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

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Executive Intelligence Review Mideast oil supplies, strengthened the "Third Way" anti-Americans (ISSN0 273-6314) is published weekly! 50 issues jexceptfor the second in Europe, and protected the Volcker economic policies that are week of Julyandfirstweek of Januaryby undermining Western strength: Haig was among the strategists of the New SolidarityInternational Press Service 304 W 58th Street, New York, N. Y.1OOI9. effort to oust West German Chancellor Schmidt. In Europe: Executive Inteiligence Review, Nachrichten Agentur GmbH, A new foreign policy will be inseparable fr�m economic policy, Postfach 2308, D. 6200 Wiesbaden Tel: 30-70-35 Executive Directors: Anno Hellenbroich, and that is why Paul Volcker has to go, too. Haig's depopulation Michael Liebig efforts abroad were the correlative of Volcker's "controlled disinte­ In Mexico: ElR, Francisco Diaz Covarrubias 54 A-3 gration" at home. Instead of dirty tricks against our allies, the United Colonia San Rafael, Mexico DF. Tel: 592-0424. Japan subscription sales: States has to take the lead in stabilizing potential markets and O.T.O. Research Corporation, Takeuchi Bldg., 1- 34-12 Takatanobaba, Shinjuku-Ku, Tokyo 160, providing them with the development credits that will mUltiply profits Tel: (03) 208-7821 Copyright" 1982 New Solidarity at home. The United States need not fear exporting to anyone, were International Press Service we to rFturn to a policy of deliberate, accelerated technological All rights reserved. Reproduction in whole or in part without permission strictly prohibited. advances. Second-class postage paid at New York, New York and at additional mailing offices. Subscription by mail for the U.S.: 3 months-$125, 6 months-$225, I year-$396, Single issue-$IO Academic library rate: $245 per year ,.

TIillContents

Departments Economics

11 Interview 4 Volcker on the way Economist Robert Triffin. out: but what will replace him? 12 Interview The official"pol icy review" H. A. Sieman, manager of process may not produce the West German Federal much, but the Fed Association of Exporters. Chairman already has his letter of resignation ready. The question is whether the 14 Inside Canada White House will veer A breakaway ally scenario. toward monetarism or toward productively 15 Energy Insider directed credit expansion. Pentagon pushes new oil fraud. 6 The Humpty Dumpty commercial market 45 Interview Further evidence that the Maximiliano Londono, New York City office Secretary-General of the leasing boom is coming Andean Labor Party. to an ugly halt.

50 Investigative Leads 7 Paul Volcker's Did central banks shutdown of the silence P-2's Calvi? American steel sector Richard Freeman 52 Dateline Mexico documents the overall Will the PRI capacity shutdown, the listen to labor? specific victims, and the policy of running existing 53 Middle East Report plant and equipment into the ground. The "mosaic" of Father Riquet. 13 Currency Rates

16 Agriculture FmHA dried up the dairy industry.

17 Trade Review

18 Business Briefs •

Volume 9 Number 26 July 6,1982

Special Report International National

38 A new terrorist wave 56 What Harriman has in organized to explode store for Democrats By Lyndon H. The policy resolutions for LaRouche, Jr. the Philadelphia midterm party convention contain 40 Kissinger's power play every anti-growth, anti­ after Mideast fiasco minority, corporatist scheme imaginable, thanks to Averell (and Pamela) 41 Israel's potential for West German Chancellor Helmut Schmidt. His Harriman. current troubles originated not in West Ger­ anti-Sharon backlash many, but with a London- and Geneva-centered clique of financial institutions that considers his 58 Hinckley decision is governlllent the major obstacle to austerity re­ 41 European Jews are torn license for assassins gimes in Europe, NATO's expansion into the by Lebanon war developing sector, and East-West confrontation. The trial that refused to Courtesy of the German Information Center. address the would-be 43 Which policies for assassin's "Manchurian post-war Argentina? 20 How Helmut Schmidt Candidate" background The question addressed now was rigged on both sides by could stay in power by every political faction: the psychiatric network whether London will use the responsible for creating 24 Who's out to stab debt lever against Buenos programmed killers in the Schmidt in the back and Aires, or vice versa. first place. what they say 48 Why Count Rumyantsev 60 Congressional Closeup 28 Ready to enforce is turning over in his grave Bruning austerity Marxist formulas have 62 National News The CDU and CSU. obscured for the Soviets what the Monroe Doctrine 64 A gathering of the 29 'Swing party' paves is, and the relations depopulati9n lobby between its originator, John the way for fascists The participants at the Quincy Adams, and the The FOP. International Urban Russian nation-builders. Symposium provide some 31 The traitors within insight as to why U.S. cities 54 International Intelligence Schmidt's party have shrunk and collapsed. Willy Brandt's leftists. To our subscribers: In accordance with our usual 32 The new 'blood and schedule, EIR will skip soil' stormtroopers publication of the issue that The Green Party. would otherwise be produced during the July 4 34 Helga Zepp-LaRouche holiday. The next issue you on what will happen if receive will be dated July 20. Helmut Schmidt falls �IIrnEconomics

Volcker on theway out: but what will replace him?

by David Goldman, Economics Editor

Federal Reserve Chairman Paul Volker's days in office work. Publicly acknowledged is the Treasury review, in are numbered, as Treasury Secretary Regan's June 18 cooperation with the Council of Economic Advisers and announcement to the Washington Post of a general ad­ the Office of Management and Budget. However, as the ministration review of Federal Reserve conduct of mon­ Frankfurter Allgemeine Zeitung, West Germany's lead­ etary policy might suggest. ing business newspaper, revealed in a Zurich-datelined In fact, the rumors that unnerved the bond market dispatch June 22, the Treasury is working out contin­ June 22 that VoIcker had submitted his resignation letter gency plans for emergency action in the event of were not entirely false: the beleaguered Fed Chairman bankruptcies of "large corporations, raw-materials had written such a letter and leftit on prominent display companies, or even large banks, as well as a possible on his desk, but did not deliver it. In one way or another big drop in the stock market." Swiss bankers, the Volcker will leave, possibly as early as August; but it is German newspaper reported, concluded that Regan had far from clear whether a new and better policy direction given indirect confirmation to fears of a financial col­ will emerge. lapse; the article was headlined, "Fears of a Eurodollar Certainly the White House does not grasp the urgent Market Crash." Rumors of imminent American credit need for the United States to take the lead in debt controls, originating in London, swept the foreign­ restructuring and long-term credit to the so-called Third exchange markets June 24. World. V oIcker himself, speaking to the Council on the Presidential Counsellor Edward Meese has made no Americas in Washington on June 22, said that the Latin secret of his inclination towards "other measures" than American debt problem must be solved by cutting what what the Fed has to offer, and Sen. Paul Laxalt's public he termed "rates of growth ...that do not appear to me comment that "credit allocation" might be required to be sustainable .... Fortunately," he added coyly, made public, in effect, the discussion among the Presi­ "there seems to be some tendency toward a slowdown," dent's political advisers. especially in lending to Brazil and Mexico. Acceptance According to usually reliable Washington sources, of International Monetary Fund austerity regimens, he Meese recently conducted a meeting at Camp David said, should be taken by private lenders as "a stamp of with Treasury and other administration staff to plan a good housekeeping on a country." "Sunday massacre" in August, in which the White VoIcker concluded, "I hope in 1990 to be able to look House would force VoIcker's resignation on a Sunday, back to some period of rising investment, rising produc­ keep banks closed on Monday, and re-open the banking tivity, and perhaps even lower interest rates." system on Tuesday under some form of controls. How­ ever, it seems unlikely that such a plan would be Policy review and rumors attempted unless the administration were to justify it on At least two separate policy-review efforts are at national-security grounds.

4 Economics EIR July 6,I'982 With money-supply growth now strongly in excess Woods," that is, a formula for intervening to restrict or • of targets, due to Volcker's decision last year to include loosen credit should the dollar fall or rise against some savings banks' NOW accounts in the M-l definition, "price measure," e.g. a parity relationship to foreign the Treasury is complaining that Volcker shifted the currencies, or perhaps gold, or the old Bretton Woods definition in order to artificially raise money growth neither-fish-nor-fowl combination of the two. Without and obtain a pretext to keep interest rates high. The visible prospects of success, this discussion merely adds charge, which has understandable weight in the Oval to background noise. Office, is true; Federal Reserve officials have empha­ Third, the Federal Reserve itself, under prodding sized to EIR that their policy is not to limit inflation by from the Treasury monetarists, may retaliate against restricting money growth, which they believe is mone­ criticisms by invoking a less drastic form of the credit tarist dogma, but to keep interest rates high-to "hold controls Volcker put through in March 1980; the com­ their feet to the fire,"as one Volcker aide likes to put it. parison is more to the sort of "productive loans letter" Since the political pressure on the administration that Arthur Burns sent to the banks in his capacity as arising from persistent high interest rates is enormous, Fed Chairman in October 1974, thus triggering the the Treasury position, as represented by arch-monetarist bitter 1974-75 recession. Beryl Sprinkel, has gained some credence in the White "The big question is when the banks will stop House for the first time. One indication of this is that lending," said a New York bank economist, who noted Sprinkel has succeeded in forcing through a technical that the 23 percent per annum rate of credit expansion change long desired by the monetarists, the introduction during the year to date reflected "distress loans" to of "contemporaneous [rather than lagged] reserve ac­ corporations gradually sinking into bankruptcy. counting" within the next six months. "Banks will work with a company in trouble until it The Treasury task forces are referred to internally as isn't worth it, and there is no way to stop the company "Troika One" and "Troika Two." The first, Of} fore­ from going under. They still have large credit lines casting, is comprised of CEA economist Jerry Jordan outstanding to companies, which are a big obligation. (late of the St. Louis Fed); Office of Management and The lending will stop when the Fed gives the banks the Budget chief economist Lawrence Kudlow, formerly of sort of excuse they want to stop lenjing." Bear, Stearns; and an unnamed Treasury representative, However, as I showed in this space last issue, the probably Dennis Karnowsky, a Sprinkel aide and for­ collapse in profitability during the first (and presumably mer St. Louis Fed monetarist. The second and more second) quarter left corporations with no alternative but important "troika," on Jl!onetry policy, is composed of to dramatically increase their rate of borrowing or go Sprinkel, Kudlow, and Jordan. Overall direction of the under; this staggering rate of borrowing, the largest task force is under the supervision of CEA Chairman credit demand on record, supported a still-declining Murray Weidenbaum, Regan, and OMB Director Dav­ production volume. A "productive loans letter," which id Stockman . Sprinkel and his runabout Karnowsky does not mean allocation of credit to productive purpos­ have operational charge of the whole matter. es but is simply Fed jargon for a shutdown of lending, Nothing special is likely to emerge out of the task would "kill the economy stone dead," according to one forces, which do not convene, much less report, during New York bank economist. the crucial immediate period ahead; but the pressure Meanwhile, an argument is under way in the White has already begun to build . Speculation in financial and House over the status of the Credit Cqntrols Act of congressional circles centers on some dramatic move to 1969, which give the President authority to regulate impose credit controls in order to reduce money growth, every credit transaction any way he wants upon the since Volcker's rising interest rates have failed to stop declaration of a national emergency. The legislation will the money supply from rising. That phrase is used in at expire June 30, barring an extraordinary effort from least three different ways by different elements of the both White House and Congress; however, attempts administration. will be made to renew it in the current congressional session ending in October. CEA economist Jerry Jordan The credit-control question has already warned privately that the President would First, as noted, Meese, Laxalt, and the "Western" veto the legislation were Congress to pass it, while other group of advisers which the press used to call the presidential advisers are urging the President to do Kitchen Cabinet favor some form of credit allocation, everything he can to keep it. The Republican Senate although the concept appears to still be vague in the leadership opposes renewal on partisan grounds-the minds of the leading participants . act gives Democrats the chance to point out that the Second, Kudlow, Jordan, and various monetarists President could take over the Fed if he wanted to-as are toying with what the Wall Street Journal favored in well as for ideological reasons. How the White House a June 22 editorial entitled "Bring Back Bretton will deal with the act is far from clear.

EIR July 6, 1982 Economics 5 New York Real Estate "Harry Helmsley and Olympia & York are our cus­ tomers. They are in top shape. I watched this market for 15 years, and there is no fundamental downturn coming up. Nothing like '69-'71 when there was a 30 to 40 petcent fa llout. Then '71 -'74 was a disaster. The problem now is that the market just couldn't continue upsweeping like in '80-'81. The service industries like banks, advertis­ ing, and professional firmsju st can't pay the $60 and $65 a fo ot that was being asked on Park A ven ue. "Of course the banks have slowed down their leasing in the last six months, and we are all affected by the national recession. It may last for another 12 to 18 months, but then the market will firmup again. The Humpty-Dumpty "This is the best time for tenants to come into the market. They can get favorable workletters [alterations], 'commercial market free months, low escalators [escalator clauses], and other concessions. These are really more important than the price. by LeifJohnson "Helmsley just can't go under." He paused. "Why if Harry went under, so would we." EIR reported in our June 29 issue that a sharp and rapid Concessions or not, there is hardly a rush to rent New crunch was taking place on the New York City commer­ York office space. One real-estate consultant estimated cial real-estate market, a crunch which will last, accord­ that the dry-up in New York office leasing began as long ing to those who had a hand in the orchestration.of the ago as the first of the year, while a bank real-estate event, for three to five years. department put the date at five months ago. The notice­ Prime office space will plummet another 20 to 30 able crack began three months ago. percent beyond the 20 percent slide that had already While most brokers denied the current 20 percent occurred since February, said our sources, and some of discounting, none of them wanted to talk about lease the city's largest real-estate developers were on the dan­ pricing. But add up the concessions and the marked ger list. That list included Olympia & York, Helmsley, shortening of leases, and the 20 percent decline is visible. Cadillac Fairview, Bramalea, and Dayline. What will drive it down to the 30-40 percent collapse Interviews with leading New York brokers and senior stage is that peculiarity inherent to all speCUlation: it officials in commercial-bank real-estate departments can't go on forever. produced piquant confirmation of our last issue's story. It came in the pained undertones that accompanied the The end-game assurances that our intelligence could not be further This speculation is not some sort of natural cycle, from the truth of the matter. but is managed by those who control money flows. The "Harry Helmsley? Not Harry. He's not in any trou­ crucial flow into the New York commercial real-estate ble. Harry is one of our best friends. He is one of our best market has been from foreigners-and three months customers," said a senior real-estate officer at Chase. "Of ago one major group of fo reign investors decided to course Harry has been selling buildings, but every time pull out. They are reportedly going to stay out for three someone sells buildings, they think he is in trouble. We're to five years-until the market has bottomed out, also the bankers for Olympia & York and they certainly leading developers (whom they have selected in ad­ are in no trouble. Helmsley and Olympia are two of the vance) are fleeced, and the banks, if still solvent, are so most knowledgeable developers in the country." chary of real-estate investment that the foreign group Asked about the lawsuit taken by a group of investors represents the only money left in thema rket. headed by LeClerq de Neuflize, charging Helmsley with The de Neuflize lawsuit against Helmsley would tip heavy padding of expenses and failing to account for off any intelligent investor that "the big boys" are out funds, the senior Chase official refused to comment, but to tumble the market. De Neuflize is one of the oldest added, "I assure you, Harry is in no trouble. Why, the Geneva-based Swiss banking families. Uris buildings he bought have turned into cash ma­ Reached for comment on the potential for a real­ chines." estate shakeover by September, one London-based A senior broker at Cushman and Wakefield, one of banker in New York dryly asked, "Why do you think the nation's largest brokers, was equally confident. the market will last till then?"

6 Economics EIR July 6, 1982 PART I: STEEL PROFILE

Paul Volcker's shutdown of theAmerican steel sector

by Richard Freeman

The American steel industry is being shut down and June 17, "VoIcker has created the market conditions that liquidated by Federal Reserve Chairman Paul Volcker. are forcing the American steel industry to make changes As of June 14, U.S. steel capacity utilization for the that will reduce capacity. You get the 'market' to do the previous two weeks averaged 43.1 percent-the lowest work for you. This is not a recession; it is a restructur­ since the Great Depression. This time, VoIcker's anti­ ing.. .. We're going to have to have the steelworkers' industrial London sponsors are determined that the col­ wages cut by 20 percent and a further 15 percent reduc­ lapse will not be temporary. According to Michael tion in workforce size.... The recession will make this Hodges, a member of the British Royal Institue of Inter­ easier." national Affairs, the sister think tank of the New York U.S. Steel wants to blame the problem on imports by Council on Foreign Relations, "America does not need a the Japanese, the Koreans, the Brazilians, and the Euro­ steel industry. It can import steel from the newly indus­ peans."I t's foreigners using cheap labor who are flood­ trialized countries and produce steel from electric fur­ ing the U.S. market with underpriced steel," the steel naces by recycling scrap." executives shout. The United Steelworkers of America Thanks to Volcker, U.S.auto production is operating supports the essence of this argument. at less than half the level it was the year before Volcker The Morgan-controlled major steel companies plan came into office; housing production is down by more to use this lie to slash American steel wages, and, through than a half; machine-tool output, a crucial indication of anti-subsidization and anti-dumping suits launched by capital formation is down by 60 percent; rail production is down 25 percent; and production of other heavy capital

goods has begun to collapse at a 50 percent annual rate. FIGURE 1 Th is is the market fo r steel production, which has Age Distribution of Domestic Steel consequently collapsed by more than 33 percent in the Production Facilities, 1979 last three years. Employment has collapsed along with production. In 1953, the American steel industry em­ Average Percent older than- age ployed 544,000hour ly production workers. By 1978, this Facility (years) 30 years 25 years 20 years number had already tumbled to 339,000.In March 1982, Coke ovens ...... 17.3 14.2 25.6 45.9 this number was down to 234,000. For those who are still Open hearth furnaces . 33.2 43.0 78.5 100.0 employed, their week is shorter than 32 hours. Basic oxygen "U.S. steel-making capacity will be reduced by 32 to furnaces ...... 11.0 0.0 0.0 2.3 40 percent over the next several years, and 25 percent of Electric furnaces ..... 14.3 6.1 13.8 25.3 Plate mills ...... 25.6 40.8 45.1 53.6 the 1978 workforce will never be rehired," says one Wall Wire rod mills ...... 13.7 12.6 17.3 17.9 Street banker. "The union doesn't know what is going Hot strip mills ...... 19.0 11.6 16.1 31.5 on, or it knows, but doesn't want to tell its members." Cold strip mills ...... 21.2 14.7 29.2 54.1 A steel expert at American Express-Shearson Loeb Galvanizing lines ..... 18.8 4.4 8.9 40.1 Rhoades, one of Wall Streets's leading investment banks, Aggregate ...... 17.5 12.5 20.4 33.3 explained how this is going to work. Joe Wyman stated

EIR July 6, 1982 Economics 7 making business, not the steel-making business." Already by 1978, only 12 percent of U.S. Steel's FIGURE 2 profits came from steel-making. This year, the com any Percent Raw Steel Continuously Cast spent $6 billion to buy the Marathon Oil Company.

Country 1969 1975 1977 1978 This is capital that could have built a 5 to 10 million­ ton new integrated steel plant, or totally refurbished United States ...... 2. 9 9.1 11.8 15.2 two to three existing steel plants. Instead, U.S. Steel has Japan ...... 4.0 31.1 40 .8 50.9 Canada ...... 11.8 13.4 14.7 20.2 announced that it is in the "petroleum business," and West Germany ...... 7.3 24 .3 34.0 38.0 one executive told the Wall Street Journal on June 7 Frnn� ...... 0.6 12.8 23.6 27 .1 that the company would begin shutting down its steel Italy ...... 3.1 26.9 37.0 41.3 capacity. "The manufacturing group is a collection of United Kingdom ...... 1. 8 8.4 12.6 15 .5 U.S.S.R...... 6.9 8. 3 things that may not fit in where we want to be tomor­ row. " Meanwhile, since 1974, the industry's debt has doubled to $10 billion, largely because of Volcker. Steel companies in the United States consume 5 the steel companies and brought through the U.S. Com­ percent of national energy consumption. merce Department, to consolidate a cartel that will ra­ The 1979 recession, and the British-instigated Irani­ tionalize steel production in all the advanced-sector an revolution, cut demand and pushed up costs. U.S. countries. Steel shut down permanently 15 of its smaller plants, laying off 12,500 workers. Youngstown Sheet and Tube Calculated destruction Volcker moved in on the steel industry at a point closed down its 1.7 million-ton capacity plant in Camp­ when it had already been softened up by a refusal to bell, Ohio. The Alan Wood Steel Company in Consho­ commit funds to new steel-making technology and a hocken, Pennsylvania, with 1.1 million tons of capacity, simultaneous diversification out of the steel production filed for final bankruptcy. In total 4.3 percent of U.S. into other "higher-profit" activities. In both cases, the steel-making capacity was done away with. trend was led by U.S. Steel, fo ur of whose board members also sit on the boards of the Morgan Stanley Enter Paul V olcker investment bank or Morgan Guaranty Bank. In the steel state of Pennsylvania, Paul Volcker is This slow contraction of steel production began as referred to as the biggest bloodsucker since Dracula. early as the 1950s. At that time, the United States was Since he began his austerity regimen in October 1979, the world's dominant steelmaker, accounting for 40 Volcker has waged a campaign against the industry, percent of production and a large share of exports. But with two basic objectives: 1) force the Big Eight steel­ since 1950, only two greenfield integrated steel plants makers-U.S. Steel, Bethlehem, LTV, National, Repub­ (that is, plants encompassing the entire production lic, Armco, Inland, and Wheeling-Pittsburgh-to can­ process from coke facilities and limestone to iron and nibalize their plant, equipment, and workforce, dump­ steel blast furnaces and rolling or extruding mills) have ing entire sections of their operations; and 2) bankrupt been built in the United States: U.S. Steel's Fairless the rest of the smaller companies that taken together Works in eastern Pennsylvania and Bethlehem Steel's hold only 25 percent of U.S. capacity. Burns Harbor plant on Lake Michigan. Accordingly, under Volcker, the previous policy of The American steel industry used its export capacity unwillingness to invest in new plant and equipment has in the most destructive way possible: to dump steel on been transformed into a policy of running existing selected countries, wiping out those countries' nascent equipment completely into the ground and turning it capacities. into scrap metal. The perspective was enunciated by The results of the post- 1950 policy are shown in U.S. Steel president David Roderick, who predicted, Figures I and 2. Today, the average age of an American according to the May 31 issue of Business Week, that steel-producing facility is 20 years. In 1969, only 2.9 "management may decide to close a mill over a period percent of U.S. plants used the continuous casting. This of years by providing money only for the barest up­ was slightly lower than Italy and Japan's use of contin­ keep. " Walter Williams, president of Bethlehem Steel, uous casting and higher than France's. Now, those added that Bethlehem had already selected its 3.5 mil­ three economies have between 1.5 and 3 times more lion-ton capacity plant in Lackawanna, New York for contino us-casting capacity than the United States. this Nazi practice of running assets into the ground. The process was instigated by financial representa­ "We expect to keep Lackawanna running for quite a tives on steel-company boards who overrode the impul­ while with no capital improvements. " ses of production men. In 1979, then-U.S. Steel presi­ National Steel chairman Ben Love has announced dent Edgar Speer announced that "we are in the profit- that his company plans to make no investment in its 4-

8 Economics EIR July 6, 1982 million-ton plant in Weirton, West Virginia, which permanently. Kaiser has held open the possibility of needs between $300 and $500 million in capital improve­ unloadng this profitless plant on the workers. ments if it is to survive. National Steel has told its • Wheeling-Pittsburgh, the smallest of the Big Eight workers that they can either pay $250 million in deduc­ producers, is on the brink of bankruptcy. Wheeling­ tions from their wages over 15 to 20 years to buy the Pitts, which has 4.4 million tons of capacity, lost $8.7 plant,or National will close the plant; and National will million in the first quarter of 1982. It is currently make no capital improvements before it sells. holding talks with Kobe Steel, Japan's fifth largest This is policy among the Big Eight. A survey of steel-maker, in a bid to avoid bankruptcy with a Kobe other steel companies shows: buyout. • Crucible Steel of Midland, Pennsylvania, a divi­ These five companies combined represent 10.9 mil­ sion of Colt Industries, closed down permanently on lion tons of capacity, or 7 percent of all U.S. raw steel Feb. 10. The 300,OOO-ton-capacity Crucible had tried capacity. 270 "cost-cutting" steps. For the companies designated to be survivors, there • McClouth Steel is the eleventh largest American will be rationalization, i.e., liquidation, on an even steel manufacturer, whose 2.2 million tons of capacity larger scale. Three of these-U.S. Steel, Armco, and in Detroit supplies General Motors. In late 1981,Mc ­ National Steel-have extensive "diversification" pro­ Clouth was forced to file Chapter 11 bankruptcy but grams. was still allowed to operate. On March 19, a group of • U.S. Steel, the biggest U.S. producer, will reduce 10 McClouth creditors-banks and insurance coman­ itself by a third to a half within the next five or move ies-refused any new financing. McClouth is now shut­ years as follows: ting down its blast furnaces, and a federal bankruptcy The Fairfield, Alabama plant, with 3 million tons of court judge has ordered that it must close permanently steel-making capacity, closed on June 15. U.S. Steel Sept. 1. announced that this plant, which has been Birming­ • Ford Steel is the tenth largest American steel­ ham's largest single employer, will not reopen until maker. Once owned by Ford Motor, this River Rouge, 1984. How did U.S. Steel choose the 1984 date? "The Michigan-based company with 2.8 million tons of ca­ company never plans to reopen the plant but does not pacity, was said by one leading financier to be a likely want to say so openly," said one source close to the candidate to "go belly-up" in two years. management. • Kaiser Steel, the ninth largest American steel­ Geneva, Utah, a 2.2 million-ton-capacity plant," will ma�er, with 3.2 million tons of capacity, most of it most likely be closed down soon," according to Joe concentrated at its main plant in Fontana, California Wyman. lost $437 million last year. After losing again in the first • The Southworks in Chicago and the Homestead, quarter of 1982, Kaiser announced in April that it will Pennsylvania plant, with 2 to 3 million tons capacity stay in business until early 1983 and then close down each, are also on the chopping block. Southworks used

FIGURE 3 American Steel Production Capacity & Imports (millions of net tons)

Raw Finished Total U.S. Imports as % Steel Raw Steel Steel Consumption of Total U.S. Year Capacity Production" Shipments tmports (exports deducted) Consumption

197 1 .... 154.8 13 1.5 87.0 18.3 10 2.8 17.8 197 5 .... 15 7.4 120.4 80.0 12.0 89.0 13.5 197 9 .... 15 5.3 13 6.3 10 0.3 17.5 115.0 15.2 1980 .... 15 3.7 111.8 83.9 15.5 95.3 16.3 1981 .... 154.3 120.8 87.0 19.9 104.0 19.1 1982 .... 15 1** 90 ** 68.1 17.9 83.9 21.3 (Jan.·Apr.)

" Not all raw steel produced is used. Some gets filed off when the steel is shaped into a product; some does not meet specification standards, some is spilled, etc. Roughly, for every four tons of raw steel produced, three tons are fashioned into finished steel products. "" Estimate

Source: American Iron & Steel Institute

Graphics courtesy of New Solidarity

EIR July 6, 1982 Economics 9 to employ 15,000to 20,000workers . As of June 10, both tion, and obtain a sharp drop in steelworkers' wages. ill these plants were made divisions of U.S. Steel's plant in The United Steelworkers of American will be asked to Gary, Indiana, which is one of the few plants slated for give up wage and benefit concessions in exchange for continued production full blast. American Express's the steel companies bringing anti-dumping and-subsi­ Wyman reported, "Gary will continue to make raw dization suits to "save their jobs." steel. The iron and steel furnaces at both South works Robert Crandall, the steel expert for the liberal and Homestead will likely be closed down for good. Democratic Party think tank the Brookings Institu­ Some of the mills at these plants may be kept working." tion-on which AFL-CIO president Lane Kirkland sits The Pittsburgh area's Braddock and Edgar Thomson as a board member-argues that American steelworkers plants, both rated I-million-tons-plus capacity, will make 70 percent more than the average American probably be shut down permanently," according to a factory worker. At most, says Crandall, American steel­ New York steel analyst. workers should only earn 12 to 25 percent more than At the fe w plants it plans to keep open, U.S. Steel the manufacturing compensation average. This would has stopped most capital improvements. Said one exec­ mean a 30 to 40 percent steel wage cut. utive "We are going crazy. People are in a panic. I've Both Brookings' Crandall and American Express­ been told to sell steel below the cost of production just Shearson's Wyman happily expect that no new integrat­ to keep up market share. I'm doing that. But then ed steel plants will ever be built again in the United everybody at all the steel companies is doing that." States, and the shutdown of all but a few of the existing Wyman explained that once the large steel compa­ ones. Steel in the United States will be produced at nies have rationalized, "they will compete against one electric furnance mini-mills that have two distinctive another. They'll cut costs until one goes belly-up." features according to Crandall: first, they are non-union All told, 40 to 50 million tons of America's 151 and pay half the union steelworker wage rate; second million-ton capacity-or one-third-will be liquidated they use scrap steel-old car hulks, or wasted steel-as in the next three to four years . their main input. In a world division of labor, the United States will increasingly become a non-unionized The imports myth workforce, recycling other nations' scrap steel. Trade After looking at this pictures, any American who war is the pressure to work out an agreement to reduce continues to believe that imports are responsible for the capacity worldwide along these lines. industry's problems should be tested for a room-temper­ There is no reason to accept the underlying philoso­ ature I.Q. phy now gripping the steel industry: that at best the U.S. Steel arid several other producers filedsuit with goal is capturing a share in a shrinking market. In fact, the Commerce Department last year, chargiiig that the U.S. capacity is too small, were the United States to European steel-makers are dumping in the United undergo a real recovery. States at below-production cost, and that European The elements of that recovery have been outlined by governments are subsidizing their countries' steel indus­ EIR founder Lyndon LaRouche, in his fo ur-point pro­ tries. Although Europe exports a grand total of six gram for the National Democratic Policy Committee. million tons of steel per year to the United States, Big LaRouche advocates cheap, abundant credit for steel, Steel claims this is the reason American steel output is mining, construction, and other productive industries, falling. and at the same time, the e�tablishment of world gold­ In a future installment of this report, EIR will based monetary system led by the United States. This analyze the real import-export situation. Here, we brief­ would provide the prerequisites for mammoth indus­ ly assert that imports could never have caused the steel trialization projects, including the construction of shutdown. Consider this: in 1979, when Paul Volcker hundreds of nuclear power plants for home and for took office, American finished steel production was 100 export; the construction of the immense North Ameri­ million tons. For the first four months of 1982, it can Water and Power Alliance (NAWAPA) to bring averaged 68 million tons. In 1979, total imports in the Alaskan and Canadian water to and irrigate the U.S. U.S. were 17.52 million; for the first four months of West and Midwest, as well as parts of Mexico and 1982, they averaged 17.86 million tons on a annualized Canada; an expansion of capital-goods exports (rich in basis. Finished steel production has fallen by 32 million steel use) by several hundreds of billions of dollars every tons, but imports have risen only 34,000 tons. Is it three to five years. possible that 34,000 tons of imports could have caused The steel bill of materials needed for this scale of United States steel production to drop by 32 million production suggests that the United States will at least tons? have to double its steel capacity by the year 2000, Why is U.S. Steel screaming about imports? To employ 500,000to 600,000 production steelworkers, and force punitive competition and worldwide rationaliza- put the existing steel plants on full time.

