How pension funds lost $100 billion Libyan-KGB group targets Bhutto famlly LaRouche on U.S.-Mexico economic potential

Profile of a conspiracy [THIS PAGE IS INTENTIONALLY BLANK] Founder and Contributing Editor: Lyndon H. LaRouche, Jr. Editor-in-chief: Criton Zoakos Editor: Robyn Quijano Managing Editor: Susan Johnson Art Director: Martha Zoller Circulation Manager: Pamela Seawell Contributing Editors: From the Editor Christopher White, Uwe Parpart, Nancy Spannaus . Special Services: Peter Ennis

INTELLIGENCE DIRECTORS: Africa: Douglas DeGroot Agriculture: Susan B. Cohen, Robert Ruschman Asia: Daniel Sneider Counterintelligence: Jeffr ey Steinberg Economics: David Goldman Energy: William Engdahl Europe: Vivian Zoakos Latin America: Dennis Small Law: Edward Spannaus Middle East: Robert Dreyfuss Military Strategy: Susan Welsh Science and Technology: Marsha Freeman R eaders who followed EIR's warnings of assassination and desta­ Soviet Sector: Rachel Douglas bilization plans against the Reagan administration, plans underscored United States: Konstantin George in this journal since the December 1980 Eurosocialist conference in Washington, have an advantage in grasping the background l\nd INTERNATIONAL BUREAUS: Bogota: Carlos Cota Meza goals of the conspiracy outlined in this week's Special Report on the Bonn: GeorgeGregory, assassination attempt against the President. Thierry LeMarc "The Profile of a Conspiracy" argues that the plotters are a far Chicago: Paul Greenberg Copenhagen: Vincent Robson older, more deeply evil network than the Trilateral Commission, Houston: Timothy Richardson Council on Foreign Relations, and other policy fronts. Los Angeles: Theodore A ndromidas Editor-in-ChiefCriton Zoakos, Counterintelligence Editor Jeffrey Mexico City: Josefina Menendez Milan: Muriel Mirak Steinberg and EIR's Investigative Leads staff, and Linda de Hoyos, Monterrey: M. Luisa Gomez del Campo . editor of both editions of the groundbreaking book Dope, Inc., New Delhi: Paul Zykofs ky Paris: Katherine Kanter, pinpoint the elements of the requisite investigation. Sophie Tanapura One can only find a reply to Cui bono? if the "benefits" in "Who Leonardo Servadio Rome: benefits?" are properly defined. The international group that almost Stockholm: CliffordGa ddy United Nations: Nancy Coker killed another U.S. chief of state is not out for financial gain or Washington D.C.: Laura Chasen, political advantage in any ordinary sense. The aim is the destruction Susan Kokinda of the United States itself as a center of progress, prosperity, and Wiesbaden (European Economics): Laurent Murawiec moral enlightenment. The Reagan presidency and its bipartisan collaborators have the Executive Intelligence Review potential to reverse the horrifying decline of the nation. Hence the (ISSN0273-6314)is publishedweeklyby New Solidarity InternationalPress Service assassination attempt-which can be made to backfire against its 304 W,58thStreet, New York, N. Y.IOOI9. instigators, and vastly strengthen the administration. In Europe: Executive Intelligence Review, Nachrichten Agentur GmbH, I refer you in this connection to our National section's analysis of Postfach 1966, D. 6200 Wiesbaden the law-enforcement question, and to our continued coverage of the Copyright c 1981 New Solidarity International Press Service Global 2000 plotters who do not shrink from assassinating billions. Allrights reserved. Reproduction in whole or in part without permission strictly prohibited. Second-class postage paid at New York, New York and at additional mailing offices. Subscription by mail for the U.S.: 3 months-$125, 6 months-$225, I year-$396, Single issue-$IO TIillContents

Departments Economics

13 Science & Technology 4 A gameplan for the Scientific research: budget interest-rate summit cuts pull the plug The Treasury and other on national labs. strategists intend to bog down U.S. allies' demands 18 Book Review to dump the Volcker policy. The Pope, His Banker, and Venice, by Felix Gilbert. Documentation: Interviews with the Federal Reserve's 20 Guest Commentary Henry Wallich and the NSC's Henry Nau. Predator control for U.S. ranchers: a history of 7 Currency Rates government sabotage.

48 Middle East Report 9 How pension funds lost 5100 billion Britain stirs unrest on Saudi border. Leif Johnson compared the returns on their investment with average portfolios. The 49 Dateline Mexico managers of the 1970-79 Time to clean out loss are 'postindustrialists.' Alan Riding. 14 International Credit 60 Congressional Closeup Power play around Poland's debt. 64 Energy Insider 15 Gold Oppenheimer dealing with the Russians? Note: Figure 9 on page 6 of our March 31 article on the U.S. military 16 Art Investor capability was altogether Time, place, and prices. wrong, with mislling and misplaced colunms. We will 17 World Trade provide subscribers with the accurate version. 22 Business Briefs A lesser annoyance: EIR will be printed on groundwood paper for our April 21 issue once more, we hear. Volume 8 Number 15 April 14, 1981

Special Report International National

36 Who will gain the 52 Gen. Maxwell Taylor, upper hand in Poland? the Soviets, and The splits within the party, Global 2000 Yjithin Solidarity, and A Soviet faction, says among the foreign Global 2000 sponsor nations concerned. Taylor, has made a deal to let the underdeveloped 38 LaRouche specifies sectordie. recommendations on U.s.-Mexico economic Documentation: An The world noted John W. Hinckley, Jr.'s brain­ washed appearance immediately after his policy interview with Taylor, and arraignment. UPI extracts from his Population A report on EIR 's Crisis Committee paper. Washington conference. 24 The profile of 55 Response to Haig's a conspiracy Documentation: Excerpts move for control A hideous branching point from UPI's press coverage for the "chaos and and from EIR Latin International and domestic confusion" scenario against America Editor Dennis comments on the famous the White House. Small's policy statement March 31 TV assertion by on Central America. the secretary of state. 27 Unanswered questions about the attempt 41 Bhutto family targeted 56 Arms for Peking to assassinate by Britain's Libyan­ pressed by CFR the President KGB agents A first-handreport on an Arden House conference. Based on the "Manchurian Asia Editor Daniel Sneider Candidate" capability reveals privileged behind the so-called information about the real 57 Two approaches to the lone assassin. purpose of last month's law-enforcement crisis Pakistani hijacking. Presenting proposals by 28 The five levels Supreme Court Chief of investigation 45 Shimon Peres makes Justice Burger and EIR overture to the Arabs fo under LaRouche. EIR's Investigative Leads' March 31 memorandum on An initiative blacked directions of inquiry. out of the Western press; 62 National News Mark Burdman analyzes 32 The Permindex its prospects. connection Update: An EIR seminar on Documentation: Peres's "The Undeclared War On A synopsis of the activities statement. American Banking" is and personnel of the scheduled for Friday, May international operation 50 International Intelligence 8, at 7:30 p.m. in Houston. that targeted de Gaulle Economics Editor David and Kennedy. Goldman will be a speaker. Contact Donna Benton at (7 13) 972-1714 or JeffHa ll at (313) 964-2550. �IIillEconomics

A gameplan forthe interest-rate summit

by David Goldman

Finance Ministers of the Group of Five-the United tarist policy is a national security problem. States, Britain, France, Germany, and Japan-convene The view that the NATO allies will not have sufficient in London on April 10 to debate the European proposal resources to conduct a credible military program if the for a global lowering of interest rates. The Treasury Fed succeeds in pushing the country into recession is Department, which. has been closed-mouthed concerning supported by EIR's own computer econometric study of the conference, does not report what other consultations the economy's capacity to mobilize (see EIR, March 31, Treasury Secretary Donald Regan will conduct with his 1981). But it does not require computer analysis to assert European counterparts in the course of the trip, although that Volcker "could turn the United States into a military an Associated Press dispatch March 28 claimed that he dwarf," as a leading Hamburg banker put it. would also travel to Bonn and Paris for separate discus­ This is one reason why the American motivation for sions. the convening of the Group of Five meeting emerged not The convening of the extraordinary conference itself from the cabinet departments normally responsible for shows how far the influence of the Franco-German such matters, but rather from the White House itself. "superpower" has come in the United States. Despite the President Reagan and his leading staff have noted the refusal of either the Treasury or the Federal Reserve to February fall in housing starts, industrial production, consider Europe's proposal-reiterated at the highest real personal income, and construction spending, as well executive level by the heads of government of the Euro­ as the three-month consecutive decline in the index of pean Community last week-the White House accepted leading indicators, and are not blind to the fact that Fed the European agenda as a matter of urgency in the Chairman Volcker has led them into a trap. Unfortu­ foreign policy realm. nately, the White House still believes that it must com­ As National Security Council senior staff member plete the cuts in the federal budget, regardless of the Henry Nau reports (see interview below), the view of the impact of these cuts on national productivity (see p. 13). White House is that the alliance cannot proceed as long But the imminence of new declines in the economy puts as this economic issue is outstanding. EIR's European the White House in the mood to talk with the Europeans. econortlics correspondents report that even among pro­ American and anglophile bankin$ circles in West Ger­ A six-month stall? many, the Federal Reserve's interest-rate policy ,is con­ Through private channels, the Treasury has made sidered disastrous, for strategic and military reasons. known its intention to deflect the European proposal West German Chancellor Helmut Schmidt and his prin­ for interest-rate reduction for the next six months. The cipal public and private advisers firmly believe what a Treasury version of the scenario for the April 10 meet­ German defense expert warned that country's leading ing runs as follows: Treasury Secretary Regan will annual defense conference in February: that the mone- begin by reading back to the Europeans a list of their

4 Economics EIR April 14, 1981 past complaints about the instability of the American the domestic banking system following a series of major dollar, and remind them that a stable dollar is essential defaults by LDC debtors could be devastating. Far East to fighting inflation internationally-which is true, as Economic Review, in an extraordinary supplement far as it goes. He will then argue that the administration March 20, said with gallows humor, "Ayatollah Ruhol- needs time to make its tax cuts and budget cuts work, , lah Khomeini and Paul V olcker may make an unlikely and insist that the Europeans hold their peace for at pair. But from the de veloping 'world's viewpoint, the least six months; to give the program a chance. fiery Islamic revolutionary and the rather dour chair­ The Treasury viewpoint hinges on a plan to deliber­ man of the United States Federal Reserve Board have ately induce a recession during the next six months, in conspired, albeit unwittingly, to produce another Third the supposed expectation that this will ultimately bring World balance-of-payments crisis every bit as threaten- . interest rates down. ing as that brought on by OPEC seven years ago." Former executive director of the Atlantic Council of It explains, "The effects of the Volcker shock have the United States Frank Southard, who maintains close been passed directly into the balance of payments of the ties to the Treasury, put it this way: "We will do what developing world through the mechanism of the float­ [British Prime Minister] Margaret Thatcher failed to ing-interest-rate syndicated commercial loan. ... A do: we will actually cut the budget and money supply so comparison of the cost of oil and interest payments as ' sharply that housing and other sectors of the U.S. percentages of the export earnings of 12 major non-oil economy will significantly reduce activity. This will LDCs shows that the 'Volcker shock' of 1979 has had mean reduced credit demand in the ·U .S., and the as great an impact on Third World payments as the Federal Reserve will tpen be able to lower interest OPEC crisis of 1973-74." rates .... Europe will agree to give the program time to The publication cites a Morgan estimate that the work, and Regan will be able to mollify them." difference between a 10 percent and 15 percent London However, Southard continued, "What's more likely Interbank Offering Rate on six-month money, the is that the administration's program will fail, and then benchmark for much of the Third World's debt, is $10 the fat will be in the fire. There will be a tremendous billion additional red ink on the Third World's bOOKS. recession in the U.S. and in Europe, but inflation will The real number is closer to l>etween $15 and $20 billion, still be at an underlying double-digit rate of 12 to 14 but the point-�hich EIR has hammered at-is the percent." same. That is precisely what happened to Margaret What this presages is an international debt crisis in Thatcher, for reasoM that have nothing to do with the third quarter of 1981 of a magnitude sufficient to , Britain's failure to cut the budget deficit (which rose on create real trouble in all the Western economies. Such a a per annum basis by 50 percent over the past year). generalized crisis is not to be excluded should the According to EIR's econometric projection (published Europeans accept Reagan's excuses at the Group of in November) the U.S. has reached a, turning point Five summit meeting next week. similar to what occurred in Britain during late 1979 and early 1980, in which the debt-service increase ensuing The Belgian connection upon higher interest rates creates a self-feeding spiral of The American Treasury will have some help from a new borrowing demand, leading ultimately to large­ Benelux "fifth column" in the European Community. scale bankruptcies. Although the Belgians and Dutch will not be present at The diffe rence between the situation of the United the Group of Five meeting, their behind-the-scenes ' States and that of Britain is that not merely the debt of machinations may influence the French and Germans U.S. corporations or municipalities is denominated in to back off. dollars (and sensitive to changes in dollar interest rates), Belgian monetary sources warned the leading Swiss but also upwards of $300 billion of the developing daily Neue Zurcher Zeitung during the European Com­ sector's total $500 billion debt burden. As EIR has munity summit meeting at Maastricht two weeks ago pointed out repeatedly, the most devastating impact of that the European Monetary System faced severe pres­ ,the Volcker measures is likely to be on the Third sures from within. The Italian lira had just been deval­ World's capacity to pay its debts. ued against its central parity with respect to the other EMS currencies, a nuisance for a fixed-parities currency The LDC debt squeeze group. Now, the Belgian central bank reported, the Very suddenly, the financial press has admitted that troubles of the Belgian franc would contribute addition­ this is the case. Leonard Silk of the New York Times al pressure. based an April 1 column on a new Wharton School Right on time, the Belgian franc went into a storm study on the Third World debt problem which offers no on the European, foreign exchange markets, 'and was new information, but argues that the "credit shock" to saved from devaluation only through the expenditure of

EIR April 14, 1981 Economics 5 close to $1 billion in support. After a week of this, the A: [Angry] We don't have to respond tp that! Why Belgian central bank March 31 raised its discount rate should we have to respond to that? I'm sure they are not by 3 percent to 16 percent as an emergency measure. completely happy with the situation but I doubt very The ceritral bank's action caused a collapse of the much that they'd get any support whatsoever from this government, still not resolved at deadline. administration! It's one thing to demand we change our The Belgian events, in turn, are now being used to policy, and another to explain to us just what they argue that West Germany's interest-rate problem is not suggest we do about it. high American rates, but the strains inside the European Monetary System, an argument made, e.g., by the head Q: Ronald Reagan is said to findgold remonetization of the German Association of Public Banks, Herr Hans attractive. I agree that the French and Germans may Fahnding. For that matter, Christian Democratic leader have had no ready answer to the usual pragmatic argu­ Gerhard Stoltenberg is arguing, just as spuriously, that ments about looser money being inflationary, but have high German interest rates are due to the country's they suggested anything new and unusual? Giscard is budget deficit rather than to the Fed. something of a Gaullist; has he suggested a gold-dollar The point of these diversions is not to change the link or a dollar-EMS relationship? minds of the French and Germans, but-as Dutch A: Certainly not that I'm aware of, how ridiculous. Who Prime Minister Van Agt discussed with Secretary Haig are they to tell us how to run our monetary policy? We in Washington March 31-to press Europe's leaders to are responsible only to the Congress of the United States. accept the Treasury's delaying tactics. We are a creature of Congress and under the Humphrey­ Hawkins [full employment] Act we report only to the U.S. Congress. The Fed's Wallich We don't respond to the demands offoreign govern­ ments. We don't report to foreign governments. andthe NSC's Nau Dr. Henry Nau. acting director of international economics Dr. Henry Wallich. Federal Reserve Board of Governors at the National Security Council. told banking sources this member in charge of international monetary affairs. told week that European demands for lower u.s. interest rates banking sources this week that the Fed is in direct confron­ are causing an administration policy crisis. tation with West Germany and France on u.s. interest­ rate policy. Q: What is the Reagan administration's reaction to the European heads of state criticism of high U.S. interest Q: What is the Fed's reaction to the press conference rates? Tuesday by West German Chancellor Schmidt and A: There has been no public comment because this is French President Giscard, calling on the U.S. to lower causing a potential major foreign policy problem. The interest rates? European governments are, with increasing frequency A: Oh, this view isn't shared in all circles. The criticism and more and more urgently, demanding that we get our is not broadly based. The British don't agree and even interest rates down because they are extremely uncom­ the Germans and French admit there is nothing we can fo rtable with the effect on their economies. They cannot do, in practice. We ask them, do you want us to print live with it. This is clearly a matter of intense concern to money and reflate? They say, no, they certainly don't this administration because it adds an element of tension ' want us to create more money and end up with more and conflict between the U.S. and Europe, especially inflation. I've met with all their officialsright here in my Germany. Helmut Schmidt has been extremely vocal, in office recently, [West German Economics Minister] Otto the press and in Bonn, commenting every day. von Lambsdorff, [West German Central Bank President] Karl-Otto Poehl, [French Central Bank President] Rene Q: We've had no public response to him. Is this because Monory, they all agree that we can't print money. he's made no private overtures to us? They're just expressing a wish. I, too, wish that interest A: I didn't say that; he has communicated with us [at the rates could be lowered, but the only way to do it is to White House]. We have no public response because we slow monetary expansion and sl!Jwinflat ion. don't know how to deal with it. We're trying to figure out now how to deal with it. We're extremely eager to Q: That is the pragmatic view of pragmatic economists, resolve this conflictby the time of the Ottawa economic but the West German chancellor and the French presi­ summit, beforehand if possible. Or, our only choice may dent have called in the international press and demanded then be to preempt the issue by putting it into a larger set we get our rates down. Clearly they must mean business. of foreign policy and diplomatic concerns.

6 Economics EIR April 14, 1981 Q: Do you mean military or East-West security? A: I can't comment. The fact is that the administration Currency Rates is both extremely eager to tighten up relations with our allies, and totally committed to an unprecedented eco­ nomic policy which has effects. The Europeans are com­ The doUar in deutschemarks plaining loudly of these effects, and we're really feeling New York late afternoon fixing the pressures on this issue. The Germans in particular are very concerned, very vocal, but we cannot abandon the 2.20 - basis of our economic policy. Z.15 J""' ..

Q: Thatcher seems to dissent from their view. 2.10 /v J- \A.y "'--- A: Nevertheless it is the Germans and French who are , very vocal. That's what concerns us. Especially they are 2.05 "\-" worried about the administration's relationship with the 2.00 Fed. 2/11 2/18 2/25 3/4 3/11 3/18 3/25 4/1

Q: What is the relationship? Does the administration The dollar in yen want the Fed to ease off, or does it follow [Treasury New York late afternoon fixing Undersecretary for Monetary Affairs] Beryl Sprinkel's criticism that the Fed should rather maintain a steady 230 keel, and if necessary tighten more? • A: .Beryl Sprinkel is a good man, he's a committed 220 monetarist and there is no conflict "ith the Fed. That's 210 ...-'" '" why the Germans are concerned. They're concerned � 'V""�, about the monetarist influence. 200 ..r'- -V

190 Q: But Sprinkel's influence on international and eco­ 2/11 2/18 2/25 3/4 3/11 3/18 3/25 4/1 nomic policy generally has been rated as very low. Is that true? A: Not in the least. Monetarism is a major part of our The dollar in Swiss francs basic economic package. The Fed will implement a mon­ New York late afternoon fixing etarist policy. It was in the President's speech that we 1.95 \..� - have a quite hard money policy, that we will insist on a J .A"" 1.90 f stringent policy on the growth and supply of money and \;v � '" �- \1.1'" monetary reserves, and no one is backing off from this. .. ""'-" 1.85 So clearly there is a basis for disagreement and that is

why the Germans are very concerned. Schmidt clearly· 1.80 wants to see us loosen up. 1.75 2/11 2/18 2/25 3/4 3/11 3/18 3/25 4/1 Q: Do they want us to back off a bit, or are they asking for a large reduction in rates? They talk about "interest­ rate disarmament." Does that mean easing a bit to The British pound in dollars placate everyone, or a major jump down? New York late afternoon fixing A: They are concerned about the future. The Germans are asking hard questions about our monetary policy, 2.35 the complaint takes the form of many, many probing 2.30 ""\ .A questions. They want to know just when do we expect our program to take effect, when do we expect a big fall 2.25 \..'\ J \.,...J, ,� in interest rates and inflation rates. They want to know 2.20 \...10.... - - ;::7 'I all our econometric projections in detail, what do we V 'V expect interest rates and inflation to be six months from 2.15 3/4 now, twelve months from now. What are our monetary 2/11 2/18 2/25 3/11 3/18 3/25 4/1 aggregate targets, exactly? What is the nature of the administration's relationship to the Fed?

EIR April 14, 1981 Economics 7 money market funds, now counted as part of M2-B. u.s. Economy Since many people use these funds as checking accounts, it seems reasonable to assume that lower yields and/or no checking privileges might cause some funds to be shifted back into interest-bearing checking accounts (MI-B). A shift of only 25 per­ A deeper credit cent would push its year-to-date annual growth rate to 8 percent, while a shift of one-third of such crunch proposed assets (about $35 billion) would push MI-B growth well above its upper target boundary. When con­ sidering that the money funds have grown by $30 by Richard Freeman billion since the beginning of the year, such shifts are not inconceivable. In this event, the Federal New York Federal Reserve Bank President Anthony Reserve will have to decide whether a tightening of Solomon called March 26 for a monetary policy that monetary policy will be called for. would produce an immediate blowout of the nation's credit markets. Endorsing a plan proposed by arch­ Brave new credit markets monetarist Friedrich von Hayek, Solomon demanded A crunch will simply accelerate tendencies that have cessation of all new credit creation by the Federal Re­ surfaced in the U.S. economy since Paul Volcker's serve. If Fed Chairman Paul Volcker were to adopt such super-high interest-rate policy made money market a policy, it would mean a 1929-style financial crisis in a funds and their volatility in the credit markets a g oing matter of months-a precondition for the U.S. to emerge venture. subordinate in the Eurodollar markets, eliminating the The growth of the money market funds is represent­ stable credit relations once enjoyed by U.S. industry. ed by the fact that $35 billion has been poured into the A tipoff that monetary officialswere looking toward money market funds since the beginning of 1981, leap­ a monetary crunch appeared several weeks ago, when ing to $109 billion total, with a growth rate of$3 billion OMB Director David Stockman told a background per week over the last month. When Volcker took office briefingof bank officers that "there may be a contraction in August 1979, money market funds were only $32 of funds in savings and loans and second-level insurance billion. The money market funds have been drawing companies that would make the 1930s look like a picnic." savings deposits out of savings and loan associations This crunch perspective was given momentum with and savings banks, bringing the thrift institutions to the Solomon's March 26 speech before the annual banking threshold of bankruptcy and magnifying the potential symposium ofthe Financial Analysts Federation in New for a money market blowout. They are also skewing the York. The New York Fed chief stated that simple reli­ U.S. markets toward increased interest-rate volatility. ance on monetary aggregates was insufficient; instead, The funds determine daily yields on whatever short­ there would have to be more budget cutting and a change term instruments they can accumulate into their funds. in the Fed's policy of "procedures fo r setting the discount The Depository Institutions Deregulation Commit­ rate." This proposal amounts to the plan firsten unciated tee (DIDC), set up by the Henry Reuss-sponsored 50 years ago by von Hayek for a "positive discount rate": Depository Institutions Deregulation and Monetary the rate at which the Fed lends reserves to banks would Control Act of 1980, ruled last week that interest-rate be pegged 1 to 3 percentage points above the going ceilings will be lifted on commercial bank deposits, money market rates. Banks would be unable to get funds meaning volatile short-term rates and probably an from the Fed as lender of last resort, except at a sharp eventual transition to granting commercial banks the interest differential loss, which invalidates the very idea right to issue money market-type instruments. of a lender of last resort. On top of this, various agencies su'ch as the Federal Solomon's radical fringe proposal was given some National Mortgage Association (Fannie Mae) are pro­ plausibility by the fact. that Fed Chairman Paul V olcker posing to create mortgage-backed securities to be sold tightened interest rates as fed funds moved to the 14.5 on the Eurodollar market. According to the spokesman percent range from the 13.0 to 13.5 percent range they for the largest U.S. private home mortgage insurer, had hovered at for the previous two weeks. An argument Mutual Government Insurance Corporation (MGIC), to justify an emergency application ofthe Solomon plan, "We will see the largest pool of money in the world, the or at least a further tightening by V olcker, appeared in Eurodollar market, puttihg money into U.S. housing the March 23 Financial Digest of Manufacturers Hano­ mortgages. But that means the mortgages will have to ver Trust, which posed the grounds for a tightened pay comparable. rates of interest to going Eurodollar money supply: the imposition of reserve requirements on rates."

8 Economics EIR April 14, 1981 How pension funds lost $100billion LeifJohnson examines the track record of returns on pensionjund investment, and finds a giant swindle.

An examination of the way that the rapidly accumulating 500stocks, he would have reaped a 5.9 percent return per U.S. private pension funds were managed over the past year for the decade. In contrast, pension funds in insur­ decade demonstrates that these funds were used to effect ance company separate accounts returned, according to a transformation of the American economy toward a Hansen, only 4 percent. Worse, 209 bank trust depart­ "postindustrial society," as envisioned by leading think ment-managed pension funds surveyed by Hansen tanks and financial institutions. achieved only 3.6 percent per annum (see Figure 2). Pension funds were used to stabilize the markets The Standard & Poor's 500 is simply a benchmark while "sunset industry" securities-railroads, Northeast for how the market generally performed. Any w!=ll-man­ utilities, and heavy industrials-were dumped by finan­ aged equity fund would be expected to exceed that figure. cial insiders in favor of "sunrise" industries like electron­ Hansen's survey of mutual funds fo und a 7.0 percent ics, energy, and raw materials. return. Even fixed-income securities performed nearly Rates of return on nongovermental pension-fund twice as well as pension funds. The Salomon Brothers investments were so low relative to other managed funds fixed-income funds registered a 7.0 percent annual rate that this result could only have been achieved by inten­ of return for the decade. tional dumping of weak securities into the pensions' One large fo undation that performed notably well portfolios. The resulting losses to the pension funds is was the $2.8 billion Ford Foundation endowment. For conservatively estimated to top $100 billion fo r the 1970- the same decade, it produced a 9.2 percent annual 79 period. The major managers of pension funds are insurance companies and bank trust departments, which in 1979 Table 1 held $343 billion of the total $593 billion in private pension assets. Life insurance stated rate of A review of rates of return on pensions managed by return on investment income for life insurance companies, compared with the general pensions and assets, 1970-1979 funds that include the companies' own assets (see Figure Separate accounts General accounts 1), shows an astonishing divergence. Pensions in life Year (pensions) (other assets) insurance company separate accounts produced an av­ 1970 3.08% 5.34% erage return of 3.86 percent per year over the 1970-79 1971 2.95 5.52 decade, while the companies' other assets, including 1972 2.35 5.69 those owned by the company, produced an average 6.41 1973 3.18 6.00 percent return. 1974 4.48 6.31 Pension funds managed by the life insurance compa­ 1975 4.47 6.44 40 nies did percent worse than other funds managed by 1976 3.97 6.88 the same industries. 1977 4.87 7.00 At an estimated loss of 3 percent of earnings on 1978 5.82 7.39 average assets of $350 billion for the decade, the loss to 1979 3.52 7.78 the pension funds exceeds $100 billion. Source: American Council of Life Insurance, 1980 Life Insurance Fact Book. According to the A. S. Hansen Company's 1979 and 1980 Pension Facts. Note: Figures are based on ratio of net investment & income (before taxes) to mean invested assets less half the net investment Investment Performance Survey, the Standard Poor's income. All calculations based on statement value of investments which is 500 stock index achieved a 5.9 percent rate of return. neither book nor market value. That is, if any investor held the entire group of the S&P

EIR April 14, 1981 Economics 9 Table 2 Institutional funds investment performance, 1970-79 Compound annual rates of return

I. 209 bank pooled trust funds (pension funds) ...... 3.69< 2. Insurance company separate accounts (98% pension funds) ...... 4.0(7,· 3. Standard & Poor's 500 ... . 5.9% 4. Salomon Bros. bond index .. 7.0", 5. Ford Foundation ($2.8 billion fund)...... c).20'c· 6. Equitable Life (no. 4) ...... 12.2% Source: A.S. Hansen. /97<) l/at/wf/ Inl'('\fmenI Per!ormmh e .)'Url'l'f and the Ford Foundation, Pension & Inl'e.

average return. ing concern that Ford may become the next Chrysler The 1973-74 collapse of the stock market, which saw case. the Dow Jones average plummet from over 1000 to near One of the most extreme examples of dumping was 600. is the reason most often given fo r the poor pension the unloading of Penn Central stock on the pension fund performance over the decade. Beginning in the late funds. Market insiders claim that the bankruptcy of the 1 960s. pensi o n funds were convinced to buy stocks Penn Central was planned as early as 1965, when the which provided a higher yield than fi xed-income secu­ New York Central and Pennsylvania railroads were in rities like corporate and government bonds. the process of merging. The ultimate purpose of bank­ The Ford Foundation. among others, was moving rupting the nation's main t ransportation lin k was to in the opposite directiun . The fo undation was given disband it, pulling the Northeast-Midwest corridor's more than 90 million Class A Ford Motor shares in industry down in its wake. 1955. which at that time represented 100 percent of the But first it was necessary to unload the stock as end o\\fnent ' s holdings. By 1974-the onset of the oil insiders like Goldman Sachs investment house got out. hoax-the Ford Foundation had disposed of its entire Goldman Sachs was later prosecuted fo r its acitvities; holding ()f Ford stock . Nor did it hold any Chrysler. the true purpose of the bankruptcy was not revealed. General Motors, or Penn Central stock . "Penn Central was the sweetheart of the fu nds," recalled a pension manager, "Pensions went in heavily IInloading the sunsets because the press was so favorable to the success of the While Ford had positioned itself for the 19705 merged lines, and the return was good." implementation of thc postindustrial society. these pen­ The road collapsed in June 1970 only two years after sion funds were used to pick up the "s unset industry" the merger, during Federal Reserve Board Chairman stock. Had not the pensions and other assets, including Arthur Burns's money crunch. in�urance and other trust accounts. been available for In 1973 the Airline Pi lots Association pension fund this purpose. the progress I ve bankrupting of heavy trustees sued the Continental Illinois Bank for having industry, including the rai lroads, would have caused a held 27,000 Penn Central stocks until the bankruptcy market collapse. cost the pension fund $1.5 million. The Pilots Associa­ Ford Foundation. fo r example . sold nearly $100 tion charged that since Continental was a Penn Central milli on worth oj' Ford stock to the Ford Motor Com­ creditor, it knew the actual condition of the railroad . pany Salaried Employees Sa ving and Stock Investment The Pilots trustees also sued to recover losses from sales Program. a progd!ll amounting to a pension plan. The of TWAS. U.S. Freight, Lum's (a fast-food chain), and <;; ubsequent decade and a half of Naderite and Ford Management Assistance, Inc. stocks. In two cases the foundation environ mentalism . and the 1974 oil hoax, bank had management control or was the principal dedit multibillion-dollar losses tu the auto gi ant. invit- lender and therefore both knew the condition of the

