Executive Intelligence Review May 13. 1980 $10.00

Europe resists Iran caper manipulation Why Secretary of State Cyrus Vance resigned The wreckage of the Carter administration

The Aquarian Conspiracy's road to George Orwell's 1984 [THIS PAGE IS INTENTIONALLY BLANK] Editor-in-chief: Daniel Sneider Associate Editor: Robyn Quijano Managing Editors: Kathy Stevens, Vin Berg Art Director: Deborah Asch Circulation Manager: Lana Wolfe

Contributing Editors: From the Lyndon H. LaRouche, Jr., Criton Zoakos, Nora Hamerman, Editor-in-Chief Christopher White, Costas Kalimtgis, Uwe Parpart, Nancy Spannaus

INTELLIGENCE DIRECTORS: Africa: Douglas DeGroot Asia: Daniel Sneider Counterintelligence: Jeffrey Steinberg Economics: David Goldman Energy: William Engdahl and Marsha Freeman Europe: Vivian Zoakos Latin America: Dennis Small Law: Felice Merritt I n the early sixties the u.s. space exploration effort captured the Middle East: Robert Dreyfuss imagination of the population, children dreamed of being astronauts Military Strategy: Susan Welsh and scientists, and the future of the nation and the individual family Science and Technology: Morris Levitt was defined by the need for progress and an advanced education for Soviet Sector: Rachel Douglas all the nation's youth. United States: Konstantin George Today an entire generation of youth is addicted to drugs and rock United Nations: Nancy Coker music, and environmentalists, yoga freaks, transcendental medita­ INTERNATIONAL BUREAUS: tionists and biorhythm kooks consult their horiscope to determine the Bogota: Carlos Cota Meza future. Bonn: George Gregory And so do many of our elected officials. and Thierry LeMarc Brussels: Christine Juarez Governors take drugs and meditate, mayors are flagranthomosex­ Chicago: Mitchell Hirsch uals, presidents believe in UFOs, and one U.S. Senator, once an Copenhagen: Vincent Robson astronaut, has called for a congressional investigation to determine Mexico City: Josejina Menendez Milan: Muriel Mirak the role of extraterrestrial beings in the injury of cattle in his state. New Delhi: Paul Zykofsky What happened? Paris: Katherine Kanter The moral, material, cultural and intellectual decay of the nation and Sophie Tanapura is not a sociological phenomenon, but a deliberately induced social Rome: Claudio Celani Stockholm: Clifford Gaddy crisis. Washington D.C.: Laura Chasen Our Special Report this week, The Aquarian. Conspiracy's Road and Susan Kokinda to Orwell's 1984, takes you directly to the controllers of the social Wiesbaden: (European Economics): Mark Tritsch and Laurent Murawiec engineering laboratories who have used media, drugs and bestialist psychology to destroy the nation in what they now openly call the Executive Intelligence Review is published by New Solidarity InternationalPress Service "Aquarian conspiracy." 304 W.58th Street. New York. N. Y.lOOI9. Contributing editors Lyndon LaRouche and Criton Zoakos de­ In Europe: Campaigner Publications. scribe what this now "open" conspiracy is really all about: mind Deutschl. GmbH. + Co. Vertriebs KG Postfach 1966. D.6200 Wiesbaden control and manipulating the population's "self image" away from a commitment to progress, and ultimately the total destruction of Copyright' 1980 Yew Solidarity science and sanity. International Press Service All rights re.H'rI'ed. Reproduction in whol" or in part without permissioll.l'trict/y prohibited.

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I1mContents

Departments Economics

1 From the Editor-in-Chief 6 First Penn in receivership, and there's more to come 5 Editorial The leading bank in Philadelphia Humor and a way is the subject of the biggest out of the mess bankruptcy proceeding in American history; the leading 52 Dateline Mexico bank in Chicago is dumping executives as it teeters on the Kennedy and the Virgin brink. With Paul Volcker at the of Guadeloupe helm, who can be sure that any institution is safe? 53 Middle East Report Can OPEC be reunified? 8 Argentina's Friedmanite 58 Congressional Calendar bank collapse

60 Campaign 1980 10 International Credit Substitution Account killed 61 Energy Insider Will Carter use Iran to ration? 11 Agriculture Pot and pesticides 64 Facts Behind Terrorism The environmentalists 12 Foreign Exchange look to Iran The dollar's deepening slide

14 Corporate Strategy The end of the family car

15 Trade Review

16 Construction: How Volcker brought the house down

18 Business Briefs Volume 7, Number 18 May 13,1980

Special Report International National

40 The Iran rescue caper: 56 How EIR knew where , the wrecltage of the Volcker would lead Carter administration What happens to an industrial How the aborted U.S. "raid" was superpower if you increase staged, and exactly why it failed, interest rates, reduce energy are not entirely clear. But iUs consumption levels, and inhibit clear that, with Cyrus Vance's exports? An audience of resignation and more to follow, professional economists: what was left on the Iranian businessmen, farmers and foreign A still-shot from the Hollywood rendering sands was the wreck of the embassy representatives in of "Hair," heralding the "Age of present American government. Washington were stunned as Aquarius." Photo: UA EIR's Dr. Uwe Parpart, a 43 The rescue raid designer of the LaRouche­ 20 The Aquarian Conspiracy's Riemannian economic model, Will Brzezinski road to Orwell's explained that America faced not 1984 try it once more? The New Left, international only depression, but loss of the very capacity for recovery if the terrorism, the counterculture, the 45 Why Secretary homosexuals, the proliferation of Volcker program plus "energy Vance resi ned psychotropic drugs-these are g conservation" were continued for not "sociological phenomena," even 3-6 months more. but carefully planned projects of 46 The EEC summit the social-psychology research Europe resists Iran 62 National News institutions. Their creators now caper manipulation publicly proclaim them all "a single movement." Patiently and 48 The Kremlin methodically, the population of 'The U.S. is on the the United States is being brink of madness' brainwashed. Documentation: Interviews with 49 What the press Dr.William Whitsun of "Novus," is saying and Stanford's Willis Harman 51 The Bogota affair 22 Tavistock: 'mother' of planned madness Why the terrorists were the winners 25 Stanford institute's 54 International Intelligence 'images of man'

27 Crisis management: Aquarius goes public

34 The difference between their science and ours

38 The Clearinghouse: 'new age' in Congress

Editorial

Humor and a way out of the mess

Giscard, Schmidt and Carter are taken prisoner by ship to reassert the necessity of a war-avoidance the Iranians, and brought in front of a firing squad. rather than a war-provocation policy. Since then, As the gunmen level their sights on Giscard, he, the EEC has strongly rebuffed Britain's Maggie thinking quickly, screams earthquake! In the fray, Thatcher, Helmut Schmidt has decided to visit he escapes. Moscow, and the U.S. population from the trade Back in position, the Iranians take aim at unionists, scientists and military on up to the ruling Schmidt, and as usual, following Giscard's lead, he patrician circles have been shocked out of compla­ screams "flood!" And in the fray, Schmidt, too, cency. escapes. Now, having deployed humor, a crucial arm of All lined up again, the riflemen aim at Carter. courage, world leaders must relaunch a war-avoid­ Carter tries a repeat performance Ii la Schmidt and ance strategy. Such a policy was begun in May Giscard. 1978 when Schmidt last met with Soviet President He screams "fire!" Brezhnev and both agreed to broad ranging trade The above story, was narrated on April 29 by and development deals between the two nations. the West German daily Die Welt and was apparent­ Later the European Monetary System was created Iy being circulated around the European Commu­ with the stated purpose of stabilizing the world nity summit meeting in Luxembourg. monetary system and opening the way for the The following day, another West German daily, European Monetary Fund to supply cheap devel­ Die Zeit, ran an article entitled, "The Bomb in the opment credits for technology transfer to the White House," by Wolfgang Ebert. "The Ameri­ Third World. cans have the bomb. The Superbomb. It is in These first steps ofa war-avoidance policy must Washington ....in the White House. be taken up again as the basis for the creation of a " .. .It makes no distinction between good and new gold based monetary system that will redefine evil. That is why we are so afraid ... The Americans the ground rules for detente and end the rule of call it tenderly, 'Jimmy'." Malthusian depression economics. "Dr. End-Game" tells us of the bomb: "Ac­ The Executive Intelligence Review along with cording to the recent experience with American the Fusion Energy Foundation has made such technology, there is still a certain chance that it economicand development planning our business. might not function when the going gets tough." Our LaRouche-Riemann economic model pro­ This story, which we reprint in full in the vides the conceptual tools and the program to pull International Report, captures an important shift the world out of the mess. in world politics since Secretary of State Cyrus We have held seminars in Washington, Paris, Vance resigned after the humiliating spectacle of Milan and other cities to present our groundbreak­ the Iran rescue caper. The humor from the gen­ ing approach to the science of economic develop­ erally "respectful" West German press shows a ment. Diplomats, government officials, farmers certain courage, a distancing from the flight-for­ and industrialists have sat down with us to discuss ward insanity of the Carter administration, the our program for the industrial development of capacity to say no, we won't go along with this India, or the way to turn around the destruction of insanity, not even for the "unity" of the alliance. U.S. industry and technology. In the coming The fact that Vance himself refused to back weeks, seminars on the LaRouche-Riemann model "the first action of World War III" went a long will take place in other cities throughout the world. way in allowing the more responsible world leader- Join us.

EIR May 13, 1980 Editorial 5 �TIillEconomics

First Penn in receivership, and there's more to come

by Richard Freeman

Perhaps the largest bankruptcy process in U.S. banking tures have had to cut back on their bread and butter history began April 28, as the Federal Deposit Insurance loans to industry and agriculture, which constitute their Corporation (FDIC) poured a $1.5 billion loan and bail­ margin of profitability. First Penn's situation of watch­ out package into the ailing First Pennsylvania Bank. The ing tens of millions of dollars in its government securities emergency measure was taken to forestall the biggest portfolio get wiped out as Volcker's moves took out 20 collapse since the Bank Holiday of 1934 boarded up U.S. to 40 percent of their Treasury's face value, is not atypi­ banks across the country. The price tag on the rescue cal. exceeds by far any previous such bailout. But a banking collapse, while a terrible thing, is not The same day that First Penn was being rescued, in altogether despised in certain quarters oflower Manhat­ the board rooms of First Chicago Bank a decision was tan and Washington, D.C. Such a collapse, so the reason­ reached that the failures occuring there would best be ing there goes, provides a chance to reorganize the resolved by a general scapegoating of the bank's chair­ economy from the top down along deindustrialized man, Robert Abboud, who was given the boot. Not far Schachtian lines. Moreover, for every bank failure, there away, in the executive suites of First Wisconsin Bank, the is a golden opportunity for a giant New York City bank ticker tape reported that First Wisconsin's loans to Ar­ to come in and pick up billions of dollars in assets at gentinian banks, totaling $1.5 million, might go up in bargain basement prices. It is f9r this reason that last smoke in the general banking crisis underway in that month an unholy alliance of ultra-liberal Rep. Henry country. Reuss (D-Wis.), chairman of the House Banking Com­ This general atmosphere led the Wall Street Journal mittee and bank executives Walter Wriston of Citibank of April 28, in something of a panic, to report in an and David Rockefeller of Chase Manhattan joined to article entitled "Behind the Signs at the FDIC", that that ram through Congress the "Depository Institution Der­ august body might lack the funds-currently $10 billion egulation Act." This bill, geared toward crisis periods, is is in its kitty-to stem a run on U.S. banks. intended to steer the ensuing shakeout in the banking The FDIC action at First Penn can reassure no one as system toward recasting the U.S. banking system along long as Federal Reserve Board Chairman Paul V olcker the British model-where five to 10 superbanks, operat­ is at the helm. Volcker's actions in tightening credit ing across state lines, call the shots on the entire econo­ conditions that started in October 1979, have now pushed my. A quick glance over one's shoulder at the wreckage the banking system to a point of no return. Many U.S. known as the British economy shows how well that banks have nonperf orming assets that outstrip their works. performing loans, but because of Volcker credit stric- The firstPenn bailout came as the bank was about to

6 Economics EIR May 13, 1980 The Federal Deposit Insur­ ance Corporation was cre­ ated during the depression, to insure banks against a re­ peat of the "Black Thurs­ day" collapse. But today, it is an instrument for triage of selected banking institutions. report $100 million in losses for the second quarter of The FDIC is gearing itself up for further operations. this year. As part of the agreement, the FDIC put $325 Jack Guttentag, the bank expert at the Wharton School million and a consortium of 26 banks put $175 million of Finance, told EIR April 30 that "the FDIC's kitty of into capital debt, for a total of $1.5 billion. In addition, $10 billion is not large enough for the tasks that lie ahead the 26 banks agreed to put up a credit line totaling $1 fo r it. Currently, people at the FDIC are working with billion. Reuss and Proxmire to expand the credit line that the The terms of this bail-out disclose more than meets FDIC had with the Treasury, which is already there and the eye. The contribution by the FDIC and 26 commer­ implicit, into an explicit and unlimited credit line." cial banks is being done at a price the "rescuers" are The cases of First Chicago and First Wisconsin may being offered warrants, redeemable in 7 years, for 20 prove the first banks to be given an FDIC "rescue." million shares of First Penn stock at $3 per share. This First Chicago is a bank that has long been .troubled by will give the FDIC and the banks 56 percent ownership a poor bond portfolio, and directly affected by the of First Penn. The offered price of $3 per share is one­ Volcker credit crunch. Through all of 1978 and through half the current market price of First Penn's stock and the end of the third quarter of 1979, First Chicago's less than one third the stock's book value ! Thus the quarterly profits were in the range of $30 to $35 million. FDIC and 26 commercial banks are being handed major­ In the fourth quarter of 1979, its profits plummeted. ity control of First Penn at a song. Capitalizing on the difficulties at First Chicago, a What will the FDIC do with ownership of a bank. fa ction of the First Chicago board with friends in high The answer is sell it off to another bank, once the dust places and connections to dirty money networks began a has cleared. First Penn was not rescued: it wasjust barely reorganization of the bank. Ben Heinemann, the head of held afloat. First Penn is also getting large doses of Northwest Industries and a long-time member of First money from the Federal Reserve's discount window in Chicago's board, took over control of the First Chicago the range of $500 million to $1 billion. Indeed, what is executive committee, having himself appointed as its going on at First Penn is what happened in 1974 when chairman. Heinemann then had Robert Abboud, First Franklin National Bank was propped up long enough Chicago's chairman who is kown to favor industrial for a buyer to be fo und. lending, outsted. Heinemann is a crony of both Henry As fo r the most likely candidates to purchase a decap­ Reuss and Commerce Secretary Phillip Klutznick, who itated First Penn, the front-runner is the overly eager has been implicated in drug-related dirty money net­ Citibank, which made the largest bail-out loan to First works run from Chicago. He is also the individual re­ Penn of the 26-bank syndicate. sponsible fo r asset-stripping the Milwaukee Road which

EIR May 13, 1980 Economics 7 his Northwest Industries owns. At this point, there can be no doubt that if the First Penn's of the U.S. banking system go belly side up, the Argentina's other smaller regional banks can't be far behind. This is the intention ofthe giant New York banks which encour­ aged the passage of the Depository Institution Deregu­ Friedmanite lation Act of 1980, which calls for "survival of the fittest" deregulation warfare between banks. In depression con­ bank collapse ditions, this always means that the biggest with the best connections to the City of London come out on top. In by Mark Sonnenblick addition to the already passed banking law, therefore, Citibank's Walter Wriston, who called for "streamlining The chain-letter collapse of Argentina's financial insti­ the banking system" in congressional testimony this tutions could have major ramifications for the interna­ month, has supported an emergency FDIC bill, now tional banking system. sponsored by House Banking Committee chairman On April 25, the Navy component of the Argentine Reuss and his Senate counterpart Proxmire, to allow military government forced the central bank to intervene interstate banking, and undo the McFadden Act which in three banks which were rapidly going under. Banco de fo rbids such interstate banking. los Andes, the largest private bank in the country, was The granting of interstate banking is just the clear­ among them. ance Citibank needs to begin its own reorganization of The current panic was triggered by the March 29 the U.S. banking system by gobbling up the failures announcement that the central bank was liquidating produced by Volcker's depression. New York's Citibank Argentina's number two bank, Banco de Intercambio already has banks to spring into operation: it owns a $1 Regional. As it became clear that most of the banks billion bank in Miami under Edge Act laws; a South which had engaged in a whirlwind of speculation had Dakota Bank; an option to buy a Chicago bank; and 400 their portfolios filled with bad debts of clients they had credit card offices in 40 states, which could start doing helped to bankrupt, the run began. Depositors lined up banking fu nctions if permission were granted. for blocks to move their funds from the local banks to The bank reorganization has very high stakes. "The less vulnerable state and foreign banks. Some banks First Penn bail-out was just a test-case," said Richard reportedly lost 75 percent of their deposit base in a Wanlin, the emergency coordinator at the Controller of month. the Currency office at the U.S. Treasury. Wanlin is the Pressures from military men, many of whom had go-between the Controller of the Currency's office and substantial stakes in the crumbling banks, forced the the crisis management Federal Emergency Management government to scrap its doctrinaire "laissez-faire" atti­ Agency (FEMA), which is running a top-down reorgan­ tude by which the "unfit" would be allowed to die. Just ization of the economy. Wanlin is also connected with to try to control the pace of the banking collapse, the the Federal Financial Institutions Examination Council. central bank last week gave peso depositors full FDIC­ This council was set up in March 1979 deriving power type insurance and advanced $1 billion in emergency fr om the Financial Institutions Regulatory and Interest funds to the stricken banks. Despite the bail-out opera­ Rate Control Act (PL 95/630) and its current chairman tion (which is likely to cost the austerity-ridden federal is Comptroller of the Currency, John Heiman, who is government up to $4 billion), most Argentines and the Wanlin's boss. "We are putting together powers that will respected IBCA Banking Analysis in London expect bring the banking reform to a high point," he added. several dozen other institutions to fo ld in short order. "Look at the emergency powers that we have. We can At least one uninsured credit union, with 35,000 use Emergency Banking Regulation # 1, which was wheat industry employee members, had failed to gain passed in late 1962 during the Cuban missile crisis. Let us cash to meet withdrawal demand as a result of its funds say there was a war between Iraq and Iran or the south is being tied up in the liquidated B.I.R. banks and deposi­ bombed. Under this regulation, we can merge banks, tors whose money is locked into closed banks are dump­ shift fu nds, do whatever is necessary." ing their holdings on the stock market at any price, Wanlin added that he was in Alabama during the resulting in stock prices plummeting 30-50 percent over floodsthere last year, when FEMA was there supposedly the past six weeks. to help flood control. "While we were there we ran simulated tests on how to run the Birmingham banks and Deregulation and bust merge them after nuclear attack." When asked whether Argentipa's banking collapse was caused by precisely his work on flood control was incidental, Wanlin re­ the same kind of Friedmanite "deregulation" policies sponded quickly "of course." exemplified by Wisconsin Rep. Henry Reuss's Banking

8 Economics EIR May 13, 1980 Reform Act now pending in the U.S. House. Monetarist foreign banks who lost an estimated $80 million loaned Finance Minister Jose Martinez de Hoz deregulated the to the defunct B.I.R. banks in 1977 to permit them to borrow and to lend at A specialist who wrote a study of the Argentine whatever interest rates the "free market" would bear. De banking bubble for the World Bank last August told Hoz acted on the basis of classical doctrines of economic EIR, "these little banks shouldn't be playing in the liberalism with the justification that it would bring into tropical leagues, because sooner or later you're gonna the country the billions of dollars needed for its "eco­ get burned." This experience could help persuade lenders nomic reconstruction" fr om the hyperinflationary break­ already queezy about the LDCs' ability to service their out at the end of the Peron administration. debts to stop lending to the whole block of countries. Argentina was transformed into a "banker's para­ For example, foreign bank representatives in Rio dise," sucking in what First National of Boston estimates told the Brazilian daily Gazeta Mercantil that "more to be $4.5 billion in "hot money" from international than 500 banks consulted refused to participate in the speculators who clear 3 percent profit per month in the $250 million Petrobras loan syndication headed by Deut­ "Argentine banking bubble." De Hoz generously in­ schebank and the Bank of America." Brazil, which is sured the speculators from exchange risk by announcing conservatively estimated to ha ve to borrow $14-16 billion a year in advance monthly devaluation rates less than to make ends meet this year, was able to floatonly one half the country's 160- 180 percent internal inflation rate. $70 million bond and squeeze through the solitary $250 As befitting a nation run by Friedmanite policies, million loan during the firstthird of the year, according interest rates became sharply positive in respect to infla­ to official information leaked to 0 Estado. tion, leading the local middle class to jump on board While the "public" line of the bankers is that they "the Argentine bicycle." The Times of London reported: want shorter terms and a quarter percent more spread, "With rocketing prices and land values, people are sell­ Planning Minister Delfim Netto's trip to Europe last ing their houses and taxi drivers their cars to cash in." week showed little disagreement there with American The de Hoz tactic worked. The vaunted "savings bankers' insistence that Brazil submit to IMF condition­ rate" rose to a 28 percent of GNP. But only 8 percent of alities. The Brazilian daily Folha attributes the recent the GNP was invested in productive activities. purge of the raving nationalist General Carlos de An­ What made the orgy of usury possible was the desper­ drade Serpa from the Army high command to his expect­ ation of Argentina's once-dynamic industrial sector. The ed leadership of military opposition to an IMF-takeover de Hoz team of monetarists sought to turn the country of Brazil. into one big farm by instituting a "free market economy" in which manufacturing would lose its former tariff protection and subsidies and be forced to pay through Can the American the nose for energy and other government services. Such policies decapitalized industry, while the speCUlative econornyrecover? credit market drained funds away from long-term invest­ A series of seminars on ment or direct capitalization. Industrialists had to turn to the legalized usurers and pay the incredible interest the LaRouche-Riemann rates,just to try to keep afloat. Economic Analysis But, after two years of banker euphoria, the high interest rates and the increasingly depressed economy sponsored by made the creditors unable to shoulder their debt burden, the Executive Intelligence Review dragging down the banks with them. The worst may still and the Fusion Energy Foundation. be to come. Argentina's largest corporate combine, Sas­ The LaRouche-Riemann economic model Is the etru, though centered in agro-business, is known to be only econometric model to forecast with accu­ unable to repay the $500 million it owes to the banks. racy the impact of the Carter administration's With a "severe recession" begun, the pace offailures will "anti-inflation"policies. undoubtedly escalate throughout the economy. The crisis goes far deeper than "isolated problems In New York: due to financial mismanagement by a few unscrupulous Wednesday. Mqy 28.2:30 PM institutions" or "a temporary effect of the rapid decrease City Squire Hotel 7th Ave. & 51st st. in inflation catching a few insitutions with high interest Registrationfee: $50 per person liabilities and low interest assets" -explanations offered For more information contact: by defenders of de Hoz. Leif Johnson. EIR. 304 W. 58 St . . New York. N.Y. 10019 The New York Times targets First National of Seattle or call (212) 247-8820 and the very shaky First Wisconsin as being among the

EIR May 13, 1980 Economics 9 InternationalCredit by Peter Rush

Substitution Account killed Fund in financing deficits. The IMF made no progress toward official control of IMF sources themselves under­ OPEC's surplus or displacing the dollar at their recent scored after the Hamburg meeting Hamburg meeting. that "no commitments were given" by the Saudis or anyone else from OPEC. IMF spokesmen also den­ ied to EIR a report by Le Monde T he plan for a Substitution Ac­ in particular derided the idea of correspondent Paul Fabra that the count was quickly defeated at the tying up gold reserves to back IMF Saudis and Gulf states are "espe­ April 24 session of .the Internation­ "funny money" instead of using cially receptive" to the proposal al Monetary Fund meeting in the gold, as envisioned by the because they are being offe red bet­ Hamburg. The Carter administra­ European Monetary Fund fr ame­ ter-than-market returns on their tion-backed proposal would have work, to directly back the dollar presumptive loans to the Fund. officially displaced the dollar as and the other leading international "The Arab countries have al­ the world's principal reserve cur­ currencies. ready expanded their loans to the rency. "Excess" overseas dollar While the Substitution Account less-developed countries," said a holdings were to be called in, cen­ has finally died an official death, Franco-Arab banker in New York tralized in the IMF, and exchanged the question outstanding is control April 30. "I doubt that the IMF for securities valued in Special of the $I20-odd billion in annual will be given control over the sur­ Drawing Rights, the IMF's bas­ lendable OPEC surplus revenues. plus. The Arabs want to keep for ket-of-currencies unit of account. The IMF and the Carter admini­ themselves the political influence The peremptory rejection of the stration want to 1) prevent expan­ that goes with the loans." The plan was termed "a surprise" by sion of OPEC's direct dollar flows Brazilian industrial city of Sao most of the American press. The to Western Europe and Japan, and Paulo and the government of ostensible stumbling block was the 2) to absorb as much as possible Turkey are reported elsewhere to question of guarantees for the of the OPEC liquidity into the be among the recipients of quiet SDR assets. The U.S. and IMF IMF and World Bank, so that Saudi lending. wanted the Fund's still-large gold political and economic conditions This situation-or rather its reserves to be appropriated as the can be placed by these institutions potential for expansion-enrages guarantee. Western Europe pro­ on the reissuance of the surplus as the policymakers represented by tested that the U.S. Treasury itself credit. the Sunday Times, which expostu­ should bear the financial burden. The London Sunday Times of lated that "the countries with two­ This dispute could have been April 27 triumphantly announced thirds of the population of the resolved were Europe and the that "Saudi Arabia has agreed in Third World, which rely almost OPEC governments eager to es­ principle to lend large, though un­ wholly on aid from international tablish the SDR account. Our re­ specified, sums of hard currency to agencies," unlike the South Koreas port last week that they prefer in­ the International Monetary Fund and Mexicos of the Third World, stead to strengthen dollar opera­ to help finance worsening pay­ will soon have to borrow from the tions was confirmed by the Saudi ments imbalances." But the 20- IMF's general loan facilities, "con­ announcement-timed to coincide member Interim Committee of the ditions and all." with the IMF meeting-of an IMF ended its meeting April 28 At the Hamburg meeting, the agreement to provide up to $2.4 without any tangible results of this Group of 24 less-developed coun­ billion a year in dollar credits to sort. According to the final com­ try spokesmen vainly demanded a cover Japan's current accounts munique IMF Managing Director relaxation in IMF lending condi­ deficit. A similar agreement was Jacques de Larosiere was simply tions. The matter was deferred to concluded with West Germany "encouraged to start discussions the autumn General Assembly earlier this year. with potential lenders" in order to meeting of the IMF and World Behind the scenes, the French prepare a "growing role" for the Bank.

