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Please include order number. Postage and handling included in price. Founder and Contributing Editor: Lyndon H. LaRouche. Jr. Editor: Nora Hamerman From the Editor Managing Editors: Yin Berg and Susan Welsh Editoral Board: Warren Hamerman. Melvin Klenetsky. Antony Papert. Uwe Parpart­ Henke. Gerald Rose. Alan Salisbury. Edward Spannaus. Nancy Spannaus. Webster Tarpley. William Wertz. Carol White. Christopher White n our centerfold on pages for the second week in a row we Science and Technology: Carol White I 36-37, Special Services: Richard Freeman offer photographic reportage of the worldwide explosion of protests Book Editor: Janine Benton against the outrageous trial and sentencing of seven leaders of the Advertising Director: Marsha Freeman Circulation Manager: Joseph Jennings LaRouche political movement, including the 15-year sentence to

INTELLIGENCE DIRECTORS: Lyndon LaRouche, EIR's founder, who at this very moment is Africa: Mary Lalevee sitting in a jail in Alexandria, Virginia. LaRouche, described as Agriculture: Marcia Merry Asia: Linda de Hoyos "philosopher and economist," is being interviewed by international Counterintelligence: Jeffrey Steinberg. journalists, with daily prominent coverage throughout Central and Paul Goldstein Economics: Christopher White South America in the major press and media. European Economics: William Engdahl. A day does not pass that angry citizens in the major cities of Laurent Murawiec Ibero-America: Robyn Quijano. Dennis Small Latin America do not march in front of the U.S. embassies and Law: Edward Spannaus consulates demanding that LaRouche and his associates, who are Medicine: John Grauerholz. M.D. Middle East: Thierry Lalevee innocent victims of a political frameup, must be freed. Indepen­ Soviet Union and Eastern Europe: dently, a leading expert on jurisprudence has written a commentary Rachel Douglas. Konstantin George Special Projects: Mark Burdman in the prestigious Paris daily paper Le Monde pointing out that United States: Kathleen Klenetsky LaRouche would never have been jailed in France for the crimes he INTERNATIONAL BUREAUS: was charged with-conspiracy to commit tax fraud and mail fraud. Bangkok: Pakdee and Sophie Tanapura Bogota: Javier Almario In Alexandria, the government has been forced to concede the Bonn: George Gregory. Rainer Apel defendants' rights to remain together for the next days during Copenhagen: Poul Rasmussen 100 Houston: Harley Schlanger the preparation of their appeal. Meanwhile, in Boston, the same Lima: Sara Madueno defendants are pressing their right to put the "secret government" Mexico City: Hugo Lopez Ochaa. Josefina Menendez which engineered the whole monstrous frameup on trial. And in Milan: Marco Fanini Buffalo, another comer of that secret government has been revealed New Delhi: Susan Maitra Paris: Christine Bierre that threatens to blow up the entire case. See the National report for Rio de Janeiro: Silvia Palacios Rome: Leonardo Servadio. Stefania Sacchi articles on these developments. Stockholm: Michael Ericson The legal battles are the wedge-end of an unstoppable political Washington. D.C.: William Jones Wiesbaden: Garan Haglund movement to reverse the cultural, economic, and strategic crisis. As EIR reported at the time, Lyndon LaRouche warned at the end ElRIExecutive Intelligence Review (ISSN 0273-6314) is published weekly (50 issues) except for the second week of 1988 that the savings and loans of the United States were about ofJuly and last week of December by New Solidarity International Press Service P.O. Box 65178. Washington. to be sunk. Now this is occurring exactly as we forecast. The DC 20035 (202) 457-8840 "alternatives" to the deepening economic morass are a bad joke, as Europe"" H.adqlUll1ers: Executive Intelligence Review Nachrichtenagentur GmbH. Postfach 2308. this week's cover story shows. LaRouche must be freed from prison Dotzheimerstrasse 166. D-6200 Wiesbaden. Federal Republic of Germany to steer a real recovery before it is too late. Tel: (06121) 8840. Executive Directors: Anno Hellenbroich. Michael Liebig LaRouche is also the indispensable moral leader of the move­ III D.IIIIIIII"k: EIR. Rosenvaengets Alle 20. 2100 Copenhagen OE. Tel. (0I) 42-15-00 ment to stop Satanism (see articles pp. 42-44). The anti-Satanist III Mexico: EIR. Francisco Diaz Covarrubias 54 A-3 movement is taking legislative form, with an initial bill in Pennsyl­ Colonia San Rafael. Mexico DF. Tel: 705-1295. JaptJII SubSCriptioll sales: O.T.O. Research Corporation. vania: Watch the next issues for details. Takeuchi Bldg .• 1-34-12 Takatanohaba. Shinjuku-Ku. Tokyo 160. Tel: (03) 208-7821.

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TIillConteDts

Interviews Departments Economics

18 Mario Sergio Paranhos de 47 Mother Russia 4 Grand larceny drives Lima Porto Dostoevsky's "Devils." Bush's S&L scheme Mr. Paranhos, an engineer, is head Against the earnings of the solvent of planning for the Brazilian 48 From New Delhi S&Ls, set proposed bond principal nuclear firm NUCLEN. New initiative for monetary charges, increased capital reform? requirements, and the insurance 33 Jeffrey Sachs surcharge, and, 10 and behold, the The Harvard economist who 49 Report from Rio solvent thrifts are put out of architected Bolivia's cocaine "Summer Plan": speculation at business. economy discusses his plans for noon. Venezuela. 6 Will the U.S. health system SO Panama Report become the new Nazi 62 Lyndon H. LaRouche, Jr. The u.S. Establishment in a bind. model? The jailed political leader discusses his and his associates' frarneup by 51 Andean Report 9 Currency Rates the government, and what it Pro-terrorist mooted for security portends for the political future of post. 10 Genocide by "ecology": the country. Senate panel holds love-in 72 Editorial for EPA's Reilly Policing the crisis won't work. A man who has dedicated his life to depopulating whole continents to make them private game-reserves Science & Technology' for Europe's wealthy aristocracy assumes the Bush administration's 18 Brazil's nuclear program: environment post. "passport for the future" AIDSUpdate Documentation: Excerpts from the Brazilian engineer Mario Sergio 17 WHO won't condemn testimony of the National Paranhos de Lima Porto discusses Democratic Policy Committee and Soviet test measures his country's uphill battle for 21 st Century Science Associates on nuclear power, against opposition William Reilly and the EPA , and from the International Monetary 71 Urban decay a self-feeding from testimony on Energy Fund and the Greens. process Secretary nominee James Watkins.

71 One in 200 N.J. newborns 14 Agriculture carries AIDS Crop report shows looming famine.

15 Banking S&Ls shutdown violates Constitution.

16 Business Briefs Volume 16 Number 8, February 17, 1989

Feature International National

34 New East-West 'ecological 54 Bush budget: a kinder, fascist' order emerges gentler Heinrich Bruening The tip-off to the real design is that It is a deadly catalogue of sacrifice Gorbachov is being openly heralded and privation, based on false as the hero of the New Age projections of revenues and interest Aquarian movement. rates.

36 Outcry on LaRouche 56 LaRouche contests Venezuela's Carlos Andres Perez. He says he's the continues worldwide government move to Third World's spokesman on the debt, but really he's dismiss Boston case doing the bankers' bidding. 37 Hunger strike to free If the charges against LaRouche LaRouche shakes Germany there are heard again, it will be the 26 Carlos Andres Perez The action by a young man from government that ends up on trial. peddles snake-oil for debt one of Germany's leading families crisis has been one of the efforts bringing 58 Knights of Malta launch a CAP's inauguration as Venezuelan international publicity to the crusade in America President marks the beginning of a LaRouche jailing. new effortto prevent lbero­ 60 'Wiseguy' says he spied American nations from combining 39 India accelerates anti-drug against LaRouche for the to confront internationalusury. effort CIA and FBI Buffalo labor leader Ron Fino is 29 Venezuela to get the 40 Bhutto stands firm under caught between the FBI and the "Bolivia treatment" Soviet pressure mob , and he's spilling his guts to Industry crumbled and cocaine the media in a way that could lead boomed, under the programs of the 42 Pedophile ring cracked in to a new trial for LaRouche and man who's now Perez's economic Britain: 'more powerful associates. adviser. than the Mafia' 62 'Court could have held a 31 Perez puts self forward as fair trial' spokesman on the debt 44 Rock group pushes drugs and Gorbachov An interview with Lyndon H. Documentation: International LaRouche, Jr. from his jail cell. press coverage on the failure of the Baker Plan, and selections from 45 British Trilaterals and 64 Fedex: Mr. Smith goes congressional testimony of Harvard Luciferians push for 'one economist Jeffrey Sachs. world government'

66 Elephants & Donkeys 33 "Harsh adjustments" 52 International Intelligence New DNC chairman: Establishment needed to stop inflation all the way. CAP's adviser Sachs is ready with the medicine that will kill the patient. 67 Eye on Washington Mayors' panel evades youth gang issue.

68 Congressional Closeup

70 National News �TIillEconomics

Grand larceny drives Bush's S&L scheme

by Chris White

On Monday, Feb. 6, George Bush announced before the Agencies disappear, new ones appear world's press what has been deceptively called his adminis­ The Federal Home Loan Bank Board is collapsed into tration's plan "to rescue" or "bail out" the wreckage of the the Treasury Department, from where, over the next month savings and loan system. it will take over an estimated 250 insolvent S&Ls. The If this had been drama on the stage, one would have had FHLBB is the outfit mandatOd to oversee the thrift system. to compliment those responsible for the production. A well It has now effectively disappeared. organized script for the main character, discreetly organized The Federal Savings and Loans Insurance Corporation setting, beautiful gold-leaf tinted furniture for the secondary has been put under the wing of the Federal Deposit Insurance characters. And, to be sure, they were all there in an ele­ Corporation. Not to be commingled, the separate funds are gantly understated show of force. Bush himself, as the mes­ now on their way to amalgamation. senger, surrounded by Alan Greenspan from the Federal A Resolution Trust Company has been established to Reserve, Nicholas Brady from the Treasury, Richard Dar­ liquidate, or sell insolvent thrifts. A Resolution Finance man from the Office of Management and the Budget, Seid­ Company is established to raise the $50 billion, via the issue man and Wall from the Federal Deposit Insurance Corpora­ of bonds, which it is estimated the Trust Company will need tion and Federal Savings and Loan Insurance Corporation, to shut down or sell the insolvent S&Ls. The principal of and Richard Thornburgh, Attorney General. It was indeed a the money borrowed under the bond issuance will be repaid major production. by the solvent S&Ls. Taxpayers will pay for the interest How long it will be before people start to realize what accumulated during the life of the zero-coupon bonds. The was being swung by them during this beautifully scripted split is estimated to work 04t 50-50, half from the S&Ls, and staged affair is a different matter altogether. What has half from the taxpayer. The solvent S&Ls must double their been described as a "rescue" or "bail-out" package was paid-in capital by 1992, so that they make the same standards nothing of the sort. Rather, what was being announced was of accounting adequacy now applied to the commercial the outline of a program to eliminate the thrift system as banks. The insurance premiums charged the healthy S&Ls such, and hand over the approximately $1 trillion in deposits will be doubled. Legislation will be presented to permit bank within the system to the administration's cronies in the com­ holding companies to take over and own savings and loans mercial banks . institutions. $50 million was demanded to fund a special Those among us who have picked up on the buzz words Justice Department task force to root out and prosecute fraud about "fraud" and "corruption" within the system being re­ and corruption within the sayings and loan system. sponsible for all its problems, ought really to stop and think Take the profitable earnings of the non-insolvent part of again. What was laid out Monday afternoonmay well qualify the thrifts over their last accounting year. Set that profit as the biggest robbery ever seen. Its presentation would then against the charge of the principal on the bonds, the increased qualify as one of the purest examples of the con-man' s arts­ capital, and the insurance surcharge. The solvent thriftsMve just plain fraud. just been put out of business. The salient features of the package announced Monday, The Monday press conference did not feature the pro­ and what was not announced then, but leaked out subse­ posal to permit bank holding companies to takeover thrifts. quently, are as follows. That was released subsequently. The Monday press confer-

4 Economics EIR February 17, 1989 ence did not feature the guidelines laid down by Treasury ciency." LaRouche described Bush as a competent bureau­ Secretary Nicholas Brady for the package, that, according crat, who may well go on doing the things competent bureau­ to the New York Times, no public money be spent until "the crats do, without respect to reality, and by so doing push the resources of the system are exhausted," and not then, until whole shebang right over the edge. the system has been "restructured." It may well tum out that this is indeed what Bush and The next day, Tuesday, the shell of the Federal Home company have done. They "seized the bull by the horns," Loan Bank Board was moved into the Treasury Department, "bit the bullet," made "the tough decisions," and went right from where thrifts in Maryland, Ohio, Florida, and Califor­ ahead. It is more than doubtful that they know what they are nia were seized, for sale or liquidation, as the first installment doing. on the 250 or so which will be so treated in the next month. Economically, the elimination of the thrift system is The FSLlC was subsumed under the operations of the suicidal. To organize an actual economic recovery in the FDIC. The FDIC seized $ 18 billion of foreclosed real estate United States, the thrifts are necessary, and not simply be­ holdings in Texas from the FSLlC. The FDIC announced cause, from the standpoint of economic reality, they happen that it was suspending all S&L purchases now being worked to be in much better shape than the commercial banks, which on, pending review to determine if the agreements being now intend to take over their deposits . The thrifts areto the negotiated were "legally binding." It was said that the $20 economy as blood vessels to the human body. They take­ billion of such agreements concluded during the month of or used to--actual earnings and savings, and package those December were not subject to the suspension. However, the earnings and savings into loans which put people to work FDIC reserved the right to suspend those agreements should improve the capital stock of the country, through home they not be "legally binding." construction, for example. Unlike the mega-banks, they are Since the law governingeach of the cited agencies origi­ tied to the regional and local communities, not interested nated in Congress, the legal basis for such action is either solely in what can be sucked out, in the form of tribute and dubious or non-existent. Yet, such actions have been loot, but also, more importantly, in what can be put back, rammed through. The administration contends, raising the in the form of investment and capital improvement. question whether or not emergency powers have been in­ Without the thrifts that won't happen. Cut off the blood voked, that such actions fall within the regulatory purview supply and the communities will die, the industries and of the executive branch. Only the request for authority to support chain that feeds those industries will disappear. issue the $50 billion in bonds needs congressional approval, Hook up the blood flow again at some future point, and it it is contended. Whatever the legal rights and wrongs tum won't matter; if the circulatory system has gone, there is no out to be, the deed has been done. way the blood can find its way to where you want it to go. The plum is the deposit base of the thrift system. For Economically, the ending of the thrifts is the death sentence several years, the approximately $ 1 trillion in real money for thousands of communities around the country. And it saved by wage and salary earners, and others, deposited in will make the job of organizing a real recovery that much the thrift system, has made the bankrupts at Citibank and more difficult. Chase drool . They have argued, as they did in the spring of Financially, the commercial mega-banks are indeed in 1985 when the state-insured thrift systems of Maryland and worse shape than the thrifts. They no longer have the same Ohio collapsed, that the answer to all the thrift system's kind of deposit base as the thrifts. They do have, unlike the problems can be found by handing all the real money over thrifts, off-balance-sheet liabilities four and five times, on to them. Now, it seems they have an administration which average, the size of their paid-in capital; they do have, on is prepared to do that, and, with the beefingup of the Justice their books, unpayable Third World debt, sufficient to wipe Department's fraud prosecutions, is also prepared to jail out their paid-in capital one more time at least, and, since anyone who stands in the way. It seems that they have 1982 they have made themselves dependant on so-called also found an administration which is prepared to create a earnings that are really fees charged for taking in each other's stampede of deposits out of the thrift system, the better to dirty laundry. Handing the thrifts' deposits to those sharks accomplish that objective. is simply throwing good money after bad. This surely will be the effect once the reality that the And, thanks to Donald Regan and Paul Volcker, there solvent thrifts are to pay for the closure of the system as a is another problem. The thrifts also now receive so-called whole, finds its way into circulation. brokered funds, money borrowed abroad at one rate of inter­ est and re-lent here, short-term, at another. Upward of $ 100 Competent bureaucrats: catastrophe billion are tied up in such funds. Stampede the thrifts' depos­ In early December, Lyndon LaRouche, now jailed on its, change the earnings structure, and that little bomb goes trumped up charges at the insistence of his petty-minded and off, and when it does, there's no telling what it's going to vindictive enemies, told a conference of the Food for Peace take with it. The professionally staged announcement of the organization in Chicago that what he feared most about the execution of the thrifts may also have lit the fu se on that then-incoming Bush administration was its very "effi- little bomb.

EIR February 17, 1989 Economics 5 Will the U.S. health system become the new Nazi model? by Linda Everett

Before the Nazi regime could initiate the medical butchery Perhaps America's health care system has not been or­ that later so stunned the world, they had to effect a thorough dained to sacrifice the sick for the health of the Volks­ transformation of the German medical profession. The tra­ /Wrper-yet. ditional medical ethic that doctors should under no circum­ But what is clear, is the signal emanating from Wall stances take a patient's life, was attacked as "erroneous. " For Street, the insurance cartels, and the ruling hand of the under the Nazi regime, euthanasia for the incurably sick and Eastern Establishment, all of whom are committed to the insane, was considered the most "merciful treatment" and economic and industrial collapse of the country. To guaran­ "an obligation to the Volk." tee their monetarist grip, America's health care vision must The new medical ethic meant doctors had to be more conform. It cannot simply be shrunk or distorted-the vision concerned with the health of the Volk than with the individ­ must be destroyed, lest the nation continue to demand the ual. They were "doctors to the Volkskorper" (the national science, hope, and manpower to overcome the numerous body or people's body). This demanded, according to Nazi medical crises before us. medical professor Rudolf Ramm, "a change in the attitude of Right now, doctors are being trained to think primarily each and every doctor, and a spiritual and mental regenera­ about the "financial ramificationsand cost -benefitequations" tion of the entire profession." This reorganization process of their treatment decisions; elderly patients are brutally ma­ was known as Gleichschaltung, or a meshing of gears of nipulated into believing that saving them deprives the next German medical layers in either a voluntary or coercive uni­ generation of "dwindling" resources; indigent pregnant fication with Nazi ideological requirements. women, desperate for critical prenatal care , are set against There is alarming evidence that we in America are today the needs of heart and cancer patients; and AIDS victims are witnessing just such a "meshing" within our health care sys­ told to go die quietly in a hospice. tem. While not exactly a direct analogy to the Nazi concept No, our sick and elderly are not yet dying for the Volk, of "duty to the Volk," American doctors are being told that but they are daily triaged for an economic regime that differs they have to subordinate the interest of the individual patient from Hitler's ravages only in degree. The destruction of to live, to the budget restrictions of the economy as a whole. America's health care system is now rapidly approaching the What monetarists inside and out of government have created point of no return. over the last decade and half is a monstrous machine which, under the guise of cost-containment, systematically disman­ The fallacy of cost-effective health care tles the science, education, and practice of traditional medi­ The incessant screaming about the costs of health care set cal care. To the degree our health care delivery system con­ the stage for handing over the reins of the nation's health care tributes to its fundamental purpose in nurturing human life, to a bunch of fiscal experts who have no compunction about it is especially targeted by recurrent budget cuts, managed sacrificing tens of thousands of lives. The fallacy of such health care schemes, and mandatory "quality of life" proto­ supposed cost-containment or budget-gutting behavior can cols. be seen in the total collapse of the health care delivery infra­ But the goal is actually not to save costs, even if the structure and its supporting industry today. And the patient, Health Care Finance Administration's (HCFA) William Ro­ at the mercy of such cutthroat behavior, ends up dead. As per employs an army of actuaries whose expertise is used not one medical economist noted, "The ultimate economy in unlike that of the Nazis who hit upon the cost-efficiency of medicine is death." Here are two examples. making soap out of the carcasses of work camp victims. By • Last year, 14 congressmen had to sue to get HCFA one estimate, an outrageous 15-25% of every dollar spent on to stop killing people by illegally and repeatedly denying health care annually goes to "researching" the development Medicare benefits to thousands of elderly patients for "part­ of new cost-containment schemes! time or intermittent" home health care. After home care

6 Economics EIR February 17, 1989 benefits were drastically cut in the early 1980s, HCFA thell 50% of the appeal cases in which the blind, disabled or aged launched further restrictions that were never published or were unfairly denied benefits, the new plan to limit evidence debated. It refused to pay for home care for more than four would have "saved" billions. days a week-no matter how little time each day that care Who is fooling whom? Is the country "saving" anything took. So patients who needed care for one hour a day for or are we just dismantling our health care capability? When five days a week, were denied care, while those who needed each HCFA or foundation or insurance company "study" is 27 hours of care over four days qualified forit . When some­ activated, another part of the patient population is targeted one needed help for fivedifferent days, he was denied bene­ for triage. fits for the fifthday and lost Medicare coverage for the other four days as well. Medicare continued to illegally deny the Framework for rationing in place claims of patients who won their appeals again and again. The framework for rationing medical care is already in One patient died after her fourth successful appeal. The place, the Perspective Payment System (PPS). Since its in­ Federal District Court judge in the case labeled the govern­ ception, Medicare's PPS has so underpaid hospitals for treat­ ment's action as "reprehensible." We call it murderous. ment of elderly patients that it is frequently charged with These are not bureaucratic oversights. causing patient dumping, premature discharge of elderly pa­ • In October 1988, HCFA tried the same underhanded tients, destroying the financial stability of hospitals , and fuel­ conniving when it announced to home care providers that ing the nursing shortage. By the government's own account­ Medicare would cut reimbursement for in-home dialysis ing last summer, the hospital market basket has increased by treatments by 48%. Neither the 20,000 patients depending 28.3%, while Medicare payments have increased only on these services nor their providers were consulted, nor was 12.16%. Government costs restraints mean that 60% of all there the mandatory comment period. Home health care com­ hosptials will lose money this year, for others , the profit panies based their reimbursement rate on exactly what Med­ margin is "zero." icare itself proposed for the treatment five years ago! Essen­ Because Diagnosis-Related Groups (DRGs)-through tially, Medicare tried 1) to intimidate home care providers to which the Medicare system sets fixed payments for a given cut costs and make it financially impossible for them to op­ treatment, regardless of the hospital's actual costs-do not erate; 2) to eliminate the large majority of immobilized sick cover the complicated medical treatment of chronically ill or and elderly patients unable to travel for dialysis treatment; long-term cancer patients, just a few of these cases can put a and 3) to shift all costs to Medicaid of patients who must be smaller hospital on the brink of bankruptcy. Over the last two liftedand carried by trained personnel in ambulance transport years, 160 of those community hospitals did just that and three times a week (easily $100 per round trip three times closed. weekly). The intention here was not cutting costs but cutting To stave off impending crisis, the National Rural Hospi­ out, much as Britain has, a whole segment of the popUlation tal Association filed suit on behalf of some 2,700 rural hos­ past a certain age or illness level which the government no pitals against the federal government calling its Medicare longer intends to have treated. Again, this after a court in­ payment system to rural hospitals "unconstitutional." The junction restrained HCFA's actions. Department of Health and Human Services (HHS) is using the 1946 Hill-Burton Act to further cut reimbursement to Social Security gendarmes rural hospitals. Hill-Burton's "community service" stipUla­ The same relentless preying on the disabled appears en­ tion is construed by HHS to mean that rural hospitals cannot demic in the Social Security Administration. SSA has a cam­ tum away patients, including Medicare patients, no matter paign to intimidate, punish, and coerce the 700 independent how low the reimbursement. The hospital's ability to provide judges who review appeals of those who have been denied community service and free care is jeopardized and thus, Social Security benefits into reducing the benefitsthe judges their due process rights are violated. Urban hospitals receive award. Any judge who awarded benefitsin 70% of his cases an average of 39.6% more than rural hospitals in payments was targeted for review by SSA. Again, only a lawsuit (from for each DRG. As a result, over 87 rural hospitals shut down the Association of Administrative Law Judges) stopped SSA's in 1986, another 40 community hospitals closed in 1987, and actions. some 600 more rural hospitals are expected to close by 1990. Now, SSA wants its own staffattorneys to be appointed The nation's network of emergency service, initiated judges to decide these cases, and thus totally control the through the Federal Emergency Medical Sevices Act of 1973, appeals process according to the budget restrictions SSA is also being dismantled. With the 1981 Omnibus Budget sets-not according to the very real needs of the disabled. It Reconciliation Act, the federal government shifted the bur­ is no wonder then that the SSA would consider drastically den for financing sick services back to the states and local restricting the ability of millions of elderly and disabled peo­ governments. This leftvast portions of our rural areaswithout ple to appeal the government'sdenial of their Social Security, even a working ambulance or rescue capability to get patients Medicare and welfare benefits. With the government losing to hospitals 30 to 45 to 60 minutes away. The national net-

EIR February 17, 1989 Economics 7 work of regional trauma centers that can handle major dis­ Overpopulation Isn't asters with special personnel and equipment and blood sup­ plies, appears permanently stalled as well. Killing the World's Forests- The damage from DRG under-reimbursement rates from the Malthusians Are Medicare , Medicaid, and private insurers is compounded as states run out of Medicaid funds. Whole swaths of some cities are without hospitals altogether. Texas, Florida, California, Illinois and a host of other states increasingly face emergency Ther room closings or have emergency care available on intermit­ e Are tent or "standby status" only (closed to ambulances), accord­ No ing to bed availability. With DRGs, came the predictable reduced length of hos­ Limits to pital stay and less bed utilization. Per diem costs for non­ Medicare patients zoomed since fewer patients absorbed the Growth same overall expenses. With less utilization, Medicare cost­ by cutters, totally aloof to the medical needs of an increasingly sick indigent population and to AIDS patients, demanded Lyndon H. LaRouche, Jr. that hospitals decertify more beds or face penalties. Beds were cut, but it is only a matter oftime before cities in general will face the resultant crisis now seen in New York City. Order from: Ben Franklin Booksellers, Inc. Hospitals that are 'worse than Beirut' 27 S. King St. Leesburg, Va. 22075 (703) 777-3661 One physician, with the appropriate experience, has char­ $4.95 plus $1.50 shipping ($.50 for each additional book) MC. Visa. Diners. Carte Blanche. and American Express accepted. acterized New York's hospital conditions as "worse than Bulk rates available Beirut." Patients with heart attacks and strokes now often wait 12-36 hours to get into intensive care units. On any given day there are 400-500 patients waiting for a bed. For tlf a black death could spread throughout weeks, acutely ill patients are kept and treated in emergency rooms. Receiving their medications and meals is totally con­ the world once in everygeneration, survi­ vors could procreate freely without making tingent on whether staff from other parts of the hospital are the world too full. The state of affairs might available to administer it. Patients wait 7 -8 weeks for elective be unpleasant, but what of itl' operations, if there is a doctor available to do it. Otherwise, these fu ll-paying patients seek out a different hospital. -Bertrand Russell Now the state will install an expensive computer system This evil is from the father of the peace move­ to monitor the number of beds available throughout the sys­ ment-find out what the rest of them think. tem to shuffleemergency patients from hospital to hospital. Up until last year, the state was still calling for removing hospital beds from service "to save money." Over the last decade, over 13,000 hospital beds were decertified. All of this crisis management is needed just for normal daily activ­ ity, but what happens if a calamity occurs? The New Yet, HCFA's second in command, Glenn D. Hackbarth Dark Ages says, "We could do just fine with fe wer hospitals." Hackbarth states unequivocally, "In the next 5 to 10 years, we can do Conspiracy with fewer hospital beds than we have today. We don't need as many hospitals as we have right now." HCFA, William by Carol White Roper, and Hackbarth are all looking at balance sheets-not lives-and criminally ignore the increasing needs of our growing elderly population and the catastrophic devastation Order from: Ben Franklin Booksellers, Inc. by the AIDS epidemic. S. Kin St. Leesbur , Va. 27 g g 22075 (703) 777-3661 With DRGs, physicians are pressured to release patients $4.95 plus $1.50 Shipping ($.50 for each additional book) before it is medically appropriate and to dangerously delay Bulk rates available MC. Visa. Diners. Carte Blanche. and American Express accepted. admitting elderly patients until they "are sick enough" to pass DRG criteria. They are threatened with sanctions from the

8 Economics EIR February 17, 1989 Peer Review Organization (PROs) unless they change treat­ ment patterns for what they consider "medically inappro­ Currency Rates priate" reasons. PROs directly contributed to the demise of rural hospitals. The doUar in deutschemarks Certificate of need programs and other stringenteconom­ NewYork late aftemooo fixing ic rate controls used to slow the acquisition of advanced

diagnostic equipment and technology has been cited a pos­ 1.90 sible cause contributing to higher death rates among patients in heavily regulated hospitals than those with less govern­ 1.80 .JI'" '"V � � ment regulation. Yet, HCFA's William Roper says "contin­ � "'-" ued restraint . . . is necessary and does not compromise 1.70 beneficiaries' access to the quality of care they receive." But the fallacy of cost-effective medicine has been demonstrated l.60 repeatedly in the way it jeopardizes not only the lives of I.SO individual patients but also the viability of America's entire 12/21 12/28 114 1111 1/18 1/25 2/1 2/8 hospital system. The present climate against new medical technologies is The doUar in yen actually undercutting the country's capacity to spur new NewYork late afternoon fixing breakthroughs in medical-scientific fields. Investors aredis­ suaded from developing new life-saving technologies be­ ISO cause it is unlikely that financially strapped hospitals will 140 purchase or be reimbursed for using them. Yet, not only does the newer equipment pay for itself, it saves more lives than 1311 outmoded technology. - - .- - r-- .... � With DRGs came an oppressive demand for documenta­ 120 � tion. Hospital administrators saw a 100% cost increase from paperwork alone. They were forced to cannibalize medical 110 staffand critical diagnostic equipment for accountants, form 12121 12/28 114 1/11 1/18 1/25 2/1 2/8 processors, and sophisticated cost-calculating computers. The British pound in doUars Fewer lab technicians led to slower and less accurate testing. NewYork late afternoon fixing Underpaid, overworked nurses are driven out of their field by the burden of regulatory documentation and expand­ 1.90 ed patient load. Medicare budget cuts meant hospitals laid off 125,000 licensed practical nurses and nurses' aides since 1.80 - ..- 1983. That forced medical facilities to have registered nurses - � � .- perform non-nursing duties that take up 10-60% of a nurse's 1.70 time. By 1986, a shortage of nurses was reported by 83% of U.s. hospitals. Now, 18% of the nation's hospitals tum away 1.60 patients due to shortages. In some New England Veterans Administration hospitals, over halfof the beds were taken I.SO 12128 out of service due to lack of staff. Thus, as a direct result of 12121 1/4 1/11 1/18 1/25 211 218 "cost-effective" policies, the nursing crisis has become so The doUar in Swiss francs acute that HHS had to established a totally new Commission New York late afternoon fixing on Nursing to study the frightening shortage of 600,00 0 nurs­ es by the year 2000. 1.60 With sharp reductions in hospital nursing staff, patients , who need assistance with eating do not get it. Instead, they I.SO � .I' � rv - -- V starve. Some 60,000 patients die of starvation in U.S. hos­ pitals every year. One-third of all U.S hospital patients are 1.40 malnourished and a half-million more face critical compli­ 1.311 cations because of it. If a patient loses 30% of his ideal body

weight in the hospital-as one-third of all patients do-the 1.20 chance of his or her living through an operation is reduced to 12121 12128 114 1111 1118 1/25 2/1 218 about 5%!

EIR February 17, 1989 Economics 9 Genocide by 'ecology': Senate panel holds love-in for EPA's Reilly by Mrujorie Mazel Hecht

The Senate hearings Jan. 31 on the appointment of William minute eulogy, reiterating the compliments to Reilly and K. Reilly as head of the Environmental Protection Agency noting for the record their own concernswith "environmental should be enough to convince anyone who still has illusions protection." The overall quality of the remarks had the aura about the moral quality of the u.S. Senate that this body is of an awards dinner in Camelot, where everyone is expected now just plain evil. As the cameras rolled and the standing­ to live happily ever after. New Jersey's Senator Frank Lau­ room-only crowd looked on in adulation, one senator after tenberg (D) beamed, "I am pleased to join the chorus of another at the Committee on Environment and Public Works admirers and welcomers." Connecticut's Senator Lieberman heaped praise on Reilly. And not one word was said about (D) proudly noted the presence of Mrs. Reilly, a Connecticut the millions of people in the developing sector who have died native (attired in a black leather miniskirt). as a result of the policies promoted by the two organizations Reilly has headed, the Conservation Foundation and the World Reality? Wildlife Fund. The question period continued much like the opening The show of bipartisan support for Reilly featured the statements. The only hints of opposition-and these were so fact that he was the first "professional" environmentalist to much kinder and gentler than the usual that they might have be nominated for this job, that he was a Republican, and that been missed-came from Senators Alan Simpson (R-Wyo.) he was a "world class environmentalist," and that everybody and Steve Symms (R-Id.). After the obligatory remarks ("I loves him because he "focuses on those things that unite very much enjoyed our visit. I was very, very impressed with rather than those things that divide." The committee chose to you"), Simpson noted that people have to eat, work, and live, have no outside testimony or questions on the nomination. and therefore need fertilizers, pesticides, and power plants. Reilly was introduced by no fewer than five senators, He related how he had once asked a Carter-era official inthe starting off with Wyoming's Malcolm Wallop (R). Why is EPA, "Is agriculture part of man's ecosystem?" and she said an old conservative whom Time magazine has called a "hu­ "no." "Whether you like it or not, agriculture is part of man's morless ideologue" supporting an environmentalist? Wallop ecosystem," Simpson said. 'That's what's called reality." asked. "He's an excellent choice," Wallop said, a "reasoning Symms questioned Reilly on his work as part of a task and reasoned conservationist," and I'm "pleased, proud, and force that recommended the taking of private land for envi­ comfortable to recommend him." Virginia's Senator John ronmental purposes without compensation to the private Warner (R) then endorsed "this fine American," noting how owner. (For example, declaring farmland to be protected Virginia was "truly fortunate" to claim him as a resident. The wetlands, without compensating the farmer for the loss in not junior senator from Virginia, Charles Robb (D), chimed in being able to work that land). about howhe was "pleased that he's a Virginian," and pleased No one questioned the basic philosphy of Reilly's 20- at Reilly's "ability to achieve and build consensus." Bob year career-putting the protection of trees, wetlands, and Graham (D) from Florida also praised this "consensus build­ animals on a level above the health and welfare of humans. er," noting how almost every major environmental project in While Reilly rides into the EPA on a white horse be­ Florida "bears his imprint." The saccharine introductions decked by garlands, privately some senators are unhappy were concluded by Pete Wilson (R) from California, who with the appointment. "The senator shares many of your stated that the "chorus of praise was deserved" for this "lead­ concerns,"one aide told this writer, "but he does not want to ing proponent of environmental quality by consensus," and embarrass Bush by opposing the nominat!on." Another aide that the "President could not have made a better choice." said that his boss found Reilly to be arrogant, uninformed on The members of the Senate committee-all of whom the issues, and inexperienced with Washington politics. "He were present for this media occasion-then each gave a five- won't last," so we won't oppose him now, said this aide.

