]> International Who's Spying on Our Computers? By George Melloan 891101-0081 891101

An imaginative novelist writing a thriller about amateur spy-chasing might invent a Clifford Stoll , but it 's unlikely . It 's also unnecessary . Amateur spy-chaser Clifford Stoll is a real person , or as he might waggishly put it , a surreal person .

He is 37 , an astronomer with impressive credentials , and something of a genius at making computers do his bidding . He once described himself as a " Berkeley Hippie , " and played the role well ; obligatory ragged jeans , a thicket of long hair and rejection of all things conventional , including , for a time at least , formal marriage to his " sweetheart , " Martha Matthews . He also is an entertaining writer , combining wisecracks and wordplay with programmatic detail and lucid explanations of how computers work . In " The Cuckoo 's Egg " ( Doubleday , 326 pages , $19.95 ) , he spins a remarkable tale of his efforts over 18 months to catch a computer spy .

The result last spring was the arrest by West German authorities of five young West Germans , accused of stealing information from computers in the U.S. and Europe and selling it to the Soviet KGB. One of them , 25-year-old Markus Hess of Hannover , allegedly used the international telecommunications network to break into more than 30 high-security computers in the U.S. , searching for secrets . He probably did n't penetrate any top-secret files , but the KGB in East Berlin was willing to pay two of his associates , Peter Carl and Dirk Brezinski , $15,000 for some of the material Hess collected . They promised yet more for really good stuff .

Mr . Stoll draws his title from the cuckoo 's habit of laying eggs in the nests of other birds , making them surrogate parents . The computer spy had discovered that a popular editing / electronic mail program called Gnu-Emacs could do tricks with the widely used Unix operating system created by AT&T. Using Gnu-Emacs , the spy could substitute a bogus " atrun " program for the one that routinely cleans up the Unix system every five minutes . Once his cuckoo 's egg was laid , he could enter Unix and become a " super-user , " with access to everything .

Mr . Stoll was scanning the heavens at the Keck observatory of the Lawrence Berkeley Laboratory in 1986 when his grant ran low and he was asked to switch to helping run the lab 's computers . He discovered a 75-cent discrepancy in the charges made to various departments for computer time and traced it to a user named " Hunter , " who had no valid billing address . Mr . Stoll suspected the intruder was one of those precocious students who has fun breaking into computers .

But after much tracking , it became evident to Mr . Stoll , through various clues , that the hacker was not on the Berkeley campus or even in California . Finding him became an obsession for Mr . Stoll . He made a midnight requisition of all the printers he could lay hands on so that he could monitor all the telephone lines coming into the lab 's computers . After discovering that the hacker had taken over the dormant account of a legitimate user named Joe Sventek , he rigged up an alarm system , including a portable beeper , to alert him when Sventek came on the line . Some nights he slept under his desk . His boss complained about neglect of other chores .

The hacker was pawing over the Berkeley files but also using Berkeley and other easily accessible computers as stepping stones to the network of computers used by the military and national security agencies . The White Sands missile range and CIA contractor Mitre Inc . were among the targets . When the hacker moved , Mr . Stoll moved too , calling up other systems managers to alert them but keeping his own system open to avoid arousing suspicion . Sometimes , if the hacker seemed to be into a sensitive file , he would drag his keychain across the terminal to create static or slow the system down to frustrate his quarry .

The FBI initially showed little interest , and he had the impression other federal security agencies were tangled up in legal red tape . The CIA told him it does not do domestic counterespionage . One learns a lot from this book , or seems to , about crippling federal bureaucracy . " Seems to " because it 's possible that the CIA and the National Security Agency were more interested than they let on to Mr . Stoll .

Finally , he got help . Tymnet is a major network linking computers . One of its international specialists , Steve White , took a quick interest in Mr . Stoll 's hunt , ultimately tracing the hacker to West Germany . The West Germans then took over and finally found Markus Hess .

Eventually , Mr . Stoll was invited to both the CIA and NSA to brief high-ranking officers on computer theft . He savored the humor of his uncombed appearance among these buttoned-up chaps . Back in Berkeley , he was violently scolded by a left-wing lady friend for consorting with such people . He became angry in return . He had developed a hatred for the hacker and a grudging appreciation of the federal " spooks " who make national security their business . At several different levels , it 's a fascinating tale .

Mr . Melloan is deputy editor of the Journal .

International @ World Wire @ ---- WALL STREET JOURNAL (J) 891101-0081-2 11/01/89


The Soviet Union 's jobless rate is soaring to 27% in some areas , Pravda said . It said the situation is caused by efforts to streamline bloated factory payrolls .

Unemployment has reached 27.6% in Azerbaijan , 25.7% in Tadzhikistan , 22.8% in Uzbekistan , 18.8% in Turkmenia , 18% in Armenia and 16.3% in Kirgizia , the Communist Party newspaper said . All are non-Russian republics along the southern border of the Soviet Union , and all but Kirgizia have reported rioting in the past six months .

The newspaper said it is past time for the Soviet Union to create unemployment insurance and retraining programs like those of the West .

Pravda gave no estimate for overall unemployment but said an " Association of the Unemployed " has cropped up that says the number of jobless is 23 million Soviets , or 17% of the work force .


An 11-week dispute involving Australia 's 1,640 domestic pilots has slashed airline earnings and crippled much of the continent 's tourist industry . " The only people who are flying are those who have to , " said Frank Moore , chairman of the Australian Tourist Industry Association . He added : " How is a travel agent going to sell a holiday when he cannot guarantee a return flight ? " Transport giant TNT, which owns half of one of the country 's two major domestic carriers , said the cost of the dispute had been heavy , cutting TNT's profits 70% to $12 million in the three months to Sept . 30 .

BRAZILIAN INTERROGATION Brazilian financier Naji Nahas , who was arrested on Monday after 102 days in hiding , is likely to be interrogated next week by the Brazilian judiciary . Mr . Nahas , who single-handedly provoked a one-day closure of Brazil 's stock markets in June when he failed to honor a debt of $31.1 million owed to his brokers , yesterday blamed his predicament on the president of the Sao Paulo stock exchange ; a few days before Mr . Nahas 's failure , the exchange raised the required margin on stock-margin transactions .


