Thousands of people per hour paid their last respects to the late President Reagan as his remains lay in state in the Capitol Rotunda prior to Friday's funeral service. On Wednesday, tens of thousands more lined Constitution Avenue in Washington as Reagan's casket was carried on a horse-drawn caisson to the Capitol. The occasion was marred briefly as police evacuated the building when a small plane entered restricted airspace. But authorities determined it was carrying Gov. Ernie Fletcher (R) of Kentucky to the funeral and had gone off course because of radio problems.

At the invitation of President Bush, Iraq's new interim president, Sheikh Ghazi al-Yawar, appeared Wednesday at the summit of industrialized democ- racies on Sea Island, Ga. Yawar thanked the American people for their sacrifices and said his country was determined to become a source of stability in the Middle East. At the summit, leaders of the other Group of Eight governments - Britain, Russia, France, Japan, Germany, Italy, and Canada - endorsed Bush's Middle East initiative calling for democratic reforms in the region, but French President Jacques Chirac objected to the suggestion that NATO assume a major role in Iraq, an issue that could come up at the alliance's summit in Turkey later this month.

Local "Baby Bell" telephone companies BellSouth, SBC Communications, Verizon, and Qwest learned Wednesday that the Bush administration won't challenge a federal appeals court decision that frees them from a requirement to lease their lines to rivals such as AT&T at rates set by the government. Analysts said the decision means the Federal Communications Commission, which adopted the network-sharing rules last year, will not be backed by the White House if it tries to appeal the decision to the Supreme Court. An AT&T spokesman said the current situation could lessen competition and lead to higher phone bills.

The Homeland Security Department approved a plan Wednesday to offer illegal Mexican immigrants caught in the Arizona desert free flights to Mexico City or Guadalajara, plus bus tickets home. If they refuse, they'll be deported. The program replaces one in which immigrants were flown to Texas border cities.

Over the objections of environmental groups, the Bureau of Land Management said Wednesday it wants to open 387,000 additional acres in Alaska's Arctic National Wildlife Refuge to oil and gas drilling than were previously agreed. Final approval, which could increase potential energy reserves, rests with the Interior Department.

The trial of five Palestinian-born brothers in the computer business was to open in federal court in Dallas as the Monitor went to press. They face illegal-export charges in what's expected to be a warmup trial to one in the fall in which they're accused of funneling money to the militant group Hamas.

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