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1. Prospects for Instability in the Arabian Gulf gence input, stemming from Qaddafi's training at A comprehensive review of the danger of instabil­ Sandhurst and his ties to the Senussi (Muslim) ity in Saudi Arabia in the coming period. Includes Brotherhood. Heavy emphasis is placed on con­ analysis of the Saudi military forces, and the in­ trol over Qaddafi exercised by elements of the fluence of left-wing forces, and pro-Khomeini net­ Italian "P-2" Masonic Lodge, which coordinates works in the counry. $250. capital flight, drug-running and terrorism in Italy. Also explored in depth are "Billygate," the role of Armand Hammer, and Qaddafi's ties to fugitive 2. Energy and Economy: Mexico in the Year 2000 85 $250. A development program for Mexico compiled financier Robert Vesco. pages. jOintly by Mexican and American scientists. Con­ cludes Mexico can grow at 12 percent annually for 6. What is the Tr ilateral Commission? the next decade, creating a $100 billion capital­ The most complete analysis of the background, goods export market for the United States. De­ origins, and goals of this much-talked-about tailed analysis of key economic sectors; ideal for organization. Demonstrates the role of the com­ planning and marketing purposes. $250. mission in the Carter administration's Global 2000 report on mass population reduction; in the P-2 scandal that collapsed the Italian government 3. Who Controls Environmentalism? this year; and in the Federal Reserve's high A history and detailed grid of the environmen­ interest-rate policy. Includes complete member­ talist movement in the United States. Analyzes ship list. $100. sources of funding, political command structure, and future plans. $50. 7. The Global 2000 Report: Blueprint for Extinction A complete scientific and political refutation of 4. Prospects for Instability in Nigeria the Carter Administration's Global 2000 Report. A full analysis of Nigeria's economic develop­ Includes a review of the report's contents, demon­ ment program from a political standpoint. In­ �trating that upwards of 2 billion people will die if cludes review of federal-state regulations, analy­ its recommendations are followed; adetailed pre­ sis of major regional power blocs, and the envi­ sentation of the organizations and individuals ronment for foreign investors. $250. responsible for authorship of the report; analysis of how the report's "population control" policies 5. The Real Story of Libya's Muammar Qaddafi caused the Vietnam war and the destruction of A comprehensive review of the forces that placed Cambodia, EI Salvador, and Africa; analysis of en­ Qaddafi in power and continue to control him to vironmentalist effort to "re-interpret" the BitJle in this day. Includes discussion of British intelli- line with the report. 100 pages. $100.

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Make checks payable to: Executive Intelligence Review, Dept. MC·1, 304 West 58th Street, 5th floor, New York, NY. 10019 (212) 247-8820, �------Founder and Contributing Editor: Lyndon H. LaRouche. Jr. Editor-in-chief: Criton Zoakos Editor: Nora Hamerman Managing Editor: Susan Johnson Features Editor: Christina Nelson Huth Art Director: Martha Zoller Contributing Editors: Uwe Parpart. Christopher White. Nancy Spannaus Fromthe Managing Editor Special Services: Peter Ennis

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IIillContents

Departments Economics

11 Interview 4 The way out Viscount Etienne Davignon, of Mexico's the European Community's financial disaster industrial commissioner. Economic warfare from the outside is fa cilitated by past 42 Investigative Leads delays in industrialization, Fatima networks writes Timothy Rush. target the Pope. Exchange controls and political mobilization 44 Inside Canada against Mexico's "fifth column" are indispensable. The truth behind separatism. 7 The Venetian intelligence directorate 45 Report from New Delhi and the Hapsburgs' No winners in financial empire state elections. Part II of Economic Editor David Goldman's report on 46 Middle East Report his discussions at the Thurn Khomeini's blackmail. und Taxis palace in Bavaria.

47 Dateline Mexico 10 Currency Rates Security forces on alert. 12 Agriculture European Community 53 Law sets CAP prices. "Abscam subjected victim to outrage." 13 Domestic Credit Fear ofthe 60 Congressional Closeup unknown.

64 Editorial 14 Banking The new North-South A not untypical case. potential. 15 Trade qeview

16 Business Briefs June 8,1982 Volume 9 Number 22

Special Report International National

34 The Anglo-American 50 Bush and Baker place strategic miscalculation the President in danger Editor-in-Chief Criton Insisting that Mr. Reagan Zoakos concludes that needs a PR triumph in London has put into play Europe, they have ignored two processes: momentum the blatant security dangers toward nuclear war, and along his route. We provide developing-sector a profile ofWh ite House

consciousness of the need Chief 0 f Staff J ames Baker IJ to combat the British. III, who along with the EIR founder Lyndon LaRouche (c) at Jawahar­ Everything depends on Vice-President and lal Nehru University in New Delhi on April 22. in a seminar with faculty members and students which process gains Michael Deaver have from the School of International Studies. the greater speed. created this set-up.

Uwe Parparl/NSIPS 36 Iraqi defeat' would clear 52 A debate over ties to the wayJor Khomeini to Taiwan and Peking 18 India is vital take over Mideast Some members of the to reversing the Afterthe fa ll of administration still think the world depression Khorramshar, Alexander China Card can be salvaged. Ironically, certain British Haig and the Israeli Defense The U.S. may end up losing geopoliticians realize this Ministry view that prospect Taipei and gaining nothing. better than Americans do. with complacency. 56 A challenge to the 20 'Developing nations 40 France revives the Jerry Brown machine must be responsible for 'Spirit of Suez' In California, economic growth and On behalf of his British Will Wertz of the war-avoidance' senior partner, Mitterrand is National Democratic Policy carrying out NATO's "re­ Committee has shaped the A transcript of EIR colonization" policy. fo under Lyndon senatorial primary with his LaRouche's address to the blasts against what he calls Indian Council on World 48 International Intelligence the racism of Tom Hayden and Governor Brown, and Affairs on April 23. his program for growth. 28 Indian economy back 57 How Haig and on the track under the Kissinger ran Gandhi government Watergate against Asia Editor Daniel Sneider the U.S. prepared this survey after A lesson for President his latest trip to India. Reagan.

62 National News �TIillEconomics

The way out of Mexico's financial disaster

by Timothy Rush

U.S. economist and Democratic Party leader Lyndon As outlined by PLM Secretary-General Marivilia LaRouche, on a visit to Mexico at the end of May which Carrasco in her keynote presentation to the PLM included a meeting with President Jose Lopez Portillo congress, Mexico has commited three major errors in and an address to the Fourth Congress of the. Mexican its growth strategy. First, despite the effort put into Labor Party (PLM), told Mexico it had to go on the capital goods and heavy industry, the bulk of growth of offensive to preserve its economy and institutions from imports were part of continuing import substitution the danger of what he termed "Iranization." efforts with overall negative economic value. Second, The specific action he urged was that Mexico join Mexico indulged in planning efforts of such a dispro­ with its sister Latin American nations to use the region's portionate nature relative to actual building that the combined $200 billion-plus debt as a reverse weapon . development projects of the planners remain largely on against those Malthusian financial interests, based in paper four years later. A nuclear program which should London, Switzerland, and New York, who are counting have been restarted four years ago is a prime example. on the debt as a weapon against Latin America instead. And third, the government never took effective LaRouche specified how the Latin American coun­ control of the national banking and credit apparatus, tries, which are being destroyed one by one through which remained largely in the hands of speculators and genocidal financialcondition alities, could use their debt anti-growth strategists. This failing has contributed to to impose conditions on the foreign bankers: the government's current impotence in the face of flight Latin America: "We want a gold-based monetary capital, which should properly be contained by ex­ system!" change controls. Bankers: "No, no, no." What has now happened is that the foreign financial Latin America: "Youjust lost $200 billion. " sector, exploiting these weaknesses in the Mexican Bakers: "Well, I guess we have no choice." model, is taking advantage of the VoIcker high-interest­ Latin America: "We want credit at 2 percent inter­ rate regime and slack world oil markets to collapse the est!" whole situation, and hold up a gutted Mexico as an Bankers: "No, no, no." object lesson for any country which dares to aspire to Latin America: "You just lost $200 billion." rapid industrial growth. Rather than attempting to straighten out the inter­ Twofold crisis nal situation and take on the external enemies along the Mexico is simultaneously under the gun of foreign lines suggested by LaRouche, government officials are bank efforts to collapse its finances and the cumulative fo r the most part capitulating to the pressures. effects of crippling errors in its own development strat­ Mexican Finance Minister Jesus Silva Herzog called egy. in the foreign press May 18 to announce that Mexico's

4 Economics EIR June 8, 1982 dol lar (it is currently 47 to the dol lar); 2) put Mexico under GATT dictatorship; 3) use the economic crisis to destabilize Mexico politically; and 4) create a blow-out in the Middle East, as a pretext for military occupation of the Mexican oil fields.

'Poor old Lopez Portillo' A top Dfficial of Security Pacific Bank made it clear that it was not Mexico's growth errors, but the attempt to develop the country at all, which was the issue. President L6pez Portillo was responsible for bringing on "disaster" with "expansionist. growth-oriented poli­ cies," he told EIR. "Now poor L6pez Portillo has had to swallow a bitter political pill. He is humbly trying to undo what he had done. His administration will go down in the history books as a disaster. And I must say it is fitting that this should happen." He chortled that "once in a while, a terrible thing happens: a country falls into the fatal embrace of foreign bankers. Financial factors come to determine everything else, including The Ciudad Netzahualcoyotl area of Mexico City, where speculation has given rise to a shantytown. political and social policy." A credit cut-off and new forced devaluation of the peso-down to 65 to the dollar as an interim level, says pledge to cut a whopping $6 billion from its imports the U.S. Federal Reserve in private-are on the imme­ was being carried out, and that the official esti mate for diate agenda. How little either has to do with objective growth over the next year is zero percent. after growth conditions in the Mexican economy was rubbed in by of 8 percent per year for the last four years. He stated an official of a leading New York bank who is close to "Perhaps the fundamental problem is that we grew too the Council on Foreign Relations. A new devaluation fast. " "will almost certainly come sometime in June," he Silva Herzog also made the first official suggestion assured EIR, despite the fact that the peso is almost that Mexico may put off its big nuclear energy program, universally regarded as undervalued after the first deval­ set to move into its next,.stage in August with the award uation of February. The banker's fundamental motiva­ of $2 billion in new contracts. "We probably are going tion was revealed when he added, "This new devalua­ to postpone a decision on the nuclear program until the tion will be politically devastating to the ruling PRI next government," he was reported to have stated. That party and to L6pez Portillo, coming just weeks before means a moratorium on nuclear development until well the July 4 national elections." into the next presidential term, which begins Dec. 1, The maneuverings for a credit cut-off-which, as 1982, unless other officials intervene. Scrapping the EIR has reported, the U.S. Federal Reserve declared nuclear program has been aleading demand from New privately in March it was orchestrating with private York and London. banks for the May-June period-focus on a "jumbo" $2.5 bil lion loan credit on the international markets Abject Finance Minister Mexico is now seeking, preceded by a $1 billion bridge Silva Herzog's willingness to surrender what has loan. been initiated of Mexico's development plans is symp­ The purpose of the credit is to restructure current tomatic of many officials who believe that such surren­ debt into longer-term maturities at attractive rates, and der will buy time until economic progress can be help meet some of the $11 billion on interest alone that resumed. This is the same illusion that guided the Shah Mexico owes this year. Not a penny is for continuing of Iran and his more loyal advisers. If Mexico had any of Mexico's development projects. learned anything from the experience of Iran-where Officials at the New York Federal Reserve, Citi­ the Shah's nuclear program was one of the first high­ bank, and Security Pacific said the last week of May technology pillars of the economy knocked out-it that they were working to shoot the loan down. The would know that one capitulation to such nation-wreck­ New York and London financial press suddenly sprout­ ing demands only leads to another. ed articles casting doubt on whether "the little banks" In Mexico, LaRouche listed four phases of this were going to join the syndication. This was the same process now under way: I) devalue the peso to 90 to the kind of press scare tactic used against the $1.2 bil lion

EIR June 8, 1982 Economics 5 Pemex loan signed April 2. It didn't work then, and so far it does not appear to be working now. But the spread Mexico has to pay is rising fast. The second part of the jumbo package specifies rates of 1.5 points over LIBOR, a 75 percent jump over the % points above LIBOR of the Pemex loan. And the tactic is to keep building the "doubt" with each loan until one does fall through in the near future. ' Then what happens? "Mexico would be forced to go Mexico s economy to the 1M F directly, and that's the kind of 'performance guarantee' on an austerity program that we want to ataglance see," declared the Security Pacific executive. It's a calculated strategy of playing with fire, since if GNP: 1982 growth officially projected at 2-3 percent, Mexico fails to get new cash, it could mean default on said Finance Minister, Silva Herzog on May 18. For the all of Mexico's $50 billion in public debt and $20 billion year April 1982- April 1983, zero percent. Business and

labor sectors are protesting that these figures are set too in private debt. "Yes, it could be the next Poland," low, and designed to please foreign bankers. acknowledged one of the Latin American desk officers

Imports: Government is pledged a drop of $6 bi llion for the New York Federal Reserve, glibly passing over in imports for 1982, divided 50-50 between the public and the fact that the amounts involved are three times those a e is e n 1981 priv t sectors. This a 25 p rce t collapse over of Poland, and debt almost all held by U.S. banks. levels of$24 billion. The kind of ravaging of U.S. exports involved is indicated by Washington estimates of U.S. export of oil-related equipment to Mexico for 1982: $500 Plan for a new Chile million, down from $2.0 billion in 1981. The New York Fed official confided that the crucial i The Bank of Mex co announced May 24 that import policy objective was to force Mexico to reverse its long­ for nths of 1982 are to levels the first four mo close standing opposition to GATT. Mexico's vital capital­ meeting the government goals. In January-February, goods imports are already going; the GATT demand is imports fell 15 percent. This rate accelerated and in to allow a flood of cheaper foreign manufactured March-April, the fall was 33 perce nt . Over the four months, imports were down $1.9 billion. imports which would bankrupt whole sectors of Mexi­ Exports: Oil and gas revenues are heading toward can industry currently enjoying government protection. i $14 billionat best, approx mately $1 billion offlast year's The "import substitution" skew of the Mexican econo­ levels. Non-oil exports are substantially down as well, my makes it particularly vulnerable to this kind of proving the b ankruptcy of the argument that the Febru­ operation. Already, government cuts of up to 8.3 per­ ary devaluation was required to make Mexican exports cent in most areas of productive activity are leading to competitive. The manufacturing associ ation Canacintra reports manufacturing exports are off 50 percent so far waves of layoffs in non-contract labor. What you will this year. see will be "just like Chile," the Fed official promised.

Interest rates: The last week in May the Bank of The Fed plan got a boost from the U.S. Ambassador Mexico hiked domestic interest rates 1.9 percent, raising to Mexico, John Gavin, who told a meeting of the the cumulative increase since Easter week to 6.9 percent. American Chamber of Commerce of Mexico May 17 The minimum now for government paper (CETES) is that "if the Mexican government continues subsidizing" 40.1 percent, and for 30-day commercial paper, 50.0 percent; business loans are effectively at 50-55 percent. its exports, the U.S. would impose countervailing duties Inflation: Rising over the first four months at an on a broad scale, and "bilateral trade could be re­ annualized 60 percent rate, as a result of the February duced." He offered Mexico a "ready market" for its devaluation. Inflationfor April 198 1 - April 1982,40 per­ goods in the United States-provided the country cent. 1981 inflation: 28 percent. "moved toward trade liberalization." controls Prices: Price on some 5,000 items extended Gavin's threats of trade war drew outrage from May 24 for three more months. CTM hibor confedera­ Mexican business leaders of all viewpoints, even the tion pushi ng for permanent price controls; business as­ sociations warning of spreading bankruptcies if price followers of Friedmanite neo-liberal doctrine. controls are not lifted. The U.S. Department of Commerce, after giving

Projects axed: Completion of six major government definitive authorization for a 15 percent countervailing offices in Mexico City, including the 58-story Pemex duty to be levied on import of Mexican ceramic tiles the tower; subway-line extension (unconfirmed). one first week in May, has now suspended high-level trade Projects threatened: Next phases of nuclear develop­ talks with Mexico scheduled for June 9. Commerce ment and the Las Truch as steel mill; the industrial port officials told EIR that maximum pressure is being projects at Altamira and Laguna del Ostion. prepared for Dec. I, when the presidency of Miguel de la Madrid begins.

6 Economics EIR June 8, 1982 Part II: Profile of Thurn und Taxis

The Venetian intelligence directorate and theHapsburgs' financial empire

by David Goldman. Economics Editor

On the evening of April 26, the head of what is perhaps the munications, the Fugger banking house paid 600,000 wealthiest family in the world, Karl August, Sovereign thaler for the election of Charles V as Holy Roman Prince of Thurn und Taxis, died at his palace in Regens­ Emperor, in the greatest exercise of foreign influence in burg, West Germany. By coincidence, EIR Economics the history of Venetian special operations. Editor David Goldman had spent that afternoon at the Hapsburg power was driven back only a century and Thurn und Taxis palace in the company of Karl August's a half later, after the Thirty Years War of 1618-48, and heirs, Crown Prince and Princess Johannes and Maria the conclusion of the Peace of Westphalia, which estab­ Gloria von Thurn und Taxis. Below is the second part of his lished the principle of the sovereign nation-state for the account of the visit. first time in international law, as against the Hapsburg In Part I, Mr. Goldman describes how the Prince told notion of nationless "universal monarchy." As the great­ him that the secret of the family's survival was never to est of all historians, Friedrich Schiller, reported in his wield political power as such, and thus to survive all political history of the war, horrible conflict began with a provo­ changes. while diversifying its financial holdings geograph­ cation on the part of the Viennese imperial court: the ically. Even if the United States were annihilated in a "Defenestration of Prague," when Imperial agents were nuclear war, the Prince said, "there will always be some­ thrown out of a lOO-foot-high window in Prague, onto thing left over for us." the castle dungheap. The "defenestration" gave the Mr. Goldman emphasized in Part I that the family Hapsburg forces the pretext to crush their opposition controls the Benedictine Abbey in central Bavaria near inside German-speaking Europe. Only with French and Regensburg which serves as the chief training ground in Swedish intervention after 1628, under the guidance of Germany for the schismatic Lefebvrist Roman Catholics. Cardinal Richielieu, was the Hapsburg power driven It was from those Lefebvrist circles that the latest would-be back. Schiller concluded that although the war destroyed assassin of Pope John Paul IIcame (see article, page 42). one-third of the entire German-speaking population, "the hand of industry has wiped out all traces of this Wealth as such was never the key to the family'S power. destructive war, and the beneficial consequences which According to its privately published officialhi story, the accompanied it ... the community of principle of na­ ascension to control over the Imperial postal service put tions, remain." the fo unding father of the present Regensburg line, Franz of Thurn und Taxis, into business relations with The Inquisition the Augsburg-based Venetian bankers, the Fuggers and Walking through the castle's endless galleries later Welsers, and established the basis of a huge commercial that day with the family'S professional historian, we fortune. But that step upwards came after the family, stopped before a portrait of the famous general W allen­ whose origins go back to the 13th-century Bergamo in stein, the imperial strategist whose hordes of half­ northern Italy, became the chief agents of the foreign starved beggars, recruited through hunger and destruc­ intelligence of the Republic of Venice, the landless octo­ tion, nearly won the Thirty Years' War for the Emperor. pus that spread its influence throughout Europe. Nine "The portrait was done for the family in 1628, when years after Franz ofThurn und Taxis obtained the postal Wallenstein came to Regensburg for the Imperial Con­ concession, gaining control of most of Europe's com- gress," the historian explained. A Wallenstein associate

EIR June 8, 1982 Economics 7 was a certain Count Thurn of Bohemia, a firebrand rebel who started the war by setting up the "Defenestra­ tion," according to Schiller's report. "Was the Count Thurn related to the family?" I asked the historian. "Most certainly: he is the founder of the Bohemian line of Counts Thurn und Taxis, whose present-day descen­ dent is Max von Thurn und Taxis." All doubt left my mind at that instant that the Inquisition of the Republic of Venice still exists. Max von Thurn und Taxis is the world chairman of the Mont Pelerin Society, whose Vice-President is Milton Fried­ man. As this journal has reported, and as Lyndon LaRouche and I documented exhaustively in a recent book, The Ugly Truth About Milton Friedman (Benjamin Franklin House, New York, 1981), the Mont Pelerin Society is the world high priesthood of monetarism. The Hoover Institution of Stanford University, the economics think tank for the Reagan administration, the present home of Friedman, and of Reagan's former domestic affairs adviser Martin Anderson, is controlled by the Mont Pelerin Society. The private college of the Mont Pelerin Society, Hillsdale College in Michigan, Prince Jo hannes Thurn und Taxis at thefuneral of the head of sent David Stockman into Congress in the style of an thefamity, Karl-August. 18th-century British pocket borough, the same Stock­ man who lured Reagan into the trap of "supply-side economics." To say nothing of Stockman's influence, Chairman of the Foreign Policy Research Institute of Friedman's ex officio ties to the White House make him Philadelphia, transition-team adviser on foreign policy a considerable force in the Oval Office. What is worse, fo r Reagan, is presently Ambassador to the crisis zone as Jude Wanniski has reported to me on many occa­ of Turkey. sions, the Oval Office debate has occurred between Otto von Hapsburg, the current pretender to the Stockman and Friedman, that is, has been controlled by defunct Austro-Hungarian throne, and the figurehead the Mont Pelerin Society on both sides. of the Pan-European Union networks, is treated with The Mont Pelerin Society, LaRouche and I docu­ some condescension by its older and nastier members. mented, is the economics branch of Count Coudenhove­ Haig's Svengali, Fritz Kraemer, once responded to my Kalergi's Pan-European Union, the grandfather of all inquiry concerning his opinion of Otto von Hapsburg, the European fascist movements. Its influence pene­ "Otto? Otto? If Otto were not of the blood royal, he trates as deeply into the foreign-policy apparatus of the would have made a very good ... foreign correspond­ Reagan administration as does its sister organization, ent!" Indeed, Otto von Hapsburg spent part of the the Mont Pelerin Society, in economics policy-making. 1960s writing private intelligence reports for David The chief surviving aide to Coudenhove, who, like Rockefeller typed on onionskin paper, which made the the Thurn und TaXIS, was a German-speaking trans­ cheapest spy novels seem lucid by comparison, accord­ planted Venetian nobleman, is Fritz Kraemer, the Pen­ ing to acquaintances who had access to the originals. tagon official who molded the careers of both Henry But the Hapsburgs-at least two and (including the Kissinger and Alexander Haig. It was Kissinger, the dubious Maeterlinck hunting-lodge suicide) perhaps hagiographer of Hapsburg Chancellor Prince Metter­ three leading members of which family were assassinat­ nich, the man who gave the postal service of the Empire ed by Venetian-controlled anarchists during the last back to the Thurn und Taxis after 1816 (until the forty years of their reign, including the 1914 death of Prussians took it back from them in 1867), who pro­ Archduke Ferdinand, the trigger fo r World War 1- moted Haig from military obscurity. Richard Allen, the have always been figureheads. Their intelligence chiefs, former National Security Adviser to the President, is a the Thurn und Taxis among others, have always been product of the University of Munich, whose Chancellor, more important. Prince Lobkowitz, is a close friend still of Prince I had asked the Prince earlier what had become of Johannes of Thurn und Taxis. Another associate of the the intelligence and diplomatic service of the Venetian old Hapsburg circuit, Robert Strauz-Hupe, former Republic after Napoleon dissolved it in 1798. He re-

8 Economics EIR June 8, 1982 sponded that the Vatican, which had always despised emerged. The next time they will have to attack the the Venetian oligarchy as dangerous cultists, used the Falklands with canoes ! On the one hand, the English opportunity to chop up the fortunes and capabilities of dm't afford politically to make any more defense-budg­ the leading families. What survived then did so through et cuts, and on the other, the British economy is so connections to Austria, which absorbed (as a matter of fragile that they cannot rearm." historical record) the Venetian intelligence service. The After the resignation of Lord Carrington, the out­ Thurn und Taxis fortune, he concluded, represented the going British Foreign Minister, Prince Johannes contin­ principal continuation of the Venetian intelligence, ued, the British had no leadership left. What the British which the family had in any event guided for the can no longer do, he said, "is what we have always tried preceding fo ur centuries. to do: to think logically, to deal with others in a But now, viewing Wallenstein's tortured expression, predictable fashion. And that Lord Carrington, realistic I became convinced that the man with whom I had just thinker that he is, could do. He had something essen­ had dinner had as much power now as did his forefath­ tially logical and intelligent about him; when he had an ers at the height of Hapsburg power, and perhaps more opponent, he could recognize that his opponent, too, power in the American government than any other was intelligent." individual. This is not the power to build, but the power He added, "The situation in Latin America is influ­ to lame, to disorient, to confuse: the great talent of the enced by various circumstances, of course. They have Venetian Republic, which always set all against all, great internal political problems. But may I say: if I never claiming large territories, never tying itself to were the king of Spain, and I thought of my country­ fixed positions, and always emerging on top of the pile men's needs, I would overrun Gibraltar, and revise all of rubble. The activities of such lesser relations as Count my agreements with Britain to free myself from my Max von Thurn und Taxis in promoting the sort of foreign debts! The Spanish have great economic diffi­ ideology that prevents nations from functioning are of culties, and this were their only chance to get out of use to him, although he doesn't necessarily believe in them. Naturally, Gibraltar is a part of the Spanish such ideology. mainland. And Galtieri went and did it." It was not a surprise that Thurn und Taxis backed View of current events the Argentines. On April 20, the chairman of the board "I heard some 18 months ago a speech by your of the most Venetian of all firms, the giant Assicura­ relation, Max von Thurn und Taxis, the count, who zione Generali of Venice, Cesare Merzagora, had pub­ predicted the world would trend toward liberalization, lished an article in the Milan daily La Repubb/ica and that what is called the underground economy, in defending the Argentine position. But the central issue Italy, Latin America, or other places, would find its remained: what would happen to the postwar institu­ rightful place in the sun," I had told Prince Johannes tions of the Atlantic Alliance as a result of the Anglo­ earlier, referring to Count Max's speech at the 1980 Argentine war? I asked the Prince, "Do you see the meeting of the Mont Pelerin Society at the Hoover possibility that out of this, NATO might find a way to Institution. The old count had predicted the end of resolve its differences, and regroup itself on some basis national control over national economic affairs in favor that would enable it to continue to function?" of the "Hong Kong" model of free enterprise. Did the "You see," responded Thurn und Taxis, "the point Prince see events moving this way? is again, in turn, if you take all these countries, like "Actually, I do not," he replied. "Possibly in Amer­ Greece, and Turkey, and Spain, all together in the new ica, where you have a far stronger economy, and a NATO, I think it's very complicated for the next 10 market that is almost sufficient unto itself. But in years. A war could come up between Greece and Europe, I see the structures changing. Look at Thatch­ Turkey; certainly the Argentine crisis disaster was some­ er. She was just about to manage it, and now she gets thing that people never expected. It's very difficult for into this disastrous thing over the Falkland Islands." the Europeans to restructure, you see. The French He continued, "It's very hard for the English to do economy is going to be completely destroyed in three or anything else. It's very peculiar: if the thing had hap­ fo ur years. They won't be able to make it. Of course, pened two years from now, the English could have not the French are not the Germans. For Spain, France, sent a fleet at all. One of the carriers is already sold to and these other countries, it's much harder to do." the Australians, and the other is due to be scrapped, "The result of this," concluded the Prince trium­ along with a good deal of the rest of the fleet. It we phantly, "will be that the misguided efforts to indus­ look closely at this Falklands situation, Mrs. Thatcher trialize countries like Argentina or Brazil will be sus­ was in the process of giving up a large part of her pended forever!" defense expenditures when this Falklands affair To be continued.

EIR June 8, 1982 Economics 9 Currency Rates EIR

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10 Economics EIR June 8, 1982 those industries that will not adapt and those that will Interview adapt. This holds for high-technology industries as well as others. Our Manichean mind would like to have c1ear­ cut solutions-it does not work.

