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

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INTERNATIONAL BUREAUS: Before Abscam victim Senator Harrison Williams of New Jersey Bogota: Carlos Cota Meza resigned on March II, the U.S. Senate pledged to put Justice Depart­ Bonn: George Gregory. Rainer Apel Chicago: Paul Greenberg ment and FBI wrongdoing in the Abscam operation under an inves­ Copenhagen: Vincent Robson tigative microscope. It had taken a national campaign of constituency Houston: Harley Schlanger. Nicholas F. Benton pressure to bring that commitment about; and it will take more Los Angeles: Theodore Andromidas pressure to make sure a Warren Commission or Watergate-style Mexico City: Josefina Menendez Milan:. Stefania Sacchi. Marco Fanini coverup does not now ensue. Therefore, we are making an unusual Monterrey: M. Luisa de Castro request of EIR's American readers: Let your Congressman and Sena­ New Delhi: Paul Zykofsky Paris: Katherine Kanter. tor know-by letters that will be carefully read in this election year­ Sophie Tanapura that you expect a full, no-holds-barred inquiry in this matter. Rome: Leonardo Servadio This week EIR reports the collapse in world trade that is becoming Stockholm: Clifford Gaddy United Nations: Nancy Coker both the cause and effect of the deepening depression. To turn that Washington D.C.: Richard Cohen. process around, the United States will need all three constitutional Laura Chasen. Susan Kokinda Wiesbaden: Philip Golub. Mary Lalevee. branches of government. The President must be able to stand up to Thierry Lalevee. Barbara Spahn the arrogance of the usurping "fourth branch," the Federal Reserve. Executive Intelligence Review (ISSN0273-6314) And we will need an independent, unblackmailed Congress to work is published weekly!50 issues )exceptfor the second with him in shaping a recovery program along the lines EIR founder week ofJulyandjirst week of January by NewSolidarity InternationalPress Service Lyndon LaRouche has laid out-low-interest credit for productive 304 W.58thStreet.New York. N. Y. 10019. industry and agriculture, large-scale nuclear power development, In Europe: Executive Intelligence Review, Nachrichten Agentur GmbH, national infrastructure projects (especially waterways), and a new Postfach 230S, 0.6200 Wiesbaden Tel: 30-70-35 Executive Directors: Anno Hellen broich, gold-reserve monetary system. Michael Liebig In Mexico: EIR, Let your elected representative know you expect him to act on Francisco Dfaz Covarrubias 54 A-3 Colonia San Rafael, Mexico OF. Tel: 592-0424. both the economic and constitutional issues. It was Senator John Japan subscription sales: O.T.O. Research Corporation Melcher, in a speech to the Senate March 10 which every national Takeuchi Bldg. 1-34-12 Takatanobaba Shinjuku-Ku, Tokyo 160 news service except this one blacked out, who made the connection Tel: (03) 208-7821 succinctly. Melcher began his call (see page 25) for a full probe of Copyright � 1981 New Solidarity International Press Service Abscam wrongdoing: "I firmly believe that there is a desperate need All rights reserved. Reproduction in whole or in part without permission strictly prohibited. for the Senate to be addressing the problems of the economy." 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-$396, Single issue-$I 0 Academic library rate: $245 per year • ilillContents

Departments Economics

11 Energy Insider 4 World trade sinking Another notch in back to the 1930s Volcker's belt. The volume and pattern of decline. 37 Investigative Leads Defferre's purge of law­ 6 Currency Rates enforcement agencies triggers resistance 7 Behind the U.S. oil in France. import tax proposal The Warburgs proposed it; 39 Interview who's supporting it, and Yigal Laviv, Israeli anti­ what it would do. drug investigator. 8 International Credit 44 Interview Socialists plan takeover Dr. Fasihuddin Mahtab, of world finance. former Agriculture Minister and current Finance 9 Gold Minister of Bangladesh. A good investment at $300.

50 Middle East Report 10 Agriculture Muammar meets Bruno. The "user fee" caper, Part l.

51 Dateline Mexico 12 Real U.S. The PSD's business empire. unemployment index Prepared by Leif Johnson. 57 Science & Technology NASA chief: "space 13 Trade Review station next step." 14 Business Briefs 59 Eye on Washington

60 Congressional Closeup

64 Editorial Phase II begins against Mr. Reagan. Volume 9 Number 12 March 30, 1982

Special Report International National

32 White House is AI 54 Vietnam war planners Haig's target in launch peace movement Central America The sudden "nuclear­ The effort to sever the freeze" advocacy and push President from Mexico's for mass demonstrations negotiated-peace initiative. have nothing to do Documentation: Jose Lopez with war-prevention. Portillo describes that initiative. 56 Congress leaps into Volcker budget trap 34 Cold coup in Cutting off one leg in Panama adds to response to promises that Senator Williams with his wife Jeanette following regional instability the other will be spared is his resignation from the Senate on March II. UPI not sound policy . Why 35 Brandt versus Schmidt fo llow the recommendations of the same Federal Reserve The transatlantic chairman who blitzed U.S. conspiracy to oust the industry? 16 Evidence of FBI West German Chancellor. crimes now before the 62 National News U.S. Senate 40 Obstacles to Brazil's An introduction to EIR's export push mean exclusive in-depth investment cuts, documentation of the devaluation pressure Senate debate over the case Correction: of Sen. Harrison Williams. Due to a 42 Problems and production error in our potentials: an March 23 issue, titles on two 18 What the Senate Ethics eyewitness in maps were reversed in the Committee refuses to Bangladesh Special Report article admit about FBI crimes Introducing a report headlined "Siberian A fu ll dossier presented by Asia correspondent Development: The Fulcrum by Linda de Hoyos. Paul Zykofsky. of U.S.S.R. Economic Growth." The firstmap 23 What the Senators said 46 Financial constraints should have been labeled "The Three Siberian Four sections of excerpts hit urgent investment from statements on the Development Zones," the Senate floor. second, "West Siberian 48 Dispute with India Natural Gas Pipelines." stalls water program And, on page 27 ofthat Special Report, the 52 International Intelligence reference to Table 3 should have read "Table 2." �TIillEconomics

World tradesinking back to the19308

by Richard Freeman

Images of the 1930s were revived in mid-March, when depression. Today, Paul VoJcker's high interest rates are reports appeared that world import levels measured in already beginning to destroy international trade as Smoot­ current dollars contracted 5 percent in 1981 compared to Hawley did in the 1930s, with Africa, fo r example, now 1980, the first fall in world imports since 1958. The fall­ being "decoupled" from the world and left to starve. off in import levels from $1,925 billion to $1,821 billion If the world trade collapse continues to gain momen­ promises to worsen, as the major motor of world trade­ tum at its present rate, the Third World will find itself the import and export capacity of the Western industrial defaulting on its debts, and bankers will begin hastily nations-continues to weaken under an industrial con­ calling in their international loans. Less Developed traction engendered by the relentless assault of the high Countries (LDCs) owe $550 billion in debt, including interest rates of Federal Reserve Board Chairman Paul $60 billion to $100 billion coming due this year. A Volcker. Contributing to this process, too, is the "con­ cutback in international lending was recommended ditionality" policy of the International Monetary Fund, March 6 by Emile Van Lennep, the secretary-general of which penalizes Third World nations unable to keep the Organization for Economic Cooperation and Devel­ current with their debt payment schedules by requiring opment (OECD) in Paris. The combination of debt and them to cut back on imports. the call-in of loans is precisely the chemistry that leads to It should be remembered that in the 1930s, after the a chain-reaction of bank failures that could bring down first shock of stock market failures in 1929, it was the the entire global banking system. fr agmentation of international trade that took the world from monetary disaster into full-fledged depression. At Trade collapse that time, under protectionist measures, led by the U.S. The most striking fe ature about the world trade Smoot-Hawley tariff of 1930, each nation erected trade contraction is that it occurred after several years of barriers and tariffs that prevented other nations' exports hefty current-dollar trade expansions. As the chart from crossing its borders. As nations retaliated with shows, from 1976 to 1980, world trade doubled. Nations higher and higher tariffJevels, world trade fractured into and banks built their borrowing policy on the expecta­ a thousand pieces, and the world plunged deeper into tion of higher trade volumes the next year. In 1980,

4 Economics EIR March 30, 1982 world imports expanded 26 percent, leading to a large of them high-technology goods, from slowing down in borrowing spurt. When the 5 percent import contrac­ the second half of 198 1 and from turning to a negative tion occurred in 1981, the Third World in particular was level in February 1982-the first Japanese export con­ left with hefty interest payments, but sharply decreasing traction since 1975. If Japan's exports go, Japan will be revenues to pay that interest. forced to slash imports. In real, constant dollars, world imports also fell in As fo r the United States, which imports 40 percent 1981, by 2.9 percent. This was the second year in a row of all Third World goods, its imports actually rose in that constant dollar imports fell, marking the first time 1981. There is no mystery here. An overvalued dollar, that world trade has fallen in back-to-back years since artificially inflated through high interest rates, made the end of World War II. It should be noted that the foreign goods cheap. Through its strong dollar, Ameri­ physical volume of trade fe ll less sharply than the non­ ca tapped the higher productivty levels of goods-produc­ inflation-adj usted volume of trade. That is because ing economies around the world. globally-although not in the United States or Western By the summer, the United States will be running an Europe-there was a price deflation. A Third World ever-widening current account deficit, as exports fall nation might ship an only slightly smaller quantity of because they are overpriced in dollar terms, and certain goods than the year before, but earn considerably less invisible earnings, such as oil company repatriation of in current dollars, because the price of the goods has profits, will fall because of the fall in the price of oil. fallen. The dollar will go into free fall, and U.S. imports will The world trade contraction hit the Third World be cut massively. much harder than the advanced sector for two reasons. The bitter irony of the fall in world imports, espe­ First, the advanced sector had more accumulated infra­ cially in the advanced sector, is that it forced the Third structure to fall back on; second, most of the cuts in World to slash exports and cut export prices in order to imports occurred in the advanced sector and they were find markets in the industrial west. Third World raw of Third World goods-thus the Third World lost materials prices fell by 15 to 25 percent; the Third export earnings. West Germany cut its imports by 13 World looted itself by charging prices below the costs percent for 1981; part of this cut was due to lower levels of production just to sell its goods to the industrial of importation of oil, but also lower import levels of sector. other commodities also occurred. In the first nine Nowhere is this fact more appa�ent than in trade months of 1981, France cut its imports by 12 percent, relations between Africa and the United States. In 1980, and hard-pressed Belgium cut its imports by 14 percent. the U.S.A. imported $34 billion worth of goods from The fa ll of world imports would have been far worse Africa; in 1981 U.S. imports fe ll to $27 billion, a fall of were it not for the fact that the two largest economies in 20 percent. Not only did the U.S. cut back on its oil the world, Japan and the United States, maintained consumption fr om Nigeria, Algeria and Libya; African their import levels in 1981, although for different rea­ copper, cocoa, rare metals, lead, and other raw mate­ sons. rials were shipped to the United States at a fraction of Japan kept up its import level because its export their cost. Instead of the United States subsidizing levels continued strong. But even the resourceful Japa­ Africa, as it so frequently claims, the world trade nese could not prevent the level of their exports, many collapse forced Africa to subsidize the United States.

World trade: current and constant dollars

Unit import Total world imports Percent prices Percent Unit world imports Percent Year (billion current dollars) change (1975=100) change (billion 1975 dollars) change

1976 ...... 926.4 13.4 101.2 1.2 915.3 12.0 1977 ...... 1,067.6 15.2 110.1 8.8 969.3 5.9 1978 ...... 1,240.6 16.2 121.2 10.1 1,023.5 5.6 1979 ...... 1,563.4 26.0 144. 2 19.0 1,084.2 5.9 1980 ...... 1,920.8 22.9 177.9 23.4 1,079.6 -0.4 1981 * ...... 1,824.8 -5 .0 174.0 -2.2 1,048 .7 -2 .9

*Estimate by ACLI International, New York Sources: International Monetary Fund, ACLI International

EIR March 30, 1982 Economics 5 The British and Venetian oligarchs standing behind Volcker and the IMF realize that their world banking system is very close to collapse and are planning to Currency Rates salvage the situation by decoupling the Third World from the world economy. This is an idea first introduced by the New York Council on Foreign Relations in its 26-volume "Project 1980s" program; developing coun­ The dollar in deutschemarks tries are to be shut out of world trade, made unable to New York late afternoon fixing obtain the high-technology capital goods they require to industrialize. Decoupling is willful, conscious geno­ [2.35 � ��" r"- � � cide. i 2.3� V !, Decoupling 2.25 i I I Joseph Nye, who headed up the Project 1980s report :2.20I on the Third World, boasted March 15, "There is no question that decoupling is taking place. Africa is being 12.15 1/23 2/111 2/17 hived off from the world banking system. They will be 2/3 2/24 3/3 3/10 3/17 forced to do without banking from the private sector altogether." Nye elaborated, "Some countries like Tan­ The dollar inyen zania will limp along. Others are being forced onto self­ New York late afternoon fixing subsistence agriculture and are dropping out of the 2 4 market economy for good." . 0 - '--/ As Nye knows, once a nation cannot get private 2.30 r V "------�� bank funding, it must go to the International Monetary ,-" Fund and its austerity-enforcing loan "conditionalities" 2.20 policy. In 1977, only two out of all African nations were 2. 10 going to the IMF for funds. Today, that number has reached 21. 2.00 1/23 2/3 2/17 2/24 3 What is happening to Africa as a result of the export 2/10 3/ 3/10 3/17 collapse is a lesson for the rest of the world: • Zaire-according to an AID official of the U.S. The dollar in Swiss francs State Department March 16, Zaire, which has $5.5 New York late afternoon fixing billion in total debt, has just been cut off from even an IMF loan. In 1982, Zaire must pay $650 million in 1.90 - interest payments; thanks to collapsed copper and co­ 'V-'� " balt prices, Zaire is earning only $35 million a month 1.85 ./ �- from exports. If Zaire were to put all its export earnings 1.80 toward debt repayment, and buy nothing, it still could pay off only two-thirds of the debt it owes. 1.75 1------• Tanzania-a nation with over $1.3 billion in debt. 1.70 Each worker in Tanzania earns only enough money 1/23 2/3 2/111 2/17 2/24 3/3 3/10 3/17 each week to pay for half of the amount of corn that his family needs to survive. Tanzania has had 18 million The British pound in dollars people reduced to self-subsistence farming. New York late afternoon fixing • Nigeria-once the showcase country of Africa. Now because of the fa ll in world oil prices, Nigeria will 1.95 have to borrow on the world market. Wall Street bank I officials are saying that Nigeria must give up its ambi­ 1.90

tious development plans. 1.85 r'\..� � ..... � - What is occurring in Africa, will soon spread to the '-' rest of the Third World. An official for the General 1.80 """"-1'00 Agreement on Tariffs and Trade reported March 16, 1.75 "Last year, the Third World was most hurt by the fall­ 1/23 2/3 2/111 2/17 2/24 3/3 3/10 3/17 off in trade. We have done a study that shows that this year the advanced sector will be hurt."

6 Economics EIR March 30, 1982 If Reagan refuses, Congress, already blaming him for creating an unsustainable budget deficit, could block the budget by refusing to allow the debt ceiling to be raised, creating a budget crisis by early summer. Behind the U.S. oil The President is under heavy pressure from an oil tax clique within the White House. Council of Economic import tax proposal Advisers head Murray Weidenbaum, Office of Manage­ ment and Budget Director David Stockman, and Trans­ portation Secretary Drew Lewis attempted to force the by Leif Johnson President's agreement to the tax during the December White House budget discussions and continue to raise What single measure-now being promoted by the U.S. an unholy din on the subject. press, Office of Management and Budget Director David The claque in Congress is headed by Socialist Inter­ Stockman, and a group of ultra-liberal Congressmen­ national Democrats including Senators Gary Hart could seal the United States into permanent depression, (Col .), William Bradley (N.J.), and Representatives wreck the Reagan Presidency, and starve the most pop­ John Dingell (Mich.) and Philip Sharp (Ind.). An aide ulous oil-producing countries into population-reduction to Bradley explained that last summer Bradley and Sen. policies? Charles Percy (R-IIl.), who chairs the Foreign Relations A $10 tax on each barrel of imported oil could Committee, had introduced oil import tax legislation accomplish just that. that died unnoticed. "Now we can impose the tax Ten dollars added to each imported barrel would set because international prices are coming down and the all oil prices, including domestic, at $40 a barrel. Natural public won't notice the price increase as much. But we gas and coal prices would also rise to "competitive" are not going to introduce legislation. We want Reagan levels, and the U.S. economy would suffer a net drain of to enact it." between $60 billion and $80 billion the first year. Who are the oil taxers? They are the Socialist Consider the effect of taking about $50 billion out of International-linked Democrats who formerly occupied consumers' pockets on the U.S. auto, housing, and other top positions in the Carter administration. consumer-goods industries. The tax would have a more One muscleman is Al AIm, Undersecretary of Energy ruinous effect on today's depressed American economy for Policy Planning under James Schlesinger. He has than either the 1973 or 1979 oil shocks. Coupled with already gotten support from the oil cartel, which not Federal Reserve policy of pushing up interest rates, the only sees the advantages of a $40 barrel of oil, but holds oil import tax could put the economy into a "post­ vast domestic natural gas and coal lands as well. industrial age" for good. The chief international strategist is Carter's Under­ Federal Reserve Board Governor Henry Wallich told secretary of State for Economic Affairs, Richard Coop­ the Overseas Press Club in mid-March that he not only er, and "economic credibility" comes from William favored maintaining high interest rates "to fight infla­ Nordhaus, Chairman of Carter's Council of Economic tion," but also backed the oil import tax. Of course, the Advisers. import tax would boost the consumer price index by a N ordhaus is said to be working with the International fu ll percentage point the moment it was imposed, not Association of Energy Economists whose former head, counting the further inflationary impact of increased Jim Plummer of the Electric Power Research Institute natural gas and coal prices. But inflation fighting is the (EPRI), is preparing a major report advocating the tax. last thing on the minds of the tax's backers. EPRI, the think tank of the electric utility companies, is According to one: "If we could lower international controlled by the Aspen Institute headed by Robert O. oil prices 15 percent, we would force OPEC countries to Anderson, fo rmer chairman of Atlantic Richfield,the oil face up to their real problems, and for the populated giant. OPEC nations, their number-one problem is population. Another leading strategist is David G. Snow, the top It would have to be reduced." energy analyst of Warburg Paribas Becker-A.G. Becker, who is also a member of the Israeli-intelligence-linked Reagan is at stake Wall Street Nuclear Club. His contribution, "The Oil The oil taxers feel that the proposal is the perfect Import Tariff: A Painless Way to Balance the Budget" weapon against the Reagan administration. If Reagan claims that decrel\Sing the OPEC surpluses is the only enacts the tax under powers contained in the 1982 Trade way to prevent the Arabs from buying out the United. Expansion Act, then he destroys all chance of economic States. There is a double irony in this argument, since recovery he and his advisers had promised, and goes Warburg Paribas Becker is a leading broker for Arab down as having passed the largest excise tax in history. buy-ups in the United States.

EIR March 30, 1982 Economics 7 InternationalCredit by Renee Sigerson

Socialists plan takeover of world finance the 1930s, but we expect to see the The newly formed Institute for International Economics is a same economic collapse going on now, extended into the fu ture," the front for the Socialist International. source said. The policies they plan are iden­ tical to those put fo rward by the Brandt Commission's 1980 report, "A Blueprint for World Survival," A group of top leaders of the So­ Commission, the Socialist Interna­ which was written to carry out the cialist International, the Social tional's lobbyi ng group for nega­ Carter administration's Global Democrats, and Democrats who tive economic and population 2000 Report. support zero economic and popula­ growth in the Third World; W. Mi­ The three-point agenda would tion growth, met in secret in mid­ chael Blumenthal, Jimmy Carter's mean the death of more than 2 bil­ March to plan new policy initiatives Treasury Secretary and leader of lion people: which they say will allow them to the Council on Foreign Relations I) A new reform of the Interna­ "take over" the world financial sys­ 1980s Project fo r "controlled disin­ tional Monetary Fund to make tem. tegration" of the world economy; more LDCs dependent on the IMF The unusual part of this Social­ Karl-Otto Poehl, the Socialist head by "softening" its harsh condition­ ist International meet was that it of the West German central bank; alities and granting LDCs more took place at the boardroom of the Lane Kirkland, head of the AFL­ members on the IMF board. Imme­ elite Lehman Brothers, Kuhn, Loeb CIa and leader of the Socialist In­ diately, commercial banks will investment bank at 55 Water Street ternational; Andrew Young, for­ slash their loans and force LDCs to in lower Manhattan, led by Leh­ mer Carter U.N. Ambassador and adhere to IMF demands or starve. man Brothers Chairman Peter Pe­ Brandt Commission associate; 2) A new international mone­ terson. Donald McHenry, head of the tary /foreign exchange system of The occasion was the first Agency for International Develop­ "multiple currencies," replacing Board of Directors meeting of the ment under Carter; and Anthony the U.S. dollar system. As high Institute for International Eco­ Solomon, liberal President of the U.S. interest rates cause European nomics (lIE), a new center set up by New York Federal Reserve Bank. currencies to collapse, the lIE in­ the German Marshall Fund with a Also present were "right-win­ tends to use the crisis to "make a $4 million grant last November. gers" who are in fact leading sup­ proposal in a timely manner" for The purpose of the lIE and of the porters of the Socialist Internation­ nations to move off the dollar meeting, one participant told a al. These included Raymond Barre, standard, which will greatly restrict journalist, was "not just to talk former Prime Minister of France; world trade and reduce dollar cred­ about policy, but to bring it into Alan Greenspan, fo rmer Nixon its to LDCs in particular. Rudiger effect. We are a channel for deliber­ Council of Economic Advisers Dornbusch, an liE Advisory Board ating, making, and carrying out chief and current White House ad­ member, has already written a plan economic policy." viser; George P. Shultz, Chairman for Europe to impose capital con­ Governments, said the source of President Reagan's Economic trols against the dollar in the form who is close to the German Mar­ Advisory Board; and Dennis of an "Interest Equalization Tax" shall Fund, will be forced to do as Weatherstone, Chairman ofthe Ex­ against European investment in the lIE says, "when we put fo rward ecutive Committee of the Morgan dollars and in the U.S. itself. our proposals in time of crisis. We Guaranty Bank. 3) A new world trading system will make sure they get into the The lIE and the German Mar­ which would restructure world in­ implementation stage," he added. shall Fund are interested in using dustry, telling each country what it The men who met to dictate what they say is a coming "crisis" in can produce and where it can ex­ terms to the world's governments the world economy to promote port. This would shrink world in­ included Peter Peterson, who is also their aims. "I wouldn't want to dustry and destroy capital goods the U.S. Chairman of the Brandt characterize the world situation as exports to the LDCs.

8 Economics EIR March 30, 1982 Gold by Montresor

A good investment at $300 sales were estimated at [only] 250 Gold may fall still further, but those who have the time and tons in 1981, about normal. Soviet sales are not the main reason for the money should buy rather than sell. price drop." Mr. Green admitted what we have long reported, and what was confirmed to me March 17 by the head of one of Germany's largest When gold reached the three­ Consolidated Goldfields, I have gold trading rooms. The millions of year low of $310 in Hong Kong documented repeatedly over the small gold buyers in the less-devel­ March 17, many in the markets be­ last months the fact that the Soviets oped nations are being "totally gan to panic in anticipation of a have sold no more than their usual shaken out of the market," this repetition of the events of 1976, volume during the past year, at banker said, by high U.S. interest when the price fe ll sharply to the least on the open market. They con­ rates and the world economic $100 level. I would not do so. tin ue to sell at levels of some 200to depression. According to my colleagues in 250 metric tons per year. "Money is pouring out of gold Frankfurt and ZUrich, the price of No chimeras of the "internal in the Third World, where people gold is falling in the short term for disintegration of the Soviet Em­ can no longer hold their gold, the the same sorts of reasons which will pire," so popular at the Interna­ maj or form of savings," he contin­ soon make it attractive again. In tional Institute of Strategic Studies ued. "In Iran, we are seeing desper­ fact, as I have reported many times, in London, should make people ation sales. The same situation most of the gold goes to those same imagine that the Soviets are either holds in South Asia and through­ old European fa milies who are in a terminal bankruptcy, which out the Middle East." Especially planning to corner the market when they are not, or desperate fo r cash hard hit by the fa ll is OPEC reve­ smaller investors around the world due to the crisis in Poland, which nues are the "poorer OPEC coun­ are totally shaken out. they are not. In point of fact, West tries," he said. And the small investors are cer­ German, French, and other credits Indeed, Mr. Green himself not­ tainly very close to being fu lly shak­ continue to flow eastward, and the ed in the New York Times that sales en out. partisans of stability in Poland and of gold are coming from "Egyptian First, I would like to dispel once the U.S.S.R. have won a considera­ shopkeepers and millions of other again the nonsensical rumor, begun ble victory . savers in the Middle East, India, by Consolidated Goldfields last What extra cash the Soviets Indonesia, and poorer countries fall, that "Soviet dumping" is be­ need is indeed being raised through worldwide;" a direct plagiarism of ' hind the fa ll in the gold price. gold mobilization-but not open­ my earlier analyses. During the week of March 15, market sales. The Soviets have been Who benefits? The "oldest Eu­ one of our readers wrote to inform swapping large amounts of gold ropean money is snapping up most me that Consolidated Goldfields with the South African, Swiss, West of the gold sales," my European representatives are touring the German, and perhaps the Brazilian banking source confided. United States repeating this false­ central banks, in large part keeping While I do not expect a sharp hood. One American mining execu­ it off the market. rise in the gold price, I would say tive told us that a Cons Gold execu­ In fact, Mr. Timothy Green, the that a downward spike from the tive, after insisting that the "Rus­ renowned gold analyst for Consoli­ current level, while possible, would sians are dumping gold on the dated Goldfields, was forced on be temporary, and that those in the world market," tried to frighten March 16 to admit, afterour analy­ know are counting on $300 as a him with the "confidence" that the sis grew current, that there is after strategic floor.If one has the capital South African producers are so des­ all "no Soviet dumping." Without and liquidity to hold gold for some perate that they plan to shut their explanation, Mr. Green told H. J. months, in the face of perhaps fur­ mines at the $320 an ounce level. Maidenberg of the New York Times ther temporary setbacks, then $300 In spite of the best efforts of that he now believes "Soviet gold is a good price.

