Gennan growth means no recession for Europe

The Mexican Republic vs. the Brandt Commission

A new calculation of agricultural parity

India's Indira Gandhi talks to EIR

on peace and development
[THIS PAGE IS INTENTIONALLY BLANK]
Editor-in-chief: Daniel Sneider
Associate Editor: Robyn Quijano
Managing Editors: Kathy Stevens,
Vin Berg
Art Director: Deborah Asch,
Martha Zoller
Circulation M anager: Lana Wolfe
Contributing Editors:
From the
Lyndon H. LaRouche, Jr.,
Criton Zoakos, Nora Hamerman,
Editor
Christopher White, Costas Kalimtgis,
Uwe Parpart, Nancy Spannaus

INTELLI G ENCE D I R ECTORS:

Africa: Douglas DeGroot
Asia: Daniel Sneider
Counterintelligence: Jeffrey Steinberg
Economics: David Goldman
Energy: William Engdahl and
Marsha Freeman
Europe: Vivian Zoakos
T his week our special report was wired in from New Delhi where
Latin America: Dennis Small EIR editor-in-chief Daniel Sneider is on tour with Dr. Uwe Parpart,
Law: Felice Merritt director of research for the Fusion Energy Foundation. The India
Middle East: Robert Dreyfuss
tour followed an EIR-FEF sponsored conference on Indian develop­
Military Strategy: Susan Welsh
Science and Technology: ment in Frankfurt, West Germany, and was aimed at presenting our
Morris Levitt report on the Industrialization of India, From Backwardness to Indus­
Soviet Sector: Rachel Douglas tria/ Power in Forty Years to Indian scientific and political layers. The
United States: Konstantin George
United Nations: Nancy Coker tour has been a resounding success and the LaRouche-Riemann
model of analysis which was the basis for the India development
INTERNATIONAL B UR EAUS:
Bogota: Carlos Cota Meza report is now being studied for application by important circles in that
Bonn: George Gregory developing nation.
and Thierry LeMarc The centerpiece of our special report is an exclusive interview with
Brussels: Christine Juarez
India's prime minister Indira Gandhi. Mr. Sneider spoke to the Prime
Chicago: Mitchell Hirsch
Copenhagen: Vincent Robson Minister at length on June 5 when Mrs. Gandhi charged that "large
Mexico City: Josefina Menendez funds" have been flowing from outside into the Indian state of Assam
Milan: Muriel Mirak to back antigovernment agitation there. Mrs. Gandhi spoke at length
New Delhi: Paul Zykofsky
Paris: Katherine Kanter on the history of the Assam problem and the apparently deliberate
and Sophie Tanapura character of the destabilization of the northeast region now taking
Rome: Claudio Celani place. The Prime Minister herself, noting that the problems of that
Stockholm: Clifford Gaddy
backward region are not "new", asked "Why has this movement
Washington D . C . : Laura Chasen
and Susan Kokinda come up when it did?"
Wiesbaden: (European Economics) Mrs. Gandhi also discusses with EIR the danger of war and the
Mark Tritsch and Laurent Murawiec
role of economic development in securing peace.
We follow up the interview with an article from the influential
Executive Intelligence Review is published by
New Solidarity International Press Service Indian weekly New Wave by Leela Narayan on the tour of Dr. Parpart
304 W. 58th Street. New York. N. Y.10019. along with excerpts from a number of Indian dailies reporting on the
In Europe: Campaigner Publications,
Deutschl. GmbH. + Co. Vertriebs KG Parpart presentations.
Postfach 1966. D. 6200 Wiesbaden The introduction to the package was written by EIR Asia specialist
Copyright III 1980 New Solidarity Peter Ennis.
International Press Service
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strictly prohibited.

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 •

�TIillContents
Departments Economics

5 Editorial 6 Gold is back on the

Can we avoid international agenda
strategic disaster? At the Venice summit meeting,
Giscard d' Estaing will propose a
50 Dateline Mexico far-reaching plan to reorganize
Sir Keith strikes out the world monetary system and
recycle OPEC's petrodollars.
5 1 Middle East Report
Certain important elements of the
plan are now clear.
What was Ramsey Clark
doing in Iran?
8 The Brazilian debt crisis

58 Energy Insider
M ark Sonnenblick looks at a
looming threat to world banking.
Kooks and nukes:
They don't mix
1 1 West German growth means
no recession for Europe
60 Congressional Calendar
The LaRo uche-Riemann model' s
profile of Germany's economy.
64 Facts Behind Terror
The Hispanic activation 18 Calculati ng new
agricultural parity
A statement by presidential
candidate Lyndon LaRouche

21 Domestic Credit
The snowball effect

22 International Credit
French banks gain
Euroloan clout

23 Foreign Exchange

24 Science & Technology

What science loses
when it loses the
Solar Polar Mission

25 Trade Review

26 Business Briefs
 Volume 7. Number 24 June 24. 1980

Special Report International National

38 The Mexican Republic vs. 54 The Democrats. revolt

Indira Gandhi addresses an election rally
in December 1979. Photo NSIPSjZykofsky
28 Indira Gandhi talks to EIR
on peace and development
In an exclusive June 5 interview
with Editor-in-Chief Daniel
Sneider, the Indian prime
minister describes her nation's
battle against destabilization, and
for economic development and
world peace.
the Brandt Commission
Between the principles on which
the republic of Mexico was
built, and those of the Brandt
Commission's supporters, there is
an unbridgeable gulf. But one of
the Brandt Commission's
supporters is M exico's own
foreign minister.
The men who built the
republic of Mexico
Who is Jorge Castaneda?
46 Will Israel survive
the Begin government?
The only character remaining to
the Likud coalition is that of
terrorists.
against Carter
His own party's Congressional
leaders are rejecting everything
Carter puts before them, from oil
import fees to military policy.
One way or another, they want
to find a way n ot to renominate
him .
The press on Carter
Congress hits Carter
on military policy
59 Campaign 1980
62 National News

Parpart tours India: 48 Italy

'Science is universal' The elections:
Dr. Uwe Parpart, research Cossiga finished?
director for the Fusion Energy
Foundation, is touring India, and 52 International Intelligence
his development proposals have
made headlines throughout the
subcontinent. A special report
from New Delhi.
Fourmen
who did not
subscribe to
Lee Iacocca, Chairman Robert Abboud, ousted
of the near-bankrupt Chairman oj the First
Chrysler Corporation National Bank oJChicago

Executive Intelligence Review

Frank Fitzsimmons, Robert Dole, unsuccess­

and missed out beleaguered President

oj the Teamsters union
JulRepublican candidate
Jor President

on whatEIR • the deregulation of trucking

readers knew-
• Volcker's October credit policy
would lift inflation to 20% and
push major banks toward the
brink of bankruptcy.
• the Trilateral Commission would
• Volcker's policy would also
strangle the industrial sector,
starting with auto and steel.
would be rammed through
the Senate- its passage will cost
the U.S. economy more than
the Vietnam war, not to mention
thousands of Teamster jobs.
rig the Presidential primary pro­
cess to eliminate any candidates it
couldn't control.

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Fl
 Editorial
Can we avoid strategic disaster?
Last week a series of false al arm s fro m the U . S .
defense network ' s computer system i n d icating that
the So viet Union had launched nuclear m i ssiles
against the United States brought us o nce again to
the brink of n uclear disaster by miscalculati o n .
While the Soviets warned that such " m i stakes"
could lead to World War I I I , Capitol Hill is abuzz
with rum ors that the errors were in fact deliberate
and consi stent with the provocative U . S . military
post ure based on "calculated insanity . "
Senator J o h n Tower, t h e Republican minority
leader of the Senate Armed Services Committee,
called on his colleagues to investigate . A m erican
strategic bomber crews were placed o n alert, silo­
based missiles were brought closer to the stage of
fi ring, and ballistic missile subm ari nes at sea were
on the al ert !
Investigation of the Iran rescue mission debacle
by the same comm ittee revealed " m aj or errors"
were made i n the planning and executio n .
These scandals come as an i ncreasing n u mber
of traditio nalist military men are publicly express­
ing alarm over the erosion of U . S . military capabil­
ity, from a severe lack of m ilitary R and 0, to the
drugged-out all-volunteer army, and the state of
breakdown of mi litary equipmen t . However, it was
the Executive Intelligence Review in collaboration
with the Fusion Energy Foundation that fi rst drew
attention four years ago to the devastating facts
concerning the collapse of U . S . military capabili­
ties and the contrasting Soviet advances .
Soviet commitments to large i ncreases in mili­
tary-related experimentation and personnel devel­
opment in the most advanced fields of military­
re l ated tech n o logy has y i el d ed cruci a l b r e a k ­
throughs in beam-weapon ry-a devel opment that
changes the geo metry of strategic warfare .
But even though the U . S . is i ncapable of fight­
ing a war agai nst the Soviet scientific superpower,
the provocations o f the Brzezinski insanity doctrine
have increased . W ar by miscalculati on, strategic
EIR J u n e 24 , 1 980
disaster, and threatened humiliation m u st be the
subj ect of national debate . When General David
Jones, chairman of the Joint Chiefs of Staff argued
on June 9 that the N O R A D computer errors had
served a useful functi o n , because they showed the
U . S . S . R . that the U . S . was prepared to take mili­
tary action if required, the wretched bluff was
caught by many who are now set on k n ocking the
General out of his position a n d President Carter
o ut of t'!e Dem ocratic candidacy.
But now the essential ques tI on which must be
answered is what it will take to cool o ut the current
bent tow ard war and at the same time recreate a
healthy well prep ared military .
EIR fo under and contributing editor Lyndon
H. LaRouche has gained a growing p olicy i n fl u­
ence over the past fo ur years in European capitals
by advisi ng that only a crash program in nuclear
fusion development can deal with the problem of
the woeful in adequacy o f U . S . military capability .
Executive Intelligence Review will sponsor a
conference, "Can the U . S . Avoid Strategic Disas­
ter?" o n Wednesday afternoon , June 25 at the
Hotel Washington in W ashi ngton, D . C . Dr. Ste­
phen J. Bardwell, director of plasma physics for the
Fusion Energy Fo undation and author of "Sputnik
o f the 80' s," an outline of Soviet advances in beam
weaponry, will give a com parative an alysis of U . S .j
U . S . S . R . warfighting capabilities . Dr. Bardwell,
who has toured Soviet plasma p hysics research
faci lities, will dem onstrate with the help of ad­
vanced com puterized modeli ng techn i ques, the
so urce of the current disparity in U . S .j U . S . S . R .
warfighting capabilities.
Costas Kalimtgis, co nsultant o n strategic af­
fairs for the EI R, will outline why the SALT process
cannot avoid war. He will propose a concrete plan
for global war avoidance through a U . S .-led, capi­
tal-i ntensive development program i n the Third
World, combi ned with i nternatio n al scientific col­
laboration in space and energy development.
Editorial 5
�ITillEconomics
Gold is back on the
international agenda
by Richard Freeman
French Treasury director Jean-Yves H aberer, president
of the European Comm unity' s M o netary Committee,
stunned a meeting of F rench n ational financial co unse­
lors June 4 by telling them that gold will recirculate in a
large way between central banks. No one listeni ng need­
ed to be told what this would mean: eventually-and
quite probably quite soon-gol d will return to its pre­
eminent role i n the world monetary system .
H aberer's remarks were delivered in an atmosphere
of bullio n's upward movement . From a level o f $ 5 0 1 per
troy ounce M ay 22, gold ro se to $624 per troy ounce by
June 9, o r a n i ncrease of nearly 25 percent in three weeks,
before settling back a little .
The reason for this i ncrease is, as H aberer's statement
indicates, po litical prearrangements to bring gold -back
as a monetary standard of value . U ntill 0 days ago, most
gold market tradi ng was light, in dicating not volume
pan ic hedge buyi ng in response to the erupti on of inter­
n ational hot spots , b ut the steady activity of insiders who
know that something far bigger i s in the win d .
The move toward stability
The context for M r . Haberer's speech i s the upcoming
summit of the heads of the leading seven Western na­
tio ns-the United States, Germany, France, G reat Brit­
ain, Japan, I taly and Canada-to discuss economic and
military m atters in Venice June 22-23 .
It has been wi dely reported since the turn of the year
that French President Valery Giscard d' Estaing has been
so thorough ly dissatisfied with the inflation and econ om-
6 Eco n om ics
ic m alfunctions associated with current I n ternational
M onetary F un d-based arrangements that he had worked
out a plan to launch gold into the monetary system which
he will presen t at Venice .
H aberer, whose current European Comm unity posi­
tion places him i n charge of overseeing the pace of
implementation of the EMS, addressed this s ubject in his
June 4 address, which was entitled "The European Mon­
etary System : A n I nternational M o netary System . " He
. told the gathering of French financial counselors that the
principles i nspiring the EMS are "subversive-but in a
positive sen se . " The s ubversiveness of the EM S resides
precisely in the ability of that system's gold-backed
" E uropean C urrency U nit" to serve as the means of
p utting gold into circulation between central banks. This
o f co urse would m ake gold more than simply a static
reserve a sset , locked away in central bank vaults .
Taking aim at the I nternational M onetary Fund and
its Special Drawing Rights, H a berer asserted that "the
ECU will be able to threaten the credibility o f the S D R . "
T h e EM S will set t h e priority of "monetary stability" in
a worl d beleag uered by a "non-system . "
Haberer added that the seco nd phase of the European
M o netary System-the creation of the European M one­
tary Fu nd-may have to be delayed because of the world
economy. Other a lternatives a re cropping up.
Recycling O PEC dollars
H aberer's speech was described by one member of
the audience as " aggressive and on the offensive . " Its
EIR J u ne 24, 1 980
emphasis on the role of the gold-backed ECU was n ot a
matter of personal discretio n , but a policy option that
has emerged on the highest level , i nvolving the support
Gold
(Dollars per ounce) London afternoon fixing
of Giscard, West German Chancellor Helmut Schmidt
and European b usiness leaders . The i dea behind the the 750
ECU is to couple it to financing terms enabling the Third
700
World to import Western capital goods.
The fundam ental element involved i n this conception 650
is to recycle to the LDCs the petrodollars from the Arab
600
oil states deposited i n official European Community
financial institutions as well as the French and German 550 A. r
private banking systems . The ECU would be a denomi­
nating instrument for this relen ding.
500 '\... �
-""'"V
At a June 9 meeting o f European Comm unity finance 450
4/24 5/1 5/8 5/15 5/22 5/29 6/5 6/12
ministers in Luxembourg, French Finance M i nister Rene
M onory said that "the world is in a m ajor financi al­
economic crisis" requiring a " new i nstitution to recycle
Strategic an alysts h ave not lost sight of the fact that
petrodollars ." The old arrangement of the I M F can be
the alignment of pl ayers involved in the gold m arket­
partially used for recycling, Monory stated , but in o rder
F rance, Germ any, the Arab Gulf nations, the Soviet
to do this, the I M F will have to soften its conditio nalities,
U n io n-has important political significance . A M iddle
which often involve severe austerity .
East peace initiative involvi ng the creation of a Palestin­
Asi de from the I M F , M on ory suggested that Europe
ian state is something all the above nations are known to
can recycle its petrodollars through the European I n vest­
support in varying degrees . Rumors have it that such an
ment Bank (EIB). The EIB, previously controlled by the
i nitiative m ight be "cemented i n gold . "
British, has recently come under the influence o f a " Ger­
T h e emergence o f t h i s g o l d i nitiative is at t h e moment
man factio n . " Monory specifically proposed that the
a threatening o ne to the London-Am sterdam-W all Street
bank, which makes on average $2 . 5 billion in loans per
axis of fin ance . A characteristic response came J une 9
year mostly i nside the Comm unity, issue gold-backed
from Dr. Jelle Zij lstra, p resident of the Bank for I nter­
ECU assets to the Arab G ulf states geared to " more
national Settlements, as well as the president of Nether­
technology i n rural areas of the Third World," and other
lands central bank, on the occasion of a B I S m eeting in
development efforts such as "harnessing A frican rivers
B asel , Switzerlan d . The June 1 0 N ew York Journal of
fo r irrigation . "
Commerce reports that " I n private conversations, Dr.
Reliable reports from B o n n in dicate that C hancellor
Zij l stra made it very clear that he rejects the idea, recently
Schm idt convened a secret June 1 -2 meeting of top
circulated in European Comm unity headquarters, that
scienti fic and financial experts , excluding by and l arge
the OPEC countries be allowed to receive European
members of Count Otto von Lambsdorffs economics
C urrency Units to s up plement their reserves . H e insisted
ministry . The word is th at Schmidt stressed at the m eet­
that the ECUs are " n othing b ut swap instruments at this
ing two proposals he will make at the Venice Summit:
stage ." This B I S m eeting was otherwise noteworthy for
first, a petrodollar recycling plan, and secon d , a plan for
its calls for harsh a usterity.
the fu ll-fuel n uclear energy cycle.
However, some opponents of Giscard have recog­
n ized that a gold option and what it implies m ay be a
The Soviet gold angle necessary pill to swallow.
With the Europeans and the heavy-gold purchasers A senior Swiss Bank Corporation monetary expert
of the Arab Gulf states discussing gold arrangements, told EIR June 1 0 that he thinks G iscard will call for a
the Soviet Union, a third important player in the world "gold-dollar standard" requiri ng all central banks to
gold game, entered the picture this past week . hold both i nstruments, and will quite p ossibly also pro­
This was telegraphed in the June 7 New York Times pose a plan for o ffering O PEC gold-b acked bonds. The
report that the Soviet Union m ay have sold 200 tons of expert' s own preference-like that of the London Roth­
gold off-m arket to S audi Arabia at $600 per ounce. The schilds-is, he said, for continuing the status quo, where­
June 9 London Daily Telegraph reported that part of the by central banks continue to treat gold as an important
Soviet gold may be paid fo r with A rab oil, and p redicted reserve asset but neither sell it nor fix its price. Clearly,
that the price of the m etal will hit $930 d uring some point the real q uestion i s the expanded long-term international
in 1 980. lending a new gold standard might, o r m ight not, entai l .

EIR J u ne 24 , 1 980 Eco n omics 7

The Brazilian debt crisis
EIR's Mark Sonnenblick examines a looming threat to world banking.
Repeated warnings about "the danger of Brazil de­
faulting on its $ 5 5 billion debt and blowing o ut the
Euro do ll ar market" are being echoed throughout An­
glo-American monetary circles .
As a result of such well-p ublicized fears, Brazil h as
been practically closed out of the Eurodollar market so
far this year. The few public loan syndications which
have been attempted have been completed o nly with the
greatest difficulty . And Brazil m ust borrow another $ 1 0-
14 billion during the remainder of this year or the " de­
fault" scenario could become a self- fulfilling prophesy.
The chorus is being conducted th rough press organs
such as The Economist and the Wall Street Journal, both
of which quite suddenly shifted gears on Brazil fro m
boundless optimism to panicked pessimism . The Econo­
mist begi ns its M ay 1 7 survey by intoning: "Brazil, long
the biggest and brightest developing star in Latin Amer­
ica , m ay be about to explode into a supernova . " It ends
with: "The intern ational banking system should start
girding its loins for the possibility that it may never again
see some of the m oney it has splashed out to Brazi l . "
The Economist, the Journal o/ Commerce, m ost U . S .
commercial bankers and the U . S . Treasury are insisting
that Brazil m ust go to the International M onetary Fund
and receive its "shock" medicine before being able to
gain needed debt relief. In fact , a semi-secret conclave on
Brazil was held May 20-2 1 at the New York Council o n
Foreign Relations t o try t o p u s h Brazil i n t h a t directio n .
But Brazilian authorities, headed by Planning M i n­
ister Del fim Netto , think differently. They regard the
IMF as irrelevant in terms o f the volume of funds it could
supply, and downright destructive of Brazil' s po litical
stability i f its conditionalities are implemented. This was
explai ned by Professor Riordan Roett, the chairman of
the CFR gathering and one of America ' s best known
Brazilianists, in the fo llowing terms: "They have to go to
,
the I M F . That ' s what I ' ve been telling them , but Delfim
[Netto] does n't want to face reality. He's scared shitless
of the political explosion which would come from that.
H e j ust won't do it . "
Many observers o f the Brazi lian scene are also q ues­
tioning the logic of going to the I M F . One New England
ban ker interviewed by EIR moaned: "I don't want Brazil
8 Eco n omics
to go to the Fund . I see not the slightest reason for it."
Indeed, even the people p utting the most press ure o n
Delfim t o go t o t h e I M F a d m i t t h a t he is "skillfully"
applying the same F riedmanite mo netarist nostrums to
B razil that the I M F dem ands, as fast as the body politic
o f that cou ntry can tolerate them .
The questi on demanding an answer is why Brazil,
which has yielded wo ndro us profits to foreign investors
si nce the 1 9 64 co up, and Del fi m N etto, known as "the
architect of the B razilian Eco nomic M iracle" for his
coordinating the 1 968-73 period of rapid growth, i s now
being so s avagely attacked by their former frien ds?
Pushing the Brandt Commission
The a nswers lie well o utside Brazi l's borders .
Threatening the world with a blowout of Brazil' s $ 5 5
billion in debt i s a strong card in t h e hand of t h e C F R ' s
po licy plan ners w h o a r e seeking to reorganize t h e world
financial system along the li nes prescribed by the Brandt
Commission report . The Brandt report called for "re­
forming" the I M F by recycling Arab petrodollars into
the repayment o f LDC debt. By publicizing the danger
of a Brazilian blow-out, the C F R crowd is saying: if you
don't go along with our plans, the whole thing goes up in
smoke. This was made al m o st explicit by the M ay 30
London-based Latin America Regional Reports: " Brazil­
ian min isters are pressing for structural changes i n inter­
national financial markets . . . . Brazil is li kely to embrace
with fervour this new role as 'champion o f the oppressed .'
. . . It is clearly in Brazil's interest to m obilize a lobby of
developing nations to call for radical changes. And it i s
t h e increasing rel uctance o f com mercial b a n k s . . . to
increase their exposure in such heavily indebted co untries
as Brazil, which will bri ng abo ut the formation of this
lobby . "
Syn dicated columnist H obart Rowen w a s even more
to the point. If the U . S . refuses to embrace the Brandt
reforms at the Venice economic summit, Rowen wrote
recently , the world will face an "economic time bomb in
Brazi l," whose deto nation "could set off shock waves
transforming a global recessio n i nto a global depres­
sion ."
EIR J u ne 24, 1 980
 Rowan was equally b lunt on the I M F q uestion: "ap­
plication of the I M F's well-known rules imposing strict
co nditions for its loans . . . could stir a series of social
revoluti ons i n the Third Worl d . "
The C F R crowd is h ardly unaware that driving Brazil
into the arms of the I M F will result in just such social
co nvul si ons. The fact of the m atter i s that this i s a
deliberate goal of the C F R policy-to destabilize or
" Iranize" Brazi l i n m uch the same way as South Korea
and Mexico have been targetted . As in these last two
countries , the CFR's main "assets" in Brazil are the
Jesuits, and the "Theology of Liberation" radicals within
the Catholic church . Possibly the best k nown of these is
the Sao Paulo metalwo rkers trade union leader " Lula,"
who receives his di rectives in public from his intimate
friend and confessor, Frei Beto.
A fully " Iran ized" Brazil, in the thinking of the C F R ,
would pose n o risk of engaging in independent i nd ustrial
development, and would be the best lobbyi st for the
Brandt Commission's low-growth reorganization of the
world economy.
The Brazilian economy i s , i n deed , a mess, thanks to
unpaid bills from the 1 967-73 " Economic Miracle" and
the reluctance of foreign creditors to fun d the kind of
industrial development needed to get the country out of'
the hole. Having to spen d $ 1 2 billion this year importing
oil contributes to , but does not cause, the crisis .
T h e extern al constrains are serious. Brazil has to raise
$ 1 3- 1 4 billion in new loans this year, j ust to pay off its
debt service. It is heading for a $2 billion trade deficit
and another $2 billion on non-interest services . This adds
up to close to $20 billion in foreign capital requirements
when even the most minimal fin ancing of on-going
proj ects is included. Up to the end of April, Brazil h ad
raised only $4 billion and had spent most of the liquid
part of its foreign reserves.
When given the Planning M i nistry in September of
last year, Delfim Netto announced Brazil would "grow
its way out of the crisi s . " He explained that growth was
necessary to provide j obs for Brazilians and to provide
the m aterials for an extraordin ary surge i n exports .
Delfim promised that by increasing exports fro m $ 1 5
billion last year to $20 billion this year and $40 billion i n
1 984, Brazil would clear t h e crisi s .
Delfim h a s made t h e $ 2 0 b i l l i o n figure a questi o n of
national and personal honor, and he will achieve it even
if he has to export so much coffee and soy that Brazil will
have to import its i nternal needs of s uch comm o dities
after January I. At this time, with a 35 percent i ncrease
in exports in the first fo ur m o nths, it looks like he will
make it. However, imports increased by 5 1 percent. Any
savage slashing of imports, such as a rum ored 40 percent
cut in oil im ports, would close down the industrial econ­
omy, provoke riots, and im pede Brazils' s ability to gen­
erate exports.
EIR J u ne 24, 1 980
The economic liberalization policies decreed by Del­
fim Dec. 7 i ncluded a 30 percent " m axi" devaluati o n and
the eli mination of many subsidies . While substantially
reducing the government b u dget deficit, these measures
have contributed to catapulting inflation to 94.6 percent
in the last 1 2 m o n th s . This is more than double the
inflation rates o f the 1 974-76 peri o d . The export orienta­
tion and the wasting of billions of dollars on ersatz
energy substitutes, such as alcohol from s ugar cane,
firewood, and high-ash coal, have also contributed to the
record in flatio n .
The Brazil hands talk
about the Brazil problem
Dr. Riordan Roett's Center of Brazilian Studies at
fohns Hopkins University is financed by Brazilian busi­
nesses, as well as American foundations. He is a coordina­
tor of an ongoing panel on U. S. -Brazilian relations man­
dated by the New York Council on Foreign Relations and
ran the two-day emergency brainstorming session on Brazil
at the CFR May 20-21. Thefollowing are excerptsfrom an
interview with Dr. Roett:
Q: What d o you think o f the Brazilian debt situation?
A: They have to go to the Fund. That' s what I ' ve been
telling them , but Del fi m [Nett o , Planning M i n ister]
doesn ' t want to face reality . He's scared shitless o f the
political explosion which would come from that. H e j ust
won ' t do it.
Q: I s the I M F ' s role to b reak the state sector?
A: Del fi m ' s doing a damn good job at that . . . . But
Brazil n eeds shock; gradualism i s no good. Delfim has
got this thing about continuing growth . H e does n ' t want
m o re unemployment. But what' s he got? He's got a big
balance o f trade deficit. . . .
He has got to get dollars. He's got a $ 5 5 billion debt
he can't service . . . You know his subordinates are under
sharp attack . The idea is to tumble him . . . . How, you
understand the reason for The Economist article?
. . . I was in Europe two weeks ago with the people i n
Deutscheb ank and in London . They were very worried
about Brazil defaulting and that having a domino effect
on all the LDC' s Eurom arket debt. They were afraid it
would cause tremendous international economic dislo­
cation.
The American banks are also afraid. They are clench­
ing, refusing to l o a n . The U . S . government m u st give
Brazil priority. It must pull together a big loan package
from public funds and armtwist the banks and corpora-
Eco nomics 9
tions to give Brazil the funds to get it through the year.
Our national interest requires it, but it' s high ly unlikely
because of the elections. No leadership . No one i n Wash­
ington will do anything for Brazi l .
Q : I ' ve been thinking about what I M F condition alities
would cause in Brazil, and it' s quite frightening.
A: It isreally scary, b ut they have to go . . . . No one
knows what will happen . Brazil is a different country
now from 1 964 , much more complex . Politically, now is
the best time. The opposition i s totally disorganized .
Gol bery [the regime's chief strategist, General Golbery
do Coute e Silva] has done really well with his political
reform . The only problem is Sao Paulo. It could blow
sky high .
. . . The military will go along. They' re already rest­
less about this political opening . A n d to enforce an I M F
agreement will require a po litical closing. There will j ust
have to be a return to repression. It's going to be h orrible.
But it can't be allowed to last long. I n the long term , a
repressive regime is very bad for Un ited States i nterests,
not j ust in the ideological sense, but because they become
too indepen dent . They could go off in some other direc­
tion .
Q: What kind of reactions are you getting from Brazili­
ans on the I M F?
A: Brazilians are eternal optimists . That' s a problem.
They have a big country and they don't know a damn
thing about what' s going on i n the outside world . I ' m
going t o Brasilia i n a few weeks to set them straight.
The Brazilian busi nessmen at the meeting I had this
week at the CFR j ust started to wake up and get the
point.
Following are excerpts from an interview with the vice­
president of a major New England bank.
Q: The word is o ut all over the p lace that Brazil has to go
to the Fund because the secon d-tier banks won't loan
anything without the Fund's stamp of approval .
A: I don't want to see Brazil go to the Fund! I see not the
slightest reason for it.
It' s really h ard for banks to loan to Brazil, even if we
want to. The banks are under the gun from the Co ntroller
of the Currency to hold down lendi ng. He highlights any
country loans over 2 5 per cent of capital. By highlighting
these loans, he' s telling them , ' Don't len d any m ore!'
Also, bankers aro und the co untry are reading all
those stories about strikes, about the abertura [political
openings] and they are looking at what happened to
Iran , and now all the trouble i n South K orea, Liberi a ,
and some co untries in Central America . Jesus, it' s a
tough environment for a bank ma nager!
Q: What would the Fund want from Brazil?
A: The Fund would attack tl).e rate of growth o f the
\0 Econ o m ics
Brazilian economy. For the last several years , the sine
qua non of Brazilian po licies h as been that 5 o r 6 percent
annual growth i s needed to provide employment for the
million and a h alf people entering the j ob market . To do
so, they need im ports, a certain amount of in fl ation and
increased debt . That point is being attacked by the Fund.
I ' ve been doing some h ard �hi n king about Brazil
going to the Fund: Can you put it on the same plate with
the abertura? N o . It wo uld mean fundamental changes in
the Brazilian system . They would probably push a free
m arket on Brazil similar to Argen ti n a and Chile, maybe
freeing up imports, reducing protectionism .
Q: How do you think Brazil is going to get the funding it
needs?
A: Obvio usly the J a ps a re dead in the water. That knocks
out what's been a big source .
The medium sized [America n ] banks are o ut o f the
m arket . The large banks are not o nly out of the market,
but have run down their exposures . United Virginia
looks at the big ban ks pulling out and says, 'Why sho uld
I help Citibank or Chase'?
But they can ' t pull out of the L D C ' s . They h ave too
·
much invested there . With all those years of Citibank
boasting about their LDC profits, they tooted their own
vulnerability. You can see what people think of their new
plans by looking at the price/earnings ratio on their
stock.
The following is excerptedfrom an interview with Brian
Zipp. u.s. Treasury Brazil Desk Officer:
Q: Will the U . S . bail out Brazil?
A: The United States h as n o global responsibility to bail
out everybody who gets them selves into problems . The
commercial banks are in there and so are other countries
. . . official rescheduling is not under con sideration.
Q: What would the I M F want Delfim to do?
A: . . . The Fund' s sta m p of approval means something
to bankers only when it has teeth in it. There is no way to
achieve austerity and the kinds o f changes the banks
require while at the s ame time improving the social
indicators . There has to be a trade-off. . .
. . . We have the same kinds of troubles as Brazil , like
high prices of imported oil. When you' re in that kind of
situation, you have to bite the bullet sometime.
. . . . Brazil traditionally does not like goi ng to the
Fund . It creates too m a ny po litical pro blem s . I hope they
can do it on their o w n . They have to decide .
Q: Why should Brazil go to the I M F if Delfim seems to
be doing the kind of policies it would recommend?
A: Delfim is doing a good j o b . He's moving in our
directi on, towards our own policies. He's on the road.
He's doing many of the things the Fund would have him
do; let' s hope he keeps doing it.
EIR June 24, 1980
 West German growth means
no recession for Europe
David Goldman on what the LaRouche-Riemann model
has disclosed: startling economic health across the Atlantic.

