[THIS PAGE IS INTENTIONALLY BLANK] Founder and Contributing Editor: Lyndon H. LaRouche, Jr. Editor-in-chief: Criton Zoakos Editor: Robyn Quijano Managing Editor: Susan Johnson Art Director: Martha Zoller Circulation Manager: Pamela Seawell Contributing Editors: . From the Editor Christopher White, Uwe Parpart, Nancy Spannaus Special Services: Peter Ennis

INTELLIGENCE DIRECTORS: Africa: Douglas DeGroot Agriculture: Susan B. Cohen, Robert Ruschman Asia: Daniel Sneider Counterintelligence: Jeffrey Steinberg Economics: David Goldman Energy: William Engdahl wo crucial intelligence pictures are presented in this week's issue. Europe: Vivian Zoakos T Latin America: Dennis Small The subjects are continental Europe's open declaration of war on Law: Edward Spannaus monetarist economic policy, and a LaRouche-Riemann computer Middle East: Robert Dreyfuss simulation demonstrating the results, by the beginning of 1984, of Military Strategy: Susan Welsh Science and Technology: Defense Secretary Weinberger's "in-width" approach to U.S. defense. Marsha Freeman Our Special Report features a series of statements by the leaders of Soviet Sector: Rachel Douglas United States: Konstantin George France and West Germany, expressing unqualified opposition to Federal Reserve Chairman Paul Volcker's policies, and signaling that

INTERNA TIONAL BUREAUS: after French President Giscard's April re-election, the continent will Bogota: Carlos Cota Meza move to establish a fund for global economic development. George Gregory, Bonn: Our Economics section leads with the LaRouche-Riemann study's Thierry LeMarc Chicago: Paul Greenberg conclusion: "Weinberger's view is that American military power may Copenhagen: Vincent Robson be projected onto the globe by throwing into deployment whatever Houston: Timothy Richardson mothballed vessel and weapons system happen to be sitting around. Los Angeles: Theodore Andromidas Mexico City: Josefina Menendez This is wrong, from a straightforward military standpoint. What is Milan: Muriel Mirak even worse is that the program fails on its own criteria. Without an Monterrey: M. Luisa Gomez del Campo New Delhi: Paul Zykofsky 'in-depth' infusion of effort into precisely those areas of the scientific Paris: Katherine Kanter, budget that Stockman intends to cut, the proposed 'in-width' buildup Sophie Tanapura is economically impossible." Rome: Leonardo Servadio Stockholm: Clifford Gaddy To make a point developed more fully by EIR founder Lyndon United Nations: Nancy Coker LaRouche at our March 20 conference in Washington on "Europe's Washington D.C.: Laura Chasen, Challenge to Volcker," the issue is not free-market versus dirigist Susan Kokinda Wiesbaden (European Economics j: policies. The Volcker-Weinberger approach is as strongly dirigistic as Laurent Murawiec Europe's industrial-development approach. Giant powers over credit and industry are being used in the U.S., but used badly. Economic and Executive Intelligence Review (ISSN 0 273-6314) is published weekly by military recovery require scientificdirigism, as Dr. Steven Bardwell of New Solidarity InternationalPress Service the Fusion Energy Foundation documents. 304 W.58th Street, New York. N. Y.lOOI9. In Europe: Executive Intelligence Review, In this connection, you will appreciate the content of LaRouche's Nachrichten Agentur GmbH, Mexico tour, a tour I am continuing in Mexico City. I'd also like to Postfach 1966, D. 6200 Wiesbaden call your attention to our coverage of recent corporate takeovers in Copyright C> 1981 New Solidarity International Press Service the U.S. and in France. All rights reserved. Reproduction in whole or in part without permission strictly prohibited. Second-class postage paid at New York, New York and at additional mailing offices. Subscription by mail for the U.S.: 3 months-$125, 6 months-$225, 1 year-$396, Single issue-$l0 TImContents

Departments Economics

11 Science & Technology 4 Model shows 'in-width' Europe protests US. military buildup is space budget cuts. impossible for the U.S.

48 Dateline Mexico 9 Why research and What is the 'Monterrey development are key to Group?,-Part I. national security A leading US. plasma 49 Middle East Report physicist develops the The plot to install a implications. Syrian ayatollah. 13 First-quarter results 60 Congressional Closeup confirm EIR forecast

64 Energy Insider 14 Domestic Credit Regulating America's A close look at nuclear future. unemployment.

To our subscribers: Forgive 15 International Credit our appearance this week, Supply-siders ship which is due to delayed to Third World. paper shipments to our printer. And our lateness 16 Foreign Exchange last week: there was a Can the dollar logjam at the bindery. While join the EMS? we're at it, an editorial correction: in the March 17 Business Briefs, the French 17 World Trade bank Societe Generale was misidentified as Banque 18 All the Queen's men Nationale de Paris. Richard Freeman on Seagram and other US. corporate grabbers. .

21 'Technetronic' strategy for France led by Paribas bankers

23 Currency Rates

24 Business Briefs Volume 8 Number 13 March 31, 1981

Special Report International National

34 LaRouche's Mexico 52 Anti-Volcker tour and the oil-for­ mobilization mounted nuclear plan in Washington The trip to Monterrey and An ad hoc committee Mexico City this month by lobbied (and grilled) EIR's founder was a policy Pennsylvania congressmen, initiative that hit "critical while House Majority mass." Leader Jim Wright said Democrats must challenge French President Valery Giscard d'Estaing and West German Chancellor Helmut Schmidt in Documentation: LaRouche's the Fed's policy. Baden-Baden during a July 1980 summit at which proposals for they affirmed "the renaissance of European in­ industrialization, energy, 54 WWF and PCCjDraper fluence." Armel Brucelle/Sygma and trade policy, plus a Fund sponsor Global grid of press coverage. 2000's attack against 26 Western Europe's new science 39 Nuclear po,!er mobilization against The effort to convince U.S. advocates spurred by Thatcher business that Maoist proposals for Criton Zoakos outlines population control and bans the Franco-German expanded investment on technology are the counteroffensiv.e against The LaRouche call to strategy of the future. British-style policy. exchange "20th-century" oil for "21st-century" nuclear 57 Benchmark decision in Documentation: Statements technology had a sharp Texas on corporate by Giscard, Schmidt, effect. claims against Iran banking spokesmen, and The first article in monetary officials. 41 Hijacking could clinch EIR's expanded coverage of . U.S. arms shipment to legal1lnd constitutional 30 Phase Two of the EMS Pakistan-and undo questions. looks to Third World General Zia's hold development A report from New Delhi on 59 'Yippies' a cover for the State Department's push assassination capacity 31 West Germany and to arm Zia. and terrorism wave France act as strong The questions behind a 'interlocutors for peace' 42 NATO to control bomb explosion. Europe's East-West Arab oil? relations, and Mobil is in the middle of 62 National News its recommendations both pipelil1e re-routing to Reagan. and RDF buildup. The photograph on page 55 33 Why was Thatcher 45 Southern Africa's is of General William kept in office? destabilization Draper. Most important is deluding A report from our Mr. Reagan that her policies Africa Editor. can work. 50 International Intelligence �ITillEconomics

Model shows 'in-width' militarybuildup js impossible for the U.S.

by David Goldman

EIR has employed the LaRouche-Riemann econometric between defense spending and economic output into the model to test the assumptions underlying the Weinberger future. defense budget, and has found that these assumptions The questions we have used the LaRouche-Riemann will lead the United States toward economic and strategic model to answer are: disaster. As we reported last week, the Weinberger strat­ 1) What amount of physical product (plant and egy relies on the "in-width" deployment of existing equipment, raw materials, consumer goods) must be technology, in the context of drastic cutbacks in all forms invested in military-related sectors of the economy to of federal government support for research and devel­ produce a significantin crease in defense procurement? opment and scientificeducat ion. 2) How productive are the military-related and non­ Weinberger's view is that American military power military-related sectors of the economy now, and how may be projected onto the globe by throwing into de­ productive can they be under the conditions prescribed ployment whatever mothballed vessels and weapons sys­ by Stockman and Weinberger? tems happen to be sitting around. This is wrong, from a 3) Can the economy afford to lose this margin of its straightforward military standpoint. What is even worse output from the stream of civilian production? is that the program fails on its own criteria. Without an 4) Would such a program succeed? "in-depth" infusion of effort into precisely those areas of the scientific budget that Stockman intends to cut, the The modeling method proposed "in-width" buildup is economically impos­ The LaRouche-Riemann model, in its present gen­ sible. eration, is unique in two respects. First, its data base However necessary, defense expenditures are an eco­ views the economy from the standpoint of a production nomic overhead expense. Investment in industrial capac­ manager, measuring the quantities of tangible output ity for defense purposes may enhance the productive required to maintain plant and equipment, provide raw sector ofthe economy, but the output from that capacity and intermediate materials, make up the bill of con­ is a pure tax on the productive resources of the rest of the sumption of goods-producing workers, and finally, to economy. Except in a very indirect way: the apparent pay the nonproductive overhead bill of the economy: ability of the United States to finance defense expendi­ white-collar employees, government expenditures, office tures tells us nothing about our ability to conduct a buildings, and so fo rth. It abandons the Gross National defense mobilization. Neither do conventional "econo­ Product measurement, which is indifferent to invest­ metric" models, which merely project past relationships ment, e.g., in gambling casinos versus steel mills.

4 Economics EIR March 31, 1981 Aggregate U.s. economy Figure 1 Figure 2 Gross surplusof Consumptionof U.S. eronomy productiveworkforce (hlUionsof ronstant 1976dollars) (hlUionsof ronstant 1976dollars)

5S3 r----,r------, 67r-�------�

49S�______� ______� 63.S �____ ...... I:""- ______� 1978 1981 1984 1978 1981 1984 Figure3 FIgUre 4 Figure5 Aggregatenet Raw materials and Rado of surplus to consumption capital investment semifinished goodsinput of producdveworkforce (bUU- of ronstant 1976 dollars) (billions of doRars)ronstant 1976

��------� 659 8 r--r------....,

S5 L-______� S97 L-______� 7 ______--J 1978 1981 1984 1978 1981 1984 1978 1981 1984

FIgUre 6 Figure7 Figure8 Reinvestible surplus Ratio of surplusto total Ratio of reinvestible of U.S. economy capital and labor inputs surplus to total capital (bIIu- of ronstant1976dollars) anda l bor inputs SI .742 r----,------, .mo r------,

-17���______. 659 L-____�==� -.022 "----'1.-_____...... 1978 1981 1984 1978 1981 1984 1978 1981 1984

EIR March 31, 198 1 Economics 5 Secondly, it measures the characteristic ratios that the existing technology base in the production process, describe the economy as a physical process: its capital i.e., no rise in the productivity of the physical system; intensity; its labor productivity; and its capacity to unlimited budgetary and credit largesse fo r a procure­ generate a surplus in excess of tangible production costs, ment program enhanced by $20 billion 1976 dollars; and as well as its ability to invest that surplus in further a mix of defense procurement from different industrial economic expansion. To simplify somewhat, the eco­ sectors based on the most recent available input-output nomic modeller converts political and business policy data for the U.S. economy.. It is further assumed that decisions, e.g., to invest in some sectors at the expense the program begins immediately, and that Federal of others, to shift economic surplus from productive to Reserve monetary policy and OMB fiscal policy do not overhead investment, and so forth, into changes in the create additional economic disruptions in excess of the cited and other characteristic ratios. The model then present still-severe recession. solves 150 simultaneous differential (rate-of-change) These assumptions give Stockman and Weinberger equations reflecting the interaction of 30 economic the benefit of the doubt in all cases. The last assumption sectors to simulate the result of such policy decisions. of an otherwise stable economic environment, condu­ The present simulation shows that a concerted mo­ cive to defense production, contravenes available evi­ bilization of resources for defense procurement employ­ dence that the economy is headed deeper into recession. ing existing technologies wouldfail to reverse the declin­ The assumption that productivity (in the physical terms ing growth capability of the U.S. economy. By'the end measured by the LaRouche-Riemann model) will re­ of a fo ur-year program, it would produce a new econom­ main stagnant is generous, considering that productivi­ ic downturn. ty fe ll by about 12 percent, by our measure, during the Our assumptions are based on the stated policy of past two years (see Figure 5). Defense Secretary Weinberger and OMB Director We summarize the result of the simulation by refer­ Stockman. The model was programmed to reflectuse of ring to the adjoining computer-generated graphs:

Figure 9 Relative weight of industrial sectorsin military expenditures

Increase in reinvestible Outputl surplus required to Amount Percentage gross capital produce $10 billion Sector (millions) of total investment· additional output

Transportation equipment I ...... $17.8 .9 62 32. 6 $1,214 million Electrical machinery2 ...... 7.7 .9 62 28.1 775 TransportationJ ...... 3. 1 .955 5.7 394 Chemicals ...... 1.6 .898 16.4 835 Nonelectrical machinery ...... 1.4 .971 27.8 345 Instruments ...... 0.9 .93 6 25.0 63 Vehicles ...... 0.8 .824 32.9 99 Construction ...... 0.7 .754 33.4 33 Fabricated metals ...... 0.6 .9 79 37.5 132 Total 3,8 60

Notes: I. Includes ordnance, guided missiles, aerospace. 2. More than 80% of defense $ for telecommunications equipment. 3. This is transportation companies, i.e., railroads, local mass transit, etc.

·Three year moving average. Correlation 1959-69. Source: LaRouche/Riemann data base

6 Economics EIR March 31, 1981 Figure 10 Ratio of reinvestible surplus to total capital and labor inputs, 1978-1983

Sector 1978 1979 1980 1981 1982 1983

Transportation equipment ...... 0978 .0482 .0030 .0030 .0023 .001 1 Electrical machinery ...... 0902 .0074 .0324 .03 18 .0235 .0114 Transportation ...... 0416 -.005 1 .047 1 .0459 .0342 .0168 Chemicals ...... 0894 -.0278 .0384 .0378 .0284 .0141 NonelectQcal machinery ...... 09 15 .01l! .05 12 .0495 .0365 .0178

Instruments ...... 1347 .0261 .0283 .0280 .01 78 .0077 Vehicles ...... -.0059 -.0299 .0588 .0564 .04 04 .0193 Construction ...... 0479 -.0592 .0320 .0307 .0226 .0110 Fabricated metals ...... 0605 -.0917 .0305 .0294 .0218 .0107 Source: LaRouche/Riemann data base

Figure 9 documents EIR's procedure for the defense-buildup Figure 10 documents the growing inertia of the economy under simulation. The second column shows the percentage share of the simulated "in-width" buildup. The numbers listed for each defense procurement of the most important defense-related sector (historical data through 1980, projections for 1981-83 ) industrial sectors . Column 3, labelled "output/gross capital reflect the free energy ratio, or potential growth rate, the critical investment, " shows the result of a study of the relationship ratio. The ratio fo r the total economy was shown in the series of between output and capital investment. The correlations be­ computer-generated graphs. tween these two series are mostly above 0.9, indicating an What is striking is that the military-related sectors, the ones extremely close historical relationship. What this tells us is that that obtain the most capital investment, nonetheless grind to a to get more output from these sectors, we will have to invest in halt by 1983, due to the shrinkage of total economic "free proportion. energy. " This is clear in all cases, especially so in the case of For the most part, it shows that a small rise in investment sectors that underwent negative growth during the 1978-1 979 will produce capacity for a very large rise in output, i.e., that collapse. Vehicles for instance, had a negative ratio of -0 .5 most of the additional output costs will turn up in labor and percent and -3 percent in 1978 and 1979 respectively. Under raw materials. These data were employed to calculate the final projected heavy defense procurement requirements the sector column, labelled "increase in reinvestible surplus required to rises to a positive 5.8 percent growth rate in 1980, but falls produce each sector's component of a $10 billion output rise." rapidly to less than 2 percent in 1983. This is due to the lack of This established the precise amount of investment required to available resources from the rest of the economy to maintain make up the simulated increase in the defense procurement the same production growth rates, i.e., the fizzling of the entire budget. military buildUp.

Figure 1 shows the behavior of total economic But this is a one-shot affair. If the product of the military surplus (value-added in physical terms). Over 1980, sectors remains outside the flow of production, as all surplus fell from an annual rate of $553 billion 1976 defense goods do, the net tax on the total economy will constant dollars to an annual rate of $495 billion; as the ultimately drag the total economy down. graph shows, a weak recovery began at the end of 1980. For example, the productivity of the total U.S. Under the simulated procurement program, surplus economy is about 7.8 on the LaRouche-Riemann model rises to an annual rate of $523 billion, recouping less measurement, that is, we obtain 7.8 units of tangible than half of its previous losses by the start of 1984. surplus for every 1 unit of labor input. The respective The increase in output occurs for the simple reason productivities of the major defense-related producers that a military buildup is a tax on some sectors of the are: economy on behalf of others, i.e., on mainly civilian producers to expand the output of mainly military Transportation equipment 13.0 producers. As might be expected, those industrial sec­ Electrical machinery 10.6 tors that produce for the military are, by and large, the Transportation 6.4 most technologically advanced, and hence the most Chemicals 15.0 productive. So a shift in resources toward military Nonelectrical machinery 10.5 producers reduces the output of high-productivity sec­ Instruments 11.5 tors. This change in the production "mix" results in Vehicles 9.6 Fabricated metals 7.2 higher average productivity fo r the economy as a whole.

EIR March 31, 1981 Economics 7 Except in two cases, transportation and fabricated ing industries to full capacity. The inefficiency of this metals, the productivities of the major providers to the basic industry would force down the crucial rate of military are substantially higher than the average. gross surplus, a measure of "total factor productivity." Therefore, by taxing less productive sectors to expand Figure 8, the "free energy ratio," or potential growth more productive sectors, the economy receives a one­ rate, is the most important in the series. It measures shot burst of momentum, although it is not sufficientto reinvestible surplus (gross surplus minus overhead compensate for the total rise in overhead. costs) divided by total input costs. As the graph shows, Figures 2, 3, and 4 show the volume of required the economy's rate of growth-after rising from a inputs for the total economy, respectively labor (tangi­ negative rate during 1979-1 980-falls continuously ble consumption goods), capital investment, and raw through the period of the military buildup, to virtually ' and intermediate materials. zero (1.5 percent per year) at the end of the finalyear. The final group of graphs shows the continued In summary, a substantial buildup in width would deterioration of the economy. ruin the economy's future capacity to grow, and pro­ Figure 5 shows the value for productivity, pre-set duce a crisis in the physical economy through under­ according to the assumptions noted earlier. Because of· investment in the civilian economy by the end of the the changed mix of economic activity, the effective present administration. productivity rate for the total economy is slightly high­ er. The recommendations Figure 6 shows the volume of economic "free ener­ But does this grim forecast show that the United gy," the amount of reinvestible surplus. Immediately States is too far gone down Britain's economic path to upon initiation of the military buildup, this category defend itself? Not at all. It merely demonstrates that the recovers slightly, but not nearly back to levels registered Weinberger approach is incompetent on economic as of 1978. During 1982, it begins to fall. (It cannot be grounds, all strategic issues aside. But the strategic and computed for 1983.) economic issues, as EIR emphasized in last week's Figure 7, the rate of gross surplus (surplus divided analysis of the proposed defense budget, are in reality by all tangible input costs), remains below even reces­ susceptible of a common solution. The basis for the sion levels, an unacceptably poor rate of economic qualitative leap in productivity the United States re­ functioning. This is due to sharply escalating real input quires is expansion of both basic research and techno­ costs, particularly on the raw materials side. A defense logical applications. During the height of the NASA buildup would force the U.S. economy to crank up its moonshot program during the 1960s, productivity old, energy-wasting, technologically backward process- growth per annum reached 6 percent, the highest the postwar U.S. economy ever achieved. This is the direct result of the rapid absorption by industry of electronic, metallurgical, and other advances. produced through NASA. International productivity ranking, 1960-1979 Both economic and strategic considerations dictate a basic overhaul of defense technology. This presumes a Manufacturing crash program for the development of both particle­ Japan 8.3 beam antiballistic missile systems and inertial confine­ ment methods of achieving CTR fusion power. Both Italy these goals require breakthroughs in the same area of basic physical research-the propagation of shock France waves through a plasma-and theoretical and techno­ logical breakthroughs are mutually applicable. Germany The Soviets, who are now training six engineers for every one graduated in the United States, announced at U.K. this month's Soviet Party Congress that the basis of all

Canada economic policy under their direction will be basic scientific research. If we do less, we cease to be a Source: u.s. Bureau of Labor Statistics U.S. superpower.

o 2 4 6 8 Th e computer simulation fo r this report was prepared Percentage average annual growth by David Goldman, Dr. Steven Bardwell, Sylvia Barkley, and Richard Freeman.

8 Economics EIR March 31, 1981 · Science Policy

Why research and development are key to national security

by Dr. Steven Bardwell

In the past two years, there has been a fundamental The budget proposed last week by David Stockman, change in the nature of strategic nuclear war. This especially the military components of that budget, fails change involves two components: first, both the Soviet dismally to meet these requirements. This budget has the Union and the United States now possess an arsenal of same underfunding of R&D that has plagued the U.S. nuclear armed missiles with essentially infinite accuracy. both militarily and in civilian areas, for the past 20 years. Using satellite guidance systems and sophisticated com­ It is rigid in conception with insufficientcommit ment to puters, these missiles can be targeted within 100 feet of new technologies. And it is combined with a disastrous their objective after traveling thousands of miles. Since series of cuts in the most critical areas of civilian indus­ there is no known method for defending any target trial research-cuts in the nuclear fusion research pro­ against a direct hit by a nuclear explosive (past passive gram, massive cuts in the most advanced areas of space defense systems were designed for protection against the research, and a total gutting of science education. De­ effects of blasts occurring one-half to several miles dis­ spite significant funding increases, the Stockman-Wein­ tant from the target), this new level of accuracy means berger budget does not change the character of the U.S. that there is no passive defense system capable of pro­ military-we remain prepared with too few of the wrong tecting missile silos, airfields, industrial concentrations, weapons for a type of war that will never be fo ught. or other targeted objectives. Secondly, as EIR reported last week, there now exists, A defensive budget on the drawing boards of U.S. laboratories and in test The clearest view of the problem facing the Reagan facilities of the Soviet Union, a design for a directed administration was given by the outgoing Undersecre­ energy beam weapon capable of destroying strategic tary of Defense for Research and Engineering William nuclear weapons in flight. In the words of a Pentagon Perry, in a statement to Congress on Jan. 20 when he official: "[This weapon] has the potential of tipping the presented the Carter budget: battle in favor of the defense for the first time in the history of nuclear warfare." Edward Teller was recently The Soviet Union now has about twice as great an .quoted as saying that the latest step in the development effort as we have in military research and devel­ of this weapon was the "most significant breakthrough opment creating a growing risk of technological in military technology since the hydrogen bomb" was surprise ....The Soviets have applied their invest­ invented. ment program to their research and development These two developments in military technology pres­ base, devoting an increasing share of th«ir total ent a fundamental challenge to the Reagan administra­ defense expenditures to improving their military tion. It must reformulate the war-fighting doctrine it technology in an attempt to negate our technolog­ inherited from the McNamara school of the Pentagon; it ical lead .... We are losing our lead in some key must reassess the military deployments of the present technologies, including electro-optical sensors, U.S. force structure with these new realities in mind; it guidance and navigation, hydro-acoustic technol­ must devise a budget which can deploy a military force ogy, optics and propulsion. Of particular concern capable of fighting a new type of war. ·But, by far most is the Soviet concentration on several unconven­ critically, the new administration must fund and carry tional technologies at a level far jn excess of the out a research and development policy designed for the U.S. program. Examples include their high-energy quantitative changes now taking place in war fighting laser program and their charged-particle beam and capable of meeting the dramatic and largely unfore­ program. We estimate that their high energy laser seeable changes over the next decade. program is roughly five times the size of our own

EIR March 31, 1981 Economics 9 program. We believe they have made the commit­ of any Western industrial power. This obsolescence is ment to develop specific laser weapon systems, especially marked in the defense industry. Of the De­ while our high energy laser program continues in fense Department-owned plants now in use, only about the technology base. one-third were built in the last 35 years. Most were built during World War II, four were build before 1900, and Faced with this situation, starkly drawn by the U.S. the oldest still in use were built in 1813 and 1816. military, Perry went on to describe the U.S. research and development policy as defensive and reactive: new 2) The United States has the lowest growth in weapons are designed to match their Soviet counterpart, productivity of any Western industrialized country. In and advanced projects remain in the laboratory until 1960-1975, Japan's productivity increased at a com­ their "cost-effectiveness" can be proven. Perry summa­ pounded rate of 10 percent per year; the U.S. at a rate rized, "Our strategy is to equip our fo rces with weapons of 3.6 percent pet year. The rate of growth of industrial that outperform their Soviet counterparts." productivity in the U.S. for the last two years has been The Stockman-Weinberger budget does not change negative. These productivity statistics are even worse this policy in the least. The percentage of the budget when the directly defense-related industry is studied. going to research and development remains almost 3) Capital investment as a proportion of GNP is exactly constant at slightly over 8 percent. This percent­ lower in the U.S. than in any other Western industrial­ age has held con�tant since the Carter administration, ized country. The rate of new investment in the defense and Weinberger's budget does not challenge that. There industries is about half that of other industry in the is a slight increase (of less than three-quarters of a United States. An Aerospace Institute study five years percentage point) in the research, development, and ago showed that the more capital intensive the defense engineering budget line, which results from the in­ industry, the lower the rate of replacement of new creased engineering costs of the significantly larger equipment it had and the greater degree of obsolesc­ acquisition budget. ence. The much-vaunted U.S. aerospace industry was The status of innovative programs like the beam among the most obsolete of any U.S. industry. weapon remains the same as under the Carter adminis­ 4) The inefficiencies <;>fU.S. industry are severe, and tration. The "feasibility" remains to be proven; the worsening rapidly. The lead times for all critical ma­ "cost-effectiveness" has not yet been demonstrated; the chines parts for military equipment have increased same arguments are being made by Weinberger's staff sev�ral-fold in the last three years: between December as by Carter's Pentagon. 1975 and August 1979, the lead time for aluminum What the Stockman-Weinberger budget does pro­ sheets increased from 14 weeks to 70 weeks, for bearings vide is more of the same-only more so. The weapons from 18 to 50 weeks, for nuts and bolts from 7 weeks to systems developed over the last 10 years are to be made 45 weeks, and for titanium sheets from 15 to 76 weeks. in greater quantities, but there is no change in emphasis A significant amount of electronics in all areas of U.S. or direction for the whole military effort. The most industry is now purchased from Japan, because U.S. egregious failing of the military expenditures of the last suppliers cannot provide either the quantity or quality 20 years remains the central pillar of the Stockman­ of components needed. Weinberger budget: the conservative R&D policy in 5) There are severe manpower shortages in highly which new ideas are evaluated on the same systems­ skilled areas like engineering, machinists and techni­ analysis cost-effectiveness basis as established (and fre­ cians. Today, most categories of machinists are 20 quently outdated) systems. percent short; industry projections show a 40 percent The results of this essentially conservative approach shortfall by 1990. The Air Force has more than 7,500 to R&D are evident throughout. the U.S. military. jobs for engineers that remain unfilled for lack of Military industrial capability is outdated and inefficient; qualified personnel. By contrast, the Soviet Union is there is a pervasive barrier to the implementation of graduating six engineers for every one graduating in the new technologies; and there is a bureaucratic inertia United States-a statistic even more frightening since that prevents recognition of new scientificpotenti als. 40 percent of the enrollment in American engineering Since military R&D spending accounts for more schools is made up of foreign students. than 30 percent of the R&D funding in the United . States, and another 20 percent of R&D is federally The 'cost-effectiveness' of R&D funded (energy research and space exploration being The results were summarized by Gen. Alton Slay, the largest part of that 20 percent), the character of head of the Air Force Systems Command before the governmental R&D shapes that of all new technological House Armed Services Committee: "If you don't have development in the country. The results of this R&D skilled labor you are not going to have capacity to policy on the U.S. as a whole have been devastating: produce; increased lead times because you can't produce 1) The United States has the oldest industrial plant at the rate that you need to; increased dependence on