Murawiec: The United States is plunging headlong into economic depression. How will Europe react? Davignon: When so large a market as America's under­ Davignon assesses goes such difficulties, global trade undergoes difficulties too. Insofar as the problem persists in the United States, we will find ourselves faced with the problems posed by the global slump the monetary setup, the interest rates. . .. Whatever efforts are made, it is extremely difficultfor a European Viscount Etienne Davignon. Vice-President of the Euro­ country, which ever it is, to dissociate itself from U.S. pean Community in charge of industrial affairs. energy. interest rates, lest the penalty is paid by the currency. If research. and science. talked with EIR European Econom­ our interest rates climb, our currencies will not fall too ics editor Laurent Murawiec on Aprill at the Brussels EC much, but productive investment will suffer .... heq.dquarters. A Belgian. the Viscount was responsible for In the field of energy, of construction, we need con­ the Davignon Plan to "rationalize" EC steel output. siderable increases of productive investment. How can savings be convinced to flow in this direction if it will be Murawiec: According to Club of Rome member Jean rewarded by rates several points above the rate of infla­ Saint-Geours [now an economic adviser to President tion without taking the slightest risk? This increasingly Mitterrand], "sunset" industries, as they are phased out, shifts to public authorities the burden of investment­ take many jobs away with them which are not being but there are limits to what public investment should do. replaced by "sunrise" industries, which are of little ben­ efit for employment. Can large, permanent underem­ Murawiec: Do you intend to subject other sectors of ployment be averted? European industry to the same fate as steel? Davignon: Let me make a few remarks. First-Saint­ Davignon: The steel problem must be distinguished from Geours acknowledges it, and he helped us define some usual industrial problems. In the case ofsteel, it was a points; he did several studies for us on the notion of classical case of worldwide structural overcapacity .... economic strategy within a changed energy environ­ The Japanese extricated themselves better than the ment-we are only slowly coming along this idea that the others, but at the price of huge sacrifices. But as they did economic model we are dealing with is not an old model the sacrifices in time, the results [success] drew more subjected to new pressures, but a new situation, a struc­ attention than the sacrifices. The situation of steel in the turally changed situation. It is a nasty and very worri- United States is complex. Some states there did not 'some, disquieting situation .... succeed in their post-industrial adjustment any better My second remark is that this structural analysis than some European regions. sheds light on some positive elements that had not been noticed before that. For instance, the fact that there has Murawiec: Is there a concrete perspective of the Euro­ been a decoupling between energy consumption and pean Monetary System [EMS] for creating the European growth. This phenomenon has been occurring for the Monetary Fund [EMF]? last three years. While the curves of growth and energy Davignon: The EMS question is this: when it was set up, consumption were parallel-this holds for the United the EMS drew quite some skepticism. But the services it States as well as Europe-when there is actual growth, rendered compelled the member states to consolidate it. nowadays, the energy curve is flat or even inflected It's an old story: if you don't have a car, you findit's downward .... normal to use public transportation; when you've en­ joyed the benefitsof a car, but you have no money to buy Murawiec: These are curves for non-manufacturing ac­ another one, your organizing of a good maintenance for tivities, services, so-called "soft"te chnologies . . . . your car becomes an essential eleme�t. ... Today we Davignon: No, no. There are also manufacturing ele­ have a generalized sentiment, politically, that the EMS ments! It is not well known yet. We must distinguish. should be strengthened. . . . Should it be-that's the between what results from a decrease in production and choice to be made-a fund, or an enhanced solidarity what results from a structural transformation. This de­ with more operating modes? The fund, it is true, has an coupling is a fact. ... The real distinction is between important quality, symbolic, subjective ....

EIR June 8, 1982 Economics II Agriculture by Susan Brady

European Community sets CAP prices and the Community. I pointed out British manipulation of the Ee forced a compromise that that the event overturned a basic means more trouble for European agriculture. understanding of the way the Com- o munity works and reaches deci­ sions, and that method is no loqger in existence, having been totally vi­ olated for the first time in 16 years." The annual price increase for After nearly two months of stall­ Kingdom and West Germany are the Common Agricultural Policy ing, the European Community on net beneficiaries from the budget. (CAP) is based factors including May 18 went ahead with a majority Britain's demand to pay less to the cost of production, prevailing vote over Britain's bitter protesta­ the EC than the Nine stems from market prices, and a fair profit for tions to set a new agricultural price the fact that they import over 60 farmers, resembling the American package for 1982-83. percent of their food needs from system of parity. Throughout the meeting, the Commonwealth nations outside the Because inflationha s been at an British had insisted that there was Community, which require heavy average II percent, ranging from 6 no legal basis for such a vote, but customs duties although the fo od to 19 percent at the extremes, any that did not stop the Nine from products are relatively cheap. price increase per country below forcing through, at long last, a Western Europe's concession to inflation rates will erode fa rmers' voice vote denying the United continue the sanctions against Ar­ incomes and profits and force bor­ Kingdom any right of protest. The gentine imports indefinitely enables rowing at high interest rates. new prices take effect on May 20. Britain to milk the EC fo r what it The combination of reduced The package gives the farmers can get, while purporting to have world trade plus high interest rates an average 10.7 percent price in­ done the gentleman-like thing by and increased costs has brought crease, somewhat lower than the settling the budget so quickly. down real incomes for EC farmers French demands and not quite This situation has prompted by 12 percent since 1979. This puts keeping pace with inflation. Britain France to raise the issue of renego­ pressure on individual countries to wanted only a 6 percent increase. tiating Britain's status in the EC, support their own farmers, or see Then, in what the British por­ and there is talk of reviving de the collapse of their agricultural tray as a magnanimous concession, Gaulle's plan of "association." De sectors. The new budget provides the United Kingdom has agreed to Gaulle's plan and the current one fo r a 7 percent increase in farm accept the EC's offe r of a £450 differ in a vital regard. Both agree spending. million rebate, instead of the £570 that Britain should have a free­ The three-week delay in setting million they had demanded. That is trade relationship with the EC, but the new price cost European farm­ a 75 percent reduction from their the new plan also allows Britain to ers, including Britain, some $400 regular contribution to the EC have a political say in the European million is reduced income. budget. affairs, creating a "two-tier" Com­ Europe's militant farmers be­ Though the agreement settles munity the West German claim will came extremely discontented. In this year's budget, the issue is not degenerate rapidly. Britain will the traditional European way, Bel­ settled. By the end of the summer, then have gone a long way in gian farmers staged two tractor discussion will begin on next year's achieving its goal of turning the EC blockades at the Common Market budget, and Britain will no doubt into a free-trade association. Foreign Ministers meeting in Brus­ raise the demand for a long-term British Agricultural Minister sels on May 9. The demonstrators agreement. Another pending issue Walker haughtily described the carried placards reading "Europe­ is West Germany's refusal to con­ voice vote tactic used to override an farmers do not want to pay for tinue to be the sole "net" contribu­ the British veto of the price increas­ Britain's War in the Falklands" tor to the Common budget to the es as "a very remarkable steam roll­ and "eight million EC farmers are current extent. At this point all EC ing operation which will reflect very more important than 1,800 Falk­ members other than the United badly on the Brussels Commission landers."

12 Economics EIR June 8, 1982 Domestic Credit by Richard Freeman

Fear of the unknown age corporation is consumed by Chase Manhattan's acknowledgement of the 'end of distress debt service, and corporate repay­ ment capabilities continue to sink borrowing' means bankrup tcies have only started. with the depression, the number of potential Chryslers is in the high hundreds. This was not the case during the 1930s, when large num­ bers of smaller banks fo lded, but For the first time a major bank, "As profitsand cash flow have virtually all the "name" corpora­ Chase Manhattan, has put the deteriorated because of sagging tions made it through unscathed. bankruptcy wave in perspective, a consumer spending, these firms Corporations are sustained not noteworthy event because banks' have found themselves in financial only by banks, but by the highly willingness to carry along strug­ distress, needing to borrow an in­ volatile market for unsecured com­ gling borrowers is at the moment creasingly greater amount to fi­ mercial paper, whose holders stand .the principal near-term determi­ nance their heavy interest commit­ to gain nothing (unlike the bank­ nant of how the fi nancial crisis will ments in order to avoid bankrupt­ ers) in the course of a bankruptcy, proceed. cy. . .. If economic activity does and by suppliers' credits. Commer­ In its May 24 International Fi­ not rebound, more over-leveraged cial paper has been funded, to a nance newsletter, Chase entitled a firms willgo bankrupt." great extent, by the burgeoning commentary, "Distress Borrowing Only the fact that this is stated growth of the money-market funds. Cannot Last." The relevant por­ by a major lender, not the content A significant shift of "preference" tions read: as such, makes it news. It ,!onfirms, towards Treasury securities on the "The surge in short-term corpo­ after the Braniff failure and the me­ part of the money-market funds, rate borrowing so far this year has dia preparations for an Interna­ who may fear withdrawal by safety­ exceeded most observers' expecta­ tional Harvester failure in August, conscious investors of their own tions [although not ours-R.F.]. that banks are gritting their teeth unsecured funds, could tip the en­ The levels of commercial and in­ and preparing to take major losses. tire apple cart. dustrial bank loans and non-finan­ This slight policy shiftis occasioned As the depression deepens, cial commercial paper outstanding by the fact that some major debtors, banks themselves will findthat the have grown at an annual rate of like International Harvester, oper­ attrition of their capital compels nearly 23 percent since January. By ating at less than 30 percent of ca­ them to shut offloans at an acceler­ normal standards this growth is un­ pacity and losing money at a $1 ating pace, pushing more debtors usual, given the weakness in the billion annual rate, simply cannot under, and further attriting their economy, the sizeable inventory be sustained by bending the nor­ capital. This point has been made liquidations that have occurred, mal rules of banking. with a vengeance by British com­ and the depressed state of corporate The policy shiftis also evident in mentators in the public press, al­ investment spending plans ..... the spectacular increase in the rate though treated somewhat gingerly "Debt-to-total-asset ratios on a of corporate bankruptcies, already on this side of the Atlantic. book value basis have risen from an 80 per 10,000 corporations, "within Combined with another market average of less than one-third in the shot of' the 100 per 10,000 record incident like the May 19 Drysdale early 1970s to over one-half today set in 1933, as the Wall Street Jour­ failure (see Banking), which could ... fi rms have been reluctant [and nalput it. occur on virtually any of the finan­ unable-R.F.] to commit them­ But what bankers fear is not the cial or commodity markets with selves to long-term debt obligations handful of airlines or floundering equal ease, or a significant default at existing high interest rates ... behemoths like Harvester or Chrys­ of a Third World borrower, the requir[ing] them to refinance pe­ ler that have made the headlines, above weaknesses could surface riodically at historically high inter­ but rather the unknown: in a corpo­ within hours. The economy is est rates, swelling the magnitude of rate environment in which two­ marching towards a fall crisis which their interest payments. thirds of the cash flow of the aver- no central bank can control.

�------�J

EIR June 8, 1982 Economics 13 Banking by Kathy Burdman

A not untypical case ing room to find out what exposure Chase and Manufacturers Hanover's role in Drysdale is the the bank actually had, after he heard the news about Drysdale. proverbial tip of the iceberg. None of the control offices at the bank were able to give him a report. To one group of New York bank analysts, the Drysdale affair merely demonstrates that the system has Although Chase Manhattan, at threat is on the financial side. Not run out of control. the expense of a large share of this merely Chase, but, to a lesser de­ The suspicion remains unprov­ year's earnings, managed to swal­ gree, Manufacturers Hanover and en that Chase may have been set up low the Drysdale Government U.S. Trust were "throwing their by financial competitors who want­ Securities problem, sophisticated names around" in support of Drys­ ed the relative parven u to get the market participants believe the dale and "were guilty as hell," said worst of a banking crisis that a problem has only started. one well-informed bank analyst. growing plurality of financial opin­ Ongoing Senate Finance Sub­ Not merely banks, but also in­ ion considers imminent. committee and SEC investigations dustrial corporations, have been The circumstances are certainly may provide answers to the big driven to establish as independent lurid: Peter Wasserman and Joseph question, namely, how it was possi­ profitce nters such exotic entities as Ossorio, the latter from the Amstar ble for an unknown operator to money-trading desks, foreign­ Sugar fortune, buy out a small old­ start business with $5 million in exchange divisions, captive insur­ line firm, Drysdale Securities, in 'capital and rack up $320 million in ance sUQsidiaries, and commodity­ mid-1981. At the turn of the year, losses within only fOUl months of trading operations, as the profit they put $5 million into preferred operations, and unpleasant revela­ stream from normal business oper­ stock of Drysdale Government Se­ tions about Chase Manhattan's ations has dried up. curities, whose equity they totally back office may come out. This is "zero-sum" business, control, but whose management Whatever opprobrium attaches where one corporation's gain rep­ they leave exclusively in the hands itself to Chase Manhattan, how­ resents another's loss, and volatile of a notoriously unstable hot-shot ever, the important lesson is that swings in securities, commodities, bond trader, Robert Heuwetter. market practices of the sort Drys­ and currency values are typical. In fo ur months Heuwetter man­ dale was engaged in are typical of Thus a large section of corporate ages to rack up losses 70 times the the post-Volcker financial era. and banking activity has been size of his capital with the help of The annual volume offutures in structured to make the Drysdales of unnamed individuals in the Chase government paper is three times in this world as indispensable as they back office. Wasserman and Osso­ excess of the U.S. national debt. are vulnerable. rio, as mere "investors" in the sub­ And the replacement of commercial To the extent that banks rely on sidiary, have no responsibility, and bank lending by commercial paper what are speculative financial activ­ Chase is left holding the bag. lending through money market ities to supplement otherwise de­ The Federal Reserve officials funds and other forms of quasi­ clining or risky profits, ordinary who managed the rescue operation, bank, reserve-free, unsecured busi­ controls must go out the window. i.e., pinned Chase to the wall, are ness means that the actual leverage Chase is a notoriously 'badly dumbfounded by this chain of of the financial system is many managed bank, and its managers events, for which they can offer no times in excess ofthe typicaI 20-to- l had no idea what their trading explanation. assets-to-caJ'ital ratio prevailing room was doing; nor did they want Even if the "conspiracy" hy­ among the commercial banks. to know. But the problem is not pothesis, now popular on Wall In 1980, the panic threat came merely at Chase. At Citibank-the Street, turns out to be correct, no from the silver market and the Hunt supposed administrative miracle of such devilry could take place except brothers; after two years of Volcker Wall Street-Chairman Walter in a situation where such disasters and deregulation the principal Wriston called into the bond trad- were able to occur on their own.

14 Economics , EIR June 8, 1982 Trade ReView by Mark Sonnenblick

Cost Principals Project/Nature of Deal Comment

NEW DEALS

$223 mn. Japan from Eight large containerships, each capable of hauling Japan has been losing Taiwan 1,600 containers, will be built by Japan's IHI and contracts to South Ko­ Onomichi for Taiwan's largest shipping operator, Ev­ rea yards which give ex­ ergreen Marine Corp. This is the biggest single order port financing in deval­ ever given Japan's shipbuilding industry, the world's ued dollar terms. Japan's largest, and is equal to a year's construction volume for total orders fell 10% in IHI and Onomichi. Financing is in yen terms. year ending March to 391 ships at 8.4 mn. gross tons. Export or­ ders down 17%. $145 mn. Taiwan from Northern Engineering Industries signed letter of intent U.K. Exports Credit U.K. for generators for Taiwan's Yenlieo nuclear power Guarantee Department plant. Deal is for two 1,020 MW turbines. NEI beat is subsidized credit to Westinghouse, GE, Brown Boveri, Mitsubishi, and Hi­ 7.75%. tachi. $3 mn. Brazil from Brazilian Navy bought from J. Lauritzen of Denmark a Brazil's long negotia­ Denmark 25-yr. old ship reinforced for arctic operations. The 82- tions for Antarctic capa­ meter Thala Dan will be leased by Brazil to Danish bilities have been has­ govt. for summer research around Greenland with two tened by South Atlantic Brazilian officers aboard; will be delivered to Brazil in crisis. Brazil's navy plans Sept. and begin Brazil's first Antarctic exploration in permanent research site December, before deadline set by multinational Antarc­ in Antarctica, probably tic peace treaty. near Germans. Base needed to have future voice in Antarctic af­ fairs. $800 mn. Indonesia from Indonesian govt. awarded contract for 600,000 tpy steel Financing includes $270 France/Spain cold rolling mill to Creusot Loire of France, Centurion mn. from France and and Technicas Reunidas of Spain. Mill is expansion of $100 mn. from Spain at big Krakatau complex on West Java; will be owned by 7.75% for 10 years; $200 Indonesian govt., the overseas Chinese Liem group and mn. bank credit and Ciputra construction company. Turnkey project. $240 mn. equity capital.

$42 mn. Australia from GE and AEG will each build 4 gas turbine generators Mitsui & Co. of Japan is U.S.A./West for New South Wales Electricity Commission. GE's running the deal. Germany local subsidiary will install them. $150mn. Tunisia from Tunisia has bought a 340 MW electric power plant from Runs on either heavy oil Japan Mitsubishi. or gas. UPDATE

$2.5 bn. Israel from Reagan administration asking for Congressional ap­ U.S.A. proval for sale of 75 more F-16 fighter jets to Israel to complement 75 received under 1978 deal. Plane is made by General Dynamics, which is contracting $300 mn. in aviation equipment and parts from Israeli producers as part of 3-yr. buy-back arrangement linked to F-16 contract.

$663 mn. U.S.A. from Budd of Michigan is expected to file injunction against Bombardier total cost, Canada New York's MTA which gave contract for 825 subway financed by 9.7% Cana­ cars to Bombardier of Canada. Budd price was $33,000 dian govt. export credits, per car less than Bombardier with a U.S. domestic was lower, while Budd content of 80% vs. 40% for Bombardier. stuck with Volcker rates.

EIR June 8, 1982 Economics 15 BusinessBrief s

Foreign Exchange 12.7 million tons. This is some three­ layer pipe which makes possible a dou­ quarters of their total production. bling of pipeline pressure, and gas facili­ Thatcher advisers fe ar According to the U.S. Department of ties will, in the fu ture, have twice the Agriculture, as of March I, the Soviets throughput capacity of present ones .... sterling collapse had picked up IO million tons and had "As an example for the rapid prog­ made an extra large pick-up in May. ress in the pipeline construction, it is Leading economic advisers to British The other lie that the Soviets will now reported that the Soviets have completed Prime Minister Margaret Thatcher now be begging the United States for extra the link between Urengoy and Chelia­ believe that the London markets may grain is mere wishful thinking. binsk (1,470 kilometers) under difficult "collapse" when the government is com­ During the weekend of May 22, U.S. climatic and geographical conditions in pelled to float a major new loan to pay Deputy Undersecretary for Agriculture only one year. In comparison, the Sovi­ the costs of the current war in the South Lodwick met his counterpart in Paris to ets say, the Alaska pipeline, with a Atlantic. discuss future grain sales to the Soviets. length of 1,300 kilometers, took seven - Although the pound sterling has held U.S. grain sales have fallen drastically years to build." steady at $1.80 or slightly lower since the since the 1980 grain embargo, and bump­ fighting began, much of sterling's er crops are overflowing storage facili­ strength is due to short-term s\olpportfor ties. Yet the talks merely emphasize the International Credit the pound from European central banks, abundant U.S. supply and that the Sovi­ who have elected to help the British even ets could order and pick up any time. though the British are the only European Since the Polish invasion, the United Bank of England warns Community member who have not States is refusing to discuss a renewal or of potential disaster joined the European Monetary System. extension of the six-year grain agreement Such support can neither work indefi­ that expires Sept. 30. nitely nor can be expected to continue Bank of England Deputy Governor without limit. Christopher McMahon, in a major Lon­ Thus fa r, one top adviser said, the don speech May 26, has warned interna­ East- West Relations cost of the war has been $1.8 billion, or tional bankers not to panic and pull back on lending to the Third World, because a one billion pounds, and the threat of a protracted war-which London has rec­ Moscow to push pipeline world banking crisis could ensue. The Bank of England is apparently respond­ ognized since the May 25 attacks by Ar­ through, Swiss report gentina on the British fleet-threatens to ing to increasing threats by Argentina raise the costs out of hand. Another assis­ and its Latin American allies that if Brit­ tant to Thatcher says simply, "You could The Swiss daily Neue Zurcher Zeitung ish and U.S. bankers push them too far, say that we are in bad shape." reported May 26 that the Soviet Union they will declare a moratorium on their will force through development of the multibillion-dollar foreign debts. EIR rarely makes specific predictions abut currency rates, but it appears that in Siberian gas pipelineto Western Europe "International bankers should not this case a significant fall in the sterling before the April 1983 deadline, supplant­ develop excess prudence," McMahon rate against other lending currencies is ing embargoed U.S. technology ship­ told a financial audience. "Rather, the unavoidable. ments with its own substitutes which, in Eurodollar market needs more liquidity, some cases, represent technological ad­ not less . International bankers need not vances over what America might offer. withdraw from world lending at this "In the machinery factory at Sterlita­ time," he said, adding that the central Agriculture maksk in the Bashkir Soviet Republic, banks and governments of the world, development of a pipe-layer with a ca­ "should back them up." u. s. press lies about pacity of 50 tons is being accelerated," Reached for comment, a Bank of the NZZ reported. "It is supposed to be England spokesman told EIR that Gov­ Soviet-Argentine grain the equivalent of the American Caterpil­ ernor McMahon is reacting to the calls lar Company product which was affected by the fa ction in Washington around Press stories that the Soviets are delaying by the U.S. embargo. Simultaneously a U.S. Treasury Secretary Donald Regan grain imports from Argentina, and that 30-ton transport for use in marshy areas for even tighter conditions on world the Soviets will be seeking to buy more will be developed. Accoring to Rude Pra­ credit. "These people in the U.S. are total grain from the United States, are lies VO, its contact weight with the ground fools," the Bank spokesman said. "Tigh­ emanating from "Western diplomats" in will be no greater than that of a grown ter lending now to the Third World will the Soviet Union. man on skis .... cause a world banking disaster." The The truth is that the Soviets have The Academy of Sciences of the spokesman said that McMahon is speak­ contracted to buy, with cash, not credit, Ukrainian S.S.R. has developed a multi- ing for the Group of 30 advisers to the

16 Economics EIR June 8, 1982 Briefly

• 'BUY GOLD' was the advice to EIR readers May 27 by a knowl­ edgeable international business consultant. "Especially if Iran in­ vades Iraq ....Priv ate Arab inves­ IMF and the Bank for International set­ Monetary Policy tors are diving into gold." tlements. The Group of 30 proposes to gather private bankers at the BIS and set • U.S. BANKS could try to dis­ careful guidelines to control lending, to Reagan to be set up tance themselves from British try to prevent panic. at Ve rsailles summit banking partners if Argentina and Similar warnings were given by Brit­ other Latin American nations de­ ish and allied bankers speaking at the clare a moratorium on their for­ International Monetary Conference of President Reagan is being set up for a eign debt payments to Britain, sen­ the American Bankers' Association in break with America's continental Euro­ ior officials of a New York bank Vancouver May 28. pean allies and a strategic humiliation at told EIR May 27. Although most the June 4-6 economic summit in Ver­ such loan agreements have "cross­ sailles. As a result of U.S. adherence to default" clauses, which would the British policies of tight money at force U.S. creditors to declare de­ Trade home and colonialism in the Third fault if British creditors were de­ World, the United States is now viewed faulted upon, such contracts may Japanese report on in Europe as a drunken elephant bent on not apply. "When one of the cred­ wrecking the world economy. "In Eu­ EIR's Olmer interview itors i.e., Britain, is militarily at­ rope, Japan is only enemy Number 2," tacking the debtor, Argentina, one European bureaucrat said May 23. then it's unclear whether the other JIJI PRESS, one of the two top wire "It's the U.S. that is Number I." creditors have any obligation to services in Japan, put out a May 26 dis­ U.S. high interest rates are viewed as the attacker," one banker said. EIR patch on the recent interview with the greatest danger to the Western alli­ "That goes well beyond fo rce ma­ Commerce Undersecretary Lionel 01- ance, and West German Chancellor Hel­ jeure. " mer. The JUI dispatch says, in part, "A mut Schmidt is expected to demand Rea­ ranking government official says the gan "put into practise his promise" that • 'CENTRAL BANKERS,' a top United States is using trade friction with U.S. rates will be brought down, the Los source close to the Swiss-based Japan to retain the 'remnants' of Ameri­ Angeles Times reported May 22. While Bank for International Settlements ca's supremacy by precluding Japan's Schmidt will surely maintain his pro­ told EIR May 27, "are working challenge. In an interview with Richard American stance, the French and others together beautifully to prevent an Katz published in the May 25 issue ofthe are expected to use the issue to create international financial collapse." Executive Intelligence Review, an Ameri­ anti-Americanism in Europe. "It's the finance ministries of the can political and economic journal, U n­ In London the weekend of May 22, world, which are creating disar­ dersecretary Lionel Olmer explained the the Swiss-leaning President of the West ray." The central banks, he added, domestic economic strategy lying behind German central bank, Karl-Otto Poehl, are already prepared for limited the recent escalation in Washington's told the International Association of numbers of bankruptcies of bank economic pressure on Japan. Foreign Exchange Dealers that the pres­ branches in international markets "The EIR said 'Olmer hopes to pre­ ent "exotic" levels of American interest . such as the Euromarket. "We will serve the remnants of America's techno­ rates were the principal problem in the force the home-country headquar­ logical, economic, and political suprem­ world economy. Poehl's intervention ters bank to take responsibility," acy-not through direct promotion of makes the Versailles summit even more he said. U.S. industrial-technological progress­ likely to blow up. but by using trade friction to prevent The supranational "consultatative • THE FRENCH FRANC may Japan from challenging what remains of group" of central banks and finance min­ withdraw from the European America's economic advantage' .... isters will be created at Versailles, the Lo s Monetary System, the London Fi­ "Olmer, who believes that 'techno­ Angeles Times reports, to "set up a rec­ nancial Times reported May 27. logical leadership translates into political ognized mechanism for airing views" OPEC will withdraw or borrow 'leadership' told the magazine, 'I doubt about U.S. policy, a place, at least, where a huge net sum of$24 billion from we will need to come to the point where the Europeans can go to complain about the world banking system during we view that free flow of technology as U.S. economic bungling. 1982, the Economic Research In­ potentially damaging to either our na­ This plays into the British plan to stitute of the Middle East an­ tional security or our position and re­ submit the entire world to IMF "surveil­ nounced May 26 in a special study. sponsibility as the major Western indus­ lance" and zero-growth policies. The OPEC will have a current account trial power. But if you [Japan] want free Times report was one of the first to deficit, in aggregate, of at least access to U.S. technology ... then you appear in the mass media, though EIR that amount, the survey said. have to give free access to American has reported on the plan since the days companies.' " of the Carter administration.

