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Newsroom/World View

NEWSROOM for May 17, 2000

Aired May 17, 2000 - 4:30 a.m. ET


ANNOUNCER: Seen in classrooms the world over, this is CNN NEWSROOM.

ANDY JORDAN, CO-HOST: Hi there. It's Wednesday here on NEWSROOM. Thanks for joining us. I'm Andy Jordan.

Today we head to the Middle East just days after the worst violence there in years.

In today's top story, will there ever be peace in the Middle East? The United States renews efforts to get the Israeli and Palestinian talks moving.

In "Business Desk," rap artists rev up their attire NASCAR style.


UNIDENTIFIED MALE: All that display is just a fad.

UNIDENTIFIED MALE: I believe it's just a professional trend.


JORDAN: We're in Russia for "Worldview" where the new president is being put to the test. Can he put his rubles where his mouth is?


ROBERT HORMATS, GOLDMAN SACHS: There are indications that Putin wants to move in the direction of a stronger private sector.


JORDAN: Then "Chronicle" heads to New York where teens are taking care of business -- the family business.


S. BINOIRIS: It's good because you know how hard your parents are working to make, you know, the money that sends you to school, that puts the food on your table.

(END VIDEO CLIP) JORDAN: Today's top story is a familiar one: the allusive peace in the Middle East and the violence that haunts those efforts. Against the backdrop of some of the worst fighting between them, Israelis and Palestinians are working to reach common ground.

Three Palestinians were killed and hundreds of them were injured Monday along with 15 Israeli soldiers in gun battles in the West Bank and Gaza. Monday, the Israeli cabinet approved plans to hand over three West Bank villages to Palestinians. But the Israeli prime minister says that will only happen after the violence subsides.

The gesture was meant to nurture ongoing peace talks with the West-based -- West Bank-based Palestinians. They want to establish a capital in East Jerusalem. That's one of the thorny issues that negotiators face, but was not brought up at secret meetings over the weekend in Stockholm, Sweden, where U.S. negotiator Dennis Ross tried to mold a framework for peace.

Israel and the Palestinians have committed to finding parameters for a deal by the middle of this month. They face a September deadline for a final treaty. It would include a full agreement on borders, Jerusalem, refugees and Jewish settlements.

Mike Hanna reports on how recent violence is affecting efforts towards peace.


MIKE HANNA, CNN CORRESPONDENT (voice-over): Scattered clashes continued for a fifth consecutive day, but the intensity of violence appeared to diminish, and clear signs in the streets that Palestinian police are attempting to contain the situation on their side of the conflict lines.

DENNIS ROSS, U.S. SPECIAL ENVOY: Both sides are working hard to calm the environment, and that's a key not only to restoring calm and ending victim, but it's also a key to being able to move this process forward with the objective of ending the conflict.

HANNA: A conflict that's led to yet another parent mourning a dead son. All their eyes bear witness and friends and relatives comfort the mother of Ahmed Oded (ph). The 20-year-old Palestinian policeman was shot and killed in a clash with Israeli forces Monday. And among those attending his funeral, there remains little faith in the politicians who are supposed to negotiate a peace.

UNIDENTIFIED FEMALE: Every time, they will kill more and more. There's no solution to our misery.

HANNA: "We were ordered to calm things down because the clashes were so intense," says the local governor. "But it will be hard to keep things quiet."

The ongoing violence is seen as potential fuel for extremists on both sides, and threatens to undermine whatever trust remains in the value of talk. (on camera): There's been much speculation in recent days of secret negotiations aimed at ending the deadlock in the peace process. But at this stage, there's no public evidence of any results.

(voice-over): The challenge facing those embarking on yet another round of talks to produce some tangible signs of progress, to give some ammunition to those Israelis and Palestinians who are still willing to argue that lasting peace be achieved.

Mike Hanna, CNN, Jerusalem.


