THE WEEK

By KATHLEEN ADAMS, MELISSA AUGUST, JANICE HOROWITZ, LINA LOFARO, BELINDA LUSCOMBE, MICHAEL QUINN, JEFFERY RUBIN, ALAIN SANDERS AND STEVE WULF

WORLD

RABIN ASSASSINATED

Israeli Prime Minister Yitzhak Rabin was shot and killed as he left a peace rally in Tel Aviv. His alleged attacker, a 25-year-old Jewish law student named Yigal Amir, was arrested on the spot. He reportedly said he acted alone, although he has been linked to a tiny extremist group called Eyal, which fiercely rejects Rabin's participation in peace negotiations with the Palestine Liberation Organization. "I am very sad and very shocked," said P.L.O. leader Yasser Arafat. President Clinton, who called Rabin "a martyr for his nation's peace," will attend Monday's funeral. The Israeli Cabinet immediately named Foreign Minister Shimon Peres acting Prime Minister. A government spokesman vowed "to press ahead with the peace process.''

CANADA, BY A HAIR

After a boisterous campaign that stirred passions in Canadians from all provinces, Quebec chose to remain part of Canada, voting 50.6% against secession and 49.4% for it in a special plebiscite. The razor-thin margin consisted of just 52,448 votes out of almost 5 million cast; the 93.4% turnout was a record. One day later, Quebec Premier Jacques Parizeau, leader of the separatist Parti Quebecois, announced that he would resign before year's end. But charismatic Quebec politician Lucien Bouchard insisted that the cause of secession is not dead: "The next time will be the right one. And the next time may come sooner than people think."

YELTSIN REAPPEARS BRIEFLY

Triggering worldwide anxiety about Russian President Boris Yeltsin's health, Prime Minister Viktor Chernomyrdin took on more of the day-to-day governance of the country. Although Chernomyrdin said Yeltsin will still make all major decisions, the ministries of Defense, Foreign Affairs, the Interior and Security have been reporting to Chernomyrdin. At week's end, Yeltsin appeared for less than a minute on Russian television, looking wan and puffy and slurring his speech. He is scheduled to remain in the hospital until the end of the month.

BOSNIA PEACE MOVES

Meeting at the heavily guarded Wright-Patterson Air Force Base outside Dayton, Ohio, the leaders of Bosnia, Croatia and Serbia made limited progress on plans for ending the 42-month-old war in Bosnia. Secretary of State Warren Christopher said the U.S. expects Bosnian Serb leaders Radovan Karadzic and Ratko Mladic to be ousted from power shortly; the two have been indicted by an international tribunal as war criminals.

COURT ORDERS CULT DISBANDED

The Tokyo District Court, finding that Japan's Aum Shinrikyo manufactured the sarin nerve gas used in the Tokyo subway attack, ordered that the cult lose its tax-sheltered status as a religious organization. The ruling paves the way for a liquidation of Aum's assets, estimated at anywhere from $20 million to $1 billion. The proceeds from the sale would be seized by the government or used to settle lawsuits against the cult. Echoing the relief felt by a vast majority of his countrymen, Prime Minister Tomiichi Murayama said, "We were expecting to hear this conclusion, and I am glad to hear the result." The cult has filed an appeal contesting the ruling.

SUBWAY FIRE KILLS 288

In Baku, capital of the former Soviet republic of Azerbaijan, a malfunctioning electrical cable ignited gases trapped in a subway tunnel, sparking an explosion that killed 288 people and injured 200 more; most of the victims died from carbon-monoxide poisoning. Officials blamed the accident on outdated Soviet equipment.

NATION

ESPIONAGE MALPRACTICE

The CIA made a shocking confession to two congressional committees: in the last years of the cold war, it knowingly passed on questionable information to the President and the Pentagon. The agency's new director, John Deutch, told stunned legislators that CIA officers had on occasion obtained and relayed information from Kremlin insiders whom the agency suspected of being double agents. The CIA did not properly warn U.S. national security officials that the information might be tainted; worse, the information may have prompted the expenditure of billions on unnecessary defense projects. "Devastating" and "inexcusable" were Deutch's assessments. He pledged an intensive effort to "reconstruct" the agency's spying operations.

BUDGET GRIDLOCK

President Clinton and the Republican congressional leadership met behind closed White House doors to discuss how to bridge their differences over the G.O.P.'s seven-year balanced-budget plan, which includes large tax cuts and a Medicare overhaul. In an unsurprising development, no agreement was reached--not on the budget plan and not on an extension of the nation's debt ceiling, which is scheduled to expire sometime this month. Republicans have said they won't agree to more than a brief extension of the debt--which must be approved by Congress and is necessary to avert default on billions of dollars in government bonds--unless President Clinton agrees to accept the main provisions of their budget package. So far, the President has rejected making a deal.

