captioning sponsored by macneil/lehrer productions >> ifill: good evening. i'm gwen ifill. the taliban's top military commander is captured in pakistan. >> woodruff: and i'm judy woodruff. on the newshour tonight, the significance of that seizure, plus an update on the big coalition offensive in afghanistan's helmand province. >> the marines from bravo company first arrived in the central part of the area, they were welcomed, if will, by

repeated small arms attacks. >> ifill: then, politicians jump ship in the face of a rising anti-washington tide. next out-- indiana's evan bayh. >> woodruff: a report from egypt on the country's innovative approach to overcoming a massive problem with garbage. >> the system. let's work in the north and the south. it doesn't work. >> ifill: and european currency under stress-- what it means for europe and the world. that's all ahead on tonight's "pbs newshour". major funding for the pbs newshour is provided by:

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station from viewers like you. thank you. >> ifill: the campaign to crush taliban resistance in afghanistan advanced on two fronts today. u.s. marines pushed deeper into a key town amid reports a top taliban official has been captured in pakistan. margaret warner begins our coverage. >> warner: 15,000 nato and afghan troops made new gains today in their offensive in southern afghanistan. u.s. marines and other forces linked up with units who'd been air-dropped into marjah, when the operation began four days ago. the marines-- moving in from the north-- reported resistance weakening in the city of 80,000, a taliban nerve center in helmand province and a hub in the opium poppy trade. correspondent rajiv chandrasekaran of "the washington post"-- who is with a marine unit in marjah-- reported that the fighting is less intense than it was.

>> this place is a little quieter this evening, but when the marines from bravo company first arrived here, they were welcomed, if you will, by repeated small arms attacks, grenades being shot into their compound. when the afghan soldiers who were with them tried to hoist the afghan flag here, they were repeatedly shot at. but since then, marine commanders have dispatched another company, several hundred marines of reinforcements to this area, and they've conducted operations aimed at trying to create a bit more of a buffer zone around the space today. it seems to have worked. >> warner: still, snipers continued firing from hidden positions, and marines proceeded cautiously, moving from house to house looking for bombs and booby traps. >> reporter: there was an expectation that they would be

able to roll into some of these areas somewhat unopposed, and that's clearly not been the case. but a big part of this deliberate strategy is aimed at keeping americans alive out here. u.s. marine convoys go very deliberately down the road to look for roadside bombs. when they are seeking to clear housing compounds, they're moving very carefully to send in explosive sniffing dogs and other technicians to look for booby traps. the result has been remarkably few marine casualties for such a large and complicated operation. >> warner: nato and afghan officials reported three international troops have been killed so far, along with one afghan soldier. and they confirmed three more afghan civilians killed since sunday. there was also progress on another front-- targeting the senior taliban leadership, which is holed up in neighboring pakistan. word came that mullah abdul ghani baradar, the afghan taliban's top military

commander, had been secretly captured ten days ago in pakistan. "the new york times" and others reported he'd been hiding here, in the port city of karachi. they said he was seized in a joint c.i.a.-pakistani operation and is being held and interrogated by the pakistanis. though the story didn't break until last night, the "times" learned of his arrest last week. the white house asked the paper to withhold the story in hopes baradar might reveal information about his fellow taliban leaders before they learned of his capture. at the white house today, presidential spokesman robert gibbs would not confirm the arrest. but he did point to growing assistance from pakistan in the fight against the taliban. >> i think we have, over the course of many months, seen an increase in that cooperation, and we've seen dating back to

last spring, an increase in pakistani pushback on extremists in their own country, which i think is beneficial not simply for us, but the pakistanis realize extremist threats are threat to their own country and have appropriately taken strong action. >> warner: baradar was said to be commanding the taliban's military operations in afghanistan's southern insurgent heartland. and he was second only to the group's spiritual head, mullah mohammad omar. for its part, the taliban denied baradar had been captured, or that nato's offensive is gaining ground. a spokesman said, "this is just rumor spread by foreigners to divert attention from the marjah offensive. they are facing big problems in marjah. in reality, there is nothing regarding baradar's arrest. he is safe and he is in afghanistan."

in the meantime, nato commanders were already looking past the immediate fight. u.s. marines today secured the area in marjah where they plan to establish a new government center, and pave the way for tribal leaders and others to meet and discuss the city's future. >> woodruff: for more on all of this, we get three views. seth jones is a senior political scientist at the research organization rand. he was an advisor to the u.s. military in afghanistan last year. thomas johnson is a research professor at the naval postgraduate school in monterey, california. he focuses on afghanistan and central asia. and steve coll is president of the new america foundation and a writer for "the new yorker." he's the author of "ghost wars: the secret history of the cia, afghanistan and bin laden." thank you, all three, for being with us. seth jones, to you first. let's focus on this important capture. first of all, we do believe that baradar has been captured