RUDI BAKHTIAR, CO-HOST: In the headlines today, the U.S. Federal Reserve steps up its assault on inflation with another interest rate hike. It's the Fed's most aggressive rate hike in five years driven by a racing economy the Fed is trying to control.

The Federal Reserve is a network of 12 central banks appointed by the president. They set ceilings on interest rates that member banks may pay. An interest rate is the percentage that a borrower of money must pay for the use of that money. The Federal Reserve raised interests rates half a point to 6 1/2 percent yesterday hoping to tame consumer demand.


BROOKS JACKSON, CNN CORRESPONDENT (voice-over): Here we go again: another interest rate increase. And, again, the economy seems to just shrug, stock markets up strongly -- a full percentage point for the Dow Jones Industrial averages; more than 3 percent up for the Nasdaq market, the opposite of what's supposed to happen.

The truth is, the economy is still racing much faster than the Federal Reserve wants. Five previous rate increases have had little effect. A former Fed governor thinks he knows why.

LYLE GRAMLEY, MORTGAGE BROKERS ASSN.: The main reason was that the stock market all of the last half of 1999 was simply ignoring the Federal Reserve, and it was roaring along and consumers became so wealthy and so confident that they continued to spend with great gusto.

JACKSON: Just look at the evidence. Higher interest rates make buying a home more expensive. A quarter-point rise in rates adds more than $26 to the monthly payments on a typical $150,000 mortgage. Yet new home sales are still roaring along at a rate of nearly a million a year, higher now than a year ago.

And auto sales: The cost of leasing a $25,000 car is about $18 a month more expensive now than before the Fed began tightening rates. Yet passenger cars are selling at a rate of more than 9 million a year. And on top of that, sport-utility vehicles and trucks are selling at a rate of more than 8 1/2 million, both higher than a year ago, defying both interest rates and soaring gasoline prices. And it's not just consumers. Business spending also refuses to slow down. ALAN BINDER, BROOKINGS INSTITUTION: Business investment is just booming. The Fed is fighting, in some sense, with its relatively weak interest rate instrument, a very strong tide of a buoyant economy pushing business investment forward, especially investment in technology and communications.


JORDAN: Well, how fashion conscious are you? Well, those of us who think we're hip to the latest ins and outs of fashion are closely watched by clothing retailers. Successful retailers know there are three things that determine fashion cycles: style, fashion and fad.

Style is a distinctive way of presenting a product. For example, a bikini is a style of bathing suit. Fashion is a style that is currently popular. And a fad is a fashion that is popular for a short time.

Rap stars are some of the most fashion-conscious people around and lately they've taken to wearing NASCAR apparel. If it's fad or fashion, you be the judge.


STACEY WILKINS, CNN CORRESPONDENT (voice-over): NASCAR is a loud sport -- revved up cars, high-speed action and clothing that's just as noisy as a souped-up stock car.

Rap artists are turning up the volume another notch. Cam'ron and Trick Daddy are just two of the rap stars making NASCAR clothes a hot new trend in the African-American community where the sport isn't traditionally popular.

TRICK DADDY, RAP ARTIST: I love the NASCAR clothing. I love the colors. And I believe I wore it with some yellow pants, and they was like, whoa, that's tight.

WILKINS (on camera): Music may be bringing new attention to NASCAR, but the interest of rap fans usually doesn't go anywhere near the racetrack.

(voice-over): Young people are racing to the stores for the logo-covered jackets, hats and T-shirts. They say it's about style, not sports.

UNIDENTIFIED MALE: I don't like the sport. It's just a fad.

UNIDENTIFIED MALE: I believe it's just a fashion trend.

WILKINS: Designer Jeff Hamilton helped develop the trend when he modified racing clothes to appeal to the hip-hop market. The Los Angeles-based entrepreneur added brighter colors and additional logos to create a new look.

JEFF HAMILTON, NASCAR FASHION DESIGNER: The details are more made out to fashions. We kind of switched colors and made it more -- tried to make them more attractive to a fashion customer.

