EIR Executive Intelligence Review Special Reports

The special reports listed below, prepared by the EIR staff, are now available.

1. Prospects for Instability in the Arabian Gulf 5. The Significance of the Shakeup at Pemex A comprehensive review of the danger of instabil­ EIR correctly forecast the political troubles of ity in Saudi Arabia in the coming period. Includes former Pemex director Jorge Diaz Serrano, and analysis of the Saudi military forces, and the in­ this report provides the full story of the recent fluence of left-wing forces, and pro-Khomeini net­ shakeup at Pemex.lncludes profile of new Pemex works in the country. $250. director Julio Rodolfo Moctezuma Cid, implica­ tions of the Pemex shakeup for the upcoming 2. Energy and Economy: Mexico in the Year 2000 presidential race, and consequences for Mexico's A development program for Mexico compiled energy policy. $200. jointly by Mexican and American scientists.Con­ cludes Mexico can grow at12 percent annually for 6. What is the Trilateral Commission? the next decade, creating a $100 billion capital­ The most complete analysis of the background, goods export market for the United States. De­ origins, and goals of this much-talked-about tailed analysis of key economic sectors; ideal for organization. Demonstrates the role of the com­ planning and marketing purposes. $250. mission in the Carter administration's Global 2000 report on mass population reduction; in the 3. Who Controls Environmentalism P-2 scandal that collapsed the Italian government A history and detailed grid of the environmental­ this year; and in the Federal Reserve's high ist movement in the United States. Analyzes interest-rate policy. Includes complete member­ sources of funding, political command structure, ship list. $100. and future plans. $50. 7. Near-Term Prospects for Gold Price Increase 4. Prospects for Instability in Nigeria A political guide to the reasons for the recent A full analysis of Nigeria's economic develop­ decline in the price of gold, and likely price move: ment program from a political standpoint. In­ ments in the future. Includes analysis of control cludes review of federal-state regulations, analy­ over international private gold stocks, ongoing ef­ sis of major regional power blocs, and the en­ forts to corner the market, and review of scenar· vironment for foreign investors. $250 ios now in circulation for remonetizing gold.$500.

------, ! EIR ! , EXECUTIVE INTELLIGENCE REVIEW I , I , I would like to receive these EIR.Special Reports: Name 1 , Title I t Order Number(s) Company : I 0 Bill me for $ 0 Enclosed is $ Address I , PIease c h arge to my 0 VISA 0 Master C harge I I Card No. City State Zip I I , S'Ignature Exp. Date__ Telephone ( I . ��a rea�c�oo�e �------I I I I Make checks payable to:

�X.:�:I:��n::e:e::e:.���::::�t�s:::::::�:=:::.:�1���:8�:______1 L ______Founder and Contributing Editor: Lyndon H. LaRouche. Jr. Editor-in-chief: Criton Zoakos Editor: Robyn Quijano Managing Editor: SusanJohnson Art Director: Martha Zoller Contributing Editors: Uwe Parpart. Christopher White. Nancy Spannaus Special Services: Peter Ennis From the Editor

INTELLIGENCE DIRECTORS: Africa: Douglas DeGroot Agriculture: Susan B. Cohen. Robert Ruschman Asia: Daniel Sneider Counterintelligence: Jeffrey Steinberg Economics: David Goldman European Economics: Laurent Murawiec Energy: William Engdahl Europe: Vivian Zoakos Latin America: Dennis Small Law: Edward Spannaus Middle East: Robert Dreyfuss Military Strategy: Steven Bardwell Science and Technology: Marsha Freeman Soviet Sector: Rachel Douglas United States: Graham Lowry Large portions of the world's present population, especially in the English-speaking world, have lost the ability to respond to the concept INTERNATIONAL BUREAUS: Bogota: Carlos Cota Meza of causality. This was made possible because of the subversion of the Bonn: George Gregory. Rainer Apel concept which has proceeded within the scientific milieu." Chicago: Paul Greenberg Copenhagen: Vincent Robson So writes Editor-in-Chief Criton Zoakos in this week's Special Houston: Timothy Richardson Report on the new papal encyclical, Laborem Exercens. From a Los Angeles: Theodore Andromidas Mexico City: Josefina Menendez philosophical, as opposed to sectarian, standpoint, the report pursues Milan: Muriel Mirak the distinction between labor as degraded, object-fixated activity, and Monterrey: M. Luisa de Castro labor as the self-expanding contribution by each individual to "sub­ New Delhi: Paul Zykoftky Paris: Katherine Kanter. duing the earth," as John Paul II puts it: i.e., civilizing and transform­ Sophie Tanapura ing brute nature according to the very laws of creation. Rome: Leonardo Servadio Stockholm: Clifford Gaddy Subscribers have told me that our July 28, 1981 Special Report, United Nations: Nancy Coker "The Strategic Significance of the Ecumenical Negotiations," by EIR Washington D.C.: Richard Cohen. Laura Chasen. Susan Kokinda founder Lyndon LaRouche, profoundly struck them as a vehicle for Wiesbaden: Philip Golub. Mary Lalevee. grasping the nature of science and the purpose of politics. We bring Thierry Lalevee. Barbara Spahn this document to you as a sequel. Executive Intelligence Review (ISSN0273-6314) In our International coverage, we also bring you a series of is published weekly!50 issues )exceptjorthe second week ofJulyandfirstweek ofJanuaryby interviews, obtained by EIR, encapsulating the mentality which NewSolidarily InternationalPress Service 304 W.58thStreet.New York. N.Y. 10019. knows the potential of science and technology, yet demands chaos I" E",ope: Executive Intelligence Review. and depopulation: representatives of the State Department, Aspen Nachrichten Agentur GmbH. Postfach 2308 . D. 6200 Wiesbaden Tel: 30·70-35 Institute, and associated institutions demand that Egypt reverse the Executive Directors: Anno Hellenbroich. Michael Liebig industrialization and demographic growth attained thus far, submit I" Mexico: EIR, Francisco Dlaz Covarrubias 54 A·3 to "the Iran process," and so much the better if the Soviets move in to Colonia San Rafael. Mexico DF. Tel: 592·0424. IlIptUI SIIbscriptio" ,Illes: accelerate the havoc. O.T.O. Research Corporation Takeuchi Bldg. The Soviets' own "follies of cleverness" are addressed at length in 1-34-12 Takatanobaba LaRouche's article, "Brezhnev Should Break With London Before It Shinjuku-Ku. Tokyo 160 Tel: (03) 208-7821 Is Too Late." Copyright 0 1981 New Solidarity International Press Service All rights reserved. Reproduction in whole or in part without permission strictly prohibited. Second-class postage paid at New York, New York and at additional mailing offices. Subscription by mail for the U.S.: 3 months-SI25, 6 months-S225 . I year-S396 . Single issue-$IO Academic library rate: 5245 per year ITillConteDts

Departments Economics

15 Energy Insider 4 u.s. interest rates: Gear-up in Sweden's how far will nuclear program. they decline?

46 Interviews Francisco Javier Alejo, 6 Fed sees loan demand Mexican Ambassadorto disappearing fast Japan; Noboru Matsunaga, An interview in which a Japanese Ambassadorto New York Fed spokesman Mexico; Renzo Taguchi, saysth ey want to infli ct a represent ative of Japan's slow, st eady recession that Keidanren industrial won't panicth e President . association. 7 Industrial chain 49 Dateline Mexico reaction, not Whither De la Madrid? 'fine-tuning'

30 Report from Paris 8 Currency Rates Mitt errand's nuclear Wat erloo. 9 No credit, scant revenue St at e and municipal finance 51 Middle East Report is being abruptly sabotaged. The Trilaterals strike back. 11 West German bankers 60 Congressional Closeup and industrialists join demand for 64 Eye on Washington further lending

13 Schmidt's battle The Chancellor's domestic and political efforts.

Documentation: Excerpts fromtw o recent speeches.

17 Gold No near-t erm price rise.

18 Agriculture Farm eq uipment markets devastated.

19 World Trade

20 Business Briefs Volume 8 Number 42 October 27, 1981

Special Report International National

30 State Department's 54 Will Ronald Reagan unfinished business: stick out his depopulating Egypt political neck? The hands and feet of More than AW ACS is at British intelligence, stake: th e abiliity of including the same State the executive to personnel who fostered provide leadership. Khomeini, say Murabak must submit or 56 The IMF is imposing be overthrown. the 'lifeboat ethic' An interview with Garrett Pope John Paul II. on his plane. the Dante Aligh­ 32 DOS, Clark, Aspen: ie,i, having arrived in Santo Domingo on Jan. Hardin, one ofthe original 25. 1979. D. Goldberg/Sygma destroy industry publicists of the population Five interviews. triage policy. He applauds the Peking model and 22 The labor encyclical: 35 'Leonid Brezhnev must accurately emphasizes that an idea that could save break with London the State Department and IMF policy of depopulation civilization before it is too late' is his own, under more Editor-in-C hief Criton Especially for the Middle polite names. Zoakos comments on John East: by Lyndon H. Paul II's new contribution. LaRouche, Jr. 58 A case study: the Guardian Angels 27 From the text of 41 Mexico's bid for "Volunteerism" to replace Laborem Exercens industrial partners city workers is bad busi ness, Extracts from the encyclical. A chronology ofthe and bad politics. This pilot renewed drive for nuclear project is promoted by 28 'The Pope ought to energy there, with its pseudo-conservative study sociology' implications for North­ opponents of industry A sample of verdicts from South relations in general and urban growth, and Catholic schismatics and ties with the U.S. in funded by the likes of and liberals. particular. Chase Man hattan.

43 The seven bidders 62 National News for Laguna Verde Their strengths and weaknesses. This entire section was written by Timothy Rush.

44 Tokyo out to rebuild trade and investment Consolidating its position in Mexico.

52 International Intelligence �TIillEconomics

u.s. Interest rates: how farwill theydecline?

by David Goldman, Economics Editor

Federal Reserve officialsthemsel ves are sharply divided sector is running its own, similar deficit. To this must be in their outlook for the immediate weeks ahead. A New added the present $35 billion rate of credit expansion York Federal Reserve officialfo resees a possible stabili­ that is going to refinance old debt service of developing zation of the prime rate at around 15 percent (see append­ nations. ed interview); a Philadelphia Federal Reserve official Our own view is that the economic downturn will warns of "intense volatility" during the next few weeks; continue, but that rates will nonetheless stick at around while a Board of Governors economist in Washington their present level, and that the New York Fed's sugges­ does not rule out a further increase in the relative near­ tion that the prime could stabilize at 15 percent is far too term. generous. The monetary system, which traversed the The reduction in major banks' prime lending rate to land-mines surrounding the Oct. 1 shiftover to "same­ 18 percent had not yet persuaded institutional investors day settlement" at the New York Clearing House, will to risk their money on long-term bonds as of deadline on remain fu ndamentally unstable and volatile for the fore­ Oct. 14, and, indeed, the day's rise in the federal funds seeable period. rate back to 163/8 percent, the previous day's two-point fall fo r long-term bonds, and the same day's 15 point The mechanism drop in the Dow-Jones index on the New York Stock What has happened thus far is simply explained. Exchange clouded the prospects for additional lowering Although, as the Federal Reserve insists, it made no . of interest rates. addition to total bank reserves during the past six The Fed's problem is not much different from anyone weeks, nonetheless it permitted banks to pay off reserves else's, namely, that it does not know to what extent the borrowed at 18 percent at the Fed's discount window present sharp decline in economic activity will reduce by adding fresh non-borrowed reserves to the system, to credit demand, or even increase credit demand for the the extent of about $1.2 billion. immediate coming period. It is not merely that the It made those reserves available at rates lower than Federal government's borrowing requirement, both on the discount rate, taking pressure off th� banking and off-budget, is likely to exceed $120 billion (minus system in anticipation of the Oct. 1 clearing date­ whatever dribbets David Stockman can findto save) in precisely as Fed officials told this publication would the fiscal year that started Oct. I, but that the private happen (see EIR, Sept. 29). As the federal funds rate

4 Economics EIR October 27, 1981 fe ll, the Fed brought the discount rate down, and banks that an oil-price increase is likely due to the recent brought down the prime lending rate. events in the Middle East. Because the mechanism of the interest-rate fall was As for the international markets, despite the warning the substitution of reserves provided at the Open Mar­ by the International Monetary Fund's Interim Commit­ ket desk fo r reserves borrowed at the discount window, tee Sept. 27 that the present $100 billion payments the relevant rates to compare are the discount rate (plus deficit of the developing nations is "unsustainable," surcharge) and fed funds; now that the discount rate there are no signs whatever that commercial banks are and the three- and six-month Eurodollar rates are stable cutting back on deficit-financing loans. On the contrary, at the 16 percent range, there seems no good reason major regular borrowers such as Brazil are continuing why the fed fu nds rate should not also stabilize at that to get all the credit they ask, while nations such as India level, and no good reason why the prime rate should and Nigeria, who have stayed off the private markets, not remain at 18 percent. may start to tap them substantially in 1982. We .argued Throughout the process, the rate of bank lending (see EIR. Oct. 6) that the U.S. Treasury and Federal continued at a quick pace, i.e., 13 percent per annum in Reserve proposal to force a reduction in. the Third September and 20 percent in the 13 weeks ended Sept. World lending bubble could not work, and no current 30; the rate of commercial paper lending was consider­ evidence is available that it will work. On the contniry, ably faster. However, as a Board of Governors econo­ Fed officials responsible for enforcing the lending-re­ mist explained, the dropoff in economic activity reduced duction program worry privately that the economic corporations' transactions balances, or demand depos­ downturn in the United States and other industrial its, while the continued corporate scramble for liquidity nations will widen the developing nations' deficits, by promoted growth of time deposits, money-market funds reducing their export markets, and that this would force balances, and so fo rth. Therefore, M-I barely rose while the commercial banks to put themselves further out on M-2 and M-3 continued rising at double-digit rates. a limb. Since commercial banks must keep only 4 percent of Therefore, the basic outlook remains one of politi­ time deposits on reserve, against 15 percent for demand cal-economic crisis. The Federal Reserve may well have deposits, the shift. from M-IB to M-2 and M-3 enabled won the last round with the White House, but the real them to lend more on less reserves, permitting interest confrontation is yet to come: Fed Chairman Volcker rates to fall. has, in the view of the White House, destroyed the The continued strength of loan demand in the face prospects of the President's economic program, and will of what is clearly a rapid fall in economic activity have to answer for it. suggests strongly that the basic illiquidity of the corpo­ rate sector is holding interest rates up. So much borrow­ Going bump , ing is due to capitalization of old debt service, or The thinking behind the Fed's policy may have been financing unsold inventories-we calculate about 70 exposed in the London Economist's Oct. 3 cover story, percent of total borrowing-that a decline in economic. "Things that Go Bump in the Morning," which warned activity has not yet produced a reduction of credit of a 1930s-styll crash unless governments took unprec­ demand, only a technical reaction on the banking edented action to slash expenditures, reduce wages, and reserve side. Clearly, at some point, a reduction in total bring down living standards. Since the June meeting of lending will occur. Although the energy sector, which the Bank for International Settlements, the central took about 20 percent of the bank loans issued in 1981 banking elite has used the spectre of financialcat astro­ so far, is expected to borrow even more during 1982, phe to bludgeon advanced-sector governments into other sectors will ultimately have to diminish their adopting this type of regime. With the American Con­ short-term borrowing. But it may require major bank­ gress balking, and the German and Japanese govern­ ruptcies and other forms of reorganization of the econ­ ments refusing the demands of the central banks point­ omy's growing debt to finally stop the lending bubble. blank, a likely point of political confrontation was the Oct. I conjuncture. The outlook In a way, the Fed's decision to permit rates to soften The fo regoing suggests that the decline of the na­ slightly represented a political backdown. Had the chain tion's economy between now and year end will be of payments broken, the Germans and Japanese could sudden and cruel, and dump a major decision on the have, and probably would have, responded by remone­ desk of the President. If to the credit problem a major tizing gold. rise in oil prices is added, interest rates will shoot back Could it be that the masters of the BIS believe that up quickly. Indeed, the West German central bank is a threat to the Euro-Japanese aorta, the Persian Gulf, reported by Der Spiegel magazine Oct. 12 to fear a could accomplish what the threat of financial crisis rapid lowering of interest rates, precisely on the grounds could not?

EIR October 27, 1981 Economics 5 EIR: Albert Sommers of the Conference Board wrote Interview this week that the Fed wants this recession. Is it true? A: Yes. We need the recession; economic slack may be very painful, it causes agony, but the slack is necessary. It hurts like hell, those are real people out there, but we have to have a period of economic slowdown. We need to cool inflation, and we need to cool off wage demand. The unions will have to cool their demands. But weha ve Fed sees loan demand to walk a thin line. We have a recession of the right sort. EIR: The right sort? disappearingfast A: We can't have 12 percent unemployment like the . British-that would cause "the Fed political problems. Federal Reserve Chairman Paul Volcker has won "a big But now, Volcker's in a very strong position, because the victory" over President Ronald Reagan, a Federal Reserve economy is not collapsing. Volcker's avoided a British source close to the Chairman said in an Oct. 13 interview, situation with exploding unemployment-that's a real because Volcker has succeeded in imposing an economic economic collapse. U.S. unemployment will do nothing recession, but "of the right sort. " Excerptsfollow. of the sort, just rise gradually, but we don't want a sharp downturn, just a gradual leveling off. That's not econom­ EIR: You said this August that Fed Chairman Volcker ic collapse, and unless you get a real British-style col­ would back off and print money if the White House quit lapse, with strikes and riots in the streets, Ronald Reagan backing the Fed and instead backed congressional calls simply cannot reverse his course on .monetary policy for lower interest rates. Has the time come? overnight, or at all. Volcker has been betting very heavily A: No. on what's now happening: the demand for credit slack­ ening off, the recession, and therefore interest rates EIR: Is the fightbe tween Donald Regan and Volcker, fa lling because of the successful recession-and not be­ with Regan calling for lower rates on behalf of the White cause we've printed any money at all. House, phony then? This fa ll in interest rates will take a lot of pressure off A: Absolutely not, it's for real. Beryl Sprinkel is still Volcker, that's exactly how he wants it. What we want is endorsing us, and Regan endorses us personally, and yet a slow fa ll of the prime rate to 15 percent. That will make he's giving us real trouble. That means it's political­ a lot of difference in public perception, in world percep­ Regan is being made to act politically. tion, that's very diffe rent from 20 percent, from what it was. It is now clear to the world that our money supply EIR: Who's behind the attack on the Fed? targets are all being met, and met without inflating, and A: The President, Ronald Reagan. He's using Regan, yet rates are being successfully brought down. he's very disappointed in the state of the economy. The That's a very big victory fo r Volcker. It takes the Republicans in Congress are really pressing him [to get stuffi ng right out of Ronald Reagan's political sails with interest rates down]. Ronald Reagan, personally. But it respect to the Fed. It makes it virtually impossible for hasn't affected us yet. Congress hasn't moved. Reagan to attack us.

EIR: But you say you're not loosening up. Why pave EIR: But aren't you worried that if interest rates fa ll, the I interest rates come down? dollar will collapse? A: Falling credit demand. We haven't moved our supply A: Most of the people predicting that are crazy. The of total reserves, borrowed plus non-borrowed, at all. prospects for the dollar are stable for the foreseeable future, at least for six months, it won't move, net. EIR: But bank loan demand numbers are up. First of all, rates won't fa ll much further anyway. But A: That's only a p art of the picture. The only current what will fall is inflationary expectations. data you have is bank loans. You need to look at all the rest of credit demand. If you added up net funds raised in EIR: Will Volcker continue to demand that Reagan cut credit markets from the Flow of Funds data, you'd see the budget, even going into a recession as Hoover did in that other credit demands are way down. 1931? A: Yes. Once the slack continues in the economy, we can EIR: So the recession has enabled you to let interest have corporate tax cuts of the right kind, the kind that rates fa ll? will shift our structural problems [shift U.S. industry A: Yes. from sunset to sunrise-ed.].

6 Economics EIR October 27, 1981 EIR: But Volcker denounced Reagan's tax cuts last This March, steel operating rates were up to 87 week. percent, as steel was produced at near-capacity levels for A: Volcker wants the individual tax cuts rescinded or rapid auto output. Those cars were soon to sit unsold on postponed, and all the loopholes closed. auto dealers' lots; once the downturn in auto sales caught up with production schedules, auto companies were EIR: Aren't you worried that fo reign central banks sold forced to cut back production. $800 million in V.S. Treasury bills last week? As a result, the steel industry produced at only 70.8 A: They're not dumping, net. The French sold a lot of percent of capacity for the week ending Oct. 9. The fact short-term Treasury bills to support the French franc, that steel operating capacity had fallen 1.6 percentage which they did in dollars. They sold a lot more than $800 points from the previous reporting week indicates how million, that's just the net. They did over $3 to $4 billion fast the industry is unravelling. V.S. Steel announced in total intervention when the EMS was re-aligned. But Oct. I that it will close down one of two remaining blast they sold a lot of the Treasuries to the Kuwaitis and the furnaces and two open hearth steel-making furnaces at Saudis-the Arabs are buying plenty. Short-term V.S. its Fairless, Pennsylvania works, and will lay off 850 Treasury rates have come down in spite of what the workers. French did, because there is a big capital inflow, net. Developments in other industries show that unem­ Kuwaitis are buying up Los Angeles real estate. ployment-which reached nearly 8 million in Septem­ Sadat's assassination won't hurt the dollar, it just ber-will continue to increase. The construction industry makes the V.S. and Treasury bills a safe haven from is indicative. Employment there, which had shown some Mideast Instability .... We can get along without Mid­ growth in the later part of 1980 and early months of east oil. No matter how destabilized it gets. 1981, fe ll by 20,000 in September; it has declined by There's now been reached an upper limit to energy 165,000 since April. The number of construction jobs in prices, where demand is fully responsive to price rises. September actually tumbled below the July 1980 reces­ Yamani is right about that. We will just cut our imports sion trough level. And the latest report for the month of more. The V.S. is the best positioned of any industrial August, which shows housing construction down to an economy. This works in favor of the dollar, and the annualized 937,000 units, 50 percent below normal levels British pound. The V.S. will simply buy less than every­ and falling fast, means that construction employment is ' one else, and Europe and the Third World will suffe r the in for a further big tumble. most. And Japan. Chain-reaction effect By slashing hard into basic sectors of the economy, Volcker necessarily cuts the props out from other sectors. The fall in the housing and general construction sector has had terrible repercussions for the forestry and u.s. Economy lumber industry. Forest company output will be down 10 to 15 percent this year. The auto industry exemplifiesthe chain reaction, as indicated above. The Big Three auto producers an­ nounced Oct. I that the production schedule of cars for Industrial chain the fourth quarter of this year, at 1,544,000, is down 8 percent from last year and will be the lowest level of reaction, not output since the fourth quarter of 1970, when an autoworkers strike against General Motors, the nation's 'fine-tuning' largest auto producer, wiped out most ofGM 's produc­ tion. The cutback in auto production will not only lead to a new wave of layoffs-in an industry with more than by Richard Freeman 175,000 workers already on indefinite layoff-but will also trigger layoffs in industries that ship a good Federal Reserve Board Chairman Paul Volcker's under­ amount of their output to auto. This is the case in steel, lings claim that he can finely tune his control over V.S. as already documented. money supply and interest-rate levels over the next sev­ It is also true of aluminum, where orders fo r the first eral months so that he can gently ride the V.S. economy two weeks of September were down 17 percent fr om last down into full recession, but avoid a sharp industrial year's levels. The aluminum industry, of course, also crash. The latest steel operating-capacity figures disclose ships to the aerospace and consumer durables sectors, that the economy is not going to be so tidily controlled. the latter of which is not doing well either. Aluminum

EIR October 27, 1981 Economics 7 operating rates are rapidly pushing below 80 percent, and the announcement Oct. 9 by the number-three aluminum producer, Kaiser Aluminum & Chemical Currency Rates Corporation, that its third-quarter earnings fell a stun­ ning 75 percent, lends credence to the Sept. 30 assertion by one Wall Street analyst that "high interest rates will probably choke the sector" further, and that the profits of some aluminum companies will be down as much as The dollar in deutschemarks 30 to 50 percent below 1980's weak levels. New York late afternoon fixing

Two choices 2.45 t---o.. Paul Volcker's actions remind one of the TV repair­ , 2.40 � � man who announces, "Don't worry, I'll have this baby working in a jiffy," and then proceeds to take a 2.35 \ sledgehammer Ol:1t of his repairman's kit and smash the .... 2.30 - set to pieces. \ II" This is how delicately the loutish Volcker is "fine­ 1.25 1 � tuning" the economy. Remarks by American Treasury 'ili 9/l ---';'- 9/16� 9/23 '/ 4 Secretary Don�ld Regan on behalf of the President to the effect that Volcker is "perhaps undershooting" ThedoUar in yen monetary targets reflected a glimmer of recognition on New York late afternoon fixing the part of the White House that something is going drastically wrong-but only a bare glimmer of recogni­ 2.50 tion. 2.40 In March 1980, Volcker imposed lending limits and extra reserve requirements on all banks, as well as 2.30 � � � ...P "'" � i"'\"..'" raising the discount rate by three extra percentage 2.20 � points fo r all money center banks with more than $500 million in assets. 2.10 8/26 9/2 9/9 9/16 9/23 9/30 10/7 10/14 Volcker proceeded to elaborate that his policy was not meant to force a contraction in auto loans or home mortgage lending. Needless to say, these were the first ThedoUar in S� francs two sectors that got crunched. By May of 1980, produc­ New Yor� afternoon fixing tion was down 5 percent, and Jimmy Carter, watching 'V , his chances for re-election evaporate as tears streamed 2.10 � J down his eyes, telephoned Volcker and told him "ease 2.05 up." The economy managed to climb by 'December 1\ 1980 to a level below its 1979 production levels, and 2.00 \. � then clung to this depressed December plateau for the 1.95 -- � next several months. When, by summer 1981, the econ­ r\.�V omy had not turned downward again, several econo­ 1.90 1 8/26 9/2 9/9 9/16 9/23 9/30 mists proclaimed that the U.S. economy is "imper­ � vious" to high interest rates. Of course, the economy cannot "adapt" to high The British pound in dollars interest rates, even if they were "only 10 or 12 percent." New York late afternoon fixing An economy cannot bear a rate of interest that drives 1.95 the cost of funds higher than the rate of real profit that can be generated by industrial firms. Interest payments 1.90 of 17 to 20 percent can be paid from only one of two 1.85_ sources: from real industrial expansion and the resulting J� �Ioo � l profits,or from the destruction of the underpinnings of 1.80 Iio.. industrial and agricultural capacity. \ r--'"7 � -- �� These are the only two choices; there is no third 1.75 8/26 9/2 9/9 9/16 9/23 9/30 10/7 10/14 way. There is no evidence that President Reagan under­ stands this point.

8 Economics EIR October 27, 1981 No credit, scant revenue

State and city governments are being squeezed out of borrowing markets at the same time recession hits their income, reports LeifJohnson.