even though the administration isn't confirming it. >> most evidence points to the strong likelihood he has been captured. >> woodruff: how big a deal is it. >> it's important to know that the insurgency is not hire arcally structured. there are a range of insurgent groups and a range of tribes and sub tribes. the taliban is the largest insurgent organization. this is probably important for three very brief reasons. one is baradei is the second in command. he is a primary operational commander involved in running a range of the senior shurahs. >> woodruff: what is that? >> councils. the taliban is broken down into a series of committees or councils. a third, it does demonstrate or, second, it does demonstrate improved pakistani cooperation with the u.s. on the afghan insurgent groups. the taliban has not been a major focus of operations. then third, i'd also note that this does now begin to put

into question whether the insurgency is tipping now with at least a major senior taliban official now being captured. >> woodruff: steve coll, how do you see this? how important? >> i think it's potentially very important. the pakistanis, as seth notes, have not gone after the supreme leadership of the afghan taliban in a vigorous way. the fact that they apparently partner ed with the united states suggests they may be breaking their past pattern of catch-and-release where they've made symbolic arrests to please the west but not to change their fundamental tolerance of the taliban on pakistani soil. but let's see whether this becomes part of a concerted effort against taliban leadership and whether it also leads the pakistanis to try to push the taliban to convert their violence into political negotiations with kabul. that would be a big tipping point in the insurgency. >> woodruff: what do you look for to determine the significance of this? >> well, i think that what's

very important here is that there's been rumors for many months that there are fissures and disputes between different leaders in the council. >> woodruff: again to define the.... >> it is basically the leadership council of the taliban. and baradei is viewed as one of the more pragmatic members. i think that there's long been rumors that some of the hard- liners have disagreed with barader and this has had major impacts relative to how they viewed questions of reconciliation and negotiations. there's been further rumors that a military leader by the name of mullah zakir might have rated out barader. so i think this could be very significant relative to the notions of reconciliation and

negotiations, two key aspects of our counterinsurgency strategy. i would disagree relative to what this means vis-a-vis the pakistan cooperation. let's not forget that just two weeks ago secretary gates directly asked islamabad to increase military action against the afghan taliban in the tribal areas of pakistan ostensibly in north waziristan and the pakistani military as well as islamabad came back and said, no, we don't have any new military operations this year. i think this is very significant. >> woodruff: okay. i want to divide out that point because you raised it again about the significance of the fact that the pakistanis were part of this despite their historic support for the afghans. taliban. but what mullah barader himself. we just heard tom johnson say he was seen by some as a moderating force in the taliban. is it known whether that's the case or not? >> well, it's unclear what the reason and why he was

captured. i mean tom is right that there have been fissures within the inner shurah. there has been a push for suicide attacks. baraider has asked that the taliban be careful in targeted assassinations and suicide attacks because the ininsurgency is about hearts and minds and he has recognized that. what is unclear is what the reasons within pakistan were for targeting mullah braider in this case. as steve noted earlier whether this is a longer term strategy or a capture. >> woodruff: how do you see that, steve coll? >> i think pakistanis have a record of going after militant groups on their territory when they see it as being in their own interest. if a pakistani taliban faction wages revolutionary violence against the pakistani state, the state responds. the question here is what does the pakistani army and intelligence service see as being in their interest in the prosecution of the shurah or potentially the movement of

the council into a reconciliation strategy. i think ultimately pakistan is going to play its hand to defend its own natural interests as the army and the leadership interprets them. let's hope that that leads to negotiations. >> woodruff: tom johnson focusing on the taliban in afghanistan, does this clearly weaken them or because they are so divided, is there a question about that? >> well, let's not overstate the divisions. but i think it's really too early to tell. the shurah is the command center for the insurgency in the south but that being said, the taliban have morphed into more of a franchise organization. their regional and district leaders have degrees of freedom in their actions so i think it's basically too early to tell but there's no question that this... that he's an important player and this is a major event for the united states as well as nato. >> woodruff: what do you think

the immediate effect could be on the taliban? impacts. one is that it may cause some short-term impact on the inner shurah's ability to run the strategic and operational components of the insurgency. he was the one that was giving guidance in some of these shurah meetings in pakistan of senior shadow governors and military commanders. there may be a short-term impact until it's clear that he's been replaced. second issue is again this does... the bulk of any insurgency is of the local population. most of them in afghanistan tend to be fence sitters. part of the issue is, are many of them going to begin to sort of question openly who is winning. >> woodruff: steve coll, how quickly should we expect the taliban to sort of reorganization reorganize themselves to mke us for a loss like this. >> watching what they do and announce over the next week or two is an important indicator of how they interpret this