10 Economics EIR July 6, 1982 INTERVIEW

Robert Triffin foresees global currency blocs

EIR Economics Editor Laurent Murawiec interviewed summit's finalstat ement on multilateral surveillance? Prof Robert Triffin, architect of the post-war European Triffin : There is no change in the policy of the Reagan Payments Union and arch-proponent of regional currency administration concerning the Third World. In Europe, blocs, on June 17 at the European Community's Brussels little change. The banks are running out of steam, they headquarters,where Professor Triffin is a consultant to the fe ar that an IMF and/or World Bank intervention will European Monetary Commission. Now at Louvain Univer­ be necessary to prevent the whole shebang from blowing sity in Belgium, Professor Triffin,formany years professor up. But the Reagan administration's attitude with respect at Yale University, was one of the first economists to warn to the World Bank's affiliates is such that the internation­ of the crumbling of the u.s. dollar's dominant role in the al institutions will suffer a severe lack of resources. At a post-war period. conference in Geneva in the last few days, some Ameri­ Early in the 1960s, Professor Triffin-correctly fore­ cans very close to the administration, Wallich, De Vries, casting the dollar collapse that followed at the end of the stressed that the intervention of the IMF must be mainly decade-propounded a reversion to the old John Maynard one of conditionality, with a strengthened surveillance, Keynes plan for the International Monetary Fund, i.e., to rather than one of financing. What matters in their view make the 1M F a full-fledged central bank issuing its own is surveillance. [William] Hood, the Research Director world currency. Failing that, he has, in recent years, of the IM F, had a different standpoint, he thought that worked for the evolution of a European monetary bloc the principal weakness of the 1M F's surveillance policy is opposed to the dollar. that until now it has never been seriously applied to any Unlike the European Monetary System as conceived by of the big countries, to the policy ofthe big countries, the West German Chancellor Helmut Schmidt and former United States in the first place. But, it is the U.S. interest­ French President Valery Giscard d'Estaing, Professor rate policy that determines in large part the policy of Triffin saw the European bloc as an instrument to dictate those weaker countries on which there is more surveil­ central bank policy to various national governments, a lance! position still held at the European Monetary Commission. Murawiec : That was debated at the Versailles summit. Schmidt and Giscard by contrast saw the EMS as the Triffin : The administration is not of one mind. The Fed "seed-crystal of a new world monetary system" for the definitely wants IM F or multilateral surveillance of the expansion of international trade. U.S. At the present moment I am rather skeptical. What In this interview, the Belgian economist concludes that was mentioned was the desire of the IMF to review the world must break up into competing blocs, under conditions of a dollar debacle, when "there is no solution" multilateral surveillance with the Big Five countries, in for Europe and Japan .. except to make themselves indepen­ the form of meetings between de Larosiere and the Big Five ministers. Until now the meetings were separate, so dent of the dollar." Excerpts follow. the idea is to bring them all under one roof, simultane­ ously. What intervention there has been on the foreign Murawiec: What is your view of the international mon­ exchange markets by the U.S. was more Madison Ave­ etary situation, especially in view of the recent Versailles nue than substance.

EIR July 6, 1982 Economics 11 Murawiec: What about the central banker's recent, in­ INTERVIEW sistent warnings of chain-reaction of debt defaults and bank failures? Triffin: No major country will allow one of its big banks to go bankrupt.When subsidiaries based in Europe will run into trouble, the head offices will bail them out. If the head offices are in trouble, the central banks will refinance them, to refinance the country that would German export chief otherwise go into default or be compelled to delay its payments. In the U.S., the Fed will refinance. So,there sees markets shrink will be no debt collapse,bu t renewed,ma ssive inflation­ ary financing. "By the end of 1982,"says H. A. Sieman,mana ger of the Now, to come back the situation of the currencies, Federal Association of Exporters, "West Germany will there was a majority of opinion at the Geneva conference have an export surplus, but we will be the victim of an [at the Center for Monetary Research of the Graduate optical illusion, because this surplus will reflect neither Institute of International Studies-L.M.] that interven­ our real industrial competitiveness, nor the real condition ings on the foreign-exchange markets cannot succeed, of world trade." they are not the key, what is key is the policies that go In discussion with EIR's George Gregory in June with them. But this brings immediately problems of from his Bonn office,Herr Sieman said he is extremely national sovereignty, budgets etc. That's the crux.Con­ pessimistic."In dustrial countries must take action to put sultation on the realignment of basic national policies. developing nations back into a position where they be­ But there,persp ectives are still unclear. come once again potent purchasers of industrial goods, or we will have a simultaneous explosion of the econom­ Murawiec: What could ensure that this happen? ies of the Third World and industrial countries.The main Triffin: Things will have to break apart for governments reason for our pessimism is debt-in too many countries to be convinced. It's a fundamental problem.It 's that of in the world market, export earnings are far lower than the United States in particular. Look at this absurd payments on principal and debt service." situation: when U.S. inflation goes up, the dollar goes For the last several years, the West German economy up, because the markets expect a stricter Fed policy to has survived on its exports, helped along for the most result. This is absurd. In the short term,it creates some part by an artificially cheap deutschemark, itself caused more leeway for a strengthening of the dollar-which by high U.S. interest rates. This year, while the German makes it even more vulnerable. Bundesbank has "fine-tuned " progressively dropping interest rates here to maintain economic activity at least Murawiec: In sum, the general attitude among central at the stagnation level, West German imports are drop­ bankers and so fo rth, is that a depression with a total ping at an annual rate of 6.5 percent. financial shakeout is inevitable? Once the dollar falls-and Herr Sieman has no doubt Triffin: Yes, many have taken this attitude. It's their that it will-"then people will see that we have been only hope to see things truly change. Any stabilization, selling on the back of a cheap O-mark." In reality, they say,mu st first go through a stabilization crisis.... German exports are suffocating under debt,and German markets are increasingly turning into war zones. Murawiec: This is the triumph of Friedrich von Hayek In Latin America, "The most important countries for then? us were Brazil, Argentina, and Mexico. But with the Triffin: Yes, this is the prevailing trend, with a meek Falklands conflict, the atmosphere of economic relations rearguard fight waged by the Keynesians. is so poisoned that major projects or investments are now hardly imaginable." And the stupidity of the British­ Murawiec: 00 you see any initiatives coming to try to enforced European Community embargo against Argen­ influence this situation, in spite of this? tina is that "there is no case in which such sanctions have Triffin: Tindemans stressed it quite ferociously, Ver­ ever had the desired political effect. The only significant sailles did not ch ange one iota to the policy intent of the effect of such sanctions in this phase of world financial Americans. For the others, Europe and Japan, there is crisis is to further contract world trade." no solution, to make themselves independent of the West German exports to OPEC last year grew by 53 dollar, and start with that proposal of an interest equali­ percent to nearly 35 billion OM; to Iraq the growth of zation tax to make European interest rates less dependent exports was over 100 percent, primarily in capital-goods on the U.S. rates, then add capital controls.... categories.Th is year, Iraqi income is off 72 percent, and,

12 Economics EIR July 6, 1982 since Iranian forces took Khorramshar the government export guarantees called Hermes insurance have been Currency Rates lifted. The Association of Wholesale and Foreign Trade, linked to Herr Sieman's association, estimates that 10 billion deutschemarks in contracts to Iraq are blocked as The dollar in deutschemarks a result. Otherwise, Nigerian income is off 27 percent; New York late afternoon fixing West German firms are involved in major industrial G:I1 projects there. April data show that bookings for capital �--T �! goods are down by 11.4 percent from April 1981, and o--r i : total industrial orders for export are down 9.4 percent. �T---l--- - · -f-----+ - "The Eastern European countries are obviously not the place where we are going to findan alternative to our --- business with Argentina," Herr Sieman said. The high 1::1 �______i ___--'- _____ " ___ --'-J_ "--LLJ volume of Eastern debt per se is only part of the problem. �' 5/5 5/ 12 5/ 19 5/26 6/2 6/9 6/ 16 6/23 Eastern European countries have been maneuvered-or have maneuvered themselves-into "a very unfortunate maturity bunching of debt payments. " Seventy percent The doUar in yen of Soviet debt comes due in 1983. New York late afternoon fixing As fo r the United States, Herr Sieman says German

exporters do not want to think beyond the end of 1982. 2-=-50 __t-- -T---r-_! -r------1 r= +- , . ------.-,'---H---rt-t---< Plant-construction orders have collapsed, although "we 240 I are still selling a decent volume of machinery ...for the ------::;;;1----"+----+---+---++--+-+-1-1 moment, and our steel people are doing so well,they all have anti-dumping suits on their heads. " --t� -.•. : _- - _- L:::�:.:�:- - West Germany sells 13.1 percent of its total exports I . -.------i-H---rt--l to France. Here exports are riding on French inflation and,ag ain,the cheap deutschemark. "But the French are 5/5 5/12 5/19 5/26 6/2 6/9 not going to be able to avoid a devaluation of the franc. How hard our exports get hit will depend on how large the devaluation is,b ut we will get hit." The dollar in Swiss francs In the past, the government has used the Hermes New York late afternoon fixing export-credit insurance system to help exporters open 2.10 new markets where the economic risk was high, but _�i __=L_ prospects good. "What we fear now is that Hermes risks 2.05 will no longer be judged on economic criteria,but rather ---f-�J----- on criteria on a scale of religious, racial, and political �I ---1---�++---+-____+_+_t---+--+-l priorities. " Four or five years ago, only 30 percent of German exports to the Soviet Union-about 5 percent of total exports-were insured,"b ecause their business was 6/2 so solid. No one doubts that they are still economically solid, but the political risks have been raised," and so no one will go into Soviet exports without insurance cover­ The British pound in dollars age. "The Falkland crisis is an example of the same New York late afternoon fixing thing," he claimed, criticizing his own government's having bowed to British demands. "Argentina is a rich 1.85

country, and there would be no reason to stop Hermes 1.80 guarantees unless one thought there was an immediate danger of direct war with Argentina." 1.75

Herr Sieman says that there is no justification for the 1.70 complacent belief of German banks that they will just continue to finance exports. "Switching from finance 1.65 credits to supplier credits does not change much," he 5/5 5/12 5/19 5/26 6/2 6/9 6/ 16 6/23 points out cautiously, "not in a threatened worldwide ...rece ssion. "

EIR July 6, 1982 Economics 13 Inside Canada by Pierre Beaudry

A breakaway ally scenario and the next general elections are in How many bankrup tcies can Canada affo rd before it rejects 1984. The second, and more prob­ able option, would be drastic u. s. interest rates and imposes controls? measures to break the Canadian economy away from the United States. Trudeau watchers say this option is already being seriously considered. Canadian bankers and financial minion Bank, and William Mulhol­ Following a report from the Los pundits have started screaming that land, chairman of the Bank of Angeles Times on May 23 that Tru­ "a default crisis" similar to 1929 "is Montreal, strongly urged Ottawa deau may be "willing to cut Cana­ almost inevitable," unless interest to lower interest rates. da's ties to the American economy" rates go down now. Two states of M ulholland warned of general­ by enforcing some kind of "curren­ affairs can in fact develop. Either ized bankruptcy: "The proportion cy exchange controls, " the Mon­ Canada soon becomes the first ad­ of pre-tax cash flow of industry in treal Gazette editorialized on June vanced-sector country to go belly­ Canada going into interest pay­ 21 that, "if exchange controls are up in a 1929-style depression, or ments in the fourth quarter of 1981 the price of lower interest rates, so Trudeau and his gnomes will sever was 66 percent," he said. "The fig­ be it. " the Canadian economy from its ties ure for the last quarter of 1980, one Under such an option, Trudeau with the United States and "man­ year earlier, was only 25 percent." would also have to impose draconi­ age" the crisis . The Canadian economy is in­ an wage and price controls and re­ It was on June 9, during a deed close to plunging over the pre­ flate the Canadian dollar, that is House of Commons inquiry on cipice. Compared with a drop of7.4 print more money. As things stand banks, that the scenario started to percent in the U. S. economy, the now, the money supply is close to $2 unfold. The background is the po­ industrial production of Canada billion below the target range set by tential collapse of big companies has had a year-to-year drop of 10.4 the Bank of Canada for this year. such as Dome Petroleum, sending percent, the worst of all advanced Thus, according to Seymour Fried­ some big banks such as the Canadi­ industrialized nations. According land of the Gazette. in order to an Imperial Bank of Commerce to the Finance Department, the prevent big corporations from (CIBC) over the edge. The number country's public debt is now at $122 going under, Canada would have to of bad loans reported by Canadian billion, close to $5,100 for every print up to $3 billion, bringing banks are expected to double this man, woman and child. Figures prime rates down by about four year to C$I.5 billion. from the Bank of Montreal show points to 14 percent. However, At the hearing, the chairman of that the current account deficit fo r should the Bank of Canada decide CIBC, Russell Harrison, warned 1981 is $6.6 billion and the national to print money, it could collapse the that his bank was expected to "lose debt payments for this year will Canadian currency. This might be $327 million this year in bad loans, reach $18 billion. An accelerating the pretext to impose exchange more than its entire 1981 profit," rate of bankruptcies, a post-de­ controls. reported the Toronto Globe and pression record of 10.6 percent un­ If Trudeau enforces exchange Mail. Yet, Harrison pleaded in fa­ employment, inflation over II per­ controls, it will have an immense vor of continued high interest rates, cent, and the Canadian dollar at affect on the United States, since alleging that if they were lowered, .77 U.S. dollars and still going Canada is its biggest trade partner. about $130 billion would leave down, plus interest rates now at 18 Gazette editorialist Joan Fraser Canada. percent, are forcing a policy shift. said privately that the worst that Speaking for the Commerce's Trudeau may be fo rced to re­ could happen to the United States, big competitors, on the other hand, sign; but this is unlikely, since he although she found it unlikely, Gordon Bell, president of the Bank recently fired the last pro-growth would be if Canadian exchange of Nova Scotia, Douglas Peters, officialswho could raise opposition controls were to entail a "genuine chief economist ofthe Toronto 00- within his majority government, total debt moratorium."

14 Economics EIR July 6, 1982 EnergyInsider by William Engdahl

Pentagon pushes new oil fraud currently supplies the largest share A study being pushed by some moles in the DOD echoes the of Germany's needs, at 37 percent, and Holland is expected to reduce CIA 'Soviet shortages ' scandal of April 1977. this amount by the end of the 1980s. A highly placed source at the Defense Intelligence Agency (DIA) who had actually studied the Bryen/Perle report said diplomati­ A little cabal under the direct'su­ Charles Percy sit. Richard Perle cally, "I frankly did not think too pervision of the Assistant Secretary was Jackson's top aide before mov­ much of it." A number of DIA fo r International Security Policy, ing to DOD last year.Af ter consid­ memos have gone to the White Richard Perle, is promoting a fraud erable inquiry among knowledgea­ House which document the fact which threatens to cause greater ble oil-intelligence sources, I was that we, the United States, as one long-term damage to the credibility surprised to find that a report as source put it, are "shooting our­ of the U.S. intelligence establish­ potentially earthshaking as Bryen's selves in the foot" when we an­ ment than did the infamous April had gone practically unnoticed. nounce a ban on licenses of export 1977 CIA report, "The Internation­ The U.S. Geological Survey is of certain turbines, compressors, al Energy Situation." in the midst of an in-depth survey of and pipe-laying equipment to build The current scandal involves a North Sea oil and gas resources. the $45 billion Siberia project. report issued by a certain Dr. Ste­ The director of that study, Charles Engineering sources at GE, one ven Bryen of the DOD Office of Masters, called the allegation by of the U.S. companies involved in Trade and Security under Perle. Bryen, "rather absurd on the sur­ turbine licensing for the pipeline, This report, first leaked in public face." Masters, who has pored over frankly state that if the U.S.do esn't testimony by Bryen on May II to extensive geological data, stated allow GE export licenses, the Sovi­ friendly members of the Senate that the gas reserves, for example, ets can get the machinery easily Subcommittee on Investigations, in the North Sea are on the order of from converting aircraft turbines, claims that the North Sea contains "tens of trillions of cubic feet, not using seven instead of three of the far more oil and gas than had been hundreds of trillions." By compari­ larger GE turbines. Further, relia­ thought: what a source in Bryen's son, he noted, the Soviet Urengoi ble intelligence sources report that office said was "two and a halftimes field alone contains more than 200 the Soviets have already "reverse­ the reserves of the United States," trillion cubic feet, a full order of engineered" the GE turbine design claiming that this is sufficient to magnitude larger than anything and produced two prototypes. replace the European supply of So­ known in the North Sea. The total But I am convinced such dis­ viet natural gas from the West Sibe­ U.S consumption of natural gas crediting is precisely the intended rian Yamal region. last year was about 20 trillion cubic effect. Bryen was an aide to Sen. Whether this remarkable reve­ feet. Frank Church when the latter was lation was instrumental in persuad­ The magnitude involved in the busy launching witchhunts against ing President Reagan to abruptly U.S.S.R.-European natural gas the traditional U.S. intelligence reverse his Versailles pledge to deal could reach as much as 3.5 community in the 1970s. In 1979, West Germany and the other U.S. trillion cubic feet (tct) per year to Bryen was caught passing U.S.mi l­ allies on June 18 is not certain.The Europe. A new $2 billion Norwegi­ itary secrets to a person at the Isra­ fact that such information is being an North Sea gas transmission sys­ eli Embassy. He resigned and the circulated by government officials, tem to continental Europe, by com­ affair was hushed up. His boss, however, is an issue of national se­ parison, will deliver about 0.245 tcf Richard Perle, also places evident curity as well as energy policy. per year beginning in 1986.And the London-Israeli intelligence loyal­ The Bryen report was first float­ Dutch North Sea gas fieldsare ac­ ties above those of this nation.Perl e ed in testimony before the Senate knowledged even by the Dutch is a member of the elite Interna­ Investigations Subcommittee, on government to be depleting and tional Institute of Strategic Studies which Henry "Scoop" Jackson and past their peak output. Dutch gas in London.

EIR July 6, 1982 Economics 15 Agriculture by Cynthia Parsons

FmHA dries up the dairy industry enough equity. FmHA lending to the dairy industry must be constricted, says I questioned an official in the Washington, D.C. office of the Agriculture Secretary Block, to inhibit 'overproduction. ' FmHA about this case. He said that Secretary of Agriculture John Block was concerned about dairy overproduction, reporting that Block has kept price support levels For over 40 years, the Farmers "overproduction," taking the posi­ even for three years in a vain effort Home Administration (FmHA) has tion that it is a glut of milk and to stem production. been the lender of last resort for dairy products on the market, and The official also reported that in farmers who are unable to borrow not high interest rates, that are the April Block sent a memo to all elsewhere. But FmHA has been not cause of the industry's problems. FmHA area supervisors urging just a money lender for hard­ The administration asserts that caution on loans because of the pressed farmers. It has provided ad­ the overproduction is the result of oversupply situation on the dairy vice for fa rmers, operating loans the system of fe deral price supports, markets. The gist of Block's memo fo r their yearly purchase of seed which for the past three years has was that it was preferable to lend to and fe rtilizers, and infrastructure­ set milk prices paid to the farmer at farmers to help them meet their creating credit to build new barns $13. 10 cwt (hundredweight), and is yearly operating costs, rather than and silos and houses, for rural de­ now threatening to drop federal to lend for capital investment and velopment, sewage systems, and supports to $12.00 on Jan. 1, 1983. improvement. farm-related businesses. According to the American Agri­ The FmHA official then as­ Now, in a period of high interest culture Movement, this will result sured me that the yearly $ 100,000 rates which have rendered a grow­ in the bankruptcy of one in four insured direct operating loan was ing number of farmers unable to U.S. dairyfa rms. the most common type of loan now even pay off their back debt, the The current price support sys­ being made by the agency. In all FmHA is holding back all ocated tem guarantees dairy farmers only cases, the "best managers"-that is funds that would in the past have 75 percent of parity-the farmers' of financial matters and not pro­ been used to help out such farmers. total production costs plus an oper­ duction-are being given the most In 1978, Congress provided $600 ating profit. Although 100 percent consideration, he said. million for Economic Emergency of parity was never established, the Has the FmHA, on Secretary loans for farmers suffering hard­ 30-year-old federal price support Block's orders, abandoned its tra­ ship after the drought. Yet not one system has allowed modernization. ditional role as a provider offederal penny of this money has been allo­ One New York State dairy credit to American farmers who cated since fiscal year 1981. I n fact, farmer was recently refused an wish to increase their capital invest­ the administration has asked the FmHA operating loan by the agen­ ment, efficiency, and production? FmHA to tighten its regulations cy's area supervisor, who had spent This seems to be the case. regarding the use of these funds, 15 minutes inspecting the fa rm last "Many farmers do not under­ with a view toward terminating this year. This fa rmer is carrying a stand that a new tractor is not just a loan program by 1983. heavy debt load, but is by no means pretty piece of machinery, but an In the case of the dairy industry, bankrupt, or near delinquency in integral part of the process of pro­ the administration is using the loan payment s. His farm is well­ duction," the ab ove-mentioned FmHA in a way that contradicts the managed, the cows are clean and New York State dairy farmer told agency's own guidelines and oper­ healthy, and he earns enough to pay me. "They don't understand that ating principles, in fa ct making it a $200,000 yearly in debt payments. without increased modernization, party to the dismantling of Ameri­ Yet his application fo r an FmHA you can't have increased ef­ ca's high-technology dairy indus­ loan to consolidate his debt and buy fi ciency ." try. The administration is targeting a new tractor was rejected on the Neither does the FmHA any­ the dairy industry on the issue of grounds that he did not have more.

16 Economics EIR July 6, 1982 Trade Review by Mark Sonnenblick

Cost Principals Project/Nature of Deal Comment

CANCELED DEALS

$800 mn. U.S.A. from General Public Utilities (GPU), the owner of Three Canada has attempted to Canada Mile Island, has cancelled letter of intent signed with supplant the U.S. energy Ontario Hydro last November for 1,200 MW power sources closed by envi­ cable under Lake Erie. The cable was to move coal- and ronmentalists. Now reg­ nuclear-generated power from the western peninsula of ulatory agencies are en­ Ontario to Pennsylvania and New Jersey. GPU said the forcing acid-rain com­ project fe asibility damaged by financing problems and plaints against coal sta­ regulatory delays . tions in Canada. GPU has been fo rced to shed most of its capital-in­ vestment plans as anti­ nuclear forces raise its TMI costs.

NEW DEALS

Panama from Panama's first auto asssembly plant will be opened by Brazil exported over $2 Brazil Gurgel, the Brazilian jeep manufacturer, in associ ation bn. in transport material with Panama's state-owned Compania de Financia­ in 1981, including $300 miento Nacional and a group of Panamanian compa­ mn. in CKD (unassem­ nies . Gurgel will hold 52% ownership and Panamanian bled auto) kits and equal public and private sectors 24% each. Plant will turn out amount in parts for 1,800 vehicles per year, mostly jeeps. "world cars." But Gur­ gel is probably first Bra­ zilian company to as­ semble abroad. South­ South cooperation.

$220 mn. Portugal from Port for Sines petrochemical and industrial complex in Deal arranged on state­ Brazil/Italy Portugal to be built and equipped by consortium of state basis provides op­ Brazilian and Portuguese builders and equipment mak­ portunities for national ers in a state-state deal which provides contracts to capitalists. Mendes Jr., private sector companies. Brazil's private Mendes Jr. with several bn. dollars construction co . will work with Portugal's capital goods worth of experience in manufacturers Mague, Somague, and Equimetal and Iraq and Africa , gets Italy's Condott d'Acqua to build the cargo and mineral fi rst European job. Bra­ docks. Cranes, tracks, and other loading equipment will zilian technology will be be built jointly by Brazil's largest private capital goods transferred to Portugal. concerns, Villares and Bardella, together with Portu­ South-North coopera­ gal's Socometal and Equimetal. tion.

U.S.A. from Hitachi, Ltd. has signed contract with National Ad­ The Hitachi computer is Japan vanced Systems Corp. for export of Hitachi's very large­ compatible with IBM s.cale M-280H computer to the U.S. market. NAS, a systems .... subsidiary of National Semiconductor, will market the computer in the U.S.

U.S.S.R./East Soviets setting up rail-ferry system between Lithuanian West Germany refused Germany/ port of Klaipeda and East German port of Sassnitz. Soviet offers for rail-fer­ West Germany Purpose is to get around Polish bottlenecks. Shipments ry terminal there last of up to 2 mn. tpy will include Soviet trade with Western November during Polish Europe, especially West Germany. crisis because of U.S. "Polish" sanctions pres­ sure, but Bonn has of­ fered to help upgrade and electrify East Ger­ man railroads fo r extra loads.