West Germany's economic strength, despite economic In an Apri l s urvey of the American eco nomy, EIR
catastrophe conditions i n the U n i ted States, h as bewil­ dem o n strated that the principal cause o f i n flati o n and
dered A m erican and British o bservers , and scared some low productivity growth i n the A m erican eco nomy was
o f them more than a little. I t i s now apparent to all b ut not higher oil prices, b ut the A d m i n i stration's energy
the econ om ists o f the Chase M an h attan B a n k and the co n servatio n pol icy .
editors of the Wall Street Jou rnal both of whom re­
Mirror image?
-

cently predi cted economic downturn i n West Germany­

The case of W est Germ any provides an i nstructive,
that there w i l l be no recession i n West G erm any, n or, by
al most m irro r-i m age comparison; the West Germans
iinp l ication , in conti nental Western E u rope.
. have d o ne everyth i n g the opposite way, and succeeded.
We present herewith a sampling from a recent i n­
I n stead of enj o i n i ng i n d ustry a n d consumers merely to
depth study of the West German economy conducted by
conserve energy-the Germ ans did place speed limits o n
EIR' s econometric servi ce, which should settl e the ques­
the A utobahnen a n d took o ther trivial conservation meas­
tio n for the time bei ng. EIR's study shows that West
ures-the Schm i dt govern ment opted for greater energy­
Germ an economic policy , by favoring high rates of
intensi vity at a h igher l evel of energy efficiency . That
capital formation parti cularly in export-related, heavy­
requ ires some explanati o n .
goods i ndustries, has developed sufficient i mpetus to
I n dustria l econ om ies, as Lyn don LaRouche, the de­
make the Germ an eco nomy alm ost i m pervious to h igher
signer of the LaRouche-Riem a n n computer model em­
oil prices. That i s an extraordi nary conclusi o n , consider­
ployed in thi s study has em phasized, can be measured by
ing that Germany is twice as depen dent on energy i m ­
fo ur physical param eters . An i n d u stri a l eco nomy o r
ports as t h e U nited States . I t s st rategic i m p licatio n ,
combi n at i o n of econom ies m ust be studied as a traj ectory
particu larly i n the co ntext of the West German-Soviet
thro ugh a five-dimensional phase space i ncorporating
trade comm ission meeting i n Bonn at the beg i n n i ng of
these four parameters plus at least dne measure of time
J u ne, are equally extraord i n ary .
( m ore t h a n one t i m e scale i s p o s s i b l e). Eco n o m i c
"health" is defined b y a condition where economic sur­
Data for the computer analysis of West Germany were plus (tangible o utput above and beyond m a inten a n ce) is
prepared by Ralf Schauerhammer of the Fusion Energy rising; the rate o f rei nvesti ble tangible surplus i s risi ng;
Foundation's West German office, Mark Tritsch and Laurent and the rate o f energy throughput i s rising at h igher
Murawiec of EIR's Wiesbaden bureau, and Alice Roth. levels o f energy fl ux-den sity, a m easure o f energy effi ­
Simulations were conducted by David Goldman and Ralf ciency .
Schauerhammer. German steel i n com parison with A m erican steel i s a

EIR J u ne 24, 1 980 Eco n o m i cs II

 case in point. We recently saw the American steel ind us­
Nominal West German energy efficiencies try fall to capacity utilizati on rates of about 60 percent
i n a space of eight week s , a l o n g with s u dden a n d
Output per manhour in constant marks widespread perm a n en t shutdow n s o f capacity . Ameri­
35
can steel making uses slightly less than twice as much
energy per ton of raw steel as either Germ a n or Japa­
30 1979
nese, i . e . , it is twice as energy-i ntensive, but only half
as energy efficient. During the past 1 5 years, Germ a n
35 steel makers steadi ly im proved their capacity to achieve
superior pro ducti vity a n d energy efficiency while Amer­
30 ican steelm a kers-who d i d not invest even when there
were no environ mental regulations a n d high i n terest
25 rates to hamper them-did little to improve capacity ,
but shut down the worst of what they had.
20 Yet when we look at the figures on total energy
co nsumptio n , it is evident that for West German m a n u­
15 facturi ng it rose stead i ly thro ugh the 1 970s, while A m er­
ican en ergy consumption fel l , both per unit of o utput
10 and per hour worked. That is to say, i n the West German
eco nomy, the rate o f i n vestment i ncreased i n the most
5 energy- i ntensive sectors, such that total energy-i ntensiv­
4.0 6.0 8.0 10.0 12.0 ity rose, even while those secto rs became more energy­
Kg. coal equivalent/manhour efficient. I n the U n ited States economy, in vestment
shifted from en ergy- and capital -intensive sectors to
labor-i ntensive secto rs, s uch that total energy-i nten sity
Nominal U.S. energy efficiencies fe l l , even though i n d ustrial processes themselves did not
Units.of mfg. per manhoor
become m ore energy-efficien t .
As H arvard eco n o mists H udson a n d J o rgenson p o i n t
1.20
o u t , t h e A m erican econ omy substituted l a b o r for capital
197 1
and en ergy , u n l i ke West Germ any. I t is highly sig n i ficant
1.10
that the West German rate o f increase o f m a n ufacturing
productivity is m u ch higher than the A m erican ( 5 .2
1.00
percent versus 1 .4 percen t i n 1 979) but even m ore signi f­
ica nt when we look at the content o f that productivity .
.90

Productivity and investment

.80
The LaRouche- R iem a n n m odel util izes a defi n ition
of p roducti vity superior to the o utp ut-per-manhour def­
.70
i n i tion em pl oyed by the U . S . government. O u r measure
1954
is the i ncrement of labor req uired to produce an addi­
.60
tional i ncrement of s u rplus. U n der opti m al conditions,
.30 .35 .40 .45 .50 .55
the two measures wi ll move i n tan d em . In fact, that is the
MBTUs/manhour
case fo r the West Germ an economy. H o wever, i n the
These two graphs plot productivity, measured in terms of U nited States, the o u tput-per-manhour num bers show a
output per manhour, against energy c onsumed per man­ s l ow rise between 1 976 a n d 1 979, w h i le the LaRouche­
hour in the manufacturing process. For West Germany,
Riem ann m o del ca lcul ates an average 3 percent ann ual
the trajectory shows a sharp rise undisturbed by oil prices.
For the United States, the reversal of energy consumption
decline i n productivity. That discrepancy in the A merican
per manhour has been lauded as a success, since output eco n o my between the two productivity measures, and
continued to rise. The actual character of energy efficiency the lack of d i screpancy in the German eco n o my, tel l us a
and productivity shows up in the growth of the West great deal about the way both econom ies work .
German economy and the rapid decline in the United The La R o uche- R i e m a n n m e as u re "fact o r s o u t"
States, showing the dangers of substituting labor for energy gains in output per m a n ho u r that con tri bute nothing to
and capital.
the global prod uct ivity of a n econ omy. The m a n ufact u re

12 Econom ics EIR J u n e 24 , 1 980

i
of an tipol l ution devices may show spectacular gai ns i n
productivity on a n outp ut-per-manhour basis, b ut the
instal lation of these devices will contribute n o t h i ng to
the next year' s o utput. The sam e is true for i nvestments
in auto manufacture geared solely to down-sizing cars,
or similar in vestments i n the m ost short-sighted, d ub i o us
sort of "en ergy conservati o n . " When we factor i n i nvest­
ments that lower the rate of p rod uctivity of the economy
as a whole, such as synthetic fuel p lants, which take m o re
capital goods to prod uce energy than i s currently re­
qui red , we red u ce p r o d u c t i v i t y i n the La R o u c he­
Rieman n meas urem ent.
Th erefore, the 3 percent an n ual drop i n producti vity
during the late sixties is a good quantification-meas­
ured against the supposed i m provement of the produc­
tivity rate-of the sh i ft towards n o n -productive i nvest­
ment. In an economy al ready suffering fro m chronic
un derinvest ment, that co uld produce a fatal sort of ane­
mia. EIR reviewed the prospect of U . S . economic death
in its May survey, and we include a graph from the
com puter output of that survey for purposes o f contrast
i n this report .
The fact that the two producti vity m easurements are
in phase i n the case of West Germany m eans, of course,
that that economy has concen trated investment in those
areas which are both sectorally and globally prod uctive.
We do not wish to give the impression that West
Germany is a perfect eco nomy. Far fro m it. Rather, b oth
that n ation's problems and s uccesses a re i n structive for
us and others . We shall see fro m the LaRouche-Riemann
model ' s measurements that the functioning o f the econ­
omy by all parameters-excep t living standards-fell
d rastically after the 1 97 3 o i l price rise, and then resumed
growth at about the previo u s speed . There i s nothing
spectacu lar here. By o u r m ost opti m i stic scenario, the
West Germans will have barely recovered their 1 970 peak
growth potential some time during 1 98 2 . But the West
German s are n ot acc ustomed to being spectacular, o n l y
reliable. And it can b e stated emphatical ly that West
Germany has slowly b u i lt up sufficient productiv i ty and
energy efficiency to make it i m mune from the effects o f
even fai rly substantial oil price i ncreases.
Export expansion
Cap ital fo rmation is the most po l i tical, an d i n terna­
tional , of q uesti ons. N o natio n in West German y's posi­
ti on can improve productivity in capital-goods industries
without taking advantage of econo m ies of scale that
require a su bstantial and growi ng export market . West
Germany solved this prob lem d uri ng 1 979 by i n vesting
heavi ly (in physical terms) i n the French and I talian
econ omies-preventi ng those economies from entering
recession-and this year by a major export offensive to
EIR J u ne 24, 1 980
the East. Soviet trade, no matter w hat the Carter adm i n i­
stration says or t h i n k s , is n ot a m ere option for West
Germany, b ut a quest i o n o f whether German society will
prosper o r be d isso l ved . That West Germany chooses to
ship the Soviets precisely what the Soviets need to realize
their p otential for fossil fuels, and possi bly n uclear en­
ergy, has alarm ed some i n the U n ited States (who are i n
any event forbidden b y the Carter adm i nistration from
sel li n g many categories of such goods to the Sovi ets).
However, since the same A m ericans who show this alarm
un derstand n either why they have n early r u i ned the
A merican economy, n o r why the Germans refuse to
col lapse with them, the i r o bj ections are not especial ly
i mportant in the scale of events.
There i s a keen awareness amo ng West German
i n dust rialists and ban kers that the q uesti o n o f the devel ­
oping-sector market is also a life-and-death matter for
West Germany, even if the Soviet market i n itself pro­
vides a s u fficient aven ue for expansion at this moment.
That was the original o bj ective of the July 1 97 8 Schm i dt­
Brezhnev acco rd outlining m utual development efforts
in the Third World; it was an outgrowth o f this accord
that b l o ssomed i n to this year' s 25 percent q uarterly rate
of i ncrease in Soviet-German trade. Chancellor Schmi d t
i s consideri ng a maj o r i n i tiative for t h e reorganization o f
devel opi ng-co u ntry fi n ances at t h e J u n e summit of i n ­
dustrial nations i n Venice. To p ush through such an
i n i tiative, since the Carter adm i n i stratio n will be hostile,
w i l l requ i re m ore wi l li ng ness to shake up Washington
than Schm idt has yet show n . But the i n itiat i ve i s n o less
necessary . West Germany cou l d stil l , through i naction,
ruin its s u ccess. U n less the West takes m eas ures to
reb u i l d the damaged econom ies of the devel oping sector
this year, there may scarcely be a devel oping sector left
to rebui ld later o n .
Econom ics 13
 How Germany did it...
and can keep doing it
by Susan Johnson

The first series of comp uter graphs generated by the
LaRouche- Riemann model shows the 1 962-79 period i n
t h e West German econ omy. T h e net investible surplus
available to the economy-that is, t he capital a n d con­
sumer goods avai lable over and above rep lacement needs
to expand the p rod uctio n of tan gi b le goods- reached an
all-time high of 74 b i l l i o n marks (about $80 b i l l i o n 1 970
do l lars) in 1 963. I ts rise and fal l to the low p o i nt reflecting
the first 1 970s oil crisis came i n tan dem with that of the
U.S. economy. But after 1 975, starti ng from a l ower
level , th is indicato r rapidly recovers its earlier rate o f
increase. B y contrast, net i nvestible surplus h a s fai led t o
rise above the zero level in t h e U n i ted States si nce 1 974,
and in 1 979 fel l sharply i nto deficit.
The West German free energy ratio is shown next fo r
1 962 thro ugh 1 979. This is the proporti o n o f net investi­
ble surplus to the capita l and wage costs expen ded in the
same prod ucti on period . It meas ures the maxim u m po­
ten tial growth rate avai lable to the economy. A t present,
the West Germ an free energy rati o is risi n g even m o re
sharply than the physical net i n vesti ble s urpl us, and by
the beg i n n i ng of 1 979 was wel l above the present 6
percent rate of i ncrease in manufacturing o utput.
The th i rd graph i n this series may startle even readers
familiar with recent pitches for foreign i n vestment in the
U . S . based o n the erosion of A merican-German wage
d i fferential s . Starting at a low level in the 1 960s, variable
capital, o r physical consumpt ion of workers i n the West
German p roductive sector, rose b ut then sh owed a dra­
matic reversal d u ring the 1 969 recession-which had
m ore severe effects i n Western E u rope than in the U . S .­
and triggered a costly strike wave. However, consump­
tion by these wor kers- b lue-co llar manufacturi ng, m i n­
ing, transportation, constructio n and farm emp loyees,
minus those occupied in retra i n i ng or producing over­
head goods like m i l it ary equ ipment which do not re­
enter the productive cycle-was not c ut during the 1 974-
75 o i l price cr i s i s , a n d i n t h e late 1 9 70s i ncreased
sharply. By contrast, living standards i n the United
States have fallen a conservatively estim ated 25 percent
between 1 970 and 1 980.
This is one way in w h ich the Federal Rep u b lic has
mai ntained and expanded its secular p roductivity and its
prod uctive p otenti a l . The other way i s shown i n the
fo urth graph, 1 962-79 investment net of depreciation.
Recoveri ng fro m the o i l b u rden , this param eter rises at a

The West German economy,

1962-1979
Public and private policies of increasing productivity through capital­
intensive and energy-efficient investment pulled West Germany out of
its post- 1 973 trough. Not a spectacular record, but a sound one,
especially compared with the U.S. economy's shortsighted efforts to
substitute elbow grease for modernization and advanced energy
utilization methods.

14 Eco n omics EIR J u n e 24, 1 980

sharp clip i n 1978 . While the graph ends before the
final quarter of 1979, total net investment during the
fo ur quarters of that year and the first quarter of 1980
rose nearly to the 1960s peak . This occurred while
American net investment n ot only fai led to recoup its
1975 deficit of $10 billion, but fel l into the red by $50
billion as of 1 979.
I n real terms, the West Germ an economy i s now
grow ing at 6 percent a year, despite lower o�ficial projec­
tions for overall GN P. The rate of i ncrease of manufac­
turing productivity in the first quarter of 1 980 was 3
percent-the best average achieved by the U . S . economy
during its stro ngest decade, the 1 960s. Between 1 960 and
1 97 8 , val ue added per em pl oyed person (again, in con­
stant 1 970 marks) m ore than doubled in the economy as
a whole, and in the producing sector, rose 1 1 5 .5 percent .
West Germ an expansIOn o f investment i n fixed capi­
tal and labor capabilities has been based o n a strategy of
expanding the volume and market share of industrial
exports, as we stressed earlier i n this report. C urrently
West German exports are showing " m o re biceps than
ever, " to quote the b usiness daily Handelsblatt. As the
world' s number-two salesmaker, the Federal Rep ublic i s
o n ly sl ightly behind the U n ited States (and U . S . export
composition is, of course, far more heavily weighted
toward agric ultural products ) .
I n t h e fi rst qua rter o f 1 980, total West German
exports disp layed a 1 9 .6 percent nominal growth , with
retai l price increases r u n n i ng at an average 6 percent.
Exports to Eu ropean Comm unity partners were up 22
percen t; to non-EC Eu ropean co untries (Scan d i navia,
Austria, Switzerland) 28 percent; and to the Soviet
U n io n , 24 percent. In 1 979, the proportion o f German
exports was roughly 4 8 percent to the EC, 6 percen t to
the U . S . , 6 percent to O PEC, 5 percent to C omecon
countries, and 8 percent to less-devel oped cou n tries .
The implementation of the Bonn- M oscow industrial
cooperation agreement will mean not only a further
dramatic i n c rease in eastward exports, but, centered as
they are on energy devel opment and transfer, a new
phase o f pro ductivity p otential. The German Chamber
of Com merce and I n d u stry is now tryin g to accelerate its
drive to b u i l d u p " k n owledge-intensi ve" exports . De­
pending on how quickly the n ation resolves its current
nuclear-power development i m p asse, and/or moves into
a more com fortable energy-supply s ituation on the basis
o f the B o n n - M oscow accords, the next tough question
facing the West German econom y will be how to expand
labor-force s k i l l s sufficiently to meet Soviet capital goods
dem a n d and the n eeds of n ew high-technology domestic
i nvestment.
Conservative projections
The seco nd series of computer graphs is based on
p roj ecti ng 1 962- 1 979 t rends into the four years from
1 980 thro ugh 1 98 3 . This was translated into the La­
Ro uche- R iem a n n di fferenti al equati o n s employed by the
m odel by spec i fying val ues for the composition of rein­
vested capital, for prod ucti vity meas ured as the ratio of
gross surplus to wage costs, and for the nonproductive
expend iture ratio as wel l as the proportion of circulating
to fixed capital and the capital depreciation rate-at
rates of ch ange extrapolated from that 17-year trend.
N et i n vest i b le s u rp l u s, in this projecti o n , reaches new
historic highs. The free energy ratio sti l l remains below
its pre-oi l crisis pea k , reflecting in part the l ower val ue
for S ' rei n vesti ble s urp lus i n the S ' /C+ V ratio, and the
l ower prod ucti vity ratio relative to the optim i stic series,
despite the t remendous p ro ductivity gains made during
the 1 962-79 peri od.
Variable capital requ i rements show an o rder o f mag­
nitude of 50 percent increase above thei r 1979 level; thi s
does not incl ude t h e overhead costs o f i n c reased ed uca­
tional expen diture for tomorrow ' s workforce, which
have been ded ucted fro m net i n vestib le s u rpl us. N et Conservative projection for 1980-83
i n vestment alm ost triples i n constant-mark val ue o ver Based on 1962-79 trend
the pre-oil-crisis pea k , in a steady i n c rease.

Optimistic projections
Based on the 1 975- 1 979 t rend l ine, t hese grap h s show
a slower rate of increase i n net i n vesti ble surplus and the
free energy ratio-partly because there is a larger volume
o f fixed capital bei ng depreciated at the same rate as the
con servative proj ecti ons' smaller vol ume. By 1 98 3 , h ow­
ever , both reach higher absolute levels than the conser­
vative proj ections. The optimistic trend-line also sh ows
the "j ags ," or relative discontin uities, that ten d to occur
at higher intervals of g rowth and consolidation, fol lowed
by further growth . N o te that the substantial i ncrease i n
S' net s urplus, compared with the conservative proj ec­
tion, is accom pl ished with only a slight i n crease in out­
lays fo r vari able capital wages, altho ugh i t cannot be
assumed that this sit uation w o ul d l inearly conti n ue .

Oil price scenario Optimistic projection for 1980-83

For the final series of g raphs, the m o delers too k the Based on 1975-79 trends
optimistic projections and superimposed o n them a high
oil price increase i n 1 980-83 . The figures a re 1 5 billion
(constan t) deutschem arks i n 1 980, 20 b i l l i on i n 1 98 1 , 20
billion in 1 982, a n d 25 b i l l i on in 1 98 3 above the ordinary
trend line. The severity o f this surcharge can be seen by
comparing these costs with net i n vestment levels. Yet
this increase i n overhead fails to throw the proj ection
into a tai lspi n, o r even signifi cantly decrease growth
potential, beca use the economy has reached higher levels
of energy-efficiency and p rod uctivity. I n 1 98 3 , net s ur­
plus does n ot reach the level it does in the opti m i stic
projection, beca use the oil costs are ded ucted fro m gross
surpl us; the free en ergy ratio nevertheless contin ues to
rise as do va riable capital and net i n vest ment.
The fu ll shock o f this series comes, h owever, w hen i t
is compared with t h e U . S . p roj ections published i n the
M ay 6, 1 980 i ssue of EIR. These carried forward the
1 970-79 trends in the American eco n o my t h rough 1 986,
with no extra oil price i ncreases ass u m ed . Rei n vestible
Sharp on price increase imposed on optimistic
Added oil cost overhead : over the four years 1980-83 60
surplus by 1 98 3 was $ 1 30 billion 1 972 dollars in the
negative; the free energy ratio was - . 1 70; and wages
entered a zero-growth p hase in 1 98 1 , followed by a sh arp
decl i ne i n 1 984-86.
It should be added that both the "conservative" and
"opti m i stic" West German proj ectio n s are fun d amental­
ly conservative in the sense that they do not p resuppose
any major tech nological b rea kthroughs applied o n a
large scale i n the early 1 980s, or any red uction of energy
costs of the kind wh ich i m ports of n uclear-produced
power co uld introduce. I n another sen se, they are both
opti m i stic, si nce they assume co ntin ued demand growth
from the West German export markets that account for
expanded net i n vestmen t .