inside the shurah, how serious it may be. the taliban have developed very sophisticated messaging. they'll want to message some narrative of continuity and succession, but let's see. as we've seen in the case of the pakistani taliban after the decapitation of leadership it's taken them some time. they've exhibited disarray in the success process. let's see what happens here. >> woodruff: tom johnson, i want to come back to this big military operation in the helmand province in marjah. what is the goal and do you think they'll be successful? >> i think general mcchrystal recognizes we can't kill and capture our way to victory in afghan stachblt i think we've heard different statements coming out of the military concerning government in boxes and this notion that we need to separate the people, the population from the taliban insurgents. i find it somewhat interesting that it was such a large force. 15,000 troops going in to

marjah where nobody suggests there were more than a thousand, maybe 2,000 taliban at the most. but i think that what the taliban have to do here is they recognize that if they don't lose, they win. that's to suggest they're not going to come out and face us kinetically. they realize that a steal mate is a victory for them. patience is on their side. >> woodruff: seth jones, do you think it will be a successful? >> the key issue will probably not be the military operation. the key issue will be negotiating with the key power brokers in the marjah area that tend to be a range of tribal and other community leaders. the question is, will the combination of afghan and nato forces be able to coerce or co-op these power brokers lower the long run to ensure that they stay on their side as opposed to going back to the taliban because in this area of helmand there's a constant shift between both sides. >> woodruff: it's an ongoing operation. seth jones, we thank you. tom johnson and steve coll,

gentlemen, thank you all. >> ifill: now, with the other news of the day, here's hari sreenivasan in our newsroom. >> sreenivasan: the u.s. military presence in iraq has fallen below 100,000 for the first time since the war began in 2003. a spokesman in baghdad said today the total force now numbers 98,000. all but 50,000 american troops in iraq are due to leave by the end of august. the rest are scheduled to withdraw by the end of 2011. the war of words over iran's nuclear program kept heating up today. in tehran, president mahmoud ahmadinejad warned other countries against trying to impose new sanctions on his government. >> ( translated ): if someone wants to act against iran, our response would not be like previous times. we will not advise or clarify or explain anymore. definitely, there will be a counter action that will make them regret, as usual. >> sreenivasan: at the same time, russia, france and the

u.s. called for iran to stop enriching uranium to higher levels. they wrote to the u.n. nuclear watchdog agency and questioned iran's claim that the uranium is only for medical purposes. and in saudi arabia, secretary of state hillary clinton said the hope for a middle east free of nuclear weapons is what's at stake. >> if iran gets a nuclear weapon, that hope disappears. because then other countries which feel threatened by iran will say to themselves, if iran has a nuclear weapon, i'd better get one too in order to protect my people. then you have a nuclear arms race in the region. >> sreenivasan: on monday, clinton also warned that iran is moving toward a military dictatorship under the revolutionary guard. today, president ahmadinejad dismissed the criticism. he said, "we don't take her comments seriously." new optimism about the economic recovery washed over wall street today.

stocks surged on good earnings reports and other upbeat data. the dow jones industrial average gained more than 169 points to close above 10,268. the nasdaq rose more than 30 points to close at 2,214. the u.s. department of transportation demanded today that toyota hand over internal documents on its sweeping recalls. it's part of a federal investigation of problems with gas pedals and brakes in millions of toyota vehicles. also today, the japanese auto maker announced it will shut down two plants in kentucky and texas for now. it said the recalls may be creating a backlog of unsold cars and trucks. for the record, toyota is a newshour underwriter. president obama has announced $8 billion in loan guarantees for america's first nuclear power plant in nearly three decades. the money would go to a project in georgia. the president spoke today in lanham, maryland. he said nuclear power is environmentally cleaner and economically vital. >> there are 56 nuclear reactors under construction around the world.

21 in china alone. six in south korea. five in india. so make no mistake, whether it's nuclear energy or solar or wind energy, if we fail to invest in the technologies of tomorrow, then we're going to be importing those technologies. instead of exporting them. >> sreenivasan: the president also conceded nuclear energy has what he called "serious drawbacks". he said a bipartisan group of nuclear experts and leaders will try to speed up efforts to store nuclear waste safely. texas today challenged the u.s. environmental protection agency on its finding that greenhouse gases are dangerous to humans. governor rick perry said it was based on flawed science and would damage farmers and energy producers. he said he's asking a federal appeals court to intervene. texas leads the nation in oil refineries, chemical plants and coal-fired power plants, and in greenhouse gas emissions. in eastern india, police searched for more than 100 maoist rebels who stormed a remote police base on monday,

killing at least two dozen officers. the rebels set the base on fire with grenades and land mines, and gunned down defenders with automatic weapons. seven policemen were wounded. the government insisted it would continue a crackdown on the maoists. they now operate in 20 of india's 28 states. the earthquake damage in haiti may reach nearly $14 billion. that estimate came today from the inter-american development bank. and haitian president rene preval said the huge job of clearing rubble will delay rebuilding. he spoke to associated press television news. >> i am going to tell you one thing to take away the debris which is on the streets of port-au-prince. we need 1,000 trucks for 1,000 days. that makes it three years. >> sreenivasan: preval also said the rebuilding must focus on investment in the provinces to discourage overpopulation in port-au-prince. at the winter olympics in vancouver, canada, the u.s. men's hockey team won its first-round game over