EIR July 6, 1982 Economics 17 BusinessBrief s

Treasury Market the congressional intent of the 1978 allowed to invest only in A or AA rated Emergency Farm Act passed to alleviate commercial paper, so if a corporation in A pre-panic atmosphere drought-distressed fa rmers. trouble fe ars its rating will drop, it will The judge ruled that Congress in­ place as much commercial paper as pos­ clouds dealers and buyers tended that the Act should give holders sible as a precautionary measure and of consolidated Farm & Rural Develop­ drive rates up-which is precisely what is As the present rise in u.s. interest rates ment Act loans the same chance for de­ happening now. Then if there's a finan­ takes its course, the chances for the out­ fe rrals as holders of the agency's rural cial crisis anYWhere, not just a bankrupt­ ' break of a major bankruptcy approach housing loans, which can be deferred, cy in the U.S., and a rush into quality 100 percent. One factor promoting a vol­ "due to circumstances beyond the bor­ paper, the commercial paper market will atile upward movement in rates, bankers rower's contro!''' collapse because investors will run out of say, is the effect of the Drysdale bank­ Farmers remain in desperate need of it. Then corporations w.i ll have to call on ruptcy in May. cheap credit to cover operating costs and every bank credit line they have, and the Every firmis now suspect; incredibly, make investments. Moratoria, welcome banks will have to issue Certificates of the chairman of Warburg Paribas Beck­ as they are, merely provide breathing Deposit to fu nd them . And since CDs are er, one of the biggest American security room. Congress has yet to address the better quality than commercial paper, houses and primary dealers in govern­ basic problem. the money market funds will buy them ment securities, was compelled to call a instead of commercial paper, collapsing press conference June 23 to announce a the paper market further, and triggering $2 million loss for the past eight months, a wave of bankruptcies among corpora­ to scotch persistent rumors that the Banking tions who ultimately can't get funds." house was nearly bankrupt-rumors The banker added, "All it takes is a which had cut into its business. Vo lcker's deregulation report that one money-market fu nd is Dealers will no longer take positions holding commercial paper from a com­ on Treasury securities (borrowing short­ is taking its toll pany that has gone bankrupt, and there term to finance long-term security inven­ will be a run out ofthe funds comparable tories), for fe ar that a loss on inventory The system of financial deregulation to what happened to the banks in 1934." would turn into rumors that could ruin which grew weed-like under Federal Re­ them; in this pre-panic atmosphere the serve Chairman Paul Volcker (although market is entirely retail. And retail buy­ begun by his predecessor Bill Miller) has ers will not touch the market until they run out of room. In ternational Trade feel it has troughed, building in a sharp The effect of deregulation has been to volatility to the present upward interest­ move borrowing out of normal banking Europe, Japan blast rate movement. channels and into unregulated, reserve­ free markets which have burgeoned as a U. S. pipeline curbs result, including Eurodollar borrowing by U.S. corporations and commercial European and Japanese government and Agriculture paper. The latter has ballooned by $35 business leaders have issued strong de­ billion in the past year to $176 billion nunciations of the administration's new 'Cheap credit, not outstanding, supported to a decisiv!: ex­ round of curbs on exports and licensing tent by the ballooning money-market of equipment to be used in the mam­ just moratoria' funds, about one-third of whose $200 moth Soviet-Europe gas pipeline. billion in assets are in commercial paper. Speaking on behalf of West German As a result of an order by U.S. District Instead of reserve-protected bank depos­ Chancellor I' elmut Schmidt, govern­ Judge Anthony Alasimo, the FmHA was its and secured bank loans, the corporate ment spokesmdn Klaus Bolling branded enjoined in late June fro m foreclosing on sector is living off unguaranteed money­ the U.S. sanctions "violations ·of the any farm program loans in the state of market fund deposits and unsecured agreements reached at the Versailles and Georgia. commercial paper. Bonn NATO summits" which "hit not so Ruling in fa vor of a class action suit "The commercial paper market is a much at the U.S.S.R., but most of all at brought against U.S. Agricultural Sec­ hair-trigger which anything could pull," our own jobs in industries involved in retary Block and the FmHA by seven says one well-placed New York banker. this deal." Georgia fa rmers, the judge went beyond "What we used to call 'hot money,' short­ A spokesman for the the giant West the plaintiffs ' request by mandating the term money seeking high interest rates German utility firm AEG announced FmHA to grant debt moratoria without and safety, has gone into the money-mar­ that his firm might lose thousands of time restrictions to fa rmers in trouble. ket fu nds rather than the banks. jobs, while the German Federation of The suit had asked the court to uphold "By law the money-market funds are Machinebuilders termed the U.S. move

18 Economics EIR July 6, 1982 Briefly

• H.R.6636, which has 41 spon­ sors, mandates that the U.S. gov­ ernment should make no more loans to the Soviet Union, unless was a "blatant humiliation of Chancellor getting all kinds of support, including the Soviets agree to disarm anent Schmidt personally." the Black Caucus, many liberals, and the first. The bill was introduced by Japanese Prime Minister Zenko Su­ AFL-CIO." Lewis's aide stated that the Rep. Jerry Lewis, who says it will zuki told the Japanese Diet on June 22 House Foreign Appropriations Subcom­ have sponsors in the Senate. "We that Tokyo was dismayed and surprised mittee will hold hearings July 15 on put­ will also tell commercial banks by the U.S. move, but the [Japanese) ting Poland into default, at which the that under the bill if they lend to "government will take the necessary AFL-CIO will testify in favor. the Soviet Union and get into trou­ steps to have the project continued." ble with the loans the U.S. govern­ In a related move, Harald Kuehnen, ment will give the banks no finan­ president of the German Bankers Asso­ cial back-up," his officere ports. ciation, denounced the effort by the U.S. Econometrics Congress (the Kasten-Moynihan Bill) to • JAPAN'S Fujitsu Fanuc Ltd. declare Poland bankrupt. "East as well LaRouche-Riemann and General Motors Corp. of the as West must be primarily interested to United States announced June 24 help Poland's recovery," he declared. model-best track record the establishment ofajoint venture for the manufacture and sale of EIR 's LaRouche-Riemann model pre­ industrial robots, according to the dicted the performance of the physical­ English-language Japan Economic East- West Debt goods output of the U.S. economy fo r Daily, published in New York by 1982 far more accurately than any econ­ Kyodo News Service. The new New effort behind ometric model in the United States, the firm, called GM Fanuc Robotics model staff has announced. Corporation (GMF), was set up Moynihan Amendment Whereas Treasury Secretary Donald June 23 at Troy near Detroit Regan had twice prediced a recovery for with a paid-up capital of $10 mil­ President Reagan vetoed on June 24 the the first half of 1982, and other econo­ lion equally shared by the two fiscalyear 1982 Supplemental Appropri­ metric models are projecting industrial companies. It will initially produce ations bill, to which was attached the output increases for the year, the La­ robots at Fujitsu Fanuc's plants in Moynihan-Kasten amendment which Rouche- Riemann model accurately proj­ Japan, except for a numerically­ would have the U.S. declare Poland in ected that the continuation of Federal controlled printer system assem­ default on its debts to the U.S. The Pres­ Reserve Chairman Paul Volcker's aus­ bled near Detroit. ident used his veto because he disagrees terity will result in another downturn in with one part of the Appropriations bill, an economy already fu nctioning at • JIJI PRESS of Japan ran a the "Lugar housing subsidy," which depression levels. June 23 wire on EIR 's report that promised $3 billion for aid to housing Against a 6.4 percent reported decline U.S. trade representative William over the next five years; Reagan termed in the 1982 rate of physical goods output Brock wants Japan to raise its in­ it "budget-busting." compared with 1981, the LaRouche-Rie­ terest rates to the level of the A spokesman for Rep. Jerry Lewis mann model had forecast a 7 percent United States. JUI notes "He has (R-Calif.), the co-sponsor of the Moyni­ decline. launched a campaign to press Ja­ han-Kasten amendment in the House, Merrill Lynch Econometrics predict­ pan to boost the rates, Brock says stated June 24 that his group plans to ed a 2.7 percent increase in industrial in an interview in the latest issue of strip the "Lugar housing subsidy from production-a level that will not be the economic magazine Executive out of the overall appropriations bill, and achieved. Chase Econometrics predicted Intelligence Review. Brock criti­ resubmit it. We are confident that the a 3.8 percent increase; Wharton Eco­ cized Japan for placing restrictions President would sign such a reworked nomic Forecasting, a 3.9 percent rate of on credits by limiting the flow of bill, which would include the Moynihan­ increase; and Evans Econometrics, a 6.3 hot money, or short-term funds, Kasten amendment." Were the U.S. to cent rate of increase. for international investments declare Poland in default, a chain reac­ In contrast, in approximately half the through the so-called administra­ tion to defaults could ensue. 29 sectors analyzed by the LaRouche­ tive guidance. He stressed that the ' When asked what would happen if Riemann model for 1982, the model re­ free flow of funds, if realized, the President vetoed a stripped-down sults corresponded to economic perform­ should result in a rise in Japan's version of the Supplemental Appropria­ ance. EIR will lay out the fu ll respective interest rates. Low interest rates tions bill, the Lewis aide stated, "We will track records in a fo rthcoming issue. are the evidence of Tokyo's unfair submit it again on the very next appro­ The LaRouche-Riemann model was control on credits, he added ." The priations amendment. We are over the jointly developed by EIR economists article by Richard Katz appeared hump; we can get majority support for it and physicists from the New York-based in the June 29 issue. in the House and the Senate. We are Fusion Energy Fo undation.

EIR July 6, 1982 Economics 19 TIillSpecia1Report

How Helmut Schmidt could stay in power

by Michael Liebig from Wiesbaden

West German politics is presently undergoing a profound change. The survivability of the Schmidt government has become ever more doubtful since the Liberals in the Free Democratic Party under Foreign Minister Hans-Dietrich Genscher are driving toward an open break of the government coalition with the Social Democrats (SPD) of Chancellor Helmut Schmidt. This situation has absolutely nothing to do with a "normal" parliamen­ tary play of forces, wherein the SPD / FD P governing coalition has ostensibly been worn out after thirteen years, so that a new government, led by the opposition parties of the Christian Democracy, ought to take over power in Bonn. The Schmidt government and the SPD/FDP coalition on which it is based won a clear majority in the Bundestag elections in November 1980, and was thus given the mandate to form a government up to 1984. What we are presently witnessing in Bonn is a totally "abnormal" and "unnatural" process of the attempted overthrow of a legally elected govern­ ment. An international conspiracy is moving against Chancellor Schmidt, directed by such institutions as the Geneva-based Bank for International Settlements (BI S), its affiliated International Monetary Fund (IMF), and the City of London banks. This grouping, headquartered outside of the Federal Republic of Germany, is dictating the anti- Schmidt activities of saboteurs located in the U. S. Department of Defense, State Department, congression­ al offices, major media outlets, and think tanks, as well as the activities of the German political factions that are moving against the Chancellor's government. The "foreign" pressure is usually left out of account. What the new Secretary of State will do is crucial.

Why they want Schmidt out Schmidt's policy has always been ambivalent, even contradictory, and dangerously pragmatic, but it was always characterized by a certain strategic rationality and calculability. Despite all fo reign and domestic rotten political compromises, Schmidt insisted upon holding firm to a

20 Special Report EIR July 6, 1982 Schmidt with Leonid Brezhnev in Bonn. December 1981. If Schmidt moved to rally his country behind a reinvigorated war-avoidance policy based on East- West economic development. West Germans would respond.

policy of detente and East-West economic cooperation, a policy of rejecting monetarist deflationary recipes in economic policy, and a policy opposed to military In this section adventures in and against the Third World. That put the Schmidt government on a collision The anatomYJJf..a cons/!.iracy co urse with the dominant faction of the Anglo-Ameri­ Schmidt's enemies report on their can leadership, as that is represented by Britain's Mar­ activities against him ...... 23 garet Thatcher, Alexander Haig, or U.S. Federal Re­ serve Chief Paul VoIcker. Schmidt was hunted into West Germanv's 'Union ' /!.arties corners persistently by Anglo-American fi nancial cir­ Set to enforce 'Bruning-style' cles, personalities around the British government, with­ austerity ...... 28 in and on the periphery of the Reagan administration. The crises they cooked up, the NATO m edium missile The Free Democrats crisis, the Polish crisis, the war in the Malvinas, and the 'Swing party' that paves the way confrontation in the Middle East, were each utilized to to fascism ...... 29 undermine Schmidt's position. The present crisis of the Schmidt government is only The LeI! Social Democrats comprehensible in light of that background. Without Traitors in Schmidt's own party ....30 the massive support from the Anglo-American milieu, a Genscher and his liberals would not even dare to behave The Green PartY.. as they have in recent months. We document below how Stormtroopers for the scandals, revelations, and affronts were fa bricated, all of which lead back to London, New York, and new fa scism ...... 31 Washington. Once again: the cause of the present destabilization of the Schmidt government is only sec­ Interview ondarily a domestic political matter. The causes are The European Labor Party's Chairman primarily a function of an internationally coordin ated Helga Zepp-LaRouche on what will ' destabilization. happen if Schmidt fa lls ...... 33 It thus becomes very clear when we consider the phenomenon of the "Ham burg malia:' In German

EIR July 6, 1982 Special Report 21 post-wa� history , the "Hamburg mafia" was always the results of the June 6 Hamburg regional elections something of a political "kingmaker" of the Federal demonstrate this. But, with the necessary resoluteness, Republic. Compared with the Ruhr area, with the Rhein a broad-based support for a strategy of crisis-contain­ Main area or Baden-Wiirttemberg, Hamburg is neither ment and war-prevention can be mobilized in the Ger­ an economic nor an industrial power center. But, Ham­ man population. burg has the crucial lines of communication within Anglo-American centers of power, especially to London The dangers of Schmidt's pragmatism and the American East Coast. At the same time, the Furthermore, Schmidt must summon up his re­ "Hamburg mafia"has at its disposal an immense media sources and put an end to his pragmatic, tactical control through such publications as Der Sp iegel. Stern. maneuvering with the" adversaries within his own party. Die Zeit and the press empire of Axel Springer, Ger­ That goes especially fo r the chairman of the party, maoy's largest newspaper publisher. Brandt, and the proteges of Brandt, the "greenies" Thus, it is not at all surprising if the "Hamburg inside and outside the party. These green-fascist storm­ mafia" is now blowing the trumpets for a frontal attack troops against a democratic republic, that have been on the Schmidt government, only a few days after the and still are tolerated in the SPD, have contributed London Economist gave the official start signal for the fundamentally to demoralizing Schmidt's political base hunt, with the order that Genscher's liberals should now in labor and the trade unions . They have also therefore move to topple Schmidt. The officialspok esman of the contributed to giving Genscher the room he needs to "Hamburg mafia," Theo Sommer did the very same maneuver. thing in the pages of Die Zeit. Sommer did not restrict If Schmidt is not capable of this shift in order to himself to generalities. He detailed everything concrete­ offer his demoralized electorate a new perspective, his ly, all the way down to the exact point in time: July 7, fate is, of course, practically sealed. We do not want to the day on which Schmidt must accept or reject the 1983 awaken illusions, but Schmidt can survive in the present federal budget proposals of his FOP coalition partners. international crisis situation, the most dangerous since Genscher would have up to then to topple the Schmidt the end of the war, if he rises above himself in a certain government. Lo and behold, only days after Sommer's way. He has no chance on the basis of defensive call to arms, the FOP in the State of Hesse ended their pragmatism and concessions to cultural pessimism. coalition with Schmidt's closest ally in the SPD, state Even if the media claim the contrary, the German governor Holser Boerner. population is quite ready to respond positively. Genscher and the FOP now intend to use the What is the alternative to a Schmidt government? It deliberations on the fe deral budget as the excuse to is actually the same as it was in 1980: the Christian jump out of the coalition. They are demanding a series Democrat Kohl as figurehead and Bavarian Christian of drastic budget-cutting operations and other austerity Socialist Franz Josef Strauss as the actual power. The measures directed against the trade-union base of the combination Kohl-Strauss-Genscher is no more attrac­ SPD. We expect the FOP will take on this job with the tive today than it was a year and a half ago. The utmost of brutality and provocation. political and programmatic "alternatives" of the Chris­ The intended departure of the FOP from the coali­ tian Democrats are limited to an imitation of the worst tion depends upon two factors. First, Schmidt's foreign aspects of Thatcher politics and the Reagan administra­ and domestic adversaries would have to give the FOP tion: monetarism, austerity, and international confron­ water-tight survival guarantees, since there is a very real tation in a special mixture of ignorance and malicious­ possibility that Genscher's plunge can be a plunge into ness. Any sober evaluation of the politics of Kohl and the political suicide of the FOP. So, Genscher requires Strauss would end in a dramatic deterioration of the political guarantees as well as the financial support of domestic and foreign policy position of the Federal his Anglo-American friends. And he needs guarantees Republic, not to mention another crack in the potential from the Christian Democrats that they will split votes for war-avoidance. off from their own CDU constituencies in the direction As the German politician Helga Zepp-LaRouche of the FOP to keep the FOP alive as a party. These recently pointed out, people in Germany recognize conditions have not yet been definitively met. possibly better than they do in other countries what the Second, Genscher's game depends on how Schmidt connection is, between depression, political collapse, reacts. Schmidt still has reserves as a reliable, respected fascism and war. And as she elaborates in an interview international statesman. This is particularly the case in in this Special Report, if the moral and political reso­ the present situation of accumulated crisis spots and luteness is not summoned to learn from history, there East-West confrontation. Schmidt has lost the confi­ will be a horrible price to pay. It is in this sense that the dence of many because of his despicable behavior with Federal Republic is presently undergoing the most respect to British blackmail in the Malvinas war, and severe test of its history.

22 Special Report EIR July 6, 1982 elections in Schmidt's home state, Hamburg. A similar loss of face for the SPD is hoped for in the upcoming September elections in the state of Hesse. The NATO headquarters in Brussels controlled the deployment of The anatomy of the Green Party, through such agents of influence as • Petra Kelly, the protegee of NATO Secretary-General a conspIracy Joseph Luns, in these deployments. In the United States, Alexander Haig's State Depart­ ment worked behind Schmidt's back with opposition by, Lonnie Wolfe party leaders, up to the point of giving the green light for Schmidt's ouster. In the Defense Department, Undersec­ The road to Helmut Schmidt's ouster from office is being retary Fred Ikle, a member of a prominent Swiss banking paved by a group of conspirators directed from outside family, has coordinated with other DOD officials and of the Federal Republic of Germany. This group is led members of congressional staffs, to put "maximum pres­ by a clique of Swiss and London bankers, which has sure" on the Schmidt government and force its collapse. drawn all of its international assets into a centralized U.S. Ambassador to the Federal Republic Arthur Burns, deployment against the West German Chancellor. The himself an operative of the BIS, has worked behind profiles of West German political parties, leaders, and Schmidt's back coordinating and pressuring the opposi­ social institutions developed at such think tanks as the tion to break with Schmidt's economic program. London-based Tavistock Institute in the years following Inside Germany, these fo rces have coordinated with World War II are among the powerful weapons being the leadership of the Christian Democratic Union and used against Schmidt. the Bavarian-based Christian Social Union led by Franz At the top-most levels of the conspiracy are the policy Josef Strauss. The leadership of Schmidt's coalition part­ makers of the European oligarchy and their banking ner, the Free Democratic Party, has functioned as de­ interests in London and the Bank for International Set­ ployed assets of the conspiracy . tlements (BIS) in Basel. Their goal is not simply the The major U.S. media and most of the German press replacement of the Schmidt government, but as one have served as the propaganda and psychological war­ American-based source familiar with the thinking in fare arm of the conspirators. For example, New York London and Basel stated recently, the "shattering of all Times Bonn correspondent John Vinocur takes his cues German political institutions" and imposition of fascist from Burns and NATO headquarters. German publisher austerity on Germany. "This is the 1930s all over again," Rudolf Augstein, whose Der Sp iegel magazine promotes the source said. The fa scist transformation of Germany the Green movement, got his orders to publish a March is intended to pave the way for a similar transformation 1982 muckraking attack on Schmidt's trade-union base of all Western Europe and a re-organization of NATO. directly from former Secretary of State Henry Kissinger, Schmidt is viewed as the major obstacle to London and whom he met in New York. Basel's plans to use NATO for "out-of-area" colonial The conspiracy reaches into the highest echelons of looting expeditions and population warfare in the devel­ Schmidt's own Social Democratic Party. Party Chairman oping sector, and to plans for strategic bluff against the Willy Brandt, parliamentary caucus leader Herbert Weh­ Soviet Union. ner, and Deputy Chairman Egon Bahr, are all working The strategy of the conspirators has been to place behind Schmidt's back to force his ouster. Chancellor Schmidt into what British psychological war­ According to EIR's sources, the conspiracy has taken riors call a controlled aversive environment, under con­ place behind the back of President Reagan. Angelo tinuous attack both at home and from abroad. In late Codevilla, an aide to Sen. Malcolm Wallop, told an January, these sources were predicting that Germany interviewer in late January that the whole process could would be plunged into political chaos, provoked by the move much faster if only Reagan were out of the way. growth of Germany's environmentalist movement and Should Schmidt not be forced to resign, the conspir­ worsening economic conditions brought about primarily ators are prepared to remove him by other means. Earlier by the continuation of U.S. Federal Reserve Chairman this year, when it appeared that Schmidt might stabilize Paul Volcker's high interest-rate policies. They outlined himself, frustrated spokesmen for the conspiracy were a number of potential branching points that would weak­ talking about the possibility of Schmidt being assas­ en Schmidt's coalition government with the Free Demo­ sinated. Since the forces behind the conspiracy are the cratic Party and eventually pave the way for its break-up, same people wo control and deploy international terror­ the most important of which have been defeats for the ism, such talk is not wishful thinking. Chancellor's Social Democratic Party (SPD) in the Here we present the conspirators, in their own words, March 20 state elections in Lower Saxony, and the June describing their sabotage of the Schmidt government.

EIR July 6, 1982 Special Report 23 Who's out to stab Schmidt in the back, andwha t they say

January deals with the left. The German people hate the left, so A former top aide to the Senate Armed Services Com­ let's tar Schmidt with the left. mittee, January 1982 : "The CDU doesn't need a program "Of course we are coordinating with other people in because they are the opposition. It is Schmidt's job to the United States who think the way we do, and we all rule and when he fouls up, he pays the price and the CDU have the same contacts in Europe. There isn't one person gets the benefits. I'm almost tempted to make a compar� in the policy establishment that I talk to that doesn't ison to Jimmy Carter and Ronald Reagan. There is no want Schmidt out. There are other people in London doubt in my mind that [CDU leader] Helmut Kohl who have reached the same conclusion. We must make would do fine.He would certainly take a tougher stance Schmidt choose between NATO and the United States, on issues than Schmidt's waffling. and the Soviets. Ifwe force that choice on our own terms, "Our problem in getting Schmidt out is that since the then Schmidt falls and the SPD splits. That will happen State Department has the podium on fo reign policy and sometime this year, and we want to help the process since [White House aide] Dick Allen got kicked out, we along." don't have a spokesman fo r our viewpoint. Everybody February talks quietly and no one except Fred Ikle says anything An official of the Washington, D.C. office of the in pUblic. The Department of Defense is strong on German Marshall Fund, Feb. 1, 1982 : "Schmidt has wanting Schmidt out, but they are quiet now in pUblic." worked very hard at surviving, but he probably won't succeed. I think that he will get through the party con­ Angelo CodeviHa, intelligence committee staff aide to gress in April, but that he will run into deep trouble in Sen. Malcolm Wallop (R-Wyo.), Jan. 28, 1982 : We have the late spring. The real tests will occur in the state to take Schmidt out, but I'm afraid there is not official elections-Hesse and Hamburg are key, with Lower and public help from the administration. Reagan is Saxony less important because no one is expecting the locked on a policy course of saving Schmidt and he SPD to do well there. If Schmidt loses Hamburg or won't listen to reason. The State Department is con­ Hesse, however, he is finished. strained and Haig doesn't have the guts to take care of "It is the opinion of several people I know that two this problem anyway. As long as Reagan is around, we things will happen in the spring and summer in Germany: will have to take care of this problem through private an upsurge of Italian-style terrorism, and great mass channels. demonstrations of the Greens. The effect will be total "There are a fe w factors on our side . The Lower chaos and Schmidt will be horribly compromised. What Saxony and Hesse elections are coming up. Schmidt if the spinoff of terrorism in Germany was that people doesn't have to lose these elections, just do worse than began to worry about doing business there? That would people expected so that it appears that he is losing scare the Germans and they would blame Schmidt." strength. The way to do that is to make the SPD look like a McGovernite coalition, to seem that Schmidt is making A Heritage Foundation analyst, Feb. 6, 1982 : "There

24 Special Report EIR July 6, 1982 is no way I can see that Schmidt can last through 1983. I conventional nonsense-and convince themselves that don't like making bets, but I think it's pretty safe to say everything is alright. that he will be out by next year. There are two reasons. "I've been talking to people here, some of whom have One is the Euromissile deployment, which will create all talked to people in West Germany. Schmidt is out one kinds of hell on the SPD left, starting in the spring, but way or the other within six months. Either we get him picking up later in the year. Then there is the economy out or he becomes a lame duck. Everything is in place for which is falling apart. this. Schmidt will do poorly at the SPD congress. He will "I'm looking to the last round of state elections, the pass his resolution on the Euromissiles that reneges on ones in Hamburg. They happen late, and I think the SPD his initial agreement to deploy them. He has already will lose, unless the economy gets better. If that happens, compromised with the left and many people don't like the upper house will be deadlocked and Schmidt won't that. " be able to govern. Then Genscher walks out of the March coalition. " An official of the Washington, D.C.-based German Irving Kristol, leader of the Committee for the Free Marshall Fund, March 15, 1982 : "Schmidt doesn't like it, World, Feb. 9, 1982 : "Germany is a real mess and things but the fact is that he could never rule without Willy will get worse before they get better. My friends who talk Brandt, and everyone tells him this. Right now, Brandt is all the time to CDU and CSU officialssay that Schmidt keeping the party from flyingapart and making sure that is much weaker than he appears. He is a great actor, that Schmidt doesn't walk too far away from the left. There bastard, but he could still be toppled and we could still are really two SPDs-the old trade union-based group get a CDU-CSU government. that Schmidt comes from and the university-based social­ "The peace movement in Germany will be worse than change action-faction people. When Schmidt goes the anything we have seen, including the worst period during party will be transformed. It will move left and take a the Vietnam war in the United States. The Greens will be more aggressive position. I don't know how that would a permanent fe ature of politics in Germany, and there work exactly, but Brandt would take a role." will be terrorism ....I don't think Schmidt can live out A U.S. official of the Konrad Adenaeur Foundation, his term. You can always hope for such things. One way March 30, 1982 : "Press stories about a split between the or the other, he won't make it through." State Department and the Department of Defense on A fo reign policy aide to a top-ranking Republican policy toward West Germany are lies: Both departments member of the Senate Foreign Relations Committee, Feb. would welcome a change in government." 17, 1982 : "One must remember that it is very difficult to The official then recounted a discussion with Franz dump a mid-term government in Germany. What is Joseph Strauss about Strauss's recent meeting in the required is that the coalition break apart. For that to United States with Secretary of State Alexander Haig. happen, the FOP would have to find an issue that the Strauss asked Haig point blank if the State Department German public would accept as a legitimate basis for supported the Schmidt government. Haig replied the he splitting. So it is not that easy to get rid of Schmidt. The did not, although political reality demanded that the best way is around the security issue, in the context of a State Department not take overt actions against the major weakening of Schmidt. That would be the effect of Schmidt government. If and when Schmidt fell, Haig a major defeat in Hesse or Hamburg-it would show promised Strauss, the State Department would give a that Schmidt is continuing on a downward trend and new government full support. that you have a tired and old government which has lost A leading U.S. defense analyst, late March 1982 : "The the confidence of the people. If the Euromissile decision significance of the scandal now breaking out in Der is bearing down on Schmidt, he might just decide that it Sp iegel magazine around the union-run construction is not worth it and pack it in. But what holds him back company Neue Heimat is not easy to calculate. I can say from doing that is his sure knowledge that without him that this scandal goes straight to the heart of the whole the SPD is finished." Social Democratic state and its institutions. I know what Angelo Codevilla, February 25, 1982 : "There is no [Der Spiegel editor] Rudolf Augstein is up to. He is not way to improve U.S. military posture and the NATO after one figure, not even Schmidt. He is afterthe whole alliance without kicking around people like Helmut Social Democratic state: the trade unions and social Schmidt who can't make up their minds what side they institutions that were created in the 1950s and 1960s and are on. You have to kick the hell out of people like which form the basis of the political power of Schmidt's Schmidt and get them out of the way, or you don't have faction of the SPD. Augstein is going for broke, to create ' an alliance. These people accept the rotten condition of chaos in the sociai institutions of Germany at the same NATO and then try to throw a nice new look at it-this time chaos breaks out in the econolllY. Then if Schmidt

EIR July 6, 1982 Special Report 25 goes, Social Democratic rule goes with him and the Schmidt. Schmidt won't cut his budget and you know structure of politics in Germany changes fo rever. . what Arthur thinks of people who won't cut the budget. "Augstein has powerful backing in this operation. So he is talking to the FOP, putting the pressure on. He was just in the United States, you know, and I am Burns wants a new government, so does Haig, but you sure he discussed it while he was here." can't make 'It look like U.S. interference, so it is low profile.Reagan would not like it." April June A former official of the Carter administration, April 5, 1982 : "Schmidt is much weaker now than ever before. The London Economist, June 12, 1982 ; editorial enti­ He is being roped in by these election votes. He has tled "Go on, Genscher: West Germany's liberals have the become a lame duck who is trying to pretend he is not. power to end the Schmidt government's misery. They "The German public is demanding that he deal with should use it": "After last Sunday's Hamburg election, issues at home and stop pretending to be some kind of Mr. Schmidt's Social Democratic-Free Democrat coali­ global spokesman. The economy can bring him down, tion seems to be moving to its end. It is best that it and it is. Schmidt has tried to be all things to all people, should ....Sinc e Mr. Schmidt is reluctant to step aside, but his time is running out. He can't please both the left the decision to end the coalition will probably have to be SPD and his center base, but he refuses to push·the left taken by the leader of the liberal Free Democrats, Mr. too far. His image is becoming one of a tragic figure who Hans-Dietrich Genscher. At Hamburg, the Free Demo­ can't control those around him. crats had their third-party clothes stolen by a motley "When Schmidt falls, he will go slowly with a great gro up of protest-vote-catchers on the left. Mr. Gensch­ deal of agony. And if he falls, the SPD will undergo a 'er's best chance of coming in from the naked cold is to transformation. It will move to the left and lose its put Mr. Schmidt's coalition out of its misery and form a center ." new government with the opposition Christian Demo­ crats .... Mr. Genscher's party risks a particularly un­ A leading U.S. defense analyst, April 15, 1982 : pleasant form of political death if it handcuffs itself to a "Genscher and the FOP are playing games. He could Social Democratic corpse ... move faster if he wanted, but he is politiking, and he has "Why the certain doom? Most governments go gotten some people so angry that they would love to find through a bad spell in mid-term. But the Social Demo­ a way to take power without Genscher. But we are crats are unlikely to bounce back. They are war-weary, putting pressure on Genscher and he will move, in his not from defending their policies against the opposition own time. Old Willy Brandt can help speed that up, God ...bu t from fighting among themselves over what those bless him. policies should be .... By clinging to the Social Demo­ "I am very encouraged by what Al Haig told [Franz crats, clinging to power, at best Mr. Genscher can offer Josef] Strauss. It was important and it took a great deal West Germany two more years of lame duck govern­ of pressure to get Haig to say it. For all practical purpos­ ment. At worst, he and Mr. Schmidt can hold on until es Haig let it be known that he would welcome a CDU the coalition collapses, exhausted, beneath them ...." government in Germany. Strauss has been going around telling people this and it helps our efforts. A Heritage Foundation analyst, June 14, 1982 : "I have been speaking to some people around [Ham­ "Schmidt can't hang on fo rever. He is alrady a lame burg CDU leader] Leisler Kiep and they are saying that duck. But it is much bigger than this. Schmidt holds the the Hamburg election could surprise Schmidt. We have rotten and decaying social fabric of the Federal Republic not broken Schmidt yet psychologically; he is boxed in together. That fabric must be discarded and the only way to do that is to discard Schmidt. So when Schmidt goes, on policy questions, but not broken. But for Schmidt to Germany plunges into the unknown. We shake up all the lose in Hamburg would be like Reagan losing California. institutions when he falls and I think this is desirable. It would break him." What we are headed fo r is the castration of the SPD. It May will become something like the current British Labor A leading U.S. defense analyst, May 26, 1982 : "[New Party, which resembles a leftsect ." York Times Bonn correspondent] John Vinocur is telling "In the process, the SPD will lose its traditional base, people that the FOP can't wait to walk out on Schmidt and take on more of the left. Those left wingers who until afterth e Hesse elections because it would look too don't go with the SPD will go to the Greens. This whole opportunistic. Vinocur says they should move on July 7, process is possible because of the Greens. They are the by voting down the budget and forcing a government catalysts, not the FOP, because they were what was crisis. John talks to people in the U.S. embassy and they needed to shake things up. The old left will become an are telling him this. I know from other people that [U .S. isolated minority . The FOP may fa de away into irrele­ Ambassador to Germany Arthur] Burns is fed up with vancy, then part of it may go left, and part to the new

26 Special Report EIR July 6, 1982 The conspirators against Helmut Schm idt

Policy controllers The Pan-Eu ropean and British oligarchies: Their banking network: City of London, Manhattan, Geneva BIS, IMF

Command centers Coordinating points NATO headquarters Brussels: U.S. State Department: Alexander Haig General Joseph Luns U.S. Defense Department: U.S. embassy Bonn: Caspar Wein berger, Fred Ikh§ Ambassador Arthur Burns Think tanks: Think tanks: Heritage Foundation, Institute for Policy Studies London's IISS, German Marshall Fund Committee for the Free World: Irving Kristol London School of Economics: U.S. congressional office: Ralf Dahrendorf Senator Malcolm Wallop aide Angelo Codevilla