16 Econom ics
projection, 1980-83
billion deutschemarks
Calculating new agricultural parity
Democratic candidate LaRouche's statement on thefarm problem.
For about 96 percent o f the A m erican people, the reality
o f agricu lture is buried under g reat heaps o f ' wel l-known
truths' which are chiefly myths o r even outright lies
agai nst our farmers .
For some years , the A m erican food producer h a s
been sel l i ng his product at prices which , fro m y e a r to
year, have averaged out at consi derably less than the
calcu l ated parity values. When farmer product i s sold at
a price which i s m o re than sl ightly below s uch parity
values, the difference between the p ri ce received and cost
of production m ust come out of the capital o f agriculture.
This takes the fo rm of depletion o f improvements in
land , decay of agricu ltural equi pment, a n d so forth .
The reason many farmers have avoided bankruptcy
as long as they have is that until recently agricult ure
enjoyed the avai labi lity of signi ficant volumes of credit,
some at com paratively favorable i n terest rates. W h at the
fa rmer did u nder these circumstances was to b o rrow
cap ita l to replace the in vested capital he had lost by way
of less-than-parity prices . The p ile-up of agricultural
debt that resulted was covered o n the acco unting ledgers
of the len ders by a spiral of agricultural land prices.
The ficti on i n these land prices is exposed by the fact
that no fa rmer cou l d buy farmland at such prices for the
purpose of agricultural producti o n . In other words, this
i n flation i n land p ri ces meant that the fi nancial ren t on
that land fa r exceeded the i n come of prod uction using
that land.
So, al l the yea rs farmers were p i l i n g up debts to cover
the depleti o n of thei r capital by less-than-pari ty prices, a
disaster was being b u i l t into Ameri can agricult ure­
whenever the supply o f credit d ried out, or w henever
some d rastic cut i n farmers' income triggered the spiral
i n debt-equ ity ratios.
Then came President Jimmy Carter .
President Carter' s ad m i n i strati o'n partici pated i n rig­
gi ng the overth row o f the S h ah o f I ra n . Alth ough the net
result of the cut in I ranian o i l production has turned out
to be a glut in world ma rket oil s uppl ies , the London
petro leu m-marketi ng cartel used the pretext o f the K ho­
mei ni coup d'etet to do uble their petroleum prices, a n d
t h e Ca rter admi n i strati on rigged a n a rt i ficial petro leum-
18 Econom ics
price crisis in the U nited States in di rect co l l usion with
the London petroleum-ma rketi ng companies.
This swindle, w h ich Ca rter aided as part of his 'energy
po licy,' hit agriculture severely. Agriculture is extremely
en ergy-i n tensive i n term s o f such items as fertilizers and
fuels, and a l so d i rectly and i n d i rect ly extremely energy­
price sensitive.
Then, C a rter and Federal Reserve C h airman Paul A .
V olcker conspired t o b ring o n a credit-crunch a n d the
fi rst stage o f an actual depression with the mislabeled
'anti- i n flati o n ' package o f last October. Then , as usua l ,
Carter lied . H e prom ised t h a t t h e grain em bargo agai n st
the So viet U nion wo u l d not res ult in bringing the sudden
grain s urpl us i n to the domestic and world m arkets, to
depress grain prices recei ved by fa rmers. Typical o f
Carter, he bro ke that prom ise a l most as s o o n a s he had
given i t .
A l tho ugh V o lcker h a s fo rmally reversed t h e new
round o f i n terest-rate h i kes i ntroduced by Carter M arch
1 4, the e ffect o f that short-term leap in interest-rates was
to wreck the U . S . and world credit system s to the point
that o nce i nterest rates began to be l owered , permanen t
dam age h ad been d o n e t o the credit str uct u re.
N ow, the farmer is forced to t u rn everyt h i ng salable
i n to cash fo r l i q u idity, u n der pressu re from b a n k s . Farm­
ers trapped in 'prime-plus' fi n a ncial contracts a re s u ffer­
ing a m assive loss. Forced d u m p i ng of fa rm prod ucts at
near-d isaster p rices drives prices recei ved by fa rmers
ever-lower. Po r k , beef, a n d so forth are n ow bei ng sold
at prices gen era lly way below the cost o f prod uctio n .
T o g i ve t h e n o n farmer citizen some i dea o f what this
m eans fo r his o r her din ner table in 1 98 1 , we refer to the
1 97 3 - 1 974 sha ke-o ut i n agricu lture, a m uch m i l der shock
than is occurring right now. Duri ng that period, herds
were red uced by slaug hter, and the cut i n herd size has
never been reversed si n ce. I t is a lie that h igh beef prices
are holding down beef con sumption by the p u bl i c. The
p ub l i c has been b uying every pound o f beef the cattle­
rai ser and cattle-feeder have been able to deliver to the
m a rket without cutting repl acem ent herd-stocks to the
point o f sign ificantly red uci ng the fo l lowi ng years of
s u pply o f beef.
EIR J u n e 24, 1 980
 Admitted ly, there is an additional aspect to the prob­
lem. When the own er-operator farmer i s forced to d u m p
h i s prod uct, i t is t h e fi nancial ly connected maj o r grain
an d other fa rm-p roduct o l igopol ies which buy up the
farmer's product at low prices and resel l that prod uct
under circum stances of sign i fi cantly h igher p revai ling
market price . The farmer lacks the credi t-reso urces to
hold his own prod uct-i nventory to s upply fi n al demand.
For the m o ment, we merely cautio n the n o n farmer citi­
zen that such an i n-between matter exists . We conti nue
now to co n centrate on the matters deali ng with parity
values of p rices paid to ow ner-operator farmers .
I f the farmer i s driven out of business, as a growing
n um ber are going out of b usiness th i s year, the next year
will see a shortage in food producti on, and substantially
higher prices. This rise i n food prices wi l l then spi ral
upward as fi n ancial syndicates m o ve in to control a n
i ncreasing portion o f fa rm l a n d sti l l i n product i o n . The
trend will then be toward raising agricultural p rices to
levels determ i ned by the arti ficial valuati o n o f debt-l aden
agricultural land.
To repeat the point stated earlier. What is at issue for
the 96 percent n o n farmer percentile o f the citizenry i s a
loss of stable food supplies at stable prices. Parity p rices to
the owner-operator fa rmer protect n ot only the farmer:
they are i n dispen sable if we are to ens ure a stable n utri­
tional level at stable prices for the fam i l y din ner table.
We have stressed 'owner-operator farmer' and we
add th at the agricu ltural po licies of the La Ro uche ad­
min istration will be based o n keep i ng that i n dependent ,
owner-operato r fa rmer as the mai nstay of U . S . food
productio n . I t is that farmer, not the absentee-owner,
who someti mes works up to 1 7 o r 1 8 h ours a day, several
days in succession, to p revent vagaries of weather from
destroy ing a harvest and such co nti ngencies . I t i s the
techno logical i ngen uity of such owner-operator farmers,
especially those operati ng l arge fam ily o r i n t rafamily
farms with benefits of economies of sca le, which effects
the main part of the improvements in quality and eco­
nomic prod uctivity of the A m erican System ' s agricultur­
al m i racles.
That is the i ndepen dent-farmer system I am com m it­
ted to keep ing and strengthen ing. If the m ajority of the
96 percent nonfarmers are as sensi b le as I trust they are,
they will join with me i n i nsisting o n that same pol icy .
How parity ought to work
Agricult ure cannot work merely from the plan ting to
the harvesting, one year at a time. A farmer prod uces
eco nomical ly by underta king a program of productio n
fo r each part of h i s output, a program involving i n vest­
ments in land-improvements, equipment and so forth ,
which m ust be averaged out over not less than a th ree-to­
fi ve year perio d .
Th erefore, t o secure eco nomic efficiency-that i s , t o
EIR J u ne 24 , 1 980
keep parity-val ues as low as technology perm its-farm­
ers must commit them selves to productio n programs for
their farm s based on fai r fore-knowledge of the market
demand in quantities and average prices for forward
running periods of between three to five years , allowing
for m argi n a l year-to-year adj ustments.
In other words, to brin g the requ i red parity val ue
down to the lowest sound price, we m u st work to create .
orderly m a rkets for agricultural products, i n both do­
mestic and fo reign markets over run n i n g t hree-to-five
yea r forward periods. Farmers can then prod uce accord­
ing to rel iably forecast dem a n ds . A s l o n g as we can
buffer the excesses and shortages caused by weather and
such with reaso nable product inventories, the farmers
can keep the food-pipelines fi l l ed to any reason ably
forecast food-requirement at a stable average price for
th i s volume of product.
Let i t be clear that we are n ot hinting at some scheme
fo r governmental de facto 'co l l ectiv izatio n ' of the Amer­
ican farmer . No m eas u re m ust be i n t roduced which
undercuts the i n dependence o f the owner-operator farm­
er. Our j ob i s to use the too l s of better forecasting and
better agricu ltural export practices and p o licies to p ro­
vide those in dependent farm ers with reliable forecast
vo lumes and prices w h ic h they w i l l use as i n formation to
guide themselves in m anagi n g their farming. This means
also retaining meas ures such as the Capper-Volstead
Act , as means to aid fa rmers in col l ab oratin g among
them selves to p romote o rderly m arketing o f their prod­
uct-to protect themselves again st bein g p layed against
one another by g reedy m iddlem a n organizations. We
desire that the portion of the price we pay for food which
properly belongs to t he fa rmers should go to the farmers,
to keep our food supplies stable and stable in price .
I t is t h e ingenuity and i nvestment-risk of the owner­
operator fa rmer w hich wi l l work within a combi n ation
o f orderly m arketing a n d so u n d pari ty-val ues to foster
new tech n o l ogical i m provements in agriculture by the
best i n dependent farmers . The benefits of competition
among farmers w i l l be fostered i n that way .
Included Policy-Measures
Severa l specific measures must be taken i m mediately
by the federa l government to relieve the current agricul­
tural crisis-that is, i f the 96 percent o f the n o n farmer
citizens are to have proper n utrition at reasonable prices
for their d i n n er tables in 1 98 1 a n d 1 98 2 .
I a m com mitted to a policy of world-market prices
for A m erican agri cu ltura l exports, for o n e thing. I am
agai nst taxing o u r farmers in o rder to dump foo d on the
world m a rket , that being the general dri ft o f federal
policy to date.
Less than 4 percent of our labor force produces the
food which has fed our pop Ulati o n and a good part of
the rest of the world besides. O f th i s total , abo ut 1 . 5
Econ o m i cs 19
percent o f o u r total l a bo r force, working as owner-oper­
ator fa rmers, produces the great b u l k of the total, with
part-time and so-cal led m argi nal farmers fi l l i ng o u t the
tota l . U ntil the cum ulative disasters o f the two K issi nger
administrati o n s and the Carter a d m i n i strati o n erupted
over the 1 970s, we cou l d say with confiden ce that our
farm ers were the m ost p roductive i n the world, prod uc­
ing h igh -quality food at the l owest social cost of any
nation . About 80 percent of the C o m m u n ist C h i n ese
population is em ployed in p roducing a m i serabl e diet for
those people as a whole. About o n e-quarter of the Soviet
labor force is requi red to prod uce a poorer average d i et
than less than 4 percen t o f the U . S . labor force .
A LaRouche admi n i stratio n pol icy fo r agricultural
export treaties w i l l be geared to world-m arket prices.
M ost u rgent i s providing sta ble l ines of agricultural
short- to- long-term agricultural prod uctio n and capital­
improvements credi t at rates of between 4 and 6 percent .
This should b e adequate to p ro m o te revivals o f agricul­
tu re, stopping the looming disaster to o u r n a ti o n ' s foo d
supplies, and also p rovi ding farmers with fi nancial lee­
way for better col l aborative m a nagement of the m arket­
i ng of their p roduct.
Without ignoring other components o f o u r agricul­
tural export categories, my adm i n i strati o n w i l l stress
th ree categories o f product as paradigm atic for m y agri­
cult ura l pol icy as a whole. I am committed to i n creasing
grai n , beef-cattle, and dairy producti on, with em phasis
on i ncreased m argi ns o f export. For the medi u m -term ,
grain should be a big seller u nder treaty agreements
secured by my admin istration . A s developing n ations
improve their grai n p roducti o n over the medium-term ,
rising purch asi ng power i n these and other nations w i l l
i ncrease the demand fo r U . S . beef a n d dairy exports
co nsiderably. The point i s to beg i n b u i l d i ng up our beef
and dai ry herds, p h asi ng i ncreased grain production
grad ually from export into feeding of beef and dairy
productio n .
Perhaps i t wi l l b e rumored that w hen President La­
Ro uche greets foreign am bassadors in boots and o ver­
al ls, the am bassador wil l know th at the President is i n a
mood to sell g rai n , beef, and dairy products. I wouldn't
actually appear in such d ress for d i p l o matic fu nctions,
but the rumor will probably be spread nonetheless . I
mean to sel l a growing amount o f o u r agricult u ral prod­
uct to nations in search of some good eati ng.
I f some gifted people can pro ve good methods for
improving the prod uction of twins i n beef cattle, a n d
avoiding steri lity among twins i n dairy cattle, you m ay
be certain that those people's government w i l l n ot show
itself ungratefu l .
I a m not a fa rmer, b u t , l i ke m o st sensi ble people, I
appreciate an adequate supply o f good foo d fo r the
din ner table.
20 Econom ics
Otherwise, as President, I shall a ppo int a selection of
farm ers to staff the relevant positi o ns in the Agricult ure
Department, with some leading agro n o m ists worked i n .
T h e A merican people, a n d a l o t of h ungry people abroad
are going to be secured good n utriti o n .
The Profit-Factor
in Parity
The preceding o utline p rovi des the n o n farmer citizen
with a rough outline of the essential backgro u n d for the
.prob lem on wh ich I am going to report at this time.
W h en o n e asks, ' W h at should a farmer' s gross profit
be?' The q u esti o n , stated in that fo rm , m ight be an swered
by alm ost any figure picked out of the air. That i s the gist
o f the poi nt I have been d isc uss ing with a n u m ber o f
lead i ng fa rmers.
H o wever , when we t h i n k of profi t as the fu nd avail­
able for rei nvestm ent i n ex pansion and i m p rovement of
agriculture, any co m petent eco n o m i st-or fa rmer, i m ­
m ediately s m e l l s o ut a better w a y to answer t h e questio n .
At w hat rate o f profit c a n beef herds b e i n creased a given
amount, dairy herds, grain producti o n , and so fo rth and
so on?
In other words, to determ i ne w h at the proper gross
profi t com p onent of p arity-val ues o ught to be, we m ust
work backwa rds from the desired quantity and quality of
total o utput fo r the category o f agricu l tural product
u n der consi derati o n . I ask the A m erican citizen ' H ow
m uch beef do you req u i re for you d i n ner table i n 1 98 1 ,
1 98 2 , 1 98 3?' At what parity-value w i l l the A m erican beef­
producer be able to supply that requ i red volume?
I n m aking this calculati o n , we m ust also take into
account certain other consi derati o ns . O u r obj ective
should n ot be m ere ly to increase the supply of food, b ut
to prom ote tech nological im provements i n q ual ity and
quantitati ve features o f food producti o n . This means
i ncreasing the capi tal-i n tensity . These i m provements i n
agricu ltural technology a re k e y to contro l l i n g the price
o f food at the di n n er-ta ble i n the med ium a n d l o ng term .
I t happens that there exists presently o n l y one analyt­
ica l method fo r considering both o f these two req ui re­
ments, quantity a n d technology, s i m u ltaneo usly to arrive
at a rel iable definite val ue fo r profit-ratios. That is the
La Rouche- R iemann program of ana lysis.
I have therefore initiated the work with my relevant
col labo rators to begi n developing the package for deter­
m i n ing the k i nds of parity-val ues req u i red for the needs
of the A meri can System of agriculture.
This proced u re and pol icy will b r i ng the 96 percent
non farmers o f the electorate i n to the process of shapi ng
national agricultural policies . I nstead of viewing the
farmer as a go bb ler of subsidies, you w i l l begi n to view
the fa rmer as your o n ly source of a stable supply o f food
at stable prices.
EIR J u n e 24, 1 980
Domestic Credit
The snowball effect
The Fed appears to be trying to pump money in to the
economy to slow the col/apse it earlier provoked-but loan
demand hasn ' t revived.
F or President Carter to promise
the big-city mayors who gathered
in Seattle on June 1 0 that he wi11
do something i f u ne m p l o y m en t
contin ues to s o a r is l i k e a hit m a n
offering to send a fruit basket t o
the wi dow o f his victi m . T h e reces­
s i o n triggered by the M arch 1 4
C arter / V oJcker cred i t res traint
p ac k age i s now r u n n ing o ut o f
everyone's contro l .
The fastest a n d m o s t deep ly
collapsing sector has been steel,
which operated at only 6 1 . 1 per­
cent of capacity in the week ending
June 7. I n d ustry s o urces expect
operating rates i n their industry to
fall to 50 percent of capacity befo re
long, which would m ake the down­
turn the worst on record . The im­
m ed i ate cause i s t h e collapse of
orders from auto, which has cut
back new auto production by more
than 3 0 percent fro m l a s t year;
construction and steel service cen­
ters, which are reducing their in­
ventories on the expectation that
there will b e n o reb o u n d in de­
mand. One steel i ndustry source
rep o rted to us recently t h a t the
murderous cancellatio n of orders
hit the steel industry all at once
right after M arch 1 4 . Until that
point, he said, his company had
contin ued to receive orders from
customers who were sti11 not con­
vinced that the economy was head­
ing i nto a prolonged recession .
The Commerce Department' s
latest survey of b u si n e s s c a pit a l
spending intentions, taken i n l ate
EIR J u ne 24, 1 980
by Lydia Schulman
April and M ay , shows that plant
and e q u i p m e n t o utl ays will rise
only about 1 percent this year from
last, taking i n fl ation into account,
after a 6 percent real increase in
1 97 9 . The s urvey the Commerce
Department too k in l ate Jan uary
and February had indicated that
the current level o f capital spend­
ing would be higher, b ut that busi­
nessmen also expected i n flation to
be higher . Spending was expected
to be as high as 2 percent.
Surprising n o one, retail sales
dropped 1 . 5 percent in M ay before
adj u stment for inflation, for the
fo urth con secutive m o n t h . The
drop was heavily weighted to the
auto and b u ildings materials sec­
tors , which were reported down 22
percent and 1 3 percent respective­
ly . The overall drop would h ave
been a lot more severe were it not
for a 3 1 percent gain i n gasoline
sales-entirely a functio n of price
increases. Administration officials
are puzzling over the fact that de­
spite the p artial lifting of consumer
cred i t con tro l s , A m erican c o n ­
s u mers sti l l a p p e a r u n w i l li n g t o
resume spending.
From all indications, the Fed­
eral Reserve appears to be trying
to p u m p s o m e m o n e y i n t o t h e
eco nomy through bringing down
borrowing costs i n order to arrest
the negative growth of the basic
money s upply and p atch up the
ero ding status of the U . S . as an
industrial power. This tack i s not
working any better than the Fed ' s
earlier attempts to bring d o w n the
in flation rate by pushing i nterest
rates sky high .
In the n i ne weeks through M ay
2 8 , business loans at the l arge com­
mercial banks pl unged by $6 bil­
lion to $ 1 5 2 . 1 billion-at the same
time that i nterest rates tumbled by
almost 10 percent. The com mercial
paper market, which until recently
had been picking up some lending
business from the banks, has nose­
dived in recent weeks , falling $ 2 . 3 2
billion i n t h e week en ded M ay 28
and $ 5 3 6 million i n the previous
wee k .
Some of t h i s demand for credit
has been diverted to the bond mar­
ket, where the top-rated corpora­
t i o n s a re co nvert i n g s h ort-term
debt i nto l onger-term m aturities .
But a lot of the credit demand has
simply been crushed by the snow­
balling economic collapse. Con­
sumer credit o utstanding dropped
precipito usly by $ 1 .99 bi11ion in
April, the fi rst decline i n more than
five years.
Speculation was rife last week
that the Fed would be forced to
take a m o r e d ra m atic m ove to
loosen credit and slow down the
rate o f eco n o m i c c o l l a p s e , with
s o me an alysts expecting t h at the
Fed might call a n emergency ses­
sion of the Federal Open M a rket
C o m m i t t e e , w h i c h d e t e r m i n es
short-term interest rates, to lower
its i nterest rate targets further. On
June I I , the federal funds rate­
t h e k e y s h o r t- t e r m r a te -ca m e
down to 8 percent a n d banks be­
gan reducing their prime rates to
1 2 percent . How far the Fed will
move to bring i n terest rates lower
is a less interesting question, h ow­
ever, than whether the admi n istra­
tion can slow down the uncontroll­
able collapse i t has triggered .
Econ omics 21
Internationa l Credit
French banks gain Euroloan clout
Resting on their petrodollar deposits they look to stronger bond
management.
D uring 1 9 79, figures released on
the growth o f assets and deposits
am ong l e a d i n g F r e n ch b a n k s
forced bankers everywhere to con­
cede that the French had acquired
a privileged access to petrodollar
deposits . I n formed observers at­
trib uted this to the persistent di­
plomacy of French Presi dent Gis­
card d' Estaing, and his efforts to
engineer an indepen den t European
foreign policy in the M iddle East
based on Euro-Arab collaboration
for economic development. French
b a n k s , h oweve r , had led o n l y a
s m a l l proportion of s y n d i cated
Euroloans and Eurobond i ssues,
e s p ec i a l l y d o l l a r - d e n o m i n a t e d
ones.
This month it became m ore ob­
vious that i n the past 1 8 m o nths,
France' s leading ban kers are de­
vel oping both the expertise a n d
finesse t o transform t h i s acquired
financial weight into a deployable,
aggressive force in i nternational
banking. Just as the British banks
domin ated the Euromarkets i n the
late 60s, and the German banks
moved i n during the 1 974-77 peri­
od, cu rrently French banks are the
most aggressive force i n European
and intern ational finance. U . S . and
L o n d o n m e rc h a n t b a n k s h a ve
pulled back in several cases from
Eurobond acti vity .
At the end of 1 979, Bank for
International Settlements reports
identified Credit Agricole ( C A ) ,
Franc�'s government-owned fi n­
ancier of agricultural operatio ns,
a s the l argest deposit- h o l d er in
22 Eco n omics
by Peter Rush
Western Europe, secon d only to
Ban k of America worldwide . CA
i s now being reo rganized to enable
it to hold stock shares o f compa­
nies it finances, and gain g reater
flexibility in internati onal fin ancial
operati ons.
At the same time, by the end
o f 1 979, France' s Credit Lyonnais
emerged as the n um ber-three lead
m anager of Euroloan syndications
i n the world, heading $2 1 . 2 billi o n
in o fferings. W h i l e lagging behind
both Lloyds Bank and the Bank of
Tokyo in volume o f transacti ons,
C redit Lyon nais achieved this per­
form ance by putting together the
largest n um ber of deal s , 1 1 6 .
The con nection between Gis­
card d' Estaing' s diplomacy and the
g r o wth of French intern a ti o n al
banking potential is underlined by
the case of Societe Generale (So­
gen ) . Last year, Sogen reorganized
its entire bond tradi ng department,
having recr uited prestigi o us Italian
b a n k e r S t e fa n o C o l o n n a fr o m
M organ Stan ley I n ternational to
h e a d t h i s o p erat i o n . Then i n
M arch S ogen made its first maj o r
b r e a k , h e a d i n g a $ 1 00 m i l l i o n
bond deal for M exico ' s Nacional
F i n a nciera, and a $ 500 m i l l i o n
Mexican Eurocredit. Both ventures
w e r e a r r a n ge d d u ri n g G i s c a r d
d' Estai ng's state visit t o M exico
City; and maj or ad diti onal fina nc­
ings by Sogen for M exico are cur­
rently un der discusison, i ncluding
export credit loans.
Most fi n anci al analysts, as re­
vealed in a series of interviews i n
N ew Y o r k , h ave n ' t b e e n g i v i n g
m uch attention to French banking
acti vities . Last week, however, the
Eu ropean I n vestment B a n k a n ­
nounced t h a t a $ 1 00 million, eight­
year dollar bond sched uled to be
marketed in New York by its chief
fi n a n c i a l dea ler, M e r ri l l Lynch ,
wo uld be postponed . In its pl ace,
the EIB deci ded to launch a $ 1 00
million o ffering with a consortium
headed by C redit S uisse-First Bos­
ton . The c o n s o rt i u m , which i n ­
c l u d es P a r i s b a s a n d B r u x el l es ­
Lam bert, g o t the i ssue b y o ffering
the EIB a deal it couldn't refuse:
an interest rate of I I percent, 1 / 2
percent lower than Merril l ' s bot­
tom o ffer . The dollar Eurobond
sector had livened up overall as
U . S . rates came down .
The same approach was then
taken by Parisbas, France' s most
politically i n fl uenti al com mercial
ban k , i n design ing an issue for the
World Ban k . I n an offer described
as "dram atic" by one New York
bond-trading m a nager, Parisbas
offered the World Bank, a seven­
year $ 1 00 m illion dollar bond at
1 0- 1 /4 percent, fo llowed June 1 0
by a five-year $200 million issue
with a 9- 1 /4 coupon . A European
source in New York com mented
that these latest French moves sig­
nal that "many changes" are un der
w a y in E u r o m a r k e t fi n a n c i n g .
"J ust o ne m o nth ago," the source
added, " Eugene Ro tberg [World
Bank director] said he wouldn 't
i s s u e any d o l l a r - d e n o m i n a ted
l oans, and now it' s happened . Just
l o o k a t t h e changes underway ."
Paris b a s ' lead fo r the World
Bank i ssue-which Deutsche Bank
had been expected to take i f the
issue was transferred-was cited as
an i mportant m ove in the "very
competitive situation right n ow . "
EIR J u n e 2 4 , 1 980
 Can The U.S. Avoid
Strategic Disaster?
The dollar in deutschemarks
New York late afternoon fixing An Executive Intelligence Review Seminar:
1 .95 In Washington:
Wednesday, June 25th, 2:30 p . m . -4:30 p .m .
1 .90
Hotel Washington, The Capitol Room
1 .85 1 5thand Pennsylvania Avenue, N.W.

1 .80 - .A
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1 .75 .... '"'- --
A Quantatitive Comparative
4/23 4/30 5/7 5/14 5/21 5/28 6/4 6/ 1 1
Analysis of US/USSR
The dollar in yen Warfighting Capabilities
New York late afternoon fixing
Dr. Stephen J. Bardwell
250 Author of Sputnikof the 80 's,
the authoritative outline of Soviet
240 � .A
advances in beam weaponry.
"-�
�
230 Director of Plasma Physics,
,... """'" Fusion Energy Foundation
220 � A. .....

210 '",,,,
4/23 4/30 5/7 5/14 5/2 1 5/28 6/4 6/ 1 1
Why Salt Is Inherently
Unworkable
The dollar in Swiss francs Costas Kalimtgis
New York late afternoon fixing Consultant on Strategic Affairs,
Executive Intelligence Review
1 .80

1 .75

1 .70 Over the past several weeks the maj or U . S .

media have begun t o highlight the severe
1 .65
�
V\ L.. .--... -
deterioration in U . S . military capabilities.
1 .60 ��", "" However, it was the Executive Intelligence
4/23 4/30 5/7 5/ 14 5/l1 5/28 6/4 6/ 1 1 Review in collaboration with the Fusion
Energy Foundation that four years ago first

The British pound in dollars drew attention to the devastating facts con­
New York late afternoon fixing cerning the collapse of U . S . force capabilities

J� '\
and the even more important advances in
2.30 ," "'I'�
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2.15 202-223-8300

2. 10 R.S.V.P. Registration - $25 .00

4/23 4/30 5/7 5/14 5/11 5/28 6/4 6/ 1 1

EIR J u ne 24 , 1 980 Economics 23


Science &Technology
What science loses
when it loses the
Solar Polar Mission
by Marsha Freeman
Last month, in a burst of budget-balancing stupidity, the
House Appropriations Committee elim i nated funds for
the most important proj ect remaining in the space pro­
gram' of the National Aeronautics and Space Admini­
stration (NASA)-the Solar Polar Missio n . The action
brought immediate protest from the European Space
Agency (ESA), which had already spent $30 million o n
the j oint proj ect . T h e Europeans a r e still h opeful they
can pressure American policymakers to restore the pro­
gram .
They have weighty arguments on their side: The Solar
Polar M i ssion would give scientists a " new window" on
previously unexplored aspects of solar, intestellar and
interplanetary space. It exemplifies the crucial role of
space exploration i n a nswering the most far-reaching
questions of basic science.
The Solar Polar Mission would launch two spacecraft
to probe the sun from opposite poles sim ultaneously,
providing our first three-dimensional view of the helio­
sphere (the solar "atmosphere" ) . Because the polar re­
gions of the star are less active than other regi ons,
scientists believe, measurements and observations of ac­
tivity underneath the s urface or corona could reveal
much about the nature of the therm onuclear fusion
process . The s un , i n effect, i s the nearest working fusion
reactor to the earth .
The two solar sp acecraft, one built by NASA and the
other by ESA, would include both stationary instruments
targeted in fixed directions, and spinning platform­
mounted instruments . The mission would be the first to
send craft outside the solar system's plane o f the eclip­
tic-n o previous spacecraft has had sufficient boost­
thereby obtaining a view of interstellar space free of the
interferences of the solar system .
NASA ' s Space Shuttle would launch the two space­
craft on a trip to Jupiter. M aking X-ray measurements
as they fly by the giant planet, the craft would be boosted
by Jupiter's immense gravity into a path above the
ecliptic plane.
24 Econom ics
The craft would then explore the following:
• The corona: M ariner 2 verified theories of a solar
wind blowing continuously o utward from the sun ' s out­
er, halo-like layer in 1 96 2 . Scientists learned that some
high-speed streams in the wind cause m agnetic storms on
earth , which they believe originate from "h oles" in the
coro n a . A white-light coronagraph and an X-ray I UY
(ultraviolet) telescope will provi de a three-dimensional
view of the corona, and peer down i nto the "holes" -the
aim is to predict geom agnetic and auroral activity as
m uch as 1 0 days i n advance, imp ortant for short-wave
radio communications, n avigation and geological explo­
ration system s using m agnetometers .
• The convection layer: The sun' s magnetic fields
apparently originate in a layer closer to the thermonu­
clear reactions at the sun's core. Fusion heat cannot
escape as fast as it is produced, p roducing a co nvection
layer of circulating fl uids and energy which , i n conj unc­
tion with the sun ' s rotation-faster at the equator than
the poles-prod uces effects like sun spots, solar flares
and prominences . Some m i ssion i nstruments are de­
signed to explore all of these phen omen a.
• Solar b ursts: High-speed p rotons and electrons
sporadically burst from the sun at near the speed of light,
believed to o riginate from huge, fiery eruptions on the
surface-solar flares. Some seem to linger, then flash
across space; others stream i n stantly outward . The space­
craft will "listen" to the radio waves these flares emit,
and try to track them . They will also "listen " to other
waves generated locally i n i nterplanetary space; they
interact with the solar wind.
• Interstellar space: M o st m atter and energy entering
the solar system never reaches earth . I n terstellar gases
are blocked by the solar wind, whose m agnetic field
keeps out low-energy charged particles and robs cosmic
rays o f their energy as well . Operati ng above the ecliptic
plane, the Solar Polar mission craft will detect cosmic
rays in their pristine state, and throw open a new window
on galactic space and these m a ny interstellar phenomena.
There i s another issue-apart from the specific bene­
fits to be realized from the Solar Polar Mission itself. Its
temporary cancellatio n by certain fools in the U . S . Con­
gress is one m o re step i n dismantling NASA, and ending
all space explorati o n . Yet, space exploration itself must
be returned to at least 1 960s levels if U . S . economic and
scientific strength i s to be revived-in the way NASA
and the space program effected mighty improvements in
U . S . education, effected important spinoffs for in dustrial
applications, and captured the popular imagination
around the Idea of Progress. So, the issue of this partic­
ular space mission is a broader issue-industrialization
versus deindustrializati on . The Europeans stand for the
first, but currently, both the White House and Congress
stand for the other .
EIR J u ne 24, 1980
Trade Review
N EW DEALS

Cost Principals Project/Nature of Deal Financing Comment

($)4 bn Australia from Neth­ LNG and other petroleum products $ 1 . 3 bn loan for Contract to
erlands, U . K . , and will be extracted from the N orth West Woodside j ust supply 6 mn
others shelf off Western Australia by a group approved by tons LNG per
of companies acting together, with consortium of annum to
Woodside Petroleum (controlled by banks Japanese
Shell Oil and Australia's Broken Hill utilities is
Proprietary) holding 50 percent inter­ pending
est; Shell and B H P (jointly) 43 percent;
and BP and California Asiatic Oil,
1 6.67 percent.
($) 1 . 53 bn East Germany / Sixty-nine percent of this trade will be Protocol
Bulgaria in metal products. Bulgaria will in­ signed in E.
crease deliveries of m achinery and Germany
electric forklift trucks to East Ger­
many, while East Germany will export
entire steel rolling mills, mining equip­
ment, tractors, and computers to Bul­
garia.
($)735 mn China from West A 1 7-member multinational consor­
Germany and several tium dominated by West German
others companies and led by Schoemann Sie­
m ag will build a large cold steel rolling
mill as part of the Paoshan iron and
steel works outside Shanghai. Siemens
and AEG will supply the electronics;
MAN part of the plant and H ochtief
much of the actual construction
($)600 mn Switzerland from S w i s s a i r h a s o r dered fo u r B o e i n g
U.S. 747's, two McDonnell Douglas DC-
1 0-30's, two DC- I O-30 refitting kits
($)400 mn Canada from France Michelin will build a third tire produc­ Company
tion plant in Nova Scotia announcement
U . S ./Oman Agreement for cooperation in
economic development, trade,
and security

EIR J u ne 24, 1 980 Econ o m ics 25

Business Briefs
Labor
Real U. S. unem p loyment
in double digits
Executive Intelligence Review analysts
reported June 12 that this past April,
when the official unemployment rate
reached 7.0 percent, real unemployment
was minimally 1 2.4 percent. And a com­
bined measure of real unemployment
and misemployment-a growing num ber
of workers have been shunted into non­
productive, dead-end jobs over the last
several years-was nearly 25 percent.
The real unem p l oyment rate among
black male youths ages 16 to 21 was
nearly 40 percent, by our measure.
The number of individuals "not in
the labor force" has been steadily in­
creasing in line with the disappearance
of productive j ob opportunities in the
U . S . economy. A full report is coming
in EIR.
Energy
Soviets gear u p
nuclear develo p ment
The Soviet Central Committee met June
3 to gear up the country's energy devel­
opment program, especially nuclear en­
ergy, in the next Five Year Plan . M oti­
vating this program, Politburo mem ber
A . P . Kirilenko said in the main speech
of the meeting that "The i m p erialist
ci rcles , and especially the U . S . , have
seriously complicated the international
situation . . . . The situation in the world
dictates the necessity for successful im­
plementation of the development plans
for Soviet electrical energy, which plays
a key role in the further growth of the
nation's economic and defense potential.
The calculations of the Carter admini­
strati o n that its so-called 'economic
m e a s u r e s ' of s t r u g g l e a g a i n s t t h e
U . S . S . R . would restrict the development
of our economy and its energy will fail .
" Particular attention must be given
to make sure that the atomic po wer
26 Econ om ics
stations are completed on ti me," Kiri­
lenko stated, stressing the fut u re re­
q uirements of "expansion o f n uclear
plant construction with fast-breeder re­
actors, development of work on ther­
monuclear fusion power, use of solar
and geothermal energy, and work on
the phenomenon of s upercond uctivity.
The U . S . S . R . State Committee on Sci­
ence and Technology, the Gosplan, the
ministeries and departments, will un­
doubtedly move ahead on these pressing
scientific-technological problems with
high responsibility, and ensure the com­
plex sol ution of all questions concerning
the implementation scientific discoveries
and the creation and use of new tech­
nologies ."
According to West German corpo­
rate executives, during his recent talks
in Bonn, which produced the new West
German-Soviet ind ustrial cooperation
accord, Soviet leader N. Tikhonov in­
dicated that a decision in favor of the
huge new n atural gas pipeline deal be­
tween the two countries could be taken
in the middle of this year. Chancellor
Helmut Schmidt visits M o scow at the
end of June.
Banking
DIS re p ort calls for
bullet-biting
The ann ual report of the Bank for I n­
tern ational Settlements applauds the
fact that most countries have pursued
the tight monetary and fiscal policies
long advocated by the BIS, which is the
consultative group o f Western central
bankers based in Basel, Switzerlan d .
" Fighting inflati o n " rem a i n s t h e top
priority, states the report, even though
credit restriction can "push the Western
world into an outright recession." The
BIS staff, headed by Alexandre Lamfal­
ussy, singles out the American economy
a s most in need of " p a i n ful adj ust­
ments " ; for the Western ind ustrial world
as a whole, it adds, "an extended period
of painfully slow growth is necessary,"
because " freedom of choice" is lacking.
The report coincided with the ann ual
meeting of the BIS, attended by central
bankers from more than 70 nations . The
meeting celebrated the 50th anniversary
of the instituti o n , which origin ated
Friedman-style monetarism . Discussion
centered on recycling of petrodollars,
specifically the still vague French pro­
posal to expand the European Monetary
System and its capacity to absorb the
O P EC s u rp l U S . S u ch i n fl o w s c o u l d
dampen inflation while allowing lending
expansion, if they were channeled into
productivity-boosting ind ustrial in vest­
ment in Western Europe and the devel­
oping secto r . On this topic the B I S
report states that there i s no immediate
problem with current forms of financing
non-oil LDC deficits . In the medium
term , i t s uggest s , the I n t e r n a t i o n a l
Monetary F u n d should take o n a larger
recycling role.
Agriculture
Carter threatens milk
support cuts
U . S . Secretary of Agriculture Bob Berg­
land threatened June 4 to postpone the
sched u l ed October i n crease in dairy
price supports, claiming that he thinks
the dairy industry will go along because
the alternative is " for Congress to set a
limit on d airy support spending, like
they have on food stamps. "
According t o the New York Times,
the National Milk Producers Federation
h as a l r eady s u b m i tted p r o p o s a l s to
make the price support level more flex­
ible. Currently the law requies Washing­
ton to support twice a year if the parity
index rises, as has been the case for the
past three years.
Bergland's supporters argue that the
increase in U . S . milk production from
1 2 1 .6 million pounds in 1 978 to , 1 23 .6
million in 1 979 reflects unfair incentives
allowed dairymen and compels the gov­
ernment to buy up excess m i l k and
cheese surplus. Farmers say, however,
that their costs have o utrun their real
incomes, j eopardizing the future of the
EIR J u n e 24, 1980

dairy secto r. The output increase, they
report, reflects the unprofitability of the
non-dairy farming they usually devote
resources to, s uch as production of beef
and feedstuffs.
Oil
Are OPEC p rices
leveling off?
The OPEC oil cartel's price-setting
meeting in Algiers this week saw the
most conservative move on the pricing
front by the 1 3 oil producers since the
Iranian Revolution last year. The m ax­
imum upward motion of OPEC prices
is expected to be no more than $2 a
b arrel between n o w a n d Septem ber
when the Cartel meets again .
Despite the widely publicized mili­
tant rhetoric of the so-called pricing '
militants led by Iran, Saudi Arabia and
its moderate ally, the United Arab Emir­
ates, refused to raise their prices or m eet
Iran's demand to lower production . Ira­
nian Oil M inister Ali Moinfar, in a bid
for publicity, spent most of his time in
the corridors convincing correspondents
that the cartel h ad agreed to decrease
crude output by 2 million barrels a day .
Moinfar was summarily overruled by
. other more responsible oil ministers who
confirmed that no such agreement on a
production cut existed.
According to A P-Dow-Jones, Saudi
Arabian oil minister Zaki Yamani left
the meeting after the first day for tem­
porary consultations with Saudi Crown
Prince Fahd in Spai n . The n ext day,
Saudi Arabia flatly refused to raise their
price one penny above the $28 a barrel
level . This was seconded by the U nited
Arab Emirates . Yamani' s only comment
on Moinfar's insistence that an agree­
ment to lower production a n d raise
prices had been reached was: "Saudi
Arabia has agreed to nothing . "
At present there i s an estim ated 6 . 7
b i l l i o n b arrel w o r l d reserve o f oil in
stock with a daily surplus of over I
million barrels. OPEC can only enforce
further price hikes by lowering its pro­
duction. Iran has begun to feel the brunt
EIR J u ne 24, 1 980
of this situation, with sales of only about
600 , 000 b ar r e l s a d a y . O i l i n d u s tr y
sources report that I r an is now secretly
lowering its prices from the $35 a barrel
range j ust to keep its customers.
M oi n far a l m o s t engaged Iraqi o il
minister K arim in a fi s t fight during the
meeting , accusing Iraq of taking Iranian
markets by increasing oil output.
World finance
De Montbrial : need
'exceptional actions'
A June 12 essay in the French daily Le
Monde shows the degree to which West­
ern E u rope has b een shaken by the
fail ure of U . S . economic leadership . The
author, Thierry de M o ntbrial, is a direc­
tor of the I nstitut Fran�ais des Relations
I ntern ationales, a member of the Club
of Rome, and a member of the Trilateral
Commission.
De M onfbrial writes that "transat­
lantic disaffection," the "unprecedettt­
edly critical economic situation," and
especially "the indebtedness of the Third
World" and the insolvency of part of
the Fourth World" now "threaten the
international system in a qualitatively
and quantitatively new mode . . . . The
i dea o f a world con flict is n o t being
ruled out any more. Exceptional situa­
tions require exceptional reactions . "
M o ntbrial adds that "I dream of a
U . S . President" who would announce
the reconvertibility of dollar official re­
serves into gold and "a war plan" for
energy independence, adding that Eu­
rope must "assert in practice the exist:.
ence of a European p il l ar , coherent,
independent, but allied with America.
. . . A more coherent role for the Nine
[European Comm unity members) is not
incompatible with the idea of a direc­
torate introduced by General de Gaulle
in his 1 95 8 memorandum to Eisenhow­
er . . . . " De Gaulle proposed a "Tri­
directorate" of the Atlantic Alliance, in
which France, the U . S . , and Great Brit­
ain would each have veto power over
any use of n uclear weapons.
Briefly
• A M E R I C A N B A N K I N G As­
sociation members were heard at
the recent international monetary
conference in New Orleans vocif­
ero usly protesting government
loan guarantees for the Chrysler
Corporation. Asked to comment
on their support for a "safety net"
to bail out bad international loans
held by U . S . b a n k s , they said,
"That's different ."
• ITALY'S statistical agency re­
ports that April 1 980 manufactur­
ing output j umped 1 4 .9 percent
above the year-earlier level . In the
fi rst fou r m o nths of this year,
in dustrial production rose 1 0 . 8
percent, seasonally adj usted. Ac­
cording to the national manufac­
turers' association Confindustria,
rising productivity, domestic con­
sumer demand, and capacity ex­
pansion have contributed to the
increase.
• JOHN MOORE president of
the U . S . Exp ort- Import B a n k ,
said last week that t h e large New
York commercial banks have cut
off all new credit to South Korea
for the next three months, pend­
ing resumption of the "liberali­
zation" of the country demanded
b y the C arter a d m i n i s trati o n .
Otherwise they expect "unrest"
and wil l probably extend the cred­
it embargo.
• J IMMY CARTER told a June
10 conference of big-city m ayors
that "I hope and I pray that the
recession will be s h ort and the
worst of the unemployment is be­
hind us." His Treasury Secretary,
G. William M iller, stated June 6,
however, that until we "know the
path o f the economy, we do not
i n t e n d t o fl i n c h a n d c h a n g e
course. "
Econ omics 27
�JJillSpecia1Report

