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CNN LOU DOBBS MONEYLINE

Stocks Down Again Amidst Uncertainty of Possible War

Aired January 21, 2003 - 18:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JAN HOPKINS, GUEST HOST: It is now 6:00 in the East.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Tuesday, January 21. Sitting in for Lou Dobbs, Jan Hopkins.

HOPKINS: Good evening. Tonight, President Bush is warning Iraqi President Saddam Hussein that time is running out to disarm. The administration also issued a report on Iraqi propaganda. That report is called "Apparatus of Lies." President Bush also took issue with many of this country's foot-dragging allies.

Suzanne Malveaux is at the White House and joins us with the latest -- Suzanne.

SUZANNE MALVEAUX, WHITE HOUSE CORRESPONDENT: Good afternoon. The White House is engaged in a full-blown public relations blitz, that they are trying to make their case not only to the American people but also to U.S. allies. That case that Saddam Hussein refuses to comply with the U.N. Security Council resolution requiring him to disarm, that there are no signs that he intends to disarm, and also that international pressure is not working.

The White House creating a new office of global communications to bring that message home and also abroad. Today releasing this 32-page report called "The Apparatus of Lies." 13 years showing Saddam Hussein's defiance. And earlier today President Bush met with a group of economists trying to bring forth his economic stimulus package. But he also answered those suggestions to the U.N. Security Council members, those from France and Germany, suggesting that Saddam Hussein could be contained. President Bush arguing that history shows otherwise.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He's not disarming. As a matter of fact, it appears to be a rerun of a bad movie. He's delaying. He's deceiving. He's asking for time. He's playing hide and seek with inspectors. One thing is for certain, he's not disarming. And so the United States of America in the name of peace will continue to insist he does disarm, and we will keep the pressure on Saddam Hussein.

UNIDENTIFIED MALE: Some people may say there is no smoking gun. But there's nothing but smoke.

(END VIDEO CLIP)

MALVEAUX: And Jan, another part of the White House strategy is to bring forward the message saying, that look, they would like to do it with the support of the U.N. Security Council but the administration is willing to do without the support of the U.N. Security Council. And also, as you can imagine and as you can see, the huge military build-up that's in the region to show Saddam Hussein that the United States is serious, that it needs -- if it needs to use military action then it will -- Jan.

HOPKINS: Suzanne Malveaux, at the White House.

U.N. weapons inspectors today returned to a huge complex south of Baghdad. Inspectors visited the site more than a dozen times. The complex was listed in a dossier of weapons facilities compiled by Britain. The site was once used by scientists involved in Iraq's nuclear program.

The chief U.N. weapons inspector, Hans Blix, arrived back in New York from Iraq tonight. Blix is due to present a crucial report to the United Nations next Monday.

Senior U.N. Correspondent Richard Roth traveled with Blix and joins us now from JFK airport in New York -- Richard.

RICHARD ROTH, SENIOR U.N. CORRESPONDENT: Jan, Hans Blix from Sweden has left the hot crisis in talks in Baghdad, returned to a frigid New York here. Ten hour flight from Athens. Blix using the time to start writing reports and getting some early thoughts in mind for an important report he'll deliver to the Security Council next Monday.

Sitting near him, a woman from Atlanta who was interested in recognizing Blix and getting his autograph. Blix is still not pleased with the level of cooperation he's getting From Iraq. Upon arrival here he was asked if he's going to request more time to continue his work.

(BEGIN VIDEO CLIP)

HANS BLIX, CHIEF U.N. WEAPONS INSPECTOR: I don't know at all. I'm going to read them the report, that is, tell them like it is, as you say in the U.S., yes. Precisely. (UNINTELLIGIBLE) All the latest things will be there.

QUESTION: What will be your message to the Americans?

BLIX: My message will be directed to the Security Council. And it will be a description of what we are achieving and what problems we are facing. That's about it.

(END VIDEO CLIP)

ROTH: The fact that Blix's inspectors found thousands of documents inside the home of a scientist is going to be a part of that report to the Security Council on Monday. Blix may be one of the most important men in the news these days. But this quiet, unflappable diplomat left Kennedy Airport in a New York City taxi cab, and that is the way he travels here in New York.

There's no limousines. And you would think he would travel with an armed SWAT Team, Jan. But he's a simple man who takes taxis and checks into hotels on his own, carries his own bags, and we'll see what happens in the future. He hinted he may have to return to Baghdad, maybe in February -- Jan.

HOPKINS: Richard Roth at JFK Airport in New York. Thank you.

President Bush's comments on Iraq today revealed his frustration with some of this country's allies. Coalition building has never been easy. But it is proving much more difficult now than before the last Persian Gulf War.

Kitty Pilgrim has our report.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): It's more than a decade later, but in geopolitical terms the current crisis in the Gulf is light years from 1991. In essence, less military support. In 1991 the Allied Coalition consisted of 34 countries. Some sent troops, 43,000 from Britain, France, 16,000 troops, Kuwait, 7,000. Gulf countries Bahrain, Oman, and Qatar and the United Arab Emirates, 10,000, Pakistan, 11,000, Saudi Arabia, 118,000, Syria, 15,000, Egypt, 40,000. Added to 540,000 U.S. troops. This time around it's Britain and the U.S. Alone building up forces in the region.

Why not such an outpouring of support now?

RACHEL BRONSON, COUNCIL ON FOREIGN RELATIONS: It's a whole different situation. The Arab states did support the United States last time around because it was an invasion of another Arab state. So they had U.N. Cover. Now it's not clear that we'll have U.N. cover and we are the ones invading another Arab state.