Forces in the field The propaganda arm FOP leadership: BRD press sewers: Genscher, Lambsdorff, Scheel Der Spiegel (Rudolf Augstein); CDU/CSU leadership: Die Zeit (Theo Sommer) Strauss, Woerner Ameri�an media: SPD left wing: New York Times (John Vinocur); Brandt, Eppler, Bahr, Wehner Wa shington Post Green party: Petra Kelly, Gen. (ret.) Bastian

right, the new COU-CSU." terms of the new FOP program. I am told that [German central bank chief] Karl Otto Poehl is telling them what A leading U.S. defense analyst, June 20, 1982 : to say. So is Arthur Burns. He is more th�n an ambassa­ "Genscher and Scheel gave the orders fo r the Hesse FOP dor, he is the bankers' agent on the scene. to split its coalition with the SPO. Now, the decision has "Die Zeit commentator Theo Sommer has never been been made for a national split. The FOP will submit an a friend of Schmidt. He plays a role and he takes the same austerity budget and make demands on the SPO. If kind of orders as the people in the FOP. When I was last Schmidt accepts their budget, he loses control of the in Germany, Sommer was reportedly already talking to SPO. If he doesn't, the FOP votes his budget down and people in London on the phone about the post-Schmidt the coalition falls apart. government. He talks all the time to Ralf Oahrendorf at "The FOP is the bankers' party. It always has been. the London School of Economics. And the bankers have decided that Schmidt must go. If "It hasn't sunk into peoples' heads yet what is going you want a particular place, look to London. The hand­ to happen to Germany. The FOP is going to pull the writing was on the wall when the Economist went public plug on the whole post-war era. Not only chancellors with that editorial calling for the FOP to split from the and parties will be shattered. The major institution in the SPO. Everyone knows that Genscher takes his orders country-the SPO-will be destroyed. The Schmidt fac­ from London. But the key person, really, in the FOP is tion will be destroyed and the base of the party will be [former party chairman] Walter Scheel. He is the bank­ wrecked . A new government will first and fo remost be ers' agent, they put him in. The bankers are dictating the an austerity government and this will destroy the trade

EIR July 6, 1982 Special Report 27 union movement. The SPD will become a party of the extreme left, like the Labour Party in Britain. This is the The 'Union' Parties plan of Brandt, Eppler, Bahr, and Wehner. They will purify the SPD. The CDU will become more domestical­ ly reactionary. Ready to enforce "People here like Fred Ikl6 and Secretary of Defense Weinberger welcome this change. Haig has given it his BrUningausterity blessing. "In the long run there is no way that Schmidt can survive. He is growing desperate, and has only two by Susan Welsh options other than taking the slow death of compromis­ ing with the FDP budget plan. First he could call new If the conspiracy to oust Chancellor Helmut Schmidt elections, but if he doesn't change his profile, all private succeeds and the Christian Democratic Union/Christian polls show a huge SPD loss. The other option he has is to Social Union (COU/C SU) is installed in a new West call for a grand coalition. That would be clever because German government, disaster is in store fo r the Federal it would split the CDU leadership. But I don't think it Republic. Not only would such a government be incap­ would go through. The most likely thing is a CDU-CSU­ able of solving the country's problems; its role would be FDP government within the next three months or soon- to implement the "Bruning-style" austerity which er." Schmidt has wisely refused to. The trade unions would A Washington, D.C.-based official of the International be destroyed as an effective force for maintaining living Monetary Fund, June 21, 1982 : "[A rise in U.S. interest standards. The "peace movement" would polarize the rates] will cause problems for the West German federal country even more than it is already polarized, and budget, which must be voted on at a cabinet meeting set terrorism will escalate. The country would truly become for July 7. That is the real issue. Herr Genscher, the Free ungovernable. Democratic leader, is calling for more sharp cuts in The Christian Democratic Union is no longer the expenditures, on social entitlement programs, welfare, party which Konrad Adenauer created after the war as a and on industrial subsidies, regional development proj­ party of Christian humanism and industrial progress. ects, and so on. If the world economic situation clearly Adenauer, the first post-war Chancellor, forged the deteriorates, Germany will deteriorate economically, and COU in the course of a long struggle fo r German this will support the demand by the FDP-which is national identity, against the factions in the Anglo­ supported by SPD Finance Minister Manfred Lahn­ American pccupation forces which wanted to dismember stein-for more expenditure cuts in 1983. and deindustrialize the country. Step by step, Adenauer "We cannot divulge our confidential advice to gov­ pulled his devastated country out of the ruins of war and ernments, but obviously if the world economy deterio­ set it on the road to its post-war "economic miracle." rates further Germany will have disturbing budget defi­ Today it has lost this orientation to industrial prog­ cits. It will further the demands of the SPD for austerity, ress, under the increasing influence of the Club of Rome as well as those by the Christian Democrats. In fact, I and similar Malthusian operations. Instead of a party think the CDU may be in the government by the end of shaped by a coherent and generally progressive world the year, if not sooner. view, it has become a hodge-podge of factions, a Volks­ "Confidentially, it would require a miracle to stop partei (people's party). The European Labor Party (EAP) Schmidt from falling now. I'm quite soon the govern­ in West Germany has proposed that the CDU be re­ ment will be out soon unless a miracle happens, and I named the Ex-Christliche Volkishe Union (EVU-"Ex­ don't see one. Schmidt's problem is that he's tied down Christian People's Party ") for this reason. to the SPD, which will not take the necessary austerity steps, given the reality of the world economy. If there are Strauss: power behind the throne further cuts in entitlements in the 1983 budget, the trade If the CDU's wishy-washy technocratic chairman, unions will never go along. So the momentum is clearly Helmut Kohl, becomes Chancellor, most analysts agree against the SPD, which is locked in with the trade unions. that the power behind the throne would be FranzJosef "This isjust like the 1930s, in the sense that the world Strauss, the Bavarian "strongman" who heads the crisis will cause a major domestic economic crisis in Christian Social Union (C SU). Strauss was the Union Germany, foreign bankers will have no confidence in the parties' Chancellor candidate in the 1980 national elec­ deutschemark, and German leaders will be impotent in tion, and took the opposition parties down to their the face of world events. The situation in Germany is worst defeat in postwar history. Strauss's factional ally very, very serious, more serious than most people realize. Alfred Dregger is currently at the center of national Germany is headed for a very rough time indeed." attention as the CDU candidate fo r governor in the

28 Special Report EIR July 6, 1982 state of Hesse. The Free Democratic Party's recent The Free Democrats decision to campaign for an alliance with Dregger instead of with the Social Democratic incumbent means the virtually certain defeat of Chancellor Schmidt's party in this crucial race in September. CDU /CSU campaign literature and television speeches present the Union parties as favoring economic growth and as pro-American, in contrast to the left­ wing "Finlandizers" of the Social Democratic Party. 'Swing party' paves These claims are a fraud, as even a cursory examination the of the reality behind the rhetoric reveals. The best way way for fascists to understand why is to look at Strauss's Bavaria. by Susan Welsh Bavaria is viewed with embarrassment by most Germans, due to its well-known feudalist and monar­ chical aspirations. It was not until 1949 that the Free The Free Democratic Party (FOP) in West Germany is State of Bavaria agreed to join the Federal Republic, now calling the shots on whether the government of and many Bavarians would like to see a monarchy Chancellor Helmut Schmidt, a Social Democrat, will restored. While Bavarian Minister President Strauss's survive the next days or months. The FOP, which has government claims to be in favor of nuclear-energy been the partner of the SPD in the national governing development, Bavaria in fact produces less nuclear coalition since 1969, has thus placed itself at the center of energy than any other West German state: 2.7 percent international attention even while it is disappearing from of total energy, as against 3.7 percent nationally. Asked the landscape in numerous state and local elections, about the potential for the growth of an environmental­ failing to gain the 5 percent of the vote required by law ist Green Party in the state, one Bavarian official for representation in government. commented: "There is no need fo r a Green Party. In The FOP has been such a "swing party" in German Bavaria everyone is Green." The state Interior Ministry political life ever since its predecessor, the German Dem­ finances one of the principal environmentalist organi­ ocratic Party (DDP), pulled out ofthe "grand coalition" zations, whose membership overlaps that of the Green of Social Democratic Chancellor Herman MUller in Party, to the tune of several hundred thousand deut­ 1930, toppling the last democratic government in Wei­ schemarks per year. mar Germany. After MUller came BrUning with his The CDU /CSU in Hesse is claiming that if elected "emergency decrees" and cruel austerity measures which it will launch an economic recovery, including nuclear broke any remaining resistance to the Nazis and paved energy programs and infrastructural expansion. Dreg­ the way fo r Hitler's seizure of power in 1933. ger has secretly promised 50,000 jobs and a $8 billion Of the five DDP deputies in the Reichstag who voted investment program to Hesse trade unions. Yet the up the 1933 "Enabling Act" that dissolved all parties party's "Thatcherite" austerity policy reveals this to be except the National Socialists, two deputies founded the simply a lie, since there is no way such a program will Free Democratic Party after the war, with the help of the be financed. Dregger's own campaign manager stresses British occupation forces. The two were Theodore Heuss that the CDU will give greater attention to "citizens' and Reinhold Maier. Maier states in his memoirs that the feelings about nature." only problem with Nazi Germany was that Hitler dumped his "liberal" Finance Minister Hjalmar Schacht, The Pan-European Union a former member of the DDP whose famous financial Strauss is "pro-American" only in the sense that he "wizardry" made it possible for Germany to shift to a is a factional ally of people like U.S. Federal Reserve total war economy. Chairman Paul Volcker. His closest political ties are to Schacht, the darling of the British oligarchy, was let the fe udalists of the Pan-European Union, headed by off at the Nuremberg Tribunal due to the intervention of Otto von Hapsburg, pretender to the throne of the London. Austro-Hungarian Empire. The Pan-European Union believes in a "Europe of the regions" which would The party of British liberalism abolish the "outdated" nation-state and return Europe What is the Free Democratic Party? Like its Weimar to the bucolic backwardness which characterizes Bavar­ predecessor, the FOP is the party of British liberalism. ia. This new European "third way" would serve as a Here is what that. means concretely: battering ram against the nation-state elsewhere, includ­ The FDP is rooted in the European federalist move­ ing most emphatically against both the United States ment against the nation-state. Just like Franz Josef and the Soviet Union. Strauss of the Bavarian Christian Social Union, FOP

EIR July 6, 1982 Special Report 29 leaders like Hans-Dietrich Genscher have no use for the push for legalization of narcotic drugs and of euthana­ German nation with all of its impulses to industrial and sia. FOP member Rudolf Augstein, editor of Der Sp ie­ technological progress. Genscher's call for a new Euro­ gel magazine and a key conspirator against the Schmidt pean Union is an echo of the schemes of the fe udalist government, was arrested by Italian customs officials "Mitteleuropa" movement of the early 20th century, in two years ago for transporting marijuana across the which DDP fo under Friedrich Naumann was active. border. This movement later became the Pan-European Union of Otto von Hapsburg, Strauss's close associate and the Postwar 'swing' party pretender to the throne of the Austro-Hungarian Em­ During the post-war period, the Free Democratic pire. Eric Mende, the chairman of the FOP until 1966, Party has been a junior government partner continu­ was an executive committee member of the Pan-Euro­ ously except for two brief periods from 1956-57 and pean Union. He later joined the Christian Democratic 1966-69. Union (CDU). In 1966. it toppled the government of Christian The FOP is the party of organized crime in West Democrat Ludwig Erhard . A "grand coalition" was Germany. Mende is the European director of the Inves­ then fo rmed between the SPD and CDU, with Christian tors Overseas Services (lOS), part of the "M urder, Inc." Democrat Kurt Kiesinger as Chancellor. Permindex organization which directed assassination In 1969. the FOP put Social Democrat Willy Brandt attempts against French President de Gaulle and suc­ into power. Brandt won 42.7 percent of the national ceeded in murdering U.S. President Kennedy. Today vote, against 46. 1 percent for the Christian Democrats; the FOP leadership in the city of Frankfurt, including but secret overtures to the FOP landed Brandt in the such individuals as Frankfurt FOP executive committee Chancellery. member Ignaz Bubis, is known as the center of an In 1974. when Brandt was collapsing under the Israeli-linked illegal narcotics, diamond, and pornogra­ weight of too many martinis, mistresses, and ultimately phy ring. an East German spy scandal, FOP spokesmen like Ralf The FOP is the party of the Club of Rome, Global Dahrendorf of the London School of Economics hinted 2000, and the "Aquarian" ideology. The FOP's think broadly that they would not tie their party's fate to the tank, the Friedrich Naumann Foundation, sponsored a Social Democrats. After Brandt's resignation, a new conference in June 1981 to promote the Carter admin­ SPD-FDP coalition was formed with Schmidt as Chan­ istration's Malthusian Global 2000 Report. The confer­ cellor-the combination that has lasted up to the pres­ ence was organized by FOP leftist Helga Schuchardt, ent. the most prominent Global 2000 propagandizer in West The FOP's political leverage has given it influence Germany. and cabinet seats far out of proportion to its 5-10 Speakers at the conference included FOP Interior percent voter base. In Schmidt's cabinet, the FOP holds Minister Gerhard Baum, who declared that "we must the key posts of fo reign minister, economics minister, adapt ourselves to zero growth or virtually zero growth, interior minister, and agriculture minister. The party's to extremely tight budgets; we must give up our accus­ unusually high 10.6 percent total in the 1980 federal tomed wastefulness." Former federal president and election did not at all indicate growing popular support former FOP chairman Walter Scheel stressed that the fo r the Free Democrats. The vote reflected instead the conclusions of Global 2000 must be incorporated into disgust of traditional SPD voters and some CDUers the "North-South dialogue," and then-U.N. Ambassa­ with the leftist shenanigans prevailing in the Social dor Riidiger von Wechmar demanded the extension of Democratic Party. Global 2000 to agreements on energy, raw materials, Anyone who wanted to keep Chancellor Schmidt in and monetary and trade policy. power-and he was by fa r the most popular national At the FOP's national congress in Munich in 1980, leader-but could not stomach the idea of voting for Genscher called fo r an end to economic "gigantoman­ his party, voted fo r the coalition by voting FOP. ia" and said the party should orient itself toward "the Without this factor bolstering its electoral strength, it is simpler and the smaller." doubtful that the FDP would be able to gain even 5 Interior Minister Baum has done more to sabotage percent of the vote nationally. nuclear energy development in the Federal Republic, If the FDP today votes itself out of existence, as its through red tape and environmentalist regulations, than predecessor did in 1933, it will be because the oligarchs thousands of unwashed Greenie demonstrators. who pull the party's strings have decided that a "liberal" The FOP is "liberally" disposed toward drugs and Schachtian party is no longer adequate. Perhaps then terrorism. Under Baum's regime, law enforcement has the Green Party, or some new political formation, been emasculated, allowing a revitalized terrorist move­ would be geared up for the modern version of the role ment. The FOP "left" wing is at the fo refront of the the Nazis played in the past.

30 Special Report EIR July 6, 1982 process with the Greens get underway. Gloetz did the The' Social Democratic Left interview with the pro-terrorist, Frankfurt-based Tages­ zeitung, which intersects groupings that have represented a terrorist assassination threat against Schmidt. Brandt's policy ofacc ommodation has been defended by Eugen Loderer, head of the Metalworkers Union, and SPD Executive Committee member Egon Bahr. Follow­ ing the June 6 state election in Hamburg, Loderer and The traitors within Bahr called for the SPD to "negotiate" with the Green parliament fraction there, after the SPD lost 8 percent of Schmidt's party the vote and couldn't form a government.

Brandt and social fascism by Renee Sigerson Willy Brandt's current accommodation with the Greens is a fitting endpoint of a career which has been If Helmut Schmidt is to remain in power, he will have to strictly devoted for 50 years to the British Fabian allow certain bitter factional issues now ripping apart his experiment of "fascism with a democratic face." Social Democratic Party to come to a head. The forces U.S. State Department official Eleanor Dulles exist within the SPD fo r these factional issues to be pushed Brandt into the leadership of the West Berlin resolved in Schmidt's favor. SPD in the 1950s. Dulles had been part of her brother Central among these fights is how the SPD will Allen Dulles' Switzerland-based wartime intelligence counteract the electoral growth of the London­ operations, through which British intelligence salvaged sponsored Green Party. The Green Party has been geared extensive fascist political assets for future deployment. up by Schmidt's London-based enemies as a battering The coordinating center for that Dulles operation be­ ram against the SPD and constitutional government. came the Geneva-based Fascist (or Malmo) Internation­ Schmidt's electoral base has the legal means to halt the al, whose networks set up the Green parties in Germany Green Party, and many SPD leaders are simply waiting in 1976-78. Willy Brandt was educated in the 1940s for a go-ahead signal to exercise it. They are being period, leading up to the formation of the new Fascist restrained by the implicit threat from the faction around International by the joint British-Austrian "left-wing" Chairman Willy Brandt that if they move to halt the or Fabian component of the same operation. Greens, the SPD itself will split. To a large extent, the Brandt wing of the SPD today The Brandt faction, similarly controlled out of Lon­ is actually run out of Austria, through Prime Minister don, has protected the Green movement from its incep­ Bruno Kreisky. In 1942, Kreisky and Brandt held long tion. Brandt's goal is to eventually merge the Greens into indoctrination sessions in exile in Sweden with "Ieft­ the SPD, thereby permanently disenfranchising the wing" fascist ideologue Gunnar Myrdal, a mastermind SPD's pro-technology, working class electoral support. behind policies for population elimination in the Third The fight over SPD policy toward the Greens is World. In chairing the so-called Brandt Commission on intensifying. In mid-June, the SPD weekly Vorwaerts North-South relations today, Brandt has become a covered the results of a study commissioned by the SPD leading implementor of Myrdal's programs. fe deral parliamentary fraction on the Greens. The study London ensured that between 1933 and 1945, the concluded that the Green parties are anti-state, right­ majority of the pre-Hitler SPD leadership was elimi­ wing extremist, and organized around the pre-Hitlerian nated by Nazi terror. Brandt only joined the SPD after cult ideology of Blut und Boden (blood and soil). 1945. During exile, he was a member of an obscure According to West German law, such anti-constitu­ socialist fringe group which was funded out of the tional, neo-fascist formations must be outlawed. But the United States and London, and was controlled by the Brandt faction argues that the Greens represent a "legit­ Austrian-trained ideologue Richard Loewenthal, still an imate" expression of public anxiety over nuclear power. influential eminence grise in the SPD today. Brandt personally has chiefly supported the Greens It is well known that Brandt and Schmidt have been through his spokesmanship in the peace movement, bitter opponents ever since Schmidt stepped fo rward in which overlaps with the Greens through the peace move­ 1974 to head a successful conspiracy to oust Brandt ment's violent wing. Brandt has encouraged a policy of from the Chancellorship. Since then, Brandt has often "reconciliation" with all such "protest" groups. threatened to split the SPD to outflank Schmidt. Were The same day the Vorwaerts article appeared, Peter Brandt to carry out that threat after a real political Gloetz, a Brandt adherent and federal business manager fight, Schmidt's base would be strengthened-not of the SPD, issued an interview urging that a "dialogue" hurt-by a Brandt faction exodus from the party.

EIR July 6, 1982 Special Report 31 The Green Party technology fascist ideology, Schmidt's enemies aim to establish all the preconditions, as the economic crisis worsens, fo r a full-scale revival of German fascism.

The source of fascism-then and now The Anthroposophist movement is the common thread which ties the founders of German Nazism to the environmentalist shocktroops in West Germany today. At present, the center of Anthroposophism is situated in Germany in the province of Baden-Wiirttem­ berg, and its capital city, Stuttgart. It is by tracing the Anthroposophist movement that complete clarity is established as to why so many of the The new 'blood and founders of the present-day Green movement began their political careers in either the Nazi Party directly, soll' stornntroopers or in post-war right-wing Nazi offshoots like the Na­ tional Demokratische Partei Deutschlands (NPD). , . A characteristic example of this pattern of unrege­ by Renee Slgerson nerate Nazis becoming leading spokesmen of the "lef­ tish" environmentalist movement is former Army In two West German elections this year, environmental­ Gen . Gerd Bastian. During the Hitler period, Bastian ist parties whose leaders and members had been actively voluntarily joined the Nazi Party, and was deployed to involved in violent civil disturbances against nuclear the Eastern Front. After the war, he joined the right­ power, gained seats in state parliaments. These environ­ wing Christian Social Union, until 1958. Ai that point, mentalist parties, which nationally fuse loosely into the he began a process of searching for new associations Green Party chaired by German-American fe minist Pe­ more agreeable to his "social and cultural values," tra Kelly, achieved these state electoral victories largely finding his way, through Anthroposophy, to environ­ at the expense of the Social Democratic Party (SPD) of mentalism . Chancellor Helmut Schmidt. In public, Bastian is never seen without Green Party It was the SPD's electoral losses-particularly among leader Petra Kelly, who-according to several eyewit­ youth, disillusioned voters won over to anti-technology ness accounts, coddles and feeds Bastian, who radiates propaganda-which gave the signal that the precondi­ the impression of being fear-ridden and infantile. tions had been set fo r a move, coordinated out of Lon­ The pair travels extensively together, giving speeches don, to dump Schmidt. In Lower Saxony, the Greens on the danger of thermonuclear war, and the evils of received 6 percent of the vote, giving them II seats in technology. Bastian stands out among the current lead­ parliament, while the SPD fe ll below 40 percent for the ers of the environmentalist/peacenik circuit, because first time since 1948. In Hamburg June 6, the Green prior to his linking up with Petra Kelly, he had held a Party gained nine seats in parliament. Three members of high-level post in the German military, and at that time, the Green parliamentary fraction were previously mem­ appeared to take a standard NATO military line on bers of t,he pro-terrorist Communist Alliance. The SPD questions of strategy. there, which had governed in Hamburg since the war, While Kelly and Bastian like to peddle the story that lost its absolute majority. The SPD is now debating Bastian was "converted" to the peace movement follow­ whether it might have to form a coalition with the Greens ing a religious-like experience during a visit to the to prevent losing the state to the opposition Christian Japanese city of Hiroshima, the truth is that Bastian is Democrats. a product of the Anthroposophist movement, which Schmidt's enemies and the controllers of the Green selected him to become a spokesman of the new fascism. movement have no intention of now building the Green Party by normal electoral means to keep winning more A doctrine of evil votes. Their plan is to maintain one part of the Green Bastian proudly reports that one of his favorite movement as Germany's new "fourth" party, and to split ideological tracts is the turn-of-the-century document off sections of it to now be redeployed back into the two by Rudolf Steiner titled "The Anthroposophic Path." broader-based parties, the SPD and Christian Democra­ Rudolf Steiner was a member of the elite Anglo­ cy (CDU). Their goal is to repeat, in detail, the process Nordic devil-worshipping circle around 19th-century Germany was put through during the last depression. By mystic Madame Blavatsky. Her closest associate, Ed­ saturating all of Germany's political parties with anti- ward Bulwer-Lytton, authored the major cult docu-

32 Special Report EIR July 6, 1982 ments picked up by Richard Wagner and Friedrich Achberg Institute, circulated a letter on the objectives Nietzsche, who designed the racial supremacy doctrines of its political activity, which said in part: taught to Adolf Hitler during his tutorship by the Thule We are on the threshhold of a decade of achieve­ Society. The Thule Society cult was modeled on and ment of preparatory work fo r an historic project, linked through the Anthroposophists to the British­ whose goal it is to dissolve the existing social based cult of Aleister Crowley and Julian Huxley, the system of contempt of men and of destruction of Isis-Urania Order of the Golden Dawn. nature. . .. and to replace this system with an Then as now, fascism in Germany was conceived by alternative ... of the other Third Way, ecological elite Anglican-Nordic circles which include important humanism .... appended to this letter is an invi- layers in the Anglican Church hierarchy, and the Jesuit tation which is connected to the founding of the sect in the Catholic Church. political alliance of The Greens. Bastian is a personal friend of Monsignor Bruce Kent, the British Jesuit who leads the peacenik move­ When Petra Kelly founded the Green Party in 1979, ment internationally. Bastian's military adviser, former she was joined on the executive committee by August right-winger Alfred Mechterscheimer, is now in touch Haussleiter, one of the best known examples in Ger­ with the whole spectrum of "left-radical" and environ­ many of a confessed Nazi turned green. Haussleiter had mentalist groups as an adviser on military affairs. been identified by the German courts in the early 1960s Through his work at the Foundation for Peace and as a dangerous figurewhose sect, the Deutsche Gemein­ Conflict Research in Hesse, Mechtersheimer remains in schaft, was banned under anti-Nazi laws. In 1976, constant contact with the London Tavist.ock Institute, Haussleiter made a comeback on the basis of an envi­ the command center for British psychological warfare ronmentalist program, with a new organization, the operations. Aktionsgemeinschaft Unabhangiger Deutscher. The launching of the AUD was enthusiastically supported SPD targeted for infiltration by a well-know avant-garde artist, Josef Beuys, who It is Bastian's conviction that once Schmidt is out, became one of its candidates. Beuys, additionally, is a the Green Party will be poised to target the SPD for member of the Achberg Institute of Stuttgart. infiltration. By saturating the SPD with anti-technology In 1980, Haussleiter's Nazi past became a subject of ideology, and wrecking its ability to function politically discussion again in the press, and he was made to resign as the depression worsens, the SPD will be permanently from the Green Party leadership. discredited as a party of trade-union-organized working A similar pilot project for launching the Greens was people. run in 1978 in state elections in Rheinland-Pfalz. There, The gameplan revealed by Bastian is identical to the a group under the name Green List w�s exposed as a way Steiner behaved in the period leading up to Hitler's renamed front organization for the NPD, the most emergence. Steiner circulated among all the radical overt pro-Nazi organization in the post-war period. The layers of his time, including among the left-wingof the environmentalist electoral program adopted by the SPD, setting the preconditions for a strongman dicta­ NPD had been modeled on a book by Herbert Gruhl, torship to assume power. titled A Planet is Being Plundered. Gruhl, originally In setting this process into motion, the target of the from the Christian Democracy, is one of the current Anthroposophist-Jesuit-Evangelical circle is not merely gurus of the Green Party. destruction of the SPD as such. Their ultimate target is In the months leading up to the Lower Saxony and to destroy the foundations of moral coherence and Hamburg electoral victories for the Greens, the environ­ economic progress which unite the SPD's mass base. As mentalists-with open protection from the Evangelical Steiner and his cohort Friedrich Nietzsche made clear Church (Lutherans)-ran a series of violent demonstra­ in their works, what had to be destroyed in the modern tions in German cities against nuclear power and tech­ world for their aims to be achieved was the common nological progress. Numerous astute citizens came for­ Judeo-Christian ethic which formed the fo undations ward to denounce these actions as identical to the and expectations of Western populations in the then­ methods of terror of the Sturmabteilung, Hitler's SA, in emerging nation-states. Anthroposophy is a devil­ the 1920s. As the unbroken chain of command from worshipping cult which aims to halt economic progress London through the Anthroposophy cult of evil attests, to enforce oligarchical rule through irrationality. the similarity is lawful. The Nazi movement and the In 1979, when Petra Kelly formed the Green Party environmentalists were launched, funded, and protected nationally to run in elections for the European Parlia­ by the same exact chain of command, who possess an ment, she received strong backing from the Anthropo­ unbroken enmity to the Judeo-Christian outlook which sophist Achberg Institute in Baden-Wiirttemberg. In unifies the great majority of the German population in December 1979, Wilfried Heidt, a representative of the its commitment to.nationhood.

EIR July 6, 1982 Special Report 33 The European Labor Party

Helga Zepp-LaRouche on what will happen ifHelmut Schmidt falls

Helga Zepp-LaRouche, Chairman of the European La­ 1980 federal election campaign, that her party would seek bor Party in West Germany (EA P), is perhaps best known to replace the Free Democratic Party (FDP) as thejunior to West Germans as the Chancellor candidate in the 1980 partner in a coalition with Schmidt's Social Democrats. fe deral elections who appeared repeatedly on television Th is would ensure the defeat of the SPD's left-environmen­ standing in fr ont of the Biblis nuclear power complex, talist wing and make possible new political fo rmations explaining that high-technology economic development is which would unify pro-growth, pro-detente fo rces across the fo undation fo r a world peace policy. Th e national goal party lines . of the Federal Republic of Germany, she said, must be to . So fa r EA P deputies have not been elected, largely become the supplier of industrial goods and scientific because of an intensive slander campaign conducted by "know how" to the developing sector, in the context of a such publications as Der Spiegel magazine and Franz Josef New World Economic Order. Strauss's Bayernkurier in Munich. Anot�er obstacle has As Mrs. Zepp-Larouche explains in this June 16 inter­ been the law requiring a party to have 5 percent of the vote view with EIR, her party'sfightfora New World Economic before it can be represented in government. Order dates to its fo unding in 1974. At that time, Helga Th e EA P hopes to field about 80 candidates in the Zepp led a delegation to the Bucharest Conference on Hesse state elections in September 1982, establishing itself World Population Growth, sponsored by the United Na­ as a party with a mass fo llowing. But, as Mrs. Zepp­ tions and the Club of Rome. Her intervention there LaRouche explains below, the EA P cannot wait until against the zero-growth Malthusians is remembered with September to effe ct a shift in the current dangerous politi­ horror to this day by the organizers of the conference. cal situation, and the Hesse campaign is intended to have In spring 1975, the American economist Lyndon H. an impact now, regardless of how many votes the party Larouche, Jr. gave a press conference in Bonn, calling fo r gets in the fa ll. the creation of an "International Development Bank," - which would institutionalize East- West cooperation to pro­ EIR: Some of these people who would like to get rid of vide low-interest credits fo r the industrial development of Schmidt describe him as the "glue" that holds the fabric the "Third World. " Th is concept, known as the IDB, of German political life together. They intend therefore became the core of the EA P's program in elections in the to use his ouster to effect a transformation of the political Ruhr in 1975 and the fe deral elections in 1976, in which scene. Can you tell us more about these plans, and how Zepp ran as "Chancellor Candidate fo r the New World you think Schmidt's supporters should combat this? Economic Order. " The wide circulation of the IDB propos­ Zepp-LaRouche: Ralf Dahrendorf from the London al by the EA P in Germany and by LaRouche associates School of Economics, a world federalist and pro-British throughout the world was indispensable in the 1978 creation psychological warfare specialist, has predicted that the of the European Monetary System (EMS) by Chancellor German political system will disintegrate into five polit­ Helmut Schmidt and French President Valery Giscard ical parties. The reason behind these destabilizations is d'Estaing. Th e EMS, as originally conceived but never that the international oligarchy is now supporting sepa­ fu lly put into practice, was to be the cornerstone of a new ratist movements of all kinds. The Pan-European Union, world monetary system, based on gold and fu nctioning its president Otto von Hapsburg, Aurelio Peccei of the essentially along the lines of the IDB proposal. Club of Rome-these people envision the destruction of Th e poor prospects fo r leadership of the Federal R�pub­ the nation state in Europe too. Sicilians, Corsicans, lic of Germany ifSchmidt leaves the scene motivated Mrs. Tyroleans, Bavarians, Flemings, Walloons-all of these Zepp-LaRouche's announcement, during the course of the ethnic or regional groups would be split off.

