August 29, 2002

Pres Mohammad Khatami of Iran says hard-line clerics make it all but impossible for him to do his job; says he will propose legislation to restore powers that Iran's president has lost to clergy; his statement seen as clear expression of frustration with clerics who hold most real levers of power and have thwarted president elected twice on promises to open economy and usher in greater civil liberties; says his dialogue with hard-liners has proved fruitless; his challenge suggests new willingness to confront them more forcefully; it seems certain to intensify long power struggle in Iran; his proposals seem certain to pass in Parliament, where his supporters hold majority; but any changes can be blocked by religious panel called Guardian Council, which has turned back reforms before; Khatami says he has already presented Parliament with bill to limit powers of council, and will soon send bill to restore presidential powers that would allow him to act as head of state, enforce Constitution and protect citizens' rights; says public disaffection is rising, stemming mostly from his government's failure to bring citizens greater freedom; photo (M)

Marconi agrees to hand over almost complete control of company to creditors in return for forgiveness of most of its debts; says existing shareholders will probably wind up owning only 0.5 percent of company, though they will have right to buy additional 5 percent in future (M)

Foster's Group is selling more wine than beer in dollar terms; reports 21 percent increase in profit, to $310 million in year to July, and revenue of $2.8 billion, up 14.6 percent; wine revenue was $1.1 billion, exceeding beer sales of $960 million; wine sales increased 28 percent and beer sales just 1.7 percent in period; photo (S)

Regional drought, worst on record, takes heavy toll in North and South Carolina, which have some of fastest-growing cities and suburbs in nation and are proving unexpectedly vulnerable to water shortages; water shortages are so severe that one North Carolina town is borrowing water by fire hose; cities and small towns face mandatory restrictions intended to reduce water use by as much as 20 percent; water experts and city planners blame water shortages on abnormalities in climate; those abnormalities are compounded by sprawling growth, which has sent water use spiraling ahead even of population increases and has cut into supplies of water that would have otherwise recharged aquifers, rivers and streams; in Charlotte, number of water users served by local utility has increased 36 percent since 1992, but average daily water use has increased 56 percent; this shrinks cushion that planners expected might prevent water rationing in rain-scarce years; water managers in region say more must be done sooner to promote conservation; photo; graph (L)

Saudi government has spent millions of dollars on lobbyists and national television advertisements since Sept 11 in drive to improve its image among Americans and is poised to spend more as anniversary of events approaches; Saudi officials say they want to counter intensified anger or skepticism among Americans toward their country, which was home to 15 of 19 hijackers and which has clashed publicly with Bush administration over possible attack against Iraq; royal family is scrambling to find gesture of solidarity with American people on anniversary of attacks, in striking sign of Saudis' eagerness to reach out to US; toward that end, Saudis have hired several public relations firms and already spent more than $5 million, according to new Justice Dept filings; Adel al-Jubeir, adviser to Saudi government and key figure in new effort, says his government is appropriating techniques of American political campaign to overhaul its image in US (M)