refuses to carry more mail until the Post Office makes good on some 210 million rubles in old bills _ about $13 million in today's dollars, or $35 million in dollars six weeks ago. Air mail, which amounts to one of every four or five letters, was also suspended at one of Moscow's major airports until this week, when the Post Office coughed up 5 million rubles for old bills. A second airport is still demanding 3 million rubles for past-due debts. So much mail is backed up that post offices in Moscow and elsewhere have simply stopped accepting out-of-town mail, except for areas that can be easily reached by truck. Delivery schedules have fallen weeks, and perhaps months, behind. ``The situation is really extraordinary,'' said Vladimir Sherekhov, the deputy chief of mail service administration in the government's Communications Committee. ``We've never had anything like this before.'' Maybe the Post Office has been lucky. Extraordinary is the rule elsewhere in Russia. Until Friday, the lower house of Parliament was preparing to sue the government for failure to provide soap, heat, toilet paper and copy-machine paper in the legislature's monumental downtown offices. It turned out that politicians had exhausted their funds by cutting short their recess and returning to address the nation's economic crisis. Earlier in the week, officials said Russia's Arctic shipping routes may close next month because half the nation's icebreakers are in disrepair and there is no money to fix them. The oldest of the ships is so ancient that its nickname is Granny. Such anecdotal evidence that Russia is losing its wheels, like one of its old, ill-maintained Volga sedans, is everywhere. But oddly, real signs of public distress are not particularly common, perhaps because the system rarely seems to shed a part as big as a postal system. If the U.S. Postal Service is increasingly a pipeline for sweepstakes notices and bills, the Russian Post Office still holds a special place in the national conversation. Russians still write letters to each other, frequently and fervently, and many in remote regions get their news through the mail. Millions use the mails to ship canned goods and other provisions to needy relatives and friends in faraway areas, an especially vital service in winter. And in the last few years, the Post Office has become a vehicle for a growing mail-order trade in books, clothes and other catalog items not readily available outside big cities. Exactly why all this has rumbled to a halt is in some dispute. What is clear is that the Post Office and the Railway Ministry both suffer from what ails every Russian venture, private and public alike: Nobody pays his bills. The state Railway Ministry complains that it is continually stiffed by customers who believe the railroads are honor-bound to carry freight whether they are paid or not. The government has specified nearly 40 categories of freight which the railroads must carry for next to nothing. Among the biggest deadbeats are the ``power ministries'' _ the military and interior departments _ which did not pay during Soviet times and feel little need to pay now. ``It's a psychology formed during the socialist period,'' said Tatiana Pashkova, the deputy spokeswoman for the ministry, ``and the same situation exists with the Post Office. We've been in dispute for a very long time. Always we try to understand their differences. But we can't carry cargo for free.'' No kidding, says the Post Office: It, too, is owed 200 million rubles by government agencies, and is barred from raising rates even though freight costs are outstripping revenues. Moreover, the Post Office is also required by the government to carry some forms of mail, such as pension checks, at reduced rates. Officials at the state Communications Department say they also suspect an ulterior motive in the railroads' actions: a struggle to dominate the thriving mail-order business. ``Here's competition between us and the railroads for the delivery of parcels, and I think decisions made by the railroads are mainly explained by this competition,'' Sherekhov said. ``They blame us for carrying some commercial cargoes instead of mail.'' The Railways Ministry's spokeswoman, Ms. Pashkova, said such ``commercial cargoes'' are indeed a problem, but only because the railroads know that the Post Office has already gotten cash to transport the packages. The railroads are still waiting for their share of that money, she said. In the meantime, the situation has come to a boil. In late September the railroads cut mail service in and out of Moscow, effectively decapitating the postal system and forcing officials to draft a fleet of trucks to move letters in and out of the city. Hundreds of empty and full rail cars have clogged some local yards to the point where moving cars into position for unloading has become difficult. At last count, 39 loaded cars were awaiting service at one yard. And customers are getting angry. ``We've gotten all kinds of complaints,'' said Viktor Salikov, a deputy in the Communications Department's mail shipping center. ``People are even coming to us, searching for mail that was sent weeks ago.'' ||||| When the world's finance ministers and central bankers gathered last year in Hong Kong, they nervously congratulated each other for containing _ at least for the moment _ a nasty financial brush fire in Asia. In a year's time, many predicted in hallway chatter, the troubles in Thailand and Indonesia would look like a replay of Mexico in 1995 _ a rough bump in the road for a world enjoying remarkable prosperity. Talk about bad market calls. Twelve months later, as the same financial mandarins clog Washington with their limousines and glide through endless receptions at the annual meeting of the International Monetary Fund and the World Bank, just about everything that could have gone wrong in the world economy has: the worst downturn in Japan since World War II, economic meltdown in Russia, a depression in Indonesia that is plunging 100 million people below the poverty line, and deep fears over what happens next in Latin America. What makes this year's IMF meeting most remarkable, though, is that the harshest criticisms are directed at the monetary fund itself, and, by extension, at the U.S. Treasury, which is viewed as the power behind the IMF. This year, in place of confident predictions, there are mutual recriminations. Arguments are breaking out over whether the true culprits were crony capitalists and weakened leaders like Russian President Boris Yeltsin, or huge investors who poured money into the world's emerging markets with reckless abandon in the mid-1990s and panicked in the past twelve months. Whatever the reason, one reality prevails: Hundreds of billions of dollars have fled from economies on four continents _ seeking the safest havens possible, often in the United States _ and the money is not returning anytime soon. And the subtext of every seminar on capital flows and every conclave of nervous ministers will be some painfully blunt questions: Can this be stopped? Or is the world headed for a global recession? Fifty-three years ago the IMF was created after the Bretton Woods conference which sought to stabilize the world economy and secure the peace after World War II. Now it is under attack from all sides, charged not only with worsening a bad situation by misjudging the economics, but with being politically tone-deaf in some of the most volatile capitals in the world, from Jakarta, Indonesia, to Moscow. For the first time, there are disturbing questions about whether the institution itself is still capable, financially or politically, of containing the kind of economic contagion that caught the world unaware. Once, the IMF's critics were largely found in Africa and South Asia, were the fund was often viewed as arrogant; today they include Wall Street's biggest players and top officials in the most powerful economies of Asia and Europe. Only a few _ including former Secretary of State George Schultz and members of Congress who are increasingly suspicious of all international institutions _ are talking about scrapping the IMF altogether. But almost everyone is talking about creating a ``new financial architecture'' that can do what the old one clearly cannot: smother financial wildfires before they leap around the globe. President Clinton, British Prime Minister Tony Blair and other leaders, after months of silence, have edged into the debate, in some cases wresting the issue for the first time from their finance ministers and central banks. Their fear, their advisers say, is that 15 months of financial turmoil are now threatening political stability. Such concerns have turned this year's meeting into a tumbled mass of worries and a groping for short and long-term solutions. The Japanese, the French, the Southeast Asians are all arriving in Washington with different diagnoses of what went wrong, and different solutions about how to set it right. The United States has its own set of plans, a mix of suggestions to force more disclosure of financial data in countries around the world and to impose more American-style financial standards and regulation. Meanwhile, an ideological argument is breaking out over whether the world should slow down a long march toward more free and open markets _ a strategy pressed by the Clinton administration for the past six years. Others argue that it is unwise to start rebuilding the hospital while the patients are still on the operating tables. ``Last year the standard answer that all of us were given came down to this: `We have the IMF and the World Bank, and they know best,''' Indonesian Foreign Minister Ali Alatas said over breakfast in Washington the other day, reflecting on how the crisis turned 30 years of astounding growth in his country into an overnight depression. ``Then they said everything that went wrong was our fault,'' he said. ``But now, now I think people know that much of the problem came from the outside, and we need something better.'' And the IMF itself is beginning to fight back, an awkward role for an institution dominated by Ph.D. economists who are unaccustomed to being openly challenged. ``Every place you turn you read the same story, that we came in, that we made things worse,'' said Stanley Fischer, the deputy managing director of the fund, who was born in Northern Rhodesia _ now Zambia _ and became chairman of the Massachusetts Institute of Technology's economics department before taking a job that has now put him in the center of the financial storm. ``We frequently get the blame, some of it well-deserved,'' he said. ``But it is politically convenient for governments around the world to cry, `The IMF made us do it,' and pin their mistakes on us. That's fine. We'd rather be loved, but more than that we'd like to be effective.'' MISCALCULATIONS, POLITICS AND SAFETY NETS On a steaming January day, Michel Camdessus, the IMF's top official, slipped into Jakarta to the private residence of President Suharto and sat down for a four-hour meeting to tick off, line by line, the huge reforms Indonesia would have to implement in return for tens of billions of dollars in emergency aid. Two previous deals had collapsed when Suharto ignored the fund's conditions, so Camdessus insisted that he strike a deal directly with Suharto, then Asia's longest-serving leader. It was a meeting of men who knew different worlds of power politics: Suharto rose as a general in central Java, and Camdessus had detonated mines in Algeria for the French army before entering the French Treasury on his way to becoming head of France's central bank. ``It was all there,'' a senior IMF official recalled. ``He was told he had to dismantle the national airplane project, the clove monopoly, all the distribution monopolies.'' At one point, Camdessus looked at the impassive Suharto and said, ``You see what this means for your family,'' a reference to their vast investments in the country's key industries. ``He said, `I called in my children, and they all understand.''' But within months, that exchange in Jakarta came to symbolize the IMF's twin troubles: Its inability to understand and reckon with the national politics of countries in need of radical reform, and its focus on economic stabilization rather than the social costs of its actions. Suharto had no intention of fulfilling the agreement. It was, one of his former Cabinet members said, ``a delaying move that was obvious to everyone except Camdessus.'' Perhaps one reason why the IMF sometimes appears tone-deaf is that its senior staff is almost entirely composed of Ph.D. economists. There are few officials with deep experience in international politics, much less the complexities of Javanese culture that were at work in Indonesia. Historically, experts in politics and security have gravitated to the United Nations, development experts to the World Bank, and economists to the IMF _ creating dangerous gaps in a crisis like this one. As a result, the fund had only a rudimentary understanding of what would happen if its demands were met and all Indonesia's state monopolies were quickly dissolved. While that system lined the pockets of the Suhartos and their friends, it also distributed food, gasoline and other staples to a country that stretches for 3,000 miles over thousands of islands. To help balance the budget, the fund demanded a quick end to expensive subsidies that keep the price of food and gasoline artificially low. But that, combined with the huge currency devaluation that sparked the crisis, resulted in high prices and shortages that fueled riots that continue to this day, as millions of Indonesians lose their jobs. The IMF _ unintentionally, its officials insist _ also sped Suharto's resignation, insisting on the elimination of ``crony capitalism,'' code words for removing the Suharto family from the center of the economy. Ultimately, that may prove to be Indonesia's salvation, if the new government can contain the rioting against the ethnic Chinese minority _ whose money is desperately needed to save the country's fast-shrinking economy. ``It is worth noting,'' Fischer said this week, ``that our programs in Asia _ in Indonesia, Korea and Thailand _ only took hold after there was a change in government.'' Nonetheless, the Indonesia experience has revived the argument that the IMF is so focused on stabilizing banks and currencies, on preventing capital flight and freeing up markets, that it is blind to the social costs of its actions. Among the toughest critics has been its sister institution, the World Bank, whose main charge is alleviating poverty. ``You've seen the tension almost every day,'' one senior World Bank official said recently. The bank has gone to extraordinary lengths in recent months to differentiate its role from that of the fund, and to announce a tripling of aid to the poorest in the countries hit by the economic chaos. Even U.N. Secretary General Kofi Annan has joined the argument, warning in a speech at Harvard recently that ``if globalization is to succeed, it must succeed for poor and rich alike. It must deliver rights no less than riches. It must be harnessed to the cause not of capital alone, but of development and prosperity for the poorest of the world.'' IMF officials say they are changing strategies when they see they are exacting too great a social cost. ``It's a very difficult formula to get exactly right,'' Fischer said in August, as Russia was teetering and the IMF was sending in $4.8 billion in aid that was rapidly wasted. ``You need enough discipline to send the right message to the markets and keep investors from fleeing. But you need enough leeway to keep people from suffering more than they otherwise would.'' In recent months, he noted, the IMF has allowed more spending to sustain subsidies for basic goods for longer periods in Indonesia, Korea and elsewhere. ``There is a new flexibility at the IMF'' a senior Indonesian official concluded recently. ``It is a lot better.'' A U.S. PAWN, OR A RUNAWAY AGENCY? The Clinton administration admits that the IMF has many failings, many of them on display this year. But it insists that the world has gone through global financial crises without an IMF once before in this century _ and the result was the 1930s. ``I have no doubt the situation over the past year would have been much worse _ with greater devaluations, more defaults, more contagion, and greater trade dislocations _ without the program agreed with the IMF and the finance it has provided,'' Deputy Treasury Secretary Lawrence Summers told Congress last week. Many Republicans and some Democrats are unconvinced. Even though the Senate has overwhelmingly approved an $18 billion contribution to the fund to help it fight new crises, the House defeated that measure two weeks ago. The fund's last hope of getting the money, which will free up nearly $100 billion in contributions from other nations waiting for the United States to act, will come when the House and Senate try to resolve their budget differences in a conference committee in the next 10 days. A rejection, Treasury Secretary Robert Rubin insists, would send a message around the world that the United States is turning its back on the one institution charged with restoring economic stability. Everywhere else in the world, though, politicians and businessmen insist that one of the biggest problems with the IMF is that, contrary to the view of Congress, it acts as the U.S. Treasury's lap dog. Ask in Jakarta or Moscow, and the response is the same: The IMF never ventures far without looking back for the approving nod of its master. When the United States weighs in, however, is when the IMF is called on to rescue a country in deep trouble. Only then does the IMF _ and the U.S. Treasury _ have the leverage to extract commitments in return for billions in aid. In theory, the U.S. influence is limited: It has an 18.5 percent vote in the fund. Germany, Japan, France and Britain have about 5 percent each. But in practice the United States usually gets its way, exercising its influence behind the scenes, often in interactions between Fischer and Summers. The two met when Fischer was on the MIT faculty and Summers was a graduate student taking one of his classes, later becoming a colleague at MIT. Each served as chief economist of the World Bank. It was Summers who was instrumental in placing Fischer in the fund's no. 2 job, and these days they talk constantly. ``It's usually a warm relationship,'' Fischer said this summer. ``Remember, this is a job where you cannot turn to outsiders for advice _ you can't call the chief economist at a Wall Street firm, or even many of your academic friends, because so many of the issues are confidential.'' The Treasury's relations with Camdessus are often more strained as he plays the role of world diplomat, traveling the globe and trying to coax along political leaders. The tensions were obvious from the start of the Asia crisis. The fund made little secret of its displeasure that the United States was not offering direct aid to Thailand, a major U.S. ally, as a sign of support and confidence. Mindful of the backlash in Congress when Mexico was bailed out with U.S. money, that was the last thing the Treasury planned to do. Summers, in turn, thought the fund was not forcing the Thais to implement its reform commitments rigorously enough or disclose their true financial picture. Within the U.S. government there was other dissension: The State and Defense Departments felt the United States should do more for Thailand, but backed off when the Treasury asked if they would like to pony up some aid out of their own budgets. There were other conflicts. When Japan used the last IMF meeting to propose setting up a $100 billion ``Asia Fund'' _ one that would exclude the United States and would probably offer aid under much more relaxed conditions than the IMF does. Rubin called up Camdessus at breakfast one morning and told him that the Japanese proposal would undercut the IMF's authority. ``We've just had a dispute with Michel,'' Rubin reported to his aides as he returned to his orange juice and croissant. One of them shot back: ``And it's only 8 a.m.'' Camdessus backed down at Rubin's insistence and walked away from money that Asia could have used. Japan says it will be back with a similar proposal this weekend, this time for a $30 billion fund. Camdessus has also rankled U.S. officials with statements that amounted to cheerleading to reassure the markets _ sometimes in the face of the facts. In June, with Russia on its way to collapse, Camdessus declared that ``contrary to what markets and commentators are imagining'' about the slow collapse of Russia's economy, ``this is not a crisis. This is not a major development.'' The bailouts of Russia and South Korea were prime examples of how Washington muscles into the IMF's turf as soon as major U.S. strategic interests are involved. Last Christmas, as South Korea slipped within days of running out of hard currency to pay its debts in December, it sent a secret envoy, Kim Kihwan, to work out a rescue package. ``I didn't bother going to the IMF,'' Kim recalled recently. ``I called Summers' office at the Treasury from my home in Seoul, flew to Washington and went directly there. I knew that was how this would get done.'' Within days the Treasury dispatched David Lipton, its most experienced veteran of emergency bailouts, who is leaving his post as undersecretary for international affairs this month, to shadow the IMF staff's negotiations with the government in Seoul. Fischer was displeased. ``To make a negotiation effective, it has to be clear who has the authority to do the negotiating,'' he said. WHO LOST RUSSIA? The pattern was repeated this summer, when the United States raced to put together a $17 billion package for Russia. The IMF's staff in Moscow declared that Russia needed no money at all _ it just needed to enact policies that would restore confidence in investors. The Americans and Germans came to a different conclusion. Soon after, U.S. officials gathered in the