WILKINS: High-end leather jackets sell for $1,200, a price tag that doesn't stop customers from buying the clothes.

DAVID PRICE, RACE TEAM COLLECTIBLES: Price doesn't seem to be a big issue with them. They just want something that matches and looks good.

MICHAEL GATES, NASCAR CLOTHING FAN: If you got on something that looks nice and cost a little money and people know that, they're going to respect that.

WILKINS: The NASCAR organization hopes the fashion craze will help attract new fans to the sport.

BRIAN FRANCE, NASCAR: We're going to have a bigger urban impact. Any time you can create awareness, you have a chance to create interest.

WILKINS: A sport that has never been hip...

UNIDENTIFIED FEMALE: It looks great, doesn't it?

WILKINS: ... may become hip-hop if music and fashion have their way.

Stacey Wilkins, CNN, Atlanta.


ANNOUNCER: You're watching CNN NEWSROOM, seen in schools around the world, because learning never stops, and neither does the news.

JORDAN: Our "Worldview" itinerary puts us in Europe and Asia today so grab a seat. Our trip begins right away. We'll stop in Cambodia, a country trying to close the book on a gruesome chapter in its history. We'll focus on a cultural revival in the Asian nation -- revival and reforms. We'll regroup in Russia for a business brush-up. We'll hear from investors and consumers, and we'll even go shopping.

SHELLEY WALCOTT, CO-HOST: Russia is the world's largest country in land area. It stretches over a vast expanse of eastern Europe and northern Asia. Russia has been an independent country since the breakup of the Soviet Union in December, 1991. The president of Russia is Vladimir Putin. Putin became acting president when Boris Yeltsin unexpectedly stepped down on December 31, 1999. The former KGB officer enjoys huge power and huge popularity.

Western investors see Putin as a more stable leader than his predecessor. He has launched an aggressive agenda of both political and economic reforms. Still, investors want to see results of these reforms before committing new funds to Russia.

Kitty Pilgrim reports.

(BEGIN VIDEOTAPE) KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Mac Hisey is making money in Russia. His Lexington Troika Dialog Russia Fund gained 159 percent last year, the best-performing emerging market fund, according to Lipper Analytical. It's up an additional 41 percent this year.

MAC HISEY, LEXINGTON MANAGEMENT: I think Putin's election has a very positive impact on investment, and actually has already had a very positive impact on investment. We have seen strong flows already into the market.

PILGRIM: But up until now, the money fueling Russia's market has been speculative. And with the new president, it's now time for a reality check.

Little is known about Putin except his resume. The former KGB officer has cultivated a strong-man image. His tough stance on Chechnya won him popular approval and, some say, the election.

He has paid lip service to the principles of democracy and market reform, promised to crack down on corruption, but only time will tell what policies he will follow.

MARIN STRMECKI, SMITH RICHARDSON FOUNDATION: He has an authoritarian impulse. His entire background and his statements about economic policy indicate that he wants to centralize economic policy. He wants to manage national economic policy much more tightly rather than as a -- in a market economy, you have to set the incentives, create property rights and let the system go.

PILGRIM: Meanwhile, the economy is improving. Since the dramatic collapse of the ruble in 1998, the economy has turned around, posting growth of more than 3 percent last year.

Some small Russian business are thriving, such as this chocolate factory in Moscow. It's booming in part because Russians had to give up expensive imports and rely on domestic goods.

Still, the business climate is chaotic, corruption is still rampant, and sketchy business laws keep many Western investors at a distance.

HORMATS: They don't see in Russia yet a rule of law. They don't see corporate law. They don't see protection of the interests of stockholders. They don't see a private sector economy taking hold. There are indications that Putin wants to move in the direction of a stronger private sector, better rule of law, ending corruption. But I think the private sector investor would like to see more progress, a higher degree of confidence that that is really going to happen.