10 Economics EIR February 17, 1989 The role of the EPA Documentation The Environmental Protection Agency came into being 20 years ago because of the lobbying of environmentalist groups. Its major proper functions can be maintained through the normal activities of the Department of Agriculture, the Department of the Interior, the Department of Energy, the Department of Commerce, and the Food and Drug Admin­ istration. Among the other advantages of such a reorganiza­ NDPe: 'We oppose EPA tion would be the reduction of the present cost of running the as wellas Reilly' EPA, now one of the largest governmental bureaucracies. The EPA functions by manipulating ignorant opinions of a popUlation that has been conditioned to fear and ignorance, From the testimony of National Democratic Policy Commit­ of a public worried by daily horror stories of big bad indus­ tee (NDPC) to the Senate Environment and Public Works trialists poisoning their food, water, land, air, and so on, in Committee on the nomination of William Reilly as adminis­ order to carry out a secret agenda. Its decisions have been trator of the Environmental Protection Agency, Jan. 31, made for political reasons only, having little to do with actual 1989:

The NDPC is opposed to the appointment of William Reilly as administrator of the Environmental Protection Agency, for the same reason that we are opposed to the existence of Reilly's a enda the EPA . Both Mr. Reilly and the agency itself represent a g political lobby rather than a department of government-a lobby, we contend, that does not operate in the national In his speech to the Senate committee and in his an­ interest. swers to the questions on issues, Reilly stressed that he The policies that Mr. Reilly has advocated in his capacity intends to mount "aggressive enforcement" of regula­ as head of the World Wildlife Fund and the Conservation tions, "significantly higher degrees of internationalac­ Foundation are those of a feudal oligarchy concerned with tivity and cooperation with other countries in the global hunting wildlife for personal pleasure, not an industrial na­ village," and the kind of "economic growth ...that tion that since its inception has developed science and tech­ doesn't shorten our breath or our lives." Reilly praised nology for the purpose of advancing the material and cultural the Montreal Protocol, saying that he expected that the standardsof its own people as well as those of the rest of the United States would go even further, virtually phasing world. out all chlorofluorocarbons. He promised new legisla­ As his career demonstrates, Reilly is a malthusian who tion on acid rain. places a higher value on preserving wildlife and so-called ". . . We have established the most comprehensive natural habitats than on preserving human life. He sees "Na­ regulatory framework for pollution control in the world. ture" as some sort of pagan force that must be worshiped and Enormous investments have been made by the public, allowed to run its course without the messy intervention of by industry, by government at all levels. And these man. This is contrary to the goals of this nation as expressed investments have paid off handsomely .... in the U.S. Constitution, as well as the Judeo-Christian ethic. "Yet the domestic environmental agenda seems only In our present economic crisis, any further environmental to have lengthened and grown more complex with time. restraints can only result in reducing world food reserves and It turns out that we didn't know all that was being put increasing the possibility of a worldwide famine. Such re­ into the air and water. New, more sensitive measure­ straints would also introduceinsupportable taxes to industries ment techniques and more extensive monitoring have already at the point of bankruptcy. revealed toxic substances of great variety, distributed The two organizations that Mr. Reilly has headed are widely in air, water, land, and wildlife. In some places, devoted to overturning the American belief in scientific and 'sanitary landfills' of a decade ago have become to­ technological progress. To quote from an annual report of day's environmental hazards. Air pollution indoors ap­ the Conservation Foundation: "Increasing population causes pears to be threatening many Americans more than air a drain on natural resources which is geometric, not arith­ pollution outdoors. Abandoned toxic waste dumps dot metic ....Science cannot be expected to supplant the vital the landscape. Pollutants of all sorts have seeped into processes of nature." Such population reduction policies run the vast, unseen reserves of groundwater from which counter to the philosophy of a majority of the American millions of Americans draw theirdrinking water." people, as does the anti-science bias.

EIR February 17, 1989 Economics 11 facts and actual risks. By taking an adversary role against vancing science and technology. They fostered industry and science and against industry, the EPA has seriously damaged the building of infrastructure to facilitate development. Their the quality of life for our citizens and those of other nations, idea was sound: Man's mind was capable of inventing the and has caused actual deaths. For example, the political rul­ means of making muscle-power and primitive technologies ings banning life-saving pesticides like DDT have meant the obsolete. Therefore, to grow, the nation should do everything deaths and illnesses of millions in the developing sector. possible to ensure the development of the minds of the pop­ Given its political history as an agency that has often ulation. arbitrarily supported the extremist views of environmentalist Today, the organizations Mr. Reilly heads are the cham­ lobbying groups, we believe that any necessary regulatory pions of the same feudalist views that this nation was estab­ activities could be better carried out by other existing govern­ lished to eliminate. Such environmentalists place Nature on ment agencies. To subsume the role of the EPA into these a higher level than man, and give animals-and even insects other departments would remove the governmental sanction and weeds-"equal rights." This political philosophy of en­ from an environmentalist "religion" that worships "Nature." vironmentalism is not just another opinion. When put into In any case, by confirming Mr. Reilly as head of the practice, as it has been throughout the history of the EPA, existing EPA, Congress will be adopting the World Wildlife environmentalism kills people in the name of protecting the Fund and the Conservation Foundation as a government environment. agency, in effect increasing the fund's annual multimillion­ We will be very specific, taking the cases of DDT and dollar budget for its anti-people activities by about $5 billion dieldrin, both of which were life-saving pesticides banned by (the EPA 1988 budget). We believe that this nation cannot two former administrators of the EPA who are the mentors afford to give such power to an organization characterized by of Mr. Reilly. the elitist views of its leading spokesman worldwide, Eng­ First, DDT: land's Prince Philip. In 1971, the EPA held seven months of hearings on the If the United States is to survive as an industrial and DDT issue, with testimony that filled9, 000pag es. The EPA scientific nation, it must returnto the American System idea, hearing examiner, Edmond Sweeney, made his official de­ popularized during the Lincoln administration, that "people cision April 26, 1972, stating: "DDT is not a carcinogenic are wealth" and that man must have dominion over nature. hazard to man. DDT is not a mutagenic or teratogenic [cre­ The appointment of William Reilly will take us in the oppo­ ating birth defects] hazard to man. The uses of DDT under site direction-giving an oligarchic elite dominion over this the regulations involved here do not have a deleterious effect nation's future in the name of "protecting the environment." on freshwater fish, estuarine organisms, wild birds, or other wildlife ....The evidence in this proceeding supports the conclusion that there is a present need for the essential uses of DDT." The EPA administrator, William Ruckelshaus, who now 21st Century:'R eilly is a board member of the Conservation Foundation, single­ a costly blunder' handedly overturned this EPA ruling and banned DDT in 1972 for what he admitted were"political" reasons. As Ruck­ elshaus said in 1979, "Science, along with other disciplines From the testimony of 21st CenturyScience Associates to the such as economics, has a role to play. The ultimate judgment Senate Committee on Environment and Public Works on the remains political. In the case of pesticides in our country, the nomination of William Reilly as administrator of the Envi­ power to make this judgment has been delegated to the ad­ ronmental Protection Agency on Jan. 31, 1989: ministrator of EPA. " Second, the dieldrin case: The appointment of William Reilly as administrator of the Russell Train, who succeeded Ruckelshaus as EPA ad­ Environmental Protection Agency would be a costly blunder ministrator in September 1973, and who is now the chairman for an administration committed to seeing this nation remain of the World Wildlife Fund and the Conservation Founda­ as an industrial leader . tion, banned the chemical dieldrin in October 1974. Train Mr. Reilly has headed up two organizations, the World took this action contrary to the advice of the Aldrin/Dieldrin Wildlife Fund and the Conservation Foundation, that are Advisory Committee to the EPA as well as several other dedicated to policies that 200 years ago would have kept the committees appointed by other government agencies. In ad­ United States as a backward, rural colony, perhaps where the dition, Train redefined the word "carcinogenic," which pre­ European elite could have come on hunting expeditions in viously had been definedby all scientificagencies concerned the vast Western lands. Fortunately, our Founding Fathers to mean substances that cause cancerous tumors. Train de- . had other ideas. They fought a war to establish this nation as cided that carcinogenic would henceforth be synonymous a republic dedicated to progress-progress achieved by ad- with "tumorogenic."

12 Economics EIR February 17, 1989 These political decisions of EPA administrators Ruckel­ keep the nation's defense effort adequately supplied with shaus and Train were at the behest of the environmentalist tritium. The key here is redundandy of facilities-and no lobby, the same lobby for which Mr. Reilly is working. This capitulation to the so-called environmentalists whose pur­ lobby still brags about its role in banning these and other pose is actually to force unilateral U.S. disarmament. pesticides. The consequences can be measured in human Third, research and development spending by the De­ lives lost. partment of Energy is the only way to ensure the energy future Entomologist J. Gordon Edwards, who has taught biol­ of this country. Over the past eight years, under the rubric of ogy and entomology at San Jose State University in Califor­ the "free market," the nuclear fission budget has been reduced nia for 40 years, estimated that 100million people die per and research and development has stagnated, while entire year as a result, directly and indirectly, of these and other projects, such as spent nuclear fuel reprocessing, have been anti-pesticide activities here irrthe United States. Edwards, abandoned. Funding for research in thermonuclear fusion, who is a longtime member of the Sierra Club and the Audu­ the unlimited energy that must be ready to play a major role bon Society and a fellow of the California Academy of Sci­ in U.S. energy supply by the beginning of the next century, ences, says that this estimate is probably conservative. has declined by about 25% in absolute dollars. There is every indication that Mr. Reilly will continue in The nuclear fission and fusion research and development the tradition of Mr. Ruckelshaus and Mr. Train, making budgets both must be brought back to a level where they can decisions that will kill people in the name of protecting the develop new energy technologies. The nuclear budget should environment. include funding to develop prototype reactors and facilities for breeder reactors, spent fuelrepro cessing, advanced tech­ nologies for fuel enrichment, and fission-fusion hybrids for a variety of functions. Fusion energy should be proceeding with the goal of Wa tkinsand theneed producing an engineering test reactor as quickly as possible, to o fullynuclear close to the tum of the century. This effort must include g adequate funding to proceed with tritium testing in the Princeton Tokamak Fusion Test Reactor, the construction of From the testimony of 21st Century Science Associates on the Compact Ignition Torus, the acceleration of the other the hearings to consider the nomination of Adm. James Wat­ tokamak and also non-tokamak magnetic fusion energy con­ kins as Secretaryof the Department of Energy to the Senate cepts as well as the inertial fusion programs, and the most Committee on Energy and Natural Resources. Feb. 2. 1989: broad-based approach to solving the remaining scientific questions in fusion research. We support the nomination of Admiral James Watkins for Fourth, the x-ray laser and other portions of Strategic Secretary of the Department of Energy. In our view, Mr. Defense Initiative research that are overseen by the Depart­ Watkins enters this position at a time when crucial decisions ment of Energy and carried out in DOE national laboratories will have to be made in his department in six basic areas: must be funded with the goal of producing a layered system First, the sabotage of the civilian nuclear power industry of defense that will meet President Reagan's initial 1983 and electric utilities over more than a decade, through regu­ mandate to make nuclear weapons "impotent and obsolete. " latory and antinuclear "environmental" organizing, has re­ Impressive results have been produced in these directed­ sulted in severe shortages of electric power in various parts energy weapons technologies over the past four years, and of this nation. This situation will get worse before it gets they should not be held back by limitations in funding. better. There are no legitimate reasons not to go full speed Fifth, is the question of radioactive waste. The main ahead with nuclear power. problem here, aside from the fact that waste disposal has This requires the timely completion of all plants under become a political football, is that this nation decided not to construction; the end to regulatory and financial warfare complete the nuclear fuel cycle, therefore necessitating the against the nation's utilities; the availability of low-interest burial of 100% of the waste, instead of a very small percent­ credit to begin to build our way out of the shortages; and the age-the 4% that cannot berecycled. Reprocessing is a known implementation of the modular, standardized, and most ad­ and tested technology; we should join with the rest of the vanced nuclear fission power designs, so the nation can return nuclear nations and begin reprocessing spent fuel. to a healthy 6-7% rate of electricity growth per year, using Sixth, is the area ofeducati on. On the graduate level, the the most economical technology. department must ensure through special programs that top­ Second, the defense production situation requires a crash quality students are recruited into ,nuclear engineering and program approach to complete not one but at least three nuclear research programs. Without such recruitment, we different "next-generation" tritium production facilities, while will not have the talent to run the nuclear plants of the near keeping on line as many of the currentreactors as needed to future ....

EIR February 17, 1989 Economics 13 Agriculture by Marcia Merry

Crop report shows looming famine This year, the most optimistic pro­ The USDA 'sfigures, as usual, are ridiculously op timistic, but jection might be a planting of only 70 million acres. So far, the subsoil still can't hide the reality . moisture in the far northern spring wheat belt is so deficient that it will not be worth the cost to plant. There is no hope for Western Eu­ rope to make up for the wheat short­ falls. The European Commission has T he latest monthly world crop fore­ volving planting of an additional 200 ordered that EC grain growers be cast by the U.S. Department of Agri­ million acres, to get a yield of at least docked 3% in grain prices, to penalize culture (USDA) paints a rosy picture 230 million tons in additional cereals. them for "overproducing" during compared to the truth . But even the In December, the FAO officerepeated 1988. The Argentine and Australian USDA figures show world grain and the warning. In January, FAO offi­ wheat harvests were both lowered by food stocks at such a low level that, cials repeated the warning. But due to drought. unless miracle crop yields occur, food funding restrictions, they did not pub­ Corn, Coarse Grains. "Global shortages may occur on a scale of lish their figuresfor these two months. coarse grain production was reduced global famine. They hope to resume their monthly more than 4 million tons, and now The report, World Agricultural "schedule of warnings" now. stands 9% below 1987/88. Prospec­ Supply and Demand Estimates, was However, even the USDA fig­ tive Argentine com output was low­ released Feb . 9 at 3:00 p.m., after the ures-which systematically overstate ered 2 million tons because ofthe con­ ritual 24-hour "lock-up" of the voo food production and stocks-show the tinued hot, dryweather. . . . Forecast doo statisticians who produce it. The catastrophe in the making. The "High­ 1988/89 global ending stocks . . . are secrecy surrounding its preparation is lights" section of the Feb. 9 report pre­ down around 40% from a year ear­ supposedly to prevent any advantage sents the following summary picture. lier ....U. S. com exports are fore­ being taken on world markets . How­ Wheat. "Forecast 1988/89 for­ cast up 15% from 1987/88 and the ever, it is an open secret that world eign and world ending stocks were largest since 198 1/82." food stocks are at levels so low that dropped around 5 million tons. World Given that the 1988 drought drove the only question is, how long will the ending stocks are forecast a fourth be­ down the U. S. com harvest by well general public tolerate the calculated Iow a year earlier and the lowest since over 30% from a year earlier-in even failure to take emergency production 1977178." the rosy estimation ofthe USDA-the measures. Given the world population growth current flows of com to the Soviet Total world grain output in the last of the last 20 years, these low stock Union amount to a strategic supply three years has been dropping from a figuresmean that we are at record lows crisis. USDA estimated 1.685 billion metric of grain availability per capita on a Soviet wheat and coarse grain im­ tons in 1986/87, down to 1.605 billion world basis. All the alarm bells should portsin the year to the end of June will tons in 1987/88, to 1 .55 billion tons in be sounding, since various regions of be up a sharp 113% over last year, 1988/89, according to the USDA es­ the U. S. winter and spring wheat belt because of their poor 1988 harvest, timates. are now being hard hit by bad weather. according to the Feb. 2 estimates of Even the Global Warningoffice of The United States is the world's larg­ the London-based International Wheat the U.N. Food and Agriculture Or­ est wheat exporter. A disaster here is Council. The IWC estimated that the ganization in Rome has sounded the automatically a world disaster. Soviet Union would need to buy 35 alarm about the record drawdown of Apart from weather, the acreage million tons of wheat and coarse grains world stocks now taking place, de­ of wheat in the United States has fallen in the year through June. This is 4 spite the fact that the U. N. agency sat off drastically. In 1981, planted wheat million tons higher than Soviet im­ on the sidelines for years and quietly area in the United States was about 80 ports in 1987/88, when Westerngrain watched the disaster take shape. million acres. In 1988, planted acreage stocks were much higher, as the USDA In November 1988, the FAO called was only 65 million. Only 53 million report highlights. The Soviets might for an increase of 13% in world grain acres were estimated to have been har­ easily expect to be provided 40 million output in the 1989-1990 period, in- vested. tons duringthis trade year.

14 Economics EIR February 17, 1989 Banking by Kathy Wolfe

S&Ls shutdown violates Constitution responded at a press conference on the new scheme Feb. 6. Executive Order 12333 of the early Reagan years is the root of But under the Executive Order the fa scist direction being taken in banking policy. 12333 government,any capitalist who bucks this "Wall Street welfare" is due President Bush's banking plan, spectively into the Treasury and its to be locked up, to destroy leaders with which will shut down the nation's sav­ Federal Deposit Insurance Corpora­ a national constituency (such as peo­ ings and loan institutions (S&Ls) en­ tion (FDIC), Wall Street's own insur­ ple who like to live in houses). Presi­ tirely, was blueprinted by the Wall ance fund. This ripping up of the con­ dent Bush said he will double the Jus­ Streetgenocide lobby to destroy pop­ stitutional separation of powers is the tice Department staff prosecuting fi­ ulation growth in America, and was hallmark of E.O. 12333 operations. nancial fraud and give it a new $50 likely rammed through under emer­ FSLIC director Stuart Root, who million budget, to "seek out and pun­ gency Executive Order 12333, judg­ recently fended off Citibank's take­ ish . . . to place behind bars those who ing from the way it violates the V.S. over of his Bowery Savings Bank in have caused losses through criminal Constitution. The plan also prepares New York, resigned in protest over behavior." for the V.S. Department of Justice to the plan Feb. 3. The merger is a "bad "The S&Ls are going to have to begin indicting and locking up busi­ idea," he said, because the country pay for letting lobbyists promote lax ness leaders who buck Wall Street. needs a protected savings sector, and supervision. all these years," one Trea­ Lyndon LaRouche exposed the a national housing policy. sury ghoul told the Washington Post. role of E.O. 12333 in creating a "se­ The plan, which shuts bankrupt The Post's editorial Feb. 7 calls for cret government," in an EIR cover sto­ S&Ls, perhaps $ 1 trillion worth, the former officialsof the FHLBB and ry dated July 17, 1987. places the cost of the $ 100 billion bail­ FSLIC such as Edwin Gray, Stuart The S&Ls were created by Con­ out of the other $ 1 trillion in S&L Root, and others to be indicted and gress to channel the average worker's assets on the remaining S&Ls-which blamed for the entire mess. deposits into home mortgages, and so will cause a run on any healthy S&Ls Meanwhile on Wall Street, Citi­ were to be kept totally clear of the the minute it is implemented. "Survi­ bank announced the grand opening of dope-money "free market" Wall Street vor" S&Ls will have to pay huge FDIC its "McMortgage" program, under brokerages and commercial banks. fees, reserve fees to the Fed, and repay which anyone who wants a home loan Thus they were given their own regu­ $50 billion in bailout bonds to be bor­ in America will have to crawl to Wal­ latory board, the Federal Home Loan rowed from greedy Wall Street bank­ ter Wriston like a Third World coun­ Bank Board (FHLBB) and their own ers. Worse, the Brady merger of try. Just as the. S&Ls are being closed, insurance agency, the Federal Savings FSLIC into FDIC in particular would Citibank has put on line a 1984-style and Loan Insurance Corporation force S&Ls to double their capital in national computer network in the of­ (FSLIC), separated by Congress from order to qualify for Wall Street's FDIC fice of every real estate agent on every the Executive branch and particularly insurance. The only way they have to block in America, compared to the the Treasury Department, which since raise capital is to dump their stock and McDonalds fast food outlets. Here, Alexander Hamilton was shot, has bonds on the market, causing a col­ the realtor will "check" with Citibank been controlled by Wall Street. lapse in S&L stock. The nationwide to see if the home-buyer deserves a Former FHLBB head Edwin Gray deposit run on S&Ls, begun by Brady mortgage. If so, the lucky serf will be told EIR (see last week's issue) that the firstweek of February, is continu­ issued a computer-generated "jiffy Donald Regan and Citibank's Walter ing and will really escalate once S&Ls mortgage" right there in the realtor's Wriston were the architects of the de­ begin collapsing on the stock market. office, using completely automated struction of the S&Ls to stop Ameri­ "No, hell, no, we can't pay for it!" artificial intelligence with no human cans frombuilding houses and having Bud Coch, chairman of the lobby involved in the mortgage decision. families. group National Council of Savings, This makes Citibank an instant nation­ The Bush plan, craftedby the Don told the press about the Brady plan wide megabank. Of course, if Hal the Regan crony and Wall Street banker, Feb. 6. "What you'd be doing is put­ computer doesn't like your financials, Treasury Secretary Nicholas Brady, ting the S&Ls out of business!" you don't get a house, or children, merges the FHLBB and FSLIC re- "Nothing is without pain," Bush either.

EIR February 17, 1989 Economics 15 Business Briefs

AIDS based mining group. Minoroco's assump­ to secure a potential $25 billion contract to tion of fu ll ownership of ConsGold is the modernize Italian telecommunications in a WHO won't condemn largest corporate takeover in British history, deal with state-owned Italtel. But the French and is part of pattern of worldwide reorgan­ Alcatel, in a competing bid, has reportedly Soviet test measures ization and concentration of precious metals offered to the Italians joint venture collabo­ mining and processing. ration in world marketing, and is waging an The World Health Organization will not intense battle to outbid AT&T. condemn Soviet measures to stop the spread of AIDS , among them widescale testing, Trade War and tests of foreigners. WHO official Dr. Netter told EIR that Telecommunications InternationalCredit while WHO officials don't like these mea­ on the agenda sures, they will not intervene as they did Phili pines, IMF with other countries. In some instances, the p WHO even threatened to cut off aid to na­ West German Economics Minister Hauss­ reach agreement tional health programs if traditional public mann was told by U.S. officialsthat the "tele­ health measures were adopted. "telecommunications sector is on the agen­ The International Monetary Fund and the The WHO, including its AIDS section, da" now for transatlantic trade war. He got Aquino governmentof the Philippines have is notoriously dominated by Soviet health the message directly from Clayton Yeutter buried differences over economic policies officials. and his successor as U.S. Trade Represent­ that had prevented agreement on a $1 .3 bil­ ative, Carla Hills, and also from Nicholas lion loan deal in December, the Financial Brady and other officialsof the Bush admin­ Times reported Feb . 3. The agreement in istration whom he met with in Washington principle reached between Prabhabar Nar­ Raw Materials Feb. 2-3. vekar, director of the IMF's Asian Depart­ Hills informed him bluntly that the U.S. ment, and Vicente Jayme, Philippines Fi­ London's mineral expects the Europeans and the Germans to nance Minister, opens the door for a re­ have their telecommunications sector dere­ sumption of talks with commercial bank position on the rise gulated and opened up to U.S. products by debtors on up to $1 .6 billion in new money no later than one year from now. as early as March. "The role of London in world minerals con­ In this context, a pattern of "scandals" The agreement centers on a $900million trol is becoming stronger," stressed a senior has begun to implicate major West German loan aimed at closing the country's balance City of London bank official to EIR Feb. 7. producers of telecommunications equip­ of payments gap for the next three years . "The approval by Lord Young of the Minor­ ment. Siemens was targeted in the Libya Also involved is a $400 million contingency co takeover of ConsGold last week will now (Rabta), Pakistan (nuclear), and South Ko­ facility that the country could draw on to open the way for further raw materials take­ rea (electronics) affairs; Bosch and Nixdorf offset the effectof sharpfluctuations in com­ overs. Over the last 10 years , control of have been hit by management bribery scan­ modities prices. U.S. mining assets has increasingly shifted dals, and the chief executive of SEL, Hel­ But other potential lenders and donors to London. Oppenheimer [Sir Harry , South mut Lohr, first was investigated on bribery are waiting in the wings. Manila has re­ African head of Anglo-American and De and fraud charges, then fired from his post, quested $1.8 billion in new loans from com­ Beers gold and diamond mining interests 1 is and finallyarrested in a police action. mercial banks. It wants to restructure almost really British." Apparently, trade war in telecommuni­ $700 million in interest payments due this London mining sources added, "This role cations is only the first salvo under the pu­ year to the Club of Paris, a private commer­ of London has especially increased in the nitive terms of the 1988 U.S. Trade Act. cial bank group. past year as commodity prices for metals The U.S. Government Advisory Committee Rescheduling of debt owing to the Club have risen. The R1Z acquisition of BP Min­ on Telecommunications, headed by AT&T, of Paris will probably have to wait until a erals late last year and now Minorco' s likely is reportedly behind the demand that Trade new package is signed with the IMF, prob­ takeover of ConsGold will confirmthis role. Representative Hills target Germany, ably in May, analysts said. It's a major revival of Britain's historic role. France, Japan, and South Korea. An IMF team will return to the Philip­ Neither New York or Tokyo have anything Hills reportedly is arguing that Europe­ pines soon, stay about three weeks , and then to compete at this point. " an telephone state monopolies must be pri­ present its report to the Fund' s management, The Minoroco referred to is a Luxem­ vatized and opened up to U.S. equipment Jayme said. He said the two sides reached bourg-chartered investment company owned makers such as AT&T and Motorola, ac­ agreement in principle on the allowable by the Oppenheimer Group, which already cording to Business Week International. public sector deficit, projections of tax col­ held 29% interest in ConsGold or Consoli­ In a related development, the London lections, the target growth rate , and mea­ dated Gold Fields, the $4 .9 billion British- Financial Times reports that AT&T is about sures to safeguard public sector invest-

16 Economics EIR February 17, 1989 Briefly

• HOMELESSNESSin the United ment-i.e. , some form of assuredly brutal at the edge of the right of way; and no more States is the subject of new figures austerity program . than 200 rnilligauss maximum magnetic field issued by the U.S. Conference of The agreement indicates that President at the edge of the right of way. The rule Mayors: 34% are families with chil­ Corazon Aquino has foolishly rejected ar­ "allows" the utilities to decide how to meet dren; 23% are employed; the demand guments of some officials and legislators the standards, including wider rights of way, for assisted housing increased nearly that the country would do better to limit debt taller towers, bringing the lines closer to 20% between 1987 and 1988; and the repayments. cancel the fields, or putting lines under­ average wait on a list for assisted ground-the most expensive alternative . housing in major cities is 21 months.

• 10,000 CHILDREN in the Third Energy World are dying every day of diar­ Thrift Crisis rhea, UNICEF reports . Another 3 Florida adopts million children are dying every year FSLIC chief resigns of measles, polio, diphtheria, tuber­ EMF standards culosis, and whooping cough; 2-3 amid controversy million childrenare dying peryear of The Florida Regulatory Commission (FRC) respiratory infections, and another I has adopted the nation's firstemission stan­ Stuart D. Root, the head of the Federal Sav­ million of malaria, and Vitamin A dards for electromagnetic fields(EMF) gen­ ings and Loan Insurance Corporation and iodine deficiency. All these dis­ erated by high-voltage electric lines, ac­ (FSLIC), has submitted his resignation ef­ eases are treatable. cording to the Jan. 30 edition of Electric fective Feb. 9, in a letter to the Federal Home Utility Week. Loan Bank Board dated Jan. 30. • ADOPT·A·FARM·FAMILY is A public hearing was held in Tampa on In the letter, Root, who was a lawyer for the name of a lace-curtain organiza­ Jan. 18, after four years of study by various the firm Cadwalader, Wickersham and Taft tion soliciting private donations for special state commissions and sections of and a vice chairman of New York's Bowery "restoring dignity to the American the Florida Department of Environmental Savings Bank, said that he found criticism farmer." It was founded in 1985 and Regulation (DER) . The rules become effec­ of his actions trying, particularly in regard is headed Mary Myers, wife of Peter tive Feb. 17, but do not affect existing lines, to his "Southwest Plan," in which the Bank Myers, Deputy Secretary of Agricul­ only new line construction. Board tried to consolidate bankrupt Texas ture in charge of the Soil Conserva­ There are currently six other states with savings institutions. But "the resources of tion Agency. "Adopted" families are regulations on emissions of electric fieldsby the Bank Board were tested fully and are to be saved by "parent" donors. high voltage lines, but there are none with owed a full acquittance for an inspired per­ standards for magnetic emissions. formance in the face of constant criticism, • INDIA'S Ministry of Agriculture The DER estimates that "the rules will detraction, and efforts-both direct and says the countryis set to reap a record add $100million to $5 billion to the cost of oblique-to demoralize." harvest of almost all crops in the cur­ 500kV lines over the next 30 years ." During In an interview published in the Feb. 4 rentyear. Total foodgrain production that time, an estimated 330 miles of 500kV New York Times, Root said his resignation will be 166.5-171 million tons. Of lines are planned and about 4,000 miles of was unrelated to the major changes the Bush this, rice is estimated at 67-69.5 mil­ 230 kV lines are "on the drawing board." administration is planning for the savings lion tons, wheat 51-52 million tons, A spokeswoman for the state's largest banks, or to criticism of FSLIC operations coarse cereals 34-35 million tons, electric utility, Florida Power and Light, during his tenure. pulses 13.5-14.5 million tons, oil­ made clear that in their view, the standards' But he also told the Times that he wanted seed 14.5-15.5 million tons, sugar adoption represented capitulation to irra­ to return to the private sector and a position cane 196-200 million tons, and cot­ tional environmentalist demands. "The rule where he would feel free to speak out on ton 9-9.5 million tons . is a reasonable compromise ....Obvious­ savings industry issues, including why a Iy, it has some costs involved, but in light merger of the FSLIC and Federal Deposit • 'TURKEY is not in a hurry" to of all the political pressure for the state to Insurance Corporation(FDIC) is a bad idea, obtain full membership in the Euro­ set some kind of standard, [itl attempted to why the nation needs a national savings pol­ pean Community, Prime Minister balance-with no scientific evidence of the icy, and whether the country needs a sepa­ Turgut OzaIsaid in an interviewpub­ need of a standard-the economic impact rate savings industry. lished in Euromoney . Turkey formal­ with the emotional concerns." In Bush administration plans, the FSLIC ly applied forEC membership in April The rule for 500kV lines has three pro­ and FDIC are being merged, and the unstat­ 1987. Ozal said that a realistic pace visions: a limit of to kV/meter maximum ed goal is evident: gradual liquidation of the would be six to eight years after the electrical field within the right of way; a entire industry to the benefitof the big com­ application. limit of 2 k V Imeter maximum electric field mercial banks.

EIR February 17, 1989 Economics 17 �TIillScience & Technology

Brazll's nuclear program: 'passport for the future'

Brazilian engineer Mario Sergio Paranhos deLima Porto is interviewed by MarjorieMazel Hecht. managing editoroj '2 1st

Century Science & Technology.·

Mr. Paranhos, a naval engineer by training, joined the Bra­ a big factory for building the reactor vessels, which is in­ zilian nuclear program in 1975 , working with Westinghouse stalled now and in operation, but it is doing work out of the in its joint venture with Brazil to build the Angra 1 nuclear nuclear field, since with only one power plant, there is not plant. Before assuming his present job with the nuclear firm much work. This factory is doing submarine structures and I NUCLEN, he worked fo r a year on the nuclear submarine guess some work for Petrobras-the Brazilian petroleum program. He now heads up NUCLEN's planning depart­ company. ment, managing the scheduling of design and construction. The agreement with the Germans was supposed to give NUCLEN is responsible fo r planning the construction of the us the complete transfer of technology for nuclear power nuclear power plants under the 1975 agreement with the West plants. The company was KWU, now a division of Siemens. German government. Since September 1988, NUCLEN has been administered by Electrobras, the state company respon­ EIR: When was Angra I built? sible fo r planning all electrical installations in Brazil. The Paranhos: Construction started more or less in 1970, with views he expresses here are his, and do not necessarily rep­ the civil engineering work and the road to reach the site. With resent those of NUCLEN. all the various delays, the plant did not get into operation until 1984. There were problems with the plant-problems EIR: Under an arrangement with Westinghouse, Brazil built with a steam generator design. There was a fire during the one nuclear plant, Angra 1, and others are planned. What is construction in the storage area where mainly the instrumen­ the current situation? tation was stored. That delayed the plant. And there were Paranhos: We have the 620-megawatt Angra I in operation, many other problems, for example, with the diesel engine, a light water reactor, and there are two more plants under which is used for the plant's emergency power supply. After construction. the plant was in operation, a section of the generator burned, which shut down the plant for almost one year. Then that was EIR: These new plants are part of an agreement with West repaired and now the plant has been in operation for about Germany that Brazil made in 1975. What are the details of two months. the agreement? Also, because of the various problems of Angra I, the Paranhos: Originally, the West Germans were to provide construction of the two plants I am working on have had their Brazil with the means to complete the nuclear fuel cycle, budgets underfunded. The public started to joke about the including support for the design and construction of four plant, and the government was affected by that. power plants, with an option for four more. Also, they were to provide a plant for enrichment of uranium, a reprocessing EIR: Are the new plants the same type of reactor? plant for spent fuel, and a fuel fabrication plant. We do have Paranhos: Yes, but bigger- l ,300 megawatts each plant.

18 Science & Technology EIR February 17, 1989 EIR: That is about as big as they build nuclear plants. Paranhos: The West Gennan reference plant for our plants, is the Grafenheifeld plant. But because of the delay in our construction, the design is not frozen; we are getting a lot of modifications. As time passes, there are some improvements in the design of the Gennan plants, and they are proposing them to us. Some of them are accepted by the owner (Furnas), others have to be adopted because of licensing criteria.

