State Department coup in the· Philippines Who Said it First? EIR Did!

How did the U.S. State Department destroy Ferdi­ nand Marcos, America's long-term ally in the Pa­ cific? EIR on-the-scene reporters had the story. seven months before the Philippine tragedy unfolded. and President Reagan succumbed to the State Department conspiracy: they documented how traitors in the U.S. State Department and Senate had a/read\' plotted a coup against Marcos. By August 1985. Philippine traitors Lt.-Gen. Fidel Ramos and Defense Minister Juan Ponce Enrile had been tapped to lead the coup.

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$265, 3 mo. $145 1______------Founder and Contributing Editor: Lyndon H. LaRouche. Jr. Editor-in-chief: Criton Zoakos Editor: Nora Hamerrnan Managing Editors: Vin Berg and Susan Welsh Production Director: Stephen Vann Contributing Editors: Uwe Parpart-Henke. Nancy Spannaus. Webster Tarpley. From the Editor Christopher White. Warren Hamerman. William Wertz. Gerald Rose. Mel Klenetsky. Antony Papert. Allen Salisbury Science and Technology: Carol White Special Services: Richard Freeman Advertising Director: Joseph Cohen Director of Press Services: Christina Huth INTELLIGENCE DIRECTORS: W hy is Gorbachov srniling? Not only has he won a central corn­ Africa: Douglas DeGroot rnittee 50% cornposed Agriculture: Marcia Merry of military engineers at the 27th CPSU Con­ Asia: Linda de Hoyos gress (Feature, page 26), but the U. S. adrninistration seerns to be Counterintelligence: Jeffrey Steinberg. Paul Goldstein following a Krernlin-authored script for handing over every world Economics: David Goldman choke-point to the Soviet Navy. President Reagan on March 7 narned European Economics: William Engdahl. Laurent Murawiec Philip Habib as his new special arnbassador to Central Arnerica. Europe: Vivian Freyre Zoakos Habib, fresh frorn the role of undertaker for Lebanon and the Phil­ Ibero-America: Robyn Quijano. Dennis Small Law: Edward Spannaus ippines, is hirnself a rnessage to the region, that it is going to be sold­ Medicine: John Grauerholz. M.D. out by the United States, and destroyed. Middle East: Thier,.,. Laln'ee Soviet Union and Eastern Europe: The destabilization of Panarna which we exposed last week is Rachel Douglas. Konstantin George going ahead full force. The United States is fully backing IMF United States: Kathleen Klenetskv. Stephen Pepper dernands for irnplernenting labor austerity, ordering the governrnent INTERNATIONAL BUREAUS: Bangkok: Pakdee and Sophie Tanapura there virtually at gunpoint to rip the country apart. Under this pres­ Bogota: Javier Almario Bonn: George Gregor.·. Rainer Apel sure, the governrnent has conceded, thus giving labor no choice but Chicago: Paul Greenberg to go out on strike (see page 47). Copenhagen: Poul Rasmussen Houston: Harley Schlanger EIR is focused on stopping this latest giveaway to the Soviets. Lima: Sara Madueiio We rnade available, for use at Sen. Jesse Helrns'sMarch 10 hearings Los Angeles: Theodore Andromidas Mexico City: Josefina Menendez on Panarna, explosive new docurnents on the past of the rnan Helrns Milan: Marco Fanini ' is pushing to "dernocratize" Panarna, Arnulfo Arias. Even the En­ New Delhi: Susan Maitra Paris: Christine Bierre cyclopedia Britannica calls Arias "pro-Fascist"; the record shows , Rio de Janeiro: Silvia Palacios hirnas a Hitler-saluting Nazi. (We'll print the docurnentsnext week.) Rome: Leonardo Servadio. Stefania Sacchi Stockholm: Clifford Gaddy A letter frorn EIR editor-in-chief Criton Zoakos to Helrns on the United Nations: Douglas DeGroot salient facts of the case, was run on March 7 in the Panarnanian Washington, D.C.: Nicholas F. Benton. Susan Kokinda. Stanlev Ezrol press. Wiesbaden: Philip Golub. Mary Lalevee The pace of the destabilization planned for Central Arnerica has EIRIExecutive Intelligence Review (ISSN 0273",(,314) is everything to do with irnpending econornic blowout (see page 4). published weekly (50 issues) except for the second week ofJuly and first week of Januan' b\' New Solidarit\' All of the Ibero-Arnerican nations but Peru and Mexico rnay have International Press Service 16/2 K St. N. W. . Suite 300. 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TIillContents

Departments Economics

55 Report from Rome 4 London and Zurich debate Andreotti exposed in Qaddafi trial. merits of financial crash

56 Report from Madrid 7 Brazil's new 'cruzado Gonzalez creates anti-NATO plan': how to do nothing wave. about debt

57 Report from Bonn 9 Curtain drops on the farce A debacle in Schleswig-Holstein.. of the Brazilian experiment in 'gasohol' 58 New Delhi India, South Korea expand ties. 13 'Privatization' to ravage German economy 59 Southeast Asia 14 Currency Rates World Bank says own plan failed.

15 Agriculture 72 Editorial Not the man for the job. Rule of Law murdered in Manila.

16 Labor in Focus Pilots, attendants warn on safety.

Investigation 17 Africa Report Preparing for a debt conference. 36 AIFLD: It's not labor, nor is it for freedom 18 Business Briefs A dossier on the American Institute for Free Labor Development, friend of the drug­ pushers in Ibero-America. Science & Technology 40 AIFLO's origins: Subversion by Grace, 20 Disastrous cuts in 1987 Romualdi, Rockefeller budget for fusion power Charles B. Stevens reports on the conseq�ences of amputating America's most promising energy source of the future. Volume 13 Number n. March 14. 1986

Feature International National

42 NATO elite is told: We 62 Russian demands defense must keep economy strong cuts, U.S. lawmakers The Wehrkunde meeting of comply defense experts in Munich discussed sensitive issues in 64 LaRouche candidates Alliance relations. which are define issues in March 18 hardly ever mentioned in pUblic . minois primary

44 Investigating the Palme 66 Robert Penn Warren: killing: investigative Southern secessionist hypotheses A blood-and-soil anti-industrialist APlWide World By Lyndon H. LaRouche. becomes the first U.S. "poet Why is this man smiling? Since his summit meeting laureate." with President Reagan, shown here, Mikhail Gorba­ 47 Central America: chov has consolidated his power to build up the Soviet war machine. Contadora seeks war on 67 Eye on Washington narco-terrorism GOP presidential hopefuls gather. 26 Gorbachov mobilizes for 48 Aquino government in the 68 Congressional Closeup war-as West's economy Philippines faces the Int'l falls apart Monetary Fund test . 70 National News Heads are rolling in the Soviet bureaucracy. but there' s more to it Documentation: President than the Kremlinologists think. Marcos's letter to the Filipinos..

29 'Russian Party' drops 50 Queen backs New Yalta in river diversion plan Pacific

30 The new Soviet scheme for 52 French Socialists plot world debt reform against Tunisia

31 Build up science, 53 Trilateral Commjssion technology being put to the test in French elections Speeches to the Party Congress by Prime Minister Ryzhkov and KGB chief Chebrikov. 60 International Intelligence

33 Trilaterals otter Soviets help in war economy mobilization �TIillEconomics

London and Zurich ,debate merits of financial crash

by David Goldman

Just before the spot oil price sank below $12 per barrel, City activities are relatively fe w. There are many more· Standard Chartered Bank's chief economist, Jan Toporows­ in Britain who would stand to gain from a revival of ki. broughtto the surface the subterranean debate concerning trade , investment, and production which are currently the merits of a financial collapse, in a Feb. 19 article pub­ suffering progressive paraI ysis from the burden of ren­ lished in the London Financial Times, under the title, "Why tier claims. The devaluation of those claims is a nec­ the world economy needs a financial crash." The Financial essary , if insufficient, condition for the quickening of Times' Anatole Kaletsky argued the contrary two days later, real economic activity and perhaps even the survival speaking for that section of the City whose livelihood de­ of the capitalist system. pendson trading an ever-expanding, polymorphous variety of dollar-denominated paper instruments. Anatole Kaletsky's reply Feb. 23 was at once less con­ Toporowski begins by citing the doyen of Marxist capi­ vincing, but far more in cqosonance with the thinking of talist-breakdown theory, the tum-of-the-century economist the major Western governments. It adopts the usual format Rosa Luxemburg, and continues as follows: of "I never saw that horse qefore , your Honor, I was only borrowing him, and besides, he was lame anyway." .. . The old solution of ruining the rentiers (in this Default by the major Third-World debtors "would leave case the international banks and their creditors) no the world banking system broadly intact," Kaletsky argues. longer seems to be available. The position of the in­ "Most, if not all of the international banks are now strong ternational banks is reinforced by central banks' im­ enough to withstand substantial losses on their Third World plicit, if not explicit, willingness to act.as lenders of lending," he argues, citing the specific case of Lloyds In­ last resort in order to avoid precisely that financial ternational, the bank with the most exposure proportionally crash which would resolve the debt problem by de­ in Mexico debt, analysing the effect of a theoretical 6% valuing it all ..... Mexico ceiling on interest, a de facto repudiation of two­ Nevertheless, the decision of debtor countries such thirds of current interest requirements. Kaletsky argues this as Poland, Nigeria, Peru, and Argentina to limit debt will mean only a 5% reduction in that bank's annual profits. service payments to a minority share of their export In any case, he assertsthat U.S. banks may have convinced earnings testifies to the urgent need of those countries the White House to step in to prevent a full Mexico default to be released from the grip of rentier claims that are crisis by telling the President that the consequences of. such paralyzing their ,trade and development. . . . Undi­ a default would be disastrous. minished by devaluation, the acceleration in the growth of these claims must eventually crush either the ren­ Winners and losers tiers, or the countries themselves .... Mr. Toporowski's sly concluding comment about the Those drawing their main incomes directly from small number of people who;actually maketheir living from

4 Economics EIR March 14, 1986 the "City," i.e., the world's premier market in dollar-denom­ traders with long positions. inated paper, indicates what is at stake . His argument must The same process has occurred in the tin and sugar mar­ be read in the context of the discussion on the European kets, in disarray after falling prices destroyed the resources continent concerning what will happen to the dollar, should of joint producer-consumer agreements. Neither has much a financialcrash actually take place. hope ofcoming back together in the foreseeable future. The chief economic spokesman for the Paris bank, Credit Of course, the banking system's direct losses in the com­ du Nord, predicted March I: "Before the end of 1986, the modities debacle arerelatively small. But the entire inventory entire world monetary system will be reformed." Credit du of dollar-based paper, includingthe recent fad of bank-backed Nord is historically associated with the French Rothschild internationalcommercial paper, will cease trading at the mo­ interests. The spokesman, Michel Lutsalla, wrote in the daily ment that the sanctity of some major names in the market are Quotidien de Paris that the situation in the internationalmon­ questioned. Given the impact of collapsing oil prices on etary system is "extraordinarily delicate ." He further rejected developing nations, Texas oil producers, and the oilfield the likelihood of a "new Bretton Woods system of fixed industry internationally, the continued faith shown in some exchange rates, or a new expanded European Monetary Sys­ of the largest American banks might have awed the most tem" of currency bands. Quotidien. in its own commentary, devout 12th-century Hashishin. speculated that the new System, "according to rumors circu­ lating in high financial circles" will limit exchange fluctua­ Volcker's fear tions and reduce the role of the dollar internationally." The That is precisely what Federal Reserve Chairman Paul chairman of the Banque Credit de Nord, Bruno de Maulde, Volcker warned the House Banking Committee Feb. 20. is formerFrench representative to the IMF. Banks' wildcat activities, sometimes referred to as "off-bal­ No one in "high financial circles" is silly enough to worry ance-sheet liabilities," include potential obligations through much about the shape of a new monetary system; that is like financial guarantees and securities repurchase agreements speculating about the layout of a camp of shipwreck survi­ equal to twice their official balance sheets. Volcker, whose vors, before the shipwreck. Their present concernis more to own policies caused the current crisis, warned in testimony ensure that they survive the shipwreck, by pushing fellow­ that current U. S. banking laws "pose a clear threat not only passengers overboard . However, the catch-phrase, "reduce , to the coherence, but also to the safety and soundness" of the the role of the dollar internationally," refers to something banking system, adding, "time is growing short." Volcker, specific: a financialcrash would take down with it the mech­ as the London Financial Times commented, sought to im­ anisms by which dollar credit is now generated. press a "new sense of urgency" upon Congress, because of The $2 trillion-plus Eurodollar market is now as pure an the combined impact of the oil price collapse and agriCUlture example of what Andrew Jackson's contemporaries called debt defaults, as well as "a series of recent dramatic court "wildcat banking," as has ever existed in financial history. rulings" which allow brokerage houses like Merrill, Lynch Foreign-exchange transactions now exceed 23 times the vol­ or E. F. Hutton to take on banking activity "without the ume of merchandise trade . Even more important than the protection provided by the federal safety net" of the Federal cash foreign-exchange market, however, is the market in Deposit Insurance Corporation. futures contracts for foreign exchange, Treasury securities, While the fuse bums towards the core of the dollarbank­ certificates of deposits, and other financialinstrum ents. ing system, the dollar is meanwhile collapsing of its own Since the Eurodollar banks have no reserve requirements, grotesque weight. It has lost about one-third of its parity they may generate, in theory, an infinite multiplier of banking against the West German mark during the past year, and credit. The entire, vast mechanism of currency, commodi­ stands to lose much more. The global system of wildcat ties, and financial instruments futures trading depends on this banking, fueled by a $400billi on annual worldwide flow of infinite bankingmulti plier. A financialcrash would produce narcotics and other illegal money, has a wobbly base: Amer­ a chain-reaction of defaults, wiping out many market partic­ ica's dependency on foreign suppliers of essential goods. ipants and damaging the ability of banks to keep their worried Last year's trade deficittopped $150 billion, and this year's depositors away from the withdrawal window, reducing the is already running at a more than $200 billion rate, largely ' dollar's international role in an extremely sudden, brutal because America must pay more devalued dollars for the fashion. same essential goods. At a time when the dollar is falling Exactly such a chain reaction is happening, in slow mo­ sharply, the United States must pay (and therefore borrow) tion. One of the world's most important commodities mar­ at an accelerating rate to import essential goods. The ingre­ kets, the London-based oil futures market, ceased to exist dients for a truedollar crash are unmistakeableto anyone. late in February after a series of defaults by leading traders. Since 1979, when newly appointed Paul Volcker im­ Previously, the average barrelof North Sea or otheroil brought posed a credit squeeze on theU.S. banking.system, the rest to the "spot" market was bought and sold an average of 100 ofthe world has lived in a chronic dollarshorta ge, beholden times, according to industry sources, before its ultimate pur­ to the largesse of the Fed. Foreign centralbankers could not chase by a refiner. The collapse of oil prices from $28 per visit the men's room without first checking with the trading barrel in November to only $12 per barrel has wiped out desk of the New York Federal Reserve Bank.

EIR March 14, 1986 Economics 5 All that changed during the firstweek in March, when all investment bank White Weld to Credit Suisse in 1978. A world markets waited breathless to see whether the German cynic might suggest that Mulfold is a Swiss agent, promoting central bank would reduce its discount rate, supposedly per­ the interests of continental E rope an financiersat the expense mitting the Fed to also reduce rates without crashing the of the Anglo-Americans. dollar further. (The German central bank did reduce its rate, for whatever that is worth.) 1934 all over again? The dollar does stand to lose its international role, with In a very broad sense, the debate over the merits of a terrible consequences for the United States; for if the dollar financial crash replicates the division of the world at the is no longer the ruling international currency, why should disastrous London International Monetary Conference of foreigners accumulate $200 billion a year of additional dollar 1934, when President Roosewelt devalued the dollar by 40% paper, in return for the goods they sell us in excess of their against gold. The British, who lost the benefit of their 1931 purchases? competitive devaluation of sterling as a result, were livid, to What is most remarkable-and the source of grim con­ the point that the Queen Mo her cut dead the American am­ cern in the London dollar markets-is the fact that the U. S. bassador at Buckingham Palace garden parties. (Only John Treasury is so fixated on the supposed benefits of a falling Maynard Keynes supported Roosevelt, on the crackpot as­ dollar (to increase exports the United States can't even pro­ sumption that a devalued dollar would automatically reverse duce), that it is riding the dollar down-in fair imitation of the 50% deflation of world trade prices. No such thing hap­ Slim Pickens astride the H-bomb in Dr. Strange/ove. Even pened.) Paul VoIcker's cautionary voice concerning the dangers of But what was then called the."gold bloc," i.e., France, devaluation mania has been lost, the British note with worry. Switzerland, and Italy, took advantage of the simultaneously It is of special interest that the Treasury officialnow in control cheap dollar and cheap U.S. share prices to buy up a big of international policy, Assistant Secretary for International chunk of the American market at pennies on the dollar. Those Affairs David C. Mulford, has extremely close personal ties who call for a redu.ction in th�dollar's internationalrole today to the Swiss: �e was part of the team which sold the old-line have something similar in mind.

I

agriculture and industry. LaJouche prescribed the follow,­ ing emergency steps: I 1) "Federalize" the Federal Reserve Board, so that it no longer controls the credit of the nation and cannot set What should be done interest rates. The Federal �eserve as it now exists is a violation of Article I, Sectio s 8 and 9 of the U.S. Consti- about a financial crash? tution. '.'. 2) Issue $500 billion in gold-reserve backed, 2-4% interest Treasury notes through ,a regulated private bank­ In a nationally televised address to the American people ing system to specified prodJctive categories of manufac­ on Feb. 4, 1984, and in a series of other broadcasts prior ture, agriculture, transportat"on, and infrastructure, to put to the Nov. 6 presidential elections, EIR founder Lyndon 5 million people back to work quickly. LaRouche explained exactly how a financial crash could 3) Convene an emergency summit of, at minimum, be avertedand the currentworld depression in production the heads of WesternHemispheric governmentsand other and trade brought to an end-by an American President allies to reorganize the internationalmonetary system with not particularly concerned with preserving the power of 2-4% refinancing to allow 1pird World nations to import London, Zurich, or their cousins in usury in New York again-allowing the United �tates to export again. Estab­ and Boston. lish gold-based parities betWeencurrencies, and work out The United States has the idle plants to produce, and a framework of credit and" oreign aid" based on "great the unemployed or misemployed workforce to man them. projects" to industrialize the underdeveloped world. Where is the "demand" to come from? The real demand This implies that the British doctrine of "free enter­ is already there: the nation needs highways, bridges, prise," "free trade," "free arket," as re-popularized in waterways, railroads, industrial plant, agricultural ma­ the 19th century by Karl Marx, be once again thrown out chinery and t;quipment, vehicles, ships-and exports to the window to rebuild the nation and industrialize the meet the enormousneeds of Third World nations. world, just as America:s Fbunding Fathers threw such But,how do you pay for it. The answer is credit: Low­ "free market" dogmas out t�e window to originally build interest, long-term credit issued by the U.S. Treasury to the American Republic out c f colonialism.

6 Economics EIR March 14, 1986 Brazil's new 'cruzado plan': how to do nothing about debt by Mark Sonnenblick

The "Cruzado Plan" unveiled by Brazilian President Jose April inauguration as the first civilian president in two dec­ Sarney Feb . 28 is one of the most flamboyantexercise yet for ades. Political commentators said the "New Republic" only not dealing with the debt crisis. While throwing the brakes started Feb. 28. Knowing full well that the government's on an inflationary spiral, it does nothing to deal with the real price-controlboard, SU BAN, could never enforce fixedprices causes of Brazil's hyperinflation. over a land area larger than the continental United States, Under the plan , Brazil joins Argentina in applying what Sarney implored consumers to take responsibility for enforc­ economists call "heterodox shock" to outlaw inflation. Wages ing the measure. are frozen for a year and prices are frozen indefinitely. As They hardly needed to be asked. When a dozen stores with the Argentine Austral Plan, a new "inflation-proof' triedto raise their prices immediately after theSarney speech, currency was born and its relationship to the dollar fixed. angry customers rippedthem apart. Hours later, Federal Po­ The wonder of the plan is that it gives hope of ending lice Chief Romeu Tuma, long known for his highly central­ inflation, which has been over 200% for the past two years ized law-enforcement practices, went on television to en­ and whose February rate of 14.36% gave every promise of courage citizen arrests of price hikers. an annual rate soaring over 300%. The Cruzado Plan differs, Consumers armed with official price lists patrolled store at least on the surface, from orthodox economic shock as aisles. Two prestigious members of the National Monetary applied in Germany by Hitler's economics minister, Hjalmar Council were caught having ordered their store employees to Schacht, or in Pinochet's Chile, and Shimon Peres's Israel spend the night before Sarney' s speech marking up prices, by the academic children of Milton Friedman. In these cases, and werefined . Following over 10,000consumer complaints police repression had to be applied against workers whose and dozens of highly publicized arrests, the price freeze was wages were cut from the beginning. In Brazil, most wages made to stick, at least in the beginning. were raised at the onset of the program, while prices were The consumer enforcement orgy, a virtual second Car­ frozen. naval, was part of the "psychological" aspect of the Cruzado Plan, which its drafters consider more important than any Psychological warfare other aspect. Such a novel de-indexation plan was formulated All Brazil stopped working at 9:30 a.m. on Friday Feb­ in studies commissioned in 1984 by International Monetary ruary 28 morning so all could hear the announcement of a Fund director Alexandre Kafka. This shadowy Czech-born surprise economic package. Film clips of President Sarney economist with Brazilian nationality sits out of sight in Wash­ meeting the day before with top military leaders were flashed ington running the economic policies of most Third World repeatedly on the screen. Then Sarney told his countrymen, countries like a master puppeteer. "Today is the beginning of a life-and-death war against infla­ Kafka's original plan was for Tancredo Neves, the father­ tion." He quickly passed the microphone over to Finance figure who was supposed to be the firstcivilian President, to Minister Dilson Funaro, who explained how the new pro­ use his immense popularity to impose shock austerity policies gram is to work. with the new psychological packaging shortly after his April At first, people were perplexed and confused, our Rio 15, 1984 inauguration. But Neves died before being sworn Bureau reports . Brazilians had learned to live with what for in, and Sarney was thrust into the presidency with the image most others would be unimaginable inflation. Everything in of a graceless hatchet man who had forced the Senate to the economy was indexed, rising roughly in tandem with rubber stamp unpopular measures for the military dictator­ inflation itself. Interest rates and other financialfactors were ship. totally protected from growing inflation, while wages, which To build credibility, Sarney made nationalist speeches caught up with inflation only everysix months, were serious­ against the IMF and reflated the economy by means of run­ ly eroded. ning the "printing press" for yet more credit and subsidies to Sarney's wage-price freeze brought more popular eu­ the nation's exporters, and for small increases in real wages. phoria than when he proclaimed a "New Republic" at his As a result, the GNP grew by 7%, recuperating a small part

EIR March 14, 1986 Economics 7 of what it had lost during the previous three years of depres­ guaranteed for another year,i but interest rates were reduced sion. on an equal amount of principal due in 1985 and 1986. Dilson Funaro, who became finance minister in Septem­ Funaro got a gift. Brazil would receive interest rate cuts ber, emerged as the champion of Brazil's recovery. Funaro of 7 /8 of one percent on $15.5 billion of its $104 billion debt. has taken a hard line against the IMF in public and is com­ Finally, Brazil would be paying the same rate as Mexico. It mitted to maintaining 5-6% growth this year. He has concen­ was a good start, though not Funaro's ultimate ambition, trated economic policy control in his hands, even more than which he had expressed Feb. 26: "I expect within the next DelfimNetto , Brazil's "economic czar" from 1979-85, had months to use Mexico's fight with the bankers over interest done. The difference is that Funaro, a not-so-successful Sao rates like a judo fighter, to win better rates than Mexico." Paulo toy manufacturer, is a "nice guy" and knows how to So much for the solidarity among debtors which the Car­ make friends in democratic society. tagena Group proclaimed at its Punta del Este meeting on Even more than Delfim,for whom winning over a handful Feb. 28! Funaro, of course, did not go to the meeting. Brazil ofbackroom authoritarians was all that was required, Funaro has "astutely" played off the hardships of others, but has is a master at "packaging" economic policy. It also seems consistently thwarted efforts to unite debtors to reform the that he shares Delfim's very Brazilian character of being a world financial system so tl1at real investment and growth pragmatist, of utilizing higher principles like "sovereignty" could take place. and "justice" as rhetoric for the end of winning. some mun- How much was Brazil rewarded for fightingagainst both dane advantage. inflation and debtor unity? Funaro himself gave the figure of Thus, Funaro proclaimed with great aplomb on the morn­ $150 million. That is, just over I % of the $11 billion Brazil ing of Feb. 28, "Brazil will never again sign agreements with will pay in interest this year. . the IMF which allow Fund economists to come here and Further interest relief is ctependent not on inflation statis­ determine our economic policies." Three days later, the New tics, which bankers really could care less about. The critical York Times quoted him confiding, ''I'm carrying out a very question is whether Brazil continues to divest ownership of tough policy, much tougher than if I went to the IMF. And such strategic industries as the state oil company, Petrobras, I'm achieving, because I don't have the IMF behind me. My and the state mineral company, Vale do Rio Doce. Congress would not approve policies imposed by the The banks that Henry Kissinger represents demand their

Fund ...." debtors cut "inflation," becalJse "shock therapy" gimmicks Rather than being scandalized, Brazilians tend to admire generally end up handing a country's natural-resource and someone withjeitinho, a person who pulls off a clever hustle, industrial base over to foreign interests. The Brazilian gov­ even at their own expense. ernment has been milking the state-run productive sector so Samey and Funaro embarked on the Cruzado Plan for much that companies have to sell off assets in order to fund primarily political reasons. People were getting bored with priority projects. As a prelude to the Cruzado Plan, it in­ the government. On Feb. 25, the largest element of the gov­ creased tax collections by 10% in real terms last fall. Any erning coalition, the old PMDB party of opposition to the "anti-inflation" move which implies further budget cuts or militafy government, announced it was going its own way. tighter credit, will cause further divestment, and further do­ The left end of the party was already in alliance with Rio mestic recession. socialist Leonel Brizola. And many former supporters of the The real cause of Brazil's inflation is the incredible cost militaryregime from the Samey side of the coalition, were borne by the domestic economy so that Brazil could export making deals with Sao Paulo populist Mayor Janio Quadros, double what it imports and uSe the $12-13 billion trade sur­ who is anxious to return to the presidency as a right-wing plus to keep current on debt interest payments. There are a authoritarian. myriad of these costs. The Brazilian government wastes the So, Samey chose to prove his leadership with a crusade equivalent of $2 billion per year in subidizing alcohol pro­ against inflation, which the media had projected as Brazil's duction (see page 9) to achieve marginal foreign exchange crucial problem. The pundits say that if he succeeds, his savings. Brazilian steel sells cheaper in Baltimore than in Sao group will sweep the Nov. 15 elections for governors and a Paulo, thanks to generous export subsidies, fuel discounts, constituent assembly. If he fails, he will blame it on Funaro tax rebates, bounties, and losses taken by producers on export in an effort to prevent Brizola and Quadros from shortening sales. The population pays in a myriad of ways, which boil his term. down to radical cuts in consllmption levels. When the gov­ ernment briefly let consumption recover a bit at the end of Bankers rejoice last year,without allowing importsto increase, inflationstarted During the days before the Cruzado Plan, Brazil's foreign to mount. creditors forced the issue by suddenly canceling $71 million So long as Brazil continues to sabotage debtor unity, it is of the $15.5 billion in short-term credit lines which keep doing nothing but wearing out its population and its produc­ Brazil solvent. Within 48 hours after Brazil "bit the bullet," tive apparatus, if not giving it away to creditors to pay un­ Funaro was rewarded. Not only was the full $15.5 billion payable debts.

8 Economics EIR March 14, 19S6 Energy

Curtain drops on the farce of the Brazilian experiment in 'gasohol'

by Lorenzo Carrasco

Since 1979, the forecasts of the LaRouche-Riemann econo­ certain tax exemptions. In other words, the greater cost of a metric model have indicated that the Brazilian energy pro­ car running on alcohol, which has a shorter lifespan, is gov­ gram, which called for replacing gasoline consumption by ernment-subsidized. combustible alcohol ("gasohol"), was an incompetent farce, Through such subsidies, the alcohol producers have re­ and that it would lead, sooner or later, to a debacle, bringing ceived a total of nearly $20 billion since the program began in its wake far greater losses than the apparent short-term about a decade ago, rather than the $8 billion official figure. benefits. The predictions, which first appeared in Fusion According to investigators Fernando Homem de Melo and magazine, foresaw the same effects from the solar energy Eli Roberto Pelin, Petrobnis, with a $10 billion investment­ program put forward by then-U.S. President Jimmy Carter. a lot less than the government handout to the alcohol inter­ Except for a few crazed environmentalists who kept on ests-raised oil production from 168,000 barrels per day jn I worshipping the Sun, the solar energy program has fizzled 1973 to 600,000 barrels per day in 1985, a rise of 432,000 out, while Brazil's alcohol program underwent a strong ex­ barrels, which compares to only 140,000 barrels-equivalent pansion, to reach the stratospheric production level last year per day in alcohol. And the alcohol producers, with this low of nearly 10 billion liters of alcohol, and is expect to climb this year to 12 billion liters. Such production levels have required devoting more than 4 million hectares of Brazil's best arable land to the program, and the labor of more than 1.5 million workers and peasants who are dying of hunger and overwork. The fall of oil prices casts any remaining argument in favor of this program on the garbage heap; anyone who de­ fends it at this point is either a hopeless idiot, or belongs to the tiny band of landowning oligarchs who found in Pro­ Alcohol an ideal means of securing the ownership of their absurdly vast land holdings under the justification that they were lending "a service to the nation," while pocketing the juicy subsidies dished out by the federal government. Thus, the so-called Brazilian energy miracle, Pro-Alco­ hol, has been, when you get right down to it, the biggest farce mounted by the sugar barons, to fill their pockets at the expense of Brazilian taxpayers. Last year alone, the stagger­ ing energy inefficiency of alcohol earned the producers of that fuel the fabulous subsidy of several hundreds of millions of dollars. If the policy of government support for Pro-Al­ cohol continues, it will cost Brazil more than $100 million a month, merely in price subsidies. according to calculations put out by the state oil firm. Petrobnis. (Because of alcohol's energy inefficiency, one liter of gasoline is replaced by 1. 3 liters of alcohol and at the cost of much greater corrosion ot the vehicle.) Since alcohol, by Brazilian law, must cost 65% percent of gas, the difference is subsidized by the State. Likewise, the prices of alcohol-driven cars are kept down by

EIR March 14, 1986 Economics 9 productivity, occupy millions of hectares of the best fertile liters of alcohol, the bottom line is that to move a taxi for one land in Brazil. year we would need about 7 hectares of very fertile land! To According to the same investigators , in 1981 the cost of run a private car would take more than a hectare of land per a barrel-equivalent of alcohol was $80, but by 1983 the cost year. To move 2.5 million alcohol-fueled automobiles, more of production was $73.4 dollars per barrel-equivalent. This than 4 million hectares are being planted, and more than 1.5 drop was due firstto over-harvesting in the state of Sao Paulo, million workers and peasants work directly or indirectly in which went from three to four cane cuttings per year, and the production of alcohol. second, to the drop in production costs due to the cheapening This alcoholization of the economy has led to a reduction of manpower and industrial inputs in this period. by 17% of the area allotted to food production for intemai The absurdity from the energy standpoint is seen in that while in 1983 the cost of a barrel of gasoline refined domes­ tically with imported oil was $41 (and sold retail in Brazil for $120, with the difference being used mostly to pay the sub­ TABLE 1 sidies to alcohol producers), the equivalent in alcohol cost Energy flux density $73.4 dollars . The drop in oil prices has made this price gap a yawning chasm. Power denalty Energy aource (kllowatta per aquare meter)

Energy ftux density Solar-biomass .0001 These differences in monetary costs are not due to "mar­ Solar-earth surface .2 ket circumstances," as the alcohol producers and the auto­ Solar-near solar orbit 1.4 makers claim. The problem is more basic. Since September (5 million miles) 1979, Fusion magazine has warnedagainst the establishment Fossil 10,000 of the Pro-Alcohol program because the entire process had a Solar at sun surface 20,000 very low energy-flux density. As is shown by Table 1, al­ Fission 70,000 cohol, as biomass energy, has the lowest energy fluxdensi ty, Fusion (early commercial) 70,000 even lower than solar energy. A square meter planted in sugar Fusion (theoretical limit) over several millions cane produces during one year a maximum of 3.7 liters of of trillions of watts alcohol. From this quantity we must subtract the correspond­ ing areaoccupied by the process of refinementor distillation. With this amount of alcohol we could run a light bulb of less TABLE 2 than one watt per year! As can be seen in comparing the other Brazilian gasohol output sources of energy, this system turns out to be absurd. The Alcohol best form of using biomass energy is to produce food, culti­ production Required arable vating the earth with the highest technologies. from augar cane land area· Alcohol .. l .. The high inefficiency of Pro-Alcohol reached the limits V.. r (thoua. litera) (thoua. hectarea) (number) of criminality, as can be seen by the following data: During 1975 175 47 1985, about 10 billion liters of alcohol were produced (see 1976 175 47 Table 2), which meant more than 4 million hectaresplanted 1977 636 172 with sugar cane in the most fertile lands of the country of the 1978 1,510 408 south-central zone, especially the state of Sao Paulo. For this 1979 2,210 597 year, the installed capacity already exists to produce 12 bil­ 1980 2,591 700 241,000 lion liters , and for 1990 the thinking has been to double the 1981 3,036 820 137,000 presentalcohol production for fuel, which would mean about 1982 4,165 1,126 10 million hectares supporting this industry. In this area, we 234,000 1983 5,822 1,400 are not quantifying the surface occupied by the 380 immense 590,000 1984 7,864 alcohol refineries and the new ones that would have to be 2,000 590,000 1985 9,244 built. 3,243 590,000 Bususinessman Joao Augusto Gurgel points out that, giv­ 1986 12,000 (+) 4,000 en that a ton of cane produces between 60 and 75 liters of •• 2,400,000 alcohol, to supply the fuel for a taxi for one day of work, one needs one ton of sugar cane . We can finishthe calculation by • Arable land calculated on a productivity rate for sugar cane per hectare of saying that if this taxi runs 350 days a year, in that year it 60 tons per hectare; and a rate of conversion into alcohol of 3,000-3,700 would consume more than 26,000liters of alcohol. Since one liters per hectare. hectare produces 60-70 tons of cane and, therefore, 3,700 •• Number of existing alcohol-driven vehicles at the end of 1985.