EIR June 8, 1982 Economics 17 I �TImSpecia1Report

India is vital to reversing the world depression

by Daniel Sneider, Asia Editor

Speaking before the Indian Council on World Affairs in New Delhi last month, the well-known economist and American political leader Lyndon H. LaRouche, Jr. issued a major new policy proposal on "North-South rela­ tions." In the midst of world economic and strategic crises, Mr. LaRouche told his audience, it is imperative that "the nations of the so-called South, or some of them, make a unilateral statement on the nature of the crisis and what must be done to stop the world depression and to stop war." "If you of the developing sector begin to give leadership," Mr. LaRouche concluded, "perhaps we can stop World War III-perhaps your intervention will succeed where previous paths of negotiation have failed." M r. LaRouche's choice of India as the location for this policy address, which we present in full below, was deliberate. India is the most strategic location from which to address the leadership of the developing nations, whose populations make up two-thirds of humanity. In every respect­ economically , politically, and from the viewpoint of culture and historical understanding-India is the most important single nation among those of the so-called South. Without India, even the best-led among those nations will not be able to move fo rward in a decisive fashion, nor be able to effectively intervene into the crisis gripping world affairs at this moment. India's decisive leadership role is even more critical now at a time when other leading developing nations are under sustai' ed attack in the fo rm of economic destabilization and warfare. Mexico, one of the most important nations in the developing sector, has been subjected to all-out economic warfare by the International Monetary Fund, which has set back Mexico's ambitious plans fo r industrial growth and quieted Mexico's leaders in their usual role as spokesmen for the entire developing sector. Iraq, another important case, has been hit with sustained, draining military attack, carried out by the fanatics of Khomeini's Iran acting with the military backing and encouragement of the Anglo-American circles, the Israelis, and even the Soviet Union. Once situated through its large-scale commitment to economic development to play the key leadership role among the Arab nations, Iraq is

18 Special Report EIR June 8, 1982 Indira Gandhi campaigning in December 1979. Her return to po wer has resto red leadership to the natio n and the No n-Aligned. now fa cing possible dismemberment. guage, and the most advanced in conceptual terms, in the There is nothing new in the pattern of such attacks. world. The development of profound ideas, of science In this century, every attempt by nations and individual and philosophy, first reached heights in Indian civiliza­ statesmen fr om among the developing nations to step tion. This is not a dead past. Such traditions were evoked into the arena of world affairs has been met with unre­ and understood by the leaders of the independence strug­ mitting hostility by the oligarchic financial forces who gle, men like Tillak, Gandhi, and Nehru, as the weapon created the current world economic order. The develop­ they wielded to defeat their imperial oppressors. ing sector demand for a new world economic order, best Contrary to the widespread U.S. view that India is a expressed in the resolutions of the Non-Aligned Nations land of poverty, cows, and Hindu mystics, India today heads of state summit held in Colombo, Sri Lanka in has capabilities and achievements in the fieldof economic August 1976 was met with a wave of destabilization development-both industry and agriculture-and in operations piloted by the likes of Henry Kissinger, aimed scientific aud technological development that are un­ at developing sector governments and leaders. Ultimate­ matched in their breadth in the non-industrial world. ly, the goal is to destroy economic development itself, to With the third largest number of scientists and engineers impose Malthusian genocide upon those populations to in the world, India can do things-from putting a satel­ maintain the power of the financial interests who control lite into space to producing nuclear power plants-that the present world order. only a fe w "advanced" nations can do. Its economic India, precisely because of its size, development, and development, which we update in this Special Report, historic tradition is no stranger to such attacks. Because puts India on the verge of an economic takeoff that could of these qualities, however, it has shown a strength and make it an economic superpower by the beginning of the staying power under attack that few other developing next century . countries can match. India's leadership, steeled in the In late July, Indian Prime Minister Mrs. Indira Gan­ crucible of a mass struggle for freedom against the dhi will visit the United States at the invitation of the British Empire, has a healthy understanding of the enemy Reagan administration. In September, she will visit the they face. Almost 200 years of British colonialism provid­ Soviet Union. There is a clear possibility, and desire, that ed a bitter lesson on that subject. she and India play a crucial role in bringing about an The key to India's strength and confidence in itself as East-West/North-South understanding, the kind of a nation, is that it is the product of 6,000 years of a great "new agenda" which Mr. LaRouche called for in his civilization, the historic mother of what we know as New Delhi speech. Mrs. Gandhi will be making her visit Western civilization. The Sanskrit language, the basis of in good faith, desirous of better world economic and the modern Indian languages, is the oldest written lan- political relations. We urge that she be well received.

EIR June 8, 1982 Special Report 19 'Developing nations must be responsible for economic growth and war-avoidance' by Lyndon H. LaRouche, Jr.

Executive Intelligence Review Founder Lyndon H. La­ Western nations, and the so-called mytical divide­ Rouche, Jr. addressed the Indian Council on World Affairs which is unreal, and indeed mythical-should not con­ in New Delhi, India, April 23, during a two-week trip to centrate on cooperating among themselves economically India which brought the Democratic Party leader back to as the basis for political security. Instead, they should the subcontinent fo r the first time since his service in the bring into play questions of high-technology economic u. s. Army 36 years ago. LaRouche was accompanied by development to the developing sector. his wife Helga Zepp-LaRouche, chairman of the European What we argued in particular was this: the Soviet Labor Party in West Germany, and EIR Contributing "Union did not have at that point, and still does not have, Editor Uwe Parpart on a tour that included stops at the largely because of its military expenditures, a significant Bhandarkar Institute in Pune, the National Institute fo r export capability relative to the needs of the developing Science, Te chnology, and Development Studies, the Jawa­ sector. Therefore, it was necessary that the United States, haral Nehru University School of In ternational studies, Western Europe, and Japan assist the Soviet Union in and a meeting with Indian Prime Minister Indira Gandhi. developing in the Urals and Siberia certain large indus­ We print here an edited transcript of LaRouche's April tries, which fitthe needs of the Soviet labor force and so 23 address to the Indian Council on World Affairs, which forth, which would given them the capacity for capital was titled "A New Approach to North-South Relations. " goods production in excess of what they would require domestically. Then we could say to the Soviets: "You Thank you, Mr. Chairman, members, and guests. don't have to pay us back directly for this. You can pay I have been involved in a significant way in the fo r some of the credits that you received from Japan, the question of North-South economic development since United States, and Western Europe by delivering certain approximately the beginning of 1974, with the aid of exports of capital goods to the developing nations for Helga Zepp-LaRouche, who has been my wife for the joint projects, creating a three-way trade. past three years. In 1974, Helga intervened in the Lower What we've achieved is a general comprehensive Saxony, Germany state elections campaign on behalf of agreement along broad policy planning lines, of proj ect the Social Democratic Party (SPD). She told the voters objectives, over a period of 25 to 50 years. We agree, that despite everything-referring to the leadership of North-South and East-West, that certain general things the Social Democratic Party-they should vote for the have to be accomplished in the way of economic devel­ SPD. But the particular policy which she introduced, opment projects over the next two generations; that we which has been our policy ever since, was to propose that will organize economic cooperation, both East-and-West Germany at that point take the leadership in developing and N orth-and-South, toward the point of fu lfilling what we called a "golden ruble." The concept of the those objectives; that we will organize credit mechanisms golden ruble was to establish cooperation between West­ to fa cilitate meeting those objectives; and that we predi­ ern Europe and the Soviet Union along traditional world cate our political relations and the resolution of problems power lines, but this was to be somewhat differently of military confrontation and other problems upon this defined than in past world-power efforts. The difference combined East-West/North-South trade. was that East-West relations had to be tied to North­ In this process I have made many efforts and have South relations. That is that both Eastern nations and become, in Western Europe and in the United States at

20 Special Report EIR June 8, 1982 least, and in a few other places, perhaps the most contro­ developing sector governments should be advised that versial public figure in certain precincts. At the beginning economically sound proposals are in fact unworkable, of 1975, according to official U.S. government records, and that therefore these governments should not make Henry Kissinger made himself my avowed personal ene­ themselves 'silly" in the eyes of enlightened Oxbridge my, and devoted a good deal of the time of persons politicians of the United States and Britain by submit­ assigned to his office to doing nasty things against me ting such silly proposals. In point of fact it is the case because of this. But apart from Henry Kissinger, and that many of these proposals, as typified by those several fe llows like Richard Hambros who approached included in the Sri Lanka agreement of 1976, are us in 1975 and told us that he was going to do bad things eminently sound. to us, apart from this sort of thing, there are two basic Therefore some special conditions must be created, problems that have so far prevented the success of either before we can talk seriously-except in ineffable rheto­ my own efforts or the efforts of anyone else in North­ ric-about achieving any significant improvement in South relations. This lack of success will continue, as North-South economic relations. We have to somehow long as these two conditions exist. I submit to you that eliminate the factor of institutions of the kind that all new proposals on North-South cooperation are point­ Henry Kissinger used to work fo r, and still does, in his less insofar as these problems are not tackled. deployments against North-South development. We also have to neutralize the professional economists of The Anglo-American stranglehold the Oxbridge and related London School of Economics First of all, the dominant institutions of Western varieties, whose doctrines shape the policies against Europe and the United States are controlled by what we development in the industrialized countries and poison might call Anglo-American forces centered around the the policy-making of the developing nations. Swiss Bank for International Settlements, the Interna­ I shall address myself as summarily as possible to tional Monetary Fund, etc. These forces are absolutely both of these propositions, and indicate how I propose determined not only to crush the developing sector, but we approach this. to significantly depopulate it, using economic means to facilitate the depopulation. Therefore, under no circum­ 1982 deadline for East-West showdown stances while these institutions have power-while they Some months ago, some people of my own govern­ can determine the policies of the United States and ment talked to me about the coming East-West crisis, a Western European countries and can dominate the crisis which is to be worse than the Cuban Missile Crisis international monetary system-is there a peaceful of 1962. The crisis was scheduled to occur on the basis means by which the developing sector could secure of the emplanting of medium-range thermonuclear mis­ significant improvement in North-South relations. Any siles, targeting the Urals and other parts of Russia, in attempt to find a pathway under these conditions is West Germany, Britain, and elsewhere. This is a totally merely the search for a pathway to failure. unacceptable proposition for the Soviet Union. The These institutions apply brute force. The Rambouil­ Soviets will not allow the emplacement of thermonu­ let agreement of 1975 is exemplary. Henry Kissinger clear, i.e., strategic, missiles in Western Europe within a and the British got the OECD nations together at few minutes' range of the major industrial and popula­ Rambouillet palace outside of Paris, and they agreed to tion centers of the U.s.S.R.-and any American who ignore any demands fr om the developing sector along thinks otherwise is crazy. the lines of those actually submitted and adopted the Therefore, this means that we have the Cuban following summer, in August 1976, at the Non-Aligned Missile Crisis in reverse, because of the present deter­ Nations summit in Colombo, Sri Lanka. What had been mination of the United States to carry out the Schlesin­ - put together at Sri Lanka was probably the model, for ger counter-force doctrine by emplacing Pershing II the whole, or a large part, of the developing nations for missiles in West Germany. So everyone in the United development. States was assuming that the 1983 deadline for the After this deployment of brute fo rce, the other main missile emplacement would bring us into a crisis-man­ obstacle to economic development is the economists agement showdown situation against the Soviets. themselves-the so-called professional economists. This I said, no, that is not when the crisis is going to is perhaps one of the most important things, because come. The crisis is going to break out between April economists in the developing sector are often susceptible and May of 1982-as it is now breaking out. We will to the arguments of such paid traitors to the cause of soon find outthat the Malvinas crisis is not the only humanity as Gamani Corea of UNCTAD, whom I one set to explode. (The Falklands crisis is simply the know personally to be an enemy and saboteur of efforts result of the British trying to reclaim territory that they to create rational North-South relations. According to stole years ago, and which is the property of Argentina the blandishments of the Ox bridge economists, the under U.S. law and international law. Lord Carrington

EIR June 8, 1982 Special Report 21 deliberately manufactured this crisis.) the United States or the Soviet Union that the political The Malvinas crisis is only part of a constellation of existence of the United States or of the Soviet Union is crises, which includes several crises in the Middle East. in jeopardy, then that nation will go to thermonuclear Israeli Prime Minister Menachem Begin is either resign­ war. It has no other military option. Therefore, the trick ing or he is playing another trick. But according to my is not to allow the condition to develop under which best information, Begin will be out within a matter of that can happen. days. Lord Caradon's protege · Ariel Sharon will be Now I'm going to come back to the question of running Israel, and if Sharon is running Israel, we are North-South relations in this context. What we have to going to have madness and bloodshed all over the do is intervene in this process: a plunge toward confron­ Middle East. tation, depression, and possible thermonuclear war; To The London press is already picking the bones of prevent these things, then, we must situate the effort to Iraq, before that nation is dead. Iraq holds the Gulf achieve a new world economic order in the effort to coast, but it will not for long if it loses its present war avoid war. How do we propose to do that? with Iran. Greek Prime Minister Andreas Papandreou has a The problem of littleness very strange notion of the proper way to · run his What does the fact that we are going into a depres­ government. He has organized a military coup against sion mean to the average citizen in Western Europe and himself, which is now in preparation-a royalist military North America? It means that the institutions and coup. The atmosphere is also beginning to be heated up policies which have governed the United States and fo r a confrontation between Turkey and Greece over Western Europe over the past decade have proven Cyprus. All it takes is a bloody shirt on Cyprus and the themselves incompetent. The problem is this: In soci­ entire Greece-Turkey-Cyprus conflict blows up, in ety-as Plato correctly observed, as St. Augustine cor­ which case the right-wing fo rces associated with Colonel rectly observed, and as Dante Alighieri documents in Turkesh inside Turkey will tend to make a play for his Commedia-we have three possible moral levels of power as they have in past Cyprus crises. development of the citizens of society, that is, qualitative Yugoslavia is marked for destruction. The entire moral development. We have on the lowest level, the Venetian-British-run Albanian operation is to be beastlike existentialist, the hedonist, irrationalist, the cranked up. philosophical anarchist, who does as he pleases, who does not believe in the law of reason, who does not North-South relations in today's crisis believe that the universe is lawfully ordered, or that if it We are now in the middle of a depression which is lawfully ordered it ought not to be, from his stand­ began during the period between October of 1981 and point. With this sort, you can't do much of anything. February of 1982. The depression is about to go into Morally, they're very close to animals. phases like the Kreditanstalt of spring of 1931; we're We have two other levels. We have a few people­ just waiting for blowup, a structural collapse in some well, we hope, at least a few-in society, who dedicate part of the U.S. economy which might be triggered in their lives to making some contribution to the condition any number of ways. One that is most likely is a debt of future generations, who see themselves as a positive default, rolling out of war- between Britain and South instrume�t of history, using their mortal lives to con­ America; and Britain will be at war with most of South tribute good. They understand that it's absolutely criti­ America if it shoots at Argentina. This is of course a cal that what has been given to them be passed on to rolling, chain-reaction of debt default, and the entire other generations. These people who locate their ident­ international monetary structure would collapse. ities so are only a handful in any society today. So we're in that kind of situation. We're headed for The majority of citizens-who are decent citizens­ a depression; in fact, we're in it already; it's just that the are moral in their personal and family lives. They can't structural damage is not yet done. We're headed toward go much beyond that, at least not realistically. They war, we're headed toward thermonuclear war-not be­ don't wish to achieve anything which they consider cause anybody is planning thermonuclear war, but be­ immoral as an objective. They don't want to achieve cause the conditions are developing in the world in anything by what they would consider immoral means. which we're going toward a point at which somebody But otherwise, their motivation is hedonism, in the will not be able to back down. broad sense of hedonism. That is, what they consider That's the only way you can have a thermonuclear the material and related interests of their family and war: you create an aggravated situation of crisis, a crisis friends is paramount. They cannot think about politics in which one party cannot back down. Particularly, on a national level; they cannot really think about nations cannot back down from war when they believe politics on an international level; because their souls their political existence is in jeopardy. If you convince and stomachs just won't allow them to grasp such ideas.

22 Special Report EIR June 8, 1982 Lvndon H. LaRollche, Jr. addressing the Indian Congress on World Affairs. At his immediate left is the President of the Counci/, M. J�sh.

And therefore in society, even the moral cItIzens of That is a typical response! I don't exaggerate; that's society, on whom we depend if we're going to have the kind of response you get. They're good people, but anything but a dictatorship of the enlightened few, they are very little. Like the good people of most behave irrationally on large issues. They define their nations, they're little when it comes to attempting to relationship to policy in terms of institutions-political comprehend the relationship between cause and effect parties, religious associations, trade unions, and so on. on the scale of a nation as a whole, or on the scale of They allow these institutions to do their thinking for international relations. They're not immoral in that them, and they express thei r relationship to these insti­ sense; they just don't think about it. They can't think tutions in terms of slogans and simple kinds of notions. about it even when you try to get them to think about They say, "I am of such and such an institution; I it, ordinarily; they just can't do it. therefore embrace this policy." You ask them to rate Therefore, if they adhere to institutions which have the policy? They can't. I n the final analysis, they sim ply bad policies, you can change the people only by reform­ have confidence in their institution and its policies. ing those institutions, or by causing them to become The problem is that among the industrialized na­ disaffected from those institutions if the institutions tions-in the United States, for example-approxi­ cannot be reformed. Therefore, the only time that you mately three-quarters of the population are essentially can produce what we might call a nonlinear change in good people. Their minds are lim ited, but they're good the course of policies of nations are those conditions of people. But they're little. They're concerned with their crisis in which the little people themselves begin to own family and personal and related affairs. They question those institutions. Under those circumstances, cannot think, their emotions cannot be mustered to if a people is inspired, great enterprises may be accom­ force their intellect to think in the long span about the plished . I saw the people of India inspired in my small nation as a whole, about the conseq uences of policy for contact with them in 1946, by the great enterprise of more than the next year ahead. Independence. Even the coolie making four or eight You tell them, for example: look, we must do dollars a day, was inspi red to think of nation-building something because the entire pension funds of the trade and the industrial development of India. unions are about to be wiped out, wh ich means that you So, in periods of crisis, it is possible under the best and all the other fellows who have been investing for circumstances to evoke in the people-the little years in these pensions won't have any pensions. He people-a passion and the ability to comprehend great says, well look, I agree with you, it's a very important issues. As Shelley says (I'm not anti-English, I'm only issue, but I haven't got time to become involved in it; anti-British), there are periods in which the power for I've got to worry about my future, you see. receiving and imparting profound and impassioned

EIR June S, 1982 Special Report 23 ideas concerning man and nature is increased. In such ment. It's just against nuclear war; it's for conventional times of crisis this is possible. However, also in such war. As Paul Warnke, who is the leader of it, has said, times of crisis there is a peril: lacking leadership for and as Senator Kennedy has said quite clearly in his great enterprises, mankind will often turn itself into public statements in support of the peace movement, as beasts. The same little people will destroy themselves. people in West Germany who are in the leadership of We saw that in Europe in the case of Mussolini's Italy. the peace movement have said: the peace movement is a We saw what happened to Germany. ·We saw what conventional-war movement. happened to other nations during the 1930s period. War against whom? War against the developing A crisis is approaching at which the failed institu­ sector-that's quite peaceful! And war against the de­ tions of the previous period must either change their veloping sector will lead to war between the superpow­ policies or be replaced. According to the alternatives ers; there's no way you can avoid this, as Iran illustrates. presented, mankind will take the lower branch toward Britain and the United States decided t6 destroy Iran. Hell, or mankind will embrace a great enterprise and And what is Iran now? Iran is now a vacuum which is take the higher road toward progress. And therefore, I sucking the two superpowers into a point of conflict. If propose that the question of North-South relations be you destroy other sections of the world, and you will situated in the conception of this branch point. suck the two superpowers into a point of conflict. Britain decided to destroy Argentina. Argentina is a The fo lly of"disarmament major supplier of Soviet grain. Can we avoid some The two superpowers have got themselves into a fix, degree of conflict there? Perhaps not war full-scale, but as I told my contacts in the United States from the a heated up confrontation is on the agenda. Will the relevant Soviet government. Therefore I understand Soviet Union allow its citizens to go hungry because of some of their problems; I understand the things they're a British blockade of Argentina? saying; I understand their complaints, their concerns. Look what's happening in Africa: genocide. Let's However, I point out to them that as long as they stop calling it by any other name; it's deliberate geno­ adhere to their present policies, and adhere to those cide against the black population of Africa. I've seen policies in the deepening crisis, we shall have thermo­ the plans to reduce the population of Nigeria by half nuclear war. I also concede to them that if the United and eliminate most of Africa. The plan is in the United States continues its present policies, and tries to negoti­ States, in the offices of Gen. Maxwell Taylor and ate on the basis of present policies in the crisis we're in, William Westmoreland, among others; in sections of we shall also have thermonuclear war. The two super­ the State Department. These plans were laid down in powers, if they attempt to negotiate their present respec­ the Office of Population Affairs of the State Department tive positions under crisis-management conditions, will and the National Security Council of Henry A. Kissin­ only negotiate war, because they can make no negotia­ ger. I've seen them, and their operation. And they lead tion, no compromise with their existing agenda, which to war. will prevent war. You cannot disarm. These people who talk about A competent system of economics disarmament-it's nonsense! Ten percent of the existing Which brings us back to the question: what is the thermonuclear arsenals would generate sufficient radio­ positive policy which would substantiate my proposal­ activity, if detonated, to wipe out all higher fo rms of life the proposal, again, that we establish an East-West/ on earth within two years after their detonation. If North-South three-way agreement on long-term eco­ present calculations of the behavior of radioactive cae­ nomic development, and that we predicate political sium are true, the world weather pattern will simply detente between and among the systems on the basis of take the radioactive caesium produced by a thermonu­ that agreement to 20 to 50 years of development in the clear warhead explosion, run it around the globe, and period ahead. deposit it in various parts of the world. The caesium Let's turn to the second obstacle: economic theory. will replace iodine in people's systems. It gets into the Contrary to the mythologies that are taught in every system, and people die a particularly horrible death, university in the .U nited States and Western Europe along with their animals, along with the birds and fish today, the British system of economics and its deriva­ as well. tives, like those that are taught today, made not one So what's the sense of a 5 percent or a 10 percent or single bit of contribution to the development of industrial a 50 percent disarmament? What good is it going to do? states in Western Europe and Japan or North America. It does no good whatsoever. What's the sense of a peace If the British system of economics had been used, we movement? The present peace movement is a fraud. As should not have gotten out of feudalism. Britain is the a matter of fa ct, the peace movement is a war move- only industrialized nation which did not develop under

24 Special Report EIR June 8, 1982 Lincoln's peri od, every period of successful economic development in the United States was done under the aegis and under the policies directly following from the American System. The successful industrialization of France was accomplished in two phases, under the influ­ ence of Colbert during the 17th century up until Colbert was ousted, and then, in one of the greatest explosions of industrial and military power in modern history , during a few years from 1793 to about 1798. During this short period, the Ecole Polytec hnique, under the leadership of Lazare Carnot and Gaspard Monge, made a revolution in science and conducted an industrial revolution-they did things in four years that people say you couldn't do today in the extent of 20. People talk to me about ten­ year projects, and I laugh. If you have to, you can do it in three. You can mobilize a nation and get it done. The successful industrialization of Germany was ac­ complished on the basis of the American System as represented in Germany by Friedrich List, in the 1830s and 1840s. The successful industrialization of Japan was carried out on the basis of the same American System. Japan is the model of reference for the developing sector today, that is for all sensible nations of the developing sector-I'm not saying you should imitate everything Japan does, but Japan is clearly the proof that for a developing nation, particularly a nation like India, which has greater advantages today than Japan had in 1868, Japan is always the model of reference for comparison. Japan's industrialization under the Meiji Restoration was based entirely and consciously on the American System. Any literate Japanese will tell you that the only competent economics is that of Hamilton, Mathew and Henry Carey, and List. The Americans say that Japan is very unfair-Japan is unfair not to be stupid like those to" Americans who have abandoned the American System "-� " for the sake of the British system. _L '''-' :S Now let me just turn to the basics of this: British Mr, and Mrs, LaRouche examine an ancient iron pillar at the Qtub Minar site outside New Delhi, economics is monetarist economics. It starts with the assumption that the fund of money as such is the source of wealth. Let me just indicate to you what is the issue the aegis of what was called a mercantilist policy-the and what is the possibility of mobilizing for example, ec onomics of Leibniz, the eco nomics of Hamilton, and Americans, and people in Western Europe, for an Amer­ so forth, or the economics of Colbert. Britain did it by ican System economic policy as the internal feature of looting its colonies. History therefo re shows that no this East-West/North-South development effort. nation can develop as an industrial power without loot­ ing other nations, except by fo llowing the mercantilist The significance of potential policies of Colbert and Leibniz, that is, what later became relative population density known as the American System . In scientific economics, we start with only one The American eco nomy was developed under the metric. That metric is potential relative population den­ American System, as laid out by Alexander Hamilton in sity. a series of reports to the Congress fr om 17S9 to 1791, By that we mean the average number of persons we concluding wi th the December 1791 Report to the Con­ can sustain per average square mile through the produc­ gress on the Subject of Manufactures. in which the term tive labor of that population alone. That is, what is the American System was used fo r the fi rst time. Up to ability of the population to reproduce and to maintain

EIR June 8, 1982 Special Report 25 itself? That's the fundamental measure of economics. ress is the first proper instrument of policy of any To give some indication of what this means: according nation. Secondly, within that, we must promote educa­ to the anthropologists-I wasn't there-some millions tion and science comparable to what that requires . We of years ago our ancestors were living pretty much as must educate to produce individuals in whom all crea­ gifted baboons, talking pretty much like hippies in the tive potentialities are optimized, as citizen as well as United States today . They had a mode of hunting and producing persons. We must educate to the level that gathering which, as I read it, if sustained as a culture our technology and technological progress require. We would have permitted the human race never to exceed must realize that progress results from investment and at most several million individuals. Yet contrary to that, reinvestment. We must have policies under which the the human species today is estimated four-and-a-half margin of wealth-which is comparable to profitmeas­ billion individuals, and with the existing technology or ured on a national scale-is invested in improving the technology we ought to have developed during the past scale and quality of production. 20 years, we could sustain quite comfortably tens of We must be dirigist, we must plan to cause this billions of people on this earth, at standards of living in surplus to go into the areas which are of greatest benefit excess of those found in Western Europe and the United . to the nation. This means technological progress in States today. agriculture, in industry, and in basic economic infra­ We have the technology. The fi rst thing we have to do structure. The other investments will have to go tagging is make sure that about 35,000 to 40,000 kilowatt hours along at a lower priority. of electricity is generated per capita. If we start with this energy supply, the developing sector can very quickly Why we are called mercantilists bring the standard of living up to that comparable to How do we mobilize, then, this profitable part of Western Europe and the United States. We have the our production and capacity in order to foster growth? technology-we just have to have a little nuclear energy, Here is where we come into direct conflict with the otherwise we can't do it. British Oxbridge economists. , In the future, we can go into space. And with what We are called by the British mercantilists, neo­ we know now, we could build earth-habitable locations mercantilists, and protectionists, as the Americans were in space sometime during the next century, at social when they were still Americans-before they became costs not in excess of the social costs of maintaining a British. We believe in protecting our industries, our person on earth today. agriculture, and our infrastructure-protecting them by So there are no limits to resources; there are no tariff policies and protecting them with fair prices. That limits to population. The more creative people we have, is, we do not expect agriculture to prosper if we demand the more creativity we're going to have, and the faster that the farmer sell his product at a price below his cost we're going to grow. Resources are not a problem. Our of production. Therefore, we must ensure that our problem is to determine what policies will actively farmers have fa ir prices, so that they may prosper and increase both the potential of the population density reinvest. We will even subsidize our farmers to make and the quality and opportunities of the individual in sure that they can progress and not fall behind the rest society. That's what economics ought to be concerned of the world. We demand that our vital national,indus­ with. And the monetary side of the thing comes in as a tries be protected by tariffs , be protected by internation­ secondary consideration. That is what I define as eco­ al agreements with friendly nati6ns for cooperation on nomic science. this question, and be protected by our providing fair The way society achieves an increase in potential prices for the products of those industries. So those relative population density is chiefly by injection of new industries which are doing a good job maintaining technologies, or advanced technologies, which repre­ competitive standards, will not be ruined by foreign sents man's mastery of the lawful ordering of the dumping.

universe in a more perfect way. By injecting these more We also differ with the British on a second point: on powerful ideas about the universe into the practice of the cr((ation and use of credit. We are opposed to production in high-technology industry and basic infra­ usury-that is, the lending of money as a resource. We structure, we increase the average person's power to insist that the power to create credit must be reserved to produce, increase the number of persons we can sustain, the government alone, the government of sovereign and increase the standard of living which we are able to states. The government of a sovereign state prints provide by means of that labor. money. It does not itself spend the money that it prints. The problem is to sustain this process of injecting Rather, it loans this money, in currency notes, to a well­ technology. First of all it means we have to have regulated banking system, so that the capital is made institutions which make technological progress the effi­ available for a fe w categories of projects of public and cient instrument of national policy. Technological prog- private investment, so that the capital may be available

26 Special Report EIR June 8, 1982 on a medium- and long-term basis at low interest rates feasible in terms of the productive capacities of the to meet those objectives which are agreed to be in the industrialized countries. Adding $200 to $400 billion a national interest and require capital. year to the present level of capital goods exported from This arrangement must be' put on a gold-reserve the industrialized to the developing nations I think basis, otherwise we would have trouble with interna­ would be adequate to reverse the pattern of the devel­ tional relations. We require gold-reserve issues of cur­ oping sector; if we are patient. In some cases it will take rency by the state through a regulated banking system longer than others. to provide ample credit for medium- and long-term Furthermore, this would cause an economic boom investment at reasonable interest rates for those cate­ in the industrialized nations-not because of profits on gories of improvement of agriculture, industry, and sales to the developing sector, but pecause the increased infrastructure which we have agreed are in the national turnover of capital goods in producing industries would interest. If somebody wants to borrow for something accelerate productivity and generate great profitability else, that's their business, but they shall not use the through increased productivity. This becomes now-at funds of the state for that purpose. If somebody wants a point when the present international monetary system to loan their savings for that purpose, they may. These is breaking apart in a depression-the only alternative restrictions are necessary to prevent inflation and to for the industrialized countries, particularly the capital­ maintain national priorities. ist industrialized countries, to the depression, which if it This is not inflationary, contrary to what the British is unleashed will be worse than that of the 1930s , and say. If I were the head of the government of the United much longer. It also represents, if fo llowed through, a States, I could print as much money as I chose, and by basis for common interest in economic development this system I could never inflate the economy. Because and in peace among nations of East and West and before any money is spent, it must be lent to utilize idle North and South. resources, or otherwise idle parts, labor, and capacity. I propose that people in the developing sector ignore And it is lent only to create economic infrastructure or this piece of nonsense known as the Brandt Commission to create improvements in agriculture and improve­ and all these other pieces of diversionary nonsense. The ments in industry, all of which are beneficial to the nations of the so-called South, or some of them, must economy. These improvements increase national pro­ make a unilateral statement on the nature of the crisis ductivity, which increases national wealth per capita. and what must be done to stop the world depression And that is our credit policy. , and to stop war. They must declare that the solution to The creation of a new economic system may be the crisis is to be found not by peace negotiations, not simply accomplished if those industrialized nations by disarmament, but by creating the conditions under which either have or can have a large surplus capacity which peace negotiations are unnecessary and in which in high technology capital goods or production issue disarmament does not require negotiation, it simply credit on a gold-reserve basis. Since they don't have to happens. Therefore I propose that the developing na­ borrow from anybody, these nations can lend it at any tions, and the spokesmen of them, either official or price they choose. The new credit could be lent at 1 unofficial, make a unilateral statement to this effect: percent interest, it could be lent on deferred payment that there be international cooperation on East-West/ terms; it's no problem. If the state creates credit, that's North-South development interrelatedly; that condi­ not a problem. Then this created fund, which corre­ tions of political stability and peace be premised upon sponds to the otherwise idled productive capacity of the the mutual self-interests of the parties in promoting industrialized countries, is lent for long-term and medi­ economic development. um-term credit for investment by the developing coun­ Because this is a time of crisis, that which I have tries. I estimate that the order of magnitude of this been proposing since 1974, which has been suppressed, credit-generating capacity should be between $200 and rejected, which used to make me a figure of attack $400 billion per year added to the present level of precisely because of prevailing institutions, may now be development. That means that the governments of the proven the useful solution. Now that these institutions developing sector will, through their national banking have weakened themselves in depression and crisis, systems, borrow part of this amount, which is essentially perhaps we can intervene to appeal to the conscience of borrowing the currencies of the exporting country in nations which now themselves may despise these insti­ order to purchase exports of the type that they require tutions. And if you of the developing sector begin to from these countries. This means that these imports will give leadership in this matter, at this time when your be over and above the purchases that the nation would intervention is needed, perhaps we can stop World War make on the basis of its current balances. III. Perhaps your intenvention will succeed where pre­ This mechanism, if it were agreed to, would ensure, vious paths of negotiation have failed. I believe, an adequate level of investment. It is quite Thank you.