EIR April 14, 1981 companies and profited from the pension fu nds' losses. shortly after the passage of the Employee Retirement Thirteen other Chicago-based unions sued Conti­ Income Security Act of 1974 (ERISA), sponsored by nental in a class action fo r a $21 million loss in Penn Senators lake lavits (R-N.Y.) and Harrison Williams Central stock, suing separately fo r individual recovery (D-N.J.) on behalf of the insurance and trust companies. of Penn Central, Lum's, TWA, and Boise Cascade stock ER ISA served to alibi the disastrous performance of the losses. pension plans, by mandating that the plans invest in Despite the overwhelming evidence that Continental "low risk" securities, which are also the poorest per­ Illinois had fa iled as fiduciary agent to protect the fo rmers. interests of the pensions, and had profited by the funds' To investigate the Teamster fund, the Department losses, the court refused to hear the case on the grounds of Labor, with assistance from then Deputy Attorney that the trustees had given the bank fiduciary powers, General Benjamin Civiletti, assembled a special investi­ and therefore had no standing in court to sue! gation staff which thoroughly examined the fund's This ruling was subsequently reversed on a techni­ accounts. What they fo und was quite interesting. cality that pertained only to these cases. Yet subsequent The fund, which then had nearly $1.4 billion in decisions have made it nearly impossible fo r pension­ assets, was more than two-thirds invested in real estate, plan trustees to sue ban k trust departments and insur­ a quarter of it in Nevada. Other major holdings were in ance companies fo r mismanagement or fraud in connec­ Florida and California, both growth areas. The fund tion with the dissipation of pension fu nds. had a 5.4 percent rate of return for the years 1972-76, the same period in which the common stock portfolios The Teamster Central States Fund of pension funds were being decimated. Between 1972 In contrast with the legal carte blanche allowed and 1976 the value of common stock held by pensions bank and insurance managers to dissipate pension funds dropped from $1 15 to $109 billion despite the additional is the treatment given the International Brotherhood of stock purchases of $2 1 billion. Teamsters' Central States Pension and Welfare Fund­ Over this period, it is estimated that the Teamster the fu nd portrayed by the press as the epitome of union fund performed twice as well as pensions in general. and pension corruption and fraud. During the 1973-76 downturn, real-estate values also A federal investigation of the Teamster fund began went tumbling. Of the $20 billion in real-estate invest-

Hutchins, president of the University of Chicago, Ford Foundation moves took the foundation away from the Ford family, it has spent billions nurturing the "postindustrial" perspec­ into 'postindustrials' tive, popUlation control, and environmentalism. The Ford Foundation is well documented as one As early 1965, the Ford Foundation reduced its com­ of the major vehicles for the sunset-sunrise destruction mon and preferred stock holdings to 26.4 percent of its of heavy industry and simultaneous creation of raw portfolio. The remaining stock holdings were a cross­ materials and energy shortages. It created the Re­ section of "sunrise" assets; in the largest category, sources for the Future institute in 1952 to oversee utilities, 19 of the 26 listed holdings were in the high­ control of natural resources on the North American growth areas of the South and Southwest. Only two continent, including water, and it organized the Pop­ were in New England. ulation Council two years later to study and apply The next largest category was $112 million worth methods of population reduction worldwide. Since of oil and gas stocks, followed by consumer products, 1952 it has spent over $ 100mill ion creating environ­ banks and finance, business equipment, metals, retail mental "movements" as field and legal strike forces trade, drugs, electronics, airlines, photographic sup­ for raw materials control and an end to industrial

plies , and paper. The foundation had no holdings in growth. steel, railroads, farm equipment, machinery, or ma­ In 1979, the Ford Foundation gave large sums to chine tools; it had minor holdings in one construction the Environmental Defense Fund, Conservation equipment company and in Ford Motor. Foundation, Environmental Mediation International, The foundation's keen market sense could be ex­ International Union for the Conservation of Nature plained by the fact that since 1948, when former and Natural Resources, Sierra Club Legal Defense Marshall Plan administrator Paul G. Hoffman, SJd­ Fund, the Center for the Biology of Natural Systems, ney Weinberg of Goldman Sachs, and Robert and the Resources for the Future.

EIR April 14, 1981 Economics II ment trusts held by bank trust departments, nearly half system, the largest in the nation, invest in mortgages, were nonperf orming-not paying interest or principle, small companies, and "alternative energy sources" as a or both. Of the Teamster fund's $900 million worth of matter of social benefit rather than profitability. real-estate loans and holdings, only $8.5 million was These proposals represent an extensiol) of the dissi­ nonperforming-Iess than 1 percent of the fund's hold­ pation of the.pension assets into an "endgame" where ings. the assets are finally locked into securities that cannot be It was found that the Central States Fund could sold. continue benefit payments for 15 years even if all A deeper indication that the endgame is approach­ contributions were to cease. Investigation of the Teams­ ing is the continued inflationary path of the overilll ter fu nd also found, contrary to press reports, that the economy. The inflation causedby the declining produc­ rate of acceptance of pension applications was 92.4 tivity in the basic industries which have been starved of percent, about average for all pensions, and that pay­ new capital because of "postindustrial" investment and ments were up to $550 per month, granted from age 63 banking policies will ultimately dissolve the pension with reduced benefitsfrom age 57. funds themselves. Even if pension plans are actuarially The primary thrust of the Labor Department inves­ sound and contributions are maintained, future pension tigation, apart from continuing the "Get Hoffa" tradi­ fund benefits will approach nil value if inflation contin­ tion of the Kennedy Justice Department, was to force ues at the present 10 to 15 percent a year. Workers the Teamsters to accept a fiduciary agent to manage the covered by a financially adequate pension plan will fund. In March 1977, the Teamster trustees accepted receive only nominal benefits 15 or 20 years from now. Equitable Life as fiduciary, with Victor Palmieri & If inflation continues, the greatest beneficiaries of pen­ Company manager of real estate west of the Mississippi. sion funds will be the present holders of the funds' Victor Palmieri Was the real-estate operator who man­ reserves. aged the several hundred millions worth of real estate Large accruals to the plans continue, since most that the Penn Central Company was able to shield from pension plans have not reached an equilibrium at which the bankruptcy court. the maximum number of workers have retired and are Not satisfied, the Department of Labor next took receiving benefits. For example, the number of retirees civil action against the fund's trustees for "breach of receiving benefitsfrom insurance company-held pension fiduciary obligation by failing to discharge their duties plans increased by 100 percent over the last decade. with respect to the plan solely in the interest of its Those eligible to receive pensions increased by 125 participants." Banks and life insurance companies have percent; in the aggregate the pensions have not hit yet to be prosecuted, despite the voluminous evidence maturity. However, the reserves of these plans increased of mismanagement, conflict of interest, and fraud. by 238 percent, an indication of the huge increase of these funds. Pensions enter endgame The Social Security system, having functioned for Pension managers now hint that the funds will be over 40 years, shows the opposite trend: those receiving shifted once again. With ongoing banking deregulation, pensions over the last decade increased by 34 percent savings and loan banks are being squeezed out of the while those eligible, but not receiving, increased 24 housing market, if not out of business altogether. These percent. Reserves fell by 20 percent. banks hold billions in low interest-rate mortgages, but Therefore, it is not surprising to find that, while in must pay high rates for deposits. 1950 Social Security paid 28 percent of all pension Some investment managers hope that the pensions benefits, it now pays nearly 60 percent. Private pension could pick up as much as $50 billion worth of low-rate plans currently pay only 14 percent of all pension mortgages, so that the savings and loan banks can be benefits, despite the enormous increase in pension-plan converted into money market institutions to service the assets over the past two decades. This is why insurance credit needs of the "sunrise industries" and offshore and trust companies expend such efforts to sell pension funds. A top Treasury Department official explained to plans. an interviewer on April 1 that the Federal Home Loan There is nothing inherently wrong with a pension Bank board is expected to propose selling nonperform­ plan. It is an entirely legitimate fo rm of social saving. If ing mortgages to institutional investors including pen­ invested properly in industrial and technological expan­ sion plans. sion, the fund can provide substantial benefits to retired Others like Jeremy Rifkin and Randy Barber, au­ members of the workforce. If used by insurance and thors of The North Shall Rise Again, propose investment trust companies to transform the economy into a ser­ in bankrupt companies and worker-owned businesses to vice-dominated nonmanufacturing "postindustrial" save jobs. Last week California Gov. Jerry Brown economy, the pensions, with the rest of the economy, demanded that the state's $60 billion public pension are rendered valueless.

12 Economics EIR April 14, 1981 ar Accelerator (SLAC), emphasizes that the most impor­ Scientific Research tant effect of budget cutting is in the reduction of the small margin of extra funds, 1 or 2 percent, left after operating costs have been accounted for. It is this extra Budget cuts pull the margin of funding that allows a facility to carry out innovative activity. The Stanford facility is a single-pur­ plug on nationallabs pose laboratory devoted to experiments using a two­ mile-long electron accelerator to probe the structure of by Dr. John Schoonover matter at the microscopic level. Energy costs began to erode the utilization of this accelerator as early as 1972. The cuts in fu nding for basic scientificinv estigation and Today, it can be run only long enough to produce 27 research and development in the United States proposed percent of the high-energy electrons it is capable of by the Office of Management and Budget will mean a generating over the course of a year. serious erosion in the capability of u.s. research labora­ Bennett pointed out that funding for high-energy tories. projects in Europe, such as CERN in Geneva, Switzer­ After 1967, the fe deral fu nding fo r science programs land and DESY in Hamburg, West Germany, have began to level off, and in recent years has gone into benefited from several times the amount of funding absolute decline. As ,a result, the production rate of granted to installations in the United States. The one qualifiedscientists and engineers in the United States has bright spot in SLAC's futt�reis that its $100 million fund decreased. Basic laboratory research equipment has for construction of the Linear Collider has not been grown obsolete, and some of the larger experimental touched. This machine will allow collisions of very high equipment, particularly the high-energy particle acceler­ energy particles that could confirmthe existence of some ators, have'either been shut down, or are forced to run massive elementary particles that current theories have for reduced periods of time, Furthermore, research teams hypothesized. that have been working together for years are disinte­ The situation for the Fermi National Laboratory in grating as experiments are shut down or curtailed. Batavia, Illinois is very similar to that at Stanford. In EIR has made a preliminary survey of some of the neither case is the level of budget cuts as drastic as it is major U.S. laboratories to find out what the effects of for mUltipurpose laboratories such as Brookhaven. But proposed fiscal year 1982 funding will be. it still represents a significant bite out of an already The case of Brookhaven National Laboratory in Up­ austere budget. ton, N.Y., is probably the most dramatic. Brook- · Fermilab operates a high-energy (400 GeV) particle haven employs approximately 3,640 scientific and sup­ accelerator used for elementary particle research. Since port personnel activities ranging from energy production 1977, the use of this accelerator has progre�sively de­ and utilization experiments, through the use and design clined through a combination of budget cuts and rising of high energy accelerators, to elementary particle re­ electricity costs. Although the acceleratorcould be run search. In fiscal 1982, Brookhaven expects an operating 46 to 48 weeks per year, it was projected to run for 36 budget of $182 million, down from $ 197.7 million in weeks in 1981, but will be reduced to 27 weeks because of 1981. This absolute budgetary decline, coupled with a new hike in the cost of electricity. double-digit inflation, has forced the laboratory to an­ Fermilab is currently undergoing several modifica­ nounce the planned layoff of about 520 people, 15 per­ tions to its accelerator to make it more energy efficient, cent of the staff. including replacement of conventional magnets with Currently, Brookhaven is building two new facilities, superconducting magnets. At the same time, the energy the National Synchrotron Light Source and the ISA attainable by the machine will increase from 400 GeV to BELLE accelerator. Although the operating budget does 500 GeV, and, at a second stage, to 1,000Ge V, and it will not cover construction costs for either project, it does be possible to collide beams of protons and antiprotons include operating costs. When the effects of past budg­ at this very high energy. etary austerity are considered, there is good reason to Acting Deputy Director Philip Livdahl points out, wonder whether it will be possible to take full advantage however, that the Soviet Union has just given authoriza­ of these new facilities. tion for the construction of an accelerator capable of The Alternating Gradient Synchrotron, a high ener­ delivering protons at 5,000 GeV at the Serpukhov instal­ gy particle accelerator that will become a part of ISA­ lation near Moscow. The Soviet Union, at its recent BELLE, has been running at reduced levels since 1978. It party congress, reaffirmed its commitment to a rapid is projected that AGS will operate only 22.5 weeks out of development of nuclear fusion energy, and announced a a PQssible 42 in 1981, 21.5 weeks in 1982. significant upgrading of its research and development Wayne Bennett, budget officer fo r the Stanford Line- programs.

EIR April 14, 198 1 Economics 13 InternationalCredit by Renee Sigerson

Power play around Poland's d�bt Royal Institute of International Af­ Bonn wants to stabilize the situation. The U. s. has a small fairs who is cited as one of the creditor role but a big political one. West's top authorities on Soviet bloc debt, emphasized the political nature of the Polish talks in a pres­ entation before the New York Council on Foreign Relations (CFR). An emergency meeting of top in­ as how to set interest rates, as well CFR sources report that Portos ternational bankers from the Unit­ as prices on the steel pipes which indicated that the decision to cease ed States, Germany, France, and West German firms will produce. Polish debt payments was made on the U.K. convened in London An amenable resolution of the Pol­ the highest levels within the Soviet March 31 to work out a position for ish debt would benefit the pipeline Union. "The Soviets are putting tense negotiations with Poland on negotiations, which West German pressure on Western governments its debt to Western banks. Two spokesmen already assert are going by not bailing the Poles out. ... weeks ago, Poland-which has very well. The Soviets are inviting Western gone through a heavy economic With $27 billion in total debt to banks and governments to get to­ downturn due to the political crisis Western banks, Poland is one of the gether" on solving this problem, there-started missing payments top debtor nations in the world. Its the source underlined. for the firsttime on the $6.5 billion cessation of payments coincides It is estimated that $17 billion of due to its creditors during 1981. with a pattern of Third World debt Polish debt is guaranteed by West­ The Polish debt talks are the emergencies. ern government agencies. Since the focus of a political showdown. The Banks estimate that during 1981 banks are strapped fo r funds, if Po­ political issue involved is that the Third World countries will need no land is to get any new loans-as it two countries with the "biggest less than $83 billion to meet debt has appealed for-this would have stake" in Poland are West Ger­ service, oil payments, and other to be generated by the governments many and the Soviet Union. With current account payments. If U.S. involved. $4.5 billion in commercial loans dollar interest rates go back to 20 "The key issue is that new mon­ lent, West Germany is Poland's percent levels fo r any length of ey must come in, and must be suffi­ leading creditor. The Soviets, in time, global borrowing needs dur­ ciently long term to meet the turn, not only act as a de facto ing 1981 could top $100bill ion. needs," the source stated. He added "lender of last resort" fo r the East This global monetary weakness that Bonn is recognized as "run­ bloc, but in recent months are also has triggered speculation that Po­ ning the show" at the debt talks, known to have directly financed land could topple the Western but on new money "Bonn can't do Poland's debt payments. banking system. The Christian Sci­ the whole thing alone." If a mutually agreeableso lution ence Monitor on April I, for exam­ "It is the American government to Poland's debt crisis is found that ple, ran a commentary by a fo rmer which will have to take the lead" in both of these countries can endorse, congressional staffer who asserted, giving new funds. The Germans then an influential precedent will "A Polish default would send "need the Americans." have been established for East­ strong shock waves through the in­ Bonn may indeed move to draw West agreement on solving serious ternational monetary system." the United States into the settle­ international financial problems. Numerous other sources, how­ ment. What is clear, though, is that Currently, West German banks and ever, emphasize that while the glob­ the Germans will make substantial Soviet officials are also negotiating al debt situation serves to limit the commitments to prevent the Polish a $5 billion German credit to fi­ options open to creditors, Poland's crisis from getting out of control. nance construction of a natural gas debt crisis is, above all, a political If the United States supports a pipeline fr om Siberia to Western problem. stabil:zing package, it will also have Europe. Detailed attention in these On April I, Richard Portos, an to be a package acceptable to the talks is being given to such matters economist associated with Britain's Soviets.

14 Economics EIR April 14, 1981 Gold by Montresor

Oppenheimer dealing with the Russians? long view. If he's selling three or Strategic rather than market considerations may be behind four strategic minerals that the U.S. reports of South African-Soviet gold talks. needs, he's strengthened. His policy is to control the markets." Notefrom the Economics Editor: To Montresor's analysis it should be added that if Secretary Watt's policy of fostering American min­ Mr. David Marsh of the London lyst Thomas Wolfe told me, "South ing, including opening of federal Financial Times attempts to defend African officials say Marsh's lands to exploration and develop­ his earlier reports that representa­ charges about Soviet-South Afri­ ment of related internal improve­ tives of the South African Oppen­ can collusion were a bit overdone, ments, is realized, there will be no heimer interests are in frequent but there's no denying that Oppen­ shortage. Ahead of minerals devel­ contact with the Soviets by citing heimer and the Soviets are both opment are development of skilled names, dates, and places of such quite interested in how the strategic labor and cheap nuclear energy, trips to Moscow in an April 1 fea­ minerals markets deVelop. Anglo­ without which the U.S. will not ture. Marsh was compared to Nazi American, like all the major gold even be able to use the mineral re­ propagandist Josef Goebbels in a producers, are already major min­ sources it has already developed. savage attack in Izvestia last Nov. erals producers. Furthermore, all The actual content of the stra­ 30. His crime was to recirculate a the gold producers, led by Oppen­ tegic materials debate-and per­ report first published by EIR last heimer, are now diversifying out of haps also of the Oppenheimer-So­ July 22. gll)ldand going deeper into strateg­ viet connection-is political. There We wrote at the time that ic minerals." have been discussions between an sources at Consolidated Goldfields EIR said April 7 that the mining American faction represented by of South Africa (Oppenheimer inter­ companies concerned are attempt­ the Action for World Development ests) had told us, "If ConsGold is ing to swindle the U.S. through a committee, and that Soviet faction going to Moscow, it is probably manufactured scare over so-called represented by the Russians' correct to conclude that they are strategic materials. U.S.A.-Canada Institute, on this discussing the coordination of gold A British friend with excellent topic, �s EIR revealep last week. sales." That seemingly innocuous contacts in both the Oppenheimer Relevant names include Gen. Max­ report drew hysteria from Moscow family and the U.K. defense minis­ well Taylor and Georgii Arbatov. as well as Johannesburg. try explained it this way: "You can They both argue that the Sovi­ Marsh is now reporting that certainly make a case that Oppen­ ets should allow Secretary Haig et ConsGold executive director Mi­ heimer is collaborating with the So­ al. to pursue a policy of regional chael Beckett and two executives viets on strategic minerals. It would wars and depopUlation in the Third visited the Soviet Foreign Trade increase their clout in dealing with World unimpeded, letting the U.S. Bank last September. Following the United States tremendously to chase resources it could just as well this, Gordon Waddell, a director of have this kind of monopoly over develop at home. The Russians, so Anglo-American Corporation, vis­ world resources. They have a com­ the argument goes, have all the ited Moscow in November. mon interest with the Soviets in metals they need at home. ConsGold sources told the Lon­ increasing their clout." Neither the American support­ don journalist that their Soviet rela­ Would Interior Secretary Watt ers of this program, which we refer tionship "could eventually broaden attempt to stop the Oppenheimer to as the Carter administration out to exchanges of view on mining interests from increasing their U.S. Global 2000 proposal, nor the Rus­ techniques and metallurgy. This holdings, which they appear eager sians who believe this to be in their could include some kind of joint to do? "Watt is not important," my interest, are in power. But the Op­ mining venture." British friend said. "He's only penheimer connection may be a Apparently much more than going to be there for fo ur years. sounding for this strategic deal be­ gold is involved. Gold market ana- Oppenheimer is out for the very hind the scenes.

EIR April 14, 1981 Economics 15 Art Investor by D. Stephen Pepper

Time, place, and prices the condition, that is, the physical A case study of an Italian painting whose resale value state of preservation ofthe work. quintupled in a six-month period. Note that when a painting is offered to a museum, one finds that to complete a sale one has to treat not only with the director and the curator, but also with the museum's To invest successfully in fine arts newed in the Fascist era, which es­ restorer and its board of directors, or collectibles, the investor who has tablishes a list of national monu" so that in the end one is dealing with the widest knowledge of the field ments for which export is a criminal 6 to 10 persons, all of whom have to will always come out ahead. The violation (violation of the first law agree on the purchase. This ex­ most efficient way to provide this carries only a fiscalpenal ty). There­ plains why museum purchases usu­ overview for the reader is to trace a fore, the prudent dealer or collector ally require protracted negotia­ successful transaction. will always ensure that he is not tions. Only the large London and A very important painting by an involved with a painting that has New York dealers can afford to be Italian master of the 17th century been "notified," as these listed tied up so long. appeared on the art market in paintings are called. The present painting is a case in Switzerland six months ago. This In the present case the painting point. After the museum rejected painting belonged to the class of was unknown and clearly not "no­ the work, it was immediately sold to wor ks of art that represent precious tified." One of the results of the a New York dealer for $100,000' assets of civilization in world terms, Italian laws is that a class of paint­ cash plus a third interest in the in contrast to the current "specula­ ings in Italy is considerably less eventual resale. Since the painting tive bubble'" of hot money seeking expensive than the world market was now priced at $300,000, this investment in objects"of no endur­ price for them, so that if they can be meant that the total value of the ing worth. bought near the frontier, as it were, transaction would eventually be The painting obviously came they can be bought exceedingly $165;000. The painting is now out of a private collection in Italy, well. One cannot do this long-dis­ being considered by a major mu­ but because of the export restric­ tance, but only on the spot, and one seum for $300,000. tions on old works of art in Italy, its has to assess the quality of the work Clearly, the earlier an investor is source was not revealed. for oneself; the Italian dealers in­ placed in the chain of events, the Italy requires export licenses on volved in such trade function as better. We also see that the museum all paintings and charges an export feeders to large international cen­ market is extremely unreliable. tax based on a percentage of the ters such as New York and London. Often, a museum director will pre­ sale price as listed by the exporter. Since the time of Bernard Ber­ fer to offer its board a painting fo r If the exporter should put down an enson and before, Duveen and Col­ $300,000 rather than $150,000, es­ artificially low figure he runs an­ naghi's benefited greatly from this pecially if it comes from one of a other risk. The Italian government trade. Therefore, to intercept the half-dozen dealers. Therefore, it is can stop any painting from export market at the point of entry where important to have the option of that it chooses, and can acquire it at the painting is freshly available in selling at a profitable margin to a the listed price. To fu rther discour­ Switzerland is advantageous. Since big dealer in this vertically oriented age the exporter, the customs offi­ it is a fast turnover trade, it does not business. This depends upon how cer will often allow a painting to allow for drawn-out negotiations. well the work was bought original­ languish fo r months before an ex­ This particular painting was ly . port license is issued. The predict­ bought for $60,000. It was offered able result is to encourage clandes­ in London to a- major American Dr. D. Stephen Pepper is an in­ tine export of works of art. museum at $175,000 and was con­ ternationally prominent art scholar A second law governing works sidered inexpensive for the artist. specializing in Old Masters, and a of art in Italy is considerably more The museum eventually turned it consultant to PFA , Inc. in New important. This is an old law, re- down. The reason had to do with York.

16 Economics EIR April 14, 1981 Wo rldTrade by Mark Sonnenblick

Cost Principals Project/Nature of Deal Comment

NEW DEALS

$8 bn. Venezuela C. E. Lummis, subsidiary of Combustion Engineering, Project, owned by Vene­ from U.S.A. beat out 18 companies to win contract to supervise zuelan state of Lagoven, development of Venezuela's Orinoco heavy crude. Lum­ will only be turning out mis will get an estimated $700 mn. for coordinating 125,000 bpd crude when design of project, procurement, and construction. It will completed in 1988. gain those additional parts of projectwhich Venezuelan Bechtel expected to win companies can't do. Project involves drilling 1,000 deal, but lost on political wells, building steam-injection facilities, building a grounds. plant to upgrade tar-like crude to light crude, pipeline and coastal terminal. Subsidiary of Vollmer-Zuluaga, Venezuela's most powerful private group, will be Lum­ mis junior partner.

$1.8 bn. Hong Kong GEC of England won order for 2,640 megawatt coal­ Largest project credit in from U.K. fired electric plant from China Light and Power of London history; credit Hong Kong. Exxon is part owner of new plant. British arranged by Schroder Babcock will subcontract boilers. Wagg; 8.5% on dollar; 12 yr. term aftercomple­ tion; 85% British govt. ECGn coverage.

$1 bn. Malaysia from Nippon Electric Co. won order for digital switch sys­ Is NEC's biggest order; Japan tems as part of Malaysia's $4 bn. telephone expansion tenders for remaining $3 program. Systems will be assembled over 10 yrs. by 40% bn. expected soon. to 60% Malaysian govt. joint venture.

Almost U.S.A. from FIAT's Comau won order from General Motors for 200 FIAT claims will save $200 mn. Italy automated robot car-body welders to be installed on 14 70% of body assembly­ GM assembly lines. line l.tbor cQsts.

$100 mn. Mexico from Financial Times reports U.S. govt. has approved sale to Mexico has not an­ U.S.A. Mexico of 12 F5 supersonic fighters. Mexico has reject­ nounced F5 order. ed Israeli Kfir as too expensive.

$425 mn. Canada from Canada's largest charter line, Wardair, o�dered 6 Airbus 85% of financing from Europe/U.S.A. A3 10 planes. Engines will be made in U.S.A. by GE or European banks. Pratt & Whitney.

UPDATE

Brazil/ Preliminary agreement reached on Soviets' drilling for Reagan administration U.S.S.R. oil in Sao Paulo state. Negotiations in progress on made Brazil ineligible Soviets exporting hydroelectric, coal, and coal gasifica­ for General System Pref­ tion equipment and chemicals in exchange not only for erences on $63 mn. ex­ Brazilian grain and breakfast foods, but also manufac­ ports to United States. tures and semi-manufactures. Soviets filling vacuum.

$1.6 bn. Saudi Arabia Mitsubishi and Saudi govt. will form joint company in Saudis guaranteeing Ja­ from Japan Japan for building petrochemical project in Al Jubayl. pan extra 110,000 bpd Plant will produce 230,000 tpy ethylene glycol. crude supply for its tech­ nology in this project.

CANCELLED DEALS

$405 mn. China from Mitsubishi Industrial announced termination of con­ Japan tract to build steel rolling mill at Baoshan.