China 's parliament ousted two Hong Kong residents from a panel drafting a new constitution for the colony . The two , Szeto Wah and Martin Lee , were deemed unfit because they had condemned China 's crackdown on its pro-democracy movement . The committee is formulating Hong Kong 's constitution for when it reverts to Chinese control in 1997 , and Chinese lawmakers said the two can only return if they " abandon their antagonistic stand against the Chinese government and their attempt to nullify the Sino-British joint declaration on Hong Kong . "


Israeli officials confirmed that Energy Minister Moshe Shahal and his Canadian counterpart , Jake Epp , discussed a possible Israeli purchase of a $1.1 billion Canadian nuclear reactor for producing electricity . However , a Canadian Embassy official in Tel Aviv said that Canada was unlikely to sell the Candu heavy-water reactor to Israel since Israel has n't signed the Nuclear Non-Proliferation Treaty . Israel has been accused in the past of using subterfuge to seek elements needed to develop nuclear weapons .


The South Korean government is signing a protocol today establishing formal diplomatic relations with Poland . The two are also signing a trade agreement . South Korean government officials said they do n't expect that Seoul can loan money to Warsaw , but it can " offer experience . " Poland is the second Communist nation to recognize the Seoul government ; South Korea established diplomatic relations with Hungary in February 1989 .


Venezuela will hold a debt-equity auction Friday , with 32 potential bidders participating .

Earlier this year , Venezuela announced it was opening up debt-equity swaps to foreign investors but said the program would be limited to a net disbursement of $600 million a year . Friday 's auction will be limited to $150 million disbursed by the Central Bank to potential investors .

The office of foreign investment has authorized some $1.78 billion worth of investment proposals , said Edwin Perozo , superintendent of foreign investment . Most of the proposals are in tourism , basic industry and fishery and agro-industry projects , he said .

Under the debt-equity program , potential investors will submit sealed bids on the percentage of discount they are willing to purchase the debt at , and the bids will be allocated based on these discount offers . The Venezuelan central bank set a 30% floor on the bidding .


A song by American singer Tracy Chapman praising jailed black leader Nelson Mandela was banned from South African state radio and television . The South African Broadcasting Corp . said the song " Freedom Now " was " undesirable for broadcasting . " . . . Britain 's House of Commons passed a law that will force English soccer fans to carry identity cards to enter stadiums . The " anti-hooligan " law , which would deprive troublemakers of cards , must be ratified by the House of Lords and is expected to become effective early next year .

Law -- Legal Beat @ Imelda Marcos' Abduction Claim @ Is Denied in Ruling on Evidence @ ---- WALL STREET JOURNAL (J) 891101-0080 11/01/89

A federal judge ruled that Imelda Marcos was n't brought to the U.S. against her will and that marital privileges , which protect spouses from incriminating each other , do n't apply in her case .

As a result , Judge John F. Keenan of New York ordered Mrs . Marcos to turn over to the court all pleadings and documents she may have filed in foreign countries in opposition to U.S. requests for evidence . Mrs . Marcos had claimed that she did n't have to turn over the documents because she was brought here involuntarily and because providing the materials would violate her marital privilege .

In 1988 , a year and a half after Mrs . Marcos and her late husband , Ferdinand Marcos , the ousted president of the Philippines , fled the Philippines for Hawaii , they were charged with racketeering , conspiracy , obstruction of justice and mail fraud in a scheme in which they allegedly embezzled more than $100 million from their homeland . Much of the money was fraudulently concealed through purchases of prime Manhattan real estate , federal prosecutors have charged . Mrs . Marcos 's trial is expected to begin in March .

U.S. law requires criminal defendants to turn over foreign documents such as those sought in the Marcos case . The law is meant to overcome delays caused by defendants ' use of foreign procedures to block U.S. requests for records , Judge Keenan said in his opinion . For instance , the documents could involve foreign business dealings or bank accounts . The U.S. has charged that the Marcoses ' alleged crimes involved bank accounts in the Philippines , Hong Kong , the U.S. and other countries .

On the allegation of kidnapping , Judge Keenan wrote , " The suggestion that Mrs . Marcos was brought to this country against her will is unsupported by affidavit or affirmation . "

The judge also said the two marital testimonial privileges cited by Mrs . Marcos do n't apply . The first one permits a witness to refuse to testify against her spouse . But Judge Keenan said that privilege 's purpose is " fostering harmony in marriage . " Because Mr . Marcos died Sept . 28 , the privilege can no longer apply , the judge said .

The second marital privilege cited by Mrs . Marcos protects confidential communications between spouses . But Judge Keenan said that privilege is meant to protect private utterances -- not litigation papers filed with foreign governments , as Mrs . Marcos 's attorneys maintained .

Though Judge Keenan threw out most of Mrs . Marcos 's objections , he agreed with one of her concerns : that turning over the foreign documents could violate the defendant 's constitutional right against self-incrimination . As a result , he said he will examine the Marcos documents sought by the prosecutors to determine whether turning over the filings is self-incrimination . Judge Keenan also directed the prosecutors to show that Mrs . Marcos 's Fifth Amendment right against self-incrimination wo n't be violated .

Mrs . Marcos 's attorney in New York , Sandor Frankel , declined to comment on the ruling . Mrs . Marcos has n't admitted that she filed any documents such as those sought by the government . Charles LaBella , the assistant U.S. attorney prosecuting the Marcos case , did n't return phone calls seeking comment .

U.S. AND BRITISH LAW FIRMS announce rare joint venture in Tokyo .

Sidley & Austin , a leading Chicago-based law firm , and Ashurst Morris Crisp , a midsized London firm of solicitors , are scheduled today to announce plans to open a joint office in Tokyo .

The firms will be registered under Japanese law as foreign legal consultants and their practice with Japanese clients will be limited to advising them on matters of foreign law . The office may also be able to advise foreign and multinational clients on international law and general matters .

The office will provide " one-stop shopping " for Japanese financial institutions and other clients seeking advice on access to the world capital markets , according to A. Bruce Schimberg , Sidley 's senior banking specialist , who will move to Tokyo from Chicago to open the office next year .

The Sidley-Ashurst venture will also be staffed by another Sidley partner specializing in corporate law , a partner from Ashurst concentrating on acquisitions and a Japanese attorney . The office will tap the resources of Sidley 's 700 lawyers in the U.S. , London and Singapore as well as the 400 Ashurst staff members in London and Brussels .

Ashurst is new to the Far East . Sidley will maintain its association with the Hashidate Law Office in Tokyo .

THE UNITED AUTO WORKERS said it will seek a rehearing of a U.S. appellate court ruling against the union 's claim that the state of Michigan engages in wage-discrimination against female employees . A three-judge panel of the court in Cincinnati made the ruling Saturday . The UAW is seeking a hearing by the full 14-judge panel . The union sued the state in November 1985 , alleging that it intentionally segregated job classifications by sex and paid employees in predominantly female jobs less than males in comparable jobs . The UAW also charged that the state applied its own standards for determining pay in a discriminatory manner . In November 1987 , a district court judge in Detroit ruled against the UAW. The union is the bargaining representative for more than 20,000 Michigan state employees .

