ANNOUNCER: GE is proud to support the McLaughlin Group. From to aircraft engines to appliances, GE: We bring good things to life.

MR. MCLAUGHLIN: Issue one: Is it the Panama Canal or the China canal?

REP. DANA ROHRABACHER (R-CA): (From videotape.) I can guarantee you that within a decade, a communist Chinese regime that hates democracy and sees America as its primary enemy will dominate the tiny country of Panama and thus dominate the Panama Canal.

MR. MCLAUGHLIN: The communist Chinese running the Panama Canal? That's not what President Carter had in mind 22 years ago, when he and the U.S. Senate agreed to give the canal back to Panama in the then-distant 1999.

Even in '77 the Panama Canal Treaty was deeply controversial. It squeaked past the Senate by one vote.

But this coming Tuesday, when America ceremonially hands the canal over to Panama, many are worried and angry the prized waterway will fall straight into Chinese hands. Just two years ago a firm from Hong Kong, now ruled by the Chinese, bought a 25-year contract on two ports on both ends of the canal, Balboa in the Pacific and Cristobal on the Caribbean. That move disturbed many security experts.

Former secretary of Defense and director of the Office of Management and Budget Caspar Weinberger calls the Hong Kong company's authority grab over the two ports "the biggest threat to the canal." Weinberger adds that the Chinese would not, quote, "pass up a chance to acquire a major foothold in one of the world's three major naval choke points. It suits their diplomatic, economic, military, and intelligence interests."

But President Clinton is not worried.

PRESIDENT BILL CLINTON: (From videotape.) It's important for the American people to understand that the canal itself will be operated and controlled entirely by the government of Panama, through the Panama Canal Authority; that is, the locks, ingress and egress, access, openness to the canal, is completely and totally within the control of the Panamanians.

MR. MCLAUGHLIN: Like Clinton, supporters of the hand-off say that Panama, not China, will hold control of the canal.

One, no diplomatic ties. Panama doesn't even officially recognize China. They exclusively interact with Taiwan.

Two, open canal. Panamanian law prevents the Hong Kong firm that bought port authority on each end of the canal, Hutchison-Whampoa Limited, from barring any ship entry to the canal. And no ship is obligated to use the Hutchison port. There are other ports on each side.

Three, U.S. dominance. The Panama Canal Treaty guarantees U.S. warships the right to enter the canal in times of need, ahead of all other ships. Note that President Clinton, in his press conference last Wednesday, said that the canal will be run by the government of Panama; the locks, ingress, egress, access. But on the preceding Tuesday, eight days before, Mr. Clinton said this; namely, it was not the Panamanians; it was the Chinese who are running the canal.

PRESIDENT CLINTON: (From videotape.) I think the Chinese will in fact be bending over backwards to make sure that they run it in a confident and able and fair manner. And I would be very surprised if any adverse consequences flowed from the Chinese' running the canal.

MR. MCLAUGHLIN: Question: So did Clinton misspeak earlier, or does he know more than he cares to reveal, Michael Barone?

MR. BARONE: Well, I think he was misspeaking, John, and perhaps falling into a characteristic mode of always defending the Chinese, you know, the people he had to spend nine days with, without stopping in any other country in the Far East, in 1998.

But I stand on this issue with Mark Falcoff of American Enterprise Institute, who I think is the -- best expert on the canal; and that is that, even if this company has some -- the Hutchison-Whampoa has some maligned links with the Chinese Communist government, that this is not really as dangerous to us because the Panama Canal is no longer an essential canal to the United States either in military terms -- we haven't had a carrier that can get through it since 1976 -- or in economic terms. Its effect on our overall trade is very limited now. It's a symbol of great American achievement at the beginning of this century and one that's important in our national life, but it's no longer an economic or military necessity.

So even if the Panamanians, who are now unknown for corruption as Mr. Clinton is not unknown for corruption; even if the Panamanians let the Chinese take this over, we are not in deep trouble.


MS. CLIFT: Well, the Wall Street Journal called the canal a "commercial convenience." So I agree. Even if the worst scenario that you paint comes true, that it is somehow taken out of Panamanians' hands and taken over by the Chinese, U.S. interests would not be affected.