$1 14 mn. China from Nippon Steel notified by China ' of cancellation of raw Kobe Steel notified of Japan materials processing facilities feeding second stage of cancellation of Baoshan cancelled Baoshan steel works. oxygen plant.

tIR Apri1 14, 1981 Economics 17 Ve nice andthe enemies of the Renaissance: a new view

by David Goldman

findsin the form'of a novel, The Bravo. The Pope, His Banker, and Ve nice Since FJR has made frequent reference to the unbro­ ken power of Europe's old financial oligarchy, and the by Felix Gilbert importance in that light of the Bank for International Harvard University Press Cambridge, Massachusetts, 1980. 157 pages. Settlements, it is past time to identify some of the relevant background. Professor Gilbert's contribution is a good place to start. Professor Gilbert's new book adds some important clues Gilbert has fo und the check stubs showing how a to the solution of one of the great problems of modern Genoese pope, Julius II (Giuliano delle Rovere), and his history, that is, how the enemies of the High Renaissance Sienese banker Agostino Chigi paid for the Venetian threw Europe back into chaos that finallybled itself out victory against the League of Cambrai-an alliance of in the Thirty Years War. We are not done today with the all the great European powers formed in 1508, which Venetian problem. The modern fo rm (if not the real sought to crush The Most Serene Republic for all time. origin) of all contemporary problems in counterintelli­ Delle Rovere and Chigi-the forefather of the "Siena gence dates to the turn of the 16th century, and nothing Group" -used the revenues of the papal salt and alum important can be done in intelligence analysis without · monopolies to buy Venice the Swiss mercenaries who reference to the continuity of what we tentatively call the held out against the League. Venetian problem. 'This evidence tends to confirm the published judg­ Because most American policy-makers are illiterate ment of the period's greatest intelligence analyst, Niccolo with respect to the last 500 years of history, they are Machiavelli, that Venice was the pivot of the ruinous infinitely susceptible to "Venetian" forms of manipula­ foreign invasions into Italy between 1494 and 1527, the tion. Venice perfected, for the modern era, the art of engine of ruin of the High Renaissance. More work is persuading great powers to throw their weight against needed to establish that this Venetian-Genoese alliance their own best interests. This findsexpressi on in today's was decisive, but what we have now is compelling. Alexander Haig problem. As EIR reported in its March 3, i981 cover story, Haig's lie that all international Venice against Italy terrorism is due to Soviet intrigue came initially from an Consider what was at stake: in the 40 years after the Italian Socialist leader, President Sandro Pertini. The Italian League formed in 1454 under -Medici direction, conduit was outgoing ambassador Richard Gardner, Italy had its longest interval of peace. With Cusa's whose wife, Daniele Luzzatto, is from one of Venice's friends the Piccolomini family in sometime control of oldest families. Now that the White House has reportedly the papacy, the Italian Church intermittently collabo­ become aware that Haig set a trap on this and the related rated with the great Cardinal Nicholas of Cusa in El Salvador issue, it should consider what sort of evil is Germany and the "Spider King," Louis XI of France. capable of setting traps of this sort. The world saw the work of Leonardo, Raphael, Durer, Venice was a high-priority counterintelligence con­ Titian, Erasmus, Reuchlin, and Cusa, among others­ cern for American leaders after the Revolution. Using the greatest concentration of creative output in any Benjamin Franklin's dossier on the "Mesmerism" hoax, period of human history. Friderich Schiller, Germany's greatest poet, published By 1498, the fanatic Dominican Savonarola had what is still the most comprehensive report on Venetian exiled the Medici, the Venetians had brought Louis XII intelligence in the fo rm of a roman a clef, The Appara­ of Orleans into Italy, and the League had crumbled. tionist. An American author and counterintelligence spe­ The Borgia Pope Alexander VI kept up a grim kind of cialist, James Fenimore Cooper, surfaced additional rearguard, by killing as many members of the factious

18 Economics EIR April 14, 1981 Roman nobility as he could. On his death the Sacred the "new wave" miseries of Claudio Monteverdi, in a College installed another Piccolomini, Pius III, who city where a full 20 percent of the 100,000 inhabitants died after only a month, presumably by poison. Julius were prostitutes or cutthroats. II became Pope, in 1503, and was the butt of Erasmus's Machiavelli has informed us that Venice manipulat­ attacks for the next 10 years. He was able to use the ed the 1498 French invasion, the source of the great Vatican's financial resources to fr ustrate the League of destabilization. What role did the Council of Ten play Cambrai-France, Germany, England,and Spain-in in the 1492 death of Lorenzo de' Medici and the their effort to eliminate what Machiavelli at the time ascension of the monk Savonarola, in the Fugger called the city "chiefly to be watched." banking house's backing for the leaders of the Peasant Genoa's control over the Vatican broke in 1513 with Wars in Germany, in the Hapsburg takeover of the the election of a Medici as Pope Leo X, but the damage Holy Roman Empire? Professor Gilbert's find in the was done. Charles V of Spain was already installed, Venetian archives suggests that the archives will yield extending Austrian Hapsburg power to the Iberian answers to these questions, too. peninSUla, and in 1519 he would become Holy Roman Emperor. The concordat of the European powers Cusa The rise of Genoa and the Piccolominis had sought collapsed. In 1517 The story of Genoa's ensuing financial power is less Martin Luther issued his first theses. By 1527 Lutheran obscure than the contemporary oligarchy likes to be­ mercenaries had sacked the Vatican, French power in lieve. Two of the world's great insurance companies, the Italy was broken, and Julius II's Genoa had become Riunione Adriatica di Sicurta and the Assicurazione banker to Emperor Charles. The Peasant Wars had Generale di Venezia remain in Venetian-Genoese hands. scourged Germany of the great humanist revival of But the bulk of the Genoese fortune was exported via Cusa and Erasmus and ended in 100,000 deaths. Eras­ foreign investment and intermarriage, beginning with mus's friend Sir Thomas More had fallen from power in the 1602 formation of the Dutch East India Company England, beginning Henry VIII's political and moral and the sub rosa role of the Genoese Spinola family. decline. The bulk of remaining Genoese money was already in Venice and Genoa had already taken the loot of the Geneva when Napoleon destroyed the Genoese state in third and fo urth crusades two centuries earlier, but had 1797, and thence to London-and eventually the United been eclipsed during the 1400s by the trade and manu­ States. facturing power of the Medici. But the sudden, 1494 As for surviving Venetian influence, we need only collapse of the Medici and their allies left the Venetian­ examine the role of the Pan-European Union leader backed Fuggers and Genoese bankers a clear way to Count Coudenhove-Kalergi, the descendant of a Greek­ the loot of the next century. Genoa's grip over the Byzantine family that settled in Venice in the 14th Spanish debt was such that the gold and silver output of century. Kalergi created the Mont Pelerin Society, the the Spanish mines of the Western Hemisphere colonies agency which, as EIR has documented, is principally went directly to Genoa and Genoa's Dutch offshoots. responsible for infiltrating remnants of the old oligarchy Apparently, the commercially declining Venetians into Washington.· In several ways which there is no concentrated on intelligence and "cultural" operations room to go into here, the case of Kalergi makes sense of the type-Schiller exposed in the cited work, creating of Alexander Haig. what was for two centuries the most feared and biggest It is both enjoy�ble and disconcerting to read Pro­ intelligence service in Europe. As Professor Gilbert fessor Gilbert's present book. Unlike most American notes, Venice degenerated fr om an oligarchical republic leaders, who imagine they make policy on the basis of in which at least the forms of debate were preserved to this morning's phone calls and daily newspaper, he is as the model of a totalitarian regime, ruled by the Council much at home in 16th century politics as today's. of Ten, Venice's equivalent to the KGB: Unfortunately he writes with sympathy and nostalgia "The Great Council, originally the source of all for Venetian power, and his monograph does not tell power, had to concede part of its functions to the enough of the contextual story for the American reader Senate; then the [smaller] Collegio and the Savi began to grasp its very real importance. Professor Gilbert has to take over many of the activities of the Senate; and, in nonetheless made a basic contribution to our under­ the 17th and 18th centuries, the Council of Ten became standing why the leaders of the American Revolution all-powerful. The years of the War of the League of reserved a special hatred for the Most Serene Venetian Cambrai turned out to be a crucial step in this develop­ Republic. ment," Gilbert concludes. In 1508, Venice had imported leaders of the Florentine artistic Renaissance, and their *For a fuller treatment see Britain's New Dark Ages Conspiracy, by Carol White, and The Ugly Truth About Milton Friedman, by Lyndon efforts in the visual arts and music kept a foothold H. LaRouche, Jr. and David P. Goldman, both published by New through the century. But by 1600 Venetian music fell to Benjamin Frankln House.

EIR Apri1 14, 1981 Economics 19 GUEST COMMENTARY

Predator control for U.S. ranchers: a history of government sabotage

by Don Meike, Chainnan , National Woolgrowers Association

Th e problem of predator control that Western ranchers dogs, and coyotes was the most destructive element fa ce is not well appreciated. The attack on predator control affecting the industry. Stockgrowers can't control the programs and methods was one of the first springboards weather, taxes, or consumer demand for their products. fo r the environmentalist movement. Interior Secretary They can suppress predator damage to the herds. James Watt and Agriculture Secretary John Block have Shortly afterthe dead eagles were fo und, the Defend­ expressed their resolve to restore a vigorous U. S. predator ers of Wildlife and the Sierra Club filed suit in district control program. With this in mind, EIR presents this court in Washington, D.C. to halt the animal damage history of the fight on the issue of predator control, contrib­ control program. Their suit charged injury to several uted by Don Meike, chairman of the board of the National species of wildlife, and possible danger to humans. Woolgrowers Association. Meike lives in Kaycee, Wyo­ ming, where he is co-manager of Peter M eike & Sons, lnc. , A secret agreement a sheep and cattle . ranch operating on 30,000 acres of The suit was denied, but the Defenders and the rangeland and 1,200acres of irrigated cropland. Sierra Club continued their harassment and threats of legal reprisal to the point that an assistant secretary of There were many forces at play in the decline of the the interior, Nathaniel Reed, was prompted to make a U.S. sheep popUlation to its present level of 121/2 million secret deal with the two environmental groups. A\sealed head, and predation was certainly one of them. In fact, it stipulation between the principals agreed that the Inte­ was the numerical decline itself that singled out the sheep rior Department would remove all toxicants fr om the industry for the envirocratic attack. predator management program if the Defenders and In 1971, a few dead eagles were fo und in central Sierra Club would forego additional legal actions. Wyoming. Tests revealed that the eagles had died from The only problem was that there was no official thallium sulphate, an illegal, nonselective, and cumula­ basis for the removal of the toxicants; no hearings, no tive poison. Thallium had previously been abandoned legislation, etc. Assistant Secretary Reed chose a yet to for use in the animal damage control program carried be completed document on predation (the Cain Report) out by the U.S. Fish and Wildlife Service of the Depart­ as the rationale. Curiously, when the Cain Report was ment of the Interior. In the minds of the general public, finished, it not only recognized the value of some all toxicants were immediately under indictment. toxicants, but recommended the retention of Compound A combination of chemicals were being used by field 1080. agents to reduce coyote impact in major sheep areas. The Nevertheless, Executive Order No. 11643 was signed U.S. Fish and Wildlife Service, in cooperation with state by Richard NiJ(on in January 1972, suspending the use governments, placed control devices, treated baits, and of toxic chemicals for predator control. mechanical equipment in the field. The costs of these A lawsuit by the State of Wyoming against Interior programs were borne by ranchers, state agencies, and the subsequently uncovered the sealed stipulation. It was federal government. Sodium monofluoracetate (Com­ the first step in removing the predator control program pound 1080), sodium cyanide, or strychnine were located from the fieldof science, into the political domain. Then by professionals in areas where sheep and lamb kills were the Environmental Protection Agency abolished the frequent and extensive. registration of chemicals used in the predator manage­ Even with this comprehensive program, predation ment program. EPA's cancellation order was inaccurate continued. The losses were unwillingly absorbed by some and misleading in its charges, particularly where Com­ ranchers, while others were forced out of business. The pound 1080 was concerned. EPA cited 13 human deaths sheep industry had struggled to recover from the effects recorded from the use of 1080. What they failed to of artificial fibers and imported lamb meat, but of all mention was that these fatalities occurred only in urban factors considered, the predation of sheep by eagles, areas where the chemical is used for rodent control!

20 Economics EIR April 14, 198 1 The Environmental Protection Agency also erro­ interests and the wool growers. The final EIS was neously claimed that sodium fluoracetate is highly toxic reluctantly accepted. Secretary Andrus then promised a to all species. This claim is contrary to reams of revised policy for Animal Damage Control based on the scientific information emphasizing the selectivity of the EIS. Sheep growers relied on scientific proof as assur­ chemical when used in proper dosage. EPA cancelled ance that the revised program would endorse accelerat­ the registration and then refused to hold a hearing on ed control methods. the cancellation. It was on Nov. 9, 1980 when the sh�ep people The least tolerant species affected by 1080 is the realized that the amended control policy was a political canine. Consequently, the chemical is effective in coyote document. The policy Andrus announced was a non­ control. As the Western Regional Coordinating Com­ lethal, non-capture approach banning or restricting the mittee, a consortium of 31 eminent scientists, recently few remaining tools left in the program. It was later stated: "Since there are no known human safety hazards determined that the policy was designed by the Council if reasonable care is used, and no significantprimar y or on Environmental Quality (CEQ), without regard for secondary hazards to non-target animals, no biological even the Environmental Impact Statement. CEQ has reason supports prohibiting the use of Compound consistently maintained that livestock losses can be 1080." reduced without lethal control although the methods The chain of events surrounding the executive order they propose are too expensive, ineffective, unproven or led to confusion among the general public and exploi­ have limited application. tation by politicians and environmental action groups. Sheep growers again requested hearings on predator Well-publicized hearings were held in Washington be­ control, with the usual results. The environmentalists fore committees charged with environmental responsi­ charged the rancher with a failure to provide adequate bility. Empty promises of accelerated research and the protection for his flocks, and the rancher accused the emphasis of "mechanical" control techniques as a sub­ environmentalists of aborting the facts. The scientists stitute for the toxicants sent the wool growers home again defended the control program and the elected with a gleam of hope. officialsrem ained somewhere in the middle. But over the next seven years, 81/2 million lambs and Shortly after the hearings, 13 major agricultural 21/2 million sheep worth a respectable $592 million organizations requested the transfer of the Animal would be destroyed by coyotes and dogs. Coincidentally Damage Control program to the Department of Agri­ during the same period, sheep numbers would drop by culture. In January 1981, Sen. James McClure (0- 81/2 million head, the number of lambs killed by coyotes Idaho) attached an amendment to the agriculture ap­ during that same period. Several states filed for emer­ propriations bill that would transfer the program to gency use of 1080, but these requests were turned down. USDA. The amendment passed the Senate by a substan­ 11,000 sheep ranchers went out of business, attributing tial vote, but Congressman Jamie Whitten held up the their enterprise failure to predators. proposal in the joint conference committee on the basis

• The State of Wyoming filed a lawsuit claiming that it wasn't germane to the "money" bill. After nine long the government erred when it cancelled the registration years, it was another disappointment for the wool on 1080 without an environmental impact statement, as growers. The conference committee stipulated that required by the National Environmental Policy Act $500,000 was to be appropriated to study the transfer. (NEPA). The district court found in favor of the suit The sheep people groaned at the prospect of another and suspended the federal ban on the interstate ship­ lengthy analysis. ment of toxicants. The 10th Circuit Court of Appeals There is little need for further research on coyotes or overturned the ruling and the Supreme Court refused to predation since over 5,000 studies already exist. There hear the case. The 10th Circuit, a pawn of the Eastern has been enough litigation, emergency use requests, and environmental community, then ordered the district experimental use inquiries. Sheep have been dipped in court not to hear the issue, as it related to the cancella­ garlic, spray painted, and fitted with collars. Ranchers tion of 1080. The lawsuit was gutted. have been harangued and harassed by the government In 1977, the National Wool Growers again appealed and environmental groups. to the Department of the Interior, requesting relief from The Animal Damage Control Act of March 2, 1931 accelerating predation. Secretary of Interior Cecil directs the secretary of the interior to control predators. Andrus offered another study, and eventually an envir­ There are no legitimate scientific or environmental onmental impact statement on the predation issue. reasons why the law shouldn't be enforced. To further deny the sheep men the right to protect his private Andrus and the CEQ property disparages the Constitution and perpetuates a The draft version of the Environmental Impact glaring federal injustice. America needs lamb and wool. Statement was condemned by both the environmental Does America need an uncontrolled coyote population?

EIR April 14, 1981 Economics 21 BusinessBrief s

Insurance man mark will rise 3 percent above its bled them of $60 billion in potential de­ former central parity, while the Belgian posits in the last six months. Prudential gobbling up franc, the Danish kroner, and the Italian "The S&Ls are getting bad advice lira will fall by 3 percent from their pre­ from their economists," some of whom bank stock vious parity. The French fr anc will re­ are supporters of the Volcker Fed, said portedly remain unchanged, and the the source, "and they've been told the Prudential Life Insurance Company has Dutch gijilder, which usually moves in money funds are an easier target." increased its holdings of U.S. commer­ close step with the German mark, may cial bank stocks. also be revalued upward by 3 percent. Prudential, which was recently in the A report last week in the Swiss Neue Wo rld Trade news for its takeover bid to acquire Zurcher Zeitung gives some credence to Bache, Halsey, Stuart, the eighth largest this report. The NZZ cited Belgian cen­ Ito to Haig : commercial bank in America, disclosed tral bank officials pre�icting another re­ that it has purchased the following per­ alignment within the EMS, following the resume nuclear trade centage ownership of American bank recent devaluation ofthe Italian lira by 6 stock: Chase Manhattan, 5.4 percent; percent. No numbers were given. How­ Japanese Foreign Minister Masayoshi Continental Illinois, 5.7 percent; Citi­ ever, since the Belgian central bank is Ito requested Secretary of State Alex­ corp, 4.0 percent; Bankers Trust, 5.0 per­ currently pressing to avoid a franc deval­ ander Haig to end the obstruction of cent; Western Bancorp, 5.0 �rcent; and uation, this forcast may indicate that the Japan's nuclear energy program that had Bank of America, 1.5 percent. present franc defense effort is already prevailed under Carter, according to Prudential has indicated that it is in­ prediscounted for failure. Washington sources. Carter had halted creasing its ownership of U.S. bank Japan's reprocessing of plutonium by stocks, because the prevailing gap be­ threatening to cut off uranium supplies tween commercial bank prime rate, and Banking and had hindered Japanese industries' the current rates for certificates of depos­ plans to export nuclear reactors. it, etc. range between 300 and 400 basis 'S&LS don't recognize At a March 25 joint press conference points. This represents effectively the with Ito, Haig agreed only to "further spread the commercial banks have en­ their enemy' discussions ...with a view toward great­ joyed, as money market rates have come er flexibility" by the U.S., which has been down much faster than the prime. Thus The savings and loans thrifts are being interpreted as a stalling gesture. banks are enjoying very large earnings deliberately "tracked" into criticizing Following a March 26 cabinet meet­ for the last part of the first quarter and unregulated money market funds, which ing, the government licensed the con­ will probably continue to enj oy these steal thrifts' deposits using higher interest struction of three nuclear plants for a earnings even if the economy goes into rates, to "keep them fr om attacking Fed total output of 2 gigawatts, the first in recession, because the Fed has indicated Chairman Volcker's high interest rates," two years. In addition, Hitachi an­ it will keep the interest rates such that the a source at the Treasury told EIR . nounced plans to resume development of large banks can continue to enjoy their "The fact is that we are going to have nuclear reactors intended for export. super-high prime. a high rate of inflation and high interest rates for some time," said the official, "and the savings and loans are going to Energy Foreign Exchange have to be rationalized. Continued high interest rates will mean that they will not Japan to overtake Revaluation insid'e be able to afford the deposits they need, and home buyers will not be able to U. S. in fusion the EMS? afford their mortgages. So there will be fewer S&Ls. This is the main danger to The Japanese government's Science Usually reliable West German banking the S&L industry." Council has proposed a $5 billion fusion sources predict a revaluation of curren­ But "luckily," he said, "the S&LS program for 1982-1993, including the cies within the European Monetary Sys­ don't recognize their enemy, and have achievement of a demonstration engi­ tem (EMS), a fixed interest-rate agree­ chosen to attack money market funds neering reactor prior to anything now ment between the members of the Euro­ instead of the Fed." The U.S. League of planned in the U.S., according to sources pean Community excepting Britain. The Savings Associations is lobbying for in the Japanese fusion community. revaluation will reportedly follow the ex­ Congress to regulate the money funds U.S. sources said the program is pected re-election of France's President and cap their interest rates, which are equivalent to a, $10 billion U.S. budget, Giscard early in May. twice those paid to depositors by the about twice the level now being spent in According to these sources, the Ger- S&Ls. The S&Ls charge the fu nds have the U.S. and a 150 percent increase from

22 Economics EIR April �4, 1981 Briefly

• WEST GERMAN construction activity fell 5 percent in February current Japanese budgets. The House Mining and Mines sub­ compared to 1980, although the The heart of the program is a $3 committee has scheduled hearings for pattern of downturn is different billion fu sion engineering device (FED) April 9 on the tftkeoverbill. from the U.S. pattern. The largest to be completed by 1993. It wiII produce downturn was in office building net power and will be the last device construction, with housing sec­ needed before a commercial prototype. Military Technology ond. Industrial plant construction It is much larger than the FED mandated stayed flatat last year's levels. by the U.S. McCormack fusion act to be British moving on built here by 1990. • ETIENNE DAVIGNON, the Japanese sources say the Ministry of Trident deterrent EC steel commissioner, was in Finance has given "tacit budgetary ap­ Washington this week for the Tri­ proval" to the proposal. The DefenseSubcomm ittee of the British lateral meeting and to propose a o committee," ac­ Japanese Foreign Minister Masa­ Parliament spent several days in Wash­ U.S.-Japan "aut cording to Washington sources, yoshi Ito and former Prime Minister ington during the week of March 22 for which would rationalize the world Takeo Fukuda, whose administration semisecret consultations with U.S. offi­ auto industry into eight companies launched U.S.-Japan joint fusion re­ cials on likely British purchases of Tri­ with vastly reduced production. search, both urged President Reagan to dent missile technologies. continue the research cooperation, dur­ The MPs came on request from Brit­ ing their March visits to Washington. ish Prime Minister Margaret Thatcher, • INTERNATIONAL Banking who has launched a confidential inquiry Facilities (IBFs) are under staff re­ to determine what would be involved view at the Federal Reserve, and Corporate Strategy both financially and industrially in pro­ the New York banks' plan for free ducing Trident missiles for the British banking zones may have to be "re­ Congress to stop armed services. Current estimates are vamped," Fed sources said, before that Britain does not have the money to the Fed can approve it. The Chi­ fo reign takeovers? purchase the range of Trident equipment cago and California Clearing it would like to possess. House banks have protested they A group of congressmen is attempting to The talks in Washington were kept want national banking to be im­ stop the takeover of U.S. mining con­ confidential because the guidance system plemented before they'll support cerns by foreign interests which has re­ designs for the Trident warhead are IBFs. cently become a deluge in the U.S. This classified and Britain is currently at­ includes the British Petroleum-owned tempting to determine whether it has the • U.S. government pressure on Sohio "friendly" bid of $1.77 billion to electronics capacity to produce parts of Tokyo may be behind the fa ilure take over Kennecott Copper and the the guidance apparatus. Members of the of the Japan-Soviet talks to reach Bronfman-owned Seagram $2 billion House and Senate Armed Services and agreement on sale of approximate­ hostile bid to take over St. Joe Mineral's Foreign Relations Committees agreed, ly $3.5 billion worth of steel pipe­ Company. in addition, to keeping the talks hush in line. The talks broke up March 28 Congressmen (Jephardt and Emer­ deference to Thatcher's request. after weeks of discussion but are - son, both from Missouri, the state where However, it is possible that a more expected to resume. The steel St. Joe has large holdings, have intro­ politically sensitive issue has pressured firms,plagued by loss of sales else­ duced H.R. 2826, which would establish Britain to keep its study of Trident out of where were eager to make the deal, a six-month review cooling-off period the U.S. press. Trident is currently being according to Japanese sources, but from the time a foreign concern made a developed as a replacement for the out­ the government's Export-Import bid for an American minerals firm with moded 1960s Polaris submarine technol­ Bank complained the interest rates leases covered under the Mineral Leasing ogy. Britain acquired the Polaris system sought by the Soviet Union were Act of 1920, until the time that such a in 1962 as an "independent" nuclear de­ below the 8.5 percent limit set by takeover could be approved. During this terrent, only aftera very bitter fightwith the Western powers. But this may cooling-off period, the Congress would sectors of the U.S. military who wanted be just a pretext since the limit is decide whether the takeover posed a se­ to ensure that Britain could never have often abridged. U.S. government curity threat. finalsay over whether to launch a nuclear sources said Washington indicated The 1920 Mineral Leasing Act covers offensive on its own . Thatcher may be to Tokyo that reaching a big eco­ all mineral firms that have mineral leases concerned to prevent any current discus­ nomic deal "would be sending the under the act, which includes oil, gas, sion of the role of Britain's independent wrong signal to Moscow during coal, and some of the nonfuel minerals. deterrent in the NATO alliancesince it is the Polish crisis." Other minerals, such as lead and zinc, are not known what the Reagan administra­ covered under the 1872 Minerals Act. tion's views are on the issue.

EIR April 14, 1981 Economics 23 TIillSpecialReport

The profile of a conspI• racy

by Crlton Zoakos, Editor-tn-Chief

The assassination attempt against President Reagan on March 30 was part ' of a broader political plot to immerse the United States in a protracted period of domestic crisis, confusion, and disintegration of policy-making. This broad-ranging plot had been initially fo rmulated and advanced by the leadership of the Socialist International which met in Washington, D.C. a few weeks before the President's inauguration. The assassination attempt itself represented a branching point for that "chaos and confusion" scenario. Had the attempt been successful, the scenario would have proceeded in a self-evident way; the attempt's failure, on the other hand, triggered a massive speculative orgy, mostly led by Socialist International-linked press outlets, respecting the so-called succes­ sion struggle among Secretary of State Haig, Vice-President Bush, the White House Staff, Defense Secretary Weinberger, and others.

Anti-American campaign The intended purpose of this speculative orgy is precisely what the leaders of the Socialist International could utilize to feed the flames of a renewed international campaign of anti-Americanism centered on the theme of "instability" and "chaos" in Washington. The President was shot at primarily because his personality and political style so far have made him a symbol of stability. Two important sets of considerations argue in favor of viewing the actions of assailant John W. Hinckley, Jr. in the context of the indicated plot. First, the context of deliberately cultivated political hysteria against President Reagan; second, the important, unanswered questions surround­ ing Hinckley's action. Regarding the firstof these two considerations, it has been widely noted that a gigantic international rumor mill has been circulating the idea that "Reagan is not.going to live through the year," or, alternately, "Reagan is not going to complete his term in office." Such themes have been played up

24 Special Report EIR April 14, 1981 Yippie cofounder William Kunstler, a leading attorney fo r accused terrorists, with Yippie leader Dana Beal at last month's Yippie gathering. almost continuously on the pages of fringe-radical posters reading "Now Is The Time To Kill Reagan," socialist publications internationally. hinted at in more "Reagan: The President Who Is Already Dead," and respectable publications, and discussed rather freely similar themes. All participants were given buttons that among intelligence-connected circles, especially British read "Kill Bush First." and Canadian. The Yippies' controllers Washington rumor mills The significance of this Yippie outrage is mostly Within Washington itself, rumor mills close to the located in that influential group of people above the Washington Post, and others close to the seedier side of Yip pies, which in fact controls and deploys them. That certain places within the Library of Congress, have been group is a central part of the international drug and freely cultivating a climate of anticipation around the pornography racket which is closely associated with the theme of whether the President's first term in office Socialist International. Paul Krassner, editor of Hustler might survive an assassin's bullet. and former editor of Playboy, is a longtime Yippie; Gridding of the rumor mill indicates an unusual attorney William Kunstler is a long time Yippie member "heating up" around the time of President Reagan's and currently the key political controller of Yippie visit to Canada on March 10-11. The entire Canadian leader Dana Beal; the network includes Robert Gutwil­ press was obsessed with the issue of President Reagan's lig, a former top executive of Playboy, and others. security arrangements, an obsession ranging from com­ The overt Yippie agitation to have the President plaints about "excessive security" to fo rmal recommen­ assassinated was only one component of the climate­ dations by the Royal Canadian Mounted Police that the setting effort. Similar activities have been observed President's· entourage should prefer a posture of "open throughout the lunatic fringe and numerous law en­ access" by the public at the expense of "excessive forcement agencies have reported the existence of small security:" Individuals from Prime Minister Trudeau's "cult groups," produced and sustained by brainwashing officewere involved in this disgrace. (behavior modification) techniques, whose belief struc­ At approximately the same time, "anti-Reagan" ture is pivoted around the idea of "shooting Reagan." hysteria was reaching new heights among radical-fringe The sustenance of these groups is described as similar networks around the United States, all of it deliberately to the Symbionese Liberation Army affair notorious for "fed" from higher-up circles. The high-point was per­ the Patty Hearst kidnapping, and the "psychotherapy" haps the Yippie conference in New York on March 19- group which inspired the "Son of Sam" killings in New 22. The Yippie conference room was decorated with York two years ago.

EIR April 14, 1981 Special Report 25 Third, the story of the "motives" cannot survive scrutiny on the basis of currently known facts. The alleged existence of love letters to actress Jodie Foster, in which he threatens to "kill the President" in order to demonstrate his love, does not constitute evidence of "motive." It, however, constitutes powerful evidence that the assailant is severely psychologically deranged .

Brainwashing In the face of such evidence. any competent investi­ gator turns to a detailed examination of the psycholog­ ical history of the subject, and refocuses the investiga­ tion on the hypothesis that a person of such extensive .v v otle rhoughr Os .....ald ..... as a loner. Th erejiJre ' crazed' assassins suggestibility is likely to be under the inn uence of ..... re1' cre(lr I'd. individuals expert in the techniques of beha vior modifi­ cation and behavior control. Instead, the public side of the investigation so fa r indicates that the love letters are being used to establish "motive" and thus discou rage further inquiries. The 'lone assassin' hoax The behavior of the assailant during and after his Last Monday's assassination attempt must be arrest, as reported by law enforcement officials present viewed against the background of these considerations. on the scene, strengthens the hypothesis that he may The current theory promoted by the press, that of a have been under alien psychological control during his " l one a��assjn" living out a "romantic fantasy," has action. Police officers reported that Hinckley was in a some !l aws \v hlch render it incredible and useless. There completely disassociated state, that "he did not know are three �ets of fa cts that puncture it completely. what had happened," afldthat only after a fe\v hours at FIrst: On the ba:,is of his so fa r known past, John the police station did he go into psychological eruptions W. Hinckley. Jr.. the assailant. should have been on the and began giving indications that he was only then potentia! presidential assassin list of aproximately realizing what had happened. Later on. FBI physicians 25,000 names retain...-:d by the Secret Service according put him on tranquilizers, presumahly to prevent violent to standard procedure. A number of incidents of his eruptions, a usual symptom of abreactIOn. past life,kn own by law enforcement authorities, would Quite apart from the particulars of this a�sassination have justified his inclusion on this list. The single most attempt, that which is in fact breeding political violence important such incident was his arrest, last October, at and potential presidential assassins, is not what the the Nashville, Tenn. airport for carrying firearms at a liberal press, led by Katharine Graham's Washington time when President Carter was visiting. On March 31, Post, so piously condemn. It is not the outrageous Nashviile pollce officials reported that they had at the generalization that Americans are "a nation of gun­ time fo rwarded the suspect's name to the FBI. The happy, violence-prone individuals." What is feeding the fo llowing day, the major national media carried a story current wave of political violence is the gameplan of which dellied that the FBI ever received such report destabilization laid out by the leadership of the Socialist from Nashville. International conference last December in Washington, According to standard procedure, if the FBI had D.C. Those same, ultimate moral perpt:trators of this receIved such a report, the suspect's name would have outrage are now attempting to fu rther exploit the been included in the Secret Service list. Other incidents aftereffects of the failed attempt in order to exacerbate from the assailant's iife would also have been cause fo r a climate of "chaos and confusion" in Washington on his inclusion ltl such a list. Therefore, person or persons the basis of which to build yet another anti-American inl1uential enough existed to have kept his name off such campaign internationally. If there are serious and re­ a li�t. sponsible people inside the White House who place Second, the security arrangements around the Pres­ greater importance on the task of preserving the ap­ ident's person at t he Washington Hilton Hotel were, by pearance of government stability over and above the universal admission. a complete violation of standard need to publicly investigate the fo rces behind the assas­ procedure. Up until the second when the shots were sination attempt, then this is only another indication of tired, there had heel! a breakdown of security which will how serious the destabilization effo rt by this country's require npi,matIons. enemies really is.