NEW JERSEY MERGER : One of the largest law firms in central New Jersey has been created through the merger of Norris , McLaughlin & Marcus , a 41-lawyer firm , and Manger , Kalison , McBride & Webb , a health-care specialty law firm with 14 lawyers . Norris McLaughlin is a general-practice firm that has expanded recently into such specialties as banking , labor and environmental work . The merged firm will carry Norris McLaughlin 's name .

DRUG WARS : A Texas legislator proposes color-coding drivers ' licenses of some drug offenders . The bill would authorize courts to order the licenses as a condition of probation . State Senator J.E. " Buster " Brown , a Republican who is running for Texas attorney general , introduced the bill . He said an altered license would be an " embarrassment " to teenagers and young adults and would act as a deterrant to drug use . Richard Avena , executive director of the Texas Civil Liberties Union , called the proposal " political gimmickry , " and said it fails to recognize the drug problem as a health issue .

`Two-Time Loser' Measur WALL STREET JOURNAL (J) 891101-0079 11/01/89

The House approved a provision , dubbed the " two-time loser amendment " by its supporters , apparently aimed at preventing Texas Air Corp . Chairman Frank Lorenzo from acquiring another airline .

The amendment , offered by Rep . Douglas Bosco ( D. , Calif . ) , was approved 283-132 during debate on a bill designed to strengthen the Transportation Department 's authority in dealing with leveraged buy-outs of airlines .

The bill would require the agency to block the acquisition of 15% or more of an airline 's stock if the purchase threatened safety , reduced the carrier 's ability to compete , or put the airline under foreign control . Debate on the legislation , which faces a veto threat from President Bush , is to continue today .

The amendment would require the department to block the purchase of a major airline by anyone who has run two or more carriers that have filed for protection from creditors under Chapter 11 of the Bankruptcy Code .

In 1983 , Texas Air 's Continental Airlines filed for bankruptcy . Earlier this year , Texas Air 's Eastern Airlines filed for bankruptcy .

" This ought to be subtitled the ` Do n't let Frank Lorenzo take over another airline ' amendment , " said Rep . James Oberstar ( D. , Minn . ) , chairman of the House aviation subcommittee , who argued that the provision was unnecessary because the bill already would give the department ample power to block undesirable deals .

Opening Up @ Nissan Shakes Free @ Of Hidebound Ways @ To Mount a Comeback @ --- @ Designers, Unshackled, Make @ Boxy Cars Aerodynamic; @ Everyone Hunts for Ideas @ --- @ Flex-Time and Coed Housing @ ---- @ By Paul Ingrassia and Kathryn Graven WALL STREET JOURNAL (J) 891101-0078 11/01/89

For years , a strict regimen governed the staff meetings at Nissan Motor Co . 's technical center in Tokyo 's western suburbs .

Employees wore identification badges listing not only their names but also their dates of hire . No one could voice an opinion until everybody with more seniority had spoken first , so younger employees -- often the most enthusiastic and innovative -- seldom spoke up at all .

But in 1986 , the badges and the " do n't speak out of turn " rule were abolished -- early steps in a cultural revolution still rolling on with all the subtlety of a freight train . In recent years , Nissan has instituted flex-time work schedules and allowed employees to dress casually , even in blue jeans . A rule forbidding staffers to own competitors ' cars has been lifted , and now many designers drive foreign cars to get useful ideas . Nissan 's decades-old corporate song filled with references to Mount Fuji has been scrapped in favor of a snappy tune sung by a popular Japanese vocalist .

And in a Japanese corporate first , Nissan recently opened the first coed company dormitory for single employees at the suburban Tokyo technical center . " We had lots of internal debate about this one , " concedes Tadahiko Fukuyama , a senior public-relations official . " But in the end , top management decided to follow the voice of the younger generation . "

This corporate glasnost is a big reason Nissan , after years of making lackluster cars and lousy profits , has loosened up its rigid ways and now is riding a string of hits , ranging from the sleek Maxima sedan and Porsche-like 300ZX to the whimsically nostalgic Pao , a minicar sold only in Japan . The company 's turnaround is far from complete ; many crucial tests are just beginning . But its surprising progress so far holds important lessons for companies in trouble .

The big one : A company 's culture ca n't be radically changed unless top management first admits that things have gone badly awry and then publicly leads the charge . Atsushi Muramatsu , Nissan 's executive vice president for finance , helped set the tone in December 1986 , when the company was heading toward the first operating loss by a Japanese auto maker since the nation 's postwar recovery . " This is a time of self-criticism to discover what is wrong with us , " he said . Yutaka Kume , who took the helm as Nissan 's president in June 1985 , added simply , " I am deeply disappointed . "

No wonder . Nissan , Japan 's second-largest auto maker and the world 's fourth-largest , was getting beat up not only by its bigger rival , Toyota Motor Corp . , but also by Honda Motor Co . , the most successful Japanese car company in the U.S. but a relative pipsqueak in Japan .

Nissan 's market share in Japan had been dropping year by year since the beginning of the decade . Its U.S. sales sagged , partly because of price increases due to the rising yen . Worst of all , Nissan was preoccupied with management infighting , cronyism and corporate rigidity .

Consider the experience of Satoko Kitada , a 30-year-old designer of vehicle interiors who joined Nissan in 1982 . At that time , tasks were assigned strictly on the basis of seniority . " The oldest designer got to work on the dashboard , " she recalls . " The next level down did doors . If a new person got to work on part of the speedometer , that was a big deal . "

This system produced boring , boxy cars that consumers just were n't buying . Desperately hoping to spark sales , Nissan transferred 5,000 middle managers and plant workers to dealerships . Meanwhile , President Kume ordered everyone from top executives to rookie designers to go " town watching , " to visit chic parts of Tokyo to try to gain insights into developing cars for trend-setters .

Some town-watching excursions were downright comic . One group of middle-aged manufacturing men from the company 's Zama plant outside Tokyo was supposed to check out a trendy restaurant in the city . But when they arrived at the door , all were afraid to go in , fearing that they would be out of place .