India: the fight

for peace and
development
by Peter Ennis

Several weeks ago , a Parliamen tary Consultative Co m m ittee report on

I n dia' s foreign policy circulat I ng in New Delhi stated the com m itment of
the government of Prime M i n ister Indira Gandhi ability to defuse the
growing m i litary and political tensions throughout the I n dian Ocean area .
Two fundamental planks o f this policy were speci fically mentioned: I n dia' s
relations with the Soviet U n i o n , " which strengthen our ability to diffuse
the situation ," and I n dia' s ties with France, which were consolidated
during a visit of French President G i scard to New Delhi earlier this year.
At the sam e time that the report appeared, I n dia was in the m idst of a
heated electoral cam paig n , with polling set to take place for state assem blies
in nine states . Every w eekend during the m o n th of M ay, M rs . G andhi
visi ted various con stituencies in the nine states and delivered a simple and
straightforward message to the urban and rural populations: the world is
on the brink of w ar and India, "as part o f the human race, m u st face the
enormous difficulties and challenges o f the day" to play a role in securing
peace. The electi ons, held in the last days o f May, resulted in big victories
for M rs . Gandhi's Congress Party in eight of the n i ne states, giving her a
mandate to further pursue the policies for peace.
Both the foreign policy report and the successful electio n campaign
con ducted by the Congress Party- I ( I n dira) have served to emphasize an
important fact not well un dersto od: I f war is to be avoided, India will p lay
a central role in that p rocess . I n deed , as East- West tensions continue to
flare, I n dia is a cou ntry uniquely positioned to cool thi ngs out, h aving
close ties and being held i n respect by countries of both East and West .
For this reason, the world has a great stake in the stability of India and
the Gandhi govern ment, and the future economic development of the
co un try .

n Speci a l Report EIR J u ne 24, 1 980


Since coming to office last Decem ber, the G andhi
government has devoted extensive tim e and effort to
formulating political solutions to both the crisis in neigh­
boring Afghanistan, to the west, and the still-tense situ­
ation in Southeast Asi a . The economic policies of the
In dian govern ment which emphasize the importance of
high-technology and i n dustrial development, have been
very i mportant for war-avoidance as well. Perhaps m ore
than anything else, the underlying cause of war danger
in the world today is the effort of the World Bank and
the Club of Rome, with the backing of the Carter ad­
min istration and the government i n Peking, to impose
on the developing countries econo m ic policies similar to
those China used in Kampuchea to m urder upwards of
three million people. A Gandhi government pursuing
nuclear energy development and related policies poses a
severe threat to this Dark Age strategy . M uch of the
Third World will fol l ow I ndia on the route Gandhi
chooses .
I n both its diplomati c and economic efforts, the
Gandhi govern ment has been faced with tremendous
obstacles and threats fro m the com m unist Chinese, who
are now ful ly allied with the Carter admi nistration .
Chinese threat
Througho ut India, here is not simply a "general"
feeling of international war danger, but a very intense
EIR J u ne 24, 1 980
Photo: NSIPS/Zykofsky
sensing that the i mmediate n ational security of India is
being threatened by the actions of China i n the region .
Well informed security and political analysts speak of a
growing "encirclement" of India by China, b acked by its
Carter allies .
To the west, there is the crisis in Afghanistan, w here
the Chi nese have a heavy hand. Together with Pakistan,
China has b een funnelli ng arms and m o n ey to spur a
"rebel" m ovement in A fghanistan again st the Soviet­
allied government in Kabu l . The crisis in Afghanistan i s
a direct extension o f t h e U . S . a n d Chinese- b acked "rev­
o lution" in Iran that put Khomeini in p ower. Now, I ran
in being put through the horror of an eco nomic policy
l ittle different than that i m p lemented i n Kampuchea
several years ago . The crisis in the area i s being used by
both Washington and Peki ng to strengthen m i l i tary and
political ties to the government i n Paki stan .
To the north, the Chinese are using the crisis in the
area to build up troops o n its border with I n di a , while
the U n ited States is beefing up naval deploym ents in the
I n dian Ocean , to the south of I n di a .
However, it is t h e eastern fl a n k of I n d i a which is the
most i m mediate concern to po litical circles in India.
There, in the northeast section o f the country, China is
ful ly backing a pol itical rebellion and secessi onist m o ve­
ment against the central government.
The northeast area consists of one full-fledged state,
Special Report 29
Assam, and six sem i-autonom ous regions closely affil­ Exclusive Interview
iated with the central government. All seven a reas are
largely made up of people from a di fferent eth n ic and
cultural background than the rest o f India.
Assam has been the principle focus of attenti o n , as
students are demanding that all " foreigners" ( M uslims
and other "non-Assamese") who entered the state after
1 95 1 be i m m ediately expelled . There has been widespread
violence and eco nomic dislocati on wrought in the state,
including the sh utdown o f oil refineries i n the a rea that
provide thirty percent of India's entire domestic oil pro­
duction .
Backing up the Assam agitation are the demands for
"indepen dence" from the m o re tribal-based a reas , s uch
as Nagaland and M izoram , where violen ce has also
taken place . In all seven areas, brutal killings are reported
Indira Gandhi
talks to EIR
every day .
Chinese back i ng for these political rebellions is so
wel l docum ented that it is now com m o n knowledge
thoughout India. Even radio b roadcasts fro m China
have expressed support for the rebels again st the "repres­ about peace
sion" of the Gandhi government. Arms and money a re
also flowing into the area .
Recently a new element was introd uced to the north­
and development
east situation when the Gandhi government revealed
that the fanatical Hindu chauvinist o rganizati on RSS
On June 5, Indira Gandhi, the Prime Minister ofIndia,
has become involved i n the anti-government agitation .
granted this interview to Daniel Sneider, E I R Editor-in­
RSS was the leading constituent o rganizati on i n the
Chief, in New Delhi.
Janata Party govern ment that came to power i n 1 97 7 in
India, but which was routed i n the national electi ons last
Q : I would l i ke to start with the situation in Assam
year that ret urned Mrs. Gandhi to power. Nominally a
beca use it is very difficult to get an accu rate i m age from
"super-n ationalist" organization , the RSS-dominated
the press as to what exactly is going on . I would li ke your
Janata governm ent is known to have had extensive talks
assessment of the situation now and what the govern­
with China, I srael and So uth Africa while i n power. All
ment ' s po licy is.
three of these nations wo rked together to devel op n uclear
A: Wel l , there is an agitation there against the so-cal led
weapons.
foreigners . Ostensibly they say it is against those people
The northeast crisis has si nce Decem ber been a tre­
who have come into I n dia from Bangl adesh or from
mendous drain on the energies of the Gandhi govern­
Nepal , but in act ual fact it is working agai nst some
ment, due to both the economic i mpact and the danger
I n dian citizens who have come from other states as wel l,
to national unity and security. Foll owing the recent
and citizens o f Assam who are co m p letely Assam ese,
electi ons, Mrs . Gandhi is expected to renew efforts for a
who have lived in Assam for generati on s . It is one of
negoti ated settlement, all o f which have been rej ected up
those chauvinistic things that come up every now and
to now.
then .
I n dia is a deve l oping country, and devel opment has
Strong economy needed been rather uneven. It is o b v i o u s that where there is
Overall , there is a widespread recognition throughout industry it is m uch easier fo r that area to grow and for
India that a strengthening of the n ation al economy, people to get more j o b s . We have a program for devel­
nearly brought to its knees by the policies of the previous o ping backward areas and we have made progress in it.
Janata go vern ment, is vital to counter the threats to B ut nevert heless we don't reach all pl aces, and business
India at this time. Short-term meas ures to get the econo­ peop le don't like putting u p an industry where it is going
my moving are an i m mediate necessity. H o wever, a long­ to cost them more, ei ther by way o f transport, or other
term economic devel opment plan to modernize the entire things.
co untry is also an immedi ate priority, as thi s will enable Certain a reas that have remai ned backw ard have
India to become both a political and economic super­ ben efi ted less from o u r scient i fic advan ces and Assam is
power fo r the cause of peace . one of them . B u t it is not the only one. Eastern Uttar

30 Speci a l Report EIR J u ne 24, 1 980


P r a d e s h i s i n t h e s a m e s i t u a t i o n . L a rge p a r t s o f O r i ssa
a re so, pe r h a p s even m o re t h a n A s s a m . A l m o s t e v e r y
s t a te h a s a n a re a w h i c h i s n o t d e v e l o p e d . T h a t ' s w h y w e
m a d e a l i s t o f b a c k w a r d a re a s a n d b a c k w a r d d i s t r i c t s .
N o w w e h a ve t h i s p r o b l e m o f p eo p l e c o m i n g i n fr o m
b o t h s i d e s o f P a k i s t a n . B u t w h e re a s t h e r u s h fro m W e s t
P a k i s t a n [ l a rge m i g r a t i o n i n t o t h e W e s t o f I n d i a a t t h e
t i m e o f t h e 1 94 7 p a r t i t i o n - e d . ] w a s a t o r r e n t o r a fl o o d
right i n o n e s t a t e , h ere i t h a s b e e n a m o re g ra d u a l
process . M a n y o f t h e m w e r e be i n g p e r s ec u te d t h e r e . W e
accepted t h e m , a n d w e w e r e accep t i n g t h e m u p u n t i l
1 9 60-6 1 , w h e n t h e g o ve r n m e n t o f I n d i a d i d t a k e a s t e p
a n d s a i d t h a t we h a ve t o d o s o m e t h i n g a b o u t t h es e
pe o p l e .
Tribunals were set up t o see that people were sent
b a c k a ft e r t h a t . W h e n B a n g l a d e s h c a m e i n t o e x i s t e n c e ,
we h a d n o fo r m a l a g r ee m e n t b u t we m o re o r l e s s a g reed
t h a t- n ot a t my l e ve l b u t a t t h e j u n i o r m i n i s t e r s l e v e l ­
t h a t t h o s e w h o h a v e c o m e h av e co m e , b u t fro m n o w o n
w e h a v e t o b e v e ry s t r i c t . H o we v e r , s o m e o f t h e p e o p l e
w h o h a d b e e n d e p o r t e d h a ve c o m e b a c k b e c a u s e t h e
b o r d e r i s n o t t h e s o rt o f b o r de r y o u c a n t o t a l l y s e a l .
N ow, w hy has t h i s movemen t come u p at the t i m e i t
h a s? T h i s i s r a t h e r c u r i o u s , a n d a l s o t h e m a n n e r i n w h i c h
i t h as a r i s e n . T h e p r o b l e m w a s t h e r e , e v e ry b o d y k n ew
a b o u t i t . I t w a s t h e A s s a m e s e t h e m se l v e s w h o w e r e n o t
t e rr i b l y k e en a t t h a t m o m e n t o n i m p l e m e n t i n g a s o l u t i o n .
T h e ce n t r a l g o v e r n m e n t w a s r e m i n d i n g t h e m a b o u t t h i s
pr o b l e m . T h e y d i d n o t b o t h e r a b o u t i t i n t h e P a r l i a m en ­
t a r y e l e c t i o n s i n 1 9 7 7 : t h e y d i d n o t b o t h er a b o u t i t i n t h e
EI R J u n e 2 4 , 1 9 �0
Photo: Sygma
a s s e m b l y e l e c t i o n s in 1 9 7 8 . T h e n , w h e n the J a n at a g o v ­
e r n m e n t fe l l i n A s s a m , a p a rt o f t h e J a n at a b r o k e o ff a n d
ca l l e d i tse l f t h e A s s a m J a n at a . N o w t h a t i s t h e m o m e n t
w h e n t h i s s t a rt e d . N o w t h e A s s a m J a n a t a p e o p l e fe e l t h a t
i t was those w h o h ad g o n e o ut , a n d w hose govern m e n t
h a d b e e n d e fe a t e d - t h e y a r e t h e o n e s w h o s t a r t e d t h i s ,
t h i n k i n g it m i g h t h e l p t h e m o u t .
I t i s n o t possible to s a y w h ether t h i s is true or n o t , b u t
t h i s i s t h e r e p o r t , bec a u s e t h e a g i t a t i o n w a s o n fo r s o m e
t i m e b e fo r e o u r g o v e r n m e n t c a m e i n , a m i n i m u m o f
m o n t h s o r s o . T h i s was the report we g o t w hen we came.
By t h a t t i m e i t h a d a l ready s p r e a d .
T h i s s o rt o f t h i n g , i f y o u d e a l w i t h i t i n t h e b e g i n n i n g ,
i s m uc h e a s i e r . O n ce i t h a s s p r e a d , i t beco m e s m o re a n d
m o r e d i ffi c u l t . N o w , w h y i t h a s p o p u l a r s u p p o r t , i s that
t h e fee l i n g i s b e i n g s p r e a d a m o n g t h e peo p l e t h at i f you
t h r o w o u t a l l o f t h e se p e o p l e , t h e n y o u w i l l g e t m o re
l a n d , y o u w i l l g e t m o re j o b s . T h i s i s n o t g o i n g to w o r k
o u t t h a t w a y i n fac t , b u t i t i s so m e t h i n g t h a t c a n a r o u se
peo p le ' s fe e l i n gs , a n d m a y m a k e t h e m fee l i n vo l ve d .
I ' ve a l w a y s dea l t w i t h a l l s u c h t h i n gs s y m p a t h e t i ca l l y ,
beca u s e I k n o w t h a t a l t h o ug h s u c h d em a n d s a re u n re a ­
s o n a b l e , t h e r e a l w a y s i s a b a s e o f g e n u i n e g r i ev a n c e s . W e
a r e p re p a re d to d e a l w i t h t h e g e n u i n e g r i e v a n c e , w h i c h i s
o n e o f ec o n o m i c d e v e l o p m e n t , t h e q u es t i o n o f e m p l o y ­
ment which they s h a re with the w h ol e o f I n d i a . I n fact,
say .
w i t h a l m o s t the w h o l e of the T h i rd W o r l d , I w o u l d
N e v e rt h e l e s s , s o m e t h i n g s p ec i a l h as t o be d o n e fo r t h e
n o rt h ea s t a r e a s .
T h ese a re a s d o n o t h a v e v e r y g o o d c o m m u n i c a t i o n
S p eci a l R e p o r t 31
 and a re i n a di fficu l t situati o n , even w hen you start
development. It is a l onger process than it would be on
the plai n s . So, on that part o f it, we took action i m medi­
ately. We set up a committee of m i n i sters. This does not
m ean putting o ff something, as some people think when
you name a com m i ttee you put the problem off. Our
experience was that J a m m y and K as h m i r had raised the
same pro blem-t h i ngs not being passed quickly by the
center [central govern ment-ed . l .
D u ring my previous regime, w e had set up a smal l
committee and any economic iss ues that came up, a l l of
the people met i m med iatel y and too k a decision on the
spot, and they were very happy with this. W h en I came
back, the fi rst t h i ng they said to me is, ' Lo o k , this was
not done in Jan ata t ime, so can you revive this?' So, we
thought we would do a s i m i l a r thing in Assa m . I nstead
. of decision making from fi le to fi le, office to office,
everybody meets , and either they say yes or n o , b ut it's
defi n ite. Of co urse, there a re proposals for speci fic proj ­
ects which w e a r e also loo k i ng a t .
Now, w i t h regard to the so-ca lled fo reigners , we want
to m ake a clear disti nction that those who h ave come
after 1 97 1 , there is no doubt that they m u st all go. There
is n o con troversy about this with any pol itical party o r
with t h e Bangl adesh govern ment. The controversy starts
abo ut the others. The proposal made to the agitators was
that, let us start this work. A t the m oment, n o th i ng is
bei ng done, the tri b u nals are inactive, the local staff is
not work i ng . So, we wanted to start. While this process is
going on, we sh a l l meet sim ultaneo usly, to try to under­
stand: a) the size of the problem; b) the h uman aspect . I n
theory, y o u can say that i f so mebody is born i n I n d i a , h e
is an I ndian citizen . B u t suppose y o u h ave o l d parents
who were n ot born i n I n dia. What are you goi ng to do,
where a re you going to push them out? We can ' t deal
with them as statistics . We have to say that these are men,
women and chi ldren and we don't want to k eep a burden
on Assa m . But first, we m ust k n ow the n u m bers, and we
must know the type o f prob lem . Then we m ust sit togeth­
er and fi nd a h u man settlement, so that n o b ody is h ar­
assed . I said to them clearly, do you want me to shoot
these people? So o f course, they said no, no. Then I said,
where do they go? I'm not sayi ng they shouldn't go
anywhere, but i t' s someth i ng that h as to be worked out.
I can't j ust say I'm going to push them into Bangl adesh
if Bangl adesh d oes not want them , o r to any other state.
So on these m atters they (the students) have been rea lly
very un reasonable. They say n o , you agree to this fi rst,
then we wi l l see.
What happen s when yo u agree to anything is that
both of the political pa rti es want to k eep 1 97 1 as the
cutoff date. I have only taken 1 97 1 as a starti ng point,
not as a cutoff point. Then , somebody started tal k i n g
about 1 967, a n d im medi ately , t h e West Bengal govern-
32 Special Report
m ent and others started saying, ' O h , she is doing some­
thing beh i n d o u r bac k . She p ro m i sed she wouldn't move
from 1 97 1 . ' So, it's extremely compl icated from that
angle, b ut it's not an i nsoluble pro blem .
Q : What about the question o f fo reign i nvolvement?
A: Wel l , I was j ust coming to that. As I said, it is the
general public who's i o volved, it is this k i nd of econ o m ic
issue. A n d o f cou rse, they h ave done a lot of propaganda,
that these people stayi ng there means that Assamese
c u lture is going to get d rowned , w h i ch is not true. In fact,
the people who are coming are being absorbed. They a re
spea k i ng A ssamese, they are n ot spea king their l an­
g uages. In fact, in o ur census, we see that the n u m ber of
Assamese spea k i ng people sho u l d h ave gone down , but
it h asn't. I t has i ncreased . So that far fro m drown i ng it, i t
has hel ped i t blossom . Every other country d oes want
new talen t .
N o w w h i le the b u l k of the students a r e also si ncere,
perhaps they h ave been affected by what is h appen i ng i n
other countries, a n d they feel t h a t they s h o u l d take the
lead. From t i me to time they make a statement l i ke,
'poli tical parties a re i rrelevant.' And even in the last two
days, they were angry that I met with the poli tical parties
to co nsult with them o n the Assam situati o n . So that
a t t i t u d e is t h e r e . H o w e ve r , t h e re a r e s o m e o t h er
peop le . . . who are guiding those people, and who are
motivating them , we d o n ' t know . But every time the
students themselves have agreed to something they have
gone back and o n e h o u r later have sai d , 'we are sorry .'
They have made a suggestion to which we have agreed
and then they have go ne back on it. So this is w h at gives
the feeling that there is somebody beh i n d them .
Also, they seem to h ave large fu nds. I n the begi nni ng,
so me local people were g i vi n g fu n ds, b ut they tel l us they
have not ta ken any money from them fo r m a n y m o n ths.
There is certain other ci rcum stan tial evidence and also
previ ous experience . There is also a certain amount of
ri valry there between groups.
Now, there a re some e lem ents who would l i ke to
i n t roduce co m m u n al overtones. Some o f them say it is
the pure Assa mese vs . the rest, a n d not specifica lly
aga inst the Benga l i s (beca use) in British ti m es there was
no ed ucation in Assam , and o n l y a few Assamese could
go to Ca lcutta U n iversity . They were the ones who got
ed ucated . A l m ost a l l of the officials were Bengalis. So
that feel i ng is a l so there. But now gradually, the As­
samese are ta k i ng over from them . But m ost of our civil
service cadres a re rather m i xed . They m ay be so uth
I n dian o fficials and we t h i n k that is a good thing fo r
national i ntegration .
Q : I n term s o f the co m m unal el emen t, I see in the press
here so me questi o n s about the role of the RSS in partic-
EI R J u n e 24, 1 980
· ular, in terms of giving it a H i nd u- M uslim ch aracter.
A: The RSS has been there, as everybody else. There is
an anti-national element. I t may be exceedingly small,
but there a re some people who b ri ng out anti- I n dian
posters, and so on . N o w , my grouse was that n one of
these people who a re supporti ng the agitation-I am not
accusing them of being anti-nation al-why don't they
condem n that aspect of it, and those who are doing these
things? But they are not. The RSS has been encouraging
the agitat ion w i t h o u t pro vi d i ng a s o l u t i o n . A n d o f
co urse, even earlier their solution t o i t a lways i s t o h ave
an exchange of population rel igion-wise, or something
l i ke that, which would be fatal to the unity and strength
of the country .
Q : You have pointed out t h a t this t h i n g h a s accelerated
somewhat in the peri od si nce your govern ment came to
power . I s there anythi ng i n loo king at thi s which suggests
a pattern of destab il izati o n which perhaps may be simi lar
to previous efforts that have ta ken place i n the earl ier
part o f th is decade'?
A : Those who a re aga i n st us, they conti nue to be very
vi rulently hostile. Now there is one th ing to be hosti le i n
y o u r speech, or something, but it i s another matter when
you go beyo nd that. I don't know whether you have read
the statement of the leader of o ne of the pol itical pa rties
when we won these elections. N o w it has been a pretty
cl ose fight, some of o u r people have lost by only a couple
of hun dred votes, and some of their people have won by
that. Now the con trast is that when they won , we did not
say a word about riggi ng, although the victory was so
EI R June 24, 1 980
sweepi ng that i t w as not rea l l y believa b le. In some places ,
it was almost as though m ore people had voted than
existed, a n d thi ngs l i k e that. I t i s hard to imagine that in
one p l ace every body wo u l d vote for the same candidate,
and the other can didate would n ot get any votes. A ny­
way, this gentleman has said that n ow Parl i ament i s
irreleva n t . N ow you see t h a t t h i s i s t h e sort of attitude
that while they a re w i nn i ng the system is al l right, but as
soon as they d o n ' t win they start b l a m i n g the system .
Q : But also in terms o f the fo reign quest io n . That was
a l so on m y m i n d .
A : T h e foreign element i s very d i fficult to say, b ut I don't
k n ow i f they have reco nci led them selves to the changes
here . Now certa inly, m ost of the fo reign p ress has not,
and they continue their host i l i ty . And, a lso some o f the
govern ments enco u rage elemen ts which are so hostile.
One i s the pol itical hosti lity. You say we do not
approve of the pol icy, and you put the facts . That is fai r
en o ugh . B ut it seems s o m e of them encou rage people
who a re very vicio usly agai nst, witho ut having anything
to back up what they are sayi ng. And their statements·
a re given trem en d o us p u b li city, whereas no reply is
a l l owed .
Q : Let m e take off fro m t h i s press questio n . I have
b ro ught this copy o f Newsweek . I don't know if you h ave
seen th i s cover. This is the J u n e 9, 'China's M i l itary
Liftoff, ' coverage of Newsweek. But the i m p l icatio n both
here a n d e l sewhere is that a l i n kage is bei n g made
between the C h i nese new m i litary rel ationship with the
'I 've always dealt
•
with popular unrest
sy mpathetically ,
because I know that
although some
demands are
unreasonable, there
always is a base of
genuine grievance .
which is one of
economic
development. , .
Durgapur steel plant, West Bengal.
Special Report 33
U .S . and the recen t I n do-Soviet arms deal .
A: Ours is not recent. I mean this tal k w as going o n long
before, even during the Janata time, because, you k n ow ,
these things are n o t decided i n a couple of months. W e
have finalized something that was o n the anvil for quite
a while, and I think most o f it was done when M r .
Kosygin visited here in 1978 .
Q : I am aware o f that fact. W h at is your view on the
Chinese role, the way the Chi nese are viewing their role
i n Asia, a n d their relationship with the U n i ted States?
A: The Chinese want to strengthen them selves i n every
possi b le way . Now, if they can use the U n ited States for
this, they w i l l use i t . They are using i t . The U n i ted States
thought it could use China agai nst the Soviet U ni o n and
they d i d . But it was cou n terprod uctive in this sense, that
this is what has started the other reactio n , because the
Soviet U nion is very much con cerned about w h at t hey
consider is a new movement to surro u n d them . A n d , I
thi n k sometime o r other the Chi nese and the Soviet
U n i on may m ake up. None of these th ings are perma­
nent. We don ' t l i ke anybody encouraging anybody .
Q : Y o u have been spea k i ng a l ot i n yo ur campaign
address, I notice even i n your cam p aign i n the Assem b ly
elections, about the th reat of a third world war, the
possibi lity of the renewed cold war turning into a n uclear
confrontati o n . What is your view o f the importance of
East-West detente for the developing sector?
A: Wel l , it is very i mportant for us because we t hi n k that
war is disastro us fo r anybody, but more so for countries
like I n d i a, wh ich desperately need peace to conduct our
own eco n om ies. What I was saying i s not that war is
likely, but that o u r effort is to see t hat it i s avoided.
Q: When President G iscard d ' Estai ng was here i n J a n u­
ary, there was a sense communicated both i n verbal
statements and i n subsequent events of a com m o n u nder­
standing between France and Europe and I n d i a and the
deve loping sector o f p l aying a role, perhaps even a role
together, to preserve thi s kind of peace, and p reserve
conditions for development in the world . I ' m wondering
how you visualize I n dia' s role now, and how you see the
Eu ropean role i n thi s perio d , particularly a fter the last
few weeks. The Europeans, I t h i n k , have taken some very
c lear moves to preserve peace, at least in E u rope.
A: Wel l , I thi n k they also see that war is n o t i n t hei r
i n terest . Each is worried about their own eco n o my, h ow
the i n tern ational situation is going to affect their m a r­
kets, their deal i ngs with other countries.
Q: I n terms o f India's policy at this time, i s there some
sort o f coordi n atio n , at least chec k i ng back and fo rth , as
far as the initiatives that are being made from the E u ro-
34 Special Report
pean side, i n the M i ddle East, and so forth?
A : It i s m o re a question of keep i ng in touch . We agreed
with the French that we would keep in touch . I n Salisbury
and Belgrade, I met a large n um ber o f people, practical ly
n ight and day . W h i le they were con cerned abo ut Afghan­
istan and I ran, they were also wo rried abut their own
. co untries, thei r econom ic d ifficulties, p rices, and also the
N o rth-South si tuation .
Q : I s th ere a l i n k i n your m i n d on the necessity of
m odern ization in the devel oping sector and the preser­
vation of peace?
A: There is, of course, a l i n k .
Q : As far as I ndia is co ncerned, as fa r as the developing
sector is co ncerned , how do you act to create the circum­
stances whereby large-scale devel opment can take p l ace?
A: Firstly, there s h o u l d be peace and sta bil ity within the
coun try, and then peace and stabi lity around the country ,
and so o n . Today' s w o r l d i s such t h a t if there is a confl ict
anyw here, the waves are bound to touch most other
coun tr ies . We i n I n dia are in a special delicate positi o n ,
because i n s o m e ways we are am ong t h e poorest coun­
tries, a n d yet , we are also devel oped . So, we get the worst
of both w orlds, i nstead o f getti ng the best . Take o i l
prices . I n the m ore affl uent co u n tries, you can gro use
about it, b u t they can p ay fi nally whatever the price is.
Now, we are not i n a positi o n to pay . N o w , the develop­
ing countries, m o st o f them also can n ot pay, b ut thei r
needs are very m uch smal ler than o urs . Now i t is not such
a large prob lem for them . For us, it is a very big problem.
Now, our farm ers are usi ng l arge q u antities of fertilizers
and diesel fo r pump sets. They are average farmers, not
j u st the big farmers . We are not wasting it (oil), but it is
j ust that the size o f the country and the size o f the
popu l ation creates a h uge dem a n d .
Q : Y o u have j ust com pleted t h e Assem b ly e lections and
the Parliament opens shortly. What are the priorities of
the govern ment, particu l arly i n terms o f the economy?
A : Fi rst, to get the economy going. There has been
stagnation . We have to enco u rage in vestment to increase
prod uction, we have to b u i l d up the d i stributi o n system
for essential commod ities, and o n e of the b iggest bottle­
necks was transport . We simply co uld n ot get coal to the
factories, sugar to the m a rkets, and thi ngs like that.
Railways have i m proved, but sti l l there i s a gap. We have
to take up agai n the speci a l programs fo r the poorest and
wea ker sections o f the populati o n , because what happens
i n developmen t-we are bl amed for i t but it i s a n atural
law, there's nothing we can do-that wh atever program
you have, it i s the better off people who benefit from it. I f
y o u have m o re tech n o logy it i s those w h o c a n u s e that
technol ogy who a re going to become richer. Now, i f we
EIR June 24, 1 980
 deny it to them , we are in a way cutti ng o ff o u r nose to
spite our face . So, we have to balance i t by doing some­
th ing fo r the others. A l though the benefi t does seep
thro ugh, as we have seen in the Punj ab , that is, with the
im provement o f agriculture the rich farmers got richer,
but so did the middle farmers and so did the smaller
farmers, and finally the l abo rer . Their daily wage went
up as wel l . So, it does perco late down.
As I said, i t is such a large co u n try, there are large
.a reas which have not ben efited , and we m ust refo r m ,
where w e g i v e l a n d t o the lan dless. T h e n , i n o u r twen ty­
point program we also propose b u i l d i n g small houses for
t.he homeless, and various thi ngs l i ke that. I f anyth i ng i s
l acking, w e will take up new programs to provide it.
Employ ment-we have certai n programs, b ut at best
t hey are patchwork, beca use employment can o n l y come
with greater development. Parpart tours
There i s a constant quarrel going on . . . . On this
a.gai n , the govern ment im mediately before m i ne fel t that
beca use we were encouraging i n d ustry, we were neglect­
India: 'Science
is universal'
ing the farm ers . This is not at a l l true, beca use m ost o f
o ur ind ustry i s based on agricult ure o r for t h e benefit of
agriculture. I n a place l i ke the Punjab, bringing i n ma­
chinery there has not led to unemployment. On the Special from New Wave b y Leela Narayan
contrary, i t has led to a shortage of labor. So all of these
things are there . Beginning in mid-May, Dr. Uwe Parpart, Director of
The electio n has cut across d i fferent layers of the Research for the Fusion Energy Foundation, undertook a
population i n many pl aces, b ut i n th i s i n terim period, tour of India with Daniel Sneider, EI R 's Editor-in- Chief
when we were not i n power, caste-ism ruled very largely. Dr. Parpart is also a contributing editor to EI R . Both men
It was always there, but had not played such a n i m p ortant had addressed a conference May 6 - 7 in Frankfurt, West
part i n po l itics. Th ere i s a general l ack of w i l l , a lack of Germany, jointly sponsored by FEF and EIR under the
th rust with everyone working together. N o w , a lot of title, " The Industrial Development of India-Its Poten­
people who come from a b road, say that peo ple here have tial, Its Necessity. " That conference was devoted to a
been apathetic compared to what they see in Germany. special programmatic report issued on the basics of the
So we have been able to build up that atm osphere. The LaR ouche-R iemann economic model, which outlined
yea r j ust befo re my defeat, people felt they were invo l ved measures that could successfully achieve "economic super­
with I n dia and every body felt that it was their future, and power" status for India by the year 2020. The 40-year
it was not someth i ng i n the air. So, we h ave to bring back program, based on specific, high-technology development
that k i nd o f feeling. projects , focused on irrigation ofagriculture in the Ganges­
Brahmaputra region. It included an extensive treatment of
Q: Si nce I have been here, and tal k i ng to people in Indian energy needs-emphasizing that nuclear power was
different parts of the country, there is an atm o sphere of absolutely indispensable-and proposed both educational
ex pectati on . and manpower development programs. Naturally arousing
A : Yes, you know it is the usual expectati o n , that some­ great interest in India, Dr. Parpart and Mr. Sneider were
body has come and something is going to h appen from invited to undertake their current tour, with the goal of
above, which simply cannot h appen . A t the m ost you elaborating and clarifying the details of the programmatic
can give a di rection, you can give encou ragemen t . What proposal in the minds of Indian officials and the scientific
has to be done has to be done a l l along the line. If community on the subcontinent. We publish here a report
agriculture producti o n i n my time has do ubled I did n ot on Dr. Parpart 's Indian lecture tour dispatched to EIR by
go and dig the fields, but we gave a p rogram . The Leela Narayan ofNew Wave, the influential Indian weekly
farmers accepted it, and it yielded res ults. All that we can newspaper.
do i s to try to help to the best o f our abi lity, b ut they
must h ave the feeling that they must take advantage of Ad dressi ng the I n d i a n National Science Academy and
the programs that are made for their benefit. the Nehru M em orial M useu m and L i brary here last