PILGRIM: Worried about instability in the region Arab League Secretary-General Amr Moussa recently warned that a war would open a, quote, "Pandora's Box in the Middle East." Analysts point to one key difference.

SHIRLEY TELHAMI, UNIVERSITY OF MARYLAND: In this case we do not know what the end game is. And therefore, even when the regime in Iraq may collapse that's the beginning of the U.S. involvement, perhaps the international involvement, not the end of it.

PILGRIM: France yesterday hinted it might use its U.N. Security Council veto against a U.N. resolution on Iraq. Germany's Gerhard Schroeder saying flat out Germany will not vote for a war.

JAMIE RUBIN, FMR. ASST. SECRETARY OF STATE: I think Germany is the last country we're likely to get support from. I think the key is France. Just like in the last case, if France can be moved I think we'll get the majority of the Security Council, and we'll get the resolution that many people think would help.

(END VIDEOTAPE)

PILGRIM: Germany's Gerhard Schroeder said today Germany would not support a U.N. resolution in favor of a war against Iraq. However, German officials have not said that they will veto any resolution. So the thinking now is Germany might abstain in a Security Council vote -- Jan.

HOPKINS: Interesting. Thank you, Kitty Pilgrim.

The Pentagon has ordered two more aircraft carriers to the Persian Gulf region. Two other carriers are within striking distance of Iraq. The Army's 4th Infantry Division has also been given deployment orders.

Senior Pentagon correspondent Jamie McIntyre has the latest.

(BEGIN VIDEOTAPE)

JAMIE MCINTYRE, SENIOR PENTAGON CORRESPONDENT (voice-over): The USS Abraham Lincoln was scheduled to arrive home in Everett, Washington, yesterday. Instead, it was ordered from Australia back to the Persian Gulf to wait for possible war. The crew has seen it coming for months, especially since the Lincoln is the only U.S. carrier armed with the Navy's newest, most capable fighter plane, the F-18 Super Hornet.

CMDR. JEFF PENFIELD, SUPER HORNET SQUADRON COMMANDER: I think this particular squadron with these brand new airplanes, given the capability that it has, if and when something occurs, we're going to be leading from the front. And there's no doubt that we're ready.

MCINTYRE: The latest deployment orders issued late last week include a second carrier, the USS Theodore Roosevelt, now exercising near Puerto Rico, as well as nearly 20 additional cruise missile firing escort ships and submarines. All told, about 16,000 sailors. That will bring to four the number of U.s. Carrier battle groups in the Gulf Region by next month. To ratchet up the pressure on Iraqi leader Saddam Hussein.

BUSH: He's not disarming. As a matter of fact, it appears to be a rerun of a bad movie. He's delaying. He's deceiving. He's asking for time.

MCINTYRE: The pace of the deployments indicates Iraq may have more time, but not much. Deployment orders for about 17,500 soldiers from the Army's 4th Infantry Division from Fort Hood, Texas, and Fort Carson, Colorado, put most soldiers on a four-day alert while their equipment is shipped to the region ships over the next few weeks.

(END VIDEOTAPE)

MCINTYRE: And Jan, those troops don't know exactly where they're going. Pentagon sources say the U.S. wanted to send them to Turkey but there's still no agreement with the Turkish government, which faces significant opposition to the war from its own citizens. By this time next month, though, the 65,000 or so U.S. troops in the region will have swollen to about 150,000 as well as about 30,000 British troops. But of the 80,000 U.S. troops that have received deployment orders so far, only a handful have left. Most of them will leave in the next couple of weeks -- Jan.

HOPKINS: Jamie McIntyre, thank you, at the Pentagon.

Kuwait is becoming increasingly dangerous for American troops and civilians. American contract worker Michael Rene Pouliot (ph) was killed and another man was injured today when their car was ambushed in Kuwait City.

Martin Savidge has the story from Kuwait.

(BEGIN VIDEOTAPE)

MARTIN SAVIDGE, CNN CORRESPONDENT (voice-over): It was an ambush. Kuwaiti officials say that trapped two Americans in a hail of gunfire. At least two dozen bullets punched into the SUV, the pair of civilian U.S. military contractors were riding in north of Kuwait City. 46-year-old Michael Rene Pouliot of San Diego in the passenger seat was killed instantly. The driver wounded, shot at least four times in the leg, shoulder, and chest.

BRIG AL DOSARAL, KUWAIT ARMY: Nobody knows. Must be there was in vehicles, then they are standing, then they are using their weapons, behind these bushes, and then they took their vehicle to escape from this area.

SAVIDGE: Authorities believe the attacker or attackers hid in the small trees lining the highway, choosing this spot because of the intersection and traffic light that would slow potential targets.

Police say the weapon used was an AK-47 and the suspect or suspects then fled in a waiting vehicle. The incident took place just three miles from Camp Doha, the largest U.S. military base in the country. The U.S. ambassador to Kuwait called the shooting a terrorist attack.

As a manhunt began to find the assailants, the Kuwaiti government called the incident shocking and terrible and offered its condolences to the families of the victims and U.S. officials.

It is not the first time Americans have been in the crosshairs here with deadly results. Last October, U.S. marines involved in a training exercise were shot at by two attackers from a pickup truck. One marine died, another was wounded. The gunmen were killed.

Then, in November, two American servicemen were shot and wounded by a Kuwaiti police officer after he stopped the soldiers on a roadway. The suspect was later arrested in Saudi Arabia.