Other trips were more productive . Mr . Kume himself visited Honda 's headquarters in Tokyo 's upscale Aoyama district . He liked the well-lighted lobby display of Honda 's cars and trucks so much that he had Nissan 's gloomy lobby exhibit refurbished . Later , Nissan borrowed other Honda practices , including an engineering " idea contest " to promote inventiveness . One engineer developed a " crab car " that moves sideways .

Such sudden cultural shifts may come across as a bit forced , but they seem to be genuine -- so much so , in fact , that some older employees have resisted . Nissan handled the die-hards in a typically Japanese fashion : They were n't fired but instead " were neglected , " says Kouji Hori , the personnel manager at the Nissan Technical Center .

Despite the pain of adjusting , the cultural revolution has begun to yield exciting cars . A year ago , the company completely revamped its near-luxury sedan , the $17,699 Maxima , which competes against a broad range of upscale sedans ; it replaced its boxy , pug-nosed body with sleek , aerodynamic lines . Since then , Nissan also has launched new versions of the $13,249 240SX sporty coupe and 300ZX sports car . The restyled 300ZX costs as much as $33,000 and is squared off against the Porche 944 , which begins at $41,900 . Besides new styling , the new Nissans have more powerful engines and more sophisticated suspension systems . All three new models are outselling their predecessors by wide margins .

In its home market , Nissan has grabbed attention with limited-production minicars featuring styling odd enough to be cute . One is the Pao , a tiny coupe with a peelback canvas top and tilted headlights that give it a droopy-eyed look . Nissan initially planned to sell just 10,000 Paos , but sales have passed 50,000 , and there 's a one-year waiting list for the car . Then , there 's the S-Cargo , an offbeat delivery van with a snail-like body that inspired its name . Nissan helped develop a Tokyo restaurant with both vehicles as its design theme . The chairs are S-Cargo seats , and a gift shop sells such items as alarm clocks styled like the Pao 's oversized speedometer .

All these vehicles have sharply improved Nissan 's morale and image -- but have n't done much for its market share . Nissan had 29% of the Japanese car market in 1980 before beginning a depressing eight-year slide that continued through last year . Strong sales so far this year are certain to turn the tide , but even the 25% market share that Nissan expects in 1989 will leave it far below its position at the beginning of the decade .

Nissan concedes that it wo n't recoup all its market-share losses in Japan until at least 1995 , and even that timetable might prove optimistic . " Everyone else is going to catch up " with Nissan 's innovative designs , says A. Rama Krishna , auto analyst at First Boston ( Japan ) Ltd . Nissan 's pace of new-model hits will slow , he adds , just as arch-rival Toyota unleashes its own batch of new cars .

Likewise , in the U.S. , Nissan has grabbed 5.2% of the car market so far this year , up from 4.5% a year ago . But even that brings Nissan only to the share it had in 1987 , and leaves the company behind its high of 5.5% in 1980 and 1982 .

Why ? So far , Nissan 's new-model successes are mostly specialized vehicles with limited sales potential . In compact and subcompact cars , the bread-and-butter sales generators for Japanese auto makers , Nissan still trails Toyota and Honda .

Nissan hopes that that will start to change this fall , with its new version of the Stanza compact sedan . The Stanza has been a nonentity compared with Honda 's hugely successful Accord and Toyota 's Camry . But this year , Honda has revamped the Accord and made it a midsized car . Nissan instead has kept its new Stanza a bit smaller than that and cut the base price 6% ; at $11,450 , Stanza prices start $749 below the predecessor model yet have a more-powerful engine . Accord prices start at $12,345 .

Nissan 's risk is that its low-base-price strategy might get lost amid the highly publicized rebates being offered by Detroit 's Big Three . But " on a new car , a rebate does n't work well " because it cheapens the vehicle 's image , contends Thomas D. Mignanelli , executive vice president of Nissan 's U.S. sales arm .

Even if the new Stanza succeeds , Nissan will remain behind in the subcompact segment , where its Sentra does n't measure up to the Honda Civic and Toyota Corolla . Nissan will introduce a completely revamped Sentra next fall .

At the opposite end of the market , Nissan launches its luxury Infiniti division on Nov . 8 -- three years after Honda pioneered Japanese luxury cars and two months after Toyota 's Lexus went on sale . Nissan started advertising Infiniti fully eight months before the cars hit American showrooms . The ads featured fences , rocks and pussy-willow buds -- almost anything but the cars themselves . The ads have generated some laughs but also plenty of attention because they are so unlike any other U.S. auto advertising .

On the other hand , Nissan 's sales goals for Infiniti are modest compared with Toyota 's targets for Lexus . Nissan will build only about 3,500 of the $38,000 Infiniti Q45 sedans each month , sending about 2,000 of them to the U.S. and keeping the rest for sale in Japan . Toyota wants to sell about 49,000 Lexus LS400 sedans next year in the U.S. alone .

" When I saw the Lexus sales projections , I got worried , " confesses Takashi Oka , who led the Infiniti development team . But on reflection , Mr . Oka says , he concluded that Nissan is being prudent in following its slow-startup strategy instead of simply copying Lexus . " Infiniti is Nissan 's big business move for the 21st century , and we 're in no hurry to generate large profits right away , " Mr . Oka says . Despite plans to add two new Infiniti models next year , bringing the total to four , Infiniti wo n't show profits for at least five years , he adds .

These days Nissan can afford that strategy , even though profits are n't exactly robust . Nissan had record net income of 114.63 billion yen ( $868 million ) in the fiscal year ended last March 31 , a remarkable recovery from the 20.39 billion yen of two years earlier , when the company lost money on operations . Nissan has increased earnings more than market share by cutting costs and by taking advantage of a general surge in Japanese car sales .

But Nissan expects to earn only 120 billion yen in the current fiscal year , a modest increase of 4.7% . The big reason : For all its cost-cutting , Nissan remains less efficient than Toyota . In its last fiscal year , Nissan 's profit represented just 2.3% of sales , compared with 4.3% at Toyota . To help close the gap , Nissan recently established a top-level cost-cutting committee .

Nissan is the world 's only auto maker currently building vehicles in all three of the world 's key economic arenas -- the U.S. , Japan and Europe . That gives it an enviable strategic advantage , at least until its rivals catch up , but also plenty of managerial headaches .

For example , Nissan 's U.S. operations include 10 separate subsidiaries -- for manufacturing , sales , design , research , etc . -- that report separately back to Japan . And in July , Nissan 's Tennessee manufacturing plant beat back a United Auto Workers organizing effort with aggressive tactics that have left some workers bitter .

" We are in a transitional phase from being a Japanese company to becoming an international company based in Japan , " says Mr . Muramatsu , the executive vice president . He promises that Nissan will soon establish a holding company overseeing all U.S. operations , just as it 's doing in Europe .