26 SpeCIal Repon EIR April 14, 1981 In preparing this initial investigative report, EIR's coun­ co and Firearms Division. Was Hinckley possibly al­ terintelligence editor and his staff polled dozens of law ready a known entity to federal agencies at the time of enforcement and intelligence professionals all over the his Nashville arrest? world. Out of these discussions, a number of questions 3) Did Hinckley's psychiatric treatment at any point have repeatedly been posed that represent the key to intersect: behavior modification institutions involved offi­ unlocking the "Manchurian Candidate" closet and un­ cially or unofficially in MK-Ultra or any other drug-con­ raveling the full story behind the events of March 30. ditioning experiments; "est" or any other Lewinite 5ensi­ 1) Where did John W. Hinckley Jr. receive his weapons tivity training; the Church of Scientology or any other cult­ training? Careful review of the videotape film fo otage of therapy centers employing linguistics methods of brain. the assassination attempt demonstrates conclusively that washing; the Esalen Institute; the RAND Corporation; the Hinckley was an extremely proficient shooter, particu­ Aspen Institute for Humanistic Studies; clinics and/or larly skilled in the execution of rapid fire under combat therapeut�c communes run by Dr. Frederich Hacker, Dr. stress conditions. His choice of weapons and his now­ David G. Hubbard, or any of their proteges; any U.S.­ speculated use of explosive bullets bears all the earmarks based institutions affiliated with the London Tavistock of an individual technically prepared to succeed in his Institute and its affiliated Center for the Study of Conflict? mission: kill the President from close range. These institutions in their totality represent some of the Not one word has surfaced publicly as to Hinckley's leading witting centers of brainwashing that currently training in combat handguns. Furthermore, the speed operate in the United States. Any one of these institutions and accuracy of his firing on March 30 would have possesses the resources and the trained personnel to required consistent practice with the designated assassi­ create a "Manchurian Candidate" assassin. nation weapon during the period leading up to the At this point, the totality of evidence made available attempt on President Reagan's life. Are there any records through public channels and through sources accessed of Hinckley's turning up at shooting ranges in Washing­ by EIR overwhelmingly points to such a "Manchurian ton, D.C., Evergreen, Colorado, or Hollywood, Califor­ Candidate" profileof Hinckley. nia over the last two-month period? Numerous prior cases, such as that ofthe Symbionese 2) Why did the FBI fail to act on the basis of the arrest Liberation Army and the Black Liberation Army, and information received on Hinckley in Nashville, Tennessee another purported "lone assassin" David Berkowitz, during October 1980? Hinckley was detained by Nashville have all been documented by EIR specialists to have been airport police attempting to board a New York City the work of professional behavior modification pro­ flight carrying at least three weapons and 50 rounds of grams. These programs, such as the Vacaville Prison ammunition. Yet the U.S. attorney's office in Nashville behavior modificationunit run by Dr. Frederick Hacker, reports that the FBI did not indicate that mUltiple weap­ employ behavior-conditioning techniques firstrig orous­ ons had been seized. Despite the fact that Hinckley was ly employed at the pre-World War II Tavistock Clinic in flying into New York City, where both President Carter London and subsequently massively exported to the and candidate Reagan were scheduled speakers-from a United States. Drugs such as prolyxin and thorazene, as city where both had been scheduled to appear-no report well as torture techniques such as electroshock and sen­ was made to the Secret Service or to the Alcohol, Tobac- sory deprivation, are rigorously applied to targeted vic-

EIR April 14, 198 1 Special Report 27 tims. The result is programmed killers, whether they International Law Association connected to a forthcom­ belong to so-called political cells, to Satanic cults, or ing conference on international terrorism at Carlton even to the growing ranks of "lone assassins." University in Ottawa have been identified as part of this The past decade's proliferation of drug use among "dry run" profiling team. These same individuals, in­ the nation's youth, the epidemic proportion outbreak of cluding Thomas Mitchell, acknowledge at least corre­ homosexuality, and the popularization of T-Group and spondent collaboration with Dr. David G. Hubbard and other self-brainwashing techniques among particularly Dr. Frederick Hacker, both cited above. the nation's middle and upper class population, have both cited earlier in this memorandum. created a massive recruiting ground and labor pool for The special role of Canada in current and future "Manchurian Candidates" schools such as those listed assassination efforts against President Reagan and other above. political targets of opportunity is underscored by the Both Playboy magazine and key affiliated sections of prevalent political power exerted over that "British the motion picture industry have played pioneering roles Crown Colony" by the remnants of the wartime Special in the fostering of this climate. Playboy's sponsorship of Operations Executive (SOE) within British intelligence. homosexuality, drugs, and cultism has recently been The SOE networks, through the person of Major Louis documented in a special report prepared by a team of Mortimer Bloomfield,sponsor ed the "j oint assassination EIR investigators. The role of the motion picture indus­ bureau" of the 1958-68 period that was identifiedas the try has already become a matter of direct concern to the control over the assassination of President John Kennedy Hinckley investigation. and the aborted assassination efforts against French Script writer Paul Schrader's screenplay for Taxi President Charles De Gaulle. This Canada-based SOE Driver had remarkable parallels with the psychological network, known in the 1958-68 period as "Permindex," profile of the assassination attempt by Arthur Bremer is itself a subsidiary capability of the broader intelligence against George Wallace. Hinckley has cited that filmas apparatus that includes Tavistock, Playboy, and other one of the triggering factors in his own attempt on the component elements cited. life of President Reagan. While the media pUblicity surrounding the Taxi Driver revelations has been princi­ pally directed at proving the bogus "lone assassin" claims, the same evidence points in a fr uitful direction as well: the witting role of elements of the motion picture The five levels industry in profiling and popularizing vulnerability to efforts such as the March 30 effort to assassinate the of investigation President. The fact of such mass aversive conditioning of the Th e fo llowing memorandum was released by Investigative American people, and the more targeted and recruiting Leads, a subsidiary of EIR. of Manchurian Candidate assassins, poses a necessary further question: How many more John W. Hinckleys are March 31, 1981, 1500 hours-On the basis ofthe first presently roaming the streets as controlled human time 24 hours of investigation following yesterday'S assassi­ bombs? nation attempt against President Ronald Reagan, the lL 4) Has the summer meeting of the Group of Five heads counterintelligence staff has developed the fo llowing of state been designated as a high-feasibility time and place grid of investigative leads. These leads represent five for a second attempt on the life of Ronald Reagan? The different levels of command, all of which would have fact of that conference's taking place in Ottawa, Canada potentially been involved in aspects of the assassination should be a matter of grave concern to all individuals effort. This initial memorandum will be updated as ap­ responsible for the security of the President and the other propriate new elements of the investigation are devel­ heads of state scheduled to participate. oped. It is a confirmed fact that during President Reagan's recent trip to Canada to meet with Prime Minister Pierre 1) John Warnock Hinckley, Jr. Trudeau, there were a string of severe security breaches John W. Hinckley, Jr., presently in FBI custody for that several times placed the life of the President in the attempted assassination of President Reagan, bears immediate jeopardy. EIR investigators have established the initial profile of a "Manchurian Candidate" assas­ that those security breaches were part of a "dry run" sin. Based on his proficiency with the .22 revolver he profilingof the Reagan security screen; and that person­ used at the Washington Hilton scene, his technical nel on the private staff of Trudeau, on the prime minis­ abilities are those of an expert gunman. However, no ter's Crisis Management Staff, and within the Privy professional "hit man" would have ever attempted to Council were all witting in this effort. Affiliates of the carry out a presidential assassination under the circum-

28 Special Report EIR April 14, 1981 stances of March 30. Any avenue of escape was virtually the Alcohol, Tobacco and Firearms Division of the U.S. out of the question. Department of the Treasury and is accessed by the The information presently available regarding Secret Service, the Federal Aviation Administration, the Hinckley's personal profile points in this overall direc­ U.S. Sky Marshals, the FBI and other agencies. tion. Sources close to the Hinckley fa mily stated public­ Within approximately one week of his detention in ly that John Jr. was undergoing as yet unspecified Nashville, Hinckley was in Dallas, Texas purchasing psychiatric care. It is known that from March 8-23, two .22 caliber revolvers. 1981, he was living in Lakewood, Colorado at the In addition to his profiled neo-Nazi affiliations, Golden Hour Motel. He had no visitors at the motel Hinckley has been characterized as a radical environ­ and paid for all of his expenses in cash. He drove into mentalist who was reportedly incensed at the anticipated Lakewood in a Plymouth Volare bearing Texas license anti-environmentalist policies of the Reagan adminis­ plates. It has been reported that he was either a patient tration. It has been suggested that during a period of or an employee at the Mt. Airy Hospital in Denver. Mt. residence in Hollywood, California Hinckley was direct­ Airy Hospital is a very exclusive, private, l00-bed ly involved in environmentalist activities; however, no hospital which specializes in psychiatric care including confirmingevide nce of this has emerged yet. It is known drug and alcohol addiction treatment. Spokesmen for that Hinckley-during his recent visits to the Lake­ the hospital have refused to either confirm or deny wood, Colorado area-had been associated with the Hinckley'S presence there. local drug-rock-environmentalist circles through a rock From 1978-80, Hinckley was an on-again off-again band called "Kamikazi Klones," led by one Jimmy student at Texas Tech University in Lubbock, Texas. It Murphy. is known that during 1978, he was a student in the history department, during which time he studied under 2) The neo-N azi connection Prof. Otto M. Nelson. Hinckley's several-year association with the Nation­ As the term paper fo r Nelson's course on "Modern al Socialist Party of America represents one level of European Social Movements: Socialism, Communism, fruitful potential leads. NSPA is associated with both Anarchism and Fascism," Hinckley prepared a study of the Skokie, Illinois riot provocations of the 1978 period Adolf Hitler's Mein Kampf At this time, Hinckley was and with the more recent November 1979 Greensboro, a member of the National Socialist Party of America North Carolina gun battle with members of the Com­ (NSPA), a neo-Nazi organization. On March 12, 1978, munist Workers Party (CWP) in which five communists Hinckley was in St. Louis, Mo. for meetings with were killed. Among the leading identified members of members of the NSPA. According to Michael Allen, a the NSPA are: leader of the NSPA, Hinckley was expelled from the • Frank Collin, leader of the Skokie march efforts, party some time in 1979 as the result of his continued now in jail on charges of child molesting and related sex demands that the group should "blow up and shoot up crimes. Collin is widely reported to be the son of Jewish everything. " concentration camp victims and a potential informant Hinckley's studies at the Lubbock, Texas campus for the Anti-Defamation League of B'nai B'rith, a continued through at least the summer session, 1980. In private intelligence agency. the first and second weeks of October 1980, Hinckley • Harold Covington, leader of the NSPA in the was actively stalking Ronald Reagan and/or Jimmy Carolinas and the principal figure behind the Novem­ Carter. On Oct. 9, Hinckley was arrested by airport ber, 1979 shootout . police at Nashville Airport as he attempted to board a • Karl Hand, leader of the NSPA in the Buffalo, flight for New York City carrying a duffle bag with New York area. Hand is closely associated with neo­ several hand guns and ammunition. President Carter N azi circles in Canada, including Don Andrews of the was scheduled to hold a town meeting in Nashville that Western Guard Party, now called the Canadian Nation­ night; and candidate Reagan was due to be in Nashville alist Party. These networks were involved in the 1973-74 the previous day until his plans were interrupted. Both project known as "Unity Now," an amalgam of both Reagan and Carter were scheduled to be in New York left-wing and right-wing extremist groups who consti­ City beginning on Oct. 10. tuted themselves as a phony Canada-based cell of the By all standard procedures, Hinckley's name should Arab terrorist "Black September" group and were have been added to a computerized list of Individuals prepared to conduct a wide-scale terrorist activation posing a threat to the President as the result of his until U.S. intelligence agencies intervened to pre-empt detention in Nashville. For reasons that have yet to be the actions. clarified, Hinckley was allowed to leave Nashville after • Vincent Allen, an NSPA member in Chicago with paying a $62 fine, and his name was apparently never links to a nationwide network of Nazi motorcycle added to the list. That list is principally maintained by gangs. These gangs go under the name National Social-

EIR April 14, 1981 Special Report 29 investigated. During his recent stay in the Denver area,

as well as during his immediate p ost - H ilton interroga­ tion. H i n ckl ey was re ported in a "spaced-out, dazed �tate- as if he did n o t know what had happened." His involvement with the NSPA must be viewed in the context of his rep o rte d severe mental problems and possi b le involvement in psychiatric behavior modifica­

tion t rea t ment . I t should be noted that the Evergreen-Lakewood, Colorado area is dotted with radical psychi atric

progra ms- some of w hich take the fo rm of therapy communes. In a rece n t ly p u bli s hed book, TheAq uarian CUflspiracl' . by M a ri lyn Ferg uso n . a series of radical psyc hotherapy programs were cited in the Evergreen area that engage in precisely the kinds of radical psychotherapy t h at leads to the fo s t ering of political c u lts of b ot h the extreme right-wing and left-wing profile. Hinckley's reported neo-Nazi and environmen­ ist Liberation Front in several areas around the country, t alist bac k grou nd conforms to these kinds of programs. including Los Angeles. They are known to be the most Among the m o st imm edia te l y identified leads fo r violent of all of the neo-Nazi gangs, openly advocating i n vest i ga t io n with respect to Hinckley are: the overthrow of the U.S. government through the • Dr. George UovenmuehIe, formerly the director of barrel of a gun. In the southern New Jersey-eastern the Evergreen Institute and now a private psychothera­ Pennsylvania area, there are active National Sociali st pist in the Lakewood area. Dovenmuehle was reportedly Liberation Front cells. Among the identified members involved in t he fo unding of a Gestalt Institute in the are: Ed Reynolds, Frank Duffy , and William Sickles. Denver area. an i n s tit u te associated with the Colorado

Sickles operates throughout the Northeast, particularly H olist ic Health N e twork. also located in Denver. in Connecticut, in conj unction with a network of hard­ • �aropa, a Boulder. Colorado center advertising core Nazi criminals with long records of prison behavior training in p hil osop h y . music. and martial arts. Both modificationtr eatment. the Evergreen Institute and N a ropa have been prelimi­ It should be noted that the area of Colorado that narily identified as behavior modification programs includes Lakewood. Evergreen, and Denver is heavily fo rmerly linked with the MK-Ultra experimentation in populated by neo-Nazi and related extremist para­ the inducement of p sych osis t h rough the use of mind­ military groupings. This profile of the area dates back altering d rugs . to the 1950s and 1960s when organizations such as the • Mt. Airy Hospital (see above). Christian Soldiers of the Cross (a West Coast parallel to It should be noted that the Esalen Institute in the Min utemen organization of Robert DePugh) were southern California, a si milar radical psychotherapy running active training camps in the Evergreen area. center. was t h e last known address of Charles Manson Furthermore, the Lubbock, Texas area has long during the several-week pe ri o d leading up to the mass­ been associated with right-wing extremist paramilitary murder spree of the Manson fa mily. The Nazi cultist causes. These connections, in turn, track into higher aspects of the Manson fa m i ly directly intersected the levels of the command apparatus through the 1960s activities of the National Socialist Liberation Front and assassination bureau, Permindex, which maintained related m o torcycle gang elements in California. safehouse and training facilities on large private ranches in the area. 4) The profilers Proceeding from t h e view that a broader conspira­ 3) Behavior modification torial n etw o r k was behi n d the March 30 assassination The existence of "national socialist" countergangs attempt ag a inst President Reagan. and that the assassi­ in the United States is properly viewed as a "political nation plan had the c ha ract er of a "Manchurian Can­ cult" capability consciously fo stered th rough the use of didate" deployment. a further level of command is behavior modification techniques frequently within suggested. This level of command involves the profiling prison and drug detoxification settings. It i s in this of both t h e p o t ential assassin and the potential target of context that the role of the NSPA in shaping the profile assassination. of would-be presidential assassin Hinckley is p ro pe rly A tigh tly knit network of professional behavior

30 Special Report EIR April 14, 1981 modification experts and criminologists has been iden­ Reagan was subjected to a severe security threat in the tified that bears special investigative attention in this form of a several-thousand-strong demonstration by regard. Members of this network represent themselves hostile and, in many cases, proterrorist leftist protesters. as some of the world's fo remost experts on terrorism. At points during the President's public appearances, the Among the individuals most relevant to the Hinck­ demonstrators were within 50 feet. Radio reports at the ley case are: time indicated that the Secret Service detachment trav­ • Dr. David G. Hubbard, director of the Aberrant eling with the President had been stripped of their Behavior Center in Dallas, Texas, and former psychiat­ weapons. ric consultant at the Medical Center for Federal Pris­ The presidential security situation during that Can­ oners in Springfield, Missouri. The Springfield facility ada visit was the subject of reported profiling by a is known to be a center for behavior modification and is group of university-based associates of Bloomfield, believed to �ve been the location where Minutemen Hubbard, et al. According to Thomas Mitchell, a head Robert DePugh had been subjected to psychiatric professor at Carlton University in Ottawa and the conditioning. Hubbard is listed as a consulting psychi­ sponsor of the soon-to-take-place Carlton "Conference atrist for the International Law Association, an inter­ on International Terrorism in the 1980s," he personally national network of lawyers involved in the higher conducted a profile study qf the behavior of President levels of deployment control over terrorist networks. Reagan, the Secret Service and the Royal Canadian • H. H. A. Cooper, a British subject residing in the Mounted Police on being faced with a severe security ' United States for the past several years. Cooper has problem, Mitchell is himself known to be a sympathizer personally acknowledged close ties to Italian Red Bri­ of environmentalist causes in addition to being an gades controller Prof. Toni Negri. Despite this, Cooper expert on terrorism. Among his 'cosponsors for the has served as a terrorism adviser to the International Carlton conference on terrorism is Michael Widding­ Association of Chiefs of Police and tne Law Enforce­ ton, a member of the Canadian government's crisis ment Assistance Administration. A close collaborator management team. Thomas Mitchell is identified as a of David Hubbard, Cooper is presently believed to be consultant with the International Law Association. In in attendance at an international terrorism conference his own written works, he has cited personal gratitude in Syracuse, Sicily. to Dr. David Hubbard for his contributions. • Major Louis Mortimer Bloomfield, a leading figure Such professional, in-depth profiling of security within the above-cited International Law Association. procedures and the precise mannerisms of the targeted During the 1960s, the former Special Operations Exec­ victim are preconditions for any professional hit at­ utive major was exposed by U.S. and French security tempt-even an attempt in which the assassin is a services as the director of Permindex, a Montreal-based "Manchurian" deployable. company that bankrolled the assassination of President John F. Kennedy and the over 30 aborted attempts on 5) The British Security Commission the life of Charles de Gaulle (see article below). Bloom­ While the activities of the behavior modification field is a special antiterrorism consultant for the United specialists, and those criminologists who interface with Nations and has in that capacity drafted every U.N. their activities, constitute a critical area of investigation, convention on terrorism -and air piracy. the overall command over such an ambitious terrorist • Vittorfranco Pisano is the direotor of the Europe­ effort does not reside with these technicians. an law division of the Library of Congress and another In the case of the Permindex assassination activities self-described expert on international terrorism. Pisano of the 1960s, that command level decision-making pro­ is currently in attendance at the Syracuse, Sicily terror­ cess was traced to the highest levels of a "one-world ism conference. command structure" deeply interfaced with the intelli­ The particular group of behavior modification and gence networks in the Royal Household of Britain'. criminology specialists cited above are an inner core One of the vehicles through which the. Permindex within a larger environment of witting operatives who assassination apparatus was activated was the British profilefor future terrorist acts. They' have been singled Security Commission, then known as the Radcliffe out because their immediate activities potentially inter­ Commission. The Radcliffe Commission was constitut­ sect the particulars of the Hinckley case. ed in 1962 under the pretext of conducting a thorough The most significant point of intersection (aside of review of the security procedures of the British MI-5, the case of Dr. David Hubbard, whose center in Dallas MI-6 and other secret services. Strong evidence indi­ may have direct bearing on the Hinckley profile) in­ cates that the conducting of this procedural review was' volves the early March 1980 state visit by President merely a cover for the activation of a massive interna­ Reagan to Ottawa, Canada. During that visit, President tional dirty-tricks campaign dedicated to preventing the

EIR April 14, 1981 Special Report 31 United States and continental European governments from embarking on an independent economic and polit­ ical policy profilecontra ry to the interests of the British oligarchy. Permindex director Louis M. Bloomfield was an asset of the Radcliffe Commission at the time of the John Kennedy assassination and the aborted attempts on General de Gaulle. In the past week, under the guise of the MI-5 "spy revelations," British Prime Minister Margaret Thatcher has announced the reactivation of the Security Commis­ The Permindex sion, now called the Diplock Commission after its chairman, Lord Diplock. Linda de Hoyos The Diplock Commission consists of seven long­ by time secret service executives who report only to the Royal Household. The members of the Commission This brief outline of the Permindex organization is based are: on an investigation by the EIR's Investigative Leads staff, • Lord Diplock, Law Lord also using the results of the New Orleans District Attorney • Lord Bridge of Harwick, Lord of Appeals and a Jim Garrison's 1967 investigation and the suppressed Per­ fo rmer member of the High Court mindex papers written by .. William Torbitt" (an apparent • Lord Greenhill of Harrow, former director of the pseudonym), itselfbased on reports by U.S. and French Diplomatic Service and former director of British Petro­ intelligence agencies. A fu ll expose of the Permindex leum organization will appear in the second edition of Dope, • Lord Allen of Abbeydale, former permanent under­ Inc., by Investigative Leads' Jeffr ey Steinberg and David secretary of the British Home Office Goldman, published by the New Benjamin Franklin House • General Sir Dudley Ward, former commissioner of Publishing Company, due fo r release this spring. the Royal Electrical and Mechanical Engineers • Admiral Sir Horace Law, former commander-in­ In the spring of 1963, a series of planning sessions chief of the Naval Home Commission was held at an exclusive resort club in Montego Bay, • Sir Allen Cottrell, former science adviser to the Jamaica, called the Tryall Compound, built at the close government and to the Defense Ministry, currently the of World War II by Britain's Chief of Special Operations Master of Jesus College, Cambridge. Executive (SO E) William Stephenson. Present at various times for the planning sessions were: Major Louis The disinformation factor Bloomfield, still an officer, then of British SOE; Ferenc It should be noted that much of the detailed infor­ Nagy, a wartime cabinet minister in the pro-Hitler Hor­ mation coming out of public sources will tend to have a thy government in Hungary and later its prime minister; strong disinformation factor. It is for this reason that a Georgio Mantello, a Romanian-born Jew who had broad range of leads bridging different levels of the served as trade minister under Mussolini; Col. Clay assassination command have been identified in this Shaw, a former officer of the U.S. Office of Strategic preliminary memorandum. Simultaneous pursuit of all Services and in 1963 the director of the New Orleans five levels of the investigation is one of the most International Trade Mart; Jean de Menil, a White Rus­ effective insurances against severe misdirection. It is the sian emigre and president of the Houston-based Schlum­ overall environment that produces the terrorist capabil­ berger Corporation; and Paul Raigorodsky, another ities activated on March 30 that is the propeJi.subject of White Russian emigre who had served as Special Repre­ any serious investigation. The agencies cited above have sentative to Europe for NATO and was a high-ranking the capacity to deploy thousands of Hinckleys provided officialof the Tolstoy Foundation. that they themselves remain aloof from criminal inves­ Without exception, each of these people was also a tigation. member of the board of directors of Permindex (Perma­ In addition to the areas of investigation cited above, nent Industrial Expositions). The subject of their meet­ special critical attention must be devoted to establishing ings: the assassination of President John F. Kennedy in the reasons behind the security breach that allowed Dallas, Texas on Nov. 22, 1963. Hinckley to enter the immediate environment of the President Kennedy was not the first target of the President after his October 1980 detention in Nashville. Permindex international assassination bureau. In 1967, The rigorous pursuit of that line of investigation will the French intelligence agency SDECE released the re­ most surely lead to the opening up of leads that are yet sult of a five-year investigation into the 1962 aborted to surface and that represent crucial evidence. assassination attempt against President Charles de

. 32 Special Report EIR April 14, 1981 Puerto Rico hotel. Bannister himself had died a year earlier under similarly mysterious circumstances, and his files removed by officers of Division Five, never to show up again. It would take the unexplained deaths of 17 key prosecution witnesses and the launching of a nationwide media witch-hunt against the New Orleans D.A. to bring a halt to the Garrison investigation. At minimum, Garrison had "cracked" the Kennedy connection assassination plot at the operational level directed by New Orleans case officer Clay Shaw. On March 14, 1967, Garrison brought Perry Raymond Russo, an insurance salesman from Baton Rouge, Louisiana, be­ fore a three-judge criminal district court panel. Russo Gaulle, carried out by the right-wing Secret Army Or­ testified that during the middle of September 1963, he ganization (OAS). While the SDECE report traced the had been witness to a conversation between Clay Shaw, origins of the assassination plot to the Brussels head­ his coworker David Ferrie, and an individual named quarters of NATO and to a specificgroup of disgruntled "Leon Oswald." The topic of the conversation-which French and British generals, as well as remnants of the took place at Ferrie's house in New Orleans-was the old Nazi intelligence apparatus, it also singled out Major murder of the President. In the conversation, Ferrie, an Bloomfield's Permindex trading company as the agency agent of Division Five, emphasized the importance of responsible for conduiting $200,000 into the OAS to using at least three marksmen to produce a "triangula­ bankroll the attempt. tion of fire." In February 1967, three days before Garrison was to The Division Five role take Ferrie into custody, he was fo und dead of a massive French intelligence traced the funds to Division Five hemorrhage of the brain. (counterespionage) of the Federal Bureau of Investiga­ According to the Garrison investigation, the person tion, whose chief contract recruitment officer was Ca­ introduced to Russo as "Leon Oswald" at the Septem­ nadian Major Louis Bloomfield. According to the ber 1963 meeting was in all likelihood not the Lee SDECE investigation, $200,000 in black-market reve­ Harvey Oswald charged by the Warren Commission nues were channeled into the Banque de Credit Inter­ with being the "lone assassin" who killed the President. nationale accounts maintained by Permindex. Among The individual was more likely William Seymour, one the sources of those funds was the Bank Hapoalim, the of several persons assigned to impersonate Lee Harvey Israeli bank owned by the Histadrut, for which Major Oswald in the several-month period leading up to Nov. Bloomfield was the primary Canadian fundraiser. 22, 1963. The funds were then passed from Bloomfield's Mon­ Seymour was an agent for a Miami-based detective treal law offices to the New Orleans station chief for agency called Double-Check, a U.S. subsidiary of the Division Five, Guy Bannister. From there, Bannister Rome Centro Mondiale Commerciale (World Trade dispatched .one of his agents, Jerry Brooks Gatlin, to Center), an offspring of Permindex. Double-Check was Paris with a suitcase full of cash for hand delivery to the reported to be the CIA channel for weapons into the OAS generals. Bay of Pigs invasion fo rce. These weapons were provid­ The address of Bannister's Division Five offices,544 ed through the Schlumberger company of Houston, Camp Street, had also been the address Lee Harvey Texas, whose president was Permindex's Jean de Menil. Oswald had placed on the bottom of his Fair Play for Jack Ruby, the man who killed Lee Harvey Oswald Cuba Committee leaflets he passed out in New Orleans in the basement of the Dallas police headquarters, is in September 1963. also known to have been associated with Permindex The same Permindex organization was named in the through David Ferrie and Clay Shaw, with whom he investigation of the Kennedy assassination by New was involved in gun-running and other ventures in Orleans District Attorney Jim Garrison. In 1969, Gar­ Cuba. It is presumed that Ruby drew the "short straw" rison managed to win an indictment in a case against in the plot to assassinate the President, and was given Colonel Clay Shaw for the conspiracy to kill the Presi­ the task of shootil1g the "patsy." dent. Garrison had other evidence linking Ferrie et al. to At the outset of Garrison's investigation in 1967, the Kennedy murder. In February 1964, a Winnipeg Gatlin, the bagman for the OAS, had died when he was businessman overheard a conversation between a man thrown out of a sixth-floor window in a San Juan, (whom he later identified "100 percent positive" as

EIR April 14, 1981 Special Report 33 ..