EIR June 8, 1982 Special Report 27 Indian economy back on the track under the Gandhi government

by Susan Brady and Ramtanu Maitra

In a gloomy world economic situation, the performance A progress report for 1981-82 of the Indian economy has been a relative bright spot. The distinct economic improvement that began with After two years in power, the government of Prime Mrs. Gandhi's resumption of power in January 1980 Minister Indira Gandhi has succeeded in putting the has continued during 1981-82 (fiscal year April-March). economy "back on the rails," showing substantial gains As shown on page 30, the major production indicators in production and lowering the rate of inflation following in industry and agriculture are up, import costs have the three-year debacle of rule by the coalition Janata been moderated, and inflation hasdropp ed from almost government. During those years output stagnated and 17 percent to 3 percent (with latest figures showing a inflation soared as the government pursued a ruralist, zero rate of growth of inflation). The one clear trouble anti-industrial policy. spot is the plummeting of the Indian foreign-exchange balance, a situation which prompted the government to The next step negotiate a three-year, $5.7 billion balance-of-payments India is now situated to make new strides toward the credip from the International Monetary Fund (IMF), a goal originally set forth afterin dependence by Jawahar­ move which prompted a great deal of controversy inside lal Nehru: consolidation of a strong industrial base India reflecting fears that the IMF would dictate utilizing advanced science and technology, alongside a changes in Indian government economic policy. self-sufficient, productive agricultural sector. The Gan­ dhi government appears committed to such a path, but it Agriculture faces enormous obstacles and risks, not the least being The agricultural situation has been a major source the reality of world depression. While India's perform­ of strength during the past year. After a bad year in ance is to be applauded, it will quickly face nightmarish 1979-80, the past two years have produced good crops conditions if world economic collapse shrinks Indian and the 198 1-82 fo odgrain production is expected to export markets and dries up the sources of essential reach 134 million tons (mt), an all-time high surpassing credit and capital investment from outside India needed the 1978-79 level of 132 mt. Projections for the current to meet the targets of the Sixth (1981-85) Five-Year Plan year are also good although weather conditions, includ­ and future plans. ing unseasonably cold and rainy conditions this spring Within the world economic context, there are two in the northern wheat-producing region, could lower dangers in Indian economic thinking and planning which estimates somewhat. . must be confronted. The first is the potential for pres­ In general India has achieved something few other sures on fo reign-exchange holdings to become a point of developing nations have, and with 700 million popula­ almost total fixation, such that a fo olish approach to tion: basic foodgrain self-sufficiency . The prospects for export development and promotion is established to the the major cash crops are also good-sugarcane, detriment of other needs. In a worst-case scenario, the groundnuts, cotton, jute, mesta, and tea-and steady Sixth Plan itself would be subordinated to forex-earning progress has been made in allied rural activities such as concerns. animal husbandry, poultry development, and fisheries. The second danger is a lack ofclear focus in economic In the area of animal husbandry generally, the planning, an absence of a clearly determined set of emphasis has been on improving the quality of cattle priorities for major projects and investments. This is and other animal stocks, improving the pr,ocessing already a problem in regard to the power sector, in capacity, and establishing the institutional framework particular nuclear-energy development, where the prior­ for making animal and poultry products available ity of electrical energy generation and of even small but throughout the country. India's "Operation Flood," catalytic fu nding for advanced scientific research and which has increased milk production by 50 percent development has been insufficientlyun derstood. between 1970 and 1980, from 20 mt to 30 mt, is

28 Special Report EIR June 8, 1982 exemplary of this type of effort. This will be a model for ects. At the end of 1981 the total irrigated land are� in a similar effort to gear up oilseed production and the India was 55.02 million hectares. The target of 2.63 edible oil industry (edible oil is one of the top three or million hectares in new irrigated land for 1981-82 is four items imported by India). expected to be "su,bstantially" achieved despite local In the crucial grains-production sector, the emphasis shortages of cement and steel, and cost escalation. has continued to focus on a high-technology "package" On the fertilizer front, usage in 1981 was up 5 approach involving the efficient use of existing irriga­ percent from the previous year, to 5.52 mt of which 2.8 tion systems and further irrigation development, cou­ mt are imported. The government plans include a major pled with increased fertilizer use and the continued effort to increase domestic fertilizer production, moti­ spread of high-yielding varieties of seeds. The policy is vated in part by increased domestic needs and by the aided by the provision of electricity to farmers on a . desire to reduce the import bill for fertilizers. Those priority basis, necessary for running electric pumpsets efforts are centered in the establishment of two huge and thus mitigating the effects of shortages of rainfall, new projects in the public sector-the Thai Vaishet and particularly in high production areas like the Punjab Hazira projects in Maharashtra and Gujarat respective­ and Haryana in the northwest. There are also new ly will include four large gas-based ammonia plants that initiatives to assure credit availability to farmers and to are harbingers of a new network of gas-based fertilizer provide adequate price supports through the govern­ plants presently being sited by a specially appointed ment's grain purchasing program. export committee. The idea is to combine coal with use Within this "package," irrigation development has of gas from the Indian offshore oil fields in Bombay been given priority. In 1980-8 1, 2.46 million hectares of High and Bassein as feedstocks, and to pipe the gas land were provided irrigation, 1.6 million through "mi­ directly to plants in farm areas, so that transport of nor" and .86 million through "major" irrigation proj- increased fertilizer supplies does not aggravate the

The Indian subcontinent CHINA

Arabian Sea

Bay of Bengal

Indian Ocean Ds",,,",,

EIR June 8, 1982 Special Report 29 Selected indicators of the Indian economy (Percentage change over previous year)

1981-82 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 (1982 estimated)

Gross National Product at 1970-71 prices ...... 1.2 9.6 1.3 8.6 5.3 -4.8 7.5 4.5 Agricultural production ...... -3.2 15.2 -7.0 14.5 3.4 -15 .5 15.4 3.0 Foodgrain production ...... -4.6 21.2 -8.1 13.7 4.3 -17.1 18.4 9.0 Industrial production ...... " 3.2 7.2 9.6 3.3 7.6 -1.4 4.0 9.8 Electricity generated ...... 5.2 12.9 11.5 3.4 12.2 2. 1 5.0 11.6 (Utilities only) Wholesale prices ...... 10.1 -6.5 12.0 0.3 4.6 21.4 16.7 3.0 (on point to point basis) Monetary resources ..... : ...... 10.9 15.0 23.6 18.4 21.9 17.7 17.6 11.3 , Imports ...... 52.9 16.5 -3.6 18.7 13.2 32.4 38.2 4.0 (in current prices)

Exports ...... 31.9 21.4 27.2 5.2 5.9 12.8 3.9 14.1 (in current prices)

Foreign exchange assets ..' ...... 5.1 144.3 91.9 57.2 16.0 -1.1 -6.6 -27.2 (excluding gold and SDRs)

Source: Indian Ministry of Finance

already serious rail-transport bottlenecks. efficiency in the coal fields and increased power availa- bility to the mines. '. Industry One of the principal areas of concern is the steel Overall Indian industrial output will increase by industry . Despite a longstanding Indian commitment about 8 percent during 1981-82, a significant rate of (since Nehru's days) to self-sufficiency in steel produc­ growth (see above). All three major industrial sectors tion, steel remains one of the four major import items. contributed to the growth-manufacturing increased Total availability of steel in 1981 was about 10 mt­ 8.6 percent; mining 17.7 percent; and electricity genera­ including 6.9 mt produced by the six integrated steel tion 11.8 percent. mills in the country, 1.6 mt produced by the mini-steel This growth, however, is largely a product of in­ industry, and 1.5 imported. Steel output was affected creased utilization of existing capacity, the figures re­ both by power cuts and by lack of high-quality coking flecting recovery from a depressed condition rather than coal. The power problem is particularly acute in the any significant net additions to productive capacity. eastern region where all six major mills are located. This improvement is attributed to the recovery of the The obvious problems in steel are being taken on in fu nctioning of vital infrastructure-mainly power and part by a decision to construct two new integrated steel transport-a focus of major concern by the Gandhi plants, the first new steel plants started since the I 960s. government, with the Prime Minister herself monitoring These are the 3.4 mt capacity Vizag project, to be built the performance in these areas. with Soviet assistance (the third Soviet-assisted plant), Virtually every industry group in the manufacturing and a plant in Paradeep, the $2.8 billion contract for sector registered growth, with the exception of food which was originally awarded to the British steelmaker manufacturing, textiles, and electrical machinery, ap­ Davy McKee but was terminated just recently when the paratus, and appliances. Mining growth is accounted British attempted to renegotiate the terms of the con­ for by the 62 percent growth in crude petroleum out­ tract. The plant will now be built by the Indians put-a stunning tribute to the preliminary successes of themselves with the most advanced technology import­ India's ambitious oil development program, with some ed wherever it is available. help fr om the restarting of oil flows from the Assam The decision to build the two new plants, combined fields in northeast India which had been blocked by with projects to increase the capacity of existing steel political destabilization in that region. There was also a facilities, are looked to as hopeful signs that the long 1 2 percent jump in coal production, a result of great stagnation in steel production has ended. The govern-

30 Special Report EIR June 8, 1982 ment is working with conservative estimates that steel require 10 percent annual growth rate for the rest of the demand will reach 18.4 mt by 1990, and plans to Plan period. Central allocations for coal are to increase, increase installed capacity in the integrated plants to and there are efforts to improve and modernize technol­ about 20 mt. This will be difficult to achieve, however, ogy with assistance from many countries including unless parallel efforts are made to improve the infra­ France, the United Kingdom, the U.S.S.R., and Poland. structure needed to support it. The increased use of coal poses severe problems, how­ ever; fo r already strained rail transport . As well, most Energy Indian coal has a high ash content, making for great The weak point of.the Indian economy remains in maintenance problems in existing thermal plants. its energy and transportation infrastructure. The growth The obvious solution is to increase India's nuclear­ of power generation capacity and the performance of power generation program, already the largest in the that sector have continued to lag behind the rest of the developing sector, and backed up by the third-largest industrial-and agricultural-economy, and act as a storehouse of scientists and engineers in the world. At drag on overall growth. There are vast areas of the present, plans call for gradual increase of nuclear-pow­ country "plagued by lack of power; and power cuts ered electrical generation to a level of 10 Gw by 2000, continue to afflict urban areas and industry with regu­ well below earlier estimates and hopes. In large part this larity. Efforts to improve rail transport of coal to power is the result of U.S. sabotage by means of a cutoff of plants and to construct coal-fired thermal plants at the supplies of equipment and fuel under the guise of the coal pit head to reduce transport problems have helped, discriminatory "non-proliferation" policy. India has but the basic problem remains. tried to compensate with development of indigenous The most recent figures show the gap in the power technical capabilities; but while the Indians are now sector in 1981-82. Despite an increase of 11.6 percent in theoretically capable of constructing a heavy-water electricity generation, there will be nearly an II percent moderated nuclear plant from top to bottom, the con­ gap between requirements and availability for the year. struction time is quite long, and capacity is limited. The In 1980-8 1, the. addition to generating capacity was nuclear program, despite considerable success, has been 1,600 megawatts (Mw), compared to a target of 2,600 put on the defensive in favor of more "practical" Mw, and in 1981-82 no more than 2,300 Mw is to be alternatives like coal. But if there were a new commit­ commissioned against a target of 3,200 Mw. Slippages ment from the government to a thorium-based fuel in the construction time of power projects is chronic, cycle (India has the largest thorium reserves in the due to many factors including the inability of the main world) utilizing high-temperature gas-cooled reactor domestic power-generation equipment supplier, Bharat technology, progress could accelerate. Heavy Electricals and Instrumentation (BHEL) to sup­ ply on time and in sequence. (See page 32 for graphs of Transportation selected industrial and energy production figures.) Transport, which principally means rails and, less The Indian government is working within the frame­ important, water surface and port development, is piv­ work of estimates that power demand will increase to otal to the Indian economy. Though showing improve· 32.7 (gigawatts) Gw by the end of the Sixth Plan, and ment, it is acknowledged to be unable to achieve Plar to 52.6 M w by the end of the Seventh in 1990. As of targets with currently available resources. The railways March 1980 total installed generating capacity stood at the most extensive system in Asia, have suffered frorr 31 GW, and according to present plans new capacity prolonged underinvestment that has left them witt amounting to 19 Gw is to be commissioned during the inadequate capital stock (rolling stock, track, and otheJ period of the Sixth Plan, achieving an installed capacity equipment) and with extensive repair and moderniza· of 48 G W by 1985. This framework already imposes tion needs. The track bed and rails are in need of large­ constraints on industrial development because targets scale overall inputs to allow for increased freightage, are so low. Recognition of the situation and of the fact higher speed of transport with reduced accident rates. that even these low targets may not be achieved is In the area of rolling stock, despite a large wagons­ evidenced in the government's decision this year to producing industry in India, wagon production has allow public-sector undertakings in the core sectors to lagged behind targets. set up their own captive thermal power plants. Inadequate traffic-handling capacity at major ports, The realities of the power picture are also reflected which has emerged as a major constraint in recent years, in the government's plans regarding coal production: is being dealt with through a construction program and the bulk of power generation will depend on coal-fired the opening of new ports for exclusive handling of thermal power plants. In 1981-82, coal production containers and bulk carriers. A Japanese firm has just jumped II percent to about 124 million tons, and the secured a contract for upgrading of the key Cochin port Sixth Plan sets a target of 165 mt by 1985 which would on the west coast.

EIR June 8, 1982 Special Report 31 Electricity Cement Billion KWH T Production of T 120 18 selected industries

in India 12

6

� April-November T=Target 0 Source: Indian Ministry of Finance. 1975-76 77 78 79 80 81 82 82 economic division

Coal Saleable steel Nitrogenous fertilizers Million tons Million tons Million tons 8 4 T T T 6 3

4 2

2

0 0 1975-76 77 78 79 80 81 82 1975-76 77 78 79 80 81 82 1975-76 77 78 79 80 . 81 82

The balance of payments 'problem' gaps left by domestic production. This has left an About 60 percent of India's imports are accounted inadequate amount of foreign exchange for the import for by oil, fertilizers, steel, and edible oils. That is the of capital goods and industrial raw materials, the cate­ beginning and the end, in essence, of India's "balance­ gories which need to be vastly expanded if development of-payments problem." Increasing trade deficits, likely is to move forward as rapidly as it can. to exceed 50 billion rupees (about $5 .5 billion) for the The basic strategy at present is to increase the second year in a row, have put pressure on Indian production of the principal import items, reducing the foreign exchange reserves. import and foreign-exchange burden they pose, and This pressure has left India open to the intervention freeing resources for capital goods imports. This is and manipulation of international financial circleswho coupled with a vigorous program to promote Indian gain a foot in the door through India's need for exports and increase forex earnings. , international credit to finance its payments deficit and The centerpiece of the first part of the strategy is the maintain even the modest pace of capital investment massive investment in oil exploration and development called for in the current Plan. Over the past two years, inside India. Budget allocations for this program in the India has entered the commercial credit market in a 1981-82 budget were increased 30 percent from the significant fashion for the first time-prompted in part previous year and the 1982-83 budget raises this alloca­ by decisions to finance large industrial projects, and by tion another 90 percent to 20 billion rupees. the cutbacks in available credit from multilateral facili­ The major part of the oil-development effort is being ties (and lower interest facilities) like the World Bank's carried out by the Indian state oil companies, which International Development Association (IDA): have developed an impressive capability including re­ The concern over the balance of payments has search and development. However, in addition it was shaped the investment decisions of the government. The decided to supplement their effort by opening up oil value ,of imports has doubled in the three years from concessions to foreign oil companies on a production­ 1979, principally due to the escalation of oil prices sharing contract basis. Some interest has been evoked­ during 1979-80 (a problem augmented by the need to Chevron which is involved in a drilling project-interest import a larger volume of oil due to the destabilization spurred by several new oil discoveries in offshore areas. of Assam). Other essential items like fertilizers, steel, In addition, the Soviets have agreed to assist in further and edible:; oils are imported in volumes dictated by the onshore development.

32 Special Report EIR June 8, 1982 Revised estimates for proven oil reserves in India's ing currently in commercial markets. offshore areas now stand at 2.5 billion tons, an increase The IMF is clearly calculating that within a year the of 300 million tons over previous estimates. It is expeted Indian economy will be in deteriorated condition, along that by the last year of the Sixth Plan, indigenous oil with the rest of the world economy, and that the loan is production will reach a level of 30 million tons (com­ a "foot in the door" to dictating stringent conditionali­ pared to 14.5 mt in 1981), meeting about 70 percent of ties for the Indian economy, including abandonment of total crude demand. The state-owned Oil India Ltd. large-scale industrial and agricultural development (OIL) has fo rmulated an ambitious plan which calls for plans. At present the loan is subject to "adjustment the production of 60 million tons of crude annually by criteria" and "performance criteria," including check­ the year 2000. The Indian government is hopeful that ing inflation, curtailing non-bank credit to the public their efforts will bear fruit and relieve India's oil-import sector, reduction in public expenditure, and improve­ requirements in the immediate fu ture. ment in the functioning of public sector enterprises. In On the income-generating side of the BOP equation, many instances the Indian government is already pur­ India has launched an export promotion drive. Signifi­ suing some variation of these goals, and there is no cantly, the "boom" in Indian exports from 1974-77 was evidence that the Indian government has taken steps largely due to the price run-up for agricultural products contrary to its own objectives, particularly regarding such as oil cakes, marine products, and sugar. Otherwise austerity measures, due to IMF pressures. Mrs. Gandhi India's major traditional exports-jute, tea, and tex­ has made it clear that the IMF will in no way be allowed tiles-are heavily dependent on world commodity mar­ to contravene parliamentarily approved decisions on kets and increasingly subject to protectionist barriers in the economy and that future installments of the credit advanced sector markets. will be abandoned rather than bow to such dictates. The government is emphasizing the development of Yet the discovery and development of oil in India exports that are both competitive internationally and remains the collateral for the IMF loan and hence an for which world demand is rising. There is also a push Achilles heel of sorts. Failure in this effort will put to increase India's exports of engineering goods and extreme pressure on the export-promotion side of manufactured items which have risen as a portion of things, distorting the economy, and will also mean total exports in the past decade, and for which there is pressure to adopt austerity measures including curbing an expanding market in other developing countries, in development spending and imports of capital goods. Eastern Europe, and in the Soviet Union. The Indian economy has built up a tempo of growth Incentives have been provided to promote exports, which under favorable world conditions could rise even including the establishment of two "free-trade zones," more rapidly, but under depression conditions India where a complete tax holiday for the initial fiveyears is will be no less immune to the consequences of global granted to industrial units set up for 100 percent export, collapse. including fo reign companies. Those producing in these areas, or even outside them, for export are eligible for special credit facilities; for waiving of import duties on capital goods, raw materials, and so forth imported for An EIR White Paper export processing; and for exemption fr om central Beam. Weapons Development: excise duties and other levies. Very recently the sale of The Scientific 'Driver' 25 percent of output from the free-trade zones to for National Security domestic markets was approved, subject to duties. Other tax credits and exemptions are also available, some A complete technological review by recently introduced in the 1982-83 budget by Finance EIR's Military Editor, Dr. Steven Bardwell, Minister Mukherjee. Editor of Fusion magazine

It is the balance-of-payments problem, viewed in the • Techniques for beam-weapons defense against light of the requirements of the Sixth Plan, that prompt­ the ICBM ed the Indian government to . arrange the huge IMF • The Soviet plasma beam program credit last year. The Plan assumes the availability of • The U.S. program and its prospects foreign aid and loans of more than 93 billion rupees • Why the Soviets never accepted Mutually Assured Destruction (about $10 billion), probably an underestimate. Under • How beam technologies can transform industry the circumstances, a large loan was a necessity for 120 pages $100.00 maintaining the pace of development; and as Indian Order from: Peter Ennis. EIR Director of Special Services. authorities have explained, the average interest rate on at (2 12) 247-8820. or 304West 58th Street. New York. the entire IMF package works out to below 10.5 New York. 10019 percen t, considerably below the 18 percent-plus prevail-

EIR June 8, 1982 Special Report 33 The Anglo-American strategic miscalculation

by Crlton Zoakos, Editor-in-Chief

The war in the south Atlantic, part of a larger strategy by British colonial war and the sUpportit receives from the Great Britain to redirect NATO military forces in "out­ United States. of-area deployments" to crush developing world nations, The extent to which the nuclear confrontation threat becomes a likelihood, is defined by the following overall is rapidly driving the already calamitous world situation . to a point where senior personalities of international strategic factors. political life see a "world catastrophe." In the past week, the potential for a superpower confrontation and for the RDF in the Gulf use of nuclear weapons has become the subject of "p ublic In the course of the next week or so, there is the concern as I write on May 28. strong likelihood that large military forces under NATO It is a confirmedfact that Britain's naval task force in jurisdiction may be deployed in the Persian Gulf under the South Atlantic is equipped with nuclear weapons and the rubric of Rapid Deployment Force policies. The that its commander, Admiral Woodward, has received collapse of the Iraqi military effort in the Iran-Iraq war, authorization to employ them in case of "dire need." It is orchestrated by Britain with United States and Israeli also confirmed that some �even Soviet submarines are participation, is threatening to ruin every Arab state in prowling the area of combat with an as yet undetermined the area. U.S. Secretary of State Haig, in a Chicago assignment. Numerous responsible international leaders, speech on May 26, made it clear that the State Depart­ including former Venezuelan President Carlos Andres ment will not attempt to avert such a destruction of the Perez, have warned repeatedly that the danger of a existing regimes in the region but rather will try to Use nuclear superpower confrontation continues to mount their expected destruction for the purpose of introduc­ every day that Britain pushes forward its colonial cause. ing the Rapid Deployment Force in what he expects to In the past few days, Argentinian leaders, including become a classic NATO "out-of-area" deployment. The that nation's Defense and Foreign Ministers, stated stupidity and recklessness of the scheme bears the clearly that, given the massive U.S. military support for imprimatur of Her Majesty's government, the usual Britain, Argentina will not exclude the possibility in the supplier of policy to the foolish Mr. Haig. future of seeking Soviet military aid, if Argentina's sur­ As a senior Egyptian military source emphasized vival is put to question by the war. The Soviet Union, so after the collapse of Iraq's military effort, "nobody far, has limited itself to strident denunciations of the knows what the Soviet Union will do." The fact of the

34 International EIR June 8, 1982 matter is that the U.S.S.R. currently has the military rio, Argentina should have been a "pushover." It was capability, based on its verified current deployments, of supposed to have collapsed early on, thus demonstrat­ putting some 22 divisions into any spot of the Gulf they ing to reluctant NATO allies the efficacy of "out-of­ desire. By comparison, the RDF is as effective as a USO area deployments," and giving a terrible lesson to other, troupe commanded by Bob Hope. Iraq's defeat has presumably awed, nations of the "South." created a situation in which the Soviets have the option Instead, Argentina has put forward a gallant and of taking over the Middle East. Whether they shall take inspiring resistance. This resistance has now caused a this option or not is not known at this time. Further, it strategic earthquake-virtually all of Latin America is cannot be predicted what general course of action the moving in the direction of a break with the United Soviets will select. EIR founder Lyndon LaRouche, the States. Latin America is about to become the most Democratic Party leader, upon receiving the news of influential sector of the non-aligned movement. Nations Khorramshar's fa ll to the Iranian army, commented: of the "South" are demonstrating a resiliency far great­ "The entire region is now going into a rapid qualitative er than British planners had assumed . NATO's threat to transformation, a phase change, in which no expert can launch out-of-area deployments, rather than destroying predict the consequences. All we can say at this time is the "South," is now functioning as a stimulus, driving that the Soviets have been given the option of picking these nations toward the objective of strengthening their off the Middle East. But how the Soviet Union will defens� and reinforcing their societies. They have to do move cannot be known at this time by anyone. Over the so in order to survive the British-inspired NATO on­ next 30 days the Soviets themselves will be deciding on slaught. To be able to do so, they shall need, at least how to take advantage of their new opportunities." temporarily, outside assistance. Given present realities, such assistance would only be forthcoming from the North versus South Soviet bloc. The process occurring in the Gulf area is being This is the gist of Her Majesty's strategic miscalcu­ repeated throughout the globe: British or British-assist­ lation: NATO'S military adventures, insufficient to de­ ed forces have put into effect a grand strategy of using stroy the better-developed nations of the "South," are military force to destabilize and ruin all governments enough of a threat to compel these nations to seek the and nations of the developing sector. The war of the means of their self-defense in the Soviet bloc. The whole Malvinas was used by Britain as a level to oblige NATO strategy, instead of producing broken, servile client­ adopt its current "out-of-area deployment" posture. states, is now about to produce resurgent, mobilized When the NATO Defense and Foreign Ministers unan­ nations which, in a world of "East" and "West," view imously approved this fateful resolution, they took the the British-dominated "West" as their destroyer and step of proclaiming a war of the "North" against the pronounce themselves non-aligned. "South." Most influential governments of the "South" Thus the West has now two options open before it. are now proceeding from the fact that NATO poses a Either it removes Her Majesty from the driver's seat military threat to their existence. and restores the United States to the status of a super­ This North-South conflict has in fact now become power commited to the rapid economic, industrial, and the central issue in politics and diplomacy. Broadly, the technological development of the "South," or it esca­ non-aligned, developing sector will be wide open to lates, under the leadership of Her Majesty, its military Soviet influence, in pursuit of military safety from provocations to the only level at which the West's NATO's "out-of-area deployments." What is being military power is credible: nuclear confrontation with done to Argentina could be done to any one of them, is the Soviet bloc. the generally accepted sentiment. The ways in which the The pace of developments in the Gulf and in Latin Soviet Union will move to provide backup militarily America indicate that in the course of the coming will to a large extent determine whether the world will month these issues will be on their way to being face a thermonuclear nightmare, or whether it will fall resolved. No one should entertain the delusion that a under Soviet hegemony, or whe ther it will allow its British military victory over Argentina in the Malvinas "Southern" portion to be exterminated by British-led would in any way abate the crisis. As the Bank of RDF-style "out-of-area deployments." England well knows, the minute the British forces capture the islands, some $250 billion worth of Latin Her Majesty's miscalculation American debt will be declared in default against British The conduct of British strategists in the case of the banks, with fa r-reaching strategic consequences. If the Malvinas War identifies conclusively the source of the Bank of England knows what is good for it, it should kind of "strategic miscalculation" which may well lead issue explicit orders to Admiral Woodward not to dare to thermonuclear war. According to the British scena- win his assigned military task.