Perhaps the biggest challenge , however , will be to prevent a return to its former corporate rigidity as its recovery continues . Already , personnel officials are talking about the need for a " Phase Two " cultural-reform effort of some sort . " We are still only half way through the turnaround of this company , and there are many more things to do , " President Kume says . He adds , however , that " the momentum we have generated is unstoppable . "

Marketing & Media @ Warner Agrees to Form WALL STREET JOURNAL (J) 891101-0077 11/01/89

As expected , Warner Bros . Records said it agreed to form a recorded-music and music-publishing joint venture with former MCA Records Chairman Irving Azoff .

Warner said it will provide financing for the venture , but did n't disclose terms . Mr . Azoff has n't named the company yet , but any records it produces will be distributed by Warner .

Warner is part of Warner Communications Inc . , which is in the process of being acquired by Time Warner Inc . Mr . Azoff resigned as head of MCA Records , a unit of MCA Inc . , in September , and had been discussing a joint venture with both Warner and MCA. In a statement yesterday , Mr . Azoff said he chose Warner , the largest record company , because " their standing in the entertainment industry is second to none . "

Politics & Policy @ Bush and Gorbachev Plan to Meet Dec. 2-3 @ Aboard U.S., Soviet Ships in Mediterranean @ --- @ White House Avoids Calling @ Talks `Summit' to Damp @ Expectations for Accords @ ---- @ By Gerald F. Seib and Walter S. Mossberg WALL STREET JOURNAL (J) 891101-0076 11/01/89

President Bush and Soviet leader Mikhail Gorbachev will hold an informal meeting in early December , a move that should give both leaders a political boost at home .

The White House is purposely not calling the meeting a summit so that there wo n't be any expectation of detailed negotiations or agreements . Rather , senior administration officials said that the unexpected meeting was scheduled at Mr . Bush 's request because of his preference for conducting diplomacy through highly personal and informal meetings with other leaders .

The two leaders will meet on Dec . 2 and 3 , alternating the two days of meetings between a U.S. and a Soviet naval vessel in the Mediterranean Sea . The unusual seaborne meeting wo n't disrupt plans for a formal summit meeting next spring or summer , at which an arms-control treaty is likely to be completed .

In announcing the meeting yesterday , Mr . Bush told reporters at the White House that neither he nor Mr . Gorbachev expects any " substantial decisions or agreements . " Instead , he said that the purpose is simply for the two to get " better acquainted " and discuss a wide range of issues without a formal agenda .

Despite the informal nature of the session and the calculated effort to hold down expectations , the meeting could pay significant political dividends for both leaders . Mr . Gorbachev badly needs a diversion from the serious economic problems and ethnic unrest he faces at home . American officials have said that a meeting with the leader of the U.S. could help bolster his stature among Soviet politicians and academics , whose support he needs .

For his part , Mr . Bush has been criticized regularly at home for moving too slowly and cautiously in reacting to Mr . Gorbachev 's reforms and the historic moves away from communism in Eastern Europe . A face-to-face meeting with Mr . Gorbachev should damp such criticism , though it will hardly eliminate it .

Senate Majority Leader George Mitchell ( D. , Maine ) , who has been the most prominent Democratic critic of Mr . Bush 's handling of the Soviet relationship , praised the president for arranging the meeting . But he added : " The mere fact of a meeting does n't deal with the substance of policy . "

Mr . Bush said that the December meeting , which was announced simultaneously in Moscow , will be held in the unusual setting of ships at sea to hold down the " fanfare " and force the two sides to limit participation to just small groups of advisers . " By doing it in this manner we can have , I would say , more time without the press of social activities or mandatory joint appearances , things of that nature for public consumption , " Mr . Bush said .

Soviet Foreign Minister Eduard Shevardnadze , at a news conference in Moscow , said , " As the two sides plan to hold a full-scale summit in late spring-early summer next year , they found it useful , I would say even necessary , to hold an interim informal meeting . " Although no specific agreements are expected , Mr . Shevardnadze said " that does n't mean they will be without an agenda . "

If the two leaders cover the subjects that have been featured in lower level U.S.-Soviet meetings , their talks would include human rights , Soviet reforms , regional disputes , relations with allies , economic cooperation , arms control , and joint efforts to fight narcotics , terrorism and pollution .

The president specifically mentioned U.S. economic advice to Moscow as a possible topic . Mr . Gorbachev has for months been publicly urging the U.S. to drop its restrictions on Soviet trade . He recently told a small group of American businessmen in Moscow that he hoped to sign a general trade agreement with the U.S. , possibly at the 1990 summit . The Soviets hope a trade agreement would give them Most-Favored Nation status , which would lower the tariffs on Soviet exports to the U.S.

In an unusually candid article about the latest economic woe -- unemployment -- Pravda yesterday reported that three million Soviets have lost their jobs as a result of perestroika and the number could grow to 16 million by the year 2005 . Economists in Moscow are now proposing that the state start a system of unemployment benefits .

But one Bush administration official knowledgeable about the summit plan cautioned against assuming that there will be bold new initiatives on the Soviet economy or other issues .

" Do n't take this as some big opening for major movement on economic cooperation , or arms control , or the environment , " he said . " Those things will all come up , but in a fairly informal way . "

Instead , this official said , " This is vintage George Bush . This was George Bush 's own idea . It 's George Bush wanting to meet a foreign leader and talk to him directly . "

Aside from the Soviet economic plight and talks on cutting strategic and chemical arms , one other issue the Soviets are likely to want to raise is naval force reductions . Western analysts say that , given the meeting 's setting at sea , Gorbachev is unlikely to pass up the opportunity to press once again for negotiated cuts in the navies of both the North Atlantic Treaty Organization and the Warsaw Pact .

That theme has been a recurring one for Soviet military officials for much of this year . They argue that as the Kremlin follows through on announced plans to cut land forces -- the Soviets ' area of greatest strength -- the U.S. should show more willingness to cut sea forces -- Washington 's area of greatest superiority .

One of the reasons Bush administration aides are anxious to insist that the coming meeting will be informal is to avoid comparisons with the last such loosely structured superpower gathering , former President Reagan 's 1986 meeting with Mr . Gorbachev in Reykjavik , Iceland . That meeting sent shivers through the Western alliance because Mr . Reagan was pulled into discussing the possible elimination of nuclear weapons without consulting American allies .