PILGRIM: But building confidence with investors is going to come slowly.

Kitty Pilgrim, CNN Financial News, New York.

(END VIDEOTAPE) TOM HAYNES, CO-HOST: We continue our look at Russian and its economy. This time, we focus on the middle class. The middle class is defined as the members of society occupying socioeconomic position between the laboring classes and the wealthy.

With more, here's Steve Harrigan.


STEVE HARRIGAN, CNN CORRESPONDENT (voice-over): They lined up in the cold 40,000 strong, then set off at a run when the doors opened, all to buy furniture.

LENNART DAHLGREN, GENERAL DIRECTOR, IKEA RUSSIA: We had about 50 percent more sales, so they bought everything.

HARRIGAN: They are the Russian middle class, a group many thought had disappeared after a financial crisis two years ago -- young families like policeman Maxim Borisov and his wife Natasha, an accountant.

NATASHA BORISOV, ACCOUNTANT (through translator): It's my dream to have a modern, Italian kitchen.

HARRIGAN: For the Borisovs, as for many Russians, space is tight. At night, the living room doubles as a bedroom.

MAXIM BORISOV, POLICE OFFICER (through translator): We're not going to die from hunger. We've got clothes on our backs and sometimes enough to go to the theater. I've got no yacht, no dacha, but we live like human beings.

HARRIGAN: The size of the Russian middle class is not easy to judge, making furniture giant IKEA's $40 million store a risky investment.

DAHLGREN: If you read the statistics, it seems like you haven't anything to spend. But if you look at the way you spend, you have a lot to spend. So it doesn't fit together.

HARRIGAN: With a steady ruble and a new government in place, other retailers may follow. But the road to Moscow is a slow one. It took IKEA 12 years to open its first store. And the fight is not over yet.

(on camera): Moscow region says the store has to build a bridge to reduce traffic. But Moscow city says the bridge would block the view of a World War II monument.

(voice-over): The region controls the land but the city controls the road. That leaves the bridge half-built and many of the drivers around the store stuck.

Steve Harrigan, CNN, Khimki, Russia.

(END VIDEOTAPE) JORDAN: Cambodia is a small tropical country in Southeast Asia. Its neighbors are Vietnam, Laos, Thailand and Myanmar. Cambodia's warm climate, flat, fertile land and access to water from the South China Sea make for ideal farming conditions. Agriculture is the primary industry.

Cambodia was once the center of the Khmer empire, which extended throughout most of the Southeast Asian mainland. The Khmer ethnic group still accounts for the majority of Cambodia's population.

Cambodia experienced a devastating civil war in the 1970s. A communist faction called the Khmer Rouge took control of the country in 1975. They confiscated business and farms and forced citizens to dress alike and move out of the cities to work in the rural areas. Cambodians died from execution, starvation, disease, or hard labor during the reign of Khmer Rouge. The repressive regime was overthrown in 1979, and eventually a democratic, multi-party system of government was established.

Mike Chinoy reports on the current state of affairs.


MIKE CHINOY, CNN CORRESPONDENT (voice-over): The "killing fields," a holocaust which claimed the lives of nearly two million people, a quarter of Cambodia's population, a revolution that took the country to what Pol Pot and his Khmer Rouge guerrillas called "year zero." The nation turned into a vast labor camp, cities emptied, schools, temples, banks shut down, money and property abolished.

And yet, on this 25th anniversary of the Khmer Rouge takeover, Cambodia, against all the odds, has come back to life, the once deserted streets now throbbing with activity; in the now tranquil countryside, the long-disrupted rhythms of traditional society restored.

(on camera): The revival of Cambodia is a tribute to the resilience of the human spirit, but the wounds in this country remain deep and continue to cast a long shadow over the present and the future.

(voice-over): Just minutes away from the carefully tended palace of the ailing King Sihanouk and the office of Prime Minister Hun Sen are slums and shanty towns reeking of poverty and distress.