10 Economics EIR �ay 13, 1980 Agriculture by Susan B. Cohen

Pot and pesticides tent must be filedwith the County California's environmentalist-drug lobby is acting to make Commissioner. After all this, the pesticide production difficult, and getting a permit for its use permit is good for only one crop. virtually impossible. The actual authors of the 45 pages of regulations and 120 pages of operational protocol, written in what rational observers describe as "H ear about it?" exclaimed a California Environmental Quality "mindboggling legalese," remain knowledgeable source, "I know for Act (CEQA) certified by Human unknown. There is reason to be­ a fact that it's true." That was the Resources Secretary Huey Johnson lieve that the program was drafted response to this writer's prelimi­ in December. Previously, pesticide in Huey Johnson's office. Johnson nary effort to confirm the report use in agriculture had been ex­ heatedly denies it. that Dope, Inc. was financing empted from the provisions of the Others insist that the regula­ moves to regulate farm chemical CEQA when the California legis­ tions came word-for-word from production and pesticide use out lature decided that making a farm the Governor's office. Others ar­ of existence. producer submit a full-dress envi­ gue the distinction is academic. Under the leadership ofthe En­ ronmental impact statement every Significantly, the same Huey vironmental Defense Fund, the en­ time he wanted to use a pesticide Johnson threatened to throw Farm vironmentalist lobby conspired to was "unrealistic and unworkable." Chemicals editor Gordon Berg out rewrite California's pesticide reg­ Now, Assembly Bill 3765 orders of his office when Berg, in the ulations program so as to virtually the Department of Food and Ag­ course of an interview, posed the double the cost in time and dollars riculture to come up with pesticide question to Johnson directly: of developing and using pesticides. regulations that meet CEQA by "What's more important-pot or The new regulations railroaded January 1, 1981. food?" Johnson consented to con­ through the state's Department of Everyone in the chemical in­ tinue the interview only if Berg Food and Agriculture are present­ dustry and farm production agree would turn off his tape recorder. ly stalled in the legislature. A cam­ that the measure's effect will be Berg later questioned in print (see paign has been mounted there to crippling. Previously growers con­ the April issue of Farm Chemicals) deny fu nding for the farm chemical sulted with their local pest control why a man of Mr. Johnson's stat­ control program and five bills pro­ advisor, decided on the appropri­ ure would become so hysterical, posing to do away with it altogeth­ ate pesticides to use, and applied refusing to be quoted on the pot er have been fielded. to the County Agriculture Com­ lobby's role in the farm chemicals' The agriculture industry na­ missioner for a permit which. Now fight. tionally is watching the California the grower must prove to the It is admittedly shocking, but case closely, fearing that it may be County Agriculture Commissioner the "marijuana connection" is one a harbinger of an attempt to shut in writing that all "feasible alter­ of the best-known secrets in the down farm chemical use state by natives" have been fully explored state. The individuals contacted by state. California is known to have and that use of the pesticides does this writer were quite specific. one of the strictest farm chemical not conflict with any "sensitive "They grow very fine marijuana control programs in the country, area" prohibitions before receiving up along the northern coastal area to begin with, more than comply­ a permit. of California," one reported, "and ing with federal Environmental Once the permit is issued, the want to stop the use of chemicals Protection Act requirements. The grower must further prove in writ­ in the forested areas." The possi­ proposed new regulations in effect ing that additional measures that bility of pesticide "contamination" preempt federal law . would "mitigate" the adverse im­ cheapens their product, and could The redrafting of the pesticide pact of the pesticide have been presumably put the illegal industry regulations were to qualify them applied. Further, prior to using a out of business altogether, he ex­ as a "functional equivalent" of the pesticide, a detailed Notice of In- plained.

EIR May 13, 1980 Economics 11 ForeignExchange by Richard Katz

The dollar's deepening slide the Bundesbank also cut reserve An interest rate decline has invited outflowsfrom the u.s. requirements 8 percent and ex­ currency, but without reversing the business squeeze. panded rediscount borrowing quo­ tas by $2.6 billion for German banks. The net effect is not a straight tightening, but, as a Deutsche Bank official character­ ized it for EIR, "increased liquidity at a higher cost." The Bundesbank has taken into account the foreign­ trade effects of the deutschemark appreciation encouraged by this move. Upward pricing of exports T hepast two weeks' drop in U.S. ing its prime rate to 18Y2 percent. is expected to be outweighed by interest rates has sharply acceler­ Fortune 500compan ies are getting decreases in import costs, the costs ated the decline of the dollar. Over a break, but psychologically that have most fueled German in­ this period, the dollar has lost geared pullbacks of this small flation. Meanwhile, the funds in­ more than 5 percent of its value magnitude won't pay the nation's flow is intended to cover the cur­ vis-a-vis other major currencies bills. The U.S. lending structure rent accounts deficit. (with the exception of sterling, remains locked into the Carter ad­ While the Bundesbank pro­ classified as a "high-inflation" cur­ ministration's credit crunch for in­ motes inflows into the mark, the rency, like the dollar). Unfortu­ dustrial and agricultural purposes. Federal Reserve acted to curb in­ nately, this is not a tradeoff be­ The recently announced down­ flows to the United States. On tween a credit upturn and a dollar turns in U.S. loan demand reflect April 22, Fed Chairman Paul downturn. We are looking at the no decline in aggregate require­ Volcker told leading fo reign cen­ worst of both worlds. ments for funds. Rather, banks tral bank governors to prohibit Short-term rates have eased have lent up to the credit-corset private banks from lending to U.S. dramatically as the Federal Re­ "base ratios" imposed by V olcker corporations, on the grounds that serve this week allowed overnight in March. And the obvious effect such lending undermines Volcker's interbank money to dip as low as of lower short-term U.S. rates is to credit cutoffs . The Bundesbank 10 percent from its recent 20 per­ heighten the potential for specu­ and Bank of Japan replied that cent levels. Treasury bills lost lative outflows that will deepen the they will try to do so; the Banque about half a percentage point in overall liquidity crisis here. de France refused, saying it lacks one day on April 30-spurred by West German central bank the legal authority. foreign central bank purchases of chief Karl-Otto Poehl announced . Outright dollar panic never a Whopping $1.2 billion in U.S. recently that the Federal Republic materialized this week despite the Treasury paper to help bolster the is out to "attract foreign capital." U.S.-Iran crisis, basically thanks to dollar! Private demand for Trea­ French and Belgian interest rates restraint by American allies. How­ suries, which helped drive down began to come down this week in ever, foreign exchange traders say rates this month, also has ironic reaction to the U.S. situation. But they see no turnaround coming in origins in investors' fear of other on April 30, the Bundesbank hiked the dollar's slide, and no basis for placements. interest rates. The cost of discount one. As "long" positions mature, The prime rate for favored cor­ borrowing was raised half a per­ they expect increasing movement porate customers has been stickier. centage point to 7Y2 percent, its out of dollars. "The recession is This week, seeking to reassure the highest in 10 years, and the lom­ supposed to help the dollar," com­ business community that some re­ bard rate (on loans from the cen­ mented Barclays Bank this week, lief is in sight from impending tral bank collateralized by securi­ referring to the conventional wis­ chain-reaction bankruptcies, the ties) went up 1 percent to 91/2 dom that "recession" will lick in­ ultraconservative Morgan Guar­ percent. flation. "But that really doesn't anty Bank took the lead in lower- Unlike the U.S. Fed, however, make sense."

12 Economics EIR May 13, 1980 The dollar in deutschmarks New York late aftemooo 1.95

1.90

1.85

1.80

1.75 3/12 3/19 3/26 4/2 4/9 4/16 4/23 4/30

The dollar in yen New York late afternoon ..... 260

- .-/, 250 "V' " 1"""111 240 .... �

230

220 3/12 3/19 3/26 4/2 4/9 4/16 4/23 4/30 The dollar in Swiss francs New York lale afternoon 1.85

1.80

1.75

1.70

1.65 3/12 3/19 3/26 4/2 4/9 4/16 4/23 4/30

The British pound in dollars New York lale afternoon 2.30 � J � � � .. 2.25 ./'I ...... - 2.20 ------"""" """"" � - ..... � 2.15 � 2.10 3/12 3/19 3/26 4/2 4/9 4/16 4/23 4/30

EIR May 13, 1980 Economics 13 CorporateStrategy by LeifJohnson

The end of the family car Re�ss (D-Wisc.) suggested that Loan guarantee or not, Chrysler Corporation is about to be Chrysler convert a portion of its trimmed down to size and the rest of the industry will be capacity over to the production of pollution abatement equipment for forced to adjust to the standard. other companies. In the new twist of the loan guarantee saga· the Public Citizen Litigation Group, the legal arm of A s of this writing the Chrysler effect of forcing Detroit to produce Ralph Nader's Congress Watch, Loan Guarantee Board has again smaller, more "fuel efficient" cars filed a suit in federal district court postponed its decision on whether in order to compete. last April 25 demanding that the to release $1.5 billion in federal "U.S. automakers are now be­ Chrysler Loan Guarantee Board loan guarantees for the ailing ginning to lop off their big car conduct its meetings in pUblic. The auto maker. Whether Chrysler gets facilities," he commented. "You group, which contends that the the loan guarantees or not (it prob­ may have noticed that all the major board is subject to the Sunshine ably will get them in the end) the plant closings announced recent­ Act on public disclosure, won a die is already cast for Chrysler and ly-such as the Ford plants in Los temporary restraining order; all the U.S. auto industry. Angeles and northern New Jer­ the proceedings of the board's "Detroit has been living too sey-are big car plants." meetings are now being recorded much in the past," Lester Brown, As of this week, Chrysler-al­ on tape or otherwise pending the president of the W orldwatch Insti­ ready in default on some $601 mil­ outcome of the law suit. tute, told a financial reporter last· lion in current obligations-will "There is a lot at stake here," week. "The auto industry is run by not have sufficient cash to meet its an attorney for the group ex­ an aging bureaucracy. But, fortu­ regular payroll. The need for the plained. "There is a lot of taxpay­ nately, circumstances are forcing loan guarantees has become criti­ ers' money involved and some very the industry to adjust." cal. The guarantees have been held critical economic issues. We want Brown, the ubiquitous environ­ out as the "carrot" to get Chrysler to make sure that Chrysler is mentalist and doomsayer, recently to streamline itself into a much fo rced to meet fe deral standards coauthored the book Running on smaller automobile company pro­ on air pollution and fuel efficiency, Empty: the Future of the Automo­ ducing much smaller cars. To win for example. We firmlybe lieve that bile in an Oil-Short Wor/d. Last approval of the loan guarantees, Chrysler is no longer viable in its week, he predicted that with the Chrysler announced within a space present size and in its present in­ decontrol of domestic oil prices of ten days last month: tentions to remain a producer of a now underway, "it is quite likely • A cut-back in its automobile full line of cars." that on Oct. 1 the price of gasoline lines from three families to two. On the similarity of the group's with be $2.00plus -probably clos­ As of four months ago, Chrysler views on Chrysler to those of many er to $3.00. You can extrapolate hoped to keep five families in pro­ Wall Street investment bankers, the effects on American driving duction. Now it will maintain only the attorney noted that there was habits and the automobile indus­ its Omni/Horizon compact model a tremendous interest in the suit try. There may be ebbs and flows and its new front-wheel-drive "K­ from Wall Street. "As soon as in interest rates. However, a gen­ car" due out next fall. word got out about our suit we eral transformation of the econo­ • A 20 percent slash in its white got a lot of calls, including from my is now under way." collar staff and blue collar support financial reporters. Judy Miller of Brown added that in testimony staff (including everyone from jan­ the New York Times called. She before Congress he has repeatedly itors to scientists and engineers). had been talking to people in the opposed the placing of any restric­ The layoffs will reduce the size of financial community who were tions on auto imports, because in these staffs by 35 percent from very interested in our suit. It seems his view the rising level of fo reign January 1979 levels. that they share many of our views car imports has had the salutory Last summer, Rep. Henry about Chrysler."

14 Economics EIR May 13, 1980 TracIeRevieW'

NEW DEALS

Cost Principals Project/Nature of Deal Financing Comment

1.3 bn Rumania from Iran Iran will sell Rumania 5 mn. metric tons per annum of crude oil

275 mn Poland from West Poland has placed orders for a wide Under umbrella Germany variety of machine tools with a large of $1.1 bn. 1977 group of West German engineering credit issued by firms Dresdner bank­ led consortium, originally for coal-gasification (Poland cancelled this)

100mn Taiwan/U.S. GM will participate 45 percent with GM plus Taiwanese interests in construction announcement and ownership of plant in Taiwan that will produce medium and heavy-duty trucks and buses, and diesel engines.

91 mn United Kingdom British Airways has ordered an all­ from U.S. cargo Boeing 747 jumbo jet.

41.7 mn Mexico from U.S. Mexico's Comision Federal de Electri­ $35.4 mn cidad will purchase 10 gas turbine elec­ Eximbank credit tric power generators (6 from GE, 4 at 8 percent from Westinghouse)

34.43 mn Argentina from U.S. Hidroelectrica Norpatagonia S.A. Eximbank credit (HIDRONOR) will purchase four 250 of $29.27 mn at megawatt turbines and engineering 7.83 percent services for the 1,000 megawatt ALI­ CURA power plant in Nequen prov­ ince. Winning contractor for turbines is Chalmers

33.8 mn Singapore from U.S. Northrop Corp is selling six F-5E Approved by fighters to Singapore U.S. Defense Department; Congressional approval expected

20mn India from France Peugeot will supply manufacturing technology for diesel engines to the Mahindra and Mahindra company. An output of 25,000 engines per year is anticipated.

11.4 mn Yugoslavia from U.S. Iskra Commerce will build a plant to Eximbank $2.8 cancelled manufacture microelectronic integrat­ mn credit at 8.75 ed circuits and a compressor motor percent plant, and will expand a collector mo­ tor plant. Supplier is American Micro­ systems Inc. of Santa Clara, Calif.

54.8 mn Morocco from the Bos Kalis, the Dutch construction co., Netherlands has indefinitely postponed its contract to build a Western Sahara harbor proj­ ect-despite Moroccan government opposition to the postponement. Bos Kalis says Polisario guerrilla activity has made the company's activity un­ tenable.

EIR May 13, 1980 Economics 15 Construction: how Volcker brought the house down by Lydia Schulman

When Federal Reserve Chairman Paul Volcker inaugu­ icantly below 17 percent by this coming October, these rated phase one of his credit restraint program last Oct. builders report, there will be a sh arp ratchet in both 6, the National Association of Home Builders (NAHB) commercial and industrial contract construction. responded with disbelief and braced for the worst. The Cutbacks in federal spending since 1975 have leveled association stated that the entirely predictable results of public spending on hospitals, schools, and other essential the credit measures would be a precipitous drop in new infrastructure. The bulk ofthe cuts proposed in the Fiscal housing starts down to 1 million units per year-50 1981 budget are to come out of federally funded con­ percent drop fr om 1978 levels-and mass unemployment struction projects: Army Corps of Engineer projects, in the construction industry. water resource proj ects, airport construction grants and Those predictions have come true with a vengeance. road building. But even before these budget cuts hit, the Those types of construction immediately related to main­ Federal Highway Administration is expected to run clear taining and enhancing the standard of living of the U.S. out of money by this summer, leaving states in the lurch population-the single-fa�ily home, middle and low fo r $1.4 billion in let contracts. income apartment dwellings, hospital and schools, and nuclear power plants-are in a nose dive. Housing: a calculated collapse In March, starts of new private homes fell to a One of the first calculated consequences of the Volck­ seasonally adjusted annual rate of 1.04 million, down 42 er credit squeeze was to dry up mortgage money, or, percent from March 1979. The number of construction what amounts to the same thing, to price it out of the workers employed in residential construction has plum­ reach of most prospective home buyers. In the state of meted by over 163,000 since a peak last August-a 28 California, one of the 24 states without usury laws, percent drop. No one is pretending that this is a merely mortgage rates were holding firm at 17.5 percent at last "seasonal" phenomenon. Record high interest rates and count, even though certain other interest rates have come the collapse of the bond market have been the coup de down a bit. grace for the U.S. nuclear industry. Besieged alternately The dizzying rise in mortgage rates this past winter by unwashed greenie demonstrators and spiraling inter­ has resulted in an even more dizzying rise in monthly est rates, the Public Service Co. of New Hampshire was mortgage payments. In January 1979, the median price forced to begin laying off half of the 4,700 construction of a single family home in California was $79,599, the workers at Seabrook in March. Plans for at least 13 prime mortgage rate was 10�8 percent, and the monthly nuclear facilities were cancelled or shelved for the same mortgage payment was $577. In January 1980 the price reasons this past winter. of the same house was $97,957, the mortgage rate was 13 Industrial and commercial construction have not percent, and the monthly mortgage payment was $1,170. been significantly affected-yet. In these areas of the (These figures are from an in-house report in preparation construction industry, where projects have long lead by Crocker National Bank in San Francisco.) Over the times and co nstruction spans several years, builders re­ 30 year life of the mortgage, the homeowner will have port that they are still working off contracts that were paid $4 14,000 in interest and principal payments for the signed in early 1979 before the Volcker tight money $97,957 house! regime began. If interest rates do not come down signif- In many states mortgage money has simply been

16 Economics EIR May 13, 1980 nonexistent. Unpublished figures compiled by the Fed­ time about $1 billion in synthetic fuel-related construc­ eral Home Loan Bank Board indicate that the federally tion contracts are in progress or have been let out in what insured savings and loan institutions made fewer mort­ is known as the "overthrust belt," the mountainous gage commitments to prospective homebuyers this past region encompassing parts of Montana, Idaho, Wyo­ March than at any time since such statistics started being ming, Utah, and Colorado. This figure could easily triple kept in 1976. In the first quarter of the year the S&Ls had by the end of 1981, according to area contractors. the lowest net inflowof deposits in a decade, a situation Also on the agenda in Utah: construction of the which is not likely to improve, because, even if interest Intermountain Tower Project is expected to start up next rates ebb and flow over the months ahead, high interest year. When completed, the ITP will be the largest coal rates are here to stay. processing plant in the country. Projected time of the project is seven to eight years and the cost $4 billion. The possibility of the $50 billion MX missile system The "growth" areas also holds out the promise of billions of dollars in future The Carter administration does have a construction construction projects for Utah, according to some. The program of sorts-one which is guaranteed to feed the cost analysis study done by the General Accounting nation's double-digit inflation since it adds nothing to Office on the system indicates that 60 percent of the $50- the production of tangible wealth. to-52 billion in projected costs will be in construction. In Houston, Texas, in a pattern typical of the oil The basing of the missile system in Utah has been producing and refining regions of the country, a new opposed by forces in the state who do not like the war­ "growth" area has opened up for construction in the preparation implications of the system and who do not maintenance and refitting of old oil refineries. At the want to see their state torn up to house it. The "race­ present time, approximately one-third of the industrial track" design for the system advanced by the Airforce construction workforce in the area-around 10,000 involves the construction of a vast underground railway workers-is engaged in the maintenance and revamping system in the Utah desert over which the missiles would of refineries to outfit them to process domestic crude oil be constantly moving-ostensibly out of reach of Soviet with its high sulphur content. bombers. Currently making the rounds in Utah is the The state of Utah-an open shop state like Texas, has joke that there is really no need fo r this elaborate subway been promised billions upon billions of dollars in future system; the Airforce should just give the missiles to construction contracts related to the production of syn­ Amtrak and then the Russians will never be able to find thetic fu els and the MX missile system. At the present them.

Construction by sector

Housing Starts Public Educational Buildings Public Hospitals ( ••a sonally adjusted in millions 01 units) (seasonally adjusted, in millions 01 (seasonally adjusted, in millions 01 constant dollars) constant dollars) constant dollars)

2.2 8,000 2.0 1,300

1.8 1,200 5,000 1.8 1,100

1.4 1,000

1.2 4,000 900 2nd round of �. 1.0 800 Volcker measures � .8 700 3,000 .8 800

______0.0 '--______o �______o�

EIR May 13, 1980 Economics 17 Business Briefs

who will continue to absorb inflationary Agriculture Minerals and Mocatta Metals, both of processing and marketing costs. The which have close ties to the Anglo­ retail price of food is expected to con­ American financial elite, and who co­ Farm prices collapsing tinue to climb until it "takes orr' again ordinated with the Fed and the board later this year when, for instance, live­ of the New York Commodity Exchange. The u.s. Department of Agriculture stock supplies snap. As part of his avowed "controlled dis­ announced today that farm prices had integration" policy, Volcker is now ap­ plunged by 4.6 percent-or a 54 percent plying credit controls selectively to annual rate-during the month of April. break up the Hunt empire and dismantle Domestic Credit The April collapse follows a 1.7 percent any other business institutions which drop in March, and was led by livestock, may be the least bit independent of the corn and wheat. Tight credit has forced Volcker crushing the "Groton crowd." According to a rumor the livestock industry to retrench-the Hunt brothers circulating in the Chicago financial dis­ price of beef and hogs is falling as trict, First Chicago chairman Robert producers rush to slaughter animals they Abboud's approval of loans to the Hunt The Hunt brothers may be forced to can't afford to feed. Bumper crops of brothers just before the silver shakeout liquidate much of their silver holdings wheat and corn this year were turned was used as a pretext for his tiring. as a condition for receiving bank fi­ into a liability for farm producers by the nancing, Federal Reserve Chairman Carter administration's grain embargo Paul Volcker told a House Banking and related export policy. subcommittee on April 30. This ought to put an end to Secretary In ternational Credit The Hunts are currently negotiating Bergland's attempt to "talk up" farm a $2 billion loan from a group of banks prices with encouraging propaganda, led by Morgan Guaranty and First Na­ IMF postpones relaxation and just plain lies. Such a precipitous tional Bank of Dallas which will be used drop in prices could also trigger a break of conditionalities to finance extensive silver-trading debts. in land prices and the unraveling of the It appears that one condition of the entire farm credit structure. The Interim Committee meeting of the bank loan is that the Hunts eventually The price drops guarantee that ear­ International Monetary Fund ended in sell much of their silver. In the words of lier Agriculture Department predictions Hamburg April 28 without concrete ac­ Paul V olcker, the terms of the loan "will of a 20 percent drop in farm income tion on the Group of 24 less-developed enhance the prospects of that lump of during 1980 will be conservative-and countries' demand for a relaxation in silver being dispersed." . in fact the department is already talking IMF lending conditions. The matter was The Hunts have also been forced to about a probable 25 percent income deferred to the autumn General Assem­ mortgage most of the oil and gas prop­ drop. bly meeting of the IMF and World erties owned by the Hunt family concern There is no way that the farm sector Bank. Placid Oil as collateral for the Morgan­ can stay afloatwhen costs of production The French business daily, Les Echos First Dallas loan. are soaring by as much as 50 percent, claimed April 28 that "a more attentive According to metals market sources, when loan funds costs have doubled and ear" is being bent toward the LDCs, the Federal Reserve has conducted a income is drastically contracting. however. As part of the effort to expand near vendetta against the Hunts during In terms of impact on the rest of the the IMF's role, even friends of Henry the last two months, using its enhanced economy-already farm equipment sales Kissinger's have recently conceded that credit control powers to make it impos­ have plummeted. The Farm and Indus­ the Fund "won't fly politically" unless sible for U.S. banks to lend to the trial Equipment Institute, a trade asso­ something is done; the London Times brothers, except on the most onerous of ciation, reported that sales of farm trac­ proposes extending the terms of IMF terms. Lamar Hunt complained to the tors dropped by 28.9 percent in March, loans and "improving the supply side" Wall Street Journal that the Fed "put a bringing total tractor sales for the first of debtor economies. clamp on us" and even put "the strong quarter of 1980 to 18 percent below the The hard-liners on the subject are arm on the major European banks." year-earlier period. Other reports indi­ exemplified by the Sunday Times, whose Since the Hunts were unable to obtain cate that since at least the beginning of Hamburg correspondent, Malcolm a bank loan themselves, they were forced the year, farm equipment manufacturers Crawford, wrote April 27: "The IMF to borrow indirectly through Placid Oil. have been increasingly forced to finance has plenty of money outside the Supple­ their own sales to get business at all. As EIR has documented in previous mentary Financing Facility, which bor­ What's more, as the Agriculture De­ issues, the March silver market crash rowers have preferred (despite interest partment itself pointed out, the drop in which took such a heavy toll on the terms which are virtually at market farm prices will not help the consumer, Hunts was stage-managed by Engelhard rates) because the conditions concerning

18 Economics EIR May 13, 1980 Briefly

• CITIBANK last month began to cut back sharply on its loans to consumers. Has the bank now be­ gun to "borrow" money from its domestic economic po licies are not so though steel unemployment is heavily customers? One irate Citicard tough as on the IMF's general loan concentrated in pockets around steel holder reported to us that a pay­ facilities. Soon, the developing countries plants closed because of dramatic de­ check she duly deposited in a "24- will have to face up to these, conditions clines in orders, the companies must hour" Citicard machine a week and all. The deflationary IMF condi­ now begin to shut down blast furnaces earlier still hadn't appeared in her tions cannot be relaxed much, because at major plants, spreading the layoffs. account-and this wasn't the first IMF loans are meant to be repaid, not The question remains, can the indus­ time a check had been "lost in the rolled over." try restore production when orders flow system." Citibank customer serv­ Unlike the South Koreas and Mexi­ in again? U.S. Steel executives may not ice said they couldn't promise cos, Crawford adds, "the countries with find this an interesting question. They anything. "You could have put an two-thirds of the population of the may intend to leave the steel making empty envelope in the machine." Third World which rely almost wholly business altogether like the Penn Central on international agencies" are "the most Co. left railroads. The remaining com­ • DISQUE DEANE, senior part­ exposed to acceptance of its loan con­ panies might then expect enormous ner of Lazard Freres, may intend ditions. For the poorer countries, there profit from the ensuing shortage of steel. to ride out the depression on LSD is no solution except deeper poverty." and vitamin pills. Deane is one of the prominent financial commu­ nity members on the board of trustees of the Huxley Institute Industry Banking for Biosocial Research. The insti­ tute, originally fo unded by Al­ Steel Capacities Exim-OPEC financing dous Huxley, eschews costly ·"classical" psychotherapy, and in­ collapsing plan proposed stead promotes "orthomolecular psychiatry," using hallucinogens, The steel companies now boast that they The U.S. Export-Import Bank chief vitamins, and psychotropic drugs. prepared well for the present downturn John Moore has proposed that the sur­ by reducing inventories, closing obsolete plus countries of the Organization of • JOHN J. BLASCO, Vice Pres­ plants, eliminating expansion plans, di­ Petroleum Exporting Countries (OPEC) ident for Administration at Mack versifying into other, unrelated fields, participate with the Exim bank in fi­ Trucks, recently returned a copy and suing more productive, fo reign nancing projects in the underdeveloped of EIR's special report, The In­ manufacturers for "unfair" competition. sector. In the past, American private dustrialization of India, "since it But when U.S. producers like U.S. Steel banks have pursued the OPEC nations does not fit into our current mar­ findthe present slump much deep�r than for recycling their surpluses into joint keting objectives." Given the they had expected and, worse, that they financing of projects in third countries, company's steep sales slump and are unable to recover those production but the conservative Arab governments cutbacks one is inclined to ask levels they may desire to fillgovernment have refused this approach as too risky. Mrs. Blasco, what exactly is Mack defense and synfuel plant construction Moore argues that since 1934, the Ex­ Truck's marketing strategy, and orders, they may find that they have imbank has generated 5100,000 million does it involve selling trucks? only prepared their own bankruptcy. in lending, and lost only 520 million. • JUDE W ANNISKI, intellec­ At present, the industry appears to The Saudi Arabian government's tual arbiter of the U.S. tax revolt, lack even the capacity to produce steel central bank, the Saudi Arabian Mone­ wrote a letter appearing in · the they enjoyed during World War 11- tary Agency (SAMA), this year has be­ Wall Street Journal April 28 to more than a third of a century ago. gun to make sizeable loans to certain express his "profound admiration U.S. Steel re orts that in the last advanced nations. Saudi Arabia is ex­ l' and affection" for pop singer three weeks its orders have dropped an pected to buy up to 52.7 billion worth Frank Sinatra, despite his low incredible 40 percent, while Bethlehem, of West German government debt this opinion of Sinatra's latest album. the nation's number two steelmaker re­ year. Japan is slated to receive between In his book The Way the World ports a similar precipitous, but unspec­ 51 to 51.5 billion from Saudi Arabia. Works, Mr. Wanniski compares ified decline. In the first quarter of this West German Finance Minister Hans Sinatra to Leonardo da Vinci. year, total steel shipments in the nation Matthoefer, upon announcing the Saudi "Both have given the world enor­ fell by approximately 10 percent, largely agreement with his country, stated that mous pleasures while using up due to the auto collapse which last week SAMA, during the first quarter of 1980, only trivial amounts of planetary took that industry to the low-point it will recycle petrodollars into other oil resources, i.e., physical capital." reached in the 1974-75 recession. AI- consuming countries in the West as well.

