The Week January 16-22

By Christopher John Farley, Sophfronia Scott Gregory, Michael D. Lemonick, Michael Quinn, Jeffery C. Rubin, Alain L. Sanders

NATION

Another L.A. Disaster

A major earthquake measuring 6.6 on the Richter scale struck near Los Angeles, killing 55 people and causing an estimated $15 billion to $30 billion in damage. The quake's epicenter was in a community northwest of L.A. in the densely populated San Fernando Valley. Across the city and its suburbs, houses collapsed, streets buckled and gas and water mains ruptured. Overpasses of three heavily traveled freeways fell in; repairing them may take a year or longer. More than 1,000 aftershocks occurred, and at week's end 20,000 displaced residents were sleeping in parks and on the streets for fear of re- entering their damaged homes. President Clinton visited the area and promised immediate aid, including $41 million to repair highways and $200 million for housing.

Inman Out -- Way Out

In a news conference widely regarded as "bizarre," Bobby Ray Inman withdrew as Clinton's nominee for Secretary of Defense. The retired admiral and former deputy director of the cia insisted in a disjointed monologue that his decision was prompted by attacks on him in the media and a belief that Republicans had plotted his character assassination. At week's end Deputy Defense Secretary William Perry, 66, appeared to be at the top of a short list of possible nominees that the President was studying.

Special Counsel Begins Work

Attorney General Janet Reno named Wall Street lawyer Robert Fiske, a Republican, to be special counsel in charge of investigating President Clinton's involvement with the Whitewater Development Corp. and the Madison Guaranty Savings & Loan while he was Governor of Arkansas. Fiske, 63, is a former U.S. Attorney who served in the Ford and Carter Administrations. He said that he would not use Justice Department prosecutors in the probe and that he expects to question the President and Hillary Rodham Clinton under oath.

Special Prosecutor Ends Work

Special prosecutor Lawrence Walsh submitted the final report on his seven- year, $40 million inquiry into the Iran-contra affair. While Walsh's report states that neither President Reagan nor Vice President Bush committed crimes, it does say that Reagan "set the stage for criminal activities by others" and that Bush was fully involved in the affair despite his public comments to the contrary.

Tonya Harding Questioned

The circle of intrigue tightened around figure skater Tonya Harding last week as her ex-husband Jeff Gillooly was arrested and charged with assault in the Jan. 6 attack on Harding's rival, Nancy Kerrigan. Meanwhile, Harding's bodyguard, Shawn Eckardt, implicated her in the attack in an affidavit released by police and in an interview on ABC's PrimeTime Live. Harding, who was questioned by the fbi for nearly 11 hours, maintains her innocence and has not been charged.

A Disaster L.A. Was Spared

A frigid mass of arctic air gripped the nation's Midwestern and Eastern states, where a number of cities recorded their coldest days ever. The cold is blamed for the death of at least 130 people.

A Woman at the Citadel

As a result of a ruling from Supreme Court Justice William Rehnquist, Shannon Faulkner became the first woman to attend day classes at the Citadel, the all- male military college in South Carolina. Rehnquist's ruling allows Faulkner to study without cadet ranking while her sex-discrimination lawsuit against the school is pending.

Children Under Siege

The Children's Defense Fund called for a "cease-fire" last week in the gun violence it says kills one child every two hours or "one classroomful every two days." The group released its 1994 State of America's Children report, which says murder is now the third leading cause of death among children ages 5 to 14, following accidents and cancer.

Mrs. Bobbitt Acquitted

A Manassas, Virginia, jury found Lorena Bobbitt not guilty by reason of insanity of malicious wounding, concluding that she was so mentally impaired that she could not resist the impulse to sever her husband John Bobbitt's / penis. Mrs. Bobbitt was committed to a mental hospital for at least 45 days for observation.

WORLD

Russian Reformers Out

President Boris Yeltsin and Prime Minister Viktor Chernomyrdin announced a new, conservative Cabinet that is expected to reverse or slow down many of the reforms designed to create a market economy in Russia. The country's most prominent advocate of free markets, Economics Minister Yegor Gaidar, had previously resigned, charging that the government was not committed to economic reform. After the Cabinet announcement, Gaidar's reformist comrade- in-arms, Boris Fyodorov, quit his post as Finance Minister and said the country's economic policy was taking a "turn back." Said Chernomyrdin: "The period of market romanticism has ended."