U.S. urban residents may soon have little difficulty un­ received a lower interest rate which reflected the tax derstanding the meaning of IMF and World Bank credit savings to the buyers. cutbacks to the Third World. Changes in budget and tax The Tax Act reduced the top bracket tax from 70'to policy combined with high interest rates and lowered 50 percent, reducing the amount of income wealthy bond ratings are making it impossible for America's individuals would try to shelter from taxes, while reduc­ cities to provide even the basic services needed fo r surviv­ ing the capital gains taxes in order to improve the al. \ attractiveness of equity as opposed to fixedincome secu­ For more than a decade, cities and states have been rities like municipal bonds. It has also reduced estate and forced to cut back their spending on capital goods, the gift taxes, expanding tax avoidance through individual water mains, sewerage systems, school buildings, recre­ retirement and savings plans like IRA and Keogh plans. ation facilities, old age homes, bridges, and highways. In 1980, cities were spending less than one-half the dollars All Savers per capita that they had spent in 1970-and it was Most important the Tax Act created the All-Savers steadily downhill all through the decade. Certificate granting tax exemption fo r investments that Changes brought by the recently passed Federal are far more liquid than long term general obligation Budget Bill and the Tax Act of 1981, coupled with bonds of states and cities. interest rates that now even exceed usury for usually low­ interest tax-free municipal bonds, make new borrowing by America's cities nearly impossible. It was this borrow­ Figure 1 ing that paid fo r municipal and state capital construc­ State and local borrowing, tion. 1970-81 (bi \I ions of dollars) The clamp on municipal spending was a three-round assault. The Omnibus Budget Reconciliation Act, passed Total in 1970 dollars with such great fanfare on Aug. 13, cut federal spending Total in Total in discounted for by $35 billion. One-third of that amount had gone in Year current dollars 1970 dollars first-year interest grant form to the nation's localities. Those localities in 19 70 .... $35.7 $35.7 $33.5 turn depend on the federal government for 43 percent of 1971 .... 50.7 43.6 41.0 all their capital spending dollars. 197 2 .... 48.1 39. 7 37.3 In the next round of federal budget cutting, it is 1973 .... 47.7 35.8 33.4 expected that half of the $13 billion cut will come from 1974 .... 51.8 35.0 32.5 capital spending grants to municipalities. 197 5 .... 58.3 36.2 29.8 If local public construction is to continue, the local 19 76 .... 55.4 32.5 29.4 authorities will have to borrow substantially increased 1977 .. . . 71.5 39.4 35.4 amounts on the municipal bond market. That option, 1978 .... 69.7 35.7 31.9 however, has been nearly eliminated by the Tax Act of 197 9 .... 65.0 29.9 26.1 1981. 1980 .... 76.1 30.8 24.9 For the first nine months of 1981, 75 percent of 1981* ... 70.6 26.0 17.6 municipal bonds, expected to be about $70 billion, were purchased by wealthy individuals. These bonds, since *Projected from first seven months. they are tax free, have been the traditional method of tax Source: Puhlic Securities Association: Bureau of Labor Statistics avoidance for such individuals. In turn, the localities

EIR October 27, 1981 Economics 9 Further, the Tax Act's expansion of leasing tax nities as it upgraded. The lower a municipality's bond shelters, increases in "investment" credit, and acceler­ rating, the higher interest rate it must pay. ated depreciation will give commercial banks, previ­ ously large buyers of municipals, more profitable, short­ Proposition 13 term avenues of tax avoidance than the municipal bond For some localities, borrowing becomes all the more market. necessary as it becomes simultaneously impossible. Mu­ Property and casualty insurance companies, which nrcipalities in the state of California for example, which currently hold about a quarter of the $325 biIlion in is spending the last of its multibillion dollar surplus, will outstanding municipal debt will probably be out of the soon feel the brunt of Proposition 13 passed two years municipal market entirely in 1982. In addition to more ago. That amendment to the state constitution drasti­ lucrative alternative investments made possible by the cally cut local taxes and prevented new increases. Now Tax Act, the casualty companies have been running without state grants and a seriously weakened real increasing deficits on their underwriting since 1979. . estate market particularly in Los Angeles and San Losses in 1981 are expected to be $6 billion while next Diego, the municipalities are doubly hit. They cannot year's are estimated by the industry at over $7 biIlion. borrow to continue capital spending since their ability This would not be such a problem if there were to borrow depends on their ability to tax which has alternative means for financing cities' needs. But the been pinched off by Proposition 13. Such legislation in deliberate depression policy of the Federal Reserve recession-wracked industrial states like Michigan and under Paul Adolph VoJcker's chairmanship has ensured Massachusetts has stopped nearly all capital spending that there are not. and put former municipal workers on the welfare lines. For a municipality to issue a 20 or 30 year bond at current rates of 13 percent interest, is to incur an Borrowing cut in half extraordinary future debt that must be serviced from A short hiatus in local and state capital spending revenues that decline as the recession deepens. No would not be so serious if it were not for the decade matter how badly a bridge, firehouse, water main, long decline suffered throughout the nation. school building, or public swimming pool needs re­ In 1979 state and local capital borrowing was $35.7 building or replacement, local authorities will be hard billion from which we deduct the cost of the first year's pressed to accept a 13 percent interest rate burden. interest to give a true picture of the worth of that Because of the economic impoverishment of the borrowing. state and local governments, the risk ratings have gone By 1981, projecting the first seven months' figures, down. Contrary to the trend since World War II, of borrowing in constant 1970 dollars, discounted for the general improvement in bond ratings for municipalities, first year's interest charges, was only $17.6 billion. Thus last year Moody's Bond Service, the nation's largest total borrowing, short- and long-term combined was rating service, downgraded three times as many commu- only half of what it was a decade earlier. Not only has borrowing halved, but the purpose of the borrowing has changed radically. In 1970 two-thirds

Figure 2 of all municipal bond borrowings were general obliga­ tion bonds which went to fund school buildings, sewers, Per capita public works investments (1972 constant dollars) waste treatment or police stations. By 1980 only 30 percent of municipal bonds were general obligation Year Dollars issues-the rest were revenue bonds attached to projects that .generate income. These include industrial revenue 1968 $1 83 bonds for industrial parks, bonds for airports, bridges, 1970 154 docks, and other facilities from which the municipality 1972 144 or public authority can collect user fees. 1974 137 Revenue bonds cannot be sold for schools or other 1976 123 traditional public works like roads and sewers which do 1978 121 not generate revenues. 1980 \09 In 1970 total borrowing for education was $5 billion; 1982 86 in 1980 that figure was $4.9 billion. Adjusted fo r Note: Public works includes highways, industrial and port develop­ ment financed by municipal bonds, and military building, in inflation, the 1980 borrowing was only $1.8 billion or ' addition to traditional municipal and state public construction. 36 percent of the 1970 figure. By 1979 education bor­ Source: Statistical Abstract of the United States. 1982 estimate based rowing was only 5 percent of the municipal bond on impact of Tax Act, federal budget cuts, and weakness of municipal bond market. market even though this is traditionally the largest local expense.

10 Economics EIR October 27, 1981 West German bankers and industrialists join demand for further lending expansion by George Gregory, Bonn Bureau Chief

When industrialist and banking personalities like Rolf minds together in political support of the ways and Rodenstock and Karl Klasen enunciate their disappoint­ means to bring inter�st rates down fu rther. ment over the Oct. 8 decision of the German Bundesbank to ease off interest rates here with a mere I percent No Japanese-model development reduction of the bank-refinancing "special lombard The success of the German export drive this year, up rate," it is a sure sign that Chancellor Schmidt's trade­ at least 4.5 percent overall in a climate of contracting - union SPD base has allies who are not about to let world trade, is remarkable. Furthermore, barring ma­ sleeping dogs lie at the central bank. terialization of a number of crises Chancellor Schmidt Rodenstock, who is President of the Association of has identified, the German export profileis a solid one: German Industry (BDI), had an informal discussion incoming foreign orders are still rbtnning at rates higher recently with the editorial board of the Frankfurter All­ than actual foreign deliveries, which is proof that the gemeine Zeitung, and asserted that the accelerating bank­ previously super-cheap deutschemark is not the only ruptcies over 1981 to date was reason enough for the reason German market positions have strengthened. Bundesbank to have lowered interest rates. The rate of The contrast, however, with domestic GNP contrac­ insolvencies, up 24 percent over last year as of August, is tion of negative 1.5 percent thus far this year is dramat­ far beyond any "natural economic selection process" ic; and it runs counter to the case of Japan, where the among healthy and ailing enterprises, he said. His expla­ export drive not only rapidly turned around a sizeable nation was that this is a result of high interest rates external current-account deficit, but also fueled a strong having depressed investment activity. domestic recovery and investment activity. German Klasen was himself President of the Bundesbank at industry, ultra-sensitive to high interest rates because of the beginning of the 1970s, when Chancellor Schmidt the miserable debt/equity ratio that has persisted was Finance Minister in Bonn; Klasen now manages the throughout the postwar period, has been simply incap­ Deutsche Bank in Hamburg. In Dr. Klasen's view, one able of capitalizing on its export earnings sufficiently to that no banker in Germany would interpret as the posi­ leverage investments that translate into domestic tion of a mere factional lobbyist, German interest rates growth. In some branches of industry, export activity are going to "continue to slide downward." "The econ­ has expanded very handsomely, but in almost perverse omy urgently needs cheaper money," he said in an relationship to net domestic production and investment interview, "so that we can finally invest again to create generated. Some firms in the crucial machine-tool and and maintain jobs." plant and equipment construction sectors, for example, The German industrial and banking community al­ have achieved export dependency ratios of upward of ready sees the Rodenstock/Klasen configuration as a 70 percent, in comparison with export dependency virtual barrage of heavy artillery. The Bundesbank typi­ within the total economy of somewhat over 25 percent. cally battens down the hatches when it comes to justify­ For these reasons, a number of economic forecasting ing its lineup on the side of the Bank for International oracles have fa llen in line with tentative projections Settlements on the interest-rate issue; also, typically, published in an EIR multi-client study of July-August, German business associations are allergic to the idea of where EIR pointed out that projections of 2 percent the Bundesbank's being forced to "lose face" in battles GNP growth for the German economy by institutions ' with their own trade-union opponents. But now that the such as the International Monetary Fund, the OECD, powers that Rodenstock and Klasen represent have spo­ and even Bonn's Free Democratic Economics Minister ken, matters are entirely different. Professor Rodenstock Graf Lambsdorff, were politically motivated to make even castigated other banking and industrial associations the IMF's and BIS's budget-slashing demands on Ger­ generally for having been incapable of putting their many more palatable. EIR projected that, even exclud-

EIR October 27, 1981 Economics II holes in state budgets which are going to be very expensive to repair. In the crucial industrial state of North-Rhine Westphalia, total state debt has doubled since 1978, and even on present projections will be higher than the planned budget of 58.9 billion marks by 1983. The Chancellor's own city-state Hamburg had a deficit of 419 million marks planned into the 1981 budget, but the interest-rate induced slackening of economic activity has resulted in a tax-income shortfall that pushes the actual 1981 deficit up to 700 million. Chancellor Schmidt has estimated that genuine eco­ nomic progress will only be seen when German interest rates fall three points to 8 to 9 percent. "That would be the best investment program we could have."

Deutschemark strength Just before the Bundesbank lowered the special lombard rate, the Bonn Finance Ministry made it known that it was striking the last domestic weapon from the Bundesbank's arsenal of justifications for high interest rates: as of the beginning of October, govern­ ment borrowing requirements have been fulfilled well ahead of sche dule, with 90 percent already cover ed. ing consideration of the globally disastrous conse­ Judging from the rate of borrowing from domestic and quences of a financial and economic collapse in the foreign sources over the year, about 8 billion marks United States, Germany would be lucky to register just remain to be pulled in, and that could be done in a zero growth of GNP in 1982, over negative 1.5 percent month to six weeks easily. in 1981. Barclay's Bank in London now remains on the From mid-August to date, the mark has strength­ optimistic side with its projections of I percent growth ened to the dollar from 2.50 to a tentatively stable 2.18 for Germany, while pointing out that record German deutschemarks now. That was effectively a belated interest rates make the previous OECDjIMF projec­ recognition of the strength of the German export per­ tions of 2 percent untenable. formance and the consequent improvement in the exter­ Otto Wolff von Amerongen, President of the Ger­ nal current-account deficit. The most conservative esti­ man Chamber of Industry and Commerce, has pointed mate of the shift in the German current-account balance out that Germany would require a 4 to 5 percent rate of for 1982, were present developments simply extended, growth in the second half of 1982 to reach a net 2 would halve it to a deficitof to billion. percent on the year, launched from the present trough However, those domestic and foreign considerations of domestic economic activity. To term the second-half pale in the face of the fact that no one here in banking 1982 growth rates of such magnitude impossible is not or business believes that Fed Chairman Volcker can pessimistic under the circumstances. control a collapse of the U.S. economy, and, even There is also general agreement now that even a rate before the assassination of Egyptian President Sadat, of growth of 2 percent would be insufficient to reduce Chancellor Schmidt had called attention to the extreme present rates of unemployment of near 1.3 million, danger of a blowup in the Middle East. He saw that especially as 200,000 young operatives will be coming danger, and the "danger of a failure of economic policy onto the labor markets. in the United States and France" as the severest threats Interest rates with a previous floor at the 12 percent to international peace and the world economy. special lombard rate, now II percent, and mortgage Schmidt is looking for allies to stabilize the Middle rates hovering around that general level, have thrown East. If he does not find them for effective action, there domestic construction down to �5 percent capacity is no hope fo r the German, or European, economy. If utilization; and this industry has never recovered from he does, the Chancellor and his domestic allies clearly the II percent tax on investments levied by the Brandt have the power to tear interest rates and monetary government in the construction crisis of 1974. Further policy out of the hands of the BIS, and thereby show aggravation comes from reduced public expenditures the United States how to halt an economic collapse and on investment and construction at the community and get on with the business of healing the world economy state levels. High interest rates over 1980-8 1 have ripped and monetary system.

12 Economics EIR October 27, 1981 The fo llowing are excerpts fr om Chancellor Schmidt's Schmidt's battle speech to the workers at AEG- Telefunken on Oct. 9. by Susan Welsh The German economy is in difficulty, the world economy is in difficulty, and AEG too has its own special Since the July 20-21 Ottawa summit of major Western difficulties .... There is an often-quoted statement by industrial powers and Japan, West German Chancellor Walter Rathenau, the son of the founder of the firm Helmut Schmidt's international assertiveness has in­ [AEG], and German Foreign Minister during the Wei­ creased-at the same time that his domestic difficulties mar period, made after the First World War: "The have intensified sharply, culminating in the largest anti­ economy is our destiny." A Marxist could have said the government "peace demonstration" in Bonn on Oct. 10, same thing. The economy is our destiny. Today one in the history of the Federal Republic of Germany. would have to say: the world economy is the destiny not Despite the most intense pressure from the United only of us Germans, us Berliners, us Hamburgers, but of States government, including semi-official threats to all the countries of the world. This goes for the develop­ withdraw U.S. ground forces from Europe, Schmidt has ing countries, for Romania and Yugoslavia and Poland maintained economic ties with the Soviet Union, slowly and the Soviet Union and the GDR [German Democrat­ but surely negotiating the multibillion-dollar Siberian ic Republic], as well as for the Federal RepUblic of natural gas pipeline project, which is expected to be Germany .... wrapped up when Soviet President Leonid Brezhnev Walter Rathenau can be a model for many of us. He arrives in Bonn for a state visit at the end of November. was murdered by violent German extremists soon after Schmidt's moves have earned him the hatred of those the First World War-by members of an anti-Semitic U.S. political factions, centered in the State Department right-wing extremist radical organization called "Kon­ and the Heritage Foundation, that intend to impose on suI," because he was slandered as a so-called erfiillungs­ the world "controlled" economic disintegration, de-in­ politiker [a politician who wanted to implement the harsh dustrialization, and East-West confrontation. Since the conditions of the Versailles Treaty-ed.]. This is one of inauguration or Jimmy Carter in 1977, these forces have the steps that led to German chaos: political murder. sought to destabilize Schmidt and, if possible, topple his That was in 1922. Today we must also learn the lesson of government. Thus far they have failed because of this fi rm German republic: repudiation of all violence Schmidt's overwhelming domestic popularity and the from right or left, repudiation of all terror. lack of any credible alternative to his leadership. But the We have had sad news in the last months. There was destabilization of the Chancellor's own party, the Social the assassination attempt against President Reagan, the Democratic Party (SPD), by domestic supporters of attempt against the Pope in Rome; in Hesse the Econom­ Haig's Global 2000pol icy has now matured to the point ics Minister Karry was shot. At the beginning of this that 50 SPD parliamentarians attended the Oct. 10 anti­ week in Cairo one of the bravest men of our time was Schmidt demonstration of 250,000 in Bonn. Next, Chris­ shot, a man who took a great personal risk to make peace tian Democratic Union head Helmut Kohl arrived in finally, after fo ur wars between the Egyptians and the Washington Oct. 13, presenting himself as the Chancel­ Israelis. This has moved me deeply .... lor-in-the-wings. It is in our primary interest to bring interest rates In his speech to workers of AEG-Telefunken, down again ....Thank God the first signs have appeared Schmidt cited Walter Rathenau, the Foreign Minister of of a lowering of interest rates. Rates have fallen a whole Weimar Germany and son of the AEG's founder, that percentage point during the last four months. Yesterday "the economy is our destiny." Rathenau, under pressure [Oct. 8] the Bundesbank lowered short-term interest from German industrial and military leaders, had signed rates somewhat also by I percent. I truly hope that over the famous Rapallo Treaty for industrial and military the next months interest rates can be lowered more. Then cooperation with the Soviet Union in 1922, when the construction activity and investments will pick up again, Western powers lined up solidly against Germany. and this will also ease the gain and loss situation of your While Schmidt's policy is not "Rapallo" in the sense firm, AEG-Telefunken-which is in fact a loss situation, of a break with the West and an alliance with the Soviets, not a gain and loss situation. his intent in citing Rathenau was clear: the Federal The preservation of peace in the world is an important Republic will pursue its national interests, and will do precondition fo r that. If, for example, the situation in the everything in its power-including emphatically eco­ Middle East after the murder of Sadat should become nomic cooperation with the Soviet Union and Eastern more difficult than previously, then the world economy Europe-to prevent U.S. economic policies from pulling and money flows and world interest rates would suffer the German economy into depression and the nation into and worsen. It is therefore necessary that we, the Federal social dislocation and a new fascism. Republic of Germany, do everything we can, in our own

EIR October 27, 1981 Economics 13 We know that our exports must rise. And they can only rise if we are better than others (we cannot be cheaper), more punctual, more modern, more reliable respecting delivery dates, more reliable in supplying spare parts, more reliable in service. I spoke before about exports to the Soviet Union. If the numbers are correct that I read today on the airplane, AEG will receive a very fine portion of the natural gas pipeline deal. I hope I'm not tempting fate to say so. Knock wood. A sum of over half a billion marks-orders fo r gas turbines .... I said that AEG is in a difficult phase, undergoing a very difficult process. I know that. I know that you have suffered greatly because of the high interest rates, since you rely particularly heavily on foreign credit.

Text of Schmidt 's speech that was to be delivered Oct. 12 at the Ubersee-Club in Hamburg. Th e speech was canceled due to illness. Vl c.. Vi Our policy is a peace policy. In our situation, at the z heart of Europe, in consciousness of our history, with Helmut Schmidt more neighbors around us Germans than other peoples have around them, there is no alternative. We do not interest, to stabilize peace. I support fu lly the "peace want to exaggerate our possibilities to make peace more through disarmament" appeal of the German trade secure, or our possibilities to move things toward more union federation [DGB] ....I am against appeals, how­ justice, more freedom, more-human dignity-here and ever, which make it seem as though Soviet missiles are throughout the world. But the possibilities we do have, fo r peace and American missiles are for war. I don't go we want to use, not through loud demonstrations, cer­ along with such one-eyed nonsense. tainly not through violent demonstrations, but through Next month I will receive the Soviet General Secre­ a carefully thought-out, consistent, and resolute policy. tary, Mr. Brezhnev, fo r a visit in Bonn. This will be his What can we hope for? third visit in Bonn. It will be the fifth time that I have met We must take the world as it is-but we should not with him at length. Mr. Genscher will meet with Mr. leave it that way. We should give the world fo rm. This is Gromyko. Naturally, the opportunity will be taken to one of the basic ideas in the new Laborem Exercens discuss missile armaments and the disarmament negoti­ encyclical, which Pope JohrtPaul II recently dedicated to ations, and the best possible outcome would be "null"­ workers and their labor-labor as a transforming force the complete renunciation by both sides of medium­ in service of the community. It we apply our fo rce fo r the range missiles. But it is not we who are the main partners. community, heedful of man and of nature, then we can Secondly, we will discuss with Mr. Brezhnev our hope that neither our earth nor the men on it, nor moral mutual wish fo r expansion of economic exchanges with and ethical values will go under which originated thou­ the Soviet Union. We damn well do have an interest in sands of years ago. expanding economic exchanges. We deliver highly com­ I will never forget the nighttime discussion on the � plex, top-quality machines and capital equipment. They Nile in which my friend Anwar el-Sadat explained to me deliver to us raw materials, oil, and gas. We damn well how the three great religions of the Jews, Christians, and do have an interest in expanding these economic ex­ Muslims had such common historical origins and how changes, not only because it helpd our employment much their basic values coincide. situation-for example, in capital goods industries, in I warn first of all against a petty or provincial treat­ heavy-machine building, or electric engine building­ ment of the problems and the opportunities of the Fed­ but also because a coilntry that relies economically on eral Republic of Germany. We need a Hanseatic view of others findsit easier to understand that they should not the world as a whole, across borders. The federal govern­ stab one another in the back or threaten one another ment can do nothing to talk down either the oil price or with missiles. Naturally, the third thing we will discuss the interest rates. when Mr. Brezhnev comes is continuation of cooperation A look across the borders shows that we have two big in other areas, detente policy and its continuation pure international problems to deal with at the same time: the and simple .... day-to-day problems of high interest rates and the struc-

14 Economics EIR October 27, 1981 tural problem of adjustment to new terms of trade­ particularly in energy-and to the new structur.e of na­ tional demand and its fi nancing. EnergyInsider

North-South Cooperation between industrialized countries and developing countries is on the agenda next week at the so-called North-South summit in Cancun, Mexico. We do not want any formal negotiations in Cancun, but informal and intensive discussions with one another­ about the problems and priorities of policy of equal Gear-up in Sweden's partnership. Independence of the developing countries is a factor nuclear program for international stability. Help for the Third World­ here I agree with Alexander Haig-is an investment in by William Engdahl the preservation of peace and security. Whoever has read the report of the North-South Commission that worked under the chairmanship of In terms ofpercen t of electric power derived from nuclear Willy Brandt, and then several weeks ago the report of sources, Sweden today ranks as the world's leading the World Bank and the U.N. Conference on Trade and nation. Nine plants supply some 6,500megaw atts to this Development [UNCTAD], has understood the situation energy-intensive, industrial export economy of some 8 of the poorest developing countries, the oil-importing million people. This is 30 percent of their electricity. By developing countries, must have great concern fo r the 1985, it will be at least 40 percent. Almost all the rest future of these countries, great concern for the fu ture of comes from major hydroelectric sources, giving Swedish humanity. . industry one of the world's cheapest power sources for But we should not and we will not continue to nurse its high-technology export industries. France is the clos­ our anxiety. In Cancun we want to talk about ensuring est runner-up with about 27 percent nuclear. food and agricultural development, about raw mate­ Some background is useful to the Swedish case. In rials, trade and development, about energy, about the hysteria surrounding press coverage of the 1979 monetary affairs and about development aid in the Three Mile Island u.s. nuclear incident, ousted Socialist context of a fu nctioning economy. Prime Minister Olof Palme, a fanatical zero-growther, Food and energy are decisive aspects of development succeeded in swinging his reluctant party behind a na­ policy. Yet more important seems to me to be the ti'onwide referendum on the future of the country's sub­ question of how the world's population develops. stantial nuclear program. That vote was finally held in It took humanity tens of thousands of years to reach March 1980. Despite vague alternatives from the govern­ its first billion people in the year 1800. It took only a ment, all agreed that a majority had voted to continue ' century to reach the second billion, and half a cnntury with nuclear energy, to Palme's dismay. The vote ended to reach the third billion, hardly 25 years to reach the a two-year stalemate which had been used by a weak fo urth billion, and by the year 2000,ju st 19 years away coalition government to block all economic decisions the population of the world will probably have grown pending the referendum's result. Threenu clear reactors by another 2 billion people. had been ready for loading, but stood idle while the In the American report Global Future: Time to Act, debate lasted. Sweden was forced at one point to import it is recommended that the U.S. government place the power from its Scandinavian neighbors using a highly population problem on the agenda of all summit meet­ developed regional power transmission grid. ings. The report also imp.ressively describes the so-called Once the referendum had passed and the press hyster­ "other energy crisis," which, in the long term, is just as ia evaporated, work on the stalled program quietly, but serious as the oil crisis: namely the widespread defores­ significantly, resumed. According to John Hardwick, an tation caused by procurement of firewood. Every year editor of the widely respected pro-nuclear magazine the fo rests of the earth shrin k by 18 to 20 million Energi och Utveckling, Swedish industry is investing hectares, with hitherto not completely determined ef­ more, even in constant dollars, in nuclear construction fects on the earth's climate. than at any time in the 35-year history of the Swedish In view of such dimensions of the problem, what the nuclear program. "In strictly practical terms," Hardwick Western industrial states provide in the way of devel­ stressed, "most thinking Swedes are beginning to realize opment aid seems paltry-and this is many times what the vital importance of this investment. It is the strongest the communist industrial states provide. single new source of high-skilled jobs in the country, and ,

EIR October 27, 1981 Economics 15 not yet accompanied by commensurate political sanity. While Palme tries from the shadows to retool his image and recapture the government in next fall's elections, he and his zero-growth accomplices in the Riksdag (Parlia­ ment) voted in May to pass a new national energy bill. This bill, I was told by a spokesman from the Energy Ministry, formalizes a decision to phase out the cheaper and more reliable nuclear reactors by the year 2010. As though this were not insane enough, the government official added that this capacity cannot be filled even by the logical alternative of hydroelectric power. The abun­ dant flows from the Kalix and Torne rivers in the far north were permanently put off limits by Parliament in 1977, presumably for the perpetual enjoyment of rein­ deer. This just means the water is wasted in runoff. Instead, the energy bill provides that energy must come from coal, which must be imported, and from such medieval sources as peat and wood. The coal economy will require massive and costly infrastructure, to say nothing of its environmental impact. I was encouraged to find that active optimists like Hardwick, however, refuse to take such stupidity as permanent. "In Swedish law," he explained, "a referen­ dum is merely advisory. It does not have the force of law. We had experience with this in 1966," he said, referring to a government proposal to convert from left­ hand to right-hand driving that was defeated by refer­ endum. One and a half years later, the government

The Forsmark I and IIsite. chose to ignore the "will of the people" and converted nonetheless. The economic sense of making the Swedish auto industry competitively uniform with U.S. and. it is also essential in the long run, if we are to be able to continental European markets was sufficient to overrule maintain an advanced export industry." Hardwick and the shortsighted popular majority. others I spoke with see the government's reliance on the At this point, the vital issue for knowledgeable referendum tactic as a spineless way to temporarily pass people such as Hardwick and the forward-looking the buck to cover for its own inability to implement industry people is the development of nuclear exports necessary economic policies. fo r the urgent energy needs of developing nations. With Because of the startup of three reactors since the some of the world's most advanced shipbuilding capac­ March 1980 vote, some 2,700 megawatts of electric pow­ ity lying idle because of the world economic recession, er, eriough to electrify a city almost the size of Chicago, some industry people are discussing construction of has been added to the Swedish electric grid. As a result, floating nuclear plants to be sent to select developing according to a spokesman from Vattenfall, the state nations. If this is combined with a program for devel­ power board, Sweden was temporarily able to become a opment of Sweden's immense ai1d untapped uranium net exporter of power during the summer months to resources-Sweden has fully 80 percent of European power-short Denmark. Danish anti-growth activists and uranium reserves that lie untapped because of environ­ a Socialist government have to date prevented needed mentalist opposition-Sweden, they reason, could make nuclear construction from beginning there. Sweden's a major contribution to solving the world energy prob­ two largest reactors, Forsmark III and Oskarshamn III, lem. will both be completed by 1985, and will supply 1,050 It is an exciting prospect. Hardwick concluded his megawatts each. I should note that 9 reactors of the remarks by pointing out the real lesson of the referen­ current program of 12 have been fully made from indig­ dum. "This experience shows that, despite immense enous Swedish engineering, using the most exacting propaganda from an anti-nuclear government and anti­ standards in the world, from its ASEA company in nuclear media, it is not so easy to kill our nuclear Vasteraas. industry . Eventually, reality begins to take away the But, as I quickly fo und out, this positive outlook is deception-provided that we stand up and fightfo r it."

16 Economics EIR October 27, 1981 Gold by Montresor

No near-term price rise ment of parities inside the Europe­ Short of a major upheaval in the Middle East, gold is very an Monetary System. The French intervened with dollars, to the det­ unlikely to rise sharply in price in the next weeks. riment of the dollar's parity, be­ cause the West German central bank was tired of lending marks fo r the French to fritter away in fo reign exchange intervention. As such, the re the Saudi monarchy to per­ clear that little points to a rising French had no choice but to dump ceiveWe its power ebbing, on that day gold price at the moment, even if dollars on the market in order to the gold price would bottom. Short the sharp decline of the gold price maintain the franc's parity. of dramatic developments in the of the last few months has, indeed, The support operation for the Persian Gulf, however, the present come to a stop." franc might have been a disaster for world credit environment and the Degussa also notes that the sensitive U.S. credit markets as slow progress on the issue of gold President's Gold Commission will well, had not the Saudis and Ku­ remonetization argue against any have nothing to say until next waitis discreetly bought most of the spectacular near-term gold price March, and might have added also, securities the French sold off. movement. that the White House has agreed to According to Federal Reserve Nonetheless, we hold strongly keep the issue on ice until the report sources, that is why the Fed's hold­ to our stated view that gold stands is on the President's desk. ings of U.S. Treasury securities fo r to increase substantially in price The argument concerning the foreign governments fell by less over the next 12 months. Those in Saudis is well taken; in the heat of than $1 billion, against the $4 bil­ the know, if they possess the liquid­ the battle over AWACS deliveries, lion the French sold; the Arabs ity position that permits them to the monarchy is more than anxious bought the balance. hold a non-earning asset, are accu­ to avoid offense to the United The one extremely active force mulating. States. in the market now is Japan, which One of Europe's most respected As a result Saudi (as well as bought considerably more than the gold refining firms, Degussa, re­ Kuwaiti) purchases of dollar in­ already large figure of 97 tons re­ ports in their most recent German­ struments, particularly U.S. Treas­ ported for the first 7 months of the language gold-market report a list ury securities, have risen. year. According to a Japanese of reasons to expect little upward For example, the French central friend who buys gold for Japanese movement between now and year­ bank liquidated $4 billion in U.S. investors, "There are many loop­ end: Treasury securities in the weeks holes in Japanese Treasury regula­ "American dollar interest rates prior to the early-October realign- tions." have indeed fa llen back, but the Reagan administration is sticking

to a tight-money policy ...and the I market does not see the clear begin­ 650 , I I Gold i ning of a fu rther interest rate fall. I I[ I Dollars I I I 600 i "Industrial demand wi\1 contin­ per ounce ) II I I i I I ue to fall through year's end. ---I T , I I i I "The oil-producing countries' I, 1 ��L---+-, I iI investment funds for gold will 500 scarcely rise in the fo reseeable fu­ 1 450 .-. ..l..-.. .r- ture, since the sales of OPEC coun­ � - 1 ...... -- rFioii tries have fallen sharply. The Saudi London 400 I I � 1---- i I oil minister is predicting sinking oil afternoon I revenues. fixing 350 "These considerations make 9/2! 9/9 9/16 9/23i 9/30 10/7 I I 10/ 14

EIR October 27, 1981 Economics 17 Agriculture by Susan B. Cohen

Farm equipment markets devastated Over the past year, John Deere, Between high interest rates and collapsedfarm income, the largest U.S. producer, has in­ In ternational Harvester fa ces bankruptcy. creased its market share by a re­ spectable 10 percent. While IH has laid off thousands and consolidated dealerships, and while Massey Fer­ guson, for example, is suspending production at three Detroit area plants this fall for the second time nternational Harvester, one of the like Larry Hollis, Vice-President of­ this year, Deere executives will Ination's leading farm equipment the investment firm Robert W. maintain tractor production at last manufacturers, is waiting fo r a fa­ Baird in Milwaukee, who views the December's high levels. Deere's vorable response from its 225 lend­ plan as workable but doubts that an first-halfsales of $1.47 billion were ers worldwide to its latest proposal early agreement can be reached. "If only off 4 percent from a year ago, for a financial bailout. The new you get another two or three banks while earnings of $128.6 million plan, presented several weeks ago that start pulling out," he told the were off 17 percent. after in-house fo urth-quarter fore­ press, "the thing could start coming Observers attribute Deere's dy­ casts of a more than $500 milIion apart rapidly, because other banks namism to its relatively sound fi­ annual loss blew apart the previous would want to protect themselves nancial condition and the fact that package, is a $4. 15 billion refinanc­ and might also call their loans." the company's management has ing due Dec. 15, 1983-a change Farm equipment manufacturers undertaken an ambitious capital from the three-year terms of the readily acknowledge that the single expansion program over the past earlier proposal. best development for their industry decade. For the past six years Deere "The company's situation is so would be reduced interest rates. has increased its annual capacity by serious now that it has to get some­ So far this year, farm equipment 5 to 6 percent on average by spend­ thing done soon," one banker at the sales are down about 10 percent ing $1.4 billion on plant and equip­ meeting told the Wall Street Jour­ from the depressed levels of last ment additions and improvement. nal. While IH Senior Vice-President year, when sales plunged 30 percent The company plans to spend anoth­ fo r Finance and Planning James during the first half and only re­ er $325 million this year. Cotting told reporters that compa­ covered enough to end the year By contrast, IH is seen as having ny officials had not told lenders with a net 15 percent drop. The soft "dug its own grave." As EIR noted their choice was between quick ac­ demand results from depressed in June 1980, the digging began ceptance of the plan or bankruptcy, farm prices and plunging farm in­ with the arrival of Archie Mc­ the disclaimer is academic. come-now expected to come in in Cardell from Xerox to the position Already one bank, the First Na­ real terms at the lowest level since of Chairman and Chief Executive tional Bank of Commerce of New the Great Depression and 45 per­ Officer of the firm in 1977. Mc­ Orleans, has refused all considera­ cent below the annual average of Cardell, upholding his reputation tion of refinancing proposals and the I 970s. as a kind of McNamaraesque "tiger sued fo r recovery of $3.5 million The squeeze has touched offbit­ on costs," instituted a new "high­ due fo r repayment. Harvester re­ ter competition for the dwindling profit regime," at IH. In addition to fused, claiming it couldn't repay markets between the major farm a long list of high dividend payouts any single lender until the restruc­ equipment producers. Allis Chal­ and a low level of re-investment, turing was complete, an argument mers apparently intends to hold its McCardell's new regime included rejected by the federal district own with the help of its edge in the such clever practices as prov0lWtg court. The decision is now on ap­ pioneering no-till equipment field. and prolonging strikes. EIR's con­ peal. Massey Ferguson, the Canadian­ clusion that he is part of the For­ The possibility of a bank panic based giant, recently concluded a tune 500's predominant "post-in­ and stampede to call loans has not $700 million bailout package with dustrial" faction has been all too escaped the attention of observers the Canadian government. amply borne out.