EIR March 30, 1982 Economics 9 Agriculture by Susan Brady

The 'user fee' caper, Part I to the "marketplace," harbor de­ Congress has been stalling on what it only dimly recognizes as velopment will be "expedited"! Committee sources do not know an attack on the American System. when to expect floor action. In the House, Public Works Subcommittee on Water Resources Chairman Robert Roe (D-N.J.) stated during hearings this month Wten anarchist ideology is ele­ comprehensive study be done on that the issue is being looked at too vated to the principle of practice for the effect of the fees on the trans­ narrowly, and insists that there will the world's greatest economy, one portation system as a whole. be no legislation in the House this can be sure that disastrous conse­ In April Senator Lloyd Bentsen year. In February the Subcommit­ ' quences are in store. A case in point (D-Tex.) and a group of Senators tee on Water Resources began yet is the Reagan administration's issued a "Dear Colleague" letter another round of hearings on the campaign to terminate federal co­ recommending that "j udgment be user fee. ordination, planning and funding withheld" on S-809 and S-8lO until The hearings provided a forum of economic infrastructure-the more information on their potential for Transportation Secretary Lewis program of "internal improve­ impact is available. A bipartisan to unveil the Waterway User ments" our fo unding fathers made report of the House Public Works Charge Study. The study shows a cornerstone of the American Sys­ and Transportation Committee that imposition of the user-fee sys­ tem of Economics. recommended that no action be tem will inflict permanent damage One year ago the Reagan ad­ taken before completion of the In­ on the barge industry and on grain ministration asked the Chairman of land Waterway User Charge Tax shippers-effects which Lewis, the Senate Public Works Commit­ Study required by PL 95-502. And cheer-led by the Brookings Institu­ tee's Subcommittee on Water Re­ the entire Tennessee delegation, in­ tion's creator at the OMB, Alice sources, Senator Abnor (R-S.D.), cluding Majority Leader Howard Rivlin, insists are "not nearly great to do something no Senator would Baker, urged postponing consider­ enough to turn us fr om a policy of do on his own-introduce S-809 ation of the administration bills un­ full cost recovery." and S-810. The bills mandate the til the U.S. Army Corps of Engi­ The barest of facts about the recovery of lOO percent of costs for neers undertake a "detailed and nation's waterway system show operation, maintenance and con­ complete" study. what is immediately at stake. struction on the nation's deep-draft Last October, the liberal Sena­ Barges are the most efficient means channels and ports (S-809), and its tor Moynihan (D-N.Y.), moved to of transport, at more than five inland waterways (S-8lO), through bail out the free-marketeers. Moy­ hundred ton-miles per gallon of a system of "user fees." nihan is ranking minority member fuel compared to 200fo r rail and 50 Hearings were held on the pro­ of the Subcommittee on Water Re­ fo r truck. They carry more than 40 posals, viewed by lawmakers at the sources. Together with Subcom­ percent of the nation's export grain time as a "radical departure" from mittee Chairman Abnor he intro­ to port, and haul ,fertilizer, petrole­ even the existing program of fuel­ duced S- 1692, an "alternative" to um and other raw materials back tax user fees. The 1978 Inland S-809 that mandates 25 percent cost upstream into the country's indus­ Waterways Revenue Act, PL 95- recovery on maintenance of har­ trial heartland. Compared to an 502, had established a precedent­ bors and channels authorized by historic federal "subsidy" of $50 setting fuel tax 'on commercial Congress prior to January 1, 1981, billion to the country's privately barge operations, starting at four and 50 percent cost recovery on owned railroads, the total federal cents per gallon in October 1980 maintenance and operation of investment in the waterways .sinc e and rising to ten cents per gallon in channels and ports developed after. 1824 is just $7.4 billion. fiscal 1986. But Congress realized it The principal selling point for was a drastic step, and therefore this proposal is that since it shifts Next week: a closer look at the also mandated in PL 95-502 that a new project construction funding Waterway User Charge Study_

lO Economics EIR March 30, 1982 EnergyInsider by William Engdahl

Another notch in Volcker's belt Freeman's TVA predecessor, Namely, the Tennessee Valley Authority's retreat on Aubrey Wagner, committed the construction of eight nuclear-power units. . TVA to nuclear power in 1975 after the price of OPEC oil increased 400 percent. The Wagner program, to­ gether with the region's Clinch Riv­ er Breeder Reactor proj ect near Oak Ridge, remains the most im­ A decision taken this month by helped pull much of the southeast portant concentration of nuclear two of the three commissioners re­ out of the last depression, is thus power in the world today. Such sponsible for the government­ able to build nuclear capacity at far concentrations cannot be lightly owned Tennessee Valley Authority lower costs than most utilities. To thrown away. (TVA) is calculated stupidity. S. defer or cancel one single nuclear Following the latest TVA board David Freeman and Richard Free­ plant in the current economic vote chucking three reactors, Free­ man were reportedly jubilant after depression is therefore tantamount man exulted: "I feel better about their decision to indefinitely defer to insanity. the TVA power system today than I completion of three large nuclear As I have emphasized in this have fe lt any day since I have been generating units. column, every penny spent in infra­ here. " The units, Hartsville A I and A2 structure investment like nuclear Meanwhile, the Nuclear Regu­ near Nashville, and Yellow Creek I plants or large-scale water projects latory Commission has continued in northeast Mississippi, have al­ is a net gain fo r the overall economy its sabotage of nuclear power in two ready provided more than $2.1 bil­ regardless of its costs on paper. To ways. A report, commissioned by lion in skilled employment con­ boot, the TVA has a preferential Carter holdover John Ahearne and tracts for the region. Immediately, interest-rate situation to build its based on "conjecture, newspaper some 4,000 to 5,000 skilled con­ nuclear plants. For President Rea­ articles, conversations with finan­ struction workers and hundreds of gan to urge the TVA to order 15 or cial houses, and hearsay," has been engineers will join Paul Volcker's 20 more nuclear plants would be the issued to "predict" that another 19 unemployment rolls. best way to revive the economy. nuclear plants under construction Industry sources report that an But David Freeman, a fanatical throughout the nation could be additional fivenu clear units of the solar-power advocate who is un­ cancelled or postponed. One utility nation's largest power utility will qualified for his position on that has already denied any such plan; get the axe before Sept. 30 of this count alone, has been devoted to the NRC did not even ask the utili­ year. Hartsville Bl and B2, Phipps destroying the TVA's nuclear-plant ties themselves. But such reports Bend I and 2, and Yellow Creek 2, concentration for years. Freeman aim to be self-fulfilling by panick­ are currently on hold. This would changed his public stripes to "pro­ ing utility investors. mean that since S. David Freeman, nuclear" to persuade the Reagan Mr. Ahearne also joined his two Jimmy Carter's energy architect, administration to keep him on. But anti-nuclear NRC colleagues to came to the TVA from the Ford his latest decision makes clear his veto a government request for ex­ Foundation in 1977, the utility's· role in the chicken coop. pedited construction approval for nuclear program will have been David Freeman drafted the de­ the Clinch River breeder, the na­ slashed fn:Jm 17 to only 9 plants by liberately destructive Carter Na­ tion's only serious prospect for de­ 1990. tional Energy Policy fo r James velopment of second-genera. tion The TVA case is serious. It is Schlesinger, and wrote the zero­ nuclear reactors. one of the only remaining areas of growth Ford Foundation energy The TV and NRC actions aren't the economy immune from Volck­ study, Th e Time to Ch oose; it was just a matter of local concern. The er's interest rates because of special adopted in 1975 by Swedish Social­ fight for the future of the TVA nu­ access to credit through the little­ ist Olof Palme as his energy policy. clear program will help determine publicized Federal Financing The Swedish economy has yet to whether we will leave any advanced Bank. The six-state utility, which recover from aspects of that policy. industrial capacity to our posterity.

EIR March 30, 1982 Economics II workers who have retired before age 65 and withdrawn their lifetime of skills from the economy, the thou­ U.S. sands of unemployed who have Real unemployment index turned to small businesses to eke out a living, or the 2.6 million EIR publishes this week an historical problem, it is obvious that unem­ students- 15 percent of the student index of unemployment in the ployment is considerably larger than population-who have become stu­ United States since World War II, the 8 to 9 percent claimed by the dents rather than stand on street which will be updated monthly. Our Bureau of Labor Statistics of the De­ corners, unemployed. purpose is the rebuilding of the partment of Labor. Consider the Remarkably, the BLS does not American labor force, once the finest throngs of jobless youth who hang count part-time workers who cannot labor force in the world. out on street corners, the army of find fu ll-time work as unemployed, The gross figure for unemploy­ prostitutes, gam biers, dope pushers, and makes no attempt to find the ment in February 1982 was 22.2 per­ pornographers, and participants in millions who were not fo und by the cent of the entire labor force. This organized crime that operate in our census takers. figure measures, most dramatically, largest cities, plus the hundreds of The above index is computed by the progressive erosion and waste of thousands of cult members or youth­ adding the following categories: the workforce since World War II, ful drug-culture floaters. A) The officially counted unem­ when total unemployment was only ployed; 3.9 percent. Unemployment index B). Fifty percent of the involun­ To anyone who considers the Consider also the 1.6 million tary part-time employed and 15 per­ cent of the voluntary part-times; C) Fifteen percent of fu ll-time Real Unemployment, 1945-82 (in percent) students and 5 percent of those en­ rolled in vocational education; D) Fifty percent of the employ­ abies among the estimated 6.9 mil­ 25 Volcker lion people not counted by the 1980 Census;

Oil Hoax E) Two-thirds of the employa­ bles associated with welfare families; F) All those who leave the 'Great Society' 20 Welfare State workforce early, but are not dis­ abled.

1957-58 Sources: Official unemployment is Recession that reported by the Bureau of La­ 15 bor Statistics, U.S. Department of Post-War Labor. Part-time unemployment, Export Cutoff both voluntary and involuntary, is reported by the BLS back to 1960 with BLS estimates fo r 1950 and

10 1955. Student enrollments in higher education and federally assisted vo­ cational training are compiled by the U.S. National Center for Edu­ cation Statistics. The census under­

5 count estimate is based on a 1972 federal review of the 1970 Census count that fo und an undercount of 2.7 percent . The number of welfare recipients is compiled by the U.S. Department of Health and Human 1945 '50 '55 '60 '65 '70 '75 'SO 'S1 'S2J '82F Services.

12 Economics EIR March 30, 1982 Trade Review by Mark Sonnenblick

Cost Principals Project/Nature of Deal Comment

NEW DEALS

$850 mn. New Zealand Refinery modernization and expansion to 3.7 mn. tpy from Holland/ crude capacity being carried out by Badger and Chiyoda Japan with technical advice from Shell.

$800 mn. Saudi Arabia Mitsubishi has won contract for 1,000 megawatt ther­ from Japan mal electricity plant for Jeddah. Contract includes boil­ ers, fo ur 250-MW generators, transformer states and related equipment.

$400 mn. Bahrain from Gulf Petrochemical Industries, owned by Bahrain, Ku­ Snamprogetti is super­ Italy/West wait, and Saudi Arabia, has ordered a plant to turn its vising the plant, which Germany/ abundant natural gas into 1,000 tpd each of ammonia will use Uhde and ICI U.K. and methanol. technology.

$15 mn. Venezuela CAVIM, owned by the Venezuelan military, has ordered Used Espindesa process; from Spain 11,000 tpy concentrated nitric acid plant from Tecnicas turnkey basis. Reunidas.

$50 mn. Peru from Peru has contracted Balfour Beatty Engineering to U.K. govt. giving $9.3 U. K. halJdleever ything from site selection to installation of a mn. aid grant; remainder large number of small hydroelectric generators. The 50 to be financed by Baring megawatt units will provide light to an estimated Bros., who have never 900,000 rural Peruvians, most of whom presently lack been known to give aid. light, treated water, and fo od.

$1 1 mn. Indonesia fr om Japanese companies have won another small order for Japanese hoping to Japan cars and signals for Dj akarta'S suburban railway system snare main $100 mn. Ja­ modernization. Since the plan began in 1976, the Japa­ botabek modernization nese have won orders for 40 railway cars and 56 diesel program starting in cars, plus signals and communications equipment. Sum­ 1983. itomo, Nissho-Iwai, Kawasaki, Hitachi, and NSSK are the suppliers.

$2 13 mn. Morocco from Mitsui will provide the engineering and Spain's Com­ Japanese and Spanish Japan/Spain ercio exterior the equipment fo r Morocco's new sul­ govt. financing. phuric acid plant. Will produce 13,800 tpd.

$85 mn. North Yemen The Wadi Mawr irrigation project to improve 60,000 Plan includes water sup­ fro m U.K. acres of fa rmland and build 100mil es of new access ply to 103 hamlets. roads will be under the consultancy of Sir M. Mac­ Donald and Partners of Cambridge.

$190 mn. Brazil fro m Mannesmann Steel has received Brazilian govt. export Mannesmann says not West Germany tax incentives for plan to increase its steel production in bothered by Brazil's Brazil from present 750,000 tpy to I mn. tpy. Mannes­ profit remittance laws, mann is shifting project mix to demands of Brazilian "since we reinvest our market. It dropped plans to produce welded pipe in profitsin Brazil." 1979, but will now fabricate 133/8 inch seamless pipe for petroleum industry to replace imported pipe. It is moving into huge hydraulic steamshovels, while divest­ ing its process control equipment subsidiary, which is constrained by regulations on fo reign companies, and by market conditions.

$70 mn. Tunisia from Pirelli Tire won contract for equipment and technology Pirelli share is $25 mn. Italy for Tunisian tire plant which will make 8,250 tpy auto and large industrial vehicle tires. Plant is for STIP, owned by Tunisian, Kuwaiti, and Saudi investors.

$67 mn. Malaysia from Hazama-Gumi of Japan will build 4,300 prefabricated Japan houses in Bangi, Selangor State.

EIR March 30, 1982 Economics 13 BusinessBriefs

to itemize the collapsed auto and housing hoping to be able to sell the excess homes Domestic Credit sales , factory capacity utilization down and bail out the homebuilders-but even to 70 percent, and asked, "Isn't that at these rates, homes are not selling. Fed's Wallich promises enough? Why are interest rates so highT' The deregulation of the airline indus­ Leonard Silk, in the New York Times, try continues to threaten several medium higher interest rates intoned that "monetarism ... is an un­ and large carriers-led by Air Florida, mitigated failure," and cited Citibank New York Air, World Air and Braniff­ Federal Reserve Board member Henry Chairman Butcher, erstwhile Volcker de­ with bankruptcy. In the steel industry, Wallich told fo reign press March 16 that fe nder, complaining about high interest Kaiser Steel of California is on the edge interest rate levels in the U.S. will remain rates. A top Wall Street economist ob­ of bankruptcy, as a potential investor at high levels. served that this is the "worst slump since withdrew his offer to help refinance the Wallich, who mantains close ties to the great depression," in a complete shaky company, which led to a stock the Switzerland-based Bank for Interna­ change of line fo r this self-professed con­ collapse on Wall Street for the company. tional Settlements, said that "we're going servative. "The main cause of this cumu­ National Steel is also in trouble, it was to see the policy [of tight credit 1 through. lating downturn has been the Federal just announced, and will freeze all wages There should be no doubt or reserva­ Reserve's excruciatingly tight money and in anticipation of huge losses for the first tions." When asked whether the U.S. credit policy over the past year or so ..." quarter. high interest rates were hurting Europe's he continued. economies, Wallich said, "the high inter­ Silk himself identifiedthat high inter­ cauSe est rates in Europe are not exclusively the est rates are a major of the budget Foreign Exchange result of U.S. interest rates. Besides," he deficits and general crisis they are osten­ added, "the main pain is being felt in the sibly intended to correct, pointing out United States." that they destroy productivity and capital Fight over European WaIlich he stated that "the Federal investment and thus "induce inflation." exchange controls Reserve does not agree with Milton Friedman that monetary policy should The meeting of the European Commu­ be the main instrument of economic pol­ nity finance ministers March 14-15 was icy. It would be better," WaIlich contin­ Industry an open confrontation between the forces ued, "if there were an incomes policy, no of the United States, and the West Ger­ Davis-Bacon, no farm price supports, a Auto, housing, airlines man government of Chancellor Helmut reduction in the budget, a $10 oil import Schmidt, who is determined to keep close tax." But since neither the Congress nor still on the skids ties to U.S. President Ronald Reagan. the President will accede to such de­ As the meeting 'opened, former Tory mands, Wallich concluded, "we'll have The announcement on March 15 that Prime Minister of Britain Edward Heath to rely mostly on monetary policy." auto sales for the first 10 days of March took the floor of Parliament to demand were 30 percent below last year's de­ that Europe immediately cut itself loose pressed levels confirms that the worst is from the dollar monetary system and Ne ws Media happening to the auto industry-it is impose exchange controls on European continuing to collapse in 1982 fo llowing currencies. "The European community Journalists discover a disastrous 1981. Consumers are simply must immediately set about insulating not buying: prices are higher than for itself on capital movemments," he said, Vo lcker's depression comparable imports; people are worried repeating his open call for controls made about their jobs and don't want to be in a speech in Fulton, Missouri this A round of attacks on Federal Reserve saddled with payments; banks and fi­ month. Board Chairman Paul Volcker for start­ nance companies are withholding credit . The identical demand was reportedly ing a depression appeared in the nation's fro m those who still want to buy. made by the Socialist government of major liberal press over the third week in Housing is continuing its decline for Fran�ois Mitterrand in France at the March. the same reasons. Many banks that lend EEC finance ministers meeting. West The liberal Los Angeles Times head­ to homebuilders, it was reported in German banking sources report that lined an editorial "Interest Rates: The March 14's Baltimore Sun, have so many France has been using its critique of high Real Culprit" in which it said that "the bad loans to homebuilders that they can't U.S. interest rates as an excuse to de­ grim word 'depression' is being afford to fo reclose. The Fort Worth, mand full-scale European exchange con­ heard.... The great depression didn't Texas, National Bank is offering mort­ trols, and attempting to give Americans happen overnight, either," and went on gage loans to homebuyers at 12 percent, the impression that West Germany has

14 Economics EIR March 30, 1982 Briefly

• LEO TINDEMANS, Belgian Foreign Minister, is working with similar designs. "This is nonsense, the European Commission and the Schmidt wants nothing to do with ex­ Development Policy Reagan administration on a plan change controls," the German banker for a dollar devaluation to re-start said. Brandt Commission world trade, sources at the Euro­ The French demand .was totally re­ pean Commission told EIR . Under buffed at the meeting by the German attacks Reagan the Tindemans plan, the United delegation. States would loosen monetary pol­ icy, allowing the U.S. dollar to The Overseas Development Council depreciate against European cur­ (ODC), the official U.S. representative rencies far enough for European Banking group for the Brandt Commission, central banks in turn to signifi­ strongly attacks President Ronald Rea­ cantly drop their interest rates. gan's Third World economic policy in its Congress to rescue Tindemans reportedly broached recently released annual report. The the plan to President Reagan dur­ bankrupt S &Ls ODC demands that Reagan stop block­ ing Tindemans' March Washing­ ing the Brandt Commission strategy of ton trip. The U.S. Congress has taken steps to bail "decoupling" the less-developed coun­ out the nation's Savings & Loan associ­ tries LDCs from the industrial West, and • ROBERT MCNAMARA, just­ ations. House Banking Committee fo rcing them to stop importing Western retired head of the World Bank, Chairman St. Germain (D-R.I.) an­ technology. will be traveling to South Africa nounced March 10 the introduction of a The ODe's book-length report enti­ later this year to give a very con­ fo rmal Congressional resolution pledg­ tled "u .S. Foreign Policy and the Third troversial speech denouncing ing the "full faith and credit of the U.S. World: Agenda 1982" is written by Rog­ apartheid. The speech has been ar­ government" behind the $13 billion com­ er D. Hansen, author of the Council on ranged with the Witwatersrand bined fe deral insurance fu nds for the Foreign Relations Project 1980s study on University, but the South African S&Ls and banking industry. Should the the LDCs. It was ordered by the ODC's authorities do not know the con­ Federal Deposit Insurance Corp. (assets new chairman, Robert Strange Mc­ tents, McNamara confided . "If $5 billion) or the Federal Savings and Namara, which claimed in an interview they did, they would deny me my Loan Insurance Corp. (assets $7 billion) March 16 that all U.S. foreign policy visa," he said, noting that the be depleted, Congress under the resolu­ must now be devoted to population re­ speech could cause problems for tion "will back" the funds and replenish duction. South African relations with the them. "Agenda 1982" opens by attacking Reagan administration. This is the first time Congress has the Reagan administration's purported pledged Treasury tax revenues to this view that the Third World should be seen • WILLIAM REES MOGG, re­ end. Senator Banking Committee Chair­ as a battleground between the U.S. and tired editor of the London Times, man Jake Garn (R-Utah) has introduced the Soviet Union. In fact, "the South is a now believes that "gold won't a similar measure into the Senate which security issue in the traditional geopolit­ work in the international mone­ is being cosponsored by Senator John cal sense," writes Hansen, an area which tary system," he told EIR from Heinz (R-Pa.), Senator William Prox­ the U.S. must see to control in-and-of London. A fo rmer avid advocate mire (D-Wisc.), and Senator Donald itself. of the BIS plan for central bank Riegle (D-Mich). This can only be done by attempting gold remonetization, he said Furthermore, a full "bailout of the to manipulate the LDCs into cutting "nothing can be done to get a cen­ S&Ls with Treasury cash is imminent, themselves off from both East and West tral bank arrangement" on gold and will be sent through Congress by he says, and by encouraging them to ja li because "the Reagan administra­ April 15," the same official predicted. St. back on their own domestic resources ' tion won't buy it." Germain introduced HR 5568 in Febru­ even if in practice this means starvation. ary, which calls for a $7.5 billion Treas­ In order to promote "self-subsisting" • ZENKO SUZUKI, ury subsidy to S&Ls, Senator Alan Cran­ economies cut off from world trade, the Japan's ston this month began circulating similar U.S. should be even willing to consider Prime Minister, said March 16 he legislation in the Senate. approval of "Third World socialism" has instructed Foreign Minister "All we're fighting about is the price such as that set up by the Maoist Chinese Yoshio Sakurauchi, who will leave tags," said my source. "The White House in Tanzania, Hansen fu rther writes. Such for the United States March 20, to has thrown their weight behind the movements will keep theLDCs from ask­ urge Washington to lower interest moves, led by [Presidential Counselor) such brutal . austerity as a "nationalist" rates. Ed Meese, who's being political." policy.

EIR March 30, 1982 Economics 15 TIillSpecialReport

Evidence of FBI crimes now before the U. S. Senate

by Linda de Hoyos

Both the British-pedigreed Sen. Malcolm Wallop and the controlled media have so far refused to admit to the American people that in carrying out its Abscam campaign against the United States Congress, the Justice Depart­ ment and the Federal Bureau of Investigation were guilty of gross miscon­ duct. Yet during the Senate debate March 3 through March lI on the expulsion of Sen. Harrison Williams, reams of evidence of FBI misconduct were placed before the nation's senators. That evidence will be the starting point for the full Senate investigation into Abscam and the FBI promised by the Senate leadership. The opening of this investigation is the subject of a resolution which Senator Alan Cranston, Democrat of California, an­ nounced on March 11 he will soon be presenting to the Senate. Already the evidence before the Senate, and assembled in the Congres­ sional Record of March 3, 4, 8, 9, 10, and 11, records crimes that fa r surpass the "dirty tricks" on the part of the executive branch that were paraded before the American people during Watergate. From the first day of the Senate debate, it became clear that with Abscam the Justice Department was not seeking to prosecute Senators and Congressmen who had demonstrated "a pattern of criminality," but was carrying out a political witch-hunt. From there the crimes documented in the evidence submitted show that the effect of the Abscam operation was a gross violation of the Constitution of the United States, which endangers the basic civil liberties of every citizen. Second, it was shown that to carry out this unconstitutional campaign the Justice Department and the FBI employed criminal means. It is that combination-the use of criminal means in action against the civil liberties of citizens-that represents the police-state methods that must be immediately brought to a halt if this nation is to survive as a democratic republic. The evidence now in the hands ofthe Senate must be only the beginning of the investigation if the Abscam apparatus in the Justice Department is not merely to be constrained but rooted out. In its two-year battle against Abscam, Executive Intelligence Review has documented that the Abscam apparatus in the Justice Department is up to its necks in international

16 Special Report EIR March 30, 1982 Th e Capitol Building in Washington. D. C.: Soon on the floor of the Senate will be a resolution mandating a fu ll probe of Justice Department misconduct during the Abscam investigation. organized crime, including dope trafficking. Begi? with the FBI's star witness convicted con man Mel WeInberg himself, who boasted in his authorized biography, Th e Senate debate Sting Man. that he had helped to fund the terrorist Red Brigades in Italy through an entity called London Inv�s­ March 3: Opening statement by Senator Wal­ tors, known to be part of the billion-dollar dope empire lop forEthics Committee in favor of expulsion of of Mafioso Meyer Lansky. Proceed from there to the Senator Will iams; opening statement by Senator Abscam prosecutor Thomas Puccio, who is a "good Inouye iri defense of Senator Williams; statement fr iend" of Italian dope mobster Michele Papa, and, as of intent by Senator Cranston to enter censure reported by the Italian press agency La Repub lica on ? motion. Feb. 23 of this year, is rumored to have "received the March 4: Opening statement by Senator Wil­ modest sum of $16 million in one of his numerous trips liams, with request that, as a show of his good fa ith to Sicily in exchange for shutting his eyes to the traffick­ his immunity be waived; Senator Cranston an­ ing of drugs between Palermo and New York ." nounces that he will sponsor a resolution fo r a full It is also the case that Abscam's initiating Attorney Senate investigation of executive-branch miscon­ General Benjamin Civiletti and Assistant Attorney Gen­ duct during Abscam. eral Phillip Heymann, while they were busy preparing March 8: Senator Williams continues his state­ frame-ups against U .S. congressmen, were also busy ment; Senators Wallopand Heflinre butt. covering up the Billygate scandal that linked the Carter March 9: Senators Heflinand Mattingly defend fa mily to the dirtiest terrorism and drugs apparat�s in Senate Ethics Committee report; Senator Cranston the Mediterranean. Those links to Libya and to the dlrty­ introduces motion to censure, not expel, Senator money networks were mediated through Thomas Puc­ Williams. cio's friend Michele Papa. March 10: Senator Melcher speaks in Wil­ A Senate investigation that pursues these leads-and liams's defense; Senators Leahy. Bradley, Pryor, many others-to the bitter end will neces�ar�ly lead to the . and Mitchellcall for expulsion; Senato r Hayakawa conclusion that the Abscam apparatus withIn the Justice supports censure motion. Department operates not on behalf of the citizenry of the March 11:Se nator Williams delivers fa rewell United States but is an asset in position within the speech; Senators Cranston and Inouye pledge nation's highest law enforcement capabilities operating probe of Abscam . fo r the protection of the international British-dominated dope cartel, Dope, Inc.

EIR March 30, 1982 Special Report 17 What the Senate Ethics Committee refuses to admit about FBI crimes

by Linda de Hoyos

I. Violation of the Constitution against the Senate by executive branch prosecu­ tors who unblinkingly asserted in an October 2, of the United States 1981, Government brief on this matter "that un­ The very existence of the Abscam campaign repre­ dercover operatives do not need probable cause, sented a violation of the Constitution, on three counts: or even reasonable suspicion to commence an violation of the separation of powers, violation of due investigation." ... process guaranteed by the Sixth Amendment, and the Such an operation when directed against the use of law enforcement capabilities to carry out a co-equal legislative branch of Government by the political witch-hunt. executive branch poses a very real threat to the separation of powers and checks and balances that Violation of the separation of powers . the Constitution establishes to protect our system .. On March 3, the gross violation of the separation of of government and the freedom of all Americans. powers between the executive branch and the Congr ss � Executive branch action-such as through the were raised on the floor of the Senate by Senator Damel manipulation that occurred in the 1960s and 1970s Inouye (D-Hi.): "It is not the business of the executive of FBI and IRS resources-to develop informa­ branch to test for weaknesses in any member of Con­ tion which could be used to attempt to compro­ gress or to attempt to discover at what point the mise members of the Congress could impair the uncorrupt can be corrupted .... After many weeks of constitutionally established independence and in­ studying the anatomy of Abscam, I am convinced that tegrity of the Congress itself. the decision to undertake it, the Government's miscon­ Unchecked abuse of executive branch investi­ duct once it began, and its subsequent effort to justify it gation and prosecutorial power could escalate into all, all add up to an encroachment on the indepen ence � despotism and the ultimate subservience of the of the legislative branch which we cannot tolerate If we Congress to the executive branch in derogation of are to remain separate and co-equal ." the Constitution. The next day, Senator Alan Cranston, Democrat of It takes little imagination in light of the events California, again raised the issue in motivating his of the last decade or so to conjure up a scenario resolution fo r a full Senate investigation into Abscam: whereby an executive branch, believing the tactics Moreover, I am sure all Senators share my deep employed in Abscam were appropriate or at least concern about an undercover operation directed tolerated, might target a member of Congress

18 Special Report EIR March 30, 1982 because of the member's anti-administration views Later, in testimony before the House Judiciary Com­ and actions. mittee on March 4, 1980, Phillip Heymann simply lied Toleration by us of the Government's actions as to the nature of the Abscam probe: "I know of no under the previous administration in this case case where an agent has gone out and tried to persuade would, in my view, invite its repetition under a political figure to take a bribe, which would be the circumstances that could produce a disastrous equivalent of trying to persuade him to take stolen blow to our constitutional fo rm of Government. goods." In the case of Senator Larry Pressler (R-S.D.), the A political witch-hunt sting operation was approved by FBI director William But, in fact, political targeting of the Congress has Webster himself. Senator Pryor told his colleagues already occurred under Abscam. Even aside from the March 10: "The investigation, the attempt of a $50,000 case of Senator Williams, Senators Inouye and David bribe on Senator Pressler, was not authorized by mid­ Pryor (D-Ark .) presented cases of Justice Department dlemen. That authorization was made by William targeting of Senators, despite the fact that there was no Webster .... William Webster has signed this memo­ reason to suspect them of corruption. randum. It states ... 'Try to be sure this new Senator "In recorded conversation on September 10, 1979," [Senator Pressler] knows he's being paid.' " Senator Inouye reported, "Mr. Melvin Weinberg, Abs­ Senator Pressler had been told that he was not a cam's No. 1 con man, said 'Javits we would definitely subject of investigation by the FBI, as Pryor indicates: like and we'd like Moynihan.' "I ask my colleagues, if Senator Pressler was not a "Now just what was going on in this investigation? subject of investigation, as the letter of Feb. 6, 1981, This Abscam team wanted the Speaker of the House, from the U.S. Department of Justice indicates, why then Tip O'Neill. They went after Peter Rodino, Chairman was it William Webster himself who gave. this authori- of the House Judiciary Committee." zation?" Senator Inouye then documented for the Senate the process by which it was determined to go after Sen. Violation of due process Strom Thurmond, Chairman of the Senate Judiciary "Never before had employees of the executive Committee: branch tried to frame up a member of Congress," Senator Williams told his peers on March 8. "Never Let us take, for example, a recorded conversation before in the history of our great Nation has a Senator of January 7, 1980, in which Congressman John been convicted of a created crime. For the first time, we Jenrette of South Carolina indicated that Senator confront the fear that we could be ultimately and Strom Thurmond, the senior Senator from South whimsically subjected to criminal punishment for no Carolina, could be approached to assist these reason or any reason, all at the caprice of some executive Abscam investors, but that he would be "damn employee." expensive." When Congressman Jenrette was on Throughout the Abscam campaign against the Con­ the stand at his trial, he said that his allegations gress, the willingness to convict an individual on the about Senator Thurmond were false .... basis of a crime created by the FBI constitutes a What actually happened in this case? Let me violation of due process. This violation of due process quote fr om the testimony of Mr. Phillip Heymann: jeopardizes the rights of all citizens, Senator Cranston "The first time I think I learned of Jenrette's pointed out in his speech entered into the Congressional statement about Senator Strom Thurmond was Record on March 4: when United States Attorney Charles Ruff called me up and said, 'I want to go ahead and offer in Abscam was a wholesale fishing expedition with some way an opportunity fo r Senator Thurmond the executive branch using a large net to try to

to come in and take some money ... . ' trap members of Congress. It could have mounted "And I said, 'Go ahead.' This is the first time into a massive assault upon the Constitution. Any I heard of it. So, for me, the time within 15 Senator, no matter how unblemished his or her minutes of the time the phone rang, I said, 'Yes.' " record, could have been targeted. Within 15 minutes-that is according to his Due process requires strict observance of rules testimony-the Assistant Attorney General of the to protect all citizens from entrapment-from United States said, "Yes." And this from the man deliberate designs to overcome the will of someone who testified before Congress: resisting temptation and criminality . ... "After the careful internal review procedures No one is immune from rumor and innuendo. are satisfied, we will initiate an undercover inves­ Someone is almost always available to circulate tigation only where we have a well-founded reason gossip or fa bricate charges against any elected to believe that there is a pattern of criminality." official. ...

