EXECUTIVE INTELLIGENCE

REVIEW December 12-18, 1978

New Solidarity International Press Service [THIS PAGE IS INTENTIONALLY BLANK] Editor-in-chief Fernando Quijano EXECUTIVE Managing Editor Tessa DeCarlo Contributing Editors INTELLIG ENCE Lyndon H. LaRouche Jr. Nancy Spannaus Criton Zoakos REVIEW Christopher White

International Nora Hamerman U.S. Report Stephen Pepper Konstantin George Economics David Goldman Counterintelligence Jeffrey Steinberg Military Intelligence Paul Goldstein The new Europe Vivian Zoakos Science & Technology monetary system Morris Levitt Soviet Sector Rachel Berthoff -it's official! Middle East Robert Dreyfuss Asia Daniel Sneider Africa Douglas DeGroot Latin America Robyn Quijano Dennis Small Law Felice Gelman As expected, the new European Monetary System was officially Press approved at the European Community summit in Brussels Dec. 4 and Fay Sober 5. Is it still-born, as the British and elements of the U.S. media Energy proclaimed? Or has the machinery been put in place for a new era of William Engdahl industrial prosperity and monetary stability? Our story on the historic summit, featured in our ECONOMICS section, features an analysis Production Editor by economics specialist Renee Sigerson on what to expect, both in Deborah Asch terms of the steps by which the EMS is going into operation, and the frantic opposition from Britain and her allies. Our package also Executive Intelligence Review features the story behind Italy's abrupt postponement of her decision is published by New Solidarity on whether to join the EMS, plus a retrospective based on our International Press Service coverage over the past six months, of the steps which led from the P. O. Box 1922, GPO, New York City, N. Y. 10001 Schmidt-Brezhnev agreements in May to the historic Brussels summit. page 8 Subscriptions by mail for the U.S.: 3 months-$125, 6 months-$225, On the cover (left to right) : French President Valery Giscard 1 year-$400. d'Estaing, West German Chancellor Helmut Schmidt, and British Prime Minister James Callaghan. ISSN 0146-9614

© 1978 EIR News Service Inc. All Rights Reserved. Reproduction in whole or in part without permission strictly prohibited. EXECUTIVE INTELLIGENCE IN THIS ISSUE REVIEW

THE "KOOL-AID" APPROACH TO HEALTH CARE THIS WEEK

Now the U.S. has to decide ...... Will Senator Ted Kennedy's proposal 5 for "National Health Insurance" Will the U. S. go the way of bankrupt Britain transform the U.S. health care system or join the new monetary system? into a vehicle for hospice-style "easing the passage" of the aged and seriously Bhutto's fate in the balance ...... 5 ill? It sounds extreme, but you'll get a horrifying new insight into the reasons Japan's new government: 'low quality' ...... 6 for doctors' opposition to the Kennedy plan when you read Kathleen Murphy's Crack in cult coverup ...... 7 report on Kennedy and HEW Secretary Joseph Califano's com­ mitment to the· hospice cult, and the rhetoric about "useless eaters" ECONOMICS creeping into the terminology of the Kennedy plan's supporters. Featured The new monetary system - it's officiall ...... 8 in our U.S. REPORT, together with a policy statement by U.S. Labor Party 1. What's next on the agenda? ...... 10 Chairman Lyndon H. LaRouche, Jr., which recasts the often-demagogic 2. Britain's 'grand delusion' shattered ...... 1 3 debate about "rising health costs," and presents a plan for defeating the 3. Italy: out of the frying pan, Kennedy approach. page 38 into the fire ...... 14

IRAN: WHO'S 4. How the EMS was built ...... DESTABILIZING WHOM? 16

If the Shah of Iran survives the current wave of destabilizations, he will almost SOVIETS certainly organize a new civilian The Soviets view Schmidt's key EMS role ...... 19 government with members of the But this Novosti commentary National Front and others. But the reflects Soviets' policy dilemma immediate question is, will he survive? The destabilizations, as our IN­ TERNATIONAL Section this week shows, are being sponsored as a COUNTERINTELLIGENCE pretext for a confrontation with the Soviets and a new oil hoax. In the same Organized crime goes legit ...... 21 section, a Soviet commentary provided How Kennedy 'reformers,' the mob, and drug to this news service by Novosti, bankers took over in New Jersey warning of the dangers of a U.S. military intervention, contrasted with Report names Lansky, Intertel, and Scotiabank ...... 25 Henry Kissinger's demands for con­ frontation in the Persian Gulf. page 27

© 1978 EIR News Service Inc. All Rights Reserved. Reproduction in whole or in part without permission strictly prohibited. Vol. V, No. 48 LEGALIZING. December 12-18,1978 ORGANIZED CRIME?

Legalized gambling, legalized drugs - do such measures rein in organized INTERNATIONAL crime, or encourage it? In COUN­ TERINTELLIGENCE, a repoit that What's at stake in Iran ...... 27 bares the truth about organized crime, NATO, Kissinger moot regional chaos, using the case of New Jersey totrace the oil crisis, and World War III linkup from gangsters to state government, Washington, and the The Shah is ready for a fight...... 28 powerful international financiers who run the world's multibillion dollar illicit The Soviets warn of U.S. military intervention ...... 29 economy - and to explain why their favored tactic is .. going legal." A Novosti release provided to this journal Highlighting a new official in­ expresses Soviet concern over its strife-torn neighbor vestigation on Resorts International and its Atlantic City casino, our coverage tells what the investigation THIRD WORLD has already uncovered - and the Another U.S. fiasco in Indochina ...... : ..... 31 shocking full story of crime's takeover Peking lures the Administration in New Jersey that officials still have to into embracing Cambodia investigate. page 21

The USSR-Vietnam treaty ...... 32 COMING SOON Third World battles for pressresponsibility ...... 34 • An exclusive interview with the At the UN, heated debate over president of Brazil's state-owned oil the role of the media company Petrobas, General Araken da Oliveira, as he completed a tour of Venezuela, Mexico, Houston, and New U.S. REPORT York. General Oliveira's comments on Ted Kennedy's deadly health hoax ...... 38 Brazil's energy and trade policies, A right-to-die plan for particularly in light of Mexico's vast America's 'useless eaters' new oil finds, and his discussion of the role he expects nuclear energy to play Defeating Kennedy's Health Bill...... 40 in Brazil, will interest all who are concerned about Latin America's A policy statement contributed by development proposals, and about the U. S. Labor Party chairman Lyndon LaRouche future of the United States' beleagured energy industries. Nation of Islam attacks the death cults ...... 46 ·What ever happened to the China card? Our next issue will feature a fully documented report on the dramatic changes now occurring inside China,

Note to our readen: We apologize for the inconsistency in the and what they mean for America's typeface in this issue of our journal, which was caused by relations with Asia, the Soviets, and mechanical difficulties. the world. EXECUTIVE EXECUTIVE INTELLIGENCE REVIEW INTELLIGENCE Is u.s.policy REVIEW made inDisneyland?

... GIVES YOU the intelligence you need to be making policy whether your responsibilities are in government. the labor movement. business. education. or elsewhere.

... COVERED WHAT WAS really negotiated at the July 1978 Bremen and Bonn summits of industrialized countries ... and how the European Monetary System launched at Bremen was modeled on a 1975 proposal by the American political economist Lyndon H. LaRouche, Jr. as the "seed-crystal" of a new, development-oriented world monetary system ... how the United States can get into this system and out of the depression .. ... DOCUMENTED ... REPORTED HOW what's behind the world outbreak of terrorism. fusion energy researchers in the United States the names of the global networks that deployed achieved the milestone breakthroughs reported in both "Ieff' and "right" terrorism to kill Juergen August, 1978 from Princeton, and what other Ponto, Hanns-Martin Schleyer, and Aldo Moro­ advances are coming in this clean, cheap and and plan an even bigger terror wave for the United virtually unlimited solution to the world energy States ... Executive Intelligence Review provides crisis . .. how and why there was a massive the tirst-hand documentation from the world's sabotage attempt against the U.S. fusion program, press, including accurate translations from non­ and who's backing fusion now . .. what were English sources, showing how continental Europe, Japan's and the Soviet Union's offers in 1978 to the Japan, the East bloc, the Arabs and developing USA for joint fusion R&D. sector countries are seeing and acting on events.

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------� Now the u.s. must decide

With the formal decision this week cuts, arms buildup, and tourniquet­ economic and political crisis now to institutionalize the European like interest rates, and above all before the U.S. Monetary System, the process of the drug and cult proliferation. Perhaps it is this donkey-like reorganizing the world economy Moves to turn the United States fixation on politics as usual that for vastly expanded' production, away from national suicide and provoked Illinois Senator. Adlai trade, and Third World develop­ toward the EMS must come within Stevenson to call this week for the ment has entered into a new phase. days and weeks. The U.S. Labor formation of a new, third political France's Giscard and West Party, whose chairman, Lyndon H. party based on American ingenuity Germany's Schmidt have made LaRouche is one of the intellectual to return the USA to world leader­ clear that their new system is a authors of the EMS, greeted its ship in fostering global high­ political, and not simply a mone­ endorsement by the European technology economic development. tary instrument. It is intended to heads of state with a call for imme­ Stevenson's call came in an inter­ polarize the world's industrialized diate U.S. alliance with the new view with the Chicago Sun Tim es, nations behind the detente and eco­ system. Such an orientation must and reprised the ideas he had laid nomic growth perspective which be at the center of a coalition effort out during an early November first came clearly into view at the to bring the U.S. industrial giant speech in Abraham Liilcoln's May summit where Schmidt and out of recession and back onto its hometown of Springfield, Illinois. Soviet President Brezhnev con­ rightful world leadership course, There, speaking to the Center for cluded $20 billion in trade and co­ the Labor Party stressed. the Study of the Presidency, operation agreements. However, both the Republican and Stevenson proposed that the The institutionalization of the Democratic Party leaderships are "presidency may again require a EMS has already provoked some foolishly angling toward the 1980 new party to sustain it." revealing public alignments on elections, and ignoring the national Western Europe's new policy. Radio Jerusalem announced Dec. 4 as its lead news item that Israel opposes the EMS as a mortal Bhutto's fate in the balance threat to its economy.There is now every reason to expect that nations The fate of Pakistani Prime Min­ implications. The military junta who have previously indicated ister Zulfikar Ali Bhutto hangs in that deposed him is determined to their support for the EMS - the the balance this week. Bhutto, over­ get Bhutto permanently out of the nations of the southern rim of thrown by a military coup in July way, fearing that the stability of its Europe, Mexico, and the Arab 1977 and arrested and tried for an rule depends on that. While the world - will reassert their com­ alleged "criminal conspiracy" to junta continues to claim that this is mitment at this point, leaving murder a political opponent, has merely a "criminal case," its real Israel, the satellite state of the City been held in prison for the past motivations are not hard to see. of London, and other British-run year and a half. He was sentenced The regime's desperation countries, as London's only allies to death by a Pakistani court in threatens not only the life of Bhutto against the new world economic November of 1977. He has been but the stability of Pakistan itself. order. appealing that conviction before and with that the stability of the Where, then will the U.S. stand? the Supreme Court of Pakistan entire region from Iran and the Every element of U.S. government since then. The appeal is reaching Persian Gulf to India. It is pre­ foreign policy is now being dictated an end, with Bhutto's lawyer dicted that the junta's scant cred­ by British intelligence and the Yahya Baktiar now finishing his ibility will evaporate if Bhutto is Israeli Mossad - from Camp final summation before the court. killed. leading to the unleashing of David, to NATO, to Southeast Asia. the case of Mr. Bhutto, the fore­ disintegrating forces in the country The same is true of domestic most civilian political leader in which would spread into Iran and policy: the prescription of budget Pakistan's history, carries great India. Bhutto himself has made

December 12-18,1978 EXECUTIVE INTELLIGENCE REVIEW THIS WEEK 5 this point and cited forces in Wash­ lished a tiny article claiming that including the role of "foreign" ele­ ington' London, and elsewhere who the Bhutto document was inco­ ments typified by Henry Kissinger. desire precisely that outcome, in herent, both Jack Anderson and the The Executive Intelligence Review tandem with the destabilization of Washington Post obtained the will soon release an abridged Iran and heightened tensions and document but refused to print a version of the document, as a special Cold War confrontation in the word about it or Bhutto's perilous supplement, hopefully before the region. situation. The document is a jury tries to silence Mr. Bhutto At this moment there is no clear detailed account of the events lead­ forever. indication of what will happen ing up to and surrounding the coup, -Daniel Sneider when the Supreme Court begins its final deliberations. Bhutto's lawyer said last week that he and his client have "confidence in the judgement of the Court," a state­ ment which reflects repeated Japan's new government: rumors that in fact some of the judges are leaning toward an acquittal of Bhutto. However, 'low qual ity' everyone, especially the Court, is aware of the junta's strong desire Japan's new Prime Minister, aign to virtually buy the election to see Bhutto hanged as quickly as Masayoshi Ohira. announced his for Ohira. while Tanaka hates possible. cabinet last week, and the new Fukuda for what Tanaka believes The stepped-up junta offensive cabinet members are an extremely is the role Fukuda played in earlier against its opponents makes this undistinguished lot. The new helping to watergate Tanaka him­ clear. Most prominently reported government includes political self out of office in 1974. was the arrest of the editor of the hacks from every major faction in­ The intense battle between respected independent Pakistani side the ruling Liberal Democratic Fukuda and Tanaka has been weekly Viewpoint. The editor, Party, many of whom have been heightened by charges of China's Mazhar Ali Khan, is known to favor waiting 20 years or more for a role in funding the Ohira campaign. Bhutto and was a strong supporter cabinet post. Not surprisingly, Ohio The Bank of China, according to of detente in the region, including ra made one of his own faction rumors now circulating in the friendly relations with the Soviet members head of the powerful Japanese business community, used Union and India. This was backed Ministry of Finance position, while the Hong Kong and Shanghai Bank up by the announcement of General the other key bureaucratic post, as a funnel to launder money to Zia ul Haq, the junta chief, of the that of head of the Ministry of Ohira. formation of special "Shariat" International Trade and Industry, Ohira's own limitations as a Islamic courts which would exam­ went to a follower of former Prime leader were described in graphic ine all legal rulings according to Minister Kakuei Tanaka, Ohira's detail in a column in the Dec. 3 "Islamic law." major factional ally. Yomiuri Evening News. The ar­ There is very little in the Western According to a top Japanese ticle quoted a Foreign Ministry press on the reality of events in political expert in Washington, the official who said that when Ohira Pakistan. The Executive Intelli­ reason for what he termed the ob­ was Foreign Minister, "to brief gence Review is taking a special vious "low quality" of the new Mr. Ohira we have to explain the responsibility to fill the void. Sev­ cabinet was that the struggle for same thing again and again. It's a eral weeks ago the EIR received the "balance of power" inside the lot of fuss to make him understand important papers smuggled out of LDP itself had not yet been anything. When he was going to Pakistan, including a 3I9-page resolved. According to the source, talks with a ranking foreign official document written by Bhutto in jail, the two major interparty rivals are he used to say 'I understand a lengthy appeal to the court refut­ Takeo Fukuda and former Prime nothing. Please pass me a memo ing the allegations made against Minister Kakuei Tanaka, whose when I falter.' He was outspoken. him by the government in a special unity is an absolute necessity if But he used to be irresolute when White Paper issued earlier this Japan is to be put back into its he had to decide." The Yomiuri year. active position as the Asian article also comments that when The document has been banned organizer for the European Mone­ Ohira was Foreign Minister, "It is in Pakistan and little covered out­ tary System. Fukuda is enraged at said that Kissinger in particular side of the country. After the Tanaka for his role in funneling in liked him." Financial Times of London pub- "dirty money" to Ohira's camp-

6 THIS WEEK EXECUTIVE INTELLIGENCE REVIEW December 12-18, 1978 But according to highly reliable sources in the Caribbean. Blakey was in Angola from 1975 to 1976. functioning as a mercenary Crack in the cult coverup against the Popular Movement - while still a member of the Peoples Temple. Evidence has come to light in­ protege Zbigniew Brzezinski. are Blakey was not among the Jones dicating that the Peoples Temple of clamping down on any investi­ Cultists who perished in Guyana Reverend Jim Jones was involved gation of the Jones cult in par­ last month. He is presently in Bar­ in the illegal channeling of mer­ ticular and the whole business of bados. having captained the cenaries into Angola to fight cult creation in general. Peoples Temple trawler Albatros against the MPLA during 1975 and Important indications of an IlI on a Caribbean-wide tour 1976. This puts a new light on the "Angola angle" on the Jones cult during the mass human sacrifice already alarming indications that appeared in a front-page feature in ritual. Albatros III. registered in top officials in the U.S. Ad­ the New York Times Dec. 4. on the Panama. is believed to be involved ministration are engaged in a gig­ background of the Laytons. a in large-scale drug and weapons antic coverup of the grisly facts of family involved in the American running. likely linked to known the Jonestown massacre. Friends Service Committee and Israeli intelligence operations of The overall command of the mer­ subsequently sent into the Peoples the same nature in the Caribbean. cenary deployment into the FNLA Temple. _ going into the U.S. via both East and UNITA "movements" opposed The article relates that Times and West Coasts. to the Popular Movement for the when Debra Layton was sent to The cover story of our last issue Liberation of Angola - now the Britain during the late 1960s to provided abundant leads for in­ government of that country - was study at the British Friends School. vestigation into those who created coordinated by Henry Kissinger she became acquainted with a the Jones cult and those who and British intelligence. As our last British national, ,Philip Blakey. protected and deployed it. The issue documented in detail. the Blakey, also a member of the Blakey story is just one of what can same forces were behind the Friends. and Layton returned to be confidently predicted to be a creation of Jones and the Peoples the U.S.. according to the Times. series of new revelations and Temple and their establishment in and both became members of the "leaks" on the cult operations that Guyana. Now what might be ter­ Peoples Temple. In 1974, Blakey will make Brzezinski et al. 's med the Kissingerians in the White was sent to Guyana to prepare stonewalling increasingly difficult. House. in particular Kissinger Jones's operations there.