10 Economics EIR March 14, 1986 c.onsumpti.on. It is n.ow being used n.ot.only f.or growing sugar Third, the m.ostseri.ous and the pripcipal key t.othe "suc­ cane, but .otherexp.ort pr.oducts such as s.oybeans, c.offee, and cess" .ofthe Pro-Alc.oh.olprogram is that the c.ountrylegitim­ .oranges. These f.ourproducts currently .occupyab.out 35% .of ized a system .of intensive lab.or whicH keeps severalmilli.on the cultivated area .of Brazil, .optimistically estimated at 50 peasants enslaved. Whereas a peasant in one day of work, milli.onhectares . With the 4 milli.onhectares dev.otedt.o sugar for example, in cutting cane, uses up more than 4,000 cal.o­ cane, the f.o.od problems .of the entire p.opulation of Brazil ries per day, he receives as payment the equivalent of that­ c.ouldbe s.olved. for himself and his entire family. Thi� is the reason why the president of Volkswagen in Brazil, Wolfgang Sauer, enjoys Schachtian model of slave labor repeating, "the alcohol-fueled car is an authentic Brazilian The reas.ons why Pro-Alc.oh.ol initially seemed t.o w.ork miracle." were three: This model of super-exploitation .oflabor power was pro­ First, .oilprices were extremely high. But even assuming moted by Ad.olf Hitler's economics minister, Hj almar this c.onditi.on, the Pr.o-Alcoh.ol program c.ould never have Schacht, starting in 1933, and led later to the organization .of produced at prices bel.ow that .of gas.oline, if it were n.ot f.or the concentrati.on camps under the Nazi terror . Schacht im­ the .other tw.o c.onditi.ons. posed this program by making people believe that intensive Second, the g.overnment granted huge subsidies t.o the lab.or was a national strategic imperative for Germany to producti.on and refinement .of sugar cane, with subsidized fulfill the conditions imposed by the international bankers credits at negative interest rates, .or even written .off. Ab.ove through the Versailles Treaty. With this same twisted reason­ all, the g.overnment st.oppedc.ollecting taxes on the p.otential ing, the Pro-Alcohol program was imposed in Brazil, t.o run producti.on .of the area n.ow cultivated in sugar cane, and 2.5 million cars with the gen.ocide of millions of human st.opped c.ollecting the taxes .owed by the landh.olders wh.o beings who toil in bestial conditions in the fields. .ownedthese immense tracts .ofland . F.orthese c.onditi.onsthe g.overnment paid, in fact, .out .of the nati.onal c.offers, the Who benefits from Pro-Alcohol? usury .of gr.oundrent t.o these latifundist "patri.ots." As we indicated, it was a nucleus .oflatifundist Brazilian and European families wh.o discovered the hom of plenty in Pro-Alcohol. The whole business was fraudulent from start t.o finish and marked by the role of the transnational auto­ Gasohol pushed mobile manufacturing c.ompanies. farmers An irony which should not escape the reader's attention on U. S. is that while Brazil's "gas.ohol"bo.ond.oggle has received the biggest government handouts in hist.ory, prominent among Despite the fiasc.o .of "gas.oh.ol" in Brazil, there is a the beneficiaries are such apostles of"'free enterprise" as ex­ maj.or push in the United States f.or pr.oducti.on .of the U.S. Treasury Secretary Bill Sim.on, a bitter f.oe of state absurdly inefficient energy s.ource, c.ombustible alc.o­ intervention to foster productive industry and author of the h.ol, fr.om valuable f.oodstuffs, particularly c.orn. Des­ introduction t.o the b.ook Free to Choose, by Milt.on Fried­ perate farmers are being pushed int.o this as a means .of man, the high priest .of"magic of the market place" economic getting rid.of surpius crops. The U.S. industry current- the.ories. 1y uses about 500 milli.on bushels .of c.orn t.o make This has to d.o with a peculiar financialorganizati.on which ethan.ol, the octane-enhancing additive which is used was b.orn with Pro-Alcohol: Brasilinvest. lts president, Mari.o in unleaded gas.oline. Interestingly, this industry has Gamero, f.ounded it in 1975, the same year in which, as ."boomed" since the envir.onmentalists succeeded in director of Volkswagen of Brazil and president of the N ati.on­ their campaign against lead in gas. The high pricey.ou al Association of Vehicle Manufactures, he launched the Pro­ payf.or unleaded gas includes the subsidiest.o the ethan.ol Alcohol program. He gained his Vo kswagen p.ost by mar­ t industry. rying the daughter .of JoaquIn M.onteiro de Carvalh.o, who is The biggest distiller .ofc.orn alcoh.ol is Archer Dan­ chairman of the powerful economic group, M.onteiroAranha . iels Midland (ADM) .of Decatur, Illin.ois, which has This group in tum bought up the Volkswagen st.ocks at the gr.own s.o rapidly that it nearly ranks with the. maj.or close of World War II, cashing in on previously c.oncluded grain cartels. ADM in 1984 pr.oduced .over 300 milli.on barter deals of grain for machinery, which had been worked gall.ons .ofethan.ol , a large percentage .ofthe industry. out by the Nazi financial "wizard," Schacht. On the board .ofADM are, am.ong .others, Mrs. Nels.on Among Brasilinvest's partners were found, when the in­ Rockefeller and R.obert Strauss, the f.ormer chairman stituti.onwas liquidated last year, Wolfgang Sauer, president .ofthe Democratic Nati.onal C.ommittee from the days of Volkswagen of Brazil, and the president of the airline .ofJi mmy Carter. company Varig, Helio Smidt, who turned up as a former member of the b.oard of directors, al.ongside U.S. Secretary

EIR March 14, 1986 Economics 11 of State George Shultz and ex-U.S. Treasury Secretary Wil­ cars per year. VW is the biggest feudal landlord in Brazil, liam Simon. (Simon jumped off the sinking ship one month together with Italian-based Pirelli conglomerate and the Swiss­ before Brasilinvest's bankruptcy was announced, but went based Nestle. These are partof the 342 landholders who own to Brazil to testify as a character witness for Mario Garnero !) 47 million arable hectares in Brazil. The network of Brasilinvest partners and executives is lost in These Brazilian and Eur0pean families are the only ones the muddy waters of the transnational auto assembly plants. who benefit from such an energy program, which has to be One example is Newton Chiaparini, vice-president of Brasi­ one of the major causes of internal inflation in Brazil. It is Iinvest, and ex-vice-president of Ford Motors. Garnerohim­ this clique of families that has let loose its dogs, in the Society self, besides having beena VW executive, kept tightre lations of Sugar and Alcohol Producers (SOPRAL), in the National with Gianni Agnelli, the owner of the giant Italian auto firm Society of Vehicle Manufacturers (ANFAVE A), among the FIAT, and had interceded with the late Brazilian President distillery producers, and in t e Central Cooperative of Sugar Tancredo Neves in FIAT's favor. and Alcohol Producers of Sa0 Paulo, to howl and bay against And so, in 10 years, Garnero succeeded in making Bras­ those who want to impose reason, and dismantle the insanity ilinvest into one of the biggest financial groups in Brazil, called Pro-Alcohol. with a network of operations in the Bahamas, Panama, S witz­ erland, and Liechtenstein, the notorious centers offshore banking centers, which allow every kind of money launder­ ing and capital flight operation. In early 1985, as a result of investigations by the Treasury Ministry, Brasilinvest was ordered liquidated for having car­ ried out frauduluent operations, for issuing financial instru­ ments out of thin air, without backing. For these proven Recently ,aproposal circ lated in Europe to produce financial crimes, Garnero, an erstwhile agent of the U.S. ethanol with Common M et surpluses, i.e., fuel made State Department, deserved to be jailed, and this was de­ SUbstantially from grain, nd alleged to be more eco- manded by the Treasury Ministry and the Justice Depart­ nomical, cleaner, and more "ecological" than petrole­ ment's prosecutor. But from then on, the judicial process um . The proposalcame fr m the Ferruzzigrou p, head­ against Carnero got bogged down, and in the end he got off quarteredin Ravenna, Italf, one of thebiggest agricul­ the hook , when the Central Bank allowed Italy's Ferruzzi tural groups in Europe and the world-and a leading group to buy up Brasilinvest, in partnership with the Montei­ players the Brazil Pro -A!lcohol hoax. in .'1 ro Aranha group. Th us, the former brother-in-law of Gar­ The Ferruzzi group, �anaged by Raul Gardini, is nero, Joaquin Monteiro de Carvalho, who owns 10% of the quoted on the Milan stoc market, but its empire ex­ stocks of VW Brazil, picked up the tab on the mess-but tends to every corner of he globe. It has land and everything stayed in the family! d S livestock in Paraguay, Br�zil, and �he Unite tates, The Ferruzzi group, headed by Italian entrepreneur Raul and finance companies ip Luxembourg, Belgium, Gardini, is not exactly alien to the sugar business. Besides France, the U.S.A.,and 'Jlrazil. Its annual turnover producing grain, concrete, cement, ships, and tents, it holds surpasses $4 billio,n. Fe:rn.:izzi is the only Italian firm, the reins of the biggest sugar monopoly empire in Europe . besides the Venetian ins 1 rance giant Assicurazioni The Ferruzzi group is the main producer of sugar in Italy, Generale, to have been recognized by Edmond de and the main producer of sugar in France, besides controlling Rothschild, the "Swiss-Venetian" financier, as having a large volume of soybean imports and owning 800,000 hec­ international stature . tares of land between Brazil, Paraguay, and Argentina. The Ferruzzi group is·, said to be allied to Italian It must be remembered that the Monteiro Aranha group financier Carlo be Bened tti, who recently made an was a key part of the Atlantic Community Development unsuccessful bid to buy tht( Italian state-held fOO

12 Economics EIR March 14, 1986 and reduce the role of government- in economic policy. Thatcher's private economic advisers were coached by Prof. Karl Brunner of the Mont Pelerin Society. Bruimer, who alternates between residence Geneva and New York, has 'Privatization' to ravage been perhaps the single most influential strategist of the "Thatcher Revolution" and the Reagan "Supply-Side Revo­ German economy lution." As a result of the policy imposed by Thatcher's retreat from dirigism, British industry is a wreck of rusty, by William Engdahl outmoded technology. Britain's most important asset of recent decades, the vast reserves of oil and gas discovered in the North Sea, has been West German Economics Minister Martin Bangemann (Free turned over to private companies which are presently col­ Democrat) has just won the agreement of Chancellor Helmut lapsing investment in the area because it is cheaper for them Kohl's coalition government to a series of proposals which, to get oil on other markets. Already privatized under Thatch­ if implemented, will ensure that the remaining industrial base er's program are Britoil, the state oil company; National of West Germany will go the way of that of Britain and the Telecom, the telephone and telegraph utility; Associated Ports United States. Bangemann's Annual Economic Report, on Holdings, the national harbor authority; British Petroleum; the theme "dismantling dirigism," calls for selling off state­ British Gas; British.Airways; British Shipbuilders; and Brit­ owned enterprises, using the fashionable liberal term, "re­ ish Aerospace. It is now proposed that the state sell off th� privatization." The document has been approved by the entire National Water Authority, which regulates the provision of cabinet as governmentpol icy. basic drinking and industrial water to the nation. Bangemann proposes to remove the last of the protective barriers which West German industry has built up over a Junk bonds and stock bubbles? century and half, and which restrict "wild west" stock-market . The sale of German state enterprises to the "private sec­ speculators from using the bourses to play with major indus­ tor" is only one side of what has become the biggest stock tries as though they were chips on a Monte Carlo gaming swindle in human history-worldwidederegulation of finan­ table. The proposals will remove taxation on stock transac­ cial markets. This scheme, the most ambitious project of the tions, open medium-size companies to the lure of the unre­ Mont Pelerin strategists, will make banking nothing but one gulated bourses, and sell off such state enterprises as Veba, vast money-laundry for moving hundreds of billions in world VW, and Salzgitter. Even Lufthansa, Airbus, and the Bun­ criminal revenues into the takeover of entire national econo­ desbahn (Federal Railway) can become targets for privati­ mies. The model for this fraud is the New York Stock Ex­ zation . In the 1920s, Hjalmar Schacht, Hitler's economics change and the development of what are known as "junk minister, openedGerman steel and other industry to the loot­ bonds." ing of the London and New York financiers around' Morgan Last year, through one firm, Drexel, Burnham, Lambert, Bank. That swindle was known as the Dawes and Young with headquarters in New York, $47 billion was raised in so­ Plans after the signing of the Versailles Treaty. But Schacht called junk bonds to finance huge, speculative corporatetake­ would drool in envy to see what Herr Bangemann and his overs. colleagues now want to impose on a largely unsuspecting Under recently passed U.S. laws, financial markets are German nation. effectively removed from any and all state control and super­ vision. They can literally "get away with anything." An es­ The Thatcher model timated 70% of the "boom" in the U.S. stockmarket in the The "privatization" frenzy of recent years swept from past three years has come from . purely speculative stock Thatcher's bankrupt England, via her Swiss-based econom­ mergers or rumors of mergers, financed largely by "junk ics advisers, to Ronald Reagan's Washington, and now bonds." threatens the industrial capacity of Western Europe. The Revisions of U.S. law, very similar to what Herr Ban­ Bangemann strategy is "Made in England" by Swiss tailors. gemann plans to impose in the Federal Republic, permittiny , With finishingtouches by such as the Kjel Institute's Herbert often unheard-of firms with assets of millions to take over Giersch, Germany's "privatization" actually originates with billion-dollar giants like Gulf Oil, Bethlehem Steel, or Trans an elite circle of secretive economists around the aged Fried­ World Airways, Names like T. Boone Pickens, Carl Lindner, erich von Hayek, Milton Friedman, Max von Thurn, and Saul Steinberg, Vic Posner, Stephen Wynn of the Atlantic Karl Brunner-the so-called Mont Pelerin Society. These City "Golden Nugget" casino, people who, a decade ago, "economists" go so far in their "free market" economics were buried in the dark recesses of arbitrage or "loan shark­ (read: usury) as to call for the legalization of heroin. ing," suddenly become "respectable" giants in corporate In 1979, Britain's "Iron Lady," Margaret Thatcher, came America, How? into office with a commitment to dismantle the state sector Junk bonds are totally unsecured debt-or rather, debt

�IR March 14, 1986 Economics 13 secured only by the value of the firm to be taken over by use of the borrowed funds. Thus, a small firm, targeting a cor­ porate giant, uses, not its own net worth, but the net worthof Currency Rates the targeted giant to secure the loan. The borrowed debt is then repaid by "asset stripping" of the victim company. Thus, in one case, little-known Triangle Industries, with a net worth The dollar in deutschemarks of $65 million and annual sales of $2 million, borrowed$428 New York late afternoon fixing million at 18% interest. Why? In order to take over one of the top 500 U.S. industrial companies, National Can Cor­ 2.60 poration, with assets in the billions. 2.50 The loans come to this select circle of takeover specialists from one company, Drexel, Burnham, Lambert of the Bel­ ---- 2.40 .- gian Baron Lambert. Drexel raises capital from international " � --: ...... sources in the form of junk bonds. (Because junk bonds are 2.30 ""'� totally unsecured, if the firm goes into bankruptcy, holders of these bonds get nothing for their paper. Hence the name 2.20 " "j unk. ") 1115 1/22 1/29 2/S 2/ 12 2/ 19 2/26 3/5 Drexel, Burnham, Lambertis reliablyreported to belinked The dollar in yen to the murky world of offshore money laundering and the New York late afternoon fixing secret Luxembourg, Swiss, and Panamanian bank accounts used by the narcotics mafia to "launder" billions in illegal 210 drug revenues back into the legitimate economy. Gambling casinos such as those in Las Vegas have been run by orga­ 200 nized crime since the 1930s for just this purpose. But as the \. 190 � revenues of criminal activity have soared in recent years, . - new innovations have been developed. Enter financial dere­ gulation and "financial innovations" in world stock markets. 180 �. I"- At the center of the "financial revolution" has been Don­ 170 ald Regan's Wall Street firm, Merrill Lynch. "Merrill Lynch, 1115 1/22 1/29 2/5 2/12 2/ 19 2/26 3/5 E. F. Hutton, these firms are synonymous with fraud," com­ The dollar in Swiss francs mented one veteran attorneyin the Federal Republic familiar New York late afternoonfixing with a wave of law suits against these firms' branch offices in Germany and elsewhere. "Why else do Merrill Lynch or 2.20 E. F. Hutton have offices in Lugano, Switzerland? The 'Piz­ za Connection' is only the one that got caught laundering 2.10 illegal money across the Italian border into secret Swiss bank­ ing accounts." 2.00 '- � In October, under what is called by the financial specu­ lators the "Big Bang," the City of London will complete the 1.90 � � Thatcher process of deregulation of financialmark ets. At that point, 24-hour Hong Kong to London to New York comput­ 1.80 1115 1/22 1/29 2/5 ; 2/26 3/5 erized speCUlation in the billions will be unleashed daily. 2/12 2/19 Frankfurt and other German bourses and banks are simulta­ The British pound in dollars neously removing the last vestiges of defense against this New York late afternoon fixing "offshore" attack. There will be no restriction on "foreign capital" coming in to buy up German industry, loot it of 1.50 value, and sell the remains for scrap. Meyer Lansky's defunct 1.40 � '" Investors Overseas Services, the most famous money laundry r--.... .- � """"" "-� of the 1960s, pales by comparison with this computer-age 1.30 swindle.

Leading Mont Pelerin official Max von Thurn, relative 1.20 of Bavarian financierPrince Johannes von Thurnund Taxis, three years ago delivered a speech in which he advocated 1.10 government legalization of the "black economy." The Ban­ 1115 1/22 1/29 2/5 2/ 12 2/19 2/26 3/5 gemann plan will do just that.

14 Economics EIR . March 14, 1986 Agriculture by Marcia Merry

Not the man for the job and then established the commodities The difference betweenRi chard Lyng and John Block is "more trading division of the Wall Street bro­ stylethan substance. " kerage house, Goldman, Sachs. Since 1983, Amstutz has personally shuttled between Washington and Moscow to guarantee cheap U. S. food exports to the Soviet Union, andat the same time, TestimOny was presented March 4 tee . On March 4, the day of the hear­ has collaborated with George Shultz in the Senate Agriculture Committee ing, committee chairman Jesse Helms to initiate "food trade war" programs on the matter of the nomination of contrived the time and circumstances against U.S. allies. Richard Lyng as the next secretary of for the NDPC to speak in a way in­ During the Senate confirmation agriculture. Lyng is just the kind of tended to play down criticism of the hearing, Lyng deferredto this policy, "grey man" that does not evoke con­ USDA. called euphemistically the "exporten­ troversyin Congress, so there were no Helms invited the NDPC spokes­ hancem�nt program," by announcing sparks flying at the hearing, and con­ man, Gerald Kopp-a wheatgrower that increased farm exports would be firmation by the committee came on and Democratic Party contender for his top priority. Next month, for ex­ March 5, by voice vote . Congress from North Dakota, to speak ample, the rice "export enhancement" Lyng was state agriculture direc­ soon after 12:00noon . That is the time program goes into effect, in which tor in California from 1967 to 1969, when the MUZAK goes on in the Rus­ government-owned Commodity and served in the USDA during the sell Office Building corridors, so no CreditCorp . (CCC) ricestocks will be Nixon administration, and the first four one in the back of the hearingcham­ given for free (at taxpayers' expense) years of the Reagan administration. bers can hear anything. to the cartelrice exporters , to undercut From 1977 to 1979, Lyng was presi­ Just before introducingMr. Kopp, farm exports of allies of the United dent of the American Meat Institute. Senator Helms publicly announced States, like Thailand. The state of disarray and collapse that Richard Lyng was welcome to Ironically, the same week as the of U . S. agriculture as of March 1986 leave at that time. So, Lyng did not hearing, the Commodity Credit Corp. shows that only a "superman" could have to meet the NDPC farm leader requested an emergency $5 billion au­ cope with the USDA job under the face to face. thorization from Congress to continue disastrous policy direction taken by Kopp began his testimony, "I am meeting its purchase obligations to the administration and Congress. Both advising against the confirmation of farmers. government branches have acted un­ Richard Lyng as secretary of agricul­ Lyng testifiedto the committeethat der the myths that there are food "sur­ ture, because, based on his previous the new five-year farm law, which pluses" in the United States, that low­ USDA service record, and his perfor­ lowers CCC and all price supports to ering farm crop prices will promote mance to date, he has not shown him­ U.S. farmers , will make their prod­ "competition" on world export mar­ self disposed to take on the tasks of ucts more competitive. He used he­ kets, and that everything will im­ reversing the disastrous policies, and man rhetoric to reassure the commit­ prove . In fact, serious food shortages moral and bureaucratic breakdown, of tee he would conduct a "hands-on,full­ will inevitably be the result of the cur­ the U.S. Department of Agriculture. press effort" to improve exports, rent acreage reduction and farm bank­ The requirements that the next agri­ which, he finally added, "would not ruptcy programs, and world famine culture secretary must meet include, be easy." and epidemics will be guaranteed. in particular, the willingness to stop On farm bankruptcies, Lyng In the meantime, low crop prices the domination of USDA policies by lamely commented, "I have a concern are simply guaranteeing the domina­ Cargill, Inc., and similar cartel inter­ and compassion for these people and tion and profits of the major foodcar­ ests, through the office and channels realize that USDA has a particularly tel export houses-Cargill, Bunge, of influence of Undersecretary of Ag­ significant role in trying to bring so­ Continental, Louis Dreyfus, Andre, riculture Daniel Amstutz. Amstutz lutions wherever possible." and the rest. himself should be removed from his Perhaps his most accurate state­ Testimony to this effect was pre­ position on grounds of conflict of in­ ment concerned the difference be­ sented in writing to the Senate Agri­ terest. " tween himself and the outgoing John culture Committee on March 3 by the Amstutzjoined the USDA in 1983. Block: It "would be more in style than National Democratic Policy Commit- He had spent 25 years with Cargill, in substance."

EIR March 14, 1986 Economics 15 Labor in Focus by Marianna We rtz

Pilots, attendants warn on safety ants in the event of a strike. Under attack by the airlines' creditors, employees are publicly The nation's airlines are victims of warning that safe ty has deteriorated beyond acceptable limits. the vicious "free enterprise" vise cre­ ated by the twin pressures of deregu­ lation and high interest rates. East­ em's plight is paradigmatic. Eastern Airlines holds a debt of $2.5 billion. When deregulation hit in 1978, the airline attempted to cut costs by mod­ ernizing. It ;wasforc ed to incur debt at In an unprecedented action, brought greatest threat to safety, " Eastern Paul VoJcker's stratospheric interest about by "the pilots' concernover the Transport Workers Union spokesman rates, and today pays $250 million a reduced standards of safety since the Cathy Nelson told a Chicago press year in interest to its American and airlines were deregulated in 1979," the conference the day before the settle­ European �reditors, led by Chase pilots of United Airlines on Feb. 25 ment. Under new work rules imposed Manhattan Bank and Citicorp. passed a "vote of no confidence" in by the company, she said, flight at­ To ensure payment on that debt, United's flight management policy. tendants are working up to 18 hours a the banks installed their chief "asset­ The Master Executive Council, lead­ day and spending, in many cases, more stripper," Texas Air Chairman Frank ership arm of the 6,000 United pilots than 25 continuous days away from Lorenzo, as new CEO at Eastern in who belong to the Air Line Pilots As­ home. late February. Lorenzo is a close friend sociation, denounced United for its The Eastern attendants accepted a of Chase M�nhattan president and Tri­ new policy "of merely meeting the new accord including 20% pay cut�, lateral Commission founder David minimum standards as set by Federal reduced vacation and benefits, and Rockefeller, Mere mention of Loren­ Aviation Administration regula­ more flight hours. The mitigating fac­ zo's name, So hated and fe ared by the tions. " tor in the contract was the company's unions, forcl!da quick settlement with The council also revealed that agreement to rehire many ofthe 1 ,010 all but the machinists, who refused to United recently petitioned the FAA to attendants laid off in February when open their I �87 contract to renegotia­ have certain minimum standards re­ the company moved to prevent liqui­ tion, as the banks demanded. Lorenzo duced. Roger Hall, chairman of the dation by its more than 60 banking last year purchased the bankrupt Con­ council, said, "Considering the safety creditors. tinental Airlines, put it through Chap­ record of the airline industry this past Trans World Airlines attendants ter II banIavptcyreor ganization, and year, the pilots of United believe safe­ are heading toward a possible strike in ripped up its union contracts. ty standards should be raised, not low­ early March. Like their Easterncoun­ The brutal treatment of the na­ ered. This is an absolute necessity to terparts, the TWAattendants have of­ tion's airlines workers has ramifica­ insure the safety of the traveling pub­ fered to take a 15% wage cut, but new tions not onlf for union members. The lic." TWA chairman Carl leahn has de­ breakdown .n what most Americans This striking development oc­ manded a 22% wage cut and a 23% have considered to be untouchable curred in the context of the greatest benefitcut too, a condition the attend­ safety standards is the direct result of turmoil in the nation's airline industry ants have so far refused. the bankers', determination to break since deregulation. Two major air­ leahn, one of the nation's leading the airline unions and cut costs. lines, TWA and Eastern, are em­ "asset-strippers" (financiers who The fare ; war that has already be­ broiled in bitter disputes with their "save" companies by selling offtheir gun as a result of Eastern's buyout by unions over cutbacks being forced by tangible assets) said that a successful Lorenzo ma)! bring airline passengers the depression conditions in the indus­ strike might force him to "dismantle" a few dollars in immediate savings. Its try . the airline and sell the pieces. "I ex­ long-term effect, however, will be Eastern Airlines attendants, who pect to be able to operate TWA with further cannibalization of the airlines' settled on a new three-year contract on or without a settlement" with the at­ infrastruCture, greater sacrifices de­ Friday, Feb. 28, narrowly avoiding a tendants, leahn told the press . TWA manded of , the already-stretched strike, have also denounced their air­ has trained about 1,500 reservations workforce, and, necessarily, a rapidly line for safety violations. New auster­ clerks to replace the attendants, and declining saf�ty situation for the na­ ity-driven working conditions are "the plans to hire 1,500 additional attend- tion's airline passengers.

16 Economics EIR March 14, 1986 Report from Mrica By MaryLalevee

Preparing for a debt conference Nigeria is being forced to freeze all Many creditor countries have rejected OA U proposals to import licenses, on which domestic "globalize" the debt problem-but it may happen anyway . industry depends, following the fall in oil prices, and one businessman was quoted in the Financial Times saying, "I have written this year off. " What could result from such prob­ lems was hinted at in an article in the A series of top level meetings are the need for political steps to be taken. weekly African Concord. by editor due to take place at the headquarters A Somali source said that Diouf is de- . Lewis Obi. Writing on the shock that of the Organization of African Unity termined that the debt problem should the fall in oil.price had caused to the in Addis Ababa, Ethiopia over the not be handled by bureaucrats, but by economy, he concluded, "No-one is course of March, preparing for two Presidents and heads of government, certain what Nigeria would do in the major international conferences on as a political problem. circumstances [of a further fall in the Africa. According to Diouf, in his talks so price], but debt-servicing would cer­ The first is the United Nations far, his call has been rejected: Every tainly not be the priority of a country . Emergency General Assembly Ses­ government has insisted that the debt which had consistently earned more sion on Africa, due to take place from problem can not be "globalized," but than $7 billion yearly from oil in the May 27-3 1. The two key themes there should be handled on a case by case past 10 years and would have to settle will beagriCUlture and debt. The OAU basis. Only French President Franc;ois for slightly more than $2 billion." chairman and President of Senegal, Mitterrand supports him, he is repo,rt­ Zaire's President Mobutu is also Abdou Diouf, said in an interview to ed to have said. But even the French hinting at action on: his country's debt: the Frankfurter Allgemeine Zeitung on bureaucracy has spoken out against In a speech given at the New Year, but March 4, that this U.N. conference such a conference. only recently drawn to our attention, "must not fail." A "development Moves to strengthen South-South he pointed out that Zaire had imple­ charterfor Africa" should be signed at cooperation are being taken within mented all the IMF's demands, and the session, whose central point will Africa, very much along the lines of the result had been: "In three years, bethe rehabilitation of agriCUlture. that EIR founding editor Lyndon Zaire has paid a total of 1,371 million Diouf is going to Germany March LaRouche proposed for Latin Ameri­ SDRs to pay its debt. During the same 17-20, after a visit to Austria, to seek ca in his 1982 Operation Juarez doc­ period, loans madeto our country were support forhis proposal. He will also ument. During Tunisian Prime Min­ only 893 million SDR. If you examine visit Moscow, with the same aim. So­ ister M'zali's recent tour of West Af­ these figures, you will see that we are viet contributions to Africa's econom­ rica-the firstever by a Tunisian gov­ paying a lot without receiving any­ ic development have been virtuallynil ernment leader-discussions took thing in return. This is not fair for a over the last 30 years. place about increased barter deals, and young country which has to devel­ The key question remains Africa's economic and political cooperation op ....During these three years, the debt: Sources have stressed: "Unless between sub-Saharan countries and Zairean people haS accepted depriva­ the debt problem is solved, all other North Africa. The first results of this tions and agreed to enormous sacri­ measures will be useless." are aplanned "Tunisian fortnight" in fices.. .. However, there are lim­ President Diouf has been cam­ Ivory Coast and Gabon, a trade fare its. . . . I do not lead sheep, I lead paigning broadly for the holding of a presenting Tunisian products to the men. Rigor, payment of externaldebt , conferenceon Africandebt , and in the public. Gabon's PresidentBongo spent the 'bravos' and the congratulations, FrankfurterAllgemeine interview, he four days on an official visit to Tunisia they are all good, but you can't 'eat' said that he would be calling for Ger­ at the beginning of March to concre­ rigor, you can't 'eat' congratulations. man supportfor such a conference on tize efforts at collaboration. I have another debt, a very important debt during his visit. Urgent solutions have to be found one: the one I have contracted to my Diouf sees the danger, wrote the to Africa's economic problems: the people for its happiness and prosperi­ German paper, that too many techni­ falling price of commodities, includ­ ty. When will I be able.to honour this caldetails at the U.N. session will hide ing oil, is hitting Africa very hard. debt?"

EIR March 14, 1986 Economics 17 BusjnessBriefs

Ibero-America : fall of ex-President NicolaisArdito Barletta, continues to soar-despite administration who was implementing IMF dictates. He claims-the poverty-line ceiling will crush u.s. to cut ofT was replaced by then� Vice President Eric more and more families. aid to Bolivia Delvalle. The proposal , which the President is CONATO leaders were then permitted pushing as a way to "disentangle" the poor to go inside to address the assembly and from "dependency" on the federal govern­ The u.s. government intends to cut off all condemn "undeniable pressures on our ment, attacks the welfare system for de­ new aid to Bolivia, until Bolivia wipes out country from the IMF and World Bank." stroying families, eliminating work incen­ at least 10,000 acres of coca bushes, the The speech given by a CONATO represent­ tives, etc . U.S. embassy in La paz announced the first ative was broadcast on National Radio, week of March. which covers every session of Congress. President Victor paz Estenssoro replied Nevertheless, the Panamanian govern­ that the withholding of aid "endangers our ment on March 6 introduced the legislative Development delicate program of economic and political package demanded by the IMF and the World stabilization." The Bolivian military is now Bank. By all reports, this was the result of Garcia buys into considering canceling some small joint ma­ intense blackmail by the U.S. State Depart-

neuvers with the United States. ment. ,_ Nestle milk production The aid involved totals $1.5 million, but That legislative package, the same as the fact of Bolivia falling into the bad graces that which forced Ardito Barletta to resign, Peruvian President Alan Garcia's govern­ of the United States suggests that pressures includes anti-laborchanges in the labor code, ment will buy out 15% of the Nestle milk on Bolivia from the International Monetary and reformsin investment laws to allow for­ plant in Arequipa: Fund and bankers will escalate . eign capital to take over companies and local Peru will make its investment in terms Almost simultaneously, on March 4, markets. The reforms are opposed by both of new packaging ecjuipment so that milk Hugo Banzer, Bolivian dictator from 1971 labor and industry . The whole package is can beprovided more cheaply to the poorest through 1978, was in Washington, D.C. as expectedto be approved by the Congress on sectors. Garcia, while visiting a poor Lima part of a secretive visit which will also take March 10. slum, stated: "It is preferable to drink pow­ him to Europe and Israel. The Panamanian labor movement im­ dered milk packaged in plastic bags that Banzer, who overthrew an elected gov­ mediately held an extraordinary general as­ would cost 5% of the milk's total price" than ernment and ruled during the periodin which sembly, in which they decided to hold a wasting one-third of the cost on cans for the Bolivia was made into a cocaine paradise, general strike March 10. evaporated milk Nestle now markets . was an "honored guest" at the 1984 Repub­ He also condemned Nestle, a Swiss­ lican Party convention in Dallas. Banzer has based food-cartel giant, for having a "mo­ a pact with President paz Estenssoro to pro­ nopoly" over milk in Peru . It takes pow­ tect the regime from the workers' move­ dered milk imported and subsidized by the ment, but claims no responsibility for the U.S. 'Recovery' governm�nt, only to add water, can it, and government's failures. sell it. Measures to liberate the poor from 'dependence'

Austerity In a desperateeffort to cut the domestic side InterTUllional Trade of the federal budget to conform to the dic­ Panamanian workers tates of the Gramm-Rudman law, President U.S.S.R., Kuwait Reagan has called for a cap of $10,990 as in anti-IMF demo the maximum income allowable for families sign agreements receiving federal assistance through any Panamanian workers held the largest anti­ combination of welfare , Medicare-Medi­ The Soviet Union and Kuwait signed im­ International Monetary Fund (IMF) dem­ caid, subsidized housing, and other such portant oil market and banking accords in onstration in Panama's history on March 4. programs . That figurerepresents the official February: According to the Feb. II KUNA Leaders of theNational Council of Orga­ poverty line for a family of four. news agency of Kuwait, the protocols in­ nizedWorkers (CONATO) said that 40,000 Right now, the percentage of recipients clude joint construction of oil installations were in the street. of such programs with incomes above the and other projects in the two countries, as The demonstrators marched peacefully poverty line ranges from 46%for Medicaid well as the building of such facilities in third to the National Assembly, chanting slogans to 27% for subsidized housing. Thus, the countries; an agreement: to regularly ex­ such as "Delvalle, respect us, or you go like "cap" would create hordes of "new poor." change information on conditions in the oil Barletta," referring to the resignation last In addition, in six months' time, as inflation markets; and an agreement to cooperate on

18 Economics EIR March 14, 1986 .Briefly

trade exchanges involving oil and its by­ which he is now wrangling with Congress. products. Earlier, on Feb. 4 Reagan had stated that • ABOUT 10,000 people are ap­ The protocol also provides for "financial such a tax might be in order, to offset some plying for only 270 jobs at the soon­ cooperationbetween banking institutions in changes in tax laws that would otherwise to-open General Electric plant in the two friendly countries. . . . " tend to discourage investment in oil-produc­ Buffalo, N.Y. The jobs are to over­ They also stated something the Russians tion. Now he says he's thought better of it. haul New YorkCity subway cars. have never before said, and certainly have The fee, more importantly, would also never done, their intention to jointly lend have functioned as a protective measure, • MEXICO will de-nationalize $1 assistance to underdeveloped countries in safeguarding domestic producers against the billion in state-sector industries, developing their national economy, and to ongoing collapse of international oil prices. Planning Miili�er Carlos Salinas de implement oil projects as well as energy and . This decision followed testimony by Gortari said in late February . He was irrigation schemes in third countries. DeputyAssistant Secretary of State E. Allen quoted in the Financial Times saying Wendt to the Senate Finance Committeethat "at least" 80 more public companies an oil import tax would "set back relations would beput on sale, including Mex­ with our neighbors and closest allies," and icana airlines. The Financial Times "strengthenthe hand of unfriendly elements believes the government will persist Labor in key developing countries." in efforts to sell half of the $3 billion At the same hearing, Texas Railroad Sicartsasteel complex to Japanese in­ Thrkish workers Commissioner Mack Wallace testified that terests. demand strike rights 30% of the nation's oil producing capacity will be shut down if prices remain at the $15 • SAUDI ARABIAN Oil Minister per barrel level for another six months. ZakiYamani blamed non-OPEC pro­ On Feb. 22, more than 20,000 workers ducers for the collapse of world oil seeking greaterunion and strike rights staged prices, and he called on Japanese Turkey's firstprotest rally since the Septem­ Prime Minister Yasuhiro Nakasone ber 1980 military coup. Disease to take up the issue at the May eco­ Approximately 3,000 police cordoned nomic summit. Yamanisaid he hoped off Izmir's Republic Square and searched AIDS situation called that Britain and other oil producers workers attending the rally, organized by outside OPEC would help stabilize the country's largest trade union confeder­ 'terrible,' but secret the market by curtailing production. ation, Turk-is. Britain "was not cooperating," Ya­ The demonstration was held under the "The plague of the 20th century," has been mani said. slogan "Bread, Peace, and Freedom"; Some the theme of a conference on "AIDS , A demonstrators, however, chanted slogans Problem of Public Health," taking place in • THE U.S.S.R. plans to increase callingfor the government's resignation. Madrid, Feb. 27-March 1. The conference shipping and Iliade links with Singa­ Turkey has beenunder intensive strateg­ has beenco-sponsored by the National Cen­ pore, according to Soviet Trade Rep­ ic pressure from the Soviets and their ally ter of Microbiology, Virology and Immu­ resentative M. A. Vilenchik on Syria, as well as from Greece, while U.S. nology, and Administration, of Madrid. March 4. He said that some 965 So­ military aid has been held up. The nation is According to speakers, the number of viet ships passed through Singapore known to be on the same U.S. State Depart­ cases of AIDS in Spain has risen from 8 in last year, making the Soviet Union ment destabilization list which featured 1983 to 83 in 1985. Cases are expected to the leadingmerchant navy in the area. President Marcos of the Philippines. double within the next six months. One Despite a decline in Soviet-Singa­ speakerrevealed that the spread of AIDS in poretrade in 1985, Vilenchik said his Spain is greater among heterosexuals than country was "exploring ways to ex­ homosexuals, for various reasons , one being pand economic ties." 'Free Enterprise' that Spain must import blood for its hospi­ tals from countries with high incidence of • DR. STEPHEN �ARRETT, a Reagan reverses stand AIDS . This has exacerbated the situation, psychiatrist from Allentown, Penn­ particularly in Madrid. sylvania, in the keynote address at the on oil-import fee One speaker at the event was Dr. D. 115th annual California Medical As­ Armstrong of the Cornell University Medi­ sociation Convention the first week Acting on the advice of his arch-"free enter­ cal College in New York City, who reported of March, said that "medical quack­ prise" Counsel of Economic Advisors chief that the AIDS situation in New York is "ter­ ery" is a $10 billion business in Beryl Sprinkel, President Reagan in early rible." He saidthat panic has not yet hit New America. It is not known if he includ­ Marchdefinitively rejected anoil importfee York, because of various panic-prevention ed psychiatryin that category. as part of a larger tax-reform package, over measures and a "goodpublicity campaign."