EIR June 8, 1982 International 35 THE GULF WAR

Iraqi defeat would clear the way for Khomeini to take over Mideast by Robert Dreyfuss, Middle East Editor, and Nancy Coker

Iran's victory against Iraq in the decisive bjlttle for the "human-wave" war against the Iraqis." city of Khorramshahr marks the start of a new phase of Great Britain's effort to impose a new Dark Ages on the Oil blackmail Middle East and the Islamic world. The threat of a Persian Gulf oil cutoff has been Like the Mongol hordes that swept out of central cleverly used to force Western Europe to capitulate to Asia in alliance with Venetian and Byzantine intelligence London on support for the British against Argentina. during the Middle Ages, the Khomeini mob threatens to Failure to back the British war in the South Atlantic, destroy civilization in the entire Arab world and beyond. the Europeans were told, would result in the cutoff of At the start of the Khomeini era in Iran in 1979, their oil supplies. quondam U.S. presidential candidate Lyndon H. La­ At the NATO foreign ministers' meeting May 17, Rouche warned that only a ruthless and uncompromis­ Secretary of State Alexander Haig reportedly delivered ing campaign of extermination could end the Khomeini a statement to the allies predicting spreading chaos and plague. But Iraq, fearful of casualties and with few an immediate threat to oil supplies as a result of Iran's international allies, waged a half-hearted and inconclu­ victory. Such a threat, Haig said, would require urgent sive campaign that has now ended in disaster. NATO cooperation to secure the oilfields, through the The fall of Iraqi President Saddam Hussein, a pro­ establishment of an entirely new system of military development nationalist who opposed Khomeini's fas­ bases, naval deployments, and construction of a Middle cists from the beginning, is now highly probable. Unless East Treaty Organization. sufficient backing, including Arab military support, is The core of that plan, first envisaged by the Carter rushed to Iraq's aid, the collapse of the Iraqi regime will, administration, is the so-called Rapid Deployment Joint in turn, lead to the Iranization of the entire Persian Gulf, Task Force, whose assigned task is to secure the Persian jeopardizing world oil supplies. Gulf from the Soviet threat. In a press conference May 26 in Mexico City, La­ As most insiders know, the Haig call to action is Rouche, now Advisory Board Chairman of the National based on utter deception and lies, since the Iranian Democratic Policy Committee, stated that despite the military victory against Iraq was made possible only by gravity of the situation in the Middle East in the wake of the massive arming of Iran, chiefly by the British, Iran's victory, the battle is not lost. What is required, he Israelis, and Americans. Despite some Soviet military stated, is the launching of a full-scale mobilization by support to Iran, the leading source of Khomeini's arms Iraqi nationalists and their allies to crush the Khomeini was British intelligence-allied in the West and the menace once and for all. associated black-market arms dealers. Egypt, Turkey, and India have a singular roleto play With his crocodile tears over Iraq's defeat-a defeat in this fight. It is these three countries that have the he himself helped to cause-Haig is trying to overcome strongest republican tradition in the region-a tradition NATO and Arab opposition to the Rapid Deployment that is now threatened head-on by the spread of Khom­ Force concept and to the idea of installing a network of einism. If Iraq is wiped out, the very future of the nation­ bases in the Middle East. West Germany, Turkey, Saudi state is at stake in the Middle East, bringing to fr uition a Arabia, and oth� states oppose, some vehemently, the centuries-long British intelligence commitment to pre­ extension of NATO into the Middle East. vent the consolidation of modern sovereign republics in The reality is that Haig's support for the spread of the region. For it was Britain, along with its U.S. han­ Iranian-style fu ndamentalism in the Gulf will mean the gers-on, which installed Khomeini's regime in 1979, and real winner is the Soviet Union. No RDF can secure the which orchestrated international support for Iran" in its Gulf, as the Soviets know; Moscow can afford to wait

36 International EIR June 8, 1982 patiently, while encouraging the "Islamic fu ndamental­ the war on Iraq's side. ists" in order to weaken actual American interests in Saudi Arabia, caught in between, is in a serious the area. crisis. With both Khomeini and Qaddafi threatening to join in supporting the overthrow of the Saudi royal Fanatics on the move family, and with the Israelis threatening an attack on Inside Iraq, dissident and pro-Iran subversives, in­ the Saudi oil fields, the Saudis are concerned with cluding communists, Kurdish tribesmen, and Shiite propitiating the source of danger rather than with extremists, are poised to stage a rebellion against Sad­ confronting the Iran threat aggressively. dam Hussein. In mid-May, when Iraq requested that Saudi Arabia And in the rest of the Arab world, radical elements lead a boycott of Syria because of Syria's support for are foolishly celebrating Iran's defeat of Iraq. In Al­ Iran, the Saudis refused. Following the fall of Khorram­ giers, foreign ministers of the Steadfastness Front­ shahr, the Saudi Foreign Minister, Prince Saud, flewto Algeria, Syria, Libya, and the PLO-met and issued a Damascus to discuss with the Syrians a "compromise communique welcoming Iran's victory and called upon solution"-despite the fact that a compromise with the other Arab states to "support the Iranian revolution." Khomeini regime is impossible. Libyan leader Muammar Qaddafi personally called for the overthrow of the Saudi regime and the liberation of The Israel-Iran axis the holy sites in Saudi Arabia! Israel is not concealing which side it is on in the The mobilization of Arab radicals in support of Iran-Iraq war. Sharon wound up a visit to Washington Khomeini means that Iraq may find itself in severe on May 25 defending Israel's alliance with Iran and difficulty if it tries to get Arab League members to attacking those moderate Arabs supporting Iraq. De­ abide by their commitments to defend a fellow Arab scribing Iraq as "one of the most radical countries of nation. Although Iran has succeeded in driving out Iraq the region," Sharon called the Arab coalition of Egypt, from occupied territory, there is a strong likelihood that Saudi Arabia, and Jordan that has taken a position Khomeini's hordes will not stop at the border but will against Khomeini's Iran "a threat to peace." continue into Iraqi territory. Both Iran and Syria have Sharon's statements were seconded by Prime Minis­ pledged to overthrow Saddam Hussein and will receive ter Begin, who rejected the idea that Jordan is being support from Israel. ' "squeezed" by a hostile Syria and Iran, and therefore In the wake of the Iraqi announcement that it had must be supported. "Jordan is not squeezed," said lost Khorramshahr, the Khomeini regime announced Begin. "Jordan by its own choice decided to join Iraq in that its demands included the ouster of Saddam Hus­ its war of aggression against Iran." sein, the payme'l1t of $50 billion in war reparations to Thus, Begin and Sharon have placed Israel in the Iran from the Arabs, and the establishment of Kho­ camp of the radical, pro-terrorist, pro-Khomeini Arab meini-style "Islamic regimes" in Iraq and all the states countries of Syria and Libya-Israel'S so-called sworn of the Gulf. enemies-and against Egypt. Despite the claims of Khomeini's sympathizers in Despite Sharon's strange bedfellows, Secretary of the U.S. State Department that Iran would cool down State Haig and Defense Secretary Weinberger tripped after Iraqi troops left Iran, Khomeini's demands signal over themselves to accommodate Sharon by reactivating no moderation on Iran's part. • the strategic Memorandum of Understanding between the United States and Israel. The MOU is expected to Iraq invokes treaty be ratified in June when Begin visits the United States. With the fall of Khorramshahr on May 25, Baghdad Although the contents of the MOU are under tight called upon its Arab neighbors to remember their wraps, insiders reveal that the essence of the agreement obligations under the 1950 Arab League defense treaty is to make Israel the centerpiece of an expanded NATO to come to Iraq's aid. However, of all the Arab states, into the Middle East and Africa. Specifically, Haig, only Egypt has the capability to support the Iraqi war Weinberger, and Sharon are using their support for effort substantially. Immediately necessary is a full-scale Iran to force the Arabs, terrified by Iran's ascendancy, mobilization by Egypt to send its air force and several to come crawling for a deal. The price: dropping their divisions of troops to join Iraq's fight and to carry the resistance to Camp David and an Israel-centered re­ battIe against Iran into Teheran itself, and if necessary, gional strategic consensus. to topple Khomeini's regime. President Mubarak re­ Haig and Weinberger are not the only top figures portedly favors such action, but he is being threatened involved with Sharon in this operation. On May 23, with "the Sadat treatment" from terrorist sympathizers Sharon met with Henry Kissinger, at the latter's request, of the Khomeini group allied with London and Israel's to coordinate Israel's enlarged regional-and super­ Defense Minister Ariel Sharon should he decide to join regional-role in the aftermath of the Iranian victory.

EIR June 8, 1982 International 37 THE MALVINAS Council on May 22, Venezuelan Foreign Minister Jose Alberto Zambrano described what is at stake in this crisis. The U.S. decision to back Britain's aggression against Argentina has had an "unpredictable" effect upon the OAS, Zambrano said, and warned that "world Latin Americans opt equilibrium and intercontinental relations are seriously affected by this tragic conflict." The British Empire, he for a new diplomacy concluded, "extended its colonial domination across the planet with the brutal, systematic, and calculated use of force .... The British aggression is not a struggle for by Cynthia Rush the defense of law, but an effort to reimpose the law of the Empire." As EIR goes to press, Latin American fo reign ministers Panamanian Foreign Minister Jorge IlJueca con­ and diplomats meeting at the Organization of American demned British military aggression as "monstrous and States (OAS) in Washington are concluding their debate abominable" and told the United States that "it is on what course of action their nations should adopt in repulsive to learn that Argentine youth are dying from the Ma1vinas crisis. Despite the wishful thinking of some the arms, technology and plans provided by the United U.S. media and political observers that all has been States-a country which has signed a military alliance "quiet" at the OAS, the two days of meetings reflected [the 1947 Rio Treaty]-with Latin America. Those who the depth of Latin America's anger at U.S. support for think they can play with the countries of Latin America Great Britain and the damage done to the inter-Ameri­ are very mistaken." can system as a result of this. Due largely to manipulations by Great Britain and The question Latin American leaders have b,eende­ the United States, that Security Council session pro­ bating is how far to take their anger over the role the duced a content less resolution which gives U.N. secre­ United States has played in backing Great Britain's tary general Perez de Cuellar seven days in which to colonial warfare against Argentina. Although the draft "continue the search for a ceasefire." The meeting also resolution introduced by Argentina does not represent a saw a shameful alliance between the governments of total break with the United States, its strong language Chile and Mexico, both of whom demanded that the was enough to send the U.S. delegation and its allies "first use of force" be condemned. EIR 's evaluation is scurrying to obtain a "watered-down" version. that the resolution is intended only to buy time for The Argentine resolution urges the foreign ministers Great Britain while it escalates military activity in the to "vigorously condemn the unjustifiable armed aggres­ South Atlantic. sion perpetrated by the United Kingdom against the The responsibility for fo rmulating effective action Argentine Republic," and proposes that Latin American against Britain and the United States was left to the states "adopt those measures they deem appropriate to Organization of American States. During the Security assist the Argentine Republic in combating the armed Council sessions, Argentine Foreign Minister Nicanor aggression perpetrated by the United Kingdom." The Costa Mendez mooted that his government might in­ resolution also calls on the United States to "order the voke Article 8 of the 1947 Rio Treaty, by which signator immediate lifting of the sanctions applied against the nations must respond collectively with economic or Argentine Republic and to refrain from providing the military sanctions to any aggression against a member United Kingdom with any material assistance." nation. Whether this or a less strongly worded resolution is To prevent the kind of "embarrassment" that the passed is less important than the process that was set in invoking of Article 8 or some other unifiedden unciation motion at the OAS meeting, a process that could have of the United States would represent, Alexander Haig lasting effects on the structure of the inter-American canceled a scheduled appearance before the World system. Affairs Council on May 26 in Pittsburgh in order to be Since the Malvinas crisis erupted, the State Depart­ present at the OAS meeting. While the Secretary of ment and leading media have continuously lied that the State intoned to the gathered delegates that the "Rio damage to inter-American relations as a result of the Treaty is an inappropriate mechanism" for dealing with U.S. alliance with Great Britain is inconsequential. the crisis, and that they "should return to the United Once the crisis blows over, they have smugly predicted, Nations," the State Department exerted what Latin things can be "patched up" without too much difficulty. American military sources described as "terrible and The harshness of the Latin American response, which unrestrained" pressure against the smaller nations of has largely been blacked out of the U.S. media, shows Central and South America to prevent them from fully otherwise. supporting Argentina. In his speech before the United Nations Security The crude nature of the blackmail, which in the case

38 International EIR June 8, 1982 of the Central American nations was based on threats News of increased U.S. military aid to Great Brit­ of withdrawing the meager "benefits" of the adminis­ ain-now including Sidewinder air-to-air missiles and tration's Caribbean Basin program, was revealed in the Hawk surface-to-air missiles-has greatly increased ten­ public statements of EI Salvador's representative to the sions between the United States and Latin America. OAS: "We regret that the United States seems to feel American military aid to Britain will only prolong the that the smaller countries are susceptible to pressure. conflict in the South Atlantic and threatens in addition We have always been an ally of the United States, but to internationalize it, Costa Mendez told an ABC-TV we are a brother to Argentina. We are deeply disturbed interviewer on May 26. At the opening session of the at what the United States is doing, and by its perception OAS meeting on May 27, the foreign minister reiterated that we are second-class allies ...." his warning that the United States was "shattering" the inter-American system by turning its back on its treaty Backfire potential obligations. There is no guarantee that Haig's blackmail will The OAS meeting is important because it leads into produce the desired results. Sources at the OAS meeting the conference of non-aligned nations scheduled to report that even if a softer version of Argentina's begin in Havana on May 30, and will help to shape the resolution is approved, solid allies like Venezuela, Peru, debate that takes place there. Argentina is a member of and Panama might act together and take further action, the non-aligned movement and Costa Mendez will such as breaking diplomatic relations with Great Britain reportedly flyto Havana via Lima and Caracas to meet and providing military aid to Argentina through bilat­ with Cuban President Fidel Castro and other Cuban eral arrangements. Argentina has maintained a tough government officials. According to Argentine diplomat­ stand in defense of its position-Foreign Minister Costa ic sources, discussions will focus on how the Malvinas ' Mendez received a standing ovation after his OAS crisis has affected the stability of the inter-American speech-and earlier in the week of May 22-28 the system. Argentine President GaItieri wrote on May GaItieri government announced the withdrawal of its 25 to Castro-the president of the non-aligned move­ military representatives from the Inter-American De­ ment-thanking him for the support the non-aligned fe nse Board in Washington and from training facilities nations had shown Argentina, and denouncing Britain's in the Panama Canal Zone, as a protest against U.S. colonial warfare "to the detriment of the developing policy. sector nations." EIR U.S., Canada and Mexico only Foreign Rates Central America, West Indies, Venezuela and Colombia: 3 months ...... $12 5 3 mo. $135, 6 mo. $245, 1 yr. $450

6 months ...... $225 Western Europe, South America, Mediterranean, and

lyear ...... $396 North A;frica: 3 mo. $140, 6 mo. $255, 1 yr. $470 All other countries: 3 mo. $145, 6 mo. $265, 1 yr. $490

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,EIR June 8, 1982 International 39 NATO REORGANIZATION the week of M ay 17, in light of the fact that Mitterrand has been the most inten� backer within the European Community of sanctions against Argentina. As one of France's leading commentators stated in a private discussion on May 21, "There is no contradic­ tion at all between the farm-price issue and complete France revives the French-British agreement on North-South issues," i.e., on neo-colonialism , Four days later, French Foreign 'Spirit of Suez' Minister Claude Cheysson himself told French radio broadcasters that ties between the two countries were "never so close and so good" · as they are now, a by Mark Burdman fr om Wiesbaden judgment confirmed from t� British side by arch-Tory parliamentarian Julian Amery to EIR on May 21. An "Entente Cordiale" has recently been consolidated Simon May, a senior aide to Tory Edward Heath, under between the Tory government of Britain and the Socialist whose premiership in the eady 1970s Franco-British government of France. Hearkening back to the coloni­ antagonisms were in large part reversed, said, "There is

alist Middle East adventure of 1956, Europeans are a major shift from the Giscard era . There is a genuine commenting on the renewed "spirit of Suez." As Presi­ entente. There are simih\r outlooks on the world." dent Fran�ois Mitterrand slavishly supports Britain's And the same judgment \Vas voiced to EIR on May piracy in the South Atlantic, the partnership and its 25 by Britain's Sir Pbilip Zulueta, who incorporates the Israeli allies have their eyes set on two other strategic Anglo-French-Israeli axis, as a top man in the British­ zones: the oil- and mineral-rich continent of Africa and based Rio Tinto Zinc raw-materials-plundering con­ the Indian Ocean/ Persian Gulf theatre. glomerate and a director of two drug-revenue clearing­ In Africa, Mitterrand, for all his "Third Worldist" houses, the Hongkong and Shanghai Bank and the rhetoric, is carving up the continent with British, Israeli, Leumi Bank of Israel. He also presides, from the British and U.S. interests, to secure raw materials and trade side, over the Franco.-8ritish Council, which held its routes; indigenous populatiQns an: to be sacrificed if latest meetingin mid.MlilY in Edinburgh, Scotland. need be in fratricidal wars to secure these aims. Some The council was e!!tablished in 1972, following the 15,000 French troops have been readied by the Socialist precedent-making visit of Queen Elizabeth to France, regime fo r this strategy. at a time when French President Georges Pompidou For the Indian Ocean/Gulf theatre, the French have was operating under the illusion that a "British card" 4,000men and 20 warships in the East African country of would be useful, to his regret in later years. At this Dj ibouti: Six thousand troops are on the French Island point, the council is an obscene melange of oligarchs of Reunion east of Madagascar for contingency actions and Socialist functionaries. Zulueta's counterpart on in tandem with those British frigates left after deploy­ the French side is Robert Pontillon, a Socialist Senator ments to the South Atlantic, and with American capabil­ with extensive connectionsto the British Foreign Office ities at the British-owned base on the island of Diego and the British-controlled U.S. State Department. In Garcia in the Indian Ocean, as well as base facilities in London, the prime movers of the council include Lord Mombasa, Kenya and Berbera, Somalia. Duncan-Sandys. the early-1970s architect of the "East French Prime Minister Mauroy made a lightning visit of Suez" strategy for multinational Rapid Deployment to Lebanon May 26., reportedly linked to the announce­ Forces to supplant departing B.ritish units in the Persian ment that France is sending 2,000 more troops to Leba­ Gulf; Lord Thomson, head of the Independent Broad­ non, supposedly for the U.N. peacekeeping force there. casting Authority, an intelligence branch; Lord Pol­ To underscore its commitment to NATO's out-of­ warch, Chairman of the Bank of Scotland; and Lord area deploymt?nts, France has agreed to act as host for Strabolgi, whose name is the Scottish equivalent of the NATO summit in 1983. While France is a member of "Lord of the Bogey." the North Atlantic Treaty Organization, this marks a reversal of President de Gaulle's strategy of pulling the Re-colonialization strategies country out of NATO's military command, in the inter­ The Entente Cordiale now has its eyes set on inter­ ests of French sovereignty. Last month the French, for vention into the "�otspots" erupting around the world, the first time in years, also led a high-powered multina­ as planned by the British Foreign Office. In the explo­ tional naval exercise in the Mediterranean. sive Persian Gulf region, the British are playing a two­ That Franco-British relations have reverted to the vectored game of blackmail, with the connivance of pre-World War I Entente Cordiale was openly discussed France, the Israeli Defense Ministry, and the U.S. State in the pages of France's pro-Socialist Le Monde during Department.

40 International EIR June 8, 1982 On the one hand, the British are telling the rest of French correlate of the British operation in the South the EC that the mounting Khomeini threat to Saudi Atlantic, which is a show of force to control raw Arabia and its neighbors following the Iraqi debacle at materials and sea lanes." Khorramshar signifies that continental Europe must Oligarchic circles in France label this an "Atlantic drop objections to a NAtO move into the Gulf, in Ocean strategy": British, French, and American coor­ ' order to secure oil supplies; arid in the face of this dination to militarize coastal zones as the core of a ' blackmail, terrified European governments are increas­ grand strategy. Senegal has granted port-refueling ingly responsive to the out-of-area push. On the other rights to Britain's Falklands fleet; it was Senegal which hand, the [ritish are telling the Saudis and their Gulf most wholeheartedly welcomed Mitterrand. Another neighbors that a British (ot Anglo-French) protectorate instance is the effort to incorporate the Republic of is the only thing that can save their skins, a magnani­ South Africa into a new "South Atlantic Treaty Organ­ mous offer is known in Foreign Office parlance as re­ ization." colonization. Recent developments in the former Belgian Congo Washington think tankers like to fantasize about the are part of the pattern. In mid-May, Zaire's President, "projection of American power" in the Gulf. But the Mobutu Sese Seko, at the prodding of Paris and Wash­ United States is so discredited in the region that this is ington, suddenly resumed diplomatic relations with

hardly the real game. It is the Entente Cordiale that has Israel, causing a break with Arab countries-which the inside track, and will only invite the United States Mobutu denounced for "neo-slavery"-and thus ending into the Gulf as the crisis peaks if it is necessary to draw a substantial flow of Arab financial assistance. Mobutu on the "dumb giant." has reportedly been promised American and possibly This means, however, that imminent military inter­ French aid-to buy Israeli military equipment and ventions into the area by Rapid Deployment Forces advisory services. cannot be excluded. There exists a 1980 tripartite naval Belgian sources told EIR that "this is the official accord among France, Britain, and the United States burial of the trialogue," referring to the policy of which calls fo r joint actions in the event of a blockage Mitterrand's predecessor, Valery Giscard d'Estaing, of the oil flow from the Straits of Hormuz. A three­ who mooted the use of Arab petrodollars and French nation armada with three aircraft carriers is readying technology to develop Africa. movement into the upper reaches of the Gulf at any Instead, Mobutu will have a twofold policy, thanks moment. All the dynamics are in place for a NATO­ to French, Belgian, and Israeli influence in his army, Warsaw Pact confrontation in that area, and there are and Israeli influence in his palace guard: repression of upwards of 20 army divisions contiguous to the Gulf­ his own popUlation under conditions of aggravated Mideast region. economic pressure, and the transformation of Zaire into a geopolitical gendarme, for military actions--:-possibly The African opening in conjunction with South Africa-against "the com­ In Africa, the British and their allies in France also munist threat" emanating alledgedly out of Angola, see a "window of opportunity" for re-colonization, Mozambique, and the neighboring Congo. "This will given the continent-wide economic devastation inflicted make Zaire part of SATO," one source summed up. by the collapse of raw-materials prices, rising debt­ It is reliably reported that should Mobutu balk at repayment burdens, and the self-feeding brutalization any point, he will be replaced with the exiled former caused by what are euphemistically termed austerity Foreign Minister, Karl-I-Bond, a favorite of the Inter­ measures. national Monetary Fund and the re-colonizers. A Paris source commented, "What is happening Other countries in Africa are supposed to follow now in Africa is frightening. The whole continent is Zaire's lead. According to a senior French military being carved up, with French connivance, by Israel, analyst, "French-Israeli collaboration in secret-service Britain, and the United States. The NATO extension and other fields is very close. It extends into both policy is operating, and all the tensions of the Mideast francophone and anglophone Africa." Israeli sources and the Gulf are becoming interchangeable with Afri­ emphasize that Defense Minister Ariel Sharon is intent ca's, and vice versa." on expanding Israel's "sphere of influence" throughout A focal point for the militarized re-colonization Africa. One likely target is the Ivory Coast, which was push was the extended end-of-May visit by Mitterrand visited by Mitterrand as part of his assignment to to Western Africa-Niger, Ivory Coast, Senegal, Maur­ expedite Israel's entree into Africa. A second target is etania-a coastal area rich in oil and other raw minerals. strongly British-linked Kenya; one leading Kenyan According to a highly informed Belgian source, the aim newspaper, Th e Standard. published an editorial in late of the trip was to consolidate "a French military buildup May lauding Mobutu's action, and praising the Israeli in Africa to oversee the commodity flows. It is the government as "a dependable ally of Africa."

EIR June 8, 1982 International 41 the Italian House of Savoy; the followers of Bishop Investigative Leads Lefebvre who personally ordained Father Krohn; the 25-million-member Blue Army of the Lady of Fatima cult; and Tradition, Family, and Property, a paramilitary

group whose members have been photographed m ,� a picture of Pope Paul II for target practice. This European oligarchic subgroup and its British allies have fo und the Papacy-most especially the poli­ cies enunciated by Pope Paul VI in his encyclical Fatima networks Populo rum Progressio and by Pope John Paul II in his encyclical Laborems Exercens-a major impediment to target the Pope its plans to bring the world to a new dark age through regional wars, famine, and plague. This depopulation by ScottThompson policy is today embodied in the Carter administration's Global 2000 Report, which advocates the death of two billion people by the year 2000. On May 12, a suspended priest named Juan Fernandez It is the Pope's immovable opposition to this policy Krohn attempted to assassinate Pope John Paul II with that has made John Paul II a target for repeated a bayonet during the Pope's visit to the shrine of Our assassination attempts. In September 1981, Episcopal­ Lady of Fatima in Portugal. Father Krohn, the 34-year­ ian Canon Edward West, the Queen's Protocol Officer old would-be assassin, had been ordained as a priest by and a prelate of the British Order of St. John working the schismatic arch-feudalist Bishop Lefebvre of France. under Bishop Paul Moore at the Cathedral of St. John Security analysts' review of videotapes of the attempt the Divine in New York, told an interviewer that he found that, contrary to initial reports, Father Krohn had fo und the Pope's advocacy of technological progress actually come within inches of stabbing the Pontiff be­ and population growth "disastrous." West made the fore he was subdued. International security agencies intent of the Anglican hierarchy perfectly clear when he believe that this latest attempt upon the Pope marks the added: "Given the system as it is, you have no methods beginning of a new outburst of assassination attempts, of dealing with the problem. Death is the only solu­ whose targets are especially President Reagan and West tion. " German Chancellor Helmut Schmidt. Within weeks of Likewise, New York investment banker George Ball, the May 13, 1981 shooting of the Pope in Rome, assassi­ a protege of the late U.S. eugenicist William Draper, Jr. nation projects were uncovered or attempted against Mr. and who helped write the Global 2000 Report, told an Reagan, Indian Prime Minister Indira Gandhi, Mexican interviewer shortly after the spring 1981 attack on the President Jose Lopez Portillo, and French President Pope: "There is strong pressure from the Vatican not to Valery Giscard d'Estaing. do anything at all to encourage popUlation control in Latin America .... This Pope is too strong. It's too Who wants to kill the Pope? hard to, do anything at all with him. He is absolutely Investigation into the latest attempt to assassinate dead set against any poulation policy, and he is very the Pope has led into the highest levels of branches of powerful." Ball, a Lehman Brothers Kuhn, Loeb part­ the European "black nobility" and of the Anglican ner, is a banking associate of Lido Gelli, whose Propa­ Communion, including especially the crypts of the ganda-2 Masonic Lodge-sponsored by the "black Cathedral of St. John the Divine in New York. Among nobility" of the Sovereign Military Order of Malta and those continental oligarchs now placed in the plot the Duke of Kent of the British royal family-is believed against the Pope with the British Secret Intelligence to have coordinated the 1981 attempt to assassinate the Service are the Thurn und Taxis family of Regensburg, Pope. Bavaria; the Lobkowitz family; and the royal house of Portugal, the Braganzas, closely related by marriage to, Tools of the Inquisition and close political affiliates, of Otto von Hapsburg, The Thurn und Taxis, Lobkowitzs, and Braganzas, pretender to the throne of the Holy Roman Empire and together with British SIS, still run what must be de­ head of the Pan-European Union, an explicitly fascist scribed as the Inquisition. Its tools include: group founded by Count Coudenhove-Kalergi. These • The traditionalists of Bishop Lefebvre. Father European oligarchs oversee a feudalist network of cults Krohn was trained as a priest at the Econe, Switzerland and paramilitary groups that burrowed within the Cath­ seminary of Bishop Lefebvre. From there, he joined olic Church, including: the Sovereign Military Order of Sedes Va cantes (" Va cant Seat"), an extremist faction of Malta, which relies heavily upon funding from the Lefebvrists which believes that no Pope since Pius XII Thurn und Taxis family, who in turn share control with has been legitimate. According to intelligence sources,

42 International EIR June 8, 1982 Krohn has been implicated in two previous murders in France and Switzerland. He received special training as an assassin at a facility maintained by the Portuguese and Spanish oligarchy in Malaga, Spain. Similar facili­ ties are maintained by the Sovereign Mi litary Order of Malta at castles in Geneva and Luxembourg, partially � fi funded by the Thurn und Taxis family, whose private � wealth is estimated at $6-$ \0 billion. One of the most o " powerful if least-known patrons of Bishop Lefebvre is � � Father Emmeram, o a Prince of Thurn und Taxis and u Benedictine priest who presides at a seminary in the Tradition. Family and Property's target practice against the family's seat in Regensburg. Pope in Brazil.