White House situation room to consider what might happen to Russia if the ruble was devalued and market reforms collapsed and to push the IMF to come up with emergency money. So the fund began assembling a last-ditch program to prop up a country that had resisted its reform plans for seven years. Camdessus, though, was still hesitant, questioning whether the IMF should risk its scarce resources in Russia. ``We had to pull Michel along,'' a senior Treasury official recalled. As it turned out, Camdessus' instincts were right while the approach championed by Rubin and Summers proved disastrously wrong. The first installment of that payment _ $4.8 billion _ was wasted, propping up the currency long enough, in the words of one IMF official, ``to let the oligarchs get their money out of the country.'' Then Yeltsin reversed his commitments, let the ruble devalue anyway, began printing money with abandon and fired virtually every reformer in his government _ resulting in a collapse of the IMF agreements and the indefinite suspension of its aid program. Now, inside the IMF and on Capitol Hill, there are recriminations over ``who lost Russia.'' Publicly, Fischer argues that ``there are no apologies owed for what we attempted in Russia.'' But some IMF officials complain privately that they let Rubin and Summers run roughshod over them, striking a deal that fell apart within weeks as the Russian parliament rebelled and Yeltsin backed away from his commitments. Summers responds that the United States ``took a calculated risk'' because ``it was vastly better that Russia succeed than not succeed.'' The Russian collapse touched off new rounds of economic contagion, with investors fleeing Latin America, and triggering huge losses in hedge funds like Long Term Capital, the Greenwich, Conn., investment firm that needed to be rescued by Wall Street powerhouses whose money it had invested. ``Russia was a turning point,'' said Robert Hormats, the vice chairman of Goldman, Sachs & Co. ``It made the world realize that some countries can fail, even if the IMF and the Treasury intercede. And that changed the perception of risk.'' Now, as the countries meet to face a future that the IMF has warned could be very bleak, they need to reverse those perceptions, or watch countries slowly starve for lack of capital. The emerging markets are calling for controls on short term investments. The French want a stronger IMF. The Americans say the answer is more disclosure, so that investors are better warned, and tougher regulation. ``These are usually nice, quiet meetings; everyone very polite,'' a top U.S. official said earlier this week. ``Not this year.'' ||||| President Leonid Kuchma called Friday for ``corrections'' to Ukraine's program of market reforms, but pledged that reforms would continue. Kuchma did not elaborate in his comments to a group of Ukrainian economists, saying only that the changes were necessary because of the country's economic problems. Kuchma urged the economists to come up with recommendations before a national meeting of economists in November, the Interfax news agency reported. Ukraine has suffered economic problems since the 1991 collapse of the Soviet Union and it has been especially hard hit by the financial crisis in neighboring Russia, its main trading partner. The Russian crisis has hurt bilateral trade, caused the Ukrainian currency to fall and led to a withdrawal of investors from Ukraine. In recent months, Kuchma has implemented some economic reforms by decree, prompting the International Monetary Fund to release the first installment of a long-awaited dlrs 2.2 billion loan. Many reforms, however, remain stalled. National Bank chairman Viktor Yushchenko was in Washington this week for consultations with IMF officials. Yushchenko has warned that the bank would not spend its dwindling reserves to support the hryvna currency, but has avoided comments on the currency in recent days. Kuchma met Friday with Yushchenko, Prime Minister Valery Pustovoitenko and other senior officials to discuss ways to stabilize the hryvna. The government's press service said they focused on possible ways to keep the hryvna under 3.5 to the U.S. dollar through the end of the year. The hryvna has been trading at 3.4 to the dollar in recent days but trading has been limited. There are wide expectations in Ukraine that the hryvna will fall even further, and Ukrainians have been stocking up on food, clothing and household goods to save their fast-devaluing money. ||||| The United States is disappointed by the economic confusion within the new Russian government of Prime Minister Yevgeny Primakov, said Secretary of State Madeleine Albright on Friday, and she warned Russia about the dangers of an anti-Western policy. In her first comprehensive review of U.S.-Russian relations since Primakov was confirmed as prime minister last month, Albright said Washington was ``deeply concerned'' about Russia's direction and did not think the crisis there would soon abate. ``We have heard a lot of talk in recent days about printing new money, indexing wages, imposing price and capital controls and restoring state management of parts of the economy,'' she told the U.S.-Russia Business Council in Chicago. ``We can only wonder if some members of Primakov's team understand the basic arithmetic of the global economy.'' While praising Primakov, once her counterpart when he was foreign minister, as a pragmatist able to cooperate on key issues with Washington, she had harsh words of warning for him. ``Our initial reaction to some of the direction he's going in has not been particularly positive,'' she said, adding, ``The question now is whether that cooperation can continue.'' The United States must keep up its aid to Russia but is adjusting it to promote the building of democracy and student exchanges as well as arms control, Albright said. Washington does not favor more direct aid. ``More big bailouts are not by themselves going to restore investor confidence in Russia,'' she said. ``In the long run, the gap between Russia's needs and its resources must be met not by foreign bailouts but by foreign investment.'' Albright sharply criticized as self-defeating the ``many voices in Russia who want to shift the emphasis in Russia's interaction with America and our allies from one of partnership to one of assertiveness, opposition and defiance for its own stake.'' Russia could not stand alone in the world, she said, and the United States' ability ``to help Russians help themselves will go from being merely very, very difficult to being absolutely impossible.'' At the same time, she said, Washington would not ``assume the worst, for there are still plenty of people in Russia who will fight against turning back the clock.'' And she urged the world _ and American critics _ to ``be patient with the workings of the democratic process in Russia'' and ``not start each day by taking a census of reformers in the Kremlin,'' a census that American officials themselves promoted before President Boris Yeltsin dismissed the previous government. While Moscow may continue to oppose any NATO use of force against Serbian forces in the southern province of Kosovo, Albright said, NATO must be prepared to act regardless. ||||| Prime Minister Yevgeny Primakov said Saturday that the economic crisis would not bring an end to the government's program of privatizing state property. ``Privatization will be accomplished for growth of production, growth of investment and growth of production effectiveness through renewal of major funds,'' Primakov said during a meeting of Western businessmen. ``We shall conduct privatization so that it serves the interests of the people, the state, and business,'' he said, according to the ITAR-Tass news agency. Primakov reassured the businessmen, members of the prime minister's consultive council on foreign investment in Russia, that the government had no plans to ban the circulation of U.S. dollars in Russia. But, he said, the government would take steps to staunch the flow of dollars from Russia. Responding to media reports of a government economic plan that would prohibit Russians from buying U.S. dollars and other foreign currency, Primakov said the reports ``absolutely do not correspond to reality,'' ITAR-Tass quoted him as saying. He said there was no need to regulate the influx of dollars into Russia, but the government should take steps to prevent what he called ``the dollar drain.'' Russian companies stashed about dlrs 2.5 billion outside the country in September alone, the Interfax news agency reported Friday, quoting central bank figures. Primakov said foreign investors are ``the force'' that will help Russia to minimize its losses from the current economic crisis. ``We are very much interested in foreign investments, especially in ones that go into the real production sector,'' Primakov said, according to Interfax. ``We need a continuous dialogue with foreign investors, without whom it will be difficult for us to overcome the current difficulties.'' He said Russia wanted long-term investments. ``Foreign capital has been coming to the country via short-term operations,'' Primakov said. This, he said, ``is not to our liking or yours.'' Viktor Gerashchenko, the central bank chairman, said on Friday that the government must act to stem the flow of dollars from Russia. Gerashchenko and Finance Minister Mikhail Zadornov were in Washington Saturday for the annual meeting of the International Monetary Fund, where they plan to spell out the measures Russia is taking to bail out its finance system. Russia wants the IMF to release the second dlrs 4.3 billion installment of a loan that was approved in July, a month before the country's economy crashed and the government effectively defaulted on its foreign loans. IMF officials have said they want the Russian government to come up with a sound economic program before the installment is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable.

In October 1998 amid worldwide financial crises, particular concern focused on Russia where economic meltdown was exacerbated by conflicted politics. President Yeltsin's latest Prime Minister, Primakov, was supported by Communists and when word leaked out that a Communist economic program was under consideration, Yeltsin denounced it. Primakov then assured the public that "there is no program," suggesting that there would not be until the International Monetary Fund (IMF) came forth with a massive loan. IMF demanded a sound economic program before approving loan payment. Meanwhile neighboring Ukraine felt economic effects of the IMF-Primakov standoff.

Ukraine's parliament on Friday refused to approve President Leonid Kuchma's decree establishing a state fund to compensate people for savings lost in banks. Deputies voted 240-47 to prepare a revised version of the decree and debate it later in the month. They must consider the decree by Oct. 10, or else it automatically takes effect under the constitution. Leftist factions, which voted against the proposed legislation, said it would not fully guarantee the return of savings lost during the financial instability that has recently hit Ukraine. The fund Kuchma proposed to establish would have accumulated money in a special National Bank account and repay people in case the bank they kept their savings in went bankrupt or became insolvent. Although the decree provided for compensation of deposits amounting only to 500 hryvna (dlrs 147 at the current exchange rate), its authors said it would cover more than 90 percent of Ukrainians who keep their money in banks. The measure was meant to prevent mass withdrawals of deposits that most Ukrainian banks have already experienced as people, scared by the fall of the national currency and the turmoil in neighboring Russia, started to stock up on food, clothing and household goods. Government officials say that Ukrainians have recently withdrawn at least 10 percent of the 3 billion hryvna (dlrs 882 million) they deposited in banks. ||||| Russia's new prime minister picked an unusual way to reassure the nation Thursday. After two weeks of deliberations he announced that he still had no plan to rescue the country from its economic crisis. ``I want to repeat once more _ there is no program,'' Prime Minister Yevgeny Primakov said. ``It has yet to be worked out.'' In most nations such a statement might provoke alarm. But Primakov was seeking to calm an anxious public that was worried that the Kremlin's cure could be worse than the disease. It is not as if Russians do not have something to be concerned about. Thursday Primakov convened a meeting of top aides to try to hammer out a strategy for overcoming the economic woes. A main item on the agenda was the plan drafted by Yuri Maslyukov, a Communist and the government's senior policy maker on economic issues. It did not take long for Maslyukov's plan to hit the street. A newspaper, Kommersant Daily, published it in full Thursday morning. Not surprisingly Maslyukov's plan calls for a greater state role in the economy, including controls on hard currency. A new State Bank for Reconstruction and Development would be established using the ``nationalized assets'' of failed commercial banks. Wages and pensions would be paid in two months, and the minimum wage would be indexed to inflation. There would be huge tax cuts, a combination that suggested that the government was committed to printing additional money. The exchange rate of the ruble would be set by the central bank, based on changes in inflation and the balance of payments. Maslyukov's plan also implies that Russians would be able to buy dollars at exchanges through the country. It stipulates that hard currency could enter the country only with special authorization. Exporters would be required to sell most of their hard currency reserves. That is an allusion to currency controls that sent shock waves through the Russian public. Russians have come to treat the dollar as a second currency, and many people have squirreled away dollars as a hedge against inflation. ``It is an obvious stupidity,'' Otto Latsis, a commentator with the newspaper Noviye Izvestiya, said. ``People won't give their dollars away. They will go to the black market if they need to.'' Yegor Gaidar, the former prime minister who favors free markets, said the plan was a ``war against the dollar'' and predicted that it would lead to a shortage of imports. As the criticism grew, Primakov rushed to distance himself from the talk of currency controls. ``The rumors of the state's becoming a monopolist on the inflow of hard currency into the country is nonsense,'' he said, asserting that the document published by Kommersant Daily was just one of six possible plans. Primakov may be opposed to wildly unpopular currency controls. He may be worried that the plan would would set off the panic buying of dollars, further depressing the ruble. Or he may simply be trying to keep his distance from Maslyukov's plan while Russia tries to wrangle its next disbursement, $4.3 billion, from the International Monetary Fund. The particulars could be modified, but many people following the maneuvering say they believe that it represents the basic thrust of the government's thinking. Primakov has called for greater state regulation and an expansion of the money supply, two themes of Maslyukov's plan. The plan also has many similarities with the plan presented to the government by Gorbachev-era advisers. ``We think it is close to being a final document,'' said the United Financial Group, a Russian investment business. It is unclear how long Primakov can carry on without spelling out a detailed strategy. The ousted tax chief, Boris Fyodorov, has argued that the IMF should not provide further aid until Primakov has taken tough measures to build a free market. Primakov has, however, sought to turn that logic on its head, arguing that his government's economic strategy will depend on the fund's willingness to provide aid. His aim appears to be to pressure the fund by implying that it will be the fund's fault if Russia is forced to default on its loans or take draconian measures at home. Or as Primakov put it Thursday, without the fund's money, Russia will have to impose ``unpopular measures.'' ||||| If the Communist Party has its way _ and it has been planning for months _ millions of Russians will take to the streets on Wednesday for some of the biggest demonstrations in years. But now that Communists or politicians with the Communist stamp of approval are running the country and its economy the question is what the marchers will be demonstrating against. President Boris Yeltsin and his economic advisers were easy targets two months ago. But Yeltsin seems but a shadow of himself today, and his advisers are gone. The Communists, who have undergone a sort of resurgence by playing on the discontent, are working hard to cast themselves as outsiders in the government that they help run _ and to keep the focus of the protests on Wednesday on Yeltsin and his policies. Even that strategy may backfire, however, because discontent over Yeltsin does not necessarily translate into support for his predecessors. An adviser to the Communist Party leader, Gennadi Zyuganov, made headlines not long ago when he called the new government bourgeois. The characterization was striking, because the new prime minister, Yevgeny Primakov, was one of Zyuganov's top choices for the post. The deputy prime minister in charge of the economy, Yuri Maslyukov, is a Communist Party figure who once headed Gosplan, the infamous central-planning program that helped bring the Soviet Union to ruin. ``We don't have slogans that are aimed against the government,'' the first secretary of the Moscow Communist Party committee, Alexander Kuvayev, said in a recent interview. ``All the slogans are aimed against the president and the economic course of the country. Only the president can fully be blamed for the course that has brought the country to this situation.'' Anger over Russia's fate, and their own, is drawing some Russians back to Soviet-style slogans and old-style hostility toward capitalism. The ardently pro-Communist newspaper Sovietskaya Rossiya devoted most of its front page on Thursday to what it said were the results of a contest among readers for protest slogans. The entries ranged from catchy to kitschy, from, ``Legislator, official, banker _ study the Constitution; the exam is Oct. 7,'' to, `` Imperialist! Help Russia return the exported capital, and we will pay the debts at once.'' Russia has seen nothing approaching this sort of economic chaos and despair since 1993, when hyperinflation swept the economy. There is no real way of knowing whether the latest travails will produce huge and ugly crowds or small, peaceful ones. A deputy editor and political analyst at a newsweekly, Itogi, Masha Lipman, said the situation was not unlike that of 1993, when Yeltsin sought, and won, a popular mandate in a referendum. He used it to dissolve the Communist-dominated Parliament and increase his own power. That led to an autumn showdown, the shelling of Parliament by tanks and the total defeat, for the time being, of Yeltsin's legislative opponents. ``You can interpret this demonstration as a Communist mandate, but I don't think they will act like Yeltsin,'' Ms. Lipman said. ``Support for the Communists is at its smallest level, maybe 20 percent.'' In a survey of 1,714 people that was released last week the All-Russian Public Opinion Center said that nearly half the population supported the idea of demonstrations against Yeltsin, but that barely one-tenth were likely to participate in any way. ``Nobody is interested in any sort of struggle,'' Yuri Levada, who heads the center, said in an interview. ``This is mainly a general expression of a great wave of distrust of authorities, mainly the president. He's the great scapegoat for all our sins.'' There seems to be little enthusiasm for demonstrations of any sort. Only a few thousand people turned out Sunday for the fifth anniversary of the shelling of Parliament and Yeltsin's subsequent triumph over the Communists. The Communist Party and the Federation of Independent Russian Unions, a leftist organization that says it is the main sponsor of the protests, predict that 9 million Russians will participate on Wednesday. The government has vowed to keep order without resorting to force. But it is concerned enough that it has summoned 11,000 police officers to patrol Moscow and 6,000 military troops to intervene if violence erupts. Protests since 1993 have generally been tepid, a deep-seated feeling here. Some demonstrations last week, more or less practice runs, hinted at similarly dampened marches this year. ||||| President Boris Yeltsin would respond strongly to any effort to prohibit Russians from buying foreign currencies, believing the move would be like bringing another Iron Curtain down on the country, his spokesman said Friday. ``The president clearly understands that such a ban would be a clear violation of our rights ... that would mean a return to the Iron Curtain in everyday life,'' said presidential spokesman Dmitry Yakushin. The remarks came after media reports of a government economic plan in the works that would prohibit Russians from buying U.S. dollars and other foreign currencies, and institute other strict economic controls, rolling back seven years of reforms. Though government officials say such a plan is only one of six possibilities, Prime Minister Yevgeny Primakov warned Thursday that he might be forced to take ``unpopular'' measures to rescue the Russian economy if it does not receive the next installment in a dlrs 22.6 billion loan from the International Monetary Fund. Central Bank Chairman Viktor Gerashchenko and Finance Minister Mikhail Zadornov flew to Washington on Friday for negotiations with the IMF over the dlrs 4.3 billion installment. IMF officials have said they want the Russian government to come up with a sound economic program before the loan is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable. But Primakov