Syrians, Israelis to Talk Peace

Syrian President Hafez Assad, meeting with President Clinton in Geneva, said his country seeks "normal, peaceful" relations with Israel -- under certain conditions. Among them is the complete return of the Golan Heights, which Israel captured in 1967. Israeli Prime Minister Yitzhak Rabin said that before a substantial Israeli withdrawal from the Golan Heights could be considered, his government would hold a national referendum on the subject. Israel plans to resume peace talks with Syria this week in Washington.

Serbs, Croats Sign Accord

The foreign ministers of Croatia and the Serbian-led rump state of Yugoslavia signed an agreement in Geneva to improve their relations and to open diplomatic offices in each other's capital beginning Feb. 15. Diplomats feared that the separate Serb-Croat agreement could be a precursor to overt military cooperation against Bosnia.

To Strike or Not to Strike?

Secretary-General Boutros Boutros-Ghali told the U.N. Security Council that without a substantial new ground presence there would be little point to using air strikes against Bosnian Serbs, as threatened by NATO leaders at their summit meeting in Brussels earlier this month. U.N. officials advised Boutros- Ghali that air strikes would endanger U.N. peacekeepers and humanitarian- aid workers.

Overture to Mexican Rebels

Mexican President Carlos Salinas called a special session of Congress to offer full amnesty to the Zapatista National Liberation Army, which stunned the country with its New Year's Day rebellion in the southern province of Chiapas that killed at least 107 people.

No Political Cleanup in Japan

Prime Minister Morihiro Hosokawa lost a battle to reform Japan's notoriously corrupt political system when the upper house of parliament rejected his legislative package by a vote of 130 to 118. Hosokawa had staked his five- month-old administration on the reforms, which would have eliminated corporate contributions to individual political campaigns, provided public funds to political parties, and redrawn election districts throughout the country. Despite the defeat, Hosokawa vowed to try to revive the reforms this week.

BUSINESS

Improving Economy

The Federal Reserve reported that, except for Southern California, the economy is improving almost everywhere around the nation, spurred on by strong consumer spending, manufacturing activity and home construction. The puzzlingly slack employment demand continued, however: the Labor Department reported that initial jobless claims increased to 380,000 for the week ending Jan. 15, the highest level in six months.

Bentsen in Asia

On a trip to Asia, Treasury Secretary Lloyd Bentsen told Chinese leaders that the U.S. will not renew Beijing's most-favored-nation trading status if the government does not significantly improve its human-rights record. In turn, the Chinese told Bentsen they would let U.S. officials inspect five prisons suspected of producing goods for sale to the U.S., which forbids the importation of products made by prison labor. China will also allow U.S. and other foreign banks to enter some cities that are now closed, and to receive yuan deposits. Just before Bentsen arrived in China, U.S. and Chinese negotiators reached an accord on new quotas for Chinese textiles.

A U.S.-Japan Deal

Japan announced a plan, acceptable to the U.S, that would open up bidding on major Japanese public works projects to all qualified construction bidders, including foreign ones.

Paramount Flip-Flops

In yet another about-face, the board of Paramount Communications urged shareholders to accept a revised merger bid from Viacom, its preferred suitor, spurning a hostile offer from QVC Network, which the board had previously approved -- twice. The new, complicated proposal increases the cash portion of Viacom's bid and offers some protection against a decline in the value of the stock portion. Analysts value both the QVC and Viacom bids at about $10 billion. qvc can now come back with its own new bid. A person close to the Paramount board told Time that QVC chairman Barry Diller is "short on cash and synergy."

Time Warner Poison Pill

Time Warner, the world's largest media conglomerate and the owner of TIME magazine, adopted an anti-takeover plan, known as a poison pill, that would block a creeping takeover of the company. In such a takeover, the acquiring party gains effective control of a company without the board's consent and without purchasing a majority of the company's shares. Under its plan, Time Warner will flood the market with new, diluting shares if anyone attempts to acquire more than 15% of its stock. Seagram, the Canadian spirits company, currently holds nearly 12% of Time Warner and intends to increase its stake to 15%.

SCIENCE

Deep-Space Iron Mystery

Astronomers have discovered that iron is more abundant in distant quasars than in the sun. Since the light arriving from the quasars began its journey billions of years ago, there must have been more iron when the universe was young than there is now -- an astonishing conclusion, since iron is manufactured in stars, and should have been scarce in the early universe.