<table><tr><td>Can We/Should We Count on the House of Saud? A Rogue State in the Making?</td><td>Page 15</td></tr><tr><td>Population is Growing, Are We Ready?</td><td>Page 16</td></tr><tr><td>We Now Know the Truth/What's Next with Libya</td><td>Page 17</td></tr><tr><td>Africa - Still Struggling</td><td>Page 18</td></tr><tr><td>Russia Bouncing Back, But ...</td><td>Page 19</td></tr><tr><td>A Dark Horse in Europe</td><td>Page 20</td></tr><tr><td>A Really Important Decision - The Next Supreme Court Nominees</td><td>Page 21</td></tr><tr><td>Healing the Racial Divide</td><td>Page 22</td></tr><tr><td>Glass Ceiling Gets Cloudy</td><td>Page 22</td></tr><tr><td>Terror May be Up, but Crime is Way Down - Yet There is Still Reason for Concern</td><td>Page 23</td></tr><tr><td>America's Education System Changing: School Choice Gaining Momentum</td><td>Page 25</td></tr><tr><td>Senior Americans Shunning Retirement</td><td>Page 26</td></tr><tr><td>Facts & Figures</td><td>Page 26</td></tr></table>

WHEN WILL THE NEXT TERRORIST STRIKE COME?

Interviews with more than a dozen top security and intelligence professionals in the United States and Europe suggest that if terrorists are able to launch a major attack, it will come before the end of 2003. The reasoning is that the terrorists have no interest in seeing George W. Bush re-elected and a major attack next year would almost guarantee that the incumbent U.S. president is returned, even if the economy remains stagnant.

Some say the attack will be biological, but others discount this, emphasizing it is 1) hard to control a biological weapon and 2) the impact would not be large enough. To be sure, a biological attack is easier and less risky if the terrorist has the right ingredients.

There is no question that we shall experience more terrorist attacks in all parts of the world. Egypt's President Hosni Mubarak is on record predicting "terrorism will be aggravated" and terrorists are becoming "united."
Mohammed Adwan, Jordan's information minister, says terrorism "is going to be very hard to contain. Saudi Arabia's Ghazi Qusaibi predicts "more violent displays of anger."

Conventional wisdom suggests that terrorists are working hard to surpass the horror created on 9/11 and if they can devise a scheme to do this it will be in the next few months.

FREEDOM - WHAT HAPPENED?

Let's face it:

All over the Western world, and in particular in the United States, the concept of openness and freedom has changed.

You can see it in people's faces; in the security in the airports and at the bridges and tunnels; and in all the major buildings we enter today.

It seems that the "terror alert" is being raised or lowered every week or so.

Everything is tight as a drum.

Will the absolute freedom and rights we once enjoyed return? Not for some time.

Get used to it. And be ready to do what is necessary to survive in a style to which you will have to become accustomed.

NO ONE IS SAFE

Terrorism, it is obvious, no longer knows any boundaries. The ocean is no
guarantee of safety and the man on the street in any nation, not only those in
the Middle East, is vulnerable.

Efforts to protect average citizens in all parts of the world are uneven and often lacking. There is virtually no airport security in Madrid, Paris, Athens or Rome; and efforts to share data among various police and intelligence units around the globe are just getting underway.

Despite numerous arrests and killings of terrorists, there are many, especially
young people, who are signing up to promote their fanatical goals. Two
extraordinarily dangerous areas of the world, which do not get attention, are
South America, where Columbia's citizens rank it as the top terrorist state in
the world; and Africa, where, in many countries, carrying an exposed gun is a
commonplace.

No one as yet has an answer and it is virtually impossible to interdict all terrorists and outlaws.

Expect plenty of disruption in the months ahead; plenty of money spent on non-productive means to protect average citizens (in the U.S. we have already gone through more than $5 billion in preparedness funding); and an increase in contentious dialogue about what to do on this issue.

THE 20TH AND THE 21ST CENTURIES ARE TOTALLY DIFFERENT

The 20th century was, to a considerable extent, about acquiring land - World War I and II reshaped the globe; the "Cold War" had a similar impact. The three philosophical/political movements that blighted the 20th century - Nazism under Hilter, Communism under Stalin, and Fascism under Mussolini - all failed.

The 21st century is based on science and technology. No nation seems to want to expand its territory. But everyone wants the competitive edge that a breakthrough in science and technology can bring. The major ideological battle of the era, which actually was spawned in the middle of the 20th century, seems rooted in religious belief.

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IS GEORGE BUSH VULNERABLE?

Not quite! Or, at least, not yet!

President Bush's re-election prospects, which looked so rosy after the
Congressional Republicans' off-year election triumphs last November, have
surely taken a turn for the worse. But the Democrats have not yet united
behind a single candidate for the 2004 presidential election.

In leading his party to a victory last November that regained control of the Senate and retained control of the House, President Bush looked unassailable. His job performance rating was over 60 percent; the U. S. economy appeared on the road to recovery; and he enjoyed worldwide support for his war against terrorism in the wake of 9/11 and the routing of Al Qaeda in Afghanistan.

But world and economic conditions have changed dramatically since.

National polls taken last month indicated that fewer than 50 percent of likely voters favor his re-election. Polls also indicate that, with the exception of former Vermont Governor Howard Dean, none of the other eight announced Democratic candidates have won favor with the general voting public, and, if the election were held now, Bush would beat any of them, including Dean.

If she enters the race, Senator Hillary Clinton could present a genuine
challenge to the President. Ms. Clinton's people have floated several "feelers"
recently to gauge support, but the view is that she will sit the election out
simply because she cannot afford to lose.

Still, the President's decline in the polls is of increasing concern to White
House political strategists and to Republicans up for re-election in the House,
the Senate, and in 11 governors' races where President Bush will surely impact
their chances.

At this writing, the odds are still that President Bush will win in November, and
while there may be some erosion in the Congress and in state houses, it will
not be significant.

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THE OUTLOOK FOR THE 2004 ELECTIONS

As noted, political vulnerabilities, notwithstanding, President Bush will most
likely be re-elected next year. As President, he not only enjoys a "bully pulpit,"
but is also in a position to take dramatic actions to improve his political
position. For example:

* President Bush could get U.N. approval to send its peacekeeping troops to Iraq and provide financial assistance for the rebuilding effort if he is willing to give up total U. S. control of the process.

* He could apply greater pressure – political and financial – on the Israelis and Palestinians, as well as neighboring Arab states, to push ahead with his road map for peace in the Middle East.

* He could tone down the right wing rhetoric from Tom DeLay and House Republicans on sensitive social issues like abortion, school prayer and gay bashing that hurt the GOP with moderates and independents.

In addition, it is well to remember that President Bush is a formidable
campaigner and will be campaigning with the biggest campaign war chest in
U.S. history. Also, since he is running unopposed, he can act presidential
during the primary season while the nine (or perhaps more) Democrats fight
each other for their party's nomination.

HAS IRAQ BECOME A QUAGMIRE?

President Bush's drop in the polls results directly from the Administration's key foreign and economic policy decisions. At the top of the list is Iraq, where, despite a quick and relatively painless victory, 140,000 U. S. troops are currently bogged down in a costly -- $3.9 billion per month and with estimates that as much as $150 billion will be spent this year and next -- and bloody effort to restore order and rebuild a nation.

Beset by persistent guerrilla attacks from Hussein loyalists and others; the sabotage of oil and water pipelines; widespread hostility from many Iraqis who opposed Hussein, but regard the American and British as unwanted occupiers; and internecine conflict among Muslim factions vying for control, the United States appears to be faced with a long and bitter nation-building challenge. The monetary cost of rebuilding Iraq is now estimated to be in the tens of billions of dollars, not to mention the mounting cost of lives of U. S. and British troops.

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Administration critics charge that even more money and additional U. S. troops will be needed to pacify and rebuild the country. President Bush just asked Congress for an additional $87 billion.

Having thumbed its nose at the U.N. and most of the major nations that opposed the U. S. invasion of Iraq, the United States now finds itself in the position of seeking military and financial assistance from that international body and those very nations that felt an attack on Iraq was unwarranted.

Perhaps most galling to the Administration is that Iraq's alleged arsenal of weapons of mass destruction, that the President claimed were a direct and imminent threat to U.S. security, are still nowhere to be found and that Hussein himself is still at large.

The Iraq debacle is beginning to evoke distant echoes of the Vietnam era and the two terms that so eroded President Johnson's popularity – "credibility gap" and "quagmire."

Costly and divisive wars lead to protests and political and economic instability. If the Administration fails to quell widespread conflict in Iraq and cannot enlist wider international and domestic support for restoring stability and rebuilding the country, be prepared for stormy and volatile economic consequences next year.

## A GLOBAL ECONOMY TAKES HOLD

Economic isolationism is over. The American economy is now inextricably bound with the economies in the rest of the world.

Globalization of business is, of course, the prime reason. Statistics that bear this out -- the commitment of U.S. companies abroad – are overwhelming.

And there is more.

Over $500 billion is invested by non-Americans in the U.S. every year – about 5% of America's GDP. Many countries have huge holdings in U.S. debt obligations.