• The cult of Our Lady of Fatima. This cult was founded in 19 17 as part of a religious war against "atheistic Russia," which the 1917 prophecy of "Our tion of Otto von Hapsburg. Both WACL and ECDI are Lady of Fatima" says would be converted to Christian­ centers for deploying expl icitly fascist terrorist groups, ity following a collegial act of consecration at the shrine including the Ordine Nero ("Black Order") of Italy, and by the Pope. Steps toward consecrating this cultish other groups linked to the Propaganda-2 Masonic prophecy, which brought the Pope to Fatima, were set Lodge of Licio Gelli. into motion two years ago by Cardinal Ratzinger of Munich, now head of the Congregation of the Doctrine 'Reopen Hinckley case' of the Faith, who is a close associate of Prince Nicholas At a press conference in Mexico City on May 25, Lobkowitz of Munich. Patrons of the Fatima cult in­ EIR founder Lyndon H. LaRouche, Jr. called for clude the House of Braganza, who are also patrons of reopening the case of John W. Hinckley, Jr., the Man­ the Abril 25 (named after the date of the 1974 Spinola churian candidate who attempted to assassinate Presi­ coup in Portugal), which warned that the Pope would dent Reagan in March 1981, based upon new evidence be assassinated one month before Pope John Paul II's uncovered in a probe of the latest attempt upon the trip to Portugal. The current Infante of the Braganza Pope. family has been a frequent visitor to the Thurn und One of the principal new leads involves Prince Paul Taxis estate in Regensberg. Lobkowitz, a second cousin of Prince Nicholas of Mun­

Attached to the cult of Fatima is a "Blue Army" ich, who runs a hospice in Lakewood, Colorado-the with 25 million members in 110 countries. It maintains town where John Hinckley received his programming an International Secretariat under Albert Setz-Degen in as an assassin. The hospice movement practices euthan­ Basel, Switzerland, and it has other international centers asia, which is referred to as "death with dignity" (the in Portugal and in Washington, New Jersey. The latter same slogan chanted by members of the Jonestown cult is the headquarters of John Hafo rd, international lay as they committed suicide). A further investigation is director of the Blue Army, who is an intimate friend of now underway to uncover links between the hospice of the Duke and Infante of Braganza. The cult nature of the Prince Paul Lobkowitz, named the Georgian House, and Army is underscored by the fact that Father James the network of psychiatrists and hospitals implicated in LeBar, Master of Ceremonies at the New Jersey shrine, the programming of Hinckley during his stay in the is a close collaborator of Rabbi Maurice Davis. Davis, Lakewood, Colorado region. nominal head of an anti-cult parents network, was, in Prince Paul Lobkowitz, a priest in the Chaldean Rite fact, responsible with Bishop Paul Moore for promoting ("Nestorian cult"), has spent several months at Regens­ Rev. Jim Jones, 900 of whose People's Temple cult burg nieeting with Father Emmeram and other mem­ members committed suicide in Guyana in 1978. bers of the Thurn und Taxis family. Lobkowitz is also a

• Tradition, Family, and Property (TFP). This par­ member of the Russian order of St. John of Jerusalem. amilitary pseudo-religous group, which has publicly On May 21 a branch of this Order, the Knights of St. proclaimed its hatred of the Pope, overlaps closely with John of Jerusalem based at 7 St. Anne Street in Floriana, the Lefebvrists, and handles recruitment to the Blue Malta, sent a death threat to Mr . LaRouche, phrased in Army in Brazil. It was founded in July 1960 by a the fashion the old Inquisition was accustomed to German priest under the patronage of Prince Luis de employ. This particular branch was created by King Orleans e Bragan\;a, pretender to the throne of Brazil, Peter of Yugoslavia, an asset of British SIS under the whose cousins in the Thurn und Taxis family own vast direct control of Prime Minister Winston Churchill, landholdings in that country. TFP leaders work closely Lord Beaverbrook, and Fitzroy MacLean. While in with the World Anti-Communist League and the Madrid­ exile, King Peter is known to have maintained a net­ based European Center for Documentation and Info rma- work of Croatians, some trained as assassins.

EIR June 8, 1982 International 43 Inside Canada by Pierre Beaudry

The truth behind separatism the problem is that they have no How the federal government under Trudeau incites it, and uses leadership, and that is why "the benign despot" [Trudeau] is in by it for purposes of social and political control. default. " However, he concluded, "If Pe­ ter Lougheed [Alberta'S Conserv­ tive Premier] were to capitalize on WCC, he could be the next Prime Minister." Lougheed said in mid­ Contrary to popular belief, sepa­ tel, SJ., as early as the 1930s, when May that he was considering a bid ratism in Canada is not a grassroots he became a member of the secret for the leadership of his party at the • movement. separatist society called the Loge fe deral level. The separatist tendencies in the des Chasseurs (Hunters' Lodge). The answer to the question Parti Quebecois and in the recently This was noted in an open letter to "who benefits?" from the recent created Western Canada Concept Trudeau written in 1979 by a lead­ WCC surge was pointed to by Dal­ (WCC) organization are both a cre­ ing Quebec separatist, businessman ton Camp in the Montreal Gazette ation of the federal government in Francois J. Lessard, who called on March 2: "Thus far, " he wrote, Ottawa, using British psychologi­ Trudeau not only "the fifth col­ "no one has blamed Clark for the cal-warfare methods to intercept umn" of separatism "inside the fed­ triumph of separatism in Olds-Dis­ and undermine legitimate impulses eral system," but also a "double bury [Alberta, where WCCer Gor­ toward nation-building among the agent" who is "simultaneously be­ don Kesler won a seat in the provin­ population, and to maintain the cri­ traying Quebec and English Cana­ cial assembly earlier this year], al­ sis-management policy of Prime da." though Clark has joined those who Minister Pierre Trudeau. The WCC movement is similar­ have blamed the Prime Minister." The truth about separatism is ly overseen by the Conservative The rationale behind this fe der­ that Trudeau's Liberals are running Party of Joe Clark. Except for sepa­ ally supervised separatism is thus it in the East, while Joe Clark's ratism, the Conservatives and the twofold. On the one hand, if the conservatives run it in the West. In WCC have the same formulas: free main opposition to Ottawa is sepa- . between is the fe derally owned enterprise, reduced government ac­ ratism, there can be no serious na­ province of Ontario-the strategic tivity, and less social welfare. They tional challenge to its policies. center for royalism, �hich over the also have basically interchangeable Secondly, since the policies in course of Canadian history has memberships. Ottawa are made by "administra­ adopted whatever political colora­ For example, the newly elected tive discretion and consensus" of tion it finds expedient. Conservative Premier of Saskatch­ the Queen's Privy Council, encom­ Trudeau's form of psywar is to ewan, Grant Devine, had been pre­ passing both the Liberals and the launch obviously unacceptable ini­ ceded at the head of his party by a Conservatives, separatism takes the tiatives so he can have them reject­ former "Western separatist," Rich­ form of a radicalized opposition ed, and then to exploit the reaction­ ard Collver. Similar swaps have oc­ whose impotence and frustration fo rmation of the targeted popula­ curred with the synthetic Social make parliamentary theatrics seem tion. Credit Party. reasonable by comparison. A case in point is his ludicrous A close watcher and supporter In this context, separatism can proposal for full bilingualism in Al­ of the WCC, editor-in-chief of the be exploited by both British-run berta and other English-speaking To ronto Sun Peter Worthington, parties, and a "Canada of regions" provinces, without any educational told me recently that the separatist can be more easily controlled by the backup to introduce French, and movement in the West exist only on central government. If separatism costly, impossible-to-meet regula­ the basis of hatred for Trudeau. became a serious threat, however, tions. "When Trudeau is gone," he said, the emergency powers of the War This Jesuit method Trudeau "Western separatism will go also." Measures Act would be invoked by learned from Father Francois Her- As for the Conservatives, he added, Trudeau.

44 International EIR June 8, 1982 From New Delhi by Paul Zykofsky

No winners in state elections In Haryana, part of the grain­ Mrs. Gandh i and the Congress Party must correct serious producing breadbasket of the northwest, the Congress won 36 out weaknesses in local organization and leadership . of 90 seats (I is undecided);. the regional farmer-based Lok Dal party won 31 seats; the Hindu­ chauvinist RSS-linked Bharatiya Janata Party (BJP) won 6 seats; 4 seats went to smaller parties; and 12 The ruling parties in four states of These gains, observers think, to independents. The Governor of India were put on notice by over 37 are a negative reaction to the rural­ the state has already asked the Con­ million voters in elections for state ist policies of the previous CPM gress Chief Minister Bhajan Lal to assemblies held May 19. In the two government and charges of wide­ form a new state government. Six of states which have been under the spread corruption. A similar, the state cabinet ministers lost. rule of the Communist Party of In­ though less pronounced, trend can In the northern state of Hima­ dia-Marxist (CPI-M), the opposi­ be seen in West Bengal, where al­ chal Pradesh, the BJP took 29 seats tion parties led by the Congress-I though the Left Front government out of 68 and the Congress 31. The (for Indira Gandhi) made signifi­ retained a two-thirds majority, with balance of power is held by six cant gains. Meanwhile the ruling 238 seats out of 294, the Congress elected independents, five of whom Congress-I suffered setbacks in the more than doubled the seats it and are former Congressmen, so it is other two states under its rule. its close allies hold to 56, making a likely that here also the Congress The elections took place at the strong showing in Calcutta where it Party will be able to retain power, mid-point in Prime Minister Ghan­ took half the 22 seats. Six of the but barely. di's five-year term of office; some CPM's state government ministers There were also by-elections for observers referred to them as were defeated including Finance seven seats in the Lok Sahba, the "mini-national elections" and vot­ Minister Ashok MItra, a Maoist lower house of the national parlia­ ers turned out in record numbers in economist who worked for the ment. The Congress won three of most of the 592 constituencies World Bank for many years. The the seven. being contested . Congress would have done much The overall results indicate sev­ Unlike the 1980 national elec­ better had it not been for the fac­ eral things. The right-wing BJP did tions, which were basically reduced tionalism and poor quality of its more poorly than they expected, to a referendum "for" or "against" state leadership. particularly in Kerala, where they Mrs. Gandhi, the state polls in­ In the smaller northern states of failed to win a seat and in West volved more complex local factors. Haryana and Himachal Pradesh, Bengal. The Congress Party organ­ Nevertheless they supply some in­ the Congress-I's greatest enemy ization has shown serious weakness dications of voters' mood and gen­ was also the divisions within its own in its state and grassroots organiza­ eral political trends. ranks and problems of its leader­ tions, a weakness which cannot be It is clear that in the two states ship, problems which extensive per­ compensated for by the continued with the largest communist fo llow­ sonal campaigning by Mrs. Gandhi popularity and mass appeal of Mrs. ing-Kerala and West Bengal-the could not fully overcome. At this Gandhi. There are other states, Maoist-leaning CPI-M was dealt a time it seems almost certain that the such as in the south, where Con­ blow. In the coastal southwestern Congress will retain rule in those gress governments are suffering state of Kerala, the United Demo­ states, but only with the help of from similar problems of weak and cratic Front (UDF) coalition led by elected independents, many of incompetent leaderships. the Congress-I won 77 out of 140 whom are Congress members who The Congress and Mrs. Gandhi seats in the state assembly, a gain of ran as independents after being left have an opportunity to correct 8 seats, giving them a firmma jority off the official list of party candi­ those problems; they must do so if · after a period of unstable govern­ dates. In both states as well, the the central government is to be ef­ ment in the state. Congress majority slipped. fective in "delivering the goods."

EIR June 8, 1982 International 45 Middle East Report by Judith Wyer

Khomeini's blackmail that wealthy Muslim nations cease Iranian demands fo r GulfWa r reparations dovetail with larger depositing their surplus funds in plans fo r an Islamic bloc with " Islamic banking. " Western banks, whose high interest rates are hurting the developing Muslim states, and instead directly deposit their billions in Islamic in­ stitutions. Should the Iranian ploy suc­ In early May, just before Iran be­ demand for reparations. ceed, London calculates that a new gan "Operation Jerusalem" to end But if the Gulf states cave in to Islamic banking system may come Iraq's occupation of Iran, Iranian Iran's outrageous demand they will into being. President Khamenei informed a walk into a trap laid not by Kho­ Over the past five years, a vast mediator that Iran wanted $50 bil­ meini but by the same British intel­ network of Muslim banks has lion in war reparations as a precon­ ligence service and its assets in the emerged under the titular leader­ dition for beginning serious negoti­ State Department who installed ship of Saudi Prince Muhammed al ations to end the 21-month Gulf Khomeini �nd keep him in power Faisal, the eccentric son of the late war. The $50 billion demand is ex­ fo r certain deadly strategic objec­ King Faisal, who has been an out­ pected by the Ayatollah Khomeini tives . cast in the Saudi royal family since regime to come from the wealthy London is committed to the cre­ he proposed that the kingdom tow Gulf states aligned with Iraq. ation of an Islamic bloc, the so­ icebergs from Antarctica to solve If the Ayatollah Khomeini suc­ called U mma, which would super­ its water problem. ceeds in ousting the Iraqi regime of sede the sovereignty of the nations An ardent supporter of Kho­ Saddam Hussein, as he pledges to of the Muslim world, and impose meini's revolution, Prince Mu­ do, Iran calculates it can blackmail the genocidal policies carried out hammed is controlled by a clique of Saudi Arabia and its oil-producing by Khomeini, and Pakistan's Is­ elite European-based Muslim ideo­ neighbors, whose only military de­ lamic dictator and narcotics trade logues associated with such groups fe nse against Iran has been Iraq. protector Zia Ul-Haq. as the Geneva-based Islam and the A well-placed Middle East ana­ Key to this scheme is to cut the West and London's Islamic Foun­ lyst in Washington confirmed to Muslim world loose fr om the world dation. These groups in turn are EIR that with the defeat of Iraq, monetary system, leaving it depen­ fronts for the likes of the Club of Khomeini is now preparing for dent upon a gang of corrupt Islamic Rome and the Swedish-based Inter­ phase two of his strategy of spread­ bankers, who are puppets of neo­ national Federation of Institutes of ing his evil revolution throughout colonialists in London and Geneva. Advanced Studies, open advocates the Persian Gulf. A source associated with the Per­ of the drastic population reduction The source reports that the Ay­ sian Gulf proj ect of Georgetown for the developing sector outlined atollah "intends to bleed the Gulf University's Center for Strategic in the State Department's Global states financially, by blackmailing and International Studies revealed 2000 Report. them with the threat of destabiliza­ that "London now sees the pros­ The State Department, EIR has tion through Shiite Muslim minori­ pects for an Islamic solution to the learned, is involved in efforts to get ties allied with Khomeini through­ Gulf conflict which will greatly ad­ the Gulf states to pay war repara­ out the region and Arab extremists vance the Islamicization of the en­ tions to Iran through Islamic finan­ within the PLO along with Syria tire region." cial institutions. If this should occur that have vowed support for Kho­ Two weeks after President Kha­ it will give "Islamic banking" a meini." menei set his price of$50 billion, the tremendous political boost. The Wall Street Journalreport­ central bank governors of the 42- Khomeini has spread the motto ed on May 26 that Saudi Arabia nation Islamic Conference met in that "the Saudis make the petrodol­ and the five other states of the Gulf Istanbul. The Wall Street Journal lars and the Muslim people should Cooperation Council are already reported May 24 that one of the spend it," reports a Mideastern considering Khomeini's financial proposals put to the conference was source.

46 International EIR June 8, 1982 DatelineMexico by Josefina Menendez

Security forces on alert the U.S. border patrol and other The U. S.-Mexico border becomes afocus of effo rts to prevent security forces. NLM hooks up with the Comite outbreaks of terrorism. de Defensa Popular (CDP) in Mex­ ico, a Maoist movement based in squatter centers in several cities of Chihuahua. The CDP's modus op­ erandi is to manipulate impover­ This capital is still buzzing with The next day Galvan showed ished inhabitants of urban slums as reactions to the speech delivered by that the commitment to maintain a battering ram against Mexican the Undersecretary of the Interior internal security was more than authorities. They are seen here as a for security affairs, Fernando Gu­ rhetoric. A contingent of 800 sol­ possible launching pad for urban tierrez Barrios, in a ceremony com­ diers moved in to the Superior chaos in the country. memorating the anniversary of School of Agriculture in Ciudad Many attendees of the Denver President Lazaro Cardenas's birth­ Juarez, Chihuahua, the city border­ meeting will go on to a second day May 21, an occasion tradition­ ing EI Paso, Texas. For several meeting of the American Indian ally used by the government to de­ years, the school has been a seed­ Movement in the Papago reserva­ liver a key message to the nation. ground for terrorist gangs, and tion of Arizona, 40 miles away from The security chief warned left and days before a group of students had the Sonora border, on June 3-13. right forces now. inducing lack of kidnapped the director and taken Here they expect to manipulate the confidence in national institutions over the school demanding in­ Papagos' old claim that the border that the government �ill not allow creased fe deral funds. line established by the Guadalupe them to use the present economic In a message to other ultra-radi­ Hidalgo Treaty of 1848 be changed weaknesses to provoke social dis­ cal groups at several universities of because it dispossessed the Papagos content and chaos. the country, Galvan Lopez and of part of their ancestral land. Envi­ The speech was widely com­ Raul Mendiola Cereceres, head of ronmentalist, radical, and terrorist mented upon here in the press and the Federal Judicial Police, person­ groups from all over the world will among political circles. It came at a ally oversaw the clean-up. descend on Arizona for this meet­ moment of heightened political The move also signals security mg. tension fed by wild rumors of an fo rces' awareness that the U.S.­ In this regard, collaboration be­ eventual military coup and by Mexico border has become a flank tween U.S. and Mexican security bomb threats in several parts of for destabilization by radical and forces will be crucial. Such collabo­ Mexico City. terrorist networks. ration has already proven success­ Gutierrez Barrios' speech fo l­ Security agencies on both sides ful. Last month, U.S. intelligence lowed another warning a week be­ of the border are now paying atten­ agencies passed on a warning to fore by the Secretary of Defense, tion to two meetings of radical Mexican authorities that Syrian, Felix Galvan Lopez. In a ceremony groups in the area. One is a meeting Palestinian, South American, Mex­ commemorating the anniversary of of the so-called National Libera­ ican and Cl1jcano commandos the execution of Hapsburg emperor tion Movement and other ultra­ would meet secretly in Ciudad Maximilian in 1867, Galvan blasted radical groups in Denver, Colo­ Juarez to map out a strategy to those "who dream or rumor-mon­ rado, according to propaganda lea­ destabilize the country. Mexican ger about possibilities of military flets, on May 28-30. The purpose is authorities placed the warning participation [in anti-government to map out a strategy to "liberate" prominently in the local Juarez activities] ...do n't count on any of Mexican-American, Puerto Rican press. From there it was picked up us soldiers! ... [W]e shot Maximi- and black populations from "U.S. in national and international wires, lian, but also-and let this be occupation fo rces" in the South which noted that the information c1ear-Miramon and Mejia [the and Southwest ofthe United States. had "been processed" in New York traitorous Mexican generals who A topic of discussion will be how to and had been- corroborated by the collaborated with him-J M]" confront the "repressive" forces of State Department.

EIR June 8, 1982 International 47 InternationalIntellig ence

"From the very time of its birth as a al crusaders against "corruption." Bechtel unlikely fo r modern nation, it has been proj ected be­ The new national chairman, Ernst Basque nuclear project yond the old continent to be one of the Breit of the postal workers, is considered members-the original and oldest mem­ a "solid unionist." If so, he will have to A spokesman for the Bechtel corporation be r-of a community of independent rid the federation of the "post-industri­ declared on May 22, that it was highly Hispanic nations .... If Europe were to al" outlook cultivated by his long-serv­ unlikely that the international construc­ be closed, selfish, disdainful of others, ing predecessor, Heinz-Oskar Vetter. tion/engineering firm would take charge Europe would be less European ....This Meanwhile, the "safety first" resolu­ of completing the nuclear reactor at Le­ is how I understand being King; this is tion on the cautious development of nu­ moniz. The entire technical staff at the how I understand my country and its clear energy, which the DB delegates site resigned after the assassination of historical duty. We must increase liberty voted up, indicates that the federation is their head, Angel Pascual, by Basque for men, ...for various countries beyond in approximately the same morass as the separatist ETA terrorists two weeks ear­ our frontiers which under no pretext ruling SPD party. lier. Bechtel'S specialty is projects that whatsoever must be violated, dominated, have to be built under aversive condi­ or invaded." tions. Juan Carlos next went to Bonn, where Spain currently has 8 percent of its he reported he had just sent a "personal, energy supplied by nuclear sources, and urgent, and private" letter to President Ch inese divided over Reagan, urging him to fulfillthe United plans to hit 20 percent by 1985. Soviet olicy Meanwhile, having taken credit for a States' role as a world power, to restore p rocket attack on the Basque National peace in the South Atlantic. Peking is caught in a policy split on Police Comisariat on May 24, the ETA­ whether or not to heal the riftwith the Military met with other Basque factions, Soviet Union, according to an unnamed legal and illegal, in Bayonne, France. Chinese official cited in the overseas Chi­ The terrorist connections of the ruling German unions nese press. According to this official, the Socialists in France have been well doc­ Foreign Office would like to improve umented by EIR . hogtied by scandal state-to-state relations and economic ties. However, the International Liaison The mid-May congress of the Deutsche Department of the Chinese Communist Gewerkschaftbund (DGB), West Ger­ Party insists on maintaining the current Juan Carlos hails role many's equivalent of the AFL-CIO, policy. demonstrated that the trade union move­ The same Chinese official reported of classical culture ment in that country is in no better con­ that in 1979 when the Soviets made their dition than management in facing world first rapprochement overture, Chinese King Juan Carlos of Spain has under­ economic disaster. The gathering was Ambassador Wang Youping received in­ taken a series of diplomatic moves which dominated by continued discussion of structions from Marshal Ye Jianying to show that Spain is not following the rest the months-long "Neue Heimat" scan­ "go ahead and adopt a 'warm' attitude." of Europe in obeisance to Great Britain. dal-in which Der Sp iegel magazine However, Party Vice-Chairman Deng On May 23, Juan Carlos was in Aach­ sought to implicate the construction firm Xiaoping countermanded Ye's instruc­ en, West Germany to receive the Charle­ of that name, wholly owned by the DG B, tions and told Wang to "be firm and magne Award, a symbol of the European in financial wrongdoing-rather than hard." As a result, the talks fa iled. Renaissance and humanistdevel opment. economic policy. He used the occasion to outline the roots Observers note that the scandal, of Hispanic culture in world history. which has caused the resignation of top Ties between Spain and the Americas, Neue Heimat board members as well as he cited, derive from the tradition of the the withdrawal of DGB cha�rman-desig­ French celebrate great humanist philosophers Philo and nate Alois Pfeiffer, could have been han­ St. Augustine, who established links be­ dled easily by a DGB labor press which 'Decline of West' tween Spain and Africa. As an outcome has a circulation about 15 times as great of those ties, Spain's monarchy soon be­ as the scandal-mongering Sternor Spie­ As the world political situation deterio­ came the "Hispanic monarchy, integrat­ gel weeklies. Spiegel publisher Rudolf rates, the Socialist regime of French ed in both hemispheres, beneath a single Augstein (arrested for possession of President Fran�ois Mitterrand has be­ crown." hashish) and Stern publisher Henri Nan­ come increasingly redolent of "cultural "Spain is not just a European, but it nen (once an employee of Josef Goeb­ pessimism," a disease which historically is a trans-European country," he added. bels) should have little credibility as mor- paved the way for fascism.

48 International EIR June 8, 1982 Briefly • EUROPEAN governments should stop their "silly chatter about U.S. budget cuts and defi­ cits," EIR founder Lyndon La­ Rouche said on May 28. "While I Socialist Party international relations opponent of Chinese leader Deng Xiaop­ do not have total agreement with chief Jacques Huntzinger, writing in the ing whom Deng has been trying to pres­ President Reagan on these mat­ March issue of Po litique Etrangere (the sure into retirement for some time, thus ters, the budget is absolutely not French eq uivalent of Fo reign Affairs) far unsuccessfully. the problem. If the Europeans draws hope from the fact that the eco­ want to talk about the economic nomic depression is leading to the weak­ problems of the U.S., let them ening of Western culture, so that "so­ first kick out the Mont Pelerin called universal values are being shrunk Society agents who are entrenched and becoming local values only." Huntz­ within their own governments." inger is also happy to see America through an analogous process become a Piperno charged in Moro • JOHN VINOCUR, the New mere "local power." York Times correspondent in Huntzinger also says that the under­ murder Bonn, is part of the clique of developed nations are the cause of their Americans working to bring down The political and legal forces who have own problems because of their "inegali­ West German Chancellor Helmut been protecting terrorist controller Fran­ tarian" regimes, and sees the rise of "re­ Schmidt, according to a source cesco Piperno in Canada for the last eight gional" powers like Iran as a hopeful with extensive NATO connections. months, preventing his extradition to It­ sign. Vinocur is working with ambassa­ aly, suffered a setback on May 18 when Economist Yves Laulan (with a fo l­ dor Arthur Burns, the source said, lawyer Joseph Nuss, representing the lowing in both Socialist and opposition to convince the Free Democratic Italian and Canadian governments at Pi­ circles) speculates in the French National Party to break with its Social Dem­ perno's hearing in the Quebec Supreme Defense Review fo r May on whether a ocratic Party coalition partners Court, charged he "renaissance" might not fo llow in the that "participated" in over the budget, which will be de­ the kidnapping and murder o f former wake of a nuclear war. Although casual­ bated beginning June 12. Italian Prime M i nister Aldo Moro in ties would be high, says Laulan, the en­ 1978. suing scarcities might fo rce man to be­ • THE ECONOMIST magazine At the Montreal hearing, Nuss said come more contemplative, in a way the of London May 22 compared the that Piperno had indirectly participated Chinese are particularly suited fo r. Lau­ Iran-Iraq war to the Thirty Years in both the kidnapping and murder of Ian is the top economic adviser to the War which devastated Central Eu­ Moro through two Red Brigade terror­ powerful Societe Generale de Banque. rope in the 17th century. "Ayatol­ ists currently on trial in Rome. "The lah Khomeini matches the Emper­ proof shows that Valerio Morucci and or Ferdinand, 'The Crowned Jes­ Adriana Faranda participated materially uit,' in the ferocity of his fanati­ in the kidnapping," said Nuss. "Piperno cism, and the Gulf has the same Self-criticism fo r was aware and participated in this act." strategic importance the Baltic This is the first time since last September, once had." Ch inese Premier ? when Piperno was first arrested, that a Canadian lawyer has responded to the • RUDOLF AUGSTEIN, pub­ f According to Hong Kong news sources, official request o Italian Judge Imposi­ lisher of the popular German por­ Chinese Premier Zhao Ziyang engaged mato, the leading judicial officer in the nography weekly, Der Sp iegel. was in "self-criticism" fo llowing the recent Moro case, for the extradition of Piperno forced to cancel his appearance as revelation that three of his sons were on 44 charges, including the kidnap­ featured speaker at this year's Roe­ ki f conducting illegal economic dealings murder of Moro and the lling offiveo merberggespraeche radical-chic with fo reigners from their base in his bodyguards. symposium in Frankfurt May 22. Guangzhou, Guangdong (Canton) pro­ At the hearing, Nuss said that he will The European Labor Party, which vince. be introducing in court the proof that the distributed a satirical leafletat the Though the phenomenon is rampant gun used to kill Moro, "a Skorpion, a event with a cartoon of the degen­ throughout the country, especially in the Czech gun used for several murders," erate Augstein, said that the last­ coastal areas where there is frequent con­ was in Morucci's possession when his minute cancellation was due to tact with foreigners, the story is believed residence was raided by police in 1979. "either our leaflet, or what we to be part of factional mud-slinging tac­ "We are not contending that Piperno wrote in the leaflet: that he drinks tics, currently being used by rival groups actually went to the scene and participat­ too much, smokes hashish, and in the Chinese leadership to embarass ed concretely, materially, in the kidnap­ walks around in the street in his opponents. ing .... But the proof will show that to neglige." Similar rumors are rife about the be part of a crime, it is not necessary that family and doings of Ye Jianying, an the person partici pates actively."