18 Economics EIR October 27, 198 1 Wo rld Trade by Mark Sonnenblick

Cost Principals Project/Nature of Deal Comment

NEW DEALS

$835 mn. Egypt fr om An integrated steel complex near Alexandria is to be Japanese will supply en­ Japan built by National Iron & Steel Co., a consortium of the gineering and all equip­ Egyptian govt. with Nippon Kokan, Kobe Steel, Toyo ment except rolling Menka Kaisha, and the World Bank. Plans are for mills; open to all bid­ 600,000 tpy direct reduction plant, four 200,000 tpy ders. Announced before electric arc furnaces, continuous casting units, bar and Sadat murder. rod rolling mills.

$400 mn. Brazil from Brazil's purchasing pattern has become determined by Deal is conditional on U .K./France/ its financial problems. Planning Minister Delfim Netto European banks provid­ Portugal/ will sign package of shipbuilding deals with European ing added $300 mn. loan Belgium yards because financing terms are excellent. Orders package to Brazil's include roll-on/roll-off vessels, chemical ships, and cash-strapped maritime other equipment not built in Brazil. Total is 15 ships. agency, Sunaman, which must pay $400 mn. debt service this year. Euro­ peans will buy Brazilian exports, such as planes.

Belgium from Armed steel company is signing contract with Brazil's Brazil plans $10 bn. an­ Brazil CVRD for 3 mn. tpy iron ore at market prices. Ore will nual exports from $6 0 come starting 19 8 4 fr om Carajas, Brazil's mountain of bn. investment in Cara­ minerals estimated by Chase Manhattan to be worth jas. over $333 billion.

$6 5 mn. East Germany Industrieanlagen-Import has contracted Hitachi, Nip­ Japan expects another from Japan pon Steel and Mitsui and Co. to build a cold rolling $550 mn. in East Ger­ mill for production of steel sheets for appliances and man plant contracts next autos. Mill has 400,000 ton capacity. First Hitachi six­ year. role mill to go up in Europe. Japanese underbidWestern European competitors, thanks to its Export-Import Bank financing and letting East Germany repay with machinery exports, much of which will be re-exported.

South Yeman International Airports Authority of India will design a IAAI will probably also from India modern airport at Al Ghaidha in eastern South Yemen . win construction con­ IAAI is completing another airport project in Aden and tract. expects to use equipment already there.

$70 mn. U.S.A. from Penrod Drilling Co. 'as ordered from Hitachi Ship­ Sixth such rig ordered Japan building a semi-submersible offshore rig capable of by Hunt group. drilling to 7,6 00 meters.

Algeria from Two 500,000 tpy cement plants in eastern Algeria will Algeria boosting cement East Germany be built by Industrieanlagen-Import for SN MC by end output by 6 mn. tpy by of 198 2. end of 19 8 2.

$350 mn. Spain from Spain is building 5 fluid catalytic crackers over next Contract signed. U.S.A. fo ur years. A 40,000 bpd unit for Petronor's Bilbao refinery will be engineered and built by Foster Wheeler Iberica, Tecnicas Reunidas, and SEN ER.

$316 mn. Saudi Arabia Namkwang Construction received orders from the Sau­ from South di govt. for a $206 mn. cement plant at Jubail and a Korea $110 mn. housing complex in Yanbu.

$58 mn. Algeria from Algeria buying equipment to raise efficiency of Zarzai­ Financing from Exim Japan tine oil field from Japan. and 7 private banks.

$370 mn. Algeria from Algeria signed memorandum of understanding with Algeria prefers state-to­ U.K. U.K. govt. for 20,000 housing units to be buill by state deals before com­ British contractors. mercial side set.

EIR October 27, 1981 Economics 19 BusinessBrief s

In ternational Trade financialcoll apse. traffic" so that the Pittsburgh and Lake "The real estate markets of today Erie, which intends to buy the line, will Soviet-German tax treaty provide a parallel to the stock market of have no labor problems with fo rmer the 1920s," Richebacher argued, citing Conrail workers. clears financing obsb,lcles the 20 percent price drop in Hong Kong real estate prices as a harbinger. In addition, Richebacher fo recasts a Soviet and West German authorities Technology signed a treaty eliminating "double tax­ rise in dollar interest rates from present ation" of German companies' trading reduced levels during the next several profitswith Moscow, eliminating a num­ weeks, as a result of co.ltinued stringent Japanese produce ber of financialobstacles to expansion of liquidity in the financial system. Al­ cera�ic diesel engine Soviet-German trade. A similar treaty though this may result in near-term gains was signed by the Soviets last week with for the U.S. dollar, the German econo­ NGK Spark Plug Company of Nagoya. Sweden as well. mist contends, "A long ride down for the Japan, has just tested the world's first . The extraordinary feature of the dollar is already programed." ceramic diesel automobile engine with treaty is a de.facto subsidy of the interest what it describes as "outstanding interim rates the Soviets will pay on German­ results." The engine, made of silicon ni­ originated trade credits. Henceforward, Transportation tride rather than the older alumina ce­ German companies will be permitted to ramics, will have steel only in its bearings put loans to the Soviet Union on the Conrail's demise and bolts. books of their token Moscow offices. The silicon nitride ceramic was fo und Interest income will be treated as the accelerates further to withstand shock as well as steel does. profit ofa Soviet-domiciled fo reign com­ but could withstand temperatures of pany, paying about 40 percent tax to the Dismemberment and abandonment of 1,500 degrees Centigrade, twice as high Soviet government. The same interest Conrail, the nation's largest railroad, as steel . income will be tax free in West Germany was speeded up with the recent vote by The designers said they solved the itself. unionized Conrail employees to accept problem of ceramic brittleness. In effect, the German government is the May 5, 1981 agreement between the NGK Spark Plug claims that the en­ giving the Soviets a 40 percent interest­ unions. Conrail, and the Department of gine, which can be produced for a cost rate subsidy and the West German firms Transportation. comparable to the steel engine, will re­ a major tax break . Financing terms had The agreement, incorporated in the duce fuel consumption by 20 percent. earlier been a significant sticking-point Northeast Rail Service Act of 198 1 The company also says other auto com­ in major projection negotiations, includ­ passed by Congress Aug. 13, takes $200 panies. both fo reign and domestic. are ing the just-concluded deal for a natural million from previously negotiated Con­ anxious to begin production of the new gas pipeline from the Soviet Union to rail wages, abolishes the employee pro­ engine. West Germany, and a more recent plan tection granted under�theRe gional Rail for West German help in building a $50 Reorganization Act of 1973, and aban­ billion new industrial city in eastern Sib­ dons Conrail's commuter service by Jan. eria. 1,198 3. Under the NRS Act. if Conrail does Domestic Credit not show a profitby 198 4. it will be sold in part or (remaining) whole to neighbor­ Path of economy will ing railroads. Real Estate The wage deferral and abolition of shape interest rates employee protection has made Conrail's German economist warns parts more attractive to potential buyers Market analysts expressed the view the while Conrail managmeent is using the week of Oct. 12-1 6 that U.S. credit de­ of market dangers- remaining 12 to 18 months of Conrail's mand could be high over the next several life to conduct large-sale abandonments months. James O'Leary, chief economist Dresdner Bank's just-retired chief econ­ and workforce reductions. Conrail has of U.S. Trust Bank of New York report­ omist Kurt Richebacher, who now pub­ asked ICC permission to abolish 36 5 ed Oct. 15. "If the economy really falls. if lishes a ZUrich-based financial newslet­ lines totaling 2,300 route-miles of track GNP falls by 5 percent in the fourth ter, warned in his #\02 this month that in 13 states by Dec. 31 . quarter of this year. and then by as much the "freakish" situation on international Since last December, Conrail has cut in the early part of198 2. then it is possible real estate mar\(ets pointed to a major traffic on the Erie mainline to "token that interest rates may come down some,

20 Economics EIR October 27, 1981 Briefly

• FOR ALL BUT TWO U.S. do­ mestic air carriers, the value of their aircraft greatly exceeds the value of their outstanding stock, reports Aviation Week & Space Technology. The weekly reports although long-term rates won't fa ll much million subsidy the contractor needs to that Pan Am, United, and Eastern for a while. complete the plant. are trading at 26 to 28 percent of "However," O'Leary continued, "if, Reagan's announcement that the ad­ the value of their aircraft. These over the next six weeks, the Fed can ministration will study the fe asibility of were the airlines identified in last stabilize the situation somewhat, then the "economic incentives" for private re­ month's EIR airline survey as most large credit needs of the economy will processing is a Friedmanite absurdity, likely candidates for as a self­ assert themselves, and interest rates will EIR believes. transformation into hotel, real es­ bounce back to where they were a few The largest problem, left unspoken tate, financial, and computer-tech­ weeks ago." by the President, is that the cost of pro­ nology services companies. EIR evaluates the situation to be so ducing a nuclear plant has risen from fraught with unfilled credit needs in both under $200 million to $6 billion in the • HARRY LINDBERG, Vice­ the corporate and household sector, that past decade-not least because of high President of the American Road unless GNP falls by 10 to 15 percent, interest rates and financial warfare by the and Transportation Builders As­ even as the economy goes into recession, New York investment houses against sociation reports that excavating the demand for credit will be so great utility financing. EIR will soon publish a and concrete paving on federal that interest rates will fa ll, but not sub­ Special Report on this situation. highways is down 50 percent from stantially. the level of 15 years ago. Lindberg If the econom'y turns downward at a says that this is the result of both a sharp clip, many corporations will have decline in new highway building to borrow heavily just to compensate for Insurance and fa ilure to repair the existing lost cash flow. system. A better measure offailure Ohio Plan insurance to repair the system that is already ' to go private? built is the 25 percent decline in asphalt use on federal highways. Energy The nation's largest public insurance sys­ • RALPH B. HIRSCH, National The pros and cons of tem besides Social Security may go pri­ Legislative Director of the 100- vate if voters agree on Nov. 3. The 70- Reagan's nuclear policy year-old League of American year-old Ohio Plan, the state's workers' Wheelmen , an organization of bi­ compensation insurance fu nd, with as­ cyclists, says that the U.S. is not President Ronald Reagan's Oct. 8 state­ sets of $3.1 billion, is coveted by the taking advantage of an "impor­ ment in support of accelerated develop­ nation's largest insurance companies tant natural resource," the aban­ ment of the U.S. nuclear power industry who are spending $4 million to obtain a doned rights-of-way of railroads has already raised the morale of the near­ "yes" vote on Ballot Proposition I. which can be made into bicycle bankrupt nuclear industry and opened Warren Cooper, Vice-President of trails. Although authorization for the political potential for renewed nucle­ the Insurance Company of North Amer­ the "rails-to-trails" program was ar exports, because it commits the ad­ ica, does not dispute the state auditor's contained in the 1980 Staggers ministration to speeding up plant licen­ claim that Ohio has the highest benefits Rail Act, Hirsch believes that Con­ sing, full fu nding for the Clinch River fo r the lowest costs in the nation, but says gress is not disposed to fund the $5 Breeder reactor, an end to the Ford-Car­ that private companies could cut the ben­ million a year program. ter ban on reprocessing of spent fuel, and efitssubstant ially. technology for permanent disposal of "It's really a question of how freely • THE ADDISON REPORT in­ highly radioactive commercial nuclear you give away money. They [the state vestment newsletter from Quincy, waste. fu nd] are here to pay losses. The [insur­ Massachusetts, predicts in its latest The principal shortcoming within the ance companies] don't feel that way," report that money market funds plan concerns reprocessing. Since, under Cooper said. "Labor feels more comfort­ could experience serious liquida­ the Carter administration, utilities had to able with government than with the pri­ tions over the next several months. amass large stockpiles of waste on their vate sector," he continued. "They feel High interest rates could lead to own properties, the waste issue has be­ they have more influence. They don't corporate bankruptcies, affecting come a real one, and not just an environ­ have any clout with us." the ratings on commercial paper. mentalist bugaboo. Now, one of three Privatization is opposed not only by A substanti al portion of the $160 reprocessing facilities in the U.S., the the unions but also by the Ohio Manu­ billion in money market assets is facility at Barnwell, South Carolina, may facturers Association, the Ohio Chamber invested in commercial paper. go bankrupt because the administration of Commerce, and the Growth Associa­ has forced the elimination of a mere $11 tion.

EIR October 27, 1981 Economics 21 TIillSpecialReport

The labor encyclical:

an idea that could save civilization

by Crlton Zoakos, Editor-in-Chief

If those ideas are true whose existence is necessary, then the ideas contained in the latest encyclical of Pope John Paul II, On Human Labor. which begins with the words Laborem Exercens are true ideas: they have never been as necessary for the survival of humanity as they are now. The history of civilizations, their emergence, flourishing, decline or further upward progress is regulated, in the final analysis, by the degree to which the individual citizens of such civilizations, their institutions, their statesmen, their wise men of science and their moral leaders inform them­ selves, each other as well as their social endeavors by such true ideas. If it is false ideas which inform the conduct of social life then civilizations decline, their institutions disintegrate and their citizens are thrown into moral chaos, confusion of purpose in life and mankind is set adrift into self-destruction. Mankind is now going through such a crisis and it is against such a background of events that the idea in the Pope's encyclical is cast. That idea is on what is human labor and what is human labor all about. It contains three aspects whose implications regarding imminent political and strategic events are enormous. The first aspect is that human work, fo r the human race as a whole, is the way by which-and the only way-we fulfillthe divine command to exercise dominion over the universe. The second aspect is that human work, for the individual person. is the way by which each one of us perfects his or her God-like powers to exercise ever increasing dominion over the universe through science, technology, and industry. The third aspect is that human work, fo r nations. is that which their political, economic, and cultural institutions must strive to cherish and perfect, so that individual persons may have the possibility to live their lives as God-like creators and shapers of the universe in the image of man. Upon reviewing these features of Pope John Paul II's idea of human work, every person of good will, whether Catholic or not, whether Christian

22 Special Report EIR October 27, 1981 Space Shuttle this April: extending man 's dominion over the universe.

or not, will tend to experience a rush of joyous leaps of the meaning of a parent's work for his family is thought, let his or her mind race back into the distant ultimately given by what the children ultimately turn past of humanity in a time during which these ideas were out to be; the meaning of an industrial worker's labor first fo rged, then into the more recent past and the in producing semi-finished industrial items depends on alarming present and then look forward into a future whether his factory or another factory turns out the that humanity deserves, arrived at through pathways that finished product-one does not produce windshields, this God-like concept of human work is capable of one takes part in the production of an automobile. If forging. the automobile is eventually not put together the act of Then it becomes easier for a thoughtful person to producing windshields is meaningless. identify the source of the resiliency and toughness of the The farthest extension of this lawful and necessary only continuous and living 2,OOO-year-old institution of relationship is the following: the meaning of every act our civilization, the Roman Catholic Church; that source of human work which takes place upon the face of the of resiliency and toughness is the tradition of Augustini­ earth-manual, mechanical, intellectual, scientific-de­ an thought, as continued by Dante Alighieri, as ad­ pends upon the "final product" which society as a vanced by Cardinal Nicholas ofCusa and so many others whole assembles. That "finalpr oduct" is Dominion Over and as reflected in Pope Paul VI's Populo rum Progressio; the Earth. If human societies, nations, are not organized man is created in the image of the Creator, the cause of in a way appropriate to turning out this "finalproduc t," scientificadvance, technology, and industry. then the individual labors of citizens and institutions are Then, a thoughtful person of good will compares the rendered meaningless and fruitless, regardless of what present world political and strategic situation with the such individuals may believe about the worth of their outlook embedded in Laborum Exercens. individual endeavors. Whoever takes pride in manufac­ turing "windshields" that shall never become part of an 1. Man's dominion over the Earth "automobile" is a fool. The first preliminary but true observation one can The moral content of labor is not located in the _ make about an individual act of work is that its effect, individual piece of work of any individual worker, but, i.e., its meaning is derived not only by what the individ­ primarily in the generalized effort of the human species ual performer of that act intends, but also by what to increase mastery over the universe. The Papal encyc­ society eventually does with that piece of work. Thus, lical locates the moral content of work in the fact that

EIR October 27, 1981 Special Report 23 work is the universal intervention of mankind as a whole sion in the various epochs of culture and civiliza­ upon the creation as a whole. We quote: tion... . Not only in industry but also in agricul­ ture we are witnessing the transformations made When man, who had been created "in the image possible by the gradual development of science of God ... male and fe male," hears the words: and technology .... "Be fruitful and multiply, and fill the earth and subdue it," even though these words do not refer 2. The purpose embedded in directly and explicitly to work, beyond any doubt 'Dominion Over the Earth' they indirectly indicate it as an activity for man to Man, in order to be truly human must engage in the carry out in the world. Indeed, they show its very endeavor to subdue the earth in order to thus obtain the deepest essence. Man is the image of God partly means by which to increase his powers of subduing the through the mandate received from his Creator to earth. Therefore, the purpose of "dominion" is not to subdue, to dominate the earth. In carrying out this access the necessities of corporeal existence per se, but mandate, man, ' every human being, reflects the to increase the powers to exercise dominion, i.e., the very action of the Creator of the universe. Work creative powers of every individual man and woman. understood as a "transitive" activity, that is to Without this thus-completed statement, the biblical say, an activity beginning in the human subject command for "dominion over the earth" would be mor­ and directed towards an external object, presup­ alIyempty . poses a specific dominion by man over "the earth" H uman work's moral (social) content is species dom­ and in its turn it confirms and develops this ination over the universe; the moral (social) purpose of dominion. It is clear that the term "the earth" of this species domination and thus the social purpose of which the biblical text speaks is to be understood human work is to augment the "domination potential" in the first place as that fragment of the visible of all individual members of the species. The Pope universe that man inhabits. By extension, how­ develops the folIowing argument in the encyclical: ever, it can be understood as the whole of the visible world insofar as it comes within the range Man has to subdue the earth and dominate it, of man's influence and of his striving to satisfy his because as the "image of God" he is a person, that needs. The expression "subdue the earth" has an is to say, a subjective being capable of acting in a immense range. It means all the resources that the planned and rational way, capable of deciding earth (and indirectly the visible world) contains about himself and with a tendency to self-realiza­ and which, through the conscious activity of man, tion. As a person, man is therefore the subject of can be discovered and used for his ends. And so work. As a person he works, he performs various these words, placed at the beginning of the Bible, actions belonging to the work process; indepen­ never cease to be relevant. They embrace equally dently of their objective content, these actions the past ages of civilization and economy, as also must all serve to realize. his humanity, to fulfiII the the whole of modern reality and future phases of calIing to be a person that is by reason of his very development, which are perhaps already to some humanity .... And so this "dominion" spoken of extent beginning to take shape, though fo r the in the biblical text being meditated upon here most pa"rt they are still almost unknown to man refers not only to the objective.dimension of work, and hidden from him .... This process is, at the but at the same time introduces us to an under­ same time, universal: it embraces all human standing of its subjective dimension. Understood beings, every generation, every phase of economic as a process whereby man and the human race and cultural development, and at the same time it subdue the earth, work corresponds to the basic is a process that takes place within each human biblical concept only when throughout the process being, in each conscious human subject. Each and man manifests himself and confirms himself as the every individual is at the same time embraced by one who "dominates." it. Each and every individual, to the proper extent And finally: and in an incalculable number of ways, takes part in the giant process whereby man "subdues the The word of God's revelation is profoundly earth" through his work. marked by the fu ndamental truth that man, creat­ This universality and, at the same time, this ed in the image of God, shares by his work in the multiplicity of the process of "subduing the earth" activity of the Creator and that, within the limits throws light upon human work, because man's of his own human capabilities, man in a sense dominion over the earth is achieved in and by continues to develop that activity and perfects it means of work. There thus emerges the meaning as he advances fu rther and further in the discovery of work in an objective sense, which findsexpres- of the resources and the values contained in the

24 Special Report EIR October 27, 1981 whole of creation ... Man ought to imitate God, his Creator, in working, because man alone has the unique characteristic of likeness to God. Man ought to imitate God both in working and also in resting, since God himself wished to present his own creative activity under the fo rm of work and rest. This activity by God in the world always continues as the words of Christ attest: "My father is working still," he works with creative power by sustaining in existence the world that he called into being from nothing. '" Awareness that man's work is a participation in God's activity ought to permeate ... even the most ordinary everyday activities. .., The knowledge that by means of work man shares in the work of creation constitutes the most profound motive for under­ taking it in various sectors."

3. The consequences for society's institutions The encyclical's concept of human work lays down a political challenge which is bound to produce fo rmi­ The Brunelleschi dome in Florence: creative labor. dable consequences if the concept becomes assimilated and understood as a practical idea by even a minuscule proportion of persons in positions of trust and responsi­ for the development of new arrays of technology and bility. The challenge is posed both to socialist institutions new social pedagogies needed to ensure the transmission and capitalist ones of the "free enterprise" variety, in the of such new knowledge and new technologies to all following way: citizens. In such a situation, political institutions were In light of the defined social content of work (species required to ensure that the end product of this huge dominion over the universe) and its social purpose endeavor remains coherent with natural law: a net (perfection of the individual's creative powers), it is increase in individual man's potential to increase his demonstrated that that which is human, i.e., God-like, Creator-like powers over the universe. in man is man's potential to increase his Creator-like As the encyclical itself makes clear, this is not the powers over the universe. Individual man does so by measure by which existing institutions, East or West, engaging in work, a species activity. But individual man measure their performance. The Pope accurately points does not possess any mysterious ability to engage in out that in both great social coalitions, the measure of such species activity directly. He must employ the institutional performance, though different in appear­ mediation of social institutions-cultural, economic, ance, is one and the same and derives from the outlook and political: enterprises, factories, research laborato­ of the 19th century "liberalism," i.e., Jeremy Bentham, ries, universities, nations and nation-states. How these the grand-dad of the British school of political econo­ institutions behave, how they succeed or fail to fashion my, both its Marxist and "free enterprise" variants. The an assembled finished product out of the immense underlying outlook which dominates the decision-mak­ number of individuals' labors, derives from the intellec­ ing fu nctions of individual leaders of human institutions tual and moral capacities of their leaderships, from the is Benthamite which means "materialist" in the sense ideas which dominate the minds of individual leaders of that materialism is that outlook which locates "exist­ these institutions. The most important, the e�ential, ence" exclusively in corporeal "discrete objects." A key idea is the idea respecting human work a� its /) civilization whose institutional leadership is informed proper purpose. by such a "discrete object" outlook can at best produce If the encyclical's idea of work were dominant "mass consumer" societies. institutionally, then one would observe economic insti­ tutions, both private and public, strive to maximize the 4. The Aristotle question rate of increase of the creative powers of their employ­ The world to whom the encyclical addresses its idea ees, universities and research establishments trying to of human work is, at the present time, a moral pigsty. supply the steady fl ow of fundamental breakthroughs Even the great "oppressed masses," those sunk deep in in our levels of knowledge of the causalities governing material impoverishment, the "exploited," tend to ex­ the corporeal domain of the universe, a flow required perience their distress, in their mind, in terms of lack of

EIR October 27, 1981 Special Report 25 means to enable them to turn themselves into consum­ heirs, John Scot us Erigena, Alcuin, Grosseteste, the erist swine just like the next opulent fellow. This is not Franciscan fr iar Roger Bacon, Peter Abelard, and the people's reality, but it certainly is their deluded self great Canon Cardinal Nicholas of Cusa, who is the conception. This "discrete object" orientation in the ecumenical giant of Augustinian Christianity upon prevailing outlook of our civilization causes an enor­ whose legacy rest the fo undations of modern science. mous conceptual barrier which gives rise to the ques­ This is a fact that would be freely attested by Johannes tion: will the Pope's idea of human work be gotten Kepler, Giordano Bruno, Leibniz, Bernhard Riemann across? and Georg Cantor. The idea itself is extremely simple as most profound To call upon the aid of these men today is absolutely ideas are: Th e purpose of man's creative activity is to necessary and unavoidable. One need only look at the increase his potential fo r creative activity. Men and composition of the anti-civilization forces today: Just as women hear it, even delude themselves that they under­ at the outset of the Dark Age of the 14th century, stand it. But its true content, its causal self-sufficiency is governments, parliaments, mass institutions and instru­ generally not grasped. So, what in fact is a profound ments which shape popular thinking are bought for and statement respecting causality is banalized into what owned by what Wall Street calls "Old Money, " what people of ill will mistake as "circular reasoning" and Genoa and Venice once called the fa mily fo ndi of their others of good will mistake as a mere moral precept. oligarchy. The family names behind today's "Old Mon­ The reason is that the prevailing organic outlook which ey" are the same as those behind the old fondi with the dominates minds living within the present civilization is additions of what became the allies of the Venetian­ blind and deaf, totally incapable of identifying the Genoese fondi in the course of the Reformation, the existence of self-reflexive causal statements. Thirty Years War and the Counter-Reformation: the Unless an assault is undertaken to dislodge Aristo­ British, Belgian, and Dutch oligarchies which, as junior telianism as the dominant implicit outlook of our partners to the Genoa-Venice-Hapsburg-Swiss venture civilization, the Pope's idea of human work cannot be of fi nancial holdings, joined in the looting of the then­ assimilated-for-practice by any discernible proportion opened colonial world. That financial hold of those of people. The Aristotelian outlook, including the sub­ "Old Money" families is retained intact today, through sumed case of Thomism, prohibits efficiently the assim­ vastly diversified financial holdings, control over the ilation of any conception of self-reflexive causality, modern resource-oriented multinational corporations, including the conception of human work developed in control over the Bank for International Settlements, the the encyclical. In fact, cause does not exist in the World Bank, the IMF, the OECD as well as over the Aristotelian scheme; it is replaced by the syllogistic $1.8 trillion Eurodollar market. "middle term." Now, who ever heard of a "self-reflex­ It is this cabal of Old Money, whose present owners ive" middle term? Rigorously, the Aristotelian cause of hail back to the 12th and 13th century fondi and from work is the "middle term." Both individual labor and there claim direct lineage to the priest-banking families species labor is done for an oligarchy, the employer of of the Imperial Senate of Rome. This cabal is the Aristotelianism. menace to civilization which Saint John in the Apoca­ Given the present state of affairs in the world, a shift lypse calls the Whore of Babylon, the Baal-Marduk away from the "discrete object" -centered Aristotelian Babylonian priesthood which devised and deployed the outlook shall not be effected unless Aristotelianism is cult of Lucifer-Apollo westward into ancient Greece conclusively discredited in the domain of its greatest and Rome. pretensions, the physical sciences. The proof of the The most persistent, continuing policy of this faction existence of efficient self-reflexive causality as a primary over the last 25 centuries is its opposition both to existent in the domain of natural-science so-called is the fundamental scientific advances and to those methods efficient means for overthrowing Aristotelianism, inclu­ of inquiry which lead to such fu ndamental advances. sive of Thomism and Cartesian ism fr om that domain. Each time during these millennia that our Mediterra­ Embedded in the encyclical are the essential concep­ nean-centered civilization inaugurated eras of great . tions required fo r this necessary assault against Aristo­ renaissance, it did so because of prior fundamental telianism. The premises, the historical pedigree and the advances in science and scientific method, generally content of Laborem Exercens are in the high tradition identified as the Platonic method of "hypothesizing the of that Augustinian Platonism which has repeatedly higher hypothesis." This method is epistemologically rescued civilization from extinction. It is necessary that identical with the self-reflexive concept of labor devel­ these traditions be revived and brought to bear now in oped in the encyclical, and is coherent with the Christian the battleground of scientific ideas. Discrediting the conception of the consubstantial Trinity. pseudo-scientificpret ensions of Aristotelianism shall be The enemies of civilization, each time they succeeded in the spirit of Saint Augustine himself as well as his in reversing an era of renaissance and in imposing a