According to the Federal Reserve, private foreign investors poured $129 billion into U.S. government and agency securities in the second quarter of 2003. The biggest foreign investors are Asian central banks in China, Japan, South Korea and Hong Kong who owned a total of about $696 billion in U.S. Treasuries alone on June 30. Foreign investors now own 38 percent of all U.S. Treasuries.

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* Cities and states that, under the previous Administration, were flush with cash and free with tax cuts now are facing huge deficits requiring severe cutbacks in essential services like health, education and welfare.

* An unemployment rate up from 4 percent of the workforce to over 6 percent (an estimated nine million), even with an economic recovery underway.

It appears that George Bush may be the first president since Herbert Hoover to preside over a net job loss.

There is certainly merit to the Administration's claim that the economic downturn actually began under former President Clinton's watch and was exacerbated by the terrorist attacks of September 11, 2001 and the costs associated with providing for homeland security.

But there can be little doubt that the biggest factor in the economic upheaval was the centerpiece of President Bush's economic program--the phased-in $1.7 trillion tax cut package in his first year in office, followed by this year's $785 billion reduction.

State governments, whose tax programs are tied to the federal tax rates, have been gravely impacted. And reduced federal tax revenues now ensure large state deficits for some time to come.

So, while the federal government is running up big deficits, state governments, most of which must, by law, balance their budgets, have been forced to make draconian cuts in nearly all services and, in many cases, increase taxes. And cities, dependent upon shared state revenues, have been forced to follow suit.

One other area of concern is the latest index of consumer confidence from the authoritative University of Michigan, which dropped modestly to 88.2 in early September, dampened by higher gasoline prices. Consumer spending now accounts for two-thirds of all economic activity in the U.S.

To be sure, most signs remain positive, but we are not out of the woods yet and the economic recovery remains fragile.

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PROTECTIONIST SENTIMENT CONTINUING TO GROW

The accelerating exodus of white collar jobs to overseas locations, coupled with continuing loss of domestic manufacturing jobs -- around 57,000 a month -- is fueling protectionist sentiment on a bi-partisan level.

The nation's manufacturing base is disappearing. Today, more than half of the goods that Americans buy are made outside of the U.S., up from 31 percent in 1987. Organized labor, a bulwark of the Democratic Party, has historically opposed unfettered free trade, viewing protectionism as a way to offset the exodus of jobs.

Republicans, traditional free trade supporters, not long ago pushed a bill through the House requiring all products the Pentagon buys to be at least 65 percent U.S.-made. Legislation has also been introduced in some states that would mandate all government contractors to be U.S. citizens or legal residents.

President Bush, although ostensibly a free trader, slapped big tariffs on steel imports last year and signed a farm bill (with major support from both sides of the aisle) that continues to heavily subsidize domestic production. The European Union—notably, the French—also maintain costly protectionist agricultural policies producing artificially low prices. All this has had a devastating impact on developing countries' agricultural exports. Meanwhile, the U.S. trade deficit continues to escalate. Our trade deficit jumped in July to $40.3 billion as imported goods from China and imported oil purchases hit record highs.

Free trade advocates argue strongly that a powerful stimulant to the stagnant U.S. economy will come from opening new markets to U.S. goods and services. But until the U.S. job situation turns around, you can expect the swing to additional trade barriers to gain considerable momentum. This is bound to roil relations with many of our allies and other nations as well as spark retaliatory measures.

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WHEN MORE CAN ALSO MEAN LESS -
THE PRODUCTIVITY DILEMMA

The latest federal government statistics confirm that productivity for the total U.S economy grew by an impressive 5.7 percent this past spring without a corresponding rise in demand. Typically, it now takes nine workers to produce what ten did only two years ago. This means a company like American Express grew its revenues by $1.2 billion in just the last two years -- with 9,000 fewer employees. Anyone reading the papers these days knows that business continues to announce substantial layoffs.

When business operates more efficiently, it can pay employees better wages while posting decent profits without raising prices. That makes U.S. goods more competitive internationally and promises higher future living standards. The downside to these productivity increases, however, is the immediate job loss. It's a paradox that can't be ignored.

In the short-term, enhanced productivity cancels any need for additional hiring. In the long run, studies by the Federal Reserve show that higher productivity -- read, old-fashioned economic growth -- does boost employment. But that may be cold comfort to the millions now out of work. The productivity vs. jobs conflict represents a serious dilemma that won't go away and one that will demand some kind of resolution.

IT'S NOT JUST MANUFACTURING,
GLOBALIZATION HITS U.S. SERVICE SECTOR

Outsourcing domestic manufacturing jobs to cheap-labor foreign nations has been underway for 30 years and is now a marketplace given.

Today, the same trend is beginning to take its toll on white-collar workers in the service sector. This trend is affecting not only lower-level workers, but financial analysts, accountants, programmers, architectural drafters, medical specialists, claims adjusters, and the like -- individuals with often high-paying jobs and advanced degrees.

The out-migration of white collars workers is moving up the value chain from relatively unskilled call center and back office workers to highly skilled professionals. Employers, battling fierce global competition, can realize huge labor cost savings by exporting white-collar work overseas. Beginning computer programmers in India toil for as little as $5,000 annually compared to at least $60,000 and much higher for their U.S. counterparts.

According to Forrester Research, over the next 15 years, 3.3 million white-collar jobs will move abroad, representing $136 billion in lost salaries. That compares with only $4 billion outsourced in 2000. Consulting firm A.T. Kearney says the biggest outflow will be in financial services with at least 500,000 jobs moving overseas in the next five years.

Hewlett-Packard, a major outsourcer, now has some 5,000 employees in India doing research, software development, and running call centers. Oracle has 4000 Indian employees at two major development centers. The trend is also impacting relatively high-level professionals. By year's end, JP Morgan Chase expects to employ at least 40 Indian research analysts out of Bombay.

Organized opposition to this outflow is beginning -- especially from unions, who see this latest globalization threat as eroding all worker bargaining power here in the U.S. as wage gains lag behind inflation rates. At the same time, worker anxiety about job security in a "jobless recovery" continues to mount.

The current economic expansion is, in fact, the worst on record in terms of job growth and a new study by the Federal Reserve Bank of New York indicates that this recession's job losses are much more structural and permanent than such losses have been in the past.

Nonetheless, because of the enormous savings in labor costs, the trend appears unstoppable unless federal lawmakers decide to take some kind of legislative action to block, or limit, the exodus.

## ARE WE ENERGIZED ON ENVIRONMENTAL AND SOCIAL ISSUES AND DOES IT MAKE A DIFFERENCE?

The Administration's environmental and social polices have managed to energize some, particularly the Democrats liberal base, in a way that former Vice President Gore was unable to do in the 2000 presidential race.

Environmentalists point out that the Administration has:

* Walked away from the Kyoto agreement to reduce greenhouse gas emissions devised to slow global warming.

* Weakened provisions of the Clean Water and Clean Air Acts and reduced funds for enforcement.

* Pushed for drilling in the Arctic Wildlife Refuge, despite strong opposition in Congress.

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* Eased a key EPA regulation that will permit more than 500 older polluting power plants and about 20,000 aging factories and refineries to expand without installing new pollution control equipment,

Environmental activists have made it clear that defeating Bush will be their number one priority in 2004 and their support will be an important asset to the Democratic nominee. But do not expect this issue to supersede Iraq and the economy in any way.

## IRAQ - WHAT'S AHEAD?

Most Iraqis, we believe, are pleased that the U.S. and its allies ousted Saddam Hussein.

But, still, there is a small, hard and committed core of the population that wants the U.S. out and has adopted a strategy of terrorism and killing to force our departure.

Right now, we have almost no reliable intelligence on when or where the next attack will come. While we are catching Saddam loyalists almost every day, Iraq, with its porous borders, has become a magnet for Islamic radicals intent on expelling the "infidels," much as happened to the Russians in Afghanistan.

We have no choice.

If those who bombed the U.N. conquer, win and take power, a rogue state of unprecedented proportions will have been created with dire implications for the West. But, alone, the U.S. does not have enough money or people to do the job.

The pressures on Americans and the Bush Administration will only increase.

## EUROPE HAS COME A LONG WAY AND THE RESOLVE IS THERE TO GO FURTHER

In just the past 20 years, Europe has united into a single market; has adopted a single currency (with the exception of the U.K.); has created a constitution; and has found ways to discuss and make sweeping changes over matters of mutual interest.

Europe, however, remains split on foreign policy.

11

But Europe is exceptionally active in trade as a way of protecting its people. Its workers are starting to migrate from country to country and a balance on laws is being created to make working together much easier.

Still, the growth rate of most European countries has slowed considerably to around 1.5 percent per year and fear of deflation is very real. Most are looking to the U.S. to get things going again. There is a view that, if current trends continue, by 2050 Europeans will be half as wealthy as Americans.

## DESPAIR IS SETTLING IN AND DEEPENING IN THE MIDDLE EAST

The failure of Middle Eastern societies to create opportunities that their people seek and to deal with their deficiencies in daily life is causing considerable unrest.

Study after study shows the man-on-the-street in the Middle East wants exactly what his counterparts in New York, London and Tokyo seek - better opportunities, improved hygiene, better schools, health care and so on.

But the fact is that little of these basics have been delivered by national and business leadership and serious unrest is building up.