David Ferrie) and another man (tentatively identifiedas Operations Executive, to which he was recruited in Major Louis Bloomfield) in the Winnipeg International 1938. Under SOE commission and through the SOE's Airport: The topic of the conversation was the success­ prewar special relationship with the United States, he ful completion of the assassination plot against Kenne­ was given an officer's rank in the U.S. Army and dy. The businessman reported the conversation to the assigned to the newly created Office of Strategic Ser­ FBI, who several months later told him he should forget vices-although he was a Canadian national. As a about the episode as it was "too big," and "we can't major in the OSS, Bloomfield was detailed to the FBI, protect you in Canada." especially its counterespionage Division Five, where he When the businessman saw David Ferrie's picture in remained up to and throughout the period of the the paper with a report of the Garrison investigation, Kennedy assassination. he reported the incident anew, and gave an interview on Until 1968, when President de Gaulle exposed the the exchange to McLeans magazine. role of Bloomfield's Permindex, Bloomfield's name was A massive campaign was mounted by the Justice on the letterhead of the law firm Phillips, Vineberg, Department to quash the Garrison investigation. Not Bloomfield, and Goodman. The firm's most prominent only had 17 key witnesses died before they could take client is the Bronfman family, whose vast Seagram the stand. On Oct. 13, 1967, a few days after his empire and holdings are itself a fr ont for the Eagle Star confirmation as attorney general of the United States, insurance group of top British financial interests and Ramsey Clark delivered a speech at the University of the $200 billion a year British drug cartel. Virginia Law School, stating: "Much as' l hate to do it, Bloomfield also assumed the directorship of the I just might have to prosecute Jim Garrison ... [who] Israeli-Canadian Maritime League and became the took a perfectly fine man,Cla y Shaw, and ruined him Consul-General in charge of the Western Hemisphere just for personal aggrandizement." Twenty-four hours of the African state of Liberia. Liberia is, of course, a later, the public relations office at the Justice Depart­ tax shelter and smuggler's port of call, whose unregu­ ment was forced to issue a fu ll retraction of Clark's lated banks account for $7 billion in average daily statement. transfers, most of it related to black-market transfers. The guts of the operation to discredit the Garrison In 1952, Bloomfield became a ranking official of the investigation was carried out by Walter Sheridan, the United Nations Organization, from his position as head of Robert kennedy's "Get Hoffa Squad," who Overseas Representative of the InternatiotJal Executive was hired by NBC-TV just long enough to prepare a Board of the International Law Association. Bloom­ "white paper" against the Garrison probe in July 19'67. field's area o'f expertise: international terrorism, air Sheridan has interesting connections of his own. Now piracy, and civil aviation. To this day, the International the chief investigator for the Senate Labor Committee, Law Association has representatives in nearly every he had started his career, after graduation from Jesuit nation, including the socia:list bloc, with a heavy com­ Fordham University, with Division Five of the FBI, ponent of so-called international terrorism experts. Bloomfield's abbreviated dossier places him, first, and had then entered the counterintelligence division of , the National Security Agency, the most secretive of all squarely in British intelligence, and mak�s him a point- government intelligence agencies and the creation of man both for dirty-money operations and international British SOE chief William Stephenson. terror. He maintains his headquarters in Montreal. By July 1967, Garrison had won fo ur indictments Joining Bloomfield on the board of Permindex are against Sheridan on charges of public bribery in efforts fo ur operatives of the White Russian Solidarist move­ to wreck the Garrison investigation. ment, centered in the United States in New York City's Tolstoy Foundation: Who is Permindex? • Ferenc Nagy, the late wartime cabinet minister in According to evidence presented in the course of the the pro-Hitler Horthy government in Hungary who Garrison inquiry, Clay Shaw, Georgio Mantello, and attended the TryaU Compound planning sessions; Ferenc Nagy, all members of the board of Permindex • Paul Raigorodsky of the Tolstoy Foundation, who and the Centro Mondiale Commerciale, were in place in was associated with Lee Harvey Oswald in Dallas when New Orleans, Dallas, and Los Angeles on Nov. 22, Oswald returned to the United States from the Soviet 1963, handling aspects of the assassination and coverup. Union in 1961; Their deployment had been arranged months earlier • Jean de Menil, of the Schlumberger Corporation. by Bloomfield, and Bloomfield is perhaps the best After fleeing from Russia, de Menil's family settled in starting point for a brief outline of the apparatus that is France, where Jean de Menil married into the Neufliz, the international assassination bureau called Permindex. Schlumberger, Mallet banking empire. In 1958, de Throughout his life, Bloomfield, of Romanian Jew­ Menil became president of the Schlumberger oil diag­ ish extraction, was an agent of the British Special nostic equipment company, which accounts for 50 per-

34 Special Report EIR April l�, 1981 cent of all such equipment in the industry. During the Phoenix, now deceased, and chairman of the board of mid- 1960s, de Gaulle's intelligence services established the Lionel Corporation; that the Neufliz, Schlumberger, Mallet Bank was chan­ • Major-General John Bruce Medaris, former direc­ neling funds to OAS leader Jacques Soustelle for the tor of the Defense Industrial Security Command, which purpose of bankrolling OAS terrorist activities; attempted in the late 1950s to place all U.S. space • Ferenc Simonfay, former Nazi collaborator in programs under armed forces instead of civilian control, Hungary, leader of the Solidarist movement. and a member of the board of directors of the Lionel The Italian component of the Permindex board Corporation in 1958. centers around the figuresof: • Prince Guttierez di Spadafora, former undersecre­ Perm index today tary of agriculture under Mussolini, sponsor of the The international assassination capability of Per­ Sicilian separatist movement, and the chief oligarch and mindex has not been downgraded since its board mem­ landowner in Sicily, whose name has come to light in bers met to plan the assassination of John Kennedy in the continuing terrorist activities in Italy and in connec­ British SOE's Tryall Compound in the spring of 1963. tion with the semi secret terrorist cult, the Muslim Rather, the success of the MK-Ultra project launched Brotherhood, which is the power behind the Khomeini by British intelligence, led by Aldous Huxley, to create regime. Spadafora is undoubtedly associated with an­ the drug counterculture in the United States and the other Permindex board member, Munir Chour Bagi, ensuing spawning of hundreds of cults and left- and uncle of King Farouk of Egypt; right-wing terrorist organizations out of that culture • Carolo D'Amelio, attorney in Rome, representing has provided the Permindex assassination bureau with the financial holdings of the House of Savoy and the a "sociological" screen for targeted assassinations. House of Palla vicini. D'Amelio is also the attorney for This applies to the professional assassins who oper­ the "Circolo Rex" of Italy's black nobility and is ate in the name of the terrorist Red Brigades in Italy, general counsel for the Centro Mondiale Commerciale; and the terrorist Baader-Meinhof of West Germany. • Giuseppe Zigiotti, head of the Italian political In the case of the March 30 assassination attempt party, Fascist National Association for Militia Arms; against President Ronald Reagan, the Yippie organiza­ • Georgio Mantello, financial adviser and invest­ tion is a case in point (see above). ment banker to the House of Savoy. A Romanian The Yippie connection to Permindex runs through Jewish emigre, Mantello is a chief suspect fo r the 1977 its sponsorship and bankrolling by the Playboy Foun­ kidnap-murder of fo rmer Italian Prime Minister Aldo dation, also a bank roller fo r the marijuana lobby Moro. He is the owner of Permindex's subsidiary Capo­ NORML. Playboy's editor Robert Gutwillig is also a cetto, which was revealed by Italian journalists to be the principal shareholder in the Munich-based publishing liaison between the B'nai B'rith International and such house NewMag. In 1980, NewMag deployed one Hans terrorist gangs as the Red Brigades of Italy and the Magnus Enzensberger to the United States for a profil­ Baader-Meinhof of West Germany. ing operation against Democratic Party leader Lyndon Central Europe is represented on the board of H. LaRouche, Jr., whose name appeared on a 1977 hit Permindex by: list of the Baader-Meinhof and who has been the target • Hans Seligman, the head of the Seligman Bank of of assassination threats continuously since. Enzensber­ Basel, Switzerland. Seligman is the last remaining Eu­ ger is also a member of the Playboy-bankrolled P.E.N. ropean-based member of the Seligman family that made International-an organization of literary radical jour­ its vast fortune in the United States during the 19th nalists, who specialize in giving literary support to century. The Seligmans originated in Bavaria as part of terrorist operations. the Hofjuden entourage built up around the Wittelsbach NewMag itself fits squarely in the networks identi­ and Hapsburg courts; fied with Permindex. Its publisher, von Nouhuys, was • Max Hagerman, editor in Munich of the National the Munich control point for the OAS would-be assas­ Zeitung, a neo-Nazi publication. sins of de Gaulle. Jacques Soustelle himself is a director In the United States, members of the board of of NewMag, and arranged for NewMag to provide the Permindex aside from Clay Shaw are: safehousing of the OAS terrorists in the early 1960s. • Roy Marcus Cohn, attorney, New York City, The fact that another bankrolled organization of the former general counsel to Sen. Joseph McCarthy. Aside Playboy Foundation-this time the Yippies-is now from representing members of the dope-linked mafia in publicizing its desire to kill the President of the United New York City, Cohn was a member of the board of States should not be taken lightly. It must be assumed directors of the Lionel Corporation in 1958, when the that the Permindex international assassination bureau corporation was an initiating stockholder in Permindex. has many options available for the murder of a U.S.

• . Joseph Bonnano, syndicate boss of Montreal and President. The Yippies are but one of them.

EIR April 14, 1981 Special Report 35 Who will gain the upper hand in Poland?

by Rachel Douglas

In early February, Polish Defense Minister Gen. under way in and around Poland were extended beyond Wojciech Jaruzelski took the reins of government as their original schedule, so that the forces for a Soviet prime minister, in hopes of ending the brushfires oflocal­ military intervention to curb Solidarity were already issue strikes that were inflamingPoland. He appealed for mustered. 90 days of calm, without strikes, to permit recovery from Not until the night of Monday, March 30 was a staggering idustrial production shortfalls while econom­ nationwide general strike averted by a government­ ic reforms were drafted. union accord, scarcely an hour before it was to begin. Lech Walesa, the head of the Solidarity trade unions, During the 11 days of confrontation, it emerged that exhorted union members to view the Jaruzelski govern­ the incident in Bydgoszcz was a provocation on both ment as the "last" that would treat Solidarity as a partner sides: Solidarity militants, defying Walesa's directive to and therefore to obey the plea for labor peace. oblige Jaruzelski, led the Bydgoszcz sit-in, and the plain­ But on March 19, while West German Foreign Min­ clothes thugs who attacked Solidarity were out of the ister Hans-Dietrich Genscher was in Warsaw for talks on control of the central authorities. economic aid to Poland and renewal of regular political Both the threatened general strike and its prevention contacts between the two countries, the peace was bro­ resulted from decisions taken outside of Poland, and ken. Police in the northwestern city of Bydgoszcz con­ played out by pawns on the Polish chessboard. fronted Solidarity organizers who were carrying out a The militant wing of Solidarity centers on the KOR preplanned filibuster in the provincial assembly hall on (Workers Defense Committee) grouping, which was in­ behalf of the not-yet-legalized farmers' union, Rural strumental in lauching the Polish crisis last year. Solidarity. Expelled into the street, some Solidarity mem­ Through its leaders Jacek Kuron, Adam Michnik and bers were beaten by identified men in civilian clothes, Oxford University-based Prof. Leszek Kolakowski, and three of them landed in the hospital. KOR is under the control of British intelligence services Solidarity immediately staged walkouts in Byd­ and the European leftistsuppor t networks that also assist goszcz, and the union's national leaders went into contin­ terrorism in Western Europe. It has been an instrument uous sessions to prepare a nationwide strike in retaliation of provocations by the Soviet KGB as well, in tacit for the Bydgoszcz incident. Negotiations with the gov­ alliance with these British networks. ernment followed. The U.S.S.R. responded, in turn, with The Polish secret police, believed to be responsible a barrage of press releases containing more and more for both the Bydgoszcz beatings and the recent appear­ serious charges against Solidarity, up to the point of ance in Warsaw of inflammatory anti-Semitic literature, calling it a counterrevolutionary "fifth column" on are closely interlocked with the KGB as well. March 29. Meanwhile, Warsaw Pact military maneuvers The dramatic escalation of the Polish crisis by these

36 International EIR April 14, 1981 two sides, leading to increased expectations of a Soviet approval from Solidarity's national coordinating com­ invasion, came at an extraordinarily sensitive time in mission for the agreement to pledge the union to refrain international politics-even before the attempted assas­ from tension-creating activities such as the occupation sination of President Ronald Reagan. of buildings. Two of the militants beaten in Bydgoszcz France and West Germany, renewing their moves to sat up in bed long enough to dispatch a letter to the expand the European Monetary System into its second, commission meeting, accusing Walesa of selling out, credit-generating phase, are pressing the Reagan admin­ but their bid failed. istration to abandon monerarist policies and high inter­ Walesa, originally a KOR-selected organizer of the est rates. The open factional sparring inside the U.S. August 1980 strikes, has reached his current advocacy administration poses the possibility that Reagan could of moderation in large part due to his close ties to link up with the Franco-German alliance on these poli­ Polish Catholic Church officials, including the entou­ cies. rage of Primate Stefan Cardinal Wyszynski. Although The jaundiced British interpretation of this state of Catholic radicals developed the ideology of "solidar­ affairs was candidly revealed by a senior British official ism" and its movement in Poland, the Catholic advisers to the Frank/urter Allgemeine Zeitung. "The real threat to Solidarity are concerned not to jeopardize the insti­ to security in Europe is not Poland," he said, "but the tutions of the Church by inviting Soviet tanks to roll Franco-German alliance." into the country; they will go as far as they can to And the Polish crisis, tested last summer against implement their low-technology, "human value" eco­ Polish leader Edward Gierek, who was the foremost East nomic policies without pushing Moscow over the brink. European collaborator of France and West Germany The other tempering influence on Solidarity is the before his ouster, is the way to smash the efforts of Paris fatigue of the Polish population, worn down by the and Bonn. effects of eight months of constant strikes: with 1981 The motive of the East European networks implicat­ industrial output at 20 to 50 percent below 1980's in ed in the latest destabilization of Poland stems from various branches of industry, Poland is facing food abiding opposition to the Brezhnev leadership's stake in supply disruptions so serious that in mid-March many rebuilding detente with the West Europeans. The pres­ Warsaw stores had nothing on the shelves except peas ence of this factional view in East bloc councils is dem­ and vinegar. When the Warsaw local of Solidarity onstrated by repeated Czechoslovak and East German passed a resolution to reject the national union-govern­ media demands for Solidarity to be crushed, regardless ment agreement, its worker constituents rejected the of the consequences. rejection. Several U.S. administration officials anticipated countermeasures against a Russian invasion and pro­ The next milestones claimed them in advance with stridence. Secretary of Party members initially favorable to Solidarity are Defense Caspar Weinberger, for instance, said March 27 now also fed up with the radicals. Even Deputy Prime that a Soviet military intervention would spell an end to Minister Mieczyslaw Rakowski, who as a leading party possible East-West arms talks. liberal and member of the Anglo-Polish Friendship Senate Foreign Relations Committee Chairman Society aided the formation of Solidarity in 1980, Charles Percy (R-Ill.) suggested in a March 29 television complained March 25 that "some Solidarity people" interview that arming China would be part of a Western were attacking him personally without cause and response to the Russians. launching "colossal actions" at the slightest excuse. The next questions facing Poland are whether party Breathing room feuding will stymie Jaruzelski's political and economic The March 30 government-union agreement deflat­ stabilization plan, whether Walesa continues to rein in ed such scenarios for the time being. the Solidarity radicals, and what foreign economic aid Jaruzelski and communist party First Secretary can be obtained to cover both the food crisis and Stanislaw Kania, advocating moderation, carried the Poland's rugged debt repayment schedules (see Inter­ day in an 18-hour party meeting March 29-an outcome national Credit.) encouraged by the prospect of West European economic With the food shortage causing panic hoarding assistance and the continued confidence of the Brezhnev throughout the country, the Polish foreign ministry leadership. Even though the Soviet news agency TASS called in ambassadors of the European Community issued daily warnings that Solidarity had become a nations and the United States in mid-March to request threat to socialism in Poland, the daily Sovetskaya emergency food aid. And Poland has reportedly begun Rossiya wrote that the Polish government still had the to miss some loan payments, starting a flurry of consul­ overwhelming trust of the population. tations and strategic planning in the West on how to And Lech Walesa outlasted the radicals to obtain handle the Poles' requests.

EIR April 14, 1981 International 37 Conference Report

LaRouche specifies recommendations on U. S.-Mexico economic policy

This magazine's Latin America editor locked horns with has already publicly rejected as a threat to its industriali­ one of the Reagan administration's top policy-makers zation plans-is the basis for economic and political for Mexico and Central America at a well-attended stability in the region, including Central America. Washington seminar sponsored by Executive Intelligence Democratic Party leader Lyndon LaRouche outlined Review March 26: The debate occurred at the final session the strategic context for the entire discussion in his of a two-day seminar on "The U.S., Mexico and Central afternoonkeynote address. If the Reagan administration America: Conflict or Cooperation?" which brought to­ accepts Mexico's offer to trade oil for advanced Ameri­ gether a high-level audience of over 100 diplomats, Rea­ can technology and capital goods at the upcoming April gan administration representatives, and members of the 27-28 meeting of two countries' presidents, LaRouche business and intelligence communities. argued, America's entire economic and foreign policy Present at the EIR seminar were representatives of can be put back on the right track. the White House; Defense, Agriculture, Commerce, "We now have a real strategic possiblity for change," Treasury, Labor, and State Departments; the Army LaRouche told the attentive gathering, if the U.S. helps Corps of Engineers, the Naval Reserve, and the Nuclear Mexico fill its "shopping list" of high-technology goods Regulatory Commission; diplomatic representatives it needs to meet its ambitious industrialization goals. from European, Asian, African, and a half-dozen Latin This is the best way for the U.S. to abandon the "Global American embassies; and various participants from think 2000" antigrowth policy pushed by the Haig State De­ tanks and intelligence agencies in the Washington area. partment, LaRouche said. Al Zapanta, a member of the Reagan transition team Alexander Haig and Federal Reserve Chairman Paul with responsibility fo r Mexico and Central America, Volcker "want to halt technological progress," the Dem­ currently a vice-president at ARCO Ventures, presented ocratic Party leader charged. "This is a policy of geno­ the high points of what he said was the thinking that cide, of bringing the world population down from 6 went into formulating Reagan's foreign policy. On Mex­ billion projected in the year 2000to 4 billion. This is 100 ico, Mr. Zapanta urged the adoption ofa "North Amer­ times worse than Adolf Hitler." ican Accord," which would be a cleverly disguised ver­ sion of the North American Common Market proposal But can we which calls for uniting Mexico, Canada, and the United produce enough? States. Zapanta also suggested that a model of U.S. ties LaRouche's address came after a morning session with area nations should be with the new Seaga govern­ had heard Dr. Uwe Parpart, the director of research of ment in Jamaica. the Fusion Energy Foundation, present a detailed pro­ EIR Latin America Editor Dennis Small attacked file of the prospects for Mexico's rapid economic Zapanta's idea of Jamaica as a model. "Seaga's 'free growth. Dr. Parpart, who recently completed a ground­ enterprise' approach has meant legalizing Jamaica's breaking study of the Mexican economy based on the large marijuana exports to the U.S., and the financial LaRouche-Riemann econometric model, argued that flowsfr om it. This is no ally of America," Small charged, Mexico would in all likelihood be purchasing upwards "this is a bill of goods we are being sold." of $150 billion in capital goods imports over the decade The EIR editor counterposed to this a U.S.-Mexico of the 1980s, to fuel an 11 to 12 percent growth rate. relatienship based on an exchange of oil-for-technology "We can sell Mexico $100billion in capital goods over first proposed by former Democratic presidential con­ that time period," Parpart claimed, if the right bilateral tender Lyndon H. LaRouche. Small argued that this­ political relations are established between the two coun­ and not a trilateral common market accord that Mexico tries.

38 International EIR April 14, 1981 Parpart argued that the U .S.'s major problem would be that Volcker's wrecking policy against the U.S. economyhad left it physically unable to match Mexico's Mexican press covers demand, and that a prompt reversal of those policies was required. LaRouche in Washington Parpart was followed by Dr. Joseph Dietrich, a former president of the American Nuclear Society and Lyndon LaRouche recently returnedfr om a JO-day tour of chief sciedtist at Combustion Engineering, who dis­ Mexico. And on the day aft er he addressed the Washington cussed how U.S. nuclear policy had to be changed in EIR conference on U. S. -Mexico relations. the Mexico order to take advantage of export markets like City dailies Avance, El Universal, Ovaciones, El Heral­ Mexico's; and by Dennis Small, who reviewed the do, and the semi-official El Nacional, as well as El Norte policies of U.S.-Mexico relations and the steps needed and El Porvenir in Monterrey, all covered the fo llOWing to improve those ties. March 26 UPI wire on the LaRouche speech. Full discussion followed the three presentations, with the audience asking for details on the political and It has been said that Mexico is sitting on top of "a sea economic feasibility of the oil-for-technology proposals of oil," but an American economist suggests that the outlined. Is it possible to modernize Mexico's agricul­ future ofthat nation lies in nuclear technology. ture without changing that country's ej ido system of "The most important characteristic of overall invest­ land tenure? Will the United States be able to competCi ment during the next decades should be nuclear technol­ with Europe and Japan for the Mexican market? Will ogy," declared Lyndon LaRouche .... LaRouche, who Mexico's next president follow in L6pez Portillo's pro­ is an energetic proponent of his country's exchanging development footsteps? technology fo r oil with Mexico, stressed that "only the . capabilities of nucfear energy could satisfy the necessi­ Who runs terrQr? ties" of Mexican development. . . . LaRouche empha­ The worsening civil war in Central America, which sized that "every nation which seeks a technological threatens U.S.-Mexico relations and hemispheric stabil­ future, including the majority of the semi-industrialized ity as a whole, was put under .a microscope on the developing nations, should begin right now developing second day of the conference. In particular, the contro- . thermonuclear technologies. versial question of who really runs terrorism in Central "Mexico," proposed the economist, "should be own­ America was asked, and answered in detail. er of nuclear technologies, developing research and the Criton Zoakos, editor-in-chief of EIR. explained necessary training programs, just like [the state petrole­ that the key to understanding the entire chaotic situa­ um entity] Pemex did in respect to oil technologies." tion in Central America was knowing State Department LaRouche recommended tbat Mexico complement policy in the area. It is that policy which is shaping the thermonuclear development with extensive pumping of supposed "ideological dispute" between "left" · and gas, especially in the eastern part of the country where "right" there. And that policy, Zoakos charged, is natural gas is abundant. He said that if oil exports to the deliberate genocide, depopulation as prescribed by the . U.S. reached 2.5 million barrels per day, during the first Global 2000 report. decade of this agreement Mexico would receive $150 "Ideologies are manip�lated to create this policy billion in high-technology capital goods. result," Zoakos explained, "and there are fools in Latin "These figures are not so impressive when it is ob­ America who aid and abet this population policy." served that it works out to only $2,500of investment for Zoakos was followed by Paul Goldstein, contribut­ every Mexican living in 1991," he added. ing editor of Investigative Leads and a counterintelli­ As far as the U.S. is concerned, if it reached an gence specialist who has studied Central America agreement with Mexico, it "would produce an increase closely. Goldstein flatly characterized Haig's charge in employment in the production of ca.pital goods, which that only the Soviets and Cubans run terrorism as "a would stabilize for a long time the U.S. balance of lie." The State Department has 18 pounds of documen­ payments and would guarantee that Mexico would • tation on the role of organizations like the Socialist achieve its objectives by the year 2000." International and the Jesuits in El Salvador, but they On his thesis of exchanging oil for technology, La­ have released only a tiny portion which concerns the Rouche said that tbis "would represent, in principle, a Soviets and Cubans. "Why are they covering up?" model for a new world economic order in North-South asked Goldstein. , relations. A U.S. government which rejected Mexico's offer of exchanging oil fo r technology would deserve'to Transcripts of the EIR conference are available at $100per copy. be locked up in an insane asylum because of its clearly Order fr om Peter Ennis at (212) 247-8820, or write to EIR. galloping lunacy."

EIR April 14, 1981 International 39 Policy Statement develop Central America. Perhaps the Alfa group of Monterrey could then be interested in using their HYL process of direct reduction steel fa brication in Central America. The natural gas that could be provided through the proposed pipeline would be one of the necessary feedstocks; the only other major needed input is iron ore, which both Brazil and Venezuela A program to rescue have plentiful supplies of. This would be an excellent area for immediate cooperation between the Mexican Central America and Brazilian economic giants of Latin America: to aid the industrial development of Central America. I also think it would be very interesting politically to by Dennis Small get the Monterrey Group involved in Central America. Pemex's activities in aiding the exploration for oil in Th e final panel discussion of the Washington, D.C. EIR the Central American region would also be very useful. seminar centered on the best means to stabilize the current­ The Mexican-Venezuelan oil accord could be usefully ly explosive Central American region. Thefo llowing ex­ reoriented in these industrial and related ways. cerpts were taken fr om the presentation made on this 2) We need significantflows of U.S. credit for devel­ subject by EIR's Latin America editor, Dennis Small. opment in the region. This is self-explanatory. It should! only be added that this would have to be made condition­ The situ�tion in Central America and in EI Salvador al on the absolute elimination of the offshore banking specifically, as it stands right now, is a no-win situation networks that operate throughout the Caribbean basin for the United States. No matter which way we turn, and in Central American nations like Panama. These within the current definedopt ions, there is no solution. offshore banks, as we have documented, are primarily Both sides of this civil war, both the Christian Democrat­ drug-money laundering centers, whose financial func­ ic Junta and the Social Democratic and Jesuit-run oppo­ tions are not only not a contribution to the industrial sition, are in fact controlled by the same international growth of the area, but they are actually a cancer on it. forces at the top. And you can trace ' this command This damned thing should be stopped, the drug-run­ structure right back into the European nobility that runs ning in the area should be stopped. U.S. credit should be the Christian Democracy and similarly runs the Society provided for the kind of industrial production we're of Jesus. I think it is crucial to remind ourselves of this to talking about, but on the basis ofthe elimination of these keep the EI Salvador situation in proper focus .... offshore financial centers. Our proposal is different. 3) The flip-side of this antidrug operation must be The United States and Mexico, on the basis of the fulfilledwithin the realm of direct drug interdiction. The kind of oil-for-technology accords which we've discussed Jamaica problem is perhaps only the region's most ex­ in earlier panels, should jointly address the Central treme one, after Colombia, of the way narcotics produc­ American problem from the standpoint of encouraging tion can entirely take over an underdeveloped economy. rapid economic development as the basis for geopolitical The participation of the Drug Enforcement Administra­ stability. This approach would include: tion in making sure that Central America ceases to be the I) U.S.-Mexico economic cooperation projects transshipment point that it is for drugs into the U.S. throughout Central America. A firstelement of this must would be very useful. This is also a tailor-made opportu­ be immediate fo od relief. This is an urgent problem. nity to apply Mexico's expertise in combatting narcot­ Secondly, there was a project floated once by certain ics-which they demonstrated in their own successful Mexicans to construct a natural gas pipeline south­ effortsin the 1975-77 period .... since there didn't seem to be any interest in the north. 4) The finalpoint I propose for a viable stabilization This would be very useful. Relatively economically it packet for the Central American region, I would like to could be extended throughout Central America, provid­ call the "Charles III Memorial Point." Charles III was ing urgently needed energy supplies and industrial feed­ the Bourbon King of Spain who played a very important stocks for what could then be built up as an industrial role in helping to develop the entire New World in the region south of Mexico's border. A related project would 18th century. Perhaps one of his most significantaccom­ be for private sector companies in Mexico like ICA, and plishments was that he expelled the Jesuits from the public sector companies like Fertimex, to expand their entire Hispanic empire of the time. already significant activities in the region in the areas of This fourth and final point is urgently needed, if we construction and fertilizer plants, respectively. These are to be successful in the project of economic develop­ would be the kinds of industries which could in fact ment which we have laid out.