26 Special Report EIR October 27, 1981 Dark Age, did so by first hounding the Platonic tradi­ tion of scientific method, whether in science proper as Documentation i was the case of "British empiricism" which gave us Jeremy Bentham and the "hedonistic calculus," liberal­ ism and materialism, all based on the Newtonian as­ sumption of self-evident "discrete objects" which , pre­ cisely as in Aristotle, "do not require the hypothesis of causality." Now, this Whore of Babylon has assigned the task From the text of of final assault against civilization to the shock troops of the environmentalist movement, a mass disease very Laborens Exercens much resembling the host of Hell described by John Milton; anarchists, irrationalists, enemies of science, Below are fu rther excerpts fr om the papal encyclical sodomists, pornographers, drug addicts, all united in Laborem Exercens. their shrill opposition to the "tyranny of reason." What unites this arbitrary mass of irrational passion is the Man is made to be in the visible universe an image hostility to the principle of causality, a hostility given and likeness of God himself, and he is placed in it in currency among so-called intellectual circles by Aristo­ order to subdue the earth. From the beginning therefore tle who replaces causality by the "middle term" and he is called to work. Work is one of the characteristics Newton who obscenely proclaims that he does not need that distinguish man from the rest of creatures, whose to hypothesize the existence of causality ! activity for sustaining their lives cannot be called work. Large portions of the world's present population, Only man is capable of work, and only man works, at the especially in the English-speaking world, have lost the same time by work occupying his existence on earth. ability to respond to the concept of causality. This was Thus work bears a particular mark of man and humanity, made possible because of the subversion of the concept the mark of a person operating within a community of which has preceeded within the scientific milieu. Since persons. And this mark decides its interior characteris­ the disappearance of the heirs of the Oratorian Order's tics; in a sense it constitutes its very nature.... Ecole Polytec hnique and of the classical German math­ While in the present document we return to this ematical physicists, no fundamental advances in human question [of work] once more-without however any knowledge took place. Science became degraded into a intention of touching on all the topics that concern it­ handmaid of technology; technology became degraded this is not merely in order to gather together and repeat into the handmaid of military advantage, and commer­ what is already contained in the church's teaching. It is cial profit by technetronic-based mass brainwashing rather in order to highlight-perhaps more than has and social engineering. Labor' became merelyan adjunct been done before-the fact that human work is a key, of this. probably the essential key, to the whole social question, A thus self-degraded science, steeped in stagnation if we try to see that question really from the pointof view as in the Dark Age of the 14th century when Aristoteli­ of man's good. And ifthe solution-or rather the gradual anism reigned in the Great Schools of Christendom, has solution-of the social question, which keeps coming up lost the capacity to communicate efficient concepts of and becomes ever more complex, must be sought in the causality to the population at large. This causes degra­ direction of "making life more human," then the key, dations of outlook which the "Whore of Babylon," namely human work, acquires fundamental and decisive oligarchical Old Money moulds into environmentalist importance .... movements, rock-and-roll concerts, jacqueries, flagel­ In the modern period, from the beginning of the lant processions, sodomy and other forms of central­ i industrial age, the Christian truth about work had to ized, centrally-deployed outbreaks of anarchy. A moral oppose the various trends of materialistic and economis­ outlook cannot subsist efficiently in a population if it is tic thought. not nourished by an efficient principle of self-reflexive For certain supporters of such ideas, work was under­ causality which is practiced by the scientists of society stood and treated as a sort of "merchandise" that the and their institutions. worker-especially the industrial worker-selIs to the It is there that the Aristotelian outlook must be employer, who at the same time is the possessor of the assaulted and thus be disabled from erecting the mental capital, that is to say, of all the working tools and means barriers which would otherwise prevent a morally com­ that make production possible. This way of looking at petent concept of human work, such as that which Pope work was widespread especially in the first half of the John Paul II generously offers to humanity in Laborem 19th century. Since then explicit expressions of this sort Exercens. have almost disappeared and have given way to more

EIR October 27, 1981 Special Report 27 human ways of thinking about work and evaluating it. and its true maker and creator. Precisely this reversal of The interaction between the worker and the tools and order, whatever the program or name under which it means of production has given rise to the development occurs, should rightly be called "capitalism"-in the of various fo rms of capitalism-parallel with various sense more fully explained below. Everybody knows that fo rms of collectivism-into which other socio-economic capitalism has a definite historical meaning as a system, elements have entered as a consequence of new concrete an economic and social system, opposed to "socialism" circumstances, of the activity of workers' associations or "communism." But in light of the analysis of the and public authorities, and of the emergence of large fundamental reality of the whole economic process-first transnational enterprises. Nevertheless, the danger of and foremost of the production structure that work is-it treating work as a special kind of "merchandise" or as should be recognized that the error of early capitalism an impersonal "force" needed for production (the can be repeated wherever man is in a way treated on the expression "workforce" is in fact in common use) always same level as the whole complex of the material means of exists, especially when the whole way of looking at the production, as an instrument and not in accordance with question of economics is marked by the premises of the true dignity of his work-that is to say, where he is materialistic economism .... not treated as subject and maker, and for this very reason In all cases of this sort [a "one-sidedly materialistic as the true purpose of the whole process of civilization"-ed.], in every social situation of this type, production .... there is a confusion or even a reversal of the order laid The structure of the present-day situation is deeply down from the beginning by the words of the Book of marked by many conflicts caused by man, and the tech­ Genesis: Man iiitreated as an instrument of production, nological means produced by human work play a pri­ whereas he-he alone, independent of the work he mary role in it. We should also consider here the prospect does-ought to be treated as the effective subject of work of worldwide catastrophe in the case of a nuclear war,

"the old conceptions of capitalism and socialism." Commentary Professor Federico Mancini, Craxi's adviser on judi­ cial matters and a longtime Fulbright Commission spokes men on Italian politics, is beside himself be­ 'The cause the enclyclical "denies the social conflict" and Pope ought the role of confrontation in fostering social and gov­ to studysociology ' ernmental progress. Had the Pope acquainted himself with the great bourgeois sociologists , according to Hans Kling, theologian disciplined by the Vatican Mancini, he would be better attuned to the reality of who dissents on such questions as abortion, contra­ our era.

ception, infallibility, celibacy, and ordi nation of wom ­ The Italian news m agazine Espresso. owned by

en, made the following public comment on the encyc­ Count Cariacciolo and controlled by the Socialist lical: "I still have not read it at all; I consider it Party, deplores the encyclical fo r failing to "attain the

unimportant . It was written for Poles". . . . When level of understanding of Rolf Dahrendorf, the fa­ pressed, he recommends an article by his fellow Cath­ mous sociologist and director of the London School

olic schismatic Franz Alt in the West German week ly of Economics . . . . " Der Sp iegel. Alt angrily asks why the Pope does not Most curious was the reaction of the British press,

indict i ndustrial society fo r its pollution of the envi ­ which has been talking for a long time about an ronment, alienation of human beings, and unemploy­ "ecumenical understanding" between the Catholic ment. According to Alt, the principle of mankind's and Anglican Churches. Ten days after the publica­ exercising dominion over the earth is transformed tion of Laborem Exercens. not a single commentary

through industrialization into " maki ng earth into a had yet appeared in the British press. An indirect garbage heap." response was published in the London Financial Times The economic adviser to Italian Socialist Party on Sept. 17 under the headline "The Actual Cause of

chief Bettino Craxi, Francesco Forte, one of the most High Interest Rates, " expostulating that a fa voring of energetic spokesmen in Italy for the Global 2000 capital at labor's expense is the only possibility for

depopulation policy , states that the encyclical lacks improving the economic situation-extending all due relevance to the modern world because it is based on respect to the Marxist class-struggle theory.

28 Special Report EIR October 27, 1981 which would have almost unimaginable possibilities of of stating the issue contained a fundamental error, what destruction. In .view of this situation we must firstof all we can call the error of economism, that of considering recall a principle that has always been taught by the human labor solely according to its economic purpose. church: the principle of the priority of labor over capital. This fundamental error of thought can and must be This principle directly concerns the process of produc­ called an error of materialism, in that economism directly tion: In this process labor is always a primary efficient or indirectly includes a conviction of the primacy and cause, while capital, the whole collection of means of superiority of the material, and directly or indirectly production, remains a mere instrument or instrumental places the spiritual and the personal (man's activity, cause. This principle is an evident truth that emerges moral values and such matters) in a position of subordi­ from the whole of man's historical experience .... nation to material reality .... Further consideration of this question should con­ However, within the framework of the present con­ firm our conviction of the priority of human labor over sideration, it seems that economism had a decisive im­ what in the course of time we have grown accustomed to portance for the fundamental issue of human work, in calling capital. Since the concept of capital includes not particular for the separation of labor and capital and for only the natural resources placed at man's disposal, but setting them up in opposition as two production factors also the whole collection of means by which man appro­ viewed in the above-mentioned economistic perspective; priates natural resources and transforms them in accord­ and it seems that economism influenced this non-human­ ance with his needs (and thus in a sense humanizes them), istic way of stating the issue before the materialist philo­ it must immediately be noted that all these means are the sophical system did. Nevertheless it is obvious that ma­ result of the historical heritage of human labor. All terialism, including its dialectical form, is incapable of means of production, from the most primitive to the providing sufficient and definitive bases for thinking ultramodern ones-it is man that has gradually devel­ about human work, in

EIR October 27, 1981 Special Report 29 State Department's unfinished business: depopulating Egypt

by Robert Dreyfuss, Middle East Editor

The Muslim Brotherhood secret-society assassins of tion in world population. Based on an explicitly stated Egyptian President Anwar Sadat, according to high­ "Malthusian" perspective, they have repeatedly empha­ level intelligence sources, consider the destabilization of sized-in Club of Rome policy papers and in the State Egypt "unfinished" and have begun making p lans to kill Department's Global 2000 document-their intention to President Hosni Mubarak and complete the Iranization reduce the world population by some 2 billion people of Egypt. over the next generation. The principal agency invo lved in the assassination of But, in their eagerness to bring instability to the Sadat was the elite financial and intelligence families Middle East and to precipitate a 1973-style Great Oil along the axis from London through Switzerland and Hoax, the London-Venice axis and the Brotherhood has northern Italy, who sponsor the Muslim Brotherhood set into motion potentially uncontrollable factors, fac­ across a string ofbases in southern France, Malta, Sicily, tors that could lead to a U.s.-Soviet collision and the Cyprus, and Beirut. Under the overall coordination of outbreak of World War III. Moscow and Washington the British Secret Intelligence Service (SIS), this is the are now on a confrontation course, allied respectively to organism that bears prim ary responsibility fo r the death a Balkan-style pair of alliances pitting Egypt, t he Sudan, of Sad at, with useful but secondary cooperation from Somalia, and Oman, along with silent partner Saudi elements of Israeli intelligence and the U.S. State De­ Arabia, against Libya, Ethiopia, South Yemen, and partment of Alexander Haig. Khomeini's Iran. The purpose of Sadat's assassination was to plunge In this tinderbox, the urgent threat of war along the Egypt into Iran-style chaos, with severe destabilizing Egyptian-Libyan front would likely spread thro ugh the effects in the Persian Gulf, North Africa, and down in entire region, even as far as Morocco, engulfing the area Central Africa as fa r as Kenya and Zaire. That would and drawing the superpowers into a direct and inexorable accomplish two primary objectives; first, to reverse the clash. development thrust recently fueled by the petrodollar Despite such risks, the conspiracy that murdered resources of the Arab sector, in coordination with Japan, Anwar Sadat is accelerating its efforts to complete its West Germany, and the United States; and second, to unfinished business in the wake of Sadat's death, as this trigger a far-reaching new oil crisis resulting from the report and the appended interviews make clear. collapse of Saudi Arabia. The motivation fo r such a policy on the part of those u.s., Soviets: Britain's fo ols powers of London and Venice who, together with the In the wake of the Sadat assassination, the United Club of Rome, control the Muslim Brotherhood, is their States and the Soviet Union have already come peril­ commitment to effect an immediate and dramatic reduc- ously close to confrontation. Like two dumb actors

30 International EIR October 27, 1981 following a script, Washington and Moscow seem un­ alliance with the United States and Israel. able to resolve on anything resembling a stability policy In fact, a North African war would permanently for the area, instead stupidly lining up with their polarize the Middle East area and would go a long way ostensible allies in the region. toward halting any fu rther development of the pros­ From the Soviet side, following the murder of Sadat, pects for peace in the area. But the radicalization of the Moscow applauded the assassination in barely veiled Arab world, already worsened by the Sadat murder, is terms and encouraged its radical allies to do the same. precisely the objective sought by the British, Soviet and At the same time, the U.S.S.R. hinted that it is prepared some Israeli intelligence circles. to defend Libya's Muammar Qaddafi from attack. Taking note of stepped-up U.S. military deploy­ Oil crisis, popUlation policy ments in the region around Egypt, Moscow delivered a Even were the looming North African war averted, harshly worded note Oct. II addressed "to the govern­ however, the Malthusian conspiracy aimed at destabil­ ment of the United States," protesting Washington's izing the Middle East is proceeding apace. "gross and unlawful" U.S. "pressures" on Egypt. The protagonists involved in the Muslim Brother­ "What is happening around Egypt cannot but effe ct the hood side of the Global 2000 policy are the circles interests of the Soviet Union's security, and it will associated with the "Islam and the West" group, which attentively follow the development of events," said held a major conference in Paris Oct. 14-16 in conjunc­ TASS. The Soviet media also quoted positively state­ tion with the Club of Rome. Islam and the West is ments by exiled Egyptian General Saad el-Shazli, a sponsored by Dr. Armand Hammer's Occidental Petro­ former chief of staff of the Egyptian armed fo rces who leum and by the Club of Rome's Aurelio Peccei, who is currently living in Libya. Shazli, a collaborator of the delivered the keynote address at the Paris conference. Muslim Brotherhood and the London-based Islamic Hammer, a longtime British intelligence operative who Council of Europe and its "Islamic Institute fo r Defense maintains close ties to the Soviet KGB, is Qaddafi's Technology," is a kept asset of the British SIS Arab number-one contact in the West, together with Peccei's Bureau, which created the Muslim Brotherhood in 1929. backers in the Italian noble families of Venice and Meanwhile, from the American side, AI Haig an­ Genoa. In fact, three days before the Sadat assassination nounced his intention to have a "highly increased U.S. Hammer and Robert Abboud of Occidental Petroleum presence in the area." Citing the Libyan bogeyman, were in Libya and met with Qaddafi. Haig sought to justify a closer Egyptian-Israeli military Along with the British, Swiss, and Italian bankers alliance as the cornerstone of the Edgar Bronfman plan who support Islam and the West as the nerve center for for a Middle East Treaty Organization. Under Haig's the Muslim Brotherhood command across the entire direction, the State Department leaked plans for expan­ Middle East, the Socialist government of France deliv­ sion of military manuevers in North Africa and the ered its blessing to the Islam and the West conference. Indian Ocean. Entitled "Operation Bright Star," the Both President Mitterrand and Foreign Minister Cheys­ Nov. 9-Dec. 6 manuevers are supposed to include U.S. son addressed the meeting, whose principal objective, Marine Corps landings in Somalia and Oman, joint as stated by the participants, is to use the "revival of manuevers with Egyptian and Sudanese forces, and a Islam" to ensure that the Islamic world follows an anti­ round-trip fl ight of B-52 bombers from North Dakota industrial, Khomeini-style policy. to Egypt in a practice bombing run. Should the Muslim Brotherhood shock troops of the According to intelligence sources, there exists a Islam and the West organization take over in Saudi possibility that such manuevers could develop into the Arabia, in particular, the result would be the reorgani­ protective cover for a joint Egypt-Sudan attack into zation of world energy flows according to a precisely Libya. Qaddafi, having repeatedly threatened to kill defined British scenario. That scenario began with the both Sadat and Sudan's President Gaafa Numeiry, is cutoff of Iran's oil in 1978, and then spread with the financially backing a host of subversive organizations Iranian attack on Iraq in 1980, which led to the suspen­ in both Egypt and Sudan; and Numeiry hinted Oct. 12 sion of Iraqi oil exports, a total of almost IO million that his country is considering a preemptive war against barrels per day (mbd) production. Now that OPEC's Libya. output has sunk from 31.5 mbd in 1978 to about 19 But, U.S. and Arab intelligence experts warn, such mbd in 1981-with half of that· coming from Saudi a conflict would be a disaster for all parties concerned. Arabia-the British have almost completed their power Even if it were not to result in U.S.-Soviet showdown, play. an Egyptian-Libyan war would drive Qaddafi deeper In its final form, the United States would fi nd itself into alliance with the U.S.S.R.-despite resistance from completely isolated from the Arab world, dependent on some Soviet factions suspicious of the Colonel-and, at Venezuela, Mexico, Alaska, and Canada in a "North the same time, isolate Egypt by reinforcing its military American Common Market." In turn, the industrial

EIR October 27, 1981 International 31 powers of Japan and West Germany, now totally depen­ food subsidy program phased out, we want an end to dent on the Arab Gulf states, would be at the mercy of general cheap food prices. They will have to import less the British and their Muslim Brotherhood allies con­ food .... trolling the oil spigots there. We're saying, "slow down the subsidization of a According to State Department officials, in this heavy economy which Egypt cannot afford, and you will scenario Egypt would fi nd itself forced to submit to a slow popUlation growth." drastic, virtually genocidal austerity program. Former Attorney General Ramsey Clark. the man who directed the American side of the Khomeini revolution in Iran in 1977- 79. said in New York fo llowing the assassina­ DOS, Clark, Aspen: tion of Anwar Sadat that he will help le{ld a worldwide effo rt to destabilize Egypt. in the defense of "Egyptian destroy industry human rights. " By his own account. Clark is working with French President Mitterrand. "my good fr iend" French Below are excerpts provided by ajournalisl.from an OCI. Justice Minister Badinter. Amnesty International in Lon­ 15 interview with Joseph C. Wheeler. Deputy Administra­ don. the International Commission of Jurists in Geneva. tor of the Haig Slate Department's Agency fo r Interna­ the World Council of Churches. and circles in England tional Development (AID J. Mr. Wheeler is a Carter hold­ around the L.abour Party 's Michael Foot and Anthony over who worked on the Global 2000 Report. Wedgwood Benn. Th e fo llowing are excerpts fr om an account ofa conver­ We will use the fact of the new political situation in sation with Clark. given to EIR by one of Clark 's collabo­ Egypt in any way we can to get them to speed up rators. population control policies. We're going to try to show the "Rapid" [computer simulation] program to Presi­ It is very urgent that we move fa st, before M ubarak dent Mubarak again, to impress him with the seriousness has a chance to consolidate and crack down against the of the situation. We've got Lennie .K angas from our Egyptian opposition even more. Mubarak will be much population office over in Cairo now discussing new tougher than Sadat was, not only against the Muslim population programs .... Brotherhood but against the social democrats, the Lib­ Continuing the industrial investment program only erals, and the left. Things are in flux now fo llowing encourages people in the labor force now to have more Sadat's death, and now is the time to move. children, and the huge number of children in Egypt ·now, In April of this year I visited Egypt to attend some aged 15 and under, which is most of the popUlation, soon trials that never took place. This, of course, did not will no longer be able to be absorbed. surprise me, given the horrible repressiveness of the What is really needed is policies which do not subsi­ Sadat regime. I met several Egyptian officialswhi le I was dize high capital fo rmation, high capital imports, and there, including the Justice Minister and the chief prose­ high energy fo rms of production, the so-called "capital­ cutor, and complained to them about the lack of human intensive" types of industry. These provide few jobs. For rights in Egypt. They both gave me blank stares-they example Egypt built a huge steel industry. This is very had no idea what I was talking about. Sadat was the inefficient. They shouldn't build any more steel mills. same way. He had absolutely no comprehension of hu­ But they want to, and furthermore they're doing some­ man rights, civil liberties, and do on. The same was rue thing even worse, they're building a whole new industry, in September, when on of my law partners visited Cairo, a new aluminum industry, which is based on high-energy right at the time of Sadat's crackdown. consumption and low employment. That's the most out­ Now that Sadat is out of the picture, we should not rageous .... sit back and relax. Things are going to get worse in Egypt should take the place of the labor-intensive Egypt, so we have to step up or operation. I intend to economies of the 1950s and I 960s, which began from the become much more active on this matter; I really haven't ground up, like Hong Kong, Singapore, Japan. They been up to now. The Khomeini support operation, in have no business trying to jump i nto heavy industry .... comparison to our Egypt operation, may have appeared They subsidize food prices, so food is too cheap, food thicker and more substantial, but it really wasn't. In is way below world market prices .... reality, it was just half a dozen people, myself included, We want the Egyptian pound devalued to a more running around the country and the world making a lot market-consistent rate, that will lower imp9rts. We want of noise. The only big diffe rence is that fo r Iran, we had their interest rates, which are now below 13 percent, a very large and very loud student movement to play up raised to world market levels, which will bring in foreign to, which we don't have in Egypt's case, except, of course, remittances from Egyptian workers abroad . We want the [with]in Egypt. But I am optimistic. I am in touch with

32 International EIR October 27, 1981 my leftist friends in Egypt-Iawyers,journalists, respect­ cities seeking industrial jobs. The cities cannot handle ed people-and also a few of the more respectable M us­ this influx of population. This has bred unrest. lim Brotherhood types. I am also working in coordina­ They will have to reverse the process. They will have tion without friends in Europe, especially the French. to create a great many new jobs in the rural areas, with You know, it's nice to have a government in France far more labor-intensive programs than current industri­ whose official state policy is backing human rights. al programs. They will have to go back to the sort of industrial technology which is more appropriate to the Below are excerpts fr om an interview with Fa ther John present state of Egypt's rural economy. This is the only B. Taylor. director of the Ecumenical Institute of the way to stop the imbalance. The International Monetary World Council of Churches in Geneva. Th e WCe. through Fund and the World Bank have also made this demand its ties to the Anglican Church and the Russian Orthodox to the Egyptians. Church. maintains links to British and Soviet intelligence. There is no question that the unrest in the cities will force Mubarak to move in the direction of ruralization. Q: Now that Sadat is dead, what future do you see for Sadat was already being forced to consider this.... Egypt? [Mubarak] will have to concentrate on creating jobs with A: The worst-case scenario is that Egypt will be like a labor-intensive rural programs. house of cards, tumbling down, with government replac­ ing government. Egypt will be pushed further and further Q: This sounds like what happened in Iran. into extreme reaction-completely opposite to what Sad­ A: Yes, there will have to be a new policy, modeled on at stood for- and will become more and more like Iran, that conducted by Iran. That is what the opposition will a xenophobic, anti-West type of regime. There is a whole demand, and there will be tremendous unrest unless they structure, a military apparatus, that has been built by get what they want. Sadat that still remains. However, Sadat, as can be seen by the relative quiet after the assassination, had struck In another interview. Gaylord Freeman. Aspen Institute his neck out too far, and had become extremely unpopu­ trustee andformer Chairman of the First National Bank of lar in the last months .... His vulnerability increased Chicago. predicted that the Soviet Union will use Libyan when he quarreled with the Coptic pope. It was a very terrorists to "undermine and d�stroy" the Egyptian econ­ risky thing for Sadat to do, to attack both Copts and omy. Th is will fo rce the shutdown of Egypt's industrial Muslims .... I would say that Saudi Arabia has a few programs and lead to fa mines. which will reduce the Egyp­ more years to go. At some point the fe udal system there tian population. Excerpts fo llow. has to go. In Egypt, Sadat's economic policy was the problem . He was playing with fire. He was orienting too Q: What will be the effects of the political unrest in much to Western styles. Egypt on U.S. investment there? A: There is going to be a slowing of U.S. and foreign Dr. Colin W. Williams. senior fe llow and director of investment in general throughout the Middle East. Al­ developing nations programs at Aspen. told a journalist ready U.S. companies have slowed their investment that the assassination of Sadat will fo rce Egypt to begin a pace .... These countries are going to have to change depopulation and de-industrialization program "modeled their industrial policy. We're entering a period of increas­ on that conducted by Iran." Williams. the Dean of the Yale ing worldwide disappointment and despair, in which the University Divinity School. is a British subject and fo rmer United States can no longer fu lfill the expectations of the Anglican priest. region's people. There's no money. The program will be slowed. Q: Will social unrest force President Mubarak to reverse Sadat had been building up new cities outside Cairo Anwar Sadat's industrialization and Westernization at a tremendous rate, with huge capital investment. This drive? can't continue .... Population pressures are already A: This is a serious problem for Egypt. The Islamic causing political tension. People will have to be moved fundamentalists, and even the secular intellectual leaders out ofthe cities. But what's likely to happen is that efforts opposed to the Camp David agreement, are opposed to by Mubarak to move them out of the cities. How the import of technology because they feel it ties Egypt can you keep them down on the farm after they've seen to an alliance with the United States. So the Sadat Paris? Then there will really be disturbances, because the industrialization drive has had a strong destabilizing government will not be able to support these populations effect. on Egypt. in the cities. There is no question that political unrest in Egypt is Then the problem becomes that the Soviets will use fundamentally a question of the population crisis. If the that against Mubarak, to pose a threat to Egypt, to you push industrialization this fast, people pour into the create tensions inside the country as a threat to the

EIR October 27, 1981 International 33 government. to try to impose their own socialist system. production and urban strife. even the bombing of indus­ They are already soliciting agents throughout the coun­ trial plants and urban construction sites. try and are threatening to set up a government in exile in I had a long talk with Anwar Sadat some years ago. Libya against M ubarak. It is very dangerous. He told me, "You bankers have performed miracles in Egypt's cities are overpopulated, and this provides a Germany with your capital and industry. Please do this sort of agar dish, a fertile ground fo r the Soviets to sow in Egypt." I told him, "No, it's diffe rent here. You don't their seeds of unrest and revolution. The goal of the ha ve the entrepreneurial spirit. No one saves." Soviet Union in Egypt is to create enough of a disruption in Egypt to undermine and destroy Answar Sadat's Q: Don't you see any way to solve Egypt's population ..'J Westernization program, which is linking Egypt to the CriSIS. West through Western industry and investment. The A: No, there is simply nothing which can stop a cata­ Soviets want to create enough of a disturbance to fr ight­ clysm in Egypt caused by overpopulation, unless there is en fo reign investors and American bankers out of some tremendous religious revival or reversal in which Egypt-to cut off fo reign investment and stop the capi­ people decide to have no children at all. I don't see any talist industria I programs. You'll see terrorists disrupting solution.

Q: Won't the Soviet actions drive people out of the cities? The IMF A: This process will certainly reduce the buildup of planfor Egypt urban population in Egypt, but it won't be enough. What is more important is that it will lead to a cutoffin fo reign The World. Bank and the 1M F are the chief inter­ financing in Egypt. That could create real problems fo r national enforcers of a depo pul atio n policy fo r their fo od supply, which is heavily imported. First, there Egypt. Under the headline "Egypt may be the fi rst could be a fo od crisis. Then, they are losing their water victim of a tougher IMF," Business Week com­ supply, so there could be a water crisis. There will be little mented Oct. 12 that refusal of the IMF this month the Egyptian government can do. to grant Egypt a $400 million loan "could mean chaos for Egypt." Q: What is U.S. policy? What should it be'! Since 1977 there has been a standoff between A: This is precisely why [Aspen Institute President] Jo­ the IMF and Egypt following food riots in Cairo, seph Salter's people are already visiting the leaders of triggered when Sadat heeded an IMF demand to state in the Mideast. to try to pull something together. cut back on government subsidies. Now, with in­ We need some new accord; Camp David is not sufficient come from oil sales declining and a drop in investor to deal with the Soviet threat. If the Saudis could bring con fidence in Egypt which began even before Sad­ themselves to carry on the work initiated by Sadat at at's death, M ubarak may be forced to come to Camp David in reaching a new accord with the Israelis, terms w ith the IMF. to accept some adjustment in their demands on Israel, Less than a month before Sadat's death, he perhaps the area can be stabil ized. It might have to be at opened up an unprecedented confrontation with the expense of Jordan, but that's unfortunate. the major multinational banks. In a tense Sept. 14 meeting Egyptian Finance Minister Abdel Razak Q: Why should the Arabs agree to this now? Abdel Meguid confronted a number of banking A: Because the turmoil in the area fr ightens them. This executives for speculating on the Egyptian econo­ could fr ighten them into sacrificing more, more to Israel. my. A mon th earlier, Sadat had ordered changes in If the Russians take over Egypt and shut down the Suez Egypt's complex foreign-exchange laws to redj.lce Canal, how do you think Europe will feel? That would capital flight from Egypt. An IMF official com­ starve Italy of fuel. Don't you think they'd go along? mented on these actions with displeasure. If you want to find out more about what the Soviets The IMF official noted that the IMF's sister and the Libyans are thinking, you should call Dr. Ham­ organization, the World Bank, is promoting a plan mer, Armand Ham mer of Occidental. Or call my oId for Egypt to base the economy on cotton produc­ fr iend Bob Abboud (former First Chicago Bank chari­ tion, because it is "labor-intensive." The phln calls man and mow president of Occidental Petroleum). They for moving people out of Egypt's cities into the were just over to see Qadaffi in Libya three or fo ur days coun tryside; it is identical with the economic diktat before Sadat was shot. Both of them, especially Armand imposed on Egypt by Britain during its colonial Hammer, are very close to the Libyan situation. They are rule in the 19th century. also very close to Soviet thinking on the area. They can tell you what's going on in Moscow on this.

34 International EIR October 27, 1981 'Leonid Brezhnev must break with London before it�s too late '

by Lyndon H. LaRouche, Jr.