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December 12-18,1978 EXECUTIVE INTELLIGENCE REVIEW THIS WEEK 7 Following a stormy, two-day session of the Common Chancellor continued, emphasizing his point by Market Heads of State in Brussels Dec. 4-5, a new adding that EMS membership will be open to non-EEC European Monetary System has been officially countries. launched. It will go into effect on Jan. 2, 1979, with a At a press conference following the summit, French six-member core of the EEC countries participating. President Giscard d'Estaing declared that the "agree­ Italy and the Republic of Ireland have been given one ment reached in Brussels is the beginning of a truly and two weeks, respectively, to make a final decision European monetary system." He lauded the system on whether to enter. Great Britain, whose strident as completely "viable," despite the reluctance of demands for preferential membership conditions Italy, Ireland, and Great Britain to join at the present were rejected, has decided not to join. time, and stressed that from the standpoint of econ­ The EMS, as designed by cofounders Helmut omics and trade, the EMS "already constitutes a very Schmidt and French President Giscard d'Estaing, will important group inside Europe." Elaborating the redirect huge portions of Europe's presently unpro­ broader significance of the EMS, Giscard stated that ductive monetary assets into credits for industrial the new monetary arrangements "will create confi­ development, trade and economic expansion, geared dence and with confidence there will be investment toward modernizing the advanced sector countries so and growth." that they can, in turn, meet the Third World's need for West German Chancellor Helmut Schmidt, the high-technology growth. second principal architect of the new system, stressed The monetary system will go into effect beginning in a radio interview that the stabilizing effects of the the new year, when members deposit 20 percent of EMS would go far beyond the confines of the Common their gold and dollar reserves in a central pool. This Market. Reports in the British press confirm that allots the fund over $30 billion off the bat, with an Schmidt and Giscard intend to use the EMS as a equal amount of national currencies to be pooled as launching pad from which to draw the United States negotiations on the European Monetary Fund and Japan into a program for global monetary proceed. This is not only a formidable weapon to back stabilization. Schmidt and his Finance Minister, Hans up stabilizing foreign exchange market interventions Matthoefer, will begin this process by briefing U.S. - it is the basis of a new world monetary system. Treasury Secretary Blumenthal and Assistant Speaking at a businessmen's dinner in Brussels Secretary Anthony Solomon on the summit results following the heads of state meeting, Schmidt said as when they visit Bonn this week. much as he declared that the EMS had been made The U.S. has already implicitly recognized the necessary by the collapse of the Bretton Woods significance of the EMS's creation, although press System. It is this system - the present international coverage in the New York Times and Wall Street Jour­ monetary system - which the EMS will replace, the naJ belies this fact. A joint State Department-

8 ECONOMICS EXECUTIVE INTELLIGENCE REVIEW December 12-1 8. 1978 Treasury communique issued on Dec. 6 welcomed the Andreotti and Lynch two weeks to "reflect" on the EMS as "an important step toward the economic long-term implications of the new system for their integration of Europe." a goal which the U.S. "has economies and give a firm "yes" or "no" answer. long supported . .. (and) which will contribute to British Prime Minister Callaghan removed any sustainable growth in the world economy." Promising lingering doubts about British intentions by announc­ U.S. cooperation to maximize the potential of the new ing that he could not recommend British participation system. the statement as released to the press by in the system. Callaghan's decision was expected. Hodding Carter. said that the U.S .. along with Ger­ since Britain had practically been thrown out of the many. Switzerland and Japan would "continue to summit for demanding a role in the management of cooperate in a forceful and coordinated way to ensure the EMS, without having to face the implications of stability in the exchange markets" and that the Carter the system for its weak pound sterling. According to Administration looked forward to continued collabora­ Agence France Presse, Callaghan had angrily stormed tion with its European trading partners as the new out of the meeting, only to return sulkily in the hopes monetary arrangements evolve. of forging a bloc of "second tier" members. Despite reports in the pro-British press here and Whatever the decisions made in Rome and Dublin, abroad that the EMS has been established on shaky the EMS will scarcely be affected as a financial giant foundations and is doomed to failure. the summit with a commitment to rescuing the dollar and the results make clear that Giscard and Schmidt are on world economy. The West German central bank has the offensive and are waging the kind of fight not seen already received a mandate to negotiate the associate since the late Genera"l de Gaulle's successful. no­ membership of non-EEC members Switzerland, holds-barred battle to keep Britain out of the Common Austria. Sweden, - and Norway. With American Market. The two flatly refused to compromise with cooperation, Japanese backing, and eventual Come­ Irish Prime Minister Jack Lynch and Italian Prime con participation along the lines of the multi-billion Minister Giulio Andreotti when they unexpectedly pro­ dollar economic agreement for peaceful mutual claimed that their two countries were not yet "sat­ development signed in May by West Germany and the isfied" with the arrangements and bogged the summit USSR. a new world economic order is coming into down in protracted wrangling. Giscard met this being which will enable public and private sector challenge publicly and with categorical bluntness in a industry to cooperate fully for human development in press conference exhorting them to reconsider. the advanced sector and the developing world. Emphasizing that the EMS "is not a bartering issue. but a political issue" and warning that " selfish finan­ -Marla Minnicino cial interest" must not be allowed to cloud the decision of Ireland and Italy to join the system. Giscard gave

December 12-18. 1978 EXECUTIVE INTELLIGENCE REVIEW ECONOMICS 9 1. What/s next on the agenda

The announcement of official endorsement by six tion at an early date, Giscard has launched a French European heads of state for membership in the Euro­ diplomatic offensive into West Africa, which, French pean Mo netary System (EMS) launches a new era in diplomats have pointed out, will include high profile international monetary affairs. "A new epoch of pros­ tours by French officials in "former British colonies." perity," the description offered by French President Giscard d'Estaing on national television Dec. 6, is British wreckers about to begin, and its effects will be felt throughout In sum, the EMS program is a foundation, created by the world. Giscard and West German Chancellor Schmidt, for a The EMS will begin implementation first through a new, world monetary system. series of dramatic "innovations" in monetary rela­ Leading British circles - which means not only the tions. Important among these steps will be 1) an in­ City of London, but in addition, the British monarchy, creased role for government-held gold reserves as a British think-tanks, and the many-faceted tendrils of medium for stabilizing monetary relations, and 2) British intelligence operations worldwide - have ac­ EMS intervention on foreign currency markets curately understood that revamping the Bretton through a huge, $70 billion central intervention ap­ Woods international monetary system - set up under paratus, which is specifically aimed not only at main­ Britain's tutelage by Lord Keynes - is the purpose of taining stability in internal European monetary trans­ the EMS . For that reason, they have been frantically actions, but more importantly, in effectively propping committed to wrecking, delaying, or subverting the up the U.S. dollar. scheme since its announcement on July 8 of this year. These innovations will pave the way during 1979 for On Dec. 5, the British not only voted against the EMS the issuance by the European Mo netary Fund (EMF), program, but arm twisted Italian Prime Minister the EMS "central_ bank," of multibillion dollar Giulio Andreotti and Irish Prime Minister Jack Lynch development loans to especially Third World borrow­ into forming a block of "poor countries" of Europe in ers. To encourage the Fund's effective implementa- opposition to the plan.

that the economic equilibrium of Giscard on those who stayed out the community be threatened by the exaggerated demands of cer­ On Dec. 6, following the conclusion that Great Britain will not take tain of their partners. If one wants of the Brussels summit, Agence part in the monetary system as far the Common Market to be endowed France Presse issued the following as intervention mechanisms are with a new monetary system, one dispatch on French President Gis­ concerned, but that the pound must think more of the economic card d'Estaing's press conference sterling will continue to contribute and political advantages one may on the evening of Dec. 5: to the basket of European curren­ eventually gain than be clouded by cies, with a frozen value .... Re­ selfish financial interests. Despite the absence of Great Bri­ garding Italy and Ireland Giscard tain, Italy and Ireland, President d'Estaing stated that these coun­ Giscard d'Estaing said he thought tries should give a definite reply, in A question of political will the agreement reached in Brussels the case of Italy within eight days was the beginning of a truly Euro­ and for Ireland within 15 days ... Th e fo llo wing are excerpts of pean monetary system. Following (He) also evoked the case of Nor­ an editorial by Serge Maffe rt titled 31 hours of discussion, the French way and other European countries "Political Will," published in Le President expressed the wish that who could themselves also join the Figaro Dec. 4, tha t is, before th e the three member countries which EMS .... conclusion of the Brussels summit: did not yet wish to join the Euro­ European leaders who met in pean Monetary System acknow­ Brussels yesterday also discussed The construction of Europe is ac­ ledge the efforts made and the ad­ the transfer of funds to the less complishing, in the beginning of this vantages for all of the broadest prosperous members of the week, a stage of exceptional impor­ possible zone of monetary stability Community, notably Italy and Ire­ tance. The monetary Europe which in Europe. ll;lnd. On this subject, Mr . Giscard France has been asking for since The French President indicated d'Estaing said, "It is inadmissible 1969 will finally see the light of day.

10 ECONOMICS EXECUTIVE INTELLIGENCE REVIEW December 12-18. 1978 The blackmailing of Andreotti cast a shadow over be implemented in a way which will contribute to sub­ the Brussels summit. Nevertheless. British Prime stantial growth in the world economy and a stable Minister Callaghan's post-summit comment that. "it monetary system .... The U.S. looks forward to con­ was a bold effort" that failed. and accompanying tinued close cooperation with its European trading British press cries that Brussels was a "setback" for partners as these arrangements evolve." the EMS. are gross exaggerations. Simultaneously. observers are carefully monitoring Andreotti may still reverse his negative decision. U.S. business and official reactions to Europe's deci­ More importantly. Schmidt and Giscard have fre­ sion to effectively remonetize gold. In early quently underlined their commitment to bringing November. Thomas Wolf. a former U.S. Treasury offi­ Spain. Portugal and Greece - NATO's "southern cial under President Nixon. delivered a speech in tier" countries also subject to extensive British which he pointed out that the effect of EMS gold destabilization scenarios - into both the EEC and remonetization will be to set a new world price for EMS at the earliest possible date. gold. most likely in the $200 range. At the same time. the ability of EMS networks to In the coming weeks. France and Germany will clean out British financial and political networks will announce a joint decision on what the official gold largely depend on the outcome of the next immediate price will be in the EMS. Presently. the disparity in phase of political organizing in behalf of the EMS : a Europe on official gold pricing ranges between the diplomatic drive to bring the u.S. and Japan into col­ "established" price of $42.22 and the open market laboration with. or even "associate membership" in. price of $200 an ounce. If West Germany agrees to peg the system. its gold reserves to the open market. French level, this will force central banks to orient to the new level. and u.s. monetary debates will quickly establish the $200 level as the price for all Leading U.S. circles have been strongly influenced world reserves. until now by British distortions of the EMS. for in­ A series of high level deliberations have been on­ stance the claim that the EMS constitutes a threat to going since early November between U.S. and West the U.S. dollar. In what may represent a major shift in German officials on implementation of President official U.S. attitudes toward the system. on Dec. 6. Carter's Nov. 1 dollar support package. During these the State Department and Treasury issued a press talks. West German central bank officials have been release which stated that "the new arrangements will taking the lead in guiding the U.S. Treasury on pro-

Since the institution of the CQmmon Now more than ever. Europe is a that the development of the con­ Agricultural Policy. this will be the question of political will ... tinent is a priority .... most determining event the France wants Africa to be consti­ Community has lived through. tuted by strong and stable states, Where the EMS is headed Let us thus appropriately salute with uncontested borders and in the European tenacity of French On the eve of a visit to Africa good economic health .... I intend to policy and the success of Giscard which is to take him to Guinea to have France appear to Africa as a d'Estaing. principal European meet with Presiden t Sekou-Toure. faithful. certain and disinterested artisan of this monetary construc­ French President Giscard was in­ friend. or more exactly. a friend tion .... tervie wed in the weekly magazine who is only interested in the peace The United Kingdom. which only Jeune Afrique Dec. 6. In this inter­ and the economic and social pro­ entered the EEe to make it evolve view. which coincided with the gress of the continent .... in the direction of strict English in­ Brussels conference. Giscard The organization of Europe will terests. wiil remain outside the noted that the process of orga niz­ play a positive role in this evolu­ European monetary system. Italy ing Europe will enable Europ e to tion. There seems to me. in effect. and Ireland are asking for special more effectively participate in the to be a convergence between the aid .... economic development of th e destinies of Europe and Africa. Today, like yesterday. Europe is African continent and the rest of who want to be able to determine pulled forward by the determi­ the world. their own futures. outside of the in­ nation of the Six. then of the Nine. fluence of the States-continents of to increase solidarity and the work The principles which determine America and Asia. This solidarity in common by the member states; the attitude of France vis-a-vis the already exists between us. France and. at the same time, it is pulled African states lead her to affirm on can. I think. claim the honor of backwards by the resistance of of­ the political level that the fate of having been its principal promoter ten legitimate national interests. or Africa must be decided by the Af­ within the European Economic by hidden political afterthoughts. ricans. and on the economic level Community ....

December 12-18. 1978 EXECUTIVE INTELLIGENCE REVIEW ECONOMICS 11 cedures for marketing $10 billion worth of deutsche­ the U.S. were committed to implementing an mark denominated bonds on the West German engineered recession in business activity. British net­ market, a key feature of the Carter program. There is works' determination to sell this policy to U.S. busi­ little doubt that these talks have also been used for ness was directly connected to British desires to use a informal exchanges on the EMS . depressed U.S. economy as a bludgeon to collapse the The most important of these exchanges is occurring EMS at an early date. Rockefeller's release, which Dec. 7 and 8 in Bonn, between Schmidt and U.S. Treas­ sent the New York Stock Exchange's Dow Jones in­ ury Secretary Blumenthal. The Dec. 4 London dustrials average climbing 13 points Dec. 6, may indi­ Guardian leaked that at this meeting, Schmidt will cate a thoroughgoing reassessment on his circle's part begin to sound out Blumenthal on how the EMS can be of the prospects for a U.S. recovery. used to reform the entire international monetary City of London forces are no less committed to creat­ system. ing a deep wedge between the EMS and Japan. The Observers are also carefully monitoring the recent word has gone out that unless Japan ceases its policy moves of Chase Ma nhattan Bank Chairman David of developing Asia's economy through massive, low­ Rockefeller, who is now completing a lengthy tour interest trade and industrial loans, Japan will be isol­ abroad. While Rockefeller has issued no public state­ ated as an enemy as it was during World War II. The ments yet on the EMS , his comment in London this Japanese policy of issuing low-interest, dollar­ week that "U.S. interest rates are probably now at denominated loans on the Tokyo Capital Market was their peak," has been interpreted as an important evolved under the recently deposed Administration of signal of a shift in U.S. business community per­ Takeo Fukuda, in closest collaboration with Schmidt ceptions of the dollar crisis. and Giscard. The steady hike in U.S. interest rates since Sep­ On Dec. 2, Mont Pelerin Society economist Milton tember was the direct result of British warnings, Friedman intoned during an interview with Swedish channeled through Federal Reserve Chairman Mi ller, television. "Before World War II, Japan embarked on that the U.S. dollar would fa ll through the floor unless building a greater East Asia co-prosperity sphere ... you can now see the outlines" of this same policy "emerging through trade. ... If Japan continues along its present course ...this will once again lead to U.S. welcomes EMS trouble." A joint statement by the U. S. State Department Another free-enterpriser who has surfaced in and Treasury yesterday welcomed the European Britain's anti-EMS drive is the ubiquitous Henry Kis­ Monetary System . Somewhat surprising in vie w singer. In Europe during the summit for an Aspen of previous Administration reluctance to make Institute Conference in West Berlin Dec. 2 and 3, Kis­ In ternational Hera ld Tribune any comments on the EMS, and in vie w of singer was quoted in the Britain's bitter opposition, th e fu ll statement as warning that "the basis for economic development reads as follows: is the free market economy," and that "collaboration between the West and Comecon countries on develop­ "The United States believes the new monetary ment of Third World countries" cannot head off an arrangements announced December 5 represent closer monetary cooperation within the Euro­ East-West confrontation. Pursuing the same line, James Reston of the New pean community which is an important step to York Tim es economic collaboration of Europe which we have headed a Dec. 6 column, "30 Years After Pearl Harbor." The effectiveness of British attacks on long supported. We believe the new arrange­ Japan - which have also included direct British net­ ments will be implemented in a way which will work collaboration in massive corruption of the recent contribute to substantial growth in the world eco­ Japanese elections - is largely based on the con­ nomy and a stable international monetary tinuing, short-sighted hostility of major U.S. banks to system. The U.S., Germany, Switzerland and Japanese low-interest lending policies. Several New Japan will continue to cooperate in a forceful and York banks recently revealed that they had turned coordinated way to ensure stability in the ex­ down Japanese offers of joining in on major consortia change markets . The U.S. looks forward to con­ to finance Asian development, because the lower tinued close cooperation with its European Japanese interest rates would undermine the U.S. trading partners as these arrangements Federal Reserve's commitment to sustaining high evolve. " U.S. domestic interest rates. - Renee Sigerson

12 ECONOMICS EXECUTIVE INTELLIGE NCE REVIEW December 12-18,1978 2. Britain's 'grand delusion' shattered

One of the clearest outcomes of the Dec. 4-5 Common into question their f;;)Vernment'ssin cere desire to be a Market summit was the rejection of Britain's pleas for disciplined and cooperative member of the European "special status," i.e., that she be recognized as a Community." founding member of the European Monetary System, ... Nothing short of a clear and unqualified decla­ participating in the "management team," without ration of British support for the objectives of EEC having to bear the consequences or responsibilities of policy will do, above all in the monetary area. membership. When this "half-way house" status was ... The "trial" of the U.K. in Brussels is rejected by Britain's European partners, British likely to be inconclusive.The defendant will be let out Prime Minister Callaghan picked up his papers and on bail on the promise of future good behavior. But in almost walked out of the meeting, according to the view of some EEC diplomats, this will only post­ Agence France Presse. pone the day of reckoning between the Community The shattering of Britain's illusions has not been lost and its obstreperous offshore island partner. on the London press, as the following excerpts show: The Sunday Telegraph. Dec. 3, "This other Eden," by Guardian. Dec. 5. "Joining the Poker Game Without Economics Editor Patrick Hutber: Any Cards." by Peter Jenkins: Anthony Eden's unforgiveable mistake was not the The great error of the Chinese in the 19th century was Suez campaign.... It was his attitude to Europe, his to believe themselves to live at the center of the complete underestimating of the political will of the world. ... There is a touch of similar unreality original Six, and his refusal to join the Treaty of Rome about the present British attitude towards Eur·ope negotiations, which he could, if he had chosen, have .... What may seem eminently reasonable to us. as no dominated.... doubt it did to the Chinese, strikes our partners as a This week in Brussels, we will see James Callaghan grand or even pathetic delusion. .. repeat Eden's tragic mistake ...... (London is attempting) to persuade the world And so one can see the whole tragic, humiliating that Britain is ready and eager to join the EMS in process unfold itself. Britain will stand back with every regard but one small detail; namely,that she certain sections of the Treasury waiting for the EMS will not participate in its currency stabilization mech­ to fail.... Our position in Europe will be immensely anism.That is a bit like saying we are ready to join the weakened; the French will secretly rejoice; and Irish poker game except we don't want any cards or chips nationalism will be given a fillip. . .. Then after a at this stage. greater or lesser length of time, we will have to crawl Who do we think we are fooling? along and ask to be taken in, on terms, I fear, far less The idea that the British have uniquely perceived favourable than we could get this week. the fatal flaws of the EMS, are uniquely qualified to The irony is that just as Eden was the supposed play the pivotal role between the United States and expert in foreign affairs, it is in international finance Europe or are uniquely unable to take a step apparent­ that Callaghan's especial expertise is reputed to ly within the capacity of the Italians or the Irish reside. strikes the continental observer as scarcely less ludi­ crous than the ethnocentric delusions of the 19th century Chinese. Kissinger, Friedman: .. . I have the impression that for once our European partners do not feel quite the same sense of urgency EMS means war about the "British question." They are thoroughly sick of the "British question." ... Two prominent spokesmen for the pro-British "free enterprise" viewpoint in the U.S., the Mont Pelerin Guardian, Dec. 4, "Britain in the Dock," by John Palmer: Society's Milton Friedman and Henry Kissinger, just Although no one in Brussels would dream of admitting happened to be in Europe coincident with the Brussels it, Britain will go on trial at the summit meeting of the summit, and both, while not expressing themselves on Common Market leaders.... There will be no formal the EMS directly, made statements touching on the charges brought against the defendants. the Prime basic issues raised by the new system. While Fried­ Minister, James Callaghan, and the Foreign man, on Swedish television, threatened trade war with Secretary, Dr.Owen. But if there was one, it would be Japan, and cited drug-infested Hong Kong as the likely to read: "The accused are charged with world's most dynamic "free market" economy, Henry behavior over many months and years such as to call Kissinger appeared at the "Perspectives '79" confer-

December 12-18, 1978 EXECUTIVE INTELLIGENCE REVIEW ECONOMICS 13 ence held by theAspen In stitute in West Berlin Dec. 2- 3 to state that industria l development would neither help the Th ird World nor head off East- West con­ frontation. Some excerpts: 3. Italy: from the pan

Fried man: The extraordinary political difficulties and internal ...Before World War II. Japan embarked on building pressures behind Italian Prime Minister Giulio Andre­ a greater East Asia coprosperity sphere. It sought to otti's unexpected Dec. 5 repudiation of the highly favor­ build that sphere by force. by military power. The able terms for Italian EMS membership to which he result was disastrous. for Japan and this whole part of had earlier agreed are well-known and understood. the world - and for the rest of the world as well. I But the consensus among informed observers is that might say. what is most fascinating is that you can Andreotti's last-minute Brussels "balk" in response to now see the outlines of a new greater East Asia co-pro­ those pressures has removed him from the political sperity sphere emerging ...through trade .. .. frying pan into the fire. In the judgment of one high­ To get to my point. if Japan continues along its level Vatican observer. whose views are not unique. if present lines of government intervention into foreign Italy does not join the EMS . she faces an alternative of and domestic trade. then these signs of emergence of a internal chaos and possible civil war. greater East Asia co-prosperity sphere will once again All indications leading up to the Brussels summit. lead to trouble. They will once again lead to political including repeated public statements of Andreotti conflict and confusion.. .. himself. pointed to a firm decision already made by The most remarkable performance that has been the Italian government in favor of Italian partici­ achieved in the whole Far East. I think. has been by pation in the new monetary system. Two days before Hong Kong. Hong Kong is the freest market in the the summit started. Economics Mi nister Pandolfi pub­ world. It has no tariffs. it has no quotas. it has no lished a long article in the Milan daily Corriere della central bank. it has no government direction of in­ Sera explaining the system in detail and pointing out dustry. it has one of the lowest ratios of government that the economic results of Italian entry. in terms of taxes to income in the world ... Hong Kong has the the Italian economy. were in fact the same precondi­ second highest average income throughout Asia. tions laid out in his (Pandolfi's) three-year plan for exceeded only by Japan. What is even more surpris­ cleaning up the Italian economy: controlling the rates ing: the average income in Hong Kong is beginning to of inflation and unemployment. approach the average income in Great Britain and Instead of following through on this commitment, other countries ... Taiwan and Japan have been however. Andreotti at the last minute raised a new set growing despite their government plan and not of unacceptable "conditions" for Italian membership because of it. The result is that they haven't been at the Brussels summit. Upon their rejection, he growing as fast as Hong Kong. returned home proclaiming that the decision on Italian EMS membership was too important for him to Kissinger: make alone, and that broader consultations and Do not think that a confrontation between East and consensus were required. Giscard has given Italy a West can be avoided by setting up collaboration be­ week to make up her mind . tween the West and Comecon countries on develop­ Immediately behind Andreotti's sudden failure of ment of Third World countries or by furthering of the will is a nasty situation in the Italian Communist North-South dialogue .. .. Party. whose support is the basis for Andreotti's The Soviets are committed to confrontation with the Christian Democratic government, and without which West. and if you try to cooperate with them in par­ the Andreotti government would fall. Giorgio Amen­ ticular sectors of the world. they will use that to black­ dola, the ancient leader of the party's right wing, has mail the West .... suddenly re-emerged from several years of enforced Before. one used to say that economic development semiretirement. This coincides with the failure to leads to political stability : this is no longer the case. publicly endorse the EMS by party secretary Enrico and now it leads to political instability. as the case of Berlinguer, which facilitated the virtual takeover of Iran demonstrates. What is important now is not just economic policy making b;y- the party's "economics economic advancement as such. but also its political bureau" led by Amendola's ally, PCI chief economist legitimacy - the best basis for economic development Luciano Barca. Barca and other PCI economic ex­ is the free market economy .. .. perts are now dominating the party's press with an Take the example of Iran - there economic anti-EMS line which bears a close resemblance to the development has had the effect of destroying the old British version : the weak countries must stick togeth­ political and economic institutions. In such a situation er, the EMS will mean West German hegemony over the U.S. has a political obligation to deal with the Europe, and the conditions of Italian adherence must political dislocations caused by economic success include "resources transfer" and the reform of the which it has itself set in motion. EEC 's agricultural policy.

