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LaRouche, Jr. Editor: Nora Hamerman Managing Editors: John Sigerson, Susan Welsh From the Editor Assistant Managing Editor: Ronald Kokinda Editorial Board: Warren Hamerman, Melvin Klenetsky, Antony Papert, Gerald Rose, Allen Salisbury, Edward Spannaus, Nancy Spannaus, It is not often enough that we get the opportunity to prove our Webster Tarpley, Carol White, Christopher White contention that "there are no limits to growth," and that all the fretting Science and Technology: Carol White about over-population introduced by the malthusians and most of the Special Services: Richard Freeman Book Editor: Katherine Notley so-called environmentalist folk is just a lot of unscientific hand­ Advertising Director: Marsha Freeman wringing destined to make the real problems worse, and to combat Circulation Manager: Cynthia Parsons problems that don't really exist. So with great pleasure, I direct your INTELLIGENCE DIRECTORS: attention to the Feature which is the report-back from Science Agriculture: Marcia Merry & Asia: Linda de Hoyos Technology editor Carol White on the international "cold fusion" Counterintelligence: Jeffrey Steinberg, Paul Goldstein conference in Como, Italy. This publication, and its founder Lyndon Economics: Christopher White LaRouche, have been proponents of a fusion solution to the world's European Economics: William Engdahl lbero-America: Robyn Quijano, Dennis Small energy and ecological crisis for a long, long time, and so we find the Medicine: John Grauerholz, M.D. promise of the greatest scientific advance of the second half of our Soviet Union and Eastern Europe: Rachel Douglas, Konstantin George century to be not only good, but also, exciting. Special Projects: Mark Burdman And while you have your gray matter attuned to these questions United States: Kathleen Klenetsky of the laws of the physical universe, I recommend the informative INTERNATIONAL BUREAUS: Bangkok: Pakdee Tanapura, Sophie Tanapura book review on well-tempered tuning which appears in the National Bogota: Jose Restrepo section. Bonn: George Gregory, Rainer Apel Copenhagen: Poul Rasmussen And then, alas, the world-the poor old world as we confront it Houston: Harley Schlanger today. International leads with the precarious strategic picture in Lima: Sara Madueno Mexico City: Hugo LOpez Ochoa Europe, in the wake of the Bush-Gorbachov summit, starting with Milan: Leonardo Servadio the expanding war in Yugoslavia, followed by a first-hand report New Delhi: Susan Maitra Paris: Christine Bierre from Lithuania. Please note the parallels here; not by accident, the Rio de Janeiro: Silvia Palacios Kremlin bosses continue to commit atrocities in the Baltic states, Rome: Stefania Sacchi Stockholm: Michael Ericson and have issued an ugly warning to western Europe about not inter­ Washington, D.C.: William Jones vening to stop Serbia's imperial rampage in Yugoslavia. Wiesbaden: GiJran Haglund We think readers will find, on their own, fIluch that speaks to EIR (ISSN 0886-0947) is published weekly (50 issues) their own interests in our unique coverage in this issue, especially in except for the first week ofApril, and the last week of December by EIR News Service Inc., 1430 K Street, the Economics area. And so, let me conclude by telling subscribers NW, Suite 901, Washington, DC 20005 (202) 628-0029 about a few of the special packages now in preparation: an article EUrtlfHlJII HHIiII-"': Executive intelligence Review Nachrichtenagentur GmbH, Postfach 2308, devoted to Wolfgang Amadeus Mozart, on the occasionof the bicen­ Dotzheimerstrasse 166,0-6200 Wiesbaden, Federal Republic of Germany tennial of his death; a full report from Baghdad by the Committee to Tel: (0611) 8840. Executive Directors: Anno Hellenbroich, Michael Liebig Save the Children in Iraq; a detailed indictment of Israeli genocide In Dennuzrlc: EIR, Post Box 2613, 2100 Copenhagen 0E, Tel. 35-43 60 40 against Palestinians; and an extensive report from Buenos Aires, In M�xieo: EIR, Francisco Dlaz Covarrubias 54 A-3 Colonia San Rafael, Mexico OF. Tel: 705-1295. on the nationalists' struggle to defend Argerltina against Anglo­ ItI[HJII subscriptionlilies: O.T.O. Research Corporation, American/Soviet dismemberment. If you don't have a subscription Takeuchi Bldg., 1-34-12 Takatanobaba, Shinjulru-Ku, Tokyo 160. Tel: (03) 208-7821. yet, now is a good time to sign up. Copyright © 1991 EIR News Service. All rights reserved. Reproduction in whole or in part without permission strictly prohibited. Second-class postage paid at Washington D.C., and at an additional mailing offices. Domestic subscriptions: 3 montbs-$125,6 montbs-$225, I year-$396,Single issuo--$IO Postmaster: Send all address changes to EIR, P.O. Box 17390, Washington, D.C. 20041-0390. illContents

Interviews Departments Economics

6 Robert Bench 25 Report from Bonn 4 BCCI scandal a 'coup' for The fonner U. S. Comptroller of the Gennans look to Ukraine's the Basel bankers Currency and a member of the potential. The Bank for International Bank for International Settlements' Settlements is making a global Cooke Committee, now with the 26 Banking power grab, bragging that their Price Waterhouse accounting finn, Is Citicorp the next merger move .to force the $20 billion maintains that power must now be candidate? banlcrtIptcy of the Bank of Credit ceded to the central banks. and Commerce International has 27 Dateline Mexico not even caused a "ripple" in the 23 Cecilia Soto Gonz8lez NAFfA opponents persecuted. world monetary system. Or so they A candidate from the Authentic think. Party of the Mexican Revolution 58 Australia Dossier for federal deputy (pARM) Hollinger take over bid in 7 'Financial AIDS' hits discusses her experience working Melbourne. Japan, Hashimoto "under cover" at the Tetakawi maquiladora. 59 Panama Report 8 U.S. state budgets New outbreak of judicial terrorism. unraveling already 51 Valdemaras Katkus and Juozas Tumelis 72 Editorial 9 Cholera in the U.S. 'a Lithuania's deputy foreign minister British policy leads to war. matter of time' and the president of the independence movement Sajudis 10 Environmentalists declare discuss the superpower deal to world war on Malaysia sacrifice their country, and what Strategic Studies Lithuanian patriots intend to do 12 China's floods show about it. 30 Beyond Marx and Smith: human cost of lack of the 'Productive Triangle' infrastructure, insane Lyndon LaRouche's plan for a Paris-Berlin-Vienna triangle of economics Book Reviews high-technology development is 14 Currency Rates 65 Reviving the lost science of now on the agenda. But will governments respond in time? A weD-tempered tuning speech by Gabriele Liebig at an EIR 15 African nations form Tuning: Containing the Perfection seminar in Copenhagen. economic community of Eighteenth-Century Temperament, the Lost Art of Nineteenth-Century Temperament, 16 Twenty years of and the Science of Equal decapitalization sinks Temperament, Complete with world shipping capacity Instructions fo r Aural and The first of a two-partanalysis of the Electronic Tuning, by Owen H. sorrys�te of the maritimetrade. Jorgenson. 22 Mexicans do not want 'free trade' A pre-election report from a northern state.

24 Frankfurt emerges as German dope capital

28 Business Briefs VOlume 18. Number31. August 16.1991

Feature International National

48 Soviets threaten Europe 62 The 'Bushgate' clock is with war over Yugoslavia ticking louder The tough demarche from Moscow There is little chance that the is aimed at Gennany; the spreading scandals building in Washington war in Yugoslavia is aimed at the will die down by the time the heart of Europe. President returns from his �'5 Kennebunkport vacation. From 50 Landsbergis rips both BCCI to Iran·Contra to the Bush 'J superpowers over new family financial wheeling and ·s � massacre in Lithuania dealing, there's trouble ahead. A sampleof thePons-Fle ischmann cold fusioncell on display at theNational Cold Fusion Institute in Utah. 51 'We need direct economic 64 Anglo-Americans meet at ties to the European Bohemian Grove The freemasons and kooks are at it Community' 36 Cold fusion is a revolution again, at their "Encampment" in the An interview with Valdemaras in science California Redwoods. Carol White reports on the Second Katkus and Juozas Tumelis. Annual Cold Fusion Conference in 68 Congressional Closeup Como. Italy. Contrary to the 53 Shaul Eisenberg at U.S.­ propaganda of the anti-science Soviet summit mob. cold fusion is a reality. 70 National News Indeed. its discovery is the most 54 Foreign powers behind important scientific event of the Gandhi assassination? Correction: latter half of this century. The new commercial food irradiation plant, Vindicator of 55 South Africa: ANC reaps Florida, scheduled to open in mid­ benefits of funding scandals August, is the most modern in the world and ote of the largest-but 56 'New order' to leave not as large as noted in our July 26 Argentina defenseless article. It will be able to handle 500 Documentation: From court to 600 milliQn poundsof produce testimony by Col. Mohamed Ali per year-not tons. Seineldfn.

60 International Intelligence �TIillEconomics

BCCI scandal a 'coup' the Baselbankers for ! by EIR Economics Staff

i I Federal Reserve General Counsel J. Virgil Mattingly, Jr. the new chairman of the "cooJceCommittee." and Fed Bank Supervision Director William Taylor told the On Aug. 6, President George Bush confirmed the ap­ Senate on Aug. 1 that the complex scandal over the Bank of pointment of the Fed's other BIS representative, William Credit and Commerce International (BCCI) should and shall Taylor, tohead theFederal Deposit Insurance Corp.The Fed result in a vast increase of power for the supranational Bank and Bush forced out retiring FDIC chief William Seidman, for International Settlementsin Basel, Switzerland-thecen­ and have put the bank insurance, and hence the savings, of tral bankers' central bank. The U.S. Federal Reserve, they the American people in the hands of theBIS. made clear, and not theelected U.S. government, will be the American enforcer for the BIS. 'Not even a ripple' The Fed officials told Sen. John Kerry's (D-Mass.) Sen­ Cooke Committee official� in London, New York, and ate Foreign Relations Subcommittee on Narcotics that Con­ Washington bragged in inten1ews with EIR that their para­ gress must rapidly pass the Fed's "Foreign Bank Supervision military operation on five continents to close BCCI was a Enhancement Act" (S. 1019), or face a world banking crash. "coup for the BIS." The Fed's "BCCI bill," also called "Gam-Kerry," would "The whole point of the BCCI affair is that . . . we were tum the $20 billion BCCI bankruptcy into a gain of wildly able to close a huge internatioDal bank without even a ripple unconstitutional powers for the Fed and the BIS over the in the international markets," a spokesman for New York U.S. economy. Fed's President Corrigan said Aug. 2. ''This is our first major In addition to the bill, the Fed officials demanded more coup.. ..The BIS system works!" regulatorypower for "the Basel Committee of the BIS, which ''The BCCI events are a success for the BIS Cooke Com­ is setting up the exchange that is needed," in Mattingly's mittee," said Robert Bench, now a Washington director of words. All BIS central banks plan to "change their country's PriceWaterhouse, former U.S. Comptrollerof the Currency, laws to conform with the decisions of the Basel Committee," and as such a Cooke Committee member for many years. "It he announced. was the cooperation and coordination among the BIS Cooke The Fed should know. Taylor has been U.S. delegate to Committee, that led to the BCCI exposures," he said (see the BIS Committee on Bank Supervision, called the "Basel" interview, below). or "Cooke Committee," for years. The Cooke Committee The BIS executed the maneuver, he said, "to demonstrate was run from 1975-88 by Bank of England official Peter that our coordinationand controlgets results.We have shown Cooke, who then moved to the Price Waterhouse accounting that we can have a $20 billion bank go belly up-and not firm. It was he who wrote the June 1991 Price Waterhouse even a ripple!" accounting report on BCCI, which resulted in the seizure by The BIS's perfect performance in the BCCI affair gives the Bank of England and other central banks of BCCI offices the central banks license to become a one-world government, in 69 countries on July 5. Cookemembers conclude. EveryBIS centralbank is present­ Since then, the BIS grip over the U.S. government has ly going to its country's elected government and demanding increased.Three days after seizing BCCI, the BIS appointed a rewrite of national laws, along the following lines: New York Federal Reserve President E. Gerald Corrigan as • "There are too many banks in the world," as one offi-

4 Economics ElK August 16 , 1991 cial said, and every countrymust reduce thenumber of banks. brought the Eurodollar market into the U.S. • There is too much lending going on, and that must be • Pushing it all through the Senate was Jake Garn (R­ reduced. Utah), author of the 1981 Garn-St Germain omnibus bank • There is too much control generally over national deregulation act. economies by national governments; more control must be given to the BIS central bankers. DIS-controlled re-regulation The re-regulation phase starte4 in 1987, when Peter A deliberate time-bomb Cooke set up a "BIS College on BCCI," a committee of On-the-record testimony by BIS and Fed officials demon­ central bankers to run BCCI, hands-on. The group consisted strates that BCCI's operations, as well as the bursting of the of the central banks of England, S�itzerland, Spain, Hong BCCI bubble, were managed by the BIS for almost 20 years Kong, Luxembourg, andthe Cayman Islands. They told the as a time-bomb. The BIS deliberately detonated the crisis to Fed how to handle BCCI in the U. S" as Cooke himself, and provide the occasion for the Basel bankers to reorganize Robert Bench, report proudly. world finances. Thesame individuals who had writtenall the deregulation Lyndon H. LaRouche and the editors of EIR predicted legislation then proceeded to cry"sqandal" about BCCI, and the entire mess, in the 1978 book Dope, Inc. There, we to demand re-regulation of U.S. banking. John Heimann, reported that the Bank of England, BIS, and the Fed were who had moved to Merrill Lynch, led the charge, testifying writing bank rules to let the drug-running Hongkong and frequently against BCC!. Shanghai Banking Corp. (the HongShang) into the United In early 1988, the New YorkFed, according to President States. We warned that such deregulation would allow in Corrigan, began investigation of BCCI, along with New trillions of dollars of illegal foreign bank operations, just York District Attorney Robert Morgenthau. They brought such as those that were subsequently conducted by the BCC!. the scandal before the Congress via Senator Kerry. The purpose of the Anglo-Swiss dope bank invasion was The press outlets pumping the scandal since 1990 have described by LaRouche as an "organized crime" operation: been those owned by British merchant banks, starting with first to devalue the U. S. banking and industrial system, using Lazard Freres' Washington Post. deregulation, interest rate hikes, and speculation, and then Finally, Senator Garn author of the Garn-St Germain to buy it up cheap, a nickel on the dollar,by slapping on BIS­ deregulation act, on May 9 introduced the Fed's BCCI bill controlled re-regulation. into Congress. According to the testimony of Taylor and In effect, the BIS deliberately gave the U.S. "financial Mattingly on Aug. 1, the bill has the following provisions: AIDS," and now wants euthanasia for the U.S. banks. • "The Fed has asked for resiionsibility to monitor all foreignbanks," Mattingly said. This would put in law for the The deregulation phase firsttime that the Fed, never the elected nationalgovernment, The deregulation phase continued from 1972, right after has this power. (Currently the Fed sharesthat powerwith the the Aug. 15, 1971 decoupling of the dollar from gold, states.) through1987. The Federal Reserveand the BIS centralbanks • The bill gives the Fed the power to say that "no foreign were aware that BCCI was a dirty bank as early as 1972, bank may open a branch in the U.S. unless it can show proper the Fed's Virgil Mattingly told the Senate Foreign Relations home country supervision." This allows more HongShang Committee on Aug. 1. and BCCI banks into the U.S., but it bars Third World, In 1975, the BIS set up the Committee on Bank Supervi­ Japanese, or other banks from countries with quasi-national sion-the Cooke Committee-as the basis of a supranational banking systems. financialdictatorship. Everypiece of U.S. bank deregulation • No U.S. judge will be able to overturn decisions made legislation was written or authorized bythat BIS Committee: by the Fed regarding foreign banks, • The 1978 International Banking Act, written by Peter • Under Section 6, "Cooperation with Foreign Supervi­ Cooke and John Heimann-Jimmy Carter's Comptroller of sors," the bill states that the Fed "may disclose information the Currency, formerly of Salomon Brothers merchant bank­ obtained in the course of supervision or examination to any allowed Hongshang, BCCI, Banco Ambrosiano, Banca Nazio­ fo reign bank authority"without asking the U.S. government. nale del Lavoro, and others, into the United States. This means that anything the Fed finds out about any U.S. • Heimann, Felix Rohatyn (Lazard Freres), Robert Hor­ bank or company, as well as foreign banks, could and will mats (Goldman, Sachs), Donald Regan (Merrill Lynch), and be disclosed to the BIS. other merchant bankers became U.S. government officials There is only one proper response to the BCCI affair: and members of the Cooke Committee. Nationalize theFederal Reserve, andimplement LaRouche's • These very men draftedthe savings and loan deregula­ 1981 Federal Reserve Reform Act, which would create a tion bills in 1980-82, the usury deregulation bills in 1980- Third National Bank for the United' States, runby the govern­ 83, and the International Bank Facilities (mFs), which ment, and not private foreign banlrers.

EIR August 16, 1991 Economics 5 EIR: No one fromthe U.S.Federal Reserve? Interview: Robert Bench Bench: No ....The BIS centralbanks ' trendis anincreas­ ing web around the banks.They are already casting a huge and tight net over theseinstitutions. During the post -1987 periodof oversight by these super­ visors, a lot more become known about BCC!. And we used 'Power must be ceded it to demonstratethat our coordination and control get results. Why, even the Washington Post said the other day thathere we have a $20billion bank go belly up, and not even a ripple! to the centralbanks' One could argue this is a major sign that the regulators have done theirjob. Ro bert Bench, the fo rmer u.s. Comptroller ofthe Currency Now, the BIS Cooke Committee is demanding that all anda memberof the Bank for InternationalSettle ments Cooke banks operating internationally should be consolidatedon a Committee, was interviewed on Aug. 2, 1991. Bench is now global basis. We need a new expansionof the Basel Concor­ with Price Waterhouse accountants in Washington, D.C. dat, to close that loophole used1by BCCI.

EIR: What is the role of the BIS Cooke Committee in the EIR: Wasn't New York Fed, chief Gerald Corrigan just Bank of Credit and Commerce International (BCCI) affair? named chairman of the Cooke Committee? There 's not much criticism of theFederal Reserve. Bench: Yes.Now we'll probably have to call it theCorrigan Bench: In fact, the BCCI events are a success for the BIS Committee. Look , the problem is, that the only reason the Cooke Committee.It was the cooperation and coordination central banks don't have thepowers theyneed, is the national among theBIS CookeCommi tteemembers thatled to the BCC I governments get in their way. J!very government has to go exposures.Now, anew, strongerinternational supervisory re­ and legislate individually what �e Basel Committee wants, gime is emerging as a furtherresult of the BCCI affair. in each national legislature.There 's too much independence The BIS Basel Committee on Bank Supervision, named of legislatures. after Peter Cooke, its first head, was established as part of There's been no "Law of the Sea Conference," or even the Basel Concordat in 1975 to deal with just such problems. GAIT[G eneral Agreement on Tariffs and Trade] discussion, The Concordatcame about because there was a sudden rash of this level of "risk and regulatorylegislation" of banks.So, of collapses, the collapse of Herstatt, which was caused by GerryCorrigan has been made the Basel chairman and he's the failure of thecentral banksto coordinate. going to deal with this.He 's the right man in the right place Then we had the collapse of Banco Ambrosiano's Lux­ at the right time. embourg subsidiary in 1982, in which neither Italy nor Lux­ embourg would take responsiblity for the Luxembourg sub­ EIR: How will the BIS strengthen its controls? sidiary. So we expanded the Concordat in 1983. The Bench: Governments have to give centralbanks cross-bor­ expansion focused on expanding powers of consolidated reg­ der inspectionauthority , theyneed absolute authority to shut ulation. Under consolidated regulation, we set up a system banks , remove management, remove directors.You can't in which the central bank of the parent country where a have this situation where the Bank of England was thwarted bank is headquartered, must take responsibilityfor thebank 's in doing its job by the Court.Read the London Financial entire international operations and subsidiaries.Italy, in the Times yesterday.Imagine a judge in the U.S. daring to re­ case of Banco Ambrosiano, for example. verse the Fed's closure of the Bank of New Engand! Ridic­ Now the problem with BCCI, of course, is that it had ulous. threeor more home countries, Abu Dhabi, Luxembourg, and The central banks need a IIOt more authority to carry the Cayman Islands. And there's a hole in that last 1983 out their international responsiblities. National governments version of the Concordat, which says a bank in effect can get have to give the central banks whatever they need. away with threeparents. The role and raison d' etre of a bank regulatoris to prevent We were awarethat this loophole was being deliberately financial meltdown, to prevent a systemic collapse.Any ca­ utilized by BCC!. So, in 1987, when we saw BCCI was reer regulator sees that as job number one.Whereas, the getting to be a reallylarge bank, a BIS College of Supervisors enforcement agent, like the Department of Justice, would was formed specifically to monitor BCC!.The college con­ not have that as his preoccupation.Tha t's why thereis tension sisted of the central banks where BCCI had offices: Bank of betweengovernment agenci es, and also across countries. England, Swiss National Bank, Spanish National Bank, and The result of the BCCI scandal will be that countriesall Luxembourg Monetary Authority, to start,to strengthen su­ over the world are going to start.passing the laws which the pervison over BCC!.Later, Hong Kong and Grand Cayman central banks want.Tha t's why the Fed has this new Senate were added to the college. bill (S.1019) on Foreign Bank Supervision.

6 Economics EIR August 16, 1991 ister Toshiki Kaifu, as head of state. Kaifu is highly unpopu­ lar for kowtowing to Bush's genocide in Iraq earlierthis year. Hashimoto as prime minister might have attempted to defend Japan's Meiji Era banking system and Japanese industryfrom the BIS's demands. 'FinancialAIDS' Hashimoto "admitted responsibility" in the Fuji Bank scandal Aug. 6 and apologized to the public, which is silly. hits Japan, Hashimoto The BIS and Jardine'sare counting on him and other Japanese leaders to be impotently self-effacing, according to profile. The only way to stop the destruction of Japan, in fact, is for by KathyWolfe Japanese patriots to break all the rules and name the names of the BIS and private western bankers who are cooking up Japanese Finance Minister Ryutaro Hashimoto will resign to these scandals to pry open the Japanese market. take responsibility for scandals plaguing Japan's financial Let's face it: The BIS's "flea market" economics carries sector, the Japanese press reported Aug. 6. Hashimoto him­ "financial AIDS" as efficiently as mosquitos carry the lllV self denied it the next day, but even if the press is lying, his virus. And you can't be "just a little bit lllV-positive." If chance to become Japan's next prime minister in October, Tokyo backs down and lets the BIS really deregulate Japa­ and his career, are now done for. nese markets, it will gridlock the wholeJapanese economy. After resisting demands to quit over the Nomura stock Prime Minister Kaifu, on the otherhand, is suddenlynow scandal since June 21, Hashimoto confirmed on July 27 that assured of reelection in October, promoting himself as "Mr. his former top aide, Toyoki Kobayashi, had acted as an inter­ Clean" to Hashimoto's "fallen idol1' image. Reality is that mediary in securing possibly illegal loans in a "totally unre­ Bush, the Federal Reserve, and the ,BIS want to keep Kaifu lated" scandal at the huge Fuji Bank. in office because he's the one ready to play geisha to their On July 25, Fuji Bank announced it had firedthree execu­ plans for a new BIS occupation of Japan. tives caught in a loan fraud scheme involving nearly $2 bil­ Kaifu opened an emergency session of Japan's Parlia­ lion. Days later, three more of Japan's largest banks were ment on the scandal crisis on Aug. 5, with a call for political implicated. Fuji and other Japanese banks are in a cash and financial "reforms" which make Lyndon Johnson's squeeze because of Bank for International Settlements (BIS) "Great Society" speech look conservative. capital restrictions, which have forced a contraction of Japa­ Kaifu said: ''There are a number of systemic issues inthe nese bank lending over the past year. The Fuji employees way politics and government currently work that need to be reportedly issued false documents showing deposits at the reformed." He expressed regret over the recent brokerage bank for 23 corporate clients, mostly real estate companies, scandal and called the brokerages' conduct "deplorable" be­ which the desperate realtors then used as collateral to get cause "they are at variance with ourideal of a fair society." loans elsewhere. Hashimoto's aide is said to have known Kaifu will submit an amendment to the law covering about the deal. securities trading that would increase inspections of securi­ There are now four or five such "totally unrelated" scan­ ties firms, ban compensation, and generally deregulate fi­ dals rocking all of Japanese finance, industry, and govern­ nancial markets. ment. The situation reeks of the kind of sting operation the Kaifu is further demanding election law reforms includ­ BIS set up with the Bank of Credit and Commerce Interna­ ing redistricting of Japanese electoral districts which would tional (BCCI) scandal, which has become a time bomb for give far more seats in Parliament to the "New Age" yuppies financial warfare against the U. S. and other nations. in Japan's suburbs. Kaifu's reforms would also give the new The first of the recent Japan scandals against Nomura U.S.-modeled watchdog agencies tighter control over how Securities was begun by Britain's Dope, Inc. bank Jardine political leaders raise electoral funds. Matheson (see EIR, June 19 and June 26). Wall Street's Securities and, Exchange Commission (SEC) meanwhile has sent letters of investigation to at least Fatal disease three of Japan's four main securities firms, asking them for Hashimoto reportedly coined the term "Financial AIDS" information and threatening indictments. to describe the banking and financial deregulation which the The New York Stock Exchange and the NationalAssoci­ BIS central bankers have used to destroy the U.S. and other ation of Securities Dealers, which operate the two biggest western financialsystems over the past 20 years. He is being U .S. stockmarkets, recently sent letters to the Big Four firms targeted not for what he has done wrong, but for what he requesting to "verify that Nomura and other Japanese firms' might have done correctly. U.S. subsidiaries were abiding by" U.S. law. Whether the Before the scandals broke in June, Hashimoto was the Japanese are "still beating their wives" is expected to be the front-runner to replace Bush's favorite doormat, Prime Min- next SEC-Wall Street inquiry.

EIR August 16, 1991 Economics 7 For his performance as Dr.Frank enstein in putting this budget together, Governor Wilson is now touted in the na­ tional media as a future Republican presidential contender. Beyond the fiscal sleight -of-hand in the state's budget projec­ tions, the entire package is absurdly premised on an econom­ ic upturn, echoing the ravings QfGeorge Bush.Even Califor­ nia's chief economist, however, estimates a one-in-three u.s. state budgets chance that the economy will not recover, but will experience what Wall Street wags call a "dead-cat bounce." unraveling already In Illinois, Gov. Jim Edgar signed budget bills July 24 which drastically reduce income assistance and health pro­ grams for the poor, in a package of cuts totaling $1.5 bil­ by H. Graham Lowry lion-nearly half the total in California.But the Illinois health care appropriation assumes $640 million in federal Five weeks after the July 1 beginning of the fiscal year, matching funds, tied to new state assessments on hospitals state budgets are already collapsing under huge and interest and nursing homes based on the amount of Medicaid services payments for emergency borrowing.Bitter legislative fights they deliver.Worse yet, this bookkeepingtrick assumes fed­ in a number of states dragged on well past the fiscal year eral fundingfrom the very programs the Bush administration deadline, only to end in the drafting of budgets which have says it intends to eliminate. already been denounced as inadequate to pay the bills.The state of Connecticut, still without a budget following Gov. Constitutional crisis loomsfor Connecticut Lowell Weicker's Aug.7 veto of the legislature's latest tax The budget deadlock in Connecticut between the gover­ plan, faced the prospect of a government shutdown for the nor and the Assembly over tax policies threatened to become second time. a constitutional crisis following Weicker' s latest budget veto. The final temporary budget expired Aug. 5, and the state Huge shortfalls would thus be without funds if the veto were sustained as Under the current rate of U.S. economic collapse, the expected.The Assembly has repeatedly rejected Weicker's plain truth is that no budgets will meet theirproj ected revenue attempt to institute a state income tax, and the governor or spending levels. The situation in Maryland provides a has vetoed every budget without one. Legislative leaders dramatic case in point.After a series of blood-lettingsessions declared they have no plans to pass another temporary spend­ during the past fiscal year, cuttingmore than $650 million to ing bill, but intend to challenge Weicker's authority to run bring the budget into line, the General Assembly was in­ the government by executive decree. formed June 25 that this year's shortfall was already pro­ The budget dictators of Wall Street have been pushing jected at a whopping $300million. for exactly such powers to impose austerity, and Standard On Aug. 1, state budget officials announced the figure and Poor's bond rating agency jumped in Aug. 5 by putting could grow to $675 million next year; and Gov. William Connecticut's bond-anticipationnotes and general obligation Donald Schaefer ordered state agencies to prepare for $300 bonds on its "credit watch." S&P threatened to lower both million in new cuts, about 5% of the general fund, beginning ratings, due to the state's "continuing budget impasse and Oct. 1. Additional layoffs of state workers are considered deteriorating financial condition." "inevitable ," and the chairman of the Maryland's House Ap­ The chimera of economic recovery and visions of coffers propriations Committee declared, "I think people are going bulging with revenueshave dazzled state governmentsacross to have to bite the bullet on taxes." the country.But despite record tax hikes across the country, In California, Gov. Pete Wilson signed a $55.7 billion which may equal the $23 billion in federal tax increases budget July 16, which included $3.2 billion in cuts and a which Congress enacted last fall , state governments are al­ record $7.3 billion increase in sales and income taxes. The ready scrambling for funds.Even with major tax increases next day, he announced that he would still lay off up to in half the states last year, state tax collections nationwide 20,000 state workers , unless the legislaturegave him a free grew less than 1 % during the first three months of 1991. hand to cut their wages and benefits by $800 million.As it is, In many of the older industrial states of the Northeast and the Californiabudget is full of holes, including $2.5 billion in Midwest, revenue shortfalls doubled and tripled during the borrowing from special funds, shifting and delaying pension first six months of this year, forcing those states to reopen payments, and smoke-and-mirrors bookkeeping changes. their budgets for additional major cuts. "If revenues don't Nearly $1.4 billion in cuts to public schools was sold as a pick up in the next month or two," said a spokesman for the one-time reduction, with the money to be restored a year National Association of State Budget Officers, "they will be from now. right back in there."

8 Economics EIR August 16, 1991 being reported in the localmedia. Fearful of a cholera contagion spreading among the 41,000Central Americans living in Mexican refugee camps along the border with Guatemala, the U.N. High Commis­ sion for Refugees has prohibited th� direct consumption of water in the camps. But Erasmo Sainz Carrete, the head Cholera in the U.S. of the Mexican refugee organization, said that controlling cholera in the camps would be easr in comparison to the 'a matter of time' problems Mexico will face should· the slums surrounding Mexico City become infected, "because it would be practi­ cally impossible to control it." by Valerie Rush Central America, another 'Peru' With the discovery of one cholera case in Canada and the Guatemala is the firstCentral American country to be hit rapid spread of the disease across Mexico and Central with the cholera epidemic, and 20 official cases were being America, U.S. health specialists are convinced that cholera reported as of Aug. 6, out of a likely 60 under investigation. outbreaks in the United States arejust a matter of time. Guatemalan President Jorge Serrano Elias has declared a According to Paul Blake, of the U.S. Centers for Disease national emergency, noting the irony that "we had thought Control in Atlanta, Georgia, "Trying to keep it out is just [the disease] would come from the south, but it hit us from about impossible." Blake disputed claims that U.S. living the north," that is, from Mexico. If the epidemic in Guatema­ standards will contain the disease, noting that there were la surges out of control, an estimated 700,000 (out of a total many , and spreading, pockets of poverty in the U . S. lacking population of 9.5 million) could become infected. Compari­ proper water and sewage facilities, precisely the conditions sons between Guatemala and Peru are regularly made by the for breeding a cholera epidemic. media, in view of the fact that Guatemala has but one doctor One such pocket of poverty lies just north of San Diego, and one hospital bed per thousand inhabitants. California,where over 10,000migrant Mexican workers live Sixteen of Guatemala's cholera victims have been identi­ in squalor, with no electricity, public services, or sanitation fied in the southwest, bordering EI Salvador, which has just facilities. Healthauthorities in San Diego began testing thou­ announced a state of alert in anticipation of the arrival of sands of these workers for the cholera bacteria afterMexican cholera there "within a matter of hours." Next door, Hondu­ Health Secretary Jesus Kumate announced the existence of ras is gearing for an outbreak there. And on Aug. 6, nervous 253 cholera cases in that country. Said physician Stephen Panamanian health authorities seized an entire boatload of Waterman, San Diego faces "a potential danger" of a cholera food and fishproducts which was purchased in various Cen­ outbreak, especially in light of recent budget cutbacks in tral American countries and sold in the Panamanian port of health and medical services for the poor. Col6n without passing through sanitary controls. Kumate insists that the disease is "under control," but The disease is spreading rapidlY in Colombia, although five Mexican states have officially reported cholera out­ officials there-as in Mexico-are scrambling to deny it. breaks. Two Health Department physicians broke their si­ Cholera outbreaks have been detected all along its Atlantic , lence Aug. 1 to demand that "the truth must be told about Pacific, and Caribbeancoasts , while at least four urban cases cholera, as the disease-like any other-requires a great of cholera have been identifiedin the capital city of Bogota. awareness on the part of the population to prevent it, since it On July 27, Colombia's National Health Institute reported is a question of hygiene." 76 offical cholera fatalities, and on Aug. 3, admitted to 4,43 1 While Mexico's worstcases are occurring in outlying rural probable cases of the disease, and 916 confirmed. areas like poverty-stricken Chiapas along theGuatemalan bor­ Perhaps most frightening are reports from Peru that a new der, the disease is alsospreading in theinterior of thecountry. epidemic of unknown origins is spreading through its jungle The city of Puebla, just a few hours from Mexico City, is regions, in the wake of cholera's ravages. With symptoms reporting scores of casesand numerous deaths,and at least two similar to those of cholera, the new disease is said to have victims of the disease have now been acknowledged in Mexico infected 81 people, of whom 17 have already died. City. According to Mexico City official Eduardo Cano, the Juan Aguilar, U.N. health adviser on Ibero-America and cholera bacillus has been found in the raw sewage flowing out the Caribbean, told journalistsin Bogota Aug. 3 that "the war of Mexico City that is used to irrigate surrounding croplands. against cholera is not being won.", He said that widespread Mexico City and its metropolitan surroundings are home to poverty across the continent provided an ideal breeding nearly 20 million people. As of Aug. 1, the Mexican Depart­ ground for the disease, and that it was there to stay. Aguilar ment of Health was admitting to only threecholera deaths , and also predicted that cholera would spread from continent to to a total of 327 cases.However, scoresof cholera fatalities are continent, until the entire planet was infected.