Moscow's present policy toward the Islamic world, es­ to examine the policies which motivated the pecially Egypt and Iran, is clever and sly. Moscow is assassination. being as sly as a monkey about to seize a delicious nut from a Malay peasant's monkey trap. That Malay peas­ British-Venetian coordination ant is an operative of the British Secret Intelligence To keep matters within the range of the ordinary, Service (SIS). politician's comprehension, we begin with identification Specifically, so far, on the issue of the murder of of the official intelligence-service of nations which in­ Egypt's President Anwar Sadat, Moscow has acted as an spired and coordinated the overall deployment behind errand-boy for London. In such a case, if Moscow con­ the assassination of President Sadat. tinues such self-degrading folly, not all the "peace move­ The official primary responsibility for coordinating ments" and "disarmament negotiations" which occupy and directing the murder of President Sadat was the the fantasy-life of the Soviet press could prevent the British Secret Intelligence Service (SIS), working in United States and Soviet Union from stumbling into the close connection with controlling influences of Venice, thermonuclear war each government presently believes it Trieste, Verona, Geneva, and Beirut. does not intend to occur. The division of SIS assigned principal responsibility Through our own special resources, and with aid of for coordinating the assassination was the Arab Bureau. cross-checking of facts with highly-placed friendly intel­ It was the SIS Arab Bureau, and SIS official St. John ligence and other officials, our international news service Philby (the father of KGB General Harold "Kim" Phil­ has developed all of the essential background-features of by), who created the Muslim Brotherhood out of Aden, the plot to assassinate President Anwar Sadat. There are Cairo, and Beirut as an Arab Bureau front-organization a fe w important pieces missing from our present knowl­ and cult during the late 1920s. edge, but the absence or presence of those particular To understand the Muslim Brotherhood accurately pieces of added information could not alter the intelli­ from a counterintelligence and law-enforcement crimi­ gence evaluation we have circulated to our friends and nal-division standpoint, one should know that the Arab other responsible agencies which have requested this. Bureau was created during World War I by T. E. On the basis of that knowledge, two leading points Lawrence ("of Arabia") and reshaped at the special are to be made. First, if Egypt is "Iranized," Saudi insistence of British India Office operative St. John Arabia will soon fall next; this will set off a strategic Phil by, as a subdivision of British SIS's Islamic-world chain-reaction, leading to developments, under which operations as a whole. The Arab Bureau was a "rib" the United States and Moscow could not findit strategi­ taken from the body of the British "Company." "Com­ cally acceptable to back away from general nuclear pany" or "Mother," in British means interchangeably warfare striking immediately the homelands of the two the old British East India Company, or to this day, powers with thermonuclear assault. British Secret Intelligence Service. Second, in this crisis, President Ronald Reagan has The President of Egypt was killed in a sophisticated reacted instinctively and properly despite virtual traitors version of a typical (St. John) Phil by-style operation by (opposing the AWACS for Saudi Arabia) in the Con­ a spun-off branch of the Muslim Brotherhood, and the gress; unfortunately, in this same crisis, the Soviets are deed was done in a region of the world in which the taking their turn in playing the strategic fool. Muslim Brotherhood and its offshoots are totally under The best way to expose the wicked stupidity of Mos­ coordination top-down of SIS's Arab Bureau. cow's cleverness in the Egyptian destabilization is to In the midst of the shooting, a call for a general begin to identify summarily the combination of fo rces military insurrection in Egypt was issued by one General which organized the murder of President Sadat, and then Sa'ad el Shazli. Shazli, 1973 Chief of Staff fo r the

EIR October 27, 1981 International 35 Gen. Saad Shazli. Eg�pt's left-wing dissident. arriving in London in 1974 as the Ambassador to Great Britain.

Egyptian Army, is today overtly an official agent of Trieste, with nuclear-weapons technology supplied di­ SIS's Arab Bureau. rectly by the British government. Shazli is a member of the Board of Governors of a The head of the HOT's mother-organization, the London-Venice-Trieste front for British SIS, called the Islamic Council of Europe, is Salem Azzam, Secretary Islamic Institute for Defense Technology (IIDT), which General of that British SIS front. Salem Azzam is an is a subsidiary of the British SIS front organization with Egyptian national who successfully inserted himself into which Henry Kissinger cooperated in effecting the the position of appointment as Saudi Arabia Plenipo­ overthrow and murder of Pakistan's Prime Minister tentiary Ambassador, and is the key link in the SIS Bhutto, the Islamic Council of Europe. It is the latter, operations targeting the Saudi royal family fo r the the Islamic Council of Europe, through which Paki:­ treatment earlier aff.orded the Shah of Iran. Salem stan's dictator Ziaul Haq and Shazli are controlled. Azzam is also a coordinator of SIS's " Arab" subversive It is to be stressed that the Board of Governors of and terrorist operations inside the United States, run the HOT is composed chiefly of top-level members of through a nest of Eastern Orthodox, Lebanese and Arab the Muslim Brotherhood, mixed with bought-and­ ,scoundrels based out of Englewood, New Jersey. owned military officials and ambassadors. This overlaps British SIS-created and controlled Exemplary of the HOT's leadership is Korkut Orkal, entities such as CAABU, "Islam and the West," and the fo rmer Interior Minister of Turkey. Orkal is presently overlaps the Sufi Freemasonic Lodges of the transatlan­ on trial in Turkey for complicity with the terrorist tic community, of which fo rmer IMF Director Johannes leader Erbakan, a network linked to the recent, Qaddafi­ Witteveen is a prominent member. Through British SIS aided attempt to assassinate Pope John Paul II, and coordination and NATO intelligence, various parts of linked to Beirut-coordinated Turkish-Armenian terrorists NATO are deployed under British SIS coordination, internationally (e.g., the Armenian Liberation Army.) interfacing the drug-runners of the "parallel secret Otherwise the most notorious activity of the 1I0T organization" of NATO run out of Venice-Trieste and has been to deliver a British-supplied "Islamic" nuclear­ through the Verona-Bolzano-Switzerland-Stuttgart weapons system to the Ziaul Haq dictatorship of Paki­ drug-smuggling axis. This plugs into a regional coordi­ ' stan. This operation was run out of the NATO base at nating center at Beirut, where British SIS coordinates

36 International EIR October 27, 1981 the direct collaboration among elements of Arab-terror­ ment of a wide assortment of complicit official and ist and Israeli intelligence, as well as the Armenian private intelligence capabilities, both of nations and of European terrorist organizations. sucI1supranat ional pedigrees as the Geneva office of the It is through Beirut that the targeting of Egypt is World Council of Churches. The problem here, as the predominantly run. The reasons are not only historic same problem confronts any counterintelligence field and geographic. Beirut is the command and coordina­ operative or evaluations specialist in most major opera­ tion center for heroin, hashish and other drugs run out tions in the world today, is to distinguish the primary of the Golden Crescent into Sicily, Marseilles, and direction from the secondary and lower ranks of the through Bulgaria and Yugoslavia. These drugs move assets and instruments more visibly deployed. by way of the NATO center at Verona into Stuttgart, This is particularly the case with the British, whose West Germany. This drug-trafficis the principal source intelligence services are notorious parasites and free­ of funding and other logistics for British SIS operations loaders, using other nations' intelligence organizations in Europe and the Mediterranean region, including the to do British dirty-work and defray most of the costs of funding of terrorist gangs and environmentalist projects British SIS operations otherwise. It is typical, for ex­ on the continent of Europe. ample, fo r the British to hoodwink the United States The case of Libya's psychotic dictator Col. Muam­ into conducting an operation, for Lord Caradon, Lord mar Qaddafi illustrates the nature of the operations run Carrington, or like creature to run trotting to Moscow, through the Trieste-Beirut axis. Qaddafi, a protege of confiding to Moscow what "frightfully bloody brutes" ex-Nazi networks since no later than 1959, was made the Americans tend to be. In general, the greater dictator of Libya by joint arrangement of London and number of organizations coordinated by the British SIS Trieste with NATO-Verona in 1969. in arranging the murder of President Anwar Sadat are This occurred as part of the broader "NATO strate­ the same organizations which brought the "Pol Pot" of gy of tension" operation under which the international Iran, Ruhollah Khomeini, to iJower and arranged, with environmentalist movement was created almost instant­ complicity of Ramsey Clark and Cyrus Vance, Kho­ ly during 1969-1 970, and international terrorism meini's seizure of U.S. hostages. launched in Western continental Europe and the United Next, in categories of accomplices, is the complex of States (the Weathermen) during 1969. This was also the old Czarist "Black Hundred" oligarchical families and year the fascist F(eemasonic lodge, Propaganda Due their Italian "Black Nobility" cronies who ran the was launched to coordinate the Socialist Party of Italy attempted assassinations of President Charles de Gaulle and to act as a coordinating channel for both right­ from the Venice colony known as Switzerland. This wing and left-wing terrorist (and drug-smuggling) op­ gang is best known for its association under the cover erations in Italy. of the Bronfman-Iinked organization called Permindex, Qaddafi is an agent of the British-Venice-Trieste the organization proved complicit with British SIS in complex. His principal interfaces to London and Trieste organizing the assassination of President John F. Ken­ are through the British Petroleum Company (an SIS nedy. This includes the late Jean de Menil, of the business front) and Armand Hammer's Occidental Petro­ Houston, Texas-based Schlumberger Limited (an old leum. Qaddafi's links into Italian terrorism and drug­ Russian "Black Hundred" family), and controllers of smuggling are through the Italian-Libyan Friendship the Scottish Rite Freemasonic organizations of Italy, the Societies, including the in-laws and friends of former creators of the fascist Propaganda 2 (P-2) Lodge and U.S. Ambassador to Rome, Richard Gardner, and the controllers of both the fascist MSI Party and the Craxi Sicilian cronies of Billy Carter. Through these connec­ leadership of the Socialist Party. tions, Qaddafi acquired his nominal status as a de facto Special mention must be made of one part of this agent of the Socialist International. complex, the Paris-based command of what is called the Every present indication by all intelligence services Curiel network. The Curiel network is a cover for the is that Qaddafi did not control the murder of President old intelligence organizations of deposed Egyptian King Sadat, although he is part of the British SIS complex Farouk, which is now based in emigree Coptic families which did, and although Qaddafi's money poured into in Western Europe, but, more significantly, in the the funding of the network responsible. The reason for United States and Latin America. This network was the this is simple: Qaddafi's assets in Egypt were under specific asset of British MI-5, and has the deepest "hot" scrutiny during the relevant period. Sadat was penetration of any foreign intelligence organization to murdered from his "blind side," the British SIS side. the present day, inside the Egyptian state bureaucracy and military. This Curiel network intersects one of the The more gent:ral involvement most evil networks of drug-runners in the world today, Like any major intelligence operation, the British which operations are conducted out of Beirut, Lebanon. SIS's murder of President Anwar Sadat involved deploy- All three categories of networks are coordinated

EIR October 27, 1981 International 37 jointly by the top hierarchy of the Established Church of purpose of bringing into being the kind of Malthusian, England (the Anglicans) and that Jesuit network other­ one-world order demanded during the 19th century by wise currently engaged in efforts to assassinate the Pope the homosexual Pre-Raphaelite Brotherhood cult of Ox­ and organize a Gnostic schism against the Roman ford's John Ruskin and Cambridge's hoaxster Benjamin Catholic Confession in the Western Hemisphere. Both Jowett. It is sufficient to add that the Coefficients of the Anglicans and Jesuits are deeply involved in support Lord Alfred Milner, and London Round Table, and its and coordination of the Muslim Brotherhood, together successors, have become the dominant force in British with elements of the Eastern Orthodox Autocephalic ruling circles during this century, and that those Angli­ hierarchies and the World Council of Churches. Special can-Jesuit cult-circles are conscious bearers of the tra­ attention must be given to the ecumenical arrangements dition of John Ruskin's global scheme for establishment in the Netherlands, which coordinate with the World of a worldwide Malthusian, World-Federalist imitation Council of Churches in Geneva in environmentalist and of the ancient Persian and Roman empires. Whoever terrorist-sympathy operations, as weIl as in attempting does not understand that point and its importance to organize the Gnostic schism. This is the same crowd understands very little of any importance concerning which ran the Poland Solidarity destabilization in coop­ the major features of world history during the entirety eration with British SIS under British SIS direction and of the 20th century to date. Let us pass from that more coordination through the London Tavistock Institute difficult point fo r the moment, and concentrate on facts (KOR)-the fight between these pagan elements and the which an intelligent layman can more quickly under­ Catholic Church in Poland today (e.g., between L. stand: Henry Kissinger's continuing evil antics. Walesa, a "Son of the Church," and those of his radical During Henry Kissinger's two-term reign as "Act­ opponents within Solidarity controIled by London.) ing President of the United States," the British SIS Admittedly, .at first glance, such a listing is a com­ seconded a leading official of its Arab Bureau to the plicated mess, unless one looks at the whole coIlection United States. That official was and is a Kissinger crony from the proper vantage-point of reference, at which by the name of Bernard Lewis. Lewis was seconded to point the complexity dissolves into relative simplicity. Princeton University, where he heads up a centralized To make this apparently complicated mess simple task force in charge of destroying the Saudi royal and understandable in the sense of "Who do we have to family. (Typically, a member of the Saudi royal family shoot?" one must ask -in whose interest and for what has been hoodwinked into being a chief funder of that purpose did British SIS coordinate the murder of Presi­ Princeton-based operation!) Lewis was also seconded dent Anwar Sadat? Each of the petty assassins, such as by British SIS to David Abshire's CSIS at the Jesuit the psychotics of the Muslim Brotherhood, would each Georgetown University. This is the key to the Carter offer his or her own motives for the kiIling. Only a fool administration's bringing Khomeini to power in Iran of a counterintelligence operative bases evaluations of and also the role of Kissinger'S friends in setting up such an operation on the motives of belief of the mere Anwar Sadat to be murdered. instruments of a crime. Who knew how to exploit the Lewis's initial function on behalf of SIS inside the motivations of psychotics such as the Muslim Brothers United States was to develop the policy which Zbigniew to the special interest of British SIS? What was the Brzezinski later named the "Arc of Crisis" policy, and motivation of those who direct SIS? The motives of the which that grinning imbecile, President Jimmy Carter, rest of the coIlection of degenerates are those of merely praised as "the Islamic Fundamentalism Card." The clinical interest. policy was worked out in London and at the Arab Bureau branch headquarters in Switzerland (under Henry Kissinger's motive to kill Sadat Glubb Pasha), but the trick was to make it appear as if To understand why British SIS murdered President the dumb Americans had invented the policy all on their Sadat one must pose the question, "Cherchez la own. To "launder" this criminal policy into the U.S. femme?" How was Henry Kissinger involved? Henry National Security Council and State Department, a may be no lady, but, as Osmin the Eunuch once said, British intelligence asset known as the Aspen Institute under the circumstances he wiIl have to do. was used. The Aspen Institute was under the sponsor­ The policy-motivation for the murder of President ship of Robert O. Anderson, head of a British Petroleum Anwar Sadat by British SIS is the "China Card policy." subsidiary known as Atlantic-Richfield. Aspen whose We must understand what the "China card policy" Colorado, Washington, and Berlin offices perform a really means. It means a global genocide based on the very dirty role in Middle East as well as continental Peking doctrine of "population policy," a destruction European political life, subsidized and sponsored Lew­ of the sovereign nation-states of the world together with is's assignment to produce a new Middle East policy for a reduction of the world's population by several biIlions the United States. This policy, conduited into the Na­ over the coming two decades. This is projected to the tional Security Council and State Department by Henry

38 I nternationa I EIR October 27, 1981 Kissinger, was known originally as "the Bernard Lewis fact that not only is Carter's "Global 2000" more Plan." Like most of the projects proposed by the rabidly criminal than Hitler's Mein Kampf, but that the present Malthusian Aspen Institute, the "Bernard Lewis Plan" policies of Paul A. Volcker, the International Monetary was a plan for genocide against the populations of all of Fund, the World Bank, and the Bank for International those nations which Zbigniew Brzezinski later targeted Settlements are conscious policies of genocide against in his "Arc of Crisis" destabilization doctrine. Latin America, Africa, and most of Asia's peoples. Once Brzezinski had brainwashed the suggestible Americans generally refuse to face the simple fact Menachem Begin (in Polish, naturally), the Begin-Sadat that Henry A. Kissinger, �A lexander Haig, and Thomas negotiations toward comprehensive Middle East peace Enders willfully and consciously set up the trusting Lon were thrown off track, and Egypt and Israel forced to Nol government of Kampuchea to be murdered by the adopt a policy under which Israel became the Carter genocide of Peking's puppet-dictator Pol Pot, and that administration's instrument for general destabilization through the influence of Kissinger, Brzezinski and throughout the region Brzezinski marked out as the Vance, the State Department, which knew the extent of "Arc of Crisis." Sadat, although a dedicated Egyptian Pol Pot's genocide, covered up that genocide as a nationalist, was also very much a "politician of the gesture of alliance with Peking .

• possible," capable of adapting to what he perceived as unavoidable short-term realities in hope of surviving to Soviet fo llies achieve longer-term Egyptian-nationalist objectives. However, now, exactly the same program of geno­ Sadat went along; he was in a box, and saw no hope for cide which Peking's puppet, Pol Pot, conducted in Egypt's physical survival unless he complied with the Kampuchea is being enacted by "Pol Pot" Khomeini in demands of Brzezinski. Iran. This time, the same Soviet Foreign Minister Gro­ Sadat was witness to the shocking fact that Brzezin­ myko, whose government rightly denounces Pol Pot, ski made a fundamental change in U.S. policy toward stands barefaced before the United Nations to defend a Israel. Whereas, earlier, the United States had had a regime far worse than that of Adolf Hitler, that of commitment to Israel as a nation, under Carter and Ruhollah Khomeini. The Soviet government knows Brzezinski, the authority of the United States' backing what Khomeini is, what the Muslim Brotherhood is, was shifted away from the nation of Israel to the and yet that same Soviet government connives with personalities of Menachem Begin, Sharon, et al. Khomeini and the M tislim Brotherhood, for some This is extremely relevant to the fact that those imagined expediency in strategic games with the U.S. elements of Israeli national life directly complicit in Unfortunately, Soviet moral complicity with geno­ assisting the murder of President Sadat are either offi­ cide goes deeper than such strategic expediency. cials of the Aspen Institute or drug-traffickers linked to . The son-in-law of the late A. Kosygin, Dzhermen the Permindex/Space Research complex tied into South Gvishiani, is Soviet head of a Vienna-based organiza­ Africa and Hong Kong as well as Montreal, Canada. tion called the International Institutue for Applied Sys­ Most Americans, to this day, have trouble in accept­ tems Analysis (IIASA). IIASA is in fact a creation of ing the conclusive, overwhelming proof that it was the NATO, dedicated to subverting the East bloc as a whole Carter administration's Brzezinski, Vance and Henry through spreading the influence of a doctrine of "sys­ Kissinger-the Trilateral gangsters-who willfully tems analysis" concocted by a branch of British SIS, the brought Khomeini to power in Iran (with Soviet KGB Apostles of Cambridge University. IIASA is a chief cooperation), and orchestrated Khomeini's playing with conduit for spreading into the East bloc and leading U.S. hostages right up to the eve of President Ronald Soviet circles themselves (IMEMO) the genocidal Mal­ . Reagan's inauguration! The problem of comprehension thusian dogma of the Club of Rome. The Club of Rome which most Americans suffe r on this point is their is also a creation of NATO intelligence, as well as the refusal to believe how really evil Kissinger, Rockefeller, author of the international "environmentalist" move­ Brzezinski, Vance, George Ball, and Jimmy Carter are. ment and its terrorist-sympathizer offshoots. Gvishiani They refuse, generally, to make the connection between is a leading accomplice of the Club of Rome's Aurelio the fact that President Jimmy Carter proposed genocide Peccei in spreading "environmentalism" and genocidal greater than that perpetrated by Adolf Hitler as the dogma into both the Western nations and the Soviet cornerstone of U.S. fo reign policy: "Global 2000." They bloc. refuse to make the connection: that it was Henry This behavior of Gvishiani is not only that of a Kissinger, as a two-term "Acting President of the Nuremberg criminal, but is symptomatic of high-level United States," who established institutions of govern­ factional protection for Gvishiani in Moscow itself. The ment dedicated to promoting genocide as U.S. foreign extent of pro-genocide influences in Moscow is symp­ policy within both the National Security Council and tomized by the public policy-declarations of Boris Pon­ the State Department. They refuse to face the simple omarev at an East Berlin conference of communist

EIR October 27, 1981 International 39 parties last year. Ponomarev did not explicitly propose Kissinger pretends to imply by his recurring barkings genocide against developing-nation countries, but he on this matter; what frightens Kissinger's masters is the did propose a global economic policy whose directly fear that such deals will strengthen the position of the calculable effects could be only widespread genocide. A Soviet nationalists within the Soviet leadership itself. similar policy was voiced on behalf of Foreign Minister Kissinger's masters are fanatically determined to have Gromyko in protocols of the Haig-Gromyko meeting. M. SusIov and B. Ponomarev take consolidated control Behind these Nuremberg-criminal influences pene­ over the Soviet leadership-in that sense, Henry Kissin­ trating Moscow, there stand British triple-agents Donald ger might be called a "Soviet KGB agent." His every Maclean (IMEMO) and KGB General Harold "Kim" action in U.S.A.-Soviet relations is aimed to strengthen Philby. This is the same Philby who, together with his the factional interests of Suslov and Ponomarev, in father, ran Muslim Brotherhood and related networks in order to strengthen the forces accommodating genoci­ the Middle East prior to his 1963 flight to Moscow-and dalist Gvishiani, and Maclean and Philby. who consistently plays the side of British SIS and the Each time the Soviet Union moves in direction of Arab Bureau in all Soviet KGB operations in the Middle policies based on economic cooperation, Kissinger and East to the present day. similar creatures begin breaking furniture in their tan­ trums around Washington and other policy centers. The danger of war When the Soviets move in the direction which Kissin­ It is not irrelevant that Secretary Alexander Haig is ger's masters desire from Moscow-as during the both a Jesuit and a supporter of the genocidal "Global succession of Gromyko's meetings with both the Israeli 20(}()" policy. Haig's Jesuit connections are to that Foreign Minister and Haig, Kissinger et al. pat Moscow network which is conniving with the Anglican Church on the head, uttering the diplomatic equivalent of "nice to split the Roman Catholic Confession in the Western doggie" to the manipulated fools in Moscow. In brief, Hemisphere from Rome. Haig is knowledgeably sup­ a straight "Mutt and Jeff' brainwashing tactic, aiming portive of this faction, which he knows to be motivated to create the circumstances under which Suslov and not only by "Luciferian" Gnosticism,· but which is Ponomarev take over the succession to power. determined to destroy the Vatican in order to remove What Kissinger's masters require is an aggressive the Vatican as an obstacle to genocidal policies such as "Cominternist" policy for Moscow, matched by a bit­ "Global 2000." In his function as U.S. Secretary of terly anti-Soviet posture from the West. In such a State, Haig, together with Jesuit-influenced James Buck­ circumstance, British SIS, aided by high-level Common­ ley, is explicitly deploying elements of the State Depart­ wealth errand-boys such as Lord Carrington, can hope ment which are operationally committed to genocide to control the world by acting as middleman between against Latin America, Africa and Asia. Washington and Moscow. In that circumstance, SIS's In these policies there is no difference between Haig masters believe both Moscow and Washington can be and Kissinger, nor does either have any difference on systematically weakened to the point that John Ruskin's these issues with the "Dr. Frankenstein," Fritz Kraemer, homosexual fa ntasies of a Malthusian, World Federalist who created Henry Kissinger from the mud of a war­ order can be brought to reality. time Louisiana replacement-depot, and who made Alex­ Whenever Moscow wittingly crawls into bed with ander Haig Kissinger's errand boy. Haig and Kissinger British SIS's assassins, as in connection with the murder are merely golems, not actually people (not in the moral of President Anwar Sadat, the world is being moved sense of personality). It is the masters who control these toward precisely the strategic, miscalculations out of golems who must be understood to understand the which an otherwise impossible thermonuclear war may motives for what the golems do. The special feature of erupt. Therefore, we must say clearly to Moscow: "Stop the strategy of the golems' masters toward the Soviet your babbling about peace movements and disarma­ Union is to bring into power-as Secretary Brezhnev's ment negotiations, and get out of the British bed. Then, successors-the gang of genocidalists, typified by Gvi­ dumb Russians and dumb Americans might finally shiani, within the Soviet leading circles. grope their way toward solutions, establishing world Golem Kissinger has repeatedly reflected the nature peace without sacrificing the vital strategic interests of of his masters' concerns on this point. either nation." The surest way in which to have Kissinger deployed Moscow's instinctive reply will be: "We gave Rea­ out of his golem's closet into public view once more is gan a chance, and it didn't work!" So typical of our to· have the Soviet Union enter into any treaty of simple, sentimental Russians! Perhaps it will not work, economic cooperaion with Western Europe, Japan, or but it . is the only course of action which could. If key nation of the developing sector. The dirty golem's Moscow stays in the homosexual political bed of the reaction to each and every such occasion is "Finlandi­ British SIS, there will be no future Soviet generations­ zation!" What frightens the golem's masters is not what and little good fo r humanity as a whole.

40 International EIR October 27, 1981 before the summit of 22 heads of state in Cancun, Mexi­ co, convened to examine "North-South" economic issues on a world basis. The pronuclear decision by Cancun's host country is Mexico's bid for a signal to the other participants in the summit that Mexico remains committed to transfer of technology as industrial partners the linchpin of national development-and not any of the "appropriate technology" schemes which some na­ tions in both North and South have tolerated. by Timothy Rush And, though U.S. firmsare not guaranteed the con­ tracts in Mexico's current round of bidding, they are When Miguel de la Madrid was tapped late last month absolutely i'lth e running-something which could not by Mexico's ruling PRI party as President Jose Lopez have been said a year or even six months ago. Portillo's successor, one of the questions was whether­ This week, and in future installments, EIR will survey and how aggressively-the nominee would continue the the new steps toward a North-South relation based on industrialization policies which have made Mexico a technology transfer being taken by Mexico and three showpiece of the economic development possible when principal partners: the Ur.ited States, Japan, and West "North" and "South" come to terms. Germany. In this issue we review Mexico's ties with the One early signal is the decision by the Lopez Portillo first two countries, including I) improved prospects fo r administration to pull out the stops on Mexico's ambi­ U.S. involvement in Mexico's ambitious nuclear pro­ tious nuclear energy program. This program will of gram; and 2) the status of Mexico-Japan ties, with an necessity bridge the Lopez Portillo and De la Madrid exclusive report from Guadalajara, Mexico by EIR's administration-it had to be personally approved by Hector Apolinar, on the twelfth annual meeting of the both men-thus fostering continuity of Mexico's high­ Japan-Mexico businessmen's council, accompanied by technology development strategy. EI R interviews with the Japanese ambassador to Mexico, The full-speed-ahead decision on nuclear power came and the Mexican ambassador to Japan. Mr. Apolinar a few days after Lopez Portillo and Reagan had met reports that the low-profile approach taken by the Japa­ personally in Grand Rapids, Michigan-and a few weeks nese in Mexico is a thing of the past.

the immediate bidding package, Mexico is also making How the Mexican nuclear clear that it is interested in full fuel-cycle technology further down the road-particularly uranium enrich­ push was re-Iaunched ment.

Mexico officially opened bidding Oct. 5 on the next stage September 22 meeting of its ambitious nuclear program. The tender is attracting Mexico's December 1980 National Energy Plan interest from almost all major nuclear export countries: ratified a strong nuclear energy program, setting the the United States, France, Canada, Sweden, and West goal of 20,000 MWe by the year 2000. Bidding in Germany. February for the next stage was postponed, however, in As is standard practice in Mexico, the renewed nucle­ part because of a furious debate in some nuclear circles ar push is planned as an integral element of Mexico's over whether to go with the light water reactor technol­ overall industrialization plan, with special emphasis on ogy, which is the world standard and the technology of capital goods production. And Mexico is looking to Laguna Verde, or with Canada's heavy water design, constantly upgrade its access to technology: as one pri­ called the CANDU. vate U.S. nuclear official put it upon returning from Then in late September the nuclear issue was sud­ Mexico two weeks ago, "Mexico's principal interest is in denly put back on the agenda and rapidly pushed tying the construction of these next reactors to a long­ through. EIR has reconstructed tJ.l.ev ent.>. term transfer-of-technology package." On Sept. 22, Lopez Portillo Just back from Grand To underscore the technology issue, Mexico is in fact Rapids, Michigan, attended an unpublicized session of building an unusual feature into its bidding process. The the administration's top energy officials at the officeof validity period for technology transfer offers will run six the Mexican Federal ElectrIcity Commission (CFE). months beyond the validity period for the reactor con­ Present, in addition to the President, were Ing. Alberto struction bids themselves-up to Feb. I, 1983. Escofet, director of the CFE; Jose Andres de Oteyza, Though it does not necessarily demand this as part of Min ister of Industry with responsibility for energy

EIR October 27, 1981 International 41 matters; De Oteyza's Undersecretary for Energy, Fer­ nuclear energy area." nando Hiriart; Finance Minister David Ibarra; Planning U.S. Ambassador John Gavin, a party to the high­ Minister Miguel de la Madrid; and Damau Costa, level Bush-Reagan-Lopez Portillo diplomatic consulta­ Director of the Nuclear Research Institute (lNIN). tions that were undertaken just before and during the According to reliable sources, Hiriart presented the Grand Rapids meeting Sept. 17, had previously called case for proceeding with immediate bidding on the next on De Oteyza to receive assurances that Mexico planned stage of the nuclear program. Costa, in part reflecting the to include U.S. firms in the bidding. De Oteyza report­ bias of the nuclear workers' leadership for the Canadian edly stated emphatically that U.S. companies were CANDU design, asked for a delay and a scaling down of welcome, and offered to meet personally with U.S. the program. ;Thear gument of the CANDU backers is vendors in Mexico. that Mexico should go slower in order to maximize its That opportunity came a week later on Sept. 29-0ct. "independence" fronifo reign sources for enriched urani­ I, when a three-day U.S.-Mexico nuclear symposium um or components. opened up in Mexico City. All the major U.S. reactor CFE head Escofet and Industry Minister De Oteyza companies made presentations on their records in nucle­ reportedly intervened strongly to insist that the plan ar exports and what they were prepared to offer Mexico. could suffer no further delays. De la Madrid upheld the The U.S. Department of Energy, the Nuclear Regula­ same position. And then Lopez Portillo sealed the tory Commission, and the Commerce Department filled argument by noting that the CFE had finalresp onsibil­ out the picture of what doing nuclear business with the ity fo r setting the pace and scope of the electricity U.S. would look like. program, and therefore its viewpoint carried the great­ Ambassador Gavin inaugurated the symposium est weight. with a headline-grabbing pledge that the "obstruction­ The fo llowing day De Oteyza announced that bid­ ism" of the Carter era was over, and that the United ding on the next stage would begin Oct. 5. And two States was once again a "reliable supplier" that could days later the PRI party announced the designation of be trusted by the Mexicans. Lopez Portillo's successor-De la Madrid. In a private meeting with executives from one of the U.S. firms involved, De Oteyza reportedly declared, The U.S. role "We are determined that this program go ahead, re­ Three of the seven bidders are American firms.This gardless of the change of administration at the end of is a turnaround from the four years of the Carter the Lopez Portillo term next year. We will continue not administration, when the U.S. closed itself so complete­ only under De la Madrid, but under the President after. ly out of the Mexican market that America was not This is our intention." even included in the prospective list of partner countries The U.S. role is still far from a sure bet, encouraging that Mexico drew up in early 1979. Mexico remembers as these developments are. For one thing, U.S. financ­ bitterly, in addition to the general anti-nuclear tenor of ing through Eximbank is grossly inadequate for com­ Carter export laws, Energy Secretary Schlesinger's uni­ peting with the attractive export-financing packages lateral embargo of previously contracted enriched ura­ available from such bidders as France, West Germany, nium to Mexico-despite the fact that Mexico had been and Sweden. Exim's capabilities, eroded under Carter, an original signer of the Nuclear Non-Proliferation have been cut back even further under David Stockman. Treaty, and has headed the successful movement to turn Several U.S. firmsindi cated extreme concern over the Latin America into a nuclear-free zone. existing situation. Westinghouse, in fact, is considering The Reagan administration began to make overtures inviting in Mitsubishi on its bid solely in order to tap to Mexico to end this chill as early as March 1981, but outside Japanese financing. really moved the question forward only in September­ Similarly, there are problems still to be resolved in in perfect timing with the Mexican initiatives. demonstrating America's newly pledged reliability. The The U.S. made a point of bringing up its interest in same week that Gavin spoke in Mexico for one wing of nuclear exports at the U.S.-Mexico Trade Commission the administration, the "Global 2000" wing, acting meetings in Mexico City on Sept. 21-22. The final thro ugh Haig's and James Buckley's offices at State, communique from the trade sessions, released the same backed up an NRC ruling that Brazil could not be day as the Mexican cabinet meeting on nuclear policy, shipped enriched uranium previously contracted for on stated in its finalclause: "The United States affirmedits both sides. intention to re-establish itself as a reliable international Reliable sources indicate that Washington plans to nuclear supplier and partner, and indicated a special send "a high-level delegation" to Mexico near the end interest in strengthening nuclear energy cooperation of the year to explain U.S. non-proliferation policy, between the U.S. and Mexico .... The Mexican dele­ "identify problem areas," and provide Mexico with gation was receptive to undertake consultations in the additional assurances of U.S. cooperation.