But this notion that there is a Chinese takeover is a completely bogus argument. The company is a large container corporation, one of the largest in the world. It operates three major ports in Britain. There are not going to be Chinese pilots or Chinese troops associated. Everybody piloting the ships will be Panamanian.

And China, why would they want to sabotage a Panamanian canal? How does that advance their interest?


MR. BLANKLEY: I think Michael slightly overstates the lack of a problem. He's correct it's no longer a major military convenience. However --

MR. MCLAUGHLIN: Well, what about in shipment of supplies --


MR. MCLAUGHLIN: -- to the Pacific Ocean --

MR. BLANKLEY: No, it's --

MR. MCLAUGHLIN: -- from the East Coast, through the canal?

MR. BLANKLEY: Well, what I was going to say was, the experts, in the same Wall Street Journal article that Eleanor talks about, says it would -- if there was a disruption, it would be a substantial economic disruption for a short to medium period of time, after which we would readjust. So it is still a useful choke point for a potential enemy. And the question has to come: Why, given that it has any value at all, would we want to risk turning it over to the Chicoms?

MR. O'DONNELL: B, there is no risk turning it over to them. This is being turned over to the sovereign state of Panama. This is a 10-mile --


MR. BLANKLEY: Say that with a straight face!

MR. O'DONNELL: -- 10-mile-wide strip, 50 miles long, in the middle of a country, that has been operated by another country all this time. This is a deal we made, wisely, when the canal had already become largely irrelevant. You have to forget that there are any cargo planes in the world if you're going to worry about the canal.

MR. MCLAUGHLIN: Look, were you in the Senate when this was voted through?

MR. O'DONNELL: No. Before my day.

MR. MCLAUGHLIN: You know it passed by one vote, as you saw from that brilliant setup.

MR. O'DONNELL: Because it was overly politicized then, John. The big super ships don't even fit through it, John.

MR. MCLAUGHLIN: Did you think it would have passed the Senate if the Senate was told that a Hong Kong company --


MR. MCLAUGHLIN: -- Hong Kong now being under the control of China --

MR. BARONE: Well --

MR. MCLAUGHLIN: -- and bear in mind, there's no such thing as a private corporation in a totalitarian state, headed up by a man by the name of Li Ka-Shing, who we'll talk about in a minute -- do you think it would have passed?

MR. O'DONNELL: John, Hong Kong -- absolutely. Hong Kong still is --

MR. BLANKLEY: Look, wait, wait --

(Cross talk.)

MR. MCLAUGHLIN: Okay. Another view: Don't kid yourself. China is trouble.

One, pattern of expansion. China has been creating footholds throughout the entire Pacific region -- in Burma, the Paracel Islands, the Spratly Islands, Tarawa in the Central Pacific. They also have a major ocean mining tract off the coast of Hawaii.

Two, communist ties. The chairman of Hutchison-Whampoa, an entrepreneur named Li Ka-Shing, also indirectly owns a massive share of the company and has many connections to Beijing's inner political circles.

Three, rigged bidding. The State Department continues to object to the quote, unquote, "improper and highly irregular" bidding process through which Hutchison-Whampoa won control over the two ports.

Question: Western leaders in the 1930s ignored the ominous signs of Japan's military buildup. Then came Pearl Harbor. Aren't we making the same mistake now with China; namely, appeasement on everything -- MFN, WTO, anything China wants, even the most strategically critical piece of real estate in the Western Hemisphere, the canal, on our doorstep? Tony?

MR. BLANKLEY: I think that, not to overstate it, that we are being incautious in our relationships with China; that, while they are not yet an enemy and we hope never will be an enemy, they clearly are not a strategic ally, as Clinton has suggested. And we should be giving them less opportunities, rather than more, to potentially make mischief.

MR. O'DONNELL (?): We are not a -- (inaudible) --

MS. CLIFT: Yeah. This is a cabal on the part of a small number of Republicans trying to arouse the fervor around this canal that existed 20 years ago.

Ronald Reagan won a presidential election on the fact that: "This is our canal. We bought it; we paid for it." But he got elected president. He never chose to renegotiate it.

This is a canal that properly belongs to the Panamanians.

MR. O'DONNELL (?): John?

