captioning sponsored by macneil/lehrer productions >> woodruff: rocket attacks and airstrikes intensified in the middle east, as the stand off between israel and hamas showed no signs of easing. good evening, i'm judy woodruff. >> ifill: and i'm gwen ifill. also ahead this wednesday, pope francis picks a new leader for the scandal-plagued "vatican bank." his latest effort to confront controversies from the church's recent past. >> woodruff: plus, the power of play in the classroom. a california school embraces video games to keep students curious. >> a game designer's role is to constantly scaffold challenges over time so that a person will always want to play, always want to engage. and i said what if replace game designer with teacher or school.

>> woodruff: those are just some of the stories we're covering on tonight's pbs newshour. >> major funding for the pbs newshour has been provided by: ♪ ♪ moving our economy for 160 years. bnsf, the engine that connects us. >> supported by the john d. and catherine t. macarthur foundation.

committed to building a more just, verdant and peaceful world. more information at macfound.org >> and with the ongoing support of these institutions and... >> this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. >> ifill: thousands of people in the northeast assessed damage and waited for the lights to come back on today, after severe storms rolled through last night. five people were confirmed dead. the worst was in upstate new york, where a rarely seen tornado tore throughout the town of smithfield. winds of at least 100 miles an hour destroyed four homes, including one that was blown off its foundation and carried 150 yards. governor andrew cuomo visited today.

>> we don't get tornados in new york. i've seen tornado damage in other parts of the country. i haven't seen it in new york. we haven't seen a house just gone literally like a bomb exploded within the house. neighboring homes with 2x4's shot into the side of the home. >> ifill: the storm system struck from virginia to vermont. 200,000 customers were still without power today. >> woodruff: the mayor of new orleans during the hurricane katrina period, ray nagin, is going to federal prison for ten years for corrupt dealings. nagin was sentenced today for bribery, money laundering and wire fraud, among other crimes. he accepted hundreds of thousands of dollars in bribes, much of it involving rebuilding projects after the hurricane. >> ifill: in iraq, security forces found the bodies of 53 men blindfolded and handcuffed. the corpses were near a mainly shiite village about 60 miles southeast of baghdad.

most of the victims had been shot. the motive for the attack remains unclear, but the discovery comes amid a sunni insurgency in northern and western iraq. >> woodruff: civilian deaths from the violence in afghanistan have spiked in the first half of this year, to well over 1,500. the united nations reported today the figure is up 17 percent over the same period last year. taliban attacks were blamed for three-quarters of the deaths. >> ifill: from germany today, more allegations of spying, leveled at the u.s. "the new york times" reports a worker in the defense ministry is now suspected of handing over secrets to american spies. that follows last week's arrest of a german intelligence employee on similar charges. >> woodruff: voters in indonesia went to the polls today to pick their next president. both candidates claimed victory, setting the stage for a possible legal battle to decide the winner. the three most reliable early surveys of the votes showed former jakarta governor joko

widodo winning 52%. he celebrated with supporters in the capital city, jakarta. >> ( translated ): the winning result published by some quick count agencies is not a victory for me. it's not a victory for the party. it's not a victory for the campaign team. this is a victory for the people of indonesia. >> woodruff: the surveys showed his opponent, former general prabowo subianto, with about 48% of the votes. but he refused to concede. instead, he said other preliminary data showed he was in the lead. final results are expected in about two weeks. >> ifill: cyber-security and maritime disputes topped the agenda as china and the u.s. opened annual talks in beijing today. the u.s. has accused china of widespread computer hacking and has criticized its tougher stance on territorial claims. china charges the u.s. has encouraged japan and other states to be too aggressive in the territorial disputes.

the talks run for two days. >> woodruff: on wall street, stocks managed to regain some ground after sliding for two days. the dow jones industrial average gained nearly 79 points to close at 16,985. the nasdaq rose 27 points to close at 4,419. and the s-and-p 500 added nine to finish well over 1,972. >> ifill: still to come on the newshour: the stand-off between israel and gaza escalates; the politics of immigration reform takes a sharp, new turn; integrating child's play and learning in the classroom; reforming the vatican bank; and, the battle for the future of ukraine. >> woodruff: in the middle east today, the battle between israel and hamas raged on.