EIR June 8, 1982 International 49 �ITmNational

Bush andBaker place thePr esident in danger

by KathleenKlenetsk y

Contrived pressures and manipulations on the part of the the President around the staggering failure of his eco­ George Bush-James Baker III group within the White nomic · policy by offering the hope that a beefed-up House have convinced President Reagan that the key to "leadership image around fo reign policy" will recoup reversing his real and imagined popularity loss at home that loss. For this purpose, they have told Mr. Reagan is a public-relations triumph at the heads-of-government that a number of polls show Sen. Edward Kennedy summits in Europe this month. The Bush-Baker group leading him were presidential elections to be held now, has thus succeeded in exposing the President to a very adding that-as with Nixon and Carter before him-the serious security threat indeed. polls signify not a rise in the Senator's popularity, but a Working with Baker have been Deputy Chief of Staff serious decline in his own. Michael Deaver and Baker's aide Richard Darman, as well as Alexander Haig. They have brainwashed the The fifth column President into clutching at the sugarplum of staged Meanwhile, the man who served as Texas finance diplomatic successes abroad at the Versailles economic chairman for Ronald Reagan's 1980 presidential cam­ summit June 4-6 and the NATO summit in Bonn June paign has accused White House Chief of Staff James 10, while even those most loyal to Mr. Reagan have Baker III of deliberately undermining the President. In foolishly downgraded the security risks there (see article, a letter sent to Reagan last month, Houston lawyer page 42). Clymer Wright accused Baker of helping to "create the Perhaps the worst risk comes June 8-9 in England, image of Ronald Reagan as a vacillating President who whose elite is resolved to wreck the American presidency. can't formulate a program and stick to it." There Mr. Reagan will meet with the Royal Family, the Wright's letter, which was also circulated to other Prime Minister, and address the British Parliament. And early Reagan supporters and contributors, charged that the President's stop on June 7 in Rome, where he wUl Baker is working at cross purposes to Reagan's eco­ meet with Pope John Paul II, is beset with security risks, nomic policies and has contributed to a portrayal of the assuming that no harm comes to him at Versailles­ President as "an amiable, uninformed, lazy; slightly under the Mitterrand government, terrorists are enjoing confused politician ... a far cry from the genuine, a free-fire zone in France. Also on the itinerary is a courageous statesman we know Ronald Reagan to be." publicity stunt in West Berlin on June II, modeled on Wright's denunciation of Baker is the latest and . John F. Kennedy's legendary appearance there; West probably the most politically important in a series of Berlin is "a security nightmare," in the words of one attacks which grassroots Reagan loyalists and some member of the U.S. national-security apparatus. conservative groups have made at Baker and Vice­ The Baker-Bush group has specifically manipulated President George Bush since the two Reagan rivals

50 National EIR June 8, 1982 round of three-minute, ceremonial hand-shaking en­ counters, mak ing it virtually impossible for the Presi­ dent to sit down and think seriously about the multitude of problems faci ng the nation. Baker has also been careful to keep Reagan loyalists out of positions of influence, especially presidential counselor Ed Meese. According to a profile of Baker published in the May issue of Texas Monthly, Baker has consistently leaked to his media friends stories detri­ mental to Meese, and has teamed up with his Deputy Chief of Staff Mike Deaver to limit Meese's policymak­ ing input.

� The Anglophile element , ,I '0) James Addison Baker III is the scion of an old Confederate family which has been part of the British­ linked Houston aristocracy for decades. His great­ grandfather founded Baker & Botts, one of the top three Houston law firms. Its clients have ranged from the Gould and Harriman railroad interests to the 3chlumberger Corporation, whose former head, Jean de James Baker IlI t r) with Michael Deaver. Menil, belonged to the Permindex organization which assassinated President John F. Kennedy. Baker's grandfather, Capt. James Baker, was a (Baker ran Bush's primary campaign in 1980) were business partner and intimate friend of the notorious brought into the Reagan White House inner circle. Col. E. M. House, the British agent who controlled the Since that time, Baker and Bush, old friends and Wilson admi nistration and promoted Britain's control political allies, have been charged with attempting to over U.S. foreign policy by bringing the United States manipulate Reagan into scuttling his campaign plat­ into World War I on Britain's side. form and into adopting policies cooked up by the Baker is widely believed to want an even more Eastern Establishment wing of the Republican Party. powerful post. According to Texas Monthly, there are The President rushed to defend Baker from Wright's rumors that he is considering running for the Republi­ attacks-going so far as to claim that his former Texas can presidential nomination in 1984-which would finance chairman is "sabotaging" his Chief of Staff. But mean having to do something about George Bush, who Wright's allegations are right on the mark. is also eyeing the spot. Last month, the major media ran their first "expose" Baker's role of Bush since he became vice president. The story As soon as Baker persuaded Reagan to name him claimed that Bush had become improperly involved in head of White House operations instead of Ed Meese lobbying to retain a tax abatement for pharmaceutical back in January 198 1, he proceeded to set his own firms, even though he has held major blocks of stock in agenda for the administration. Despite his carefully­ two drug companies. The New York Times version cultivated image as a "non-ideological technocrat," contained a particularly interesting note: Bush had Baker was the first administration official to oppose the become involved only when James Baker urged him to. President on issues-including the tax cut and increased This wouldn't be the first time Baker has undercut military spending-which Reagan had made the corner­ Bush to advance his own political interests. When Bush stone of his policies. insisted on remaining in the primary contest during the He also staffed key White House posts with his own 1980 presidential campaign, even though it was clear people. Typical of the appointments he made was that Reagan had the nomination sewn up, Baker, his cam­ of Richard Darman as his top assistant. Darman, a paign manager, called a rump meeting while Bush was protege of Boston Brahmin and Club of Rome member on the road to put an end to the campaign. Baker then Elliot Richardson, now controls the paper flow to the held a press conference to announce that Bush was President, meaning that Reagan only gets to read what effectively out of the campaign, which the candidate Darman thinks he should read. Baker, meanwhile, sets only found out about when he heard it on the radio. the President's schedule: according to a recent White Said another Bush aide of Baker's actions: "Baker had House visitor, Baker has Reagan engaged in a nonstop to cut his best friend off at the knees, and he did it."

EIR June 8, 1982 National 51 Asia Policy Chinese leader Ye Jianying last fall-G.B.] and adding that "in the context of progress toward a peaceful solu­ tion there would naturally be a decrease in the need fo r arms by Taiwan." Both fo rmulations are unprecedented for Reagan, and they shocked Taiwanese officials, who had been kept totally in the dlark. Many are interpreting A debate' over ties to these passages as the first sign of pressure from Washing­ ton for Taipei to begin to talk with Peking. Taiwan andPeking Washington sources report that Haig has been urging Reagan to initiate U.S. "mediation" between Taiwan and Peking. NSC head Clark and Reagan personally by Gregory F. Buhyoff have opposed this. However, the public release of the letters is in itself now seen as a fo rm of pressure on The Reagan administration is caught up in a debate on Taiwan to enter talks. whether or not to seek a "face-saving subterfuge" which Nonetheless, Taiwanese officialsagree that as long as would allow the United States to bow out of its commit­ Ronald Reagan is President, U.S. commitments to Tai­ ments to Taiwan, in order to salvage its dwindling hopes wan will at least minimally be honored. of an anti-Soviet "strategic alliance" with the Peking However, Taiwan is hedging against the 1984 presi­ regime. dency . The prospects of a Bush-versus-Mondale candi­ Sources close to the administration complain that dacy do not bode well fo r Taiwan, given the strong China President Reagan is being urged into "mediating" a Card orientation of both men. reconciliation between Peking and Taipei on the former's According to Aviation Week, Taiwan is planning terms. The advocates of that policy include Secretary of maj or investment in the production of its own advanced State Haig, Vice-President Bush, Assistant Secretary of fighter aircraft and weapons technology. That report State for East Asian Affairs John Holdridge, and neo­ was corroborated by Lt.-Gen . Tang Chun-po, director conservatives close to U.N. Ambassador Jeane Kirkpa­ of Taiwan's Chung Shan Institute of Science and Tech­ trick. This group is also advising Reagan to give Peking nology in a message he delivered to the Society of some assurance that arms sales to Taiwan will not contin­ Strategic Studies. Taipei is currently scouting interna­ ue indefinitely. tional markets for military hardware and is known to be Among those resisting this line, the sources say, are interested in France's Mirage fighter jet. Should Paris the President himself, National Security Adviser William balk at arms sales to Taiwan in favor of its relations with Clark, and NSC deputy Robert MacFarlane, the latter Peking, a likely substitute could be the Israeli-made despite a past affinity to Kissingerian policies. The recent Dagger jet, a copy of the Mirage which, because it has appointment of Gaston Sigur, director of George Wash­ no U.S. components, does not need Washington's ap­ ington University's Sino-Soviet Institute, to head the proval for export. Asia desk at the NSC adds to the list of officials who, While the Taiwanese would rather not go elsewhere while amenable to using China against Moscow, are for their defense needs, all options are being considered, unwilling to sacrificeall other American interests in Asia and if the U.S. "washes its hands of us," as one Tai­ to this end. wanese source put it, "we'll manage to survive." Some It appears that the Haig-Bush-Holdridge group won sources suggest that circles in the administration may be a victory when the Vice-President went to China in early subtly encouraging Taipei to go this route in order to May. They warned Reagan of increasingly tough Chi­ justify ending arms sales to Taiwan on the basis that they nese threats over the Taiwan issue, and of the undesirable are no longer needed. message that might be conveyed to Moscow if Bush's While such arrangements may buy more time for tour of Asia did not include a stop in Peking. Reagan China Card advocates, those in the administration who finallyagreed to cajole Peking into allowing Bush to visit fixate on Taiwan as the fundamental obstacle to desired China by sending him with a "new package." The Chi­ relations with Peking may find that they come up empty nese Foreign Ministry claims this included a promise handed. Recent shifts in Chinese foreign policy, i.e., a that U.S. arms to Taiwan would end at some point. toned-down anti-Sovietism and a more pro-Third World If the Foreign Ministry's claim is true, it is believed stance, suggest that there is much more dividing Wash­ that Bush went beyond the President's wishes. Bush has ington and Peking than Taiwan. Instead of obtaining a declined comment. "strategic alliance" with Peking in exchange for Taiwan, Mr. Reagan allowed his name to be appear on three and fo r just about all that is left of U.S. credibility with letters carried by Bush to Chinese leaders, one of which respect to its commitment to traditional friends, if the stated "we welcome your nine-point initiative [referring United States succeeds in pressuring Taiwan into "reu­ to a proposal for "peaceful reunification" issued by nification" talks, Peking may get Taiwan for nothing.

52 National EIR June 8, 1982 Excerpts fr om Judge Bryant's decision follow.

[A]s Abscam affected [Rep. Richard] Kelly, it was not the type of carefully devised and supervised covert operation generally accepted by the courts .... I know of no reported case where at least some �bscam subjected inkling of corruption was not the forerunner of under­ cover activity in a bribery prosecution. When Weinberg victim to outrage' first passed the word that money would be paid to a Congressman for immigration help and that large amounts of money were availble fo r investment, no one by Sanford Roberts in the government had even the remotest suspicion about the existence of any prior, on-going, or imminent crimi­ Judge William Bryant of the Federal District of the nal activity of this type either as to its existence in general District of Columbia acquitted former Florida Rep. or the participation of any individual. In other words, Richard Kelly May 13 of the bribery and conspiracy there was nothing to trigger traditional law enforcement charges he had been convicted of under the Carter Justice activities until the government made its overtures Department's Abscam operation. Kelly's conviction was through those who were attracted to the honey pot. ... overturned because the court ruled that his FifthAm end­ [A]s it affe cted Kelly, Abscam was not a traditional ment due process rights were violated by the "outra­ sting operation. It had a fe ature unknown to any sting geous" conduct of the government- in initiating and operation that I know of. This consisted of a recruiting carrying out Abscam. agent who was programmed to go out and use a formula Judge Bryant is the first to overturn an Abscam supplied by the point man ofthe operation, which includ­ conviction based upon FBI "outrageousness," a legal ed a strong legitimate attraction. This formula contain­ term that signifies gross violation of due process of law ing legal and illegal bait was used .... guaranteed in the U.S. Constitution's Bill of Rights. The ordinary sting, on the other hand, is nothing Most defense cases to date have relied on the argument more than a passive operation which serves as an attrac­ of "entrapment"-that the FBI had no evidence of any tion fo r those who become criminals under their own predisposition to crime on the part of the defendant power, certainly with no help from anyone connected before ma'king its bribe offer. with the sting .. " Persons who patronize a "fence" The question of due process goes to the heart of the operation set up by police are thieves who have already issue that governmental misconduct in Abscam is an committed crimes when they contact the sting. In another assault on constitutional government in the United standard motif, police officers disguise themselves as States. Even in cases where the victim of the Abscam elderly persons sitting in a park which has been plagued frameup is shown to be predisposed to criminal behavior, by robberies and muggings .... In neither instance do which could defeat a defense based on entrapment, the we have officers, or persons programmed by them, can­ consideration of due process can mandate acquittal. If vassing the neighborhood with legitimate incentives de­ the government uses tactics which exceed the barest signed to encourage apparently innocent persons to take standards of fa ir and honest law enforcement, as Judge advantage of the sting operation .... Bryant found was done throughout the Abscam opera­ Although the Department of Justice and the FBI tion against Representative Kelly, such "outrageous­ disavow any purpose of testing the virtue of members of ness" violates the due process clause of the FifthAme nd­ Congress, that in fact appears to have been the sole ment. In Kelly's case, the court determined unequivocal­ objective of the operation. In the case of the defendant ly that Abscam represents precisely this sort of outlawed Kelly the evidence points unwaveringly to this conclu­ "outrageous" misconduct, based on the FBI's persistent sion. Given the concession that there was not even a scent offers of bribery afterrepeated refusals by Kelly. of suspicion of criminal conduct, past, present, or immi­ The Bryant decision has profound implications for nent, or of criminal behavior by Kelly or any other other Abscam cases now in various stages of appellate individual, that no investigation in this regard was un­ review, especially for that of Harrison Williams of New derway, and the firm belief that if Ciuzio got his hands Jersey, who was forced to resign from the Senate March on the money the Congressman would never know any­ II after a courageous year-long fight in which he dem­ thing about it, no other objective can emerge except that onstrated his innocence of any miscon duct. Unlike Kelly, of testing virtue, or as Judge Kaufman [of the Second who finally succumbed to FBI bribery when $25,000 was Circuit Court of Appeals] stated in Alexandro, [one of spread before him, Williams never accepted any money. the early Abscam convictions] "to test the faith of those The FBI succeeded only in videotaping him repeatedly in the high echelons of government." Either that, or the saying "No" to insistent offers of bribes. patently unacceptable objective-prosecution for the

EIR June 8, 1982 National 53 sake of prosecution .... ference between the legal and the When improper proposals are re­ illegal, and rejects the latter, the per­ YOU'RE A jected in these virtue-testing ven­ son should be free of further testing MOVING TARGET tures, the guinea pig should be left by a device which only government FOR SOMEONE WITH A alone. In ordinary real life situations, agents could have the audacity to use MOTIVE. anyone who would seek to corrupt a in the face of the penalties provided Congressman would certainly not for iheir conduct. This standard cre­ continue to press in the face of a ates a workable, discernible line sep­ Could be an international terrorist or crim­ rejection for fear of being reported arating the merely offensive and inal group, or even someone with a grudge and arrested. The FBI of course had the constitutionally impermissible. against your organization, You or one of your no such restraints in this case .... Crossing this line is patently outra­ employees could easily become a statistic ... unless you know how to protect yourself. I believe that in the circumstances geous. A person corrupted under cir­ . MTI's EXECUTIVE PROTECTION MANUAL of this case, any further pursuit and cumstances which only police offi­ provides the most complete coverage of pro­ pressure on the part of government cials can create or by a process which tection strategies available in one resource. agents was nothing short of outra­ only the authorities are licensed to Originally created for 10 multinational corpo­ rations by a team of security consultants as­ geous. A suspicion-free subject use, has been made into a criminal by· sisted by security directors and government should be exempted from further his own government. ... experts , the EXECUTIVE testing on the basis of winning the During the course of the trial, in PROTECTION MANUAL discusses: first battle against temptation. He an apparent attempt to escape con­ • Case studies should not be required to win a pro­ viction and at the same time hang on of terrorism

longed war of attrition against chi­ to some remnant of respectability, • Executive protection canery. Human nature is weak Congressman Kelly presented the bi­ policies and strategies • Hostage negotiation enough and sufficiently beset by zarre, nearly farcical defense that he pages Bomb threat procedures 320 temptations without government was conducting his own investiga­ • • Pros and cons of paying ransom adding to them and generating tion of the reason why he had been • Special problems in family protection

crime. If the government had no surrounded by shady characters. He • Vulnerabilities- home, office, and vehicle • knowledge of Kelly doing anything suggested that he was being targeted wrong up to his rejection of illicit for destruction by his political ene­ • Crisis management systems • Protection equipment mopey, its continuing role as the mies who resented his independence • And more! third man in a fight between his con­ and courage in the political arena. All this, together with hundreds of dia­ science and temptation rises above Not a scintilla of evidence which ' grams, photos, security checklists, and the level of mere offensiveness to that would support this theory ever sur­ methods for threat analysis, for only $29.951 of being "outrageous." No concept faced in this case. Don't make the mistake of thinking that it of fundamental fairness can accom­ However, as the case unfolded I couldn't happen to you. Order the EXECU­ TIVE PROTECTION MANUAL today and modate what happened to Kelly in was plagued with the unsettling re­ receive a free bonus, MTl's Executive Survival this case .... alization that with this loose cannon Handbook! The function of law enforcement rolling around on the deck of the r------..... is to prevent crime and catch crimi­ criminal justice system such a thing Te leprogrsnJs nals. Conversely, law enforcement could indeed occur. Also, I became I MTI InC_ I 3710 Commercial Avenue. Northbrook. Illinois 60062 exceeds its bounds when it manu­ aware that even if a victim success­ I Name ____ . I factures crime and creates crimi­ fully invoked the defenses of selective nals. The manufacture of crime and prosecution and/or entrapment, this I Position ------I creation of criminals have been would be of little solace to him, for I Organization ------1 specifically prohibited by numerous he nevertheless has been destroyed as Address I I cases .... a voice in public affairs. This great City. State. Zip To reiterate, I do not believe that potential for a type of mischief, I Te lephone( ____ ) I testing virtue is a function of law which hopefully will always remain I�· ��I enforcement. But this personal belief alien to our system, standing alone, EXECUTIVE PROTECTION MANUAL $ __ - Softbound $29.95 each aside, and assuming that it is, the may be a compelling justification for I _ Hardbound $39.95 each I method of testing must be fair. If outlawing the government's conduct 0 Payment enclosed ( check or money order only) I Add $2.05 for shipping and handling. I after an illegal offer is made, the against Kelly as a law enforcement Illinois residents add 6% sales tax. subject rejects it in any fashion, the procedure. If we condone such a I 0 VISA 0 Mastercard I goverment cannot press on. Certain­ measure, the fall-out might well be I Card # I ly when a person recognizes the dif- intolerable fo r us all. Expiration Date

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Fill out the coupon and order today , I Name I or call us toll-free. I Position ------I Organization ------MTI Te /eprograrns In c. I • Address ______- 800-323-5343 I City , State, Zip I In Illinois, Alaska , and Hawaii, Phone I ( ) - I call collect 312-291-9400 ... ------_ .... Democratic Party The NDPC has pulled together a broad coalition to oppose Hayden and his "economic democracy" euphe­ misms fo r zero-growth socialism. "Hell no, we won't go-for Hayden!" chanted over 50 picketers-who modified Hayden's own 1960 chants as they marched in front of the fo rmer SDS leader's campaign headquarters A challenge to the in a recent demonstration. "Those LaRouche people are giving Jane Fonda Jerry Brown machine fits," commented a trade-union leader, referring to NDPC fo under Lyndon LaRouche. "They're fo rcing by Andrew Rotstein her to dig deep into her pocketbook." According to articles in the New York Times and elsewhere, funds for Hayden's campaign and other CEO activities like cam­ Because the California Democratic Primary and ensuing paigning fo r Brown have had to come from Jane 1982 congressional elections are broadly viewed as a Fonda's exercise salons and sales of her Wo rkout book. bellwether for the 1984 presidential campaign, Gov. Other picket lines have been thrown up at the site of Jerry Brown, a presidential hopeful, needs a clear victory Hayden's new home by Santa Monica and Los Angeles in his June 8 primary bid for the Democratic senatorial building trades councils. The house is being built with nomination to prove that wide support exists for his non-union labor. ultra-liberal, environmentalist zero-growth kookery. But The anti-H ayden sentiment spills over into anti­ as of this writing, Brown has had to keep looking back Brown sentiment; even the scandals surrounding the over his shoulder at a challe,nger, William Wertz, whose two are the same. DNC chief Manatt and Mickey support has been growing stronger by the day. Cantor, Brown's campaign manager, were caught Wertz, for several years the West Coast coordinator building their new law office with non-union labor­ of the multi-candidate National Democratic Policy with the result that chunks of Brown's nominal labor Committee, has a sizeable machine to call upon in the support are threatening to desert him. "If something NDPC's 6,000 members in over 100 chapters throughout isn't done about this," said one union president, "we California. His goal is to produce a mandate for the may have to reconsider our endorsement of Brown." NDPC's fo ur-point emergency program-water proj­ The challenger's prospects began growing late in the ects, nuclear plants, low-cost gold-backed credit, and fa ll, when he blanketed the state with a pamphlet, "The Third World development-and, he states flatly, to end Campaign for Economic Democracy [Hayden's]: the political career of Jerry Brown. Brownshirts of the 80s," whose iillpact was to definethe Wertz strategists are now talking of pulling together primary campaign's issues in advance. The pamphlet the ingredients for a real political upset. A fundamental defined the character of the Hayden-Brown apparatus economic breakdown is beginning to make itself felt in as "authentically fascist" in both economic- and social­ California, after eight years of Brown's no-growth eco­ policy terms. A Republican primary candidate exerpted nomic administration, which killed both water-develop­ portions for circulation under his own signature. Now, ment and nuclear-power projects. This has created open­ Wertz has issued a half-million copies of a leaflet ings for the Wertz campaign, especially among labor. naming Brown as an advocate of genocide. Wertz has Over 30 trade-union officials, primarily building trades denounced the British and called for the invocation of and teamsters, have bucked the state AFL-CIO leader­ the Monroe Doctrine, making much of Brown's support ship by endorsing Wertz. for the British colonial adventure in the South Atlantic, The lsrown machine is based in Charles Manatt's a precedent fo r NATO's "population-reduction wars" chairmanship of the Democratic National Committee, in the Third World. in the state's Democratic Council, and in Tom Hayden On May 22 and May 27, Wertz appeared with and Jane Fonda's "Campaign for Economic Democra­ LaRouche in half-hour television spots in San Francisco cy" organization. They are already disquieted by the and Los Angeles, generating dozens of supportive calls results of the Pennsylvania gubernatorial primary, from viewers of all political persuasions. He has now where NDPC Democrat Steve Douglas, like Wertz a purchased $15,000 worth of one-minute radio spots. "political unknown," won 147,000 votes (20 percent Although Jim Jones People's Temple is no longer statewide, 35 percent in Philadelphia) on a program around to provide bodies for counting in the Brown identical to Wertz's. vote, Wertz strategists fear vote fraud. Although he has The Brown machine is also running Tom Hayden raised over $150,000, the Los Angeles Times omitted fo r State Assembly; on that front, too, they are showing him from a candidate-financing article, and from an signs of wear under attack from the Wertz forces. opinion poll-characteristic preparation for vote-theft.