42 International EIR October 27, 1981 A second severe problem area is export financing. Evaluation Eximbank is currently inadequate to the task. Evaluation : Despite these problems, the U.S. firms stand an excellent chance.

France The seven bidders France has been in the running long and hard since the time of President Giscard's visit to Mexico in March 1979. Strengths: More than any other bidder, France is willing to discuss transfer of enrichment technology to Seven bidders are participating in the Mexican nuclear Mexico. It is offering Mexico concretely the 11.6 percent competition opened Oct. 5. Bids on this second stage of of the shares of Eurodif, a pooled enrichment arrange­ Mexico's nuclear program-to encompass a target 2,400 ment in Europe, which Iran let lapse after the Khomeini MW-ar e due by Feb. I, 1982, and results will be an­ takeover. This woulq guarantee Mexico enriched ura­ nounced by Aug. I, 1982. nium supply until the Eurodif capacity is saturated. At This is the way the bidders stack up as of this moment, that point France promises Mexico access to two exper­ though it should be remembered that Mexico has left imental enrichment processes, chemical isotope separa­ itself plenty of room over the next 10 months for hard tion and laser separation. France has also repeatedly bargaining and further definition of its own needs. offe red Mexico access to the technology of France's Super-Phenix breeder reactor as it comes into commer­ United States cial use in the late 1980s. Three of the seven bidders are American: General Weaknesses: In a word, Mitterrand. So long as the Electric, Westinghouse, and Combustion Engineering. new Socialist government slashes domestic nuclear plans Strengths : General Electric is the principal builder leftand right, France has had to do some fast talking to of Mexico's first nuclear reactor complex, the 1,300 convince Mexico that it plans to stay in the business of MW of Laguna Verde, due to come on stream in 1983- being a reliable nuclear exporter. The French embassy in 84. This means GE is well established in Mexico. It Mexico has put out the word that nuclear will be "at the would have a special advantage if Mexico wanted to top of the agenda" that Francois Mitterrand brings with expand the Laguna Verde site, because the extensive him into talks with President Jose Lopez Portillo . in testing fo r placing GE's Boiling Water Reactors (BWR) Mexico Oct. 19-21. there, including most importantly seismic studies, would Evaluation: Despite the Mitterrand problem , France not have to be repeated. retains the support of a strong current in Mexico's Westinghouse, w!1ich produces the more widely energy and nuclear establishment. Also up near the adopted Pressurized Water Reactor (PWR), is pitching front. its bid to Mexico on its ability to guarantee 100 petoent transfer of technology, as demonstrated in its 10-year Canada program of transfer to Spanish licensees. It has also up until the recent re-entry of U.S. bidders, Canada considered strenthening the financing package it can had been the principal country going head-to-head with offer by bringing in either Mitsubishi (its Japanese France. It now looks in trouble. licensee) or its Spanish associate firms. Strengths: Canada, unlike all the other entrants, is Combustion Engineering's forte in the past has been offering solely Heavy Water Reactors (HWR), known its leading role in producing heavy components such as as the CANDU. The CANDU does not require en­ pressure vessels and steam generators. It is expected to riched uranium, and hence offers Mexico a way out of be selling Mexico on this capability. Its basic model: the delicate and uncertain business of seeking guaran­ Pressurized Water Reactor. r teed sources for enriched uranium. All three U.S. firms benefit from their extensive Weaknesses : The CANDU requires heavy water, a experience in reactor production and export, and the substance difficult either to import on an assured basis momentum of the current thaw in U.S.-Mexico rela­ or to produce at home. The Atomic Energy Commission tions. of Canada (AECL) contracts out for all its reactor Weaknesses : Mexico is interested in both guarantee­ components (50 percent of which are actually produced ing supply of imported enriched uranium for the next in the United States), and is therefore not in a position set of reactors and in acquiring such enrichment tech­ to offer a complete transfer-of-technology package. nology for itself further down the line. The U.S. has yet Finally, since CANDU is a major divergent technology to demonstrate a convincing record in either area. from the more widespread Light Water Reactors

EIR October 27, 1981 International 43 (LWR) offered by everyone else, it entails a top-to-bot­ , tom re-tooling of the Mexican nuclear industry, outside Japan-Mexico Relations the kind of timetable implied in the decision to go for immediate bids on the next stage, as taken Sept. 22. Evaluation : The CANDU is supported for political reasons by a powerful faction in the Mexican nuclear workers' union, SUTIN, the nuclear research institute, IN IN , and surrounding leftist political layers. Their argument is that heavy water is subject to less "foreign dependence" than enriched uranium. This argument did Tokyo out to rebuild not carry the day in the Sept. 22 meeting and is not likely to in the fu ture. Other considerations, technical trade and investment and commercial, fa vor the other bidders and Canada's chances are now somewhat reduced. by Hector Apolinar Sweden Sweden has made a surprisingly strong run for the Over 100 Japanese businessmen and government repre­ money, starting with a full tour of Sweden's nuclear sentatives met with various Mexican businessmen and industry provided Lopez Portillo during the Mexican state officials the week of Oct. 5-7 in Guadalajara, 300 President's visit to Sweden in May, 1980. miles west of Mexico City, at the 12th Plenary Meeting Strengths: Sweden is making an offer no other of the Mexico-Japan'Businessmen's Committee. competitor has on the table: the physical relocation of The most striking aspect of the meeting was the its nuclear company, ASEA ATOM, to Mexico. This evidence that Mexico and Japan are taking steps to would enhance Mexican opportunities for manufacture consoLidateec onomic and political cooperation of a sort of components, both fo r itself and for export. Sweden perhaps not occurring anywhere else in the world at this also already has an extensive share of Mexico's non­ time. I f this relationship succeeds, it could rapidly be­ nuclear electricity technology market. Mexico's Indus­ come a new model for relations between advanced indus­ try Minister De Oteyza, with a large say in the nuclear trial countries and those underdeveloped countries aspir­ decisions, was reported to have been particularly im­ ing to advanced status. pressed with the Swedish industry during his 1980 visit. Economic ties between the two countries have made Weaknesses : Sweden does not have enrichment ca­ surprisingly large advances in the past two years, dem­ pability, nor a major export record (its only &.ale has onstrated by the fact that Japan moved from fi fthto third been to Finland so far). place in foreign investment in the country. Japanese Evaluation : Not one of the front-runners. investment now totals $1.5 billion, surpassing France and Sweden. For 1982, the Japanese objective is to West Germany displace West Germany, currently in second place, with A late entry in the competition, Germany did not approximately $3 billion in investments. even include nuclear energy on the formal agenda when The Japanese offensive is making businessmen from Lopez Portillo visited Bonn in 1980. other countries nervous. The Mexico-Japan Business­ Strengths: West Germany's Kraftwerke Union men's Committee in fact projects a $4 billion level of (K WU) is the only firm in the bidding able to offer all investment by 1983 and trade valued at $3 billion. three commercial reactor technologies: Boiling Water, In the course of talks in Guadalajara with the Japa­ Pressurized Water, and Heavy Water. It has experience nese participants, it became clear to me that fo r these with a broad-ranging Third World nuclear development industrialists, who created Japan's economic resurgence, program (the Brazil deal) graduating into supply of a Mexico is seen as an almost ideal place to invest. Mexi­ full fuel-cycle capability. Specifically, like France, Ger­ co's economic opportunity and natural resources, and many has an experimental enrichment technology it has above all the enormous productive and creative potential been willing to export. of the Mexican population, are considered by the best of Weaknesses: Entered the bidding so late that it does Japanese industrialists to endow Mexico with the mak­ not have any significant "lobbying" apparatus already ings of a second Japan. built up in Mexico . It has to demonstrate that it is Another faction of Japanese businessmen is discon­ seriously interested in the Mexico market, which it had certed by these developments, even unhappy over the previously been willing to write off as it concentrated markedly political emphasis established by Mexico in its on the Brazil deal. international economic negotiations. Part of this reac­ Evaluation : Trailing the pack at this point. tion can be traced to the fact that Mexico has refused to

44 International EIR October 27, 1981 • carve out enclaves of economic influence, as many less Mexico for a larger share of Mexican crude oil exports developed countries have done, but has instead insisted than the 100,000 barrels per day set in the beginning of on welcoming Japanese investment only according to that year. Mexico repeatedly stated that there was no Mexico's "rules of the game." more oil to export at that time and that additional This has meant asking the Japanese to form consortia quantities in the fu ture would depend on better oil-for­ of companies and banks capable of offering large pack­ technology packages than those then being offe red by ages of technology and financing for the large-scale the Japanese. projects Mexico has adopted. For example, Japanese Then, this June, when the bottom fell out of Mexi­ firms and Mexican government consortia, with financing co's export contracts because of price squabbles in a from Japanese banks, are now collaborating on this basis contracting world market, Mexico suddenly came back to build part of the second stage of the Las Truchas steel to Japan and said that 200,000 and even 300,000 barrels plant and an adjacent plant to produce large-diameter per day of oil was available. The Japanese, with ample steel tubing. current supply from elsewhere, replied that they appre­ The principle of association and joint venture for the ciated the offer, but were not interested at this time. industrial projects was stressed by Mexican government At the Guadalajara meeting, the Mexican govern­ officials throughout the meeting. The Mexican Under­ ment renewed its pressure fo r Japan to take more oil. In secretary of Foreign Trade, Hector Hernandez, stressed a speech written by Pemex Director Moctezuma Cid in his speech that "the Mexican government has had and read by Francisco Ruiz de la Pena, Pemex's Direc­ special interest in intensifying its economic ties with tor of Finances, the Mexicans emphasized that "we can those countries which help in strengthening OUT national see future operations of greater magnitude than those productive plant, as has been the case in the recent period we are carrying out today" in oil sales. What we require, with Japan." he stated, "is to transcend purely commercial relations, In the face of this Mexican strategy, the high com­ creating a mechanism fo r true collaboration." Or as mand of the Japanese business community has split Ambassador Alejo put it, "It would indeed be unfortun­ between those who are ready to invest under Mexico's ate if, once again, we were not able to arrive at an rules and those who are not. Some, like Keidandren head accord which is acceptable to both sides. I believe that Toshio Doko and Renzo Taguchi, in private say they the moment has arrived to identify the most productive love Mexico because of its enormous development poten­ avenues of cooperation for the medium and long term, tials. and proceed immediately to advance along them with In contrast, groups like those around fo rmer Foreign . an explicit program." Minister Saburo Okita have refused to cooperate with Though the Japanese in Guadalajara continued to the Mexican government approach, and freely comment speak of problems in price and quality in the Mexican that the Mexican government is incapable of directing crude oil offer, there is reason to think that Japanese the economic development of the country. interest may converge in the relatively near future on The diffe rence in approach became particularly evi­ increased Mexican imports. I was told that studies exist dent�when Okita ran the show during Prime Minister in Tokyo saying that it is strategically important for Ohira's ill-fated trip to Mexico in early May 1980. The Japan to reduce its dependence on Mideast oil supply, Japanese so offended their hosts with unacceptable de­ and increase Mexican imports until the latter reach 5 to mands and arrogant public criticism that relations took 6 percent of total Japanese needs. a Qosedive, and were only slowly and painstakingly Overall, a strong sense of cooperation and joint resumed over the fo llowing six months. The current commitment to deepen economic ties predqminated in progress in relations is a hopeful sign that the Okita Guadalajara, spurred fu rther by Japan's emergence as a approach will take a back seat under Japan's current spokesman sympathetic to large-scale transfer of tech­ Sutuki government. nology at the Cancun North-South talks. Several fu rther Japanese visits are immediately The oil question planned to follow up on this momentum. At the end of turns around October, a mission of the Japan Consulting Institute In the course of an interview with EIR, Mexican will arrive to study the prospects for setting up joint Ambassador to Japan, Francisco Javier Alejo, stressed ventures in the five largest Mexican port projects, and his view that Mexico has established a clear strategy report back to Japanese businessmen on their findings. toward Japan, but that Japan's strategy toward Mexico Shortly thereafter Japan will send an importers' mission had been much less defined. with representatives of 150 fi rms. The mission will be He may have been referring to the ironic turnaround headed by the Chairman of the Board of Directors of in the state of Mexican sales of oil to Japan. Mitsubishi, Bunichiro Tanabe, and sponsored by the ' Starting in early 1979, Japan constantly pressured Japanese foreign trade ministry MITI.

EIR October 27, 1981 International 45 Alejo : Well, I don't think that this question can be personalized, since Japan is a very institutionalized coun­ Mexico's ambassador: try. I would say that there has been more of a Mexican strategy toward Japan than a Japanese strategy toward 'A very positive attitude ' Mexico. The Mexican strategy is finding favorable ground because there is wide general interest in Japan The fo llowing exclusive interview was conducted by EIR about Mexico, as much from the standpoint of the size of correspondent Hector Apolinar with Mexico 's Ambassa­ the Mexico market as from the medium- and long-term dor to Japan, Francisco Javier Alej o, at the 12th Plenary dynamic of the Mexican economy, as well as its nearness Meeting of the Mexico-Japan Businessmen 's Committee to the U.S., which offers interesting perspectives for held in Guadalajara, Mexico, Oct. 5-7. international trade. Plus Mexico's natural resources, which of course offer very interesting complementary Apolinar: Mr. Ambassador, could you tell us the status possibilities. So from the Japanese side, more than hav­ of the oil negotiations between Mexico and Japan? ing a particular type of strategy, there is a general interest Alejo: Japan had been seeking to buy an amount of that gets translated into concrete decisions to the degree crude oil which Mexico had not been able to supply, due we specify to them what it is that we want. to prior commitments. We have a policy with a fixed export ceiling of 1.5 million barrels per day-unless the Apolinar: I have spoken to several Japanese businessmen circumstances or necessities of development demand established in Mexico who are thinking of delaying their more. Given our 1..5 million barrel per day export ceiling, investments for the rest of this year and part of next year, and prior commitments, for a long time we were unable due to the current election campaign in Mexico. to satisfy Japan's repeated request to increase deliveries Alejo: Well, this is a very general Japanese attitude, of 100,000bar rels per day up to 300,000. what they call a policy of "wait and see." It refers not But now, with the present situation of a short-term only to Mexico, but to any country they are dealing with. oversupply on the international market, we have told our Japanese investors, perhaps because they have worked so Japanese friends that we want to satisfy their old request hard to achieve what they have achieved, are very cau­ as soon as they wish, and obviously they have been tious. So there are some examples of delay. pleased. But on the other side, they also have a short­ But there are others where work is proceeding in­ term problem . Japan's petroleum industry has suffered tensely. The most noteworthy case is that of Nissan strong financial setbacks, seen in the fall in price of Motors, which has an investment program of $450 mil­ products from their refining industry, and from the rise lion, no small amount in Mexico . They have been work­ in interest rates, that have produced devastating effects ing very hard, and have no intention of interrupting or on Japan's holdings. postponing that work. For this reason, Japan has had to make adjustments. Their reply to our offer has been ambiguous so far, due Apolinar: You have mentioned the importance of the to Japan's dilemma in these circumstances. But their favorable position of Japan for the Cancun meeting. On attitude has been very good, very positive, and we are what do you base that understanding? examining the situation like friends, patiently. It is up to Alejo : It's based on specific statements made by the them to accept or not. Of course, at a certain point if they Japanese government; on the position adopted by Prime don't decide, then we will sell our oil to others, since we Minister Suzuki at Ottawa, a very positive position; and have other requests. So it basically depends on Japan. on the position adopted by the Prime Minister and several of his ministers during the ASEAN coordinating Apolinar: What areas of co-investment do you believe meeting in Osaka. All the countries in that region have may have the greatest interest for Mexico? asked Japan to be their spokesman with the other devel­ Alejo: The areas of co-investment which have been oped nations. planned are those decided by Mexico-basically indus­ try, tourism, and fishing. The priority areas in our indus­ Apolinar: What has been the reaction of Japanese polit­ trial development plan include metal-working industries, ical circles to Mexico's position on El Salvador? capital goods, consumer durables, some basic metals, Alejo: Japan has traditionally had close relations with EI secondary petrochemicals, a bit in transportation, a bit Salvador, so relations with EI Salvador claim their atten­ in electronics. tion and interest. I believe that Japan's attitude for the present is basi­ Apolinar: Have you seen a more defined strategy on the cally to observe and study our position, which I believe part of the Suzuki government toward Mexico? they regard with a great deal of respect.

46 International EIR October 27, 1981 Matsunaga : He wi\l flydir ectly into Cancun and back again to Japan, because at this time Japan is in full session of the Diet [Parliament]. But he already knows Japan 's ambassador: Mexico very well. He has come several times. He has very 'Our neighboris grow ing' good personal relations with the leaders of Mexico, including President Jose Lopez Portillo. Japan's Ambassador to Mexico, Noboru Matsunaga, has taken an increasingly fo rthright and public role as a Japan­ Apolinar: Are there consultations between Mexico and ese spokesman on development. In some moments taken Japan in regard to the Cancun meeting? out fr om the Japan-Mexico Businessmen's Meeting in Matsunaga : We are consulting constantly with Mexico. Guadalajara Oct. 7, Mr. Matsunaga explained to EIR's We have very close contact with the Mexican govern­ Hector Apolinar how the Japanese see their relations with ment. Mexico and the rest of the developing wor/d. Apolinar: Can you tell me the main point that Japan will Apolinar: What is [Prime Minister] Suzuki's apprecia­ make in the Cancun meeting? tion of the relations between Mexico and Japan? Matsunaga : I don't know what the Prime Minister will Matsunaga : The development of bilateral relations be­ say in the Cancun meeting. I can tell you only that the tween Mexico and Japan is good. Mexico is growing basic position of Japan has always been looking toward very fast in its economic and political relations with such a meeting at the highest level, to contribute to the . countries outside its borders. Japan is one of the most progress of the dialogue between North and South. industrialized countries in the world, searching to expand Japan is a country which is heavily dependent on its its relations with various countries. Mexico now occupies relations with the South, the developing countries. We a very important place in this framework. believe that without the economic development of the Moreover, we are confident that the next century will developing countries, the developed countries cannot be a century ofthe Pacific Ocean. This is a very important enjoy their own prosperity. So we are making our best concept in this meeting, because Mexico and Japan are effort to assist and encourage the development of the both neighboring countries. They have only the Pacific underdeveloped countries. Ocean between them. I don't think the Cancun meeting will result in reach­ ing agreement on concrete projects. They will have only Apolinar: Do you expect an increase in the economic two days of discussion and the participants are all heads collaboration between Mexico and Japan? of state. But if they are coming to Cancun in order to Matsunaga: As I mentioned, Mexico will grow and it is create a kind of good atmosphere for future dialogue our expectation that Mexico will become a very modern between North and South, then I think we can say that country participating and contributing to the creation of the Cancun meeting wi\l be a big success. The most a stable world economic order. The prosperity of its important thing is to avoid confrontation between the economy will contribute to the whole world. There can North and the South. We should recognize the impor­ be no doubt about this. With this in view, we wi\l tance of interdependence and reaching common interests endeavor to achieve closer cooperation between Mexico between the North and the South.- and Japan. Apolinar: As you know, Mexico is very worried about Apolinar: Do you expect that Mexico and Japan wi\l the deterioration of the situation in Central America. reach an agreement on oil purchases? The violence is increasing, and Mexico is proposing that Matsunaga : We are now importing oil from Mexico on the economic development of these countries is the way the basis of 100,000 barrels per day. In the long range we to bring peace. Does the Japanese government agree expect to increase our imports of Mexican crude. Look­ with this view? ing short term, the immediate supply-and-demand situa­ Matsunaga : We are also worried about the unstable tion for crude oil in the world is very loose. We cannot situation in Central America. And we know that the increase our imports from Mexico today or tomorrow. economy in Central America is not very good. They But definitely we are looking forward to developing our certainly need assistance from the outside world. How­ relations with Mexico which will include the transfer of ever, as you know, we have always been strongly against crude. external intervention for the settlement of disputes. In this area again, it is always our view that such instability Apolinar: Will Mr. Suzuki stop in Mexico City after the be resolved through the interested parties on the basis of Cancun meeting? peaceful negotiations.

EIR October 27, 1981 International 47 of our countries, there has always been fraternal unity between our nations, as we see in today's meeting.

Apolinar: Do you think that Mexico can become another industrial Japan in the near future? Taguchi: It can happen, but the key area for this is education. It will take a major educational effort that • reduces the percentage of illiteracy and raises the educa­ tional level of the popUlation to the point that the people can read technological documents written in a foreign language in that language. This is a basic contribution to the eventual industrialization of your country, like Japan. In the trip I made tQ Mexico last December, visiting various ports and factories, I found large numbers of Taguchi: 'Mexico 's people on every hand, very industrious workers, and an atmosphere of striving for a goal which the country feels strength is her is close at hand. If we look at statistical projections for the year 2000, young population we see the active working-age population fluctuating around 25 years old, which is very young. It will have t,o Th e fo llowing interview was granted to EIR by Renzo be guaranteed employment. Japan now has the largest Taguchi, representative of Japanese industrialists at the percentage of old-age popUlation in the world. From this 12th Plenary Meeting of the Japan-Mexico Businessmen's standpoint, Japan is conceptually moving toward old Committee held at Guadalajara, Mexico, Oct. 5-7. The age. Its working population is diminishing. interview was conducted by Hector Apolinar. By contrast, Mexico's working-age populatio� is in­ creasing-that's the source of Mexico's economic ad­ Apolinar: Have there been political obstacles to Japan's vance. One can see in Mexico's youth hope for the future, increased purchase of oil from Mexico? which they should have, and confidence in themselves. Taguchi: There is no political obstacle. Generally, news The old people do not have much hope in life, but the reporters insist that there are political problems, both youth have great hope in life and should have a prosper­ Japanese and Mexican reporters, but I do not think so. ous future. Japan is a very small country; old people must go abroad to subsist. We human beings must work very Apolinar: There are some in Mexico who think that hard; that is the secret to remaining young. Japanese industrialists are disposed to cooperate only in The power of the press in each country, especially you a limited way with Mexican industrialization. Are there young reporters, must have a sense of guidance to pro­ limits to Japanese cooperation with Mexico, or are Jap­ mote the destiny of each country. Two decades ago, anese industrialists willing to make Mexico into another students who studied Marxism-Leninism were consid­ Japan in industrial terms? ered progressive, but now when one studies Marxism­ Taguchi: There are politicians, industrialists, and offi­ Leninism, one is not considered progressive; such is the cials in Japan who think that limits exist. There are atmosphere which exists in Japan . The proof of this is always problems in the economic sector. But others do Eurocommunism in Europe, where the Marxist-Lenin­ not think so. ists are not considered progressive. Look at the case of Libyan oil. Libya opposes U.S. policies, but the U.S. buys 40 percent of Libya's oil. In Apolinar: Do you believe there is any similarity or coin­ the political realm, it's as if the economic relation didn't cidence between the Meij i Restoration and the Mexican exist. The responsibility of you reporters is very impor­ Revolution or Mexican Independence? tant. What you say is vital, because it is what is sent from Taguchi : The times have changed. Japan was the only one place to another, while politicians are the ones really country that had more than half its population able to responsible for directing the course within each country. read between 1804 and 1828. Fifty years later came the Meiji period, in which fo reign technology was ir,tro­ Apolinar: My magazine has stated that there are inter­ duced into the country. When the Meiji Restoration national groups or factions that want to impede closer occurred, each person in Japan was able to read the cooperation between Mexico and Japan. foreign culture, able to use what he read; he was already Taguchi : I don't think such pressures exist. In the history prepared.

48 International EIR October 27, 1981 DatelineMexico by Josefina Menendez

Whither De la Madrid? vate TV broadcasting firm, Telev­ Two opposed camps are battling to shape the economic policy isa, in a media campaign promot­ of the Mexican presidential candidate. ing popUlation reduction in Mexi­ co. Televisa is politically controlled by the Miguel Aleman interests­ who are Moya's major sponsors. The IEPES program is not the only game in town. The CTM labor he dust raised herelas t month by Mexicans that a slower population federation has issued its own Pro­ theT intricate maneuvering leading growth rate would allow all Mexi­ gram of Government focused on to the unveiling of Miguel de la cans a better life. Aware of the sus­ industrialization, and which explic­ Madrid as the Partido Revolucion­ picion that such Malthusian pro­ itly rejects Malthusian arguments ario Institucional's presidential posals arouse among nationalist which glorify ruralization. "The candidate for 1982, has not settled elements here, the lEPES authors radical transformation of Mexico," yet. The country's various political argued for "confronting those ide­ argues the CTM, "must be based machines are jockeying fo r posi­ ological conceptions which dis­ on a process which is eminently tions in De la Madrid's fi rst cabi­ qualify all population policies by urban industrial." Fidel Velasquez, net-whose selection is still over a associating them with the imperial­ the powerful head of the labor year away ! ist dogma of'overpopulation.' " group, has also made arrangements But the byzantine maneuvering It is still too early for me to tell to secure labor's imput into De la is beginning to give way to a more you just who is behind the lEPES Madrid's camp, by announcing this substantive debate between two report, and to what extent it will week that he will personally oversee major factions over the kind of pro­ influence De la Madrid's thinking. labor's integration into the elector­ gram De la Madrid should carry Nonetheless, some close allies of al campaign. out during his 1982-1988 term. President Lopez Portillo I talked Industry Minister de Oteyza is Mexico's largest and most pow­ with are concerned over the earlier also playing an important role in erful trade union grouping, the role of Manuel Bartlett, now De la campaigning for a continuation of CTM, and Industry Minster Jose Madrid's electoral campaign direc­ Lopez Portillo's pro-growth poli­ Andres de Oteyza, are emerging as tor, in the introduction of popula­ cies. In an Oct. \0 meeting of the the loosely allied leading fo rces of tion control policies in Mexico in Chamber of Manufacturing Indus­ an effort by thecountry's national­ the early 1970s. Bartlett at the time tries (Canacintra), de Oteyza ist layers to guarantee continuity was head of the Office of Govern­ warned that "a country with great with Lopez Portillo's pro-growth ment under Interior Minister Mar­ needs and with a high demographic policies. io Moya Palencia, and helped growth rate like Mexico does not On the other side of the fence, Moya design a highly controversial have the luxury of stopping its eco­ zero-growth circles working out of campaign promoting population nomic growth." key political institutions such as the reduction and other Malthusian De Oteyza, one of thepil lars of Institute of Economic, Political and proposals, under the slogan "Va­ the Lopez Portillo government's Social Studies (IEPES)-the PRl's monos haciendo menos" ("Let's pro-industrial policies, is known to policy-making think tank-are ag­ make ourselves less"). be personally close to De la Mad­ gressively calling on the candidate I must say that I share many rid. Rumors in this capital are that to place economic growth on the nationalists' distrust of these poli­ he and Jose Ramon Lopez Portillo, back burner, and instead focus its cies as "imperialist." I have well­ the president's son, who is Vice efforts on reduci ng Mexico's high documented proof (which I will Minister of Budget and Planning population growth rate. make available to my readers at a under De la Madrid, will both play This month, the IEPES issued future date) that U.S. Malthusian key roles in guaranteeing policy its official Program of Govern­ organizations such as the Washing­ continuity-probably by holding ment, calling for a "real national ton-based Population Institute ranking cabinet posts in the next persuasion" campaign to convince have worked with the Mexican pri- government.