Former Buddhist monk, Pat Nun (ph), runs a center for slum children.

"Many of these kids are so poor, they sleep in the streets and scavenge in garbage dumps," he says. "They have no money for school, so I take them in here."

But it is, above all, the psychological scars. There is hardly a person in Cambodia who did not lose a loved one to the Khmer Rouge.

"The Khmer Rouge killed my husband," says Sao Sakun (ph), who works for the Cambodian Red Cross. "The people of Cambodia cannot forget the past."

Today, this is still a culture of violence shorn of its moral underpinnings, where robbery and murder are as routine as the checkpoints and weapons searches, where the current leader, Prime Minister Hun Sen, seized power in a bloody coup in 1997.

It would be easy to dismiss Cambodia as a basket case, its suffering of little interest or meaning to the rest of the world. But that would be to ignore the work of people like Pot Nun, scrounging from day to day to help his ragged pupils and teach them that their culture and their country not only has a past, but a future.

Mike Chinoy, CNN, Phnom Penh, Cambodia.


ANNOUNCER: Teachers, make the most of CNN NEWSROOM with our free daily classroom guide to the program. There you'll find a rundown of each day's show so you choose just the program segments that fit your lesson plan. Plus, there are discussion questions and activities, and the guide highlights key people, places and news terms. Each day, find hot links to other online resources and previews of upcoming desk segments. It's all at the Web address, where you can also sign up to have the guide automatically e-mailed directly to you each day. It's easy, it's free, it's your curriculum connection to the news. After all, the news never stops, and neither does learning.

JORDAN: Wal-Mart, Johnson & Johnson -- can you tell me what these companies have in common? Well, they both started out as family-owned businesses. In the days before mega-mergers and dot.coms, most businesses were owned by families and were handed down from generation to generation. In fact, many common last names come from a family's trade. For example, a Smith was a blacksmith or iron worker.

Today, family businesses are still flourishing. In the United States, there are 20 million of them. They make up 37 percent of Fortune 500 companies, and they account for 65 percent of all paid wages.

Well, maybe you're considering joining your family's business or one day starting your own.

Mara Wilcox introduces us to young people getting a head start in the business world by sticking close to home.


MARA WILCOX, CNN CORRESPONDENT (voice-over): It's 9:00 a.m. and Michael Olivo has already been working on this candy truck for three hours. It's not the easiest schedule for a 15-year-old.

MICHAEL OLIVO, AGE 15: It puts a lot of responsibility on myself because I have to wake up by myself at 5:30, have to set up my own alarm, get up, get dressed and be ready to leave. WILCOX: Michael spends his school vacations delivering orders to local New York stores and restaurants and taking orders from his uncle, who owns the candy distributing business.

Michael's Uncle, Marcos Rodriguez (ph), is from the Spanish- speaking Dominican Republic. Michael is proud of his uncle, who built his business from scratch after immigrating to the United States. Michael is learning everything he can about the business and teaching his uncle a few things at the same time.

OLIVO: We have some store owners that are not Spanish, so I go with him to stores, translate and stuff, you know, try to help him out with some words, teach him some English. So it's good. We both learn.

MARCOS RODRIGUEZ (through translator): He knows a lot. He's learning a lot. He's making good progress.

WILCOX: Michael's learned enough from his uncle to think that one day he might want to take over the family business.

OLIVO: I'll take it over because I've really learned how to run this business. It would be easy for me to run, and especially the way he explains it to me. He explains it -- makes it easier that what it really is.

WILCOX (on camera): But while an estimated 80 to 90 percent of all businesses are family-owned, only about one third of those businesses are passed on to the next generation. Less than one half of those will make it to the third generation.

(voice-over): Peter Binoiris worked for his father when he was a teenager, then he moved to the United States and started his own family business.