14 ECONOMICS EXECUTIVE INTELLIGENCE REVIEW December 12-18. 1978 into the fire

Berlinguer has failed to formulate a clear and firm It is not from the PCI itself, however, that the answer to this misinformation. He has in recent weeks dangers of internal breakdown or civil war emanate. given some good indications that he knows what the Amendola, who in effect is threatening to bring down. potential of the EMS is: in a speech to agricultural the Andreotti government if Italy does enter the EMS, workers in Rome on Dec. 2, Berlinguer spoke of the is closely connected to the Socialist Party of Bettino need to vastly expand agricultural production and Craxi. It is Craxi who controls the left-wing terrorists employment, on the basis of improved technological infesting Italy. At the same time, Ugo La Malfa, the inputs, and indicated the EMS should play a part in aging leader of the right-wing Republican Party, a this. In an interview on Nov. 24 in the party newspaper bitter foe of Andreotti whose links to both British in­ L'Unita , Berlinguer demanded a new world economic telligence and his "political opponent" Amendola date order that would involve the development of the back to at least World War II, is using his leverage African continent on the basis of economic cooper­ within layers of the Christian Democratic Party to ation with Western Europe; he did not, however, threaten a government collapse if Italy does not enter explain the role of the EMS in this. the EMS. These layers are typified by such figures as Amendola, a British agent of documented pedigree Senator Massimo De Carolis, who like La Malfa is well going back to his parents, has moved in to fill this connected to terrorist networks. In a recent interview leadership vacuum. He appears to have completely with Executive Intelligence Revie w (see Vol. V, No. dominated the latest PCI Central Committee meeting 46, Nov. 28-Dec. 4, 1978) , De Carolis hinted that a left­ with a speech on the elections for the European Parlia­ right crisis in Italy could trigger a civil war scenario ment next June. While not openly pushing the British similar to the crisis in Iran. The networks around line against the EMS, he did dwell on the zero-growth Craxi and La Malfa are capable of this, given. the concept of resource transfer, and devoted most of his political opportunity, and L 'Espresso, a leading time to a demagogic discussion of the supranational monetarist linked paper, has already published a European working class taking power away from scenario of crisis followed by terrorism, special dirigist heads of state: an approach which is the op­ elections, and finally a coup d'etat. posite of the philosphy behind the EMS. Amendola's It may be, as several Italian sources report, that comments on the EMS itself were cautious but none­ Andreotti is moving to deal with these pressures theless revealing: "We hope that prudence wiU guide through Byzantine, "Machiavellian" maneuverings. the work of the Italian delegation at Brussels, as The fact remains that his best course of action was appears to be the case from Andreotti's first decla­ and is to move decisively and publicly in supportof the rations. It is not necessary to say yes or no imme­ EMS, with a view to rallying the slumbering Berlin­ diately, but to examine the conclusions of the meeting guer forces in the PCI, and thus isolating Amendola without preconceptions ... " and his allies such as La Malfa. -Mary Sonnenblick

PCI favors Great -industries diminish because of the weak, in fact) , and hurt others. revaluations imposed on their res­ From this, the relaunching of the Britain's position pective currencies by the dollar; in snake. the same period, on the other hand, ... The position taken by Great Italy, the United Kingdom and, Britain has created favorable Italian Communist Party econo­ France have seen their firms' conditions for reopening a real mist Luciano Barca called on Italy margins of profit grow because of negotiation and has made it evi­ to bloc with Great Britain in oppo­ devaluations to the advantage of dent that the alternatives are not sition to the European Monetary exports. simply two : to join or remain out­

System in a Dec. 3 article in the When France modified its own side. There are also two other \ PCI paper L'Unita, titled, "The economic policy, adopting with the possibilities: The first is to con­ 'Snake' is not Europe and Must be Barre plan a policy of deflation, the vince the other countries -alwayS. Negotiated. " The key excerpts: conditions were created for free, obviously, to adhere to the breaking the front of the countries snake - to put off for some months ...The central fact is that in the outside the snake and attempting the definition of a "general ac­ last years . .. West Germany, to link them all up to the mark, cord," in order to find technical Holland, Belgium and Luxembourg putting an end to the situation that and political solutions capable of have seen the profits of their export gave privileges to some (the more! starting up a r(;ally European sys-

December 12-1 8, 1978 EXECUTIVE INTELLIGENCE REVIEW ECONOMICS 15 tem, an expression of common : in a Dec. 3 article in the daily We must remember that the last choices and co�mitments of all the Corriere della Sera, entitled "We condition for Italy's successful countries of the EEC to common Can't Miss the EEC Boat. " participation in the European objectives for growth. This would ...The Italian position in the monetary integration is the same undoubtedly be the best solution . course of the (EMS) negotiations is condition that holds for reaching The second is that of postponing oriented towards a configuration of the internal objective of stable . Italy's entry together with Great the new monetary system to reflect growth. If we don't improve the Britain, continuing to negotiate on the following fundamental requisi­ conditions of our economy, we will the basis of a unilateral or pluri­ tes : to result, above all, in a rea­ not reduce the difference in in­ lateral political commitment, listic and long-lasting system, in as crease of prices and the cost of whichever would carry out the much as its failure would have se­ labor between us and the other conditions laid out by the govern­ rious repercussions on the func­ EEC countries - conditions on ment so many times before tioning of the international mone­ which we can reach a greater Parliament, which could bring tary system, on the future and on strictness of exchange . together the entire (Italian govern­ . the possibility of advancing with The European appointment ment) majority and perhaps the economic construction of raises the stakes in this challenge. strengthen it in the face of difficult Europe and on the conditions in the If we fail in our internal objectives, tasksthat await it .... individual countries; to include all we add to inflation and unemploy­ the EEC currencies, in order to ment the economic, political and avoid acccentuating the diffe­ cultural injury of relations with Pandolfi : We can't rences in the working of the Europe that are precarious to the point of disappearing. If, on the m iss the EEC boat various economies ;... to be sup­ ported, finally, by financial ac­ other hand, we are successful, our Italian Finance Mi nister Filippo cords that are broad enough to position will be reinforced and ulti­ Maria Pandolfi declared that It aly create a real European Monetary mately guaranteed. adhered "in principle " to the EMS, Fund ...

4. How the EMS was bui lt

For regular readers of Executive Intelligence agreements signed May 6 by Chancellor Schmidt and Review, the European Monetary System was welJ Soviet President Brezhnev. understood long before its formal establishment on The 25-year treaty between West Germany and the Dec. 5. Over the past six months, our coverage of the Soviet Union provides for cooperation between the two EMS has been the most comprehensive in the world, countries in industry, mining, science and technology, with our regular news coverage and press surveys and nuclear power and energy research and backed by exclusive interviews with leaders in the development of an unprecedented scale and depth, form ation of the new system and regular analyses by including the highly significant stipulation for joint Lyndon H. LaRouche, Jr ., whose 1975 International cooperation in all these areas in third countries. The Development Bank proposal is widely credited with huge scope of the accords implies the necessity of helping inspire the EMS. participation of Western Europe, Japan and the U.S. In the following we present a summary recap of the in carrying out the provisions. The commitment to evolution of the EMS, as we documented the process, long-term state credits for trade at Most Favored that will be a useful refresher and reference for Nation status between the two nations makes the pact regular readers, and an invaluable eye-opener to all a springboard for a broad effort of the industrialized those who just got the news. nations as a whole to undertake massive technology transfers to the Third World, and move to fashion a new monetary system based on that commitment. The strategic significance of the. pact and its im­ MAY 6: THE BONN-MOSCOW PACT portance as the key foundation-stone for the EMS and 'The Deal of the Century' broader "Grand Design" effort is its explicit premise that economic and scientific cooperation and growth is The cornerstone of the initiative, and the first major the only serious war-avoidance policy. Chancellor benchmark in its realization was the historic set of Schmidt and President Brezhnev both emphasized in

16 ECONOMICS EXECUTIVE INTELLIGENCE REVIEW December 12-18. 1978 their joint communique of May 6 that "the lessons of basis for their own EMS proposal. history and responsibility for peace" confirm their Carrying a Saudi Arabian mandate and other common conviction that only the road of detente can weighty support Schmidt and Giscard took charge at secure humanity's future. the pre-Bonn Bremen meeting July 6 of European With the conclusion of the Bonn-Moscow Treaty the heads of state where they won agreement to their plan "Grand Design" process guiding the EMS was for a European Monetary System, "the seed crystal launched. A flurry of diplomatic activity ensued, for an institution that will replace the World Bank and highlighted by the state visit beginning May 17 of International Monetary Fund," as one West German Mexican President Lopez Portillo to the Soviet Union, official put it at the time. and the conclusion of far-reaching accords for The London Tim es was left to complain ruefully on scientific cooperation, trade and nuclear and oil July 20, after the success of Bremen had broken open technology transfer between the leading Third World the controlled environment of austerity and trade war government and the Soviet Union. of the Bonn meeting, that "the Schmidt-Callaghan Similarly, at a May 22-24 conference of African Grand Design was hijacked on the way to Bremen and heads of state in Paris, French President Giscard became the Schmidt-Giscard Grand Design." d'Estaing elaborated a perspective for the in­ To the dismay of British Chancellor of the Ex­ dustrialization of Africa in cooperation with the East chequer Denis Healey and the American Anglophiles, bloc. Bremen shaped the Bonn Summit to produce two highly significant results that further shaped the Grand Design initiative. The final communique stated unequivocally that "the further development of MAY 22-26: INTERNATIONAL nuclear energy is indispensable and the slippage in the MONETARY CON FERENCE execution of nuclear power programs must be 'The Counterthrust' reversed," significant at a time when both the Soviet Union and Japan already have large-scale proposals on the table for nuclear fusion and other advanced The counterthrust to the sweeping East-West, North­ energy process collaboration, and marking an im­ South peace and development drive was mobilized portant victory for Schmidt-Giscard over the Anglo­ immediately under the direction of former Secretary American "nonproliferation" policy. of State Henry Kissinger and a handful of his consorts Equally significant was the unanimous adoption of among City of London bankers. Fresh from the antics an emergency resolution presented by Chancellor in Zaire's Shaba Province, Kissinger led the charge Helmut Schmidt to "combat international terrorism" with a broadside against U.S. partiCipation in East­ by cutting off all air traffic to and from countries West trade and Third World industrialization at the which fail to act against airline hijackers or refuse to annual private-sector International Monetary Con­ extradite terrorists, a direct challenge to the brazen ference in Mexico City. British use of the terror weapon against Anglophile U.S. Treasury Secretary Blumenthal's prodevelopment, prodetente forces. keynote address to the same conference baldly counterposed IMF "surveillance" of national economies - .what he called, the "cornerstone of a new system" - to the detente and development orientation of Schmidt, Giscard, and Brezhnev. AUG. 10: EMS IS lOB Blumenthal, flanked by Lloyds Bank chairman Sir Jeremy Morse, attacked Germany and Japan and As the momentum built around the Schmidt-Giscard demanded their capitulation to the demands of British initiative, drawing in firm political and financial Chancellor of the Exchequer Denis Healey to cut cooperation of the Arab nations and others, it became back exports and reflate, threatening a further dollar increasingly apparent, as EIR had reported, that the devaluation as the penalty for resistance. EMS was no mere technical arrangement, that it was indeed the kernel of a new world economic order. That order was to be based on rapid in­ JULY 6-9: BREMEN AND BONN SUMMITS dustrialization of the Third World and East-West trade, a strong dollar bolstered by the corraling of the 'Schmidt Takes Charge' Eurodollar market into productive long-term in­ vestments, a return to the gold-exchange standard A fierce battle raged throughout the month of June in and fixed rates, and a commitment to nuclear energy antiCipation of the July 16 Bonn meeting of Western development. heads of state, during which time Chancellor Schmidt On Aug. 10, To the Poin t In terna tional stated and President Giscard collaborated to successfully publicly what had become the buzzword of financial defeat the British demands for trade cutbacks, and political circuits : the EMS was modeled along the reflation, dollar-dumping and austerity and lay the lines of U.S. Labor Party Chairman Lyndon

December 12-1 8. 1978 EXECUTIVE INTELLIGENCE REVIEW ECONOMICS 17 LaRouche's International Development Bank Chancellor Schmidt's state visit to Japan on Oct. 9 was proposal. returned by former Japanese Prime Minister Fukuda By late August German officials were stating openly on Oct. 17. As reflected in the communique from that the EMS, was intended to "out-dimension the Tokyo, the extended talks centered on world economic International Monetary Fund," in the words of West leadership, and the maintenance of peace and German Finance Minister Hans Matthoefer. economic growth. Japan has already implemented what can be a model for the EMS "clearing house" operations for footloose Eurodollars. The Tokyo SEPT. 14-1 5: THE AACHEN MEETING capital market has been set up to channel inflationary Eurodollars out of speculation and put them into long­ 'In the Trad ition of Charlemagne' term development projects in Asia. Both nations' outspoken commitment to the development of nuclear "There is now no chance of the system being watered energy sources was spelled out in their communique, down or postponed," a frustrated London Sunday as was their common comm itment to uproot Tim es admitted, following the Schmidt-G iscard terrorism, and an explicit determination to work to meeting at Aachen. "The Franco-German partnership expand world trade. Fukuda greeted the fact that has virtually taken over the running of Europe." Held "such a (European) monetary system would con­ to work out final details of the EMS plan and cement tribute extensively to stability not only of currencies the Franco-German entente basis for collaboration, in Europe, but also of international currencies. " the Aachen meeting settled the Jan. 1 implementation date once and for all. More importantly, for a meeting held at the seat of Charlemagne's empire which NOV. 1: THE SIENNA DISCUSSIONS turned Europe into a force for progress in an earlier age, France and Germany showed the world the 'Italy Announces It's Joining' scientific, industrial, and energy policy for which the EMS is about to provide the monetary and financial Following discussions of Prime Minister Andreotti underpinnings . Three new Franco-German programs and Chancellor Schmidt in Sienna, Italy on Nov. 1, were announced at Aachen : 1) a new university for Italy announced it would join the EMS. scientific, technical and economic studies to be The Chancellor's official economics spokesman located on the border ; 2) a joint undertaking in space Armin Grunewald spoke frankly with EIR exploration, and 3) a series of nuclear fission power correspondent Muriel Mirak at this time on the theory plants which will, both leaders said, epitomize both of the new economic organization. nations' commitment to nuclear energy. Ridiculing the Hobson's choice of "inflation or This is the essence of the EMS policy as Schmidt and deflation" as incompetent economics, Grunewald Giscard have shaped it. In calling for a world "of­ vigorously stressed the benefits the system would fensive against Malthusianism," the French press has yield for the entire world community, and took par­ made explicit the global intent of the EMS otherwise ticular aim at the nonsense claim that the EMS was an manifest in the web of North-South and East-West "antidollar bloc" : trade and investment arrangements and plans that are the sinews of the EMS initiative. "The EMF was not intended by President Giscard and Chancellor Schmidt to bring the dollar down. It would be silly if that were the case. For months, and even years, they have OCT. 9-11: SCHMIDT-FUKUDA TALKS been trying to make clear that the devaluation 'Bremen East' of the dollar, even though it might appear profitable for economic growth within the "Chancellor Schmidt and Prime Minister USA, is a danger for world trade and for Fukuda had a thoroughgoing exchange of economic development - in the advanced views on questions of international and economies, not to mention the developing regional policy, the international economic countries. Now, it would be wholly con­ and monetary situation, the current state of tradictory if Chancellor Schmidt, who has the North-South Dialogue, and German­ been trying to make clear to responsible U.S. Japanese relations. They found that their officials that a devaluating dollar is a danger identical evaluation offers good prospects for to the Western World, should invent a system future German-Japanese cooperation ; both which would perpetuate this dollar sides confirmed their determination to devaluation. " cooperate for the benefit of the world, toward securing international peace and develop­ ment of the world economy .... "

18 ECONOMICS EXECUTIVE INTELLIGENCE REVIEW December 12-18, 1978 SOYIET SECTOR )

Soviets view Schmidt's key EMS role

But th is Novosti commentary reflects Soviet policy dilemma

Since the new European Monetary commentator Alexander Tankov come under frequent attack in System was first formulated last recognizes that the push behind the Soviet publications. summer. the Soviet Union has EMS comes from West German But Tankov concludes - inter­ maintained two. opposite public Chancellor Schmidt and French estingly enough. in a series of policies toward the new institution. President Giscard d'Estaing. the passages introduced by the phrase. The following article was provided Western heads of state with which "in my opinion" - that the EMS is to this news service by the Soviet the US SR has the best relations. doomed to failure because of the news agency Novosti on the eve of For the first time ever in Soviet "sharpening contradictions" the Brussels summit's final coverage. Tankov points to Sch­ between the Western powers, and · session. and is as far as we know midt's repeated statements that in any case it will only mean auster­ the first official Soviet statement the EMS is not anti-dollar - and he ity for the population of Europe. on the EMS's formal establish­ contrasts this to the spurious claim Ignoring the logic of his own argu­ ment. Moreover. the Novosti ar­ of anti-EMS England to be the ment. he denies that global eco­ ticle is the first Soviet commentary dollar's chief supporter. nomic expansion in a context of to depict the EMS as the central As Tankov accurately notes, the detente is the purpose of the new world political issue it is - yet at opponents of the EMS in the United system - and thus relegates the the same time it exemplifies the States do not want to see the dollar USSR to the status of "outsider" in Soviet dilemma by reflecting both stabilized, and fear that the EMS a situation which in fact it did contradictory Soviet policies. will undermine the power of the much to help create ! Reviewing the clashes surround­ International Monetary Fund - an Here is Tankov's commentary in full. ing the formation of the EMS. institution whose austerity policies

Even up to a year ago. people were rejecting as agreed on the plan for the European Monetary System. quixotic the idea that the European Economic Com­ The USA's cautious position toward the project of munity could take an independent initiative in the creation of the EMS can be totally traced back to monetary affairs. And this was due not least to the its deep fear, which in my opinion. can be explained as conduct of the Federal Republic of Germany. whose coming from three principal sources. First, the government considered close coordination of the creation of a "zone of currency stability" in Europe domestic economic, monetary. credit and financial can essentially restrict the USA's ability to policies of EEC members as the indispensable manipulate the rate of exchange. In order to reassure precondition for any step on the road to a monetary the USA. Helmut Schmidt has repeated again and union. It was precisely a year ago that the Federal again, publicly. that a unified European monetary Republic of Germany delegation to the EEC finance front would protect the value of the dollar from ministers' conference blocked new initiatives which decreasing. But does the USA want this itself? Car­ had as their purpose the pooling of part of the gold and ter's Administration would rather be certain that such currency reserves of the Nine and the creation of a protection would not prevent an increase in value in European currency. those currencies that have a tendency towards The devaluation of the American currency. which. revaluation. for example the deutschemark. since the beginning of 1978. has occurred to a degree Secondly, the USA fears that greater independence never before known in post war history. has permitted by Western European countries in monetary affairs Chancellor Helmut Schmidt to become the main ad­ would have the consequence of weakening the control vocate of the idea of an EEC monetary union. The held over them by the International Monetary Fund. President of France. Valery Giscard d'Estaing. in which the USA occupies the key position. Third. the