said that the country's plan would be dependent on the IMF loan, not the other way around. No short-term economic plan will be known for another three weeks, long after the IMF is set to make its decision, said First Deputy Prime Minister Vadim Gustov. A draft version of the government's fourth-quarter budget would rely heavily on the IMF loan, the Kommersant newspaper said. Without the loan, the government would have to engage in major deficit spending. Calls for Soviet-style controls _ part of the plan drafted by First Deputy Prime Minister Yuri Maslyukov and leaked to the press _ have apparently created a rift within the Cabinet. The plan drew heavy criticism from Zadornov, and Gerashchenko called the idea of banning foreign currency sales ``a mad idea.'' Meanwhile, Russia's stock market dropped by 5 percent to 38.8 Friday, but trading was so light the downward move meant little. The stock market has continued to fall since the crisis hit Aug. 17. And tax collection was down in September, the result of the collapse in Russia's banking system, said Alexander Pochinok, head of the government's finance and credit department. Revenues totaled 14.3 billion rubles (dlrs 875 million), 700 million rubles (dlrs 43 million) less than expected. The government wants to reverse this trend by raising taxes for oil and gas companies, but the idea is expected to meet sharp resistance in the lower house of Russia's parliament, which wants to cut tax rates, Pochinok said. ||||| Wall Street extended a global stock selloff Thursday with the Dow industrials tumbling more than 200 points for a second straight day. The Dow Jones industrial average, which plunged 237.90 points on Wednesday, fell an additional 210.09, or by 2.7 percent, to close at 7,632.53. Broader market indicators also sank sharply in heavy trading. Bank and technology stocks were particularly hard hit. The selling spree, amid worries about shrinking corporate profits and fears of new financial crises, left the Dow 18.3 percent, or more than 1,700 points, below the all-time high of 9,337.97 reached on July 17. It was getting closer to the low of 7,400 that was reached during trading Sept. 1, before Wall Street's best-known indicator began a comeback bid that brought it above 8,100 as recently as Monday. The Dow's 12.4 percent slide in the third quarter, which ended Wednesday, was its worst quarterly performance in eight years. It now is 3.5 percent below where it began this year. Stock prices earlier plunged in Asia, with Tokyo shares falling 1.6 percent to a new 12-year low, and shares were falling sharply in Europe, where Germany's central bank left interest rates unchanged. Blue chips in London sank 3.1 percent to close at new lows for the year, while the key index in Frankfurt, Germany, closed down 5.5 percent and the main indicator in Paris was off 5 percent. The selloff in stocks has sent a flood of money into U.S. Treasury securities, a traditional haven in times of uncertainty. Yields on 30-year Treasury bonds fell further below 5 percent Thursday, reaching levels unseen for long-term government bonds since 1967. Traders were alarmed to see prices on the New York Stock Exchange nosedive 2.9 percent on Wednesday, even though the Federal Reserve had lowered a key interest rate one-quarter percentage point on Tuesday. Some traders were disappointed that the cut was not deeper amid fears a go-slow approach would not do enough to counter the economic crises that have swept through Asia and Russia and are threatening Latin America. ``The smaller-than-expected lowering of interest rates by the U.S. Federal Reserve has a chain reaction,'' said Lee Won-ho, an analyst at Samsung Securities Co. in Seoul, South Korea, where the main stock index fell by 1.5 percent. ``It is affecting Wall Street, the Japanese market, ours and others.'' The managing director of the International Monetary Fund, Michel Camdessus, on Thursday said the Fed made the right decision in cutting rates and that global powers now must push for stronger growth to offset steep recessions in Asia and Russia. Asked why stock markets, particularly in the United States, have reacted so negatively to the Fed rate cut, Camdessus said he believed confidence will soon be restored, especially if financial leaders show resolve in their discussions over the next week. There also are worries about where the next financial market crisis may erupt after last week's dlrs 3.6 billion private bailout of Long-Term Capital Management LP of Greenwich, Connecticut. In addition, investors worldwide worry that the downturn on Wall Street could signal a possible slowdown in economic growth _ a bad omen for the many foreign companies dependent on exports to the huge U.S. market. ``There's a psychological impact overall, but there's also a direct impact on companies like Sony and TDK which derive a high percentage of their earnings from overseas markets,'' said Pelham Smithers, a stock strategist in Tokyo at ING Baring Securities (Japan) Ltd. A new survey in Japan said confidence among small- and medium-sized businesses about the economy plunged to its worst level since the Bank of Japan began the quarterly samplings in 1967. ||||| In a season of crashing banks, plunging rubles, bouncing paychecks, failing cropsand rotating governments, maybe it is not the ultimate insult. But the nation that bore Tolstoy and Chekhov, and still regards a well-written letter as a labor of love, is buckling a little this week, because it can no longer wish good health to Baba Anya in Omsk. The Post Office is broke. In 60 of the country's 89 statelike regions, more than 1,000 mail cars have been sidetracked, many stuffed with up to 18 tons of letters, newspapers and parcels. The state Railway Ministry refuses to carry more mail until the Post Office makes good on some 210 million rubles in old bills _ about $13 million in today's dollars, or $35 million in dollars six weeks ago. Air mail, which amounts to one of every four or five letters, was also suspended at one of Moscow's major airports until this week, when the Post Office coughed up 5 million rubles for old bills. A second airport is still demanding 3 million rubles for past-due debts. So much mail is backed up that post offices in Moscow and elsewhere have simply stopped accepting out-of-town mail, except for areas that can be easily reached by truck. Delivery schedules have fallen weeks, and perhaps months, behind. ``The situation is really extraordinary,'' said Vladimir Sherekhov, the deputy chief of mail service administration in the government's Communications Committee. ``We've never had anything like this before.'' Maybe the Post Office has been lucky. Extraordinary is the rule elsewhere in Russia. Until Friday, the lower house of Parliament was preparing to sue the government for failure to provide soap, heat, toilet paper and copy-machine paper in the legislature's monumental downtown offices. It turned out that politicians had exhausted their funds by cutting short their recess and returning to address the nation's economic crisis. Earlier in the week, officials said Russia's Arctic shipping routes may close next month because half the nation's icebreakers are in disrepair and there is no money to fix them. The oldest of the ships is so ancient that its nickname is Granny. Such anecdotal evidence that Russia is losing its wheels, like one of its old, ill-maintained Volga sedans, is everywhere. But oddly, real signs of public distress are not particularly common, perhaps because the system rarely seems to shed a part as big as a postal system. If the U.S. Postal Service is increasingly a pipeline for sweepstakes notices and bills, the Russian Post Office still holds a special place in the national conversation. Russians still write letters to each other, frequently and fervently, and many in remote regions get their news through the mail. Millions use the mails to ship canned goods and other provisions to needy relatives and friends in faraway areas, an especially vital service in winter. And in the last few years, the Post Office has become a vehicle for a growing mail-order trade in books, clothes and other catalog items not readily available outside big cities. Exactly why all this has rumbled to a halt is in some dispute. What is clear is that the Post Office and the Railway Ministry both suffer from what ails every Russian venture, private and public alike: Nobody pays his bills. The state Railway Ministry complains that it is continually stiffed by customers who believe the railroads are honor-bound to carry freight whether they are paid or not. The government has specified nearly 40 categories of freight which the railroads must carry for next to nothing. Among the biggest deadbeats are the ``power ministries'' _ the military and interior departments _ which did not pay during Soviet times and feel little need to pay now. ``It's a psychology formed during the socialist period,'' said Tatiana Pashkova, the deputy spokeswoman for the ministry, ``and the same situation exists with the Post Office. We've been in dispute for a very long time. Always we try to understand their differences. But we can't carry cargo for free.'' No kidding, says the Post Office: It, too, is owed 200 million rubles by government agencies, and is barred from raising rates even though freight costs are outstripping revenues. Moreover, the Post Office is also required by the government to carry some forms of mail, such as pension checks, at reduced rates. Officials at the state Communications Department say they also suspect an ulterior motive in the railroads' actions: a struggle to dominate the thriving mail-order business. ``Here's competition between us and the railroads for the delivery of parcels, and I think decisions made by the railroads are mainly explained by this competition,'' Sherekhov said. ``They blame us for carrying some commercial cargoes instead of mail.'' The Railways Ministry's spokeswoman, Ms. Pashkova, said such ``commercial cargoes'' are indeed a problem, but only because the railroads know that the Post Office has already gotten cash to transport the packages. The railroads are still waiting for their share of that money, she said. In the meantime, the situation has come to a boil. In late September the railroads cut mail service in and out of Moscow, effectively decapitating the postal system and forcing officials to draft a fleet of trucks to move letters in and out of the city. Hundreds of empty and full rail cars have clogged some local yards to the point where moving cars into position for unloading has become difficult. At last count, 39 loaded cars were awaiting service at one yard. And customers are getting angry. ``We've gotten all kinds of complaints,'' said Viktor Salikov, a deputy in the Communications Department's mail shipping center. ``People are even coming to us, searching for mail that was sent weeks ago.'' ||||| When the world's finance ministers and central bankers gathered last year in Hong Kong, they nervously congratulated each other for containing _ at least for the moment _ a nasty financial brush fire in Asia. In a year's time, many predicted in hallway chatter, the troubles in Thailand and Indonesia would look like a replay of Mexico in 1995 _ a rough bump in the road for a world enjoying remarkable prosperity. Talk about bad market calls. Twelve months later, as the same financial mandarins clog Washington with their limousines and glide through endless receptions at the annual meeting of the International Monetary Fund and the World Bank, just about everything that could have gone wrong in the world economy has: the worst downturn in Japan since World War II, economic meltdown in Russia, a depression in Indonesia that is plunging 100 million people below the poverty line, and deep fears over what happens next in Latin America. What makes this year's IMF meeting most remarkable, though, is that the harshest criticisms are directed at the monetary fund itself, and, by extension, at the U.S. Treasury, which is viewed as the power behind the IMF. This year, in place of confident predictions, there are mutual recriminations. Arguments are breaking out over whether the true culprits were crony capitalists and weakened leaders like Russian President Boris Yeltsin, or huge investors who poured money into the world's emerging markets with reckless abandon in the mid-1990s and panicked in the past twelve months. Whatever the reason, one reality prevails: Hundreds of billions of dollars have fled from economies on four continents _ seeking the safest havens possible, often in the United States _ and the money is not returning anytime soon. And the subtext of every seminar on capital flows and every conclave of nervous ministers will be some painfully blunt questions: Can this be stopped? Or is the world headed for a global recession? Fifty-three years ago the IMF was created after the Bretton Woods conference which sought to stabilize the world economy and secure the peace after World War II. Now it is under attack from all sides, charged not only with worsening a bad situation by misjudging the economics, but with being politically tone-deaf in some of the most volatile capitals in the world, from Jakarta, Indonesia, to Moscow. For the first time, there are disturbing questions about whether the institution itself is still capable, financially or politically, of containing the kind of economic contagion that caught the world unaware. Once, the IMF's critics were largely found in Africa and South Asia, were the fund was often viewed as arrogant; today they include Wall Street's biggest players and top officials in the most powerful economies of Asia and Europe. Only a few _ including former Secretary of State George Schultz and members of Congress who are increasingly suspicious of all international institutions _ are talking about scrapping the IMF altogether. But almost everyone is talking about creating a ``new financial architecture'' that can do what the old one clearly cannot: smother financial wildfires before they leap around the globe. President Clinton, British Prime Minister Tony Blair and other leaders, after months of silence, have edged into the debate, in some cases wresting the issue for the first time from their finance ministers and central banks. Their fear, their advisers say, is that 15 months of financial turmoil are now threatening political stability. Such concerns have turned this year's meeting into a tumbled mass of worries and a groping for short and long-term solutions. The Japanese, the French, the Southeast Asians are all arriving in Washington with different diagnoses of what went wrong, and different solutions about how to set it right. The United States has its own set of plans, a mix of suggestions to force more disclosure of financial data in countries around the world and to impose more American-style financial standards and regulation. Meanwhile, an ideological argument is breaking out over whether the world should slow down a long march toward more free and open markets _ a strategy pressed by the Clinton administration for the past six years. Others argue that it is unwise to start rebuilding the hospital while the patients are still on the operating tables. ``Last year the standard answer that all of us were given came down to this: `We have the IMF and the World Bank, and they know best,''' Indonesian Foreign Minister Ali Alatas said over breakfast in Washington the other day, reflecting on how the crisis turned 30 years of astounding growth in his country into an overnight depression. ``Then they said everything that went wrong was our fault,'' he said. ``But now, now I think people know that much of the problem came from the outside, and we need something better.'' And the IMF itself is beginning to fight back, an awkward role for an institution dominated by Ph.D. economists who are unaccustomed to being openly challenged. ``Every place you turn you read the same story, that we came in, that we made things worse,'' said Stanley Fischer, the deputy managing director of the fund, who was born in Northern Rhodesia _ now Zambia _ and became chairman of the Massachusetts Institute of Technology's economics department before taking a job that has now put him in the center of the financial storm. ``We frequently get the blame, some of it well-deserved,'' he said. ``But it is politically convenient for governments around the world to cry, `The IMF made us do it,' and pin their mistakes on us. That's fine. We'd rather be loved, but more than that we'd like to be effective.'' MISCALCULATIONS, POLITICS AND SAFETY NETS On a steaming January day, Michel Camdessus, the IMF's top official, slipped into Jakarta to the private residence of President Suharto and sat down for a four-hour meeting to tick off, line by line, the huge reforms Indonesia would have to implement in return for tens of billions of dollars in emergency aid. Two previous deals had collapsed when Suharto ignored the fund's conditions, so Camdessus insisted that he strike a deal directly with Suharto, then Asia's longest-serving leader. It was a meeting of men who knew different worlds of power politics: Suharto rose as a general in central Java, and Camdessus had detonated mines in Algeria for the French army before entering the French Treasury on his way to becoming head of France's central bank. ``It was all there,'' a senior IMF official recalled. ``He was told he had to dismantle the national airplane project, the clove monopoly, all the distribution monopolies.'' At one point, Camdessus looked at the impassive Suharto and said, ``You see what this means for your family,'' a reference to their vast investments in the country's key industries. ``He said, `I called in my children, and they all understand.''' But within months, that exchange in Jakarta came to symbolize the IMF's twin troubles: Its inability to understand and reckon with the national politics of countries in need of radical reform, and its focus on economic stabilization rather than the social costs of its actions. Suharto had no intention of fulfilling the agreement. It was, one of his former Cabinet members said, ``a delaying move that was obvious to everyone except Camdessus.'' Perhaps one reason why the IMF sometimes appears tone-deaf is that its senior staff is almost entirely composed of Ph.D. economists. There are few officials with deep experience in international politics, much less the complexities of Javanese culture that were at work in Indonesia. Historically, experts in politics and security have gravitated to the United Nations, development experts to the World Bank, and economists to the IMF _ creating dangerous gaps in a crisis like this one. As a result, the fund had only a rudimentary understanding of what would happen if its demands were met and all Indonesia's state monopolies were quickly dissolved. While that system lined the pockets of the Suhartos and their friends, it also distributed food, gasoline and other staples to a country that stretches for 3,000 miles over thousands of islands. To help balance the budget, the fund demanded a quick end to expensive subsidies that keep the price of food and gasoline artificially low. But that, combined with the huge currency devaluation that sparked the crisis, resulted in high prices and shortages that fueled riots that continue to this day, as millions of Indonesians lose their jobs. The IMF _ unintentionally, its officials insist _ also sped Suharto's resignation, insisting on the elimination of ``crony capitalism,'' code words for removing the Suharto family from the center of the economy. Ultimately, that may prove to be Indonesia's salvation, if the new government can contain the rioting against the ethnic Chinese minority _ whose money is desperately needed to save the country's fast-shrinking economy. ``It is worth noting,'' Fischer said this week, ``that our programs in Asia _ in Indonesia, Korea and Thailand _ only took hold after there was a change in government.'' Nonetheless, the Indonesia experience has revived the argument that the IMF is so focused on stabilizing banks and currencies, on preventing capital flight and freeing up markets, that it is blind to the social costs of its actions. Among the toughest critics has been its sister institution, the World Bank, whose main charge is alleviating poverty. ``You've seen the tension almost every day,'' one senior World Bank official said recently. The bank has gone to extraordinary lengths in recent months to differentiate its role from that of the fund, and to announce a tripling of aid to the poorest in the countries hit by the economic chaos. Even U.N. Secretary General Kofi Annan has joined the argument, warning in a speech at Harvard recently that ``if globalization is to succeed, it must succeed for poor and rich alike. It must deliver rights no less than riches. It must be harnessed to the cause not of capital alone, but of development and prosperity for the poorest of the world.'' IMF officials say they are changing strategies when they see they are exacting too great a social cost. ``It's a very difficult formula to get exactly right,'' Fischer said in August, as Russia was teetering and the IMF was sending in $4.8 billion in aid that was rapidly wasted. ``You need enough discipline to send the right message to the markets and keep investors from fleeing. But you need enough leeway to keep people from suffering more than they otherwise would.'' In recent months, he noted, the IMF has allowed more spending to sustain subsidies for basic goods for longer periods in Indonesia, Korea and elsewhere. ``There is a new flexibility at the IMF'' a senior Indonesian official concluded recently. ``It is a lot better.'' A U.S. PAWN, OR A RUNAWAY AGENCY? The Clinton administration admits that the IMF has many failings, many of them on display this year. But it insists that the world has gone through global financial crises without an IMF once before in this century _ and the result was the 1930s. ``I have no doubt the situation over the past year would have been much