EIR: What stage are the two 1 ,300-megawatt plants in? Paranhos: Angra II is under construction, but on Angra III, we've only removed the rocks from the site-nothing more ! The civil contractor is on site, but they are not doing much work. Although they have removed the rocks from the site, the government didn't decide on a budget for that plant. The last infonnation that we have is that we have to postpone the start of Angra III for 18 months, which will make the com­ pletion date go to 1997 . But II is under construction and is scheduled to be finished in mid-1994. Mario Sergio Paranhos de Lima Porto EIR: It's a very long time from 1975 to 1994 ! Paranhos: Yes. And the 1994 date resulted from a study we did last October, assuming that certain conditions could be EIR: What changed in 1982 to stop the funding and stop the fu lfilled. But none of those conditions has been fu lfilled from program from proceeding at full speed? the time of our study up to now ! So this schedule that calls Paranhos: This is related to the Third World situation with for completion of Angra II in July 1994 is not very finn. the International Monetary Fund. Since that year, we began to feel the effect of the IMF requirements and we have not EIR: What is causing the delay? had money for our development. Paranhos: The main reason for the delay is lack of money­ especially the part that has to be given by the government. EIR: So, Brazil is paying its debt and there isn't enough The part that is being financed through Gennanbanks is not money for nuclear plants. suffering so much. Almost all the imported equipment for Paranhos: Yes, and this is like a snowball. The population Angra II has been ordered or is in storage; these and the has received bad infonnation about nuclear power. We have imported engineering have been financed through West Ger­ environmentalists, the greens, saying things in the press. As man banks. But the part of this that has to be given by the long as we didn't have an operating nuclear plant to show Brazilian treasury has not been sufficient since 1982. So the them-because Angra I had problems-it has been difficult plant is suffering delays because we are not able to buy for us. Also, the governmentis very timid. The attitude from equipment in the national market. We aren 't able to put the top down of the nuclear community is timid. They never pressure on the subcontractor design company . We haven't said anything about nuclear power in a finnway , to show the been able up to now to hire the main building contractor­ people that there are arguments to counter the lies of the which is one of the biggest contracts, installing the pipes, environmentalists. and so on. And the active people who are against nuclear power get The idea is to have one building company to do the com­ more and more and more media space. And today, the pop­ ponents, installation of pipes, and pipe construction. We can ulation is completely influenced by the media-completely do this only when we have the money to pay. This was against nuclear power plants. supposed to happen on Dec . 15 of last year, but this didn't happen . EIR: There is a similar situation in this country. Paranhos: There is a lot of contact between students and EIR: No money? some of the scientific community who are anti-nuclear. One Paranhos: No money. Also, the organizational situation or two of these guys is continually talking and writing things changed last September, and we at NUCLEN are under a against nuclear power plants. And no one from the other side new holding company. And the owner, Furnas , is analyzing is doing any kind of counter-argumentation . So, these people our previous bid evaluation for the construction contract and are writing and saying things on television, and no one says may do the bid again. This will give more delay . anything to criticize their misinfonnation .

EIR February 17, 1989 Science & Technology 19 EIR: What about the government. Do they take a public German program. He invited me to join the parallel program. stand for nuclear power? I worked for him for about 11 months. He is a very hard Paranhos: In 1987, when the governmentdecided to make worker. official, more or less, what was normally called a parallel His ideas started with a small group, which got in touch program, the Brazilian nuclear navy program, it was an act with the Instituto de Pesquisar Nucleares (IPEN) in Sao Pau­ of courage! It was the firstact of courage in this area in eight lo. They got support from within the Navy and in the Nuclear years ! Because the government even put advertisements in Commission. Nobody knew exactly what they were doing, newspapers saying, "Now, we are going to see the nuclear in fact until 1981. At that time, the Minister of the Navy said era." everything in a newspaper interview. This is when they announced that Brazil had a new pro­ I think at that time, he was not supposed to do that. I gram for the enrichment of uranium, related to the nuclear remember, during those 11 months I was working for Othor, submarine program. It was the firsttime since 1980, that the he asked me not to say very much about what I was doing. government said formally, "We are for nuclear powerplants ." So when I saw a complete page in the Sunday newspaper And after September 1987, this group has more political about the submarine and other things, it was a surprise. I power to guide the decisions of the government. found out later on that they got a lot of criticism, because the program was not official. However, it was supported from EIR: So, Brazil has actually had two parallel nuclear pro­ 1981 until 1987, when they finally announced that they had grams-civilian and military? achieved the enrichment of uranium. That was a proud day Paranhos: Yes. Because there were two separate programs, for everyone who worked in the'nuclear industry. Even those the military program became known as "the parallel pro­ of us who didn't work on that program saw that was a good gram." But since September 1988, what the government did thing-an achievement. The experience in this program will was really to say, "We have a Brazilian program." This be shared for the benefitof the whole continent. changed things, putting the full fuel cycle under the Brazilian Othor began with a small group, and many people called Nuclear Commission, which is joined with the military pro­ him crazy. Now he has accomplished a great deal. I think he gram, and putting the power plants under the administration will succeed because he is a very good worker. He is a man of Electrobras , the governmentelectrical company. By doing that has really good intentions: His objective is to give to the this, the government is saying, we no longer have two pro­ nation that technology. He will succeed in that, I believe. grams, but a Brazilian national nuclear program. But they have to bring the civilian and military programs The new Nuclebras agency, called Industrias Nucleares together. Brasileiras (INB) comes under the Brazilian Nuclear Com­ mission; but NUCLEN is not administered by that agency. EIR: In this country, in the 1950s when Admiral Rickover We are regulated and licensed by the commission, but we began the Nuclear Navy, the program was secret. But it was now come under the administration of Electrobras. out of the submarine program that the American civilian nuclear industry got its start. The first commercial nuclear EIR: That sounds good-if the money is there to keep these plant ever built here was with thecollaboration of the Atomic things going .... Energy Commission, which had previously done only the Paranhos: And if the people who are in the military program submarines and the military work. In Brazil, your civilian really think that we have to work as a whole, and not in program began first, so you must have a whole corps of isolated groups. Because now , with the Brazilian Nuclear people who have worked on the civilian nuclear program Commission, they have the political power to steer the gov­ since the 1970s. ernment into solutions of nuclear power. But it seems that Paranhos: Yes, there is a bunch of people, but since 1984- they are not very much interested in what's going to happen 85, we have been losing many people. Our company really with the power plants that fall under the West German agree­ has a lack of people now, but because of all this financial ment. trouble, we are not allowed to hire anybody. So we are running into difficulty in some areas , because we don't have EIR: Who started the nuclear navy program? sufficient technical people to do the work. Paranhos: Adm. Othor Luis Pinheiro da Silva took up this In some areas we have a complete lack of people. For idea back in 1976. He went to the United States and got a example, if we received the whole budget to finish the plant degree in nuclear engineering. Then he returned and began in four years, we would run into a problem! Our estimate is work in the research center of the Air Force. He launched the that we will have to hire more than 100 people to finishthis idea of a nuclear navy and convinced an admiral or two of it job-in the design and planning part alone. (at that time he was not an admiral). They started with a very small group. I remember this because in 1981, I was working EIR: What about in the militarypart of the program? Have for Westinghouse in the construction of Angra I, not in the they trained people?

20 Science & Technology EIR February 17, 1989 The Angra I nuclear plallt. But will there be an Angra 1/ and I/I ?

Paranhos: I don't have much information about what's going EIR: That's a lot of missing power. on on the military side, because they are not saying very Paranhos: Yes, we're going to miss 2,600 megawatts. And much about it. They established a company that is hiring there is no other hydroplant scheduled to be ready in that time people. Part of their budget is the navy budget and part, I period. think, is given through the national Nuclear Commission. They are not having problems with money, and they are not EIR: Where are the sites for Angra I and II? dependent on the IMF. However, they have less money than Paranhos: These plants are between Rio and Sao Paulo, we have spent up to now in our program. Recently, some 200 kilometers from Rio. Angra I, which has 620 megawatts congressmen started to argue about how much is being spent. now on line, alone represents 20% of the power in the city I don't know the exact amount. of Rio de Janeirp . So, I think we're going to have problems.

EIR: In terms of the power needs of Brazil, if you have one EIR: How fast is the rate of electricity demand growing in 620-megawatt plant in operation, and have delayed the 2,600 Brazil? megawatts that were planned, is there a power shortage? Paranhos: Last year, the growth in demand was 15.8%; in Paranhos: We don't have one yet, but I think we are going 1987 it was 8.2%; in 1986 it was 8.5%; and in 1985 it was to get into this in one or two years. It's expected. In fact, the 10%. last plan that Electrobras made, which was called the Plano 20 10, included those two plants, Angra II and Angra III, in EIR: That's very high. In the United States, with post-in­ the inventory for 1992! This means that Electrobras calculat­ dustrialism, only a 2% growth rate was planned for the 1980s. ed the power of Angra II and Angra III in the energy needs But the actual demand here last year was a 4-5% growth rate for 1992-93 ! in some areas; in New England and in the New York area,

EIR February 17, 1989 Science & Technology 21 there were brownouts last summer, because there wasn't the nuclear technology transferred. enough power to keep up with the actual electricity use. Paranhos: Yes. And, in fact, in 1982, after the bid evalua­ What do you expect will happen in Brazil as people ex­ tion for starting construction was done and the site was cho­ perience power shortages? sen, the government completely canceled plants III and IV. Paranhos: There are a lot of hydroplants to be on line by Perouibe, the name of those two plants, is in the state of Siio 1995. We have a potential reserve in hydro of213,000 mega­ Paulo, not very far from the Angra plants, 200miles south of watts . Of course, some of these are not economical to use, those plants. The factory I mentioned was supposed to build because they are in the Amazon. It is not very economical to the steam generator, the main vessel, the reactor vessel, for send the energy up from there, and there is not much industry the plant, but all this stopped. in the Amazon. And one of the plants that is now starting operation is getting a lot of discussion, because the density EIR: That's a frustrating situation.... of energy per square kilometer is very, very low; it's com­ Paranhos: A very frustrating situation. Because many of parable to solar energy! So, it's very inefficient. Further, by the people there are leaving the company, because they don't the beginning of the next century we are expecting not to see a future for their work, and they are looking for other have any more hydroplants. jobs. Of course, nuclear power plants will have to be in oper­ ation to enable development to take place. But people are EIR: How did the Carter nonproliferation act affect the saying, "No, we have the hydroplants, we don't need nuclear agreement that Brazil had with West Germany? energy." Paranhos: Just at the beginning of the Carter administra­ Another problem, of course, is that you have to start tion, there was great pressure put on the Brazilian govern­ planning for nuclear plants much earlier than you really need ment to get the nuclear deal canceled. Carter started to make them on line, because you don't go to the nuclear power just a lot of conditions, and even some threats. I have real reason like that-in two minutes! to think that Carter posed to Brazil threats that the United States would put strong customs barriers against the import EIR: So you are saying that a nuclear plant is actually cheap­ of Brazilian products-and even German products-in er than an inefficienthydro plant. American markets . Other threats were to block export from Paranhos: Yes. Although, because of our practical prob­ the U.S. of products that Brazil and Germany needed; to lem, of taking so many years to build Angra I, its cost is very block the access of Brazil to the international market; to stop high. the supply of enriched uranium that was already contracted with West Germany (our uranium was already contracted EIR: What is your view of the future of nuclear power in through the United States for Angra I). And there was a Brazil? Do you think you will overcome the political obsta­ demagogic threat of taking the troops out of West Germany. cles to proceeding with the German program? Is it simply a This was just talk, to pressure cancellation of the project. question of money, or now that you have begun this indige­ nous capability, do you think that the government doesn't EIR: More recently, I think theWorld Bank has intervened. want to complete the agreement? Paranhos: Yes, the World Bank had promised $500 million Paranhos: I think that the government has not really made to help the financial problems of Electrobras. That money any decision on this. They have doubts; especially because opened up the possibility of other money from other banks, of the situation with public opinion. Because of all these in Japan, for instance. After the World Bank released that problems, the transfer of technology was not completely money, some other loans were supposed to be given to us to fulfilled;one plant is not even ready. The agreement that was match that amount. This $500 million was in discussion for supposed to give us the whole technology, the full fuel cycle. a long time. And then when the nuclear program became the But if we don't build any other plants, this knowhow will not responsibility of Electrobras, the World Bank said that it be totally transferred. In the firstplant , much of the technol­ would not give the money until they clarified this question. ogy is wholly German. Some of the design, some of the As a matter of fact, they were saying that during the week systems of the nuclear part of the plant, are not completely that was the final week to release the money. The president transferred to us. The plant has about 120 systems; 90% of of Electrobras came here to the United States to discuss this these systems are designed by us, but the main part-the problem. But it's not solved-at least it wasn't when I left nuclear island-is designed by Siemens. And this nuclear Brazil. part was supposed to be transferred only afterthe fourth plant was built. EIR: Are they claiming they are not giving the money to Electrobras because of the nuclear plants? EIR: So that means that if you don't build all four plants in Paranhos: Yes. They are afraid that Electrobras will use collaboration with the West Germans, you never get any of this money for nuclearpower, and the money is not supposed

22 Science & Technology EIR February 17, 1989 to be used for that ! cycle meansbuilding an enrichmentplant, a processing plant, a fuel fabrication plant. EIR: Why not? Paranhos: This is one thing that is very complicated. Be­ Paranhos: Because this was an agreement before Electro­ cause in the decree that the government established in Sep­ bras took over the nuclear program, and the money was tember 1988, they even eliminated the company that was supposed to solve some cash problems with equipment and supposed to do this enrichment. But as far as I know, this transmission lines, and a lot of small cash problems that the company is not finished yet-it's still alive .... electrical system in Brazil was having. Now, the World Bank Also, the government decree said that it would privatize said that they don't know if this money will be used for this the company that makes the vessels. This big factory is under purpose, and they want the facts about the nuclearplants in the National Nuclear Commission now, and the idea is that the economics of Electrobras's situation. There are a lot of if any Brazilian company would be interested in running it, questions about this. it would be privatized.

EIR: So, they are really trying to stop the nuclearprogram. EIR: It seems to me that if Brazil is to progress as an indus­ Paranhos: They are trying to stop it. Because they were trialnation , that you would need more nuclear power. saying other things before the nuclear power issue in order Paranhos: For sure. Because nuclear power is not only for not to release themoney. For example, they said they wouldn't the supply of energy; it is a step up, a high technology that do it because of the situation in the Amazon, the people will open other branches of technology. Even in my area, as burning forests and things like that. a study I did showed, the nuclear industry technologies and methods are affecting other industries-for example, the EIR: So, your only hope then is that the government will concepts of quality assurance. So, what the Brazilian govern­ come through with the budget for the unfinishedplants. ment still doesn't realize is that nuclear power is more than Paranhos: Yes, we have a hope this year that we are going just giving electricity to the people. This is like a passport for to get the budget. The budget that is scheduled for us is the future ! something around $300 million, to take the program through 1989-to move it forward. And this includes ordering of EIR: That's true. The nuclear program gives you the trained equipment, contracting the main building company, con­ workforce and the research staff to work on new advanced tracting the instrumentation company to do instrumentation technologies. If you don't do this, your industries will always work. Also, there is a lot of other equipment that has to be be antiquated and more primitive than necessary: ordered in Germany and Brazil. Paranhos: Yes, and there are many other applications in We have some hope, because in the budget that was voted nuclear energy and research. For us, there is the very impor­ in the Congress at the end of last year, it seems that our tant field-food irradiation. The amount of fish protein that budget was passed. But there are two differentth ings: one is is eaten by the average Brazilian-by all Ibero-Americans­ to have a budget approved, and the other is to get the money. is very low. And with food irradiation technology, we could If we get that money that was approved in the congress, we put this protein source in the middle of the country without can go ahead and finish Angra II. needing any investment in refrigeration or refrigerated trucks.

EIR: And then , what about number three? EIR: And now, even in a country like Brazil, which has so Paranhos: That's the big question. Angra III, they said, much agriculture and potential, there are many who are going should be postponed for one and a half years. Which means hungry. that we finish it in 1997. When I leftBraz il, we didn't have Paranhos: We are exporting food in order to pay the debt! much information about the situation with Angra III. Nothing Part of the difficulty in preventing this is the anti-nuclear was allocated for it. And now, when the World Bank asked movement. I think you have heard of an accident we had in to make an economic study of Angra III, at first the govern­ 1987 in Goiania. ment said that this was an interference in our sovereignty, and that it would not do any kind of work on this. But then EIR: Yes, it was front-page news. [A discarded X-ray ma­ the government decided to go ahead with the study. When I chine was taken apart in a junk yard, and the irradiation left Brazil in the middle of January, the study was almost source was passed around and eventually killed and injured ready to be sent to the World Bank. people.] Now perhaps the World Bank will not accept the plan, Paranhos: That accident really goes to show how a lack of and ask for more explanations, and continue to delay. knowledge on the part of the technicians can do harm. But it is amazing that immediately after that incident, the media EIR: But even if you complete II and then III of the Angra turnedthe discussion to the supposed danger of nuclear power plan, the agreement with West Germany to complete thefuel plants. It is a very well organized campaign.

EIR February 17, 1989 Science & Technology 23 Brazil's first nuclear plant, the Angra I, which went into operation in 1984 .

EIR: Who runs this campaign in Brazil-the environmen­ ing nuclear power plants is very bad. But the strategy they talist campaign? have adopted is that they have to call people to discuss, show Paranhos: Mainly the Greens-there is a Green Party that them that nuclear power is a good thing for society, and to is growing. It is growing very fast. have some kind of seminars, to contact the press-and not criticize the press. When something happens, they will write EIR: Where is it based? a letter to the editor trying to explain, but they don't want to Paranhos: They start in the urban centers, mainly promoted make any polemics. Okay, there is something we think is bad by actors and actresses. in the press, then let's write a letter to explain the facts, but without polemicizing. I don't think this does any good. But EIR: Jane Fondas. anyway, I think that theirs is an honest effort and the only Paranhos: Yes-like that. There is one actress that was in one being made. Although I have different opinions concern­ a very famous Brazilian movie based on a novel. This actress, ing the methods, I am supporting them and working with Lucilia Santos, is very active, and she started to organize this them. movement. But today they are already in the rural areas. Even in the interior they are starting to build support. EIR: In this country, nice "education" hasn't made much of an impact. Because unless you really fight and call the EIR: Is there money supporting them from outside the coun­ names .... try? Paranhos: There is one name that has to be fought against Paranhos: It might be, because ofthe way they are growing. in Brazil now. I am referring to Jose Goldemberg, the head of the University of Siio Paulo. He is one of the main oppo­ EIR: What do the people in your nuclear association do to nents of nuclear power. try and counter the propaganda? Paranhos: I think we are still very timid. The people are EIR: He is a physicist, isn't he? still afraid to say things clearly, but are just nibbling at the Paranhos: Yes. I have an article of his from several years edges. In some cases these Greens have to be fought in a very ago in which he even says that he would like not to be a clear arena. We have to say what they represent-what is physicist because of nuclear power plants, because of the behind them, and make polemics against them. way nuclear power is being used in the world. I don't know The Brazilian Nuclear Association is trying to change, exactly what his objective is. But I do know that this man has and it seems that they will reach this point, but in a very slow become more popular since 1975-76, mainly because of his process. They recognize that the public information concern- opposition to nuclear power.

24 Science & Technology EIR February 17, 1989 EIR: He is quoted here in the U. S., in the scientificjournals some of our friends met herin Brasilia. Speaking of Goldem­ he is quoted. berg, she said she has a report of all his speeches from 1975 Paranhos: Yes, and he has gained political ground with this to 1988, and it's incredible how he changes his mind. Includ­ flag, because this is a popular thing, to be against nuclear ing, she said, once in a conference in Europe, she and some power. It seems to him that nobody wants it, so he is using of her friendstook the Goldemberg record along and distrib­ that to gain politically. Goldemberg is the most important uted it in three languages at the congress. It was very effec­ individual that we think we should fight-that we should tive, and Goldemberg got a little demoralized. argue with and polemicize against, and make him accounta­ ble for his statements-including his statements concerning EIR: What you need to do is counter their propaganda with this problem of the World Bank. He wrote a newspaper article some positive program, and what we spoke of before-the saying that it is okay that the World Bank is withholding the mass production of nuclear power plants. Perhaps slightly $500million-because it is their money. smaller plants that are grouped, so that you can build them indigenously and get them operating in some of these areas. EIR: The World Bank meanwhile is killing people ....If Is that what you were thinking of? the United States had built the number of nuclear plants Paranhos: We are thinking of holding a seminar on this planned in the Atoms for Peace period, at least 250 million subject in Brazil to bring this idea under discussion, spread people would still be alive today-these arepeople who died it, and develop it, and to lay out all of the options for the because their nation did not have the economic advantage nuclear industry in Brazil. that these nuclear power plants would have brought. . . . Paranhos: There is an argument the anti-nuclear peopleuse , EIR: What about collaboration with the Argentines? which is really very easy to refute. They say, "You planned Paranhos: It is a must. In the President's speech where he so many plants in 1975," and they said that the problem was announced the enrichment of uranium through the military (as we say in Portuguese) megalomania, or too much bigness. and the Instituto de Perquisas Nucleares, he proposed this. And they say, "You planned such and such plants, you don't And it is really necessary because Brazil and Argentina have have any of those plants-only one-and nothing has hap­ experience. They have to join together in a complementary pened. Where is the lack of energy, where was the need for force for this. the energy of those plants?" But they forgot a simple problem. What about the energy EIR: Because then-you have the trainedpeople-you could that doesn't reach some regions of the country, and people go to the rest of the continent. . . . are using wood and biomass, and what about the cultivation Paranhos: In fact this collaboration is starting. There is a of food-it i'ltaking place far away from the cities because committee of Brazilian and Argentine industrial people. I am of this lack of energy. not really informed what is going on, but I know that some people in our company are participating on this committee. EIR: Yours is a rich country in terms of resources, so to One of our directors, I think, is the representative of Brazil. have people in poverty, people burning biomass in the 20th Having meetings between Argentine industrial people and century is really. . . . Brazilian industrial people to achieve this collaboration. And Paranhos: Not to mention the gasohol problem. That is we must do much more than that. We must really develop another big problem. Today they have big distilleries and big cooperation between Argentina and Brazil and spread this to plants-they don't know what to do with them. the other countries.

EIR: What does Dr. Goldemberg say about the energy sit­ EIR: Peru has just opened a researchreactor. I am sure that uation in Brazil? you can move the program out, throughout the continent. Paranhos: Some years ago therewas a meeting of the Bra­ Paranhos: Yes, I am working on a report that suggests the zilian Society for the Advancement of Science, of which formation of a central Ibero-American nuclear institute in Goldemberg was once the president. At that meeting, he said Brazil or Argentina, because we already have a basis for that "all this business about energy in Brazil is only because collaboration. the big construction companies push it-because they need jobs. We don't really need this energy, and we can solve all EIR: If the countries go with the Greens and the environ­ the problems of our lack of energy by conserving energy. " mentalism that they have imported from the West, people If you pick up the things he says from 1975 until today, will die-more and more people will die. you will see clearly that he is going according to the way the Paranhos: We import all bad ideas. The big problem is that wind is blowing. He always changes his speech a little ac­ the Greens support ideas that are sympathetic to the public, cording to the way the wind is blowing. In fact there is a but their realob jectives are hidden, and helped by the media, Congresswoman that has all this written, and last November they go on to pursue their evil goals.

EIR February 17, 1989 Science & Technology 25 TIillFeature

Carlos Andres Perez peddles snake-oil for debt crisis

by Peter Rush

The inauguration of Venezuela's new President Carlos Andres Perez-some com­ mentators called it a "coronation"-on Feb . 2, marks the official beginning of a new effort to prevent the nations of Ibero-America from effectively combining to confront the developed sector banks and governments on the issue of paying their foreign debts. Carlos Andres Perez, known as CAP j has carefully groomed himself for much of the past decade, since his last stint as head of state from 1974-78, to become the leading spokesman for the continent vis-a-vis the foreign banks on issues of debt and integration, while actually serving as the point man for the InternationalMonetary Fund's austerity policy. The attendance at his inauguration of over 20 heads of state and over 20 former heads of state, has further bolstered his international stature . Behind the pomp and pomposity of the occasion lies a deadly reality: CAP is taking officeat a point of the most serious financialand economic crisis that Ibero­ America has ever faced, and even his own country, long insulated from the problems of inflation and falling incomes endemic in the rest of the region since the debt crisis of 1982, is now entering the same barrel. The perceived "danger," from the viewpoint of the international banks and the DECD nations (the U.S., Europe, and Japan), is that economic crisis may lead to the rise of nationalists­ usually referred to as "populists" -who will break "the rules of the game" and declare unilateral debt moratoria and take other moves to protect and develop their economies, and who might succeed in creating a continental "debtors' cartel" to enforce this approach. This situation has engendered a policy debate within the world's financial elite over whether to finally grant "debt relief," or to continue with what has come to be known as the "Baker Plan," after then-Secretary of the Treasury James Baker, of increasing debt loads to pay interest to the banks. CAP has injected himself into this debate on the side of those advocating debt rel.ief. His role will be to organize the rest of Ibero-America behind the nostrum of an international facility to buy up Latin American debts at a sharp discount, while the International Monetary Fund "restructures" each nation's economy. Domestically, CAP has already proposed

26 Feature EIR February 17, 1989 Demagogues and snake-oil salesmen peddle their schemes fo r "solving" the debt crisis with austerity, and keeping the banks happy: Venezuela's Carlos Andres Perez (left) , Cuba's Fidel Castro (center top), fo rmer u.s. President Jimmy Carter, Nicaragua's Daniel Ortega, and U.S. Secretary of State James Baker III (right).

just such an IMF-approved economic program for Venezue­ the limelight was Cuba's Fidel Castro, Nicaragua's Daniel la. The only "catch" is that the collapse of the financialhouse Ortega, and former U. S. President Jimmy Carter. Carter met of cards in Argentina, Brazil, and Mexico will probably with Ortega, upstaging an annoyed Vice-President Dan outrun the implementation of any palliative schemes, and the Quayle making his foreign policy debut. Quayle did make facility won't work in any event. clear in a statement that the U.S. would use diplomacy toward Nicaragua, rather than back the "Contra" resistance, in reply The 'coronation' to which Ortega effusively praised Quayle's "grasp of polit­ Playing to an assemblage of 2,400 in a modem theater ical reality." complex in downtown Caracas, Perez delivered a speech Generally unreported, but undoubtedly more important long on rhetoric but short on substance. He hailed the new than the public hoopla, were the host of private meetings that detente between the United States and the Soviet Union, and CAP had with visiting dignitaries. European Social Demo­ asked why the Central American conflicts cannot, like Af­ cratic leader and prime minister of Spain Felipe Gonzalez, ghanistan, Namibia, and Cambodia, be speedily resolved and Second International luminary Willy Brandt of West between the superpowers. He detailed the present economic Germany, mingled with the heads of state of most nations of and financialcr isis of Venezuela, called for "discipline, pro­ Central and South America. CAP himself is a former vice ductivity, and sacrifice" from its people to resolve it, and president of the Second International, and is now the leading said his specific measures would be announced later. On the social democratic head of state in the Western Hemisphere. foreign debt, while he called the present strategy a failure, The day following the inauguration, the heads of state or his choice of words to describe the debt crisis was among the their representatives from seven countries of the so-called mildest formulations of any Ibero-American leader in a long Group of Eight (Panama has been suspended) met in an time, and he said his idea of a special "debt facility" was the informal conference and endorsed the resolution of their re­ best solution. spective finance ministers in Rio de Janeiro last December, In addition to the ceremony itself, was the diplomacy that which called for sharply reducing the debt of their countries surrounded it. The heads of state of most nations of Ibero­ by means of capturing the substantial discounts of their debts America were gathered in Caracas for 1-3 days. Capturing on the so-called "secondary market." Attending were Perez,

EIR February 17, 1989 Feature 27 Presidents Jose Sarney of Brazil, Virgilio Barco of Colom­ as his top economic adviser, and of Harvard's Jeffrey Sachs, bia, Alan Garcia of Peru, and Jose Maria Sanguinetti of whose "shock" program decimated the Bolivian economy as Uruguay, and foreign ministers of Mexico and Argentina, the price for ending hyperinflation, as an adviser on economic FernandoSolana and Dante Caputo. program, should dispel it. For most of the past five years, at every gathering of 'Pied Piper' Perez plays IMF song Ibero-American leaders, the devastating effectof paying tens Venezuelans didn't have long to wait to learnthe outlines of billions in interest payments on the foreign debt has been of the sacrificesthat CAP is calling on them to make. While denounced, and the IMF strongly criticized. Last summer, many details are yet to be made public, it has already been when the heads of state of the seven remaining nations of the announced that the Venezuelan economy will undergo what "Group of Eight" met in Punte del Este, Uruguay, the cus­ the press is referring to as a "shock" program intended to tomary rhetoric was strangely toned down. It is now clear open the economy to "free market forces," and which con­ that the major nations have resolved on "dialogue" with the forms to standard IMF prescriptions. Its effect will be to drop creditor banks and the IMF, to try to obtain a reduction of real standards of living and make life more difficultfor busi­ their interest payments. CAP has assumed the mantle of ness. According to the Financial Times of London Feb. 7, leading spokesman for such a "dialogue." the new measures include: relaxing price controls; gradually Not waiting for his inauguration to outline his major eliminating fixed interest rates on savings and loans; elimi­ proposal, CAP proposed to the World Economic Forum nating the two-tier exchange rate for the bolivar, effectively meeting in Davos, Switzerland on Jan. 28 the formation of a enforcing a sharp currencydevaluation; reducing the govern­ new "multilateral agency" that would buy developing coun­ ment's budget deficit; and providing incentives for foreign try loans from the creditor banks, at a sharp discount, and investment in tourism and export industries. would pass the discount on to the debtor countries. The banks Even before the inauguration, the core of this program would receive what CAP called "risk-free" bonds bearing a was attacked by Elio Espinoza, president of the Com Pro­ market-rate of interest from the agency, which the agency ducers Association, who said that "the increase in interest would service by collecting interest payments from the debtor rates is one of the most important inflationary factors, and countries at rates bearing the same discount wrung from the therefore it is a stupidity to try to reduce inflation with infla­ banks. The effect would be to reduce the total interest pay­ tionary measures," and cited the failure of high interest rates ments due from the debtor countries by the amount of the in Peru to stem inflation. And Venezuelan Labor Confeder­ discount. The day after his inauguration , CAP specified that ation head Juan Jose Delpino, emerging from a Jan. 30 meet­ the discount must be at least 50%, and as close to the present ing with CAP, commented, "There are measures that are value of the debts on the secondary market as possible (only going to impact very severely on the working class, less Colombia and Chile have discounts above 50%; Mexico's is favored by that program ....We do not agree with freeing 38.5%, Venezuela's 37%, Brazil's 34.5%, and Argentina's interest rates, nor with increases in public utility rates and 20%, according to Salomon Brothers' latest estimate). fares." Moreover, while the government is expecting the The loss, apparently, is to be borne mainly by the banks, bolivar to be devalued by 75%, many analysts fear it could though CAP has argued that regulatory changes should allow fall much farther. Such a sudden devaluation is bound to be the banks to pass along at least some of their losses to the highly inflationary, especially since it means that the govern­ taxpayers. Also, the new bonds are to be guaranteed by the ment and private debtors with dollar debt must now pay 75% World Bank and/or the IMF, which in tum must obtain their more bolivars (or more) to service the same dollar value of funds, should a bailout be required, from the taxpayers in the debt. industrialized countries as well. In a press conference on Jan. 29, CAP himself confessed Who is to run Perez's agency? "Such an agency could be that "we have to stop living fictions and confrontthe genuine set up by the IMF and the World Bank," CAP said at Davos. reality of Venezuela's economic situation, and its relation Unspoken, but implicit, is that in return, participating coun­ with the IMF ....We cannot be thinking about whether it tries must adopt the austerity and "restructuring" programs is good or bad; what is important is to negotiate with it as approved by the IMF. head of the international financial world ....We will agree On cue, the foreign press, especially in the United States, with many of their proposals." Bankers have already re­ has published numerous articles praising CAP as the new sponded favorably. According to Diario de Caracas of Jan. spokesman for Latin American nations on the debt issue. The 27 , Citicorp President John Reed, briefed in advance on Washington Post heralded the inauguration in a Feb. 1 article CAP's program, called it "a very conventional and orthodox that said, CAP "advocates an aggressive foreign policy aimed plan, which we could support. . . . It is also a plan with at uniting Latin America's debtor nations to demand a better which the IMF should feel comfortable." deal from their creditors. Evidence that Perez is taken seri­ Should any doubt remain on the true nature of CAP's ously is the blue-ribbon audience that will watch the inau­ economic policy, his appointment of Pedro Tinoco, one of guration ceremony." The article reported that CAP does not Venezuela's top bankers and a rabid "free market" advocate, favor unilateral debt moratorium, but a united alliance for

28 Feature EIR February 17, 1989 "coordinated action" on the debt question. The debt agency called for by CAP at Davos is in itself nothing new: The Japanese proposed such an institution over two years ago, and the Omnibus Trade Act of 1988 of the U. S. Congress calls for establishing an International Debt Venezuela to get the Management Authority which is indistinguishable fromCA P's proposed agency. What is new, is that CAP has become the point man in the Third World for a scheme being pushed most 'Bolivia treatment' vigorously by financial and political leaders in Europe and by Mark Sonnenblick the United States, against the resistance of, in particular, the U. S. money center banks and the U. S. Treasury. Venezuelan President Carlos Andres Perez has contracted Attacks on the 'Baker Plan' 31-year-old Harvard monetarist Jeffrey Sachs to design what The documentation which follows in this Feature is rep­ he called in his Feb. 2 inaugural address the "progressive resentative of the arguments being presented in Congress and liberalization of the economy." Sure enough, the terminol­ in the U.S. and British press, to the effect that the plan put ogy which Perez uses to describe his economic plans mimics forth by then Treasury Secretary James Baker in 1985, to the way Sachs portrays the "successful stabilization pro­ manage the debt crisis by increasing the flow of new debt gram" which he prescribed for Bolivia. The outcome was money somewhat, has failed utterly. So far, despite several the rapid demise of Bolivia's agro-industrial economy and a statements that he is "open" to new approaches , President concurrent expansion of the cocaine industry. George Bush has in practice backed up now-Secretary of Jimmy Carter is correct in promoting Sachs as "the man State Baker in maintaining this plan, with only minor modi­ who defeated inflation in Bolivia." When his "shock" pro­ fications, and rejecting all forms of "debt relief," that is, gram was adopted there on Aug. 29, 1985 by Perez's fe llow anything which discounts the value of the banks' debts down Social Democrat, Victor Paz Estenssoro, inflation was run­ toward their secondary market values. ning at 25,000%. By 1987, it was down to 25%. The Baker Plan has been a dismal failure, for all the Sachs accomplished this by devaluing the peso by 93%, reasons indicated. The problem is that none of the indicated to the "parallel market price" set by those who trade in solutions, certainly not CAP's proposed debt agency, repre­ dollars from cocaine exports. The governmentbegan buying sents any kind of real solution. Under the debt agency pro­ dollars from the suppliers of 40% of America's raw cocaine, posal, the countries will still pay out large (if somewhat with no questions asked. The dollar became legal tender. smaller than under current arrangements) amounts of net Banks, free to charge what they pleased, raised interest capital exports , when growth can only take place if there is a rates to 35-45% above inflation. That did encourage some substantial net capital inflow-a policy which finds no ad­ traffickers to put their dollars into Bolivian banks, but none vocates from these circles. And the quid pro quo for debt of these dollars went into productive investments. By 1987, relief is even tighter control by the incompetent and corrupt a full 35% of the debt owed local banks was uncollectable, International Monetary Fund, recently exposed by former and the banks were technically bankrupt. senior official Davison Budhoo for faking its statistics to Bolivian industry was also ravaged by the kind of tariff justify its "conditionalities" policy. The so-called "free mar­ reductions Perez promises Venezuela. Imports increased ket" policy being universally touted will not restore economic 30% in 1986, as cocaine dollars returned in the form of health to Ibero-America, but will only accomplish what top consumer products. Commerce became nothing but money supporters of Mexico's President Carlos Salinas de Gortari laundering. Sachs's "tax overhaul proposal" imposed a have openly called for: turning Ibero-America into one huge heavy burden on cattle-growers and industrialists, while eas­ "export free zone," where runaway U.S. shops get super ing the burden on money markets. In a May 1987 article in cheap labor to produce items for reexport, while the domestic American Economic Review, "The Bolivian Hyperinflation population sinks deeper and deeper into poverty. and Stabilization," Sachs boasts that the step "with the most Will CAP be successful in leading Latin American gov­ important short-run effect was the rise in public sector prices, ernments into an IMF-run debt agency? The likelihood is that which raised government revenues immediately by several impending financialcrises will detonate in Argentina, Brazil, percent of GNP." The tenfold increase in fuel prices helped and possibly Mexico, long before the arrangements are in paralyze industrial activity. place. At that time, events will be determined by whether Sachs writes, "The policy package had the desired effect nationalists take power who can guide their countries into an of closing the flow budget deficitof the central government. alliance to demand a new world monetary order, or whether With the combination of higher public sector prices, the the countries descend into chaos, repression, and coups. virtual halt to all public investment, a tight freeze on public CAP's phony "pressure bloc" will not bring any positive sector wages at very depressed levels, and a moratorium on results. foreign debt servicing, government revenues jumped above

EIR February 17, 1989 Feature 29 expenditures after the start of the program." of cocaine products. Price controls and all labor protection laws were abol­ The influx of skilled labor coincided with an upgrading ished. By 1987, schoolteachers' wages had been cut to $15 of the industry. In 1984, almost all of Bolivia's cocaine a month. The state mining company, COMIBOL, fired all went, in the form of basic cocaine paste, to Colombia and but 7,000 of its 30,000 workers , and then auctioned off elsewhere for refinement. Now, up to half of the paste is many of the mines to foreign speculators . Another 20,000 refined locally by the 30 to 40 families which dominate private-sector miners were fired, resulting in the loss of the Bolivian end of Dope, Inc., according to U.S. Drug livelihood to another 140,000 peasants and workers who Enforcement Administration estimates. Cocaine is the only supplied goods and services to the miners. The "inefficient" industry in Bolivia in which capital investment and techno­ productive economy simply vanished. Shoe factories, soap logical advance are taking place. factories, palm oil factories, glass factories- 132 factories According to former Finance Minister Roberto Jordan closed their doors. The "inefficient" workforce now had no Pando, $3.6 billion of the $4 .5 billion Gross National Prod­ choice but to driftinto the jungle to survive, or die, as slaves uct comes from cocaine. The "free market economy" brought of the cocaine producers. an increase in coca bush plantations from 198 ,000 acres in 1985, to 372,000 acres in 1987, despite a widely publicized The cocaine industry booms U.S. Army eradication operation. The eradication program In early 1988, over one-third of Bolivia's labor force was has now stalled, due to lack of money and to peasant opposi­ linked to the production of cocaine, double the proportion of tion. The governmentclaims to have destroyed 900 process­ a few years earlier. The Social and Economic Studies Insti­ ing centers and arrested 600 people during the first 10 months tute (lESE) of the Universidad Mayor de San Sim6n de of 1988. But, Bolivia is more addicted to the narco-economy Cochabamba, directed by Father Federico DeAquilo, found than ever. Coca leaf production rose from 56,420 tons in that ofthese 703,000 people, 415,500 were involved directly 1987 to 62,060 tons in 1988, the U.S. GovernmentAccount­ in the production of coca leaves and their purchase and ing Office estimates. transport to processing centers. It estimated that 4,000 co­ Sachs boasted that his Bolivia experiment "is the greatest caine factories employed 42,500 people. Processing chemi­ verification I know of basic monetary theory . . . . It has cals were provided by 250 specialized traffickingopera tions. worked so much according to the textbook, that I don't have Some 240,000 of the 703,000 are also themselves consumers to revise one major idea."