19 December 12-1 8, 1978 EXECUTIVE INTELLIGENCE REVIEW SOVIET SECTOR perspective that has obviously created unhappiness in exchange on the market. They were forced to exhaust the Carter Administration is that a common credit their reserves of hard currencies and to accept large fund will be created from a portion of the gold credits from the countries with the "stronger" reserves of the EEC countries that will serve as the currencies, above all from the BRD, in order to have backing for issuance of the European Currency Unit ­ their index of inflation and their balance of payments the ECU. This unit will probably replace the dollar as "catch up" with the BRD's condition, and they have the medium that will be used most frequently in the very often had to pay for this by decreasing their rate official settlement of accounts among the EEC of economic growth and by increasing the number of countries. unemployed. It appears to me that the proj ected mechanism of The British role the EMS will be unable to change this situation The period since the Bremen summit conference has essentially. In the event that their economic situation clearly shown that there exist deep-seated worsens, the participating countries will be forced to disagreements concerning the goals and the carry out a policy of "economic discipline" according mechanism of the EMS. with the front line of this fight to the BRD's formula and this will require victims, running between West Germany and France on one above all from the working class and from other side. and England on the other side. layers of the working population. England's conduct. which Valery Giscard d'Estaing During the negotiations, England. Italy and France diplomatically described as "discussion. but not tried to place the obligation of providing the largest membership" can be explained above all by the in­ amount of the money used to fix the exchange rate terest in maintaining the conditions that encourage onto the "strong" currencies (those of the BRD and the devaluation of the British pound. For this leads to Holland) . strengthening the competitiveness of British industry At the Finance Ministers' conference of Sept. 18. a and stops. to a certain extent. the further increase in proposal by Belgium was accepted as a compromise the number of unemployed. which nevertheless. in my opinion. allows the BRD But at the same time, the British government, which and Holland to bear an insignificant portion of the fears the prospect of isolation in the Common cost. Therefore it is no accident that the differences Market, attempted to maneuver in the last couple of between France and the Federal Republic have come months and. on the advice of experts and finance to a head on the question of the practical imple­ ministers. to negotiate concessions in exchange for mentation of the Belgium scheme. entry into the EMS. These efforts were discredited England has altogether rejected this scheme. This is toward getting the largest possible amount of the understandable, too. for behind every disputed detail. credits from the program for the transfer of resources which on first glance appears to play a purely tech­ to the most backward regions of the Common Market nical role, there are millions of francs. marks and as well as bringing about a connection between the pounds in EMS expenditures. as well as the attempt to establishment of the EMS and the revision of the safeguard one's - own interests at the cost of one's EEC's agricultural policy, which is forcing England to partner. transfer considerable sums to the EEC's Agricultural In the absence of any precise indications of Fund. obligations respecting the coordination of the member The English ' representatives even attempted to countries' domestic monetary. credit and financial represent themselves as the main defenders of the policies. or the execution of collective measures interests of the USA and the dollar in Europe, ob­ against inflation. or the realization of steps leading to viously in the hope of getting certain political the goal of overcoming the deep-seated discrepancy dividends. It cannot be overlooked that England's between the most important economic indicators. the position has certain definite points of contact with that prospects for the EMS appear to be quite doubtful. of France. As the discussions in the last couple of There are already sharp disagreements in con­ months have shown. a number of English arguments nection with the question of which countries have to have been supported by Italy and Ireland. bear the main burden of the EMS's "stability policy." The disagreement among the EEC countries has There is also a confrontation among the "Nine" in been the greatest in fixing the ceiling for the rate of working out the conditions through which the common exchange fluctuations. The documents from Bremen credit fund's medium-term credits will be granted. specify that "respecting the fixing of the rate of ex­ The political unification of the West European change. the EMS will not be softer than the 'snake· ... countries threatens to become a house with no firm The BRD is sticking to this firmly. Of course, it is economic foundation. provided for that in the initial period, the values of a The results of the last couple of years have con­ couple of the "weak" currencies will be allowed to firmed that the integration of Western countries does fluctuate widely. But. as experience has shown from not diminish the discrepancy in the economic the fluctuation of the "snake," the countries with the development of its participants. On the contrary, the weak currencies ultimately have to come up with a differences are increasing. and the contradictions are greater share of the money spent to support the rate of becoming sharper.

20 SOVIET SECTOR EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 COUNTERINTILLIGINCI )

Organized crime goes l egit

How Kennedy 'reform ers', the mob and drug bankers took over New Jersey

The fight over casino gambling in New Jersey has served to place the mob - the real mob - and its started to break open the real story on organized activities even further beyond the reach of the law. crime in the United States. A state report just issued The story af New Jersey Governor Brendan Byrne, on Resorts International and its gambling operation in "the man the mob couldn't buy" according to his PR Atlantic City has uncovered the edges of a vast net­ handouts, illustrates nicely how these bogus "reform" work of drug trafficking and dirty money which, when movements operate. fully traced out, leads from lowly mobsters and thugs First as Essex County (N.J.) Prosecutor until 1967, to the Kennedy machine in the Justice Department, then as state commissioner of public utilities, as a international intelligence services, and some of the judge, and finally as governor, Brendan Byrne has world's top financial institutions. been instrumental in giving Kennedy and British­ On Dec. 4 the New Jersey Division of Gaming En­ linked crime networks a foothold in the United States. forcement issued a recommendation that Resorts Through his participation in "cleaning out" the old­ International be denied a permanent gambling license line political machines in the state and in making for its Atlantic City casino. The lIS-page report, which Atlantic City a legal gambling town, Byrne has in­ sources say was in the making for months amid troduced into the United States the "new model" tremendous pressure from both pro- and anticasino organized crime that had previously been confined to forces, concentrates on documenting in detail the former British colonies and banana republics. complete domination of Resorts' financing and The "new model" was created in the Bahamas with operations by well-known mob figures, particularly the collaboration of British and Canadian banking Meyer Lansky and Robert Vesco. However, the interests, Kennedy men in the U.S. Justice Depart­ Gaming Enforcement Division promises shortly to ment, gangster Meyer Lansky, and international make public a report which should delve into a much swindlers and drug pushers including fugitive Robert more sensitive and vital area that the present Vesco. The Kennedy Justice "clean sweep" method document touches only peripherally: Intertel, the was instrumental in pulling the plug on traditional private police force composed of former U.S., Canada organized crime operations, reorganizing the political and United Kingdom intelligence and law en­ structure of the state, and then using a slick "re­ forcement officials and owned by Resorts. former" image to legalize gambling and to put sophis­ As a private investigative agency, with unusual access to confidential government documents and ticated drug-running operations in place. investigations, including wiretap material, Intertel, The Kennedy Justice methods were developed by and its predecessor, a collection of similar employees Robert F. Kennedy during his tenure as chief counsel directly under the aegis of Resorts, was in the perfect to the Kefauver Committee, ostensibly investigating position to redraw the political map in favor of the racketeering in the late 1950s. In fact Kennedy devoted Kennedy family, the factional grouping commonly himself to an all-out drive against the Teamsters termed the Zionist lobby, and associated circles in Union, employing a team composed of law en­ British and Israeli intelligence. forcement investigators, accountants, and lawyers. The case of Resorts International, and its history in This team approach is institutionalized in the Justice New Jersey, is in fact a model example of how such Department in the Organized Crime Task Forces and political "remapping" is carried out. Since organized in the Organized Crime and Racketeering Section of crime - the hundreds of billions of dollars in in­ the Criminal Division of Justice. When Kennedy ternational receipts from illegal drug and other trade became Attorney General of the U.S. in 1961 he staffed - is at the core of this political faction's power-base those sections top to bottom with his own people. the essential point is to make organized crime legal. Every Justice Department official named in this While publicly justified under slogans such as " take report owes his career and methods of investigation to the profit out of organized crime," schemes to Robert F. Kennedy, and maintains a strong political legitimize gambling, drugs, and so forth have actually connection to the Kennedy family political machine.

December 12-18. 1978 EXECUTIVE INTELLIGENCE REVIEW COUNTERINTELLIGENCE 21 1. Interteland the Bahama beginnings

In the Bahamas Resorts International provided the Mob at work: basis for the operation. In 1965, Resorts, then known as the Mary Carter Paint Company, targeted Paradise U.S. Labor Party organizer Max Sawicky has won a Island in the Bahamas for the development of a huge continuation of bail while he is appealing a con­ gambling casino-resort complex. From the beginning, viction for assault stemming from a police riot in organized crime was in on the deal. The president of the Newark City Council chambers in 1973. Labor Mary Carter (now president of Resorts International) , Party organizers had distributed 100,000 leaflets in . Robert Crosby, secured a gambling license and Newark last week denouncing the original trial as a constructed a toll bridge to the island from Nassau sham and attacking Gov. Brendan Byrne for at­ with the assistance of Sir Stafford Sands, who was tempting to revenge himself on the Labor Party later exiled from the Bahamas in disgrace for his through Sawicky. organized crime connections and dirty-money The charges stemmed from the Labor Party's operations. In exchange for the gambling license, 1973 effort to dismantle Leroi Jones's Kawaida cult, Crosby gave the Lansky-dominated Lucayan Beach which the party identified as the culmination of an Hotel and Casino, on Grand Bahama Island, four­ effort growing out of the 1967 riots. It was after ninths of the take from the Paradise casino. those riots that the Essex County prosecutor's of­ Resorts also thoroughly swindled the man who must fice, alleging that "political corruption" was at the be the United States' most credulous millionaire, root of the rioters' grievances, began a "clean-out" Huntington Hartford, who had the original rights to prosecution of the old political machine. The clean­ Paradise Island and had vowed to build a resort "free out involved the jailing of Newark Mayor Addonizio of organized crime and gambling interests." After an and the takeover of Essex County by the Resorts initial campaign in which Hartford accumulated still International gambling mob. Brendan Byrne was unreleased files on British intelligence and organized crIme links to Resorts - files still not made public - Hartford sold his interests for 10 percent of the Resorts stock, and a $1 million bank loan guaranteed crime connections - and to steal their investment out by Resorts International. When Hartford ran low on from under them. liquidity, Resorts cancelled the guarantee for.the note In 1965, the Internal Revenue Service initiated and Hartford was forced to part with his 10 percent Operation Tradewinds, an investigation of "hot interest in the operation. money" activities in the Bahamas including secret Drug trafficking was also involved from the start. bank accounts, laundering of organized crime Crosby's brother Peter, a convicted stock swindler, is proceeds, tax evasion. Coordinating Operation a close asscciate of Dino Cellini - known to be Lan­ Tradewinds were William Kolar, IRS Chief of In­ sky's right-hand man in skimming casino profits and telligence, and Robert Peloquin of the Organized collecting gambling debts. Dino Cellini is a close Crime and Racketeering Section of the Justice associate of Canadian heroin traffic kingpin Giuseppe Department. Peloquin and his boss, Henry Petersen, Cotroni. Dino's brother Eddie was hired to "manage" worked under the direction of Criminal Division chief the Paradise Island casino. William Hundley. The first major investor in Resorts - to the tune of Immediate casualties of the investigation were Sir $10 million - was William Mellon Hitchcock. Hitch­ Stafford Sands and his "Bay Street Boys," who had cock had earlier picked up Timothy Leary's tab in run the Bahamian government, and Billy Mellon creating the LSD drug cult in the United States, and Hitchcock. Also smeared for their organized crime then singlehandedly financed the manufacture and connections were a group of American investors who distribution of that drug. Hitchcock's interest in had financed the political opposition spokesman to the Paradise Island was, initially, to use it as a center for Bay Street Boys, Lynden Pindling, hoping to cash in offshore, large-scale LSD manufacturing and as a with their own casino. bank to launder his drug money. The latter service The investigators then turned in their badges and was provided by the Bahamas-based Fiduciary Trust cashed themselves in on the Paradise Island loot. The Co., a subsidiary of the Vesco-owned Investors law firm of Peloquin and Hundly, formed in 1967, was Overseas Services (lOS). lOS itself invested at least $4 retained within weeks to manage the Paradise Island million in the Paradise Island development. casino, and both men became vice presidents of the What Hitchcock and some of the local organized Resorts subsidiary that owned the island. crime interests like Sir Stafford Sands didn't know By 1970, Resorts had created a wholly owned sub­ was that Crosby's deal in setting up the Paradise sidiary, International Intelligence, Inc. (lr�tertel), run Island casino was accompanied by a plan, using the by Peloquin and Hundley and recruited almost en­ U.S. Department of Justice and the Internal Revenue tirely from the Operation Tradewinds personnel, Service, to investigate them, to expose their organized including William Kolar. Intertel was to provide

22 COUNTERINTELLIG ENCE EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 under Sen. Clifford Case's protege Frederick Lacey. and finally as U.S. Attorney himself. indicted or put in the Sawicky case jail 79 top state officials. "Only a handful of those who've gone to trial have escaped conviction, and only a few of those convicted then Essex County Prosecutor and used the Jones escaped stiff prison sentences." Playboy Press's cult to oust the old-liners. book Tiger in the Court commented on Stern's suc­ Labor Party interference with the plan to take cess. "In addition to Congressman Gallagher over New Jersey ultimately provoked then-Essex (ranking Democrat on the House International County prosecutor Joe Lordi to move against the Relations Committee) , the roster includes two suc­ party. Six Labor Party leaders were arrested by cessive secretaries of state, two successive state Lordi's operation on a variety of bogus charges. including the Newark City Council affair, when treasurers. a former speaker of the state assembly, a state senator, two commissioners of the Port of New police went on a rampage through the crowd in the chamber. York Authority. the executive director of the Garden State Parkway. plus the mayors and a significant part Lordi lost five of the six cases. In Sawicky's case. of municipal adminishations of New Jersey's largest although they won a conviction, the New Jersey cities. Newark and Jersey City. and a half-dozen courts held an appeal in limbo until recently, when lesser communities. a handful of judges. the state's troubled Resorts International apparently felt most powerful Democratic boss and its most in­ driven to act. Sawicky's defense. including a writ of certiorari fluential Republican Party leader." to the New Jersey Court of Appeals. will include Knowledgeable Jersey sources believe that Stern and Lacey's high conviction rate is not surprising. reopening of the Byrne machine's involvement in They were both appointed federal judges and heard the affair. argument on some of the cases they were said to have originally investigated ! Other Kennedy cothinkers moved into the state and provided the environment for the current takeover. A "security" for the casino and similar services to team of State Department and Ford Foundation business. operatives were appointed to high state positions. This included approving Robert Vesco's Investors Paul Ylvisaker. head of the Ford Foundation's Grey Overseas Service $60-million bid to buy outright the Areas urban counterinsurgency program, became Paradise Island operation. The man who put the deal head of the Department of Community Affairs. Joel together was Pellegrino Loia (also known as Jimmy Sterns. formerly with the Agency for International Neal), an associate of Giuseppe Cotroni. Loia received Development in Brazil at the time of the 1964 generals' a $50.000 finder's fee. Vesco made his proposal less coup, became Ylvisaker's assistant. Ralph Dungan. than four and a half months before he was indicted for U.S. Ambassador to Chile during John F. Kennedy's stock fraud by the Securities and Exchange Com­ Administration and CIA "bagman" for dirty mission and fled to Costa Rica. Intertel claimed no operations there. became head of the New Jersey knowledge of Vesco's shady connections and im­ Department of Higher Education. Joel Jacobson. pending indictment. currently New Jersey energy commissioner - whose The activities of Lansky. Vesco, Resorts In­ energy program is based on the burning of garbage, ternational. and the Kennedy Justice Department solar and hydroelectric power - was in the middle of firmly established the Bahamas as a center for the the operation through his connections with the Ford transshipment of drugs to the U.S., the laundering of Founda:tion-funded Center for Community Change. organized crime loot. and for rapacious casino And the "New Left" Institute for Policy Studies of operations backed by organized crime collection Washington. D.C. sent SDS leader Tom Hayden into squads. Newark with a group of "left-wing" radicals to begin organizing riots. 2. The move to New Jersey On July 14. 1967 the Newark riots exploded. A panel appointed by then Governor Hughes to examine the Its Bahama operation a success, the same machine causes found "a pervasive feeling of corruption" the went to work on the state of New Jersey. single most important cause. This led to grand jury The invasion began on a major scale in 1966 when investigations by Essex County Prosecutor Brendan William Hundley deployed Herbert Stern of the Byrne. which were continued by his successor. former Organized Crime and Racketeering Section of the OSS counterintelligence specialist Joseph Lordi. Justice Department to New Jersey to break up the Byrne and Lordi also collaborated with federal existing political and organized crime structures. By prosecutors Herbert Stern and Frederick Lacey in 1973, Stern, first with the Organized Crime and breaking up old-line political machines. They were Racketeering Section. then as assistant U.S. Attorney assisted in this by an unlikely ally - Meyer Lansky.

December 12-1 8. 1978 EXECUTIVE INTELLIGENCE REVIEW COUNTERINTELLIGENCE 23 Organized crime in New Jersey, including the Resorts International then put together a $l.3 tolerant relationship of many politicians to the mob, million war chest and bought off, for between $800 and was managed and overseen by long-time Lansky $25,000, many of the politicians and public figures in associate and Atlantic City boardwalk owner Abner the state. Victor Lownes, president of Playboy In­ "Longy" Zwillman. Stern and the Internal Revenue ternational, Inc. and manager of four English casinos, Service targeted Zwillman for a tax evasion in­ became By�ne's top advisor on the casino question. dictment ; Lansky ordered him to commit suicide. Lownes understood Atlantic City as the Normandy Eliminating Zwillman pulled the plug on mob sters beachhead for a full-scale invasion of the U.S. by and politicians alike, while the Newark riots had legalized casino gambling. "Aside from the profits," signalled the go-ahead for breaking up Newark Mayor Lownes said, "which of course are substantial, the Hugh Addonizzio's machine in a joint Essex County­ most important concern is what a good operation here federal project. Ironically, one of the major charges in Atlantic City can mean for the future of licensed against Addonizzio and his police director Dominick casino gambling in the U.S. We have a chance to Spina was involvement with gambling ! establish respectability of the sort that has existed in The next significant problem faced by the Kennedy Britain for a long time, where the Queen's bookmaker and British-organized crime elements was the almost breakfasts at Buckingham Palace on occasion as a certain re-election of Republican governor Cahill in token of his honored post. " 1973. Since 1970, Cahill and state Attorney General The total "walking war chest" that Resorts used to Kugler had been the most vociferous opponents of get the Casino referendum through the New Jersey legalized casino gambling. legislature was $300,000, distributed in bribes to Two weeks before the gubernatorial primary, various legislators , through an organization called former top Robert Kennedy aide Lewis Kaden came to "The Committee to Rebuild Atlantic City." The Herbert Stern with "evidence" of campaign financing money for this operation came from the Bank of Nova irregularities in Cahill's 1969 election campaign. Stern Scotia in the Bahamas, passed through the Bank of leaked the story to the press, leading to Cahill's defeat Nova Scotia and Banker's Trust in New York and then in the primary by Charles Sandman. The Kennedy to the "Committee." A complaint is on file with the machine dragged out their candidate, "the man the Securities and Exchange Commission, charging that mob couldn't buy," Brendan Byrne, and won the Resorts lied in its SEC and annual reports for that election. year by stating emphatically that "Resorts made no Although Byrne's successor as Essex County political contributions in the U.S." The SEC's prosecutor, Joe Lordi, was a known associate of the response to the complaint was that the money organized crime family of Vito Genovese through his definitely was paid by Resorts, but did not represent own and his brother's association with Genovese political contributions. According to the SEC - so underling Gerardo Catena, Byrne had a "clean" relentless in going after Nixon campaign contributors reputation. That reputation was established by FBI on Intertel's behalf during Watergate - the money tapes of conversations of Simone Rizzo "Sam the paid to buy the New Jersey Legislature merely Plumber" de Cavalcante and Angelo "Gyp" DeCarlo represented "lobbying expenses." describing their difficulties with Byrne. As DeCarlo With the sweetener of heavy payoffs, tremendous probably never understood, "the man the mob coercion and certainly a heavy margin of vote fraud, couldn't buy" had already been bought, but by a the casino referendum passed in November 1976. In

different mob - the Kennedy-British organized crime the next election, when Byrne was virtually certain to machine, a machine committed to making organized lose to Republican Ray Bateman, the attorney crime "legit." heading Bateman's $100,000 ballot security-vote fraud prevention campaign was Richard Weinroth, an 3. Once Byrne was installed employee of Resorts International. Weinroth par­ ticipated in suppressing massive evidence of vote While governor, Byrne moved ahead rapidly with fraud accumulated by Republicans, and Byrne was plans for legalizing organized crime activity. As head returned to office. Weinroth's partner is Joel Sterns, of the Law Enforcement Assistance Administration's the top legal counsel for Resorts, who worked in the National Governors Commission on Criminal Justice state Department of Community Affairs after the 1967 Standards and Goals, Byrne called for the Watergate-style cleanup of old-line organized crime. decriminalization of marijuana. He also began arm­ Other applicants for casino gambling licenses in twisting to force the state legislature to author ize Atlantic City were equally contaminated. Rocky Aoki, a referendum for legalized gambling. The bill was owner of the Benihana restaurant chain andconnected sponsored by two legislators, Assemblyman Steve to Japanese gangster figures, has applied for a casino Perskie and Senator Joe McGahn ; Perskie's uncle and license in Atlantic City. Aoki has done this through the McGahn's brother were on the payroll of Resorts Hardwicke Company, whose chairman of the board is International and Interte l. But opposition from law the Duke of Bedford, a member of the (Bertrand) enforcement and church groups was so overwhelming Russell family and a high-ranking British oligarch. that the referendum was defeated two to one. The Hardwicke Corporation was bai led out of recent