All this is further exacerbated by the various wars underway, which most ordinary citizens in the Middle East oppose, not because they do not want Saddam Hussein or the Taliban out, but because military actions further destabilize the area and diminish the quality of their daily lives.

The result is hundreds of millions of bitter, disillusioned people who are looking for answers and directing a great deal of their anger at the U.S.

## CAN THE ROAD MAP BE SAVED?

In the wake of Abu Mazen's departure as the Palestinian Authority's prime minister and the appointment of Ahmed Qureia as his successor, the Israeli-Palestinian situation appears as intractable as ever. Qureia is seen by many as a moderate, reasonable, highly intelligent figure, but serious doubts exist about his ability to wrest control of the Palestinian security forces from Yasser Arafat -- an essential move if Hamas and the other militant groups are ever to be stopped. Hamas will not be placated and only the Palestinian Authority itself, which now has a security force of some 40,000, can make this happen.

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Meanwhile, suicide bombings and harsh Israeli retaliation continue unabated. The U.S. road map to establish a Palestinian state by 2005 has never been fully acceptable to either side. Independent critics point out that, although the road map outlined measures to be taken by both sides, it is lacking in specificity about strict standards of performance and accountability and the sequence of concessions -- which party does what and within what time frame. Both sides have predicated progress on meaningful actions the other would not take. The level of significant compliance by both has been minimal. Sharon demands that the Palestinians crush Hamas before he meets his major obligations. Simply having the Palestinians call for the end of violence or condemn the terrorists is not enough. The Palestinians want Israel to make the first big move whether ending retaliatory strikes, eliminating the settlements, or stopping the new partition wall.

To break the impasse, some kind of sequence of concessions for both sides has to be put in place and implemented under greatly increased pressure from the U.S. More than ever, a heightened role by the U.S. appears to be absolutely critical to save the collapsing road map and bring about an eventual peaceful, two-state solution. Until now, the level of American monitoring and its determination to oblige both parties to comply has not been very strong.

In addition to the humanitarian issues involved in halting the ever-mounting death toll and alleviating the severely depressed economies of both sides, the geopolitical significance of achieving an equitable Israeli-Palestinian peace cannot be over-emphasized. Continuing violence in the region is a major driver of instability throughout the Arab world, where virulent anti-Israel sentiment is rampant, while powerfully fueling global terrorism. As never before, the U.S. has a huge stake in the outcome of the Israeli-Palestinian crisis.

## ASIA (EXCEPT NORTH KOREA) IS VERY QUIET AND VERY SUCCESSFUL

While the rest of the world is wondering what lies ahead for the global economy, most Asian nations are booming economically with no end in sight.

Manufacturing and job growth in India and China, particularly, is rising at unprecedented levels and both nations have become "outsourcing" capitals for the rest of the world, which is sending them countless thousands of jobs.

Japan is starting a slow comeback as totally new leadership takes over in business and politics.

Significant investment is pouring into Asian countries like Viet Nam, China, of course, Thailand and others.

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There is talk of an Asian currency, an Asian army and a pan-Asian foreign policy.

It is worth monitoring these Asian developments very closely since this phenomenon will have a huge impact on the rest of the world.

## AGAINST NORTH KOREA, DIPLOMACY RULES

Perhaps chastened by the unexpected course of events in post-war Iraq, the Bush Administration is adopting a much more conciliatory posture in meeting the North Korean nuclear threat. Diplomacy and dialogue rule.

Some small progress was made at the recent six-nation parley in Peking attended by North and South Korea, Japan, Russia, China, and the U.S. Earlier, the U.S. had insisted that North Korea first dismantle its nuclear weapons program before it would offer any direct economic aid or security guarantees. Although still firm in its resolve not to yield to what President Bush has termed "nuclear blackmail," the Administration now appears to be backing off from a rigidly tough stance to adopt a softer, more flexible tone.

A high-ranking U.S. official has already indicated that a mutual, reciprocal, step-by-step approach to eliminating Korea's nuclear capabilities may now be in the offing. In addition to direct economic aid, Pyongyang wants some kind of non-aggression pact with the U.S. and we have expressed a willingness to address the communist state's security concerns.

There will be plenty of hard-dealing in the immediate future, beginning at the next round of talks slated for year's end in Beijing. But a military, Iraqi-type solution of the North Korean crisis is not in the cards.

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CAN WE/SHOULD WE COUNT ON THE HOUSE OF SAUD?
A ROGUE STATE IN THE MAKING?

The Saudi monarchy is in trouble - unemployment is now at 40 percent - and dozens of princes and others will be jockeying for position when 80-year-old King Fahd dies.

Why is this important?

Because Saudi Arabia remains the world's largest supplier of oil and also a center for Al Qaeda funding and activity.

Sources believe that Al Qaeda is consolidating its ability to operate in the Kingdom and point out that this cannot happen without support from Saudi military and paramilitary agencies.

Clearly, September 11 boosted the confidence of many Saudi people in the ability of Osama bin Laden and the jihadists to confront the West and the United States.

At the same time, the U.S. criticism of Wahhabism reinforced the widely held Muslim belief that Washington was waging a war against Islam. (Muslims in Saudi Arabia have pre-dominantly followed the Wahhabi brand of Islam for more than two centuries.)

Moreover, the Saudi people increasingly view the ruling House of Saud as an ally of the United States in what it perceives to be a war against Islam.

In the 13th century, bin Taimiyyah, the intellectual godfather and founder of Wahhabism, issued a fatwah, or religious edict, legitimizing rebellion against a ruler who was not ruling in accordance with Islam. Today, many see that fatwah as the rationale for attacking the House of Saud.

Indeed, major intellectual support for Al Qaeda comes from religious scholars. Three of the top scholars are Ali al-Khudair, Ahmad al-Khalid, and Nasser al-Fahd.

Expect disruption and violence and assassinations of princes to begin within a year and all of this to significantly affect oil prices and shake the stability of the world.

15

By 2015, expect a tremendous growth in the population of California:

Resident Population
Numbers in Thousands

<table><thead><tr><th>State</th><th>July 1, 2000</th><th>(Projected)<br>July 1, 2015</th></tr></thead><tbody><tr><td>California</td><td>32,521</td><td>41,373</td></tr><tr><td>Texas</td><td>20,119</td><td>24,280</td></tr><tr><td>New York</td><td>18,146</td><td>18,916</td></tr><tr><td>Florida</td><td>15,233</td><td>18,497</td></tr><tr><td>Pennsylvania</td><td>12,202</td><td>12,449</td></tr><tr><td>Illinois</td><td>12,051</td><td>12,808</td></tr><tr><td>Ohio</td><td>11,319</td><td>11,588</td></tr><tr><td>Michigan</td><td>9,679</td><td>9,917</td></tr><tr><td>New Jersey</td><td>8,178</td><td>8,924</td></tr><tr><td>Georgia</td><td>7,875</td><td>9,200</td></tr></tbody></table>

WE NOW KNOW THE TRUTH/WHAT'S NEXT WITH LIBYA?

We made a deal.

Muammar Qaddafi, after 15 years, finally admitted the Libyans blew up Pan Am Flight 103 over Lockerbie, Scotland killing 270 people. Qaddafi agreed to pay $2.7 billion or about $10 million to each family in return for a lifting by the U.N. of economic sanctions. Libya also reportedly agreed to increase compensation for a terrorist attack in 1989 that brought down a French airliner. Despite some opposition from France, the U.N. did, in fact, vote to lift sanctions against Libya (U.S. sanctions are still in place). Libya has, however, never admitted responsibility for the bombing of the UTA airliner over Niger, which killed 170 people, but it paid France $34 million in compensation in 1999 after a Paris court convicted six Libyans in absentia of responsibility for the attack.

Qaddafi said in a recent speech, "We are opening a new page in our relations with the West." This came as Qaddafi, a self-admitted terrorist, gave deposed Liberia tyrant Charles Taylor ammunition and arms.

The bombings took place 15 years ago and Taylor is now gone. But we are tolerating an individual who, like others in the world that we turn from, rejects this nation's democratic values and would very much like to see the United States in a disadvantaged position. We know there is probably a rationale for all this, but one wonders why our best thinkers cannot figure a way to deal with him that helps us keep our head high.

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## AFRICA - STILL STRUGGLING

Readers of this Trend Letter will recall that, for many years, we have suggested that the top thinkers in the world have simply ignored Africa.

Today, 17 of Africa's 54 nations are considered democratic, compared with just four less than 20 years ago.

But progress on this continent is still glacial.

Despite the positive trend, Africa continues to be beset by serious problems – AIDS throughout the continent, lawlessness in Nigeria, regime change in Liberia, violence in at least a half dozen countries, and more.

In Zimbabwe, political repression has become much worse. The Ivory Coast, once envied for its stability, is teetering on the verge of a breakdown. And Africa's first military coup in more than three years took place earlier this year in the Central African Republic.

Africa is still largely sunk in the morass it fell into in the 1960s. Indeed, power struggles, ethnic conflict, mismanagement, profiteering and political corruption are the rule in much of Africa.

In Nigeria, political assassinations have become commonplace. Politicians run their own militias, and the electoral commission lacks credibility. Despite four years of democratically elected government, the country still battles severe unemployment, poverty, violence and graft.