EIR August 16, 1991 Economics 9 Environmentalists declare world war on Malaysia by Rogelio A. Maduro

In what promises tobe another in an escalating series of wars none of the many other foreign environmentalists present against sovereign governments, the environmentalist move­ was arrested,or in any way harassed by theMalaysian police. ment has launched a global assault on Malaysia. On July 5, The Sarawak 8, six of whom pleaded guilty and are now eight environmentalists assaulted and took over several log serving 6O-dayja il terms, have becomecauses celebres inter­ barges and cranes in the province of Sarawak, to protest the nationally. Their arrest is being used by the international harvesting of timber. The assault and subsequent arrest of the environmental movement to whip up hatred and hysteria perpetrators have been used to mobilize environmentalists against the governmentof Malaysia. worldwide to put pressure on western governments to ban the The eight environmentalists arrested in Malaysia are: importation of woodand other products from Malaysia. Anja Light, Sweden, Rainforest Information Center; Angie Although Malaysia is the immediate target, the environ­ ZeIter, U. K. , EarthFirst! ; CarstenHuett che, Germany,Rob­ mentalists have made it clear that Indonesia is to follow soon, in Wood; Jake Burbridge, U.K., Earth First!; Jake Kreilick, and the ultimate target is Brazil and India, yet too powerful U.S., EarthFirst!; Deborah Witkin, U.S., independent; Ralf to challenge. The waragainst Malaysia is part of a sequence Schmitt, Germany, Robin Wood; Nancy Rolfe, Australia, of actions scheduled to take place before the U.N. "Earth Earth First! Summit" in Brazil in June of next year. The profile of this operation is extremely interesting. During the summit, an internationalecological treaty will While groups such as Earth First!, Robin Wood, and the be signed which will governall trade andeconomic activity Rainforest Action Network are organizing to "save the rain in the name of saving Mother Earth from man's supposedly forest," the Gaia Foundation is organizing indigenous move­ destructive industrial activities. The treaty, now embodied ments in various countries to "save" the tribes of the Penan in a document called Agenda 21, will create an international from modem civilization. The Gaia Foundation, which pro­ military force under the control of the United Nations. This motes the revival of pagan religions, plans to use the same military force will enforce theinternational ecological dicta­ indigenous people's networks against other governments in torship. Before this treaty is signed, however, all resistance future campaigns. to such a dictatorship has to be crushed. In essence, the war against Malaysia is being used to set The environmental assault on Malaysia's logging indus­ up an international infrastructure that can attack and topple try on July 5 was carried out with great precision by the the sovereign governments of Third World nations, using white-skinned, Anglo-Saxon environmentalists who had the excuse of saving the environment. The timing of this been flownin from a base of operations called the Rainforest operation is critical: The Earth Summit in Brazil is only eight Information Center in Australia. The environmentalists, months away. Malaysia was chO\Senas the firsttarget for four mostly members of Earth First!, an organization which advo­ basic reasons: cates violence and terrorism "in defense of Mother Earth," 1) It is small and isolated. The most coveted target is were part of a team of 20 foreigners, the rest of whom were Brazil, but first the environmentalists have to organize their providing logistical and media support. war machine by taking on a· smaller, more vulnerable At the crack of dawn, the "Sarawak 8," as they call country; themselves, assaulted several cranes and barges used for log­ 2) Prime Minister Mahathir Mohamad is passionately ging, chaining themselves to the equipment. committed to economic development andindustrialization of The action had been carefully planned, and the press was Malaysia; present throughout the incident, taking footage which was 3) Malaysian representatives have led the fight against quickly sent to Singapore for international transmission. international environmental treaties, including the Montreal After eight and a half hours , the police ended the takeover Protocol banning the use of chlorofluorocarbons (CFCs), a by arresting the environmentalists. It should be noted that ban which will cause thecollaps� of theinternational refriger-

10 Economics EIR August 16, 1991 ation chain and cost the lives of 20-40 million people every program by Third World standards, and is committed to re­ year through starvation and food-bornediseases; planting areas that have been logged. 4) Australia serves as an excellent base of operations The basic point remains, nevertheless, that to halt all against Malaysia. Australia's popular opinion has already commercial logging will not significantly stop deforestation. been predisposed against the Malaysian government due to As long as people continue to use wood to cook their meals its policy of hanging all major drug dealers they catch, which and provide heat, the deforestation �ill continue. has included several Australians. The actions of the environmen�lists will furthermore severely hurt the Malaysian people. Forestry is an essential An economic war industryin Malaysia, given that 74% of Malaysia's total area The environmental war against Malaysia is now being is covered by forests. In comparisQn, 28% of the U.S. is largely carried out in the West. In the last few weeks, the environmentalists have carried out a timber ship blockade in Nantes, France; a port blockade in Bremen, Germany; According to thets, environmentalis demonstrations at the Group of Seven meeting in London, should in the and at the Malaysian embassies in The Hague and London. Malaysia remqin Altogether, these actions have generated a lot of press StoneAge, and its nationalincome coverage and increased the pressure on governments to ban will.deri.vedfro be m Westerners the imports of products from Malaysia. The environmental­ togawk at them. ists are trying to force an economic embargo that would coming destroy the economy of Malaysia. The campaign will escalate during the second week of September, when the environmentalists are going to carry forested, and Great Britain has forests on a mere 9.3% of coordinated actions in Western Europe, the United States, its land. To ban all timber operations in Malaysia, as the Canada, and Japan.Those actions will lead to Oct. 7, which environmentalists are demanding, would be devastating. In has been declared an international action day for the Penan. the state of Sarawak, the forestry industry accounts for half In Germany the environmental groups, including the Green of total revenues and employs 55,000 workers, most of Party, will hold a nationwide protest day against the timber whom are indigenous peopleliving close to the forests. trade, centering around demonstrations in 60 different cities. What alternatives do the environmentalists have to feed the Malaysian people? In their press releases, the environ­ The deforestation myth mentalists propose "the marketing of alternative forestprod­ All of these actions against Malaysia are being taken on ucts and income sources, such as medicines and alternative the basis of purportedly saving the rain forests from destruc­ tourism." In other words, Malaysia should remain in the tion. The environmentalists, however, refuse to tell the truth. Stone Age, and its national incom.e will be derived from Deforestation is a very serious ecological problem-as a Westerners coming to gawk at them. matterof fact, after the spread of AIDS , deforestation is the As to the threat that logging poses to the indigenous world's leading ecological problem. people, one should note these facts: The Penan, as an indige­ What is never mentioned to the public, however, is that nous people, are already beneficiariesof preferentialgovern­ over 60% of global deforestation is the result of the use of ment programs. They number about 10,000 out of the total wood as a fuel source. A study by the United Nations has Malaysian population of 17 million,. About400 of the Penan documented that83% of logs cut down in the Third World are continue to remain in the jungle, leading a nomadic life as used as firewood. In Central Africancoun tries, for example, hunters and foodgatherers. It has been the Malaysiangovern­ firewoodand biomass burningprovide over 90% of all energy ment's policy to bring the Penan and otherindigenous people consumption. If the environmentalists were serious about into the mainstream of society in Malaysia. This includes saving the rain forests, they would support a crash program attemptsto provide them with schools and medical facilities, to industrialize the Third World, and bring modem energy since the Penan suffer acutely from tropical diseases and a technologies, such as nuclear and hydroelectric power, to short lifespan as a result of their! poor diet and primitive replace wood as an energy source. lifestyle. The Malaysian government recently announced Another 20 to 25% of deforestation is the result of slash­ that it was setting up a "biosphelTe reserve" in the Baram and-bum primitive agriculture. Logging accounts for approx­ District of Sarawak for those Penan who have difficulty ad­ imately 18% of deforestation, and most logging companies justing to modem society and wish to continue living a no­ replant trees, which in the tropics can rapidly reforest the madic life in the rain forest. That ¢oncession, however, has area cut down. It is indeed truethat improper logging practic­ not been enough for the environmentalists, who are de­ es have caused severe damage to the ecosystems in some manding that just about the entirety of Malaysia be turned parts of the world, but Malaysia has an advanced forestry into a "biosphere reserve."

EIR August 16, 1991 Economics 11 China's floods show human cost of lack of infrastructure, insane economics by Michael Billington

The devastation of the floods in the People's Republic of of the "reform" policy at the World Bank, but their denials China has resulted in sober and relatively honest appraisals provoke a haunting memory of previous periods when such by some Chinese officials as to why thenation was so drasti­ dangers were ignored even as they came to pass. cally unprepared. Directors of the flood control programs, food storageofficia ls, and others , have published angry inter­ The Three Gorges Dam views about the fact that even the basic maintenance of the The State Council, the leading governmentbody, under existing infrastructure , let alone the necessary new develop­ the pressure of the shocking �ports from the flood sites, ment, has been sabotaged by the government to sustain the announced in July that the Three Gorges Dam across the "coastal development strategy," which is based on providing Yangtze River will be construc�ed during the next five-year concessions and tax breaks to export-oriented (mostly for­ plan (1996-2000), and that preliminary work will begin im­ eign) enterprises along the coast, utilizing the desperate mediately. Had this project bee� built any time over the past cheap labor generated by the historic and continuing under­ 70 years-it was first proposed by Dr. Sun Yat-sen as part investment in agriculture. A senior engineer at the Water of his International Developqtent of China proposal in Conservancy and Hydroelectric Power Research Academy 1921-the death and destruction of the past weeks could bluntly told the official newspaper China Daily that the gov­ have been avoided. Although the cost appears great to an ernment's policy in water infrastructure has been the equiva­ accountant at the World Bank, it would have been made lent of a policy to produce "coffins rather than medicine." up by the prevention of the current flood losses alone, not These are the murderous policies being implemented un­ considering the contribution of Ithe project to the economy, der the name of "reform," which are portrayed to the West and the lives of millions of Chinese. by both the fr iends and the enemies of the currentregime as However, the project appro'tal does not mean it will pro­ "progressive" and worthy of support. These economists at ceed. For example, one officialdescribed two major drainage the World Bank, Harvard University, and elsewhere, whose channels that were designed iq 1958 for the Yangtze and policies have bankrupted the British and U.S. economies, Huai rivers, the two worst hit by the floods. Construction are attempting to return China to the 19th century ofcolonial was never finished. They were r¢approved in 1985 and again "concessions" as a source of cheap labor and loot. The false in 1988, with the same result. The cost of the projects would notion that the only alternative to the insanity of Maoist have been $560 million. The dllmage they would have pre­ irrationalism is the equally irrational "magic of the market vented this year is nearly $2 billion, and would have saved place," has been used to set up the 1.1 billion Chinese for a many lives. China Daily admitted that government invest­ holocaust. Both Mao Zedong and the post-Mao reform lead­ ment in water control infrastructure has fallen from 7% in ers have sustained the nation by looting agriculture, leaving the 1950s to 2% today. I a continually decreasing level of sustenance for the 80% of Another admission of the aocumulated sins of omission the population who still live in th areas, while refusing to that have brought on the current crisis appeared in the daily develop the infrastructure necessary to transform the nation, Ban Yue Tan in Beijing, reporting on the status of the nation's or even protect it from natural and man-made disasters. grain storage. Much has been rqade of the bumper crop last Although the floods have been described as the worst of season, when a record 435 million metric tons (mmt) were the century , no one pretends that the devastation could not harvested and a significant amount placed in storage (the have been prevented. Damage estimates are now over $7.5 exact storage figures are secret, but estimates range between billion, as tens of thousands of bridges, dikes, roads, factor­ 75-125 mmt). However, an enOrmOUS 15% of stored grain is ies, and homes were washed away. The death toll is over lost to spoilage under normal weather conditions. The article 2,000, but the secondary deaths from diseases , including reports that a full 70% of the stored grain is kpen air bams, malaria, cholera, and typhoid, are mounting. The threat of and about 25 mmt is simply stored outdoors ! Approximately famine is being denied by the government and by the authors 6 mmt were literally washed aw�y by the floods. Some un-

12 Economics EIR August 16, 1991 confirmed reports in the mainland press estimated that as ban consumption rose by over 10%.: Edible vegetable oil, much as 60-80 mmt, half the stored grain, may have been the major source of protein, fell by 40% nationwide but only water damaged due to poor storage facilities. 10% in the cities. Even clothingconsumption shows the same The construction of new storage facilities has not even urban-ruraldivision. Thus, by 1978, average food consump­ kept up with replacement needs. Less than 2% of the grain tion was slightly lower than the pre-war periodof the 1930s, is stored in modern steel granaries, and earthen warehouses while thatof the peasantry was far lower. constructed in the 18th century under the reign ofEmperor Lardy also points out that while thegovernment subsidiz­ Qianlong are still in use. es the sale of grain to the urban work force as part of the wage policy, no such subsidies exist for the peasantry. Half Looting of agriculture the government's procured grain is sold back to those peas­ The history of development in China since the victory of ants who are involved in non-grain production, but theprice Mao's peasant army has been one of continuous looting of is pegged to the procurement price. Similarly, most of the the peasantry. Following the civil war, grain production re­ social benefits, like social security �unds upon retirement, turned to normal after 12 years of constant warfare. Food are not applicable to the peasantry, who must depend on consumption levels at best returned to the pre-war levels of children for support in their old age. But having more than the 1930s under Chiang Kai Shek. The emphasis was on one child is a crime. industrialization, with Soviet support, which was paid for by Partially to enforce the "local self-sufficiency" in food, extracting resources from agriculture in the form of cheap it was forbidden to use the rail system for food transport, and grain for the urban work force, cheap cotton for the textile the roads were not adequate for significant inter-province industry, and taxes to support the government. Agricultural transportation. The entire road and rllil system, in fact, was production itself remained primitive. The myth that the in­ based on preventing the movement otpeople or foodbetween dustrialization process in China was turning out large provinces. This policy is still used to varying degrees by the amounts of agricultural machinery, fertilizers, pesticides, current government. etc., is disproved by the fact that between 1958 and 1978, only 10% of heavy industryoutput went into agriculture. The 1980s 'reform' As physical reality periodically asserted itself, causing Did this nightmare end with the,beginning of "reform," agricultual stagnation, Mao took thecountry through several as the free market gurus would have us believe? Production rounds of bloody and psychotic episodes of forced collectiv­ of grain did shoot up after 1979, when farmers were allowed ization, eliminating even the small private plots, and strictly limited control over running their own farms. The same phe­ enforcing government procurementof grain and other taxes nomenon happened after the war in 1949 and after the Great on agriculture. During the Great Leap Forward of 1958- Leap in 1961, for the same reason. But, as Lardy pointsout, 1960, and twice during the Great Proletarian Cultural Revo­ although the government increased · the agricultural budget lution of 1966-1976, the nation's economy and society were in 1979, "the commitment of the Central Committee was thrown into chaos while the peasantry were treated like abandoned within little more than one year." Advice was slaves, with the resulting collapse of production. In the Cul­ pouring in from the Anglo-American elite, with an eye on tural Revolution, Mao insisted that each province be self­ the cheap Chinese labor and the eX{llIlding Golden Triangle sufficient in grain and other agricultural products, regardless drug flowthrough China as a source. of loot for their collaps­ of the vastly differentiated types of soils and climates in the ing financialbubb le, while equally �xious to prevent China different provinces. Areas suitable for grazing, for example, from a real modernizationpolicy of the sort Japan had under­ but without the water resources needed for cultivation, were taken. The initial leap in agricultural output was used to plowed under to meet the grain quotas, leading to a drastic justify slashing the agriculture budg�t, along with the invest­ fall in output of virtually every crop , including grain. ments needed in transport, energy, water control, communi­ The Great Leap resulted in the genocide of 64 million cations, and so forth, except wher� they were essential to souls, counting increased mortality, primarily from starva­ facilitate the climate for fast buck investments in the emerg­ tion, and the nearly as great rate of reduced births, due to the ing coastal freetrade zones. collapsed state of health of the population. The deaths from As a result, the rate of growthof grain output (the source the Cultural Revolution were only slightly fewer, although of over 80% of the caloric intake � the Chinese diet), de­ they resulted mostly from murder and forced suicides rather creased after 1983 and became negative by 1985. Extraordi­ than from famine. narily good weather in 1989 and 19,90 brought the total pro­ Nicholas Lardy of the University of Washington has dem­ duction back to the 1984 peak level, lbutper capita production onstrated another aspect of the looting of agriculture. Be­ and consumption never recovered \\1henpopulation increases tween 1957 and 1978 (the beginning of the current reform are factored in. period), the consumption of grain per capita/ell by 3.2% in Since the 1988 inflationary explpsion, caused by the"hot China. But rural consumption fell by almost 6% , while ur- money" generated by the free trade zones, there has been a

EIR August 16, 1991 Economics 13 general retrenchment of the economy, with many of the signs of the earlier Maoist reactions. Some 20% of the agricultural land is being recollectivized, reverting to governmentowner­ Currency Rates ship, while self-sufficiency of the regions is being reempha­ sized, and movement of foodand people is again being close­ ly regulated. This must beseen in the light of the control over The dollar in deutschemarks political and social freedoms since the massacre at Tianan­ New York late afternoonfixing men Square, and a renewal of the hated Cultural Revolution­ 1.80 - .A style campaigns against "bourgeois liberalism," "peaceful ./'" - evolution," etc. 1.70 '\.-.

The World Bank solution 1.60 • The World Bank released a special report on the grain situation in China in July, in which it is ecstatic about the 1.50 push to remove government subsidies on grain. The Bank is 1.40 demanding the complete elimination of all regulations and 6119 6126 713 7110 7117 7124 7131 sn subsidies in the grain market. This is in keeping with their international policy against national protection of food pro­ The dollar in yen duction, aimed at placing food control in the hands of the New York late afternoonfixing Anglo-American food cartels. The report states: "Since market prices for grain in Chi­ 160 na's free markets have fallen precipitously due to record 150 production in 1989 and 1990, China should seize the moment to raise urban ration prices and reduce per capita allocations 140 in order to reduce the subsidy burden without causing too - - much hardship for the urban poor. " 130 , Such concernfor the poor doesnot extend to the situation "down the road" when the "free market" prices skyrocketdue 120 , to some disaster, like a flood, intersecting the accumulated 6119 6/26 713 7110 7117 7124 7131 sn failure to develop infrastructure, as is evolving now. The The British pound in dollars report adds as a postscript that the government, within weeks New York late afternoonfixing i of seeing the draft of the report, implemented precisely such policies. 1.90 , The Bank is quite aware that China is now the world's 1.80 third-largest grain importer, importing primarily from the i U.S. In a crisis, China will be entirelydependent on the U.S., 1.70 which has demonstrated, in the cases of Iraq, the Sudan, and V elsewhere, that it is more than willing to use the foodweapon 1.60 ...... � lr- to impose its political will, up to and including causing the mass death of children. 1.50 Ironically, the World Bank Economic Review for May 6119 6/26 7/3 7110 7117 7124 7131 sn 1991, published just prior to the floods, points out how the The dollar in Swiss francs free market policy decisions and China's brutal population New Yo rk late afternoonfixing reduction programs (both policies advocated and supported by the Bank) have combined to create a situation where "an 1.60 unraveling of the established safety nets , an aging popula­ /"-...... � tion , and the advent of high episodes of inflation"have under­ 1.50 "" mined living standards for an increasing proportion of the 1.40 population. Unmentioned by any of the Bank spokesmen is the vast "floatingpopulation" of 100-200million who wander 1.30 the nation in search of any means of survival, legal or other­ wise. It is this army of unemployed that assures thecontinued 1.20 low cost of labor to those investing in the free trade areas­ 6119 6/26 713 7110 7117 7124 7131 sn about one-tenth of the average wage in Taiwan.

14 Economics EIR August 16, 1991 "There was a triple tragedy of slavery, colonialism, and neocolonialism which has now spaIli11ed nearly 600 years," he pointed out. Historians estimate thatmore than 12 million men and women were forcibly rem

EIR August 16, 1991 Economics 15 Twentyyears of decapitalization sinksworld shipping capacity by Anthony K. Wikrent

The firstof a two-part analysis of the state of the maritime the British Empire was built, and competitors subjugated. trade . Noting that there are very few shipping companies in the world with a market capitalization of more than $1 billion, Five bulk cargovessels have sunk during the firstfive months Anglo-American interests are insisting that what remains of of this year. In 1990, twelve ships sank, another 11 were the world maritime industry be consolidated, on British seriously damaged, and more than 200 seamen lost their terms, if it is to receive bank financing. The financiers want lives. This is no ordinary loss and casualty rate. These ships to be sure there are sizable assets that can be seized in the went down as a result of the last 20 years of decapitalization event of default. and "free trade" competition. And to make debt-for-asset grabs easier, shipowners are At the beginning of 1990, there were 22,983 merchant also being told to make their assets more liquid for short­ ships in the world, the average age being 16 years. With most term loans. Finally, to make sute there will be plenty of such merchant ships designed and built to last 20 years , almost grabs, bankers are demanding a "better return" on long-term the entirety of the world's fleet should be replaced over the ship financing; in effect, demanding that already-strained next few years. But this is not happening. For most of the shipowners pay more in debt service. "Banks can't tolerate past two decades, shipowners (carriers) have barely been a 1 % yield on the upside with aU that risk on the downside," able to recover their operating costs, to say nothing about the managing director of Manufacturers Hanover Trust's funds for new ship construction. The United States Lines global shipping group, D'Arcy H. LeClair, lectured a Ship­ went bankrupt, and saw some of its pride-of-the-line vessels builders Council of America conference on finance in April. sold for scrap. Only the commodity cartel companies-Car­ DanWhite , a director of the British bank County National gill, Continental, and others-have successfully maintained Westminster, places thecost of replacing all the tankers, bulk theirown shipping capacities with ease, while succeeding in and combination carriers, general cargo ships, and container­ imposing low freight rates on independent shippers. ships that will be 20 years old or more by the year 2000, at It is a wonder that as many new ships have been commis­ $250-350 billion. White estimates that shipping companies sioned as there are. The reason is that the largest shipbuilding themselves will only be able to divert $80 billion from cash countries-Japan , South Korea, and Germany--offer vari­ flow; only $15 billion will be recovered through scrapping; ous types of direct and indirect subsidies that can cover up and banks will probably be unwilling to lend more than $125 to half the cost of a new ship, and many other countries offer billion. various kinds of alternative, non-market sources of capital for Shippers (those who own the cargo transported by the ship construction. In contrast, the United States has moved to carriers), however, are reluctant or unwilling to providecar­ terminate all government support for its maritime industries. riers a high enough rate of return to be able to finance new The result has been, that while shipbuilding capacity in most ship construction, as the $20-120 billion shortfall projected countries is presently strained to the limit, U.S. shipbuilders by White demonstrates. In fact, shippers are presently con­ have only three commercial vessels under construction, and testing every dollar, mark, guilder, kroner, and yen they are are now facing extinction. Almost the sole customer in most charged by carriers, and are militantly supporting each new U.S. shipyards for the last decade has been the U.S. Navy, proposal for "increasing competlition"-the free market pan­ now cutting its shipbuilding program by half in response to acea designed to force carriers to underbid each other, but the bankruptcy of the national government. which all too often leads to bidding under costs as well. For example, earlier this year a group of U.S. cartel­ The British grip on maritime finance dominated agricultural commodities shippers filed a petition The London institutions that still dominate world ship­ against the widespread use of shipping surcharges with the ping remain committed to the "free market" policies on which U.S. Federal Maritime Commission. They argued that sur-

16 Economics EIR August 16, 1991 charges make it nearly impossible to effectively plan ship­ ping costs. However, the true cause of their dissatisfaction is revealed in shippers' arguments that surcharges are nothing but a means of unjustifiably increasing carriers ' revenues, and should be used only to recoup sudden increases in cost due to temporary exigencies, such as steep risesin fuelcosts , unanticipated port congestion, or war-risk insurance. Ac­ cording to shippers, carriers (who join together in rate confer­ ences to establish standardrates for particular types of freight on specific trade routes) are slapping on surcharges to make up for their inability to raise rates in the supposed freemarket. Symptomatic is the widespread anger amongst shippers at the TransPacific Westbound Rate Agreement (which sets rates for moving cargo from Asia to North America) , which has flatly refused to accept discount deals for high-volume commitments from shippers, known as service contracts, which were authorized for U.S. trade routes by the U.S. Shipping Act of 1984. The Shipping Act of 1984 also made it possible for carriers to offer special contracts at rates lower than those agreed to by the conferences. This has driven rates down to abysmal levels on the major U.S. trade lanes.

Aging vessels There are threemajor types of merchant vessels: contain­ A containership, pioneered byAmericatz steamship lines, which has helped to trim the time and cost of ocean transportation. erships, bulk carriers , and oil tankers , and, for each category , Today, even containerships cannot survive in the "free market." revenues are insufficientto meet replacement costs. The data i below present the age profile of the world fleet, carriers' plans for new shipbuilding, and the inadequacy of carriers' 1,442,424 TEUs, or an average of 1,571 TEUs per vessel, revenues to finance new ship construction. The declining and were deployed on deep-sea trade roptes, with the remaining decrepit world shipping capacity is a prime example of the 469 ships, carrying only 242,531 ifEUs, or an average of strategic, systemic weakness of Anglo-American "free mar­ 517 TEUs per vessel, deployed on illtra-traderout es, such as ket" economics: Contrary to the appearance of success, free the fast-growing intra-Asian routes! Another 596 container­ market economics has been a miserable failure, able to pass ships, carrying 513,843 TEUs, wer!! built before 1976. That itself off as successful only by ignoring replacement costs. is, 42.97% of the world's contai�erships, accounting for With "buy cheap, sell dear" as its basis, "free market" eco­ 30.50% of world capacity, are 15 ot more years old. nomics has chronically failed to fund the level of capital This is one of the better age prpfiles of major maritime expenditures required to maintain the physical basis of pro­ sectors, reflecting the relatively gre!ater attraction container­ duction and transportation. ized shipping has had for investom.. However, it must be recognized that the trade in high-value finished goods has The container trade been almost completely driven by ithe need of the U.S. to Most of the world's trade in manufactured goods is now import up to one-half of its apparent "standard of living" carried in intermodal containers, allowing the transfer of (i. e., 30% of its automobiles, over �O% of its clothing, over the cargo from one mode of conveyance to another without 80% of its footwear, and almost all of its consumer electron­ having to unload the container. Specialized vessels, known ics)-the direct result of the "post-industrial" and radical as containerships, have been developed for the marine con­ ecology policies which have domiml-tedthe United States and veyance of this cargo. Since these finishedgoods are usually debilitated the U. S. manufacturing base. the highest value cargoes, the shipping of containers has Though the latest phase of the I U.S. depression, which been amongst the most lucrative of trades. However, not all beganin 1990, caused U.S. import� to stagnate, and in some container traffic is high-value finished goods: Among the cases decline, the Asia to North AI1lerica trade route remains leading U . S. exports of containerized cargo is wastepaper. the largest maritime container rout� in the world, accounting The world's fleet of containerships at the beginning of for 24.6% of container trade in 1989. But the fastest growing 1990 totaled 1,387 vessels of 29.7 million deadweight tons area of container trade worldwide i$ intra-Asia. MichaelCo­ (dwt) , able to carry 1,684,955 TEUs (20-foot container hen, an analyst for the World Sea 1frade Service of Temple equivalents). Some 918 of these ships, able to carry Barker & Sloane, forecasts a 9. 8% igrowthrate in intra-Asia

EIR August 16, 1991 Economics 17 Number of Deadweight new ships added tons added (OOOs) FIGURE 1 110 250,000 New containership construction is not enough to 100 maintain the world fleet

90 200,000

80

150,000 70

60 100,000 50 Source: Nippon Yusen Kaisha Research Division, World Containership Fleet and Its Operations, 1990 Edition. 50,000

Despite a briefpeaking in 1990, new construction of container capacity will not quite replacecapacity lost through ships ending their usefu l lives . 1976 n 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92

trade thisyear, comparedto a4.3% growth rate in container­ on the North Atlantic trade routes fell 13% . Particularly hard ized shipments worldwide. hit was the Port of Boston, wheretotal movement in and out fell 35% in April, leaving a year-to-date decline of 12%. New completions drop Container volume at the Hampton Roads ports of Virginia Following the period of 1977 to 1980, when 325 new was down 1 %, while volume at the Port of Baltimore was up containerships, averaging about 1,000 TEUs each, were 13% from 1991, but still remains 20% below the level of completed, new completions fell rapidly, with about 50 new 1989. Hampton Roads and Baltimore serve as entrepots for vessels a yeardelivered through 1986. The average number the Midwest, with containers niloving to and from the ports of TEUs per vessel climbed markedly, to 1,454 in 1983 and by rail.As Juerg Bandle, vice president of Kuehne and Na­ 2,054 in 1984. Deliveries then fell off, to 35 in 1987, 30 in gel, Inc., a freight forwarding firm in Jersey City, New Jer­ 1988, and 38 in 1989, while average size increased to 3,019 sey, told the Journal o/ Commerce on May 28, "If [consum­ TEUs in 1988 before falling to 2,268 TEUs in 1989 (Figure ers] aren't buying, then Sears, Montgomery Ward, Reebok 1). The 1990 edition of Nippon Yusen Kaisha's World's and the rest of them aren't going to be bringing in any cargo." Containership Fleet and Its Operations, from which these figures are taken, notes that 119 new containerships with Rate increases unsustainable capacityto carry 161 ,652 TEUs, arescheduled for deliveryto As a result of the decline in cargo, carriers have been world fteets in 1989-90,with another 86 new containerships, unable to sustain badly needed rate increases. In November able to carry 170,872 TEUs, scheduled for delivery in 1991- 1990,the 13 ocean carriers in the Asia-North America East­ 92. bound Rate Agreement (Anera) proposed a general rate in­ While this pace of new construction will just barelykeep crease (GR!) of $325 to the basle rate of $2,000 for moving up with the aging of capacity, the abrupt stagnation of the a container of cargo. By January, the volume of trafficto the North American trade routes has led maritime executives to depression-wracked United Stattshad fallen so dramatically, fear an impending chronic surplus of containerships. This that Anera reducedthe GR! to ohly $200. would createunbearable downward pressureon freightrat es, In late May, Maersk Lines unilaterally offered nearly leading to the ruinof many carriers, especiallythose that have $400 discounts to its customers, setting off a discounting committed themselves to new ship construction programs. scramble to preserve market sh*re, effectively reducing the For example, the Port Import Export Reporting Service GR! to only $25-50 a container. Wayne Schmidt, president (Piers) of theJournal o/ Commerce reported in mid-July that of Votainer Consolidation Service (U.S.A.), Inc. and a 20- U.S. ocean-borne imports nationwide fell 7%, while imports year veteran of maritime shipping, told the Journal ofCom-

18 Economics EIR August 16, 1991 merce in March, "Disaster. Underline that word five times and you've got the idea what Atlantic rates are like." FIGURE 2 For example, the Anera rate for moving a 40-foot con­ Tonnages constructed for worldtanker and tainer of kitchenware from Asia to Los Angeles was $2,075, dry bulk carriers lag behind replacement but some carriers were offering to do it for only $1,005 to needs

$1, 155 in May . The rate for moving a 40-foot container of Deadweight tons (ooos) toys to Cincinnati was $3,495 , but six of eight Anera mem­ Tankers Dry bulk carriers bers were offering their services for only $2,200. 164 044 Ship lines have attempted to force up freight rates by withholding capacity and forming agreements to share ves­ sels while maintaining independent sales and shore handling facilities. In 1989, Anera, which controls about 90% of the import container traffic to the U.S. West Coast, agreed to reduce cargo space by 10%. By early July, some carriers 95.742 began reporting an increase in eastbound traffic to the U. S. , with American President Lines bringing in some 4,300TEU ships at over 100% of capacity. However, the increase was not enough to provide a firmbasis for raising rates, with Sea­ Land reporting only 85% vessel utilization, and Kawasaki Kisen Kaisha ("K" Line) reporting under 70% . Ken Johnson, director of corporate sales and marketing for Maersk Lines, told the Journal of Commerce in March,

"If we had capacity coming out of our ears, we'd be on 1970-79 1980-89 1970-79 1980-89 our own. [Vessel-sharing agreements] are a compromise, Source: Nippon Yusen Kaisha Research Division,Review and Outlookof Ship­ a second-best alternative." But with ocean-borne traffic in ping Market, December 1990. decline, carriershave little choice. An executive of Sea-Land told the International Intermodal Expo in late May that Sea­ ore , scrap, coal, pulp, paper,grain, fertilizer, and chemicals. Land's vessel-sharing agreement with two other lines (P&O Of the 188.288 million dwt of dry bUlk carrier capacity at the Containers and Nedlloyd) had slashed operationalcosts from beginning of 1990, some 51.41% had been built before 1981. 27% to 12%. Unlike tankers , therewas not a very:dramatic increase in new Carriers have also strivento minimize the time their ships additions in the mid- l97Os. From 1990 to 1992, some 15.5 must sit idle. U.S. railroads, for example, have enjoyed an million dwt are scheduled to be Qompleted, equivalent to explosion in shipments of containers over the past few years, 8.2% of the world's fleet of dry bulk carriers. That is not as carriers chose to completely unload their ships at one port enough to replace the 17.36 million dwt that were completed and distribute the containers by rail, rather than having their before 1971 (see Figure 2). ships slowly work their way from one port to another. How­ Following Paul Vo1cker's high interest rate shock of ever, land and terminal costs now account for about 60% of 1979, which depressed U.S. indu�trial output by 20-30%, the cost of moving cargo. The first attempt to deal with and even more in some sectors, the ¢ost of a year-long charter these costs was made in early June, when Sea-Land, P&O for a bulk carrier fell by over half, to only $5 ,000 a day. By Containers, and Nedlloyd announced they were poolingtheir 1989, charter rates had struggledback up to $13 ,000 aday­ 50,000 truck chassis used to carry containers in the U.S. still well below ship replacement costs. The rapidly deterio­ The world's second-largest container trade route is Asia rating economy in the U.S. caused the rate to fall back to to Europe, where any profit is lost by having to carry five under $10,000 bythe end oflast ye�. However, in mid-July, empty containers for every full one on the return voyage. sometime charter rates of $15,500 a day were being made, The Far Eastern FreightConferen ce, whose member carriers but most charters were beingset ar�und the range of $12,000 account for about half the trade, has struggled to bring rates a day. Jim Cleary, vice president of Rodriguez Sons Co., back up to agreed levels following a full-fledgedrate war last told a conference in June that a new open-hatch vessel �ith year. In April, and again in July, FEFC raised Europe-bound shipboard cranes today costs ove� $36 million, and would rates by $200. Another "rate restoration" is scheduled to be require daily revenue of $21 ,000 !to operate. "The lumber implemented in October. Cargo volumes to Europe are up movement to the East Coast and Gulf will not support this about 10% over last year, but carriers attribute the rise to type of cost," Cleary said. "The �ost of innovations today demand generated by the rebuilding of East Europe. cannot meet with market and comnetitive facts." In theDecember 1990 Review! and Outlook of Shipping Bulk cargo capacity not replaced Market by the Research Division of Nippon Yusen Kaisha, Bulk carriers transport basic commodities, such as iron the largest Japanese shipping line, an analysis of time charter

EIR August 16, 1991 Economics 19 $10.00

FIGURE 3 Panamax vessels no longer receive the rates they did 18 years ago, on Far East-Europe trade routes

U.S. $Ideadweightton Yearly rate, high and low, Far East to Europe

5.00

1.00

Source: NipponYusen Kaisha Research Division, Re­ view and Outlook of Shipping Market, December 1990.

