Turning Defeat into Victory

A Total War Strategy Against Peking

by General T' eng Chieh

A book-length presentation on the nature of warfare, which begins with a discussion of the traditional Chinese philosophy of benevolence, and identifies the revolutionary democracy of the entire people as paramount.

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IIThere is a limit to the tyrant's power." -Friedrich Schiller, Wilhelm Tell.

The long-awaited second volume of tpe Schiller Institute's new translations o( Germany's greatest poet. Includes two plays, "Wilhelm Tell," "The Parasite"; On Universal History; On Grace and Dignity; The Esthetical Lectures; and numerous poems. 562 pages. $15.00

Make checks payable to: Ben"Franklin Booksellers, Inc. 27 S. King Street, Leesburg, VA 22075

Shipping: $1.50 for first book, $.50 for each additional book. Or, order both volumes of the SchiUer, Poet of Free­ dom translations (Vol. I contains the play "Don Carlos," poems, and essays) for $25.00 postpaid. Founder and Contributing Editor: Lyndon H. LaRouche, Jr. Editor: Nora Hamerman From the Editor Managing Editors: John Sigerson and Susan Welsh Editoral Board: Warren Hamerman, Melvin Klenetsky, Antony Papert, Gerald Rose, Alan Salisbury, Edward Spannaus, Nancy Spannaus, Webster Tarpley, William Wertz, Carol White, Christopher White hailand is one of the few countries in the world that still exports Science and Technology: Carol White T Special Services: Richard Freeman food on a large scale. Therefore, it was altogether fitting and proper Book Editor: Katherine Notley that, while the attention of the world is still riveted on Asia due to Advertising Director: Marsha Freeman Circulation Manager: Joseph Jennings the recent shattering events in China, Bangkok should have hosted the first major meeting of the "Food for Peace" movement in Asia, INTELLIGENCE DIRECTORS: Africa: Mary Lalevee addressedby-among others-Schiller Institute founder Helga Zepp­ Agriculture: Marcia Merry Asia: Linda de Hoyos LaRouche from the Federal Republic of Germany, and Thailand's Counterintelligence: Jeffrey Steinberg, former deputy premier, Admiral Sontee Boonyachai. Paul Goldstein Economics: Christopher White Our initial report (pp. 6-9) from that conference, which vowed European Economics: William Engdahl, to expand food production worldwide, is accompanied by news of Laurent Murawiec Ibero-America: Robyn Quijano, Dennis Small the important grain producers' conference in Bogota which heard Law: Edward Spannaus Food for Peace representatives Jonathan and Rosa Tennenbaum (p. Medicine: John Grauerholz, M.D. Middle East: Thierry Lalevee 10). Soviet Union and Eastern Europe: The expanding horizons of the international movement to find Rachel Douglas, Konstantin George Special Projects: Mark Burdman solutions to growing worldwide hunger, are the firmbasis for cultural United States: Kathleen Klenetsky optimism (and see also the upbeat update on our anti-Satanism cam­ INTERNATIONAL BUREAUS: paign, p. 65, and the progress report on morality in art on p. 42). Bangkok: Pakdee and Sophie Tanapura Bogota: Javier Almario That doesn't mean we can evade reality, far from it. In several of our Bonn: George Gregory, Rainer Apel columns and in the Science & Technology section we provide the Copenhagen: Poul Rasmussen Houston: Harley Schlanger latest grim facts on the scope of the food shortage and its impact on Lima: Sara Madueiio the spread of disease. Food riots are now sweeping through the Soviet Mexico City: Hugo Lopez Ochoa, Josefina Menendez empire (p. 40). Milan: Marco Fanini This week's Feature story was filed from Taipei by Webster New Delhi: Susan Maitra Paris: Christine Bierre Tarpley, reflecting the recent events on the mainland from the stand­ Rio de Janeiro: Silvia Palacios Rome: Leonardo Servadio, Stefania Sacchi point of Chinese patriots who feel a deep responsibility for the future Stockholm: Michael Ericson course of their country. We weren't able to fit in everything Mr. Washington, D.C.: William Jones Wiesbaden: Goran Haglund Tarpley had to say, so expect follow-up coverage. But we do have two other important reports revealing the background of the seem­ EIRIExecutive Intelligence Review (ISSN 0273-6314) is published weekly (50 issues) except for the secontl week ingly incoherent U.S. China policy: the Investigation, which probes of July anti last week of December by New Solidarity International Press Service P.O. Box 65178, Washington, the drug connection, p. 36, and the story on p. 63, about CIA-Beijing DC 20035 (202) 457·8840 "joint" covert operations. EurtJfHfUI HellllqUllltBrs: Executive Intelligence Review Nachrichtenagentur GmbH, Postfach 2308, We have tried to provide a particularly rich and varied array of Dotzheimerstrasse 166.0-6200 Wiesbaden. Federal Republic of Gennany coverage this week, in anticipation of our customary midsummer Tel: (06121) 8840. Executive Directors: Anno Hellenbroich. Michael Liebig holiday next week. The next issue will be dated July 21. In IHnnuulc: EIR. Rosenvaengets Aile 20. 2100 Copenhagen DE. Tel. (01) 42-IS.()(J A good place to begin your reading is on p. 58, where we inter­ In Mexico: EIR. Francisco Diaz Covarrubias 54 A-3 view Lyndon LaRouche on current history. Colonia San Rafael. Mexico DF. Tel: 70S-129S. JfIIHUI subscription silks: D.T.D. Resean:h Corporation. Takeuchi Bldg .• 1-34-12 Takatanobaba. Shinjuku-Ku. Tokyo 160. Tel: (03) 208-7821.

Copyright © 1987 New Solidarity International Press Service. All rights reserved. Reproduction in whole or in part �ithout pennission strictly prohibited. Second",lass postage paid at Washington D.C .• and at an additional mailing offices. 3 monlhs-$12S. 6 months-$22S. I year-$396. Single issue-$10 Postmaster: Send all address changes to EIR. P.O. Box 17390, Washington. D.C. 20041-0390. TIillContents

Interviews Departments Economics

47 Bruno Garisto 15 Report from Rio Panama's ambassador to Rome Is Petrobnis dying? blasts U.S. aggression against other countries that use the Canal. 17 Dateline Mexico Food consumption plummets in 58 Lyndon H. LaRouche, Jr. Mexico. What's required concerning China is not just "action," but a change 51 Report from Bonn A'marketplace in Thailand. The Food for Peace move­ in policy. For starters , George A contribution to China's future. ment, meeting in Bangkok June 24-25, called the Bush has to declare that Kissinger world food crisis the top strategic concern. was wrong, says the jailed 52 Andean Report American statesman, whose candidacy for Congress from Terrorists play yo-yo with Barco. 4 A White House meeting Virginia has already awakened that did not occur much attention. 53 Mother Russia Apparently George Bush didn't Russian groups flaunt racism. want to hear what Helmut Schmidt had to say about the financial 65 Satanwatch debacle that lies ahead. Book Reviews Anti-Satan bills before two 6 'Food for Peace' meets in governors . 61 CIA commissioned anti­ Thailand, maps campaign LaRouche book 66 Kissinger Watch to feed the world Documentation: The Bangkok Jeffrey Steinberg describes the Scowcroft scandal looms over Resolution. political and banking networks White House. which financed Dennis King's book-length slander, Lyndon 72 Editorial 10 Colombia: Grain growers LaRouche and the New American hear of world food crisis Scientific optimism vindicated. Fascism. 11 Mother Nature is biggest 'ozone polluter,' Michigan study shows Science & Thchnology 13 Currency Rates 22 When tropical epidemics and tuberculosis meet HIV 14 Menem economic plan will Findings presented at the Montreal spark a revolt AIDS conference show how in tropical countries, AIDS is leading 16 Agriculture to an explosion of other diseases Food cartel puts out 1990s plan. such as tuberculosis, sleeping sickness, and elephantiasis. 18 International Credit Bankers' plot advances in Madrid.

19 Banking Death throes of the S&Ls.

20 Business Briefs Volume 16 Number 28, July 7, 1989

Feature International National

26 Deng Xiaoping is 40 Warsaw Pact to meet amid 56 Supreme Court takes steps butchering t million food riots, uprisings toward fascism Chinese With the outbreak of the biggest Although its flag-burning decision A comprehensive report, filed by Hungarian crisis since 1956, the got the most attention, the court Webster Tarpley from Taipei, on temptation is high in Moscow for committed far worse crimes death warrants which Deng has a military adventure. against the Constitution. already issued against all opposition leaders. "After all," 42 Schiller Institute at the 63 U.S. intelligence is blinded Deng argued before the massacre Cini: Let's go with the by joint CIA-China at Tiananmen Square, "I million Verdi tuning! operations victims is a small price to pay in a From a conference and concert, in The CIA has been collaborating country as large as China." Venice, progress in the campaign with the Beijing regime on covert for a tuning fork based on natural operations, including Afghanistan, 30 R.O.C. prepares law. Kampuchea, Africa, and Central counteroffensive amid America. No wonder they were rumors of Red attack 44 Panama lawmakers' caught flat-footed in their Taiwan leaders are intensively conference rallies evaluations of the P.R.C. debating the best way to achieve opposition to New Yalta their long-term goal of retaking the 67 Eye on Washington The U. S. is now so desperate to mainland from the Communists. crush Noriega, it's asking Moscow Soviets seek press censorship for help. treaty. 34 Taipei ceremony marks Documentation: Statements to the tOOth issue of the Chinese recent meeting of 150 Ibero­ 68 Congressional Closeup Flag Monthly American legislators, from Panama's legislature, President, 70 National News 35 Madame Chiang Kai-shek foreign minister, planning on 'Satanic' carnage in minister, and the head of the U.S.­ Beijing Panama Combined Commission Corrections: In last week's issue for Military Security of the the "IMF' and "EIR" labels were Panama Canal. inadvertently switched on the two curves in Figure 14 on page 38 of Investigation 48 Socialists promote global the feature on Argentina's green fascism economy; EIR's alternative is for much lower interest payments 36 Could dope money be why The lOOth anniversary meeting of the Socialist International in through the year 2000. In the Bush protects Deng? Stockholm. article on page 50 titled "Palme A new look at the Western murder trial serves political aims," banking apparatus which relies for the correct spelling of the its survival on the world's biggest 50 South Koreans fear U.S. defendant's name is Christer opium producer-the P.R.C. troop pullout Pettersson, while on the following page, Palme's widow spoke of an 54 International Intelligence "insane deed by a psychopath," not an "insane murder." �TIillEconomics

A White House meeting that did not occur

by Chris White

On June 24, the White House press office confirmed that a 1989 is, for those with whom we cross-checked this story, meeting between President George Bush and former West something waiting to happen. German Chancellor Helmut Schmidt had not taken place. From his jail cell in the Alexandria, Virginia Detention The non-meeting has generated a certain amount of outrage Center, political prisoner Lyndon LaRouche wanted it known among well-placed circles in Western Europe, especially that he agrees both with this view of the attitudes prevailing those with some insight into the accumulating dangers on the in and around the White House, as an objectiv.e assessment, financialand economic fronts. Among such circles, the June and with the concomitant evaluation of the dangers that lie 22 meeting which did not occur has been understood as con­ ahead. Regular readers of EIR will recall that it was La­ firmatory evidence of the thesis, that on the crucial questions Rouche who, back in May and June of 1987, predicted in the of financial and economic policy, the crowd who runs the pages of this publication and elsewhere, what would occur in present White House is out of the real world. the fall of that same year. LaRouche's predictions were based The significance of the White House report was cross­ on his analysis of the slide into a new Herbert Hoover-style checked in London, Switzerland, France, and West Ger­ depression of the world economy. many. Circles in those countries concur that the conclusions LaRouche, from his jail cell, is now running for Virgin­ which may therefore be drawn include, firstly, that the White ia's 10th Congressional District seat, as he put it in his an­ House has no economic policy, and secondly, that world nouncement of candidacy, "in the tradition of Henry Clay." economic and financial questions have ill-advisedly been From Congress, in the life-and-death crisis of 1810, Henry relegated to low-priority status. Instead of a policy, the fan­ Clay, organizer of the faction known as the Whigs, rallied tasizers of Washington, D.C. insist that they can continue to the United States to fightfor survival. "muddle through." Capital flightout of Asia, especiallyfrom Hong Kong, in the wake of Deng Xiaoping's Tiananmen Alarm bells in Europe Square butchery, running according to some well-qualified As far as the European side of the matter goes it is not circles at a rate of $3 billion net per day into the U.S. dollar, simply a matter of canvassing the private views of those with provides the cushion on which such complacency rests. insight and expertise on the matter. The kind of behind-the­ More generally, the complacency which dominates today scenes ringing of the alarm bells about the course the United is compared with the same typeof mind-set which dominated States is taking, has also become a matter, increasingly, of the administration of the ill-fated Herbert Hoover between public discussion. France's veteran laureate of the Nobel the stock market crash of October 1929, and the banking economics prize Maurice Allais took to the pages of the crash of 193 1-33, which was set into motion by the failure of leading Paris daily Le Monde on June 28, to editorialize that the Austrian Kreditanstalt in the summer of 1931. If 1929 "in fundamental terms the world economy is potentially un­ was a problem, it is being pointed out, 1931 was a real stable. . . . In the short term its evolution is unpredicta­ disaster. So, now, October 1987 in retrospect may seem like ble.... Reform is needed." In his editorial, titled "From a problem overcome, but the crisis of the summer and fall of Crash to Euphoria:· The Plague of Credit," Allais compared