The latest shooting immediately raised security levels in Kuwait around U.S. forces. After receiving word of the attack, these Oklahoma national guard troops raced to take up defensive positions around the army installation they were assigned to protect. U.S. troops can beef up security but as Tuesday's incident demonstrates, no plan is perfect.

Martin Savidge, CNN, Kuwait.

(END VIDEOTAPE)

HOPKINS: In other international news, another day of diplomacy focused on North Korea's nuclear program. A delegation of North Korean officials arrived in South Korea's capital, Seoul. South Korean officials want to talk about North Korea's nuclear program, but the chief North Korean delegate indicated he was only prepared to talk about bilateral issues, such as cross-border transportation.

Coming up next -- some states are facing financial disaster, but Senator Charles Schumer says he has an idea to help. We'll talk to him about the benefits and the costs.

Riots continue in Venezuela as former President Jimmy Carter tries to negotiate an end to the nation's deadly oil strike.

Fears of war with Iraq worried investors, leaving stocks lower on wall street. Christine Romans will have a look at the market.

And the big chill comes to the northern United States, thanks to a blast of bitterly cold Arctic air. We'll have those stories and more when we come back.

(COMMERCIAL BREAK)

HOPKINS: Tonight, a blast of Arctic air is holding the northern United States in an icy grip. That frigid air mass has sent temperatures plunging. Readings in the teens and single digits the rule from Montana right through New England. It's also produced snow showers in the nation's capital and around the great lakes. Blustery winds are producing brutal, bone-chilling wind chill values, and forecasters say there is more cold weather ahead.

The cost of gasoline hit a 16-month high today as fear of war with Iraq intensified. The average price for regular unleaded gas rose to $1.45 a gallon. Crude oil prices also rose to a two-year high. They later fell after some Venezuela oil tanker pilots agreed to end a seven-week strike.

Former President Jimmy Carter is in Caracas, Venezuela, to help bring an end to that general strike. Meanwhile, a man was killed yesterday in clashes between progovernment and anti-government demonstrators. At least six people have died since the general strike began.

The Venezuelan strike and a possible war with Iraq are sparking renewed calls to tap into the nation's strategic petroleum reserve. Senator Charles Schumer of New York is one of those who believes it's time to tap into that reserve.

Earlier I spoke to the senator and asked him why. (BEGIN VIDEOTAPE)

SEN. CHARLES SCHUMER (D), NEW YORK: Well, we don't really even have to tap it, Jan. All we have to do is put it on the table and say we might use it as a weapon should things get out of hand.

Right now, we have a crisis where not only is there indecision about Middle Eastern oil, but of course Venezuelan oil has been cut off. And OPEC really controls the situation here. They can determine how much oil to let out. If they know that if prices go too high that we'll start using our strategic petroleum reserve, if the past is any indication, they actually increase output. Because once they know the price will come down, they'd rather make the money themselves than have our SPR, our government, make the money.

HOPKINS: Well, and in fact, a few years ago you proposed tapping the strategic oiling reserves, it was done, and prices came down, right?

SCHUMER: Prices went down anywhere between 10 percent and 25 percent, and they stayed down. And it was a lesson to OPEC that we would mix in during certain situations.

And what I've found troublesome, vexing, I guess, is that the president has said we will not use the strategic petroleum reserve. That's like giving OPEC a green light to raise prices.

HOPKINS: But, on the president's side, he's saying that this is for emergency and if we're at war with Iraq maybe we need those reserves at that point and we don't now.

SCHUMER: Well, two things.

First, the law was -- may have been ambiguous when it was first passed if it could be used for non-war situations, for economic situations. But the law has been changed, and it's clear now it can be used for the kind of situation we have now where Venezuela has just shut off the spigot.

Second, in 19 -- 2000, when I urged the president to do that, they used 30,000 barrels of oil, it was so successful that they got back more oil, they did a swap and got back more oil than they had. So out of our reserves, which are now close to 600 million barrels, all we'd need is about 30 million barrels. So it's not in one way or another jeopardizing need for oil should we come to war.

HOPKINS: Now, you and Senator Snowe are proposing that states be given quite a lot of money in order to help balance their budgets. Why is it such a crisis in the states' budgets, and where is this money going to come from?

SCHUMER: OK.

The crisis in the states occurs because of the general economic downturn and because many, many, many of the states, not just New York and California, but many are dependent on, you know, the financial returns, capital gains taxes, and things like that, all of which are weighed down with the stock market bubble being burst.

Why is this a good idea? To put -- where the money would come from, is we think it should be part of the stimulus package. The president's proposed a $670 billion package. We're proposing only $40 billion of that go to the states.

And why is that the right thing to do? Three reasons.

First of all, it's immediate money into the system. If you want to get the economy going, a one-year influx into the states, who by the way now have a $90 billion deficit and then the localities have even more, so they have a huge deficit, they'll spend it right away. So it pumps the money out in established programs.

Two, it doesn't increase the structural deficit, because if you do this for one year, unlike a permanent tax cut, it doesn't change the budget, hopefully, when the economy turns around and becomes prosperous in 2005, 6, 7, 8, et cetera. And third...

HOPKINS: This is not in the president's stimulus package?

SCHUMER: It is not. He originally had put some money in, and they took it out at the last minute. And so Senator Snowe and I and many people, this is a bipartisan issue, think it should be, and it's one of the best tools we have to get the economy going.