Fully 28 of Africa's 54 countries are listed as "low" in human development by the United Nations.

There is positive movement on this continent of more than 650 million, but serious progress is decades, if not longer, away.

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RUSSIA BOUNCING BACK, BUT....

The Russian economy continues to barrel ahead five years after the severe financial crisis of 1998, which came on the heels of a devastating debt default and ruble devaluation. Thanks to a GDP growth rate that's averaged six-and-a-half percent since 1999 --matched by few nations anywhere on the globe -- Russia, though still with huge problems, has been steadily emerging as a viable modern economy.

The lion's share of this recent prosperity is directly attributable to a big upswing in global oil and gas prices. Oil and gas sales represented more than 50 percent of the country's exports last year and nearly half of the government's revenues. Russia can now also point to a budget surplus, Central Bank reserves that exceed $64 billion, and foreign debt that has been shrinking rapidly.

While the chaos of the Yeltsin era has been left behind and a cosmopolitan city like Moscow appears relatively prosperous with a fast-growing middle class, the majority of Russians living in the provinces are, however, still mired in grinding poverty. The gap between rich and poor is huge - especially away from the larger cities. The nation's health care system is in disarray. The life expectancy rate for Russian males, the lowest in Europe, is actually dropping. Crime, corruption, alcoholism and disease are widespread -- even in the larger, metropolitan areas.

Recent official criminal investigations of many Russian business oligarchs were probably motivated, in large measure, by political considerations. Many of these new capitalists acquired their vast wealth through highly questionable methods during the privatizations of the 1990s as the old Soviet system crumbled. There is no love lost between the millions of struggling Russians (who will soon vote) and the new billionaires who've gained control of some of Russia's most valuable assets.

President Vladimir Putin has been successful asserting the federal government's authority and introducing many necessary economic reforms including strict enforcement of a uniform 13 percent flat-rate income tax. Meanwhile, larger Russian companies are becoming much more transparent although a number of major industries, like the natural gas monopoly Gazprom, the electricity monopoly, and some financial institutions continue to be state-owned.

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Putin will have to implement many additional market-oriented reforms -- in the banking, civil service, and administrative sectors, particularly -- if the current expansion is to be sustained. To date, he has done relatively little to diversify the economy and lessen its dependence on energy revenues or to encourage entrepreneurialism. A study last year showed that only eight business owners now control 85 percent of the nation's largest companies.

Most observers agree that, if the Russian economy is to continue to grow, much more will have to be done to strengthen the rule of law. Not only is that essential to attract more private investment capital, but ordinary Russian citizens have to feel confident that the law will protect them.

Watch December's parliamentary elections and then next year's presidential vote, which could see a formidable backlash from discontented masses across the nation.

## A DARK HORSE IN EUROPE

Emerging as one of Europe's brightest economic stars for the year 2004 is Spain which, according to global economists, is poised to grow faster than Britain and all the leading euro zone economies. Key to this is the leadership of Spanish Prime Minister Jose Maria Aznar, who has both the attention and admiration of the Spanish and the world. The Spanish economy is expected to achieve a growth rate of nearly 2 percent this year, according to HBV Group economist Julian von Landesberger, who says Spain's performance stands out against the gloom and doom affecting the other large euro zone economies.

Spain grew more than twice as fast as Britain in 2003 and almost as fast as the United States. Its solid performance came during the worst European downturn in 10 years with Germany, France and Italy all suffering an economic contraction. Spain's strong performance going into 2004 is due to structural reforms, tax cuts and the European Central Bank's "one-size-fits-all" interest rates, economists believe.

20

A REALLY IMPORTANT DECISION --
THE NEXT SUPREME COURT NOMINEES

There is now a scramble to identify competent replacements for the looming
retirement of a number of United States Supreme Court Justices. Currently,
the nine Justices who serve have done so for longer than any other group.
Because of their ages and continuing health problems, some predict an
opening will occur soon. Chief Justice William Rehnquist, 78; Justice Sandra
Day O'Connor, 73; and Justice John Paul Stevens, 83, are the most likely to
retire in the foreseeable future.

There is pressure on President Bush to make the nomination process more bipartisan than it has been in the past. It won't happen. Democrats fear the impact of the nomination of an ultra-conservative candidate on issues such as abortion, gay rights and affirmative action.

A change in the Supreme Court will prove crucial for business. The current Court is generally considered to be conservative and pro-business; and the next few appointments could lock that posture in for years to come.

Meanwhile, the Court is expected to hand down rulings on several cases involving high-profile defendants during its next session, scheduled to begin October 2003:

- Verizon is the defendant in an antitrust case stemming from alleged violations of the Telecommunications Act of 1996;

- The United States Postal Service is the defendant in an antitrust case that may set a precedent as to who can be sued for violations of antitrust laws;

- Also being contested are provisions of the Americans with Disabilities Act, the Age Discrimination in Employment Act of 1967, and the Securities Exchange Act of 1934.

Each of these cases has the potential to significantly impact how businesses operate.

Do not expect this nomination process to be simple or unchallenged. But, in the end, the President most likely will prevail and business should expect a positive climate.

HEALING THE RACIAL DIVIDE

In addition to the emergence of Latinos as the nation's largest ethnic group -- now numbering well over 35 million -- one of the more interesting current demographic trends is the rapid growth in the number of so-called mixed-race families in America.

Steadily rising rates of inter-racial marriage and, equally important, the great number of childless American couples that have been adopting foreign-born children - notably, from Eastern Europe, China, India, Latin America and Vietnam - are driving this development.

Recently-released 2000 U.S. Census figures on the subject indicate that more than one in six adopted children today is of a different race than their new parents. Some 1.6 million children under 18 are adopted. Close to one-fifth of those adoptees are members of inter-racial families.

One in every 15 marriages in the U.S. is now inter-racial -- up from 1 in 23 a decade ago. If Latinos are treated as a distinct racial group, there are currently some 3.7 million inter-racial marriages in this country. Both these trends are expected to accelerate going forward.

All this bodes well for future healing of the nation's still festering racial divide. Adoption and interracial marriage should help break down racial barriers in important ways that preaching and moralizing can not.

GLASS CEILING GETS CLOUDY

Nearly 40 years after the equal pay act was created, women's salaries are actually dropping compared to men, according to research by the National Committee on Pay Equity.

In a recent study, the NCPE found that the majority of women managers were worse off, relative to men, in 2000 than they were in 1995. The study, which used the latest information available, looked at the 10 industries that employ 71 percent of U.S. women workers and 73 percent of women managers. These industries included entertainment and recreation services, communications, finance, insurance and real estate, business and repair services, retail, professional medical services, hospitals and other medical services, public administration and educational services.

22

The key findings confirmed that full-time women managers earned less than their male counterparts in both 1995 and 2000. In seven of the 10 industries, the earnings gap between full-time women and male managers actually widened during that time. And the wage gap is more pronounced for older women than younger ones. The report also found that only five of the industries had women managers in the same proportion as total women in those sectors' work force in 2000.

Another report by the women's organization Catalyst showed that while women make up 46.5% of the work force, they represent only 12% of all corporate officers.

Why is the wage gap widening instead of shrinking? And why is it that the glass ceiling seems to be firmly in place despite advances for women in many other areas? The report could not give a definitive answer, but called for more study to determine ways to promote better employment practices and remove attitudinal barriers.

On the positive side, Congress is considering two bills that seek to update the Equal Pay Act of 1963.

Look for this more-than-50-percent of the American public to offer a not-to-be ignored voice on the issue.

## TERROR MAY BE UP, BUT CRIME IS WAY DOWN --
YET THERE IS STILL REASON FOR CONCERN

A major surprise is that reported crime is way down. To be sure, most Americans feel their personal safety is at greater risk today because of terrorism. But U.S. citizens are less threatened by serious crime than ever before despite what they may see and hear on television almost daily.

The latest National Crime Victimization Survey shows that violent and property crime last year fell to their lowest levels since the federal government started gathering these official statistics three decades ago.

In 2002, the U.S. was the scene of 23.6 million violent and property crimes compared to 44 million such criminal acts committed 30 years ago -- a decline of nearly 50 percent!

23

During the past decade, the violent crime rate fell by 54.6 percent from 52.2 per 1,000 Americans in 1993 to 23.7 per thousand last year. Property crime rates fell 50 percent for the same period. Murder remained the exception to the overall positive picture. Capital crimes continued to rise, but only incrementally -- 16,110 in 2002 compared to 15,980 in 2001.

What's behind the big decline? Criminologists and law enforcement officials attribute the drop to tougher sentences since violent crimes are committed overwhelmingly by young males. Some argue that the new sense of national unity, cohesion and patriotism emerging from the reality of the terrorist threat has also been a factor.

U.S. prisons now hold over two million inmates -- a greater number, by far, than any country in the world. The U.S. incarcerates 6 to 10 times as many people as any other industrialized country in the world, and in the past two decades, about 1000 new prisons and jails have been built in the U.S.

Today, one out of every 25 males in the U.S. is under the direct supervision of the criminal justice system, either incarcerated, on parole, or on probation. Among young black males the number is one in three; among young Hispanic men, one in eight.