4 Economics EIR July 7, 1989 the world economy to a giant casino, and argued that the commission on international financial flows.Similar to the untrammeled growth of credit that has prevailed in recent World Forum, which is made up of former heads of govern­ years , has brought matters to a breaking point. ment, like Schmidt himself, Britain's James Callaghan, and The same views are expressed privately by those quite France's Valery Giscard D'Estaing, the commission on in­ familiar with the workings of such U.S.-based outfits as ternational financialflows consists , among others, of former David Rockefeller's Trilateral Commission. One such told central bank chiefs such as Paul Volcker of the U.S. Federal us: "There should have been a crash already, but it hasn't Reserve and Maurice Clappier from the Banque de France. happened ....As long as the U.S. administrationand Con­ U.S. participantsat the World Forum meeting such as Special gress are oblivious, what can you do? I wouldn't be surprised Trade Representative Carla Hills had not been too kindly to see a new October 1987 business, but all this doesn't seem treated by discussants on such matters as the U.S.implemen­ to matter on Capitol Hill or in the White House." tation of its Omnibus Trade Act of 1988, and its so-called One day after this report was provided, confirmation again Super 301 trade war features. Apparently, the same sort of came from within the adminstration. On June 29 the Com­ concerns were to have been addressed by Schmidt at the merce Department presented its annual estimate of the mag­ White House, had the meeting occurred. Schmidt, it was nitude of U.S. international assets and liabilities up through said, had prepared some statements, designed to warn the the year ending Dec. 31, 1988. By that time, the U.S. had United States about the dangers that lie ahead. But the White become the world's single largest debtor, owing the world, House didn't want to hear it. according to the Commerce Department's estimates, $532.5 Since the period March-April of this year, Helmut billion.Equally staggering, the total owed increased by 40%, Schmidt, on behalf of the financial interests he represents, up from $378.3 billion at the beginning of 1988. Up until has been telling those who would listen that the Bush admin­ 1984-85, the United States had been a net creditor of the rest istration has been given until the Group of Seven heads of of the world from the end of the First World War. state summit meeting, scheduled to be held in Paris on the Yet, according to the June 30 Wall Street Journal, "Bush July 14 anniversary of the fall of the Bastille in 1789, to come administration economists said the strong flow of foreign up with a serious program to cut the U.S. budget deficit. capital, particularly direct investment, proves that the U.S. Failing that, it is further implied, the foreigncreditors of the economy remains attractive. 'It reflectscontinued confidence United States will not continue to look so kindly on making in the U.S. economy,' said Anthony Villamil, chief econo­ available the further funds required to sustain the United mist for the Commerce Department." In principal categories, States' ever-increasing appetite for foreign finance. foreign direct investment in factories and companies amount­ This perspective was adopted by the Bank for Interna­ ed to $328.9 billion, up 21% from the year before.Foreign tional Settlements, the Basel, Switzerland-based central holdings ofTreasury securities totaled $96.6 billion, up 19%. bankers' central bank, and was presented in that agency's Foreign holdings of other securities totaled $393.6 billion, annual report in the form of unusually harsh attacks on all up 12%. Foreign borrowing by U.S. banks totaled $609.5 aspects of current United States fiscal, monetary, and eco­ billion, up 11.3%. The overall total of foreign assets in the nomic policy. Following the BIS annual meeting, European United States climbed to $1.786 trillion, up 15.4%. central bankers began to cooperate to force the dollar down While foreign lending to U.S.banks may have risen more from the high level it had reached against the deutschemark slowly than the growth of liabilities as a whole, or the growth at the end of May. In the last week of June, the same European of enumerated subcategories, the more than $600 billion central banks increased their interest rates, in a coordinated taken in by banks from abroad is among the chief indicators move which took effect on June 28 and 29.Further downward to watch, since that portion of the total is primarily made up pressure was thus exerted on the U.S. dollar, and also on the of the flight capital leaving crisis spots-among them, in U.S. stock market, which lost 91 points for that week, its 1988, the debt-strapped nations of lbero-America.Since such worst performance in some 15 months. money is short-term, following interest rate movements and Both indicate the kind of instabilities that continue to currencydiffer entials to maximize short-term gain, and since characterize the financial markets, and that will become the the internal U.S. real estate bubble which has provided the turmoil of the late summer and fall, after the Paris summit chief source of support for such short-term gains, via bro­ gibberings are over and done with. Such instabilities will kered deposits into government-insured savings and loan ac­ increase withthe progressof the political calendar, in partic­ counts, is going into a new downturn, the dominant compla­ ular where the $350 billion savings and loan bailout is con­ cency is insanely misplaced. cerned, and with the early August breaching of the present $2.8 trillion U.S. government debt ceiling. If the present No welcome for Schmidt's advice administrationcontinues with its willful disregard of the cri­ Schmidt, who was in the United States for a meeting of sis it refuses to concede exists, then by Hallowe'en the ghost the World Forum, out in Vail, Colorado, had apparently of HerbertHoover will probably have taken over in the White hoped to present Bush with the findingsof his recently formed House.

EIR July 7, 1989 Economics 5 'Food for Peace' meets in Thailand, maps campaign to feed the world by MaryMcCourt Burdman

The international Food for Peace movement held its first disbelief, Mrs. LaRouche stated; instead, people subscribe conference in Asia on June 24-25, in Bangkok, Thailand. As to the propaganda that the United States and Europe "over­ the former deputy prime minister of Thailand, Adm. Sontee produce" food. Farmers know this is not true: They have seen Boonyachai, said in his opening statement to the conference, the overall reduction of both agricultural production and food is now a national security issue for all of Asia. Many farmers, over the last 10-15 years . tens of millions of uprooted and hungry people from China, The world food shortage is our greatest international stra­ Vietnam, Cambodia, Burma, and Laos, are flooding through tegic concern, Mrs. LaRouche stated. Even the U.S. govern­ Asia in a phenomenon never seen on such a scale in the West, ment is reporting that 75% of Third World income is now in what is called in Chinese the mong Ii. or blind wave. In being spent on food; organizations such as the WorldW atch Soviet Central Asia, food riots are breaking out among the Institute estimate that world food reserves are at their lowest Muslim populations. in 20 years. Activists of the Food for Peace movement attended the In the Soviet Union, the leadership is in crisis over fear conference fromthe United States, New Zealand, Australia, of starvation this coming autumn, and the Tiananmen Square West Germany, Malaysia, and India. Greetingswere sent by massacre could easily be repeated in Moscow or other Soviet Gen. T'eng Chieh of the Republic of China on Taiwan. cities. Already in Uzbekistan, where people eat only 8 kilo­ Admiral Sontee described how, as a member of the last grams of meat or sausage a year, the Russian Army moved Thai government, he put into effect a guaranteed parity price in as ferociously as the Chinese did in Beijing. Gorbachov is for rice farmers and defended an adequate price for rice in a more unstable situation than Deng Xiaoping. In China, exporters-an action which helped raise the living standard 100 million people could starve very soon. The situation is of 70% of Thailand's people. With the crisis in world food now so bad that soldiers are keeping watch over the crops to production, and with even the few surplus-food producing take the grain by force as soon as it is harvested. nations such as Thailand surroundedby hungry neighbors, it What we now see is an irreversible change in the world was timely to organize a seminar in Bangkok on "Food for situation. All the assumptions of the Westernleaders�rge Peace," he said. Bush, Margaret Thatcher, Helmut Kohl-about the "tripolar world" are overthrown, whether they know it or not. The so­ 'The year of decision' called policymakers , such as Henry Kissinger, Hans-Dietrich This year is the year of decision for this crisis, Helga Genscher, and Helmut Schmidt, should have realized that Zepp-LaRouche, the chairman of the international Schiller the "global condominium" is finished-but they have not. Institutes, told the conference in her keynote address. Her Therefore , they are finished. George Bush has lost face, husband, Lyndon LaRouche, now jailed in the United States because all he will support is "stability" -not freedom, and for his political principles, warned last year, after the Dem­ not the right to eat to live. The massacre in Tiananmen Square ocratic Party nominated Michael Dukakis for President, that has created what Lyndon LaRouche called the "river of blood" hunger in the world is the greatest threat to world peace. dividing those who follow Henry Kissinger and those who Russia and China are cannibalizing their economies due to want the world to survive. the total economic failure of Communism; at any time, they The great danger, Mrs. LaRouche said, is that world could use their military power to take food from producer agriCUlture is collapsing so fast that soon, farmers will no nations in Western Europe, Asia, and America. The Com­ longer be able to feed the world's growing population. Out­ munist empires are anti-human; they are completely corrupt. side Southeast Asia, grain production fell 3.5% overall last This is why they cannot feed themselves, and will start wars year, and 3% in China. The bad harvests have driven grain to survive. prices up 30-45%. Producer nations are cutting exports Lyndon LaRouche's warnings have been greeted with sharply, except the United States-which is selling grain to

6 Economics EIR July 7, 1989 China and the U.S. S. R. at the expense of its own population. This led to a level of corruption unprecedented in world Very soon, the U.S. and Western Europe will be faced with history. These bureaucrats know nothing about developing the horrible choice between feeding their own populations or or running industry; they have only one interest-to make giving food to the Communists. money-and they ran industry into the ground. For this, Food production is stagnating at 1986-87 levels, when, these "crown princes" earned the undying hatred of the to give every human being enough food, we need twice what Chinese people. we are producing today, Mrs. LaRouche said. The policies Inflation took over the economy of China, and industry of those institutions-the food cartels, the World Wildlife stopped as the state attempted to control inflation by cutting Fund, the Club of Rome-to achieve "equilibrium" by cut­ all credit. It was this policy that created the "blind wave," as ting the world's population to 2 billion people, have created farmers were paid only worthless promissory notes for their total disaster. After 20 years, their policies to increase the crops, and construction workers were thrown out of work. death rate through disease and starvation, have not brought There is no social welfare in China-if you have no job, you "equilibrium." We face war, whether civil wars or world can only wander the country looking for work. A huge army war. of over 50 million people fled south to "prosperous" Guan­ Lyndon LaRouche proposed policies that could solve this dong province, only to be turned back north, to Manchuria. crisis: emergency programs to increase production, parity This has happened before in China, as dynasties broke down, prices to farmers , a new credit system. But now, he is injail, and the conquerors enlisted the army of homeless to take because he proposes the means to support far more than 5 control of the country . billi9n people on the Earth. Webster Tarpley, president of U.S. Schiller Institute, The Food for Peace movement was created to solve the said that the "great Chinese people" hadbroken up the global food crisis, and we will devote all our efforts to doing this, condominium superpower deal-which was also a racist Mrs. LaRouche stated. What we must do, is adopt a rigor­ deal-between the Soviets and the United States. But the ously ecumenical policy: Every African child is as precious Chinese people have paid dearlyfor their courage. At least 1 as any child born in Europe or America. No human being million will die under Deng Xiaoping, he warned. Deng should die for lack of food. The problem is easy to solve; Xiaoping was the first "refonn Communist," not Mikhail what is necessary is the political will to solve it. Gorbachov, and now China's disasters are showing the So­ Mrs. LaRouche's statements were the basis of the reso­ viets their own future. Already, 20-30 million died of hunger lution passed by the conference the next day (see page 8), in the 1988-89 winter, and the biggest banking crisis in the which will be circulated worldwide. The conference also recent period was not in a capitalist country, it was in China. demanded of U.S. President George Bush that he take im­ Deng's policies were inspired by Chen Yun,·a "Chinese mediate steps to meet the danger of the world food shortage, Bukharin," who took the Hong Kong "sweatshop" model for and use his presidential pardon to release Lyndon LaRouche. a nation of over 1 billion. "Investors" came in to take what profits they could before the country collapsed. The crisis in China There has been no real development in China, Tarpley The situation in China makes clear the need for the solu­ said. Not a single nuclear plant has been built; 20% of indus­ tions proposed by LaRouche, as a panel at the Bangkok try is always shut down due to electricity shortages. Because conference demonstrated. Dr. Preedee Kasemsup, chainnan education was stopped for at least 1 0 years during the Cultural of the Faculty of Legal Studies at Thammasat University, Revolution, labor productivity is worse than in 1949! said that the upheaval in China, was the coming to the surface The Communist regime will end by the end of the centu­ of years of trouble. Since 1979, Deng Xiaoping has led the ry , Tarpley said, but we cannot leave China to the Hong "refonn movement," because he had to realize that the col­ Kong model. There is another economic policy, whose cur­ lective economy was dragging China behind other nations. rent champion is Lyndon LaRouche.This is what China must This did not mean that Deng was "opening up" to the West, adopt. however-the situation in China was so desperate 10 years In the 1920s, the great founder of modem China, Sun ago, that even a die-hard Communist like Deng had to realize Vat-sen, wrote a book, The International Development of that individual enterprise was essential to develop a country. China, that proposed converting the war industry left from The "refonns"began in agriculture, where private production World War I to develop China. Sun warned, rightly, that if increased at first, when Mao's communes were dismantled. the problem of China were not solved, there would be anoth­ Deng began extending this policy to urban areas. But leasing er, greater war. He called for 100,000 miles of railroads, 1 state-owned factories to individuals could not work. In the million miles of roads, and three great ports and port cities to 1950s, China's entrepreneurs were liquidated by the Com­ be built in north, central, and far southernChina. LaRouche 's munists, and now, only those who have power to protect 50-year development program for the Pacific Basin, released themselves risk becoming "capitalists." That meant only the in 1983, emphasizes the same type of development for the most powerful of the Communist Party bureaucracy. Pacific Ocean.