34 Special Report EIR July 6, 1982 I don't think these people will ever be successful, of Europe, given the special role Germany plays in because we would have World War III before they ever Europe. achieved their world order. But the idea of splitting the As to the trade-union wing of the SPO, the "kanalar­ present institutions is motivated by the desire to establish beiter," more and more of them are saying that the EAP such � world order. was right all along and that they should have taken our The problem is that the existing institutions and the advice years ago. They should not have made any com­ parties represented in the parliament have in any case promises with the Greens. The opening of the SPO to undergone a transformation over the last 10 to 15 years, Brandt's idea of "unity for unity's sake," opening it to all indeed some of them have changed their character to a kinds of sinister elements, has led to the total destruction great degree. Take for example the Christian Democratic of the SPO. This is a very critical moment, because the Union. The COU has no qualified leaders, with some people who are really German patriots and believe in exceptions like Gerhard Stoltenberg who is probably a technological progress are on the verge of being demor­ more reasonable figure. But the majority of the COU/ alized. The situation looks quite dangerous right now. CSU leadership is totally unqualified, ranging from Franz Josef Strauss, who is a c1earcut ally of the Austro­ EIR : How do you see the role of the Green Party? With Hungarian pretenders to the throne, to Ernst Albrecht, the FOP disappearing in some state elections and possi­ whom we call the German Jimmy Carter (and that is not bly on the national level, the question now arises whether meant as a compliment). There is a whole faction around anybody will go for coalitions with the Green Party. the Club of Rome, which includes Heiner Geissler, Kurt Zepp-LaRouche : First of all, I would not regret the Biedenkopf, Albrecht, Matthias Wissmann [the head of FOP's disappearance from the political landscape of the the COU youth organization]. They are in the process of Federal Republic of Germany. This party, by its own transforming the COU into "a party of the Club of admission, has no principles. Genscher used to say that Rome," in the words of Eduard Pestel, ex-minister in they were open to all comers. Historically the FOP has Lower Saxony, and they have succeeded to a great extent. played a very evil role. Its predecessor was the Liberal The COU is no longer a pro-industrial party; it is actually Party which brought down the MUlier government in the the right-wing version of the ideas the Club of Rome 1930s and opened the way for Hitler to take power. It is stands for. It would impose Thatcherite economics, the quite possible that Mr. Genscher has the ambition to economics of Friedrich von Hayek. play a similar role in history, although if he succeeds I In the SPO a similar transformation has gone on, in don't think there will be much history left to discuss. The which fo rmer Chancellor Willy Brandt is one of the most FOP has never been a party; it is a stepping-stone for guilty. There are others like Erhard Eppler or Oskar people's careers. If someone wanted to get a position LaFontaine (a more recent development). Whole sec­ quickly , he would go through the FOP, since in the SPO tions of the SPO have been turned into green ie-oriented and COU it takes longer. The FOP is something you use, leftists, the left version of the Club of Rome. People like but it has never had a coherent policy. One should not Eppler and Schmidt are totally incompatible in terms of forget that it was the extreme right-wing liberals who their world outlook. consciously decided to bring Hitler to power, and that In the Free Democratic Party (FOP), the same thing ideology never totally changed among certain figures in has happened. You have people like Helga Schuchardt, the FOP. Gerhard Baum, Andreas von SchUller, Peter Menke­ There should be no illusion about what the Green GiUckert, who are totally "green" and are linked directly Party is. It is not a natural or a sociological phenomenon. to international oligarchical networks. The Club of Rome and the World Wildlife Fund, Peccei If Schmidt were kicked out right now, total chaos and Prince Philip and Prince Bernhardt and similar would break out. The SPO would probably split. If oligarchs quite proudly claim that they created the Green Genscher should be so foolish as to declare that the FOP movement. We have documented in other locations that wants a coalition with the COU on the federal level, the it was that section of NATO representing oligarchical FOP would split; the Judos [youth movement] and the views that decided to create these machine-stormer shock leftwing would leave and probably some kind of new left troops as a battering ram against technological progress. party would be formed. That's quite possible. But more They flooded the media and the bookstores for 10 to 12 dangerous is that the whole party structure and institu. years with all kinds of zero-growth propaganda, and tions would disintegrate. consciously created this Green movement. If you remove Schmidt now, there is nobody in his If you look at some of the leading figureswi thin the own party or in the COU who could hold the institutions Green movement, you find an overlap between people together. Germany would be thrown into economic who are conscious adherents of the "conservative revo­ chaos, terrorism, and quite unforeseeable developments lution" and "universal fascism," what you would call would become possible. It would probably mean the end neo-Nazis, and the so-called total left. This is no secret,

EIR July 6, 1982 Special Report 35 implement what is NATO policy in any case, namely: under the pretext of being fo r nuclear disarmament, building up conventional forces fo r out-of-area deploy­ ments in the Third World. So the peace movement and the Green movement are nothing but the creation of the rotten part of NATO. And they are fascists. Without any question, they repli­ cate precisely the methods of the SA shock troops. If you look at the street-fighting and violence in Berlin during Reagan's visit, that isjust an imitation of what the Nazis and the SA did in their early stages. No one should have the slightest illusion about the character of this Green and peace movement.

EIR: The EAP is running in elections in the state of Hesse this fa ll. You recently iss ued a call for a mobiliza­ tion in Germany fo r a New World Economic Order as one of the fo cal points of this cam paign. How do you see this shaping up and what are your plans fo r the election? Zepp-LaRouche: The EAP was fo unded as an organia­ tion against the ideas of the Club of Rome, and since 1974 we have been fightingfo r the idea of a New World Economic Order. I personally ran as a "Chancellor Candidate for a New World Economic Order" in 1976. Not that I thought at that point that I had a chance of winning the election, but I regarded it as necessary to European Labor Party Chairman Helga Zepp-LaRouche. make a programmatic intervention against Kohl and Schmidt. and numerous articles have been published recently in If you take the situation now and proj ect it into the Germany about it. The spiritual fathers ofthis movement future, we will repeat the horror of the 1930s in an even admit in writing that there is no diffe rence between left more horrible way. We will go through a full-scale and right. The NPD [National Democratic Party of depression and end up sooner or later in World War III. Germany, the neo-Nazis-ed.]. which in 1968 got JO Up until very recently Schmidt expressed the view that percent in Baden-W iirttemberg, has now disappeared. the only effective war-avoidance measure would be to The Communist Party (DKP) has disappeared, the overcome the depression. He did this especially when maoists have disappeared, all the other so-called K­ French President Gisca rd was still around and the possi­ groups, diffe rent varieties of communist groups, have all bility fo r enlarging the European Monetary System into disappeared into this big grab-bag. a gold-backed monetary system was objectively a little Look at the circles who control Petra Kelly fo r ex­ bit better. Thirty-seven years after the end of the last ample, this woman who is being boosted now as the world war, we are again facing the probability of what leader of the peace movement and the Green movement could this time be the last world war. All the existing by British-controlled media in Germany like Der Spiegel conflicts and crises in the world have been aggravated and Der Stern. and other such revolutionary outfits. She over the last couple of years, particularly to the degree comes out of the Young European Federalists, an organ­ that the world economic crisis has worsened. It is gener­ ization fo unded by Josef Stingl, the current head of the ally understood in Europe, much more than in the United Federal Labor Office. He is a member of the Pan-Euro­ States, that there is a very direct connection between pean Union; he was at Wilton Park [postwar British political and economic policies associated with fascism "denazification" center-ed.]. This was one of the insti­ in general, and sliding into a war. tutions which had the idea of building up a new oligarch­ I don't know how much Schmidt ever thought this ical elite. Petra Kelly and her fe llow Green Party leader through to the fi nal conclusion, but Schmidt has said Roland Vogt wo rked with this organization in the early that the only really effective war-avoidance policy would 1970s. She was then deployed into Brussels where she be to overcome the depression. He has said many times worked with European federalist Sicco Mansholt. There that he regarded the economic situation as the most is no question that what she and the rest of the peace severe strategic crisis faci ng the West, not the military or movement are doing isjust fi nding the credulous fools to other problems. But right now. with the Versailles sum-

36 Special Report EIR July 6, 1982 mit's capitulation to the IMF dictatorship, Schmidt has would agree to work in such a configuration. I think that de fa cto thrown that out of the window. If you just Japan, for example, would be a natural partner for this. project the present developments, you see mass unem­ Japan in any case is the big winner around the Malvinas ployment throughout Europe and in the United States, crisis, not so much the Soviet Union. And key developing accelerating genocide in the developing sector due to sector countries which urgently want German technolo­ lack of development, and continually exploding crisis gy should be included. If Germany decides to do this, it spots. It is quite clear that we are heading towards would find many partners in the world ready to go for disaster, with the perspective in the fall of a much more this kind of arrangement. severe economic crisis in Germany. Of the 2 million unemployed in Germany, you can None of this is necessary. I suggested in 1976 that the say roughly that I million was caused by the high interest EMS conception was originally supposed to be what my rates and the other million by the greenies' sabotage of husband [Lyndon LaRouche, Chairman of the Advisory various industrial projects. The Greens have blocked Committee of the National Democratic Policy Commit­ investments worth around 100 billion deutschemarks. tee-ed.] has proposed in a more elaborated form for What we are therefore proposing in Hesse is to unblock many years: given the fact that the old monetary system these investments and go for a full nuclear energy pro­ is bankrupt, you can create a new monetary system based gram and infrastructure development projects like the on gold, reorganize the Third World debt and start the Frankfurt Airport runway. This will gear up the whole biggest boom in history by gearing up high-technology economy. It is even more urgent now, with the uncertain­ exports to the Third World which urgently needs this. If ty of continued oil supplies from the Middle East. we decide to do what is in any case the only chance to That is one aspect of our program. Secondly, because create a decent order in the world, to create a New World of the break-up of existing institutions and parties, the Economic Order, we could overcome the depression EAP wants to build up a new institution based on practically overnight. republican principles, reviving the republican tradition Therefore since Germany at this point is barely keep­ of Germany as it was expressed both in the period of the ing up its East-West trade, has lost Latin America, its Weimar Classic and the political reforms of vom Stein, largest Third World trading partner, due to its disgrace­ Humboldt, and Scharnhorst in the 19th century. Namely ful support for the British in the Malvinas crisis, given the idea that a republic, a nation can only function if a the fact that the Gulf situation is highly unstable and the majority of citizens is becoming true state citizens, true IMF in any case would prohibit any large-scale develop­ republicans participating in the formulation and realiza­ ment, it is very clear that Germany now stands at a tion of all important political questions. crossroads. We put a lot of emphasis on the need to reorganize The EAP on the other hand, because of our unhesi­ the education system. We have written a detailed pro­ tating mobilization for Argentina and against the contin­ gram for a binding curriculum based on the educational uation of colonial wars, has not only gained a great deal concepts of Wilhelm von Humboldt, but enriched by of respect in Latin America but also in many other many aspects of modern science. There are certain simi­ developing countries. In the last couple of weeks I had larities with the United States, where also the level of the opportunity to meet personally with both Indian knowledge of pupils and students leaving school is drop­ Prime Minister Gandhi and Mexican President Lopez ping dramatically due to the educational "reforms" Portillo on trips with my husband to these countries. In which have been introduced. the consciousness of forces abroad, but also, due to our years-long mobilization for this policy, in certain politi­ EIR: Do you think your program will be effective? cal layers in Germany, the EAP has become the only Zepp-LaRouche : This is no ordinary election campaign, visible rallying-point for a policy alternative. So I have because we are in the midst of a strategic crisis which has just issued a call saying that if Germany wants to get off already approached Suez Crisis dimensions, and there­ the road to disaster, a faction must be built for the New fore we are not only running the campaign in order to World Economic Order, across all party lines, represent­ get votes. We want to create an immediate impact on the ing industry, trade unions and other individuals. Either politics of Germany right now, to change the course President Reagan should be drawn into such an arrange­ right now. ment, or Germany, rather than being drawn under with I cannot tell you whether we will be successful. But everyone else, should make a unilateral move to a gold we have reached such a fundamental crisis that it comes standard, should issue cheap, long-term credits for de­ close to a test of the moral ability of a population to velopment projects, technology transfer, full utilization survive. Maybe people in Germany especially can learn of industrial capacities and investment in new plant and something from history and correct a disastrous course equipment, and should conclude bilateral and multilat­ in time, or maybe not. But I hope that we can answer this eral trade agreements between sovereign nations which question positively.

EIR July 6, 1982 Special Report 37 A new terrorist wave organized to explode

by Lyndon H. LaRouche, Jr.

Th e fo llowing document was issued on June 18. 1982. Mr. Arab fronts linked to the HitIerite Grand Muftiof Jeru­ LaRouche, EIR's fo under. chairs the Advisory Board of salem , a significant change in the scope, character and the National Democratic Policy Committee. EIR's law­ political profile of international terrorist operations is enforcement bulletin. Investigative Leads, provides sped} now in progress. Large chunks of the old terrorist appa­ ic dossiers. background. and hypotheses concerning inter­ ratus are being "hung out to dry" and wasted, regarded national terrorism. as a drugged, insane group of zombies, who have out­ lived their usefulness. A new, vaster apparatus of terrorist Brilliant performance by a team of undercover inves­ elements of assorted separatist movements is now in the tigators, aided by several of the most sophisticated anti­ first phase of general deployment, includi ng a massive terror intelligence teams of several nations, has uncov­ wave of terrorism slated for portions of the Western ered the control behind a new wave of international Hemisphere including Mexico and the United States. terrorism ready to explode in Western Europe and the The most distinctive features of the new terrorist United States. profile are the qualitatively increased emphasis on sep­ The coordination of the new complex of intern at ion­ aratist movements, such as native-American move­ ai-terrorist deployments is run through an international ments, plus the more prominent role of international network of anthropologists and sociologists, together networks of anthropologists as political controllers of with complicit networks of lawyers. These networks, this movement. The Misquito and Kuna Indians of identified by their coordination of such separatist groups Nicaragua and Panama are merely typical examples of as Basques, Bretons, Sicilians, Sardinians, Corsicans and native-American groups controlled by the anthropolo- native-American groups, have been conclusively proven , gis� networks of Jacques Soustelle, et aI., featured in to operate as front-organizations and cut-outs for the this new profile of international terrorism. neo-Nazi International organizations officially coordi­ The political "trigger" being employed to set this nated through Lausanne and Geneva, Switzerland. Be­ new wave ofterrorism into motion is the Israeli invasion hind those neo-Nazi networks is the same complex of of Lebanon. Already, in West Germany for example, powerful aristocratic and financier interests which there is a worsening of the threat-pot�ntial to U.S. and brought Benito Mussolini to power and created the other personalities and installations. This is centered Bavarian Nazi Party around Adolf Hitler. around a terrorist bloodbath between forces of pro­ Although this neo-Nazi network also controlled the Israel groups such as the Jewish Defense League-Kach old international-terrorist networks, including Nazi of Rabbi Meir Kahane and PLO sympathizers, a wave

38 International EIR July 6, 1982 movements, enjoying the spectacle of "the West de­ stroying itself from within," and have sometimes been not exactly unhelpful to aspects of terrorist movements. Just as East Bloc fo rces spent a reported one billion rubles' worth of assistance to the "nuclear freeze" and "peace movement" organized by Averell Harriman's and Joseph Luns' circles, in rage against the Euro­ missiles deployment, it is not entirely out of the question that Moscow, out of rage, may not exactly interfere to halt what they view as a "new effort of the West to destroy itself fr om within." The Israeli involvement in international terrorism continues to be complex. Elemen ts of Israeli inteIl igence and other organizations popularly believed, sometimes erroneously, to be Israeli-controlled, have been deeply involved inside international terrorism since approxi­ mately 1969, as Italian official reports have documented recently. This involved both Israeli monitoring of ter­ rorist networks fo r counter-intelligence purposes, and some use of such terrorist capabilities as assets for covert operations, including the manufacturing of ter­ rorist incidents calculated to justify Israeli mil itary actions in the Middle East. It must be understood that

Separatists ascendant: the Basque ETA. Israeli political life and intelligence circles are highly fa ctionalized on these matters of policy, but that only among insiders will Israeli opponents of use of terrorists of terrorism aggravated in scale and intensity by the discuss this problem frankly. role of Qaddafi-linked and Khomeini-linked fo rces and fu nding. A complicated matter However, this "trigger" is intended to be the deto­ Often, as at the present moment, Israeli-linked fac­ nator fo r broader-based terrorist actions by an assort­ tions and anti-Israeli Arab factions buy services of ment of well-known and new terrorist groups, empha­ terrorist groups through the same brokers, including sizing terrorists identified with separatist causes: Turk­ brokers situated in New York City and Atlanta, Geor­ ish "Grey Wolves," Armenian terrorists, Sicilian sepa­ gia. Israeli intelligence is fully aware, meanwhile, that it ratist groups, Basques, Sardinians, Corsicans, Bretons, is the neo-Nazi network fo rmally based out of Geneva various Arab and "Islamic fu ndamentalist" causes, and Lausanne, Switzerland, which coordinates interna­ Qaddafi-funded "black liberation" groups in the tional terrorism overall. However, Israel views itself as U.S.A.-pulled. together in the U.S.A. and Mexico a small, imperiled nation, obliged therefore to employ around native-American groups linked to the neo-Nazi alI varieties of Byzantine tricks, in complicity even with internat ional through anthropologist groups specializ­ certain hated Nazi-linked circles, as a part of the ing in "threatened peoples" and "endangered ethnic complex business of Israeli "survival." cultures. " When the Israeli government says Moscow controls Although there is no indication that terrorist-pro­ alI international terrorism, fo r example, the Israeli tecting legal fronts, such as those associated with fo rmer government is simply lying outright, pure and simple. U.S. Attorney-General Ramsey Clark and Yippie Wil­ However, Israel believes that its survival depends upon liam Kunstler are out of the business, by any means, the massive military backing from the United States and control of the new waves of terrorism will require not NATO, and believes that that backing depends upon only attention to anthropology circles associated with Washington's continuing perception that Israel is the fa mous and other universities, but direct attention to indispensable U.S. military bastion against Soviet influ­ the neo-Nazi international and the Hospitaler-inter­ ence in the Middle East, as well as indispensable because fa ced oligarchy circles which created the fa scist move­ of Israel's extraordinary penetration of Soviet political ments of both the 1920s and the present period. and intelligence circles. Therefore, Prime Minister Men­ The Soviet policy toward this new manifestation can achem Begin and others tell the United States what it not be precisely predicted at this time. In the past, believes that government wishes to hear, on the issue of Soviet elements have smirked at the terrorist and allied international terrorism and other questions.

EIR July 6, 1982 International 39 "comprehensive" peace scheme would evolve into reali­ zation of the ultimate objective: a "strategic concensus" of Israel and the moderate Arabs against the Soviets. Kissinger's "linkage" formula, whereby a West Bank deal is struck in conjunction with a Lebanon deal, all Kissinger's power play within the Camp David fr amework, is espoused by a crew of liberal Senators long associated with the Ameri­ after Mideastfi asco can Zionist lobby, such as Charles Percy, voicing criti­ cism of Israel. Following a meeting on Capitol Hill June 22 with Begin, Sen. Paul Tsongas (D-Mass.) said, "I by Nancy Coker think it is fa ir to say that in my eight years in Washington I've never seen such an angry session with a foreign head Henry Kissinger, Britain's self-professed agent-of-influ­ of state." The next day, Tsongas presented in a press ence in the United States, has emerged as the chief conference a nine-point peace plan effectively identical American spokesman for the fallacious notion that the with Henry Kissinger's British-sponsored proposals. crisis in Lebanon is somehow good for Washington. In New York Times columnist James Reston has also an op-ed printed by the Washington Post on June 16, endorsed Kissinger's linkage plan, while liberal, pro­ Kissinger stated that the fighting in Lebanon "opens,up Palestinian Times writer Anthony Lewis has gone so far extraordinary opportunities for a dynamic American as to call for Kissinger's return as diplomatic shuttler to diplomacy throughout the Middle East." the region. K�ssinger is turning on its head the reality of the matter, that U.S. influence in the Middle East is about to The Haig-Kissinger miscalculations evaporate as a result of the Reagan administration's The trick to Kissinger's plan is, of course, Soviet support of Israel's invasion of Lebanon, and that the acquiescence . Britain, and Kissinger, worki ng through Soviets are going to pick up the pieces (see EIR , June the Philby-Andropov networks, think they can make a 29). deal with Moscow. Their elaborate strategy to take There is a method to Kissinger's strategic madness. advantage of the debacle for the United States in the The egotistical fo rmer Secretary of State eagerly views Middle East does not take account of the fact that the the Lebanon crisis as a war-crazed mercenary would: an Soviets, ascendant in the region, are in no need of a deal. opportunity to insert his fat self back into the Middle Furthermore, deal or no, the U.S.S.R. will not tolerate a East as a shuttle diplomat. "NATO-ized Middle East." "Henry is looking for a job," joked one Washington Kissinger's protege Alexander Haig, however, con­ analyst. "His op-ed was his notice of availability." vinced Reagan to meet with Israeli Prime Minister There is more to it, however. It is the British who are Begin on June 21, countering White House objections activating Henry and angling to have him sent to the that such a meeting would only enhance the deadly Middle East as Washington's special negotiator to build image of U.S.-Israeli collusion in Lebanon and further up their interests in the region. Britain calculates that the erode America's position in the Arab world. It was also destruction of the PLO in Lebanon and the demise of Haig who had Reagan dismiss a peace plan worked out U.S. credibility in the region have cleared the way for a by Egypt and the PLO, under which the PLO would British-sponsored "peace" centered around, as Kissinger have laid down its arms and begun negotiations with writes, "a comprehensive approach [to] the three great Israel and the United States. issues of the Middle East: the Lebanon crisis, the auton­ In his talks with the President, Begin secured Rea­ omy talks regarding the West Bank and Gaza, and the gan's continued support by playing up to his anti-com­ threat to Western interests in the Gulf." munist profile. Begin raved about the "crushing blow" Specifically, Britain wants to station U.S. and French Israel had dealt to Soviet influence in the region by troops (i.e., NATO) in Lebanon to "solve" the crisis means of attacks on the PLO and Syria, and how Leba­ there and get Israel out (although "residual Israeli non had been cleaned up as a terrorist base. In point of fo rces" would remain along the border of Galilee, Kis­ fa ct, international terrorism is expected to increase as a singer notes). Linked to such an arrangement would be a result of Israel's annihilation campaign, as is Soviet proposal to fo rce Arab acceptance of the discredited influence in the region. High-ranking Egyptian sources Camp David formula on the West Bank autonomy issue, confirm that Cairo, until now the strongest advocate of entailing not a return to the 1967 borders, but the trans­ an Arab-American alliance, is disgusted with the United formation of part of the West Bank into-as Kissinger States and is considering reopening relations with Mos­ says-an "Israeli security zone subject to later negotia­ cow. "America has lost Egypt," was how one diplomatic tion." The participation of Jordan and Egypt in such a contact bluntly put it.

40 International EIR July 6, 1982 Mordechai Gur had opposed the idea of an invasion in months past. While Labour itself has given official support to the war (although at times disagreeing on its extent), certain Labour members of parliament have made outspoken Israel's potential for comments about the ethical and strategic implications. Rabbi Menachem Cohen, a Knesset member, has, for anti-Sharon backlash example, warned of the "unnecessary shedding of blood," and has called for a commission of inquiry to be formed to investigate the war. by Mark Burdman from Wiesbaden Israeli sources anticipate that a counterpole of oppo­ sition to Sharon could emerge in the short or medium While an atmosphere of strong on-the-surface "national term around President Yitzhak Navon, a Labour mem­ unity" prevails in Israel, there exists an undercurrent of ber who, in the words of one source, has "maintained dismay and malaise, both at the atrocities committed some element of stature in the midst of a general political during the misnamed "Operation Peace in Galilee" and and moral collapse." at the heavy casualties Israeli forces are suffering as the Navon is being touted as a possible candidate for the conflict escalates. This undercurrent could at some point premiership in future years, a possibility that has Mena­ in the near future be transformed into a backlash against chem Begin so worried he is trying to ram a bill through the war's architect, Defense Minister Ariel Sharon. the parliament denying the right of any President to run The backlash in turn could express itself in wide­ for the premiership at a future time. spread demoralization and inchoate protest, as occurred The "Navon option" might resonate among certain in the United States during the Vietnam War, or it could elements of the Israeli cabinet, particularly among the result in an important reassessment of the entirety of liberals in the ruling Likud coalition. Several cabinet Israeli policy. The direction anti-Sharon sentiment will members have been extremely uneasy over Sharon's mad take will depend in large part on the moral and political escalation, but as of this writing, have been outflanked influence exercised on Israel from the United States and and quieted bY'Sharon's megalomanic exertions. from Jewish communities abroad, particularly that ofthe United States. 'The worm may yet turn out to be a viper' Given the obvious growing importance of the armed A broader potential is suggested by commentaries forces in day-to-day Israeli life, the most significant in the opposition press. A June 15 feature in the barometer of the anti-Sharon potential is the report from English-language Jerusalem Post expressed the view authoritative intelligence sources of "extensive opposi­ that rather than crush Palestinian opposition, Sharon tion to Sharon from within the army command itself," would only ensure a dramatic new rash of Palestinian even among generals. These sources reveal that Sharon extremism in the future, while undercutting potential has been carrying out fe rocious purges within the army moderate Palestinian interlocutors fo r Israel. "It may chain of authority to attempt to nullify this development. seem churlish in the light of the Israeli defense force's A European source told EIR June 21, "There is no dazzling military operation to look now for the worm question that there is growing dissatisfaction within the in the apple," commentator David Bernstein wrote. Israeli army," not only because ofa belief that Sharon's "But it would also be well to consider that that worm strategy is going to fa r, but because the specificac tions may yet turn out to be a viper." that Israeli units are being called upon to perform "vio­ The centrist Ha 'aretz Hebrew-language daily has late the moral and ethical codes of Jewish culture." likened Sharon's strategy to the genocidal British In the · same vein, another source underscored that bombings of Dresden in 1945, attacking Begin in strong because of the "growing militarization of Israeli society" language for being drawn in by "Sharon's machina­ under war conditions, the army's attitudes would ulti­ tions," and warning that Israel is heading toward a mately be determining, and that it could be from within confrontation with the U.S.S.R. The journal of the left­ the army itself that a force might arise to block Sharon's of-center Mapam party, AI Hamishmar, has gone still extreme ambitions and call the whole war strategy into further, accusing Sharon of "bloody craziness," while question. the maverick Bamerkhav, the Hebrew-language coun­ In particular, experts familiar with the situation have terpart of the provocative Paris-based Israel and Pales­ drawn attention to political leaders of the rank ofgeneral tine magazine, has stated emphatically, "the aggression within the opposition Labour Party, who could bolt from in Lebanon endangers the very existence of the State of the "national unity" display and demand a shiftin Israeli Israel. " strategic thinking. Top Labourite Generals Bar-Lev and The most precise statements of reality have come

EIR July 6, 1982 International 41 from the left end of the political spectrum and from independents who in toto represent a small component of Israeli society. The content of these statements has nonetheless been important. Tel Aviv University Profes­ sor of History Benjamin Cohen, for example, has ac­ Euro,peanJews are cused Begin and Sharon of "Goebbels-like lies" and of bringing about the "dejudaization of the Jews" through torn by Lebanon war their "veritable blitzkrieg" in Lebanon, in a letter appearing as a full-page advertisement in France's Le by Thierry Lalevee, from Wiesbaden Monde on June 19. Cohen has formed a "Committee Against the War in Lebanon," and has appealed to American Jews to take a stand against Sharon's geno­ Relations between the state of Israel and the Jewish cide, in an interview with EIR . communities of Europe are being transformed as a result Alluding to Begin's frequent references to Hitler and of Israel's invasion of Lebanon. What Israeli Prime the holocaust, Cohen told EIR : "Who is now commit­ Minister Begin and Defense Minister Sharon have done ting the crime? Begin makes the comparison with a to Lebanon under the Hebrew code name of "Operation certain person. If you compare, Begin is more and more Purification" divided and traumatized European Jews, resembling someone whom I don't care to mention." particularly those in France. Cohen made the same point even more forcefully about The fact that French Jews are leading the criticism of Ariel Sharon: "In an interview Sharon told it openly, Israel has its own irony. Only a few years ago, the Begin that he had prepared the whole thing before he was government, finding French Jewry too passive, sought brought into the government! ... in terms of the PLO to mobilize them on Israel's behalf, directly financing he used the Hebrew word hashmada. which means new organizations such as "Jewish Renewal." A "radi­ extermination; this is identical to the words used by the calization" occurred, but not that sought by the Likud Nazis ...." government. Six hundred and fifty representatives of Israeli uni­ Soon after the invasion began, Radio Jerusalem lam­ versities, the military, and other institutions have signed basted French Jewry not only for insufficient support of a public petition against the war. In a press conference the invasion, but fo r showing active disapproval. Radio announcing this initiative, Hebrew University Professor Jerusalem stated, "numerous cases have been noted Y oshayahu Leibowitz accused the government of "fab­ where traditional supporters of Israel have been seen ricating a pack of lies" and using "Orwellian" language refusing to donate to Israel after prayers at the syn­ in labeling the blitzkrieg action "Peace in Galilee." He agogue." called for immediate Israeli negotiations with the PLO. Eyewitnesses reported that fightsbrok e out between During a trip to Paris, peace advocate Gen. Matti the unconditional supporters of Israel and the "refuse­ Peled charged that Israel's most recent actions were niks." The occurrences were hushed up to avoid publici­ making of the country "the Mongols of the Middle ty, but the crisis was out in the open. Fights among Jews, East, spreading destruction and misery" throughout the an unprecedented phenomenon, grew to dramatic pro­ region. His colleague, Uri Avneri, stated that the ab­ portions. On June 15, several Jewish organizations, some sence of a constitution in Israel gave Sharon a green of them known for their association with the Israeli peace light, since there were no constraints on his actions. movement, organized a demonstration of 500 in front of Avneri's statement echoed this writer's prior call for the the Israeli embassy in Paris where Israeli Foreign Minis­ creation of an Israeli constitution as a necessary instru­ ter Shamir was speaking to the press. ment to reverse the moral and political degeneration The demonstration was' assaulted by the "Jewish Israel has been undergoing. Renewal" group and the hardcore youth group of the However, Sharon's critics have not pinpointed the Likud, the Betar, known for its thuggery. Demonstrators role of Great Britain in having set up this crisis, through and attackers exchanged epithets of "anti-Semite" and allowing the "triggering" assassination attempt on Is­ "shameful Jew." Similar demonstrations were organized raeli Ambassador Argov in London. The critics have in front of the Israeli embassies in Bonn, West Germany thus left untouched Britain's filthy role in manipulating and Vienna. On June 22 the Israeli ambassador to Bonn Middle East factions toward war, and have not identi­ was prevented from speaking at a public event by a group fied Sharon's real pedigree as a brutish agent of the of demonstrators composed primarily of German Jews. Crown's neocolonialist wars of population-reduction in That this could happen at all was a sign, said German the developing sector. A constructive opposition to representatives, of a sweeping change in attitude toward "Israel's Vietnam" will require pinpointing British Israel. responsibility for arranging the entire despicable affair. Most of the mainstream Jewish communities have