MR. BLANKLEY: Wait, wait, wait, wait --

MS. CLIFT: Then to create this Hong Kong corporation as a front for the Chinese --

MR. MCLAUGHLIN: You've heard of a company --


MR. MCLAUGHLIN: -- a company by the name of COSCO --

MS. CLIFT: -- is the latest political --

MR. BARONE: Well, John, I think your setup here makes some legitimate points about China. This administration has been perhaps criminally incautious about China.


MR. BARONE: The fact is that COSCO --

MR. MCLAUGHLIN: Is that another reason to wonder about this deal?

MR. BARONE: -- but this deal is less troublesome to me than the deal where we let this Chinese military company, I believe it is called COSCO, have a lease on facilities in Long Beach. Now, Long Beach in Los Angeles harbor, the No. 1 port in the United States, that's much more important to our economy right now than the Panama Canal.

MR. MCLAUGHLIN: And did you know -- may I just make a point --

MR. BARONE: Perhaps.

MR. MCLAUGHLIN: -- that Hutchison-Whampoa has ties to COSCO?

MR. BARONE: Well, they have probably all got ties to each other.

MR. MCLAUGHLIN: So the fear is that COSCO, which has these enormous containers that can now house tanks -- (laughter) -- could move to Balboa and unload the tanks in the event that the Chinese wanted to get control of the canal. (Laughter.)

MR. BARONE: But, John, Balboa is rather small --

MR. MCLAUGHLIN: Suppose that there is real tension --

MR. BARONE: -- (inaudible) -- to Long Beach.

MR. MCLAUGHLIN: -- suppose there is real tension between --

MR. O'DONNELL: Are we really defending --

MR. MCLAUGHLIN (?): -- (inaudible).

MS. CLIFT: It's ridiculous.

MR. MCLAUGHLIN: You obviously don't want to hear about this. (Laughter.)

MR. O'DONNELL: I do want to hear it, John.

MR. MCLAUGHLIN: All right. Well, curb yourself. (Laughter.)

Now, suppose there were real tension between China and Taiwan. Suppose there were a Pearl Harbor attempt on Taiwan --

MS. CLIFT: So why --

MR. O'DONNELL: You actually think --

MR. MCLAUGHLIN: I actually --

MR. O'DONNELL: -- that the government of China, through a Hong Kong corporation, would somehow execute, what, a military maneuver at the Panama Canal?

MR. MCLAUGHLIN: No, I am talking about COSCO. (Laughter.) And I am --

MR. BARONE: I'd be much more worried about that, John. But one thing is --

MR. MCLAUGHLIN: COSCO is a merchant-marine company that --

MS. CLIFT: Well, excuse me.

MR. BARONE: -- one of the things --

MR. MCLAUGHLIN: -- fronts for the People's Liberation Army.

MR. BARONE: Hey, John, the Clinton administration, I think, was quite negligent in letting them have access to Long Beach -- (inaudible) -- certainly is secure, and after a Chinese general threatened Los Angeles --

MR. BARONE: -- when we sent the 6th Fleet in 1996.

MR. O'DONNELL: Michael, you're not seriously worried that the Chinese have a beachhead in Long Beach?

MR. BARONE: I don't think that we should have given them that much of a beachhead.

MR. MCLAUGHLIN: Well, did you --

MR. BARONE: I do think, though, on the Panama Canal, remember that people have changed their minds. It's the Panamanians that want us to stay now. And even many American conservatives, like Mark Falcoff, suggest that it would not be worth our while economically or strategically to stay in the canal area. Long Beach is more important than Balboa.

MS. CLIFT: Two points -- two points: One, it is in our interest to incorporate China into the family of nations, and we're doing that economically.

MR. BARONE: By being fuzzy and sweet to them.

MS. CLIFT: Two, under the permanent treaty, we have the unilateral right to defend the canal. So maybe you'll get your war, Michael, and we'll all be happy.

MR. BARONE: I don't want a war in the canal at all.

MS. CLIFT: It's not going to happen. (Chuckles.)

MR. MCLAUGHLIN: Exit question: Should the U.S. put an ultimatum to Panama: no canal turnover unless Hutchison-Whampoa is out? Michael Barone.