switzerland. germany won gold in the women's biathlon. and sweden took the gold in the 12.5 kilometer biathlon pursuit. but heavy snow forced officials to delay the men's super combined ski race. those are some of the day's main stories. i'll be back at the end of the program with a preview of what you'll find tonight on the newshour's web site. but for now, back to judy. >> woodruff: and still to come on the newshour: finding opportunity in garbage in egypt; and the threat to european economies posed by the greek debt crisis. >> ifill: but first, the growing political frustration directed at washington, and from within washington. >> i love helping our citizens make the most of their lives, but i do not love congress. >> ifill: after two terms in the senate, indiana's evan bayh shocked fellow democrats yesterday by announcing he would not run for a third six-year term. his stated reason-- he doesn't like the job anymore. >> there's just too much brain- dead partisanship, tactical maneuvering for short-term

political advantage rather than focusing on the greater good, and also just strident ideology. >> ifill: of all the democrats running for reelection, bayh, a senator's son who also served as indiana governor and secretary of state, was among the best positioned to win. but without bayh in the race-- he had already raised $13 million and enjoyed an early double-digit polling lead-- the seat looks ripe for a republican pick-up in november. with public hostility toward washington on the rise, many other lawmakers are also choosing to get out of town. five senate democrats are now vacating their seats, including connecticut's chris dodd, north dakota's byron dorgan, roland burris in illinois, and ted kaufman in delaware. republicans are leaving, too. that party will defend six open seats this fall-- in missouri, florida, new hampshire, ohio, kansas and kentucky. but retirements only begin to tell the story. incumbent democrats are at risk

in arkansas, pennsylvania, colorado and nevada. the president travels this week to both nevada and colorado, where democratic leader harry reid and freshman democrat michael bennett, respectively, are each struggling. arizona senator john mccain, who was the republican presidential nominee just two years ago, is being challenged, too-- this time, from his right flank. former congressman j.d. hayworth. >> you could say there are two john mccains-- the one who campaigns like a conservative and the one who legislates like a liberal. ( cheers and applause ) in fact, when it comes time to debate, i'm going to ask for a third chair in case both john mccains show up. >> ifill: mccain jabbed back at hayworth, who lost his seat in 2006 and is now a talk radio host. >> i know for nearly a year on his radio show, mr. hayworth

used to attack me in the most disrespectful fashion, so i would imagine, over time, that we might see a repetition of that. but the fact is, i'm confident of victory. the polls show us with 20-point leads. but i'm going to go out and earn every single vote. that's the only way i know how to campaign. >> ifill: all over the nation, mainstream candidates have become fresh targets. in florida, governor charlie crist-- once thought a shoo-in for the republican senate nomination-- is now trailing former state house speaker marco rubio. >> you know the establishment in washington is not supporting me. to them, this is nothing more than the opportunity to pick up another senate seat in >> ifill: rubio, and candidates like him, are picking up support from the tea party movement, the fractious coalition of conservative anti-government groups that is taking aim at both parties this fall. so how deep does the anger at washington go? and how will it determine the outcome of the 2010 midterm elections?

for that, we turn to stuart rothenberg, editor and publisher of the "rothenberg political report"; and amy walter, editor-in-chief of the hotline, "national journal's" political daily. welcome to you both. stu, is this the tip of the iceberg? >> i think he reflects a lot of sentiment in washington and certainly around the country. a sense that washington isn't working. capitol hill, we have democrats, they had 60 seats and now 59 seats in the senate. a huge 80-seat majority in the house. the white house can't get anything done. it has to be frustrating to everybody. >> ifill: is it about incumbency, amy? is it just people are so unhappy kind of in a way that they just want to lash out at somebody. >> in a cosmic sense they're angry at everything. it's true that establishment means a lot of things in this environment. it means there's the upset, of course, about corporate america and the banks and wall street. there's upset, it seems, at... even at major league sports. there is a scandal at every

moment whether it's major league baseball and steroids. there's just a sense overall that big institutions have let us down. congress is a easiest place to lash out because it's the only place where you can really have an impact. you can't do much about the fact that the ceo of wall street bank is making millions of dollars and getting big bonuses. if you're really upset about the direction of the country, you can take it out on congress. >> ifill: what's different though this time? it feels like in 1996 a lot of people decided to change congress. mid-term elections are known for being upheavals. it seems like it's the moderates who are leaving. >> well, i think the results are actually mixed. i think what you're seeing on the democratic side it's the moderate democrats who are going to lose because they are in more republican districts. so they were swept in by the anti-bush, anti-republican sentiment in 2006-2008. those districts are conservative. they will return back to republican. i think you're going to see moderate republicans win, take