EIR May 13, 1980 Economics 19

�TIillSpecia1Report

The Aquarian Conspiracy's road to Orwell's 1984

by Criton Zoakos, Contributing Editor

At present. the Executive Intelligence Review staff is Every unwashed environmentalist has come out of a contributing to the preparation of a pamphlet and a book. social engineering laboratory. Every drug addict is the fr om whose materials the fo llowing Special Report has product of some government-sponsored or foundation­ been compiled. Th ese publications have been prompted by sponsored brainwashing project. Every yoga-freak, our discovery of the exact manner in which the population every transcendental meditationist, every biorhythm of the United States of America is being brainwashed. kook is merely the human refuse that has been excreted methodically and patiently. by a large corps of expert from some government-sponsored, foundation-funded social psychologists deployed out of research institutes. the project somewhere. There are no exceptions to this. communications media. and government and private agen­ In the 1940s, the very same group of powerful inter­ cies. ests who are today commanding the evil forces of social Th is is the "A quarian Conspiracy. " as the brainwash­ engineering, then launched an irrational Cold War and a ers refe r to themselves. domestic McCarthyite witchhunt. Suddenly, rational ar­ Our report is essentially a combat manual. Brainwash­ gument in policy fo rmulation disappeared from national ing depends on the ignorance of the victim. AllAm ericans life. The traditional debate that American citizens histor­ not members of the conspiracy perceive their nation disin­ ically conducted to determine their fo reign policy, i.e., tegrating. and can report the fa cts in terms of day to day. the special mOJal and practical weight of this nation personal experience. But no coincidences. no accidents are among the )litions of the world, was abandoned and involved. Americans must come to know this as deliberate; replace�.¥Y the unchallenged, axiomatic, pervasive irra­ they must come to know who is doing what to them. and tiompityof the Cold War. The result was that the moor­ why. If Americans know what they mustforefficientacti on ings of national moral purpose collapsed; the citizens against the brainwashing process. in thefa ce of the "stress­ who make up the nation and share its moral purpose fu l situations" and "social shocks" directed against them. surrendered to a morally indifferent irrationality. then the Aquarians. however vast their network and re­ Armed with this moral indifference and irrationality, sources. can be crushed. young adults entered the decade of the 1950s in pursuit of private goals and petty career concerns. And the children of this generation began growing up without The central conclusion that you will reach upon finishing clear ethical moorings. What followed was the notorious the examination of the facts in this report is that the "generation gap" and the large-scale manipUlations of moral, material, cultural and intellectual decay that you the social engineering establishment, from the Rand are witnessing every day in America's cities and towns is

not accidental, not a "sociological phenomenon," not an Photo: A scene from the broadway version of " Hair "­ "act of God," but a deliberately induced social crisis. the Age of Aquarius.

EIR May 13, 1980 Special Report 21 Corporation, the Stanford Research Institute, etc. The "New Left," the Vietnam War and the antiwar move­ ment were all social-engineering projects. Watergate, environmentalism and the slow and deliberate destruc­ tion of American technology, as we shall show, were also pre-planned social engineering projects. What is under assault is the institution ofthe "nation­ state," and the form of republican constitutional govern­ ment inaugurated in world affairs by the successful con­ clusion of the American War of Independence. The philosophical, political and economic doctrines embed­ ded in the American Constitution form the basic core of Tavistock: 'mother' that fundamental conception of human affairs which the "Eastern liberal establishment" that commands the de­ of planned madness ployments of the entire profession of social psychology regards as its axiomatic philosophical enemy. A best-selling book was published during February The Tavistock Clinic in Sussex, England is the world's of this year called The Aquarian Conspiracy by one center fo r mass brainwashing and social engineering Marilyn Ferguson, the publisher of a weird magazine programs and activities in the postwar period. During called The Mind/ Sp irit Bulletin. This book boasts that all the war Tavistock was the headquarters of the British the various kook outfitsin the country, from drug freaks Army's Psychological Warfare Bureau which, through to environmentalists, to yogi groups, Jesus freaks, left the arrangements of the Special Operations Executive radicals, right radicals, libertarians, "cosmic conscious­ also dictated policy to the United States Armed Forces ness" groups, etc., are all parts of one, centralized, in matters of pshycological warfare. At the end of the coherent conspiracy. The book is a fraud in a special war, the Tavistock personnel took over the World Fed­ sense, though its claim of a conspiracy is, of course, true. eration of Mental Health and the Psychological Warfare It is a fraud because its author merely plagiarized an in­ I?ivision at the Supreme Headquarters, Allied Expedi­ house study of the Stanford Research Institute of May tIOnary Force (SHAEF) in Europe. 1974. Ms. Ferguson took the .contents of that study, put them in popularized form and put her name under the product. The Social Policy Director of SRI, Dr. Willis Harman had asked Ms. Ferguson to produce a popular­ ized version of their study under her name. The book is part of a massive social engineering program currently How we know what conducted by the Stanford Research Institute and others. the Aquarians are An essential part of that program is to come out publicly and reveal key aspects of the conspiracy, though not the EIR is well qualified to make this report. Lyndon really important aspects. We shall explain why later. LaRouche, EIR 's fo under and a Contributing Editor So, the question arises, what is SRI up to? is considered by many the greatest scientific thinke; Stanford Research is one of the more prestigious America has so far produced. By contrast, the "ex­ subunits of a much larger, integrated network of centers perts" in the Aquarian camp are kooks. The principles of applied social psychology and social engineering that of science, which the Aquarians oppose and reject, emerged in the aftermath of the Second World War. Its definethe evil aspect of their conspiracy, but also their sister think-tanks include Rand Corporation, the Ad­ weakness. Their resources far outweigh the institu­ vanced Center of Behavioral Sciences at Palo Alto, the tional resources associated with LaRouche, but the Institute of Social Research at the University of Michi­ crude, plodding social engineering and social psychol­ gan, the Wharton School of Business, the Harvard Busi­ ogy crowds lack the capacity to even comprehend the ness School, the National Training Laboratories, the conceptual weapons LaRouche has thrown against National Institute of Mental- Health, the National Insti­ them in a decade of bitter political battle. tute of Drug Abuse, the Office of Naval Research and In the 1950s, LaRouche made his fundamental many others covering the entire country. The job of all breakthrough by successfully applying the concep­ these social research centers is to conduct mass scale tions of advanced Riemannian geometry to economic social-psychology projects on the entire U.S. population; processes. The primary measure of an economic sys- they began to do so in 1947, approximately, when most of the network was fo unded.

22 Special Report EIR May 13, 1980 Other importantcolleagues of Kurt Lewin, such as Eric Trist and John Rawlings Rees of Tavistock, as well as H.V. Dicks, W.R. Bion, R. Crossman and others, took all the personnel from the Strategic Bombing Sur­ vey, the Committee of National Morale and others, and from this pool, founded the Rand Corporation, the Stanford Research Institute (which produced the Aquar­ ian Conspiracy), the Wharton School, the National Training Laboratories, the National Institute of Mental Health and others. The United States government started contracting multimillion dollar projects with all these outfits. Over a period of thirty years, tens of billions of dollars have been allocated by the federal government to fund the work of these groups; other tens of billions of Tavistack 's Eric Trist and the late Margaret Mead. dollars found their way into these institutions from pri­ vate foundations. Over the years, these outfits grew and Tavistock's chief theoretician in America, Dr. Kurt the scope of projects they contracted grew. Lewin, organized the Harvard Psychological Clinic, the Every aspect of the mental and psychological life of MIT Research Center for Group Dynamics, the Institute the American people was profiled, recorded and stored of Social R�search at the University of Michigan; Lewin into computer memories. The personnel of these centers also played a pivotal policy role at the psychological of social psychology grew massively in numbers and year department of the OSS, at the Office of Naval Research, after year it penetrated deeply into every nook and the Strategic Bombing Survey and the Committee on cranny of federal, state and local governments. Their in­ National Morale. Morevoer, a large number of influen­ house specialists and graduates were called in to develop tial people at the top policy level were trained in Dr. policies for welfare departments, labor mediation Lewin's theory of Topological Psychology, which is to boards, trade unions, the Air Force, the Navy, the Army, this day, the world's most advanced method of behavior the National Education Association, psychiatric clinics, modification (brainwashing). the works.

tern is the rate of growth in scientificand technological publications by EIR 's publisher, New Solidarity Inter­ advances, whose principle of causality-creative men­ national Press Service, stretching back to 1968, ex­ tal activity-is the epistemological equivalent of the posed the "New Left," "international terrorism," and ontological existence of negentropy as the fundamen­ the drug-rock "counterculture," as nothing more than tal law of the universe. The resulting thermohydro­ "social engineering projects" created and controlled dynamic theory of economic systems has massive, by "research institutions" identified in the present direct implications for advanced research in every report. branch of science, from high-energy physics, to biol­ Also exemplary was the pUblication of the book,

ogy, physiology, psychology, and the social sciences Dope, Inc. , by the U.S. Labor Party of which La­ including political processes. Rouche was a founder. The heavily documented, pri­ The institutions associated with LaRouche have mary fact of international drug traffic, proven in that elaborated this knowledge for political battle, to trig­ publication, is that the aristocratic English and conti­ ger creative insight wherever the Aquarians seek to nental European "noble" families otherwise control­ trigger "disassociation." The LaRouche network has ling Tavistock are the principal masters of narcotic employed this knowledge and formidable intelligence and psychotropic drug smuggling internationally. Or, and counterintelligence capabilities to destabilize the as the book's subtitle reads: "Britain's Opium War Aquarian command itself. Against the United States." Exemplary was the publicati()niri Jan uary-Febru­ EI R and its editors and staffha ve played a key role ary 1974 of two reports under the title, "The Tavistock to date in crushing many of the Aquarian Conspira­ Grin," which uncovered both the Tavistock network cy's operations, their "movements," and their "social and the methods of brainwashing and psychological engineering" projects. Now, we are issuing a combat warfare then being adapted for application to large­ manual to all Americans. We intend to crush the scale social engineering projects. Those and related Aquarian Conspiracy itself.

EIR May 13, 1980 Special Report 23 Over the years, close cooperative relations were de­ Moonies, and numerous other exotic religious cults. You veloped between these think-tanks and the key polling have seen or heard about the "charismatic movements," organizations in the country, and between them and the "liberation theology," the new religious fundamental­ maj or media. Gallup Polls, the Yankelovich-CBS-New ism, the PTL ("Praise the Lord") shows on television, York Times polls, the National Opinion Research Center and of course you have "Islamic fundamentalism" com­ and others are incessantly conducting psychological pro­ ing out of your ears. files of the entire population and share them for evalua­ You have also, in one way or another heard or come tion and processing with the ubiquitous social psycholo­ in contact with "yoga," "transcendental meditation," gists. What the public sees printed in the newspapers as "ying-yang," "sufism ," and other cult practices. You opinion polls is only an infinitesimal portion of the work have heard about biorhythms, telepathy, ESP, telekene­ that the pollsters really do. sis, astrology and other fo rms of kookery. You have Above this closely cooperating grouping of social heard of or known people who are seeking to gain psychologists, pollsters and media manipulators, pre­ "cosmic experiences" and "consciousness raising" by sides the elite of "powerful patrons" the "gods of Olym­ means of a wide variety of chemical substances; and of pus" as they delight in being referred to. These are a course you are will aware that this country right now is cluster of corporations and families on top of the elec­ going through the worst drug epidemic in human histo­ tronics, communications and related sophisticated-tech­ ry. nology industries. The core cluster consists of the fo llow­ Fewer among you have noticed that in the 1970s a ing: ITT, ATT, Xerox, Rank Organization, Bendix, drastic shift occurred in school curricula at all levels to Raetheon, A.D. Little, Eagle Star Group, RCA, Bechtel, the point that youngsters are now rewarded school cred­ Textron, Reliance Group, Prudential Insurance, Ameri­ its for such courses as "TV soap opera," "socially rele­ can Express, Lazard Brothers, Kuhn Loeb, Blythe-East­ vant basket weaving," and various environmentalist sub­ man-Dillon (now owned by Paine-Webber), Petro-Can­ jects. An epidemic of cultism, kookery and Sodom and ada, Standard Telephones and Cables, and their subsidi­ Ghomorra has overwhelmed the country, accompanied ary, affiliated and interlocking corporations. by pseudo-science, charlantanism and superstitfon in our All in all, it is estimated that this group, which on education institutions. matters of long-term strategy tends to act in a very This picture is only the raw empirical evidence side of disciplined and unified way, commands over sixty of the top "Fortune 500" companies in the USA. It has swal­ lowed up all the other, older historical "power groups" of earlier U.S. history, such as Morgan, Rockefeller, Cabot-Lodge, etc., etc. In the deeper recesses of the intelligence establish­ ment in Washington, veteran intelligence officers refer to this awsome group in hushed tones and mysterious lan­ guage as the "Committee of Three Hundred." The group prefers to be called "The Olympus." These are the real power in the land, the deployers of our social engineers and social psychologists.

What is "Aquarius?" What is meant by the "Aquarian Conspiracy" and the "New Age" or "Age of Aquarius" which the entire social psychology establishment is now mobilized to impose upon our society? First, let us survey the terrain of physical evidence, what our eyes see and ears hear every hour of the day and night over at least the last fifteen years: Every one of you has heard about sex education programs in which little grammar school children are instructed in masturbation, "alternate life styles', such as homosexuality, transvesti­ tism, lesbianism, prostitution, and so forth. You have seen "gay rights" groups and parades either with your The bibles of the own eyes or in newspapers and magazines. You have Aquarian Conspiracy. heard, or seen, or lost relatives to the Hare Krishna, the

24 Special Report EIR May 13, 1980 the story, the surface impressions that every citizen gets by merely observing what is going on around him. A slightly closer examination of the matter, statistical com­ pilations and so fo rth, indicate the following: approxi­ mately 15 million of our citizens are participating in one active form or another in the outfits of this organized insanity; millions are habitual drug users; millions more claim to have had "mystical experiences" with cosmic forces; millions believe in "faith healing," and so fo rth. There are literally thousands of "counterculture" news­ papers and magazines which proclaim the coming of the "New Age," the "Age of Aquarius." The President of the United States believes in UFOs. Stanford Institute's His National Security Advisor, Zbigniew Brzezinski makes speeches proclaiming the advent of the "New 'images of man' Age" and has written a book about it, called the "Tech­ netronic Era." The Joint Chiefs of Staff every morning The technical study proposing the complete extirpation read so-called intelligence reports on the biorhythm and of mankind's inner sense of identity, the tearing out of horoscope status ofthe members of the Soviet Politburo. mankind's innermost soul and the placement; in the Senator Harrison Schmitt of New Mexico is using tax­ vacant space, of an artificial, synthetic pseudo-soul, was payer money to conduct an investigation into the possi­ prepared in May 1974 by the Stanford Research Institute. bility of extraterrestial beings having invaded the South The contents were later used in popularized form in West! Marilyn Ferguson's book. The House of Representatives has established a new The study is entitled Changing Images of Man (Con­ congressional committee, the Congressional Clearing­ tract Number URH (489)-2150, Policy Research Report house On the Future which holds day long encounter #4/ 4.74, prepared by SRI Center for the Study of Social sessions with futurologists and other kooks like Marilyn Policy, Willis Harman, Director). The 319-page mimeo­ Ferguson, Elizabeth Kubler-Ross, the death cultist, and graphed report was prepared by a team of fo urteen Isaac Asimov, the science fiction seer. Congressmen researchers and directed by a supervisory panel of 23 come away proclaiming to the press that they have controllers, including Margaret Mead, B.P. Skinner, experienced a personality transformation. Ervin Laszlo of the United Nations, Sir Geoffrey Vickers To top all this, in the coming June of this year, a of British intelligence, and others. major international conference will be held in Toronto, The study begins with the argument that the funda­ Canada, under the title "First Global Conference ofthe mental concept of what mankind is, and the "image" Future," which will be attended by over 4,000 social that mankind has of itself, determines the behavior of engineers, cybernetics experts and futurologists from all mankind. To change mankind's behavior away from the think tanks we have mentioned above. The purpose industrialism into "spiritualism," one must force first a of the conference: "The time has come to move fr om change in mankind's "self image," its fundamental con­ thinking and dialogue to action. This conference will ception of what mankind is. To quote: become the launching pad for that important action to occur in the 1980s," said the Chairman of the conference, Images and fundamental conceptions of human the multi-billionaire Maurice Strong, Chairman of Pe­ nature and potentialities can have enormous power tro-Canada, high-ranking British intelligence officer in shaping the values and actions in a society. We during World War II, one of the Chief executives of have attempted in this study to: Dope, Inc., and former director of the United Nations (I) Illuminate ways our present society, its citi­ Environmental Program. One of the chief speakers will zens, and institutions have been shaped by the be Dr. Aurelio Peccei, Chairman of the Club of Rome, a underlying myths and images of the past and pres­ NATO thinktank on which we shall say more later. ent. Close investigation of the preparatory activities of (2) Explore with respect to contemporary socie­ the conference participants and the in-house studies of tal problems the deficiencies of currently held im­ the social-engineering think-tanks that will participate, ages of mankind and to identify needed character­ has confirmed conclusively that the "decisive action" of istics offuture images. which Maruice Strong is speaking is nothing less than (3) Identify high-leverage activities that could the mass scale brainwashing oithe entire human species. facilitate the emergence of new images and new All the kooks of the world are coming out in the most policy approaches to the resolution of key prob­ impressive Witches Sabbath yet in Toronto. lems in society (p. xxii)

EIR May 13, 1980 Special Report 25 We use "image of man" (or man-in-the-uni­ verse) to refer to the set of assumptions held about the human being's origin, nature, abilities and characteristic, relationships with others and place in the universe. A coherent image might be held by any individual or group, a political system, a church or a civilization ... most societies have an image of man which define his social nature, for example. . .. an image of man is thus a Gestalt perception of humankind, both individual and col­ lective, in relation to the self, others, society and the cosmos ... For most, however, assumptions about the nature of human beings are held subcon­ sciously. Only when these hidden assumptions are recognized and brought into awareness is an image of man contructed. Th en the image can be examined carefu lly and with perspective. to be retained. dis­ carded or changed.

Then the SRI report proceeds to declare that in our present society, the "image of industrial and technologi­ cal man" is obsolete and must be "discarded.":

Many of our present images appear to have become dangerously obsolescent, however. An image may be appropriate for one phase in the development of a society, but once that stage is accomplished, the use of the image as a continuing guide to action

will likely create more problems than it solves ... Th e Stanfo rd Research Institute: "a new image of man " and a Photo: C. Science, technology and economics have made pos­ "life-style of the fu ture. " Wesley /NSIPS sible really significant strides toward achieving such basic human goals as physical safety and security, material comfort and better health. But identifies no less than nineteen "images of man" that many of these successes have brought with them dominated in various epochs. From each one of those it problems of being too successful-problems that extracts such fe atures as are useful in replacing the themselves seem insoluble within the set of societal "industrial-technological image," i.e., totemism and value-premises that led to their emergence ... our identification with animals in the Upper Paleolithic era is highly developed system of technology leads to useful fo r today; the "farmer son of Goddess earth" of higher vulnerability and breakdowns. Indeed, the the neolithic era is useful; the Sumerian image of submis­ range and interconnected impact of societal prob­ sion to ruling elites must be retained in the post-industrial lems that are now emerging pose a serious threat to image; the Old Testament image of man having "domin­ our civilization ... if (our) projections of the future ion over nature" is dangerous and must be dropped; the prove correct, we can expect the associated prob­ Zoroastrian image needs to "be worked on;" the Indian lems of the trend to become more serious, more image of yogi is good, will contribute to the "self-reali­ universal and to occur more rapidly. zation ethic;" the Chinese Confucius image will contrib­ Therefore, SRI concludes, we must change the industrial­ ute to the "ecological ethic" of our future society; the technological image of man fast: Greek dionysian/mystical image can contribute to deem­ "(Our) analysis of the nature of contemporary socie­ phasize material overconsumption; the Greek apollonian tal problems leads to the conclusion that ... the images image can help combat the "technological ethic;" the of man that dominated the last two centuries will be Christian image of the New Testament must be re­ inadequate fo r the post-industrial era." worked; the Christian image of the Gnostic Gospels can Therefore, the image of man appropriate to that new contribute a new "self-realization ethic;" but, the image era must be sought, synthesized and then wired into that emerged from the Italian Renaissance, the "eco­ mankind's brains. The SRI report then conducts a sum­ nomic man," individualist, rationalist, materialist, seek­ mary review of the "dominant images of humankind ing objective knowledge, this is inappropriate and must throughout history" from 250,000 B.C. to now, and it be dropped.

26 Special Report EIR May 13, 1980 Following this, the SRI planners point out that the industrial nation-state is the one supporting the image of "economic man," but: The industrial state at this point has immense drive but no direction, marvelous capacity to get there but no idea of where it is going. Somehow the breakdown of the old images has seemed to lead more to despair than to a search for new images. Despite the pessimism implied by a lagging domi­ nant image, there are numerous indications that a new, anticipatory image of humankind may be Crisis management: emerging: • Youth involvement in political processes. Aquarius goes public • Women's liberation movement; black con­ sciousness, etc. The ordinary citizens react with horrified incredulity • Youth rebellion against societal wrongs. when presented with this situation. They simply refuse to • Emerging interest in social responsibility of believe that this conspiracy is at work. This in scientific business. terms is called hysterical reaction formation. On many • The generation gap implying a changing par­ occasions, for instance, when in past years I have dis­ adigm. cussed these matters with generally well informed and • The anti-technological bias of many young influential citizens, the virtually universal reaction was people. "Lies ! I don't believe it. I don't accept conspiracy theo­ • Experimentation with new family structures ries. Where are your facts !" and interpersonal relationships. When in the course of time the facts were produced, • The emergence of communes as alternative and the conspirators themselves took to writing books, lifestyles. magazine articles and research papers to publicly pro­ • The emergence of the conservation/ecology claim that they have been for all these years engaging in movement. this far flung, multibillion dollar conspiracy, most of our • A surge in interest in Eastern religious and good interlocutors were still speechless. philosophical perspectives. The decent majority of citizens of the U.S. must force • A renewed interest in "fundamentalist" themselves to get acquainted with the facts of the con­ Christianity. spiracy. Because the conspirators depend on producing • Labor union concerns with quality of the a paralyzing shock-effect in order to succeed. In part, the work environment. reason that they have decided to come out and openly • An increasing interest in meditation and proclaim the conspiracy is to produce such paralyzing other spiritual disciplines. shock-effect. • The increasing importance of "self-realiza­ The strategic fo undation fo r the current fo rm of the tion" processes. Aquarian Conspiracy were laid down during the 1966-67 These disparate trends do not, when taken in­ period in a series of high level NATO conferences which dividually, signify the emergence of a new image of at the time involved, among others, a famous NATO human being; yet when they are considered collec­ official, Aurelio Peccei, the then little known Dr. Zbig­ tively, they suggest substantial societal stirrings niew Brzezinski in his capacity as a staffmember of the which may eventually emerge into a new and guid­ State Department's Policy Planning Group and most of ing image. the leaders of those multinational corporations we men­ This was published in May 197.4 , and the authors were tioned earlier. The final decisions of those NATO delib­ careful not to fully reveal their direct involvement in erations were to apply a series of long . term policies artifically manufacturing all these · hideous, inhuman throughout the Western World for the purpose of induc­ fo rms of countercultural zombie-ism. Six years later, ing a transition to a technologically "steady-state," however, in February 1980, Dr. Willis Harman, the "zero-growth" "post-industrial society." Project Director of the SRI report, after lengthy collab­ The Soviet bloc was supposed to be skillfully induced oration with Marilyn Ferguson, induced her to come out to gradually evolve toward a similar type of "steady­ fully into the open and boast that all this Sodom and state" equilibrium system. Dr. Brzezinski, in the after­ Ghomorra was fr om the beginning the work of a delib­ math of those NATO meetings wrote his fa mous essay, erate conspiracy. the "Technocratic Era" and Aurelio Peccei his famous