EIR March 30, 1982 Special Report 19 Hence, if the FBI agent in charge is gullible, posed to do? If I learn that his name is Abdul compromised, or simply careless, ... as the evi­ Habib, am I supposed to say, "Whoa, I do not dence indicates beyond any doubt in Abscam, an want any part of Arabs." Is that what we are individual in any walk of life could be made the supposed to do? target of a sophisticated, persistent scam. So I go to this meeting. What have I done by going to this meeting? The same thing that Sena­ But the most startling testimony to the FBI's crea­ tor Williams did. He touted and blew his own tion of crime comes not from any senator but from horn . It was not vastly different; it was just slightly within the FBI itself. In a memorandum dated Jan. 29, different in degree and maybe in kind .... I am 1 980, Newark Organized Crime Force chief Robert certain that all of us have one time or another Stewart complained to his superiors that Abscam vio­ used our good offices to encourage investment in lates normal entrapment procedure. He described Abs­ our State or in our State's businesses. What is cam as fo llows: wrong with that? ... Basically you have a public official who is minding So what crimes did Pete Williams commit, if his own business and presumably discharging his he did commit any crime at all? He was trapped in public responsibilities in a correct manner. An this nightmare because he wanted to help his intermediary then asserts that the official is cor­ constituents. And what is the nature of our busi­ rupt and will take a bribe. Usually, there is little ness here? To help our constituents. Each of us or no evidence that the official knows anything intercedes to encourage the economic interests of about the intermediary's representations. There our constituents. This is part of our job. And we may be little, if any, extrinsic information which would not be re-elected unless we were able to would suggest that the particular official is cor­ provide such assistance. rupt. On the contrary, most of the officials begin the conversation with disclaimers of criminal in­ II. Criminal means tent and offers to handle the problem in a perfectly The evidence submitted to the Senate on the FBI's correct and lawful manner. The Undercover Op­ use of criminal methods in order to carry out Abscam eratives then press, and they dangle large sums of comes from two basic sources: memoranda submitted money in front of the official-initially with prom­ to the courts by assistant U.S. Attorneys Robert Weir ises that he will never be required to deliver the and Edward Plaza, who risked their careers in submit­ quid pro quo because the payment is only insurance ting such info rmation; and Mrs. Marie Weinberg, who against a remote contingency. The official relents knowingly risked and subsequently lost her life to bring and accepts the payments-in some cases offering forward such evidence. to perform further criminal acts, in others without providing additional evidence of predisposition or Manufacture of evidence criminal intent. In several cases the payment was Even before an investigation was given approval, refused. the Abscam teams created evidence to convince supe­ All of this is very different in kind and quality riors that the probe should be initiated or continued. from a conventional sting operation. According to the memoranda of Robert Stewart, this occurred in the case of Senator Williams. Stewart states: What happens when, as Senator Williams did, the "On March 4, 1979, Mr. [Thomas] Puccio indicated official does refuse the bribe? In this case, a roster of that suspect 'W' [Williams] of New Jersey had a hidden charges are drawn up which the prosecutors believe, interest in the particular business venture. It was the with the suppression of certain evidence can convince a hidden nature of this interest which was malum prohibi­ jury-already operating in a �limate of press innuendeo tum, and it was this fact which justified further investi­ concerning the victim. I n reality, as Senator Inouye gation ....On May 11, 1979, ... Mr. Puccio reiterated pointed out on the Senate floor on March 3, the official to Mr. Del Tufo and myself that 'W' had a hidden has in fact been accused ex post fa cto of a crime of interest in the venture; and during a conversation on coming to a meeting-or even worse, in the eyes of the June 5, 1979; Puccio told me that 'W' had acknowledged FBI, of attempting to serve his constituents. his hidden ownership during a meeting the preceding Senator Inouye argued: Thursday. Many months later, when we finally obtained Imagine if I were in New York during the conven­ the tapes, the situation proved to be quite different. The tion in 1980 and a mayor from one of the cities in whole idea of hidden ownership appears to have sprung Hawaii comes forward and says, "I met some very up from a statement by 'F' [Philadelphia City Council interesting people. They would like to invest some member Abe Feinberg] on March 8th to the effect that money for geothermal energy." What am I sup- 'W' would have a piece of the venture, though he could

20 Special Report EIR March 30, 1982 not show it. That was a prediction by 'F,' not a In a letter to the Senate Ethics Committee on Jan. statement of existing fact." 22, 1982, Senator Inouye asked the Ethics Committee if The set up continued. In his speech entered in the it has considered Mrs. Weinberg's testimony, which he March 4 Congressional Record. Senator Cranston relates described as follows: how Williams had been set up by Edward Ellis, a New "Mrs. Weinberg will testify that Mel Weinberg did Jersey owner of the Garden State Raceway. In the tape not lose four tapes on the Air Florida flight; as he of March 5, 1979, it was revealed that "Edward Ellis, testified at Senator Williams's trial; that Mel Weinberg after coaching by Weinberg, indicates to undercover pocketed substantial sums of money in kickbacks he got FBI man McCarthy that he can corrupt Senator Wil­ fr om Angelo Errichetti, and never disclosed this to the liams, and that he has already bribed him-he "cost me FBI agents who were supposed to be controlling him; a hundred thousand bucks." Later in the March 8 tape that Weinberg gave Anthony Amoroso and John Good both Feinberg and [former Camden Mayor Angelo] gifts (includingthose that he had extorted from others), Errichetti, talking about how Ellis had oversold the and that said agents never closely supervised Weinberg; Williams connection, indicate Ellis had probably never that certain FBI agents lost about 40 other Abscam even met Senator Williams. tapes . I am told that Mrs. Weinberg can also testify that "As is confirmed by much other evidence, this was Mel Weinberg covered his gift of a microwave oven by Weinberg's standard method of operation. As he told purchasing another oven and giving the receipt to numerous Government prosecutors, 'we would have no Puccio and FBI agents; that Mel Weinberg is and was cases' if he did not put words in people's mouths." in the possession of many of the Government's docu­ ments on Abscam; that Leslie Maitland, the reporter Forgery who broke Abscam, was a house guest of Mel Weinberg According to an FBI contact memorandum dated the week prior to the publication of the articles written Sept. 26, 1979, the Abscam team forged a letter in by Maitland; that she [Marie Weinberg] was in posses­ Senator Willi ams's name stating his interest in the sion of the 1979 and 1978 diaries of Mel Weinberg, and Abscam business venture. Angelo Errichetti fo rged the that Mel Weinberg stated to Marie Weinberg that he letter during a meeting in Cherry Hill, New Jersey, with had perjured himself in a number of Abscam trials." FBI agents Anthony Amoroso and Bruce Brady. The Ethics Committee informed Senator Inouye that When Mr. Williams presented this story to the it had decided that it need not call upon Mrs. Weinberg Senate, Senator John Melcher of Montana pointed out to testify before it. the reason for the forgery: "I suggest that perhaps the Affidavits submitted by the FBI in late February, forged letter was to show in a convincing way, not to after the death of Mrs. Weinberg, corroborated her the sheik, who was an FBI agent, as the other three FBI testimony. As reported to the Senate by Senator Cran­ agents are who know it is forged-but it was to convince ston: "We learned only last week that FBI affidavits . somebody else that the Senator was willing to partici­ filed on Feb. 23 before Judge [George] Pratt fully pate as broadly as the letter would indicate." corroborate Marie Weinberg's allegations that numer­ In short, the investigation was pushed along, not ous personal effects from her home were turned over because of the slightest evidence of criminal intent or the FBI agents Good and Amoroso ....Besides attest­ predisposition on the part of Senator Williams, but on ing to Mrs. Weinberg's credibility, these affidavits show the basis of manufactured evidence manufactured by incredible insensitivity on the part of the FBI and Melvin Weinberg, the Abscam FBI agents, and Prose­ Justice Department. Chief Prosecutor Puccio now de­ cutor Thomas Puccio. fends these actions by the FBI and suggests that the extent to which the agents ... had been compromised Gift-taking and bribery by engaging in personal financial transactions with The chief evidence of gift-taking and bribery on the Weinberg is irrelevant to Senator Williams's case .... part of the Abscam team comes from an affidavit "Despite Mr. Puccio's assertions in Judge Pratt's submitted by Mrs. Marie Weinberg to the court of the court that there was nothing improper about these County of Palm Beach, Florida, on behalf of defendants transactions, they clearly violate the Department of Richard Kelly, Eugene Robert Ciuzio, and Stanley Justice's Standard of Conduct regulations, in part 45 of Weisz. Her affidavit began as follows: the Code of Federal Regulations governing the behav­ "I) I am married to Melvin Weinberg. I am a ior of all Justice Department employees." resident of the State of Florida and I will disclose my home address to the Court in camera. The reason fo r Conflictof interest my refusal to place my address in this affidavit is my Given the overall criminal character of the Abscam fear that I shall come to harm if my home address is investigation and its criminal methods, it is not surpris­ known." ing to findthat Prosecutor Thomas Puccio, in charge of ..

EIR March 30, 1982 Special Report 21 the Abscam campaign against corruption, should be The ensuing course of the Abscam trials would tend involved in a conflict of interest. The conflict revolves to answer that question in the affirmative. Judge George around his co-authorship of a book on Abscam with C. Pratt specificallychar ged the grand jury in Brooklyn Jack Newfieldof the Village Voice. to overlook all misconduct of the FBI. In his letter to the Senate Ethics Committee, Senator The issue of fo rum shopping was also directly raised Inouye reported: "I am told that Esther Newberg, the in the Senate debate on March 9 by Senator Cranston: literary agent for author Jack Newfield, will be queried "Two weeks ago, in filing answers to Senator Wil- concerning Thomas Puccio's possible illegal financial . Iiams's and Mr. Jenrette's motions to reopen the due interest in Project X, the book to be written by Newfield process hearings, the Government took conflicting po­ on Abscam, whose hidden collaborator was allegedly sitions. And listen to this: In its memorandum before Thomas Puccio. This book project was in progress prior Judge Bryant in the Jenrette case, the Government to the indictment of Senator Williams. staunchly denied Marie Weinberg'S allegations about "I am told that Mr. Puccio will be queried about his her husband's transfer of personal property to the FBI allegedly inconsistent testimony concerning Mr. New­ agents. But the very next day, before Judge Pratt in the field's book and his involvement therein." Williams case, the Government filed the FBI affidavits The Senate Ethics Committee replied that they had confirming her accounts. already called upon Thomas Puccio, and further an­ "I am shocked by this Government duplicity. Is this swered, "Again, the issue is not the conduct of Mr. a case of forum shopping to find where best to bury Puccio, but rather the conduct of Senator Williams." incriminating evidence of Government misconduct?" But there is doubt that this conflict of interest, which already violates the Justice Department standards, was Suppression of evidence irrelevant. Senator Williams reported to the Senate on The major point of suppression of evidence involved March 8 that "Mr. Newfield, a reporter, has been the Abscam tapes themselves. Senator Cranston report­ quoted as saying that: 'If Williams isn't convicted ed to the Senate that "Some 900 tapes were made during maybe there won't be a book.' " the Abscam operation. Many never have been tran­ scribed . Many were missing-many disappearing while Forum shopping in Weinberg's custody. Many have gaps. Substantial evidence was submitted to the Senate to "Custody and control of most of these tapes were show that the Abscam prosecutors in 1980 had forced entrusted to Mel Wei nberg. The decision as to what to the moving of the Abscam trials from Newark, New tape and what not to was entrusted to him. When the Jersey, to the Brooklyn court of Judge George C. Pratt tapes were heard and transcribed by the FBI was where the cases would be prosecuted by Brooklyn controlled by Weinberg in terms of when he chose to Organized Crime Strike Force chief Thomas Puccio. send them in. The October 2, 1981, letter of fo rmer The change in venue came with the case of Kenneth Federal Prosecutor Edward Plaza substantiates all of MacDonald, vice-chairman of the New Jersey Casinos this. " Control Commission, who had been brought up on Abscam charges. After the Newark Grand Jury had Perjury already begun hearing the case, members wrote the Once the Abscam case is brought to trial, the fo llowing letter to the Newark Judge Fisher: successful prosecution of the targeted victim depends "Our Thursday panel [panel jury] listened to testi­ on government testimony falsified to hide the gross mony in this case [MacDonald] from early fall through violations of due process and ethical standards perpe­ the firstweek of January. We expected the attorneys to trated during the "investigation." present the bill for our consideration within a few The most exhaustive documentation of the perjury weeks. Now, without having been told, we read in the committed by Melvin Weinberg and the Abscam team newspaper that this case is to be moved to a grand jury is found in memoranda submitted by Edward Plaza and in Brooklyn. offered as exhibits to the Senate from Senator Cranston in the March 3 Congressional Record. "This seems a strange decision in view of the time On Dec. 2, 1981, Edward Plaza presented Judge spent on the case in Newark, and of the court costs, Penn, currently presiding over the due process hearing payments to jurors, and commuting expenses of attor­ of the Jenrette case in Washington, D.C., with a mem­ neys from Washington and of some of the witnesses .... orandum in which he lists 10 instances of false testimony "Moreover, what does this mean in terms of the on the part of Deputy Assistant Attorney General overall investigation? Does the Justice Department feel Irving Nathan, including the fo llowing instance: that it will be more likely to get the preferred decision Nathan Testimony-page 704:. "Most of the unre­ in Brooklyn than in Newark?" corded conversations between Weinberg and the sub-

22 Special Report EIR March 30, 1982 jects of Abscam investigations were of the 'Hello,' 'How are you' nature. Facts : "A review of the existing tape recordings reveals substantial portions of un-recorded conversa­ tions as well as references to countless un-recorded and otherwise undocumented meetings between Weinberg Who upheld and the various subjects. Plaza and Weir were advised by [Justice Department attorneys] Weingarten and the Constitution Holder that telephone toll analysis revealed that there were more than eighty (80) un-recorded conversations between Weinberg and Errichetti alone." Plaza lists fivecases of false testimony on the part of FBI Special Agent John Good, including the following: Good's Testimony-Pages 865 through 869: "Melvin Weinberg was carefully monitored during the investi­ gation and the FBI maintained a careful chain of ' custody of the tapes produced by Melvin Weinberg. Facts: "In May 1980, several months after the Abs­ Sen. Inouye: cam investigation had gone public, it was still not known which conversations and meetings of Weinberg had been taped .... Many months later Messrs. Wein­ 'Trial ajarce ' garten and Holder were still uncovering evidence of untaped and undocumented Weinberg meetings and conversations." As fo r Melvin Weinberg himself, Plaza has this to say: "The limited purpose of this outline does not permit Excerpts fo llow from the statement by Daniel Inouye, me to list all of Mr. Weinberg's false statements." Democrat of Hawaii, on the Senate floor March 10: Yet on March 4, 1980, the FBI Director vouched for Senator Inouye's opening statement to the Senate on Melvin Weinberg and the entire stable of Federal March 3 in defense of Senator Williams was excerpted in Witness Protection Program criminal informants, in the last issue of Executive Intelligence Review. testimony before the House Judiciary Committee: "Those of us who live in a world of decency ... I know that all of us have read recent editorials and sometimes find it hard to assume that anyone who we have heard from our constituents that Pete Williams engages in crime can tell the truth. But when he is was convicted of crimes and, therefore, expulsion is the telling the information to someone whom he thinks is in only possible remedy. league with him, that is sometimes the way by which we The Ethics Committee has said that the Senate should get our very best information consistently, in all proceed independently of these convictions, and I agree. types .... The convictions in Brooklyn are a house of cards that "We have some of the most important ones now could collapse at any moment. that are going through the process, organized crime If the Senate's action is based on the trial court, and figures dealing with our undercover agents, and telling the trial court verdict is overturned, there will be nothing us things are that are true and turn out to be true." left but perhaps a Senate that looks foolish because we As the summary evidence presented here and the were in a rush to thrust an embarrassment from our pages of documentation in the Congressional Record midst. I believe that all of us who have spoken thus far show, the FBI Director would have more accurately would agree with at least this one proposition. It is the stated: "things that ar:e false and which we make to be task of the Senate to judge our colleague solely on the true." That is the police-state method-protected by the evidence before us. And the Senate cannot and should U.S. controlled media-which is at the core of Abs­ not rest its decision on an initial judgment of a court in cam, from the initiation of "investigation" to the pres­ what will undoubtedly be a long and complex judicial entation of charges in the court, to the due process process. hearings, to the Senate Ethics Committee. This is the Mr. President, I know that such a view of this case police-state method employed by the international dope will not win us any friends; I know that this view will be machine against the citizenry of the United States, misunderstood by many of our constituents. But I believe which must and will be stopped. that such a view will serve this body as an institution by

EIR March 30, 1982 Special Report 23 maintaInIng the independence of our judgment of a colleague's behavior. It has been said many times that the Constitution commits that power into our hands and that we must not-we must not-delegate it to the judicial branch .... In all of the previous cases where we had expelled a Sen. Cranston: Senator, the evidence has been unequivocal. That such a measure of proof was used seems only fi tting when the Senate is co nsidering this extraordinary act of expulsion. 'Abscam a threat' In the Bright and Blount cases the evidence was in the fo rm of letters, and in all of the other cases it was a conduct of engaging in a rebellion. Whether this was by writing or by conduct, the actions which were judged From the statement by Sen. Alan Cranston, Democrat of were unequivocal. California, on the Senate floor, March 4: The case of Senator Harrison Arlington Williams, Jr. is based on a much diffe rent fo undation. This case is Next week, I wi ll propose a substitute amendment to based almost entirely on the interpretation which we the pending measure that would censure, rather than placed on conversations, interpretations. It is, therefore, expel, Senator Williams for behavior bringing the Senate much more difficult to state unequivocally what took into disrepute. place in these conversations .... Second, I will be introducing next week, with the co­ If we must interpret, if we must guess at, the meaning sponsorship ofthe Majority Whip [Ted Stevens (R-Alas­ of words, phrases , and whole conversations, if the evi­ ka)], an original Senate resolution to provide for fu ll dence is equivocal. then I say we should not employ the Senate investigation of executive branch misconduct re­ remedy of expulsion. The sanction of expulsion is too garding the Abscam undercover operation and other fi nal to be used on equivocal evidence, and the case activities targeted against members of the Congress. The before us rests on an equivocal fo undation. investigation would be designed to determine the extent Just recall yesterday, the confusion in the questions to which these activities constitute a danger to the sepa­ and the answers, the unanswered questions: add to this ration of powers and the system of checks and balances the unsubpoenaed and now unavailable witnesses. How inherent to our Constitution and to produce recommen­ can we, under these circumstances, impose the most dations regarding what protections may be necessary to severe sanction, the sanction of finality? preserve the independence and integrity of the Con­ The Constitution has been quoted many times. We gress .... know what the qualifications [for being a U.S. Senator] To rely on thej ury verdict in this case, obtained as it are: 30 years of age, 9 years a citizen, and a resident of was-I will undertake to show-by a marauding execu­ the state he or she represents. tive branch thoughtless of constitutional separation of But now it appears that we may have added a fo urth powers between the great executive and legislative requirement. Now we may also be subject to a pass-fail branches of the federal government, is to abrogate to the test on our probity and our sense of ethics. This test is to executive our responsibility under Article I, Section 5, be initiated by, and under the sole control of, the execu­ Clause 2, of the Constitution to decide the qualifications tive branch. I am certain that the Founding F lthers of our members and punish those who go astray. We would surely not have countenanced such a malicious should not, in the name of self-disci pline, in effect permit device. The integrity of the Senate is challenged by this the executive branch to decide who may sit in Congress. investigation, and the Constitution compells us to reject Moreover, I am sure all Senators share my deep its advance .... concern about an undercover operation directed against The press has been reporting this sad episode since the Senate by executive branch prosecuto rs who unblink­ early February 1980, and has, within the past week, been ingly asserted in an Oct. 2, 1981, government brief on quite explicit in its editorials and feature articles .... this matter that "undercover operatives do not need They have been telling us where our duty lies .... Each probable cause, or even reasonable suspicion to com­ of us must decide the case of Pete Williams alone: without mence an investigation." regard to the pain and suffe ring that we may have Mind you, the so-called "undercover operative" in suffe red, or the embarassment we may have experienced; question here is not the clean-cut, high-minded agent of without regard to the pressures from the press; and "This is Your FBI" fame. Not at all. The operative here without regard to the pressures of political expediency. is one of the sleaziest crooks and con artists ever caught We are the guardians of this instit ution, which was and convicted of a federal felony: He was then turned created by the Constitution. loose, with the blessing and protection of the govern-

24 Special Report EIR March 30, 1982 ment, to pursue and trap members of the Congress at a No independent review of the facts has been conduct­ time when the government had no basis to suspect them ed. The Ethics Committee report is a simple recitation of of criminal wrongdoing or propensities .... Prosecutor Puccio's case, plus testimony submitted by Such an operation when directed against the coequal Senator Williams and other witnesses. Basically, it is a legislative branch of government by the executive branch case regarding Senator Williams which was presented by poses a very real threat to the separation of powers and Mr. Puccio, which was conducted almost a year ago .... checks and balances that the Constitution establishes to There are continually flaws in the committee argu­ protect our system of government and the freedom of all ments that keep unfolding, and that really have con­ Americans .... cerned me as to the conclusiveness of the evidence pre­ It takes little imagination in light of the events of the sented .... last decade or so to conjure up a scenario whereby an The greater matter before us, the second matter, is executive branch, believing the tactics employed in Abs­ the method used by the Justice Department to gather cam were appropriate or least to be tolerated, might evidence and the presentation of that evidence by the target a member of Congress because of the member's Justice Department, and the witholding of evidence by anti-administration views and actions. Toleration by us the Justice Department, or the prosecutor, or the judge of the government's actions under the previous adminis­ to convince a jury that Senator Williams should be tration in this case would, in my view, invite its repetition convicted. The FBI scam used taxpayers' money-none under circumstances that could produce a disastrous of which Williams accepted. Justice Department blow to our constitutional fo rm of government. ..." methods in obtaining evidence, in my judgment, violated the law ....That is, the Justice Department conspired to violate the law, that evidence was witheld by either the Justice Department or the judge, contrary to law, and that the depth of this quagmire of Justice Department Sen. Melcher: illegal activities has not yet been gauged. We have been told by the Ethics Committee that consideration by the Senate of Justice Department irreg­ 'Look at economy ' ularities is fo r another time. It is my belief that that is an equal problem we face today with the Williams expul­ sion-and we cannot conclude the consideration of that problem until we consider the intertwining of Justice Department falseness and deliberate misleading of the public, the jury, and indeed, the Senate itself.... We From the statement of Sen. John Melcher. Democrat of cannot say-as does the committee in the reports and Montana. on the Senate floor. March 10: arguments made here on the floor-that this Senate debate is totally independent of anything that occurred I firmly believe that there is desperate need for the outside and then turn around and make the trial, the trial Senate to be addressing the problems of the economy. judge, and the prosecutor the basis for the expulsion of We slip every day deeper into a recession that threatens Williams. I ask, can we investigate Abscam-that in­ to engulf more jobs, make more families poor or desti­ cludes the trial judge, the FBI, and the prosecutor­ tute, cause farm, ranch, and small business foreclosures, while at the same time using the very scenario created by and bankrupt large businesses and institutions and deci­ the Abscam team and the events that fo llowed as a mate many of our basic industries. justification for expelling Williams? ... All of this year so far the Senate. I will remind my There is a scene from history I want to call your colleagues, has spent practically all of its time debating attention to'; a scene based on real life from A Manfor All whether or not to televise ourselves, and the rest of the Seasons. time, other than that, dealing with a filibuster on bus­ Like the attorney general, renowed lawyer and king's ing .... legal adviser Thomas More refused Henry VIII's de­ I am not yet ready to vote fo r expUlsion because I am mands for a legal pronouncement on one of the King's not sure of all the facts. I am not sure of the credibility of marriages. Thomas More's legal opinion on that was the evidence that has been presented because I am not very important to Henry VIII. sure of the credibility of those who gathered the evidence His refusal-More's refusal-set Henry against his to present to the prosecutors, and eventually, the same former friend and one of his leading counselors. evidence that went to the Ethics Committee. I am not Henry plotted. He sent a secret agent to More's sure that all of the evidence has been presented by the household to seek evidence to discredit More. He seeks Justice Department. ... employment-gets none at all.

EIR March 30, 1982 Special Report 25 But More's daughter Alice, cries; "He is a spy. Arrest him. Father, that man is bad." More replied: "There is no law against that." More's son-in-law Roper interjects: "There is. God's law." More replied: "Then God can arrest him." The Senators who More adds at this point in soliloquy that he is not God and would never attempt to dispense God's law. wanted expulsion The play then continues:

More: "But in the thickets of [human] law, oh there I am a fo rester. I doubt if there's a man alive who could fo llow me there." Alice (Exasperated, pointing afterthe spy): "While you talk, he's gone."

More: "And go he should if he was the devil himself, until he broke the law." Roper: "So now you'd give the devil benefit of Sen. Heflin: law."

More: "Yes, what would you do? Cut a great road 'Stings are proper' through the law to get after the devil?" Roper: "I'd cut down every law in England to do that."