Mr . Bush said that he initiated talks with the Soviets on the informal meeting by sending a proposal to Mr . Gorbachev last July , which the Soviet leader readily accepted . But word of the possible session was closely held by the president and a handful of top aides , and word of it did n't reach many second-level officials until the past few days . Indeed , many senior officials had been insisting for weeks that Mr . Bush was n't interested in such an informal get-together .

Though President Bush 's political critics at home have been urging him to open a more direct dialogue with Mr . Gorbachev , it actually was the arguments of leaders within the Soviet bloc itself that led the president to seek the December meeting . Mr . Bush decided he wanted the meeting after talking in Europe in July with the leaders of Poland and Hungary , who urged him to support Mr . Gorbachev 's efforts to transform the Soviet system and to urge him to loosen his grip on Eastern Europe , a senior aide said . While flying home from those discussions , Mr . Bush drafted a letter to Mr . Gorbachev suggesting an informal get-together to precede their formal summit next year .

Peter Gumbel in Moscow contributed to this article .

BNL Says Iraq-Loan Losse WALL STREET JOURNAL (J) 891101-0075 11/01/89

Banca Nazionale del Lavoro said its potential losses from lending to Iraq could reach 1.175 trillion lire ( $872 million ) , marking the bank 's first quantification of potential costs of unauthorized lending by its Atlanta branch .

BNL previously reported that its Georgia branch had taken on loan commitments topping $3 billion without the Rome-based management 's approval . State-owned BNL, Italy 's largest bank , has filed charges against the branch 's former manager , Christopher Drogoul , and a former branch vice president , alleging fraud and breach of their fiduciary duties .

BNL also said that its board had approved " after an in-depth discussion , " a letter to the Bank of Italy outlining measures the state-owned bank has taken or plans to take to improve controls on its foreign branches . The central bank had ordered BNL to come up with a suitable program by yesterday . Bank of Italy has also ordered BNL to shore up its capital base to account for potential foreign loan losses , and the Rome bank has outlined a 3 trillion lire capital-raising operation .

BNL was unable to elaborate on what measures were planned by the bank to improve controls on its branches abroad .

Democracy Doesn't Need Picketer @ ---- WALL STREET JOURNAL (J) 891101-0074 11/01/89

Hardly a day passes without news photos of the police dragging limp protesters from some building or thoroughfare in one of our cities . Of recent note are the activities of the pro- and anti-abortionists , anti-nuclear activists , animal rights protesters , college students concerned about racism , anti-apartheid groups , various self-styled " environmentalists " and those dissatisfied with the pace of the war against AIDS .

Maybe he did n't start it , but Mohandas Gandhi certainly provided a recognizable beginning to non-violent civil disobedience as we know it today . The Mahatma , or " great souled one , " instigated several campaigns of passive resistance against the British government in India . Unfortunately , according to Webster 's Biographical Dictionary , " His policies went beyond his control and resulted . . . in riots and disturbances " and later a renewed campaign of civil disobedience " resulted in rioting and a second imprisonment . " I am not a proponent of everything Gandhi did , but some of his law breaking was justified because India was then under occupation by a foreign power , and Indians were not able to participate fully in decisions that vitally affected them .

It is difficult , however , to justify civil disobedience , non-violent or not , where citizens have full recourse to the ballot box to effect change . Where truly representative governments are safeguarded by constitutional protections of human rights and an independent judiciary to construe those rights , there is no excuse for breaking the law because some individual or group disagrees with it . There may be a few cases where the law breaking is well pinpointed and so completely non-invasive of the rights of others that it is difficult to criticize it . The case of Rosa Parks , the black woman who refused to sit at the back of the bus , comes to mind as an illustration . But most cases of non-violent civil disobedience are not nearly so benign .

The public has a tendency to equate lawful demonstrations with non-violent civil disobedience . It is true that both are non-violent , but there is a fundamental difference between them . Lawful demonstrations , such as peaceful picketing and other assemblages that do not disturb the peace or cause a public nuisance or interfere with the rights of others , are rights guaranteed by any truly free system of government . Civil disobedience , violent or non-violent , is intentional law breaking .

The subject of this discussion is non-violent civil disobedience ; but , before we get on with that , let me make just a few tangential remarks about lawful demonstrations . They are useful to call public attention to grievances , but they have little value in educating anyone about the issues in dispute . The delight of television in dramatic confrontation encourages overuse of slogans chanted through bullhorns , militant gestures , accusatory signs and other emotionally inspired tactics . Civilized discourse and an environment where compromise can begin are lost in a hostile posture abetted by superficial media interviews .

At best , demonstrations are overused and boringly uninformative ; at worst , they can become the stimuli that lead to law breaking . Demonstrations are particularly apt to degenerate into criminal conduct when they leave the site of the grievance and become mobile . Petty criminals and street people looking for excitement attach themselves like remora to the fringes of the crowd and use the protest as an excuse for rock throwing , auto trashing , arson , window breaking , looting , pocket picking and general hooliganism . Soon the whole purpose of the demonstration is lost in mob mania . There are better ways to promote a cause .

Where non-violent civil disobedience is the centerpiece , rather than a lawful demonstration that may only attract crime , it is difficult to justify . Some find no harm in the misdemeanors of trespass , minor property destruction , blocking traffic and the like . They say these are small prices to pay for galvanizing action for the all-important cause . The crimes may appear small , but the prices can be huge . Here are two cases to illustrate .

Assume a neighborhood demonstration to protest speeding on a certain road or a careless accident involving a police car . The protesters lie down in the street , blocking traffic , and will not move until the authorities carry them away . Assume that someone caught in the jam has a heart attack . There is no way to get an ambulance in quickly to move him to a hospital . He dies . The demonstration was non-violent and involved only a simple misdemeanor , but its impact on that individual was violent and terminal .

Assume that a TV network is airing a celebrity interview program with a live audience . The politician appearing is highly controversial and has recently generated a good deal of rancor amid certain groups . In a planned protest against his appearance , several members of the studio audience chain themselves in front of the TV cameras in such a way that the program cannot continue . The network must refund money to the advertisers and loses considerable revenue and prestige . The demonstrators have been non-violent , but the result of their trespasses has been to seriously impair the rights of others unconnected with their dispute .