EIR May 13, 1980 Special Report 27 "Chasm Ahead." Following that, McGeorge Bundy and very frustrating to merely modify the behavior of the the Council on Foreign Relations attempted to start the victim case-by-case and they started puzzling over doing "inducement process" with the Soviets by jointly estab­ something drastic and permanent like altering the deeper lishing the Vienna International Institute of Applied structures of human personalities. Thus, brainwashing Systems Analysis. moved from the era of "behavior modification" to the The SALT and "non-proliferation" processes also era of "identy change." got underway. The NASA program was gradually ter­ The theory for this type of activity again relied upon minated and a massive increase in world drug trafficgot the original fo rmulations oftwo Tavistock theoreticians, underway. Aurelio Peccei went to Tavistock Institute at Dr. William Sargeant's theory in his Battlefor the Mind, Sussex England and there he launched, the notorious and Kurt Lewins's own work on personality regression. Club of Rome jointly with Tavistock. Again in summary, Lewin observed that the inner self of The brainwashing specialists of the Tavistock net­ individuals displays certain reactions when under tension work internationally went to work. The era of govern­ from the environment. When there is no tension, then the ment by "crisis management" had arrived. Some basic normal "inner self' of a person is well differentiated, things ought to be said now about the social-engineering balanced, multifaceted, versatile. When a reasonable technique of "crisis management." amount of tension is applied from the environment, then all the various abilities and faculties of the inner self go Kurt Lewin and topoligical psychology on alert, ready for effective action. When a intolerable The technique derives from the "topological psychol­ amount oftension is applied, then this geometry collaps­ ogy" doctrine of Dr. Kurt Lewin, the seminal theoretical es into a blinded, undifferentiated "schwarmerei," a influence in the entire field of social-paychology, the primitivization, a regression of the personality occurs. patron-saint of all the Tavistock-related think-tanks and The person is reduced to an animal, the highly differen­ the man upon whose theories the psychological warfare tiated' and verstaile abilities disappear. The controlled battles of World War II were fought. environment takes over the personality. To summarize the matter of Lewin's doctrine: all psychological phenomena occur in a domain defined as "psychological phase space" or "life space." This space is composed of two interdependent "fields," the "envi­ ronment" and the "self." Life space is the domain in 'Crisis management' theory which human behavior occurs and that behavior depends says we have a 'controlled on both environment and "self' or B=f(E.P) (meaning Behavior is a fu nction of Environment and Person.) This environment, ' so what is accompanied by a tremendous amount of misplaced happens to people when we emphasis on mathematical/topological interpretations introduce "environmental of psychological relations none of which makes any contribution to scientific knowledge but which is admi­ turbulence ' ? ..Disassoc iation. rably suited for transforming psychological problems into computer-programmable problems, which was promptly done. The concept of "controlled environment" arose from From this bit of nastiness emerged the theory of the common-sensical observation that if you have a fixed government by "crisis management." The social psy­ personality (one susceptible to being predictably pro­ chologists reasoned, more or less, in the following fash­ filed) and if you want to elicit from this personality a ion: "since we are already in control of a 'controlled particular type of behavior, then all you have to do is environment,' what will happen to the P (person) en­ control the third variable of the equation and thus pro­ trapped inside it when we introduce 'social environmen­ duce the desired behavior. This was the standard social­ tal turbulence'?" The deliberately directed "turbulence" psychology fo rmula used for years in every type of will create tensions for the P (person) and under those situation from labor negotiations to army counterinsur­ conditions we shall examine the effects of directed ten­ gency operations, to major diplomatic maneuvers, until sion upon the personality and character structure oflarge apparently some time in the 1960s. From that point on populations. the greater emphasis of social-psychology practice and A senior psychiatrist of the Tavistock clinic, Dr. Fred theory was placed on the problem of using the technique Emery, now at the National University of Australia and of "controlled environment" to produce not the desired formerly a member of President Johnson's Kerner Com­ B (behavior) but the desired P (personality) in the equa­ mission, describes the fo llowing symptoms that large tion. It can be speculated that our brainwashers fo und it popUlations display under conditions of this sort of

28 Special Report EIR May 13, 1980 "social environmental turbulence" i.e. the social crises Interviews that "crisis management" causes: There will be three phases of reaction to social crisis. The first is "Superficiality" in which the threatened population will react by adopting some shallow sloga­ neering ideals to which, however, it shall not attach any serious "ego investment." This is a passive "maladap­ tive" response. Maladaptive because it fails to identify Willis Harman the causes of the crisis and therefore the crisis (tension) will persist. The second phase of reaction, since the crisis continues, will be "fragmentation" in which panic begins 'Ifyo u canforce to strike, social cohesion breaks down and small social groups try to protect themselves from the crisis at the ' expense of other small and fragmented social groups. changed life-styles ... This is also a "passive maladaptive" reaction and, failing to identify the causes of the crisis, it degenerates further Willis Harman of the Stanfo rd Research Institute, men­ into a third phase: "disassociation" the victim turns away tioned as a leading "Aquarian conspirator" in Marilyn from the source of tension, from the induced crisis and Ferguson's book, The Aquarian Conspiracy, was the lead­ goes into a fantasy trip of introspection, obsession with er of the study group that produced SRI's 1974 report, self, the so-called "self-realization" process of the Stan­ "The Changing Images of Man ." Th is interview was ford Research Institute's report. provided to EIR by an investigative reporter. Subsequently, Dr. Emery's Tavistock report adds that these three "passive" maladaptive responses are Q: When did your group at the Stanford Research each accompanied by an "active" but equally maladap­ Institute get involved in this line of study? tive response. Superficiality is thus paired with "synoptic Harman: We started in 1967, but we sharpened up our idealism" as its opposite; "fragmentation" with "author­ line of analysis in 1-969. That is when we issued our first itarianism"; disassociation with "evangelicism." The re­ report. By then, it was clear to us that changes were port then goes on to summarize the results of the last occurring of a very profound nature. thirty years of combined applied social psychology and The way it happened was this: the U.S. Office of "crisis management:" Education asked us to do a study on "The Generation of In the decade of the 1960s we had the "superficiality" Alternative Futures. " We stayed away from computers, of the New Left movement paired with the "synoptic since we were analyzing value shifts. It was very expen­ idealism" ofthe Great Society. sive. We studied how to generate alternate futures: We In the decade of the 1970s we had the "fragmenta­ came up with 40 paths to the future. Among them, there tion" of "community control " movements paired with were very godamned few that anybody would want to the "authoritarianism" of the Nixon era. live through. We all said, 'Holy Cow!' So we looked In the decade of the 1980s we have the "disassocia­ around fo r other ideas, and we saw the counterculture, tion" of "self-realization," "transcendental meditation," and so we began to input values from that direction. drugs etc, paired with the "evangelicism of all forms of I can with confidence say that we were the first mass religious fu ndamentalism. futurist group that began to talk in these value-change So all these scenarios are in the computers of our and transformation terms. pervasive social engineering think tanks. The scenarios For a couple of us, the whole experience was pretty are in operation at the present time. What is supposed to traumatic. It was gut-wrenching. One of the senior re­ emerge out of the pair of "disassociation" and "evange­ searchers at the institute left. He just couldn't take it! licism" of the present national crisis is the "Age of What we are talking about is much more than just Aquarius." "alternative life-styles." Only recently have we heard The snag in the whole project is that the brainwashers much talk on what really matters: What has to happen of our society are counting exclusively on the popUlation on the institutional level to meet what the Third World responding with only "maladaptive" responses, i.e., re­ calls a new global order. sponses to the crisis which fail to identify the causes of the crisis or "environmental turbulence." Q: This sounds very much like the current direction of Should the population, or even significantminorit ies work by the Club of Rome. of the population, be able to identify what the causes of Harman: There are a lot of groups out there more the crisis are, the whole social engineering operation of important than the Club of Rome. For example, there is the last thirty years will collapse. the Geneva-based International Foundation for Devel-

EIR May 13, 1980 Special Report 29 opment Alternatives. You must understand that there are two fo ci for this: first, changes needed in the United States; and second, the global order. For the global order, most ofthe important people are in and out of the United Nations circles. For the United States, they are scattered. Read Ferguson. She has all the groups. She is not tied to us institutionally, but the ties are very close with individual people at SRI. Dr. William Whitsun Q: I have seen a reference to an SRI study on "voluntary simplicity." What is it about? is Harman: That was a report which has since been picked 'The key how to up by the Co-Evolution Quarterly. It is about life-styles and beliefs, but it is low-key. We have just finished a attract the energies ' more important study, for the California Energy Com­ mission. It's not public yet. It was an expensive study, The fo llowing interview conducted by telephone with Dr. and deals with the energy situation for the next 70 years. William Wh itsun was made available to EIR by an investi­ It is the most elaborate scenario yet constructed, cross­ gative journalist. Dr. Wh itsun is the fo under of the Califor­ gridding energy with economics, lifestyles and values. nia-based institution called Novus (fo r "New Age"), which It is very critical. We discovered that with even a he describes as part of the Aquarian Conspiracy. Dr. modest change of values, if held over half a century, you Wh itsun is also the Director of the military and defense can bring about a remarkable difference! That is, even if policy division of the Congressional Research Service. less than one-third of the population undergoes a change less monumental than what the counterculture represent­ Q: Is it true that you are now working full-time to inject ed, and sticks to that change, there will be a 2: 1 difference "new age" ideas into the presidential campaign? in energy usage by the year 2050. By then, we can be Whitsun: I and Judy Skutch (of Washington's Founda­ using only 70 percent of what we use today! With legis­ tion for Inner Peace) have spent a great deal of time lative help, this can be accomplished. talking about this. We are concerned with translating the The point is that major life-style changes mean abso­ ongoing shift in values into an institutional fr amework. lutely nothing over a year. The question is one of decades. This process of change is going on whether or not the Before then, you can show nothing. By the end of dec­ candidates want it. Most candidates are looking back­ ades, you can engineer a shift in the capital goods base, ward, using the paradigms of the 1930s or 1950s, not the and change the meaning of what capital formation itself 1980s. John Anderson had this problem until five years represents, by forcing the use of solar power, and so on. ago, but his courage lies in his ability to change. I worked very closely with Jerry Brown in Wisconsin; Q: Is this tied into Jerry Brown's Novus advisory group? many of his ideas parallel those of Anderson. Anderson's Harman: Interesting you should mention that. William only problem now is that he doesn't entirely believe what Whitsun is the key figure, the co-founder with Judith he is saying; maybe he doesn't fully understand the ideas Skutch. he's in fact pushing. I may meet with him the next time I head East. Q: Then you agree with Brown's contention that Califor­ You should consult the book, Th e Aquarian Conspir­ nia is a test-tube laboratory for new-age ideas? acy, by Marilyn Ferguson. Let me lay out some statistics Harman: There is definitely something to that. Brown is for you: The Gallup Poll of 1979-you can call George continuing to use Whitsun and Novus. In fact, Whitsun Gallup, Jr. at Princeton on this-outlined that 15-20 is more than ever a continuing consultant to Brown now percent of adult Americans have engaged in mystical that Brown has dropped out of the race. What this tells disciplines. They have essentially abandoned the rituals me is that Brown has good ideas. He's no flake. He just of traditional religion, are seeking an inner path, and are has trouble in fo rcing us to get where we have to soon not satisfied with the aridity and sterility of traditional enough. Through Whitsun, we can get Jerry Brown's religion. Politically, on the surface, this seems to be not collaboration with anything. important. But: that adds up to 30-40 million Americans. Whitsun's idea is to work on alternative defense We at Novus alone have a mailing list of 100,000and strategies. He is seeking the ultimate resolution, but not we have a potential mailing list of 2 million. What so fast that it is naked. He's done a paper called, "Alter­ characterizes these people is they are fed up with the native Defense Strategies," which has had a lot of impact institutions, so fed up that until now they've copped out. into Congress. That is, until now.

30 Special Report EIR May 13, 1980 and conservatives. In both categories are people who are fe d up, who haven't participated in the campaigns. An­ derson appeals to both parties; that's why he's important. Our emphasis is on small groups. Novus, you see, is a network of the networks. That network has already partially organized the 30 million. We take people out of the antinuclear or the anti-abortion movements, and we say, "convert from being 'anti,' be positive." This can converge on Ferguson's idea of the entry-point. We want to link personal transformations with social transforma­ tions. When you hit the entry point, you have the person­ al experience of realizing that there is a lot more to you Transcendental meditation: millions of government than you think. We're not just entities linked to a com­ dollars are going to see if it can stop an ICBM. puter with central nervous systems. This notion is getting around. SRI has physics people To round it out, Anderson is looking for a new involved in crucial psychic research, looking into them­ constituency . He is really attracting the genuine inde­ selves. There is a group on this at Princeton University pendent vote. You know, in 1976, the overall vote was under Bob John. Harman at SRI also heads the Institute way down . Most of these 30 million did not vote. of Noetic Sciences, which does psychic research. People Pardon me a second, my wife is now bending her keys are realizing that there's another dimension, which is like Uri Geller [an Israeli 'psychic'-ed.J I have to re­ mystical-spiritual . strain her when she is under stress. Where were we? Yes, the independents. You have a 'Psychic intelligence' 30-million-people boundary line that defines this layer. What is now appealing to our government is the The question is, how do you reach these people? How do stunning accuracy of intelligence derived from this. The we bring value-structures into the presidential campaign? government has been involved, investing in "distant There is a new paper on this by Daniel Yankelovich, viewing." You don't have to be there to see something! "Values, Work and the New Breed." He argues that 52 This idea is key. As you explore human potential, you percent of the American population are a "new breed." realize that if I were to say to you, "Tell me what's on These are the 18-32 age layer and those in their 40s to lateral x and longitude y, close your eyes, think. Watch some extent. They no longer measure success in material the movie in your mind!" What you could come up with terms. The hallmark of the group is they don't think would be remarkably accurate! material rewards are important, and they are dubious This is the angle SRI physicists have been involved in about candidates who are concerned with material val­ fo r three years. They've written two books on it recently. ues. Another report to be aware of is by Peter Schwartz at Q: Is this what you refer to by your work on "alternative the Stanford Research Institute. Any company could give defense strategies?" it to you. Schwartz is a futurist at SRI, head of the Whitsun: To a certain extent, yes. There is a whole new division on American Values and Life-Style Changes. line of technology coming up which could render defense What he has done fills out Ferguson's work. weapons obsolete. We are already dealing with the peo­ A central problem fo r a presidential candidate is to ple who are making decisions. Consider this: The target­ sound coherent. As values change rapidly, there are ting mechanisms fo r our ICBMs are on magnetic tape. problems fo r a candidate in addressing the changes. How By an active mind, Uri Geller has already wiped out can he translate all this into values? He'll sound like a information on such tapes. What happens if, as a war is kook if he moves too far out in front on issues like initiated, you discover you've lost the guidance program defense, inflation, and taxes. That problem dogged Jerry because of enemy wiping out of the key parts of the tape? Brown. It's not easy to fo rmulate a program that can Here, too, the key is the process of values, of shifts.It incorporate this. I've travelled with Judy Skutch on the is a matter of shifts in who we think we are. This is like Novus project around the country. We don't have a 100years ago, with the breakthroughs made at the time program, but we tell groups to use their own creativity, in psychology. their own building ideas. As Novus talks of the process All this is linked to the politics of the 1980s, because of handling major issues, we say, "A shift is occurring people are disgusted with the old paradigm. Thus, in away from macro-management," but we don't impose effect, we have the capabilities fo r entry points on a wide one way that this process can occur. scale. Read chapter 12 of Th e Aquarian Conspiracy. What What this means is that we can appeal both to liberals happens is that individuals begin to explore their inner

EIR May 13, 1980 Special Report 31 space, and to move away from values of the American The whole approach reflects the growing Congres­ Dream. sional interest in alternatives. Two years ago, the Joint John Anderson has been working his way around to Economic Committee asked me to study the social dis­ the same notions as Marilyn Ferguson. He is becoming locations of the 1980s. But I was asked to stop the study the social and political expression of that social theme. when it became too unsettling for some people. I decided There is another book by William McLaughlin, the to take a leave of absence. I explored the country with Brown University historian, who is tracing out the prec­ Judy Skutch for months. It has been a stunning revela­ edent for an Anderson presidency. His book, Revivals. tion to do this, to see the mood of the country. You see, Awakenings. and Reform, shows there have been four , Carter was elected as an advance person, in effect, prof­ great awakenings in the U.S., each of 30-year duration. iting from the kind of spiritual tone of politics. We're The first was 1730-1 760. The second was the Civil War. right on the eve of a bigger thing now. The third was the 1890- 1920 McKinley period. The Anderson now believes it, or he listens, and is picking fourth was the 1960s-and we're right in the middle of up that kind of energy. A lot of Congressmen are now that one. All the periods are very similar, and we can trying to pick up on that energy. In the Congress, a lot of clearly see what's now happening in respect to the past. individuals are pursuing a private path, not an evangeli­ We are now entering a very violent period. There is cal one. Some meet in groups to participate in transcen­ no way of avoiding it. It will be a conflict that will have, dental mediation. This is neither crazy nor weird. It is on one side, the traditional Republicans, along with just a new version of the old group prayer idea. some Democrats who believe in the old line. In this You see, the fear in Washington is palpable. Fear of category, I include the neo-Keynesians. On the other side are the "new economists." A key one is Francis Kelly, who was director of research at Blythe Eastman Dillon. He is excellent. He deals with Ferguson's conspiracy idea from the economic standpoint. They show the power of a few minds being applied to particular problems. " John Anderson could be the Q: One thing that worries me about this is that if we lig htning rod to denigrate basic science and math, the Soviet Union is attract all the going to take over the whole show, aren't they? Whitsun: Not really. What you're leaving out is that the energies of the societal transformation is happening very fast over there. Aquarian They invited me to the U.S.S.R. to discuss some of this in Conspiracy ..• 1979. Curiously, in the Soviet Union, there is funding and support for psychic research. In fact, their athletes, when they train, are brought to the Institute for Yoga in Tashkent. This creates some interesting problems: How the Soviets, fear of inflation, and so fo rth. There is not can athletes be atheists when they're told to study yoga? much inspiration. Congressmen are paralyzed by the You should talk to Michael Murphy over at Esalen confusion, by the fear. The same is prevailing in the Institute. He's writing a novel about a Soviet athlete with Executive Branch. Therefore, we must more than ever psychic skills. He knows about small groups like Novus turn our attention to the grassroots, to the citizens, who in the U.S.S.R. They're in Moscow and Leningrad. can provide direction and guidance. Novus, you see, is Qot an organization, but is rather A: How many Congressmen do you think have been horizontal. It brings into it many "new age" groups: brought into all this? citizens groups, consciousness groups, the California Whitsun: There are many very aware Congressmen. group, Citizens for Economic Democracy, the Oregon They'll see the impact of the Aquarian Conspiracy on Fair Share group, and others. It is happening all over the them as they meet their constituents in the 1980 elections. country: meditation, Werner Erhardt's "est" and others. There is a transcendental meditation group on Capitol These groups reflectthe search for a better way to solve Hill. But the center of the effort there is the Congression­ problems. Novus is the catch-all. We tell all the individ­ al Clearinghouse for the Future. They use futurist tech­ ual groups: Become coherent by thinking of yourselves nologies such as Harman's ideas. There is also a more as a mOl!ement. Don't think of violence and confrontation important private institution, the Congressional Institu­ since these are part of the old paradigm. tion for the Future. It is correct to say that the Clearing­ house is the creature of the Institute. Charles Rose (0- Q: It amazes me that a military-advisory professional NC-ed.) is a key guy in this. like yourself could be against violence and confrontation.

32 Special Report EIR May 13, 1980 Isn't that what military strategy and war are all about? Q: What corporations would you say are farthest along Whitsun: Look, remember what I said about the "awak­ in pushing the Aquarian Conspiracy? ening" process. In any such process, there is a' split, Whitsun: The best are those corporations modeling between two groups: Those who say, we refuse to use the themselves after Japan. They are achieving the break­ old, against those who are against the new. There is a throughs in productivity. Tenneco is one. Several insur­ polarization going on. Novus'sjob is to do the bridging. ance companies are doing it. A lot is done out of Holly­ This means that we see, for example, in the Proposition 9 wood and by the film industry. Television, too. Also, movement and related phenomena in the Reagan camp good science fiction lays the fo undation for change, even a possible bridging into the Aquarians. if the author is not completely aware of it. You should There is no Novus opinion or consensus. There is only talk to Dale Phillips of the Public Broadcasting System a consensus on the process of the decision, on the neces­ and ABC. Tell him you spoke to me. He is preparing for sity of self-reliance. There is less and less faith in macro­ 198 1 -season futurist films, looking to the year 2000. management. This is true among corporate executives, There is also an important book called Europe 2000 by who are thinking more and more of decentralization. Peter Hall. Oxford University Press published it. Small groups, citizens groups are the key. network The power of the is something that most Q: Which thinktanks are most involved? leaders are not aware of because of the obsession with Whitsun: Stanford Research Institute is getting into this the macro, with the vertical. Something powerful is very deeply. Schwartz and Harman, in particular. Other happening. McLuhan is right when he sees the medium, thinktanks are too hooked on the old paradigm, but SRI the means, as the message. All of this fits together. We is different. The American Enterprise Institute is out of have talked directly to 10,000 and are otherwise reaching it. Rand only has a few good people. I was there for four 1 million. The process of networking requires catalysts. years and I don't think much of it. That is the importance of the Anderson campaign. Will In terms of military-strategic thinktanks, there is he be successful as the lightning rod to attract the ener­ BDM, for Braddock, Dun, and McDonald in Washing­ gies? ton. It is doing a lot of work on alternative energies. By 1982, I can tell you, we will see the impact of all Another good consulting outfitis Booz, Allen and Ham­ this. Anderson could be the lightning rod for the Aquar­ ilton. A third is Arthur D. Little. Jim Gavin (Gen. U.S. ian Conspiracy, because we are transcending the two Army ret.-ed.) there is very interested in these things. political parties. Not so much the new consciousness as such-it's too specific to put it that way. The reality we are in is too Computerized Aquarians multidimensional to put Gavin in a box that way. It is a We are eager now to see the same happen in Europe. matter of value structures, institutions. You cannot focus Do you know the Green Movement of Europe, in France, on any one dimension. Germany and England? It, too, is attracting people from It sounds kooky and silly but we are dealing with the traditional parties. The Greenies are the Novus of some very big numbers whose reality has not yet been Europe. We'll contact them soon to make this more manifested. The old precedents are being eroded. A formal. They'll bejoined by computer networking. These typical awakening, remember, takes 30 years offerment. networks will be linked by a computer. We are now only slightly more than midway. And the For example, if you want to know about holistic last decade of the awakening is the most tum ultuous. medicine, you input that request, and you get it out. Smug media, journalists, and television men who There is one system already doing this, The Source at used to think otherwise will start joining the new wave. MacLean, Virginia. Right now in Los Angeles, San Francisco, and Sacra­ We are getting into this now so that we can get an mento, things are changing. Reporters I know there are inventory of skills and viewpoints. Because of this, we hitting entry-point! Why? The specificcatalyst is hard to will have quite a valuable campaign mailing list for the identify. new presidential campaigns. The media will change. I just spoke to Brendan The political parties aren't important anymore. Peo­ Stoddard, ABC-TV's president, and he said: "I'm trying ple in both parties are saying that the parties are dead, to get spiritual and consciousness-raising themes · into they're just skeletons. Congressmen no longer feel an shows." This is a powerful guy, who shows little of his obligation to party discipline. This is an expansion of intentions to his masters, out of fear of hurting the what David Broder wrote in his 1972 book, The Party's ratings. But the new show, "It's Incredible," which deals Over. We have moved much further since then. with psychic research and psychic shifts of the mind is at The network is pervasive. The next step is the com­ the top of the ratings! It is an awakening program. puter link-up. After that, will we form one big group? A Television will make things happen very fast. Televi­ third party? I don't know yet. sion is the major catalyst.

EIR May 13, 1980 Special Report 33 The difference between their science and ours

by Lyndon H. LaRouche, Jr., Contributing Editor

Over the most recent period, the combined intelligence The Olympians may play with the world, and so come resources of my associates has been conducting probes to delude themselves that they are all-powerful. They to determine the extent to which the self-styled Aquarian have thus ignored the higher order of lawfulness which Conspiracy has so far succeeded in transforming business actually rules this universe. leaders, responsible military officials, members of Con­ gress, as well as others, into deranged kooks. What are the Aquarians? The preliminary results are horrifying. The popular book cited above implies that the "Age More than 100 members of the U.S. Congress are of Aquarius" is relatively a new phenomenon. being transformed currently into kooks. Not only is the Their argument to this effect, as the book more or Pentagon a hotbed of this same sort of brainwashing, but less accurately reports that rhetoric, is that recent devel­ there is a special unit, called the "delta group," which opments have superannuated the entire sweep to date of concentrates on transforming the Joint Chiefs of Staff Christendom's commitment to scientific and technolog­ into a deranged group of such zombies. ical progress. Now, they insist, the evidence ostensibly in The Dionysian cult-conspiracy outlined in the book support of the "neo Malthusian" doctrines of the Club "The Aquarian Conspiracy" is not, unfortunately, some of Rome has put a period to approximately 2,000 years egregiously wild piece of fa ntasy-fiction. It is not only of the Age of Reason. the drug-ridden, unwashed varieties of "environmental­ With that, they propose to usher in the Age of ists" and terrorists whose minds have slipped into the Unreason. In a word, the ancient Manichean doctrine­ watery coma of the "Age of Aquarius." The topmost gnostic guises of the Isis-cult and its Dionysian sub-cult command-structure of government and business is being fully in bloom. transformed, rapidly, into a collection of such zombies. There is nothing new in fact in this scheme. It is as Exemplary is the mental condition of fo rmer astro­ ancient as its earlier appearance in Sodom and Gomor­ naut, Senator Harrison Schmitt (R-N .M.), who is report­ rah, the ancient magicians of the Whore of Babylon, the ed to have introduced a proposal into the Congress: to Phrygian cult of Dionysus, the ancient cult of Isis, the determine whether injury to some cattle in his state might cult of Apollo, the Peripatetics, Stoicism, and the Roman have been perp etrated by extraterrestials! It appears that Caesar's "mystery religions." In fact, this policy has been Senator Schmitt's formerly respectable mental condition the continuing commitment of the descendants of the has not been exactly improved since his exposure to the ancient senatorial families of Rome, as centered in recent notoriol1s controller of Senator Jacob Javits, resident centuries in the creation of the pseudo-Christian Isis­ British intelligence "asset," Arthur Ross. cult, the Society of Jesus. Senator Schmitt's aberration is, unfortunately, typi­ It is not properly astonishing that the centers propa­ cal of the drift toward lunacy among the congressmen gating the Aquarian cults within the United States today and others subjected to the Aquarian programming. are the New York Anglican Cathedral of St. John the It used to be said, that whom the gods would destroy, Divine and Georgetown University. they firstdriv e mad. It should be added, with emphasis, Nor is there anything original in their program. The that there is nothing extraterrestial, excepting delusions promotion of the combined brainwashing techniques of such as those of Schmitt, in the agencies behind the anti-industrial "environmentalism," "recreational" current spread of lunacy among the leading circles of a drugs, rock-like dance-orgies, terrorism, pornography doomed United States. The authors of this plunge into leading into proselytizing homosexuality, and "charis­ Erebos may be Olympians in their delusions; they only matic" religious irrationalism like that of Jesuit "Liber­ imagine themselves also to be gods as well. ation Theology," are all as ancient as the identical pro-