EIR March 14, 1986 Economics 19 TIillScience &: Technology

Disastrous cuts in 1987 budgetfo r fusion power

Charles B. Stevens reports on the consequences qfam putating Americas most promising energy source qfthefuture.

Soviet physicist Academician Nikolai Basov, the scientist search, are shown in Figure t. The dotted line plots the who shared the Nobel Prize for developing the laser, an­ projections made by the government in 1976 for the budget nounced to the 27th Congressof the Soviet Communist Party necessary to realize commercial fusion electric power plants in Moscow at the end of February, that inertial fu sion could by the year 2005. beperfected for industrial applications before the year 2000. As the figure shows, the actual budget is now at about Evidence is alreadyemerging that Mikhail Gorbachov' s chief one-third the level needed for fusion energy development, by science adviser, Yevgenii Velikhov, has perfected a com­ the government's 1976 projections. The proposed 1987 budget bined form of inertial andmagnetic fusion energy production will cut deep, as funding descends to levels below those of for powering space-based beam weapons. 1976. These developments serve to underline the shocking in­ Whereas previous cuts have primarily undermined the adequacy of the budget for fusion powerresearch and devel­ technological prospects of realizing the commercial poten­ opment proposed by the Reagan administration for Fiscal tials of fusion energy, the current round of cuts will destroy Year 1987. If passed by Congress, it will undermine any substantial portions of the program's scientific base. The prospectfor development of commercial fusion poweron the scientific manpowerof the fusion program will bereduced to timetable proposed by scientists during the Carter adminis­ a fraction of what it was in mid- 1 970s. The proposed cuts tration;it will put a brake on any effort to reindustrialize the will mean lay-offs for scientists, engineers, and other staff in U.S. economy over the coming decades and, more immedi­ university research programs throughout the country . Highly ately, it will sabotage President Reagan's Strategic Defense trained researchers working on basic theoretical issues will Initiative (SOl) project for developing effective missile de­ find themselveswith no job in the plasma physics field. fenses, since the technologies required for achieving "break­ This disaster is exacerbated by the distribution of the even" in fusion power, are closely interrelated with those remaining resources of the program . To a government ac­ requiredby an antiballistic missile defense system. countant, it might appear more rational to maintain a large, Although the proposedbudget might appearto be a linear capital-intensive experimental facility, than to fund a diver­ continuation of previous real cuts implemented each year sity of smaller efforts with higheroperating costs perscien­ since the Carter administration in 1976, the cumulative im­ tist. But the direct resultof thisreasoning is that the proposed pact has reacheda pointwhere the very scientificbase of this budget cuts will wipe out large areas of basic fusion and essential program is endangered. Furthercuts mandated un­ plasma research. The situation is aggravated by the fact that der the Gramm-Rudman bill will intensify this process. government estimates of inflation rates are generally much The actual appropriations from 1976 to 1986, together too low, particularlyfor scientific R&D. with the FY 1987 Reagan request for magnetic fusion re- Ironically, despite the continuing trend of budget cuts

20 Science & Technology ElK March 14, 1986 since 1976, the U.S. fusion program has been able to meet­ tory-have shown that current economicpotential for fusion and in many cases substantially exceed-all of the scientific energy is far greater than that originally projected in the mid- goals projected in the 1976 government study. As Figure 2 1970s. According to one 1983 study, fusion has the potential shows. there has been consistent progress as fusion experi­ of producing electrical energy for as little as half the cost of ments have moved toward meeting the physical parameters current and future nuclear fission and fossil fuel power sys­ needed for fusion energy production. It is now likely that tems, and commercial prototypes could still be achieved be- . both the European JET tokamak and the U.S. light ion beam fore the year 2000. PBFA-ll (Particle-Beam Fusion Accelerator) at Sandia Na­ A detailed review of the FY 1987 budget request dem­ tional Laboratory will demonstrate the conditions needed for onstrates that this potential is being forfeited and that sub­ substantial net energy production-despite the fact that nei­ stantial segments of the scientificbase are being gutted. Fig­ ther device was originally designed to attain this goal . ure 3 gives a breakdown for the magnetic fusion R&D pro­ As the budget has decreased, the economic stakes have gram from FY 1985 to FY 1987 in current dollars. increased. In recent years, studies of fu sion's economic po­ It should be noted that it is impossible to give any com­ tential-such as those carried out under the direction of Dr. parable analysis for the inertial confinement laser and particle John Nuckolls of Lawrence Livermore National Labora- beam pellet fu sion R&D effort , because this program was not even given a separate budget line in the current request. The detailed figures for this program will not be released until and

FIGURE 1 unless the directors of the U.S. national laboratories-Los Fusion budget versus requirements for fusion Alamos, Sandia, and Lawrence Livermore-decide to make development them available. In FY 1986, the Reagan administration had proposed a zero budget increase for inertial confinement. We present here the situation with each subprogram of Millions of 2005 the magnetic fusion program. 19n dollars First commercial power plant Applied P,asma Physics. This subprogram is directed at 7oo------�--� developing the fundamental scientific knowledge of the nu­ clear fusion process and the extremely high temperatures­ from tens to hundreds of millions of degrees-needed to ignite it. This subprogram represents the scientificcore of the � ------.r------fusion effort . It funds the small groups of theoreticians and experimentalists based within the universities and colleges of America. These smaller-scale efforts complement and � ------�--��------ERDA's projections made in 1976 reinforce the larger, national laboratory-based experiments, for a 30-year development schedule such as the Princeton Tokamak Fusion Test Reactor. The · 300 --..�------smaller, university-based programs provide the essential en­ _....-:-.... _ Actual appropriations 1 976-1 986 (converted to 19n dollars) vironment for a full scientificel aborati9n of discoveriesmade 2OO �------��------on these larger experiments. The Applied Plasma Physics subprogram relieson people and ideas more than hardware. Reagan's proposed 1987 budget It provides fertile ground for the development of entirely new 100 ------concepts. Most of the international exchange of concepts and re­ I search is carried out by this part of the fusion effort. Inter­ 1975 1980 1985 1990 1995 2000 2005 national activities consist of joint workshops and study teams, together with exchange visits to experimental facilities, and sometimes exchange of experiments. The actUIJifusion appropriations from 1976 to 1986 (solid line) are shown, in addition to President Reagan's proposed budget The primary mission of the Appl�d Plasma Physics di­ fo r Fiscal Year 1987. The Reagan budget, as can be seen, sinks vision is the development of the theory of fusion, exploration significantly lower than the Caner administration's budget. of plasma behavior with small experiments, fusion-related More startling is the comparison of the actUIJIfu nding with that atomic physics, and development of.. new diagnostic tech­ projected in 1976 (dotted line) by the U.S. Energy Research niques required to determine fusion plasma behavior. The and Development Agency, the predecessor to the Department of Energy, fo r the achievement of commercial fu sion by the year program also develops and tests alternative fusion confine­ 20005. ment schemes. Through its support of university programs, it trains a large percentage of the scientists employed in all other areas of both the fusion and beath-weaponprogra ms. It Source: Fusion Power Associates also manages the Magnetic Fusion Energy Computer Net-

EIR March 14, 1986 Science & Technology ' 21 FIGURE 2 Progress in achieving conditions required for fusion power

TFTR (Princeton) JET (European Community) JT·60 (Japan) T·15 (Soviet Union) PBFA II (Sandia)

� ��====::;-. ff! Alcator C (MIT) 10 5 E ' I- nergy rea even 8 >u , ������k��_����� ______(I) ���=-� �t-�::::::� -" c: 10"

c:1=(I) Doublet III (GA Technologies) While the fu sion budget has been steadily .� ,§ 10" 1 984 eroded. the major fu sion experiments .ax Novelte (Lawrence Livermore) 1 984 have proceeded to make more than the o�10 2 expected progress toward the goal of net -;; ·iii ' energy prpduction. 65i E"C "2 x 10" 8 !!! -oa .� :::1� 0. Source: Fusion Power Associates D" 1970 1975 1980 1985 ��E

work, which provides all of the large-scale computing used Recent progress in this Subprogram area has included by the fusion program as a whole for experimental data anal­ tests of three large superconducting magnets in the Interna­ ysis, theoretical and engineering modeling, experimental de­ tional Fusion Superconducting Magnet Test Facility; opera­ sign, and system studies. tion of a multi-pellet pneumatic fuel injector on the Tokamak Confinement Systems. This subprogram works on two Fusion Test Reactor; successfUl demonstration of sources for of the four key technical issues facing the realization of com­ long pulse neutral beam heaters; development of new con­ merical fusion power-the development of the magnetic cepts for compact, high-power radio frequency electromag­ confinement systems to contain fusion plasmas at the high netic wave launchers . for plasma heating and current drive; temperatures needed to maintain nuclear fusion reactions, increased confidence in vanadium as a reduced activation and the exploration of the scientificprinciples governingthe material for power reactors; first results of steady-state ero­ behavior of burning plasmas. This is achieved by conducting sion and deposition materials changes using the Plasma In­ large-scale experiments, which are directed at producing the teractive Surface and Components Experimental System. required conditions. Planning and Projects. this is "the division of the mag­ The tokamak, the stellarator, and the tandem mirror mag­ netic fusion program which, in the past, has designed and netic confinement concepts have been the major magnetic built the program's major experiments and carried out studies systems researched by this subprogram. The Princeton To­ for experimental and engineeringtest reactors. kamak Fusion Test Reactor is the largest such experiment, and is directed at producing the physical conditions for burn­ 'Phasing out the future' ing fusion plasmas with deuterium-tritium fuel by 1987. Ac­ As Figure 3 shows, Planning and Projects is now all but tual fusion fueling with deuterium-tritium has now been set phased out. The budget request notes that it is hoped that back to 1989 by the Reagan budget. "internationalcolla boration" will lead to some kind'offuture Development and Technology. This subprogram pro­ development-a myth fostered by former presidential sci­ vides for the realization of the technologies and engineering ence adviser George Keywor$, a zero-growther. science needed for existing experiments and future power While the overall Applied Plasma Physics subprogram reactors. Four major areas have developed: 1) superconduct­ budget does not appearto be taking a substantial cut-about ing magnets for generating the fields to confine hot plasmas; an 8% reduction fromFY 1985 levels-a closer examination 2) specification of fusion plasma conditions from an engi­ ofthis subprogram's budget, as seen in Figure 4, shows that neering standpoint; 3) nuclear technology and knowhow es­ the most manpower-intensive portions of the division are the sential for design and operation of fusion power reactors; 4) ones being targeted. materials science for the realization of systems which can This can be immediately seen in the 42% overall reduc­ withstand thefusion reactor environment at economical costs . tion from FY 1.987 levels in the experimental researchoper-

22 Science & Technology EIR March 14, 1986 FIGURE 3 Department of Energy FY 1987 congressional budget request

FY 1985 FY 1986 FY 1987 FY 1987 Request Appropriation Appropriation Baee Request V8 Baee

Magnetic Fusion Energy Applied plasma physics Operating expenses $ 78,937 $ 69,692 $ 69,692 $ 70,700 $+ 1,008 capital equipment 3,170 5,619 5,619 4,500 - 1,1 19 Subtotal 82, 107 75,31 1 75,31 1 75,200 - 111 Confinement systems Operating expenses 26,395 188,650 188,650 In,500 -11,150 Capital equipment 15,400 14,529 14,529 7,100 - 7,429 Subtotal 221 ,795 203,179 203,179 184,600 -18,579 Development and technology Operating Expenses 67,900 57,059 57,059 50,510 - 6,549 capital equipment 5,100 4,330 4,330 1,890 - 2,440 Subtotal 73,000 61,389 61,389 52,400 - 8,989 Planning and projects Operating expenses 12,201 5,528 5,528 4,780 748 3,801 3,801 19 capital equipment 3,800 3,820 + Construction 32,500 12,653 12,653 8,200 - 4,453 48,501 21 ,982 21 ,982 16,800 - 5,182 Program Direction Operating expenses 4,1 50 3,608 3,608 4,000 + 392 4,150 3,608 3,608 4,000 + 392 Total Operating expenses 369,583 324,537 324,537 . 307,490 -17,047 Capital equipment 27,470 28,279 28,279 17,310 -10,_ Construction 32,500 12,653 12,653 8,200 - 4,453 Magnetic fusion energy $429,553 $365,469 $365,469 $333,000 '$-32,469

ations and the 18% reduction in the basic experimental plas­ ations at thesewidely dispersed university facilities, but rath­ ma researchbudgets of this division-the first and third line er, that the resultwill be their total obliteration. The scientists of the table. These funds are used to support small, univer­ involved will now be forced to seek workin areasoutside the sity-based experiments. The proposedcuts will continue the fusion program-in many cases, in totally different disci­ devastation that has occurred to this essential scientific base plines. of the fusion program over the past several years. The point The23% reduction fromFY 1985 levels proposedfor the is not that it will lead to simple reductions in staffand oper- fusion theory program is even more catastrophic. Entireuni­ versity-based groups will be dispersed as a direct result. These theoreticalgroups work as an organic team; they attack a specific problem in a combined effort , where various ave­ FIGURE 4 nues of approach are combined to produce a solution or at Budget breakdown in Applied Plasma least the elements of a solution. They cannot functionwith a (thousand Physics $) half a tank of gas! Instead of facing ihe disintegration of the FY 1987 team through slow attrition of the JrOUP, they search out FY 1985 FY 1986 request alternative fieldsfor the workof the group as.a whole. The FY 1987 cuts will provide the straw to the Experimental research 21 ,501 14,413 12,455 break proverbial camel's back, in this case. Already, teams which Fusion theory program 22;644 19,046 17,500 have worked in the fusion fieldfor decades and more, Basic experimental three plasma research 16,024 . 14,866 13,215 arenow planning to move to entirely differentdisciplin es. In some cases, leading scientists are considering abandoning fundamental researchaltogether.

EIR March 14, 1986 Science & Technology 23 The devastation being wrought by the fusion cuts is being The effects of the Shuttle disaster extend even to space­ nonlinearly amplified by the effects of the explosion of the based experimental astrophysics. The net result is that there Space Shuttle Challenger. For example, many proposed bas­ is nowhere for these basic p,lasma physics scientists to go, ic plasma and directed-energy experiments have now been for work in their field. postponed by several years, as a direct result of the loss of Although it would appear that the Confinement Systems one Shuttle and the delay in the launch of the others. These portion of magnetic fusion R&D-which has consisted of basic science experiments will now have to compete with two main lines of approach, the linear tandem mirror and full-scale hardware demonstrations of the Shuttle in the out­ toroidal systems like the tokamak-is at least being main­ lying years. Given the priority of the Strategic Defense Ini­ tained near previous levels, the actual budget proposal states tiative, program managers are being forced to cancel these that "to accommodate present fiscal constraints, further re­ smaller experiments and cut them completely out of the SOl search on tandem mirrors is l)eingdeferr ed." program. The result is that the world's largest fusion experiment,

those on the Sun, but very low density, so that it does not melt the materials with whic it comes in contact. If the r? fusion plasma were to com in contact with the reactor Whatis fusion powe wall, the wall would cool the plasma, stopping the fusion reaction. , Fusion, the fu sing together of atomic nuclei, is the energy The fusion reaction requi s an energy investment to sourcethat powers the Sun and the otherstars , and will be create the high�temperature p,lasma and a confining force the energy source of the 21st century. Unlike nuclear to keep the plasma under control . ht order to achieve net fission, which splits heavier elements like uranium up into .energy output, the following conditions are required: I) lighter ones and makes use of the energy released, fu sion the temperature must reach SP-IOOmill ion degreesC ; 2) fuses lighter elements into heavier ones. Fusion's basic the density of the fusion fuel times the length of time it is fuels, deuterium and tritium, are fo und in sea water. Deu­ confined-a measure ' of the energy output-must reach teriumis sufficiently abundant that there is enough in sea about 1014 particles per cubic centimeters times seconds water to fuel fu sion reactors for millions of years. (100,000 times less dense t an the density of air in an When it fuses, a fusion fuel releases one million times ordinary room) . more' energy than burning a comparable weight of coal or There are two basic approachesto confining the fu sion oil, so it is a very efficient producer of energy . A single plasma, magnetic confinemeptand inertial confinement . gallon of sea water can fuel as much fu sion energy as five For magnetic fu sion, magnetic fields are generated barrels of oil can fuel conventional energy . The fusion either by external electric circuits, such as sets of copper fuel produces about eight times more energy than a fission coil magnets, or by electrica currents induced within the reactor produces from a comparable weight of uranium. confined plasma itself. The magnetic field acts as a coun­ The electromagentic energy in the fusion-energized tervailing force to the gas pressure of expansion exerted plasma will make it possible to build fusion reactors w!th by a "lOtplasma . There are tw'otypes of magnetic confine­ a closedcycle of materials and energy flows that willhave ment devices: an open systerpor magnetic mirror;"and a no waste and no radioactivity . Further, fusion would per­ doughnut-shaped system (e.�. , the tokamak). mit man to redefine his earthly supply of raw materials, Inertial confinement, on tJte other hand, makes it pos­ through the use of plasma processing. sible to eliminate the magne ic coils. Only the inertia of How will the reactors work? The key element in a the fuel itself is utilized to c nfine it to a' specific density fu sion reactor is a fusion plasma, a very high-temperature while it is heated to fu sion ignition temperatures. In iner­ gaslike mixture of ions and electrons. The gas is at such a tial confinement fu sion (als called laser fu sion), a tiny high temperature that when the nuclei of the atoms in it hollow pelletis filledwith deuteriumand tritiumfuel , then collide, they fuse together and form new elements. Heat irradiated with a laser beam, ' on beam , or electron beam. is released, which heats up a moderator; a coolant circu­ This force heats and compresses the pellet to produce a lating around the moderator produces steam, which can burst of energy, before the dellet flies apart. It is essen­ be used to produce electric po�er. tially a miniature explosion, the same process that goes The requirement for a "break-even" fusion reactor is on in the hydrogen bomb. Bu the pellets are so small that to make a fusion plasma that has high temperatures, like the microexplosionsdon 't damage the reactor vessel.

24 Science & Technology EIR March 14, 1986 the nearly completed MFfF-B (Mirror Fusion Test Facility) three orders of magnitude , and the time span from concep­ at Lawrence Livermore National Laboratory, will be "moth­ tualization to actual test could be reduced from years to balled"; qualitatively speaking, half of the magnetic fusion months. confinementsystems will be cut. Even more significant for the Soviets is that such labora­ tory experiments are virtually impossible to detect, while Cutting national security: the x-ray laser underground weapons tests are easily discerned-especially The U.S. fusion R&D program has demonstrably provid- in the United States. In fact, the recent Soviet initiative to . ed the lion's share of the technology, science, and personnel implement a comprehensive nuclear weapon test ban treaty for the Strategic Defense Initiative. Because of its broad may indeed be based on the ability to produce laboratory­ scope , the fusion program has especially encouraged inno­ scale undectable "weapons tests." vation in science and technology. The proposed FY 1987 The direct potential for revolutionary spin-offs from the fu sion budget will significantly curtail any such future con­ fusion program into the beam-weapon effort has already been tributions. demonstrated in the United States. Researchers at the Prince­ Some measure ofthe resulting strategic loss to the nation­ ton Plasma Physics Laboratory-the flagship facility of the al security may be judged by this example: magnetic research program-began investigations into mag­ The most potent missile defense weapon yet developed netically confined plasma x-ray lasers a few years ago. While is that of the nuclear-explosive-pumped x-ray laser. The first initially scoffed at by more conventional x-ray laser scien­ generation x-ray system could destroy a score or more ICBMs tists, there are recent indications that this Princeton work has per x-ray nuclear explosive. Recent basic science advances directly led to revolutionary developments in nuclear-bomb­ indicate, that this capability could be vastly increased to a pumped x-ray laser systems. point where one x-ray nuclear explosive could take out the Although this conclusion has not yet been fu lly con­ entire Soviet ICBM fleet. And the x-ray laser is just the first firmed, the example serves to demonstrate how the proposed of an entire family of new types of directed-energy systems Reagan fusion budget cuts could immediately result in a maqe possible by the high energy densities of fu sion. major national security deficit. Currently U.S. researchers can access these high energy densities only with expensive nuclear weapons tests. This greatly hinders the development and perfection of the exist­ ing x-ray laser, as well as new possibilities, like the gamma­ ray laser. An economical alternative is to use laboratory inertial confinement fusion, like that produced by laser or particle beams. Inertial confinement fusion in the laboratory, in fact, can attain even higher energy densities than those generated by thermonuclear weapons. Recent intelligence reports from the Soviet Union indi­ cate that under the direction of Academician Velikhov, So­ viet scientists have succeeded in combining magnetic fusion • FusiQn has fought an 11- with inertial confinement to obtain significant fusion plasmas year battle for fission and fusion on a laboratory scale. power,.,against the environmentalists It is reported that compact tori magnetic plasmas, in which and budget-cutters; the confining magnetic fields are primarily generated by in­ • Fusio n is campaigning i' n:terrlaticlnally, duced electrical currents within the plasma "doughnut" itself, for hlgh-'technology industrial devloprne\1t have been injected into metal cylinders that are then implod­ ,against the zero-growthers; ed-an approach generically known as the imploding metal • Fusion advocated a bealll1-W'eaolon-�1el liner. This combined magnetic-inertial approach appears to I977-the program noW Initiative; . be the technologically most accessible means for laboratory • RusiQn advocates generation of fusion plasmas. Is the United States researching but why stop there? this area of fusion development? No. The U.S. imploding liner R&D effort was killed in 1978 by Jimmy Carter's energy secretary, James Schlesinger. The Soviets, however, appar­ ently maintained a program on the scale of the overall U. S. tokamak effort . Having such a cheap and readily accessible source for laboratory high-density fusion would put Soviet researchers in a vastly superior position. The cost of conducting full­ scale testing, for example,. could be reduced by as much as

EIR March 14, 1986 Science & Technology 25 TIillFeature

Gorbachov mobilizes fo r 'war, as We st's economy falls : apart

by Edith Vitali

The 27th Congress of the Soviet Communist Party concluded in Mosco� on March 6, consolidating the drive of "Czar Mikhail" Gorbachov to reorganize the Soviet economy for the biggest military build-up since World War II. The sweeping personnel changes which have been under way for the past year, were officially rubber-stamped, as half of the former Central Committee was replaced (134 of the total 319 members). According to the West German magazine Der Sp iegel, every second CC member now has training as a military engineer! Confirming the emergence of the chauvinistic "Mother Russia" tendency which EIR has reported on at length, 97% of Central Committee membtlrs are Europeans and 80% are Great Russians, according to Der Sp iegel. Contrary to the endless ruminations of the Kremlinologists, the significance of the personnel changes effected by the Congress is quite obvious. The octogenari­ ans and holdovers from the Brezhnev era have been dropped, leaving the engi­ neers, industrial managers, KGB officers, and military men who will oversee the war-economy transformation. The results of the Congress strikinglyconfirm the forecast published by EIR in July 1985, in our Special Report titled Global Showdown. We said that a U.S. drive to implement the Strategic Defense Initiative (SOl) for antiballistic-missile ' defense, would threaten to unleash an unprecedented economic recovery in the West, and hence would propel the Soviet leadershipto adopt a "bruteforce" effort to outstrip the United States, by adopting a "Plan B" mode of economic mobili­ zation which would entail "a virtual revolution in Soviet economic policy of practice." This would mean a purge of the Soviet bureaucracy, an attempt to challenge the Soviet people's ingrained resistance to rapid technological progress, and a shift of managerial and investment policy to very high rates of technological progress. Exactly this approach is outlined in the speeches by Gorbachov (excerpt­ ed in last week's EIR) and by Prime Minister Nikolai Ryzhkov (see Documenta­ tion, below). Equally clear fromthe proceedings of the conference, is that the Kremlin leadership is counting on the economic collapse of the West to pave the way for

26 Feature ElK March 14, 1986 The poster pictured here exhorts the Soviet population to fu lfillthe directives of the Five-Year Plan fo r economic growth . This photo was taken in 1981 ;five years later, Gorbachov has revealed that the economic program of the Brezhnev era was a resoundingfailure. Now the leadership has been overhauled, placing those on the Central Committee who will transfo rm the economy fo r an extraordinary war build-up.

NSIPS/.Uwe Parpart its own drive for world domination. Gorbachov and other (68), first party chief of the Ukraine. All the others owe their leaders emphasized that sales of Westerntechnology , partic­ full membership status to either Yurii Andropov or Mikhail ularly from WesternEurope , will provide a crucial margin of Gorbachov. In the period before the Congress, Kunayev and . input for the Soviet build-up. As the response of such political Shcherbitskii had to undergo a humiliating process of criti­ figuresas West Germany's Helmut Schmidt and Theo Som­ cism and self-criticism, as a precondition for remaining in mer indicates, the western side of Moscow's "New Yalta" the leadership. Gromyko had proposed Gorbachov for the arrangement is indeed fast coming into place. post of general secretary in March 1985, and the powerful In the dossier which follows, we report some of the more foreign minister was later "rewarded" by being kicked up­ significant changes in the Kremlin leadership under Andro­ stairs into the office of President. pov and Gorbachov. Mainly for age reasons, at the Party Congress the 81- year-old Boris Ponomaryov and the 85-year old Vasilii Kuz­ The new guard netsov, firstdeputy chairman of the Presidium of the Supreme A prime example of the type of party functionary now on Soviet (formally the second highest position in the hierarchy the rise, is Central Committee Secretary Lev Zaikov, former of the Soviet state), resigned as alternate members of the party chief of Leningrad, a crucial scientific-technological Politburo. Ponomaryov, a leading functionary of the Com­ center and bastion of the military-indus�rial complex in the munist Internationalunder Stalin, headed the powerfulInter­ Soviet Union. Zaikov is the only addition to the Politburo, national Departm�ntof the Central Committee, which culti­ the main executive body of the party, which includes 12 vates relations to Soviet assets in the West, including socialist members now. Zaikov, who began his career as direotor of a and social democratic parties as well as terrorists and "na­ major defense-linked electronics firm in Leningrad, is re­ tional liberation movements" in the developing countries. sponsible for the overall military-industrial production of the Yurii Solovyov, the new firstparty chief of Leningrad, and U.S.S.R. By holding the position of Politburo member and Nikolai Slyunkov, the head of the Byelorussian party orga­ Central Committee secretary simultaneously, he is now bas­ nization, were newly elected as alternatemembers . ically number three in the Soviet hierarchy, afterGorbachov With the election of five new Central Committee secre­ and Yegor Ligachov, the main organizer of the purges of the taries, the role of the Secretariat has been strengthened. The past year. five are: Anatolii Dobrynin (long-time ambassador in Wash­ Of the 12 Politburo members, only three rose into this ington), Georgii Razumovskii (ch'ef of the Departmentof position under Leonid Brezhnev: Andrei Gromyko (78), the Organizational Party Work), Alexandra Biryukova (a trade President of the U.S.S.R., Dinmukhamed Kunayev (74), union secretary and first woman in the leadership since Yek­ first party chief of Kazakhstan, and Vladimir Shcherbitskii aterina Furtseva, who made her career during the Khrushchov

EIR March 14, 1986 Feature 27 era), Vadim Medvedev (chief of the Departmentof Science outside criticism" in the future. His attack on the editorial and Educational Institutions), and Alexander Yakovlev, board of Pravda, which, he said, had gone to the other ex­ former ambassador to Canada and former director of the treme, by publishing readers' letters criticizing the privileges foreign policy think tank IMEMO, who is now'chief of the of party functionaries too strongly, added new fodder to the Central Committee's Propaganda Department. Central Com­ speculation that Pravda Editor-in-Chief Viktor Afanasyev is mittee Secretary Ivan Kapitonov (7 1) was deprived of his on the way out. After Ligachov's speech, Afanasyev called post, and elected instead to be chief of the party's Central a press conference where he confessed: "I agree to Liga­ Auditing Commission. chov's criticism." Speculation has it that Boris Pankin, cur­ With Dobrynin and Yakovlev, two specialists in the West, rently Soviet ambassador to Stockholm, will become the new and the North American continent in particular, have been editor-in-chief. added to the Secretariat. It can be expected that they will Although a full evaluation of the military component of apply their intimate knowledge of Western politicsto inten­ the new Central Committee is not yet available, it is important sify Soviet strategy and propaganda aimed at eroding the to note that Marshal Nikolai Ogarkov is still a member­ Westernalliance and wreckingPresident Reagan's SDI. despite speculation by Kremlinologists in the Western press Gorbachov has at the same time upgraded the role of that his replacement as Chief of the General Staff in 1984 noted Germany experts, reflecting thefact that breaking West represented a "demotion." EIR has extensively refuted that Germany away from NATO is one of the cornerstones of claim, and shown how Marsha,l Ogarkov has been playing a Soviet foreign policy. Shortly before the Party Congress, crucialrole in leading the Soviet warbuild-up . Gorbachov promoted Anatolii Chernyayev, deputy chief of the International Department, to his foreign policy adviser, Mother Russia-in the space age as a replacement for Andrei Aleksandrov-Agentov, who for Ligachov's speech gave considerable insight into how 22 years was an aide to Leonid Brezhnev. Chernyayev is the Russian leadership intends to combine the old, oligarch­ considered an experton West Germany and responsible for ical culture of Russia with the achievements of modem tech­ building the relationship between the CPSU and Willy nology-lasers, electronics, and computers . "The party has Brandt's Social Democratic Party. Valentin Falin, longtime to care for everything which is dear to the memory of the ambassador in West Germany in the '70s, has been elevated people," he said, citing the example of the fight to protectthe to chief of the Novosti press agency. Leonid Zamyatin, estate of the Tolstoy family from environmental pollution! another frequent visitor in Bonn, who is currently chief of "Those who are raising their voices in alarm to save the the Information Department, might return to his former po­ architectural appearance of our famous ancient cities, are sition as general directorof the news agency TASS, accord­ absolutely right." It is the duty of the party to "safeguard the ing to Soviet "leaks." national holy things," he said-one reason being that "his­ Finally, the name of Yulii Kvitsinskii, who is heading tory . . . is a powerful source for the education of a people:" the space weapon group on the Soviet negotiating team in At the same time, Ligachov called for a "crash develop­ Geneva, is being mentioned as a possible replacement for the ment of intermediate and higher edllcation," because scien­ current Soviet ambassador in Bonn, Vladimir Semyonov. tific-technologicalprogress mustbe based on the "continuous Kvitsinskii, whose profession it has become to destroy the professional upgrading of the cadres. " Workers must be pre­ SOl and who is the darling of the Western "arms control pared to "work under new conditions." He said that "modem mafia,"would be the perfect man to strengthen the anti-SDI informatics and electronics" must be introduced into all forces in Germany. spheres of leamingand ideological work. This involves "the Boris Yeltsin, the new first party secretary of Moscow creation of major facilities for the production of video-tech­ and successor of Gorbachov' s 72-year-old rival Viktor Grish­ nologies" and "modernizing the technical basis of televi­ in (who was dumped from the Politburo on Feb. 24, together sion." with Konstantin Rusakov, another old-timer who lost his job The counterpoint to Ligachov's demands was put forth as CentralCommittee secretary), announced major structural by Prime Minister Nikolai Ryzhkov, who sharply criticized changes ofthe Central Committee apparatus. He emphasized the stagnation during the Brezhnev era. Outlining the guide­ strengthening the role of the Department forOrganizational lines of social-economic development until the year 2000, PartyWork , or Cadre Organization, as it is also called. Yelt­ Ryzhkov announced that by 1990,the share of atomic energy sin named the republics of Uzbekistan and Kirgizia as the in the generation of electricity will be doubled, from 10% to two main areas where cadre policy had been neglected by 20%. Primary attention will be given to "fundamentally new those responsible in Moscow. These two republics have been technologies," including laser and plasma research. Invest­ the site of massive purges in the last months. ments in the metal-working industry, a driving motor of Yegor Ligachov, Gorbachov's powerful number-two scientific-technological progressin production, will increase man, made clear that nobody will be "outside control or by 80% in the next fiveyears .

28 Feature EIR March 14, 1986 gued that the project was not "cost effective" and that the money required would be much better spent on "soil im­ provement schemes in traditional farming areas ." Aganbegyan was transferred to Moscow recently on or­ ders from Gorbachov, from his post as director of a Siberian 'Russian Party' drops think tank, the Institute of the Economy and Organization of Industrial Production. This is the Novosibirsk command cen­ river diversion plan ter for scientific and modernization programs central to the Soviet defense build-up. by Luba George The Muslim populations Mikhail Gorbachov has shown little enthusiasm for gran­ A multi-billion-ruble project to divert the northern rivers of diose irrigation projects, especially when the regions to ben­ the U.S.S.R. southward, where they would irrigate the dry efit the most by them would be the non-Russian, largely regions populated largely by Muslims, will be postponed, Muslim areas undergoing so-called demographic explosions. the deputy chief of the State Planning Commission (Gosplan) Any severe drought in these regions, where local water announced at the 27th Party Congress in Moscow. The river­ sources are already seriously depleted, Soviet analysts admit, diversion scheme has long been opposed by the "Russian would force the Muslim populations to relocate-to Siberia, Party" now in power in the Kremlin, and its moth-balling for example, where the war economy drive suffers from signals a consolidation of that power. severe labor shortage. For the Russian chauvinists who put Mikhail Gorbachov Given the Soviet Union's war economy mobilization re­ in power,there is no need to spend scarce resources to benefit quirements, the problem of the labor shortage was under­ non-Russian populations. Instead, the emphasis is on relo­ scored at the PartyCongress in a speech by Aganbegyan. He cating those populations to areas of extreme labor shortage, said that the Soviet labor force, because of the "long-term to help with the war-economy build-up. demographic impact of the war," is growing "very slowly." The cancellation of the river-diversion project fits in with It has increased by 10 million over the past five years, but the economic guidelines approved unanimously by the Party would rise by only 3.2 million over the next five. Much of Congressfor the 12th Five Year Plan and the next IS years, this increase will be in Central Asia-away from the key to prioritize investment in the modernization of existing in­ industrial regions of the country. dustry and agriculture, and confining new large-scale invest­ A spate of recent articles in the Russian Republic's news­ ments to Siberia, the Soviet Far East, and the northern part paper Sovietskaya Rossiya stressed the need to relocate at of European Russia. least one million workers and their families from Russia and The project was mentioned in the original draftFive- Year the Ukraine into Siberia during the current Five-Year Plan Plan, which has now been scrapped. It would have dug chan­ (1986-90). nels to divert water from the Onega and Dvina rivers into the The Muslim republics are being to(d to make do with Volga, which flows south into the Caspian Sea. The reason what they have and concentrate on "upgrading" their present given by Gosplan Deputy Chief Leonid Vid was: "The water industrial and agricultural capacities. It was striking that Gor­ level of the Caspian Sea is no longer falling." bachov, during his keynote speech at the Party Congress, Another ambitious scheme-an essential element of the singled out the Muslim republics for economic "mismanage­ Brezhnev-era "food program"-totake water from the Irtysh ment." The Muslim Communist Patty leadership of Uzbek­ and Ob rivers by means of a I ,SOO-milecanal to the plains of istan and Kazakhstan-the two largest republics-received Uzbekistan in Central Asia, fell out of favor after Mikhail the brunt of the attacks. Starting in November, in the build­ Gorbachov came to power last year. It was not mentioned in up to the Party Congress, a massive purge swept out most of the new Five-Year Plan. Despite the fact that Uzbekistan and the party leadership in the Muslim republics, including three four other Soviet republics in Central Asia heavily depend on first secretaries from Turkmenistan, Tadjikistan, and Kirgh­ irrigation, the project was attacked by Gorbachov's "eco­ isia. nomic reformers" and other "Russian Party" chauvinistic The catastrophicdecline of the Russian birthrate , and the enviromentalists as "wasteful" and "damaging." explosion of nori-Russian, especially Muslim, populations in The fate of the northern rivers project was already sealed the Soviet Union, are uppermost among Gorbachov's con­ in February, when the project was attacked in the official cerns. \Yhen asked in a recent interview with the French Party daily newspaper Pravda by Gorbachov's chief eco­ Communist Party newspaperL' Humanite which problems in nomic adviser and architect of Moscow's new IS-year eco­ the Soviet Union he considers most significant, he answered: nomic modernization program, Abel Aga.nbegyan. He ar- "the demographic situation of the Russian population."