EIR July 7, 1989 Economics 7 Gwei Way Kiat of Malaysia, an associate of the Dragon ed by force, werethrown to the winds. Flag publication of the Republic of China, gave an eyewit­ Politicians and bureaucratshave clung stubbornly to their ness account of Beijing in the days before the Tiananmen delusion about agricultural "overproduction." They have massacre. He saw with his own eyes, that there was no hysterically refused to even consider LaRouche's proposal opposition to the students' movement among the population, for an immediate and fundamental shift in the agricultural but because the students would not yield to the government, policy of the biggest producer countries toward expanding they were killed. The U.S. governmenthas been too weak, food production, and instead they have continued their policy Gwei said. He attacked Henry Kissinger for his support for of deliberate and long-term destruction of agricultural pro­ the Beijing government. duction capacities. Today, just one year later, LaRouche's assertion is un­ The broader Asian picture fortunately more than confirmed: The discussion on China was followed by presentations "In Moscow, Fears of Famine Grow," reported Welt am on the agriculture and economies of the Asian region. Ram­ Sonntag on June 18, in large letters on the front page, citing tanu Maitra, editor of Fusion Asia, described the enormous official Soviet sources. It is no longer any secret that in the potentialand problems of the Indian subcontinent, which has developing sector, where people have been kept under the a population as great as China's. Management of its tremen­ subsistence level for decades by the IMP, the banks, and the dous water system is the question of survival for the subcon­ food cartels, this has reached the point of genocide beyond tinent, Maitra said. Farm leader Denis McLachlan of New anything in the past. At the end of May, Egyptian President Zealand described how the constitutional changes in that Hosni Mubarak, in a speech before the World Food Council, country, especially the loss of the protection of the Crown, informed the world that in this decade alone, 512 million had opened it up to bankruptcy and total loss of national people have died as a result of hunger. Mubarak called upon sovereignty through an unpayable $56 billion foreign debt in the industrial nations at least to forgive a portion of the debts 10 years . John Koehler of Australiareported that agriculture of the developing countries, so that they could invest more was being financially destroyedthere . People now are almost money in building up the economy of their own nations. better not to engage in any business, Koehler said, but Aus­ Hunger kills more people in a single year than died in tralia could double its food production readily. both world wars! And yet, an agriCUltural and economic Pakdee Tanapura, editor of the Thai newsletter Offthe policy is maintained, whose foremost declared principle is Record, warnedthat Thailand is far too complacent about its bankruptcy. food production. It is a food exporter, but its per hectare If one accepts the "logic" of the agricultural policy of the productivity is considerably lower than that of even Bangla­ past years, then over 500million people have died of "over­ desh. Thailand's food surplus comes from the amount of production." The EC Commission, the U.S. Agriculture De­ arable land alone, but, surrounded as it is with starving Com­ partment, and the big cartels have announced as the highest munist nations from which many thousands of refugees are priority, "to reduce the burden of food surpluses." All sorts fleeing, Thailand must build up its productivity in order to of measures to curtail production, quotas, price incentives, survive. environmental restrictions-all of this is justifiedin the eyes of the politicians in order to cling to their delusion of "sur­ pluses." Even a spokesman of the WorldWatch Institute, an insti­ The Bangkok Resolution tution explicitly hostile to agriculture, sounded the alarm recently about the collapse of world stockpiles: Food supplies have dropped to only 61 days of current consumption-the lowest level since the 1972-73 world food crisis. Consumer The decisive question prices in many countries are 50% above what they were 18 months ago. Further price hikes by as much as 75% can be expected, particularlyin the poor countries; even hunger riots for human survival in many countries can no longer be ruled out of the question. The food crisis has now become the most important stra­ In July 1988, the American opposition politician Lyndon tegic threat; it has shifted the previous potential for military LaRouche, on the occasion of the Democratic Party conven­ conflictinto second place. Already in March of this year, the tion in Atlanta, warned that the world food shortage would World Farmers' Times, pointing to the catastrophic conse­ have to lead quite soon to a strategic crisis between East and quences of food shortage, rising prices, and astronomically West. Following a rigged political trial, LaRouche was im­ high debts, noted that leading politicians of the world must prisoned for a IS-year sentence, and his warnings that the "bring about a conceptual change, from stress on military Communist regimes would one day seize the food they need- security to stress on food security."

8 Economics EIR July 7, 1989 Collapse of agriculture in Communist sector such as the reunificationof Germany in freedom, and a real Just how right this is, is underlined not only by the shrink­ democratization in the Soviet Union and the entire East bloc. ing figuresfor per capita food supplies for the world's popu­ LaRouche's proposals are highly relevant for the present lation, but also the developments in the Communist part of moment. The governments of the West mustact immediately the world speak a convincing language. The ethnic unrest in to change their agricultural policy along the lines LaRouche the Soviet Union, as well as the rebellions in China, are has proposed; otherwise the supply crisisin the East bloc will caused not least by the food supply situation, which is con­ become the greatest strategic threat to the West. It is indeed stantly getting worse and which for some has reached the quite possible that if no other alternative is left to them, the absolute minimum. In Uzbekistan, the latest scene of unrest Communist potentates will use force to appropriate the food in the Soviet Union, per capita consumption of meat and supplies they need so desperately from the West. sausage has fallen to 8 kilograms per year! In China, the As LaRouche stresses, a fundamental change in the ag­ supply for the population is so bad, that soldiers guard the ricultural policy of the West, with the goal of expanding crops, and then seize the grain right afterit is harvested. production as rapidly as possible, is indispensable, since The catastrophic supply situation in the Soviet Union can world agriculture as it is today, already can no longer feed no longer be kept under wraps. At a press conference given the people of both West and East. The question is, who will in the middle of June by leading Soviet politicians and sci­ be able to eat in the future-the people in the East, or those entists, Prof. Vladimir Tikhonov, an agricultural expert and in the West? If the food and agricultural crises come to that member of the newly elected Parliament, said: "If we do not point, then military conflicts become unavoidable. take radical measures this year to deal with agriculture, by To feed 5 billion people, we will have to produce 3.5 next year we will be confronted with an outright famine. " billion tons of grain per year-and that is exactly double this Gorbachov's deputy Abalkin underlined this warning with year's worldwide agricultural production. The "scissors" of the words: "If the economy doesI\ot stabilize in the next year supply and demand are opening ever wider. The present and a half to two years, and no clear improvement takes agricultural policy is simply a means to commit genocide. place, there will be no way to prevent a shift to the right. Our If mankind is to survive, we need higher and more secure society is getting out of balance. It cannot be predicted what incomes for farmers and a doubling of agricultural produc­ form this will take , but it will be inevitable." And Viktor tion. This, however, can only occur if we defuse the "debt Belkin of the Academy of Sciences warned: "The economic bomb" in time and overcome the present crisis through a situation is worse than we could have imagined it would be. new, just world economic order. This means: Sometimes I doubt whether we can survive until fall. The • Debt moratorium and/or the transformation of existing economy is cannibalizing itself, it is consuming itself in order unpayable debts into long-term credits with an interest rate to stay alive." no greater than 2 %. • Establishment of a new world monetarysystem , aimed LaRouche's proposal at furthering productive development. The IMF and World LaRouche's warningscould hardly have been more clear­ Bank must be immediately dismantled and replaced with a ly confirmed. At a press conference on Oct. 12,1988 in West new "two-tier" credit system that will encourage productive Berlin, which LaRouche gave together with his wife Mrs . projects, while placing speculative financial deals at a dis­ Helga Zepp-LaRouche, the chairman of the international advantage. Schiller Institutes, he repeated his warning, that the food • Restoration of the sovereignty over credit of the na­ crisis in the East bloc is becoming the greatest strategicthreat tional governments and placing of the central banks under to the West. At the same time, he proposed concrete measures their direction. to secure peace by solving the food crisis: • Renunciation of the cynical policy of so-called "appro­ • A fundamental change in agricultural policy of the priate technologies" for the developing sector, and instead a biggest producing countries, in favor of increasing produc­ return to the policy of financing infrastructural Great Proj­ tion . ects, particularly in the areas of agriculture (prevention of • Western aid to alleviate and solve the economic and drought and flood catastrophes, irrigation), transportation food crisis in the East bloc, by shipments of food supplies (railroads, highways, waterways), and energy (including nu­ and capital goods, as well as carrying out a program of eco­ clear energy). nomic reconstruction. • Doubling of agricultural production in the entire world, However, LaRouche made this aid contingent on the through dismantling the dictatorship of the international car­ following three conditions: tels and the Brussels EC, debt reorganization programs for 1) The supplies could not be provided at the expense of flounderingfamily businesses, and parity prices for farmers . the developing countries. Unless we immediately adopt this policy, we will we lose 2) Future shipments could only follow market prices. not only the battle against world hunger, but also the battle 3) Western aid is linked to certain political concessions, for world peace.

EIR July 7, 1989 Economics 9 can guarantee that the producer "can cover his costs of pro­ Colombia duction and still turn a reasonable profit for reinvestment in machinery, livestock, and buildings." The other measure for achieving food self-sufficiency must be "productive invest­ ment" on the part of the state throughthe cheapening of credit Grain growers hear of for agricultural activities. He noted that U.S. economist Lyndon LaRouche has world food crisis predictedan imminent world recessionof unprecedented scale, which could upset the cartels' plans and force governments by JavierAlmario to take measures to protect their people. Under such circum­ stances, he said, "top priority is resolving the dramatic food crisis. " The world food crisis is caused by people who believe the The next speaker was his wife, Rosa Tennenbaum, a Earth's "carrying capacity" is for only 2 billion people, and spokesman of the West German Schiller Institute and a that "the world population must be reduced to that limit," founding member of the Food for Peace movement. She charged Dr. Jonathan Tennenbaum, director of the West argued for support prices, which can assure the constant German Fusion Energy Forum, in his address to 200 dele­ growth of world food production. If farmers are rich , she gates and invited guests of the XIII Congress of Colombia's said, the whole world is rich. "If the farmers are poor, every­ National Grain Producers Federation, Fenalce, held in Bo­ one is poor. " gota June 22. Fenalce director Adriano Quintana told the delegates that The powerful food cartels, charged Tennenbaum, are Mrs. Tennenbaum's father was the first German farmer to behind the current collapse in food production. They have sow corn in his country, for which reason "he will be accepted designed policies that are bankrupting the food producers of as a member of the National Grain Producers Federation." the advanced sector, while giving themselves enormous prof­ Fenalce President Hernan Osorio Arengas congratulated the its through the control they wield over the international food Tennenbaums and declared that their arguments "give us trade. "They see the market differently from ourselves; they further incentive for our fight. " He regretted that Colombia's don't see food as something primarily for people's nourish­ politicians are "not present at this conference to learn that ment, but as a very powerful weapon which they don't hesi­ national agriculture must be encouraged in the face of the tate to use," said Tennenbaum. He added that as a result of world food crisis. " cartel policies, world agriculture is scarcely able to feed 3 billion people, much less the nearly 6 billion inhabitating the Agriculture minister backed planet today . Yet further cuts in food production are dis­ The Fenalce congress took place just one week after for­ cussed at meetings of the General Agreement on Tariffs and mer Colombian President Alfonso Lopez Michelsen, noto­ Trade. rious for his secret meetings with the cocaine cartel, criticized Tennenbaum showed that the large cartels, including Agriculture Minister Gabriel Rosas Vega for having raised Cargill, Nestle, and Phillip Morris, fund "ecologist" cam­ farmsupport prices. Lopez proposed that instead of financing paigns against modern farming, to promote backwardness. national grain production, which would allegedly lead to "They speak about returningto nature, but in truth they want "overproduction," the governmentshould subsidize imports to impose a supranational dictatorship under their racist view "of grains in which we have deficits, such as wheat." of the world." Tennenbaum said that Phillip Morris, identi­ In his speech to Fenalce, Minister Rosas said that "the fied by Italian authorities as a financierof the pro-druglegal ­ raising of support prices, which for more than six semesters ization Radical Party , has "concrete plans to restructure its has been kept below the inflation rate and growth in costs, is production of cigarettes to produce marijuana cigarettes." to our way of thinking the only expeditious short-term means Many Colombians in the audience gasped. for recovering the profitability of the farm sector." Thanks to He pointed out that these cartels, which in many cases this policy, he said, "the crops have grown reasonably and share their boards of directors with the World Bank and previously scarce stocks have recovered. We have even re­ InternationalMonetary Fund, plan to place world foodstocks turned to self-sufficiencyin key crops , such as sorghum and "under the strict control of the World Bank," which "creates corn, and we are producing surpluses in products that until tremendous blackmail opportunities in the financial world." last year we were importing, such as rice and milk. " Tennenbaum recommended that in the face of such a Fenalce backed the minister against Lopez Michelsen, serious world food crisis, the world's nations must guarantee asserting in a letter to the minister that the support prices food self-sufficiency "as a mattt:rof life and death" for their "which are today the object of strong criticism, offerjustice national sovereignty. To achieve this objective, he said, na­ for the growers, by correcting the decline caused by suffo­ tions must adopt a policy of maintaining support prices that cating costs of production."