42 International EIR July 6, 1982 stayed out of these demonstrations, due to an inability to resolve the "moral dilemma," as a French Jewish . Latin America leader expressed it, "between our support for Israel and the revulsion against its actions in Lebanon." The same strata did not hesitate to contribute financially to the campaign of those who did decide to go public. Which policies for Hundreds of paid advertisements were published by various professional, political, and religious groups post-warArgentina? willing to express their opposition to Israel. These included a letter published by Pierre Vidal Naquet in France, from his Israeli friend, Professor Benjamin by Mark Sonnenblick Cohen, denouncing the "Goebbels-type lies" of the Likud government to its own population. Others were Argentina's top military leadership still has not come to qlls to members of "the three religions of Abraham" grips with the fact that Britain's war against it was not to join to end the fighting. for mere possession of some God-forsaken islands, but Then there were the activities of the peace movement was for the larger "principles" which have always moti­ as such. On June 17, a press conference in Paris vated England's imperial system. London's Daily Tele­ organized by the Orientalist Maxime Rodinson fe atured graph contemptuously enunciated those principles in a Israeli peaceniks General Peled and Uri Avneri, who June 21 editorial message to a rudderless Argentina: had recently participated at the founding conference of "Whoever leads Argentina next will have to gain accept­ the "International Jewish Peace Union" sponsored by ance for a degree of austerity whic� its hedonistic society the Paris-based magazine Israel and Palestine. The has never known." conferences final communique had called for an "im­ Important sectors of the army appear to be taking mediate Israeli withdrawal to the international border" economic marching orders directly from Argentina's and upheld "the right to national self-determination of enemy, as per the Daily Telegraph dictum. The army high the Palestinian and Israeli peoples within the framework command has unilaterally appointed retired General of the two states." Reynaldo Bignone as President, effective July I. Bignone is a committed advocate of the British-inspired monetar­ The case of Nahum Goldmann ist policies which, since 1976, have ravaged not only Summing up the statements of the peace movement Argentine industry and society, but also its war-winning and the sentiments of those who had decided to remain capabilities. silent was a series in the French dailies Le Monde and The navy and air force-cognizant that the contin­ Liberation by Nahum Goldmann, fo under of the World uation of such policies would sink Argentina into civil Jewish Congress. The views of this once-isolated figure war-withdrew from the government. The army is thus are findingwi de echoes. presented with the problem of ruling a three-legged junta ' In one article in Liberation, Goldmann raised the with one leg, a sure recipe for instability. It hopes that courage and determination of the Israeli people, but British and American backing for such an arrangement warned against "transform[ing] Israel in certain ways will enable it to consolidate its power. into a protectorate of the United States that would The other two services have pulled theirof ficersout contradict the meaning of Zionism itself: Jews could not of all government positions and reportedly opened con­ have suffered through two millenia only to see their tact with dissident generals, colonels, and other army ancestral fatherland being dependent on the good will officers, and with civilian forces from the "Multiparti­ of a superpower. daria" umbrella group of opposition political parties, "The only hope for a peaceful solution lies in a who also want an end to monetarism. The Buenos Aires change of policy of the superpowers, which up to now daily Clarin revealed June 20 that a 35-point ultimatum have contented themselves with making platonic decla­ presented by Navy Commander Anaya in April to then­ rations. Concerning the United States, they tried to president Galtieri included a demand that Friedmanite eliminate the Soviet Union from any agreement in the Economics Minister Roberto Alemann be fired and his Middle East, something which is impossible .... The monetarist policies reversed. The air force has also draft­ joint pressures of the superpowers could bring Israel ed an economic program for Argentina's post-war recu­ and the Arab states to recognize each other and to peration, which includes salvaging Argentine industry establish relations-initially of cooperation, later of and restoring workers' incomes stolen by Alemann's friendship, [announcing] a new era of political, econom­ wage freeze. ic, and cultural development fo r Israel as well as for the What's at stake is Argentina's foreign debt of nearly other countries of this region ...." $40 billion. Everybody recognizes that even with the

EIR July 6, 1982 International 43 coming bountiful harvest, Argentina will not be able to national unity based on participation of all sectors ...." pay the $14-$ 15 billion in debt service due this year In Buenos Aires, Argentine Foreign Minister Nica­ without some fo rm of refinancing or re-negotiation. nor Costa Mendez released the communique to the This "debt bomb" can be London's weapon against press, with his thanks. Argentina, as mandated by the Daily Telegraph, or it can be Argentina's weapon against London, as pro­ A Latin American common market? posed by EIR iounder Lyndon LaRouche, Jr., whose Hundreds of businessmen from the five Andean Pact recommendations have been widely publicized in Ar­ countries (Venezuela, Peru, Colombia, Ecuador, and gentina. Bolivia) met in Buenos Aires June 24-25 to ink deals Inside Argentina, the targeted use of debt against buying from Argentina the fo odstuffs which Europe London is receiving growing backing from a nationalist had boycotted. The Andean countries will buy-and spectrum ranging from the left-wing Montoneros to the sell-Argentine, instead of buying fo ods from the anti-communist officers who once went to war against United States and the British Commonwealth. That them. "We have confronted the enemy on the battlefield meeting and the re-activation of the Latin American of its choosing. Why not also on the economic .battle­ Economic System (SELA), which has languished since field?" writes noted economist Raul Cuello in EI Econ­ the mid- 1970s, could be the germ of a Latin American omista, a business weekly printed on paper the color of common market. London's Financial Times. Cuello adds, "What I find LaRouche argues that such a common market incomprehensible is the attitude of those who oppose would be good for Latin America as a mean for 'on principle' ... that Argentina declare a cessation of promoting industrial development and shielding the international debt payments .... I think we will come continent from the plans of the British and their allies out strengthened in any future negotiations .... To to promote genocidal wars and famine throughout the such effect, Argentina must take advantage of its situa­ region. LaRouche also argues that such initiatives are tion to coordinate financial and commercial action with in the real interests of the United States-a view wel­ the rest of the Latin American countries who have comed by those Latin Americans who still hope to understood that the Malvinas is not just an Argentine reconstruct U.s.-Latin American relations from the cause." rubble left behind by former Secretary of State Alex­ Popular Left Front head Jorge Abelardo Ramos ander Haig. demanded June 15 that "a moratorium be declared on LaRouche's proposals have been widely reported in debts to all the international usurers who invaded our the Argentine, Mexican, Colombian, Venezuelan and territory. All mining, industrial and financial assets of Panamanian press. The major Caracas, Venezuela, daily the countries which blockaded Argentina and attacked EI Universal, ran an extensive report on how Latin its soldiers should be confiscated .... In this situation, America could deal with its unpayable $234 billion diplomacy should do nothing other than invite Latin fo reign debt. EI Universal cites LaRouche: America not to pay back its debts to the usurers and to "I have proposed that the government of Argentina establish a Latin American system of mutual help to prevent the triggering of a domino-like collapse defense.... " of the international monetary order, by limiting its The defense of Argentina's economic future is also unilateral action on financial relations to expropriating under intense discussion throughout Latin America. British financial claims against Argentina under the title Following their June 18-20 meeting, the fo reign minis­ of 'contraband of war.' Such a selective action, I have ters of Panama and Venezuela issued a joint statement explained, would avoid generating a threat against the which bolsters the efforts of those in Argentina who are integrity of an already tottering international financial resisting British blackmail efforts. It stated, "The blood system, a system already pushed to the edge of chain­ of our Argentine brothers has not been spilled fruitless­ reaction collapse by the lunacy of passage of the Moy­ ly; starting April 2, the days of the British colonial nihan-Kasten bill in the U.S. Senate." presence on our continent are numbered. With this quality of ferment in Latin America, "The governments of Venezuela and Panama an­ London's fears that a new Argentine regime may trigger nounce their commitment to provide ever more solidar­ a chain of debt actions across Latin America are ity and support on all levels to the righteous Argentine beginning to surface. A column in the June 23 edition cause, and they invite the great family of Latin Ameri­ of Clarin cites several British financial sources disturbed can nations to preserve continental unity and stay alert by Latin America's unpayable debt crisis, and then to the designs of imperialism and colonialism ....Th ey quotes the Financial Times of London noting fearfully: exhort the Argentine people, in these critical moments "A chain-reaction of destabilization throughout Latin resulting from a crucial battle, to preserve the needed America would be catastrophic fo r the West."

44 International EIR July 6, 1982 lation has increasingly fa vored support of Argentina in its fight against the British Empire; and third, fundamen­ tally, the Colombian population wants a change in eco­ nomic policy. The rejection of Lopez Michelsen is very important, because traditionally the Liberal Party he represented has been a majority party in Colombia. Nonetheless, Belisario Betancur won by nearly a half million votes. There is no clearer proofthat the Colombian people want a policy change. Lopez represented an aggregate of Friedmanite measures-credit restriction, fiscal reform, and a free hand to the financial sector. This created the conditions fo r turning Colombia into a drug economy; it is today the leading producer of marijuana and refined cocaine in the world. The options posed are now clear. Colombia must Interview: Maximiliano Londono again take a leadership role in the hemisphere-it is presently outside the hemisphere for all intents and pur­ poses because of its support fo r Britain in the Malvinas crisis. Internally, Colombia must fo rge a program of economic development based on long-term low interest rates fo r investment in heavy industry. A turning point for EIR: How did Betancur, a representative ofthe minority Conservative Party, win? How does your party expect to Colombian politics influence his administration? Londono : Not accidentally, both the Betancur campaign On May 30, the Colombian electorate went to the polls in and that of [Liberal Party dissident candidate] Luis unprecedented numbers to choose a new president. The Carlos Galan reflected in good measure the marginal but man they chose was Belisario Betancur, the first Conser­ nonetheless crucial influence of the Andean Labor Party. vative Party candidate elected in free and open elections in Their campaign themes were ours. One of them focused more than three decades. Betancur will assume office on on the country's industrial bankruptcy. Both Betancur Aug. 7. and Galan were obliged to attack Milton Friedman as The significance of a Conservative victory over the the cause of the productive sector's utter bankruptcy; majority Liberal Party for Colombia's future was the they had to say that long-term low-interest credits were subject of an interview EI R's Valerie Rush held June 4 with vital fo r the economy's recovery; they had to denounce Maximiliano Londono, the Secretary-General of the Co­ the monetarist policies which allowed the financial sector lombian-based Andean Labor Party (PLA N), who was in to grow at the expense of the productive sector. They New York at the time of the election. Mr. Londono, a implied that it was these policies which led to the growth political economist, was a candidate for the Colombian of the drug economy. Those were all themes introduced Senate in this year's congressional elections and his party by the PLAN campaign, and they had to be taken up by has played a prominent role in promoting region-wide Betancur and Galan if they wanted votes, plain and industrialization as a solution for Colombia. On June J 7. simple. EIR held its first seminar in Bogota, which was extensively Now we have already had several victories. The fi rst and favorably covered in a leading Colombian daily, EI was in the congressional elections in March, when we Espectador. defeated the drug-trafficking fi nancier Ernesto Samper Pizano, who was the ca mpaign manager fo r Lopez. He EIR: The recent presidential elections have opened up a was on the Lopez slate for Senate in Bogota, and lost new political dimension in your country .... dramatically. And of course this was compo unded by Londono : The recent election of Belisario Betancur as Lopez's defeat in the presidential elections. We believe president demonstrates, fi rst, that the Colombian popu­ that appropriate conditions now exist fo r both Betancur lation violently rejected Lopez Michelsen, who was the and the opposition led by Galan to carry fo rward some president in the period of 1974-78 [and Betancur's prin­ of the intiatives we have proposed for Colombia's recov­ cipal challenger-V.R.]: second, the Colombian popu- ery. The program we will be presenting is the best weapon

EIR July 6, 1982 International 45 we can have for educating these forces. The other faction is led by ex-President Misael Pastrana Barrero. Pastrana's faction is made up of many tenden­ EIR: Under the outgoing Turbay government, Colom­ cies, but among them are some industrial interests. Gom­ bia allied itself with the United States, Trinidad-Tobago, ez hoped to become the candidate of the Conservative and Chile in voting against Argentina at the recent OAS Party but was massively defeated at the nominating meetings. Is Colombia's position now likely to change convention, and was forced to accept Betancur as the under Betancur? compromise candidate. With Betancur in the presidency, Londono: Colombia was a leader in the creation of the Gomez will nonetheless have a certain influence in the Organization of American States, and it is now playing government, controlling perhaps 20 percent of the Con­ the role of grave-digger in burying it; it has set itself up servative machine. It is worth remembering, however, against the interests of the hemisphere. The worst thing that Gomez was the principal partner in government of Colombia could have done was to ally itself with the Lopez Michelsen during his fo ur years in office, and United States in this situation. What happened is that, controlled an estimated 40 percent of the government particularly regarding the Caribbean, under the influ­ machine. Whether Gomez will be able to increase his ence of the Haig State Department Colombia has' played control remains to be seen. the role of increasing tensions in the area toward an Remember that there are other fo rces which helped eventual confrontation with the Soviet Union. This is an put Betancur in power, including the Catholic Church. absurd role for Colombia, because if we were to confront The Church opted for Betancur over Lopez because the the Cubans the battle would not last two hours; we would fo rmer is nominally a Catholic, rejects abortion (which , be devastated. The State Department is sending Colom- Lopez favored), and his policy would be to sign a treaty bia to its suicide, something the people of my country with the Vatican to renew the Concordat, which Lopez obviously do not want. would not have renewed. Furthermore, Lopez had writ­ But this is in fact a still larger game, because what we ten a letter to Willy Brandt pledging that the moment he are talking about is the concept of NATO out-of-area was elected the Liberal Party would join the Socialist deployments-the United States wants to set up a NATO International. The Colombian elections proved that the base on Colombia's islands of San Andres and Providen­ Liberals did not want to be social democrats, and in fact cia. The islands would be a beachhead and, in a division preferred to go Conservative in that case. of labor with the British, would give the United States The military was very worried that Lopez govern­ control of the entire South Atlantic-playing with fire. ment would turn Colombia into another EI Salvador I think Betancur may make some changes in this, if under a policy of permitting terrorists to legally enter his statements in the recent period and those of his politics; that is, that they would have full rights to campaign manager can be taken seriously. His campaign political participation under a broad amnesty. This was chief Augusto Ramirez Ocampo said about a month ago, Lopez's program-what he cynically called his "plan for before the elections, that the United States had shattered peace" -and would have meant destabilization fo r Col­ the continental alliance, had destroyed the Monroe Doc­ ombia and the region as a whole. trine, that Latin America had to reorganize itself, and that the Colombian government position was absurd. EIR: The Liberal Party is the majority party in Colom­ These statements clearly had an effect on the vote, be­ bia and has many factions within it. Has Lopez Michel­ cause the population knew that a vote fo r Lopez would sen's defeat sealed the fate of the Liberal Party? mean a continuation of the government's pro-British line Londono: The only thing the Liberal Party can do now is on the Malvinas issue. What we await now is for Betancur to carefully review the causes that led to its defeat and to fulfill his promises, and we are applying the necessary rescue some of the more positive elements that it has had pressure to see that he does. in its history, exemplified by the government of Lopez Pumarejo in 1934-38 and again in 1942 through 1945. EIR : The PLAN has in the past characterized the Con­ They must realize that the policy of Lopez Pumarej o, servative Party as the domain of people like Alvaro which was to forge an alliance between the working class Gomez Hurtado, who is a self-proclaimed fa scist. What and the industrial sector to develop a basic industrial does it mean that a candidate supported by Gomez, as infrastructure, was once the foundation of the Liberal well as by the other factions of the Conservative Party, Party's success. But slowly, thanks to the influence of has reached the presidency? certain anglophile agents like [ex-President] Alberto Londono : The Conservative Party continues to be di­ Lleras Camargo, these policies were eliminated from the vided into two basic factions. One faction is headed by party program. If the Liberal Party wants to have a Gomez Hurtado-who is linked to the European Center future-and it can have one still under the kind of new for Documentation and Information in Madrid, a Haps­ fo rces Galan has tended to represent-it must recapture burg and European oligarchy-run intelligence center. its tradition. It must again become a party representing

46 International EIR July 6, 1982 labor and industry in favor of economic progress. In EIR: Colombia has been promoted as a developing­ other words, only with a capital-intensive and high-tech­ sector model for the reduction of population growth on nology development program can the Liberal Party re­ the continent. How does the PLAN program view the cover the leadership it has lost. issue of population growth? Londono: The La-Rouche-Riemann econometric model EIR: Can you describe in more detail the programmatic that we used for our method of analysis considers the solutions your party offers to Colombia? question of population as fundamental. It views the Londono: First let me note that the Andean Labor Party wealth of a nation as made up precisely of the develop­ will hold its Second Annual Congress on June 18 and 19, ment of the intellectual powers of that nation's labor and the centerpiece of that congress will be a presentation force. This is the core of the program. This is in fact at of our program on how Colombia can be turned into an the center of a fierce battle against the current "supply­ advanced-sector nation between now and the year 2000. side" economic theories and all the other monetarist This program that we will be presenting, a global pro­ theories, because the key question to be asked is, how do gram counterposed to the [Carter administration's] Mal­ you expand the real economy? How do you distinguish thusian Global 2000 Report, was produced by a team of between productive activities that represent an expansion experts from the Fusion Energy Foundation and the of useful processes and unproductive activities? Executive Intelligence Review. It was headed by FEF We want to bring out this issue of population in the research director Uwe Parpart, and included Peter Rush, Colombian case, because here we have a classic case. A Dr. Steven Bardwell, and Sylvia Brewda, among others. significant reduction in the growth rate has actually been What we did was take a look at the historical balance achieved, from 3.5 percent annual growth some 12 to 15 of how the Colombia economy has behaved over, say, years ago to the present 1.9 percent. This has been the past decade. We found some interesting things. First, achieved essentially through reducing living standards, that the oil crisis did not strike the Colombian economy dis-investment, credit reduction. In our program we with the same intensity that it did many other Western propose that there be a significant expansion of the countries. This has given Colombia a certain advantage population. The program has been designed to prove with respect to its potential to expand its economy. that with a larger Colombian population better condi­ Nonetheless, when in 1 974 Lopez Michelsen became tions can be created; we're not just talking about feeding president, the impact was immediately visible in the a larger population but of developing future generations. statistics. By 1976, there was a drastic fall in the coeffi­ cients which express the reproductive capacity of the EIR: Belisario Betancur has been somewhat of a popul­ economy as well as its level of productivity. One can see ist in his campaign. One of the proposals that earned him a redirection of the bulk of investment capital toward his popularity was "long-distance education" [courses light industry and labor-intensive agriculture to the det­ by mail and television/radio-V.R.] This sounds similar riment of the capital-goods industrial sector. to the PLAN's programmatic emphasis on raising skill This represented a phase-change in the economy. It is levels. Is there a difference? now devoted to producing consumer goods for the Londono: There is a substantial difference . The people's emerging class, the middle class-particularly those sec­ mandate in voting fo r Betancur was for change, substan­ tors linked to hotels, to services, to the drug trade, those tial change. However, we know that certain interests sectors stimulated by the financial activities Lopez pro­ associated with Betancur's campaign hope to turn his moted. administration in certain undesirable directions. For ex- , What we fo und is a classic demonstration of the ample, in the area of education, certain entities of the effects of a Friedmanite package: drugs, fiscal reform, United Nations linked to Ervin Lazslo and other such Stockman-style budget cuts; simply put, the thermody­ individuals have been working to create programs for namic destruction of an economy. We also prepared an rural and peasant communities which are referred to as alternative history, that is, what would have occurred if "saturated areas." That is, they have "too many engi­ in 1974-78 we had continued with the modest rates of neers," or "too many skilled professionals." Therefore growth-say 2-3 percent-that existed in the heavy in­ they seek to provide very specific fo rms of training for dustry sector until 1974. Our model showed that Colom­ labor-intensive activities, for manual labor, for "appro­ bia would have been in significantly better shape. Now priate" technologies. This has us deeply concerned, the final model run we prepared goes much further, which is why we seek to educate the country's leaders on because what we proposed is achieving levels of living the need for more scientists, more engineers and techni­ and culture by the year 2000 comparable to those in cians. We want to eliminate the absurd theories of the Western Europe today. This is the purpose of the pro­ World Bank and the Brandt Commission, which speak gram, to show what investments are required to reach of a so-called contradiction between employment and these goals. technology.

EIR July 6, 1982 International 47 WhyCou nt Rumyantsev is turning over in his grave by Rachel Douglas, Soviet Union Editor

"Will President Monroe Turn Over In His Grave?" and then plunged into historical error: "Yet it is precisely asked Alexander Baryshev of Moscow's weekly New these interests that are expressed by the Monroe Doc­ Times. Havingjust read a Pravda spoofin which the irate trine, and its author is notiikely to turn over in his grave ghost of George Washington chastized a New York Post because of such a violation of his doctrine. He knew for reporter for holding forth on the Anglo-American "spe­ what purpose he had conceived it." cial relationship" although he, George Washington, had And at that, I have no doubt that not only James led a liberation war against England, I wondered if Monroe, but also Count �ikolai P. Rumyantsev, Com­ Baryshev was going to go a step further and treat the merce Minister, Foreign Minister and Chancellor to His readers of New Times, in the 10 languages in which it Imperial Majesty Alexander I of Russia, each completed appears, to a taste of the real history of conflict between one sepulchral rotation, and groaned across the centu­ the British and the American political systems in the ries. Western Hemisphere. Baryshev certainly milked fo r all it was worth "the Rumyantsev and John Quincy Adams crisis of the inter-American system," the havoc wrought The error was tiresomely predictable. If Karl Marx on the United States' relations with the nations of Latin did not distinguish between the American system of America, when we took Britain's part in the South political economy-with its repUblican institutions and Atlantic. doctrines of foreign policy-and the British imperial "In the Monroe Doctrine," Baryshev summarized system of economic looting, who would Alexander the words of American politicians from the 1940s, "the Baryshev be to claim that the Monroe Doctrine was U.S. had declared that any attack on any American state anything other than a new, Western Hemisphere brand to the south of us would be regarded as a manifestation of imperialism? of an unfriendly attitude toward the United States. In the Yet sometimes, as in this case, the historical evidence [1947] Rio de Janeiro pact this became the doctrine for is so crystalline that it should offer a Soviet writer the the entire Western Hemisphere." He continued, "Today opportunity to shed those burdensome categories of a situation has emerged where it would seem that the analysis. Shall he read John Quincy Adams' denuncia­ pact essentially based on the Monroe Doctrine ought to tion of "colonial establishments" and still insist on his be activated .... For one of its signatories is threatened "U .S. imperialist policy" of 1823? But perhaps it will be with a massive armed attack by a non-American power, more fruitful for Mr. Baryshev to reflect on the thoughts Britain .... of Count Rumyantsev, a Russian, about the young "Why has Washington forgotten about the assur­ republics in North and South America. ances given by Monroe and all succeeding presidents of Count Rumyantsev could understand what was at America's readiness to defend its southern brothers stake, although he was an old man, out of office for against any aggressor? Evidently because at the given nearly a decade, when President Monroe proclaimed moment this does not accord with the interests of the the doctrine in December 1823. Its main author, Secre­ United States' imperialist policy both on a global scale tary of State John Quincy Adams, had been his frequent and in the South Atlantic." guest in earlier years, when Adams was U .S. Ambassa� Baryshev teetered on the brink of his own question dor to St. Petersburg in 1809-12, and the prospects of

48 International EIR July 6, 1982 independent nations in South America often figured in yantsev contested, in his diplomacy and then with a their long, congenial conversations. formal Statement on Neutral Trade issued by the Rus­ They came to discuss South America by way of sian government in December 1810, the French classifi­ issues of commerce, which were where Russia and cation of United States vessels as "English" and there­ America found common ground from the American fore subject to the ban. Rumyantsev wanted to protect Revolution on. Russian commerce with the United States and also Despite having a monarch sympathetic to England, trafficking with the Spanish colonies in South America, Catherine the Great, Russia in 1780 had been organized some of which were just becoming independent. The by the French and the Americans to head the League of French ambassador reported of Rumyantsev in a Janu­ Armed Neutrality that defended merchant vessels of ary 1811 dispatch, "He reminded me that he had told neutral nations against British attack. The Armed Neu­ me many times that while still a Minister of Commerce trality allowed vital supplies to reach the colonial forces; he did everything possible to establish trade connections its survival as a principle of policy for several nations with the Americans, whom he views as natural rivals of represented a serious challenge to the British, who the English. It would be a political shortsightedness, he meant by "free trade," trade free of any nation's said, to allow relations with the Americans to deterio­ protectionist impediments to total British domination. rate at the moment when they are so openly opposed to In Russia, the security of neutral navigation had a the English." champion in Count Rumyantsev, who became Minister Both John Quincy Adams and Rumyantsev, as of Commerce in 1802, soon after the accession of Adams's record of their conversations shows, hoped Alexander I. Son of one of Russia's greatest 18th­ that the South American lands, free of Spain, would century military officers, Gen . P. A. Rumyantsev-Za­ assert independent policies in trade, making them free dunaiskii, N. P. Rumyantsev was a scholar as well as a of England as well. Rumyantsev drafted a proclamation diplomat. His collection of books and manuscripts was on allowing Latin American ships to enter Russian turned during his lifetime into the Rumyantsev M u­ ports; it said that since American ports had been opened seum, which later became the kernel of the huge V. I. to all seagoing nations for commerce, "we hold that, Lenin State Library in Moscow. whatever mode of government be established there, it would not create an obstacle to commerci al connections Economic questions between their inhabitants and our subjects, so long as Rumyantsev has often been glossed in history books our enemies have no influence there." Adams surmised as merely "pro-French" (and therefore anti-British), that Rumyantsev wanted a policy "to favor the indepen­ because he supported conclusion of the 1807 Treaty of dence of the provinces of South America which be­ Tilsit between Russia and Napoleonic France, after longed to Spain" and attributed the Russian State Alexander's humiliating early defeats by Napoleon. But Council's rejection of the plan to "a lurking English his exchanges with Adams show that there was more to influence. " the Tsarist fo reign minister than francophi�ia. "I have American guts," he told Adams near the Nation-building faction end of his career, when British and Venetian factions in Adams wrote in his diary that Rumyantsev's opin­ Alexander's court had beaten him, "and were it not for ions on South American independence were close to my age and infirmities, I would go now to that coun­ American views, and he elaborated that this meant anti­ try." Jacobin. Rumyantsev fe ared the outbreak of "examples In 1811, Rumyantsev fa ulted Napoleon on the mat­ of that sort of violence and those scenes of cruelty which ter of trade. Adams recorded in his diary that Rum­ experience had proved to be too common in such yantsev objected to Napoleon's failure to consider "that revolutions," but he would welcome new governments commerce was an interest in which all mankind was on the American model. concerned; he saw in it nothing but the trade of a With these remarks, Adams suggested that Rum­ certain class of individuals .... But in truth, commerce yantsev's interest in the American system went beyond is the concern of us all. The merchants are, indeed, only the opportunities presented for Russian trade, that he a class of individuals, bearing a small proportion to the had an idea of the virtue of those republics the later mass of people, but commerce is the exchange of mutual Monroe Doctrine would seek to fo ster and protect. superfluities fo r mutual wants-is the very chain of In this, Count Rumyantsev was not alone in Russia. human association; it is the foundation of all the useful The American Revolution, which Russia assisted by and pacificint ercourse between nations; it is a primary leading the Armed Neutrality, had heartened the Rus­ necessity to all classes of people." sian faction that was heir to the great nation-building After Tilsit, Russia was party to Napoleon's conti­ effort of Tsar Peter the Great (who ruled from 1682 to nental blockade against English shipping. But Rum- 1725), acting on Gottfried Wilhelm Leibniz's proposal