More (roused and excited): "Oh? And when the last law was down , and the devil turned around on From the March 3 statement to the Senate by Ethics you-where would you hide, Roper, the laws all Committee Vice-Chairman Howell Heflin, Democrat of being flat? This country's planted thick with laws­ Alabama, on the committee's findings in the case of Sena­ man's laws, not God's-and if you cut them down tor Williams: d'you really think you could stand upright in the winds that would blow then? Yes, I'd give the devil No sooner had the jurors in Brooklyn returned home benefitof law, for my own safety's sake." from court on May 1 last year, having duly rendered their verdict, than telegrams and letters began to pour Sir Thomas More-in my church we call him Saint into the office of the Ethics Committee urging that we Thomas More-had no love for the devil. immediately and forthwith expel Senator Williams. In He had love for the law and love for principle-for language sometimes cynical and emotional, often sober justice. and reflective, many of my constituents in Alabama and For our country's sake we should not allow all the countless citizens throughout the land advocated action laws to be cut down by the Justice Department-to set so swift that it would have been summary. In all candor, aside, bent-to gain what they have contrived to be who can argue that the reputation of the Senate is seeking justice. enhanced by the presence among its numbers of a person They have sought too hard, they have disregarded who has been convicted of a crime? .. the law we have imposed here in the legislative branch to We cannot wait until all appeals are exhausted. To do protect us all as citizens. so would delay our decision possibly for years. The They have gone too far. Constitution does not require it, and the American peo­ I do not believe there has been an adequate defense of ple will not stand for it. ... the Justice' Department action here in bending the law, in Assume fo r a moment that the government's conduct shoving it aside, to say that it is a process that sometimes in Abscam was reprehensive; let us assume it. The com­ you need to do to enforce the law. mittee steadfastly maintained that government conduct If they succeed in this striking down or bending of has absolutely no bearing on the conduct of Senator the law, I believe it is a question of safety's sake and like WiIIiams as a keeper of the public trust unless it can be More I ask "Can citizens stand upright in the winds that demonstrated that his will was overborne ....It should blow then?" be perfectly clear that Senator Williams was not targeted

26 Spe cial Report EIR March 30, 1982 by the FBI, the Department of Justice, or the Carter White House .... Having examined the evidence, it is clear that Senator Williams has violated his public trust; that he breached Sen. Wallop: his sacred convenant with the people of New Jersey .... Entrapment could never be a defense to allegations of misconduct when the standard fo r judgment is a higher one than that which obtains in the criminal process .... 'No FBI misdeed' Assume coaching, even assume entrapment. If a member of this body really knows right from wrong ... then that member would not hesitate ...to get up and walk, walk away fro m the sleazy characters, walk away from the talk about sheiks and deals ...wa lk away fr om From the March 8 statement by Senate Ethics Committee talk about Government contracts ... . Chairman Malcolm Wallop, Republican of Wy oming, re­ By the rule of fu ndamental fa irness under the watch­ butting Senator Williams's defense: fu l eye of a concerned public and a vigorous free press, we have an obligation to see that an ultimate judgment First is that the issue before us is the conduct of be made, and that it be fa ir, impartial, and just. The Senator Williams and not that of law enforcement au­ Constitution re quires we do no more. The American thorities in the Abscam cases, and if the latter is to be people expect we do no less. considered, it should be done at a later time when these law enforcement authorities are given the same oppor­ From Senator Heflin's March 8 statement rebutting Sen­ tunities to present their side of the various allegations ator Williams's defense: made against them .... The only issue before us today, and throughout this Certainly in regard to the separation of powers we proceeding, is the conduct of Senator Williams .... should have a law, and this is something we can look Senator Inouye has stated that Senator Williams, too, into, that if a decision is made to target a member of was improperly targeted and the Justice Departmen t's Congress that that decision should be made at the highest investigation was based on charges against Senator Wil­ echelons of the Department of Justice and the Federal liams which wen: initially fabricated by Mel Weinberg. Bureau of Investigation. This statement is simply not borne out by the record in We think that the sting operations can be effective in this case. In fa ct, there is no evidence that the FBI sought bringing people who have been committing crimes to a out Senator Williams .... The government's investiga­ stage of where they can be convicted, and sting opera­ tion of Senator Williams, fa r from being part of an tions have been effectively used by the FBI and by police orchestrated attack on the legislative branch, was the departments in various places .... I do not feel that natural outgrowth of Senator Williams' January 1979 because a person is a member of Congress that that gives meeting with Mayor Errichetti in Camden, New him immunity fr om a sting operation. Jersey ....

From Senator Heflin 's March 9 rebuttal:

The Ethics Committee had done an independent investigation. It was limited because we could not inter­ Sen. Bradley: view up until the trial evidence was made available, or may have been made available a few months in advance of the actual trial, I believe, but t hey did have an indepen­ dent investigation, and after this was over then, of course, 'Follow Wa llop' the new set of lawyers, being a third group of lawyers who were involved, wanted to reopen the case. The committee had already made its report. The majority leader and the minority leader, the leadership in the Senate, asked the Ethics Committee to From the statement by William Bradley, Democrat of New act as an investigative arm fo r them and we made our Jersey, on the Senate floor March 10: recommendations, in effect saying that we did not feel any new evidence was presented or if it was new evidence To protect that faith [which people extend to political that it could not have been presented at the trial. ... institutions] the Senate has created an Ethics Committee

EIR March 30, 1982 Special Report 27 and has vested that committee with guardian responsi­ Rosenberg, Mr. Bruce Brady, a special agent of the FBI, bility for the standards of the Senate. A Senator should and also Mr. Tony DeVito, a special agent of the reject a recommendation of the Ethics Committee only if FBI. ... that recommendation seems very substantially unsup­ In this transcript, Mr. Rosenberg, who was a convict­ ported by the evidence before the committee and very ed fe lon, who has subsequently been found guilty in one clearly inconsistent with the standards of the committee of the Abscam cases, represented himself as having 'been and the Senate. Nothing in this case, I am sad to say, in contact with Senator Javits, with me, with Congress­ suggests such exceptions to me. I will vote for expulsion. man Lent of New York ....he also represented himself as being in contact with the late Senator Robert Kerr of Oklahoma. He was instructed by Weinberg and DeVito to offer money and bring in a person .... Sen. Eagleton: It could be pointed out that Mr. Charles B. Renfew, the Deputy Attorney General on Jan. 27, 1981, wrote to me and wrote to Senator Javits that Mr. Rosenberg had 'Expel Williams ' confessed to lying with respect to the representations he had made ....

Sen. Pryor: From the statement by Th omas Eagleton, Democrat of Missouri, to the Senate March 9: 'FBI not on trial ' am the showcase liberal on the Ethics Committee .... In my view, Senator Williams was a knowing participant in this sleezy enterprise. He was not dragooned or blugeoned into it. ... Mel Weinberg is a demonstrated crook and a liar-truly a reprehensible person. But, as a fo rmer prosecutor and State attorney From the statement by David Pryor, Democrat of A rkan­ general, I realize that in certain areas of criminal law sas, and member of the Senate Ethics Committee, on the enforcement, you must sometimes deal with reprehensi­ Senate floor March /0: ble people to make a case .... Senator Williams has not had the good grace and I would like to compliment Senator Heflin and Sena­ good judgment to withdraw from this body. We should tor Wallop for an outstanding, unselfish, patriotic not perpetrate our own disgrace by asking him to job ....Du e process in the Ethics Committee was grant­ stay .... ed to Senator Williams. It is my opinion that if the strict definition of due process were not granted to Senator Williams in the trials and in the proceedings before it got to the Ethics Committee-maybe it did not, under the Sen. Moynihan: strict interpretation of the law-if it did not meet that test, it certainly would have been a callous disregard for the rights of a human being .... ' [But] the Federal Bureau of Investigation is not on 'I did right trial. As I balance the interests, the equities, and look at what I have to do, I think at this point that the only thing we can do is vote to expel our friend Senator Williams from the Senate.

From the statement by Daniel Patrick Moynihan, Demo­ crat of New York, on the Senatefloor March 4: Senator Edward Kennedy, Democrat of Massachusetts, took no part in the Senate debate. Th e Senate's Republican It seems to me an elemental duty to Senator Williams Party leadership made no substantial contribution to the to report to the Senate that I have the transcripts of two debate. meetings involving Mr. Melvin Weinberg, Mr. William

28 Special Report EIR March 30, 1982 committee or whatever and as a result I can make calls on behalf of the Smalltown, U.S.A. and indeed I will, and there it is." And, indeed, he makes the phone calls and either because of that or maybe purely c6incidentally the assistant deputy director of sewer grants uses some of that discretionary funds and the money actually shows up there. Has he violated his office? Senators challenge Senator Wallop: Senator, my guess is probably that he has not, unless he also shares in the $100million loan to Ethics Committee the sewer company that is building it, which is what is at issue here.

Senator Leahy: Let us say he has an interest in a sewer company but is also interested that he does not want his taxes to go up. On March 9, Senators Joseph Riden (D.-Del. ), Ted Stevens Senator Wallop: I think that any time in the world a (R-Alaska), and Patrick Leahy (D.-Vt.) challenged the Senator ties his public service to some personal function, Senate Ethics Committee definitionof conflict of interests, he is on the thinnest of ground with the Ethics Commit­ as applied in their consideration of the Harrison Williams tee, whether or not it could be proved .... case. Exerpts fr om the exchange between Senator Leahy and Ethics Committee Chairman Malcolm Wallop fo llow. Senator Leahy: If future Senators were actually to fall to the temptation while campaigning in their own state Senator Leahy: On the specificqu estion of promising to to say "Because of me you have this Veterans' Hospital" use your office to get something of value for another, let or "Because of me you have this dam" or "Because of me me pose a hypothetical: Suppose someone comes to you you have this park," or "Because of me you have this from your state, the mayor of a community in your state, federal building," or "Because of me you have this and says they needs funds to finish a sewer proj ect in that seaport," or whatever, that they are- community, otherwise they are going to have to raise Senator Wallop: Senator, the difference is unbelievable taxes in their community. Let us say, to even stretch it a in what we are talking about here in the case of Senator little further, that you own property within that commu­ Williams, who traded on his office for personal profit. . . nity. The mayor comes to you and the senator responds: What we ought to be looking at is what is at issue here in . . . This is your lucky day, because I know all of these front of us . people right up to the top, and they need me. They need me badly. I will get you that sewer grant, or whatever." Senator McClure: I understand the question that was And let us push it even further. Let us say, indeed, asked by the Senator from Delaware ....Bu t the hypo­ whoever is involved with issuing those grants downtown thetical situation the Senator has outlined seems to me to in the bureaucracy actually comes before [your] commit­ be in the ordinary course of the business we are doing tee on whatever subject, and on the way out the Senator here .... says: "By the way, I know you have got X amount of Senator Leahy: But that does not seem to be the answer discretionary money. Smalltown, U.S.A. needs some I get from the distinguished Chairman. money. Send them some money." Is that a violation? Senator Wallop: Yes, I think it would be a violation, ifit Senator Wallop : Perhaps I do not understand the Sena­ co uld ever be proved that the Senator traded on his tor's question. I have tried to .... Perhaps he could influence in return not for his constituents but for his restate it. support and a wide realization that he had held those two Senator Leahy : The concern I had ...was the emphasis things together. you were putting on bragging about your ability to use your office. And I questioned whether at least the temp­ Senator Leahy : That is not my hypothetical. tation might not be there to Senators, on occasion, to SenatorWallop : Well, it sounds like your hypothetical to brag, back within their own states, of their importance me. or their influence or whatever. And I am asking the Chairman to what extent-and the reason I posed my Senator Leahy: No. The hypothetical is stated exactly as hypothetical-is to what extent that creates an unethical it was. He said just those things: "I am a powerful situation, because if it does, we may be here for the next important Senator because I am chairman of this sub- couple years trying 99 more people.

EIR March 30, 1982 Special Report 29 am Sen� Willi s: \ 'Abscam.thr eatens the sovereignty oJ the legislative branch'

' From the statement of Sen. Harrison Williams to the improperly . It is this misconception which has been Senate. March 4: It is this misconception which has been created, cre­ ated by the techniques of this operation and by the Mr. President, today , as I stand before you and my media, which I must dispel. colleagues, I know that I am completely innocent of all So I rely upon you, my colleagues, to conduct a crime and impropriety and, therefore, totally confident reasoned, thorough investigation of the reprehensible that I will be fully exonerated in the appeals process. activities of the executive branch of government during We all have an important responsibility to deliberate its Abscam operation. I rely upon you to perform the on the most fu ndamental questions relating to the sov­ historic fu nction fo r which this great body exists, to ereign integrity of the u.s. Senate as an independent guide our nation on the course ofju stice. institution of Government. The constitutional barrier that separates the executive This is the first time I am to be judged by my peers on and legislative branches has been shattered by this at- the totality of the Abscam net that was so crudely wrapped around me. In Brooklyn, New York where my law case was tried, the jury was specifically denied the right to consider government misconduct. The Ethics Committee prohibited any consideration of the gross misconduct of operators fr om the Depart ment of Justice and the FBI. If the Abscam operation is to be understood in its totality, not only my conduct but the Government's Cranston calls for a conduct must be considered, I submit to you, by the full Senate, so that justice might be realized. probe into Abscam These elements of the Department of Justice and the FBI, which sought to instigate and foster criminal activ­ ity where none existed, must bear responsibility fo r their part in this sordid affair. It is this Government miscon­ duct, the illegal, unconstitutional, and ethically repug­ On Thursday March II, following the resignation of nant methods of those involved within the FBI and the Senator Williams. Sen. Alan Cranston, Democrat of Justice Department who sought to impl icate me in their California. motivated his soon-to-be-submitted Senate criminal scheme that must be examined. resolution fo r an investigation of government miscon­ And it is in light of this executive culpability that we duct in Abscam. Excerptsfr om his statement follow: must consider the entire operation before we can consi der the preposterous recommendation that I be expelled The Senate has come face to facewith the enormity · from this body-an action last taken in our history of misconduct and impropriety by the Department of against those who committed treason during the Civil Justice and the FBI in the entire Abscam War. operation .... It is now incumbent on the Senate to No citizen should be made to be answerable, either proceed with a full Senate investigation as is provided by judicial or moral standards, for what it appears he or fo r in the resolution I and others will in troduce she may have done. Each citizen, however, must be held shortly .... I am confident that the Senate will adopt responsible, and in every respect, fo r what he or she has such a resolution swiftly and that Senator Williams' done. So it must be with a U.S. Senator. I have not committed a crime nor have I acted

30 Special Report EIR March 30, 1982 tempt to create crime. It is the first time in the history of me have been extensive. Government agents, a hired our country that this has happened. criminal, and co-opted individuals forged a letter on my It has happened to me. It can happen again. My fight, Senate stationery . They committed major perjury, ob­ until most recently. has been a lonely fi ght, but in con­ struction of justice, and other crimes. They took bribes science I had no choice. If this tactic goes unchallenged, and gift favors fr om the convicted felon Mel Weinberg, tomorrow, tomorrow, tomorrow, it could become an who brazenly attempted, at taxpayers' expense, to bring Executive method to control and intimidate this sover­ about my demise. They considered drugging me .... eign branch of government. ... The essence of FBI and Justice Department wrong­ I, along with all American citizens, first heard of the doing is the machinations of Mel Weinberg, the hired previously secret Abscam operation two years ago. As I criminal, and the errant government operatives. Even looked out of my house and saw a barricade of media fu rther goes the web of government misconduct against who had received leaks fr om the Department of Justice the Constitution and ...the U.S. Senate.... befo re I, myself. was accused of any crime, I knew that I therefore appear before you not merely in my self­ the first principle of American justice was being turned interest but to insure that we together preserve the integ­ on its head. That first principle ofjus tice is that a man is rity of the U.S. Senate as an institution and the very innocent until proven guilty. I knew when I looked out democratic principles which are our heritage. No forum into that sea of media, innocent though I was of any is more suited to this task than the Senate of the United crime, that I wo uld have to battle to prove my innocence. States. No fo rum is more able. No forum is more proper. I knew that the fantasy that had been developed over the I just feel that because of the profundity of one ques­ prior 13 months was an attempt to get me to appear to be tion-the question of separation of powers and the doing something criminal. methods used by the executive branch-our Founding The abuses of certain members of the government Fathers would have us here this day doing what we are during the investigation and since it was first revealed to doing ....

lonely fightaga inst overwhelming odds, over these six filled in, if possible , and what can be learned of days, will have been the reaso n a fu ll investigation will untaped and undocumented conversations.

be undertaken . . . . The extent to which allegations of misconduct If there we re ever any doubts that Abscam went were and were not fully investigated by the J ustice wrong, and how badly it went wrong, they were Department. removed by yesterday's revelations . .. that the at­ The extent to which there was a failure of supervi ­ tempt to bribe our colleague Senator Larry Pressler sion over Weinberg with respect to his taping activities was done on the spur of the moment with the express and his other activities. approval of the Director of the FBI William H. Webs­ The extent to which Weinberg was led to believe

ter . ... As the Senator fr om Hawaii said about the that any of his compensation depended upon convic­ matter: "Shame, shame, shame." This shocking dis­ tions. closure alone fu lly justifies the investigation we are The extent to which there was any effort to cover calling for. up improper or illegal government activities in con­ My questions about the government performance nection with Abscam. include: The extent to which other Senators and Members The extent to which the Justice Department itself of Congress were targets of Abscam ....

was being deluded . . . by Mel Weinberg , the con man The extent to which the full scope of executive­ who was masterminding the entire undercover opera­ branch misconduct . . . may have compromised the tions, and the extent to which adverse statements by investigation and prosecution of Senator Williams others about Senator Williams and other government and other Abscam defendants. targets may have been manufactured by Weinberg The extent to which executive-branch misconduct and reliedon by the government. that is fo und to have occurred was approved by or The extent to which the U.S. government was itself known to the top officials of the Justice Department compromised by Weinberg. and the FBI. ... The extent to which there were gaps in tape tran­ The resolution directs that a final report be sub­ scriptions, what might be fo und when the gaps are mitted to the Senate not later than July 1, 1983 ....

EIR March 30, 1982 Special Report 31 White House is AI Haig's target in Central America

by Gretchen Small

President Reagan gave tacit approval to Mexico's pro­ commandos operating along the Honduras-Nicaragua posal for a mediated Central American settlement when border and funding opposition layers inside Nicaragua. he obliged Secretary of State Haig to meet at length Next came the dramatic State Department presentation March 14 and 15 with Mexican Foreign Minister Jorge of glossy photos of Soviet installations in Nicaragua, Castaneda in New York . Haig and Castaneda are report­ shown by the same photo expert used to recognize the ed to have worked out "concrete proposals" to alleviate Soviet missile sites in Cuba in 1962. the crisis, and the Mexican Foreign Minister said he will relay the American position to the Cubans and Nicara­ Predictable response guans. The Nicaraguans responded exactly as they were Although "Mexico cannot negotiate for us," Reagan supposed to. Nicaragua's new ambassador to Washing-' said during a visit to Montgomery, Alabama, the Mexi­ ton quickly announced that if the threat of invasion and can initiative is a welcome effort to "open doors." Pri­ covert operations continues, his government will feel vately, Mexican and American officials close to both fu lly justified in buying MIG fighters from the Soviets. presidents are optimisitic about a dialogue. "If we did not build up our defenses after what is However, though it appears that Castaneda is under happening now," echoed Managua's Agriculture Min­ orders from his President-despite his proclivities to do ister, "we would be very irresponsible." the bidding of the Socialist International-the same r The dynamiting of two bridges in northern Nicara­ cannot be said of Haig. In depending on Alexander Haig gua a few days later added to the paranoia. Managua to coordin ate with Mexico to bring stability to the re­ imposed a 30-day state of emergency, suspended some gion, Reagan is calling on a pyromaniac to put out a fire. civil liberties, and put the militia on alert. The White House decision to go with the Mexican The White House began to register its anger over proposal fo llowed a week of provocations, military prep­ the turn of events. Presidential Counselor Edwin Meese, arations, and an unmatched display of intelligence in­ said the London Daily Telegraph March 14, was fu rious competence that looked almost deliberate on the part of at the State Department's leaks about covert action. Haig. The Secretary of State had accomplished two Next fo llowed the now-famous incident of the Ni­ things: First, his efforts to come up with evidence of caraguan defector, brought to the United States to "tell "powerful" Cuban and Soviet intervention made Wash­ all" about his training in Cuba and Ethiopia before ington a world laughing stock. Second, his theatrics were going to fight in EI Salvador. Instead, he announced on exactly what the radical right and leftextremes in Central nationwide television that his "confession" had been America wanted to justify their own policies. obtained by torture at the hands of the Salvadoran Haig's bull-in-a-china-shop routine began when the government. President Reagan wondered aloud to re­ American press ran front-page coverage of well-timed porters why no one had raised the possibility that the State Department "leaks" of plans fo r covert U.S. action incident was a "setup." against Nicaragua, including backing of paramilitary A setup by whom, the President did not say. But

32 International EIR March 30, 1982 some people at the White House are trying to put the tion accepted the Mexican proposal only because "if the State Department on a shorter leash. National Security mediation effort fails," then the Mexican government Adviser William Clark-like Meese, a member of the will 'better appreciate the threat to its security repre­ "California group" of White House officials-has since sented by Soviet and Cuban interference in Central moved to seize a modicum of control over Foggy America." Bottom, issuing a memo stating that all new presenta­ With shooting incidents between Salvadoran, Hon­ tions of "evidence" on Central America must be cleared duran, and Nicaraguan gunboats breaking out in the by the interdepartmental group on fo reign policy over­ Gulf of Fonseca and the Salvadoran military demand­ seen by the National Security Council. ing the United States help them double troop strength A quiet intelligence war has broken out. Unnamed to 50,000 men, time and maneuvering room for the "senior administration officials" complained to the New White House and intelligence community allies to sta­ York Times in mid March that they were "disappointed bilize the area are running out. Shutting Haig's mouth that intelligence agencies had refused" to make public is just not enough. any evidence to back up Haig's claims about Nicaragua. The arrest of a ring of international arms traffickers in Costa Rica announced by San Jose authorities March Documentation 16, in fact is the first "concrete" evidence on who runs guns to the Salvadoran insurgents-and the story it uncovers does not fitwith Haig's "facts" at all. Lopez Portillo discusses Seven terrorists of Argentine, Costa Rican, Salva­ doran, and Nicaraguan nationality were caught with his mediation plan 150 M- 16 automatic rifles, thousands of rounds of ammunition, grenades, bomb-making materials, and Th e fo llowing are excerpts fr om a New York Times communications equipment. Several carried multiple interview with Mexican President Jose Lopez Portillo passports. When questioned as to why they had chosen March /0, 1982. Th e New York Times only published a Costa Rica as the base for their gun-running into EI small portion of the interview. Salvador rather than Nicaragua-which borders on EI Salvador-the smugglers replied that authorities were Q: Do you believe that Nicaragua is arming itself be­ too vigilant in Nicaragua. yond its own needs? Do you believe there is evidence of Even more shocking is the report from sectors of arms being sent to the Salvadoran rebels? U.S. intelligence that the American-made weapons A: That Nicaragua is arming itself is a fact; it is afraid of found on the terrorists were originally issued to Israel being invaded; the United States is arming itself; the in 1978 by the U.S. government under the Camp David Soviet Union is arming itself ...each one has fear of its accords. These sources further report that the captured own risks; in proportion to its power. That of Nicaragua group is believed to have been on the, payroll of the is minimal; its resources very limited. What is happening Israeli Mossad intelligence agency. to Nicaragua is the same thing that is happening to Cuba: all efforts to arm itself means its people are being Eye on Mexico deprived of expectations of development, and this de­ Despite Reagan's instructions to cooperate with prives them of [necessary] living standards, which is Mexico, the Mexican government is now a target of the inconvenient fo r each of those two countries ....It is a State Department's demolition crew. There has been a fact that cannot be denied ... they are weak countries sharp intensification of the line developed over the past faced with fear, and with only one response: to arm two years by the circuit of U.S. Social Democrats. The themselves .... line is that Mexico collaborates with leftists abroad, but I can tell you what the Nicaraguans told me, that they at home it is a reactionary "dictatorship" that will deliberately are not allowing the transport of arms. The inevitably be rocked by violence and unrest from the arms can arrive, in open countries with coasts, from poor and oppressed, as have its neighbors. anywhere. They insist no, the United States declares yes; U.S. ambassador to EI Salvador Deane Hinton told the fact is the arms arrive. They leave from somewhere. the Washington Post March 17 that Mexico "should not What I would like is for us to create sufficient condi­ play the lead" in fo rging a solution to the regional tions of security such that through reciprocal agreements crisis, because "they are part and parcel" of the prob­ we would be assured that they will not continue arming lem . The Mexican government, he charged, has allowed themselves. How do we achieve such security? By elimi­ guerrillas to establish a "base for fundraising and nating the cause, and eliminating the cause means elimi­ propaganda activities" in Mexico . Simultaneously, the nating the fear; ...we eliminate the fe ar through formal State Department's faceless "senior officials" went into "non-aggression" pacts that would serve as the basis for action, telling the New York Times that the administra- stabilizing and defending the area ....

EIR March 30, 1982 International 33 Q: What are your special concerns on relations in the fight alongside the rebels. Scion of the Panamanian near-term future? branch of the "black nobility" Italian family of the same A: To resolve the longer-term problem, in my way of surname, the Libyan-trained Spadafora is now organiz­ looking at it, nothing can replace intensified North­ ing similar "brigades" for El Salvador and elsewhere. South dialogue and global negotiations at the United Nations. That is why in my proposals in Managua, More radical stance although the solution was implicit, the proposals were One possible outcome of the coup is that the Guard's concrete and addressed the short term. That speech was new high command may now adopt a more radical in fact a proposal for detente ....I am certain that Cuba stance toward Central America. In the early days of the is prepared to negotiate all points of security concern for conflict in EI Salvador, fo rmer Panamanian strongman the United States. If detente between the United States Omar Torrijos had initiated talks with all the warring and Cuba is achieved, we will have alleviated most of the fa ctions in an attempt to mediate the conflict. He had Central American situation ....It may seen absurd, but also begun to link his peace-making efforts with those this is a security we should give to a country which feels of Mexico's President, Jose Lopez Portillo, and with cornered ...a non-aggression pact and negotiations and Ecuador's Jaime Roldos. guarantees that its neighbors will not attack it. These are This earned Torrijos the enmity of the Jesuits and minimum assurances that a poor nation demands before other radicals-both of the "right" and "left" vari­ it becomes desperate. If all hope is eliminated for that eties-who wanted to heat up the Salvadoran war. people, it will become desperate and a desperate people Torrijos was killed in an "airplane accident" in July of is a group of human beings ready for anything, including last year, a few weeks after Ecuador's Roldos was also death. I don't believe this is the solution, eliminating killed in the same manner. Nicaragua's youth. The coup in Panama will likely bring about the shift in policy that was not fully achieved with Torrijos's assassination. Cold coup in Panamaad ds After Torrijos's removal, the Panamanian govern­ ment continued its mediation attempts. In October to regional instability 1981, President Aristides Royo offered his services as a go-between to U.S. Secretary of State Alexander Haig, and in a speech to the United Nations General Assem­ by Ricardo Ramirez bly. More recently, Panama has lent its support to Lopez Portillo's peace proposals for Central America. The high command of Panama's National Guard, the There have been persistent indications that Pana­ country's only military force and highest policy-making ma's cooperation with Mexico to bring an end to the body, was reshuffled in early March in what amounted genocidal bloodshed in Central America provoked the to a coup. Forced into sudden retirement were the ire of the war-mongering circles around Haig. In mid­ Guard's commander-in-chief, Florencio Flores, and two February, for example, U.S. ambassador to the United of his top deputies. Nations Jeane Kirkpatrick, a "right-wing" Social Dem­ Among their replacements are officers who have been ocrat, denied that either Panama or Mexico were "dem­ linked to the international drug trafficand to the Italian ocratic nations," and left the distinct impression that Freemasonic Propaganda-2 lodge. The outlawed P-2 both nations could expect reprisals. lodge, headed by Licio Gelli, was identified by the Italian government as the control center for Mediterranean and Drugs and P-2 Latin American drug traffickingand terrorism. The new head of the National Guard is Ruben The Panamanian government insisted that the unex­ Dario Paredes, but it is believed that the real power lies pected changes in the Guard's leadership were strictly with associates of the new vice-chief of staff, Col. "routine." But this was belied by the statements of Manuel Noriega, which include Torrijos's cousin and Socialist International adventurer Hugo Spadafora, who heir-apparent, Col. Roberto Diaz Herrera. said that "Flores was ousted because he was too timid Noriega's name has surfaced in investigations of the politically." Spadafora's comments were interpreted as drug traffic that goes through Panama, report officials referring to the Guard's relatively moderate posture of the U.S. Drug Enforcement Administration. As head toward the Central American crisis, paralleling the of intelligence during the almost 13 years that Torrijos stance taken by Mexico. ruled, Notiega oversaw the forging of the South Amer­ Spadafora-a former member of the cabinet-gained ican "connection" to Panama's traditional role as a wide notoriety during the Nicaraguan civil war, when he transshipment point for drugs on their way from the organized an "International Brigade" of guerrillas to Orient to the West.

34 International EIR March 30, 1982 Brandt versus Schmidt

The West German Social Democracy 's chairman is at the core oJ the transatlantic plot to dump the Chancellor, reports Renee Sigerson.