rates for Panamax vessels clearly shows that from 1975 to tonnage." 1979 and again from 1982 to 1986, shipowners were barely Still, NYK's analysts found� "Panamax triptime charter able to cover thedirect expenses (crews' and storesexpens es, rates were around $2 even in tUne of structural recession." insurance premiums, taxes, and other duties) of their vessels, Carriers were able to stay in business because "the crew's to say nothing of operating costs (fuel, port charges, and expenses were suppressed by increasing the proportion of office expenses), and capital costs (interest payments and seafarers fromdeveloping counttiesin the crew complement, recovery of invested capital). According to the NYK analy­ and the repair costs were also ikept low by the protracted sis, the annual average rates for the period of 1982-86, in shipbuilding recession." Reviewing the trendin charterrates dollars per dwt (the carrying capacity of a vessel, in tons of from summer 1990 on, the NYK analysts wrote, "it seems 2,240 pounds), were: that the 'amber' light, if not quitethe 'red' signal, has begun • approx. $4.50: Handy size (around25 ,000dwt) to go on and off." I • approx. $3.00:40, 000dwt class As a result of this, ships are going down. As of May • approx. $2.00:Panamax type (50,000-79,999 dwt) this year, five bulk carriers hadisunk. Speakers at a special • approx . $1.00:Cape size (100,000-149,999 dwt) seminar of the International Association of DryCargo Own­ The NYK Review noted that these rates "are all barely ers held in early June attributed the unusually high rate of sufficientto pay the ship's direct expenses, and if these rates losses to corrosion; improper i loading procedures which continue for a long time, shipowners will become unable to caused cargoes to shift, placing twice as much stress on a pay the interest and refund the principal on their debts, run vessel's structure than it would endure in a storm at sea; and into financial crisis, and go bankrupt one after another" (see the lack of qualified crews. Matitime executives placed the Figure3) . blame on faulty ship design, while insurers blamed charterers According to the NYK Review, "direct ship's expenses for hiring the cheapest vessel available, while completely have always stayed and still stay in a narrow range around ignoring its condition and the qualifications of its crew. $2." While noting that charter rates have sunk below $2 for A major trend is the increasing specialization of ship only brief periods, NYK's analysts explain that rates have designs. For example, Gearbulk Holding, Ltd., a major Nor­ been forced back up because, "at such low charterage, the wegian dry bulk carrier that was 25% bought out by Mitsui owner can no longer afford to pay the direct ship's expenses OSK Lines in May, has ordered three 41,000 dwt "Totally necessary to keep the ship operable, resulting in the progres­ Enclosed Bulk Carriers," which reportedlyresemble aircraft sive disposal of superfluous vessels either by laying up or carriers . These ships are solely designed to carry forest prod­ scrapping and, consequently, in the adjustment of active ucts from Vancouver, Canada to Japan, and will make their

20 Economics EIR August 16, 1991 eastward voyages empty . These vessels are "Totally En­ rates seen so far this year have been about $40,000 a day. closed" to prevent their cargoes from becoming wet while In mid-July, the Journal of Commerce reported that Chris loading. Horrocks, secretary general of the International Chamber of Oil tankers carry one-third of the total tonnage of world Shipping, estimates that shipownerS are earning only about maritime trade . Of the 244.334 million dwt of tankers in the half of the repayment costs of a dew, double-hull super­ world's fleets as of the beginning of 1990, statistics from tanker. Lloyd's Maritime Data Network, used by Nippon Yusen Kaisha's Research Division, show that 76.74% was built Tighter regulation inevitable before 1981. Some 131.799 million dwt, or 53.94%, were In the wake of the Exxon Valdez spill in Alaska's Prince built in the years 1973 to 1977. Scheduled completions of William Sound three years ago, shipping executives dis­ tankers during 1990-92 will replace only 29. 1 million dwt, cerned that new, tighter regulations were inevitable, but are or 11.9% of world capacity. Looked at another way, the 29. 1 warning that the specifications ougqt to apply only to newly million dwt of new tankers scheduled to be completed by built tankers. If the new specifications being discussed by 1992 is not even enough to replace the 32.216 million dwt the International Maritime Organization (lMO) are applied of tankers that were built in the years before 1972. retroactively to existing tankers , many companies would be driven out of business, and wholesale scrapping of older Cutting costs on maintenance vessels would occur. The result would be that "the American While the average merchant ship is constructed to provide public will have to wear more clothes in winter and walk to about 20 years of service if adequately maintained, the work," one shipowner told the Jourllal of Commerce in mid­ squeeze on carriers ' profits has led to severe cutbacks in July. proper maintenance. All the world's merchant ships are re­ Under the provisions of the U ,So Oil Pollution Act of quired to undergo thorough inspections every five years . 1990, which the IMO is considering adopting as an interna­ (Japanese-flagged vessels are required to undergo inspec­ tional standard, only older tankers built before the 1990s will tions every four years. to 19) Nippon Yusen Kaisha' s Review be exempt from the requirement for double hulls, and even of World Shipping noted, "Trends which became notable they must be replaced by 2015. Brent Dibner, of Temple, since about 1988 are the increase in tankers undergoing their Barker and Sloane, points out that these requirements will third regular inspections (at the age of 15) and the great not be a factor for "many, many ye�s," and notes that there differences in repair cost from vessel to vessel. . . . The wide is a difference of opinion over the serviceabilityof very large differences in repair cost mean that they were repaired with crude carriers (VLCC), with one IJ¥lj or oil company having different degrees of thoroughness when they went through just bought several VLCCs built in the 1970s or early 1980s. their last regular inspections (in 1983 or 1984). At the time "They obviously believe that they

EIR August 16, 1991 Economics 21 de Gortari has further indebted Mexico and the candidate's charge that the government's embrace of theInternational Monetary Fund's policieshas destroyed the nation's produc­ tive capabilities. The daily reported Tirado's statement that Mexicans do not "we were told that the foreign debt would be reduced by 30%, down to $7S or $80 billion. The fact is that the current want 'free trade' debt is more than $100billion ....We were told that there would be help for agriculture to produce more efficiently. . . . The fact is that the elimination of guaranteed prices for by Peter Rush producers has accompanied the constant increase in the prices of inputs. " Refuting the myth that "Mexicans want a free trade agree­ In the same article, PARM State Deputy AlbertoVizc arra ment with the United States," opposition candidate Jesus is quoted saying that"what no one wants to say is thatGeorge Tirado Valdez, running for municipal president of Cajeme, Bush wants a dictatorship in Mexico to implement the geno­ the municipality in which Ciudad Obreg6n is located, in the cide already imposed on Iraq and in Panama. He wants a state of Sonora, has an excellent chance to win, if there isn't dictatorship like that already existing in the United States, widespread vote fraud. Tirado has created the possibility to where political dissidents, such as Lyndon H. LaRouche and win against the entrenched, corruptruling PRJ party appara­ his collaborators, are jailed, alongwith black civil rights and tus by successfully mobilizing the "forgotten masses" of religious leaders , who also suffer policebrutal ity. " Mexico--the 70% or more of the electorate who are so disaf­ Other opposition candidates are also shakingup thepolit­ fected with the political system that they have stopped voting ical scene in northern Mexico. Patricio Estevez Nenninger, at all. a federal deputy from the PARM, is running for governor Tirado is backed by a coalition of the Party of the Authen­ of Sonora, one of Mexico's tichest-but still quite poor­ tic Mexican Revolution (PARM) and the lbero-American states, bordering on Arizona and California. Estevez has Solidarity Movement (MSI), both of which oppose the sell­ defined the issues in his rac¢ against PRJ favorite Manlio out of Mexican sovereignty and prospects for economic Fabio Beltrones, by attacking the inhuman working and liv­ growth represented by the North American Free Trade ing conditions of workers in the maquiladora factories that Agreement (NAFTA) being pushed by Presidents George have proliferated along Mexico's northern border. The ma­ Bush and Carlos Salinas de Gortari . Under the election slo­ quiladoras are plants that import parts from the United gan "Tirado is the good candidate," Tirado has gone into the States, perform final assembly in Mexico paying very low slums and barrios that ring Ciudad Obreg6n, and has found wages, and then ship the total output back to the U.S.­ a ready response. The PARM-MSI coalition has also fielded benefiting Mexican workers hardly at all, and stealing jobs a number of other candidates who are running for state and from American workers . federal positions, opposing the PRJ's neo-liberal economic Cecilia Soto Gonzalez (see interview with her below), a policies with a program for the industrialization and develop­ deputy in the Sonora state legislature who is running for ment of the nation. federal deputy from the third congressional district, has On July 31, for example, Tirado held an open meeting, stirred up a storm by her expose of one particularmaquila­ which in itself is significant, given that the candidates oppos­ dora, Tetakawi, located in Empalme, Sonora. Tetakawi is ing him have been reluctant to hold even a single such meet­ an auto parts plant at which she worked, incognito, for a ing, for fear of failure . In the words of the local paper Diario week, before revealing to the, press the real situation in the del Yaqui, the event "had the full attendance of the citizens plant. In a packed press conference on June 13, Soto Gonza­ who poured out from the barrios where Dr. Tirado has been lez revealed that wages at the plant were about as low as conducting his visits to homes and workplaces." It quoted any in Mexico--SO¢ an hour, low even compared to other Dr. Tirado saying, "This rally once again confirms that the maquiladoras. overall attitude of the people is a total rej ection of the official Surrounded by 14- and IS-year-old girls with whom she [PRJ] candidates and a strong commitment to defend partici­ had worked in the plant, Soto revealed that as a condition of pation in the elections and defend the vote ." He added, "I employment, she had to sign up with the "company" union, fiercelyoppose the free trade treaty , which is only producing and sign an undated resignati(l>n form, such that if the plant work for slaves with miserable wages of 13,000pesos a day" ever wanted to get rid of her for any reason, the management ($4.30 for 9-10 hours). could do so on the spot, without having to pay severance or any other benefits. The interview which follows is a report Opposition to dictatorship from Soto on what she encountered, and of the successful The Sonora state daily ElImparcial also favorably report­ strike which workers at the plant held to obtain better wages ed on Tirado's campaign, detailing his attacks on how Salinas and working conditions.

22 Economics EIR August 16, 1991 one company which offers one wage for all of Hermosillo's Interview: Cecilia Soto Gonzcilez maquiladoras. . . .

EIR: How long did the strike last? Soto: It lasted 10 days, but they stqpped working every day for four hours ....Bef ore the strike began, the company decided to increase wages "on their own initiative," so terri­ fiedwere they that a precedent mig�t be set, and not wanting to have to deal with the union. But the workers replied, "We won't accept this ....We want tQ have a union," so they 'The maquiladora went ahead, in order to get more bebefits. Incentives are so poor, that instead of improving produc­ system is suicidal' tion, they sabotage it. For example, if you have "perfect attendance," you don't arrive late, don't get sick, etc. for a Cecilia Soto Gonzalez is a candidatefr om the Authentic Par­ month, they give you a 15,000 peso bonus for the month. tyof the Mexican Revolution (PARM) fo rfe deral deputyfrom The problem is that for women with children, it's hard not the third congressional district. Mrs . Soto was interviewed to miss work for a whole month. � So the workers got the byHugo Lopez Ochoa in Sonora on July 29, about her experi­ company to make this a weekly, rather than a monthlybonus. ence working "under cover" at the Tetakawi maquiladora Moreover, the company increased the wage from 11,800 fo ra week. pesos daily to 18,000-19,000 pesos, although they demand more production in exchange for that. EIR: Tell me about the workers' fight for better wages and conditions at the Empalme maquiladora, for example, the EIR: What did you conclude from all this? fact that hundreds of workers surrounded the CTM leader's Soto: The important thing was that the union was revived. house and forced him to call a strike. Within eight months, the workerS can alter their contract Soto: When I held my press conference after working for when it comes up for renewal. Another important thing is a week at the maquiladora, I reported that I hadn't seen that the company committed itself not to force workers to mistreatment of the workers-at least, I didn't see people sign a resignation letter when they are hired, and they will getting beaten, or anything like that. But then a tall young also demand a birth certificate, so as not to hire under-aged man who was at the press conference interrupted me and workers. By the way, in a radio interview I did in Guaymas on said, "I have seen that." He was Sergio Villa, the one who this issue, I said I would send copies of the papal encyclicals organized everything. He asked for a wage increase, and the Rerum Novarum and Centesimus At/nusto the owner of Teta­ company threw him out arid sent him to jail. When his friends kawi, Luis Felipe SeIdner Tonellal so thathe can deal with saw that he wasn't coming back, they left, one by one, and his workers in a more Christian manner. held a four-hour strike. The union had never acted ....The I also noticed thatthe president of the Hermosillo maqui­ incredible thing was that theydidn 't even know whetherwhat ladoras, ArmandoLugo , told me is Guaymas that wages are they were doing was really a strike. The work stoppage finally low because there is no competiti�n, and that there's not a lasted 12 hours. The company didn't let him back into the wage problem, but it's just that the workers don't want to plant, and told other workers to stay out. . . . work. I said to myself, "They're dying of hunger and don't No one went to work, and they all went out to march- want to work? They must be Martians, so I'm going to look 1,000 of them-to surround the house of the CTM leader, to into this. " demand that he call a strike. The labor leader, Juan Salas de la Paz, decided to do that, rather than lose his credibility. He EIR: What else can you say about your work in the maqui­ had been the CTM leader in Empalme for three years; not ladora? only had he done nothing, but he looked the other way and Soto: I saw a real sense of dignity. There are many under­ allowed all sorts of irregularities.. .. aged workers, working because they have to; but they don't let themselves be so worndown by accepting non-existent EIR: Why are they called the Tetakawi maquiladoras? Are wage incentives. Sure, there's a certain cynicism that devel­ there several of them? ops. But the point is thatthe maquiladora strategyis suicidal Soto: Yes, theymainly belong to National Industriesof Ala­ from the standpoint of real productivity. Where I worked, bama. The other one is Wilson, a clothing maquiladora. every day they hired 50 to 100new workers; it was a revolv­ Tetakawiis the Mexican firmwhich services themaquilador­ ing door. They all have job applicationsat three other places, as. One of them hires the workers , so the gringos won't have to get out as soon as they can. Y;ou'll never achieve labor any labor problems. They hire for all the others ....It 's productivity thatwa y.

EIR August 16, 1991 Economics 23 ($1 1,000) daily for one team. The police speak of about half a million deutschemarks daily in cash income invested in the drug trade . The Yugoslav gangs get a fixed salary, while the cash flow is taken by the local drug barons. Illegal gambling in Frankfurt yields an annual turnover of DM 300 million Frankfurt emerges as ($1 .7 million), with the gigantic profit from the heroin, co­ caine, and arms trade not included. Yugoslavs have taken over the heroin business, which German dope capital they run for the city's mafia, sometimes called the "Israeli" mafia. This is run by the Beker brothers, who have run the by Vo lker Hassmann red light district since the mid-sixties. The Bekers later moved into real estate speculation and, together with real A series of bloody shootouts between rival gangs in Frank­ estate czar "Joschi" Buchmann, are involved in various cor­ furt-on-Main have confirmed recent warningsby Chancellor rupt deals with local politicians. Buchmann, with connec­ Helmut Kohl against the growing power of organized crime tions to the organized crime networks of the late Meyer Lan­ in Germany. In the last cabinet meeting before the summer sky networks, is believed to be the "godfather" of organized recess on July 24, Kohl reacted to a dramatic escalation of crime in Frankfurt. the drug p�blem in the country, which saw a record death toll among drug addicts in the first half of 1991. In the east Liberal city fathers do nothing German states, a full-fledged drug trade network is being The gang warfare has alarmed the public, while the liber­ established and a large amount of laundered drug money is als are playing down the problem. Social Democratic Mayor flowingeastward in the form of regular "investments ." Kohl Andreas von Schoeler, a passiclmateadvocate of the decrimi­ cited a study by Interpol that counts an annual turnover of nalization of drugs since his days in the liberal Free Demo­ $500billion in the global narcotics trade . cratic Party (FOP), did not even mention organized crime in Kohl called the drug cartels "a challenge to the state and his inaugural speech in May, and denies that Frankfurt is a society," and said that the dimensions of the world dope "crime capital." Not only has he, withthe Social Democrats, tradeare such that extraordinary measures,such as a ban on prevented the closing of the red light district; he now wants money-laundering and new options for drug enforcement, to open a "tolerance zone" for prostitution in the northern had to be considered. part of the railroad station district. Under heavy pressure, he Kohl voiced concernabout the recent, massive inflowof finallyordered a "review" of the permits of bars and brothels, dope from areas east of the German-Polish border, and and agreed to force them to close at 2 a.m. instead of 4 a.m., pointedout that synthetic drugs are producedin large quanti­ calling this a "decisive blow" againstcrime. ties in Poland, naturaldrugs in the Soviet Union. The liberals in the FOP on ,the national level have sabo­ taged the federal bill against ot1ganized crime so effectively, Gang warfare that Frankfurt police spokesmen have criticized it sharply. In recent years, Frankfurt has become the nation's capital The chief of police regretted ··unrealistic concepts" which of crime. Drugs, prostitution, illegal gambling, money laun­ are not sufficient "if we really are to fightorganized crime." dering-all are organized within a tight, mafia-style struc­ Except for the fact that organized crime is finallyrealized as ture, headed by mobsters and real estateczars linked to inter­ a major challenge, there is not much to the bill. The penetra­ national organized crime. Now, a violent gang warfare has tion of the mafiaby undercover agents is seriouslyhampet1ed , erupted. On July 18, shots were firedfrom a passing car into as these agents are not allowed to place wiretaps on apart­ a group of Yugoslav gamblers playing the "shell game" in ments (where all deals are negotiated) and have no effective front of a bar in the red light district, leaving two dead and protection of their identity if they are called to court as wit­ four injured. Ten days later, there was a shoot-out between nesses. "The drug barons can be happy," editorialized the a Turkish drug dealer and Yugoslav gangsters. On July 22, daily Stuttgarter Nachrichten. I warning "that within years, a drug dealer opened fire against a police officer during a far more drastic measures than discussed today, will have to routine check; two bullets hit the head of the officer, who has be taken against organized crime. But then it will be too been in a coma ever since. late." According to the city's Attorney General, this is only the No matter what Schoeler says, Frankfurt is losing its tip of the iceberg. The power struggle among the gangs is reputation, causing alarm among industry and local politi­ escalating, with shootings every two or three days-four in cians. An internalstudy by an economic newsletter has called the last week of July. The Yugoslav gangs are only the foot it "the German Chicago." In the debate over the future seat soldiers of the Frankfurt mafia. There are seven to ten groups of the planned European Central Bank, Frankfurt is now running the "shell game," which yields up to DM 20,000 rated fourth, behind Luxembourg, Brussels, and London.

24 Economics EIR August 16, 1991 Report from Bonn by RainerApel

Germans look to Ukraine's potential policymakers in Moscow and Kiev is Focusing onjarming, industry, and transport, Ukraine has good building an entirely new railway grid based on the European gauge-width, op tions, ifthe political problems can be resolved. parallel to the main routes that exist today. This would offer the perspec­ tive of eliminating the chronic back­ log at central U.S.S.R. border transit Ukrainian politicians have toured the Germans' view: stations to Europe like Brest-Litovsk, Germany often in the past months, to The 1991-2000 railway develop­ Przemysl, and Grodno, where trains explore the potentialfor economic co­ ment plan of the Soviet Ministry of have to be adjusted to the changing operation. Such cooperation is possi­ Transportation, which recommends a gauges. ble and desirable, also fromthe stand­ crash program for investments, lists In this context, a study recently point of the interest of the central the rail route Moscow-Kharkov-Rost­ done by the German Railway Con­ Soviet administration and the Russian ov-Baku among those that should be sulting firm in Frankfurt-on-Main for Federation government. given priority investments because of theGerman governmentrecommends The Germans usually argue that their importance for the transport of that the Soviet! state railways would economic assistance can be efficient agricultural and industrialgoods . This gain a far higher efficiency if they in­ only on thecondition thatrelations be­ includes the construction of new "par­ troduced the concept of the "rolling tween Moscow and the individual re­ allel tracks ." highway." This is valid also for rail publics are clearly defined and re­ Kharkov, a central rail junction in transport among Moscow, Kiev, spected by the Kremlin. Germany is Ukraine, is the biggest for commodity Kharkov, and the Black Sea ports, un­ not in favor of the "warof laws" that transport in the southern Soviet der the new union treaty. is still raging between Moscow and Union. It can be reached fromthe two Using this · method, which com­ Ukraine. Black Sea ports of southwestern bines rail and road transport, anentire Expectations are expressed in Ukraine in Odessa and Chersson, and truck convoy or its equivalent could Germany that thenew "9 plus 1" union from Kiev. Kharkov is well posi­ travel 1-3,000 kilometers in 1-3 days treaty, unfavorable as it may be to the tioned for the distribution of commod­ at the most, with virtually no use of cause of fullUkrainian independence, ities and prefabricated products be­ costly gasoline. will reintroduce some principles of tween the mining and industrial The truckswould be landed, simi­ stability, calculability, and confi­ regions of Donbass and Krivoi Rog. lar to roll-onlroll-off methods used at dence into Moscow-Kiev economic From the latter, a Russian gauge rail seaports, at well-selected railway piv­ relations. route that needs no change of gauge­ ots deep in the interior, from where Ukraine is well-positioned for widths, as otherwise required at the they could trayel on to their final dis­ economic recovery because of its fer­ borders to theWest , leads to theheavy tribution points 100-250 kilometers tile soil and productive farming, its industrial region of eastern Slovakia away. Given the huge transportation developedrailroad and port structure, (Kosice), in the neighboring Czech distances, often several thousandkilo­ and its strong industry. and Slovak Federated Republic. meters, that are typical for the Soviet Ukrainian development will The importance of improving the Union today, the use of such "small­ work, however, only on the premise functioning of the Kharkov junction er" distribution diameters would rep­ that the neighboring republic of Rus­ has repeatedly been pointed out by resent a giant stepforward in transport sia managesto establish a high degree German experts in rail transport. density. of independence from the Kremlin On the basis of the existing, Rus­ Especially in the transport chain and reorganize its own economy so sian-gauge railroad system, invest­ between theBlack Sea ports, the main that it works. An economically unsta­ ment in modernization projects can railroad track$, and the industries in ble Russia alongside a flourishing create an efficient rail transport grid. the interior, a "rolling highway" grid Ukraine would createa dangerous im­ Ukraine is the central transit region would add immensely to the produc­ balance. to and from the big Black Sea ports, tivity of the future economies of the Assuming that the new union trea­ which areall relatively well connected "9 plus 1" union-the western parts ty works, the following approach may to the interior of the country . of Russia and Ukraine being vital mo­ be best for Ukrainian development, in But what should be considered by tors of rapid economic recovery.

EIR August 16, 1991 Economics 25 Bankleng by John Hoefle

Is Citicorp the next merger candidate? properties � being renegotiated se­ America's largest bank is bankrupt, but is there anyone around verely downward" as vacancy rates climb "on$ously" in "the depressed who is big enough to buy it? New York tnarket. " With the nation in a deepeningde­ pression and the real estate bubble having popped, things will only get C iticorp is "technically insolvent" I and Tier II capital is 8.16%, all of worse. Th¢ banks and thrifts have and "struggling to survive," House which is a matter of public record." hundredsof billions of dollarsin over­ Energy and Commerce Committee A plethora of banking analysts valued real estate andreal estate loans chairman John Dingell (D-Mich.) chimed in to defend Citicorp's honor. on their books , and the Resolution stated at a hearing of his committee's "Technically, if you marked Citi­ Trust Corp. has another $150 billion Telecommunications and Finance corp'sbalance sheet to market, some­ or more of assets to unload. Under Subcommittee on July 31. one might be able to have the opinion these conditions, Citicorp and the oth­ OnAug. 2,two days afterDingell 's that they're insolvent," admitted er big U . S. banksare bankrupt several bombshell, Standard and Poor's Tucker Anthony analyst Gerard Cas­ times over. dropped their Citicorp rating ''tonega­ sidy. ("Marking to market" means Citicoql's problems are not limit­ tive from stable to reflect concerns counting assets at currentmarket val­ ed to real estate, either. London bank­ about asset quality. " In more ordinary ue, as opposed to speculative "book" ing sourcestold EIR that Citicorpnow times, were a senior congressman to value.) Cassidy added that marking to also faces a:major threat from the cri­ publicly statethat the largestbank in the market "doesn't fall under generally sis of the U.S. insurance sector in the United States was insolvent, and S&P accepted accounting principles," and wake of the (:ollapseof Mutual Benefit to nod, the resultwould bepandemoni­ does not take into account the future Life Insuranceof New Jersey in July. um on the markets. Bankers and the value of the banks' loans. Citicorp is the largest U.S. bank press would accuse the congressman of Federal Deposit Insurance Corp. dealing in what are known as "asset­ everything from incompetence to beat­ chairman William Seidman stated, "I backed" sequrities. In this particular ing his dog, and the FBI would investi­ don't believe it is insolvent under any financial iDllovation, the bank takes a gate him and S&P. standard. " pile of its real estate loans or credit But these are not normal times, Standard and Poors have long card loans and "bundles" them into a and the lack of outcry gives credence worked as private raters for the BIS new bond which it sells to a pension to EIR reportsthat the Federal Reserve central banks. "The major concern fund or othe.. large invest or. It guaran­ is running an operation for the Bank centers on the domestic real estate tees the revenue of the mortgage or

for InternationalSettlements (BIS) , to portfolio," S&P said. "This portfolio credit cardsI contained therein by an put America's biggest banks under has experienced a slowdown in addi­ added "enh�cement," in the form of quiet Fed receivership in an insane at­ tion to loans on non-performing sta­ an insurance policy insuring against tempt to stop an uncontrolled crash. tus. However, given the deteriorating default on theunderlying mortgage. The BIS says the number of banks conditions in real estate markets, par­ Mutual Benefit and other compa­ must be reduced, and merger is one ticularly in California where Citicorp nies down�ded by Moody's have quick answer. Did the BIS and Fed has significantexposure, there is a po­ made a hugq business in such "credit make a shotgun wedding of Chemical tential for non-performers to reach enhancement" underwriting. As this and Manufacturers Hanover, and Sov­ substantially higher levels, which now is called into doubt, it will hit ran and NCNB? Is Citibank being could prompt a rating downgrade. Citicorp and stymie their major tech­ softened up for a megamerger, and . . . Reserves appear low for the cur­ nique for meeting the 1992 Basel

with whom? rent level of problem assets." BIS's bank I capital adequacy stan­ Citicorp, of course, quickly de­ Citicorp is also in trouble with its dards. nied Dingell' s statement. "Congress­ New York real estate. "New York A Germ$} source told EIR , "All man Dingell' s statement is irresponsi­ City, like other areas, has plunged indications I have are that the U.S. ble and untrue," the company into one of the worst real estate slumps authorities are in a state of near panic, insisted. "We have $18 billion of Tier in history," the Wall Street Journal that the entire system is on the verge I and Tier IT capital. Our ratio of Tier admitted. "Rents on many New York of being illiquid."

26 Economics EIR August 16, 1991 Dateline Mexico by Carlos Cota Meza

NAFTA opponents persecuted which companies have suddenly been A new prosecutorial machine will be turned against critics of the found guilty of contaminating. Mitsuhara Nakata, representative Bush-Salinasfree trade pact. of the Japanese; assembly plants along the northern border of Mexico, re­ cently noted th't "there is some uncer­ tainty within the maquiladora indus­ Attorney General Ignacio Morales intention of his office, when he de­ try ," and expressed his concern that Lechuga and Finance Secretary Pedro clared that "there will be no pardon "my nation's 4apital not be affected Aspe Annella announced in mid-July for evaders ," and that "the punitive by the signing Of the treaty." thecreation of a new Special Prosecu­ structures, like the administrative," Regarding NAFTA's "rules ofori­ tor's Office for Tax Crimes. "Every will be increasingly severe. gin," the Uni�d States' position is businessman who dares to open his Thus, the firstaction of the special that "no fourth nation shall benefit mouth against NAFTA is going to be prosecutor's officewas to trainits per­ from the trilateral agreement." The hit by the Treasury ," a Mexican busi­ sonnel ("tax police") in "techniques president of Germany's Mercedes­ nessman told EIR , in reference to the used by swindlers," "company ac­ Benz company, Andreas Sperl, has al­ North American Free Trade Agree­ counting measures," "detection of ready warned Mexico that trade war ment that is currently under negotia­ false documents," and other means has de facto \>den declared, and stated tion among Mexico, the United used "to elude or simulate compliance that "the amblitious investment pro­ States, and Canada. with the law. " grams [we] have for Mexico could be ''The new prosecutor's officeis an Not accidentally, the new tax po­ revised if the trilateral agreement es­ import of tax laws from the United lice will go into operation just as the tablishes very istrict rules of origin­ States," said another businessman. formal trilateral trade negotiations that is, ifMeXjico remains interesting "Everyone is going to be suspectedof among Mexico, the U.S., and Canada for European IlDd Japanese investors being like Al Capone, until we prove get under way. The Salinas govern­ once the treaty is signed." The $2 bil­ otherwise. " ment is clearly determined to silence lion Merced� investment package The special prosecutor's office, opposition to NAFTA among indus­ was one of the few shining achieve­ together with a new U.S. -Mexico en­ trialists and farmers , by using the ments of President Salinas's earlyJuly vironmental border plan and NAF­ threat of fiscal scrutiny which might trip to Europe ! TA's "rules of origin," all form part not merely send them into bankrupt­ With Mexico's new fiscal and eco­ of a formidable political and adminis­ cy, but now to jail as well. logical policits and trade rules, the trative persecution apparatus, to be On Aug. 1, representatives of Mexican and U.S. governments have deployed by the Salinas and Bush Mexico's Urban Development and created an administrative structure governments against opponents to Ecology Department and the U. S. En­ through which all "undesirables" may NAFTA withinthe Mexican business vironmental Protection Agency be expelled �om their "free trade" sector. signed a cross-border environmental plans. The Ja�anese and Europeans fit In announcing the new prosecu­ plan designed, among other things, to the category of "undesirables" be­ tor's office, Attorney General Mo­ oversee border movements of "dan­ cause theyar� very competitive. They rales Lechuga denied that the new gerous waste products," to control might be dealt with through accusa­ agency meant that the federal govern­ chemical emergencies, and to police tions of beiQg "highly contaminat­ ment had begun "a policyof fiscal ter­ the contaminating practices of compa­ ing." Mexic� businessmen, on the rorism." Rather, according to Pedro nies on both sides of the border. other hand, are considered "undesir­ Aspe, the office "will establish a In announcing the new plan, Mex­ ables" becauSe they are not compet- ' mechanism to provide for greater ican Secretary Patricio Chirinos de­ itive. flexibility of action against tax fraud, clared that "highly contaminating in­ By sweeping the Mexican econo­ through both increased and improved dustries have been found" in the so­ my free of such "undesirables," the intelligence. " called maquiladora belt. Since this is free trade fanatics on both sides of the However, it was Roberto Hoyo, hardly news to anyone who cares to border hope tjoclear the way for con­ the special prosecutor designated to enter the maquiladora zone, it should verting the eljltire nation into a slave­ the new post, who made clear the real prove very interesting to note just labor camp, I'fUlquiladora-style.