EIR March 14, 1986 Feature 29 of the IMF, as proposed by Lyndon LaRouche in his 1982 document Operation Juarez. and as currently being put into place by Peruvian President Alan Garcia. The last Soviet bloc leader to come up with a plan for The new Soviet scheme international monetary "reform ," along the lines of the Shev­ ardnadze memorandum, was Adel Castro, who in June 1985 for world debt reform issued a plan for what he called "saving capitalism" from the debt crisis (see EIR . July 2, 1985, "LaRouche Replies to 1988 Doomsday Forecast by Castro"). Lyndon LaRouche by Rachel Douglas described the purpose of Castro's scheme at that time:

Soviet and Cuban strategic policy toward the The Soviet government, seeking to capitalize on the inter­ Americas is, to use the destabilizing effects of IMF national debt crisis and the opposition among Third World "conditionalities," to promote conflicts between the countries to the austerity dictates of the International Mone­ U.S.A. and Ibero-American states. Castro is not de­ tary Fund (IMF), has launched a propaganda offensive aimed bating President Reagan; he is laughing at the follies at securing a political stranglehold over those debt-strapped of the Kissinger Associates-steered Reagan adminis­ nations. Recent moves include a memorandum issued to the tration. United Nations calling for an international conference on the Castro is not debating President Reagan; he is debt crisis, and high-powered diplomatic courtship of key debating Lyndon LaRouche, LaRouche's "Operation debtor nations in Ibero-America. Juarez." Castro, like the Soviet Academy of Science's The memorandum, issued on Jan. 27 by Foreign Minister Tashkent-directed subversive operations in Ibero­ Eduard Shevardnadze,. was titled "International Economic America, fears nothing from the United States except Security of States: An Important Condition for the Improve­ LaRouche's proposed transformations in U. S. foreign ment of International Economic Relations." Its thesis is an policy, as typified by LaRouche's 1982 policy-paper, old one for the Soviet propaganda mills: cuts in arms spend­ Operation Juarez. ing are the means to create funds for economic development in theThird World. It states: The Soviet-Cuban diplomatic offensive is now targeting especially those countries of Ibero-America which President The problem of external indebtedness of devel­ Garcia has identified as the key to forging his continental oping countries to the West has assumed unprece­ alliance: Brazil and Argentina, the economic giants. At a dented acuteness in recent years . Payment of the in­ press conference on Feb. 15, Garcia proposed that the An­ terest on the debts leads to a speedier pumping of dean Reserve Fund serve as the starting point for a new financial resources out of developing countries, and regional monetary system. "The day that Argentina or Brazil renders the economies of newly independent states wereto join the Andean ReserveFund ," he said, "that agency lifeless. These resources are enriching the monopolies would have much more capacity to act than the IMF." and are spent on financing the budget deficits and To head off such a development, two "firsts" occurred: military programs of Western countries.... The nec­ visits to Moscow by Brazilian Foreign Minister Olavo Se­ essary condition for the solution of the problem of mbal in December, and Argentine Foreign Minister Dante foreign debt is the lowering of interest rates on loans Caputo at the end of January. and credits, stabilization of currency rates, rej ection Sembal discussed the debt crisis with Soviet Foreign of protectionism in trade , restructuring of the inter­ Minister Eduard Shevardnadze, and the two laid the basis national financial system to take into account the in­ for expanding Brazilian steel exports to the U.S.S.R. in terests of all states, and democratization of financial 1986. institutions functioning within its framework. Caputo, the first Argentine foreign minister to visit the The Soviet memorandumhas nothing, in fact, to do with Soviet Union in decades, signed several trade agreements, reforming the world monetary system; Moscow has not the including for the import by the Soviet Union of 4.5 million slightest interest in fostering the growth of Third World tons of Argentine fodder grain and soybeans per year until countries, as its recent efforts to blackmail Peru with the 1990. Argentina will buy Soviet industrial equipment and "food weapon" attest. The current propaganda offensive is heavy machinery. Shevardnadze told Caputo at a luncheon intended to align the countries of lbero-America against the on Jan. 29, that "a huge and ever-increasing foreign debt United States, and especially against the U.S. Strategic De­ is arising as an insurmountable barrier on the path to the fense Initiative. It is furtherintended to blockthe emergence socio-economic progress of the peoples of the developing of a continent-wide alliance for development, independent countries. "

30 Feature EIR March 14, 1986 Having critically analyzed the situation, the party took Documentation measures to strengthen the leadership of economic institu­ tions, and especially to raise the level of organization and labor discipline. It received the supportof the whole people and gave the impulse which has made it possible for us to Ryzhkov: Build up move ahead. As a result, beginning in 1983, definitepositive moves took place, which somewhat improved the fulfillment science, technology of the l ith Five-Year Plan .... Thus not a little was accomplished during the years of the Five-Year Plan. But at the same time, we are obliged to give The fo llowing are excerpts from the speech delivered to the an objective evaluation of its results, and to expose, in a 27th Soviet Party Congress on March by N. /. Ryzhkov 3, , principled manner, its serious deficiencies, which are putting chairman of the Council of Ministers of the U.S.S.R . Ryzhkov a brake on our forward motion, in order to draw the necessary delivered a report on the Central Committee's new draft consequences for the future. document, "Basic Directions of the Economic and Social It must be said plainly, that we did not fully succeed in Growth of the U.S.S.R. fo r /986-90 and the Period to the carrying out the tasks of the Five-Year Plan. Many branches Year 2000" of industry were not able to achieve their planned targets. As

I . . . The draft "Basic Directions" assesses the results of the Five-Year Plan which is now ending. These give every reason to conclude, that through the lal>or of the Soviet people, a "Many managers continued to work significant contribution was made to strengthening the eco­ with outdated methods and proved nomic might of the country. Because of this, the well-being unpreparedJor work in the new of the nation grew, and the defense capability of our Moth­ erland was kept at the necessary level. conditions. Discipline and order Nevertheless, as is generally known, the execution of the deteriorated to an intolerable level. tasks laid out at the 26th Congress did not proceed under There was- aJall in exactingness simple circumstances, and in the firststage , things were even quite difficult. Unfavorable tendencies which had appeared and responsibility. The vicious in the development of the economy during the '70s, not only practice qfre vising plan targets did not improve, but even worsened at the beginning of the downward became widespread. " '80s. And this had its effect on the fulfillment of the lith Five-Year Plan. In the first two years, the rate of growth continued to fall. Qualitative economic indicators deteriorat­ ed. In 1982, the rate of growth of industrial production was a whole, the Five-Year Plan fell short by 35 million tons of one-and-one-half-times lower than it had been, on the aver­ finished goods, 145 million tons of coal, over 50 million tons age, during the years of the 10th Five-Year Plan. The grow­ of oil, 16 billion rubles of consumer goods. The structure, ing difficulties could not help but affect the solution of the technical level , and quality of machinery and equipment did most important problems in the social sphere as well. Thus, not always correspond to the demands of the national econ­ in the second year of the Five-Year Plan, the rise in the real omy. Systematic lagging behind was tolerated in the chemi­ income of the populationhad actually stopped. cal, forestry, and woodworking industries. From yearto year, Various factors were involved. The most fundamental the basic construction ministries were not able to keep up reasons for the deficiencies, were the failure to take into with their plans. We did not receive the expected returns account, for practical activitiy, the changing economic situ­ from the large resources invested in agriculture .... ation as a resultof the exhaustion of the potentials of extensive All of this could not but affect the results of the growth growth, the lack of the necessary persistence in applying the of the economy and its proportions; causing the loss of bil­ achievements of scientific-technological progress ...Both lions of rubles of national income. As a result, various targets in the center and in the regions, many managers continued to were not met for increasing the general well-being, such as work with outdated methods and proved unpreparedfor work those for real income and retail trade. Finances and monetary in the new conditions. Discipline and order deteriorated to an circulation were made more difficult. intolerable level. There was a fall in exactingness and re­ Thus, comrades, the burden of deficiencies, which had sponsibility. The vicious practice of revising plan targets piled up over a long period, was so large that it was not downward became widespread. . . . possibleto eliminate them in a short period of time. Individ-

EIR March 14, 1986 Feature 31 ual measures which were taken could not overcome the neg­ ative tendencies in the economy, and send it on the path of steady and dynamic growth. Fundamental reforms were needed, a far-reaching transformation, and the Partypersist­ ently sought out the solution of the tasks facing the coun­ try.... In the document under discussion, a fundamentally new approach to satisfying the economy's need for material re­ sources is laid out. Whereas, in the preceding years, this need KGB chief: ·U.8. was met mainly by increasing production, the long-term task is that 75-80% of the growth rate for fuel, energy, raw and other materials, will be met by conserving these mate­ spies uncovered rials .... The firstand very crucial stage of the practical realization This speech was delivered Feb. 28 by KGB chiefB . M. Che­ of the long-term economic strategy of the Party, is the 12th brikov: Five-Year Plan. In these years, we must ensure the substan­ tial growth of our economy and shiftit onto a higher trajectory ...Unfortunate ly, the leading imperialiststates are not dis­ of growth-the trajectory of acceleration. playing any inclination to stop the arms race, and are contin­ From this standpoint, the main task of the Five-Year Plan uing to carry out their policy "from a position of strength. " is defined. This is to raise the rate of growth and effectiveness The pivot of this policy is ope, anti-Sovietism, feverish ef­ of the economy, on the basis of the speeding up of scientific­ forts to achieve military superiority over the U.S.S.,R.And technological progress, the technical . renovation of produc­ it is the U. S. administration wbich is setting the tone for this. tion, the more intensive use of existing productivepotential , Washington is continuing to interfere in the affairs of sover­ the improvement of the system of management and economic eign states, and is conducting � policy of state terrorism. A mechanisms, and the achievement, on this basis, of greater special role in the practical realization of this, is played by well-being for the Soviet people.... the American secret services, in whose activity political and To implement the achievements of science and technol­ armed provocations, as well as ideological and economic ogy today, means to accelerate scientific-technological prog­ diversions, are playing a greaterand greater role. ress in the top-priority areas, to ensure the rapid and wide­ A special target of the intl:;lligence activities of the im­ spread mastery of all the most advanced technology, the perialist states, of various fo{eign subversive centers and qualitative transformation of the productive forces. This means organizations, is the Soviet Union and other socialist coun­ also joint planning for effective use of the scientific-techno­ tries. Our enemies have not renounced the intention to liqui­ logical achievements of the states of the socialist community, date socialism as a social system. The secret services of the and active participation in the world division of labor. . . . U. S.A. , of various other NATO countries, are undertaking At the April (1985) Plenum of the CC CPSU and at the persistent efforts to compromise the domestic and foreign June conference of last year, in the Central Committee of the policies of the U. S.S. R. , carrying out actions aimed at un­ Party there was sharply posed, on the basis of a profound dermining the Soviet economy. They are poking into our analysis, the question of how to decisively overcome the political, military, economic,. and scientific-technological barriers standing in theway of scientific-technological prog­ secrets, striving to penetrateo�r state institutions, important ress .... military objectives, and scientificresearch institutions. Using One of the most important aspects of scientific-techno­ the proliferation of international ties, the imperialist intelli­ logical progress, is the broad mastery of advanced technolo­ gence services are seeking out the social degenerates, the gy. Having taken this path, we will be able to take a step that politically immature and mor.lly corrupted people in our will lead to a qualitatively new situation, not only for indi­ society, and through bribing officials are trying to get from vidual productive processes, but for whole industries. In the them information which is a secret of the state or of the 12th Five-Year Plan, there will be a 1.5- to 2-fold increase services. in the use of progressivetechnolo gies, essential to each branch Most recently, in several ministries and departments, a of industry. A noteworthy place will be held by fundamen­ numberof agents of the imperialistintelligence services have tally new technologies, like membrane, laser, and plasma been uncovered, renegades who have sold important secrets technologies, technologies using super-high pressures and to foreign organizations. The people concerned, having com­ pulsed power, etc . The scale of their use will grow by several­ mitted a state crime, were dealt with severely but justly, in fold, which will, undoubtedly, have a tremendous economic accordance with the law. Such an inglorious end awaits all effect .... who betray the interests of the Motherland. . . .

32 Feature EIR March 14, 1986 · 1lilaterals offer Soviets help in war economy mobilization by Vivian Freyre Zoalms

In the wake · of the Soviet Party Congress, with its stated "If Gorbachov does not want the power balance in the detennination to reorganize the Soviet economy for maxi­ world to tum against the Soviet Union, he must seekcoexist­ mum industrial/war mobilization, spokesmen for the Trila­ ence with the West in all areas, including disannament." teral Commission have begun to air the curious view that One day before Sommer's article appeared, West Ger­ Western aid in backing up this mobilization is the only sure man Foreign Minister Hans-Dietrich Genscher broadcast an guarantor of peace . interview over the Gennan Saarland radio advancing the The proposal is not actually a new one for the Trilateral argument that Gorbachov's speech at the Soviet Party Con­ Commission. It was publicly introduced back in 1982 by gress proves that Soviet interest lies only in technological Trilateral member Bertold Beitz, currently chainnan of the modernization of the economy. From this, Genscher con­ West Gennan Krupp Foundation. At that time, Beitz sur­ cluded that the U.S.S.R. can have no interest in "existing in faced a public plan for virtually merging the West Gennan a foreign policy environment characterized by a confronta­ and Soviet economies. He stated that the Federal Republic of tion which wastes one's powers, and a costly armsrace ." For Gennany need not rely on markets across the seas in the that reason, "the West cannot interpret Gorbachov's arms­ developing nations. The Soviets, he argued, need Gennan control proposals as propaganda." technology and know-how, and Soviet labor and raw mate­ Later that week, Genscher had his Chief of the Planning rials are cheaper than what is otherwise available to West Staff, Konrad Zeitz, author a dicussion of the implications of Gennany. The combination, he concluded, would be ideal. Genscher's argument for creating"stability" in Europe. Now that the U.S.S.R., under Gorbachov, has shown its Zeitzbegan by reviewing the threat tothe "security struc­ categorical detennination to reverse the inefficiencies of the ture in Europe"represented by "the imbalance of convention­ Soviet economy-ineffiCiencies which have to date ham­ al forces to NATO's disadvantage," and the fact that "the pered thefu ll potentialfor Soviet war production in depth­ Western alliance ... neutralizes the threat ... with the offers to participate in this economic transfonnation are being counter-threat to escalate a war begunconventionally by the repeated by Trilateral Commission spokesmen and their co­ other side, with nuclear weapons." Afterdetailing the prob­ thinkers. lems inherent in this fonnof deterrence,Zeitz concludes: "What would move the Soviet Union to offer Western 'Gorbachov needs Western credits' Europe a condition of 'equal security'? ...What would In an article entitled "Let Peace Become Conceivable," move the Soviet Union to give up the offensive structure of published in the March 3 edition of the West Gennanweekly its armed forces, which gives it such a comfortable conven­ Die Zeit. Trilateral Commission memberand Die Zeit editor tional superiority in Europe? The answer is obvious: The Theo Sommer returns to the Beitz program. Speaking of present structure of armed forces prevents real detente and Gorbachov's sweeping plans for the Soviet economy, Som­ large-scale economic and technological cooperationbetween merwrites: West and East in Europe. This is disadvantageous for both "Itis difficultto see where the advanced technology and sides, but the costs are incomparably higher for the Soviet the financial means for it are supposed to come from, other Union. than from the capitalist West. Eastern Europe can hardly "The democracies of the industrial triangle America! expand its exports into the Soviet Union significantly ... WesternEurope/Japan are in the midst of a new technological and there are also problems with their quality. Without in­ revolution. They are on the threshholdof a transitioninto the vestment goodsfrom the West, Gorbachov cannot implement infonnation age. his program. He needs cooperation with Western exporters. "If the Soviet Union and the other countries of the War­ He needs trainingcenters in his country, entirely or partially saw Pact only rely on themselves, then in the course of this staffed with Western technicians. And he will not get by technological revolution, they will fall increasingly behind. withoutWestern credits .... They can connect up to this revolutiononly under two COD-

Em March 14, 1986 Feature 33 ditions: They must liberate their economies from the pressure proposed. But Sommer concluded that, thanks to the Gramm­ of an exaggerated armament, and they must create a situation Rudman budget-cutting amendment, the backers of the SOl which makes possible a broad technological exchange and will shortlybe brought to their knees. large-scale economic cooperation between East and West. He wrote: "The U. S. bud�t deficit is now supposed to "However, the door to a confidence-based, economic­ be cut. Where, and how, and ivhat will be cut is still open. technological cooperation with the West can only be opened But one thing is clear: The days when Defense Secretary entirely if, parallel to nuclear disarmament, conventional Weinberger could dip his ladle into the soup without worries . disarmament in Europe too can be brought forward. The goal are over. Not even the budget fOr Reagan's darling project of must be to create conventional as well as nuclear stability, a missile defense will go unshorn. and thus to create the basis upon which a dynamic pan­ "The SOl program is going to be further thinned out. European cooperation in all areas can unfold." When the axe falls, it could mean that, of Reagan's demand for $312 billion for the Pentagon, $75 billion will be rudely Drive to stop the SOl chopped off. A freeze of the defense budget is the best he In line with Soviet views, the Trilateral faction in West could hope for. . . . There is a need for rethinking. " Germany is advancing supportfor Soviet "disarmament" pro­ Meanwhile, Sommer's fellow Trilateral Commission posals, side-by-side with denunciations of alleged American member, former German chancellor and Social Democrat aims to achieve "superiority," via PresidentRonald Reagan's Helmut Schmidt, has just released a book which is being Strategic Defense Initiative (SOl). partly serialized in the national circulation German newspa­ perDie Welt. Entitled A Strategy fo r the West, Schmidt's book is a recipe for the disarming of the West, in which WesternEurope would be decoupled fromthe United States. u. s. Undersecretary ojDfif ense Schmidt deals at length with the topic, formerly advanced Fred Ikle has denounced the "club by the so-called Brandt Commission on International Devel­ opment, that the "surplus" of funds currently employed for ojfo reign ministry stability weapons production would belb etter used for reorganizing fa natics" in Europe, and no Third World debt, under the aegis of the International Mon­ wonder: Thefo reignmin isters and etary Fund. Schmidt's poliCy agrees well with that of Beitz, whose argumentin favor of Gerinan-Sovieteconomic collab­ their Trilateral Commissionfriends oration was premisedon a switch fromGerma ny's traditional are endorsing Gorbachovs offer, Third World markets to those ;of the Soviet Union and its Europ e helpfinan ce the Soviet Eastern satrapies. that Despite some progress, says Schmidt, "one would have war-economy build-up. to say, in the words of Henry Kissinger, ·1 have the impres­ sion that thepresent debt management has reached its limits. ' "The economic corrective 'measures demanded by the International Monetary Fund of the debtor countries are , at Not for the firsttime , Foreign Minister Genscher said as core, reasonable, but they do not always necessarily take much at the Wehrkunde meeting of militaryexperts that took account of the domestic politi�al situation of debtor coun­ place in Bavaria, West Germany, the first week of March. tries. . . . It seems essential to me that all of the governments Genscher was responding to statements fromU.S. Undersec­ concernednow reach agreement on a comIilonstrat egy. This retaryof Defense Fred Ikle, who had arguedagainst what he strategy would require sacrifices from almost ' all sides." called the European "club of foreign ministry stability fanat­ Schmidt proposesthe reorganization of the Third World debt ics." Ikle criticized those who think "that we should help the structure, together with a plan, firstput forwardby Kissinger, East to modernize its economy, and that our help towards for the sale of Third World equity to the developed sector improving the economic development of the Soviet bloc con­ b� creditors. tributes to European stability. Such help will do the oppo­ Returning to the implications of this for the SOl and site. " militarypoli cy, Schmidt concludes: Genscher counteredthi s with the classic Soviet argument "To a certaindegree , European governments understand against the SOl: that those who demand Western superiority these necessities better than Wall Street, but up to now the over the Soviet Union will "endanger stability as much as Europeans have preferred to leave the game to the IMF and will the attempt to guarantee security only in military cate­ Wall Street. . . . I am surethat European governments could gories [Le. , to reject East-West economic collaboration]. " be more excited about such a plan for joint financial aid for Theo Sommer, too, discussed the SOl as an impediment CentralAmerica, than theyare aboutthe Americaninvitation to the disarmament-cum-economic collaboration policy he to deploy budget financesfor StarWars research."

34 Feature ElK March 14, 1986 GLOBAL SHOWDOWN The Russian Imperial War Plan fo r 1988

What the director of the CIA does not know ••• What the President's National Security Adviser is incapable

of understanding .••

What many conservatives lack the guts to read •..

The only comprehensive documentation of the current Soviet strategic threat available publicly in any language. This 368-page Special Report has been compiled by an international team of EIR experts. Includes 34 maps, plus tables, graphs, index, and extensive documentation.

Contents Part I: Part 4: The Soviets Have Already The Build ..Up of Declared War on the U.S.A. Soviet Absolute Superiority 1.1 The Two Qualitative Facets Of Soviet Strategic 4.1 The Soviet Military Build-Up's Two-Fold Role Mobilization Under the Operational Ogarkov Plan 4.2 Active Defense: The Soviet 'Star Wars' Program 1.2 Soviet Doctrine on the War-Economy 4.3 Passive Defense: Survival After War 1.3 Soviet Conclusions from World War II 4.4 The Build-Up of the Soviet War Economy 1.4 The 'Maximum Option' of the Ogarkov Plan: 4.5 The U. S. and Soviet Economies Since MAD Winning Thermonuclear War 4.6 What Are 'Acceptable Losses' for the Russian 1.5 The Soviet Military Command for World War III Command in a Global Nuclear War? 4.7 The Religious Factor: Call to Arms for 'Holy War' Part 2: Soviet Imperial Motives Part 5: Soviet Strategic Sabotage and 2.1 Soviet Imperial World-Domination by the 1990s! 2.2 The History of the Soviet Imperial Tradition Assassination Programs 2.3 Imperial Soviet Russia and the Chaldean-Byzantine 5.1 Andropov's Rise in the KGB: Warsaw Pact Enters Model of Empire _ International Drugs-and-Terrorism Business 2.4 The Andropov Dynasty: 'Stalin's Children' 5.2 Soviet Surrogates Provide 48 Months of Prewar Assassination and Sabotage Part3: Soviet Imperial Objectives Part 6: 3.1 Redrawing the Political Map of the World The Soviet Plan of Attack 3.2 The Northern Flank Pa 7: 3.3 The Imminent Knockout of NATO's Southern Flank rt Keys to U.S.A. and NATO 3.4 Germany- the Key to Europe 3.5 The Socialist International-Comintern 'Popular Front' Counter.. Strategy 3.6 Syria and Israel Within the Soviet Strategic Sphere 3.7 China vs. Japan and Vietnam, Under Soviet Strategic Hegemony 3.8 The Anglo-American Liberal Establishment and Its Penetration by Soviet Intelligence Price: $250 Order from: EIR News Service, P.O. Box 17390 Washington, D.C. 2004 1-0390 Order #85006

EIR March 14, 1986 Feature 35 TIlliInvestigation

AIFLD : It's not labor, nor is it for freedom

In 1962, something called the was formed in 1984 by Helga Zepp-LaRouche, to strengthen American Institute for Free the Western Alliance and press for a new world economic Labor Development (AIFLD) order. was founded under the aus­ The directive against relat ons with the Institute was is­ pices of the Alliance for Prog­ sued under orders from AIFLD representatives. The Schiller ress. Its formal mandate was Institute has demanded a full investigation, and has called to provide an anti-communist upon the U.S. government to immediately suspend funding counterweight to the influence to AIFLD, which received $ 13.5 million in 1985 from the of Fidel Castro's revolution State Department's Agency for International Development

If within the Ibero-American la­ (AID). AlFLD Director Doherty bor movement. In fact, it was The Schiller Institute's own investigation has established to function as a "dirty tricks" the following facts, which should guide future investigative arm of the U.S. State Department. The subversive activities and law enforcement action: of AlFLD have been repeatedly denounced by anti-commu­ nist trade unions and political leaders across Ibero-America. • Bernard James Packer, currently director of AIFLD It has participated in the corruption, destabilization, and de­ operations in Colombia, is a personal intimate of the Peruvian struction of labor movements and governments throughout Carlos Langberg Melendez, who is currently sitting in pris­ the continent. on in Peru on drug-traffickingcharge s. But, hitherto kept tightly under wraps is AIFLD's collab­ • The Colombian Workers' Bank (Banco de los Tra­ oration with the drug mafiaof Ibero-America, and with the bajadores), established in 1974 with a grant from the Intera­ Communist-terrorist networks which serve as its partners merican Foundation, on whose board sits current AIFLD and, frequently, its sponsors. Executive Director William C. Doherty, Jr., has been pub­ As we reported in our Feb . 14 issue ("State Department­ licly cited as a "laundromat" for illegal money transfers of Funded Labor Institute Tied to Mob"), the AIFLD ,connec­ drug money launderer Hermin Botero, who is currently im­ tion to the drug mafiawas established during the course of an prisoned in the United States for his crimes. investigation by the Schiller Institute into a directive issued • Tulio Cuevas Romero, the former UTC secretary by the Union of Colombian Workers (UTC) on Jan. 28, · general who for many years served on AIFLD's board of demanding the severing of all contact between members of trustees, founded the sam� Colombian Workers' Bank, and the tabor tederation and the Institute. The Schiller Institute immediately sought to allow sale of UTC stocks in the bank

36 Investigation EIR March 14, 1986 to Gilberto Rodriguez Orejuela, a Colombian who is cur­ United Fruit Company. In his 1967 . autobiography, Presi­ rently residing in a Madrid jail, awaiting extradition to the dents and Peons, Romualdi declared regardinghis friendship United States on drug-trafficking charges. With the help of with Figueres, "In every major activity in which I was in­ AIFLD's Cuevas, Rodriguez Orejuela was placed on the volved since 1949, I have had the cooperationand support of .. board of directorsof the bank. and by 1978 was its majority 'Don Pepe. · stockholder. Figueres's 1947 coup in Costa Rica was financedby what • Cuevas' s behavior was so blatant that the U . S. embas­ was then the United Fruit Company (today United Brands), sy in Bogota forced AIFLD to conduct an inquiry into his ties through the mediation of a Costa Rican businessman and head to RodriguezOre juela-but the results were never released. of its Social Democratic Party, Fernando Castro Cer­ AIFLD continues to defend Tulio Cuevas. vantes, a favor "Don Pepe" has returned many times since • UTC Secretary-General Alfonso Vargas traveled to to that cocaine-traffickingcompa ny. Spain in 1984 to plead against the extradition of Rodriguez Figueres was a founding member of the Caribbean Le­ Orejuela to the United States. This was the same Vargas who gion back in the 1940s and 1950s, which provided the bulk signed the UTC directive of Jan. 28 against the Schiller of the funding to Fidel Castro's July 26th movement. Fi­ Institute, along with UTC President Victor Acosta. gueres was a major financier of guerrilla movements in the In the dossier which follows. we expose the history of region, his lands serving as guerrilla training centers and his AIFLD's 24-year collaboration with the dirtiest networks of financialconnections as weapons procurement networks. Fi­ organized crime. gueres personally financed the Southern Front of the Sandi­ nista movement in Nicaragua along With"Commander Zero" AIFLD and the mafia Eden Pastora. To understand AIFLD's links to organized crime, it is Figueres's most overt embrace of the drug-trafficking necessary first to know that AIFLD has nothing to do with criminal underworld came in the ins1lance of master money­ the American labor movement from which it stole its "cre­ launderer Robert Vesco. who. as a fugitive from U.S. justice dentials." Rather, it was founded by "dirty tricks" specialists in 1972, found a ready haven in Don Pepe's Costa Rica. deployed into the American labor movement by the State Vesco was a major investor in Figueres' company. and the Department. the CIA-predecessor OSS (Office of Strategic Costa Rican President's New York bank accounts began to Services), and by the mafia. swell dramatically as a result of their partnership. Exemplary is the case of Jay Lovestone, the KGB agent Figueres extended the protection of his presidency to the and former head of the Communist Party USA who turned criminal, providing Vesco with a diplomatic passport stamped "anti-Communist" and joined the payroll of the State De­ "financial advisor to the President,'" and writing a letter in partment/CIA as a leading mole deployed against the U.S. July 1972 to then U.S. President Riqhard Nixon noting that and lbero-American labor movements. Lovestone, a mentor Vesco was helping Costa Rica "es.ahlish some new instru­ of AIFLD's firstdirector, SerafinoRomualdi . was a principal ments of finance and economic development" and expressing figure in the creation of AIFLD. his concernthat "any adverse publicity from the S .E.C. (U. S. Even as early as the 1920s. while still formally identified Securities and Exchange Commission) against Mr. Vesco withthe .Communists. Lovestone collaborated with the crim­ might jeopardize the development of ;my country. . . .�. inal·underworld. His Communist Party accepted millions of Vesco agreed to invest heavily in Costa Rica in return for dollars in loans from New York underworld chief Arnold the creation of an "international free zone" complete with Rothstein, to lead the garment workers' strike which turned gambling and banking concessions,. which would serve as Lovestone associate David Dubinsky's International Ladies Vesco's new base of operations, a project which Don Pepe Garment Workers' Union (ILGWU) into one of the nation's went to bat for-including writing . a pamphlet defending leading trade unions. Dubinsky' s own mob connections have offshore mutual funds, Vesco's spedialty. (It is no accident repeatedlysurfaced on the public record. that in the 1940s, Meyer Lansky had considered Costa Rica as the site of a gambling haven, but found the Bahamas and 'Don Pepe' and the mob other such territory more to his liking.) One of AlFLD's closest associates in lbero-America has Figuereswas not Vesco' s only prestigious partner. Later, for decades been former President of Costa Rica, "DonPepe " Vesco was to join in partnership with Colombian cocaine Figueres, an intimate friend and collaborator of AIFLD's czar Carlos Lehder Rivas in organizing a Caribbean-based first director, Serafino Romualdi, a continued close associ­ cocaine trade, the same Nazi-Communist Lehder wanted to­ ate of AIFLD's currentdirector William C. Doherty, and one day by the Colombian government for involvement in the of the most corruptfigures in recent Ibero-American history . April 1984 assassination of that country' s justice minister, Together with Romualdi, Figueres helped to create a gener­ Rodrigo Lara Bonilla. Forced out of Costa Rica when the ation of "trade union leaders" (like outgoing Costa Rican U.S. authorities got too close for comfort, Vesco has a new PresidentLuis AlbertoMonge) at the service of the mob and safe haven in Havana, Cuba-courtesy of another old friend of "business" empires like that of "EI Pulpo" (The Octupus), of Don Pepe's; Fidel Castro.