10 Economics EIR March 31, 1981 foreign sources for processed materials and products; and increased urgency for plant modernization." Science& Technology As the accompanying study of the economic impact of the "in-width" military buildup proposed by the new administration shows, the industrial base of this country is insufficient to sustain a significant increase in indus­ trial output. The industrial plant and manpower base of the country are too old and too inefficient to increase even the scale of the energy- and capital-intensive goods required by the military. Massive capital investment, innovative management, and new technologies are re­ quired. In economic terms, the resurrection of the U.S. economy can only be accomplished by a directed effort at the de�elopment and implementation of new indus­ Europe protests U.S. trial technologies. A properly conceived national budg­ et, especially its military component, must stress an space budget cuts aggressive, innovative R&O policy as the centerpiece of a program for national industrial development. There by Marsha Freeman are four essential components to such a program: • Advanced energy production. Nuclear technologies In testimony I attended before the space subcommittee must be funded at an accelerating rate. Advanced fossil of the House Committee on Science and Technology on fuel technologies like MHO must be funded (the Stock­ March 11, Mr. E. Quistgaard, director general of the man budget cut the funding for MHO from $76 million European Space Agency, expressed the outrage ofthe 11 to zero). Thermonuclear fusion development must be member nations of that agency at the proposed budget put on a crash program of the sort mandated by the cuts in the National Aeronautics and Space Administra­ 96th Congress's passage of the McCormack bill (Stock­ tion (NASA). In particular, the ESA was concerned with man's budget cut more than $70 million from the legally the cuts dictated by the Office of Management and required budget of $525 million for fusion research). Budget in the budget request for fiscal year 1982 for the • Space research. The NASA program for putting a International Solar Polar Mission (IS PM), which is the man on the moon resulted in a tremendous boost to the largest such cooperative program. Since the project re­ economy. New technologies ("spinoffs"), hundreds of quires two identical spacecraft, aiid one of them was to thousands of new engineers, and a national commitment be built by NASA, dumping the program on the U.S. to scientific progress powered the whole U.S. economy side would kill the entire scientificmiss ion. Il through t e 1960s. The Stockman budget makes severe Quistgaard noted that over the last 10 years, Europe cuts in the NASA budget, which will result in delays in has spent $1.2 billion in cooperative projects with the the Space Shuttle, a cancellation of all planetary explo­ United States, and never imagined that once NASA had ration projects, closing of the Jet Propulsion Labora­ signed a memorandum of understanding on a program tory, and the delay or cancellation of a multitude of that the budget process could simply end it. earth-imaging and meteorological programs. Following his testimony, excerpted below, concerned • Science education. The most critical component is congressmen raised the question of whether the scrap­ manpower development. Without scientific and engi­ ping of the Solar Polar Mission would make the United neering knowhow, economic health is impossible. The States an "unreliable partner" in space science coopera­ longest lead-time item in any bill of materials is the tion. Mr. Quistgaard emphasized that it would. skilled manpower required. The Stockman budget cuts My Washington sources report that the European the funding for science education from $11 2 million to Space Agency has taken its case against the cuts directly $12 million! to Secretary of State Alexander Haig. • A military R&D commitment. One of the most effective ways to direct a program of national reindus­ From the Quistgaard testimony trialization is with a well-conceived, imaginative mili­ The European director general stated: tary R&D policy. Space research, high-energy physics, "Because it has a bearing on some plain speaking I and plasma technologies are all required for successful have to do later, I wish to state at the outset that ESA military research, and receive task orientation from such and its member states are fully committed to the princi­ research. The essential point is that an expanding, ple of cooperation with the U.S. in space activities. vigorous economy, a large and healthy industrial base, Indeed, over the past 10 years, Europe has spent over " and a strong military are inseparable. $1.2 billion in cooperative projects with NASA. ,

EIR March 31, 1981 Economics 11 "Y ou will understand that I cannot but start with and this without prior consultation. space science, and with the International Solar Polar "The short-term financial advantage to NASA aris­ Mission, ISPM, in particular. ing from this action may well, in the long term, cost "ISPM is a cooperative ESA/NASA venture, in them many millions of dollars, since the present unilat­ which two spacecraft, one developed by ESA and the eral withdrawal from a cooperative venture cannot fail other developed by NASA, are to be launched by the to have adverse consequences on potential future under­ [Space] Shuttle. Their trajectories will take them on takings of this nature. In Europe's view, international - paths that will overfly the poles of the Sun after using cooperation, in terms of financial constraints, is essen­ Jupiter's high gravity as an accelerating force to throw tial to carrying out cost-effective programs with limited them out of the ecliptic plane. This is the first time eyer resources. that a spacecraft will go out of the ecliptic plane. "In this context, I have to say that when the ISPM "ISPM has been under a bad spell almost from the project was decided upon by ESA, it was chosen in beginning .... The latest and most serious blow to the preference to a number of other, purely European, · ISPM program and to the European scientists involved missions, because of the value ESA attaches to trans­ came on Feb. 20 of this year when NASA informed atlantic cooperation. ESA, without prior consultation, that the U.S. space­ "In summary, we consider that the scientific value craft would be deleted. of the dual spacecraft mission is outstanding and that it "It is clear that the scientific value of the mission is an essential mission in space research that will inevit­ would be substantially affected by the withdrawal of the ably have to carried out in fu ture." U.S. spacecraft, eliminating the possibility of simulta­ neous measurements over the polar regions of the Sun, Congressional response a crucial feature of the mission. European scientists Following this testimony, the subcommittee chair­ from no less than 17 scientificin stitutes who are partic­ man, Ronnie Flippo (D-Ala.) stated: "The NASA pro­ ipating in experiments to be flown on the NASA grams have the support of this committee. When the spacecraft would no longer be able to fly them. This International Solar Polar Mission [IS PM] was threat­ will have profound consequences on the long-term ened last year we cooperated to continue funding for research activity of these groups, and nullify the efforts ISPM. Is there a fallback position for the U.S. in ISPM already invested in the mission. if we do not build the second craft? Could NASA "The financial consequences of a cancellation of the provide instruments for the mission for ESA, or could U.S. spacecraftwould also be serious. European invest­ we launch our part at a later date?" ment in the overall program amounts to approximately Quistgaard responded that "there is no fallback. $200 million, of which over $100 millio�, equivalent to You need two spacecraft on the mission. If only the almost the whole of the agency's annual budget for ESA craft were to be launched, we have to reconsider space science, has already been committed. This invest­ the program. It would be less than 50 percent effective ment was judged against anticipated scientificob jectives with one craft." which would now be seriously degraded. In reply to an inquiry from Representative Mc­ "Furthermore, the funds already spent by the Euro­ Grath, Quistgaard explained that the funding for ESA pean scientists participating in the U.S. spacecraft is about $700 million for fiscal 1981. "Our funding is amount to approximately $15 million. This sum would committed over the life of a program; there are no be irretrievably lost. yearly funding allocations that are not agreed on for a "NASA has not excluded the possibility of main­ specificprogram ." Rep. Michael Lowry (D-Wash.) then taining support for the European spacecraft fo reseen in asked about the impact of the proposed U.S. space the Memorandum of Understanding; however, it cannot budget, and Quistgaard reiterated: "We are very con­ be taken for granted that the ESA Science Programme cerned. We had ground to think that when we made an Committee will decide to maintain the ESA spacecraft agreement with NASA they would continue the pro­ alone if the cancellation of the NASA spacecraft is gram. Up until last May we never thought NASA might • upheld. pull out. In times when funds are scarce, cooperative "As you may have heard, the governments of the 11 ventures will give a greater value to programs than member states of the European Space Agency and ESA either program alone." itself have voiced strong objections to this unilateral I also got the clear impression from the director withdrawal. It cannot, in fa ct, be accepted that at such general's exchange with the congressmen that Europe an advanced stage of development, and after the com­ plans to use the French Ariane rocket as a launch mitment of more than half of the European fu nding, vehicle, especially if the U.S. shuttle launches are unre­ NASA presents ESA with the fait accompli of its liable, in meteorological and communications satellite . withdrawal from an international cooperative program, efforts.

12 Economics EIR March 31, 1981 u.s. Industry for feeding and clothing the productive labor force. Working on this real level of the economy, the EIR staff estimated that the labor productivity of the economy. as measured above, would fall by the first quarter of First-quarter results this year. EIR projected that the net reinvestible surplus of the economy-the fund of future expansion of the confIrm EIR forecast economy-would also fall. EIR further predicted that the growth rate of the fr ee energy ratio-the rate of net investible surplus by Richard Freeman divided by the real costs of production-would "fall from its best level of about 4 percent at the end of the The announcement March 17 that u.s. housing starts third quarter of 1980 to a range of negative 4 to negative fell from a 1,61S,OOO annualized level in January of this 7 percent by the second quarter of 1981." year to a 1,218,000 annualized rate in February signals With these crucial ratios fa lling and the debt-to­ that the EIR's prediction last autumn of a downturn in output for manufacturing industry growing, represent­ the economy in the firstquarter of this year is stunningly ing the growing illiquidity of the corporate sector, EIR verified. Housing starts took a staggering drop of 24.6 concluded that the only factor to abate the collapse percent, the biggest one-month drop since March 1970. would have been significant relief on the interest-rate In the Nov. II, 1980 issue of EIR. in an article entitled front from Volcker, allowing firms to rebuild their "LaRouche-Riemann Model Projects First-Quarter profoundly unsound financialsituat ions. With this relief Downturn for the U.S.," we forecast that the economy denied, EIR concluded that the economy would fall would fa ll out of bed. Most economists claim that GNP through the floor. rose 4.6 percent in the fo urth quarter of last year, so the Nevertheless, according to a March IS New York economy is doing well; but the concept of GNP, which Times release, "After months of predicting a significant measures hot air, is meaningless. slowdown in economic activity during the first quarter, EIR wrote last November that "a computer-based the majority of the nation's economic forecasters have simulation of the behavior of the American economy changed their tune. According to Blue Chip Economic , ...con ducted Oct. 23 and 24, [showed] that real output Indicators, which polls 40 economic fo recasting services. will fall steeply during the first quarterof 1981, compa­ inflation-adjusted output during the first quarter is now rable to, but not as steep as, the second-quarter 1980 expected to rise 2 percentage points, a much faster rate downturn." than expected [emphasis added]." We said that the key cause of this downturn would be The Commerce Department reported March 17 that the loan-shark interest rate policy and credit constriction industrial production fell O.S percent in February of this of Federal Reserve Board Chairman Paul Volcker. year. Industrial production had risen a scant 0.4 percent "The bottom line is a prime rate above 16 percent by for January; thus it is down 0.1 percent for the firsttwo year end. and a high interest-rate level even if the econo­ months of 1981. It would have to rise 1.9 percent in my dips off sharply," EIR wrote. During the "recovery March for the consensus of the 40 economic houses to period" dating from May to J!Jne 1980, "the corporate be correct. That is not about to happen. sector has not been able to improve its balance-sheet The stunning drop in housing activity-where mort­ liquidity position." Nor did households have the oppor­ gage loan rates are at a record IS.4 percent-and the tunity to restore their income and liquidity positions. news that personal incomes grew by only $14.9 billion in February, indicate that the consumer side of the The basis of accuracy economy is drying up again. The savings rate of house­ The key to the LaRouche-Riemann approach is that holds is only 4.4 percent, a 20-year low. Auto output, it interprets the consequences of the Volcker interest while up from January, is only at'S.8 million cars per rate policy as exogenous economic and political as­ year, despite a gigantic rebate program. sumptions entered into a thermohydordynamic system Business will not only suffer from the loss of con­ model of the U.S. economy. sumer purchasing, which is two-thirds of all final pur­ This model measures variables of tangible output in chases in the U.S. economy. According to the Confer­ the same way that a scientist measures the temperature, ence Board, capital appropriations by the largest man­ volume, and pressure of a diesel engine. Critical to this ufacturing firms, excluding petroleum, were off by 22 tangible physical output economic model is the defini­ percent in the final quarter of 1980 from the firstquarter tion of labor productivity. which measures the output of peak. If the commercial paper market, which is fueled surplus of an economy divided by the costs of both the by the money market fu nds, drops off, then industry replacement of plant and equipment and the wage bill will have no funds even for operating capital.

EIR March 31, 1981 Economics 13 DomesticCredit by Richard Freeman

A closer look at unemployment with dependent children-will take Th ere is a radical change both in the rate and nature of u. s. "community-level" jobs, replacing employment, with serious fu ture consequences. many of the 350,000 CETA em­ ployees whom Stockman hopes to purge from the Federal budget. New Hampshire may be the first state to implement workfare. State House Majority Leader Leigh According to Department of La­ changed if the husband loses hisjob Bosse introduced legislation there bor statistics, 1,300,000 wotkers en­ and his wife finds one, in fact the on March 10 to put welfare recipi­ tered the ranks of the unemployed family income suffers. ents to work at three-fourths of the in the year since February 1980. Not only is the family income minimum wage. Anyone refusing That is a shocking figure. diminished, but at the present levels to work would lose welfare, unem­ In recent testimony to the Sen­ of female labor force participation, ployment compensation, and So­ ate Banking Committee and the which was 52.0 percent in Febru­ cial Security. Elderly aid recipients House Ways and Means Commit­ ary, family formation continues to would not be fo rced to work, but tee, Federal Reserve Board Chair­ sharply decline. would be officially required to pay man Paul A. Volcker stated that his Statistics indicate that as female back whatever financial assistance credit and interest policies would employment rises above a certain they received! add another million to jobless totals level, birth rates collapse. For ex­ Thus the real labor story be­ during 1981. That is not shocking; ample, in 1950, female labor-force neath the apparently static unem­ he has already made his intent clear. participation was 33 percent and ployment figuresis the two attacks but it is extremely dangerous. births per one thousand women was on the American family. Behind the gross figures for un­ 106.2. By 1960, female labor partic­ Combine Volcker's wrecking of employment lies a more desperate ipation increased to 37 percent, and heavy industry with Stockman's de­ figurefor the fate of the U.S. work­ births per thousand women contin­ sire to drive an additional half to fo rce. In the year since February ued to climb to 1I8. three-quarters of a million women 1980, 835,000 adult women have However, by 1970 a threshold into the labor force, and America is entered the labor force, essentially had been crossed. As labor partici­ firmly on the road to the 75 million to replace the 450,000 adult men pation by women increased abrupt­ U.S. population goal announced and 270,000 teenagers who were ly to 43.3 percent, births per thou­ recently by Club of Rome member unemployed in that period. sand women fell to 87.9. and University of Florida Prof. The much-vaunted marginal By 1980, labor force participa­ Howard Odum. drop in unemployment from Janu­ tion soared to 51.6 percent. Births To unemploy America's most ary to February 1981 was wholly per thousand women sank to 76.0 skilled workers in heavy industries accounted for by women entering , Over the past year, American and substitute their earnings with the work force, replacing men who families have been quickly pushed their wives' lower skills and earn­ were unemployed. toward a condition traditionally as­ ings means the collapse of both in­ This shift toward working sociated with the poorest families: dustry and the family. women in the labor force is the an unemployed father and a work­ To eliminate the minimum largest since World War II. But the ing mother. wage for teenagers might lead to present labor situation is entirely And Office of Management and employment of a marginal number the converse of that period. Budget Director David Stockman's of youth as virtual coolie labor, and While during World War II, intention to put 800,000 welfare re­ fixthe unemployment statistics in a women replaced men in industrial cipients into "workfare" programs more speciously cheerful direction, production, today those women are will force a further 'birth-rate de­ but the result is both loss of labor largely obtaining poorly paid ser- . cline. productivity and loss of that gener­ vice industry jobs. Although the Stockman has sMted that the ation oflabor. And on that is staked unemployment figures remain un- welfare recipients-mostly mothers. the future of America.

14 Economics EIR March 31, 1981 International Credit by Renee Sigerson

Supply-siders ship to Third World to guarantee this outline is en­ Th e ' cost-benefits' would include cutbacks in price supports forced. The reorganization aims to and interest rate subsidies. integrate their lending with the business of the Euromarket banks, which have over $400 billionin out­ standing loans to the Third World. This is what OMB otherwise calls opening these countries to the "free The World Bank and the Interna­ includes the fo llowing points: market." tional Monetary Fund (1M F), the • A coordinated rise in interest To facilitate this integration, central multilateral lending bodies rates on international loans. Devel­ the IMF jWorld Bank need more which oversee loans to developing oping countries' "will have to start funds. Recently, the IMF issued countries, are currently being "re­ paying private market interest over $5 billion in loans to a handful tooled" to implement the doctrine rates," the official reports. "We of developing countries in larger , of "supply-side" economics in the need to cut back on subsidized chunks than ever seen before in its Third World. loans ...at 9 percent, when world history. As an IMF staffer explains, Practically, this means that the rates are 20 percent." This also "Certainly loans have increased in Third World is slated to be chopped means fo rcing Third World gov­ nominal size-but so have the defi­ up into a patchwork of regions in ernments to dismantle interest-rate cits ... in real terms," he empha­ which pockets of industry operate subsidy programs, about which the sized. The IMF's resources "have alongside stretches of depopulated OMB officer said, "This has to lagged much behind ...the relative continents. stop." growth ofimports" and trade. A V.S. government Interagency • A coordinated rise in world The IMF is also gearing up a Task Force, announced last week energy prices, aimed at drastic con­ new program of "non-concessional by Treasury official" Tim Mc­ servation. OMB reports that the lending" activities in coordination Namar at hearings before a Senate Agency for International Develop­ with Euromarket banks. "There is a Foreign Relations subcommittee, is ment is conducting a study on the general belief that this will lead to now trying to hoodwink the Rea­ effects on developing countries of additional flows for certain devel­ gan administration into fully back­ removing "their domestic energy oping countries," with all such ing the exportation of supply-side price-support systems." By letting loans at market interest-rate levels. economics to the Third World. Vn­ "their domestic energy prices rise to This is where supply-side eco­ der fo rmer McKinsey consultant world market prices ...we intend nomics come in. "The general ori­ McNamar's direction, the task to enforce conservation not by quo­ entation of the World Bank is on force is using the cover of evaluat­ tas and government programs, but 'soft projects' " like health pro­ ing whether V.S. taxpayers' contri­ by straightforward rising of energy grams and agriculture, "which are butions to the "multi-banks" are prices." not income-generating," the offi­ supporting policies "coherent with • A rise in world food prices. cial explains. "To work with com­ the objectives of V.S. foreign poli­ This would also be based on prod­ mercial banks, one would have to cy" to force the administration to ding governments to remove price take their preferences into account. back the IMF and World Bank's support programs. "We are now We believe commercial banks drive to reorganize Third World restructuring PL 480," the V.S. would prefer industrial projects economies. Agriculture Department's interna­ which are income generatjng." An official .of the Office of Man­ tional loan program, "to require IMF teams, the agency's offi­ agement and Budget working on recipient countries of V.S. food aid cials report, are now concentrating the task force described current ad­ to restructure their domestic food on advising Third World govern­ ministration objectives in the Third price support systems and bring ments on how "cost-benefit" sup­ World as aimed to "force Third . fo od prices to world levels." ply-side economies are the only pol­ World economies to totally open up Simultaneously, the IMF and icies which would successfully at­ to the free market." This policy World Bank are being restructured tract such private capital.

EIR March 31, 198 1 Economics 15 ForeignExchang e by David Goldman

Can tliedollar join the EMS? would not be sufficient to peg the A plan raised at last week's meeting of Europeanjinance dollar versus the European curren­ ministers could stabilize a dollar-EMS parity. cy joint float. The United States would have to adopt an economic stance parallel to the Franco-West German commitment to nuclear energy and capital-intensive ex­ The leading West German finan­ Poehl at Oavos, Switzerland. Poehl ports to the developing world, and cial daily Handelsblatt reported said that "if the dollar were to re­ correct the huge American trade March ·19, "In the confidential por­ turn to long-term stability, then the deficit, the original source of dollar tion of the European finance minis­ dollar and the EMS together could instability. ters' discussions in Brussels yester­ provide the fo undation for a stable The United States would have day, a proposal was made to unite world monetary system during the to throw out the foreign economic the separate arrangements con­ 1980s." policy (see International Credit) de­ cerning swap credits between the What is important in this con­ vised by Undersecretary of State monetary authorities of European· text-when the principal European James Buckley and his collabora­ countries and the U.S. Federal Re­ economic initiative toward Wash­ tors at Treasury and Office of Man­ serve into a singh: comprehensive ington revolves around bringing agement and Budget, and vastly agreement with the Fund for Euro­ interest rates down in coordina­ expand the size and fu nctions of the pean Moneatary Cooperation." tion-is the efficacy of the cited U.S. Export-Import Bank. These swap lines-central bank currency proposal on the interest By the time Helmut Schmidt ar­ to central bank credits to finance rate front. Most American com­ rives in Washington in May, how­ currency intervention operations­ mentators, including those of the ever, some rethinking may well now total $16 billion. From the Eu­ administration, belittle the Franco­ have been done at the White House. ropean standpoint, there is a valid German plan for "global interest The dollar, far fr om shooting to­ technical reason to unify the differ­ rate disarmament" on the superfi­ wards the OM 2.50 level that the ent central banks' relationship with cial ground that the plan is not New York Fed and some others the Federal Reserve, as the German possible. This fo llows the monetar­ were talking of recently, has fallen daily notes, namely, to make possi­ ist argument that increasing the back to OM 2.05. This is only indi­ ble currency intervention in dollars money supply in order to bring rectly the consequence of the fall in as well as European currencies, to down interest rates would, on the American interest rates; the interest smooth the intervention process. contrary, have the perverse effect of rates themselves have dropped as a However, centralizing the swap raising inflationary expectations result of the second leg of the pres­ lines into a single fund through the and hence raising interest rates. ent economic depression. The mul­ Fund for European Monetary Co­ This form of sophistry ignores tiple consequences of the depres­ operation-the joint checking ac­ the simple problem that the bulk of sion put the dollar into a weak posi­ count of the European Monetary speculation centers around curren­ tion, and give the Europeans System-implies something much cy instability in the firstpl ace. Cur­ considerable bargaining room in broader. The only type of currency rency hedging alone takes up per­ Washington. operation for which such an action haps $200 billion of gross world Clearly, the OM has bottomed would be indispensable is the stabi­ credit demand. If they were success­ out on the foreign exchange mar­ lization of the dollar against the ful, vigorous counter-speculative ket. The fact that the German cur­ European currencies, e.g. an inter­ actions would eliminate the artifi­ rent account deficit is susceptible vention target for the dollar parity cially high credit demand ensuing . only to slow-working solutions against the European Currency from "floating currency rates," and makes a spectacular OM rise un­ Unit. make it much easier to bring down likely. But now that President Rea­ Such a plan was mooted last interest rates. gan must look to the stability of the month in a speech by West German Obviously, a bigger interven­ dollar, the European offer is a seri­ Bundesbank President Karl-Otto tion fu nd for currency support ous one.

16 Economics EIR March 31, 1981 Wo rldTrade by Mark Sonnenblick

Cost Principals Project/Nature of Deal Comment

NEW DEALS

$1.7 bn. Colombia from Morrison-Knudsen �on contract for 16.5 mn. tpy Cer- Mine jointly owned by U.S.A. rejon open pit coal mine. Job includes lOO-mile railroad, Exxon and Colombian unloading facilities and a new port, plus airport and city govt. for 3,100 people.

$300 mn. Bahrain Arab Iron and Steel Co. iron pelletizing plant has award- Will shun commercial ed $50 mn. dredging contract to local firms. Plant will loans by using Japan's utilize local natural gas and employ otherwise empty Ex-1m Bank and bank returning oil carriers to bring in iron ore. Plant construc- guarantees. tion will go to Kobe Steel or Lurgi-Hitachi.

$IOO mn. Iraq from International . Harvester won order for 1,800 F-5070 U.S. relations with Iraq U.S.A. Paystar heavy-duty dump trucks from Iraqi govt. Deal suspended since 1967. includes service, parts, and training. IH beat out 6 com- petitors for a contract representing half its total 1981 truck exports.

$50 mn. Iraq from Salzgitter subsidiary Karl Walter was given order for 160 Construction of 6 similar West Germany mn. brick per year automated brick plant. This is 14th plants not interrupted by brick plant built by Walter in Iraq in recent years. war ..

$IOOmn. Libya from Foster Wheeler Italiana will build a plant to produce Contracts awarded on a Italy coke from heavy crude oil as part of a huge aluminum turkey basis. complex near Tripoli. Most of the 170,000 tpy calcinated coke will be used in aluminum refining and the rest exported. Value includes a second contract for engineer- ing management ofa new 220,000 bpd oil refinery.

$50 mn. Spain from Combustion Engineering has won contracts fo r. engi- V.S.A. neering and components for 2 coal-firedelectrical plants to be built in Spain.

UPDATE

$22 mn. U.K. from Hong Kong's Yangtsekiang Garment Manufacturing YGM expects grants Hong Kong planninll a big move into Britain's ragged textile indus- from U.K. regional try with a denim plant in the depressed northeast development agencies. fo llowed by jeans-making shops for U.K. and export Attracted by cheap, trade. unemployed, labor. , $342 mn. Ivory Coast Plessey was told by Ivory Coast officials it would get Financial Times cele- from U.K. $342 mn. Abidjan airport expansion contract. Project brates first big British has been delayed by collapsing coffee and cocoa prices, penetration of French but will go ahead if oil fo und offshore. British firms sphere of influence. expecting another $100 mn. in Ivory Coast project orders.

CANCELLED DEALS

China from China has ordered suspension of 3 petrochemical proj- Cancelled suppliers hope West Germany ects under construction by Lurgi of Germany. Lurgi, China acting from oil, however, says it is continuing work, since all compo- rather than money, nents are being fabricated and it would require 100% shortages. compensation. Zimmer, a subsidiary of Davy Int. of U.K. also expects cancellation of its 80% complete polyester plant, worth $200 mn.

EIR March 31, 1981 Economics 17 "

All the Queen's men

Behind the wave of takeovers, reportsRi chard Freeman,'is a 'buy America cheap' resource grab by the British elite.

Great Britain and its financial allies have begun to buy • Socal (Standard Oil of California) one of the Brit­ whole chunks of U.S'. industries, in particular, raw ma­ ish-influenced Seven Sister oil multis, announced this terials firms. They anticipate that with commodity prices week that it will make a $3.8 billion takeover bid to already depressed by 20 to 30 percent, a further phase of acquire AMAX, the largest U.S. producer of the militar­ the recession instigated by the high interest-rate policy of ily strategic material molybdenum and a large coal the U.S. Federal Reserve could send stock prices drop­ producer. ping by 25 to 50 percent, and allow the buyout of • Seagram, run by the notorious Bronfman family of American firmsat 50 cents on the dollar. Canada, has made a $2 billion tender offer to buy out St. In the last three weeks alone, takeover bids and actual Joe's Minerals, the largest U.S. producer of zinc and takeovers by British interests of u.s. firms havereached lead. the unheard-of total of $15 billion-equivalent to the total volume ofInternational Monetary Fund lending to Seagram and St. Joe's the Third W orId in 1980. Many more companies, espe­ According to an official of the Seagram group, the cially others of the Seven Sisters, are ready to get il,ltothe Montreal-based company "spent months analyzing act. "The total takeovers could hit $25 billion in the next takeovers, before it settled on St. Joe's Minerals. St. three months," report Wall Street sources. Joe's only owns 20 percent of its own stock. The other At the core of this invasion are old oligarchic families 80 percent is owned out there in the market place, and within the London-Venice-Geneva financial axis, and the at the price we're offering, which is twice the price St. corporations and investment banks in their orbit (see the Joe's shares are trading at, we should be able to buy St. accompanying chart). This group, reaching up into the Joe's out." Queen of England's household, is the command center St. Joe's denounced the Seagram takeover offer as for British intelligence. Its strategy is in effect the re­ "unsolicited" and "hostile" and labeled the $2 billion colonization of the United States: buying America's raw takeover price "grossly inadequate." materials and then holding the nation hostage while Seagram wants to buy more U.S. firms. According strategic metals and minerals prices are bid through the to its official, "We have about $6 to $7 billion in cash in ceiling. our treasury and we're ready to move." The Bronfman Three giant takeover bids have already been an­ family "is moving in a big way into U.S. real estate nounced: through Cadillac Fairview," a Bronfman holding com­ • Sohio (Standard Oil of Ohio) announced on March pany, the official reported. 12 that it had reached an agreement in principle to buy Brascan, the Canadian met�ls and investment firm out Kennecott Copper, the largest U.S. copper producer, chaired by Peter Bronfman, which is tied to the Seagram for $1.97 billion. Sohio is majority-owned by the British group, has been buying heavily into U.S. firms. Brascan Petroleum Company, itself jointly owned by the British spent $121 million just last week to increase its share of government and controlled through the Queen's house­ ownership in the Scott Paper Company, a major U.S. hold. paper producer, from 3 to 12 percent. A Brascan official

18 Economics EIR March 31, 1981 QUEEN OF ENGLAND

Royal Household Angus Ogilvy, husband of Princess Alexandra, cousin to the Queen Viscount Cobham, Lord Steward of Her Majesty's Household, 1967-72 Viscount Cobbold, Lord Chamberlain of Her Majesty's Household, 1963-7 1

Angus Ogilvy Viscount Cobbold Viscount Cobham Earl of Inchcape Marquess of Linlithgow Sir David Steel Earl of Cadogan Lord Barber Sir Kenneth Strong Sir Denis Mountain Edmond de Rothschild '"""4�+-----�

Charter Consolidated Mining Engelhard Minerals Lord Carrington Minorco Hudson Bay Smelting & Mining

BANK eF ENGLAND

Directors and advisers:

Sir David Steel, chairman, BP Leopold Rothschild, N.M. Rothschild's Sir Robert Clark, Eagle Star Holdings Viscount Cobbold, BP

says it plans to increase its "stock ownership in Scott expand into North America." Oppenheimet has built Paper to 20 percent," which would give Brascan control up a $3 billion reserve in cash for this purpose; he of the company. already owns Inspiration Copper, a medium-sized U.S. metal producer, and Engelhard Minerals, the largest The Oppenheimer group U.S. metals company, which figures largely in rigging' Sir Harry Oppenheimer's South African dirty-dia­ the world's oil spot market. monds-and-gold empire was linked in the press this Oppenheimer has created a Bermuda-based shell week to a prospective buyout of Phelps Dodge, another company, the Minerals and Resources Corporation, giant U.S. copper producer. Oppenheimer, the world's (Minorco), for his buyouts in North America and has largest diamond and gold producer via the South appointed Citibank Chairman Waker Wriston and a African-based De Beers Diamonds and Anglo-Ameri­ lawyer from Citibank's law firm, Shearman and Ster­ can Gold Companies, has promised, "We mean to ling, to the Minorco board of directors.