EIR July 6, 1982 International 49 to found a Russian Academy of Sciences. Russians in the Academy, in the government, and among publicists, were studying how science and industry developed in Investigative Leads the y�ung United States of America. In 1807, Rumyantsev's colleague Finance Minister D. A. Guryev sponsored the publication in Russian of a seminal document on the American science of pro­ moting industry, Alexander Hamilton's 1791 Report on Manufactures. It was translated by V. F. Malinovskii, who as first headmaster (1811-14) ofthe Tsarskoye Selo school fo r boys would be the teacher of Russia's greatest poet, Alexander Pushkin, and of M. A. Gorchakov, the Russian Foreign Minister who negotiated Tsar Alex­ Did central banks ander II's alliance with Abraham Lincoln. In his intro­ duction to Hamilton's document, Malinovskii held that silenceP-2 's Calvi? "all the rules, remarks and means proposed here" were "suitable" ,for Russia as well as they were for the United States. by Umberto Pascali in Rome

Russian republicanism On the morning of June 18, a London worker found, Malinovskii's impulse to seize the best of America's hanging on a scaffolding under the Blackfriars Bridge, republican, industry-building principles was no mere two steps away from the City of London, the dead body footnote to Russian history. Russia's own nation-build­ of Roberto Calvi, the president of italy'S biggest private ing faction grew continuously, especially from the time bank and a key figure in the P-2 scandal that has rocked of Peter the Great, always in contact with the republi­ Italy for the past year. In Calvi's pockets, Scotland Yard cans of Europe and America who were also responsible reported, were 10 kilos of stones-put there as a Mafioso fo r the great republican project, the United States of "message": This is what happens to those who betray America. their "friends." The history of Russia as a contest between oligarch­ So ended the career of the powerful head of Banco ical and republican policies is the subject of a Russian Ambrosiano, whose name was associated with convicted history project commissioned by American economist Mafia financier Michele Sin dona. As a member of the and Democratic Party figure Lyndon H. LaRouche, Jr. Propaganda-2 (P-2) masonic lodge which ran Italy's Since Soviet and United States policies toward each drug-and-dirty-money networks, and which mounted other "are more governed by impassioned mythologies coup plots against the Italian government, Calvi took than realities," LaRouche has written, it is vital for with him to the grave some of the best-kept secrets of world security to provide a higher point from which to Rome, Geneva, and London. see each nation's interests. London authorities are now trying to sell the idea Both for American patriots and for Soviet Russians, that Calvi killed himself. But on the front pages here is the LaRouche survey of Russian history, from the rise the story that Calvi "had to die" because he was about to of the city-state of Kiev a thousand years ago to the reveal what he knew about the Grand Mother Lodge of shift of power into the hands of Lenin, is designed to London, of which he was a member, and its relationship give such a perspective. By looking at Russian history to P-2. through the eyes of the American patriotic Whig tradi­ Members of the Grand Mother include the most tion, a team of LaRouche's collaborators will vault over important bankers in the City and top aristocrats; the the prevailing mythologies of socialism and capitalism Grand Mother is probably the most important single to reach the true principles of national interest. For lodge of the Scottish Rite Freemasons (headed by the Alexander Baryshev, and many others, it will be an eye­ British Royal Family) and is believed to be the center of opener. a central bankers' network, encompassing the Bank of England, U.S. Federal Reserve, Bank of Italy and others. *Rumyantsev's views and his discussions with Adams are The Italian police have asked British authorities to covered in Adams' diaries; they are also carefully documented start an investigation of whether the City harbors a in Soviet Russian historian N. N. Bolkhovitinov's The Begin­ center for the recycling of money coming from Italy, and nings of Russian-American Relations. 1775-1815. published in English by Harvard University Press, 1975; several of the perhaps other countries-money collected through kid­ quotations in this article are from Bolkhovitinov's compila­ napings and drug traffic. tion. This information was revealed in the Communist

50 International EIR July 6, 1982 Party-linked Italian daily Paese Sera, which adds that in 1979 the Milan magistracy had uncovered one such operation in London that was recycling dirty money. Paese Sera mentions in connection with Calvi one Italian Mafi oso named Pierluigi Rotti, who in the early 1970s had built in London an empire of instant banks special­ izing in recycling dirty money, under the apparent pro­ tection of the British authorities. Paese concludes that after all "the Mafia isnothing but the violent instrument of other powers." EIR 's own investigation into the Calvi murder points to the all-important Hambros bank, which had extensive financial relations with Banco Ambrosiano and on whose board sits none other than former Foreign Minister Lord Carrington, who still runs Thatcher's foreign policy. Another suspect is the Duke of Kent, head of the London Freemasonic organization. Just before his fl ight, Calvi was reported as saying: "I'm not a P-2 man, I belong to the real freemasonry, that of the Duke of Kent," indicating Calvi sought protection in London afterhe had received threats on his life. Calvi disappeared from Italy exactly one week before Roberto Calvi's topmost controllers seem to have been ill Great his body was fo und. According to investigators, Calvi Britaill . had left Rome for Venice accompanied by a person linked to international drug trafficking; from Venice he reached Vienna and then presumably Switzerland, where Later, under questioning by a parliamentary commit­ he apparently received a bagful of explosive documents tee, Calvi said he was fo rbidden to speak fu rther on the on the Grand Mother before his arrival in London. After London lodge. "I received death threats," he said. "I his death the bag disappeared. don't want to end up dead.'" At the time of his death, Calvi was scheduled to be One theory here, put forward by the London corre­ interrogated in just a few days by Italian magistrates spondent of II Giorno, is that Calvi became "the most (prosecutor-judges) in connection with Calvi's appeal of important victim of the Falklands War." The journalist his conviction on charges of illegal currency export. claimed Calvi was involved in fi nancing the Argentine Sources here say Calvi, on the edge of a nervous break­ junta to the tune of 2 b i lli on lire through Banco Andino. down, had recently met with Bettino Craxi, boss of the Another version, put out by the Communist Party Italian Socialist Party (PSI). Immediately thereafter paper Vnita, is that Calvi, after realizing that his Banco Craxi told his close collaborators of his alarm about the Ambrosiano was going unavoidably bankrupt, "decided banker's "psychological fragility," and his fear that Cal­ to go secretly to the Grand Mother Lodge to ask fo r vi could no longer keep a secret. help. It is possible that, having gotten a refusal, he might Already when the P-2 scandal broke out last year, h ave threatened to reveal the many secrets he k new. At Calvi had confessed, among other things, that he had that point the killers entered the action." illegally funded Craxi's PSI to the tune of 21 billion lire Calvi's testimony might well have shed a dramatic at the direction of the P-2 lodge. light on Italian magistrates' current investigation of the At that point Craxi started a loud campaign against Bank of Italy. On M ay 28, Judge Raffaele Bertoni, a the Italian magistrates, whom he accused of "police member of the highest body of the Italian magistracy, brutality" in their interrogations. He also suddenly de­ accused the central bank of covering up "illegal fi nancial manded changes in the Italian constitution to limit the activities in the Italian banking system'"-the recycling "excessive" power of the magistrates. of drug money. For many years, Bertoni said, the Bank During the same period, banker Calvi admitted, "I of Italy has "favored the parasitical and unproductive am a member of the Grand Mother Lodge of London emergence of a certain powerful fa ction, with conse­ because [P-2 Grandmaster] Licio Gelli and Umberto quences that are before everyone's eyes." Ortolani persuaded me to join. If I had disobeyed those The "powerful faction" to which Bertoni was refer­ orders, I could not have done business in the City of ring is, of course, the P-2 Banco Ambrosiano group London." centered around Calvi.

EIR July 6, 1982 International 51 DatelineMexico by Josefina Menendez

Will the PRI listen to labor? Portillo's response to the CTM-is Old timer CTM leader Fidel Velasquez is making IMF-style not only endangering .t he old gov­ ernment-labor alliance but is also austerity the issue, under pressure fr om his base. threatening the basis of 50 years of political stability. The backers of the IMF-style "through the wringer" austerity push are correspondingly picking In late June, top labor leaders of have no choice but to go the IMF up attacks on the CTM structure. A the Confederation of Mexican by late summer as the current credit particular target: Joaquin Gamboa Workers (CTM), led by Fidel Ve­ squeeze tightens. Pascoe, head of the Senate and Fi­ lasquez, paid a visit to Mexican The CTM attacks against aus­ dei Velasquez protege. Gamboa President Jose Lopez Portillo to terity and monetari st policies have got double-barreled treatment in present the following demands: re­ been backed with specificpr ogram­ late May when a plane he was rid­ duce interest rates, put an end to the matic demands. One of the key is­ ing in on the way back from U .S.­ "dollarization" of the economy, sues that the Confederation of Mexico interparliamentary meet­ and halt capital flight. TheMe xican Mexican Workers labor Federation ings in California was reported to President told them that it was no has pushed for is exchange controls have contained undeclared import longer up to him to fulfill their as an immediate measure to stop items, and when labor unrest in a demands but up to the incoming capital flight. Mexico City union under his ulti­ administration. What has most affected Mexico mate supervision led to two deaths. In the period before the July 4 are the U.S. Federal Reserve policy However,... high-profile CTM elections, a period characterized by of high interest rates and the col­ mobilization put an end to the political instability, Mexico's or­ lapse of the international price of scandal-mongering. Furthermore, ganized labor has been the sole oil. The government has already Velasquez stated June 12: " ...It is force among Mexican institutions been forced to cut or "postpone" a pity that we live under a rule of to systematically reject the attempts development projects. In mid-June, law. Otherwise I would tell you by the International Monetary plans to build a second nucl ear that the CTM w ill finish off all the Fund and Bank for International complex were canceled, and a week enemies of the Revolution once Settlements to impose a monetarist later the postponement of the con­ and for all." anti-industrial economic model struction of two petrochem ical After referring to the present upon Mexico. plants on the Gulf of Mexico-La­ period as key for the future of On June 16, Porfirio Camarena guna de Ostion and Altamira-was Mexico, Fidel Velasquez added: Castro, a Mexican congressman also announced. These two plants "We are willing to show our faces, and economic adviser to the CTM, were part of an ambitious long­ and if necessary give our lives to made the anti-IMF point with par­ term project which includes the cre­ defend our constitution and the ticular vehemence. "Labor would ation of new "port cities" to be integrity of our institutions." absolutely reject Mexico's getting populated by skilled workers. The CTM announced a mass credits from the IMF. We would The IMF policies that the CTM rally of 2 to 3 million workers in rather go and seek credits from the characterized. as being "against our Mexico City for June 28 to con­ socialist bloc," he said. Camarena nation's most fundamental inter­ clude the electoral campaign ofPRI recalled that in 1976, when Mexico ests" are in fact in their first phase. presidential candidate Miguel de la signed a letter of intent with the This is widely referred to as "IMF Madrid Hurtado with a show of IMF, the Mexican government was without the IMF," and is compared fo rce. Political observers here be­ forced to freeze wages and pledge to Brazil's similar approach begin­ lieve that the CTM leaders will not to reduce population growth. Mex­ ning in 1980. be able to hold together their labor ico currently has no agreement with The lack of immediate response base behind the PRI in the future if the IMF, b ut is being told by some by Lopez Portillo and the official the PRI and de la Madrid ignore international bankers that it will PRI party-best shown in Lopez their demands.

52 International EIR July 6, 1982 Middle East Report by Robert Dreyfuss

The 'mosaic' of Father Riquet laborates with the Grande Loge A Jesuit spells out his version of a plan fo r carving up Lebanon, Nationale de France, the only Ma­ sonic lodge in France officially rec­ Jordan, Iran, and Iraq-using Swiss cantons as a model. ognized by the mother lodge of England. Like most representatives ofthe European oligarchy, Father Riquet expresses a thorough disdain for What does Israeli Minister of the visits to Switzerland. the United States. Interior Joseph Burg have in com­ "The West Bank could have a "A lot of Lebanese Christians mon with Henry Kissinger, Prof. status like the Swiss canton, in asso­ view American policy in Lebanon Bernard Lewis of Princeton U ni­ ciation with Jordan, Egypt, and Is­ with suspicion. The United States is versity, and the Prophet Isaiah? rael. In Lebanon, the Christians, accused ofha ving tried to use Leba­ According to the French-based Druses, and Shiites would each also non to resolve the Palestinian prob­ Reverend Father Michel Riquet, have their own canton." What lem by favoring Christian emigra­ S.J., all three find agreeable his plan about Kurds? "Yes, we should also tion. " to carve up the Middle East into have a Kurdish canton, which Riquet's proposal has been in theocratic "nations" organized would be partly in Iran, partly in the public domain since the publi­ along the model of the Swiss can­ Iraq." cation of his article in the June 1980 tons. "My friends in Lebanon," he issue ofthe Revue des Deux Mondes. Under circumstances less ex­ said, referring to the Israeli proxy There, he wrote that "the Middle treme than the Israeli onslaught Maj. Saad Haddad, Christian mili­ East has always been a mosaic of into Lebanon or the orchestrated tia leader in the South, and to Bash­ different ethnic and religious com­ spread of Islamic fundamentalism ir Gemayel of the fascist Falange, munities," but a "global solution" throughout the Middle East, one "call this 'the United States of the is possible "inspired by the model might be tempted to shrug off such Levant: " of the Helvetic Republic." In Switz­ proposals as the fantasies of an oli­ Israeli Defense Minister Ariel erland, each canton is a sovereign garchical elite that has lost touch Sharon is known to be operating on state, organizing its own law-en­ with strategic reality. Unfortu­ precisely this sort of blueprint fo r fo rcement, education, and partici­ nately, such discussions have be­ destroying the nation-states of the pation in the defense and diplomat­ come so commonplace as to war­ Middle East, and installing a Ma­ ic representation of the confedera­ rant closer scrutiny. ronite Christian entity in souther­ tion. No matter how much a Father most Lebanon, a Shiite entity in In a bloody caricature of this Riquet might now claim to be ap­ Tyre, and a Falange entity in and model, the canton formula "would palled by the regime of Ayatollah around Beirut (see EIR, June 22). enable the Christians of Lebanon, Khomeini, it remains it fact that the Father Riquet first came to just like the Druses and the Sunni, barbaric regime in Iran is the out­ EIR's attention in April 1981, when Shiite, or Alawite Muslims to each come ofthe experiment in theocrat­ he co-signed an appeal on behalf of have their own canton. ... The ic rule concocted by British nation­ Lebanese Christians with Marie­ same formula would enable us to al Bernard Lewis and Lord Cara­ Madeleine Fourcade, a World War give the Palestinians of the Gaza don, the foremost authority on Je­ II leader of the British-run "Alli­ strip as well as the West Bank, i.e., rusalem for British intelligence, ance" segment of the French resist­ of Jordan, the possibility ofgovern ­ among others. ance. ing themselves in the same condi­ At his Jesuit seminary on the What made the appeal interest­ tions as a Swiss canton, within a Rue de Grenelle in Paris June II, ing was its suggestion that the evil confederation with Egypt, Jordan, Father Riquet described to EIR Knights of Malta "organize an in­ and Israel. "With Jerusalem as the how his idea for a "global solu­ ternational brigade to liberate Le­ federal capital, this would finally tion" in the Middle East had come banon." A member of the Order of realize the wishes of the Prophet ' to him during one of his many the British Empire, Riquet also col- Isaiah. "

EIR July 6, 1982 International 53 International InteWgence

adviser to French President Mitterrand, pan at a time when trade relations are Schmidt warns of regional during the Socialist's campaign in the already tense, particularly in the high­ 1981 presidential election. technology field. An official at the U.S. wars and economic danger In coming to its decision, the court Trade Representative's Office told EIR . noted that the use of the term "Nazi" "The inci dent can't help but adversely West German Chancellor Helmut " ... undermines the honor and the con­ affect Congress's thinking about Japan Schmidt told the fe deral parliament June sideration of the European Labor Party when they consider trade legislation." 24 that world peace is threatened by re­ by making it the heir of the Hitlerian Japanese sources have speculated that gional conflicts including those in the Party." Since a libel charge in France can this was the intent of the operation, as Falkland Islands, Lebanon, Iraq-Iran, be co untered by an appeal to the truth, well as giving Washington more leverage the Mideast in general, Poland, and Af­ the court had considered the writings of in direct negotiations. U.S. Attorney Jo­ ghanistan. Each of these situations has the PO E, and fo und that they "contain seph Russionello insisted to the press the potential for a superpower confron­ severe criticisms of Zionism or the policy that "there was no coordination between tation, he said. The second threat comes fo llowed by governments of the state of the investigation and ongoing trade ne­ from the "economic recession" which, he Israel. But this is different from anti­ gotiations," but the suspicion ofconspir­ said, is weakening the West and particu­ Semitism and can even less be proof of acy remains widespread in Japan. larly the developing sector. ideological affiliation with Nazism. " The FBI affidavit and an Hit!lchi U.S. interest rates, he said "are higher The POE won a similar libel case last spokesman both agree that the alleged than ever since the American civil war" year against the In ternational Herald offer by Hitachi for more than $600,000 and are "a decisive fa ctor responsible for Tribune. This is thus the third time that a for IBM technological secrets occurred the world economic recession." Schmidt French court has rejected the slander, in response to initiatives to "sell" the lashed out at the latest U.S. effort to known to have originated with the Anti­ secrets by an FBI dummy corporation quash the European-Soviet natural gas Defamation League in the U.S., that named Glenmar Associates. The FBI pipeline deal, saying that West Germany LaRouche an his associates are "Nazi version states that the FBI began the case had agreed at the Versailles summit to anti-Semites. " after it was informed by a fo rmer FBI restrict loans to the East, "but what agent working for IBM that IBM mate­ should not happen, and what will never rials were known to be at Hitachi offices. find ourapprov al, is a trade war against There is reason to suspect, however, that the Soviet Union. We will never partici­ this initial incident may also have beel' pate in a trade war, because this would the result of a "sting" operation set up mean a revival of the cold war." The Tokyo: Hitachi sting by the FBI. Soviet economy is not on the verge of collapse, he said; and if sanctions are 'politically motivated' imposed against it, it will only step up its own efforts, especially its military efforts. The FBI's "sting" operation against Jap­ anese industrial giants Hitachi and Mit­ subishi-in which employees of those Indonesian Minister: fi rms are charged with offering to buy technological secrets "stolen" from China 'biggest threat' IBM-is certain to aggravate already French again rebuff tense relations between Japan and the In an interview published in the June 28 United States. international edition of Newsweek mag­ anti-LaRouche slanderer FBI official Tom Anderson told EIR azine, Indonesian Foreign Minister Ku­ he was "virtually positive" there had nev­ sumaatmaja Mochtar criticized U.S. pol­ The effo rt by pro-dope Dr. Claude Oliev­ er before been an industrial espionage icies in Southeast Asia as "too simple," en stein to reverse a libel judgment case against a non-Soviet-bloc country. indicating instead that all the countries against him by the European Labor Par­ The Japanese government has al­ of the region "agree that ultimately the ty (POE) was denied by the Court of ready announced it will not extradite the biggest threat [to sovereignty] is China." Appeals in France on June 23. suspects to the U.S. because the FBI's Mochtar's statement was aimed at wide­ Olievenstein had been fo und gui1ty entrapment tactics-similar to those spread efforts by the U.S. State Depart­ by the 17th Correctional Court in Paris used in Abscam-are illegal in Japan ment to project Vietnam as a threat to on Jan. II, 1982 for referring on a radio except for narcotics cases. the region's security. show to the PO E, headed by associates of Moreover, many of the Japanese While Mochtar's warnings did not EIR fo under Lyndon LaRouche, as a newspapers are raising the issue of make the pages of U.S. papers, what did "Nazi grouplet ." The POE had attacked whether the entrapment was a "political­ make news was the coming into existence the pro-drug stand of Olievenstein, an ly motivated" attempt to embarass Ja- of the "Kampuchean government in ex-

54 International EIR July 6, 1982 Briefly

ile," bringing the three rebel groupings was virtually destroyed (down to the • ADEEB DAWISHA, The chief operating outside Kampuchea under one present day) by means of the substitution Middle East expert at the Royal umbrella under Chinese sponsorship. of "German blood" for "German cul­ Institute for International Affairs, While onetime Kampuchean head of ture." To argue that the German Jew, the told EIR June 25 that "America state Prince Norodom Sihanouk was de­ epitome of German culture, was not Ger­ needs a good jolt" and that this clared President, the Khmer Rouge reb­ man on grounds of [Averell] Harriman's should be accomplished by a total els who under Pol Pot's direction con­ favorite eugenics-doctrine, was to repu­ break of the Arabs from both su­ ducted genocide against the Kampu­ diate German culture (and German re­ perpowers, but particularly from chean people in the 1975-79 were award­ publican nationalism) just as much as the U.S., while Britain picks up all ed responsibility for foreign affairs. The substituting "Jewish blood" for Jewish the pieces left in the wake of the remaining rebel group, headed by Sonn culture obliterates the real existence of American collapse. "The mood in San, was given the Prime Ministership. the Jew .... the Arab world is that the Soviets One of the reasons the rebel coalition Is not the Arab human? ..You wish to are letting the Arabs down, while was put together by the Chinese is that say Arafat is some sort of criminal; to the Americans are totally with Is­ the Pol Pot group is losing international his people, he is a patriot. ... rael," Dawisha asserted. "The support quickly. Several European gov­ Let Israel recommit itself to the Jewish British and the French will now try ernments have indicated in recent weeks heritage of the [12th-century] Iberian to move in to fill the vacuum, al­ that when the vote for recognition of Pol renaissance, by becoming a leading and though the British have the inside Pot as the legitimate government of faithful spokesman for those conditions track. The oil-rich Gulf countries Kampuchea comes up this September at of rationality and material security most cannot for much longer keeptheir the United Nations, this time they may desirable in a neighbor .... dependency on the U.S., given the not vote for it. However, the U.S. State Then, Judaism may walk with re­ present situation, and the Soviet Department promptly greeted the for­ stored honor among the peoples of the option is untenable. So, Europe is mation of the coalition-in-exile as a "pos­ world. the best compromise." itive step." The full text of the document. titled "Lebanon: Israel's 'Vietnam War: " is • THE GREEN PARTY in West available from EIR . Germany is not left-wing but right-wing in its ideology, and be­ lieves in "blood and soil" like the Nazis. This is the conclusion of a Lebanon: Israel's study produced for the Social Democratic Party's parliamentary 'Vietnam Wa r' U. S. -Israeli relations: a caucus, due to be published soon. It was based on an analysis of more Predicting "a deep-seated eruption ofthe little allegory than 300 speeches given by Green Jewish conscience," Lyndon LaRouche deputies in various state and local issued a statement on June 21 on the At a recent gathering of sages, one pon­ parliaments. Israeli invasion of Lebanon. It examines dered aloud at the chutzpah (gall) of an how Germany was ruined in the 1930s Israeli who claimed that his country is • FRAN{:OIS MITTERRAND and 1940s and America was ruined with now the only friend of United States. signed a petition, pub1ished in the Vietnam, to pose the question: "Shall "It's simple," the elder said. "It's like the Montreal paper Le Devoir. in sup­ Israel continue to be essentially a mere friendless, unmarried woman who never port of terrorist Francesco Piper­ British-Hapsburg puppet, a present-day had any suitors because she emitted a no, who the Italian government tool of the same oligarchical fo rces which stench so rank no one could bear come has unsuccessfully sought to have deployed Adolf Hitler's Nazis?" near her. Her luck seemed to change, extradited from Canada for partic­ Excerpts follow: · however, when she met a man with no ipation in the kidnaping and mur­ Unless a truly Jewish solution for the olfactory sense. They married. der of fo rmer Italian Prime Minis­ Israeli crisis of the Middle East can be "Within a week, the neighbors on the ter Aldo Moro in 1978. fo und, a solution consistent with the new couple's block departed; the man's morality of Jewish humanist culture over faithful dog left home; the garbage man • A WINDOW in the press office centuries, every Jew in the world dies a refused them service, and the groom's of the Navy Ministry building in bit when he or she thinks of a cellar in mother renounced her only son. Per­ Buenos Aires, Argentina, we are Tyre piled six feet high with lime-sprin­ plexed, the husband turned to his wife told, has sported a sticker that kled masses of Palestinian men, women in despair. reads: "Honk if You Hate Haig." and children, all in such a mass grave .... " 'See,' she said, 'I'm the only friend you . . . German repUblican nationalism have left.' "

EIR July 6, 1982 International 55 �ITillNational

What Harriman has in store for Demo crats

by Barbara Dreyfuss and Kathleen Klenetsky

The big question facing the Democratic Party as it enters Fenn continued: "We ran them by Cyrus Vance and its midterm 1982 convention in Philadelphia is whether others. Governor Harriman went over them." there will be anything "democratic" left of America's Charles Manatt, the Democratic National Commit­ largest political party. tee chairman, is understandably nervous about charges W. Averell Harriman, the former New York gover­ that he is forcing Democrats to swallow austerity policies nor and promoter of Anglo-Saxon racial supremacy, is which will be catastrophic to the party's traditional base. attempting to dictate to every Democratic office-holder "These draftsar e not party dogmas," he told a reporter, and candidate the same "Global 2000" policies that u.S. "nor an attempt to rewrite our party's platform. They are voters rejected in disgust when they turned Jimmy Carter part of the continuing dialogue about our future now out of office in November 1980. His wife Pamela Harri­ going on among Democrats across the country." man's political action committee (PAC), Democrats for But excluded from this "dialogue," if Manatt and the '80s, headquartered at the Harriman mansion in New Harriman get their way, will be the one significant PAC York, designed the issues papers which will be given to that has denounced the Harrimanite proposals as "An­ delegates arriving at the convention June 25. The papers glo-Saxon racist" and offered alternative resolutions. As were then written by a group of nominally separate PACs we go to press, Lyndon LaRouche's 15,OOO-strong Na­ and think-tanks whose key figures circulate interchange­ tional Democratic Policy Committee has been denied ably. This Harrimanite brain trust, described by a Dem­ convention credentials, and LaRouche, who ran for the ocratic congressional staffer as "incestuous," was behind Democratic presidential nomiriation in 13 state primaries the resolutions on policy sent out earlier to convention and catalyzed opposition to Carter at the 1980 Demo­ participants. cratic convention, has been denied the right to speak. According to Peter Fenn, director of Democrats fo r In June, the NDPC formally submitted to the Dem­ the '80s, the Harriman PAC "realized a few months ago ocratic Policy Council a draft convention program, titled that the Democratic National Committee was not pre­ "Halting and Reversing the New 'Herbert Hoover' Eco­ pared to do the briefing book for the midterm conven­ nomic Depression." The 25-page document outlines tion, so DNC chairman Charles Manatt told us 'go LaRouche's anti-depression program and hits hard at ahead, you have my blessing.' In January we pulled the necessity fo r the United States to recover the "Amer­ together the leading experts in the Democratic think­ ican Century" outlook developed at the close of World tanks such as the National Policy Exchange, Brookings, War II by Franklin Roosevelt for replacing British co­ the Center for National Policy, and some former Demo­ lonialism with high-technology industrialization of the cratic office holders. We met with them and delegated underdeveloped sector. them to draw up, on 20 issues, a list of options." The NDPC is urging delegates to fightfor a resolu-

56 National EIR July 6, 1982 tion that the policies of "population control, immigra­ Constitution), who created the Center for National Poli­ tion restriction and the blockage of the Third World's cy. "These people do a lot of different things under just aspirations to technological progress and full eco­ different hats," said an aide to Gephardt. "They are like nomic equality with the advanced sector nations" en­ bees flitting from one group to another." dorsed by the Harriman nexus are "totally incompatible After the midterm convention, the DNC plans to with the principles of the Democratic Party." The reso­ inundate Democrats with policy papers and forums, as lution calls on Averell Harriman to renounce his associ­ do the numerous Harrimanite front groups. "We hope ations with such racist policies, or resign from the party. by 1984 to have a consensus on policy which can then Particularly at the site of the convention, Philadel­ become national policy," gloated Ted Van Dyck, direc­ phia-where NDPC-backed gubernatorial candidate tor of the Center for National Policy. But a scan of the Steve Douglas polled 35 percent of the vote in the May resolutions submitted by the Harrimanite cabal reveals a 18 Democratic primary-Manatt's attempted shutout of policy around which no consensus could possibly devel­ the NDPC is an explosive move, with the potential of op unless party members are brainwashed en masse or becoming a party-wide scandal. Much of the Douglas driven out. vote came from black and Hispanic voters who will be disenfranchised by the Manatt-Harriman policies of re­ The Harrimanite resolutions ducing dark-skinned populations, to be enforced in the The foreign policy document to be voted on at the developing sector by NATO conventional wars, and in convention adds up to an unqualified endorsement of the U.S.A. by the high-interest-rate regime of Paul transforming U.S. and NATO military capabilities into Volcker, whom the Democratic National Committee an instrument for massacreing the popUlations of devel­ refuses to attack. These policies, the NDPC points out, oping nations. "Internationally we are faced not only are all an outgrowth of the now-notorious Global 2000 with Soviet military power, but also with intensified Report, commissioned by the Carter administration, economic competition, resource shortages and cartels, which suggested that the alleged problem of limited spread in nuclear weapons capabilities, starvation or resources could be solved by reducing population by 2 poverty of half the world's population, and burgeoning billion people by the year 2000, particularly in the part of demands upon the environmental heritage of humani­ the world below the Tropic of Cancer. ty .... All of these are threats to our national security In addition to Pamela Churchill Harriman's Demo­ and explosive challenges to our way of life ...." crats for the '80s and the PACs named by Peter Fenn, the "America's fo reign policy must address as well the Global 2000 cabal can be fo und in the Democratic global problems of environmental deterioration, hun­ National Committee's National Strategy Council and ger, and rapid population growth .... America's long­ the party's Economic Opportunities and Growth panel. standing leadership in confronting the population threat Charged with pushing the program in the Senate are should be maintained." Democrats Gary Hart of Colorado and Bill Bradley of Other DNC resolutions call for: New Jersey, and in the House, Tim Wirth of Colorado Legalized murder in the name of health care. The and Richard Gephardt of Missouri. DNC draft resolution on "Investing in Our People" A survey of these groups reveals that they are all proposes that "The problems of our health care system Harriman fronts. One name that shows up often is former pose continuing challenges to the Democratic Party and Secretary of State Cyrus Vance, the Harriman protege to the nation as a whole. We must find new, creative whose State Department prepared the Global 2000 Re­ incentives to reorient health care instead of treating port and who helped the Ayatollah Khomeini into power sickness. We must pursue an aggressive program for in Iran, in order to implement a "dry run" ofthe Report's restraining costs." These solutions, whose leading recommendations. Others include Trilateral Commis­ spokesman is Senator Ted Kennedy, involve denying sion member and AFL-CIO president Lane Kirkland; medical care to the elderly, poor, and handicapped and Representative Gephardt, who recently told EIR he restraining costs by inflicting "death with dignity," on works in close coordination with Volcker's Federal Re­ the Nazi model of doing away with "useless eaters." serve; Felix Rohatyn, the investment banker responsible Labor policy can be summed up as sacrifice. "In for gutting New York City's industrial base; Stuart every period of national challenge in our history, the Eizenstat, who designed Carter's economic policies; and American people have been willing to sacrifice for the Gary Hart, whose economic adviser is a member of the common good so long as they understood the sacrifice "limits to growth" Club of Rome. would be fairly shared. We must launch a national Carter veterans including Vance, his successor Ed commitment, building 011 a partnership among govern­ Muskie, fo rmer Treasury Secretary Michael Blumenthal, ment, business and labor to invest in our future growth former Labor Secretary Ray Marshall, and former White and productivity." Securing labor's cooperation House counsel Lloyd Cutler (now out to junk the U.S. through a M ussolini-modeled corporatist apparatus,