israeli air strikes on gaza, while hamas fired rockets aimed at tel aviv for a second straight day. the militant group even attempted to strike israel's dimona nuclear plant. >> woodruff: towering plumes of black smoke rose all across gaza today. the israeli military said it has hit more than 550 hamas targets in two days. >> this is a crime against the palestinian people. against children. against women. against our scholars. what was the fault of these children who were just sleeping in their beds? when these air strikes shake as the casualties grew, hundreds of palestinian mourners flooded the streets of khan younis for the funerals of eight killed in air strikes on tuesday. two children were among the dead. looking on from the west bank, palestinian president mahmoud abbas labeled the gaza offensive

a war crime. >> ( translated ): this family lost seven and that family lost seven. one was six-years-old, one was 70 and all the ages in between. got killed with air strikes and rockets. so what is this crime called? what would we call it legally? he who kills an entire family? isn't this collective punishment? genocide, this is called genocide. >> woodruff: and hamas, which rules gaza, vowed retaliation is coming. >> ( translated ): by demolishing civilian homes because of the commitment to massacre from the zionist enemy, they have crossed a line. the occupiers will pay a high price. the resistance will not stay silent. >> woodruff: so, the barrage of hamas rocket fire on israel continued, day and night, and deeper than ever into israeli territory. a wedding in holon was interrupted by incoming rockets,

but the iron dome system managed to intercept them in the sky. on the streets of tel aviv, air raid sirens had people running for shelter as more rockets fell. >> ( translated ): yesterday when i heard the sirens, i was upset but you know there have already been several days of sirens. it doesn't matter if it's tel aviv or southern israel, it's a whole country that is under rocket attack and no other country has spoken about it. >> woodruff: israeli tanks lined up at the border and officials suggested a ground offensive may be coming soon. prime minister benjamin netanyahu. >> ( translated ): we will not tolerate fire oour towns and cities and our children and hamas will pay a heavy price. we are in the midst of a military operation. we need, as i've said and i'm saying again, patience, determination and resoluteness. >> woodruff: the united states again urged restraint, but there was every sign the fighting would continue for at least

another day. >> woodruff: a short time ago - i spoke again to josef federman who is in jerusalem covering the story for the associated press. >> josef hole again. the situation has only deteriorated since you and i talked last night. tell us about casualties. >> the casualty count continues to grow day by day. here we are at the end of second day much fighting. we now have over 50 palestinians who have been killed in air strikes by israel. a fair number, quarter to a third of them maybe 20 people so far are confirmed as civilians. it includes women and some young children. woodruff: and casualties on the israeli side? >> the israelis, so far the casualties have been very light. there have been i believe just a handful of soldiers maybe lightly wounded by sla shrapnel,

that kind of thing. iron dome, u.s. funded system seems to be a very good job of shooting down anything fired towards populated areas. not hit anything. woodruff: you were describing for us last night how sophisticated the israeli military is. i guess the question some people have, if they are so advanced more than the palestinians have, why are they not able to take out these batteries where the rockets are coming from? >> that's a good question, but these rocket batteries are located everywhere. we looked to the side off the balcony of our buildings and swish, two rockets took off from almost outside the building.they had no idea that was there. there are so many.

the infrastructure seems to be hidden and so widespread it is almost impossible for israel to tstop it altogether. >> you and i talked about this last night but what about how people are dealing with it? do they see this as something temporary? are they worried that it continues? >> yes, i think people are stressed out on both sides. i think in israel there's a sense because they've been through this before, there's a sense that it will blow over eventually. it may take a week, it may take two weeks, no one knows. in gaza i get the sense that there's really a sense of dread just because these air strikes, the amount of power is just so overwhelming, and they don't know where they're coming from. there's very little advanced warning, in many cases there's no warning. and when an air strike hits a building it is flattened. flattened into rubble. and so it can be a pretty terrifying experience. like i told you yesterday, a lot of people have fled their homes, moving to areas and where they

think they can be safer so there is a sense of dread in gaza. woodruff: there are some reports josef of diplomatic efforts to put a stop to this, egyptian leaders getting involved. what have you learned about that? >> yeah, it seems like even on the second day we are reaching a crossroads. israel is massing its troops, on the border, and egyptian president al-sisi put out a communication, also in touch with the u.n. secretary-general. benjamin netanyahu has been in touch with various parties, including j.k, the secretary of state, the german chancellor merkel and other officials. there does seem to be a little bit of diplomatic efforts that are just beginning. that said, the sense is it's going to take a little while to