The third grounds I was going to mention is the fact that it seems to be, you know, that the states do have a crisis and if they're all to raise taxes, it would undo a lot of the tax cuts that would occur in this fiscal year now and you wouldn't want to rob Peter to pay Paul.

So it makes sense from just about every grounds. And we're gaining a lot of support from the governors, from the mayors, and a lot of bipartisan support on Capitol Hill.

HOPKINS: Thank you very much. Senator Charles Schumer, a Democrat of New York.

SCHUMER: Thank you, Jan.

(END VIDEOTAPE)

HOPKINS: Liberal Senator Edward Kennedy today launched a bitter attack against President Bush's policies. Kennedy called a possible war with Iraq -- quote -- "a wrong war at the wrong time." Kennedy also criticized the president's tax plan, saying that only the rich will benefit.

Kennedy today also said that he believed that Senator John Kerry will win the Democratic nomination in 2004. Today, Reverend Al Sharpton officially launched his bid for the Democratic nomination. The 48-year-old civil rights leader said that he is the only anti-war, anti-death, anti-tax cut candidate.

We'll hear more about sharp ton's candidacy tomorrow on MONEYLINE. Reverend Al Sharpton will be our guest.

And turning now to our MONEYLINE poll -- first, the final results of Friday's question. Do you think that American culture is declining, improving, or about the same? Seventy-eight percent of you said declining; only 7 percent said improving and 16 percent said about the same.

Tonight's question tackles the debate over genetically modified crops. We ask: "Why do you think some African nations are rejecting genetically modified crops? Because of health concerns or politics?" Please cast your vote at cnn.com/moneyline. Later in the broadcast, we'll be joined by an expert on bioengineered foods, Dr. Henry Miller.

Coming up next -- a leading prescription drugmaker tries to stop Americans from ordering cheap medicines from Canada.

Also, Democrats target the president's economic policies. Tim O'Brien has the details -- Tim.

TIM O'BRIEN, CNN CORRESPONDENT: Jan, the debate heats up on the administration's economic package. Democrats laid out their case against it today and promise a fight -- Jan.

HOPKINS: Thanks, Tim.

And we'll have the latest evidence of the growing influence of Hispanics in American society. All coming up next.

(COMMERCIAL BREAK)

HOPKINS: Much more is still to come on MONEYLINE tonight, including the latest on how to limit medical malpractice awards. Casey Wian has a report on how California is tackling the problem -- Casey.

CASEY WIAN, CNN CORRESPONDENT: Jan, here in California medical malpractice insurance premiums are lower, adjusted for inflation, than they were 25 years ago. We'll tell you why -- Jan.

HOPKINS: Thanks, Casey.

We'll have that report and a lot more in a moment.

(COMMERCIAL BREAK)

HOPKINS: Hispanics have surpassed African-Americans as the nation's largest minority. The Census Bureau says that as of July 2001 there were 37 million Latinos in America. That compares to 36 million blacks. Hispanics now account for about 13 percent of the country's population. And with high birth and immigration rates, experts say that the numbers will continue to rise.

President Bush will propose boosting federal spending by 4 percent in his fiscal 2004 budget. White House Budget Director Mitch Daniel says the military and homeland security will see the biggest increases. The announcement comes as the debate heats up over the president's economic stimulus package.

Tim O'Brien has a report from Washington.

(BEGIN VIDEOTAPE)

O'BRIEN (voice-over): The Democrats made it clear they do not think the president's economic plan will work and they're poised to fight it.

SEN. BYRON DORGAN (D), NORTH DAKOTA: The plan to put the economy back on track and jumpstart the economy should be temporary, should be short-term. It should be fair, and most importantly, it ought to be effective.

President Bush's plan, regrettably, in my judgment, is none of these.

O'BRIEN: the Democrats specifically claim that cutting the tax on dividends is long-term, benefiting the wealthy, and that accelerating previously approved tax cuts will do more harm than good.

SEN. FRANK LAUTENBERG (D), NEW JERSEY: His current proposal will cost upwards of a trillion dollars, won't stimulate the economy, will help the wealthiest among us, won't help out of work Americans very much, and it will wreck the long-term health of our economy.

SEN. KEN CONRAD (D), NORTH DAKOTA: Mr. Orzag, what do you anticipate would be the increase in economic growth created by this proposal?

UNIDENTIFIED MALE: Over the long term, because it's not paid for, I think the effect would be a negative number. So you had asked for what the increase would be, but it's of the wrong sign.

O'BRIEN: As Democrats railed against the administration's plan, Mr. Bush was sounding out some of the country's leading economists at the White House...

BUSH: It is a plan that addresses our needs, and it's a plan that Congress needs to pass.

O'BRIEN: ...who lined up in the blowing snow to shower praise on the Bush plan.

ALLEN SINAI, CEO, DECISION ECONOMICS: Our calculations say it's easily 600,000, 700,000 extra jobs a year for the next five years.

MARTIN FELDSTEIN, PRES. NATL. BUREAU OF ECON. RESEARCH: And I certainly hope that the president is successful in getting the Congress to enact it quickly so that people have confidence that it's there.

O'BRIEN: Yes, they were all talking about an identical tax plan. Their warring points of view surely to reverberate throughout the Capitol and elsewhere as the debate over what to do about the economy heats up. (END VIDEOTAPE)

O'BRIEN: It could be a replay of the bitter partisan debate that doomed previous stimulus plans, only this time the Republicans control both houses of Congress.

The administration's full-court press on the economy is expected to be the centerpiece of the president's State of the Union address one week from tonight -- Jan.

HOPKINS: And the betting is that there will be some kind of stimulus package?