EIR October 27, 1981 International 49 Report from Paris by Katherine Kanter and Sophie Tanapura

Mitterrand's nuclear Waterloo highways in their continued pro­ France's citizens are not prepared to quietly watch the test. destruction of their greatest industrial achievement. The . Socialist government pre,. sented Its energy program to thef National Assembly the second week in October, calling for a large cut in the 1982-83 nuclear plan he anti-nuclear power Mitter­ gional General Council and a lead­ which originally scheduled 8 reac­ Trand government has discovered it ing member in the Gaullist party. tors of 1,300megawatts and one of has a wolfby the ears. The Commit­ The Lorraine region, which 900 M w to be started. The govern­ tee for Cattenom, formed to defend shares a border with West Germany ment plan calls for a reduction by nuclear plant construction in the along the Rhine River, has been the 3,900 MW, enough energy at pres­ Lorraine industrial region, held a industrial belt of France. The Com­ ent levels of consumption for 4 mil­ conference on Oct. 8 to announce mittee for Cattenom, whose three lion people. its decision to campaign nationally fo unders were the POE, the French The government plan met with for nuclear construction. section of the Fusion Energy Foun­ stiff resistance in the National As­ More than 250 business, labor, dation, and the regional branch of sembly, even from within Socialist and area citizens assembled in the the Young Giscardians, was party ranks, where some argued for city of Metz, the largest town in the formed to fight not only for the the original program established by vicinity of the Cattenom nuclear preservation of the nuclear plant, Giscard. reactor, to hear presentations from but also against the de-industriali­ To put a lid on the fight, the a veritable "who's who" of regional zation that would accompany its Prime Minister turned the vote on political leaders. demise. energy program into a vote of con­ Jacques Cheminade, President The Cattenom nuclear energy fidence, thereby forcing the entire of the Committee and General Sec­ plant, originally to be made up of body of the Socialists-which holds retary of the European Labor Party four reactors, would be the center­ single party majority in the N ation­ (POE), warned against any tenden­ piece of such an economic develop­ al Assembly-into line. Giscard's cy fo r the group to rest on its laurels ment program for the region. Soon political coalition voted against the or accept any compromises with the after Mitterrand's election, the plan, while the Gaullist Party environmentalists. The pro-nuclear government announced a freeze on (RPR), in a sign of the back room lobby-in-making, he said, must be the construction of all fo ur reac­ deals of its leader Paris Mayor an alliance of productive workers tors, but quick action on the part of Jacques Chirac, abstained. and industrialists that will treat the the Committee and others brought Yet, fearing the worst from the environmentalists as the recruit­ about a firstcon cession: Reactors I opposition, the government also ment ground fo r terrorism. One and 2, for which ground had al­ conceded that the five nuclear committee member, Jean-Marie ready been broken, were allowed to plants it had frozen in July, includ­ Rausch, a Senator and the Mayor continue, the government said, but ing Cattenom 3 and 4, should be of Metz, told the crowd they must the fate of Reactors 3 and 4 was to allowed to proceed, provided they fight for the Lorraine region to remain undecided. . are fully approved by the local au­ once again become "France's Tex­ Since July, when the decision thorities in each prospective site. as." was made, demonstrations and The. fate of Cattenom is now rela­ Other distinguished members of meetings of local residents and tively secure. The Committee's de­ the Committee for Cattenom who workers have taken place non-stop, cision to expand nationally means shared the podium with Cheminade including several strikes-probably there is now a rallying point for the and Rausch were Alphonse Boeh­ the first ones recorded in favor of resistance. First endorsements for ler, Mayor of Cattenom; Dr. Denis nuclear energy. The day the confer­ th� national committee include Jacquat, head of the Giscardian ence was held, hundreds of mem­ Senator Chauty of the Gaullist par­ Republican Party for the region; bers of the Communist labor union, ty, who heads the French Society and Dr. Schvartz, head of the re- the CGT, blocked traffic on local for Nuclear Energy.

50 International EIR October 27, 198 1 MiddleEast Report by Rol?ert Dreyfuss

The Trilaterals strike back Israel gets out ofthe West Bank. Menachem Begin is helping Carter, Linowitz, and Kissinger to Two things need to be said. First, by hinting at support for take front stage'once more in the region. Carter and Linowitz, the Begin government is deliberately under­ cutting President Reagan by rein­ fo rcing the Carter has-beens. Beg;� is known to be enraged at the White everal times before his tragic as­ PLO if the PLO recognizes Israel's House for its effort to maintain Ssassination, Egyptian President right to exist. links to Saudi Arabia and the Anwar Sadat publicly blasted the Well, that is nothing new, as Arabs. Jimmy Carter administration as President Reagan noted the next Second, because "the Linowitz weak, bumbling, and incompetent, day. That has been consistent plan" is anathema to Jordan, the and favorably contrasted the Rea­ American policy since 1975. But, to Saudi kingdom, and especially the gan administration to that of the make sure that Jimmy and Gerry Palestinians, Begin's new stand is a Georgian's. did not bungle their headline-grab­ deliberate affront to all parties con­ Sadat is said to have been par­ bing session with a captive press cerned. It slams the door in King ticularly annoyed with Carter's in­ corps aboard the jet, Kissinger and Hussein's face, in particular. sane brother Billy's antics with Linowitz sat silently nearby during Given the connections of Li­ Colonel Qaddafiof Libya, and with the entire performance. nowitz and the Trilaterals, it is not Zbigniew Brzezinski's outspoken On Oct. 13, the Baltimore Sun surprising. The special point of ref­ support for "Islamic fundamental­ suggested editorially that either erence is the intimate connection ism," Khomeini-style. In the end, it Carter or Kissinger be named spe­ between the Trilateral Commission was Qaddafi and the Muslim cial envoy to the Middle East by and the Aspen Institute, the Colo­ Brotherhood secret society that Reagan. It even quoted a presump­ rado-based British secret service killed Sadat. tuous Carter to the effect that he think tank. 'Now, with the earth not even "would be honored" to serve in Recently, Israeli Defense Min­ settled over Sadat's tomb, Jimmy such a post . ister Ariel Sharon appointed Col. Carter and the whole Trilateral Of course, no one is asking­ Menachem Milson as civilian gov­ Commission crew-led by Sol Li­ not yet. ernor of the occupied West Bank; nowitz and Henry Kissinger-are There is more of the game to be Milson is a special adviser to the trying to stage an open comeback played. Aspen Institute, who since the late in the Middle East. And Israeli cult Two days after Air Force One 1970s has particularly been in­ leader Menachem Begin is giving touched down on its return from volved in Aspen's executive semi­ them a hand. Cairo, the New York Times leaked nars on Islam . It seems almost like a horrible on page I that at the funeral Mr. Since taking office Sharon has dream: there on Air Force One, Begin had sidled up to Carter and repeatedly expressed his idea of flyingback from Sadat's funeral in Linowitz and promised that he in­ overthrowing King Hussein and in­ Cairo, were Jimmy Carter and Ger­ tends to make Linowitz "famous." stalling a radical "Palestinian ry Ford-whose combined IQ soars In brief, Begin reportedly said state" in Amman! into two-digit figures-expound­ that Israel will soon announce its With the assassination of the ing their wisdom on the subject of acceptance of "the Linowitz plan" Egyptian kader, the Sharon plan U.S. relations with the Palestine for West Bank autonomy. For for eliminating Hussein takes on a Liberation Organization (PLO). In students of "the Camp David pro­ more urgent character. The Aspen scrambled syntax-Carter said that cess," the Linowitz plan is a gob­ Institute and the Trilateral Com­ these "discussions have to be bledygook concoction of technical­ mission seem ready to oack Shar­ done"-Jimmy and Gerry fumbled ities which most decidedly do not on's project. Hopefully, President their way to announce that the add up to the sine qua non for Reagan will not buy this one-and United States should talk to the Middle East peace, namely, that will so inform Mr. Begin .•

EIR October 27, 1981 International 51 InternationalIn te11igence

closed dowii bythese forces during 1980 Piperno to stay at the home of Marta Will France be and reopened by Mr. Riaz in 1981. Aragon in Montreal. According to the ruled by decree? Since March, Mussawat has been in RCMP, if the extradition hearings the forefront of exposing drug smug­ stretch beyond Nov. 12, Piperno will be gling activities by individuals close to free to leave the country, under the Ital­ French Prime Minister Pierre Mauroy Gen. Ziaul Haq. The paper's exposes of ian-Canadian extradition treaty. warned the National Assembly Oct. 12 Muslim Brotherhood operations in sev­ that he may "demand exceptional means eral Middle East countries have proved from Parliament" with which to carry embarrassing to the Pakistani junta, and out "rapid and decisive 'action" against it is believed that the current pressures unemployment. After officially raising against Mr. Riaz are an effort to force Soviet systems analyst the possibility of invoking the rarely used him to end publication of his newspaper. Article 30 of t.he Constitution, Mauroy endorses Global Mr. Riaz was one of a handful of 2000 tried to backtrack by stating that he was Pakistanis who waged a tireless cam­ just seeking to institute a battery of leg­ In a recent debate between Ivan Frolov, paign to save the life of the late Pakistani islative measures enabling him to force Deputy Director ofthe Soviet All-Union Prime Minister ZulfikarAl i Bhutto. the public sector to adopt his pet work­ Institute of Systems Research, and the sharing schemes, known as "solidarity Politburo's international affairs chief contracts. " Vadim Zagladin, Frolov praised the U.S. President Fran�ois Mitterrand him­ State Department's Global 2000 Report self warned during a visit to the Lorraine as a realistic document. According to the region that "there will be no witch-hunts, Canadian government latest issue of Literaturnaya Gazeta. he but the witches must not come after us." called for the development of "an ecolog­ In Mitterrand's dictionary, a witch is releases Piperno ical culture" and "an ecological educa­ defined as anyone who opposes the pro­ tion." The environmentalists in West grams he is seeking to impose in France. Italian Red Brigades leader Francesco Germany, Frolov added, represent the Minister of the Interior Gaston Def­ Piperno was ordered released on bail Oct. spirit of the times, but the "gre enie" 14 despite protests from Italian govern­ ferre meanwhile railed against the Sen­ movement is no substitute for global so­ ment representatives seeking to extradite ate, the only legislative body not con­ cialism. him to Italy. Piper trolled by the Socialists, which is in no no, wanted on charges Frolov also cited Aurelio Peccei of hurry to rule on his proposals for so­ of gun smuggling in connection with the the Club of Rome as offering the proper called decentralization. Defferre has de­ 1978 Aldo Moro kidnaping and assassi­ "anthropological" model. The Global clared that "if the Senate continues to nation, had entered Canada legally in 2000 Report has been published in the oppose putting the decentralization law mid-August and was only reluctantly U. S.S.R. on the agenda, I will ask the executive to apprehended by Canadian authorities in set this agenda by fiat." mid-September after the Italian govern­ ment discovered that he was safehoused there. Quebec Pro vincial Superior Court Houston debate Justice Jean-Guy Boilard justified Piper­ Threats made against no's release on $50,000 bail on the on Rothko conference grounds that the Italian government had anti-Zia editor engaged in "unreasonable and unjusti­ Houston City Councilwoman Christin fied delays" in presenting documents ar­ Hartung sponsored a resolution Oct. 14 Several times over the past three weeks guing for Piperno's extradition. Boilard proposing that the City Council request the life of Bashir Riaz, editor of the Lon­ made this decision even though the that the Houston Police Department and don based Pakistani paper Mussawat has RCMP admits Piperno will probably use Legal Department adopt a plan to close been threatened. Mr. Riaz is an outspo­ his release to attempt to flee to France, down a Muslim Brotherhood strategy ken opponent of Pakistani dictator Gen. which has already agreed to accept him. session scheduled to convene from Oct. Ziaul Haq and it is believed that his role Boilard's arguments were assisted by 21 to Oct. 25 at the Rothko Chapel in in exposing the political and personal comments fr om PSI leader Giacomo Houston. . co rruption of the junta has resulted in Mancini that the Italian government's The City Council deliberations fo l­ threats to himself and his fa mily. attempts to extradite Piperno were polit­ lowed a presentation by National Dem­ Dirty tricks by the Pakistani embassy ical and "not fo unded in fact," comments ocratic Policy Committee representative in London during the past year have circulated in the newspaper Corriere Harley Schlanger, who, on Councilwom­ resulted in intense financial warfare Canadese. an Hartung's invitation, described to the against Mussawat. The newspaper was Arrangements have been made for Council the international terrorist con-

52 International EIR October 27, 1981 Briefly

• PEKING will host a conference on population control Oct. 27-30 nections of the Muslim Brotherhood for parliamentarians from 18 leaders who will attend the Rothko con­ Ikhwan attendees Asian countries. Sponsored by the fe rence and the role that the Brotherhood at Texas conference U.N. Fund fo r Population Activi­ played in the Oct. 6 assassination of ties, the sessions will include tours Egyptian President Anwar Sadat. In his of the centers where pregnant An investigation of some of the Muslim testimony, Schlanger stated: "The Ro.th­ women who already have one child Brotherhood (Ikhwan i-Muslimun) lead­ ko Chapel, in inviting the Muslim Broth­ undergo forced abortions. ers slated to attend the Oct. 21-25 Rothko erhood to Houston, is sponsoring the Chapel conference on Islam in Houston, very same organization responsi ble for • REGINALD DALE, U.S. Edi­ Texas, has revealed the fo llowing con­ the murder of Anwar Sadat. It is incum­ tor ofthe London Financial Times. nections: bent upon the City Council to do what­ claims the U.S. government will One conference attendee, Ahmed ever is necessary to prevent the conven­ offer West Gerrr,anya coal, nucle­ Taleb Ibrahimi, adviser to the President ing of this conference and the entrance of ar power, and natural gas package of Algeria, is a member of the Club of these people into the United States." to deter Bonn from signing its Rome. He is also a board member of Schlanger's testimony was featured multibillion-dollar natural gas UNESCO. Oct. 15 in the Houston news media. In pipeline deal with the U.S.S.R. The chief organizer of the Rothko addition to press coverage, the local conference is one Nadjm ud-Din Bam­ ABC-TV affiliate ran a story quoting mat, an Afghani Sufi mystic. Bammat, • EL SOL, a leading Mexico City Schlanger extensively and interviewing who hails from the Caucasus in the Soviet daily, asked editorially Oct. 13 why the visibly shaken director of the Rothko Union, has a Muslim fu ndamentalist pe­ "the Socialist International of Wi 1- Chapel, Ann Meade, who said: "We digree. Iy Brandt," which "seems to be the know it's not true because the people His father �as a leader of the Mus­ group backing one of the factions coming have been certified as people of lim resistance organized by the British opposing the Duarte junta" in EI integrity and honor with one of them a to oppose the fledgling Soviet govern­ Salvador, charges genocide in that Nobel Peace Prize winner, and we feel ment. country but remains silent on the confident that they are coming with the This resistance and its outgrowths mass slaughter in Iran. right motives and no alternative mo­ were also deployed against Kemal Ata­ tives. " turk, fo under of the modern Turkish Re­ • ANDREAS VON BULOW, The Mayor of Houston, Jim Mc­ pUblic. Bammat teaches at the University West German Minister of Re­ Conn, referred the question to the city of Paris, traveling frequently to the Mid­ search and Technology, opened police department after liberal Council­ dle East to coordinate Muslim Brother­ Bonn's largest technological ex­ woman Eleanor Tinsley blocked action hood operations in the region. For the position ever held in a foreign on the City Council resolution. last 30 years, he has worked with UNES­ country Oct. 12 in Mexico City. CO, primarily as Director of the Depart­ The North-South meeting in Can­ ment of Culture, and is also active with elm, he said, should discuss world the Organization of Islamic Foreign hunger fr om the standpoint of A plan to eliminate Ministers. "improving agricultural produc­ He is a close friend of Prof. Hamid tivity in the developing countries, Yasser Arafat? Algar, a pro-Khomeini mystic and Mus­ for which modern technology is lim Brotherhood activist who operates necessary." A week after the assassination of Anwar out of the University of California at Sadat, a plot to murder PLO chief Yasser Berkeley. • ROBERT DREYFUSS, co-au­ Arafat was uncovered, according to Aus­ Khurshid Ahmad, director of the In­ thor of the book Hostage to Kho­ trian intelligence sources. To have been stitute of Policy Studies in Pakistan and meini. is in demand for radio and carried out by Palestinian extremists, the the Muslim Brotherhood adviser to Pres­ TV appearances on the Muslim hit was intended to implicate Iraq and ident Ziaul Haq, works closely with the Brotherhood's current activities in Jordan, setting the stage for the over­ Muslim Students Association in the the Middle East. A leading Kuwai­ throw or murder of Saddam Hussein and United States. The MSA, the U.S. ti newspaper, AI-$iyassa. has seri­ King Hussein, the countries' respective branch of the Brotherhood, has as its alized large portions of Hostage to heads of state. Director of Education one Anis Ahmad, Khomeini. and the Iraqi news Had the plot succeeded, analysts Khurshid Ahmad's brother. Khurshid agency, INA, issued a worldwide think pro-Iraqi forces in Lebanon would Ahmad has translated Mowlana Madou­ news release on the book's proof have been wiped out; the moderate wing di's works; Madoudi was the leader of that Khomeini was installed by of the PLO would have come under fi re; the Jamaat-e Islami (Muslim Brother­ British intelligence. and the Syrian-backed radicals would hood) in Pakistan for years, until his have taken control of the organization. recent death.

EIR October 27, 1981 International 53 ITmNational

Will Ronald Reagan stick out his political neck?

by Lonnie Wolfe

The Reagan administration, 10 months into its term, A parallel failure of nerve was displayed in dealing confronts not just a few foreign policy blowups or tricky with fo reign-policy saboteurs: every time Secretary of domestic pieces of legislation, but a challenge to the State Haig opens his mouth, he has damaged the ability of the White House to govern as it was elected to AWACS propsects, (as during the funeral of Anwar do. Sadat). The White House still pretends Haig is a team During the week of Oct. 12-18, the administration player whose mistakes derive from pardonable clumsi­ was set back in its efforts to stabilize the Middle East ness. Yet why does a former official of the ADL report through securing congressional approval of the sale of that AI Haig has never been in favor of the AWACS five AWACS aircraft to Saudi Arabia, while the Presi­ deal, and still opposes it? dent's economic recovery prospects further unravelled. As for Jimmy Carter, newly returned to the U.S. On Oct. IS, the Senate Foreign Relations Committee foreign-policy arena, his treachery and vindictiveness voted 9-8 to report to the floora resolution disapproving are legendary. Carter went to the White House Oct. 13 the AWACS sale; that vote had already been written off and "endorsed" the AWACS policy. Then, as he made in the Oval Office,but the President now needs a majority his exit, he flatly refused to say that were he stiII vote in the full Senate to sustain the sale. It is that vote, President, he would have pursued the sale, although it postponed to give Reagan more lobbying time, which had been initiated by his own administration. Next, he worries the White House. delivered a speech attacking every other aspect of current Reagan policy. The AWACS case Ostensibly, Reagan was enlisting Carter's support to But Reagan's advisers thus far refuse to take what is win over Democratic votes for AWACS, but Capitol admittedly a political risk, and go after the networks Hill was scratching its head over whom Carter might lobbying to destroy the U.S.-Saudi relationship. In the ever again influence. The very fact that the man dared Oct. IS Foreign Relations Committee vote, for example, to show his face in Washington was termed by HiII the administration declined to take on the one GOP sources a reflection of the hard times beginning to Senator who voted with the Democrats to defeat the engulf the administration. sale-freshman Rudy Boschwitz of Minnesota. Sources Nor, it appears, has the White House acknowledged report that leaders of the anti-AWACS Anti-Defama­ to itself who is ultimately behind the anti-AWACS tion League openly brag of having Boschwitz in their lobby. The latter's two key Senate organizers, Republi­ pocket, but say the administration was afraid to chal­ can Robert Packwood or Oregon and Democrat Alan lenge Boschwitz because it wants the Senator's vote on Cranston of California, are members of the elite depo­ pieces of their economic package. pulation core-group, the Draper Fund. As the case of

54 National EIR October 27, 1981 Iran shows, these are the networks who seek "arc of administration wants to encourage nuclear exports to crisis" destabilizations throughout the Middle East-to the developing sector, ending the Carter administra­ cut off international energy supplies, to reverse regional tion's sabotage of these efforts; the administration has industrialization potential, and even to instigate wars, pledged to be a reliable supplier of nuclear fuel to those in order to reduce population. nations and advanced-sector partners. Reagan remains committed to two more weeks of Here too there is a problem of delivery. The U.S. back room pressure tactics, and perhaps some additional nuclear industry has been thoroughly wrecked by the promises from the Saudis on the terms of the AWACS credit-strangulation policies of Federal Reserve Chair­ / sale. Sources close to the White House report that the man Volcker. Unless those policies are reversed, the President still resists the urgings of those who would nuclear industry cannot revive, however inspiring this have him take his case to the American people; he verbal support from the White House. As at home, doesn't want to step on any toes. These sources are nuclear power in the developing sector requires credit. pessimistic about the final Senate outcome. Even if the The provision of that credit is specifically opposed by sale does squeak through, these same sources are wor­ the IMF and related institutions, along with the V.S. ried about the White House's continued ability to Treasury and State Department. Private American fi­ command support for its fo reign policy. Damage has nancial institutions and such agencies as the Export­ already been done. Import Bank still refuse to provide loans to finance such projects. They are waiting for "magic of the free North-South policy market," which Reagan referred to in his IMF speech While the AWACS sale is necessary, it is not of last month, to accomplish the job. In fact, the Exim course sufficient to stabilize the Middle East. In Egypt, Bank, (now headed by William Draper III, the son of for example, the administration's idea of a stabilization the founder of the Population Crisis Committee/Draper policy consists of tough words against Libya and the Fund) is withholding credit to Westinghouse for financ­ Soviet Union, and the dispatch of two AWACS. But the ing potential Mexican nuclear contracts. new government of Hosni Mubarak desparately needs economic development assistance, and here the White The Volcker question House has yet to even consider proposals. On the question of the V.S. economy as a whole, Bold economic-development initiatives are required, Reagan's second round of budget cuts and new tax which link the Arab countries and Israel through a increases is now a dead letter in Congress, by the comprehensive peace settlement. If Mr. Reagan's recent admission of the GOP leadership. The President's men speeches, handed to him by Haig's State Department are scrambling behind the scenes to put together a new and the lunatic monetarists in the Treasury Department, package, but the outcome of their efforts remains as are any indication, there is no chance of that at present. dubious as their success would be economically destruc­ Reagan confirmed some of the worst fears of develop­ tive. ing-sector nations in an Oct. 15 speech before the Volcker's high interest rates have undercut both the Philadelphia World Affairs Council, while the Senate U.S. industry and the bi-partisan political alliance that Committee was voting on the AWACS sale. The Presi­ was swung behind the President's initial misguided dent repeated the essentials of his call for a free-market fiscal austerity program. As even the pro-Volcker U.S. approach to development and tough conditions on press now indicates, Reagan has been told by the GOP Third World loans before the International Monetary leadership that there is no way that the party can Fund conference in Washington. This will, unfortu­ campaign if the economy stays flat. So the President put nately, be the policy that the President will take on Oct. pressure on the Fed to bring down interest rates. 22 to the North-South summit in Cancun, Mexico. It is This was confirmed by a spokesman for the New a policy designed by its authors to promote chaos York Federal Reserve, who reported that Fed strategists throughout the developing sector, and praised as a de no longer feel confident about risking a dramatic col­ facto means of genocide by the bankers and aristocrats lapse of the economy, fearing reaction from the White who control the Draper Fund networks. House (see Economics). Instead they plan to win their The only particle of hope the Reagan administration battle with Reagan by slowly taking the economy down, currently holds out to the underdeveloped sector was trying to avoid abrupt shocks that could jar the White contained in the energy policy statement issued by the House into emergency measures to provide credit and White House this month. The President took a strong other backup for industrial employment and produc­ stand in support of nuclear power, pledging steps to tion. revitalize America's nuclear industry. Well-placed The Fed, like Mr. Reagan's other enemies, is count­ sources confirm that the White House commitment to ing on the President to stay in profile,to stay in his box, nuclear energy extends beyond the U.S. borders: the to take no real political risks.

EIR October 27, 1981 National 55 Below are excerpts from the interview with Hardin. Interview Q: What about population trends in the developing sector? Hardin : There is a real problem here. I don't think that you have seen much change in the published mortality rates for the developing sector .... Let me point out a few things. When people die because of civil disorder such as what has been going on in Lebanon or Afghani­ stan or El Salvador, the official mortality statistics take no account of lives lost in that way. The people who are gathering the statistics don't count those 20 guys who The IMF is imposing were gunned down and buried in a mass grave.... The same is true fo r starvation figures in the interior the 'lifeboat ethic' of some African countries. Who knows how many people are even alive there, let alone how many are dying? ... Look at Cambodia.The mortality figures never counted Garrett Hardin, one of the most vocal depopulation all those deaths. The government never reported them, strategists, said in an Oct. 5 interview provided to EIR yet everybody now agrees that 2 or 3 million people were that the International Monetary Fund and World Bank, killed there, but they are still not reflected in the death with the backing of parts of the U.S. government, are rate ....They would not be reflected in a place like Iran now carrying out his policies. Currently a professor at either .... I can conceive of a world in which this is a the University of California at Santa Barbara, Hardin is major part of the death rate and if they are still not most notorious for a series of essays laying out a doctrine counted, then we have a fraudulent mortality and fertility .of global triage. Perhaps the best known of these is a rate. 1974 piece in Psychology Today in which he calls fo r the adoption of a "lifeboat ethic." A group of 50 people Q: You talked about cutting off aid to certain countries. representing the nations of the affluent world is in a Well, under this administration and the IMF, aid and lifeboat that has a capacity for 60. Swimming in. the loans to the developing sector are being cut back. water outside are lOG others-the developing sector­ Hardin : Well, I think that every nation will be a different begging to be taken aboard. Which 10 are to be chosen? history. I would say that what is now going on in El Only those, says Hardin, with a chance for survival, those Salvador is in a broad sense the result of overpopulation. that have lowered birth rates and proven that that they Many people, 10 years ago or even more, cited El Salva­ can sustain themselves. The others must fend for them­ dor as one of the hot spots from a popUlation standpoint, selves; if they go under, so be it. and I think that is very relevant to what is going on now. Hardin's work has been carefully studied. It has I object to all the people who blindly look at the El found praise, somewhat muted for popular consumption, Salvador thing right now as a purely political thing .... in the writings offormer Undersecretary of State George Whoever comes into power, with or without our help, Ball in his book Diplomacy in a Cro wded World. In 1974, will be powerless to do anything about the problem Hardin and the rabid population-reduction advocate because population is the root problem. William Paddock formed a splitoff of the depopulation lobby dedicated to the promotion of forced population Q: How would you update the lifeboat ethic? reduction, the Environmental Fund. The group received Hardin : Many people are being won over to that point immediate financial support from the Mellon family of view. The lifeboat ethic is the attitude and thinking of interests and political support from members of the this present administration or at least parts of it in NATO-linked Atlantic Council. Former Carter National insisting on higher standards for loans given by the Security Adviser Zbigniew Brzezinski eagerly called its World Bank or IMF. That amounts to telling the poor offices to put his name on one of the Fund's advertise­ countries, if your loan isn't one that by standard banking ments advocating that the U.S.-Mexican border be practices would be approved of, you won't get any sealed off. subsidy. We are telling these countries: "We are not When Secretary of State Edmund Muskie held his going to do this job for you. If you do bite the bullet, press conference in 1980 to announce the Carter admin­ then we'll figure out what we can do for you." istration's support fo r the newly released Global 2000 They wouldn't call it that. No political leader in any document, Garrett Hardin, an early backer of the proj­ country is going to get elected to office or stay in office ect, was among those who stood next to him. as an explicit support of the lifeboat ethic. Instead, what

56 f./ational EIR October 27, 1981 they will speak of is responsibility in international fiscal control. They especially won't do so as long as they can affairs or some such term. Well, that's all right. It is the export their excess population to the United States. As same thing and it has the same effect. I think we are Paddock and I have said, that the best thing that we moving closer to this in every aspect of policy, partly could do in the long run for Mexico is to shut down the because we have less free money to pass around in border. It wouldn't solve the problem completely, but dubious experiments thanks to the world economic con­ the immediate effect would no doubt be disastrous fo r ditions. And that is true not just of the United States but the Mexican political party. They will scream bloody of the advanced sector as a whole .... murder if we shut down the border. Let them scream ....

Q: So people like Robert McNamara .... Q: What about China? Hardin: Well, McNamara is a mixed case. As he stayed Hardin : Now, gee, China is making it and I always bring at the World Bank he became softer and softer. When he it up as the best example because it points out the right came in there he was very tough. Now the new person, model. Clausen, is taking the position that McNamara did when he firstcame in. He is going to be real tough. The soft or Q: Isn't there a lot of coercion there? partially softloans are a thing of the past. Hardin : Oh, sure there is a lot of internal coercion. But that is none of our business. We have no right to go Q: What effect will that have on an African country that around condemning people for taking care of their own depends on these loans and on aid? business. China is making it on its own, in its own way, Hardin : Well, in all these really poor countries, there is and that is the way others should do it. We have this this very small percentage of quite wealthy people who damn problem of judging people on their moral actions, control things, and they milk the economies. These peo­ imposing our Western moral value judgments on every­ ple will find ways to take care of themselves. So you thing. If we keep doing this then we are writing the won't hear too many complaints from the people who are prescription for disaster. No, I think the essential thing dying because they are not in control of things. between nations, and many people might disagree with me on this, is one of hands-off .... Q: What about the private sector? Are they going to finally come around and force through this policy, Q: The Pol Pot government, backed by the Chinese, whether they call it the lifeboat ethic or not? wound up killing 3 or 4 million people [in Cambodia]. Hardin : As I see it, what is happening in all these coun­ Hardin : We don't like that, and it may be that they are tries is that private interests from outside the country right and it may be that they are wrong. What we have to approach the countries and say we want something, say ask is: are we willing to intervene in Cambodia, take oil. And whom do they approach? The elite gets what it control of it, and I mean complete control, because you wants, namely money. Some of it goes into public coffers, can't go in a little bit; either you take complete control or but most of it goes into their private pockets ....It is in you stay out completely. This is not a "latter of saying the interest of the commercial banks to go in and try to that we like what Cambodia is doing, but we are helpless change the mores of the people to reduce population. It to do otherwise. We can speak against it if we want, but has to be done by people inside the country; the private we should confine ourselves to speaking. What I am sector doesn't have the power to make the kind of saying is it is their right to handle things their own way. changes .... We have no business telling each little individual country what to do. We are right not to interfere with Pol Pot or Q: What about a country like India? anyone else, even if we disapprove of what they are doing Hardin : I don't think that India will ever make it, be­ on these matters, unless and until it comes to the point cause being a country with some 700 million people and where we think that it is a long-term threat to mankind its popUlation still increasing as it did 20 years ago, they or to us. For example, I think we were right to intervene just don't have a chance. Mexico is an interesting prob­ in the European conflict in World War II. I think what lem. In William Paddock's book Fa mine 1975, Mexico Hitler was doing threatened our national security. But I was put into the category of "can take care of them­ think that in Cambodia, it was really not affecting our selves." I would think that things look less optimistic national security .... now. This oil makes very little difference, because it is quite apparent that the oil money is going to be chan­ Q: The Catholic Church would argue with you. Its neled to the rich and wealthy in Mexico. The Mexican teachings are against everything that you are saying. government is officially in support of population pro­ Hardin: The whole basis of Catholicism, which is univer­ grams, but the government won't really figureout how sality, is contrary to what I am saying. This concept of a to bite the bullet and turn birth control into population universal ideal or morals is too dangerous to follow.