40 International EIR April 14, 1981 Behind the Pakistani Hijacking

Bhutto fam ily targeted by Britain's Libyan-KGB agents by Daniel Sneider

MA Y 1980-Somewhere in Western Europe I am sitting ations go on, then flies on to Syria where finally after talking to a Pakistani fr iend, an exile and activist in the tense moments the Pakistani regime yields to demands circles of the Pakistan Peoples Party (PPP), the party · for the release of political prisoners who are flown out of founded by the executed Prime Minister Zulfikar Ali the country. Bhutto. We are discussing a recent newspaper report, In the midst of the hijacking and after comes a wave alleging that Murtaza Bhutto, the exiled son of the late of propaganda from the Zia regime, echoed in the West­ leader, is in Kabul, Afghanistan. The source of the ern press, claiming that the terrorists are part of a report; he tells me, is an exiled Pakistani army officer "foreign" conspiracy involving the Afghan government active in anti-regime politics. (and by implication the Soviets) and that the hijackers "I am worried" he says to me as we talk quietly in the are led by Murtaza Bhutto. Young Bhutto is accused of corner of a restaurant. "Zia [referring to the military plotting with the infamous international terrorist Carlos dictator, General Zia UI-Haq, who overthrew the Bhutto "the Jackal." government in 1977] is planning something. This report Amidst this propaganda a massive wave of arrests was planted by Pakistani intelligence to provide an ex­ and political repression · is launched in Pakistan. The cuse to eliminate Begum Nusrat Bhutto and Benazir target is the Bhutto family and the PPP, who are linked Bhutto." He is referring to the wife and daughter of the by the regime to the incident. Mrs. Bhutto and Benazir late prime minister who now leads the PPP. are thrown in jail along with hundreds of others. OCTOBER 1980-General Zia announces the indef­ inite cancellation of national elections that were prom­ The nature of the plot ised (for the third time since the coup) for November; The Pakistani hijacking is part of a plot, but it is not cancelled when it was obvious that the P�P would win an the one described by the regime and its supporters overwhelming victory, a tribute to the memory of the around the world. It is part of a carefully knit conspir­ martyred leader and the vast unpopularity of the funda­ acy, one which my Pakistani friend smelled in the mentalist Islamic military regime. making almost a year ago. FEBRUARY 1981-Despite a ban on political par­ It is a plot against first of all the Bhutto family, a ties and their activity, nine opposition parties-almost terrible conspiracy to finish the job the junta began all those in the country-led by the PPP fo rm the Move­ when it overthrew the Bhutto government, the only ment for the Restoration of Democracy. Shortly after, democratically elected government in the history of the waves of student protests calling for an end to the martial country, hauled Bhutto before a military controlled law regime and restoration of democracy swept the kangaroo court on phony "murder conspiracy" country, forCing the regime to close colleges �nd univers­ charges, and subsequently executed him in the dead of ities. The protests spread to strikes of doctors and lawyers night April 4, 1979 despite worldwide protests. and the Movement planned an escalating series of ac­ Bhutto had become the target of Henry Kissinger tions, aimed at culminating in a nationwide demonstra­ after the Pakistani leader went ahead with the purchase tion/strike on March 23. of a nuclear reprocessing plant from France, despite MARCH 2, 1981-A Pakistani Airlines Boeing jet is Kissinger's pfotests. In 1976, then Secretary of State hijacked on a domestic flightfr om Karachi to Peshawar Kissinger warned Bhutto that he "would make a horri­ in the northwest. The hijackers, three of them, claim to ble example of Pakistan," if he did not give up the represent a previously unheard of organization called Al­ reprocessing plant deal. Kissinger remained active in Zulfikar,presumably named after the late premier. The the persecution of Bhutto even after he left his state plane is taken to Kabul where for almost a week negoti- department post, and is seen by many leading Pakistanis

EIR April 14, 198 1 International 41 as the man responsible fo r Bhutto's execution. As to General Zia's motives, the miliary junta was desperate to extinguish the one leader they knew could challenge their rule if he was alive anywhere. When the job was done they fe lt safe to pursue their policies of "Islamization," the policies of the Muslim Brotherhood which runs General Zia. But they were wrong, fo r Bhutto became perhaps even more a threat as a martyr than he was alive-the popularity of the regime is non­ existent. The regime meanwhile was fa cing doubts as to its viability even from its backers in London and Washing­ ton. Pa kistan is seen by the geopliticians as occupying a key strategic position as the eastern anchor of the Persian Gulf and the "front-line" against "Soviet aggression" in Afghanistan. Rumors abounded in Western capitals that "Zia must go" or perhaps the entire game would be lost. But, it was argued, if we remove Zia, we may lose control entirely. While these games went on, the plot unfolded, heading toward a "final solution" to Zia's problem­ if it were not laundered through two countries where it the elimination of the entire Bhutto fam ily, the wiping gained credibility in the eyes of those who needed to be out of the memory of a national leader, and the duped-Libya and Afghanistan. In the case of both of guaranteed destruction of any hope to unify the oppo­ these countries the role played by the Soviet intelligence sition to the regime. service, the KGB, is such that their involvement is also The unfolding of this plot takes place as the Thatch­ evident. But the evidence suggests that these were not er regime mounted a heavy-handed effo rt to drag the acts of Soviet state policy but rather of elements linked Reagan administration into backing fo r the Pakistani to British intelligence "triple agent" KGB General H. regime, part of a general buildup of the military deploy­ "Kim" Philby, whose specialty is particularly in this ment into the Persian Gulf region, and piggy-backed as part of the world. a policy of support fo r the "valiant Afghan freedom As I have watched detailed accounts of the alleged fighters" against "Soviet invaders." The Zia regime will conspiracy behind the hijacking appear, mostly in the not allow an escalation of the arms supply to the rebels British press, accounts which usually trace the role of unless Pakistan is protected by both security guarantees Murtaza Bhutto, a curious feeling has come to me. The and by large-scale arms supplies. The Reagan adminis­ trail of evidence is presented, sometimes with a degree tration is actively contemplating these moves now. of truth, but when that trail is examined closely it The hijacking has all too conveniently helped set the becomes clear that the fo otprint must have been planted stage for these moves. in advance with the aim of leading to the door of Now let us examine who is really involved and the Murtaza Bhutto and by implication from him to his details of their actions. But before we start I should add fa mily inside the country. that I have decided to reveal information which I have gained through privileged access to the movement Tbe planting of the clues against the Zia regime, a movement I have been a friend Murtaza Bhutto, the eldest son of the Pakistani of for many years and whose cause, in the dear memory leader, was studying in England at the time of the 1977 of Z. A. Bhutto, I have often supported. Not all of what coup and subsequent arrest of his father. Until April of is reported here may be complimentary to my friends, 1979, when his father was murdered, M urtaza cam­ but it is part of the truth that will be told here. paigned unceasingly to try to save his life and his country. He traveled all over the world, including to the The plotters United States and to the Middle East, where Bhutto had The principal elements of the hijacking plot, and many friends, to seek support fo r this cause. Despite what led up to it, were constructed by the intelligence letters and telegrams from heads of state from Moscow services of Pakistan (particularly mil itary intelligence) to Washington, Bhutto was killed on April 4, 1979. and Britain, the latter being the colonial trainers of the Murtaza was determined to avenge this deed and to fo rmer. But the plot could not have gone as fa r as it did serve the cause to which his father had dedicated his

42 International EIR April 14, 1981 life, the development of his nation. He left London on ization he was setting up, later to be called the Peoples April 18, 1979 returning after that date for only a few Liberation Army (PLA). Major Iftikhar, by then having short visits. He first went to the Middle East with the gained a relationship with Murtaza, introduced him to aim of trying to build a political organization of exiles Bangash, whom he met in the major's house in London. against the Zia regime. Searching for support he arrived After several meetings M urtaza was persuaded to form in May in Kabul, capital of neighboring Afghanistan, an alliance with Bangash and his party, and in early which had the virtue of providing access for propaganda March the "Peoples Liberation Movement" was and organizers into Pakistan and a haven for those formed. fleeing Pakistan. It was Murtaza's presence in Kabul Bangash's offer was to provide the services of his that provided the circumstances for the trap to be laid. organization in NWFP, said to be the best-organized It was during this time that two crucial actors in the leftist group in Pakistan, including the offer to carry out plot entered the scene. They are Major Iftikhar Ahmed armed activities against the regime. and Brigadier Usman Khalid, both officers in .the On March 2, 1980 Major Iftikhar boarded Ariana Pakistan army who ostentatiously defected from the Afghan Flight 702 from London to Kabul, carrying army and became political exiles in London, where they with him a list of names of Bangash's people to be given claimed to be supporters of the Bhutto cause. The major to Murtaza's associates there. Curiously the flight de­ arrived in early January 1979 and the brigadier in toured to Karachi, Pakistan due to bad weather and for September of that year. A third officer, a colonel, also two nights Majur Iftikhar, a public defector from the defected with them. army carrying a British Home Office-approved U.N. All of these men were in fact agents of Pakistani passport clearly identifying him, stayed in a Pakistani military intelligence planted by the regime. All of them hotel. served in the military intelligence branch of the service How did the major explain this to his confederates? and were working in London in close collaboration with How did he escape the watchful eye of Pakistani author­ the British Home Office and British intelligence. Major ities? Later he claimed that he had destroyed the docu­ Iftikhar in fact received curiously good treatment from ments with the names of Bangash's people while in the Home Office. He was granted the status of political Karachi and told authorities there that he "lost" his asylum and a U.N. passport for a stateless person­ passport. He arrived in Kabul on March 6 and left on privileges denied far more prominent Pakistani political March 13, returning to London. exiles. On April 13 Murtaza Bhutto traveled to Kabul in Their job was to set up an operation inside the exile the company of Bangash. Bangash claimed that he movement, get close in particular to Murtaza Bhutto, could provide a link to Babrak Karmal, the Afghan who led the exiles, and implicate him and his followers president who had been installed by the Soviets when in "terrorism." With great publicity they held press they intervened in December 1979. (Bhutto's patron had conferences denouncing the regime, established their been Afghan leader Hafizollah Amin, deposed by Mos­ opposition "credentials," and moved themselves into cow and accused of being a CIA agent). On April 20, place. Privately they claimed links to disaffected army 1980 the major again came to Kabul, returning to officersins ide Pakistan who would provide their services London on May 18 and to our knowledge not returning in case of an armed struggle. since. In April a series of bO'11.bings took place in the The curious case of Flight 702 NWFP, apparently the work pf bangash's people, per­ In January of 1980 another actor entered the scene. haps an effort to e8tablisn the "credibility" of his He was Afzal Bangash, a Pakistani leftist lawyer from credentials. Curiously when the PLA tried to send a the Northwest Frontier Province (NWFP) bordering group of organizers secretly into Pakistan, where they Afghanistan, where he had organized the Kisan Maz­ were to make contact with Bangash's people, they fo und door party. Bangash had been a communist who broke the Pakistani army waiting for them. from the party on his own and fo rmed the Kisan Mazdoor in the 1960s, based among tenant farmers The Libyan connection from the NWFP. He had been accused among the left Simultaneous with these developments, another part of being a Maoist, but in recent years had presented of the trail was being put into place-the Libyan himself as pro-Soviet and a sympathizer of the April connection. The, key to this was the other Pakistani 1978 Afghan revolution. military intelligence officer, Brigadier Khalid. Khalid, Bangash arrived in London after "fleeing" Pakistan working with the major, set up a newspaper based in through Afghanistan. In February Murtaza Bhutto London called Inqlab (Revolution), a paper with only a visited London, seeking political support for the organ- thousand or so circulation which was in fact a front and

EIR April 14, 1981 International 43 a useful device in later implicating Murtaza Bhutto in Pakistani government controlled media is none other alleged terrorist actvities. than that Sept. 27 issue of lnqlab. The evidence thus was Khalid was a Khomeini type in his proclaimed manufactured by the same people who now are using it ideology-opposed to the PPP and for a Qaddafi style to the hilt-the Pakistani military junta. "one-party state" to be formed in Pakistan. Clearly such were not the views of MUrtaza Bhutto. The finalacts lnqlab was financed out of the Libyan embassy in The convening of the tribunal, whose decisions London-hardly a concealed fact as the paper was full could be announced any day, helped set the stage for of pro-Qaddafi propaganda including advertisements to the final acts. purchase Qaddafi's "Green Book" from the Libyan We must firstpick up the trail of Afzal Bangash, the embassy. Khalid set up a PeoplesLiberation Movement Northwest Frontier Province leftist. According to in­ (PLM) as a political front and with lots of money at his fo rmed sources Bangash left Kabul in the late fall, disposal became very visible and active among the large sometime around October-November of 1980 and by Pakistani community in Britain, and elsewhere in Eu­ December was in London again where he has since rope. He claimed also to be a defense adviser to stayed. According to our source Bangash had been Qaddafi. publishing a paper which was being smuggled into the Khalid in collaboration with the Libyans-whose NWFP which took a left, militant and anti-PPP line. links to British intelligence and British-KGB networks This activity at some point crossed the qoundary of are known-set up a training camp in Libya supposedly Soviet toleration (assuming there was some Phijby­ to train young Pakistanis for guerrilla warfare. The KGB control previous to this, which is likely), and the camp was run by his sister, Samina, and his brother-in­ Soviet and Afghan authorities moved in and closed law, Col. Usnan, also a Pakistani military officer. down his operation. This may reflect moves by the Through a connection inside Pakistan, also run by Brezhnev elements who would not favor the destabiliz­ Pakistani military intelligence, leftist and pro-PPP stu­ ing politics Bangash was pushing. dents were recruited and provided visas and tickets to The beginning of this year found Bangash, Brigadier Libya. According to an eyewitness account the students Khalid and Major Ahmed all in London, and, our were told that this was an operation of the PPP and that sources report, all working together in something called everything was being done "on the orders of Begum the Organization of Overseas Exiles. Bhutto." They were told "you will be met in Tripoli." The hijacking itself is almost an anticlimax. Its In Tripoli, they were met by Khalid, the sister, and Col. major purpose has been 'to surface all the parts of this Usnan and taken to the camp where they were trained trail of footprints at the door of Murtaza Bhutto and to blow up bridges, hijack planes, etc. Some 30 students provide the pretext for the massive politicat crackdown were brought in on this basis. in Pakistan. One major source for much of the stories in In the meantime the Inqlab operation was being run the British press is none other than Maj. Iftikhar to drive a wedge between Murtaza Bhutto and regular Ahmed, who was identified in the March 19 Guardian circles of the overseas PPP as well as to move to set up as the London end of the PLA. Major Iftikhar is also the "incriminating evidence." The crucial piece of "evi­ employed by Credit Commercial Insurance Company in dence" was placed in the Sept. 27, 1980 issue of Inqlab. London, a subsidiary of the Bank Commercial and Under the headline "Bhutto's Son Forms a Guerrilla Credit International (BCCI). Army," the paper claimed that Murtaza Bhutto was the This bank is owned by a Agha Hasan Abidi, the key head of the PLA which was carrying out armed activ­ financier of the destabilization operation against Bhut­ ities against the army. Also in that issue of lnqlab was a to. A strange employer indeed for the intrepid majorl purported interview with Murtaza claiming credit for alleged guerrilla actions carried out in Pakistan. The hijackers The importance of the lnqlab operation has only The case of the hijackers themselves is less conclusive recently become apparent. In January of this year it was but fits the pattern. The leader of the hijackers is announced that a closed military tribunal was being Salamullah Tippu Khan, described as a student at fo rmed in Peshawar to try 24 people including Murtaza Karachi University wanted for the bombing murder of Bhutto (12 of them were not in the country) for "waging a Muslim Brotherhood youth leaderduring the campus war against the country" and committing acts of "sab­ disturbances in February. Tippu is a member of the otage" and "subversion." The penalty is death and Pathan ethnic group from the NWFP, as is one of the could also mean the confiscation of all the Bhutto other hijackers, suggesting in fact that they may have property in the country. come out of Bangash's network. The key to the evidence being presented in the One story which appeared in the Indian press origi­ tribunal and now being reproduced throughout the nating from the United News of India press service,

44 International EIR April 14, 1981 claimed that he was a member of the Pakistani Secret Israel I' Service Group who was trained at a special camp in Pakistani-occupied Kashmir by Chinese instructors. The third hijacker is fr om Azad, the Pakistani-held portion of Kashmir. Shimon Peres makes But it is other features of the job which give it away. According to 'even the Pakistani accounts, it is the overture to Arabs hijackers who identified their "leader" as Murtaza Bhutto. Despite their claims that Murtaza Bhutto met them at the Kabul airport, Bhutto, in a message report- by Mark Burdman / ed in the Guardian, explicitly denied any foreknowledge of the hijacking. The intensifying political fight in Israel leading up to Indeed, aside from the footprints placed at Murta­ that country's June 30 national elections has taken an za's door, there is no evidence at all, even of the kind important turn with the March 25 unveiling by Labour the regime is manufacturing, to link Mrs. Bhutto and Party prime minister candidate Shimon Peres of a major Benazir to these activities outside the country or to the new initiative toward Israel's Arab neighbors and, indi­ hijacking. rectly, toward resolution oflsrael's economic problems. This writer can reveal that well before these events, Although Peres's initiative, detailed in an interview early in 1980, Benazir Bhutto sent a message to London with the Jerusalem Domestic Television Service, has in which she explicitly warned that the army "defectors" gone almost completely unreported in the Western news were "fifth-columnists" who were not to be trusted. She media, it is potentially the most significant policy for­ sent instructions to regard all army "defectors" as mulation made by an Israeli statesman since at least the plants of the regime. Apparently these messages never October 1973 Arab-Israeli war. reached Murtaza. Further, to our intimate knowledge, In the March 25 interview, Peres offered to several of there was absolutely no contact fo r an extended period Israel's Arab neighbors an arrangement in which "pro­ of time between Murtaza and members of the family moting economic cooperation" would be linked to "j oint inside the country. We also know that it was the wish of action against terrorism and fanatic movements." Mrs. Begum Bhutto that the use of Kabul as a base of While not all the details of this conception were made operations cease precisely fo r fear that the regime would public in the interview itself, Peres indicated that a key

, use that fact to its own ends. salient feature of his plan was Israeli cooperation with France and other European nations in opening up lines The plot against the Bhuttos of communication with the Arab states-a departure The plot against the Bhuttos is not over yet. Pakista­ from the wall-to-wall hostility toward France that has ni circles seriously fear that the regime is now set to tended to operate in the Israeli political spectrum. eliminate the entire Bhutto family. On March 18 Gen­ Peres also asserted that his plan signaled the opening eral Zia proclaimed that he would take "severe action" of a "new chapter" in Israel's history, as Israel makes against the hijackers and those responsible. Asked how efforts to become a working partner in the development he would do that with the hijackers now in Syria, the of the Middle East. This, again, is a new departure, this general replied: "You just keep quiet and see the result. time away from the dominant geopolitical notion of If they are not in the country, it doesn't mean that they Israel serving as a NATO-connected proxy power. will escape Allah Almighty." Finally, Peres insisted that Israel must "take the Indeed, according to well-informed sources in Lon­ initiative" in launching a new political arrangement in don four teams of Pakistani hitmen, four men in each the Middle East. This quality of voluntarism challenges and trained as commandos, have now been dispatched. the "victim mentality"-induced passivity that has char­ Their targets are the two sons of Bhutto, Murtaza and acterized mainstream thinking in Israel for much of its his younger brother Shahnawaz. Mrs. Bhutto and Ben­ history. In the past, Israeli leaders have characteristically azir are under arrest in an increasingly repressive situa­ used the excuse of Arab hostility to avoid extending tion in which the regime is trying to isolate them from economic cooperation-linked peace offers to its Arab the rest of the political opposition. neighbors. Will General Zia and his backers in London and According to an assessment presented to EIR by an Washington succeed in this plot? That cannot be fore­ associate of Peres, the March 25 offer is "not only meant told. But, the Pakistan Peoples Party and the Bhutto for Egypt, Jordan, and Saudi Arabia [the countries tradition remain the best hope for stability and devel­ named explicitly by Peres in the interview], but also to opment in Pakistan and the region. Any attempt to Iraq and other countries as well, as the circumstances remove that hope is a formula for disaster. become appropriate."

EIR April 14, 1981 International 45 The same source (old £:1R that Peres hopes to "make the outlines of his policy clear in personal meetings with Arab leaders and to t: nlist Western European leaders, particularly West Germany's H elm u t Schmidt, in explor­ ing the vla bility of the plan_" The source indicated that Peres's plan is " fully con­ sistent" with the mJny Middle East policy statements made by 1:1 R fo under Lyndon H _ LaRouche. LaRouche has insisted that reg i o n a l economic development pack­ ages are the on I) haSlSfor isolating the fa natical Q addafi ­ Khomeini axis and shifting the regIOnal configuration o ut of the destabilization-and-crisis-management frame­ work defined by British intelligence and its allies in the European black nobility. LaRouche has also indicated that a credible Israeli offer of reg i o nal economic cooperation and approaches toward Euro pe would open up t he possibility fo r Israeli in tegration into the French-German plan fo r eventual expansion of the E uropean M o neta ry System into a European Monetary Fund capable of extending vast gold-based credits for l a rge - scale n uclear-energy-based proj ects in the developing world. Peres's nod toward France is partic ularl y interesting i n this light , since it is the French who have most vigor­ ously pursued an atom s-fo r - peace co nceptio n in the Mid­ Shimoll "ern dle East, through nuclear reactor export arrangements with Egypt and iraq. and well-advanced discussions with Morocco. A lgeria , and other Arab natio n s . Short of t he a ggressi ve organizing perspective indi­ A new Israeli nationalism? cated above, Peres's plan is likely to fall prey to some of As promising as Peres's "new initiative" may be, the the seamier facts of life in the Middle East today. danger exists that It will die in its infa n cy, unless it becomes the: .foundation fo r actively mobilizing the Isra­ A delicate situation eli electorate around a new role fo r Israel in the Middle The Middle East is presently entering an extremely East. Such a mobilization would de pend on defining delicate phase, as a result of the intersection of several clearly, lor the fi rst time in Israei's 3 3 -yea r history, what factors. in clud ing the irresolution of policy determina­ Israel's interests are as a sovereign nation-state in the tio n in Washington, the continuation of the Iraq-Iran Middle l:-ast. Heretofore. Israel's i n terests have largely wa r . and scarce ly disguised British intelligence efforts been defined in terms of ZionIst ideological baggage to destabilize Saudi Arabia and its Gulf neighbors. The and British geopolitIcal gamesmanshi p , a combination situation is made even more volatile by the incendiary that has created a ca pa bili ty fo r a certain kind of unity antics of certain of Peres's political opponents in Israel. in times of lTiSIS, hut hardly for a tfuly positive sense of For the past several days, Prime Minister Menachem national ide ntity. Begin and Chief of Staff Rafael Eytan, in collaboration A nallonalis{ alternative to the Zionist-geopolitical w ith their m i rro r- i mage extremists in the Palestinian concept ion that would be consistent with Peres's March movements, have been heati n g up border tensions with 25 design would be to define Israel as the radiating both Lebanon and Jordan, tensions that could be center o/ lechn% g/(-al and scienlitic development fo r the transformed into g i a n t international crises in the weeks enlire Middle EasT. Such a co ncepti on would reflect the leading up to Israel's elections. Top-level Israeli intelli­ density of scientists. (�ngineers. and skilled workers that gence sources have in fact warned EIR that the Begin Israel has developed over the past decades. It would team may be co unting on just such an eventuality to also be the key to reversing the profound sense of declare a national emergency and usurp the election national malaise reflected in sagging national economic process by virtual fiat. p erformance. hig h rates of emIgration, and growing Particularly menacing is the sudden-and timely­ tal k about the need fo r a dlctatonal "strongman" to March 31 raid into Israel by Palestinian guerrillas run the country operating out of Jordan. Chief of Staff Eytan labeled

46 International EIR April 14, 1981 the raid a "very unusual development which is viewed with extreme gravity in Israel." The "development" occurred only days after both Syrian President Hafez From the Peres interview Assad and Ahmed Jebreel, the leader of the Syrian­ controlled extremist Popular Front for the Liberation Excerpts o/ a March 25 interview granted by Israel Labour of Palestine General Command, announced that Jordan Party Chairman and prime ministerial candidate Shimon would be used as a base for Palestinian terrorist opera­ Peres to the Jerusalem Domestic Television Service. tions into Israel. Reliable intelligence experts estimate that Assad, In my estimation, the entire Middle East, and Israel Jebreel, Begin, and Eytan are in full alliance in a in particular, is currently in a special predicament. The conspiracy to destabilize Jordan's King Hussein, and next four years will not be like the previous four years. thereby knock the props out from one of the main After Camp David, given a new administration in the countries mentioned by Peres in his March 25 interview. United States, and Reagan.signifies not only a personal Assad notably accused King Hussein on March 26 of change but a change of world concept and a view of this "high treason" because the king's brother Muhammad area in a regional and global perspective .... had reportedly met with Peres in London. In a parallel Yet I am convinced that with a correct Israeli policy deployment, the pro-Begin press in Israei has been it would be possible to establish a regional antitcrror lambasting Peres for his public and private overtures to setup to counter Soviet or alien penetration and fanatic Arab leaders. forces and at the same time promote economic coopera­ tion. Israel should take this initiative. As party leader, it The Dayan factor is my duty, on the eve of the elections, to go and meet all Another is the close collaboration in the Israeli the prominent figures to examine the possibilities and the electoral campaign between the Herut-Likud and incumbent interlocutors. Let me tell you one thing: I Moshe Dayan, whose family is intimate with top Israeli have returned optimistic from my travels .... mafioso Mordechai Sarfati ("Mentesh"), according to In my opinion, under the term "Jordanian option," a revelations published in the March 27 Jerusalem Post. host of things can be done, such as, for instance, begin­ Post reporter Mark Segal reveals that "Mentesh" fund­ ning economic cooperation-and· I talked about this ed the weddings of Dayan's children; one of these with Arab leaders and European leaders, and, again, I children was arrested by West German authorities in am not impressed with' declarations ....I am not walk­ the 1970s and implicated in coordinating a massive drug ing around feeling that I represent a weak Israel; I walk and prostitution ring extending throughout Europe and around feeling that I represent an Israel that has strength, into Latin America. an opinion, initiative, and also needs the appropriate­ Dayan has become the near-linchpin of the entire restrained-style .... Likud-Herut re-election strategy. He is expected to I believe that Saudi Arabia needs peace and stability announce at any moment that he is going to head a new in the Middle East no less than we do .... Let us fight political party in the elections. Previously, Dayan had terrorism together ....We can achieve economic coop­ acknowledged that such an election bid would have eration, we can achieve joint war against terrorism, we only one aim: to wreck Labour's chances for a majority. can face up to fanatic movements .... Begin aides and Dayan representatives have mean­ [O]n the regional level, Israel can make a contribu­ while been meeting to map out how they can prevent tion in the region. In my opinion, the Middle Eastern the public release of the Agranat Commission Report chapter has now opened in Israel's fo reign policy. I know on the 1973 war. The report allegedly contains extensive many people do not like this. It is not the firsttime in my sections, never before made public, documenting how life that I, and not only I, have reached a conclusion that Dayan sabotaged Israel's intelligence capabilities on the there is room for a new situation, for a new initiative, eve of the war. According to one Israeli source, "Re­ and then all the people of routine who are accustomed to lease of the report now could wreck Dayan's career slogans begin to ask: What is this? Who is this? forever. Begin is determined to prevent this from hap­ Believe me, the same happened to me in France ... pening." surpriseand criticism. I do not intend to be fr ightened by Peres's allies are lobbying for the report's release, as this. It is my duty, as a representative of a responsible a countermove to Dayan. One irony of the current party, to examine 'new situations. I believe that the Israeli situation is that it was Labour's anxiety over Middle Eastern chapter has now begun in the Israeli Dayan's moves that was in part responsible for nlOtivat­ foreign policy. We are not used to this. It seems strange ing P-eres's March 25 new foreign policy offer. But to us .... I believe that a lot depends on Israel's initia- precisely to nip Peres's initiative in the bud, Begin and tive .... I do not want others to make peace for us and Dayan are greatly intensifying their collaboration. instead of us.

EIR April 14, 1981 International 47 MiddleEast Report by Robert Dreyfuss

Britain stirs unrest on Saudi border Deployment Force is essentially to Th e travels of u. K. Defense Minister John Nott coincided with stir up anarchistic rebellions aimed South Yemeni intrigues. at challenging the Fahd faction of the Saudi elite, seen as American allies. There were reports in March that Saudi forces had engaged North Yemen in fighting to halt Kept in a state of controlled ten­ satisfied withef forts ofthe Popular what Riyadh perceives to be a turn sion since the Yemeni civil war in Front fo r the Liberation of Oman, in North Yemen toward its south­ the early 1960s, the Yemeni region based in South Yemen, to destabil­ ern neighbor. And last week, Brit­ on Saudi Arabia's southwest bor­ ize the Om ani regime, and envi­ ish reporter Michael Adams, editor der appears to be headed for anoth­ sions a military challenge of the of Middle East International, a er blowout, of even bigger dimen­ Omani regime of Sultan Qaboos. mouthpiece for a British intelli­ sions. The instigatoris the Marxist For ordinary political observers gence front, the Committee for regime in South Yemen (the Peo­ the Yemens have remained an enig­ Arab-British Understanding, wrote ple's Democratic Republic of Yem­ ma, as they are one of the most that there is growing hatred of Sau­ en), a longstanding enclave of Brit­ backward areas of the Third World, di Arabia by Yemenis, and Yemeni ish intelligence covert operations. a status enforced by British colonial workers in Saudi Arabia, a signal of A major turn within the regime policy. future tensions on Saudi Arabia's of North Yemen was signaled last Since the civil war the Yemens southern border. week when its Radio Sanaa an­ have been cultivated by Britain and British Foreign Office agent nounced that a number of parlia­ the notorious British triple agent, Professor J. B. Kelly, at a recent mentarians and political leaders, Soviet KGB General Kim Philby. Washington briefing, warned that closely allied with Saudi Arabia had Before defecting to the Soviet the Yemenis in Saudi Arabia would been placed under house arrest. Union, Philby was in the Yemens, be used "by Marxists" as "cannon North Yemen's more conserva­ manipulating the civil war that pro­ fo dder" against the Saudi regime. tive regime has close links to the duced the original division between Kelly is known to have had Saudi ruling family, historically op­ the moderate North Yemeni regime lengthy transatlantic telephone dis­ posed to any unification of the two and the ultra-Marxist regime in cussions beforehand with British Yemens for fear that the renegade South Yemen. lawyer Lionel Bloch on the future regime in Aden would dominate a Behind the current unrest, Lon­ of the Persian Gulf. That week reunified state and destabilize Sau­ don is also running a protection Bloch himself issued an editorial di Arabia. racket with the Arab regimes of the commentary in the London Sunday South Yemen has been actively Gulf. As rumors spread about the Times advocating a "Western mili­ organizing liberation movements Oman-South Yemen border skir­ tary invasion" of the Persian Gulf. throughout the Arabian peninsula mish, Nott proposed to Oman, Ku­ Bloch expresses the view that it and the Persion Gulf to confront wait, Bahrain, and the United Arab "would not be a catastrophe" if the "pro-American" regimes, most im­ Emirates that Britain increase its West occupied the oil fields and portantly Oman, for cooperating ground fo rces in the Gulf states to even destroyed them. Both Bloch with the controversial Rapid De­ provide security for the unrest Brit­ and Kelly are members of the newly ployment Force. ish intelligence is creating. formed Committee for the Free The day that British Defense The prime target is Saudi Ara­ world, a gaggle of social-democrat­ Minister John Nott arrived in bia. Riyadh has repeatedly declared ic cold warriors whose aim is to Oman last week, a border conflict that it is not interested in any for­ steer the U.S. into a deadly' military reportedly erupted briefly between eign military presence in the area. move into the Gulf. South Yemen and Oman. South The reason Britain and its Gulf as­ Yemenese President . Mohammed sets have crafted a propaganda This column was contributed by Ali Nasser is said to have been dis- campaign against the U.S. Rapid Th ierry LeMarc, Bonn bureau chief

. 48 International EIR April i4, 1981 DatelineMexico by Josefina Menendez

Time to clean out Alan Riding wealth, make our southern neigh­ Th e New York Times corr..espondent in Mexico is a one-man bor a pre-eminent partner for U.S. friendship and trade, Riding slickly disinformation service. and cynically manufactures a pan­ orama of "rich getting richer and poor getting poorer" in which an "authoritarian" state sets the con­ ditions for an Iran-style explosion. Since President Reagan has fu lly reworked the same story fo r Take a look at the individuals scheduled a meeting with Mexico's the Washington Post, The first news and organizations Riding has fa­ President Jose Lopez Portillo this most Mexicans heard of their for­ vored in his background features spring, it is important to clean up eign minister's action was from the over the past three years. It is a one of the persisting contributory New York Times wire service; only catalogue of Mexico wreckers. factors in the troubled U.S.-Mexico as an afterthought did the fo reign There's the Jesuit-run clearing­ relations: dishonest news reporting. ministry circulate a release for the house for environmentalism, "hu­ A husband-and-wife news maf­ domestic press. man rights" causes and terrorism, 'ia operating out of Mexico City is When Lopez Portillo and Rea­ the Center for Social Communica­ responsible fo r three-quarters of gan met the next week, the fishing tion (Cencos). There's Rosario what most U.S. opinion-makers see issue was not even mentioned in the Ibarra de Piedra, a virtual Riding as their daily-press news from Mex­ singlJlarly cordial meeting. creation, who heads a fraudulent ico. They are Alan Riding of the But Riding is usually much "political prisoners defense com­ New York Times, a British nation­ more circumspect, reflecting the re­ mittee." al, and his wife, Marlise Simons, fining influence of his Jesuit associ­ The catalogue goes on: Herber­ Mexico correspondent for the ates. Alan Riding is the journalist to Castillo, the proterrorist engi­ Washington Post, Their coverage is of the left-JesuitTheolog y of Liber­ neer and would-be ayatollah who is an unbroken stream of disinforma­ ation, and from intimate personal leading a crusade to stop Mexico's tion and distortions, knowledge poured streams of fa­ oil development and thus its eco­ On Dec. 28, 1980 Riding vorable coverage of Central Ameri­ nomic development. Riding calls teamed up with a faction in Mexi­ ca's Jesuits into the U.S. media in him the "respected critic" who is co's Foreign Ministry to try to scut­ the two years leading up to the "the conscience" of his nation. tle the Reagan-Lopez Portillo current slaughter in EI Salvador. Then Carlos Hank Gonzalez, the meeting at Ciudad Juarez set for To no one's surprise, the flashy "strongman" mayor of Mexico one week later. Foreign Minister fr ont-page New York Times inter­ City who coordinates terrorism Castaneda and his stepson in view Dec. 27, 1980, announcing from backstage to clear his route to charge of "North American rela­ with as much fanfare as it lacked the presidency. tions," Andres Rozental, called up fo undation the "final offensive" of No list would be complete with­ Riding to give him 24 hours pre­ the left in EI Salvador, was con­ out Francisco de la Cruz, the man vious notice that Castaneda intend­ ducted by Alan Riding. Riding extolled in 1977 as the sav­ ed to let existing fi shing treaties Riding currently is attempting ior of Mexico City's land squatters. with the United States lapse. to set Mexico and the United States In March 1981 de la Cruz landed in Riding knew what to do and the at odds over EI Salvador as his jail with a hundred charges against next morning the story was promi­ crowning achievement. him in the most spectacular antiter­ nently featured on the front page of The characteristic fo rm of Rid­ rorist bust in Mexican history. the New York Times. complete with ing's dispatches is promotion of the If you see Riding's byline on Riding's warning that the issue same conditions of Jacobin anarchy any coverage of the next Lopez could derail the Reagan-Lopez in Mexico as that spreading Portillo-Reagan meeting, assume Portillo summit and would defi­ through Central America. At a time the opposite of what is reported and nitely figure on the agenda at the when Mexico's exciting industriali­ you will be headed in the right di­ border meeting. Wife Marlise duti- zation projects, based on its new oil rection.