EIR March 31, 1981 Economics 19 However, the Oppenheimers' and Bronfmans' vast of the Global 2000 mass-murder apparatus. family holdings, as well as those of British Petroleum, These are the groups that will soon own major the Seven Sisters, and other multinationals, should not chunks of U.S. industry if they are not stopped. The be thought of as powers in themselves. They are merely British thought this moment was propitious because, deployable pawns of the royal households of Europe. through the Bank of England and Paul Volcker, who is This is the command apparatus that is responsible for, among other things a member of the elite British among other things, most of the world's environmental­ Ditchley Foundation, they had succeeded in shaking ism and deindustrialization. Its center is the Queen of out the U.S. economy. England's immediate coterie and members of the British The list of buyout proposals and actual takeovers of peerage, who control every firm of importance within the last two months extends beyond raw materials. Britain, and who have launched the buy-out-America • The Canadian Reichmann family, owners of the spree. Olympia and York real-estate company, just bought for The Bronfmans, for example, are basically run by $567 million Abitibi, the Canadian-based newsprint ' the Eagle Star Holdings Ltd., a London-based real­ producer. Abitibi sells 68 percent of its paper in the estate, insurance, and investment trust, valued at several United States and controls the U.S. newsprint paper billion dollars. Until recently Eagle · Star, through its market because it is the world's largest producer. subsidiary English Properties Ltd., owned the giant • Prudential Life Insurance, the largest U.S. life real-estate firm Trizec, in a joint venture with one of the insurance company, which is under British control, Bronfman family investment companies, Edper. (The announced that it will spend $400 million this year for other major Bronfman family investment company buyout investments, mostly in oil. is CEMP, as noted on the accompanying chart.) • Overseas Trust Bank in Hong Kong announced Trizec has now been sold to another Eagle Star-con­ that it will move to take over the $1 billion Long Island trolled asset, the Reichmann family of Canada; but the Trust Company, the largest bank on Long Island. . controlling links remain between Eagle Star and the • The Gulf and Western conglomerate, owners of Bronfmans. Eagle Star Holdings represents one of the Paramount Picture Company, and closely connected to European oligarchy's prize holdings (the eagle repre­ the Venetian oligarchy, announced last week it has sents the Venetian-controlled House of Hapsburg, the bought 6 percent of B. F. Goodrich, the rubber produc­ star represents Britain). er, and 15 percent of the stock of the -Brunswick Control points over Eagle Star include two members Company, the fabricating metals company. Gulf and of the highest-ranking British nobility. One of them, Western already owns a sizablt\ chunk of seven other Viscount Cobham, shaped Eagle Star's policies during U.S. companies, including General Tire and Rubber the 1970s before retiring. He holds the Order of the Company and the Cummins Engine Company. Garter, in which at any one time there are only 24 • Warner Communications, sponsors of the drug­ members, including Prince Philip and the kings of rock counterculture in U.S. entertainment media, has Norway and Belgium. The other, Angus Ogilvy, be­ paid $200 million in the last two months to acquire the longs to the family that runs Schroeder's Bank in Franklin Mint, the largest private mint in the U.S., as London and is influential in Lonrho. Angus Ogilvy is well as 8.6 percent stake in Harcourt Brace publishers. also one of the two dozen people considered the Queen's • American Telephone and Telegraph has just been immediate family, as his wife is the Queen's first cousin. given $17 to $22 billion in rate increases by the federal Ogilvy heads MEPC Properties Canada, which is con­ government. AT&T has now been allowed by the courts trolled by Eagle Star Holdings. Others at Eagle Star are to diversify into other fields and it is expected to plunge the Marquess Linlithgow, one of the highest-ranking into the buyout of electronics firms. British nobles, and the Earl of Cadogan, who owns According to one Wall Street analyst, "Oil compa­ major stretches of London's fashionable Chelsea district. nies are going to make the next plunge in buyouts." In the case of British Petroleum, the guiding spirit The oil multis are already hoarding a vast amount of for many years, until his recent retirement, was Viscount U.S. mineral supplies. As of last year, oil companies Cobbold, who held the highest position in the Queen's owned 35 percent of U.S. copper production, 25 percent household and is a member of both the Order of the of its uranium production and 25 percent of U.S. coal Garter and the Order of St. Michael and St. George. production. It was British Petroleum that helped direct the ouster With the U.S. State Department now recommending of the Shah of Iran and installed the madman Kho­ that several billion dollars be spent to build up a U.S. meini; it was BP that helped run the 1973-74 and 1978- strategic materials stockpile, the largest supply of basic 79 oil hoaxes that crippled industrial production in the U.S. raw materials-lead, zinc, copper, molybdenum, Western world. It is Eagle Star and the British royal coal, etc.-is about to pass out of American hands. household that run the World Wildlife Fund, creators Who will benefit from the price run ups?

20 Economics EIR March 31, 1981 'Technetronic' strategy for France led by Paribas bankers by Laurent Murawiec

The French business community was shaken the first prime minister from 1969-72, had infuriated the late week of March by the unexpected announcement that President Georges Pompidou with his Kennedyesque the giant investment bank Paribas (Ban que de Paris et "nouvelle societe" policies. du Pays Bas) was taking the controlling share of the huge Moussa's global conception is that of acting as a Empain-Schneider conglomerate from Belgium's Baron "bridge between the key role of the nation-state and the Edouard Jean Empain. The purchase price of 90 million one-world features of modern economic life," which French francs represents quite a bargain: Empain­ leads to great political-intellectual flexibility and adap­ Schneider employs more than 132,000and has an annual tation to dominant policies, including those of Frem:h turnover of FF 40 billion. President Giscard. "Our influence,"Mo ussa adds, "is on Included in the Paribas acquisitions are the small but the Montreal-Hong Kong line," a wholly different set of powerful Bank de l'Union Europeenne; Creusot-Loire considerations. Lord Roll of Ipsden, the S. G. Warburg and its subsidiaries Framatome and Novatome, which chairman, sits on the Paribas board. are responsible for fu lfilling orders to construct nuclear plants that are placed by the state-controlled electricity Industrial takeovers monopoly EDF; and a variety of large corporations, Paribas was also recently involved if! the reorgani­ mainly in the fieldsof engineering (civil and mechanical) zation of the giant communications conglomerate and steel (including specialty steel and shipyards). Hachette, which has diversified interests in media, pub­ With this move, which reportedly enjoyed the early lishing, electronics, and communications. A controlling backing of President Valery Giscard d'Estaing, Paribas share of Hachette was recently sold, with prompting greatly strengthens its central position in ownership and from Giscard and support from Paribas, to the high­ policy control of the French economy. The policy direc­ technology "military-industrial" conglomerate Matra­ tion it will now take is a crucial element for determining Industries, a fast-growing business with intereJits in ' the direction of French global policies, week� before the advanced electronics, in telecommunications, in sports April 26 presidential elections. cars, in military equipment, and in one of Europe's Paribas, a bank more than a century old with tradi­ leading broadcasting organizations, Europe Number tional links to Lazard Freres, has-aside from its sub­ One. Matra-Industries immediately brought in a new stantial standing on the international financial partner from Hachette, media king Daniel Filipacchi, a markets-a history of geopolitical involvements which publisher of several well-known pornographic journals have made it a political factor to reckon with. Its deep with connections to the notorious Permindex intelli­ involvement in the pre- 1914 Baghdad Railway venture gence operation. of Deutsche Bank and Germany gave it the clout to set Yet a third major restructuring that has �ltered up the Compagnie Fran�aise des Petroles in 1924, the France's political landscape in the past year was the "eighth sister," and to challenge British and American takeover of France's fifthlar gest corporation, the trou­ interests in the Middle East. bled national computer and electronics manufacturer, The current Paribas chairman, Pierre Moussa, a for­ CII-Honeywell Bull by Saint-Gobain-Pont-a-Mousson mer French colonial office official and former director of (SGPM). To broaden its horizon in the electronics field, the World Bank for Africa-in other words, a leading SGPM then bought up 25 percent of Italy's Olivetti. representative of old French "imperial" policies-shares One underlying logic behind all three affairs is the with the bank a long history of involvement in left-wing indispensable consent, if not the initiating impulse, of ' politics. This "left" history includes his bankrolling of President Giscard. Another component involves a dif­ Giscard's social-democratic challenger in the presiden­ ferent kind of business, namely the "technetronic" tial elections, Socialist Party leader Fran�ois Mitterrand, designs on French and European industry. and Fabian GauUist Jacques Chaban-Delmas, who, as Speaking to the Feb. 6 Conference on European

EIR March 31, 198 1 Economics 21 Management in Davos, Switzerland, European Com­ currently the vice-president of SGPM's joint operation missioner Viscount Etienne Davignon, whose purview with Olivetti, as his co-author. Nora enlisted half the within the European Community now includes industry, French membership of the Club of Rome as consultants: energy, and research, announced a "much tougher line" Jacques Lesourne, who led the OECD "Interfuturs" on subsidies extended by the member nations to their project; Robert -Lattes, Paribas chief economist and industries. "No subsidies [will go] to depressed areas grey eminence in high-technology affairs; and Andre and traditional industries, except to reduce capacity, Danzin, who heads the Institute fo r Automation and restructure, and innovate. Community powers will be Informatics Research. Other consultants included mad used to prohibit certain kinds of subsidies .... Com­ left-wing terrorist philosopher Michel Foucault, a munity funding will be granted to such areas as energy much-publicized advocate of schizophrenia and para­ conservation, coal gasification, and data banks." noia as legitimate social expressions; Mitterrand's chief Davignon's European Commission counts on the economist and adviser, Jacques Attali, a proponent of support of the European Parliament to ram such poli­ the replacement of the economy with "culture"; French cies down the throats of reluctant European govern­ sociologist Michel Crozier, top pro filer for the Tavis­ ments. Most directly, this strategy aims at isolating the tock Institute, who planned the student component of government of France, whose unbending adherence to the May 1968 upsurge against de Gaulle; and Alain its nuclear program, including the advanced fast breeder Touraine, also an advocate of the postindustrial society. programs and proliferation of nuclear sales to the Third The Nora-Minc report, "L'Informatisation de la World, has proved a major obstacle to the anti-industri­ Societe," was filed with the president in January 1978, al, anticapitalist designs of such supranational bodies as and part of its proposals have actually become executive the Club of Rome, the Organization for Economic policy. The Nora-Minc report was published last year Cooperation and Development (OECD), and the Ger­ in the United States by MIT in book form under the man Marshall Fund. title Th e Computerization of Society. Its approving Sir David Nicolson, a Tory member of Britain's introduction was contributed by an American ideologue parliament, has been especially active in defining such a of postindustrialization, social democrat Daniel Bell of European-wide sunrise/sunset outlook. In a document Harvard. soon to be released, Sir David contends that the EC's The basic thesis is that "the prime challenge of the Common Agricultural Policy (CAP) should be largely coming decades is not, for the advanced policies of dumped and resources devoted to a "coherent industrial­ mankind, the capacity to master matter. This is grant­ policy." What the policy should be he spelled out quite ed. The challenge lies with the difficulty of building the precisely: "moving [the EC's] industrial base up-market network of connections that enhance information with away from the old labor-intensive industries into new organization." What this jargon concretely means, the high-technology ones. This requires a willingness to authors conclude, is the end of capital-intensive employ­ restructure declining industries . ... Because of the im­ ment, and of industry generally, with the simultaneous portance of the defense sector as a market for high destruction of centralized forms of political, social, and technology, Europe should look again at the case for economic life. Computers, or informatics generally, are building up its own defense capability and reducing its precisely the instruments of this shift into the "poly­ reliance on the U.S.A." morphous, informational society." It is useful to underline the identity of design Under the cover of preparing the state to manage between such proposals and those outlined at the Wash­ the "new emerging conflicts" typical of such a postindus­ ington, D.C. conference of the Socialist International trial society, Nora and Minc are in fact fielding propos­ and the German Marshall Fund in early December, als to turn the nation-state into the instrument of its ' titled "Eurosocialism and America." De-industrializa­ own demise-its powers devolving to decentralized and tion, de-urbanization, and the ascent of energy-poor, de-federated basis-groups and communities. Concpmi­ electronic-gl!.dgetry industries were the leitmotifs. tantly, the report presents such proposals of co-opting In December 1976, Giscard commissioned top civil "environmentalist" policies as the sole· defense against servant Simon Nora to conduct a study on "The Effects the social fe rment this movement represents, and, in of Informatics on Society and the Economy." Informat­ addition, proposes the "informatization" of the econo­ ics is the catchword fo r the mass use of computers and my in order to meet the "IBM challenge" before it is electronics in daily economic, social, and individual life. too late. Nora himself is a veteran Fabian haut-fonctionnaire A Frenchman is quite amazed to see the policies of with a wealth of past associations with Pierre Mendes­ Mitterrand's advisers put forward to the president al­ France and Jacques Chaban-Delmas as well as with . most verbatim by supposedly faithful senior civil serv­ various local subsidiaries of the Club of Rome. ants, where otherwise.Giscard's own policies have be�n Nora recruited rising young technocrat Alain Minc, largely marked by a strong nationalist industrial out-

22 Economics EIR March 31, 1981 look (which the Council on Foreign Relations likes to dub "neomercantilist"). It is time for the president to smell a rat (or a Socialist mole), in his own camp. Currency Rates Giscard's problem is that he has allowed the mone­ tarist management of his prime minister, Raymond Barre, to lead the country's economy into an impasse summed up by the fo llowing figures: 14 percent infla­ tion; FF 60 billion trade"deficit; 1.6 million unemployed. Social unrest is so strong that Giscard is by no means The dollar in deutschemarks assured of his re-election. And if he begins another New \" ork late afternoon fixing seven-year term, the success of his policies is in doubt. 2.15 1"'\ .. Drastic measures will be required,. starting the day after the balloting. 2.10 It.. ,.,J ,. �" " ... � � Already, Giscard is being pushed to effect a "Social­ I"'" 2.05 � ist turn" and go ahead with the "reforms" indicated in the Nora-Minc report. Mitterrand supporter Jean­ 2.00 Jacques Servan-Schreiber gave the proposals a popular 1.95 fo rm recently in his international best-selling book Le I/ll 1/4 1/11 1/111 1/15 3/4 3/11 3/111 Deft Mondial (The Global Challenge), and a good many of Giscard's supporters and advisers are now pushing in the same direction. The dollar in yen New York late afternoon fixing One of Giscard's possible choices for prime minister is the Paribas-supported, New Left-linked Chaban-Del­ 230 mas. Among the more "right-wing" profiles, some of 220 Giscard's own ministers have bought the technetronic perspective lock, stock, and barrel through the think­ 210 -A. tank influence of the Nouvelle Droite (New Right) and � - ""�..... its intellectual center, the Club de I'Horloge, which 200 o represents important components of Giscard's rganize" d 190 electoral support. 1/211 1/4 1/11 2/111 1/15 3/4 3/11 3/18 Giscard's trusted personal friend and adviser. Michel " - Poniatowski has himself not been immune to the French The dollar in" Swiss francs version of the Club of Rome's technetronic outlook. In New York late afternoon fixing the sphere of science-his principal area of activity:""'he has presented policies that mix equal parts of the 1.95 " A. informatics follies of the Socialist International (along I(V- � .� 1.90 II � with its sister, telematics-telecommunications, bio­ � � engineering, and so fo rth) with proposals for the devel­ 1.85 , opment of contr:.olled thermonuclear fusion. This is not 1.80 to say, of course, that there is anything inherently wrong with advanced electronics and telecommunica­ 1 .75 tions industries. It is to state that they can only be 1/28 1/4 1/11 1/18 1/15 3/4 3/11 3/18 effective if they enhanc� global productivity of fusion­ powered, capital-intensive forms of production and The British pound in dollars employment. New York late afternoon fixing In the past few months, France has undertaken sales, or negotiations for sales, of nuclear technology to 2.40 Brazil, South Korea, Algeria, Morocco, Tunisia, Egypt, 2.35 "'\ and Nigeria-a far cry from the Club of Rome's policy --- of stopping technology transfer to the Third World and 2.30 '---'" imposing starvation on Africa. 2.25 '-f\ This is the choice that faces France and President '- Glscard, the fight shaping the election, and the actual 2.20 , - � """"� 1/18 1/4 1/11 1/18 1/15 3/4 -- 3/11 3/18 international stakes behind the French presidential elec­ tions.

EIR March 31, 1981 Economics 23 Business Briefs

World Trade ain ....Just when you're about to doze "bringing the U.S. budget and economy off, they toss a brickbat at Friedman­ into order?" Stockman scorched on such as, 'The Nobel Prize committee The 31 signatories head or work with must have been drinking nitroglycerin leading astronomical, physics. construc­ Eximbank cutbacks when they gave him the award in 1976.' " tion and research companies and fo un­ Readers don't seem to have fo und the dations in Germany, Italy, France, and expose boring at all. The first 15,000 run Switzerland. They include Prof. 'Walter Senator Russell Long CD-La.) challenged sold out last week, after six weeks in Seifritz of the Swiss Institute for Reactor Office of Management and Budget Di­ pUblication. Airport newsstands report Research; Prof. Ulrich Hanser, director rector David Stockman March 28 on that Israeli tQurists have been grabbing of the Cologne University Physics Insti­ Stockman's proposal for reduced fund­ up the book, apparently because of what tute; Dr. Klaus Leuthauser, director of ing for the Export-Import Bank. During Friedman did to Israel's economy as an the Institute for Scientific-Technical hearings held by the Senate Finance adviser to Menachem Begin. Analysis in West Germany; Prof. Chris­ Committee, Long stated that overseas tian Groeber of the Frankfurt University markets for U.S. manufacturers of air­ Physics Institute; Prof. Marcel Felden, planes, nuclear plants, and other high­ Budget director of the Institute for Plasma Phys­ technology equipment would be grabbed ics, Nancy, France; Jacques Houbart, up by international competitors if Exim­ editor of Industrie et Te chniques, Paris; bank funding support were not available. European scientists and Prof. Enzo Menapace of the Nation­ Reducing Eximbank funding. Long denounce NASA cuts al Nuclear Energy Committee in Italy. asserted, was "a short-term gain for the Treasury, buta long-term loss." Stockman countered by saying that In a personal telegram to President Rea­ U.S. export policy had to be more "tar­ gan, 31 West European scientists and geted" anyway if it were to work. The engineers state: "As Europeans, we have idea was not just to export manufactures, long admired the United States' dedica­ tion to the development of science and but to concentrate exports for "direct Conference Report head-to-head competition" with partic­ technology, embodied in the Apollo ular products of foreign countries offer­ landing of man on the moon, and more ing export subsidies. Stockman also stat­ recently, in the admirable McCormack LaRouches pose Europe's ed that cutbacks in Eximbank would fusion bill for the rapid realization of 'challenge to Volcker' have little effect on U.S. export capability controlled nuclear fusion as an unlimited overall since 66 percent of Eximbank energy source for mankind. The well­ A fa r-ranging briefing on "Europe's funds went to only five or six big com­ being and security of the entire world Challenge to Volcker" drew 150 U.S. panies. depends on such a continuing commit­ ment of the United States. policy makers, foreign diplomats and "We therefore urge you to reverse the businessmen, and leaders of the La­ ill-advised and dangerous policy of mas­ Rouche wing of the Democratic Party, in Political Economy sive budget cuts in fusion research, in the Washington, D.C. In attendance at the NASA space program, in science educa­ conference were officials from Com­ Friedman book gets tion, and other vital areas of R&D, pro­ merce. Defense, ' State, the Eximbank, posed in the Stockman budget. ...[The GAO, AID and other departments and 'best title award' cuts] will inevitably undermine European agencies. The March 20 conference was research effortsin the same areas." co-sponsored by EIR and the National The Los Angeles Times soft-cover book­ The cuts are "particularly-ill-ad­ Democratic Policy Committee, whose review column conferred its "Best Title vised" because "adventurist fo rces" in national advisory committee Lyndon Award" March 15 on The Ugly Truth the Soviet Union "will not fail to read a LaRouche chairs. About Milton Friedman. the critique of reversal of decades of U.S. leadership in Mr. LaRouche warned in his speech Friedman monetarism authored by EIR basic science . . . as a decisive sign of that the second phase of the U.S. reces­ founder Lyndon H. LaRouche and EIR weakness," the telegram states. sion could "Hooverize" Ronald Reagan economics editor David Goldman. Calling for a "more prudent" solu­ unless the administration transforms its Reviewer Don Strachan comments: tion to budgetary problems. the state­ interest-rate and international economic "LaRouche and his ... partner blame ment concludes, "Would not a reversal policies, as Europe demands. Helga Friedman for every economic slump In of the present high interest-rate policy, Zepp-LaRouche, chairman of the Euro­ the United States since the '50s, as well as [which is also] in juring our European pean Labor Party, described in detail the the fiscal woes of Chile, Israel and Brit- economies," be a more effective means of European Monetary System.

24 Economics EIR March 31, 1981 Briefly

• TAKEOVERS can be halted, according to U.S. law, if the un­ friendly bidder is shown to be a Energy major political deliberation." The Finan­ participant in trafficking of fu nds cial Times commented on this, "If fac­ related to narcotics. U.S. Code Japan to go nuclear tions cannot be reconciled ...the choice #2 1, 88 1 (A),(B) states that the fed­ is between sackings and resignations." eral government can additionally after referendum defeat On March 13, West Germany's finan­ confiscate all properties of a firm cial daily Handelsblatt described Thatch­ related to the drug traffic. Following the recall of a small town may­ er's budget as "a Bruning budget," refer­ or by antinuclear forces, the government ring to Hitler's predecessor as chancellor. • WEST GERMAN business or­ and industrial spokesmen of Japan have By removing all social security and un­ ganizations are looking forward to decided to launch an educational cam­ employment inflationad justments, it will Chancellor Schmidt's April 23 visit paign among the population on the need reduce income for several million wage­ to Saudi Arabia, for much bigger for nuclear power, according to the earners by 15 percent at current inflation reasons than military contracts. March 17 Nihon Keizal Shimbun. rates. This follows an average 25 percent A vote of 6,300 to 5,800 defeated the drop in living standards since 1975. • THE NEUE ZURCHER Zei­ mayor, who had agreed to allow a nucle­ The cuts are due to a collapse in the tung reports that West German ar plant to be sited within the 18,000- country's tax base since Thatcher un­ industry thinks that "without nu­ person town of Kubokawa, in a special leashed her infamous experiment in clear power, the future cannot be referendum. "Friedmanite" economics, and drove in­ mastered." In a lengthy March 17 At present, nuclear energy provides dustrial output down 21 percent. The article on the fight in Germany only 13 percent of Japan's electricity. The reduction of tax revenues has driven up over atomic energy, the Swiss fi­ government has decided to triple nuclear the deficit by $10 billion to $30 billion. In nancial daily reports that industry energy production to 51 gigawatts by American terms, this would be equiva­ supports a program, associated 1990. However, obstruction by the Japan lent to an increase in the federal deficit with the giant VEBA utility con­ Socialist Party, the leading opposition from $100 to $150 billion per year­ glomerate, of a 400 percent rise in party, had made it difficultto findsites. about double the current U.S. govern­ nuclear-generated power by 2000, If site location difficulties limit nucle­ ment deficit. based on 600 billion marks total ar energy production, policy-makers fear investment. Japan will suffer a major energy crunch in the late 1980s. Corporate Strategy • WILLIAM DRAPER III was nominated by the White House on St. Joe's Mineral cites March 18 to head the U.S. Export­ Import Bank. If he is approved, Austerity Debate Seagram's dark past this could install a peculiar advo­ " cate for U.S. foreign trade. Draper Thatcher obsessive' St. Joe Mineral Corporation, a leading is the son of Gen. William Draper, U.S. producer of tin and lead, sued Sea­ the fo under of the Draper Fundi about Tory opposition gram & Sons March 16, to prevent an Population Crisis Committee, a attempted Seagram takeover. St. Joe ac­ major promoter of ZPG and eco­ British Prime Minister Margaret Thatch­ cused Seagram of standing "illegal activ­ nomic contraction. er, whose name is now globally synony� ities" and fa ilure to disclose the activities ' mous with depression, is reported to be of the Bronfman family that owns Sea­ • OPEC may agree to introduce frantic about oppo!;ition in her own cab­ gram's. an indexed oil-pricing system at its inet to her just-announced austerity The suit cited "Seagram's long histo­ May 25 oil ministers' meeting, or budget. Based on 15 percent across-the­ ry of illegal activities in the United States, shortly thereafter, according to board reductions, the budget is officially including illegal political contributions Kuwaiti oil minister Ali Khalifa projected to generate 3 million unem­ and illegal payments to state liquor offi­ ai-Saba. The indexation, widely ployed, or a 12 percent jobless rate by cials, and numerous violations of federal critiCized as a proposal that could year-end-worse than during the 1930s. tax law and liquor laws, including 33,000 severely worsen the world eco­ The London Observer reports that violations in Pennsylvania alone." nomic downturn, would peg oil cabinet members have been leaking to The suit further accuses Seagram of prices 2 to 3 percent over the aver­ the press that the budget will never work "false and misleading" statements in its age rate of inflation. This might and adds that Thatcher has become "ob­ takeover bid, which failed to disclose mean a fourfold rise in oil prices sessive" about such leaks. Recently, she information regarding the integrity of over the next decade. told the press that her cabinet opponents the Seagram management and its control are "too leaky ... to be entrusted with by the Bronfman family.