EIR March 14, 1986 Investigation 37 In thevarious Ibero-Americancountries in which AIFLD since September of 1975. An�er major stockholder in the operates, it has helped create "workers' banks," either by bank was Jorge Luis Ochoa� who was arrested in Spain providing the seed-money itself, or arranging donations or along with Rodriguez. When First Interamericas was shut loans from foundations and institutes with which it maintains down by the Panamanian govemment, its manager was none ties. The Colombian Workers' Bank, set up with help from other than the former UTC treasurer and Colombian Work­ AIFLD Executive Director William Doherty and former ers' Bank director Antonio Beltran. trustee Tulio Cuevas, has operated as a laundromat for drug Although Rodriguez divested himself of his holding� in money, and it is not an isolated case. the Colombian Workers' Bank in early 1984, those holdings As early as 1964 , AIFLD Executive Director Romualdi were sold to an associate who, together with his family, helped set up a Workers' Retail Bank in Buenos Aires, under remained a majority stockholder in the bank until the Colom­ the auspices of the General Confederation of Commercial bian banking superintendent began investigating him for il­ Employees. Armando March, the confederation's general legal financial maneuvers last year. However, even after secretary and close associateof AIFLD, became president of Rodriguez Orejuela's departure from the Colombian Work­ the bank. By 1969, however, repeated fraud and embezzle­ ers' Bank, it was publicly named as one of four Colombian ment forced the bank into bankruptcy, and the ensuing scan­ banks involved in drug money laundering for one Hernan dal led to March's expUlsion from the confederation. Botero, a businessman and soccer-team owner who became Colombia: The Colombian Workers' Bank was founded the first Colombian extradited to the United States on drug in 1974 with a $500,000 grant from the u.s. Interamerican charges. Foundation to the Union of Colombian Workers (UTC), whose Peru: AIFLD's foothold in the Peruvian labor movement president at the time was Tulio Cuevas Romero. On the was gained through Julio Cruzado Zavala, secretary gen­ advisory boardof the Interamerican Foundation sat (and con­ eral of the Confederation of Peruvian Workers (CTP) and, tinues to sit) the executive director of AIFLD, William Doh­ like Colombia's Tulio Cuevas, a member of AIFLO's board erty; Cuevas himself was a member of AIFLD's board of of trustees. Cruzado's controllerwaS AIFLD' s country direc­ trustees. tor Bernard J. Packer. In 1982, 'Cruzadoand Packer attempt­ Within six months of its founding, Cuevas and UTC ed to create a Peruvian Workers' Bank, on the Colombian Finance Secretary Antonio Beltran began to seek a way of model, the funding for whichwas to have come from AIFLD, changing UTC statutes to permit the sale of the labor feder­ among other sources . .The bank never got off the ground, ation's stocks to drug-traffickerGilberto Rodriguez Orejuela. however, due to opposition within labor circles to Cruzado's Beltran's brother was an employee of Rodriguez Orejuela, notorious mafiatact ics. as Beltran himself would later become. Although Cuevas Insider sources within the Peruvian labor movement re­ was unable toget legal approval for a change in UTC statutes, port that standing in the shadows of Cruzado and Packer's he did succeed in making Rodriguez Orejuela a partner in . banking venture was the now-jailed drug trafficker and co­ one of the UTC's housing cooperatives-thus qualifying caine addict Carlos Langberg Melendez. During Packer's Rodriguez forpurchase of the UTC stocks. Despite the sub­ tenure in Peru, the AIFLD official made regular visits to the sequent sale of UTC holdings in the Workers' Bank, Cuevas home of Langberg, along with Cruzado. and Beltran remained on its board of directors, along with Beginning in 1982, and culminating in 1983, Cruzado Rodriguez. and Packer's unwholesome alliance was the center of a scan­ Rodriguez, one of Colombia's prominent financiers and dal within Peruvian labor and political circles. Cruzado's businessmen, was also a top drug trafficker. According to effortsto tum his presidency ofthe CTP labor federation into recent revelations in the Colombian press, in 1979, he hired a dictatorship for life were resisted by a faction within the lawyer Diego Pardo Koppel (later to be named mayor of APRA party and its trade union confederation. Bogota, until a scandal forced his resignation) to argue in a AIFLD's funneling of tens of thousands of dollars into U.S. court in favor of Rodriguez's ownership of a wayward the CTP was denounced by nationalist trade union forces as suitcase discoveredat aU. S. airport and containing a quarter "imperialist intervention," but worse was the charge that of a million dollars. Cruzado, who received the funds through Packer, an offi­ In March of 1985, Panamanian authorities intervened cially designated CTP adviser, was pocketing the money against First Interamericas Bank, S.A., shutting it down for instead of investing it in CTP activities. Memos written by "failureto heed Panamanian laws" and for unexplained trans­ Packer to AIFLD headquarters were published in the Peru­ fers of funds abroad. The majority stockholder in First Inter­ vian press, including the politicalprofiles ofvarious Peruvian americas was Rodriguez Orejuela, who had beenarrested on trade unionists and their designation by Packer as "trouble­ trafficking charges five months earlier in Madrid, where he maker," "untrustworthy," and the like, prompting furious remains imprisoned today, facing possibleextradition to the charges of intervention in the iRternal affairs of Peru. United States on a wide range of drug-running and money­ The fact that Packer's officetelephone was directly linked laundering charges. to the U.S. embassy, clinched the matter. Following a huge First Interamericas Bank had been operating in Panama public brawl in which Packer \Vas accused of being a CIA

38 Investigation EIR March 14, 1986 agent and Cruzado "a traitor to the working class," Packer phasing out of the UPD as a labor/peasant umbrella organi­ was recalled from Peru , and Cruzado suspended from the zation ...." One UPD leader, however, was more explicit APRA party, of which he had been a representative in the in describing Packer's plan as an attempt to "destroy the base Peruvian senate. Cruzado retained his fiefdom in the CTP, of the Pact [betweenDuarte and the UPD-ed.] and to pursue however, and his special relationship to AIFLD continues to a military solution to the war." this day . When the UPD unions balked at AIFLD's prodding to "de-politicize," i.e., withdraw backing for the President, The State Department's hatchet-man Packer created a parallel labor federation called the Confed­ EI Salvador: After his exit from Peru, Packer was sent eration of Democratic Workers (CTD), and used threats of to EI Salvador, where preparations for presidential elections cutting off financialand logistical supportto try to pull unions were already under way. Although AIFLD had been expelled out of the UPD and into the CTD. AIFLD began to reposses from EI Salvador in 1973, its influencecontinued through the vehicles and communications equipment used by the UPD peasantunions it had helped fonn during the 1960s. unions, and then to label certain of the more resistant UPD AIFLD returned to EI Salvador in 1979, and was desig­ leaders "subversive" or "Marxist-Ieaning"-charges which nated the guinea pig of a State Departmentpolicy of "endless amounted to death sentences in a country where the death civil war" in Central America. AIFLD, coordinating with a squads wereworking overtime. group of Jesuits at the San Salvador University and with the A furious letter was sent by the political commission of Socialist International, brought in "agrarian refonn" expert the UPD to AIFLD Director William Doherty, blasting Roy Prosterman to draw up a radical agrarian refonn pro­ AIFLD's "absolutely shameful" manipulations and con­ gram for EI Salvador. Prostennan transfered to EI Salvador demning "the insufferable and contemptible insolence of SeDor his experiencein dn;l.wingup the "strategic hamlets" program Packer." From now on, insisted the letter, "We want no applied so unsuccessfully by the United States during the contact whatsoever with Packer." Within a week, Doherty Vietnam War. The refonn, which divided the land into plots had arrived in EI Salvador to try to calm things down, and too small to produce, and herded peasants into army-run Packer was recalled. The AIFLD "trouble-shooter" was as­ compounds, without credits, capital, or technical advice, hit signed to Guatemala, but his reputation had preceded him EI Salva90r like a bombing raid. Agricultural productivity and his appointment was refused. Packer was re-assigned to collapsed, and the country devolved into the right-left terror Colombia. that has ripped it apart ever since. Colombia: Bernard Packer's stint in Colombia, while AIFLD then set out to tum labor into a weapon of insta­ brief, has beenactive . His associate Tulio Cuevas is no longer bility. In 1980, AIFLD funding helped to found the Popular fonnally linked to the UTC labor federation, nor is he any Democratic Unity, a new labor-peasantcoalition which grew longer a member of AIFLD's board of trustees (too hot to quickly to 200,000 members and became the backbone of handle, perhaps?), but his influence in the UTC lives on in U.S. electoral policy in EI Salvador. In 1982, the UPD, with the new president and secretary-general, Victor Acosta and nearly 80% funding by AIFLD, committed its substantial Alfonso Vargas. union forces to getting the Christian Democratic candidate, In 1984, Acosta and Vargas rammed through the UTC Napole6n Duarte, elected to the presidency. During 1984, executive committee a public denunciation of the U.S.-Co­ however, with what many observers described as a U.S. lombian Extradition Treaty, the same treaty which every policy shift away from Duarte, Packer-as the AIFLD coun­ leading Colombian drug mafioso has publicly denounced, try director in EI Salvador-became the point man for a the treaty for whose defense and enforcementJustice Minis­ pressure campaign on the trade unions to pull their support ter Rodrigo LaraBonilla was assassinated by the drug mob out fromunder the Salvadoran President. in April 1984, thesame treaty whose approval by theColom­ According to a Washington Post article of March 20, bian Supreme Court led to the narco-terrorist siege of the 1985, Salvadoran labor leaders and some Christian Demo­ Justice Palace in November 1985, during which half the crats "complained that the U.S. shift was undennining SupremeCourt magistrates weremur dered. Duarte's declared goals," which included peace talks with Vargaswas later sent by Acosta, and in the company of the rebels. Their view was confinnedwhen acting U. S. Am­ Tulio Cuevas and CTC labor federation head FelipeHurta­ bassador David Passage blithely told a group of visiting U . S. do, to Spain to plead the cause of drugtrafficker Rodriguez labor leaders that a defeat for Duarte in the upcomingassem­ Orejuela beforethe Madrid courts. bly and municipal elections "would be fine" with the U.S. In January 1986, it was Vargasand Acosta who put the embassy. names of the UTC executive committee to the directive de­ An embassy reportat the time explained: "The long range mandinga cutoff of relationsbe tweenthe UTC andthe Schill­ plan, according to Director Bernard Packer, is to help create er Institute, whose Colombian members had been offering a large confederation of urban labor organizations for EI courses in political economy and science to UTC members , Salvador, with links to ORIT [Interamerican Regional Or­ as well as organizing drama, musical, and other cultural ganization of Workers]. This confederation would mean the works with UTC affiliates.

EIR March 14, 1 986 Investigation 39 his start in the 1940s running the public relations office of AlFLD's Origins Pan American Grace Airways, Panagra, and, then W.R. Grace's Latin American Division in Peru; Robert Bill, U.S. ambassador to Costa Rica during the Figueres period who helpedto consolidate United Fruitcon­ trol over that nation, and later was to be rewarded with a ' directorship in the company. Hill had earlier served as vice­ president for W.R. Grace Co. ; Arthur H. Davis� current U.S. ambassador to Panama Subversion by Grace, whose public pledge to destabilize that country's government nearly led to his being declared persona non grata. Davis Romualdi, Rockefeller worked for the Grace empire's Panagra airline during the same period as Ulloa, from 1945-56. The American Institute for Free Labor Development (AIRD) was founded in 1962, under the auspices of the Alliance for Rockefeller agents Progress, with the alleged purposeof providingan anti-com­ The first executive directorlof AIFLD was Serafino Ro­ munist counterweightto the influenceof Fidel Castro's rev­ mualdi, an agent of the Rockefeller family. He began as an olution within the lbero-American labor movement. AIRD's employee of Nelson Rockefeller's Office of the Coordinator real mandate, however, was quite different. Inter-American Affairs (CIAA) during World War II, and as AIFLD's first chairman, leading contributor, and propa­ an operativeof the Officeof Special Services (OSS), precur­ gandist was J. Peter Grace of the company W. R. Grace, sor to the Central Intelligence A.gency. RomuaIdi' s qualifi­ Inc. GraceThe empire, comparable in many respects to Brit­ cations for the AIFLD postwert not only his years of service ain's East India Company of the 18th century, derived its to the Rockefeller interests in libero-America, but the sobri­ vast fortune from nearly a century and a half of looting in quet he earned asGen. Juan PenSn's"Enemy NumberTwo"­ Ibero-America. Starting out by collecting bird guano off the afterformer U . S. Ambassador to Argentina SpruilleBrad en. Peruvian coast and exporting it home to Britain, the Grace Peron's efforts to forge Argentina's labor movement and family-transplanted to the United States-rapidly evolved industrialist class into a single! political movement for the into shipping, and from there to sugar plantations, mining, industrial modernization of Argentina. was anathema to textiles, and banking. Like the infamous United Fruit Co. Rockefeller and Grace interestson the continent. (today, United Brands), the Grace empire extended its ten­ Romualdi was trained by master labor manipulator Jay tacles across the continent, buying up resources, towns, and Lovestone, former head of the Communist Party U.S.A. people. Together with Braden and otber Rockefeller agents in the Ina recentinterview, EIR founder Lyndon H. LaRouche, State Department, Romualdi plotted the creation of a new Jr. told the Argentine publication Nueva Provincia, that J. inter-American labor organization through which to isolate PeterGrace is partof that circle of nominal Catholicsimplic­ and destroy the Peronist"virus ." In 1948, the Inter-American itly attackedby the Vatican at the recent ExtraordinarySynod Confederation of Labor was born, to become the Interamer­ of Bishops in Rome. Along with Grace, LaRouche names ican Regional Organization of Workers (ORIT) one year CIA directorWilliam Casey, former U.S. TreasurySecret ary later. Romualdi served as ORIT's assistant secretary general William Simon, and Notre Dame University presidentFather in 1951. . Theodore Hesburgh. ORIT, as an umbrella organization of most of the demo­ These men, who have embraced the "Protestant ethic," cratic labor confederations of lbero-America, was not an declared LaRouche, "accept the Teddy Roosevelt doctrine easily manipulable instrument, and therefore not useful for that Latin Americans suffer a natural cultural inferiority to deployment against Peronism. 11t was determined that a new. the British and North Americans . . . and seek to wipe out entity withfiner-tuned political lControlover the flowof funds existing Latin American institutions, to replace them with and indoctrination into Ibero-America' s labor movements institutions and practices which correspondto the doctrineof was required. Thus, AIFLDwas born. The majority of AIFLD Adam Smith. ..� ." trustees, American and Ibero-American alik� �an be traced The Grace empire has spawned any numberof individu­ to Rockefellerfamily interests. Exemplary is AIFLD's vice­ als who have been implicated in dirty tricks and destabiliza­ chairman and trustee until his deathin September 1985, Ber­ tions in Ibero-America. Among them are: ent Friele. Manuel UUoa, former Peruvian prime minister who Friele, like Romualdi, was a Rockefelleremployee at the played a leading role in implementing economic policies CIAA during the '40s, and from 1946 to 1968 was senior conducive to the flourishingof the drugtrade there. Ulloa got vice-president of the Rockefeller family's American Inter-

40 Investigation EIR March 14, 1986 national Association for Economic and Social Development. itate the trafficking of drugs through the region and, ulti­ In 1968, he served as special assistant to New York Gov. mately, convert all of Central America into a "free enterprise" Nelson Rockefeller, during the latter's famous "fact-finding drug plantation. tour" of Ibero-America. AIFLD's commitment to defend the usurious interests of Funding the Grace and Rockefeller empires in Ibero-America was Funding sources for AIFLD in 1985 included $900,000 never more clearly stated than in its executive director's from the AFL-CIO, $4.8 million from the quasi-governmen­ wholehearted endorsement of the Kissinger Commission Re­ tal National Endowment for Democracy, and $13.5 million port on Central America, which AIFLD helped to formulate. from the State Department's Agen y for International De­ AIFLD Executive Director William C. Doherty, Jr. enthu­ velopment (AID). However, trustworthy sources report that siastically testified at hearings of the House Committee on the funds which AIFLD handles are actually at least fivetimes Foreign Affairs on Feb . 23, 1984, that the Kissinger recom­ that. mendations �'embody the major requirements for a successful AIFLD's effort to pass itself off as a labor organization foreign policy in Central America. They include, in particu­ is limited to putting a handful of lab r leaders on its board of , lar, tlie concept of ·conditionality. " That concept means trustees. It is run by multinationals with the worst record in making financial or military aid to those countries contingent labor relations in Ibero-America-the Grace and Rockefeller upon conversion of Central America's economies into "Hong empires. Upon close inspection, one discovers that it is not Kong"-style, labor-intensive "free ports" which would facil- labor they an! financing, but drugs and communism.

' down,tb� g:ovemment.", Business Week adds, "Today, Sudan's prime minister is a former eader of the doctors'

up to the fall of the 5 was summarily as

. 'Despite claims of the American Institute fb I: Fre�. La- tiO� rlev�lopment (NFLD) to be anti-communist, it a�d its fe llowin stitutions-the African-Am!!rican 4bot:C e.n� i i tef anc;i Asian-American Free La bor lnsti,tute:-�ave been \l'N ���tedly caught running operations of benefiuo COq:l-, munist Qr terrorist drug-running regimes, such as those of �Fid�l Castro and . Muammar Qad�afi. E'$emplary is>tq e t �ase of, �IFl.:.D:�: link through Jose "Pepe" Figu ereslo

" Robert Ve�co, the La nsky m(mey-launderer wh� tod in s drug-runner residence. . 4Niy" �s flav�n'! aS·Castr()' in "".. The U.S. State Departmentdeployed one of its diJiY tricks operations, the African-AmericanLaborf e"te�'iin tan�in wifb tli� International 'Monetary lfu�d �0I'b��g ' down',the govemment ofSudan.. . ' .. " "lit!' Business, Week mag�ine . repQrted th,e foil�,-¥ing , on ov. 4 u 1 985: "[Executi ve. .. Director'of the Afri can:"A mer� ic an L,ab<>f Center Pattick] O'Farrell describes,a re vo!!!" ?,:;*ion ,last:.-\pril in Sudan against the governme?tpf ' . ,�. 'de nt Dafar Mohammed Numayri : 'It was brought d iifl'Vie ly by tHe unions, especiallY the do,ctors , e� " been helping to train some union me mbers w, ' fd God 's sake, don't say we were training people to over: J*q:l�w the government, beeaus� we weren't,' s�ys O'F�f7 ';;:tell . 'But the unions did go'to the streets, to he lp bri ng < f

EIR March 14, 1986 Investigation 41 l]3TIillInternational

NATO elite is told: We must keep the economy strong by George Gregory

"Our adversaries have learned that if our democracies be­ Ministry, et al . have decided upon one of two possiblepolicy come sufficiently aroused, we might mobilize our full eco­ responses to U.S. financial chaos and degraded credibility nomic strength to rebuild insuperably superior military forces. and power internationally: a re-run of the Kissinger-Nixon Our security therefore demands that we maintain overall eco­ detente and arms-control program, with large-scale econom­ nomic superiority." ic deals with the Soviet Union, including Soviet access to Those werethe words ofU. S. Undersecretary ofDefense Western European technology, from an admittedly weaker Fred Ikle to the March 1-2 annual meeting of the NATO position than last time around, but in the curious hope that alliance's military elite, the International Wehrkunde (De­ the Russian leadership will not cheat this time. fense Sciences) meeting in Munich, West Germany. Some But the Wehrkunde conference steered a course in the 150 of the most prominent figures in the military establish­ direction of the other possible policy response. There were ment of the Western Alliance were in attendance. no fixed moorings visibly guiding policy discussion, but there Ikle, the featured Americanofficial, faced not a few among was also no mouthing about the "new phase of detente, " "new his European audience who relegated him to "that small bunch era of cooperationborn in Geneva," nor "back-channel crisis of ideologues around Weinberger-whose influence on management of the superpowerrelationsh ip." Instead, there [President] Reagan is steadily decreasing, however." was a focus on fundamentals, and a number of sensitive This Wehrkunde meeting took place under conditions subjects were discussed which are hardly ever mentioned in which demanded a strong American demonstration of com­ pUblic. mitment to U. S. defense and the integrity of Westernpolitical West German Defense Minister Manfred Womer, in his and strategic relationships worldwide. These conditions in­ key-note address, "Strategy in Flux," stated that, for Western clude the first phase of Gramm-Rudman budget butchery, European countries "to fully satisfy the Soviet need for se­ which went into effect on March 3, one day afterthe begin­ curity, they would have to surrender." The 19th-century ning of the Munich assembly; second, by the fall of the Prussian master of strategy, Clausewitz, gave a characteri­ Marcos government in the Philippines. The weight of U.S. zation which applies perfectly to the Soviet Union, when he policy is evaluated in Western Europe, by both friend and noted that any "conqueror would prefer to invade a neigh­ foe , according to criteria of credible U.S. power, and U.S. bor's country peacefully." Contrary to notions of entering a loyalty to established security commitments based upon that "security partnership" with the Soviet Union, the new name power. Gramm-Rudman and the Philippine destabilization for the rerun of Kissinger's detente program, Womer noted call thatcredibility into question. that the West German government had received messages As perceived in West Germany, the U.S. State Depart­ loud and clear from Moscow concerning policyexpected of ment, the Trilateral Commission, the West German Foreign West Germany in this "security partnership": "good behavior

42 International EIR March 14, 1986 in general, and prevention of SOl in particular.... The perhaps to some fairy tale creature like Rumpelstiltskin," Soviet notion of security would in effect be our insecurity. " came right after he derided any quest for "arms stability," As for arms-control,the West German defense minister's pursued in the West with such complacency that the Soviets evaluation was based upon the "Soviets'" thoroughly Rus­ were virtually invited to seize superiority, while nothing at sian drive to minimally "secure the empire acquired in the all became stable in the developing countries. course of a history of several hundred years," rather than One day afterthe conference, liberal West German For­ mere scepticism: "To them, arms control policy is primarily eign Minister Hans DietrichGenscher flooded the mediawith an instrumentof diplomacy by which their own positions are protests that ''those who seek superi�rity" are "undermining consolidated, and Westernfreedom of action is curtailed." East-West stability," arms control negotiations, and pros­ Concluding the series of exploded myths and percep­ pects for cooperation. A foreign · policy spokesman for tions, Womer stated: "It makes little sense to distinguish Genscher's Free Democrats named rue as the culprit who between 'a strategy of deterrence' and a 'war-fighting had committed this heinous crime, and demanded that Pres­ , , strategy. , WesternEurope confronts an overwhelming S0- ident Reagan "shut rueup , or risk loSingcredibility himself. " viet conventional superiority, which is becoming an even Fred Ikle had, in fact, quoted a widely circulated policy more enhanced threat for reasons Womer outlined. Devel­ statementof Genscher' s fromDecember 1985. "I disagree," opmentof Soviet strategic missile defense is progressively Ikle said, "with a view sometimes expressed by European degradingthe deterrentvalue of U . S. strategicnuclear fo rces; officials that we should help the East to modernize its econ­ likewise, upgraded Soviet air-defense systems, also in East­ omy, and that our help toward improving the economic de­ ern Europe, immediately degrade NATO's air forces, and velopment of the Soviet bloccontributes to European stabil­ will soon be able to defend against NATO's nuclear missiles ity." Ikle charged that this would merely "make it easier for in Europe; at the sametime , improvements in the precision the Soviet leadership to accelerate its military buildup." and armament of Soviet short- and medium-range ballistic missiles, which are armed with conventional and chemical Doctrinal debate warheads, and accelerated production of cruise missiles, There is a raging debate in the ranks of West German means that "in the forseeable future the Soviet Union will commanderson NATO operational doctrine, for whichWest possess some kind of conventional. first-strike capability in German officers have no responsibility, according to NATO Europe ." rules. Officially, thereis no West German stafffor operation­ While dealing with Soviet conventional supremacy itself al planning; the operational levels of maneuvers are planned "can not be accomplished without the participation of the at NATO. The issue is the insanity of expectingto defend by United States," "the need for a European defense system is waiting for the enemy to storm across the East-We�t divide, as logical as it is imperative." The evaluation in the relevant with no depth of territory to fall back into, butwith aNATO West German military staffs is, in fact, that the time latitude prohibitionagainst crossingthe borc:lerto the East at the very on developing and installing an enhanced EuroPean air-de­ moment of attack to carry out flanking and envelopment fense capability against short- and medium-range missiles, counter-attacks within the enemy's own territory. whether nuclear or conventionally armed, cruise missiles, It was a mistake for Iklenot to demand a corrective NATO and the 4.5:1 superiority of Soviet air forces, is probably command guideline to incorporate West German officers in even less thanfor SOl itself. responsibilitiesfor operationsplanning. But he did denounce The only debate over the issue of whether SOl should be the insanity of "the dogma of immaculate aggression . . . "restrained" or bargained away in exchange for Soviet mis­ which holds that our enemy, after launching a full-scale at­ silereductions occurred between American senators, not with tack onto our territory, would remainimmaculate of any sin," the Europeans, who have made up their minds, that they do so that it would be a sin, in turn, to hit him on his own not want it bargained away. territory. With the exception of those West German flag Womer's argument is, that the need for a European de­ officerswho earned most of theirstarS under Helmut Schmidt, fense system "could be met by an extension of the American who went so far as to eliminate courses in tactics at West defense system" (and West Germany does intend tQ partici­ German militaryacademies, it is ratherobvious-hot potato pate), but other WesternEuropean countri es, which are less or not-where the majority of army commanders stand on obviously enthusiastic about SOl, have to contribute to an this issue. enhanced air defense for Europe, or recommend surrender. American participants at the Wehrlrundeconference , par­ "Even if it did not come to war, Western Europe would, ticularly congressmenand senators,repeatedly dodged ques­ under the influence of numerically superior Soviet military tions aboutthe U.S. budget, and merely respondedwith "it power,be susceptible to politicalblackma il, and in the longer [Gramm- Rudmann] hasn't gone into effect yet, don't wor­ run submissive to the Soviet Union." ry." These are the kinds of AmeriC4lOs, said the Europeans, Undersecretaryfor Defense Ikle was also aiming to shake who would pull U.S. troops out ofEliropeon "cost effective­ up his listeners. His jokes about the "dozens of papers by ness" grounds. Then, they would try to convince Europe it NATO experts" who can employ only "euphemisms" to de­ was all done because they. thought Europe wanted a troop­ scribea possibleatttack on NATO by "an aggressor, alluding reductiondeal with the Russians at any price.

EIR March 14, 1986 International 43 Operation Edgar Allan Poe

Investigating the Palme killing: investigative hypotheses . by Lyndon H. LaRouche, Jr.

The international newsweekly, Executive Intelligence Re­ overlapping or not -overlapping other elements of the array.. view. hereby structures its ongoing investigation, to the pur­ The foregoing list is an arrayof alternativeor overlapping pose of defining editorial judgment on both a) the killing of elements consistent with the probable indications that the the late Prime Minister of Sweden, Olof Palme, and b) the perpetratoroperated in the mode of a professional killer. indicative features of international coverage of the killing, The most important clues to be considered, come from by news media, governmental agencies, and other relevant the area of news-media coverage of the killing and investi­ agencies. gations. Two characteristics of such news-media coverage This investigation is herewith named Operation Edgar must receive specialemphasis in the inquiry: Allan Poe. That name is adopted for the practical purpose of 4. Efforts to divert suspiciion to or away from certain identifying the methods and outlook to be employed in the classes of suspects. inquiry: to emphasize our abhorrence of the contrary, more S. Effortsto exploit the killi�g to generate a politically or ' popularmethods identified thewith fictional Sherlock Holm es. strategically significant reaction: Thegeneral investigative hypothesis to guide the inquiry It need only be mentioned, that the Soviet dis information at this stage, is based on efforts to arrange the full array of channels are , so far, most active in attempting to generate available evidence in such a manner as to narrow theinves­ variously politically or even S1;rategically significant reac­ tigation down to one among the following general and more tions to the killing. The pivotal question, is whether political particularchoices of motives for, and character of the assas­ exploitation of the killing is merely opportunistic, or whether sination. the exploitation reflectsin one sense or another the motivation for the killing. 1. The Killing was Motivated Either: So far, the most probable hypotheses are: 1.1 Simply to Kill Olof Palme; A. That Palme had been actually or plausibly instrumen­ 1.2 Less to Kill Palme, than to produce the effect which tal in some recent action or action-in-preparation, which the killing of Palme was intended to produce. prompted some agency to require the immediate killing of Palme as either revenge or prevention. 2.1 The Motivation Was of a Personal or Business-Interest B. That Palme was killed by the Soviets or some related Nature, or Some Combination of the Two; agency, because the political value of Palme's bloody shirt 2.11 Personal Revenge was esteemed to greatly outweigh the usefulness of the living 2.12 Action in Defense of Some Personal Interest; Palme. This would coincide wi� the use of either elements 2.13 Revenge for Injury to Business Interests; of international terrorism or Soviet-steered ultra-right-wing 2.14 Action In Defense of Perceived Business Interest; groups as accessories to the action. The special difficulty, is that the public and covert Olof ' 3. The Motivation Was Political, and was either one or a Palme represent somewhat distinct images. That is to empha­ combination of the following: size the query: Did the motive fo r ordering Palme's killing 3.1 Swedish National Matters; bear uponthe authors' perceptionof Palme' s public or covert 3.11 Intra-Party Motives; role? 3.12 Non-Intraparty National Motives; Obvious circumstanceslocal to Sweden, include: 3.2 International Political Matters; 1) The Gyllenhamer affair , and effects bearing upon the 3.3 Strategic Matters As Such. fall of the stock-exchange values. 2) Increased threats to Sweden's national security. For purposes of files-organization, each element of the 3) Widespread expressions to the effect that Palme's ac­ foregoing listing is to be treated as a "Boolean" conception, tions had betrayed allies and supporters .

44 International EIR March 14, 1986 Olaf Palme: Who benefits, politically and strategically, from his assassination?

The distinctive political circumstance, was that Palme's calculated effect,. or which was so powerfully motivated by standing was at a lower ebb than during his earlier electoral more narrow considerations, as to disregard such pre-calcul­ defeat. The best way to eliminate Palme politically, was to able effect. keep him alive as a target of growing hostility from all na­ tional sectors, including much of his former electoral base. Moscow's charges against the CIA The effect of his murder, is to revitalize "Palme the martyr," The Moscow allegation, that the CIA was involved in the and thus strengthen the perpetuation of the policies with killing of Palme, is worse than absu d insofar as this charge which Palme was associated. is understood to mean the U.S. Central Intelligence Agency. The fact that Palme's killing has features of a professional However, there are certain powerful, private agencies, which killing, is strong indication of authorship by some agency public opinion might confuse with the CIA, which are fully qualified to pre-calculate the political sequelae of such a capable of complicity in such a killing. I shall not name any murder. An agency which had the means to deploy a profes­ of these agencies (for obvious reasons of discretion), al­ sional killing, would have, "instinctively," reckoned with though I have several such immediately in mind. I shall the fact that killing the politically discredited Palme would merely indicate the characteristic features of the relevant elevate his standing to that of a "martyr." This suggests either problem, so that investigators may bear this line of inquiry an agency which intended to produce such political sequelae, in mind as they weigh the evidence. or which was so blinded by desire to kill Pal me that they were The killing of Palme occurs in the context of two global prepared to risk the political after-effects as part of the price sets of events: for immediately conducting the killing. 1) The global banking-collapse crisis now in progress, Who benefitspolitically and strategically? Most narrow­ and ly, Moscow benefits. More broadly, the benefit accrues to 2) A cascade of extraordinary unleashings of coups d'etat the modem outgrowth of the 1920s "Trust," the political and kindred events in the setting of the period from the Ge­ "joint-stock company" interests of the contemporary form of neva Reagan-Gorbachov summit to the present Soviet 27th the "bi-polar arrangements" between certain wealthy West­ Party Congress. A powerful faction of bankers in the West, ern interests and Moscow, including the so-called left wing which has reached a global, "bi-polar" agreement, through of the Socialist International . This benefitwas pre-calculable; "back-channels," with Moscow, is acting to pull the United the success of the killing, at firsttry , in an operation with the States out of the Strategic Defense Initiative, to pull U.S. characteristics of a professional assassination, strongly indi­ strategic influence, rapidly, out ofEurope , Africa, and Asia, cates an agency which either intended to produce such a pre- and back to the Americas. This same faction, is faced, si-

EIR March 14, 1986 International 45 multaneously, with an imminently threatened general col­ also conflicting aims, with Mos¢ow, in an arrangement for lapse of the U.S. banking system, and the chain-reactions consolidating a "New Yalta" ver$ion of a "bi-polar" dictator­ this collapse portends for most of the world. ship over the planet. They wor� with Moscow on common This "bankers' faction" in the West, is an integral part of interests, but also in conflictwith Moscow on other matters . the present-day equivalent of the 1920s Soviet "Trust" orga­ They are turning over Europe , ..j\sia, and Africa, to Soviet nization, the continuing "Trust"-linked organization within strategic domination, while simultaneously acting desperate­ which Olof Palme's political activities have been situated. ly to preserve their financial interests in both the Americas The killing of Palme by such circles, or by aid of such circles, and parts of the world being abancaonedto Moscow's strategic would be, therefore , an "inside job." domination. This "bankers' faction" of the West, has built up a mas­ It is my first-handknowledge , from a large accumulation sive, privately operated, international intelligence capabil­ of isolated cases of such first-handknowledge , that this "third ity, akin to the fictional "third force" of the famous James force" is presently so hysterical that it appears to have lost its Bond movies. This capability has penetrated deep into the senses entirely. This is the one major force in the West which policy-making and operations capabilities of Western gov­ would have been capable of killing Palme with the view of ernments, and is able to orchestrate the policies and actions using Palme's "martyrdom" to reeestablish Socialist Inter­ of such governmentsto suit its own purposes, in an increasing national control over Sweden in particular. Or, this force number of cases. It has an operational capability more or less would have readily killed Palme, if Palme were suspected of equivalent to that formerly commanded by the CIA. moving as part of a Socialist Internationaleffort to coopt the With aid of the Socialist Internationaland other left-wing anti-IMF movement now rising in the developing sector and andleft-liberal political forces, this "third force" (which could parts of Europe as well. I have no indication that this "third be named by names of organizations and key personalities) force" was implicated in the killing, only that, on the basis has gained great power over nations of the West and devel­ of patterns of recent performance, they would be perfectly oping nations . Yet, at the point this "third force" is at the capable of such an hysterically iflsane act. verge of realizing its political objectives within the West, the The "third force" must be included among the list of imminent collapse of the U.S. banking system threatens to general suspects, for an additional reason . Under the "back­ destroy much of that power. This powerful "third force" is channel" arrangements between Moscow and the Western, currently operating with blind fanaticism and desperation, bankers' element of the present-day "Trust," the Soviets leave seeking to crush any force which resists it, or even threatens problems in the Westernsectoq >f "bi-polarity" to their back­ to resist it. channel partners of the West, while the Western partners The case of the destabilization of the Philippines, planned leave matters in areas of Sovi\!t strategic responsibility to first underPresident Jimmy Carter, and set into motion be­ Moscow. So, Moscow left the destabilization of the Philip­ ginning 1982, is an example . First, this "third force," exert­ pines and South Korea, to the "bankers' faction." So, most ing great power on the U. S. and other governments, toppled of the assassination-plots, harassment, and defamation op­ President Ferdinand Marcos, and is now moving to dump erations against me ordered by the Soviets, are run through soon the new provisional President of the Philippines, Mrs . the resources of Western-based, or Sharon-linked private Corazon Aquino. At the same time, the same "third force" is intelligence capabilities. In certain matters of agreement moving to d�stabilize South Korea, completing another op­ within the "Trust" arrangement, Moscow would say to the eration first set into motion under President Jimmy Carter. bankers' faction: "That's your r\!sponsibility;take care of it." This means, in short order, that the U.S. bases in the Philip­ In other matters, the Western partners would make the same pines are lost, and the United States is out of the western sort ofobservation to Moscow, as in the case of the projected Pacific and Southeast Asia strategically, altogether. politicalelimination of Yasser Arafat. The same forces are acting to destabilize Egypt, and to If a "Trust" -centered killing of Palme were the case, tum control of southern Africa over to Soviet naval, air, and Palme lies between the cracks of Moscow's and bankers' missile forces based in Angola and Mozambique. They are faction responsibility. Either could be responsible for the act, moving to a bloody destabilization of Panama, backing the it could have been conducted jointly, and would almost cer­ professed Nazi, Arnulfo Arias Madrid, as the "democratiz­ tainly have been done with a "need to know" degree of know 1- ing" agency for the region of the Panama Canal. The list goes edge of both. on, and is very long. I can not draw the conclusionthat it was the "Trust" which It is to be said of this "third force,!' this agency of the killed Palme; there are other possibilities not to be excluded. "bankers' faction," that "whom the gods would destroy, they One can only say, that whether the "Trust" was directly firstmake mad . " involved or not, the sequelae of the killing will involve both The political ideology of this nameable "third force ," is principal components of the "Trust"; and, if it was not the not exactly pro-Soviet. They are , after all, an asset of a "Trust" which authored the killing, this fact itself would be a variety of wealthy financier families joined, in common if most remarkable feature of the operation.

46 International EIR March 14, 1986 money, and logistical support for all sides in Central Ameri­ Central America ca's war, a war on narco-terrorism outflanksthe Soviet gam­ bit. Ibero-American governments, therefore , have taken a new step to block U.S. strategic disaster. As Noriega arrived Contadora seeks war in Colombia, the foreign ministers of the Contadora Support Group, Ibero-America's diplomatic coordinating council, on narco-terrorism announced at the end of a two day meeting in Uruguay, that they have agreed to establish a multinational civilian peace by Gretchen Small force along the Costa Rican and Nicaraguan border. "We are talking of a commission for observation, prevention, and inspection," Colombia's foreign minister, Augusto Ramirez Buried by the American media under the debate over funding Ocampo, explained, "not an armed forced aimed at separat­ Nicaraguan "contras," called "freedom fighters," were two ing the two sides, or at intervening in armed conflicts." The Ibero-American initiatives which have opened new flanks for Commission, which will patrol the border against illegal winning peace in Central America, instead of Washington's weapons shipments and troop incursions, was requested by current, Soviet-supported, no-win strategy of fomenting vi­ Costa Rica last month, to halt the continuous border skir­ olence and counter-violence in the region. mishes between Nicaraguan military forces and the "contras" While Washington talked, a quick "working and good­ based in Costa Rica. will" visit to Colombia by Panama Defense Force head Gen. Peru immediately volunteered to participate in thecom­ Manuel Noriega on Feb . 28 concluded with plans to make mission. The Contadora Support Group, joining Panama, their borders "impervious" to drugs and arms traffic, and Mexico, Venezuela, Colombia, Peru, Argentina, Brazil, and initiated discussion on how to close offthe Panama Canal to Uruguay, announced they will invite the nations of Europe, clandestine arms and drug traffic. Japan, and Canada to provide communications and transpor­ General Noriega was received with honor in Colombia, tation equipment for the Commission. greeted at the Bogota airport byColombian Defense Minister The Nicaraguan/Costa Rican patrol force is viewed as a Miguel Vega Uribe, and hosted by the commanders of all of precedent for the creation of others throughout the region, Colombia's military forces during his two-day visit. In a brief especially along the "hotter" Honduran/Nicaraguan border, comment with the press, he explained that the purpose of his where much of the "contra" activity is concentrated. "We trip was to work out the "joint infrastructure" required to fight hope there will be a chain reaction of this magnificent idea in narco-terrorism. "Because of our geography," the general the region, " Ramirez Ocampo stated. Final details of thenew explained, Panama "is vulnerable for our soil to be used as a peace commission are to be hammered out on March 12, at a trampoline for cocaine and marijuana towards the consumer meeting in Costa Rica. markets. Narco-terrorism is a new concept of the violence The Commission challenges stubborn U. S. insistence on we are living in these days, in which anti-social elements escalating war in the area. The final statement from the Sup­ make use of the enormous economic power and resources of port Group meeting reiterated that a cessation of allfore ign drug traffickers to achieve their ends." support for guerrilla and irregular operations in the area "is Noriega noted that the Panama Canal functions as a sieve an imperative need." Costa Rica's new President, Oscar Ar­ for illegal arms and drugs shipments. "The canal zone is very ias, reiterated another basic principle of Contadora strategy big, since ships of all nationalities go through it." He pro­ in a U.S. television interview March 2: "If I were President posed that "a special police to inspect the holds of those Reagan, I would give those funds to Guatemala, EI Salvador, ships" be created. Before leaving Colombia, Noriega signed Costa Rica, and Honduras in economic aid, instead of mili­ an agreement with Colombian Army Chief Gen. Rafael Sa­ taryaid to the contras ." mudio Molina, to cooperate in keeping their common border Assistant Secretary for Inter-American Affairs Elliott "impervious" to arms and drug trafficking. Abrams flat-outrej ected any cooperation with Ibero-Ameri­ Every major Ibero-American government, minus the Is­ can concerns for the region, in a satellite interview with raeli client state of Ecuador, has warned the United States Ibero-American journalists on Feb. 28. "There will never be that its so-called "military solution" in Central America­ a Contadora agreement unless there is pressure on the San­ arming tens of thousands more combatants in the region­ dinistas to sign it," Abrams stated. For Abrams, "pressure" will create the strategic crisis in the Western Hemisphere means deployed armed insurrection against the Sandinista which the Soviet Union seeks. Hitting the terrorists on their regime. U.S. officials now speak of arming 25,000 men. vulnerable flank, their logistical supply lines, however, iso­ "Thousands of Nicaraguans are willing to die," he told the lates and weakens the insurgents, while avoiding the Soviet journalists. Under present U.S. policies, undoubtedly they trap . As the drug trade is the primary source of weapons, will.