24 CO UNTERINTELLIGENCE EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 financial problems by Castle Bank and Trust Com­ and opium-morphine base for medical purposes. pany of the Bahamas. the main source of information Honest law enforcement officials have been justifiably used by the IRS Operation Tradewinds in setting up suspicious for some time of "leakage" of cocaine and the Resorts operation on Paradise Island. other drugs from New Jersey pharamaceutical Bally Manufacturing Co. has also applied for a companies. The independence of the Casino Control casino license. Bally has been indicted for violating Commission is further brought into question by the Nevada gaming laws which prohibit corporate con­ presence of Intertel's security service at the Atlantic nections to known organized crime figures. Bally's City Resorts International casino. Since Intertel "godfather" is Sam Klein. formerly of Ohio and a executives Hundley. Peloquin. and James Jesus close associate of the Jacobs family and the Canadian Angleton (long-time head of CIA counterintelligence) Bronfman family - both heavily implicated in the are themselves ranking figures in the Kennedy mob. international drug traffic. does the CCC oversee Intertel or vice versa? The agency presumably responsible for weeding out The answer may be forthcoming as the Division of such undesirables is the state Casino Control Com­ Gaming Enforcement. in its upcoming Intertel report. mission. headed by former mob-associated Essex decides whether or not to bite the bullet and expose the County prosecutor Joe Lordi ! Also on the CCC is entire filthy operation. Albert Merck. head of Merck Pharmaceuticals. one of - Felice Merritand the three firms in the U.S. licensed to import cocaine A/Doug/as

Report names Lansky, Intertel, and Scotia bank

The New Jersey Division of Gambling Enforcement (later transformed into Resorts International) report on Resorts International was put together by were financed in ·their entirety by Meyer Lansky­ a task force of investigators initially assembled and associated mobsters fleeing Cuba and the collapse directed by Nevada Gambling Comm ission investi­ of their casino operations on that island. They gator Ennis Gomes. Gomes and most of his origin�l placed themselves under the protection of the investigative forces resigned as the investigation British governors of the Bahamas and set up shop. ran into fierce opposition. according to the DGE report. Apparently Governor Brendan Byrne and his The report also notes that most of the original Attorney General John Degnan found particularly financing for Resorts Paradise Island was provided objectionable Gomes's efforts to substantiate by the Bank of Nova Scotia. which an investigation charges that Resorts was instrumental in buying by the U.S. Labor Party. reported in previous votes and legislators to insure that the casino issues of this journal. has shown is British­ gambling referendum would pass in the state. and intelligence controlled. The second major financing would be structured favorably for Resorts. (The bank was the Fiduciary Trust Company. which enabling legislation drawn up insured that only DGE places as jointly owned by Lansky and a Resorts would be able to open a casino without group of known stock swindlers. having to construct a new building.) On the interesting question of Intertel. the private On Gomes's departure. the investigatioR came intelligence agency of Resorts. the report under the direct control of Byrne operative Robert notes that Robert Peloquin. president of Intertel. Martinez. who provided the cleaned-up version now directly interceded with the Bahamian and British being presented to the public and the Casino Control governments on behalf of two notorious Meyer Commission for further hearings and testimony. Lansky associates. attempting to have them Byrne. it is rumored by such impeccable sources as "cleared" to work in gambling casinos. Rupert Murdoch's Ne w York Post. hopes to use the As well. the report says. Intertel has demon­ report as a credential in his ongoing campaign to strated access to Canadian wiretap materials (in replace U.S. Attorney General Griffin Bell. this case material concerning Pellegrino Loia. However. the report does provide the astute a.k.a. James Neal. a Resorts employee who is also observer with numerous clues as to the actual associated with Canadian heroin kingpin Giuseppe nature of Resorts' activities. Resorts Bahamas Cotroni). Intertel used its access to government casino. Paradise Island. and all the early investigative material to judiciously cover up ilie acquisitions of the Mary Carter Paint Company relationships between Resorts and the mob.

December 12-1 8. 1978 EXECUTIVE INTELLIGENCE REVIEW COUNTERINTELLIGENCE 25 Th e Story of the Century! DOPE INC.

Britain 's Opium Wa r Against the United States

AN EXCLUSIVE REPORT by U.S. Labor Party investigators on the who, how, and why of the British Oligarchy's centuries-old control of the multibillion dollar "hidden economy" of the international illegal drug trade. A 416-page paperback with over 40 pages of charts and pictures. $5.00 Plus $1 .00 postage and handling

Prepublishing bulk ra tes available on request from: Campaigner Publications p.o. Box 1920 G.P.O., New Yor k. N.Y . 10001 • What/s at stake In Iran

NATO, Kissinger moot regional chaos, oil crisis and World War 11/

The continuing crisis in Iran has become the keystone dependents of military personnel to remain in Iran of a major destabilization scheme choreographed by and for all other companies with large numbers of NATO to plunge the entire northern tier, from the U.S. nationals to comply with this call. But the Middle eastern Mediterranean to the Indian subcontinent, Eastern magazine Events this week writes that the into chaos. U.S. naval facility at Bahrain could be used for such Should the Shah fa ll, or be forced to abdicate, the an armed intervention, and the Greek Communist delicate balance of the region will be thrown askew, Party daily Rizospastis reported two weeks ago that setting the stage for parallel reactionary upsurges in there has been a discreet U.S. military buildup on neighboring Turkey and Pakistan and leading to Cyprus in light of the Iranian crisis. And NATO heightened tensions in Saudi Arabia and the strategic . Secretary General Luns is calling for a major Persian Gulf. strategic debate within the Alliance over the question In pushing the Iran crisis to the brink, NATO is of Iran. flirting with transforming the region into a flashpoint In addition to fueling a U.S.-Soviet crisis, any move for confrontation with the Soviets in a Cuban-style like that could trigger a new "oil shortage" hoax. With missile crisis, precisely along the lines called for by oil production in Iran once again down, the West top British strategists and, most recently, by Henry German daily Sueddeutsche Zeitung of Dec. 3 Kissinger. With Strategic Arms Limitation Talks favorably recalled the 1974 "invade-the-oilfields" (SALT) in the home stretch, the Soviets are less than scenario of then-Defense Secretary, now Energy willing to tolerate such provocations, and are letting Secretary James Schlesinger, as a still-live option for that fact be known. In a Novosti release provided activation today. Schlesinger has already made public exclusively to this news service, the Soviets have his hopes that a world oil crisis will result from Iran's underlined the need to maintain stability in Iran and troubles. the Middle East. The Soviet statement, following a similar tough message from Soviet President Leonid Brezhnev, represents a firm warning to Kissinger, The Turkish tinderbox who last week issued a provocative call for U.S. or Turkish officials fear that the situation in Iran will NATO intervention into Iran to stop "Soviet ex­ spill over into Turkey, setting off a wave of tribal pansion" there, and his allies in NATO and the U.S. unrest among Turkey's large Kurdish populations in southeast Turkey. The activation of separatist tribal government. ' And in signing a 20-year friendship and cooperation movements to weaken the control of central govern- treaty with Afghanistan last week, the Soviet ments has been · the time-tested method for leadership likewise made it clear that they will not manipulating regimes, such as the independent­ back down in any confrontation growing out of the minded Turkish government of Bulent Ecevit. into Iran crisis, that they have regional interests that implementing unpopular policy dictates put forth by cannot be compromised. the International Monetary Fund and allied insti­ tutions. Turkey is already besiegeq by a wave of Staging U.S.-Soviet showdown sectarian violence that has killed more than 700 people With such high strategic stakes hanging over Iran's since the beginning of this year. situation, various cold warriors have begun to press Similarly, . repercussions from Iran threaten to the U.S. for a military intervention "to save the surface in Pakistan. where Baluchistan separatists Shah." One variant of the scenario involves a massive are prepared to rev up their breakaway strategy. The U.S. military intervention, Santo-Domingo-style, to Soviets have reported that British-linked Chinese "evacuate Americans." The Carter Administration tribal agents are behind the separatist tribal move­ has attempted to keep the question of a U.S. ments throughout the region. a revelation that makes evacuation quiet in order not to suggest any loss of it clear that they view such operations as direct provo­ U.S. confidence in the Shah. According to the New cations against the integrity of the Soviet state and its York Tim es, the Defense Department has called on all regional interests.

December 12-1 8, 1978 EXECUTIVE INTELLIGENCE REVIEW INTERNATIONAL 27 The Shah is ready for a fight

Former Secretary of State Henry Kissinger has welcome in Paris, as a tool of the Israeli Mossad. sounded the battlecry for a U.S.-Soviet showdown over Kissinger's line that the Shah's government which he strife-torn Iran. pretends to support is "threatened by the USSR" In a Dec. 11 interview with Ne ws week magazine's covers up those who actually are threatening the Shah Arnaud de Borchgrave, Kissinger declared that the and his policies - the old feudal families of Iran and "West is experiencing a geopolitical decline" in the their British and Israeli underwriters. area from Afghanistan to Angola. "We must stop the Domestically, the Shah's government stiffened its USSR" decreed Kissinger, "by defending the Shah position last week when the new Premier General and our strategic position. " Gholam Reza Azhari, issued a strong warning to But the proindustrial government of Iranian ruler powerful exiled Ayatollah Ruhallah Khomeini. It was Shah Reza Pahlevi has denounced the British Broad­ the first time the Iranian government has ever at­ casting Corporation, hardly a tool of Soviet tacked a prominent Islamic Shi'ite leader. Azhari propaganda, as the maj or instigator of violence denounced the reactionary opposition as not Muslim against the regime, and European intelligence at all but "atheists" and "saboteurs." sources have identified Ayatollah Khomeini, the ex­ The general made clear that the military would take treme opposition leader currently wearing out his a hard line on attempts to transform the upcoming religious celebrations of Dec. 11 into mass anti-Shah actions. Dec. 11 is the high point of the religious season known as Moharram, and Shi'ite provocateur ele­ Iranian leader: 'Revea l ments are pushing for a showdown. It is widely anti­ cipated that the outcome of mass demonstrations on Britain's plunderi ng designs' that date will determine the future of the Pahlavi dynasty. Th e lower house of Iran 's parlia ment, th e Ma jlis, Azhari also laid to rest any hope that the Shah would held a debate on No v. 30 on th e provoca tive abdicate the throne to his IS-year old son, a proposal Persian-language broa dcast coming fr om the floated both by the British Broadcasting Corporation British Broa dcasting Corpora tion . Gholam and the London Tim es. Only the day before the Iranian Hoseyn Daneshi, a dep uty fr om the oil-rich Information Ministry also issued a declaration Abadan region , made the follo wing remarks denying that the Shah would abdicate. The general regarding th e BBC and th e British government: made it clear that the Iranian military holds a strong "A glance at the events and developments allegiance to the Shah and would take orders from no throughout the world over the past year one else. demonstrate a diabolical plan aimed at the dis­ The totality of the Premier's statements indicate integration of Iran. It should not surprise you if that the Shah, while willing to negotiate a coalition you hear Radio Aden has established a Persian government with more moderate members of the section and makes Iran a target of dastardly opposition, is in no mood to appease the demands of attacks for half an hour each evening. You Khomeini and Co. What Azhari does not state outright should not be surprised if you see that the BBC but what high-level French sources have indicated is prepares programs and during its three Persian that Khomeini is a dupe of Israel foreign intelligence, programs thinks of nothing but to make Mossad, and British secret intelligence services provocations, create disturbances and chaos. which are waging a full campaign to oust the Shah and This old fox, no longer able to secure good for preserve long standing interests in Iran attached to itself, is looking for a prey in this chaotic the influential royalist families. situation, when Iran is the target of devastating attacks .. .. The BBC's dirty work "My question for the government is : why does The last two weeks have seen four blistering inter­ it not clarify political facts and why does it not changes between Tehran and London over the con­ inform the people about the political develop­ tinued provocative Persian language broadcasting ments in the world which have been launched against Iran? Why does not the government from the BBC. Last month Azhari's government temporarily jammed BBC broadcasts. But when unveil Britain's designs as it is still tasting the flavor of its plunderings?" broadcasts were resumed the BBC began broad­ casting sermons from Khomeini - a move which prompted the Tehran government to again complain

28 INTERNATIONAL EXECUTIVE INTELLIGENCE REVIEW December 12-18. 1978 to London's Foreign Office. According to the visional government that would rule until elections in Washington Post, the Iranian government considers June 1979. the BBC "public enemy number one," and the It is widely agreed that many figures associated military government has reportedly resumed jam­ with the National Front - founded by the ming of the BBC. revolutionary Mossadegh in 1953 - are willing to Among the declarations which Khomeini has made create a new coalition government. But the pre­ are a call for the Iranian people to die in battles with condition will be the silencing of Khomeini, who still the military in order to succeed in the overthrow of the wields sufficient power within Iran to threaten and Shah. The Paris daily Le Figaro reports that blackmail many figure amenable to a new govern­ Khomeini's followers are planning a massive ment. Even the more moderate Shi'ite religious demonstration in which the protesters will wrap leaders such as the Ayatollah Shariat-Madari themselves in white shrouds - traditionally used recognize this fact and have kept their own discreet within the Moslem faith for burial of the dead. The channels open to the Shah. demonstrators plan to defy the troops and be shot Azhari at his Dec. 6 press conference invited down, says Le Figaro, in a tactic calculated to put Khomeini to return from his exile in Paris. What maximum pressure on the military to break with the prompted the offer is not entirely clear. Whether this Shah and join the dissidents. At the same time that means that the Shah has succeeded in putting together Khomeini told the London Financial Times that a coalition which leaves Khomeini out in the cold is too Iranians must be prepared to die, a band of well­ early to say. If the Shah survives through the armed terrorists known as the "suicide squad" was December days of mourning and still holds his ab­ uncovered in Meshed in eastern Iran. solute rule, his next step will almost have to be the According to European press sources, the first few formation of a new civilian government. days of Moharram, which began Dec. 2, did not - Judith Wy er produce the anti-government violence that Khomeini had hoped for. Le Figaro reports that as a result, the extremist Shi'ite leaders have placed loudspeakers outside the mosques playing tapes of gun battle and screams after curfew hours. In turn various press, The Sov i ets warn of u.S. including the BBC, would then report the "sounds of violence" throughout the cities. There has been a marked increase of terrorist milit ary intervention provocations against Westerners in Iran. Many foreigners have received threatening phone calls and three homes of U.S. nationals were firebombed last Novosti, the Soviet press agency, dispatched the ar­ week. These developments coincide with the ticle excerpted here to NSIPS on Dec. 6. It was titled reemergence of the Mujaheddine ("the people's "American interests in Iran. " strugglers" ) , which was ousted from Iran in 1975. The Mujaheddine interfaces with international terror net­ According to Soviet officials, the danger of an works which in turn connect into various Arab American military intervention into the situation in terrorist groups. The Mujaheddine was named as Iran is not to be ignored. Corroboration of this ap­ responsible for a bloody machinegun attack on a Teh­ praisal is not lacking either in Iran or the United ran police station this week which left one officer States. dead. It is these terrorist networks that will be Soviet experts in military-political problems pOint provoking the participants of the emotional Dec. 11 not only to the number of Americans now in Iran - religious processions into mayhem. over 50,090 - but also to the U.S. Army's military equipment now stationed in that country .... Economic disaster The USA's efforts to influence developments there The net economic toll of Iran's crisis runs into the are also indicated by other facts. The Americans not billions. Following last month's strike which nearly long ago opened an "information center' in Tehran, brought Iran's oil output to a near halt, the military which American citizens can call at any time. This government was able to force the workers back to measure would seem at first glance to be an effort to work in party through considerable pay raises and maintain closer contact with the United States' fellow other increased benefits so that Iran's output of crude countrymen in Iran. It should be noted in this con­ reach its near 6 million barrels a day average. This nection, as Soviet experts have confirmed, that was reversed this week by new labor strikes bringing recently about 400 CIA agents have come to Iran, and oil output down to less than 4 million barrels a day. not to help American citizens there, but to support the This figures heavily into the Shah's furious military regime by fighting the opposition to the Shah. diplomatic efforts to reach an agreement with It is obviously not easy to maintain a dependable link­ moderate opposition figures to form a civilian pro- up with such a quantity of secret service agents.

December 12-1 8. 1978 EXECUTIVE INTELLIGENCE REVIEW INTERNATIONAL 29 Therefore a special information center was America. The plan also provides for an active and necessary. illegal intervention by the U.S. Army into that coun­ As for the evacuation of 50,000 Americans, there are try's secret service, its police, and armed forces as also, as the American press says, special plans well as into its civil and administrative organs, with worked out for the deployment of the armed forces of the goal of influencing the policies of the host coun­ the USA. Not coincidentally, a special team is working try's government. day and night in the U.S. State Department, The Soviet experts emphasized that the U.S. Army, registering every slightest change in the situation. Navy, and Air Force have their representatives in This heightened "watchfulness" is to be explained not Iran and that there is also an extensive group of CIA only by the investment which runs to 12 billions in operatives there. Only the naive would assume that arming the army of the Shah, and the 10 percent this contingent is staying off to the side of those events contribution that Iran makes to the USA's oil imports, that have developed in Iran in the last couple of but also by the wide-reaching political-strategic plans months. In President Carter's message to the Shah. in which the Pentagon and NATO are interested. which Brzezinski passed on by telephone, Carter The Washington Post remarked at the beginning of guaranteed the Shah his total support. When he November in its commentary on events in Iran that received the Crown Prince Reza Cyrus. the President the President's advisors regretted that the CIA had of the USA affirmed that "our friendship and our such a bad reputation. In this connection, Soviet ex­ alliance with Iran is one of the most important points, perts underline the fact that the secret agency's "FM on which our entire foreign policy is based." 30-31" plan, which is still in effect today, provides for When one takes into consideration that, according to an entire series of special operations in a "friendly the agreement signed between the USA and Iran in country" in case the danger should arise there of a Ankara in 1959, the U.S. is allowed to march its troops radical change in the political situation. into Iran in order to protect American citizens, then it The goal of the above-mentioned measures to is understandable that the Soviet Union's warning is "destabilize" or "stabilize" a country's regime, ac­ totally well-founded, stating that an arbitrary in­ cording to its political and social orientation, is to keep tervention into the affairs of Iran. and even more, a in power, at any price, that circle which is acceptable military intervention, affects the security interests of to the USA and which follows policies friendly to the USSR as one of the states bordering on Iran.