34 Special Report EIR May 1 3 , 1980 In the early I 960s. u.s. space exploration. and the prospect of their children becoming scientists captured the imagination of the population. Today . through an induced social crisis. a generation has become addicted to drugs. rock music. environmentalism. and hor05copes. gram of the Phrygian cult of Dionysus. of the nature of those laws of the universe which the The most recent of the comprehensive studies of the Anglicans, Jesuits, and other satanic Aquarians are in­ ways in which this program degrades the moral and solently proposing to violate today. mental powers of the credulous is Dante Alighieri's It is those laws of the universe, so accessible to the systematic analysis of this in the "Inferno" canticle of his informed mental powers of any sane person, which warn "Com media," back at the onset of the 14th century. unequivocally and undebatably of the doom symptoma­ Unless this Jesuit-Anglican sodomy is stopped cold, tized by Senator Schmitt's cited aberration. here and now, the United States is doomed to die as surely as Sodom and Gomorrah died as a consequence of What is knowledge? the earlier version of this Jesuitical program. That doom Take the psychoanalysts, the mystics and the rest of is not a matter of the long term. It is imminent for the the corrupt lots offakers to one side. What is the empiri­ months, or, not longer than a very few years, immediately cal test of a sane mind, the test of which kinds of ideas ahead. and beliefs are sane, which delusions? A nation which tolerates this becomes quickly mor­ The question of sanity is a practical question: Wh at ally unfit to survive, and will not survive. kinds of ideas. developed as beliefs by what method. prove adequate to enable the human species to perpetuate its The laws of the universe existence? If one comprehends actual Apostolic Christian the­ This is not, and could not, be a question of the actual ology adequately, in opposition to the satanic cultisms of or approximate immortality of the individual qua indi­ the Jesuits and their kind, one understands exactly how vidual. Civilizations are saved by the self-sacrifice of Christianity did save Mediterranean civilization, and soldiers. Indeed, the survival of our species, of nations, is doubtless all humanity, from the doom intrinsic to the a constant activity of self-sacrifice by parents, and by Roman imperial political order and culture. What Chris­ individuals in other ways. It is the survival of our species, tianity rescued mankind from was precisely what the of entire human cultures, which is the irreducible, pri­ satanic Jesuits are proposing today-as an "Age of mary fact to be considered in determining what is truth, Aquarius." what is sanity. This is not an opinion, but a scientific, empirically The fundamental question of sanity is posed in first demonstrated fact. The most direct proof of that fact is approximation by testing which ideas, as the governing secured by rejecting the incompetent sort of doctrines fe atures of the characteristic informed conscience of the taught as "economics" in universities today, for a scien­ ruling institutions of societies, enable those societies to tific economics whose ABCs are almost axiomatically perpetuate their populations on at least the same demo­ common sense in their simplicity. graphic levels and at least a constant level of the material This analysis leads, step by step, to a conclusive proof preconditions of existence of such a population? It is the

EIR May 13, 1980 Special Report 35 kinds of ideas which enable mankind to survive which al of a growing population of at least equal per capita are symptomatic, in the first approximation, of the inter­ degrees of power over nature generally. related qualities of truth and sanity. We divide the population's households as a whole Yet, particular ideas are, generally speaking, outlived into two approximate parts. This need be only a consist­ over the course of time. This informs us that our first ent method of approximation, for reasons we shall give empirical tests for truth and sanity are but a useful first below. One part is represented by those households approximation. It is something deeper which is enduring. which, as an aggregation, supply the labor-force for As societies progress, the successful particular ruling production of tangible, useful wealth. The residue repre­ ideas of yesterday are replaced by a new set of ruling sents waste, administration, and services. This residue ideas. Insofar as that succession correlates with demo­ may perform useful, even indispensable functions, but it graphic progress in man's power to survive, this succes­ does not produce wealth. At best, it merely organizes and sion of ruling ideas within successful branches of culture services the productive process. reflectsso mething deeper. It reflectsan un/olding method This analysis is properly reduced to the equivalent of of developing ideas. in conjunction with that aspect of modified versions of the accounting categories associ­ society's practice which determines the successful pro­ ated with David Ricardo. There are three categories of duction of the material preconditions for survival. output of wealth, as fo llows: Looking at this matter more rigorously, we compre­ (1) Symbol "C": the portion of output which must be hend that the pattern described by such a method of alloted to maintain productive capacities in the equiva­ ordering progress in particular sets of ruling ideas is lent of status quo ante: improvements of land and live­ what might be termed otherwise a principle of scientific stocks, plant, equipment, machinery, semifinished goods progress. By such "scientificprogress" we mean a grow­ inventories, materials, supplies, and energy. ing correspondence between the actual lawful ordering (2) Symbol " V": the portion of output which must be of our universe, and man's method, through ideas, of alloted to maintain all the households supplying the mastering the application of such laws. productive component of the labor-force, both actually It is ideas which are a coherent expression of such a employed and potential. self-perfecting body of scientific progress which are rel­ (3) Symbol "S": The residue, or gross profit,of total atively true. It is minds which are governed by the prin­ output, after deducting C and V. ciples appropriate to such progress which are sane. All of the overhead expenses-waste, military costs, All contrary tests of truth and sanity are false. All administration, and services-can be symbolized by "d." ideas developed in opposition to such tests are fa lse, and The allotments for "d" are secured as portions of S, such the minds which cling to such false methods are insane. that (S-d)=S', or "net profit" of the total output of that This does not mean that no psychiatry is useful. It society. means that competent psychiatry must begin with the The idea of "natural resources" as such is an absurd­ principles of truth and sanity we have summarily identi­ ity. For example, a cubic mile of the earth's surface fied here. It means that the function of clinical psychiatry contains somewhat more or less than a current year's is to uncover and neutralize those impulses which cause requirement of global mineral requirements. The recy­ the victim of such impulses either to act contrary to cling of junk combined with this would mean an unend­ knowledge of relatively valid ideas (neurosis), or acts ing supply of such "natural resources." However, a upon delusional beliefs (psychosis). It must be stressed natural resource for a particular economy is defined by that the tests of sanity are not provided by normative social cost of extraction of useful forms .of semi finished tests of beliefs per se; no psychiatrist is competent unless product. Those sources which cannot be economically he or she proceeds from comprehension of and fidelity to exploited are not considered usable natural resources. the principles of truth and sanity we outline here. So, "natural resources" is actually only a relativistic notion, correlated with a certain backwardness of tech­ nological progress. If we can raise the energy flux density Demographic economics of controlled energy sources sufficiently high, at a suffi­ The question of whether or not a society's practice is ciently low social cost, everything becomes an economi­ sane or not is manifest in the most concentrated and cal natural resource. comprehensive manner in the varieties of economic anal­ So, the notion of relatively finite natural resources is ysis which proceed from the sort of demographic criteria merely a way of reflecting the underdevelopment of an to which we have referred above. existing productive technology. In a "zero technological We take the society as a whole as our primary unit of growth" society, the depletion of the kinds of natural empirical study. We examine the society's ideas by ob­ resources correlated with the fixed technology would serving the way in which the society organizes its practice mean the collapse of the society. to produce for itself the material preconditions of surviv- Increased costs of C would deplete S, while the rise in

36 Special Report EIR May 13, 1980 social costs of overall production would also lower the misinformed, notion of such a breakthrough is the trans­ ratio of national productivity, S/(C+ V). The resulting fo rmation of our ideas concerning the lawful organiza­ shrinkage of S', toward even negative values, would halt tion of the universe through the emergence of the notions the possibility of population growth, and would lead to of "relativity." a condition of fa mine, epidemics, and homicidal social It is the notion of a developmental unfolding of chaos. The parameters of demographics would decline, successive, ever higher-ordered hypotheses, each advance and an absolute spiral of decline toward savage depopu­ corresponding to a crucial-experimental breakthrough, lation and savagery would ensue. which is the proper notion of science, and of truth. The Thus, the culture whose ruling ideas directly or other­ transfinite conception which defines a subsumed, or­ wise efficiently prevent technological progress is the dered sequence of hypotheses corresponding to crucial­ typification of an insane culture which has lost the moral experimental breakthroughs, is the proper notion of fitnessto survive. science and of truth. Th is is not a mere opinion. mere alternative "explana­ The physics of truth tion." but is the only judgment which corresponds to the The transformation of productive technologies which empirical evidence. correlates with a society's continuing ability to survive Therefore, the ordering of the universe which corre­ signifies both an increasing per-capita energy through­ sponds to this notion of truth and of science, is the only put overall, and also an increase in the flux density of the true, scientific conception of the lawful ordering of that energy-sources of production (the equivalent of energy­ universe. The correlative of science is the ordering of the sources of higher temperature equivalent). In secondary universe which, itself a transfinite, subsumes rising values school chemistry's language, a twofold increase of this for the hydrothermodynamic values of S' I(C+ V). sort is the "reducing power" of the society. Human practice proves that no other knowledge can This cannot be the simple energy of scalar primitive­ be true. This is the knowledge which corresponds to ness. The expansion and the energy-intensity of produc­ continuing human mastery of the lawful ordering of the tion are to be measured, as combined, indispensable universe. It is, otherwise stated, the degree to which developments, as an "investment" of S' in capital for­ human behavior and knowledge corresponds to that mation, correlating with a secular increase in the capital­ lawful ordering that human behavior is in efficientagree­ intensity ratio, C/V. The simplest expression of the rate ment with the lawful ordering of the universe. at which a society can effect this is the rate of profit, S'I Therefore, ideas about the universe and its lawful (C+ V). Hence, what is required is not only increasing ordering which correspond to the conceptions just devel­ magnitudes of energy at rising energy fluxdensities. This oped are the only conceptions which are real, which must be expressed in rising relative hydrothermodynamic represent truth and sanity. values for the "rate of profit," S' I(C+ V). The energy­ throughput is alloted, as consumed, to S', C, V. The theology of physics This cannot be reduced to labor-time equivalents, These are the principles which are to be traced contrary to Ricardo's and Marx's schemas. The potential through Leibniz and Carnot's circles into the emergence for rising productive-power of productive labor corre­ of the Riemannian physics of the multiply-connected lates not merely with a rise in the equivalent consumption manifold. As conceptions of a more general sort, they are of labor (relative to a preceding interval of production), very old, at least as old as Plato's dialogues, and also the but with V shrinking as a percentile of the total. of S, V, characteristic conceptions of Apostolic Christianity. C. They are also the outlook of Rabbi Philo Judaeus, the S' must rise faster than C/V. collaborator of St. Peter at Rome. So, the analysis of this process of improved reproduc­ In Plato, these conceptions center around the notion tion of the productive processes of society must be ex­ of the "hypothesis of the higher hypothesis," which is the pressed as a problem in hydrothermodynamics. Logos (Holy Spirit) of the Gospel ofSt. John. The notion Therefore, the lawful organization of energy in the of consubstantiality, the central ontological-theological ·universe which corresponds to human survival is of the conception of Christianity involves a strictly Platonic fo rm of rising values of the ratio S'/(C+V). conception of physics. The Christian God is not a pagan­ This rise is effected as successive forms of technolog­ like, irrational anthropomorphic providence, but a crea­ ical progress. That succession is defined as the realization tive intelligence, consubstantial with the universe as a of basic scientificpro gress. whole, and also with a lawful princ iple of continuing Basic scientific progress is not defined by ordinary creation (enumeration of higher-order domains in a discoveries, but only by those special cases of discovery manifold) which is described by the notion of the "hy­ which are commonly described as crucial-experimental pothesis of the higher hypothesis." breakthroughs. The popular, somewhat distorted and It is fr om this vantage-point of unequivocal Apostolic

EIR May 13, 1980 Special Report 37 Christianity that we report, with absolute certainty that the cited Jesuits' conceptions are not Christian, but are a nominal, counterfeit Christianity based in the ontologi­ cal and cultist charismatic conceptions of both the Isis cult and of what St. John describes as the "Whore of Babylon." Theirs is the doctrine of the "fallen angel," Satan, the semitic name for Dionysus. Clearinghouse: The Aquarians The characteristic doctrine of the satanic cults over the 'new age' the millennia has been centered around what is most rigorously termed "the oligarchic model," and known during the middle of the 4th century B.C. as the "Persian in Congress model." The function of the cults, including the cults of Dozens of Senators and Congressmen are members. Dionysos, Apollo, and Isis, as well as of the Mesopota­ Hundreds have attended its meetings. And it is one of the mian magicians, is to degrade mankind into a lunatic most influential institutions on Capitol Hill, not only condition in which the oligarchists' slaves will not only shaping specific pieces of legislation, but shaping the accept, but will work to bring into being the "oligarchical very way America's legislators view the world. model." That model is a "zero technological growth" This is the Congressional Clearinghouse on the Fu­ fo rm of antiurban society, combining what popular ture, an "Aquarian Conspiracy" organization that, opinion would identify with rule by allied feudalist and along with the Congressional Research Service, is effi­ rentier-financier forces, mixed with the sodomic lunacies ciently brainwashing U.S. lawmakers into supporting of Aldous Huxley's Brave New World. the Club's zero growth perspective. Aquarius is but a new name for Satanism, overlap­ The Congressional Clearinghouse specializes in "im­ ping the Liberation Theology of the Jesuits. ages of the future," or "futurology." Its staff and lectur­ This problem is not only unoriginal in the span of ers feature a number of science fiction writers of notorie­ human history. It is not original to this century. The last ty-Isaac Asimov, Ray Bradbury, Hal Clement-and expression we had of this, until now, was Nazi Germany. such oracles of "a new dark age" as Barbara Tuchman The sort of lunacy which Nazism represented in (A Distant Mirror), Marilyn Ferguson (The Aquarian practice could not be effected by sane people. The Odin Conspiracy), and Alvin Toffler (Future Shock. Th e Th ird and Thule cults are exemplary of the "Aquarian" ideol­ Wa ve). They have in common a disbelief in the arguments ogy which permeated the Nazis generally. To transform of science, and a hatred for economic growth and scien­ the United States into a fascist horror, the Jesuits and tific progress, which their "images of the future" seek to their Anglican partners had to eliminate the last efficient eradicate from the minds of Congressmen. vestige of the American dedication to scientific and Says Clearinghouse director Ann Cheatham, describ­ technological progress from the controlling institutions ing the transformation of elected officials into mystics, of society. "in some way I don't even understand, we have addressed So, typified by the conceptions of the allies, H.G. a deep need in Congress to speak to people's sense of Wells and Teilhard de Chardin, the one-worlder Aquar­ frustration and pain, to the awareness that you don't ians destroyed first much of the youth of the United have to pretend you know exactly what to do, because States-through the Chardinesque-Huxley "entry nobody knows what to do right now." point" of drugs, and used the drug-destroyed minds of a Amid the worst crisis in the history of the nation, youth lured into pornography, disco orgies, and homo­ over 200 members of the House and Senate, through the sexual cuitisms, into "post industrial society" antitech­ seminars, dinners, newsletters, and discussion groups of nology, hooligan cuits, and thence into lurid "sensitivi­ the Clearinghouse, are now celebrating the fact that they ty" cults, "charismatic" fo rms of satanism, often in the "don't know what to do right now." The crux of the name of Christianity. process, however, is that Clearinghouse personnel quick­ The decay of the United States' leading circles is so ly assume the role of telling Congressmen what to do. bad that a mentally unbalanced Carter is tolerated as "It is impossible to measure what has happened to nominal President, and that a wholesale assault on the themembe rs of the House and Senate who have attended very idea of Reason appears almost unopposed in those these monthly dinners," says Congressman Charles Rose strata. (D-NC), "but surely we are not the same as we were Either we end this Jesuit-Anglican lunacy, or we shall before we heard them ." not long survive. Subtlely, the Clearinghouse convinces its Congress-

38 Special Report EIR May 13, 1980 men that they themselves have developed the new "dark death cultists, environmentalists and witches and devil­ age" perspective the Clearinghouse was created to pro­ worshippers around the country, they, too, are members mote. "The key to adaptation is people's perception of of "the Aquarian Conspiracy," reality," reports Arnold Brown, a stafferwho developed "She was very well received," says Gore. a program by which Clearinghouse participants arrive at "consensus" decisions favoring precisely what the Club A wide scope of Rome proposes. "There is no reality, just perceptions. The effectiveness of the Clearinghouse is indicated by I developed the TEAM approach for the Clearinghouse. the activity of Rep. Henry Reuss, now a believer in TEAM starts from the view that most people fear transcendental meditation who sits on the Clearing­ change-even when it's good. It upsets them and threat­ house's advisory board. Chairing the House Banking ens them, because they have to change their view of Committee, from which he launched his "Omnibus themselves and the way they relate to the world. TEAM Banking Bill" and other legislative parts of his "Reor­ tries to get people to view ideas for change and informa­ ganization for the 1980s" package, the Wisconsins Dem­ tion as things they thought up themselves. At the Clear­ ocrat has done more damage to American industry than inghouse, we get people together from all over Capitol any other figure on Capitol Hill. Hill, and help them perceive information they're given as Reuss thinks of himself as facilitating "the transition their information, and upcoming changes as their from abundance to scarcity." changes. Information becomes non-threatening to them In mid-April, with Reuss playing a key role, the and they believe they have a stake in it." Clearinghouse began to orient strongly to determining The Congressional Clearinghouse was created in specific legislation, rather than simply the "friendly fas­ 1976 by Aurelio Peccei's Club of Rome. Director Ann cist" outlook in general. Reuss is directing a series of Cheatham is one of 150 select members of the U.S. monthly Clearinghouse dinners featuring leading cor­ Association of the Club of Rome, and she and her entire porate executives. At the first of these on April 16, staff are also members of the World Futures Society. Citibank chief Walter Wriston called for complete bank­ The World Futures Society is an umbrella association ing deregulation and elimination of the McFadden Act, for "futurist" organizations around the nation. These which protects regional banks against take-over by out­ organizations are designed for "raising new states of of-state major banks. Reuss has the legislation prepared. consciousness" enabling persons to "see new dimen­ But the Clearinghouse's target is broader. "This year sions" in reality. Any "dimension" will do, if it disposes we are trying to prepare a 'Futures Agenda' for every one to passively accept stagnation and decay, death and subcommittee in Congress," explains Congressman economic disintegration. The organization is blunt about Gore. "We are working with all the Congressional sub­ this objective. Their conference this July in Toronto committee staffs." fe atures panel discussions under the titles, "Death and "There are many very aware Congressmen," declared Dying" and "Friendly Fascism." Dr. William Whitsun, director of military and defense The Congressional Clearinghouse, whose entire staff policy at the sister Congressional Research Service. A and membership will attend that Toronto conference, leading figure in futurology circles, Dr. Whitsun is cur­ turns Congressmen into Malthusians who will view the rently doing well-funded research into "psychic war­ collapse of the U.S. economy as merely "a change in life­ fare"-with the perspective that mind-waves might be­ style," the spread of psychotic cults as merely "a new come an anti-ballistic missile weapon! Says Whitsun, all consciousness," and the proliferation of drugs and sado­ of the nation's lawmakers "will see the impact of the masochistic homosexuality as desirable instances of Aquarian Conspiracy on them as they meet their constit­ "mind-body awareness." And recently, when the Clear­ uents in the 1980 election. The Clearinghouse is just the inghouse held a seminar on "new dimensions in science," center of the effort on Capitol Hill." the fo cus was the revival of Nazi race science undertaken The very government structure will be changed by by geneticist William Shockley. the Clearinghouse Aquarians, say their spokesmen: Last "This will influence whether Shockley will be allowed month, the Capitol Hill group sponsored a gala dinner to continue his work," to create a new master race for Barbara Tuchman, A Distant Mirror's author. Tuch­ through genetic engineering, explained an aide to Rep. man stressed the need to rewrite the Constitution, and Albert Gore, Jr., now Clearinghouse chairman. called for a Constitutional convention. At a Clearing­ According to Gore, one of the most popular speakers house dinner one month earlier, Alvin Toffler declared at the Clearinghouse was Marilyn Ferguson, author of that the Constitution was written when America was The Aquarian Conspiracy. After her talk, Ferguson met passing through its "agrarian phase." America then privately with representatives Gore, Long, Rose, Fan­ passed through its "industrial phase" but is now in its cell, Schroeder, and Mississippi Senator Cochran. She "informational phase." The Constitution is no longer informed them that, as in the case of homosexual cultists, appropriate, in the Age of Aquarius.

EIR May 13, 1980 Special Report 39 The Iran rescue caQer The wreckage of the Carter administration

by Robert Dreyfuss

The resignation of Cyrus Vance in public disagreement government, said bluntly that the Vance departure with the White House, an almost unprecedented occur­ proves that not only Europe "but even the Americau rence in V.S. history, has knocked the remaining props secretary of state" disagrees with Carter policy. out from under American foreign policy and sent V.S. The impetus behind the Vance departure, according allies and friends scurrying to duck the debris. Domesti­ to insiders, was the fact that Vance seriously believed cally, the resignation of the Episcopalian aristocrat has that the Carter-Brzezinski policy would lead to World once and for all shattered the illusion of national unity War III. Just before his resignation, Vance reportedly that had been carefully cultivated since the start of the told a friend, "We haven't begun just an attack on Iran. Iran crisis last November. We may have started World War IlL" Together with a The news of the Vance "resignation hit the summit particular Anglo-American faction associated with for­ meeting of the European Economic Community like a mer New Yark Governor Averill Harriman and former bombshell. For weeks, especially since the April 8 Carter V.S. V ndersecretary of State George Ball, Vance ditched announcement of economic sanctions against Iran and the Carter administration in the belief that the regime the V.S. break in diplomatic relations, America's NATO was heading over the brink. allies and Japan had been caught in an increasingly In this sense, the Iran crisis and the rescue action were uncomfortable squeeze. Knowing that the proposed V.S. mere ephemerals in a much broader strategy leading to meastttes against Iran would be counterproductive and what Ball described this week as a "pattern of escala­ dangerous, they were also aware that Washington was tion." The New York Times, in an editorial on Vance's making their acceptance of such measures a litmus test resignation, said what many others were thinking, that of their loyalty to the Atlantic Alliance. With Vance's much more than Iran per se was involved in Vance's resignation, which reportedly stunned the European decision. "Duty will not be done until Mr. Vance tells the leaders only just recovering from the shock of the failed nation what he findsso reprehensible about ... rescuing V.S. rescue action, the Europeans felt relieved of any hostages," wrote the Times. "If Vance so feared the responsibility for what many French and West German failure of the rescue mission-and perhaps even more the leaders considered to be knee-jerk solidarity with the success-it must be because he knows more than the rest Carter administration. Le Figaro, the conservative of the country about the President's mood and the drift French daily which often reflects the views of the Giscard of his policy in these days of frustration."

40 International EIR May 13, 1980 Iranian soldiers look over the wreckage of a u.s. helicopter in the Iranian desert. Photo: Sygma

New York Times columnist James Reston, close to Vance ever since the secretary served on the board of the Times company, reported that what Vance sought was the dismantling of the powerful National Security Coun­ cil and its downgrading from a policymaking to a simple coordinating body. What is certain is that the failed raid on Iran and the Vance resignation have plunged the country into the most profound fo reign policy crisis in this century, cou­ pled with a complete fragmentation and disintegration of political leadership. What is much less certain is the actual course of events in and around the attack on Iran itself. At this point, what can be said with some assurance, according to EIR's sources, is the fo llowing: First, the mission was not aborted because of the failure of three helicopters. Informed military experts assert that the chances of those helicopters failing sim ul­ taneously was approximately I in 10,000. Further, ac­ cording to reliable reports, the Soviet Union was in­ volved in direct military action against the U.S. raiding party. During the operation, CIA sources report, a Soviet Mig jet fighter was shot down by U.S. forces. According to other information, the Soviet air force carried out a limited air strike against the exposed U.S. force on the Iranian desert, while one source asserts that the Soviets did not actually attack the U.S. party but simply sent Cy rus Vance: Wh at does he know? Photo: U.N.

EIR May 13, 1980 International 41 several Mig-25s over the landing area "and someone in strengthen the grip of the clerical regime by providing a the field command panicked," thus aborting the mission. rallying point for them against their growing opposition, Second, several sources, including published reports much of which is getting powerful backing fr om Iraq. in the Kuwaiti AI-Qabas, claimed that the Kremlin got To the extent that the operation was a rescue action, on the "hot line" with the White House to warn against it could only have succeeded with the collaboration of continuing the attack on Iran. Despite Pentagon denials the Iranian leadership, many of whose leading figures of such reports, U.S. assertions that the Soviet Union did would like to be rid of the hostages in a manner that will not know about the raid until the U.S. told them 30 not open them to criticism for having made a compro­ minutes beforehand are not credible, and intelligence mise with "the Great Satan." specialists agree that Soviet intelligence would have de­ tected the raid even while it was in the planning stage. Israeli intelligence leaks that appeared one day before Policy vacuum the raid, concerning U.S. air activity from bases in The wake of the attack on Iran, has created a policy Egypt, indicates that the raid itself was no secret to vacuum in Anglo-American circles. While key forces in insiders. New York and London have realized that the Brzezinski Third, it is certain that the U.S. government and White House is heading for war, in both the rest of Iranian authorities, including Foreign Minister Western Europe and for the Soviet Union the scenery is Ghotbzadeh and President Bani-Sadr, acted in full col­ dominated by the common understanding that the situ­ lusion with the United States, as the report below makes ation is out of all control. In fact, at this writing, reports clear. Thus, the action could not have been designed in continue to come in with evidence that Brzezinski is still order to overthrow the Khomeini regime-since, in fact, building up forces in the area and keeping options open the impact of the U.S. action would have been to for more military action in the immediate period ahead.

general U.S. strategic alert called during the opera­ tion. While there has been, as of this writing, no confir­ mation of this last hypothesis, reports have begun to surface in the international press that the U.S. and the u.s. -Soviet hotline Soviets were very close to W orId War III last week. According to an account in the May 1 AI-Qabas, invoked during Iran crisis? "When Cyrus Vance was shown the range of options involved in the action, he told Carter, 'Mr. President, Five top-level European sources reported to EIR this you are not carrying out a rescue mission. You are week that President Carter and Soviet President firing the first shot in World War III.' It was at that Brezhnev were on the "hotline" between Washington moment that Vance tendered his resignation." and Moscow during last week's Iran "rescue opera­ tion" crisis. This report was propelled into the international press as well by an account in Kuwait's AI- Qabas, What aborted datelined Paris, that the two leaders had been in "hotline" communication during the peak of the cri­ the 'rescue mission'? sis. The consensus among these sources is that some­ Three high-level U.S. policymaking sources indepen­ thing "much bigger" than a rescue operation was dently reported their assessments May 1 that the going on last week. While the conventional wisdom reason that last week's Iran "rescue mission" had been fr om these circles is that the Soviets were irate- over aborted by President Carter and/or the on-site com­ the massive dimensions of the U.S. operation being manders was that the Soviet Air Force moved in force launched, another school of strategic thinking surmis­ against the planes at their staging-ground, either at­ es that the Soviets would not "go to the brink" in this tacking them or threatening to mount an attack. Once way unless they were responding to some kind of the Soviets made their move, these sources concur, the

42 International EIR May 13, 1980 From this standpoint, the British intend to take ad­ vantage of the very fa ct of the appearance of a crazed White House in order to attempt to strengthen their own influence in continental Europe. Essentially, the British argument is that the "special relationship" between Lon­ don and Washington will allow the British-whose Lord Carrington arrives in Washington this week-to repre­ THE RESCUE RAID sent the interests of all Europe in taming the American monster. Will Brzezinski Thus, within the councils of the EEC the British have been arguing, albeit with questionable success, that they be allowed to become the arbiter and spokesman for try it once more? Europe. But along with the wreckage of American helicopters The Carter administration's aborted raid into Iran last and C- 1 30s on the Iranian desert is the wreckage of the week has set the stage fo r gradually escalating, low­ painstakingly cultivated U.S.-British strategy for putting intensity operations in Iran and throughout the region, cumulative pressure on Western Europe. Whereas only leading inexorably to a follow-up U.S. military adven­ last week the Europeans were caught up in a process of ture that could well trigger a cutoff of oil supplies and a step-by-step capitulation to NATO, since the Iran events, full-blown military confrontation with the Soviet Union. the entire geometry of European politics has shifted. The first in this series of escalating incidents occurred Which direction Paris and Bonn will now take is an open early April 29, when U.S. Air Force fighter planes at­ question. tacked an Iranian reconnaissance jet over the Gulf of Oman. Although the Pentagon denied the affair stating that the incident involved only a routine "shadowing" of the Iranian plane, the Iranians claimed that an alterca­ U.S. command panicked and the escapade was called tion took place, with their air fo rce successfully repulsing off. the U.S.jets. According to one leading New York-based for­ National Security Council chief Zbigniew Brzezinski, eign policy adviser to several presidential administra­ the loose nut of the Carter administration, is the architect tions, "the only information that I have seen that of Washington's suicidal policy to go to the brink-and makes any sense at all is that the mission was aborted beyond-in Iran in the interest of taking on the Soviets because of an actual Soviet attack or because of the "once and fo r all." In a nationwide television interview threat of such an attack." April 27, Brzezinski made this all but official by an­ A Washington-based expert on Iranian affairs nouncing that an aggressive "long reach" policy would provided the fo llowing account of the chain of events: henceforth characterize America's posture abroad. "On� the Soviets got wind of the dimensions of the Brzezinski's Operation Long Reach is taking the operation being launched inside Iran, they immediate­ dimension of the largest military buildup ever by the ly began overflights into Iranian territory in the vicin­ U.S. in the Indian Ocean-Arabian Sea theater. The U.S. ity of the staging-ground. They sent MIG-25s up there aircraft carrier Forrestal has entered the Indian Ocean as a warning. When our people realized what was area and, later in the week, the nuclear-powered carrier going on, they panicked, they lost their nerve and Eisenhower will also join the deployment, as the fourth called a retreat." aircraft carrier poised for action in the strategic Persian One well-informed oil industry source added an Gulf. A total of 44 warships are now positioned at the important twist to these accounts: "My information is entrance to the Gulf and are reportedly assuming battle that the Russians probably just blew the planes up. formations. In addition, U.S. Airborne troops are being There was a Soviet air strike that wrecked the mission, airliftedinto Bahrain and other "suitable areas." that caused panic in the command. The Soviet action In short, everything is primed for a showdown. was not based on hostility to our getting the hostages The Soviet armed forces newspaper Red Star has out; that they can go along with. What they can't charged that the United States may try military actions stomach is the dimensions of the operation that we in Iran again. Such actions "will inevitably lead to a mounted-especially with Zbigniew Brzezinski at the further heightening of the danger of hostilities in the helm of American policy." Middle East and a further aggravation of the interna­ tional situation," the paper warned.