play out and this is going on for a few more days of fighting. woodruff: meantime as you say, israeli reservists have been called up. tell us what you know about what they're doing and what they would be expected to do. >> well, my impression is that reservists are actually playing a support roll and they are going into a less critical areas, areas that are not as intense. west bank, syria, lebanon, places like that, people doing their cifer duty are moving towards the border. the presumption is they would be better trained and ready to go. roughly 10,000 reservists have been called up. so that allows that number of forces to go to the border. my understanding it takes times to mobilize. whether the government makes a

study to go in. >> josef federman. thank you so much. reporting are from 800 number. thanjer a >> ifill: one day after president obama requested almost $4 billion from congress to cope with the influx of children at the southern u.s. border, the debate over what to do next moved to capitol hill. >> ifill: with congress back at work, the politics of immigration dominated the day, starting at a senate hearing. wisconsin republican ron johnson: >> we've got to come to a decision in this country whether we're going to have totally open borders or whether we're going to have a legal immigration system, which i want to fix this. >> ifill: the smoldering immigration issue has flared back to life with fresh debate over the rapid increase in the number of unaccompanied children

crossing the u.s. border to mexico. craig fugate, head of the federal emergency management agency, conceded today the surge has outstripped efforts to stop it. >> the children continue to come across the border. it's a very fluid situation. although we have made progress, that progress is oftentimes disrupted when we see sudden influxes of kids coming in faster than we can discharge them, and we back up. >> ifill: since october, 57,000 juveniles have been detained, more than double the number from the same period last year. thomas winkowski, of immigration and customs enforcement, told senators the agency is trying to change the perception that once migrants arrive, they'll be allowed to remain. >> we're already seeing people saying, that i didn't' realize i was going to detention, i thought i was going to be released. that begins that process of sending the deterrent message, if we're going to be successful that, in my view, that's what we have to do. >> ifill: but republican john mccain of arizona said the actual numbers speak louder than

the administration's words. >> in fiscal year 2013, 20,805 unaccompanied children from el salvador, guatemala, and honduras were apprehended by the border patrol. in that same year 2013, 1,669 of these unaccompanied children were repatriated to their home countries. if you were one of these children and you were there in one of these countries, wouldn't you think your odds are pretty good? >> yeah, but there is a legal process and that process takes time to make its way through the system. >> ifill: the justice department used the hearing to announce it's moving cases involving children to the top of immigration court dockets. juan osuna runs the department's executive office of immigration review.

>> these cases will go to the front of the line in the immigration process and adjudication judges will be assigned to ensure these cases are heard promptly and ahead of all others. this change has consequences for the broader immigration case load, cases not considered a priority will take longer to adjudicate, however given these seriousness of the situation along the border it is the proper response by our agency. >> ifill: yesterday, president obama asked congress for $3.7 billion in emergency funding to address the crisis. the money would go to detention, care-giving, and court facilities, but republicans sounded doubtful. house speaker john boehner said the request doesn't address the main issue: >> if we don't secure the border, nothing's going to change. and if you look at the president's request, it's all more about continuing to deal with the problem. we've got to do something about sealing the border and ending this problem so that we can begin to move on with the bigger question of immigration reform. >> ifill: the president traveled from denver to dallas today for a long-planned fundraising trip

now overshadowed by the immigration furor. republicans, including texas senator ted cruz, said the president should go to the border as well. >> president obama today is down in the state of texas. but, sadly, he's not visiting the border. he's not visiting the children who are suffering as a result of the failures of the obama policies. instead, he's doing fundraisers. he's visiting democratic fat cats to collect checks and apparently there's no time to look at the disaster, the devastation that's being caused by his policies. >> ifill: the white house dismissed the criticism. instead, the president was meeting with texas governor rick perry as well as local officials and faith groups that work with detained children. >> ifill: as the border crisis heats up, we turn to two reporters who've been covering the politics driving the debate at the white house, and on capitol hill. carrie budoff brown, senior white house reporter for politico. and todd zwillich, washington

correspondent for the takeaway on public radio international. >> carrie you have been writing quite about inside the roosevelt room in the white house as the administration tried to find its balance, criticized by republicans and democrats for different reasons. >> yes, there are two separate tracks that are key to immigration. with the influx of young people from central america and there is this bigger process going on, because congress did not pass an immigration reform bill, there is an effort for the president to work on his own to provide temporary legal status to millions of people potentially. there's high hopes in the immigration rights community, the democratic base, lawmakers on the hill, hispanic and asian lawmakers who really want him through stroke of his own pen to provide a legal status to potentially as many as 10

million people, 10 million undocumented immigrants. there's a lot of pressure on him to do that and this crisis on the southwest border clouds that whole process. and how he responds to this and how he manages this process will have an effect on public opinion potentially and his ability to make these businesser decisions that he's home -- bigger editions he's about to do in the next few months. ifill: called him the reporter in chief, something he didn't take well. >> yes. >> ifill: today he was talking about right-sizing expectations. what does that mean? >> he has a very difficult relationship right now with hispanic advocates, asian advocates, who are pushing him to put all his might behind immigration reform. he has deported nearly as many people as george w. bush did. they want him to go to the mat.