U.S. military move of any kind. It variety of reasons, that superiority was gratuitous and provocative. has eroded ...That means that we Kissinger demands In this context, our own answer and our allies must have a capacity was not very strong. I don't think it for regional defense inside and a showdown came across as a ringing affirma­ outside the NATO area. If we don't tion of a commitment to a country develop this, then in the '80s we're In his interview with Newsweek's that is so vital to us or as a warning going to pay a very serious price. Arnaud de Borchgrave, Henry Kis­ to the Soviets not to meddle in Iran­ The first installments are already singer pushed hard fo r a confron­ ian affairs. It almost sounded as if visible .... tation with the Soviets and all but we were declaring Iran an area of There is to me inexplicable self­ accused the Carter Administration neutrality .. .. hatred (in some Carter Ad­ of a policy of "appeasement. " The In the context of (U.S.) ministration officials) that fo llowing is excerpted from that weakness, some challenge was denigrates everything we attempt interview, which appeared in inevitable. It happened in Angola. and despises those who associate Newsweek's most recent issue. That could and should have been with us . This was compounded by contained. When it was not, the President's Notre Dame The Iranian situation is a Ethiopia followed as the next step. speech, for example, when he said tragedy for the West. The Shah is a That sequence shook confidence in he would free our policy from the leader who on every critical us not only in Africa but also in the inordinate fear of Communism foreign-policy issue has been Middle East. So I think the Soviet which had characterized it in the totally on the side of the West and Union will certainly press to the past. What were allies of the U.S., who has been a stabilizing factor in limits of its geopolitical strength. who had worked with us for a every crisis in the area .... (But) That is its nature as a great power generation, to think? Had they the Shah is paying the price of and as a Communist power. It's our become dispensable? Did our new modernization : he is being at­ responsibility to create the attitude toward Communism tacked by those who think he necessary counterweights .. .. weaken our previous comm it­ moves too fast and by those for For the greater part of the post­ ment? These uncertainties account whom he is not moving fast World War II period we could for some of the strains of the past enough. Brezhnev's statement defend most threatened areas by year. ... occurred when there had been no our nuclear superiority ... For a

30 INTERNATIONAL EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 THIRD WORLD )

• Another U.S. fiasco In Indochina Peking lures the Adm inistration into embracing Cambodia

Washington's obsession with the China card has led to denounced them as "dictatorial, militarist, and another travesty in American foreign policy. Last fascist." The Front (KUFNS), led by Hen Somrim, a week the Carter Administration went on record as former commander in the Cambodian Army, is also supporting the barbarous regime in Cambodia in its charging the "Chinese authorities" with backing a Chinese-provoked conflict with Vietnam. regime that violates human rights by herding its This is the same Cambodian government that people into "camouflaged concentration camps." President Carter himself denounced only several months ago as the "worst violator" of human rights in 'Freedom of residence' and the world. Administration officials now acknowledge an economic recovery program to reporters a "pro-China tilt" in American policy on Significantly, the KUFNS, in its own radio broadcasts, the Vietnam-Cambodia conflict, and justify the Ad­ has emphasized its economic and political program to ministration's remarkable about-face toward the government of Prime Minister Pol Pot as necessary to maintain an unspecified "equilibrium" of power in Southeast Asia. The "equilibrium" of course, is the Henry Kissinger 'A dictatorial, militarist, scheme of giving tacit backing to China's known and fascist regime' desire to be the dominant power in Southeast Asia, and cooperating with the Peking leaders on military Th e following are excerpts from the political matters as part of a NATO "second front" strategy in program of the newly form ed Cambodian Un ited Asia against the Soviet Union. Fron t for Na tional Salvation (K UFNS) , an­ The decision to "tilt" toward the monstrosity in nounced in a radio broadcast Dec. 4. Beyond its Phnom Penh shows how much the pursuit of Chinese denuncia tion of the Ph nom Penh regim e, the favors has become the idee fixe of Asia policy-makers progra m called for "freedom of residence, in and around the Carter Administration. Led by movement, associa tion and religion ... a planned National Security Council Director Zbigniew Br­ economy, with markets, banks and a currency, zezinski and Assistant Secretary of State for East Asia and an end to forced labor. " Richard Holbrooke, the Administration is driving for a The reactionary Pol Pot-Ieng Sary gang and "strategic" relationship with China in Asia, with all their families have totally usurped power, other policy considerations secondary to that ob­ sought by all means to betray the country and jective. harm the people, causing innumerable suffering However the Chinese have shown themselves vastly and mourning to our fellow Kampucheans and Brzezinski's superiors at playing big-power politics. threatening our people with extermination. It is Chinese Deputy Premier Teng Hsiao-ping is cynically, the Chinese authorities who have encouraged and adroitly, playing his "American Card." With the and backed to the hilt these traitors and tyrants. Cambodian affair, he has managed to get the Carter In fact, they have herded our compatriots into Administration on its hands and knees, sacrificing camouflaged concentration camps, robbed our self-respect as well as long-term policy. people of all means of production and consumer The announcement by the State Department of goods, forced them to overwork, while giving official American support for Cambodia was made in them the minimum of food and clothes, forcing part as a response to the formation last week of the all strata of the population to live in misery as Kampuchean (Cambodian) United Front for National slaves. Salvation in the areas of Cambodia now occupied by Everywhere our people have witnessed massa­ Vietnam and its anti-Pol Pot Cambodian allies. As cres more atrocious, more barbarous than those reported by Radio Hanoi, the Front has called on the committed in the Middle Ages or perpetrated by Cambodian people to "rise up for the struggle to the Hitlerite fascists. They spare not even overthrow the Pol Pot-I eng Sary clique," referring to fetuses inside mothers' wombs. the Phnom Penh regime's top two leaders. The Front

December12-18. 1978 EXECUTIVE INTELLIGENCE REVIEW THIRD WORLD 31 revive the small country, which has been horribly in Indochina. The U.S.'s consistent backing of losers in devastated by the death cult-style mass extermination Southeast Asia - first the French, then an assortment and social regimentation policies of the present of minor puppets, and now the Pol Pot horror - stems regime. Western press reports say the program in­ from its consistent lack of any real policy, except cludes "freedom of residence, movement, association "stopping" somebody else. and religion ... a planned economy, with markets, Peking is aware of this and has moved to banks and a currency, and an end to forced labor." manipulate every shade of American political opinion Analysts of the region have placed great for its own designs . Last week Chinese Deputy significance on the formation of the United Front, and Premier Teng told syndicated columnist Robert see it as evidence of the intention of Cambodian Novak that the United States should drop negotiations nationalists and the allied government of Vietnam to with the Soviet Union for a SALT II treaty and instead pursue a military overthrow of the Pol Pot regime. normalize relations with China to "contain" Moscow. The joint Cambodian-Vietnamese military forces Americans, said Teng, need not fear that China will already control major portions of the eastern region of doublecross them and normalize relations with the Cambodia, and have begun a dry-season military Soviet Union after the U.S. makes its move toward offensive . China - a possibility entertained by many Opposing them are the dwindling forces of Pol Pot, "traditionalists" in the State Department opposed to who is being kept in power by a Chinese "advisor" the Brzezinski-Holbrooke policy. To entice U.S. corps, estimated by some press sources at 20,000 and conservatives, Teng proposed that Taiwan could still by Vietnamese sources at up to 100,000. Chinese arms, maintain its own system of economy and government particularly jet fighters, have been flowing into the while united with China. country in an attempt to shore up the regime's fighting The Ne w York Tim es reported on its front page Dec. capability, but battlefield reports are clear that these 6 that the Administration is "seriously concerned" efforts have been almost completely unsuccessful. about the conflict between Vietnam and Cambodia and the Treaty of Peace and Friendship recently Manipulated by Peking signed between Vietnam and the Soviet Union. China The Carter Administration has decided to ignore these has denounced the treaty, which Vietnam signed to battlefield trends and the character of the Cambodian help bolster its national security, as evidence of regime, setting the stage for another American fiasco Vietnam's "puppet" status of the Soviet Union, a

Article 2: The High Contracting and culture, education, literature The USSR-Vietnam Parties will join efforts for and the arts, the press, radio and treaty strengthening and expanding television, public health, en­ reciprocally advantageous vironmental protection, tourism, Here is th e official transla tion of economic, scientific and technical physical culture and sports, and in the articles of the "Trea ty of cooperation with the purpose of other fields. They will stimulate the development of contacts be­ Friendship and Coop era tion " accelerating socialist and com­ signed by th e So viet Un ion and th e munist construction, of steadily tween working people of the two Socialist Republic of Vie tnam in raising the material, cultural and countries . living standards of the peoples of Mosco w No v. 4. their countries. Article 4: The High Contracting The Sides will continue long-term Parties will pursue an all-out and Article 1: In accordance with the coordination of their national­ consistent struggle for the further principles of socialist in­ economic plans, will correlate strengthening of fraternal ternationalism the High Con­ forward-looking measures towards relations, of unity and solidarity tracting Parties will go on developing crucial branches of the among socialist countries on the strengthening relations of un­ economy, science and engineering, basis of Marxism-Leninism and breakable friendship, solidarity will exchange knowledge and socialist internationalism. and fraternal mutual aid. They will experience accumulated in They will bend every effort steadfastly develop political socialist and communist con­ towards the consolidation of the relations and deepen all-round struction. world socialist system, will make a cooperation, will give each other vigorous contribution to the all-out support based on reciprocal Article 3: The High Contracting development and protection of respect for state sovereignty and Parties will facilitate cooperation socialist gains. independence, equality and between organs of state power and noninterference in each other's public organizations, will promote internal affairs. broad ties in the spheres of science

32 THIRD WORLD EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 r position the Administration has now adopted. Union for economic aid. One American businessman The Tim es article followed by one day similar who recently visited Hanoi for three weeks was statements by Holbrooke, who told the Washington shocked when he returned and tried to brief State Post in an interview that the Carter Administration Department officials on the extensive information he has not normalized relations with Vietnam because of had gathered during his stay. The State Department the Vietnam-Cambodia conflict. Later, a State wasn't interested. Department press spokesman labeled the Cambodian To internationalize the real issues in the Indochinese United Front an "instrument" of Vietnam, while the conflict, the Vietnamese have sent a letter to the Post quoted an unnamed Administration official as United Nations Security Council laying the blame for saying the normalization of relations with Vietnam is the present situation on "the Peking authorities' ex­ being considered only within the "strategic" context pansionist policy in Southeast Asia" whose aim "is to of United States relations with China and the Soviet exclusively occupy the East Sea, to pit the three In­ Union. dochinese countries against one another, and to push the Association of Southeast Asian Nations into op­ U.S. business stymied posing Vietnam and Laos." They are pursuing a Aside from the strategic disaster of the Ad­ "policy to divide Southeast Asian countries in an at­

ministration's current " policy ," the concern voiced by tempt to carry out Chinese hegemony in the region," the State Department over Vietnam's relations with the letter charged. (The full text accompanies this the Soviet Union is a blatant fraud. Hundreds of report.) American corporations are known to be itching to Most of the region's lepJers share this assessment of begin full economic and trade relations with Vietnam, the situation, despite the delusions entertained by

but are being blocked by the refusal of the State Holbrooke that the U.S . "shares" with Southeast Asia Department and the National Security Council to the suspicions of Vietnamese intentions in signing the normalize relations with Hanoi. treaty with the Soviet Union. The Indian weekly New Officials of the newly formed U.S.-Vietnam Trade Wave reports that the Indonesian Foreign Minister, on Council report that Vietnam is offering extensive a recent trip to New Delhi, told Indian officials that trade and other arrangements to American firms, "Chinese aggressiveness" left the Vietnamese no arrangements these officials argue could reduce option but to seek such a treaty with the Soviets. Vietnam's overwhelming dependence on the Soviet -Dean Andromidas

Article 5: The High Contracting They will unwaveringly come out Article 7: The present Treaty does Parties will go on bending every for the development of relations not affect the rights and obligations effort for protecting international between countries with different of the Parties under bilateral and peace and the security of the social systems on the basis of the multilateral agreements now in peoples. will vigorously counteract principles of peaceful coexistence. force, concluded with their par­ all the designs and machinations of for expanding and deepening the ticipation, nor is it directed against imperialism and reactionary detente process in international any third country. forces. will support the just relations. for the final exclusion of struggle for the final eradication of aggression and annexionist wars Article 8: The present Treaty is colonialism and racism in all its from the life of the peoples. in the subj ect to ratification and will forms and manifestations. will name of peace. national in­ come into force on the date of support the struggle of the non­ dependence, democracy and exchange of the instruments of aligned countries. the struggle of socialism. ratification which shall take place the peoples of Asia. Africa and in the city of Hanoi at the earliest Latin America against im­ Article 6: The High Contracting date. perialism. colonialism and neo­ Parties will consult each other on colonialism. for strengthening all important international issues Article 9: The present Treaty is independence, in defence of affecting the interests of the two concluded for the period of 25 years sovereignty. for the right to freely countries. In case one of the parties and will be automatically dispose of their natural resources. becomes the object of attack or of prolonged every time for another for the establishment of new in­ threats of attack, the High Con­ lO-year period, unless either of the ternational economic relations free tracting Parties will immediately High Contracting Parties gives from inequality. diktat and ex­ begin mutual consultations for the notice of its wish to terminate it ploitation. will support the striving purpose of removing that threat and twelve months before the ex­ of the peoples of Southeast Asia for taking appropriate effective mea­ piration of the respective period. peace. independence and sures to ensure the peace and se­ cooperation among them. curity of their countries.

December 12-1 8, 1978 EXECUTIVE INTELLIGENCE REVIEW THIRD WORLD 33 In Southeast Asia, doubts about China's intentions

Th e fo llo wing are excerpts from an article entitled Third World battles "Doubts Over' Peking Trip. " which appeared in th e In dian weekly paper New Wave No v. 26. 1978. Th e At the UN, heated debate over the ro le article fo cuses on rela tions between In dia and China. but contains insigh ts on th e situation in Southeast Nonaligned nations around the globe have been Asia. Particularly appropria te are the comments steadily pursuing an effort stemming from before the cited in the article that were made by the In don esian Colombo Non-Aligned Nations' meeting in 1976 to Foreign Minister during his recent trip to In dia . wh ich rescue news control from the mouths of British­ stand in stark contra diction to comments by U. S. sponsored propaganda outlets which systematically Assistant Secretary of State for East Asia. Richard "filter. mutilate, and distort", developments of vital Ho lbrooke last week. interest to these nations. The largest press agencies of The Indonesian Foreign Minister. Mochtar Kusu­ the West. notably Reuters (British) and Associated maatmadja. had come to New Delhi (last week - ed.) Press and United Press International (U.S.) are straight from Hanoi. and had� first hand knowledge of among the major targets. what is happening there. It is true that the Indonesians At the center of this battle is the controversial still persist in their "once bitten. twice shy" attitude Tunisia-Group of 77 (Third World nations) study en­ towards the Chinese. but they are no lovers of the Viet­ titled "The New World Order of Information;" The namese and the Soviets either. His view that Chinese study asserts that "in the absence of adequate regu­ aggressiveness has left no option for the Vietnamese lations. one must expect a veritable invasion of tele­ except to seek a treaty of friendship and cooperation vision programs and broadcasts constituting a vio­ with the Soviet Union. should therefore carry con­ lation of national territory and individual homes and viction in New Delhi. The Indonesian Foreign Minister is fully convinced that the Vietnamese would. neither invoke the treaty in their dispute with �ampuchea (Cambodia - ed.) nor allow their nonlignment to be compromised. There is therefore no reason why our foreign policy makers Free expression 000 should have any doubts about the treaty signed be­ tween the Vietnamese and the Soviet Union. The Indo­ Th ird World dip lom ats and journalists ha ve nesian Foreign Minister was not speaking for himself numerous cases wh ere We stern journalists ' exer­ alone when he said that before signing the treaty the cise of "free expression " passed over into disinfor­ Vietnamese had taken steps to remove whatever mation and outrigh t fa lsehood. Som e examples : doubts lingered among their neighbors about their

intentions . • At the height of the recent demonstrations against Indeed, the treaty which Vietnam has signed with the Shah of Iran, UPI reported from Teheran that the Soviet Union is on the same lines as the Indo-Soviet the Shah had been assassinated, causing panic on treaty, and the clauses of the two documents which lay Iranian financial markets. Iran expelled the UPI down that in the event of aggression or threat of correspondent responsible. aggression against either contracting party the two

sides would hold consultations for effective steps to • The British Broadcasting Corporation (BBC) end the threat and eliminate aggression, are identical. broadcast appeals from exiled Shi'ite leader Aya­ It seems that the Vietnamese as also the Soviet Union tollah Khomeini to strike, demonstrate and blow up deliberately took the Indo-Soviet treaty as the model the oil fields ; the government responded by jam­ for their draft instead of the treaties which the Soviet ming BBC Persian language broadcasts and expell­ Union has signed with some other countries like ing BBC correspondents. Angola and Ethiopia.

With our own experience of the Indo-Soviet treaty. • Maltese Prime Minister Dom Mintoff addressed our Foreign Minister does not need any assurance that the European Commission last month regarding the Vietnamese treaty would not result in Soviet inter­ consistent British press falsification of matters vention in Southeast Asian affairs, contrary to what relating to him personally and to his government's the Chinese allege. But the Indonesian Foreign Minis­ policies. Malta over the past two years named the ter seemed to feel that the Chinese have failed to BBC, the Daily Telegraph, and the Daily Ma il as remove the suspicions in these countries about their failing to retract stories as they had agreed, and own intentions. These doubts have in fact, been was forced to take court action to receive retraction strengthened by Chinese involvement in Kampuchea, and civil penalties. their pressures on Laos, and their aggressive attitude against Vietnam.

34 THIRD WORLD EXECUTIVE INTELLIGENCE REVIEW December 12-18, 1978 for press responsibility of the media

the rape of men's minds. This threat cannot be too with virtually all telecommunications and satellite strongly denounced." services in Western hands. And the study calls for the right of any nation to The study has been the target of a bitter and intense receive news that is not "filtered, mutilated, or dis­ opposition campaign by Western media led by the torted"; the right to equality in the use of the world's British press and such U.S.outlets as the Ne w York airwa ves ; the right to a code of ethics for reporters to Tim es and CBS's Walter Cronkite, who charge that the ensure fair and honest reports and the right of study's effort to impose standards of professional reporters to be free from reprisals from their em­ accountability on newsmen amount to censorship of ployers ; the "right of correction" to distorted, false or their right to " freedom of expression." misleading news stories ; and the right to break the But the underlying issue is the fact that too many Western monopoly of news agencies which the Western news gatherers - far more than what was developing sector views as a colonial holdover. suggested in the Church Committee report in 1977 - The Tunisian study, which was supported by the have become tools of Western intelligence and eco­ Soviet bloc, further points out that the five largest nomic agencies. They regularly, almost instinctively, international agencies control 80 percent of news Third World spokesmen charge, slant their coverage circulating in the developing sector and maintain 4,300 in favor of their own government's foreign policies (to foreign correspondents and over 500 news bureaus, the point of encouraging coups and government

or disinformation and lies?

• The Belga Press Agency (Belgium) released the • The Ne w York Tim es, on March 19, 1978, during . story of the French rescue operation in Shaba the Colombian presidential campaign, ran a story Province, Zaire, four hours before it took place, entitled "Drugs, the New Treasure," blaming precipitating the massacre of Western medical and Colombian government officials for drug running. mining personnel. • The March 22 Ne w York Post, in a story titled • On July 3, 1977, UPI correspondent Van Benniker "Cocaine still pouring in," claimed that Julio announced that President Alfonso Lopez Michelsen Caesar Turbay, then running for President of of Colombia had been assassinated by terrorists. Colombia, was involved in drug trafficking. Van Benniker was expelled from Colombia, as he

had been expelled previously from Peru for asking • CBS's "60 Minutes" program claimed that President Poveda if he ran drugs. Van Benniker is Rosalyn Carter had handed Colombian President still employed by UPI - now in Nicaragua. Michelsen a list of names of drug runners whieh in­ cluded Turbay as one high government official who • The Church Committee of the U.S. Senate exposed "possibly" ran drugs. This was two weeks after the CIA-fed story carried by UPI just before the CBS had agreed to, but had not aired, a retraction Chilean coup in 1973, announcing that the coup was of earlier slanders. going to take place. This destabilization from

without was run by 970 press outlets in the next • UPl's Juan Tamayo, just hours before the dead­ three days. line for agreement on the tense Beagle Islands dis­ pute between Argentina and Chile, ran a lengthy • CBS's "60 Minutes" program, Sunday, Feb. 26, dispatch, "War Noises in the Southern Cone," 1978 accused Cuban President Fidel Castro of asserting that war between Peru and Equador was running cocaine into the U.S. and laundering drug inevitable because Peru had no oil. This war never money. occurred, and Peru certainly has oil.