Opponents of "get-tough," mandatory sentencing laws, filling prisons with repeat offenders and non-violent drug addicts, advocate prison alternatives such as expanded drug treatment programs and more humane sentencing. Nearly one out of four inmates in federal or state prisons today are there because of drug-related offenses. The long-term decline in crime, they assert, is a strong argument against building new prisons. But supporters of lengthy incarcerations counter that the decline is simply a direct result of keeping criminals behind bars for much longer periods.

One growing concern is that the big budget crunches facing many states and local municipalities, triggering nationwide cuts in crime prevention programs, police forces, and after-school programs, could have a seriously negative impact on the current lower crime rates.

24

AMERICA'S EDUCATION SYSTEM CHANGING:
SCHOOL CHOICE GAINING MOMENTUM

With the crisis in the nation's urban public schools showing little sign of abating, the movement to controversial school choice is picking up steam.

Choice currently takes a number of forms -- vouchers, charter schools, magnet schools, or choice within the public school system.

Most recently, Colorado legislators voted to launch a pilot voucher program. Ten states have already put in place publicly funded voucher or tax credit programs of some kind and 39 states plus the District of Columbia have charter school laws. In 2002, state legislatures in at least 40 states introduced new school choice bills.

Back in June 2002, vouchers received one of their biggest boosts when the U.S. Supreme Court ruled they did not violate the First Amendment's separation of church and state provisions as long as parents had the right to choose where to send their children.

Today, the heated school choice debate increasingly surrounds the effect that vouchers might have on public schools. Voucher opponents insist that such programs inevitably drain valuable resources and teachers from already failing schools, undermining their ability to improve. Choice advocates hold that, in fact, competition afforded by alternative schools can be a powerful incentive for improving the quality of education in the nation's public schools.

A recent Florida study provides evidence that vouchers can be good for public schools. Researchers found considerably higher test score gains in public schools where parents were exercising the voucher option than in those schools that were not eligible for choice. They concluded that vouchers can provide public schools with powerful incentives to improve.

A similar analysis of the nation's largest voucher program in Milwaukee also seems to support the belief that competition can help public schools. Noted economist Milton Friedman, a long-time advocate of school choice, points out that New York City now spends $11,000 per year per student—perhaps the highest in the land. Proposed vouchers would be worth $7,500. Thus, he argues, for each student who leaves a public for a private school, the system would gain some $3,500.

25

## SENIOR AMERICANS SHUNNING RETIREMENT

Out of economic necessity, enhanced longevity, or simple boredom, Americans are remaining in, or returning to, the workplace in unprecedented numbers. Currently, no less than 21 million U.S. citizens 55 and over are part of the nation's full-time workforce while uncounted millions work part-time and "off the books," paying no taxes.

Recent data statistics indicate that at least one million seniors are searching for work each month.

Many companies are now actively hiring retirees. As one such employer put it: "Older folk bring an invaluable work ethic from a different era."

Wal-Mart is a case in point with no age limits as to whom it will hire. Twenty-two percent of the giant retailer's 1.1 million employees are over the age of 55 and 3,000 of those seniors are 80 and over.

Employers agree that older workers tend to be more reliable and, clearly, less expensive than younger ones whom they are often competing against for available positions. Experience is also an important plus factor on their side.

Many working seniors take jobs far below their skills or competence levels. The motivation here is the simple attraction of the activity itself -- doing something useful to counter boredom, loneliness, isolation and inactivity. Look for the trend to continue and put pressure on younger workers and women trying to advance in the workplace.

## FACTS & FIGURES

Number of people around the world that now have access to the Internet through home computers: 585 million.

Country with the largest percentage of Internet users: United States with 42.65 percent of the population.

Worldwide adherents to major religions: Christianity: 2 billion; Islam: 1.3 billion; Hinduism: 900 million; Buddhism: 360 million.

Secular/Non-Religious population: 850 million.

Percentage of Americans who believe in God: 90 percent.

State with largest number of non-English speakers: California at 12.4 million.

26

Percentage of U.S. population that is foreign-born: 11 percent, largest number since the beginning of the 20th century.

Number of languages spoken around the world today: 6,000, but at least half are now in danger of extinction.

Number of Americans who still smoke: 71.5 million.

Number of Americans suffering from alcohol or drug abuse: 22 million.

Number of cosmetic plastic surgeries performed in the U.S. last year: 6.9 million, 88% on women.

******

We conclude with this celebrated passage from Charles Dickens which still appears to be relevant 150 or so years later.

> "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair."

A Tale of Two Cities (1859)
Book I, Chapter I

27

IRAQ: ACHIEVING MULTILATERALIZATION... OR NOT

-- By Robert Gelbard

The last month has seen a reversal in the previous heartening trend towards better security and slow but marked progress in restoring basic services. The dramatic -- and politically powerful -- use of car bombs against the leading (and moderate) Shiite cleric, the chief U.N. representative and the Jordanian Embassy succeeded in inculcating a heightened sense of insecurity to the Iraqi people and to the international community. A key indicator for developing confidence is electricity: the Coalition Provisional Authority (CPA) had gotten back to 79 percent of capacity; that has now dropped to 72 percent. With Ramadan approaching, having basic services operating at their optimum will be important to demonstrate to the Iraqis that better days are truly coming.

What has become clear is the need for significantly greater military forces to establish a secure environment, and injections of massive additional financial resources (which will be necessary even when oil production rebounds) to get the economy moving, begin developing democratic institutions and pay salaries for public employees, including large numbers of new Iraqi paramilitaries and police. This has already proven to be extraordinarily expensive.

The cost to the United States is already enormous: $79 billion has been spent and the Administration has requested an additional $87 billion, with no end in sight. In contrast, the U.S. provided only 33 percent of the troops in Bosnia and less in Kosovo, and no more than 20 percent of the reconstruction costs in either of those places.

As the debate within the Bush Administration heightened in the past weeks, three tracks emerged in the debate over future policy. One group, mostly at the Pentagon, abhor having the U.S. involved in any so-called "nation building" and argue for setting up an Iraqi provisional government and departing Iraq, leaving it in the hands of the U.N. or anyone else to undertake the post-conflict efforts.

A second track, also including Pentagon elements, prefers the current semi-go-it-alone process, which would either involve no additional military and/or financial resources, or would result in politically unpalatable budget-busting as the 2004 election year nears. As occurred last year, Colin Powell presented a third track and had a tactical victory by convincing the President to try for a U.N. Security Council resolution as the best way to broaden the Coalition, and thereby adding troops and funds. Now the problem is whether and how this can be done.

Early reactions from France and Germany have been predictably negative but lower key than might have been, leaving room for negotiations, albeit hard ones. Russia and China are sounding more positive. The elements for a Security Council resolution deal, followed by separate bilateral deals, are there. What must be done?

First, to get others to join, the Bush Administration might be forced to hand over leadership of the CPA while keeping command of what would be a newly broadened international security force. The U.S. has done this elsewhere, such as in Bosnia, and still maintained significant influence and involvement in the political, economic and infrastructure aspects of the operation. Bifurcating responsibility between U.S. military command and European civilian leadership would open the way for the additional financial help that the U.S. Congress is reluctant to provide through the EU Commission and EU bilateral aid; the World Bank would also become more eager to assist.

It would certainly then provide the "umbrella" that many European and non-European nations (India and Turkey among others) require as domestic political cover in order to send troops and police. The latter are seriously required to help provide a different type of security; their presence, as has been the case in other peacekeeping operations, would both help win the confidence of Baghdad citizens and other urban residents and alleviate the need to have a high density military presence in those cities, permitting the troops to engage in other tasks.

Some side deals with countries such as Russia will be necessary. Iraq's financial situation must be regularized through the IMF and with debt rescheduling (and perhaps forgiveness) through the Paris and London Clubs. To secure the agreement of Russia others who hold significant prewar contracts, we and the new Iraqi leadership will be forced to recognize some - and perhaps many-of these, although there needs to be a mechanism for eliminating deals where corruption was apparent. Doing this, along with allowing new Coalition entrants to participate in new contracting, would open the way for their militaries to engage in Iraq, producing the additional forces needed and lighten the projected burden of the American taxpayer.

****

Ambassador Robert Gelbard, now an international business consultant, had a 35-year career in the State Department. His many senior assignments included being President Clinton's Special Envoy for the Balkans, Ambassador to Indonesia and Bolivia, Assistant Secretary of State for Counter-Terrorism and Counter-Narcotics, and Principal Deputy Assistant Secretary for Latin America. He has had extensive experience in Europe, Latin America, Southeast Asia and Southern Africa.

The Dilenschneider Group

December 12, 2003

The Honorable Henry A. Kissinger
Kissinger Associates, Inc.
350 Park Avenue
New York, NY 10022-6022

DEC 12 2003

Dear Dr. Kissinger:

Making a significant contribution to selected charities during the
Holiday Season in the names of our clients has been a tradition with The
Dilenschneider Group since our Firm was established in 1991.

With so many charities worthy of support, it's always difficult to
single out one or two.

As in previous years, however, we felt that those devoted to the
well-being of children and their futures merited special consideration. At
the same time, we also wanted to make a contribution to needy indigent
seniors and to the arts.