MR. BARONE: No, because they would say, "Let's -- we want you to stay there," as they've been begging us to do and 60 percent of their voters do. It's not in our interest, despite the Hutchison-Whampoa.

MR. MCLAUGHLIN: Well, you heard me say that there was a rigged bidding --

MR. BARONE: Oh, well, this is Panama --

MR. MCLAUGHLIN: -- and that two American companies formed a consortium, and no one knows why, since they bid higher than Hutchison-Whampoa -- why it went to Hutchison-Whampoa.

MS. CLIFT: Well --

MR. BARONE: The fix was obviously in. But that's -- the question is whether the United States should continue to accept responsibility down here for minimal returns, and I think the answer is no.

MR. MCLAUGHLIN: Who arranged the fix and who knew about it, Eleanor?

MS. CLIFT: (Chuckles.) The Panamanians are obviously in bed with the Chinese communists, John! That's got to be the answer.

No, we should let that container company stay there -- and heck, buy stock in it! (Laughs.)

MR. MCLAUGHLIN: You hear that frivolous, dismissive tone from her? (Soft laughter.)

MR. BLANKLEY: Yeah. Well, you know, in times of peace, people always giggle at the dangers of war, and then in times of war, they wish they'd prepared. It strikes me that there's enough of a question mark here that we ought to abstain for the time being, pause before we turn it over, and -- both because of the contract violations and because of the nature of the company that's trying to take over. So I think yes, we should stop for a while and review the bidding before we get into it any further.

MR. MCLAUGHLIN: How about a congressional hearing, public and in private, on the whole matter? What do you think?

MR. O'DONNELL: In the age of air freight, it is absurd to be overworrying this question. We have no reason to break a deal. The canal has been run by 90 percent Panamanian personnel for a very long time now. Nothing's going to change.

MR. MCLAUGHLIN: You see how Los Angeles is changing him?

MR. O'DONNELL: It's relaxed me, John.

MR. MCLAUGHLIN: He's become the soul of complacency.

MR. O'DONNELL: (Laughs.)

MS. CLIFT: He's sensible. He's sensible. (Laughs.)

MR. MCLAUGHLIN: Let the good times roll!

MR. BARONE: I think we've sent him to Long Beach, John, and he's identifying now --

MR. MCLAUGHLIN: The answer is, we should put a stop to the Hutchison-Whampoa takeover; we should call congressional hearings, open and closed, reexamine the matter, particularly the background of the chairman of the company and his Chinese connections, which included the mayor of Beijing, who he's involved with in a major real estate deal. Then the mayor was removed from the Communist Party, sent away, and his assistant mayor was assassinated.

Okay. Earlier this month we asked: Should basic memorization be the primary educational tool for children? Get this: 78 percent yes, Lawrence; 22 percent no.

When we come back, if the 6-year-old Cuban boy Elian were an American child, how would we view his predicament then?


MR. MCLAUGHLIN: Issue two: Elian's Casus Belli.

RICARDO ALARCON (president, Cuban National Assembly): (From videotape.) Nobody has the right to steal a boy from his father.

MARISLEYSIS GONZALEZ (resident of the Miami area, relative of Elian Gonzalez): (From videotape.) He's going to have lots of love here. Besides love, he's going to have a future, he's going to have a carer, he's going to have the things that he's never going to have over there.

PRESIDENT CLINTON: (From videotape.) I think the most important thing is what would be best for the child. And there is a legal process for determining that. I don't think that politics or threats should have anything to do with it, and if I have my way, it won't.

MR. MCLAUGHLIN: Fidel Castro calls the case "a flagrant kidnapping" and demands the Cuban boy's immediate return to Cuba. Failing that, quote, "we are going to move heaven and earth. It will be war," unquote.

Six-year-old Elian Gonzalez has caused an international crisis that has reached boiling point. Tens of thousands of anti-American protestors have assembled around the U.S. interest section in Havana, with Castro providing the bleachers. As tensions mount, the United States warned Cuba to protect the 50 Americans at the U.S. mission, and no hostage-taking.