EIR March 31, 1981 Economics 25 TIillSpecialReport

Western Europe's new mobilization against Thatcher .

by Criton Zoakos, Editor-in-Chief

Sometime between now and the scheduled July 1981 "economic summit" among the top five industrialized Western nations (U.S.A., Japan, France, the Federal Republic of Germany, and Great Britain), President Reagan will have to make a clear-cut choice whose immediate consequences will fully determine the future of his administration in both domestic and foreign policy. The choice: line up with the body of broad policies represented by the alliance between France and West Germany, or with the totally opposite policies represented by Mrs. Margaret Thatcher's Great Britain . . The Franco-German alliance at this time represents a fairly clear and consistent policy perspective centered around the concept of industrial devel­ opment. Great Britain, on the other hand, represents an equally clear and consistent perspective centered around the effort to reduce world population by approximately three billion people by the end of this century. President Reagan will recognize that this British policy is identical to the Agenda '80s report which informed every one of the disastrous policies of his predecessor Carter administration. President Reagan will also recognize that the British Global 2000 perspective is shared by such members of his own administration as Secretary of State Alexander M. Haig and Defense Secretary Caspar Weinberger. Not accidentally, both Haig and Weinberger are currently engaged in intense efforts to influence the President in favor of Mrs. Thatcher's Britain and against Chancellor Helmut Schmidt of the Federal Republic of Germany and his friend, President Giscard d'Estaing of France. So, amid the arcane power struggles going on in Washington these days, the underlying, really important question is: will the White House succeed in breaking through the Haig-Weinberger et al. screen (including submarines in the Kitchen Cabinet) and abandon Thatcherism in favor of the Franco­ German option, or will the President unwisely squander the electorate's good will and, following Thatcherism, be Hooverized by the summer? Wh ich way this question will be answered will depend primarily on the following factors: first, the thoughtfulness that the White House and its allies, and potential allies in Congress, will display. Second, the energy and

26 Special Report EIR March 31, 1981 Schmidt. Giscard. and Thatcher at their first European summit on April 27. 1980 in Luxembourg. Giscard called Thatcher's . obstructions "a contemptible spectacle. " and the Franco-German directorate of continental policy grew tougher.

determination with which the Franco-German alliance the World Bank-IMF genocide policies and the launch­ will pursue its aims. Third, how well the American society ing of a $200 billion-plus annual export drive from the and economy will be able to resist the effects of Thatch­ United States; a concomitant massive industrial and erist economics already rampant in the Reagan adminis­ technological expansion of the domestic U.S. economy; tration. and a challenge to the Soviet Union to compete with us Wh at the stakes are that hang upon resolution of this on who will better develop and industrialize the Third question: ifPr esident Reagan goes with Mrs. Thatcher. he World. will be locked into the type of no-win military posture President Reagan's choice is between becoming a embedded in Secretary Weinberger's defense budget, great President or ending up like Herbert Hoover some­ thus further weakening this country's strategic position time during this year. vis-a-vis any potential adversary. The foreign policy For reasons we are not completely privy to, both implications of Thatcher's monetarism will translate into Chancellor Helmut Schmidt and President Giscard rapid expansion of destabilizations, upheavals and d'Estaing decided to mobilize all resources at their dis­ shooting wars throughout Latin America, western Afri­ posal against Mrs. Thatcher immediately after the prime ca, southern Africa, the entire littoral of the Indian minister completed her visit to the United States two Ocean and Southeast Asia. The domestic implications of weeks ago. In a March 10 nationally televised interview, Thatcher's monetarism for the U.S.A. will be similar to President Giscard branded Mrs. Thatcher's policies as that lady's impact on the British economy: mass unem­ "extraordinarily dangerous from a social standpoint." ployment, shrunken tax base, greater budget deficits, "These policies which are called monetarist policies," he higher inflation rate, collapse of industrial production, continued, "accept a slowdown of economic activity, and shrinkage of industrial capacity, and long-term erosion I can tell you that next year the British economy will of the country's ability to put up a credible, science and again decline, that there will be another drop in produc­ technology-based strategic long-term defense effort. If tion in Great Britain." Two days later, Mr. Giscard's President Reagan goes with the Franco-German op tion. he treasury secretary, Jean-Yves Haberer, reiterated once will essentially adopt the international economic policy more the alternative to Thatcherism: "The European of the European Monetary System, involving the long­ Monetary ' Fund has protected continental Western term world industrial-development perspective initially Europe fr om the monetarist epidemic that has spread elaborated during the 1975-77 period by Mr. Lyndon elsewhere." LaRouche, the chairman and founder of the EIR . The most important observation to be made about This would mean some type of reorganization of the the political struggle in Europe is that France and West trillion dollar-plus Eurodollar market, dumping of all . Germany have no choice in the immediate future but to

EIR March 31, 198 1 Special Report 27 redouble their energies and efforts on behalf of their If continental Western Europe, European leaders current policies, so long as their present governments reason, sides with a continuously weakening U.S.A. in remain in power. The reasons are primarily military­ provocations against a continuously improving Soviet strategic reasons of national security; the leadership Union, what are we to do in the event one of those Third circles in both France and the Federal Republic of Ger­ World conflicts escalates into a superpower conf.ronta- many, especially over the past disastrous four years of tion with thermonuclear implications? the Carter administration, have conducted an in-depth Under such circumstances, continental Western Eu­ study of the causes underlying the erratic and disastrous rope will either side with the U.S.A. and be incinerated, course of United St�tes policies at home and abroad. It or will part its ways with the U.S.A. and become a captive was a study which was significantly assisted by the pawn of the U.S.S.R. Neither of these two alternatives is publishing and. other activities of the EIR and its founder, appealing to sovereign nations. Therefore, the forces of Mr. LaRouche. The conclusion that any cultured person the European Monetary System have no option available had to reach upon completion of such a study WaS that to them but continue to strive to defeat Thatcherism's what ails America is not the erratic and inadequate influence over the Reagan administration and assist personality of a Jimmy Carter per se, but rather the President Reagan to appreciate the enormous benefits underlying policies of the Eastern Establishment's long­ this country's economy, industry, and technological term policy elite, the policies of Global 2000, Agenda power would derive by dumping monetarism and, along '80s, Project 1980s, and associated neo-Malthusian poli­ with the European Monetary System, going into a mas­ cy commitments of the New York Council on Foreign sive program of technology transfers into and general Relations, Trilateral Commission, Heritage Foundation, industrialization of the Third World. Ditchley Foundation, the Carnegie Foundation, the Ford Foundation, and others. According to the French and German leaders' esti­ mations, these neo-Malthusian commitments of the Eastern Establishment elite, commitments which are as­ President Giscard sociatedwith both the "liberal" and "conservative" guis­ es of Thatcherite monetarism, are locking the United blasts monetarism States into a full-scale march backward into the "post­ industrial" dark ages, with the medieval banners of the On March 10, French President Giscard delivered a blast Mont Pelerin Society and the Heritage F.oundation fully against Britain's monetarist policies in a nationally tele­ unfurled against the tempest of growing world crises and vised interview to the French nation. EIR excerpts his destabilizations. The rub for the Europeans is this: statement. Giscard began his attack by desaibing the two Thatcherite monetarism must dictate to the United States economic policies that destroyed Britain's industry. a military policy very much like Secretary Weinberger's defense budget: not one penny for advanced military The first ... is a statist policy. That is to say "let's R&D and improvement of strategic fo rces, while at the recruit functionaries, let's nationalize different sectors." same time massive increases in colonial-type convention­ This is what the Labour government did in Great Britain, al forces assigned to engage in every conceivable type of and you have seen the state of the British industry as a combat throughout the Third World. The Europeans, to result. There are 2 or 21/2 million unemployed, despite their horror, see Washington invite them to join this mad, considerable oil resources. Entire portions of British shallow, in-width deployment while they see the Soviet industry have disappeared. They may have nationalized Union continuing to meticulously improve its science the auto industry, but now it is being bought up by the and technology-based strategic forces. The Europeans Japanese. And the steel industry is having much greater reason thusly: the Soviets already have undisputed supe­ difficulties than ours. In France our industries are strug­ riority in conventional military forces and it would be gling with some difficulty, but they are struggling to stupid for the United States to match conventional Soviet maintain their activity and jobs. strength. If you want to pick a fight at least be smart So the solution that consists of creating nonproduc­ enough to pick it when you have the advantage, dummy. tive jobs is a solution that is guaranteed to fail after two Second, while the U.S.A. is trying to match the U.S.S.R. or three years, and this failure has a very simple name: in an area where the U.S.S.R. will continue to retain bankruptcy .... decisive superiority, the U.S.A. is also totally neglecting Then there's the other solution: here we have Mrs. any efforts to qualitatively improve its long-term strateg­ Thatcher's or Mr. Reagan's name being brought up. ic capabilities at a time when the U.S.S.R. is moving These are policies which, if implemented in France, forward all the industrial and scientific capabilities re­ would be extraordinarly dangerous from the social quired for such an effort. standpoint. Because these are policies which accept a

28 Special Report EIR March 31, 1981 slowdown of economic activity-and I can tell you that, will have to face up to the fact that the deutschemark and for example, next year the British economy will again the Swiss franc will suffer a currency collapse in which decline, that there will be another drop in production in the currency flight will turn into a capital flight. The Great Britain. West European economies will then lack the resources These policies, which consist of unleashing certain necessary for recovery. fo rces of the economy-which [otherwise] is healthy when pushed to the limit-result in employment and West German finance Minister Hans Matthofe r, conjunctural situations that are totally unacceptable, and statement referred to by West German Handelsblatt busi­ which are accompanied by interest rates of 20 percent, ness daily in a Feb. 13-14 artic/e, "Maithofe r Pleadsfor a since as soon as you create large deficits, they are fi­ World Interest-Rate-Lowering Round, " which reads in nanced by borrowing, and these loans are at 19 percent part: in. terest rates in the U.S. and 22 percent in Great Britain. Federal Finance Minister Hans MatthOfer warned at Can you imagine French farmers with 22 percent the Wirtschaftswoche [weekly economic magazine] mon­ in1erest rates? Can you imagine the construction industry . ey-market fo rum of a "tendency for a kind of currency in France with 20 percent interest rates? I am quite sure revaluation race" on the basis of international interest­ there would be a revolt within a few months! These rate policy. This theme should become the subject of policies, which are called monetarist policies ...would international. consultations. "A kind of government def­ mean accepting interest rates which, in my opinion, the icit-financing race or interest-rateraisin g race, which no French people-and I understand them completely­ longer leads to improved chances for growth and there­ have absolutely no intention of accepting. fore leads instead to a worldwide contraction of markets and decreasing employment opportunities, would cer­ French Treasury Secretary Jean- Yves Haberer, Paris col­ tainly not be sensible strategy." loquium in honor of economist Jacques Rueff, March 12, The data fo r unemployment and inflation in the high­ 1981. interest countries should, according to MatthOfer, give The European Monetary System has protected con­ pause for thought. ... An internationally coordinated tinental Western Europe from the monetarist epidemic move to lower interest rates would therefore be in the that has spread elsewhere. interests of not only the Ger�an national economy.

French Economics Minister Rene Monory, interview, Dr. Eberhard Dettweiler, Bank fii r Gemeinwirtschaft French national television, prior to departure fo r United chief economist, EIR interview, Feb. 24, 1981. States. Will [Volcker] increase interest rates even more; will Current U.S. interest rates are a handicap for Euro­ he kill off, from the bottom up, the small and middle­ pean countries. It is unreasonable for them to be main­ sized industries, and move on to the big ones? I don't tained for any length of time. know a businessman in the world who can keep his shop running on 25 percent interest rates. I see no reason at all why Volcker's resignation would bring the dollar European leaders down ....If Volcker's resignation had any effect at all, this would be very slight. Reagan's basic program for castigate V�lcker economic growth, investment, and productivity, is exact­ West German Chancellor Helmut Schmidt, interview, ly what is needed to give Americans back their sense of French Les Echosfinancialdaily, Feb. 25, 1981. confidence in themselves. That is what is good, and�)D I consider the interest rates in America and in other that basis, there is no danger of the dollar's collapsing. parts of the world to be destructive, and in the long run Get the interest rates down! That is what the Ameri­ to be absolutely unacceptable if we do not want to can economy needs, and that is what we need. abandon our goal of full employment. ... The unpre­ dictable character of American monetary policy in the Dr. Andreas von Becker, chairman, Industriebank past few years was one of the reasons that the European A.G.-Deutsche Industriebank of DUsseldorf, EIR inter­ currencies, in particular the franc and the mark, detached view, Feb. 24, 1981. themselves from the dollar, which then led to the creation The idea of convening an international conference of the European Monetary System. for interest-rate disarmament with the Big Four coun­ tries is a very good one. Our sentiment is indeed that We st German Chancellory Defense spokesman Lothar interest rates are too high .... Ruehl, Munich conference of the Wehrkunde defense dis­ Therefore, it would be very good to have a worldwide cussion group, Feb. 22, 1981. cut in interest rates, and it would be very good for the If current high interest rates persist, the Americans United States, too. This is a question we also ask our-

EIR March 31, 1981 Special Report 29 selves: How long can U.S. industry go on with such the summit of Western industrialized nations scheduled interest rates? ... If Volcker resigns, I do not see any for early this summer in Ottawa, Canada. reason why the dollar should go crashing down. Why Ifonically, the high interest rates have had one effect should it? If the dollar went down slightly, it would do quite the opposite of what their originators had in mind. no harm to the U.S. economy .... Giscard and Schmidt, the two initiators of the European It is not true that Mr. Volcker enj oys the support of Monetary System (EMS), have put implementation of the international banking community. Even if we feel EMS policy on the front burner. The second phase of the that we should not intervene into American affairs­ EMS, the European Monetary Fund (EMF), would in­ what is good fo r West Germany is not necessarily good stitute a new credit-generating mechanism that would for the U.S.A.-even if it is not our job to criticize what rapidly outdistance the monetarist-dominated Interna­ our American friends are doing, still, this does not mean tional Monetary Fund. that Mr. Volcker has our support, not at all! Speaking at last week's Paris conference to commem­ Let us have lower interest rates. Let the U.S. popula­ orate the late Jacques Rueff, who was Charles de Gaulle's tion tackle their problems and find their own way of brilliant monetary adviser, French Treasury Secretary doing that. ... Jean-Yves Haberer described the European Monetary System as the only thing that has protected Europe Finance Ministers of the European Community. meet­ "from the monetarist epidemic that has spread -else­ ing in Brussels. as reported in a Feb. 17 New York Times where." Haberer asserted that Phase Two of the EMS article which read in part: would not come about as the result of "technical" meas­ The ministers urged the United States to help reduce ures, but was rather a question of exerting "political the broad gap between interest rates in America and will." Within a matter of days, Finance Minister Matth­ Europe. They said that the substantially higher rates in orer asserted that Phase Two of the EMS should not be the United States were the major reason for the dollar's delayed much longer, and attributed previous delays to recentsteep climb against European currencies. difficulties with the dollar. The ministers agreed to ask French Finance Minister France, which maintains historically close political Rene Monory to explain the European position to Amer­ relations with Third World countries, is also closely ican officials later this week at a meeting of the Interna­ coordinating its interventions into the U.S. situation tional Monetary Fund's Interim Committee in Wash­ with Mexican President Jose L6pez Portillo. French ington. Economics Minister Rene Monory visited Mexico a few The EC's decision to seek a narrowing between Eu­ weeks ago, immediately prior to his official mission to ropean and American interest rates is underst�.od to be Washington. Following his talks with the Me�dcan pres­ the result of an effort by West Germany, which is seeking ident, Monory told the French daily Le Monde that both support from its Western trading partners, including the France and Mexico were extremely concerned with the United States, for a coordinated reduction in interest U.S. decision to cut back its development aid to the Third rates. World. French policy toward the LDCs is the paradigm of what Mexican-U.S. relations could become. Giscard's "trialogue" proposal was publicly defined at a Paris Phase Two of the conference by an economics ministry official recentlyas a new concept to unite the capabilities and needs of the EMS looks to Third oil-producing nations, the European countries, and the non-oil-producing Third World around economic devel­ World development opment projects in Africa. Under Giscard, France has also pioneered the oil-for-technology, and particularly by Dana Sloan oil-for-nuclear agreements that Mexico seeks from the United States. Giscard has signed nuclear cooperation agreements French President Giscard's dramatic denunciation of with Iraq, Egypt, and South Korea, among others. Un­ monetarism has set in motion a powerfully coordinated der the "trialogue" proposal, France is arranging for the international combination. According to sources ex­ financial resources of the oil-producing countries to be tremely close to Giscard, the French president intends to channeled into capital-intensive development projects in make the issue of credit contraction-the foundation of Africa using Western technology, equipment and know monetarist economics-especially with respect to the how. The EMS/EMF. would serve as the mediating 'less-developed countries, the first agenda item for all institution for these exchanges, and is open to a "hook­ future contact withthe Reagan administration, including up" with the U.S. dollar.

30 Special Report EIR March 31, 1981 East-West Policy

West Germany and France act as strong 'interlocutors for peace'

by Susan Welsh

When West German Chancellor Helmut Schmidt comes to his cabinet forbidding any public griping about Rea­ to Washington for a state visit May 20-23, the main gan's policies-even though many of the President's preoccupation of the U.S. administration faction around statements to date are by no means popular in Bonn. Secretary of State Alexander Haig will be to prevent In a radio interview March 8, Schmidt affirmed he Schmidt and Pre�dent Reagan from meeting alone, would "certainly" urge Reagan to take up Brezhnev's without aides, foreign ministers, and the like. This little offer for a summit meeting. Speaking the next day,

conspiracy was revealed by a well-placed source who o Schmidt stressed that Brezhnev's offer of a moratorium hopes it will work. Haig and Company fear that Schmidt on the deployment of medium-range miSSiles in Europe may suceed in drawing Reagan, who has no foreign should be discussed by the West, even if it is "not just policy experience, into the policy framework shaped by what we would like." Schmidt added. that Brezhnev's himself and French President Valery Giscard d'Estaing. offer is particularly important "at this time"-an evident This is the policy Schmidt has often characterized as reference to the transition underway in Washington. Europe's mission as the "superpower for peace": the President Giscard has already put relations with Rea­ effort to stabilize East-West relations and turn them into gan on a cordial footing through personal transatlantic a durable detente through economic and political coop­ tdephone conversations. In an interview with Le Figaro

eration, and the implementation of a Western economic Magazine Feb. 28', Giscard spelled out the role he sees policy based on growth-not "Thatcherite" austerity. fo r France as the "interlocutor for peace": Everything that Alexander Haig has done since as­ "In the coming months, France could play a major suming office has been aimed to prevent this from hap­ role on the international plane. At present, it is the pening. From his first irresponsible charge that the So­ chosen interlocutor of the two superpowers ....France viet Union runs international terrorism, to his latest wants to be and must be an interlocutor for peace. I know dismissal of Soviet President Leonid Brezhnev's offer for that when the word peace is used, some people compare arms control negotiations as "mere propaganda," Haig it-referring to experiences like the Munich experience­ has determined to set the United States and the Soviet to notions of resignation or national retreat. But it does Union on a course of permanent confrontation. This not mean that. The search for peace consists of studying would mean a head-on clash with France and West all possible ways of settling problems before their solu­ Germany too, unless domestic destabilizations run by tion leads to catastrophe. If we need to defend ourselves, Haig's friends in the Socialist International succeeded in we will do so; but first, we must do all we can to explore ousting Schmidt and Giscard from office. the other possibilities." But in the leaders of France and West Germany, Haig Asked whether it was true that the French people confronts skilled and experienced statesmen who are most fear "the Soviet threat to Europe," Giscard frankly moving to outflank such maneuvers and establish per­ denied it. "Their main fear is war and destruction," he sonal rapport with the new U.S. President. Relieved at said. "If a war breaks out in the world, it will be fought the demise of the Carter administration, Schmidt and once again in Western Europe where the accumulation Giscard hope to give Reagan a crash course in foreign and concentration of arms is such that it would be the policy and economics, bringing the U.S. into their own end of West Europe, a relatively glorious end but the end war-avoidance alliance. just the same." Even before Reagan's inauguration, Schmidt visited To counter the Franco-German war-avoidance poli­ the President-elect in Washington, confounding the ef­ cy, media sources ranging fr om the Baltimore Sun and forts of Haig and other Reagan aides to keep the meeting New York Times to the Swiss Neue Zurcher Zeitung have short, social, and devoid of substance. Now, as the suddenly begun to put out the line that France has chancellor's official visit nears, Schmidt has given orders become the most Atlanticist of the allies, advocating a

EIR March 31, 1981 Special Report 31 hard line against the Soviets and a cutback in East-West the Wehrkunde defense gtoup in Munich on Feb. 22. trade, whereas the Federal Republic of Germany is an (see EIR March 10). unreliable ally, "the odd man out," weakened by "neu­ This view was officially reiterated at a meeting of tralist tendencies." the West German cabinet on March 11, following the This is a total distortion, as a leading French com­ announcement by Defense Minister Hans Apel that the mentator with close ties to the presidential palace wrote increase in the defense budget would not meet the 3 in Le Figaro newspaper March II. Paul-Marie de la percent target set by NATO. "Chancellor Schmidt Gorce attributed such speculations to "some Atlanticist thanked Apel for already successful economizing meas­ circles in France," and called them "rather absurd and ures in the sum of 1.3 billion deutschemarks," reported even a little bit indecent." The fact is, he wrote, that for the financial daily Handelsblatt. "The cabinet stressed the first time in postwar history "France is no longer their view that German defense responsibilities could be isolated," and the convergence of French and German met, because the big procurement programs such as the policies allows for "a functioning European ind�pendent Tornado fighter and the Leopard II tank would not be foreign policy." cut. The cabinet concluded that the defense capabilities Far from curtailing economic ties with the Soviet of the Federal Republic of Germany were premised on Union and Eastern Europe, both France. and West Ger­ its ability to finance defense. Economic stability and many are expanding them. The French are calling for an growth capability are the preconditions for a new. end to the European Community ban on sales of grain to division of labor within NATO." the Soviet Union, and are in fact planning to sell the Schmidt will seek to convince President Reagan that Soviets 600,000 tons of wheat. West German trade with Brezhnev's offer for a moratorium on deployment of the Soviet Union increased 10 percent during the past "Euromissiles" deserves discussion and negotiation, year, with agricultural exports increasing fivefold. De­ within the framework of the overall Franco-German spite pressure from the United States to curtail the scope war-avoidance strategy. In his radio interview March 8, of the huge deal for construction of a pipeline to supply the chancellor explained why the achievement of a Soviet natural gas to Western Europe, the West Germans military equilibrium would not be enough. "Even if a reiterated during the past week that they are as commit­ military balance is a necessary prerequisite for any ted as ever to the project. The only problem involved is peace, that does not mean submission to the will of the what interest rates to charge Moscow for loans, since the other side," he said, "this equilibrium alone does not high interest policy of the U.S. Federal Reserve has suffice to· safeguard peace. What must be added is the pushed up German interest rates above what the Soviet sentiment for peace, the will for peace, the willingness Union is willing to pay. to understand the other side, the willingness to take his At the annual international trade fair in Leipzig, East interests, his requirements into account, the readiness Germany this week, new deals were clinched for the for compromise." supply of West German coal to East Germany to make Asked whether negotiations with Moscow could up for the losses in coal deliveries from Poland. The head make it unnecessary to carry out NATO's 1979 decision of West Germany's mission to East Germany, Klaus to deploy new missiles in Europe, Schmidt replied: "I Bolling, met with East German leader Erich Honecker, believe that it can still be avoided .... I am convinced and the two agreed that relations should be improved, that these negotiations will materialize. Unfortunately, and that relations between the two Germanies should be the offer made by Mr. Brezhnev in this respect in his insulated as much as possible from tensions in global speech at the party congress does not go far enough. It East-West relations. even lags behind ideas he stated once before in East Berlin on Oct. 6, 1979. At the time, he was ready to Defense and arms control withdraw a large part of the Soviet Eurostrategic mis­ When Schmidt comes to Washington, one of the top siles behind the Urals in addition to the moratorium. agenda items will be U.S. efforts to get West Germany Though this would not have meant much, because the to increase its military budget and to deploy its forces range of these weapons is roughly 4,000 kilometers, it to the Persian Gulf and other areas outside the NATO would have been a gesture toward removing the pres­ region. Numerous statements coming fr om Bonn make sure exerted on Europe." it clear what Schmidt will say: I) deploying West Schmidt concluded: "Ronald Reagan told me in a German fo rces outside NATO is completely out of the talk shortly after his election and prior to his inaugura­ question for constitutional reasons, and 2) rising defense tion in Washington that he is prepared to negotiate with expenditures are contingent on the lowering of U.S. the Soviet Union, in particular on arms limitati,on .... interest rates and an improvement in the world econom­ Surely he will not be an easy negotiating partner who ic situation. An official Bonn government spokesman, can be taken in..,...... thank God, no. By the way, the Lothar Ruehl, said so at an international conference of Russians will not be easy negotiating partners either."

32 Special Report EIR March 31, 1981 U.K. Strategy ably be in the range o.f4 to. 5 millio.n,between 15 and 20 percent o.fthe wo.rking po.pulatio.n.

The bigger gameplan The decisio.n to. reprieve Thatcher at this juncture is Whywas Thatcher no.t so. much based o.n an assessment o.fwhat ensues if the psycho.tic Friedmanite is kept in o.ffice-the disaster kept in office? signs are all o.ver the place-but o.n what the perverted po.licy-makers amo.ng Britain's sectio.n o.f the o.ligarchy co.nsiders will be lo.st if Thatcher is to.ssed o.ut. by Christopher White, Contributing Editor Lo.ndo.n is no.wattempting to. maneuver the Reagan administratio.ninto. Phase II o.fthe destabilizatio.no.f the British Chancello.r o.f the Exchequer Geo.ffrey Ho.we po.tentials unleashed within the U.S. by the electio.n o.f secured passage fo. r the third and to.ughest deflatio.nary Ro.nald Reagan last No.vember. It was, o.f co.urse, budget yet presented by the go.vernment o.f Margaret Thatcher ally To.ny Wedgwo.o.d Benn who. o.utlined the Thatcher in a Ho.useo.f Co.mmo.ns vo.te o.n Ma rch 17. Fo.r two.-phase project-which was ado.ptedat theco.nference the first time 30 o.f Thatcher's o.wn Co.nservatives ab­ o.fthe So.cialist Internatio.nal in Washingto.n, Dec. 5-7. stained fro.m vo.ting o.n crucial fe atures o.fthe package; Benn projected that in the fi rst phase Reagan co.uld o.thersvo.ted against. be manipulated into. adherence to.the high interest rate, The rebellio.n in the ranks o.fThat cher's ruling Co.n­ anti-industry and antifarming po.licies o.f Federal Re­ servative Party, mo.tivated by increasing reco.gnitio.n o.f serve Chairman Paul Ado.lph Volcker, and be what he the butchery that is being perpetrated o.nthe wreckage o.f called "Thatcherized," o.r discredited, in the eyes o.fthe British industry, disguises the fact that an increasingly the U.S. pOpulatio.n. At that po.int, Phase II, a wave o.f desperate and co.rnered. British o.ligarchy has given Mar­ terro.rist vio.lence and urban co.nfro.ntatio.ns, co.uld be garet Thatcher ano.ther guaranteed six mo.nths in which unleashed o.verthe spring and the summer o.f 1981. her so.-calledexperiment with the Friedmanite Nazi cure This internatio.nal factio.n is based o.n the neo.-Mal­ fo.r their depressio.ncan be co.ntinued. thusian geno.cide do.ctrines avo.wed mo.st co.ncentratedly by the Thatcher go.vernment in Britain, which is its Sticking with Thatcher leading instrument glo.bally. Thatcher is at this po.int ruling the wreckage o.f The decisio.n to. keep Thatcher in o.ffice, in sho.rt, Britain in a de facto.coaliti o.nwith the radical "wo.rkers' signals an upgraded determinatio.n o.n the part o.fthat co.ntro.l" wing o.f the British Labo.ur Party >asso.ciated internatio.nal factio.n, identified o.therwise by the rally­ with the high priest o.fBritish dissidentry To.ny Wedg­ ing po.ints o.f the o.ligarchy such as the Club o.f Ro.me wo.o.d Benn. In the public acco.unts o.fthe fights leading and the Wo.rld Wildlife Fund, to. keep Reagan o.n his up to. the March 17 passage o.fthe Ho.we eco.no.mic present po.litically disastro.usco.urse. package, such an alliance between the two. extremes o.f This decisio.n has been made as President Valery the public British po.litical spectrum had beco.me a Giscard d'Estaing o.f France made the internatio.nal subject o.f discussio.n in that co.untry's press. fight against the suicidal co.nsequences o.f Thatcher's As was po.inted o.ut by Peregrine Wo.rstho.rne, co.l­ mo.netarist do.ctrines the leading edge o.fhis re-electio.n umnist fo.r the Lo.ndo.n Sunday Telegraph, the radical campaign in France, and as the effo.rts o.fleading U.S. capitalist-roaders o.fthe Thatcher free-trade scho.o.l and Demo.crat and eco.no.mist Lyndo.n LaRo.uche to. pull the radical wo.rkerites o.fTo.ny Benn's factio.n share an to.gether an internatio.nal co.alitio.n to. reverse the geno.­ antipathy to. po.licies o.fgo.vernment backing o.find ustry cidal co.nsequences o.f the mo.netarist do.ctrines o.f to. secure industrial pro.gress and eco.no.mic gro.wth. Thatcher and her internatio.nal factio.nal allies achieve Wo.rstho.rnejuxtapo.sed the Thatcher-Benn co.mbinatio.n new public pro.minence in his to.ur o.fMe xico.. with the o.ppo.site appro.ach to. po.litical eco.no.my fo.l­ It must therefo.re be assumed that the British deci­ lo.wed by the French, the Germans, and the Japanese. sio.n to. maintain Thatcher is part o.fa bro.aderpac kage .Ho.wever, the fact remains that despite the squawks to. push ahead at all co.sts-rising internatio.nal o.ppo.si­ o.f o.ppo.sitio.n to. be heard fro.m such cabinet ministers tio.n to. their hideo.us strategy thus disco.unted. as Prio.r, Gilmo.ur, Carringto.n, Pym, and o.thers, the The British Parliament's budget vo.te can thus be decisio.n has been made to. pro.lo.ng the ago.ny into. the pro.perly viewed as the harbinger o.f a new wave o.f fall o.fthe year. By that time it is to. be expected that internatio.nal wetwo.rks and dirty tricks, fo.r which the entire chunks o.f the remains o.f British industry 'will climate has been prepared internatio.nally since Decem­ have been co.nsigned to. the no.t-so.-metapho.rical gar­ ber by the activities o.fthe So.cialist Internatio.nal allies bage can, and unemplo.yment within Britain will pro.b- o.fThat cher's co.ntro.llers.