The charities that will receive a donation in your name this year
are:

* Girls and Boys Town

* Inspire Kids

* The Sibling Center for Sisters and Brothers of People with Disabilities

* Food for the Poor

* The Family Center

* The Chicago Historical Society

Everyone at The Dilenschneider Group thanks you for your
continued friendship and support as we express our hope and prayers for
a better year in 2003 and beyond. The fundamental values we share with
our friends around the world have never seemed more important.

RLD:jma

The Dilenschneider Group Inc.
MetLife Building, 200 Park Avenue, 26th Floor, New York, NY 10166
212 922 0900 (fax 212 922 0971)

The Dilenschneider Group

January 25, 2003

JAN 27 2003

Dear Dr. Kissinger:

The enclosed copy of the "Financial Times" carries on page one an
advertisement that reflects our ongoing commitment to the global vision
and goals of the World Economic Forum.

Every day we communicate with, and for, dozens of top companies,
media, and individuals around the globe. Based on this dialogue, it is
clear to us that, as never before, the world needs an organization like the
WEF to meet the difficult challenges presented by the crucial issues we
face today as a civilization.

This unique annual gathering of many of the leading global figures
in every sector of human endeavor—politics, business, economics,
science, the arts, academia, the media, non-governmental organizations
—has been an increasingly important arena for exploring new ideas and
articulating a bold vision for a future world based on peace, freedom,
tolerance, and security for all peoples.

The Dilenschneider Group has been privileged to be a participant
in the deliberations of the World Economic Forum for well over two
decades.

RLD:bo'r
Enclosure

the

BORROMEAN

St. Charles Preparatory School Newsletter for Alumni and Friends

Winter 2003

# Faith and Civility

The Second Annual Borromean Lecture

Presented January 8, 2003 by Avery Cardinal Dulles, S.J.

## The Concept of Civility

At St. Charles, I am told, Latin is a required subject. Having had a reasonably good education in that language myself, I can say that I have found it a great help not only in my work as a priest but in many other aspects of life. It helps one to learn many modern languages to speak and write correct English. For example, it is helpful to know that the word "civility" in the title of this lecture comes from the Latin word *civilitas*. It means the quality of a citizen, *civis*, or that which is befitting the citizen. The citizen is contrasted with the slave and the barbarian.

The slave, being denied the privileges attaching to membership, is in the society but not of it. According to the ancient theory, slaves were inferior persons, incapable of rising to the exigencies of citizenship. They were supposed to lack the intelligence and education needed to guide their lives by reason and enter into relationships with

His Eminence, Avery Cardinal Dulles, S.J.

others on the basis of rational discourse. Incapable of acting voluntarily for the general good, they had to be commanded and, if necessary, coerced.

"Barbarian" is another word taken into English from Latin. The Latin term *barbarus* means simply a foreigner. In classical antiquity, people who lived outside the Greco-Roman world were considered wild and uncultivated. Hence the words "barbarian" and "barbaric" took on the secondary meaning of savage or uncouth. Like slaves, barbarians were beyond the ambit of civilized humanity. They gathered at the city gates, always threatening to invade. Just as the slave had to be coerced, the barbarian had to be resisted. Neither, by definition, was capable of rising to the standard of rationally ordered cultural development.

Citizens were expected to treat one another civilly—that is to say, as intelligent beings who could freely respond to reasons, once these were shown. No one is born with all the qualities required for civility. We all have to be educated so that we can deal and be dealt with according to the standards and disciplines of citizenship.

...continued on page 2

The Borromean Lecture was established in 2000 to honor St. Charles Borromeo, the school's patron. The lecture series was launched through the initiative and support of 1961 St. Charles alumnus, Robert J. Diilenschneider, a nationally-known public relations executive who works and lives in New York City. The lecture series establishes a forum at St. Charles to annually attract to campus a speaker of national renown on the

topics of morals and ethics in society, business, and government. The 2002 Borromean Lecture was presented by Avery Cardinal Dulles, S.J., currently the Laurence J. McGinley Professor of Religion and Society at Fordham University. He is an internationally-known author and lecturer, and the first American theologian who is not a bishop to be named to the College of Cardinals.

continued from the cover...

Civilization, once achieved, does not automatically perpetuate itself. We are always at the brink of a precipice, in imminent danger of relapsing into barbarism. As Father John Courtney Murray wrote more than forty years ago:

Society becomes barbarian when men are huddled together under the rule of force or fear; when economic interests assume the primacy over higher values; when material standards of mass and quantity crush out the values of quality and excellence; when technology assumes an autonomous existence and embarks on a course of unlimited self-exploitation without purposeful guidance from the higher disciples of politics and morals. (one thinks of Cape Canaveral); ... when the ways of men come under the sway of the instinctual, the impulsive, the compulsive.¹

the
BORROMEAN

The newsletter for alumni and friends of
St. Charles Preparatory School
Winter 2003

Saint Charles Preparatory School
2010 East Broad Street
Columbus, OH 43209-1665

www.stcharlesprep.org

St. Charles Administration

Dominic J. Cavello, '64
Principal

Scott M. Pharion
Assistant Principal
Academic Dean

James R. Lower
Assistant Principal
Dean of Students

St. Charles Advancement Staff

Douglas H. Stein, '78
Chief Development Officer

Louis J. Fabro, '83
Director of Alumni Affairs and Communications

Cheryl Taynor
Development Secretary

Photos by Finocchi Photography

The *Borromean* newsletter is published for the enjoyment of alumni, friends, and advocates of Saint Charles Preparatory School. The contents of this issue may be re-printed with the express written consent of Saint Charles Preparatory School, 2010 East Broad Street, Columbus, OH 43209-1665. Copyright 2003, Saint Charles Preparatory School. All rights reserved.

Since the time that Father Murray wrote these words, the Western world, including the United States, seems to be careening down the path toward a new age of barbarism, this time brought on from inside rather than from outside. The barbarian is often within the gates, highly placed in the worlds of business or finance. Our world is increasingly dominated by the rules of the market. The market is driven by the media of communication, the media of communication by advertising, and advertising by catering to the basest human instincts. Everything seems to be geared toward satisfying the urges for entertainment, excitement, and instant gratification. Anyone who seeks to rise above the general level of mediocrity is tarred with the accusation of elitism.

The trend toward barbarity is accelerated by aggression or terrorism from outside the society. In the face of real and imagined threats, civil liberties are curbed and people are treated without due respect for their freedom and rationality. In times of national emergency, fear and force become the principal determinants of behavior.

Another factor militating against civility is the increasing pluralism of our society. Pluralism is frequently promoted on the ground that every group should be encouraged to cultivate its own traditions and values. But a society is by definition an association of people who have a common goal. Unless we have some common convictions about reality and some common standards of decency, we cannot agree on what is right and wrong, what is permitted and what is forbidden, what is desirable and what is to be avoided.

When common standards are lacking, dialogue breaks down. People cannot reason with one another, because they have no common premises and no shared universe of discourse. How can I reason with another person about what ought to be believed and done unless we have some common starting point and principles of argument? How can I talk about literature with someone who is illiterate? How can I converse about ethics with someone who has no sense of right and wrong? I can fruitfully discuss religious questions with parties who accept the existence of God as known through the Bible and the Church, but otherwise it may be hard to find agreed sources and norms. And so likewise, if two of us have radically disparate political philosophies, we are in no position to debate about the merits of different candidates and platforms.

Pluralism, therefore, is not an unqualified good. Unless a consensus can be achieved regarding the principles that sustain civility, dialogue breaks down. The member groups are spiritual aliens if not enemies to one another. Instead of reasoning together they berate each other. Passion and prejudice take the place of reasoned discourse. Personal invective and defamation

2

of character intrude upon logic. It is a constant
struggle to achieve the civility required to sustain a
well-functioning republic.

Civility and Religion

As a theologian, I should like to offer a few thoughts
on the relationship between civility and religion.
Civility can, I suppose, exist without religion. In Greece
and Rome it was only tenuously connected with
religion. But where a religious faith such as
Christianity is seeking to gain a hearing, it can profit
from an environment of civility. Such an environment
provides heralds of the faith with an opportunity to
present their case, provided that they are able to
propose their message in a rationally credible form.
Faith in the Christian sense of the word, is, of course,
a response to revelation. Although it is not a
deliverance of reason, it is in accord with everything
that reason can establish.

Ever since St. Paul's sermon to the Athenians at the Areopagus, Christianity has learned how to appeal to the reason of those who are ready to listen and make them at least give serious consideration to its claims. In a barbaric community, by contrast, the voice of reason cannot assert itself. More often than not, heralds of the faith are banished or brutally persecuted because they are perceived as hostile to the entrenched ideas and customs of the people. Freedom of religion is closely connected with civility.

Christian faith and civility have been allied from the
beginning. Jesus himself, as we know him from the
Gospels, never uses or encourages physical violence.
When his followers want to acclaim him as a temporal
king, he resists them, insisting that his sovereignty is
purely spiritual. Bearing witness to the truth, he asks
for a free assent of faith. He invites a discipleship that
is free and uncoerced. Extolling love toward enemies,
he counsels nonresistance to evil and patience under
suffering. He urges his disciples to propagate the
gospel by bearing witness to his word and drawing
others by the cords of reason, trust, and love.