there is high expectation that he will do that. he is temg them, listen, there is a -- telling them, listen, there is a limit to what can i do. how the community views us and democrats in general and you know potentially puts some of the toughest races in peril this year and down the road. ifill: let's go to the other end of pennsylvania avenue to the capitol todd. $3.7 billion the president asked for to address this narrow problem, not so narrow of children crossing the border. how was that received? >> push and pull, rhetoric from both sides, how they are going to deal with this. there is hope on both sides of the aisle to do something, because this is about the children. you don't cross the troops and vets, and you do it for the children. ifill: there is a different tone to the debate because of the children. >> there is. and here is why i say push and pull. to dratl democrats on the hill,e

entire policy they want out of this is about push from central america. they say this is a refugee problem. this is children fleeing honduras and guatemala. highest murder rate in the world. they are fleeing a terrible situation. we cannot as a compassionate country just have a policy that sends them back into this fire. for republicans this is all about pull. this is all about they say an american policy and an american president that advertises to the parents of these children that if they turn up on the border, they will be welcomed, they will get amnesty. the white house points out that's not the law and border protection and judges and lawyers have to point out that's not the law and that's why there's so many thousands in many cases in detention and because they don't get automatic aamnesty. that's the law. we have a billboard, we have amnesty, that's why the parents

of these children are subjecting them to these dangerous trips. ifill: a proponent of brod based immigration reform was on the program last night and he didn't seem very optimistic that when the immigration changes to children, it's going to change the debate that's stuck in the house. >> what the republicans want out of these debates is that sending your kids to the border won't work, how will that advertisement work? this is one of the areas of policy debate that's going to happen here. in some cases it may actually be advertisement. it may be outreach by the state department in these countries, working with the hondurans and guatemalans. but jeff flick and others said on the hill, that it's the best advertisement to republicans is lots and lots of people returning home right after they left. there's no better advertisement for folks in the neighborhood to

know it didn't work. it's not useful to go to the u.s. border because you can't stay. ifill: what is the flavor, carrie, we saw president meet governor perry, said he wouldn't meet him on the tarmac but they drove to the next event together. there is some rapprochement there. >> things are in flux with the house republicans. you saw the speaker say we do have to act, we do have to do something. there's only three weeks before they take a break good part of august into september. it's really still hard to see how they come to a meeting of the minds even on something like this. immigration has been so difficult for these two parties. they talk past each other. one side says the border has been more secure than it ever has and now this issue comes up saying, what are you talking about? you wernt saying the truth when you said the border is secure.

it's been the problem all along. >> i can 68 there are signs of real effort on -- i can say there are signs of real effort on the hill. sides can't agree, democrats can't agree among themselves, republicans can't agree. but republicans didn't respond to this request to the president, this emergency supplemental the way you expect them to say, by saying, this has to be offset with spending elsewhere. conservatives hate that. you didn't see the speaker say that. he's left the door open to a real discussion with the white house. ton senate side you showed a clip from the senate floor when senator cruz and other republican colleagues were having a moment, he began in his speech a sort of familiar refraifn for ted cruz, rallying the white house for amnesty, holding the border hostage for amnesty. his colleague from texas interrupted him and took the

discussion back from ted cruz. john mccain tried to keep as contained on one issue. ifill: but isn't this threat of executive action from the white house sort of an irritant and work against cooperation? >> oh absolutely. i think it's going to cloud, boat issue is clouded by the other and feeding into each other and the executive actions, his promise to do big things with his own pen, it's all tied into this because republicans are blaming this crisis on the border now on the president's executive action 2012, allowing young undocumented children who were brought to the country by their parents to stay in the country. so all the issues are getting mixed up. ifill: including katrina has been thrown into the mix. >> the president's katrina as they say. both sides particularly with