EIR March 31, 1981 Special Repo.rt 33 ' I

LaRouche's Mexico tour and the oil-for-nuclearpl an

by Dennis Small

Lyndon H. LaRouche, the founding editor of .Executive vate sector-has responded positively to LaRouche's Intelligence Review, told an international symposium on call. This is seen clearly in the quality of political debate economics in Monterrey,. Mexico on March 9 that if the on matters of energy and population which has emerged government of the United States were to immediately in the wake of Mr. LaRouche's interventions (see news agree to trade oil for technology with Mexico, vast excerpts and reports below), and in the excepti'onal press benefitsfor both countries would result. The U.S. could coverage afforded LaRouche in Mexico. Indicative is an sell Mexico $100billion in American capital goods and editorial appearing in Mas No ticias, the largest afternoon technology during the next decade. Mexico would trade daily of Monterrey, Mexico. its "20th-century surplus resource, petroleum, for the "It would'be wise to pay close attention to the words technology of the 21st century," such as nuclear plants. of warning that have just been voiced by the American And there would be a "change in the global strategic economist Dr. Lyndon H. LaRouche. Mexico would geometry resulting, chiln-reaction fashion, from the es­ benefit if it traded its surplus of a potentially obsolete - tablishment of such a relationship." source, oil, for modernindus trial technologies of the 21st LaRouche was the guest speaker ,before 250 persons century. at the International Symposium on Economics, an an­ "It is somewhat ironic," the mass circulation daily nual event sponsored by the Monterrey Institute of concluded, "that it takes an American to alert us [but] it Technology. The institute is the principal think tank of is here that we believe that the Mexican government Mexico's industrially powerful, Monterrey-centered pri­ should focus all its attention." vate sector. Mexican government officialsand leaders of the busi� The address was part of a six-week speaking tour by ness community have already taken up Mas Noticias's Mr. LaRouche, which will ha.vetaken him from Monter­ advice. Over the past week they held extensive private rey and Mexico City back to Washington, D.C. at the discussions with Mr. LaRouche in both Monterrey and end of March to address an executive seminar sponsored Mexico City, responding favorably to the oil-for-tech­ by EIR on U.S.-Mexico relations, all aimed at influenc­ nology strat�gy, and debating out the details of its ing the April 27-28 meeting between Mexican President implementation. Jose L6pez Portillo and President Ronald Reagan. But as much as it is an offer to Mexico, the LaRouche "Shaping the outcome of the upcoming Reagan­ proposal is also a challenge to the Reagan administra­ L6pez Portillo summit is precisely one of my objectives tion: jettison Volcker's high interest-rate policy of eco­ in coming here," LaRouche told a Monterrey television nomic austerity; reject the Carterite "Global 2000" strat­ audience. egy of reducing world popUlation through genocide; and Mexico's political elite-both governmental and pri- execute the electoral inandate of re-embarking America

34 International EIR March 31, 1981 on its original course of high-technology industrial de­ 1980, President Lopez Portillo himself declared that velopment. "the creation of such an entity would inevitably hinder LaRouche elaborated on this theme to a packed press our industrial development," and would condemn Mex­ conference in Mexico City on March 16: ico to "perpetually extracting and exporting raw mate­ "If the Reagan administration continues its present rials for their consumption by more advanced societies." policy, we will probably be in an irreversible world That is why, he concluded, Mexico rejects the idea of depression beginning May or June of this year." any "regional economic association" in North America, If, however, the Reagan administration adopts a "be it general or be it in the field of energy." development strategy toward neighboring Mexico, Reagan's Canadian torpedo was not enough for LaRouche explained, this can serve as a model of mu- Haig's boys. They provocatively rubbed salt in the tually beneficial economicrelat ions to be fo llowed in all wound in the fo rm of statements to the press issued by areas of American foreign policy. This, in turn, would go John Gavin, the Hollywood actor who has been widely a long way toward cooling out the worst political hot mooted as Reagan's choice for ambassador to Mexico. spots-such as Central America and the Middle East­ Gavin is quoted in the Mexican press saying: "I propose that now have the world on the brink ofwar� to you ...the fo rmation of a North American Common Such an American policy would work hand-in-hand Market, which would include Canada, the United with the Third World strategy outlined by our European States, and Mexico ....The advantages of unifying our allies, such as President Giscard d'Estaing of France, energy resources is obvious." whose government has announced that its entire Third Gavin called for an end to Mexico's jealously de­ World policy is premised on transferring advanced tech­ fended industrialization strategy: "What Mexico needs nology to aid this sector's industrial modernization. In are labor-intensive industries, and not so much those fact, LaRouche used his Mexico City press conference to that are intensive in the use of capital ... such as steel issue a call to the heads of state of France, Mexico, West and petrochemical." Germany, and India to influence the Reagan administra­ Although it is not altogether clear whether Gavin tion to reverse the current disastrous course of U.S. actually holds the views he purportedly uttered, or if he policy. was simply fed a pre-packaged speech by Haig, the effect in Mexico was to provoke predictable outrage. Common Market The Common Market question has been a long­ Where Mexico is open to an oil-for-technology standing-and fundamental-bone of contention be­ relationship, Washington is still in the throes of a tween the United States and Mexico. Carter's terrible factional brawl between those-like LaRouche-who relations with Mexico in large part were due to his support this policy, and those circles that are opposed advocacy of this approach. Ronald Reaglln, at his first to the industrial development of the Third World. For meeting with Lopez Portillo in January 1981, judicious­ example, Secretary of State Alexander Haig and Na­ ly avoided calling for a North American Accord, despite tional Security Adviser Richard Allen have consistently the strong pressure fr om National Security Adviser opposed a U.S.-Mexican alliance based on economic Richard Allen and others to do so. In the weeks leading cooperation. up to that meeting, Lyndon LaRouche was the most Aware fr om past experience that the policy proposal vocal opponent of any such tripartite approach, calling which most rankles Mexico's government is the Carter­ then-as he is today-for a strictly bilateral approach concocted idea of establishing a "North American to Mexico, centered on the oil-for-technology concept. Common Market" among the U.S., Mexico, and Can­ The issue now is whether the LaRouche prodevel­ ada, Haig and Co. put out that line to the press last opment policy or Haig's contrary view will prevail week. Worse, they used Reagan's Canadian trip and his inside the Reagan administration. meetings with Prime Minister Trudeau to have "White House sources" tell the press that the Canadian and Growth rate American heads of state "enthusiastically" agreed to The present Lopez Portillo government of Mexico is invite the Mexican President to "regular tripartite sum­ committed to using Mexico's oil resources to achieve mit meetings" to work out the idea of a "North economic growth rates of 7 to 8 percent per year. American Accord" among the three countries. The crux of Mr. LaRouche's recommendations is The Lopez Portillo government is unalterably op­ that Mexico can and must raise growth rate targets to posed to this North American Accord proposal-a at least 12 percent per annum, the minimum annually rewording of the original "Common Market" scheme­ required to overcome key economic bottlenecks-trans­ on the grounds that it would undermine Mexico's own portation, education, etc.-and to offset the "overhead industrial development strategy. cost" of Mexico's large subsistence agriculture sector, In a speech to the Canadian Parliament on May 26, which must be replaced with a modern farming sector.

EIR March 31, 1981 International 35 Policy Proposal

'20th-century resource for 21st-century technology' Lyndon H. LaRouche, Jr.

In his address March 9 to the Monterrey Institute of Mexico must go nuclear Technology's "International Symposium on Econom­ "The major feature of global investment over the ics," Lyndon LaRouche outlined an "oil-for-technolo­ coming decades must be nuclear technologies ....Every gy" initiative that is provoking broad interest among nation which intends to have a technological future, policymakers on both sides of the border. including most of the semi-industrialized developing Based on agreement between the governments of the nations, must now begin to develop nuclear technolo­ United States and Mexico, LaRouche reported, the oil­ gies. Nations ... such as Mexico must become masters for-technology approach would "represent in principle of thermonuclear technologies, developing the research the model for a new economic order in North-South and training programs required, as Pemex has done in relations. Mexico," he continued, "enjoys the special connection with petroleum technologies." world-historical importance of being among those lead­ LaRouche also proposed that Mexico complement ing developing nations whose special circumstances en­ nuclear with advanced M HD natural-gas-based energy able it to bring the beginning of su.ch a new economic production-especially in the eastern parts of Mexico order into being." where natural gas is plentiful. He recommendeQ that American companies aggressively join the international Increased production bidding for such nuclear and MHD contracts. of oil for export "Let us assume, for purposes of discussion, that the projected increase in Mexico's production for oil ex­ Modernization of agriculture ports to the United States were to reach 2.5 million An immediate development objective must be to barrels per day," said LaRouche. "Let us assume that eliminate subsistence agriculture, not to subsidize its this ·means that over the first decade of such an agree­ continuation. "We must end the policy of bringing the ment Mexico would receive the current equivalent of price of food down to the reduced income-level of $150 billion in high-technology capital-goods imports, marginally productive households. We must, instead, in addition to other · categories of purchases effected bring the earned income of households up to the level with oil revenues .... needed to secure food supplies priced on the basis of "The export of $150 billion more of capital goods parity prices paid to agricultural producers. . . . This from the United States to Mexico would accelerate enables massive capital inputs into the rapid moderni­ investment and capital turnover in the most advantaged zation of agriculture in extensive modes. It requires basic industries of the United States, accelerating tech­ rapid development of modern industrial workplaces to nological progress in those industries, as well as increas­ meet agricultural requirements and to absorb portions ing productive employment in the United States. A of the labor force shifting from rural to urban fo rms of government of the United States which rejected Mexi­ employmen t." co's offer of an oil-for-technology p rogram would be a government which ought to be certified to a mental Expand education, manpower training hospital on clear grounds of galloping insanity." "If I were advising the government of Mexico, I "Mexico would benefit. It would be exchanging a would whisper to the ears of my friends in Mexico: surplus of a potentially obsolescent energy source, 'Mexico must have not only nuclear plants, it must also petroleum, fo r 21st-century technologies as well as up­ have a reprocessing capability, and must have educa­ to-date 21st-century industrial and agricultural technol­ tional and research centers through which thousands of ogies .... Ph.D.-equivalent physicists and chemists specializing in

36 International EIR March 31, 1981 advanced plasma-physics technologies are developed Documentation over the coming two decades.' " LaRouche proposed the adoption of France's 18th­ century Ecole Polytech nique as the model for integrated scientific and industrial centers to'be established across Mexico.

Port expansion on both sides of the border To handle the influxof capital goods and technology involved, Mexico needs a major expansion of port How Mexico views facilities on both its Pacific and Gulf coasts-even more ambitious than that now contemplated by the Mexican government. The same applies to now-languishing U.S. LaRouche analysis port facilities. "The Caribbean coast of the United States would blossom with new superports at places Lyndon LaRouche's Mexican tour received prominent, . such as Galveston, New Orleans, and Mobile," said favorable coverage in Mexico's major press, along with LaRouche. "The riparian transport system, the rail­ his econometric model, known as the LaRouche-Rie­ roads and air freight capacities, would blossom anew. mann model, the basis of a major new program for All this would be catalyzed by the need to process Mexican economic development coauthored by the Mex­ capital goods and related traffic with Mexico and other ican Fusion Energy Association (AMEF) and the U.S.'s nations." Fusion Energy Foundation, and presented to the public in a high-level-Mexico City conference Feb. 19-20. The Finance U.S. exports through Eximbank more significantarticles include: The United States has immediately at hand the Feb. 20, 1981, EI Sol de Mexico, "Aggressive Exploi­ institutional means to provide credit for the capital tation of Crude, Uwe Parpart Recommends to Pemex; goods this program requires Mexico to import from ScientificallyWe Will Soon Be an Industrial Power, Says America. The key, said LaRouche, "is the organization the Director of the U.S. Fusion Energy Foundation." of credit relationships on a state-to-state basis. In the Feb. 20, 1981, U1timas Noticias de Excelsior, "Mexico case of the United States, the Export-Import Bank is Must Not Fear Nuclear Energy: Dr. Uwe Parpart," by the obviou� vehicle for facilitating .oil-for-technology Edward Gonzalez. "Dr. Parpart stated that Mexico can agreements. This requires that the U.S. Congress au­ leave underdevelopment behind and enter fully into a thqrize increases in the capital of the Export-Import new economic model, based on the theories of Lyndon Bank up to the level of combined petroleum-earnings H. LaRouche," reported the leading afternoon daily. deposits and additional credit extended to Mexico." Feb. 21, 1981, EI Sol de Mexico, page I, "Political Groups Hold Back Mexican Nuclear Industry: S. Bard­ well and Soto Estevez," by Fermin Vazquez Legaria. "The future development of Mexico, driven no longer by oil but by nuclear energy, encounters serious obstacles in the lack of scientists ...it was said at the wrapup of the EIR Seminar seminar, 'Energy and the Economy: Mexico 2000,' or­ ganize� by the Mexican Fusion Energy Association." ,Feb. 21, 1981, EI Heraldo, page I, economics and Mexico: America's $100 finance section. "Mexico needs nuclear energy fo r the BillionNeighbor development of its human potential, according to Dr. Uwe Parpart," reported this major Mexico City daily. March 7 and 9, 1981, EI Heraldo, "The Topic: In California: Models," by Leopoldo Mendivil. Extensive excerpts from the proceedings of the AMEI-'jF EF conference and Thursday. April 16 2:00 p.m. the LaRouche-Riemann forecasts, in two parts. Speaker: Dennis Small. March 10, 1981, EI Norte, page I, "An Oil for Tech­ Latin America Editor. EIR nology Exchange Would Be Beneficial." Monterrey's leading daily reports on Lyndon LaRouche's presenta­ Contact: Theodore Andromidas (213) 383-2912 tion to the Monterrey Institute of Technology. March 10, 1981, Ovaciones, "Symposium at Monter­ rey Institute of Technology Opens."

EII:J March 3 r, 198 1 International 37 March 10, 1981, Mas Noticias, "U.S. Economist which overlap the established divisions between the Believes It Would Be Idiocy If His Country Did Not military-strategic alignments. He indicated that the neo­ Exchange Technology for Mexican Oil." Monterrey's Malthusian, "one-world" forces are typified in the capi­ wide-circulation daily on LaRouche's proposals. talist sector by the Club of Rome, the Pan-European . March 11, 1981, Mas Noticias, "Opinion" op-ed by Union, the World Wildlife Fund ....[In the Soviet bloc, Mr. Nunez Espinosa, endorses LaRouche's "oil for tech­ and among Communist parties, the neo-Malthusians] nology" proposal. are led by the Communist factions tied to the present-day March 12, 1981, EI Heraldo, "The Topic: Econo­ continuation of the old Communist International intelli­ metrics," by Leopoldo Mendivil. A full review of La­ gence institutions, known as IMEMO. Rouche's background, his econometric model, and his trip to Mexico. From EI Heraldo. Mexico City, March 12, 1981: March 14, 1981, The News, "LaRouche Brings Mex­ ico the Word: Technology," by Deborah Moffet. Mexico In a page one banner headline article in EI Heraldo City English-language daily on LaRouche's Monterrey last Aug. 11, this reporter brought you news from New speech. York about a charge made by Lyndon LaRouche, former March 15, 1981, Avance, page 1, "Mexico Should Democratic presidential candidate, against Carter and Exchange Oil for 21st-Century Technology: LaRouche." his national security adviser, Zbigniew Brzezinski, con­ "Lyndon LaRouche, the Democratic Party's leading cerning a plan to reduce the Mexican population. economic adviser, advised Mexico to buy $300billion of On that occasion, the U.S. embassy in Mexico denied technology to avoid an economic collapse in the 21st LaRouche's charges and denounced him as a charlatan. century," reported this Mexico City daily. In the months since, LaRouche was at least right March 15, 1981, EI Sol de Mexico, "Haig Will Cause about one thing: Carter lost .... the Death of Milli(;ms," by Fermin Vazquez Legaria. LaRouche is an economist and he enjoys matters Covers LaRouche's charges that Haig's policies toward related to physics. He describes himself as a Neoplatonist Mexico and Central America will lead to genocide. and says that the Republic of that Greek is exactly what March 16, 1981, EI Diario de Mexico, "Political the ideal system of government should be. Moment," by Arturo Blancas. this Mexico City daily Among other things he directs is a magazine called also reports on LaRouche's accusations against Haig. Executive Intelligence Review. which has an international March 17, 1981, Novedades, "Indicators," by Neftali circulation, and has gained a certain reputation fo r the Celis. Financial page coverage of LaRouche's March 16 importance of the things it has revealed-1;Iefore such press conference. "The economic program of Ronald things became concrete political reality. The degree of Reagan could lead by May or June to the worst economic interest and credibility attributed to it by the Mexican recession that Americans have ever faced." government is best measured, perhaps, by the fact that March 17, 1981, Excelsior, "Political Fronts." Mexi­ the President of the Republic used material taken entirely co's leading newspaper also covers the LaRouche press from the EIR for press briefingmat erial. conference. "LaRouche asked the governments of Mex­ LaRouche has a bone to pick, in the world of eco­ ico, India, France, and West Germany to jointly influ­ nomics, with the International Monetary Fund, which, ence Ronald Reagan to change his economic policy." he says, is a decaying institution that is an enemy of the development of the poor countries. And he asserts that he is the intellectual author of a plan for a new monetary From Ovaciones. Mexico City, March 10, 1981: system that can be called the European Monetary Fund, Dr. Lyndon Hermyle LaRouche, ex-presidential can­ which would be closely linked to the development of the didate of the Democratic Party in 1980 and current Third World .... chairman of the Advisory Board of the National Demo­ It turns out that LaRouche ...devel oped an econo­ cratic Policy Committee, as well as fo unding editor of the metric system for Mexico that differs widely from the magazine Executive Intelligence Review. Inc. said: "Since Wharton School model, used in circles of the Budget the 1976 election of fo rmer U.S. President James Earl Ministry, and the Cambridge model, which had a strong Carter, over the course ofthe recent fo ur years, there has influence in the drafting of the National Industrial Plan. been an increasing threat of general warfare. This has All this is sure to cause quite a polemic in Mexico in. been a conflict spilling over from deteriorating economic the next few days because-did you know-LaRouche is situations among developing nations ...." now in the land of Aztlan. In the past few days he was in Dr. LaRouche explained that the true cause for the Monterrey, and today he arrives in this city where, I am danger of general warfare is not the now-traditional told, he will have meetings with various personalities, conflictbetween industrial capitalist and socialist forms including some from the administration. of soCiety, but rather is a conflict between two policies We shall soon see what happens.

38 International EIR March 31, 1981 Energy Debate

Nuclear power advocates spurred by proposal fo r expanded investment by Timothy Rush

The small antinuclear fo rces in Mexico have tried to let area, such as in fo od and in medicine. Mexico's oil wealth do their work fo r them. While tar­ "In order to move on to the technology that nuclear geting some youth and leftists for an antinuclear move­ energy permits us to use." continued the editorial, "we ment, the "greenie" strategists have nurtured the line must carry out a great national effort to prepare techni­ among those less prone to environmentalist scare stories cians and professionals in this area. In the next few years that "Mexico can afford to wait on nuclear because it has the plant at Laguna Verde, Veracruz, and the reactor so much oil." center at Patzcuaro, Michoacan, will come on stream. To Lyndon LaRouche's fo rmulation during his visit that run these important installations and those which fo llow Mexico "must trade a 20th-century resource-oil-for them,we will need more than 50,000 nuclear technicians. 21st-century technologies" caught the imagination of the This requires a rapid and efficient training program for substantial pronuclear sentiment waiting to begin a these people. If we don't undertake such a program counteroffensive. The Mexican daily Novedades editori­ immedi ately, we run the risk of losing the enviable alized March 16 that "even the countries with oil, like advantage which we have been able to gain in the energy ours, must necessarily move toward new sources of en­ field, thanks to the richness of our subsoil in hydrocar­ ergy. In the case of nuclear energy, there are, in addition, bons and uranium." Mexico's twin nuclear plants at immense possibilities fo r applications outside the energy Laguna Verde (650 MWe each) are now due to begin

Union leader: nuclear political influence in terms of their ability to promote the kinds of projects they want to work on, which is shutdown means murder identical with th at of the German workers during the Hitler period when the German working class had no Excerpted below is an exchange on the pages of Uno rights at all? mas Uno in mid-March between Mauricio Schoijet,an Ponce: In the ecstasy of his anti-nuclear delirium, Argentine sympathizer with the Socialist International Schoijet, after accusing nuclear energy workers of who is currently operating an antinuclear crusadeout of being class collaborators, implies that if Hitler-type Mexico, and Nuclear Workers Union ( S UTIN) spokes­ cremation ovens were being built, the nuclear workers

man Arturo Ponce. would build them ... .

Schoijet cites [U . S . social-democratic labor leader] Schoijet: The workers are the first victims of radioac­ William Winpisinger, " Historically , industry replaces tive contaminatio n ....Wo rker toleration of the dan­ labor with energy, thereby reduci ng the number of gers of radiation is enco uraged by col1aborationist workers needed fo r production." This means that labor leaders .... ideal society would 'be one in which only human A worker at the Seabrook plant s uggested that energy is used. That's a really romantic idea. But we workers are unable to select the projects they would are 4.5 billion people living on this p lanet. Ifwe want like to work on and gave as an example the German primiti ve means of production, wouldn't many people workers who built the cremation ovens during the be in excess? ..Su ch a pre-industrial society (feudal, Hitler period .... What do workers expect from the primitive, patriarchal. or what?) May seem attractive system which gives them jobs, although they are dan­ to some people, but it won't p ro vide for the popUla­ gerous and unhealthy? What do they think of their tion !

EIR March 31,198 1 International 39 operation in 1983; the test reactor and training center at Patzcuaro, a $30 million fa cility, is just at the ground­ breaking stage. The reference to the Patzcuaro facility was appropri­ ate because in the preceding days a new group, calling itself the "Ecological Defense Committee of Michoa­ Hijacking could clinch can," had suddenly made a bid for national prominence with threats to stop the facility. , to Pakistan-and undo The environmental-leftist daily Uno mas Uno, which gave the committee every favorable mention it could, by Paul Zykofsky, New Delhi correspondent had to admit that fe w responded to the call. A glance at the lead speakers in a protest meeting March 13, how­ �ver, confirmed that an international coordinated inten­ The Pakistani air hijacking drama that ended in Syria sificationof environmental activity was involved. last week has set the stage for a chorus of demaqds that The most significant name on the speaker's roster U.S. arms be rushed to Gen. Zia UI-Haq's military was Dr. Adip Sabag, director of the Mexican Public dictatorship in Pakistan to "meet the Soviet threat." Opinion Institute (IMOP), a subsidiary of the newly Pakistani government charges that the Sov,iet Union and constituted Mexican Social Democratic Party, seeking Soviet-backed regime in Afghanistan operated in collu­ official affiliation with Willy Brandt's environmentalist, sion with the hijackers were repeated two days ago by the proterrorist Socialist International. U.S. State Department. Speaking with Sabag was Jose Arias, head of an But, despite the overtly anti-Zia nature of the hijack­ offshoot of the United Nations environmentalist appa­ ing, the affair has aroused deep suspicions in neighboring ratus called the "Association of Appropriate Technolo­ India and elsewhere that Gen. Zia UI-Haq may have run gies," and Jean Roberts, a collaborator of counterculture the hijacking himself as a pretext for gaining U.S. back­ brainwasher and guru, Ivan Illich. ing to embark on dangerous adventurism to maintain Some government officials are playing along. Public himself in power. Works and Housing Minister Pedro Ramirez Vazquez One Indian politico-military analyst did not hesitate has put environmentalists on the ministry's payroll and to describe the entire incident' as a "setup" carried out promoted solar energy as Mexico's energy future. Jorge with the complicity of the Zia regime to brand the Castaneda's foreign ministry is cosponsoring a hite opposition as "terrorists." The opposition is the Pakistan March "new and renewable energy" forum with the Peoples Party (PPP), founded by executed former .prime U.N.'s Economic Commission on Latin America. Its Minister Zulifikar Ali Bhutto, and the nine parties the focus will be the technologies of the 14th-century-wind­ PPP recently united into a Movement for the Restoration mills, sailing ships, beasts of burden, and swamp gas. of Democracy. Yet the tide is unquestionably running against these The analyst reported that he had first received this greenie efforts in Mexico. The government has an­ impression when, on the second day of the hijacking, nOQnced that bids will be taken this summer for the next British Broadcasting Company had reported from Isla­ 2,000 to 3,000 MWe of nuclear power construction. The mabad that Pakistan was blaming India for the incident. new official Energy Plan calls for 20 new plants by the His view was reinforced, he noted, when the head of year 2000. And at the Third Pacific Basin Nuclear Con­ Pakistan International Airways, Gen. Rahim Khan, fe r�ce in Acapulco in February, government spokesmen went out of his way to charge that the hijacking had been sent a strong message to the Reagan administration that , carried out with the full support of the PPP and the one of the actions that could most quickly undo the Bhutto family. The subsequent arrest of PPP leaders damage of the Carter years would be to reverse Carter's Mrs. Nusrat Bhutto and Benazir Bhutto, the wife and restrictions on nuclear exports (see EIR . March 17). daughter of the former prime minister executed by the The aggressiveness of the nuclear advocates, spurred Zia government, and of hundreds of opposition mem­ and reinforced by the LaRouche statements, was most bers, was taken as further evidence of the suspicious audible in the rejoinder of Nuclear Workers Union nature of the hijacking. spokesman Arturo Ponce to diatribes by countercultural Some confirmation of these suspicions emerged over columnist Mauricio Schoijet (see box). To Schoijet's one week after the hijacking when a small item appeared likening of the pronuclear labor unions to the workers in the Indian press to the effect that the head of the who built Hitler's gas ovens, Ponce simply asked Schoijet hijackers, " Algamir" (also called "Tippu "), was a fo rmer to put a figure on how many millions will die under his member of Pakistan's Secret Service Group (SSG). Ac­ own regime of primitive technologies. cording to sources near the Pakistani border, the press

,40 ' International EIR March 31, 1981 That consideration is magnified by the Soviet presence in Afghanistan and instability in Iran." The policy of building up Pakistan as an armed base in the Persian Gulf region has its origins'in Britain, whose Thatcher government has been pushing the Rea­ u.s. arms shipment gan administration to take this path. British Foreign Minister Lord Carrington will visit Pakistan March 27. General Zia's hold According to reports in the Indian press, he will discuss British arms sales to Pakistan and increased arms supplies to the Afghan rebels operating out of bases in Pakistan. Despite doubts in Washington about the wisdom of account stated, the hijack leader had received special such a policy, the Reagan administration appears ready guerrilla warfare training in the Pakistan-occupied por­ to provide substantial military and economic assistance tion of Kashmir under Chinese instructors. to prop up the ailing Zia regime. And, given the mood In a television speech afterthe hijacking, General Zia created by Secretary of State Alexander Haig, what tried to link the PPP to the affair, and also charged that better way to get U.S. support than for dictator Zia to the plot involved unspecified "foreigners." Zia went portray himself as a "defender of democracy" against fr om this totally unsubstantiated claim to say that there terrorist opposition? was an "anti-state conspiracy" which was trying to lead the country away from 'the Islamic fundamentalist path India: reason' to worry his �ilitary dictatorship has been pushing. The crack­ There is little question that India will react sharply down against opposition parties was described as a move to any large-scale U.S. military aid to Pakistan or to the to crush this "conspiracy." Afghan rebels. Despite chlims that the military supplies Indian analysts thus explain the hijacking affair as will be used to defend Pakistan against the threat of the culmination of a year-long effort by the Zia regime to Sovi�t forces in Afghanistan, neighboring India has brand the political opposition-and particularly the reason to be worried. First of 'all; as Indian analysts Bhuttos' PPP-as .terrorists with links to Libya and the point out, there is the historic precedent of Pakistan's Soviet Union. Pakistan's expulsion of several Libyan use of foreign-supplied arms in past confrontations with diplomats over the past few months, and leveling of India. Furthermore, since the Soviet intervention into charges that some of them were Soviet KGB agents, is Afghanistan, Pakistan has yet to redeploy its fo rces to thought to be part of this premeditated effort-possibly face the alleged Soviet threat. Instead, two-thirds of its conducted with the cooperation of Libya. military forces are reportedly still lined up along the The moves against the opposition had been made all border with India. the more urgent when the recently formed Movement for Large-scale arming of the Afghan rebels, another the Restoration of Democracy demanded an end to the . mooted policy in Washington, would probably hasten military regime and the holding of elections. In fact, just the downfall of General Zia-both as a result of in­ a few weeks prior to the hijacking, the Zia regime had creased Soviet pressure on Pakistan, as well as from the been �haken by the outbreak of the most widespread growing unrest in the nortltwest frontier region, where unrest to take place in the nearly four years of the the more than 1 million Afghan refugees are camped regime's existence. Before the military dictatorship was out. Recognizing this, Zia has taken a public posture in able to crack down, the ferment had spread to include opposition to arming the Afghanis. students, doctors, and lawyers fed up with General Zia's Most Indian specialists think that the United States' rule. arming of the Pakistani junta and the Afghan rebels would only undermine America's own interests in the Will Washingtpn·arm Zia? region, while intensifying dangerous tensions with the Despite the evidence that it was a setup job, the Soviet Union. Nor has the late-March visit of 'British message being. put out in Washington is that General Foreign Minister Carrington to Pakistan heartened the Zia's unpopular regime must be supported for strategic Indians. Commented one fo reign policy expert in New reasons. Baltimore Sun correspondent Henry Trewhitt, Delhi: "In the 1950s, the British dragged you into the reporting on the State Department's accusation of Cold War mess to undermine America's relations with Soviet involvement, put it this way: "Pakistan's relative the developing and newly independent nations. Is Rea­ s�urity will influence the administration's developing gan going to allow the British to once again set the U.S. policy for the entire Persian Gulf region, and its oil. up for a major foreign policy disaster in this region?"