EIR March 14, 1986 International 47 Aquino's Philippines government faces the Intl MonetaryFun d test by Linda de Hoyos

On Monday, March 10, a delegation from the International organizations set, then she will not only have doomed the Monetary Fund was scheduled to arri.ve in Manila to survey Philippines economy and her government. An actual solution the Philippines economy and decide whether or not the new to the economic devastations that have hit the Filipino people government of Coraz6n Aquino is to be eligible for $620 since the banks cut off credit a month after the assassination million in a standby credit loan that had been denied to the of her husband, Benigno Aquino, is the sine qua non of deposed governmentof President Ferdinand Marcos last Sep­ stabilizing the country . It was President Marcos's delays in tember. The new Philippines government's response to the taking such action, that allowed his malefactors to finally International Monetary Fund, and the conditions that it lays bring him down. Mrs . Aquino has even less time to learn the down for advances in credit, will largely determine whether same lesson . the Aquino government will become but a brief point of The issue is already very much on the table . In an inter­ transition between Marcos and either a military dictatorship view with reporters March 4, Finance Minister Jaime Ongpin or a Sandinista-style takeover of the Philippines by the left declared that the Philippines wants its creditors to give the and/or civil war; . or whether the Aquino government will country "some room to breathe ." He explained that the 50% carry out its campaign promises and bring about a new era of ratio of export proceeds going to pay debt does not allow for national sovereignty and justice for the Filipino people. growth-ari implied threat to carry out a unilateral lowering As the London Economist admitted in its March 3 issue, of the ratio. The Washington Post nervously commented: "Among the outsiders most interested in Mr. Marcos's de­ "His [Ongpin's] language bore some resemblance to that parture are the Philippines' foreign creditors . " For the banks , heard in debt-burdened Latin American countries who are President Marcos was a "wild cara" that had displayed a asserting their rights against the Fund . " Ongpin himself went growing potential to challenge IMP authority and force on to say: "The primary obligation is to make sure we can through measures for economic survival similar to those tak­ feed our people . I worry about that fat more than I worry en by Peru's Alan Garcia. The banks hope , according to the about paying foreign debt. " Then Ongpin threatened that the Economist, "the Aquino government will get the country's banker-backed "people's power" in the Philippines could economy growing again aridenable it to pay its foreign debt." backfire completely: As a "private citizen," Ongpin said he · However,. if the Aquino government carries out the con­ might suggest that the loans 40ntracted under the Marcos ditionalities set down by the World Bank and the Internation­ governmentthat were then siphoned off for the private wealth al Monetary Fund, that hope will never be realized. In a 1984 of Marcos and his cronies could be repudiated by the new ' report, the World Bank forecast that even if the Philippines "people's power" government. government carried out the Bank's own prescriptions to the To counter these threats, the banks are relying upon cen­ letter, it would not reach pre- 1983 levels of domestic produc­ tral bank chairman Jose Fernandez. As the Economist assess­ tion and consumption until after the mid- I990s ! Reviving the es the situation: "Mrs. Aquino has said she hopes the IMF Philippines' productive-economy is not the point, for the and banks will be more sympathetic to a credible regime . Her banks. advisers have said privately that she wants the country's debt The Fund's demands for import tariff liberalization and payments to be limited to a percentage of its foreign exchange the breaking up of the sugar and coconut government mono­ earnings. Bankers fear the new government will wish to polies have as their objective to pave the way for the debt­ appear tough. Their fears of debt populism may be exagger­ for-equity wholesale buying up of the Philippines economy, ated: Mrs . Aquino has reappointed the governorof the central in the same way the Fund has enabled the commercial banks bank, Jose Fernandez , whom fo reign bankers respect." to take the vacuum cleaner to the nation of Mexico. Fernandez has signaled that he intends to continue the . If Mrs . Aquino accedes to deals with the IMF and the same role he played in the Marcos government, upon which World Bank on the terms these supranational strong-arm he was foisted by an IMF-dictated banking reorganization.

48 International EIR March 14, 1986 On March 3, the central bank chief announced that he ex­ presidency reach so far that he seriously contemplated, ac­ pectedthe Philippines to meet IMF conditions: "We are com­ cording to sources, the assassination of Aquino. Laurel is fortable that the system is responding to the policy we have placing extreme pressure on Aquino for more cabinet posts chosen to use, and while we are still some way from the IMF for his Unido partypatron s; he was originally promised 50%. program targets for March 31, we do not believe that the The other component is the Laban-PPD party of Mrs. deviation or slippage, if the measures continue to take effect Aquino and the leftist Bayan Party, that has lines running as they have in the last week, will be all that significant." into the Communist Party. This left wing, with strong ties to But Fernandez is fast finding himself the focus of anti­ the Ramsey Clark human-rights mafia, is already at logger­ IMF resistance within the government coalition. In an open heads with the military. letter March 3 to Aquino, the Alliance of Bank Employees, The coalition equation does not add up; linless Aquino Bankers, and Businessmen for Economic Liberation, which rallies the population to her with an economic program that formed one of her key bases of support , called for Fernan­ puts the nation's survival first, the Philippines will not sur­ dez's ouster from the government. Fernandez's tenure is vive the end of the Marcos era. inconsistent with Mrs . Aquino's pledge to clean out all ves­ tiges of the Marcos regime, says the businessmen's open letter. The Alliance accuses Fernandez of having been at the Documentation forefront in imposing usurious interest rates on the Filipino economy, "higher than those in other countries," which have helpedto destroy the productive economy. This policy, the President Ferdinand Marcos on Feb. 28 delivered thefo Llow­ letter states, cost tens of thousands of Filipinos their jobs. He ing statement to the press. which gave it short shrift in cov-· also permitted the printing of junk money and aided capital erage: flight from the country . How can Mrs. Aquino expect to fulfill her campaign My beloved countrymen: promise of a full employment program with Fernandez in the I am now at Hickam Air Force Base, Hawaii, under the saddle at the central bank, the letter asks. At the Feb. 27 hospitality ofthe United States government. We are presently victory rally in Manila, leaflets were circulating demanding lookingfor private quartersto rent or lease and will leave this the central bank chief's removal . base to move there as soonas arrangementshave been made. We have been accommodated very comfortably and treated Political quicksand with utmost respect and generosity. The fight against Fernandez, although blacked out of the When I left Malacanang Palace, I had decided to move media outside the Philippines, is the key internecine struggle to Laoag City in Ilocos Norte, my home province. However, within the new government. If Fernandez should win, then shortly afterarri ving at Clark Air Force Base I was informed the centrifugal forces already pulling at the government co­ by President Reagan's direct reprel>entative that we would alition, will quickly gather strength. have to leave for Guam instead. The coalition that brought Mrs. Aquino to power had one I need not explain to you the situation that developed agreement: Remove Marcos. With that accomplished, the when elements of the defense and militaryestablishment took anomalies within the coalition have risen to the surface. steps to take over government authority. This created the On the one hand, Mrs. Aquino's cabinet retains two key need to decide whether to eliminate .them withmilitary force elements of the Marcos government. First is the military, led or negotiate. by Defense Minister Juan Ponce Enrile and Chief of Staff This situation came to a point that although I hadcontrol Gen. Fidel Ramos, who pulled off the U.S.-directed coup of superior military power and sev¢ral opportunities to em­ that brought Aquino to power and who will undoubtedly not ploy it, the employment of such an overwhelming force, no fail to remindher of that fact at criticalpoints in the factional matter how legitimate, would have resulted in the bloody strife alreadybe gun. carnage of innocent civilians. Second is the pro-IMF banking community represented I have beencalled brave in my time, perhapsimmode stly, by Fernandez. This grouping overlaps with the large latifun­ but brave as I may have beenagainst foreign invaders, I have dista and banking families epitomized by Finance Minister no heart to shed Filipino blood. My life has been devoted to Jaime Ongpin, and Aquino's own family, the Cojuangcos. the upliftment of the Filipino by re-establishing his identity In both these cases, a family member has been prominent in and dignity. And so know,ingI could lose everything, I chose boththe Marcos and Aquino camps. to use my authorityto protect the Filipino people. There are two new additions to the Aquino grouping. Now from where I am, I implore you never to forget the First is Salvador Laurel, vice-president, prime minister, and ideals and noble objectives which we will attain only through foreign minister. Laurel, scion of the dynastic political fam­ the peaceful unification of our people. ily that collaborated with the Japanese, is the chosen favorite I remain your humble servant, ' of the U.S. State Department, and his ambitions for the Ferdinand E. Marcos

EIR March 14, 1986 International 49 New Zealand the Pacific, narrowsthe geogra,hicalbounds of the spreadof nuclear weapons and facilitates the fulfillment ofthe task of doing away with nuclear weapOns on earth once and for all and preventing an arms race in outer space. "The treatyon the nuclear-free zone in the South Pacific together with the protocolsin it in their presentform basically correspond to the criteria sugliested by the Soviet Union/or backs nuclear-freezones ." But the Soviet group, including not only Queen New ForeignMini stry officials, but Defense Ministryoffi cials, . " .. pointed out the importance of making certain that the agree­ Yal ta in Pacific ment creating the nuclear-free lOnereally ensures the making of the territoriesof the signatory states into a zone completely free from nuclear weapons. This presupposes, in particular, by Allen Douglas a ban on the transit through the nuclear free zone's territory of nuclear weapons and nucleat explosive devices, including At almost the same time as the U.S. State Department or­ visits at ports and air fields there by foreign warships and chestrated the overthrow of Philippine President Marcos, the aircraft with nuclear weapons aboard. . . . The delegation Queenof England was in New Zealand helping to hand the from the South Pacific Forum expressed gratitude for the Pacificover to the Soviets. In her Feb. 26 addressat the State Soviet Union's support for the decisions taken by the SPF Opening of Parliament in Wellington, speaking in her capac­ countries to declare the South Pacific a nuclear-free ity as the Queen of New Zealand, Elizabeth Windsor en­ zone ...." (emphasis added) dorsed the Nuclear Free Zone Bill introduced into the New ZealandParliament last year. This bill denies U.S. nuclear­ Lange: 'No imbalance in the Pacific' armedor poweredwarships the right to visit New Zealand's New Zealand's Prime Minister Lange observed, "There harbors . It is designed to formalizethe February 1985 decree is no imbalance in the Pacific"and there is "no need" for New of New Zealand's Labor government,proh ibiting such visits. Zealand to have "strategic c.apabilities" in defense, such as The Queen's Feb. 26 speech is one more move in the the ANZUS Pact represents, since if New Zealand does not "New Yalta" redivision of global power, like the deal bother anyone, no one will botherNew Zealand. Curiously, Churchill and Roosevelt made with Stalin after World War Mr. Lange, who, along with his fe llow Socialist International II-but today to abandon Western Europe, Africa, and the asset, Australia's Prime MinisterBob Hawke, was outspoken Pacific to Soviet domination. It is to be seen together with in his calls for the ouster of Philippine President Marcos, has the upheaval in the Philippines and the potential for near­ been quietregarding the fo llowing series of events: I) Soviet termloss of U . S. bases there; the massive Soviet naval build­ missiles splashing down into his "nuclear freezone" off New up in the Pacific; and the declaration by the South Pacific Zealand's Cook Islands, 2) the huge buiidup of ostensibly Forumcountrie s, of a "Nuclear Free Zone" over 30 million "scientific" Russian vessels off Chatham Rise in New Zea­ squaremiles of the Pacific. land's waters, 3) the unidentified' submarine sighted by the Shortly before Elizabethaddressed the New ZealandPar­ New Zealand Air Force north of the country last month, 4) liament, a delegation of the South Pacific Forum (SPF), the the recent discovery of AK-47 rifles in the north island, island nations in the South Pacific led by the socialistgovern­ associated with "Maori rights" native activists, a core of ments of Australia and New Zealand, troopedoff to Moscow whom have visited Cuba in the recentpast , and 5) the Soviet to get their marching orders. Led by David Saldier of Aus­ "cultural invasion" hitting New Zealand in the currentperiod , tralia, the SPF delegation of Christopher Beeby of New Zea­ including visits by the Soviet soccerteam and circus, and the land, delegates from the Fiji Islands, Papua New Guinea, upcoming visit by the Russian Ballet, the same ballet com­ and theSolomon and Cook Islands, New Zealand's ambas­ pany cited by intelligence sources as financingradical activ­ sador to the U.S.S.R. Allison Stokes, and the Australian ists in New Zealand. charged' affairesin Moscow, RobertTyson, met with a series While overlooking these developments, Mr. Lange has of top Soviet officials in Moscow on Feb. 3-4. actively participated in others: 1) He granted permission for TheSPF grouplauded the cosmetic arms-controlpropos­ the Soviet airline, Aeroflot, to fly in and out of the country als of Soviet party chief Gorbachov , including his "unilateral the "fishing crews" which man the extensive Soviet trawler moratorium on any nuclear explosions." Then the Soviets presence, 2) he authorized his financeminister, Roger Doug­ and SPF issued a communique on their discussions: ." .. the las, to sell transferable fishinglicenses for watersimmediate­ Soviet side said that the establishment of a zone free from ly off New Zealand, licenses which can be resold to the nuclear weapons in the South Pacific is an important contri­ Soviets. something Douglas lauds, since "it would promote bution to fashioning a reliable security system in Asia and competition," and 3) he has rut back and demoralized New

50 International EIR March 14, 1986 Zealand's anned forces, since there is "no threat" to New with the United States but with all our traditional friends Zealand. within the Western alliance are likely to be threatened," the The virtual treason of Lange to his own country, as well paper continued. as to the Western alliance, has produced alann amongmany Other patriots, like the Federated Futures groupof John New Zealand citizens. In fall 1985, a distinguished group of Huston and his associates and the groupof pro-ANZUS ac­ former New Zealand defense chiefs issued an unusual, hard­ tivists around journalistNed Halliburton,are working to rally hitting public paper on the crisis in ANZUS (the Australia­ the majority of New Zealand's citizens not disposedto accept New Zealand-United States defense pact) produced by Lange's Russian-tinged varietyof "independence." Lange's actions. Among other things, the paper stressed, Since the Queen was pelted with eggs in New Zealand, "For more than 30 years the collective defense arrangement and "Maori rights" agitators showed her their bare bottoms most directly relevant to New Zealand's security has been in a "traditional form of Maori protest," the average New ANZUS and as is the case in any alliance, its credibilityand Zealand citizen felt a certain pity for her, as thebutt of attacks effectiveness have depended on the partners exercisingtheir by radicals. This compassion spilled over into the belief that forces together continually and cooperatingin every practic­ Prime Minister Lange had "used" the Queen to give publicity able way in peacetime. In the worst case of a direct threat to to his nuclear-free schemes, since she, as the formal head of our homeland-difficult as this may be to envisage at pres­ government in New Zealand, had no choice but to read the ent-the expectation that we would have the support of a government's program to the Parliament, a program which major power offers the most significant element in our de­ of course contained the"Nuclear Free Zones Bill." The real­ fense posture. From the point of view of Australia and New ity is much different. Zealandthere can be no effectivecollective defense arrange­ As a series of EIR Special Reportsnow in progresssho ws, ment for the South Pacificregion without the participationof the British monarchy, since the tum of the century,has been the United States .... at the core of the complex of institutions used to create the "If the ANZUS rift is not quickly repaired, its conse­ Bolshevik Revolution-the "Trust." It is this decades-old quences may yet cut much deeper and extend well beyond partnership, in which Russia now oommands the strategic defence considerations. Our wider relationships, not only muscle, that has struck the deal for a New Yalta.

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EIR March 14, 1986 International 51 gence network, with significant power and influence 'in the present French and Greek Socialist governments. The July 22 issue of the French weekly, Valeurs Ac­ tuelles. reports that the American governnment has issued standing orders to deny Rouleau access to certain American governmentar chives. Such orders are given only in regard to French Socialists agents of unfriendly foreign powers.

plot againstTunisia The coup plot The obvious aim of the coup plot is to derail the succes­ By Philip Golub andThieny Lalevee sion plan of President Bourguiba. Clearly chosen by the President as his legal constitutional successor. Prime Minis­ ter Mzali represents continuity and stability for Tunisia in a Executive Intelligence Review has been informed by well period of growing crisis in the 'Maghreb as a result of both placed Westernint elligence sources that leading elements of Libyan and Islamic fundamentalist subversion. Trapped like the French Socialist Party are involved in a plot to remove all other developing sector countries in an economic crisis Tunisian Prime Minister Mohamed Mzali from office and to aggravated by IMF policies, Tunisia remains one of the few replace him with a former interior minister, Driss Guiga. real allies of the West in the so�them Mediterannean, and a According to these sources, Eric Rouleau, the French true democracy. ambassador in Tunis, is the principal actor in the operation. Until now, the political strength of President Bourguiba A half-dozen or more French special agents have been sent has prevented even major crises from getting out of control . to Tunis over the past few weeks as partof the operation. This is true of the quick and determined reaction of the Tu­ nisian government after the Libyan commando attack on Rouleau Gafsa in 1980, the bread riots of 1984 and, more recently, Rouleau is not an ordinary ambassador. Appointed in the the positive U.S. reaction to the Israeli raid on Tunis in early summer of 1985 to the dismay of Tunisian authorities, October. By seeking to destabilize the constitutional succes­ he is a specialist in Libyan and Palestinian affairs. His self­ sion process, the French Soci,list government is not only, advertised pro-Libyan sympathies made the assignment to promoting institutional instability, but playing with the fire Tunis all the more provocative, coming in the midst of a of fundamentalist subversion. chaos. and insurrection. growing Tunisian-Libyan crisis which culminated in the ex­ The French Socialists count on some of their Tunisian pulsion of Tunisian workers from Libya in late August and allies, such as ex-Interior MiQister Driss Guiga, presently early September of last year. Immediately prior to his ap­ based in Paris and close to a dlique in Tunisia. Guiga was pointment, Rouleau, then a "journalist" for Le Monde. had trained by the Socialist-leaning section of the West German played an instrumental role in the secret negotiations between BND foreign intelligence agency in the 1950s; he was re­ the French Socialist government and Qaddafi over the crisis moved from his Tunisian pos� in 1984 after attempting to in Chad, and arranged the meeting between Mitterrand and force the removal of Prime Minister Mzali over the bread Qaddafi on the island of Crete. riots-which Guiga is said to h�ve encouraged. Bornas Elie Raffoul in Egypt some 60 years ago, Rouleau The French Socialists have clearly encouraged the devel­ became a member of the, re-created Egyptian Communist opment and growth of the fundamentalist MTl (Mouvement Party in the 1940s. He socialized with Henri Curiel, another de Tendance Islamiques) and . used it as a pressure point wealthy Egyptian-born communist who later founded th� against the Tunisian government. The MTI is financed by notorious "Curiel network," which operated out of Paris dur­ both the Libyan and Iranian governments and is close to the ing the 1960s . In 1952, Rouleau became a personal friend of Mouvement Democratique Algerien of Ahmed Ben Bella. In present Foreign Minister Roland Dumas, then visiting Cairo. tum, the MDA is financed by Iranians and the Nazi Swiss tqe. According to several reports, RaffoullRouleau was expelled banker, Fran�ois Genoud. from Egypt in 1956. In 1960 he joined Le Monde. He func­ Legislative elections occur: in France on March 17, and tioned as a power broker of some influenceduring the period the anticipated victory of the opposition may play a useful of the overthrow of the Shah of Iran, and was identified as a role in neutralizing the Sociali.ists' subversive plot. But the strong supporter of the BazarganlYazdi/Bani-Sadr wing of network in motion against Tunisia will remain active out of the Khomeini regime, having served as their legal and polit­ the Elysee and SocialstParty headquarters. Is Qaddafi really ical advisor from the time of Khomeini's exile in Paris. so important to the French socialists that they are willing to Rouleau has been assigned to many secret missions and risk the destabilization of all df Northern Africa? Unfortu­ has acted as part of a specific Socialist International intelli- nately, the answer seems to be yes.

52 International ElK March 14, 1986 Tr ilateral Commission being put to the e t st in French elections

by MarkBurdman

The national legislative elections in France on March 16 lateralist Lloyd Cutler, former chief counsel to President might well be a gaugeof what the French electorate thinks of Carter, who is working with the Paris law firm Bernard, the policiesof the Trilateral Commission, even if the ballots Gaillot, Tessler, andCarton (and particularlypartner Laurent do not read "for David Rockefeller" and "against David Gaillot) to sabotageFrench intelligence capabilities on behalf­ Rockefeller. " of Joxe and the Russians. Since Cutler is also the lawyer for The question of the Trilateral Commission has become, the processof destruction of constitutional governmentin the � explicitly and implicitly, a focalpoint in the Frenchelectio ns. United States known as the "Gram -Rudman Bill," the re­ If the large electoral lists and depth of activity of the Parti sentment against CutIerin France hasinternational repercus­ Ouvrier Europeen, the co-thinker partyof Lyndon LaRouche sions. in France, which has campaigned on an overtlyanti-Trilateral Third, there is the question of the ambitions of former Commission platform , were not enough to prove the point, Prime Minister Raymond Barre,the most enthusiastic true­ there are a number of other telltale signs. believer "Trilateralist" among Franee's Commission mem­ First, the French economy's failures, under the Socialist bers. This has becomeone of the more controversial features ; regime of President Fran�ois Mitterrand since 1981, have of the last days of the election. Parti(lularly, Barre�s decision provedthe ineptitude and evil of the Trilateralists' economic to renege on his earlier electoral �gement with the four­ orientation, which favors opening up national-sector econo­ party non-Communist "Opposition,�' by refusing to support mies to the looting of the private banks, the reinsurance a "cohabitation" governmentof Socialistsand Oppositionists cartels, and the Internationai Monetary Fund. Last fall the that would follow the March 16 election, has gained him the Mitterrandregime hosted the Commission at French govern­ bitter antagonism of leading politicalfo rces in France. ment offices, and French Economics Minister Pierre Bere­ In the last days of February, controversy broke out over gevoy gave the openingspeech at the Commission's Oct. 25- the appearance of a 48-page anti-Iilarre sheet, "Un Autre 27 European Members' summit. The quid pro quo for Mit­ Visage de Raymond Barre" ("Another Face of Raymond terrand's cooperation with the Commission was a series of Barre" '). Although the booklefs allegations about Barre's economic favors promised by the banks and insurance com­ linksto theTrilateral "one-world coaspiracy" areoften inept panies which are the Commission's French base. But these and even crude, one of the national pasttimes of France has promises have not halted the downslide of France's econo­ become intensive speculationabout who is behindthe book. my, which is one of the central contributing factors to the Some accuse theGaul list RPR, some the Socialists, and some Socialists'preference rating dipping below 30% , down dras­ even think that Barrehimself purit out to try to neutralize the tically from the Socialisttriumph in 1981. revelationsbeing published by the Parti Ouvrier Europeenon Second, the stench of treason coming out of the interior the Trilateral Commission and Barre. ministryof Pierre Joxe, who has become a full-time protector of terrorist networks in France, is associated in the minds of The POE'surprise' many 'voters with an "international conspiracy" against France. During the late night of Feb. 24-25, the Parti Ouvrier The mOtor behind the attempt to destroy French intelligence Europeen (POE) filed electoral slates in over 20 French "de­ and military capabilities, during 1985, was the so-called partments" (approximately stales, in American political terms "Greenpeace Affair,"in which Joxe pulled dirtytricks to pin of reference). This qualifies the party for three rounds of the blame on French intelligence for having blown up the television time, between the time of candidate filing and ship of the ecologist-terrorist Greenpeace group in a New March 16. While the Socialist-leaning daily Liberation, on Zealandport . Greenpeace' s lawyer is Washington, D.C. Tri- Feb. 22, marveled about POE heg�mony among France's

EIR March 14, 1986 International 53 hundreds of thousands of French Muslim voters , other re­ It is precisely on this last point, that the main obstacles gional and local newspapers and electronic media have mar­ lie. , veled at the depth of POE activity and support. The joint election platform of the RPR and UDF favors a Mostly, this reflects the POE's role as a vanguard force radical "deregulation," or "denationalization" of the French among those millions of Frenchmen who suspect that France's economy, an attempt to import a version of "Reaganomics" economic and strategic decline over the past years has not (or "Thatcherism") into France. This would include dena­ been "spontaneous," but has been the consequence of a con­ tionalizing the Banque de France, and other banking institu­ scious targeting of the French nation for destruction, by what tions that had been nationalized by Charles de Gaulle, as a is variously called, "one-world conspiracy," "Trilateral first step, followed by "privatization" of the insurance com­ Commission," "Raymond Barre ," "socialism," "liberalism," panies, "deregulation" of transport prices, and so on. or "Soviet subversion." Although many RPR and lJDF leaders are organically The POE campaign is vital to provide the ideas and poli­ foes of the one-world-federalism of the Trilateral Commis­ cies that the next coalition governmentwould need. The POE sion, this policypackage is Trilateralist in content, as it opens advocates 1) "dirigist," or state-directed credit policies for up the French economy to massive looting by foreigninter­ national development; 2) cooperation with the United States ests, or as the Catholic daily La Croix put it on Feb. 25 , to on the Strategic Defense Initiative; 3) the kind of cultural and "foreign hands." Some RPR and UDF leaders believe that scientific renaissance necessary to overCome the plagues of this "denationalization" is a means of injecting desperately formalism and positivism; 4) emergency measures to deal needed funds into France. But the result would be to put the with the spread of AIDS . The last issue underscores the assets of the French economy under the centralized control weakness of all Opposition parties, since none has any pro­ of the internationalbanking and'reinsurance-carteloligarchy: gram to deal with AIDS, and none, outside the POE, even i.e., "socialism"! . recognizesit as worthdealing with as an election iss,ue! The importance of the POE's.alternative, nation-building programlies in the fact that Opposition's economic policy is The Achilles heel not set in cement, by any means� Aside from the lureof quick The almost-certain outcome of the March 16 elections is money, the "denationalization" platform represents a politi­ that PresidentFrancois Mitterrand,who does not himselfface cal compromise. First, in the RPR, the "Gaullist" Party , there a presidential challenge until 1988 as matters now stand, will is a faction-fight between the Rockefeller-linked "privatiz­ have to agree to the formation of a government of the non­ ers" and another group, typified by industrial-policy spokes­ Communist Opposition parties, from the bloc of the Rassem­ man Michel Noir, which favors· a return to "Colbertism," the blement pour la Republique (RPR) and the Union pour la policy of centrally directed national development, createdby Democratie Francraise(UD F), with RPR chief Jacques Chirac the great 17th-century French statesman, Jean-Baptiste Col­ as prime minister. This is the so-called "cohabitation" ar­ bert, who oversaw a rapid rise Of France' s industry and infra­ rangement. structure. The immediately most meaningful question is the margin The UDF is yet more complicated. Its chief is ex-Presi­ of RPR-UDF victory, or Socialist defeat. It is generally ex­ dent Valery Giscard d'Estaing, whose 1975-81 regime was pected that the RPR-UDF bloc would win about 45% of the torpedoed by the economic-austerity policies of then-Prime vote, while the Socialists, who have been losing momentum Minister Raymond Barre. Despitethe bitterness Giscard har­ after a brief rally in the firstweeks of 1986, may not gain the bors for Barre from those days; the UDF is also the party of 30% they regardas necessaryto avoid changing policies. The the "Barristes," candidates in Binre's slate. The UDF is itself FrenchCommunist Party is expectedto gain between 8% and a coalition, and one component in it, the Christian Demo­ 11%, with the restsplit among the list of populist demagogue crats, or CDS, is historically an anti-GauUist, one-world­ Jean-Marie Ie Pen's National Front, which has also been federalist grouping, from whicb Barredraws his main base. losing momentum, and various left-wing and ultra-radical The only way to remove this factor of BarrelTrilateral groups. Commission blackmail, is for'the Barre Electoral List that The RPR-UDF would need at least the clearcut victory harbors under a nominal UDF cover to lose at the polls on indicated by these figures, if not even a larger margin, to have March 16. That would also hurt Barre'slonger-term presi­ the political mandate. to carry out the policies that many of dential ambitions, which dictate his strategy of sabotaging the Opposition bloc's policy makers want. Under the most formationof a new and viable government afterMarch 16; a optimistic scenario, that would mean "free energy" to oppose weak central government, in his view, means chaos, and the Trilateral Commission's policies, and to set in motion a chaos meanscalling early presidential elections, before 1988. policy that would include full cooperation with the United Should Barre'slis t do badly on March 16, and should the States on the SOl, restorationof French intelligence capabil­ Socialistsfail to get their 30%, these results would be inter­ ities in thefight against terrorismand against Soviet subver­ esting signals that the French voters have had enough of sion, and reversal of the devastating collapse of the French Trilateral Commission sabotage, and are seeking a dramatic economies that has occurredthrough the 1980s. change of policy.

54 International EIR March 14, 1986 • Reportfro m Rome by Thieny Lalevee

Andreotti exposed in Qaddafitrial EIR 's European bureaus, Moscow's Charging "slander of a head of state" who is not a head of state, Terrorist Satrapy: a Case Study of has put the Italian fo reign minister out on a limb. Libya's Qaddaji,to the daily pressand news agencies. In response to questions, we also outlined the line of defense to be pur­ sued by the Institute's lawyer, Silvio Suster: There can be no trial because, accordingto Libya's own law and for­ On March 5, a legal case unprece­ tute members have not been heardin mal structureof power,Qaddafi is not dented in the history of the Italian Re­ a court here since Italy became a Re­ the "Peopledom" of Libya's "head of public began at the 7th D.istrict Penal public in 1946. Indeed, had they been state" or President. Libya has no head Court of the Tribunal of Rome; four admissible, hundreds of thousands of of state. members of an international organi­ demonstrators from all shades of the As the trialCODVened On March 5, zation, the Schiller Institute, arebeing political spectrum who have held ral­ Judge Bettiol infonned the accused and triedfor "offenses against the dignity lies in the past 30 years would have to their lawyer that he had taken some and prestige of a foreign head of be tried, too. It would also mean that time to study the question of whether state"-Libya's Muammar Qaddafi ! newspapers and journalists could no or not Qaddafi was a "head of state," The issue goes back to July 13, longer write unfavorably of a foreign and had receivedan answer by the per­ 1983, when four persons now belong­ country or a foreign head of state. sonal secretary of Foreign Minister ing to the Schiller Institute set up a The cynicism of those pushing this Andreotti: "Although on a formal lev­ police-authorized picket line de­ case is all the morebrazen considering el, Qaddafiis not recognizedas a head nouncing Qaddafi's involvement in the silence of the same courts in the of state, the treatment washe given by international terrorism, much to the face of numerous public assassination President Mitterrand and Austrian delight of Roman passers-by. How­ threats and violent denunciations of Chancellor Bruno Kreisky, implied ever, it was not until January 1986 (!) President Reagan by the Italian left that Colonel Qaddafi was given all that the Institute was informed that an over the last two years. rights as Libya's representative. For unnamed party had filed a complaint. Obviously, the case is not merely thisreaso n, we considerQaddafi head a A strange case indeed. For nearly a matter of the Schiller Institute versus of state, to all intents." three years , Italian justice was pro­ Muammar Qaddafi. In fact, as events But attorney Suster immediately cessing a legal case against four per­ would prove, it is a politicalbattle be­ pulled out Qaddafl's oWn Green Book, sons without informing them. Mean­ tween the Schiller Institute and their and quoted the leader's own words to while Libya's Qaddafi has grown quite associates and sympathizers in Italy, the effect: "I am not a headof state." vocal in attacks on those associated and the leading Italian proponent of Judge Bettiol decided to postpone with the Schiller Institute. In January "New Yalta" accommodations with the trial indefinitely, announcing that 1984, the Libyan news agency JANA Moscow and Qaddafi: Foreign Min­ he would next call on a representative denounced EIR founder Lyndon H. ister Giulic;>Andreotti . of the Libyan ernbassy to �stify on LaRouche, husband of Institute foun­ The personal involvement of An­ Qaddafi's realstat us! der Helga Zepp-LaRouche, for alleg­ dreotti in this fight emerged clearly The Italian judge never bothered edly plotting a military coup against during the trial itself, before Judge to tell the Institute who had filed the Qaddafi . On Jan. 25, 1986, the Libyan Bettiol of the 7th Districtof the Rome complaint in the first place, but the "People's Bureau" (embassy) in Bonn . Penal Court. A day before the trial, involvement of Andreotti's office wrote an official letterto the Institute Institute representatives Fiorella Op­ made things quite clear. According to denouncing its "slanders" against Lib­ erto, Antonio Gaspari, and this writer journalists, the case, which continues ya. On Feb. 15, a Libyan representa­ held a news conference at the Rome to be covered in the papers, has be­ tive interrupted a speech at a confer­ Courthouse. A front-page article in come one of the hottest items in Ro­ ence of the Institute in Madrid, to do Giornale d'ltalia had been published man political circles. Talk is that this the same. the same day. We described the case time, the foreign minister has gone too The charges brought against Insti- and presented a new specialreport by far.

EIR March 14, 1986 International 55 Report from Madrid by Leonardo Servadio

Gonzalez creates anti-NATO wave If the referendum went against If the referendum on NATO membership fa ils to destabilize NATO, Sptin could not leave NATO Sp ain, the IMF is waiting in the wings . without Patliament ratifying this re- . suIt. In Parliament, the absolute ma­ jority is in favor of NATO . This would be a conflictbetween "public opinion" and Parliament, and Gonzalez would have the option of dissolving Parlia­ On Feb. 23, pacifists streamed not tum into a mass Islamic anti-Spain ment and calling early elections-the along the avenues of Madrid from all movement. But what if the King were perfect playground for the pacifists and over the country, heading for the big­ to die? Recently, the weekly Cambio Communists to create a large united gest anti-NATO demonstration so far 16 ran a scenario cooked up by "spe­ frontto try and change the presentpro­ in Spain. The youngsters screamed cialists" at Columbia University in NATO majority . "NATO no , bases out," meaning, nat­ New York, of a possible war between Even i� the government wins the urally, the U.S. bases. Over the pre­ Morocco and Spain, egged on by the referendum, the International Mone­ vious week, some 60,000 persons took Soviet Union, for the control of Ceuta tary Fund l(IMF) and the Trilateral part in anti-NATO actions in Spain. and Melilla. Commissian are waiting in the wings The biggest was in Barcelona on Feb. Bucetta's actions were triggered to stir up social conflict. The IMF has 16, where clashes with the police left by a "law on foreigners" recently prepared a new report on the Spanish

some 20 wounded, and several people passed by the Spanish government. In economy . • Its publication is being were heard shouting slogans promot­ short, both the pacifist movement, stalled so �s not to influence the ref­ ing the Basque terrorist organization, which fuses Communists, ecologists, erendum. In the last two years, the ETA. and separatists, and the revanchist Spanish ecpnomy has been function­ . In February the walls of major movements in Morocco, are by-prod­ ing on the basis of a pact between gov­ towns were covered with anti-NATO ucts of the actions of the Socialist gov­ ernment, the industry confederation, posters. The anti-NATO movement ernmentof Felipe Gonzalez. and the S�ialist union UGT, to con­ did not exist before; it has sprung up It is only too obvious that this fits trol salaries and prices in order to con­ as the result of the absurd referendum into the Soviet grand strategy to make tain inflation and allow "moderniza­ on NATO membership proposed by the Mediterranean a Russian lake . So­ tion" of industry. The "moderniza­ the Socialist government of Prime viet Ambassador to Spain Yuri Dubi­ tion" has been done at the expense of Minister Felipe Qonzalez. nin was replaced in February, after jobs, as a crisis-management instru­ Meanwhile, Mohamed Bucetta, serving in Madrid seven-and-a-half ment, not in the context of a long-term ex-foreign minister of Morocco and years . To interpret this as part of the expansion policy. Now there is over leader of the Islamic party Istiqlal, has ongoing Gorbachov purges may be too 22% unemployment, and 48% among been instigating a movement aimed at simplistic. Dubinin had worked to turn the youth. capturing the enclaves of Ceuta and Spain into an anti-NATO instrument The main opposition party, Alian­ Melilla, Spanish possessions in Mo­ within the ranks of NATO , by beget­ za Popular (AP), tries to propitiate the roccan territory . Ceuta, right across ting pacifist and separatist move­ IMF, probably in the hope of getting from Gibraltar, holds a key strategic ments; maybe it would have been em­ its supportJorthe upcoming election. position. Bucetta, a former official of barrassing to have him in Madrid to AP's official policy for Latin America Gonzalez's Socialist Workers Party of reap the fruits of his work, with the is the RohalynPlan , which is a scheme Spain (PSOE) in Melilla, accused the March 12 referendum. Dubinin, whose to grab indebtedcountries' assets while Spanish government ofbeing the only role in financingthe pacifists together turning ov� the "management" of their government in the world besides Is­ with the Libyan embassy is notorious debts to the big New York banks. rael which unlawfully occupies terri­ here , was suddenly called back to Nothing CQuid be worse; Spain's only tories belonging to the Arab people, Moscow a few days after GonzaIez hope is to support Peruvian President and of perpetrating on these territories announced that, when the referendum Alan GarCia's drive for an Ibero­ a racist policy like South Africa's. is over, he will flyto Moscow. Dubi­ American Common Market, for which As long as King Hassan II rules nin is now in Moscow preparing that Spain would be the natural bridge to Morocco, these demonstrations will visit. Europe .

