THE WEEK

By JANICE M. HOROWITZ, LINA LOFARO, MICHAEL QUINN, JEFFERY C. RUBIN AND ALAIN L. SANDERS

NATION

REPUBLICANS BLINK

Confronted with negative polls and a frustrated public, Republicans staged a tactical withdrawal from the three-week government shutdown. At week's end, both houses passed and the President signed legislation returning all federal employees to work with pay through Jan. 26. However, the measures will leave many government functions still unfunded.

WHERE THERE'S SMOKE...

The nation's five largest tobacco companies jointly denounced the Food and Drug Administration's proposed tough new restrictions on tobacco ads and sales to minors as not only unnecessary and unwise but also an "illegal power grab." The attorneys general of 25 states begged to differ. They sent the agency a supportive letter, urging a cooperative federal and state effort to curb teen smoking.

A HILLARY COVER-UP?

Republicans ordered new hearings following the release of a two-year-old Administration memo that identifies Hillary Rodham Clinton as the major player behind the controversial mass firings of White House travel-office employees in 1993. The late deputy White House counsel Vincent Foster was mentioned several times in the memo, leading the Whitewater independent counsel to express dismay that it was not released sooner. Late last week, lawyers for the First Lady also released newly "discovered" billing records of her legal work for the S&L at the heart of the Whitewater probe. Investigators have long sought the documents.

WATT A PLEA

James Watt, Ronald Reagan's Secretary of the Interior, pleaded guilty to a misdemeanor for having attempted to mislead the federal grand jury probing an influence-peddling scandal in Reagan's Housing Department. Watt had originally faced a 25-count felony indictment for his role as a housing consultant. Some observers cited the outcome as evidence that the original charges may have been unduly inflated.

AN ACT OF TERROR?

A car belonging to the lawyer of Jennifer Harbury, a human-rights crusader against the Guatemalan military, was fire-bombed on Friday. The explosion outside the lawyer's Washington home raised fear of a terrorist vendetta. New Jersey Representative Robert Torricelli, a backer of Harbury's efforts to uncover the truth behind the death of her Guatemalan rebel husband, asked Attorney General Janet Reno to open an investigation. A Guatemalan army spokesman denied that the military was involved. On Saturday at least one shot was fired at Harbury's Washington home. She was not at there at the time. The FBI said there appeared to be no connection between the two incidents.

WORLD

SERBS FREE BOSNIAN CAPTIVES

Bowing to pressure from U.S., European and NATO authorities, Bosnian Serbs released 16 Bosnian civilians taken captive in Serb-held Sarajevo suburbs. The abductions had been a serious challenge to the Dayton peace accord, which requires that all of Sarajevo be open to civilian travel.

CLINTON TO VISIT G.I.S IN BOSNIA

President Clinton plans to visit U.S. forces in Bosnia before his State of the Union address on Jan. 23. Although the White House refused to divulge exact travel plans, Clinton is expected to visit Tuzla, headquarters of U.S. operations, late this week.

TOWARD A FACE-OFF WITH CHINA?

On Saturday Taiwan announced that its Vice President, Li Yuan-zu, has been granted a U.S. transit visa allowing him to stop overnight in Los Angeles as he travels to and from a Jan. 14 presidential inauguration in Guatemala. China, which claims Taiwan as a province, had declared that it "resolutely opposed" such a move. Last June Beijing withdrew its ambassador from Washington after the U.S. let Taiwan President Lee Teng-hui attend a Cornell University reunion.

MAKING WAY FOR HASHIMOTO

Surprising even members of his own government, Japanese Prime Minister Tomiichi Murayama resigned. Murayama will probably be replaced by Ryutaro Hashimoto, the current Trade Minister, who earned a reputation as a tough negotiator during talks on auto imports with the U.S. last summer.

FAREWELL, THE LIBERAL

President Boris Yeltsin accepted the resignation of his Foreign Minister, Andrei Kozyrev. In preparation for the critical presidential election in June, Yeltsin took the opportunity to rid himself of a minister who clashed with communists and nationalists, winners in last month's parliamentary elections. Kozyrev is identified with a strong pro-Western foreign policy.

SAUDI KING TAKES A REST

King Fahd of Saudi Arabia temporarily handed ruling authority over the world's biggest oil-producing state to his half brother Crown Prince Abdullah. Fahd, in his 70s, overweight and diabetic, suffered a stroke in November. The Crown Prince, while more of a traditionalist and an Arab nationalist than the King, is not likely to divert Saudi Arabia from its pro-American course. Meanwhile, Britain ordered the deportation to Dominica in the Caribbean of Mohammed al Mass'ari, a vocal critic of Saudi Arabia's royal family. Saudi Arabia had threatened to curtail trade, including military purchases, unless London silenced al Mass'ari.

ORPHAN ABUSE IN CHINA

Human Rights Watch released a report accusing China of the systematic abuse of children in orphanages, including "deliberate starvation, torture and sexual assault." Human Rights Watch says it is impossible to know the extent of abuse but claims at least 1,000 orphans died in Shanghai alone from 1986 to 1992.

SORRY, WRONG NUMBER

The No. 1 man on Israel's most-wanted list met his demise in the Gaza Strip. Yehia Ayyash, known as "the Engineer" for his bomb-making expertise, picked up the phone and was killed by an explosive planted in its earpiece. Ayyash was the alleged mastermind of the suicide bombings that have threatened the fragile peace between Israelis and Palestinians. Officially, Israel declined to take responsibility for Ayyash's death.

BUSINESS

DISCONNECTED

AT&T said it would eliminate 40,000 jobs--13% of its work force--over the next three years. The move is part of the company's three-way split into communications services, telecommunications equipment and computers.

OUT OF MONEY

MONEY magazine, a Time Inc. publication, announced it had dismissed celebrity financial columnist Dan Dorfman following Dorfman's refusal to reveal his sources to the magazine's editor. Dorfman is the subject of a federal inquiry into possible securities-law improprieties arising from his relationships with sources.

HOLIDAY SALES: BAH, HUMBUG!

Was it the weather? (November, too warm to purchase winter apparel; December, too snowy to trek to the mall.) Or were there just too many new stores? Retail-sales growth in December ranked as the worst since the 1990-91 recession. Sales were up only 2% compared with the previous year's figures. In December 1994, sales were 5.4% higher than in 1993.

SCIENCE

THE HEAT IS ON

British meteorologists, using preliminary data, found that 1995 was the warmest year since records were first kept in 1856--average temperature: 58.72[degrees]. From 1991 through 1995, temperatures were higher than in any previous five-year period.

DOES ANTIMATTER MATTER?

Physicists created the first atoms of antimatter ever made by humans or seen in nature. All electrical charges in the atoms--called antiatoms--are reversed: the electrons have a negative charge instead of a positive one, and the nucleus, usually positive, is negative. The problem with antimatter is studying it. When it collides with matter, antimatter disintegrates--which it did in this experiment, after only forty-billionths of a second.

SPORTS

TAKE THIS JOB AND...

Just three days before Christmas, Rob Butcher was fired as the New York Yankees' media-relations director because he was with family in Ohio instead of in New York City to help announce that the club had signed pitcher David Cone. A week later, Yankees owner George Steinbrenner offered Butcher his job back, but Butcher declined. This was the 11th time Steinbrenner had fired Butcher. Apparently a man can take only so much. The Yankee boss has now gone through a dozen p.r. men. All 12, oddly enough, quit.

--By Janice M. Horowitz, Lina Lofaro, Michael Quinn, Jeffery C. Rubin and Alain L. Sanders