worse _ with greater devaluations, more defaults, more contagion, and greater trade dislocations _ without the program agreed with the IMF and the finance it has provided,'' Deputy Treasury Secretary Lawrence Summers told Congress last week. Many Republicans and some Democrats are unconvinced. Even though the Senate has overwhelmingly approved an $18 billion contribution to the fund to help it fight new crises, the House defeated that measure two weeks ago. The fund's last hope of getting the money, which will free up nearly $100 billion in contributions from other nations waiting for the United States to act, will come when the House and Senate try to resolve their budget differences in a conference committee in the next 10 days. A rejection, Treasury Secretary Robert Rubin insists, would send a message around the world that the United States is turning its back on the one institution charged with restoring economic stability. Everywhere else in the world, though, politicians and businessmen insist that one of the biggest problems with the IMF is that, contrary to the view of Congress, it acts as the U.S. Treasury's lap dog. Ask in Jakarta or Moscow, and the response is the same: The IMF never ventures far without looking back for the approving nod of its master. When the United States weighs in, however, is when the IMF is called on to rescue a country in deep trouble. Only then does the IMF _ and the U.S. Treasury _ have the leverage to extract commitments in return for billions in aid. In theory, the U.S. influence is limited: It has an 18.5 percent vote in the fund. Germany, Japan, France and Britain have about 5 percent each. But in practice the United States usually gets its way, exercising its influence behind the scenes, often in interactions between Fischer and Summers. The two met when Fischer was on the MIT faculty and Summers was a graduate student taking one of his classes, later becoming a colleague at MIT. Each served as chief economist of the World Bank. It was Summers who was instrumental in placing Fischer in the fund's no. 2 job, and these days they talk constantly. ``It's usually a warm relationship,'' Fischer said this summer. ``Remember, this is a job where you cannot turn to outsiders for advice _ you can't call the chief economist at a Wall Street firm, or even many of your academic friends, because so many of the issues are confidential.'' The Treasury's relations with Camdessus are often more strained as he plays the role of world diplomat, traveling the globe and trying to coax along political leaders. The tensions were obvious from the start of the Asia crisis. The fund made little secret of its displeasure that the United States was not offering direct aid to Thailand, a major U.S. ally, as a sign of support and confidence. Mindful of the backlash in Congress when Mexico was bailed out with U.S. money, that was the last thing the Treasury planned to do. Summers, in turn, thought the fund was not forcing the Thais to implement its reform commitments rigorously enough or disclose their true financial picture. Within the U.S. government there was other dissension: The State and Defense Departments felt the United States should do more for Thailand, but backed off when the Treasury asked if they would like to pony up some aid out of their own budgets. There were other conflicts. When Japan used the last IMF meeting to propose setting up a $100 billion ``Asia Fund'' _ one that would exclude the United States and would probably offer aid under much more relaxed conditions than the IMF does. Rubin called up Camdessus at breakfast one morning and told him that the Japanese proposal would undercut the IMF's authority. ``We've just had a dispute with Michel,'' Rubin reported to his aides as he returned to his orange juice and croissant. One of them shot back: ``And it's only 8 a.m.'' Camdessus backed down at Rubin's insistence and walked away from money that Asia could have used. Japan says it will be back with a similar proposal this weekend, this time for a $30 billion fund. Camdessus has also rankled U.S. officials with statements that amounted to cheerleading to reassure the markets _ sometimes in the face of the facts. In June, with Russia on its way to collapse, Camdessus declared that ``contrary to what markets and commentators are imagining'' about the slow collapse of Russia's economy, ``this is not a crisis. This is not a major development.'' The bailouts of Russia and South Korea were prime examples of how Washington muscles into the IMF's turf as soon as major U.S. strategic interests are involved. Last Christmas, as South Korea slipped within days of running out of hard currency to pay its debts in December, it sent a secret envoy, Kim Kihwan, to work out a rescue package. ``I didn't bother going to the IMF,'' Kim recalled recently. ``I called Summers' office at the Treasury from my home in Seoul, flew to Washington and went directly there. I knew that was how this would get done.'' Within days the Treasury dispatched David Lipton, its most experienced veteran of emergency bailouts, who is leaving his post as undersecretary for international affairs this month, to shadow the IMF staff's negotiations with the government in Seoul. Fischer was displeased. ``To make a negotiation effective, it has to be clear who has the authority to do the negotiating,'' he said. WHO LOST RUSSIA? The pattern was repeated this summer, when the United States raced to put together a $17 billion package for Russia. The IMF's staff in Moscow declared that Russia needed no money at all _ it just needed to enact policies that would restore confidence in investors. The Americans and Germans came to a different conclusion. Soon after, U.S. officials gathered in the White House situation room to consider what might happen to Russia if the ruble was devalued and market reforms collapsed and to push the IMF to come up with emergency money. So the fund began assembling a last-ditch program to prop up a country that had resisted its reform plans for seven years. Camdessus, though, was still hesitant, questioning whether the IMF should risk its scarce resources in Russia. ``We had to pull Michel along,'' a senior Treasury official recalled. As it turned out, Camdessus' instincts were right while the approach championed by Rubin and Summers proved disastrously wrong. The first installment of that payment _ $4.8 billion _ was wasted, propping up the currency long enough, in the words of one IMF official, ``to let the oligarchs get their money out of the country.'' Then Yeltsin reversed his commitments, let the ruble devalue anyway, began printing money with abandon and fired virtually every reformer in his government _ resulting in a collapse of the IMF agreements and the indefinite suspension of its aid program. Now, inside the IMF and on Capitol Hill, there are recriminations over ``who lost Russia.'' Publicly, Fischer argues that ``there are no apologies owed for what we attempted in Russia.'' But some IMF officials complain privately that they let Rubin and Summers run roughshod over them, striking a deal that fell apart within weeks as the Russian parliament rebelled and Yeltsin backed away from his commitments. Summers responds that the United States ``took a calculated risk'' because ``it was vastly better that Russia succeed than not succeed.'' The Russian collapse touched off new rounds of economic contagion, with investors fleeing Latin America, and triggering huge losses in hedge funds like Long Term Capital, the Greenwich, Conn., investment firm that needed to be rescued by Wall Street powerhouses whose money it had invested. ``Russia was a turning point,'' said Robert Hormats, the vice chairman of Goldman, Sachs & Co. ``It made the world realize that some countries can fail, even if the IMF and the Treasury intercede. And that changed the perception of risk.'' Now, as the countries meet to face a future that the IMF has warned could be very bleak, they need to reverse those perceptions, or watch countries slowly starve for lack of capital. The emerging markets are calling for controls on short term investments. The French want a stronger IMF. The Americans say the answer is more disclosure, so that investors are better warned, and tougher regulation. ``These are usually nice, quiet meetings; everyone very polite,'' a top U.S. official said earlier this week. ``Not this year.'' ||||| President Leonid Kuchma called Friday for ``corrections'' to Ukraine's program of market reforms, but pledged that reforms would continue. Kuchma did not elaborate in his comments to a group of Ukrainian economists, saying only that the changes were necessary because of the country's economic problems. Kuchma urged the economists to come up with recommendations before a national meeting of economists in November, the Interfax news agency reported. Ukraine has suffered economic problems since the 1991 collapse of the Soviet Union and it has been especially hard hit by the financial crisis in neighboring Russia, its main trading partner. The Russian crisis has hurt bilateral trade, caused the Ukrainian currency to fall and led to a withdrawal of investors from Ukraine. In recent months, Kuchma has implemented some economic reforms by decree, prompting the International Monetary Fund to release the first installment of a long-awaited dlrs 2.2 billion loan. Many reforms, however, remain stalled. National Bank chairman Viktor Yushchenko was in Washington this week for consultations with IMF officials. Yushchenko has warned that the bank would not spend its dwindling reserves to support the hryvna currency, but has avoided comments on the currency in recent days. Kuchma met Friday with Yushchenko, Prime Minister Valery Pustovoitenko and other senior officials to discuss ways to stabilize the hryvna. The government's press service said they focused on possible ways to keep the hryvna under 3.5 to the U.S. dollar through the end of the year. The hryvna has been trading at 3.4 to the dollar in recent days but trading has been limited. There are wide expectations in Ukraine that the hryvna will fall even further, and Ukrainians have been stocking up on food, clothing and household goods to save their fast-devaluing money. ||||| The United States is disappointed by the economic confusion within the new Russian government of Prime Minister Yevgeny Primakov, said Secretary of State Madeleine Albright on Friday, and she warned Russia about the dangers of an anti-Western policy. In her first comprehensive review of U.S.-Russian relations since Primakov was confirmed as prime minister last month, Albright said Washington was ``deeply concerned'' about Russia's direction and did not think the crisis there would soon abate. ``We have heard a lot of talk in recent days about printing new money, indexing wages, imposing price and capital controls and restoring state management of parts of the economy,'' she told the U.S.-Russia Business Council in Chicago. ``We can only wonder if some members of Primakov's team understand the basic arithmetic of the global economy.'' While praising Primakov, once her counterpart when he was foreign minister, as a pragmatist able to cooperate on key issues with Washington, she had harsh words of warning for him. ``Our initial reaction to some of the direction he's going in has not been particularly positive,'' she said, adding, ``The question now is whether that cooperation can continue.'' The United States must keep up its aid to Russia but is adjusting it to promote the building of democracy and student exchanges as well as arms control, Albright said. Washington does not favor more direct aid. ``More big bailouts are not by themselves going to restore investor confidence in Russia,'' she said. ``In the long run, the gap between Russia's needs and its resources must be met not by foreign bailouts but by foreign investment.'' Albright sharply criticized as self-defeating the ``many voices in Russia who want to shift the emphasis in Russia's interaction with America and our allies from one of partnership to one of assertiveness, opposition and defiance for its own stake.'' Russia could not stand alone in the world, she said, and the United States' ability ``to help Russians help themselves will go from being merely very, very difficult to being absolutely impossible.'' At the same time, she said, Washington would not ``assume the worst, for there are still plenty of people in Russia who will fight against turning back the clock.'' And she urged the world _ and American critics _ to ``be patient with the workings of the democratic process in Russia'' and ``not start each day by taking a census of reformers in the Kremlin,'' a census that American officials themselves promoted before President Boris Yeltsin dismissed the previous government. While Moscow may continue to oppose any NATO use of force against Serbian forces in the southern province of Kosovo, Albright said, NATO must be prepared to act regardless. ||||| Prime Minister Yevgeny Primakov said Saturday that the economic crisis would not bring an end to the government's program of privatizing state property. ``Privatization will be accomplished for growth of production, growth of investment and growth of production effectiveness through renewal of major funds,'' Primakov said during a meeting of Western businessmen. ``We shall conduct privatization so that it serves the interests of the people, the state, and business,'' he said, according to the ITAR-Tass news agency. Primakov reassured the businessmen, members of the prime minister's consultive council on foreign investment in Russia, that the government had no plans to ban the circulation of U.S. dollars in Russia. But, he said, the government would take steps to staunch the flow of dollars from Russia. Responding to media reports of a government economic plan that would prohibit Russians from buying U.S. dollars and other foreign currency, Primakov said the reports ``absolutely do not correspond to reality,'' ITAR-Tass quoted him as saying. He said there was no need to regulate the influx of dollars into Russia, but the government should take steps to prevent what he called ``the dollar drain.'' Russian companies stashed about dlrs 2.5 billion outside the country in September alone, the Interfax news agency reported Friday, quoting central bank figures. Primakov said foreign investors are ``the force'' that will help Russia to minimize its losses from the current economic crisis. ``We are very much interested in foreign investments, especially in ones that go into the real production sector,'' Primakov said, according to Interfax. ``We need a continuous dialogue with foreign investors, without whom it will be difficult for us to overcome the current difficulties.'' He said Russia wanted long-term investments. ``Foreign capital has been coming to the country via short-term operations,'' Primakov said. This, he said, ``is not to our liking or yours.'' Viktor Gerashchenko, the central bank chairman, said on Friday that the government must act to stem the flow of dollars from Russia. Gerashchenko and Finance Minister Mikhail Zadornov were in Washington Saturday for the annual meeting of the International Monetary Fund, where they plan to spell out the measures Russia is taking to bail out its finance system. Russia wants the IMF to release the second dlrs 4.3 billion installment of a loan that was approved in July, a month before the country's economy crashed and the government effectively defaulted on its foreign loans. IMF officials have said they want the Russian government to come up with a sound economic program before the installment is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable.

As world finance an banking representatives met in Washington, the economic news continued to be bleak. IMF officials had predicted had predicted a banner year, but stocks continued to slide worldwide and the DOW probably would record its worst third quarter loss in eight years. Russia and Ukraine have been especially hard hit by the crisis. In Russia, Prime Minister Primakov had no plan to solve the problem as the economy continued to Suffer. Postal service was threatened as the Post Office could not pay its bills. President Kuchma of Ukraine called for changes in market reform even as the Parliament turned down a bill to restore lost savings.

Ukraine's parliament on Friday refused to approve President Leonid Kuchma's decree establishing a state fund to compensate people for savings lost in banks. Deputies voted 240-47 to prepare a revised version of the decree and debate it later in the month. They must consider the decree by Oct. 10, or else it automatically takes effect under the constitution. Leftist factions, which voted against the proposed legislation, said it would not fully guarantee the return of savings lost during the financial instability that has recently hit Ukraine. The fund Kuchma proposed to establish would have accumulated money in a special National Bank account and repay people in case the bank they kept their savings in went bankrupt or became insolvent. Although the decree provided for compensation of deposits amounting only to 500 hryvna (dlrs 147 at the current exchange rate), its authors said it would cover more than 90 percent of Ukrainians who keep their money in banks. The measure was meant to prevent mass withdrawals of deposits that most Ukrainian banks have already experienced as people, scared by the fall of the national currency and the turmoil in neighboring Russia, started to stock up on food, clothing and household goods. Government officials say that Ukrainians have recently withdrawn at least 10 percent of the 3 billion hryvna (dlrs 882 million) they deposited in banks. ||||| Russia's new prime minister picked an unusual way to reassure the nation Thursday. After two weeks of deliberations he announced that he still had no plan to rescue the country from its economic crisis. ``I want to repeat once more _ there is no program,'' Prime Minister Yevgeny Primakov said. ``It has yet to be worked out.'' In most nations such a statement might provoke alarm. But Primakov was seeking to calm an anxious public that was worried that the Kremlin's cure could be worse than the disease. It is not as if Russians do not have something to be concerned about. Thursday Primakov convened a meeting of top aides to try to hammer out a strategy for overcoming the economic woes. A main item on the agenda was the plan drafted by Yuri Maslyukov, a Communist and the government's senior policy maker on economic issues. It did not take long for Maslyukov's plan to hit the street. A newspaper, Kommersant Daily, published it in full Thursday morning. Not surprisingly Maslyukov's plan calls for a greater state role in the economy, including controls on hard currency. A new State Bank for Reconstruction and Development would be established using the ``nationalized assets'' of failed commercial banks. Wages and pensions would be paid in two months, and the minimum wage would be indexed to inflation. There would be huge tax cuts, a combination that suggested that the government was committed to printing additional money. The exchange rate of the ruble would be set by the central bank, based on changes in inflation and the balance of payments. Maslyukov's plan also implies that Russians would be able to buy dollars at exchanges through the country. It stipulates that hard currency could enter the country only with special authorization. Exporters would be required to sell most of their hard currency reserves. That is an allusion to currency controls that sent shock waves through the Russian public. Russians have come to treat the dollar as a second currency, and many people have squirreled away dollars as a hedge against inflation. ``It is an obvious stupidity,'' Otto Latsis, a commentator with the newspaper Noviye Izvestiya, said. ``People won't give their dollars away. They will go to the black market if they need to.'' Yegor Gaidar, the former prime minister who favors free markets, said the plan was a ``war against the dollar'' and predicted that it would lead to a shortage of imports. As the criticism grew, Primakov rushed to distance himself from the talk of currency controls. ``The rumors of the state's becoming a monopolist on the inflow of hard currency into the country is nonsense,'' he said, asserting that the document published by Kommersant Daily was just one of six possible plans. Primakov may be opposed to wildly unpopular currency controls. He may be worried that the plan would would set off the panic buying of dollars, further depressing the ruble. Or he may simply be trying to keep his distance from Maslyukov's plan while Russia tries to wrangle its next disbursement, $4.3 billion, from the International Monetary Fund. The particulars could be modified, but many people following the maneuvering say they believe that it represents the basic thrust of the government's thinking. Primakov has called for greater state regulation and an expansion of the money supply, two themes of Maslyukov's plan. The plan also has many similarities with the plan presented to the government by Gorbachev-era advisers. ``We think it is close to being a final document,'' said the United Financial Group, a Russian investment business. It is unclear how long Primakov can carry on without spelling out a detailed strategy. The ousted tax chief, Boris Fyodorov, has argued that the IMF should not provide further aid until Primakov has taken tough measures to build a free market. Primakov has, however, sought to turn that logic on its head, arguing that his government's economic strategy will depend on the fund's willingness to provide aid. His aim appears to be to pressure the fund by implying that it will be the fund's fault if Russia is forced to default on its loans or take draconian measures at home. Or as Primakov put it Thursday, without the fund's money, Russia will have to impose ``unpopular measures.'' ||||| If the Communist Party has its way _ and it has been planning for months _ millions of Russians will