conservatives but there is an effort on the hill, look, right now, republicans really, really want you to know, they pull you aside and say this is the president's problem. they warrant the president photographed dealing with his problem. but they're also sensitive to the consequence of not being able to solve a problem that's about the kids. if they can't put something together and get something together, then they're going oown it too. ifill: that will haunt them in the next elections. thank you all very much. >> pleasure. >> woodruff: when it comes to school, keeping students engaged is a challenge virtually all teachers face at one time or another. using technology as a tool is one of the new ways of doing it, but one school in california is taking game-play to an entirely different level. the newshour's april brown has our latest report for american graduate, a public media

initiative funded by the corporation for public broadcasting. >> reporter: it's not often you hear kids talk about school like this. >> it just makes me feel good. >> reporter: but these students have been taking part in a new experiment in educational innovation known as the playmaker school. playmaker is, thus far, only for sixth graders who attend the private k-through-12 new roads school in santa monica, california. you won't find desks, seating charts or even a normal grading system in their classroom lessons often end up looking like this one, which believe it or not, is an introduction to physics. >> reporter: nolan windham and his classmates are playing a video game called "aero," wearing homemade wings which use re-purposed controllers from a >> at the beginning it teaches you the basics about how birds move their wings back and forth like this to get lift and it teaches you in another stage

about gravity, weight, it teaches you about drag, it teaches you about momentum, it teaches you about everything that has to do with flight. >> reporter: "aero" is one of the games designed by the los angeles non-profit, gamedesk, which created the playmaker concept. lucien vattel is the company's founder and c.e.o., he says gamedesk's mission is to keep kids curious and engaged, igniting passions that make students want to learn, rather than being forced to do so. >> a lot of the work we do here focuses on creating an authentic experience, something that creates intrinsic motivation. >> reporter: gamedesk launched playmaker in the fall of 2012 with large investments from the bill and melinda gates foundation, and at&t, among others. with an idea that some would no doubt consider radical, they partnered with a private school willing to share resources and take on the risk of classes designed like a video game. >> a game designer's role is to

constantly scaffold challenges over time so that a person will always want to play, always want to engage. and i said, what if we replace game designer with teacher or school. >> reporter: the playmaker school has been a work in progress since 2008, when the idea behind it was hatched here at the university of southern california as part of a project in the school's engineering department. at the time, lucien vattel was looking at how play could enhance learning at u.s.c.'s "integrated media systems center," a lab that was started with a grant from the national science foundation, which for the record is also a newshour funder cyrus shababi is the center's director and a professor in the school's computer science and electrical engineering departments. he quickly realized the power of what was beginning to take shape. >> when you teach math basically 90% of the kids just memorize stuff right? they don't try to understand the reasoning behind it and but if you have something like a

game where these things are kind of grasped naturally. nobody is telling you but you realize if i do this that's going to happen and that's wrong right, that's why i need to do it this way. >> reporter: since then, the playmaker model has been evolving, with some of the games being piloted in several los angeles' public schools and later taking over the sixth grade at new roads. gamedesk has also been developing a variety of games, with varying levels of technology. they address everything from physical geography and the driving forces behind tectonic plates, to emotional learning, with tools to cope with stressful situations. >> we have to figure out what is the reason they come to school everyday? >> reporter: the job of actually putting these ideas into practice in the classroom falls to educators a.j. webster and tedd wakeman. both have taught in more traditional schools, but they were drawn to the playmaker approach because they grew disillusioned with how students were forced to learn. >> when we talk about the area of the trapezoid or when king tut died or the third stage of

the frog cycle, might these be important to a small sliver of the population? sure. but data in the 21st century, i can look on my phone and in 20 seconds get the answer to pretty much anything i want. so shouldn't we be teaching broader skill sets? shouldn't we be encouraging curiosity and creative thinking? >> reporter: creative thinking becomes apparent when the sixth graders are tasked with designing, coding and promoting their own video games. they essentially form mini- companies that are judged by market forces, mainly seventh and eighth graders at new roads, who provide feedback as to why they like the games. >> this is a good game. >> reporter: or constructive criticism about what's wrong and needs fixing. nolan windham was his team's project manager, he believes the skills he's learned from the experience will be useful, especially if he goes into engineering, a field he's leaning towards at the moment. >> the purpose of all school is to get kids to have knowledge,

be able to think, have facts about things so they can use it in their careers. that's the whole point of school. this is just doing it in a better way. >> reporter: at first glance, it might seem like playmaker students play video games and work on computers all day. but even though technology plays a big part, the program also relies on many low-tech or no- tech lessons. like this one on life in mesopotamia thousands of years ago. >> reporter: students take on roles in the ancient civilization, playing the parts of kings and commoners, scribes and slave owners. they are forced to settle everything from legal disputes. >> and another law, if a man shall rent his boat to another man and he's careless he shall be forced to give him another boat. >> reporter: to the best ways to gather and maintain food supplies.