It might be alleged that TV has done more than its share to popularize and promote non-violent civil disobedience , so the second situation hypothesized above would be simply a case of " chickens coming home to roost . " Or maybe the TV network would lose nothing . Geraldo or Phil would probably pull up another camera and interview the chained protesters . Let us look for a moment at another type of non-violent civil disobedience that only harms other people indirectly , yet does irreparable damage to the nation as a whole . I am referring to those young men who chose to disobey their country 's call to arms during the Vietnam war and fled to Canada or some other sanctuary to avoid combat . Their cowardly acts of civil disobedience , which they tried to hide under the cloak of outrage at a war they characterized as " immoral , " weakened the national fabric and threw additional burdens on those who served honorably in that conflict .

Even more at fault are those leaders in and out of government who urged and supported their defections , thereby giving great help and comfort to the enemy propagandists . It is amazing that the ensuing mass executions in Vietnam and Cambodia do not weight more heavily on minds so morally fine-tuned . Worse , it remained to a well-meaning but naive president of the United States to administer the final infamy upon those who fought and died in Vietnam .

Under the guise of " healing the wounds of the nation , " President Carter pardoned thousands of draft evaders , thus giving dignity to their allegations of the war 's " immorality . " The precedent having been set , who can complain if future generations called upon to defend the U.S. yield to the temptation to avoid the danger of combat by simply declaring the war immoral and hiding until it is over ?

Finally , I think it important to point out the extraordinarily high visibility of non-violent civil disobedience in these days of intensive media coverage . Give television a chance to cover live any breaking of the law , and no second invitation will be required . This brings into question the motives of those who lead civil disobedience demonstrations . Do they want the spotlight for themselves or for their cause ? Here is a good rule of thumb : If the movement produced the leader , the chance that he is sincere is much greater than if the leader produced the movement . In either case , ask yourself whether you have become better informed on the issues under protest by watching the act of civil disobedience . If you have not , it is probable that a thorough airing of the dispute by calm and rational debate would have been the better course .

Mr . Agnew was vice president of the U.S. from 1969 until he resigned in 1973 .

Northwest Airline @ Settles Rest of Suits WALL STREET JOURNAL (J) 891101-0084 11/01/89

Northwest Airlines settled the remaining lawsuits filed on behalf of 156 people killed in a 1987 crash , but claims against the jetliner 's maker are being pursued , a federal judge said .

Northwest , a unit of NWA Inc . , and McDonnell Douglas Corp . , which made the MD-80 aircraft , also are pursuing counterclaims against each other in the crash near Detroit Metropolitan Airport .

Terms of the settlements for the remaining 145 lawsuits against Northwest were n't disclosed . A total of 157 lawsuits were filed on behalf of crash victims .

U.S. District Judge Julian A. Cook Jr . announced the settlements as the jury trial was to begin yesterday . He reset opening arguments for today .

The jury will resolve the claims against McDonnell Douglas , Northwest 's claim that a defect in the aircraft caused the crash , and McDonnell Douglas ' claim that the plane was improperly flown .

The National Transportation Safety Board ruled that pilots failed to set the plane 's wing flaps and slats properly for takeoff and failed to make mandatory preflight checks that would have detected the error . Also , a cockpit warning system failed to alert the pilots the flaps and slats were not set for takeoff , the NTSB said .

The only passenger who survived the crash was Cecelia Cichan , then 4 , of Tempe , Ariz . , whose parents and brother died in the crash . She now lives with relatives in Alabama .

Injury Trust for Manvill WALL STREET JOURNAL (J) 891101-0082 11/01/89

The Manville Personal Injury Settlement Trust said it is considering several ways to ease a liquidity crunch that could include the sale of Manville Corp . to a third party .

In a filing with the Securities and Exchange Commission , the majority holder of Manville acknowledged that the cash portion of its initial funding of $765 million will be depleted next year , and that alternative sources of funds will be necessary to meet its obligations . The trust , which was created as part of Manville 's bankruptcy-law reorganization to compensate victims of asbestos-related diseases , ultimately expects to receive $2.5 billion from Manville , but its cash flow from investments has so far lagged behind its payments to victims .

Spokespersons for both the trust and the company refused to comment on whether any talks with a possible acquirer of Manville had actually taken place . The trust is considering a sale of its Manville holdings , but Manville has the right of first refusal on any sales of its stock held by the trust .

Manville , a forest and building products concern , has offered to pay the trust $500 million for a majority of Manville 's convertible preferred stock . Manville and the trust are discussing the offer , but no decision has been made .

The filing also said the trust is considering a sale of Manville securities in the open market ; an extraordinary dividend on the common stock ; or a recapitalization of Manville .

Southern Co. Uni @ Enters Guilty Plea @ To Felony Charges @ ---- @ By Rick Christie WALL STREET JOURNAL (J) 891101-0086 11/01/89

Southern Co . 's Gulf Power Co . subsidiary pleaded guilty to two felony charges of conspiracy to make illegal political contributions and tax evasion , and paid $500,000 in fines .

Gulf Power 's guilty plea before U.S. District Judge Robert L. Vining yesterday marks the end of only one part of a wide-ranging inquiry of Southern Co . The company is the subject of a federal grand jury investigation into whether its officials and its utility subsidiaries conspired to cover up their accounting for spare parts to evade federal income taxes .

" The terms announced today are strictly between the United States and Gulf Power , " said U.S. Attorney Robert L. Barr . " This is only a further step in a lengthy investigation . "

The plea settlement does not allow Southern Co . to charge any of the $500,000 to its customers , or take action against employees who provided information during the federal inquiry . Gulf Power had been under investigation for violating the Utility Holding Company Act , which prohibits public utilities from making political contributions .

In a statement , Southern Co . President Edward L. Addison said , " We believe our decision to plead ( guilty ) to these charges is responsible and proper . And our action today will allow Gulf Power to avoid prolonged , distracting legal proceedings . " He did not say what effect , if any , the $500,000 fine would have on the company 's earnings .

Mr . Barr said yesterday 's plea by Gulf Power , which came after months of negotiations , was based on evidence that Gulf Power had set up an elaborate payment system through which it reimbursed outside vendors -- primarily three Florida advertising agencies -- for making illegal political contributions on its behalf .

The Appleyard Agency , for example , allegedly made contributions from 1982 to 1984 to various funds for political candidates , then submitted bills to Gulf Power . The contributions were funded by monthly payments of $1,000 to $2,000 to Appleyard in the guise of a " special production fee " -- in effect , hiding the nature of the payments from the Internal Revenue Service , federal prosecutors said .

The government also indicated that former Gulf Power senior vice president Jacob F. " Jake " Horton was the mastermind behind the use of the ad agencies -- Appleyard , Dick Leonard Group II Inc . and Hemmer & Yates Corp . -- to make payments to various political candidates from 1981 to 1988 . Mr . Horton , who oversaw Gulf Power 's governmental-affairs efforts , died mysteriously in a plane crash in April after learning he might be fired following the uncovering of irregularities in a company audit .