take to the streets on Wednesday for some of the biggest demonstrations in years. But now that Communists or politicians with the Communist stamp of approval are running the country and its economy the question is what the marchers will be demonstrating against. President Boris Yeltsin and his economic advisers were easy targets two months ago. But Yeltsin seems but a shadow of himself today, and his advisers are gone. The Communists, who have undergone a sort of resurgence by playing on the discontent, are working hard to cast themselves as outsiders in the government that they help run _ and to keep the focus of the protests on Wednesday on Yeltsin and his policies. Even that strategy may backfire, however, because discontent over Yeltsin does not necessarily translate into support for his predecessors. An adviser to the Communist Party leader, Gennadi Zyuganov, made headlines not long ago when he called the new government bourgeois. The characterization was striking, because the new prime minister, Yevgeny Primakov, was one of Zyuganov's top choices for the post. The deputy prime minister in charge of the economy, Yuri Maslyukov, is a Communist Party figure who once headed Gosplan, the infamous central-planning program that helped bring the Soviet Union to ruin. ``We don't have slogans that are aimed against the government,'' the first secretary of the Moscow Communist Party committee, Alexander Kuvayev, said in a recent interview. ``All the slogans are aimed against the president and the economic course of the country. Only the president can fully be blamed for the course that has brought the country to this situation.'' Anger over Russia's fate, and their own, is drawing some Russians back to Soviet-style slogans and old-style hostility toward capitalism. The ardently pro-Communist newspaper Sovietskaya Rossiya devoted most of its front page on Thursday to what it said were the results of a contest among readers for protest slogans. The entries ranged from catchy to kitschy, from, ``Legislator, official, banker _ study the Constitution; the exam is Oct. 7,'' to, `` Imperialist! Help Russia return the exported capital, and we will pay the debts at once.'' Russia has seen nothing approaching this sort of economic chaos and despair since 1993, when hyperinflation swept the economy. There is no real way of knowing whether the latest travails will produce huge and ugly crowds or small, peaceful ones. A deputy editor and political analyst at a newsweekly, Itogi, Masha Lipman, said the situation was not unlike that of 1993, when Yeltsin sought, and won, a popular mandate in a referendum. He used it to dissolve the Communist-dominated Parliament and increase his own power. That led to an autumn showdown, the shelling of Parliament by tanks and the total defeat, for the time being, of Yeltsin's legislative opponents. ``You can interpret this demonstration as a Communist mandate, but I don't think they will act like Yeltsin,'' Ms. Lipman said. ``Support for the Communists is at its smallest level, maybe 20 percent.'' In a survey of 1,714 people that was released last week the All-Russian Public Opinion Center said that nearly half the population supported the idea of demonstrations against Yeltsin, but that barely one-tenth were likely to participate in any way. ``Nobody is interested in any sort of struggle,'' Yuri Levada, who heads the center, said in an interview. ``This is mainly a general expression of a great wave of distrust of authorities, mainly the president. He's the great scapegoat for all our sins.'' There seems to be little enthusiasm for demonstrations of any sort. Only a few thousand people turned out Sunday for the fifth anniversary of the shelling of Parliament and Yeltsin's subsequent triumph over the Communists. The Communist Party and the Federation of Independent Russian Unions, a leftist organization that says it is the main sponsor of the protests, predict that 9 million Russians will participate on Wednesday. The government has vowed to keep order without resorting to force. But it is concerned enough that it has summoned 11,000 police officers to patrol Moscow and 6,000 military troops to intervene if violence erupts. Protests since 1993 have generally been tepid, a deep-seated feeling here. Some demonstrations last week, more or less practice runs, hinted at similarly dampened marches this year. ||||| President Boris Yeltsin would respond strongly to any effort to prohibit Russians from buying foreign currencies, believing the move would be like bringing another Iron Curtain down on the country, his spokesman said Friday. ``The president clearly understands that such a ban would be a clear violation of our rights ... that would mean a return to the Iron Curtain in everyday life,'' said presidential spokesman Dmitry Yakushin. The remarks came after media reports of a government economic plan in the works that would prohibit Russians from buying U.S. dollars and other foreign currencies, and institute other strict economic controls, rolling back seven years of reforms. Though government officials say such a plan is only one of six possibilities, Prime Minister Yevgeny Primakov warned Thursday that he might be forced to take ``unpopular'' measures to rescue the Russian economy if it does not receive the next installment in a dlrs 22.6 billion loan from the International Monetary Fund. Central Bank Chairman Viktor Gerashchenko and Finance Minister Mikhail Zadornov flew to Washington on Friday for negotiations with the IMF over the dlrs 4.3 billion installment. IMF officials have said they want the Russian government to come up with a sound economic program before the loan is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable. But Primakov said that the country's plan would be dependent on the IMF loan, not the other way around. No short-term economic plan will be known for another three weeks, long after the IMF is set to make its decision, said First Deputy Prime Minister Vadim Gustov. A draft version of the government's fourth-quarter budget would rely heavily on the IMF loan, the Kommersant newspaper said. Without the loan, the government would have to engage in major deficit spending. Calls for Soviet-style controls _ part of the plan drafted by First Deputy Prime Minister Yuri Maslyukov and leaked to the press _ have apparently created a rift within the Cabinet. The plan drew heavy criticism from Zadornov, and Gerashchenko called the idea of banning foreign currency sales ``a mad idea.'' Meanwhile, Russia's stock market dropped by 5 percent to 38.8 Friday, but trading was so light the downward move meant little. The stock market has continued to fall since the crisis hit Aug. 17. And tax collection was down in September, the result of the collapse in Russia's banking system, said Alexander Pochinok, head of the government's finance and credit department. Revenues totaled 14.3 billion rubles (dlrs 875 million), 700 million rubles (dlrs 43 million) less than expected. The government wants to reverse this trend by raising taxes for oil and gas companies, but the idea is expected to meet sharp resistance in the lower house of Russia's parliament, which wants to cut tax rates, Pochinok said. ||||| Wall Street extended a global stock selloff Thursday with the Dow industrials tumbling more than 200 points for a second straight day. The Dow Jones industrial average, which plunged 237.90 points on Wednesday, fell an additional 210.09, or by 2.7 percent, to close at 7,632.53. Broader market indicators also sank sharply in heavy trading. Bank and technology stocks were particularly hard hit. The selling spree, amid worries about shrinking corporate profits and fears of new financial crises, left the Dow 18.3 percent, or more than 1,700 points, below the all-time high of 9,337.97 reached on July 17. It was getting closer to the low of 7,400 that was reached during trading Sept. 1, before Wall Street's best-known indicator began a comeback bid that brought it above 8,100 as recently as Monday. The Dow's 12.4 percent slide in the third quarter, which ended Wednesday, was its worst quarterly performance in eight years. It now is 3.5 percent below where it began this year. Stock prices earlier plunged in Asia, with Tokyo shares falling 1.6 percent to a new 12-year low, and shares were falling sharply in Europe, where Germany's central bank left interest rates unchanged. Blue chips in London sank 3.1 percent to close at new lows for the year, while the key index in Frankfurt, Germany, closed down 5.5 percent and the main indicator in Paris was off 5 percent. The selloff in stocks has sent a flood of money into U.S. Treasury securities, a traditional haven in times of uncertainty. Yields on 30-year Treasury bonds fell further below 5 percent Thursday, reaching levels unseen for long-term government bonds since 1967. Traders were alarmed to see prices on the New York Stock Exchange nosedive 2.9 percent on Wednesday, even though the Federal Reserve had lowered a key interest rate one-quarter percentage point on Tuesday. Some traders were disappointed that the cut was not deeper amid fears a go-slow approach would not do enough to counter the economic crises that have swept through Asia and Russia and are threatening Latin America. ``The smaller-than-expected lowering of interest rates by the U.S. Federal Reserve has a chain reaction,'' said Lee Won-ho, an analyst at Samsung Securities Co. in Seoul, South Korea, where the main stock index fell by 1.5 percent. ``It is affecting Wall Street, the Japanese market, ours and others.'' The managing director of the International Monetary Fund, Michel Camdessus, on Thursday said the Fed made the right decision in cutting rates and that global powers now must push for stronger growth to offset steep recessions in Asia and Russia. Asked why stock markets, particularly in the United States, have reacted so negatively to the Fed rate cut, Camdessus said he believed confidence will soon be restored, especially if financial leaders show resolve in their discussions over the next week. There also are worries about where the next financial market crisis may erupt after last week's dlrs 3.6 billion private bailout of Long-Term Capital Management LP of Greenwich, Connecticut. In addition, investors worldwide worry that the downturn on Wall Street could signal a possible slowdown in economic growth _ a bad omen for the many foreign companies dependent on exports to the huge U.S. market. ``There's a psychological impact overall, but there's also a direct impact on companies like Sony and TDK which derive a high percentage of their earnings from overseas markets,'' said Pelham Smithers, a stock strategist in Tokyo at ING Baring Securities (Japan) Ltd. A new survey in Japan said confidence among small- and medium-sized businesses about the economy plunged to its worst level since the Bank of Japan began the quarterly samplings in 1967. ||||| In a season of crashing banks, plunging rubles, bouncing paychecks, failing cropsand rotating governments, maybe it is not the ultimate insult. But the nation that bore Tolstoy and Chekhov, and still regards a well-written letter as a labor of love, is buckling a little this week, because it can no longer wish good health to Baba Anya in Omsk. The Post Office is broke. In 60 of the country's 89 statelike regions, more than 1,000 mail cars have been sidetracked, many stuffed with up to 18 tons of letters, newspapers and parcels. The state Railway Ministry refuses to carry more mail until the Post Office makes good on some 210 million rubles in old bills _ about $13 million in today's dollars, or $35 million in dollars six weeks ago. Air mail, which amounts to one of every four or five letters, was also suspended at one of Moscow's major airports until this week, when the Post Office coughed up 5 million rubles for old bills. A second airport is still demanding 3 million rubles for past-due debts. So much mail is backed up that post offices in Moscow and elsewhere have simply stopped accepting out-of-town mail, except for areas that can be easily reached by truck. Delivery schedules have fallen weeks, and perhaps months, behind. ``The situation is really extraordinary,'' said Vladimir Sherekhov, the deputy chief of mail service administration in the government's Communications Committee. ``We've never had anything like this before.'' Maybe the Post Office has been lucky. Extraordinary is the rule elsewhere in Russia. Until Friday, the lower house of Parliament was preparing to sue the government for failure to provide soap, heat, toilet paper and copy-machine paper in the legislature's monumental downtown offices. It turned out that politicians had exhausted their funds by cutting short their recess and returning to address the nation's economic crisis. Earlier in the week, officials said Russia's Arctic shipping routes may close next month because half the nation's icebreakers are in disrepair and there is no money to fix them. The oldest of the ships is so ancient that its nickname is Granny. Such anecdotal evidence that Russia is losing its wheels, like one of its old, ill-maintained Volga sedans, is everywhere. But oddly, real signs of public distress are not particularly common, perhaps because the system rarely seems to shed a part as big as a postal system. If the U.S. Postal Service is increasingly a pipeline for sweepstakes notices and bills, the Russian Post Office still holds a special place in the national conversation. Russians still write letters to each other, frequently and fervently, and many in remote regions get their news through the mail. Millions use the mails to ship canned goods and other provisions to needy relatives and friends in faraway areas, an especially vital service in winter. And in the last few years, the Post Office has become a vehicle for a growing mail-order trade in books, clothes and other catalog items not readily available outside big cities. Exactly why all this has rumbled to a halt is in some dispute. What is clear is that the Post Office and the Railway Ministry both suffer from what ails every Russian venture, private and public alike: Nobody pays his bills. The state Railway Ministry complains that it is continually stiffed by customers who believe the railroads are honor-bound to carry freight whether they are paid or not. The government has specified nearly 40 categories of freight which the railroads must carry for next to nothing. Among the biggest deadbeats are the ``power ministries'' _ the military and interior departments _ which did not pay during Soviet times and feel little need to pay now. ``It's a psychology formed during the socialist period,'' said Tatiana Pashkova, the deputy spokeswoman for the ministry, ``and the same situation exists with the Post Office. We've been in dispute for a very long time. Always we try to understand their differences. But we can't carry cargo for free.'' No kidding, says the Post Office: It, too, is owed 200 million rubles by government agencies, and is barred from raising rates even though freight costs are outstripping revenues. Moreover, the Post Office is also required by the government to carry some forms of mail, such as pension checks, at reduced rates. Officials at the state Communications Department say they also suspect an ulterior motive in the railroads' actions: a struggle to dominate the thriving mail-order business. ``Here's competition between us and the railroads for the delivery of parcels, and I think decisions made by the railroads are mainly explained by this competition,'' Sherekhov said. ``They blame us for carrying some commercial cargoes instead of mail.'' The Railways Ministry's spokeswoman, Ms. Pashkova, said such ``commercial cargoes'' are indeed a problem, but only because the railroads know that the Post Office has already gotten cash to transport the packages. The railroads are still waiting for their share of that money, she said. In the meantime, the situation has come to a boil. In late September the railroads cut mail service in and out of Moscow, effectively decapitating the postal system and forcing officials to draft a fleet of trucks to move letters in and out of the city. Hundreds of empty and full rail cars have clogged some local yards to the point where moving cars into position for unloading has become difficult. At last count, 39 loaded cars were awaiting service at one yard. And customers are getting angry. ``We've gotten all kinds of complaints,'' said Viktor Salikov, a deputy in the Communications Department's mail shipping center. ``People are even coming to us, searching for mail that was sent weeks ago.'' ||||| When the world's finance ministers and central bankers gathered last year in Hong Kong, they nervously congratulated each other for containing _ at least for the moment _ a nasty financial brush fire in Asia. In a year's time, many predicted in hallway chatter, the troubles in Thailand and Indonesia would look like a replay of Mexico in 1995 _ a rough bump in the road for a world enjoying remarkable prosperity. Talk about bad market calls. Twelve months later, as the same financial mandarins clog Washington with their limousines and glide through endless receptions at the annual meeting of the International Monetary Fund and the World Bank, just about everything that could have gone wrong in the world economy has: the worst downturn in Japan since World War II, economic meltdown in Russia, a depression in Indonesia that is plunging 100 million people below the poverty line, and deep fears over what happens next in Latin America. What makes this year's IMF meeting most remarkable, though, is that the harshest criticisms are directed at the monetary fund itself, and, by extension, at the U.S. Treasury, which is viewed as the power behind the IMF. This year, in place of confident predictions, there are mutual recriminations. Arguments are breaking out over whether the true culprits were crony capitalists and weakened leaders like Russian President Boris Yeltsin, or huge investors who poured money into the world's emerging markets with reckless abandon in the mid-1990s and panicked in the past twelve months. Whatever the reason, one reality prevails: Hundreds of billions of dollars have fled from economies on four continents _ seeking the safest havens possible, often in the United States _ and the money is not returning anytime soon. And the subtext of every seminar on capital flows and every conclave of nervous ministers will be some painfully blunt questions: Can this be stopped? Or is the world headed for a global recession? Fifty-three years ago the IMF was created after the Bretton Woods conference which sought to stabilize the world economy and secure the peace after World War II. Now it is under attack from all sides, charged not only with worsening a bad situation by misjudging the economics, but with being politically tone-deaf in some of the most volatile capitals in the world, from Jakarta, Indonesia, to Moscow. For the first time, there are disturbing questions about whether the institution itself is still capable, financially or politically, of containing the kind of economic contagion that caught the world unaware. Once, the IMF's critics were largely found in Africa and South Asia, were the fund was often viewed as arrogant; today they include Wall Street's biggest players and top officials in the most powerful economies of Asia and Europe. Only a few _ including former Secretary of State George Schultz and members of Congress who are increasingly suspicious of all international institutions _ are talking about scrapping the IMF altogether. But almost everyone is talking about creating a ``new financial architecture'' that can do what the old one clearly cannot: smother financial wildfires before they leap around the globe. President Clinton, British Prime Minister Tony Blair and other leaders, after months of silence, have edged into the debate, in some cases wresting the issue for the first time from their finance ministers and central banks. Their fear, their advisers say, is that 15 months of financial turmoil are now threatening political stability. Such concerns have turned this year's meeting into a tumbled mass of worries and a groping for short and long-term solutions. The Japanese, the French, the Southeast Asians are all arriving in Washington with different diagnoses of what went wrong, and different solutions about how to set it right. The United States has its own set of plans, a mix of suggestions to force more disclosure of financial data in countries around the world and to impose more American-style financial standards and regulation. Meanwhile, an ideological argument is breaking out over whether the world should slow down a long march toward more free and open markets _ a strategy pressed by the Clinton administration for the past six years. Others argue that it is unwise to start rebuilding the hospital while the patients are still on the operating tables. ``Last year the standard answer that all of us were given came down to this: `We have the IMF and the World Bank, and they know best,''' Indonesian Foreign Minister Ali Alatas said over breakfast in Washington the other day, reflecting on how the crisis turned 30 years of astounding growth in his country into an overnight depression. ``Then they said everything that went wrong was our fault,'' he said. ``But now, now I think people know that much of the problem came from the outside, and we need something better.'' And the IMF itself is beginning to fight back, an awkward role for an institution dominated by Ph.D. economists who are unaccustomed to being openly challenged. ``Every place you turn you read the same story, that we came in, that we made things worse,'' said Stanley Fischer, the deputy managing director of the fund, who was born in Northern Rhodesia _ now Zambia _ and became chairman of the Massachusetts Institute of Technology's economics department before taking a job that has now put him in the center of the financial storm. ``We frequently get the blame, some of it well-deserved,'' he said. ``But