Primitive agriculture in Bolivia. Thanks to the "anti-inflation plan" of Harvard economist Jeffrey Sachs, inaugurated in J 985 , what remained of Bolivia's industry and productive agriculture was wiped out. Now, over one-third of the labor fo rce is employed in the production of cocaine.

30 Feature EIR February 17, 1989 Treasury Department when it reports to this committee next Documentation month. The Treasury's past failure in managing the debt crisis is not the result of an accident. The Treasury has failed because it put the short-term and narrow interest of a small number of U . S. banks above the interests of the U . S. banking Perez puts self forward system as a whole, and above the interests of American as spokesman on the debt economic and foreign policy more generally. The crisis has Excerptsfrom the inaugural sp eech of Carlos Andres Perez been managed for, and sometimes even by, four or fivelarge in Caracas on Feb. 2: banks, who have resisted all meaningful compromises with the debtor countries. Citicorp has led the hardline approach, If we want an economically solid country, independent and and has been backed to the hilt by the Treasury in recent invulnerable ...we must assume the consequent responsi­ years. This approach has worsened the position not only of bilities. This will not be achieved except through discipline, the debtor countries, but also of the majority of U. S. banks, productivity, and sacrifice.... To this difficultand serious and the U. S. taxpayer as well. . . . situation we must add the deterioration in the standard of A real solution to the crisis requires an across-the-board living of workers, who have suffered an important relative reduction of the debt-service burden that is shared in by all loss of well-being. The minimum wage has fallen more than of the commercial bank creditors. This reduction could come 25% in the last five years and the average real income has in the form of sub-market interest rates or a reduction of fallen almost 40% . . . . principal. Contrary to the various assertions of the banks The failure of the present Latin American strategy to deal surrounding this issue, sub-market interest rates or principal with the debt problem has stimulated the appearance of a reduction are standard banking pra�tices in financial distress series of alternative proposals ....The common character­ situations. istic of these global proposals is the emphasis on a substantial Importantly, one case of partial debt reduction has reduction of the debt and the debt service burden, by means slipped through, that of Bolivia. And the outcome of the of capturing the discount on the secondary markets. The Bolivian case to date demonstrates the remarkable gains that Ministers of Finance of the Group of Eight have also just can be garnered by a realistic approach to debt . . . the come out responsibly for this approach. . . . country has been able to end hyperinflation . . . restore The hour has arrived to intensely seek a single definite economic growth, and stabilize its democratic commitment of the industrialized countries and Latin institutions ....For the other countries, such realistic solu­ America to work together, to facilitate initiatives that will tions have been blocked by Citicorp, and a handful of other permit pushing forward on an integral, global plan that de­ large banks, working in conjunction with the U.S. Treasury finitively breaks with the vicious circle of debt and stagna­ ...[Citibank] is interested in pressuring governments on a tion. The proposal I presented last Jan. 27 at the World one-to-one basis to trade away valuable domestic assets Conference of Businessmen at Davos, Switzerland, fits this to Citicorp ...in so-called debt-equity swaps and similar criterion. schemes ....These swaps are beneficialfor the banks, but actually harmful for the countries undertaking them .... Governments that have tried to 'play by the rules' of the u.s. 'narrow' approach U.S. Treasury find that they cannot control their economies, Excerpts fr om testimony to U.S. Congress on Jan. 5, 1989 and therefore that they cannot hang on to power, or can by Harvard economist Jeffrey Sachs: do so only with fraud and violence. Interestingly, populist movements are taking hold in countries that have tried to Several members of this committee have made important follow the U.S. line .... contributions towards a solution to the debt crisis, most One inevitable result is a deep decline in the average importantly in putting forward the provisions in the Omnibus value of commercial bank claims of the developing countr­ Trade Act of 1988 calling for the establishment of an Interna­ ies. The secondary market value of the LDC loan portfolio tional Debt Management Authority (IDMA) to facilitate a has collapsed in the past two years ....For the regional reduction of the developing country debt to manageable banks, and the smaller money center banks , the loss in value proportions. of the LDC loans translates almost directly into losses .... That proposal remains the most feasible and realistic Another implication is that the U.S. Treasury is committing approach to resolving the crisis that has yet been found .... growing amounts of taxpayer dollars to bailing out the banks. I would urge this committee, in the strongest possible terms, Since it is clear that Argentina, Brazil, and Mexico have to push forward this innovative and important proposal, been pushed to the wall, and cannot be squeezed more despite the likely opposition that can be expected from the without very serious political risks, the U.S. Treasury is now

EIR February 17, 1989 Feature 31 coming up with larger amounts of official money to be their obligations to pay. The official debt strategy has been lent to these countries so that they can meet their interest doing the opposite-widening the solvency gap by forcing payments .... debtors to transfer resources through policy adjustments that The Treasury has often stated three criteria for guiding weaken their capacity to pay, and at the same time forcing the management of the debt crisis: I) the solutions must be them to take on "new money" that increases their case-by-case; 2) the solutions must not involve a taxpayer obligations .... bailout of the banks; and 3) the solutions must be 'voluntary Debt-equity swaps and schemes involving local currency and market-based' ....[Bu t] in practice we have the oppo­ payments widen the debtors' budget deficits, compounding site of a case-by-case approach ....Un der the ostensible the existing fiscal and inflationary pressures .... case-by-case approach, every case is treated like every other The first principle [of a solution] follows the logic of case. Countries that obviously need debt reduction, like Chapter II of the U.S. bankruptcy code, where contracts are Argentina, Costa Rica, and Ecuador, are denied it, and given rewritten to protect private corporations in financial distress. terms that are nearly identical to , or often worse than, those Mechanisms should be put in place to induce the troubled of the other countries .... debtor to improve its capacity to pay through growth-ori­ There is a growing list of phony solutions to the crisis, ented policy reform, and to encourage the banks to reduce some of which, like debt-equity swaps, have already been the present value of their claims to a level that is fully implemented extensively. The debt-equity swap is Citicorp's serviceable. favorite, but is also the worst possible arrangement from The second principle should be one of burden-sharing. the point of view of the debtor country. . . . It is highly Taxpayers in the creditor governments should not bail out inflationary ... the budgetary burden of the debt-equity the banks, because banks themselves should take swap is several times the burden of interest payments on the losses ....Most banks are quite capable of absorbing major debt. ... write-downs on their LDC exposure .... There are two ways to proceed on the crisis ....The Here are the key building blocks of [a solution]: first is to put in place the mechanisms for a general solution, • A Debt-Restructuring Advisory Committee is set up to which I believe can be provided by the IDMA ....Contrary act as a political mediator and economic adviser. Committee to the assertions of the Treasury, an IDMA would not be at members are chosen from major creditor governments, the all costly for the taxpayers, since the losses on the debt IMF, the World Bank ...and non-governmental experts would be absorbed by the commercial banks, not by the from the Third World .... creditor governments. . . . The other [way] is to foster more • When a middle-income debtor country decides it progress In the context of individual country needs debt relief, it submits an IMF-style "letter of intent," negotiations. . . . prepared in consultation with the Committee, detailng a program for policy reform supported by debt-service reduction .... 'Chapter 11 for debtors ' • The banks exchange their floating-rate, longer-term, The article excerpted here, "Chapter 11 Workouts fo r Latin public-sector loans for bonds issue by the country with long Debtors, " by Shafiq Islam, international finance fe llow at (l0-15 years) maturities and fixed below-market rates .... the Council on Foreign Relations, was published in the Wall Street Journal on Feb. 3:

With heightened crisis further destabilizing Mexico, Brazil The debt 'hemorrhage' and Argentina, the Third World debt problem is dominating Excerpts from "The Need to Staunch the Hemorrhage," by the meeting of officials of the Group of Seven ....The Robert Graham and Stephen Fidler, Financial Times, Feb. problem is that the Treasury's "whole new look" is still 2: avoiding coming to terms with a simple unpleasant fact: the troubled countries are overindebted ....This obligation­ The present crisis revolves round the ability of democratic capacity gap is not temporary, but will persist . . . under all institutions to survive in such countries as Argentina and reasonable future scenarios . . . the debtor countries are not Brazil. ...Si nce 1984, Latin America's per capita growth suffering from a liquidity shortage resulting from a tempo­ has scarcely averaged 1 % ....The cumulative effect of rary decline in their capacity to pay, but a solvency reduced state spending is already being felt in poor mainte­ problem .... Therefore, what these debtors need is not nance of public utilities and lack of imported spares. Plant more "new money" but less "old debt"-they need debt is deteriorating faster than it is being replaced ....The axe relief.... on public spending has fallen where it has been easiest to An effective strategy must aim at closing the capacity­ wield--on education, health and housing .... obligation gap with economic restructuring to improve the As a result there is fertile ground either for the military debtors' capacity to pay, and debt restructuring to reduce to return . . . or for a new brandof populist like Carlos Saul

32 Feature EIR February 17, 1989 Menem, the Peronist candidate in Argentina's May election, toward [getting] new money and not enough toward debt or Leonel Brizola, the left-wing leader in Brazil. ... reduction, and as I understand frol)1 press reports, the gov­ ernment is saying that it needs about $7 billion a year .... I think that's a mistake. What Mexico needs is debt reduc­ 'Buryth e Baker Plan' tion, it doesn't need new debt, and it should be working, This commentary by Jim Hoagland appeared in the Wash­ absolutely single-mindedly, for reducing the debt, not for ington Post on Feb. 3: new loans right now. It's a big mistake to be going after new lending. It is time for Washington to lean on American banks to offer relief on a debt burden that is now sharply distorting global EIR: And why not negotiate a new world monetary system? trade flows and contributing significantly to the persistent Sachs: I don't think so ....I think that the monetary rela­ U.S. trade deficit. ...Until now, U.S. debt strategy has tions among the big countries are under control right now. dictated that the bankers should not be asked to take losses There is a target exchange rate system that is operating .... on mountains of debt they built in the 1970s. Manufacturers The big problems in the world right now are the debt and should. The rescues designed by the U.S. Treasury and U.S. macro-policies, not so much the need for global mone­ the International Monetary Fund have been based on the tary reforms. . . . principle of keeping the banks whole .... When [the Baker Plan] was introduced nearly four years EIR: When you are talking about "harsh, serious real ad­ ago ...[it] was supposed to trigger fresh loans and other justments," you are talking basically about the IMF condi­ capital flows into 15 targeted debtor nations ....Instead, tionalities, aren't you? there has been a net flow of $43 billion from the 15 Baker Sachs: No. I believe in certain parts of the IMF program, Plan countries back to the banks ....Sen . Bradley (speak­ which is budgetary control and liberalization of the econ­ ing at the Davos conference) attributes the loss of many of omy, and I think that Mexican economic program is in the the 1 million jobs eliminated in U. S. manufacturing over the right direction, very much so. But what I disagree with the past decade to the closing down of markets in indebted IMF on, is the amount of debt that can be paid. I don't developing countries. They can no longer afford to import believe this foreign debt can be paid. So I want to look at American technology or goods because they are forced to an IMF program that means a real adjustment program, and spend 30 to 50% of their foreign-exchange earnings on re­ a real reform program, rather than just a collection agency paying debt. It is the American manufacturer rather than the for commercial banks. And my problem with the IMF comes American banker who has been paying the price of the down to the fact that they're trying to defend the banks, current debt strategy. . . . rather than to help the countries. Jim Baker did a logical and fair thing by giving the first crack at fixing the debt problem to the people who had EIR: So, you don't see the IMF adjustment program as a created it: the bankers and their Third World clients. The debt-collection policy in itself? plan didn't work. Time for a quiet burial. Sachs: No ....What I'm saying is the IMF programs are directed too much toward repaying the bank debt; they ought to be directed toward helping the countries to grow . The Interview: Jeffrey Sachs kind of measures that the IMF recommends are basically in the right direction, in the sense that budgets have to get under control, trade should be liberalized, exchange rates should be at realistic levels. But the populations of Latin 'Harsh adjustments' America are being squeezed to the bone, and as you said, they're starving right now in many countries. So, the time needed to stop inflation has come to recognize that the debt is unpayable, and has to The interview excerpted here with Professor Sachs, a mone­ be cut sharply. tarist economist fr om Harvard University, was conducted in Venezuela on Feb. 2. Venezuelan President Carlos Andres EIR: Not a new monetary system? Perez has contracted Sachs to design a planfor "the progres­ Sachs: They don't need a new monetary system. They need sive liberalization of the economy." a new arrangement for the debt, and on that I think that Mexico and the other countries ought to work together. And Sachs: I think that the time has come for a united Latin that's what Carlos Andres Perez called for today, and I American position, the time has come to reduce the debt, wholeheartedly back. And it's time for a Latin American rather than to continue to build the debt, and I must say approach to this issue, with tough negotiations, serious nego­ that, in that regard, I'm not absolutely happy with Mexico's tiations, united negotiations, all directed toward one goal: negotiating position right now, because it's tending too much reducing the debt.

EIR February 17, 1989 Feature 33 New East-West 'ecological fascist' order emerges

by Mark Burdman

With breathtaking speed, Satanist elites East and West are The tip-off to the real design is that Gorbachov is being moving to create a new ecological-fascist one world order, openly heralded as the hero of the New Age Aquarian move­ in which the Russians will play the predominating role. ment. In its November 1988 edition, the German magazine While efforts to create such an East-West globalist order 2000: Magazine/or New Consciousness praised Gorbachov have been going on for a long time, the key recent point of as the "pathfinder for the new consciousness." Praise for acceleration was Soviet leader Mikhail Gorbachov' s Dec. 7, Gorbachov gushed forth from such New Age lunatics as cult 1988 speech before the United Nations, in which he inclu­ leader Bhagwan, American mystic Chris Griscom (teacher sively called for a new world ecological order based on dump­ of kook actress Shirley MacLaime), and East German "defec­ ing the Western technological route to development. Since tor" and Green Party leader Rudolf Bahro . that time, the Socialist Internationaland highest levels of the Similarly, Gorbachov is praised as one of the special Anglo-American liberal Establishment have jumped on the "hierarchy of world leaders" by the Lucis Trust, the London­ bandwagon. George Kennan , the key Soviet expert of the Geneva-New York umbrella organization for New Age and Anglo-American liberal Establishment, wrote an article in paganist ecology movements. , the New York Times Magazine Feb. 5 entitled, "After the A London spokesman declares that "Gorbachov is mak­ Cold War," in which he said that "the greatest and most ing the impossible possible," and that Lucis is dispatching a important possibilities" for East-West cooperation lie in the "fact-finding mission" to the U.S.S.R. during 1989. Next field of "environmental protection and improvement on the January, the Lucis Trust-linked Temple of Understanding is planetary scale." holding a major international gathering of "world political The way this subject is packaged to the public hides the and spiritual" leaders in Moscow. true goals of its architects . On the face of it, the proposals for On the Soviet side, Gorbachov's survival may be tied up East-West cooperation seem innocuous, if not attractive, since indirectly with the New Age issue. As Lyndon LaRouche "protecting the environment" can mean almost anything, in­ stated in a Feb. 7 discussion ""ith the EIR Strategic Alen, cluding things which are obviously necessary. However, as some elements of the Soviet Nomenklatura are "less Satanist used by this crowd, the term "East-West cooperation on than others." Gorbachov, his wife Raisa, and their clique are environmental protection" is a cover for setting up the infra­ all part of the Satanist New Age, LaRouche noted, as was the structure for a new globalist order for destroying all national late KGB leader and Soviet President Yuri Andropov. Poten­ sovereignties, for unleashing Satanist and pagan "Mother tially, some factions in the Soviet Union may find Gorba­ Earth" and "Mother Russia" cults around the world, and for chov's deals with the New Age factions in the West intoler­ committing genocide against the developing world. able, for reasons outlined in an earlier LaRouche writing, The added complexity is that for the Soviets, cultivating entitled "Soviet Pseudo-Science: Could Cause World War III" "ecologists" and paganists in the West, both helps weaken (see EIR , Jan. 27, 1989). There, LaRouche stressed that the West, and strengthens the pro-Russian cultural "fifth col­ Soviet support for malthusianism, even if it is intended to umn" of believers in such Russian-originated New Age wreck the West, is only going' to speed up the process of movements as Theosophy. disintegration of the Soviets' own economy.

34 International EIR February 17, 1989 For the West, even at this late hour, if some of the more at the same time! traditional and patriotic layers begin to wake up to the mag­ A similar argument was put forward by Donna Fitzpa­ nitude of the Satanist monstrosity coming into being, at a trick, undersecretary of the Department of Energy , during a time of growing economic chaos and crisis, that could bring speech at the American Public PO'fler Association in Wash­ about a rallying behind a policy of dumping the New Age ington Feb. 6. She said: "Energy use, per capita energy use project, and of reviving the commitment to industrial and is essential and at the very heart of any opportunity to increase scientificprog ress. the standard of living, to increase economic growth. No industrialized society has been able to raise its standard of 'One world tyranny' living and advance technologically without rapidly increas­ At least since Gorbachov's Dec. 7 speech, however, the ing its per capita energy consumption ....The developing momentum is rapidly going in the opposite direction. He has countries are down close to the bottom. That means that if received positive feedback both from the British liberal es­ they have any hope of increasing theirtechnological condi­ tablishment and from the Socialist International. • In its tion, they are going to have to move rapidly up the per capita December 1988 edition, the newsletter Confidential Early energy consumption curve, and there is no way they can do Warning, edited by the "conservative anti-Communist" Rob­ that in an environmentally acceptable way and an economi­ ert Moss of Great Britain, called for putting aside talk of the cally achievable way for them unless they very much change Cold War, stating, "It is no longer in the political interest to the approach that they're taking to energy sources. They beat the Cold War drum too heavily." Rather, there should cannot continue to bum down their forests, they cannot con­ be focus on "environmental matters on a global scale," as tinue to spend about half of their valuable foreign credits just essential to "maintain Earth's life-support system," to create to import fossil fuels, as they tend to do today." "a new attitude to resource use and a new concept of the By contrast, Ramphal, during a BBC radio interview preferred life." . On Jan. 8, the U.S. and Soviets formed an Feb. 5, stated bluntly that the consensus of the Brundtland "Interacademy Committee on Global Ecology," between the Commission was to findmeans to stop nuclear energy usage U.S. and Soviet Academies of Science . • On Jan. 15, the in the Third World, and to develop such technologies as London-based Federal Trust for Education and Research is­ "solar, wind, and tide." sued a new report calling for "common security" arrange­ Sometimes, more honest lunatics say the truth , about ments with the East, toward creating a "one world govern­ what the sophisticates of the Brundtland group like to hide. ment." . On Jan. 24, Sir Shridath "Sonny" Ramphal, Sec­ In the Jerusalem Post Jan. 20, KGB-linked Soviet-emigre retary General of the Commonwealth, gave a speech at Cam­ writer Mikhail Agursky . called for expanding past years' bridge University, which was excerpted in the Times of Lon­ American-Israeli collaboration, to include the Soviets, so as don. under the title, "A Global Green Agenda." Ramphal is to create a global ' powerhouse that could have a "lasting on the Brundtland Commission, headed by Norway's So­ confrontation with the world of high fertility." cialist Premier Gro Harlem Brundtland, officially known as Meanwhile, one singularity in the process of East-West the World Commission on Environment and Development. fascist ecologism is the surfacing of "ecological terrorism." • On Jan. 25, Mrs . Brundtland herself was the keynote In the United States, a group called Earth First burned down speaker at this year's Davos, Switzerland "World Economic a livestock agribusiness complex in California Jan. 29. A Forum." She called for a world economic summit to discuss member of the group claimed responsibility for the action, both the economy and environmental issues, in the context declaring the livestock industry of "causing irreparable dam­ of a new era of East-West cooperation. age to the environment." Earth First is a pagan group that reveres the teachings on "deep ecology" of Arne Naess, a The fraud of 'sustainable development' Norwegian who seeks to reduce the world's population to The Brundtland Commission has found a way to brain­ between 100million and 1 billion people. Naess is part of a wash large numbers of people into believing that it cares for circle of Norwegian Gnostics who have begun working more the future of the human race, through use of a phrase that it closely with the Soviet-run World Peace Council and the repeats with liturgical obsessiveness: "sustainable develop­ Soviet Peace Committee. The latter is headed by Genrikh ment." The term conveys the idea that mankind, somehow, Borovikh, who is the brother-in-law of Gen. Vladimir has defined upper limits of capability for development and Kryuchkov, the head of the KGB. In July 1988, a meeting that, if they are exceeded, the Earth and biosphere will some­ was held near Oslo, Norway, involving the Borovikh clique how come apart at the seams. from the U.S.S.R. and various supporters of the Bruntland Lyndon LaRouche, in his book There Are No Limits to Commission, including co-thinkers of Naess. Growth. has proven that there is no such concept as "sustain­ During that same month of July, -Kryuchkov was making ability," or its equivalent, "carryingcapacity ." Through in­ a speech within the U.S.S.R., to functionaries in the Soviet vention of new technologies capable of being brought rapidly foreign diplomatic service, stressing the importance of Soviet on line, the Earth could "sustain" way beyond its current 5 cultivation of "green"movements in the West as a priority of billion population level-and become environmentally safer Soviet foreign policy aims.

EIR February 17, 1989 International 35 Outcry on LaRouche case continues

BONN: Above, all-night vigil in the capital city of the Federal Republic of Germany, on the eve of the Jan . 27 sentencing of Lyndon H. LaRouche and six associates to outrageously long prison terms in Alexandria, Virginia. The banner reads, "Rescue the Freedom of the West, Justice fo r LaRouche." Below, Helga Zepp­ LaRouche (in light colored coat) visits Andreas Ranke-Heinemann during his firstprotest action, when he chained himselfto the church opposite the Beethoven monument. The sign next to Ranke reads, "Freedom fo r LaRouche" and the banner held by two others, "Appeal to President Bush: "Justice fo r LaRouche." On Feb. 7, Mr. Ranke began a hunger strike (see article, opposite).

MEXICO: Marchers demand "Death to the Narcotics Traffic, " "Down with Russian dictatorship" and "Freedom fo r LaRouche" at a Jan . 12 mass rally in Mexico City. On Jan. 19, Marivilia Carrasco, secretary of the Mexico Labor Party, led protestors befo re the U.S. Embassy: "We are here to make it clear that ifanything happens to LaRouche, the United States will never regain the trust of the governments and peoples who were once its fr iends. 1f they jail LaRouche, the fu ry of our peoples will . . . flare up as an implacable flame. " Other rallies demanding justice fo r LaRouche and his associates have been staged in front of the U.S. consulates in Baja California, Sonora, Nuevo Leon, and Jalisco. On Feb. 1 Oscar Mauro RamIrez, leader of the PARM party caucus in the Mexican Congress, denounced the political jailing of LaRouche to the Permanent Commission of Congress. Hunger strike to free LaRouche shakes Germany

by John Sigerson

Andreas Ranke, the grandson of Gustav Heinemann, the first President of the Federal Republic of Germany, on Feb . 7 began what he called an "open-ended" hunger strike, in order to dramatize his demand that Lyndon LaRouche and six associates be immediately released from federal prison, where they have been sitting since Jan. 27, following a political frameup and show-trial in Alexandria, Virginia. This action by a young man from one of Germany's leading families has sent shockwaves through the political system, helping to break what had hitherto been a general­ ized press blackout in Europe on the LaRouche jailing. Ranke is the son of Uta Ranke Heinemann, a left-wing WASHINGTON: Demonstrators fr om the U.S. Midwest and Eastern seaboard march befo re the White House on Feb. 9, during Catholic theologian and fe minist; he is also the nephew of a week-long lobbying campaign to fo rce Congress to investigate the Polish Cardinal Josef Glemp. trial and sentencing of fo rmer presidential candidate LaRouche, to In a statement which received wide coverage in Europe halt fa rm fo reclosures, and to stop shipping wheat to Russia. through the leading German daily Die Welt, the 28-year-old Banner reads, "Pardon LaRouche, KGB Will Kill Him in Jail." law student declared, "I grew up in a politically engaged, See Congressional Closeup fo r details on the lobbying. pro-American family, which always maintained a critical standpoint. The sentencing and imprisonment of my political friend Lyndon LaRouche, carried out by trampling on jus­ tice, has deeply shattered my respect for the United States of America as a democratic nation. Apparently, for Lyndon LaRouche's political enemies, his years-long battle for a new , just world economic order and his indefatigable com­ mitment to the rights of the underdeveloped sector, were thorns in their side." Die Welt's article is remarkable, given the policy of the German media to give no coverage whatsoever to LaRouche, apart from an occasional nasty libel. Ranke has stationed himself in a van in the West German capital Bonn, directly outside the office of the federal chan­ cellor. He has vowed to remain there, despite the efforts of local authorities to come up with some pretext to remove his

PARIS: A huge banner reading "LaRouche Affair, Dreyfu s Affair" van from its location. is unfurled befo re the Opera in late January. (The wrongful Ranke likened the proceedings against LaRouche to "the conviction of Col. Alfred DreyfUS, framed up on espionage charges ugliest images from the period of political trials before the in 1894 , was the most notorious case of politically-motivated 'People's Court' of Roland Freisler," the Nazi hanging­ injustice in modern France.) On Jan. 31, at a press conference in judge. Paris, statements protesting the trial and sentencing of LaRouche were released from Resistance leader Marie-Madeleine Fourcade, attorney Jean-Marc Varaut, and American civil rights leader Hunger strike in Boston Amelia Robinson. Varaut called the justice meted to LaRouche "a Meanwhile, as Ranke's hunger strike entered its third river of mud. " On Feb. 6, an authoritative legal analysis published day, in Boston, Massachusetts, William Ferguson, another in Le Monde stated that in France, even ifconvicted, LaRouche would never have been jailed fo r the acts he was accused of. International 37 friend and supporter of LaRouche, was in the eighth day of and published as paid advertisements in the Washington Post a hunger strike which began on Feb. 3. In a statement and the Washington Times. The Feb . 5 Hadashot article was released at the start of his strike, Ferguson, a resident of entitled, "Helga Zepp-LaRouche: Anglo-Americans to Kill Quincy, Mass., said that he has been working closely with Lyndon H. LaRouche"; it reports Mrs. LaRouche's warning LaRouche's political movement since 1981, when he was that if the Anglo-American Establishment follows through attracted to LaRouche and his friends because of "their com­ its commitment to eliminate her husband "at any cost," mitment to the application and advancement of that which then "the United States as a nation is doomed to certain Plato described as 'my dialectical method' in the fields of destruction ....A nation which treats its greatest sons, such philosophy, art, science, and statecraft." Since that time, as Martin Luther King, John F. Kennedy, and now Lyndon Ferguson continued, he has advocated those principles as a LaRouche, in such a way, brings its own punishment upon candidate for Boston School Committee and Massachusetts itself. There is a higher agency of justice than the 'rocket State Legislature, and has been put in jail in Mainz and in docket court' in Alexandria, which boasts of its 'short trials'; Munich, West Germany, for the crime of handing out politi­ it is that higher court, which will do the judging." cal leaflets. Mrs. LaRouche also reported that the Commission to "I have been called 'Nazi,' 'fascist,' 'anti-Semite,' 'rac­ Investigate Human Rights Violations is going to "insist on ist,' (I am African-American), 'cult member,' 'brain­ getting an answer" to the question of "whether President washed,' 'Moonie,' 'communist,' 'socialist,' 'right-wing Bush backs this verdict of infamy, or not." nut-case,' and 'CIA,' because of my affiliation with 'politi­ Shortly afterwards, that Commission announced its in­ cal extremist' Lyndon LaRouche," Ferguson said. "In real­ tention of holding the second International Martin Luther ity, the closest I come to any of these labels is 'registered King Tribunal in Washington, D.C. on Feb. 25-26, follow­ Democrat.' You can't please everybody." Ferguson warned ing up on the first tribunal which was held in Rome, Italy that the U.S. EasternEstablishment will resort to assassina­ on Jan. 19. In a call issued Feb . 9, the Commission said tion of LaRouche, unless individual citizens demand justice that it will focus on the LaRouche case, because "civil for LaRouche and his associates. "I am here to remind you, libertarians and civil rights leaders alike have characterized that if this situation is not rectified, then no one in this this case as the greatest travesty of justice since the time of country, who opposes Bush's austerity policies, or Mos­ Martin Luther King." cow's plan for a global empire , will be safe from the Justice Department's stormtroopers ." LaRouche refuses to be silenced From his post at Harvard Square in Cambridge-several LaRouche's imprisonment has not succeeded in silencing hundred yards from the spot where Gen. George Washington him; quite the contrary, fromhis ja il cell he has been inter­ took command of the Continental Army on July 3, 1775- viewed by dozens of journalists from around the world, Ferguson has been receiving letters from Boston residents including many radio talk-shows in the United States. addressed to LaRouche, expressing outrage at the Alexandria In just one example, the leading Venezuelan daily El verdict and support for LaRouche's demands for economic Nacional, which has recently been running a seriesof articles justice. His strength permitting, Ferguson has also been attacking LaRouche's Venezuelan friends, on Feb. 8 fea­ giving classes on the significance of negative curvature in tured a lengthy interview with LaRouche himself. "If I were Filippo Brunelleschi's construction of the dome ofthe cathe­ free right now," LaRouche told the paper, "I would be dral in Florence, Italy. talking with the President of Venezuela [Carlos Andres Perez] or his government, with whom I have had some International pUblicity disagreements in the past but with whom we currently have Many observers, including some of the reporters who convergences . . . for example, regarding the foreign debt." have interviewed LaRouche by telephone from the Alexan­ The newspaper describesLaRouche as "a controversial econ­ dria Detention Center, are wondering if the sentencing of omist who has dedicated his life and goods to a crusade LaRouche portends the way that the new Bush administration against U.S. and Soviet imperialism, which, he says, threat­ is going to be dealing with other opponents of the "I love ens to destroy humanity through drugs." Gorbachov" frenzy currently prevailing in the corridors of And in Europe, the Catalan-language Spanish newspaper power in Washington and London. Avui ran an interview with LaRouche on Feb. 6. "LaRouche, On Feb. 7, the French daily Le Monde noted that even in statements to Avui," the paper wrote, "said that he has if LaRouche were indeed guilty of the crimes for which he been sent to jail 'because the liberal Establishment of the was sentenced, in France he could never have been put in U.S.A. and Great Britain, has carriedout Moscow's demand jail, because questions of debt-repayment are a strictly civil, to eliminate me from the political scene ..... According to and not a criminal matter. Mr. LaRouche, it is because of his increasing influence, that In Israel, the daily Hadashot prominently reported an the campaign against him built up precisely during the power appeal issued by LaRouche's wife, Helga Zepp-LaRouche, vacuum between the Reagan and Bush administrations."