Paul, the apostle best known to us because of his many
writings, never mentions civility as a Christian virtue,
but the idea appears in equivalent terms in his letters.
He exhorts the Galatians to exhibit joy, peace,
patience, and kindness, and to avoid strife, jealousy,
anger, and the like (Gal 5:19-23). In his celebrated
hymn to charity in the thirteenth chapter of First
Corinthians he insists on the indispensability of love.
Love, he writes, "is patient and kind; love is not jealous
or boastful; it is not arrogant or rude. Love does not
insist on its own way; it is not irritable or resentful; it
does not rejoice at wrong but rejoices in the right" (1
Cor 13:4-6). Although Christian love vastly excels civil

friendship, it fulfills in an eminent way the
requirements of civility.

Just as civility is the precondition for a well-functioning
commonwealth, so charity sustains appropriate human
relationships in the Church as the Body of Christ.
United in spirit, Christians are to treat one another
with mutual respect, kindness, and consideration.
Going beyond the classical descriptions of civil society,
Paul emphasizes generosity to the poor and
consideration for the weak (cf. 1 Cor 8:4-13).

In gratitude—Avery Cardinal Dulles holds an etched glass award presented to him by St. Charles Principal Dominic J. Cavello on behalf of the school to commemorate the Second Annual Borromean Lecture.

Paul did not directly attack the institution of slavery,
which was simply taken for granted in the world of his
day. But he exhorts his friend Philemon to welcome
back his slave Onesimus, who has become a Christian,
not simply as a slave but as a beloved brother in Christ.
Christian charity, then, overcame the kind of chattel
slavery prevalent in the ancient world.

Historical Developments

In the early centuries Christianity achieved
sophisticated formulations of its ethical teaching with
the help of Greek philosophers—especially Plato,
Aristotle, and the Stoics. The Fathers of the Church
assimilated the finest fruits of Greek and Roman
philosophy, literature, and jurisprudence. When the
Empire was overrun by barbarians, the Church
preserved the monuments of civilization in her
monasteries, so that, in the ensuing centuries, she
could pass them on to new populations. The monastic
and cathedral schools of the Middle Ages were the chief

3

Honored guests—His Eminence was greeted by seminarians and leaders from the Pontifical College Josephinum. From left, Rev. Mr. Jonathan F. Wilson '92, Rev. Thomas Buffer, Rev. Lawrence C. Landini, Cardinal Dulles, Rev. Thomas Kessler '66, Interim Rector Rev. James F. Garneau, and seminarians Mr. Andrew J. Cano, and Mr. Jeremy J. Priest.

instruments for taming the barbarians and building a new Christian civilization.

Although we have every right to admire the achievements of medieval Christianity in the fields of philosophy and theology, arts and literature, it must be acknowledged that medieval civilization was in some respects still backward. Traces of barbarism remained. Oppression and violence retained their grip on society, as the sad history of persecutions, crusades, and inquisitions attests. Force and fear, rather than reason and persuasion, were often used to secure conformity to law and religious orthodoxy. The vast majority of the people still languished in ignorance and servitude.

A major breakthrough in the history of freedom occurred with the United States Declaration of Independence, the Constitution, and the Bill of Rights. The American experiment in ordered liberty was a perilous venture. For its success it depended upon a virtuous citizenry who were schooled in the disciplines of civility. The people had to embrace the common ideals embodied in the founding documents, holding a certain body of truths as evident beyond dispute—most centrally, that all human beings are created by God with certain inalienable rights. These convictions sustain the American experiment.

The Declaration on Religious Freedom, adopted by the Second Vatican Council in 1965, may be seen as a religious counterpart to the founding documents of the American republic. It this Declaration the Catholic Church formally signified her acceptance of the principles of the free society. Without any minimizing of the claims of the Catholic Church to be the true Church of Christ and the sacrament of his saving presence in the world, the Declaration calls upon Catholics to accept the principles of a civil society that is not dominated by any one religion and to cultivate

civil relationships with persons who do not share the Church's faith.

The Declaration on Religious Freedom lays down principles bearing on what I have been calling civility. It begins with these words:

> A sense of the dignity of the human person has been impressing itself more and more deeply on the consciousness of contemporary man. And the demand is increasingly made that men should act on their own judgment, enjoying and making use of a responsible freedom, not driven by coercion but motivated by a sense of duty. The demand is also made that constitutional limits

should be set to the powers of government, in order that there may be no encroachment on the rightful freedom of the person and of association.

The Declaration goes on to say that one of the principal requirements of the human spirit is the free exercise of religion. In the terms of this paper, I might say that civility requires leaving people civilly free to seek or not to seek the truth of religion. Coercion in this area is viewed as barbaric.

> Avery Cardinal Dulles was born in Auburn, New York, on August 24, 1918, the son of John Foster Dulles (former Secretary of State to President Dwight D. Eisenhower) and Janet Pomeroy Avery Dulles. He has written over 700 articles on theological topics, published 21 books, and holds 28 honorary doctorates. He has an impressive collection of awards, including Phi Beta Kappa, the Croix de Guerre, the Cardinal Spellman Award for distinguished achievement in theology, and the F. Sadlier Dinger Award for contributions to the catechetical ministry of the Church.

Although the Declaration on Religious Freedom was written with special attention to the relations among Christians of different ecclesial allegiances, its principles apply likewise to relations between different religious faiths.

## Contemporary Tensions and Proposals

In the years since Vatican II, the various religions of the world have been thrust into much closer contact with one another than ever before. Reciprocal relations among Christians, Jews, Muslims, Buddhists, and Hindus are a matter of daily concern, not only in foreign affairs but to some extent within our national borders. It is not at all clear that all these groups, with their different norms of truth and scales of values, can be conjoined in a single society. Under what

4

conditions can they treat one another as civilized
persons rather than barbarians? As we know from
current events in the Holy Land, India, Indonesia,
Nigeria, and elsewhere, adherents of different religions
are prone to engage in violence. When there are sharp
religious differences within a single society, violence
is hard to avoid.

One proposal for escaping the tensions among religious
groups is secularism, a system that has prevailed with
fair success in the politics of Turkey, less consistently
in India, and to a modest degree in countries like our
own. The secular thesis is that religion is a divisive
force. To keep it under control, religion should be
banished from public life and allowed to function only
in the strictly private sphere. This solution,
sweepingly applied, is unworthy of the free society. It
is incompatible with the public documents previously
cited, in which the United States is described as one
nation under God, the creator of all human beings.
On all our currency, we inscribe the motto, "In God
we trust." Religion plays a prominent place in many
aspects of our public life. All the great religions have
teachings which, if true, should have a beneficial
impact on society. The Catholic faith, for example,
has much to say about topics such as education, health
care, the economy, crime and punishment, war and
peace. To maintain, as Marxists do, that religions may
not function except as private associations, conducting
worship services for their own members, is an affront
to religious freedom. Civility demands that believers
should be accorded full freedom to express their
perspective on issues of public concern.

A second proposal for resolving the tension is less
overtly hostile to religion but in the long run more

insidious. John Murray
Cuddihy calls it "civil
religion," or alternatively
"the religion of civility."
The phenomenon is
pervasive in
contemporary America.
The various religions,
Cuddihy contends, have
been tamed into
denominations. Dropping
their exclusive claims,
they lower themselves to
the status of voluntary
associations of
likeminded individuals.
Becoming diffident in
expressing their religious
identity, people get into
the habit of saying no
longer "I am Catholic (or

Jewish, or Protestant, or whatever)," but "I happen to
be Catholic" or even "I was raised Catholic." Citizens
are under constant pressure to profess an equal respect
for every religion. Cuddihy traces how the old formula
"outside the Church no salvation" has been
reinterpreted so as to become virtually meaningless.
Religion in the United States, he contends, continues
to function only within the boundaries permitted by
the code of what he calls civility.

To illustrate the mentality of civil religion Cuddihy
tells a touching story of about the Lutheran pastor
Dietrich Bonhoeffer, when he was at the point of being
executed by the Nazis in 1945. "Called to conduct his
last worship service in prison shortly before his
execution ... [Bonhoeffer] held back, for he did not want
to offend his neighbor, a Soviet officer." Commenting
on this event, Cuddihy remarks: "A new offense has
swallowed up the ancient *skandalon*; the rites of faith
perform themselves in the rites of love; the *ius divinum*
self-destructs; a new *ius civile* is all in all."²

The Debasing of Civility

The term "civility" has taken on a new meaning.
Whereas in the classical sense it had been the socio-
cultural framework that makes serious argument
possible, it has now become a barrier against
argument. To be civil, in the popular estimation, is to
avoid giving any offense; it is to refrain from
challenging others on the ground that doing so might
make them feel uncomfortable. Not infrequently
today, people claim to be offended if we simply manifest
our beliefs. They make us feel guilty because we hold
a position different from theirs. A wall of politeness

Addressing tomorrow's leaders—The school's campus theatre was the setting for an open discussion between Cardinal Dulles and St. Charles students following his luncheon remarks.

5

Dignitaries—Columbus Bishop James A. Griffin and Borromean Lecture Founder Robert L. Dilenschneider '61, share a conversation before lunch in the Cavello Center.

prevents the question of truth about religious questions from ever being raised.