>> when you read what business people are looking for by and large they are looking for things like collaboration, the ability to communicate, the ability to think critically. so taking that as a starting point we said ok these kids have to be able to communicate with each other. >> reporter: lucien vattel admits these playful ideas may be a hard sell for districts with tight budgets or few technology resources. but a potentially larger issue will be converting those who believe education should continue in a more traditional fashion. co-teacher tedd wakeman says a playmaker classroom requires constant flexibility from teachers and students, and that even some kids have a hard time committing to a concept that doesn't focus on homework and tests. >> it's amazing to watch how many of them actually kind of freak out and say, "i just don't know what to do with this freedom." i just want you to tell me what to do, just give me some worksheets, give me a test." >> reporter: rather than with tests and quizzes, wakeman and webster say they assess what kids are learning with constant observations and discussions during and after activities

they also have students create projects to demonstrate their knowledge. and say they are tracking how well the program works overall. still, the playmaker model is relatively new, and untested. and whether it can be implemented on a large scale remains an open question vattel says each playmaker would need to be different depending on a school's resources, culture and the needs of it's students. >> playmaker detroit would be very different than playmaker austin, very different than playmaker ny or playmaker dallas, so the idea is that we want to grow this model and see how it naturally expands in these different cultures and communities. >> reporter: and if nothing else, they've figured out how to make kids like isaac prevatt look forward to school: >> at my old school i dreaded it every single day. i really just did not like it you know i'd fake stomach aches. i've not faked any sicknesses

this year. >> reporter: gamedesk is now working to get playmaker into a public charter high school in austin, texas this fall. >> woodruff: on our website, we have more on the student-run gaming businesses, and the neuroscience link between play and learning. >> ifill: pope francis remains a hugely popular public figure. but this week, he's been trying to get the catholic church's house in order, by dealing with two major, lingering problems. hari sreenivasan has the story. >> sreenivasan: vatican officials announced today that the pope will replace top management of what's often referred to as the vatican bank. it's more formally known as the institute for the works of religion and is reported to manage nearly $8 billion in assets. it's been plagued for years by several scandals that include charges of corruption, money laundering and mismanagement.

that change was one of several announced today that impact the vatican's financial and property units. it came two days after pope francis met in vatican city with six victims of sexual abuse by clergy. he apologized and asked for forgiveness from them during a homily and private mass. the pope's response to the sexual abuse scandals has been criticized by a number of victims. john allen covers the vatican and global catholicism for the boston globe. he joins me from denver. >> lest talk a little bit about the shuffle at the bank. why is this particularity bank so significant? >> niferl we should say that the -- first of all, the vatican has a number of important financial centers and the announcement today concerns all of them. in terms of the bank i think the most important thing is that as you rightly indicated in the setup to our conversation over the years the vatican bank has been a recurrent source of

scandal and embarrassment for the vatican. and the catholic church. bringing it into compliance with 20th century standards how business should be done. to accomplish that, the pope has done a couple of things. one is, he has significantly internationalized the management of the bank, appointing a frenchman as its president, a board that is tremendously international, breaking an italian monopoly over management of the bank. what he has done is broad in a number of lay people that is nonclerics, for the vatican's other profit centers, past practice, his historically has n

made by clergy but no are experience in finance. the item here is in the words of australian george zell, the idea is to get the vatican off the gossip pages and to make it boringly successful. >> what are the reasons it is not as successful as it used to be? we have seen some of the profit margins decrease significantly. >> well i mean the profit emergencies went down for the are fiscal year 2013, largely because the vatican did two things. one it conducted an exhaustive review of all of its accounts, more than 19,000 accounts to make sure it had an adequate paper trail, that it knew who its clients were and where their money came from. that resulted in closing down about 3,000 of those accounts which meant that about 60 to $70 million of assets in the vatican bank left. the other thing is they spent

about $11 million to hire the u.s. based regulatory compliance group promontory group, to conduct that review. their compliance had been exceptional. if not for those two things, profits in 2013 would have been in line with previous years. sreenavasan: what are the scandals that make this almost a pariah of the banking system? >> the italian financial institution by the name of banco amborsiano that went belly up, that institution was led by an italian financier named al he bertho calvy, who ended up hanging to death under blackfriar's bridge in london. figured prominently in godfather