10 Economics EIR July 7, 1989 Mother Nature is biggest ' ozone polluter,' Michigan study shows by Rogelio Maduro

The claim that the clean air guidelines just announced by resulted in a statewide meteorological observation network President George Bush will reduce the amount of low-level in 1871. Parts of this network exist today as climatological "ozone pollution," also known as smog are a complete hoax, stations operated by the National Oceanic and Atmospheric according to leading scientists interviewed by the author. The Administration's (NOAA) Environmental Data Information amount of "natural pollution" is much greater than all of Service. man's pollution, and shutting down industry will have little "Observations of barometric pressure, temperature, pre­ effect in the concentration of chemical "pollutants" in the air. cipitation, cloud cover, wind direction and 'force' were re­ The evidence is presented in a scientific paper published in corded each day at many of the sites. Other data were also the November 1980 issue of the Bulletin of the American noted by those early weather observers. For example, depth Meteorological Societyby Dale E. Linvill, now at the Agri­ of water in wells and well-water temperature were commonly culture and Weather office at Clemson University in South recorded. It was in records from these sites that we found Carolina. daily observations labeled 'ozone.' What Linvill documentsis thatthe amount of ozone (smog) "Continued searchingthrough the old data has uncovered in the atmosphere today is identical to the amounts of ozone monthly average ozone values from 1871 through 1903 from found in the last century, before cars or electric power plants approximately 20 stations in Michigan.... We will present existed. The existence of "ozone pollution" can be accounted some of the early data . . . to show that the resulting patterns for by the emission of anthropogenic nitrogen from actively are similar to those of ozone concentration observed today." growing green plants and soils. Although at high concentra­ Linvill calibrated the measurements of ozone with the tions ozone can have serious health effects on humans, no standard methods of measuring ozone today, and compared scientific study has ever shown any ill effects from the very the results between July 1879 and July 1976 (see Figures 1 small amounts found in the world's most "polluted" areas. and 2). In those two years, the ozone levels were similar, and In his paper, titled "Ozone in Michigan's Environment furthermore on July 21, 1879, the state of Michigan grossly 1876-1880," Linvill states: violated the EPA. standards for ozone, something that was "Although ozone is now considered a pollutant of Earth's recorded to be happening for several months of some years atmosphere, this was not always the case. Medical doctors in the 1800s. recognized beneficial germicidal properties of ozone shortly Linvill continues: "We have just describedthe 1876-1880 afterit was identifiedby Shoenbein in 1845. They carried out periodin which day-to-day ozone levels exhibited very sim­ innumerable studies on its effect on human diseases. Litera­ ilarpatterns seen in today's data. Ozone concentration was ture of that era emphatically states the benefits of light, airy, lowest during the coldest partof the yearand highest during 'ozone rich' rooms over the customary dark sickrooms of the warmmont hs. Ozone concentrations also increased with time day. as an air mass moved slowly across the area. "Just as today's doctors have difficulty in establishing "Vegetation patterns in Michigan and throughout much cause and effect relationships for various health problems, of the Midwest during the late 1800s were probably very so did the doctors of the 1880s. Thus meteorological condi­ similar to today's patterns. The native forest of conifers and tions were recorded in hopes of explaining cause-and-effect hardwoods had been cleared in southernMichigan . Draining relationships for various health problems, so did the doctors of swamplands and wet areaswas well under way with farm­ of the 1880s. Thus meteorological conditions were recorded ing well established. Railroadshad entered the area, bringing in hopes of explaining why certain diseases become more with them increased population and industrial demands. prevalent at specific times within the year. The pioneering However, neither the internal combustion engine, electrical work of Dr. R.C. Kedzie, Michigan Agricultural College, generation plants, nor large-scale petrochemical plants were

EIR July 7, 1989 Economics 11 FIGURE 1 FIGURE 2 Ozone pollution in 1879 Ozone pollution in 1976

I I I 12 13 14 15 18 17 ,. 18 20 21 22 23 24

Daily ozone concentration at Michigan Agricultural College Hourly ozone concentration at Lansing, Michigan, July 12-24, near Lansing, Michigan, July 12-24, 1879. 1976. The ozone levels fo r the month of July and the entire year were nearly identical in 1879 and 1976.

present in Michigan nor anywhere in the Midwest during this production rates than the cooler north woods. Thus on the time period. What, then, can account for ozone measured backside of a high pressure area measured ozone levels are throughout Michigan during the late 1800s?" higher than on the front side of the high." Linvill then reviews several scientific studies on the In the conclusion to his paper, Linvill states "Average amount of nitrogen (a precursor of ozone in the atmosphere) daily 03 (0700 to 1400) was largest during the spring months emitted by plants and soils, billions of tons per year, which of March through May. The highest mean and median values is at least 100 times greater than all nitrogen emitted from all occurred as southwest winds flowed into the area during of man's pollution. Linvill adds that "when results of these April. Lowest mean and median values were recorded during nitrogen emission studies are compared with currentozone the winter period. The probability of daily ozone levels in measurements in the boundary layer (the lower atmosphere) excess of 80ppb reached a high of 0.37 in April and dropped and with the historical measurements documented in this to a December low of 0.02. paper, a strong argument can be advanced for plant-soil emis­ "During the 1876-1880 period, day-to-day ozone levels sions as the major contributor for photochemical ozone pre­ exhibited patterns very similar to patterns in today's data. cursors. Levels of 03 in Michigan start to rise in the spring­ Ozone levels peakedduring the warm months after falling to

time as the green wave advances northward. Maximum ozone wintertimeminima ls. The concentration increased with time levels and episodes of high ozone levels occur during the as an air mass moved slowly across the area. These patterns months of July and August, the prime vegetative growth can be explained using anthropogenic sources-plants and months for northernlatitute crops . Ozone levels and episodes soils-emitting nitrogen oxides into the atmosphere to act as generally decrease in late August and during September, the precursors for photochemical ozone formation. " time of grain filling or the reproductive stage of crop growth. In a phone conversation, Dr. Linvill told EIR that his "The pattern of ozone levels noted as an air mass crosses group barely touched the historical data which is available at Michigan also fits into an anthropogenic source model. Im­ Michigan State University, and that careful measurements of mediately afterfrontal passage ozone levels are low. This air ozone levels were also kept in several other parts of the world, originates in northern latitudes in areas of typically cooler such as London. It amazes Dr. Linvill that research funds temperatures and forested environments. As the air mass have not been allocated to examine these historical records, passes to the east and winds swing to southerly directions, which may provide a clue to solving "one more of earth's air from warmer areas arrives. These source areas are inten­ mysteries-the generation of boundary layer ozone." In sive agriculture and grassland areas having higher nitrogen looking at the national readings for ozone levels in recent

12 Economics EIR July 7, 1989 years , the picture that Dr. Linvill has seen is rather spectac­ ular. In the winter months, the levels of ozone are lowest, Currency Rates but in spring, the levels of ozone rises like a wave across the United States following the sweep of greenery as the trees The dollar in deutschemarks blossom with the onset of the new growing season. The New York late afternoon fixing highest levels of ozone are found when the plants are actively growing. 2.00 - ,-/ V-." � The Los Angeles basin 1.90 ./ The levels of ozone "pollution" in Michigan are clearly determined by soils and vegetation. Now, what about Los 1.80 Angeles? Again, it is worthwhile to research the historical record. The LosAngeles basin is named the "valley of smoke" 1.70 in all the accounts of the early explorers going back to the l.60 original Spanish discovery. In one of his books, Richard 5110 5/ 17 5/24 5/3 1 617 6/ 14 6/2 1 6/28 Henry Dana describes the characteristics of the smoke in the valley in the last century, following a trading trip, and the The dollar in yen same description is found in the diaries of the people that New York late afternoon fixing colonized the West. Indian folklore describes the Los Ange­ les basin as "on fire"every summer. lS!! According to Dr. Hugh Ellsaesser from Lawrence Liv­ 140 - --V'"--- 1;0 ermore National Laboratory, the smoke, haze, or smogcomes -

from the peculiar precipitation patternin southernCalif ornia. 130� Following heavy rains in the winter, there are very dry , hot

summers, so that plants, in order to survive transpire hydro­ 120 carbons in the process of photosynthesis, instead of water. These hydrocarbons are highly reactive, much more so than 110 hydrocarbons from fossil fuels, and are quickly converted SIlO 5/ 17 5/24 5/3 1 617 6/ 14 6/2 1 6/28 into ozone by sunlight. That is why the highest concentrations The British pound in dollars of "ozone pollution" are not found in downtown Los Angeles, New York late afternoon fixing or where cars and industries are located, but in the wooded

hills. Dr. Ellsaesser concludes that environmentalists could 1.90 eliminate every car and industry in Los Angeles, and it

wouldn't reduce smog one bit. 1.80 The Environmental Protection Agency, now implement­ ing what its head William K. Reilly referred toas the "clenched 1.70 fist" policy against "polluters," such those who are "culpa­ � ble" for ozone pollution. This will cost hundreds of billions 1.60 M \.. of dollars to the economy, the livelihood of millions of work­ .,...... � 1.50 .r- ers, and will harshly reduce the standard ofliving of the great '" 5110 5/17 5/24 5/3 1 617 6114 6/2 1 6/28 majority of Americans. All of this despite the fact that all the scientific evidence reveals their arguments to be a scientific The dollar in Swiss francs fraud. New York late afternoon fixing The latest EPA report states "ozone levels are highest during the day, usually after heavy morning traffic has re­ 1.80 leased large amounts of volatile organic compounds and ni­ � trogen oxides." Yet some of the highest concentrations of 1.70 � h ... r \....A. V "" "ozone pollution" in the United States arefound in the Smoky 1.60 Mountains and a few other heavily protected wildernessareas ,

hundreds of miles from away from any "heavy morning traf­ 1.50 fic." How does the EPA explain that?Perhaps the purpose of all these regulations is not to protect individuals from natural 1.40 levels of ozone or other natural gases, but to shut down SIlO 5/17 5/24 5/3 1 617 6/14 6/2 1 6/28 modem industrial society.

EIR July 7, 1989 Economics 13 and makes appropriate "reforms ." Cavallo reportedly called Menem to report that negotiations on the foreign debt would be extremely difficult, and to insist on adoption of a severe austerity program that would encourage creditors . But, as a commentator for the daily Clarin remarked in the June 18 edition, the Argentine people "have demonstrated a capacity Menem economic plan for sacrifice which has reached the limits of tolerance." For example, leaders of the Peronist-run General Confed­ will spark a revolt eration of Labor (CGT) are enraged at Menem's appoint­ ments for such crucial positions as president of the central by CynthiaRush bank and president of the state-run oil concern, YPF. Central Bank president Javier Gonzalez Fraga is a monetarist con­ sultant, whose clients include Chase Manhattan Bank. Ro­ Argentina's President-elect, Peronist Carlos Menem, won't gelio Frigerio, named as YPF president, is closely linked to take power until July 8, but he has already gotten a taste of multinational oil interests; his appointment is viewed as a the type of confrontation he will face very soon into his signal of future efforts to denationalize those state companies administration if he applies the economic program craftedfor involved in natural resources, probably with the intention of him by Nobel Laureate Lawrence Klein and the Bunge and selling them to foreign interests. The Peronist-run oil workers Born multinational grain cartel. The Peronist-controlled la­ union, SUPE, has launched its mobilization to reverse the bor movement is ready to explode in anger at the President­ Frigerio appointment. The bank workers' union is doing the elect's willingness to adopt policies tailored to what foreign same on the Gonzalez Fraga appointment. creditors want, rather than the emergency "war economy" Precisely because of such responses, and because of its that the nation needs. traditionally strong anti-IMF position, the Bunge and Born According to details released publicly, the Bunge and interests view the "hard-liner" trade unionists as irritants who Born program is an orthodox shock program, intended to must be removed. While the economic plan contemplates a produce an "export-led recovery," much as the International 150% wage increase, it has floated the possibility of "tem­ Monetary Fund and foreign banks have long demanded. "Al­ porarily suspending" labor's collective bargaining rights most every sector of the community will suffer the effects of which are guaranteed by law and which for years have per­ the economic adjustment," Menem warned recently, "and mitted the CGT to defend workers' wage levels. According there will be a very great social cost." The plan calls for a to deputy Jose Manuel de la Sota, a leader of Peronism's tripling of public utility rates, a maxi-devaluation, imposition social-democratic "reform" faction, a severe adjustment pro­ of large new taxes on agricultural exports, and drastic cuts in gram cannot be implemented "in the framework of unhin­ public sector expenses and jobs. Foreign investors will be dered functioning of collective bargaining." encouraged to increase their participation in Argentina. In response, Labor Minister-designate Jorge Triaca, Menem also warned that the price of gasoline will go up backed by the same liberal Bunge and Bornbusiness interests so dramatically, that Argentines won't be able to afford it, which demanded that former B&B executive Miguel Roig be and would do well to start using bicycles for transportation­ named finance minister, has begun efforts to remove Saul like the Chinese! Ubaldini as the CGT's secretarygeneral . A staunch defender of collective bargaining rights and of the CGT's "26 points," There will be no peace which include the call for a debt moratorium and nationali­ Contrary to the logic employed by Menem's advisers, zation of the banks, Ubaldini is viewed as a major obstacle deal-making with financial interests opposed to Argentina's to the eventual creation of a Mexican-style "social pact" in real industrialdevelopment, such as those behind Bunge and which unions, business and labor would agree on wages and Born,will not "stabilize" the country. The Argentine public prices, in the context of a continuing austerity program. has been so bludgeoned under the presidency of Raul Alfon­ In light of current inflation-June's rate is now expected sin, that a call for people to swallow even more austerity and to surpass 130%-the 150% wage increase translates into a "sacrifice," for the purpose of "inspiring confidence" among 20% increase in real wages, not enough to restore workers' Argentina's creditors, will produce quite a different result. lost purchasing power. Real wages have fallen 30% since Foreign Minister-designate Domingo Cavallo, an econ­ December 1988, while purchasing power has declined 50% omist who favors orthodox policies, spent time in Washing­ during the same period. Unemployment grows almost daily. ton earlier in June sounding out financial institutions on their Within the last month, the Labor Ministry officially regis­ approach to Argentina. IMF and World Bank representatives tered 15,000new unemployed, as a result of firings, reduced told him bluntly the only way they will even consider granting work schedules, and early vacations. Up through April the any new loans, is if the new governmentfirst bites the bullet figure had been 1,140.