EIR May 13, 1980 International 43 There is no doubt that the entire military operation war. Last week, the first of a series of bomb explosions into Iran, including its aftermath, is being coordinated ripped through Teheran-the first such terrorist actions tightly between Washington and the Teheran govern­ since the revolution. Several Revolutionary Guards at ment. According to well-placed Paris-based intelligence the U.S. embassy in Teheran were wounded by shots sources, the April 24 "rescue attempt" was plotted in fired from a passing car. The incidents, a first for the detail at a meeting in Paris of Iranian Foreign Minister capital, mark the degree to which Bani-Sadr and com­ Ghotbzadeh and First Secretary Murphy of the U.S. pany are losing control over the deteriorating internal Embassy in Paris. In addition, reports in the Syrian and situation. Outside the capItal, heavy fightinghas erupted other Arab-language press attest to the fact that U.S. between anti-Khomeini Kurdish rebels and government government ,officials are conducting intensive, ongoing forces, which are leveling the Kurdish provincial capital discussions with the Muslim Brotherhood, the secret of Sanandaj in an attempt to crush the Kurdish resist­ society of Islamic fundamentalists behind Khomeini and ance. related revivalist movements in the region. , The U.S. raid into Iran and the threat of further According to Iraqi state radio, the U.S. attack was action are serving to radicalize the entire region against "play acting carried out in orchestration between W ash­ the U.S. and into the arms of the Muslim Brotherhood. ington and Teheran." On April 25, when asked about As a result of the raid, a number of Arab states are being rumors of prior coordination between the U.S. and forced by growing internal pressure from "anti-West" Iranian officials such as Ghotbzadeh and Iranian Presi­ factions to become "more Muslim." The Kuwaiti daily dent Bani-Sadr, White House Press Secretary Powell Al-Aqba denounced the raid as a "blatant violation of a answered with a stony "no comment," thus causing CBS Moslem state's sovereignty." Expressing Saudi aliena­ to speculate about the existence of a "fifth column" tion as a result of the U.S. intervention, the Saudi daily inside Iran. Sen. John Glenn stated explicitly that there Madina cited a recent statement by the Islamic Confer­ must have been a "fifth column in or near the embassy ence against the use of force in Iran or any Muslim that we have developed." country. What is significant about the Madina report is Coordination between the U.S. and Iran continues. not so much the denunciation of the U.S. action but Following the sabotage of the mission in which three more the adoption of the Islamic Conference position helicopters "broke down," the Iranian air force rushed since it is a front for the Muslim Brotherhood. to bomb the U.S. helicopters and the disabled C-130 transport left behind by the Americans. The operation Iran conspires against its neighbors was carried out so fast that two Revolutionary Guards Taking ample advantage of the growing polarization guarding the site were killed because they were not in the area-a polarization viewed favorably and nur­ informed of the air force decision to bomb the planes. tured by Brzezinski as the number one weapon against The Iranians are now doing their utmost to create the the Soviets in the region-Ghotbzadeh embarked on a climate for "Take 2" of the Iran invasion. Following the tour of the Arab world scarcely 48 hours after the aborted aborted raid, Ayatollah Khalkhali, the head of the Mus­ rescue mission. Ghotbzadeh's aim is to stir up Shiite lim Brotherhood in Iran (the very same Muslim Broth­ Muslim Brotherhood militancy against moderate Arab erhood with which the Carter administration is collud­ leaders in the Gulf. His principal targets are the govern­ ing) displayed the charred remains of the dead U.S. ments of Iraq and Saudi Arabia. servicemen left behind. The display was part of a delib­ The operation against Iraq is particularly intense. erate effort on the part of the Iranian leadership to play Coinciding with Ghotbzadeh's Arab tour, Iran media into Carter's attempts to rally the American population launched a vicious propaganda campaign against Iraq, around a confrontationist course of action. In his most reporting as fact the outright lie that Iraqi President "anti-Iran" statement since the beginning of the crisis, Saddam Hussein had been killed in a coup d'etat. In a President Carter "denounced" Khalkhali's actions as Damascus news conference, when Ghotbzadeh was told "ghoulish" and "horrible," saying, "This has aroused that the report had not been confirmed, Ghotbzadeh the disgust and contempt of the rest of the world and stated: "Hussein and his regime can go to hell." .' indicates quite clearly the kind of people we have been Arriving in Kuwait, Ghotbzadeh became the "vic­ dealing with." tim" of a phony assasination attempt, which he rapidly blamed on the Iraqis. The "proof' put forth by Ghotbza­ A short fu se deh that the Iraqis were involved was that a car, purport­ to civil war edly used by the would-be assassins, was fo und planted Setting the stage fo r U.S. follow-up military action in fr ont of the Iraqi embassy in Kuwait filled with arms! into Iran are a chain of violent incidents-all activated The provocations against Iraq signal an imminent by the raid-that have placed Iran on the edge of civil new round of Iran-Iraq clashes.

44 International EIR May 13, 1980 niew Brzezinski some years ago out of concern for what his influence might be on U.S. policy. We profiled Brze­ zinski as susceptible of a problem, a neurosis which is called in military science 'flight fo rward' ... . "One of the great fears in military science is that this THE FALWUT kind of flight forward ...mi ght occur at the command level, or the level of head of state. "That's exactly what's happened. The Carter admini­ Why Secretary stration, which has been out-gunned, whose policy has been a failure, is responding to its failure-the bankrupt­ Vance resigned cy of its Middle East and its China policy-by going into a 'flight forward' assault against the forces of the Soviet Union." The resignation of Secretary of State Cyrus R. Vance The announcement late Sunday of Vance's resigna­ yesterday removes from the inner circle of presidential tion was but the opening shot of protest within the counsel the only Carter advisor who had retained any administration. The first stage of what could be an remnant of sanity on the ways and means by which the avalanche of resignations has now begun. United States may avoid war in the short term. On April 30, Deputy Secretary of State, Warren What Vance realizes is that the policies of the Carter Christopher, the No. 2 man at State, announced his administration have brought the United States to the resignation, also in protest over Carter policies. Highly brink of a thermonuclear showdown with the Soviet reliable sources in Washington expect U.S. ambassador Union. Vance's sudden departure from the administra­ to the Soviet Union and former IBM Chairman, Thomas tion has created the conditions in which a break in the Watson Jr., to resign in protest any hour now. Watson psychotic national unity that has bound the U.S. popu­ has known Vance intimately for years-the two were lation to Carter's lunatic policies since last November's codirectors of IBM prior to 1976, and both, along with seizing of American hostages in Teheran may come. other prominent figures such as Clark Clifford, Paul Vance submitted his resignation not only as a protest Warnke, and just-appointed Secretary of State, Edmund against Carter's military rescue caper, but also against Muskie, are figures who developed in political life as the general confrontationist bent of administration for­ proteges of FDR's former ambassador to Moscow, Av­ eign policy. Although this news service has been Vance's erell Harriman. Watson arrived from Moscow today, in most severe critic on the domestic political scene, we can a surprise move, citing "personal reasons." report that his position, that the Carter administration Amidst the resignations, the first calls for the com­ should take "no military action in or around Iran," was mencement of a "Cartergate" process have surfaced, based on an understanding of a reality that Carter, from individuals and institutions that speak for oligarch­ Brzezinski, and other administration officials are consti­ ic Atlanticist families. tutionally incapable of understanding: that a U.S. mili­ Henry Reuss, long identified as congressional point tary move into the Middle East region guarantees a man for City of London financiers, has called upon thermonuclear confrontation with the Soviet Union, Carter to follow in the fo otsteps of LBJ and declare he from which the Soviets will not back down, and therefore will not seek the nomination for reelection. David Brod­ the very high risk of general nuclear war by miscalcula­ er, columnist fo r the Washington Post, today echoed tion. As Vance was aware, the very best a U.S. military Reuss's call with the assertion that only by "ending his move into the region could portend was a U.S. back­ status as a candidate can (Carter) gain the freedom of down to the Soviets, full-scale strategic humiliation, and action and credibility he needsto deal with the deepening the threat of a Soviet invasion of Iran . crisis in Iran." Vance's denunciation of Carter's lunatic policy Following the Vance resignation, the New York course, therefore, has forced into the open the fact that Times ran a lead editorial demanding of Vance-a for­ the United States is in the middle of the gravest strategic mer director of the Times-that he publicly relate the full crisis of its history. account of why he resigned; "If Mr. Vance so feared the The immediate cause of the national crisis was pin­ failure of the rescue mission-and perhaps even more the pointed for the American population by Democratic success-it must be because he knows more than the rest Presidential candidate, Lyndon LaRouche, in an ex­ of the country about the President's mood and the drift traordinary half hour national television broadcast on of his policy ... if Mr. Vance wishes to head off reckless Jan. 27. LaRouche told his audience: "Now, the Carter adventure, it is not enough to jump ship ... a defeated administration has another fe ature. We profiled Zbig- statesman speaks his mind."

EIR May 13, 1980 International 45 lost. It is doubtful she will get a second chance. Schmidt, - with the support of Giscard, made the final offer: to reduce Britain's net contribution to the EEC in 1980 from $2.2 billion to $750 million. Schmidt later said at a press conference that he would not repeat the offe r, and his Finance Minister Hans Matthoefer declared that THE EEC SUMMIT since the proposal would require West Germany to up its own contribution by $700 million, "Schmidt can't make Europe resists Iran the offer twice without my agreement ... If I say don't do it, then he won't do it again." The Commission of the EEC, its supranational body caper manipulation in which the British play a dominating role, is now issuing dire predictions of the Community being "para­ The two-day meeting of the European Common Market lyzed" as a result of the failure in the talks. heads of state ended Monday, April 28 with results wildly different from what the British press and spokesmen had Shattering the aura of unity been predicting throughout the preceding week. Instead Few signs pointed to such an outcome on Sunday, of a newly unified Europe patching up its differences for when the heads of state first gathered in Luxembourg the sake of Western "solidarity in this time of crisis," the ready to come to terms with Anglo-American pressure profound rift that has long existed between the Franco­ on Europe to back President Carter's Iran policy. It German alliance and Britain was left gaping wide. seemed that the ongoing fight between the continent and Worse yet for the British gamemasters who had London would be hastily resolved in the name of Euro­ planned to emerge from the summit as the anointed pean unity and solidarity with the United States in a "mediators" between continental Western Europe and serious crisis period. By Monday evening, however, the the Carter administration, well-informed press circles are tenuous aura of unity had been shattered. now predicting that French President Giscard d'Estaing What had happened in the interim was the resigna­ and West German Chancellor Schmidt will be renego­ tion of Secretary of State Cyrus Vance over the aborted tiating the Treaty of Rome, the EEC's fo unding docu­ Iran rescue mission. This broke the myth of a monolithic ment, to create a two-tiered Europe: a Franco-German America gathered around its President and demanding directorate running policy, and Britain and its client the same from the European allies. The French conser­ states relegated to second class membership status. vative newspaper Le Figaro 's report April 29 of the That informed speculation is going this far is a clear impact of Vance's announcement, echoed the rest of the indication of the state of affairs when the talks ended. European media: "Cyrus Vance's resignation is in some After Giscard and Schmidt bent over backwards British sense the official confirmation of Jimmy Carter's incom­ Prime Minister Margaret Thatcher refused generous petence ... Americans can no longer ignore this essential offers to settle dis'p utes revolving around Britain's mon­ fact: for the first time, the President is not just criticized etary contributions to the EEC and agricultural prices, by double-faced adversaries or overly cautious allies Giscard uncustomarily lost his temper. Slamming his fist afraid of endangering their selfish interests. He is con­ into the negotiating table, Giscard ended the talks stat­ demned by one of his closest collaborators, the chief of ing: "Under these circumstances, Madam, there is noth­ American diplomacy." Furthermore, "with Vance, it is ing more I can do for you." The French delegation issued the 'establishment' that is deserting Carter." a statement calling the summit a failure because of "the The British had been cleverly and systematically us­ English position, characterized by unreasonable intran­ ing the argument of the unity demanded since the Iran sigence." Giscard added that "I will not allow such a crisis combined with the dangers inherent in Carter's contemptible spectacle in Venice," the next European obvious instability, to position themselves in a mediating summit in June. role between the United States and Europe as a whole. Giscard did not even attend the concluding press Because of the special Anglo-American relationship conference, leaving his ally Helmut Schmidt to explain dominant throughout the postwar period, Britain ar­ to the gathered reporters that much to their regret, he gued, differences within the EEC would have to take the and Giscard considered Britain's policy a blow against a back seat because the increasingly desperate Europeans common European policy. needed the British to help control Carter. As fo r the British Broadcasting Corporation, it de­ As the London Guardian gloated in its lead editorial scribed the aftermath: "Britain is alone out in the cold April 28: "redefine Europe as an entity and as an inter­ ... it was a hard and horrible discussion." national force ... Not we the British, or we the Germans Maggie Thatcher played the game of chicken, and or even ... we the French. We the Europeans. Outside

46 International EIR May 13, 1980 1. . Europe ... we could realistically seek to operate as little more than Washington's cheerleader across the water ... As an entity ... Europe offe rs an infinite variety of opportunities ... For the moment, in the quaking after- math of the Iranian fiasco, the potential of a more unified Europe does not need to be argued point by point. It is What the press is saying an obvious necessity." The signs of acquiescence to Carter's policies that began to emerge when the administration threatened Th e fo llowing is an excerpt of Le Monde's editorial military intervention in Iran if the "allies" didn't tow the of April 30, entitled "The Post-Rome Treaty?" line, now appear to be dissolving. West Germany's press, Can the Community be made to function without which is by no means known for being disrespectful to London? ... The Germans and the French have in the American President, launched a joke campaign at the mind a "two-tiered Europe" ... which means -a expense of Carter. At the same time, Helmut Schmidt's profound change in the nature of the Community. In maneuvering room appears to have grown. While he has fact, this solution-the nightmare of the orthodox recently painted himself into a corner with electoral Europeans-has always been practiced implicitly. considerations, a poll taken by his own office indicates a Doesn't the European Monetary System only regroup solid mandate for the independent policy course he had eight out of the nine member states ofthe communit y? been mapping out. Fourty-nine percent of those polled The idea launched by Giscard d'Estaing ... to indicated that they think West Germany should be more redefine a new financial mechanism for the Commu­ independent from the United States, with only 29 percent nity, based on the heretical rule of "j ust return," opposed. Sixty percent said they oppose the deployment announces a new era, that of the post-Rome Treaty ... of more nuclear weapons on German territory. No one really knows whether Giscard d'Estaing That very issue, which came to the fo re with NATO's and Schmidt aren't just using this weapon as a scare­ December decision to deploy Pershing II missiles in the crow fo r the benefit of the smaller countries ... (But) BRD, is bound to be a top item on the agenda of one thing is certain: the French and German leaders, Schmidt's talks with Leonid Brezhnev when he goes to are seriously thinking about a reform which would Moscow this June. have a certain logic for them ...

Th e fo llowing is excerpted from the lead editorial of Die Zeit Corriere della Sera, April 30, by Alberto Cavallari, Paris correspondent.

'The super-bomb in the All the European capitals tried yesterday to undra­ matize the collapse of the Luxembourg summit ... But American WhiteHo use' this is a pious lie to hide ... the brutal news that the Th e fo llowing article appeared under the headline "The crisis has reached its lowest point. Bomb in the Wh ite House" and the byline of Wolfgang ...What counts is that the EEC has been reduced to a multinational ship without a rudder; it is entirely Ebert in the April 30 edition of the West German daily Die paralyzed ... Zeit. The very technical solutions advanced by the French and Germans in Luxembourg to resolve the The Americans have the bomb. The Superbomb. It is British problem through a new financial arrangement in Washington. More precisely stated: in the White foreshadow the end of (EEC) solidarity, the birth of a House. "two speed" Europe, the superseding of the Treaty of When it goes, it will be all over. It makes no distinc­ Rome. But if financial solidarity is abandoned, it will tions between good and evil. That is why we are all so mean the destruction of the cornerstone of Europe ... afraid. A few lonely shepherds in New Zealand, they just It is perfectly legitimate to say that the governments might survive it. But even that is not certain. The radius of Bonn and Paris, profoundly skeptical about the ofthe effect of the bomb is supposedly very large, and no Community and disillusioned by Community misad­ one cen fe el safe from it. The Americans call it, tenderly, ventures, are dreaming of a reform of the Treaty of "Jimmy." Rome that would put Britain and the smaller countries What makes the bomb in Washington so dangerous? at a grade B level. It is so incalculable. It is a time bomb, but no one knows when it is set to go off. There is also a version in the form

EIR May 13, 1980 International 47 of a missile. The firingramp for the missile is just in back of the Rose Garden of the White House. Since it is a missile, it can also backfire. The point is only whether or not we can survive the bomb. That is the point that all the responsible authori­ ties in Bonn are concerned with. Even there, people are shuddering about the bomb in Washington. THE KREMLIN Dr. End-Game, as we visit him in his new, and we hope bomb-secured, alarm station, characterizes the bomb as "Bombenerfolg (a bombastic success), that is 'The U.S. is on the the bomb in Washington looking around for successes." "We are in the special department exclusively dealing brink of madness' with keeping the bomb in the White House under obser­ vation," he explains to us. The Soviet Union's immediate response to last week's "Is there any protection against the bomb in Wash­ aborted rescue of American hostages in Iran was to ington?" I ask. describe it as an action "on the brink of madness" which "That is what the whole world is working on feverish­ could easily have led to war over the Persian Gulf. The ly. It is a race against time," he tells us. "According to news agency TASS on April 25 blamed Western Europe the recent experience with American technology there is for failing to prevent Carter's actions. still a certain chance that it might not function when the Soviet spokesmen then began to hint that a much going gets tough." Dr. End-Game nods to himself ab­ bigger operation was afoot in Iran than a simple surgical sent-mindedly and observes a telex machine. "But you rescue of the hostages, aborted due to mechanical failure. can't absolutely rely on that either," he then opines. While Moscow is not telling everything it knows-and "What are you doing concretely against the bomb?" Soviet Foreign Minister Andrei Gromyko admitted that "We are having it observed and we are continuously he is bewildered by what the United States is doing­ informed of any change in its condition," we hear Dr. some indications of the larger dimension of the affair End-Game say. have begun to emerge. "W ouldn't that be easier if it were done from Wash­ TASS issued a release April 27 charging that the raid ington itself?" I ask. "Then if Bonn or anyone else was was intended to spark a coup against the Ayatollah interested they could be informed that there was a danger Khomeini, while the Italian Communist Party daily Un­ that the bomb was about to go off?" ita reported April 28 that high-level Soviet circles in the Dr. End-Game laughed: "Surely you mean the much­ Foreign Ministry and the Communist Party believe that cited obligation to consult among alliance partners. No, the United States was and may still be planning a larger­ in Washington, they think it sufficesif we take corespon­ scale invasion of Iran, using base facilities in Israel, sibility fo r a decision which was made previously without Egypt and Pakistan. us. Besides, what you suggest would take away the Unita also reported April 27 that the Soviet Union surprise effect.An d after all what are radio and television was quite well informed of U.S, moves throughout the for?" period of the military operation, by radar monitoring in "Is there a chance of defusing the bomb?" Armenia, Turkmenia and Azerbaijan, and that Soviet "What do you think Schmidt and the other allies are diplomatic intervention to block the intervention may continuously trying to do? The problem is that hardly well have taken place. have they managed to get the trajectile which had once Some sources report that Soviet President Brezhnev again lost its orientation back on course, disarmed it, was on the telephone "hot line" with President Carter when a new horror report comes in. Here, thank you," during the mission. he then said, and took a telex report. We read: "Insecurity advisor Brzezinski had just entered the Oval Bomb Room with a kalaschinikoff in Vance's resignation his hand, muttering 'God stand by us.' " The first Soviet public reaction to Secretary of State "Dr. End-Game, one last question: How long do we Cyrus Vance's resignation was a TASS comment April have to live with this bomb?" 28 that "Carter administration policy will be showing "If we are lucky, only until the end of the year." ever more manifestations of adventurism whose symbol "And if we are not lucky?" Brzezinski is." "Much shorter." A Soviet television commentator said that the resig-

48 International EIR May 13, 1980 nation "underscores the recklessness of the United States administration's course, which fa iled to heed his advice." Vance had tried to slow "Washington's slide into an anti­ Soviet rut," the commentator said. Again, Moscow knows more than it is letting on. The stereotyped description of "hawk" Brzezinski vs. "dove" THE PRESS Vance disappeared in the Soviet press several months ago, as Pravda declared that both are committed to a policy of confrontation against the Soviet Union. Soviet Some predictions journals earlier this spring described this confrontation policy as deriving from such institutions of the "financial and post-mortems oligarchy" as the New York Council on Foreign Rela­ tions, the Trilateral Commission, and the Bilderberg Society. The press has played a critical role in the unfolding of the Soviet analysts are now trying to piece together in Iran crisis scenario. First the press hailed Europe and more profound terms what Vance's resignation will Japan's capitulation on the sanctions issue to predict an mean. Although the Soviet press has not pointed out indefinite postponement of any U.S. military action. On Vance's specifically British political ties and the fact that April 25 just such a military action, scheduled to take Great Britain is now seeking to lead Europe into a new place, was aborted. Press post mortems, advertising the Atlantic consensus in the aftermath of Carter's "madness" of the Carter administration, emphasized the debacle an article in the government daily Izvestia April necessity of rallying Europe and Japan around an alli­ 26 described Britain's years-long effort to dominate con­ ance against the Soviet Union. tinental Europe. Washington and London both hope "to strengthen the Atlantic orientation of capitalist Europe, to undermine the position of those circles in France and Times: European capitulation other countries in the European Community which have means no military move The fo llOWing is excerpted fr om a fr ont advocated an independent fo reign policy," wrote Lon­ New York Times don correspondent V. Skosyrev. page article, .. U. S. hints at delay in decision to act militar­ The article, which described Great _Britain as Wash­ ily on Iran," which appeared April 24. ington's "Trojan Horse" in the Common Market, de­ The United States today welcomed the backing it has clared that, so far, efforts to "relegate detente to the received from the European allies against Iran and indi­ archives" have failed, since West Germany and France cated that the Common Market decision to invoke sanc­ "are convinced of how dangerous the adventuristic ac­ tions next month might defer into the summer or later tions of the present Washington administration are for any consideration of American military moves aimed at world peace." freeing the hostages in Teheran .... Moscow is by no means viewing the prospects for a ...The European Economic Community decided to continuation of detente sanguinely, however. TASS reduce immediately diplomatic ties ...and to ban all ex- 25 April warned Europe that "It might have been expect­ ports to Iran except food or medicine... . ed that the U.S. allies would try to stop the Carter In Tokyo, the Japanese government decided to join administration in its reckless action, but quite the contra­ Western Europe in imposing an initial phase of economic ry happened ... .It can certainly not be ruled out that, and diplomatic sanctions against Iran .... fo llowing Atlanticist logic, the White House will demand A senior White House official said that the timing of from its allies not only applause, but also the dispatch of the allied moves made it all but inevitable that the British, West German and other military forces to Iran ... "reassessment" of American policy toward Iran, previ­ The leaders of the West European countries will not ' ously set for mid-May, would be postponed. Moreover, be able to keep silent indefinitely, they will have to the allies, soon to be partners in sanctions against Iran, determine their position." are expected to press for a delay of as much as several Pravda 27 April linked the Iran fiasco to NATO's months in any further steps .... decision last December to deploy medium-range nuclear missiles in Western Europe: "Can anyone in NATO A long-term strategy countries still hope after all that the White House would to rally the allies' consult them if it thinks of!-,sing the missiles deployed in Th e fo llowing is an excerpt fr om an OpEd "Carter's their territories?" 'Fiasco' in Iran," by Stanley Hoffmann, professor of go v-

ElK May 13, 1980 International 49 ernment at Harvard University, appearing in the New record would command the confidence of Congress, the York Times April 26. American people and the NATO allies.