56 National EIR June 8, 1982 How Haig and Kissinger ran Watergate against the U.S.

by Kathleen Klenetsky

When Secretary of State Alexander Haig announced to Working from a sophisticated psychological profile the nation that "I'm in control here" mere hours after that stressed Nixon's paranoia both about the Eastern President Reagan had been wounded by a would-be Establishment and communist infiltration of the United assassin last March, most Americans were appalled. But States (the latter exemplified by Nixon's complete mis­ to those who had carefully studied the pattern of Ameri­ reading in the 1950s of Alger Hiss, whom he labeled a can political developments particularly over the last dec­ communist, when Hiss was actually working for the ade, Haig's power grab took on overtones beyond the British), Haig and Kissinger manipulated Nixon into ex-general's overweening ambition and total disregard extending the Vietnam War-over the opposition of for the U.S. Constitution. To them, Haig's performance then-Defense Secretary Melvin Laird. This provided the smacked of an attempt to replay the cold coup d'etat impetus for an expanded anti-war movement, the devel­ which he and his patron, avowed British agent Henry opment in the Nixon administration of a liberal anti­ Kissinger, had helped carry out against the presidency of war "counter-government" (composed primarily of Richard Nixon. Kissinger proteges like National Security Council staf­ Far from being an "impartial campaign" to rid the fe r Morton Halperin), and a series of major "leaks" to U.S. government of corruption and the abuse of power, the press, including most importantly the Pentagon Watergate was a London-instigated plot to destroy Papers. In turn, conditions were created under which America's constitutional institutions. No matter what Kissinger, with Haig in tow, could persuade Nixon that Nixon's flaws may have been, he did nothing that could "national security" required countermeasures, includ­ possibly be construed as an impeachable offense; it was ing the wiretapping, break-ins, and other offenses for Watergate itself which represented the real offense which Nixon was hounded fr om office. against the Constitution. It contravened all accepted constitutional procedures; it discredited the office of the The wiretaps Presidency, not simply Mr. Nixon personally; it weak­ The Watergate scenario took off in earnest in May ened the morale of the entire nation; and it opened the 1969, when Kissinger instigated a steady flow of intelli­ door for Kissinger and a host offellow British operatives gence leaks to his fri ends at the New York Times. The and fellow travelers to consolidate their grip over the purpose was to convince Nixon that a nest of subver­ essential policy-making institutions of the United States. sives intent on sabotaging his foreign-policy initiatives was operating fr om the White House itself. As soon as the firstleak-an expose of the U.S. covert bombings in The treachery of Haig and Kissinger Cambodia that Nixon had ordered at Kissinger's urg­ Although it was ultimately London which directed ing-appeared in the May 9 New York Times, Kissinger the Watergate proceedings from the top, it would have stormed into Nixon's office� accused Laird of the leak, been impossible without the traitorous complicity of and ranted that U.S. diplomacy was at stake. Haig, Kissinger, and their co-conspirators at the Wash­ Later that day, Kissinger got on the phone to FBI ington Post and on Capitol Hill-especially among director J. Edgar Hoover, demanding that taps be Democrats allied with the Kennedy family and such placed on the phones of s. uspect administration officials. anglophilic conservatives as then Sen. James Buckley. The individuals pinpointed by Kissinger for taps fell

EIR June 8, 1982 National 57 into two categories. The first: trusted Kissinger aides, Kissinger not only supplied the motivation for the some of whom, like Morton Halperin, were being plumbers' unit's creation, he also supplied its director. laundered into left-wing networks like the Institute for Two weeks after the Pentagon Papers broke. Kissinger Policy Studies, to give a modicum of credibility to the transferred his appointments secretary, a young t ford Kissinger charge of a "counter-government." University graduate and fo rmer Nelson Rocke iler The second category included aides to Laird and aide named David Young, to the White House base­ Secretary of State William Rogers, who were trying to ment to oversee the day-to-day deployment of the stabilize the Mideast and Vietnam. The point of the plumbers' staff. As chief liaison to the unit, Kissinger latter category of taps was to insure that Kissinger assigned Alexander Haig. knew in advance every policy-making initiative pre­ (Although Kissinger would later deny any knowl­ pared by State and Defense, so that he could walk into edge of Young's White House activities, he was forced NSC meetings with point-by-point refutations of every to admit in sworn testimony before the Senate that constructive proposal offered by Laird and Rogers. Young was kept on the NSC payroll a full two years Although Kissinger has always maintained that he after he had transfered fr om that unit to the plumbers. was simply a passive participant in the wiretappings, the And new evidence obtained by former Ne w York Times' opposite is true. In addition to his fo ur calls to Hoover reporter Seymour Hersh and published in the May issue May 9, Kissinger (either personally or through his top of Atlantic Monthly, shows that Haig was directly NSC assistant, Alexander Haig) requested a wide range receiving progress reports on the plumbers' activities of taps on people ranging from Rogers's closest aide from Young, while Kissinger was known to be con­ Richard F. Pederson through Morton Halperin. Some cerned that Young might reveal Kissinger's hand in the of the taps were so patently absurd that by themselves plumbers' unit and related operations.) they tend to blow Kissinger's cover. The cases of The immediate task assigned to the plumbers was to Morton Halperin and another NSC staffer, Helmut "plug the leaks" which Kissinger claimed were jeopard­ Sonnenfeldt, are exemplary: both men were long-time izing U.S. secret diplomacy with the Soviets. This colleagues of Kissinger; Sonnenfeldt and Kissinger inevitably led to the bungled break-in of Ellsberg's worked together as early as 1946, while Kissinger had psychiatrist's office. Meanwhile, the plumbers were busy hired Halperin to plan the entire restructuring of the making plans to bungle another break-in-Democratic NSC apparatus after Nixon's election in 1968. Indeed, Party headquarters at the Watergate Hotel itself-and Halperin was later forced to admit that Kissinger had set the stage for the public phase of the Nixon Water­ warned him in advance that the FBI was placing a tap gating. on his phone. So much for Kissinger's vaunted concern for "national security." Kissinger and "aig seize power It was the break-ins, devised and carried out by The 'plumbers' and Ellsberg Kissinger's plumbers, that inaugurated ' the final phase One of the most important aspects of the Watergate of Watergate. scheme was the Daniel Ellsberg affair. Without the In April 1973, Nixon aides Haldeman and Ehrlich­ Ellsberg-Pentagon Papers fiasco, there would have been man, along with Attorney General Richard Kleindienst, no "plumbers' unit," and no handle for bringing down were forced to resign after testimony at the Ellsberg Nixon. trial implicated them in the burglary of Ellsberg's It is therefore notable that the operative chosen for psychiatrist. On April 30, Nixon surrendered the Attor­ this assignment had been trained at Cambridge, Eng­ ney General's offiCe to Elliot Richardson, a Boston land (a well-known recruiting ground for British intel­ Brahmin with close ties to the George Bush-James ligence); then became a protege and close friend of Baker wing of the Republican Party and a leading Kissinger's at Harvard. The two remained so intimate member of the Club of Rome. With the office came the that even aft er Ellsberg had transformed himself from a license to appoint a special Watergate prosecutor. Rich­ nuclear superhawk into an anti-war liberal and was ardson promptly named long-time Kennedy ally Archi­ preparing the Pentagon Papers for publication while bald Cox to the post. Four days later, Haig replaced dashing off letters to the Times and Washington Post Haldeman, and was soon officially named White House denouncing the Vietnam War, the two continued to Chief of Staff. meet regularly. There is even reason to suspect that On May 17, the special Senate panel headed by Sam Kissinger-who had prepared the outline for the Pen­ Ervin opened its hearings into Watergate, and Cox was tagon Papers project when it was commissioned in sworn in. 1967-might have given Ellsberg access to some of this From this point on, Nixon operated in a "controlled secret material that fo und its way into Ellsberg's expose, environment," increasingly isolated fr om outside advice which was published by the Times in June 1971. and more and more dependent upon the "options"

58 National EIR June 8, 1982 offered by Kissinger and Haig, who by now were have not fo und an impeachable offense and therefore essentially running the government. The two began to resignation is not an acceptable course." He then stated place their own people (or, more properly, fellow an­ he would hold an "economic summit" to tackle the glohiles) in key positions of influence. James Schlesinger growing problem of inflation. Republican National (a protege of both Kissinger and Daniel Ellsberg) took Committee head George Bush implored Nixon to hold over Defense after Laird was forced out. Kissinger off on the summit. Nixon angrily snapped back, "No, himself finally wrenched the State Department away this is too important a problem." from Bill Rogers, and was sworn in as Secretary of After the meeting broke up, Kissinger spent two State on Sept. 19. Three weeks later, war broke out in hours trying to make Nixon change his mind and the Middle East. resign, arguing that the Soviets would use the impeach­ On Oct. 10, Vice-President Agnew was fo rced to ment proceedings as an occasion to launch foreign­ resign as a result of a "get-Agnew" investigation under­ policy adventures. Nixon refused to accept Kissinger's taken by Richardson's Justice Department. The stage advice. was set for Nixon's impeachment or overthrow. Later that evening, Kissinger and Schlesinger com­ From Oct. 22 to 25, Kissinger and James S�hlesin­ pletely usurped presidential authority by putting the ger, all alone in the White House Situation Room, held U.S. military command on an "internal alert" and a rump NSC meeting and declared a worldwide nuclear­ ordering all commands not to accept any orders coming war alert. Nixon was not involved in the decision. From fr om the White House without the countersignature of here on, Kissinger acted as though he were the President the Secretary of Defense. of the United States and Commander in Chief of the In the face of Nixon's adamant refusal to step down, U.S. Armed Forces. Kissinger al1:d Haig resorted to a final pi�ce of treach­ As Chief of Staff, Haig took over the organization ery. Unbeknownst to the President, Haig had already of Nixon's legal defense, widely conceded to be one of had the White House staff type up unedited transcripts the most incompetent mounted. No staff was ever of the "smoking gun" tape. The transcript was then organized: the legal arguments were an unmitigated sent to Nixon's closest supporters in Congress and the disaster; and Nixon's lawyers were continually handing Republican Party. As news of this supposedly devastat­ over material to the prosecution that could only damage ing tape began to circulate, panic began to spread, a the President's case. As early as November 1973, Nix­ panic compounded by the fact that it was the President's on's attorney, Fred Buzhardt, a Pentagon lawyer whom . own Chief of Staff who was pulling the rug out. Haig had known since West Point, called on the Presi­ Haig then began to bring the remaining Nixon dent to resign-even though Gerald Ford had not even loyalists to the White House, where he told them that been confirmed as Vice President. an anti-impeachment fight would be futile, and that By July 1974, the Watergate schemers were moving Nixon must be forced to resign in order to save the in for the kill. But they wanted Nixon to resign rather party. On Aug. 7, Haig brought Rep. John Rhodes and than go through with the impeachment proceedings, for Sens. William Scott and Barry Goldwater to the White fear that the latter could backfire in the President's House to inform the President that he had lost his fa vor. This wasn't so easy to accomplish. As pressure political base of support. Earlier, George Bush had sent began to build on Nixon to resign, he responded by Nixon a letter urging him to resign. insisting that to do so would be unconstitutional. When These were the finalblows. The President submitted Haig went to Nixon at the end of July and told him his resignation to none other than Henry Kissinger. point-blank that he should resign, Nixon replied that he London's cold coup had been effectively carried out would "let the constitutional process run its course." against the U.S. government. And the two men most Realizing that they needed a more subtle tack, responsible for that, as well as for all the offenses for Kissinger and Haig overnight created the myth of the which Nixon took the fa ll, were left unscathed by the "smoking gun" tape in an effort to convince Nixon he media and by the official bodies constituted to investi­ had no choice but resignation. Haig argued that this gate Watergate. Kissinger sold himself to Gerry Ford tape proved Nixon's guilt and would make his case as an indispensable foreign-policy adviser, while Haig before the Senate untenable. Nixon brushed off Haig deployed to Europe to head up the NATO forces and to and his lawyers, telling them "It's utter nonsense to prepare his own future political career. make such a big deal as this." The worst part of the Watergate tragedy is that, as On Aug. 5, Nixon totally shocked Haig and Kissin­ Nixon had warned, it set the precedent for future ger by convening a cabinet meeting to announce that he operations against U.S. Presidents. All the elements for was determined to see it through: "My view," he said, "Reagangate" are already being put into place. And "is that I should not take the step that changes the Reagan is surrounded by the same people who were Constitution and sets the precedent for the future ....I instrumental in Watergating Nixon.

EIR June 8, 1982 National 59 Congressional Closeup by Barbara Dreyfuss and Susan Kokinda

LaRouche has stated, development S pace command be able to stay on top of so many group proposed of space-based anti-ICBM beam operations. Declaring that "we need a funda, weaponry would end the threat of mental new national commitment nuclear terror and thus would be a critical development for both the to develop such space defense sys­ ' U.S. and Soviets. tems" as directed energy weapons, Psychological stress' not "Doctrine is of such impor­ Rep. Ken Kramer (R-Colo.) called valid bloc to nuclear plant tance in determining the opera­ on the House Armed Services Senate Energy Committee Chair­ tional requirements for, and the Committee to back his legislation, man James A. McClure (R-Ida.) ultimate funding paths toward, H.R.5130, to establish an Air announced May 21 that he intends new space capabilities that. we Force Space Command. to pursue the adoption of an dare not let it evolve willy-nilly." The proposed Command will amendment to the National Envi­ coordinate all work on space pro­ ronmental Protection Act (NEPA) grams in the Air Force and ulti­ which would prohibit the consid­ mately act as the coordinating cen­ eration of "psychological stress" ter for the 29 fragmented govern­ Undercover FBI operations as a factor in environmental deci­ ment departments now dealing tripled over fo ur years sion-making. McClure's action with space questions. Making a preliminary report to the comes as a response to a May 19 Kramer made his plea May 19 Senate Select Committee investi­ U.S. Court of Appeals decision in in testimony before the Commit­ gating Abscam on May 26, com­ January which ordered the Nuclear tee's Investigations subcommittee mittee counsel James Neal told the Regulatory Commission to pre­ which was reviewing the legislation stunned Senators that FBI under­ pare an environmental assessment first introduced on Dec. 7. Others cover operations between 1978 and of the effects of restart of the Three who testified in support of the bill 1981 totaled 1,192. Neal described Mile Island nuclear reactor on the included Gen. James J. Hill, for­ the growth over the four-year pe­ "psychological health of neighbor­ mer head of NORAD, and Dr. riod as follows: 176 operations in ing residents and on the well-being Barry Smernoff, a consultant on 1978; 239 in 1979; 314 in 1980; and of the surrounding communities." space strategy fo r the GAO. Kra­ 463 in 1981. Committee chairman The unprecedented decision ig­ mer developed his proposal after Charles Mathias commented, "if nored court rulings in similar cases extensive discussion at the Air you had told us that there were 500 that psychological factors could Force Academy and with officials or 600 operations of that period, it not be taken into account in such at NORAD in Colorado and spe­ might have been expected. But nei­ matters. cialists in allied space technologies. ther the growth in population or in McClure pointed out that the In his testimony Kramer called crime seems to justify that expan­ "psychological environmental im­ for the Command to have "behind sion. " pact statement" mandate under an it the full organizational resources Neal noted that there were two incorrect reading of NEPA, could and organizational power of a levels of undercover operations­ add as much as a year and a half four-star billet" which could thus those approved by the Director of to the start-up of the Three Mile become a "powerful advocacy for the FBI, which go through an un­ Island reactor. In addition, he space." Kramer motivated the dercover operations review com­ warned, "[This] could very likely need for such a high-level group to mittee, and those approved by the lead to a flood of psychological­ promote space defense systems Special Agent in Charge of an stress contentions in other pending with a declaration that the devel­ operation. The first category com­ and future NRC proceedings. If opment of space-based defense prised 327 of the 1,192 undercover the courts decision extends to other weapons systems would have a rev­ operations. Dennis DeConcini (D­ agencies as well, virtually every olutionary effect on military doc­ Ariz.) mused that it was question­ major construction or develop­ trine. As EIR founder Lyndon able whether the Director would ment project requiring fe deral ap-

60 National EIR June 8, 1982 proval-from airports, to bridges nationally respected former DEA the major effect of the bill would and roads to mi litary instal­ agent sent a letter to members of be to add services, investment, and lations-would become targets." Congress denouncing the FBI­ high-technology goods to the 1974 D EA merger of last year as an Trade Act provisions. Alleged abysmal failure, and calling for the "trade-distorting" requirements of creation of a de facto "drug czar" other countries toward foreign in­ to give the United States a real war vestment, such as local content on drugs. The proposal has report­ Pell pushes 'paper tiger' provisions, could not be consid­ edly caused substantial commo­ ered in violation of U.S. law. drug reorganization tion, and the Pell initiative is prob­ Senator Claiborne Pell (D-R.I.), ably an attempt to blunt the "drug Congress' only card-carrying Club czar" proposals with a paper reor­ of Rome member, introduced the ganization. "International Narcotics Control Defense Department Board Act of 1982" (S.2571) on to aid NASA May 25. According to Pell, his bill Senator Harrison Schmitt (R­ "will remedy the greatest single N.M.), one of the staunchest sup­ impediment to an effective inter­ Reciprocity removed porters of NASA, succeeded in national narcotics-control strate­ from trade bill adding a proposal onto the FY gy-the lack of a single entity in The "reciprocity" concept has ef­ 1 983 NASA authorization bill the executive branch with the au­ fectively been taken out of S.8094, which may become the means to thority to coordinate overseas the trade bill sponsored by Sen . save many of NASA's programs drug-enforcement activities, and to John Danforth (R-Mo.). from extinction. The Schmitt plan marshal the resources of agencies Congressional sources told EIR is to have the Defense Department within fo ur executive departments that the bill no longer contains pay the full cost of using the Space with responsibility for controlling language that would have added Shuttle to orbit its payloads. the flow of illegal narcotics into denial of "substantially equivalent "The DepartmenT oI Defense the United States." market access" by foreign coun­ should not be subsidized at the Pelt's reorganization will cre­ tries as a basis for U.S. retaliation expense of our nation's civil aero­ ate an international narcotics con­ under Section 301 ofthe 1974 trade nautics and space programs, which trol board, consisting of the heads bill. have contributed enormously to of the six agencies principally con­ The substitute language arrived our country's leadership in tech­ cerned with drug enforcement: the at in negotiations between the Sen­ nology and space, its economic Assistant Secretary of State for In­ ate and the administration now strength, prestige, and quality of ternational Narcotics Matters, the refers only to lack of "fair and life," declared Schmitt. Administrator of the Drug En­ equitable market opportunities." The proposal was endorsed by fo rcement Administration, the Di­ Denial of substantially equivalent the Senate Committee on Com­ rector of the FBI, the Commission market access is only in the bill's merce, Science and Transportation of the U.S. Customs Service, the statement of purpose. when it passed the NASA FY1 983 commandant of the Coast Guard, U.S. Trade Office officials told authorization bill May II. The to­ and the Commission of the Immi­ EIR they feared "equivalence" lan­ tal authorized for NASA was gration and Naturalization Ser­ guage could lead to interpretations $6.6.12 billion, the amount request­ vice. The Board would operate on that lack of sector-by-sector trade ed by the administration, a figure a tiny budget of $500,000. balances constituted unfair trade which puts a number of important Sources fa miliar with behind­ practices, and that this interpreta­ NASA programs in jeopardy. The the-scenes battles in the narcotics­ tion could set off a cycle of retal­ Schmitt proposal is expected to enforcement arena pointed out iatory trade restrictions. add approximately $409 million to that several weeks earlier, an inter- With "reciprocity" removed, the NASA budget in FY1983.

EIR June 8, 1982 National 61 NationalNews

•

Ted Kennedy's "Project '87" constitu­ eral of the wards-demonstrates that tion-changing scheme-told a Brook­ voting fo r Douglas was on the basis of ings Institution conference May 26 that issues, not "racial interests" lines. Harriman Tories the Confederate Constitution contained In the western part of the state, several elements that should be included plan strategy Douglas got significant returns-in the in the U.S. Constitution, among them a range of 20 percent-in those counties At a recent private dinner party given by six-year-term for the President; permit­ where NDPC campaign committees had Pamela Churchill Harriman, the assem­ ting Cabinet members to speak on the been built. (Vote fraud on the part of the bled Democrats discussed how to capi­ floor of Congress (a variant on the Brit­ liberal Republican machine of incum­ talize on what they are confidentwill be ish parliamentary system); giving the bent Richard Thornburgh is suspected the self-destruction of President Reagan president a line-item veto on the budget; there.) Douglas's campaign, although and with him the Republican Party. For and prohibiting Congress from raising hampered by lack of media coverage and what was billed as a "strategy" meeting, spending levels over those approved by funding, was the biggest grassroots cam­ ' the guest list included Sens. Alan Cran­ the President without a two-thirds vote paign run in the state in decades. ston of California and Russell Long of of both houses. Louisiana, along with fo rmer Democrat­ In an interview May 27, Cutler ic National Committee Chairman Rob­ stressed that "it's essential to change the Constitution so as to get control over the ert Strauss, who is rumored to be having NDPC: space a an extramarital affair with Pamela Har­ federal budget,"-that is, to take it out riman, the mother of Winston Churchill of the hands of constituency-oriented 'great enterprise' III. Pamela Harriman runs the political politicians-and that the Confederate Before the HUD and independent agen­ action committee Democrats for the '80s, constitution, "minus its regrettable posi­ cies subcommittee of the Senate Appro­ which remains an arm of influence for tion on slavery," could serve as a model priations Committee May 24, National her husband Averell Harriman, even fo r accomplishing this. Democratic Policy Committee spokes­ though he is 90. man Susan Kokinda presented the pro­ One East Coast Democrat in attend­ posal of NDPC Advisory Board Chair­ ance was so outraged at the lack of any NDPC's vote : man Lyndon H. LaRouche that the adequate program in the discussion that United States embark on the conquest of he is considering issuing a White Paper a political analysis space as a "great enterprise" essential to charging that the party is politically When the National Democratic Policy rebuilt the nation both economically and bankrupt. Averell Harriman has been Committee-endorsed candidate for morally, in her testimony on the NASA telling anyone who will listen that Bob Democratic gubernatorial candidate, budget. Strauss would make a fine presidential Steven Douglas, won 20 percent of the Kokinda told subcommittee chair­ candidate in 1984. vote in Pennsylvania's May primary, his man Jake Garn (R-Utah) and a group of vote was concentrated in the Democratic university and private-sector scientists strongholds of the state: Philadelphia, engaged in space research that, "If we the Bethlehem-Allentown steel cities, and look at what drugs, rock music, and Pac Democrat hails Delaware and Chester counties. man [video games] have done to the cur­ This vote in particular reflects the rent generation of our youth, it is emi­ Confederate constitution tremendous impact on the electorate of nently clear that nothing less than such a Lloyd Cutler, counselor to fo rmer Presi­ an election-eve telecast of a half-hour great enterprise as conquering space will dent Jimmy Carter and a longtime Dem­ address by Douglas and by NDPC Ad­ restore a sense of mission to our ocratic Party honcho, is openly advocat­ visory Committee Chairman Lyndon H. nation .... ing that the U.S. Constitution be LaRouche endorsing Douglas and pre­ Earlier, scientists' testimony detailed changed to incorporate key elements of senting one of the vital strategic issues of the effect of the current budget cuts on the Confederate constitution, the docu­ the campaign: the takeover of the United space research. Prof. James Elliott, ment adopted by the British-backed States by Tories within the Democratic speaking in behalf of the Planetary Sci­ Southern secessionists. Party. ence Division of the American Astro­ Cutler, who wrote a notorious article In Philadelphia itself, Douglas won nomical Society, pointed -out that "no for the September 1980 issue of the 34.6 percent and took 18 out of66 wards. new planetary missions are currently Council on Foreign Relations journal The voter composition of the wards being planned. Planetary exploration is Fo reign Affairs. urging that the U.S. Douglas won-evenly divided between heading for a drought afterthe Galileo adopt a parliamentary form of govern­ white and black blue-collar workers, with encounter in 1990 .... The budget cuts ment, and was a fo unding member of significant Hispanic communities in sev- proposed by the administration amount

62 National EIR June 8, 1982 ·U Briefly

. . .':; ..�- • EJ)W*, RI) A. � named May tl as Abteai'll� to an abrupt change in our national pol­ violations"-an almost word-for-wotd cutar Thome hccio'. suc:c:MOt, icy ... toward the dismantling of our repetition of former Presitient Jimm� says he "intends fo p�' tM facilities. " Carter's position. same types of cateS we've pUi'rded Professor Eugene Parker, represent­ However, when his own eal'tdidac.y in he last five years." Md>ott'tltd ing the Space Science Working Group of for the presidency was brought up,Mon. t has. been on the staff of Pua:io's university-based space scientists, warned dale was far less comfortable with his ed Organized Crime that "afterthe middle of 1983, it will not past associations. One reporter men­ Brooklyn-bas Force since 1977. be possible to reestablish an effective tioned that Carter, when in Stockholm Task Amc;rican space science program." two weeks prior to Mondale's visit, had endorse Mondale • HENRY REUSS (D.-Wise.), Kokinda's testimony cited the analy­ stated that he would as Chairman of the Joint Economic sis of the performance of the U.S. econ­ soon as he announced his candidacy. Committee, adtnited in a May 23 omy over the past two decades done with Mondale winced viSIbly and muttered, speech to the annual dinner of the the LaRouche-Riemann economic mod­ "He didn't say that, did heT' When � Federal Reserve Bank Governors el (see EIR , March 23) that established eral Swedish newsmen answered in cho­ that "as you know, I am not a that real productivity and economic rus, "Oh, yes, he did," Mondale was Governor of the Federal Reserve. growth were a function of infra structural heard to comment, "He didn't clear that I'd the first to the investment and the Apollo effort, not with me." be admit that mere mention of that possibility balancing the U.S. budget. could cost the nation 100 pointson the Dow Jones."

Nancy Kissinger • THE AFL-CIO Executive Mondale disturbed Council, at its spring meeting in loses round one on at Carter endorsement Washington, endorsed a freeze An attempt by Nancy Kissinger's attor­ nuclear weapons deployment and Former Vice-President Walter Mondale neys to force the court to throw out identified itself with the synthetic was the featured speaker at a Stockholm assault charges against Mrs. Kissinger "peace movement." On �onomic Chamber of Commerce seminar on the without a trial or the presentation of matters, the Federation rewarmed future of U.S. economic development on evidence fell flat May 21 in New Jersey its pathetic call for credit controls May 23-24. Mondale met with Swedish Superior Court. The assault chargc� were as the remedy for the Federal Re­ Prime Minister Falldin and fo rmer Prime filed by Ellen Kaplan of the Fusion En­ serve's interest-rate strangulation, Minister and Socialist International ergy Foundatio,n, who says Mrs. Kissin­ which is leading to the elimination leader Olof Palme, and was accurately ger grabbed her by the throat in a New­ of union jobs in unprecedented presented by the Swedish press as a pos­ ark, New Jersey airport Feb. 7, when she numbers. sible presidential contender for 1984. asked Henry Kissinger whether it was At a press conference sponsored by true that he slept with young boys at New • A NASA engineer has designed the Chamber of Commerce, �ondale at­ York's Carlyle Hotel. a mapping camera that can pho­ tempted to portray himself as a promoter invoke The Kissingers attempted to a tograph the Earth from an altitude of economic growth; but his social-dem­ virtually untested statute which allows oJ 160 miles and produce pictures ocratic background (he admitted to the chief judge to term a crime so insig­ that identify houses and buildings. "knowing Olof fo r a long time") was nificant and dominated by extenuating According to Bernard H. Moll­ conspicuous. His economic proposals cir(;umstances that it should not be pre­ berg, tbe camera's inventor, who were enforcing current tax laws and cut­ Essex sented for hearing or trial. the lobbied for 10 years to get the $5 ting defense expenditures, with nomi­ office, a County prosecutor's wbich had million needed to develop and nal attack on high interest rates aimed at shown little interest in the case ·until the build the 900-pound devioe� the the Reagan administration. When Stock- Kissinger's attempted to use this statute, camera will make its first flight . holm EIR bureau chief Cliffo rd Gaddy came into court strongly opposing the into space within two years. The asked Mondale if as President he would defense motion. The prosecutor charged tens will resolve photos down to fire Fed Chairman Volcker, Mondale that ifthe Kissinger motion was granted, about 48 fe et, compared to 270 feet termed himself unable to deal with the it would undermine prosecutorial discre­ in photos made by Landsat satel­ "very peculiar system" of the Fed. tion and an orderly system of criminal lites, currently the main source of Mondale supported the Haig stance justice in Essex County. . data about the Earth's resources. on the Malvinas crisis: "The Argentine A subsequent offer by Miss Kaplan government is a police state. They are to settle out of court was rejected unilat­ guilty of severe human rights erally by the Kissingers.

EIR June 8, 1982 National 63 Editorial

The new North-South potential

Diplomatic circles have reverberated since EIR foun­ Alexander Haig and Henry Kissinger, LaRouche der Lyndon H. LaRouche, Jr., spokesman for the emphasized-making headlines in the Mexico City prodevelopment wing of the Democratic Party in the dailies the next morning-are British operatives dedi­ United States, and his wife Helga Zepp-LaRouche, cated to this policy, and to eliminating anyone they Chairman of the European Labor Party, held an judge to be an obstacle, including Mr. Reagan, whom official meeting on May 27 with Mexican President LaRouche termed "basically decent and good." Their Jose Lopez Portillo. The 45-minute discussion, to program for Mexico, he said, is to further devalue the whose contents we are not privy, was followed by Mr. peso (which he termed undervalued) drastically, im­ LaRouche's press conference at Los Pinos, the Mexi­ pose a General Agreement on Trade and Tariffs dic­ can presidential residence. tatorship that would wreck Mexico's industrial base At a May 26th press conference earlier, Mr. La­ in favor of "tourism," use this economic warfare to Rouche had told newspaper, television, and radio foment political upheavals, and trigger a Middle East journalists that he is convinced that President Reagan crisis which among other things would offer a pretext should not travel to Europe for the June summits, fo r military occupation of the Mexican oil fields. because of the assassination threats that have surfaced Noting that he is the chief American political there. He cited new intelligence linking the President's figure opposing Secretary Haig's violation of the would-be 1981 assassin, John Hinckley, Jr., to threats Monroe Doctrine, LaRouche said that "sinking the against his own life relayed officially by the Knights entire British fleet" is required to bring the United of Malta on May 21 and to the attempt against the States to its senses. Asked what Mexico and the rest of Pope on May 13. Dr. John J. Hopper, who recently Latin America can do, he stressed that the current testified that when Hinckley was under his care in crisis makes it possible to create the kind of economic Evergreen, Colorado, he refused to order Hinckley cooperation among underdeveloped nations that will institutionalized, is linked through the Evergreen counteract the world depression. The Organization of Clinic to Paul Lobkowitz, a Central European prince American States, he said, can deliver a shock to the whose family controls various branches ofthe Maltese "North" and activate the Non-Aligned Movement to order. Hinckley spent the finaldays before his attack act on the true self-interests of both "South" and on Mr. Reagan in Lakewood, Colorado, where secu­ "North." rity specialists believe he received his finalprogram­ It is far from common to see an out-of-office ming as a "Manchurian Candidate" assassin. American political leader at Los Pinos, but of course These threats, LaRouche told the May 26th press this is an uncommon leader, whose warnings to the conference, are of relevance to the war in the South "South" that the oligarchic controllers of NATO are Atlantic, and to the attempt to destroy republican bent on its destruction have been so visibly borne out, government in Mexico. The British and the continen­ and whose proposals fo r a new world monetary system tal oligarchy are dc;:termined to keep the "inferior" devoted to generating development credits are so people of the so-called Third World from economic clearly counterposed to the economic havoc now and social advancement; they intend to make the threatening all sectors of the globe. Mr. LaRouche is globe below the Tropic of Cancer and its resources a now at the center of world diplomacy, and the rules of game preserve for themselves. the diplomatic game will never be the same.

64 National EIR June 8, 1982 Franklin House Publishers present: Lyndon LaRouche

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