EIR March 31, 1981 International 41 NATO to controlArab oil?

. Judith Wy er reports on the connections between new pipeline routing, the Rapid Deployment Force buildup, and insurgent activity in the Gulf.

London, together with the multinational oil cartels and Suez Canal by tanker, or through the newly built Sumed allied iritelligence factions, is currently maneuvering to pipeline that runs through Egypt to the Mediterranean. reroute Persian Gulf oil flows away from the Gulf into Egyptian President Anwar Sadat announced last month sea lanes that would be controlled by the U.S. Rapid that he would soon begin a second widening of the canal Deployment Force (RDF). The most important new sea to allow fully loaded supertankers' transit. lane for crude·flowsis the Red Sea. . Hayes indicated that the Saudis are presently study­ The RDF's role in the Middle East and Indian Ocean ing enlargement of the pipeline to carry 3.5 million is not primarily to counter the Soviet Union, but to barrels a day, double its current capacity, to make it the establish direct NATO control over the flowof vital raw largest and most expensive pipeline in the world-and materials. The idea is based on 20-year-old British intel­ Mobil is the prime contractor. ligence plan for setting up a mobile strike force to police The British have urged the Saudis to build a second the region. pipeline through Iraq, terminating in Oman. Following The command centers in the United States for meetings last month between Saudi Defense Minister NATO's bid fo r control of world raw material supplies Sultan and his British counterpart, Lord Carrington, the are Mobil Oil Company and the Mobil-funded George­ Saudis proposed this project during a meeting last week towh University. of six Gulf states in Oman. Mobil Oil is officiallyinvo lved in every major project in Saudi Arabia to pipe Saudi oil across the Arabian Threatening the Saudis peninsula, including the construction of a refinery which, At the same time, London and its allies in the United sources say, will provide fuel for the future RDF troops States have run a systematic campaign against Saudi slated to be stationed at the Ras Banas base across the Arabia to force Riyadh to accept U.S. military "protec­ Red Sea in Egypt. tion." Middle East scenarist Paul Erqman, author of As the accompanying map shows, the projected sites th� novel The Crash of '79, in which he promotes the for U.S. or NATO-allied troops center on choke points idea of a shutdown of Gulf oil exports, has characterized for oil flows,with special emphasis on the Red Sea. the Saudi move to pipe oil to the Red Sea as "the result This . scenario of bypassing the Gulf as a crude oil of the Khomeini revolution in Iran. That revolution has export route is premised on a dangerous strategic doc­ fo rced Saudi Arabia to accept U.S. military protection trine known among specialists as a Middle East "Yalta whether they want it or not." agreement" under which the superpowers would carve Arab intelligence sources report that Mobil and its up the area into spheres of influence, and write off Iran associates are aiming to install U.S. troops in Saudi as a Western ally. Such a plan is calculated to end direct Ara�ia, despite the vocal opposition of the current access for continental Europe and Japan to Middle East Riyadh regime. The source observed, "In the long term, crude, the lifeline of their economies. Mobil and its friend [Secretary of State] Alexander . Through the construction of a series of new pipelines, Haig know that they have to shock the Saudis into including the Mobil-built Yanbu pipeline, Gulf oil will submission with some violence like what happened at be routed through Oman and Egypt, designated as sites Mecca when the terrorists seized the [Grand] Mosque" for ROF bases. Jack Hayes, the director of cultural during the Muslim pilgrimages in 1979. affairs for Mobil, boasted this week that Mobil "is the As the Saudis and their Arab allies know, even the brains behind the construction of a new oil terminal and talk of a U.S. military presence on the Arabian penin­ processing center.... I guess you could say that Mobil sula is enough to invite a violent reaction from radical is bullish on the Red Sea." Arab groups. All crude oil exported from Yanbu would exit the Predi<;tably, the public plans of Haig and British Red Sea, going either through the Egyptian-controlled Prime Minister Margaret Thatcher for militarizing the

42 International EIR March 3 1, 1981 Middle East have triggered Arab extremists against the The six-member pact was designed to be nonaligned, Saudis and their oil-producing neighbors. During but Oman's participation in the RDF maneuvers has Thatcher's visit to the United States last month, she given the Arab radicals a new pretext for insurgency. A called for Britain and the U.S. to work together to broadcast monitored recently threatened the unleashing create a Gulf strike force. of "internal movements" against Gulf states that will Shortly afterward, the Libyan-funded Beirut news­ "threaten the oil resources" of the Gulf. paper As Safir ran an expose citing an "informed Last month, the PFLO, with Libyan and Yemeni British source" reporting that the Reagan administra­ backing, set up a "freedom front" for the Gulf to tion had asked the British government to allow Ameri­ consolidate Jacobin destabilizations. The Islamic dicta­ can troops to use facilities on Cyprus to back up the torship of Ayatollah Khomeini is known to be working RDF. At the same time, Libya's Muammar Qaddafi on a parallel course with the Arab liberationists, with railed that the U.S. Sixth Fleet was preparing an · repeated threats to shut down the flow of oil through operation against his regime. the Straits of Hormuz at the Gulf mouth. Qaddafi also recently concluded a series of meetings London journalist Robert Moss, a mouthpiece for with the president of the People's Democratic Republic British intelligence, last week charged that the Soviets of Yemen for a joint backing of the proliferation of are behind the growing threat to stability in the Gulf. "liberation movements" that would challenge the re­ Writing in the London Daily Telegraph, Moss reported gion's pro-American regimes. A key asset in this en­ that the Saudis recently discovered three plots linked to deavor is a Yemen-based terrorist group, the Popular the Soviet KGB to overthrow the Saudi royal family. Front for the Liberation of Oman (PFLO). Moss's propaganda line is typical of current moves PFLO radio broadcasts have repeatedly linked the to promote left-right polarization of the Arab world, recently established Gulf Security Pact, headed by Saudi which moves London reckons will force the Saudis to Arabia, with the just-completed military exercises be­ accept a British-American military umbrella. To do this tween the RDF and British-controlled Oman, which is presupposes · that internal destabilization will paralyze a member of the pact. or destroy that faction of the Saudi leadership allied to

Egypt India RAS

Sudan

. I"dimt(kRan

DlEGOGARCiA •

The U. S. Rapid Deployment Force to be based at Ras Banas, Egypt-just across the Red Sea from the new Saudi oil complex at Ya nbu-is part of the plan to put Mideast oil flows under NATO control.,

EIR March 31, 1981 International 43 First Crown Prince Fahd, a faction informally allied ies" for the developing sector. Former Kennedy admin­ with continental Europe in a comprehensive plan for istration official George Ball helped to set up the petrodollar financing of oil-for-technology industriali­ institute's Washington office. According to Arab zation deals. sources, Ball maintains his own connections to Middle East radical circles. Resource war Dr. Alvin Cottrell, . director of the Georgetown The proposed tradeoff University Center for Strategic and International Stud­ Policy-making circles associated with the London­ ies and an adviser to the Reagan administration, this based Royal Institute for International Affairs and the week indirectly confirmed that the Saudis are not inter­ New York Council on Foreign Relations have circulat­ ested in having an American military presence on their ed a scenario allowing Iran to be incorporated into the soil. Cottrell stated bluntly that the United States "is Soviet sphere of influence, in exchange for Soviet acqui­ aiming to project its power both from Oman and Saudi escence of a NATO occupation of the Arabian peninsula Arabia ...but we have to go slow with the Saudis. We and the Red Sea. have to back in there in such a way that it won't rock As. an inducement, the Soviets are being offered the boat." Iranian natural gas. Under the Pahlavi regime, Moscow Beyond the official requests for U.S. military rights and Teheran had reached an agreement to provide the at the designated bases, Israel's former Foreign Minister U.S.S.R. with Iranian gas as part of a swap whereby the Moshe Dayan, a proponent of extending NATO's forces Soviets in their turn would pipe Siberian natural gas to into the region, has advocated installing American Europe. Moscow is . still pursuing the gigantic gas- . troops on the Sinai at bases Israel is slated to evacuate export deal with Europe, although parts of the southern in 1982 as part of the Camp David accords between U.S.S.R. have been hurt by the loss of Iranian gas Israel and Egypt. imports. The originators of this policy are centered around A Washington source notes that "renewed Iranian intelligence fronts in London including a group that gas exports to the Soviet Union could make it a lot calls itself Aims for Industry. In 1978, Aims for Industry easier for Siberian gas exports, which Moscow really held an international symposium that called for broader needs for foreign exchange." cooperation between the private industrial sector and As Dr. Cottrell observed, there is a "stick" in this the military to prepare for a resource war-a theme that plan as well. "Even if the Soviets get in there, they has gained currency within Anglo-American oligarchi­ might find that they cannot calm things down as easily cal circles as the basis for militarizing parts of the as they thought. ... The very fabric of Iran's society, developing sector rich in vital raw materials like petro­ the military, has been torn apart, and now there's leum. nothing to hold the place together." The London-based Foreign Affairs Research Insti­ Reports are mounting in the American press that tute has also recently released studies on the coming the dominant party in Iran, the Islamic Republican conflict between the superpowers over dwindling re­ Party (lRP) is closely coordinating with the Tudeh sources in order to justify a military buildup in width [communist] party there to assist in the IRP's bid to around the southern hemisphere. ·consolidate its power and oust President Abolhassan This policy was the topic of a June 1980 conference Bani-Sadr. in Pittsburgh sponsored by the World Affairs Council Within this so-called Yalta framework, London is of Pittsburgh entitled "The Resources War in 3-0- counting on the "class war" foreign policy apparatus in Dependency, Diplomacy, and Defense." At that confer­ the Soviet Union associated with British triple agent ence, special attention was given to Saudi Arabia, Kim Philby, a KGB general. It is this Soviet faction which, because of its vast oil wealth, was designated as that is actively promoting Arab extremism on one side a country that must maintain a "special" military of the Gulf, and the fanatical mullahs on the other. It is alliance with the United States. also this faction that shares the outlook of the Anglo­ A conduit for this policy in the United States is American elite, exemplified by Mobil, in its plan to use Frank Barnett, president of the National Strategy Infor­ the deployment force to end Arab and Third World mation Center in New York. His call for a tri-oceanic national sovereignty and establish still-greater levels of alliance of Europe, Japan, and the U.S. to engage in resource control in the area. resource warfare was accepted by the Pittsburgh con­ Thus far, the Soviet faction associated with Leonid ference. Brezhnev has resisted the Philby policy, but each new This circle extends to the Institute for the Study of move to militarize the Persian Gulf is calculated to Conflict in London, which is associated with Robert increase to pressure on Moscow to agree to "divide up" Moss, and whose specialty is simulated "conflict stud- th� region.

44 International EIR March 31, 1981 SouthernMr ica's destabilization

Ifthe Reagan administration is �rawn into an 'East-West' showdown in the region, stresses Douglas DeGroot, it will also fa ce a crisis at home.

The same group of people who set up the conflagration Mozambique's capital of Maputo. The headquarters of in EI Salvador-U.S. Secretary of State Alexander the African National Congress was destroyed, and Haig, the Socialist International led by Willy Brandt, several of its members killed in the surprise attack. and the "class war" faction of the Soviet leadership Soviet policy in Africa has consistently been to back around Central Committee member Boris Ponomarev­ what the Soviets term "wars of liberation," which has are now working to spark wars and destabilizations tended to put the Soviet Union's Africa policy in the throughout southern Africa. Mozambique and Angola hands of its "class war" faction. Tb. ANC is a South are intended to trigger the scenario. African organization opposed to the apartheid system Haig's role in the operation is to ensure the polariza­ with connections to the Soviets and Cubans. Playing tion of the region by allying the United States with South into this profile of the Soviets, Louis Wolfe, who has co­ Africa in the escalating regional conflict, thus forcing authored two books with CounterSpy's Philip i\gee, and Angola and Mozambique to ally themselves more closely who is on the board of directors of CounterSpy, made a with the Soviets and Cuba. In the words of one think three-week tour of Mozambique and southern Africa tanker, "Reagan will contribute to the scenario by polar­ following the South African raid. Wolfe, significantly, izing the situation." is also a co-editor of the Covert Information Action Reagan has already come out publicly in favor of the Bulletin, a publication which exposes CIA agents. current South African government. In a March 3 inter­ Therefore, it is not surprising that after Wolfe's view, he said of South Africa: "Can we abandon a tour, the Mozambique government in early March country that has stood beside us in every war we've ever expelled four American diplomats.on grounds that they fought, a country that strategically is essential to the free were CIA spies complicit in the South African attack .. world? It has production of minerals we all must have." In addition, shortly after the South African raid, Willy Ironically, this action by the United States will create Brandt-who proudly admits his funding of the EI warfare conditions that will cut off southern Africa's Salvador leftist guerrillas-stepped in to loudly de­ minerals shipments. At the same time, Reagan is setting nounce South Africa for the raid. And the Soviet Union himself up for destabilization at home by urban riots. In also responded by sending four ships· into Maputo's the words of the above-mentioned think tanker: "Amer­ harbor. icans won't stand idly by while the U.S. lines up with South African press editorials are already calling the South Africa." Mozambique crisis a "Cuban missile crisis," in the hope The primary objective in fomenting regional warfare they will get more Western support if international is to drastically reduce the population in potentially rich tensions are escalated. Reagan's pro-South African southern Africa. In the eyes of the U.S. State Depart­ statements coincided with the expulsion of the Ameri­ ment, war, with its resultant population dislocation, cans from Mozambique, while two American civilians chaos and famine-as in EI Salvador-is an efficient were also subsequently arrested in Mozambique on method for the depopulation demanded by the Carter charges of spying. Meanwhile, tensions between Moz­ administration's Global 2000 Report. Such wars would ambique and South Africa are still quite high. On also threaten to cut off southern Africa's minerals from March 18, a few South African soldiers were killed by those European political forces intent on preventing a Mozambique soldiers in a border clash. worldwide industrial collapse into the postindustrial so­ Haig is also maneuvering for a war in Angola. The ciety envisaged by the authors of Global 2000. State Department will soon recommend that the five­ year ban on covert or overt U.S. assistance to the Mozambique: South African provocation Socialist International-affiliated UNITA be repealed. The destabilization operation between South Africa After Angola became independent in 1975, UNITA and Mozambique began Jan. 30 when the South African was a major pawn in a guerrilla war which Henry military launched an airborne commando attack near Kissinger used against the Angolan government of

EIR March 31, 198 1 International 45 President Agostinho Neto. During that war, UNITA industrial republics in Africa. this would also bring the was supported by South Africa, and Angola is still United States into opposition to the South African forced to rely upon Cuban and Soviet aid to counter policy of aparth'eid, which is preventing the industriali­ South African military operations against the country. zation of South Africa by inhibiting the development of According to Prof. Richard Falk of Princeton Uni­ its skilled labor fo rce. versity, a Socialist International "left" destabilization expert who helped bring Khomeini to power in Iran, Angola is the next target on the State Department StrategiC materials destabilization list. "If the destabilization and counter­ insurgency operations work in EI Salvador," he said, and riot potential "Angola will be the next country they will try to Th e fo llowing is an excerpted March 18 interview with a destabilize. " U. S.-based metals specialist. UNITA, headed by "third-way" socialist Jonas Sav­ imbi, has been almost entirely rooted out by the Ango­ EIR: There must be a connection between the State hiD military. Savimbi is now only a front man for South. Department's push for a strategic raw materials reserve, African terrorist military operations into southern An­ two Wall Street metal brokers' opening up sales of gola. What Savimbi claims to be his military operations . strategic metals, and the possibility that the U.S. might are made up of black South African soldiers led by push for a military presence on the southern tip of Africa. South Africans and white mercenaries recrui.ted after A: I shouldn't be talking about this for 9 and 10 days the end of the war in Zimbabwe made them no longer [but] your idea that there might be ,a military force in useful there. The operations are basically helicopter­ southern Africa is not wrong. The current situation is a borne assaults on southern Angola villages which kill backdrop for how that could happen. The talk about raw large numbers of civilians and terrorize the population, materials is great PR for this to happen. making the territory difficult for the Angolan govern­ Here's how it may happen. You have everybody ment to administer. talking about the importance of strategic metals. Sud­ Continuing this mode of attack while Haig looks on denly on Wall Street everybody forgets about the elec­ sympathetically, the South Africans on March 17 tronics stocks, and the oils, and start going into strategic launched one of their deepest raids into Angola, striking metals. at Lubango, 200 kilometers inside Angola. Then they turn around and say "Well, what are strategic materials, and where are they located?" As this Such South African attacks against its black neigh­ ' bors will escalate an internal opposition and a predicted atmosphere builds up, given the nationalistic mood wave of terrorism within South Africa. South African building in this country, you will find an increased Prime Minister P. W. Botha's explicit strategy to keep willingness for public opinion to accept a military activity internal resistance to his apartheid regime in check is to in southern Africa. preemptively strike at those black countries which op­ From a March 17 interview with Jerry Herman of the pose apartheid in order to fo restall what Botha calls the American Friends Service Committee by EIR's Cynthia "total Soviet onslaught against South Africa." Parsons. Th e AFSC is involved in support fo r various By allying himself with such a government, Reagan African liberation movements. is opening himself to attack in the United States. Already demonstrations are being called to protest We are organizing a conference in New York on Reagan's policy of support for South Africa. Monday [March 23] on Namibia. We intend to put pressure on the U.S. to build the anti-apartheid move­ Resource warfare ment here; and stop the American and British ships from Haig is getting the United States to support this going to Smithstown. One hundred groups came to this regional war operation on the side of South Africa [organizing] meeting. We will be forming a steering under the pretext that the U.S. must prevent the Soviets committee on Wednesday called the Emergency Confer­ from winning the mineral-rich southern Africa compo­ ence on Namibia ....We must get sanctions against the nent of what Haig calls "the era of the resources war." South Africans. This is doubly ironic since such regional warfare will Our problem is in making contact so that we can ensure that the resources are cut off; and at the same respond if another Soweto occurs, then people in the time Haig is doing nothing to prevent fo reign, especially U.S. will take to the streets. " . . British, interests from grabbing up all the raw materials Ultimately, there will be a major confrontation­ companies in the U.S. itself. there will be urban strikes with selective boycotts, public The only sane approach for the United States in demonstrations, urban sabotage, and urban guerrilla southern Africa, and which would ensure access ttl the wars, because the blacks do come into the cities [to be] region's minerals, is to aid in the process of building up cheap labor. The U.S. will help keep the blacks down.

46 International EIR March 31, 1981 "The Volcker Fed banking reforms may be the singlegreate st threat facingthe American

economy at this time." .. -David Goldman, Economics Editor, EIR

Federal Reserve chairman Paul Volcker and influential members of Congress are spearheading a drive to restructure the American banking system, which threatens to give the Fed and the money center banks top-down control over the deposits of regional financial institutions. Together with the Fed policy of high-interest rates, these "reforms" threaten to deprive the agricultural, con� sumer, and medium-size business sectors of vitally needed credits.

Now, the Executive Intelligence Review is making available a comprehensive study on this danger, exploring in detail the Volcker policies, how the current economic downturnis affectingAmerican banks, and a growth perspective to revive the traditional national banking system. The Undeclared War Against American Banking A special report from the Executive Intelligence Review, available January 1, 1981 $50.

And for ongoing domestic and international intelligence, subscribe to the 64-page weekly journal, the EIR . The banking report will be provided free of charge with every annual subscription purchased through this . offer. EIR ExecutiveIntelligence Review We sell intelligence.

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------Telephone -'------:---2. - --- a a d Make checks payable to: Executive Intelligence Review, Dept. M, 304 W. 58th re co e Street, 5th Floor, New York, New York 10019 DatelineMexico by Josefina Menendez

What is the 'Monterrey Group'?-Part I follows in Lopez Portillo's foot­ How Monterrey businessmen's relationship to the Mexican steps, "then we have it made." government continues to improve. Despite certain ideological preferences for British-style "free enterprise" and a reduced econom- . ic role for the state, prevalent in Monterrey for decades, the tremen­ dous growth now occurring ·under A leading businessman here in The story of who ordered the state direction has introduced a Monterrey expounded to me last assassination-and why-is a tale kind of reality principle into Mon­ week that the four institutional in itself. But the net result was that terrey's thinking. Those among the pillars on which the Mexican Sys­ Don Eugenio's tightly run business group who would kill the goose tem-and therefore the presidential empire was divided up among his that lays the golden eggs, as some succession fight-rests, are 1) la­ various sons, nephews, cousins, and called for in 1976, are now definite­ bor; 2) the army; 3) the Church; and other family members. ly in the minority. 4) the Monterrey Group. Exten,sive, and frequent, con­ Critical to firming up the gov­ Other pundits prefer variations sultations among the heads of the ernment-Monterrey alliance was on this theme-sometimes includ­ industrial groups, of course, con­ the March 1980 decision of the Lo- ing the PRI party, the presidency as tinue, but significant business and 'pez Portillo government to use the such, or even Washington's felt in­ political policy distinctions unques­ direct reduction method for Phase fluence-but none excludes the role tionably exist, and have emerged II of.the giant Las Truchas steel of the powerful Monterrey Group. increasingly strongly over the past project, and to grant the prized What is the fa mous Monterrey few years. contract to HYLSA, part of Mon­ Group, and what is its political ori­ The main reason for this is the terrey's ALFA group. entation? rapid growth of the state sector of Monterrey's improving rela­ The Monterrey Group today is the ,Mexican economy, particularly tionship with the government can an informal association of about 10 in defining areas of petrochemical be seen in their visible calm over the large industrial groups based in the and other heavy industries, under presidential succession fight. Al­ northern city of Monterrey, Nuevo the governments of Lopez Portillo though many businessmen here Leon, which together control over and his predecessor Luis Eche­ . have told me that the general pref­ 60 percent of that economically verria. Although a violent hatred erence is for Budget Minister Mig­ powerful state's. total assets. This developed between Echeverria and uel de la Madrid, since he is viewed strong concentration of capital is the Monterrey Group, especially in as being partial toward banking based around a nexus of fa milies the 1975-1976 period over the ques­ and business interests, they also (the Garzas, the Sadas, the Lagiier­ tion of political control over the recognize that his chances of win­ as, etc.), who have intermarried Mexican economy, the relationship ning are slim. The Monterrey over the course of the past three to has improved dramatically under Group will settle for almost any of four generations, leading to a high­ Lopez Portillo. From the moment the other leading contenders: La­ ly integrated business empire. he entered office, Lopez Portillo bor Minister Oj eda Paullada, Inte­ Up until 1973, that empire was called for an "Alliance for Produc­ rior Minister Olivares Santana, unified under the personal com­ tion" with the Monterrey Group, Commerce Minister De la Vega mand 9f the respected pater fami­ and after fo ur years of government, Dominguez, so long as a strident lias of the clan, Don Eugenio Garza Monterrey's powerful industrial­ Echeverrista is not chosen as the Sada. In February 1973, Don Eu­ ists, to a man, now reiterate their new president. genio was gunned down on a Mon­ "confidence" in the president. terrey street in broad daylight by a In fact, Bernardo Garza Sada, . Th is week's column was contrib­ commando of the 23rd of Septem­ the head of the powerful ALFA uted by EIR's bureau chiefin Mon­ ber Communist League, Mexico's group of Monterrey, recently told terrey, Mexico, Maria Luisa Gomez version ofthe Red Brigades. the press that if the next president del Campo.

48 International EIR March 31, 1981 Middle East Report by Robert Dreyfuss

The plot to install a Syrian ayatollah of Allah and seek his pleasure," just A fa ction figh t in Sy ria 's Muslim Brotherhood-and now a as Khomeini did in Iran. murder-are ominous fo r the region 's stability. Sa'ad Uddin has received pow­ erful support from certain interests in Saudi Arabia and Cairo, the headquarters of his operation. AI­ Attar himself has strong ties with the old-guard Saudi religious es­ The murder on March 17 of Mrs. Aachen where he pursued his oppo­ tablishment. His daughter is mar­ Benan ai-Attar, wife of the Syrian · sition to the Damascus govern­ ried to a prominent Islamicjudge in Muslim Brotherhood leader Issam ment. AI-attar was known to have Saudi Arabia, Ali al-tantawi. ai-Attar, is likely to spark a new supported the Muslim Brother­ But this old guard in the Saudi round of factional warfare in Syria hood takeover of Iran, but in a later religious community traditionally and destabilize the Middle East. Up interview with this magazine tem­ maintains ties to the ruling family, until recently Issam ai-Attar had pered his ardent support fo r the which has no interest in seeing Syria worked out of the West German ayatollah's regime by stating that ripped apart in internecine warfare town of Aachen, where he directed the dying Shah should not be extra­ aimed at installing a Syrian version an institute called the Islamic Cen­ dited to Iran as Khomeini was de­ of Khomeini. ter. Earlier this month ai-Attar manding. Like the young Muslim insur­ went into hiding for fear of an as­ AI-Attar is known to have gents who seized the Mosque in sassination. grown more reluctant to maintain Saudi Arabia in 1979, the new breed AI-Attar told the London-based his Iranian connection as the geno­ of Muslim militant like Sa'ad Syrian journalist Tammin al-Barazi cidal character of the Iranian re­ Uddin aims at destroying the Arab that his wife had been killed by gime became clear. In fact ai-Attar nation-states in the name ofIslam. "Syrian agents" and in the same has been challenged by a "Young The Bonn correspondent of the interview made the curious revela­ Turk" faction inside the Brother­ London Times reported the day of tion that its aim was to "upset the hood which espouses the same the murder that a new influx of delicate truce between the Muslim brand of bloody extremism as in Syrian refugees reached Germany Brotherhood and the Syrian gov­ Khomeini's Iran. recently as a result of the violence ernment." The truce was organized In January 198 1 ai-Attar lost between Muslim guerrillas and Syr­ at the instigation of Saudi Arabia to control over the Syrian Brother­ ian government forces. Though the cool down growing rivalry between hood to a "Gang of Three" headed Times is retailing old news, the pub­ Jordan and Syria. Damascus has by Adnan Sa'ad Uddin. This new licity which the new Syrian Broth­ blamed Jordan for instigating the grouping has received extensive erhood has received, and its threat Muslim Brotherhood against the pUblicity in the West German and of renewed violence makes clear government of Hafez Assad. This British media, culminating two that London-based controllers of tension nearly exploded into a bor­ weeks ago with a lengthy interview Islamic terrorism are setting Syria der war earlier this year. on German television with Sa'ad up for a new round. A former member of the Syrian Uddin in which he called for violent Other scenarios include a Syrian People's Party fo unded by the Sau­ confrontation with the Assad gov­ war against Jordan, coupled with di Ma'arouf Dawalibi, the current ernment. He praised the massacre an upsurge of Palestianian extre­ head of the Saudi-based World of several Syrian cadets in June mism which anglophile scenarists Muslim Congress, Issam ai-Attar 1979, as exemplary of such con­ see as the preconditions for top­ became a member of the Syrian frontation which his "Jihad [holy pling Jordan's King Hussein. From parliament in the early sixties and war] movement" supports. their standpoint, such a bloodbath then the head of the Syrian Muslim In another inverview with the is necessary in order to continue the Brotherhood. He was expelled from British-based weekly Impact. the Camp David "peace process" in the Syria in 1964 and, after a short exile proterrorist Sa'ad Uddin declared Middle East, which Hussein has in Beirut, established his institute in that his aim is to "establish the rule opposed.