In this country, paradoxically, the spectacular dem­ Financial Times: 'Carter weakened' onstration of presidential bungling will, after the ritual Following are excerpts fr om the Financial Times's edito­ rallying around the flag has passed, only reinforce the rial of April 26. chorus of simple-minded believers in force as the only solution to international problems-people whose com­ The failure has weakened President Carter as a Pres­ ing to power could provoke the biggest inter-allied crisis ident. It has caused further divisions among the Western ever and bring the world much closer to the nightmare of allies and it has enhanced the image of the Soviet Union a new 1914. as a power that can-as it did in Afghanistan-demon­ This new crisis confirms the flaws of the foreign­ strate its strength with success .... policy making process in the administration. Divisions ...The major task now before the European leaders among the principle actors produce paralysis, but secret at this weekend's Brussels summit must be to explore moves planned by an apparently small group of activi­ what means are most appropriate and to see how the tists turn out clumsy and rash. It is not only the organi­ damage to the alliance and its image in the world can be zation of the government that is bad-the absence of a repaired ....The first priority must be to maintain the long-term integrated strategy capable of rallying our alliance intact. allies and of resolving, rather than exacerbating, crises ...The U.S. preoccupation with the hostages is de­ has now become a pattern. It casts a pall over almost all flecting attention from the more important strategic of our foreign policy. issue of preventing the extension of Soviet influence in the region beyond Afghanistan ....The issue of the hos­ tages must become one in which policy is set after full 'The madman theory consultations with the allies .... The hostage issue thus of foreign policy becomes a test of U.S. willingness to submit to the Th e fo llowing is excerpted fr om the OpEd column, discipline of an alliance. .. 'Where do we go now?' .. by Arthur Schlesinger, Jr. appearing in the April 26 New York Times. London Times: 'Lawful, but not wise' Following are excerpts fr om the London Times editorial The best defense of the Carter adventure is Richard of April 26. M. Nixon's old Madman Theory. As Mr. Nixon ex­ plained to H. R. Haldeman: "Bob, I want the North American policy has, or ought to have, two objec­ Vietnamese to believe I've reached the point where I tives. The first and inevitably more important is to might do anything to stop the war." One of the few maintain the independence of Iran and to keep the Soviet voices of approval yesterday came from Henry A. Kissin­ Union from dominating the oil supplies of the Middle ger, who seems to argue that our adversaries will behave East. The second is to restore the freedom of the hostages with more circumspection if they think that the President and to save their lives .... is crazy. This argument is not likely to appe�l to our In their dealings with Iran and with the other Islamic allies, or even to impress the Iranians, who after all are powers, European countries should make two points. led by a madman oftheir own .... The first is not to underrate the United States . ...The No one can question the need for rigorous secrecy in second point is that the U.S. is not a threat to the Arab such an adventure, but that need does not have to exclude and Islamic culture and the Soviet Union is .... reponsible and experienced persons who can be counted During the period of danger ahead, while the hos­ on to raise the tough question .... Did Mr. Carter call tages are still held and American confidence is convales­ in Harriman, Ball, McNamara, Fulbright, Scranton, cent, Europe should be quick to settle her own problems, Galbraith, Kennan, Yost, and other senior figures with including the fraternal problems between Britain and long experience in international crisis? France. Europe must make herself effective in world ...When a leadership starts down the road of exploit­ terms.. ..The United States is the natural and inevitable ing international crisis for domestic benefit,this is exactly leader of the alliance but this is a moment when the rest the kind of mess in which it is likely to end. In a of the alliance can help her in that task. parliamentary regime, Mr. Carter would be finished. . .. Now that the raid has failed, there is no course left Responsible leadership, if any survives in Washington, but conciliation; it should be based on understanding. would throw out the team that conceived this misbegot­ And the effort of Europe should be to improve that ten adventure and bring in people whose experience and understanding.

50 International EIR May 13, 1980 The Bogota alIa ir Why the terrorists were thewinners

by Cynthia Rush

On April 27, the Colombian terrorist M-19 released the were far less provocative to the right wing. But in meeting 13 diplomats it had held hostage in the Dominican those demands, Turbay opened Colombia's door to in­ embassy in Bogota since Feb. 27. The terrorists had ternational human rights organizations which moved in revised their original "nonnegotiable" demands for the to help "manage" the crisis. release of 311 of their j ailed comrades, accepting instead From the initial two government officials originally $5 million. The M-19 released their hostages in Havana, involved in talks with the M-19, the number of negotia­ Cuba and then flew on to Austria where they have been tors swelled to include foreigners and members of the granted temporary asylum. political opposition summoned by the guerrillas. The crisis was resolved peacefully enough. In fact, the Dr. Erik Kobel, a Swiss physician who works for the M-19 was given a hero's welcome in Havana by the International Red Cross, was given unlimited privileges dignitaries of the Cuban Communist Party and, incredi­ in Colombia allegedly to ensure that the human rights of bly, was asked by Colombia's President Turbay to return the hostages as well as the suspected subversives were to function as a legitimate political party. being respected. Kobel visited the occupied embassy What transpired to give a group which has assissinat­ whenever he wished, held private interviews with the ed leading political and labor figures in Colombia, kid­ guerrillas and the hostages, and even held "group thera­ napped hundreds of others, took over a foreign embassy py" sessions with the hostages! and threatened to assassinate all the hostages credibility For having cooperated so willingly, the Turbay gov­ as a major political force within Colombia? ernment is now being warmly congratulated. President The crisis was in fact an experiment during which a Carter sent Turbay a letter thanking him for his "firm professional "crisis management" team successfully in­ and patient leadership" during the two-month occupa­ tervened on Colombian national sovereignty and inter­ tion of the embassy. Some of the hostages who were most ests to impose "international law." As a result, represen­ adamant that Turbay adhere to "international law" in tatives of the International Red Cross, the Human Rights resolving the crisis-such as the Venezuelan ambassador Commission of the Organization of American States to Colombia-are now proclaiming Turbay's "marvel­ (OAS) and other supranational "human rights" agencies ous" behavior. are now, for all intents and purposes, running the gov­ The evidence of brainwashing of the hostages them­ ernment's trial of M-19 suspects in Bogota under the selves, however, is the most pathetic aspect of this oper­ guise of defending their democratic rights. ation. Upon their release in Havana, several of the At each point in the crisis, the Colombian govern­ ambassadors expressed only praise and admiration for ment, already cowed by the constant threat of a right­ the M-19 terrorists, building up its image as a "nation­ wing military coup, succumbed to the methods of classi­ alist, patriotic" and very Catholic group, seeking only to cal brainwashing which alternately saw the Turbay gov­ ensure real democracy for Colombia. The New York ernment attacked for not moving fast enough to resolve Times reported April 28 that the guerrillas held a farewell the hostage situation and then rewarded when it made party for the ambassadors the night before their release, concessions to the M-19. At the same time, the M-19 and all bade each other "emotional" goodbyes. abandoned its "hard-line" demands and asked instead While the U.S. Ambassador Diego Ascencio was that the government accept the presence of international reported giving a fond goodbye kiss to one of the female "human rights" agencies as observers at the court mar­ guerrillas, Mexican Ambassador Ricardo Galan ex­ tials of their jailed comrades and as participants in the plained that "in 60 days of living together you learn to negotiations. admire people as people, if not to admire their ideas ... In the eyes of the Turbay government, these demands As people, some of them [the M-19] were excellent."

EIR May 13, 1980 International 51 -

DatelineMexico by Joesfina Menendez

Kennedy and the Virgin of Guadeloupe demonstrated, Fuentes and Paz are The Massachusetts senator got enough press during his the country's two leading enemy Mexican visit to win some Chicano votes in the southwest, agents organizing for the Iran-style but below the Rio Grande, he is no amigo. destabilization of Mexico. They vi" olently object to President L6pez Portillo's strategy of rapidly indus­ trializing the country with the use of the most modern technology. The point was not lost on Ken­ nedy's official hosts-always par­ ticularly sensitive to such diplomat­ ic nuances. "It's very simple," one source told us; "if Kennedy is with "Idon't think Mexico has a in the United States. If the latter Fuentes and Paz, he is against very favorable view of Kennedy, is done, Kennedy's 20 hour Mexico Mexico." since his is a dangerous approach. stop-over might turn out to be an Third, Kennedy locked horns With a conservative you at least unexpected boomerang for his with Mexico on the migrant worker know what you're up against; but Presidential ambitions. question. He chose to repeat in with a liberal, let alone a Kennedy Mexico his long-standing position liberal, nobody knows what he has What went wrong? of calling for "an amnesty for the up his sleeve." First, he went straight from the undocumented (Mexican) work­ This was the view offered to airport to the Shrine of the Virgin ers" who live in the United States. EIR this week by a Mexican gov­ of Guadalupe-Mexico's holiest Within 24 hours of his departure ernment official charged with religious center-where he attend­ from Mexican shores, his direct monitoring the electoral process in .ed mass. Kennedy was undoubtedly host and the head of the Mexican the United States. He added: "But trying to remind one and all of his Senate, Joaquin Gamboa Pascoe we too are playing our cards in the Catholicism, but for official retaliated: "the Mexican govern­ complex game of U.S. politics." Mexico-which adheres to a strict ment will never support an amnesty Candidate Kennedy arrived in constitutional separation of church for the undocumented workers, Mexico City on April 27 for a 20 and state-it was a sour opening since this would be like accepting hour visit, designed primarily to note. Only three weeks earlier, a that they are delinquents." Mexico puff his presidential possibilities in 5,000 person march of leftists, ho­ has always emphatically insisted the heavily-Hispanic primary mosexuals, and radical priests es­ that the illegal migrant phenome­ states of Texas and California. The pousing the "Theology of Libera­ non must be treated as an economic abundant media coverage which · tion" marched to the same shrine to and social-not a criminal­ Kennedy received, both inside and protest alleged repression of politi­ phenomenon. outside Mexico, may well help him cal prisoners in Mexico. Kennedy's There were other significant-if in that regard, but his brief stay in stop there was widely read as sup­ more subtle-rebuffs of Kennedy Mexico certainly didn't improve port for the demonstrators, as well in the course of his stay. Typical his standing in the eyes of the as possible affinity with their was the sarcastic coverage afforded Mexican government. specificcauses . him by the Mexico City daily, EI The interesting question at this Second, in the course of his brief Dia: point is whether Mexican leaders allocution before Mexico's Har­ "As he left (the Shrine ofGuad­ will let Kennedy's "amigo" image vard Club, Senator Kennedy made alupe), the few Catholics that were stand, or if they won't instead de­ three separate references in praise at church applauded the visitor ... cide to "play their U.S. cards" and of the well-knewn Mexican intel­ Outside, a deserted street awaited communicate their distaste for the lectuals, Carlos Fuentes and Octa­ him, free of all traffic, so that Ed­ Massachusetts Senator to Mexi­ vio Paz. Although scarcely noticed ward Kennedy and his entourage can-American layers they influence by most commentators, as EIR has could go to their hotel to rest."

52 International EIR May 13, 1980 •

Middle East Report by Robert Dreyfuss

Can OPEC be reunified? and Royal Dutch Shell to pull out Saudi Arabia and Iraq are acting in concert, which may of Iran's oil market and shortly undercut the renegade price-hawks in the oil cartel. thereafter Japan fo llowed suit. As a result, the Rotterdam Spot Market for the first time in months has begun to show increases in the price of petroleum products and crude oil. ' According to industry Recent announcements from the OPEC. Earlier this year the Com­ sources just back from 5audi Ara­ oil exporting giant Saudi Arabia mittee met in London to draw up a bia and Europe, the "mood is and its newfound ally Iraq to joint­ series of proposals for the cartel to clear-we are in for another round ly increase their oil producing ca­ stabilize both world oil prices and of price hikes." "If Europe goes pacity by 1 million barrels a day world oil availability. with the sanctions against Iran" by the end of this year represents An extraordinary meeting of the source noted, "hold on to your a challenge to a renegade faction the cartel was to have convened on hat." of price hawks within OPEC led May 5 to consider the proposals, The sanctions are slated to be by Libya and Iran. now two years in the making. Sud­ imposed on May 17. The Interna­ The calculation on the part of denly last week Yamani an­ tional Energy Agency meets May Riyadh and Baghdad is that a dra­ nounced that some of the Ministers 24, when sharing the shortage will matic production hike by these two were unable to attend the meeting. be discussed by the Oil Ministers largest producers in OPEC will Informed sources are speculat­ of the member states. enable them to flood an already ing that the Saudis pulled back Under such conditions, Iraq glutted market, and in so doing fr om going through with the meet­ and Saudi Arabia would make undercut the chaotic price boosts ing because of doubt that the Oil available over the coming months which have fo r the first time left Ministers of OPEC would accept several hundreds of thousands of OPEC pricing unity in shambles. the proposals. For Riyadh the ac­ barrels a day of crude to select Since last December's oil price set­ ceptance of the plan is something consuming nations on a direct sale ting meeting in Caracas, the car­ of a test of its traditional domi­ basis bypassing the m ultis. Yester­ tel's prices have continued to rise nance over OPEC. day Iraq assured France that it 'on a producer by producer basis The key challengers to Saudi would get an additional 10 million leaving the Saudi benchmark far Arabia's efforts to stabilize world tons of oil a year. Saudi Arabia behind. oil markets are the radical govern­ announced it will make another The pricing anarchy within the ments of Iran and Libya. Both 500,000 barrels a day of oil avail­ cartel erupted during 1979 right at share a strong anti-western Ideol­ able on a state-to-sta te basis. the time when Saudi Arabia was ogy colored by the dominant pres­ Europe, Japan, and certain devel­ attempting to impose a system of ence of the secretive Muslim oping nations are expected to be pricing which had been devised by Brotherhood. Both have been re­ the beneficiaries of this new oil. OPEC's Long Range Planning sponsible for price rises calculated While these new arrangments are Committee led by Saudi Oil Min­ to spark pricing leapfrogging in­ being made, 'both Iraq and Saudi ister Sheikh Zaki Yam ani. Accord­ side OPEC and outside, fed by Arabia are expected to adopt a ing to this plan, the cartel would Great Britain's North Sea oil. breakneck momentum in installing institute small quarterly price hikes Iran's eccentric Oil Minister Ali new producing capacity to insure adjusted to world inflation, elimi­ Moinfar refused to even attend the a sustainable output of 16 million nating unpredictability in pricing Long Range Committee Meeting barrels a day of oil-over half and open the door to greater co­ in London attacking the Saudi OPEC's output-by next year. The operation with the consuming na­ plan as an imperialist plot. Follow­ question is, will these efforts be tions. Both the French and West ing the meeting, Iran enacted a adequte to turn the tide of the oil German governments considered new price hike to over $35 a barrel. price rise spiral and reunify the the plan a favorable move by This prompted British Petroleum cartel?

EIR May 13, 1980 International 53 International Intelligence

nity the shutdown presents to "social of material civilization." Technology is engineers" was heralded by the fo llow­ the key to both working conditions and Europe ing passage in the May 2 New York genuine conservation of energy. Times: Sweden �hocked' by "Many Swedes, who had long re­ garded their way of life as a model of lockout of entire social justice and the triumph of reason A Zionist lobby labor fo rce in solving industrial disputes, seemed saddened and stunned by a return to fo r France ? Swedish workmen, 770,000 of them, confrontations that they believed they A new Zionist organization was inau­ have been locked out of their work had learned to put aside forever. For gurated in France this month. The places in what the international press is some, the strikes and lockouts appeared "Jewish Renewal," European _ sources billing as "the end of a long era of labor in the Swedish context almost as a com­ say, is the first step to building a Zionist peace" in the nation. In a country of 8 plement of the more threatening big­ lobby machine in France to undercut million, about one quarter of the total power rivalries of the times." French President Giscard d'Estaing's workforce was effected. At present, in­ pro-Arab Mideast diplomatic initiatives. dustries completely shut down include The movement, headed by Haghdim shipping, mining, forestry, metallurgy, Burg, is allied with Israel's ultra-right textiles, and all heavy industries. wing Herut Party, a faction of the ruling The only job categories in the private French minister calls fo r Likud Party, and is close to Israel's sector not affected are chimney sweeps, ultra-hardliner Yuval Neeman. barbers, musicians, and insurance in­ advanced R and D The French Jewish Telegraph Agen­ dustry employees. Government workers cy has released a report challenging the remain on the job. All maritime traffic The impact of space programs on med­ "Jewish Renewal" and another of its has stopped with the exception of one ical research, and the spinoffs for spe­ key organizers, Avi Prim or, for trying ferryboat to Denmark. ciality steel from work on nuclear fast to set up a machine which would include Spokesmen on both sides of the dis­ breeder reactors, are two examples cited an Anti-Defamation League chapter pute say that the shutdown of Sweden's by French Industries Minister Andre and a B'nai B'rith chapter. The views economy will last for fivefull workdays Giraud in a speech at a European Par­ being voiced by the JTA are reportedly "at minimum," in the words of an em­ liament colloquium in Strasbourg April those of the powerful Rothschild family. ployers' representative. Gunnar Nihl­ 28. His theme was the necessity of The JTA release condemned Prim or for son, a labor spokesman, proclaimed, NASA-style crash programs of ad­ publicly attacking the Rothschilds, who "The Swedish model is dead," to a rally vanced research for leading nations. from time to time have backed a softer of 40,000 workmen in Stockholm. "La­ "Planetary ambitions and grand de­ policy towards the Arabs than the Israeli bor and capital can no longer cooperate signs are not dead," Giraud declared, leadership. in the fine old spirit." despite the tendency to attack them as The decision to force a shutdown of "gobblers of capital"; they are "motors the economy was clearly taken some of industry and innovation" with direct time ago at a very high level, perhaps benefits in upgrading the economy, and outside of Sweden. The country has long this upgrading should be accompanied Mideast been treated as a "test-tube" for the by "a systematic effort to favor the mass-scale "social engineering" and transfer of technology" to developing Brown denies Soviet role "crisis management" projects of the nations. It would be "a major error," he Tavistock Institute in London, the cen­ added, to measure the impact of massive in raid cancellation ter of the British intelligence psycholog­ programs by ordinary accounting ical warfare division. The immediate methods. Speculation that there may have been cause of the lock-out was labor's anger Science, he continued, is essential to much more than helicopter malfunctions when Swedish management, remarka­ national independence, strategy, and involved in the scuttling of the U.S. Iran bly, refused to offer Swedish workers forums on the "industrial tissue" of an mission was fed dramatically Thursday more than a 2 percent wage increase. economy. A government must know when top Pentagon officials took the The "crisis management" opportu- how to use it as "the vectors of progress trouble to issue a public denial that

54 International EIR May 13, 1980 Briefly

• JAPAN'S PREMIER Masa­ yoshi Ohira and President Carter signed a five-year agreement on direct collaboration in a broad array of basic scientific research May 2 in Washington. No new research or funding for existing research is provided, however. Soviet military intervention had played the Shi'ite communities in Saudi Arabia Rather, ongoing research projects any role in that decision. which work primarily in the Saudi oil in both countries will become According to Defense Secretary fields, not far from Bahrain. joint projects through direct par­ Harold Brown, it is a "flatuntruth" that The sudden resignation of the ticipation of both countries' sci­ the Soviets had fo rced the canceling of United Arab Emirates Foreign Minister entists. The Carter administration the mission by threatening to send Mig- Ahmad Khalifa Suweidi is seen as a indicated that it feels that the most 21 fighters to attack the rescue aircraft. setback for the moderate Arab leader­ important aspect of the agreement "The way they (the Soviets) found out ship in the gulf. Suweidi resigned as a is the provision for "consulta­ is that we told them" after it was over, result of a rivalry with the Prime Min­ tions" before the results of the Brown insisted. ' ister of the Federation whose state, Du­ research are commercially ap­ Brown's denial did little to stifle the bai, maintains close ties to Iran. plied-give the U.S. potential rumors which abounded in Washington veto over advances in Japanese and European capitals of a U.S. back­ applied technology coming from down in a Carter-Brezhnev hotline con­ the research stipulated in the frontation. In fact, the failure of Brown agreement. to accompany his flat denial with any U.S.S.R. credible explanation for the precipitous • SADEGH GHOTBZADEH, haste of the U.S. withdrawal, during Gromyko attacks Zia fo r Iran's foreign minister, said that which equipment and documents were fo stering hostility his country "would not negotiate left behind along with the bodies of U.S. with terrorists" in response to the servicemen, has only fanned the flames Andrei A. Gromyko, the Soviet Foreign raid on Iran's embassy in London of such speculation. Minister, while appearing before the where Iranian diplomats are being French press, delivered a scathing attack held hostage. Armed Iranian Ar­ on Pakistan's President Zia ul-Haq for abs seized Iran's London Embassy allowing Pakis�an to be the training this week to demand the release Kh omeini militants riot ground for "foreign interference" of 91 Iranian Arab prisoners held against Afghanistan. Gromyko repeated by the Khomeini regime. in gulfemirate Moscow's charges that Pakistan is sys­ Ghotbzadeh said that the pris­ tematically arming and training rebels oners would be executed if the The same day that the U.S. invasion with the help of representatives from seige of the London Embassy was into Iran became public, riots broke out "certain countries"-and he claimed not soon ended. He did not men­ in the Arab emirate of Bahrain, a tiny that the U.S. knows who those "certain tion the fate of the 53 American island state just offthe Saudi Arabian countries" are. Gromyko also charged diplomatic hostages being held in coast in the Persian Gulf. The riots were Pakistan for continuing "hostile rela­ Iran. led by pro-Khomeini Shi'ite fundamen­ tions" with Afghanistan promoting cal­ talists and were sparked by erroneous culated destabilization of the area. II A GAS CARTEL may soon reports from Radio Israel and then Ra­ Gromyko's remarks have no doubt emerge as a sister to the Organi­ dio Teheran that the Bahrain govern­ constituted a serious intensification of zation of Petroleum Exporting ment had allowed the U.S. to use its Soviet criticism of Pakistan's continuing Countries (OPEC). That's the naval facilities to conduct the interven­ provocation of the Afghanistan situa­ word from Algiers, where six tion. The U.S. press similarly misrepre­ tion. Recently, PresidentZia had turned members of OPEC met last week sented the facts. down Afghan Premier Babrak Karmal's to draw up an agreement on gas The Shi'ite population which domi­ friendly proposal to defuse the crisis and pricing and production policy. nates Bahrain and their religious breth­ expedite the Soviet troop withdrawal by The agreement will be submitted ren in other Arab emirates that share holding a trilateral talk between Iran, to the next OPEC ministerial the Arabian peninsula with Saudi Ara­ Pakistan, and Afghanistan. The reason meeting in June. Gas producing bia have been the focus of agitation by behind President Zia's rejection of Kar­ members of OPEC have recently Khomeini to overthrow the various mal's proposal is reported to be the U.S. been raising gas prices to bring Arab royal families ruling these emir­ State Department pressure on Zia to them in line with crude oil prices. ates. This agitation, according to Wash­ accept a 4-point U.S. proposal to "neu­ ington sources, could "spill over" into tralize" Afghanistan.

EIR May 13, 1980 International 55 �lIillNational

How EIR knew where Volcker was leading

by Vin Berg

In a presentation that stunned the 30 economists, busi. effect, or that their effect would be offset by other factors. nessmen, and foreign diplomats present, Uw� Parpart We said that these measures would themselves be a major reported that the "anti-inflation" policies of the Carter contributing factor in turning inflation into Weimar­ administration are intersecting its "energy conservation" style hyperinflation by February 1980. This has now policy to assure that a hyperinflationary collapse of the happened. Did we just make a lucky guess?" American economy will occur within three to six months. Parpart, director of research for the Fusion Energy Two kinds of inDation Foundation and a contributing editor to the EIR. spoke Two distinct but interrelated phenomena constitute at a symposium on the LaRouche-Riemann economic inflation. "First, there is structural inflation," said Par­ model jointly sponsored by the Fusion Energy Founda­ part. "The long-term trend in the U.S. economy has been tion and EIR April S in Washington, D.C. for a shift into 'service-oriented activity' away from Parpart, an expert on the work of 19th-century employment in production of tangible, useful industrial mathematician Bernhard Riemann, based his analysis output. Whereas 58 percent of the labor force was pro­ of the Carter-V olcker measures on the groundbreaking ductively employed after World War II, only 38 percent Riemannian economic model employed by FEF and are so employed now; the rest, however necessary or EIR and developed in collaboration with economist unnecessary their service, constitute pure 'overhead' Lyndon LaRouche. He prefaced his talk by challenging costs," which must be financed. his audience to name "any other voice" raised that had "If you ' view the economy as a whole, as a single predicted the inflationary effects of the highly restrictive corporation, and measure the growth of the totality of credit policy Federal Reserve Chairman Paul Volcker indebtedness in the economy against the growth of the announced last October. totality of output, we clearly see the economy heading Analysts working with the Riemannian model were toward insolvency." alone in understanding that those'measures, as well as But this, he said, accounts fo r only "the single-digit the new steps announced by the president March 14, component of inflation," the rate of inflation obtaining would worsen inflation, not attenuate it, Parpart said. when Jimmy Carter took office. "How did we know this?" asked Parpart, referring to Parpart directly related a second source of inflation the climb fr om 7 percent to an annualized average 20 to the decline in the value of the U.S. dollar. "It is percent inflation rate since Carter assumed office. fashionable to argue that a lower value of the dollar will "Everyone called these measures anti-inflationary.Mind increase U.S. exports, by making their price more com­ you, we did not say Volcker's measures would have no petitive. On the contrary, it is empirically the case that

56 National EIR May 13, 1980 India, plagued by backward­ ness, but the ninth most pro­ ductive economy in the world. Said Dr. Parpart, the fu ll development of such na­ tions is "the primary task " of the next two decades. the dollar's decline has occurred because ofand in direct to real trade, and primarily, investment in the Third correlation with the decline in U.S. exports." World." If U.S. industrial output is geared up, then by Currency speculation allows dollars abroad to earn augmenting the lending capacity of the Export-Import profits, he said. But although dollar earnings may grow, Bank, "U.S. industrial growth can be directly tied to there is no connection to reality. "Nothing has occurred world development through exports." to increase production and trade volumes sustained by Why collapse these dollars. There are nearly a trillion footloose dollars not tied to trade in any way." is imminent The shift from productive to nonproductive "serv­ The most foolish and dangerous feature of Carter ices" must be reversed by a combination of "interest rate policies, said Parpart, is "energy conservation" in the and tax policy pleasures placing the premium on long­ fo rm associated with the recommendations of two Har­ term, capital-intensive, technology-vectored investment vard economists, Hudson and Jorgenson. They propose to increase both industrial output and productivity," that the economy will not suffer if human labor is substi­ said Parpart. "How can this be done under Volcker's tuted for energy use. policy !?" "But if you substitute labor for machinery," Parpart At present, Parpart said, "anyone who were to come said, "what you do is decrease the energy intensity of the by some funds must invest them speculatively, to get economy and effect a decline in labor productivity. It is quick returns in order to cope with the pressure of that simple. And 10,000 years of human history back up inflation and high interest rates. Volcker's measures that assertion." penalize the kind of fixed capital investment needed to "But what does recovery from inflation depend on if end structural inflation, precisely because that kind of not adj ustments in the economy to increase productivity? investment takes the longest time to mature." Thus, as Carter and Volcker have pursued short-term If we restore incentives for U.S. industrial growth, he policies in the domestic and foreign economic realm continued, the problem of inflation is reduced to restor­ producing hyperinflation, they are pursuing an energy ing the dollar "to the kind of currency it was before John conservation policy that is destroying the basis in the Connally took it off gold back in August 1971." productivity of labor for any potential recovery." "Gold-backed notes issued by European Monetary "In sum," Parpart concluded, "this economy, as System nations, the Treasury, and possibly regional things now stand, without a quick and directed reversal pools of Third World nations could absorb Eurodollars of these policies, will be destroyed within three to six and convert them to useful investment, connecting them months."