John Courtney Murray, in the book already referred to, analyzed the causes for this debasing of civility. In a situation of unreconciled pluralism, he says, ideological divisions make honest dialogue and argument exceedingly difficult. Seeking to avoid insult and violence, Americans put on the mask of polite urbanity, ceasing to challenge one another. Civic amity of this kind is not real friendship, but a code of conduct that conceals the wars still being waged beneath the surface.³

The shift in the meaning of civility is doing serious harm. As one nation under God, Americans are, in Lincoln's famous phrase, "dedicated to the proposition that all men are created equal." If the tenet that all men are created by God with certain inalienable rights is no longer held to be true, the foundations of civility are undermined, and the American experiment in ordered liberty begins to totter. If we lose sight of the transcendent ground, our human rights have no solid anchorage that prevents them from being voted out of existence. Pope John Paul II has clearly traced the process by which relativism and agnosticism eat away at the structures of authentic democracy. In his great encyclical *Centesimus annus* he writes:

> Nowadays there is a tendency to claim that agnosticism and skeptical relativism are the philosophy and the basic attitude which correspond to democratic forms of political life. Those who are convinced that they know the truth and firmly adhere to it are considered unreliable from a democratic point of view, since they

> do not accept the idea that truth is determined by the majority, or that it is subject to variation according to different political trends. It must be observed in this regard that if there is no ultimate truth to guide and direct political activity, then ideas and convictions can easily be manipulated for reasons of power. As history demonstrates, a democracy without values easily turns into open or thinly disguised totalitarianism.⁴

When he wrote these words the Pope may have been recalling that Hitler himself came into power by popular election.

Quite apart from its consequences in the political order, this substitution of mere politeness for genuine civility makes a negative impact on the faith of every religious group. It deters believers from giving expression to their real convictions and bearing witness to the truths they hold. Dialogue with persons who do not share our faith ceases to be a serious common quest for truth and becomes an exercise in discovering ways of masking real differences and forging a merely pragmatic consensus. The Catholic, the Jew, the Protestant, and others begin to feel embarrassed about what is distinctive to their specific religion, as though it were an ugly secret.

## What Is and Is Not Offensive

There is of course a proper place for politeness and decorum. In the November 2002 issue of the *New Oxford Review* Alice von Hildebrand has a fine article on "What's 'Offensive' and What's Not."⁵ It is unacceptable, she says, to try to wound others, and to scoff at their beliefs. The Catholic League, headed by William Donohue, has every right to denounce those who make Catholic beliefs and practices the butt of their scorn. Hatred and contempt for religious groups should be opposed not because such attitudes offend people's feelings but because they are morally wrong.

> **"The shift in the meaning of civility is doing serious harm."**

Inoffensiveness is carried to excess when people regard any manifestation of one's beliefs as objectionable, as we already noticed in the pathetic case of Bonhoeffer's final hour. Increasingly we find that a new pattern of behavior is being socially, if not legally, imposed. A handful of people can prevent major segments of the population from giving public expression to their religious beliefs on the ground that they consider it

6

"offensive." Believers may not pray in public, or if they are allowed to do so, they may not indicate to whom they are praying. William Donohue reports that in King County, Washington, employees can be arrested for saying "Merry Christmas" because it is regarded as offensive to non-Christians. To be "politically correct" and sensitive to others, one must say: "happy holidays."⁶ In the name of this new ideology efforts are being made to discard the firm professions of faith in God in the Declaration of Independence and in the Gettysburg Address. Last June an appellate court declared the Pledge of Allegiance to the U. S. flag unconstitutional in public schools because it includes the words "under God." Public displays of crèches and menorahs are at times forbidden. If we continue to drift in this direction, I submit, the foundations of our republic will be gravely weakened, clearing the way for tyranny.

The true concept of civility would give different groups in society full freedom to express and propagate their beliefs, even in the public forum, provided that they are not misrepresenting or ridiculing the beliefs of others or threatening just public order. Others have no right to take offense when I express my faith, nor do I have any right to take offense when they express theirs.

## Reversion Toward Stridency

The excesses of the movement toward superficial and false politeness, with the consequent limits on the free exercise of religion, can be breeding grounds for a new barbarism. Frustrated by the restrictions, devout believers relapse into polemics. As an example one could mention the developments at St. Benedict Center near Harvard Square, which began in 1946 to publish a journal called *From the Housetops*. Explaining the title, Mrs. Catherine Clarke, the principal founder of the Center, declared:

> The full, unequivocal, uncompromised message of Jesus Christ had to be thundered to the world again. It could not merely be told. It had to be shouted, bellowed, because the world was deaf, asleep, already half-dead. Polite talking would not wake it, nor would vague reference, large gesture, platitudinous utterance. "Never give offense" seemed to be the Catholic policy of the day. We knew it was impossible to tell the truth and not to give offense.⁷

As some of you may know, St. Benedict Center went to such extremes in its vehemence that it had to be placed under interdict and its spiritual leader, Father Leonard Feeney, excommunicated for more than twenty years. Their "barbarism" was no more acceptable than the "civility" they repudiated.

Somewhat different is the case of the celebrated French philosopher, Jacques Maritain. An adult convert to the faith, he spent much of his life skating on the fine line between polemics and civility. In an early book on the Jewish philosopher Henri Bergson, he made some bitter observations about his Catholic philosopher colleagues, accusing them of denying to the public the word of life which alone counts for ultimate salvation. "If they have such words," he asked, "why do they not cry them from the housetops, asking their disciples to give, if necessary, their very blood for them?"⁸

Up close—Students listen intently as Cardinal Dulles shares his thoughts and experiences.

In mid-life Maritain worked for many years at the Center for Advanced Study at Princeton and became much more discreet in his utterances. At one point he found himself accused of diluting Catholic doctrine by the outspoken director of the Aquinas Center at Princeton, Father Hugh Halton, O.P., who adopted a stance similar to Feeney's.

Toward the end of his life Maritain retired to France, where he resumed the more aggressive language of his early years. Shortly after the Second Vatican Council he published a book with the significant title *The Peasant of the Garonne: An Old Layman Questions Himself about the Present Time*. No longer wearing the mantle of the sophisticated philosopher, he resolved to speak with the bluntness of a peasant, or, we might say, a barbarian. In Maritain's own words a peasant is "a man who puts his foot in his mouth, or who calls a spade a spade."⁹ The peasant has no standards of politeness to keep him from upsetting the applecart. There is some irony in Maritain's title. A philosopher of exquisite urbanity, he could not possibly write as a peasant. But he rightly judges that the intellectual elite would consider him boorish for challenging the dogmas of the day—historical relativism, the myth of inevitable progress, and the supposedly unqualified blessings of technocracy. He intended to deliver these challenges in unmistakable terms.

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Cuddihy draws the conclusion: "*The Church will not survive without a willingness to be uncouth. In the end, truth is an incivil thing.*"¹⁰ But this is not a fair description of Maritain's position. He never adopted the stridency of Catherine Clarke, Leonard Feeney, or Hugh Halton. While forthrightly denouncing what he saw as error, he preserved the virtue of civility, properly so called. Like Father Murray, he spoke is measured tones, giving reasons for his views and avoiding malicious defamation. Together with John Courtney Murray, Jacques Maritain stands as a model of how to combine true civility with intrepid witness to the faith.

## Conclusion

I conclude, contrary to Cuddihy, that truth is not uncivil. In a pluralist society, civility can forge bonds of union. It can support honest dialogue and prevent controversy from degenerating into slander. But civility should not be equated with timidity or evasion of the issues. Far from preventing argument, civility makes argument possible. It appeals to reason and free consent. Schools such as St. Charles can perform a great service if they instill into their students the ability to think clearly and to give a persuasive account of the hope that is in them. Their graduates will know

how to combine good citizenship with loyal commitment to their religious faith.

## Endnotes

¹John Courtney Murray, *We Hold These Truths* (New York: Sheed & Ward, 1960), 13-14.

²John Murray Cuddihy, *The Ordeal of Civility* (New York: Basic Books, 1974), 238. In his account of Bonhoeffer's death he is quoting from Peter L. Berger, "Camus, Bonhoeffer, and the World Come of Age," *Christian Century* (April 15, 1959): 452.

³Murray, *We Hold*, 19.

⁴John Paul II, *Encyclical Centesimus annus*, 46.

⁵Alice von Hildebrand, "What's 'Offensive' and What's Not," *New Oxford Review* 69 (November 2002): 27-29.

⁶William Donohue in *The Catalyst* for January-February 2002, as cited by Alice von Hildebrand, "What's 'Offensive'," 28.

⁷Catherine Goddard Clarke, *the Loyolas and the Cabots* (Boston: Ravengate Press, 1950), 48-49. I owe this reference to John Murray Cuddihy, *No Offense: Civil Religion and Protestant Taste* (New York: Seabury/Crossroad, 1978), 51-53.

⁸Jacques Maritain, *Bergsonian Philosophy and Thomism* (New York: Freenwood Press, 1968), 298; translation of a book originally published in 1913.

⁹Jacques Maritain, *The Peasant of the Garonne* (New York: Hold, Rinehart and Winston, 1968), ix.

¹⁰Cuddihy, *No Offense*, 100.

HENRY A. KISSINGER

August 19, 2003

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