EIR October 27, 1981 National 57 by Jesuit Michael Novak. Its purpose is to promote 'Volunteerism' "volunteer associations" as a substitute for municipal employees. The project has also been "mediating" the creation of free enterprize zones free of government A case study: the regulation, and, eventually, free of all government "interference," including provision of services. And GuardianAnge ls although the rhetoric of the Angels has shifted from "world revolution" to "free enterprise," their crime patrol is a vigilante squad and protection racket, and by Charles E. Herbert worse. "Do you want to know what the Guardian Angels are?" asked an official of New York's Transit Invoking memories of Calvin Coolidge and the United Patrolmen's Benevolent Association. "Did you ever Way, President Reagan went on television to boost hear of Adolf Hitler?" "volunteerism" as a remedy for insufficient public ser­ Are these what the President meant by volunteerism? vices. It seems that the cowboy in Reagan had been sold The administration refers inquiries on volunteerism to another "free enterprise" scheme that will in fact under­ Robert O. Woodson, current head of AEI's Mediating cut business as well as organized labor. The salesman in Structures Project. In July 1981, Guardian Angels' this case is the American Enterprise Institute, (AEI) leader Curtis Sliwa, joined forces with the AEI and which promotes the "privatization" of the social services Woodson in a conference of gangs in Los Angeles. the government has provided since the industrial revolu­ Before that, the connection had been kept secret. Nizam tion of the last century . Because they are advocates of the Fattah, chairman of New York's Inner-City Roundtable "post-industrial society," AEI sa�ants such as Milton of Youth (lCRY) and one of Woodson's subordinates, Friedman, Arthur Burns, and Murray Weidenbaum have comments: "Half the members of the Guardian Angels no qualms about undermining the services and infra­ are my gangs, the Crazy Homicides, Savage Skulls, and structure upon which American industry relies. Along Ching-a-Lings. They shift between Sliwa and me." with AEI, the Washington Post, Mobil, New York's ICRY was founded by a friend of Ayatollah Khomeini: Fordham University, Lazard Freres, and Equitable Life Ramsey Clark. Since December 1980, Woodson, Falaka Insurance are among those bankrolling the campaign. Fattah of the Philadelphia House of Umoja-an outfit Their pilot project at the moment is the "Guardian cited by President Reagan-Nizam Fattah of ICRY Angels" citizens' crime patrol, whose successful test­ and others have appeared in dozens of cities, including marketing in New York City has led to the introduction Hartford, Los Angeles, and Washington, D.C., recruit­ of similar groups in 22 cities. The groups which prowl ing to the AEI volunteerism projects, setting up tax­ the cities' subways, are made up of gang members and exempt incorporated "former gangs," usually as "secu­ others reliably reported to be still-practicing criminals. rity companies." Standing on Capitol Hill July II, Curtis "The Rock" The big push for recruitment to the AEI operation Sliwa, the 26-year-old head of the Alliance of Guardian came after a December AEI conference in Washington, Angels, Inc., addressed reporters aftertest ifying before a featuring representatives of the White House, the youth violence subcommittee of the Senate Judiciary Rockefeller Foundation, the National Urban Coalition, Committee. Sliwa posed in front of a fo rmation of Angels ABC News, and the New York Times. There was also a uniformed in army fatigues, T-shirts, insignias, and red diffe rent class of speakers: Flint Augusto of the South berets. The Washington Star was quick to note the storm­ Bronx Ching-a-Lings motorcycle gang and Sister Fa­ trooper image. laka Fattah of the House of Umoja, tied to 88 Philadel­ Two days after Sliwa's appearance, the Baltimore Sun phia youth gangs. James Hargrove, head of the Nation­ endorsed a free enterprise zone for the city, and praised al Black Patrolmen's Association, spoke on the "secu­ the Guardian Angels, in terms reminiscent of 1933 in rity companies" that he has incorporated in New York Germany: "In practice, the swagger and red berets ofthe and Philadelphia. His Diego-Beeckman Security in the Guardian Agels bring feelings of comfort to people in South Bronx is staffed primarily by "Savage Skulls" New York. More than two years later they show staying and "Crazy Homicides" at $3.75 an hour. The area is power and the group is now franchising its label where intended to become one of the firstfree enterprise zones the market-a sense of helplessness at street crime-is pending state legislation. right. Baltimore is next." Hargrove says: "We hope to put organizations like ICRY out of business, recruiting their members with The sponsors jobs; this approach is growing because law enforcement A probe into the wiring of the Angels uncovers the agencies will never see the heights of manpower of their AEI's "Mediating Structures Project," run since 1975 heyday, due to the economic crisis."

58 National EIR October 27, 1981 Anthony Francaviglia, a member of the Angels' corporate board from Bankers' Trust, indicates he .is already lining up funds to incorporate the Guardian Angels' "escort and security crime patrol" in New York City's middle-class Parkchester Housing Project. Fran- . caviglia is president of the business association there. On Feb. 1, New York Lt. Gov. Mario Cuomo EIR keynoted a Guardian Angels fundraiser. Attending were state and city officials, leading Jesuits, associates of Federal Reserve secret plan for mob attorney Roy Cohn, representatives from Equita­ U.S. ban king collapse ble Life, Chase Manhattan, and Brown Brothers Harri­ man. That was the basis for New York City Mayor Edward Koch's public sanctification of the Angels in A new EI R special report May. EtR has obtained documents, prepared by economi sts for the Federal- Reserve, which Modus operandi · prove that Paul Volker and the Fed are intent on This political operation forced the New York City "crisis-managing" a controlled col lapse of the police to establish formal liaison with Sliwa's shifting U.S. banking system. Titled "A Systematic and uncheckable Angels. Previously, police had con­ Banking Collapse in a Perfect Foresight World," ducted a wave of arrests of Guardian Angels on charges and "Gold Monetization and Gold Discipline," including violations of citizens rights in "citizens' ar­ the documents make it clear that there is a rests." specific plan behind the Volcker high interest Everything points to the conclusion that there exists rates. no traceable membership list fo r police to work with. These documents, together with a full intro­ Transit police union leaders say "It's ludicrous to ductory analysis by EtR Economics Editor David believe they could perform the job of a trained police Goldman, are now avai lable from EtR for $100. officer. They do not contribute in any positive way to the criminal justice system. Half of them probably have criminal records." Despite the Mayor's claims that

membership lists are available to police, Denis Ahern of I would like to receive the EIR Special Reports titled PBA says, "There's no identification available to us." "Federal Reserve's Secret Plan for U.S. Banking The way this "shifting membership" operates is Collapse."

highlighted by several cases. In April Sliwa's appointee Order Number(s), ______

as head of the Guardian Angels in Westport, Connecti­ D Bill me for $ D Enclosed is $,___ _ cut, Tom Coyne, was fo und with a bullet through his Please charge to my D VISA D Master Charge

head after he had publicly criticized Sliwa's leadership. Card No.,______

Sliwa claimed Coyne had never been in his organization, Signature,______Exp. Date__ but was caught in the lie when the Free Press produced photos and witnesses of the two together in uniform,

during interviews. Similarly, in August New York City Name ______

Guardian Angel Malcolm Brown was shot through the Title______head at the scene of a Brooklyn mugging. Accounts of Company______the incident are hazy, because all witnesses were provid­ ed through the Angels' informant networks. Until May­ Address,______

or Koch stepped in to clean up the group's image by City______State,_____ Zip____ _

awarding Brown a citizen's commendation, Sliwa was Te lephone ( =c='------,-: forced to waffle on Brown's ties to the gang, first area code claiming Brown was "off duty" froni the Angels, then To expedite your order, calling him "a former member." call Peter Ennis at (212)247 -8820 Sliwa also denied membership when Rhode Island State Police last month arrested three uniformed Angels Make checks payable to: on charges of car theft. This is the group the AEI has promoted nationally. Executive Intelligence Review, Dept. MC-1 , 304 West 58th Street, Whatever the President's mental image of volunteerism, 5th floor, New York, N.Y. 10019 (212) 247-8820. it shows the phenomenon in action.

EIR October 27, 1981 Natiorial 59 Congressional Closeup by Barbara Dreyfuss and Susan Kokinda

against the pipeline and works statement to President Reagan Garn : 'U.S. business should with Christian Social Union leader urging him to implement the Glob­ stay out of Siberia' and Hapsburg ally Franz-Josef al 2000 Report. If Senate Banking Committee Strauss in Germany against it. Schneider, who was the key Chairman Jake Garn (R-Utah) has Garn, who purports to ques­ force behind the letter according his way, no U.S. companies will tion much of what Wall Street to her aides, works closely with the participate in the West European­ does, asked that an , article be put Sierra Club in an effort to stop Siberian natural gas pipeline. On into the Congressional Record these two dev elopment programs. Oct. 7 Garn introduced Senate backing his resolution and detail­ Schneider led the fight in the Concurrent Resolution 41 which ing the European participation in House against them and hopes to would have the President exercise the pipeline. The article was writ­ have another chance at eliminating authority to prevent any U.S. cor­ ten by two vice-presidents of David their funding when the House poration from involvement with Rockefeller's Chase Manhattan takes up the issue of the adminis­ the pipeline; President would also Bank. tration's request for an additional . be instructed to urge European A companion resolution was 12 percent across-the-board budg­ nations to stay out of financing introduced into the House by et cut. and construction of the project. LeBoutillier (R-N.Y.) and James The resolution further calls for the Nelligan (R-Pa.). Garn intends to development of a firm U.S. policy hold hearings on the issue of U.S. with respect to the general "pro­ export policy toward the Soviet ustice Assist�nce Act motion of the development of So­ Union shortly. passesJ House committee viet energy sources." The House Judiciary Committee In his statements on the reso­ on Sept. 22 passed H.R. 448 1, the lution Garn claimed·that the pipe­ Justice Assistance Act, by a vote of line wouid increase the "possibility lobal 2000 backers 22 to 5. Sponsored by Criminal fo r economic and political black­ urgeG end to Tenn-Tom Justice Subcommittee Chairman mail" by Moscow against Western Led by Claudine Schneider (R­ William Hughes (D.-N.J.), the leg­ Europe, particularly West Ger­ R.I.) and Robert Edgar (D-Pa.), islation fills part of the void in many, which is a major participant 25 congressmen sent a letter Oct. 5 federal support to state and local in the project, although the Euro­ to Senate Majority Leader Howard law enforcement efforts that was peans, especially West German Baker (R-Tenn.) urging that he left by the dismantling of the Law Chancellor Helmut Schmidt, see drop his support for the Tennessee­ Enforcement Assistance Agency the pipeline as a major contributor Tombigbee Waterway, a project (LEAA). H.R. 448 1 would author­ to world peace. In 1978, when vital for the economic growth of ize $179 million in federal match­ Leonid Brezhnev visited Bonn, major areas in the Southeast, and ing funds for state and local gov­ Schmidt and the Soviet President the Clinch River Breeder, a pro­ ernments to implement anti-crime signed a 25-year economic agree­ gram important for the develop­ programs in areas such as arson ment and re-emphasized collabo­ ment of nuclear energy in this prevention, white collar crime, un­ ration on the Siberian pipeline, de­ country. They claimed the projects dercover "sting" operations, juve­ claring that ec onomic collabora­ are too costly in a period of budget nile crime prevention, and career tion would lay the basis for peace. austerity. Both Congressmen are criminal prosecution. The bill also In introducing ' his resolution, also major supporters of the Carter provides fo r an expedited federal the "conservative" Garn is putting administration's Global 2000 Re­ response to local areas that are himself in league with Fritz Krae- ' port, which calls for the reduction struck with a major crime problem, mer, the mentor of Henry Kissin­ of the world's population by 2 such as the Atlanta child murders ger and Alexander Haig. Kra e­ billion by the end of the century. or the narcotics plague infesting mer's group, the Institute fo r Stra­ Recently these two members of the southern Florida. tegic Trade, has been waging a House and three other signers of Observers noted, however, that public campaign in the U.S. the letter to Baker co-signed a while federal aid to budget-

60 National EIR October 27, 1981 squeezed state and local authorities and security interests of this nation areas of licensing and environmen­ remains necessary, the continued require significant improvement in tal review. It also provides for fed­ practice of ch'anneling that aid into the foreign language instruction eral management of interim spent­ areas such as white collar crime offered." Hearings were held in the fuel storage until permanent facili­ and certain kinds of political sting Subcommittee last July which ties are developed. The permanent operations only serves to maintain stressed this point. Among those solution, according to the Sept. 24 the current federal imbalance in testifying was Adm. Bobby Inman, floor statement McClure made in favor of Abscam-style operations Deputy Director of the CIA. In­ introducing the bill, will be a and against, for example, a major man told the Subcommittee that "much accelerated program for the war on drugs. the nation's "rapidly deteriorating ultimate disposal of commercial House floor action is expected foreign language capabilities were high-level waste and spen.t-fuel ele­ during this session of the 97th having "an adverse impact" on ments in mined geologic reposito­ Congress, but Senate Judiciary U.S. intelligence gathering and ries. The objective of this program Committee Chairman Strom Thur­ evaluation. "We are especia1Jy v.ul­ would be to bring on line, in the mond (R-S.C.) is not expected to nerable when it comes to the more 1988 timeframe, this nation's first move any compariion legislation exotic languages such as Urdu, commercial repository for high­ until the administration position Arabic, and Farsi." Education level waste." While the federal on the bill is known. Secretary Terrel Bell sent the Sub­ government would manage both committee a letter opposing the temporary and permanent storage bill because of the cost involved. facilities, the legislation also pro­ He also told the Congressmen that vides for full cost recovery to the the administration opposed creat­ government in the fo rm of a one oreign language study ing new programs, preferring in­ mill per killowatt-hour users fee on promotionF urged stead the block grant approach. nuclear-generated electricity, Just before adjourning for the Co­ Department of Energy spokes­ lumbus Day recess, the House man and Assistant Secretary for Post-Secondary Education Sub­ Nuclear' Energy Shelby Brewer, committee unanimously passed out testifying before a joint hearing of legislation designed to promote the earings held on major the Energy and Environment teaching of foreign languages in Hnuclear waste initiative Committees on Oct. 6, stated, " Al­ the nation's elementary, second­ Senate Energy Committee Chair­ though not totally consistent with ary, and college-level schools. man James A. McClure (R-Ida.) current administration policy, we The legislation, H.R. 3231, in­ joined with Senate - Environment acknowledge that the bill would troduced by the Subcommittee and Public Works Committee provide a quantum step forward in Chairman Paul Simon (D-Ill.), Chairman Robert Stafford (R-Vt.), providing program and policy sta­ would provide $10 million to states and Alan Simpson (R-Wyo .) and bility." Shelby Brewer added, how­ for model fo reign language pro­ Steve Symms (R-Ida.), to intro­ ever, that "we feel that this is a grams in local school districts, $4 duce S. 1662, the National Nuclear service more appropriately provid­ million for junior and community Waste Policy Act 1981. The legis­ ed by the private sector." college language programs, $13 lation provides an expedited and Supporting the administration million for universities to encour­ permanent solution to nuclear view was the liberal Union of Con­ age enrollment in language pro­ waste disposal, the uncertainty of cerned Scientists spokesman Eric grams, and $60 million for colleges which is used by environmentalist Van Loon, who testified, "We with fo reign language require­ extremists to fan popular fears and agree with the posttion taken by ments for admission or gradua­ misconceptions about the safety of the administration ...that interim tion. nuclear power. storage of a spent fuel should re­ The biJI calls for assistance to S. 1662 calls for a streamlined main the responsibility of the utili­ encourage foreign language study regulatory process by the Nuclear ties, ratber than being assumed by on the grounds that "the economic Regulatory Commission in all the federal government."

EIR October 27, 1981 National 61 National News

political statement. worth recommends outlawing strikes "The Sun- Times is a leading support­ and doing away with multi-year wage er of the dope lobby through its employ­ contracts in order to eliminate cost-of­ Battle sharpens between ment of Chip Berlet, the original author living escalators. Bosworth also advo­ of the Sun- Times slander of the National cates "free trade" and a complex system NADC and Sun-Times Anti-Drug Coalition. Berlet is a contrib­ of wage-price controls as inflation-fight­ The National Anti-Drug Coalition uting editor to High Times, the magazine ing measures. of the dope lobby and drug parapherna­ (NADC) issued a statement from New Seidman's recommendations concen­ lia industry. Berlet is also the editor of York Oct. 14 in response to a libelous trate on what he calls a tax-based in­ the journal of the National Lawyers comes policy (TIP) that would place article in the Chicago Sun- Times of Oct. Guild, the leading U.S. institution which heavy tax penalties on companies that II, titled "Anti-Drug Group Finances defends terrorists such as the Puerto Ri­ Extremists," which alleged that the coa­ grant "excessive" wage increases to em­ can FALN .... ployees. Seidman also calls for replacing lition Is a front-group money machine "The NADC has also documented fo r EIR fo under Lyndon H. LaRouche, the income tax with a tax on consump­ Sun- Times tion. Jr., Advisory Board Chairman of the that reporter Alan P. Henry is National Democratic Policy Committee. guilty of fabricating information printed Although the CDP claims to have no in the story, and of harassment of sup­ official relationship to the Democratic "Every citizen of Illinois who hates porters and contributors to the National Party, the party's national Chairman drugs should act immediately to stop the Anti-Drug Coalition. Charles Manatt enthusiastically hailed pollution by the Chicago Sun-Times of "The NADC is not illegally soliciting the Center's recommendations, claiming his and his neighbors' homes, and its in the State of Illinois. The Coalition has that it "should put to rest any lingering influence in the United States. answered every request for information thoughts that the Democrats are short "The Sun- Times is not a newspaper, by the Attorney General's officeand will on ideas and alternatives to the programs it is the dirty tricks propaganda arm of continue to answer every request. The and policies of the Reagan administra­ one-worldists associated with the Trila­ NADC has learned that the Attorney tion." teral Commission, the Aspen Institute, General's office held a lengthy meeting A number of CDP luminaries also be­ and the University of Chicago .... with reporters from the Sun- Times. We long to the Democratic Strategy Coun­ "Marshall Field, fo under of Field are investigating the legality of that cil, an official party group pulled to­ Enterprises and publisher of the Sun­ meeting at the present time." gether by Manatt. Times, uses his profits from that news­ paper to fu nd terrorist linked operations through a tax-exempt front called the Field Foundation. This fo undation, headed by Morris Abram, a fo rmer law Democratic think tank: Philadelphia teachers partner of pro-Kl1omeini operative Ramsey Clark, has given millions of dol­ ban strikes, cap wages face Catch-22 lars to the Institute for Policy Studies, A Washington-based think tank closely Only 700 teachers have returned to work and the International Commission of Ju­ allied with the liberal wing of the Demo­ as of Oct. 16 fol lowing a court order by rists, which has come to the legal defense cratic Party issued a series of proposals Common Court Judges Ed Bradley and of terrorist murderers such as the West Oct. 15 on ways to combat inflation. The Harry Takiff which voided their contract German Baader-Meinhof Gang, the sharply anti-labor proposals suggested as terminated. The teachers have been on Popular Front for the Liberation of Pal­ by the Center for Democratic Policy strike since early September with de­ estine, the Italian Red Brigades, and (COP) appear in a 20,000 word pam­ mands that the Philadelphia School other radical groups. The Field Founda­ phlet. Board honor their two-year contract, tion also fi nances the efforts of groups The CDP recommendations were which was to accord them a 10 percent like the Center fo r National Security produced by a panel of Democratic econ­ wage hike this fa ll. Studies and the Youth Project to engage omists, including Barry Bosworth of the The judges ruled that the city's fiscal in lawsuits, exposes, and investigations Brookings Institution, Laurence Seid­ crisis justified the school board layoffs of of law enforcement officials and agents man of Swarthmore College, and Daniel 3, 500 teachers and rescinding of the wage of U.S. intelligence agencies . Mitchell of the University of California hike, and that this action unilaterally "James Hoge , publisher of the Sun­ at Los Angeles. The most extreme rec­ terminated the contract. Since the state's Times is a member of the Trilateral Com­ ommendations were put forth by Bos­ public employee law stipulates that mission ... [who is] reported to have worth, who was the director of the Coun­ unions must exhaust all negotiating pro­ invited the anarchists on trial for rioting cil on Wage and Price Stability under cedures after their contracts expire, the in Chicago in 1968, including cocaine . President Carter. Arguing that the key court ruled the immediate strike action dealer Abbie Hoffman, to his home as a ca use of inflation is wage increases, Bos- illegal!

62 National EIR October 27, 1981 Briefly

• THE GLOBAL 2000 report of the Carter administration is con­ firmed to remain on the State De­ partment's agenda. Accepting the The area labor movement is mooting report's conclusion that up to 2 a general strike to support the teachers. billion people must be eliminated The union is being fined $15 ,000 a day by the turn of the century, the DOS under the Bradley-Takiff court order. Bush challenged has set up an inter-agency task force which next month will begin on Latin America tour to rework the policy formulations On the first leg of his tour of three Latin in terms of ideology. American countries-the Dominican DO E launches nuclear Republic, Brazil, and Colombia-Vice­ • HENRY PRECHT, the DOS President George Bush was caught off official who helped coordinate the education campaign guard by harsh criticism of U. S. econom­ Shah's overthrow from his post as The U. S. Department of Energy is pre­ ic policy expressed by his hosts. head of State's Iran desk, main­ paring to launch a multimillion-dollar In an appearance Oct. 12 before the taining close ties with all the op­ public information campaign to undo Congress of the Dominican Republic, a position groups including Kho­ the fo ur years of Carter-supported agi­ country considered a U.S. ally, Bush was meini's networks, has suddenly re­ tation against nuclear power. not allowed to deliver his speech until emerged because of his new post: The effort, outlined in a memoran­ several legislators had made their Deputy Chief of Mission in Cairo, dum to the Assistant Secretary for N ucle­ charges that U.S. interest rates and sugar Egypt. ar Energy of the DOE dated Sept. 24, is tariffs were destroying the Dominican explicitly aimed at creating public sup­ economy. The legislators ignored Bush's • DAVID STOCKMAN has sent port for this month's pro-nuclear state­ preoccupation with Cuban and Soviet the White House a recommenda­ ment by President Reagan. subversion in Latin America. tion to dismantle the DOE and The memorandum states that "the The Brazilians burned Bush Oct. 14 create in its place a Nuclear Devel­ use of nuclear energy has important im­ on the Volcker question and succeeded opment Agency, sources report. plications for our national economic in winning a U.S. pledge that Brazil Stockman proposes to move the well-being, improved national security would be granted "special case" treat­ inertial fusion program under and reduced environmental impact asso­ ment to end Washington's blockade of complete security wraps in the De­ ciated with energy production," and pro­ enriched nuclear fuel exports contracted fense Department and to send high poses bringing other cabinet-level offi­ for a power station built by Westing­ energy basic physics to the Nation­ cials into the information effort. house. al ScienceFoundation . Fusion and Steps outlined in the campaign in­ Through Bush, the Brazilians sent a fissionwould be transferred to the clude submitting editorials and articles last-minute warning to Reagan that he new agency, but without the na­ to the press; public appearances by DOE switch from Volckerite to growth-orient­ tional stature of a cabinet-level officials; materials for schools; coopera­ ed policies before Cancun. Brazilian For­ head to promote these areas. tion with labor, civic and professional eign Minister Saraiva Guerrero ex­ organizations, and with the nuclear in­ plained in an interview with Folha de Siio • JOHN HOLDRIDGE, Assis­ dustry; attendance at meetings of local Paulo Oct. II, "The developing world is tant Secretary of State for East and state government officials to enlist an optimal thing for the industrialized Asian and Pacific Affairs, is re­ their support; seminars for media repre­ countries, since it implies an expansion ported to be on the outs with his sentatives; and efforts through the Inter­ of markets.. .. It is not a zero-sum boss. No enemy of Peking Hold­ national Atomic Energy Agency. game in which we win, and the devel­ ridge shows too much attention to In sum, the plan "should be designed oped countries lose an equal amount." other Asian nations' response to to counter the prevailing misconceptions The Brazilian Foreign Minister Sar­ the China Card, Haig concludes. about nuclear energy in order to enable aiva Guerrero indicated in an Oct. II the public to consider nuclear energy on interview with Folha de Siio Paulo that • THE AMA finds marijuana a its merits relative to other energy fo rms, Bush's cold war rhetoric will not wash in dangerous drug whose use should and to understand the impact which fa il­ Brazil either. "The South Atlantic is be studiously avoided, reports the ure to expand the use of nuclear energy more of a priority for Brazil than for the the Oct. 16 issue of its Journal. would have on the economy, national Americans," he declared, "but we view it Researchers for the American security, and public health and safety." as an area for political-not security or Medical Association conclude that Also included is a directive to the military-action." And he laughed off the drug causes a number of dele­ Office of the Science Advisor and to the the idea of Russian bases being placed in terious physical and psychological Surgeon General to commission a "blue­ Angola to threaten oil routes as "contra­ effects. ribbon panel to certify the negligible ra­ ry to the Angolan Constitution and con­ diation effect of nuclear power plants." trary to all Angolan interests."

EIR October 27, 1981 National 63 Eye on Wa shington by Stanley Ezral

The Countess de Menil is also achieving zero population growth. a major financial backer of "friend (These include abortion-at-gun­ of the oppressed" Mickey Leland. point and promotion of infanti­ When I informed the Congress­ cide.) man's legislative assistant of the Packwood was a member ofthe Where did they get Countess de Menil's involvement President's Commission on Popu­ with the Muslim Brotherhood, she lation and the American Future, their Zbig ideas? blurted out, "But we know her appointed at the urging of Henry The Department of State is in large very well!" and refused to discuss Kissinger by President Nixon in measure continuing the Zbigniew the question further. 1972, and headed by John D. Brzezinski policy of strategic alli­ Rockefeller III. The Commission 'The Pakistanis have ance with the fundamentalist Mus­ issued a series of radical Malthu­ lim Brotherhood which put Kho­ their own style' sian "zero population growth" meini into power and killed Anwar The same day the State Depart­ proposals, and proposed that nu­ Sadat. When I asked State Depart­ ment announced its approval of clear power expansion be halted to ment spokesman Alan Romberg in the Muslim Brotherhood, Robert control popUlation growth. mid-October if there were not a re­ Neumann, Reagan's former Am­ According to Packwood, there consideration of Haig's policy of bassador to Saudi Arabia, spoke at are too many children in the world, military alliance with the Muslim a rally of Arab-Americans at the so abortions and adoption should Brotherhood regime of Ziaul Haq Sheraton-Washington Hotel. be encouraged. As a legislator, he in Pakistan, he stated unequivo­ When I asked this fr iend of has sponsored every environmen­ cally that there was no considera­ Arab moderation about the United talist bill to hit Capitol Hill, and tion of such a change. I asked him States' continuing alliance with the was an outspoken proponent' of if he would make a statement Muslim Brotherhood in Pakistan, trucking deregulation. about Zia's connections to the he argued that "Islamic fundamen­ Packwood's colleague Alan Muslim Brotherhood to explain talism" was different in each coun­ Cranston has an even deeper pedi­ the value of that alliance to United try. "Pakistani fundamentalism gree. In 1938, he was invited to States' security. He not only re­ has its own Pakistani character. It Italian-occupied Ethiopia by Mus­ fused to comment, but refused to is different from Iran." solini and wrote articles denounc­ look into the question and clarify He went on to explain that in ing the "atrocities" committed Zia's relationship with the Broth­ Iran the fundamentalists had wide­ by the Ethiopians who resisted the erhood at any point in the future. spread popular support, whereas Italian invaders. Following World in Pakistan the fanatics were con­ War II, Cranston played a major French countess slips centrated in the government. Al­ role in keeping the Mussolini­ Houston a mickey though this explained why that backers among Italian "black no­ Three days after Sadat's assassina­ government had to murder its last ble" families solvent and powerful. tion, the State Department an­ electoral opponent, Zulfikar Ali He then spent the next seven years nounced that it would allow Mus­ Bhutto, Robert Neumann could of his life as a leading campaigner lim Brotherhood leaders from not explain how that made the F- ' for the United World Federalists, around the world to enter the 16 deal kosher. the predecessor organization to the Club of Rome. United States itself to participate Two ZPGers leading the in a Schlumberger family-spon­ In 1981, Cranston applauded sored organizing conference at the anti-A WACS fight the Israeli bombing of Iraq's civil­ Rothko Chapel in Houston, Texas. Leading the Senate fight to ian nuclear research facilities, and Congressman Mickey Leland block President Reagan's decision called for the United States to halt (D-Tex.) of Houston should be to sell the AWACS to Saudi Arabia all development aid to India unless feeling a bit uncomfortable about are Republican Robert Packwood India abandoned its own nuclear the Muslim assassins' gathering in of Oregon and Democrat Alan development program. Cranston his home city. The Schlumbe'rger Cranston of California-both has more recently helped lead the heiress hostessing the event is the members of the notorious Draper Democratic Senate group to block Countess Dominique de Menil, a Fund, whose Population Crisis effective attacks on the economy­ leading financial angel of the Committee has repeatedly en­ wrecking policies of the Federal Texas Democratic party. dorsed "Chinese methods" of Reserve.

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