RECRIMINALIZING ABORTION

In the first such vote since the Supreme Court decriminalized most abortions in 1973, the House voted 288 to 139 to ban a very rare form of late-term abortion that anti-abortion legislators described as particularly brutal to fetuses. Despite the likelihood of a Senate filibuster and a presidential veto, abortion-rights advocates said they feared that the House bill, which would impose criminal penalties on doctors, could presage the passage of even more restrictive legislation.

NOT SO FAST

In an embarrassing setback for the G.O.P. leadership, the House voted to instruct its team of conference negotiators with the Senate to drop a string of restrictions on the Environmental Protection Agency that the House had previously attached to an EPA spending bill. Moderate Republicans joined ranks with Democrats to repudiate the controversial restrictions, which would severely curtail the agency's enforcement of air- and water-quality laws.

WHITEWATER SPLASH

The Senate Whitewater hearings, which have been digging for political pay dirt for months, may have found some. Armed with newly uncovered telephone records, Republican members grilled two close advisers of Hillary Rodham Clinton about conversations they had with the First Lady shortly after the suicide of Deputy White House Counsel Vincent Foster. The G.O.P. claims the phone records suggest the First Lady herself put a stop to a search of Foster's office in order to protect Whitewater records--an assertion the White House has long denied.

HEY, BILL--SHHHHH!!!

What's a handler to do with a President who is addicted to bouts of over-the-phone self-analysis with not always friendly reporters? Sigh--and then insist the reporters have taken key phrases out of context. Such was the White House response after columnist Ben Wattenberg published excerpts of a telephone call he recently received from President Clinton. According to Wattenberg, the voluble Clinton offered a self-critique of his first two years: the President had "lost the language" appropriate to a moderate New Democrat; he had become too interested in the "legislative scorecard"; he had erred by behaving "like a Prime Minister, not a President." Clinton press secretary Michael McCurry asserted that Wattenberg had condensed some "very nuanced discussions."

TURNING UP THE HEAT

More and more Republicans have come to the conclusion that Colin Powell intends to run for President. That's why a group of archconservative politicos staged a news conference to attack the former general's military record as too cautious and to blast his stances on such issues as abortion and affirmative action as too liberally spiced for the G.O.P.'s appetite.

SCHOOL BUS TERROR

For 75 frightening minutes, a man desperate over his debts to the IRS hijacked a Florida school bus with 13 disabled children aboard and threatened to blow it up. Police shot the hijacker dead--and freed the children, none of whom were seriously hurt--when the bus came to a stop outside a Miami Beach restaurant where the hijacker had worked. It turned out he was unarmed.

BUSINESS

VICTORY FOR MCDONNELL DOUGLAS

Citing major improvements in a program that had been plagued by delays and cost overruns, the Pentagon awarded McDonnell Douglas an $18 billion order for 80 C-17 transport planes. That's good news for thousands of workers in Southern California but bad news for Boeing, which lost the bid.

DOW MUST PAY HUGE DAMAGES

A Nevada jury ordered Dow Chemical Co. to pay $10 million in punitive damages to a woman who claimed severe injury after receiving silicone breast implants manufactured by Dow Corning, a company jointly owned by Dow Chemical and Corning Inc. Three days earlier, the jury had awarded $4.1 million to the woman in compensatory damages. As part of its defense strategy, Dow Chemical cited numerous studies that have failed to link silicone implants and health problems. A spokesman said the company would appeal.

DAIWA BANK DEPORTED

Japan's prestigious Daiwa Bank Ltd., accused of covering up a $1.1 billion loss incurred by a rogue trader at its New York branch, was ordered by federal and state regulators to shut down its entire American operation. According to a 24-count criminal indictment, Daiwa officials had known about the losses for two months and took pains to conceal them from U.S. regulators. Among the charges: conspiracy, fraud, obstructing an investigation and falsifying records. If convicted, Daiwa faces fines as high as $1.3 billion.

SCIENCE

BREAST-CANCER GENE LINK

One year after scientists identified an errant gene that causes a rare form of breast cancer, they report that the gene--dubbed BRCA-1--may in fact play a role in most breast cancers. The discovery may lead to new treatments and new ways to predict the disease's course.

--By Kathleen Adams, Melissa August, Janice Horowitz, Lina Lofaro, Belinda Luscombe, Michael Quinn, Jeffery Rubin, Alain Sanders and Steve Wulf