EIR June 24, 1 980 Special Report 35

week, Dr. U we Parpart , d i rector of research a n d devel­
opment for the U . S .-based Fusion Energy Fou n dati o n ,
asserted that I n dia today is best positi oned i n the entire
developing secto r to uti l ize the " v i ta l i n p uts" o f i ts
economy to become "an ind ustria l superpower by the
next cen tury . "
D r . Parpart's talks i n t h e capital concl u ded a three
week lecture to u r of I n d i a w h ich he h i m self h as described
as one o f the most refreshing tours he h as d o ne in recent
yea rs. H e addressed a variety o f a u diences in H yderabad,
Bombay, Bangal ore, and New Del h i , spea k i n g before
h undreds o f scientists, engineers , tech n icians, develop­
ment planners, eco nomists, and p rogressive- m i n ded
businessmen .
Two themes
There were two themes to his lect ures, both p rovo k­
ing m uch thi n k i ng and quest i on i ng by his aud iences .
First, he presented the scientifi c com m u nity, through
slides and detai led descripti o n s, the progress i n the field
of fusion en ergy developmen t . The F E F has been carry­
ing out a major ed ucational campaign to acquaint both
the layman and the scientist of the dramatic work bei ng
done to make co ntrol led therm o n uclea r fusion the plen­
ti ful and commercially viable energy source o f the near
future .
H i s second theme was t h e FEF-initiated study o n
I n dia's growth potential , " I n d i a i n the Yea r 2020: A n
Industri a l Superpower . " The report asserts that I n di a
can , thro ugh concentrated a n d opti m a l m an agement o f
th ree key resou rces, en ergy, water and sk i l l ed m anpower,
make the kind of devel opment breakthro ugh in the next
40 years the way Japan, Germany, and the Soviet U n ion
did during the l ast 1 00 years. The q uestion in devel op­
men t, Parpart told his audiences, i s not whether the
cou ntry i s too "un managea ble" or "vast," as it is fash ­
ionable t o s a y these days, but does a country h ave en ough
skilled m a npower in absolute terms to concentrate this
on specific, time-bo und proj ect-l i n ked breakthroughs.
Of all the Third World, Parpart asserted, I n dia i s best
posi tioned to "ta ke-off."
To the scientists
Before 45 scientific- m i n ded peop le at the I n dian N a­
tional Science Academy on J u n e 6, D r . Parpart gave a
ful l b riefing on the state o f fusion energy . H e gave the
fo llowing timetab le fo r m a k i ng fusion a viable global
energy source: by 1 982- 8 3 , breakeven will be ach ieved on
energy i n put and en ergy p roduced . The Princeton fusi o n
achievem ents were one key step i n this d irecti o n . B y
1 987-88, t h e comp let ion of an engineeri ng test faci l ity i s
with i n reach , a n d in t h e last decade o f t h e century, the
reactor design and so forth ach ieved.
. . Fusion is not only an energy source," Parpart as-
36 Special Report
serted, "it is a revo l uti o n in technology, in disposal of
nuclear waste, in chem ica l recyc ling and reprocessi ng
and red uci ng materi a l s to p lasmas at the high tempera­
tures i n a fusion reactor. Lastly, fusion processes can
d i rectly c rack water, mak i ng hydrogen a possi ble po rta­
ble." He effectively debunked the " l i mits to growth"
propaganda that h as m ade scientists reluctant to fight
for their views .
Parpart rem i n ded the aud ience o f the p redicti ons and
achievements o f Dr. H o mi Bhabha, fo u nder o f the I ndian
Atom ic En ergy progra m , a n d u rged scienti sts to retake
their role in pol icy- m a k i n g for the country . The I N SA
itsel f is a body that w as led by s uch emi nent figu res as
Bhabha and N o bel La ureate c . y . R a m a n . " Science is
universal," he told t hem . "Science i s not for the colonies
or the colon izers n o r for the rich or the poor. Only i f we
view it from that sta ndpoint d oes m a n k i nd h ave hope fo r
the future."
N ehru Museum
Perhaps the im pact of Parpart's lect ures was m ost felt
at the presentatio n to N ehru M emorial M useum and
Library o n J une 7 . The locati o n was u n i quely appropri­
ate to the topic si nce the m useu m and l i brary commem­
orate the l i fe and work of I n di a ' s fi rst Prime M i nister,
Jawaharlal N ehru .
Parpart used Neh ru's own ideas on development to
com m u n icate to the 70 person aud ience that I n dia's
nation-b u i l d i ng effo rts a re not i n vai n . They are fro nt­
edge of the b attle to develo p the entire Third World. He
wa rned that if I n di a d oes not com mit i ts resou rces to
rapid ind ustri alization in the face of its expan ding popu­
lation , the nation will be beset by uncontro l lable chaos.
The lect ure was fol lowed by lengthy and l ively discus­
sion i n vo lving m any mem bers o f the aud ience. The chair­
man o f the l ectu re, Dr. R aga R a m a n n a, an em i n ent
scientist associ ated with the n uclear program as well as
the Indian Defense M in i stry , best summed up the reac­
tions in his concl uding rem a r k s . " I m ust say that D r .
Parpart h as cheered us u p quite a l o t , especi ally living i n
Del hi, where o n e so meti m es gets depressed about the
progress bei ng m ade. A n d then, you sudden ly go abroad
and come back and you fin d that the p rogress made in
I n dia is real ly enormous. W hen people l i ke D r . Parpart
come along and tel l us that this is so, it is very hearten i ng.
It is more heartening, because this is a thing that does
not often happen , that somebody coming fro m abroad
makes the case fo r n uclear energy . It is so popular to run
it down in all its aspects, so, when a person who has
thought about it s ufficiently says that's your answer,
we l l , I feel cheered ."
D r . Parpa rt's talk at the Neh ru Memorial M useum
and Li brary recei ved w ide coverage in the m ajor I n dian
daily newspapers, including the Times of India, the
Statesman, the National Herald, and the Patriot .
EIR J u n e 24, 1 980

FEF proposals make
headlines in India
The Statesman, June 8: D r . Uwe Henke Parpart, D irector
of Research for the Fusion Energy Foundati on of New
York, said in Delhi on Saturday that the key to India's
in dustrial developm ent lay i n . . . n uclear energy . . . .
D r . Parpart said th at India was rich i n m a n power,
educated and skilled (and water resources) . The country
had achieved self-sufficiency i n food grain producti o n ,
and cou l d wel l be an exporter in t he n e a r future. But, t h e
country was p oor i n energy reso urces . . . .
India has got tremendous reserves of coal b ut its
quality was not good i n that 40 percent of it was j ust ash.
And there are l imits to which hydro-power can be devel­
oped . So, what was i mportant for India was to i dentify
the basis of energy on which devel opment of industry
co uld be based for the next fo u r decades up to 2020, he
said . . . .
D r . Parpart said that one reason why I n dia should
identify and develop its future source of energy was that
its population would be doubled by 2020 . . . . If I n dia
fail s to plan its energy development now there would be
in tern al strife, unemployment, droughts and famine.
He said that at one time it used to be polemically said
that "India's oil is its water. " Time has now come for
India to prove it by harnessing its im mensely rich water
reso urces and hydro-power. It was estimated that there
existed in India a water level of 10 i n ches year-rou n d .
This meant that i f t h i s water resou rce w a s properly
distributed it would lead to tremendous, a l l-round pros­
perity .
Times of India, June 8 : Dynamic p l an n ing , decisions
based on po litical will and h igh-technology, can m ake
India a prosperous n ation within the next forty years,
according to Dr. Uwe Henke Parpart . . . .
Di sagreei ng with the M alth usian theories and the
Club of Rome report on lim its to growth, he hinted that
India becom ing an economic s uperpower was a feasible
proposition in light of studies carried out by the Fusion
Energy Fo undation .
H e m ade a stro ng plea for a new kind o f approach to
development and progress u sing sophisticated , modern
technology. To become an industrial power by 2020 A . D .
the country must utilize its extraordinarily high n umber
of scienti sts and engineers, he said .
EIR J u ne 24, 1 980
The Patriot , June 8: A n A merican scientist and social
phi losopher, Dr. Uwe H enke Parpart, said i n Delhi on
Satu rday that I n dia could become an i ndustrial super­
power i n the next fo u r decades u sing its scientific and
engin eering m a n power, and i ts natural water reso urces.
. . . He warned that if India did not go i n for a very
rapid development, it would be o n the brink of disaster
and i n ternal stri fe within the n ext fou r decades . . . .
National Herald, J u n e 8 : I n his vision of I n dia i n 2020,
the population would h ave do ubled and if problems of
eco nomic development of all the peo p le were not taken
into acco u n t seriously, "there was a dis aster" awaiti ng
the country . H ere he underscored the importance of
peace and its relationship to econo�ic development.
The evening turned o ut to be a l ively o ne, w hen m any
questions doubting the 'tantalizing vision' of Dr. Parpart
were put. To a question as to how the dream which he
was p resenting could be achi eved he said the real problem
lay with i n vestment to fi n ance n uclear efforts in the
cou ntry . In its effort to increase its n uclear potenti al , the
cou ntry could always fal l back on the help of France and
the U . S . S . R . , two co u ntries willing to s hare expertise and
o ffer hel p . Of co urse, the political com p onent in this field
could not be underesti mated.
Times of India, M a y 30: For India's growth as an indus­
trial superpower and for its own existence as a secure
nati o n , it should return to the kind of strategy for m ul ated
by Pandit Nehru . Appropriate techno logies , labor i nten­
sive processes , and non-invo lvement in heavy i n dustry
would n ot succeed in I n d i a .
T h i s was the p o i n t stressed b y D r . U w e H e n k e
Parpart. . . .
Extol ling the virtue of the s logan 'Atoms for Peace, '
he recal led D r . H o m i B h a b h a ' s prediction in 1 95 6 that
man would control thermonuclear reactions for the ben­
efit of h u m anity in 25 years, became a reality in exactly
as m a ny years . . . .
He belittled the nuclear hazards, and said n inety-five
percent of the worl d's n uclear waste is owing to military
weapons and the contribution by civilians was very
negligible.
India Express, M ay 30: D r . Uwe Parpart . . . suggested
in B o m bay on Fri day that India could not afford to
neglect research o n Fusion energy .
. . . D r . Parpart said that India could m arch on the
path of all-round devel opment p u rsuing the policies laid
down by the "visionary leader, Pandit Nehr u . "
H e said that the problem o f energy and development
were interli n ked . I n dia could achieve its industrialization
only because of the right pol icies i n this regard imple­
m ented by Nehru .
Special Report 37
 The Mexican Republic vs.
the Brandt Commission
by Criton Zoakos , Contributing Editor
The M exican Repub lican system of i ndustri a l and na­
tional development m u st be urgently counterposed to the
international obsceni ty presented as the " Brandt Com­
m i ssion" m odel for Third World Development, n amed
after W i l l y Bran dt, the i n tern ationally notorio u s drun­
kard and philanderer.
For those fam i l i ar with the epi c h istory of M exican
repub l icanism , i t is evident that the " M exican model "
for Th ird World development i s separated fro m the
Brandt Comm ission model by an unbridgeable g u l f of
d i fferences of fu ndamental pri ncip les .
The Brandt Commission advocates the bridling an d
ultimately the subversion of national sovereignty. M exi­
can rep u b licanism is the product of the efforts o f its
exceptional fo u n di n g fat hers who were p h i losophica l
men with a profound un derstan di ng of t h e fun damental
m oral primacy of national sovereign ty .
The Brandt Com m i ssion advocates reli ance o n su­
pranational eco nom ic regulato ry bodies com p lementing
the M on t Pelerin Society' s concept of a world free m a r­
ket . M exican rep ublican doctrine a n d practice a re fi rmly
based on the b ri l liant traditions of the N eoplatonic ding­
ism of Colbert, Alexander H a m i l to n , Friedrich List,
List' s great Mexican contempo rary Estevez de Antun­
ano, Lazaro de C ardenas, Alvaro Obreg6n and others .
The Brandt Com m i ssion adopts assumptions o f the
lega l matter o f "private property" from the world o ut­
look of the i nternational o l igarchy and its M exican
branch , the "encap uchados" (hooded ones, as former
M exican President Echeverria once ca\1ed them ) of the
degenerate M o nterrey G roup. M exican Neop/atonic re-
38 I nternational
publ ican i sm approaches the legal issue o f private prop­
erty i n terms defined by Plato, Plethon , Colbert, Alex­
ander H a milton and Benito Juarez . " Private property"
is national wealth which the nation h as entrusted to
individuals for the p urpose of augmenting the interests
of the n ati o n . If such i n dividuals fai l to perform their
assigned tas k , the n ation has the right to take back that
portion of national wealth i t once en trusted to i n d ividual
hands. Th i s N eoplato n i c concept is the guiding fo rce
beh i nd the great Ben ito J u a rez' s epic struggle, the Ref­
o rm a , i n cl uding the h i storic Ley Lerdo and Ley J u a rez .
"Appropriate technologies"
Finally, the Brandt C o m m i ssi o n is attem pting to
faci l itate the I nternati o n al M o netary Fund and World
Ban k ' s gen oci dal plans against the T h ird World by
promoting the doctrine o f "appropri ate technologies, " a
rationalizati o n for denyi ng m uch-needed m odern i ndus­
trial techno logies to the Third World. M ex ican republi­
canism, o n the other h a n d , was fro m its begi n n i ngs
comm i t ted to the p romotion and app l i cation of the most
adva nceu technologies avai l a ble i n the worl d . M ore im­
portant, M exican republ icanism was the p rod uct o f a
gro up of heroic N eoplatonic leaders w h o were c o m m i t­
ted to the idea o f ed ucati ng and uplifting backward
pop u l ations o n a m ass scale for the pu rpose of m a k i ng
accessi b le to such populations the g reat gifts o f science,
techn ology, and i n d ustry.
This is the true story o f modern M exican republ ican­
ism w h i ch co unts among its intellectua/ founding fathers
Erasm us of Rotterdam and his associ ates J u a n Luis
EI R J u ne 24, 1 980
Vives, Bishop V asco de Q ui roga, and other great Fran­
ciscan heirs to the great Aragonese o f the 1 3th century,
Raymond Lul l . The formal founding fathers of M exico ,
great international thin kers such as M iguel H idalgo y
Costi lla, Jose M arfa M o relos, V icente G uerrero, and
others were the d i rect heirs o f the initial Neoplatonic
network of Erasm us' s Spanish friends who l a unched the
project of creating, in N ueva Espana, a state of reason .
What i s best in the M exican system today, traces its
origi ns di rectly back to that Neoplato nic effort. It is by
that method that M exico , today, can claim that it has
al ready traversed the path of devel opment and nation­
hood that most developing n ations are aspiring to today.
I n short, a model for Third World development exists
today, whose efficacy has been proven; it is the M exican
model . Un less Third World nations today follow and
apply the general princi ples p roven by the M exican
experience, there wi l l be n o Thi rd World development . If
the Brandt Commission and its associates at the Club of
Rome, U N I TA R , C E ESTEM , Colegio de M ex ico and
vario us other U n ited Nations agencies succeed i n sel ling
to the T h i rd W o r l d govern m e n ts their per n i ci o us
" Brandt Com m i ssion model," the p ath for fu rther disin­
tegration and destabilizati on o f the Th ird World will be
wide open . Thus, the path o f the B randt Comm ission is
that which leads stra ight towa rd World War I l l .
President Lopez Portillo's European tour
Th i s general historical observation has direct and
urgent beari ng upon the events which shaped Mexican
President Jose Lopez Porti l l o ' s recent tour to Western
Europe. That important tour was undertaken , pri ncipal­
ly, on behal f o f the M exican president and his clo sest
advisors' profound co ncern about the imminent d anger
of general thermonuclear war. H o urs befo re his depar­
ture from M exico City, Lopez Porti l l o recei ved a briefi n g
from M ex ican m i l i tary intel l igence in dicati n g t h a t t h e
Carter administration h as fu lly developed operational
plans fo r using nuclear weapons as part o f a contem plat­
ed attack agai nst Cuba.
Upon his arrival in Paris, Lopez Porti l l o announced
to the press that his pri m a ry co ncern is the danger o f
world war. H e then exp lained that t h e fun damental
source of the current world war danger is the lack of
econ om ic a n d i n d u s tri a l deve l opment in the T h i rd
World. The pu rpose o f his trip to Europe, and especially
to France, was to consol i date a special comprehensive
eco nom i c-pol i tical and dipl omatic relati o nship between
M exico and France in particular, for a twin purpose: the
strengt hen ing of the M exican current industrial-techno­
logical effo rt and the p resentatio n , to the rest o f the
Th ird World govern ments, o f the French-Mex ican rel a­
tionship, as a model for rel ations between industrial ly
advanced and developi ng nations generally.
EIR J une 2 4 , 1 980
H a l fway into the trip, L6 P'�z Portillo was confronted
with the treason of his foreign m inister, Jorge Castaneda,
a careerist creature who owes\ is w retched soul to the
Club of Rome and certain Jesuit circles in M exico . Lopez
Porti l l o h ad i n structed his foreign minister to o rganize
the secondary details of the diplomatic tour around the
central theme of the French-Mexican special relation
that was about to emerge, while the president himsel f
i n tended to devote his ful l attention t o the serious work
between h i m self, France' s Valery Giscard d' Estaing, and
the Federal Republic of Germany's Helmut Schmidt.
I nstea d , J o rge Castaneda, the foreign minister, while in
Europe, i n volved himself in a widespread intrigue with
the news agencies, Willy Brandt and Sweden's Olof
Pal me, designed to pressure Lopez. Portil l o to publicly
endorse the p rograms o f the Brandt Commission .
Lopez Portillo conducted himself a s diplomatically
as he could, and a fter an acri monious stop in Canada,
returned to M exico City . The traditional celebrations
wh ich ordinarily greet the M ex ican p resident's return
from a j ou rney abroad were a bruptly canceled. Crowds
of citizens did not gather either at the Square of the
Constitution or at the sidewalks of the Paseo de la
Reforma to g reet the returning President. The trade
union and farmer delegations were asked to cancel their
visits o f felicitation. President Jose Lopez Portillo sat at
the presidential compound of Los Pinos contemplating
the treason of his foreign minister and preparing to draw
concl usions.
J orge Castaneda and h i s friends
It is h igh ti me for this now . In the Republic of the
U nited States of M exico, the issue of foreign policy and
the issue o f internal security are very closely l inked at this
time. Jorge Castaneda, the foreign minister who opposes
the " M exican model" i n foreign policy, is also a confed­
erate of those forces within and outside of M exico which,
under the guidance of Zbigniew B rzezinski's National
Security C o uncil, are frantically working for the internal
destabi lization of M exico .
Brzezinski and the international oligarchical forces
behind the Brandt Com mission have been planning the
intern a l destabi lization of M exico ever since they suc­
cessfully put the Ayato llah K homeini in power i n I ran .
Thei r reason for wanting the destruction of the Mexican
Rep ublic now i s that its existence, the existence of the
M ex ican example, represents a serious obstacle to the
genocidal designs thinly concealed behind the activities
o f the Brandt Commission.
The M exican foreign m i nister, a proponent of the
Brandt Commission is a traitor working for the enemies
of his country . But he is not alone within the Mexican
govern ment. The m i n ister of human settlement, Ramirez
Vasques, is a fel low traitor who is one of the principal
International 39
fun ders of the Club of Rome's environmentalist m ove­
ment within M exico and who, thro ugh the environmen­
tal ist movement also fi nances various Jes uit-deployed
terrorist gro ups.
The deci sions that President Lopez Portillo will make
on the matter of his foreign m inister' s treason on m atters
of foreign policy will have enorm o us im plications for the
internal sec urity and stability of M exico .

The roots of Mexican repUblicanism

We agree with President Lopez Portillo, that the
industrial developm ent o f the Third World is now the
critical issue of world war or peace facing manki n d . As
Lopez Portil lo well knows, but as m any other leaders of
The great men
who built the
developi ng nations do not ful ly real ize, industrial devel­
opment is not merely a m atter of the physical transfer o f
machines a n d equipment for r a w materi als a n d sem i fi n ­
ished goods . Those devel oping societies wh ich a r e t o
receive the req uired transfers o f technology a l so requi re Republic of Mexico
to have their populations trai ned or in the process o f
being trai ned to handle m odern scientific and industrial
The Mexican Constitution
techniques. These popu lations must also be m orally mo­
T he crucial en d result of the M exican Revolution
tivated with the desi re to muster the requi red scientific
( 1 9 1 0- 1 9 1 7) was the establishment o f a truly humanist
and technological knowledge . For large popUlations to
M exican Constitution based o n the I dea of Progress.
be thus m orally motivated , po litical i n stitutions are re­
This was the crowning success of the faction associ­
qu ired which wi ll institutionally organize the popula­
ated with General Alvaro Obregon, a brilliant military
tions toward the attainment o f such moral o bj ectives .
commander, who went on to become President of
Hence the indispen sable necessity of the RepUb lic, com­
M exico in 1 9 20 .
posed o f the spirit of republ icanism am ong the ordin ary
Against formidable o d d s internally and a thor­
citizens and the legally absolute concept of n ati onal
o ug hly hosti le U . S. administration, Obregon began
sovereignty, the sovereign natio n-state as a legal-po liti­
actually i m p lementing the 1 9 1 7 Con stituti on, with
ca l entity defined by its com m i tment to a single histori cal
emphasis o n enforcing the Constitutional p ro hibition
moral pu rpose .
of the Jesuit-co ntrolled church involvement i n politics
The hi storical definition of the sovereign n ation-state and public education . O n agrari an reform , Obregon
as a unity of moral purpose was fi rst adva nced by the was explicit: M exican agriculture would be modeled
great Platonic legal theorist H ugo Groti us who can be o n U . S . h igh-technology agribusiness as a sound base
rightly called the intel lectual father of the concept of the for industrializatio n .
modern sovereign nation -state. Groti us is indispensable The vigorous career of o n e o f M exico's foremost
for understanding the M exican Rep ublic and the Repub­ humanist leaders-whose policies set the basis for the
lic of the U n ited States, the two most advanced forms of expropriation of the nation's oil resources from Brit­
Neoplato nic repUblicanism in the worl d . i sh and B ri ti sh-controlled U . S . companies by Presi­
Both M exico a n d t h e Un ited States represent nations dent Lazaro Cardenas in 1 93 8-was cut short by a
forged from one single, si mple, and p rofound m oral Jesuit- deployed "crazed assassi n . " Obregon was shot
purpose. For the fo unding fathers of b oth the U . S . A . and killed on the eve of his reelection as M exican
and M exico , this moral p u rpose i s t o serve t h e notion of President in 1 9 30.
Progress, the noti on of Perfection of m an, to promote
within each of the two great rep ublics the ca use of m a n ' s The war of reform
liberty t o i n tel lect ually and mo rally develop, in s u c h a Domi nating the peribd of M exican history known
way as to make these two great rep ublics act as examp les as the Reforma-roughly from the late 1 8 50s to the
and beaco ns to the rest o f the worl d. Being such a beacon early 1 8 60s-is the figure of Benito Juarez, who
and example was the hi storical m o ral purpose around fought and won a civil war and defeated i nvading
which the consci ousness of nationhood was shaped in the Hapsb urg forces to establish Mexico as a sovereign
two neigh b o ring repub lics . I t was this s h ared m oral national RepUblic.
purpose which, out of S paniards, mestizos, criO I l OS, and
I ndians shaped the rea l, tangible concept o f the Mexican,