over though not those same districts. they'll be in the middle now so that after the 2010 elections, you will have a larger group of moderate republicans in the senate, people like mark kirk and congressman castle. mike castle. even around the country, you're having moderate republicans. it is just the nature of the cycle. gwen, in 2006-2008 the democrats understood they could take advantage in districts that in the past they were losing. now republicans are taking advantage of different kinds of districts. >> ifill: the mood is what it seems like. who is more in danger in that same cosmic sense republicans or democrats. >> democrats control the congress and the white house. it is their fault. i know we've talked about this before that democrats are really going to try to reframe this election about a choice that actually it is incumbency in general and you're upset at the whole process and republicans are part of this process because they're obstructing, you know, valuable legislation. but the bottom line is everybody in america knows who

really runs the show. just building on stu's point for an minute. there's an overall sense that nobody is really that excited to come back. it's one thing if you know i have a tough fight and it will be tough to win but i really want to come back because i think next year we'll be able to get great things done but i think being in the majority is important for democrats. the sense that you have right now is even if we do win and are in the majority obviously we have the president of the party still in the white house, it doesn't matter much. i don't think anything is going to get done. >> to add to that after 2010 we have redistricting after the census. a lot of these members say i'm going to run for two more years and have to run in redrawn digs trikts with new voters who don't know and still a hostile environment? as amy says, nobody thinks we're going to snap our fingers and suddenly deal with these big issues. >> ifill: we saw the president talk about bipartisanship

again. it seems like there are two things happening. the polls show everybody wants people to get along and nobody is getting along. >> they want to get something done. the white house is part at all the at that. they equated bipartisanship with competence. those are two very different things our bipartisanship with action. in reality i don't think voters care all that much about how many democrats or republicans are on a bill. they just want to see that something is happening. what they've seen is a year of really nothing happening. nothing happening on the health care front. not a whole lot happening on the jobs front. and then another jobs bill falling through. i think if democrats can just prove that they're doing hmething, whether they had republicans or not wouldn't matter. >> one problem is this will be the third really, the hird election cycle in a row where one party runs on change but they don't bother to spell out what does that mean. they don't have an agenda or a mandate. they don't have specifics that once they're in, they can go to the hill and say this is

what the people have said they wanted. they just want change. >> ifill: i saw this new poll today that you probably saw too that cnn has done in which only 34% of the people say that congress should, members of congress should go back. normally we see that. but then we don't see... people say like their own member. they don't like their own member so much this time. >> these numbers are worse in, no, my own member does not deserve re-election. much worse '94. >> ifill: remind people what happened in '94. >> we had a real republican wave there where republicans won something like, i don't remember, 52 house seats and took over the house and the senate. it was just a blood bath. obviously there are some democrats worried about that. i think amy is exactly right. right now there is a generalized sense of we don't like... washington isn't working. we don't like anything that the politicians are doing. they're not doing anything. the democrats are at much greater risk. ultimately we're going to hit october and the voters will be thinking about the general election not just the

primaries. >> ifill: more shoes to drop? >> believe it or not, we are very early in the season. now especially when it comes to the house rerecruiting season. filing deadlines have only closed in five states. we still have, you know, a lot of states still left to go. there are a lot of people looking at one morrison tore, blanch lincoln in mark mark, the filing deadline in that state is in march. she has said she's definitely running but there are a lot of people wondering based on what happened with evan bayh. they have similar track records in terms of their desires to see as a centrist. her poll numbers much worse than evan bayh. you have a lot of members who have already decided to pack it in. maybe they're holding off right now hoping that things will look better as we go down the road. but if they don't it's hard to see that a lot more of them won't decide to not run again. >> ifill: what do you think about that, stu? i know republicans are getting very excited. they think the majority might

be within reach. >> there will be more retirements. i'm quite confident of that. amy is right. there's still a lot of members who are going to decide, you know, they're keeping their options open. maybe they've even decided to retire but haven't yet announced it and both parties are trying to orchestrate some of these announcements. it will be a very good republican year. i don't see ten seats in the senate yet. but seven or eight is not an unreasonable number. that's a big number. that would dramatically change capitol hill. and in the house, you know, 24 to 28 house seats that i expect to go up. i think the republicans are going to have quite a good year. >> ifill: your numbers are like that? >> absolutely. i think we're going to see that republicans pick up something like 6 to 8 seats in the senate. not the majority but they shave it down to... significantly. i agree with stu's numbers on the house. a lot of that will depend on how much more retirements are left. it's interesting. see republicans talking about, well, we need a contract with america. so we don't get into this problem.

if we do win back the majority, what do we do with it? the problem of course that democrats have found and republicans had find the same thing is more diverse your caucus, the larger your caucus, the more difficult it is to come up with one set of ideas and be able to put that through. >> ifill: it seems like every single week there's another shoe dropping. we'll be talk to you about the next one. thank you both very much. >> woodruff: next, the efforts of two social entrepreneurs to make something better from garbage. special correspondent fred de sam lazaro has our report from egypt. >> reporter: if these students seem a bit old for their tasks, it's because none of them had ever set foot in a school until this one opened two years ago. the kids come from generations of illiterate and poor garbage collectors. >> this is how we learn numbers.