EIR April 14, 1981 International 49 InternationalIntellig ence

guan government into a psychotic "anti­ African-supported Angolan rebel Jonas Weinberger wants Jap an imperalist" mood. The Eastern Estab­ Savimbi. His trip was sponsored by the lishment liberal press such as the New fo r regional security right-wing social democratic organiza­ Yark Times is pointing to the "strange" tion Freedom House to lobby in th,.U.S. fact that the State Department did not for military support. u.s. Defense Secretary Caspar Weinber­ have to do this, since only weeks ago, Haig, who had originally called for ger told visiting Japanese Foreign Min­ Alexander Haig's people had announced the U.S. to build up Savimbi for anti­ ister Masayoshi Ito that Japan should go that Nicaragua was restricting its aid to Angolan operations, switched gears in beyond simple self-defense to take on a the guerrillas. his meeting with Nigerian Foreign Min­ regional security role, according to Jap­ Haig's provocations are already hav­ ister Audu May 27 and said that U.S. anese press reports. All governments in ing the desired effect. A Sandinista leader southern Africa policy was going to fo­ Japan have officially viewed their post­ called on April 2 for Nicaragua's popular cus on negotitions for Namibian inde­ war constitution as limiting Japan to self­ militias to get themselves ready for war, pendence instead. defense. arguing that the fact that the United Specifically, according to a March 28 States is cutting aid while Somocista ex­ Kyodo News report, confirmed to EIR iles in Miami increase paramilitary train­ by Pentagon sources, Ito told a Tokyo ing means that the U.S. is preparing to cabinet meeting that Weinberger urged invade. Berlinguer stumbles; Japan to take responsibility for the entire The decision not to give Nicaragua will Italy fa ll ? northwestern Pacific region including the last $15 million aid package approved sea lane defense extending to Guam, last year can only exacerbate the critical The Italian oligarchy, operating through northern Phillipines, and Taiwan. situation in Nicaragua's economy. Answering questions in Japan's Par­ its assets in the Christian Democracy, is liament, Ito denied the press accounts of setting Italy up for another government his report to the cabinet and said Japan collapse, making the Communist Party could not play a regional military role. the fall guy. Ito did admit Japan was requested to State to relaunch After announcing British-style aus­ "improve its ability to guard the neigh­ terity measures last month, the govern­ boring waters." At present Japan limits Na mibia negotiations ment is now threatening to directly chal­ its sea lane defense to 1,000 miles, far lenge the PCI-dominated- union move­ short of the Weinberger request. The Reagan administration is sending a ment with restrictions on the right to Japanese sources told EIR that de­ fact-finding mission to Africa to re­ strike, slashes in the cost of living escala­ spite Ito's public opposition, both Japan launch efforts to reach a negotiated set­ tor, and similar measures, provoking the Defense Agency and Foreign Ministry tlement for the independence of Nami­ three trade union confederations to officials have long studied aridfavor the bia, the White House said on March 31. counter with a threatened general strike regional sea lane protection role for Ja­ By insisting on relaunching the ne­ that would collapse the government. pan. They only fe ar it wiII be politically gotiations conducted by the U.S., Cana­ The union decision to issue its threat unacceptable to the Japanese people, so da, Britain, France, and West Germany was made only after an unprecedented it is not discussed in public. for the independence of South African­ delay, pending proposals for an alterna­ controlled Namibia, the Reagan admin­ tive government coalition should the istration has dealt Secretary of State present one fall. Haig a setback. Haig had been publicly Such a proposal has finally been I advocating that the U.S. build up an made by PCI head Enrico Berlinguer, Haig cuts aid insurrectionary movement in Angola to previously a supporter of a progrowth weaken that government before settling PCI-DC "historical compromise" be­ to Nicaragua the Namibia independence issue. tween the nation's two largest parties. Assistant Secretary of State designate Berlinguer, in a volte-face, de­ The State Department announced April for African Affairs Chester Crocker will nounced the DC, saying that no new I that it would terminate all economic conduct the mission, which will also visit coalition should accept them. Instead, ' aid to Nicaragua on the basis of that Mozambique, Angola, Zimbabwe, and there should be a "leftalternativ e"; the nation's assistance to the Salvadorean Nigeria. PCI and Socialists. Later, another PCI guerrillas. The decision has fallen as a Due to the Reagan administration's spokesman said the Communists would political bombshell in Central America insistence on Namibia negotiations, accept PSI leader Bettino Craxi as pre­ and is clearly designed to drive ultrarad­ State had to postpone for the second time mier: Bettino Craxi has, in the past, been ical Sandinista elements in the Nicara- in March a trip to the U.S. by South resoundingly denounced for his role in

50 International EIR April 14, 1981 Briefly

• CHEVRON STANDARD, Ltd. announced last week that de­ velopment of the huge Hibernia oilfield on the Grand Banks off Newfoundland will not be eco­ nomical because of Canadian gov­ supporting austerity and running terror­ The novel, a semifictional account of ernment ownership and tax restric­ ism by the PCI. KGB efforts to mislead W�slem Pllblic tions, although, "Hibernia will The PCl's current proposal threatens opinion, was the leading propaganda rank with the top fields of the it with a complete loss of credibility cover for Secretary of State Alexander world." For the same reasons, the among its party base, which is thorough­ Haig's "the Russians run all terrorsm" Beaufort Sea Fields, termed a ly fed up with the corruption, austerity, statements lasJ_month. .. "small Middle East" by Dome Pe­ and terrorism in Italian politics. The original charges of Soviet terror­ troleum, may not be exploited . ist control came through the Italian So­ cialist Party's Sandro Pertini, whose leading associates have been exposed as a • MENACHEM BEGIN, Israel's controlling element in international prime minister, made a secretive Gaza administrator admits drugs and terror in a line of command visit to the United States on April drug collaboration that stretches to the British intelligence 2, informed Lebanese sources connection of Moss in particular. claimed. Begin's trip is linked to Vocke, who praises The Sp ike, calle d an imminent "heating up of the In an interview with the New York Times the EIR unveiling of British control over Lebanese crisis and the return of March 28, Israeli Gen. Yitzhak Segev, Khomeini "a pure case of madness," and Lebanon to 1975-76 levels of civil the military governor of occupied Gaza, referred to the Muslim Brotherhood as war." revealed that the Israeli authorities freely the "famous Islamic reformist move­ collaborate with local drug traffickers ment." The combined efforts of de • VILLA · SERBELLONI, the and the extremist leaders of the Muslim Borchgrave, Moss, and Vocke is aimed Rockefeller estate in Bellagio, Ita­ Brotherhood. at breaking EIR 's longstanding credibil­ Iy, was the site for a secretive meet­ The Times quotes Segev as saying, ity with the Iranian exile movement. ing on "the resurgence and "Usually drugs and cooperation with in­ triumph of Islam" beginning April telligence go together," and then cites 1. Among the attendees was Egyp­ Palestinian contentions that "the Israeli tian diplomat Tahseen Basheer. military authorities do nothing to com­ bat drugs, and may even be intentionally Charris winds up • PRINCESS ASHRAF Pahlavi, encouraging the problem through be­ sister of the late Shah of Iran, gave nign neglect. " ADC tour a speech to the northern New Jer­ Times reporter David K. Shipler next sey chapter of the Association of reveals that "the Islamic fundamentalists Fausto Charris Romero, president of the the U.S. Army March 20 in which are also receiving some Israeli aid." Not­ Colombian Antidrug Coalition, com­ she charged that the Shah's oyer­ ing that Segev was military attache at the pleted his European-wide speaking tour throw was possible only with the Israeli embassy in Teheranjust before the in France with a speech in Versailles. assistance of "'supposedly liberal Khomeini upheaval there, Shipler avows During the course of his tour, Charris western politicians." Princess Ash­ that fu nding of fu ndamentlist-controlled was widely covered by European news­ raf also stressed that Iran would mosques and religious schools is aimed papers and broadcast media, reaching an ' soon be faced with the choice of at "strengthening a force that runs estimated ten s of millions of Europeans "monarchy or communism" once counter to the pro-PLO leftists." with his appeals to stem the tide of drugs Ayatollah Khomeini dies. through international drug enforcement treaty arrangements. • HELMUT SCHMIDT de­ In France, he was interviewed by the nounced "Greenies" and radical Sp ike 're"iewer three government television stations .. "citizens action groups" who are At his March 28 Versailles speech, . trying to block construction of a attacks EIR Charris made a special appeal to Europe highway between Berlin and Ham­ to forge ahead with the European Mon­ burg for "ecological" reasons. Die Welt columnist Harold Vocke at­ etary System. Only by instituting the sec­ These actions are costing jobs, he tacked EIR as a conduit for Soviet intel­ ond plank of the EMS, the European stated; in addition, he will not ligence disinformation in an April 2 re­ Monetary Fund, he said, could drug- hand the German Social Demo­ view of Th e Sp ike, a novel by Robert . producing nations like Colombia chal­ cratic Party over to a bunch of Moss and Arnaud de Borchgrave, specif­ lenge the conditionalities of the IMF that hippies, alluding to the party's ically citing EIR's expose of the British force them to grow cocaine, marijuana, pro-"Greenie'" left. intelligence takeover of Iran as an exam­ and opium for debt repayment cash. ple of "KGB disinformation." Charris now heads for the United States.

EIR April 14, 1981 International 51 �ITmNational

Gen. Maxwell Taylor, the Soviets, andGlobal 2000

by Lonnie Wolfe

"There is a faction in the Soviet Union that is perfectly this way Taylor hopes to meet the goals prescribed by willing to let most of the Third World go under," Max­ Global 2000. well Taylor, fo rmer commander of U.S. forces in Viet­ As General Taylor fails to note, this Soviet faction is nam, told an interviewer late last month. in overall opposition to the elements of the current Taylor is a member of the Population Crisis Commit­ Kremlin leadership centered around President Leonid tee/Draper Fund, a core group initiating the State De­ Brezhnev, which continues to seek cooperation with partment's Global 2000 re port. That report advocates Western Europe for the development of the Third World. reducing world population by 2 billion people by the It should also be noted that, while Taylor claims that year 2000. In the interview excerpted below, the retired the U.S. has no population-planning center, he and his general identifies himself as among the U.S. strategists friends built into the U.S. State Department and related who have cultivated such a faction in the U.S.S.R. His foreign policy agencies just such a capability during the colleagues in that effort include fo rmer ambassador W. Vietnam war, that continues to function through the Averell Harriman, former Defense Secretary Robert Ball-created State Department Coordinator for Popula­ McNamara, and former Undersecretary of State George tion Affairs and the Kissinger-established National Se­ Ball, all of whom share the Global 2000 outlook. curity Council Ad Hoc Group on population policy. Their Soviet counterparts are centered around the KGB intellegence apparatus and the Soviet think tanks IMEMO and the U.S.A.-Canada Institute, the latter run by Georgii Arbatov. IMEMO is a longstanding channel Taylor: 'The U.S.S.R. of Soviet liaison with the zero-growth Club of Rome, will let Third World die' which overlaps with the PCC/Draper Fund; both insti­ tutions reject advanced "capitalist" technology for the Th e fo llowing excerpts are fr om an interview with General Third World for World Bank subsistence economies. Maxwell Taylor, provided to EIR. General Taylor,former They are politically backed by Boris Ponomarev of the> special military representative of President Kennedy and Central Committeeand other sponsors of "radical revo­ commander of u.s. fo rces in Vietnam, is the author of a lution" fo r the sake of destabilizing the West. 1980 policy paper draft fo r the Population Crisis Commit­ Taylor and his co thinkers believe they have a deal tee, redrafted in January 1981 under the title "The Popu­ with the KGB-IMEMO group that will set limits on the lation Crisis and u.s. National Security Interests. " Th e level of conflicts between the superpowers in the devel­ paper lists the Th ird World nations vital to U. S. interests oping sector, in a modern fo rm of surrogate warfare as: Bangla.desh, Bolivia, Brazil, Central America, Egypt, whose major purpose will be to produce conditions of India, Indonesia, Kenya, Korea, Morocco, Nigeria, Paki­ continuous war and famine to destroy populations. In stan, the Philippines, Somalia, Thailand, Turkey, Vene-

52 National , EIR April 14, 1981 zuela. and Zimbabwe. Taylor contends that their stability Q: You mean that we should focus relief efforts on the is jeopardized by excessive population growth rates. countries you list. A: We cannot even save all the strategic countries. We Q: Have you and the other Draper Fund people consid­ don't have the resources. The Soviets will make things ered what will happen to the countries that are not on very costly by stirring up trouble. What we must do is your list as important to U.S. needs? Won't the Soviets make some difficultchoi ces. If we can get oil from places have a free hand to come in and aid them and extend like Mexico, then we can write dff Nigeria. their influence? The demographics dictate that there will be break­ A: We are of one mind that there is a Soviet faction who down crises in these countries. The Soviets may pick up for the last 30 years has been perfectly willing to let parts . a few, but they won'tbe able to keep them alive, either. of the Third World go under. You have to understand They can't afford too many Cubas; it drains their re­ the mind of the Soviet "Mother Russia" faction. They sources ....The y really don't look at the demographics care about their country. They care about the countries any differently than we do. It isjust that they don't have on their immediate borders. They don't give a damn, to worry about what their population thinks about diffi­ really, about the restof the world. They haveno desire to cult political decisions, ones that write off millions of develop anything outside this limited area. Their view is people. There is not enou gh food or capital to save that the Soviet Union and its immediate colonies are everybody. To save a few, it will take hundreds of billions totally self-sufficient energywise and in minerals. They of dollars. Each will have to reduce population growth have no use for the minerals supply of the Third World. rates, and population where necessary. Their goal is to deny this to the West. They will use the population crisis to foment rebellion and coups d'etat in Q: Do you have a sense of whether Bill Draper would these countries. They may take over a country here and take the General's views into account in running the there for a time, but their only real policy is continuous Eximbank? destabilization to deny resources to the West. A: It's an excellent thing that the boy is going to take it over. I've known him for years; he's a good boy, just like Q: Very strong statements came out of the 26th [Soviet] his father. But he won't be able to do much at the bank. Party Congress about science and industrial growth. What does he have to work with-a couple of billion You don't believe this will affect their foreign policy, I dollars? He can do some seed work, not much else. It' s take it. going to take all the money in Europe and all the A: All their congresses talk about building up Mother petrodollars to make even a credible effort at saving a Russia. They were talking about making the Soviet few countries; the boy knows that. Union strong and keeping it that way. What is their development policy toward the Third World? They don't Q: How is population policy shaping up elsewhere in have one. Washington? A: There is no real population crisis response mecha­ Q: Is your paper intended fo r circulation within the new nism in the U.S. government. Ideally, the National Se­ administration? curity Council would become a National Policy Council A: It was written as a strategic document. You should and expand its function to implement population policy. note that my report is already quite selectiveabout what For now, decisions will be made through the NATO can be sav ed. I have already written off more than a command, which thinks demographically. Their deci­ billion people. These people are in places in Africa, Asia, sions must be imposed with the full weight Qf the West. Latin America. We can't save them. The population The Soviets are aware of this; they w ill conduct limited crisis and the fo od-supply question dictate that we should surrogate warfareJor certain areas. They will not fight a not even try. It is a waste of time. The Soviets are not world war over areas of the world they don't need. These about to save them, either. are the rules of the modern game. There will be horrible consequences for our failure to heed the warnings of General Draper and others. These Q: Were you personally close to General Draper? people will suffer from continous cycles of natural disas­ A: Yes, I admired him very much. He was a wonderful ter, famine, hunger, floods, drought. Upwards of 500 person. I heard my firstlect ure on the population explo­ million people will try to escape, become refugees, flee sion by him at the Army War College in 1940. MacAr­ across borders. Most of them will never make it. Some thur never really understood this. He was really wrong. old fo ols and young ones may talk of trying to mount a At this point in human history, a population-induced noble effort to help these people, and I am sure we will catastrophe is unavoidable. We must plan for it. We try to do the humanitarian thing. But they can't be saved, started to deal with the popUlation problem far too late a'nd we must be selective. to spend more wasted time ....

EIR April 14, 1981 National 53 needs of their countrymen over the long run, they will be able to contribute little to U.S. efforts to block commu­ nist expansion and mantain a peaceful balance in strate­ gic regions of the world like the Middle East. .. Regional political conflicts are likely to intensify as population presures increase the scramble for land, water, and other essentials and as unemployment spills over national borders in the fo rm of larger labor migra­ tions .... As resentment and frustration grow, new op­ portunities are created for extremist forces to foment civil unrest and ultimately to bring down governments friendly to the U.S .... Competent observers, such as former Undersecretary Taylor on population of State George Ball, who conducted a study of Iran for President Carter, cite the overcrowded slums of Teheran Below are excerpts fr om the revised January 1981 draft of as an important factor in the 1978-79 upheaval in Iran . .. World Population Growth and U. S. Security Interests," By the year 2000 there will be 46 cities of over 5 million written by Gen. Maxwell Taylor fo r the Population Crisis people in developing countries, and 18 of over 10 mil­ Committee/ Draper Fund. Emphasis is in the original. lion .... Even the People's Republic of China, though success­ The relationship between U.S. security interests and ful in reducing population growth to nearly 1 percent per rapid population growth abroad can be stated very sim­ year, has been frustrated in its efforts to enforce regula­ ply: nearly all those Third World countries in which the tions of migration to its cities .... United States has one or another vital security interest Th ere are several ways in which the United States can have very serious population problems. These popula­ exert pressure on governmentsto make such a commitment tion problems, because they threaten the long-range to population planning: economic and political viability of such countries, under­ First, we can analyze all countries receiving U.S. mine their dependability as U.S. allies and trading part­ development assistance according to the strength oftheir ners. Included prominently are countries in latin Ameri­ population efforts and use these findings as one factor in ca, East Asia, South Asia, and the Middle East. ...Any the allocation of economic assistance. At the same time, number of them could become the next Iran. we can offer to increase [U.S.] population planning One need, in fact, look no further than the Middle assistance .... East region to understand these dangerous trends. This Second, we could earmark some of security-support­ area contains the so-called "arc of crisis" extending from ing assistance to Egypt, Jordan, Turkey, and others for Pakistan to Egypt and Turkey ....Other countries af­ their population programs. Security-supporting funds fected by severe population pressures include additional represent a somewhat larger sum than general bilateral key suppliers (or potential suppliers) of U.S. petroleum development funds, yet while 16 percent of the latter are imports, such as Indonesia, Mexico, Venezuela, and allocated for population planning, almost none of the Nigeria-already heavily populated countries with high security-supporting funds are so allocated. rates of growth. They also include Bolivia, Brazil, Mo­ Th ird, we can and should require that State, Com­ rocco, the Philippines, Zimbabwe, and Thailand, which merce, and Defense Department officials and others who supply essential U.S. imports oftin, antinomy, tungsten, do business with the top levels of government in these manganese, vanadium and columbium ore, chroinite and countries (a) have a thorough understanding of popula­ tantalum. The U.S. Department of the Interior estimates tion problems and their importance to long-range U.S. that by the year 2000, the U.S. will be dependent on and host countries' security concerns, and (b) document imports fo r 12 out of 13 of the most critical minerals their efforts to drive this point home on every appropriate required by U.S. industry. Some of America's principal occasion. To facilitate such a process, the State Depart­ allies in the Third 'World, including those where U.S. ment should be instructed to place a population officer bases or staging areas are now located or under consid­ , in all U.S. embassies or AID missions of any size in the eration, also fa ll into the high-population-pressure cate­ developing world. gory .... Fourth, we should ensure that population funds which [N]o amount of aid will keep these countries from are now in the President's budget are increased and eventually going under if population growth continues insulated from the deep budget cuts which will be neces­ unchecked .... If, as a result of horrendous population sary to bring government spending in line with expected pressures, U.S. allies are unable io satisfy the most basic government revenues ....

54 National EIR April 14, 198 1 comes as an extremely bad coincidence for Haig. The Crisis Management situation for Reagan is like what happened to JFK after Cuba. He changed his political stance, and he was killed." • An executive at the Dresdner Bank in West Ger­ Response to Haig's many: "I surely hope Reagan will draw the right lesson on Haig. Haig's support in Europe is decreasing because move for control of his off-the-wall speeches about the Soviet Union. If you want to talk like that you have to be prepared to put three divisions down in Red Square, or else you should by Freyda Greenberg shut up. Haig is a Kissinger remote-controlled robot in a three-piece suit!" An hour andforty-jiveminutes aft er the March 30 attempt­ • The West German Bildzeitung reports that press ed assassination of President Reagan, Secretary of State secretary Jim Brady circulated a joke last week: "There Alexander Haig issued the fo llowing statement fr om the is big excitement in heaven; the doctors think that St. Wh ite House: "Asof now, I am in control here in the Wh ite Peter suffers from megalom·ania. God comes to the House, pending return of the Vice-President .... Consti­ doctors and asks them, 'why do you think so?' The tutionally, gentlemen, you have the President, the Vice­ doctors reply: 'St. Peter thinks he is Alexander Haig!' " President and the Secretary of State in that order. " Mr. Coming to Mr. Haig's defense in the U.S. were: Haig's remarks, which contradicted both the U.S. Consti­ • Midge Decter, wife of Commentary magazine edi­ tution and the established military command authority, tor Norman Podhoretz, and affiliated with the Commit­ drew the fo llowing jirefr om policy spokesmen in the U. S. tee for a Free World, Coalition fo r a Democratic Major­ and Europe: ity, and Social Democrats U.S.A., who insisted that: "yesterday's incident was the result of the press gunning • Columnist George F. Will, in a March 30 TV for him [Haig]. The mistake he made about the succes­ interview wit.h ABC reporter Ted Koppel, called Haig sion was very minor and unimportant. The incident last "constitutionally illiterate" and "astonishingly insensi­ week was over territory, and absolutely not a disagree­ tive politically." ment on policy." • Radio Jerusalem said, "Haig was guilty of an ill­ • A political analyst at the Heritage Foundation: conceived act." The station had a constitutional law "This whole affair is much ado about nothing by the expert attest that "there is no basis for any of Haig's press. It's a carryover from the week before. The Secre­ statements in the U.S. Constitution." tary of State is always traditionally number three. It's a • The secretary of the Royal Institute for Interna­ question of order of authority, not of presidential succes­ tional Affairs, David Watt, asked whether Haig's role sion. At best there have been misunderstandings between was related to an international plot, replied: "There is no Haig and the White House. I have yet to see one issue of conspiracy of any kind operating here. Haig disregarded difference between them. The press is just blowing the the Constitution yesterday. He will pay dearly for that." whole thing out of proportion." • Malcolm Rutherford of the London Guardian was • A top analyst at the Georgetown Center for Stra­ asked the same question as Mr. Watt: "Those kind of tegic and International Affairs: "I'm not impressed by theories are irrelevant to real life. The real issue here is any discussion about Haig. There is no policy dispute the economy. [But] Haig is in trouble." between the State Depattment, the NSC, the President;_ • The fo reign affairs editor of the London Observer, just maybe divergences on presentation." Andrew Wilson, said: "Haig tried it again. He is really • A spokesman from the Brookings Institution: moving too fast. He made an interesting factual error on "There are no serious differences." the succession question. This will be commented on • A close associate of"right-wing ideologue Richard adversely ....Ser ious thinkers here are making arrange­ Viguerie protested: "I think George Will was too hard ments for the U.S. government if anything like this on Haig. It is not at all clear that Haig is wrong." should happen again. I'm not sure how Bush would • Henry Kissinger in a TV interview on March 31 behave: He was not seriously tested during the campaign. declared that Haig acted appropriately under the circum­ We are not sure about him." stances. • A high-ranking U.S. military official in West Ger­ At a Washington press briefing March 31, Reagan many said: "In the opinion of myself and my friends, spokesmen James Baker and David Gergen stated that Haig pulled the trigger. His performance was disgusting. Haig "did one hell of a job." They also officially ac­ This is really too much." knowledged the preceding day's dispute between Haig • A banker in DUsseldorf, West Germany: "This all and Defense Secretary Weinberger.

EIR April 14, 1981 National 55 The China Card The Carter administration "had drafted a list of weapons to sell to China," announced Percy, a leader of the CFR's Chicago affiliate. "Congress would back Reagan if he decided to do it." But the November election put the Carter plan in limbo and many confer­ ence attendees fear it will now be very difficult to sell Arms for Peking the plan to Reagan. "All that has been achieved so fa r," explained pressed by CFR fo rmer Carter National Security Council staff member Roger Sullivan, "is that Reagan has been convinced not to do anything that would disrupt U.S.-China ties until by Richard Katz the issue has been more carefully studied. But there probably won't be any decision for months on security A high-pressure campaign has now begun to ensure that relations. " the United States responds to any Soviet intervention into Poland by "realigning ourselves with China," in­ Twenty-year buildup cluding building up China's military, in the words of A member of the pro-China Card faction of the Senate Foreign Relations Committee Chairman Charles Reagan administration made it clear that the "Polish Percy (R-Ill.). In fact, Percy's March 29 call on CBS­ crisis issue" was just a pretext to package a long-term TV's "Face the Nation," echoed the same day in columns strategy of moving the U.S. closer to China. "What in the New York Times and Boston Globe, has little to do we're really talking about here is a 20-year military with Poland-that is just a tactic to sell the deal to buildup program for China. Their economy can't sup- President Reagan. Behind the campaign lay a March 19- . port a five-yearrush buildup." 22 conference on "The China Factor" sponsored by the "The U.S. won't be selling China lots of fighterje ts, Council on Foreign Relations that took place at Averell for example, but instead we will sell them components, Harriman's secluded Arden House estate in New York. the technology to build engines, avionics, and build up The more than 40 attendees included Winston Lord, electronics and other dual-use industries. Right now Richard Solomon, William Hyland, and Helmut Son­ China is falling further and further behind the Soviet nenfeldt from the Kissinger-era National Security Coun­ Union," he continued. "We want to reverse that." cil (NSC), and, from the Carter administration, former At no point, according to several participants, was Assistant Secretary of State Richard Holbrooke, former the conference allowed to discuss at ' any significant NSC staffers Michael Oksenberg and Roger Sullivan, length the simple fact that Deng Xiaoping's policy of and former Ambassador to Korea Richard Sneider. undercutting heavy industry domestically makes it im­ From the Reagan administration and other curreritpol­ possible to transform China into a credible military icy-making centers were NSC staffer James Lilley, State power. Department China desk chief Charles Freeman, Defense In fact, virtually every attendee spoken to actually Intelligence Agency Director Lt.-Gen. Eugene Tighe, endorsed Deng's economics. Sullivan, for example, ad­ Jr., and Joint Chiefs of Staff Director of Operations Lt.­ mitted that China would suffer zero economic growth Gen. Philip Gast. in 1981, but contended, "It will recover by 1983 and then have steady growth," Alliance with China On the political side, a well-known China Card One of the attendees, a longtime associate of Henry scholar dismissed reports of widespread strikes as "se­ Kissinger, told EIR the purpose of the conference was rious but manageable." "We agreed that as long as to push Reagan into joining a long-term military alli­ Deng is alive, his faction will remain in control," ance with China. "The Reagan administration will reported a Kissinger associate. "After that, no one begin selling arms to China during its first term," he knows." So much fo r a 20-year buildup. confidently predicted, "it's inevitable." "We didn't allow extended discussion of the eco­ Indeed, the final report of the conference-attended nomic or political stability in China," commented an­ by Kissinger and Carter associates as well as Reagan other attendee, "because you get bogged down and officials-declares: "Security cooperation should be ex­ decide you can't do anything once you let that kind of panded to authorize the licensing of defense-related talk start." industrial production technology," and suggests there One can only wonder if Reagan will be told "not to should be "j oint staff consultation and the removal of get bogged down" in a discussion of Chinese reality as the current prohibition against the sale of lethal but he is urged to form a 20-year military alliance with defensive weaponry." Peking.