ElK August 16, 1991 Economics 27 BusinessBrief s

Economic Theory Heavy Industries, Kawasaki Heavy Indus­ Free Market tries , and Fuji Heavy Industries. The govern­ Journal attacks World ment is also funding half the cost of the second IMF, Sachs wiping out phase of the YS-X program. When the design Bank privatization is fixed, one of the companies will bechosen Czechoslovak industry to produce the plane. TheFarEastEcon omicReview, in aneditorial AviationWeek commented: "In addition to TheInternational Monetary Fund andFinance by Anthony Rowley, has attacked the World lowering risk, the coalition approach elimi­ Minister Vaclav Klaus's monetarist policies, Bank'snew privatization drive. natesduplicate research, engineering, and oth­ modeledon theadvice of HarvardProf. Jeffrey Making an ironic attack on the Bank's er costs ....Small manufacturers benefit as Sachs, are cQllapsing the industry of Czecho­ claims to divine rights, Rowley says thatwe they are less likely to be squeezed out by the slovakia. According to statistics released in now have a" 'market friendly' orthodoxy is­ giantconglomerates . " TheJapanesehave stat­ July by the government in Prague, the main suing excathedra fromthe WorldBank. Such ed that the most promising marketfor the YS­ effect of the treemarket mania is to wipe out beliefs are sweeping Eastern Europe and the X is NorthAmeric a. industry. ThirdWorld .. ..Its liturgy is not inspiring. In the firstsix months of 1991 , industrial The realkey to development, accordingto the production went down 17% and consumer latestrevealed wisdom in that bible of develop­ Soviet Union prices went up 50%. Unemployment went ment, the World Bank's WorldDevelopment up 5%, but inSlovakiait rosetwo times faster Report, is the 'interaction between govern­ Fuel and energy crisis than in the Czech region. ment andmarkets .' " The governmentis trying to postponethe Referencing the role of fonner British added to food crisis social explosion which is expected to come Prime Minister Margaret Thatcher and "her in the second half of the year when Klaus's ideological soulmate, Ronald Reagan," in the "Fuel and Energy Crisis Imminent in theCoun­ monetarist policywill simply stop wage pay­ creation of this dogma, he points out that "the try,"was the headline of an article in the July ments in most of the large state companies. marketdoctrin e's narrow approach to human 18 Sovetskaya Rossiyawhich catalogued cur­ Data given out by the ForeignTrade Ministry development has failed to roll back poverty . rentenergy problems in the Soviet Union. The forecast a 35% increase in exports to the in­ . . . Thereis no mention of themoral, ethical article singled out for criticism the desire of dustrialized nations , but the ministry admits oreven culturalvalues which Christian, Mus­ each republic to manage its own energy grid . that it does not know if this increase is due to lim, and other religiousleaders would like to 'Theeconomic base sectors providing people the devaluation of the currency or a drop in see infonn the development debate. It is pre­ with heat, light, automobile fuel, and rawma­ prices. sumptuous of the World Bank to talk of a new terialsfor the chemicaland many other sectors 'consensus,' "except among themselves. of industry, have ended up either completely or partially rudderless." An entity called the SiberianOil andGas Complex, which had pro­ Development vided reserve fuel output for the country, can Aerospace no longer do so. 'Greenhouse' politics Thearticle warns: "Mankind has not yet called 'immoral' Japanese consortiumto learnthow to do without fueland electric pow­ er," and criticizes local governing bodies producecommercial planes which have killed off powerplant pro jects over Sir William Mitchell, a leading scientist at the past decade throughout the country. 'The Wadharn CoUege in Oxford, England, at­ The Japanese Ministry of International Trade negative attitude of the so-called 'public at tacked the idea of "sustainable development" and Industry (MITI) is funding a feasibility large' towardelectric power engineering ... as ensuring poverty in the Third World, and study by Japanese aircraft manufacturers ex­ hasled to a halt in planning and constructionat attacked "greenhouse effect" politics as im­ pectedto leadby the year 2000to the produc­ 64power stations with a total capacityof about moral, in anaIticle in the latest issue of Physics tionof a 75-100passenger airplane called the 160million kilowatts," giving the U.S.S.R. a World, the July 31 London Daily Telegraph YS-X. It will be a competitor to the Airbus reservepower capacity of only 4-5%. reported. consortium, and the major U.S. plane manu­ "Let'shope that what shookthe U.S. back Mitchell arguedthat "sustainable develop­ facturer,Boeing. in 1965 does not happen here during the com­ ment" is "IIDrally unacceptable" because According to Aviation Week, MITI has ing winter," SovetskayaRossiya warnsIt . con­ world energy. demand will have to roughly fundedat least 60%ofa two-year, $2.2 million cludes with anargument for centralizedman­ double if the world's 5 billion people areto be fe asibilitysurvey . Theremaining money carne agement of the electrical power grid, even broughtout of poverty. Sustainable develop­ froma non-profitcoalition of aircraftand com­ though it contradicts the principle of "freeen­ ment, he charged, "simply means the status ponent manufacturers , including Mitsubishi terprise ." quo of half the world's population living in

28 Economics EIR August 16, 1991 BriEdly

• A MINING pact on gold was signed between the Soviet Union and South Africaon July 16 in Johannes­ burg. The two nations produce al­ most half the world's gold. Radio poverty ." The only morally acceptable basis beenpretty tough; there areonly some 36 Ma­ Moscow quoted Naas Steenkamp, for action, is to bring the 2.5 billion up to the lawians currently working in our mining in­ president of the Chamberof Mines in standard of living of the developed world. dustry," he said. South AfriclII, saying that the agree­ Even withefficiency measures, this would in­ Ellis Smith, thechairmanoftheFederation ment could ltad to exchange of tech­ creasethe gasesthat cause the greenhouse ef­ ofMasterPrinters in Zimbabwe, told itsannual nology , eq'l'ipment, and mining fect. "We shalltheref ore, in my view, have to recently, thatmore apprentices must meeting methods. learn to livewith it." be recruited to replace those who are dying Mitchell argued thatpriorities for world from AIDS. "At present, AIDS-infected pe0- • AN AS$OCIATION for ec0- development should bedevoted to adapting to ple represent4% of the population. This per­ nomic cooperation in northeast Asia a warmer climate rather than preventing it. centage is going toincrease to perhaps 25% or has beenfounded in Beijing between "Thismeans developing new us­ even 30% by the year 2000," Smith said. He agricultures, China, Japan, North Korea, South unusedland, andeven encouraging means noted that the failure to train more people ing Korea, the U.S.S.R., and Mongolia. of population migration," he said. would lead to a rapidescalation of wages for a While not a trade pact, the associa­ Theprof essordismissed computer models shrinking poolskilled of workers.The number tion will "promoteeconomic cooper­ offuture climatebehavior as aguide to policy of AIDScases in Zimbabwehas risen from 119 ation" in the region. because"scientific knowledge is currently in­ in 1987 to almost 6,000 at theend of 1990. What is essential is long-term cli­ In Uganda, where 1.3 million of the total adequate." • PAKISTAN and Sudan held mateh. researc Increased understanding will population of around 17 million arenow HIV­ meetings td consolidate economic come from laboratory studies, satellite positive andthe number of AIDS cases is dou­ only and technol�gy ties July 20-21, ac­ monitoring, and improvement of computer bling every six months, households are in­ cording to Iflamabad Radio. Work­ models,he 'said. creasingly shortof farmlabor and have totake ing groups ",ere set up for trade, in­ childrenout of school or abandonmore labor­ dustrialcooperati on, and agriculture. intensive crops, South Magazine reported. • MCDO�NELL Douglas, the AIDS U.S.'s number one defense contrac­ tor, asked �ePentagon last January Africa facing zero to advance ,it $1 billion against its defense contracts to to stem cash Infrastructure try population growth ftow problems, Aviation Week re­ ported July �9. In a letter to the De­ Industryand actuarial experts are increasingly Ministerurges Berlinto fense Department, the firmstated that alarmedby theprospect that AIDSwill reduce Moscow market conditions had made "bor­ many Africannations to arate of zeropopula­ high-speedrailroad rowing from traditional sources very tion growth, with devastating effects on in­ difficult." dustry. There should be ahigh-speed rail connection South Africa's population growth will from Berlin toWarsaw and Moscow, recom­ • THE MOON-MARS mission have ceasedby thetum of thecentury , predicts mended Wilhelm Knittel, the assistant trans­ should invQlve both a manned pro- TheoHartwig,Chief Actuaryof theOld Mutu­ portationminister of Germany, at aneast-west gram and �veloping the automation alInsurance Group and oneof SouthAfrica's transportpanel in Sofia, Bulgaria on July 31. and robotiq technology to compli­ leading statisticians. Hartwig has concluded Knittelsaidthatthe routeal:ready projected ment humah exploration, the Office thatby 1995, about 10% of theworlting popu­ fromHanovertoBerlin,on which construction of Technolbgy Assessment recom­

lation will be infected with the AIDS virus , work would begin this autumn, should be ex­ mended in I a study, "Exploring the 30,000 will be ill, and 25,000 will die that tended to thecapitals of Polandand the Soviet Moon and lrfars," releasedAug. 1. year. By 1998, there will be 40% infected, Union tolink them up withthe West European 175,000 will be ill, and 130,000 will die. high-speed railroad grid. • THE CARRIZO Plaines solar AIDS is a threat tothe mining industry in Knittel also emphasizedthe importanceof power plant in California is shutting termsof output,profits, andlabor, Johann Lie­ continent-wide waterway transport, which is down beca.. se it cannot competewith benberg, a seniorgeneral mana geroftheSouth expected to increase significantly after the otherform" of energy. Atlantic Rich­ African Chamber of Mines, said in an inter­ opening of the Rhine-Main-Danube Canal in field Co. originally built the plant in view withSouth Magazine. He notedthat pre­ late 1992. The canal will create a continuous the early 1980s based on the estimate employment testing for the HIV virus has waterwayfor container freightand othercargo that itwou ld be economical when oil meant thatmost Malawians are already turned over the distanceof 3 ,500kilometers between went to $60per barrel. away . "Our experience with Malawians has the North Sea and the Black Sea. I

EIR August 16, 1991 Economics 29 �ITmStrategic Studies

Beyond Marx and Smith: the 'Productive lliangle'

by Gabriele Liebig

At an EIR seminar in Copenhagen, on June 13, Gabriele generation of safe nuclear power plants, massively upgraded Liebig, editor-in-chief of the German weekly Neue Solidari­ R&D and education efforts , and a new, unconventional tat, discussed Lyndon LaRouche's concept of the Productive method of financing those infra.structural projects by state­ Triangle of European development, showing how the moves generated, non-inflationary credits that are granted exclu­ taken so fa r in this direction by European governments are sively for productive investments. totally inadequate. Since her talk, this has become increas­ The successfulimplementation of the "Productive Trian­ ingly clear in the case of Yugoslavia, where the crisis has gle" approach is called in the Berlin Declaration "the only reached the threshold of all-out war, due to the lack of a way to rebuild the economies i� eastern Europe and at the program to solve the economic problems of the region. We same time to pave the way in the Soviet Union for a peaceful publish Mrs. Liebig's presentation here, including some of transition from totalitarianism to a free society, without trig­ the graphics she used. For more details on the Berlin confer­ gering civil war." Such "an economic miracle in Europe," ence which she mentions, see EIR , April 19, 1991, and our the declaration finally states, "is the only lever to pull the new Special Report, "Can Europe Stop the World De­ world economy out of the depr�ssion and to finally realize pression?" the development of all peoples, which' has been overdue for decades." In March of this year, more than 100econom ists, govern­ In the meantime, several such conferences have taken ment officials, parliamentarians, and business people from place in the East-in Gdansk, Budapest, Bratislava, and East and West Germany, Hungary, Czechoslovakia, Poland, Prague, and in many cities in east Germany. The Productive the Baltic states of Lithuania and Latvia, Russia, Armenia, Triangle has received press coverage in places as far away Bulgaria, Croatia, as well as Denmark, Sweden, France, as in Brazil and Peru. A Germantlanguage book on it is now Italy, and the United States gathered in Berlin for a confer­ in its second edition. ence on Lyndon LaRouche's proposal for a Paris-Vienna­ There is just one problem: It has not been implemented Berlin "ProductiveTriangle" of European development. yet. They passed a resolution which called on all European governments to make the Triangle program the center of Peace through development their policy and to state their intent to build an all-European TheProductive Triangle is more than a list of projects. It modem infrastructure system reaching from the Atlantic into is the answer to the three pressing problems the world is the Soviet Union, and centering around a 12,000 km, high­ facing today: speed railway system integrating the most modem magnetic 1) Rebuilding the economies of eastern Europe, which levitation (maglev) technology with the more standard ICE are devastated by several decadcts of communist command or TGV trains . The "Berlin Declaration" also called for a new economy.

30 Strategic Studies EIR August 16, 1991 2) Getting the West out of its economic crisis, which more clearly by the West, but it is alsp true that Moscow was has reached depression proportions in the English-speaking gloating about the consequences of! switching suddenly to world, while Germany and Japan seem to be exceptions­ world market prices in the trade among the former CMEA until now. countries. The Soviets hope that Poland, Hungary, and 3) Reversing the collapse in most of the developing sec­ Czechoslovakiawill crawl back on their knees to them, beg­ tor, instead of pursuing the presently prevailing course of ging them to buy goods from them in return for oil. In this militarization of theNort h-South conflict. sense, economic chaos in eastern Europe is in Moscow's Such a policyof "peacethrough development" is not just interest. a pious slogan coming fromPope PaulVI and John Paul ll­ It is, of course, not in the interest of the West. most notably in their encyclicals Populorum Progressio and Therefore, the strange recipes which the International Centesimus Annus. Monetary Fund (IMP) or Harvard's Prof. Jeffrey Sachs are It is rather a very practical and very wise policy, and imposing upon Poland through Finance Minister Leszek among its protagonists was Gen. Charlesde Gaulle. General Balcerowicz and on theCzech and Slovak Federated Repub­ de Gaulle never gave up hope and efforts to see all Europe lic (e.S.F.R.) through Finance Minil>terVaclav Klaus, don't one day reunited, and he almost never spoke about the per­ make sense. spective of a united Europe without adding, that the mission In Poland, the results of one yearof "shock therapy" are of thatEurope "from theAt lantic to the Urals" would be to known: Inflationis still at an annual rate of 250%, therewere aid the development of theThird World. 960,000unemployed by early 1991, and in the course of the In his New Year's speech on Dec . 31, 1963, de Gaulle year this number will grow likely to 2 million. Since the end said: "Without falling for illusions, but also without losing of 1989, real incomes fell 31 %, and the average monthly hope that finallythe freedomand dignity of man will prevail income is about $60. Industrial production has declined by everywhere, we have to be preparedfor the day when maybe 27% during the same interval. in Warsaw, in Prague, in Pankow [East Germany) , in Buda­ What is the advice of Mr. Sachs'1It is congruentwi th the pest, in Bucharest, in Sofia, in Belgrade, in Tirana, in Mos­ conditionalities of the IMP.The main elements of the shock cow the totalitarianregime , which still today can keep down program implemented by Polish Finance Minister Balcero­ captive nations by force, slowly undergoes a development, wicz are a 60% devaluation of the zloty vis-a-vis the dollar, which would be compatible withour own process of change. a removal of price controls combillled with a wage freeze, Then perspectives would open themselves to Europe, ade­ abolishing protective tariffs (i.e., liberalization of trade), and quate to her means and capabilities." the illusion that "privatization" is magically able to solve all The cooperation among Western European nations "will problems. The most important rule of Jeffrey Sachs is to not miss its effect on the peoples beyondthe Iron Curtain," outlaw any "government intervention," like infrastructure de Gaulle said in June 1962. "These peoples deeply wish to projects. one day find themeans to live with us. . . . This great Europe The same sad story repeats itselfiinCzechoslovakia under fromthe Atlantic to theUra ls, this Europe will then, with the the rule of neo-liberal Finance Minister Vaclav Klaus. He help of the New World, which is her daughter, be able to devalued the crown four times. The rate is now 28 crowns to solve the misery of 2 billion people in the developing coun­ the dollar. What does thatmean? A nurse earns2, 000 crowns tries." per month, or $7 1! An average worker gets 2,400 crowns, A closer look at each of these three herculean tasks proves or $85 per month. The prices have beenderegulated and went thatthere is no alternative to the implementation of the Pro­ up dramatically, but any foreigner with dollars or deutsche­ ductive Triangle, except disaster. marks can buy up Czechoslovakian goods, factories, land, and labor power for next to nothing. At the same time, the Eastern Europe C.S.F.R. cannot afford to buy anything (in particular the The failure of Marx andthe communist system in eastern much-needed high technology) from the West. This system Europe is self-evident. The easternEuropean economies, in de facto transforms the country int0 a Third World, colonial fact, were much more run down than was apparent from the entity, with the difference that Africa or !bero-America are officialcommunist statistics. They simply lied about produc­ used as sources for the extractionof raw materials, while the tion volumes and a lot of other things, in order to look better main raw material in the C.S.F.R. is relatively skilled, but to the West as well as to theirmasters in Moscow. Also, one cheap, labor. has to take into account, thatapart from big money theft, the The process of privatization in Czechoslovakia is prob­ communists planted numerous economic time-bombs that lematic, because no normal Czech or Slovak citizen has the exploded after their demise. fundsto buy a former state company. Who has money? Only The collapse of trade among the countries of the East the communist party or foreigners, On top of that, a. highly bloc's former Council for Mutual Economic Assistance restrictive creditpolicy doesn't allow the formation of a na­ (CMEA) is a case in point. It should and could have foreseen tionalM ittelstand, a layer of private entrepreneurs withmedi-

EIR August 16, 1991 Strategic Studies 31 um-sized productive firms. East Germany Also under Vaclav Klaus, government-sponsored infra­ As I come from Germany. you certainly want to hear structural projects are outlawed. No exaggeration! Infrastruc­ about the transition process in the five new federal states. In ture projects are not neglected. as one would tend to think, many ways, the crisis in East Germany was quicker and more but rejected outright. painful than in the other eastern European countries. The At the end of March, Klaus made a speech to the Institute collapse of CMEA trade has hitihard , the big state bureaucra­ of Economic Affairs in London, in which he listed as his cy is being dissolved, and 2,000 of 8,000 state companies enemies "all those who organize elaborate government pro­ have now been privatized by the Treuhand agency and cannot grams, build infrastructure and dominating industries, deter­ keep all their employees. The result is that of 10 million mine winners and losers, ask for massive Western financial people in the labor force, 2 million are presently unem­ aid, help endangered companies." Klaus says he wants a ployed, and 1.7 million are on short work. In many areas "pure market economy." unemployment is above 50%. But since last summer, there It is not only EIR that has discovered that the Sachs-IMF were also 400,000 new jobs created, and 200,000 business approach is a disastrous failure. So did the Geneva-based entities were opened, even though a lot of them are video U.N. Economic Council, whose former director Melvin Fa­ stores or sausage vendors , an4 most of them close down gen said that the shock therapy was a mistake. Also Prof. again after a short while. Kasimir Laski of the Vienna Institute for International Eco­ The situation is not easy, but there is a very big difference nomic Reseasrch called it an utter failure. compared to Poland, the C.S.F 2R., or Hungary: But most important is the recent criticism of Balcerowicz 1) Germany is one countryJ and OM 140 billion [about in Warsaw itself: President Lech Walesa's chief of staff and $78 billion] in governmentmoney is flowinginto the rebuild­ close ally Jaroslaw Kaczynski, who is the leader of the Center ing effort. Last year, on top of that, OM 20 billion was Alliance, said in a party press conference in mid-June that invested privately in east Germany. This is a big difference economic czar Balcerowicz should give up the post of deputy in social terms: OM 70 billion of the OM 140 billion is spent prime minister to Housing Minister Adam Glapinski. "The for unemployment benefits anq other social costs, OM 20 economic situation is bad, the economy is withering, and a billion goes to the east GermaDI municipalities, and OM 30 personnel change should take place," he said. Then Glapinski billion is spent for productive in�estments. took the podium and explained that the present economic 2) Unlike in Poland and the C.S.F.R., infrastructure program must be drastically changed, because it is stifling projects are not outlawed in GenlDany. They may come along demand and killing Polish industry . Also tight monetary poli­ too slowly and be too limited, but there is German Transpor­ cy and wage controls must be loosened to stimulate demand, tation Minister Gunther Krause1s OM 56 billion traffic pro­ and import tariffs should be raised to protect industry from gram for 17 rail, highway, anti waterway projects. Most Western competition. important are the new high-speed east-west connections Ber­ Without the "Productive Triangle," the fate of eastern lin-Cologne, Hamburg-Berlinl Nuremberg-Erfurt-Halle­ Europe is grim, and the chances to positively influence the Leipzig-Berlin, Berlin-Oresden� and Leipzig-Gottingen to transformation of the Soviet Union are zero. In the context the Ruhr region. The major handicap in Krause's program, of the Group of Seven meeting in London in July, there are however, is that it doesn't include yet any Maglev-Transrapid American attempts to force the Soviet Union to accept the connection. dictate of the IMF, the "Polish model" for the Soviet Union. Among the large industrialists, there is a broad consensus Moscow rejects that. They may like the model for Poland, that modernization of infrastructure is the key to economic but not for themselves, because they know too well, that this development in East Germany. Klaus Murmann , the presi­ would give the final blow to the rundown Soviet Economy. dent of the German Employers' Association (BOA), foresees EIR has first-hand reports that Moscow smells in this IMF more than OM 100 billion in investments into telecommuni­ tactic an evil Western attempt to weaken the Soviet Union cations and railway projects in the former German Democrat­ economically still further. He who proposes such tactics, ic Republic during the '90s, and OM 50-60 billion in energy plays a dangerous game. projects. The idea is to develop east Germany as a new nodal This doesn't mean that there shouldn't be conditions tied point in East-West and North-SOUth economic relations. It is to financial aid to the Soviet Union. There should be political forecast that the present downtUrn will end next year, and conditions-e.g., in regard to Baltic independence and in make room for economic growth. regardto more autonomy for the individual Soviet republics 3) From government people! as well as businessmen in in terms of foreigntrade deals, etc .-but the conditions have Germany we have heard occasionally formulations like: "The to lead to improvements in the economy, not to its total pure doctrine of market economy sometimes doesn't work. destruction. Wise Europeans should support those in the re­ And if we see that it doesn't work, we must learn from publics, as well as in Moscow, who tend to think in terms of experience." This may be a pragmatic approach, but learning the "Productive Triangle." from experience is better than not learningat all.

32 Strategic Studies EIR August 16, 1991 'Pure' Adam Smith in East Germany and eastern Europe: Once the infrastructure It may be worthwile, however, to take a more principled projects get under way, there must be a quota of at least 50% glance at this "pure doctrine" which the unfortunate world for orders to be given to eastern EUropean construction or has inherited from Adam Smith. According to Smith, it is a industrial companies.) crime and a frivolous presumption for the state or anyone to Another characteristic feature of Adam Smith's doctrine intervene in the "invisible laws" of the market: is his neglect of technological innovation as a factor of pr0- ''The governmenthas no such duty as to direct companies ducing wealth. Even though Papin: had already invented a or private people into undertakings most adequate to the steam engine 100 years before Wealth of Nations appeared, common good. If the government would attempt to assume and Leibniz had already discussed the revolutionizing conse­ such a duty, this would lead to innumerable illusions . . . quences of the steam engine for manufacturing, Adam Smith because no human knowledge or wisdom could suffice the doesn't even hint at it. He rather warns of the high cost of fulfillmentof this duty . . . . A statesman, who would attempt improVed machines, which devouq; a growing part of the to direct private people in how to use their capital, would not overall profit. Instead of spending the money for machines, only take on a very unnecessary task, but would assume an one could as well employ more w

EIR August 16, 1991 Strategic Studies 33 FIGURE 1 The deindustrialization of America: growth of non-goods production as proportionof GNP (billions of dollars) GNP = 235 GNP = 1,213 GNP=4,521 Construction-63 ; Construction-219

1947 1972 1!987

The shifttoward a post-industrial society can be demonstrated by examining several parameters of the ecor,omy. The government . measures the share of Gross National Product originating in different sectors and industries of the U.S. ectmomy. Goodsproduction fe ll

as a percentage of GNP from 53% in 1947, to 37% in 1987, the lastyearfor which figures are available. 1 meted, the debt has grown steeply. allies in Europe and Asia is one feature of the new world When I presented these facts several days ago to a group order. The other one is the replacement of the East-West of young liberals in Germany, they said incredulously: Why conflict with the North-South conflict. In other words: The should the U.S. do that, they are shooting themselves in the economic war among the industrialpowers over capital, mar­ foot? Yes, indeed. They have shot themselves in the foot. kets, and raw materials is fought on the back of the devel­ The miserable shape of the U. S. economy is a great dan­ oping sector. ger for Europe and the world as a whole, because the Bush According to the freetrade doctrine, the developing sec­ administration is tryingto compensate for the economic de­ tor is supposed to remain a supplier of raw materials to the cline with military power, which the United States stilI has. industrial countries. A U.S: National SecurityCouncil mem­ That is the background to the "new world order," which orandum of 1974 even uses the raw materials argument to supposedly emerged from the battlefield in the Gulf war. motivate drastic population control measures in a list of 13 New York City, the site of the big ticker tape parade, is developing countries, which Washington wants to convince broken down. Bridgeport, Connecticut, is the first citywhich "how much more efficient expenditures for population con­ has officiallyfiled for bankruptcysince theGreat Depression. trol might be than - raising prodUction through direct invest­ Washington needs $400billion to finance thefe deral bud­ ments in additional irrigation and power projects and factor­ get'deficit until Sept. 30. Where willthe money come from? ies." [For more on this memorandum, see EIR, May 3, . Japan doesn't want to buy more U.S. governmentpaper, and 1991-ed.] Eutope can't, given the tasks facing it in the east. This is the This policy was accompanied - since the 1970s by a big most relevant agenda point in the Group of Seven economic campaign on the issue of "overpopUlation." It claimed that summit in London. Bush will threaten with GAIT, with the misery in the world didn't come from underdevelopment, trade war measures. Did you know that the CIA since 1990 but from "too many people." has a Fifth Directorate, exclusively dedicated to trade war But the real reason for the collapse in the less developed issues with the "friends and allies who are now our rivals," countries is shown by the fact timt since 1983, more money as CIA director William Webster said? has flowed out of the developing: nations to OECD countries than in. Losses through collapsed raw material prices and New world order and North-South conflict growing debt service added up in 1987 to an annual net The economic rivalry among the U . S. and its friends and outflow of $30 billion.

34 Strategic Studies EIR August 16, 1991 FIGURE 2 Debt & Speculative Investments Bubble, 1972·1989 (trillions of dollars) $22.218

In 1972, the total of all 1) Bank off-balance sheet liabilities debt and sp eculative Stock market and mutual funds 20 2) investments stood at 3) Community option and other markets $3 .810 trillion; by 4) American bank portion of Eurodollar and 1982 , this was inflated other markets to $9.825 trillion, and 5) Total debt then to $22 .218 trillion 15 by the third quarter of $9.825 1989. This growth of 1) $1 .093 2) $1 .798 the bubble by $12 .393 3) $0.300 trillion in the last seven 10 $3.810 4) $0.514 years has been 5) $6.119 misnamed the Reagan­ Bush "recovery." 5)$13.501

Source: Federal Reserve Board Flow of Funds Ac­ count; New York Stock ex­ change Fact Books; Chicago Board of Trade published re­ ports; Salomon Brothers, The Status of Global Risk-Based Bank Capital Adequacy, June 1988 report and up­ dated reports; Morgan Guar­ anty Trust, World Financial Markets newsletter.

The high interest rate policy, started by the Federal Re­ cause no matter what the details of political and military serveand thenspread throughout the financialmark ets, made actions would be, the essence of all of them would be the the debts of the developing nations unpayable. The interest reduction of the population in the Southern Hemisphere by added to thelegitimate debt a widening portion of illegitimate every means available. In other words: genocide. debt. The militarization of the North-South conflictmust not be The war of the Anglo-American-led alliance against Iraq the policy of Europe; Europe must say no to this malthusian marks the beginning of the militarization of the North-South strategy which is quickly gaining support within NATO and conflict. A member of the U.S. War College identified Iraq other supranational institutions. There is an alternative: We in an EIR interview, because of its policyof universal educa­ Europeans have to rediscoverthe policy envisaged by Gener­ tion and modern infrastructure , as "the only viable state in al de Gaulle, who said in 1960 that Europe should be a the Middle East." That was before the war, of course. Iraq's modelfor the "path of cooperation, instead of giving in to the modern infrastructure no longer exists today. temptation of war," and called for cooperation between East According to the book The End of the Past, by the re­ and West in the effortto help the developing sector. In 1960 nowned French geopolitician F.O. Miksche, the North­ de Gaulle said, at the National �ss Club in Washington: South conflict will inevitably lead to "intercontinental race "In our time, there cannot be peace without development. In wars," because the overpopUlation in the South is finally the developing countries live 2 billion people. I believe, the bringing about Oswald Spengler's "demise of the West." great task of the world, beyond all theories, doctrines, and "We whites," Miksche writes, are facing the "greatest show­ regimes, is to help those 2 billion poor people to overcome down in our existence" and should get prepared for war their misery. " against four-fifths of the world's population. LaRouche's "Productive Triangle" is a concretization of Miksche invokes the "right of the stronger, whom the that policy of de Gaulle's, and it is the only alternativeto the weaker has to follow. Oderint, dum metuant-Letthem hate nightmare outlined above. us, as long as they fear us-the old Romans used to say." Once the "ProductiveTriangle" works in Europe, it will (Ferdinand Otto Miksche, Das Ende der Gegenwart, Herbig become a model generally. This cannot but bring about a Verlag, 1990) healthy shift in American policy. But we have to hurry: The Do we want that? This is sheer insanity. Such a policy Americans will elect a new administration by the end of would bring about a nightmare of gigantic proportions, be- 1992.

EIR August 16, 1991 Strategic Studies 35 TIillFeature

Cold fu sion is a revolution • • In sCience

by Carol White

This author attended the Second Annual Cold Fusion Conference held in the beautiful alpine setting of Como, Italy from June 20 through July 4, on behalf of 21st Century Science and Technology magazine. Contrary to the deliberate disinformation campaign-led by theNew York Times, Nature magazine, and the European Center for Nuclear Research (CERN)-which seeks to describe cold fusion as a dead issue, the conference established stunning confirmation that cold fu sion is indeed a nuclear phenomenon. My collaborators on coverage of the conference were Jonathan Tennenbaum, director of the Fusion Energy Forum in Germany, and Evanthia Frangou and Giuseppe Filipponi of the independent Ital­ ian-language science journal Ventunesimo Secolo. Itt was the consensus of this team that the discovery of cold fusion is the most important scientific event of the latter half of this century. It is a unique experiment which calls into question all of existing quantum theory. For fiveda ys, 200scientists met to consider a wide range of results confirming the reality of that process known as cold fu sion. Cold fusion pioneers Martin Fleischmann and Stanley Pons werethere to report on their newest, highly success­ ful experiments . For the firsttime, using a palladium.·silver alloy, they were able to guarantee the repeatability of their experiment. (See also, EIR ' s interview with Dr. Fleischmann, April 19, p. 22.) Fusion scientists from major laboratories in Japan, Los Alamos in the United States, and Frascati in Italy reported on neutron findings. The presence of helium- 4 was reported on by a team from the Naval Weapons Center in China Lake, California, and incontrovertibleevidence of the production of tritium was reported by the director of the National Cold Fusion Institute in Utah, which is now , unfortunately, closed down for lack of funds-the result of a lying press campaign against the center. Unfortunately, Dr. M. Srinivasan of India was unable to attend to report on the extensive experimental program in his country. Present were working scientists from Japan, China, Italy, Russia, Romania, Hungary, Sweden,

36 Feature EIR August 16, 1991 A bank of coldfusion cells at Texas A&M. Initially, the electrochemistry group lookedfor neutrons and fo und nothing. When they sent samples of the electrolyte fo r a routine test with a liquid scintillation counter, to their amazement, two cells were producing as much as 1.6x106 counts per minute of tritium, which is about 1010 atoms of tritium produced per second. To check this anomalous result, the cells were sent to fo ur other labs, including Los Alamos National Laboratory, and all confirmedthe presence of tritium. Nevertheless, the science mafia accused Texas A&M of "spiking" the cells.

Australia, Spain, and Gennany , as well as a good delegation .p.A. from the United States. nrn,rf"""nr of physics at California The atmosphere in Como was jubilant, although there State Polytechnic University in , compared the con- were many disputes---especially in the area of theory . This ference favorably to the one a year before . In a recent was a group of men and women who had been tested, not interview, he said: only by the demands of science, but by the necessity of "The cenference was a success, and certainly a standing up to the abuse of the leading controllers of science feather in the cap of the Italian nro,,,n" 7f",r,, [Bressani, Prepara- in the United States and Great Britain-Dfwhom John Mad­ ta, et al.] and the rest of the . advisorycommittee. dox , the editor of Nature, acted as the leader of the pack. The general message conveyed the conference was that, Maddox's camp follower Douglas Morrison, of the European far from fading away, cold research appears here to high-energy physics laboratory CERN, attended the confer­ stay and is getting stronger. in contrast to the situation ence as a representative of the opposition, but his abrasive at the First Annual Conference, presence was easily overlooked in the environment, which ported failures to see the excess was happily preoccupied with advancing the frontier of scien­ vast majority of groups reporting tific knowledge. Pons-Fleischmann effect of The first cold fusion conference took place in Salt Lake "In addition, the replrO(lUC1�11Ity is much greater than City, Utah, on March 28-31, 1990, about a year after the before . To be sure , many of the who previously were original Fleischmann-Pons announcement. The results re­ unable to achieve the excess effect have now discon- ported were extremely encouraging . At this second confer­ tinued their efforts. ence, the evidence con finned that cold fusion is here to stay , "Any list of highlights of the �"""Ul1J; for me, would have real and important from any scientific point of view , and to include the following: ' results' achieved by Pons most probably of great technological value for the future . A and Fleischmann , in which large amounts of third conference is planned to be held in early autumn of next heat were generated in a few time in a palladium cath- year in Japan. Financial sponsorship for the Italy conference ode to boil offthe electrolyte in calorimeter. There were came from the Electric Power and Research Institute of the 11 successive events achieved this type, so that reproduc- United States (which is also financing research in the U.S.), ibility is essentially 100%. , this effect, which ne- from the Japanese Technova, Inc., from a number of scien­ cessitates excess heat on the megajoule levels, tific research institutes in Italy, and from the commercial leaves no room for doubters ."

EIR August 16, 1991 Feature 37 Bush also puts Soviet results and the finding of helium-4 carefully controlled through a body chemistryheavily depen­ high on his list of successes over the year. He is also justly dent upon catalytic effects. (Water, after all, is the key com­ enthusiastic about his own experiment, in which he achieved ponent in body tissue. Furthermore, diagnostic devices such high excess heat and a high percentage of excess power with as nuclear magnetic resonance imaging depend upon varia­ cathodes consisting of thin films of palladium electroplated tion in the "structure" of water in tissues-in particular on onto silver. the time of spin relaxationwhen a magnetic fieldis applied­ to determine the relative health of tissue. This spin effect is, Cold fusion's first two years in tum, dependent upon the potassium-sodium salt balance On March 23, 1989, Martin Fleischmann and Stanley in the tissue.) Pons announced to the world that they were able to achieve the fu sion of deuterium molecules at room temperature Experiments in Japan through a process of electrolysis. Their research had come The conference was openedby Dr. Hideo Ikegami, coor­ out of a decades-long study of the anomalous behavior of dinator of the Japanese cold fusionprogram. He reported the hydrogen diffusion in palladium-which, in fact, is used wide range of experiments ongoing in Japan. While he doubts industriallyfor purifying hydrogen. that excess heat results, of the sort reported by Fleischmann Indeed, before World War n, scientists had already spec­ and Pons, are themselves produced by nuclear events, he is ulated that the ability of palladium to concentrate hydrogen absolutely convinced that the array ofnuclear products (i.e., might allow cold fu sion to take place. Palladium will concen­ charged particles that are emitted), such as protons, tritium trate the volume of gaseous hydrogen to a density 800times and neutronemissio ns, at their expectedener gy, all establish greater than it is in the atmosphere . This phenomenon is yet definitively, the existence of "cold" fusion. to be understood, but it was a natural step which Fleischmann Japanese scientists appear to pave great freedom to con­ and Pons took to substitute heavy water for light water. duct their experiments , a state of affairs sadly beginning to In their table-top laboratory experiment, conducted at disappear in the West-a discrepancy that was not lost on roomtemperature , they use one palladium and one platinum the audience. Over 100scientists 'are working on cold fusion electrode. The plasma that is formed as a result of this ap­ experiments in Japan, although some of these are doing so proaches the density of the plasma found in the core of stars , on their own time. They are organized into 20 groups, which where fu sion reactions occur continuously. span 40 universities and institutes. One decided advantage One hypothesis that has been generated by another team they have is that free materials aresupplied to them by Tanaka independently working on cold fusion effects, led by Steven Precious Metals Co. , according to their individual specifica­ Jones from Brigham Young University, is that cold fu sion tions. also occurs at the center of the Earth, where temperatures Ikegami represents the standpoint of many physicists in­ approach those at the photosphere of the Sun. Jones uses ternationally, who tend to evaluate cold fu sion results in electrodes and electrolytes that were designed to replicate terms of the parameters of thermonuclear fusion. Unlike the geological conditions rather than to generate heat (which he vast majority of physicists in the West-particularly those in does not report) , so that his cold fu sion experiments are the field of fu sion-he is so persuaded that cold fusion truly essentially different in character from those of Fleischmann exists, that he describes Fleischmann's idea of using the and Pons, although important in their own right. palladium lattice to concentrate deuterium to densities at Thermonuclear fusion, which takes place when a hydro­ which fusion becomes a possibility. at room temperatures, as gen bomb is detonated, occurs at temperatures of hundreds one idea in a million. of millions of degrees. Controlled thermonuclear fusion in Ikegami's point of view is completely at odds with the the laboratory-as with the tokamak at Princeton University vast majority of experimenters in the field who are primarily or the Joint European Torus-also occurs at these high tem­ electrochemists. They are convinced that there is no way that peratures, which are needed to compensate for the fact that the excess heat-particularly in the amounts achieved by the plasma fuel, deuterium and tritium, has an extremely low Fleischmann and Pons--could h;f.ve been produced chemi­ density, as compared to the compression within stars or in cally. Therefore they contend that this is a crucial experi­ the palladium cathode. In both room-temperature and high­ ment, which will lead to new theoretical breakthroughs in temperature fusion, the nucleus of a new element is created order to explain all of the anomalies which have surfaced, by the fusing of two existing nuclei: For example , with the especially the excess heat. fu sion of two deuterium nuclei (isotopes of hydrogen), a Several experiments which Ikegami reported upon were helium nucleus is formed. At the same time , energized parti­ extremely exciting. At NIT Basic Research Laboratories cles and large amounts of heat are released. in Tokyo, neutron bursts of 1 million neutrons have been Understanding how this cold fusion process occurs , may observed, in gas phase experiments which are 100% repro­ also give us a window on biological processes, where chemi­ ducible. cal reactions occur at room temperatures and heat flow is In order to simulate the potential structure in the electro-

38 Feature EIR August 16, 1991 lyre, a surface barrier is created in the palladium. Magne­ order to determine if there is background radiation or unex­ sium-oxide is used to coat one side of a palladium plate that pected spurious radiation. The othbr two detectors are also is loaded with deuterium. The other face of the palladium electrically independent The neutr