O'BRIEN: his time we do think something will get through. The mere arithmetic favors that with the Republicans in control of both Houses. There will be some compromises, but the White House has the upper hand.

HOPKINS: Thanks. Tim O'Brien in Washington.

And coming up next -- a severe drought is devastating Ethiopia. Tonight, millions of people face starvation. And the United Nations is issuing an urgent appeal for help.

Meanwhile, the European Union and developing nations are refusing to accept genetically modified foods from America. The former director of the FDA's Biotechnology Office, henry miller, will join us next.

(COMMERCIAL BREAK)

HOPKINS: President Bush is proposing limits to the amount of money patients can win in medical malpractice lawsuits. California passed a similar measure years ago to help these rising malpractice insurance costs. Casey Wian looks at whether it's worked.

(BEGIN VIDEOTAPE)

WIAN (voice-over): From buying a house to driving a car, it's more expensive to do most things in California. But practicing medicine here is a bargain because unlike in many states, medical malpractice insurance rates adjusted for inflation are lower than they were 25 years ago.

In 1976 California faced a malpractice insurance crisis of its own, with high premiums forcing doctors out of business. Doctors blamed frivolous lawsuits and big jury awards for pain and suffering.

ALAN MILLER, CHMN., UNIVERSAL HEALTH SERVICES: If you can get a jury to be sympathetic to the individual and then you can get a paint the case as a large institution, insurance company against the institution with a good lawyer who makes a good story, it's break the bank.

WIAN: So California capped noneconomic malpractice awards at $250,000. Damages for lost wages or increased medical costs remained unlimited. Now the typical surgeon in Los Angeles County pays about $37,000 a year in malpractice premiums compared to 88,000 in Wayne County, Michigan and 174,000 in Dade County, Florida.

DR. JACK LEVIN, CEO, CALIF. MEDICAL ASSN.: It has worked better than any tort reform legislation, anywhere in the country. People who are injured get compensated fairly. But it's kept premiums down so that doctors can still be in practice and community clinics and public, particularly the safety net, doesn't go bankrupt.

WIAN: Trial lawyers and consumer advocates are fighting the Bush administration's proposed cap on noneconomic damage awards nationwide. They've seized on the recent case of Linda McDougal who was misdiagnosed with breast cancer and underwent a double mastectomy as an example of why $250,000 is not enough for pain suffering. They also credit stricter regulation of the insurance industry, not the cap on malpractice awards for California's lower premiums.

JAMIE COURT, RDN. FOR TAXPAYER & CONSUMER RIGHTS: It's not frivolous lawsuits that are driving this crisis. It's frivolous insured business practices by unregulated insurance companies and if we had better regulation we'd take care of this problem.

(END VIDEOTAPE)

WIAN: Democrats are expected to counter the White House with proposals for more insurance industry regulation. Also they're proposing or expected to propose a national malpractice insurance program that would offer a similar to the way flood insurance now operates and also are expected to propose premium rebates for doctors -- Jan.

HOPKINS: But as you were reporting, Casey, the way that it works in California seems to be working.

WIAN: Absolutely. It's just a matter of which reform measure you give credit to, the trial lawyers and the consumer advocates say it's tighter regulation of the insurance industry. The doctors say that it's capping those damage awards.

HOPKINS: Casey Wian in California. Thank you.

Americans who take prescription drugs made by GlaxoSmithKline will no longer be able to buy them through Canada. Glaxo says it will stop selling its drugs to Canadian pharmacies that sell them at a discount to Americans through the mail or over the Internet. In a statement Glaxo said it, quote, "understands the concerns of Americans without prescription coverage," end quote, but it says ordering the drugs from Canada is not, quote, "the answer and puts patients at risk," end quote.

Turning to Africa now. The U.N.'s food agency today said that millions of people in Africa are in danger of starvation. Ethiopia is one of the hardest-hit countries. Poor rains have reduced the harvest in grain-producing areas. Catherine Bond has the story from Ethiopia.

(COMMERCIAL BREAK) CATHERINE BOND, CNN NAIROBI BUREAU CHIEF (voice-over): Nothing to wash in, nothing to drink.

"And nothing to eat," says Rukia (ph), "except a little food aid."

The ponds now bowls of baked earth, trees tend to dry, the dust choking. Many parts of Ethiopia are suffering drought.

In this area some 200 kilometers south of the capital the situation is more severe than in 1984, when about 1 million Ethiopians died from famine. The difference now -- mass starvation has been held at bay because relief food is already being handed out though it's not much.

"If we're lucky, we eat bread once a week," says this man. "But mainly we survive on cracked wheat."

There may be hunger. There's also plenty of grain on sale for those who have money to buy it. Even vegetables. Few here can afford them.

Nafisa (ph) makes her way to market to sell firewood. To buy water for her children to drink. Without fodder and water livestock numbers are declining. Those cattle left are skeletal, fetching lower prices.

(on camera): In better times there would be about 6,000 cattle being traded here at this major market in Southern Ethiopia. But times are hard, and the numbers have dropped.

(voice-over): Farmers watch their cows being sold for the equivalent of a few dollars each.

"It's nowhere near enough," says this farmer. "In good times they fetched ten times that. I'm just selling them instead of watching them die."

These villagers are thankful for the lifeline of food aid, but they don't want to depend forever on the outside world's goodwill to survive.

Catherine Bond, CNN, Dera, Ethiopia.