December 12-1 8. 1978 EXECUTIVE INTELLIGENCE REVIEW THIRD WORLD 35 destabilizations, as some Third World spokesmen ignored the issue of the media's responsibility for note, angrily pointing to the example of the BBC's truthful reporting. This declaration was sent to the recent egging on of anti-Shah rioters in Iran) and be­ Special Political Committee on Nov. 29 for full UN little developing nations' efforts to industrialize (e.g., sanction. the low-key coverage of recent Mexican oil dis­ There, just before a Dec. 5 vote, the French dele­ coveries in the Ne w York Tim es and Wa shington gation, reportedly with support from the Soviets and Post) . Says one Third World diplomat at the UN : Indians, suddenly asked for consultations with other "They (the Western news agencies) are used against delegations - effectively blocking the vote. us like a robber uses his knife." The U.S. is saying that it will not tolerate any at­ The battlefield recently shifted from UNESCO to the tempt to "curtail the freedom of the press." In a Special Political Committee, preparatory to reaching declaration to the UNESCO Plenary on Nov. 20, U.S. the floor of the General Assembly. Although Britain, it Delegate William G. Harley said that the U.S. "would is widely conceded, would be most affected by the not accept any language" that imposed "any restric­ Tunisian-Group of 77 proposal, it is the United States tion upon journalists seeking in their professional which has taken up the cudgels against the Third duties to gain needed access to sources of information, World draft. Applying intense pressure, the United any harassment of professional media personnel, any States forced UNESCO to replace the Tunisian draft suspension or blocking of the entry or exit of infor­ with a Mass Media Declaration which completely mation across national borders, and any suppression

U.S.: Freedom of Third World: disinformation expression vital retard s development

From the Mass Media Declaration, UNESCO, From the Tunisian Group of 77 Study: Paris, Nov. 29, 1978 : (The Western press agencies present the Third The exercise of freedom of opinion, expression World) in the most unfavorable light, em­ and information, recognized as an integral part phasizing crises, strikes, street demonstrations of human rights and fundamental freedoms, is and coups d'etat. a vital factor in the strengthening of peace and The protection of journalists is a basic element international understanding .... It is essential of the world communication and information that journalists and other agents of the mass system. Such protection should be extended to media, in their own country and abroad, be include the journalists' relations with their assured of protection guaranteeing them the employers and should enable them to retain best conditions for the exercise of their freedom of thought and analysis .... Journalists profession. are disloyal to their profession if they provide erroneous, tendentious or truncated in­ formation, or information dictated by their own U.S. Delegate George A. Dalley to the Special particular concerns, criteria or choices. Political Committee, Dec. 4 , 1978: In that case, the state involved has the right (Dalley) recalls the incipient spirit of to issue a correction in which it may add to cooperation which is coming to prevail in the incomplete information which has already been world community with respect to information disseminated the elements needed to give an and communication. In an atmosphere of accurate picture of the facts and restore them tolerance, forebearance and mutual respect, to their proper context. we overcame some very difficult obstacles to cooperation .... Non-Aligned Nations Declaration, August 16, 1976, Colombo, Sri Lanka : The Delegate of Ecuador to the Special Political The Non-Aligned countries noted with concern Committee, Dec. 5, 1978, in support of the the vast and ever-growing gap between com­ Declaration : munication capacities in Non-Aligned countries We are totally opposed to any restriction on the and in the advanced countries, which is a freedom of the press by any government. In my legacy of their colonial past. This has created a part of the world the government doesn't situation of dependence and domination in control the press ; it is just the other way which the majority of countries are reduced to around. The press makes suggestions that being passive recipients of biased, inadequate usually are taken up and made into legislations. and distorted information ....

36 THIRD WORLD EXECUTIVE INTELLIGENCE REVIEW December 12-18, 1978 of the fundamental human right of individuals to siderable attention to the UN social whirl. express themselves ...." A substantial minority, however, are known to be In place of the Tunisian study, Harley has offered a stringers for intelligence networks interfaced with plan to assist in training developing nations' journal­ Reuters/BBC /MI-6 and related Canadian and U.S. ists and share Intellsat time with other nations. He intelligence/press networks. proposed a Consultative Group sponsored jointly by Despite the massive in-place capabilities of the UNESCO, the World Bank, and the UN Development British Intelligence-run press networks, and the politi­ Program (which funds low capital "appropriate tech­ cal support that the U.S.continues to lend to them, the nologies") to create an Advisory Committee of Ex­ issue of providing honest news is coming to a head. perts to deal with "specific communications The Shah of Iran responded to the BBC's month-long problems." saturation of that country's airwaves with calls to A respected Asian journalist commented, "When revolt by Mossad agent Ayatollah Khomeini by developing countries use government resources to set jamming BBC broadcasts and kicking the BBC up press services, the West claims this is not 'free.' Do "reporters" out of the country. they think we don't know who these correspond�nts -Leif Johnson are - like Jack Anderson for example? " United Na tions, New York Another correspondent said, "What will we do with the satellite time? That is really the problem; we must develop personnel. It's easier to pay ten rupees for a James Reston column than to develop a worldwide journalist corps. A press pool was agreed to at the Colombo Summit (of Non-Aligned nations -ed.) in Advertisement 1976 and is now run by Tanjug (Yugoslav Press Agency) but it's just a collection of random articles. 99.9% of the universe is My paper almost never uses it."

Background of the controversy The controversy goes back to 1974 and 1975 when offi­ cials from India, Guyana, and Cuba, spurred by the need for what one high level Non-Aligned nation diplo­ mat described as "development oriented" news and not the "garbage about Liz Taylor or riots in Africa," attempted to set up a Third World press pool that would guarantee the delivery of news and reduce dependence on Western media.But there was a split in the developing countries themselves, and Tunisia went ahead with a January 1975 Information Con­ ference before the Non-Aligned foreign ministers met in New Delhi in July 1976 in preparation for that year's Non-Aligned Summit in Colombo, Sri Lanka. Two programs were presented, with the central rind out about controversy being whether UNESCO (as in Tunisia's proposal) or the Third World should fund and control The ABC's of Plasma Physics the press pool. The significance of this issue can now in the November i;,ue of be clearly understood : even if the UN General Assembly defeats the Mass Media Declaration, UNESCO will continue to implement it in its Inter­ FUSION national Commission for the Study of Communication \\:\( ,1\/1'\,1 (H IIlI 1\ "'I( )'\, 1'\.11\(,) Hll 'llAlll )'\, Problems. The Commission is headed by Sean Mac­ featuring Bride, a founder of Amnesty International, a world­ wide British spy network specializing in "human "Elementary Plasma Physics from rights" destabilizations of governm ents. an Advanced Standpoint" The difficulty of developing Third World journalists by Dr. Steven Bardwell to break the Reuters-British Intelligence control of 10-issue subscription, $18 world news is glaringly shown at the UN. In a press corps numbering 200, there are no more than a dozen Single copy, $2.50 postpaid genuine "prodevelopment" working journalists. Of Send check or money order to: Fusion Energy Foundation the remainder the majority pump out tunnel-vision Box 1943. GPO. New York, N.Y. 10001 copy about "their" country or bloc, and devote con-

December 12-18, 1978 EXECUTIVE INTELLIGENCE REVIEW THIRD WORLD 37 (� U*S* R.PORT· ______)

Ted Kennedy's deadl y health hoax

A right-to-die plan fo r America's 'useless eaters'

Senator Ted Kennedy. Patricia Robert Harris. a series of vicious cutbacks in federal welfare and jobs Secretary of Housing and Urban Development (HUD). programs. and Joseph Califano. Health. Education and Welfare At the same time. the Kennedy faction is making a (HEW) Secretary. are moving with all deliberate major bid for power in the Carter Administration speed to get a slew of "right to die" measures off the under cover of a Brookings Institution-inspired drawing boards and onto the federal statute books. government reorganization plan. If approved by Counting on the pyschological shock effects of the President Carter. this plan will give the Kennedyites Jonestown massacre to acclimatize the American the leverage to guarantee that their policy package is population to genocide. the trio is pushing the Ken­ implemented and will bring Ted Kennedy a giant step nedy-sponsored "national health insurance" bill and closer to the oval office.

Socially useless Americans? A taste of what the Kennedy networks are planning for In this section the general population came Nov. 27 with the an­ Many people find the rhetoric of the "r.ight to nouncement that. acting on Califano's advice. the die" movement - "easing the passage." Carter Administration will slash its proposed in­ "getting comfortable with death. " "pulling the crease in the welfare budget from $17 billion to $6 plug" - ghoulish and disturbing. The reality is billion and impose stringent "workfare" even grislier. Under the guidance of some recent requirements on welfare recipients. Echoing almost recruits. Senator Edward Kennedy and Health. verbatim the "useless eaters" argument adopted by Education and Welfare Secretary Joseph the Hitler regime to justify the murders of millions of Califano. "right to die" has become the war cry children. elderly. infirm and otherwise "undesirable" of the supporters of the "Kennedy health bill." a sections of the German population. an HEW movement to slash U.S. health care expenditures spokesman defended the cutbacks on the grounds that which will decrease health care not only for the "It is no longer the federal government's respon­ terminally ill but in such categories as infants sibility to maintain a socially useless population ...." and the aged with years of potential productive In similar terms. Califano told the National League lifetime remaining. of Cities annual convention Nov. 28 that "the liberals Our report on the Kennedy health bill and the and progressives of our society (must) match their "right to die" cult is in three sections : First. compassion and generosity with competence and correspondent Kathleen Murphy reports on efficiency." adding that any cutbacks in the HEW Kennedy and Co.'s embrace of the death cults. budget will be deducted directly from benefits and their rapid movement toward the Nazi payments to HEW program beneficiaries. German rhetoric of eliminating "useless It should be stressed that the workfare requirement eaters." Second. U.S. Labor Party Chairman which the Carter Administration is adopting in its Lyndon H. LaRouche. Jr. presents a policy welfare "reform " package is a cruel joke. since huge statement outlining how the American Medical cutbacks in federally funded jobs programs are also Association and other supporters of health care being planned. With no jobs available. welfare can act to block the Kennedy movement. Finally. recipients forced off the rolls will become increasingly Anita Gallagher reports on the campaign being lumpenized and consequently much more vulnerable waged by one of the U.S.·s less well-known major to recruitment into People's Temple-type cults. denominations. the World Community of Islam. against the infestation of death cults and drugs in National death insurance the United States. While Califano was presenting his "cost-cutting" justifications for welfare cutbacks. Ted Kennedy was

38 U.S. REPORT EXECUTIVE INTELLIG ENCE REVIEW December 12-1 8. 1978 'Death, Dying and Decision-Making': Cutting Hospital Costs to the Bone

How to get the population to ac­ manslaughter c),;: rges incurred Concern for Dying - which this cept the fundamentally anti­ for letting a patient die unneces­ year changed its name from the human notion that death is just sarily, and broad discussion of Euthanasia Educational Council another phase of life was the topic specific measures for organizing because, as a spokesman put it, of discussion as 400 thanatolo­ a death cult in the United States. "we realized that euthanasia is a gists, right-to-die advocates, The most important of these, dirty word" - has distributed "medical ethics experts" and var­ according to conference partici­ millions of copies of the living will ious others gathered in San pants, is the so-called living will. and has been instrumental in se­ Francisco for a conference on Now on the law books in eight curing its passage on the state "Death, Dying and Decision­ states and under consideration in level. Now, the group is itching to Making." The conference, which 27 others, the living will is a docu­ get the living will - the ultimate was cosponsored by the Bioethics ment popularized by Concern for hospital cost-containment Group of the University of Cali­ Dying and its legislative arm, The measure - incorporated into fornia San Francisco School of Society for the Right to Die. The federal law. According to George Medicine and a New York-based wills, which are legal documents J. Annas, a member of Concern group which calls itself "Concern to be signed by individuals, state for Dying's Board of Directors for Dyin g," took place on the that should "the situation ... arise and a member of the Boston same weekend as the People's in which there is no reasonable University School of Medicine's Temple mass suicides in J ones­ expectation of my recovery from faculty, this will be achieved by town, Guyana. extreme physical or mental dis­ making the signing of such a The conference agenda ability, I direct that I be allowed living will a prerequisite for parti­ featured such highlights as a film to die and not be kept alive by cipating in Kennedy's national entitled "Death by Request," an medications, artificial means or health insurance program. "O f address on "Medical Dilemmas 'heroic measures.' I do, however, course," Annas said in an inter­ in Clinical Decision-Making for ask that medication be mercifully view, "you don't have to say you Terminally III Persons" by Dr. administered to me to alleviate want them to pull the plug." Urs Peter Haemmerli, M.D., of suffering even though this may Zurich, recently acquitted on shorten my remaining life."

pushing the same line on hospital costs in a series of the London-based international drug trade. (This public hearings he held this week in Chicago, Los swindle will be fully documented in an upcoming Angeles and Denver to publicize his national health Executive InteJJigence Review feature - ed. ) insurance bill. Kennedy plans to introduce the bill into The story on the health insurance bill does not end Congress within eight weeks. here, h owever. According to informed sources, once While the final draft of the legislation remains a Kennedy manages to win congressional approval for closely gua'rded secret, an outline released by Ken­ his health bill, HEW will mandate that every par­ nedy's office confirms that its primary concern is to ticipant, as a condition for receiving insurance slash, under the guise of "cost-containment," the covera'ge , be required to sign a so-called living will quality and quantity of medical services available indicating whether or not he wants the "plug pulled" nationwide. during the "dying process." Kennedy himself proclaimed in a statement dated Despite Califano's ostensible opposition to the Oct. 2 that his "national health insurance is a system Kennedy bill, sources report that the HEW Secretary that will provide incentives for alternatives, less secretly favors it, and sees it as the key means for costly delivery models (such as health maintenance getting his own hospital cost-containment proposals organizations - HMOs - and hospices - ed.) ; it is a off the ground. system which will enable through progressive reimbursement policies, an emphasis on prevention of Kennedy power play disease, of increasing individual responsibility for The Kennedy machine is so determined to see that maintaining health ...." these programs become the cornerstone of U.S. In addition to legislating a dramatic deterioration in domestic policy that they have launched an ambitious medical care standards nationwide - a deterioration campaign to consolidate control over government which will contribute directly to the deaths of untold departments which will have primary responsibility numbers of people - the Kennedy bill will also for administering them . The most visible indication of provide a multibillion dollar payoff to the insurance this push is the proposal cooked up by the Brookings industry, which is significantly under the control of Institution and now under consideration by President

December 12-18, 1978 EXECUTIVE INTELLIGENCE REVIEW U.S. REPORT 39 Carter, to dissolve the Commerce Department and place its largest unit, the Economic Development Administration, under HUD, which in turn will be transformed into a Department of Economic Defeati ng Kennedys Development. How to fight the 'Kool-aid approach ' to Under this plan, HUD Secretary Harris - a former member of a Washington law firm with strong links to British intelligence - will have at her disposal huge Th e fo llo wing is a policy statem en t submitted by amounts of money to dispense on the kind of "com­ Lyndon H. LaRouche. Jr. , Ch airman, U. S. La bor munity counterinsurgency" programs for which HUD Party. is becoming notorious. Kennedy is building up his own power base on the It is of the utmost urgency that the medical profession chairmanship of the influential Judiciary Committee. quickly develop and present a comprehensive alter­ Kennedy is also conducting negotiations for a seat on nate to the evil legislative concoction known as "The the powerful Budget Committee where, as an aide put Kennedy Health Bill." The stress must be laid on the it, "He'll be able to exercise fiscal restraint over every most evil feature of Senator Kennedy's proposals, pro­ government program." posals which may be fa irly described in the aftermath Though Kennedy's commitment to austerity is as of the Jonestown tragedy as the "Kool-Aid for the ironclad as an yone's, there are indications that the Aging" approach to slashing medical assistance to the Senator is simultaneously attempting to position senior citizens. himself at the head of the developing opposition to the The model for this feature of the Kennedy bill is the Administration's austerity policies - obviously pilot conducted at St. Christopher's Hospice in Lon­ boosting his own presidential ambitions. According to don. Yet, the more appropriate precedent is those fea­ Leon Shull, executive secretary of the Americans for tures of Nazi Germany's medical practices during the Democratic Action , "Kennedy will lead the liberal 1930s which became the subject of the postwar Nurem­ forces against Carter this coming year." Shull also berg Tribunal proceedings. The Nazi precedent shows said that Kennedy will be "the silent collaborator" of that it is but one step from "Brompton Mix," as a the liberal-fascist groupings led by United Auto medical cost-cutting measure, to the "cost-benefit" Workers head Doug Fraser and original poverty-pimp dictum of quickly terminating the existence of Michael Harrington which are expected to protest "useless eaters." The relevant provisions of the Carter's policies and boost the Kennnedy health in­ Kennedy proposal represent the wedge-end for such surance bill, in particular, at the Democratic Party's Nazi-like practices . mid-term convention in Memphis Dec. 8-10. A source By emphasizing the hideous immorality of this in­ close to Shull confided that the so-called debate on cluded choice of policy-direction in the Kennedy pro­ health insurance between Kennedy and Califano posal, we are able to draw public attention to the other which is a "highlight" of the convention is "just for dangerous and deplorable features of the whole body show," since " Kennedy and Califano see eye-to-eye on of this legislation. The inclusion of the blatantly im­ the whole hospital cost thing." moral, evil feature aptly betrays the quality of philo­ - Kathleen Murphy sophical outlook which has governed the design of the bill in all principal features. Such an assault on the unspeakable evil of that pro­ posed legislation could not be adequately effective by itself. The American voter must be given an accept­ able alternative to the evil proposed legislation. It is not indispensable that an alternative comprehensive bill be presented. It is indispensable that a clearly articulated, factually grounded alternative national medical policy be elaborated for popular under­ standing. It is my recommendation that a "Blue Ribbon Com­ mission" be constituted, preferably by resolution of the assembled representatives of the medical pro­ fession. I most strongly urge that the divisive issue of public and private health insurance not be the primary focus of the work of the Commission. Consideration of those matters should not be excluded, but should be included in a commission report as appended . findings. The primary focus of the Commission's work should be the

40 U.S. REPORT EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 Health Bill health care fo r the dying

service of those ethical principles for which all honor­ main text as a part of the Commission's report as a able professionals stand in essential agreement, whole. despite secondary divergences among them on the What I contribute to this general purpose in the re­ issue of financing the delivery of a quality of profes­ mainder of this proposal for a "Blue Ribbon Com­ sional service on which all honorable professionals are mission" is, and properly so, the advantage of my own generally agreed. special expertise: the economics aspect of medical It should be stressed that the general public is cost trends. divided on the issue of financing the delivery of pro­ I shall summarize the character of the economic fessional health services. As long as the medical pro­ disease responsible for inflation generally and for the fession is drawn into making the financing of delivery explosion in services' costs, especially since the 1957- the most prominent feature of the policy debate, the 1960 period. By exploding popularized myths, I aim to proponents of evil policies, such as the proponents of dra w the attention of medical professionals to those the Kennedy proposals, will demagogically exploit the features of their own experience which corroborate issue of modes of financing delivery to obscure the my analysis. deepest issues from public attention. The issue to be emphasized at this moment must be made the issue of wh at is to be delivered. After that fight for the quality of health services is won, we can settle the issue of AMA assails Kennedy health plan financing delivery properly. Once we agree on the quality of what is to be delivered, we can judge financ­ This week's issue of the American Medical ing of delivery by the standard of realizing the Ne ws, the official publication of the American required quality. Medical Association, devoted a front-page ar­ The objective must be to mobilize the majority of ticle to an attack on Senator Edward Kennedy's trade unionists, farmers and others for the cause of na ealth insurance plan, including quotes . maintaining and continuing to improve health · serv­ t� from a recently released U.S. Labor Party ices. Once that constituency for a basic national health leaflet to tie Kennedy to the Jonestown murder­ policy is consolidated, the basis is established for re­ suicide cult. solving the subsumed policy-issues. Th e object is to Under the headline "Another Installment in win . Ke nedy National Health Insurance Show," the We know that there is a coherent connection be­ n tween the modes of financing health services and AMA reported on hearings held by Kennedy on his National Health Insurance plan in Chicago. quality of health services. At this point, the majority of the electorate does not. By winning a majority to a "Handed out" at the hearings, the article reported, was "a release from the U.S. Labor quality health services policy, we have laid the basis for promoting intelligent understanding of the eco­ Party charging that Senator Kennedy and Henry nomic problems, of producing qualified professionals Kissinger are behind the Guyana suicide cult, which, the release charges, is really nothing and maintaining quality through appropriate . modes of more than a 'right to die' campaign to promote financing delivery. Th e object is to win . the hospice concept." Kennedy, charged the AMA, attempted to pusb The economics of health the "Canadian health system," a program of "socialized medicine" premised on the reduction It would be wrong to exclude the question of the eco­ of health services nationwide. The Illinois nomics of professional health services from the main Medical Society took issue with Kennedy, body of the Commission's report. The matter of the blasting the Canadian system as an attack on the cost of providing adequate, per capita health services American high-technology approach. Tbe is not directly the same issue as financing payment for Canadian system is vastly inferior to the delivery of those services to households and persons. I American, concurred the AMA publication. The propose only to exclude the latter point merely from journal quoted a Canadian physician who urged: the main body of the Commission's report, not to "Do not bring American medicine down to the exclude it from the separate recommendations on Canadian level. " means of payment which I propose be appended to the \.