38 International EIR February 17, 1989 sonal view that drugs are a priority problem of national se­ curity, much of the credit for keeping the anti-drug fightin the public eye must go to the Youth Congress (I) and its active Anti-Narcotics Cell, led by Haroon Yusuf. The Youth Congress has kept the drug issue las a top priority for the India accelerates ruling party and as a visible national campaign, even as other sections of the party buried themselves in factional in-fight­ anti-drug effort ing and other petty politicking. Over the past year, Yusuf led a national campaign, targeting campuses and urban popula­ by Susan Maitra tions, demanding the death penalty for drug traffickers and organizing local awareness and activity to take on the prob­ The new year has stated off with a bang, so to speak, for lem. India's anti-drug fighters. In the first two weeks of January, One outcome of that campaign was the government's the Border Security Force seized a total of 420 kg of heroin introduction of the Narcotic Drugs and Psychotropic Sub­ from smugglers coming across the border from Pakistan into stances (Amendment) Bill of 1988 into Parliament, and its Punjab state. That is already double the monthly average for passage on Dec. 16. The death penalty for second offenders heroin seizures in 1988. In the view of some, this represents in narcotics cases is only one of the major new provisions in "panic dispatches" on the part of Pakistani-based traffickers the NDPSA Amendment. The law also states that narcotics anxious to cash in before the new Bhutto government in offenders are strictly held without bail, and that there is no Islamabad begins to implement its promised crackdown on remission of sentences in narcotics cases. the narcotics traffic. But the prospect of collaboration with Pakistan to run Closing the loopholes Dope, Inc. out of the subcontinent is only one factor giving The new law also provides for a system of special courts a boost of optimism to the anti-drug effort here in India. Late to try narcotics cases, a move which will remove a significant last year, an incident in a Bombay court set a precedent for bottleneck. As the statistics show, less than half of those the toughening attitude toward the drug menace. Four indi­ arrested were brought to trial in 1987-88 (see Table 1). A viduals were arrested with several kilograms of heroin. Three survey in New Delhi in mid- 1988 showed that from Novem­ were granted bail, and for some apparently bureaucratic rea­ ber 1985, when NDPSA went into effect, through May 1988, son, the fourth was not. When the last took his plea for bail some 4,931 cases were reported. Of these, 4,222 were heard. to a higher court, the judge not only denied it, but revoked Of these, only 932 cases were decided, and of that, fully 734 the bail for his three cohorts . "This does not just involve a resulted in acquittal. The point is: Fully 3,290 cases were murder, this involves mass murder," the judge told the court pending, and in three years and more than 4,000 cases, there and the nation. were only 195 convictions. In an interview with this correspondent in December, officials of the Narcotics Control Board (NCB), India's na­ tional anti-drug unit, emphasized the significanceof this break from the pattern of arbitrariness and leniency on the part of TABLE 1 the judiciary that has bogged down anti-drug enforcement A statistical profile of India' s anti-drug effort efforts over the past three years , since India's archaic narcot­ Seizures (kg) ics laws were radically overhauled in 1985. Further encour­ 1985 1986 1987 1988· agement followed, with decisions against granting bail to several narco kingpins operating internationally, who were Opium 8,789 2,929 2,718 cornered and arrested in a major NCB operation at the end of Heroin 761 2,621 2,747 2,613 the year. Marijuana (ganja) 66,314 60,618 53,920 32,291 Hashish 18,909 14,796 14,242 A political campaign Cocaine 26 5 77** This toughening stance toward the drug menace coincides Methaqualone 1,485 1,500 1,250 with the steady worsening of the drug problem in the country Legal action and with a critical view developing in enforcement and other Total arrests 2,018 1,729 circles as to the loopholes and inadequacies of the 1985 Foreigners 280 131 Narcotics Drugs and Psychotropic Substances Act (NDPSA). Convictions 247 212 The new attitude was given teeth during the winter session in Acquittals 541 228 Parliament, with passage of an amendment to the Act which "As of Oct. 31 tightens up enforcement by several orders of magnitude. ""Of this, 14 kg remains to be positively identified as cocaine. Apart from Prime Minister Rajiv Gandhi's known per- Source: Narcotics Control Board, Government of India.

EIR February 17, 1989 International 39 Another major enforcement loophole has been closed a ton of heroin annually to the United States. A month earlier, with a unique provision for pre-trial disposal of seized drugs. a Delhi-based network smuggling heroin from Pakistan to Since, under the law, the drug peddler has to be caught red­ the Netherlands, United Kingdom, and United States was handed, seized drugs were routinely kept as critical evi­ taken apart. dence-and just as routinely reentered the contraband mar­ As in other cases, these milestones also reflected the ket. Under the new law, on arrest, seized material is pre­ sented to a magistrate together with the accused, and full details of the material are recorded, photographed, etc. The trial court is compelled by the law to accept this record as "primary evidence," and the drugs are to be immediately destroyed. The other major new provision is for confiscation of as­ sets of drug traffickers and their accomplices. Significantly, the real estate and financial management support network for the drug traffichas been made specificallyliable . "To provide for the forfeiture of property derived from, or used in, illicit traffic in narcotic drugs and psychotropic substances, to im­ plement the provisions of the International Convention on i. Narcotic Drugs and Psychotropic Substances," is the way the �Them uch-ballyhOoedFe b. �-5 visit to Paki stanby Soviet i law now reads. " Foreign Minister Eduard Shevardnadze.th e highest-level "Illicit traffic" is further defined as including, beyond Soviet official to trisit Pakis�an since Aleksei Kosygin in growing or handling of illegal substances, the "handling or o the late 1960s, to. "work out an acceptabl e solution" on letting out any premises" for carrying out those activities, as Ngbanistanfel l �at on jts 1'0:' Pakistan Prime Minister well as "financing, directly or indirectly" any such activities, 'BenazirB hutto , refe rringto �oscow's cont inuing pledge "abetting or conspiring in the furtherance ofor in support of' of support to the Kabul re gi me, said bl untly at a pre ss ..• .. those activities, or "harboring persons engaged" in them. . y try to stay ou t, yet cOofere�.ce, "Wh� sh.ould thf. stay!� The confiscationof assets and forfeiture of property pro­ by shonng up the regupe?" I, . .... ' visions have a wide scope. They apply to anyone convicted Thefac t is that the Sovi,t withdrawal fro m ,f\fghan i­ under the NDPSA in India, or anyone convicted under similar sta n, to be completed before lFeb. 15, is conceivedby the . as a .. . hat . not ... laws outside of India, to those in detention under the new ke mlin tactical ploy. T the so. viets dO . have "preventive detention" law for suspected narco kingpins and any . intention of washing thdir bloody hands. of . Afgh. ani- co-conspirators . Enacted six months ago, 204individuals are staJ,) becarne evident when Sl)evardnad ze,piq ued by Mrs. now in custody under its provisions. Significantly, the con­ Bhutto's firmness, warned,bf ne w complication s hap­ fiscation of assets and property provisions also apply to rel­ peri, if there is coptinued figp,ting, the Soviet Union h� atives or associates of those individuals as well as any holder obligations to that country ." Afghanistan.But carefuln ot of property previously held by them. 'to sb(lw his hand in full, S�evardnadze quickly added , Under the new law, authorities are empowered to inves­ "We are !lOt thinking of an Soviet reentry to Afghani­ tigate any and all assets acquired going back six years before stan . ';"t the offense, and, importantly, the burden of proof lies with Shevardnadze 's visit to Pfk istanat thisla te)tOU �1 wi� the offender and his associates, to prove that the properties 'nine days remaining before Jhe last Soviet troo ps are to were acquired lawfully and not with dope money. leave AfghanistJn, was to �twist into submission the 35-year-oldpri me minister of Paki stan.But he .found that A powerful tool be1was making eth sante mfstaketha t India's' C(lngfess The amended anti-drug law is a powerful tool in the hands Party politicalbarons had Wir th e late Mrs. Ind ira Gandhi of the Narcotics Control Board . With a staff of 164-includ­ when she assumed the pr ime ministry of Ind ia in 1966 ing a mere 80-odd enforcement officers of its own-and fo llowing the de ath of Prim'1Minister Lal Babadur Shas­ centers in Bombay, Madras, Calcutta, Varanasi, and Delhi, tri. At that time , Mrs . Gai'ldhi, known chiefly as the NCB coordinates anti-drug activities across the country, op­ daughter of Jawabarlal Netto. ,seemed to the Congress erating through the whole spectrum of police and enforce­ heavyweights to be" easy pic�ings." However, they fou nd ment agencies. Despite its fledglingstatus-it began work in out soon enough theirmi stak!� and fade d into obliv io n. February 1987-and a persistent shortage of funds , the NCB Itis that kind of illusion thatbro ught Shevardnadze tQ has made real gains. Islamabad . Earl ier, Soviet Qeputy Foreign Minister and Last fall, NCB chalked up a string of successes, including Ambassador to Kabul Yuli VOfo nts ov had triedthe u su sal the arrest in October of Gurbux "Sam" Bhiryani, the elusive, carrot-and-stic k appro ac h with Mrs. Bhutto, withqut any Bombay-based kingpin of a syndicate that was shipping over

40 International EIR February 17, 1989 growing efficiency of international cooperation in the anti­ tance to the NCB-the information collaboration with en­ drug fight. NCB officials told this writer that while foreign forcement agencies of other countries has been very good assistance per se to the anti-drug effort was negligible-the and useful. Key embassies now have designated anti-drug United Nations Front for Drug Abuse Control has just begun liaisons in New Delhi. the first of two projects here, involving $7.5 million assis- Otherwise, NCB has been concentrating on building up

r.-�______� ______�______�______�

noticeable effe ct. From the outset, Sbevardnadze put up nants in Pakistanwere activated to supportthe Soviet line . the "strongman" fa� ad e and reiterated th e old stand with Chief Bizenjo of a Baluchi clan and President of the Pak­ force and verve, expecting Mrs. Bhutto to succumb. He istan National Party, held a press

EIR February 17, 1989 International 41 the infrastructure necessary to extend the writ of the tough new laws to every comer of the country. This means training and equipping police and others, thus building up a special­ ized anti-narcotics capability in the various military and en­ forcement branches. It means establishing laboratories for testing drugs in different regions of the country . Pedophiles arrested Very recently, the development and production indige­ nously of a simple "field kit" for drug enforcement officers was announced. The kits, being produced for the equivalent 'more powerful than of $100 each, contain a set of reagents, a small testing tray, and a few droppers to allow on-the-spot testing for about by Mark Burdman eight of the most common narcotics. Previously such a kit was available in only limited quantities from the U.N., or could be purchased from Czechoslovakia for the equivalent On Feb. 2, in London's Old Bailey court, four men were of $1,000 each. convicted for running a ring of pedophiles-adults who sex­ ually use children-which had recruited at least 150 young Formidable task boys, some as young as nine, for repeated sodomic abuse. It Though India's response has been timely to the virtual is the biggest ring of pedophiles yet uncovered in Britain. invasion of Dope, Inc . in the wake of the Soviet invasion of British newspapers Feb. 3 said it had been run as a "Mafia­ Afghanistan and fundamentalisttakeover in Iran, the job of like conspiracy." One man arrested was too frightened to putting the narco-traffickers on the defensive in the subcon­ testify,declaring that the ring was "more powerful than the tinent is formidable by any standard. From 1980, when not a Mafia." single case of dope peddling was registered, the traffic soared. According to experts on child abuse in Britain, this case In 1985, when India emerged as the number-one source of is only the beginning. Interviewed on British television Feb. heroin to Europe in Interpolrecor ds, the Indian government 3, Dianne Core, head of the Childwatch organization, stated drafted sweeping new anti-narcotics laws. But as current that "people in high places" were involved in pedophiliac statistics indicate, the trend has yet to be reversed. activities, and that the whole matter would "explode" during The biggest problem, say NCB officials, is on the bor­ the coming months. The London Daily Telegraph's crime ders . Ninety percent of the seized drugs are positively iden­ correspondent reported Feb. 3: "Despite the convictions, po­ tified as coming from Pakistan, the principal conduit for lice believe there is still a flourishing pedophile network in drugs grown in Afghanistan. NCB officials state their con­ Britain, with a sophistication said to resemble the Mafia." viction that the Northeast must also be a major transit area The most prominent figurein the ring, Colin Peters, was for drugs coming from the Golden Triangle, but say that so trained at Oxford, and was formerly a senior adviser in the far they haven't been able to get the evidence. British Foreign Office. Following his Foreign Office work, All big seizures are on the export side, at airports mostly, he prosecuted cases for the British Customs and Excise. as the drugs are being shipped out to the West, officials Investigators working on the case had interrogated at least explain. These seizures have turned up "white heroin," the one senior member of the House of Lords, one vicar in West famous 98% pure type from Burma, but it isn't being caught London, and officials in Whitehall, "but the police did not when it comes into India. It is "common knowledge" that have sufficientevidence or manpower to pursue their suspi­ sections of the military who enjoy political protection are cions," the Telegraph reported. involved. Alan Delaney, the official head of the ring, is a cleaning Although the issue of illegal poppy cultivation and "leak­ company director. Delaney would procure young boys for age" from the government's legal opium production program pedophiles, by putting job advertisements in the press. The has surfaced repeatedly over the years-and sophisticated ring would also procure boys who were members of a junior heroin-refining labs have been discovered in the interior as soccer team. Many of the youngsters had been at special well as Bombay-NCB officials maintain that this is not a boarding schools for educationally below-normal children. significantpro blem, at least not yet. In 1988, some 50 acres Others were runaways, who were caught up by members of of illicit poppy cultivation and 623 acres of marijuana were the Delaney-Peters ring, who would roam" the streets of Lon­ destroyed by the NCB . But officials say they have not found don scouting for boys. evidence of marketing contacts from the cities plugging the According to the Feb. 3 Telegraph account, the young small isolated poppy cultivators-limited to several hundred boys were "passed aroundits members for sexual degradation acres in the hills of Uttar Pradesh, they say-into national, and, when the attraction faded, abandoned to a life of pros­ much less international, operations, or broader smuggling titution, drugs, and petty crime ....The boys were tempted rackets-in which gold invariably plays a major role. off the unfamiliar London streets with promises of food,

42 International EIR February 17, 1989 cent case, in Trieste, Italy, involving one Alessandro Mon­ cini, a businessman nabbed by law enforcement in the United States and convicted in 1988 for importing child pornography (although he received a paltry one-year sentence and was released "on good behavior" after serving less than three in Britain: months in jail). Investigators in Trieste working on the Mon­ cini case have recently been to the United States, attempting to accumulate more information on what they believe to bea the Mafia' "most exclusive ring of international pedophiles." Informed sources in Britain believe that the Delaney­ Peters ring and the Moncini-linked networks are connected, and that both are part of an international pedophile conspir­ acy. U. S. law enforcement officials have in their possession accommodation, money, and a sympathetic ear. Some were tapes of Moncini attempting to procure a young girl, for plied with drugs, including cocaine, and sexually assaulted Satanic-ritual abuse purposes. Experts on ritual abuse stress while under their influence." that pedophile rings, as horrifying as they are in and of them­ When he was brought before presiding Judge Pownall for selves, are actually fronts for, or extensions of, hard-core sentencing Feb. 3, Colin Peters was told: "On your own Satanist cults, for whom the pedophiles provide young boys. admission, you found boys to satisfy your lust. You were In Britain, however, the Home Office has repeatedly prepared to encourage them to drugs or to lace their drinks­ indicated its opposition to allowing the matter of satanism to and you have made matters worse by trying to get witnesses be pursued by police and in the courts. Should this attitude not to attend court. You did that to save your own skin. That continue, it will be impossible to crack the command-struc­ was disgraceful. You of all people should have known that." ture controlling powerful pedophile rings.

'A pernnanent conspiracy' Investigative leads British deputy police superintendent John Lewis, who Experts in pedophilia and Satanism report to EIR , that oversaw the investigations, is calling on Scotland Yard to that the dossiers on previously publicized cases of European­ create a special squad to deal with pedophile rings. Lewis based pedophile rings have never been fully closed, and may declared Feb. 2 that "these people are as organized and so­ now be reopened. These involve pedophile rings that were phisticated as any other criminals, and are involved in a either cracked or exposed in the 1986-87 period. Three of permanent conspiracy which is renewed daily as they hunt them are worth noting: for new boys. They need to be targeted like bank robbers. It • On June 18, 1987, the head of the Belgian national is important that we should not feel complacent. Positive office of UNICEF was arrested for involvement in a large­ policing should be continued." scale child pornography and pedophilia ring. Ring leader British police investigators were reportedly angered by Jozef Verbeeck had used his influential position in UNICEF the light sentence meted out to Peters, Delaney, and their two to procure children, often from broken homes, some as young collaborators. The four received, in total, only 34 years of as eight months old, for some 400 wealthy clients across sentences. Peters received only 8 years, for combined charges Europe. The basement of UNICEF in Brussels was used to of conspiracy to commit buggery (sodomy), buggery and store pornographic pictures of children. conspiracy to pervertthe course ofju stice. Delaney was jailed • In spring-summer 1987, Dutch authorities uncovered for 11 years, on conspiracy to commit buggery, indecent one of the worst cases of collective child sex abuse in record­ assault, taking indecent photographs, indecency with a child, ed history. In a small town called Oode Pekala, during the and attempted buggery. One of the four was given only 6 Easter holidays, a gang of pedophiles, dressed as clowns, years. lured more than 70 children into taking part in pornographic A senior British police officertold the Daily Express Feb. movies. 4: "It should have been more. The damage these people have • On Aug. 3, 1986, the Sunday Times of London "In­ done to young lives is very severe." In an editorial entitled, sight Team" exposed the activities of a secretive organization "Is This Justice?" the Express Feb. 4 called the sentences called the Spartacus Club, based near Amsterdam in Holland, "woefully inadequate . . . weighed against the enormity of which sent pedophile literature to 25 ,000 subscribers in Great their crimes and the emotional and physical damage they did Britain, and which specialized in procuring boys from the to their victims, some of whom were only nine years old." Philippines for pedophile activity. Headed by one John Stam­ ford , the club was part of Spartacus International, which Moncini and the Satanist track published homosexual literature and the Paedo Alert News, The London case has refocused attention on another re- "a magazine about boy love."

EIR February 17, 1989 International 43 pealed to parents to keep their children away from concerts of The Shamen. According to a review in the London Independent Jan. Rock group pushes 27, the group combines 1960s "psychedelicisms" with the music popular in the "Acid House" movement of the U.K., drugs and Gorbachov which grew up in the mid- 1980s around the use of hallucin­ ogenic drugs. The album contains "blatant propaganda for by Mark Burdman drugs." One song has a chorus, "M-D-M-A-Zing," identified by the Independent as a "pun on the chemical abbreviation of the drug Ecstasy." "Ecstasy" is a particularly dangerous blend Are Satanic rock-music groups really Soviet cultural spetsnaz of PCP and "crack" that has become the hottest fad in the agents , deployed to destroy the West? rock/drug counterculture and the jet-set. Judging from the activities of the British rock group "The Reviewer Andy Gill stresses that the group is "for" Gor­ Shamen," that would seem to be the case. The Shamen push bachov, but against both Jesus Christ and the United States. drugs, attack Jesus Christ and organized religion, hate the Their best-selling song, "Jesus Is a Lie," is described by Gill United States, and revere Soviet leader Mikhail Gorbachov. as a "cheeky riposte" to the "Jesus is alive" campaign of Their new album release is entitled, "In Gorbachov We Trust." Christian religious organizations. The cover of the album shows the Soviet leader with a crown The case of The Shamen is not an isolated phenomenon. of thorns on his head. The company that released the album A number of rock groups are planning to visit the Soviet is called Demon Records. The album was released with the Union in March, for a big "peace and perestroika" concert, number, "Fiend 666," a reference to the number accorded officially patronized by Gorbachov's wife Raisa. Satan in the Apocalypse. One participant in that scheduled event, Beatles guitarist The release of "In Gorbachov We Trust" early this year Paul McCartney, has released an album for circulation in the coincides with a growing trend among spokesmen for the U.S.S.R. only, with the title, "Back in the U.S.S.R." Mc­ "New Age" Satanist movement to publicly idolize Gorba­ Cartney has also taken part in a call-in show of the Russian chov as a New Age "pathfinder," as is stated in the November Language Service ofthe BBC, in which callers phone in from 1988 edition of the German publication 2000: Magazine fo r the U.S.S.R. He is the only person outside of British Prime New Consciousness. Whether Gorbachov personally sur­ Minister Margaret Thatcher to have been accorded this du­ vives in power or not, these Aquarians believe, as 2000 bious distinction. magazine claims, that "from Russia, comes the hope of the The Beatles, who came from Liverpool, were the group world." around whom the satanic drug-rock scene was really launched, The Shamen' s managers have been concretizing plans for especially with their mid- 1 960s "Sergeant Pepper" album. concert tours to East Germany (in late March-April), the Beatles leader John Lennon boasted that the group was "more Soviet Union (at some point between late April and early popular than Jesus Christ. " June), and Poland (no details finalized). It is also planning a Liverp

44 International EIR February 17, 1989 British Tr ilaterals and Luciferians push for 'one world government' by Mark Burdman

A report released in London in mid-January reveals the extent "Albion" in a coordinating role in the next phases of East­ to which the British liberal Establishment has openly em­ West and global relations. This would mean, at some point, braced the international pagan "New Age" movement, in an for Britain to drop its official opposition to the "Europe 1992" effort to pull off a global deal with the Soviet Union that plan for the corporatist restructuring of Europe and for Britain would be the stepping-stone toward what the report's authors to become the guiding force in European Community policy. call a "one world government." That is not explicitly stated, but the idea has been promoted Entitled "A Step Beyond Fear: Building a European Se­ by one contributor to the report in a background discussion. curity Community," the report issued by the Federal Trust The authors welcome the potential achievement of "defense for Education and Research received a flurry of publicity in integration in Western Europe" by 1992, after which "secu­ the British liberal press Jan. 16. The chairman of the study rity policy and a joint policy toward the East should form part group which worked over an 18-month period to prepare "A of European Union." This should be followed, or joined, by Step Beyond Fear" is Sir Michael Palliser, chairman of the a menu of "political and economic links with Eastern Eu­ British branch of the Trilateral Commission. Among those rope ," including exploring possibilities for "collaboration working under Palliser's coordination, is the curious Briga­ and greater convertibility between the European Monetary dier Michael Harbottle, an operative closely linked both to System and the Transferable Ruble Zone"; the unfolding of the Russians, and to the London-Geneva-New York-based a "special relationship" with the Soviet Union equal to the Lucis (formerly Lucifer) Trust, the umbrella organization for special relationship with the United States (as the U.S., of "New Age" and "ecology" groups around the world. course, progressively disengages from Europe); and the link­ The report's release coincided with meetings in Moscow age of the U.S.S.R. in some form of "associated" status with between Soviet leader Gorbachov and a Trilateral Commis­ the European Community. sion delegation headed by Henry Kissinger and David Rock­ But all of this is purely transitional, toward reaching an efeller, meetings given flattering coveragein the Soviet press effective "world system," and, eventually, a "one world gov­ Jan. 19. In his preface to "A Step Beyond Fear," Palliser ernment," in which the EC would have a unique global role returns the compliment: "Changes in Soviet attitudes coin­ to play. cide with the advent to power in the U.S.S.R. of Mikhail Gorbachov and the extraordinary fascination he exerts on 'World order Mark III' East and West alike." Of the policy guidelines and proposals put forward at the end ofthe report, the last two, concerningthe United Nations, 'Special relationship' with the U.S.S.R. echo recent Gorbachov proposals. They read: "The United Much of the report recycles recent years' proposals and Nations also has to be made an effective frameworkfor set­ catch-phrases from the liberal Establishment's Aspen Insti­ tling disputes and a more effective peacekeeper. The Security tute for Humanistic Studies, the Trilateral Commission itself, Council now needs to be made the main focus of the search the German Social Democracy, West German Foreign Min­ for security consensus between the powers and reinforced ister Hans-Dietrich Genscher, and other such entities and with effective staff. The emergence of integrated regional individuals. It advises that WesternEurope "should seek to groups outside Europe could also help to create a better bal­ develop a common security relationship with the Soviet Union ance between North and South, a reformed Security Council and Eastern Europe." This should be based on new arms and a more effective United Nations. Though the prospect 0/ control accords, reinforcement of the Non-Proliferation world governmentis remote, an interim objective should be Treaty, new "confidence-buildingmeasur es," the creation of a World Communityo/ Communities, in which major regions "non-aggressive defense postures" by East and West, ad work together in a reformed U.N." (emphasis added) nauseum. In its chapter 6, under the heading, "Managing the Plan­ " What is new, is that this is a solely British production, et," the report defines its aim as a new push forward to a and thus is a move by the British liberal Establishment to put world order Mark III," following the earlier attempts of the

EIR February 17, 1989 International 45 League of Nations ("world order Mark I") and the United retary of State at the British Foreign and Commonwealth Nations ("Mark U"). "Mark III" would be based on a "re­ Office. During Harold Wilson's 1964-66 Labor Party prime formed and strengthened U.N. which is used, for peacemak­ ministry , he served, variously; as head of the Planning Staff ing and peacekeeping, not just on holy days and the occa­ of the Foreign Office, and as a private secretary to the prime sional Saturday, but every day of the week. . . . The U.N. minister. His wife is Marie Marguerite Spaak, a daughter of has to be made the main framework for negotiating world the late Paul-Henri Spaak, the ,ex-Trotskyist who was one of policies and resolving world problems, not the last resort." the architects of the European federalistmovement and of the This upgraded United Nations would be founded on the basis European Community. of a "world security consensus ....The Europeans ought to Palliser's helper Harbottle is listed in the report as repre­ be able to contribute imaginatively to such a structure, for it senting "The London Centre for International Peacebuild­ has parallels with the consensus-building mechanism of the ing." Harbottle was, in 1982-83, the co-founder of a KGB European Community." frontcalled "Generals for Peace and Disarmament." Accord­ Beyond this, eventually, what would emerge would be a ing to an unimpeachable source, Harbottle launched this group "world Community of Communities that works." A yet more following strategy sessions wifh Anatoli Dobrynin, then So­ utopian goal would be "a world government operating on viet ambassador to the United States. One leading member democratic principles ....That alone would provide the of "Generals for Peace" is We�t Germany's Gen. Gerd Bas­ context in which it is plausible for national forces and all tian, the traveling partner of Green Party co-founder Petra remaining national nuclear weapons to be surrendered or Kelly. Michael Harbottle and his wife Eirwen, who is the placed under common control ." , "projects coordinator" for the London Centre for Internation­ The latter idea recalls the 1950s proposals by Bertrand al Peacebuilding, have spoken at forums sponsored by the Russell, when he was launching his World Association of Lucis Trust in London. In his presentation, the KGB-linked Parliamentarians for World Government, for a world agency brigadier pointed to the Centre as a "bridge-builder between that would have absolute control over nuclear weapons de­ East and West," committed to using such issues as "environ­ velopment. A similar notion of world federalist control over mental damage" to "draw the two sides together." nuclear weaponry is a pet idea of the Lucis Trust, which Among the projects billed by the London Centre's pub­ pushes "world government"and which has had a key behind­ licity brochure, is one on "Collective Security," being carried the-scenes influence in the workings of the United Nations out "with the blessing of the Commonwealth Secretary Gen­ Organization. The Lucis Trust's direct influence on "A Step eral," Sir Shridath "Sonny" Ramphal . In a speech at Cam­ Beyond Fear" is mediated via Brigadier Harbottle. bridge University Jan. 25 , Ramphal called for a "global green agenda" and welcomed Soviet leader Gorbachov's Dec. 7, Palliser and Harbottle 1988 appeal at the United Nations for a new global ecological The Federal Trust for Education and Research, the spon­ order. Ramphal is on the board of a Lucis Trust-backed soring agency for the report, is itself key to the European project called "International Television Trust for the Envi­ branch of the "world federalist" movement. The Trust's pres­ ronment." ident, John Pinder, is also president of the Union of European A second project of the London Centre is "to organize Federalists. He is one of those in Britain most actively push­ international collaboration on environmental projects" for ing "Europe 1992." The report's actual author, Christopher young people. A third is "a young people's musical called Layton, was formerly with the London Economist, the mag­ Peace Child, which originated in Britain in 1981." In the azine of the Lazards, Pearson-Cowdray, and N.M. Roth­ mid- 1980s, the U . S. city of Minneapolis, through its Church­ schilds financial interests, all key "Europe 1992" advocates. es' Council, and Moscow "were linked in a joint production Palliser, the chairman of the study group, is director of [of Peace Child] by Satellite.'" Midland Montagu, the investment bank broughtabout by the Among the London Centre's listed consultants, one finds merger of the interests of Midland Bank and Samuel Monta­ some interesting figures: • Sir James Fawcett was assistant gu , from which vantage point he has been trying to organize legal adviser to the British Foreign Office from 1945-50. bank-consortium loans from British banks to theSoviet Union. From 1955-60, he was General Counsel to the International Palliser is also the chairman of the London International Monetary Fund. • Lord Caradon was British Governor in Institute for Strategic Studies, and of the British branch of Cyprus from 1957 to 1960. He was Minister of State for the Trilateral Commission. In autumn 1989, he will be the Foreign and Commonwealth Affairs and Permanent U.K. host for the next meeting of the European branch of the Representative to the U.N. from 1964 to 1970. He has been Trilateral Commission. He will travel in mid-May to Mos­ a central figurein British Foreign Office"Arab Bureau" links cow , for a conference sponsored by the International Herald to Islamic fundamentalist gr01ilps.• Dr. Frank Barnabywas Tribune. where he will appear together with Armand Ham­ former director of the Stockholm International Peace Re­ mer. search Institute (SIPRI). He is also a member of the "A Step In 1975-82, Sir Michael had been Permanent Undersec- Beyond Fear" study group.

46 International EIR February 17, 1989 Mother Russia by Rachel Douglas

Dostoevsky's 'Devils' hated. He wrote, "Our most ardent The Soviet partypaper Pravda says this Satanic novel shows the Westerners ...became at the same very essence of perestroika . time the negators of Europe and joined the ranks of the extreme left. . . . And thus . . . they revealed themselves as most fervent Russians-as cham­ pions of the Russian spirit." ProbablY many people in the Soviet Shatov was struck and which he fully, In Devils, the atheist is Stavrogin, Union right now feel as if they were passionately assimilated, was the fol­ a hereditary prince who inspires the living in a Dostoevsky novel. Life lowing: the point is not industry, but nihilist band in mysterious ways, who grows more hellish: There is no edible morality, not the economic, but the unwittingly wields the heavy cross of sausage to be found, cheaply built moral rebirth of Russia,' as opposed Orthodoxy against the hated West. His apartment buildings collapse in an to 'a bourgeois solution to the problem name suggests the Greek stavros, earthquake to crush and entomb the of comfort.' For Dostoevsky, 'moral "cross," and Russian rog, "hom." people who lived in them, scores of strength is more important than eco­ Dostoevsky said: "Everything is con­ children catch AIDS from contami­ nomic.' " tained in the character of Stavrogin­ nated syringes in the hospitals. Mean­ A useful thought, I expect Pravda Stavrogin is everything." while the Moscow bossesproclaim that means to suggest, for anyone who The author's admission, and Lyu­ the country is undergoing perestroika, might be wondering where his next bimov's embrace, points to the es­ getting restructured, which is a puri­ sausage will come from. sence of the Bolshevik Revolution, as fication and improvement for all. "Only our time," intones Lyubi­ it was foreseen by masters of cultural The contrast recalls 19th-century mov, "with its pathos of repentance warfare like Dostoevsky and his hosts writer Fyodor Dostoevsky's theme, and purification, of striving to look at Optina Pustyn. Of a piece with the that the greater the wretchedness and inside our own soul, our own sins, New Age movement launched in the degradation a person plunges into, the permits us to say aloud what was al­ late 19th century by the crazed Fried­ nearer he comes to God. ways thought and understood by some: rich Nietzsche from Venice and the On Dec. 29, 1988, the Communist Devils is about our life, about them Crowleyite spiritualists in Britain, the Party paper Pravda wrote that Dos­ and about us, about thee and about "purifying" revolutionary cataclysms toevsky was indeed the writer for to­ me ." Dostoevsky sought were explicitly day. Boris Lyubimov's theater re­ Soviet authorities used to de­ Satanic. view, "The Russia of Dostoevsky on nounce Devils as "socially obnoxious Stavrogin, who sojournedwith the Stage," welcomed recent productions and detrimental to the cause of social­ monks of Mt. Athos in Greece, as­ of two plays (one of them by the French ism/' because the plot hinges on a serts, "I believe canonically in a per­ existentialist Albert Camus) based on conspiracy by a band of nihilist revo­ sonal, not an allegorical devil. " When Dostoevsky's novel Besy, translated lutionaries, to murder one of its mem­ he bursts into wild activity, Dostoev­ as The Possessed or, better, Devils. bers . sky writes, "Then the beast un­ According to Lyubimov, these Devils, however, was never the sheathed his claws." And this hero is stage performances are timely, be­ anti-socialist tract that Soviet critics obsessed with recollection of and sup­ cause of "the deep consonance of Dev­ claimed. It came out in 1871-72, when posed repentance for having raped a ils with today's political and cultural Dostoevsky was already deep in study little girl who worshipped him, after situation and [because of] the ability with the monks of Optina Pustyn mon­ which she hanged herself. of the theater and the audience to en­ astery, on how the atheist revolution­ For the theater production of this ter, for the first time in many years, aries were "doing God's work." Dev­ great guide to repentance and purifi­ into a dialogue with Dostoevsky the ils was part of a planned opus, The cation, Pravda writer Lyubimov gives prophet, who drove out 'devils' and Atheist. thanks. He compares Dostoevsky with healed the possessed." He is pleased Later, in Diary of a Writer, Dos­ Christ, whom the mob drove away, that "the rich idea" comes through on toevsky elaborated on how the revo­ after He exorcised devils. Now, let stage: "In one of his draftsfor the nov­ lutionaries could be the best instru­ Russia not drive Dostoevsky away el, Dostoevsky noted, 'The main idea ment for preserving Russian Ortho­ again, concludesthe Communist Par­ of the Prince [Stavrogin] , by which doxy, against the Westernization he ty daily Pravda.