PETER BINOIRIS, BUSINESS OWNER: My father, in Greece, had a shoe store. And when I was 14 years old, I started working in it. I still remember the first sale I made.

WILCOX: Now 13-year-old Philip and 15-year-old Sofia are making sales at their father's pastry shop. By helping out after school and on weekends, Philip and Sofia have grown to appreciate their family's bread and butter.

SOFIA BINOIRIS, AGE 15: It's good because you know how hard your parents are working to make, you know, the money that sends you to school, that puts the food on your table. And I don't think a lot of people get to experience that.

WILCOX: Part of that experience is interacting with all types of customers.

PHILIP BINOIRIS, AGE 13: I'm learning how to work with people, learning how to be patient, especially when it gets really busy and you have tourists who can't -- a lot of times, can't speak the language and you have to wait for them, you have to keep telling them what's in the pastry or what the pastry's made of.

S. BINOIRIS: You get used to hearing a lot of different languages and seeing how, you know -- figuring out what's the easiest way to communicate with people who speak different languages. I mean, I haven't really noticed that I can learn that anywhere else yet. So that's really important, especially if you want to do something in foreign relations or anything.

WILCOX: Foreign relations? But what about taking over the family business?

P. BINOIRIS: It might make me want to take over the place when I get older and then keep it in the family.

WILCOX: Whether the business stay in the family or not, these New York teens are learning about their families and about their communities.

Mara Wilcox, CNN NEWSROOM, New York.


JORDAN: Well, come a little closer. I've got something to tell you. Can you keep a secret? Well, according to a new study, some of you cannot. The report says some young people are willing to divulge personal family information online, especially if there's a free gift involved.

Anne McDermott has more on who's giving out the 411 and how parents feel about it.


ANNE MCDERMOTT, CNN CORRESPONDENT (voice-over): Some parents fear Internet obscenity. Some fear the violence there. But according to a new study by the Annenberg Public Policy Center of the University of Pennsylvania, a bigger fear of parents is that their kids will reveal sensitive family information on the Web -- and some do, especially if a free gift is involved. About half the kids surveyed say they have given out such information as their parents' favorite shops or the kinds of cars their families own.

But Michael Shanahan doesn't do this. He says he knows the consequences.

MICHAEL SHANAHAN, AGE 16: You fill out all that information about yourself, you're going to get junk mail, you're going to have, you know, weird people advertising to you, you know, just more stuff that you don't want.

MCDERMOTT: But a communications professor says privacy is not just a kid problem.

PROF. WILLIAM DUTTON, UNIV. OF SOUTHERN CALIFORNIA: There's been no slowdown in the number of applications for credit cards. MCDERMOTT: And applications can reveal a lot about those who fill them out, but so can a grocery store receipt. Is privacy possible? Professor Joseph Turow, one of the study's authors, says information is the currency of the Internet.

PROF. JOSEPH TUROW, UNIV. OF PENNSYLVANIA: A famous executive from Silicon Valley said, there is no such thing as privacy anymore. Get over it.

MCDERMOTT: But Turow himself thinks some privacy can be preserved by using certain blocking devices or just by talking about the issue with everyone in the family who uses a computer. In Michael Shanahan's family, for example, they leave Internet questionnaires alone because -- well, let Michael's father explain.

PAT SHANAHAN, MICHAEL'S FATHER: It's Orwellian. Yes, we've all grown up with -- well, our generation anyways -- thinking of "1984." Of course, that's probably passe now, but it's the whole idea, the whole concept of "Big Brother" reaching in and the intrusiveness of it.

MCDERMOTT: As for those free gifts, well, Michael Shanahan figures he's not missing out on a thing.

M. SHANAHAN: I usually have money to buy what I want, so I don't trust those free things. Nothing's free anymore.

MCDERMOTT: Anne McDermott, CNN, Los Angeles.


JORDAN: Well, that'll do it for today. We'll see you back here tomorrow. Bye-bye.



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