14 Economics EIR July 7, 1989 Report from Rio by Silvia Palacios

Is Petrobras dying? Ibero-American integration is ever to Shocking news: Brazil's state-owned oil company is strangling occur. The most advanced capital goods under IMF austerity . fell in production by 10% in 1988, the lowest production level this decade, while industry as a whole fell 2. 1 %. "All this is due to the crisis of the state companies, which make up 70% of internal demand," according to a study A few months ago no one would of all the state companies were under­ of the Brazilian Association for the have guessed, not even the economet­ mined; Petrobnis was left withless than Development of Base Industries. The ric forecasters, that the state oil com­ $1 billion for investment, which had cited sector is using only 61.4% of its pany Petrobnis was a step away from already been spent. installed capacity, and from 1980 to bankruptcy. Nearly a decade of The ruling elite in Brazil has made 1988 fired some 60,000 "over-quali­ shrinking investments, a policy inten­ oil self-sufficiency by the end of the fied"workers. sified in the past two years to comply century a priority for guaranteeing na­ The crisis , of Petrobnis parallels with the austerity demands of the In­ , tional sovereignty. For this year, with that of the electrical sector, subjected ternational Monetary Fund, has led one the new explorations in the deep waters to the sabotage and blackmail cam­ of the world's largest companies, the of the Campos Basin, the goal is to paigns of the World Bank and its eco­ symbol of Brazilian national pride, into produce 700,000 barrels of oil a day. fascist cohorts. According to the gov­ desperate straits. The cutback in the investment budget ernment's Plan for the Year 2010, the Petrobnis president Carlos will seriously affect such plans. electrical sector requires annual in­ Sant' Anna made an urgent announce­ Investment in Petrobnis has been vestments of $6.5 billion through the ment that the company's investment falling for years. It is reckoned that year 1991, if a collapse worse than program will be paralyzed for the rest between 1982 and 1988, investment that of the oil industryis to be avoided. of this year, due to an absolute lack of fell 51 %. The annual volume of in­ However, every indication is that il­ resources. Sant' Anna blamed, al­ vestment dropped from $5.2 billion in lumination in the country will soon be though not by name, the finance and 1982 to $2.5 billion last year. Still, by candlelight. Investment in 1988 was planning ministers, for the disaster, interest payments on the foreign debt $4 billion. due to their blind obedience to the mo­ have been paid punctually; in only five In sum, Brazil in the 1980s has lost netarist program they and the creditor years, Brazil has sent abroad $55 bil­ its development rhythm. The average banks agreed to. "Our distress in­ lion in liquid dollars! GNP growth rate was 2.39% over the creases when we see that Petrobnis' The near collapse of the state oil past nine years , while the average in weakening has not yielded a lowering company, which contributes 10% of the 1980s was 8.7%. This year, Brazil of inflation." He added, "Inflation is the GNP and employs directly and in­ will certainly lose its status as eightQ fought with investment and work," not directly nearly 3 million people, is just economy in the world. by freezing public service rates, as was the tip of the iceberg. Each of the key And worse is to follow. There has decreed under the failed economic infrastructural sectors of the economy been much commentary of late about strategy of the "Summer Plan." is in trouble, especially electrical en­ the coming "Black September," since Petrobnis had expected a 1989 in­ ergy and steel production. without resources from abroad, the vestment of some $3.2 billion in its The capital goods industry in Bra­ country will have to either bum up its expansion and maintenance pro­ zil, one of the largest and most modem reserves to pay $3 billion in foreign grams . With the January decree of the on the continent, is in rotten shape. It debt interest charges due in Septem­ latest monetarist package, the money is precisely this sector which must be ber, or enter into a technical morato­ almost vanished. High interest rates the cornerstone for an economic re­ rium. However, the collapse of Petro­ and an inflation rate of 3-9% a month covery program that can end the Af­ bras could come sooner than that, produced a flow of money which in rican levels of poverty afflicting the serving as the spark for a general eco­ better times would have gone to the country. Brazil's capital goods indus­ nomic conflagration in Brazil that productive economy but today has fled try will also be its most important con­ could make troubled Argentina appear to the speculative markets. Resources tribution to the rest of the continent, if an oasis of stability, by comparison.

EIR July 7, 1989 Economics 15 Agriculture by Robert L. Baker

Food cartel puts out 1990s plan ence an initial decline of prices and The three "options" given by the AgriculturalPolicy Working sales receipts, which would require larger government payments ing the Group all sp ell trouble fo r fa rmers. early years . "Following about two years of adjustments, increased mar­ ket growth would bring price recovery and higher incomes as well," the study On June 28, the Agricultural Policy Act of 1985 (FSA) for another five says. "With this plan in place for five Working Group-the Washington, years. The study projects declining years , the sector would be much more D.C.-based policy front for the giant shares of world markets and slowly competitive both in domestic and ex­ world food cartel companies-re­ declining farm incomes because of port markets. It would mean faster leased a special report, "Agricultural constraints on farmer decision-mak­ growth, lower stocks, much less land Policy for the 1990s." The loo-page ing. "Stock would build slowly and idled, greater production and, by the document was written in doublespeak place increasing pressure on market end of the period, stronger prices and to tone down the blatant cartel agenda prices," according to the study. "Total higher incomes. " against farmers . "This study is intend­ idled acreage would continue to be When asked which option he felt ed as a resource for the next farm bill substantial, and farm income likely was best, Penn said he liked the de­ discussion," said William G. Lesher, would decline slowly during much of coupling option or option three. This a Washington consultant and spokes­ the period." makes sense fromthe grain cartel van­ man for APWG, who also worked as The second option retains the bas­ tage point. According to the report, a consulting partner with former Ag­ ic structure of the current farm bill, "In initial years . . . the large free riculture Secretary Richard Lyng. but replaces crop-specific bases with stocksof grain andrelatively low prices When the Working Group's a single farm base, giving farmers the lead to shiftsslightly away fromgrains spokesman, J.B. Penn, was directly option of planting various program or to oilseeds." This increased soybean asked by this reporter, whether the oilseed crops on their farm acreage production would play heavily into the three scenarios will drive more farm­ base. The study projects expanded grain companies' hands as a valuable ers off the land, Penn replied, "We production and use, and somewhat source of protein to wield political didn't get into that." Penn said, "I don't greater marlcetgrowth . "With this plan power in the increasing food crisis. think we would see any big swings in in place for five years," the study says, Also, the lower prices, will bankrupt farm numbers, like before, but there "the sector would be allocating re­ even more farmers . would be some." Then, abruptly, the sources somewhat more efficiently In all three scenarios com prices press conference was closed to more than under current policy-concen­ and the value of total food grains will questions. trating production more on the fastest­ be lower at the end of five years than In order to understand this grain growing commodity markets. The re­ they are today. All three scenarios cartel study, it is necessary to know sult would be smaller carryover stocks, show no relativeincrease in carryover who makes up the Agricultural Policy faster market growth and somewhat stocks of feed grains and reduced car­ Working Group, which was founded higher incomes." ryover stocks of soybeans and soy­ in 1986, as the USDA and other agen­ Under the third "decoupled" poli­ bean income. Even a comparison of cies were finally being taken over, cy option, income support would be total farmnet cash income in the 1991- lock, stock, and barrel, by the cartel continued at about the same historical 95 period shows a steady downhill interests. The A WPG includes Car­ level. Price-support loans aremade on . slide each consecutiveyear for aU three gill, Inc., Central Soya Company, Inc. a recourse basis, annual land idling scenarios. (Ferruzzi), Louis Dreyfus Corpora­ programs are eliminated, and the cur­ This report is a real deception op­ tion, IMC Fertilizer Group, Inc, Mon­ rentExport Enhancement Program and eration. It is the old marketingtrick of santo Company, Nabisco Brands Inc. grain reserve policies are continued. giving the customer threealterna tives, All these top guns have a big stake in Farmers may plant any program or oil­ each of which is equally bad. But then the food and grain business. seed crop on their farm acreage base. what would you expect from multi­ The first option would be the con­ The study projects that under this national grain cartels: a policy that tinued extension of the Food Security option, the farm sector would experi- would be goodfor the farmer?

16 Economics EIR July 7, 1989 Dateline Mexico by Cruz del Carmen de Cota

Food consumption plummets in Mexico fections, and pneumonia has been ev­ More children are dying than being born in some parts of the ident since 1973; however, the frankly rising tendency expresses itself in the country, a sure sign of biological holocaust. last six years." The report concludes that despite the efforts of health centers, Mexico is registering "greater perinatal, in­ T he drastic and continued reduction 91.8 grams. The poor and middle fant, and pre-school mortality, reach­ of Mexico's agricultural production classes are filling their stomachs with ing 20,000deaths annually of children over the past six years has resulted in more com tortillas (221.5 grams), under the age of five." a biological holocaust. The vertical double the tortillas eaten by better-off In the poverty-stricken mountains drop in food consumption has led to strata. of the north of Puebla state, an epi­ epidemics of diseases which had for­ Medicine has become scarce, due demic of measles, in a panorama of merly been under control or even to the high cost of imported ingredi­ grave malnutrition and amebiasis, has eradicated. ents. Mexico has to import 80% of the caused the deaths of 50 infants in the This tragedy is a consequence of ingredients of some of the most widely past 20 days. Dr. Maximino Betan­ the economic policies begun by Pres­ used medicines. zos, chief of epidemiology at Puebla ident Miguel de la Madrid and contin­ The outcome is the return of epi­ University Hospital, reports: "The ued by Carlos Salinas. Government demics. A recent study by Professors growth rate has inverted; more chil­ men boast of their successes in push­ Olivia Lopez Arellano and Jose Blan­ dren are dying than being born."Al­ ing crop guarantee prices paid to farm­ co of the Autonomous Metropolitan though the Health and Welfare Sec­ ers far below the cost of production, University reported, "Between 1979 retariat tried, in the beginning, to play while raising the prices of imported and 1986 there was an impressive rise down the epidemic, on June 22 it had inputs. The other pillar of their "anti­ in morbidity from malaria. In that pe­ to admit the epidemic was attacking inflation" program, the lowering of real riod malaria went fromapproximately not only Puebla, but had spread to the wages through the "Economic Soli­ 30 cases per 100,000to a bit more than states of Tamaulipas, Sinaloa, Oaxa­ darity Pact," has undermined the in­ 160 cases per 100,000; the curve goes ca, and Hidalgo, with more than 2,205 ternalmarket for food. up most sharply starting in 1982, the cases of measles reported. The cost per gram of animal-ori­ year when it began sustained takeoff. " However, the "solution" the gov­ gin protein rose 600% in real terms The Health and Welfare Secretariat ernment is offering to the problem of from 1985 to 1988, as food subsidies registered 35,000 cases of malaria the population's survival is the one in were eliminated in compliance with during the first half of this year, 10,000 the new Federal Labor Law , now on International Monetary Fund condi­ more than in the same period of last its way toward formal approval: In­ tionalities. A worker earningthe min­ year. The epidemic is centered in the stead of raising the minimum wage to imum wage could only afford 11% as states of Guerrero, Michoacan, and catch up with inflation, it leaves wages much protein of animal origin as he Oaxaca. up to "the free market of supply and could in 1988, a study published in the The Metropolitan University re­ demand" and encourages wages to be daily El Financiero, June 23, calcu­ searchers note, "The reappearance of based on piece-work. Thatwould leave lated. That meant a reduction from 369 dengue fever, considered until recent­ workers at the mercy of Mexican and grams to 39 grams (a little more than ly to have been eradicated, is another multinational sweatshop operators . one ounce) per family memberper day. grave regression in the population's Citibank presidentJohn Reed, the The National Consumer Institute re­ health indicators. Starting in 1981, chief negotiator for the 500 banks ports that daily meat consumption when there was an epidemic in Central holding Mexico's debt, has his own among the poorest 32% of the Mexi­ America, the disease was again de­ diagnosis of Mexico's problems. Reed can population averages 29.7 grams tected [in Mexico] . It reached 22,000 prescribes, "Mexico does not need (one ounce), while the "richest" 25.5% cases in 1986, an increase of 36% over large amounts of money, but rather a average 160.2 grams (5.5 ounces). 1985." They add, "An increase in in­ psychological push which dilutes the Egg consumption averages 25.4 cidence of diseases such as amebiasis, feeling some Mexicans have that they grams daily; milk and dairyproduc ts, gastroenteritis, acute respiratory in- are going through a crisis."

EIR July 7, 1989 Economics 17 International Credit by William Engdahl

Bankers' plot advances in Madrid terrand government, is the up-front The 12-nation European Community at its Madrid summit took a , pusher for Europe 1992. According to the Luxembourg banker, his Commit­ giant step toward ending the nation-state. tee for the Study of Economic and Monetary Union was a hand-picked affair whose finaloutcome was agreed C reation of an autonomous, supra­ Great pains have been taken by by a tiny elite. Chaired by Delors, who national central bank for the 12 na­ European Commission President himself drafted the final report, the tions of Western Europe's Economic Jacques Delors and others to create the committee included the heads of the Community, politely dubbed Euro­ impression of a serious "debate" about 12 central banks. Absent were any na­ pean Monetary Union, advanced a the issue of a European central bank, tional trade union, farmer, or other giant step at the June 27 Madrid heads­ a highly controversial scheme consid­ constituency organizations. of-state meeting. ered by its backers to be the very heart The core of the Delors Report to The prime ministers and Presi­ of the supranational Europe 1992 the heads of government at Madrid dents of the 12 nations agreed to full scheme. was his plan for a "three step" process participation of all 12 national curren­ In reality, the European central leading to the supranational central cies in the European Monetary System bank scheme has been fu lly worked bank. Thatcher has conditionally (EMS) by July 1, 1990, the time when out by a secretive elite of central bank­ agreed to join "step one" while insist­ national financial market controls in ers and Brussels EC civil servants. ing on her fundamental opposition to the EC will be finally lifted under Eu­ Trilateral Commission economist steps two and three, the real core of rope 's "1992 Single Market" plan. The Niels Thygesen drafted the blueprint the central bank scheme. Rightly, she EMS is the system of agreed currency for a scheme nominally modeled on says this "would be the biggest trans­ zones in the EC, which was created in America's 12 Federal Reserve district fer of sovereignty we've ever had." the late 1970s to defend against dollar banks. Under his plan, each nation Ifthe scheme succeeds, Germany, instability. But it was intended by its would have a seat on a new European for example, or France, will simply architects to be the firststep to creation System of Central Banks, or ESCB. give up control over the most basic of a top-down central bank for all Eu­ Even the name has been chosen to de­ decisions of everyday economic life. rope. ceive. Control of national budgets will pass Until Madrid , British Prime Min­ "Let me be very crude," a Lux­ to the new ESCB . If national parlia­ ister Margaret Thatcher had refused to embourg insider intimately involved ments vote emergency employment link the pound sterling to the German in the process confided. "This process measures to improve their national mark and other currency levels of the leading to creation of a European cen­ economy and it is opposed by the EMS "until the time is right." In Ma­ tral bank is very, very strong. The de­ ESCB, the ESCB will rule. If a coun­ drid, under pressure from the financial tailed design of how to bring it about, try decides to improve health condi­ interests of the City of London includ­ and exactly what it will be, was al­ tions and violates the ESCB, it will be ing the Bank of England, she agreed ready agreed before the [June 1988] voted down. Control of money and to a conditional "compromise" agree­ Hanover summit when Delors was credit, the very heart of national sov­ ment for British full membership in 'asked' by the heads of state to form a ereignty, is surrenderedunder the De­ the EMS by next July. commission to study the idea. The lors scheme. More significant, according to French and the Germansare behind it. Delors is explicit. His new central Brussels EC sources, was Thatcher's If France and Germany agree , the oth­ bank will be "independent of instruc­ agreement to take part in a summit to er smaller nations of Europe have no tions from national governments and revise the Treaty of Rome, the EC's alternativebut to go along," he insist­ Community authorities. Both Gover­ ground-rule treaty . Monetary and eco­ ed. "Thatcher can 'bargain' until she nors and [ESCB] Board members will nomic union is explicitly left out of is out of the game. But there are too have security of tenure. " "The Delors the mandate of the EC under the pres­ many things carefullyin place for this scheme has been designed explicitly ent treaty. For a new, supranational to be stopped now. The stakes are very to set up a central bank autonomous central bank to be created, unanimous high." and free from any interference from agreementby the national parliaments Delors, formerBank ofFrance of­ national parliaments," a senior City of of all 12 member states is required. ficialand Socialist minister in the Mit- London banker stressed.

