[THIS PAGE IS INTENTIONALLY BLANK] Founder and Contributing Editor: Lyndon H. LaRouche. Jr. Editor-in-chief: Criton Zoakos Editor: Robyn Quijano Managing Editor: Susan Johnson Art Director: Martha Zoller Circulation Manager: Pamela Seawell Contributing Editors: From the Editor Christopher White. Vwe Parpart. Nancy Spannaus Special Services: Peter Ennis INTELLIGENCE DIRECTORS: Africa: Douglas DeGroot Agriculture: Susan B. Cohen. Robert Ruschman Asia: Daniel Sneider Counterintelligence: Jeffr ey Steinberg Economics: David Goldman Energy: William Engdahl Europe: Vivian Zoakos Latin America: Dennis Small Law: Edward Spannaus Middle East: Robert Dreyfu ss Military.Strategy: Susan Welsh Science and Technology: Marsha Freeman Soviet Sector: Rachel Douglas ithin the space of less than a month, assassination attempts were United States: Konstantin George W made or uncovered against President Reagan, President Giscard of INTERNA TIONAL BUREAUS: France, President Lopez Portillo of Mexico, and Prime Minister Bogota: Carlos Cota Meza Bonn: George Gregory. Gandhi of India. Clearly, this is more than a freak epidemic of "lone Th ierry LeMarc assassins." It comes at a time, moreover, when an unprecedented Chicago: Paul Greenberg insurgency has mounted against Chancellor Helmut Schmidt of Ger­ Copenhagen: Vincent Robson Houston: Timothy Richardson many, Giscard's closest ally and potentially one of President Reagan's Los Angeles: Th eodore Andromidas as well. The best elements of the Western alliance, and those leaders of Mexico City: Josefina Menendez the Third World most dedicated to industrial progress and war­ Milan: Muriel Mirak Monterrey: M. Luisa Gomez del Campo avoidance, are under the gun. New Delhi: Paul Zykofs ky Our Special Report this week, prepared under the direction of Paris: Katherine Kanter. Counterintelligence Editor Jeffrey Steinberg, traces the escalation of Sophie Tanapura Rome: Leonardo Servadio political terror against these targets since Reagan's electoral victory, Stockholm: Clifford Gaddy when the Socialist International announced an all-out campaign to United Nations: Nancy Coker Washington D.C.: Laura Chasen. destabilize him and his allies. It identifies the Socialist International's Susan Kokinda key assets, focusing on Libyan dictator Mq.ammar Qaddafi, on the Wiesbaden (European Economics): support networks that have legitimized the terrorist M-19, and on Laurent Murawiec organizations like Amnesty International, which did so much to impose the Ayatollah Khomeini on Iran. Executive Intelligence Review (ISSN 0273-6314) is published weekly by Our International section presents an intelligence picture of the NewSolidarity International Press Service Socialist International's effort to jacobinize France and 'submit Italy 304 W,58th Street. New York. N. Y.IOOI9. In Europe: Executive Intelligence Review. to a new Mussolini. Nachrichten Agentur GmbH. In Economics, you'll find a detailed analysis of the Eurodollar Postfach 1966, D. 6200 Wiesbaden Copyright c 1980 New Solidarity operations behind the bulge in the U.S. money supply, and the International Press Service illiquidity crises that prompted those operations. There is also an All rights reserved. Reproduction in whole or exclusive interview with U.S. Agriculture Secretary John Block, who in part without permission outlines the administration's growth policy. strictly prohibited. Second-class postage paid at New York, New York and at additional mailing offices. Subscription by mail for the U.S.: 3 months-$125, 6 months-$225, I year-$396, Single issue-$IO Academic library rate: $245 per year TIillContents Departments Economics 12 Science & Technology 4 A brave new world of NASA and fusion energy financial decontrol program still on the "The decontrollers and the budgetary hit list. proponents of credit controls are the same 42 Dateline Mexico people," writes David The slow growthers take Goldman. it on the chin. 7 Agriculture Secretary 43 Middle East Report Block foresees U.S. Behind the crisis in farm export push Lebanon. Susan B. Cohen held this exclusive interview in 59 Eye on Washington Washington, where Mr. Block described his 60 Congressional Closeup aggressive view ofthe department's role. 64 Energy Insider 10 Warfare over An alternative to the oil prices strategic reserve. The new interest-rate rise will reduce petroleum demand further: was it engineered to undercut the Saudi move to bolster the world economy? 13 Currency Rates 14 Banking Volcker and variable mortgage rates. 15 Foreign Exchange New central bank actions threaten OM. 16 Domestic Credit Toward permanent unemployment. 17 World Trade 18 Business Briefs Volume 8 Number 19 May 12. 1981 Special Report International National 32 Socialists in Italy 46 Reagan strengthened: produce another Duce key decisions Milan bureau chief Muriel yet to come Mirak's blow-by-blow Richard Cohen reports from account of Socialist leader Washington on the budget, Craxi's new move for the A WACS decision, and power-in historical the little-known war-On­ perspective. drugs announcement by �dwin Meese. 