EIR August 16, 1991 Feature 39 erally known before. More to the point, the very fact that Then there is the geometry Qf the cell. They choose cells they were pressing on with their work despite a witchhunt with small diameters relative t� the length of the cell, and against them, conducted with equal vigor by the U.S. press they consider this to be key to ! success in obtaining excess and such groups as the American Physical Society, was a heat (although experimenters i� Japan have found that the unifying factor, in a body of researchers who by-and-Iarge reverse is true with regard to n¢utron generation). Most re­ had sharpdisa greements with each other. cently, Fleischmann and Pons qave used a palladium-silver Cold fu sion is a new science, and there are many sharp alloy in order to increase the s41bility of the electrode, and disputes raging among scientists and theorists about what is they report virtually total repea41bility: positive results in 10 happening, why it is happening, and how to explain it on the out of 11 tests , with one ambig�ous result. Rumors circulat­ most fundamental level. There is also a definite competitive ing at the conference that the "ambiguity" occurred because spirit, as different groups vie to establish their own patents the experiment actually blew uP. appeared to be corroborated and glean a share of what limited funding is still available. by Fleischmann's comment abOlH the difficultyin developing Nonetheless, there is a common purpose among them-to calorimeters capable of withsta1lding higher heats, with the pursue the truth at whatever cost-a commitment not usually design constraints of his experiment. He pointed out that so profoundly in evidence at scientificgatheri ngs. there was no question that they: got excess heat and a boil­ For myself, the meticulous detail necessary to achieve off, but that they could not estimatehow long the experiment positive results in this intricate experimentwas also extreme­ could have continued had the eltlctrolyte not boiled off. ly impressive. This came out not only in the presentation A crucial point that Pons raised was that the heat transfer by Pons, but was a theme repeated time and again by the in the experiment is highly nonijnear: It does not occur in a speakers-particularly the electrochernists. These experi­ quasi-steady state in the cell, an

40 Feature EIR August 16, 1991 You can certainly take platinum electrodes, crank up the (Considering the experience and reputation of both scientists, current, and just put in as much power as you need to boil the supposition that they are mruqng some gross blunder of out all of the D2O-Or H20 as well-and, to within a few the kind involved with misreadirt their instruments is not percent, you get pretty much a clean heat balance, as you really tenable. In any event, altho�gh such accusations have would expect just from joule heating and radiation from the been bandied about, no one has �ome up with a plausible circuit," had only an electrochemical reaction taken place. hypothesis of what sort of errorth ls might be.) The kind of energies which wp are seeing in the case of Independent corroboration the Fleischmann-Pons experiments is on the order of 600- At this point Pons turned the microphone over to Dr. 1,500% excess power, which traqslates into the production Wilford Hansen, a physicist fromUtah State University, who of excess energy on the level of 20 $legajoules or equivalently had been commissioned by the Fusion Energy Council of the 6 kilowatt-hours of energy. Bor Y � Liaw fromthe Univer­ �' State of Utah to conduct an independent study of unreleased sity of Hawaii, John Bockris fro Texas A&M, and Robert data of Pons and Fleischmann. Reflecting on the witchhunt Bush have also shown energy gai s of this magnitude. against cold fu sion, which is continuing in the United States, The generation of excess he which Fleischmann and he began with the comment: "Last January I was asked to do Pons report appears to scale appro imately quadratically with an independent study , an analysis, of some unreleased data the current density, leading them �o prefer thin, 1 millimeter of Pons and Fleischmann. My colleagues warned me not to diameter cathodes. When the di�eter is increased to 8 mm, do this-it was a no-win situation. Whatever that might be, no excess power is generated. Furthermore, the currentmust I now have a report, and I have brought copies of that for exceed 100 milliamperes per squate centimeter if theexperi­ Pons and Fleischmann to read. It is also being reviewed by ment is to succeed. An increase in �verage excess heat gener­ some other people. I would like to tell you about it before ated correlated to an increase in iliecurrent. the world grabs it and bums it, and me with it. But soon it This key feature in theirexpe dment, which was in differ­ will be out." ent ways replicated by Bockris � Texas A&M, the Italian He then proceeded to verify the statistical methods used experimenter F. Celani and a teru,ttat Frascati, as well as in by the team to determine the production of "excess" heat­ Japan, was the responsiveness o� heat bursts to changes of as much as 100 times more than any which could be attributed state. Thus, they would ramp up �e current, and this corre­ to a known chemical reaction. He chose eight cells; two were lated with the heat gain; similarly Bockris applied pulses of controls, which used hydrogen and showed no excess heat. power; and Celani-in a gas-Ioadibgexperiment with a high­ The rest were intended to be heat cells and used deuterium temperature superconductor (yt1irium barium copper ox­ as an electrolyte. Of these, five of the six, in his words, ide )-was able to stimulate neutr�nemissions by alternating "showed definiteexcess heat." He determined that the whole the gas through a superconductin� and nonsuperconducting set of experiments was impressive: In one cell, 6,000electron phase. Similar techniques in othqr gas-loading experiments volts of power were generated per palladium atom-l ,000 using titanium targets involved rapid temperature changes or times beyond any effect known to chemistry. As a point the creation of sudden vacuums. For example, the NITgroup of comparison, with only five electron volts, a palladium in Japan achieved large neutron bursts when they lowered electrode will be heated to its boiling point and vaporize. gas pressure in the vicinity of the palladium. Fleischmann added to Pons's report by revealing that the There is an interesting difference between experiments team is now using a palladium-silver alloy for a cathode, and using electrolysis and those in which the deuterium is intro­ that this is giving them a repeatable experiment. What is key duced into a tube directly. In the case of electrolysis, there here seems to be the stabilization of the palladium, which is are more problems concerningthe purity of the material, but, otherwise quite brittle. Robert T. Bush and R.D. Eagleton on the other hand, the ability to! control the voltage at the also reported success by plating a thin filmof palladium onto electrodes allows the palladium lattice to be loaded in approx­ silver cathodes. imately an atomic ratio of one-to-one with the deuterium. Much of Pons's talk was devoted to showing how-from This loading ratio-or at least the achievement of a loading the accurate measurements over several-day periods-they ratio above 7.5-appears to be crucial in guaranteeing suc­ were entitled to extrapolate the profileof the heat balance for cess in the experiment. the total experiment. In the future , several scientists plan to The application of 120 millivolts of electrical power to measure net energy gain over the entire experiment. While a palladium electrode through electrolysis is equivalent to Pons did not report that they measured the total inflow and raising the partialpressure (in gasidynamic terms) to 100,000 outflowof energy of the four, five, or even up to eight weeks atmospheres. With a gas-loading experiment, the highest during which electrolysis takes place, nonetheless they can loading ratio (between deuterium and palladium) that is show such extremelyhigh energy gains during days in which achieved is in the range of 0.6 or 0.7, while with electrolysis energy bursts occur, that it is virtually impossible to explain it is possible to load the palladiclm electrode with an equal this, unless a nuclear process is assumed to be occurring. number of deuterium atoms. On the other hand, the electroly-

ElK August 16, 1991 Feature 41 rator K. Cedzynska' s experimental findingsof tritium in cells that replicated significant aspeds of the Fleischmann-Pons experiment. Will is also formerl* the president of the presti­ gious Electrochemical Society, ahd, like many of those pres­ ent, a highly respected electrochdmist. (See also EIR ' s inter­ view with Dr. Will, April 19, p. 24.) Tritium is found on Earth dnly in trace amounts, and therefore these experimental resJlts are important confirma­ tion that fusion--or at the least, uclear reactions-are tak­ ing place in these cells at the �lladium cathode. Tritium is the heaviest isotope of hydro�en, with a nucleus which contains one proton and two neutrons; compare this with deuterium, which has one proton �nd one neutron, and hydro­ gen with just one proton. In ty¥cal thermonuclear fu sion between deuterium molecules, e· er tritium or the next high­ est element in the table of eleme ts, helium-3, which has a nucleus containing two protons �d one neutron, are formed. However, a nuclear reaction prodhcing the amount of tritium found-according to existing thdory-<:an account for only one-millionth of the heat actually generated experimentally. Clearly, then, some other process ust be occurring, in order to account for the excess heat. For this reason, Dr. Will was rarticularly happy with the finding by the Naval Weapons Fenter of helium-4, even though these are yet to be confirmed. He believes that these will break the stalemate in which i� was otherwiseimpossible to refute critics who maintain thatlthere may be a mechanism of mechanical or chemical energy storage at work that is consistently being overlooked by experimenters, particularly those who report energy excess 1n the amount of 10-20%. I These critics speculate that a sma I error, for example a 10% Stanley Pons. left. and Martin Fleischmann. with their initial cold fu sion experiment. error in the calculation of the porer might be accumulated over a period of a million secon to create the appearance of a small but significant energy � cess. So far only Fleisch­ mann and Pons, the team at the University of Hawaii-in sis experiments have an upper limit to the temperature which two experiments which they have been unable to repeat­ they can achieve, which is determined by the boiling point and Robert Bush have reported a shfficientlyhigh heat excess of the water. This lowers the Carnotefficiency of the process to obviate such an error factor. I from the point of view of possible technical applications. Many cold fusion researchers had predicted that this I (The Carnot efficiency refers to the fact that heat "flows" might be the explanation for the otherwise anomalous results. from high to low temperature , so that the ability to use the The amount of helium-4 producetl is much more consistent heat to accomplish work is a function of the temperature with the excess heat. In fact, in dr. Will's opinion, the dis­ difference. The obvious model for this is the steam engine.) covery of helium-4, as reportedb� the NRL team (and by the Experimenters at the University of Hawaii overcame this Spring 1991 issue of 21st Centu1 Science & Technology) , temperature limitation by conducting electrolysis with mol­ is the single most important development reported at the ten salts, but this is a highly corrosive process that presents conference. its own problems: While they reached an impressive tempera­ There is, of course, also the p

42 Feature EIR August 16, 1991 mode of transmutating the elements . Dr.Will is modest,emphasizing wqat work is yet to bedone . Lastly, there is a possibility, which Dr. Will rejects out At Como, he emphasized that it is now necessary to develop of hand, that there is some unknown chemistry involved. techniques of on-line measurementiof the production of triti­ Dr. Will describes himself as a conservative scientist, um, as it occurs, which he was not able to do. Nonetheless, who is satisfiedthat there is goodexperimental data. Howev­ his work was not only an outstan

pressed frustration at the Como conference, about the failure I of any demonstrated theory to explain the anomalous results. Breakthroughs at Stanford iResearch Notwithstanding, it was difficult not to agree with Martin There has been a rumor that there will be a dramatic Fleischmann and John Bockris, when they asserted that heat report coming from the cold fusipn scientists at Stanford is, after all, the most important aspect of cold fusion. As Research Institute by the end of the year to the effect that Fleischmann said, we cannot uninvent an explanation or a they are able to turn their experiments on and off at will new science. Ironically, in the same way that some of the by controllingelectrochemical con4itio ns. Hence, the report physicists were uncomfortable with such boldasserti ons, the from SRI's Michael McKubre w!ls listened to with great electrochemists failed to appreciate the beauty of nuclear interest. His work is being sponsored by the Electric Power findings, particularly the most recent showings in Japan and Research Institute (EPRI), and for; this reason, much of the at Los Alamos. work of his group is ptoprietary. Nonetheless, his talk was Dr. Will's own work in establishing thepresence of triti­ of great interest, because it is a well-known secret that his um in closed cells, modeled upon the general outlines of the experiments have been extremely lIuccessful and, therefore, Fleischmann-Pons deuterium-palladium electrolysis experi­ participants weretrying to gleaneverything they could about

ment, is unique: It totally accounts for the tritium found in what he was really doing. I the cell, before and after the experiment in each of the three McKubre primarily devoted h� discussion to answering possible phases-metallic, liquid, and gaseous-in which it critics who asserted that in all probllbilitythe excess heat was occurs . not nuclear in origin-a contentioq which he, as well as Fritz The finding of tritium by Dr. Will is no isolated occur­ Will, flatly rej ects. Another que�tion which came up was rence: Tritium findings have been reported by the Bhabha whether electrodes should be coated with palladium dust Atomic Research Center (BARC) in Bombay, and by Storms to "blacken" them, or whether they operate best in a clean and Talcott at Los Alamos, and particularly by Bockris at environment. Texas A&M. However, in no case has the experimentbeen McKubre began by emphasi�ng, as had many before so precisely controlled as to put an end to the doubt that the him, that the loading ratio, which � the numberof deuterium tritium was somehow present at the inception or introduced to palladium atoms in the palladium lattice, must be close to extraneously while the experiment was in progress. Clearly one. In fact, during the discussio� period, he admitted that then, a nuclear event is occurring in these cells. Dr. Will's SRI researchers only get positivt1 results when the loading work should have put to rest some of the skepticism about ratio is above 0.9. To understand how to achieve a high the reality of cold fusion which has been generated in honest loading ratio, however, it is firstn4cessary to determine what members of the scientificcommunity . occursat theinterface betweenthe palladium and theelectro ­ Although he was able to work only with four tritium lyte medium. He was not apologetic about the fact that, cells, he found complete repeatability. A crucial element, despite making nuclear measurements, at SRI they do not according to him, was the loading ratio of hydrogen or deute­ find significantamounts of tritiuIIl!or other nuclear products . rium to palladium atoms , which was one-to-one. No tritium For him too , heat is key. He devoted the beginning of his was found in any of the light-water, control cells. Here, presentation to a detailed explanation of how calorimetry again, is a strong confirmation that there was nuclear action works and why he is sure that the excess heat he measures is occurring in his experiment-as opposed to a merely chemi­ not an artifact of the measuring apparatus. His groups mea­ cal reaction-since only by a transformation of the nucleus sure theentire energy of the system. They areconcerned with of deuterium could thetritium have been formed. By using a theflow rate (dml dt, which is the ohange in mass over change closed-cell system, theenvironment in which the experiment in time). They attempt to maintlain a constant current by took place was controlled. adjusting the voltage to compens.te for changes in the elec­ The tone of the institute's summary report submitted by trolyte as the experimentprocee d$, and so on.

EIR August 16, 1991 Feature 43 Thence, the question arises about potential sources of mann-Pons electrolytic cell, this group succeeded in de­ systematic error which might occur because of the nature of tecting helium gas, using a mass.spectrometer. the calorimeter. He analyzed why such errors could account Miles's group had expected! to find helium-3; instead, for an erroron average of 10%, and of25% maximally, in any they were surprised to findhelium-4. The finding, however, particular reading. These figures, however, are significantly was in accord with several the011ies: It is otherwise difficult below the percent of excess heat generated by his experi­ to account for both the small am<*Intsof neutronsand tritium ments. One method they use to check for error is to inter­ compared to heat generated in cold fusion experiments, and change resistors, which are used to measureheater and elec­ also for the fact that there is as much as a discrepancy of 10 trochemicalpower; thus, if the electrochemical readingis too million between the amount oftritium discovered,and to the high because of a mechanical error, switching the resistors amount of neutrons. This runs cdunter to the branching ratio should show a discrepancy between the reading of excess observed in thermonuclear fusion, where it is equally proba­ energy that is generated by electrochemical input power and ble for either helium-3 or tritiumto be produced. the heater power, before and after thechange. They are convinced that what they are observing is a They are also careful not to underestimatethe amount of surface reaction, because, among other things, the helium is mass change over time, since thiswould resultin an apparent detected in the gas above the electrolyterather thanmixed in excess amount of heat generation. Another key feature of with it. Unlike Fleischmann and Pons, they are successfully their design is that where they ran control cells (which was using a massive palladium electrode, which they struggled not in every experiment), they multiplexed them to a single to keep uniform. They feel this allowed them to get results multimeter: In other words, the two cells were placed in more quickly than Fleischmann and Pons-although it series in the same calorimeter. McKubre made the strong should be noted that they do not see comparable excess heat. assertion in this regard: "When we are running light experi­ Miles et al. believe that the nuclear reaction which is oc­ ments, experiments in series produceexcess heat in one and curring is a surface effect, because the helium is found out­ not in the other. It is very hard to attribute that to an error in side the electrode. Excess heat generated was only about four the multimeter. An error in the multimeter should show up times what might have been expected from the amount of in all the cells that we are running." helium that was generated. This is an outstandingresult. McKubre also emphasized that they needed to run a typi­ The experiment was carefully controlled. While the ex­ cal cell around 2,000 hours in order to have a successful periment was done at Naval Weapons Center in China Lake, experiment. On average, his team's experiments are getting California, measurements were made at the University of something like 250% excess energy, in terms of the electrical Texas: Lagowski, in Austin, never knew in advance what input, which is somewhat more than 45 megajoules permole . cells he was being sent, and his group was even deliberately Furthermore, they have never seen an energy deficit during given cells filled with nitrogen, to test their apparatus and an experiment. He raised the question: If the excess heat is make sure that they would repot!t a null result. In any cell theresult of a mechanical malfunctionof the heat calibration, with excess heat at or above 0.14 watts, helium was detected; why would there not be an equal number of deficitsas energy in any cell with less than that mount, it was not detected. excesses? His team has never observed excess energy in Seven out of ten cells they worked on gave excess heat to a light-water experiments, although it is his estimation that maximum of about 30%. they have yet to do a sufficient number of these to establish Miles announced during his presentation that he hadjust the pointdefinitivel y. received a facsimile transmission from his collaborator Ben His conclusion: "We are unable to account for the excess Bush; Bush reported that when he performed the experiment temperature by any artifact that we have considered, and we with a palladium cathode that hadlbeen blackened with palla­ are unable to account for it by any chemical or mechanical dium black, he achieved excess htat within abouttwo hours. processes that we are aware of." In thediscussion period, he This would be seen as confirmation that cold fusion is a also emphasized that he had achieved high repeatability. He surface effect by Robert Bush, John Bockris, and Miles­ asserted that this depended upon accurate controlof the initial although they were already convinced that this would be the conditions-state of the electrodes, loading ratio, and control case. Robert Bush reported that he platinizes his electrodes. of the current. Others at the conference, such as Will and McKubre dis­ agreed, and they contended that the best results come from Breaking the stalemate a palladium rod which is shiny ratherthan coated. Melvin Miles commanded attention when he described Robert Bush agreed with Bert Bush that the addition of the details of theexperiment which he and G .C. Ostrom from palladium chloride to blacken the surface should cut down the Naval Weapons Center ran in collaboration with Ben loading times and work more efficiently than smooth, shiny Bush (no relation to Robert Bush) and J.J. Lagowski of the palladium, once an optimal loading ratio has been reached. Department of Chemistry at the University of Texas in Aus­ He believes he also has confirmation of predictions (ac­ tin. Using an apparatus very similar to the initial Fleisch- cording to his theoretical model) <>fthe discovery by Franco

44 Feature EIR August 16, 1991 I Scaramuzzi of a neutron emission line at a temperature of there can also be locally high current densities, at voids on about 120°C. Robert Bush had predicted that such a line points where cracking occurs, where fusion may take place. would show up at 126°C. He had not been aware of Scara­ These spread as the reaction time advances. This means that muzzi's results before coming to the conference. there are probable locally high currentdensiti es. Bockris also hypothesizes that the dendritic and cauli­ Slander campaign flower-likeformations which grow on thesurface ofthe elec­ John Bockris, of Texas A&M, has taught many of those trode may may also be the locus of cold fusion reactions. now most eminent in the field of electrochemistry, not the Dendrites were found to be about 2 microns high. In order least of them Martin Fleischmann. He has a worldwide repu­ to keep the reaction going after these formations emerge, tation, yet he has not remained untouched by the vicious it is necessary to step up the current. He believes thatthe climate against cold fusionbeing created in the United States. palladium is thickly encrusted with impurity metals, particu­ Journalist Gary Taubes has spread the slanderous story, in a larly platinum (which has migrated from the anode), which forthcoming book debunking cold fusionto be published by penetrate the palladium within a few weeks. Random House, that Bockris allowed one of his students to He described severalexperiments with heat bursts. Elec­ manually place tritium into a sample in order to pretend tric pulses of 5 seconds duration would trigger heat bursts, that cold fusion occurred. While Taubes has, of course, no apparently correlated with electrode charging. Some bursts credibility among anyone who is familiarwith Bockrisor his were also triggered when electrolysis was stopped, as the work, nonetheless, he is using the financial clout of a large liquid of the electrolyte was used up. Pulsing correlated to publishing house to try to force Bockris into a no-win situa­ heat burst in five experiments. The two highest actually ter­ tion, where he, anindividual withrelatively small resources, minated the burst before the electric pulse was stopped. will bepitted in court against Random House. These occurred between 110 and 350 hours of electrolysis, Nonetheless, Bockris is a fearless individual. He and and excess heat varied from around 8-23%. Martin Fleischmann, in my view, are outstanding in their Bockris's own cold fusion experiments have focused unwillingness to compromise on the question of cold fusion. upon the palladium-deuterium relationship; nonetheless, he Yes, the results were anomalous compared to thermonuclear pointed to the need to look at a number of transition metals, fusion, which they see as a challenge to theorists, rather than because, even though they do not concentrate deuterium or requiring them to defend the validity of the Fleischmann­ hydrogen to the same degree as palladium, nonetheless cold Pons experiment. fusion occurs within them at a lower rate. He is also extreme­ As opposed to the physics community, Bockris points to ly interested in a Japanese patent taken out last year, which the discrepancy between tritium and neutron detection as specifies a number of alloys of the superconducting genre, proof that the result-cold fusion-canrlot be evaluated in as possible mediums for cold fusion. terms of thermonuclear fusion, and that it therefore repre­ sents a new type of nuclear reaction. He also points out that Soviet and other national programs cold fusion has an advantage over thermonuclear fusion: It V.A. Tsarev from the Soviet Union reported that the does not produce the same amount of charged particles, witchhunt against cold fusion by Nature magazine put a which would make containment of the radiation necessary. "freeze" on what had looked like a promising cold fusion Since it is established thatthe excess heat is produced in these program, which originally had 45 . institutes engaged in the experiments, far in excess of any known chemical reaction, work. Nature notwithstanding, Soviet researchers have ap­ then this must be a nuclear event, whatever the problems parently also developed another means of provoking the with detecting tritiumor neutrons. emission of neutrons, by what they call "nuclear mechano­ Even though Fleischmann believes that excess heat is fusion." One such device involved thefracturing of ice made the key parameter for asserting that cold fusion takes place, from deuterium oxide. Similarexperiments were done with nonetheless he did point to theneed for more general access lithium oxide. There is presently some effort to bridge the to tools, such as mass spectrometers, so that helium-4 could two devices with a fracture model, in order to explain at least bedetected moregenera lly. some of the nuclearreactions which occurduring cold fusion. In his presentation, Bockris presented evidence showing The Soviets are also pursuing theg�ophysical andastronomi­ a correlationbetween electricalpulsing and heat generation, cal implications of cold fusion reactions, even were these and he also showed pictures ofthe evolution ofthe palladium to occur only on the low levels reported by Steven Jones. electrodeduring electrolysisas partof a detailed study of the According to this view, the primordial Earth would have fugacity of deuterium as it penetrates the palladium elec­ been composed of about 60%hydr ogen, and hydrogen would trode . "Fugacity" is a term used by chemists to describe have comprised 4.5% of the total mass of the planet. Other internal pressure. A major problem for experimenters, is elements would exist as hydrides, and therefore the number embrittlement at the palladium electrode, since cracking can of cold fusionevents would be high. stop the reaction; however, he considers the possibility that Both the Republic of China on Taiwan and the People's

EIR August 16, 1991 Feature 45 indeed be of nuclear origin. So far the main justification for the nuclear origin of 'excess heat' had been the argu­ Srinivasan: 'A new ment that the magnitudes of both excess power (W/cm3) and (MJ/mole) involved aresuc � thatit is orders of magni­ door has opened' tude more than what can be e�plained on the basis of known chemical phenomena (�action enthalpies, phase It was a sad loss to the conference that Dr. M. Srinivasan change effects, stored energy release, etc). However the could not attend. In the April 25 issue of the Indian journal recent observation of significantquantities of He-4 in the Current Science, he published an open letter in which off gas streamof electrolytic cells generating excess pow­ he reviewed the prospects of cold fusion. No doubt his er, besides a marginal excess ofiHe-4 in one electrolyzed remarks at the conference in Como would have been along Pd button should perhaps begin to convince the scientific the same lines. Dr. Srinivasan, the head of the Neutron community that proof of exce�s heat being of nuclear Physics Division at the Bhabha Atomic Research Center origin is now on hand. Howevdr this information is not (BARC) in Bombay, unlike many physicists, fully en­ yet widely known. dorses the conclusions of Martin Fleischmann and others: "In the judgment of this re\liewer the infant field of that excess heat, as well as the presence of neutrons, 'cold fusion' is rapidly acquiring�e status of a respectable tritium, and helium, is of nuclear origin (see EIR , April new branch of science, and the nlysteriesbehind what this 19, page 25). His summary conclusions state the case: author and a growing number ofi'converts' firmly believe "While physicists find iteasy to accept that D-D reac­ is one of the most fascinating scjientific breakthroughs of tions at the 'Jones level' (10-20 to 1O-23/s/d-pair/d-pair ) our times is slowly being unra�led. Indeed the humble can possibly occur in deuterated solids, there seems to be 'battery and bottle' experiment may well have unexpect­ still considerable reluctance on their part to accept the idea edly opened the door to unchart¢d new realms of physics that the 'excess heat' generation in electrolytic cells could and nuclear technology. "

Republic on the mainland have ambitious cold fusion pro­ will be based upon gas-loading �vices; we may well find, as grams. They have favored gas-loading experiments, and in­ is emerging in high-temperature $perconductors, thatceramic terestingly, observe a bluish glow at the tip of the palladium alloys will replace palladium or 1jitanium. If it is true that the cathode, which may be a signal for helium. This occurredat deuteriumin the palladium lattice ts ina coherentstate, as many the Southwestern Institute of Nuclear Physics and Chemistry theorists now suggest, then perhaps someday a cold fusion cell in China. According to Zing Zhong Li, who is from Tsinghua will produce lased light instead orheat. Another possibility is University in Beijing, they are seeing particleswith energies the undetectedexistence of slow neutrons,which could beused greater than 5 MeV and, in some cases, charge numbers immediatelyto breednuclear fuels. greater than 2. If it is borne out that there are emissions of There is, however, one exceptional experiment, which particles with charges greater than 2, this would weigh the would show immediate applica�ility were it repeatable. At balance heavily in favor of those theorists like Mayer and the University of Hawaii, Bor IYann Liaw and a team of Hagelstein, and Professor Yang of Hunan Normal Universi­ experimenters generated heats a. 350-400°C, using a molten ty , who believe that what is occurring is a neutron transfer, salt electrolytic cell. I not the fusion of two nuclei. Replacing heavy water, thet used lithium chloride and A laboratory in Romania had also achieved positive re­ potassium chloride salts in which a small amount of lithium sults in cold fusion experiments. deuteride was dissolved, to act as the main current carrier. The deuterium in this case was 4issociated at the anode (the What the fu ture may hold positiveelectrod e), to become a illegative ion. In this way, a It is certainly premature to speculate about technological reducing environment was crea�, in which the surfaceox­ applications of cold fusion at this time. In general, the heat ides on the palladium wereremoved. This had the advantage which is generated in the experiments has still to go much of facilitating the deuterium re�ction. Liaw notes-as had above the boiling point of water, but neither the potentialities Bockris-that many transition e�ements and their alloys can nor the scientific implications of this discovery have yet un­ also absorb substantial amounts I of deuterium, but are pre­ folded. vented from doing so in water sCl)lutions, because they have While the electrolysis experiments are of great scientific an oxide surface layer. interest, it may well be that the most successful applications They achieved excess power levels as high as 25 watts

46 Feature EIR August 16, 1991 for an input power of 1.68 watts-a power gain of 1,500%. Mayer believe these impurities to pIfiy a crucial role, because Unfortunately, it has only succeeded on two occasions. How­ they act as neutron donors or acceptors; others believe that ever, positively, a control experiment based on lithium-hy­ the impurities enlarge the surface of the palladium electrode , dride did not produce excess heat. and thereby foster cold fusion, Wlhich they believe to be Excess power increased with current density, and one entirely a surfaceeff ect. For those who believe it is a volume, heat burst lasted for four days, generating 5 megajoules of or only a near-surface effect, such plating of the surface energy. The experiment only stopped because the lithium­ prevents the circulation of the deuterium and would impede deuteride was exhausted. the reaction. In this case, the positive electrode(the anode) was made Once a crucial experiment, stich as the Fleischmann­ from palladium, and it was found after the experiment to Pons discovery, has challenged the ijasicassumptions held by contain 4x 1010 of helium-4. This impressive amount is far scientists, it is to be expected that !there will be a period of more than that present in a control sample of palladium; great turmoil, from which existing theories will be trans­ however, it is seven orders of magnitudeless thanthe amount formed to accord with the new understanding. This, of which would be expected on account of the heat generation. course, is how science progresses,iby means of the succes­ The amount of excess heat which was generated, calculated sion of hypotheses , each of which expresses more profoundly in watts per gram of fuel, compares favorably with light­ man's understanding of the universe. In the course of such a water reactors . Similarly, when this is calculated in terms shakeup, whole series of experim�nts are designed to test of watts per cm3 of fuel-600 watts per cm3 of fuel-the and refine competing hypotheses. comparison is still in favor of the molten-salt cell, that is, In the arena of fundamental theory, scientists also have four to one. In a review paper, BARC's M. Srinivasan com­ profound differences, many of which have already been re­ pares the potential of the molten-salt cell to the Canadian­ ported on in EIR , and will continu!! to be in the future . For designed Candu heavy-water nuclear power plant. the moment, the spotlight is rightly placed on the wealth of experimental data which is being assembled. In any event, Legitimate questions exist on the most fu ndamental level , no tqeory can succeed without The cold fusion debate is complicated by the fact that not firstfac ing the vicious assumption ipherited fromIsaac New­ all of the criticisms are coming from its enemies: There are ton, and incorporated into quantum theory: that the universe legitimate disagreements among scientists about what the functions on the basis of disorder, chance, and therefore process is, how it happens, how to optimize it, and so on. irrationality, which is most clearly �xpressed in the so-called In an interdisciplinary gathering like this was, one prob­ Second Law of Thermodynamics. I lem is that the electrochemists and the physicists do not al­ Dr. Heinz Gerischer of the MjiX Planck Institute, who ways understand each other's working assumptions. Thus, recently retired as director of the iFritz Haber Institute, is the physicists look for chargedparticles; look askance at heat perhaps the most eminent electroqhemist living today . He results and the chemists' assertion that excess heat generated was invited to speak as an unprejuqiced observer. In fact, as during experiments leaves no possibility of a merely chemi­ he admitted in his address, he wasl invited as someone who cal reaction; and they are less impressed by neutron detec­ had accepted the mainstream line that cold fusion was a dead tion. When it comes to theory there are practically as many letter. However, afterreviewing thq available material before theories as experimenters. the conference and then attending !:he sessions at Como, he No one still has any clear idea about about just what changed his view. He would repe�tedly resort to the image is happening in the experiment, even with regard to such of confirmed religious "believers" to describe some of the apparently simple questions as whether the action is oc­ conference participants; yet, turning his irony on himself, curring on the surface of the deuterium lattice, or just below when it came to cold fusion, he d�scribed himself, humor­ the surface, or is an effect involving the whole volume. Not ously, as an agnostic. However, h� echoed the "believers." only does this lacuna affect experimental techniques, but when he expressed the conviction �at the anomalies in the it also raises the question of how measurements are best ratio of charged particles to the pr<*luction of excess heat, is evaluated, as energy per cm2, or energy per cm3• in fact, evidence of the occurrence pf a new nuclear process. Of course, to some degree and in some manner, the reac­ Echoing the thoughts of many at the conference, he said: "If tion involves the total volume and near surface, as well as these quantities are correct, if a {evolution in the nuclear the surface itself. The deuterium first concentrates on the theory has to combine solid state tlteory with nuclear force, surface of the palladium, but then diffuses through the vol­ we have a fantastic, new discovery." ume. It also concentrates irregularly within the lattice, caus­ ing cracking which can impede the reaction, but perhaps Author's Note: The Fall 1991 issue bf21s t Century Science & creating points of concentration which allow cold fusion to Technology will have a report on the leomo conference which in­ take place. Researchers have intense disagreements about cludes pedagogical graphic material, (If help to the general reader the role of impurities in the experiment: Some theorists like in understanding more about the issue$ involved in coldfusion .