56 International EIR March 14, 1986 Report from Bonn by Rainer Apel

. A debacle in Schleswig-Holstein "The air is out of the balloon in Bonn. The Chancellor's party, after bad losses in the state's elections, Three years ago, the people believed talks of changing candidates, but not policies. this Kohl government would tum things around. Today, no one believes that anymore." The vote in Schleswig-Holstein is, actually, a firm voter rejection of Kohl's coalition partner, Foreign Minister Hans-Dietrich Genscher's DesPite two severe 1985 election 'The CDU should have known be­ Free Democratic Party. They lost 40% defeats in the industrial states of Saar­ forehand, that the people would not of their vote in the municipal elec­ land and North Rhine-Westphalia, the buy this idiotic talk of the recovery tions. It has not escaped the attention Christian Democrats of Chancellor any longer," said a leading spokesman of voters that all of the austerity poli­ Helmut Kohl were confident they for the Social Democrats in Kiel. "This cies in Bonn have been conceived by would beat the opposition Social was an economic vote against the pol­ the Free Democrats; the policies have, Democrats in all five elections sched­ icy of the Bonn coalition government. however, been sold as "coalition pro­ uled in 1986, and that this would ce­ Kohl is the best campaign manager for posals." ment the chancellor's victory in na­ the Social Democrats, actually. We If any Christian Democrat could tional elections in January 1987. just harvest the protest votes." be held responsible, it is not really On March 2, 1986, these hopes He was correct in reporting that Chancellor Kohl, who knows no more collapsed. The first test run, the mu­ farmers are up in arms over the income about economics than President Ron­ nicipal elections in the state of Schles­ losses they have suffered under Chan­ ald Reagan; it is Finance Minister wig-Holstein, was a debacle for the cellor Kohl's agricultural austerity Gerhard Stoltenberg, the "pope of fis­ Christian Democrats. In the last elec­ policy. Whole constituency blocs of cal conservatism" in the Bonn govern­ tions of 1982, they had won a majority Kohl's party have turned their backs ment. of 50. 1 %, leaving the Social Demo­ on the Christian Democrats. Irony has it that after the election crats far behind with 34.6%. Now, The CDU's worker base is also up debacle in Schleswig-Holstein, the four years later, the Christian Demo­ in arms, because the employment sit­ sentiment is growing among the crats came out with only 44 .2%, the uation (a jobless rate of 13% in the Christian Democrats to have Kohl re­ Social Democrats close behind with state) has not improved despite all the placed as chancellory candidate by 40.5%. Kohl's coalition partners , the talk of "economic recovery," and be­ Stoltenberg-as if replacing a person, Free Democrats, were kept out of all cause the governmentplans to change instead of replacing a policy, were the but one of the state's municipal parlia­ strike laws. lesson to be learned. This is the more ments, falling from 6.8% in 1982 to Medium-sized businessmen and ironic in that Schleswig-Holstein is 2.4% this year. The Green Party, craftsmen are enraged, because the Stoltenberg's home-state! The elec­ which ran in three different groups in Bonn policy of high interest rates and tion defeat there is, in that sense, his 1982 and tallied 6. 1 % then, came in budgetary austerity deprives them of personal debacle. with 7.4%. vital credit-lines. Medical doctors, It is only because Kohl stood out In sum, most of the Schleswig­ another strong traditional constituen­ on the frontline in the election cam­ Holstein municipalities will be run by cy ofthe Christian Democrats, are en­ paign, that Stoltenberg was spared "red-green" coalitions of Social Dem­ raged because of the deep cuts in the from becoming a target of public rage. ocrats and Greens. medicare budgets. The government Were Kohl removed from the scene, The Christian Democratic loss of has encouraged the insurance compa­ Stoltenberg might quickly prove even an average 6% state-wide included up nies in a cost-limiting policy for med­ less popular than the chancellor. to 10% in the bigger cities and regions icare. The remedy is not simply a new populated by poorfarm ers. These were Public opinion pollsters and econ­ candidate for chancellor, but a new also the districts where voter absten­ ometricians, when asked for com­ policy. But there is no indication that tion was the highest. In Kiel, the cap­ ments on the Schleswig-Holstein elec­ anyone in Bonn will learn this lesson ital ofthe state, voter participation fell tions, were agreed, in spite of all an­ in time for the national elections of 12% below the 1982 level. alytic differences, on that one point: January 1987.

EIR March 14, 1986 International 57 From New Delhi by Susan Maitra

India, South Korea expand ties iary manufacturing sector, among Cooperation in economic, scientific, and technologicalfields other things. Korea has already made could be a model of South-South relations. a proposal for assisting in the expan­ sion of the Paradip port, and is await­ ing India's decision. Both nations share a very practical interest in reducing their technologi� cal dependence on the big industrial T he two-day official visit of South ister Lho urged Indian and Korean powers . Moreover, the Indian and Korean PrimeMinister Shin Yong Lho businessmen to work out a coopera­ Korean economies are in many ways March 2-4 has given Indo-Korean ties tive structure that would be a model complementary-with Korea's effi­ a solid boost, and put into clearer fo­ for South-South joint work. Signifi­ cient development of basic industries cus the enonnous mutual benefit such cantly, Prime Minister Lho an­ and India �s depth in basic scientific cooperation promises. nounced that the Korean' government work, not.bly space and nuclear sci­ The relationship has been quietly would give special recognition to the ence. building for some time,· and a major three joint economic councils in both Prime Minister Lho's visit was push was plaRned around a scheduled the public and private sector. preceded by the visit of a Korean sci­ visit by Korean President Shin Doo Korean commitment to a substan­ ence and technology delegation in late Chun in 1983. That visit was canceled tially expanded relationship was also February, led by Mr. Sung-Tae Chang, . abruptly, however, under tragic cir- . seen in the forthrightness with which director general for technical cooper­ cumstances: When President Chun was the problem of the Indo-Korean trade ation. TheKorean delegation held talks in Bunna, en route to India, a North balance-four to one in Korea's fa­ with science and technology officials Korean terroristattack killed 17 South vor-was addressed. The stated pur­ in Delhi and toured several scientific Koreans, including 4 cabinet minis­ pose of the economic delegation ac­ institutions to evaluate the prospects ters . companying Mr.Lho was to , first, find for collaboration. With the visit of Mr. Lho, who had out how the imbalance can be correct­ According to newspaper reports, served as ambassador to India during ed and, second, promote Indo-Korean the Korean scientists were very im­ the 1970s when the decision to elevate joint ventures. Mr. Lho raised the is­ pressed by India's achievements. Del­ diplomatic relations with both of the sue publicly, stating his certainty that egation leader Sung-Tae stated that Koreas was taken , the momentum has great scope existed for expanded pur­ nuclear f�l was one field in which been restored. The South Koreanprime chases of iron ore , coal , cotton, and South Korea would greatly value In­ minister was accompanied by a 30- machinery from India. dian assistance. Electronics, commu­ member economic delegation, led by Trade between the two countries nications, computer systems, metal­ Mr. Yong Sukyoon, president of the climbed sharply from 1976 to 1984, lurgy, chemical engineering, and en­ Daewoo Ship Building and Machin­ when it reached the $1 billion level ergy were other areas of potential co­ ery Corporation, one of the largest ship following Indian purchase of a num­ operation, he added . builders in the world, and including berof<:argo vess els. Since then, it has Mr. Sung-Tae discussed Korea's the CEOs of all the major industrial dropped back to the $700 million experience in being denied advanced and tradingcompanies in Korea. range•. with India exporting iron ore technology by the developed coun­ Besides a 45-minute meeting with and importing machinery, chemicals, tries .and emphasized his country's re­ Prime Minister Gandhi, which Mr. cement, etc . from Korea. At present, luctance to become dependent in cru­ Lho described as "friendly and fruit­ there are also as many as 67 joint­ cial areas....such as communications. ful" and which focused on economic venture projects in various stages of The country spends 1.7% of its GNP. and traderelations primarily, the Ko­ negotiation, most of them relating to on R&D. rean prime minister called on the Pres­ arrangements fortechnology transfers The two governmelllts are alsodis­ ident and the Vice-President, and had to India. cussing a proposal to share freight meetings with the ministers for indus­ India is especially interested in this trafficbetween the two nations, which try, commerce, and electronics. aspect of the relationship, and is seek­ could increase dramatically if new In an address to Indian business­ ing assistance in modernizing its field agreements materialize. Direct air and men at theFederation of Chambers of plants and in developing its automo­ shipping links have been discussed Commerce and Industry, Prime Min- bile industry, in particular the auxil- privately.

58 International EIR March 14, 1986 SoutheastAsia by Sophie Tanapura

World Bank says own plan failed price of crude from the Shell conces­ sion in the Kampaengpetch province. Prime Minister Prem has backed do wnfrom harsh austerity PTTis trying to imposeunila teral cuts on phet crude to $13.45 per barrel, measures to preserve his government. whereas Shell is insisting on the cur­ rent $24.57 per barrel. The drop in world oil price has also led to the decisJon by the Ele�tiic­ W orld Banlv'I�temational Mone­ bank financial institution� under spe­ ity Generation Aut)lority of Thail�d taryFund finllIlcialpress�N has unal­ cial conditions were down from 15% (EGAT) to reduce e1ectri�ity.pri�es for ly rt:ached �e limits ,of toleration in to 13.5%. For others, the ceiling was private subscribers; industry, and ho­ Thailand. As soon as the new 200- reduced from 14% to 12.5% tels. These cuts were made poSsible page World Bank Report on Thailand Leading bankers think that the in­ because Qf th.erecept .government de­ came up for discussion in Bangkok terest rate cuts will allow consumer­ cision to reduce the retail price of early this month., Thai officials blew goods producers to lower prices and bunker oil by 29 satangs (l00-satangs theit JQPs. The World Bank stated that that the rate of inflation could even hit ==.1. bha t) and the price of liquified thefifth five-year plan ending this year zero . NESDB Secretary-General Snoh natural gas sold to EGAT by 4.38 bhat had failed to achieve its target "and Unakul hopes that the reduction of in­ for every million : BTU . The hotel serious �IlCN�economic imbalances terest rates along with falling oil prices business is expected to gain the most remain stubbornly resistant to con­ will help to improve economic growth fromthis measure. trol." to more than 4% this year. How did this sbift away. from the Nothing could be more humiliat­ At the same time, Prime Minister IMFlWorld Bank guidelines occur? ing for National Economic and Social Prem Tinsulanonda decided to back­ The 17% devaluation of the bhat of Development Board (NESDB) offi­ track on increases in registration fees November 1984 and subsequent eco­ cials than to be told off by the World for diese1- and gasoline-fueled vehi­ nomicausterity measures for mbre than Bank after precisely fo llowing World cles. The revised policy will exempt a year have in fact created a quite con­ Bank guidelines. users of older vehicles from the in­ solidated opposition to these supra­ According to The Nation. in­ creases, andnew vehicles will be taxed national institutions. The anti-IMFI formed sources said that World Bank at only twice the old rate , instead of World Bank momentum was mainly loans to Thailand have dramatically the four-fold increase of the original led by the largestlabor grOUpj the Thai declined in recent years-from $450 decree. Originally, the government Trade Union Confederation of Paisal million annually during 1980-83 to a had intended to increase the diesel oil Thawatchainan and the M. R. Kukrit mere $100million each year for 1984- price. When there was too much pro­ Pramojboonchu Rojanastien group in 86. Reportedly, the World Bank of­ test, the government decided to tax the Social Action Party. In a recent fice in Bangkok has been scaled down diesel- and gasoline·fueled vehicles interviewwith the Thai economic dai­ gradually to the point that top bank instead. Then, when this also met with ly Koa Sod. Bangkok Fusion Energy officials are now contemplating clos­ oppositionfrom both governmentand Foundation representative Pakdee ing it down entirely, due to lack of opposition members in parliament, Tanapura warned that "persistent im­ activity. Prem was forced to back down in or­ plementaion of WotldBanklIMF pol­ Thai government officials are now der to survive politically. The govern­ icies will lead to a social revolution shifting away from World Bank ment is even going through a painstak­ and favor the rise of communism." guidelines, i.e., cancelling austerity ing process of reimbursing those who Perhaps the Prem government is programs . A recent Council of Eco­ had already paid. beginning to learn the lesson of the nomic Ministers' meeting approved a At the time of this writing, world Philippines. In February, rumors were request by the Bank of Thailand to cut oil price drops have sparked tough ne­ numerous of the imminent fall ofPrem deposit and lending interest rates, from gotiations between the Petroleum Au­ and early elections. However, the re­ 17% to 15% on bank loans and from thority of Thailand (PTT) and Thlli cent shift in economic policies may 20% to 18.5% on loans made by fi­ Shell Exploration and Production perhaps have bought the government nance companies. Depositrates of non- Company, Ltd. on the question of the some time.

EIR March 14, 1986 International 59 International Intelligence I

On Feb. 27, two Soviet fe llow travelers, that close collaboration will be established Botha issues plan West German Green Party leader Petra Kel­ between the Peruvian President and the op­ on Namibia withdra wal ly and her pet general , Gerd Bastian, gave a position Peronists in Argentina. press conference in Spain to call upon the Rockefeller spokesman Manuel Ulloa, Spanish to vote "No" in that March 12 ref­ a former Peruvian prime minister, has In a March 4 statement before the South erendum. They came with a petition against mounted a campaign to postpone Garcia's African parliament, State President P. W. NATO signed by ex-generals from West Argentine visit. By means of his hired pen, Botha said that the state of emergency, im­ Germany, Holland, the United Kingdom, Manuel D'Ornelles, Ulloa attacked the Pe­ posed last July, would probably be lifted in Portugal, Italy, France, and Greece. Bastian ronists as "demagogues" and, to avoid a about 30 townships in March. He also pro­ said that Spanish participation in NATO confrontation over debt strategies between posed that a plan to implement Namibian would be "against nature ." the Presidents, proposed "postponing the (Southwest African)independe nce, along the presidential visit for a moment in which the lines of U . N. resolution 435 , be carried out question of the foreign debt has entered into starting Aug. I of this year. a new phase , whatever that may be , losing It was on Jan. 31 that Botha had pro­ Radio Liberty editor political impact. In the present phase of in­ claimed, in a historic speech to the South may have been mole definition on the part of the creditors, it is African parliament, that apartheid is "out­ only meat for the Peronist lions." dated" and laid out measures to supersedeit Oleg Tumanov, the chief editor of Radio Insinuations that Garcia will not visit (EIR VoI. 12, No. 7, Feb. 14, 1986). Libertyin Munich who vanished in late Feb­ Panama were placed in a feature by dirty Botha said that despite sporadic vio­ ruary, may have been a Soviet mole . Tu­ tricks journalist Albert Brun, published in lence, the situation in the country had im­ manov had "defected" from the Soviet navy the Peruviandaily LaRepublica . Brunwrites proved sufficiently forthe state of emergen­ 21 years ago, when he swam ashore in the that there is a "vagueness" about whether cy to be ended in magisterial districts where Mediterreanean. Garcia will go in March or April . Brunboasts it still applies. Other reports also indicate that he has that he "exposed" Panamanian Gen. Manuel On the subject ofgranting Namibian in­ now "come in from the cold." An anony­ Noriega's "secret" visit to Peru last year. dependence, Botha told Parliament that it mous caller to Radio Liberty's London of­ (Noriega brought a plane-load of journalists would still be conditional on a firm agree­ fice said that OIeg Tumanov is in fact "alive with him.) ment with Angola on the withdrawal 30,000 and well in Moscow," according to the Lon­ In 1976, Brun helped expel EIR corres­ Cuban troopsfrom that country . don Times. pondants from Peru and purge nationalist Theplan for Namibianindependence was Tumanov has been missing since Feb . generals from the cabinet. rejectedby the South West Africa People's 25. He was the third-ranking figure at the Organization (SWAPO) as a propaganda station. ploy. The Soviet-controlled SWAPOenjoys Egypt riots 'predicted' the privilege of being the only Namibian organization recognized by the U.N. Garcia's popularity by Israelifigure grows in Ibero-America Barely 24 hours before police conscript riots killing 107 began in Cairo and other cities Le Monde Diplomatique of France carried a on Feb. 24-25 , Jon Kimche, brother of the Arbatov threatens long article March 2 on Alan Garcia's pop­ former chief of the Israeli Mossad, David Spain with attack ularity spreading throughout Ibero-Ameri­ Kimche, wrote a long feature in the Jeru­ ca. The article highlights "a slogan [which] salem Post (Feb. 23) entitled, "Peace and The Kremlin's chief expert on the United made itself popular in the streets of Mexico the Egyptian Volcano." States, Georgii Arbatov, has stated that City: Ni Kissinger, Ni Castro ! Viva Alan Kimche "predicted" that social explo­ NATO membership forSpain "goesagainst Garcia!" sions would occur. Kimche, based in Great a sense of history," remarks which appeared Ni Kissinger, Ni Castro is the title of a Britain, wrote that senior ministers in Egypt in an interview in El Pais March 2. "If you recent booklet by EIR founder Lyndon see President Mubarak as "flounderinghelp­ have military bases and inside them you have LaRouche, Jr. , widely circulated on the lessly," and that there are growing "internal nuclear weapons, you should not be as­ continent. frictions" in the Egyptian regime. He added toundedif youare the targetof another bloc." Garcia, whose defiance of the Interna­ that "Egypt's domestic problems have He added: "This is a reality, it is not a tional Monetary Fund has made him a hero reached such a pitch that the government is threat." to populations throughout debt-strapped no longer in full control. . . . Egypt faces a The remarks come on the eve of a ref­ lbero-America, is scheduled to visit Argen­ situation in which all the elements making erendum to determine Spain's status in tina and Panama in the near future . This has for a violent change of authority are coming

NATO . provoked fear among international bankers to the boil. . . . "

60 International EIR March 14, 1986 Brlefly

• THE NEXT TARGET for KGB assassination, following the killing of Kimche makes no mention of murder­ Kohl on perjurycharg es, is now being asked Olaf Palme, could be France 's Pres­ ous IMF austerity impositions on Egypt, but to answer some questions himself. ident Mitterrand, intelligence experts attributes the major part of Egypt's prob­ Dietrich Austermann, a member of warn. lems to "the uncontrollable population ex­ Kohl's Christian Democrats, filed a suit plosion ....At the present rate of growth, against Schily March 5 for slandering Chan­ • ARAB TERROR squads have Egypt will have reached 65 million, its pop­ cellor Kohl. "The impression that Schily been dispatched to Europe to attack ulation target for the year 2000, by the early knowingly raised false suspicions is grow­ NATO bases lqld prominent politi­ 1990s." ing ever stronger," Austermann said in a cians, West Germany's Stern maga­ ". .. The situation in Egypt has be­ statement. Schily knew Kohl has not lied, zine has reported, quoting Interpol. come so volatile that the unexpected may he added . Interpol said it had received a warn­ happen.... " Schily accused Kohl of lying in testi­ ing from PLO sources that the squads, The Kimches have extensive banking mony in which he said that he was unaware linked to Abu Nidal, planned "at­ interests in Switzerland. Brother David is, of monies being paid through certain foun­ tacks in Italy, Spain, Holland, and today, director-general of Israel's foreign dations to the Christian Democratic Party by Scandinavia. " Politicians in West executives of the Flick firm. ministry. Germany are also targets. Radio Moscow has hailed Schily's suit as a "GermanWatergate" which may topple A RUSSIAN ORTHODOX the Chancellor. .• Greece a"ests British Church spokesman told a Roman diplomat as spy newspaper: Pope John Paul II "may want to ruin the'Society of Jesus and Prominent adviser Greek police, acting on a tip from the CIA, replace it with Opus Dei, but the Jes­ arrested a retired British diplomat Feb. 28 quits Social Democrats uits could take refugein Russia again, on suspicion of spying for the Soviet Union. as they did in Catherine the Great's The suspect is identifiedas Egerdon "Eddie" A prominent adviser to the German Social time." Duckworth, 63, a well-known figurein Ath­ Democrats for many years has quit that pro­ ens and a former British embassy commer­ Soviet party . • NEW FIGfiTiNG erupted in cial attache who retired in 1979. Prof. Martin Kriele left the Social Dem­ Chad between Libyan-backed rebels Police found five pistols and ammuni­ ocratic Party (SPD) after months of hefty andthe government forces aftera two­ tion in Duckworth's home . A British em­ controversies over the party's policy in fa­ week respite, acCording to the French bassy official, however, rejected the report: vor of Cuba and Nicaragua. Kriele, who defense ministry. A spokesman, "He has absolutely no connection to espio­ visited Central America in late summer of quoting Chad government officials, nage ....He was interviewed by the se­ 1985, wrote a book accusing Willy Brandt said the fightingbroke out March 4 at curity police as part of their routine investi­ and the Socialist International of courting the strategic outpost of Kalait, on the gation into friends of [former U.S. Navy Lt . the Nicaraguan regime in "gross violation 16th parallel dividing the rebel- and Commander John] Bothwell," the embassy of all principles which shOUld be followed government-controlled parts of the official said. by democratic parties." country. Bothwell , who maintained residences in He accused the SPD and party chairman bothBritain and Greece , was arrested short­ Brandt of collaborating with Managua and • THE TRILATERAL Commis­ ly after the defection to the United States of Cuba against the United States, thus helping sion may hold its next plenarysession Soviet embassy employee Viktor Gundar­ the Soviet cause in the Carribean. Kriele in Moscow, an Italian leader of the ev, who the State Department says was a also said that the party leadership remained Commission told the magazine Pan­ colonel in the KGB . silent on the fact that brutal human rights orama. The decision will be taken at The Athens public prosecutor has or­ violations were committed in Nicaragua by the Commission's mid-May in Ma­ deredan investigation into Bothwell's activ­ the Sandinistas. drid. "The Trilateral Commissionwas ities in Greece. Kriele's move preempted an expUlsion in a crisis," Pieto Bassetti said, "but from the party , which his local Cologne­ fortunately the speech of [27th Party Leverkusen district was debating on orders Congress] speechof Gorbachov, that Accuser now accused from SPD headquarters in Bonn. re-launches big issues like security, The professor was a prominent voice in high technology, environment, star­ in Bonn 'Kohlgate ' the party, and had done the legal work on vation in the world-themes that are Willy Brandt's Ostpolitik, the beginning of characteristic of the Trilateral Com­ Terroristlawyer and Green Party parliamen­ detente , defending this policy against a con­ mision-will beable to revitalize our

tarian Otto Schily, the accuser in an inves­ servative law suit in the German constitu­ ideas ...." tigation of West German Chancellor Helmut tional court in 1973.

EIR March 14, 1986 International 61 �TIillNational

Russian demands defense cuts; lawmakers comply

by Kathleen Klenetsky

In an interview with the Spanish newspaper El Pais early in Under the heading "Budget-Cutters Eye the NATO Sa­ March, Moscow's top " Americanologist," Georgii Arbatov, cred Cow," London Times reporter Bailey Morris wrote that praised the U.S. Congress for its "realistic" approach to de­ there are "hard times ahead for European defense programs. fense spending. "We agree with a branch of American gov­ The first hard fact is that Reagan's $320 billion military ernment: Congress," said Arbatov, mentioning the recent budget for the next financialy�ar is in trouble. . . . One study House vote in favor of a resolution calling for a comprehen­ after another in recent months has taken aim at NATO as a sive nuclear test ban. Arbatov scolded Reagan for insisting 'huge sacred cow' that can no longer be fed by American that "Congress financehis out-of-orbit budget." taxpayers. " Arbatov's faith in Congress is not misplaced. On March The Senate budget panel's vote came despite President 6, just a few days after Arbatov's remarks appeared in print, Reagan's nationally televised.speech of Feb. 26, in which he the Republican-controlled Senate Budget Committee voted warned that new cuts in military spending would be "reck­ 16 to 6 to reject the President's budget request, with most less, dangerous, and wrong ... backsliding of the most , Democrats, and some Republicans, complaining that the pit­ irresponsible kind . . The Soviets are engaged in a "relentless iful 3% increase the administratiOll is requesting for defense effort to gain military supeQority over the United States," is "too high." Some experts predict that defense budget cuts said the President, and they have invested "$500 billion more for Fiscal Year 1987 could range as high as $70 billion. than the United States in defense, and built nearlythree times The committee's vote is just a prelude to an expected as many strategic missiles," between 1975· and 1985. "great debate" over American strategic policy, in which The President also said that it would be "absolute folly members of the Trilateral Commission and kindred branches for the U.S. not to press foith" with the Strategic Defense of the Eastern Liberal Establishment are proposing a total Initiative (SDI). overhaul of the American military , on the grounds that Pen­ That latter point was underscored by SDI director Lt.­ tagon management is "flawed." These advocates of a "New Gen. James Abrahamson, in testimony before the House Yalta" deal with the Soviet Union, will use the pretext of subcommittee on research and development on March 4, in budget constraints under the Gramm-Rudman bill to justify which he bluntly asserted that Soviet strategic militarydoc­ decoupling the United States from its allies. trine is "firststrike . " The London Times reported March 3 that, because of the If Congress does not allocate the $4.8 billion requested budget deficit, U.S. political leaders are considering cuts in by his office to push ahead with President Reagan's SDI U.S. spendingfor NATO defense which hitherto would have program, the consequences, given Soviet aggressive inten­ been unthinkable. This confirms what EIR alone had previ­ tions, will be "a very dangerous world indeed," Abrahamson ously warned: that the Gramm-Rudman billwould necessar­ stressed. ily lead to U.S. troopwithdrawals from Western Europe(see , Abrahamson said that Russia's SDI effort dwarfs that of for example, EIR, Feb. 14, 1985, "Economic blowout in the United States: "Since the 1960s, the Soviets have been 1986: the realstate of the Union," by Lyndon H. LaRouche). pu�uing research into advanced technologies for . strategic

62 National EIR March 14, 1986 defense" including "high-energy lasers, particle-beamweap­ The commission report is being played up in the liberal ons, radio-frequency weapons, and kinetic-energy weapons. . press as a corrective to Pentagon "waste," but its real pur­ Moreover, during this same period, the Soviets have had an pose, as the report itself acknowledges, is to justify further active and expanding military space program ." restraints on the defense budget, and to remove the military By contrast, he said, by cutting 25% of SOl fu nding as far as possible from defense policymaking. One of its chief requests the last two years, Congress has forced the U.S. SOl recommendations is that U.S. military strategy be keyed to program "to accept higher program risks, prematurely down­ pre-set budget levels, which "would reflect competing de­ select certainpromising technologies and in general pursue a mands on the federal budget and projected gross national more austere research program," including reducing the ef­ product and revenues and would come from recommenda­ fort on "certain major technologies such as space-based las­ tions of the National Security Council and the Officeof Man­ ers, prematurely." agement and Budget." The process would also involve hav­ But Congress is in no mood to take national security ing the JCS chairman "frame explicit trade-offs among the considerations seriously. The President's speech drew the Armed Forces. " usual catcalls from liberal Democrats in Congress; but Senate The report was greeted enthusiastically by House Armed Republicans deserted him as well. House Majority Leader Services Committee chair Les Aspin (D-Wisc. ), a former Jim Wright (D-Tex.) accused Reagan of taking money from McNamara "whiz kid," and Senator Nunn , who said its rec­ health, education, and other social programs to finance "this ommendations were "compatible" with those he and Gold­ unprecedentedbuild-up in arms." The real question, he said, water were fashioning. "The commission may have started is "how much [defense] can we afford ." Similar responses out talking about toilet seats, but it ended up proposing to came fr om John Heinz (R-Pa.): "There is no doubt in my restructure the whole house," said Nunn. mind that the President's budget request will not be agreed The Packard Commission reporthas , unfortunately, won to by Congress." Even pro-defense Strom Thurmond (R­ the approval of President Reagan as well. S.C.) conceded: "We may not be able to get as much as the . A week later, on March 6, the Nunn-Goldwater blueprint President wants." was voted up by the Senate Armed Services Committee, On the SOl front, informed sources on the Hill have told overriding strong objections from Pentagon leaders . Senator EIR that Reagan would be "supremely lucky" ifthe SOl were Nunn said the "sweeping and historic" legislation-which to be slashed by only one-third. eliminates 17,000Defense Departmentjo bs, restructuresthe JCS, and creates an undersecretary of defense for procure­ Defense 'reform' ment-would help remedy problems "that have plagued our If the Pentagon had only to face Arbatov's friends in national defense for decades." Goldwater, boasting that the Congress, that would be bad enough. But a new flank has committee "has had to fight elements of the Pentagon every been opened in the war on defense: Pentagon "reform." There inch of the way," called the bill "the most significant piece are at least two major sources of this operation-the Presi­ of defense organization legislation in the nation's history. " dent's Blue Ribbon Commission on Defense Management But others disagree . Heads of all the military services (a.k.a. the Packard Commission, after its chairman, former sent fiery protests to Goldwater and Nunn, charging that the Trilateral Commission member David Packard) , and a scheme legislation would reduce the services' role in strategic plan­ cooked up by Georgetown University'S Center for Strategic ning and make a "hash" of the defense structure. According and International Studies, and sponsored by Sens. Barry to the March 5 Baltimore Sun, Marine Corps Commandant Goldwater (R-Ariz.) and Sam Nunn (D-Ga.), chairman and Gen. P. X. Kelley was especially incensed over the propos­ ranking Democrat, respectively, of the Senate Armed Ser­ als, asserting they would cause "significant degradation in vices Committee. the efficiency and effectiveness of the defense establish­ Early in March, both groups took important steps in the ment-to the point where I have deep concernsfor the future direction of reimposing on the Pentagon the worst aspects of of the United States." Kelley charged that the legislation formerDefense Secretary Robert Strange McNamara's "sys­ would also destroy the "corporatenature" of the joint chiefs. tems analysis." Navy Secretary John Lehman stated that the legislation The Packard Commission, whose members include the would undo Defense Secretary Weinberger's work in revers­ likes of Wall Street investment banker Nicholas Brady, a ing "30 years of centralization and bureaucratization," and close personal friend of both Fed chairman Paul Volcker and would also "make the officesof service secretary and service Vice-President George Bush, and Boston Brahmin Louis chief essentially ceremonial. " Cabot, issued an interim report Feb. 28, claiming that "there In their March 7 syndicated column, Rowland Evans and is no rational system" for reaching a coherent national mili­ Robert Novak excoriated Goldwater for making an alliance tary strategy, and proposing a sweeping overhaul of the de­ with "the heirs of his nemesis of over 20 years ago, Robert fense establishment, including restructuring the Joint Chiefs S. McNamara ....Although the reformdebate is ostensibly of Staff, giving greatly enlarged powers to the JCS chairman, about how the defense establishment should be run, it ac­ and changing Department of Defesne procurement methods. tually is an inquest on how the militaryhave runit ."

EIR March 14, 1986 National 63 LaRouche candidates define issues in March 18 illinois primary

by MarlaMinnicino

The March 18 Illinois primary will put the state's 22 con­ sory board chairman, filed for Congress, Senate, and state­ gressmen, its senior U.S. senator, its governor, lieutenant­ wide office in Illinois, as part of the national effort to "take governor, secretary of state, comptroller, treasurer, and at­ Congress back" from the KGB liberals in Washington. Na­ torney-general to an electoral challenge from supporters of tionally, the NDPC has already recruited over 750 citizen­ Lyndon H. LaRouche, Jr.., EIR founder and already a de­ candidates from labor, farmer, patriotic, minority, and cul­ clared candidate for the 1988 Democratic presidential nomi­ tural organizations. nation. It is the most complete slate of "LaRouche Demo­ The NDPC slate has targeted Illinois congressmen of both crats" ever filed in the state, and is the first primary of the parties, whose support for genocide , euthanasia, and the 1986 electoral season, which will see such slates of "La­ destruction of the nation's defense "make Soviet General Rouche Democrats". for senate and congress filed in at least Secretary Mikhail Gorbachov very happy," in the words of 22 states. one NDPC spokesman. Policies such as the Gramm-Rud­ Perhaps that is one reason that Democratic Party officials man-Hollings "balanced budget" legislation will eliminate in the state insist that there are "no issues" in the campaign, not only the old and infirm , but the productive farmers and no nationally significant trends to be established in the pri­ workers whose labors have made Illinois a hub of production, mary, virtually "no chance" of any political realignment. The manufacturing, distribution, and one of the world's richest voters are "not interested" in such matters anyway. farm regions for over 100 years . It is not uncomrnon in Illinois elections for elections to Both of Illinois's senato�s and 12 of its 22 congressmen be well-sewn up in advance-at least when times are normal. voted for the bill, which has " put the nail in the coffinof this But times are far from normal. More likely, they are fright­ country's economic sovereignty," according to NDPC-backed ened that the voters are growing very interested in what Gerald Pechenuk. Pechenuk; is the only challenger to Rep. . "laRouche Democrats" have to say, that they are quite well Dan Rostenkowski in Chicago'S 8th C.D. "Unless repealed, aware of the key political issues at stake and hold their elected Gramm-Rudman and the terrible, but less-noticed tax n!form officials entirely responsible for the disastrous tum in U.S. bill authored by Rostenkowski's House Ways and Means foreign and economic policy. Committee, will blow out the U.S. economy during 1986," Voters in Illinois-a state considered crucial in every said Pechenuk. presidential election-could send a very important signal to While Illinois Democratic Partyof ficialsfocus on retain­ Washington. Every voter knows, or senses in some fashion, ing control of statewide posts such as treasurer and attorney: that thepresent Congress is the worst bunch of traitors in 100 general, members of the NDPC slate in Illinois are out on the years, losing European allies, undermining the stability of streets, mobilizing the popUlation to "re-take Congress." Led Third World allies, and wrecking the economy back home. by Sheila Jones, the only opponent to incumbent Democratic The LaRouche slate is campaigning precisely on the theme: Sen. Alan Dixon, the slate includes 11 congressional candi­ "Take Congress Back!" dates. The view that people "don't care," and can't be taught At the top of the statewid� slate is gubernatorialcandidate about national and international issues is precisely what's at Peter Bowen, challenging Adlai Stevenson, Jr. , in the pri­ stakein this election. That citizens are concernedover issues mary; Mark Fairchild is running for lieutenant-governor like AIDS, the Soviet threat, the economic blowout, and against State Sen. George Sangmeister, author of the state's "morality in politics," is indicated by the response to cam­ pro-euthanasia "living will" legislation; Janice Hart for sec­ paigns now being waged by LaRouche Democrats in Illinois. retary of state; Donald Clark against Democratic Comptroller On Dec . 18, over 30 candidates backed by the National Ronald Burris; and Rob Hartfor state treasurer, challenging Democratic Policy Committee, of which LaRouche i.s advi- incumbent James Donnewald.