(END VIDEOTAPE)

HOPKINS: U.S. Trade Representative Robert Selig has accused Europe of bullying African countries to refuse American food aid. The European Union has denied the charge. But the argument reveals the huge differences over genetically modified crops.

Joining us now is Dr. Henry Miller, a fellow at the Hoover Institution at Stanford. He was founding director of the Office of Biotechnology in the Food and Drug Administration. Welcome, Dr. Miller.

DR. HENRY MILLER, THE HOOVER INST., STANFORD UNIV.: Thank you, Jan.

HOPKINS: The U.N. is saying that it wants food aid for Africa but it wants to make sure that the food aid is safe. Now, does that mean that bioengineered products from the United States would be rejected?

MILLER: Well, they have been rejected in Zambia and Zimbabwe already. And it's ironic that one of the villains of the piece is the United Nations itself along with the European Union. The U.N. has been instrumental in creating excessive regulation that has been anti- innovative and that has in fact demonized genetically engineered foods.

HOPKINS: Well, people want to make sure that the food is safe, but is there any way to guarantee that bioengineered food is safe?

MILLER: Well, agriculture is traditionally one of the safest undertakings in our society. Those of us who do home gardening know that.

The new biotechnology, or gene splicing, is an extension or an improvement, a refinement really of the kind of genetic improvement that has gone on for a very long time. There's almost nothing in our diets except wild game, fish, and shellfish and wild berries that in fact is not genetically improved in some way. The new biotechnology, gene splicing, really enables us to do what we've done for a long time but much more precisely and in a far more predictable way.

By analogy, the regulatory schemes that have been introduced are as though when automobiles first introduced disc brakes, radial tires and seat belts, as though we instituted a completely new and excessive regulatory paradigm just because...

HOPKINS: But there's a lot of concern over whether the food is safe. Can we really say for sure that bioengineered food is safe?

MILLER: Well, this is the food that you and I and 100 million -- hundreds of millions of Americans eat every day. The genetically improved gene spliced corn and soybeans and other products are in our supermarkets. More than 60 percent of the processed foods in our supermarkets contain genetically engineered ingredients. If that's not safe, I don't know how much more proof you could want.

HOPKINS: Well, but there are a lot of other countries where they don't want bioengineered food. But in the situation where you have famine in Africa to reject food aid seems like an outrage, doesn't it?

MILLER: It's a moral outrage. It is. And it's partly concern about trade issues and partly just power politics played by the E.U.

HOPKINS: So do you think it's mostly politics we're talking about and not really health concerns?

MILLER: Oh, the health concerns are -- have been dealt with. Once again, this is really an improvement over genetic modification with which we are all familiar and all over products that we consume routinely.

But there's an addition to the politics, there are real trade concerns by some of these African countries. The Europeans have made it very clear that if farmers in Africa and elsewhere in the developing world plant these genetically engineered crops that they will in effect contaminate exports to the E.U. And these countries will be shut out of exports to the European Union. That is a great fear and a potent one.

HOPKINS: Dr. Henry Miller of the Hoover Institution at Stanford University. Thanks for joining us.

MILLER: Pleasure to be with you.

HOPKINS: We want to hear from you on this subject. Why do you think that some African nations are rejecting genetically modified crops? Because of health concerns or politics? Cast your vote at cnn.com/moneyline. We'll bring you preliminary results a little later in the broadcast.

And still to come on MONEYLINE, airport screeners find a (UNINTELLIGIBLE) in a pilots baggage. We'll have details. We'll also have a report on the latest marketing alliance.

Bill Tucker, has the story -- Bill.

BILL TUCKER, CNNfn CORRESPONDENT: Jan, three airlines plan to sell seat on each others flights but not everyone is happy, Jan.

HOPKINS: Thanks, Bill.

And tonight, more bad news from the music industry. Peter Viles, has that story -- Peter.

PETER VILES, CNNfn CORRESPONDENT: Jan, a very big bankruptcy in the music business today. And it's causing some analyst to forecast the CD, the compact disc, could go the way of the 8-track tape -- Jan.

HOPKINS: Thanks, Pete.

And we'll have a live report from Anderson Cooper at the Sundance Film Festival in Park City, Utah. We'll have the details of the latest independent movies and celebrities attending the festival.

(COMMERCIAL BREAK)

HOPKINS: Tonight a Northwest Airlines pilot facing weapons charges after trying to carry a gun on a plane. Robert Donaldson was scheduled to co-pilot a flight from New York to Detroit. He was arrested when a loaded handgun was discovered in his carry-on luggage. Donaldson could face up to 15 years in prison. The New Homeland Security bill will allow pilots to carry weapons on board, but that rule is not in effect yet.

Increased security at airports has only added to the financial woes of the airlines. Now more carriers are teaming up and marketing alliances to try to save money. Continental, Delta, and Northwest are the latest to announce a code sharing alliance.

Bill Tucker has the story.

(BEGIN VIDEOTAPE)

TUCKER (voice-over): American Airlines and Japan Airlines have one. So do United and U.S. Airways, and they're both in bankruptcy. Code sharing is, as one analyst described it, the wonder bra of the airlines, making them appear larger than they really are.

DAVID STEMPLER, AIR TRAVELERS ASSOCIATION: The way we're going with these domestic code shares, international code shares, and even alliances, all these airlines are sort of blending into one and we're probably going to be flying on "Generic Air" anyway in the future.

TUCKER: Whether the planes will end up looking like this is questionable. But it is clear that airlines like code sharing arrangements because, well, they say size matters, they don't have to merge to provide the service, and the airlines remain free to compete for the passenger dollars.