these are ones, tens, thousands, so on. its complicated if you don't touch and feel. that's what maria montessori taught us-- concepts, math concepts. >> reporter: social entrepreneur laila iskander has taken it on herself to change the world of those who live in medina zabaleen-- literally, "trash city"-- on the outskirts of cairo. for decades, the collectors, also called zabaleen, have hauled home what the people of cairo threw away. 80% of it was recycled and sold, with organic waste fed to pigs owned by the zabaleen. pigs are considered unclean in this largely muslim nation, but the zabaleen are christians. their garbage collection methods earned them little money and even less respect. >> they're perceived to be dirty. they don't wear a clean uniform. they don't really wash their trucks. they used to raise pigs, and that's not a very clean enterprise. >> reporter: a decade ago, the government tried to modernize waste management by hiring european firms to handle the

trash in major cities. but cairo's 17 million inhabitants, who produce 13,000 tons of garbage every day, were accustomed to door-to-door pick up by the zabaleen. iskander says they didn't take easily to sorting, recycling and carrying trash to bins. the multinationals also found it hard to hire workers, especially the historically self-employed zabaleen. >> they refused. they said we are entrepreneurs and we are recyclers. do you really think we enjoy going out and handling this dirt just because we love dirt? you know, so anyway they tried to hire others, but there's a stigma to the trade. its not such a pleasant thing to do. and they couldn't retain their labor. >> reporter: finally, iskander says, the multinationals and zabaleen made an informal arrangement allowing these traditional collectors again to work door to door in some neighborhoods. but last year, the zabaleen were dealt a huge setback.

in 2009, seeking to stop the spread of swine flu, the egyptian government ordered the killing of all pigs in the country. some 300,000 animals were culled. the move did nothing to contain the swine flu. it did bring an appreciation for how much organic waste the pigs consumed, how much they helped keep the city clean. for the zabaleen, farming pigs was a source of both income and protein. and with no pigs to feed, they had no reason to pick up organic waste. tons of it is now strewn along streets and in overflowing bins. neither goats nor the methods of rich countries, where trash is separated by households and dumped in large landfills, have worked here, says iskander. >> you can't copy-paste systems that work in the north in the south. it doesn't work and it was not smart in the first place. >> reporter: she thinks the solution lies in a more educated and competitive generation of garbage

collectors, who learn a uniquely tailored vocabulary. >> reporter: "pert plus, pantene and head and shoulders." these are the first words we learn in our literacy class-- >> reporter: "pert plus, pantene and head and shoulders," because their maker, proctor and gamble, pays a few cents for every container that is recycled. the company is anxious to keep them from being refilled and sold by counterfeiters. the literacy taught here is practical;; learning to read city maps, spreadsheets, to negotiate for a better contract, whether with municipalities or multinational companies. >> in 2015 and '17, when the other contracts are up for negotiation or, we hope, end, these guys here will be ready to renegotiate. contracts are part of the curriculum. >> reporter: even as she tries to improve the lot of garbage collectors, iskander wants to raise public awareness of the growing garbage crisis and the need for recycling. it's a crisis not just in cities, but also rural areas, like the sinai peninsula.

here she's worked with another social entrepreneur, sherif el ghamrawy. he started the first eco-lodge along this coast in the 1980s. everything, food to furniture, is recyclable or recycled. but with the growth of tourism came another opportunity. >> after i saw how the development is going on in the area and a lot of hotels started coming up, and little camps, so the trash was all over. >> reporter: with iskander's help, he designed a recycling program and signed agreements with surrounding towns and, especially, the areas large hotels and resorts to handle their refuse. organic or food waste is given to the livestock of bedouin herders native to this desert region. plastics and so-called inorganic materials go to a transfer center set up by ghamrawy's organization, hemaya, or "protection" in arabic. >> we can see that we are in a

touristic area-- a lot of alcohol. >> reporter: glass bottles of every color and shape, cardboard and papers and plastics, destined for a variety of recycled uses. this is anti-shock, which is used for shoe soles, and also hair for the ladies, you know. >> reporter: hair rollers? >> yeah. >> reporter: what would happen to all this stuff that you have here, before you came here or were you not here? >> if its not very well organized, everyone is collecting his own waste and throw it somewhere in the desert where its again flying around, and also, which is really bad on the coastlines the plastic bags, they fly into the sea and they come either around the corals and kill the corrals or they kill the fish. >> reporter: ghamrawy's project has turned much of that debris into profit, exporting materials like plastic to china. >> this is very expensive materials. we sell it for about 3000 pounds, makes about $600 per ton. >> reporter: about 100 young men