18 Economics EIR July 7, 1989 J ______• ______Banking by Kathleen Klenetsky

Death throes of the S&Ls and directors." But even if it doesn't, As Bush's bailout package goes into final negotiations, offi cials he warned, the S&L bill will neverthe­ less "expand the range of civil en­ are saying saving and loans are passe. forcement measures available" to the government to prosecute S&L "fraud," "extend the reach of certain existent SEC Commissioner Joseph Grund­ odof constriction" for the S&Ls, "both measures to new (and, in some in­ fest was nearly lynched by angry S&L in terms of assets and the number of stances, less precisely defined) con­ executives when he told a conference institutions." To soften the blow, he duct," and "dramatically increase the of the U.S. League of Savings Insti­ added that perhaps, over time, there civil and criminal penalties." tutions in Washington June 26, that it will be a "resurgence in deposits, for "The cumulative result of these far­ was theirmismanagement alone which those thrifts which manage to sur­ reaching changes would be to make has caused the nationwide collapse of vive." available to the federal banking regu­ thrift institutions, and that they should Without acknowledging the fact lators and law enforcement authorities basically bow out of the home mort­ outright, Wall hinted at the real pur­ uniformly more punitive sanctions, gage industry , if they want to continue pose of the Bush bill, to facilitate the and at the same time allow unfettered to exist. takeover of the S&Ls by the major discretion in their use." There are plenty of other financial commercial banks. The FHLBB head The S&L officials' reaction to this entities which can handle mortgages stated that he supports that version of picture of unrelieved doom and gloom "more efficiently," Grundfest told the the thrift legislation which willl allow alternated between rage and depres­ conference, which was convened to commercial banks to buy up healthy sion. discuss the implications of the Bush thriftsas soon as the bill is signed into Grundfest's remarks provoked the administration's S&L "bailout" law, rather than the other version, most intense response. Past USLSI scheme. The impetus for tougher reg­ which calls for a two-yearwaiting pe­ president Gerald Levy publicly blast­ ulations for the S&Ls, he said, comes riod. ed his speech as "most offensive." The partly from other sectors of the "finan­ Wall predicted that Congress will furor it provoked spilled over into the cial services industry" (i.e., the big have a compromise version of the S&L corridors outside the conference room, banks poised to take over the remain­ package ready for Bush's signature by where Grundfest found himself sur­ ing thrifts), which consider the S&Ls early August, when Congress takes its rounded by a horde of angry S&L of­ "a class of financial lepers that are summer recess; but he admitted that ficials, who denounced him for giving properly subject to stringent scruti­ Congress "may not be able to resolve a totally distorted picture, based on ny." the differences" between the House stories published in the Washington Incredibly, Grundfest advised the and Senate versions of the legislation Post. attendees that thrifts should continue by that time. When this reporterinterjected that to invest in junk bonds. As if the picture painted by Grund­ former FSLIC chairman Ed Gray had Other speakers at the conference, fest and Wall wasn't grimenough , an­ given EIR an interview charging that in various and sundry ways, delivered other speaker, Washington, D.C. at­ former Treasury Secretary Don Regan the same message, that the S&L in­ torney John K. Villa, warned the as­ had set about to deliberately bankrupt dustry is essentially a thing of the past. sembled S&L officialsthat they could the thrifts becausethere was "too much Both the House and Senate have passed soon be the victims of wholesale RICO housing" in the U. S. , several officials versions of the Bush measure, which (racketeering) suits. He reported that of the USLSI responded that they has now gone to a conference com­ the Senate version of the package "wouldn't be in the least bit sur­ mittee. "would make all the federal banking prised," since that's exactly what has M. Danny Wall, chairman of the criminal statutes predicate offenses for happened. Federal Home Loan Bank Board, told RICO." A USLSI official later told EIR that the conference that at least 700, and Ifthis provision endsup in the bill's the real causes of the thrift collapse possibly 1,200 S&Ls will "go out of final version, it "will have the unfor­ began with "Paul Volcker's interest existence," as a result of the adminis­ tunate effect of vastly increasing the rates, followed by banking deregula­ tration's "rescue" effort . number of civil RICO actions against tion, and then the collapse of oil and Wall said that he foresees a "peri- financialinstitutions and their officers real estate values."

EIR July 7, 1989 Economics 19 Business Briefs

Demography 15.5% in this group owned homes in 1988, sonalize the exchange of goods. It still re­ as against 21.3% in 1980. Young workers tains that role. The most successful private Italy holds first place are earning less than those of 15 years ago. bankers understand this and will, within In particular, workers under 25 suffered a sensible limits, continue to put the interests in population decline 28% drop in income between 1974 and 1988. of their clients ahead of those of govern­ Just 44% of blacks own their own homes, ments, and their enforcement agents . The average Italian woman of child-bearing and the report said nothing of the poorer Whether this is moral or not, is not the sub­ age (15-49) gives birth to fewer than 1.3 quality or property value. Rents are increas­ ject of this survey . It is most certainly good children, giving Italy the lowest fertility rate ing . The study claims that a growing number business." in the world, according to the 27th Annual of "poor"-supposedly 6.6 million-pay Report of the Population Reference Group, more than half of their incomes for rent, released in June . By way of comparison, often in substandard housing. 40% of all Mexican women of that age have 3.8 chil­ renters have no savings all. dren on average , and Brazilians 3.4. In Eu­ Environmentalism rope , the only country which still has a pos­ itive growth rate is Ireland,while zero growth 25 % of U.S. gas stations Dope, Inc. prevails throughoutthe continent, with Italy may have to close bringing up the caboose. The new Italian Chief of General Staff British bankers defend Over 25% of all gas stations in the United of the Army, Domenico Corcione, recently drug money laundering announced that women will be drafted into States will be forced to shut down by the the Army, because of the falling birth rate . Environmental Protection Agency over the Projections from here to the year 2037 are The London Economist magazine on June next few months, as the agency moves ag­ that Italy's population will fall to 43 million 24 issued a shameless defense of drug mon­ gressively to enforce new environmental by then, and even more alarming, that 30% ey laundering . ''The drug trade in America regulations. The targeted gas stations are of these 43 million people will be over 65 alone is reckoned to be worth as much as largely the small, mostly rural , "mom-and­ years of age . That means that for every 100 $200 billion a year. It is therefore obvious pop" gas and repair stations, which will be actively employed persons, there will be 79 that drug dealers use banks, just as they use wiped out in favor of a monopoly of mini­ retirees. long limousines. The business is simply too mum service, high-volume "superpumper" Italy's present population is 56 million. vast to be isolated. It has become part of the stations owned and contolled by the oil car­ The sharp decline is projected to begin after financial system," it argued. tels. 2007 , at which point an Italian will die every "This is why the debate about banks and The regulations require that all gas sta­ 1.5 minutes, but without a new one being drug money laundering ultimately leads no­ tions do the fo llowing: replaceleaking tanks born. The demographic collapse would be­ where .... or gasoline storage tanks 15 years or older, come more disastrous by that point, unless "Those wishing to combat the drug trade at a cost of $80,000 to $120,000 per tank; the past two decades of savage anti-life pro­ would do better to tackle the demand for upgrade all other gasoline tanks to EPA paganda and policy are reversed soon. narcotics rather than attack the related flows standards, at a cost of $18,000 to $35 ,000; of cash. The flows are a symptom, not the install devices to detect leaks and buy at disease itself. Attacking them risks further least $1 million in liability protection, which prejudicing the individual's right to banking will cost owners thousands of dollars in pre­ secrecy as a result of heavy-handed regula­ miums if they can obtain the insurance at Housing tion, for in an electronic banking system, all . banks will always be used to launder money. In addition, if any soil has been contam­ Study cites drop The only effective way to end that practice inated by a leak or spilled gasoline, the sta­ would be to ban all forms of cash. . . . tion owner is responsible for removing the in U.S. homeownership "It is not even essential to share the view soil , a costly process. of one cynical British private banker with Furthermore,new regulations now com­ A new study by the Harvard University Joint years of experience in Latin America who ing into effect in the Northeast, to be fol­ Center for Housing Studies documents how said: 'If you had morals or ethics in this lowed later in the rest of the country , will housing costs have forced families to forego business, you would not be in it. ' It is indis­ requiregas stations to install nozzles to cap­ homeownership, especially for young cou­ putable that private banking and secret mon­ ture the volatile gases at the pump, at a cost ples and the poor. Homeownership rates na­ ey do go hand in hand, and some of that of around $30,000 per.station. tionally declined to 63.9% last year, down secret money would fitmany people's defi­ Robert Lawrie, executive vice president froma high of 65 .6% in 1980. The sharpest nition of dirtymoney . . . . of Midwest Automotive and Gasoline Deal­ decline was in the 25-34 age group, the ages "The point is that money is an anony­ ers Association, a Kansas City area group, when most people buy their first homes. Only mous medium which was invented todeper- noted that the net income from gasoline sales

20 Economics EIR July 7, 1989 Briefly

• EQUITY ISSUANCE for the first of a good station is $25 ,000 to $30,000 a lO af Americans are now employed in the half of 1989 is down 40% from the year. "It makes no sense at all for them to service sector, "makes it easier to manage same period last year, and of this the take on those new costs ." the economy, because recessions hurt goods­ rate of initial public offerings was The end result of all the new environ­ producing industries more ." down 61%. Because of this, Wall mental regulations, warned Joseph Koach, During a question-and-answer session, Streetfirms have earned$800 million executive director of the Service Station an EIR representative pointed out that an less than the same periodlast year in Dealers of America, is that "you're going to economy cannot function unless it is pro­ 'fees, with their current earnings only see prices like they have now in Europe, ducing real wealth, and that, in any case, at $1.3 billion. where gasoline costs $3 to $4a gallon." the lower wages paid in the service sector will further shrink the U.S. tax base. Nor­ • MEXICO'S Undersecretary of wood disagreed: "Well, I don't want you to Industry and Foreign Investment is get me wrong . Of course you can't really heading a high-powered mission to have a viable economy without goods pro­ Europe, in hopes of increasing Eu­ Real Estate duction, but you don't have to employ so ropeanforeign investment into Mex­ many people in these areas ." ico. His argument is that Mexico is London concerned over On the issue of wages, Norwood admit­ different from the rest of Ibero­ ted that service sector jobs generally pay less America, and has prospects of stable U.S. real estate defaults now than jobs in auto and steel , but then growth in a deregulated, privatized assertedthat "managers in the retail trades"­ market. mCA Banking Analysis Ltd., the major in­ one of the areas she predicted would expe­ ternational bank credit-rating agency, re­ rience greatest growth over the next decade, • WELLS FARGO CO. and Nik­ ports privately that it is "very concerned es­ along with restaurants-"earn more than ko SecuritiesCo. of Japan havesigned pecially about the real estate bank default managers in traditonal industries." a letter of intent to make its subsidi­ situation in New England in the United ary, Wells Fargo Investment Advi­ States . The Bank of Boston and Bank of sors, into a jointly owned venture. New England are very exposed, mCA says, The deal will give Wells Fargo an especially since these banks are already be­ Takeovers inside track on Japan's huge pension ginning to take loan loss provisions for the fund market, which will open up in defaults . "New England is going into a real Lorenzo having trouble 1990. estate slump worse than that of 1982 and the bottom is nowhere in sight," an mCA breaking Eastern unions • HEALTH CARE firms are in a spokesman said. frenzy of mergers and reorganiza­ The spokesman also pointed to a very Buy-out mogul Frank Lorenzo is having tions as rising costs, cutthroat com­ weak real estate loan situation in the Mid­ more difficulty breaking the unions which petition and medical insurance cuts Atlantic , especially Pennsylvania, New Jer­ are striking Eastern Airlines, than he had six drive firms into financial straits. sey , and Delaware, and in Arizona, where years ago breaking the unions at Continental the state 's largest bank, Valley National , a Airlines. Four months into the current strike, • U.S. ARBITRAGEURS have $12 billion bank, is on the verge of being very few pilots have crossed the picket lines between $2.25 and $4.5billion rid­ further downgraded in its credit rating . "It's of striking machinists. Eastern's unsecured ing on the possibletakeover of Time, only a matter of time before this real estate creditors are not playing dead, competitors and an additional $1 billion on a pos­ recession sweeps across the entire country. " are taking away Eastern's customers, and sible takeover of Warner Communi­ the airline is being forced to run at a loss. cations, according to a Wall Street It was different in 1983, when Lorenzo estimate. forced flight attendants to strike, and then IndustrialPolicy put Continental into bankruptcy. Many of • FORD MOTOR CO. will close the pilots quickly crossed the picket lines, its Atlanta and Chicago plants on July Labor Statistics chief and Lorenzo used the bankruptcy law to re­ 17 for one week. These plants pro­ pudiate union contracts. This abrogation of duce the popular Ford Taurus and wants less heavy industry contracts was upheld even afterLorenzo had Mercury Sable models, and the shut­ the bankruptcy filing overturned. down will idle some 4,450 employ­ Speaking to a conference on education in In 1984 the Federal Bankruptcy Code ees and interrupt the production of Washington, D.C. on June 27 , Janet Nor­ was amended so that the terms of union con­ some 10,500cars . Dealers began re­ wood , head of the U.S. Bureau of Labor tracts are no longer automatically suspended fusing to buy more of these models, Statistics, hailed the U.S. shift from a man­ by a Chapter 11 bankruptcy filing. The filer when they found out they would have ufacturing to a service economy, claiming, for bankruptcy must now convince a court to wait a week more for spare parts. among other things, that the fact that 8 out to tear up the contract.