EIR February 17, 1989 International 47 From New Delhi by Susan Maitra

New initiative for monetary reform? clear to 10% of total power by the turn French President Mitterrand' s visit has put the North-South of the century. dialogue back on the political agenda . France had expressed interest in assisting water management efforts on the subcontinent to the tune of $62 billion, but India apparently indicated French President Fran�ois Mitter­ Although there is no official word that the time was not ripe. The coun­ rand's Feb. 1 visit to India seems to on the matter, a new initiative can be tries of the area have wrangled over have done more than snatch Indo­ reasonably expected to materialize in water access. In the event, a French French relations out of the doldrums due time. Indo-French ties are not proposal to establish an Institute for that set in when France lost out to merely a bilateral affair. Water in Delhi will be redrafted for a Sweden in the celebrated multibillion­ France has had a crucial input into politically more opportune moment. dollar howitzer deal in 1985. Perhaps India's sovereign development from Three agreements signed during even more interesting than the sub­ the beginning, when the visionary the visit will expand scientific and stantial French offers of cooperation Homi Bhabha took inspiration and technical cooperation in biotechnolo­ in industry, science, and defense support from France in building up gy, biomedical sciences, and vacci­ R&D, is the meeting of minds be­ India's nuclear program. More re­ nology. A joint venture pharmaceuti­ tween Mitterrand and Gandhi on the cently, it was France that came to In­ cals plant will use new technology to urgency of restarting the North-South dia's rescue with the fuel to keep the produce a new combined polio-DPT dialogue on economic development. American-built Tarapur nuclear pow­ vaccine and several other basic vac­ According to press reports, in his er plant operating when U.S. "non­ cines. It will be the largest vaccine hour-long private session with Rajiv proliferation" laws barred further manufacturing and R&D unit in the Gandhi Feb. I, Mitterrand spoke of American assistance. world. the need for disarmament at new lev­ French support for Indian R&D Following the October 1988 visit els to reduce the economic gap be­ and advanced technology capabilities of Mittemmd's special envoy, Jacques tween the developing and developed extends to space, where collaboration Attali, Defense Minister Jean-Pierre countries-stressing that the latter was is longstanding and significant, and Chevenement visited in December. An more important than the former. other areas. The Indo-French Center agreement for design consultancy on The fact that a tiny proportion of for Advanced Research in Delhi is one India's first indigenous aircraftcarrier the world's population consumes the fruit of Mitterrand's first official visit was reached. A $2 billion package for bulk of its resources is an "economic in 1982. aerospace collaboration is reportedly absurdity," Mitterrand said, and added One of the major proposals that also on the table, including both civil that this imbalance contains the seeds Mitterrand and his high-powered del­ and defense projects. of the worst type of disorder and con­ egation, including eight ministers and One day before Mitterrand' s arriv­ flict. It was in the interest of the ad­ a weighty science and technology al, Indian Commerce Minister Dinesh vanced sector nations to correct this contingent, brought along, is an offer Singh and French Foreign Trade Min­ imbalance. to supply India with two nuclear pow­ ister Jean-Marie Rausch signed an The French President wants Gan­ er plants of some 1,300MW capacity agreement on trade and industrial co­ dhi to visit France on July I, the bi­ each. Though no details have been re­ operationi in which France will help centennial of the French Revolution, leased, the proposal is said to have boost Indian exports of processed which happens to coincide with a come with a very attractive credit foods, gems and jewelry, and chemi­ scheduled meeting of the Group of package-the critical factor for India cals. France will also study the pros­ Seven industrial nations' heads of at the moment. pects for joint engineering-construc­ state. As France sees it, Gandhi should . Indian press reports on France's tion ventures in third countries. present the Third World's case at that own nuclear power program were a France has requested the same "fast meeting. For his part, Mr. Mitterrand thoughtful run-up to Mitterrand's ar­ track" facility for private investment is reportedly pushing for a confer­ rival, and a refreshing departure from granted to Japan and West Germany, ence-"like Cancun, but different, the anti-nuclear swill that has increas­ to boost its investment from the 1988 less of a big show," according to ingly put the Indian governmenton the level of 4.5% of total foreign invest­ French sources. defensive over its aim to expand nu- ment in India.

48 International EIR February 17, 1989 Report from Rio by Lorenzo Carrasco Bazua

'Summer Plan': speculation at noon cree-the spiraling rise of the internal Schachtian-style austerity measures under President Sarney are debt through unlimited issuance of new paper. For example, in January, the raising interest rates above 25% per month . Treasury-through the Central Bank-sold $7.6 billion worth of public paper to cover the $7 billion On Oct. 13 of last year, the Sarney Paulo Guedes of the Brazilian Insti­ worth that came due that month plus administration failed in its first effort tute of Capital Markets, for whom the $600 million worth of interest pay­ to launch "a star wars of interest rates." real ideal interest rate level is 40% . ments on that debt. On that day, the overnight market in­ According to the monetarist theo­ The layoffof between 60 ,000 and terest rate rose 10%, reaching the 50% ries implemented under the Summer 90,000 public employees, as the gov­ per month level. The measure imme­ Plan, the rise in interest rates will ab­ ernment hopes to carry out, will ac­ diately unleashed a wave of panic on sorb the "excess liquidity" of the econ­ complish a savings of between $700 the financialmark ets, forcing Finance omy, attracting said "excess" toward million and $1.1 billion. That is, by Minister Manson da N6brega to re­ the overnight market. With this logic, removing the economic sustenance of verse the measure and abruptly fire the the government supposes, no one will , 60,000 or more families, the Brazilian central bank's public debt director. want to hold onto dollars, gold, or real governmentexpects to save the equiv­ Three months later, President Jose estate, nor will industrialists and mer­ alent of one month's interest costs on Sarney-under the close supervision chants want to store merchandise. The the internal debt. In short, this means of such deans of the monetarist gang result, so the argument goes, will be that even if the government were to at the Getulio Vargas Foundation as immediate deflation. fire 200,000 officials, as former Fi­ Octavio Gouveia de Bulh6es and Mar­ But reality has proven otherwise. nance Minister DelfimNeto demands, io Henrique Simonsen-imposed the During the first weeks of the plan, the this would in no way alleviate the pub­ so-called Summer Plan: freezing speculative markets in gold and the lic deficit, which is what the govern­ wages and prices; creating the New dollar continued to thrive, and the ment claims it is resolving with its Cruzado with a value of 1 ,000 old cru­ government began to receive dollars Summer Plan. zados and parity with the dollar; and that exporters were acquiring through According to Treasury Secretary drastically cutting back on public ex­ foreign credit lines at 12% annual in­ Luiz Antonio Gon�alves, the internal penses, including the firing of some terest rates, to then invest them in New debt as of December 1988 was 77 tril­ 60,000 state employees. Cruzados at 1,000% a year! lion cruzados, equivalent to more than The principal measure of the aus­ At the same time, the hikes in in­ $90 billion. In 1989, before the Sum­ terity package, however, is a raising terest rates are making credit for pro­ mer Plan, payment of interest on that of interest rates, disguised as an anti­ duction and consumption more expen­ debt was calculated at approximately inflationfight . sive, which is triggering an immediate $10 billion, representing a full 15% of As far as speculators in public debt and deep depression in the real physi­ total government expenditures au­ are concerned, there is no difference cal economy. Last year alone, indus­ thorized by the national Congress for between a 50% inflation rate with a trial production fell 3%. With the this year. But with the new level of 25% monthly interest rate , which is Summer Plan, that decline will un­ interest rates decreed under the Sum­ what occurred in October, and a 25% doubtedly reach 10%, pushing both mer Plan, the additional internal in­ interest rate with the 0% inflation the state and private companies to the debtedness could reach at least $7 bil­ Summer Plan decree claims it wants verge of bankruptcy. lion a month ! to achieve. The government's philosophy can By April at the latest, when the But for the usurers, even this is not thus be summed up as follows: "If they Treasury no longer has any means to enough. Prof. Rudiger Dornbusch of want to speculate, let them do so sole­ withstand this avalanche, inflation MIT demanded "stratospheric levels" ly against public debt paper, that is, will undoubtedly rise to at least Janu­ of interest rates which he claimed against the nation's finances." There­ ary 1989's 40% a month. If the gov­ would compensate for the high risk fore , while the austerity package pre­ ernment continues obeying the bank­ posed by the Brazilian economy. This sumably puts an end to indexation of ers and their monetarist agents, the was the same argument as monetarist the economy, it maintains-by de- collapse of the nation is assured.

EIR February 17, 1989 International 49 Panama Report by Carlos Wesley

The U.S. Establishment in a bind one of Fernandez's co-conspirators, With the coming elections, the pretextfor U.S. sanctions-that naming Eisenmann, Ford, and Rodri­ guez as accomplices at the bank. Delvalle is still the legitimate President-will soon be gone. It was proven during the trial that drug trafficker Fernandez was also a co-owner of Dadeland National Bank, which was again placed under inves­ It has been almost two years since until his recent expulsion on charges tigation for drug money laundering in Washington launched in earnest its of taking orders from the U. S. embas­ October 1988. campaign to oust from power the gov­ sy. While Fernandez is currently serv­ ernmentof Panama and the command­ The Washington Post acknow­ ing a 50-year sentence in a U.S. fed­ er of its Defense Force (PDF) , Gen. leged the truth of those charges Jan. eral penitentiary, Billy Ford is run­ Manuel Noriega. Ronald Reagan is no 21. "The U. S. embassy here has been ning for Panama's vice presidency with longer President of the United States. promoting opposition unity and par­ U.S. blessing. His administration's point-man to de­ ticipation in the election in an effortto So much for the nonsense that the stabilize Panama, Elliott Abrams, is breathe new life into a listless anti­ United States wants Noriega out be­ also out of office. But Noriega is still Noriega movement." Endara himself cause he is "involved in drug traffick­ commander of the PDF. said that, if elected President, he might ing. " The people of Panama are now seek to reopen negotiations with the By the end of this year, the United preparing to hold elections May 7, in United States on the Canal Treaties. States must name a Panamanian na­ accordance with their Constitution. From the beginingof the crisis with tional, nominated by the Panamanian With the official closing of the nomi­ the United States, the Panamanian government, to be the new adminis­ nation period Feb . 7, three major goverment has insisted that the U.S. trator of the canal. Since there is little forces emerged to dispute the presi­ Establishment push to oust Noriega is likelihood that the U. S.-s ponsored dency, vice presidencies, and seats in aimed at imposing a "docile govern­ opposition could win, the U.S. strat­ the National Legislative Assembly and ment" to renegotiate the treaties, to egy seems to be, as was the case with municipal governments. allow the U.S. to retain control of the Marcos's ouster in the Philippines, to The elections present a major Canal and/or its military bases beyond scream "fraud" and disrupt the elec­ problem for the U.S. Establishment. the year 2000, when the treaties man­ tions. Whatever the results, this will bring to date U.S. withdrawal . Endara's other running mate, an end the fictionthat ousted President The fact that the United States is Christian Democrat Ricardo Arias Eric Delvalle is "the constitutional openly backing the ADO opposition Calderon, candidate for firstvice pres­ President of Panama," adopted by the alliance pretty much doomsits chances ident, described the plan in an inter­ Reagan administration to justify eco­ in the elections. Even more embar­ view with the Venezuelan daily El Na­ nomic sanctions. rassing for the United States is that one cional Dec. 24: strikes, street con­ The forces backing the national­ of Endara's running mates is Guiller­ frontations, and other disruptive ac­ ism of President Manuel Solls Palma mo ("Billy") Ford, candidate for sec­ tions to create the perception that the and General Noriega, united in the ond vice president. elections are not legitimate. Coalition for National Liberation Ford , together with Roberto A parallel tactic is to "Latinize" (COLINA), selected Carlos Duque as ("Bobby") Eisenmann and Carlos the attack on Panama, so that the ques­ its presidential candidate. Duque is Rodriguez, two other major players in tion of U .S. compliance with the Can­ head of the ruling Revolutionary the ADO alliance, was a co-owner of al Treaties is no longer so clearly the Democratic Party (PRD). Miami's Dadeland National Bank at issue. The Establishment's "Great The opposition is split. The Pana­ the time when that bank was engaged White Hope" in this is Venezuela's menista Party , the largest opposition in money laundering for convicted new President Carlos Andres Perez, party, selected Hildebrando Nicosia drug trafficker, Antonio ("Tony") who used his inauguration Feb. 2 to as its presidential nominee, while the Fernandez. The transcripts of the 1985 make clearthat he would seek to paint Democratic Opposition Alliance federal trial of Fernandez's accompl­ the Panamanians in the same "unde­ (ADO) nominated Guillermo Endara, ices (he pleaded guilty) contains an mocratic" colors as the U. S. State De­ a member of the Panamenista Party exchange between the prosecutor and partment has tried to do.

50 International EIR February 17, 1989 Andean Report by Jose Carlos Mendez

Pro-terrorist mooted for security post Guerrero Gomez. So outrageous were Venezuela's new President wants to name Jose Vicente Rangel his charges that Rangel was interro­ gated twice by the DIM (military in­ to the post of solicitor general. telligence), and word began to circu­ late of his impending incarceration if On Jan. 24, Venezuela's Presi­ "the professional muckraker," Rangel he didn't present concrete proof of his dent-elect Carlos Andres Perez told fulfilled expectations when in early charges. EI Diario de Caracas that the appoint­ February 1988 he declared on Radio It was at this point that presiden­ ment of Jose Vicente Rangel as solici­ Caracas Television that the ongoing tial candidate Carlos Andres Perez tor general would be an excellent presidential election campaigns were came to his defense, saying: "We can­ choice of "an extraordinarily well­ financed by the drug trade. Although not permit the military question to be­ thought-of man, since we are dealing he presented no evidence, he trig­ come a taboo, or military secrecy to with a man who has demonstrated in­ gered a scandal, which he then em­ take away the right of a citizen to dependence, good judgment, and lofi­ ployed to smear then-Justice Minister denounce anything he considers iness of ideals ....I speak regularly Jose Manzo Gonzalez, a strong advo­ improper. . . . It would seem to me with him." Perez explained that as cate of continent-wide action against to be an exaggeration, were Dr. President, he could not interfere with narco-terrorism and drug-money Rangel to be subject to trial." the naming of the solicitor, since "that laundering. With this backup, Rangel moved is a function of the Congress; but as a Rangel and his allies accused the to try to sabotage ongoing negotia­ leader of a political party, I can give minister of collaborating with the tions for a joint anti-terrorist cam­ my opinion." U.S. Drug Enforcement Administra­ paign involving the defense forces of But miming the pro-terrorist Jose tion (DEA) in the creation of an illegal Colombia and Venezuela along their Vicente Rangel as solicitor general is anti-drug "secret police." Manzo shared border� like putting the M -19 guerrillas in Gonzalez responded to the dirty cam­ Rangel had long been on record charge of national security. Rangel's paign against him with an interview, opposing the use of the military in history as a white-collar subversive published March 19 in the daily EI fighting narco-terrorism. When the goes back to the 1970s, when, accord­ Nacional, which charged that "this Colombian military was deployed in ing to intelligence sources, he was campaign has a strange similarity to November 1985 to recover the Justice the intermediary for money that Fidel that carried out in Colombia, first Palace besieged by the M- 19 terror­ Castro sent to the Venezuelan guer­ against [Justice] Minister Rodrigo ists, Rangel penned a violent attack rilla movement, with whose amnes­ Lara Bonilla, who was assassinated, on then-Colombian President Belisa­ tied chiefs Rangel maintains good re­ and then against his replacement, Dr. rio Betancur, accusing him of violat­ lations, as he does with Cuba and the Enrique Parejo Gonzalez." ing human rights, while making no Soviet Union. In another interview, Manzo mention of the dozen Supreme Court Once the Venezuelan guerrillas charged that one of Rangel's daugh­ judges butchered by the M- 19 assas­ were amnestied, Rangel turned into ters , Gisela Rangel Avalos, was a de­ sins. When Colombian narco-terror­ a perennial presidential candidate for fense lawyer for one of the most re­ ists crossed the border on June 12, mix-and-match coalitions of the Com­ nowned drug traffickers in the 1987 to murder nearly a dozen Vene­ munist left, and although he has never country, and that this had everything zuelan soldiers, Rangel claimed that won the presidency, his candidacies to do with Rangel's attacks against the assassins were actually Colom­ enabled him to win numerous posts in him. Nonetheless, abandoned by the bian soldiers. Congress, until 1983, when he re­ governmentof President Jaime Lusin­ Once asked to identify the sources ceived too few votes to qualify. Then chi, Manzo Gonzalez was forced to of his intelligence, Rangel boasted of he turned to journalism, which he resign on March 28, 1988. having a better network of informants used to run a smear campaign against With this notch in his belt, Rangel than the Venezuelan state . Rangel's the Venezuelan Armed Forces and turned his sights on the Armed method of infiltrating his informants other nationalist forces opposing nar­ Forces, accusing them of corruption into government agencies clearly de­ co-terrorism. and demanding the resignation of pends on high-level political protec­ Baptized by the daily EI Nacional then-Defense Minister Gen. Eliodoro tion from the inside.

EIR February 17, 1989 International 51 International Intelligence

relations with the Soviet Union would begin Izvestia counterattacks with his meeting with Gorbachov. Jenn ihger to publish "Three years ago, I said the Cambodian book his ouster Sakharov statements issue should be solved, firstof all, and Viet­ on man must genuinely pull all its troops out The Soviet government newspaper Izvestia of Cambodia. The Soviet Union can con­ Former West German Parliament President Feb . I ran an attack on Andrei Sakharov, tribute much in this regard," Deng said. Philipp J�ninger will publish a book on the the physicist and dissident who was only Shevardnadze had breakfast with affair that toppled him. It will contain select released from house arrest last year. Shanghai Mayor Zhu Rongji, described as letters of �upport he has received since his In an unsigned article that trained ob­ "a reformist leader." Nov. 11 tesignation. servers say originated at a high level, the Jenninger, who delivered a thoughtful paper warned that recent declarations by and profound speech on the occasion of the Sakharov and his wife expressing grave Israel releases anniversary of the 1938 anti-Semitic po­ doubts about the future of Gorbachov's re­ grom knQwn as Kristallnacht, or Night of forms "can be taken seriously, provoking leading Palestinian Broken mass, was subjected to a Commun­ all sorts of ideas , and creating doubt and ist-inspired walk-out and news media at­ trouble in the mind, which does not, of Israel's Jan. 30 release of detained Palestin­ tack, claiming his speech was "pro-Nazi." course , help perestroika ....Wit hout con­ ian activist Faysal al-Husseini is the clearest He resigQ.ed under intense pressure a day crete facts , without proof and serious re­ indication to date that the Israeli authorities later. search, it can only be seen as a political are quietly engaged in dialogue with the The incident was part of a broader So­ fantasy." Palestine Liberation Organization. viet-orchestrated campaign aimed at sever­ France 's Le Monde says it took one Jailed last year, Husseini is a renowned ing West Germany from the NATO al­ week for the Soviet authorities to respond activist on the West Bank and a leading liance. to Sakharov , who had made his statements member of the PLO . Just prior to his re­ Jenniilger's book is expected to deliver in an interview with Le Figaro Jan . 26. lease, he was visited by a high-ranking of­ a verdict of political cowardice against Jen­ The Soviet leadership's dilemma in an­ ficial of the Ministry of Defense. Husseini ninger's former close friend, Chancellor swering was that , on the one hand, it was is considered a potential president of a state Helmut Kohl , who sacrificed him to the hard for Gorbachov not to react to someone of Palestine. lions of the pro-Soviet media. The book casting doubts on the success of peres­ On Feb. 3, the Hebrew daily Yedioth will hit Kphl's Christian Democratic Union troika , because such expressions of doubt Ahronoth reported that officials of the Min­ (CDU) a� a whole, and could contribute to are threatening to him, but, on the other istry of Defense, including Yitzhak Rabin, Kohl's f�ll. hand , an attack on Sakharov only revives have concluded that there is no alternative In thls context, a new West German memories of his long period of exile, and to talking to Yasser Arafat's PLO , and that a opinion poll showed that the opposition So­ the previous repressions to which he was meeting of respective representatives would cial DemOCratic Party (SPD) has overtaken subjected . soon be arranged in Europe . This has been the CDD, in popularity, with 42% to the denied by Rabin. But Shin Beth intelligence CDU's 39% . The party 's general manager officials have been quoted saying that, al­ has been quoted saying: "Thank God there though "we do not talk to the devil [Arafat] , are no national elections now. They would Gorbachov set fo r there should b

52 International EIR February 17, 1989 Briefly

• FRENCH Defense Minister Chevenement has issued an appeal for the intensificationof Franco-Ger­ man military cooperation. According Shamir and Moshe Arens, because of his government has placed a $25 ,000 price on to a reporton West Germany's Deut­ longstanding anti-Soviet record. He spent Khun Sa's head. schlandfunk radio Feb. 5, Chevene­ 10 years in a gulag and emigrated to Israel Burmese Communists, the Thai mili­ ment said that a "joint military-indus­ in 1986. Since then, he has been outspoken tary, the Burmese military, the Shan army, trial base" should be developed by in denouncing Gorbachov's glasnost as a and, Drummond claims, "the remnants of the two countries. fraud. the Chinese Kuomintang Nationalists" are Professional diplomats at the Israeli all at war over 2,000 tons of raw opium EXECUTIONS in the People's Foreign Ministry are furious, according to ready for transport and sale. "This is now a • Republic of China are now taking the Hebrew daily Hadashot. fight for the control of the Thai border," place at a rate hitherto only known The appointment has not yet been con­ Khun Sa told him. "If we win, we shall in Iran, say British press reports. In firmed . The report came, however, on the have control of 80% of the opium in the Canton recently, 17 people charged same day that a leading Soviet scientist, Golden Triangle." with robbery and murder were sen­ Professor Kogan, member of a computer He said one of the reasons for the tenced to death . Other reports say and mathematical institute of the Academy bumper crop was that the Burmese govern­ that during the first three weeks of of Sciences, surfaced in Israel after he dis­ ment, crippled by unrest and economic di­ January, almost 100 criminals were appeared 48 hours earlier in Paris, where saster, has told farmers in the Shan states executed just in Guangdong Prov­ he was attending a Franco-Soviet seminar. that they could resume their traditional ince, of which Canton is the capital. Obviously, his defection to Israel was care­ opium cultivation. All Western nations fully prepared by French and Israeli author­ have canceled economic aid to Burma due mE AIR FORCE ities, who have been denounced by the So­ to "human rights violations," and the U.S. • u.s. is clos­ viets. cut all anti-drug aid. ing its long-range "spacetrack" radar Kogan said that he decided to defect, "This means that the crop, which we system in the Philippines, one of instead of requesting an official exit visa, expected to be about 1 ,200 tons, should be about two dooen systems worldwide because given his area of expertise, one about 2,000 tons," Khun Sa said-enough used to detect foreign satellites, a might never be granted. to supply the U. S. heroin market for 10 spokesman fromClark Air Base said These sudden developments, antitheti­ years . Feb. 5. The 17th Surveillance Squad­ cal to Israeli-Sovir.t relations, come amid a Burmese villagers confirmed that the ron at San Miguel Naval Communi­ series of statements and published articles government has told them there will be no cations Station, 60 miles northwest by Israeli officials critical of the superpow­ punishment for opium growing, but claimed of Manila, is scheduled to be deacti­ ers. On Jan. 27 , Shamir said that the "super­ the crop was actually slightly less than last vated by April . powers' plan for the Middle East" will never year's. VIRGILIO BARCO, President be accepted by Israel, and that any idea of • of Colombia. has offered to pardon the superpowers imposing their own peace the top leaders of the M-19 terrorist plan was "ludicrous." Gandhi warns Pakistan gang who assaulted the Justice Pal­ after missile tests ace in Bogota in 1985 and murdered half of the Supreme Court justices on War over op ium on India's Prime Minister Rajiv Gandhi has behalf of the drug mafia. A spokes­ warned that India will have to take steps to man said the pardon is being consid­ in Golden Triangle "protect itself' following Pakistan's suc­ ered "if the process of dialogue that cessful testing of its own medium- and sh­ has begun ends successfully." The The largest opium crop ever harvested in ort-range ground-to-ground missiles. governmentrecently signed a "peace the Burmese section of the "Golden Trian­ According to Pakistani Chief of Staff accord" with M-19. gle" is setting offbattles among five armies General Aslam Beg, the two missiles have in the region, London 's Observer claimed a range of 300and 80 km, respectively, and • JAPANESE police are mounting Feb. 5. Correspondent Andrew Drummond could carry a 500 kg payload with "full an unprecedented security operation filedthe report from Chiang Mai in northern accuracy." to protect the Feb. 24 funeral of Em­ Thailand. Drummond himself has been The test of what the Indians described peror Hirohito. Some 32,000 police, linked by some to the wing of the Burmese as "cross-border missiles," occurs at a time and many special security squads, "opposition" known to be dealing in drugs . that the Busij administration is considering have been mobilized. Police report Sure enough, Drummond was able to cutting military and economic aid to Paki­ their possession of "coded memos" interview and photograph the northern-Bur­ stan as of next fiscal year, following the showing that leftists plan attacks on ma-based "opium king" Khun Sa at the for­ failure of the last Reagan administration to the funeral, probably with mortar tified base of his ethnic-Chinese Shan army certify that Pakistan does not have the nu­ launchers. near the Burmese-Thai border. The Thai clear bomb.

EIR February 17, 1989 International 53 TIillNational

Bush budget: a kinder, gentler Heinrich Bruening

by Webster G. Tarpley

On the evening of Feb. 9, President Bush addressed a joint The smoke and mirrors of the Bush budget proposals session of Congress to outline certain changes he proposes begin with the underlying assumptions about the behavior to introduce into the detailed budget sent to the Congress by of the U.S. economy over the period ahead. The biggest President Reagan at the beginning of January. Although he salto mortale comes at the beginning: the prediction that sought to create the impression of a substantial departure federal revenues will rise by $88 billion during FY 1990 as from the Reagan budget, Bush's austerity diverges from a result of the ongoing recovery and the invisible hand. This Reagan's finalbudget only in minor details. After the glitter­ is based in tum on the notion that short-term interest rates ing generalities of the election campaign and the inaugural will be about 7.4% for the Treasury; these rates are now one address, this was the first occasion on which the new Presi­ full percentage point above that figureand are headed higher. dent had to be specific. This means that the interest payments on the public debt, Despite the much-vaunted experience of the Bush team, now $168.8 billion, will rise above the projected level of he did so in a way which will satisfy no one. The Bush $173.3 billion Bush assumes for 1990. Related assumptions budget is a deadly catalogue of sacrificeand privation, where about "gross national product," inflation, and unemployment Bush's desire to be known as the "education President" turns are equally utopian. out to be worth just $4 11 million in hard cash. But at the The other misleading aspect of the budget is the account­ same time, Bush's "flexible freeze" austerity is not nearly ing method employed. In lJis press briefing, OMB chief Schachtian enough to satisfy the Bank for International Set­ Richard Darman ridiculed the old budgeting method, called tlements (BIS) clique, which wants a drastic compression of "current services baseline" budgeting. The old method was living standards and spending levels which Bush wishes to that a budget item was thought of as holding steady if it duck for the moment. Even on the level of the President's continued to be funded at a level sufficient to provide the relations with the Congress, Bush's deficit-cutting method current service level, plus inflation. Above that was an in­ is seen on the Hill as a ploy to shift the onlls of "bipartisan" crease, below that was a cut. According to Darman, this cutting to the legislative branch, while the White House has a "curious Wonderland quality" since it suggests that plays up tiny increases in social and humanitarian programs. "programs funded in the past must be funded at at least The speech delivered by Bush to the Congress was equivalent service levels in the future-with a built-in up­ largely misleading, since he was silent on cuts and only ward adjustment for inflation and other factors . In a sense, modulated the "kinder and gentler" register. More details it treats spending programs as immortal. And it treats infla­ are to be found in a 193-page volume entitled "Building a tion as an acceptable given." Darman has replaced the "Won­ Better America," which Bush forwarded to the Congress derland" method with a "common sense approach," which with his speech . This curious document is being referred to measures budget cuts and budget growth simply by compar­ as "Quotations from Chairman George," owing to the many ing the nominal amount spent one year with the nominal citations from Bush's campaign speeches which fe stoon the .amount spent the next year. Using this sleight of hand, Bush pages: "There is but one just use of power, and it is to serve can claim that he is adding $2.4 billion, or 22%, to the people," is on page 11, but there is at least one on almost NASA budget to fund the Space Station Freedom. In reality, every page. We are reminded that Maoist China is the only Bush is adding nothing to the appropriation proposed by foreign country the President has ever lived in. Reagan for FY 90, and is adding only $126 million more in

54 National EIR February 17, 1989 spending authority. Bush intends to take all that back in 1991 • Medicare will be savagely gouged under the heading by lopping off some $270 million proposed by Reagan. Or, of slowing the growth of mandatory:entitlements. Projecting in the case of AIDS/HIV, including both "education" and current trends, an increase of about $13 billion in Medicare research, Bush claims that he wants to spend $1.6 billion, had been expected. The Bush budget slows that to an $8 which he says is an increase of $313 million, but this is in billion increase. Darman specifiedthat the burden would fall line with what Reagan had already proposed. on the providers of health care, not the users, indicating that this sum is to be taken out of the hides of the doctors and From Wonderland to sleight-of-hand hospitals. Also under entitlements, Bush wants a freeze of By virtue of the flexiblefreeze , a large number of domes­ the Cost of Living Allowances for retired federal workers, tic programs will be kept at their previous levels of funding, including retired military. without even an allowance for inflation. These programs • Most of Bush's humanitarian programs add up to mi­ account for $136 billion, or 12% of the overall budget. The nuscule outlays. Rewarding successful schools will cost $30 defense budget is also frozen, but allowance is made for million in FY 90; recognizing superior teachers will cost $6 what the administration asserts to be the inflationlevel which million; the National Science Scholars Program (535 politi­ is heavily underestimated in terms of the dollar's ability to cal patronage scholarships) will be just $4 million; magnet command hard commodities in the real physical universe. schools will cost $12 million. Designating the current Direc­ According to Darman, the method was then to single out tor of the White House Office of Science and Technology "headings," or general areas of spending, and fix a "lid" or Policy as Assistant to the President for Science and Technol­ maximum figurefor each of these headings. The administra­ ogy is even better-it costs nothing at all. For the War on tion economic "Quadriad" is ready to talk to Congress about Drugs, $974 million of new money is sought, about a third the dosage of austerity in each of these areas . Bush claims of it for educational initiatives. that with all this, he is bringing down the deficit by about • On the FSLIC bailout, the budget pretends that total 40% within one year, to meet the new targets set by the new outlays for FY 90 will amount to just $1.9 billion, a Gramm-Rudman-Hollings deficit reduction law. For FY 89, mere bagatelle. Such subterfuge fools nobody. the Gramm-Rudman target was supposed to be a $136 billion • Bush's speech to the Congress was packed with Theo­ deficit, but various kinds of cheating got the deficit up to at dore Roosevelt-style environmentalism. He wants $520 mil­ least $163.3 billion, by the administration's own figures. lion in new money for clean air and fighting acid rain. Now Bush claims that he will respect the FY 90 target of • Bush requested the creation of 70 Hong Kong sweat­ $100billion , coming in with $91 .1 billion of red ink. The shop "Enterprise Zones," which would cause tax revenues fictitious assumptions of the budget make that feat impossi­ to fall because of tax breaks provided. He proposes a cut in ble, as the vultures at the BIS were quick to note. Bush is the capital gains tax to 15%, provided that the speculators trying to punt, to carry off one to two more years of the hold onto their stocks for at least one year. Tax breaks for Gipper. In the meantime, there will be carnage: oil and gas producers are also envisaged. • Defense will rise to $291.2 billion, and even that Reactions to Bush's programs included a sharp drop in will include the cleanup of old nuclear weapons production the dollar and Treasury securities on European markets, a facilities and other burdens. Darman said that the budget sure signal that the BIS is not happy. There was also a steep requests for the Strategic Defense Initiative would stay at decline in the New York Stock Market. Chairman Sasser of the Reagan FY 90 request level of $5.6 billion, but he also the Senate Budget Committee noted that Bush "can't tell us referred ominously to a review of the SOl and other policy how he proposes to meet the necessary annual installment areas that Bush had ordered. Conventional wisdom is that payments," and complained that Bush had included a "black the SOl will be very lucky to come through with this year's hole" of cuts which Congress must decide. Chairman Leon authorization of $3.79 billion plus some allowance for infla­ Panetta of the House Budget Committee noted that "many tion; after theNunn and Aspin committees finishwith it, the of the tough choices were put off for another day . " Chairman figure is likely to be lower. Bush plans to cut $44.7 billion Rostenkowski of the House Ways and Means Committee in authorization and $30 billion in appropriations from the predicted that the cut in capital gains would be defeated, and Pentagon over the next four years compared to Reagan's that tax increases would be required to reduce the deficit, projections. saying "I'm not about to tell the wage earners in Chicago • Severe carnage is mandated for the farm sector. that they should pay a higher tax rate than the stockbrokers. " Agencies operating in the area of agricultural credit policy, Chancellor Bruening held power in Germany from including the Rural ElectrificationAdministrati on, the Farm­ March 1930 until May 1932. He imposed draconian austerity ers Home Administration, and the Rural Housing Insurance by decree-laws (Notverordunungen) under a state of emer­ Fund will have their outlays cut by $3.63 billion. The Com­ gency. His government was repressive but highly unstable, modity Credit Corporation is slated to drop from $13.9 and he was soon considered expendable by the bankers he billion to $10.7 billion. sought to serve. Bush has not learned from this example.