On Thanksgiving Day the Cuban child was found floating in an inner tube off the coast of Florida. Nine others escaped Cuba with Elian but drowned at sea, including his mother. Young Elian never actually reached land -- a critical legal point. He was rescued by fishermen and was granted, quote, unquote, "parole" by the U.S. Immigration and Naturalization Service, allowing him to stay in the United States and set up a bid for permanent residency.

But back in Cuba Elian's father, a Communist Party member, wants his son back, claiming Elian was taken from the country by his mother illegally.

Meanwhile, for Miami Cubans, Elian has become literally an anti-Castro poster boy.

Late in the week the INS described Elian's quote, unquote,"parole" as unofficial. Therefore, he can legally be returned to Cuba.

Question: Did Clinton cop out by saying Elian's fate is up to the authorities, as though Clinton himself were not an authority? I ask you, Lawrence.

MR. O'DONNELL: Well, of course he copped out. Here is the great policy wonk, who knows every detail of American law, who suddenly comes up dry on this particular subject. But look --

MR. MCLAUGHLIN: What was behind it?

MR. O'DONNELL: Well, it's the politicization of the immigration service in South Florida. Every single Cuba case is treated as a separate case, as if there is no precedent, each time this stuff comes along. And they play it by political ear every time.

Al Gore is desperately worried about carrying Florida. This administration wants to get this thing settled correctly with the Cuban community in Florida. That's its No. 1 mission.

MR. MCLAUGHLIN: And the person who knows that better than anyone is, not only Gore, but also Clinton.

MR. O'DONNELL: Everybody in politics knows it. The Republicans would do exactly the same thing.

MR. BARONE: The fact is, John, I think it's sort of unthinkable to send a child back to a tyrannical, totalitarian country like Cuba. It's something America shouldn't be doing.

We sent boats back, when they came here from Europe full of refugees in World War II, in the beginning, and we should not have done that. We should have kept people here.

I think that in this sort of case, they can go through the law, the courts of Florida and so forth. But the fact is that the testimony of this child's father, taken under whatever circumstances, has to be regarded as coerced testimony because he is living in a totalitarian society. And we are not obliged --

MS. CLIFT: (Inaudible.)

MR. MCLAUGHLIN: Eleanor, what is your thought? (Laughter.) Is your thought not that the primacy of the family and the primacy of the parental relationship, takes dominance and that this is a blatant assault on that, what we are doing?

MS. CLIFT: I think there is extraordinary hypocrisy of people who trumpet family values and now are so eager to break the family bond.

If this wasn't Cuba and it wasn't politics, this boy would go back instantaneously. And I frankly think in the end, that's what will happen because you have got all kinds of cases of international abductions, where a parent takes a child out of a country. And if you set a precedent where the remaining parent has no legal right, what are you saying? And we can't assume that everybody who washes up on our shores, we are going to welcome them with open arms, Michael.

MR. BLANKLEY (?): But first of all --

MR. BARONE (?): But wait a second. Perhaps we --

MS. CLIFT: I think when the Haitians were coming --

MR. BLANKLEY (?): Wait, wait, wait.


MS. CLIFT: -- I don't believe we espoused that position.

MR. BLANKLEY: Wait, wait --


MR. BLANKLEY: There's some -- a little liberal hypocrisy here, as well. Liberals, who are very happy to reduce parental responsibilities, via Hillary's writings in the past, now are suddenly standing up for the rights of a divorced father and the family values.

MS. CLIFT: He is the primary caretaker --

MR. BLANKLEY: And keep in mind --

MS. CLIFT: -- and he has apparently a sick father. (Laughs.)

MR. BLANKLEY: -- keep in mind, he was -- no, he was not the primary caretaker. They were divorced; he did not have custody of him. He only saw him on weekends. Keep in mind also --

MS. CLIFT: No, he saw him daily. (Laughs.)

MR. BLANKLEY: -- that the grandfather in this is a former official in the Interior Ministry, who is -- you know, the Secret Police in there. So this is a very ugly family on the father's side.

MR. BARONE: We have other cases --

MR. BLANKLEY: And we need to respect the child's interests and let --

MR. BARONE: -- we have other cases --

MR. BLANKLEY: -- (inaudible) -- where the Cuban community has promised $2 million to be put in trust to him, to make sure he has a good life in America.