EIR May 13, 1980 National 57 committee and his reorganization Scholar trained at Oxford, attended N unn opens organized of the staff, direction of the sub­ the Interparliamentary Union crime hearings committeehas beentoward empha­ meeting in Oslo over the congres­ The Senate Permanent Sub­ sis on the Italian mafia, so-called, sional spring recess and was one of committee on Investigations and cover-up of the Zionist ele­ a select group of congressmen to be opened up a three-year-Iong series ments who sit above them such as invited to Ditchley's annual gath­ of hearings on organized crime and Max Fisher of Detroit, and the Ja­ ering on NATO . While avoiding its connection to labor racketeering cobs family of Buffalo, and the attributing a direct linkage between and narcotics trafficking on April London-linked financial elements ;,is proposal and his attendance at 28 with a first round series of hear­ who sit above them. Committee th,,: Ditchley meeting, Pressler did ings on organized crime and its use sources have made no secret of the say that Europe will not voluntarily of violence. fact that their ultimate target be­ offer to increase their support of The first day of hearings saw hind the organized crime investi­ NATO, "if they can get it for free. FBI director William Webster and gation is labor unions such as the We may have to force them over the Drug Enforcement Administration longshoremen, the teamsters, and course of gradual talks." director Peter Bensinger discuss the the constituency-based politicians kind of legislative remedies needed who support them. fo r the fe deral government to fight "organized crime" more effective­ Bank takeovers supported ly. Among the legislative changes On April 16 Citibank President they suggested were: amending the Pressler calls for reduced Walter Wriston proposed to a tax reform act so that law enforce­ U.S. support of NATO closed meeting of congressmen at ment agencies can use tax informa­ Fresh from a trip to London fo r the Congressional Clearinghouse tion and work more closely with the the Ditchley Foundation's meeting that the McFadden Act be abol­ IRS in tracking illegal activities; on NATO, South Dakota Senator ished. The act prevents the New making murder for hire a federal Larry Pressler introduced a Senate York banking giants from branch­ crime; giving judges greater flexi­ resolution calling on the United ing across state lines. Under Wris­ bility in their ability to make sen­ States to reduce its commitment to ton's proposals, which also called tence reduction offe rs to criminals NATO and to Japanese defense by for deregulation of all U.S. bank­ in exchange for turning govern­ two percent. Introduced on April ing, the 14,500 regional banks ment witness. 25, Republican Pressler's resolu­ which now serve local U.S. industry But those legislative proposals tion is couched in budget-cutting and agriculture would be gobbled provide a kind of cover fo r the In­ rhetoric about American taxpayers up if they run into economic trou­ vestigations Subcommittee to bearing a higher per capita burden ble, a very live possibility thanks to launch another McClellan-style in­ for NATO support than the Euro­ the monetary policies ofthe Federal vestigation of "organized crime." pean members of NATO. Capitol Reserve Board. "We are trying to The second day of the hearings fo­ Hill observers pointed out that help along the birth of the brave cused on the Justice Department's Pr.essler's action came on the heels new world," declared Wriston to Organized Crime Division's "defi­ of U.S. envoy Robert Komer's the Journalof Commerce a day lat­ nition" of organized crime as large­ thinly veiled threats to the Europe­ er. Wriston's congressional audi­ ly equivalent to "La Cosa Nostra," ans to back the U.S. on the ques­ ence included the members of the or the Italian mafia. tions of Iran and Afghanistan or House Banking Committee, who Capitol Hill observers have not­ fa ce a reduction of U.S. support to had been invited by chairman Hen­ ed that since the beginning of NATO. ry Reuss (D-Wisc.), a leading mem­ Nunn's chairmanship of the sub- Pressler, a former Rhodes ber of the Clearinghouse.

58 National EIR May 13, 1980 The day after Wriston spoke, promised. Mark-up of a House ver­ the essential trade routes. The Sen­ Senato r William Proxmire (0- sion of the Senate bill was expected ate bill legalizes shipping councils Wisc.) chairman of the Senate to occur quickly after the April 8 and makes the right of independent Banking Committee introduced passage of the Senate bill. . action by the conferenc� members legislation that would allow for ex­ optional, while the House bill actly this process to occur. Accord­ moves toward closed conferences. ing to Proxmire, his bill, S.2575 Conference committee The Senate bill also speeds up would "allow a large bank, savings completes work on Energy the regulatory processes ofthe Fed­ and loan association or mutual sav­ Mobilization Board eral Maritime Commission. The ings bank in receivership to be ac­ The House-Senate Conference main fo cus of the Senate bill is to quired by another financial institu­ Committee, working on the Energy detail policy for regulating the in­ tion across state lines." The bill, Mobilization Board, has just about dustry and the bill specifies nine which was also introduced in the concluded their work, with only a policy objectives to serve as the House Banking Committee, was in­ few remaining technical difficulties standards for the Federal Maritime troduced at the request of the bank to be ironed out. Commission's evaluation of ship­ regulatory agencies, particularly The Energy Mobilization ping agreements, clarifies and af­ the Federal Reserve. The Senate Board as envisioned would speed firms the exemption of concerted Banking Committee is waiting until up construction of energy projects activities in ocean shipping fr om their hearings May 21 on the con­ targeted by the administration, es­ antitrust laws, sets procedures and dition ofthe banking system before pecially synthetic fuel plants and time limits for FMC approval of they act on the legislation. They coal programs. The major differ­ agreements and allows greater flex­ will have the heads of all the regu­ ence between the House and Senate ibility in the type of patronage, dual latory agencies, including Federal had been whether the board would rate contracts offered by carriers Reserve Chairman Paul Volcker, be allowed to waive federal laws and conferences. testify and make the case for why that held up projects. The conferees The House bill would reopen such legislation is needed. agreed that the board could waive the essential trade routes, allowing such laws. The conference commit­ them all to be renegotiated. This tee will now issue a final report on has sparked concern that · major their work and send the legislation ports would be closed and shipping Trucking deregulation to both houses for final passage. seriously disrupted. The House bill scheduled for House mark-up also allows for the Secretary of Trucking industry sources re­ Commerce to review collective bar­ port that legislation to largely de­ gaining contracts to ascertain if regulate the industry is scheduled Shipping bill passes Senate they contribute to the "efficient to go into mark-up on May 8 and 9 The Senate unanimously passed use" of vessels. The bill also allows in the transportation subcommittee the Ocean Shipping Act of 1980 shipbuilding abroad to be eligible of the House Public Works Com­ S.2585 on April 24, a bill which was fo r subsidies. The House Merchant mittee. President Carter met with largely the work of Senator Inouye Marine and Fisheries Committee is committee chairman "Bizz" John­ (D-Ha.). The bill is vastly different receiving much opposition from son (D-Cal.) and subcommittee from the omnibus shipping bill now ship owners, ship- builders and chairman James Howard (D-N.J.) being reviewed by the House Mer­ unions. Rep. McCloskey (R-Cal.) on April 30 in an apparent attempt chant Marine and Fisheries Com­ one of the prime sponsors of the bill to ensure congressional passage of mittee. The Senate bill is considered noted it had one chance in five of deregulation legislation by June 1, a regulatory bill and does not deal being enacted in the drastic form it as congressional leaders have with subsidies for ship-building nor is now in.

EIR May 13, 1980 National 59 Campaign1980 by Kathleen Murphy

Cronkite and Anderson : Reagan, or John Anderson-a grinning Ball responded: "Con­ new Hollywood sitcom? gressman Anderson." For those of you who were Interestingly, Ball had just re­ wondering back in February why turned from a European meeting CBS-TV's national news anchor­ of the secret Bilderberg Society man Walter Cronkite seemed tobe which, according to unconfirmed spending an inordinate amount of reports, discussed with much inter­ time covering John Anderson's est the campaign of fellow member underdog presidential bid-the Anderson. mystery may now be solved. Ball's long-time political asso­ Cronkite is angling for a vice­ ciation with Cyrus Vance has pro­ presidential spot in Anderson's voked speculation that the ousted newly launched independent cam­ Secretary of State might also jump paign, according to the latest issue on the Anderson ba ndwagon of New Republic magazine. sometime soon. "I'd be so honored to be asked, I wouldn't turn it down," Cronkite said in an interview with Morton Muskie for President? Kondracke, the magazine's execu­ Washington political insiders tive editor. Cronkite-who will re­ are putting out the word th at one tire early next year from his CBS reason Jimmy Carter named Ed­ post-told Kondracke: "Well, I mund Muskie to replace Cyrus don't know. I haven't been asked. Vance as Secretary of State was I'd like to be asked before I said that he fe ared the Maine Senator anything. I wouldn't turn it down. was planning to put himself for­ It would be the right party. I've ward soon as the "compromise been an independent all my life. candidate" for the Democratic .. .1 admire Anderson very much. Party's presidential nomination. A He's brought a fresh breeze to the named to Reagan's Policy Com­ liberal with strong ties to the scene." mittee, has long been in the fore­ hawkish Jackson-Moynihan wing Another fo rmer CBS bigwig, front of schemes to destroy orga­ of the party, chairman of the pow­ Frank Stanton, has lent his name nized labor, including the repeal of erful Congressional Budget Com­ to the Citizens Party which is run­ Davis-Bacon which requires the mittee, and a former presidential ning environmentalist Barry Com­ payment of prevailing area wages candidate, M uskie was reportedly moner as its presidential candidate. for work on all fe derally financed being pursuaded by certain advis­ construction in a given locality. ers to begin soliciting support fo r Reagan : all-out war a possible presidential bid. Ac­ George Ball endorses cording to one source: "Carter on unions nearly hit the ceiling when he got John Anderson Ronald Reagan may have set wind of what M uskie was up to. back his campaign to win the blue­ John Anderson has chalked up He figures he can handle Kennedy, collar workers to his presidential another big name endorsement: but Muskie is an other story alto­ bid when he called fo r putting former Under Secretary of State gether. So he decided to kill two trade unions under antitrust laws George Ball. Appearing on NBC­ birds with one stone and bring during a South Bend, Indiana, TV's "Meet the Press" April 27, Muskie on board, knowing speech April 22. Ball wound up a gently phrased, damned well Muskie couldn't re­ Reagan's proposal bears all the but nonetheless scathing indict­ fuse." earmarks of an all-out union-bust­ ment of Jimmy Carter's disastrous Carter's gambit may well back­ ing drive. The proposal's author, hostage rescue mission by endors­ fire. M uskie's expected high-visi­ Murray Weidenbaum, director of ing Anderson. Asked who he'd bility profile in his new position Washington University's Center prefer to see running U.S. foreign could well make him even more for Business Policy, and newly policy-Jimmy Carter, Ronald attractive as a candidate.

60 National EIR May 13, 1980 EnergyInsider by William Engdahl

Will Carter use Iran to ration? 500,000 bpd "to meet any new Iranian oil means virtually nothing to the United States, but demands" in the face of Iran cut­ since when did the facts influence administration energy offs. Kuwait recently reduced out­ planning? put by 500,000 barrels per day, although they just agreed to sell Japan an additional 100,000 bpd. Nigeria has also reduced output from 2.4 millionto 2.2 million bpd T he recent Carter administration power and to sabotage. because of the glut, which, b y the operation to heighten tensions in The loss of this Iranian oil will way, is largely due to the relative the strategically vital Persian Gulf mean almost nothing, unless Cart­ economic collapse in the industrial led me to do some investigation er foreign policy under Brzezin­ countries. U.S. consumption is into the possible impact of total ski's Arc of Crisis is as successful down fully 8.5 percent over the and prolonged loss of Iranian in Saudi Arabia and Iraq as it has same week of last year. crude oil production on the world been in Iran in fomenting chaos. It's quite clear that Saudi Ara­ oil markets. We have just learned from re­ bia and Iraq would have to be the When the Japanese govern­ liable sources that Saudi Arabia next target of Islamic "fundamen­ ment obliged the Carter admini­ has quietly been working at break­ talism" a la Brzezinski's "Arc of stration a week ago by refusing to neck speed to increase their oil Crisis" if Henry Kissinger's long­ buy Iranian crude at record high production capacity by a whop­ dreamed-of lEA energy rationing $35 per barrel prices, horror stories ping 20 percent over present levels. regime is to be imposed on the went out in the editorial pages of Already, according to these re­ U.S., Western Europe and Japan. the New York Times on the pros­ ports, the Saudis, OPEC's largest Otherwise, the Iranian losses have pect of imposing domestic ration­ producer, are able to sustain pro­ already been "prediscounted" by ing to honor Carter's reputed com­ duction up to 11 million bpd, up the rest of the oil-producing world. mittment to make up Japan's loss from to million some months ago, In light of all this, the Wall of Iranian crude. through improvement of equip­ Street Journal on April 29 carried The spectre of Henry Kissin­ ment. In addition, a multibillion an ominous story on how the Jap­ ger's International Energy Agency dollar investment program in new anese loss of Iranian oil is having (lEA) imposing its emergency equipment will give them 12 mil­ a "psychological" impact on world sharing agreement was raised. lion bpd capacity by the end of oil spot market prices, despite the I decided to track down the next year instead of the original glut. One of the main reasons now actual impact of Japan's loss of 1985 target. This is a devastating as last year when the tightly con­ 500,000 barrels daily of Iranian refutation of what certain factions trolled Rotterdam spot market led crude, some 11 percent of Japan's of the royal family have recently the world price spiral, is Henry total consumption. At this junc­ called for: reduced output. Recent Kissinger's International Energy ture, the oil producing and con­ Saudi production has averaged 9.5 Agency. The spot market price ex­ suming world has all but written million bpd, making up the entire plosion of last year that fo rced off Iran as a source of oil. From a Iran export deficit of 1,500,000 OPEC to up its prices could have high of over 6 million barrels per barrels. been avoided if the lEA agree­ day during the reign of the Shah, But, what of the other coun­ ments among 20 leading industrial current export is estimated at be­ tries? On Iran's border, Iraq low­ nations had not prevented flexible tween 800,000 to 1,500,000 bpd. ered its production in recent sharing of the increased Saudi pro­ Total production hovers at a max­ months to 3.3 million bpd from 3.7 duction among those hardest hit imum of 2.5 million bpd, down million because of the unprece­ by the Iranian cutoff. The rigidity from an average of 3.5 million last dented glut on the world oil mar­ fo rced crude-short buyers to feed fall. Much of this is due to lack of kets, A recent statement from the at the Rotterdam trough. Are the maintenance of pumping equip­ Iraqi government indicates they same forces attempting a rerun ment and lack of competent man- are prepared to increase output by amid a record world stockpile?

EIR May 13, 1980 National 61 ------______'i

NationalNews

Citizens groups in New Jersey have a Palestinian state and the MX missile. • branded the program pornographic and But he said he favored President Carter's charged that the curriculum is designed "mobile strike force" for intervention Pentagon reduces Carib to change the "values" and "life-styles" into Third World "hot spots." Report­ of school-age children. The program edly, his campaign will be run by naval maneuvers reportedly treats homosexuality, sodo­ Wertheim & Co., the investment bank­ u.s. naval maneuvers in the Caribbean my and prostitution as "life-styles" as ers. scheduled to begin next week have been legitimate as any other. substantially cut back, according to a Among other measures, children at spokesman from the State Department. the elementary school level are to be

"Solid Shield ' 80", as the maneuvers are instructed in "techniques" of mastur­ called, were originally intended to in­ bation with emphasis on masturbating Kennedy worships clude massive deployments in the Guan­ in front of a mirror! tanamo Bay area, as well as the landing Strong testimony opposing the man­ Guadalupe Virgin of troops on the beach and simulated date was given by the President of the Arriving in Mexico City two days ago, evacuation of civilian population cen­ Baptist Ministers Conference in New­ presidential candidate Ted Kennedy ters. The exercises will now steer clear ark, and by a number of Right to Life made a beeline to Mexico's cult temple: of Cuban waters and center around groups, as well as Citizens for New the shrine of the Virgin of Guadalupe. Florida and the North Carolina shore. Jersey, which mass distributed a leaflet Recently, the Virgin of Guadalupe has Official spokesmen cite "humanitarian exposing these outrageous features. been used as a symbol of unity by the reasons" for the divergence of an un­ The New York Times editorially en­ radical left and "liberationists" in the specified number of Atlantic Fleet ships dorsed the program May l. It is also Catholic church who want an Iranian­ from the war games to aid the Coast supported "in principle" by the New style revolution against Mexico. Guard in dealing with the refugee prob­ Jersey Conference of Catholic Bishops, Kennedy brought a 50-man delega­ lem. although this is not interpreted as an tion to attend mass at the shrine. Just days before the Pentagon made endorsement of homosexuality or pros­ Kennedy'S high profile visitto Mex­ its decision to reduce the scope of Solid titution at this time. ico was broadly characterized as an ef­ Shield '80, the Cuban government had fo rt to gain the vote of the Mexican­ issued an official communique warning American community. "Uno mas Uno," that the maneuvers were intended to mouthpiece for the "Theory of libera­ cover for a mining of the Caribbean Sea tion" Jesuits in Mexico was the only around Cuba preparatory to an invasion Enter Lindsay's face paper to give Kennedy an explicit en­ of "an island in the Caribbean part of in New York Senate race dorsement. whose population would allegedly re­ John Lindsay, the former Mayor of New Although the Mexican President quest U:S. military aid in liberating itself York City, announced that he will enter agreed to a meeting with the candidate, from foreign domination." The Soviet the race for the Democratic nomination the Senator was reportedly coolly re­ Communist Party daily, Pravda also is­ to run for the Senate seat currently held ceived. sued its own warning that "Cuba is not by Jacob Javits, a Republican. Lindsay alone," declaring that "the Soviet Union made the announcement May I at a and other countries of the socialist com­ tavern in New York. His Democratic munity all declare: Hands off Cuba!" opponents will be Rep. Elizabeth Holtz­ man, a creature of New York's Zionist Lobby, and Bess Myerson, a "girlf­ DEA sees 'worst ever' riend:' of current New York Mayor Ed heroin epidemic N.J. "sex life-styles" Koch, who is reliably reported not to like girls. in the cards plan under attack Lindsay could not specify any polit­ The United States will be inundated by A controversial program mandating sex ical differences with his opponents on a heroin epidemic this summer, resulting education throughout the New Jersey the Democratic side. Senator Jacob Jav­ in "the addiction of millions of Ameri­ school system was the subject of a leg­ its, who is controlled by mobster Meyer cans," according, to prominent drug re­ islative hearing before the State Senate Lansky through British intelligence op­ habilitation officials and the federal Education Committee May I. The Com­ erative Arthur Ross, Lindsay called "a Drug Enforcement Administration. In­ mittee acted to table legislation which good friend." vestigators of the National Anti-Drug would have instructed the State Board Lindsay attacked President Carter as Coalition, who have recently obtained of Education to review the implications "not providing leadership," echoing copies of the DEA's confidential intel­ of the sex-program mandate. Senator Kennedy. He said he opposed ligence report on the expected heroin •

62 National EIR May 13, 1980 Briefly

. flood, report that the DEA predicts an shortages, restraInIng of workers for • A CAMP DAVID Powwow epidemic 2,000 times worse than at the critically short skills and phasing out shaping up with Lord Carrington, height of the heroin wave of the late useless skills, and the recruitment of the British Foreign Secretary, this 1960s and early 1970s, the worst in the workers to necessary industries includ­ weekend? A minimally two day nation's history. ing relocation." meeting starts Friday between The source of this astonishing threat Carter, newly appointed Secretary is the prodrug Khomeini regime in Iran of State Muskie, and Warren and its Islamic fundamentalist allies in Christopher, to be joined on Sat­ Afghanistan and Pakistan. According to urday by Brzezinski and Harold officials, the 1980 opium crop from these Brown. On that day Lord Car­ three countries alone, which is already McCormack fusion rington is scheduled to arrive in being harvested and processed, is 1500 request victim of Washington for talks with Carter. metric tons-almost ten times the total opium harvest of the "Golden Triangle" austerity fever • DOUBTS as to Carter's re­ area of Southeast Asia. Before the sud­ The House Science and Technology nomination prospects rose fo llow­ den growth of "Islamic" opium produc­ Committee, bowing to the fiscal auster­ ing the White House announce­ tion, the Golden Triangle accounted for ity ideology of its senior Republican ment naming Senator Edmund approximately three-quarters of the en­ member, scaled down Rep. Mike Mc­ Muskie (D-Maine) as Secretary of tire world-s exportable opium crop. Cormack's requested $45 million in­ State. Following the announce­ crease in the Department of Energy's ment, Muskie, the object of per­ fusion request to $30 million. sistent rumors sweeping the capi­ McCormack had proposed that the tal over the past two weeks, that DOE's fiscal 1981 budget for fusion be he could be a candidate at a bro­ FEMA plans relocation increased from $403 million to $448 kered Democratic convention, million as the first, necessary step to­ commented; "This job will only of U.S. labor force ward instituting an Apollo-style ap­ be for 8 months." Carter was seen The Federal Emergency Management proach to the production of a commer­ to visibly blanch. Agency (FEMA), created by the Carter cial fusion generator by the end of the administration one year ago, now has century. McCormack has introduced • NAVY DISGUST at Carter on the books a national labor policy for separate legislation mandating such a and Harold Brown is close to the United States which will fully repli­ national effort, but felt that an increase open warfare. Chief of Naval Op­ cate the Employment Service Board of in the FY8 1 budget was necessary to erations, Admiral Thomas Hay­ the Nazi Third Reich Ministry of Labor. keep the programs intact and capable of ward in a recent interview de­ FEMA's "National Labor Mobilization the kind of expansion he envisions. His clared that till recently "6 or 7" Plan," as disclosed to EIR by sources $45 million increase passed the Subcom­ ships on average were laid up at inside FEMA itself, calls for the top­ mittee on Energy Research and Produc­ Norfolk for insufficient crews, down national "retraining, relocation, tion, which McCormack chairs. and now the total has skyrocketed and certification" of all U.S. workers by But on April 23, the full committee to 20. Hayward pledged he would FEMA in the event of any national voted up an amendment offered by fight Carter and Brown's defense emergency. ranking Republican John Wydler of policy and budget with "all FEMA's labor program follows the New York which cut back the proposed means" available. principle laid down by Adolph Hitler's increase from $45 million to $30 million Finance Minister Hj almar Schacht when under the guise of "budgetary re­ • THOMAS J. WATSON, JR. he fo unded the Employment Service straint." Wydler, a self-admitted sup­ U.S. ambassador to the Soviet Board: Under conditions when the econ­ porter of McCormack's Apollo-project Union, may be the next to resign omy, and the labor process, breaks style legislation, argued that unless the in protest following Vance and central agency, committee itself showed some restraint down, a above popular Christopher. Watson, reportedly control, must be established to make in the midst of massive and across-the­ infuriated at being frozen out and implement decisions on the deploy­ board budget cutting, it would be im­ from any substantive role in U.S.­ ment of labor throughout the economy. posed on them by the rest of the House. Soviet relations, is the former Sources report however, that further "FEMA and the Department of La­ chairman of IBM, and a close bor" said an agency source, "have es­ "restraint" is in the offing as the House intimate of Cy Vance. Prior to tablished a totally centralized program Appropriations Committee may attempt 1976, he and Vance were co-direc­ fo r the mobilization of the U.S. work­ to scale the budget back to the original tors of IBM. fo rce. It covers wage and salary stabili­ DOE proposal, despite Wydler's at­ zation, determination of critical skills tempted "self-discipline."

EIR May 1 3, 1980 National 63 FactsBe hindTe rror by Jeffrey Steinberg

Environmentalists look to Iran • From April 24-28, 1980, the The anti-nuclear movement and all shades of MFS and Coalition for a Non­ environmentalists are coalescing with the outright terrorist N uclear World held a series of organizations, and the author of the merger is one of the joint antinuclear antidraft rallies in architects of the Khomeini revolution. Washington, D.C. in conjunction with the Coalition against Regis­ tration and the Draft (CARD), etc. The demonstrations were planned to end with a "direct action" oc­ he environmentalists and anti­ erandi is to prepare the agenda of T cupation of the Department. of En- nuclear groups in the United States activities for the environmentalist ergy on April 28. are merging with the entire spec­ movement as a whole, then pro­ • On May 24, the entire ex­ trum of terrorist support organi­ vide updated information and panded antinuclear coalition will zations nationwide, to create a marching orders to all the local launch a two-pronged assault on mass movement modeled on the "alliances. " the Seabrook, New Hampshire nu­ "Iranian revolution." The archi­ In March 1979, the MFS tested clear plant site, with the object of tect of the merger is Professor its strength and was able to mo­ occupying the site and wrecking Richard Falk of New York City's bilize virtually every group to hold equipment and sections of the Institute for World Order who has press conferences and demonstra­ plant already under construction. devoted his work in the U.S. to tions within 48 hours of the March The Coalition for Direct Action bringing under one unified com­ 28 sabotage incident at the Three will lead the attack. mand all the environmental, cul­ Mile Island nuclear power plant • The finalphas e of the merger tural and social groupings. near Harrisburg, Pa. This nation­ will occur at mass demonstrations During a recent speech, Falk, wide mobilization succeeded in against the Democratic National who helped create the Iran model building for a May 6, 1979 mass Convention in New York City be­ for terrorism, explained the "ide­ demonstration in Washington, ginning Aug. 11. Environment�ist ology of nuclear energy." The D.C. which drew nearly 200,000 groups were well represented at the Shah of Iran was so repressive, people. The rally had representa­ Youngstown planning conference Falk claimed, because he was ded­ tion fr om groups outside of the where a Chicago 1968-style dem­ icated to developing nuclear power traditional antinuclea,r movement .. onstration was planned for the for Iran. The same repression Since the May 6 demonstration New York convention, including caused by nuclear power develop­ the fo llowing developments have the MFS, Black Hills Alliance ment will also occur in the United taken place: from North Dakota, and the Co� States if it is not stopped, Falk • On Oct. 6, 1979, the Revo­ alition for a Non-Nuclear World. continued. lutionary Communist Party sent a

The central coordinating ap­ new front group, Student Coali­ * * * paratus bringing the antinuclear tion Against Nukes Nationwide movement behind the Iran model (SCANN), to the Coalition for is the Mobilization for Survival Direct Action assault on the Sea­ For up-to-date intelligence in (MFS). The MFS was created in brook, New Hampshire nuclear the fields of terrorism, drugs, and 1977 by Falk's Institute for World plant site . organized crime subscribe to Inves­ Order as the coordinating center • In February 1980, several en­ tigative Leads, the twice-monthly for every environmental group in vironmentalist organizers were intelligence report published by the the country. MFS is composed of taken to Iran for training by Nor­ EIR . Send $50 with your name and over 400 groups, run by the Insti­ man Forer, including Lucille Gun­ address to Executive Intelligence tute for World Order, Institute for derson of the New Hampshire Review, 304 W. 58 St., New York, Policy Studies in Washington, Clamshell Alliance, and Randy N.Y. 10019 (Master Charge and D.C., and the American Friends Goodman of the Boston Coalition Visa accepted). For more infor­ Service Committee. Its modus op- for Direct Action at Seabrook. mation call (2 12) 247-8820.

64 Facts Behind Terror EIR May 13, 1980