A former Mayor of West Berlin now living in New York SPD into a party of peaceniks and other radicals. City, where he runs the German Social Democracy's Friedrich Ebert Foundation, detailed in a private discus­ Genscher's sabotage move sion with American researchers how the clique around Stobbe described how the peace movement in Ger­ fo rmer Chancellor Willy Brandt aims to drive Helmut many came into existence. It began in 1979, he stated, Schmidt out of office by no later than September. Dieter as a direct response to "certain changes in American Stobbe, West Berlin Mayor from 1977 to 1979 and an foreign policy." Asked whether Germany's increasingly intimate associate of Brandt's since 1960 when he worked grave economic problems and rising unemployment in Brandt's own mayoralty campaign, documented no were perhaps adding to unrest in the population, Stobbe less than eight critical developments scheduled to occur vehemently insisted that Schmidt had made a fa tal between now and September, "each of which is signifi­ blunder by making economic policy the central issue of

. cant enough to produce a change of government." his administration. "The problems in American fo reign The goal of the Brandt faction, Stobbe indicated, is policy, more than any other issue, is the central concern to hand Germany over to a right-wing government and for the German population today," he proclaimed. yank the Social Democrats (SPD) back into the position President Reagan, he added, was distrusted by the of being an impotent opposition party. This would allow German electorate. Reagan's scheduled visit to Bonn in Brandt to reorganize the SPD as a party representing the June for the NATO summit meeting, has now become peace and environmentalist movements, not the alliance the most dangerous political showdown facing Schmidt of trade unions and regional industry groups which has in the coming months-and in the course of his pron­ emerged during Schmidt's eight years in office. ouncements, Stobbe r.evealed that it was Schmidt's Stobbe is also a listed associate of the German Mar­ Foreign Minister, Hans-Dietrich Genscher, who set the shall Fund, the elite U.s.-German association run by the trap for Schmidt to convince Reagan to come to Bonn same Lower Manhattan-London investment banking in June for an event which could permanently tarnish houses which administered the postwar military occupa­ Schmidt's government. tion of Germany. As previous issues of EIR have docu­ The NATO summit was originally set to occur in mented, the Marshall Fund is coordinating thegameplan Brussels. During Schmidt's January visit to Washing­ to dump Schmidt. ton, a proposal was presented to change the site to On March 15 Schmidt launched a new effort aimed at Bonn, to allow Schmidt to show Reagan an act of thwarting his opponents, giving preliminary announce­ friendship. As soon as the change of location was made ment to the press that he intends to run fo r re-election in public, the German peace movement declared it would 1984. A fo rmal declaration of the re-election bid will be hold mass, hun dred-thousand-strong demonstrations made at the April 20 SPD Congress in Munich. Schmidt across the country when Reagan arrived . There is a may be able to use the announcement there to counter serious danger that the violent fringe minority in the maneuvers already planned by Brandt to turn the Con­ peace movement will launch civil disturbances on that gress into a test of Schmidt's strength. The night before day, threatening Reagan's security. Asked why Schmidt the proceedings begin, the peace movement has an­ didn't just allow the meeting to be held in Brussels, nounced, it will hold a mass rally in the city. Brandt has Stobbe blurted out, "That was Genscher's idea .... He stated he wants to speak at the rally, and according to did it to gain more ,naneuvering room around his Stobbe, thus fa r Schmidt has ordered Brandt not to, on efforts to get a new coalition going." the grounds that since Brandt chairs the SPD, his pres­ The fact that Genscher is involved in maneuvers ence would give legitimacy to transformation of the against Schmidt is publicly recognized. As chairman of

EIR March 30, 1982 International 35 the Free Democrats, the small swing party, Genscher have come out that the FDP may recoup and force has openly courted the opposition Christian Democrats Albrecht to enter into a coalition. The speculations for the formation of a new government. This is the first smack of a complex deal: according to some press time, however, that Genscher has been named as the accounts, the FOP has made formation of a coalition source of the decision to bring Reagan to Bonn. dependent upon a promise from Albrecht that the It documents that the Free Democrats are not Lower Saxony delegation to the Upper House of Parlia­ merely keeping open the option of a change of govern­ ment will support Schmidt on a critical vote scheduled ment, but are actively involved in dangerous maneuvers to come up in April on raising the Value-Added Tax. to drive Schmidt out. "Schmidt doesn't want to resign," According to Stobbe's and other scenarios. Schmidt Stobbe noted at one point, "and it isn't an easy matter is supposed to lose this vote to the Christian Democratic

to replace a German government. ..." majority in the Upper House. If he does lose, this will produce a crisis in his cabinet over how to finance a 4 The pending showdowns billion deutschemark emergency employment budget Leading the chronological list of political show­ Schmidt rammed thro ugh the Bundestag last year. downs facing the Chancellor before September is the Another schedul�d development cited by Stobbe as March 20 regional election in Lower Saxony. There the a trap for Schmidt, which has now assumed complex SPD is in opposition, and the Christian Democrats dimensions, is the upcoming Parliamentary vote on govern on the basis of an absolute majority. German contributions to the construction of NATO The test for Schmidt is whether the SPD will lose nuclear missile sites in Sicily, Italy. In an effort to keep even more votes than it did in the last election. Some channels of communication open to Washington, polls have warned that the SPD might even dip below Schmidt conceded to NATO demands that Germany 40 percent, which would be disastrous for Schmidt. assume fi nancial obligations toward the buildup of The final days before the Lower Saxony election, NATO's Euromissile nuclear arsenal. The sitings in however, shed light on how German politics is far more Sicily are an emotional symbol within the hard core of complex than is generally appreciated by international the peace movement, and the parliamentary sessions on observers, and how Schmidt's base of regional trade these allocations are now a target for whipping up peace union and industrial layers is much more resilient, as movement activism. well as hostile, toward Brandt's circle than is admitted, As the session approaches, however, it has become particularly in the U.S. press. publicly known that no less a controversial figure than Lower Saxony is governed by Christian Democrat Libyan President Col. M uammar Qaddafi is working Ernst Albrecht, the protege of a patrician family, the with peace movement leaders on planning civil disturb­ Bahlsens. Owners of Germany's leading baked goods ances to protest the Sicilian Euromissile project. The firm, the Bahlsens are intimates of a generations-old fact that Qaddafi has made public his contacts to Quaker-Church of England clan, which also includes German radicals has begun to liftthe lid on a Pandora's the Cadbury fa mily of England, a clan which fo rmed box of new, intense controversies. around colonial policies in countries which produce Just as in the United States, Qaddafi is viewed by sugar and cocoa. Sometimes nicknamed the "Prince," the majority of the German electorate with greatest Albrecht has Chancellorship ambitions and until recent­ abhorrence. His admission of friendship with German ly was operating on the assumption that he would win radicals is reopening an old fight in Schmidt's cabinet a new landslide victory. which could backfire on the maneuvers to bring down Suddenly his chances have dimmed. Recognizing Schmidt's government. that Albrecht is a key personality in the cross-party Within the Free Democratic Party, there is a "left­ circle which has put Schmidt under attack, Schmidt ist" clique, supported by Interior Minister Gerhard supporters from different regions of Germany have Baum, which has been lobbying for Qaddafi to be gone into motion around Lower Saxony to prevent brought to Germany for a series of public appearances. Albrecht from getting a landslide, thereby aiming to The powerful Baum oversees police functions and the shatter his national ambitions, and mark a defeat for an secret services. anti-Schmidt protagonist. For the first time since his appointment, Baum's One form this momentum appears to have taken, sympathetic relationship to terrorist operatives like ironically, has been manuevers to get more votes into Qaddafi has emerged as a topic of debate in the press Genscher's Free Democratic Party (FOP). In the last and political circles. In mid-March, for example, the election, the F OP swing party did so poorly in the daily Die Welt questioned Baum's competence in fight­ Lower Saxony regional election that it failed to get the ing terrorism, while some CDU'ers have publicly asked necessary 5 percent required for representation in Par­ whether Baum tarnishes the FOP as a potential coali­ liament. In the final days before the election, reports tion partner should Schmidt be brought down.

36 International EIR March 30, 1982 Investigative Leads

Defferre's purge of law -enforcement agencies triggers resistance in France by Philip Golub, Wiesbaden Bureau Chief

A series of spectacular developments in an evolving crisis into forcing him to accept the Minister's "offer." Ac­ of major proportions between the government of Fran­ cording to Floss, Deferre met with Leclerc's wife alone, cois Mitterrand and the national police force of France and warned her that she and her family would bear the has raised questions on the long-term stability and via­ consequences of a refusal by her husband. bility of the Socialist regime. The latest episodes indicate The Paris police leadership sees in this affair an effort that a threshold has been crossed in the internal power to destroy the best security forces in the country for struggles affecting the country. reasons which go beyond mere political party differences. That is the significance of the recent purges under­ Le Mouel's resignation is most intriguing in that it taken by Interior Minister Gaston Defferre and of the evidences a conflict which bypasses Socialist-opposition vehement reactions from the elite of the French police divisions. force which fo llowed Defferre's actions. In an effort to accelerate the purges which began in Dismantling of French law-enforcement early summer 1981 of France's security forces, Defferre, Answers to the questions raised by this affair are fo rmer Mayor of Marseilles, tried to finesse the head of probably to be fo und in and around Marseilles and in the elite Brigade Crimi nelle, Marcel Leclerc, out of Paris the pattern of scandals, purges, and Mafia warfare police headquarters, to take over as head ofthe Judiciary which are proliferating in Socialist France. Going be­ Police of Marseilles. Though nominally a promotion, the yond day to day events, patterns emerge which deserve move was universally interpreted in Paris as an attempt investigation. to remove one of the most efficientpo lice officers from I) Not long ago, as part of the same dismantling of his sensitive criminal investigations post in Paris. the Paris police as the Leclerc affair, a leading police Leclerc, who had been expecting a national promo­ officer, Lucien Aime Blanc, was transferred to the city tion to the post of second-in-command of the National of Lille. Judiciary Police, refused Defferre's ultimative offer. He Aime Blanc, unquestionably one of the best anti­ was backed in his refusal by the head of the Judiciary Mafia fighters in France, had been along with Leclerc, Police, Fran�ois Le Mouel. The latter, a Socialist, who one of the key officers in the dismantling of the "French had been promoted by the new government, resigned Connection" in the early 1970s. Specializing in the March 8 in support of his subordinate, despite their quite struggle against the Mafia and the drug traffic, Aime different political opinions. Blanc was part of a group of officers who had made The two events served to catalyze what is now a France's police force one of the best in the world. veritable revolt in the upper echelon of the police hier­ 2) Maurice Bouvier, fo rmer head of the Judiciary archy. On March 10, 300 to 400le ading police inspectors Police and the central figure in the crackdown on the and commissioners of the Judiciary Police gathered at assassination apparatus which was directed at Charles their headquarters to protest against what they called a de Gaulle, suffered the same fate as Blanc and Leclerc "witch hunt" launched against their leadership by Def­ under MiUerrand's regime. fe rre. In the course of that assembly, Leclerc's· subordi­ 3) Francois Le Mouel, while closely tied to the nate, an Officer Floss, revealed that the Interior Minister Socialist Party, had been a leading figure with Aime had attempted to coerce Commissioner Leclerc's wife Blanc in the destruction of the French Connection.

EIR March 30, 1982 International 37 Previous to his promotion to head up the Judiciary cien Aime Blanc had trained Judge Michel. Recent Police (replacing Bouvier), he had led the Brigade des police leaks indicate that the Zampas, a Mafia family Stupefiants, the equivalent of the U.S. Drug Enforce­ working both the Italian and French sides of the heroin ment Administration (DEA). trade, commissioned the murder. 4) Marcel Leclerc and his Brigade Criminelle had 7) In early March, the head of the Marseilles social been responsible for many successes against organized security fu nd committed suicide after being subjected to crime, particularly in the hunting down of the noto­ fierce attack by the government and labor unions. The rious-and protected-criminals Mesrine and Carlier in man, Lucet, was a known sympathizer if not a member 1975, in a series of operations against the heroin Mafia of the Service Action Civique (SAC), the extreme right­ Zammour fa mily. Most recently, Leclerc had been the wing paramilitary organization whose head is a member central investigator in charge of the investigation into of the RPR. the assassination of Mafia boss Marcel Francisci, who 8) Lastly, the RPR and other opposition parties was professionally shot down Jan. 15 in Paris. revealed major electoral fr auds committed over the past 5) The murder of Francisci is one of the major pieces years by the Socialists in the city of Marseilles. This led of the puzzle. Francisi, denounced in 1970 by DEA to threats and counter-threats, including a now-famous officer Jack Kiusack as the kingpin of the French warning by Defferre that if the RPR continued its Connection, had in recent years been publicly associated investigations, he would reciprocate in Paris which with the gambling industry in Marseilles, Nice, and could implicate Jacques Chirac. Paris. Affiliated for years with the nominally Gaullist party of Paris Mayor Jacques Chirac, the RPR, as a Internal warfare local official in Corsica, Francisci however maintained The purges of the Paris police are thus part of a continuous relations to the Socialist Party via its Mar­ much broader pattern of intensifying internal warfare, seilles and Corsican apparatus. Sometimes conflicting, most of it quite covert. While internal "police wars" (la sometimes friendly, these were nominally "business guerre des police) continuously troubled Presidents de relations." Gaulle, Pompidou, and Giscard, the essential homo­ Very significant evidence has recently emerged geneity of the Paris police leadership kept conflict which proves that Francisci just before his death had within definite limits. The Socialist victory and, perhaps contacted two top-level Socialist lawyers, Maitre Dumas even more important, the appointment of Defferre as in Paris and Maitre Lombard in Marseilles, asking them Interior Minister, has set a match to a barrel of powder. to mediate contacts for him to Defferre and the govern­ The purging of the most senior police officers, the ment. This apparently strange behavior for an RPR dismantling of the anti-dope Mafia leadership, and the faithful was certainly explicable within the rules of the reorganization of the secret services has become a much game in Marseilles and Corsica. This evidence was more violent process than Jimmy Carter's blinding of contained in tapes fo und on Francisci after the murder. the U.S. intelligence community in 1977. Following seizure of the tapes by the Brigade Crimi­ Some analysts have suggested that the basic line of nelle, they were passed on to a Judge Joly, who proceed­ division today in this underground game is between the ed to a search of both Dumas's and Lombard's offices SAC and Defferre. Although it is the RPR which in Marseilles. Dumas, a long-standing friend and asso­ defeated Valery Giscard d'Estaing and were tactically ciate of Fran�ois Mitterrand, is now a Socialist Party allied to the Socialists in doing that, RPR leaders like Deputy, while Lombard is a close friend of Defferre. Charles Pasqua, a Corsican who is known for using Although Joly is not known for his sympathy to the underhanded methods, are now speaking of "an incu­ regime, he let it be known that further evidence was bating civil war in France." The days of tactical alli­ fo und in Lombard's office on Francisci's penultimate ances have gone. contacts with the Socialists. More than ever the Socialist government is leading 6) Last summer the left-leaning Marseilles Judge France towards increasing chaos and division. The So­ Michel was assassinated. Revelations at the time ·indi­ cialist-Communist coalition government is torn from cated that Michel was working in close liaison with within in two directions: one within the Socialist Party Italian judges responsible for the recent successes in the itself and secondly between Communists and Socialists. fight against terrorism and the dope Mafia. Michel was Leading government officials in private admit that working on breaking down the Marseilles-Corsican side soon they will be fo rced to resort to thoroughgoing of the heroin connection, which has its Sicilian counter­ austerity. The international economic crisis will only part. Recently, Minister Defferre affirmed that Mar­ make things worse and will force a major crisis between seilles had nothing to do with the entire matter, while Communists and Socialists. the police contended the contrary. It is worth noting The present crisis in the French national police is here that the aforementioned Police Commissioner Lu- but the first act of a widening national crisis.

38 International EIR March 30, 1982 Israeli daily Haaretz. INTERVIEW Portions of the EIR interview with Laviv appear below.

EIR: Mr. Laviv, EIR has been very active in attacking some of the same people in the Israeli Mafia that you yourself have been going after. You recently have had some problems with the Mafiain Israel, around a frame­ up arrest you've been faced with. We have heard that as many as 12 Mafiagroups may be involved in the opera­ tion against you. Laviv: The 12 are not all involved-only four or five of Yigal Laviv targets them are. They have gone to the police with false charges against me and have been trying to get me arrested. All the Israeli Mafia these men are partners of and affiliated with the famous II Mafiagroups of Israel. These II groups have been Israeli journalist Yigal Laviv, a well-known investigator known to the police for four to five years, and are the of the Mafia in Israel, is now probing the attempt by leaders of organized crime in Israel. Israeli collaborators of American mobster Meyer Lansky to take over the state of Israel. EIR: Do you thing that these Mafiagroups are involved It is the underworld that stands behind Defense Min­ in the international drug trade? ister Ariel Sharon's efforts to wrest power from ailing Laviv : Yes, definitely. They are involved in smuggling Prime Minister Menachem Begin. According to Israeli heroin, marijuana, and hashish, and then transporting it intelligence sources, Sharon is owned and controlled by from Israel and the Middle East into the United States. Meshulam Riklis, the Israeli-American head of the Rap­ id-American Corporation who is reputed to be tied into EIR: Is your life endangered? Is the Mafiathreat ening the Lansky crime combine. your life? Over the past decade, Laviv has authored numerous Laviv : They tried in the past, and they also sent me books on the Israeli Mafia,prov iding much of the source messages two weeks ago that I shall be dead in one material for the 1980 French-language expose The Israeli month. Connection by Jacques Derogy. Because of his revelations, Laviv has received death EIR: Could you tell us some of the names of the Mafia threats from Israeli crime circles. In late February he was groups going against you? arraigned on spurious charges of extortion trumped up Laviv: One of the main people involved is Bezalel Mizra­ by the Israeli Mafia. Several organized crime bosses, hi. There are two affiliated with him-Tuvia Oshri and including the notorious Samuel Flatto-Sharon, who Rahamin Aharoni. There is also a guy named Munia evaded �xtradition to his native France several years ago Shapira, who is also mentioned by the police in the 11 by buying himself a seat in the Israeli Knesset, are groups. Now there is also another guy, who was not implicated in the operation to silence Laviv. mentioned in the IIgroups, because in those days no one In 1972, charges of extortion were brought against knew about him. He's linked to construction, to the Laviv by underworld figures in Israel, but the charges building business. His name is Shalom Genish. He's the did not hold up and he was acquitted. In 1973, the Israeli partner of Mizrahi in the construction business; they're Supreme Court upheld the decision. involved in hotels. In an interview with EIR 's Wiesbaden correspond­ ents Mark Burdman and Philip Golub, Laviv indicated EIR: We understand that Sharon is presently attempting that the campaign against him is being waged by people to seize power over the government in Israel, a move that deeply involved in the international drug trade. Evidence would lead to a major conflictwith the Arab world. fo r this, Laviv states, comes partly from Federal Bureau Laviv: I think yes, because he wants to conquer all of of Investigation documents on Israeli Mafiadrug-traf ­ Lebanon. Sharon wants to make a war in Lebanon and ficking into the United States from South America, force Egypt to cut the peace agreement with Israel before documents that Laviv himself has seen but that have Israel gives back Sinai. been suppressed from public purview in America. Laviv is editor of the Israeli monthly One Hundred­ EIR: Do you think there is a possibility of a cold coup Police News. He is former columnist for the newspaper d'etat by Sharon? Hao/am Ha 'zeh, and fo rmer economics reporter for the Laviv: Not as long as Mr. Begin is alive.

EIR March 30, 1982 International 39 South America

Obstacles to Brazil's export push mean investment cuts, devaluation pressure by Mark Sonnenblick

Brazil's plans for staging an economic recovery this year increasingly using GATT prohibitions of subsidies as a from last year's recessionary disaster are threatened by bludgeon against Brazil's entire dirigistic system of the collapse of world trade. An aggravation of Brazil's economic management. crisis could lead to drastic economic and political shake­ If its export subsidies are banned, Brazil will be ups in that nation. forced into a shock devaluation such as the one imposed Brazil's hopes are contingent upon raising its exports by Finance Minister Mario Simonsen in a December fr om $23.5 billion last year to $27-28 billion this year, an 1979 deal with Carter aides Michael Blumenthal and C. increase of 15 to 19 percent. However, during the first Fred Bergsten. Simonsen promised to end export subsi­ two months, exports were down 7 .2 percent in value. The dies. Now on the board of Citibank (to whom Brazil quantities shipped did not fa ll nearly that much, but owes $5 billion), Simonsen is still united with Blumen­ prices of coffee, soy, and other commodities are falling thal and Bergsten in the new Institute for International as "demand"-the ability to pay-collapses worldwide. Economics (see page 8). Brazil managed to boost exports by 15 to 20 percent Unlike the "free market model" of Chile, Brazil has annually during the early years of the world recession by not frozen its exchange rate-it couldn't, with its 88 means of hefty export subsidies which made its quality percent inflation. Instead, Brazil devalues by about 2 manufactures a bargain. (See EIR, Nov. 3, 1981.) Ag­ percent every week or so at a rate equal to inflation. gressive marketing conquered Third World and East However, since about the time of Henry Kissinger's bloc markets. Now, the South American and West Afri­ November trip to Brazil, the black market cruzeiro has can countries which snapped up Brazilian cars and other cheapened much faster than the official one. The spread products can no longer afford such imports. between the two rates reached a record 42 percent on The Brazilian authorities have had to slash imports March II. to compensate for shortfalls in exports under the terms This rise is being publicized to promote the capital of an informal agreement they worked out with teeth­ flight and speculation which precedes-and compels­ gnashing Eurodollar lenders. The agreement is that Bra­ major devaluations, such as the recent ones in Argen­ zil will be given the right to borrow the $17 billion needed tina, Mexico, and Ecuador. Some importers argue that for each year's debt service only so long as Brazil gener­ the dual exchange rate is causing a flood of contraband ates a trade surplus. Thus, Brazilian authorities cut out imports which cannot be stopped through law enforce­ $2 billion of imports during the last months of 1981 to ment, but through making the criminal exchange rate achieve a surplus . Stockpiles of inputs needed for indus­ legal. try and agriculture have run out. But, during the fi rst two months of this year, imports were down by 1 6.8 Assault on development projects percent from the same period last year; non-petroleum Brazil's export officials admit that exports will fall imports were repressed by a whopping 23.5 percent. $ I.7 billion below programed levels during the first quarter and achieve 1982 goals only with a dramatic, Devaluation pressures and highly improbable, upturn in the world economy. Brazilian policy makers are still willing to impose The creditors to whom Brazil owes over $70 billion (in whatever sacrifices of internal consumption and invest­ gross long- and short-term debt) will not tolerate any ment are needed to spend billions subsidizing exports. failure to meet balance of payments commitments made But the United States and other trading partners are to them by Brazil's managers.

40 International EIR March 30, 1982 The liberalizing faction within the Brazilian regime of the future projects. Order books of industries desires to reflate the economy to reduce record unem­ throughout the developed world will shrink as Brazil is ployment and calm the voters before the crucial Novem­ fo rced to let them go. ber elections. They understand that military hardliners The halved electrical growth rate suggests that plans will not permit elections leading to a landslide repudia­ for the remainder of the economy are being revised. tion of Brazil's 1964 Revolution. The ratchet collapse of Coal and alcohol targets for 1985 have also been world trade and credit, however, not only rules out any lowered, but still may not be reached. improvement, but poses Brazil's rulers with the thorny Private sector investment has almost disappeared, problem of how to hold off murderous additional cuts thanks to the interest rates which are part of the in Brazilian living standards until after the elections Volcker-style deflationary package. If one gasps upon presumably bolster the government's political flank. hearing that Brazilian inflation has finally fallen to In the meantime, Brazil's strategists are trying to below 100 percent, how does one react to hearing that appease their creditors by triaging the investment pro­ commercial paper pays 260 percent? Consumer credit grams which were designed to transform Brazil into an costs over 300 percent. Many companies survived the 14 advanced industrial power by the end of the century. percent industrial production drop last year only by Most of these projects were formulated with a careful handing increasing portions of their equities over to eye towards improving Brazil's future debt servicing government development banks which provided some abilities; but they require heavy investments. On,estudy subsidized credit. These banks, however, are subject to by the left-nationalist thinktank IBASE complains that control by the World Bank, which has well-formulated the 33 big "impact projects" now programed mean a plans for collapsing one industrial sector after another. $230 billion investment over the next 4 to 16 years. That cost becomes 41 percent greater if interest payments are World Bank orders Maoism counted. World Bank President Clausen spent mid-M arch Brazil is now systematically ditching the proj ects on inspecting his biggest debtor, from the new pole of the which its future depends-as a sign of "good faith" to South American cocaine trafficat Manaus to the yacht the Eurodollar bankers. As predic ted in EIR Feb. 9, of bankrupt oligarch Ermelino Matarazzo in Guana­ electrical energy infrastructure was the fi rst to go. The bara Bay. Clausen told reporters March II, "The resolution of the conflict between the "dam-builder" international perspectives suggest low growth rates in and the pro-nuclear fa ctions was announced by Energy the world economy, inflation, high interest rates, and Minister Cesar Cals on March 3: "Both sides lost." The high unemployment. But, if youjus t look at what Brazil revised Plan fo r Meeting Electrical Energy Requirements has accomplished in this pessimistic environment-pay­ in the Year 2000 reschedules all electrical proj ects to cut ing $9 billion in interest on its foreign debt and lowering growth of capacity from 12 percent to 6.2 percent. inflation-then you have got to give credit to its eco­ Although Brazil is starting with a third of u.s. per nomic managers." Clausen indicated that the "gradua­ capita capacity, II dams are being delayed. Those tion" of Brazil from eligibility fo r World Bank loans underway will be completed an average of two years threatened by U.S. Treasury Secretary Donald Regan late; those not started will begin four years late. Even at Cancun would be held in abeyance so long as Brazil's installation of generators on the world's largest dam, managers continue following its owners' dictates. He the 12.6 million kilowatt Itaipu, will be slowed down. praised them fo r reducing subsidies to agriculture and Coal pit-mouth plants will also be delayed. industry and for raising energy prices so as to reduce Only two of the nuclear plants ordered from West consumption. He supported Brazil's draining export Germany are now scheduled to be on line in 1990, drive. rather than the eight contracted fo r that date in the But, most importantly, he mandated that "Brazil 1975 nuclear agreement. must dedicate itself to the sectors where it is possible to If the investment cuts are billed as postponements obtain comparative advantage: hydroelectricity and la­ rather than cancelations, it is because of the unique bor-intensive agriculture." Clausen stated that Brazil's system of refinancing Brazil's debt burden which has debt could be paid with proper management of "the been perfected by Brazil's Planning Minister Antonio great potentials of the country, especially its human Delfim Netto. Delfim arranges jumbo loan packages resources." His one complaint was that Brazil's leaders from each of the many countries he visits, in which have been politically unwilling to abolish the cost-of­ Brazil agrees to buy equipment from suppliers of that living indexing system which currently shelters the country for specified projects, in return for that nation's workers who earn the minimum wage of roughly $100 government and bankers providing Brazil with debt roll­ per month from the rapid wage erosion already suffered over lending equal to three or fo ur times the project by skilled workers and professionals, who are terrorized value. Thus, Brazil has already committed itself on most by the spectre of unemployment.