EIR March 31, 1981 International 49 InternationalIntel Jigence

self-image requires a "kind of people's velopment projects by the IMF two years French offi cialfirst to army," recruited from the countercul­ ago led to a downward spiraling of the visit Ethiopian regime ture. "The existence of so many sponta­ economy and dangers of destabilization, neous groups and grouplets bears witness aggravated by large numbers of refugees French State Secretary for Foreign Af­ to the vitality of our societies even in the escaping wars and fa mines in neighbor­ fairs Olivier Stirn has just completed an crisis they are undergoing. Some day it ing countries. official visit to Ethiopia, where he signed will be necessary to find the means of In Mauritania, a coup attempt failed March 16 by two fo rmer members of the agreements providing that country with consolidating their scattered efforts to Mauritanian military who were residing export credits to finance the purchase of direct them toward strategic aims." He proposes the creation of "research, re­ in Morocco. Following the 1978 coup in railroad equipment and other capital flection, debate, and proposal centers on Mauritania, that country withdrew sup­ goods. Sti'l,n also announced that France the fu ture of humanity, exclusively led by port from Morocco in the latter's attempt would be sending a thousand tons of youth." to annex the Western Sahara, a fo rmer food aid to Ethiopia. Spanish possession. Stirn becomes the first Western gov­ The leaders of the abortive coup had ernment officialto visit that country since opposed the withdrawal of Mauritanian the pro-Soviet regime of Mengistu Haile support for Morocco on the question of Mariam took over three years ago. annexing the Spanish territory. French sources emphasize tha Ethiopia's Coup attempts fa il leaders are increasingly looking to the West, and to France in particular. Olivier in Sudan, Mauritania Stirn bore a personal message to the Ethi­ opian head of state from President Gis­ Sudan President Numeiry stated in a EIR founder slandered card, with a proposal for relaunching March 16 interview that he had discov­ Giscard's initiative to convene a confer­ ered a plot to overthrow his government as 'Zionist, ' 'Nazi' ence of the Horn of Africa countries in the preceding week. Numeiry said the order to settle regional economic and plot was led by Sa'd Bahr, a retired gen­ "Apparently the ADL has made another \ political problems. France has also invit­ eral, and five other officers, alI of whom conquest," wrote Alfred Lilienthal, a ed Somalia, Dj ibouti, Sudan, Kenya, had been arrested. Sa'd Bahr has twice self-proclaimed Jewish anti-Zionist in his Saudi Arabia, and North and South before attempted coups against Numeiry, journal Middle East Perspective. The Ye men to attend. in 1971 and again last May. Anti-Defamation League's "new con­ Numeiry charged that the coup was quest," claimed Lilienthal, is EIR's fo un­ instigated by the Soviets and Syria, and der Lyndon H. LaRouche, Jr. Lilienthal, that Sovet "infiltration of Africa and the who claims to be a "true friend of the Peccei calls fo r youth Gulf region" was a "cancer" threatening Arabs," cites a "recent LaRouche press to take over alI of Africa. release and telegram to Menachem Begin 'cultural revolution ' In a remarkable turnaround from his calling 'the defeat of President Carter the previous, more nonaligned, position, greatest liberation of Israel since Moses Aurelio Peccei, the fo under of the anti­ Numeiry stressed that only the U.S., as a led the people of Israel from slavery in growth Club of Rome, has issued a new superpower, can confront such attempts. Egypt' and asking for alI out aid for book in France titled One Hundred Pages He calIed on the West to increase eco­ Israel." fo r the Future. The publication was timed nomic and military aid as a deterrent to Lilienthal recently visited London, to coincide with France's national elec­ what he calIed "Soviet infiltration" of the sponsored by the Islamic Council of Eu­ tions. continent, pledged to give military facili­ rope and the Center for the Advancement Peccei calIs for the Club of Rome to ties to the U.S. to stop the "gradual and of Arab-British Understanding, two reorient itself toward youth recruitment, systematic Soviet infiltration," and said fronts for British ties to the Muslim since youth are flexibleenough to imple­ he would welcome U. S. assistance in Brotherhood. ment the club's Malthusian policies. Man training the Sudanese armed fo rces. This In a related development, so-called is but an accident in creation, claims amounts to a virtual offer to integrate Nazi hunter Simon Wiesen thai alleged Peccei, and Christianity imposed a spe­ Sudan into the U. S. Rapid Deployment that the primary threat to American Jews cious image of man at the center of the Force setup. were the Liberty Lobby and Lyndon universe. The nation-state is said to be a At the end of his interview, Numeiry LaRouche. Wiesen thai made his com­ "remnant of tribalism of old," and must also invited Western financiers to Sudan ments in an interview with the Los An­ be superseded by supranational institu­ to exploit mineral resources such as gold, geles Heritage Jewish Press. tions. silver, iron, chrome and asbestos. EI R has uncovered the fact that Wie­ Peccei says a transformation in man's Forced cancelIation of Sudanese de- senthal is a member in good standing of

50 International EIR March 31, 1981 Briefly

• PRESIDENT GISCARD and Chancellor Schmidt did not focus the oligarchical Order of Orange-Nas­ peacekeeping force by Haddad's troops. on European Community negoti­ sau, and admits he received 80 percent of The blockage of censure sets the stage ation strategy at their March 15 his funds from non-Jewish sources. Of fo r an Israeli confrontation with the head summit; that could have been han­ public prominence among his fu nders is of the UN. forces there, Major Gen. Wil­ dled over the telephone, stresses Prince Reinhardt, a former aide to Hein­ liam Callaghan. Reportedly due to pres­ the German press. The unexpected rich Himmler and top SS officer. sure from Western European countries, meeting was designed as a demon­ Callaghan met an Israeli commander stration of political unity and con­ along the Israeli-Lebanese border and fidence about their aggressive eco­ demanded that Israel withdraw its own nomic and foreign policies. fo rces from the south and stop support­ ing the Haddad terrorists. The com­ • GERMANY'S Federal Bureau Cholera outbreak mander, A vigdor ben-Gal, flatlyref used. for Criminal Investigations has is­ Haddad thus has a green light for his In South Africa sued a national alert against an troops, who are randomly lobbing mor­ outbreak of terrorism' and violent The South Africa!} Department of tar shells into heavily populated parts of demonstrations between March Health reports that many of the black Tyre and Sidon, destroying hospitals and and Easter. One danger signal is homelands and townships in South Afri­ schools. the reactivation of support net­ ca and Mozambique are suffering an epi­ Begin's intransigence will also force a works for the Red Army Fraction demic of cholera. The department states radicalization of Palestinian militia units group. The terrorists' backers are that there has been "neglect and break­ in Lebanon, with probable spillover ef­ campaigning to free jailed RAF down" of health services for these areas. fects in various "liberation movements" members. The outbreak is the worst in 25 years: all the way to the Persian Gulf. since last October, 1,800 cases and 27 • SATO got a green light during deaths have been reported, mostly of Argentine president designate blacks living in squalid conditions. General Roberto Viola's visit to The spread of the disease is directly Washington March 16- 19, accord­ related to the South African govern­ Violence-prone networks ing to American Security Council ment's policy of forcibly relocating sources. Under such a South At­ blacks into impoverished "homelands." descend on Wa shington lantic accord, which need not offi­ Cholera cases have also been reported in cially involve the US., South Ta nzania and Nigeria, in regions where As part of Phase Two of the planned American regimes would join sanitary conditions are insufficient. destabilization ofthe Reagan administra­ South Africa in controlling oil tion, terrorist-linked gangs poured into routes, but Brazil's ties to black Washington the weekend of March 20, Africa and Arab oil producers are including holding a rally and march by seen as a major obstacle by others. the Palestinian Congress of North Amer­ Kirkpatrick backs Israeli ica, the Muslim Student Association, the • JAMAICA's national security Iranian Student Association, and the minister, Winston Spaulding, an­ provocations in Lebanon Anti-Klan Network. nounced a plan to eradicate the The Palestinian Congress of North clandestine air strips from which a UN. ambassador Jeane Kirkpatrick is America, nominally protesting the de­ hundred tons of marijuana are encouraging Israel's Begin government portation of a Palestinian terrorist, Abu flown each day to the United to unleash new atrocities in southern Le­ Eid, was created by Jawad George, an States. It seems that the grasshop­ banon. associate of Kim Philby's KGB/British per planes have nearly collided in According to sources at the United intelligence operations. The Iranian stu­ mid-air with scheduled commer­ Nations, Kirkpatrick and her advisers, dent groups are controlled by Bahraim cial jetliners so often that the all members of the new Committee for Nahidian, a Muslim Brotherhood liaison Kingston Daily Gleaner warns the Free Wo rld, have blocked a UN. Se­ in the U.S. who has called the weekend tourists to avoid night flights. The curity Council resolution condemning demonstrations to disrupt anti-Kho­ new Jamaican government of the renegade southern Lebanese forces of meini Iranian conferences scheduled to Prime Minister Edward Seaga is on Colonel Sa ad Haddad, forces Israel lav­ begin March 20. record promoting marijuanalegal­ ishly provides with fu nding and weapons. In addition, Daniel Berrigan is calling ization in order to minimize such The resolution had been put forward fol­ for a series of antiwar marches on the EI inconveniences. lowing the murder of two Nigerian sol­ Salvador issue, beginning in May, to be diers belonging to the UN.'s Lebanon preceded by feeder events in Washington�

EIR March 31, 1981 International 51 �TIillNational

Anti-Volcker mobilization mounted in Was hington

by Laurence Hecht

One hundred fifty representatives of farm, labor, and As Wright wrote his letter, the steel and auto union­ business groups joined to protest the high interest-rate ists and independent auto dealers who formed the core of policies of Federal Reserve chief Paul A. Volcker outside the Washington, D.C. picket line were organizing their the Fed's headquarters in Washington March 17, and then group, dubbed the Ad Hoc Committee Against High moved on to Capitol Hill to lobby congressmen against Interest Rates, and putting the heat on congressmen and Vo lcker. national union officials to remove the Volcker problem. The demonstration, made up mostly of businessmen Their efforts were also backed up by an international and unionists from the hard-hit industrial region of Ohio . organizing drive. of the National Democratic Policy and western Pennsylvania, is the first public showing in Committee to deliver what NDPC Advisory Committee Washington of the kind of labor-industry alliance that Chairman Lyndon LaRouche called a "shock" to the could develop against Volcker. Their impressive line administration. LaRouche arrived in Washington March extended up and down the block outside Federal Reserve 20 for a major policy address and a series of meetings headquarters, with blue and white printed signs reading with congressional leaders and other policy-makers. "Cheap Credit for a Strong America," "Bring Down the On the day of the rally, before the cameras of five Interest Rates," and "Dump Volcker and His Policies." television stations, PBS national radio, and an array of The demands of the picketers were reflectedin a letter newspapers, Ad Hoc Committee chairman Stan Hoynit­ House Majority Leader Jim Wright of Texas sent to ski read a statement of purpose: Democratic congressmen the week before the demon­ "We are here today to call for 1) Federal Reserve stration. The budget cuts are "grossly unfair to the truly Board Chairman Paul Volcker's resignation; 2) an im­ needy," wrote Wright, branding the entire budget pack­ mediate reversal of his policies; and 3) Congress to age as "incompetent." assume oversight responsibility for present and future "Goverment spending is not the cause of inflation," Federal Reserve policy. said the House Majority leader, "Interest rates and en­ "Unless action is taken on these issues," continued ergy costs are." He warned that high interest rates have Hoynitski, who is executive director of the Pennsylvania raised the price of everything and virtually closed down Independent Automobile Dealers Association, "this the housing market for the average American. "What country could well be plunged into an economic collapse the President is asking is that Congress and the nation that could be more catastrophic than that of the great risk everthing on one roll of the dice ....Co ngress wants depression. Since Volcker launched his tight money 'anti­ to be cooperative. They do not want to be supine," the inflation' policy in October 1979, both inflation and Texas Democrat stated. He urged his fellow congressmen unemployment have gone up and industrial production to make his statement the basis of a Democratic response has dropped drastically. to President Reagan's economic policies. "We as leaders of the labor and business community

52 National EIR March 31, 1981 .,

got together to work out a solution to the interest-rate them what they thought of wage-price and rent controls. problem, because labor and productive businesses are "You have missed the profound insight this group being equally devastated by Mr. Volcker's policies. We has attained," United Autoworkers leader John Mc­ believe that the problem is of such importance and Carrell instructed him. "Interest rates are the problem. magnitude that only ajoint effo rt by representatives from We want to put people back to work, not get more the labor, business, and agriculture sectors will be able to welfare." Others got a better reception. Representative mount sufficient pressure to effect a reversal of current Don Bailey of the 21st C.D. in western Pennsylvania was Federal Reserve policy." given a few minutes for opening words and then bluntly The statement was jointly endorsed by committee co­ asked: "House Bill 1640, which if enaoted, would give chairmen Mike Bonn, president of United Steelworkers Congress the power to remove the chairman of the Local 2227, and John McCarrell, president of United Federal Reserve-where do you stand?" Autoworkers local 544, both of Pittsburgh. "I would support it," Bailey replied to applause. "But Next the demonstrators divided into three groups to let me throw a caveat in here. Even though under the conduct their lobbying. Each of the delegates was armed conditions of that act, what we would be doing in effect with a "report card" that quizzed and scored congress­ is authorizing the Congress to do a recall of either the men on three questions: "1) Do you support the removal chairman or the members of the board, given present of Paul Volcker as chairman of the Federal Reserve? 2) economic conditions ...the impact that you could have Do you favor congresssional oversight of the decisions on Fed policy, on borrowing and interest rates could be of the Federal Reserve? 3) Do you favor opening an minimal." USW official Mike Bonn responded. "I think emergency credit window for productive industry by the you agree with us that if we get rid of Paul Volcker, Federal Reserve?" whoever is next has got to be better." "It can't get much After an afternoon of lobbying, the group recon­ worse," Bailey replied. vened in the Cannon House Office building, whete they When the congressman had left, the group examined were addressed by four congressmen and three aides. the "report cards" of their elected officials. Hoynitski Representatives Don Bailey, William Coyne, Austin announced his upcoming meeting with officials of the Murphy, and Joseph McDade, all of Pennsylvania, came National Auto Dealers Association. Steelworkers official to speak. Ron Mottl (D-Oh.), E. Atkinson (D-Pa.), and Bonn said he would be seeing the international president Joseph Gaydos (D-Pa.) sent aides. Lloyd McBride to seek his support, and John McCarrell, As each congressman was questioned, his responses a 32-year veteran of the United Autoworkers, announced were marked on his "report card." The aide to RepJ;'e­ his intention to rally the national union behind the fight sentative Gaydos, who arrived late, was immediately to oust Paul Volcker and break the Federal Reserve out brought up to the podium to address the group. He asked of monetarist control.

EIR March 31, 1981 National 53 World Wildlife Fund and PCC/Draper Fund sponsor Global 2000's attack against science by Lonnie Wolfe

The sponsors of the Global 2000 report, including the man of the board of Arco and overseer of the Aspen Draper Fund, the Population Crisis Committee, the U.S. Institute, which funds and deploys much of the interna­ branch of the World Wildlife Fund, and their corporate tio�nal environmentalist/terrorist movement. associates, do not doubt that scientific progress would The U.S. board and corporate finance committee of permit the world to sustain and expand population. As the WWF include senior officers from Citibank, Time, one of their spokesmen, Dean William F. May of the Inc., Coca Cola, McKinsey & Company, the New York New York Univesity Graduate School of Business, put Times, Philip Morris, American Express, Marshall Field it, they fully agree that there is a "direct relationship" Enterprises, Revlon, Xerox, Reynolds Metals, IBM, between advances in science and advances in population and all the major oil companies. potential. In 1977, the fund, along with its sister organization Therefore-since they are committed to reducing the U.N.-linked International Union fo r the Conserva­ world population by some 2 billion before the turn of the tion of Nature, commissioned a global conservation century-they intend to curb science. "Our population study based on the premise that man "must come to policy must determine our science policy, " May insists terms with the reality of resource limitation and the (see interview below). carrying capacity of ecosystems." Scientific progress May issued similar statements at a leadership confer­ can only disguise the conflict between increasing popu­ ence sponsored by the National Audubon Society on lations and the natural environment, the fu nd conclud­ Jan. 22. The conference, which launched an organizing ed. The product of this study, the World Conservation effort fo r the Global 2000 doctrine, was also addressed Strategy report released last spring, was drawn upon for by Russell Train, president of the World Wildlife Fund­ the Global 2000 report. U.S.; Larry Kegan, executive director of the Population Crisis Committee/Draper Fund; and Rep. Richard Ot­ tinger, the New York Democrat who is sponsoring H.R. 907, legislation committing the United States to a do­ mestic and fo reign policy of zero population growth. At the conference, May urged business leaders to back the China's infanticide system Global 2000 concept and the Ottinger bill.

According to Nan Fang Ribao, the leading newspaper The Global 2000 machine in southern China, "during 1980 in Jieyang [a small A fo rmer chairman of the American Can Company town in Canton's Guangdong Province] eight female and a fo rthright environmentalist, May confirmed that infants were found dead, abandoned in fr ont of the the World Wildlife Fund and PCC/Draper Fund are local party headquarters .... Most had been suffo­ central strategists fo r this effort. cated." The World Wildlife Fund (WWF) is run in the In deference to the U.S. China Card lobby, the United States by fo rmer Environmental Protection acknowledgment of Chinese infanticide has been Agency chief and German Marshall Fund board mem­ blacked out of the U.S. press, although the story ber Train. Its most prominent but least important broke in European and British newspapers this commitment is protection of endangered animal species. month. Its international board includes Prince Bernhard of the The murders are a direct result of China's rules Netherlands, fo under of the Bilderberg Society; Prince limiting couples to only one child. A woman pregnant Philip of Great Britain; Club of Rome fo under and for the second time is strongly pressured to have an NATO operative Aurelio Peccei; Royal Dutch Shell chairman John Louden; and Robert O. Anderson, chair-

54 National EIR March 31, 198 1 At the time of the study's release, WWF networks ments in the Kennedy and Johnson administrations fo rmed the Committee for the Year 2000 to coordinate who devised the Vietnam War as a depopulation proj­ American deployments. It includes Train. Anderson. ect. The current board of the PCC/Draper Fund is a fo rmer ambassador Elliot Richardson, Walter Cronkite, roster of fo rmer Kennedy officials: fo rmer Defense Smithsonian I nstitution head S. Dillon Ripley. and Secretary and World Bank chief Robert "Body Count" fo rmer Secretary of State Cyrus Vance. It was this McNamara, fo rmer Treasury Secretary C. Douglas Dil­ group that in turn put together the newly named lon, fo rmer Treasury Undersecretary Henry Fowler, "Global Tomorrow" citizens' committee. fo rmer Undersecretary of State George Ball, and fo rmer The WWF leadership overlaps with the second key Agriculture Secretary Orville Freeman, now at Business institution, the Population Crisis Committee/Draper International. Other board members are George Mc­ Fund. Ghee, fo rmer undersecretary of state and fo rmer Mobil Established in 1966. the PCC is dedicated to zero Oil chairman; Angier Biddle Duke, fo rmer special am­ population growth; its fo unding documents assert that bassador; Richard Gardner, former aide to George Ball the world is already seriously overpopulated. Its initia­ and Jimmy Carter's ambassador to Italy; fo rmer presi­ tors were the late Hugh Moore and Gen. William H. dential economic advisers Walter Heller and John Ken­ Draper. Jr. neth Galbraith; fo rmer Army Chief of Staff William Hugh Moore was a member of the Brown family, Westmoreland; and fo rmer special military representa­ partners in Brown Brothers Harriman investment bank; tive to the President Gen. Maxwell Taylor. fo under of Dixie Cup Company and adviser to Ameri­ As EIR has reported, this is the group that created can Can Company; active on the U.S. NATO Commis­ an Office of Population Affairs (OPA) within the State sion. the American Association fo r the United Nations, Department, which maps depopulation targets, and and Planned Parenthood; and a member of the U.S. continues to do so under Secretary Alexander Haig. Council on Foreign Relations. He was also chairman of Philander P. Claxton, Jr., who directed the OPA fo r 10 the board of directors of the Atlantic Union and the years, is a member of the PCC board. Population Reference Bureau. Like the World Wildlife Fund, the PCC/Draper General Draper was an investment banker at Dillon, Fund also includes European "black nobility" and Read, U.S. Ambassador to NATO, and economic direc­ NATO subordinates, including Prince Bernhard, Prince tor of the military occupations of Germany and Japan, Philip, and Aurelio Peccei. where he attempted to use occupation policy to keep population levels depressed. The Chinese model Moore and Draper received backing from the ele- Since its inception, the PCC/Draper Fund has pro­ moted the zero-growth Chinese Communist "popula­ tion program" as its global model-a program carried out in China today through infanticide. abortion. If a second child is born, "one of the parents In 1971, Draper held a private is fo rced to buy all grain rations at twice the regulation dinner in Switzerland to organize prices for the next fhven years," a Western diplomat fo r a propaganda blitz in favor of told Reuters news service . the Chinese model. In attendance A third child is a "non-person," the Population were fo rmer Maryland Sen. Jo­ Crisis Committee reports approvingly. "He does not seph Tydings. a popUlation con­ get any identity card. The family's rations are not trol advocate and a meml5er of increased for the new child, so they must lower their the Draper Fund board; Draper own consumption to feed him. And the child is not Fund board members Lord and allowed to go to school." Lady Caradon; and the pro­ The national goal of the People's Republic is Maoist Edgar Snow, another absolute zero population growth by the year 2000. Draper Fund board member and Full observance of the "one-child" rule would, of a direct liaison to the Maoist regime. The result of this course , more than halve the population. meeting was a pamphlet titled "Why Not Adopt China's Many parents fear that if their first child is a girl , Population Goals?", produced and circulated by the they will be left without an heir or bereft of support in PCC and the Victor-Bostrom Fund, which marveled at their later years . Thus they have begun murdering the success of the Chinese program. first-born girls. The Chinese newspaper states that the In a newsletter of the Victor-Bostrom Fund. the one-child-only rule must be observed, but "equality of architect of the postwar German occupation policies the sexes" advises against murder of females. makes the fo llowing observations fo llowing a trip to Africa:

EIR March 31. 1981 National 55 We visited the most famous animal reserve­ development, and popUlation growth. The Global 2000 Kruger Park in South Africa. We learned there report addresses the fact that the relationship must be that the elephants were getting too numerous-at drastically altered. Now we must be careful to prevent present some 6,000 must be reduced to 5,000, as scientific progress from automatically producing new they are pushing over and killing too many trees surges of population growth. We need a new sense of and thereby threatening the food supply of other science. Our population policy must determine our sci­ animals .... ence policy. So the park rangers will act as judge and jury. Population control is the number-one issue facing the They will arbitrarily reduce one or another species United States and its business institutions. We are start­ as necessary to preserve the future food supply ing very late in getting population under control. There and balanced environment for all other animals. is no choice but to accept that there is going to be But who will be the park ranger for the human widespread starvation and death in the developing sector race? ... there is really very little that we can do to help the Who will cull out the surplus in this country or people in the so-called Fourth World [the over 1 billion that country when the pressure of too many people in the poorest nations of the underdeveloped sector­ and too few resources increases beyond endur­ ed.]. We can help them help themselves, but ifthey don't ance? ... make it ... the kinds of things William Paddock says Will the death-dealing Horseman of the.Apo­ may sound extreme [Paddock is a fo rmer State Depart­ calypse-war in its modern nuclear dress, hunger ment adviser who openly states that hundreds of millions already haunting half the human race, and disease must die because the globe is overpopulated-ed.], but which medical techniques could conquer if given they are only extreme in precise numbers. half a chance-will the gaunt and forbidding horseman become the park ranger for the two­ Q: Can you elaborate on the implications you draw for legged animal called man [emphasis in original]? technology and science? A: The idea is to control and in some cases prevent the The Draper Fund has been one of the principal application of new technology. Take energy ...the high backers of the Environmental Fund of William Paddock price of oil has been beneficial;energy use and consump­ and Garrett Hardin, which advocates "thinking the tion have been dropping at a phenomenal rate. It would unthinkable" about the fo rced reduction of global not be to our benefit to suddenly have the promise of a population through the "triage principle." cheap, abundant source of energy .... There are no Most recently, the PCC/Draper Fund has been cheap sources of energy supply, nor should there be; as working with .Henry Kissinger's networks at George- long as that is the case, we will have a tendency to keep . town's Center for Strategic and International Studies population down. (CSIS) to refurbish Global 2000 as "national security The World Bank [1980 development and energy] policy." In the American corporate sphere, Dean May report [is] right on the mark when it says that all devel­ describes PCe/Draper Fund board member Orville opment projects must now take into account the perma­ Freeman, head of Business International, as the key go­ nent high price of energy and scarcity questions. Projects between fo r Global 2000's ability to, in May's words, will be scaled down, and this will mean greater popula­ "control, and in-some cases prevent, the application of tion control. new technology." The core of U.S. strategic doctrine for the rest of the century is population control and science control. Popu­ lation is already pressing the existing popUlation base­ we are overpopulated for it. This creates security prob­ 'u.s. business hasto lems we must prepare for. PopUlations will spill over the borders. Regional wars are going to be fought over accept technologycontrol ' resources. This will create more pressure on population and more wars. In some areas of the world this could Th efollowing interview with William F. May, dean of the become a way of life-continuous war-until popUlation Graduate School of Business at New York University, was levels drop. prOVided to EIR by an independent journalist. Right now we are forced to respect the sovereignty of nations, at least in the political sphere. The U.S. can't Q: What do you see as the most important aspect of the walk in as a government and say, "You do this or else." Global 2000 report? That is where the private institutions come in. They A: What has to be recognized is that there is a direct and the transnational corporations can impose the right relationship between scientific progress, technological policies.