EIR February 17, 1989 National 55 LaRouche contests government move to dismiss Boston case

by Jeffrey Steinberg

In a hearing before U. S. District Court Judge Robert Keeton political association that he founded over 20 years ago. Such in Boston, Massachusetts on Feb . 9, attorneys representing revelations, which did begin to come out during the lengthy Lyndon LaRouche and several of his co-defendants opposed first Boston trial last year, prompting the government to the government's motion to dismiss the 124-count indict­ scramble for a mistrial, would have likely provided new ment against them. Defense counsel argue that, if the trial evidence forcing the reopening of the Alexandria case. proceeds, the defendants would be vindicated of all charges, and the basis would be provided for reversal of the Alexan­ A special case of 'graymail' dria "railroad"-the political frameup trial which resulted in At least one current occupant of the West Wing of the the conviction of LaRouche and six associates on Dec . 16-­ White House breathed a sigh of relief when U. S. Attorney on grounds of massive government misconduct. McNamara filed his dismissal motion. C. Boyden Gray, On Jan . 27, Boston U. S. Attorney Frank L. McNamara, former general counsel to Vice President George Bush and Jr. had fileda motion asking the dismissal of the case against now the White House general counsel, had emerged during LaRouche, a dozen associates, and four organizations, on the final weeks of the first Boston trial (which ended in charges of mail and wire fraud and conspiracy to obstruct mistrial in May 1988) as a major player in the second Re­ justice. agan-Bush administration's "Get LaRouche" program, a Judge Keeton has not yet ruled on the matter. program that intersected possibly criminal aspects of the Not at all coincidentally, the very same day that the Iran-Contra scandal that are now the subject of other prose­ Department of Justice was moving to dump U.S.A . v. The cutions, including the Oliver North trial. LaRouche Campaignet at., another federal judge in Alexan­ In the midst of the first Boston trial, a Freedom of Infdr­ dria, Virginia was sentencing LaRouche to a draconian sen­ mation Act (FOIA) suit by the defendants demanding all tence of 15 years in jail-in effect a death sentence for the National Security Council documents referring to Lyndon 66-year-old political economist and four-time presidential LaRouche turnedup a May 6, 1986 memorandum fromGen . candidate-and ordering him and six associates to immedi­ Richard Secord to Oliver North which said, "Our man here ately begin serving theirsenten ces. TheAlexandria prosecut­ has info against LaRouche." The document, in the posses­ ion had centered around mail and wire fraud charges, merely sion of Irangate Special Prosecutor Lawrence Walsh, had replacing the Boston conspiracy to obstruct justice counts been retrieved from the NSC office safe of North. A May with a single-count conspiracy charge that LaRouche had 1, 1986 FBI memorandum released to defense attorneys concealed information from the IRS . revealed that "our man here" was a retired U.S Army Special In all but the most legalistic and technical features, the Forces sergeant major, Frederick Lewis. Lewis and his two two cases were identical , and were the handiwork of the partners, Gary Howard and Ron Tucker, had made repeated same Department of Justice "Get LaRouche" squad that was efforts, beginning in September 1984 to "infiltrate the LaR­ convened under the direction of former U.S. Attorney and ouche organization" on behalf of both the FBI and the CIA. Criminal Division head William Weld, at the behest of such By planting false information in FBI and CIA files against liberal Establishment bigshots as Henry Kissinger, Edward associates of LaRouche, the trio had successfully triggered Bennett Williams, Donald Regan, and the leadership of the a criminal investigation into LaRouche-linked organizations. Democratic National Committee-with strong urging from According to a spring 1988 Washington Post article, the Moscow and the City of London. Lewis-Howard-Tucker trio had been reporting their activities On the most immediate level, the government's decision directly to none other than C. Boyden Gray. The exposure to drop the Boston case on the eve of a scheduled retrial, of these ties prompted Judge Keeton to order a more thorough was motivated by a decision within the Establishment to search of White House files for exculpatory documents. "bury" LaRouche by shutting off all public forums-includ­ Keeton singled out the filesin the Officeof the Vice President ing the Boston federal courtroom. More to the point, how­ for special scrutiny. ever, a retrial in Boston threatened to further bring to light In addition to their efforts to "sting" LaRouche, the three the Justice Department's own criminality in its decade-long Texas-based lIlorcenaries had been simultaneously working effort to frame up LaRouche and destroy the international as undercover agents for the U.S. Customs Service. Accord-

56 National EIR February 17, 1989 ing to British sources, while working in England between LaRouche case began to seriously jeopardize FBI "methods 1984-86, Howard, Lewis, and Tucker had been bagmen for and procedures." a North-Secord Enterprise associate, Col. David Walker of It was under these circumstances that the Department of the British SAS front company, KMS , Ltd. KMS had been Justice jumped at the firstopportunity to "cut bait" and walk brought in by North and by Secretary of the Navy John away from the Boston trial with a mistrial. The issue of Lehman to carry out military covert operations in Nicaragua government corruption and interference in the affairs of a on behalf of the Contras, according to congressional tes­ legitimate political organization had become such a central timony. issue in the trial that the jurors, in an informal poll taken In short, the Howard-Lewis-Tucker issue threatened to moments after the case was ended, voted unanimously to unearth the otherwise successfully suppressed "Bush role" acquit all defendants on all counts. in Irangate. Fearful of the consequences of a repeat of the initial Boston experience, prosecutors went shopping for a new The Emerson-FBI angle judge and a new jurisdiction. The Department of Justice From the very outset of the Boston prosecution, which handed down a November 1988 "new" indictment against began on Oct. 6, 1986 with a 4OO-man paramilitary raid LaRouche and six colleagues in Alexandria, a jurisdiction on the offices of two LaRouche-linked Leesburg, Virginia known as the "killing field," and scheduled the Alexandria companies and the unsealing of the original indictment, trial to "leapfrog" the Boston retrial. defense attorneys had labeled the prosecution a political frameup of LaRouche, capping a 17-year FBI COINTEL­ Lying their way in, lying their way out PRO campaign against the National Caucus of Labor Com­ At the time of the Oct. 6, 1986 raid, the Justice Depart­ mittees (NCLC) , the philosophical association LaRouche ment succeeded in having two of the Boston defendants, founded. Jeffrey and Michele Steinberg, held without bail. In a highly Despite agreements between defense attorneys and pros­ charged hearing before Magistrate Grimsley of Alexandria, ecutor John Markham committing the government to turn Va. , U. S. Attorney Henry Hudson had argued that the over all documents relating to FBI informants before the Steinbergs were "kingpins" of the obstruction, and would start of the trial, it was only on the 70thday of the trial that continue to obstruct justice if allowed to remain free on bail. the government released an extensive FBI file on informant From the official transcript of the Oct. 9, 1986 hearing: Ryan Quade Emerson, a.k.a. Ivan Nachman. An oftentimes Hudson: "We will show that the failure to produce docu­ paid informant for the FBI since 1966 , Emerson had been ments and the agreement to squirrel these witnesses off to used by the FBI to plant "evidence" on several LaRouche Europe was the direct result of a conspiracy created by Jeff associates who were then accused of obstruction of justice; Steinberg and Michele Steinberg ....These individuals are the "evidence" took the form of verbal briefings that were a very bad flight risk because they, like the people who went reflected in those defendants' personal notebooks, and then before them, could easily go to Germany ....We would used to build a case against them. Markham used quotes also ask for their detention because they are very likely to from the FBI's Emerson, taken from seized notebooks of continue to engage in obstruction of justice that brings us defendant Jeffrey Steinberg, in his opening statement before here today." the jury as "proof' of the obstruction conspiracy. Seventy FBI Special Agent Richard Egan, the case officer for days into the trial, Markhamwas forced to submit an affidavit · the two-year grand jury probe in Boston, delivered wildly to the court acknowledging that he had personally authored perjured testimony at that bail hearing. Among his lies, the notebook entry delivered by Emerson as part of the subsequently disproVed during hearings and the trial: that informant's efforts to gain access to the offices of EIR in four LaRouche-linked entities subpoenaed to provide docu­ preparation of the search warrant. ments to the Boston grand jury had failed to provide any Confronted with massive evidence of government mis­ documents-under orders from the Steinbergs. In later testi­ conduct, Judge Keeton eventually ordered an evidenciary mony, Egan acknowledged that millions of pages of material hearing to determine the level of government abuse. Emer­ had been submitted to the grand juries. son was grilled by defense attorneys and Judge Keeton or­ The Steinbergs spent 100 days in jail without bail. dered FBI classified files on Emerson from half a dozen field When the government filed its Jan. 27, 1989 motion to offices to be declassified and madeavailable to the defense. dismiss, an accompanying memorandum suddenly offered a In the course of his testimony, Emerson revealed that during radically different set of facts, belatedly admitting that their 1978-80, he had been paid by the FBI to publish a "private" target was LaRouche. Edward Spannaus, the director of law enforcement oriented newsletter filled with FBI-pro­ legal affairs for the NCLC, was now the secondary "king­ vided information. This FBI invasion of the media unleashed pin." Since LaRouche and Spannaus had already been con­ a storm of protests and investigations by investigative report­ victed in Alexandria, further prosecutionswere now deemed ers around the country. This groundswell of interest in the "unnecessary" and a waste of government funds.

EIR February 17, 1989 National 57 Knights of Malta launch a crusade in America by Scott Thompson

On Jan. 13, the Sovereign Military Order of Malta presented the U. S., Fra Bertie spoke of the importance of closer ties its highest honor, the Collar of the Order of Merit, to Presi­ between the Order (recognized as sovereign under interna­ dent Ronald Reagan at a dinner at the W aldorf-Astoria Hotel. tional law) and the United States. The only earlier official This was the first time that an American President had been contact between the Order and America had been when the offered and accepted an award from the Knights. It was also Grand Master, after Napoleon's conquest of Malta, suggest­ the first visit of the Knights' Grand Master, who holds the ed to the American President that a portion of the United rank of Prince and Cardinal of the Catholic Church, to the States be set aside so that the Knights could form a sovereign United States in the 900 years of the Order's history. The principality within the young republic. award dinner was sponsored by the American Association of Rejected in the United States, the Knights of Malta found the Knights of Malta, which is the oldest and largest of three refuge in Russia, under the insaneCzar Paul I, who adopted associations of the Catholic branch of the Knights of Malta the title of Grand Master and affiliated the Knights with the in the United States, headed by J. Peter Grace. Russian Orthodox Church. Since the Bolshevik Revolution, His Most Eminent Highness Fra Andrew W.N. Bertie, the Kremlin has maintained a special office to keep tabs on the new Grand Master, presented President Reaganthe award, the Knights, at least one faction of whom have remained a stating: "You have defended the rights of the unborn, and the back-channel with Soviet intelligence, seeking to have Jeru­ importance of moral spiritual values, at great political risk to salem made into an international city under the auspices of yourself. The Order of Malta was and is an aristocracy of the Knights of Malta. service, and you have personified this ideal in your service as President." The real story of Irangate Fra Bertie, who became Grand Master ofthe Knights last President Reagan stressed in his speech to the Knights year, is the first British Grand Master since Hugh de Revel that private charity should become the principal means to (1258-77). In his speech, Fra Bertie stressed the potential supplant the welfare state. PresidentReagan was apparently importance of the Knights of Malta establishing closer ties unaware that the hospice movement, advocates that those with the United States, as symbolized by the award to Presi­ with terminal illnesses or "more will than wallet" are permit­ dent Reagan. Informed analysts believe that Fra Bertie is ted to "die with dignity," while being stupefiedby painkillers. attempting to play the Anglo-American "special relation­ But there is another story underlying the Knights of Malta's ship" through the Knights of Malta. version of charity. Under the cover of establishing hospitals Fra Bertie's appointment was widely regarded as a spe­ for the poor, the Knights of Malta have become, according cial favor to Queen Elizabeth II, who reportedly used her to U.S. intelligence sources, among the biggest arms-traf­ visit to meet Pope John Paul II to help save the Knights of fickers in the world. Malta, which various Cardinals had decided should be dis­ Exemplary is the hospitill maintained by the Knights of banded as an anachronism and center of Gnosticism within Malta under Prince Lobkowicz in the Syrian-occupied Bekaa the Church. Fra Bertie is the son of the Earl of Lindsey and Valley of Lebanon, the major breeding ground for interna­ Abington, who was a broker on the London Stock Exchange. tional terrorism. The Knights are known to provide services Otherwise, Fra Andrew Willoughby Ninian Bertie is a to the terrorists, who fund their activities partly by having strange choice for the post of Grand Master. Born in London turned the Bekaa Valley into a major narcotics production on May 15, 1929, he studied at Oxford and the School of spot. Oriental Studies at London University. For 23 years , he taught When the Irangate scandal broke, U.S. intelligence modem languages at Worth School of the Benedictine Order, sources informed EIR that finallythe real story of the Knights which was responsible for founding what became the Knights of Malta might break through. Irangate Special Prosecutor of Malta during the Crusades. Fra Bertie is considered one of Lawrence Walsh was allegedly investigating them. Among the world's leading scholars on Tibet. those members of the Knights of Malta who had a role in In his brief remarks on the firstvisit of a Grand Master to Irangate were: 1) Director of Central Intelligence William

58 National ElK February 17, 1989 Casey, a member of Grace's American Association of the ley, who was the eminence grise in Irangate. Knights of Malta, who ran whole sections of the Irangate There is some question as to just how good a Catholic policy as a "vest pocket" operation; 2) Alexander Haig, who Alejos Arzu might be. In February 1968, Roberto Alejos had a hand as NATO commander in toppling the Shah of Arzu was arrested andcharged with kidnaping the Archbish­ Iran, also in 1982 initiated the strategic "Memorandum of op of Guatemala, Msgr. Mario Casariego (now a Cardinal). Understanding" with Israel, under whose terms Israel sup­ Alejos Arzu has given interviews in which he claims to plied arms to Iran; 3) Cyrus Hashemi, the Iranian arms­ have helpedcreate Vietnam-style strategic hamlets along the trafficker and Savama paymaster, who was arrested in 1980 Honduran-Nicaraguan border. It is suspected that Ameri­ bearing a Knights of Malta passport; 4) Ibrahim Yazdi, the cares aid was used in this project, which included major former foreign minister of Iran, who traveled to the U.S. emigration from Nicaragua in 1982, and created bases for secretly in June 1986 at the height of the arms-for-hostages Contra operations. Moreover, Alejos Arzu has been an out­ deal, when he met with Oliver North; he now travels on a spoken advocate of drug legalization at a time when factions Knights of Malta passport. of the Contras have been accused of drug-and-gunrunning to This curious relationship of the Knights of Malta, who fund their operations. were always a private intelligence network in the Middle East for the old European nobility, with Iranian leaders and arms­ Communists and Freemasons traffickers, had been furthered when, shortly before the top­ The Kremlinhas maintained a back-channel to the Knights pling of the Shah of Iran, the Knights of Malta opened an of Malta since the Bolshevik Revolution. Stalin offered to embassy in Teheran. The Knights reportedly also worked restore the Knights' Russian and Polish Commanderies in closely with the Shi'ite fundamentalist clergy led by Ruhol­ exchange for the Knights' opening a legation in Moscow. lah Khomeini. Many awards similar to that given President This involved intricate negotiations over the status of Jeru­ Reagan and passports were handed out to Iranians on both salem, which Stalin believed the Knights might become the sides of the conflict. mandatory power over. A faction of the Knights liked Stalin's offer. At present, the Kremlin is again considering diplomat­ The Knights and the Narcontras ic recognition of the Knights, whose sovereign state encom­ J. Peter Grace's branch of the Knights of Malta has been passes one small building on the Via Condotti in Rome. the primary distributor of at least $50 million in aid to the J. Peter Grace, head of the American Association that Contras in Central America, raised by the New Canaan, entertained President Reagan, comes from a family with an Connecticut-based Americares Foundation. Some $ 14 mil­ equally long history of dealing with the Bolsheviks. His lion was distributed in 1983 and another $20 million in 1984. father, Joseph Grace, whose family concernstarted as junior Figures for more recent years are not available, but the pro­ partners of the British in Peru, was on the board of the Amer­ gram is known to have continued apace. ican International Corporation at 120 Broadway that traded This is not all private charity. Both Americares and the extensively with Russia, before and afterthe Bolshevik Rev­ Knights of Malta have each, separately, become Private Vol­ olution. A Grace-Russia corporation was formedthat stayed unteer Organizations (PV 0) receiving grants and credits in business with the Bolsheviks. from the U. S. Agency for InternationalDevelopment, which Under the Reagan administration, J. Peter Grace headed has historically been employed for covert operations by the thePresident 's Private Sector Survey, which, while it viewed Central Intelligence Agency. debt payments as sacrosanct, recommended massive budget While there is no evidence that this aid was other than cuts in national defense, as well as the "privatization" of humanitarian, Robert Macauley of Americares has been critical areas of the military . quoted as saying that he would have also shipped weapons, The Knights of Malta have also been scandalously close if he were asked to do so by President Reagan. The Salva­ to the Satanic currents of Freemasonry since the 18th century , doran Association of the Knights of Malta is also registered when Joseph, Count Cagliostro (a reputed bastard son of the as a PVO, and it received $ 178,500 for a project to build a Grand Master) entrapped Marie Antoinette in the "necklace "model town," which is believed to have been modeled upon scandal," which helped create the Jacobin French Revolu­ the strategic hamlet program in Vietnam. tion, which had been organized through Scottish Rite Free­ The chief Knight involved in distribution of the Ameri­ masonic networks. Count Cagliostro, who was inducted into cares aid is Roberto Alejos Arzu, who is president of the Freemasonry in London, founded his own "Egyptian Lodge" Guatemalan Association of the Knights of Malta and the in Rome, which led to his imprisonment by the Holy Inquis­ Order's former ambassador to Honduras. He is a strong Con­ ition, as well as a secret lodge among English Knights on the tra supporter, who earlier lent his Guatemalan coffee estate island of Malta. for use by the CIA to train the Bay of Pigs invasion force. In Several leading Knights have also been Freemasons in interviews, Alejos Arzu admitted knowing well not only the 20th century. According to French author Jacques Pey­ Alexander Haig, but also rogue CIA officialTheodore Shack- refitte, the same Comte de Pierredon (descended from an

EIR February 17, 1989 National 59 Ottoman Pasha) who received Stalin's offer to the Order to become partners in the division of Jerusalem after World War II, was receiving funds to advance his factions power within 'Wiseguy' says he the Order from the Grand Orient of France. Also, then Grand Master De Mojana-allegedly imposed upon the Knights of Malta by British intelligence MI-6-was a member of the La Rouche for the Palazzo Giustiniani Lodge, a branch of Scottish Rite, while simultaneously holding the rank of Cardinal of the Catholic by Herbert Quinde Church. Even more recently, the Knights of Malta were involved in a major Freemasonic scandal. Within days after the May A series of articles in the Buffa lo News during early February 13, 1981 attempt to murder Pope John Paul II by the assassin revealed the previously undisclosed activities of a govern­ Ali Agca, Italian carabinieri raided the villa of former Mus­ ment informant who for lO years illegally spied on Lyndon solini secret police (OVRA) official Licio Gelli, where they H. LaRouche, Jr. and associates. discovered a 1,000 person membership list of the secret Pro­ Ronald M. Fino, the former president of Buffalo Labor­ paganda 2 Masonic Lodge. ers Union Local 2lO, has beena Federal Bureau of Investiga­ As it turned out a number of prominent Knights of Mal­ tion and Central Intelligence Agency informant for two de­ ta-including the top Italian military and intelligence offi­ cades, primarily reporting on organized crime activity in the cers-were also secret members of the P-2 Lodge, including: labor movement. But, Fino told the News, "He had infiltrated Defense Chief of Staff Giovanni Torisi; Gen. Giulio Grassi­ the organization of Lyndon H. LaRouche for the CIA." ni, chief of the SISDE ("FBI"); and Gen. Giuseppe Santovi­ Although FBI officials have denied it, Fino was reporting to to , chief of the SISMI ("CIA"). the Bureau about LaRouche's political activities as recently Likewise, Italian Foreign Minister Giulio Andreotti was as December 1988. later said to have held simultaneous membership in the Knights The revelation, coming on the heels of the jailing of and in Gelli's P-2 Lodge, which had directed slush funds to LaRouche and six associates, on trumped-Up conspiracy parties ranging from the Communists to Christian Democra­ charges, again confirms the claims made by defense attor­ cy. neys that government agencies have directed a COINTEL­ The P-2 Lodge was further discovered to have been in­ PRO-style operation of political harassment against the volved in a series of coup d'etat attempts in Italy, which American political figure and his associates for two decades. started with the Dec. 7, 1970 aborted coup attempt of Prince During the I 960s and 1970s, COINTELPRO (counterin­ Junio Borghese, a member of both the Knights and Gelli's telligence program) was the codename for a broad FBI pro­ Lodge. It was also the P-2 Lodge that was behind a wave of gram of harassing political organizations under the guise of "red" and "black" terrorism, which began in the 1960s in protecting U.S. national security. Italy as part of a "strategy of tension" that culminated in the The revelations of Ronald Fino could be the basis for bombing of the Bologna train station by the neo-fascist Or­ reopening the LaRouche case in Alexandria, Virginia. Dan­ dine Nuovo. iel S. Alcorn, a LaRouche defense lawyer, is quoted by the According to extensive Italian court testimony, when News saying that the Fino revelations "might be a break in Henry Kissinger was National Security Adviser to President the criminal case, if there was government misconduct." Richard Nixon, Kissinger (whose name has been linked to Judge Albert V. Bryan, who presided over the Alexandria Gelli's Monte Carlo Lodge) directed "crocodile" funds to the railroad, denied the defense much of the information sought P-2 Lodge for destabilizing Italy. Other testimony has charged by LaRouche attorneys. "There were hundreds of pages that Kissinger personally threatened Italian Christian Dem­ deleted for national security reasons," Alcorn told the Buf­ ocratic Party president Aldo Moro, who was later killed by fa lo News. "We don't know what's behind that shield." terrorists. Kissinger's accomplice in these NSC-coordinated The earlier Boston trial against LaRouche and associates operations was Gen. Alexander Haig, a member of Peter ended in a mistrial, in part due to the illegal activities of Grace's American Association. Ryan Quade Emerson, another FBI informant unearthed Licio Gelli himself, who formed this arcane association during the six -month trial. The Boston jury informally polled with the Knights of Malta, is what the U.S. Counterintellig­ itself after the mistrial and told the media that it would have ence Corps during World War II would call a "Nazi-Com­ acquitted all of the defendants because of government munist." Saved by Communist partisans he had worked cov­ misconduct against the former presidential candidate. ertly with during the war, Gelli established elaborate connec­ Fino, who had posed as a sympathetic supporterof LaR­ tions with the same Bulgarian and related East bloc intelli­ ouche's presidential bids, is currently in hiding, his life gence services, which were used by the KGB for the 1981 threatened under a contract put out by the Buffalo mob. The attempt to murder Pope John Paul II. FBI is trying to force Fino to join the Federal Witness

60 National EIR February 17, 1989 By the time of the Michigan meeting, Fino had become enmeshed in an FBI operation to destroy the "LaRouche spied against organization." He became personally associated with an PBI-controlled and mob-linked group inside LaRouche's )etroit organization, led by Kenneth Dalto, an aide to LaR­ CIA and FBI )uche during the 1980 campaign. Dalto was instructed to advise LaRouche to go into business with certain Republican entrepreneurs-later identified as linked to organized crime. LaRouche and associates rejected the idea as crazy, leading to a break with Dalto and his coterie. Protection Program (FWPP) , but Fino says he wants a new Dalto had developed a relationship with organized crime­ identity and money for his services. The FWPP is notorious linked labor operatives who were also being courted by for its bad record in protecting former snitches. Caught be­ the Reagan-Bush campaign. This placed Dalto in Fino's tween the mob and the FBI, Fino is singing to the me dia. environment. Under the direction of CIA director William "If I were Ron Fino, I would not be walking the streets. Casey and James Baker, the Republicans were vying for The mob does have a contract hit out on him. Although conservative Democratic voters out of this layer. Fino, like the Feds are also squeezing him, they cannot discredit him many blue collar unionists in the Teamsters and Building because they need him to testify against some union offi­ Trades, could not back Jimmy Carter for reelection. And cials," said a source close to the affair. Some civil liberties LaRouche was developing a substantial following among activists who are following the story believe that Congress what became known as Reagan Democrats, much to the might take an interest in the case. chagrin of Republican Party operatives. So, unbeknownst to LaRouche, the Dalto grouping went to work with the FB I, Fino feigns support for LaRouche the mob , and the Republican Party to undermine his cam­ There are some humorous moments in Fino's work for paign. the FBI against LaRouche. After the 1980 presidential elections, the same FBI-run During spring 1988, Marianna Wertz, representing LaR­ operation shifted gears, focusing now on breaking all of ouche's presidential campaign committee, solicited a finan­ the channels between LaRouche and the incoming Reagan cial contribution from Fino. "Always glad to help" LaR­ administration that had been built up during the campaign ouche, the FBI informant pledged and sent a check to the period. An FBI document dated Oct. 1981, obtained under LaRouche Democratic Campaign. But Mrs. Wertz recalls the Freedom ofInformation Act, referred to an FB I operation that Fino sounded somewhat paranoid during the phone con­ code named "PROBE-X," which focused on LaRouche and versatioq. He said that he had read the press coverage about Teamster ties to the Reagan White House. the Boston trial, and commented that he had noticed that an Part of the overall FBI maneuver had included promoting FBI informant had been exposed during the trial. Fino for a position in the campaign. Mrs . Wertz is the wife of William Wertz, former coordi­ Fino has now confirmed the story, quipping to the News, nator of fundraising for LaRouche-affiliated entities prior to "He wanted me to run for vice president one year." his jailing along with LaRouche. As the Fino story unfolds, it seems likely that, next, Back in 1979, during the primary period leading to the James Baker's involvement in "dirty tricks" with the mob 1980 presidential election, Fino met twice with LaRouche, and the FBI against LaRouche may see the light of day. who had entered the race for the Democratic nomination. According to the Buffalo News, Fino offered to seek out A Communist for the CIA support for LaRouche among conservative Democrats. Dur­ Fino started his life as an informant while a student at ing a campaign swing through upstate New York in Septem­ the State University of New York at Buffalo. He was re­ ber 1979, LaRouche met privately with Fino in a hotel near cruited by the CIA to monitor the activities of the radical Greater Buffalo International Airport. LaRouche security Students for a Democratic Society during the late 196Os. personnel who attended the meeting recall that Fino and During this period, Fino was a member of the Young Work­ LaRouche discussed ideas for building highways in underde­ ers Liberation League (YWLL), the official youth group of veloped countries. Fino detailed his techical knowledge on the Communist Party-USA. "Fino also said he had infiltrated the subject, referencing his travels to Saudi Arabia. Sources the organization of Lyndon LaRouche for the CIA and used who have known Fino report that he had traveled extensively his Mafia connections to help the CIA look for possible throughout the Middle East, including Israel. mob connections in the assassination of John F. Kennedy," In 1980, Fino traveled to Pontiac, Michigan to meet reported the Feb. 2 Buffalo News. privately with LaRouche again. It is not known if Fino was According to numerous published histories of the Viet­ electronically "wired" when he met with LaRouche. nam era anti-war movement, Fino's early days as a snitch

EIR February 17, 1989 National 61 were likely part of Operation Chaos, later exposed in a congressional hearing that led to a major shake-up of the Interview: Lyndon H. LaRouche. Jr. U. S. intelligence community. Operation Chaos was the CIA codename for an unauthorized program of domestic surveil­ lance targeting anti-war activists. After the expose, the sur­ veillance program, run out of the CIA Office of Security, was quietly turned over to the FBI.

A mobster for the FBI Fino hooked up with the FBI in 1972. By 1973, with 'The court could have FBI backing, he took over as business manager for Laborers Union Local 210, running on a reform platform. Over the Mr. LaRouche granted the fo llowing interview on Feb. 4 to years , Fino rose in stature, becoming a "pillar of the commu­ Lonnie Wolfe of EIR News for Loudoun County, a local nity." His union's pension fund invested $80 million in paper in Leesburg affi liated with EIR, fr om the Alexandria constructing hotels and office buildings in the downtown Detention Center in Alexandria. Virginia. We reprint it here area of the industrially depressed city. The News reported, in a slightly condensed version. "The flamboyantFino , a commercial pilot and low-handicap golfer who seemed more at home with corporate executives EIR: You and your associates have stated that the Alexan­ than the laborers he represented, enjoyed the company of dria trial was "rigged" to achieve a guilty verdict. Given the bankers , leaders of the black community, and politicians government's animus, and the campaign of vilification, do during his 15 years as business manager of Local 210." you think it possible that you could have gotten a fair trial Although the son ofa well-known Mafialieutenant, Fino anywhere in the U.S . ? denied his union had any links to organzied crime. But LaRouche: Broadly, the answer is yes. You have to distin­ he was telling the FBI another story. He leaked the same guish between two things. First of all, the rigging, the arro­ information he was giving the FBI to selected reporters, gant absolute rigging of the Alexandria trial, which was a which produced stories about impending indictments of mob fraud from beginning to end, by the government and by the figures, months before they occurred. court, as opposed from the difficulties of assuring a fair jury Fino maintained close connections with mobsters and trial, say in the Eastern District of Alexandria. For example, Laborers Union officials in Cleveland and Chicago. His the case of Boston, where three weeks approximately were lawyer for 17 years, Paul Cambria, also represented Harold spent in obtaining a jury selection, through proper voir dire Friedman, the recently convicted Teamster vice president. processes, which of course was not allowed in Alexandria. Recently deceased Teamster president Jackie Presser was After the conclusion of some months, it ended in a mis­ an FBI informant. Henry Rossbacher, an Assistant U.S. trial caused by the government's dilatory tactics. The jury Attorney in Los Angeles until two years ago, is representing polled itself afterdischa rge, and said it would have acquitted Fino in his negotiations with the FBI. all the defendants on all charges, and said the case was dom­ inated by governmentmiscond uct. So that demonstrates that ACLU to LaRouche's defense? a fair trial is possible, under proper conditions. In Alexan­ The Fino case highlights a pattern which is increasingly dria, it was not. disturbing to civil libertarians. The FBI is again out of con­ There is of course a difficulty in the Eastern District of trol, but since the outrages are directed at LaRouche, the Virginia, where you have a very special kind of liberal ideo­ defenders of the First Amendment have been slow in shaking logical influence in the population, which makes it rather off their liberal ideological blinders to realize that if the difficult to get an impartial jury for anyone who is not that government can silence LaRouche, they may well be next. type of liberal. But it would be possible if the court were to But a recent article in an anti-CIA publication is indica­ attempt to do it. tive that even some of LaRouche's harshest critics from the left are waking up. EIR: You have written that "all your enemies are evil." The winter 1989 issue of Covert Action Information Could you explain that? Bulletin (CAIB) reports on illegal FBI operations against the LaRouche: I distinguish between those who may disagree "LaRouche organization." In an article entitled "COINTEL­ with me, who may be right or wrong, and those who are evil. PRO in the '80s: The " 'New' FBI," Boston Globe investiga­ An example of what I mean by evil is illustrated by the case tive reporter Ross Gelbspan highlights the LaRouche case of Uganda. Uganda, of course, according to my information, in a section subtitled, "Spying on LaRouche." The article is has 60% of its population infected with the HIV virus, oth­ a review of several illegal FBI operations, including those erwise known as the AIDS virus, which means the nation is against the Committee in Solidarity with the People of EI extinct. The starvation and mass death in black Africa has Salvador (CISPES). been the result of a deliberate policy by the most powerful

62 National EIR February 17, 1989 and that the next unfortunate to come down the line to get the same treatment is going to find himself in the deep kimchee faster than we did.

ElK: Do you hold any hope of vindication in the appeal process? LaRouche: There are always honest fellows in the process who may say, I don't care what the pressure is, this is a foul ball decision, and I am going to do something about it, some­ held a fair trial' where in the appellate process. That can happen. Otherwise, barring such action, by simply honest judges, who have had international financial institutions in the world, who happen their belly-full of this stuff, the political process will influ­ to be my enemies. They are quite evil. ence the ultimate outcome. One can say in summation, that And the Soviets, of course, are a related case there also. if Gorby goes up, I tend to go down, If Gorby falls, I tend to Moscow is quite evil. It's the same kind of problem. As I go up. That's the way I think things will go. say, distinguish between those who are my enemies, who are behind the Alexandria process, for example, and those peo­ ElK: There are people, not your friends, who have started ple who simply, for one reason or another, happen to disagree circulating the story around these parts that your jailing will with me. have the same kind of effect on the organization as the Soviet pullout on the puppet governmentin Afghanistan: that is, that EIR: In several locations , both before and after the sentenc­ there will be a collapse and dispersal of the organization from ing, you have said that the Alexandria trial would have a Loudoun County and elsewhere. What is your assessment of disastrous effect on the U. S. Could you tell us what you see that? that effect being, and whether there is any way to do some­ LaRouche: These people are cheering for what would be thing about it? called fascism, which indicates that such people represent a LaRouche: A good example of the influenceon the foreign fascist mentality in the County. And they should begin to interests of the United States is the case of the impact in examine their own pedigrees on that account. But, however, Europe. In West Germany for example, Austria, Switzer­ they are wrong on every account. People who think like that land, and elsewhere, the judge in Alexandria was character­ are generally very stupid. The Soviets never intend to leave ized by knowledgeable circles, close to or in government, as Afghanistan, and have not left, and have not begun to leave, comparable to the famous Nazi judge Freisler of the 1930s and of their own volition, never will. and 1940s. I think it's not an unfair comparison, but it was interesting to me that it would be volunteered by people as ElK: There is currently a trial going on here in Loudoun, their immediate reaction to what they knew of the case. directed by the state Attorney General's office and presided The problem in Europe as such, as far as the effect in the over by Judge Penn, which appears to heading towards the United States goes, is around the proposal to more or less same kind of prejudicial result as Alexandria. What would dissolve the sovereign borders among European states, under have to be done here to avoid a similar "railroading" as in the title of what is called Europe 1992. The British are deter­ Alexandria? mined that shall work out to their advantage, to which effect LaRouche: It's simply a fair trial. But undoubtedly there they have put continental Europe under virtual British eco­ will be some political factors in that too. It could go badly. nomic slavery. The U.S. is presently allied with those British It's possible, but if it does, 99% of the citizens of Loudoun interests against France, Italy, Germany, and other nations. County will findthat whatever can be done to us will be done And naturally, the French, Italians, and Germans, aren't to them next. happy with the United States engaging in this kind of thug­ gery on Britain's behalf. And they reacted to this trial as the ElK: What role, if any, do you now see for yourself in last straw . helping steer the Bush administration? It persuaded them that the United States may have gone LaRouche: There are some people in the Bush administra­ all bad . As a result, there are much stiffer reactions to U.S. tion or around it who value my opinion-whether they accept diplomacy now, than there were before the news of the trial it or not-very highly. They like to know what it is, even if hit Europe. Inside the United States, of course, this is an they don't follow my advice. Under conditions of crisis, they impairment of the system of justice. And therefore, to me, to will tend to have a stronger voice within the Bush counsel permit such a travesty of justice to occur, particularly against and George may have the good sense to say, okay, what my a major figure with some fighting capability, where other dear friend James Baker III has been proposing is a lot of people ordinarily could not fight this kind of thing, even to garbage, and it isn't going to work; maybe I have to listen to the degree we did, means that the system of justice has failed what the other fellow says.