40 International EIR J u ne 24 , 1980

 Miguel Hidalgo y Cost illa President Benito Juarez
The life of Juarez is one of the most powerful
i nspirations for Mexicans and a living disproof of the
Jesuit notion that "progress means ethnocide. " Born
of a poor I ndian fam ily i n the wayward town o f
Oaxaca , i n t h e mountains of So utheast M exico , Juarez
was ed ucated by a Spanish family for whom he worked
as an errand boy; his remarkably rapid development
prompted his employers to send him to school where
he even tually earned a law degree and went o n to
become an eminent j urist, then President.
The civil war k nown as the W ar o f Reform ( 1 858)
was incited by agents of the Jesuit Order and fought
over the implementation of three laws which together
form the pillars o f Mexico's national sovereignty; the
Ley Juarez, the Ley Lerdo and the Ley I glesias, direct­
ed largely at the then all-powerful Catholic Church.
I n one fell swoop, these l aws respectively stripped the
church and its officials of ( I ) legal i m munity; (2) all
land and the right to own land; and (3) the exaction of
alms from the poor.
I n 1 862 , at the height o f the War of Reform , Great
Britai n launched the Tripartite Alliance invasion of
Mexico on the pretext that Juarez, then president o f
Mexico operating from Vera Cruz, had declared a
moratorium on all foreign debt. With nominal help
from Spai n , France's Napoleo n I I I installed Austrian
H apsburg M aximilian on the "throne" o f M exico
with a two-pronged objective: destroy Juarez and
preven t a victory by the North in the ongoing Civil
War i n the U nited States.
Juarez fi nally clenched victory over M axi mi lian
with the aid of A braham Lincoln following Lincoln's
successful defeat o f the Confederate forces i n the
EI R J u ne 24, 1 980
General A lvaro Obregon
United States. Maximilian was caught and shot in
1 8 67 .
H idalgo's independence fight
On September 1 6, 1 8 1 0, M iguel Hidalgo y Costil­
la, a priest educated in the best tradition o f the Platon­
ic Erasmian networ k s that arrived i n N ueva Espana i n
the 1 6t h century , called o n the people o f a small town
in the south of M exico to prom ulgate his fam ou s
G ri to de Dolores, t h e Mexica n equivalent o f t h e U . S .
Declaratio n o f I ndependence . The Grito de Dolores
marked the b irth of Mexico's struggle to become a
sovereign state, and until this d ay every President of
M exico celebrates Hi dalgo's Grito de Dolores to com­
memorate September 1 6.
When Hidalgo was a ssassi nated by the Jesuit-run
I nquisition, Jose Maria M orelos y Pavon contin ued
his struggle. I n 1 8 1 3, M o relos called the First Nation­
al Congress . Two years later he was also killed by the
Jesuits .
O n October 4 , 1 824, the fol lowers o f H idalgo and
Morelos issued the first Federalist Constitution o f the
U ni ted States o f Mexico . This constitution was i n fl u­
enced by the American Constitution and the nation­
building concepts of George W ashingto n . This period
of Mexican h istory was m arked by the strong i nflu­
ence o f the Europeans, particularly the Germa n and
French humanists. The n etworks o f Beethoven and
Schiller extended to M exico where gi fted m usicians,
scientists, and poets, including the great Pavo n, deep­
ened the traditio n of M exican republicanism during
this period .
I n ternational 41
a national ity totally devoid of ethnic or raci al content .
The existence of M exican nationality is adeq u ate pro o f
o f H ugo Grotius ' s doctrine of national sovereignty as
moral purpose.
Co ntrary to the propaganda of the Jesuit Enlighten­
ment, Jean Jacques Ro usseau and M o ntesquieu h ave
nothing to do with the s haping of either the M exican
Rep ublic or of the United States of Am erica .
The philosophical and lega l principles of m odern
M exican rep Ublicanism go back to the great struggles
between the Platonic and Aristotelian el ites in the conti­
nent o f Europe du ring the 1 5th and 1 6th centuries. As
the New World and the Far East were being opened u p
t o European commerce , t h i s vast newly opened domain
of lands and peoples became the great arena in which the
two great European factions s o ught marginal strategic
advantage.
The Platonists were principally the vast netwo rks o f
Erasm us, Luis Vives, Tho m as M ore and others , and that
faction in the Franciscan Order which continued the
tradition of Roger Bacon and Raymond Lull. Their
program was one of contin u o us scien ti fic and ind ustri al
development as a means for the m o ral and intellectual
per fection of man and a means for contin uing G o d ' s
etern al w o r k of Creati on. They based their political work
on conti n uously evo lving new pedagogies fo r the pur­
pose of un locking the creative potentials in backward
popUlations.
The Aristotel ians were principally the Dominican
Order and the Society of Jes us, political instrum ents in
the hands of the international o ligarchy, the H apsburgs,
the Black G uelphs, the Fugger financiers and later the
Genoese bankers, the Grimaldi, Spinola and Pallavicini.
For the new lands and the new peop les of t he New
World , the Dominicans and the Jesuits h ad only one
program : pacificati on, looting, enslavement, and de­
pendency . The Jesuits in fact invented a whole branch o f
pseudoscience , anth ropo logy, in order to promu lgate a
pecu liarly Jesuit doctri ne, "cultural relati vis m , " the doc­
trine of del iberately kee p i n g b a c k w a rd p o p u l at i o n s
backward, in the name of the right of backward cultures
to resi st ci vi lizatio n . If the Jesuits had thei r way, the
M althusian Aztecs would sti ll be cutting out hearts in
Mexico City.
The M exican h um anist rep ublican tradition begins
with the great V asco de Q uiroga , a member of the
network of Platon ists led by Erasm us and Luis Vives,
who beca me the first Bishop of the M exican province of
M ichoacan and there established a maj or educati onal
proj ect, a Neoplatonic academy dedi cated to the task of
creating a moral and in tel lectu al el ite from the in dige­
nous pop ulations.
The fiery Miguel H i d algo y Costi lla, the George
Washington of M exico, the man who i ssued fo rth the
Grito de Dolores which sti ll resounds aro und the worl d ,
42 I n ternational
was an accompli shed Platonist who ch ose to begin his
intellectual career with a devastating attack against Ar­
istotle in the fo rm of a doctoral dissertati o n .
J ose M a rfa M o relos y Pavo n , t h e military geni us o f
M exican in dependence a n d H i dalgo ' s successor, a poet
in. his own right and a Renai ssance man, did all in his
power to la unch, u n der con d itions of hideous wa rfare,
the m usical system of M exico aro u n d the m usician Eli­
zaga who orga n ized symphonic orchestras and mu sical
societies for the performance of the great Beethoven's
m u sic thro ughout M exico .
Around these exceptional individuals were gathered
that spec ial breed of men of ec umenical educati on, sci­
entists, states men , generals, m u sicians and historians
who created the M exican RepUblic. It was to these people
that Beethoven t urned h i s thoughts when he composed
his Seventh Sym phony with its uniquely M exican third
m ovement.
The enemy : Society of Jesus
I n d i vi d u als of the same moral and intellect ual ca l i ber
fl anked the great effort of Benito J u arez to o u st the
H apsburgs from M exico . During J u arez's strugg le there
was probably no greater m oral inspiration for the M exi­
can republicans than the two Germans, Friedrich Sch il ler
and Ludwig van Beethoven.
N o other n ation in the devel oping sector of the world
has the richness and depth o f cl assical republ ican tradi­
ti on as does M e x ico . Cuba has no such m o del to o ffer to
the world, nor Algeria, nor any other nati o n . The repub­
l i can el i te of I n dia as an instituti on i s the only other force
in the wo rld with a s i m i l ar depth of h umanist val ues but
the pop u l ation which sur ro unds the I n dian elite has not
assi m i lated the spirit of rep ubli canism to such a profound
degree as the M exican population has.
The constant enemy o f M exican rep ublican ism has
been the Society of Jesus . It was the Jesuits who endea­
vored to destroy the work of V asco de Q u iroga . It was
they who assassin ated M iguel H i dalgo; they who butch­
ered M o rel o s . It was the Jesuits who attem pted to keep
M ax i m i l ian H a ps burg in power agai nst Benito J u arez;
the Jesuits who s ubverted the republic during the M exi­
can Revo l ution in the begi nn ing of the 20th century; the
Jesuits who assassi nated A l varo Obrego n .
S o today, i t i s again the Jesuits . The Comm unist
Party of M ex ico i s tota lly controlled by the Society of
Jesus; the M ex ican Soci a list Wo rkers Pa rty is control led
by the Jesui ts; the right-wing successor to the m u rderous
Cristero Party i s also tota lly Jesuit; the left-wing terro rist
organizations from the " League of 23 September" to the
"Debate Group," and so forth, are all controlled and
dep l oyed by the Jesuits. The Jesuit-control led A rchbish­
op of Cuernavaca and his " l i berat ion theo logians" are
work i ng i n tensively fo r the i ntern a l desta bil ization of the
M exican rep ublic along the K homein i model .
EIR J u ne 24, 1 980
Who is Jorge Castaneda?
by Chris Curtis
Businessmen and diplomats should be warned that when
they deal with M exico through M exican Foreign M inis­
ter Jorge Castaneda, they are i n fact not dealing with a
trusted representati ve of official M exican policy . Shock­
ing discrepancies i n o utlook appeared as recently as
Castaneda's June 6 keynote address to the A n n u a l Con­
ference of the Council on Foreign Relations i n New
York, when it was expected he would be on his best
behavior.
The following E IR special report detail s the origins
and development of Mr. Castaneda' s controversial ca­
reer and perform ance as foreign minister. It is still fresh
in many M exican minds that Castaneda ' s im mediate
predecessor, Santiago Roel, was forced to resign in
May 1 979 for not representing Mexico's national i n ter­
ests abroad and substituting personal causes and proj­
ects for President Lopez Portillo's directives .
Rum ors in M exico City have it that Castaneda may
soon face the same fate as Roe! . Controversy swirled i nto
the open upon Castaneda ' s return from acco mpanying
President Lopez Portillo to Europe l ast month . Charges
that Castaneda's actions in fact constituted treaso n , cir­
culated by the M exican Labor Party, found echo in
Mexican official ci rcles and the press. O va ciones, a large­
circulation M exico City newspaper, reported J u n e 3 that
"a very critical situation is closi ng in o n Foreign M in ister
Jorge Castaneda forged by a political faction i n M exico . "
The article concluded warnjng Castaneda that i f the
campaign gained force, he might "be forced to resig n . "
T h e charges concentrate on three areas:
• Castaneda has assumed the role of international
spokesman and organizer fo r the Brandt Comm ission
and against M exican develop ment po licy .
• Castaneda is an i ntim ate collaborator of the Club
of Rome and Ervin Lazl o's U N ITA R proj ects for a
"one-world order" aimed at destroying the concept o f
nation-State sovereignty a n d a genocidal reduction of
EIR J u ne 24, 1 9 S 0
the Third World populations. Casteneda's n ame appears
i n almost every si ngle membership list of entities related
to the U . N . I nternational Law Association networks
since the early 1 950s .
• His active role i n the intern ational law circles plugs
him directly i nto the i n ternati onal assassination bureau
known as Permindex .
Jorge Castaneda, the M exican Foreign M i nister
who postures as a defen der of M exican national inter­
ests, is in fact an important member of an international
circle of feudalistic " b l ueblood" fam ilies dedicated to
the destruction of the Mexican republic. The story of
Mr. Castaneda' s career in the field of i nternational
relations places him i n contact with the so-called Black
Nobility fam il ies of Europe, the fam ilies that directly
oversee terrorism , assassinations, n arcotics traffic, and
environmentalism .
Castaneda is a " one-worldist ," developing a 25-year
career totally i mmersed i n the U nited Nations' special
brand of "intern ational law . " H e was groomed for his
position by former foreign minister Luis Padilla Nervo .
Padi lla Nervo was a fo unding i deologue o f the United
Nations apparatus, and worked closely with Julian H ux­
ley to set up U N ESCO . Through Padilla Nervo and his
col leagues , Castaneda was rewarded with his first foreign
service post, a m bassador to Egypt.
From there, Castaneda moved straight up a U . N .­
centered career . I n 1 956, he became vice president o f the
J uridic Comm ission of the U . N . General Assembly,
assu m i ng the presidency i n 1 95 8 . H e took a sub-ministry
position i n 1 967, serving i n the same period on the
Commission o f I nternational Law at the United Nations.
I n 1 97 3 , he was n a med M exico's chief delegate to the
d rafting o f the U . N . Charter of Econo m ic Rights and
Duties o f Nations, an initiative o f then M exican Presi­
dent Echeverria . Following a sh ort stint as U ndersecre­
tary of Special St udies on I n ternational Issues, he direct­
ed the M exican delegation to the Law of the Sea Confer-
I n ternational 43
ence in Geneva from 1 97 5 until his naming to the Foreign
M inister' s post in M ay 1 979.
It was during the last period that Castaneda became
an official advisor to the Club o f Rome and the Club of
Rome's V . N . affiliate , the I n stitute for Training and
Research ( V N I TA R ) . He participated in w h a t w a s
termed t h e " International Project Network" of t h e Club
of Rome' s "Goals for Mankind" proj ect, a rewrite o f its
1 973 gen ocidal tract, " Li mits to Growth," which advo­
cated the reduction of world population to t he 2 billion
inh abitant level. As late as Jan uary 1 979, j ust months
before assuming the Foreign M inister post, he appeared
in a VNIT A R progress report as the director of research
on " Exploitation of Seabed Resources" for the gigantic
VNITA R / Club o f Rome " Assessing the New I n terna­
tional Economic Order" proj ect.
The one-world lobby . . • positioning the Committee's work as the basis for the
The "one-worldist" circles that built C astaneda ' s
career have a strategic perspective that is aimed a t de­
stroying the so vereignty of the n ation-state and the
i mposition of supranati onal institutions answering only
to a self-selected international elite.
Huxley , Padi lla Nervo , and others who set up the
V . N . system pressed for quasi-legal devices that would
penalize i n dividual countries that sought to develop
heavy industry and nuclear energy, or failed to curb
economic and population growth.
When Castaneda was appointed special negotiator to
the V.N. by Echeverria, he caused a scan dal by propos­
ing that adherence to the C h arter of Economic Rights be
backed up by internati o nally applied "penalties . " I n a
1 974 volume of essays, he urged a new "globalism"
which accepts "that there exist planetary priorities"
higher than national sovereignty. The "globalism , " he
insists, demands "central i nternational planning; inter­
national admini stration of certain services and resources;
. . . and m ore advanced and effi cient regulatory m echa­
nisms . " He calls for "obligatory accords" governi ng
"control of movement of capital" ; and an "obligatory
international regimen" to "reconcile development with
protection of the environment. "
. • . And its unsavory connections
The promoters of limited sovereignty under one­
world l aw are no pie-in-the-sky dream ers . They will
m urder to get their way, as indicated by the co nnection
between the "international law" lobby and a strange
entity called Permindex .
Permi ndex was a dummy corporati on fo unded i n
Switzerland during t h e late 1 9 50s as a cover for an
international network of political assassi ns. Within five
years, Permindex and its affili ates were responsi ble for
m ore than 30 attempts agai nst the life of French Presi­
dent Charles de Gaulle, the m u rder of Italian industrialist
Enrico M attei, and John F . Kennedy. French authorities
44 I nternational
kicked Perm in dex o ut of France, and, through diplom at­
ic pressure, s ucceeded in getting Permi ndex headquarters
in Switzerland shut down . In 1 963 and 1 964 , New Orle­
ans District Attorney Jim Garrison named Permindex as
complicit in the Kennedy assassi nation . By 1 967, how­
ever, all of Garriso n ' s Perm in dex-con nected witnesses
had either been murdered or had died u nder mysterious
circumstances .
Who runs Perm index? Precisely the people who are
the "authorities" in internati o nal law . Permindex was
co-founded by M aj or Lo uis M. Bloomfiel d of M ontreal .
Bloomfield i s t h e Canadian h e a d o f t h e I nternational
Law Association , the top o ne-world lobby.
Bloo mfield ' s particular area of concentrati on and
expertise i s law of the sea- founding the I LA' s " Law of
the Sea Committee" in 1 954, perso nally steering it for 20
years from a positio n on its b o ard of directors, and
V . N . negotiations begin ning in 1 97 5 .
C astaneda fits this profile strikingly . An associate
member of the I L A , Castaneda is married straight i nto
the Eastern European exile layers around Bloomfiel d .
His wife i s a Russian-born Ca nadi an Zionist. He became
head o f M exico' s delegation to the Law o f the Sea
Conference, m oving from p revious work with Bloom­
field' s circles in the I LA, and i n turn j oined the Club of
Rome work as a specialist in the law of the sea. His long­
time righ t hand man is Alberto Szekely, son of a Ruma­
nian Zionist and a top member of the M exican branch of
the I n tern atio nal Law Association , specializing in law of
the sea and i nternati o n al terrorism . Szekely is a close
friend of Princeton pro fessor Richard Fal k , the zero­
growth radical who was i n strumental in bringing Kho­
meini to power in I ran and is now aiming "h uman
rights" scandals again st Mexico .
The M exican I L A , like the Canadian branch , consists
of local oligarch ical families and their counterparts in
the expatriate European nobility. For example, the pres­
ident of the M exican I LA is Cesar Sepulveda, an oligarch
who is also a leading mem ber of the M exican Academy
of Law. The honorary president of the Academy of Law
is none other than M iguel Aleman, dean of M exico ' s
" high society," which i ncludes not o n l y t h e local fam i lies,
but resi dent representatives of the H o use of Savoy and
almost every other noble family i n Italy. Aleman is
reported to direct large-scale d rug-running operations
under cover of to urist promotion activities . Last year
Alem a n ' s Academy of Law granted a special award to
Jacques Soustelle, the fascist French anthropo logist and
a m ember of Permindex .
: The I LA circles are the Mexican "n o bility"-the
peo ple who for generations have been running drugs,
terrorism, and now, enviro nmentalism i n an effort to
prevent Mexico from m aturing into a fully-i ndustrial­
ized, m o dern republic. And one of t heir chief assets is
Jo rge Castaneda .
EIR June 24, 1 980

Castaneda speaks . . .
but not for Mexico
On June 6, Mexican Foreign M inister Jorge C astaneda
presented the keynote address to the Annual Conference
of the Council on Foreign Rel ations in New York on the
topic " M exico and the United States : The Coming Dec­
ade."
The Council on Foreign Relations is the command
center for advanced destabilization efforts against his
nation, coordi nated by C F R Proj ect 1 980s "human
rights" director Richard Falk and leading C F R policy­
makers Zbigniew Brzezinski and H enry Kissi nger . He
made no mention of such acti vities.
Despite adherence to Lopez Portillo guidelines con­
cerning a strict "oil for techno logy" framework of oil
exports, Castaneda deviated from o fficial M exican policy
in revealing ways i n his prepared text . His i n formal
remarks to the closed-door session h ave not been re­
leased, in con formity with C F R procedures for "confi­
dentiality. "
Here are key passages and commentary:
Castaneda : "We are determ ined to continue our efforts
aimed at establishing and consolidating a New I n tern a­
tional Eco nomic Order . . . The present-day crisis is, in
fact, an expression of the in adequacy of a system based
on the concentratio n of power and wealth; a system
which presupposes and lends itself to situations of hege­
mony and subordination, opulence and misery . "
Mexico : Castaneda ' s version o f the New I nternational
Economic Order is the redistributionist, "North versus
So uth " one of the Brandt Commissio n . It has n othing to
do with Mexico's long-standing conception o f a New
I nternational Economic Order as ajoint p roj ect of North
and South centered around development and transfer of
advanced technology.
Castaneda "If Mexico seeks to contribute to the estab­
lishment of a new international order, it does so because,
aside from intrinsic merit, it sees in that o rder a symbol
of its own place i n the world, its political in dependence
and a definition of its international personality . "
EIR J une 24, 1 980
Mexico : C astaneda presents the New I nternational Eco­
nomic Order as a good idea which Mexico favors because
it enhances M exico ' s aspirations to play a more impor­
tant role in world affairs. For Lopez Portillo, as he
repeated with the utm o st emphasis at every stop of his
recent European tour, the question o f the New I n terna­
tional Economic Order is the urgent question of averting
im minent therm onuclear war. Lopez Portillo's a nalysis
in Europe of how regional conflicts are no longer circum­
scribed but lead rapidly to fro ntal confrontation of the
superpowers reveals acute awareness of CFR and Trila­
teral Commission "co ntrolled disintegratio n " policy .
Castaneda made n o t the slightest allusion to this intense
war-avoidance strategy .
Castaneda "With those countries that h ave reached a
stage of devel opment similar to that of M exico , especially
in the industrial field, we can coo perate closely in order
to develo p j oi n tly technologies m ore adequate to our
situation . . . "
Mexico : "Techno logies more adequate to our situati on"
is code language from the Brandt Comm ission report. It
means de-co upling from the m o st advanced tech nologies
avail able and establishing "South-South," "horizontal"
lines o f interaction which feed confrontation between
North and South .
O fficial M exican policy is clear: the highest technol­
ogies available, from nuclear to ports , capital goods,
steel and m echanized agriculture .
Castaneda : " . . . It goes w ith o ut saying that our diversi­
fication policy in oil sales is not directed against the
United States . . . The sale o f oil to Europe and Japan or
j o int arrangements to process it and sell refined products,
i n fact alleviates pressures on those countries, . . . and
decreases their dependence o n M i ddle East and Iranian
supplies . . . Politically, the depen dence o f Western Eu­
ropean countries and Japan o n Iranian and M i ddle
Eastern oil had an i n direct though important effect on
their attitude regardi ng the im position o f economic sanc­
tions on I ran, and conti n ues to affect their outlook on
the whole range o f M i ddle East problems . "
Mexico : This is the m ost extraordinary passage of the
speech . He essentially asserts that Mexican policy is to
help the Carter admi nistration line up the Europeans and
Jap anese behind Carter con fron tationist dictates, and to
stop i n dependent European i nitiatives to replace the.
Camp David fiasco .
Nothing could be further from actual M exican poli­
cy, as asserted by Lopez Portillo i n Europe . Lopez Por­
tillo gave unco nditional backing to French and West
Germ a n war-avoidance initiati ves, including Giscard ' s
trip to Poland, and lam basted t h e "hegem onies" -the
U . S . and the Soviet Union-for b reakdown i n detente.
Intern ational 45