56 National EIR April 14, 1981 Two approaches to the law enforcement crisis

by MaryJane Freeman

Calling America the victim of "double-digit crime infla­ In his presentation to the ABA, Burger correctly tion," Chief Justice Warren Burger proposed a four­ noted that the judicial process is currently undermined point program for combatting crime in his annual report by the magnitude of court caseloads, delay in trials, and to the American Bar Association this February. In line opportunities for dilatory action by both prosecutors with the Reagan administration's policy of re-establish­ and defense. Punishment is distant and uncertain for the ing violent crime, rather than so-called white-collar cor­ legally well-protected criminal, while freedom for the ruption as the main target of V.S. law enforcement, innocent or minor offender may be long delayed Burger told the ABA that "crime and the fear of crime through inability to raise bail. To deal with this prob­ have permeated the fabric of American life." The Chief lem, Burger offers proposals which he believes will Justice recommended changes in the criminal justice streamline the judicial system, or "control the damage": system he described as "a damage control program." 1) Restore to all pretrial release laws the crucial By "damage control," the Chief Justice means steps element of danger to the community to be determined taken after the commission of a criminal act that may by available evidence and the defendant's record, to ensure prompt trial procedures, sure and swift punish­ deter crimes committed while on bail; ment for convicted offenders, and attempts to curb recid­ 2) Provide for trial within weeks of arrest for most ivism. "When I speak of 'crime and punishment,'" cases, except for extraordinary cause shown; Burger told the ABA, "I embrace the entire spectrum 3) Priority for review on appeal within eight weeks beginning with an individual's first contact with police of a judgment of guilt; authority through the stages of arrest, investigation, 4) Following exhaustion of appellate review, re­ adjudication, and corrective confinement." Implicit in stricting a subsequent judicial review to claims of mis­ Burger's approach is that law enforcement's role in carriage of justice to halt what is often an endless round combatting crime is ex post fa cto, after the gun is smok­ of appeals and retrials based on technicalities. ing. Following conviction, Burger offers six recommen­ Some of the Burger proposals speak to crippling dations which he sees as a means to reduce the rate of secondary weaknesses of the V .S. criminal justice system. criminal recidivism by giving prison inmates skills But for a nation with a tidal wave of crime, increasingly which they can use to re-enter society. For example, he virulent urban disorders, and terrorism-and which this proposes "a broad-scale program of physical rehabili­ week saw with horror an attempt on the life of the tation of penal institutions to provide a decent setting President-a law enforcement program which deals with for ... educational and vocational training." He rec­ crime only after the fact is totally insufficient. ommends that the programs should be mandatory, and A way out of the after-the-fact bind on law enforce­ credit fo r educational progress could be applied to ment personnel was offered by former presidential can­ reduce prisoners' sentences. His four additional recom­ didate Lyndon H. LaRouche, Jr. in a recently released mended changes in prison procedures and functions are: policy document issued by the National Democratic "generous use of probation for first nonviolent of­ policy Committee (NDPC), whose advisory committee fenders, with ...swi ft revocation �f probation terms are LaRouche chairs. LaRouche takes aim at the institution violated"; "generous family visitation ... to maintain of criminal activity, rather than mere punishment of family ties, with rigid security to exclude drugs or specificcrimes after the fa ct, as the proper object of law weapons"; "counseling services after release"; and "en­ enforcement. The LaRouche document emphasizes that couraging religious groups to give counsel on ethical the twin pillars of the V.S. criminal infrastructure, dope behavior and occupational adjustment." traffic and domestic terrorism, can only be dealt with In his first four proposals dealing with the crisis in through the "approach of breaking the back of crime." judicial procedures, Burger is responding to the univer-

EIR April 14, 1981 National 57 sally acknowledged near-breakdown of the court sys­ control of crime." What if, the memorandom asks, tem. The cause of this problem, however, is not proce­ "instead of such queer occurrences in an otherwise dural. Rather, as the LaRouche memo emphasizes, it is orderly beat, the 'queerness' of the environment is the magnitude, the omnipresence of crime. The existing extensive, and if the officer is constrained by policies atmosphere of criminality, the LaRouche memo states, which prevent him from enforcing ordinary standards is the result of liberal law enforcement policies "which of orderly conduct to keep the 'queerness' of the beat serve to protect the criminal infrastructure .... [w]hich within manageable proportions?" say, in effect, 'It is now the function of the law to defend Thus, instead of crime-related disorders standing the criminal from undue annoyance by the representa­ out as "queer" and threatening, "lack of efficient law tives of the criminal's victims.' " enforcement action against drug usage as well as drug­ To re-establish a genuine criminal justice system, as distributing offenses means an environment so contam­ opposed to both the liberal "protect-the-criminal" view inated with unlawfulness that that condition in itself of law enforcement and the narrow "after-the-fact" creates a condition of crime out of control. " damage-control outlook represented by the Burger re­ LaRouche examines two crucial cases of the institu­ forms, the institutionalization of criminal activity, the tionalized forms of criminal activity that feed the "en­ environment of crime, must be reversed. The cause of vironment of crime": drugs and terrorism. Citing a the breakdown of the court system, quite simply, is the notorious example from New York City, which liberal overwhelming amount of crime. In the same way, the law enforcement policies have transformed into "the inducement of the ex-convict to return to criminal crime capital of the U.S.," LaRouche comments on the activity results in large measure from the networks of nightly congregation of dope dealers-whom New criminal behavior which define that individual's social York police officers are forbidden to arrest under the relations. Moreover, the threat of swift incarceration, libertarian Koch administration-that meet openly in crucial as it is to law enforcement, is not by itself midtown Manhattan. This pushers' conclave determines enough to deter recidivists. The criminal mind, La­ which city neighborhoods will be targeted for drug Rouche writes, is "by nature rife with fantasy, is char­ dealing. Spinoffs will be other crimes-burglaries, mug­ acterized by moral indifferentism," and lacks as a result gings, drug use and disorderly incidents which establish any ability to comprehend reality. Consequently, the the institutionalized, criminal environment. criminal does not believe that he will be caught no Law enforcement must attack this environment all matter how great the likelihood of his apprehension is. together. LaRouche notes that "without sweeping up the drug users, it is impossible to isolate significantly The problem of British criminology the drug pushers. It is therefore necessary, says LaRouche, to "dispel "The problem of law enforcement practice here is the delusion that the arrest and conviction of discovered related to the nonsense-doctrine of 'victimless crimes.' perpetrators represents in itself effective suppression of Whoever contributes to the institutionalization of the the institutions of crime." "The core of the issue," drug traffic, by supporting the market on which the writes LaRouche, "is the British criminological policy drug traffic depends, is complicit in the death of every which defines the primary objective of law enforcement person who dies from drug usage, and complicit in to be the apprehension and conviction of the perpetrator every case of burglary, mugging and so forth which after the fa ct of the commission of the particular crime." flows from drug usage." · The U.S. criminal justice system must be premised Likewise, a competent attack on international ter­ on "the contrary policy [that] defines the apprehension rorism focuses on dismantling the "control-apparatus" of perpetrators afterthe fact of the crime as a necessary of political machines, lawyers, support fronts and the incidental fe ature of the much broader task of proper like which sustain the actual "bomb throwers" them­ law enforcement ... defined ... to be the control of selves. crime before the fact, the neutralization of the institu­ "The fundamental policy for law enforcement," tionalization of circumstances which engender the per­ LaRouche concludes, "must not start from the problem petrated individual criminal act." of apprehension and conviction of particular perpetra­ LaRouche asks citizens to look through the eyes of tors after the fact of the commission of a particular the cop on the beat. "ElemenUiry law enforcement," crime. The fundamental policy fOl'law enforcement and LaRouche writes, "conceived as control of crime, cen­ related enactment of statutes is to shape the interrela­ ters around the officer's trained eyes and ears for tionship between law enforcement and criminal statutes 'something queer.' The beat officer, who knows every such that we define an efficientme ans under due process nook and cranny of the beat, backed by roving patrol and related considerations of probable cause to deploy cars, and both backed by an intelligence-oriented detec­ law enforcement professional institutions in a winning tive force in the precinct, is the point man in effective war against the infrastructure of criminality."

58 National EIR April 14, 198 1 The EIR has warned forover five years that the decline in American industrial, scientificand moral strength would undermine th� nation's military capabilities and security. Industrial weakness has led to deficiencies in military hardware, and the decline of scientific research and education has removed from American youth the moral desire to serve and fightfor the country.

Now, the Executive Intelligence Review presents a fullstrategic assessment of the condition of the U.S. armed forces. How far has America fallen behind the Soviet Union? How severe is the man­ power problem? What is the actual "surge" capability of the American economy for arms buildup? This and more in: The Erosion of u.s. Military Capability A special report from the Executive Intelligence Review available October 15, 1980 $50.

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Make checks payable to: Executive loteUigeoce Review, Dept. M, 304 W. 58th Street, 5th Telephone --'--::a::::re::-::a-::c::::o�de::-'------Floor, New York, New York 10019 Congressional Closeup by Barbara Dreyfuss and Susan Kokinda

The group, which existed last year Committee including Dan B ill to end grain as well, has taken on added impor­ Rostenkowski (D-I1I.), Barber embargo introduced tance because'here is a Republican Conable (R-N.Y.), and Sam Gib­ Following the Senate passage administration. Coleman said the bons (D-Fla.), sent letters to Presi­ March 25 of a resolution urging group will be preparing substantive dent Reagan expressing their con­ the President to end the grain em­ reports and keeping members in­ cern over reports that Haig was bargo to the Soviet Union, Sen. fo rmed on issues such as trade, ,handling trade matters. At the Edward Zorinsky (D-Neb.) intro­ foreign aid, international commu­ same time a number of staff mem­ duced legislation which would ac­ nications, military credit sales, as bers of the Senate Finance Com­ tually mandate the President to well as general policy questions in mitee communicated their concern end the embargo. In introducing all regions of the globe. Staffmem­ on the 'matter to the administra­ his bill, S. 802, on March 25, Zo­ bers are currently working on a tion. In response, the President as­ rinsky declared that it was neces­ report on EI Salvador. "The t4lsk sured Ambassador Brock that he sary for Congress to do more than force will actively solicit input and was the primary figure responsible merely express its concern on the comments fr om individuals and for trade issues. issue, as it had with the resolution. organizations directly involved in Senator Long's floor remarks "America's grain producers are international relations and U.S noted, however, that "at this point tired of hearing speeches," he said. fo reign policy" said Coleman. the matter is still a little vague; "They are tired of hearing that the Secretary Haig's statements are Senate has told President Reagan still on the record and the Presi­ how they feel. America's farmers dent's reported conversation with do not want to hear that the Senate Ambassador Brock is still off the has again told President Reagan B rock runs trade the record." . where it stands on the embargo." policy, say senators The Senate Finance Committee Zorinsky's bill would require the Two of the Senate's leading sup­ chairman, Robert Dole (R-Kans.), President to end the embargo with­ porters of a strong export posture took the floor fo llowing the re­ in 30 days after passage of the called on the administration to marks of Bentsen and Long to measure unless Reagan can show make public assurances that Spe­ state his full agreement. • that the embargo is necessary to cial Trade Negotiator Bill Brock further U.S. national security and and not Secretary of State Haig is that the continuation of the embar­ overseeing U.S. trade policy. In go does not create an undue ad­ statements on the Senate floor verse effect or burden on American March 27, Russell Long (D-La.) C ommittee challenges . farmers. and LLoyd Bentsen (D-Texas) ex­ Pentagon budget 'quick fix' pressed grave concern over Secre­ The Senate' Armed Services Com­ tary of State Alexander Haig's ap­ mittee unanimously rejected the parent usurping of U.S. trade pol­ Navy's request fo r funding to re­ R epublicans set foreign icy. Long stated, "What troubles furbish the mothballed aircraft policy task force me is a report that the secretary, carrier Oriskany on April 2. John Representative E. Thomas Cole­ Mr. Haig, had rather lengthy Tower (R-Texas), the committee man (R-Mo.) announced March meetings with the fo reign minister chairman, said that Armed Ser­ 25 that he will chair a 12-member of Japan on the subject of trade vices is not "a rubber stamp" for task fo rce on foreign policy of the and automobiles. The automobile Pentagon requests. House Republican Committee. question is a trade issue, and if we The Navy's estimate for taking The group "will work closely with let it get mixed up in foreign policy the carrier out of mothballs was the Republican leadership in both I think the situation in that indus­ originally $305 million, but was Congress and the administration try is probably going to be made upped to $518 million. Tower em­ in building a broad base of support even worse than it already is." phasized that, cost aside, only fo r Republican policy positions in Several days earlier; members small fighter bombers could be the area of international affairs." of the House Ways and Means used on Oriskany, planes that are

60 National EIR April 14, 1981 no match for modern enemy air­ saying, Mr. Stockman had a pre­ a nutshell, the all-volunteer ap­ craft or submarines. The senator conceived plan to make the cuts?" proach has been a failure," de­ also pointed out that the Navy The NDPC spokesman declared clared Hollings when he intro­ lacked the skilled manpower to run that Stockman's cuts are intended duce(i the bill. "It has failed to such ships. to implement the policies outlined provide the necessary number of The committee has approved a in the Global 2000 report of the troops. It has failed to provide a $2.8 billion supplemental FY 1981 Carter administration, that is, pop­ quality defense fo rce. We have authorization. ulation reduction and destruction failed to appropriate fo r it. And we of the productive economy. He have failed, as a people, to fairly specifically cited proposed cuts in and equitably distribute the burden agriculture research and develop­ of our national defense. Our vol­ ment, the cuts to the Agristar proj­ unteer forces are sadly unrepresen­ H earings held on ect, cuts in PL 480, raising the cost tative of the society they serve." farm policy of borrowing under the FMHA Senator Mark Hatfield (R­ The House Appropriations Sub­ and Rural Electrification Admin­ Ore.), an opponent of the draft, committee on Agriculture heard istration programs, and eliminat­ welcomed introduction of the bill, testimony March 30 from various ing Federal Financing Bank guar­ saying that Hollings provided the national farm groups and rural antees. Senate "with a good vehicle upon associations, demanding that the The fo llowing day Senate Ag­ which to make a rather significant subcommittee not allow the cuts in riculture Subcommittee Chairman national debate." The bill has been the FY 1982 agriculture budget Thad Cochran (R-Miss.) told an­ referred to the Armed Services proposed by the OMB. They other NDPC representative who Committee. wamed that the cuts would "im­ gave similar testiony that "it's pose zero growth on the rural sec­ good to stretch our minds some­ tor of America." "There must be times and look at some of the some relief from the doubling of premises and implications of the Water user fee interest charges" on agricultural policies we are implementing. I'm legislation introduced loans, warned one witness, "or glad you brought this Global 2000 Senator Robert Staffo rd (R-Vt.), there will be devastation." . report to our attention." chairman of the Senate Environ­ A National Democratic Policy ment and Public Works Commit­ Committee spokesman told the tee, introduced S. 809 and S. 810 subcommittee that "I want to be­ on March 26, establishing water­ gin by saying to you that we have way user fees. The legislation, in­ to help defend the Department of troduced on behalf of the adminis­ Agriculture from the degradations Hollings proposes tration, would establish fees for and national disgrace of David renewal of draft commercial use of ports and cer­ Stockman. His cuts are not across Senator Ernest Hollings (D-S.C.) tain inland waterways fo r the first the board but are weighted to introduced legislation, S. 756 on time in American history. bring about the postindustrial so­ March 23 which would "provide The bill comes at the urging of ciety which he advocates .... Mr. for the reinstitution of registration OMB Director David Stockman Stockman deliberately intends on and classification, and reinstate the nominally as a means to raise rev­ dismantling the necessary protec­ authority of the President to induct enue. However, Prof. Daniel Bell, tive mechanisms of the productive persons into the armed forces." author of the bok Th e Coming of sector." Hollings bill to reinstate the draft the Post-Industrial Society, cited In response,' subcommittee was cosponsored by James Cannon Stockman's support of waterway chairman Jamie Whitten (D-Ala.) (D-Nev.). The proposal is that user charges as the best evidence asked "whether Mr. Stockman just within 180 days after ssagpa e of that Stockman is a supporter of didn't have enough time in decid­ the legislation, the President would postindustrialism. In a recent in­ ing on the cuts, which is why they be required to begin "registration terview, Bell stated, "It shows in­ are so bad, or whether, as you are and classification of citizens." "In dustry that the free ride is over."

EIR April 14, 1981 National 61 National News

by suspiciously well orchestrated dem­ and minihydro as well as more efficient onstrations, which were in turn promi­ energy conversion devices, such as wood­ nently, covered by the media. According burning stoves. Reopen TMI says to sources, Church and his backers were "Rapid popUlation growth in devel­ destabilized by this hostile environment oping countries exacerbates fo od, envi­ business, labor and placed on the defensive. ronment, and energy problems. As the The agitators, many linked to net­ On March 28, the second anniversary of largest donor for international popula­ works associated with the Washington­ the Three Mile Island nuclear incident, tion programs, the United States has based Institute for Policy Studies, fo­ Pennsylvania Building Trades Council played an important role in bringing de­ cused on the volatile issue of the security President Tom Miller issued a pubtic creased population growth rates." of union pension fu nds and the mining of statement calling for TMl's reopening. non-union coal. Miller cited estimates that the loss of Union officials say they are worried power from the shutdown of Unit l.is that coal-owning oil multis, acting costing Pennsylvanians $14 million per through Bobby Brown of Continental FEe goes after month in higher utility costs. Oil's Consolidation Coal, will now try to Miller's statement was issued as a Iran hostages pin the strike on the union. From the rally by environmentalists to keep the Citing a provision ofthe Federal Election beginning, they have sought to shut unit closed fizzled, largely because of Campaign Act that is designed to curb down the mines to break the union, one strong pronuclear stands by labor and congressional bribery, the Federal Elec­ UMW leader said. business representatives. Earlier in the ' tion Commission announced March l6 week, the head of the building trades that the former American hostages must division of the AFL-CIO, Robert Geor­ report income accrued from publishing gine, had said that the antinuclear rally their Iranian experiences, and could be had no labor backing. Pennsylvania subjected to FEC ceilings. Chamber of Commerce head Robet Hib­ McPherson endorses The former hostages have already bard reported that continued closure of Global 1000 been unconditionally barred, through Unit I, which was uninvolved in the ac­ the agreement the Carter administration cident two years ago, may "result in the M. Peter McPherson, the Reagan admin­ negotiated with the Khomeini govern­ bankruptcy of Metropolitan Edison," istration's choice for AID director, has ment for their release, from suing the 2000 and cause '''dramatic increases in the endorsed the Global report which Iranians for damages. Since the Carter cost of electricity" for Pennsylvania and calls for reduction of the world's popu­ administration's complicity in the hos­ 2 2000. New Jersey residents dependent on Met lation by billion by the year tage seizure is already widespread knowl­ Ed's power grid. McPherson went on to stress his support edge, the FEC's further crimp on the for AID population reductionprogra ms, hostages' ability to publicly discuss their which, he said, are "essential" to meeting experiences represents a heavy-handed the goals of that report. effortto shut them up. Testifying before the Senate Foreign According to the FEC, since the hos­ Mineworkers reject Relations Committee on April 1 Mc­ tages are government employees, FEC Pherson said, "In the past year public provisions apply to them. negotiated pact awareness of our interdependence has Striking members of the United Mine­ been highlighted by the President's Hun­ workers (UMW) voted by a two-to-one ger Commission, the Brandt Commis­ margin this week to rej ect a tentative pact sion, and the Global 2000 study. The' with Bituminous Coal Operators Asso­ Global 2000 report in particular presents Birchers in dirty tricks ciation. Union officials warned that the a sobering picture of large-scale interre­ strike, which began March 27, could be­ lated problems caused by population against EIR? come the longest in U.S. history because growth, energy scarcity, forest destruc­ Victims of a possibly illegal operation by the coal-owning oil multinationals see no tion with attendant soil and atmospheric the John Birch Society have come for­ interest in settling. effects" and pressure on fo od production ward with evidence that the society may Only a week ago, UMW officials capacity." have targeted Executive Intelligence Re­ were optimistic about passage of the McPherson went on to discuss the view with slander, attempts to disrupt pact. They underestimated the ability of , problems the energy pricerise has caused business, and encouragement of credit the media and various agitators to create the Third World. "AID is therefore giv­ card scams. A spokesman for victims of a stampede against the contract. When ing increased emphasis to the develop­ the Birchers' activities revealed, "What UMW president Sam Church went to the ment and diffusion of alternative rural we've fo und is that our customers are coal fields to sell the pact, he was greeted energy sources," he said," such as biogas being told by representatives of the soci-

62 National EIR April 14, 198 1 Briefly

• JIM BAKER, White House chief of staff reportedly has re­ ety to cancel legitimate credit card pur­ developed in a demand-side framework. quested that his staff do a review chases. We think that's illegal and in If David Rockefeller continues to shift of "who did what when" in the restraint of trade, and we're looking to his views to the supply-side, a process administration during the period see what other businesses might be vic­ under way for a year or so, the Trilater­ immediately fo llowing the at­ tims." According to the source, Gary alists can become a powerful force for tempted assassination of President Handy of the Birch national headquar­ global prosperity." Reagan. ters in Belmont, Mass. told an EIR sub­ scriber "The editor of our magazine, the • PERHAPS the lesson of Mon­ Review of the News. referred to [EIR day's assassination attempt will founder] LaRouche people as a commu­ provoke the Congress and Depart­ nist sect. ... Regan grilled on ment of Justice to bend the branch "What I would do is I would drop a back in the proper direction. Per­ letter to Master Charge telling tbem that FBI failures sons and organizations who advo­ you don't want to pay, that you feel there Treasury Secretary Donald Regan, un­ cate terrorism or toleration for ter­ was misrepresentation on the part of the der whose jurisidiction the Secret Service rorist groups ought to be defined people who solicited the funds, and send falls, testified before the House Appro­ as providing probable cause for a copy of the letter to the Executive Intel­ priations subcommittee April 2 that he surveillance of their activities and ligence people. Just tell them you are didn't "know why" the FBI failed to associations by federal, state, and cancelling your subscription." inform the Secret Service that John local law enforcement agencies," A spokesman for EIR. informed of Hinckley, Jr. had been arrested while writes EIR fo under Lyndon H. Handy's remarks, said, "This kind of trying to carry .22 caliber guns onto a LaRouche in the latest bulletin of thing goes further than their usual red­ plane from Nashville, Tennessee to New the National Democratic Policy under-the-bed propaganda. We view this York last year at the same time President Committee. as possible suggestion for misrepresen­ Carter was also going from Nashville to tation by credit card users. The Birchers New York. "On hindsight," said Regan • DONALD REGAN told House are even more suspicious than loony," "it looks like it should have been [report­ Appropriations subcommittee the spokesman continued. "After all, ed). The FBI apparently thought it April 2 that he does not expect they got their start by attacking Eisen­ wasn't necessary. We still don't have a U.S. interest rates to really come hower as a communist. In a word, this is complete answer as to why Mr. Hinck­ down before 1982. a British intelligence-run, anti-American ley's previous arrest was not known to operation." the Secret Service. We have to wait for a • GLOBAL 2000 reports are more complete answer." being planned for 20 to 30 states. Eldon Rudd (R-Ariz.), a former FBI The idea, said one person associ­ agent, expressed his concern about the ated with the effort, is to "think domestic security guidelines established globally but act locally." Wanniski turns by fo rmer Attorney General Edward Levi, stating that the federal government • JEAN CHRETIEN, Canadian supply-side up has been restricted in its ability to moni­ Justice minister, reportedly ap­ Jude Wanniski, supply-sider and brave tor groups who pose potential security proves of the decriminalization of crusader against the Trilateral Commis­ threats. Rudd stressed that the Secret drugs, threatening the U.S. with a sion, responded to criticism from Hobart Service depends on the FBI for its intel­ massive flow of illegal drugs from Rowan in the Washington Post with a ligence. Regim replied that he intends to the north. letter to the editor. review the guidelines with Attorney Gen­ Mr. Wanniski says, "Mr. Rowan eral Smith. • DEEP GOAT, a Washington misunderstands my position and thus un­ Regan assured subcommittee chair­ source, tells EIR that after Alex­ wittingly misrepresents it. I am not only . man Edward Roybal (D-Calif.) that he is ander Haig wasassigned to Henry an internationalist, but also a believer in ordering a total departmental review of Kissinger in 1973 the secretary of eventual world government .... everyone involved in the incident. state had to post an armed guard "Mr. Rowan suggests that I have an According to the Warren Commis­ at his desk every time he felt the irrational fear of the Trilateral Commis­ sion report on the 1963 assassination of call of nature. Otherwise, said sion, which I have wrapped around my John F. Kennedy, the FBI's lack of such Deep Goat, "by the time he got • conspiracy theory.' Actually, I have the protective cooperation is a known quan­ back, he would find Haig there highest regard for the members of the tity. The Bureau had 18 years ago ne­ holding a press conference to an­ Trilateral Commission, but I believe that glected to inform the Secret Service of noun� that he was 'in control.' " they jointly become a destructive fo rce their knowledge of Lee Harvey Oswald's • simply because their common ideas have activities.

EIR April 14, 1981 National 63 EnergyInsider by William Engdahl

World oil : two alternatives amounts of sawdust with the grain The dramatic economic downturnsh arply cut consumption, he fed to the unsuspecting mare. posing a dilemma/or world producers. The strategy worked great-till the horse went and died. Look at the situation as it is reflected domestically. The latest Department of Energy reports show that oil refineries are at less than 71.9 percent of capacity. In Is there a "mini-glut" of world oil rations to listen to a peculiar species 1978, the average was 86.5 percent. today, as media like the New York called "economists." I say peculiar Gross imports of crude and refined Times and Wall Street Journal are because the predictive track record petroleum product for March is declaring? Or is the world economy of these guys, whether at Exxon, down 19.8 percent from 1980. Pri­ on the threshold of unraveling in a Mobil, or Chase, is a scandal . mary stocks of ga'soline stood at an downward spiral? We should make The latest wisdom circulating all-time high at the end of March of closer examination of the real rela­ among these boys is that the plunge almost 287 million barrels. tion between energy growth and in oil demand is a direct result of For the first time since the early economic health. "conservation," rather than eco­ days of the Iran-Iraq war, the do­ Reliable figures are available nomic downturn. The shell-game mestic price of gasoline fe ll slightly. showing that worldwide crude oil artist who came up with this will Depressed energy consumption is production dropped almost 5 per­ probably get a Nobel Prize in Eco­ already being reflected in lower cent last year to 59.67 million bar­ nomics. But it hides something far quarterly earnings for some inte­ rels a day. This is the authoritative more stupid and self-defeating fo r grated oil majors. And much atten­ estimate by the industry publica­ the world economy. tion has been given to the "record" tion, Oil & Gas Journal. The most There are two opposing philo­ level of domestic oil and gas drilling dramatic illustration of the deter­ sophies on this issue. One, which I activity over the last 15 months. ioriation of the world economy that call the "Chase" or "finance peo­ However, very little drilling to has occurred since the January 1979 ples' " view, is that so long as you delineate large new petroleum re­ ouster of the Shah of Iran is that hold market dominance, direct or serves has gone on since the 1950s despite the outbreak of war be­ indirect, you can offset declining exodus of the majors to the Middle tween Iraq and Iran last year that sales by jacking up the price. East. The current boom is only just cut about 4.5 million barrels/day A case in point is a new report above levels of 26 years ago. The from global output, the loss had from some economists at Shell Oil decline in domestic production has little impact on world supplies. in Houston. Their method is sim­ slowed, but substantial new pro­ Last September, Chase Man­ ple: incompetence raised to the level duction has yet to occur. hattan Bank's Energy Economics of principle. They took trends of the This is an appropriate juncture Department predicted that a pro­ recent months of drastic high U.S. to pose a production-oriented alter­ longed Iran-Iraq conflict "would and European money interest rates, native: if companies such as Exxon exhaust the cushion before the end combined with a staggering 272+ and Mobil could see beyond their of winter," referring to their esti­ percent increase in the cost of world noses, they would stop paying the mate of a "normal" world stockpile energy feedstock as their statistical Public Broadcasting Service to of some 600 million barrels of oil. "norm." Then, they extrapolated show provocative anti-Saudi films, That "cushion" represents about 12 from this induced depression to and spend that money on an all-out . days of total world consumption. "predict" that U.S. oil consump­ media effort to urge reversal of the Six months later, world stocks are tion will "plateau" in the early Volcker interest-rate policy. I know still in relative oversupply. What has 1980s, "bringing to an end the his­ a score of oil and gas producers happened? toric trend of increasing consump­ who would not hesitate to come There is a dangerous tendency tion." This reminds me of the fa rm­ down on the expanded-production in the boardrooms of major corpo- er who mixed larger and larger side of this vital issue.

64 National EIR April 14, 1981