EIR February 17, 1989 National 63 Jan. 31, 1975. On that day, Smith was notified of a fraud indictment by the Little Rock, Arkansas district attorney and while driving home, he hit and killed 54-year-old George C. Srughill, who is reported to have been crossing Airways Boulevard in Memphis, Tennessee against a red light. Smith left the scene of the accident and later told police that he was not aware of what he had done ! He was charged with leaving the scene of an accident and driving with an expired license. But once again, fortune intervened and the charges were dropped. After this narrow escape, Smith went on to tum Federal Fedex : Mr. Smith Express into the flagship New Age corporation that it is today. goes Aquarian Making Fred Smith In 1972, when he founded Federal Express, Fred Smith by Steven Meyer was 28 years old and a graduate of Yale University, where he was inducted into the super secret Eastern Establishment On the cover of the Feb . 13 issue of Business Week is a cult, the Skull and Bones Society. Smith was a highly decor­ painting of a smiling Federal Express chairman Fred Smith. ated Vietnam War veteran. He began Federal Express using In the background is a profile of a cargo plane tagged with his family trust fund as backing, with the idea that a fast and both Federal Express and Flying Tiger, signifying the long­ efficientfre ight company could soon tum a profit. But in its awaited merger between the two corporations. On Jan. 31, very first months, the company hovered near bankruptcy, the U.S. government officially approved Smith's acquisi­ and Smith needed a huge infusion of credit to expand com­ tion, giving Federal Express routes and cargo planes to the pany operations. Orient and Southeast Asia. Through friends, he sought the help of White, Weld Entitled "Mr. Smith which were interested in finding investors for Federal Ex­ Goes Global," the article press. Readers of this publication will recognize White, details the risks and diffi­ Weld. William Floyd Weld, the son of David Weld, now culties involved as Smith deceased partner of White, Weld, was the U.S. attorney attempts to put together, in who covered up the Bank of Boston's massive drug money his own words , "the largest laundering and who initiated the nationwide prosecutorial and best transportation witchhunt against Lyndon H. LaRouche. company in the world." According to writer Robert A. Sigafoos, when White, According to the admiring Weld agreed to help Smith, Federal Express was "absolutely authors , "of all the factors broke," so they informe� him that they would provide back­ that helped make Federal ing if Smith could provide $1.5 million of equity for the Express a $4.6 billion-a­ company. yftar juggernaut, including Smith's own prescience and On Feb. 5, 1973, to meet their request, Smith frantically plenty of good fortune, perhaps the most important is his secured a $2 million loan from the Union Bank in Little overwhelming desire to be No. 1." Rock, Arkansas by forging the signature of the lawyer for Contrary to that assertion, it was not Smith's desire his family trust, which was the securer of the loan. It was that built Federal Express, but the omnipotent hand of "the this action which was the subject of the aforementioned goddess Fortuna" operating through Wall Street's powerful indictment. White, Weld and New Court Securities. Not only did they During Smith's trial he was asked by the prosecutor; steal ownership from Smith outright and then reorganize the "Were you pressured enough that you would do anything to company, but they directed Federal Express in their fight for get some money?" Smith answered, "I wouldn't kill some­ deregulation of the airline industry. According to one source, one, no sir." Prosecutor: " ...but you would submit a false passage of deregulation saved a nearly bankrupt Federal and fictitious statment on a document to a bank to get it, Express and gave the moribund company a new lease on life wouldn't you?" Smith: "I have never denied that ...and that by making available expanded routes and planes without is correct, sir." Although he admitted forging the document, which the company could not be profitable. Smith was acquitted by a home-town jury . Probably for Smith, fortune's singular act was to save Despite acquiring the loan, Federal Express racked up a - him from a hit-and run manslaughter rap on the evening of deficit of over $4.4 million by April 1973. Total stockhold-

64 National EIR February 17, 1989 ers' equity was only $289,000. White, Weld still had not of directors of the Washington, D.C. based CATO Institute, delivered on its promise to find investors when Henry W. the high powered libertarian think-tank which advocates the "Brick" Meers, White, Weld's man on the scene, set up legalization of recreational drugs! He also sits on the Reebok a meeting for Smith with Chicago's powerful Col. Henry (footwear) Foundation Human Rights Award Board, along Crown. According to Sigafoos, "Smith realized this might with Rock Stars Sting and Peter Gabriel. The board recently be the last hope to keep Federal Express alive." issued an international award to Winona LaDuke, who is Publicly, Crown was a benificent industrialist and real associated with the InternationalIndian Treaty Council. The estate magnate. But according to criminal court documents, latter is officially administered by the terrorist American Crown was a man who had been convicted of swindling the Indian Movement. Sources also report that Smith is a new U.S. Army Corps of Engineers out of millions of dollars factor in Democratic Party fundraising. in 1945 and had been indicted for stock fraud in 1963 . Smith admits that his New Age management policy is Midwesterners also knew him for his decades-old ties to the partially influenced by "Futurists" Alvin Toeffler and John mob syndicate of Meyer Lansky. Naisbitt. Federal Express fosters the concept that all employ­ On May 12, 1973, through the help of Crown, Smith ees are part of an extended family and to his employees, secured a four-month loan of $23.7 million from Chase Fred Smith's reign is that of guru and paterfamilias. He Manhattan bank. Smith was now hooked into the whirlwind often appears on the company's internal television network, game of high finance. Since the loan was due in a short quietly motivating the need for speed-up and productivity period of time, Meers came to Smith's aid once again and increases. Big Brother? contacted New Court Securities Corporation, the Wall Street According to Blaine Harden of the Washington Post, investment house of the European Rothschilds. Charles Lea, these in-house television addresses have made Smith a hero New Court's executive vice president, agreed to co-manage to his employees. Harden described the October 1980 "Em­ a search for investment capital with White, Weld. ployee Family Briefing" which was televised to employees and their families nationwide as a combination of "a Johnny Wall Street takes over Carson show with the atmosphere of a faith healer's fes­ Things got worse. By its due date, the Chase loan was tival. " in default. Federal Express could not meet its payroll. Smith An aide to Smith once joked, "He's the Massah of the and his family Trust were on the verge oflosing $7.9 million. great Federal Express plantation." According to Business After being kept dangling for months, on Nov. 13, 1973, Week, Smith gave an "eyebrow-raising speech last year, White, Weld and New Court provided a $52 million loan to [where he] urged managers to follow the lead of three armies: Federal Express. A board meeting was set for March 19, the Israelis, the Nazis, and the Confederates." 1974 to meet the next round of refinancing. If smashing the personal identities and independence of But on March 6, the Smith family trust, the Enterprise his employees through New Age gimmickry were not Company, was informed that the $2 million loan that Fred enough, Smith has personally installed the Consensor com­ Smith had fraudulently secured, was now overdue ! Fred puter system to brainwash his management. Through com­ Smith's sisters, Fredette and Laura Ann, both board mem­ puter polling which registers a manager's perceived expertise bers of the trust, who knew nothing of the loan, also learned on a matter at hand as well registering his or her depth of of their brother's fraudulent signature which secured it! The "feelings," the computer generates a "consensus" and policy cat was out of the bag. Smith was a liability. Investors met is made. According to Chief Operating Officer James L. with Meers and Lea and decided to remove Smith as Federal Barksdale, this "muffles dominant personalities who can Express's chief operating officer. overrun any meeting." So much for individual creative as­ After the smoke had cleared over the financial intrigue sessment and intelligent debate on proposals. of the previous months and Fred Smith's fraud scandal, the Smith's boast that he intends to make Federal Express Wall Streeters had taken away Federal Express from Fred the largest and best transportation company in the world is Smith. At Federal Express's March 19, 1974 executive board not an idle threat. According to historians and financial meeting, Rothschild's New Court emerged holding the great­ specialists consulted by this reporter, it would appear that est number of voting shares of Federal Express, almost the powers behind Fred Smith and Federal Express are at­ 21 %, while Fred Smith held only 9.8%, and his family trust tempting to become the private mail carriers for the new 9.25%. Smith and his trust had lost outright control of the trade agreements between East and West which are part of company and financial analysts suspect he has never come the U.S.-Soviet global condominium. They suggest that the close to owning it again. powerful financiercontrollers of Federal Express are trying to reestablish control of the international mail for their own Fred Smith: New Ager political and financialgain as the the Thurnand Taxis family In the ensuing years, Fred Smith has become a leading of Germany did by running the mail or "taxi" service in New Ager. He is a financial backer and member of the board 16th-century Europe.

EIR February 17, 1989 National 65 Elephants & Donkeys by Kathleen Klenetsky

protege of the Urban League's Whit­ Jones, known in Texas as an out­ ney Young, and got his first taste of spoken proponent of a strong defense, national politics when he served as and pro-growth economic policies, is deputy manager for Ted Kennedy's considering legal action against New DNe chairman: 1980 presidential bid. He served as Slagle. pure Establishment deputy chainnan of the Democratic Party from 1982 to 1985. John Warner faces The election of Washington lawyer Although a number of prominent Ron Brown as chainnanof the Demo­ Democrats-several fonner Con­ electoral challenge cratic National Committee sends out gressmen among them-were also In Virginia, LaRouche Democrat several signals. contenders for the DNC post, Nancy Spannaus, a longtime associ­ First and most obvious, it means Brown's election was assured after ate of the internationally famous that the party's policies will almost Kennedy, Cuomo, Sen. Bill Bradley economist, announced Feb. 3 that she certainly keep to the same old anti­ (D-N.J.), and, finally, the AFL-CIO will try to unseat Republican Sen. defense, soft-on-Moscow line, which publicly endorsed him. John Warner, more widely known as has alienated large chunks of the par­ Brown's selection caused some the fonner Mr. Elizabeth Taylor. ty's traditional base, and led to the grumbling among more conservative Spannaus told the press that she humiliating defeat of Democratic Democratic leaders, who objected had decided to initiate her campaign presidential hopefuls. that the party desperately needed a now, even though the election won't Second, it suggests that the Dem­ leader who wasn't cast in the McGov­ be held until 1990, because of the ocrats will call an early end to their ern-Mondale mold. urgent necessity of solving the mas­ honeymoon with President Bush, and sive crises currently facing the United start exploiting the political problems Texas hacks remove States. which will soon start engulfing Bush, These crises, she said, range from LaRouche Democrat as the U. S. economy continues to the collapse of the U. S. and global nosedive. Brown threw a few punches Ron Brown's fellow Democrats in the economy, to the horrendous decline at the Republicans in a speech to state Texas state party were thrown into a of culture, epitomized by the growth party leaders Feb. 9, blasting them tizzy last year, when Claude Jones, a of AIDS, the rock-drug scene, and the for not caring "about truth or about LaRouche Democrat, won election as frightening growth in overtly Satanic decency." chainnanof the Harris County (Hous­ activities, through the destruction of Much has been made of the fact ton) Democratic Party-the largest the American justice system, most that Brown, who will be the first black Democratic entity in the state. clearly Seen in the jailing of LaRouche to head up either party, is close to Led by state party chainnan Bob and six of his associates, including Jesse Jackson. While it's certainly Slagle, the party leadership tried ev­ Mrs. Spannaus's husband, Edward. true that Brown was brought into ery trick in the book to prevent Jones Mrs. Spannaus said she believed Jackson's campaign after the pri­ from perfonning his duties. it was her duty to run, because the maries were over, to negotiate what Late last month, Slagle decided to United States is headed "into a devas­ kind of deal Jackson would get in ex­ resort to straight bonapartist tactics. tating economic and financial crisis, change for backing Mike Dukakis, He simply declared that he was throw­ where the Soviets will gain dictatorial and his election as DNC chainnan is ing Jones out of the post, on the power internationally, and where the likely to bolster Jackson's political grounds that he had violated party opposition to the austerity in the U.S. muscle, Brown's more important rules by not supporting the 1988 Dem­ and to the capitulationto the Russians links are to the Washington liberal ocratic presidential slate. will be crushed by a far over-reaching Establishment. Jones fired back a letter in which Justice Department." Is this the future A partner in the prestigious Wash­ he documented that Slagle's charges you want for your children," she ington law finn of Patton, Boggs & were fabrications, and that his action asked. "It is not the one I want for Blow, Brown has been heading down to remove Jones violates Texas State mine-nor do I believe that we have the Establishment track since his days Law, the First Amendment of the the right as human beings responsible at Middlebury College. He studied Constitution, and the Statement of before God, to allow such a future to law under Mario Cuomo, became a Principles of the Democratic Party. come into being."

66 National ElK February 17, 1989 Eye on Washington by Nicholas F. Benton

Mayors' panel evades youth gang issue groups, with East bloc backing, and The discussion got interesting when panelists were challenged have become paramilitary operations. It makes sense that they would insinu­ on the national security dimension of the threat. ate similar operations into their distri­ bution networks in the U. S. You would think by its title that the turn, he amazed everyone by averring "It may be the case that youth most interesting panel slated for the that there was no evidence that youth gangs are a foreign intelligence opera­ Second Annual Conference on Crime gangs were involved in drugs in his tion and, a national security threat," I and Drugs sponsored by the National city-and he moved on to bore every­ said. "Would anyone care to Conference of Mayors here Feb. 5-7 one with a laundry list of local anti­ comment?" would be the one entitled, "Drugs and drug activities. The room broke into pandemo­ the Growth of Youth Gangs." That's Patrick Fitzsimmons, Commis­ nium. FitzsimmQns attempted a re­ what many people thought. The room sioner of Police for Seattle, a last­ sponse. "There is a great deal of truth was packed with media as well as con­ minute replacement for no-show Ben­ to what you say," he said. "There are ference registrants-most of whom jamin Ward, New York City'S Police very diabolical workings out there." were either mayors or chiefs of police Commissioner, did slightly better He then took issue with Williams of major U.S. cities. than the other two. At least he talked from Philadelphia by referring to the The local media were out in force about youth gangs-the appearance Jamaican networks that traffic on the because the District has become world of members of the Los Angeles-based East Coast as "youth gangs." They famous for its escalating murder rate, Crypts and Bloods in his area over the are called "posses" he said, "but that now well over one a day, most of last year. means 'gangs.' " which are drug related, and many of He said there are an estimated 50- Williams admitted that youths do which have the appearance of gan­ 70,000 members of youth gangs in run drugs in Philadelphia, but only as gland-style executions. the L.A. area, and that over 400 of low-level distributors. "They do not But to say that the opening presen­ them have been arrested in the Seattle control any operations," he said. tations by the panelists were a disap­ area bringing drugs in. He said the Then, however, Police Chief pointment would be an understate­ ability to sell single "hits" of the po­ Charles Reifsnydc;rof Lansing, Mich­ ment. Instead of talking about the tent cocaine derivative, "crack," for igan, jumped up from the audience topic, the three panelists spent all their $3 apiece has led to an unprecedented to take issue, citing the situation in time bragging about the great pro- f rise in trafficking. There is so much Detroit. "You are talking Oldy about grams they have in their cities to com­ profit in it that gang members can 'scavenger gangs,' " he told Wil­ bat drugs, from enforcement to com­ jump a bus or plane from L.A. to liams. "But in Detroit 'corporate munity participation and education in Seattle and still make a killing in a gangs' exist, too. They are adminis­ the schools. new market in days. trators , they run distribution net­ Panel chairman Bill Harris, the When the question period began, works, they are promoters, and they mayor of Lincoln, Nebraska, con­ I reminded the panelists of the title of are between 14 and 20 years old," he fessed that the subject of youth gangs their workshop, and noted that none said. "They used to make $3.5 million and drugs was beyond his purview, of them had talked about it. I won­ in a week. Now they make a million because there was no evidence of it in dered, I said, why police in Washing­ a day." his town of only 200,000. ton, D.C. (like Philadelphia's Wil­ Williams, now sweating, said, But while Harris couldn't resist liams) officiallydeny the existence of "I'll make a call to Detroit about that the chance to drone on about the won­ gangs "when there is every evidence today." derful programs in his town before the they exist, and officers admit pri­ Pittsburgh's Director of Public TV cameras, the audience expected vately they do." Safety chimed in about Detroit and the next speaker, Willie Williams, There is a need for a real "threat New York gangs arriving in his city. Police Commissioner for Philadel­ assessment" of the growth of drug­ Not only had the meeting begun to get phia, to have a lot to say. After all, trafficking youth gangs. "In Latin interesting, but concernsabout threat­ he had his mayor, Wilson Goode, sit­ America," I pointed out, "the interna­ ened cutbacks in federal funds for in­ ting in the front row to back him up. tional drug cartels are working openly teragency intelligence sharing began But when it became Williams's with politically motivated terrorist to surface as well.

EIR February 17, 1989 National 67 Congressional Closeup by William Jones

LaRouche activists ers are three-quarters responsible for raise and sent the measure to President descend on Capitol Hill their own problems." Bush, who signed it just hours before Some 50 supporters of Lyndon LaR­ Although the general reaction to the midnight deadline. The defeat of ouche from around the country de­ the lobbying effort was hysteria and the congressionalpay raise also killed scended on Capitol Hill during the fright, a number of people took the raises of 16-50% for 6,200 members second week in February to demand matter more seriously. A letter from of the Senior Executive Service, made justice for LaRouche and his six im­ former Attorney General Ramsey up of career civil service employees prisoned associates. They targeted, in Clark to Judge Albert V. Bryan ques­ above the rank of GS-15. particular, members of the Senate and tioning the rapidity of a trial involving House Judiciary Committees, which complex charges, which the lobbyists have oversight responsibilities over circulated, created quite a bit of inter­ the judiciary system. est. One northeastern congressman Reactions from congressmen var­ commented, "I know more about ied widely. One congressman, Bar­ LaRouche than you think, and I know Yeutter approved as ney Frank (D-Mass.), a closet liberal about the use of these conspiracy Agriculture Dept. head who recently came out of the closet, charges by the federal government." On Feb. 8, the Senate approved Clay­ lost his cool and sent for the police to Another congressman commented, ton Yeutter as head of the Department clear his officeof these uncomfortable "The Department of Justice is out of of Agriculture in a unanimous 100-0 constituents. control." vote. Yeutter said that he plans to be Sen. Al D'Amato's (R-N.Y.) of­ During lunch hour on Feb. 7, fifty "deeply involved" in the final two fice was subjected to a sit-in by angry LaRouche supporters held a demon­ years of negotiations of the General constituents who wanted to speak stration on Capitol Hill, featuring slo­ Agreement on Tariffs and Trade with the senator on the LaRouche gans like "J-U-S-T-I-CcE: we won't (GATT), which will be led by the new case. D'Amato's brother, who was leave 'till LaRouche is free ," and Trade Representative Carla Hills. accosted in the halls by the New York "Gulag justice we must abort; close Yeutter told the Senate Agricul­ delegation, mistakenly taken for the Judge Bryan's Nazi court." They also ture Committee, "If we hang tough senator, was given a dressing-down demanded a "sub-minimum wage for and negotiate skillfully, we can open for his brother's refusal to meet with Congress." Several congressmen markets." Y eutter plans to cut income his constituents. passed by during the course of the supports to U.S. farmers because they The office of Sen. Bill Bradley demonstration. Barney Frank yelled, are 'lrade distorting." He also plans (D-N .J .) gave the excuse that they "LaRouche got the justice he de­ to increase funds for export subsidies wouldn't interfere in matters of the served. I hope you have your bail to use as "leverage for trade reform." judiciary branch. This was also the money ready." Yeutter told the committee that response of the offices of congress­ "American agriculture is still far too men who themselves were on the judi­ dependent on the generosity of the ciary committee. Sen. Lloyd Bentsen American taxpayer for its livelihood." (D-Tex.) had instructed his aides not House votes One "cannot realistically hope to es­ to talk to anyone about court cases. against a pay raise cape" farm spending cuts, he said. Staffers from the office of Rep. Congress yielded to intense public The budget for the USDA is pro­ Frank Wolf (R-Va.), the congressman pressure and voted on Feb. 7 to reject jected to be $52.1 billion during 1989, from the district where LaRouche a 50% pay raise for its members, fed­ including $ 13.8 billion in crop price lives, were generally snide and abra­ eral judges, and top administrationof­ supports. sive. One aide to a Texas Democrat ficials. Forced into a recorded vote The Yeutter confirmation had who said that "some people think that its leaders had tried for weeks to been delayed because of questions LaRouche should be kept in jail" also avoid, the House of Representatives concerning his relation to the scandal commented on the problem of the col­ disapproved the pay raise 380-48. The on the Chicago commodity futures lapse of farming by saying that "farm- Senate then voted 94-6 against the pay markets.

68 National EIR February 17, 1989 T ower still dangling In spite of all the flap, Tower has resolution based on Gramm-Rudman While President Bush reiterated his been carrying out some of the func­ deficit-reduction targets would auto­ support for his Defense Secretary­ tions of secretary of defense, attend­ matically become law. Providing for designate John Tower, expressing his ing the annual meeting of the Wehr­ a high-powered. budget committee' confidence that Tower would win kunde defense association in West and an early deadline for action, say Senate confirmation, Senate commit­ Germany, and on Feb. 4, addressing the proposal's advocates, would ac­ tee members are still expressing skep­ the American Friends of Turkey. At commodate the White House's inter­ ticism about the nomination. the AFOT meeting, Tower stressed est in early budget negotiations with Although the major objections to two major points: 1) that NATO has Congress. the Tower nomination, sensationally placed too much emphasis upon the Senate Budget Committee chair­ played up by the mass media, have central front (West Germany), and it man James Sasser (D-Tenn.) ques­ concerned Tower's alleged drinking needs to place greater emphasis upon tioned the need to reform the budget problem and womanizing, the latest the northern and southern flanks; and process. "There's continued tinkering question marks were raised in connec­ 2) that the greatest foreign policy de­ with the process, but the process is tion with contributions which Tower bacle of the Congress in recent history not the problem," said Sasser. "The (while a senator) may have received was the decision to embargo Turkey problem is, there's not enough money fromcompanies now under investiga­ after the Cyprus war. to go around." tion in the FBI's "Ill Wind" probe of defense procurement. According to a report in the Washington Times, the FBI is also looking into charges that New budget procedure Carlucci gives aides to the former senator profitedby proposed by senators advice to Congress selling classified documents to de­ What is billed as a "radical reform" In a letter published in the Jan. 29 fense firms. of the budget process, which would issue of Roll Call magazine, outgoing Some senators are expressing adopt some of the streamlined proce­ Defense Secretary Frank Carlucci doubts that Tower will be confirmed, dures used afterthe 1987 stock market gave a few words of advice to the with all these "snags." Even Republi­ crash, was put forth by Sen. J. Ben­ Congress. "There has been an erosion can stalwarts are starting to balk. Sen. nett Johnston (D-La.) and Sen. Pete of trust [between the Executive and Malcolm Wallop (R-Wyo.) said that Domenici (R-N.M.). Legislative branches], without which the Tower situation was "beginning to "The budget process is not work­ no partnership can function effec­ look a little Bork-like" (Robert Bork ing," said Senator Johnston. "This tively," he wrote . "This cannot con­ was the failed 1987 nominee for Su­ will work, just as the last summit tinue without doing serious damage to preme Court Justice.) Sen. Sam meeting worked." the reform pro­ the national interest." Nunn, chairman of the Senate Armed posal would: 1) create a new, 18- Abuse in the defense industry Services Committee, said that, al­ member budget committee, which should be prevented and violations of though Tower may still be confirmed, would include congressional leaders the law prosecuted, Carlucci wrote. "certainly he has been damaged." and the key players on each house's "But we must also provide the stabil­ Tower has been subject, ever budget committee, appropriations ity and incentives for private industry since his nomination, to a negative committee, and the Senate Finance to seek defense business and produce media campaign. Despite his compat­ and House Ways and Means commit­ quality goods as efficiently as ibility with the new Bush team and tees; 2) replace the current year-by­ possible ....The impact of further his statements endorsing limits on the year budget system with two-year defense reductions on America's co­ Strategic Defense Initiative, Tower is budgeting; 3) require the President's alition strategy wouldbe severe, since still suspected of being a defense ad­ signature on budget resolutions, mak­ our force structure is now stretched as vocate, who might under some cir­ ing them binding laws rather than thin as it can be stretched, while still cumstances oppose the policy of dis­ "blueprints" for spending. allowing us to maintain our deploy­ armament and appeasement. If not passed by May 15, a budget ment rotation schedules."

EIR February 17, 1989 National 69 National News

the Navy; and Amos A. Jordan ofthe Center moment of extraordinary opportunity" to for Strategic and International Studies at implement the Democratic agenda. Georgetown. Bush has heard "the voices of people SDI is officially crying for help. . ..The man chosen to be our President, after having tried it another on chopping block way for a long time, has begun talking like The lead story of the U.S. Army newspaper one of us," Cuomo said. "We should make Stars and Stripes on Feb . 5 reports that U.S. Urban decay a the most of it." National Security Adviser Brent Scowcroft Clark Clifford, a longtime fixture of the participated in a report calling for dropping self-feeding process Washington establishment, extolled Bush the idea of a "Star Wars shield," and con­ Roderick Wallace, at the Departmentof Ep­ in a Washington Post Magazine story on centrating instead on making land-based in­ idemiology and Social Medicine of Albert Feb. 5 on the preparation of his memoirs. "I tercontinental ballistic missiles mobile. Einstein College of Medicine, released a had a fairly close relationship with Prescott President Bush has significantly up­ new study in January entitled, "A Syner­ Bush, George Bush's father," Clifford said. graded the role of NSC director, and Scow­ gism of Plagues: 'Planned Shrinkage,' Con­ "I found him to be intelligent, a splendid croft's role in the preparation of the report tagious Housing Destruction and AIDS in public servant. He brought the boys up ex­ puts the Strategic Defense Initiative offi­ the Bronx," which demonstrates that urban ceedingly well." cially on the chopping block. decay creates a self-feeding shockwave of Clifford insists that for Bush to be suc­ The report , "issued with unusual bipar­ murder, drugs, and AIDS . cessful, he must not "buckle under to the tisan support" on Feb . 3, was sent to the Wallace attacks the policy of "planned ideology of the right wing," which he has White House in hopes that Bush would ac­ shrinkage" developed by the New York City shown himself sensitive to in the past. On cept its basic premises and ask Congress to RAND Institute which closed many fire sta­ whether Bush really agreed with Reagan, act on them. tions, and which triggered a process he Clifford comments, "He's had to take a Stars and Stripes comments , "If the termed "contagious urban decay ." When public pbsition of having to approve every­ main recommendations of the I8-month fires break out, people are driven into other thing that's gone on. But I would be sur­ study are adopted, it will mean official rec­ neighborhoods, which become over­ prised if he did approve of everything. Eight ognition that former President Reagan's crowded, leading to more fires and further years ago, when he took a look at Reagan's dream of a space-based missile defense sys­ abandonment of housing. economic policy, he delivered himself of a tem-under the Strategic Defense Initia­ Wallace points out that the spread of striking expression: voodoo economics­ tive , popularly known as Star Wars-is drugs is ordinarily contained by a kind of an interesting little indicator. But then he dead. It also will mean a renewed U.S. social immune system, a network of per­ had to suppress any indicators of criticism." commitment to completing a broad arms sonal relationships mediated by churches, control agreement with the Soviets at the clubs, schools, and community groups, Strategic Arms Reduction Talks which are destroyed by contagious urban (START)." decay. The result is accelerated drug addic­ Carter administration Defense Secretary tion, skyrocketing homicide rates, infant Soviet spetsnaz threat Harold Brown , who co-chaired the panel mortality, and, most recently, rampant that compiled the report, claimed that a na­ AIDS spread as the forced migrations have to U.S. energy grid tionwide defense against missiles is not fea­ mixed IV drug users into previously rela­ For the first time, a U.S. government offi­ sible and that the United States must retain tively drug free populations. cial has publicly acknowledged that Soviet and improve the doctrine of nuclear deter­ unconventional war-fighting units , or sp ets­ rence . naz, are a threat to U.S. targets , especially The panel also included "members of the nation's energy grid. the national security priesthood," including Edward Bodolato, deputy assistant sec­ Sen. Sam Nunn (D-Ga.), chairman of the Top Democrats retary for energy emergencies, told the Sen­ Senate Armed Services Committee; Sen. ate Governmental Affairs Committee on John Warner of Virginia, the ranking mi­ call Bush 'one of us' Feb . 8 that his office has developed proce­ nority member on the committee; Sen Wil­ New York Gov. Mario Cuomo told 140 dures to determine possible threats and to liam Cohen (R-Me.); Rep. Les Aspin (D­ House Democrats gathered at the Green­ respond to energy emergencies, and is tak­ Wisc .), chairman of the House Armed Ser­ brier resort in White Sulfur Springs, West ing steps to improve security. Top priority , vices Committee; Robert McFarlane, for­ Virginia, for their annual "issues confer­ he said, would be given to protecting elec­ mer U.S. national security adviser; R. ence" on Feb . 4, that the presidency of trical power systems, because power lines James Woolsey , former Undersecretary of George Bush presents Democrats with "a are most vulnerable to attack.

70 National EIR February 17, 1989 Briefly

• RICHARD ARMITAGE has been chosen to replace Gaston Sigur as assistant secretaryof state for East Asian and Pacific affairs . Armitage, 43, has been assistant secretary of "The Soviet Union has an unconven­ ments of fairness and due process for these defense for the past five years . In tional warfare capability, spetsnaz units, to defendants, refused to cooperate. 1985, he was involved in the over­ which it has assigned the mission of crip­ Defense attorneys determined that they throw of the Ferdinand Marcos gov­ pling the West's industrial infrastructure, would have to file a motion before Judge ernment in the Philippines. particularly its vulnerable energy systems, Albert V. Bryan to get the reliefthey were before an outbreak of hostilities," Bodolato seeking for the prisoners. Once the govern­ • LAWRENCE Eagleburger, the said. "Although the main sp etsnaz target ment was served with the motion, Robinson nominee for deputy secretary of state appears to be Western Europe, the potential reversed his position, and asked the judge and a Kissinger associate, is likely to for such action in the United States cannot for the prisoners to be allowed to remain be hit by a scandal because he "was be ruled out." in Alexandria for 100 days. Judge Bryan until last month director of a bank Michael Gent, president of the North reportedly signed the order immediately. facing charges for money launder­ American Electric Reliability Council, an ing," according to the Sunday Times industry association, said that the utilities of London Feb. 5. LBS Bank of New had been asked by the National Security York was indicted by a grand jury Council in 1983 to set up a nationwide secu­ in Philadelphia in November 1988, rity system after terrorist attacks against One in 200 N.J. after a government sting codenamed U.S. targets . "They were concerned that "Operation Flying Kite." trained teams of foreign-sponsored sabo­ newborns carries AIDS teurs could attack a number of key electric The results of a statewide study sponsored • HENRY KISSINGER, along system facilities and cause extended and by the Centers for Disease Control testing with former French President Gisc­ widespread outages that would compromise newbornsin New Jersey for AIDS infection ard d'Estaing and former Japanese out national security and seriously disrupt has shown that one in 200 are carriers · of Premier Yasuhiro Nakasone, is draft­ the economy," Gent testified. the virus, the Newark Star Ledger reported ing a book for theTrilateral Commis­ A staffer for the committee, which is Feb. 10. sion which will be a review of East­ conducting hearings to examine the vulner­ The study tested the blood of virtually West policy. The book is supposed ability of telecommunications and energy all babies bornduring a three-monthperiod . to be the main foreign policy inter­ resources to terrorism, testified that dupli­ Dr.Molly JoelCoye , the state's health com­ vention of the Commission into the cating systems would prevent full-scale loss missioner, reported that this was "the first Bush administration, and will be re­ of service, but . rnajor disruptions could oc­ time in the nation" that such a study was leased at their April meeting in Paris. cur from widespread attacks. conducted on a statewide scale. Of the Assisted by Bill Hyland, Kissinger nearly 30,000 newborns tested, 0.49% will concentrate on arms control tested positive for antibodies to HIV. policy. "The numbers in our study are disturb­ ing, but extremely useful, because they help • A PARTICLE BEAM test on a Unexpected reversal us more accurately project the future needs rocket will take place soon, accord� of HIV positive mothers and children for ing to a statement by O'Dean Judd in LaRouche case health service. These levels of infant expo­ of the Strategic Defense Initiative A motion by defense attorneys brought sure to the AIDS virus tell us that there will Organization, made at a Feb. 8 press about an unexpectedreversal by the govern­ be a rapidly growing need for the network conference sponsored by the Global ment on Feb. 9, in the Alexandria, Virginia of services we now have in place," Dr. Foundation. federal case against Lyndon LaRouche and Coye told the press. six associates. The "Alexandria Seven" According to Coye New Jersey ranks • PRESIDENT BUSH presided were imprisoned on Jan. 27 , on conspiracy second only to New York in the number of over a meeting of the National Secu­ charges. LaRouche and his fivemale associ­ pediatric AIDS cases. New Jersey ranks rity Council Feb. 10 to review U.S. ates won the right to remain together in the fourth among states in the number of AIDS policy options toward Afghanistan Alexandria jail for 100 days, to assist their cases. after Feb. 15, the date when the last counsel in preparation of their appeal, rather The Hudson Dispatch added that, by Soviet troops ate supposed to have than being dispersed to federal prisons all Jan. 31, 187 children under the age of 13 pulled out. Among the issues said to around the country. had developed AIDS. Of those, 149 were have been discussed was whether the Defense attorneys had attempted to get black or Hispanic, and 171 were the chil­ U. S. should "rethink" its large covert Assistant U.S. Attorney Kent Robinson to dren of parents who were at a high risk military aid program to Afghan agree to this arrangement earlier in the of contracting AIDS , mostly because they rebels. week, but Robinson, unmoved by argu- were intravenous drug users.

ElK February 17, 1989 National 71 Editorial

Policing the crisis won't work

President Bush's speech unveiling his proposed budget in the years 1974-75. has been widely recognized as an exercise in empty u.s. regional banks and S&Ls are insolvent be­ rhetoric . So long as he remains committed to the vi­ cause the fann and the energy sectors have been ruined cious mythology of the Reagan recovery, nothing more by the free-market policies of the Reagan administra­ could be expected. A collapsing stock market and tion, coming on top of the Volcker high-interest rate higher interest rates were the immediate response of policy and Jimmy Carter's attacks on the energy sector. the international financial community to his platitudes, Those Texans who thought the Bush government and his "rescue plan" for the savings and loans. would offer them a new deal, now have reason indeed The wag was right, who said that Bush's eulogy to be bitter, although Bush himself is on record as to Winston Churchill, which included Longfellow's opposing the only measure which could have put Texas famous lines: "Sail on, 0 ship of state ," was recited back on its feet , Lyndon LaRouche's proposal of an from the helm of the Titanic. oil import tax . One of the nastiest aspects of Bush's latest exercise Despite the President's emphasis on ethics in gov­ in crisis management, the reorganization of the savings ernment, it now turns out that his secretary of state, and loan institutions, has been his contention that the James Baker, is demanding a specialexemption so that failure of these institutions is due, not to mismanage­ he can maintain his sizable shares in Chemical Bank's ment of the U.S. economy by the Reagan administra­ holding company. He has had a personal financial tion of which he was a part, but of criminal malfea­ incentive for his policies, which bled the U.S. econ­ sance by S&L managers. omy and the Ibero-American nations in debt to the Thus Bush's answer to the collapse in the banking New York banks . system, is to jail bank managers . Were he to point the Baker's excuse, that while he was Treasury Secre­ finger at David Rockefeller and his ilk, we would not tary , he recused himself from policy decisions having have too much to complain about, but of course, this to do with Chemical Bank, is a farce, since every is not the case ! On the contrary , Bush's reorganization policy of the Treasury under the Reagan administration scheme will tum the S&Ls over to the commercial favored Chemical and its sister commercial banks . banks , which are themselves also bankrupt. The end George Bush may believe that he can crisis-manage result will be still less credit available to productive his way out of any situation, and use the strong ann sectors of the economy still functioning. of the Justice Department to silence any opposition to It is Paul Volcker, Donald Regan, and James Baker his policies; but reality has a way of asserting itself, III who are criminally responsible for the destruction even in the most tightly run police states. of the U.S. economy. Their financial policies-along There is no solution to the savings and loan crisis with those of former Agriculture Secretary Richard except the LaRouche solution, which calls for massive Lyng-will result in famine on a global scale, and infrastructure and high-technology investment in the these policies are being continued by the Bush adminis­ United States, and credits for development to the Third tration . World. Such a program could only be implemented by In the face of drought and other anomalous weather strengthening the foundations of the regional credit conditions, with spreading crop damage, U.S. policy structure , as a support to industrial entrepreneurs and remains to drive the family fanner off his land, and to the family fanner. keep fannland out of production. Even the U.N. Food Whether Bush means to deliver an impoverished and Agriculture Organization has begun to hit the panic United States into the clutches of the world's central button, warning that world cereals reserves are lower bankers , or not, that will be the result of his policies. now than even during the food crisis that hit the world His budget proposals are a step in that direction .

EIR 72 National February 17, 1989 IIThere is a limit to the tyrant's power.,"

, -Friedrich Schiller, Wilhelm TeU.

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