it is politically convenient for governments around the world to cry, `The IMF made us do it,' and pin their mistakes on us. That's fine. We'd rather be loved, but more than that we'd like to be effective.'' MISCALCULATIONS, POLITICS AND SAFETY NETS On a steaming January day, Michel Camdessus, the IMF's top official, slipped into Jakarta to the private residence of President Suharto and sat down for a four-hour meeting to tick off, line by line, the huge reforms Indonesia would have to implement in return for tens of billions of dollars in emergency aid. Two previous deals had collapsed when Suharto ignored the fund's conditions, so Camdessus insisted that he strike a deal directly with Suharto, then Asia's longest-serving leader. It was a meeting of men who knew different worlds of power politics: Suharto rose as a general in central Java, and Camdessus had detonated mines in Algeria for the French army before entering the French Treasury on his way to becoming head of France's central bank. ``It was all there,'' a senior IMF official recalled. ``He was told he had to dismantle the national airplane project, the clove monopoly, all the distribution monopolies.'' At one point, Camdessus looked at the impassive Suharto and said, ``You see what this means for your family,'' a reference to their vast investments in the country's key industries. ``He said, `I called in my children, and they all understand.''' But within months, that exchange in Jakarta came to symbolize the IMF's twin troubles: Its inability to understand and reckon with the national politics of countries in need of radical reform, and its focus on economic stabilization rather than the social costs of its actions. Suharto had no intention of fulfilling the agreement. It was, one of his former Cabinet members said, ``a delaying move that was obvious to everyone except Camdessus.'' Perhaps one reason why the IMF sometimes appears tone-deaf is that its senior staff is almost entirely composed of Ph.D. economists. There are few officials with deep experience in international politics, much less the complexities of Javanese culture that were at work in Indonesia. Historically, experts in politics and security have gravitated to the United Nations, development experts to the World Bank, and economists to the IMF _ creating dangerous gaps in a crisis like this one. As a result, the fund had only a rudimentary understanding of what would happen if its demands were met and all Indonesia's state monopolies were quickly dissolved. While that system lined the pockets of the Suhartos and their friends, it also distributed food, gasoline and other staples to a country that stretches for 3,000 miles over thousands of islands. To help balance the budget, the fund demanded a quick end to expensive subsidies that keep the price of food and gasoline artificially low. But that, combined with the huge currency devaluation that sparked the crisis, resulted in high prices and shortages that fueled riots that continue to this day, as millions of Indonesians lose their jobs. The IMF _ unintentionally, its officials insist _ also sped Suharto's resignation, insisting on the elimination of ``crony capitalism,'' code words for removing the Suharto family from the center of the economy. Ultimately, that may prove to be Indonesia's salvation, if the new government can contain the rioting against the ethnic Chinese minority _ whose money is desperately needed to save the country's fast-shrinking economy. ``It is worth noting,'' Fischer said this week, ``that our programs in Asia _ in Indonesia, Korea and Thailand _ only took hold after there was a change in government.'' Nonetheless, the Indonesia experience has revived the argument that the IMF is so focused on stabilizing banks and currencies, on preventing capital flight and freeing up markets, that it is blind to the social costs of its actions. Among the toughest critics has been its sister institution, the World Bank, whose main charge is alleviating poverty. ``You've seen the tension almost every day,'' one senior World Bank official said recently. The bank has gone to extraordinary lengths in recent months to differentiate its role from that of the fund, and to announce a tripling of aid to the poorest in the countries hit by the economic chaos. Even U.N. Secretary General Kofi Annan has joined the argument, warning in a speech at Harvard recently that ``if globalization is to succeed, it must succeed for poor and rich alike. It must deliver rights no less than riches. It must be harnessed to the cause not of capital alone, but of development and prosperity for the poorest of the world.'' IMF officials say they are changing strategies when they see they are exacting too great a social cost. ``It's a very difficult formula to get exactly right,'' Fischer said in August, as Russia was teetering and the IMF was sending in $4.8 billion in aid that was rapidly wasted. ``You need enough discipline to send the right message to the markets and keep investors from fleeing. But you need enough leeway to keep people from suffering more than they otherwise would.'' In recent months, he noted, the IMF has allowed more spending to sustain subsidies for basic goods for longer periods in Indonesia, Korea and elsewhere. ``There is a new flexibility at the IMF'' a senior Indonesian official concluded recently. ``It is a lot better.'' A U.S. PAWN, OR A RUNAWAY AGENCY? The Clinton administration admits that the IMF has many failings, many of them on display this year. But it insists that the world has gone through global financial crises without an IMF once before in this century _ and the result was the 1930s. ``I have no doubt the situation over the past year would have been much worse _ with greater devaluations, more defaults, more contagion, and greater trade dislocations _ without the program agreed with the IMF and the finance it has provided,'' Deputy Treasury Secretary Lawrence Summers told Congress last week. Many Republicans and some Democrats are unconvinced. Even though the Senate has overwhelmingly approved an $18 billion contribution to the fund to help it fight new crises, the House defeated that measure two weeks ago. The fund's last hope of getting the money, which will free up nearly $100 billion in contributions from other nations waiting for the United States to act, will come when the House and Senate try to resolve their budget differences in a conference committee in the next 10 days. A rejection, Treasury Secretary Robert Rubin insists, would send a message around the world that the United States is turning its back on the one institution charged with restoring economic stability. Everywhere else in the world, though, politicians and businessmen insist that one of the biggest problems with the IMF is that, contrary to the view of Congress, it acts as the U.S. Treasury's lap dog. Ask in Jakarta or Moscow, and the response is the same: The IMF never ventures far without looking back for the approving nod of its master. When the United States weighs in, however, is when the IMF is called on to rescue a country in deep trouble. Only then does the IMF _ and the U.S. Treasury _ have the leverage to extract commitments in return for billions in aid. In theory, the U.S. influence is limited: It has an 18.5 percent vote in the fund. Germany, Japan, France and Britain have about 5 percent each. But in practice the United States usually gets its way, exercising its influence behind the scenes, often in interactions between Fischer and Summers. The two met when Fischer was on the MIT faculty and Summers was a graduate student taking one of his classes, later becoming a colleague at MIT. Each served as chief economist of the World Bank. It was Summers who was instrumental in placing Fischer in the fund's no. 2 job, and these days they talk constantly. ``It's usually a warm relationship,'' Fischer said this summer. ``Remember, this is a job where you cannot turn to outsiders for advice _ you can't call the chief economist at a Wall Street firm, or even many of your academic friends, because so many of the issues are confidential.'' The Treasury's relations with Camdessus are often more strained as he plays the role of world diplomat, traveling the globe and trying to coax along political leaders. The tensions were obvious from the start of the Asia crisis. The fund made little secret of its displeasure that the United States was not offering direct aid to Thailand, a major U.S. ally, as a sign of support and confidence. Mindful of the backlash in Congress when Mexico was bailed out with U.S. money, that was the last thing the Treasury planned to do. Summers, in turn, thought the fund was not forcing the Thais to implement its reform commitments rigorously enough or disclose their true financial picture. Within the U.S. government there was other dissension: The State and Defense Departments felt the United States should do more for Thailand, but backed off when the Treasury asked if they would like to pony up some aid out of their own budgets. There were other conflicts. When Japan used the last IMF meeting to propose setting up a $100 billion ``Asia Fund'' _ one that would exclude the United States and would probably offer aid under much more relaxed conditions than the IMF does. Rubin called up Camdessus at breakfast one morning and told him that the Japanese proposal would undercut the IMF's authority. ``We've just had a dispute with Michel,'' Rubin reported to his aides as he returned to his orange juice and croissant. One of them shot back: ``And it's only 8 a.m.'' Camdessus backed down at Rubin's insistence and walked away from money that Asia could have used. Japan says it will be back with a similar proposal this weekend, this time for a $30 billion fund. Camdessus has also rankled U.S. officials with statements that amounted to cheerleading to reassure the markets _ sometimes in the face of the facts. In June, with Russia on its way to collapse, Camdessus declared that ``contrary to what markets and commentators are imagining'' about the slow collapse of Russia's economy, ``this is not a crisis. This is not a major development.'' The bailouts of Russia and South Korea were prime examples of how Washington muscles into the IMF's turf as soon as major U.S. strategic interests are involved. Last Christmas, as South Korea slipped within days of running out of hard currency to pay its debts in December, it sent a secret envoy, Kim Kihwan, to work out a rescue package. ``I didn't bother going to the IMF,'' Kim recalled recently. ``I called Summers' office at the Treasury from my home in Seoul, flew to Washington and went directly there. I knew that was how this would get done.'' Within days the Treasury dispatched David Lipton, its most experienced veteran of emergency bailouts, who is leaving his post as undersecretary for international affairs this month, to shadow the IMF staff's negotiations with the government in Seoul. Fischer was displeased. ``To make a negotiation effective, it has to be clear who has the authority to do the negotiating,'' he said. WHO LOST RUSSIA? The pattern was repeated this summer, when the United States raced to put together a $17 billion package for Russia. The IMF's staff in Moscow declared that Russia needed no money at all _ it just needed to enact policies that would restore confidence in investors. The Americans and Germans came to a different conclusion. Soon after, U.S. officials gathered in the White House situation room to consider what might happen to Russia if the ruble was devalued and market reforms collapsed and to push the IMF to come up with emergency money. So the fund began assembling a last-ditch program to prop up a country that had resisted its reform plans for seven years. Camdessus, though, was still hesitant, questioning whether the IMF should risk its scarce resources in Russia. ``We had to pull Michel along,'' a senior Treasury official recalled. As it turned out, Camdessus' instincts were right while the approach championed by Rubin and Summers proved disastrously wrong. The first installment of that payment _ $4.8 billion _ was wasted, propping up the currency long enough, in the words of one IMF official, ``to let the oligarchs get their money out of the country.'' Then Yeltsin reversed his commitments, let the ruble devalue anyway, began printing money with abandon and fired virtually every reformer in his government _ resulting in a collapse of the IMF agreements and the indefinite suspension of its aid program. Now, inside the IMF and on Capitol Hill, there are recriminations over ``who lost Russia.'' Publicly, Fischer argues that ``there are no apologies owed for what we attempted in Russia.'' But some IMF officials complain privately that they let Rubin and Summers run roughshod over them, striking a deal that fell apart within weeks as the Russian parliament rebelled and Yeltsin backed away from his commitments. Summers responds that the United States ``took a calculated risk'' because ``it was vastly better that Russia succeed than not succeed.'' The Russian collapse touched off new rounds of economic contagion, with investors fleeing Latin America, and triggering huge losses in hedge funds like Long Term Capital, the Greenwich, Conn., investment firm that needed to be rescued by Wall Street powerhouses whose money it had invested. ``Russia was a turning point,'' said Robert Hormats, the vice chairman of Goldman, Sachs & Co. ``It made the world realize that some countries can fail, even if the IMF and the Treasury intercede. And that changed the perception of risk.'' Now, as the countries meet to face a future that the IMF has warned could be very bleak, they need to reverse those perceptions, or watch countries slowly starve for lack of capital. The emerging markets are calling for controls on short term investments. The French want a stronger IMF. The Americans say the answer is more disclosure, so that investors are better warned, and tougher regulation. ``These are usually nice, quiet meetings; everyone very polite,'' a top U.S. official said earlier this week. ``Not this year.'' ||||| President Leonid Kuchma called Friday for ``corrections'' to Ukraine's program of market reforms, but pledged that reforms would continue. Kuchma did not elaborate in his comments to a group of Ukrainian economists, saying only that the changes were necessary because of the country's economic problems. Kuchma urged the economists to come up with recommendations before a national meeting of economists in November, the Interfax news agency reported. Ukraine has suffered economic problems since the 1991 collapse of the Soviet Union and it has been especially hard hit by the financial crisis in neighboring Russia, its main trading partner. The Russian crisis has hurt bilateral trade, caused the Ukrainian currency to fall and led to a withdrawal of investors from Ukraine. In recent months, Kuchma has implemented some economic reforms by decree, prompting the International Monetary Fund to release the first installment of a long-awaited dlrs 2.2 billion loan. Many reforms, however, remain stalled. National Bank chairman Viktor Yushchenko was in Washington this week for consultations with IMF officials. Yushchenko has warned that the bank would not spend its dwindling reserves to support the hryvna currency, but has avoided comments on the currency in recent days. Kuchma met Friday with Yushchenko, Prime Minister Valery Pustovoitenko and other senior officials to discuss ways to stabilize the hryvna. The government's press service said they focused on possible ways to keep the hryvna under 3.5 to the U.S. dollar through the end of the year. The hryvna has been trading at 3.4 to the dollar in recent days but trading has been limited. There are wide expectations in Ukraine that the hryvna will fall even further, and Ukrainians have been stocking up on food, clothing and household goods to save their fast-devaluing money. ||||| The United States is disappointed by the economic confusion within the new Russian government of Prime Minister Yevgeny Primakov, said Secretary of State Madeleine Albright on Friday, and she warned Russia about the dangers of an anti-Western policy. In her first comprehensive review of U.S.-Russian relations since Primakov was confirmed as prime minister last month, Albright said Washington was ``deeply concerned'' about Russia's direction and did not think the crisis there would soon abate. ``We have heard a lot of talk in recent days about printing new money, indexing wages, imposing price and capital controls and restoring state management of parts of the economy,'' she told the U.S.-Russia Business Council in Chicago. ``We can only wonder if some members of Primakov's team understand the basic arithmetic of the global economy.'' While praising Primakov, once her counterpart when he was foreign minister, as a pragmatist able to cooperate on key issues with Washington, she had harsh words of warning for him. ``Our initial reaction to some of the direction he's going in has not been particularly positive,'' she said, adding, ``The question now is whether that cooperation can continue.'' The United States must keep up its aid to Russia but is adjusting it to promote the building of democracy and student exchanges as well as arms control, Albright said. Washington does not favor more direct aid. ``More big bailouts are not by themselves going to restore investor confidence in Russia,'' she said. ``In the long run, the gap between Russia's needs and its resources must be met not by foreign bailouts but by foreign investment.'' Albright sharply criticized as self-defeating the ``many voices in Russia who want to shift the emphasis in Russia's interaction with America and our allies from one of partnership to one of assertiveness, opposition and defiance for its own stake.'' Russia could not stand alone in the world, she said, and the United States' ability ``to help Russians help themselves will go from being merely very, very difficult to being absolutely impossible.'' At the same time, she said, Washington would not ``assume the worst, for there are still plenty of people in Russia who will fight against turning back the clock.'' And she urged the world _ and American critics _ to ``be patient with the workings of the democratic process in Russia'' and ``not start each day by taking a census of reformers in the Kremlin,'' a census that American officials themselves promoted before President Boris Yeltsin dismissed the previous government. While Moscow may continue to oppose any NATO use of force against Serbian forces in the southern province of Kosovo, Albright said, NATO must be prepared to act regardless. ||||| Prime Minister Yevgeny Primakov said Saturday that the economic crisis would not bring an end to the government's program of privatizing state property. ``Privatization will be accomplished for growth of production, growth of investment and growth of production effectiveness through renewal of major funds,'' Primakov said during a meeting of Western businessmen. ``We shall conduct privatization so that it serves the interests of the people, the state, and business,'' he said, according to the ITAR-Tass news agency. Primakov reassured the businessmen, members of the prime minister's consultive council on foreign investment in Russia, that the government had no plans to ban the circulation of U.S. dollars in Russia. But, he said, the government would take steps to staunch the flow of dollars from Russia. Responding to media reports of a government economic plan that would prohibit Russians from buying U.S. dollars and other foreign currency, Primakov said the reports ``absolutely do not correspond to reality,'' ITAR-Tass quoted him as saying. He said there was no need to regulate the influx of dollars into Russia, but the government should take steps to prevent what he called ``the dollar drain.'' Russian companies stashed about dlrs 2.5 billion outside the country in September alone, the Interfax news agency reported Friday, quoting central bank figures. Primakov said foreign investors are ``the force'' that will help Russia to minimize its losses from the current economic crisis. ``We are very much interested in foreign investments, especially in ones that go into the real production sector,'' Primakov said, according to Interfax. ``We need a continuous dialogue with foreign investors, without whom it will be difficult for us to overcome the current difficulties.'' He said Russia wanted long-term investments. ``Foreign capital has been coming to the country via short-term operations,'' Primakov said. This, he said, ``is not to our liking or yours.'' Viktor Gerashchenko, the central bank chairman, said on Friday that the government must act to stem the flow of dollars from Russia. Gerashchenko and Finance Minister Mikhail Zadornov were in Washington Saturday for the annual meeting of the International Monetary Fund, where they plan to spell out the measures Russia is taking to bail out its finance system. Russia wants the IMF to release the second dlrs 4.3 billion installment of a loan that was approved in July, a month before the country's economy crashed and the government effectively defaulted on its foreign loans. IMF officials have said they want the Russian government to come up with a sound economic program before the installment is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable.

Fifteen months of world economic turmoil are threatening political stability. Lowering Federal Reserve interest rates is not countering the crisis. IMF is worried about the turndown in Japan, economic meltdown in Russia, depression in Indonesia, and anxiety about Latin America where investors are pulling out. IMF critics say it needs to understand national politics better and focus on social issues. Russia's economic confusion is upsetting the US. Russia is considering hard currency controls, demanding IMF loans and will not end government privatization. Ukraine, affected by Russia, is trying to save its fast-developing money system and keep investors.