The escalating crisis in the occupied West Bank territory,
coupled with the scandals and fanaticism em anating
from the government of I sraeli Prime Minister M ena­
chem Begin, has brought I srael to the worst danger point
in its history .
A leading political analyst at Israel' s Hebrew U niver­
sity , Dr. Ehud Sprinzak, warned last week that Israel was
entering a period identical in most respects to the French
crisis over Algeria from 1 959 to 1 962. "Once you have
such a war in which the m ain population-in France or
in Israel-does not have a consensus, this may destroy
the conscience of a nation," Sprinzak stated. "This con­
flict brought the Fo urth Republic dow n . I t may b ring
down the Israeli republic."
Such as possibility was un derscored by statements
made last week by Agriculture Minister Ariel Sharon, a
supporter and suspected funder of the activities of the
Gush Emunim settlers on the West Bank . "The security
of I srael is more important than the Constitutio n," Shar­
on declared , according to the English-language Jerusa­
lem Post.
High-level sources i n the Israeli Liberal Party, a
component party of the ruling Li kud coalition, took
Sharo n's words seriously enough to o bstruct for now
Sharo n's wish to s ucceed Ezer Weizman as I srael ' s De­
fense Minister, since " from that position, Sharon would
gain the capability to carry out a coup d' etat . " A faction
of the Liberals threatened to resign from the government
if Begin appointed Sharon to this post.
With opinion p olls confirmi ng Begin ' s unpopularity,
the government is now held together only by the venality
and opportunism of leading political figures who have
the power to bring down the coalition overnight. Exem­
plary of this problem i s Yigal Yadin, deputy premier and
46 I n tern atio n a l
Photo: I I Settimanale
head of the Democratic Movement for Change. In a June
6 interview with the Jerusalem Post, Yadin stated: "I
understand that people w ant this government to fall, and
therefore they flOW focus m ost of their attention and
attacks, on us-on me-because they know that we can
bring it down [by withdrawing from the ruling coalition ] .
They think: the hell with Yadin; he could bring the
government down . W hy doesn' t he do it? I understand
that. . . . It would be easy enough for u s to do that. . . .
But, as I always say to my party, we have to think about
the morning after the night before . "
With Begin free to encourage them , the most wild­
eyed extrem ist elements in I srael have gone on a mobili­
zati o n . Not only has anti-Arab violence increased on the
West Bank, but assassination threats are now being
regularly issued against Israeli Jews, i ncluding mem bers
of Parliament, who advocate discussions with the Pales­
tine Liberation Organization and the creation of a Pal­
estinian state next to I srael .
Of course, m a ny people a re aware that Menachem
Begin started his p olitical career as an Irg un terrorist.
Not so many peop l e are aware of the much broader,
"intern ational terrorist" apparatus that is un der the
di rect contro l of agencies outside Israel, and with which
Begin' s Irgun b ackground is intim ately mixed up . As
developments on the West Bank establish, from the point
of the resignation of defense mi nister Ezer Weizman,
po litical developments within I srael h ave deprived the
present government of any ch aracter but that of terrorists
and assassins who are an adjunct of those foreign agencies.
M enachem Begin ' s government, from all appearances, is
an adj u nct of the same organization that used the Secret
Army Organization (OAS) of France and Algeria as a
conduit to run assassination operations against French
EIR J u n e 24, 1 980
President Charles de G a ulle in 1 959-62 . This organiza­
tio n , known as Permindex , was established by New York
mobster lawyer Roy Cohn, by high-level factions in U . S .
Army a n d A i r Force intelligence, a n d b y extremist Zi­
on ists and ex-Nazis . It has served as a protection and
assassination agency in the service o f various Itali a n ,
Swiss, and " H apsb urg" ban king fam ilies i n con trol o f
the international drug fl o w a n d m uch o f t h e political
terrorism that has erupted i n Europe over the past few
years .
A " Permindex angle" on the Begin government can
begin to explain why so many scandals are festering
around the government, and second, why n one o f these
scandals has yet been allowed to emerge fully into the
light of day . It also may explain , beyon d the usual
"ideological" interpretations o f Begi n ' s policies , why the
government is acting i n such kami kaze fashio n . The
Begin government, like certain Coptic families in Egypt
and the Falangist-connected Maronite families i n Leba­
non , is acting as an i ntegral part of the network put in
place by Europe' s "black nobility" to control its banking
and crime i nterests in the vital M iddle East regi on.
Prelimin ary investigations into the " Permi n dex an­
gle" invo lve the fo llowing suggestive leads:
• Begin ' s mentor, Vladimir Jabotinsky, the 1 920-
1 940 head of the extrem ist " Revisionist" wing of the
Zionist movem ent, was cultivated by banki ng-related
Italian and Swiss i nterests before he led Zionist opera­
tions in eastern Europe. Jabotinsky later became a close
collaborator of the oligarchical House of Savoy i nterests
in M ussolini's fascist Italy during the 1 930s.
• In the 1 950s, as the A lgeria crisis began to peak ,
Begin ' s Herut Party , it h as been charged, provi ded logis­
tical support for the "wetwork" attempts against de
Gaulle and his collaborators and for coup attempts
against de Gaulle' s government. These allegatio n s came
up in official French investigations into treasonable ac­
tions by Generals Challe, Bidault, et aI . , and of H aps­
burg-con nected anthropologist Jacques Soustelle, who
has always m ai ntained close ties to the Begi n grouping.
In the same general line of investigation, one banking
source with intimate ties to the H ungarian wing of the
"black nobility" repo rts that Begin had made a secret
trip to North Africa during World War II and became
acquai nted with OAS-related networks at that time.
• Interest in the Begin-OAS connection has been
reawakened by reports from France earlier this mo nth
that French authorities have decided to indict in absentia
mobster Sam uel Flatto-Sharon, currently a parliament
member and Begin supporter in Israel's K nesset . Flatto­
Sharon has been officially accused of em bezzlement and
other swindles relating to il legal real estate transactions,
EIR J u ne 24, 1 980
b u t his activities are known to extend i n t o drug-traffick­
ing and support for terrorism . He has been named i n the
Jerusalem Post, the K n esset , and elsewhere i n Israel as a
lynchpin of o rgan ized crime . Nevertheless, the Begin
government has stubbornly refused to i n vestigate his
activities . One explanation fo r this is that s ubstantial
sums of mo ney accompanied Flatto-Sharon when he
escaped from France in 1 973 and came to Israel; the fund
o rigi nated mainly from Basel, Switzerland, a primary
base for Permi ndex laun deri n g operations.
• Dirty money i s also the source o f suspicions sur­
ro unding Israel ' s Energy M i nister, Y i tzhak M o da' i . Be­
fore becoming active in the ruling Likud coalition,
Moda'i m a n aged the Israeli branch o f Revlon I n terna­
tional, a subsidiary of the giant ITT conglomerate often
investigated by drug enfo rcement authorities for laun­
dering drug revenues. A senior vice-president o f Revlon
International, Jay Ben nett, was with the U . S . Air Force
and with Schenley I n c . l i quor interests during the 1 947-
5 5 peri od when these two entities were sponsoring Roy
Cohn and various intell igence o perations later i ncorpo­
rated i nto Permin dex when the latter was created in 1 95 9 .
Weizman: 'Israel is
hitter and depressed'
In his letter of resignation as Defense M i nister
of Israel, Ezer Weizman m ade some un usual public
accusati o ns which reveal the depth o f the cri sis in
Israel . Excerpts from this letter follow:
" H erewith I submit my resignation as a mem­
ber of the Israeli Cabinet. . . .
"On the issue of peace with Egypt, I am not
reconciled with the government' s policy. The path
fo r strengtheni ng and solidifying peace is obvious­
ly wide open, but has not been taken . . . . I n its
years o f independence the Israeli nati o n has known
its ups and downs, times o f ebb and flow. However,
it seem s it has never been as bitter and depressed as
it has been in the last few years . Its spirit did not
collapse because of difficulties and m i series , but
b e c a u s e of a l e a d e r s h i p s o w i n g g l o o m . . . .
Through true leadership, another spirit co uld h ave
been ign ited and the vast potential we possess could
have fo und its expressions . . . . There, Mr. Prime
M i nister, you had a rare opportunity. H o wever,
you missed i t ."
I n ternational 47
Italian elections: Cossiga finished?
by Vivian Freyre Zoakos
The highly disputed n ational Italian administrative elec­
tions of June 8-9 ended without provi ding the results
hoped for by the ruling government coalition o f Chris­
tian Democrats and Socialists led by Prim e M i nister
Francesco Cossiga. Primarily these can be summed up i n
two points: neither d i d t h e Comm unists continue the
downward slide at the polls that had plag ued them since
1 976, nor did the Socialist coalition p artners show a
dramatic increase in popUlarity despite strenous back­
room dealing.
Among Cossiga's backers who must have shared his
disappointment is President Carter. Carter had person­
ally i ntervened in the Christian Democratic conference
of last February to throw American m u scle behind Cos­
siga in a close race with the other contender for the
premiership, Giulio An dreotti. The h ope of Carter and
other cothinkers s uch as the American A mbassador to
Rome Richard Gardner-who i s i ntermarried with the
Venetian black nobility-centered o n a major defeat for
the Comm unist Party. Such a defeat would h ave inevita­
bly set i nto motion inside the C P a process o f opposition
to the policies of its general secretary, Enrico Berlinguer,
which would have soon en ded with Berlinguer' s rem oval
from power .
Enrico Berling uer is the prim ary tactical ally of Giu­
lio Andreotti, Cossiga' s leading factional opponent
within the Christian Democracy . An end to Berlinguer
would soon finish the political aspirations of Andreotti .
Carters's violent oppositi o n to the latter can be
understood when one considers that An dreotti i s the
acknowledged closest ally of West Germany and France
i nside Italy, sharing these countries' commitment to a
policy of East-West cooperation and a revamped mone­
tary system backed by gold.
I n fact the Communist vote dropped by a mere . 3
percent relative to the 1 979 elections. T h e d r o p i n votes
came from the south, traditionally not a Comm unist
stronghold. But in the center and north, the areas of
historically core labor support for the CP, the Commu­
nist vote held steady . This was a definite reversal o f the
trend which saw the CP lose votes con sistently ever since
48 I n ternational
the a ll-time h ighs of the 1 97 5 and 1 976 elections. The
PCI thus rem ains the second l argest party with 3 1 . 7
percent of the total vote, o n ly 4 . 8 percent lower than the
ruling Christia n Democrats. It is now being widely ac­
knowledged among press and insi der political spokes­
men that Berlinguer ' s position and his policy of alliance
with the Andreotti layers will not be challenged .
The Socialists, Premier Cossiga' s coalition partners,
recovered .7 percent o f the vote relative to 1 97 5 and 2 . 7
percent with respect to 1 979, leaving them with a 1 2 .7
percent total. But even these fig ures are deceptive.
The Radical Party, Italy' s i n famous libertari ans and
founders o f the Italian gay rights and environmentalist
movements, deferred fro m running in these elections,
instead making a deal with the Socialists . I n exchange
for Soci alist support of their causes, the Radicals p ledged
their vote to the Socialist Party. In 1 979, the combined
tally of Socialist and Radical votes was 1 3 .4 percent-a
ful l .7 percent higher than the Socialists received this past
weekend. Hence either the Radicals' constituency refused
to vote Socialist or, more likely, there was a dramatic
drop i n the Soci ali st vote which w as o n ly partially made
up by the Radicals' throwing their weight behind them ;
The Christian Democrats went down from 3 8 . 1 per­
cent in 1 979 to 3 6 . 7 percent l ast weekend. This figure
however i s seldom cited in the press, including the inter­
national press which has generally supported Cossiga .
What is typically only mentioned is that in comparison
with 1 97 5 , when the Christian Democrats h ad slipped to
a poor 3 5 .2 percent, they have now made a recovery of
1 . 5 percent.
But the real significance o f these elections m ust be
sought behind the simple arithmetic of vote tallies. As
the J u n e 8 i s s u e of the widely circulated m agazine
['Espresso n oted , the elections took place at a time when
for the first time i n the h istory o f the Italian rep ublic both
the Prim e Minister and the n u m ber two man of the
Christian Dem o crats were facing serious crimi n al accu­
'satons .
Christian Democratic vice president Carlo Donat
'Cattin , who had p layed a key role i n Cossiga's victory
EIR J u ne 24, 1 980
over Andreotti at the party congress, w as brought before
the Parliament's Commission of Enquiry in M ay to
answer charges that he had been complicit in aiding a
known terrorist to escape the po lice. The i ndividual i n
question was D o n a t Cattin' s o w n s o n M arco, a promi­
nent member of the Prima Linea terrorist gang and
wanted for com plicity i n the 1 97 8 kidnapping and m ur­
der of Aldo M oro, former Prime M i nister and soon-to­
be President of the Republic.
Furtherm ore, Premier Cossiga himself was named by
a captured terrorist and close friend of the yo ung Donat
Cattin as the individual who abused his positi o n to tip
off Senator Donat Cattin that the police were closing i n
on h i s son. Cossiga is also accused b y the s a m e witness of
havi ng promised the Senator that he would do the utmost
within his govern mental powers to keep secret the deeun­
ciations made against M arco Donat Cattin as a terrorist
leader.
I n M ay, when Senator Donat Cattin was brought
before the Parliamentary commission, he attempted to
cover for Cossiga by putting out first one then another
story as to how he learned that his son was being sought
by the police. Eventually he broke down and began
crying before the com missioners . The decision was then
made by Cossiga and his allies in the Christian Democ­
racy to m ake Donat Cattin the " fall guy " , forcing him to
resign his position as party vice presi dent. At the same
time Cossiga himself was brought before the Parliamen­
tary commission so that they might decide whether suf­
ficient evidence existed to put the prime minister through
a form al impeachment proceeding . By a n arrow margi n ,
t h e commission absolved Cossig a . Not s urprisingly, the
vote split directly along party lines, with the Socialist and
Christian Democratic commissioners absolving Cossig a .
Their combined vote meant a m aj ority .
It was fervently hoped at this time that the issue
would be dropped and, with Donat Cattin sacrificed , the
Cossiga government would be allowed to co nti nue un­
mo lested.
But the Communist Party un der Berlinguer ' s direc­
tion refused to let the m atter drop . The Comm unists
announced that they would circulate a petitio n i n Parlia­
ment to force impeachment proceedi ngs to take place .
For this to succeed 3 1 8 signatures are necessary, a figure
easy fo r the PCI to m eet.
Days after this announcement the election began. It
is notable that Berlinguer ' s Christian Democratic ally,
Giulio An dreotti , waited until the last possible moment
before making a brief statement to the effect that the
government should not be attacked i n a peri o d of inter­
national crisis. The Comm uni sts m eanwhile focused its
electoral campaign not agai nst the Christian Democratic
Party as such, b ut against Cossiga and his cronies . While
the CP used the terrorist issue vigorously in the cam-
EIR J u ne 24, 1 9 80
paign, they also bro adened it to focus o n the overall
po licies of the Cossiga admi nistration, p articularly in the
area of foreign policy . C ossiga had i n fact become, next
to British Prime M i n i ster M argaret Thatcher, the strong­
est supporter of President Carter' s war-mongering poli­
cies in Europe. The Communists thus called for a return
to progressive leadership within the ruling Christian
Dem ocrats, with the example of France and West Ger­
m any i n foreign policy looming in the backgro und . Italy,
under Cossiga, had with�rawn i tself from Europe to
become i nstead the sole proponent on the continent of
the extraordin arily dangerous doctrines of the American
administrati on .
Because the vote was inconclusive in m o st ways, it i s
difficult to m a k e easy p redicti ons a b o u t t h e immediate
future. If, for example, the Christian Democrats had lost
heavily this would have been i nterpreted as a clear con­
demnation of Cossiga thus forcing his resignati o n . I f the
Commun ists h ad lost heavily, this would have been read
as a definite attack on the Berlinguer leadership and
possibly other C Pers closer to the views of Co ssiga would
have em erged in the foreground . It is hardly worthwhile
to speculate on a large Soci a list victory, since the likeli­
hood of such a situation was nil .
While C ossiga has been accused of helping a terrorist
escape, the Socialist Party for the past year has been
linked to the leading terrorist controllers of Italy and
discredited among all b ut the hard core that m a kes up its
permanent constituency p lus the lumpenized and degen­
erate strata behind the Radicals . In point of fact, m o st o f
t h e Socialist Party leadership , a n d especially those now
holding portfolios in the Cossiga coalition government,
have the most unsavory con nections to the "black nobil­
ity , " to the "black nobility" intelligence service called
the Jesuit Order by those who p refer to n ame it according
to its church-cover, and to all that accompanies the
"black nobility" and the Jesuits-drug-running, terror­
ism , assassin ation and political destabilizatio n . Thus, no
one knowing the truth of these m a tters was the least bit
surprised to fin d one o f the architects of this government,
Donat Catti n , protecting a p olitical assassin within his
own family.
The Communists h ad vowed befo re the voting began
to carry thro ugh with their impeachment of Cossiga
when the electio ns had ended. I f they do i ndeed follow
thro ugh on this, with the backgro und s upport o f An­
dreotti and his allies among the carabinieri and anti­
terror m agistracy , they can collapse the government,
discredit the allies of the Prime M inister, and help to
reopen the channels for an eventual return to p ower of
G i ulio Andreotti or a nother m ember of his circles. The
i ssue then is one of political dirigis m , not arithmetic.
And the future of Europe could depend o n what these
forces deci de to do .
International 49
DatelineMexico by
Sir Keith strikes out
Britain has largely been excluded from Mexico 's aggressive
foreign economic strategy and Sir Keith Joseph only
managed to remind Mexicans why.
Even blase Mexican journalists
were left s peech less last week d ur­
ing the M e x i c a n v i s i t o f B r i t i s h
i n d ustry m i n ister S i r Keith J o ­
seph- n o t because o f h i s lordly
pretentions-but because of what
he said. Mexican officials were so
shocked that one later commented ,
"Did that guy k now what country
he was speaking in?"
Sir Keith visited M exico June
3-6 to express " England's renewed
interest in M exico" and beca use he
felt that England is " falling behi nd
Europe" in economic cooperation
with M exico . I t was hardly a suc­
cessful exercise in "catch- up . "
Speaking o u t against M exico ' s
industrialization plans, H i s Lord­
ship declared that "by acquiring
expensive and sophisticated tech­
nology which carries with it exces­
sive indebtedness, Mexico is taking
the wrong r oa d . " The n ext d a y
Mexican businessmen angrily re­
futed Sir Keith ' s pompous advice.
" M ex i c o ' s devel o p m e n t h a s s u­
perceded the stage of prim ary tech­
nology ," Juan Jose M o reno Sada,
vice p r es i d e n t of the N a t i o n a l
Chamber o f Processing I nd ustries
(Canacintra) told the press. Ques­
tioned on Sir J oseph' s statements,
M o reno Sada s a i d , "the time i s
past when they used to sell us
obsolete tech nology . " O n the dan­
ger of indebting the country, M o r­
eno Sada recommended that the
British minister not worry: "We
have to accept progress with all its
advantages and risks . . . "
50 I n tern ati onal
Josefina Menendez
The minIster met with Presi­
dent Lopez Portillo, the commerce
a n d fo reign relat i o n s m i n i s t e r s ,
and t h e director of S I D ER M EX,
the state steel company . H e also
had a private dinner with the M ex­
ican busi ness secto r where he gave
them a lesson o n how the English
private sector, after World War I I ,
w a s s o con fi dent that t h e s t a te
could solve all problems , that Brit­
ain suffered serio us defeats in its
struggle to win the peacetime eco­
nomic war. H e detailed how the
busi nessmen , o n beco m i n g c o n ­
scious o f their role, ended u p re­
no uncing protectionism . The im­
p lied criticism of M exico's recent
decision to stay out of GATT was
n ot lost on his listeners, nor was it
appreciated by the many business­
men who supported the decision
As m ight be expected, Sir Keith
left without getting even promises
from the M exican government. H e
said that h e w a s n ot expecti ng any­
thing concrete, but "only to create
p roper conditions" for British in­
vestments in ports, and especially
in the second state o f the Las Tru­
chas steel complex (whose first part
was p artially b uilt with British fi­
nancing) . M exican p olitical ana­
lysts suggested that although Sir
Keith is "an extremely clever pol­
it ici a n " a n d "very i m p ortant i n
E n g l i s h p o l i t i c s , " a g r ee m e n t s
would n o t b e signed until British
foreign secretary Lord Carrington
visits i n A ugust.
Nevertheless, a Mexican offi-
cial told the EIR that i f Britain's
o fficial policy toward Mexico is­
as it i ndeed seems to be-the one
expressed by its ind ustry minister,
it was a foregone conclusion that
Lord C arrington's visit will be a
failure. With this assertion, the of­
ficial proved what w a s a l ready
"general opinion" in M exico: the
M exican government places its re­
lations with B ritain near the bot­
t o m o f i t s p ri o r i t i e s . T h i s w a s
shown on L6pez Portillo ' s recent
trip to Europe, in which he stud­
iously avoided the British I sles.
And, although Leopold Roths­
ch i l d , d i recto r of N . M . Roths­
child & Sons, Ltd . , himself visited
us last January to express the great
interest of Britai n ' s biggest busi­
nessmen in investing to "help solve
the bottlenecks" o f the Mexican
economy, Englan d's "new offen­
sive" launched by Sir Keith has yet
to gain m uch ground.
A s o ne so urce p u t i t , unless
Lord Carrington were to pull out
s o m e s o rt o f " b l a c k m ai l , " " i t ' s
hard to see h o w w e could agree o n
important business deals . " Mexi­
co's ambassador in London, Juan
Jose de Olloqui , disagrees with the
pessi mists. Before Joseph's trip, he
spoke repeatedly o f "the great op­
portunity" Britain offered M exico .
But it's worth recalling that M r .
d e Olloqui w a s recen tly dem oted
from the U ndersecretary of For­
eign Relations post and p arked at
the Co urt of St. James to soften
the blow .
What it all comes down to is
that M exico is a nation fully com­
mitted to the rep ublican fo rm of
capitalist ind ustrial development .
What "great opp ortunity" could
be offered by Britain? It is a coun­
try still feudalist on all imp ortant
issues .
EIR J u ne 24, 1 980
Middle East Report
What was Ramsey Clark doing in Iran?
Ramsey Clark is guilty of more than defying a government
ban on travel to Iran; h e 's funneling Iranian money in to
terrorist groups in the United States.
F ormer Atto rney General Ram­
sey C l ar k ' s "sympathy" fo r t h e
I ranian dictatorship o f Ayatollah
K homeini is noth i ng b ut a cover
for C l ark's coordination o f terror
in the U . S . and abroad, according
to exiled I ran i an so urces .
The Free V oice of Iran, a clan­
desti ne radio broadcast i n to I ran
by exiles opposing the K homei n i
regime, issued a report on Clark's
visit to Teheran earl ier this month
to a t te n d a c o n fe r e n c e on t h e
"crimes o f A m erica" against Iran
under the Shah. The report notes
that "immediately after the s uccess
of K homeini , C l ark has reg ularly
rece i ve d l a rge s u m s of m o n"ey
through I ran's M i n istry o f Foreig n
Affairs to arrange pro- K homei n i
dem onstrati o n s " i n t h e U n i ted
State s . I t n o tes t h at C l ar k h a s
"used part o f h i s millions o f dollars
he received to publish p ro- K ho­
meini pamphlets and publications
in the U nited States a n d has paid
black groups, American comm u­
nist and leftist student organiza­
tions in order to stage p ro- K ho­
meini demo nstration s . "
These al legations p l us C l a r k ' s
known past history of supporting
radical political groupings i n the
U.S. suggests that C l ark may have
been coordi nating u rb a n terror
and civi l un rest in the U . S . with
his cl ose confi dant Foreign M in ­
i ster Sadegh G h otbzadeh . S i n ce
Clark is known to sti l l m ai ntai n
the post o f White H ouse Special
En voy to Iran, Clark ' s presence i n
EIR J u ne 2 4 , 1 980
by Robert Dreyfuss
I ran further con fi rms EIR ' s past
documentatIOn of the fact that the
Carter a d m i ni stration b ot h i n­
stalled and currently backs the fa­
natical K h omeini regime. Secre­
tary of State Edm u nd M uskie con­
firmed that Clark was o n a covert
m i ssion for the White H o use d ur­
i n g an i n terview t h i s wee k w i t h
M eet T h e Press where h e termed
C l ar k ' s trip "part of the process of
i n direct d i plom acy now o ngoing."
The "outrage" expressed by both
the adm i n istration and the m aj or
A merican m ed i a close to the W h ite
H o u se over Clark's defiance o f a
government ban o n travel to I ran
is but a vei l the O v a l O ffice is
attempting to hide behin d .
T h e Free V oice of I ran which
speaks for the republ ican opposi­
tion associated with fo rmer Pri me
M i n ister Shahpour Bakhtiar con­
tin ued to beam its exposes o f Clark
and G h otbzadeh throughout the
co urse o f the conference. This pro­
pagandistic offensive might have
contrib uted to the strik i ng den u n ­
ci ation o f C l a r k as a " R u d o l p h
Hess" sty le A m erican agent b y the
I ranian media controlled by the
powerful I slam ic Republican Party
( I R P) . The I R P has been at odds
with G h o tbzadeh and Pres i de n t
Bani Sadr over control o f Iran's
disintegrati ng po litical structure.
On J u n e 3, Free V oice of I ran
reported that as early as 1 963 "one
of the persons who had very close
conn ecti o n s w i t h h i m ( G h o tb­
zadeh) w as R a msey C l a r k , w h o
was the representative o f A m nesty
I n ternational i n the affairs o f I ran
. . . Ghotbzadeh received a large
salary from this o rganization a l so
as an advi ser to Ramsey C l ar k . "
T h e broadcast reports that prior to
G hotbzadeh beco m i n g a " d isci­
ple" of C l ark he was a protege of
State Depa rtment envoy Richard
Cottom who put G hotbzadeh "in
contact" with Briti s h Intelligence.
C l a r k ' s fun n e l i ng of I ra n i a n
m oney into dissident groups i n the
U nited States is only a small p art
o f his subversi ve activites. The EIR
will soon release a report docu­
menting Clark's longtime control
over urban youth gangs, terrorists
and ins urgents .
Democratic presidential candi­
date Lyndon La Rouche issued a
public statement on Clark's trea­
sonous voyage to I ran in which he
asserted t hat i f t h e truth were
k n own o f w h a t C l a r k w a s really
d o i ng in I r a n n e w r e ve l a t i o n s
wou l d surface with respect t o in­
tern a t io n a l terror and the c o m ­
mens urate conspiracy to i mpose a
"new dark age" for which K ho­
meini stands.
I n recent days i n Washington
immig ration and law enforcement
agencies h ave beg un to probe i n to
the Clark dep loyment and illegal
entry o f prom inent Iranians asso­
ci ated with the K homei n i regime
into the U . S . Just before C l a r k
arri ved i n I r a n , two members o f
the K homeini government, a n ad­
visor to Bani Sadr and the gover­
nor of the provi nce of A zerbaij an ,
somehow entered the U . S . and at­
tended a co n ference of the M uslim
Student Association in Ohio. The
M SA i s a gro up which both Clark
and G hotbzadeh hel ped create out
of which both American a n d for­
eign terrorists have emerged.
I n ternational 51
International Intelligence
Asia
Ohira 's death reshapes
LDP fight
The sudden death of Japanese Prime
Minister M asayoshi Ohira June I I has
opened wider the opportunity for the
coalition of former premiers Takeo Miki
and Takeo Fukuda to regain control of
Japanese policy. Prior to h i s death,
Ohira and his " dirty money" ally, for­
mer Prime Minister Kakkuei Tanaka
still had the upper hand in determinin g
Ohira's successor. Business leaders who
opposed Ohira's toadying to Washing­
ton had feared that turmoil within the
ruling Liberal Dem ocratic Party (LDP)
would wreck the party's thin maj ority in
the June 22 elections.
Following the death of Ohira, H enry
Kissinger's " favorite Japanese," the sit­
uation has opened up . There is no clear
successor for control over Ohira's fac­
tion, not even Trilateral Commission­
s upported Kiichi M iyazawa; and the
faction's alliance with Tanaka is also
weakened . The busi ness choice for prime
minister appears to be Toshio Komoto,
candidate of the M iki-Fukuda faction
and a strong supporter of fusion power
development and industrial growth .
S tate Department U ndersecretary
for East Asian and Pacific A ffairs Rich­
ard Holbrooke commented on the Prime
Minister's death: "We may have valued
him more than his countrymen ." Wash­
ington will push hard to install Miya­
zawa as Ohira's successor.
Middle East
New violence threatens
West Bank
Two weeks after assassin ation attempts
�gainst leading Arab mayors and polit­
Ical figures, the West Bank is on the
brink of renewed, escalated violence.
52 International
D uring the p a s t days, i n c i d e n t s h a v e
occurred presaging such violence in­
cluding a sniper-sQooting of an I raeli �
Israel economic situation
policeman and the discovery of several 'ripe for a COUp '
land mines in densely populated areas.
I sraeli army units have also made their I srael's economic situation has entered
a phase "w � ich many political analysts
first incursion into Jordan in almost a
decade to the east of the occupied ter­ would describe as theoretically ripe for
a coup, " the London Times reported
ritory, in pursuit of alleged terrorists.
June I I .
Acco r d i n g to the J u n e , i 9 80 Le
I n an article entitled, " I s I s rael ' s
Monde Diplomatique of France extre­
mist elements in the Gush Emu im fa­ � Economy O u t of Control?" Times re­
porter Christopher Wal ker notes that
natic movement, with covert support
the release o f recent econ omic indicators
from the government of M en achem Be­
by I srael's central bank have shown that
g i n , a re trying t o engineer a m as ter
"the annual inflation rate was now well
scheme in which hun dreds of thousands
of Arabs w oul d be forci bly expelled
over 1 20 percent and that Israel had
overtaken Argentina to lead the world
from the West Bank .
inflation league."
According to the paper, many G us h
leaders "hope to create an atmosphere
� he. crisis has been exacerbated by
the InSistence of Israel's annexationist
o f unrest that would facilitate the ex­
Finance Mi nister, Yigal Hurwitz, that
pulsion of the Palestinians from the ter­
I srael keep up high levels o f spending
ritories . Appeals for the eviction of the
" devoted to expanding costly Jewish
i n h abitants of the territories are no
settlements on occupied A rab land . "
longer taboo . "
G ush E munim leader H anan Porat
�
C � u� led wit hyperinflationary money­
prIntI ng deVices and an astronomical
said: " R iots between Jews and Arabs
defense budget this has created a situa­
will no longer be avoided. These riots
tion in which Israeli citizens have been
will prove that Jews and Arabs are not
forced to make '''moonlighting into a
capable of living together and will lead
national pastime."
to the expulsion of all the A rabs . "
Walker notes that Hurwitz's answer
According to Le Monde Diploma­
to the j ust-released inflation statistics
tique, certain G ush leaders hope that
has been to "order a further round of
"th� Col � War b �comes definitively es­
budget cuts from ministries which had
tablished In the M i ddle East " since then
agreed on their final allocations for 1 980
"it would be possible to pr� voke chai n
reactions that would end in the 'depar­ o n l y a few weeks before . " He adds:
"There is a growi ng body o f responsible
ture' of the inhabitants of the occupied
territories . " economic opinion now convinced that
until the average Israeli is made to suffer
General A h aron Yariv, a fo rmer
head of Israeli military intelligence, re­ the effects of the high level of inflation
more fully, little result can be expected
cently revealed the existence of "certain
projects on the part o f the militant extre­ from the contin uing struggle to elimi­
mists" which involve " utilizing the sit­ nate it."
u a t i o n of w a r to e x p e l 7 0 0 , 000 o r
800,000 A rabs from the occupied terri­
tories ." Yariv has evidence that "certain
means that would permit the realization
of such proj ects" have recently been put
into effect.
Europe
The French paper n otes that " i t
Schmidt: Europe
would b e ' erroneous t o believe that the
G ush Emunim is only a group of dissi­ key to peace
dents . I t enj oys the support of Mena­
chern Begin and of several of his min­ Europe, and particularly the two Ger­
isters led by General Sharon." man states , have an important co ntri-
EIR June 24, 1 980