EIR March 30, 1982 International 41 Problems andpo tentials: an eyewitness in Bangladesh

by Paul Zykofsky from Dacca

Ever since Henry Kissinger referred to Bangladesh as a round of the coups and countercoups which have prolif­ "basket case," in the early 1970s, this South Asian nation erated since it achieved independence in 1971 (see box). has been commonly cited as an example of a country that As in 1971, when Bangladesh's struggle for indepen­ will have to reduce its population if it wishes to survive. dence from Pakistan led to a massive influxof refugees This is invariably the argument put forth by the neo­ into neighboring India, confrontation between the Malthusians responsible for the Global 2000documents. United States and the Soviet Union, and to war between Last year the London Daily Telegraph went so far as to India and Pakistan, a crisis in Bangladesh today could argue that Bangladesh should be "peopled by less than well lead to a broader strategic conflict. U.S. plans to one-tenth of its present population." That such popula­ provide arms to the Ziaul Haq dictatorship in Pakistan tion-reduction levels can only be achieved through fa­ have already led to increased tensions with India. In this mine, war and pestilence-i.e., genocide-is left unsaid. context observers in India are only too well aware of the Yet despite Bangladesh's population of 92 million strategy voiced by Henry Kissinger in 1971: using an and one of the highest population densities in the world, influx of refugees from upheaval in Bangladesh to "bleed the Malthusian argument that its population growth India." Already the ascendance in Bangladesh of Islamic must outstrip food production is exposed as a blatant fundamentalist strata with known pro-Pakistani senti­ fr aud. At present Bangladesh can produce 15 million ments, combined with moves towards a military govern­ tons of food grains per year-just short of the amount ment, not only is leading to greater strife within Bangla­ needed to feed its population. But Bangladesh has enor­ desh but will aggravate relations with India. mous agricultural potential. Situated at the mouth of the Ganges, Brahmaputra, and Meghna rivers, four-fifths of Roots of the crisis the land in Bangladesh is arable and can be cultivated During the 1980s Bangladesh's relations with neigh­ year-round. With the proper irrigation projects and fe r­ boring India were, though strained, not bitter. After tilizer inputs, Bangladesh could produce an estimated 60 present Indian Prime Minister Mrs. Gandhi assumed million tons offood grain, becoming a major world fo od office in January, 1980, Bangladesh President Ziaur producer and exporter. Rahman visited India. Although Bangladesh and India At present, however, as this corrrespondent found continued to disagree on most issues, the internal during a recent nine-day visit to Dacca, the deterioration situation within Bangladesh remained stable under in the Western economies, on which Bangladesh is still President Ziaur Rahman. largely dependent for aid, combined with a bad harvest This crisis can be traced back to the assassination of this year, are threatening the country with famine and President Ziaur Rahman last May, presumably by dis­ conditions of severe austerity (see page 46). gruntled elements of the army led by Major-General Though Vice-President Abdus Sattar was elected to Manzoor. The subsequent assassination of Manzoor the presidency by a large majority in November elections, and other officers of the Chittagong garrison under his he has failed to stabilize the situation, and there are command has obscured what was involved in the at­ growing rumors that the already powerful armed forces tempted coup. However, since then the Army Chief of will take power and plunge Bangladesh into another Staff, General H. M. Ershad has emerged as one of the

42 International EIR March 30, 1982 most powerful figures in Bangladesh. Ershad is credited with having convinced the ailing 76-year-old Sattar to take the reins of power and to run as the candidate fo r President of the ruling Bangladesh Nationalist Party (BN P), the pa rty established by Ziaur Rahman. After the elections Ershad staked his claim to power by A political profile demanding the establishment of a "National Security Council" with the three military chiefs, the President, of Bangladesh Vice-President, and Prime Min ister which would fu nc­ tion as a civilian-military "super-cabinet." For almost two centuries the area encompassed by Sattar, apparently still in the flush ofhis electoral what is now Bangladesh was looted extensively by the victory , rejected this demand and instead constituted a British East India Company-the employer ofThom­ National Security Council with three military and six as Malthus-and its successor , the British Empire . civilian members. His rejection of General Ershad's Simultaneo usly the land-ten ure structure and all na­ demands created a rift between the civilian government tive industries were destroyed. To prevent the well­ and the military and led to widespread rumors of a developed weaving industry-which prod uced the military coup in early February. world-famous Dacca muslin-from competi ng with President Sattar's problems have been compounded English textiles, the British resorted to a simp le meas­ by his inability to keep the BNP united. Founded by ure: they broke the hands of the Dacca weavers. General Ziaur Rahman in 1978 to build up his political At the time of in dependence from Britain in 1947, base and "civilianize" his regime, the BNP is a heter­ the area that is now Bangladesh was partitioned off ogenous party with factions recruited fro m other par­ from India on the basis of its majority Muslim popu­ ties. While Zia's strong rule was able to keep a balance lation, and became East Pakistan, the poorest of among the various. groups in the BNP, Sattar has relied Pakistan's provinces and over 1,000 miles from the primarily on a right-wing faction led by Prime Minister seat of government in West Pakistan. Shah Azizur Rahman fo r his base of support. Shah Economic exploitation by West Pakistan and ef­ Azizur was part of the small group of Bangladeshi forts to impose Urdu as the major language on the politicians who opposed the independence of Bangla­ Bengali-speaking populatio n led to a movement fo r desh in 1971, and he and his all ies are identified with the autonomy of East Pakistan. When in 1971 the the Islamic fu ndamentalists in the Jamaate Islami. military rulers in West Pakistan responded with a As a result, about 70 of the BNP's total of 206 campaign of systematic slaughter, East Pakistan Members of Parliament have openly broken with Sattar. launched a liberati o n struggle which a few months One dissident leader I met bitterly criticized Sattar fo r later culminated in the establishment of an indepen­ having undermined the BNP's own base of p opular dent, secular Bangladesh with the support of India support by relying on the Shah Azizur group. "Though and the So viet Union. Under Henry Kissinger's direc­ I think we should accommodate some of the small tion the United States sided with the Pakistani military minority of misguided elements who opposed Bangla­ rulers and their allies in Peking. desh's liberation, Sattar is discrediting the BNP," he Since 1971 Bangladesh has led a troubled existence noted . "The people don't like collaborationists [those with numerous coups and counter-coups, especially who collaborated with Pakistan against Bangladesh's after 1975 when independence leader Sheikh Mujibur independence-P.Z.] to be running the government." Rah man and most of his family were brutally assassi­ Others discounted the role of the BNP dissidents. nated in a coup led by a small group of army officers. "They are a bunch of opportunists who are upset over In the aftermath of the assassination of M uji b , Gen­ Sattar's refusal to include them in his cabinet," an Asian eral Ziaur Rahman, then Army Chief of Staff, as­ diplomat in Dacca told me. At the same time there are sumed control and was abl e to m aintain political reports that the dissidents are being egged on by the stability in the years that followed by ruthlessly put­ armed fo rces, who are using them as leverage to fo rce ting down su bsequent military uprisings, eliminating Sattar to yield to their demands fo r a greater share of potenti a l opponents, and s uppressing political activi ­ power. This view was strengthened when General Er­ ty. shad, in a series of statements after the election, attacked A gradual process of " dem ocratization " was in­ the government fo r including "anti-libedtion" ele­ troduced in 1979 but th e relative stability achieved ments, i.e., the Shah Azizur faction of the BNP. under Ziaur Rahman was shattered last May when he However, in early February Sattar yielded to some was assassinated. of these pressures by quietly restructuring the National Security Council, as demanded by the armed fo rces, and

EIR March 30, 1982 International 43 by reshuffling his cabinet. While the Shah Azizur group retained its control in the new cabinet, there are reports Interview that Sattar prom ised the dissidents that they would receive concessions later on. In meeting the demands of the military it is generally believed that President Sattar has bought some time; however, he has also exposed his government's weakness, and it remains to be seen how long the armed fo rces will be willing to stay behind the scenes.

The A wami League Any moves by the armed forces will have to take into consideration the growing popular strength of the Awami League, the party fo unded by independence leader and fi rst Prime Minister Sheikh Mujibur Rah­ man. After languishing under repression fo llowing the military coup against Mujib in 1975, the Awami emerged as the sole major opposition party in the November 1981 elections, and some of its leaders claim that, had it not been fo r vote fraud, it might have won. In a discussion with this correspondent the Awami's presidential candidate in the November elections, Ka­ mal Hossain, noted that despite all of the Awami League's handicaps during the elections and the fact that they were pitted against state power, "we have been overwhelmed by the response of the population." Farm Minister: 'We However, the Awami League has also suffered from fa ctionalization between the right- and left-wing sec­ can quadruple tions of the party. In an effo rt to keep the party together, Sheikh Mujib's daughter, Hasina Wajed, was prevailed upon to return from self-imposed exile in agricultural output' India to assume the Presidentship of the Awami a few months before the assassination of Ziaur Rahman. In the fo llOWing interview Agriculture Minister Dr. Fasi­ However, Mrs. Wajed has apparently been unable to huddin Mahtab discusses the short- and long-term outlook stay above the various factions, and there are new fo r fo od production in Bangladesh as well as some of the reports of strife within the party. overall difficulties the economy is fa cing. Th e 46-year-old Several members of the Awami . Leag ue also ex­ Dr. Mahtab, who holds a Ph.D. in mechanical engineering, pressed to me their concern over the growing strength was the fo under-director of a private engineering and con­ of Islamic fu ndamentalism, inside the military as well as sulting firm before he joined the government. In 1977 he outside. The fundamentalists are primarily grouped in was appointed Deputy Adviser to President Ziaur Rahman the Jamaate Islami, the equivalent on the Indian sub­ in charge of Agriculture and in April 1979 became Minister continent of the Muslim Brotherhood which brought fo r Planning. He returned to the Agriculture Ministry in Khomeini to power in Iran. Alth ough Bangladesh was November 1981. established as a secular nation, the Jamaate is reported In late February, soon ajier this interview was conduct­ to have the support of approximately 20 percent of the ed by EIR correspondent Paul Zykofs ky in Dacca, Dr. population. In an effort to obtain fi nancial assistance Mahtab was shift ed to head up the Finance Ministry. fr om Arab countries, Ziaur Rahman promoted greater A t the time this interview took place, appeals fo r "Islamization" of the country-a move which allowed emergency grains had gone out to traditional aid donors; the Jamaate to increase its strength. At present the even the World Bank urged speeded-up shipments of at Jamaate is training its young cadre, recruited from least a halfmi llion tons of grains. As of early February, colleges with lavish gifts, along paramilitary lines. The government officials expected the donors to come through, Jamaate has reportedly built up its strength with exten­ although they had fe w firm commitments. sive fi nancial support from Saudi Arabian sources and is considered one of the best organized, most homoge­ Zykofsky : What is the outlook for fo od production this nous fo rces in the country. year?

44 International EIR March 30, 1982 Mahtab : As you know we have three main seasons. Mahtab : There is a certain scope for improving our own Within the financial year (which starts in July) the first resource mobilization, like reducing subsidies. That also season is aus (harvested in July and August) and this year has its limitations. For example, we are reducing subsi­ there were some pest attacks which resulted in a shortfall dies on fe rtilizer and other inputs for agriculture. But at of 200,000 tons. Because of drought the second season, the same time you have to look at the capabilities of the aman (the main crop harvested from October to Janu­ farmer. And there is a limit after which you have to go ary), also fe ll short of our target and wheat production slowly, otherwise this will create disincentives. It is not was also affected. But boro (harvested in May and June), enough to produce more, it also has to be at levels where which is the last crop, so far looks quite promising. it is within the purchasing power of the people. So there Our original target fo r production was 16.2 million is a limit to the reduction of subsidies as fa r as agriculture tons. At present estimate, we will reach about 14.3 to is concerned. 14.5 metric tons this year, as against last year's produc­ Another thing which is hurting us very much is our - tion of 14.6 metric tons. So basically, due to the drought, trade'situation. You see, this year, in spite of increased we are losing the extra production we wanted. The target exports, the money we've earned from exports is reduced for 1984-85 set in our mid-term food production plan is because of the fall in the price of jute and of other 20 million tons. Assuming that in abnormal conditions commodities, most of them agricultural products. As a we will lose about 2 metric tons, as occurred this year, fo r result our exports in dollar terms will be less than last example, we will still get a minimum of 18 metric tons­ year. Our exports last year were about $725 million; this which will make us self-sufficientin food production. year they will be about $650 million. Our greatest problem in the medium term is the At the same time, our import requirements are about almost total dependence on the weather due to lack of $2.7 billion; because of the shortage of funds we have cut irrigation fa cilities. In the past, most of our irrigation them down to $2.4 billion. And that is naturally going to effort was on the flood control side rather than on the affect not only our various projects, but also industry irrigation side, so we took up major projects, big projects and productivity of certain industries. and these have got a long gestation period and are very highly capital-intensive. Though ultimately that is the Zykofsky: What is your estimate of Bangladesh's food solution-because the recurring cost is less-in the short production potential? and medium term we have had to change our strategy. Mahtab: As fa r as the potential of this country is con­ Now we are concentrating on more minor irrigation cerned, one estimate made in the early 1970s by the projects using pumps and tube wells of two types: deep World Bank-a famous, nine-volume report in which tube wells where the groundwater is too deep, and shal­ they did the land-use planning, water availability, irri­ low tube wells with small centrifugal pumps and also gation potential, and all that-was that this country some hand tube wells. These proj ects are basically using could produce, with proper irrigation and drainage, four surface and groundwater and will contribute about 80 times what we were producing at that time [approximatly percent of the additional land we are bringing under IO million tons]. But at that time there were not many irrigation. high-yield varieties. Now the technology has developed, But there are other proj ects being carried out by the and I think it is still valid to say that we can produce four Ministry of Flood Control and Irrigation which are large times the present level of production of 15 million tons, projects. Some are already underway and we have to that is to say some 60 million tons. complete them, although at this moment we are fo rced Our land needs irrigation. If you can provide irriga­ to move more slowly due to resource constraints. But tion you can grow three crops instead ofju st one in many nevertheless, by 1984-85 we hope to increase total irrigat­ areas. There are certain areas where there are two crops, ed land from the current 3.6 million acres to 7.2 million. but in many areas we are producing only one crop. As We could do more if we could overcome the resource soon as farmers get irrigation they can go for high-yield constraints we face. We have tremendous resource con­ varieties which will increase the yields tremendously. In straints. But we are trying to protect some of these addition to that, as the cropping intensity increases, programs; although at times it is very, very difficult. employment increases. For example, we need to have a very big program I did a study a few years back. In this study, we found next year-which should be bigger than this year's-and that when yields increased due to irrigation, employment fo r that we have to invest now. But I am finding it also increased from 90 man-days per acre to 360. The difficult to mobilize the fu nds. This year, fo r example, interesting part is that while the increase in family labor our development funds were cut substantially. is nearly double, the increa'se in hired labor goes up by about eight times. Given that 40 to 50 percent of our Zykofsky : Is there any way to overcome these resource rural population consists of landless labor, this is also constraints? very important.

EIR March 30, 1982 International 45 Bangladesh Economy year is expected to reach only 14.5 million tons. The resulting shortfall of 2. 1 million tons will have to be filled with fo od stocks and imports if Bangladesh is to avert a fa mine. Growing rumors of possible fo od shortages, spurred Financial constraints by a 100 percent increase in the price of rice during January, compelled the Food Minister to issue a state­ hit urgent investment ment in early February assuring the country that food needs would be met. According to government figures the 2.1 million-ton by Paul Zykofsky shortfall will be met from stocks of 1.23 million tons and food aid of 1.1 million tons. However, some observers Aside from a few small factories on the outskirts of report that food stocks are in fact only 0.8 million tons Dacca, the capital, the entire country of Bangladesh is a and that aid disbursements may be lower-in which case vast stretch of green fields-mostly paddy fields-inter­ famine will result in some areas. rupted by occasional large rivers, irrigation canals, and small groves of trees where villages are located. Resource constraints Agriculture is indeed the mainstay of the Bangladeshi Bangladesh exemplifies the way in which the deep- economy, accounting for 55 percent of Gross Domestic Product and employing approximately three-fourths of the total labor fo rce. Eighty-five percent of the popula­ tion still lives in the rural sector. However, Bangladesh's agricultural potential is still far from being realized. At present approximately 15 million tons offood grains, primarily rice and an increas­ ing amount of wheat, are grown every year. But the yields per acre, which average half a ton, are among the lowest in the world. The reasons are straightforward: lack of proper irrigation facilities and fe rtiziler. While abundant rain falls on Bangladesh and flows through its numerous rivers, including the Ganges, Brahmaputra, and Meghna rivers-estimated to total over one billion acre feet-the flow is concentrated in the monsoon period. Half the year is virtually dry. Only by building water storage facilities and increasing electrical capacity fo r pumping groundwater can this problem be overcome. At present, out of a total cultivated land area of 22.4 million acres, irrigation capacity is about 4.5 million acres and reportedly only about 3 million -acres are actually irrigated. Furthermore, with installed power capacity in the country at a low 750 megawatts, only 7 percent is used for irrigation based on groundwater pumping. In areas where irrigation facilities have been improved, as in the eastern Comilla district I visited, yields have increased rapidly to close to 3 tons per acre and employment has also increased substantially, given the capability to grow 2 to 3 crops per year. The precarious nature of Bangladesh's food produc­ Bay of Bengal tion, however, is shown by the situation this year. After achieving record fo od grain production of 15 million tons during fiscal 1980-81, the government had set a target of 16.2 million tons for 1981-82. However, due to pest attacks and drought, food grain production this

46 International EIR March 30, 191i2 ening crisis in the international economy leads to geno­ rate of growth requmng $17 billion dollars over the cidal conditions in the developing nations. Aside from five-year period. But as a result of resource constraints, the danger of fo od shortages, Bangladesh, which relies targets are being reduced by about 15 percent. In the on fo reign grants and loans for 64 percent of its crucial area of irrigation, officials noted that emphasis development budget, is being severely affected by the had shifted away from "more desirable" large proj ects drying up of aid monies and by the collapse of markets toward small and medium ones . As a result the Five­ for its exports. Year Plan target of producing 20 million tons of food The International Monetary Fund was the first to grain by 1985 will not be reached. Plans to augment put the squeeze on Bangladesh. Last July it stopped installed power-generating capacity from the current disbursement on a three-year $936 million dollar (800 750 megawatts to 1,030 megawatts by 1985 have also million Special Drawing Rights) loan from the Extend­ been scaled down. ed Fund Facility because of increased government spending and the continuation of various commodity Natural gas resources subsidies, primarily on food and fertilizers. Only $270 The discovery of large despoits of natural gas in the million had been disbursed when the loan was cut off eastern part of the country can provide an impetus for and no progress seems to have been made following Bangladesh's development. At present, gas reserves are negotiations with an IMF delegation which visited estimated at 10 to II trillion cubic feet, although Bangladesh in November 1981. Because of the loan government officials indicate that this is a "rough and cutoff Bangladesh was fo rced to borrow $200 million conservative" figure. Power stations east of the Brah­ on the international money markets at commercial maputra River have been converted to use gas, but it interest rates of 15-16 percent instead of the 3 percent will take some time before this energy source can be charged by the IMF, and further commercial borrow­ used in the western part of the country, because there is ings are expected. no bridge across this mighty river. Plans are under way The situation has been compounded by a slowing to build gas-based power stations on the eastern bank down in the disbursement of foreign aid due to the of the Brahmaputra and transfer energy to the western general deterioration in the aid climate. While the part of the country with large high-voltage towers government had expected to receive $1.7 billion in spanning the river. This will help reduce Bangladesh's fo reign grants and loans-compared to $1.3 billion last dependence of foreign oil imports, which currently eat year-this amount has not materialized. The slowing up 60 percent of export earning. down of foreign aid used to finance basic imports has in Gas is also being used as a feedstock for fertilizer turn lowered government revenues, 70 percent of which production, and three major foreign investment projects are generated from customs duties, excise taxes, and have been approved which will use gas in the production other revenues associated with foreign trade. of urea fe rtilizer, methanol, and sponge iron. Government revenues have also been affected by the Although at present industry only accounts for 8.4 collapse in the international price of, and demand for, percent of GOP, the government has tried to promote Bangladesh's largest export item-raw jute and jute growth in this sector and to attract foreign investment. products (used for carpet backing and sacking), which Most large industrial projects involve foreign partners account fo r close to 70 percent of total exports. In 1981, or investors, primarily from the United States, Europe, for example, the average unit price of Bangladesh's and Japan. The five-year plan envisions industrial in­ exports declined by 13 percent. Simultaneously the vestment totaling $1.32 billion, with foreign investment average unit price of imports was up 19 percent, so that making up more than half of that. A foreign investors' despite a marginal $18 million dollar increase in Bang­ forum held in Dacca in January with the help of ladesh's import bill to a total of $2.55 billion, net UNIDO drew about 100 foreign businessmen from imports sank. around the world. As a result of all these resource constraints, the However, the assassination of President Ziaur Rah­ government has reportedly been forced to cut back this man and the political instability which has followed it, year's annual development program by about 10 per­ have had an effect on foreign investors, and some cent. If the IMF does not resume disbursement of the projects have been postponed. A Japanese diplomat $936 million loan soon, the government may have to indicated to me that businessmen in Japan-which last cut back even further. year became the largest aid donor to Bangladesh-are In the longer term, government officials I spoke to watching the situation carefully and will suspend any outlined how the lack of financial resources had forced major new investments until they are confident that them to scale down many of their development plans. there is a stable government in office which is commit­ The original 1980-85 plan envisioned a 7 percent annual ted to economic development.

EIR March 30, 1982 International 47 enough water to meet the needs of Calcutta port and the full requirements of Bangladesh." Agreement was Regional Infrastructure reached on trial operation of the barrage in April and May 1975, but India reportedly continued operating it beyond that; Bangladesh claimed that this caused a record low of water in the Ganges and created drought conditions during the lean season of 1975-76. Dispute with India The issue was brought to the United Nations, and in November 1977 a five-year Ganges Waters Agreement stallswater program was signed which fixed the share of water for the two countries during the lean season and called for fi nding a by Paul Zykofsky long-term method of augmenting the dry-season flow of the Ganges. India's plan for achieving that calls for the transfer of Water is the key to the development of Bangladesh's 100,000cubic feet per second of water from the Brahma­ agricultural potential. While Bangladesh receives large putra to the Ganges through a 209-mile long, half-mile­ amounts of water from rainfall-203 million acre feet­ wide link canal, a third of which will pass through and 870 million acre feet through its rivers, most of it is Bangladesh and join the Ganges at a point above Far­ concentrated in a few short months. During the monsoon akka in India. The 100,000 cubic feet per second drawn period flooding of the rivers causes enormous damage, off from the Brahmaputra during the lean season would while during the rest of the year there is often shortage of be compensated for by building two dams in the upper water. reaches of the river in India which would store monsoon Because the land is mostly flat, there are no major waters to be released during the dry season. India also natural sites for storing water to reduce the flood level claims that the link canal would help reduce flooding in during the monsoon season and save water for the dry Bangladesh by lowering the water level during the mon­ season. The Bangladesh government hopes to build bar­ soon season. rages on the Ganges and Brahmaputra rivers so as to Bangladesh has meanwhile proposed the construc­ divert water to the southwest and northeast regions, tion of storage dams in the upper regions of the Ganges respectively. During the past few years, using labor­ in Nepal and India which will retain monsoon waters for intensive methods, it has also embarked on a canal release during the lean season. It claims that the dams excavation and re-excavation program which has im­ will permit generation of 10,000megawatts of electricity proved irrigation somewhat. and augment dry-season flows by 180,000 cubic feet per However, any lasting solution to the water problem second. will depend on a water-development scheme in collabo­ Bangladesh has officially rejected the link canal pro­ ration with neighboring India, through which the major posal as technically and economically unfeasible. It ar­ rivers flow before entering Bangladesh. gues against constructing a canal running in a southwes­ Disputes between the two countries over water utili­ terly direction which would cross a number of minor and zation date back to the I 950s, when India first decided to major rivers flowing at right angles to the canal, since build a barrage on the Ganges River at Farakka, II miles the canal would obstruct natural drainage of these rivers before it enters Bangladesh, to divert water into the and aggravate flood problems in northern Bangladesh. Hooghly River so as to clear out the silt which accumu­ The Dacca government also claims that it will force the lates in the river during the dry season and thus keep relocation oflarge numbers of people in densely populat­ Calcutta's port open. A barrage is a low dam-like struc­ ed areas. ture which creates a body of water that can be diverted India, on the other hand, argues that the long-term into canals for both irrigation and navigation purposes. solution rests in diverting water fr om the Brahmaputra, However, because it does not have the height of a con­ which otherwise goes to waste, since increased storage of ventional dam, it cannot be used to generate hydroelec­ monsoon waters on the Ganges in Nepal and India will tric power. be required to irrigate large parts of Eastern India. At When the Farakka barrage was completed in 1975, present, only about 30 percent of the Ganges basin areas there existed an understanding that the two countries in India are irrigated. would reach an agreement on sharing water during the The water dispute between India and Bangladesh has dry season before the barrage would be operated, since, become a highly charged political issue in both countries, as the 1974 joint declaration issued after meetings be­ and it is unlikely to be resolved until past suspicions are tween the Prime Ministers of the two countries, Mujibur overcome and a friendly working relationship is estab­ ' Rahman and Indira Gandhi, stated, "There might not be lished between Delhi and Dacca.

48 International EIR March 30, 1982 EIR The special reports listed below, prepared by the EIR staff,are now available.

1. Crisis In Washington: The Fight for Control of the 2. Mexico After the Devaluation. Analysis of the inter­ Reagan Administration. Details the power grab by national assault which forced the recent peso deva­ George Bush, Alexander Haig, and James Baker III; luation, and of the new government economic mea­ the growing influence of Henry Kissinger; why Paul sures. Examines four pressure points on Mexico: new Volcker has gone unchallenged; the "Swiss group" led threats of capital flight, the danger of trade war with by Fred Ikle and Jack Kemp. Includes 25 profiles of the U.S., spillover of the Central American conflict, leading administration figures. 75 pages. $250. and flaws in the ruling PRI party. 75 pages. $250.

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EIR March 30, 1982 International 49 MiddleEast Report by 'Robert Dreyfuss

Muammar meets Bruno Occidental Oil's KGB-linked Ar­ The overweight Austrian Chancellor goes out on a limb to mand Hammer, backed Qaddafi's 1969 coup d'etat. Given this con­ welcome Qaddafi to the Socialist International. nection, the Qaddafi focus on Sicily is not surprising. In Italy, the P-2 lodge is associ­ ated with the Neapolitan Camorra and the Mafia of Sicily, the organ­ ized crime "families." For years, Israeli military intelligence was Kreisky allowed that he would not since the World War II days of closely watching Col. Muammar object to the sale of Austrian arms Lucky Luciano and Vito Qaddafi's two-day visit to Austria to Libya's lunatic. And, less than 24 Genovese's collaboration with on March 13-14, while, at the same hours after the end of Qaddafi's NATO and U.S. Naval Intelli­ time, keeping an eye on one of its Vienna escapade, Kreisky's fellow gence, the Sicilian separatist move­ own, that "Qaddafi ofIsrael," Gen. Socialist, French President Fran­ ment (spelled : Mafia) has been a Ariel Sharon. cois Mitterrand, announced that powerful fo rce on that forsaken is­ And many people are beginning France was delivering ten sophisti­ land. And, through the person of to suspect that there is more than a cated gunboats to Qaddafi, ending Socialist lawyer Michele Papa, the coincidental relationship between an arms embargo begun under godfather who set up Billy Carter's Qaddafi and Sharon. President Giscard d' Estaing. ill-starred link to Qaddafi, the Li­ That Sharon and Qaddafi might Kreisky also opened doors for byan colonel has supported Sicilian be covert but witting political allies Qaddafi in Malta, Greece, Italy, "independence. " ought not to shock readers of this and other European states. Now, in that cause, Qaddafi is column. But useful evidence But the real shocker during the lining up the finest European ter­ emerged during Qaddafi's visit to Qaddafi visitwas the public tete-a­ rorists money can buy. Vienna that might shed light on the tete between the Libyan colonel and Enter Ariel Sharon. Today, the "Sharon-Qaddafi connection." a gaggle of European terrorists, in­ kingpin of the "Sicilian" mob-in­ First of all, it deserves special cluding the chief lawyer for the deed, of all organized crime-is mention that Bruno Kreisky had Baader-Meinhof gang and repre­ M iami's Meyer Lansky. Lansky, the chutzpah to invite Qaddafi to sentatives of the Italian Red Bri­ who has extensive links with the strut and swagger in Vienna. De­ gades. At this strategy session, Israeli Mafia, helped to sponsor spite the fact that the international Qaddafiproclaimed himself fiihrer Defense Minister Sharon's uneven press has repeatedly documented of the European "peace movement." career by funding his activities. The that Qaddafi's government spon­ Qaddafi's idea of peace? He conduit of Lansky dirty money to sors training camps for both left­ suggested that these gentlemen of Sharon is Meshulam Riklis of the and right-wing terrorists, the portly the terrorist underworld prepare U.S.-based Rapid-American Cor­ Austrian Chancellor intoned that for violent assaults against NATO poration. he was unaware of any evidence facilities in Sicily! Qaddafi the!) Inside Israel, of course, Kreis­ that Qaddafi supports terrorists. hopped down to Malta for further ky's obsequious support for Qad­ Such a statement reflects either to­ talks along these lines. dafi set off some alarms, for with­ tal incompetence on the part of the Now, it is a well-known fact in out any doubt some Israelis will die Austrian intelligence service, or, Italy and elsewhere that Colonel because of Kreisky's aid to Libya. even more ominously, that ele­ Qaddafi was installed in Libya by But, among those Israeli military ments in that agency are complicit the fascist Propaganda-2 lodge of officers in the know, Sharon's in Qaddafi's activities. Italian Freemasons. The P-2 lodge, shady associations with Qaddafi's I ndeed, after sitting through exposed in 1981, is a gang of Swiss friends Lansky and Riklis just as Qaddafi calling President Reagan a and Venetian bankers and insur­ surely portend evil. And, of course, "terrorist" and calling for the over­ ance company executives who, Sharon, close to home, is a more throw of the Saudi royal fa mily, along with British Petroleum and convenient target.