64 National EIR March 14, 1986 In the U. S. Senate race, euthanasia fighter and anti -drug In the 2nd C.D., once the center of Chicago's steel in­ activist Sheila Jones is challenging Illinois's senior senator, dustry, ErnieWashingt on, a former firefighter, is challenging Alan Dixon, who recently told reporters he had "no second liberal Congressman Gus Savage, a proponent of the nuclear · thoughts" about supporting the Gramm-Rudman bill. A rank­ freeze who voted to cancel the MX missile and who has won ing member of the Senate Agriculture Committee, Dixon the praise of Libyan asset Louis Farrakhan. Washington is voted to confirm Federal Reserve Chairman Paul Volcker, campaigning on the slogan that "Only Beauty Can Defeat the whose credit policies have driven U.S. farms and factories Sayage," and has made that concrete in his campaign organ­ into bankruptcy. Jones has challenged Dixon, also a member izing events-such as a recent fundraiser at Chicago's South­ of the Banking, House and Urban AffairsCommittee and its side Steelworkers' Hall, which was devoted to music and InternationalFinance and Monetary Policy subcommittee, to poetry . Washington told the audience of unemployed steel­ renounce his support for the International Monetary Fund workers, retired citizens, minority community activists, stu­ and to use his powers on the Banking Committee to clean up dents, and clergy, "We must see ourselves like Prometheus illegal money-laundering. ...the givers of fire to the population. Then we can create In the gubernatorial race, Peter Bowen is the only chal­ the necessary cultural renaissance." lenger to Adlai Stevenson, Jr. Stevenson, who ran a close On March 3, candidates Maurice Johnson and Ernie race against incumbent Gov. James Thompson (a Republi­ Washington joined EIR Biological Holocaust Task Force can) in 1982, has raised almost no substantive issues. He is medical coordinator, Dr. John Grauerhelz, at a Chicago press leaving that to Bowen, who has toured the state reportingon conference to endorse EIR ' s recently released special report, the effects of the Gramm-Rudman law on the Illinois econo­ An Emergency War Plan to Fight AIDS and Other Pandem­ my. ics . Bowen has charged Thompson's administration with The NDPC-backed candidates used the occasion to chal­ "bankrupting the industries of this state and driving farmers lenge the "dangerous and irresponsible guidelines" issued by off their land." He has pointed out that budget cuts under the Centers for Disease Control and supported by the Chicago Gramm-Rudman could mean the loss of as much as $500 AIDS Task Force, dominated by the "gay lobby," recom­ million to the state this year, with $155 million in federal aid mending that children with AIDS be allowed to attend public cuts affecting Chicago alone . Virtually every city department school. The AIDS issue is very hot in many Illinois commu­ will be hit, including community development, health care nities such as Joliet, where 4th C.D. cahdidate George Law­ programs (including Medicaid and Medicare), job training rence gained headlines last fall, advocating screening and for the unemployed, and housing construction. Transporta­ quarantine of AIDS victims. tion cutbacks of $54.5 million could shut down the metro­ In other races, candidates endorsed by the NDPC are: politan subway and commuter bus lines and the loss of federal • Marshall Hoffman, 6th C.D., running against incum­ revenue sharing could lead to layoffs of 1,300 city workers . bent Henry Hyde in the primary. In his state budget message issued March 5, Thompson • Gene Schenck, 10th C.D., running for the seat now put the reins on every operation of state government, with held by Republican John Porter. In the'Democratic primary, the exception of education, consistent with the austerity dic­ Schenck faces liberal Robert Cleland. In Cleland's own tates of Gramm-Rudman . His budget would, however, in­ Democratic Party club, Schenck received four votes of en­ crease funds for re-training workers "to meet the changing dorsement, largely for his campaign to root out the drug­ manufacturing demands of the 1990s," i.e., the transition to runners on Chicago's northern shore. a "post-industrial" society where factories have been sup­ • Terry Allen, lith C.D., is challenging Democratic planted by fast food chains. . incumbent Frank Annunzio, a 20-year veteran of Congress. In five congressional districts encompassing Chicago and Annunzio was so upset by Allen's entry into the race, that a its suburbs, NDPC-backed candidates are the only primary top Chicago lawfirm was hired in a failedeffort to challenge challengers to Democratic incumbents Russo, Rostenkows­ Allen's petition filings. ki, Yates, Annunzio, and Crane . In the 3rd C.D., retired city • Joe Baruch, in the 12th C.D., is running for the seat worker Maurice Johnson has charged that Rep. Marty Russo, now held by Republican Phil Crane. In 'addition to his NDPC . an "adjunct" to Ways arid Means Chairman Rostenkowski, endorsement, Baruchis endorsed by Right to Life. is "economically illiterate ." LaRouche Democrat Judy Ache­ • In the 13th C.D., NDPC activist and formerpolice man son has shaken up the 9th C.D. by attacking liberal Sidney Dominick Jeffrey is running unopposep in the primary, and Yates's support for euthanasia and sodomy ("gay rights"). will face Republican incumbent HarrisFawe ll in November. Acheson has made inroads in Yates' supposed "stronghold" • LaRouche Democrat and farmerWill iam Brenner, Sr. , of SkokJe, with an aggressive campaign for emergency mea­ is unopposed in the 15th C.D., represented by Edward Ma­ sures of quarantine and prevention of AIDS, and by counter­ digan of the House Agricultural Committee. posing the music of Mozart and Beethoven to Yates' pro­ The NDPC has also endorsed two candidates for state . motion of the rock-drug counterculture. legislature, Rev. Howard Snipe, and William Brenner, Jr.

EIR March 14, 1986 National 65 I­ I

the outlook of European fascism. Contributors included fas­ Profile: Robert Penn Warren cists, notably Stark Young, who penned numerous articles for the New Republic exalting Mussolini and Franco for cre­ ating "organic" societies-the kind the Southern Agrarians , envisioned for the South. / 11 Take My Stand assailed indus­ trialization and science, and �sserted that the South must maintain a feudal, agrarian-based way of life, in order to protect her unique cultural and economic matrix. The book's introduction, endorsed by Warren,portrayed industrialism and science as the source of all evil, in contrast Poet Laureate is to the "land" and "soil" from whence all good derives. It claimed that industrialization was necessarily antithetical to Southern secessionist spiritual and humanistic values, as well as to religion, and that the use of technology to save back-breaking labor, robbed by Kathleen Klenetsky labor of its human qualities. To stop the "incessant extension of industrialization," the Southern Agrarians called on all "communities" opposed to Robert Penn Warren, a fascist-medievalist possessed of an industrialization to join forces and impose an agnlrlan regime undying hatred of science and progress, has just been named upon the United States. "The. culture of the soil is the best the first Poet Laureate of the United States. and most sensitive of vocations, and therefore it should have The newly created post, an institution imported from the economic preference and enlist the maximum numberof Britain, where Poet Laureates have been singing the glories workers ," a regime which "will be secured readily enough of British imperialism since the days of John Dryden, is the where the superfluous industries are not allowed to rise against offspring of Library of Congress head Daniel Boorstin. Three it." months ago, Boorstin hosted a seminar at the Library , where Warren's contribution to the book dealt with the "race he and other select scholars discussed with the visiting Prince question," and warned that unless the south rearranged itself Charles what is "wrong" with the U.S. Constitution. around agricultural nuclei, blacks would keep on defecting Perhaps best known as author of All The King's Men, a to an "illusory" better life in nprthern industrial cities. fictionalized account of Huey Long's rise and fall which Warren has since distanced himself, at least l?ublicly, effectively justifies Long's assassination by portraying him from the racist overtones in J' II Take My Stand, but not from as a power-mad individual, Warren has spent a lifetime pro­ its overall medievalist stance. Recently, he has become loosely pagandizing for the explicitly Gnostic idea that material prog­ affiliated with the Southern IPartisan, a magazine which ress is evil. His elevation to the status of Poet Laureate drew maintains that the South must be prepared to secede fromthe kudos from Yale University's Harold Bloom, an avowed Union again unless its cultural and political views, as defined Gnostic , who called Warren "our greatest living poet." by the Southern Agrarians, come to prevail. The magazine publishes articles like the "Foreign Policy of the South," by Warren's 'Southern ethos' Heritage Foundation analyst Sam Francis, who argued that A Kentuckian, Warren attended Vanderbilt University the South is "closer to the cultural values of the old world and Yale, and then went to Oxford as a Rhodes scholar. He than the new" and is properly dominated by "pessimism about became an avid devotee of the so-called "Southern ethos," man and his works." an oligarchically oriented outlook, which is far closer to the The views of the Southern Partisan's advisory board, Dostoevskian blood-and-soil fixationof."Mother Russia" and which includes F. Reid Bucldey, the monarchist brother of the Nazis than anything in U.S. traditions. William F. Buckley, and John Hurley, curator of the Confed­ Both Warren's grandfathers were Confederate soliders, erate Memorial Hall, are typifiedby M. E. Bradford, a Uni­ and he spent his childhood listening to tales extolling the versity of Dallas historian and a friend of Otto von Hapsburg. unique virtues of the antebellum South. As an undergraduate One of the leading living spokesmen for the Southern Agrar­ of Tennessee's Vanderbilt University, Warren joined the ians, Bradford has written articleson the thesis that the model "Fugitives," a group of poets that included John Crowe Ran­ for the American republic was the Venetian oligarchy! som and Allen Tate. Drawing heavily on the existentialist With a man of Warren's outlook now Poet Laureate, why tommyrot of T. S. Eliot and the fascist Ezra Pound, * the not name Simon Legree a Founding Father? Fugitives were dedicated to the idea of the poet as an outcast soothsayer. * Warrenwas partof a committee which awarded Ezra Pound In 1930, the Fugitives translated their artistic ideas into the Bollingen Prizefor Poetry in 1948 for his Pisan Cantos, politics. Dubbing themselves the "SouthernAgraria ns," they written while Pound was in prison for treason for his pro­ , issued a famous manifesto, / 11 Take My Stand, which aped fascist activities during World War II.

66 National EIR March 14, 1986 Eye on Washington by Nicholas F. Benton

last fall, to pressure Marcos to hold Right and left elections in the firstplace , and then, in the last hours, to convince Marcos agree on Nicaragua GOP presidential that Reagan was not going to back him Defense Secretary Weinberger's three­ hopefuls gather up. hour grilling by the House Armed Ser­ On a popular local interview show vices Committee March 5 on the Pres­ Under the guise of honoring Sen. Paul in Washington, Laxalt described his ident's request for $100million in aid Laxalt (R-Nev.), the Republicans got last phone call with Marcos, when to the Nicaraguan "contras" opposing together at a big social event here on Marcos finallyasked Laxalt his candid the Sandinista regime, revealed a tell­ March 3. Every potential GOP presi­ opinion on what he should do and Lax­ tale convergence ofleftand right call­ dential campaign was represented at alt told him to leave. Laxalt said Mar­ ing for direct U.S. military interven­ the "non-partisan" fete honoring the cos was silent on the other end of the tion in Central America. retiring Senator Laxalt, who is more line for over a minute, and then mum­ This was heard toming out of the and more being talked of as a candi­ bled, "I am very, very disappointed." mouths of leftist sympathizers like date himself. Laxalt's public gloating over his Colorado Rep. P3t Schroeder and President Reagan made a few re­ decisive role in cracking Marcos has right-winger Rep. Thomas Hartnett marks at the dinner. But the real inter­ apparently propelled him into favor (R-S.C.). Schroedersaid that since the est was in the line-up of potential can­ among Reagan insiders as the pre­ Defense Department claims the Sovi­ didates for 1988, either there in person ferred option to carry the Reagan ban­ ets have put $500 million into Nica­ or officially co-sponsoring the event. ner in the White House, now that it ragua and 3,400Cuban advisers, then These figures included, besides has become clear that George Bush obviously $100 million in aid to the Laxalt himself, Vice-President George cannot hack it as a candidate. contras is inadequate, and we might Bush, Congressman Jack Kemp, for­ Bush was lampooned by the na­ as well not send anything. If we decide mer Secretary of State Alexander Haig tional press for his bungled appear­ we need to clean that situation up, then and , remarkably, television evangel­ ance in San Antonio on March 2 to we should do it properly, and not keep ist Pat Robertson. celebrate the 150th anniversary of deceiving the U.S. population by ask­ Yes, Robertson's campaign com­ Texas independence from Mexico. ing for a little money at a time, she mittee was invited on board the offi­ Bush claimed at the Alamo event to be argued. cial, prestigious list of Republican a Texan, which few Texans take seri­ Weinberger, who appeared hag­ leaders and organizations co-sponsor­ ously (he was born andreared in Con­ gard at the hearing, expressed genuine ing the event, meaning he has the necticut). Bush tried to make his point exasperation at the concept. He added blessing of the party leadership to be by listing the out-of-state hometown that if the Contadora process fails and among its bona fidecandidates in 1988! of every Alamo defender. the contras fail, over 100 million peo­ The affair was organized by Paul Laxalt's so-called "loyalty" to the ple in the Central American region Weyrich, formerly of the Heritage President is about as reliable as a gyp­ from Mexico to Colbmbia are directly Foundation and a major promoter of sy's. He sided with the Wall Street militarily threatened, as well as the religious fundamentalism within pol­ Palace Guard-Don Regan and U.S. borders. "Then we would be itics. crowd-to put the barbaric Richard confronted with a major strategic cri­ Laxalt,of course, played a key role Burt into West Germany as ambassa­ sis," he said. in pulling the plug on the Marcos re­ dor. Laxalt confided his role in con­ Weinberger also made it clear, in gime in the Philippines. He was known vincing Reagan to accept Burt to this contrast to Shultz, that Mexico and the by Marcos from the days when Rea­ reporter in a private meeting one year other Contadora nations in no way gan was governor of California, as a ago-long before Burt's appointment support Nicaragua, but are forced to close friend of the President-which becamepublic . modify their public statements only Marcos also believed he was, himself, In Paul Laxalt, the Republicans are because they have found the U. S. to until recent events proved otherwise. stuck with one more duplicitous char­ be unreliable in terms of backing them This was how Laxalt was able, be­ latan-as if Bush, Haig, Kemp, and up, and they cannot handle the Nicar­ ginning with his trip to the Philippines Robertson were not enough. aguan "armed camp" militarily alone.

EIR March 14, 1986 National 67 Congressional Closeup by Ronald Kokinda and Susan Kokinda

' duit for KGB organizing and disinfor­ that race is Webster Tarpley, a senior Gang of 5' push mation composed of senators' and editor of the EIR . to extend SALT II congressmen's wives. Solarz' confidants are reported as Drawing their inspiration from Ne­ For a few brief moments in early confirmingthe rumors, noting that So­ ville Chamberlain, fiveU.S. senators March, there was a sense of the past larz has been surprised and pleased at have introduced S. Con. Res. 112, on the Senate floor, when the "old" the national press coverage he has got­ urging the President to continue to Jesse Helms resurfaced to praise Pres­ ten over. his involvement in the Phil­ abide by the limits set in the unratified ident Reagan's recent reports on So­ ippines crisis. Perhaps Solarz is really SALT II Treaty. The March 6 timing viet arms-control violations and to in the Philippines to consult with Gen­ of the senators' resolution is impecc­ warnof a Soviet military "breakout." erals Ramos and Enrile and U.S. Am- . able, coming in the walceof the Sovi­ Helms pointed out that the admin­ bassador Bosworth, on tactics to use ets' 27th Party Congress which dem­ istration has now reported on 50 So­ in New York State if he doesn't like onstrated, for anyone willing to look, viet violations of the treaties. "This the vote count in the September pri­ that the Soviet Union is engaged in a pattern confirms that the Soviets are mary. full-fledged industrial, technological, indeed 'breaking out' of both SALT I Informed sources note, however, and militarymobili zation. and SALT II," he warned, "I report: that little Sleazy Solarz might find The five senators involved, John the Soviets are in break out. Does it some interesting questions surfacing, Chaffee (R-R.I.), Dale Bumpers (D­ make sense to worry about SALT III should he choose to run. Given his Ark.), John Heinz (R-Pa.), Patrick if the Soviets are not abiding by SALT recent public voicings over the valid­ Leahy (D-Vt.), and William Proxmire I and SALT II? If the Soviets have ity of the Philippines vote, Solarz may (D-Wis.), claim that the timing of the abandoned the arms control process, now want to explain his silence in resolution is motivated by the pending why should the United State,s adopt 1976, when political forces associated deployment of the U.S.S. Nevada, the artificial restraints that are dangerous with this magazine proved in New Navy's eighth Trident submarine. to our national security? The Soviets York State Supreme Court, that With the May deployment of the Ne­ have thrown offall restraints." enough vote fraud had been commit­ vada. the 1,200 multiple warhead In his March 4 floor statement, ted in New York State, in the presi­ missile ceiling of the SALT II treaty Helms also documents the roleof then­ dential election, to have changed the will be breached by the United States. State Department official Richard outcome of the vote in the state . A The resolution asks the President to Burt, now U.S. ambassador to West change in New York State's electoral stay within the treaty limits and de­ Germany, in undercutting President vote would have given the 1976 elec­ comission an older Poseidon subma­ Reagan's own stated preference to junk tion to Gerald Ford. A large amount rine when the U.S.S. Nevada is the SALT II treaty . of the documented evidence of fraud launched. came from Solarz' own district. Per­ The fivesenators argue that it is in haps vote fraud is not vote fraud, in the U. S. interest to abide by the SALT Solarz' eyes, unless the U.S. State II ceilings, since the Soviet Union is Solarz to run for Department determines that it is vote forced to dismantle five-times as many U.S. Senate? fraud . missiles · as the United States. What As Stephen Solarz (D-N.Y.) flew off they ignore is the fact that, in the throes to the Philippines to greet the newly of a warmobilization, the Soviet Union installed, unstable, and unconstitu­ is deploying hundreds and hundreds tional government of Corazon Aqui­ Congressman wants to end of new launchers and warheads in vi­ no, and to further his witchhunt into protection for Marcos olation of the ceilings. the financial affairs of former Presi­ Representative Howard Coble (R­ That the senators have chosen to dent Ferdinand Marcos, rumors began N.C.) called for the President of the ignore Soviet military realities, is no to emerge that Solarz is considering a United . States to discontinue Secret ' surprise. The wives of Senators run for the New York Senate seat cur­ Service protection for President Mar­ Bumpers, Heinz, and Leahy are foun­ rently held by Sen. Alfonse D' Amato cos and his family, in March 5 floor ders and leaders of Peacelinks, a con- (R). The only declared Democrat in remarks.

68 National EIR March 14, 1986 Even as the Washington Post was States and the dollar in a world in­ mittees of the House. On numerous admitting the existance of assassina­ creasingly dominated by such supra­ occasions I have asked for hearings, tion plots against Marcos, Coble de­ national institutions as the IMF, World and in writing ....I am still waiting criesthe fact that Reagan has ordered Bank , and the Bank ·for International for a response from the members of Secret Service protection for Marcos, Settlements (BIS), is not inconsistent the committees to which those bills "for an indefinite period of time." with their previous positions. Each of have been assigned." Showing to what petty depths the the senators has advanced strategic Dannemeyer then says that he is Gramm-Rudman mentality and liberal policies which agree with Henry Kis­ resorting to such tactics because media brainwashing can drag people, singer's (ldmonition that U.S. power "AIDS is an epidemic that is striking Coble says, "I believe that the Amer­ in the world should be reduced to one­ across America. . . , Experts tell us ican taxpayers have provided enough fourth of its postwar strength. Nunn, that between half a million and a mil­ aid and comfort to Mr. Marcos . . . I of course, is the leader of the drive to lion Americans today have antibodies do not believe we have an obligation pull U.S. troops out of Europe, thus of the virus in their blood ....From to grant Secret Service protection to turning that continent over to the So­ a policy standpoint, i we should take deposed leaders . " viet sphere of influence. Hart and reasonable actions to reduce the inci­ Bradley support those efforts , and Hart dence of this disease. And shutting is a well-known afficianado of a "little down bathhouses is one of the options navy" which would similarly sink U.S. that I think we should be contemplat­ Senators call for influence. ing at this time." new Bretton Woods Representative Henry Waxman Three senatorsfrom the "new realist" (D-Calif.), the floor manager of the or "Atari" wing of the Democratic bill, argued that the amendment was Partyhave introduced comprehensive Dannemeyer tried to not germane. The amendment was de­ trade and monetary legislation which push AIDS legislation feated by a vote of 403to 6. represents their bid to be "in on" the There can hardly be more eloquent So do great nations die. discussions in London and Switzer­ testimony to the present level of sani­ land over the shape of a new iriterna­ ty , or more precisely, its utter ab­ tional financial system. sence, on Capitol Hill than the recent Senators Gary Hart (D-Colo.), fate of an amendment aimed at ad­ Simon backs balanced Sam Nunn (D-Ga.), and Bill Bradley dressing the deadly AIDS epidemic. budget amendment (D-N.J.) have introduced the "Com­ Representative William Danne­ A key liberal senator has jumped on petitive American Trade Reform Act meyer (R-Calif.) introduced an the bandwagon for a "balanced budget . of 1986," S. 2127. As its firstprovi­ amendment to the Health Services amendment," greatly enhancing the sion, the bill calls for the convening Amendments Act of 1985, which prospects that the bill, which would of a new "Bretton Woods" interna­ would force state governments to close effectively write Gramm-Rudman into tional conference to discuss currency down public bath houses used for sex­ the Constitution, will be passed this reform, currency intervention, and ual relations between males or face a year. Sen. Paul Simon (D-Ill.) has greater supranational control over do­ cut-off of certain community health agreed to back a compromise version mestic monetary, fiscal, and trade pol­ grants. of the bill, which will be introduced icies. Mirroring Swiss interests, the In raising the amendment on March on the Senate floor h¥ Sen. Bob Dole senators would like to see a major de­ 5, Dannemeyer admitted that he was (R-Kan.). The "Simonized" bill, un­ valuation of the dollar and the legis­ engaging in a legislative maneuver to like an original version, would allow lation would direct the President to try and force attention to and hearings a tax increase to help balance future design long-term strategies for curren­ on bills he introduced last September federal budgets. "I think this new ver­ cy intervention to correct the problem dealing with reducing the spread of sion will belooked on more favorably of "overvaluation." AIDS. by Democrats who want restraint but The proposals ofthese senators, to Dannemeyer explained: "Those who don't want a rigid formula," Si­ reduce the economic role of the United bills have been assigned to three com- mon says.

EIR March 14, 1986 National 69 NationalNews

Jersey. Small is conducting a grand jury in­ between drugs and terrorism-in direct vestigation into TLC, IDL, and companies contradiction of the Feb. 14 claim by FBI associated with Lyndon LaRouche. Director William Webster that the two are Israeli spy Small first tried to claim that he had not unrelate�. given the documentsto lawyers for TLC and Retired Army Gen. Paul F. Gorman de­ may be set free IDL as requested, because the originals were clared that the drug pushers' infrastructure · Jonathan Jay Pollard, the spy for the Israeli not in his position; but he was forced to "is used to move ...arms and munitions, Mossad who was arrested on Nov. 26, 1985 aOmit under questioning that originals had dangeroqs persons such as terrorists, spies, for stealing U.S. military and scientific se­ never been requested-only copies. subversives or criminals, and pernicious in­ crets, may be set free without ever standing Small was also forced to admit his per­ formation, such as political, economic , and trial in the United States, Reuters reports . sonal animosity toward political associates military intelligence ... to imperil U.S. Pollard was no ''friendly spy" for Tel of LaRouche . "Was there bad feeling be­ national interests.... The money , mobil- Aviv, as his defenders in the U.S. State De­ tween you and the LaRouche people?" the ity , communications, and transnational re­ partment and the Anti-Defamation League judge asked. Small replied: "They spent a sources of the narcotraficanteslend wholly have claimed; he was a "false flag"agent for lot of time insulting my boss, William Weld. new dimensions to threats to U.S. lives and the Soviet KGB . He was caught with clas­ They called him a 'dupe of the dope lobby ' property from terrorists or insurgents." sified U.S. documents intended for an Isra­ and a 'Harvard punk.' They would chant Admiral William J. Crowe, Jr., chair­ eli spy unit which barters secrets to the So­ 'William Weld is a fag ' outside the win­ man of the Joint Chiefs of Staff, told report­ viets on behalfof a network of Israeli righ­ dow." ers on March 2 that the connection between tists aro�d former Defense Minister Ariel Small admitted to having beenin contact drugs, insurgencies , and terrorism is well­ Sharon. with lawyers for First Fidelity for over a documented. Pollard is now said to be "cooperating" year. It has become increasingly obvious to Attorney-General Edwin Meese stated with U.S. authorities, and that is the pretext observers that the bank's attorneys are con­ his disagreement with the Commission's for his potentialrelease. Pollard's wife, Anne ducting their pre-trial discoveryfor purpos­ recommendation of an increasedmilitary role Henderson Pollard, was secretlyreleased on es of assisting Small in the Boston grand in the war on drugs. "We do not use it in an bail in February , despite the fact that she jury proceeding. First Fidelity lawyer Al actual law enforcement capacity, and I agree was caught with classified documents going Besser even boasted, "I'm going to make with Secretary of Defense Weinberger that into the Israeli embassy in Washington on the government's case for them." this is not an appropriate role for the mili­ Nov. 21, 1985. Judge Ackerman is expected to issue a tary ," he said. ruling soon.

Religious coalition Federal prosecutor Crime task force seeks formed to support SDI caught lying in hearing military war on drugs Approximately 30 conservative Protestant The tables were turned in federal court in and Catholic groups announced the forma­ Newark, New Jersey on Feb . 28, as Assis­ President Reagan's Commission on Orga­ tion in late February of the Religious Coa­ tant U.S. Attorney Daniel Small, a would­ nized Crime issued a report on narcotics lition for a Moral Defense Policy to support be "Grand Inquisitor" with a reputation for traffickingMarch 3, calling on the President the Straiegic Defense Initiative (SOl) . bullying witnesses in grand jury proceed­ to order the military into the fight against The : Center for Peace and Freedom, a ings, was grilled for two hours by a federal "an airborne , amphibious, and overland in­ conservative foundation, will coordinate the judge. vasion" of the United States by the drug coalitioll. The hearing was called by Judge Harold mafia. According to the statement issued by the A. Ackerman to resolve conflicting sworn Accordingto thepanel, ''TheJoint Chiefs group, "As religious leaders concerned about statements by Small and lawyers represent­ should be instructed by the highest levels of the mor�ity of public policy, we declare ing The LaRouche Campaign and indepen­ government . . . that hostile or destructive that if genuinely defensive systems can be dent Democrats for LaRouche, concerning action from within or without-overt or developedthat prove feasible and also prac­ the availability of TLC and IDL documents covert-shall include the . . . invasion of tical from an economic and military stand­ in Small's possession, which were needed this countryby drug smugglers." point, then their development and eventual for a court battle between the campaign Leading military figures quoted in the deployment by the U. S. is not only morally committees and First Fidelity Bank of New Commission's report emphasized the link justifiable, but morally imperative ."

70 National ElK March 14, 1986 Briefly

• JESSE HELMS'S chief Israeli liaison, former parliamentarian Mi­ chael Kleiner, is hardwired into or­ ganized crime networks , an investi­ gator in Tel Aviv reports. "Michael Kleiner does not just have connec­ Signers of the statement include Rev . cernof the United States was to prevent the tions to organized crime , he has con­ Jerry Falwell; Rev . Jimmy Swaggart; Rev. "threat of bloodshed. " He rejected a sugges­ nections only to organized crime . " Jim Bakker; Rev . Tim LaHaye , president of tion that U.S. intelligence was provided to the American Coaltion for Traditional Val­ the forces of Cory Aquino, Gen. Fidel Ra­ THE STATE Department has in­ ues; Rev . Ben Armstrong , executive direc­ mos, and Juan Ponce Enrile, but was eva­ • tervened directly in Israeli wage ne­ tor of the National Religious Broadcasters; sive in confirmingwhether or not the United gotiationsfor the firsttime ever. Sec­ and Catholics for a Moral America. States had allowed rebel helicopters to re­ retary of State George Shultz sent a fuel at U.S. bases, to dissuade pro-Marcos letter to Histadrut labor confedera­ fo rces from attacking. tion Secretary-Gbneral Yisrael Kes­ "Eventually, what was clear was that sar, advising thathe adopt a "careful" there could be a major attack on civilians wage policy. and people loyal to Mrs. Aquino," Wein­ N. Y. Times ends berger said. "And we did everything we JESSE JACKSON, speaking at could to avoid that." Weinberger praised • its coverup on AIDS the Johnson Space Center in Hous­ General Ramos and said that he had written The New York Times Magazine published ton, Texas at the beginning of March to Defense Minister Enrile some months ago. an article on March 2, "Teaming Up Against said that the explosion of the Spac Asked how much military aid the United � AIDS," which reports-finally-what EIR Shuttle Challenger came only a few Sta es might offer the new Aquino regime , readers knew five months ago: that a team � months before two missions were to Wembergersaid he could not say . "We don't of Harvard University medical experts, in­ carry interplanetary probes powered . k oW how much military aid we're going to cludmg notably Dr. Myron Essex and Dr. ? by plutonium reactors . If the Shuttle give the U.S. government," he quipped. William Haseltine, is sounding the alarm had exploded while carrying one of that the AIDS virus is much more dangerous the probes, he claimed, it "could wipe and widespread than public authorities, such out all of Florida," or, if the wind as the Atlanta Centers for Disease Control were right, "the entire world." The (CDC), have been willing to admit. (See, Soviet daily Pravda had carried the for example, EIR , Oct . 4, 1985, "Doctor Carter dispels myth of bizarrecharge the week before . Tells Congress: Ten Million Africans Are Reagan arms build-up / ' Infected With AIDS"). BOSTON Speaking from his home in Plains, Georgia, • Superintendent of The Times quotes Dr. Essex: "The CDC ex-President Jimmy Carter performed the Schools Laval S. Wilson announced has beentrying to inform the public without useful service of demonstrating that the at a press conference that two stu­ overly alarming them. But we outside the "Reagan military buildup" is more appear­ dents have come down with active government are freer to speak. The fact is ance than reality. cases of tuberculosisalready this year. that the direpredictions of those who have Responding to attacks .on his military "We don't think this is any major cri d doom ever since AIDS appeared, hav­ � policies in the President's defense budget cause for alarm," he said. But the en t been far offthe mark." message eleased the last week of February, resurgence of the disease known as The article reports the findings of the � Carter pomted out that it was he who pushed the "white plague" follows other re­ Harvard team, that "thereis n't just one AIDS for deployment of 200 MX missiles (with cent outbreaks in several locations of virus, but a score that we know of. " implicit comparison to the administration's the city. currentwrangle to get 50 deployed), as well SDI DIRECtOR as insisting that they be mobile-based, rather • Lt.-Gen. James than in the fixed silos Reagan has settled for. Abrahamson has won Defense Sec­ This latter feature , said Carter, makes retary Weinberger to the idea of cre­ Weinberger ducks issue the missile a "sitting duck" for Soviet ating a think-tank for researchon the preemptive strikes. He also noted that five Strategic Defense Initiative. Accord­ of U.S. aid to Aquino of the seven Trident Missile subs currently ing toa reportin the Washington Post, On CBS-TV 's "Face the Nation" program at sea were commissionedbefore 1981. this would be "a StarWars version of the RAND Corporation"-a govern­ on March 2, Defense Secretary Caspar EIR has long noted that Reagan's "black­ Weinberger was questioned on whether the white" picture of how his administration re­ m�nt-owned high-tech company domg SDI-related systems analysis, United States hadprovided assistance rorebel �ersed �merica' s declining military, hardly at a price tag of about $30 million forces that overthrew Philippines President JibeS With the fact that his fiscal 1985 de­ annually. Ferdinand Marcos. fe nse budget-before Grarnm-Rudman­ Weinberger replied that the main con- was less than even Carter's own projection !

EIR March 14, 1986 National 71 Editorial

Rule ofLaw murdered in Manila

Not President Ferdinand Marcos, but the hallowed idea the anti-Marcos coalition disintegrated, as the object of of the Rule of Law , was murdered by the U.S. State this unity, Mr. Marcos 's power, disappeared under the Department's disgraceful intervention in the Philip­ blows of American military threats . pines, last month. Mrs. Corazon Aquino, now attempt­ Conclusion: The American intervention in the Phil­ ing to measure up to the responsibilities of office, is ippines, in complete disregard of the facts and of exist­ herself painfully discovering this dread truth . The im­ ing laws , created a situation in which the ruleof law in plications of the State Department's criminal act, for that Pacific nation has been eclipsed, and its prospects the future of political institutions around the world, of returning are diminishingr each day. especially in the Third World, are menacing. Finally, Mrs . Aquino selected as her claim to legal­ What are the facts? The chief American operative ity "revolutionary right," and not the Constitution, and in Manila, former ambassador William Sullivan, ruled thus severed her relations �ith the existing, elected that "the facts are irrelevant." However, these facts parliament. At the same time , prompted by her vice­ exist. president, Salvador Laurel, �er governmentannounced Fact: No official or unofficial body, Filipino or that it will draft a new Conl>titution and submit it to a American, loyalist or opposition, has yet presented any plebiscite in the next hundt1:.d days: General elections substantive evidence-let alone proof-either that for all elected offices are promised to take place soon Corazon Aquino won the election, or that President after the new Constitution i� approved in the scheduled Marcos's side committed election fraud on any mean­ plebiscite. ingful scale. These one hundred days ahead, we fear, shall be Fact: According to the law, the elected parliament very perilous, not only for the Philippines and its peo­ of the Philippines, invested with the sole legal authority ple, but also for the very idea of government by law to determine who is the winner of a presidential elec­ around the world. Our fear 4erives from what we know tion, proclaimed Ferdinand Marcos the winner. the intentions of the State 1j>epartment, and its agents Fact: The United States government, both the State and collaborators , to be. Department and the President through his designated As we warned repeatedly in the past, since the heady representative, asked President Ferdinand Marcos to days of Henry Kissinger's tenure as secretary of state, leave office "in order to avoid bloodshed." a growing clique inside the State Department has dedi­ Fact: According to Filipino law, Ferdinand Mar­ cated its policies to the grandiose objective of wiping cos, ignoring American advice, took his 'constitution­ from the face of the Earth tpe traditional institution of ally mandated oath of office as President on Feb . 17, the nation-state in all its forms, but especially the form 1986, and was subsequently forced by United States of the democratic repUblic. The State Department, with militarythreats to leave the country . George Shultz at its helm, is convinced that the admin­ Fact: Ferdinand Marcos has not abdicated his office istrative efficiencyand profitabilityof the supranational which, according to the still existing Filipino Consti­ corporations are more appropriate forms of government tution, runs until 1992. than nation-state governm�nts , which are variously Fact: In the first two weeks of its existence, Mrs . slandered as "corrupt," "inefficient," "dictatorial," etc . Aquino's governmenthad failed to identify the basis of Mrs . Aquino wil� soon realize that her friends' and law from which it derives its legitimacy: constitutional temporary allies' target was not Ferdinand Marcos, but or revolutionary . During these two weeks , the unity of the office of the presidency �f the Filipino Republic .

72 National EIR March 14, 1986 EIR EIR

An Emergency The War Plan to Fight GRAMM ..RUDMAN AIDS DISASTER

EIR 's Biological Holocaust Task Force has prepared President Reagan's signing of the Gramm-Rud­ the world's only science-intensive "Emergency War man amendment, which compels the federal Plan to Fight AIDS." The newest discoveries of opti­ government to reduce spending by about a cal biophysics and advanced laser technology can quarter-trillion dollars over the next five years, improve diagnosis and lead to research break- completes the national bankruptcy of the throughs-if governments move now. United States. But even without Gramm-Rud­ Th� War Plan begins with the President of the I I' man, living standards in 1986 will plunge 15- United States, in his capacity as civilian leader and 30% 1960s. commander-in-chief, declaring a War on AIDS and from the levels of the late invoking National Emergency powers to avert disas- Contents . ter. In parallel, heads of state of other nations of the Western alliance shall declare war on this Depression deflation , bankruptcy, and the scourge to mankind. Gramm-Rudman act A ISO-page Special Report for governments, sci­ The decline in the productive economy entists, public health officials, and all citizens con­ The geometry of technology cerned with a policy to fightAIDS, before a The absurdity of GNP analysis pandemic wipes out millions. The available solutions

Contents The world financial system at a breaking poiI)t The emergency war plan to fight AIDS and other An orgy of speculation pandemics The farm debt crisis The non-issue of the budg�t deficit The real story of AIDS in Belle Glade, Florida Commodity prices and Third World debt AIDS in Africa: the unfolding of a biological holo­ Peru and the debtors' resistance caust A crash of the dollar I The biology of AIDS M�mey-Iaundering in 1985

Flow cytometer and other laser technology poten­ The world will starve without an emergency'pro­ tial for combatting AIDS duction mobilization The relevance of optical biophysics for fighting The world staples shortages AIDS: designing a Biological Strategic Defense Ini­ Attack on U.S. export potential tiative (BSDI) Downgrading of world food production Mobilizing for more and better food How Kissinger and Pugwash destroyed America's biodefense against AIDS and other deadly diseases The 99th Congress's farm shut-down

The Soviet command and control of WHO's AIDS Ceramics and the ceramic heat engine for the Policy automobile of the fu ture The car of the future Why the Reagan administration has tolerated the CDC cover-up of the AIDS pandemic Russians lead West in ceramics Ceramics take man beyond the Iron Age The necessary public health program to fightAIDS

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