EIR July 7, 1989 Economics 21 �TIrnScience lit Technology

When tropical epidemics and tuberculosis meet HIV Garance Phau reports on the latest ep idemiologicaljindings, regarding the sp read qfAIDS in the tropics,f ro m the Fifth International Coriference on AIDS in Montreal, Canada.

Scientists and physicians attending the Fifth International from sleeping sickness to elephantiasis. Conference on AIDS , at the Palais des Congres in Montreal As Kenneth Kaunda, President of Zambia, warned in a June 4-9, presented shocking new evidence on the spread of speech to the conference, "AIDS could extinguish the human AIDS in the Third World, and a picture of how the HIV race," and no frontiers may stop it. Two of Kaunda's own virus's destructionof patients' immune systems is leading to sons have died of AIDS . an explosion of tropical diseases and tuberculosis already Yet governments and the "experts"refuse to confront the endemic in those areas. socio-economic crisis. The Montreal conference devoted EIR predicted back in 1985 that this would happen, when enormous attention to palliative care, but not one of the 6,000 we insisted-against all the "experts" from the World Health sessions to the immediate economic and financial require­ Organization (WHO) and the Atlanta Centers for Disease ments to deal with the situation. An angry researcher from Control (CDC)-that AIDS was not a venereal disease, but English-speaking Africa remarked, "How many such confer­ primarily a result of socio-economic factors, and therefore ences to present the 'facts' will WHO need before it resolves would spread as a result of the global economic collapse. to act?" This was demonstrated by the findingsof Dr. Mark Whiteside Dr. N'Galy Bosenge, head of the Zairean national pro­ on the correlation between AIDS and TB in very poor areas gram to fight AIDS, described how the economic crisis has such as Belle Glade, Florida, where the majority of cases furthered the spread of the disease and prevented his govern­ were not from any "high-risk group." (See EIR , Sept. 27, ment from taking effective action: 1985, "Why the AIDS Pandemic Requires a National Public Health Mobilization," and EIR's Feb . 15, 1986 Special Re­ AIDS strikes the population as a whole. There are port, "An Emergency War Plan to Fight AIDS and Other no risk groups, 90% of the propagation being in the Pandemics. ") normal heterosexual population. The migration of the At that time, Dr. Whiteside's work was mocked by the countrysidepeople into the cities is an important cause AIDS Establishment. At the Montreal conference, speakers of propagation. Many women without resources to fromArgenti na, Spain, New York City, Zambia, Zimbabwe, feed themselves or their families become forced to and the Central African Republic, scientists from the four engage in prostitution. comers of the planet, confirmedthose warnings: Tuberculo­ We lack resources not only for AIDS, but for sis is back. health in general. We can tell medical staff to take There are times when one wishes one's predictions had precautions; it is not of much use: Everyone knows beenwro ng, because the mind recoils at confronting the truth that when you are in contact with blood, you wear it had predicted. The holocaust now engulfingthe developing gloves-but we don't have gloves. In Africa, labo­ sector is such a case, as AIDS accelerates the pace and viru­ ratory employees could tell you horrible stories about lence of all the other epidemics, from tuberculosis to leprosy, contaminated blood. We can spend less than $1 per

22 Science & Technology EIR July 7, 1989 person annually in health care (and that figure is the the Central AfricanRepu blic, which reported a 10% increase same for much of the African continent). How could back in 1985-86. The CDC review of the records showed that we set up blood banks with our limited resources? tuberculosis was much more frequently associated with AIDS in heterosexuals than among the "high-risk groups." Several hospitals in Zaire do not have the money to get In plain English, the incidence ofTB is increasing as HIV the necessary equipment for the sterilization of syringes and disseminates in the general population. other necessary medical instruments. Outside of the main Asked about the association of "regular" (i.e., pulmo­ cities, hospitals do not even have running water. In short, nary) tuberculosis with HIV, Braun said the CDC was re­ all the conditions are there for the virus to spread. viewing that question as well. While we know EPTB to be a more characteristic marker of HIV infection, there is also an The spread of tuberculosis increased incidence of pulmonary TB . Braun estimated that The association of tuberculosis with HIV is "the worst perhaps 25% of HIV positive persons with EPTB had pul­ problem Africa faces today," said Dr. Bosenge, speaking in monarytuberculosis as well. the plenary session on June 6. The growing incidence of HIV - While pulmonary TB is not on the list of clinical diseases related tuberculosis is the biggest obstacle to the clinical which make for the diagnosis of AIDS today, it will be management of AIDS in Africa. "And the TB problem is tomorrow. It is already being seen in U.S. cities as well as only likely to grow ," he emphasized, as he presented slides throughout the developing sector. Most worrisome is the showing increased TB statistics for Tanzania, Zaire, and rapidly increasing prevalence of EPTB in young heterosexual Burundi. Since 90% of the African population tests positive HIV-infected patients, an age group normally spared, since for the TB bacillus, there is "an enormous reservoir of the the invention of antibiotics. In Montreal, a researcher from disease that could be reactivated." Spain, Dr. Casabona from the Barcelona AIDS program, Within the pool of HIV-infected persons, which WHO showed that TB had become the number-one problem, with puts at roughly 10 million (and is probably closer to 50 EPTB the first manifestation of AIDS in the area. million), a tuberculosis epidemic has emerged. News of un­ An Argentinian physician reported an epidemic of TB in treatable tuberculosis in HIV-positive patients originated from his country, with 17,000 cases a year, so thatif HIV serolo­ Haiti, and at first theCDC pooh-poohed the Haitians, saying gies were performed, a great many AIDS cases might appear. they did not know how to treat tuberculosis properly . That While Argentina reports few cases of AIDS today, a talk by was in 1987. Then French military physicians identifiedthe Dr. Oscar Fay of the National University on June 5 indicated same problem in Burundi: untreatable TB in HIV -positive that if blood bank screening were not instituted right away, people, not cured afterone year of treatment, still contagious, there would be 10,000 transfusions of HIV-contaminated and infecting others. blood in 1989. Now, extrapulmonary tuberculosis (EPTB) has been A report by Chequer Pedro, from Brazil's health minis­ added to the list of clinical manifestations of AIDS, and the try , reported that out of 5,219 AIDS cases, 1,068, or 21%, association between TB and HIV has become a recognized had tuberculosis, which was the third-most prevalent mani­ worldwide phenomenon. As yet the real extent of the asso­ festation of AIDS in the country (behind candidiasis at 53% ciation between the two infections is unknown. When statis­ and PCP at 29%). An indication of the dangerous shift in TB tics are compiled on proven AIDS cases, the usual figurefor prevalence toward younger age groups was given by a re­ extrapulmonary tuberculosis is 10% of all AIDS cases. How­ searcher from Zambia, in theJune 8 seminar. Alison Elliott ever, more and more serological studies done in tuberculosis of the London School of Tropical Medicine showed a study centers indicate that oftentuber culosis is the sole manifesta­ done in Lusaka, Zambia to establish HIV prevalence among tion of HIV infection. In Central Africa, as in New York City TB patients: While 10% of TB patients over 60 years of age prisoners, tested TB patients have been found to be HIV­ were found to be HIV -seropositive, the figure climbed to positive in 50% of cases! 80% for TB patients in their thirties! The study found 62% On June 8, Miles Braun of the Atlanta Centers for Disease HIV positivity among TB patients generally. For Zimbabwe, Control presented the CDC review of AIDS and TB in the a similar study showed 32% HIV seropositvity among TB United States. He noted that of 48,000 AIDS cases diagnosed patients. between October 1987 and March 1989, 1,200 had EPTB . Here and there, there is increased incidence of Bovine In Mexico, 8% of AIDS patients were recorded as having TB infection in children, and the debate is on as to whether EPTB , and the figure is 12% in Haiti. These are people who BCG (Bacillus Calmette-Guerin, an attenuated strain of tu­ suffer from several of the other clinical diseases associated berculosis given as a vaccine to prevent active tuberculosis with the official AIDS definition, so they only reflect a small infection) can still be used or not. There was wide agreement portion of the epidemic. at the seminar that emergency measures to stop the TB epi­ In New York City, as of 1988, TB rates had increased demic were required, for the secondary TB epidemic had 36%, a figure which we find again in Bangui, the capital of already started.

EIR July 7, 1989 Science & Technology 23 "Remember that TB is a readily transmissible disease to University Medical Center, Ithaca, New York, entitled "The immuno-competent people as well," wrote one researcher, Impact of HIV on Tropical Diseases." "Therapeutics is al­ referring to people with normal immune systems. ready slim for all the diseases we find in tropical areas ," "I fully agree with you" answered Luc Montagnier of the remarked Johnson. What he means, is that severe forms of Pasteur Institute in Paris, in the closing press conference, leprosy, elephantiasis, and the blindness of oncochercosis, when this reporter asked whether it was not truethat the AIDS are not exactly "curable" diseases! epidemic could only be thwartedby emergency assistance to Even TB is a mutilating disease if not diagnosed and stop the spread of TB and tropical diseases in Africa or in treated in time. Normally prevention and/or early diagnosis lbero-America. is the best defense, but with the economic crisis of the past Yet no such assistance is forthcoming. 10 years, prevention has been tossed out the window. When HIV spreads in regions afflictedby tropical disease Johnson spoke first of visceral leishmaniasis (a disease epidemics, death is not far away for entire populations. We causing lesions of the internal organs) and leprosy in associ­ are entering into this cyclone today , and we have no idea if, ation with HIV infection. when, and how, we shall weather the storm. That chilling Approximately 500,000 people are infected with visceral reflection wasbrought to the audience listening to a morning leishmaniasis (also known as Kala Azar) in the world today, seminar on June 8, chaired by Warren Johnson of Cornell with Spain, the Magreb, and parts of Brazil areas of high prevalence. Fifteen million suffer fromcutaneous leishman­ iasis. The disease is insect-borne, and dogs are an important intermediate host. Mortality-with attempt at treatment­ ranges from 5-15%. "Today we have 31 documented cases of Kala Azar associated with HIV," said Johnson, who added that the disease might soon be added to the official list of Mrica told: Give AIDS clinical manifestations of AIDS. Virulent forms of Kala Azar in HIV seropositive persons patients 'home care' had been reported to last year'sAIDS conference in Stock­ holm by Professor Coulaud of France, who had argued for Governments of African and other ThirdWorld coun­ the disease to be put on the list of AIDS-related diseases. tries were told, in a seminar at the Montreal meeting on the economics of AIDS, that they ought to move Tropical diseases on the increase away from emergency care for AIDS patients, to home Leprosy,a disease of poverty, has dramatically increased and hospice care.The issue of who should provide this in the past 10 years, with the Knights of Malta's anti-leprosy home carewas not addressed. A clinician attending the organization reporting that the incidence of the disease has conference said that a meeting in Nairobi, Kenya had been doubling yearly, with an estimated 20 million cases just addressed the question of home care. "In Africa, today, up from 11 million in the spring of 1988, approxi­ the visible AIDS epidemic has just started," he said, mately 5 million or so in 1987, and 2 million in 1984. meaning that people are beginning to die of the long­ Now Johnson reports that leprosy is affecting regions incubating disease. "All the talk about treatingoppor­ now hit with the HIV epidemic, and that there is serious tunistic diseases which we hear at this conference, is concern that leprosy will shift to the more virulent and more out of place in an African context. We do not have the contagious form, lepromatous leprosy, in HIV -positive in­ means to keep AIDS patients alive for months on ex­ dividuals. pensive therapies for the many infections, much less Dr. Pradinaud of French Guiana reported recently in the for any antiviral drug such as AZT." publication Medecine Tropicale, the case of a patient with "It has become necessary to work with charity or­ latent leprosywho , as he progressed to AIDS because ofHIV ganizations to plan 'home care,' "he added. ''There is infection, developed the virulent neurological manifestations just no alternative in the present economic and social of leprosy. context today. " He did not discuss the difficultiesfam­ Johnson, who closely collaborates with a team of Haitian ilies face in keeping an AIDS patient at home in the physicians, reminded the audience that there were 18 docu­ final stage of the disease: the patient may suffer from mented cases of AIDS-associated leprosy on the island. In a profuse diarrhea, pneumonia, or TB , is often dement­ talk on June 6, a team of French and African scientists re­ ed, and poses a real threat of contagion in a non-hy­ ported on serological studies of 1,244 leprosy patients, in gienic environment-not just of HIV contamination, which they found HIV-l and HIV-2 (combined tests) preva­ but of the other pathogens as well. lence rates of 4.9% in the Ivory Coast (and 14.4 for HTLV- 1, the otherretrovirus which is a scourge in Africa), 3.7% in