December 12-1 8, 1978 EXECUTIVE INTELLIGENCE REVIEW U.S. REPORT 41 I shall show that, apart from some considerations obvious. To begin to identify the physician's connec­ specific to health professions and institutions, the tion we need only consider the effects of lowering the general, deeper reason for the explosion in apparent mean level of life expectancy. This is not, of course, costs of health services per capita have nothing to do the whole picture : it is a point of reference through with the medical profession as such. Rather, the ex­ which we can bring the whole picture into focus. plosion in health-care costs is a conspicuous reflection The maintenance of a developing labor force cor­ and by-product of a dangerously wrong-headed relates with an increasing number of years devoted national monetary and economic policy. The explosion predominantly to education. Granting that the in medical-care costs is but one much emphasized number of years required to develop a qualified pro­ facet of a much broader general problem of economic fessional would be significantly reduced by better policy. secondary-school education, a modern culture I shall also show that, happily, a cure for the eco­ requires that the first 18 to 30 years of life be occupied nomic disease is now being brought within reach. principally with preparation for adult careers ranging The most efficient point on which to focus attention initially, to understand the destructive fallacies of u.s. economic policy, is the imbecilities integral to our present National Income Accounting system, the so-called GNP system . I illustrate the point by Rates-number of deaths under 1 year pointing out that the legalization of dangerous drugs, 120 of age per 1.000 live births such as marijuana, heroin, methadone, and other psy­ (in the U.S') chotropics for uncontrolled use on demand would auto­ matically increase the reported GNP by more than $100 billion annually - without any other change but that legislative action. The legalization of present levels of illegal gambling would increase the reported GNP in a similar fashion. The legalization of mug­ gings and burglaries, the legalization of hired assas­ 50 sination, and of other income-linked crimes would 40 have identical benefits for the GNP estimates. In brief, the present methods and standards of \; National Income Accounting make no distinction be­ 30 tween useless or even destructive paid activity and \ ", those forms of production, distribution and services ''', -­ 20 \ which augment our tangible national wealth and con­ \ tribute to the well-being - and, hence, productivity - \ of our citizens . \, '. For example, if General Motors Corporation were to cease all production, but received a Health, Education and Welfare, or HUD grant to keep all its employees on the payroll for purposes of digging and refilling holes in the waters of Lake Huron, the idiot statis­ ...... Source National Center for Health Statistics ...... ticians in Washington would prompt the White House I i to report with confidence that General Motors' shut­ ting down tangible goods production had not cau!';ed any direct fall in its GNP contribution nor led to any increase in unemployment among its employees. Admittedly, in the ordinary course of professional from semi-skilled, technologically modern forms of practice, neither educators nor physicians contribute employment to advanced forms of professional em­ anything directly to the gross tangible output of the ployment. This training represents two kinds of cost to United States' economy. Rather, those professions are the society as a whole. First, those under 18 to 30 essential to developing and maintaining the produc­ years, as the case may be, must be sustained through­ tive powers of our national labor force. Looking out that period through production by persons of more merely at this point of emphasis for the moment, let us mature years. Furthermore, as the society develops, consider the way in which education and medical the content of education and other training must be services contribute in the most obvious ways to main­ intensified in respect of its technological components. taining and improving our nation's potential This also correlates with the need for a higher stan­ productivity. dard of household and individual life in homes and The educator's connection to improvement of the communities, improved qualities of leisure, all as potential productivity of the labor force is direct and background prerequisites for advances in educability.

42 U.S. REPORT EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 All of this must be paid for out of the production con­ pens that scientific progress, education, medical serv­ tributed by the maturer layers of the population. ices increase as social costs per capita, but less Imagine a modern United States trying to maintain rapidly than social productivity potentials of popu­ its per capita output and technology under conditions lations are increased through such services. There­ in which the mean life expectancy fell into the forties fore, in a well-run economy the social costs of main­ or even the fifties ! (Not so incidentally, we have taining a constantly improving health service become identified one of the most critical problems of develop­ increasingly less burdensome to the population, even ment in the Third World.) The longer the mean life though the relative share of total costs represented by expectancy, the more successfully medical science health services must tend to rise. masters those diseases of aging, beginning with This happy connection breaks down only if the bene­ cancer and senility factors, the lower the per capita fits of health services are not being realized. That is, if cost of maintaining each citizen in higher quality of a diminishing proportion of the total potential labor life . It is to be emphasized that a gifted individual only force of a society is actually being employed in useful

Advanced health care works

Senator Ted Kennedy and other proponents of national health care legislation claim that the use of expensive, advanced tech­ Age-adju sted death rate (0,,, ) nology in health care has gotten out of hand. with costs far out­ per 1 .000. stripping benefits. They claim that health care should reorient toward improving diets. the environment, etc. But the results of Medicaid and Medicare (which Kennedy wants to eliminate) provide a test of the effects of introducing advanced medical technology into segments of the population which contra­ dicts Kennedy's claim. Following the passage of Medicaid in 1965, infant mortality plunged, as a combined result of better prenatal care and neonatal facilities, including the development and wide­ 90 spread use of neonatal intensive care hospital units. Included in the drop in infant mortality is the remarkable drop in low-birth­

85 weight mortality. which is directly correlated with the most ad­ vanced hospital technology. including monitoring equipment. incubators. and respirators. 80 Equally impressive is the fall in overall death rates of the aged population associated with Medicare. The increased health care expenditures for the over-65 population included a 47 percent 75 increase in real hospital services from 1965 to 1975. Mortality figures show a significant drop off in overall mortality between 7.0 1970 and 1975. 9.9 percent, which was greater than the total mortality dec rease for the fifteen year period 1955-1 970. 8.0 per­ cent. For the aged category. the changes in mortality are even 6.5 more marked . The death rate for the aged during 1965-1 975 fell 11.2 percent, compared to only a 2.4 percent dec rease during 1950- 6.0 1965. Moreover, the life expectancy for 65-year-olds increased 1940 1945 1950 1955 1960 1965 1970 19/5 dramatically after medicare. In 1900 the life expectancy of a 65- Source: National Center for Health Statistics year-old was 12 years; in 1950 it was 14 years. In the ten Medicare years. 1965-1 975, it increased by 1.4 years to total of 16.1 , an in­ crease of more than 50 percent of the total increase during the entire period 1900-1 965. begins to realize his matured mental potentialities production at levels of technology consistent with the during his forties and fifties. population's technological potentialities. In the case of Education and medical services are a more or less failure, the burden of maintaining quality medical well-defined, socially necessary cost per capita of the services must appear to increase, becoming increas­ general population, for each qualitative level of ad­ ingly unaffordable. This crisis of medical costs does vancement in the course of generalized scientific and not originate within the practices of the health profes­ technological advancement of social productive and sion, but in the decay of the economy to which health other practice - without yet considering the excep­ services are provided. tional, traumatic occurrences, such as wars - which Let us turn our attention back to the early 1960s. to impose increased burdens on medical practice. the period in which such monstrosities as Robert For reason of fundamental theoretical-economic Hutchins's "Triple Revolution" buncombe was being principles which I have outlined in summary in my ·popularized. Recall those numerous foolish voices who The Theory of theEuropean Monetary Fund, it hap- insisted that the U.S. shift from emphasis on industrial

December 12-18. 1978 EXECUTIVE INTELLIGENCE REVIEW U.S. REPORT 43 expansion toward a "services economy" was a praise­ selves to be diagnosed by idiot savants of the account­ worthy and hopeful development. Recall the ing profession, and perhaps donated a few words of November 1967 collapse of the British pound, and the clinical advice to relevant elements of the accounting first official collapse of the dollar and Bretton Woods profession. What are these imbecilic fictional assump­ system during February and March of 1968. Recall the tions of accountants which lead to such clearly absurd continuation of the "services econ omy" policy and results? developments into the August 1971 collapse of the The point is that high-technology facilities and sup­ dollar and the Bretton Woods agreements. Consider porting services are a resource for the entire popu­ the way in which this downward spiral of basic eco­ lation of the serviced municipality or county. To nomic decay in the U.S. economy has been covered deliver these essential means to that community, we over through White House and Congressional em­ must locate these facilities somewhere in that com­ phasis on the growth of GNP. munity. So, some progressive hospital or clinic The worse the U.S. economy becomes, the more the assumes the burden of this on behalf of the entire com­ GNP seems to expand. The imbecility of the cult-like munity. This cost is properly defrayed by applying it worship of the existing National Income Accounting to all the hospital beds. outpatient facilities and so frauds is reflected into reality by galloping inflation. forth which are involved. The fact that the clinic which Since an ever smaller portion of the total labor force is does not utilize such facilities has an apparent lower actually engaged in high-technology progress in capital amortization per patient-day does not, by any productive employment of tangible output, the social stretch of the imagination. prove that the high-tech­ cost of producing an average material standard of nology general hospital or advanced clinic is "over­ living is spiraling upward. The result is reflected into charging," or driving up medical costs with "excess the monetary realm as inflationary deterioration of equipment. " the standard of li ving. More directly to the point of inflation, the insti­ This inflationary process must affect the education tutional and equipment costs of medical services are and medical professions most severely. Both profes­ monstrously inflated by effects of inflation on real sions are not only labor-intensive forms of services, estate speculation, by financing costs generally, and but both require the relatively highest am ount and by skyrocketing medical-insurance costs - whose intensity of training of the qualified professional. The actuarial fictions are sometimes the extreme of mon­ cause of the rising relative cost of the professional strous illogic. They are also increased through the hour is not generated within the medical profession. It high costs of producing too small an amount of high­ is the result of an inflationary decay of the general technology equipment. For example, if U.S. health economy. a result which must be most greatly ampli­ facilities had an adequate number of body scanners in fied in those forms of services which reflect the use, body scanners would be much cheaper , and highest intensity of training and training costs. improvements in them would come faster and more As the medical profession attempts to combat this cheaply. problem, a further complication of general inflation is The dutyof the medical profession - and of national introduced. Improvement of the productivity of policy-makers - is to encourage the medical profes­ medical professionals involves the same principles as sion to promote high rates of expansion of services and improvement of the productivity of skilled labor in the high rates of improvement in basic research and in plant, advances in the per hectare and per capita high-technology equipment. It is the economy which is productivity of farmers, and so forth. Not only do we sick, not the medical profession. With a return to concentrate on advances in medical-scientific knowl­ emphasis on generalized scientific and technological edge. We require various products of sc ientific progress. and emphasis on high-technology forms of research and high-technology manufacture as tools of employment in production of useful tangible goods. the medical profession. the economy will begin to be cured of its own disease, These improved tools of diagnostics and therapeutic and with that development the burden of medical practice are cost-reducing in reality. The unit-hour of services will begin to evaporate. mean professional medical service is accelerated in What is threatening to produce a biological holo­ the intensity of benefits delivered to the patient during caust in this nation is the "services-oriented," "en­ that hour. Yet, ac cording to misguided accounting vironmentalist" -oriented policy of Senator Edward practices and other dubious services of information, it Kennedy and his friends. Since the anti-industry, anti­ is these improvements which are being blamed capital formation policies of Senator Kennedy and his largely for the inflationin medical costs. ----- �-�------. friends have wrecked our economy for the moment, Let us consider the-accOUntIng absurdities first. By Mr. Kennedy and his friends purport to discover that it what demented kind of argument is it proposed that it is the "useless eaters" among the critically ill and the is cheaper in net social cost to construct a clinic with a aging who must be triaged. It would appear that the low level of supporting services than to add the equi­ greatest single contribution Mr. Kennedy could make valent patient capacity to a modern general hospital? to reducing medical-cost ratios of real national in­ It is past time that physicians ceased permitting them- come would be to resign from political life.

44 U.S. REPORT EXECUTIVE INTELLIGENCE REVIEW December 12-1 8, 1978 The context for solution of the second period - approximately 50 years - the accumulated effects of high-technology im­ One step toward solving the problem before us would provements of agriculture and development of be to junk the present National Income Accounting nuclear energy-centered industrial development will system and the doctrines associated with it. As a sub­ have brought the southern hemisphere into ap­ ordinate measure, existing standard medical and proximate parity in levels and rates of economic related accounting practices demand fundamental development with the presently industrialized sector. revisions. I outline the principles which make -fliis entirely The basic feasible solution to the economics of feasible in my Th e Th eory of theEuropean Mon etary health services lies entirely outside the medical Fund. profession. We must treat the sick economy, rather By repealing those legislations and administration than focusing on the symptomatic reflections of a sick policies which are currently reducing annual U.S. economy into a medical profession. The symptomatic industrial exports by several tens of billions annually, treatment proposed by the "fiscal austerity" fetishists and by making use of low-interest (5 to 7 percent) must be seen as akin to eliminating diseases by killing credit available to U.S. investors and exporters the patients afflicted with those diseases. through the new monetary system, the increased The key to the cure of a "sick economy" is now exports in the order of $100 billion or more annually being presented to the United States by the authors of are rather quickly reached over the next two years. the European Monetary System. The new system, to This export boom is the basis for a boom in internal begin the first, two-year phase of initial, institutional­ capital-formation rates. This is the level needed to ized operations on Jan. 1, 1979, is designed to be more shift the emphasis in employment away from services than a new monetary system of the nations of western and waste toward skilled employment in production of continental Europe. It is designed to be the seed tangible wealth. crystal for a new world monetary system, a system to With increased ratios of the labor force employed replace the bankrupt vestiges of the old Bretton Woods in high-technology tangible output production, and System. On condition that the United States enters into with an accompanying emphasis on increased rates of increasing cooperation with this new system, the capital-formation and technological advances, the dollar will be brought back over a period toward a 3.00 conditions are provided for straightening out the in­ deutschemark level, and levels of U.S. high-tech­ ternal economy. nology exports will be expanded in the order of more The medical profession should consider identifying than $100 billions annually. itself with the European Monetary System's policies The key to the new system is its emphasis on in­ on behalf of vital U.S. interests. Meanwhile, the "Kool­ creasing the rates of high-technology capital forma­ Aid" aspects of the Kennedy Health Bill should be tion in the industrialized nations through developing emphasized to the point of mobilizing popular rage high levels of high-technology exports into the against the bill. Meanwhile, the medical profession developing sector. The program for the North-South would be well-advised to establish a "Blue Ribbon economic cooperation proposed covers an initial 25- Commission" for the purposes indicated above. year period, followed by a second period. By the close -Dec. 4, 1978

December 12-1 8, 1978 EXECUTIVE INTELLIGENCE REVIEW U.S. REPORT 45 Nation of Islam attacks the death cults

Although by no means a majority of U.S . religious towards religion, and if religion can gain its rightful denominations and clergymen support drugs and place it will begin the salvatiJn of society. So we get a death cults, there has been no shortage of "official" cult. a great big cult." religious spokesmen to come forward in the weeks following the Jonestown mass murder-suicide to Religion vs. cultism defend the "rights " of the kook cults, while such The World Community of Islam locates the distinction denominations as the Episcopalians and elements of between religion and cultism in religion's com­ the Society of Friends have for some time been associ­ mitment to develop the human mind. This is why ated with the rock-drug counterculture and various drugs and the counterculture are closely associated "right-to-die" doctrines. with the cults. Said Imam Inram: "There is very little With heavy media attention focused on these and that happens in our world, in our society, that happens similar religious developments, it is easy to overlook by coincidence .... Why do you think that there is the emergence of one of the nation's less well-known dope in this society ....To keep us sedated. Dope is major denominations as a significant force in the not just the physical dope ; that is just the physical ' struggle against the death cults and the drug trade. manifestation of something that is happening on three

The World Community of aI-Islam in the West has or four planes, higher planes ...They (also) have edu­ strongly attacked the death cult of the Rev. Jim Jones cational dope for the intellectuals in the college ... as the work of the same "organized conspiracy of then we hav� the spiritually inclined, so for him evil" responsible for drug-running in the U.S. Attacks they've got the spiritual dope. They put a whole bunch on the Jonestown cult have appeared in the Dec. 8 of spiritual fanaticism in the religion, then they use these people to control the masses .... BiJaJian Ne ws and in speeches given by Imam Faiz, head of the Hartford Connecticut Community of Islam " They come up with all kinds of weird lifestyles, like the idea of gays being a natural and normal thing. You and Imam Nas Inram, head of the Seattle, Washington think that just came out? It's a plan ; it's a scheme in Community of Islam in the past week. order to keep people in control. ...Som eone is trying Long vigorous opponents of drug trafficking, the to take control, and in their effort to do that they have community of Islam has begun to incorporate a cam­ learned how to control people through manipulation. paign against the death cults into its antidrug efforts. To gain control of religion, gain control of the material 8 Ne ws, The Dec. issue of the BiJaJian in its brief world, gain control of your or my personal life. They report of the Jonestown holocaust as it went to press, come right into your home through the radio, through put the term "mass suicide" in quotes, and promised the music - they have orgasms to the music. It's an that its next issue will pursue "Some of the many abomination. lingering questions surrounding this bizarre inci­ "If you read the scriptures, you will find that when dent. " societies reach that point they are on the verge of At a "Save the Children" dinner sponsored by the destruction. They don't even recognize it. They pass 26, Community of Islam in Hartford on Nov. Imam legislation to legalize marijuana ; they will legalize Faiz of the Hartford Community of Islam denounced anything. " the Jones cult in the course of a powerful attack on the A recent speech by the chief spokesman of the World drug culture. The Imam stated : "Drugs are creating a Community of ai-Islam in the West, Wallace Deen climate of death .... They are poisoning our youth. Muhammed, to the American Academy of Religion de­ We have a fixation on death in the U.S., as this cult in veloped the positive teachings of the denomination. Jonestown exemplifies ...." The same dinner of the The invitation of Wallacf' Deen Muhammed to be the Hartford Community of Islam also announced the featured speaker at it� ';ession on Nov. 19 in New formation of an antidrug coalition to end the flow of Orleans represented thE' first time that this body pub­ drugs into the schools and the community. licly recognized the coming of the great religion of On Dec. 3, Imam Nas Inram, head of the Com­ Islam to the United States. The American Academy of munity of Islam in Seattle, Wash., told an audience of Religion is a society of college and university pro­ 65 persons at a U.S. Labor Party-sponsored forum on fessors engaged in teaching and research in religion. drugs that the Jones cult was the work of organized "I don't see how any huIl',1 n being can want to be conspirators of evil : "Look at the society ; the trend is anything but a human being," Wallace Muhammed there, the suicidal trend. The Cult, Jim Jones. Don't said. "I don't want to be a prophet, because actually I think that was an accident. The conspirators recog­ know nothing to extend the scripture. All that I have nize that there is a movement toward religion. They gotten has been an understanding of the scripture that recognize that. People are beginning again to move has already been revealed." Imam Muhammed's re-

46 U.S. REPORT EXECUTIVE INTELLIGENCE REVIEW December 12-1 8. 1978 marks were in the context of explaining the "mys­ level. He wants the attributes of his God to shine in his terious" teaching of a Professor Fard, who claims to life .... He can idolize his God. is that right? Yes. have first brought Islam to the United States in De­ Meaning we can take on some of the attributes of troit, Michigan in 1930. "If he (Prof. Fard) had been Almighty God. In fact. we are born with them. We are dealing with a higher level of knowledge (among the born with kindness in our nature. we are born with population - ed.) he would have come to us with a truthfulness in our nature .... So we should strive more sensible, a more rational and a more humane always to be the best person and never accept a speck doctrine. But definitely he (Prof. Fard) did not come of sin. no matter how small it is - to be something that to us with ai-Islam. He came to us with the label of al­ we can wear honorably. No man can wear any amount Islam," said Imam Muhammed, as he described some of wrongdoing honorably. We can only wear good of the strange teachings which were formerly deeds honorably. And. Allah calls us to good deeds and associated with the Muslims in the United States, such carries us to good deeds." as the idea of the white population as a "devil" race. In view of its campaign against drugs and the death Wallace Muhammed stated that this doctrine was the cults. it is not surprising that the World Community of doctrine of Prof. Fard, and not ai-Islam: "I believe Islam is being attacked as a cult itself by the very that if Dr. Fard had been dealing with a higher level of British intelligence outlets which themselves - as last knowledge or education in the community or among week's Executive In telligence Revie w reported - are the people that he had to preach to, he would have closely linked to the kook cult madness. approached it quite differently." Almost as soon as the Jonestown suicides had oc­

. � In a statement carried irithe Dec. 8 BiliJlian Ne ws, curred. a coordinated campaign to tar the Muslims as Imam Muhammed developed the Islamic com­ a "cult" was begun by anglophile Alex Cockburn in a mitment to the process of perfection of human nature recent issue of the Rupert Murdoch-owned New York to approach the nature of God, which is the principle Village Voice. Another version of the same line ap­ which defines the common, Neoplatonic humanist con­ peared in the Baltimore Sun. which varied the slander tent of Christianity, Islam and Judaism: "Aren't we to to the effect that the Black Mu slims are a cult. but a be like Allah? If Allah is merciful, aren't we to be good one. The same cult charge was made against the merciful? If Allah is wise. aren't we to seek wisdom? U.S. Labor Party in the Village Voice. If Allah is just. aren't we to be a just people? Yes. - Anita Gallagher "The Muslim strlves to be like his God on a human

December 12-18. 1978 EXECUTIVE INTELLIGENCE REVIEW U.s. REPORT 47 Proceedings of the Conference on

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