work for him, mostly migrants from impoverished upper egypt. >> ( translated ): we came to make a living. there are no jobs, the economy is very depressed in upper egypt we don't mind doing this. it beats working for the government or a city job. including a share of the revenue >> reporter: their pay, including a share of the revenue from selling the plastic is about 200 u.s. dollars a month, a decent wage by local standard. much of it is sent back home to their families. >> reporter: they couldn't earn this kind of money doing anything else around here? >> no. no. some university graduates wouldn't earn as much money as these. >> reporter: back in medina zabaleen, laila iskander hopes her students can do even better. among her stars is moussa nazmy. at 24, he's started his own business, granulating plastic that will eventually be exported to china. >> ( translated ): at the most basic level, i learned arabic literacy. if i go to do a trade, i can definitely record it in words. i also learned new recycling

methods, because it was different from what my father was doing. >> reporter: he's in the first 44 who have graduated from the recycling school, the very first in person in his family ever to read. for iskander, it's a first step in bringing respect for him and for a trade that she says will be critical if developing countries like egypt are to sustain healthy growth. >> ifill: next, the continuing fears over the economic ripple effect starting in greece and spreading to the rest of the world. jeffrey brown has the story. >> reporter: amid what's seen as the biggest test of europe's single currency since the inception of the euro 11 years ago, finance ministers in brussels today told greece that it must take "urgent measures" to rein in its huge debt problem. the ministers set a one month deadline for new actions.

>> our view is that the program from the greece government is not enough. we need more concrete steps to regain credibility in the markets. otherwise, this will drag out. >> reporter: last year's global recession exposed the depths of greece's economic trouble. according to recent news reports, wall street firms had for years helped mask the situation with complex financial instruments, while the greek government hid the full extent of its problem. a new government has vowed change, pledging to dramatically reduce its budget gap this year. >> the greek government has already started implementation of its stability and growth program, which exactly deals with the problem of the excessive deficit. we are encouraged by the fact that we are moving quite fast. >> reporter: but those austerity measures have already spurred demonstrations in greece.

in athens today, ports were still as customs officials began a three-day strike to protest pay cuts. and concerns that the port shutdown would lead to gasoline shortages prompted long lines at stations. with the value of the euro falling, greece's problems are a threat to the entire so-called "euro-zone", the 16 european union members that converted to the euro as their sole currency. the european central bank sets monetary policy for these countries, but individual nations make their own fiscal policy. and the rest of the world is watching carefully as well, as world markets, including wall street, have been shaken in recent weeks by events in europe. and for more on all this, we turn to scheherazade rehman, director of the european union research center, and professor of international finance at george washington university; and simon johnson, former chief economist at the i.m.f. he's now with the peterson institute for international

economics and a professor at the m.i.t. sloan school of management. help people understand what's going on. this is both a local problem in a particular country but something more. >> absolutely. this is a serious fiscal problem, a budget problem, if you like in greece. it's a country that shares the euro, a currency, with 15 other countries. so as greece has its problems, there's a lot of fear about the euro in itself. will it break up? will it hit other problems? will portugal and spain, for example, be affected? >> brown: make the connection for us. greece gets itself in trouble. why does that affect the rest of the euro zone. >> because they're sharing the same currency. if this country goes down, it will reduce the value of the euro vis-a-vis other major currencies. so therefore you can't let one country falter, not in this zone. i think the real danger really is outside the euro zone which is the other countries which are not using the euro because that's where the other shoe is

waiting to fall. >> brown: other countries such as? >> such as hungary, romania. latvia. >> brown: you started with a domino. it's a bit of a domino effect. you started that. how widespread? i mean, you've argued that this could affect global recovery. >> certainly it can affect the global economy. our attempts to get a recovery going particularly if it affects banks around the world. i would stress right now wu don't see the dominos falling. we're worried about it either going to the east or to the west working around the so- called club med set of countries. ireland has problems and the united kingdom also has problems with its budget and with investor confidence. the situation right now in europe is really quite fragile. >> brown: take us back a little bit to the original idea of the single currency. it was to do what? this sort of thing was not supposed to happen. >> this is a political project from the very beginning. it obviously has enormous

economic benefits since 65% of all trade inside of europe is intraeurope trade. a single currency makes it much more efficient. the idea was only five or six countries were originally supposed to join, countries that look alike that can withstand a shock. there is no asymmetric shock in one country. in the end the political ball got moving. now there are 16 countries, slovenia, slovakia which perhaps don't have any business being in a union with germany and france because the real front line in a regional8p block like this don't come when times are good but when times are bad. we're facing the worst crisis in 60 years, financial crisis and the fault lines are showing clearly. >> brown: what would you add to that? it was controversial at the time to go to the euro. >> absolutely. you could actually say that european integration naturally should have gone west to east, poland and countries, the czech republic could have been brought in. they couldn't because of communism.