RUDY MAXA, TRAVEL NEWSLETTER PUBLISHER: In a capitalist society competition is regarded as a virtue and airlines can still compete on some things, whether it's frequent flyer programs, the occasional amenities, you know, or a nicer airport lounge.

TUCKER: But for all the reasons airlines have to code share, not everyone wants to, and the reason -- competition. Airlines like Southwest have a different business model and they're very happy that way.

RAY NEIDL, BLAYLOCK & PARTNERS: They've got their unique product. They want their own planes. They want their own employees. They want to control that customer. And their product, frankly, wouldn't be attractive to most other airlines because it's a simple type of product, no assigned seatings, no meals, peanuts, and lots of smiles by the flight attendants.

(END VIDEOTAPE)

TUCKER: Service with a smile. Now, there's a thought. It's not a business model. It's not even an original thought, but it would seem to be a key ingredient along with a handful of frequent flyer miles for building some brand loyalty, unless, Jan, you're looking for that assigned seat.

HOPKINS: But airline models just really don't work. Airlines are notoriously unprofitable.

TUCKER: They really are. And it's a (UNINTELLIGIBLE) problem for them. Southwest and JetBlue seem to be the winning formula.

HOPKINS: But will it last?

Bill Tucker, thanks.

Still to come, Peter Viles joins us with a report on the ailing music industry.

VILES: A major music retailer today filed for bankruptcy, and it blamed among other things illegal downloading and CD burning.

HOPKINS: The movie industry, on the other hand, is celebrating at Sundance, where its hottest independent films are debuting.

Anderson Cooper joins us live from the film festival right after the short break.

(COMMERCIAL BREAK)

HOPKINS: Stocks fell for the fourth straight session. Financial and energy stocks dragged the market lower. $150 billion in market capitalization was erased.

Christine Romans is here to tell us what's behind the sell-off.

CHRISTINE ROMANS, CNNfn CORRESPONDENT: Well, you know, Iraq really overshadowing some of the earnings news here today, and even a blockbuster report on housing. Housing starts the strongest in 16 years. Even that really couldn't get things lit here today. Oil prices at two-year highs, that's a problem. Four down days now, three of those days have been triple-digit declines. You had all the Dow stocks lower here today. And indeed 1.3 billion shares changing hands on the big board. That, Jan, is a little bit less than average. But two stocks fell for every one stock that rose today.

HOPKINS: And we're hearing from companies about earnings, and they aren't so bad, and yet the market goes down.

ROMANS: Right. They're not so bad for the fourth quarter, but they're concerned now, the investors are at least, about the first quarter and the second quarter. Johnson & Johnson profit up about 30 percent on record sales. 3M, profit also up double digits and forecasting double-digit profits for next year.

Citigroup's profit fell 37 percent. Of course, there's that big settlement with regulators. But revenue actually grew for Citigroup. And Ford's loss narrowed, Jan, even as it raised targets for 2003, but some of the analysts are not convinced that Ford can make it for 2003. Tomorrow Eastman Kodak, JP Morgan, AMR, Coach, Pfizer, the list goes on and on. We'll get a quarter of the Dow stocks in just the next couple of weeks.

HOPKINS: Maybe a better day. Thanks, Christine Romans.

A federal judge today denied the request of WorldCom's former chief financial officer to move his trial. Scott Sullivan argued that a Manhattan trial would impose a financial hardship on his family and his ailing wife. Prosecutors said that Sullivan, once the highest paid CFO in the United States, could afford a trial in New York. Sullivan is one of 36 executives charged in all of corporate America, four of them from Enron. It's now been 415 days since Enron's collapse. More bad news today from the battled music business. Music retailer Wherehouse filed for Chapter 11 bankruptcy protection, citing a litany of woes that might as well apply to the entire music industry.

Peter Viles has the report.

(BEGIN VIDEOTAPE)

VILES (voice-over): OK, here's the good news for music retailers. Bruce Springsteen put out a CD last year.

Now the bad news -- discount retailers, including Best Buy, were selling the Springsteen CD for $6.99 over Christmas. Put that price pressure together with Internet downloading, you've got a crisis that forced music retailer Wherehouse into bankruptcy Tuesday.

In its filing, Wherehouse cited the problems nagging the entire industry: illegal music downloading, CD burning, and brutal price pressure from discounters who can afford to sell some CDs at a loss.

STACEY WIDLITZ, SG COWEN: To my knowledge, right now, I mean, most of the players are simply using CDs and DVDs, in a large part, as traffic drivers in order to sell other things in the store that actually do have a margin, and they make money on.

But so far, right now, CDs are really used as a traffic driver.

VILES: The big music labels are trying to agree on, then develop and then promote a system of legal and profitable downloading. But it's not clear whether they can stop piracy or whether anything can save old-fashioned record stores or, for that matter, the compact disc, which is suddenly at risk of going the way of the record album and the cassette.

COLIN MCGRANAHAN, SANFORD BERNSTEIN: We're not exactly sure what the future of music looks like, whether there's going to be a subscription service or whether you're going to be able to download singles, but the practice of buying prerecorded music on little pieces of plastic in the mall is pretty much destined for the scrap heap. It's pretty likely that it's not the way music is going to be sold in the future.

(END VIDEOTAPE)

VILES: The music industry did win a big legal victory today in its war on piracy. A federal judge sided with the industry and against Verizon, the phone company, ordered Verizon to identify the customer who allegedly downloaded 600 songs on a single day. Verizon says it will appeal that ruling, in part to protect the privacy of its online customers when they surf the Web.