EIR August 16, 1991 Feature 47 �TIillIDternational

Soviets threaten Europe with war over Yu goslavia

by Nora Hamerman

The Soviet government on Aug. 7 issued its most sharply diplomatic recognition: "In Brussels, they tell us they want worded statement to date on the civil war in Yugoslavia, to wait for the decision of the IU.S.A. The United States, warning that ''there is a very thin line between good offices again, takes the Soviet view into account. And Moscow is and interference in internal affairs,"and that any such inter­ paying attention to the position of Belgrade, unfortunately." ference would be "inadmissible." The statement labeled the Indeed, if Moscow allowed Croatia and Slovenia to win introduction of outside armed forcesinto Yugoslavia as "un­ independence, it would set a precedent for the breakawayof acceptable. . . . Those who are suggesting the dispatch of many a restive republic within the U.S.S.R. "captive house international armedfo rcesto Yugoslavia seem to bemistaken of nations," something Gorbachov won't tolerate. Whereas, about possible consequences." for the Anglo-American bankers and their tame govern­ The Soviet government hinted that it would absolutely ments, the problem is: If YugoSilaviadoe sn't exist, how can opposeany moves towardrecognition of Slovenia or Croatia, they collect the huge Yugoslav debt? the two republics(of the six in the crumbling Yugoslav Feder­ ated Socialist Republic) which have declared their indepen­ German initiatives dence. ''To enter-whether unwillingly or because of egois­ Moscow's tough words target the Federal Republic of tic temptations--on one side of the conflict would mean to Germany, the nation which is in the unique position to form come into conflict automatically with others inside and out­ ties to the fledging independent republics and create a count­ side Yugoslavia, and the conflict would grow into an all­ erpolein centralEurope to Anglo-American policy. But Ger­ European one." many has precious little maneuvering room. It was German According to reports in the European press, the Soviets ForeignMinister Hans Dietrich Genscher, who said on Aug. are giving military aid to the troublemakers in Yugoslavia, 5 that the European Community must consider diplomatic the Serbians. Serbia, which is still ruled by a communist recognition of Croatia and Slovenia, as well as the creation dictator (Slobodan Milosevic), and which dominates the fed­ of a joint WesternEuropean UnilonlCSCEforce for interven­ eral Yugoslav Army, has been on a rampage to militarily ing in Yugoslavia. Genscher spoke after an EC diplomatic crush the Croatians and Slovenians in a widening civil war, mission led by Dutch Foreign Minister Hans van den Broek out of which they aim to create a GreaterSerbian empire. was torpedoedby Serbian President Milosevic. The Kremlin's demarche came only a few days afterthe In an interview with German radio, Foreign Minister summit meeting of George Bush with Mikhail Gorbachov Genscher stated that any attempt to change borders by force in Moscow, and a visit by Yugoslav Prime Minister Ante in Yugoslavia, in order to create a Greater Serbia, is ''totally Markovic to Moscow. unacceptable." He sharply criti¢ized Serbia's political lead­ Is backing the Greater Serbians in Belgrade part of the ership and said that economic · sanctions are in order. He "new peaceful world order" pledged by Bush and Gorba­ insisted that Serbia has to know that its behavior is "rejected chov? No doubt voicing the suspicions of many, on Aug. 4, by the international community ." Slovenian Premier Lojze Peterle was quoted in the Vienna Genscher also stressed theurgent need to expand the paper Die Presse about Slovenian and Croatianefforts to win European Community to include Austria and Sweden, and

48 International EIR August 16, 1991 to allow for early association with the EC for Poland, the live 71,000 Croats and only 13,000 Serbs. Osijek, which is C.S.F.R., and Hungary-a proposal explicitly contrary to inhabited by 91,000 Croats and 29,000 Serbs, has become a the views stated by French President Fran�ois Mitterrand frontline city." Serbianconquest of theseareas could tummore during a recent trip to Prague. France has lined up with than 160,000 Croats into refugees. Britain against Germany on a whole range of crucial strategic The occupation of the CroatiJ region Krajina, and its issues, including opposing an eventual "blue helmet" capital Knin, has cut the main rail Une between the Croatian peacekeepingmission to Yugoslavia, which Germany would capital, Zagreb, and the central $ld southern portions of like to avoid, but has not ruledout. Croatia's Dalmatian Coast. Meier warnedthat Serbia is plan­ ning "to extend the Serbian areaall the way down to the sea. " Serbia's drive to the sea The Serbianmilitary offensive �s at conquering a terri­ The Serbians can flout all the conventional European torial corridor across Bosnia-He�govina, to unite the two mechanisms of collective security, political solutions, and Serb communities in southern and northeastern Croatia. This diplomacy. Serbia thinks it has a strategic combination of was confirmed in remarks Aug. 2 by Lazar Macura, "infor­ possibilities, which gives it the unique chance to realize its mation minister" of the self-proclaiinedautonomous Serbian thirst for establishing a Greater Serbian empire. On Aug. 4, region of Krajina. He also confirmed secret talks between Milosevic boycotted the latest round of EC meetings with the Serbs and a current of Bosnianl Muslims opposed to the Yugoslav leaders , and said that the Serbs would never accept present Muslim President of Bosnia, withthe aim of splitting European intervention into Yugoslavia. Hours after the EC Bosnia and creating a section that would join Serbia as a effort began, a downcast Dutch Foreign Minister Van den special Muslim satellite. EIR learned that Macura went to Broek admitted, "Our mission in Yugoslavia has failed. At London to conduct a media blitz to push his KrajinalGreater themoment , there is nothing more we can do here ." He added Serbia cause, and while he was there, met Aug. 7 with Serbo­ that ''the world has a right to know" that it was the Serbian Yugoslav Crown Prince Alexander, the would-be monarch side that had been responsible forthe talks' collapse. Yugo­ of Greater Serbia. I slavia now faces "tragedy and catastrophe." Meanwhile, the political elites in Croatia and Slovenia, 'Very precarious' aspiring to their freedomand sovereignty, arejust as commit­ In a briefingon Aug. 7 to EIR' s editors, a leading Europe­ ted to their independence fight as their counterparts in the an political analyst said the strategic situation is "as precari­ Baltic republics. "Their idea is that it is a unique chance ous" as this review had warned it would become if Lyndon given to them by history, like the unique chance that was LaRouche's "ProductiveTriangle"! failed to be implemented seized by the people of EastGermany , and that they will not in central Europe, and "probably even more so." stop, they will not compromise, and they will either win "In the only part of the wo�ld where approximately everything, or lose everything and go under," a European 300,000 American troops with nuclear warheads still face expert told EIR . But Croatia and Slovenia have borne the directly some 250,000 Russian troops in east Germany, and brunt of the fighting, which has occurred on their territory, approximately 30-50,000 troops in Poland, the distance be­ and with their much greatertrade ties to the'west, they have tween the part of Europe where NATO and affiliated troops also suffered gravely from the economic disruption of the are stationed, and the heartland bf the Soviet Union has war. They are in a poor position economically to withstand shrunk, by the distance between �e river Elbe and the river the Serbian "tank communists" for long. Oder," he pointed out. "In this very part of the world, we Serbia is escalating politically and militarily. On Aug. have a dynamic which is not only the potential for war, but 1, Budimir Kosutic was named Serbia's new deputy prime is an outright war." minister. A Milosevic crony, he has a well-earnedreputation He observed that "Yugoslavia lis only about four hours' as a fanatical Serbian chauvinist-expansionist and is the first car drive from Munich, and about an hour and a half from Serb from Croatia to be named a high-ranking official of the Vienna." What was not supposed to ever happen again­ Serbian government. Kosutic is behind the Serbian media war in Europe, 46 years after the �nd of World War II-is barrage slandering Germany and Austria as the plotters of a happening. neo-Nazi "Fourth Reich," because of their sympathy for the NATO members Greece and Turkey are alreadyin danger independence of Croatia and Slovenia. of being drawn in. On Aug. 6, a London paperreported that In the leading daily of Frankfurt, Germany, on Aug. 2, Turkey had notifiedthe State Dep�ment of its concernabout correspondent Vildor Meier detailedthe GreaterSerbian war­ the Yugoslav crisis, particularly in Bosnia, which has a Turk­ plan. "Thepreliminary goal of the Serbian offensive is to estab­ ish minority. Macedonia, the eastdmmost republic, set a ref­ lish a new border (with what's left of Croatia in the Slavonia erendum on independence from Serbia for Sept. 8. Were region) along the line Zupanja on the Sava-Vinkovci-Osijek­ Belgrade to counterwith a regional extension of military and Beli-Monastir. Qearly theSerbians wantto attackthe important irregular operations, this would create anothercrisis area, at railjunction of Vinkovci in the next days, although in this town the border with Greece.

EIR August 16, 1991 International 49 Landsbergis rips both superpowers over new massacre in Lithuania

by Hartmut Cramer

In the early morninghours of July 31, another horrific massa­ to calm down the world media at the summit pressconference cre was carried out in Lithuania, the worst since the "Bloody in Moscow, that his KGB chief Gen. Vladimir Kryuchkov Sunday" of last January, when 14 people were killed and had offered Lithuania's Presid�t his cooperation in getting more than 400 wounded in an assault by Soviet military to the bottom of the latest "inc�ent," was promptly denied forces on the television transmission tower in Vilnius. The in Vilnius. "It's a lie," stated Rita Dapkus, the spokesperson Moscow regime at thattime had cynically exploited the Gulf of the Lithuanian Parliament, in a statement released on July situation, knowing full well that U.S. PresidentBush would 31. "Kryuchkov never made any such offer, and he also did not lift a finger to stop a massacre of the Lithuanian people not speak on the telephone with .President Landsbergis." at the same time he was giving the finalorders for the "surgi­ cal" airbombardment of Iraq, with the ultimate goal-as has Bush drops the mask since been proven-of destroying Iraq's infrastructure and George Bush finallylet his mask drop in Moscow. Instead heavily targeting the Iraqi civilian population. of sharply protesting the massacre, he closely matched his The joint game of the two superpowers in relation to the formulation to that of Gorbachbv; he even had the gall to Baltic states has been functioningever since. The more likely urge "both sides" to exercise Iboderation, which is worse a new summit meeting between Bush and Gorbachov be­ than a slap in the face to the sorelly tried Lithuanians: It is the came, the more frequently there were "border incidents": official admission of the fact that there is no place for the Disguised members of the feared OMON black beret units, sovereign Baltic republics in Bush's new world order. which answer directly to Soviet Internal Affairs Minister Lithuania's PresidentLandsbergis clearly recognizedthis Boris Pogo, would assault a Lithuanianborder post, system­ and drew the obvious consequ�nces. At his July 31 press atically burn down the building, and manhandle and abduct conference, he not only mentiorted the "highest levels of the the customs officers who were on guard there. Soviet leadership" as responsible for the latest massacre, but he also pointedly criticized the . United States: "Every time Executions at Medininkai the U.S.A. improves relations with Moscow, the Soviets hit On July 31, hence at the verymoment when George Bush the Baltic states with armed fortce; especially Lithuania. In and Mikhail Gorbachov were proclaiming in Moscow their fact, the United States of America is making concessions to "new, peaceful world order," a brutal attack occurred on the Moscow, because it is not vigorously demanding from the Medininkai border post, in which six Lithuanian customs Soviet Union that the guilty partiesfor the murders of January officers werekilled and two more werecritically wounded. 1991 in Lithuania and Latvia be ipunished, that the buildings Moscow will have overwhelming difficulties in pres­ occupied by Soviet units be given back, and the OMON enting this massacre, as they have in the past, as a "measured terrorists be withdrawn from the Baltic states. We cannot response"to a Lithuanian "provocation," because the Lithua­ allow ourselves to forget this connection or overlook it." nian functionaries were first forced to lie on the floor ofthe It would be refreshing to hear such clearand courageous customs office, before they were executed with a series of words fromthe German goverrurtent. The closest approxima­ shots to the head. tion so far has come fromDr. WCDlfgang von Stetten, a politi­ Lithuanian President Vytautas Landsbergisinformed the cian from the ruling Christian Democratic Union party. He public on the afternoon of July 31 about the massacre. The is chairman of the German-Baltic Friendship Circle which Parliament held a special session on Aug. 1, and a national was recently founded in Bonn, aJIld which has over 100mem­ day of mourningwas set for Aug. 3, the day the victims were bers of the federal German parliament as members. He de­ buried. manded in a firstcommunique to Gorbachov "that the OMON If there were, after Jan. 13, any illusions remaining in special forces be withdrawn immediately from Lithuania, Lithuania about the coordination of the two superpowers, and serious negotiations be undertaken to nullify the Soviet they arenow shattered. Gorbachov's announcement, crafted occupation of 1940."

50 International EIR August 16, 1991 Interview: Va ldemaras Katkus and Juozas Tumelis

'We need direct economic ties to the European Community' ·

Lithuanian DeputyForeign Minister Valdemaras Katkus and Further, it was decided to open a Lithuanian office in Prof. Juozas Tumelis, the president of Sajudis, the indepen­ Kaliningrad that would deal primarily with solving economic dence movement of Lithuania, were interviewed by Hartmut problems and, beyond that, help to implement the agree­ Cramer in the town of Hiittenfe ld, Germany on Aug. 2, while ments that were made. attending a seminar fo r exiled Lithuanians. Their visit was part of a tour of Germany in late July and early August. The EIR: Can you briefly identify the most important points of Lithuanian 11iformation Bureau is located in Hiittenfe ld. thistreaty with Russia? Katkus: There are two. First, Russia has recognized our EIR: In recent weeks Lithuania has experienced, first, a independence, and also the documents of March 11 [Lithua­ great success in foreign policy, and then, a catastrophe. The nia's declaration of independencel of March 11, 1990] . And murders at the Lithuanian-Belorussianborder station ofMed­ second, the agreement states that the annexation [of Lithua­ ininkai were, in fact, judging by the reports of the few surviv­ nia by the Soviet Union] of 1940 Was contraryto international ing witnesses, executions. What does this mean? How do law, and hence should be abrogated; and such an act naturally you judge the situation in your country? serves to improve the relations between the Lithuanian and Katkus: The events of this week reflect Lithuania's actual Russian people. I should like to emphasize that this is, on situation. On the one hand, a treaty was signed on July 29 Yeltsin's part, a genuine treaty. Yeltsin does not run away between Russia and Lithuania which is, in our judgment, a from problems, but rather is diSpOsed to solve them jointly. genuine treatyon Yeltsin's part with Lithuania. On the other In this connection I should like to point to two other hand, on July 31, the murders in Medininkai were carried things: We began treaty negotiations with Russia at the end out. These two events mark the two poles between which of July of last year. During this year we have had many Lithuania is moving. On the one hand, we cooperate with discussions and have always found compromises, since we those who want thiscooperati on; on the other, there are those were striving for good relations. We began consultations who want to destroy Lithuania. with the leadership of the Kremlin in August of last year, yet The treaty with Russia is significant;it is very important until now there has been no progress with regard to negotia­ for Russia and naturally also for Lithuania. In fact, on July tions. There are no negotiations. Instead, we are subjected 29, three documents were signed: The first is the treaty of to constant pressure, which has now turned intoaggr ession. state relations between Lithuania and Russia, which was For that matter, we have felt these pressures since March 11, signed by bothPr esidents, Boris Yeltsin and Vytautas Lands­ 1990, above all after the blockade was declared against us. bergis. The second concernsthe cultural and economic devel­ Later, during the bloody events of Jan. 13, 1991, they went opment of the Kaliningrad region. At the signing of this so far as to occupy more than 10 buildings, among them the agreement by the prime ministers of both states,also present television tower; and now we have lived through the events was the president of the Kaliningrad region, who had taken of July 31, which were also bloody. part in the preparations for this treaty. The third agreement concerns the opening of consulates in Russia and Lithuania; EIR: How do you judge the reaction of the West to these that is, a representative of Lithuania in Moscow, and a Rus­ massacres? sian representative in Vilnius. This document was signed by Katkus: The reaction of the West to Jan. 13 was quite the two foreign ministers. strong; still, it did not provide a consistent policy vis-a-vis

EIR August 16, 1991 International 51 the Baltic states. Gorbachov, on the other hand, has fo llowed and Lithuania. Western Europe must understand that the Bal­ a consistent policy toward our countries, with the primary tics, as a part of Europe , can only be freed by the Europeans. goal of using violence to oppress us. To the world, however, he declared that he is in genuine consultations or negotiations Tumelis: I should like to go over again the barbaric action with us. After Jan. 13, the occupied buildings were not re­ of July 31. Especially astonishing in that regard are,for me , turned to us, and Western Europe did not take the Jan. 13 the following elements , above all in comparison to the events events as an occasion for helping us get back those buildings. of Jan. 13. First, the complete anonymity. Whereas at that And we think that precisely this position of Western Europe time we knew exactly who had done it, today we know has fostered the most recent incident. Gorbachov and his neither who did it nor who was behind it. Secondly, the people have come to the conclusion that should they in the unusual cruelty of the action, which leads us to conclude that future comport themselves as they did on Jan. 13, nobody in it was carefully planned. There is a surprising coincidence the West would do a thing. in the timing: the parliament in Lithuania on vacation, the After Jan. 13, the representatives of various parliaments signing of the treaty with Russia, and the visit of George of Europe came to us in Vilnius, and also six members of the Bush to Moscow. European Parliament; that had a great political significance This time the occupying forces went further than in J anu­ and gave Lithuania a certain international protection. But ary. It would be terrifying if they were to go on this way. Yet these initiatives took place a relatively long time ago; after they can do so. that there arose an atmosphere in which the rulers of the Who gave thecommand , anq who carried it out concrete­ Soviet Union could feel secure in taking further steps against ly? It is very difficult to answ�r this question today. But us. The aim of the Jan. 13 events , and also those of July 31, everyone who knows the Sovi�t system, knows that such was to balkanize the Baltic problem. In other words, the actions could not be carried out, without the approval of the Soviet communists wish to provoke military resistance on top echelons of power. our part. And they wish to terrorize us, to break the dignity of our people , to stop our economic reforms, as well as EIR: What conclusion does the Lithuanian government demoralize our border police and officials. draw from this barbaric action? Tumelis: We are forced to reaffirm our decisions. We shall EIR: What do you expect from the West, especially from become more united. The biggest problem we have now is Western Europe and Germany? with the activities of the communists loyal to Moscow in Katkus: From Western Europe and the Federal Republic of Lithuania. It is no secret that they want to overthrow our Germany we expect a consistent policy. One can cite many government, which they also so�ght to do around the events examples to show that the methods of the communist govern­ of Jan. 13. They are carrying out active propaganda against ment of the Soviet Union have not changed. In 1939-40, the our government, and are seekiQg to shake the faith of the Estonian ports were blockaded by the Soviet communists; Lithuanian people in the parliament and the government. they simply checked all the ships which traveled to and from Ourfuture will also depend upon the reaction in the West. Estonia. In 1940, a passenger flight from Tallinn to Helsinki Ifthe West is going to react to the events in Lithuania, in the was shot down; all the passengers lost their lives. In Latvia same way that today people react to the Troj an War, or the in May-June 1940, Latvian border police were killed, and Thirty Years' War, then naturally our prospects are much the witnesses to these murders were dragged away to the worse. Soviet Union. The only thing left to find were the empty The war against Lithuania has been going on for 52 years cartridges of the Soviet machine guns. already . Will it go on as long again? To this question, we do In those years , Moscow accused the governmentof Lith­ not have an answer today. uania of persecuting the communists, kidnaping Soviet sol­ diers, and doing everything to get the Soviet Union involved EIR: Earlier you mentioned the coincidence between the in a war, even though Lithuania at the time had no borders frightful massacre in Medininkai and the visit to Moscow of with the Soviet Union. I recount this as proof, that the meth­ George Bush. The U.S. President has not protested against ods of the communists of Soviet Russia vis-a-vis the Baltic the massacre; instead, he went so far as to make Gorbachov's states are the same , no matter who is in power, Stalin or formulation his own, that "both sides" should avoid provoca­ Gorbachov: economic blockades, murder of border officials, tions. Does the Lithuanian government fear an agreement and provocations; for example, by blowing up bombs which between the superpowers in relation to the Baltics, that is, were laid by the Soviet forces themselves; these methods the abandonment of the Baltic sUites? have not changed. Katkus: Our people, the citizfjns of Lithuania, have such Everything at that time occurred in the shadow of the fears . And they have historic grounds for this. After the coming war; today , however, we have peace in Europe , and Second World War the Amerioans assured support to our we still believe in the collective security of Estonia, Latvia, partisan troops which were actively fighting against Soviet

52 International EIR August 16, 1991 occupation, and announced that they were coming. The EIR: What concrete help do YO expect from the West, armed resistance of Lithuania lasted some 14 years . After particularly Western Europe? that, people said, "America has betrayed us ." l Katkus: Above all making clear a osition that the creeping What happened on July 31 reminds people in our country aggression must cease, that we mu!st have returned to us all of this post war period . And the concern that has arisen from the occupied buildings, and that thf.aggressive troops of the that, has naturally also been noticed by the government of Soviet Union must be pulled out or.Lithua nia. We demand Lithuania. The question is the same: Is there some kind of the inauguration of an internation�l commission to investi­ superpower agreement? gate the bloody events . Our problems should be discussed I within the framework of the Helsinki process. In this regard , Tumelis: It seems to me that various agreements have al­ I am thinking about a special conference which would set ready been made, probably already in 1989 in Malta. Many itself the goal of solving the Baltic �roblem. That would also of the Malta accords astonish me, especially when I compare contribute to stabilizing the situati9n of this entire region . them with subsequent events in central Europe . Very likely, Naturally we need good cooIXfation in the areas of the Bush and Gorbachov at the time discussed a new division of economy and trade, not by way 01 the Soviet Union, but spheres of influence . Gorbachov could no longer hold central rather in a direct manner. Otherwise, the Soviet Union should Europe as he had formerly, and neither could he keep it as a continue to possess the corollary beans for keeping us in cordon sanitaire . He gave up this region to the sphere of subjection. We are ready to unde�e and implement con­ influence of Western Europe , and for that he probably ob­ crete economic projects in coope�ation with the European tained some promises; for example, that the borders of the states, with the European Community, or on a bilateral basis. I Soviet Union would not be changed, i.e., that the Baltics For it is through concrete economic cooperation that many would remain part of the Soviet Union. of our problems might be solved.

Bessmertnykh's upcoming trip to I rael. Eisenberg's presence at, and participation in, the sum­ .ShaulEisen berg at mit, has beentotally blacked out of �e international media. Sources in Germany familiarw th the goings-on at the U. S. -Sovietsummit summit and with the details of the Middle East negotia­ tions, say that "big surprises shou d not be excluded" in Senior Israeli businessman and intelligence operative the Middle East over the comin� one to two months, Shaul Eisenberg was present in Moscow at the Bush­ which may involve Israeli PrimeM nister YitzhakSh arnir Gorbachovsummit as a "surprise" participant, and played "popping up" in Damascus, or pe �aps Syrian President a special role in striking a Soviet-Israel-U.S. deal at the Hafez al-Assad popping up in Israe 1. summit, EIR has learned. One Israeli source told EIR th t Eisenberg "is do�ng What the Soviets indicated, in Eisenberg's presence, an enormous amount these days beth in the Soviet Union was that they were in desperate need of financial re­ and China, he's built up a very big thing. His direct con­ sources, and that "Jewish financial interests" could pro­ tacts are enormous in both countrie . In the Soviet Union, vide help in this direction, whereas the Palestine Libera­ he can speak, when he wants to, t� both Gorbachov and tion Organization, which is seen increasingly as a Yeltsin. In China, he's the first they call in, when special "nuisance" by the Soviets in any case, could not. problems arise, whether it be agri(ulture , or other areas. He has a very fine sense of pow r. He's become very Soviet concessions important for the Soviet Union. He's part ofa whole Eisenberg reportedly agreed to expedite significant galaxy of Israelis with special kno -how, who are restor­ funds for conversion of Soviet industries and for other ing vast tracks of agricultural Iand and are involved in projects, in exchange for two conditions on the Soviet other business, particularly in th Soviet Far East. As side. One was continued Soviet Jewish emigrationto Isra­ Israel aided Africa in the 1960s, s it is now doing in the el, and the other was that the Soviets would drop the Soviet Union. And Eisenberg's stlength, is that he keeps PLO . Past days' Soviet statements attacking the PLO have politics out of it all, it's pure ecooo nics, except ofcourse , codified the latter part of the .deal . Further arrangements there are political or diplomatic spin-offs , as we see in the will be made during Soviet Foreign Minister Aleksandr Middle East right now. "-Mark B �rdman

EIR August 16, 1991 International 53 incident in the Kashmir Valley where 40 Israelis, ostensibly tourists with arms training, were involved in a shootout with Foreign powers behind militant Kashmiris seeking separation from India. Since In­ dia and Israel have little in the way of diplomatic relations, Gandhi assassination? the presence of the Israelis in the troubled Muslim majority state of Kashmir adj acent to Pakistan has raised the specter by Ramtanu Maitra of yet another India-Pakistan war. The question is, who were these Israelis, why were they allowed into Kashmir,and what inroads has Israel made into theIndian political arena? Indian Home Minister S.B. Chavan's July 26 statement that the one-man commission of inquiry on the assassination of Israeli interest in the subcontinent Rajiv Gandhi would be expanded, indicates that the two­ The incident in Kashmir confirms Israel's continuing in­ month-old effort to find out who killed the former prime terest in the region. It is widely known that the Mossad was minister has hit a brick wall. The government's attempt to involved in providing counterinsurgency training to the Sri blame the militant Tamil Tigers from Sri Lanka has failed, Lankan Army in the 1980s. Later, Mossad agent Ostrovsky's and Chavan's hint that foreign powers may have been in­ expose of Mossad activities indicated that the Israelis had volved in the assassination, given Gandhi's prominence as a trained both the Sri Lankan Army and the Tamil Tigers in Third World leader, opens a broader investigation. the use of explosives. It is also a matter of speculation what Following the May 21 assassination of the Congress (I) the Anti-Defamation League (ADL) , the Zionist lobby in the president in the middle of India's 10th general election cam­ United States, was up to when i� took a high-level delegation paign, the media and Indian intelligence spokesmen pointed to India in the mid- 1980s. the finger at the Tamil Tigers . The motive, it was asserted, Particularly since the Gulf war, the pro-Israel lobby in despite contrary indications, was a vendetta against the al­ India has become extremely active. A number of former leged brutalitiescommitted by the Indian Peacekeeping Forc­ Army generals who joined the Hindu chauvinist Bharatiya es (IPKF) against the Tamils while stationed in Sri Lanka for Janata Party (BJP) during the recent election campaign, have two years in an attempt to bring peace between the warring come out promising closer Indian-Israeli relations. Leading Tamil secessionists and the Sri Lankan government forces. Indian strategic analysts, such as K. Subahmanyan, also sug­ The Indian presence had been agreed upon in July 1987 by gest that to improve New Delhi1Washington relations, India Gandhi and then-President Junius Jayewardene. The IPKF must cozy up to Israel. The emeigence of Rep. Steven Solarz failed in its mission and came to be identified with the Sri (D-N.Y.) as the pro-India lobb� in Washington is an indica­ Lankan government. tion that policymakers are proceeding along these lines. Despite clear evidence that the Tigers were aware that India's sidling up to Israel, �beit covertly, makes Paki­ Rajiv Gandhi was likely to emerge the victor in national stan suspicious of India's intentions. The incident in the elections, and were opening a communication channel with Kashmir Valley has evoked angry statements from top Paki­ him, the Tamil guerrillas were blamed. But after arresting stani officials, and it has worsened India-Pakistan relations some 2,000Sri Lankan Tamils, including a number of "prime at a time when the new prime ministers in India and Pakistan suspects," Indian authorities have not been able to clinch might otherwise have begun a dialogue to resolve bilateral their case. The alleged mastermind of the killing, Sivarasan, matters peacefully. With the el1d of the Cold War, which has eluded the security net for more than two months , and a kept India-Pakistan relations strtlined for decades, there is a recent report indicates he was seen in Sikkim, a state in the real basis for progress. I Himalayas about 7,000 miles fromthe scene of the crime. Moreover, it is evident fropt Iranian Foreign Minister Meanwhile, a number of incidents in India have surprised Akbar Velayati' s remarks recenlly in Pakistan thatthe Islam­ authorities. The latest was the escape and death of V. Shan­ ic countries will not give up their support for the Kashmiri mugam, another "prime suspect," on July 20. Shanmugam, militants (see International Intelligence). The presence of who had been arrested two days earlier, was found hanging Israeli "tourists" in Kashmir will predictably harden their from a tree near the bungalow in which he was imprisoned. stance. In the words of a statement by the ruling Congress (I) mem­ Rajiv Gandhi was crucial to the stability of thesubconti­ bers of parliament, the death of Shanmugam "has amply nent. He was emerging as a leading Third World political proved that the special investigative team (DIT) is neither figure, and his murder has provided foreign powers the flex­ capable, nor willing to conduct a sincere and proper investi­ ibility to operate on the subcontiinent. The Israelis may well gation. " Two days later, Defense Minister Sharad Pawar told be involved in seducing the Ind'ans to believe that they can newsmen in Pune that India will not tolerate attempts from solve the Kashmir problem and remove the nuclear threat outside to destabilize the country. from Pakistan, but they are most likely operating on orders Pawar's statement came almost a month after a bizarre from elsewhere.

54 International EIR August 16, 1991 cordingto intelligence sources, Tiny Rowland then provided South Africa the ANC with $20 million to move its headquartersto Johan­ nesburg. In addition, as President De KIerk pointed out in , his press conferences answering the charges of government funding of Inkatha, the ANC has received $94 million since ANC reaps benefits the mid- 1960s fromone country alone, namely Sweden. And Australian Foreign Minister Gareth Evans promised the ANC of funding scandals $1.4 million directly from Canbeq-a' s treasury when he was in South Africa in June. In short� the ANC is not without resources itself. by Linda de Hoyos It is believed, according to the London Financial Times, that half of the "national working committee" of the ANC, As South African President Frederik de Klerk was nearing which was elected in mid-July, is composed of members of completion of negotiations with the African National Con­ the South Mrican Communist Party. However, U.S. intelli­ gressand other partiesfor the dismantling of apartheid, reve­ gence sources have reportedto EIR !that a deal has been struck lations suddenly burst in the South Africanpress July 20 that between the Soviet Union and the Oppenheimer group that the De KIerk governmenthad been funneling money into the the Soviets will cease to use the ANC as an asset in return Zulu-dominated Inkatha movement of Zulu Chief Mangosu­ for South African cooperation on' setting up a gold cartel. thu Buthelezi. By July 21, the charges had been confirmed South Africaand the Soviet Unionicombined supply half the by then-Law and Order Minister Adriaan Vlok, who said that world's gold supply. the government had secretly provided funds for the labor The ANC is now poised to maximize the political benefit union associated with Buthelezi and upwards of $500,000 of the revelations, which conveniently give the ANC a boost for two Inkatha rallies. after Winnie Mandela's conviction on kidnaping charges. The revelations have rockedthe precariousbalance upon Nelson Mandela proclaimed that the"current exposures dem­ which De Klerk has attempted to negotiate a multi-party onstrate quite clearly that De KIerk and his ministers cannot alliance in South Africa leading toward the dismantling of be trusted to supervise the transitiJon to a democratic South apartheid, a revisedConstitution, and national elections. Africa. If the political field is to be truly leveled, a multi­ The immediate gainer from the political explosion is the party interim government of national unity should be set up AfricanNational Congress (ANC)of Nelson Mandela, which to oversee the transition. " has been engaged in a fratricidal warwith theInkatha for the The ANC's backers in London go even further. Writing last two years. in the Financial Times, Patti Waldmeir floats a scenario un­ . But behind the ANC stands a scenario pushed by the der which the ANC would be immediately brought into the British-linked financial nexus of Harry Oppenheimer (An­ government, supposedly to keep the De KIerk government glo-American Corp.)and ''Tiny'' Rowland (Lonrho), to de­ "honest." Waldmeir claimed in an article July 29 that "the rail De KIerk'sefforts formulti-racial and multi-party unity government believes confidence in the security forces can in South Africa. Oppenheimer's Anglo-American Corp., ac­ only be restored once joint control and supervision of the cording to South African sources, owns or controls 50% of police and military has been assured. This could include all the companies listed on theJohannesburg stock exchange, appointing members of theANC and other opposition parties and also controls most of the nation's newspapers. The aim to key positions in the public service, including the security of Oppenheimer and Co. is to impose the "Rhodesian model" forces. on South Africa, whereby thecountry is handed over to black "The governmentin Pretoria has been willing to compro­ majority rule. The reasoning is simple: A government that mise on the interim governmentissue but the measures being excludes whites is a far less powerful entity and far less able considered go well beyond earlier proposals. They would to resistthe escalated looting of South Africa by the Lonrho­ involve joint control of the executive branch of government, Oppenheimer-DeBeers complex. Lonrho, for example, is rather than merelyappointments of ANC and any other oppo­ now extremely prominent in Zimbabwe since the 1976 repu­ sition group leaders to an expanded cabinet. " diation of coalition rule, with a total of 25,000 employees in In part, the scenario is to hand over coalition power to that country alone. the ANC even beforeit demonstrates its strength at the polls. That strength may very well be questionable. The Inkatha ANC revived Freedom Party has a membership of 2 million, while the In 1985, according to South African sources, the ANC ANC has only 300,000members . AlthoughButhelezi ' s party was languishing in a moribund state with headquarters in is not believed to be strong in the cities, the Zulu chief has Lusaka, Zambia, when ANC leaders there were visited by made assiduous and reportedly successful efforts to gain Anglo-American Corp. chief executive Gavin ReIly. Ac- votes among the country's white population.

EIR August 16, 1991 International 55 he personally had met with Mehem and with several of his emissaries, to seek solutions to the military crisis. Instead, together with the Army's high command, Menem not only 'New order' to leave ignored those grievances; he took steps which threatenedthe institution as a whole. Argentina defenseless The high command persecu¢d nationalists who demand­ ed that the dignity of the military institution be respected. b by Cynthia R. Rush But as Army engineer Maj. Ru en Fernandez documented in his testimony, that's not all I they did. The generals, he charged, were "accomplices" in permitting the looting and As EIR goes to press, the three-month trial of 15 Argentine theft of military companies such as Fabricaciones Militares, Army officers is coming to a close in Buenos Aires. On trial and the handing over of natural resourcesto foreign, particu­ in federal court for their participation in the Dec . 3, 1990 larly British, interests. The loss of the Air Force's Condor IT uprising against the Army high command, the nationalist missile, and the bankruptcy of the giant steel complex Somi­ officers are charged with "mutiny and rebellion with shed­ sa, are the result of their corruption, Fernandez said. ding of blood. " Their attempt to remove the Army high com­ Major Fernandez was eloqueJit in discussing the national­ mand and change government military policy, was falsely ist military tendency of promoting infrastructural and techno­ portrayed in the Argentine and international press as an at­ logical development. Referencing Col. Romero Mondani, a tempted coup against President Carlos Menem. Press ac­ nationalist officer who died during the uprising, he asked, counts played offthe liberal media's years-long characteriza­ "What choice did he have? He was a scientist and an engi­ tion of Argentina's Armed Forces as coup-mongers and neer. He was watching 50 years of work going down the fascists. drai n. " The nationalist officers areknown by the term carapinta­ Especially in Argentina, where a strong nationalist tradi­ das(painted faces), a reference to the camouflage paint they tion has existed historically, th� Anglo-Americans fear that use in combat. Although they were sentenced to harsh jail Seineldin will be the rallying point for a morally inspired terms by the military court which tried them immediately political resistance to their policies. Thus, in his final summa­ following theDecember events , federal prosecutor Luis Mor­ tion, prosecutor Moreno Ocampo attempted to ridicule the eno Ocampo is seeking even tougher sentences now. He has profoundly Catholic principles Which guide the carapintada singled out for attack Col. Mohamed Ali Seineldin, the hero movement, comparing it, and :Seineldin in particular, to of the 1982 Malvinas War whose commitment to the defense Adolf Hitler and the Nazis. of national sovereignty and the institution of the Armed Forc­ In one and a half hours of forceful testimony, the colonel es has made him a major obstacle to the Anglo-American ripped the prosecutor's arguments to shreds. Particularly establishment's objectives. Jailed at the time in southern Ar­ since 1976, he said, Argentina I has been under assault by gentina, Seineldin took full responsibility for Dec . 3, and "international financial centers'" whose leaders were deter­ early this year, a military court sentenced him to a minimum mined to "integrate the Republi(: of Argentina into the new jail termof 20 years . international order . . . definiti�ly replacing the traditional On Aug. 8, Colonel Seineldin and several of his co­ Argentine state ." To achieve thllt aim, he explained, these defendants gave dramatictestimony to demonstratethat rath­ financiers had to dismember the j<\rmed Forces and define its er than a coup attempt, the events of Dec . 3 were the lawful mission as "regional and international"rather than as defend­ outcome of the provocative policy toward the Armed Forces er "of the nation's highest interests." The current government implemented by Carlos Menem and his predecessor, Raul has agreed to inserting ArgentiP-a into this "New Order," Alfonsin. EIR correspondents on the scene reported that the the colonel continued. That, he!added, is the only way to officers' emotionally powerful statements emphasized that understand Menem's demand Oil Dec . 3, that Seineldin and their actions were a response to Anglo-American attempts other officers be summarily exe!::uted, and the lying propa­ to dismantle the nation's institutions, including the Armed ganda about the carapintadas p\ans . No resistance to these Forces. As a result of this policy, Seineldin warned, "We're Anglo-American plans can be tolerated. entering [Bush's] new world order defenseless, with our Nonetheless, he stated, the a¢t of taking full responsibili­ hands behind our necks , crawling on our knees, poor and ty for the events of Dec . 3, 1990 is a "sacred privilege." His destroyed." subordinates, he said, "put to one side their personal interests and acted to "rescue their institQtions ....Had I not taken A deliberate policy that responsibility . . . I would h_ve been considered a traitor Since taking office in July 1989, Menem had repeatedly to the Fatherland and undoubtedly, upon my death, con­ promised to address nationalist grievances and try to resolve demned before God's Tribunal, the only court which, aside the Army 's internal problems. Seineldin documented that from feeling respect, I fear."