iii and so on. in 2010 about $30 million in vatican bank assets were frozen over suspicions of suspect transactions. there are still about three or four former officials of the vatican bank who were facing criminal investigations in italy for alleged money laundering. in 2012-2013, credit card services were frozen at the vatican because there were accusations in italy that the vatican bank wasn't providing enough paper trail for those, on and on. cleaning of the stables that i think pope francis and his team are attempting to accomplish. sreenavasan: let's talk about the meeting that happened earlier this week with victims of sexual abuse. we've seen conviction to zero tolerance. what is different? >> pope benedict met with

victims six times. repeatedly he pledged the church to zero tolerance. iin effect none of this was new. it was the first time he did it. but the novelty of this encounter was that pope francis publicly pledged himself to accountability and not just accountability for clergy who abuse but for bishops who cover it up. that has long been a central bone of contention from victims rights groups, that it has imposed zero tolerance on priests who commit abuse but basically it has not imposed any, the pope has now said with no ifs ands or buts that he intends that there will be accountability on his watch and therefore i think the take away has to be he set a new standard

for what is going to count as hi personal success or fail -- his personal success or fame your. if the public sees him holding bishops into account, then he will not get the blame for not living up to his own promises. sreenavasan: it took the pope a long time to get the meeting on the books. >> that's right. what many critics will say is why did it take 16 months for this meeting to happen? in the early stages of his papacy, pope francis met with atheists and the poor and so on, what aids to the pope will say is he wanted to make sure first of all he was up to speed on this crisis. remember, the crisis as we know it in this state, billion dollar lawsuits and so on really hasn't hit argentina and the other thing is he want imaive progress to report. he created the pontifical

commission in november, so it wouldn't be a photo open but a substantive conversation. sreenavasan: john allen, thanks so much. >> woodruff: now, back to a story that has dominated international headlines for most of this year, the crisis in ukraine. the country's previously overwhelmed military has made significant gains recently, but separatists forces are consolidating and digging in. the newshour's chief foreign affairs correspondent margaret warner reports. >> warner: dressed in military fatigues, a triumphant president petro poroshenko visited the eastern city of slovyansk yesterday, lauding it's return to government control. >> slaviansk was a symbol of terror and violence before. today slaviansk is a symbol of the liberated donbass. >> warner: ukrainian forces

recaptured slovyansk over the weekend, and kramatorsk on monday, two strongholds of pro- separatist rebels in the country's industrial donbass region. for months, ukrainian forces had appeared incapable of dealing with the russian-backed insurgency. but last week, after poroshenko lifted a unilateral cease fire, they went on the march. in liberated slovyansk, the military removed rebel barricades and handed out food and water to weary residents. >> ( translated ): the situation right now, it is hard to believe we've been rescued, that we are home now and can be ukrainians again. >> warner: the rebels have fallen back to the regional capital donetsk, a city of one million, and still hold buildings in luhansk, near the russian border. a rebel commander in donetsk says his forces will have the advantage in urban warfare, if government forces try to move in. >> ( translated ): now they are approaching a scenario that is least beneficial to them and most beneficial to us, a war in the city. >> warner: president poroshenko

dismissed that possibility yesterday, saying, "there will be no street fighting in donetsk." still, the rebels say new separatist recruits are pouring in. on sunday, thousands rallied in donetsk. >> i would take up arms tomorrow. and better to die on a barricade than be under the ukrainian hoof. >> warner: but officials in kiev claim the military now controls nearly two-thirds of the two regions where rebels had declared independence. they also say they've secured all road border crossings with russia, to try to prevent more russian equipment and forces from entering. in washington today, senators pressed for u.s. new sanctions against russia. but assistant secretary of state victoria nuland repeated the administration's preference to act in concert with the europeans. >> we are continuing to prepare the next round of sanctions. as we have said repeatedly and as the president has said, these sanctions will be more effective they will be stronger if the u.s. and europe work together.