50 International EIR March 30, 1982 DatelineMexico by Josefina Menendez

The PSD's business empire by EIR investigations, that two of Part 1/ of our expose: what every businessman should know Sintemex's closest collaborators come straight out of the U.S. State about the Sintemex 'consulting' operation. Department, and are linked to the networks which laid the basis for today's upheaval in Central Ameri­ ca-an issue of vital to the national security of Mexico Charles Hen Lee started his You can only burn a candle fr om corporate information to Hector State Departme ) career helping both ends fo r so long before you get Alvarez de la Cadena, director of adjust the Guatemala-Honduran burned, and it looks like Mexico's the Foreign Investments Office of border in the 1930s. He then passed Social Democrat Party (PSD) is the Industry Ministry (Sepafin), to Nelson Rockefeller's staff in the proving the adage once again. they are dealing with a man who Office of Coordinator of Latin Probably the most important was Vice-President of Accion Co­ American Affairs, stationed as dep­ irony for businessmen in the activi­ munitaria in 1975 and remains part uty military attache in Argentina ties of this most anomalous group is of the PSD inner circle today. during the crucial 1943-1945 years that, while pulling the strings of The other card Sintemex plays is that the Rockefeller networks Mexican left terrorism and radical its connections to the Harvard and worked with Peron to finda haven environmentalism (see Part I), the MIT economics faculties, presum­ for Nazis fleeingEurope. PSD runs one of the premier busi­ ably through Edmundo Sanchez In 1973, after a varied career ness consulting empires in Mexico. Aguilar who received his doctorate with the State Department and, Servicios Integrales de Mexico from Harvard. A dozen luminaries starting in 1958, with multinational (Sintemex) was fo unded in 1973 as from these faculties appear among corporations in Mexico, he became an offshoot of Accion Comunitar­ Sintemex's "international associ­ a fo unding partner of Sintemex . ia, the political vehicle of Monter­ ates," including Nobel laureate and From joint days in Argentina rey business leader Roberto Gua­ RAND product, Paul Samuelson, during the war, Lee drew on Charl­ jardo Suarez and a group of whiz­ and DRI's Otto Eckstein. es Burrows to be Sintemex's Wash­ kid proteges, the brothers Sanchez It's not at all clear how many of ington representative. A career for­ Aguilar-Luis, Edgardo, Edmun­ Sintemex's business clients know eign service officer, Burrows was do, and Ricardo. they are dealing with an outfit ambassador from 1960-65 in the The whole crew moved to Mexi­ which simultaneously gives direc­ United Brands plantation known as co City to do sensitive consulting tion to Mexico's terrorist and envi­ Honduras-the same United work for government and private ronmentalist left. Brands which has fomented the sector clients, in Mexico and N or is it clear how many on the Central American bloodshed from abroad, fr om pi ush quarters on A v­ left know what the PSD/Sintemex "right" and "left ." enida Escobedo. In 1979 the more is up to in the world of big business. As director of Central Ameri­ directly political work changed la­ The PSD yelped in a recent anti­ can Affairs back in the State De­ bels-Accion Communitaria be­ nuclear tirade in its leftistma gazine partment from 1965-69, Burrows came the PSD-but little was Di. that Mexican gro ups support­ supervised the buildup toward the changed in terms of personnel. Luis ing Mexico's fa r-reaching nuclear 1969 conflict between EI Salvador Sanchez Aguilar became secretary­ energy program were doing the and Honduras. The role of Lee and general of the PSD while continu­ dirty work of the "nuclear multina­ Burrows in Sintemex is now raising ing as president ofSintemex. tionals" -never mentioning that questions over the legality of the One of the cards Sintemex plays one of Sintemex's own principal registration of the PSD as an offi­ today is its access to inside govern­ fo reign clients is a major nuclear cial party. No Mexican party is al­ ment information. Few foreign supplier. lowed to serve foreign interests. businessmen are probably aware Most explosive of all for PSD­ Ha, eLc PSD stepped outside the that when they provide internal watchers is the fact, just unearthed bounds?

EIR March 30, 1982 International 51 International Intelligence

"to the point where it has now adopted 82 tanks and MIG jets. However, Delhi Peking backs Third World the role of postman, a carrier of mes­ sources said India is not interested in new sages." arms deals at this time. against the West "We are threatened by fragmenta­ tion," Hussein said. "We are fast reach­ Chinese Premier Zhao Ziyang, in a meet­ ing the point at which hope is lost. Would ing in Peking this month with a minister you like to see the entire area erupt, from the West African country of Upper which could have a devastating effect on Club of Rome routed at Volta, emphasized in his remarks an at­ the rest of the world and possibly endan­ its Paris conference tack on the Western nation's policy to­ ger world peace?" ward the Third World. Only a few He described Israel as "bellicose" and The Club of Rome's two-day public con­ months ago Zhao would have highlight­ almost out of control, and noted that fe rence in Paris March 10-11 ended as an ed "Soviet hegemonism" in such a meet­ Israel is aiding Iran to undermine the embarassment for its fo under and chief ing, but now in China's international Arab Gulf states and Iraq. "If Iraq falls ideologue, Aurelio Peccei, the man who diplomacy, as well as in its internal press there will be all sorts of dangers," said claims that genocide 100 times worse articles, the Dengists in Peking are clear­ Hussein, who also criticized Syria for than that carried out by Adolf Hitler, is a ly communicating they have turned away helping the Khomeini regime. new fo rm of humanism. from the "China Card." Peccei and his fe llow Club of Rome " The present struggle of ThirdWorl d leaders had designed the conference to countries is to strengthen unity and strive co-op one of the remaining bastions of for the new international economic or­ pro-industrial development forces in der," Zhao said, which he explained, "is SlJviet military visits France, the engineering profession. But a continuation of the struggles that var­ intervention by the European Labor Par­ ious countries fo ught to win political India; message to U.S. ? ty (POE) and its collaborators within the independence in the 1950�." French Right to Life movement undercut China recently sent three economic Soviet Defense Minister Marshal Dimitri the Club's aims, significantlyand Club of experts to the Soviet Union to "study P. Ustinov led an unprecedentedly large, Rome members were forced to publicly Soviet economic management methods," 40-member military delegation to India deny the Club's Malthusian policies. the first such delegation in almost 20 for a fi ve-day visit which began March A letter written in the name of Cam­ years. There is little speculation that 15. New Delhi sources interpret the move bodian butcher Pol Pot politely thanking these actions are a prelude to a re-crea­ as Moscow demonstrating to the United Peccei for the ideas that enabled Pol Pot tion of the original Sino-Soviet alliance, States and Pakistan its concern over U.S. to murder more than 3 million Cambo­ but they do mark a significant down­ arm supplies to Pakistan and providing dians in the late 1970s circulated among grading of China's previous anti-Soviet Pakistan with military bases-which the the 6,000 targeted engineering students. fo reign policy. Soviets have emphasized could lead to Forewarned, only 200 of the students Pakistani "adventurism" toward India. showed up fo r the occasion. In addition to Ustinov, other high­ Club of Rome leader Andre Danzin, ranking officialsin the delegation includ­ head of the com puter science department Hussein: 'A merican ed Naval Commander Admiral Gorsh­ of UNESCO in Paris, claimed that the kov and the deputy chief of staff of the Club of Rome was being wrongly ac­ interests in jeopardy ' entire armed fo rces. cused of being Malthusian, and that he Contrary to U .S. press reports, the himself was definitely pro-nuclear devel­ King Hussein of Jordan warned in an Soviet leaders, who met with PrimeMin­ opment-while standing on the podium interview March 18 in the New York ister Indira Gandhi and Defense Minister next to Club fo under Peccei. Peccei at­ Times that the Middle East is facing a Venkatarama, supported the idea of In­ tempted to intervene, but did not succeed new war and that American interests in dia continuing dialogue with both Paki­ before Danzin continued to di ssociate the area are seriously threatened. stan and China, according to New Delhi himself from the theories outlined in the "We are passing through one of the sources. The Soviets apparently believe Club-commissioned manual fo r its envi­ most critical stages we have witnessed in this would give these nations a second sioned post-industrial society, Limits to our time," he said. "It is far more serious option other than direct military collab­ Growth. "One must be realistic about the than it has ever been." He derided the oration with Washington. exponential population growth which fa ilure of the United States to adopt an The Soviet officials told Indian lead­ must be relatively curbed," he said, and aggressive diplomatic strategy to compel ers that Moscow is prepared to make noted that he had not been a member of Israel to get out of the occupied territo­ available new arms deals to match the the organization when the document was ries, saying that the U.S. role has eroded Pakistani build-up, such as the latest T- published in 1972.

52 International EIR March 30, 1982 Briefly

• CLAUDE ALBERT of the Eu­ ropean Labor Party won 4 percent of the vote in a March 14 local election in the city of Hayagne, By the second day, Danzin dropped near Metz in France's industrial his arguments on population completely Lorraine region. Her campaign and tried to appeal to his audience, now Last minute turn in had become a focal point for local less than 80 persons with an "anti-ecolo­ Colombian elections opposition to the European Com­ gist" advocacy of developing the Third munity steel plan that has thrown World. He went so far as to label the Congressional elections in Colombia thousands of Lorraine steelwork­ membership of the Club's American or­ March 14, which also served as a presi­ ers out of work. PrOVIded her ganization as irresponsible environmen­ dential primary, broke the mold of" Jter Gaullist opponent takes up her talists. apathy which has characterized succes­ program for the reindustrializa­ sive elections for years in that Latin tion of the region, she has called American country. The majority of the on her 4 percent of the electorate seats were seized by the forces of "offi­ Sharon launches new to vote for the Gaullist candidate cial" Liberal presidential candidate Al­ in the run-off election. crusade on West Bank fonso Lopez Michelsen-strongly backed by Colombia's drug Mafias.The • WEST GERMANY politely Israeli military authorities on the West politically critical capital city of Bogota, told an American delegation visit­ Bank under Israeli Defense Minister Ar­ however, was unexpectedly swept by the ing Bonn that it is not interested in iel Sharon and Col. Menachem Milson slate ofdissident Liberal Party challenger U.S. proposals for new economic March 18 suspended and dissolved the Luis Carlos Galan. sanctions against the Soviet municipal council of the city of EI-Bireh, Galan, the underdog going into the Union. The delegation, led by Un­ ousted the lawfully elected Mayor, and elections, adopted a populist campaign der Secretary of State James Buck­ installed an Israeli army junta to run the of attacking the mass corruption plagu­ ley, met with German officials on town. It is the first time in 15 years of ing Colombian political life, and the drug the first leg of its European tour to Israeli occupation that such an action has problem. Toward the end of his cam­ convince allies to further sever been taken. paign he mouthed the urgency of revers­ trade with the East. A spokesman In response, mayors of large West ing the economic collapse. Though he for the German Foreign Ministry Bank cities, including Nablus, Bethle­ did not win the election, the massive said the talks "were without any hem, Hebron, and Ramallah , joined a turnout in Bogota for Galan on the basis results or practical implications." call for a general strike. Israel denounced of that program surprised everyone-in­ the strike call and threatened to dissolve cluding Galan's political forecasters. • JAPAN'S Prime Minister Su­ the municipal authorities throughout the Lopez Michelson's winnings were zuki charged the International territory. centered, not surprisingly, along the Whaling Commission March 17 Mafia-ridden Atlantic Coast, as well as The Israeli action against EI-Bireh with trying to impose an "unscien­ in the provinces best known for growing was taken afterthe town's Mayor refused tific policy" with its proposed the marijuana and coca whose illegal to meet with Col. Milson, the, Sharon­ moratorium on the killing of revenues lubricated the Lopez electoral appointed West Bank Governor. Under whales. It has been scientifically machine. The Conservative Party ma­ Milson's direction, a crackdown on po­ proven that the world's whale pop­ chine, unified for the first time in dec­ litical and civil liberties has been ulation will increase, he said. launched that has driven thousands of ades, tailed Lopez's 2.1 million votes with 2 miilion of their own. The 650,000 votes West Bank Arabs out of the country. • MICHAEL LEDEEN, Alex­ garnered nationally by the Galan forces, In Lebanon, the PLO has issued a call ander Haig's European affairs ad­ insufficientto make Galan a serious pres­ to the United Nations Security Council viser made famous for his role in idential challenger, were significant not for immediate action to stop Israel's es­ the neofascist "P-2" conspiracy, in numbers but as an indication of a calation. held a little-publicized meeting According to Israeli sources, Sharon changing political tide within the Colom­ with West German Development is consolidating power in Israel-despite bian population. Minister Rainer Offergeld March opposition to his extremism and reputed Significantly , Cardinal Munoz 10. Offergeld had stopped at ties with organized crime-by establish­ Duque took the opportunity of Sunday Dulles airport in Washington on ing an alliance with Israeli Chief of Staff Mass on election day to appeal to the his way to Nicaragua to meet with Rafael Eytan and Yehoshua Saguy, Colombian electorate to vote against the Sandinista leaders. Ledeen report­ chief of military intelligence. Inside the "candidates of abortion and divorce. " edly showed Offergeld photo­ Israeli armed fo rces, however, many gen­ This public intervention by the powerful graphs purporting to show Soviet­ erals are said to be working against the Catholic Church helped to define the style facilities in Nicaragua. Defense Minister, and are seeking to election issue around the question of have him ousted. morality, inseparable from drugs.

EIR March 30, 1982 International 53 �TIillNational

Vietnam war planners launch peace movement

by Lonnie Wolfe

During the month of March, the U.S. media suddenly point of staging riots such as those that have hit Western uncovered a fu ll-blown grass-roots American version of Europe, those days may not be far off. Plans are in the the European peace and anti-nuclear movement. But the works fo r a mass rally in New York in June where new u.s. "peace" movement is neither spontaneous, nor organizers hope to have a quarter of a million people; does it have anything to do with peace. they expect "some violent confrontations at the fringes." Rather, what is being unleashed is a movement to As readers of this journal know, the plans fo r an bring down the Reagan administration, orchestrated by American peace movement were announced at a Decem­ the very same institutions and individuals who created ber 1980 meeting of European and American Socialist and ran the Vietnam War-and then deployed the "anti- . International leaders in Washington. Their plan identi­ war" movement to topple President Lyndon Johnson in fied 1982 as the takeoff point for a movement capitalizing 1968. on Americans' growing anxiety about nuclear war and The centerpiece of the new peace movement is a the economy. The same type of movement was to be proposal for a freeze on the deployment of nuclear created in 1981 in Europe and 'deployed against German weapons systems by both the United States and the Chancellor Helmut Schmidt. Soviet Union. Most Americans had never heard of the A listing of the stringpullers of the freeze campaign proposal until the media blitz began fo llowing the intro­ reveals just how cynical is the game that Kennedy and duction of a bi-partisan freeze resolution into Congress his cohorts are playing. Among the signers of the call for on March II by 130 Congressmen and Senators, includ­ the nuclear freeze resolution are such "peace lovers" as ing Senators Edward Kennedy (D-Mass.) and Mark former Central Intelligence Agency Director William Hatfield(R-Or e.). Colby, the man who headed the Operation Phoenix Privately, the organizers of the freeze campaign say extermination program in Vietnam; Henry Cabot Lodge, they don't intend Kennedy's resolution to pass. A spokes­ John F. Kennedy's ambassador to South Vietnam during man for the Institute for Defense and Disarmament the early escalation phase of the war; George BaH, a man Studies (lDDS) near Boston, a leading thinktank and who has advocated the reduction of the Mexican popu­ coordinating point for the freeze campaign, acknowl­ lation by half; and Averell Harriman, who shares with edges that "We are out to oust the Reagan government, Ball the distinction of having been a U.S. Undersecretary like the Germans [the peace movement in West Ger­ of State in the Vietnam era. Dozens of other figures many-ed.] are out to dump Schmidt," referring to the associated with the New York Council on Foreign Rela­ Chancellor, Mr. Reagan's friend and constructive critic. tions, the higher-level U.S. coordination center for this And while the U.S. peace movement is not yet at the "peace" movement, have signed on.

54 National EIR March 30, 1982 The 'body-count' policy content Foreign Relations Committee, a co-signer of the reso­ The presence of these figures, who have had so much lution and a registered agent of the terrorist Libyan to do with what has been evil in U.S. foreign policy over government, was appearing before the House Subcom­ the past several decades, and especially with the national mittee chaired by freeze co-sponsor Rep. Ron DelIums debacle that was Vietnam, betrays the actual policy (D-Ca1.). McNamara, according to Fulbright's testi­ content for which the current media-fanned "peace" mony, has said in the 1960s that the United States could upsurge is a cover: the genocidal population-reduction destroy the Soviet lJ.nion with only 400 ICBMS. Why policies of the Carter administration's Global 2000 Re­ continue a strategic weapons development and produc­ port. Robert McNamara, the architect of the Vietnam tion program when we have far more than 9,000 strateg­ War as Kennedy's Defense Secretary and the recently ic nuclear warheads, Fulbright asked, especialIy when retired President of the World Bank, spelled out the we must cut our budget deficit? connection in an interview made available to this publi­ Fulbright proposed scrapping strategic weapons de­ cation. velopment altogether in favor of a modest conventional . "The pressing need to cut world population," said arms buildup. Asked by Dellums how the population McNamara, can only be achieved "by a change in could be mobilized behind the freeze, the fo rmer Sena­ current U.S. government policy." He said that Ronald tor cited the general fear Of war and added, the "wors­ Reagan will never tolerate the fu lI implementation of ening. economic situation." The same connection was Global 2000 policy doctrine, which calIs for the elimi­ made March 14 by Ted Kennedy, in a nationally nation of more than 2 biIIion people from the world. televised interview where he said the freeze would make The peace movement and similar moves by the Socialist possible drastic cutbacks in defense spending. International against Presdient Reagan will weaken the This coheres with McNamara's population doctrine. government and eventually lead to his removal, Mc­ As demanded by fo rmer Vietnam War Chief of Staff, Namara stated. retired General Maxwell Taylor, the reason fo r a con­ The former Defense Secretary revealed that he is ventional build-up is to create the basis for the deploy­ working with a group of policy makers "outside the ment of troops into the developing sector. These troops government," including fo rmer Secretary of State Cyrus would become the new colonial forces to police "surro­ Vance, Trilateral Commission head David Rockefeller, gate warfare" that would depopulate the developing and former Undersecretary of State Warren Christopher sector. This warfare is predicted by such figures as to promote attacks on Reagan administration foreign "Body Count" McNamara and by Taylor, who stated and defense policy. Christopher has already signed the last year that he has written off more than a billion call for the freeze resolution, while sources close to people's lives in the Third World as beyond saving, and Kennedy's office say that Vance, who co-chairs the that the only problem was how to manage that outcome. Socialist International-linked Palme Commission on To the extent that NATO is forced, by "peace Disarmament Issues, is about to sign on. movements" here and in Europe and by "budget cris­ In late February, a fo rmer top Carter administration es," to adopt a conventional-war orientation, it is official who had already signed the freeze resolution calI moving toward overseeing the genocide in the develop­ told an interviewer that David RockefelIer and the ing sector desired by McNamara and company. Trilateral Commission had decided to "oust the Reagan administration" and stage a policy coup on defense and The origins of the freeze fo reign policy in particular using their networks in The American freeze movement was started by a Congress. He predicted the emergence of a "street supporter of "conventional deterrence." movement" against the Reagan administration. The nuclear freeze resolution is the brainchild of McNamara has not signed the fr eeze resolution, Randall Forsberg, who heads the Institute for Defense though he indicated sympathy towards its organizers and Disarmament Studies. Forsberg spent seven years and their aims. He plans to make a speech attacking as a top analyst for the Stockholm International Peace Reagan's nuclear arms policy in the near future. Research Institute (SIPRI), a group formed by circles around the late British anti-science guru Bertrand Rus­ The conventional build-up as popUlation policy sell and regarded as the top thinktank of the European Robert McNamara is best known to the American peace movement. SIPRI operatives have recently been population for his ghoulish briefings to the press during promoting schemes for a European build-up of conven­ the Vietnam War on the enemy "body count," and it tional military hardware as an alternative to further was the McNamara of that epoch who was dragged out nuclear weapons deployment. These proposals parallel March 15 to justify the nuclear freeze resolution by those of a NATO-linked "European Security Study" another popUlation-reduction fanatic, J. William Ful­ directed by Massachusetts Institute of Technology pro­ bright. Fulbright, the former chairman of the Senate fe ssor and Club of Rome executive member Carroll

EIR March 30, 1982 National 55 Wilson. Forsberg maintains frequent contact with the leaders of the European peace movement, including E.P. Thompson, the Russellite British peace leader and the former head of the Committee for Nuclear Disarma­ ment, and Petra Kelley, the former staff aide to Senator Kennedy and current European Economic Community official who heads West Germany's Green Party. Fors­ berg has been to Europe "three or four times this year" Congress leaps into according to a close aide. Kelley and other freeze leaders will meet with six Volcker budget trap European peace movement leaders who will tour 50 American cities starting March 20. These same Euro­ by Graham Lowry, U.S. Editor pean leaders, who are currently planning a mass dem­ onstration in Bonn when President Reagan travels there in June for the NATO summit, will also meet with the Under marching orders from the financial centers of the Council on Foreign Relations in New York City, as European oligarchy, the Republican and Democratic well as the New York Times>edit orial board. leaderships of the United States Congress have ganged According to an aide to Forsberg, the first freeze up to try to stampede President Reagan into scrapping proposal was introduced in 1979 by Senator Mark his proposed 1983 budget and accepting the extreme Hatfield as an amendment to the SALT II treaty. Its austerity package demanded by Federal Reserve Chair­ timing coincides with the first moves to build the man Paul Volcker. During the week of March 15, a European peace movement in response to plans to barrage of public demands to slash federal deficits, made modernize NATO's theater nuclear weapons. Freeze by the International Monetary Fund, Wall Street, and resolutions have been circulated through New England the Fed itself, sent much of the same crew on Capitol Hill town meetings and state legislatures. Organization and who backed the railroading of Harrison Williams scur- . leadership were provided by such sources as the Ameri­ rying forth with "bipartisan" calls for increased budget can Friends Service Committee, the Unitarian Church, cuts and tax increases. and the Jesuit Georgetown University and its President, Typifying the pro-VoJcker fo rces dictating this fur­ Father Healy. ther asssault on both the U.S. economy and President Reagan, IMF Managing Director Jacques de Larosiere June demonstration planned called on Washington March 16 to muster the "political It was not until after freeze resolutions had passed courage" to lower the budget deficit-or suffer continu­ scores of town meetings and parts of six state legisla­ ing high interest rates. This intrusion into U.S. affairs , tures that the Council on Foreign Relations trotted out was enthusiastically endorsed the next day by a prune­ Kennedy and other Congressmen as spokesmen and mouthed New York Times. Whining as though Reagan's added its own heavyweights like Harriman as public refusal to cut entitlements, slash defense, and raise taxes backers. National media coverage began in late Febru­ were a repudiation of the deity, the Times asked edito­ ary and is exp�cted to escalate as the resolution is rially, "Can he continue to dismiss doubters. like Mr. de brought to a vote in Septem ber or October. LarQsiere?" The freeze organizers plan a mass rally in front of On the same day, Wall Street economist Henry Kauf­ the United Nations Special Session on Disarmament man of Salomon Brothers told the House Budget Com­ June 12. The freeze movement, now headquartered in mittee that unless the budget is slashed now, interest St. Louis, claims 20,000 organizers and "millions of rates will rise rapidly and raise the threat of 1930s-style supporters." By "importing" Europeans and Japanese depression. Wall Street, Kaufman declared, has "lost for the event, organizers boast they will have "at least confidence" in President Reagan's economic program. 250,000 people in the streets of New York." Federal Reseve Board governor Henry Wallich, a Where is the money coming from to finance all this? mouthpiece for the Swiss-based Bank for International The European green leaders who will arrive this month Settlements, told foreign correspondents at the same are planning meetings with major fo undations, whose time that the Fed's tight money policy would continue heads coincide with the Council on Foreign Relations unless "there were an incomes policy, no farm price crowd. And, freeze organizers claim, they are getting supports, a reduction in the budget, [and] a $10 [per backing from "prominent and concerned citizens"­ barrel] oil import tax." Privately, the BIS and the Organ­ like those who ran both sides of the Vietnam catastro­ ization for Economic Development are running the same phe. demand for greater budget austerity past anyone who

56 National EIR March 30, 1982 will listen . Senate Dem6crats quickly convened a caucus March 16 and endorsed an open letter to Reagan, over the Science & Technology signature of Minority Leader Robert Byrd (W.Va.), calling the currently proj ected deficit unacceptable, and demanding that Reagan submit a new budget, including a deferral of the 1983 tax cut and a commitment to balance the budget by 1985. Sen. Paul Laxalt (R-Nev.), immediately embraced the Democrats' call for a bal­ anced budget, calling it "the most significant develop­ ment we've had in trying to reach a consensus" and NASA chief: 'space predicting "it should be a tremendous driving force" for reaching a bipartisan "solution." station next step' This " bipartisan" assault on President Reagan has been put forward under the fr audulent claim that the by Marsha Freeman, ballooning federal deficit is the cause of continuing high Science & Technology Editor interest rates-a hoax that even Volcker repudiated un­ der sharp questioning at a recent congressional hearing. Carrying the absurdity further, congressional leaders are In an interview with the EIR on March 4, James Beggs, now proposing to implement Volcker's program for the Administrator of the National Aeronautics and greater austerity as the means of satisfying constituency Space Administration, reaffirmedhis commitment to the demands that depression-enforcing high. interest rates idea of a permanent presence in space as the "next logical come down. Senate Finance Committee Chairman Rob­ step" in the manned space program. In the recent period ert Dole (R-Kan.), warning that Republicans face defeats this concept has been under attack from spokesmen from in the November elections and possible loss of control of the office of the President's Science Adviser, Dr. George the Senate, chimed in the day the Byrd letter was an­ Keyworth, and fr om Keyworth himself. nounced, "If the President has good political antennae, "We are still studying the permanent manned pres­ he'll give in some." ence in space because we think that it's the next logical Majority Leader Howard Baker (R-Tenn.) and step, for a lot of reasons, not the least of which is to House Minority Leader Bob Michel (R-I1I.) joined Lax­ figure out how to have engineers and scientists working alt in delivering a warning to Reagan that "unless these in space," Beggs stated. "I think space is no different budget numbers are improved and interest rates are than anything that we've done on Earth. We've got to try brought down, there will be serious political as well as things out and then fix them and change them and it is economic problems." better if you can do that in orbit than bring things back As Advisory Board Chairman Lyndon LaRouche of to Earth each time." the National Democratic Policy Committee (NDPC) "You should be able to work in space and work the warned in a March 8 release which has saturated Capitol problems out and proceed to bring things, step by step, Hill, the threat of irreversible depression makes all this to commercial reality." Beggs stressed that this experi­ haggling over budget cuts and tax increases "sheer idio­ ence and uninterrupted access to space is what will make cy ." Urging immediate passage of President Reagan's industrial processing in space a commercial concern. proposals, LaRouche emphasized, "It is worse than a "To do this you are going to have to have some kind waste of time to improve the submitted budget now, an of space station. The station also will enable us to get absolutely worthless exercise in legislative theatrics as information and develop techniques for operating in long as the issue of Paul Volcker and Volcker's economy­ space which will make possible moving men into geosyn­ wrecking policies is not resolved." chronous orbit [22,300mi les above the Earthl, then back In a clear response to growing pressure from the to the Moon, and then maybe back to Mars ....I think NDPC, which has made Volcker its main issue for two eventually there will be a move toward that, starting with years and has organized over 250 chapters nationwide in robotic stations on the Moon, and maybe Mars and then the last six weeks, Byrd's letter to Reagan concluded with expanding from that. some further hokum about the need for "a more moder­ "We still feel strongly [at NASAl that that's the case, ate monetary policy" in order to reduce interest rates and but in the launching of a space station program I would permit economic recovery. Byrd urged Reagan to strike not want to give up any of the other parts of NASA's . a deal with the Fed to adopt "a less restrictive monetary programs." policy," in return/or the same "fiscal tightening" Volcker Earlier, Beggs had stressed the importance of the has been demanding. often-threatened space science programs. Duril).g the

EIR March 30, 1982 National 57 deliberations for the FY83 NASA budget Dr. Keyworth as a separate item so we are not constrained by having and other representatives from the White House were to very strictly work on only what the military might noncommittal toward continuing the crucial planetary want us to work on. There's a political problem because exploration programs. Answering a question about the you have the case of restrictions that Congress has put next 20 years for the space program, Beggs stated that on military research, like the Mansfield amendment NASA wants to continue "what we like to describe [which in the 1960s restricted government ..funds for around here, as a 'balanced' program. We have always military research at universities], which are inhibiting in fe lt that the strong program that has existed for over the their effect on a good part of broad, fo rward-looking past 20 years in space science is the heart of our program. research programs. "It enables us to understand our environment and it One of the most controversial programs shared by also enables us to project into the future, things that NASA and the Air Force has been the development of might be useful fallout activities which have benefits fo r a high-energy upper stage which would be used to the country, and the world. The planetary exploration launch spacecraft fr om the Shuttle while in low-Earth program-the exploration of the universe in general­ orbit [300 miles above the surface of the Earth] with has been important in three ways: first, it helps us under­ commerical, scientific, and military uses. Many have stand both our origins and where we are going; second, claimed that the Air Force has dictated the major design it stimulates the entry into science and engineering of fo r the upper stage to the detriment of the NASA effort. young people, because nothing is more exciting than that "The question of a high energy stage in the Shuttle exploration activity; and third, it has very important is an issue of national policy which effects a lot of economic fa llout. different things," Beggs explained. "It would be nice to have the military join with us in a joint program of that NASA and the military type, but my hope would be that we could design an One of the key questions raised in the budget process upper stage in such a way that it would serve all of the itself and in the congressional deliberations on the market-not only the military, not only NASA's plane­ administration's request fo r NASA funding has been tary programs like Galileo and the International Solar the appropriate relationship between the civilian space Polar Mission, but also the commercial programs which program and the military. In a number of cases, tech­ will also eventually require higher lift to geosynchron­ nology development programs that have been under ous orbit. ...If we build one that is not flexibleand not civilian development by NASA have shifted over to Air priced so that it can handle all of those markets, we'll Force funding. This includes advanced communications be in trouble. The importance there is that NASA lead technology which will be used by both the military and the effort, or that whoever leads the effort in industry, commercial sector. be very sensitive to the fact that it has mUltiple uses." Beggs firmly indicated his judgment that the best place for advanced R&D development is in the civilian Making a policy fight sector. Beggs had stiff opposition in his fightfor the FY83 "Our research at NASA supports the development NASA budget over the past year and the FY84 budget of military aircraft and space applications. We've always cycle will be no better. NASA requested $7 billion, done that in the agency, and I hope we always will. which the Office of Management and Budget trimmed "It's been a very good program. It's benefitted the to $6.6 billion, but the OMB had wanted the space military and it's benefitted the civil industry because programs cut to $5 billion. No support has come from when you start a piece of research you don't necessarily Dr. Keyworth. know what the outcome will be. I think it's important On the space station initiative, Beggs stated, "We that that research be done in an open agency like NASA still have a lot of people to convince." When queried as because the results of that research can be made avail­ to whether this included the Science Adviser, Beggs able to both the civil and military side. I would argue responded that Keyworth "is sticking a needle in us and that that's the most efficient way of doing it." saying, 'I don't see a hard requirement for the station,' Responding to complaints from Senator Harrison and he's right. ...The hard requirement for the Apollo Schmitt (R-N.M.) and others that the military is not program was not to go to the Moon, but to out-distance paying for its share of space technology development, the Soviets. I don't think that that's a compelling reason particularly in the Space Shuttle program, Beggs indi­ any more. So we've got to sharpen our thought process­ cated that there are advantages in keyping as much of es and decide exactly what that requirement is when we the programs funded by NASA as possible. look at that 20-year planning cycle. I think one of the "I do not believe that just because some of our work things that this country may have been lacking in the has military applications, that the military should pay last ten years is clearly defined programs as we did in for it. Quite the contrary, I think it ought to be funded the 1960s."

