THE WEEK

By KATHLEEN ADAMS, LINA LOFARO, MICHAEL QUINN, JEFFERY C. RUBIN, ALAIN L. SANDERS AND SIDNEY URQUHART

NATION

Saddam Takes Prisoners

Last Saturday, two Americans, David Daliberti of Jacksonville, Florida, and William Barloon of New Hampton, Iowa, were each sentenced to eight years in prison by an Iraqi court for illegally entering Iraq. The U.S. condemned the sentences, arguing that the two men, both employees of U.S. defense contractors in Kuwait, strayed over the border accidentally. The Iraqi action comes just as the U.S. is preparing to support a U.N. resolution permitting Saddam to sell more oil--so long as at least 50% of the proceeds go to humanitarian relief and the rest to compensate Gulf War victims and the U.N. for its monitoring. The sentences, some analysts say, may be Iraqi President Saddam Hussein's attempt to gain leverage in the negotiations.

Welfare Overhaul Passes

The House of Representatives approved by a vote of 234 to 199 the G.O.P.'s basic "Contract with America" plan to overhaul welfare. Passage came after one of the most raucous and vituperative debates of the new Congress, during which angry Democrats accused Republicans of rushing to passage a cruel and immoral plan, and infuriated Republicans blasted Democrats for trying to preserve a failed and unconscionable system. The bill, which now goes to the Senate, would convert current welfare entitlement programs into capped block grants to the states.

The Power of the Pen

The Senate voted 69 to 29 to give President Clinton a prerogative he and previous Chief Executives have long desired: a line-item veto over spending legislation. Opponents of the G.O.P.-sponsored measure argued that it gives away too much congressional power and may even be unconstitutional.

A Tax-Break Bite

Bitten by Democratic attacks characterizing the G.O.P.'s tax-cut package as a huge giveaway to the rich, nearly half the House's 230 Republicans petitioned their leadership to scale back the scope of the breaks. The dissidentsasked that the plan's $500-a-child annual tax credit be limited to families earning up to $95,000, down from the $200,000 proposed.

Shielding the Flag

Conservative Senators and Representatives reintroduced a proposal to protect the American flag from desecration. The measure enjoys broad bipartisan support but also strong opposition from some lawmakers who are concerned about tinkering with the right of free speech.

Dole: Affirmative on Action

Senate majority leader Bob Dole--once a defender and now critic of affirmative action--continued to be tripped up by the apparent contradictions of his record. In the mid-1980s, Dole tried to help a black former aide benefit from a small-business affirmative-action program that he now wants to scrap. Dole's office explained that the Senator tries to make sure "constituents are treated fairly while working to change the system."

Campaign '96

The presidential race got a little more crowded. Republican Patrick Buchanan, the pugnacious conservative commentator who gave George Bush a run for his money in the 1992 New Hampshire primary, announced his candidacy with a tough "America first" speech. And G.O.P. California Governor Pete Wilson, laying out his own conservative agenda, announced the formation of an exploratory committee. On the Democratic side, former Pennsylvania Governor Robert Casey said he too was forming an exploratory committee--a potentially portentous move from the party's right that could complicate President Clinton's re-election strategy.

The Sheik's Trial

At the terror-plot trial of Sheik Omar Abdel Rahman and 10 followers, jurors were shown dramatic videotapes that, the government maintains, recorded the defendants at work. Prosecutors said one clip showed a co-defendant taking a scouting drive through a major New York City tunnel to explore where to plant a bomb, and another recorded some of the defendants trying to build an explosive. Defense attorneys attacked the credibility of the government informer whose cooperation made the tapes possible.

Commuter Terrorist Gets Life

Colin Ferguson, the man who gunned down six commuters and wounded 19 others in a 1993 shooting rampage on New York's Long Island Rail Road, was sentenced to a minimum of 200 years in prison, ensuring a stay behind bars for life.

The Farrakhan-Plot Case

At a preliminary hearing in the case brought against Qubilah Shabazz for having allegedly plotted to assassinate Nation of Islam leader Louis Farrakhan, the government's key informer testified that he had been promised $45,000 by authorities for his help. The defense maintains Shabazz was entrapped by the informer.

Post-Office Killings

Four people were shot to death and one seriously wounded during a holdup at a post office in the quiet suburban community of Montclair, New Jersey. Acting on a tip, police arrested Christopher Green, a former postal co-worker, who the authorities said quickly confessed to the killings, saying he robbed the facility to pay off debts, including his rent.

Neo-Nazi Nabbed

Gary Lauck, the "Farm Belt Fuhrer" who, protected by U.S. free-speech guarantees, has long embarrassed his neighbors in Lincoln, Nebraska, was arrested in Denmark on a German warrant. German authorities want to try the American neo-Nazi on charges of inciting and encouraging racial hatred in their country.

WORLD

Gas Attack on Tokyo Subway

Ten people died, and more than 5,500 were hurt in a nerve-gas attack on the Tokyo subway during Monday-morning rush hour. Two days later, police began raiding the main compounds of a religious sect, Aum Shinrikyo, seizing what appeared to be laboratory equipment and tons of chemicals. Police have confirmed that they found a stash of 22 lbs. of gold ingots and yen valued at more than $7 million. The cult's leader, Shoko Asahara, denied any link to the attack.

Turkey Attacks Kurdish Rebels

Turkish forces invaded Iraq to attack Kurdish separatists fighting an 11-year-old guerrilla war in southeastern Turkey. The incursion, Turkey's largest military intervention since its invasion of Cyprus in 1974, involved 35,000 troops. Said Turkish Prime Minister Tansu Ciller: "We are determined that in this final operation, the job will definitively be done."

Bosnians Shatter Cease-Fire

Bosnian government forces attacked a communications tower held by Bosnian Serbs outside the northeastern city of Tuzla, breaking a truce that began New Year's Day and was scheduled to expire May 1. After the Serbs responded by shelling Tuzla and another government-held town, Travnik, in central Bosnia, a return to all-out war seemed inevitable.

Russians Fight On in Chechnya

Despite taking two important Chechen cities, Argun and Shali, last week, the Russian army faces a long slog in Chechnya. "It won't end so quickly," said the Russian commander, Colonel General Anatoli S. Kulikov. "We calculate that by the summer period, we can establish control of two-thirds of the territory."

Queen Visits South Africa

In her first visit to South Africa in 48 years, Queen Elizabeth II bestowed the Order of Merit on President Nelson Mandela--thus offering the former pariah nation a further sign of its readmission to the world community. South Africa's white right wing said it would ignore the visit of "Mrs. Elizabeth Windsor."

Clinton Sets Russia Trip

President Clinton announced that he will visit Moscow on May 9 to join Russia's celebrations marking the 50th anniversary of the Allies' World War II victory over Nazi Germany. Clinton will also meet with Russian President Boris Yeltsin.

BUSINESS

Skyrocketing Trade Deficit

The U.S. trade deficit soared to a record $12.23 billion for January, clearly a result of Mexico's economic woes. The devalued peso has reduced Mexico's imports 10%. Some analysts predict a $15 billion trade imbalance by year's end.

An Insider for Sony

Sony Corp. chose a 57-year-old dark horse with a strong reputation as a problem solver as its next president. Nobuyuki Idei, who leapfrogged over two management levels to the top spot, is passionately committed to the company's entertainment businesses, despite $3.2 billion in losses and write-offs at its Hollywood studio last year.

--By Kathleen Adams, Lina Lofaro, Michael Quinn, Jeffery C. Rubin, Alain L. Sanders and Sidney Urquhart