MR. BARONE: John, we had a case --

MR. BLANKLEY: How can there be any question as to what's better for the boy; America, freedom and $2 million?

MR. BARONE (?): Money?

MS. CLIFT: Right.

MR. BARONE: John? We had the case 12 --

(Cross talk.)

MR. BARONE: -- (inaudible) -- a 12-year-old in Chicago --

MS. CLIFT: This is bribery the way your portray it.

MR. BARONE: -- whose parents wanted to take him back --

MR. BLANKLEY: It's capitalism.

MR. BARONE: -- to the Ukrainian SSR when it was part of the Soviet Union. The child did not want to go back, because he was of an age old enough to know the difference between living in Chicago and living in the Soviet Union. He did not go back. I think that was the right --

MR. MCLAUGHLIN: You apparently don't remember the Shana Lazarevic (sp) case, which -- you should read up on that. James Baker went over to Yugoslavia -- well, he didn't go over, but he successfully pled with Milosevic to release these two American children.

MS. CLIFT: Well, this --

MR. O'DONNELL: And it's not clear what this child wants. He's been calling his father every single day.

(Cross talk.)

MR. MCLAUGHLIN: This obviously -- the child is a minor. The father was close to the child, irrespective of what was just said here by Tony. And independently of that, it is the primacy of the parental tie that should govern.

MR. BLANKLEY: Well, I just --

MR. MCLAUGHLIN: Clinton should dispatch federal marshals, put the child on a plane, and send him back at once.

Issue three: Reversal of fortune.

Presidential marathon 2000 is taking its toll. Buchanan bolted, Dole and Quayle called it quits, and the front-runners are now losing ground. Take a look at this:

New Hampshire: John McCain coming in at 15 points ahead of Texas Governor and undisputed front-runner George W. Bush. And in the Democratic column, former New Jersey senator Bill Bradley has Vice President Al Gore struggling for a rebound, Bradley over Gore by 8 points.

Question: Will these polls -- do these polls signal the outcome -- the outcome -- of February's New Hampshire primary? I ask you, Lawrence.

MR. O'DONNELL: They do indeed signal the outcome. As I predicted here a long time ago, Bill Bradley was on his way to a Gene McCarthy-like upset in New Hampshire, which at that time I meant simply finishing at least a very strong second. I think Bradley's in a clear position to win. McCain is also in a position to win New Hampshire now.


MR. BARONE: Well, John, more representative -- if you sample all the polls taken recently in New Hampshire, they're within the error margins on both sides. As a former professional pollster, I'd say any of those four candidates could win.


MS. CLIFT: "In a position to win" is different from winning, and both of these fellows may have peaked too soon. They're now in a position that if they don't win, they're gone.

MR. BLANKLEY: Yeah, Michael's right. It's too soon to tell. But for the first time, there's concern among Republicans as to the strength of the Bush candidacy.

MR. MCLAUGHLIN: You're all correct.

One-word answer, please. Will Elian be sent back to Cuba, or will he stay here? One word.

MR. BARONE: Stay here.

MS. CLIFT: Back to Cuba.

MR. BLANKLEY: Stay here.

MR. O'DONNELL: Back to Cuba.

MR. MCLAUGHLIN: Answer: back to Cuba.

We'll be right back with predictions.


MR. MCLAUGHLIN: Predictions, Michael?

MR. BARONE: San Francisco Mayor Willie Brown will be reelected by a shockingly narrow margin.

MR. MCLAUGHLIN: Surprise, surprise.


MS. CLIFT: The next round of polls in New York, Hillary Clinton will draw much closer to Rudy Giuliani; in one poll, within 2 points.


MR. BLANKLEY: Al Gore's increasing demagoguery against Bradley is going to become a major issue.


MR. O'DONNELL: When asked, Bill Bradley will say that he will not entertain John McCain as a possible running mate, but he will entertain the possibility of John McCain in his Cabinet.

MR. MCLAUGHLIN: Syria and Israel are now seeking rapprochement. It will be successful. Israel will give up the Golan Heights, extending up to 100 yards from the shores of the Lake of Galilee.

Next week, President Clinton receives Prime Minister Ehud Barak of Israel and the foreign minister of Syria, Farouk Sharaa, to secure a breakthrough and possibly historic compromise.