Government officials declined to say whether the investigation includes the ad agencies or the politicians involved .

In New York Stock Exchange trading , Southern Co . rose 50 cents a share to $27.125 .

Business Brief -- Murphy Oil Corp. @ Ocean Drilling Unit to Sell WALL STREET JOURNAL (J) 891101-0051 11/01/89

Ocean Drilling & Exploration Co . will sell its contract-drilling business , and took a $50.9 million loss from discontinued operations in the third quarter because of the planned sale .

The New Orleans oil and gas exploration and diving operations company added that it does n't expect any further adverse financial impact from the restructuring .

In the third quarter , the company , which is 61%-owned by Murphy Oil Corp . of Arkansas , had a net loss of $46.9 million , or 91 cents a share , compared with a restated loss of $9 million , or 18 cents a share , a year ago . The latest period had profit from continuing operations of $4 million . Revenue gained 13% to $77.3 million from $68.5 million .

Ocean Drilling said it will offer 15% to 20% of the contract-drilling business through an initial public offering in the near future . It has long been rumored that Ocean Drilling would sell the unit to concentrate on its core oil and gas business .

Ocean Drilling said it wo n't hold any shares of the new company after the restructuring .

Politics & Policy @ Business and Labor Reach a Consensus @ On Need to Overhaul Health-Care System @ ---- @ By Kenneth H. Bacon WALL STREET JOURNAL (J) 891101-0050 11/01/89

After 20 years of pushing labor proposals to overhaul the nation 's health-care system , Bert Seidman of the AFL-CIO is finding interest from an unlikely quarter : big business .

Corporate leaders , frustrated by double-digit increases in health-care costs , are beginning to sound like liberal Democrats . Failure to check rising medical costs ultimately could " lead some of us who today are free-market advocates to re-examine our thinking and positions with respect to government-sponsored national health insurance , " Arthur Puccini , a General Electric Co . vice president , warned earlier this year .

The pocketbook impact of health benefits has driven business and labor to a surprising consensus . Both the AFL-CIO and the National Association of Manufacturers are calling for measures to control rising costs , improve quality and provide care to the 31 million Americans who currently lack health insurance .

Agreement on these points is a long way from a specific program , and nobody expects the U.S. to rush toward radical restructuring of the health-care system . But there are signs that labor-management cooperation could change the politics of health-care legislation and the economics of medicine . " I ca n't remember a time when virtually everyone can agree on what the problem is , " says Mr . Seidman , who heads the AFL-CIO's department dealing with health matters .

Because the Bush administration is n't taking the initiative on health issues , business executives are dealing with congressional Democrats who champion health-care revision . " Business across the country is spending more time addressing this issue , " says Sen . Edward Kennedy ( D. , Mass . ) . " It 's a bottom-line issue . " Business complained earlier this year when Sen . Kennedy introduced a bill that would require employers to provide a minimum level of health insurance to workers but does n't contain cost-control measures . Partly in response , a bipartisan group of senators from the finance and labor committees is drafting a plan to attract broader support . It will feature a cost-containment provision designed to keep expanded benefits from fueling higher care prices .

At 11.1% of gross national product , U.S. health costs already are the highest in the world . By contrast , Japan 's equal 6.7% of GNP, a nation 's total output of goods and services . Management and labor worry that the gap makes U.S. companies less competitive .

Chrysler Corp . estimates that health costs add $700 to the price of each of its cars , about $300 to $500 more per car than foreign competitors pay for health . " The cost of health care is eroding standards of living and sapping industrial strength , " complains Walter Maher , a Chrysler health-and-benefits specialist .

Labor is upset because many companies are using higher employee insurance premiums , deductibles and co-payments to deflect surging medical costs to workers . Health benefits are contentious issues in the strikes against Pittston Co . and Nynex Corp . In their new contract this year , American Telephone & Telegraph Co . and the Communications Workers of America agreed to look for " prompt and lasting national solutions " to rising health-care costs .

Some analysts are cynical about the new corporate interest in health-care overhaul . Carl Schramm , president of the Health Insurance Association of America , scoffs at " capitalists who want to socialize the entire financing system " for health . " They hope they can buy some government cost discipline , " but this is a false hope , Mr . Schramm says . He asserts that government has done an even worse job of controlling its health bill than business .

So far neither the Bush administration nor Congress is prepared to lead the way toward revamping health care . The administration lacks a comprehensive health-care policy . Congress still is struggling to dismantle the unpopular Catastrophic Care Act of 1988 , which boosted benefits for the elderly and taxed them to pay for the new coverage .

A bipartisan commission established by Congress and headed by Sen . John Rockefeller ( D. , W.Va . ) is scheduled to present new plans for dealing with the uninsured and long-term care for the elderly by next March 1 . A quadrennial commission appointed by Health and Human Services Secretary Louis Sullivan is taking a broad look at the economics of Medicare for the elderly , Medicaid for the poor and the health system in general . It is expected to report next summer .

" No magic bullet will be discovered next year , an election year , " says Rep . Fortney Stark ( D. , Calif . ) But 1991 could be a window for action . The pressure for change will rise with costs . " I think employers are really going to be the ones to push for major change , " says Sharon Canner , a health expert at NAM.

Any major attempt to revamp the health-care system is likely to trigger opposition from politically powerful interest groups , particularly the American Medical Association , and perhaps from the public as well , if Congress takes steps that patients fear will limit the availability of care .

The NAM embraces efforts , which both the administration and the medical profession have begun , to measure the effectiveness of medical treatments and then to draft medical-practice guidelines . Advocates hope that such standards will improve treatment while limiting unnecessary tests and medical procedures . HHS Secretary Sullivan estimates that as much as 25% of the medical procedures performed each year may be inappropriate or unnecessary .

Limiting care wo n't be easy or popular . " To slow the rise in total spending , it will be necessary to reduce per-capita use of services , " the NAM warns in a policy statement . This will " require us to define -- and redefine -- what is ` necessary ' or ` appropriate ' care . This involves trade-offs and { it } cuts against the grain of existing consumer and even provider conceptions of what is ` necessary . ' "

The AFL-CIO also embraces treatment guidelines . In addition , it 's toying with an approach that would impose health-expenditure ceilings or budgets on the government as a whole and on individual states as a way to slow health-care spending . At a meeting here on Nov . 15 , the labor federation plans to launch a major effort to build grass-roots support for health-care overhaul .