56 International EIR August 16, 1991 inhabitants .... Documentation [Our enemies use] this well-knownstate of weaknessand defenselessness, to change our religiousand cultural values; fragment and cut offpart of our nationalterritory ; . . . expro­ priate our energy and food wealth, and areas of geopolitical Seineldin's testimony: interest; make Argentine citizens feel defenseless, thus im­ posing firstpsychological andthen physical domination. . . . the mission of the Army Finally, [they seek] to integrate the Republic of Argentina into thenew world order to beestabli�hed in the 21st century, Thefo llowing are excerpts from testimony given in Buenos definitivelyreplacing the traditionalArgentine state . We will Aires fe deral court by Col.Mohamed Ali Seineldfn on Aug. 8. be poor and dependent. . . . To achieve their objectives, methods of modern war­ Military laws and regulations clearly establish that the Army psycho-political war-will be applied, which will invade all is the military arm of the Fatherland and one of the nation's areas of the national state, with far more lethal weapons than fundamental institutions. Its mission is to safeguard the Fa­ those in the militaryarsenal s: drugs, as animportant chemical therland's highest interests. It must therefore always be pre­ weapon; sterilization, abortion, m$lourishment, hunger, pared to defend its honor, the integrity of its territory , and unemployment, and prostitution, as powerful biological the nation's Constitution and its laws .. .. weapons to destroy life; ...anti-drug "agreements" and From the numerous documents and testimony presented privatization for ecological aims, which will facilitate the at this trial, we can show that, today, the Armed Forces are installation of foreign forces, peacefully invading our Na­ not the military arm of the Fatherland; are not one of the tion .. .. nation's fundamental institutions; and are in no condition to Knowing the problems and feelings of the Army , I can safeguard the Fatherland's highest interests .. .. guarantee that, if the real causes [of this crisis] are not re­ Beginning in 1976, there was a substantial change in the solved, the effects will increase in seriousness.. .. traditional political schema, according to the future division of the world, later called the "New Yalta." The economic , A sacred privilege' system of development and production was to be replaced The dismembering andweakening of the ArmedFor ces, with a financialsystem of speculation, which would accentu­ and the security, police, and corrections forces, will contin­ ate dependency. Political decisions would be subordinate to ue, as this is part of an international plan agreed on by the economic ones. To achieve this, it was necessary to weaken currentgovernment and for the purposeof insertingArgenti­ the five natural pillars of the Argentine state: the Church (as na into the [state] of dependencyknown as the "New Order." a spiritualfor ce); political leadership; ...the Armed Forces One could never understand otherwise [President Carlos (as a force for defense and development); small- and medi­ Menem's] order [that nationalists be] summarily executed um-sized industry (as an economic force); the trade unions without a fair trial for the events of Dec. 3, or the huge lie (as a social force) .... that we were going to assassinate qr. Menem, and a whole The plan to weaken the national defense forces is as series of actions taken to prove to public opinion that we follows: were irrational rebels. . . . Regarding the national strategic and military level . . . I am the only one responsible for Dec. 3, 1990, and I all areas will be privatized and, undoubtedly, some will be share that sacredprivilege with no subordinate .... bought up by potential enemies .. .. The national Constitution states in its preamble, "to pro­ Regarding operational strategy, priority will be given to vide for the common defense," an ideal which always moti­ the Argentine Navy over the other two branches ....The vated my actions .. ..In response to two years of effort ... Army and the Air Force will be reduced to a tactical level to resolve the [military] problem, I received indifference, . . . using them in the war against drug traffickingand terror­ arbitrariness, ridicule, and imprisonment. Under these cir­ ism, in coordination with foreign forces, to be deployed to cumstances, I had no other option but that adopted on Dec . Argentine territory . . . . 3, 1990, because its causes were legitimate and synthesize The constitutional mission will be replaced by a "regional the feeling of the nationalistdef ense forces .... and international" one, which has nothing to do with the Backed by our just banners, established in the national Argentine Nation .. .. Constitution and in militaryrules and laws, and remembering Today we are in a state of grave defenselessness, which my dead, maimed, wounded, and exiled comrades, I express prevents fulfillment of the national defense mission . . . my will, aided by that well-known saying of [the Liberator] [which is] protection of cultural and spiritual values, protec­ General San Martin, "When the Fatherland is in danger, all tion of national territory , protection of energy and food re­ is allowed, except lettingit perish." This is our commitment. serves and areas of geopolitical interest, protection of our God and Fatherland, or Death.

EIR August 16, 1991 International 57 Australia Dossier by Lydia Cherry

Hollinger takeover bid in Melbourne ral editor. An Aug. 7 article by Ma­ The corporation whose purchase of the 'Jerusalem Post' ushered cLean in The Age attempts to tie the Citizen's Electoral Councils in Aus­ in the Sharon war cabinet is now staking out turfin Australia. tralia to "right-wing white suprema­ cy" groups "distributing racial and anti-Jewish propaganda." MacLean reports that the CEC "is closely linked to the Lyndon T he Hollinger Corporationof Con­ industry in Australia. With the excep­ LaRouche politicalorganization in the rad Black, owner of the London Daily tion of the Fairfax Group, Australia's United States." TheCEC has emerged Telegraph and the Jerusalem Post, is media is already controlled either by as a major iheadache for the Hawke now engaged in a takeover bid for The Rupert Murdoch or by Packer. government, becauseof the grassroots Age newspaperin Melbourne,Austra­ Packer is suspected among many resistance it has mustered to the gov­ lia, and the entire Fairfax Group of Australian intelligence circles of ernment's dismantling of the farm newspapers. On July 28, Black met involvement in the dope trade cen­ sector. with Prime Minister Bob Hawke and tered in the Far East. In the early The article reports that police are other senior cabinet ministers to make 1980s, the parliamentary Costigan "investigating" various Australian the case for the purchase of the Fairfax commission conducted an extensive groups for anti-Jewish activity, citing group, and Black said after the meet­ investigation into Australian illegal­ in particular the White Aryan Resis­ ing he was sure Hawke would not drug trafficking. The commission's tance (WAR) and the Christian Identi­ apply anythingother than "reasonable vow was to "go after the bosses." ty Ministeries. She then makes the criteria" to the decision. Black has In informed circles the "bosses" "connecto" that an advertisement was dismissed critics of the proposed deal were known to have meant Kerry purchased by the Christian Identity as "paranoids." Packer and his friend Sir Peter Abeles, Ministeries In the New Citizen, news­ The takeover bid has sparked a a multimillionaire who heads the giant paper of the Citizens Electoral Coun­ controversy in Australia for two rea­ transport company, TNT. The com­ cil. The Age's smearwas followed by sons. One is Hollinger itself. The mission, however, was shut down pri­ a rural radio broadcast in Victoria megacorporation is one of the chief or to their official identification. claiming, falsely, that the WAR had operational agencies for the Anglo­ Despite the protests of the Holl­ direct links to the CEC. American establishment, as its board inger-Packer takeover of the Fairfax Last March, a full-page slander ar­ of directors would indicate: former group, the Melbourne Age is appar­ ticle on the CEC and LaRouche was U.S. Secretary of State Henry Kis­ ently priming itself for the change in published, also penned by MacLean, singer, former British Foreign Minis­ management. When Hollinger took which relied highly on an interview ter and NATO Secretary General Lord over the Jerusalem Post in the spring with Mira Lansky Boland of the Anti­ Peter Carrington; and Peter Bronf­ of 1990, the paperabruptly shifted its Defamation League's Washington man, cousin of Seagrams-DuPont editorial line, solidly backing the D.C. office.i(Prior to being given the magnate Edgar Bronfman, president coming to powerof the warcabinet of ADL post, Boland worked for the of the World Jewish Congress. Prime Minister Yitzhak Shamir and Central lnteUigence Agency.) Black himself is reportedly a sec­ Housing Minister Ariel Sharon. The Timed to coincide with the Ma­ ond-generation British Intelligence Hollinger-backed change in govern­ cLean piece. Mark Liebler went on financial warfare specialist who was ment in Israel set off the chain of the radio and television airwaves call­ sponsored by one of Her Majesty's events that led to the war against Iraq , ing for strong laws to halt "incitement leading wartime spymasters, Edward which the Post strongly backed. The to racial hatred. " Liebler is the brother Plunket Taylor. Post editorial shift also caused the of lsi Liebler, vice president of the The second problem is that Hol­ wholesale walkout of the Post's previ­ World Jewish Congress under Hol­ linger's partner in the deal is Austra­ ous reporters and editors . linger's Bronfman. In short, the indi­ lian multimillionaire Kerry Packer. At The Age, however, one report­ cations are that the dirty tactics of the Australian critics of the buy-up point er at least definitely plans to stay at ADL are being escalated in Australia, to Packer's potentially huge grip on her post under Hollinger manage­ a campaign Hollinger can be relied an increasingly concentrated media ment: Sheena MacLean, so-called ru- upon to boost.

58 International EIR August 16, 1991 Panama Report by CarlosWe sley

New outbreak of judicial terrorism His return now is most curious, Endara and his masters come down hard on critics . Are these as the U.S. Justice Department was supposed to bring charges against him guys thin-skinned or do they have something to hide? for selling the "Noriega tapes" (which Blandon got from Justice) to CNN. Since his return,I he has been meeting with Attorney General Rogelio Cruz, On July 22, the U.S.-installed gov­ demic freedom and academic a partner of the Cali Cartel, and oth­ ernrnent of President Guillermo En­ excellence. Mr. Sim6n is a solid citi­ ers , to find new; ways to incriminate dara issued a warrant for the arrest of zen of Panama," wrote Clark. "Ce­ Panamanian natipnalists. Prof. Cecilio Sim6n, for an alleged cilio Sim6n is no criminal." Panama's National Committee on political killing that occurred 14 years Endara, in his July 29 reply, said: Human Rights �eader, Olga Mejia, ago ! The arrest was ordered "on in­ "I don't know-nor have I heard of­ charged on July 24 that there is no structions from the U.S. military Prof. Cecilio Eduardo Simon. By "judicial independence in Panama" SouthernCommand ," said a source in what is contained in your letter, I don't and accused the occupation govern­ Panama's legislature . Two people believeI would be interested in know­ ment of fabricating cases, of pres­ now claim they saw Sim6n, in the ing him either." He added sarcastical­ enting false witnesses, and of con­ dark, during a wild melee between ly, "Simon . . . is not above the law, demning innocent people without any Panama's Communist Party and the even if he has Ramsey Clark as his evidence of guilt. She took to task Trotskyite FER-29 in 1978 at the Na­ godfather. No one is persecuted in Amnesty International, the U.N., the tional University, which resulted in Panama for their beliefs or opinions. " OAS, and others , because "they lack the death of one member of each Because Panama has separation of energy" in dealing with human rights group. powers, "a system of government you complaints against the current re­ No warrants have been issued for are familiar with, the Executive gime. "They arCj not acting with the members of either group . Simon, who branch cannot get involved in the af­ same energy as they did with the for­ belonged to neither, was fingered by fairs of the Judicial branch," wrote mer government," she said. a member of Panama's Communist Endara. She raised the case of Isabel Cor­ Party . Moscow recently recognized The response caused gales of ro, whose arrest wa:s ordered in July the Endara government, the firsttime laughter among Panamanians who re­ on charges of being the "intellectual the two countries have ever ex­ call that just weeks ago, Endara went author" of "paioling slogans" in Pana­ changed diplomats, and Panama's on television to call for the firing and ma City against the U.S. occupation. Communists have endorsed Bush's jailing of a judge who ordered the re­ Corro is leadin* the fight to account Enterprise for the Americas . lease on bail of Col. Marco Justines, for those killed during the 1989 U. S. The arrest order against Simon, the former chief of staff of the Pana­ invasion, and she was featured last who was the dean of the School of manian Defense Forces, who has been September on CBS "60 Minutes" say­ Public Administration at the National held for 18 months without a trial. ing that at least 4;000 Panamanians University until his removal by occu­ The arrest order against Simon were killed. pation authorities last year, caused was part of renewed repression since Corro's arrest was ordered as the former U.S. Attorney General Ram­ the early-July return of Jose administration rushedto keep thecov­ sey Clark to write a letter to Endara Blandon-he had been under the erup in place. U.S. Assistant Secre­ on July 27 , urging him to "make sure "protective custody" of U.S. Mar­ tary of State for Inter-American Af­ there are no abuses of prosecutorial shals at military bases. Panama's for­ fairs Bernard Aronson told a power." The warrant against Simon, mer Consul General in New York, on congressional dommittee on July 30 "for an offense allegedly committed whom the CIA has a thick file docu­ that "there is nb basis whatsoever to many years ago, would clearly be in­ menting his dealings with Cuba, be­ the reports that thousands of civilians tended to destroy freedom of speech, trayed Gen. Manuel Noriega, and was died," and anyone saying otherwise association, and political activity." listed as the U.S. star witness against is "demagogic." The Pentagon's Gen. Clark reminded Endara that Si­ him last year. Blandon's many contra­ J ames Harding �ingled out Mrs. Corro m6n's removal as dean "was univer­ dictory statements have since discred­ by name and insisted that there were sally seen as an attack on both aca- ited him. only 272 confirmed dead.

EIR August 16, 1991 International 59 InternationalIntel ligence

were starving." The bishop described the Mohamad called the We stern press "a KGB chargesPakistan coalition's aerial bombing of an Iraqi Army threat." He said that it was not easy to ban with 'destabilization' column in retreat on the highway outside a newspaper or expel a reporter, but that Kuwait City: "Whoever went to see what is sometimes it must be done. "You don't do Anatoli Beloussov, head of the Soviet KGB now called 'the highway of hell,' described such things without getting a bashing from in the Central Asian Republic of Thdzhiki­ blood-curdlingscen es. This is a burden that the Fourth ,Estate and those who consider stan, made a most unusual attack on the will remain on the human conscience." themselves.holierthan us," he said. But "the Giorni Pakistanispecial services, according to Ra­ Now, after the war, 30 writes, mindless a�ceptance of someone else's in­ "the small Catholic community in Kuwait dio Moscow of Aug. 2. He charged them terpretatioq of democracy and an unques­ desaparecida with spreading Islamic fundamentalism could become the last in the tioning subbrission to certain practices, as throughout Central Asia, "destabilizing the desert stonn-a 'disappearance' to be seen for exampl� the 'right' to fabricate and tell public and political situation in the Central as part of the collateral effects of this 'just lies, will undermine not only the fledgling Asian republics, and creatingthe conditions war,' and which is not even noticed, now democracies, but the democratic system it­ that the eyes and the appetites of the world for their secession" from the U.S.S.R. self. This, [the countries of Asean can ill are focused on the billion-dollar contracts Beloussov claimed to have "irrefutable afford." for reconstruction." proof' that Pakistan used Mghan mujahed­ Said Micallef: "The opening of the bor­ din forces in such efforts. He said his wam­ ders is selective. Among the Catholics the ing is not directed against Islam, but is in­ percentage remains very low ....The Pal­ Iran's Ve layati looks tended to "protect the constitutional system estinian community cannot be criminalized fromsubversive activity." to Afg h,anistan, Kashmir in toto for collaborationism. Now all Iraqi Curiously, the theme of Pakistan's al­ and Palestinianresidents have been advised leged destabilization of Soviet Central Asia Iranian For¢ign Minister Ali AkbarVe layati to stay home. Nobody was re-hired." has been raised in the context of the U.S. arrived in ltakistan on July 28 for tripartite Giorni accuses the Kuwaiti authori­ investigations into the Bank of Credit and 30 talks with !Pakistan and the Afghan mu­ ties of "discouraging the return of the 'sta­ Commerce International (BCCO. Jack jaheddin, o� an early political settlement in ble' foreigners , who before thewar amount­ Blum, the chief investigator for Sen. John Mghanistan. ed to 70% of the population. A real plan of Kerry (D-Mass.) on the case, told reporter Heavy fighting is continuing between expulsion seems to be being implemented LarryCollins, as reportedin the/nternation­ the guerril as and Afghan government for some ethnicgroups: the Iraqis and above ' al Herald Tr ibune, that the real story of troops, and ltundredsof people werereport­ all the Palestinians, the biggest community BCCI, is that it was a Pakistan-basedopera­ ed killed or injured when an arms depotwas beforethe war." tion of the late CIA chief William Casey, to blown up i, the capital of Kabul recently, fund destabilizations of the Central Asian the Pakiswp newspaper the Nation report­ regions of the U.S.S.R. ed. The bla�t was reportedly caused by rock­ Asean countries seek ets fired by i mujaheddin troops blowing up thousands ofmissil es, including Scuds. Kuwait's Catholics deny to counter medialies A decliration issued after the talks called for a "peaceful solutionof the Mghan reports of Iraqi crimes The six member countries of the Association problem un�er which Afghanistan's Islamic of Southeast Asian Nations (Asean) agreed identity and its independent, non-aligned, "TheIraqi soldiersrespected us .. ..Reports totake steps to promotemore balanced, less and sovereiinstatus are restored." of violence and murders of Catholic priests destructive journalism, at a meeting of in­ Ve layati also addressed the deteriorating are totally false," Kuwait's Apostolic Vicar, formation ministers in Kuala Lumpur, Ma­ Indo-Pakis�i border crisis over Kashmir, Bishop Aloisius Micallef, told theinternation­ laysia on Aug. 2, accordingto Radio Aus­ emphasizint his government's commitment al magazine 30 Giorni, accordingto anarticle tralia. that "the uppsing by the peopleof occupied published at the end of July. Micallef also The information ministers said that the Kashmir [tl).e Indian state of Jammu and stressed how dangerous the situation is now media should not be used in a manner that Kashmir] to achieve their right to self-deter­ for Christians in Kuwait. undermines the stability and well-being of mination will be fully supported" Radio Pa­ "It is also false that the Iraqi soldiers had countries. To this end, foreign journalists kistan reported on July 29. hidden tanks and ammunition in the church­ will beencouraged to spend timein the vari­ Ve layatii said that the Kashmiris should es," he said. "Some of the soldiers came ous Asean countries. Other measures were be given an opportunityto decide their own to churches because they were Christian. not immediately specified. future. Earlier, Britain's Lord Avebury, a Others came to ask for food because they Malaysian Prime Minister Mahathir leading supporter of the Wo rld Kashmiri

00 International EIR August 16, 1991 • GERMAN Foreign Minister Hans-Dietrich Genscher declared on Aug . 5 that ally attempt to change borders by force in Yugoslavia, in order to create! a Greater Serbia, is Freedom Movement, had told a journalist via German airspace?" "totally unacceptable." In an inter­ that he had been making overtures to Iran to The French stationing of the Hades, view with German radio, he sharply have it becomethe main international advo­ which has a range thatcould reachWlirz burg criticized Se�ia's political leader­ cate for Kashmir, because the British cannot or Prague, comes at a time when the Soviet ship for having torpedoed European "be seen" playing this role. Union is pulling out its own short-rangemis­ Community diplomatic efforts in Yu­ siles and nuclear artillery from central and goslavia. Genscher said that econom­ eastern Europe, Dregger pointed out. The ic sanctions would now be in order. Group of Seven charged decision by Mitterrand is even more omi­ I nous, as it scraps all previous agreements , • TURKEY notified the U.S. State with 'interference' for example the joint NATO-French disar­ Department at the end of July, of its mament initiative of July 6, 1990,as well as interest in the outcome of the Yugo­ The declaration issued by the Groupof Seven discussions with between France and Ger­ slav crisis, eXPressingparticular con­ industrial nations at the London summit in many over the past years. cern for the isituation in Bosnia, July could have "far-reaching consequences" Dropping the diplomatic niceties that where there isl a substantial Muslim for the Indian subcontinent, a July 22 release are usually observed in a matter as sensitive population anel a Turkish minority, by India Abroad News Service reported. as Franco-German relations, Dregger reported the �ndon Independent on ''There could be a thin dividing line between charged that Mitterrand is acting "like the Aug . 6. what the G-7 may consider the international duck that comes out of the water, shaking approach, and what others might consider in­ itself off: Everything is gone again, and the • LITHUANIAN President Vy­ terference in their affairs. In G-7 language, German security concerns are no longer part tautas Landsbergis on July 30 an­ there could be scope for intemational action of the game." nounced the diplomatic recognition in the subcontinentright now. . . . War in the Dregger's remarks are one of many of Slovenia an. Croatia by Lithuania, subcontinent could invite international solu­ signs of friction building up between Paris in a statement: of solidarity with the tions as the G-7 might see them." and Bonn on vital policy issues, and of a independence �truggle of the two re­ The G-7 declarationtalks of world polic­ realignment of France, under Mitterrand, publics against Belgrade . He said ing through a stronger United Nations, and with the anti-German coalition led by that their strusgle was as just as the refers to the "peoples" rather than "people" Britain. struggle of the Baltic nations against of the Soviet Union and Yugoslavia. Moscow for $<}vereignty and inde­ "Similarissues arepotentially explosive pendence . within India, Pakistan, and Sri Lanka," the Indian report states. In the declaration's ex­ Brazilianjournalist THE ARCHBISHOP of Berlin, hortations to the U.N. to be ready to carry • Georg Sterzinsky, recently named out other "policing actions" like that against defe nds Columbus cardinal by POpe John Paul n, will Iraq, "theremay be enough here for separat­ Brazilian journalist Jose Ignacio We rneck serve in two important posts in the ists in the subcontinent to cite." wrote on July 29 in the newspaper Tr ibuna Vatican hieratchy, the Vatican con­ daImprensa that "in the U. S., it's the vogue gregation on �ligious education and Germans worry about to attack Christopher Columbus , as the date the papal cou�cil for dialogue with of the 500th anniversary of the discovery other religion . � French missile site of America gets closer." But don't blame Columbus, he says, for the problems we • THE SO'lIETCOmmunist Party The chairman of the German Christian created. We rneck says that those who attack daily Pravda lashed out at the Pales­ Democratic parliamentary group, Alfred Columbus are still quite happy with their tinians, in an qnusual commentary on Dregger, on Aug. 2 denounced the plan of air conditioning, VCRs, and other modem July 31. "The palestinians , after their French President Fran�ois Mitterrandto sta­ comforts . If, "through an aberration of fate , very bad caldulations in supporting tion the new Hades short-range missile in America hadn't been discovered, we'd all Baghdad during the Gulf war, are Alsace-Lorraine, directly bordering on Ger­ be either in Europe or Africa, and on our demonstrating a need for new ideas many. The missile is scheduled to be placed continent, the Aztecs would still be tearing and a new cktfinition of interests of there on Sept. 1. the heartsout of their prisoners . It's true that the different : Palestinian groups." "Does France really want," Dregger GuanabaraBay wouldn't be as polluted, but The article was published to coincide asked in Bonn, "to force its ally Germany let's not blame that on Columbus: That's not with the U.Sj-Soviet initiative for a to be struck by such weapons in the defense an automatic consequence of civilization, joint confereQce on the Mideast. against an attack that would target France but only of our own ineptitude ."

EIR August 16, 1991 International 61 �TIillNational

The 'Bushgate' clock is ticking louder

by Jeffrey Steinberg

It's becoming more and more difficultfor President Bush to matters worse, Gray was for a1number of years a director of spend any time back in Washington, D.C. these days without First American Bankshares, the Washington-Virginia-Mary­ stepping into the line of fire in one of a number of growing land bank corporation alleged to have been illegally owned scandals. And although the President has packed his bags by BCC!. and left the White House on a four-week vacation, there is Gray was named in July by ABC's "Nightline" as a sus­ little chance that those scandals will die down by the time he pected participant, along with the late William Casey, in a and the Congress return to business after Labor Day. pair of meetings in Madrid, Spain in July and August of 1980, Looming over the President is the fact that his closest where the Reagan-Bush camp�gn chief allegedly cooked up advisers, his political collaborators, and even his family have a deal with the Iranian ayatoJIahs to delay the release of been intimately connected with the filthy drug money and American hostages in Teheran until after the presidential weapons-smuggling networks involved in the "October Sur­ elections. The hostages were ultimately released hours after prise" and the Bank of Credit and Commerce International Ronald Reagan was inaugurated as President in January (BCCI) scandals now under investigation. 1981. His early August Camp David get-together with key po­ The circumstances surrounding that 1980 presidential litical advisers to discuss his expected 1992 reelection cam­ campaign and the so-called October Surprise will be probed paign is a good case in point. Seated around the table were by bipartisan panels in both the Senate and the House of at least two long-time Bush aides whose names will very Representatives beginning right after the congressional re­ likely come up in the course of the BCCI investigations. cess. On Aug. 5, after months (>fpreliminary inquiry, House Speaker Tom Foley (D-Wash.) and Senate Majority Leader Fuller and Teeley George Mitchell (D-Me.) announced that a formal probe Craig Fuller, who was Bush's chief of staff in the vice would be initiated, under the dilrection of Rep. Lee Hamilton president's officeduring theReagan years, is now a top figure (D-Ind.) and Sen. Terry Sanfotd (D-N.C.). at Hill and Knowlton World Services, the public relations Also seated at the President's early-AugustCamp David firm that has been accused by former U. S. Customs director reelection gathering was Peter Teeley, formerly Vice Presi­ William Von Raab of shielding BCCI from federal prosecu­ dent Bush's communications director. Teeley left the tors . In testimony before a Senate Foreign Relations subcom­ Reagan-Bush White House just prior to the 1988 elections to mittee on July 31, Von Raab named Hill and Knowlton chief set up his own consulting firm. Among that firm's first big executive officer Robert Keith Gray as a leading figure in clients was the government of the Seychelles Islands, the BCCl's "gray network" of Washington lobbyists and power­ Indian Ocean paradise that has been virtually synonymous brokers on the bank's pad. Gray has designated Fuller as his with the "Propaganda Two" freemasonic lodge, BCCI, and heir apparent as CEO at the giant public relations firm. Indian subcontinent hot-money flows since the mid-1970s. Gray was a prominent Reagan-Bush campaign booster Although, so far, the largest number of the U.S. politi­ and hosted a private New York City banquet for Bush when cians linked to the BCCI affair have been prominent Demo­ he was first elected vice president back in 1980. To make crats , including former President Jimmy Carter and Lyndon

62 National EIR August 16, 1991 Johnson's defense secretary and Democratic Party elder targets of the Walsh probe are Clair George and Donald statesman ClarkCliff ord, at least one source extremely close Gregg. George headed the Directorate of Operations under to the various BCCI probes has told EIR that "before BCCI the late CIA head William Casey, while Gregg was Vice is over, the Bush administration won't know what hit it." President Bush's senior national secUrity staffer and is now According to this source, BCCI arranged millions of dollars ambassador to South Korea. Reportedly, Walsh's investiga­ in politicalpayof fs through a Florida bank, CenTrust Savings tion gained new life in June when severalCIA peoplestepped and Loan, headed by David Paul. Paul allegedly socked large forward to help the special prosecutor decode tapes of con­ amounts of money into the Bush campaign as well as into versations between headquarters officials and field agents. other prominent Republican campaigns. Paul is a Democrat This led to the perjury plea-bargainby Fiers and the expected who handled campaign fundraising in 1988 for Joseph Biden. new round of indictments. In a preliminary report issued by a Senate Judiciary sub­ committee on Aug. 6, CenTrust was implicated in insider The Bush family jewels stock trading with Charles Keating's Lincoln Savings and Reporters from several major news outlets arealso focus­ Loan, junk bond deals with Drexel Burnham's Michael Mil­ ing attention on President Bush's som George W. Bush, Jr. ken, and money laundering with BCCI. The committee will of Midland, Texas. George Jr. is the President's oldest son, likely hold formal hearingsin earlyautumn a Yale graduate, and, like the President, a member of the elite Skull and Bones secret society. In an article in the July Gates nomination in deep trouble 12 Texas Observer, writer David Armstrong revealed that September will probably prove to be a make-or-break Harken Oil, a firm directed by the elder Bush son, shocked month for the Bush presidency. Between Sept. 10 and Sept. the oil industry in January 1990 by winning an exclusive 16, Congress has scheduled confirmation hearings for U.S. contract to explore and market Bahrain's offshore oil and Supreme Court nominee Clarence Thomas and Director of natural gas reserves. George Bush, Jr. denies that his father's Central Intelligence designate Robert Gates. On Sept. 11, position had anything to do with the potentially multibillion­ House Banking Committee chairman Rep. Henry Gonzalez dollar deal, and terms accusations thllt theU.S. troops were (D-Tex.) (who has alreadyintroduced a bill for the impeach­ sent into the Persian Gulf last year to defend Harken's Gulf ment of President Bush) is scheduled to begin hearings on ventures, "far-fetched." BCCI that are expected to revive allegations thatBus h White George Bush, Jr. 's partner in the oil firmis Allan Quasha, House officials, including Gates, funneled arms to both Iran the son of a Manila attorney who was the general counsel to and Iraq up throughthe January 1991 outbreak of the Persian the Nugen Hand Bank, a hot-money-Iaunderingoutfit linked Gulf war. to CIA heroin trafficking in the Far East. Nugen Hand went Washington, D.C. lawyers Clark Clifford and Robert belly-up in early 1980 when one of thebank 's two founders, Altman are already scheduled to testify before the Gonzalez Frank Nugen, was found in an abandoned carin Australia, committee. Gonzalez has also requested extensive records the victim of an apparent "suicide." from Henry Kissinger and his Kissinger Associates con­ According to media sources, George W. Bush, Jr. 's busi­ sulting firm, regarding the U.S.-Iraq trade links. Bush Na­ ness ventures are linked to other sqady CIA personalities, tional Security Adviser Brent Scowcroft and Deputy Secre­ and this story is also expectedto come out publicly. taryof State Lawrence Eagleburger are both former Kissinger One of the reasons that the Harkin-Bahrain story could Associates officials, and both are prominent targets of the strike a raw nerve with the American public is the factthat one Gonzalez questionnaire. year after the start of the Gulf crisis, many people are beginning On Aug. 2, the Los Angeles Times reported that numbers to question the sanity of President Bush's Operation Desert of former and active duty CIA officers have approached Storm. Recent polls show a marked drop in public support for members of the Senate Select Committee on Intelligence the President's handling of the entire Gulfaff air. The criticisms with damning information about Gates's performance at the range from disappointment that Saddam Hussein remains in agency. "They've come out of the trenches screaming," one power, whilethe Kuwaiti regimereIrulins repressive as as ever; congressman told the paper. Such internal CIA opposition is to horror at the level of devastation brought to the innocent considered extremely rare. civilian population of Iraqby the warand the continuing sanc­ On Aug. 6, the Washington Post revealed that Iran-Con­ tions; to the harm done to U.S. interests. tra Independent Counsel Lawrence Walsh has sent a letter The situation aroundthe Bush presidency may have not to retired CIA officer Dwayne Claridge, a leading Irangate yet reached critical mass, and the Democrats may still be in figure, informing him that he is a "target" of Walsh's investi­ disarray themselves. But this should offer little consolation gation. A perjuryindictment, similar to the one handed down to President Bush as he begins his four weeks of "no poli­ in July against former CIA Central American Task Force tics-just relaxation." In all probability, come September, chief Allan Fiers , is expected any day now . Other former all hell is going to break loose, and George Bush is going to senior CIA officials who have been named as prominent face thegreatest challenge of his presidency.

EIR August 16, 1991 National 63 Corp. in winning exclusive rights to develop the huge Rus­ sian Tengiz oil field. The 8,900-square-milefield is believed to hold at least 25 billion barrels of crude. Chevron leaders Anglo-Americans meet have been traditionally linked with the "Stowaway Camp" of the Bohemian Grove, along with David Rockefeller and at BohemianGro ve William Hewitt, a former ambassador and director of the U.S.-U.S.S.R. Trade and Economic Council. Former Chev­ ron chairmen Ralph Gwin Follis and Otto N. Miller were by Brian Lantz also associated with the Kniglhts of the Order of St. John, whose members swear undying allegiance to the Queen of California's Redwoods once again served as the backdrop for England. Shultz, the man whc>m Kissinger says he respects a closed gathering of Anglo-American political and corporate the most, serves on Chevron's board of directors . leaders this July 12-27. The "Bohemian Grove," a privately held stand of Redwoods , is the site of an annual masonic Bohemia's 'weaving spiders' "Encampment" sponsored by San Francisco's exclusive Bo­ Let us consider two more <>fthe Bohemian Grove's 120- hemian Club. David Rockefeller, Henry Kissinger, George plus known camps: "Mandalay" and "Hill Billies." Bush, and banker A.W. Clausen, are among the members. The Hill Billies camp includes George Bush, A.W. The guests areequally significant. Colin Powell was allowed Clausen, William Draper ill, andWilliam F. Buckley. Half of to attend last year. This year, Prince Alexander of Yugoslavia its 26 listed members reportedlybelong to Skull and Bones, the attended. "I hope they ask me back," the Prince beamed. He Yale University-based satanic s¢cretclub, intowhich Bush was reportedly left for Israel, via Jordan. EIR has learned that initiated. The late Alden Yatesj of Bechtel Group Inc., was a this year's famous "Lakeside chats," a tradition dating from member. Bush's membership in the Hill Billies does not guar­ Herbert Hoover's days at the Grove, included: antee his political future. Richard Nixon, long a member of Mikhail Tartutua, Soviet television's San Francisco bu­ Herbert Hoover's old Bohemian camp, "The Cavemen," was reau chief, "A Soviet in the U.S."; S. Fredrick Starr, presi­ discouraged from coming back after Watergate. dent of Oberlin College, Ohio, "U.S.S.R.: Smaller But Bet­ "Mandalay" camp includes the Bechtel family, high­ ter?"; Dr. Robert W. Jamplis, clinical professor of surgery, ranking Scottish Rite freem�ons attached historically to Stanford University, "Medicine in the Year 2000: Can We Chevron. Better-known members include Kissinger, Shultz, Afford Any?"; Joseph Califano, "American Health Care Secretary of the Treasury Nicholas Brady, the late John A. Revolution: Who Lives, Who Dies, Who Pays?"; Helmut McCone, Carl E. Reichardt of Wells Fargo Bank, Edgar Schmidt, former chancellor of West Germany, "The Enor­ Kaiser, Leonard Firestone, and William French Smith. Other mous Problems of the 21 st Century"; Elliot Richardson, "De­ brethrenare Samuel Armacost and thelate Rudolph Peterson, fining a New World Order"; Defense Secretary Richard bothformer chief officersand presidentsof Bank of America. Cheney, "Major Defense Problems of the 21st Century"; ex­ Peterson was at the heart of the bank's dealings with Italy's Secretaryof State George Shultz, "Agenda For America." P-2 masonic lodgein the 1970s. Bank ofAmeri ca's activities The gathering must have been less than unanimous in sup­ as an international clearinghouse bank are currently under port of Bush's vision of the "new world order." Blueblood investigation, and litigation, in the Bank of Credit and Com­ Elliot Richardson, just backfrom Iraq, along withother Council merce International (BCCI) scandal. on Foreign Relations and Trilateral Commission folk, has been Bechtel Group Inc., closely intertwined with Chevron, publicly disagreeing with Bush's agenda. Helmut Schmidt has is a major player in the Soviet Union, in Leningrad steel been apoplectic over U.S. financial policies. production and a projected government electronics research With the British monarchy and sections of French free­ center near Moscow. Steven Bechtel, Jr. was part of a May masonry pushing a monarchist revival in eastern Europe (see 30-31, 1990 conference in Moscow, coinciding with the EIR , Aug. 2), Prince Alexander's appearance at the Grove Bush-Gorbachov summit. The conference was sponsored by was timely. This year's Encampment came in lockstep with the Royal Institute for International Affairs (Chatham the Group of 7 meeting in London, the results of which have House), the London Financial Times, and IMEMO, the Sovi­ favored the ascendancy of Prince Alexander over a short­ et "Trust" think tank. Bechtel spoke on "How the Engi­ lived, fascist "Greater Serbia" empire. neering and Construction Industries Worldwide Can Help Lyndon LaRouche has hypothesized that Anglo-Ameri­ with the InfrastructureRequirements of the U.S.S.R." It was can financial interests, jettisoning the even crazier Thatcher­ in that context that Most FavoredNation status for the Soviet ites, are moving to broker Soviet oil for German capital Union was first mooted. Such arrangements, premised on goods, placing continental Europe, including the east, again masonic geopolitical theories, lack the force of natural law. under firm Anglo-American-Russian control. Old Bechtel, founder of today's Bechtel Group, Inc., died Consider the success of the San Francisco-based Chevron in the U.S.S.R.; he fell off a cliff.