34 The fate of France is at stake in the second­ 48 'Population shock 20 Assassinations, round fight for the therapy' for the terrorism, and the presidency. Third World: Haig's Socialist International RAPID program An overview of the 36 Giscard is the only The State Department is concerted escalation against choice for France conducting an Orwellian world leaders since Ronald A statement by EIR founder psychological warfare Reagan assumed the U.S. Lyndon H. LaRouche, Jr. campaign against Third presidency. World officials. 39 Broad agreements 24 How Libya's Qaddafi reached between 50 Origins of Global 2000: spurs terror on both Bonn and Riyadh a map of depopulation sides of the Atlantic warriors in the V.S. Schmidt's trip to Saudi Arabia. Every decision maker 28 Colombia's M-19 should be familiar with this terrorists promoted by 40 Fabian peace groups history. Socialist International plan political attacks networks. 56 A Big MAC for A report on a disarmament every city? Documentation: Literary strategy session in Holland. celebrity Gabriel Garcia Stephen Parsons' report on Marquez's support for 41 V.S. investors have how the city governments of the M-19. Boston, Chicago, and new opportunity Philadelphia have been The state of Sonora in 31 Amnesty movement set boxed into unnecessary Mexico: four key economic up by Britain austerity. sectors looking for input. 62 National News 44 International Intelligence �TIillEconomics A brave new world of financial decontrol by David Goldman Half a year ago EIR surveyed the argument of banking Second, the money-supply growth during the first decontrollers that the world money markets were moving quarter occurred while all domestic sources of money out of the control of any central bank, and that this supply either fe ll substantially (bank loans) or remained presaged a terrible period of financial and economic virtually unchanged (total Federal Reserve credit, bank dislocation. The first quarter's monetary results show reserves, and monetary base). For the firsttime, a major that this regime-the integration of the uncontrolled spurt in monetary growth came from the Eurodollar Eurodollar market with the domestic money markets­ market. Part of this showed up in the first-quarter bank­ already prevails. Already the American financialsystem ing numbers, in the form of a $3 billion rise in U.S. is feeling the effects of the transformation in a number of corporations' borrowing from fo reign banks (mostly ways, the most immediate of which is the present rapid foreign offices of U.S. banks) of $3 billion, while loans increase in both long- anQshort-term interest rates. from U.S. banks fell $5 billion. Most of the Eurodollar An accompanying graph sho,ws inflow,how ever, took:the furmof U.S. corporate subsid­ the behavior of the narrowly definedmone y supply ("M I B") during the past iaries borrowing abroad, sending the loans home via six months. Note the spectacular increase in the growth leads and lags in payments, for deposit in the domestic rate since December 1980, to a per annum rate of growth banking system. in the most recent four-week period of over 16 percent. As it normally does, the Federal Reserve waited for a Two aspects of this are important. visible provocation-the rise in M I B-to lower the mon­ First, the American economy avoided a sharp drop etary boom. Attacks on the Fed's monetary course by during the firstqua rter only because money supply grew Treasury Secretary Donald Regan and Undersecretary out of hand. Despite the reported 6.5 percent rise in "real Beryl Sprinkel amount to "a lot of support for a tough GNP," due to juggling of inflation indices and so on, monetary policy from the administration," a former and the 1.4 percent rise in the March "index of leading Treasury Secretary told EIR. indicators," based on oit price increases, the economy The markets have taken the message clearly, in any remained deadflat in the firstqu arter. To do so while the event. Michigan Bell's failure to market more than two­ prime lending rate stayed close to 20 percent required an fifths of an April 28 $250 million bond issue at a record extraordinary volume of money-supply increase, to cir­ 153/4 percent interest rate, and the April 29 move of culate a debt service bill that rose to above half of major banks to an 18 percent prime rate, are the begin­ corporations' gross internal funds. EIR will analyze this ning of an interest-rate run up which will take the prime in detail in an upcoming survey. rate above 20 percent within the next two months, and 4 Economics EIR May 12, 1981 possibly much higher. Barring a change of heart over of the money market funds in the process. monetary policy at the White House, this new round of The Eurodollar flow, unfortunately, works two tightening will sink the economy before the end of the ways. Here is how a former top American monetary second quarter.