HOPKINS: Interesting. Thanks, Pete.

Silly films ruled the box office over the holiday weekend. The Australian adventure "Kangaroo Jack" jumped right to No. 1, making nearly $22 million in its debut. "Jack" easily outpaced the Martin Lawrence comedy "National Security," which made $17 million. "Just Married" added $13 million to its two-week take. "Catch Me If You can" followed in fourth with $12 million. And "Lord Of The Rings: The Two Towers" boosted its five-week total to more than $300 million.

The Sundance Film Festival is the world's most prestigious showcase for independent filmmakers. Robert Redford created the Sundance Institute more than 20 years ago to support promising filmmakers outside of Hollywood.

Anderson Cooper is at the festival in Park City, Utah -- Anderson.

ANDERSON COOPER, CNN CORRESPONDENT: Hi, Jan.

I think I can guarantee you "Kangaroo Jack" is not a Sundance film. I think I can guarantee that pretty much.

You know, this is a town that takes moviegoing, moviemaking very seriously indeed. They start showing movies here during the festival around 8:30 in the morning. It goes to well past midnight. They take the movies very seriously, and there's very serious dealmaking going on here as well.

You know, this is the place where a lot of independent producers, directors come, show their films, hope that a Hollywood executive is going to see it and pick it up for distribution. That has happened to one film here called "The Cooler" with William H. Macy. It's really the first film here that's been picked up by a big distributor; Lion's Gate Films picked it up for about a reported $1.5 million.

I just talked to the president of Lion's Gate Films about half an hour ago; he said he is very excited about this film. He thinks it has both indy credibility and independent film credibility, it's going to show in art houses but he thinks it can cross over, show in multiplexes around the country. That's why they paid an estimated $1.5 million for that.

Another movie a lot of people are talking about here, and there is reportedly something of a bidding war going on for it right now -- a film called "Pieces Of April," with Katie Holmes, Oliver Platt, sort of a dark film, but a lot of buzz about that film.

And, as I said, something of a bidding war. And that's kind of a danger here at the Sundance Film Festival. I'll tell you why. Last year there was a film called "Tadpole." a lot of people talked about it, a lot of people here at the festival said they loved it. There was a bidding war, Miramax ended up paying about $5 million for that film. It really didn't do anything at the box office in America, made about $2.8 million nationwide.

So it's very easy for Hollywood executives to get caught up in the excitement of the festival and overpay or not pay attention to the bottom line. But so far we don't have word on yet whether there's a deal on this movie, "Pieces Of April." there are a couple of other films people are looking at. But you know, for something that started off 20 years ago as a small fringe festival for independent filmmakers, it is now a destination for Hollywood celebrities, for A- list directors, A-list executives. They all come here.

A lot of companies now are coming here trying to get sponsorships. GM is offering free Hummer 2s for the use of celebrities for the time that they're here. Robert Downey, Jr. was driving around in a Hummer 2 the other day. A lot of companies here, a lot of dealmaking. There is money to be made here at Sundance -- Jan.

HOPKINS: Thanks. Anderson Cooper at the Sundance Film Festival. We're keeping you away from the movies.

Tune in Thursday, when actor Danny Glover will join us live from Sundance. His new movie, "Good Fences, " premieres at the festival. The film's director, Ernest Dickerson, will also be with us.

"CROSSFIRE" begins in a few minutes. For a preview, let's go to Paul Begala and Tucker Carlson in Washington -- Paul.

PAUL BEGALA, CNN CO-HOST, "CROSSFIRE": Well, Jan, the big debate, of course, in Washington is: war or peace? One of the tiny debates underneath it is do celebrities have a right to take a side in this? We will have a major international celebrity, Bianca Jagger, who thinks war's a bad idea.

And then a pretty weighty debate: weightlifting versus running. Our president says that running every day helped him quit alcohol and cigarettes. We have a weightlifting expert who thinks that's a bad idea. We'll tell you why.

TUCKER CARLSON, CNN CO-HOST, "CROSSFIRE": And then, Jan, huge news here on "CROSSFIRE." the leading Democratic presidential candidate, Al Sharpton. He'll appear on the show that launched his rebirth, his run for the White House 2004. He will join us here in Washington. That's going to be an explosive "CROSSFIRE" on the very day he announced for president. Don't miss it.

HOPKINS: We won't. Thanks. Tucker Carlson and Paul Begala. "CROSSFIRE" coming up.

And still to come on MONEYLINE, the results of the MONEYLINE poll and your e-mails.

(COMMERCIAL BREAK)

HOPKINS: Now the preliminary results of tonight's MONEYLINE poll.

We asked: "Why do you think some African nations are rejecting genetically modified crops?" Forty-seven percent of you said because of health concerns. Fifty-three percent said politics. We'll bring you the final results in tomorrow's broadcast.

We received many e-mails about our special report on the decline of culture in America. Scott from Austin, Texas, says: "Decline or improvement is in the eye of the beholder. Who doesn't remember their grandparents or elders making racial slurs 20, 30 or 50 years ago? How far we have come when such comments are considered vulgar and offensive by those same little boys and girls who utter expletives that I didn't even know when I was their age."

And Sara in North Dakota writes: "Having Bob Knight on your program to discuss sportsmanship in athletics is like naming Ken Lay 'CEO of the Week.'"

E-mail us at moneyline@cnn.com.

That's MONEYLINE for this Tuesday evening. I'm Jan Hopkins in for Lou Dobbs. For all of us here, good night.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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