it went north and south. it brought in the southern countries with very different characteristics. they promised they would become more like the north. it didn't happen. greece has a fundamentally different economy than that of germany. they're linked with a common currency. >> brown: is the current crisis stirring some thinking that this is not a good idea to begin with? >> there's a lot of reexamination of the europe project and the euro zone project particularly in germany right now. they don't want to bail out greece. why have we been subsidizing so many countries for so much time? it comes back to the legacy of world war ii. it comes back to how does germany feel vis-a-vis its neighbors? they spent 50 years building this and building better relationships with all their neighbors. in the end they don't. they stick with the euro zone. in the end they give a pretty generous bailout to greece. they stop the damage from spreading. it's very annoying. it's very expensive. it may lead to problems down the road if it encourages other countries. >> brown: simon used the word

bailout. what does that mean? >> let's backtrack a little bit. to answer your other question, there is no going back. this is it. the euro was dreeted. there's no going back. once a country joins it's in there. look, germany understood when it came into this that if something serious happens it's going to bear the brunt of this. with france to some extent. they don't like it. especially again we're in the midst of a financial crisis. everybody is hurting. if this happened perhaps five years ago it could have been more manageable. but no no taxpayer wants to see his tax money being paid for the local banks' bailout but foreign bank bailouts. >> brown: because they're being asked to do it. >> absolutely. you're looking at $33 billion worth of bailout money coming to greece if it needs to really get out of trouble. that's a lot of money. >> brown: do you see that? i mean, do you see this transfer happening? there's no choice. >> exactly. where do you go? if greece leaves the euro zone

that will be a disaster for greece and many other countries. if germany leaves the euro zone, that would be very bad for all their neighbors. >> brown: a disaster because what? i mean what happens if they just say we don't want this anymore? >> well if the greeks don't want it, they pay a lot higher interest rate on all the government debt. they have a lot of debt. makes the problems worse. they have their own currency. it collapsed. if germany pulls out it's a tough resilient country but all the countries they've brought with them over the past 50 years they're going to be adversely affected. i really don't think the german leadership or the german voters when it's put to them are going to go down that route. >> brown: in the meantime though these austerity proposals in greece will hurt a lot. >> politically, economically, financially, the greek workers are screaming because they're being asked to not take pay cuts but to again bail out the banks. it's the whole issue of bailing out the banks but the bottom line is there's no free lunch. germany, france and the rest of the euro zone countries

won't give any money to the greek government unless there are serious cuts, increase in tacks. there will be serious pain on the ground. >> brown: fill in a little bit more why the rest of us care. as i said the markets have been rattled over the last few weeks. why are wall street markets so aware and so concerned about what happens in gree? >> well our economy is obviously more fragile right now. we've been selling quite well to the rest of the world over the past year exports are our strength. that's much harder to continue to doing if the dollar strengthens. the dollar is strengthening because the major other currency the euro is in a certain amount of volatility. the dollar gets stronger that's not good for the ex-sports, doesn't help our growth. the big wild card is problems in the financial sector. our big banks don't have a lot of capital. they're not well provisioned against a further major shock. we thought we were in the recovery phase. if this scenario plays out with the trade unions in the streets and gasoline shortages and that impacts banks in

europe, that impacts our banks and impacts our recovery. >> there are two issues here. i'll jump on simon's one issue. that's the banks. european banks are much more vulnerable than american banks. they're not only exposed in their own home markets as we were in terms of exotic instruments but they're overexposed in eastern europe. they own 80% of eastern you're opponent banks which are faltering. >> brown: that's still.... >> right. on the issues exchange rate i think it's long overdue. the euro was overvalued. there is nothing substantial happening in europe to warrant this kind of an exchange rate against the dollar except for weaknesss in this system. i think that the market is catching on that the european recovery will be longer and more stalled out than ours perhaps. >> brown: all right. we have to leave it there. thanks very much. >> thank you. >> ifill: again, the other major developments of the day. nato and afghan troops pushed deeper into a key afghan town. and there was word the top taliban military commander has been captured.

and wall street rallied on new optimism about the recovery. the dow jones industrial average gained nearly 170 points. the newshour is always online. hari sreenivasan, in our newsroom, previews what's there. hari. >> sreenivasan: we have more details about the taliban leader captured in pakistan and what it could mean for the fight against insurgents in afghanistan; a look at how twitter and other social networking sites helped connect haitians in need with aid from around the world; mike allen of politico tells us the stories behind the headlines from capitol hill this week; and on "art beat," a conversation with sally wolf- king of emory university, who recently discovered an old plantation diary that served as inspiration to southern novelist william faulkner. all that and more is on our web site, newshour.pbs.org. gwen. >> ifill: and that's the newshour for tonight. i'm gwen ifill. >> woodruff: and i'm judy woodruff. we'll see you online, and again here tomorrow evening. thank you and good night. major funding for the pbs

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