64 National EIR August 16, 1991 Book Review

Reviving the lost science of well-tempered tuning by John Sigerson

including J.S. Bach, viewed the apparent anomalies which always croppedup in the attemptto construct a usable musi­ TunIng:Containing the Perfection of cal scale, as yet another demonstration of what has come to Eighteenth-CenturyTemperament . the Lost be termed the "curvature of space-ti�e." More specifically, Art of Nineteenth-Century Temperament. the attt;mpt to construct a musical scale solely by algebraic and the Science of Equal Temperament. ratios of the simple counting numbel!S (1:2, 2:3, 3:4 and so Complete with Instructions forAural and Electronic TunIng forth) always had the result that certain intervals of that scale by Owen H. Jorgenson would sound so harshly "out of tune" that they were unusable Michigan State University Press. East Lansing. for musical performance. The musical scale was therefore 1991 assumed toreflect some higher ordering process, which could 798 pages. hardbound $65 perhaps be approximated by some �ore complex ordering of rational numbers, or perhaps by , other numbers whose cardinality was determined in a different way, closer to the Owen Jorgenson, an experton piano technology who teaches way a living process works . According to this outlook, the at Michigan State University. has turnedhis lifelong preoccu­ practical construction of the musical . scale can be refined in pation with musical tunings other than modem equal temper­ successive steps, as that natural ordering process is discov­ ament, into a comprehensive, hands-on manual for enabling ered with decreasing degrees of imperfection. teachers and students of piano tuning to begin to break the Johannes Kepler made a profound discovery in this re­ "tyranny of equal temperament" which has prevailed over gard, when he demonstrated that the configuration of the the past century, and to reconstructthe tuning systems which planetary orbits of our Solar System is congruent with the were required by the great composersof classical polyphony. ordering of the musical scale. Leibniz' s development of the The manual is chiefly aimed at professionals, containing concept of "least action" on the basis of Nicolaus of Cusa's practical instructions on 120 different methods of tuning key­ work, provided the context for the circles around J.S. Bach board instruments by methods ranging from variants on the to devise systems of tempering which lawfully determined ancient Pythagorean tuning, through meantone and well-tem­ and yet contained no wildly out-of1tune "wolf' intervals. pered tuning. all the way to equal temperament. However, Subsequently, Kepler's finding about the universality of the the interspersed brief discussions and short essays are also well-tempered system was resoundingly confirmed in the strewn with gems of historical observations which are of early 19th century by Carl Friedrich Gauss, who found that great use to all those who arestriving today to rescue civiliza­ the newly discovered asteroid belt pr�isely fitKepler 's spec- . tion from its current cultural morass through reviving the ifications for a "missing planet" at the position represented by principles of classical polyphony based on the bel canto vo­ the note F-sharp. More recently, in 1985 Lyndon LaRouche calization of classical poetry. demonstratedthat the location of the primary natural register A few comments arenecessary in order to situate the issue shift of the bel canto singing voice, which lies between F and of equal temperament versus well temperament for those not F-sharp, uniquely locates the absolute values of the well­ familiar with the technical details: Up until the middle of tempered scale such that middle C mllstbe located at or very the 19th century, the current of Christian-Platonic scientific nearto 256 cycles per second. inquiry ranging from Plato through Nicolaus of Cusa, Leo­ The well-tempered system was therefore not invented as nardo da Vinci, Johannes Kepler, and GottfriedLeibniz , and a convenience for practicing musicians; it is part of the natural

EIR August 16, 1991 National 65 ordering of the universe, an ordering which has been discov­ in an entirely different way th� today: ered with increasing accuracy over the course of the past "Today, in the late 20th century, the term 'tuning by ear' 2,500 years . Our knowledge of this grand display of natural means that one is not using any electronic tuning aids or beauty will doubtless arrive even closer to the truth as we devices [an all-too common practice which inevitably results begin to grasp the full implications of an array of scientific in a poorly tuned instrument-JWS]. It means that one is investigations which are under way today in the realms of the using his ears to count and compare the beat frequencies harmonic ordering of the elements and of plasma structures [interference patterns caused by slightly out-of-tune upper ranging in size from the subatomic to the astrophysical. partials] of various tempered intervals. During the 19th cen­ tury and before , the term 'tuning by ear' meant the opposite; Soulless romanticism that is, one did not count or compare beat frequencies. In The concept of equal tempering, on the other hand, is fact, one did not listen to beat$ at all. . . . a product of the mechanistic, gnostic-romantic current of "In the past, tuning by ear meant that one judged the thought which views anomalies such as those found in the relationships between the two notes of an intervalby listening construction of a musical scale, as bothersome impediments to the two notes melodically only. Thefirst note was never to an otherwise logically consistent, arbitrary construct. In sustained while the second note was being played.Therefore , the 19th century, this current was most prominently repre­ no beats could be heard. In other words, tuners tuned in the sented by the mechanistic Hermann Helmholtz, who main­ manner that singers sing. Thel art of singing was considered tained that music is solely concernedwith the degree of physi­ a valuable basis fo r this technique" (emphasis added) . cal pleasure derived by the vibrations of inanimate objects. This fact has great signifi�ance not only for tuning, but According to this degraded view, the musical scale itself is for the way we think about thFconcepts of consonance and an arbitrary construct which society agrees upon, in a kind dissonance in general. In the jromantic Helmholtzian view, of Rousseauvian social contract, in order to "flatten out" the degree of consonance or dissonance between two tones or otherwise suppress what is believed to be the inherent is entirely a question of the degreeof "smoothness"or "harsh­ imperfection of the physical universe. All ideas of perfection ness" to the physical senses produced by conflicting upper are relegatedto the mystical realm of the unknowable. partials in the overtone series produced by dead vibrating The romantic view puts primary emphasis on the "verti­ objects. But it is clear from Jorgenson's reportthat for those cal" side of music, treatinggroups of notes played simultane­ minds steeped in the traditioJll of classical polyphony, it is ously ("chords") as theprimary "substance" of musical action not the physical senses, but the human mind which is the on the listener's senses. Equal tempering arose out of the arbiter of consonance and dissonance. I.e., the mind "hears" effort to minimize the effect of the "disruptive" anomaly the tones "sung" in succession, and then judges them ac­ (called a "comma") by algebraically distributing it equally cording to the higher ordering principle upon which the cre­ among each of the 12 steps of the scale, such that each ative activity of the mind itself is based. interval is algebraically equal to the successive ones. It is, as it were , a communistic "leveling" principle applied to the The concept of 'color' in music musical scale; and it is not accidental that its emergence Jorgenson reports that even through the late 19th centu­ during the early 20th century coincided with the crystalliza­ ry-by which time it had bec0me common practice to listen tion of the twin irrationalist currents of communism and for beatings in the vertical intervals of fifths and fourths in fascism. order to temper them-the finest piano tuners still did not In utter contrastto this romantic viewpoint, the classical strive for a mechanistic equal :temperament, but rather "they viewpoint of well tempering treats theordered succession of listened to the color-qualities 'and not the beats of the thirds tones in one or more sung voices (polyphony) as primary. and sixths. Thus, their musical experience, along with their Chords do not have any primary existence, but are thought aesthetic quality judgments of third, sixths, and triads, influ­ of as momentary coincidences in time of two or more poly­ enced their tempering. The result was that the traditional phonic voices. Each interval in the scale is a unique individu­ characters of the keys were still preserved." al-a Leibnizian monad-which bases its existence not on By "characters of the keys," Jorgenson means that the its perfect identity withits neighbor, but on its relation to the slightly unequal intervals which characterize all tuning sys­ ordering principle of the scale as a whole. tems except equal temperament, give each key a distinguish­ It is against this background that we can appreciate the ably different character or "color." This is equally true of significance of what Mr. Jorgenson informs us about the the older meantone temperainents-which did not permit drastic change in accepted keyboard tuning practices over modulation throughout all the keys-as it is of the well­ the past 100 years . In the chapter entitled "Why Equal Tem­ temperament promoted by the circles around J.S. Bach. As perament Was Not Commonly Practiced on Pianos Before a good demonstration of hoWl this works, Jorgenson recom­ the Twentieth Century ," he reports that before this century, mends tuning a keyboard to the well-temperament specified tuners of keyboard instruments approached tuning the scale by J.S. Bach's contemporary Andreas Werckrneister, and

66 National EIR August 16, 1991 transposing Bach's Prelude and Fugue in C major from the States. Yet his blanket assertion �t the picture was not firstvolume of The Well-Tempered Clavier into C-sharp ma­ substantially different in continental lEurope, cannot be en­ jor, and noticing how dissonant it sounds. Conversely, one tirely true, since the clash between the Kepler-Leibniz conti­ can transpose Bach's Prelude and Fugue in C-sharp major nental current and the British gnostic ·empiricists typified by into C major, and "notice how dead and lifeless it sounds. " Isaac Newton, extended to every fieldof knowledge. Perhaps Equal tempering obliterates such distinctions. Strict Jorgenson's oversight is a result of the undue amount of equal temperingonly aroseat the beginning of the 20thcentu­ respect which he accords to Helmhpltz and his tone-deaf ry, when the dionysiac irrationality of Wagner's "chromati­ epigone, Alexander John Ellis, both of whom were dedicated cism" beganto be supplanted by the equally irrational formal­ to poisoning continental scientificpraCtice from within, with ism of atonality. Jorgenson writes that equal temperament their British empiricism. achieves "a homogenized neutral gray coloring that is com­ These criticisms are in no way ilntended to belittle the pletely dependable without any changes while modulating tremendous practical value of Jorgen�on's book for reestab­ through all the keys. No variety during modulation is the lishing the practice of well-tempenbent and for burying equal-tempered ideal. Equal temperament therefo re has no equal temperamentalong with the rest of the cultural detritus tonality, and it is the most appropriate fo r the atonal 20th­ of the 20thcentury . His many practi¢al observations on old centurymusic. The qualities sacrificedin order to make equal tuning procedures also underline the heedfor us not only to temperament possible are harmoniousness in the commonly retune our instruments, but also our �, in order to properly used keys, key-color changes allowing variety when modu­ hear classical polyphony. For instance, Jorgenson points out lating, and the 'characters of the keys' " (emphasis added) . that whereas our modernears have be4naccustomed by equal (Helmholtz, who detested J.S. Bach, recommended a solu­ temperament to tolerate only sligh! �mperaments of fifths tion even more radical than equal tempering: Junk Bach's but can tolerate quite large tempe$ents of thirds away polyphonic tradition altogether by forcing a return to the old from the "just" or Platonic whole-num.ber ratios, exactly the meantone temperament.) reverse was true during the 17th centUry, when thirds would be heard out of tune if they were altetooby more than a very Newton and tone-deafness slight margin, whereas fifths and fJurths were still heard Jorgenson's argument in favor of key-color versus the as tolerable when they were as muqh as three times more grayness of equal tempering is refreshing and useful, as far tempered than they are today. Just 4is our eyes have been as it goes. However, he lets romantic irrationality reenter spoiled by the ugliness of modernistaf hitectureand "art,"so through the back door, by not proceeding to the next step of our ears have been desensitized and s�iled by the unrelieved consideringthat these "characterS of the keys" must have the monotony of equal tempering, and music teachers, students, same quality of absoluteness as do the colors of the electro­ and listeners alike arebound to bene& greatlyby hearing the magnetic spectrum. Although broad differences in key-col­ works of the great masters of classical polyphonyperformed ors can be distinguished regardless of which pitch is chosen according to the variety of well-tempered tuning schemes as the absolute reference (e.g., at the modern, arbitrary high assembled here. tuning of A = 440 Hz), those colors will always remain "off­ color," as in a poorly reproduced color photograph, to the extent that the scale is not set to the natural tuning of C = 256 Hz as specifiedby LaRouche and others . The naturally tuned well-tempered scale also possesses an additional feature which further enhances those color distinctions between the various keys: Each key is uniquely characterized not only by a distinct set of intervallic relationships, but also by a distinct set of implicit register shifts for the various species of bel canto singing voice. It is probably too much to expect that a book primarily intended as a review of the past few centuries' tuning prac­ tice, would pursue such a line of inquiry. But the absence of a single mention of the momentous work of Johannes Kepler, who vigorously opposed the arbitrary equal tempering sys­ tem as propounded by his contemporary Marin Mersennes, leads one to suspect that for all the wealth of material pre­ sented in this volume, it is still only a small partof the picture. It is to Jorgenson's creditthat he freely admits that his book is primarily a history of tuning in England and the United

ElK August 16, 1991 National 67 Congressional Closeup by William Jones

Senate whittles down amendment. The Nunn proposal is liamentarians have been comingto the SOl to point defense now virtually assured to becomea part United States, visiting members of the The Senate has approved $4.6 billion of the Defense Appropriations bill. ArmedServices Committee, to encour­ in funding for the Strategic Defense While the Nunn proposal would con­ age thQm not to close the bases. Initiative (SOl), which is $550 million tinue research into space-based inter­ Secretary of Defense Richard less than that requested by the White ceptors , the administration's "Bril­ Cheney has argued against the Con­ House, but $1.1 billion more than that liant Pebble!!," the only space-based gress having any say in the closing approved by the House. Amendments element left in the SOl, would be of foreign bases, hoping to keep that by Sens. Tom Harkin (D-Iowa) and placed on hold. prero�tive in the hands of the De­ Dale Bumpers (D-Ark.) to cut funding fense Department. But congressmen, were defeated. under heavy criticism for cutting bas­ An amendment by Sen. Albert es in their own districts, feel that they Gore(D- Tenn.) to preventany SOl de­ have to target U.S. foreign commit­ ployment was defeated in a60-39 vote . House votes to close ments abroad as well. The maindispute is betweenthose who u.s. military bases want to prevent any deployment of an The House voted on July 30 to ap­ anti-missilesystem andthose who want prove the recommendations of the De­ some fonn of deployment of a limited, fense Base Closure and Realignment ground-based SOl system. Commission, which would shut down DoJ yields to Judiciary The limited program has been a 25 major militaryand naval bases and Comtriittee subpoena threat hobby horse of Senate Anned Servic­ nine smaller facilities in the United The Dtpartment of Justice (DoJ) nar­ es Committee chainnan Sam Nuon States. The vote was 364-60. rowly averted a confrontationwith the (D-Ga.), who proposed in 1988 the Among the bases to be closed are House Judiciary Committee on July revamping of the SOl into a ground­ the Philadelphia Naval Shipyard; 31 by agreeing to allow lawmakers to based system to protect against an ac­ Long Beach Naval Station; Fort Ord, review a legal opinion giving FBI cidental missile launch. This concept California; MacDill Air Force Base in agents authority to kidnap. fugitivesin was reiterated by President Bush in Tampa, Florida; and Loring Air Force foreigJII. nations. his 1991 inaugural address, where he Base in Maine. DoJ officials were given until 9 spoke about "refocusing" the SOl for The House also voted 412-14 to a.m. Qn July 31 to tum over a 1989 the sake of "providing protection from mandate the commission to consider confidtntial legal opinion which had limited ballistic missile strikes." The foreign as well as domestic bases. On been subpoenaed by the Judiciary Sub­ Nuon committee appropriated $1.5 the same day as the House vote, the COIlUllltteeon Economic and Commer­ billion for an initial deployment of Pentagon announced that it was con­ cial Law which outlines the FBI's au­ 100 interceptor missiles by 1996, and sidering closing 72 U. S. militarysites thority to arrest criminal suspects calls for U.S.-Soviet negotiations for in Europe and reducing U. S. military abroadL-the notorious 'Thornburgh a more elaborate system. presence at seven more. The 72 Euro­ Doctrine."The subpoenas were issued Further deployments would be in pean sites include large installations after Attorney General Richard violation of the Anti-Ballistic Missile in Germany such as the Tempelhof Thornburgh boycotted a Judiciary (ABM) Treaty. Statements fromSovi­ Central Airport in Berlin, Cooke Committee oversight hearing, claiming et military leaders indicate that they Anny Barracks in Goppingen, Whar­ that Democrats on the committee were would be preparedto renegotiate such ton Anny Barracks in Heilbroon, and planningto tumit into a politicalcircus . a treaty to the extent that the U. S. re­ O'Brien Anny Barracks in Nurem­ The subcommittee also wanted jects the notion of a total ballistic mis­ berg, employing a total of 10,381 ser­ documents pertaining to the DoJ's sile defense system. vicemen and 874 civilians. handlihg of a $10 million contract The Nuon proposal was opposed About 150,000 troops, or roughly with tnslaw, Inc., a Washington­ by roughly two-thirds of the Demo­ halfthe U.S. forces in Europe, are ex­ based ' computer software company. crats , who wish to maintain the ABM pected todepartthe continent by 1995. The cdmmittee is probing allegations Treaty. But 21 Democrats joined 39 Of those, between 82,600 and 86,000 by Inslaw that DoJ officials conspired Republicans to defeat the Gore are due toleave by 1992. Gennan par- to steal a softwareprogram and deliv-

68 National EIR August 16, 1991 er it to a rival fimi headed by a long­ steps to implement it. Budget Director over hunger to . implement a "new time associate of former Attorney Richard Darman called the legislation world order" agenda of food control, General Edwin Meese. economically "counterproductive," corporatism, and genocide. "I ampleased thatthe attorney gen­ saying that it would merely add to the The bill has �n parceled out to eral . . . has decided to obey the sub­ huge federal deficit. other commmittees including Labor, poenaby acknowledgingour respective Education, and Foreign Affairs . Ob­ interests in the opinion," said Judiciary servers expect�t aspects of the bill Committeechairman Rep . Jack Brooks will be passed as !partof otherlegisla­ (D-Tex.). "I was fully prepared this Committee to save tion. The House Select Committee on morning to move forward with the con­ Iraqi children testifies Hunger reported the following devel­ tempt process against the attorney gen­ opments on July 30: The Committee to Save the Children eral to compel production, had he not • "Micro-enterprise" credit and in Iraq submitted testimony to the supplied written assurances of his will­ trainingprovisioo.s have been adopted House Select Committee on Hunger, ingness to accommodatethe interests of as proposed am�ndments to the Job chaired by Rep. Tony Hall (D-Ohio), the committee." Training and Paftnership Act (H.R. on Aug. 1, criticizing the Bush admin­ President Bush had been prepared 3033). "Microenterprises are busi­ istration for genocide against thechil­ to resist the panel's subpoena by invok­ nesses employing five or fewer pe0- dren of Iraqby maintaining the sanc­ ing executive privilege. Thornburgh, ple, one of whorn is the owner." The tions against thatcountry . under fire from Democrats for an al­ stated jectiveob is, "helping welfare Committee representative Nancy leged Dol coverup of the Bank for recipients become self-sufficient." Spannaus referred to the statements of Credit and Commerce International • The per meal reimbursement U.N. SpecialDelegate Prince Sadrud­ scandal, decided against an open con­ for senior food relief programs has din Aga Khan, that the continuation frontation. beenraised from56. 76¢ to 65.66¢, in of the sanctions "means the denial of a proposed ameJlldment to the Older the most basic human rights to the Americans Act (H.R. 2967). Thou­ Iraqi people and equals a deliberate sands of people have been cut out of policy of genocide in the name of the these programs altogether for lack of United Nations." ongress extends funds. C Spannaus pointed to the massive unemployment benefits • The HouS4 version of the 1991 contamination of water supplies In the face of growing lay-offs in in­ Foreign Aid Authorization included caused by the destructionof water and dustryand the service sector, the Sen­ several provisions calling for a U.N. powerinfrastructure , and the devasta­ ate on Aug. 1 and the House on Aug. Convention on tieRight to Food and ting effect of lack of electricity on 2 approved $5 .2 billion in extended Humanitarian Assistance, a perma­ communications and medical care. unemployment benefits. nent U.N. UnderSecretaryfor Human­ She urged the committee to call for The measure, sponsored by Sen. itarian Affairs, �d increasing U.S. the immediate lifting of all sanctions Lloyd Bentsen (D-Tex.), the chair-' funding for international hunger and against Iraq. man of the Senate Finance Commit­ malnutrition-reillted programs." This tee, would provide up to 20 additional is otherwise knQwn as the "Czar of weeks of benefits to the nearly 3 mil­ Food" proposal. lion unemployed who will have ex­ Rep. Tony Hall (D-Ohio) said, hausted their benefitsby late this year. Freedom from Want "Solving the prcpblem of hunger re­ The bill was also seen as a political Act is introduced quires comprehepsive and innovative move by House and Senate Democrats The "Freedom fromWant Act" (H.R. strategies. We bve to give people to underline the Bush administration's 2258), a mega-bill covering bothdo­ more than food-we have to give insensitivity to the plight of workers . mestic and world issues introduced in them hope, and the tools they need to The bill was sent to the President February by members of the House feed themselves� ...I'm glad that before the congressional recess, but Select Committee on Hunger, now key domestic and internationalprovis­ the White House has indicated that has over 100 co-sponsors. The bill ions of this bill ljreon the way to be­ Bush will veto the bill or refuseto take represents an effortto use the concern coming law." ,

ElK August 16, 1991 National 69 National News

Virginia reported that the controversy a player iq the military missile business with around the program has caused the private its MB/EE-6OO, SS-3OO,and SS-Iooo mis­ foundation to requestanonymity. siles, which have ranges of 600, 300, and Columnist indicts Women who have low incomes are also 1,000 kilometers, respectively; Pakistan, being offered the implant. Planned Parent­ for its acquisition of theChinese M-l1 sys­ Bush budget fraud hood has trained dozens of Denver-areadoc­ tem; and Saudi Arabia, for its purchase of Paul CraigRoberts , in a commentary in the tors and launcheda fundraising campaignto the ChineSe CSS-2. July 30 Wall Street Journal, indicted the help low-income women afford the device. Bush administration for financial fraud. Opponentsof Norplantcomplain thatwom­ "WarrenBrookes has slammed Budget Di­ en considered ''unfit'' for motherhood such rector Richard Dannanfor 'the worst fiscal as the poor, drug addicts, and others, may mismanagement in U. S. history,' " Roberts becoerced to use Norplant. Anti-war officer faces writes. "But Mr. Brookes's charge of in­ competence shields the government from court martial 'railroad' i the far moreserious charge of fraud. Capt. Yolanda Huet-Vaughn, accusedby the "Mr. Darman has managedto produce a U.S. Armyof desertionfor her refusalto serve larger deficit with a tax increase and a de­ SDIO warns of Third in the Per!lianGulf War, toid EIR on July 31 fense build-down than Mr. Reagan achieved from Ft. Leonard Wood, Missouri that the with a tax cut and defense buildup .... World missile threat govemmettthas denied her the rightto present "Moreover, the growth in the federal The ''Third World ballistic missile threat" her defen$e. She said that the court martial deficit may be far from over. States and lo­ fromnations like India and Brazil is featured beginningiAug. 5 will "bea railroad." calities aregenerally prohibited by law from in a new report by the U.S. Strategic De­ Vaug�, along with international legal consistently running deficits, and so to pare fense Initiative Organization (SOlO), the and medi4!al experts, had argued at a pre­ their deficits, they are likely to increase in­ July 29 Jerusalem Post reported. The report trial hearmg in early May that she "had a come and property taxes, which are feder­ is the latest evidence of U. S. targeting of duty under U. S. and international law to ally deducti ble. Thus, as these taxes rise, Third World nations for their efforts to de­ refuse deployment in the Gulf war." Huet­ federal tax revenues grow less rapidly with velop advanced technology. Vaughn said she stands ready to prove that income-which itself grows less rapidly as The Jerusalem Post, quoting the report, the U.S. violated intemational law in start­ taxes rise." said that the proliferation, and subsequent ing the war and, therefore, under the U.S. Roberts points out that Dannan ball­ modification of Scud-B missiles was not Army Manual ' s own rules, following orders oonedthe deficitby taking on the S&L bail­ earlier anticipated, and "it was also not an­ is not a legal excuse for committing a crime. out, and is counting on reducing it by sale ticipated that these modifiedversions would On July 15, the prosecution broughttwo of the assets, which are now worthless. The generate a new Third World missile busi­ limiting motions forward which were rub­ coming increase in federal deficits will ness, with China and North Korea as leaders ber-stampedwith no explanation or counter­ dwarf what has occurred so far, especially for development and sales." rebuttal �Iowed. These two motions in limi­ if the government bails out the commercial The paper paraphrased the SOlO: ''The ne make it illegal for Vaughn to question banking system, as now seems likely. He elaborate Iraqi missile development effort whether the war was legal, or to bring up concludes: ''The growing deficitwill reflect was not unique, but rather serves as an ad­ anything that has do with her motives, in­ a dying economy." vanced look at other such programs being cluding philosophical or religious ideas. carried out around the world. Therefore, the Vaughn, a doctor, reportsthat hundreds threat of ballistic missiles is not solved by or thousands of resisters are being ''treated the U.N . Security Council resolution requir­ increasingly vindictively" by the U.S. mil­ ing Iraq to destroy its ballistic missile sys­ itary. Teens to be given tems with ranges greater than 150 kilome­ ters ....Iraq 's ballistic missile program is birth control implants rightfully seen as a harbinger of things to

Teenagers in drug and alcohol abuse pro­ come. If Iraq can buy crude technology, I grams in Colorado will get Norplant birth upgrade it and produce longer-range or more EnviIl)nmentalists are control implants in the first demonstration lethal systems, others can as well." project of its kind in the country. Funded by The report lists several Third World the till-eat, says report a private foundation, Planned Parenthood in countries and theirmissile-r elated activities: Envirorurtentalists are a threat to peopleand Colorado plans to implant 100teenage girls India, for having test-fired its two-stage the envirOnment, according to a report is­ with the birth control device free of charge. Agni missile with a range of 1,500-2,000 sued in early August by the National Center The July 29 Richmond Times Dispatch in kilometers; Brazil, for its preparations to be for Policy Analysis in Dallas, Texas. The

70 National EIR August 16, 1991 Brif1ly

• THE FRIENDS committee on legislation is alerting citizens to the House resolutions by Rep. Tim Pen­ 86-page report points out that most of the will be an increasing number of plants reach­ ny (D-Minn.) and Henry Gonzalez money being spent to clean up the environ­ ing the 30-year-old mark in operations, and (D-Tex.) which seek to lift the sanc­ ment is wasted, and in many cases environ­ the precedent of not being stampeded into tions against Iraq which are leading mental policies actually cause environmen­ shutting them down for alleged safety prob­ to the deaths of hundreds of thou­ tal harm. lems is important forthe entire industry. sands of children. Theireffort is cited According to the report, the Environ­ The NRC is also in the midst of deciding in a letter to the editor in the July 31 mental Protection Agency funds"politically how to evaluate the conditions of the plants, Richmond Times Dispatch in Vir­ popular programs" like Superfund, which in an effort to re-license them for an addi­ ginia. "appearsto have benefittedtrial lawyers and tional 20 years.There are less than a handful politicians a lot more than the pUblic," at of nuclearpower plants being completed. If • DONALD GREGG, U.S. Am­ the expenseof others "which might advance re-licensing is not allowed and no new bassador to South Korea and national environmental objectives." plants are ordered, by the beginning of the security adviser to Vice President The problem is that members of the en­ next century, nuclear power will be all but Bush, has beeb designated a "sub­ vironmental elite believe "the bestof allpos­ phased-out in the United States. ject" of Independent Counsel Law­ sible worlds lies not in the future, but in the renceWalsh 's probe of the Iran-Con­ past," the report charges. They "are 'reac­ tra affair, the July 31 USA Today tionaries' in the truest sense of the word" reported. who "oppose science, technology, industri­ alization, and economic growth," and at Ascher: mayoralty a test • THE MILITARYFamilies Sup­ times even "imply that humans are an unfor­ port Network warned Aug. 2 of the tunate accident of evolution and have no on drug legalization danger that the U.S. will go to war natural place on our planet." John Ascher, a candidatefor mayor of Balti­ against Iraq again. The group urges Most environmentally concerned peo­ more,Maryland and an associateof political speaking out against the "blanket au­ ple, the report says, realize technology is prisoner Lyndon LaRouche, defined his thorization [the Dole-Liebermanres­ their "single most important weapon" be­ race against incumbent mayor Kurt olution] to go to warjust passed" in cause it "has allowed us to clean up rivers Schmoke as a referendum on drug legaliza­ the U.S. Senaur. air and lakes, improve the quality of in our tion, in campaign statements in late Julyand cities, and reduce the impact of oil spills"; early August. Schmoke is notorious for call­ • TOM HAYDEN, a California but these "progressive environmentalists" ing for a national debate on legalizing drugs. assemblyman, will teach a course on are becoming voiceless in the capitals of Ascher, a Democrat, is urging voters "to "The Environment and Spirituality" most industrialized countries. defeat our local pro-drug mayor. ... at Santa Monica College, the Aug. 3 Whether you like it or not, Baltimore's race New York Times reported. The course for mayor is a referendum on legalizing ends with the prospects for a new Ear­ drugs. Vote No to dope ." th-oriented reli�ion. "We need to see Ascher's statement came as the media nature as having a sacred quality, so NRC recommissions reported a 60% increase in crack use in Bal­ we revereit and arein awe of it," said timore over the past year. During the same former SDS radical Hayden. older nuclear plant time, the number of arrests for drug sales The NuclearRegulatory Commission voted has declined. Ascher blamed thisdirectly on • TELEPHONE fundraisers for 4-0 on July 31 to allow the Yankee Rowe Schmoke who, he said, has not even put up the Bush campaign are finding that nuclear plant to continue to operate . The a pretense of fighting dope. fully one-half of the "inner circle" plant, which went into operation in Massa­ Ascher's campaign has been garnering GOPers called are angry at George chusetts in 1960, is the nation's oldest nu­ media coverage. The Aug. 3 Baltimore Eve­ Bush because ofthe state of the econ­ clear power plant, and nuclear opponents ning Sun headlined one article, "Schmoke omy, according to an individual en­ are trying to have the plant shut down, Assailed." "Mayoral candidate John Ascher gaged in the phoning. claiming that neutron bombardment has says that Mayor Schmoke played into the weakened the reactor vessel to the point hands of the drug mafia by advocating the • THE U.S. MILITARY stood where it is unsafe. decriminalization of drugs. 'Many have re­ with the butchers of Beijing on the The plant will continue to operate until cently asked why there is no War on Drugs reviewing stand at Tiananmen next spring, while the utility does tests to in Baltimore; no drug czar, not even a fig Square, as the !U.S. officially ended determine the condition of the vessel. The leaf. It is because your mayor agrees with a two-yearboycott of China's annual NRC commissioners had toured the plant the drug mafia that it is better to legalize Army Day reception, UPI reported themselves on July 8. drugs than to wage war to stop drugs ,' " Aug. 1. The decision is important because there Ascher was quoted.

EIR August 16, 1991 National 71 Editorial

Britishpo licy leads to war

August not only marks thefirst anniversary of George barely ended, when the British were planning the next. Bush's infamous war against Iraq , but of the bombing The British also pioneered the use of terror-bomb­ raids on Hiroshimaand Nagasaki with which the United ing tactics to subdue coloniaJ populations. Thus, in the States ended the war against Japan 46 years ago . It is 1920s, the British bombed Iraq in order to force the indeed easy and justified to condemn the United States Iraqis into submission. The British had been given a on both counts, and PresidentBush for the former, and League of Nations mandate to rule Iraq , following the to overlook the role of the British-although they are breakup of the Ottoman Empire at the close of the First disgustingly vocalto this day in pressing forthe annihi­ World War. When the Iraqis tried to free themselves lation of Iraq as a nation. fromthis new form of despotism, theBritish used mili­ A reviewof allthe wars this century shows the hand taryforce against them . of Great Britain, as well as its geopolitics, in setting This practice of bombing colonial populations was them off. extended to "police" actions by the British against the More light was shed on this British role on Aug. 4, Indian population as well, abd continued in Iraq, even when the Washington Post carneda reviewof the book into 1932. It is even reported that they used delayed­ The Great Pacific War, written by Hector C. Bywater, action bombs, which would explode as they were being a British naval expert, in the early 1920s. According removed from areas on which they had been dropped­ to the reviewer, William H. Honan , Bywater's book a procedure designed to do · the maximum damage to was hotly debated in the West and in Japan . civilians. Bywater had laid out a scenario for a Japanese sur­ When World War IT came, Winston Churchill was prise attack on the U.S. Pacific Fleet, which would an advocate of using bombing to instill physical terror open up the Philippines and Guam for capture . He then in civilian populations, a tactic which led to the strategy proposed aU. S. answering strategy of island hopping, of fire-bombing, which resulted in the overnight massa­ to regain territory seized by the Japanese, as opposed cre of 35,000Germans in Dresden, and in the destruc­ to a frontal attack upon Japan itself. This did become tion by fire of Tokyo. Sucq incendiary bombing was the U.S. strategy in the Pacific. Most interesting is the both a precursor of the use of the atom bomb on Hiroshi­ fact that Japanese Admiral Yamamoto, according to ma and Nagasakiby the United States, and of thedevel­ Honan, adopted the strategy in Bywater's scenario, opment of napalm bombs us�d in Vietnam and recently even though he himself did not advocate going to war. against Iraq . In his book, Bywater had forecastan eventual U. S. In the 1920s and '30s, the United States opposed victory , and correspondence has surfaced in the Japa­ this kind of barbarity , and ' was in favor of the total nese archives which corroborates that Yamamoto rec­ abolition of aerial bombing.: But the British refused to ognized the correctness of this view, but apparently the give up the practice. U.S. opposition, of course, did Japanese admiral hoped for a negotiated settlement. not last, and today we see the U.S. Senate seconding Most interesting is the contention by reviewer Honan President Bush's (and Great Britain's) threat to renew that before Yamamoto's intervention-that is, before the aerial bombardmentag$st Iraq. Bywater's scenario-the Japanese war plans were di­ Certainly Hitler had to be defeated, and the Japa­ rected toward a strike against the Dutch East Indies. nese were carrying out an imperialist policy in the Pa­ The British colonies would also have been threatened, cific, but the truth about how Pearl Harborcame about, but there is no assurance that-without Pearl Harbor­ and the way in which the -British have traditionally the United States would have been brought into the manipulated the United States into wars , is a story war. Thus it would seem that the First World War had which should be told. Lest it never stop.

72 National EIR August 16, 1991 Did ou

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Bush's Surrender to Dope, Inc. Washington's Policies . Are Destroying Colombia

Contrary to what the White House public relations moguls tell you, Bush has forced Colombia to give up its war on drugs, to stop extraditing the dope kingpins to the U.S., to make "peace" with the narco" terrorists, and to move toward legalizing­ drugs. The same policies are on line for the United States, and the drug legalizers are moving in fast for the kill. This report tells you what you need to know to stop them.

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