58 National EIR March 30, 1982 Eye on Wa shington by Stanley Ezrol

In its last paragraph, the state­ was economic gadfly Jack Kemp (N.Y.), who has dominated past Republicans concede ment warned Congress: "unless you come to your senses and dump Tidewater conferences with his doom-privately Paul Volcker, the voters of this na­ rhetoric about supply side theory Every spring for the past five years, tion are going to lynch you politi­ and economic growth. Asked about about 100 elected Republican of­ cally at the polls." One individual his quiescence, Kemp said, "I fice-holders have gathered at the close to the political (if not econom­ didn't think it would be worth Tidewater Hotel on Maryland's ic) thinking of the White House bringing up anything, except may­ Eastern Shore for a weekend of in­ said, "I agree with his statement, be a gold proposal; besides, the formal policy discussion. This but most emphatically with the last only one worth influencing at this year's proceedings resembled noth­ paragraph. We have been embrac- , point is the President." ing less than a herd of lemmings ing Volcker instead of attacking Conference organizer Sen. Bob rushing to the sea. Shepherded by him." But he concluded, "I don't Packwood (Ore.), a leading popu­ fo ur cabinet secretaries, Budget Di­ see anything changing in the short lation-control advocate, carefully rector David Stockman, and Spe­ term." kept all of the discussion within cial Trade Representative Bill One Senator, having read the controlled bounds. On Central Brock, the Republicans passed statement earlier in the day, ques­ America, Packwood provocatively three windy resolutions commend­ tioned, "You talk about a May offered a Haig-like resolution on ing the administration's initiatives conjunctural crisis: What makes using armed force, if necessary, in on the economy, federalism, and you think we have that long?" He Central America, to keep it within Central America. advocated legislating a ceiling on the U.S. sphere of influence.A sub­ In particular, they promised to interest rates, noting that the Japa­ stitute amendment praised the Rea­ burrow even deeper into the eco­ nese would have long since taken gan administration's Caribbean nomic morass of the budget debate that kind of action if interest rates basin free-enterprise initiative-a as advocated by Federal Reserve were destroying their economy. Dope, Inc.-authored proposal to Board Chairman Paul Volcker and turn the region into a drug-produc­ his Swiss and London banking ing paradise. Both "alternatives" masters. Public insanity will have the ultimate effect of mas­ These, and other behind-the­ sive depopulation and disruption of scenes encounters, were the only the region. Private pessimism discussions of any economic sub­ But, in private discussions with stance at Tidewater. The budget EIR correspondents, many of the resolution passed by the conference Rebel's reward Tidewater attendees acknowledged has, among its many provisions, a Packwood recently came under that political and economic panic is section praising the Reagan admin­ pressure from the administration to gripping large portions of Repub­ istration fo r bringing interest rates recant certain comments where he lican officialdom. The statement by down by 25 percent from Carter's openly criticized the President and National Democratic Policy Com­ record high rates. The resolution his economic policies. The liberal mittee Advisory Board Chairman concluded that Reagan's program Senator, who arranged the confer­ Lyndon H. LaRouche, Jr., entitled is working, "by virtue of progress ence by seating participants at ta­ "No Budget Cuts, No Tax Increas­ to date and will be most successfully bles named after Republican his­ es," advocating quick dismissal of accomplished by action of the Con­ torical figures, was asked if he had the meaningless budget debate and gress during its consideration of the seated himself purposely at the ta­ even quicker attention to Volcker's budget taking the steps necessary ble named after John C. Fremont, depression-producing high interest to achieve the goal of a balanced the man thrown out of the U.S. rates, was appreciatively received budget by 1985." Even those few Army fo r mutiny some time before by many of the senior administra­ participants who warned of the his nomination as the first Repub­ tion and congressional figures pres­ consequences of ignoring high in­ lican presidential candidate. Pack­ ent. At one point, two cabinet terest rates, such as Sen. Mark An­ wood claimed ignorance of that members were spied in a corner drews (N.D.) and Sen. Larry Pres­ historical fact, but added that per­ comparing notes on the LaRouche sler (S.D.) had no alternatives to haps it shows that "the rebels some­ statement. offer. Conspicuous in his silence times get rewarded."

EIR March 30, 1982 National 59 Congressional Closeup by Barbara Dreyfuss and Susan Kokinda

Congress calls on Reagan March 9 to hear Agriculture Sec­ of the fu nd. "It seems that, so far, to back Global 2000 retary Block, U.S. Trade Repre­ officials who control budget deci­ Massachusetts Democrat Rep. Ni­ sentative Bill Brock and other of­ sions have not been willing to give cholas Mavroules has introduced a ficials on the problems and pros­ export credit the priority many of resolution calling on the Reagan pects for U.S. agricultural pro­ us-in both parties-believe it de­ administration to implement var­ grams. In particular, the hearings serves in the national interest. ... ious important aspects ofthe Carter focused on the export credit re­ Perhaps we may want to invite Mr. administration's Global 2000 Re­ volving fu nd authorized by Con­ Stockman to discuss these matters port which aims at reducing world gress in the 198 1 omnibus farm with us." population levels by 2 billion peo­ bill. Under that Act, funds would ple by the year 2000. be loaned to overseas customers to The Mavroules Resolution, promote market development and H.R.275, states, "It is the sense of expansion. The fu nd is considered Tower states the Congress that the executive a revolving one because as princi­ defense priorities branch should begin to systemati­ pal and interest payments are paid Testifying before the Senate Budg­ cally coordinate and improve its back to the Agriculture Depart­ et Committee on March 18, Senate projections of world population, ment, the money is reloaned to Armed Services Committee Chair­ resource, and environmental foreign buyers of U.S. farm goods. man John Tower (R-Tex:) advo­ trends, and their analysis, as out­ At the hearings, Secretary cated reducing the size of the U.S. lined in the Global 2000st udy." Block endorsed the program, say­ military fo rce structure rather than In introducing his resolution, ing that he believes it sound and cutting back in the areas of readi­ Mavroules indicated his full ap­ useful. But David Stockman has ness or modernization. Tower proval for Global 2000, a document ensured that the administration's added, "I should emphasize that I developed largely under the influ­ budget does not recommend any do not favor these force structure ence of the genocidal Club of fu nds for it. reductions, but will pursue them if Rome. "I believe that Global 2000 House Agriculture Committee budget pressures become too se­ is a landmark event, and that it members are adamant that the vere." deserves serious attention from the fund begin operation, particularly Senate Budget Committee current administration. If we ig­ now, when Paul Volcker's usurious Chairman Pete Domenici (R­ nore it, we do so at our own peril," interest rates are devastating U.S. N.M.) agreed with Tower that "it he said. agricultural production. The com­ would be a grave error to reduce Mavroules has just sent out a mittee voted to recommend to the significantly our near and long­ Dear Colleague letter soliciting Budget Committee that the FY term defense commitment, al­ support from his fellow Congress­ 1983 budget contain the funds for though we may disagree on what men. Rep. Les Aucoin (D-Ore.) the program. The committee be­ 'significant' means." Domenici has agreed to cosponsor the reso­ lieves that between $500 million agreed with Tower that defense lution. and $1 billion is needed. cuts should not be made in ex­ Republicans on the committee, change fo r increases in domestic under the leadership of the ranking spending. "I do not intend to sup­ minority member William Wamp­ port significantcuts in our military Why is Stockman ler (Va.), sent a letter to the Presi­ spending unless they come as part against farm exports? dent stressing their backing for the of a package that dramatically re­ OMB Director David Stockman's fu nd and urging him to support it. duces domestic spending and sub­ sabotage of Congressional efforts Following the March 9 hear­ stantially changes the revenue base to establish an export credit fund ing, Agriculture Committee Chair­ of the federal government," he to foster agricultural exports is man Kiki de la Garza (D-Tex.) said. being hotly discussed in the House declared in a statement March IO Tower concluded his recom­ Agriculture Committee. that Stockman seems to bethe key mendations by warning that if The committee held hearings person preventing implementation force structure red uctions were

60 National EIR March 30, 1982 carried out, the United States subcommittee of the Senate Ener­ the open border, guest-worker ap­ would have to make some of those gy Committee. Melcher pointed proach proposed by President reductions overseas. "Thus in the out that according to the adminis­ Reagan to further strengthen U.S. final analysis reducing force struc­ tration's own criteria, the MHO relations with Mexico; it adopts ture means that some foreign poli­ process, which produces electricity the popUlation control strategy of cy commitments will not be met." from coal by an efficient and envi­ the Hesburgh Commission. Tower was not specific as to ronmentally clean method, should In introducing the bill, Simp­ where these reductions in commit­ be one of the prime candidates for son said on the Senate floor, "It is ment would occur but when asked continued research and develop­ my judgment that uncontrolled by Sen. Slade Gorton (R-Wash.) ment funding. immigration is one of the greatest his opinion of Sen. Ted Stevens's Jan Mares, Assistant Secretary threats to the future of this coun­ (R-Alaska) proposed reduction of for Fossil Energy at the Depart­ try. . .. As mortals, we live in a U.S. ground fo rces in Europe, ment of Energy, replied that the world of limits and tragically that Tower replied, "We are in Western MHO program met the criteria for must include limits to our charity. Europe for our own national inter­ fe deral funding, but "the process Each man and woman here faces est, because of what the conse­ required a very expensive effort" . daily in his or her own life, the quences would be if Europe was and was being terminated for that moral dilemma posed by other hu­ neutralized or Finlandized." Not­ reason. man beings in need. Each must ing that European defense com­ Melcher answered, "Adminis­ decide where to draw the line in mitments grew at a fa ster rate than tration logic escapes me." helping others. It is tough-but we those of the United States in the While this most promising, have all done that or we would not 1970s, Tower concluded, "I do high-technology area of coal re­ be here today." think, however, that it is appropri­ search is being rescinded in 1982 The Simpson-Mazzoli bill ate to warn Europe that the Amer­ and zeroed-out in 1983 despite would, as part of a "universal em­ ican public will not support a con­ congressional support and appro­ ployment authorization" system, tinued American presence in Eu­ priations, the administration is levy fines against employers who rope if the Europeans do not main­ putting top priority on the highly hired unregistered employees. First tain an equivalent lev�1 of support inefficient and expensive technolo­ and second violations would be and if the Europeans do not permit gies to produce synthetic fuels punishable by $1,000 and $2,000 us to deploy weapons in their de­ through coal gasification and li­ fines, third violations by criminal fe nse." He also reported he has quifaction. Much of the FY83 coal penalties including imprisonment. questions about the Rapid Deploy­ research budget of $107 million­ The bill sets a total U.S. immigra­ ment Force, whose mission, he down from $417 million in 1982, is tion quota of 425,000 people per said, has "traditionally been a Ma­ devoted to those technologies. year. rine Corps function. Any other The key to the system proposed form "smacks to me of an Ameri­ in the bill is the controversial poli­ can expeditionary fo rce." cy of using identity cards or a New immigration government-maintained data bank legislation proposed to regulate the activities of immi­ Senator Alan Simpson (R-Wyo.) grants and employers. Anticipat­ Senator attacks cuts in and Rep. Romano Mazzoli (0- ing adverse reactions to this pro­ high-tech coal research Ky.), former members of the com­ posal, which parallels the work­ Senator John Melcher (D-Mont.) mission on U.S. immigration poli­ book system used under Hitler's questioned the Department of En­ cy headed by the Rev. Theodore Third Reich, Simpson insisted, "It ergy's decision to end federal fund­ Hesburgh of Notre Dame, intro­ won't be an internal passport or a ing for magnetohydrodynamics duced a new immigration bill card you have to carry all the (MHO) research in its fiscal 1983 March 17. The legislation, the Im­ time. . .. It will not be a card budget, at March 17 hearings of migration Reform and Control which some jack-booted minion the Research and Development Act, is a significant departure from mashes your door down" for ..

EIR March 30, 1982 National 61 National News

swer . clear groups and are leaking them non­ Fischer also had "no comment" on public information in order to shut down Sen. Barry Goldwater's remarks, printed the U.S. nuclear program. Abscam appeal dismissed : in Newsweek. that the Washington Post's FEF Director of Nuclear Engineer­ expose of CIA bombing of bridges in ing Jon Gilbertson charged in a Wash­ rights found not violated Nicaragua was true. But, said the Post's ington D.C. press conference March 12 A conviction obtained in an Abscam in­ Don Oberdorfer, "These are widely cir­ that fu rthermore, some NRC regulations vestigation was affirmed March 18 by a culating allegations which have now are actually causing nuclear plant break­ Federal appeals court in a decision that been confirmed by the Chairman of the downs. He gave as an example regula­ said law-enforcement agents could use Senate Iritelligence Committee. Your re­ tions which made standard maintenance "special investigative techniques to un­ fusal to deny them is tantamount to an procedures impossible, such as that cover insidious corruption." admission." "I still have no comment," which leads to the corrosion of steam The ruling focused on a relatively Fischer replied . tubing in pressurized water reactors. minor defendant, Alexander A. Alexan­ The third issue raised by the press was dro Jr., an investigator with the Immi­ Secretary Haig's offer to enforce the U.S. gration and Naturalization Service. AI­ Neutrality Act against right-wing Nicar­ aguan terrorist training in the United exandro was convicted of accepting a Philosophers invade the bribe to obtain an immigration docu­ States, in exchange for an end to Nicara­ ment for the friend of an "Arab sheik" guan support for the Salvadorean left. medical profession "Is he making enforcement of U.S. law who turned out to be an undercover New York teaching hospitals are em­ conditional on a political agreement?" agent ofthe FBI. ploying philosophers to help the medical Lars-Erik Nelson of the New York Daily In dismissing the appeal, the U.S. profession find an alternate ethic to the News asked pointedly. "I'll look into it," Court of Appeals for the Second Circuit Hippocratic Oath, according to New York was Fischer's only reply. ruled in Manhattan that Alexandro's Times March 19 front-page coverage. constitutional right to due process had John D. Arras, a philosopher recently not been violated by the methods of the appointed to the clinical staff of Montef­ Abscam investigation. iore Hospital in New York's North Lawyers fa miliar with the case note it Reagan NR C issues Bronx and the only philosopher in the could hold significance for other appeals country with a fu ll-time appointment to involving important political figures. anti-nuclear study a hospital's clincial staff, said the intent In a report which will no doubt drive was to have philosophers help physicians investors away from the utilities in ques­ make judgments about life and death tion, the Nuclear Regulatory Commis­ with a deeper insight into the "meaning Press complains of sion has released a "staff study" which of life" and into the complex and con­ lists 19 nuclear plants presently under fl icting moral and ethical questions that 'illegalities' on Nicaragua construction, which the NRC feels will are involved. · At the State Department press briefing be canceled in coming months. One util­ The philosophers, for example, give March 15, Secretary of State Alexander ity, Philadelphia Electric, issued an im­ advice on when or whether a terminally Haig came under concerted attack from mediate denial of plans to cancel its Lim­ ill patient or a deformed or brain-dam­ the press, which questioned the legality erick-2 plant near Pottstown, calling the aged infant should be allowed to die, or of recent State Department actions. NRC statement "off the wall." who should be admitted to an over­ State Department spokesman Dean The staff study was requested by Car­ crowded intensive care unit, or under Fischer was first asked under what au­ ter-appointed NRC director John what circumstances a patient can refuse thority the Nicaraguan prisoner, who Ahearne, and admittedly based on "con­ "exotic"-as the Times terms it-life was brought before the Foggy Bottom jecture, newspaper articles, conversa­ support technology. press corps March 12, was held in custo­ tions with financial houses and hearsay." "We do not, however, tell doctors dy in the United States-since the United The NRC staff did not ask the utilities what to do," emphasizes philosopher Ar­ States is not at war with Nicaragua. Pre­ involved if they had plans to cancel. ras. viously, the official answer was that he The report fo llows by less than a One situation which, according to was in the United States "on parole," but week, a call by the Fusion Energy Foun­ Arras, "still haunts physicians," was a at the press briefing it was claimed he was dation for an investigation of the Nuclear case he was called into last month involv­ not a prisoner at all, but the State De­ Regularoty Commission. The FEF ing a 15-year-old girl who had tried to partment had brought him to the United charges that there is a small group of kill herself by jumping from a building in States on an ordinary non-immigrant anti-nuclear activists who are members the South Bronx. She did not die, but visa. In that case, asked the press, why of the NRC staff, and that these individ­ became almost totally paralyzed. Arras was he in custody? Fischer had no an- uals are in regular contact with anti-nu- said that by means of blinking her eyes,

62 National EIR March 30, : }82 Briefly

• BLUE CROSS, the insurance company, is advocating that the the girl communicated to members of the depends upon funding. plug be pulled on coma victims, medical staff that she still wanted to die. Fusion would be a clean, cheap, inex­ the Washington Post reported He was asked that if the girl went into haustible source of energy. March 18. "It's a social policy respiratory arrest should she be put on a question," Blue Cross vice-presi­ respirator, or allowed to die. dent Barry Wilson is quoted as The Times reports that fo rtunately saying, "whether society can af­ the conflict was resolved when the emo­ ford to pay large amounts for care tionally disturbed adolescent decided she DOJ attempts with uncertain outcome." wanted to live after all, but the issue is Teamster local takeover still "haunting." • A FEDERAL COURT has In what is being billed as a national test Arras is an associate of San Fran­ thrown out the New Jersey case, the Justice Department announced cisco State University philosophy profes­ congressional redistricting plan March 9 that it was suing for a court­ sor Mary Anne Warren, whom the Inter­ Gov. Brendan Byrne signed into supervised takeover of New Jersey national Caucus of Labor Committees law just before leaving office in Teamsters Local 560 in Union City, New has indicted at the United Nations for January. The redistricting includ­ Jersey. Local 560's President is Salvatore violating the Nuremberg statutes for her ed a computer-designed district Provenzano, head of the New Jersey advocacy of killing deformed infants. carved out of fiveprevious districts Teamsters and an International Vice­ by Byrne Department of Consum­ President. er Affairs head Adam Levin, son U.S. Attorney for New Jersey, W. of real estate magnate and Meyer Hunt Dumont, and the Newark Organ­ Lansky associate Phillip J. Levin. ized Crime Strike Force called a press DOE committed to The New Jersey legislature has un­ conference to announce that they were McCormack Fusion law til March 22 to draw a new redis­ invoking an as yet untested-in relation tricting proposal. Department of Energy official Dr. Al to the labor movement-section of the Trivelpiece emphasized in mid-March R.I.C.O. (Racketeer-Influenced Corrupt • TERRY DOLAN, Chairman hearings the DOE's commitment to com­ Organizations) Act to file a civil action of the National Conservative Po­ ply with the McCormack Fusion Act, the to strip Local 560 of all its elected offi­ litical Action Committee, startled bill passed in 1980 which calls for a crash cials and its executive board, past and many NCPAC supporters by program to develop thermonuclear fu­ present. granting an interview to the ho­ sion. Trivelpiece's statement, made be­ In a later interview, Dumont stated mosexuals' magazine Th e Advo­ fore the Energy and Water Development that the Justice Department and others cate, in which he said he would Subcommittee of the House Committee in Washington are watching the case support a law prohibiting the fed­ on Appropriations March 15, is the first "very closely." He noted that if the DOJ eral government fr om discriminat­ public statement made by a DOE official is successful in the court-supervised take­ ing against gays. "Sexual prefer­ indicating that the law is an active con­ over of the local, that the same approach ence is irrelevant to political phi­ sideration for the Department. could be used with the International losophy," he said. During last year's budget process, the Longshoremen's Association. , previous director of the Office of Energy A hearing is scheduled March 22 be­ • JANE BYRNE, Chicago's fore Federal District Court Judge H. Research insisted that the Reagan ad­ mayor, may be in for political Curtis Meanor-the judge who heard the ministration was not taking the Mc­ trouble. In the Democratic prima­ Cormack Act into consideration in plan­ 1979 case against Teamster leader An­ ry of March 16, her chosen candi­ ning the fusion program. thony Provenzano. Two of the federal date for the 5th C.D. seat, incum­ Trivelpiece, a plasma physicist, ex­ prosecutors who will be arguing for the bent John Fary, was soundly beat­ union takeover, Thomas L. Weisenbeck plained to the subcommittee that the fu­ en by Alderman William Lipinski. sion program is "mission oriented" and and Leopold Laufer, were involved in Lipinski was backed by the forces that the DOE does have the intent to last year's framing of then Local 560 of Byrne's probable opponent in carry out the act. It is being delayed, he President N unzio Provenzano. In that next year's mayoralty race, Cook case, Salvatore Provenzano and a busi­ noted, only because of the current eco­ County State's Attorney Richard ness agent, Michael Sciarra, were acquit­ nomic situation. Daley. Another Byrne protege, ted but Nunzio Provenzano was convict­ When questioned about DOE Secre­ Jeffrey Roberts, was also defeated ed on labor racketeering charges. tary Edwards's statement that fusion in his effort to unseat State Assem­ would not be ready for 50 years, Trivel­ The DOJ argues that since one of the blyman Larry Bullock, who has piece said he had not heard Edwards's Provenzanos have held the position of prominently opposed Paul Vo\ck­ statement, but that his estimation was union President in Local 560 since 1958, er. that it would be developed within 20 that the government has the right to step years. He pointed out that the timetable in and throw out the elected officials. •

EIR March 30, 1982 National 63 Editorial

Phase II begins against Mr. Reagan

Starting in December 1980, before President Reagan's himself would be placed at the center of a free-fire inauguration, EIR presented the evidence that the zone. Socialist International was prepared to mount a mass Now, seemingly overnight, a "peace movement" movement against the new administration and its is being created in the United States as the counterpart anticipated policy failures. of the violent "green peace" movement funded and That evidence was presented in our Dec. 23 cover coached by the German Marshall Fund. This month story, "Eurosocialists Launch Takeover of the Dem­ Socialist International leader Bruno Kreisky, the ocratic Party," in our weekly coverage thereafter, and Prime Minister of Austria, openly emerged as the in our special January 1981 News-in-Depth Report patron of Libya's Muammar Qaddafi, the terrorist titled "The Socialist International Plot to Destabilize liaison who in turn openly announced his financial the U.S." The report was an exclusive account of the and political support fo r "the peace movement." Eu­ proceedings of the Dec. 5-7 "Eurosocialism in Amer­ ropean security officials confirm to EIR that "a new ica" conference in Washington, D.C., presided over 1968" is being planned as a battering-ram against by the leading Socialists of West Germany, France, national governments on both sides of the Atlantic. Sweden, Spain, Holland, and Britain. We described In the United States, the "peace movement" is the financial backers of the Socialist In'ternational, part of a general social upheaval and a specificatte mpt including the German Marshall Fund, which brings to enforce the tax )ncreases and defense policy de­ together Averell Harriman, David Rockefeller, and manded by the International Monetary Fund, by the John J. McCloy, as a conduit for the anti-growth Bank for International Settlements, and by Paul policies of the European oligarchy and its extensions Volcker-a policy of horrible civilian austerity com­ inside the East bloc. We describe{.ithe circumstances: bined with slashes in the advanced-technology sectors this international policy faction's alarm that Mr. Rea­ of the military which are indispensable for economic gan might be able to put the United States back on recovery and defense preparedness. the track of industrial development at home and high­ Throughout 1981, we warned the administration technology exports as the basis offoreign policy. that unless it dumped Secretary of State Haig-whose We relayed the Socialists' plans, as they unfolded seeming follies are part of the Socialist International's at the conference, as l) to "Hooverize" Ronald Rea­ plan to discredit and demote the United States-and gan; 2) to take control of the Democratic Party; 3) to eliminated Paul Volcker and his policies, the nation trigger a new wave of urban upheavals; and 4) to would be at the mercy of the enemies of industrial paralyze American foreign policy, with destabiliza­ progress, and the President would be set up for assas­ tions throughout the Third World; a new East-West sination attempts and "Watergate" scandals. We freeze, so that only "the worst of the KG B and worst warned that the Abscam operation was part of the of the State Department" would still have open chan­ preparatory effort to ensure that no bipartisan obsta­ nels; and a poisoning of U.S.-European relations, all cle consolidated against Paul Volcker, directing the undercutting positive American influence abroad. White House's better impulses. And we further reported, as the Carter administra­ Now the United States is in the midst of a full­ tion's Abscam-Brilab continued to be given full rein fledged depression; the Western world is on the edge under Mr. Reagan, that if the Justice Department's of social convulsions. The accuracy of EIR 's warnings political police were not curbed, and in particular if is proven, and their urgency is redoubled. It is not too an innocent Senator, Democrat Harrison Williams of late to deliver some nasty surprises to the Socialist New Jersey, were railroaded out of the nation's high­ International if those warnings, and the intelligence est legislative body, GOP leaders and the President impelling them, are acted upon.

64 National EIR March 30, 1982 Franklin House Publishers present: Lyndon LaRouche

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