>> warner: meanwhile, as the battlefield balance seems to tips it's way, the kiev government is taking a harder line, declaring that any talks on a new cease-fire will begin only when the rebels disarm. >> woodruff: and margaret joins me now. >> so margaret, you've been talking to people in both governments the u.s. and ukraine, you have been talking to people on the ground. at the time ukrainian military finally on a roll? warner: privately they admit it's not as rosy as portrayed. that is, yes they finally after really months of laying siege to slovyansk managed to provoke a panicked retreat by the rebels. they left behind a lot of heavy equipment and weapons. that was cleared a panicked escape. but even he admitted that the rebels had succeeded by using the locals as human shields for months. he says donetske is a whole 'nother order for all of these

people, makes it very complicated for us. he also admitted that even though they have sealed the road crossings from russia there is all this unprotected out to that border. there is this unprotected forest he said fields, rivers in which russians are still trying to get men and material in. >> so despite this sense that there could be that they're ready for an assault on donetske you're saying not yet. warner: not yet. and chief advisory to the u.s. security told me tonight, tens of thousands of receivables dead is not what the government wants here. we're going to have to use a different method and it's going to have to be a lot slower. look how long it took in slovyansk. the u.s. government which insists it's not directing this in any way are definitely telling the ukrainians do not mount a major assault. you cannot take donetske militarily, it will be a disaster and you have to use other methods.

woodruff: what are the other manifest? warner: judy, the military advisor laid out in this briefing today, preventing resupply for the rebels. at the same time, we'll create civilian carders, so civilians can leave if they choose. what happened in donetske, about 100,000 left, in the interim they had no food, no water, they were in terrible shape. and he said they are basically going to way for the insurgents to really sabotage themselves. for example, blowing up roads and bridges and railways. i've been to factories with 10,000 workers that take iron ore and coal and produce pipes. if you cut the railroad line those 10,000 people lose their jobs. woodruff: and they've done some of that. warner: they've done some of that. in the short term, they create

people that well, i'll get paid by the separatists but the ukrainians are counting on the locals essentially saying we've had enough. now that's a tall order. meanwhile the u.s. has said, the only answer is through this dialogue. as you may recall there's this ongoing attempt from the europeans and americans to keep the dialogue going. the separatists however saying yes, we're interested in the dialogue but only here in donetske or belarus or russia. woodruff: and speaking of putin you didn't mention him until the very end. what is his role, what is he saying? warner: his role is absolutely huge. the tone has diminished. both in public statements and i'm told by people who actually understand russian, on russian tv, russian language tv you see on ukraine, the government isn't a bunch of neonazis, they say

don't kill civilians and we need a dialogue. the question is why, that remains a mystery to u.s. officials. is it because of economic sanctions? is it because a new stronghold showing russian reputation worldwide sinking or is it because putin is playing a crazy game to let the stalemate continue in donetske? and nobody knows, nobody in the u.s. government even pretends to know. woodruff: speaking of sanctions, you mentioned, capitol hill there are still members of congress call for that. where does that stand? warner: not so far judy. so far the eu slapped sanctions on those, finance, high tech defense but they want to wait for the europeans. the big meeting is next week of the european council.

july 16th. question, will the europeans go for it? higher economic price than the u.s. and two if they don't would president obama go it alone? woodruff: and watching them act together i think is what -- warner: but if they don't, you can hear the pressure on capitol hill. like a paper tiger, this administration threatens and threatens and doesn't do anything. we'll see if the president is prepared to act alone if he has to. woodruff: margaret warner thank you. >> woodruff: again, the major developments of the day. the battle between israel and hamas raged on. palestinians in gaza reported 49 people killed so far by israeli air strikes, while hamas militants fired more rockets into israel, with no casualties reported there. president obama arrived in texas for two days. his aides rejected republican criticism that he's not visiting

the border amid a surge of migrant children crossing illegally. much of the northeastern u.s. cleaned up damage from severe storms last night that killed five people and knocked out power to thousands more. and in the world cup, argentina defeated the netherlands, four to two on penalty kicks, to advance to sunday's championship against germany. >> ifill: on the newshour online right now, millions of americans suffer from chronic pain, but it's a condition often misunderstood by doctors. on our health page, read about one woman who managed her pain by tackling the depression that came along with it. that's our latest report from our partners at "health affairs." all that and more is on our web site, newshour.pbs.org. >> woodruff: and that's the newshour for tonight. on thursday, we'll look at the latest in the battle between israel and hamas. i'm judy woodruff. >> ifill: and i'm gwen ifill. we'll see you on-line and again here tomorrow evening. for all of us here at the pbs

newshour, thank you and good night >> major funding for the pbs newshour has been provided by: >> and by the alfred p. sloan foundation. supporting science, technology, and improved economic performance and financial literacy in the 21st century. >> and with the ongoing support of these institutions and... >> this program was made possible by the corporation for public broadcasting. and by contributions to your pbs station from viewers like you. thank you. captioning sponsored by macneil/lehrer productions

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