EIR July 6, 1982 National 57 the Harrimanites intend to impose drastic cuts in real wages, give-backs in benefits, aQd other sacrifices. Editorial Comment Various proposals are being circulated on how to restrain wages: • James Tobin, Nobel economist and co-chairman of the National Policy Exchange's policy advisory Hinckley decision is board, advocates "getting rid of Davis-Bacon, zoning and building codes, and continuing deregulation, par­ license for assassins ticularly in transportation and trucking." • Barry Bosworth, Director of Carter's Council on Wage and Price Stability, suggests in a Center for by Lyndon H. LaRouche, Jr. National Policy study issued last fall, in addition to mandatory wage controls, eliminating multi-year union John W. Hinckley, Jr., a highly-trained assassin appre­ contracts and cost-of-living escalators; outlawing hended in the shooting of President Ronald Reagan and strikes; and abrogating existing contracts. others, has just been awarded a legal slap on the wrist. • Several Democratic "experts" are promoting a He has been exonerated on a plea oflegal insanity. tax-based incomes policy (TIP), which would penalize This is not merely a monstrous miscarriage ofju stice. wage hikes above a certain level by imposing additional It is, plainly and simply, an invitation to every pot­ taxes on both employer and employee. smoking scoundrel with a mental-illness-treatment­ • Paul Jensen, executive director of the National record to make himself a national celebrity by taking a Policy Exchange, is one of many DNC advisers who pot-shot at some prominent political figure. advocates setting up a national tripartite board to I am not interested in what the jury did or did not coordinate wage restraints. thin k. The jury was, overall, a typical street-corner audi­ Investment policy is devoted to the post-industrial ence standing fascinated, watching a shell-game run by era. The draft resolution acclaims "industries like com­ the federal prosecution. The jury guessed where the pea puters, communications, electronic components, aero­ was hidden; naturally, as the decision shows, the suckers space, pharmaceuticals, fiber optics, and data base bet wrong, as usual. management." This section of the DNC's economic policy resolution is a declaration of war on the country's How the shell-game was rigged basic industrial infrastructure, which is to be replaced From my knowledge of the Hinckley case, the by a post-industrial "information economy." In this prosecution and defense teams in the court case were respect, the resolution mirrors the "National Agenda both effectively orchestrators of Hinckley's "insanity" for the Eighties" issued by the Carter administration. defense, with the principal psychiatric witnesses for both Lester Thurow, also a member of the DNC's Eco­ sides drawn from the same orbit: the interconnection of nomic Priorities Panel and a favorite spokesman for the the World Health Organization, National Institute of Center fo r National Priorities argues against attempting Mental Health, and directly or indirectly interfacing the to prop up what he calls "dying industries" such as same Walter Reed Hospital at which one among the / basic steel, on the grounds that the props "will only jurors was a psychiatric researcher. prolong the pain. Whatever government does, they will More important than the "dog and pony show" in the end die. " features of the courtroom-debate on psychiatric inter­ The energy policy is "conservation, insulation, re­ pretation was the manner in which that sideshow was trofitting factories, and power plants; through produc­ rigged. Hinckley was presented by the prosecution as a tion and development of our coal, oil, and natural gas "lone assassin," and therefore the jury was not given resources; through the creation of new industries for the mass of facts indicating that Hinckley was a highly­ synthetic fuels; and in the technological miracles that trained potential assassin and that strong indications of American genius can create in solar power; geo-thermal a "Manchurian candidate" case had been developed energy, wind power, biomass and other new forms of during the investigations. energy. Energy conservation is the people's energy Especially significant is the fact that Hinckley's source," says the DNC draft resolution, ruling out psychiatric treatment in Colorado tracked him through nuclear and fusion energy. Already, an estimated 115 institutions which are known in the psychiatric literature million people in the developing sector have died since as authorities on the subject of techniques for creating the 1960s because the advanced sector, especially the "Manchurian candidate" varieties of assassins. This is United States, has put the brakes on nuclear-power especially significantwhen compared with the fact that development. Calling conservation "the people's energy a number of persons constituting a "threat-potential" source" is like saying that hunger is the people's food. against the President during the same period .as Hinck-

58 National EIR July 6, 1982 • ley's shooting-attack also operated under the same have developed a capability for selecting human "raw "Jodie Foster" scenario-motivation as Hinckley. It ap­ material" suitable to be converted into a "programma­ peared as if some team of evil psychiatric networks had ble assassin," a "Manch urian candidate." The pub­ been stamping out "Manchurian candidates" with the lished psychiatric literature now bulges with clinical clinical equivalent of a mimeograph-machine. studies of such methods and procedures of selection, conditioning, and programing. The problem of public policy on 'insanity' Hinckley passed through institutions which are in­ ' The key problem of public policy posed by the tegral to the production of such a specialist literature. "insanity" plea in the Hinckley case is a fundamental The network producing the psychiatrists testifying in distinction which neither the prosecution, the defense the Hinckley trial is connected to and well-informed of nor the psychiatric specialists are indicated to have the clinical work being done in the area of "Manchurian presented to the court or jury. In a case such as candidate" programing. Hinckley's ,reported syndromes suggest, we must deter­ The initial experimental work done by John Rawl­ mine which of three principal categories of mental ings Rees and others, experimenting on World War I disorder are involved. Does the derangement of the "shell-shock" cases, was greatly expanded with research subject's mind indicate merely possible "insanity," or into "Korean War"-style methods of "brainwashing." does it signify either "criminal insanity" or simply a However, the most important technical expansion of case of a "criminal mind"? "brainwashing" capabilities, apart from "electro­ A "criminal mind" is typified by the case of a person shock" conditioning, has developed out of a proposal who is not insane in respect to recognition of real events publicized by Bertrand Russell during the late 1920s. and social processes around him, but who is morally Russell proposed then a concentration on developing insane: who believes, emotionally, that he has the right cheap methods of mass-drugging to be developed as a to kill, steal, and so forth .... With this type, justice repertoire of social control over large popUlations. demands something approximate to tossing the convict­ The best-known outgrowth of Russell's proposal is ed perpetrator into a maximum-security center and the connection between work being done at both Palo throwing the key away. Alto and Harvard during the 1950s and early 1960s, the The "criminally insane" perpetrator is an insane drug- and cult-synthesizing pilot-experiments associated person whose insanity involves a recurring compulsion with Russell's accomplice, Aldous Huxley, Gregory to commission of criminal acts. By "insanity" we mean Bateson, and Harvard's researcher Timothy Leary . Ap­ not only an incapacity to perceive physical or social proximately 1963, the pilot-projects were deployed in reality in a "normal" fashion, but that he mixes up real the fo rm of a mass social experiment, the creation of the and fantastic images of real experiences in the manner rock-drug-sex counterculture, as well as a group of we associate with systematically generated delusions. experimental cults, including the "Manson Family." The best illustration of such a "criminally insane" The basic techniques are at least as old as the Phrygian person is the mental case of whom his psychiatrist writes cult of Dionysus, the classical model for modern inter­ something such as, "Subject will almost certainly at­ national terrorism. tempt to kill his father if released." If a youth drops into the rock-drug-sex countercul­ This sort of perpetrator, unless cured, should never ture, especially one with a certain kind of potential be released from maximum-security custody. associated clinically with inadequate mother-love in The third category is the case of the victim of a childhood, the transformation of the personality effect­ deluded composition of judgment, in which the insanity ed produces an individual of the sort wicked psychia­ does not subsume a persisting or recurring impulse to trists would scrutinize more closely, to determine wheth­ perpetrate actions which the sane world knows to be er this subject were not truly potential material fo r felonious injury to other persons or himself. In such a producing a programmable assassin, to behave more or case, the person's delusion-twisted lack of perception of less precisely as Hinckley is known to have deployed reality may cause the person to perpetrate a criminal during the period preceding the attempted assassination act, but sometimes without a criminal intent. of President Reagan. We have knowledge that at least Today, especially during the post-war period, this some of the relevant facts were part of the package problem of public policy has been compounded, chiefly placed at the disposal of the FBI and prosecutors. The as a result of the work launched by the London Tavis­ case as defined by such facts was not presented. tock Clinic under the co-direction of the late Brigadier As a result of this miscarriage of justice, a new Dr. John Rawlings Rees and Dr. Eric Trist. Through dimension of threat-potential is now unleashed against perversion of psychiatric skills and clinical procedures not only President Reagan, but many additional public for criminal purposes, there has developed a large figures. The kooks are probably already oiling their network of psychiatrists and associated specialists who weapons on receipt of news of the jury's decision.

EIR July 6, 1982 National 59 Congressional Closeup by Barbara Dreyfuss and Susan Kokinda

high-level radioactive matter reus­ cluded a number of "conserva­ C linch River Breeder able. tives" such as Cohn's friend Rich­ under fire The coalition that has allied ard Viguerie, whose attacks on , A group of Congressmen took to with the near-dozen Congressmen Secretary of State Haig appeared the House floor June 16 to an­ against Clinch River includes most to be part of the pattern of manip­ nounce that they have joined fo rces of the major environmentalist ulating the President into defend­ with a group of organizations out­ group,s, and unions including the ing the worst elements in his ad­ side Congress to defeat the Clinch Mineworkers, the Steelworkers, ministration. River Breeder reactor. Speaking . United Auto Workers, and the In­ on behalf of the group, Rep. Clau­ ternational Association of Ma­ dine Schneider (R-R.I.) declared, chinists, along with the "conserva­ Hotel union investigated "This morning we met with the tive" national Taxpayers Union, by Senate subcommittee Taxpayer's Coalition Against which is reportedly fightingit as a The Senate Permanent Investiga­ Clinch River, an umbrella organi­ cost-cutting measure. tions Subcommittee surfaced a zation of public interest groups year-long investigation of the Ho­ that have banded together in a tel Employees and Restaurant Em­ common cause fighting for an end Freeze resolution passes ployees International Union, with to federal investment in the Clinch House committee two days of public hearings on River Breeder reactor. We pledged The resolution to freeze produc­ June 22 and 23. The hearings, un­ to the coalition that we would rep­ tion of nuclear weapons won its der the direction of Sen. William resent their cause in Congress. Un­ first important Congressional test Roth (R-Del.) and Sam Nunn (0- derneath the opposition to Clinch June 23 when it passed the House Ga.), grabbed news headlines with River, Rep. Schneider made clear, Foreign Affairs Committee by a 26 the "revelation" by federally pro­ stands a basic zero-growth ideol­ to 9 vote. tected witness Charlie Allen that ogy, the idea that new technology Sources at the Members of Jimmy Hoffa had been ground up for energy production is not nec­ Congress for Peace Through Law and used as fertilizer in a Florida essary because there will be no group in Congress, an organiza­ swamp in retaliation for mob­ economic growth. "This year we tion controlled by the liberal A v­ related activities. But the subcom­ won't be changing our basic argu­ erell Harriman networks, were sur­ mittee has a longer-range goal in ment-that the Clinch River proj­ prised by the wide majority of the mind-that of adding another in­ ect is an overpriced investment in vote on the resolution, which was ternational union to the subcom­ an irrelevant technology that is sponsored by Jonathan Bingham mittee's witchhunt list. In his June based . on outdated assumptions (D-N.Y.), a protege of fo rmer New 22 testimony, subcommittee inves­ about our need for new electrical York Gov. Averell Harriman. "We tigator David Faulkner noted that generating capacity." were surprised by the number of the subcommittee's rationale for The development of Clinch Republicans [seven] who voted investigating the hotel workers River is intimately tied to develop­ with us," said one spokesman for union came from a still secret 1977 ment of a reprocessing facility, the group. Department of Justice report enti­ since the plutonium needed to trig­ The Peace Through Law group tled, "Organized Crime and the ger Clinch River's breeder process particularly singled out for praise Labor Unions," which identified is only available as a product of the work of freshman Republican the Teamsters, Laborers, Interna­ reprocessing. Reprocessing and John LeBoutillier (R-N.Y.), who tional Longshoremen's Associa­ breeding would increase uranium poses as a conservative in the mold tion, and the Hotel Employees as fuel supplies approximately 60-fold of William Buckley. LeBoutillier the major unions infiltrated by or­ from present uranium available attended the recent invitation-only ganized crime. The subcommittee and would eliminate the problem Brasserie meeting in Washington staff was able to obtain copies of of storing nuclear wastes since it arranged by organized-crime law­ it, according to Faulkner, from would make all but 4 percent of yer Roy Cohn. The meeting in- "media persons who had obtained

60 National EIR July 6, 1982 their own copies unofficially." expressed concern about the com­ brutal population-reduction poli­ The two days of hearings, com­ mission, including a group in Con­ cies within the Reagan administra­ plete with protected witnesses be­ gress who sent a letter to President tion. hind screens, concentrated on lo­ Reagan in February warning that Pell boasted of his membership cals in Atiantic' City, New Jersey, the commission may have a "bias in the Club of Rome, saying that and in Honolulu. The subcommit­ in favor of the destruction of new­ nations become like people-at a certain age, they should concen­ tee plans to go after other Hotel born children," Senator Ha' tch's locals in the fall. The international chief health adviser on the Senate trate on "quality of life." leadership of the union is expected Labor Committee, Dr. David All the witnesses and Senators to be brought in for questioning Sundwall, assured a caller that agreed that both the administra­ by the end of the year. there was no serious concern about tion and the Congress should use the Commission. In an earlier dis­ global modeling. cussion, Sundwall declared the he Hatch protects was concerned about the "terrible Kennedy's bioethics things" modern technology can do With encouragement from Senate in prolonging terminal illnesses. House subcommittee bans Labor and Human Resources wilderness drilling Committee Chairman Orrin Hatch The House Subcommittee on Pub­ (R-Utah), the Senate Committee Pell and Mathias hail lic Lands voted June 18 to ban all unanimously went on record in 'global modeling' oil and gas drilling in areas desig­ favor of S.2311, a funding bill The International Economic Policy nated as federal wilderness areas which contains financing foc a Sucommittee of the Senate Foreign and those areas under considera­ two-year extension of the Presi­ Relations Committee held hear­ tion for such designation. Approx­ dent's Commission for the Study ings on June 23 to promote a new imately 32 million acres would be of Ethical Problems to Bio-Medi­ inplementation phase of the Global affected by this legislation, H.R. cal and Behavioral Research. The 2000 Report. which looks forward 6542, which was introduced by pro-infanticide Bioethics Commis­ to reducing world population by 2 Rep. Manuel Lujan (R-N .M .) . sion was created in 1974 by Sen. billion as of the end of the century. Last year Interior Secretary Edward Kennedy, who has extend­ Chaired by Sen. Charles Mathias Watt was strongly attacked by the ed its existence every two years for (R-Md.) and attended by Chris environmentalists and their allies the past eight years. The Senate Dodd (D-Conn.) and Claiborne in Congress for wanting to allow vote took place in April, under the Pell (R-R.I.), the subcommittee oil drilling in a number of wilder­ pretext that the administration had heard from Dr. John Gibbons, the ness areas. Watt agreed to a mor­ sent confusing signals over wheth­ director of the Congressional Of­ atorium on selling drilling rights er to fund the Commission. fice of Technology Assessment, until the end of 1982 so that Con­ But on June 23, a House sub­ which has just released a new re­ gress could act. But the House committee demolished that excuse port entitled "Global Modeling, subcommittee, under pressure by voting to end such funding, the World Future." Also testifying from the rabid environmentalists, under very clear direction from the were former director of thl:: Coun­ was not satisfiedwith this and after White House, according to sources cil on Environmental Quality Gus hearings on the Watt bill, Lujan in the Subcommittee of Health and Speth (author of the Global 2000 introduced new legislation which Environment of the House Energy Report), and Committee for the would close the areas in perpetuity, and Commerce Subcommittee. Year 2000 member Elliot Richard­ unless the President, citing "over­ The same sources report that they . son. The emphasis on global mod­ whelming national need" decides expect the House position to be eling was stressed previously by to open them. Congressional upheld with support from other the Club of Rome and by Cyrus sources expect the House to .ap­ �enate Republicans. Vance's Committee for the Year prove the measure overwhelmingly While many Republicans have 2000 as the vehicle for propelling in late July or August.

EIR July 6, 1982 National 61 NationalNews

were granted victories even in rural Re­ battles were as unbalanced as the British publican districts. The county clerk, a claims suggest and that in any case, the CED candidate, illegally altered and filed Argentine air force was operating at the NDPC called in the computer election program on elec­ outer limits of its flightrang e and had as tion day. He won his election with more its primary mission the sinking of British . on Texas vote fraud than 50 percent of the vote, avoiding a ships, whereas the British Harriers were Citizens for Electoral Justice, an organi­ run-off. operating under optimal conditions and zation of Austin, Texas citizens commit­ In five precincts in Santa Monica, with no mission other than attacking the ted to reversing the electoral fraud per­ Hayden's home base, Wertz for Senate Argentine forces. petrated in the Democratic primary run­ campaign workers have already obtained off June 5, called in election-fraud expert more affidavits from voters who stated Edward Spannaus of the National Dem­ they voted for Wertz than the total offi­ ocratic Policy Committee. cial vote Wertz was credited with. Spannaus was met on his arrival at Texas real-estate the Austin airport by a group of televi­ sion and radio reporters. He stated that bubble about to pop he had come at the request of the citizens' The Houston and Dallas commercial group, which raised the funds fo r his trip, Georgetown conference real-estate bubble, representing both of­ because of reports of fr aud .similar to that fice bllildings and shopping malls, worth the NDPC is contesting in the June 8 sells Harrier jets $150 to $250 billion. is set to blow. Democratic primary there. According to the Washington Post and Both cities' markets have been vastly Spannaus told a meeting of60 Austin other sources, British Defense Minister overbuilt, on the expectation that the citizens, filmed by television cameras, John Nott hosted a major rural "bazaar" Texas economy is immune to the collapse that "the combination of massive docu­ to promote British weaponry "battle­ of the national economy. Now this is mented evidence of irregularities and vi­ tested" in the Falklands. Britain is also being proven wrong. olations, [in the two contested commis­ instructing its stable of "military ex­ Houston, now the fourth largest of­ sioners' elections], the closeness of the perts" to promote the idea that the Brit­ fice center in the United States, has gone elections, and a snow-balling citizens' ish strategic quagmire in the South At­ from 30 million square feet of office space mobilization means that we have the lantic has proven that British weaponry, in 1970, to 116 million square feet of ingredients for a victory." particularly the Harrier "j ump jet," has office 'Spaceby the end of 1981. In 1980- demonstrated its effectiveness. 82, Houston will have built roughly 50 At a Washington seminar sponsored million square feet of office space. This by Georgetown University'S Center for amount of space in Houston is equal to Court pursues Strategic and International Studies on fiveNew York City World Trade centers. June 21, Jeffrey Record, Norman Pol­ Rental demand can't possibly absorb this California vote fraud mar, and others solemnly announced amount of space, especially since the Judge Lloyd Phillips of the Sacramento that the reliability of the Harrier was the growth of Houston office rentals was Superior Court ordered California Gov. major "strategic lesson" of the Malvinas predicated on the expansion of energy Jerry Brown's Secretary of State, March conflict. Record made the ridiculous companies, the movement of company Fong Eu, on June 21 to provide full claim that the Harriers were superior headquarters from the Northeast to answers in writing within 48 hours to the because, out of eight which the British Houston, the growth of Houston indus­ questions on fraud filed by the Wertz for admit went down in the fighting, none, try, and the movement into Houston of Senate campaign following the June 8 they claim, was lost in air-to-air combat, foreign money-all of which have come California primary. Judge Phillips or­ and fo ur crashed accidentally, while four to a screeching halt. dered that the questions avoided in the were downed by surface-to-air missiles. The vacancy rate of officebu ildings Secretary's inadequate earlier response, U.S. Admiral Thomas Moorer (Ret.) in most of Houston, with the exception filed only 15 minutes before the hearing, pointed out that if the air forces available of the central business district, is a high be addressed. Two of the avoided ques­ were reversed and, "The Argentines had 10 percent. But most striking is the highly tions were: how the votes were secured Harriers and the British had A4 Sky­ speculative nature of the Houston real­ after the election, and whether unauthor­ hawks [American] and Mirages estate market. ized personnel were allowed in the com­ [French], the Argentines would have Normally, a building developer lines puter rooms during ballot processing. stayed home because the Harriers never up leases before he builds a building, In Yolo County, home of University could have made it to the Islands with leasing 30 to 50 percent of the building. of California at Davis, a base of Tom any bombs." He then takes this pre-lease list to an Hayden's Campaign for Economic De­ Other speakers pointed out that it insurance company or some financial in­ mocracy, CED-sponsored candidates was improbable that the results of the air stitution and gets 10- to 15-year money

62 National EIR July 6, 1982 Briefly

to build the project. One Houston real­ Ezrol: "Which represents vulnerabil­ • MEL KLENETSKY, National estate reporter stated, "What's happened ity for you ...." Democratic Party Committee­ over the last year is that people are build­ Thatcher: "Well, as you know, we backed candidate for Senate in ing with no prior leases or only 5 percent and the United States are trying jointly New York, was illegally denied of the building leased up .... They're ...to get certain international rules over convention credentials at the state borrowing from the banks six-month overseas investments. ... Attracting party convention June 20 and 21, money, paying the prevailing interest overseas investments is one of the most afterparty officials gave his repre­ rates." These "wildcatter" developers important goals of the Argentine, and sentatives false information about have no collateral to speak of, so as the these other countries ....To do that, it is the time of the credentials meet­ market goes, they will crash. necessary to try to secure greater confi­ ings. Moynihan won the party en­ The Texas real-estate collapse will dence in the security of these invest­ dorsement unopposed. Klenetsky shake markets in New York and ments. . .. One needs codes of will now seek ballot status by gath­ throughout the country. conduct. ..." ering 20,000 signatures fr om reg­ istered Democrats statewide.

• AN ASTROLOGER with an in­ ternational reputation has issued a startling prediction concerning the Thatcher deploys U.S. Breakthrough in life expectancy of a list of promi­ nent American political figures. for British 'codes' fu sion development According to the astrologer, who British Prime Minister Thatcher admit­ Dr. Bruno Coppi of Massachusetts Insti­ has asked that her name be with­ ted to EIR Washington correspondent tute of Technology reported to the Inter­ held from print, if either EIR foun­ Stanley Ezrol at a White House press national Atomic Energy Agency plasma der Lyndon H. LaRouche Jr. or conference June 23 that Britain was using physics conference in Gothenberg, Swe­ European Labor Party chairman the United States to carry out its debt­ den June 6-1 1 on a new theoretical break­ Helga Zepp-LaRouche is assassi­ collection policy against the Third through in understanding nuclear kinet­ nated, or the victim of an attempt­ World, and that this was essentially the ics that promised to revolutionize the ed assassination, a list of 13 well­ issue in the Malvinas crisis. development of magnetic fusion energy known political figuresheaded by Immediately following the hour-long systems and their application. Henry Kissinger, Nancy Kissin­ meeting with President Reagan, Thatch­ Plasma scientists have now confirmed ger, and Alexander Haig will meet er reported that the main topic of discus­ that nuclear polarization-the parallel sudden death by either massive sion was Reagan's congratulations on alignment of the axis of spin of nuclei­ heart attacks or strokes. The as­ the birth of the royal heir. Thatcher can be utilized to suppress undesired re­ trologer declined to reveal the claimed that the only problem the United actions in a fusion plasma. Specifically, other remaining names on the list, States and United Kingdom have with those reactions producing neutrons-the insisting that most of the remain­ Latin America is with Argentina, an as­ source of most of the engineering and ing names are self-evident to rele­ sumption challenged by EIR Washing­ technological problems in fusion reac­ vant parties. ton correspondent Stanley Ezro!. tors-can be prevented, while the non­ When Ezrol asked Thatcher whether neutron-producing deuterium-helium-3 • PETER McPHERSON, the a move by Latin American nations to reaction can be enhanced. Administrator ofthe State Depart­ seize British financial and other assets It was previously thought that the ment's Agency for International wouldn't destroy what little is left of the collision of plasmas in a reactor would Development, told reporters June British economy, her response was: "I destroy the alignment ofthe nuclei; how­ 24 that while the $35 million re­ must say, you have a way of asking ques­ ever, Coppi reported, theoretical calcu­ quested by the President for disas­ tions which is not exactly propitious." lations at the Princeton Plasma Physics ter relief in Lebanon would prob­ Ezrol: "I ask questions better than Laboratory have indicated that nuclear ably be sufficient to alleviate "im­ you fight wars." polarization is maintained under mag­ mediate life-threatening condi­ Thatcher: "Oh? I rather thought we netic plasma conditions. tions," and begin some temporary had won." The breakthrough means that the en­ "band-aid" repairs, it would not Ezrol: "You lost a great deal for a gineering and technological problems in­ begin to address the long-term re­ battle with a Third World nation." volved in maintaining fusion plasmas construction of Lebanese infra­ Thatcher: "Let me try to understand; and extracting their energy output in a structure damaged by the invading you seem to be saying that Britain has useful fo rm can be solved more easily Israeli forces. many investments in the Argentine and than the those encountered in existing elsewhere in Latin America." fissionand fossil fuel energy systems.

EIR July 6, 1982 National 63 reporter queried. "Can the popUlation, which is increas­ Urban Policy ingly black and Pakistani, be supported? Are things like hospices more efficient than hospitals?" "Well, we do have laws restricting immigration of these people," he answered. "But, yes, we don't have the right mix. As for hospices, what you're getting at is A gathering of the euthanasia, isn't it? It's a dirty word, but it is there, isn't it? I believe the world is going to blow up anyway sooner depoptliation lobby or later," Harrington concluded, beckoning the barten­ der fo r more refreshment. "Do you realize there are going to be 6 billion people by the year 2oo0? Six billion! by Andrew Rotstein We had the right amount at the turn of the century­ about 2 billion." On the top floorof New York University's Bobst Library on the afternoon of June 14, a luncheon marked the 'It's disgusting' opening of the International Urban Symposium, the After the arrival of NYU President John Brademas, Citizens' Budget Commission's fiftieth anniversary cele­ a former Congressman and Rhodes scholar, and the bration. former Mayor of New York, John Lindsay, the lunch­ The idea of the symposium was that mayors from eon began. While Metropolitan Transit Authority such cities as London, Hong Kong, Jakarta, and Milan board member Stephen Berger discoursed at one table could "share experiences" about urban problems with on the necessity of ending New York City transit service New York City's austerity experts. The symposium was to ghetto areas, another table was holding dispassionate a follow-up to the 1980 Rome Conference on Urban banter on the terrible goldbricking and unproductivity Futures sponsored by the U.N. Fund for Population of the American workforce. "It's disgusting," croaked Activities, at which the Mayor of Milan had demanded Wassily Leontieff, the white-haired Nobel laureate. that the cities be emptied out as the advanced sector "That's why we'll never be able to do what the Japs becomes transformed into a "post-industrial society." are doing," added Donald Kummerfeld, the former "No question about it," said the short man, his aging executive director of the Financial Control Board, jowls flapping as he chatted with a reporter. It was which has dictated draconian budget cuts to the city for Harold Gelb, a vice-chairman of the CBC and a senior the last seven years. Kummerfeld moved on to become partner of the giant accounting firm Ernst & Whinney. the chief executive officer of the enterprises of Rupert "The city's budget is unrealistic. There's no way the Murdoch, the Australian who owns the New York Post money's there. Yes, after the elections in November, and is the loudest purveyor of British policy in New reality will hit this city. We simply don't have the means York. to maintain these services; people are going to have to "I just finished a study on cost-effective alternatives realize this. to incarceration," chirped an up-and-coming young "Of course we don't have the money to support so think-tanker across the table, trying to catch Kummer­ many people," Gelb continued, his cocktail dwindling in fe ld's attention. "We have some ideas that would be inverse proportion to his crimson complexion. much more effective than Mayor Koch's Rikers Island "New York City lost a million people during the labor camps. I'm at a place now where we're studying 1970s," said the reporter. "How many more do you think the planned shrinkage of the transit system. It's hush­ will go? Two million?" hush, but we're projecting cutting service to various "No, no. Only about a million," he replied, turning parts of the city, altering routes, etcetera." toward the bar fo r a refill. Kummerfeld leaned over the table, interrupting the At the other end of the room camped beside another aspiring careerist. "You know, of course," he smiled, bartender stood Mr. Illtyd Harrington, Jr., the Deputy "that will mean the death of whole areas of the city. But Mayor of London and leader of London's British Labour I'll say it: the Puerto Ricans have been getting a free Party. He was asked if he too thought population was a ride. " major world problem. "Ssshhh, Don," whispered Gelb, with a chuckle. "It's the most important problem," he said emphati­ "Remember what happened to Peter Grace," referring cally, clearing his throat with three or fo ur more swallows to the Grace grain company czar who recently drew of wine. "We've lost a couple of million people in London media and minority group criticism when he described in recent years, we're at about the right level now." the food-stamp system as a preserve for Puerto Ricans. "What do you think, though, about delivering ser­ "I don't give a damn," snapped Kummerfeld. "I'm vices in a depression that is sapping local revenues?" the not running for office."

64 National EIR July 6, 1982 EIR

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