Ukraine's parliament on Friday refused to approve President Leonid Kuchma's decree establishing a state fund to compensate people for savings lost in banks. Deputies voted 240-47 to prepare a revised version of the decree and debate it later in the month. They must consider the decree by Oct. 10, or else it automatically takes effect under the constitution. Leftist factions, which voted against the proposed legislation, said it would not fully guarantee the return of savings lost during the financial instability that has recently hit Ukraine. The fund Kuchma proposed to establish would have accumulated money in a special National Bank account and repay people in case the bank they kept their savings in went bankrupt or became insolvent. Although the decree provided for compensation of deposits amounting only to 500 hryvna (dlrs 147 at the current exchange rate), its authors said it would cover more than 90 percent of Ukrainians who keep their money in banks. The measure was meant to prevent mass withdrawals of deposits that most Ukrainian banks have already experienced as people, scared by the fall of the national currency and the turmoil in neighboring Russia, started to stock up on food, clothing and household goods. Government officials say that Ukrainians have recently withdrawn at least 10 percent of the 3 billion hryvna (dlrs 882 million) they deposited in banks. ||||| Russia's new prime minister picked an unusual way to reassure the nation Thursday. After two weeks of deliberations he announced that he still had no plan to rescue the country from its economic crisis. ``I want to repeat once more _ there is no program,'' Prime Minister Yevgeny Primakov said. ``It has yet to be worked out.'' In most nations such a statement might provoke alarm. But Primakov was seeking to calm an anxious public that was worried that the Kremlin's cure could be worse than the disease. It is not as if Russians do not have something to be concerned about. Thursday Primakov convened a meeting of top aides to try to hammer out a strategy for overcoming the economic woes. A main item on the agenda was the plan drafted by Yuri Maslyukov, a Communist and the government's senior policy maker on economic issues. It did not take long for Maslyukov's plan to hit the street. A newspaper, Kommersant Daily, published it in full Thursday morning. Not surprisingly Maslyukov's plan calls for a greater state role in the economy, including controls on hard currency. A new State Bank for Reconstruction and Development would be established using the ``nationalized assets'' of failed commercial banks. Wages and pensions would be paid in two months, and the minimum wage would be indexed to inflation. There would be huge tax cuts, a combination that suggested that the government was committed to printing additional money. The exchange rate of the ruble would be set by the central bank, based on changes in inflation and the balance of payments. Maslyukov's plan also implies that Russians would be able to buy dollars at exchanges through the country. It stipulates that hard currency could enter the country only with special authorization. Exporters would be required to sell most of their hard currency reserves. That is an allusion to currency controls that sent shock waves through the Russian public. Russians have come to treat the dollar as a second currency, and many people have squirreled away dollars as a hedge against inflation. ``It is an obvious stupidity,'' Otto Latsis, a commentator with the newspaper Noviye Izvestiya, said. ``People won't give their dollars away. They will go to the black market if they need to.'' Yegor Gaidar, the former prime minister who favors free markets, said the plan was a ``war against the dollar'' and predicted that it would lead to a shortage of imports. As the criticism grew, Primakov rushed to distance himself from the talk of currency controls. ``The rumors of the state's becoming a monopolist on the inflow of hard currency into the country is nonsense,'' he said, asserting that the document published by Kommersant Daily was just one of six possible plans. Primakov may be opposed to wildly unpopular currency controls. He may be worried that the plan would would set off the panic buying of dollars, further depressing the ruble. Or he may simply be trying to keep his distance from Maslyukov's plan while Russia tries to wrangle its next disbursement, $4.3 billion, from the International Monetary Fund. The particulars could be modified, but many people following the maneuvering say they believe that it represents the basic thrust of the government's thinking. Primakov has called for greater state regulation and an expansion of the money supply, two themes of Maslyukov's plan. The plan also has many similarities with the plan presented to the government by Gorbachev-era advisers. ``We think it is close to being a final document,'' said the United Financial Group, a Russian investment business. It is unclear how long Primakov can carry on without spelling out a detailed strategy. The ousted tax chief, Boris Fyodorov, has argued that the IMF should not provide further aid until Primakov has taken tough measures to build a free market. Primakov has, however, sought to turn that logic on its head, arguing that his government's economic strategy will depend on the fund's willingness to provide aid. His aim appears to be to pressure the fund by implying that it will be the fund's fault if Russia is forced to default on its loans or take draconian measures at home. Or as Primakov put it Thursday, without the fund's money, Russia will have to impose ``unpopular measures.'' ||||| If the Communist Party has its way _ and it has been planning for months _ millions of Russians will take to the streets on Wednesday for some of the biggest demonstrations in years. But now that Communists or politicians with the Communist stamp of approval are running the country and its economy the question is what the marchers will be demonstrating against. President Boris Yeltsin and his economic advisers were easy targets two months ago. But Yeltsin seems but a shadow of himself today, and his advisers are gone. The Communists, who have undergone a sort of resurgence by playing on the discontent, are working hard to cast themselves as outsiders in the government that they help run _ and to keep the focus of the protests on Wednesday on Yeltsin and his policies. Even that strategy may backfire, however, because discontent over Yeltsin does not necessarily translate into support for his predecessors. An adviser to the Communist Party leader, Gennadi Zyuganov, made headlines not long ago when he called the new government bourgeois. The characterization was striking, because the new prime minister, Yevgeny Primakov, was one of Zyuganov's top choices for the post. The deputy prime minister in charge of the economy, Yuri Maslyukov, is a Communist Party figure who once headed Gosplan, the infamous central-planning program that helped bring the Soviet Union to ruin. ``We don't have slogans that are aimed against the government,'' the first secretary of the Moscow Communist Party committee, Alexander Kuvayev, said in a recent interview. ``All the slogans are aimed against the president and the economic course of the country. Only the president can fully be blamed for the course that has brought the country to this situation.'' Anger over Russia's fate, and their own, is drawing some Russians back to Soviet-style slogans and old-style hostility toward capitalism. The ardently pro-Communist newspaper Sovietskaya Rossiya devoted most of its front page on Thursday to what it said were the results of a contest among readers for protest slogans. The entries ranged from catchy to kitschy, from, ``Legislator, official, banker _ study the Constitution; the exam is Oct. 7,'' to, `` Imperialist! Help Russia return the exported capital, and we will pay the debts at once.'' Russia has seen nothing approaching this sort of economic chaos and despair since 1993, when hyperinflation swept the economy. There is no real way of knowing whether the latest travails will produce huge and ugly crowds or small, peaceful ones. A deputy editor and political analyst at a newsweekly, Itogi, Masha Lipman, said the situation was not unlike that of 1993, when Yeltsin sought, and won, a popular mandate in a referendum. He used it to dissolve the Communist-dominated Parliament and increase his own power. That led to an autumn showdown, the shelling of Parliament by tanks and the total defeat, for the time being, of Yeltsin's legislative opponents. ``You can interpret this demonstration as a Communist mandate, but I don't think they will act like Yeltsin,'' Ms. Lipman said. ``Support for the Communists is at its smallest level, maybe 20 percent.'' In a survey of 1,714 people that was released last week the All-Russian Public Opinion Center said that nearly half the population supported the idea of demonstrations against Yeltsin, but that barely one-tenth were likely to participate in any way. ``Nobody is interested in any sort of struggle,'' Yuri Levada, who heads the center, said in an interview. ``This is mainly a general expression of a great wave of distrust of authorities, mainly the president. He's the great scapegoat for all our sins.'' There seems to be little enthusiasm for demonstrations of any sort. Only a few thousand people turned out Sunday for the fifth anniversary of the shelling of Parliament and Yeltsin's subsequent triumph over the Communists. The Communist Party and the Federation of Independent Russian Unions, a leftist organization that says it is the main sponsor of the protests, predict that 9 million Russians will participate on Wednesday. The government has vowed to keep order without resorting to force. But it is concerned enough that it has summoned 11,000 police officers to patrol Moscow and 6,000 military troops to intervene if violence erupts. Protests since 1993 have generally been tepid, a deep-seated feeling here. Some demonstrations last week, more or less practice runs, hinted at similarly dampened marches this year. ||||| President Boris Yeltsin would respond strongly to any effort to prohibit Russians from buying foreign currencies, believing the move would be like bringing another Iron Curtain down on the country, his spokesman said Friday. ``The president clearly understands that such a ban would be a clear violation of our rights ... that would mean a return to the Iron Curtain in everyday life,'' said presidential spokesman Dmitry Yakushin. The remarks came after media reports of a government economic plan in the works that would prohibit Russians from buying U.S. dollars and other foreign currencies, and institute other strict economic controls, rolling back seven years of reforms. Though government officials say such a plan is only one of six possibilities, Prime Minister Yevgeny Primakov warned Thursday that he might be forced to take ``unpopular'' measures to rescue the Russian economy if it does not receive the next installment in a dlrs 22.6 billion loan from the International Monetary Fund. Central Bank Chairman Viktor Gerashchenko and Finance Minister Mikhail Zadornov flew to Washington on Friday for negotiations with the IMF over the dlrs 4.3 billion installment. IMF officials have said they want the Russian government to come up with a sound economic program before the loan is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable. But Primakov said that the country's plan would be dependent on the IMF loan, not the other way around. No short-term economic plan will be known for another three weeks, long after the IMF is set to make its decision, said First Deputy Prime Minister Vadim Gustov. A draft version of the government's fourth-quarter budget would rely heavily on the IMF loan, the Kommersant newspaper said. Without the loan, the government would have to engage in major deficit spending. Calls for Soviet-style controls _ part of the plan drafted by First Deputy Prime Minister Yuri Maslyukov and leaked to the press _ have apparently created a rift within the Cabinet. The plan drew heavy criticism from Zadornov, and Gerashchenko called the idea of banning foreign currency sales ``a mad idea.'' Meanwhile, Russia's stock market dropped by 5 percent to 38.8 Friday, but trading was so light the downward move meant little. The stock market has continued to fall since the crisis hit Aug. 17. And tax collection was down in September, the result of the collapse in Russia's banking system, said Alexander Pochinok, head of the government's finance and credit department. Revenues totaled 14.3 billion rubles (dlrs 875 million), 700 million rubles (dlrs 43 million) less than expected. The government wants to reverse this trend by raising taxes for oil and gas companies, but the idea is expected to meet sharp resistance in the lower house of Russia's parliament, which wants to cut tax rates, Pochinok said. ||||| Wall Street extended a global stock selloff Thursday with the Dow industrials tumbling more than 200 points for a second straight day. The Dow Jones industrial average, which plunged 237.90 points on Wednesday, fell an additional 210.09, or by 2.7 percent, to close at 7,632.53. Broader market indicators also sank sharply in heavy trading. Bank and technology stocks were particularly hard hit. The selling spree, amid worries about shrinking corporate profits and fears of new financial crises, left the Dow 18.3 percent, or more than 1,700 points, below the all-time high of 9,337.97 reached on July 17. It was getting closer to the low of 7,400 that was reached during trading Sept. 1, before Wall Street's best-known indicator began a comeback bid that brought it above 8,100 as recently as Monday. The Dow's 12.4 percent slide in the third quarter, which ended Wednesday, was its worst quarterly performance in eight years. It now is 3.5 percent below where it began this year. Stock prices earlier plunged in Asia, with Tokyo shares falling 1.6 percent to a new 12-year low, and shares were falling sharply in Europe, where Germany's central bank left interest rates unchanged. Blue chips in London sank 3.1 percent to close at new lows for the year, while the key index in Frankfurt, Germany, closed down 5.5 percent and the main indicator in Paris was off 5 percent. The selloff in stocks has sent a flood of money into U.S. Treasury securities, a traditional haven in times of uncertainty. Yields on 30-year Treasury bonds fell further below 5 percent Thursday, reaching levels unseen for long-term government bonds since 1967. Traders were alarmed to see prices on the New York Stock Exchange nosedive 2.9 percent on Wednesday, even though the Federal Reserve had lowered a key interest rate one-quarter percentage point on Tuesday. Some traders were disappointed that the cut was not deeper amid fears a go-slow approach would not do enough to counter the economic crises that have swept through Asia and Russia and are threatening Latin America. ``The smaller-than-expected lowering of interest rates by the U.S. Federal Reserve has a chain reaction,'' said Lee Won-ho, an analyst at Samsung Securities Co. in Seoul, South Korea, where the main stock index fell by 1.5 percent. ``It is affecting Wall Street, the Japanese market, ours and others.'' The managing director of the International Monetary Fund, Michel Camdessus, on Thursday said the Fed made the right decision in cutting rates and that global powers now must push for stronger growth to offset steep recessions in Asia and Russia. Asked why stock markets, particularly in the United States, have reacted so negatively to the Fed rate cut, Camdessus said he believed confidence will soon be restored, especially if financial leaders show resolve in their discussions over the next week. There also are worries about where the next financial market crisis may erupt after last week's dlrs 3.6 billion private bailout of Long-Term Capital Management LP of Greenwich, Connecticut. In addition, investors worldwide worry that the downturn on Wall Street could signal a possible slowdown in economic growth _ a bad omen for the many foreign companies dependent on exports to the huge U.S. market. ``There's a psychological impact overall, but there's also a direct impact on companies like Sony and TDK which derive a high percentage of their earnings from overseas markets,'' said Pelham Smithers, a stock strategist in Tokyo at ING Baring Securities (Japan) Ltd. A new survey in Japan said confidence among small- and medium-sized businesses about the economy plunged to its worst level since the Bank of Japan began the quarterly samplings in 1967. ||||| In a season of crashing banks, plunging rubles, bouncing paychecks, failing cropsand rotating governments, maybe it is not the ultimate insult. But the nation that bore Tolstoy and Chekhov, and still regards a well-written letter as a labor of love, is buckling a little this week, because it can no longer wish good health to Baba Anya in Omsk. The Post Office is broke. In 60 of the country's 89 statelike regions, more than 1,000 mail cars have been sidetracked, many stuffed with up to 18 tons of letters, newspapers and parcels. The state Railway Ministry refuses to carry more mail until the Post Office makes good on some 210 million rubles in old bills _ about $13 million in today's dollars, or $35 million in dollars six weeks ago. Air mail, which amounts to one of every four or five letters, was also suspended at one of Moscow's major airports until this week, when the Post Office coughed up 5 million rubles for old bills. A second airport is still demanding 3 million rubles for past-due debts. So much mail is backed up that post offices in Moscow and elsewhere have simply stopped accepting out-of-town mail, except for areas that can be easily reached by truck. Delivery schedules have fallen weeks, and perhaps months, behind. ``The situation is really extraordinary,'' said Vladimir Sherekhov, the deputy chief of mail service administration in the government's Communications Committee. ``We've never had anything like this before.'' Maybe the Post Office has been lucky. Extraordinary is the rule elsewhere in Russia. Until Friday, the lower house of Parliament was preparing to sue the government for failure to provide soap, heat, toilet paper and copy-machine paper in the legislature's monumental downtown offices. It turned out that politicians had exhausted their funds by cutting short their recess and returning to address the nation's economic crisis. Earlier in the week, officials said Russia's Arctic shipping routes may close next month because half the nation's icebreakers are in disrepair and there is no money to fix them. The oldest of the ships is so ancient that its nickname is Granny. Such anecdotal evidence that Russia is losing its wheels, like one of its old, ill-maintained Volga sedans, is everywhere. But oddly, real signs of public distress are not particularly common, perhaps because the system rarely seems to shed a part as big as a postal system. If the U.S. Postal Service is increasingly a pipeline for sweepstakes notices and bills, the Russian Post Office still holds a special place in the national conversation. Russians still write letters to each other, frequently and fervently, and many in remote regions get their news through the mail. Millions use the mails to ship canned goods and other provisions to needy relatives and friends in faraway areas, an especially vital service in winter. And in the last few years, the Post Office has become a vehicle for a growing mail-order trade in books, clothes and other catalog items not readily available outside big cities. Exactly why all this has rumbled to a halt is in some dispute. What is clear is that the Post Office and the Railway Ministry both suffer from what ails every Russian venture, private and public alike: Nobody pays his bills. The state Railway Ministry complains that it is continually stiffed by customers who believe the railroads are honor-bound to carry freight whether they are paid or not. The government has specified nearly 40 categories of freight which the railroads must carry for next to nothing. Among the biggest deadbeats are the ``power ministries'' _ the military and interior departments _ which did not pay during Soviet times and feel little need to pay now. ``It's a psychology formed during the socialist period,'' said Tatiana Pashkova, the deputy spokeswoman for the ministry, ``and the same situation exists with the Post Office. We've been in dispute for a very long time. Always we try to understand their differences. But we can't carry cargo for free.'' No kidding, says the Post Office: It, too, is owed 200 million rubles by government agencies, and is barred from raising rates even though freight costs are outstripping revenues. Moreover, the Post Office is also required by the government to carry some forms of mail, such as pension checks, at reduced rates. Officials at the state Communications Department say they also suspect an ulterior motive in the railroads' actions: a struggle to dominate the thriving mail-order business. ``Here's competition between us and the railroads for the delivery of parcels, and I think decisions made by the railroads are mainly explained by this competition,'' Sherekhov said. ``They blame us for carrying some commercial cargoes instead of mail.'' The Railways Ministry's spokeswoman, Ms. Pashkova, said such ``commercial cargoes'' are indeed a problem, but only because the railroads know that the Post Office has already gotten cash to transport the packages. The railroads are still waiting for their share of that money, she said. In the meantime, the situation has come to a boil. In late September the railroads cut mail service in and out of Moscow, effectively decapitating the postal system and forcing officials to draft a fleet of trucks to move letters in and out of the city. Hundreds of empty and full rail cars have clogged some local yards to the point where moving cars into position for unloading has become difficult. At last count, 39 loaded cars were awaiting service at one yard. And customers are getting angry. ``We've gotten all kinds of complaints,'' said Viktor Salikov, a deputy in the Communications Department's mail shipping center. ``People are even coming to us, searching for mail that was sent weeks ago.'' ||||| When the world's finance ministers and central bankers gathered last year in Hong Kong, they nervously congratulated each other for containing _ at least for the moment _ a nasty financial brush fire in Asia. In a year's time, many predicted in hallway chatter, the troubles in Thailand and Indonesia would look like a replay of Mexico in 1995 _ a rough bump in the road for a world enjoying remarkable prosperity. Talk about bad market calls. Twelve months later, as the same financial mandarins clog Washington with their limousines and glide through endless receptions at the annual meeting of the International Monetary Fund and the World Bank, just about everything that could have gone wrong in the world economy has: the worst downturn in Japan since World War II, economic meltdown in Russia, a depression in Indonesia that is plunging 100 million people below the poverty line, and deep fears over what happens next in Latin America. What makes this year's IMF meeting most remarkable, though, is that the harshest criticisms are directed at the monetary fund itself, and, by extension, at the U.S. Treasury, which is viewed as the power behind the IMF. This year, in place of confident predictions, there are mutual recriminations. Arguments are breaking out over whether the true culprits were crony capitalists and weakened leaders like Russian President Boris Yeltsin, or huge investors who poured money into the world's emerging markets with reckless abandon in the mid-1990s and panicked in the past twelve months. Whatever the reason, one reality prevails: Hundreds of billions of dollars have fled from economies on four continents _ seeking the safest havens possible, often in the United States _ and the money is not returning anytime soon. And the subtext of every seminar on capital flows and every conclave of nervous ministers will be some painfully blunt questions: Can this be stopped? Or is the world headed for a global recession? Fifty-three years ago the IMF was created after the Bretton Woods conference which sought to stabilize the world economy and secure the peace after World War II. Now it is under attack from all sides, charged not only with worsening a bad situation by misjudging the economics, but with being politically tone-deaf in some of the most volatile capitals in the world, from Jakarta, Indonesia, to Moscow. For the first time, there are disturbing questions about whether the institution itself is still capable, financially or politically, of containing the kind of economic contagion that caught the world unaware. Once, the IMF's critics were largely found in Africa and South