24 Science & Technology EIR July 7, 1989 Congo (9.7% for HTLV- l), and 0.9% in Senegal. While the percentages are not very high, they indicate the beginning of a dangerous overlap between the two diseases. Johnson gave a second presentation on the subject of the impact of HIV on tropical diseases; during which he pro­ ceeded to establish a frightening forecast as to the future Experts disagree on course of multiple epidemics in Africa and Ibero-America. He drew up a list of tropical diseases that would flare up AIDSfu ndamentals because of HIV: leprosy, leishmaniasis, and also chagas. Chagas, affecting millions in the Americas, has terrifying One should not expect any more big breakthroughs in potential. AIDS research, Dr. Robert Gallo of the U.S. National Sleeping sickness, could sweep Africa again. Cancer Institute announced at a press conference on Amebiasis and amebic meningocephalitis, can be ex­ June 6 in Montreal. He took an optimistic note: "There pected to flare up. will be new findings, but the major things we need are Then schistosomiasis, lymphatic filariasis (elephantias­ done ....It 's a problem of technology and time and is), oncochercosis (one of the main causes of blindness), testing this or that in a certain number of ways .... strongyloidiasis, all prevalent diseases in areas where HIV is We probably have more information about how this breaking out-will make their appearance. virus works to cause the disease than we have about Johnson showed the common areas of prevalence of those any single agent in the history of medicine." diseases, as well as common areas of prevalence of HIV . Gallo proceeded to extol the promise of "soluble He then went back to the problem of trypanosomiasis. If CD4"-what he has previously called the "magic bul­ we take the trypanosomiasis called chagas in lbero-America, let," the compound that it is hopedthe HIV virus will he explained, a disease transmitted by bedbugs, there is no bind to, instead of to the human cell. His enthusiasm really effective treatment. It affects several million people overlooks the fact that many human cells that do not (8% of Brazilian children are infected in the northeast of the have CD4 receptors are still infected with HIV; that the country). Chagas , which can lead to serious autoimmune infection of T 4 is but one aspect of HIV pathogenicity; diseases and is notably responsible for cardiac muscle dis­ and that CD4 receptors do play a role which, once we eases, can also remain latent in a majority of individuals. inject a person with soluble CD4, could lead to impor­ When chagas affects an HIV -infected individual, it could tant side effects, notably regarding immune functions. evolve from the latent to the virulent form , said Johnson, Luc Montagnier of the Pasteur Institute in Paris did "though I don't have a case to demonstrate this for you." not agree with Gallo's boundless optimism. The path­ During the question period, a French physician from St. ogenesis of AIDS remains unknown, he said. "As long Denis Hospital brought up a case confirmingJohnson 's wor­ as we have no coherent hypothesis to explain AIDS, ries. He stated that he had had a case of a patient from we shall have difficulties in developing rational thera­ Honduras who died of AIDS with a virulent form of chagas peutics." disease. Dr. Michael Ascher presented his hypothesis on Johnson also stressed the feared flare-up of the African dysfunction of the immune system. His notion that the form of trypanosomiasis, sleeping sickness, a disease that problem stems from overstimulation of the immune threatened to depopulate the continent earlier this century system, which exhausts itself, is conceptually mu�h and which is again developing today, especially because of a better than the standard "one virus kills one lympho­ collapse in insect (tse tse fly) control. He showed maps oftse cyte" version dished out by the WHO. tse flypres ence, which show that one species of flyis preva­ It were better to refer to the work of Elie Mechni­ lent in Western Africa where HIV-2 is spreading, while the kov, the Russian associate of Louis Pasteur and discov­ other type is prevalent in Central Africa, where HIV -1 is eror of phagocytosis. Mechnikov's basic tenet, that most prevalent. death is ultimately brought about by self-phagocytosis, . Johnson's presentation, unfortunately, corroborates the or an autoimmune phenomenon seen in aging, is essen­ studies carried out by the Fusion Energy Foundation and the tial to the concept of immunity . foundation's forecast as to the potential for a biological hol­ And what about the important and generally ig­ ocaust. I myself spoke on this subject during a conference in nored fact of HIV-induced neurological dysfunction? Munich, West Germany last year, and I used data similar to (See EIR , July 1, 1988, "Should 'AIDS' be renamed those of Dr. Johnson. I wish I had been wrong, I said to 'CNSD,' 'Central Nervous System Disease'?" This mY$elf as the seminar ended. The emerging reality is too topic will also be the feature of a fu ture report in EIR.) ,. horrible to contemplate.

EIR July 7, 1989 Science & Technology 25 TIillFeature

Deng Xiaoping is butchering 1 million Chinese

by Webster G. Tarpley

The/ollowing report wasfiled/rom Taipei, Republic o/ China, in June.

In the wake of the massacres of students, workers , and other supporters of the democracy movement in Beijing, Shanghai, Chengdu, Guangzhou, Nanjing, and dozens of other Chinese cities, Chinese Communist Party paramount leader Deng Xiaoping has ordered his secret police, the Wu Jing, to exterminate all opposition leaders. According to highly informed Republic of China sources in Taipei, the scope of these proscriptions is destined rapidly to reach the level of 1 million victims. These 1 million death warrantshave already been issued, say the sources. Deng had made no secret of his intent to inflict a holocaust on the critics and adversaries of his regime. Before the June 4 massacre, he had observed that "1 million victims is a small price to pay in a country as large as China." Deng's homicidal intent has been seconded by President Yang Shangkun, one of the warlords who dominate the People's Liberation Army , who has issued public calls to hunt down opposition leaders, to kill them, and not be soft in the process. Everywhere Communist bureaucrats and military leaders are being told that if 20 million lives were lost in the wars against the Japanese and against the Nationalists of the Kuomintang, then a large loss of life must be accepted today to prevent what is called the reestablishment of capitalism. In the view of R.O.C. experts, there is therefore no doubt that the Beijing leaders will now slaughter all the opposition they can get their hands on, using secret police and armed forces, as the only way that the Communist regime can hang on to power in the short and middle term. The Tiananmen Square massacre was carefully planned in advance by party leaders, and even the estimates of 7,000 to 10,000 killed there are much too low. The bodies of those slain by the tanks and the machine guns were quickly cremated and buried in large numbers. The real death toll may never be known. Nevertheless, the Beijing regime is already irrevocably doomed. The people will stand up and fight, and the army cannot be separated from the people. Soldiers

26 Feature EIR July 7, 1989 A military parade in Taipei. Taiwan . Well­ informed sources in Taipei are confident that the Beijing Communist regime is doomed. But they are concerned that the desperate warlords around Deng Xiaoping could launch a military adventure against Ta iwan . Ta iwanese fo rces have therefo re been placed on high alert.

have relatives. Soldiers depend upon farmers to provide food , can do no better than remain as number three , he will be and depend upon factory workers to provide ammunition. discontented and will start to plot. Then, two weeks afterthe When the food and ammunition are gone, the people will massacre, it was reported that Qiao Shi, the official respon­ prevail. Therefore the army cannot beused indefinitely against sible for internal security (including the Wu Jing), is now the people, and this means that the Communist regime is first in line for the post of Communist Party General Secre­ moribund. tary , further adding to Li Peng's discomfiture . On June 24 , it was finally announced that Shanghai party chairman Jiang Key to world strategy Zemin had been named General Secretary of the Communist Taipei observers stress that the Chinese situation is now Party , displacing those who had been in line for the job. This the key to the international strategic situation, and the main will only fuel the instability within the leadership. lever for solving the world strategic problem. The main change Deng will respond to all this in the following way, ac­ is a change of people, and the earthshaking events in China cording to sources: First, he will move to exterminate all the will affect all people-black, white, yellow, in Europe, the leaders of the resistan�e. Then, he will tum his attention to United States, and everywhere else. Previously, the Chinese the army, where there are numerous commanders who re­ people were anti-Communist, but did not dare to show it. fused to obey orders issued under martial law conditions. Whatever they were thinking, they acted under the orders of These will also be exterminated. Then, Deng can tum his the Communists. Now they know it is the time for them to attention to those in higher places. On the one hand, Deng show their hatred for Communism, and they are beginning to sees that the Yang family could command the PLA when stand up and fight. The most important thing is that the people Deng himself, despite his supposed paramount status, could are no longer terrifiedof the Communists, no matter what the not. Yang Shangkun is the vice president of the Central odds may seem. The control mechanisms of the Chinese Military Commission. His younger brother, Yang Baibing, Communists, the most effectivetotalitarian controls in world is the chief political commissar of the PLA . Yang's son-in­ history , are in the process of being smashed. law, Chi Haotian, is the Chief of the General Staff. Deng Other Taipei sources offer the following model for the fears the ability of the Yang family to command the 27th struggle for power among the Beijing warlords over the short Army , and the whole of the PLA in a crisis. Li Peng may term. The order of prominence in Beijing is changing rapidly, also have shown "excessive" ability to control the PLA, and with Deng, Yang Shangkun, and Li Peng followed by Bo Li Peng is very unpopular, since it is against him that hatred Yibo, Wang Chen, and Qiao Shi in a less defined pecking over the massacre is concentrated. Therefore the final stage order. Before Li Peng carried out the detailed work of the of Deng's purge will be to attempt to liquidate Li Peng and massacre, he was already number three in the regime behind the warlords of the Yang family. Since this is evident to Deng and Zhao Ziyang. If, despite all his dirty work, Li Peng everybody, it is also evident to the intended victims, who are

EIR July 7, 1989 Feature 27 not the type of people to sit around waiting for their own same time, if a warlord period were to emerge, theR.O.C. 's demise. military strength could make it the strongest of all the war­ Therefore , there can be no hope of stability for the P. R. C. lords, and thus the arbiter of the situation, which could lead regime. The biggest destabilization ofall would be the death in tum to the recovery of the mainland. of Deng himself, who is now in very advanced age and who 2) The takeover of the central government by a "refor­ has shown signs of debilitation in his last public appearances. mist" Communist coalition of the type exemplified by Zhao When the old fox (hu Ii) Deng departs the scene, get ready Ziyang. Zhao would have been regarded as a lesser enemy. for a ruthless power struggle in the most extreme form . Even if he could have provided no hope in the longer term, he might have opened the tactical situation in ways advanta­ Three alternatives geous to pro-democracy forces. But it now appears excluded Other Taipei sources agree that the June 4 massacres have that Zhao might prevail in Beijing, at least for the moment. produced irreversible changes, and a totally new mainland 3) The third alternative is that of a faction committed to situation. According to these sources, after June 4 there were genocidal repression of the resistance, on the model of the three basic alternatives: Deng-Yang-Li clique. Although this combination might seem 1) A civil war, in case PLA units actually began fighting to prevail in the short to middle term, its ascendancy only among each other, and warlordcombinations among political guarantees a recrudescence of rebellion within two to three and military leaders were to coalesce. In addition to the armed years, as Deng himself admits in his secret report (see box). clashes around Beijing, this possibility was seen as increased New rebellions would be guaranteed first of all because the by reports appearing in the June 9 China Post that Communist party and regime are utterly discredited and despised. More Party General Secretary Zhao Ziyang had been taken under importantly, the engine of new upheavals would be the in­ the protection of the Canton Army in southernChina . Guang­ ability of the regime to find a way out of the worsening dong province around Canton is the area of greatest penetra­ economic crisis which was at the root of the rebellion in the tion of foreign capital, the least obedience to the central firstplace . It is especially predicted that the acute food short­ regime, and in some ways Zhao's natural base. But these age will deteriorate, meaning that insurrectionary ferment reports remained unconfirmed, and nothing more has been will spread through the urban working classes and finally heard of Zhao. Taipei sources stress that the alternativeof an among the 800million peasants and other rural population of all-out civil war would be a tragedy for the Chinese people, China. This will be impossible for secret police and even the with a hecatomb of human losses without precedent. At the entire army to control .

A carefully planned provocation Taipei observers stress that the Tiananmen massacre was a very carefully planned provocation, minutely worked out by Deng and Li in advance. On June 2 and June 3, columns Deng's thermonuclear of PLA troops were sent into the Beijing city center without weapons. Deng hoped that students and workers would attack striking fo rce these unarmed troops, giving him film footage he could use to justify a "counterattack" on the protestors to restore order. As a result of the bloody repression ordered by the These same troops left their weapons in unguarded buses, Beijing regime, one of the world's nuclear powers has with Deng's hope being that the students would seize the just had a brush with civil war, and now faces a future weapons, giving him new pretexts for massacre. Instead of of continuous upheaval. Communist China exploded a falling into the trap, the students turnedthe weapons in to the nuclear device in 1964,and detonated a thermonuclear Wu Jing secret police. As a third ploy, Deng ordered other device in 1967. The country is thought to possess about troops to abandon their vehicles and leave them unguarded. 100 medium- and intermediate-rangeballistic missiles, These vehicles were then burned by protestors, or by provo­ many of which are reported to still be liquid fueled. cateurs. Deng had ordered the Wu Jing to infiltrate the stu­ The PLA air force includes some 100 obsolete medium dents in the initial phase of the Tiananmen occupation , but bombers , and 200 obsolete light bombers. More sig­ many of them had been identified and expelled by the stu­ nificant is the fact that Beijing possesses two to three dents. In the early days of June, these provocateurs made a nuclear submarines, and that it has recently tested a comeback. submarine-launched ballistic missile. Most ominous, Deng used secret tunnels under Tiananmen Square be­ Beijing has tested and deployed several ICBMs, called tween the Zhongnanhai party bosses' compound and theGreat Long March, which have the capacity of hitting certain Hall of the People to position the troops. The troops blocked points in the United States, if not the entire country. all egress except the southeast, where machine guns were posted to mow the resistance down.

28 Feature EIR July 7, 1989 readjusted their policy, they will be back sooner or later, because China is a large piece of juicy meat. . . . Looking back, we can see there have been three anti­ party groups since 1949. The first was the "Kao-Yao" group of Kao Kang and Yao Shu-shih. The second was Deng calls massacre 'a the "Gang of Four." The third was the Hu Yao-bang and prettygood experience' Zhao Ziyang anti-party group. I have observed Zhao for many years. He is ambitious. If he had become chainnan of the Military Affairs Commission, we old comrades The fo llowing is the text of a confidential report delivered would have been beheaded. . . . by Red Chinese "Paramount Leader" Deng Xiaoping to Li Peng does not have to seek the advice of Yao Yi­ a group of government and party offi cials in the wake of lin [the deputy premier] on everything. Li Peng worked the June 4 Tienanmen massacre. These minutes of the very hard this time. But he did not have to consult with meeting have been distributed at the provincial and army me on whatever he did. He even asked me whether to level. The text is that of a translation made by th