56 National EIR March 31, 1981 Constitutional Law

Benchmark decision in Texas on corporate claims against Iran by George Canning

On Feb. 12, 1981 federal Judge Robert W. Porter en­ ferred, along with other nominally Iranian funds held in joined the transfer of $19 million dollars in Iranian funds U.S. banks, to complete Jimmy Carter's dirty deal with that he had in May 1980 awarded to Electronic Data the Islamic Republic for the 52 hostages. Systems (EDS). The Dallas-based EDS had sought the Although the Reagan administration has issued an $19 million in damages in July 1979, claiming breach of executive order effectively ratifying the Carter executive contract on the part of Iranian entities. In a parallel suit orders implementing the,deal (including the suspension in the Southern District of New York, EDS sought the of lawsuits involving claims against Iran), the regulations prejudgment for attachment of $19 million in Iranian issued by the Treasury Department include the proviso funds-a common occurrence in suits against Iranian that the transfers may be delayed until "the Secretary of entities-first,to prevent the funds' flightfrom the coun­ the Treasury determines that the authority of the United try, and second, because Iranian entities do not, in States to order these transfers has been the subject of a general bank outside New York. President Carter's sei­ definitive legal ruling." Thus the stage has been set for a zure of all frozen Iranian assets for transfer to Iran in showdown between Iran's American allies and the U.S. exchange for the hostages under executive jurisdiction Constitution, a confrontation the Carterites had stu­ was termed by the court to be decidedly unconstitutional. diously attempted to avoid. "Congress expressly granted this court jurisdiction to EIR termed the deal "illegal and unconstitutional" hear claims such as the plaintiffs with the enactment of (Feb. 10, 198 1). We publish here arguments from Judge the Foreign Sovereign Immunities Act. Article III of the Porter's "Memorandum Opinion," arguments which United States Constitution vests this court with the powerfully expose the assets deal as an attack on the judicial power to enter judgments and orders within the Constitution and statutes of this country. For space scope of congressional grants of jurisdiction. I cannot reasons we have deleted many of the case citations; we ignore these principles and neither may the executive. urge executives and legal specialists to read the document Congress is free to repeal the Foreign Sovereign Immun­ in its entirety. ities Act, but the President, may not do so by executive fiat." Judge Porter on So saying, Judge Robert W. Porter of the U.S. Dis­ public interest trict Court in Dallas, Texas granted Electronic Data I note that both, the orders and judgments of this Systems Iran a preliminary injunction against the United court, and the orders of the Southern District of New States and the secretary of the Treasury, restraining them York in aid of ultimate satisfaction of this judgment, "directly or indirectly taking any action of any nature were rendered pursuant to jurisdiction conferred by whatever nullifying, impeding or interfering with, or in Congress in the Foreign Sovereign Immunities Act.... any other way affecting" court orders (including trans­ Further, Article III of the United States Constitution ferring attached funds) or the jurisdiction of the federal provides that judicial power of the United States "shall courts in EDS's suit against several Iranian entities. The be vested in one Supreme Court, and in such inferior net effect of the injunction is to prevent the transfer to courts as the Congress may from time to time ordain Iran of some $19 million awarded to EDS on May 9, and establish." It could not be any clearer than that the 1980 in Dallas and earlier attached through action in the judgment and orders of this court as well as the orders SO,uthern District Court of New York. Those funds of the Southern District of New York were rendered would otherwise be in imminent danger of being trans- pursuant to constitutional and statutory authority. If I

EIR March 31, 198 1 National 57 assume that the judgment entered in this case is a valid, Congress, the executive, an executive agency, nor a state subsisting judgment, which I think I must, then Execu­ legislature may by subsequent acts negate, disregard, or tive Order 12279 raises serious constitutional issues with nullify the judgment of the court already rendered, or regard to the power of the executive branch to nullify or the rights determined thereby .... Article III of the negate the constitutional and statutory authority of United States Constitution and the congressional grant Article III courts with respect to pending cases. As one of jurisdiction in the Foreign Sovereign Immunities Act court has stated, it must "be assumed that the Consti­ provided this court with the judicial power to adjudicate tution is the ultimate expression of public interest." the issues in this case. Concomitant with that power is the power and duty of this court to see that its orders Statutory authority and judgments are effectuated. Therefore, I am com­ The grant of authorities under IEEPA [International pelled to conclude that Executive Order 12279, with or Emergency Economic Powers Act, under which Carter without the blessing of Congress, is constitutionally claimed the authority to arrange the assets transfer­ invalid insofar as it attempts or purports to counter­ ed.] expressly excluded certain authorities granted to mand or nullify valid exercises of the judicial power .... the President under Section 5(b) of the Trading With The impact of Executive [Order] 12279 poses a the Enemy Act including "the power to vest, i.e. to take similar and related constitutional issue concerning the title to foreign property." ...Thus, it is clear that under power of either the Congress or the executive to delimit the authority of IEEPA the President may "freeze but the jurisdiction of the federal courts. ... It is well not seize" assets in which a foreign nation has an established that only Congress can confer and redefine interest. ... the jurisdiction of United States courts .... Therefore, Executive Order 12279 directs and compels the executive orders lacking congressional approval or au­ tranfer of Iranian funds in the possession of banking thority cannot possibly interfere with the exercise of institutions "to the Federal Reserve Bank of New York, jurisdiction of federal courts .... The foremost limita­ · to be held or transferred as directed by the secretary of tion on that power was succinctly delineated in Battaglia the Treasury." In essence, the order directs that the v. General Motors Corporation .... funds in which Iran has an interest be transferred to the We think, however, that the exercise by Congress control of the executive branch and attempts to vest of its control over jurisdiction is subject to compli­ custody and control of the assets in the executive. This ance with at least the requirements of the Fifth is a power which Congress declined to grant to the Amendment. That is to say, while Congress has President with the enactment of IEEPA in 1977. There­ the undoubted power to give, withhold, and re­ fore, insofar as the executive order attempts to vest strict the jurisdiction of courts other than the custody and control of the assets in question in the Supreme Court, it must not so exercise that power executive branch, such a directive is without congres­ as to deprive any person of life, liberty, or prop­ sional authority. In addition, any claim that the lan­ erty without due process of law or to take private guage of Section 1702 was intended to limit or nullify property without just compensation. the jurisdiction of Artcle III courts was effectively refuted in a recent decision involving the Iranian Assets With respect to any assertion that the directives of Control Regulations .... The court refused to accept Executive Order 12279 are within the inherent or im­ the interpretation of the government of the United plied powers of the President as commander-in-chief, I States that Section 504(d) of the Freeze Regulations note that the fa cts in this case closely resemble those in ... precluded further judicial proceedings. Citing "the Youngstown Sheet & Tube Co. v. Sawyer .... I have familiar canon that a construction involving unconsti­ concluded above that with the passage of IEEPA Con­ tutionality is to be avoided if at [all] possible," the court gress expressly declined to preserve a power previously stated that the government's interpretation would give available to the President under the Trading With the rise to grave constitutional difficulties .... Enemy Act-the power to vest custody and control of The constitutional issues resolve to the power of foreign assets in the executive branch. Likewise, in either the executive branch or Congress to negate or Youngstown Congress had expressly declined to grant countermand valid orders of Article III courts issued the President the power to seize steel manufacturing pursuant to an express congressional grant of jurisdic­ plants during times of emergency .... Just as the court tion under the Foreign Sovereign Immunitie/i Act. ... in Youngstown concluded that President Truman was The pertinent inquiry is whether either Congress or the without statutory or constitutional authority to seize executive can subsequently nullify those exercises of the the nation's steel mills, I likewise conclude that Presi­ judicial power. It is my conclusion that neither Congress dent Carter was without statutory or constitutional nor the executive have such authority ....There is more authority to order the vesting of foreign assets in the than ample authority for the proposition that neither custody and control of the executive branch.

58 National EIR March 31, 1981 linked violence in many parts of the United States, there has been a focus of inciting elements of the Jewish Facts BehindTe rror Defense League and Yippies into a public posture of inciting and threatening attacks against LaRouche. "Fact : The Yippies are avowed drug-users, capable of violence, but regarded as too mentally disturbed through drug-related brain damage to conduct any so­ phisticated operations independently. However, they provide an obvious and expendable cover for any would­ be assassins who wish to deploy the Yippies as a scape­ 'Yippies' a cover for goat cover for a sophisticated operation run behind such a public-relations diversionary screen." assassination capacity "Fact: It is the best information received from various intelligence and security sources of several nations that circles desiring LaRouche's assassination have hesitated andterrorism wave to follow through earlier threats to murder LaRouche for reasons of estimated countervailing political advan­ The offices of the National Democratic Policy Commit­ tage. It has been the estimate of expert sources regularly tee in New York issued the following statement on the consulted on this matter that new efforts to effect La­ detonation of an explosive device outside New York City Rouche's assassination would be postponed until La­ premises of the promarijuana Yippie organization. Rouche threatened to break out of the environment of "According to multiple news and other reports re­ libel-centered containment directed against his influence. ceived by our offices March 17, an explosive device was At this moment, LaRouche is breaking out of that detonated outside New York premises reportedly occu­ containment in a most significant degree. pied by the pro terrorist, promarijuana sect known as the "Therefore, the only visible significant purpose Yippies. served by an atrocity of the sort reported to have oc­ "According to reports now widespread, the Yippies curred outside the Yippies' premises is to create the are alleging that the detonation is suspected to have been conditions useful for making the Yippies a diversionary effected by persons associated with Lyndon H. La­ smokescreen fo r assassination attempts against La­ Rouche, Jr., a fo rmer pre-candidate for the 1980 U.S. Rouche effected by other, less brain-damaged assailants. presidential nomination of the Democratic Party, and "Furthermore, this occurs at a time when LaRouche's presently Advisory Committee chairman of the National increasing influence indicates increased danger of an Democratic Policy Committee. assassination threat against him, but also at a time when "There is overwhelming circumstantial evidence that all the indicators of imminent terrorist and urban riot this detonation is most probably part of the preparatory violence are rising rapidly. . measures being deployed by persons intending attempted "It is stressed that forces ()fthe Socialist International assassination of Lyndon H. LaRouche. projected a two-phase operation against the Reagan "The Security Intelligence section of Executive Intel­ administration at the close of 1980. According to leading ligen,ce Review has compiled the following and other spokesmen for Willy Brandt's Socialist International, relevant facts of assistance from other leading specialists Phase I of the destabilization of President Reagan's in antiterrorist and related personnel security matters. administration would be pressuring President Reagan to "Fact: Since the period of the August 1980 Demo­ 'Tbatcherize' himself by capitulating to Paul A. Volck­ cratic Party National Convention in New York City, the er's destruction of the U.S. economy through usury. Yippies organization has been co-deployed in threats of According to the same and related sources, Phase II of violence against LaRouche in company with such groups the destabilization operation would be fo menting of as the Communist Workers Party, and other elements social disturbances inside the United States under con­ coordinated by persons associated with attorney Roy M. ditions of growing unrest caused by a duped President Cohn. These elements include the New York City weekly Reagan's 'Thatcherization' of the U.S. economy. rag Our To wn and Our Town contributor Dennis King. "Phase I of the projected destabilization of the Rea­ There has been a de facto incitement of elements of the gan administration is well underway. There are signs that Jewish Defense League by agents of Our Town who are Phase II is about to begin. Under Phase II conditions of clients of Roy M. Cohn and by former Socialist Party of terrorist attacks and urban rioting, various cases of American Reagan-hater Irwin Sual!. politically motivated individual homicides, such as at­ "Fact: During the recent period of general heating­ tempted assassination of LaRouche, would tend to be up of preparations for urban riots and other .terrorist- merely one more of a variety of atrocities."

EIR March 31, 198 1 National 59 Congressional Closeup by Barbara Dreyfuss and Susan Kokinda

Legislation to raise rates water is a valuable commodity, we this project." Rep. Jamie Whitten for federal water cannot encourage its misuse/' (D-Miss.), chairman of the very Congressman George Miller intro­ Miller said. "Just as the oil com­ important House Appropriations duced legislation March 18 that panies say higher prices are the Committee, is a staunch backer of would require the Interior Depart­ only way to conserve their prod­ the project and reportedly won a ment to drastically increase the ucts, price is the only way to regu­ commitment from President Rea­ rates it charges thousands of farm­ late water use." gan that he would not cut the ers in the West for federally run Tenn-Tom in his budget proposals. irrigation programs. Under the fo rmula Miller is proposing to de­ termine water rates, South Dakota farmers now getting water from S enate vote the Pollack-Herreid project at halts Tenn-Tom L iberal Dems decry $3.10 per acre-foot would have to In a surprise move, the Senate En­ nuclear energy exports pay instead $35.34. Other projects vironment and Public Works In a speech on the floor of the would charge even higher rates for Committee voted March 13 to rec­ Senate March 17, Sen. Alan Cran­ their water. ommend that the Senate Budget ston (D-Calif.) accused Iraq of Miller cites a General Account­ Committee end funding for the "blackmailing" Western Europe ing Office study rel�ased March 13 Tennessee-Tombigbee Waterway. into giving it nuclear energy tech­ as confirmation that his bill is nec­ The 9 to 4 vote was engineered by nology under threat of cutting essary. The report on federal irri­ Sen. Alan Simpson (R-Wyo.), who back Iraqi oil sales. Cranston, who gation programs says that the declared the vote "signals a new has been a leading member of the projects sell water to farmers at antagonism in the Senate toward World Federalists, an organization what amounts to a major govern­ pork barrel water projects," while promoting one-world government, ment subsidy and at these rates the environmentalists from the Friends urged the Reagan administration farmers will never pay back the of the Earth stood by applauding. to press France and Italy to stop cost of the projects. The GAO Only Sen. John Stennis (D­ their nuclear energy-related ex­ reviewed 6 projects of the Interior Miss.), who. i$ not even a member ports to Iraq. If they do not, Cran­ Department's Water and Power of the committee, spoke out ston suggested, halting U.S. ship­ Resources Service in South Dako­ against the vote Stennis com­ ments of nuclear fuel to them and ta, Washington, Nebraska, Colo­ plained that the decision to take a any other nation that provides not rado, and California. vote was made so unexpectedly only .Iraq, but Pakistan, with what "The new GAO report finally only 15 minutes notice was given. he called "highly sensitive nuclear blows the cover," declared Repre­ Not even Sen. James Abdnor assistance. " sentative Miller. "For years Interi­ (R-S.D.), chairman of the Water Cranston also called for the or has been trying to say that Resources subcommittee, was congressional investigation of the fa rmers will pay back the project present when the vote was taken. spread of nuclear technologies to costs. GAO says they will never Stennis was seconded in his call India and Libya as well. Cranston come close to paying them back." to demand completion of the sore­ is the ranking minority member of But Miller is much more concerned ly needed Tenn-Tom, which would the subcommittee on Arms Con­ about declaring water a scarce re­ connect the Tennessee River to the trol, Oceans, International Opera­ source and contro'liing its use Gulf of Mexico, by Rep. Tom Be­ tions, and Environment. through high prices. His aides con­ vill (D-Ala.). Bevill predicted that Cranston said that his state­ firm that he is familiar with the the House would vote to fund ment had been prompted by infor­ Global 2000 report declaring re­ Tenn-Tom. "It's 55 percent com­ mation gotten from the "executive sources scarce and population too plete and 88 percent of the con­ branch." Capitol Hill sources in­ large. "It's very clear with more tracts have been let," he declared, dicated that this included the State and more people realizing that "and it would be foolish to stop Department. There is speculation

60 National EIR March 31, 1981 that Cranston is working with accumulate and distribute funds on the House floor March 12 that James Buckle�, undersecretary for for research for up to four years Secretary of State Alexander Haig Security Assistance, Science and without penalty. It would provide may well try to grab power away Technology, who is known to op­ a 25 percent tax credit plus a tax from President R�agan just as he pose American nuclear energy ex­ deduction for this category of ex­ did with President Richard Nixon ports. penditures. during the manipulated Watergate Cranston has also been work­ A recent survey of the members crisis. ing closely with Rep. Jonathan of the ScientificApparatus Makers Noting that the 25th Amend­ Bingham (D-N.Y.), chairman of Association has indicated that ment to the Constitution allows a the subcommittee on International three-quarters of the respondents President's staffto declare him in­ Economic Policy and Trade. to the survey would increase their capacitated, Gonzalez warned, Bingham sent a letter to Secretary outlays for university research by "What few people remember is of State Alexander Haig March 3 about 65 percent should this bill that before President Nixon re­ urging the administration to pres­ become law. signed, it was his chief of staff, sure our European allies against In a statement on the floor of together with the Secretary of selling nuclear energy technology the House March II, Representa­ State, who contemplated using the to Iraq and Pakistan on the basis tive Shannon indicated the impor­ 25th Amendment to force him out that it presented a danger to U.S. tance of research and development of office if he did not quit. Even national security interests in the for the nation's economy. "Re­ though the 25th Amendment was Persian Gulf and South Asia. search and development has played not invoked, the President's pow­ Bingham intends to raise this issue a vital role in this nation's econom­ ers were effectively shorn because when hearings are held on an ex­ ic success for many years. It has those same two individuals issued pected request fr om the adminis­ led to the unparalleled success of orders that they had to approve tration for conventional security this nation's high-technology in­ anything ordered by the Presi­ assistance aid to the government of dustries since 1945. The position of dent. ... This is as close to a pal­ Pakistan. the United States as the world's ace coup as this country has ever leader in innovation and technolo­ been. They were operating outside gy has begun to slip. It can be seen the law and outside the Constitu­ in our large trade deficits; in de­ tion by isolating him and not in­ clining productivity; in an increase voking the judgment of anyone R esearch Revitalization in the number ·of U.S. patents is­ else. It was perhaps a well-meant Act introduced sued to citizens of fo reign coun­ conspiracy, but a conspiracy ne­ Representative James Shannon has tries; in the decrease in the number vertheless. Now we see Alexander introduced H.R. 1864, the Re­ of new products being introduced Haig, who was that chief of staff, search Revitalization Act of 1981, into commerce; and in a shift in as · Secretary of State-the keeper in an effort to "promote research emphasis to short-range research of the Seal. We know that Mr. and development." The bill is one by U.S. companies. A declining Haig did not then and will not of a number of amendments to the nati0nal commitment to R&D is today hesitate to use his consider­ Internal Revenue Code of 1954, one of the major underlying causes able powers to .set his way-and and hearings on these amendments of the problem." the way could be inviting. begin in the House Ways and "Whereas Mr. Nixon was crim­ Means Committee March 23 to go inally guilty and under broad at­ through June. tack," said Gonzalez, "Mr. Rea­ The bill is designed to increase gan is of an age where his powers the amount of money available for C ongressman warns of might suddenly wane. Mr. Haig university research by permitting Haig power grab did not hesitate to become de facto business firms to establish tax-ex­ Representative Henry Gonzalez President in 1974 and he would not, empt reserve accounts to receive, (0-Texas) ·warned in a statement hesitate to do so again."

EIR March 31, 198 1 National 61 NationalNews

capacity by 2000, together with develop­ Though Pewitt did not change the ad­ ment of nuclear fast breeder capacity, the ministration's proposed 1982 budget fig­ existence of the U.S. nuclear industry ure of $460 million for the fusion budget, White House moves to could be jeopardized, threatening dire $65 million less than what the Carter overall economic consequences. He has administration had proposed, he admit­ control foreign policy been an early advocate of the "nuplex" ted that Energy Secretary James Ed­ The White House has taken charge of concept of integrated nuclear-industrial wards has publicly expressed support for planning for all foreign trips of the Pres­ complexes. the fusion program. ident, in a direct slap at Secretary of State Several scientists who have spoken Representative Marilyn Bouquard Alexander Haig. Coordination for brief­ with Davis, however, point with concern (D-Tenn.), chairman of the subcommit­ ing the President and arranging details to recent private statements downplaying tee, said that she did not agree with Pew­ on agenda, etc., with foreign govern­ the importance of a strong advanced sci­ itt's testimony that because the Reagan ments will be centered in the office of ence research and development program administration is going ahead with fis­ Edwin Meese, counselor to the President in controlled thermonuclear fusion as sion, this makes "fusion less urgent." and a personal friend of the President. well as other advanced energy technolo­ "Congress," she said, "must chart a His officesent out a request on March 18 gies. steady course for the fu sion program, to all cabinet departments requesting One source told EIR that Davis has and we believe strongly in following the them to submit memos on matters they argued against fusion because "it doesn't fusion law." think should be discussed during the have enough engineering." Some prom­ President's trip to Mexico. inent science spokesmen wonder if Davis Michael Deaver, deputy chief of staff will be able to grasp the long- and medi­ at the White House, has been sent to um-range military, as well as mineral and Conoco provokes Mexico to work out details of the April energy, implications of a vigorously re­ 27-28 trip. "I've 8een charged with the vived fusion research program. a coal strike responsibility for all foreign trips," he A strike of the nation's coalmi ners be­ declared before departing. "That's the came inevitable as of March 20 as talks change since the Canada trip." The State between the United Mine Workers Department prepared for that trip and Pewitt backs down (UMW) and the Bituminous Coal Oper­ provided briefing material very late and ators Association remained deadlocked in a format that was virtually impossible on go-slow fusion policy 'past the strike deadline. The deadlock to digest, administration sources said. Testifying March 18 before the Energy was not surprising, observers noted, due subcommittee of the House Science and to the radical nature of the demands Technology Committee, Dr. Doug Pew­ brought to the bargaining table by the itt of the Department of Energy back­ BCOA's chief negotiator, Bobby R. Reagan names deputy tracked on the anti fusion energy policy Brown, of Conoco. Brown's demands which he had put forward earlier this have included the reinstitution of Sunday energy secretary month in congressional hearings. "My work for coal miners, and the breaking President Reagan has officially named statements today will be more positive up of the Union's national pension fund W. Kenneth Davis, vice president of Be­ than what I have said previously," he into a company-by-cortlpany arrange­ chtel Power Corporation, to be Deputy announced. ment. Secretary of Energy. The new number­ In past testimony Pewitt had said that "This is' a forced strike," one UMW two man at DOE was director of Reactor the Reagan administration would not official commented. "There's no way Development in the Atomic Energy commit support for the $1 billion Fusion Sam [Sam Church, UMW president] Commission during 1954-58. Described Engineering Device (FED) mandated by could have gone along with these de­ by colleagues as a hard-nosed "bullet­ the McCormack fu sion act to be operat­ mands." headed engineer" when it c'omes to ad­ ing by the year 1990. Under questioIfing Brown's super-tough stance has dis­ vocating fission plants, Davis wrote the by the House committee, however, Pew­ turbed many of the smaller coal opera­ nuclear policy section of the Reagan En­ itt said that the administration proposes tors as well, who need to maintain pro­ ergy Task Force headed by geologist to continue the design studies for the duction in order to survive. However, Michel Halbouty. FED, and that construction costs to meet both Conoco, whose ownership of Con­ Davis chaired a national industry the law's schedule could be included in solidation Coal and 13.7 billion tons of study in 1979 which warned that unless the fiscal year 1983 and 1984 budgets. coal reserves makes it the largest holder there was a significant expansion beyond The FED construction would not begin of privately owned coal reserves in the ' Carter administration-projected nuclear until 1984 he said. world, and the other oil multinationals

62 National EIR March 31, 1981 Briefly

• FRED KHEDOURI, who was brought in by Office of Man­ agement and Budget director whiz-kid David Stockman to be OMB associate director for energy and environment, is raising the ire which are highly leveraged in coal re­ which seeks to put the Democratic Party of growing numbers of prodevel­ serves see the strike as a potential bon­ under the control of Socialist Interna­ opment groups in Washington. anza. tional networks. Prir to serving as an aide to the With world demand fo r U.S. coal young Michigan congressman, exports at record levels, a big constric­ Khedouri was a founding leader tion of American coal production could of the notorious antinuclear Nat­ cause co al prices to soar. ural Resources Defense Council. "In 1972, when oil went for $3 a John Glenn stalls barrel, a ton of Eastern bituminous went Malone appointment • MAXWELL RAAB may soon for $5,'; commented an analyst at the The appointment of James L. Malone, a be named ambassador to Italy, ac­ prestigious Energy Daily. "Today both prominent pronuclear lawyer, to the po­ cording to Washington sources. A go for over $30. They've gone up in direct sition of Assistant Secretary of State for New York lawyer who played a parallel. Just between you and me, I think Oceans and International Environmental prominent role in Ronald Rea­ it's clear that the move into coal by the and ScientificAffairs has roused the op­ gan's election campaign, Raab is oil multis might have a lot more to do position of a number of environmentalist director of the American-Israeli with that than production costs." groups, with the most vocal resistance Chamber of Commerce, chairs the being offered by Sen. John Glenn government affairs division of the (D-Ohio). United Jewish Appeal, and is a Glenn, who is the minority chairman member of the board of governors Panel to 'reform' of the Senate Subcommittee on Energy, of Hebrew University. His law Nuclear Proliferation and Government firm,Stro ock, Stroock and Lavan, presidential nominations Processes has vowed to use his committee represents the Warburg fa mily in­ A bipartisan panel of prominent Repub­ to stall the Malone appointment until terests. Supply-side economist licans and Democrats has been formed to possible "conflict of interests" between Lewis Lehrman is his personal restructure the method by which presi­ Malone's former nuclear industry clients protege. dential candidates are nominated. and his new position can be explored. Sponsored by Duke University and However, it was immediately clear that • JIM WRIGHT, the House Ma­ the Woodrow Wilson Center of the the issues which divided Malone and jority leader, says of Reagan's eco­ Smithsonian Institution, the panel will Glenn were not technical or le gal, but nomic program: "The same basic attempt to spell out "principles" for the strong differences on matters of policy. approach did not wo_r k in the two major parties to utilize in making Malone was the author of a Reagan 1920s. And in [Prime Minister] alterations in presi dential nominating transition team report which called for Margaret Thatcher'� England, a methods. an end to restrictions blocking the export similar policy has resulted in 15 Among the issues the group will in­ of U.S. nuclear technology to major percent unemployment, a drop of vestigate, says spokesmen Terry Sanford, Western allies, such as · West Germany 14 percent in production, the big­ president of Duke University, will be the and Japan. He has also been a member gest drop since the Great Depres­ proliferation of primaries and party cau­ for the past three years of the top Wash­ sion, and an increase in bankrupt­ cuses, the impact of spending require­ ington law firm of Doub, Muntzing, cies and business failures." ments, and the role of party officials in Chartered, which has been a prominent Wright's comments are in a March the nominating process. defender of the nuclear industry, espe­ 5 briefing circulated in letter form Robert Strauss is a member of the cially in cases involving nuclear export to Democratic congressmen. new panel, as are GOP Sen. Robert Dole, deals threatened by the Carter adminis­ John Sears (ousted as Ronald Reagan's tration's "antiproliferation" guidelines. • KOREAN manufacturers, three presidential campaign chairman in Feb­ Glenn, on the other hand, was the of whom are investigating color ruary 1980), and former Secretary of author of the NonProliferation Act, the television plant sites in the U.S., State Edmund Muskie. At a March 18 basis of the Carter policy denying ad­ are reportedly doing so because of press conference to announce the group's vanced technology to the Third World. the cheap labor, sincethey are in formation, Strauss said current nominat­ At the Senate hearings he focused partic­ no danger of exceeding their im­ ing methods favor "special interest­ ular fireon Malone's role in representing port quotas. The South Korean group domination." Str�uss and Muskie Kansai Electric and TEPCO, two Japa­ Lucky Group has been awarded a are also members of "Democrats for the nese firms whose successful application hefty loan by the State of Alabama '80s," an organization recently estab­ to have their spent uranium fuel repro­ to build a plant in Huntsville. lished by Pamela Harriman, wife of fo r­ cessed knocked a large hole in the Carter mer ambassador Averell Harriman, antinuclear policy.

EIR March 31, 198 1 National 63 EnergyInsider by William Engdahl

Regulating America's nuclear future Glenn 1978 Nuclear Nonpro­ Th e Reagan choicefor interim NR C head reflects a liferation Act, which halted nuclear continuation of in tense backroom battles. exports, another estimated loss of some 60-plus reactor exports fo r a minimum of at least $23 billion. This is only part of the reason a top-flight,no-nons ense chairman is needed, and someone good to fill Earlier this month, President history is relevant. One unfortunate the seat left vacant by the departure Reagan announced that he was event during the Ford administra­ of pronuclear Richard Kennedy. naming Dr. Joseph Hendrie, the tion was passage of the Energy Re­ There are worrisome signs that lone Republican on the five-mem­ organization Act of 1974 which Reagan is being pressured into fill­ ber Nuclear Regulatory Commis­ abolished the Atomic Energy Com­ ing the post with a political ap­ sion (NRC), to retake his seat as mission and created a polyglot En­ pointee. Thomas Roberts, a Mem­ NRC chairman until a final choice ergy Research and Development phis businessman who was treasur­ can be named. Hendrie was NRC Administration (later DOE) and a er of George Bush's presidential chairman until December 1979, separate NRC. With no central nu­ bid, was the reported surprise when Carter demoted him to com­ clear agency or congressional Joint choice. Sources report that Jim missioner, replaced by Dr. John Committee on Atomic Energy, the McClure, the pronuclear senator Ahearne, a systems analyst protege NRDC and Sierra Club began from Idaho, and Majority Leader of ex-Energy Secretary James sharpening their knives. Howard Baker of Tennessee per­ Schlesinger. The fight now over the One of the first commissioners sonally convinced the President last NRC could well determine whether on the new NRC was, and still is, week that Roberts was an inade­ America makes it to the end of the Dr. Victor Gilinsky, a technocrat quate choice for the vital post. century with adequate energy. protege of Schlesinger's at Rand, Hendrie was named by the Pres­ In discussions with nuclear in­ the source of a lot of bad ideas in ident as a fa llback until his old term dustry spokesmen, I got a sense of recent years. Gilinsky, together expires in June, or until a final urgency over the choice of who with lawyer-commissioner Peter choice is named. Unfortunately, heads the NRC. A weak or under­ Bradford, a former Nader-raider one of the most respected and qual­ qualified "political" appointee, no from Maine's Public Utility Com­ ified choices recommended by the matter how well intentioned, they mission, have consistently provided NRC Transition Team, Dr. Ben tell me, would be chopped to the inside wrecking and staIIingjob Rusche ofthe South Carolina Ener­ mincemeat by the slick anti-indus­ to ensure that no utility dares to gy Research Institute, a fo rmer nu­ try ideologues on the NRC. Right order a new nuclear plant. Ahearne, clear safety official with the AEC now, it is taking this country as as chairman, tended to vacillate be­ and NRC, seems to be a victim of long as 14 years to limp through the tween pro and anti in his votes. White House rumor mill disfavor. required licensing hurdles, inter­ Some 50 to 60 nuclear plants have Whatever the facts behind charges venor court challenges, and idiotic been canceled as a partial result of a of "friendship" with Secretary Ed­ labyrinth of delays that such anti­ regulatory process which has tend­ wards (hardly a heinous offense growth think tanks as the Natural ed to prioritize willful obstruction compared with some of the cronies Resources Defense Council above safe, proven energy, jobs, of the previous administration), his (NRDC) admit are intended to stop · and economic prosperity. last minute replacement by some­ nuclear power growth. Countries Such delay has meant the loss of one of Roberts's limited qualifica­ such as France and Japan take ap­ approximately 5.5 million tons of tions indicates the fr agile state of proximately six to seven years to stainess, low-grade, and equip­ the process of getting the nation build a 1,000 megawatt nuclear re­ ment steel and at least 2 million back on a firmnuclear track. actor, with perhaps even more man-years of high-skilled jobs. This Strong action by the President stringent safety standards. says nothing of the absurd regula­ here could be a far-reaching accom­ A brief review of recent nuclear tory morass created by the Percy- plishment of his administration.

64 National EIR March 31, 1981