Asia, were the fund was often viewed as arrogant; today they include Wall Street's biggest players and top officials in the most powerful economies of Asia and Europe. Only a few _ including former Secretary of State George Schultz and members of Congress who are increasingly suspicious of all international institutions _ are talking about scrapping the IMF altogether. But almost everyone is talking about creating a ``new financial architecture'' that can do what the old one clearly cannot: smother financial wildfires before they leap around the globe. President Clinton, British Prime Minister Tony Blair and other leaders, after months of silence, have edged into the debate, in some cases wresting the issue for the first time from their finance ministers and central banks. Their fear, their advisers say, is that 15 months of financial turmoil are now threatening political stability. Such concerns have turned this year's meeting into a tumbled mass of worries and a groping for short and long-term solutions. The Japanese, the French, the Southeast Asians are all arriving in Washington with different diagnoses of what went wrong, and different solutions about how to set it right. The United States has its own set of plans, a mix of suggestions to force more disclosure of financial data in countries around the world and to impose more American-style financial standards and regulation. Meanwhile, an ideological argument is breaking out over whether the world should slow down a long march toward more free and open markets _ a strategy pressed by the Clinton administration for the past six years. Others argue that it is unwise to start rebuilding the hospital while the patients are still on the operating tables. ``Last year the standard answer that all of us were given came down to this: `We have the IMF and the World Bank, and they know best,''' Indonesian Foreign Minister Ali Alatas said over breakfast in Washington the other day, reflecting on how the crisis turned 30 years of astounding growth in his country into an overnight depression. ``Then they said everything that went wrong was our fault,'' he said. ``But now, now I think people know that much of the problem came from the outside, and we need something better.'' And the IMF itself is beginning to fight back, an awkward role for an institution dominated by Ph.D. economists who are unaccustomed to being openly challenged. ``Every place you turn you read the same story, that we came in, that we made things worse,'' said Stanley Fischer, the deputy managing director of the fund, who was born in Northern Rhodesia _ now Zambia _ and became chairman of the Massachusetts Institute of Technology's economics department before taking a job that has now put him in the center of the financial storm. ``We frequently get the blame, some of it well-deserved,'' he said. ``But it is politically convenient for governments around the world to cry, `The IMF made us do it,' and pin their mistakes on us. That's fine. We'd rather be loved, but more than that we'd like to be effective.'' MISCALCULATIONS, POLITICS AND SAFETY NETS On a steaming January day, Michel Camdessus, the IMF's top official, slipped into Jakarta to the private residence of President Suharto and sat down for a four-hour meeting to tick off, line by line, the huge reforms Indonesia would have to implement in return for tens of billions of dollars in emergency aid. Two previous deals had collapsed when Suharto ignored the fund's conditions, so Camdessus insisted that he strike a deal directly with Suharto, then Asia's longest-serving leader. It was a meeting of men who knew different worlds of power politics: Suharto rose as a general in central Java, and Camdessus had detonated mines in Algeria for the French army before entering the French Treasury on his way to becoming head of France's central bank. ``It was all there,'' a senior IMF official recalled. ``He was told he had to dismantle the national airplane project, the clove monopoly, all the distribution monopolies.'' At one point, Camdessus looked at the impassive Suharto and said, ``You see what this means for your family,'' a reference to their vast investments in the country's key industries. ``He said, `I called in my children, and they all understand.''' But within months, that exchange in Jakarta came to symbolize the IMF's twin troubles: Its inability to understand and reckon with the national politics of countries in need of radical reform, and its focus on economic stabilization rather than the social costs of its actions. Suharto had no intention of fulfilling the agreement. It was, one of his former Cabinet members said, ``a delaying move that was obvious to everyone except Camdessus.'' Perhaps one reason why the IMF sometimes appears tone-deaf is that its senior staff is almost entirely composed of Ph.D. economists. There are few officials with deep experience in international politics, much less the complexities of Javanese culture that were at work in Indonesia. Historically, experts in politics and security have gravitated to the United Nations, development experts to the World Bank, and economists to the IMF _ creating dangerous gaps in a crisis like this one. As a result, the fund had only a rudimentary understanding of what would happen if its demands were met and all Indonesia's state monopolies were quickly dissolved. While that system lined the pockets of the Suhartos and their friends, it also distributed food, gasoline and other staples to a country that stretches for 3,000 miles over thousands of islands. To help balance the budget, the fund demanded a quick end to expensive subsidies that keep the price of food and gasoline artificially low. But that, combined with the huge currency devaluation that sparked the crisis, resulted in high prices and shortages that fueled riots that continue to this day, as millions of Indonesians lose their jobs. The IMF _ unintentionally, its officials insist _ also sped Suharto's resignation, insisting on the elimination of ``crony capitalism,'' code words for removing the Suharto family from the center of the economy. Ultimately, that may prove to be Indonesia's salvation, if the new government can contain the rioting against the ethnic Chinese minority _ whose money is desperately needed to save the country's fast-shrinking economy. ``It is worth noting,'' Fischer said this week, ``that our programs in Asia _ in Indonesia, Korea and Thailand _ only took hold after there was a change in government.'' Nonetheless, the Indonesia experience has revived the argument that the IMF is so focused on stabilizing banks and currencies, on preventing capital flight and freeing up markets, that it is blind to the social costs of its actions. Among the toughest critics has been its sister institution, the World Bank, whose main charge is alleviating poverty. ``You've seen the tension almost every day,'' one senior World Bank official said recently. The bank has gone to extraordinary lengths in recent months to differentiate its role from that of the fund, and to announce a tripling of aid to the poorest in the countries hit by the economic chaos. Even U.N. Secretary General Kofi Annan has joined the argument, warning in a speech at Harvard recently that ``if globalization is to succeed, it must succeed for poor and rich alike. It must deliver rights no less than riches. It must be harnessed to the cause not of capital alone, but of development and prosperity for the poorest of the world.'' IMF officials say they are changing strategies when they see they are exacting too great a social cost. ``It's a very difficult formula to get exactly right,'' Fischer said in August, as Russia was teetering and the IMF was sending in $4.8 billion in aid that was rapidly wasted. ``You need enough discipline to send the right message to the markets and keep investors from fleeing. But you need enough leeway to keep people from suffering more than they otherwise would.'' In recent months, he noted, the IMF has allowed more spending to sustain subsidies for basic goods for longer periods in Indonesia, Korea and elsewhere. ``There is a new flexibility at the IMF'' a senior Indonesian official concluded recently. ``It is a lot better.'' A U.S. PAWN, OR A RUNAWAY AGENCY? The Clinton administration admits that the IMF has many failings, many of them on display this year. But it insists that the world has gone through global financial crises without an IMF once before in this century _ and the result was the 1930s. ``I have no doubt the situation over the past year would have been much worse _ with greater devaluations, more defaults, more contagion, and greater trade dislocations _ without the program agreed with the IMF and the finance it has provided,'' Deputy Treasury Secretary Lawrence Summers told Congress last week. Many Republicans and some Democrats are unconvinced. Even though the Senate has overwhelmingly approved an $18 billion contribution to the fund to help it fight new crises, the House defeated that measure two weeks ago. The fund's last hope of getting the money, which will free up nearly $100 billion in contributions from other nations waiting for the United States to act, will come when the House and Senate try to resolve their budget differences in a conference committee in the next 10 days. A rejection, Treasury Secretary Robert Rubin insists, would send a message around the world that the United States is turning its back on the one institution charged with restoring economic stability. Everywhere else in the world, though, politicians and businessmen insist that one of the biggest problems with the IMF is that, contrary to the view of Congress, it acts as the U.S. Treasury's lap dog. Ask in Jakarta or Moscow, and the response is the same: The IMF never ventures far without looking back for the approving nod of its master. When the United States weighs in, however, is when the IMF is called on to rescue a country in deep trouble. Only then does the IMF _ and the U.S. Treasury _ have the leverage to extract commitments in return for billions in aid. In theory, the U.S. influence is limited: It has an 18.5 percent vote in the fund. Germany, Japan, France and Britain have about 5 percent each. But in practice the United States usually gets its way, exercising its influence behind the scenes, often in interactions between Fischer and Summers. The two met when Fischer was on the MIT faculty and Summers was a graduate student taking one of his classes, later becoming a colleague at MIT. Each served as chief economist of the World Bank. It was Summers who was instrumental in placing Fischer in the fund's no. 2 job, and these days they talk constantly. ``It's usually a warm relationship,'' Fischer said this summer. ``Remember, this is a job where you cannot turn to outsiders for advice _ you can't call the chief economist at a Wall Street firm, or even many of your academic friends, because so many of the issues are confidential.'' The Treasury's relations with Camdessus are often more strained as he plays the role of world diplomat, traveling the globe and trying to coax along political leaders. The tensions were obvious from the start of the Asia crisis. The fund made little secret of its displeasure that the United States was not offering direct aid to Thailand, a major U.S. ally, as a sign of support and confidence. Mindful of the backlash in Congress when Mexico was bailed out with U.S. money, that was the last thing the Treasury planned to do. Summers, in turn, thought the fund was not forcing the Thais to implement its reform commitments rigorously enough or disclose their true financial picture. Within the U.S. government there was other dissension: The State and Defense Departments felt the United States should do more for Thailand, but backed off when the Treasury asked if they would like to pony up some aid out of their own budgets. There were other conflicts. When Japan used the last IMF meeting to propose setting up a $100 billion ``Asia Fund'' _ one that would exclude the United States and would probably offer aid under much more relaxed conditions than the IMF does. Rubin called up Camdessus at breakfast one morning and told him that the Japanese proposal would undercut the IMF's authority. ``We've just had a dispute with Michel,'' Rubin reported to his aides as he returned to his orange juice and croissant. One of them shot back: ``And it's only 8 a.m.'' Camdessus backed down at Rubin's insistence and walked away from money that Asia could have used. Japan says it will be back with a similar proposal this weekend, this time for a $30 billion fund. Camdessus has also rankled U.S. officials with statements that amounted to cheerleading to reassure the markets _ sometimes in the face of the facts. In June, with Russia on its way to collapse, Camdessus declared that ``contrary to what markets and commentators are imagining'' about the slow collapse of Russia's economy, ``this is not a crisis. This is not a major development.'' The bailouts of Russia and South Korea were prime examples of how Washington muscles into the IMF's turf as soon as major U.S. strategic interests are involved. Last Christmas, as South Korea slipped within days of running out of hard currency to pay its debts in December, it sent a secret envoy, Kim Kihwan, to work out a rescue package. ``I didn't bother going to the IMF,'' Kim recalled recently. ``I called Summers' office at the Treasury from my home in Seoul, flew to Washington and went directly there. I knew that was how this would get done.'' Within days the Treasury dispatched David Lipton, its most experienced veteran of emergency bailouts, who is leaving his post as undersecretary for international affairs this month, to shadow the IMF staff's negotiations with the government in Seoul. Fischer was displeased. ``To make a negotiation effective, it has to be clear who has the authority to do the negotiating,'' he said. WHO LOST RUSSIA? The pattern was repeated this summer, when the United States raced to put together a $17 billion package for Russia. The IMF's staff in Moscow declared that Russia needed no money at all _ it just needed to enact policies that would restore confidence in investors. The Americans and Germans came to a different conclusion. Soon after, U.S. officials gathered in the White House situation room to consider what might happen to Russia if the ruble was devalued and market reforms collapsed and to push the IMF to come up with emergency money. So the fund began assembling a last-ditch program to prop up a country that had resisted its reform plans for seven years. Camdessus, though, was still hesitant, questioning whether the IMF should risk its scarce resources in Russia. ``We had to pull Michel along,'' a senior Treasury official recalled. As it turned out, Camdessus' instincts were right while the approach championed by Rubin and Summers proved disastrously wrong. The first installment of that payment _ $4.8 billion _ was wasted, propping up the currency long enough, in the words of one IMF official, ``to let the oligarchs get their money out of the country.'' Then Yeltsin reversed his commitments, let the ruble devalue anyway, began printing money with abandon and fired virtually every reformer in his government _ resulting in a collapse of the IMF agreements and the indefinite suspension of its aid program. Now, inside the IMF and on Capitol Hill, there are recriminations over ``who lost Russia.'' Publicly, Fischer argues that ``there are no apologies owed for what we attempted in Russia.'' But some IMF officials complain privately that they let Rubin and Summers run roughshod over them, striking a deal that fell apart within weeks as the Russian parliament rebelled and Yeltsin backed away from his commitments. Summers responds that the United States ``took a calculated risk'' because ``it was vastly better that Russia succeed than not succeed.'' The Russian collapse touched off new rounds of economic contagion, with investors fleeing Latin America, and triggering huge losses in hedge funds like Long Term Capital, the Greenwich, Conn., investment firm that needed to be rescued by Wall Street powerhouses whose money it had invested. ``Russia was a turning point,'' said Robert Hormats, the vice chairman of Goldman, Sachs & Co. ``It made the world realize that some countries can fail, even if the IMF and the Treasury intercede. And that changed the perception of risk.'' Now, as the countries meet to face a future that the IMF has warned could be very bleak, they need to reverse those perceptions, or watch countries slowly starve for lack of capital. The emerging markets are calling for controls on short term investments. The French want a stronger IMF. The Americans say the answer is more disclosure, so that investors are better warned, and tougher regulation. ``These are usually nice, quiet meetings; everyone very polite,'' a top U.S. official said earlier this week. ``Not this year.'' ||||| President Leonid Kuchma called Friday for ``corrections'' to Ukraine's program of market reforms, but pledged that reforms would continue. Kuchma did not elaborate in his comments to a group of Ukrainian economists, saying only that the changes were necessary because of the country's economic problems. Kuchma urged the economists to come up with recommendations before a national meeting of economists in November, the Interfax news agency reported. Ukraine has suffered economic problems since the 1991 collapse of the Soviet Union and it has been especially hard hit by the financial crisis in neighboring Russia, its main trading partner. The Russian crisis has hurt bilateral trade, caused the Ukrainian currency to fall and led to a withdrawal of investors from Ukraine. In recent months, Kuchma has implemented some economic reforms by decree, prompting the International Monetary Fund to release the first installment of a long-awaited dlrs 2.2 billion loan. Many reforms, however, remain stalled. National Bank chairman Viktor Yushchenko was in Washington this week for consultations with IMF officials. Yushchenko has warned that the bank would not spend its dwindling reserves to support the hryvna currency, but has avoided comments on the currency in recent days. Kuchma met Friday with Yushchenko, Prime Minister Valery Pustovoitenko and other senior officials to discuss ways to stabilize the hryvna. The government's press service said they focused on possible ways to keep the hryvna under 3.5 to the U.S. dollar through the end of the year. The hryvna has been trading at 3.4 to the dollar in recent days but trading has been limited. There are wide expectations in Ukraine that the hryvna will fall even further, and Ukrainians have been stocking up on food, clothing and household goods to save their fast-devaluing money. ||||| The United States is disappointed by the economic confusion within the new Russian government of Prime Minister Yevgeny Primakov, said Secretary of State Madeleine Albright on Friday, and she warned Russia about the dangers of an anti-Western policy. In her first comprehensive review of U.S.-Russian relations since Primakov was confirmed as prime minister last month, Albright said Washington was ``deeply concerned'' about Russia's direction and did not think the crisis there would soon abate. ``We have heard a lot of talk in recent days about printing new money, indexing wages, imposing price and capital controls and restoring state management of parts of the economy,'' she told the U.S.-Russia Business Council in Chicago. ``We can only wonder if some members of Primakov's team understand the basic arithmetic of the global economy.'' While praising Primakov, once her counterpart when he was foreign minister, as a pragmatist able to cooperate on key issues with Washington, she had harsh words of warning for him. ``Our initial reaction to some of the direction he's going in has not been particularly positive,'' she said, adding, ``The question now is whether that cooperation can continue.'' The United States must keep up its aid to Russia but is adjusting it to promote the building of democracy and student exchanges as well as arms control, Albright said. Washington does not favor more direct aid. ``More big bailouts are not by themselves going to restore investor confidence in Russia,'' she said. ``In the long run, the gap between Russia's needs and its resources must be met not by foreign bailouts but by foreign investment.'' Albright sharply criticized as self-defeating the ``many voices in Russia who want to shift the emphasis in Russia's interaction with America and our allies from one of partnership to one of assertiveness, opposition and defiance for its own stake.'' Russia could not stand alone in the world, she said, and the United States' ability ``to help Russians help themselves will go from being merely very, very difficult to being absolutely impossible.'' At the same time, she said, Washington would not ``assume the worst, for there are still plenty of people in Russia who will fight against turning back the clock.'' And she urged the world _ and American critics _ to ``be patient with the workings of the democratic process in Russia'' and ``not start each day by taking a census of reformers in the Kremlin,'' a census that American officials themselves promoted before President Boris Yeltsin dismissed the previous government. While Moscow may continue to oppose any NATO use of force against Serbian forces in the southern province of Kosovo, Albright said, NATO must be prepared to act regardless. ||||| Prime Minister Yevgeny Primakov said Saturday that the economic crisis would not bring an end to the government's program of privatizing state property. ``Privatization will be accomplished for growth of production, growth of investment and growth of production effectiveness through renewal of major funds,'' Primakov said during a meeting of Western businessmen. ``We shall conduct privatization so that it serves the interests of the people, the state, and business,'' he said, according to the ITAR-Tass news agency. Primakov reassured the businessmen, members of the prime minister's consultive council on foreign investment in Russia, that the government had no plans to ban the circulation of U.S. dollars in Russia. But, he said, the government would take steps to staunch the flow of dollars from Russia. Responding to media reports of a government economic plan that would prohibit Russians from buying U.S. dollars and other foreign currency, Primakov said the reports ``absolutely do not correspond to reality,'' ITAR-Tass quoted him as saying. He said there was no need to regulate the influx of dollars into Russia, but the government should take steps to prevent what he called ``the dollar drain.'' Russian companies stashed about dlrs 2.5 billion outside the country in September alone, the Interfax news agency reported Friday, quoting central bank figures. Primakov said foreign investors are ``the force'' that will help Russia to minimize its losses from the current economic crisis. ``We are very much interested in foreign investments, especially in ones that go into the real production sector,'' Primakov said, according to Interfax. ``We need a continuous dialogue with foreign investors, without whom it will be difficult for us to overcome the current difficulties.'' He said Russia wanted long-term investments. ``Foreign capital has been coming to the country via short-term operations,'' Primakov said. This, he said, ``is not to our liking or yours.'' Viktor Gerashchenko, the central bank chairman, said on Friday that the government must act to stem the flow of dollars from Russia. Gerashchenko and Finance Minister Mikhail Zadornov were in Washington Saturday for the annual meeting of the International Monetary Fund, where they plan to spell out the measures Russia is taking to bail out its finance system. Russia wants the IMF to release the second dlrs 4.3 billion installment of a loan that was approved in July, a month before the country's economy crashed and the government effectively defaulted on its foreign loans. IMF officials have said they want the Russian government to come up with a sound economic program before the installment is given, and have made it clear that currency controls and boosting the money supply by printing rubles are not acceptable.

Early October was fraught with economic woes as the International Monetary Fund prepared for its annual meeting. The IMF faces criticism for ignoring the social costs of its actions and being a pawn to Western demands. A small cut in US interest rates lowered markets worldwide. Russia, whose economy collapsed in August, was looking for a cure--possibly instituting Soviet-style measures. Key issues were stopping dollars from leaving the country and getting foreign investment end IMF loans. The postal service was in chaos, owing everyone. Demonstrations were expected. The Ukraine also struggled, especially to keep banks working. An IMF loan was on the way.