bution to make toward ensuring world
peace, said West German Chancellor
Helmut Schmidt in a speech in Essen
June 9. Schm idt was addressing a con­
gress of the Social Democratic Party,
kicking off the election campaigns.
S c h m i d t declared that especi a l l y
since the Soviet invasion o f Afghanistan,
tensions in the Third World could create
a superpower conflict that would quick­
ly spread to Europe . Therefore, Europe
must work to bring about a "new world
security system" to prevent war. The
Chancellor praised the role played by
his East German counterpart Erich H o­
necker, who made a speech last fall that
was similar to what Schmidt himself was
saying: that never again should war be
launched from German soil. Relations
between the two German states are by
no means co nfined to mere leg a l or
economic matters, said Schmidt, since
there is also a cultural affinity that has
not been lost despite the division of
. Germany.
The Chancellor said that when he
goes to Moscow June 30, he will discuss
his proposal for a freeze on the deploy­
ment of medium-range nuclear missiles
in Europe, even though so far the idea
has been rejected by both the So viet
Union and the United States.
N-Bomb research leads
to civilian breakthrough
French scientists working on neutron
bomb experiments and testi ng in the
Pacific island of Muroroa have achieved
an important scientifi c b reakthrough
applicable to civilian nuclear power, ac­
cording to exclusive reports in Le Quo­
tidien de Paris June 7 - 8 . The report
comes in the context of a debate over
whether to p roduce tactical neutron
bombs, a proposal opposed by the tra­
ditionalist military thin kers as complete­
ly inappropriate given Soviet military
doctrine.
The reported advance wo�ld remove
all limitations on the scale at which pure
neutron bombs can be generated . While
the impact of this development on stra-
EIR J u ne 24 , 1 980
tegic thermonuclear war fighting is still
debated, most relevant for France is that
this breakthrough can be used to gen­
erate fissile fuel for ordinary nuclear
fi ssion reactors, very cheaply and in
unlimited quantities.
The neutron technology would per­
mit France to use its k nown uranium
reserves-which will be rapidly used up
in the country's extremely ambitious
program for the production of nuclear
electricity-with maximum efficiency .
While ordinarily less than 1 percent of
urani um ore is converted into fissionable
fuel with existing technology, bombard­
ment with neutrons makes possible near
1 00 percent conversion at much lower
costs .
French general
ridicules N-bomb
Entering the debate over whether to
begin production of the neutron bomb
in France, General Pierre Gallois, who
contributed to France's military strategy
under Charles de G a ulle, w arned re­
cently: "The neutron bomb is a form of
Maginot Line . . . It is a typical idea of
. (BA RC) has reported that in May,
generals who want to fight the 1 940 war
over again in 1 980."
General Gallois argued Soviet mili­
tary doctrine rendered a neutron bomb,
designed as an antitank weapon for use
in a conventional war or "limited" n u­
clear conflict with the U . S . S . R . , totally
ineffective . The Washington Post report­
ed June 7, "He pointed out that Soviet
military doctrine does not involve the
massing of tanks for breakthroughs as
in the German blitzkrieg tank tactics of
World War I I . Soviet doctrine involves
the use of tanks to control already con­
quered terrain after the surrender or the
collapse of the adversary following a
strategic n uclear strike."
General Gallois's remarks followed
the proposals of various military figures
and an o fficial report from President
Giscard's electoral coalition, the U D F ,
calling for increased reliance on tactical
nuclear weapons, in particular the neu­
tron bom b .
Briefly
• T H E S I B E R I A N division of
the S oviet Academy of Science
outlined in the J u n e 8 issue of
Izvestia the Siberian "think big"
approach to Soviet economic de­
vel opment, emphasizing large­
scale integrated industrial proj­
ects. The article was written by
Academician V . Koptyug, whose
pred eces s o r G . M ar s h u k n ow
heads the U .S . S . R .'s State Com­
mittee on Science and Technolo­
gy .
• A F R E N CH M A N , interna­
tionally k nown as a commentator
and veteran Atlanticist remarked
June 12 to EIR: "Americans are
so inferior to the Russians that
they have nothing in their pants . "
The n u m b e r- o n e d i s c u s s i o n
throughout Europe, h e said, is
" w h e t h e r t h e U . S . e m p i re is
dying."
• M EXICO has signed a trade
protocol with East Germany en­
visaging a four-fold expansion of
trade by 1 982 period. The agree­
ment includes establishment o f
joint ventures in third countries .
• D R . V. K. ROHATGI of I ndia's
Babha Atomic Research Center
an I n di a n - m a n u fa c t u r e d m ag­
n e t o h y d ro d y n a m i c d e v i c e w a s
successfully tested at Soviet faci l­
ities, pavi ng the way for efficient
use of I ndia's abundant coal re­
serves . The next M H D test phase
is establishment of a pilot plant
similar to the Soviets' U-25, fol­
lowed by a commercial plant at
T i r u c h i in t h e state of T a m i l
Nadu .
• WORLD BANK so urces close
to Robert M cNamara, the bank's
o utgoing president, refused to
confirm or deny reports that the
fo r m e r D e fe n s e Secretary a n ­
nounced h i s early retirement June
9 because he intends to enter the
priv ate sector, specifically the
guano i n d ustry.
I ntern ational 53
�ilill National
The Democrats revolt
against Jimmy Carter
by Kathleen Murphy
At his weekly press conference June 7, the powerful
Senate M ajority Leader Robert Byrd (D-W . V a . ) cau­
tioned reporters "not to jump to conclusions the day or
week after the primaries are over" about who will ulti­
mately become the Dem ocratic presi dential candidate.
"At this point, anything is conceivable," Byrd said,
despite President Carter's technical lock on the nomina­
tion .
Byrd's comments accurately reflect the pandemon­
i um which has broken o ut in the p arty's ranks over the
last two weeks, as it has become inescap ably clear that a
Carter candidacy not only spells certain defeat in the
November presidential elections, but also implies a con­
ti nued commitment to policies that h ave brought the
country to the brin k of econ omic and strategic disaster.
Party regulars as well as the " fixers" -the Eastern
Establishment elite that h as traditionally rigged both the
Republican and Democratic nominations-are now
working overtime to deny Carter the nomination, while
casting desperately about for a viable substitute.
Since the prim aries ended " Su per Tuesd ay," June 3 ,
Carter has been hit with steadily intensi fying attacks
from the media, Congress, and key constituencies within
his own party. This, i n turn, i s feeding into growing
, popular support for an open Dem ocratic Party conven­
tion.
With the Eastern elites now committed to C arter's
political demise, their pr.ess outlets h ave been going after
Carter with a degree o f open contempt not seen since
Watergate. In addition to suddenly rep orting the actual
extent o f p ublic oppositio n to C arter, the media i s also
54 Natio n a l
attempti ng t o convi nce t h e President h e will l ose t o
Reagan in N ovem ber. K nowledgea ble sources s a y this i s
the o n l y way t o force Carter o u t of t h e race .
Both the New York Times and the Baltimore Sun. for
instance, carried similar articles in their June 8 editions
which concl uded , o n the basis of analyzing the primary
results , that C arter would lose to Ronald Reagan several
states essential to a November victory, i ncluding Califor­
nia, Penn syl vania, Texas, Ohio, Florida, and possibly
N ew York .
M ore immediate, h owever, is the revolt against Car­
ter policy which i s spreading throughout the Democratic
Party.
Congress has launched a virtual guerrilla war on
Carter's econ omic policy, which it kicked off last week
by defiantly rejecting C arter' s prop osed oil import sur­
ch arge . As the Washington Post put it: "A Democratic
Co ngress j ust didn't override the Dem ocratic president
fo r the fi rst time in 2 8 years; it registered a gesture of
contempt toward him. That's more than defeat; it's a
humiliation . "
A core gro up of senators, l e d by Byrd, are now
aiming at the heart o f C arter's anti-inflation program :
his tight-m oney policy. In a statement issued June 1 0,
Byrd urged the administration to pressure the Federal
Reserve Board into removing the credit restraints it had
imposed i n M a rch. The d ay before, H o use Banking
Committee chairm an Henry Reuss (D-Wisc . ) , who had
called fo r Carter to withdraw from the p residential race
two months ago , sim ilarly dem anded that the admini­
stration lift the credi t restraints. Reuss warned that unless
EIR J un e 24, 1 980
this were done, he would personally see to it that Con­
gress repealed the Credit Control Act of 1 969.
The Sen ate h as already repealed the act o n the
grounds that, as one Democratic senator put i t last week ,
"it has contrib uted greatly to the current recessio n . "
Significantly , with C ongress blocki ng m o s t of his
major legislative proposals, C arter is being forced to rely
more and more on the extraordinary "emergency pow­
ers" granted the Presi dent by the Credit Control Act.
Thus, Co ngress's threat to repeal the act entirely, as
well as other congressional moves against the White
House, would deprive C arter of his l ast prop . This will
heighten his sense of iso lation and political immobility
an d force him i nto the petty , p aranoid reactions that his
opponents are accustomed to using against him .
Carter' s method of curing inflation by forcing un­
employment up toward the 10 percent m ark and with­
holdi ng vital credit from U . S . ind ustry is not the only
crucial policy area that has provoked congressional ac­
tion . The patent lack of a competent national defense
strategy , brought home hard by the Iran rescue m ission
debacle, has panicked spokesmen for the m ore reality­
rooted military traditionalists i nto taking on the C arter
administration's military policy . They are attacking the
The press on Carter
A sampling of national press coverage of President
Carter follows:
Washington Post, June 8, Columnist H aynes Johnson:
To report that all' s not well along the Potomac is
a bit like telling someone strapped i n the electric chair
that the forthco ming shock m ight hurt. But even in
these sullen times the sense of disarray between Capi­
tol Hill and the White H o use has to be seen to be
believed .
A Democratic Congress didn't j ust override the
veto of a Democratic Pres i dent Friday for the first
time in 28 years; it registered a gesture of contempt
toward him . . . . That ' s more than a defeat, it's a
humil iation .
. . . A careful look at the political map today shows
Carter in peri l i n virtually every section of the co untry,
including his native South . . . .
New York Times, June 6 , op-ed by Tom Wicker:
The fi nal primary round o n Super Tuesday con­
firmed what has been apparent for weeks-that Dem­
ocrats are profoundly unhappy ab out nominating
EIR J u ne 24, 1 980
�scue missi o n , his defense budget, his renomination of
General Jones as Joint C hiefs chairman, and his refusal
to reinstitute the draft in place of the A ll-Volunteer Force
catastrophe .
Out of the Rose Garden,
into the briar patch
The anti-Carter sentiment in Co ngress is j ust a pale
reflection of the overall mood in the p arty and the
country at large . C arter got a bitter taste o f it personally
when he hit the campaign trail June 1 0 .
Even before h e left Washingto n , Carter received a
preview of what to expect w hen he m et with the Congres­
sional B lack Caucus June 9. Though details of their
discussions have not b een revealed , caucus spokesman
Cardiss Collins (D-Ill.) told reporters afterwards: "We
have come away with a feeling o f real disappointment,
disappointment because we feel there are two ships pass­
i ng i n the nigh t . "
Asserting that M r . C arter did not fully understand
"the intensity of the situation" i n the country, Rep .
Collins said that the caucus would meet with Carter i n
two weeks t o see i f he is willing to realign h i s economic
policies. I f not, she threatened, the black representatives
Jimmy Carter or Edward K ennedy , so m uch so that
many threaten to bolt either candi date i n the fall . . .
The hard truths exposed by that day o f eight pri­
maries are . . . Mr. C arter came out looking like a
basket case and M r . Kennedy like a welfare case.
New York Times, June 6, " Europe Looks Askance at
Choice for U . S . President," by R . W . Apple, J r . :
The Spectator, a conservati ve British weekly, car­
ries in its current issue a long editorial assessing the
prospect of a Presidential race between Carter and
Reagan .
" W hat a choice ! " says t h e h e a d l i n e over the
piece-and that sum med up the mood in Western
Europe as the primary season came to an end this
wee k . With some exceptions, Europeans consider the
nomi nating process insanely complex, and they view
the apparent victors as political pygmies unfit to lead
the Western alliance . . . .
The head o f one of France ' s largest corporations
said o f the U nited States, "you lack a man." Frances­
co Izzo, an assistant at N aples University, comment­
ed : "There is no choice; they are both shallow per­
sons . " And Cl aude M o nnier, a prominent Swiss j our­
nalist, rem arked that " m any Europeans ask with stu­
pefaction h ow the biggest and richest power in the
world i s red uced to nomi nating for the country ' s
highest position t w o such w e a k personalities . "
N ational 55
would withdraw their support from the Presi den t .
Leaders of t h e black com m unity who gathered t o
hear C arter defend his urban policy were equally hostile.
" I don't agree with his budget," NAACP national direc­
tor Benjamin Hooks said after Carter's speech . "I still
think his budget has impacted on the poor. "
On the fi rst stop of his tour, M i am i , Carter was
greeted by hundreds of booing demonstrators carrying
placards which read: " H ey, Mr. Peanut M an , we need
more pean uts . " Recently torn apart by violent riots,
Miami officials, to o, were n ot in the mood to hear Carter
self-righteously warn, "It would be a very serious m i stake
to think the federal government would pick up the entire
tab for riot relief. " M i am i M ayor M aurice Ferre p ublicly
termed Carter' s tight-fisted aid offers "bland pablum, a
Gerber' s delight," while the city' s maj o r newspaper, the
Miami Herald, carried a lead editorial titled " Carter' s
Visit Short, Empty." Comparing it to a golf trip to the
city by President Warren G. H a rding i n the 1 920s, col­
umnist Charles Whited wrote: "As the dust settles M o n­
day night fol lowing Jimmy Carter' s q uick blitz o f riot­
shaky Miami, one's first reaction was that H arding's visit
had more substance. At least he had a score . "
While Carter's next stop, t h e annual M ayors Confer­
ence in Seattle, netted him an endorsement by the Dem­
ocratic attendees, reports from the conferen ce indicate
that Carter' s aides had to reso rt to federal funds cutoffs
i n order to secure it. The m ayors, to his obvious discom­
fort, sat on their hands w hen C arter unveiled a new youth
jobs program i n his speech.
Anybody-but-Carter
While it is clear that most D em ocrats are lining up i n
the anybody-but-C arter column , the real unreso lved
question is who will replace him as the p arty's nominee.
Every candidate m ooted in the major press so far is
unacceptable to one or another of the important Demo­
crati c Party interest groups .
Spo kesmen for conservative Dem ocrats are saying
that the two options m ost favored by the East Co ast
liberal elite, M uskie and M o ndale, are out of the q ues­
tio n . As one i nsider put it: "There are people who want
Carter out . . . but their strategy is to work out a deal .
Mondale is being backed by the same people as C arter,
as i s M uskie. We can't accept either because it means the
same policies and the same general danger of war." Sen .
Henry Jackson (D-Was h . ) , another potential contender,
i s unacceptable to the li beral wi ng of the party .
This closed-ci rcui t personnel search with i n the Dem­
ocratic Party has done little to bri ng the nation face to
face with the critical econ omic and fo reign po licy issues
that m ust shape 1 980 presidenti al pol itics if the nation is
to recover from the Carter debacle. Just now, the boys i n
the back room at t h e Council on Foreign Relations are
trying to keep things in the back-roo m .
56 N ational
Congress hits
Carter on
military policy
When Senator J o h n Tower told a n ationwide television
a udience June 8 that the Senate Armed Services Commit­
tee on w hich he sits should i nvestigate the false alarm s
sounded last week by the U . S . air defense network's
comp uter system, Capitol Hill was already ab uzz with
rum ors t h at the com puter's behavior was no acci den t .
T h e alarms i n dicated falsely t h a t a Soviet n uclear attack
was un derway, U . S . forces being placed on high alert
until the report was "co rrected . "
T h e com puter "errors," June 3 a n d again J u n e 6,
came as the admi nistration was drastically foreshorten­
ing the timetable on i ts "China card" policy by publicly
wining-and-dining the chief of the C hinese People' s Lib­
eration Army-and an nouncing sales of military equip­
m ent to Peking for the fi rst time. Some o f that equipment
i s considered an aid to Chinese "nuclearizatio n, " which
the Soviet Union has repeatedly indicated it will not
tolerate, as a matter of So viet national security .
Speculation that the com puter-errors were actually
"simulations" o rdered by administrati on o ffi cials were
fueled when General David Jones , Chairman of the Joint
Chiefs o f Staff, declared they h ad served a "useful func­
tio n , " because they showed the Soviet Union that the
Un ited States is prepared to take action if necessary .
But elite Eastern Establishment po licymakers are
worried about the fact that, contrary to Jones' unsettli ng
statem ent , the U n i ted States absolutely is not prepared
to take action if necessary- U . S . military capability is
very b adly eroded, and u n der Carter military and de­
fense-spending proposals, will only get worse. On cue
from the Eastern p ress, Congressmen began to attack the
admin istratio n ' s defense policy-with Senator Tower's
computer- i n vestigation demand only one of a series.
The first flank against Carter was opened up June 5,
when a "top secret" report o n the Iran-rescue operatio n ,
commissioned b y t h e Senate Armed Services Committee
during hearings begun in April, was suddenly leaked to
major news medi a . The report d isclosed " m aj or errors"
in the operatio n, including inadequate trai ning of per­
sonnel and inadequ ate equipment maintenance, poor
contingen cy planning and execution, bad i ntelligence
and " fragmentation of com m a n d responsibilities . " The
mission comman der was the wrong m a n , and component
EIR J u n e 24, 1 980
commanders "operated in isolation," while " n o one at
the desert site was responsible for m a king decisio n s . "
A second fl a n k w a s opened by t h e same comm ittee,
when it launched a co ncerted fight in Congress to block
the ren omination of General Jones as Joint Chiefs chair­
man . Senators Helms, Goldwater, Tower and Garn have
accused him-accurately enough-of "rubber stamp­
ing" administration proposals, and failing to strengthen
the country' s defense adequately.
Similar criticisms were leveled i n the press against
Robert Komer, Defense undersecretary for policy. The
M ay 3 1 Washington Star called him incompetent, as
proven in his di sastrous V ietnam "pacification" program
in the 1 960s . The Star cited o ne critic on Komer: "He is
like the piano player in the whorehouse. You k n ow, tell
me what you want and I ' ll go play it . "
The All-Volunteer Force, meanwhile, h a s come under
attack in the House of Representatives , whose Armed
Services Committee rej ected Army attempts to white­
wash the scandal over its lack of qualified manpower,
and recalled Secretary Clifford Alexander for a round of
hearings on the issue .
Particular attention is drawn to the Navy, where
critical sho rtages of trained personnel h ave forced ships
to rem ain i n port. Chief of N aval Operations Admiral
Thomas B. H ayward pointed to the decline in a recent
Christian Science Monitor interview . "You can have a
decline for a while and not really h ave a dram atic im­
pact," he sai d . " I t is now reaching a point where the
impact is dramatic."
In Europe, a different revolt
The prob lem is: No o ne of Carter's critics has yet
proposed a competent alternative-and that includes the
Council on Foreign Relations press, like the New York
Times and Washington Post . An added contradiction i n
this mi litary reassessment is that the " C h i n a card," which
threatens to provoke pre-emptive Soviet military action
in Asia and immediately display American weakness to
the world, has yet to come under attack from any signif­
icant quarter in the United States.
The reason is clear: both American military wea kness
and the "China card" are related feat ures of those M al­
thusian eco nomic policies with which Carter ' s critics­
like Carter-have yet to break . The foundation of mili­
tary strength is strong development of scientific research
capabilities , and a strong civilian industrial fo undati o n .
M oreover, a s Carter' s government h a s drastically cur­
tailed both American research program s and industrial
strength, it has pursued the "China card" as a proposed
substitute for the sort of economic p olicies that would
actually provide the U nited States with an in-depth
strategic advantage over the Soviet Union.
By contrast with the criticism in America, o ur Euro­
pean "a llies" have not hestitated to attack the "China
EIR J u ne 24, 1 9 80
card" as a threat to peace in the immediate future.
Europe has rej ected M althusian "co ntrolled disintegra­
tion" econ omics, and the lun acies i n geopolitical strategy
and military policy that accompany it.
Exemplary was the statement by the West German
defense minister Hans Apel to an election rally in Ham­
burg last week. Referring to America ' s alliance with
Peking, Apel spoke of America ' s "incredible adventures
in V ietna m , " and stated bluntly: "Whoever decides to do
that [ally with China-ed . ] is unable to grasp what the
i n ternati onal situation really is today . " The White H o use
should put itself in the pl ace of the leaders in the K remlin,
he conti nued , The Soviet U n i on " feels they are being
encircled . "
Apel also sco ffed at America's cutoff of military aid
to Turkey when that nation invaded Cyprus . "They
should rather have given m ore development aid, like we
did . "
The West German arm y ' s I nspector General, J iirgen
Brandt made equally sharp statements about the "China
card" and N ATO posture more generally. H e told a
meeting of the Rheinland Pfalz state legislature: "The
China card can only lead to war. We m u st keep channels
open to speak to the Soviets after a crisis, which would
become impossible by playing the China card . " The same
official later told an interviewer that American military
prep aredness was extremely poor: "The IQ of a drafted
army is always higher than that of a volunteer force. The
American problem . . . is that behi n d any American
soldier there i s absolutely n o one to be the reserve, since
the U . S . abolished the draft system . The U . S . A . cannot
reach the end of this cent ury witho ut finding some other
way of creating reserves . "
What distinguishes European from domestic criti­
cism of C arter policy is the Europeans" sim ultaneous
attacks on W ashi ngto n ' s mi litary follies, eco nomic fo l­
lies, and geopol itical follies . They are, in fact, insepara­
ble .
But meanwhi le, back in the United States , the criti­
cism of Carter has the same ring of incompetence and
outright lunacy as Carter po licy itself. So, Senator Henry
Jackson and other "hawks" accuse the admin istration of
not really i ncreasing defense spending at all . H o wever,
Jackson and his like do not go beyond what Carter
purports to seek-an expansion of U . S . forces in width,
b ut not in depth. One m ay speak of rebuilding American
military strength-if one also speaks o f restoring the
health of A merican scientifi c research and development
programs , restoring science-oriented education, and
launching an economic recovery based o n high-technol­
ogy capital formation in basic i ndustry . I f one chooses to
oppose or omit such economic revitalizatio n from con­
sideration , one cho oses Carter military and geopolitical
policy, too-wh atever contrary notions one m ay enj oy
entertaining in private fantasy .
N ational 57
 by William Engdahl
Kooks and nukes : They don't mix
A spen had a wonderful strategy to eliminate nuclear po wer,
and with it, they crippled A merican strength . . .
but no one else's.
T he other day, I met a leading
geopolitical strategist of the Aspen
Institute for H u manistic Studies in
Colorado . I have mentio ned Aspen
before. Its chairman and principal
piggy-bank i s "oilman" Robert O.
A n derson of Atlantic R i c h fi e l d .
Anderson thinks m o re l i k e a Brit­
ish peer than an energy prod�cer,
and is a member of the Co uncil on
Foreign Relations .
Although little known, Aspen
is a very imp ortant policy gener­
ating operation-for instance, it
mothered the ideology o f "envi­
ronmentalism . " Aspen has consist­
ently stood for an end to progress
in human affairs; to put it b luntly,
a "New Dark Age . " The institu­
tion h as never issued a single mem­
orandum , proposal or policy state­
ment that I could agree with .
As I spoke with this p articular,
wel l - k no w n pers o n a g e , I w a s
struck by how short-sighted these
" O l y m p i a n " strategists are. I n
1 97 8 , t h i s m a n t o l d a friend o f
mine: "The bloom is off the n ucle­
ar rose. We at Aspen were the first
to develop the argument that nu­
clear energy means weapons pro­
liferation . " He was referring to the
Carter administratio n' s adoption
of Aspen ' s strategy to contain and
eventually destroy nuclear energy.
Carter halted nuclear technology ' S
next generation-the fast b reeder
and spent fuel reprocessing. The
problem I raised to him is that no
one else did.
V i ew i n g W a s h i ng t o n w i t h
58 N atio n al
stunned a m azem e n t , the French
strengthened their com mitment to
nuclear development and now have
the m o s t a d v a n ced fas t b reeder
program in the worl d . The Soviet
Union, eyeing Washingto n ' s ludi­
crous behavior, mobilized a crash
escal ati o n o f their light water,
b r e e d e r , and fu s i o n p r o g r a m s .
West Germany i s now discussing
with M oscow a p rogram for ener­
gy cooperati o n reportedly featur­
ing high temperature gas reactor
applications.
I gently pointed o ut that solar,
b i o m a s s a n d o th e r n eg a t i v e
" O l y m p i a n " e n e r g y s t r a te g i e s
fro m Aspen h a d made A m erica the
world's laughing stock. It is diffi­
cult fo r m a n y people t o believe
that some other people want a
"New Dark Age . " What everyone
sees, h o wever, is that A m e r i c a n
policy is destroying t h e nation . H e
defended himself, b ut was clearly
shaken by the n aggi ng perception
of his organizatio n 's miscalcula­
ti o n s . The w o r l d d i dn ' t bite o n
Aspen policy, a n d the U . S . , be­
cause it d i d , n o l o nger h a s the
technological and i ndustrial base
to launch an effort.
" Carter i s an absolute disaster ,
B rzez i n s k i i s a k n ee-j erk strate­
gist," said the strategist, who i s
tied to t h e Kennedy campaig n . I
pointed out Kennedy ' s antinuclear
record. " Well, you must give us
credit for. our ability to change our
thinking . "
But that's n o t s o easy for our
"Olympian s . " Take the recent an­
tics o f the Friends of the Earth, led
by Amory Lovins, high-priest of
"soft energy p aths . " FOE was cre­
ated with $200,000 of Ro bert O .
Anderson's personal funds . Last
week, Lovins' gro up surfaced in
the middle of a controversy in it­
aly. Some tim e ago, they commis­
sioned a study by " M H B Associ­
ates" o f San Francisco, who al­
leged m aj or seismic dangers in that
natio n 's nuclear plant siting poli­
cies . With help from certain " Rad­
i cal Party" j ournalists, the repo rt
became fro nt-page news in Italy .
Some analysts there have al­
ready po inted out that the report
is incom petent. That ' s no s urprise .
M , H , and B-Minor, H u bbard
and Bridenbaugh-are three engi­
neers who gai ned prominence in
the U . S . several years ago when
they resigned from General Elec­
tric, deno unci ng safety dangers in
the company ' s reactor design . It
t urned out they had undergone a
Damascus Road conversio n to an­
t i n u k ery at a C a l i fo r n i a " c o n ­
sciou sness raising" retreat, whose
resident guru convinced them that
antinu kery is next to Nirvana.
Discredited in America, Aspen
and its Friends of the Earth recy­
cled the trio i nto a European anti­
n uclear road show.
This i llustrates our Olympians'
p roblem . They' ve spent a decade,
and millions of dollars, creating
kook s . How can they now reverse
field without destroying all their
assets? A fter my meeting with one
o f Aspen's leading lights, I had a
far more profound appreciation of
the pathetic predicament of these
self-conceived elite geopoliticians.
They've been in Colorado's rari­
fied atmosphere too long without
productive activity .
EIR J u n e 24, 1 980
Campaign 1980 by Kathleen Murphy
Ed Koch p lays footsie
with GOP
On June 6, New York' s Ed
Koch became the first Democratic
Party official ever to testify before
Republican Party platform hear­
ings . Introduced by Senator Jacob
Javits (R-NY), who characterized
him as someone with "j ust the
right combination of being tough
and being sympathetic," Koch so
impressed the platform committee
with his witty discussion of urban
problems that Republican Nation­
al Comm ittee chairman Bill Brock
invited him to j oin the GOP on the
spot.
Koch ' s appearance at the New
York hearings came the day after
it was revealed that Ronald Rea­
gan's national fin ance chairman,
William Simon, has offered to pull
together Republican support for
Koch ' s reelection bid next year.
" Koch is the best thing that' s hap­
pened to New York since Fiorello
LaGuardia , " Simon told the New
York Times. Whether Simon, who
as Treasury Secretary in the Ford
Admi nistrat i o n , l ed the fight to
deny New York City federal aid,
agrees with Koch ' s publicly stated
desire to "make New York look
like Peking" is not yet known.
EI R J u ne 24, 1 980
Reagan cam p s p lit
on China Card
Sources close to the Reagan
camp report that the former Cali­
fornia governor's top political ad­
visers are divided over how far the
U . S . should go i n beefing up the
People' s Republic of China eco­
nomically and m ilitarily as a flank
against the Soviet U n ion .
A group led by Richard Allen,
the camp aign ' s national issues co­
ordinator, is pushing Reagan to
advocate stro nger U . S . ties with
the PRC. Allen, who told a gro up
of European foreign policy experts
last week t h a t C h i n a s h o u l d b e
con sidered an ally of the U . S . , had
been w o r k i n g closely with J o h n
Sears before Sears' o uster as cam­
paign m anager last February to set
up a tour o f China for Reagan .
O p p o s i n g A l l en ' s effo rt s are
several old Reagan hands, i nclud­
ing fo r m er p r ess secretary L y n
Nofziger and consultants M ichael
Deaver and Peter Hannaford, who
are telling Reagan to stop toying
with the PRC and instead reiterate
his traditional strong support for
Taiwan .
W here Reagan himself stands,
as in m ost things, isn't very well
known. But he could be leaning
toward the N o fziger g r o u p i n g ,
which is certainly where m o s t of
the voters supporting him would
ten d to line up. D uring campaign
appearances in the past two weeks,
Reagan has said several times that
if elected president, he would move
toward reestablishment of " o fficial
relations" with the n ationalist Chi­
nese on Taiwan .
That, according to Allen ' s fac­
tion, would h ave an obvious reper­
cussion on the " China card ," as
Peking would view a warming in
U .S.- Taiwan relations as a rej ec­
tion of the process of U . S . "nor­
m a lization" of relatio ns with the
mainland, not to mention the out­
right military alliance now in the
works .
GOP insiders tell us that it was
Sears and members o f the Allen
grouping who planted a front-page
story in the J u n e 6 Wash ington
Post revea l i n g that the D e aver­
Hann aford public relations firm
has since 1 977 had Taiwan as a
client, in an effort to embarrass
that faction and lessen their influ­
ence with Reagan .
Anderson seeks boost
from Euro p e
I ndependent presidential can­
didate John Anderson is planning
a trip to Europe and the M i deast
this summer. According to John
Topping, fo r m er d i rector o f the
liberal Republican Ripon Society
a n d a n a t i o n a l fig ure in A nder­
son's cam paign : "The tour could
be the thing that really propels
Anderson into front-run ner status .
I f w e c a n set up m eeti ngs w i t h top
leaders in Europe-including some
of the opposition, like Franz-Josef
Strauss-and then have the Euro­
pean press begin commenting that
A nderson appears to be the o n ly
U . S . presidential candidate who
knows anything about the allies'
needs, that's good. The real im­
portance w i l l b e when the U . S .
media, say sometime i n early Sep­
tember, begin to feed this positive
response back into the U . S . That' s
what will really give us an edge. "
Topping added that it' s "the
consensus i n Europe that none of
the m aj o r party contenders has a
fo reign p olicy worth a damn. They
feel confronted with a m uch worse
choice than they've had in the last
fo ur elections." Former Undersec­
r e t a r y o f S t a t e G e o rg e B a l l , a
staunch A n derson b acker, is re­
portedly helpi ng to c o o r d i n ate
plans for the Anderson tour.
N ational 59

H ouse committee
rakes Army Secretary
over the coals
T h e H o u s e A r m e d S e r v i ce s
Com m i ttee began their heari ngs on
the state o f the U . S . A r my June I I
by raking the Secretary of the Army
over the coals. The A rmed Services
C o m m i ttee l a m basted t h e A r m y
Secretary fo r a l l ow i n g t h e U . S .
Army t o degenerate to s uch a low
point that barely o ne-third of U . S .
A rmy recruits a re h igh school g rad­
uates. The mood at the hearings
was utter disdain for the President's
m i litary men .
Test i fy i n g at the c o m m i ttee
were A rmy Secretary C l i fford A l ex­
ander and A r my C h ief of S t a ff
General M eyer. Sitting in the a u d i­
ence were 1 4 enl isted men and offi­
cers who were s upposed to testify
the fo l lowing day, also o n the issue
o f the state o f the Army. They were
n ot supposed to be in the a udience
while the Army secretary testified,
because their testimony was a check
on the m i litary b rass. Co ngressmen
at the hearings were outraged at
their appearance . One Co ngress­
man deman ded of A lexan der why
they were present . Before he co u l d
reply Congressman Stratton ( D­
N Y ) a nswered for h i m , " Y o u or­
dered them here to fi n d out what
the party line is." Stratton, one of
the most powerfu l men on the com­
m ittee, then got u p and wal ked o ut
i n disgust.
Congressmen also attacked the
A 11- V o l u n teer Force, cal ling it a fi­
asco when less than 3 7 percent of
the Army are h igh school gradu­
ates . Out o f 340,000 first term en­
l isted men , o n l y 276 are co l lege
g ra d u ates . A fter revea l i n g t h ese
shoc k i ng stati stics, the Congress­
men dem anded that the Army sec-
60 National
retary adm i t the fai l ure of the a l l ­
volunteer a r m y and rei m pose the
draft . B ut A l exander a rgued there
were many benefi ts fro m h av i ng a n
army of n on-high "school grad uates .
Proxmire covers for Dope,
Inc. of Florida
S e n a t e B a n k i n g C o m m i t tee
chairman W i l liam Prox m i re ( D­
Wisc.) o pened hearings o n J u n e 5
on the ro le o f Florida banks i n fa­
ci l itating the m a ssive i ll egal n a rcot­
ics traffi c swam pi n g the state. Prox­
mire' s stated aim i s to force ban k
reg ul ators, i ncl uding the Control­
ler of t he C u rrency and the Federal
Reserve B o ard t o to ughen t h e i r
po lici ng a n d prosec uti on o f b a n k s
w h o d o b u s i n e ss w i t h n a rcotics
traffickers .
B u t i n reality, t h i s apparently
admi rable effo rt i s a cover for a
large-sca le reorganization o f F l o ri ­
d a b a n k i n g t o fa cili t a t e D o p e ,
I n c . ' s takeover o f Florid a . U n men­
tioned i n Prox m i re' s hearings were
the I I i nternational ly-based b a n k s
w h i c h d o n o t m erely do business
with narcotics traffickers, b ut w h o
are n a rcotics traffickers and w h o
h ave moved into Florida i n the past
two years.
In 1 978, the Florida State Leg­
islature passed legi slation a l l owing
i n t e rn a t i o n a l l y - b a s e d b a n k s to
open b ranches i n the state. Si nce
then , maj o r Dope, I nc . con nected
banks such as B a n k Le umi, Stand­
a rd and Chartered and the Bank of
N o va Scotia have opened up shop
i n Florida.
Prox m i re and h i s train of w it­
nesses left no d o u bt that their target
in the heari n gs was the domestic
Florida b an k . Several local ban kers
and a former Assistant U . S . A ttor-
ney fo r M i a m i testi fied, declaring
that narcotics-related m o n ey trans­
acti o n s were e a s i l y recog n i z a b l e
an d n o ban ker h a d to do b usi ness
with d rug d e a l e rs if they d i d n ' t
wa nt to . Assistant Treas u ry Secre­
tary Richard Davis repo rted that
the appropriate bank reg u latory
agencies were not rigorous in pur­
suing and prosec uting ban kers who
were i n vo l ved i n regulatory i n frac­
ti ons stem m i ng from such transac­
tions.
Pro x m i re has o r d ered a two
m onth st udy o f the situati on and is
clearly geari n g up to force the reg­
u l ato ry agencies to crack down o n
the d omestic b a n k s . S uch a crack­
down wi l l have the ultimate effect
of turning more of Florida banking
di rectly over to the top layers of
Dope, I n c. itself, such as Standard
and Chartered and Bank Leum i .
C ongressmen demand
prosecution of Ramsey Clark
A n g ry Senators have deman ded
t h a t t h e C a r t e r a d m i n i s t ra t i o n
prosecute fo rm er Attorney General
Ra msey Clark for violating Cart­
er' s ban on travel to I ra n . Clark
wen t to I ran last week and partici­
pated i n a conference denouncing
the U . S . As detai led by this publi­
cat ion , Clark was one o f the leading
fig ures who act ually p ut Ayato l l ah
K homeini into power, meeting with
him often w h i le he was i n ex ile in
Paris.
The govern ment should p rose­
cute Clark fo r his trip si nce i t pros­
ecuted former Attorney General
J o h n M itchell, decl a red Senator
Howard Baker ( R-Tenn . ) . " I f you
are going to prosecute people for
th ings l i ke Watergate, where the
crime was fa r less clear, you should
EIR June 24, 1 980
prosecute fo r this," he decl ared .
"The vio lation h ere was j ust a s
clear. "
Baker dem anded prosecuti o n
under t h e Logan Act, which pro­
hi bits American citizens from h av­
ing unauthorized deal i ngs with for­
eign govern ments that are in dis­
putes with the U n ited States .
Senator Robert Dole ( R - K a n . )
j o ined B a k e r . D o l e s a i d t h at h e
w o u l d a c t i ve l y p u r s ue a c t i o n
against C l ark and other Ameri ca n s
w h o attended t h e anti-Am erican
conference in I ran . On Friday June
6, D o le i n tr o d u ced a res o l u t i o n
cal ling o n President Carter t o pros­
ecute those Americans u nder the
Logan Act .
Senate M aj ority Leader Robert
By rd ( D- W . V a . ) , while not going
as far as the Rep u b licans, said he
too disapproved o f Clark's tri p .
Byrd however deferred t o t h e J us­
tice Depart ment for any prosecu­
tion .
Trucking dereg bill caught
in Congressional quagmire
The H ouse version of truc k i ng
deregulation h as been caught in the
entropy sett ling over Congress, and
the delay i n its passage m ay spel l
trou ble for the legislatio n . I n d ustry
sources report that H o use M aj ority
Leader Tip O'Neill dropped the
legislation from consideration d u r­
ing the week of J u ne 9, beca use he
does not want any major legislation
considered u ntil the b udget dead­
l ock is resolved . If that dead l ock
prevents the deregu lation b i l l from
reach i ng the floor until J u ly, the
p a p e r- t h i n co m p ro m i se w h i c h
h o lds the b i l l toget h er m ay fa l l
apart.
Already, the Teamsters are re-
EIR J u ne 24, 1 980
portedly asking for a maj o r amend­
ment to the b i l l w h ich would afford
them a l abor protect ion clause s i m­
i lar to the o ne en acted i n the airline
deregulati o n case . W h i le the ad­
m in istration is n o t particu l arly ad­
verse to that dem and, i t recognizes
that acceptance of any amendments
could open the doors to all the d i s­
parate interest groups who want
changes i n the b i l l . Since the legis­
lation was o n ly passed through the
H o use Com m ittee t h rough a com­
b i n ation of arm -twisti ng a n d rail­
roading, a free for a l l o n the floor
of the H o use could fi n ish the b i l l
o ff.
While chances are sti l l better
than even th at the legislation w i l l
pass, Capitol H i l l observers n ote
t h at w i th C o ngress o u t fo r two
weeks in J u ly and a good part o f
August, and l o o k i n g for an early
fal l recess, the l o nger the dereg u la­
tion b i l l waits fo r fl oor actio n , the
more l i kely it will fa lter.
O il import fee
killed in Congress
The Senate voted 68 to 1 0 to k i l l
President Carter's o i l i mport fee
J u n e 6, overriding a Presidential
veto . The Sen ate act i o n came a day
after the H o use voted 3 35 to 34 to
a lso override the veto . The defeat
was a stinging reb uke to President
Carter, who had i m posed the fee
several weeks ago as a centerpiece
to his energy austeri ty p rogram .
The fee would h ave added 1 0 cents
a gallon on gaso line rates and taken
$ 1 0 billion out of the U . S . econo m y
yearly.
The Co ngressi onal override of
the Carter veto was the fi rst such
override of a President by any Con­
gress of the same p arty si nce J u n e
1 952, when H arry Truman t ried t o
b l ock t h e M cCarren -Waiter i m m i ­
gration b i l l . T h e Co ngress rej ected
the o i l i m port fee, fearing the o bj ec­
tio n s of the A merican population
i n an election year. They a l so criti­
cized it as i n flationary.
Filibuster on draft
registration ends :
The Senate voted J u n e 1 0 to end
the days- o l d fi l i b uster o n d raft reg­
istrat i on which h ad held up Senate
con siderati o n of other important
pen d ing legislati o n . The vote was
62 to 3 2 to i n voke cloture, thus
ending the fil i buster, b ut a llowing
for 1 00 m o re h o u rs o f debate o n the
m atter. The fi li b uster had been led
by M ark H atfield ( R-Ore. ) who op­
posed d ra ft registrati o n .
The Senate vote appeared t o as­
sure p a ssage of the b i l l s h o rtl y .
C arter had asked for $ 1 3 . 3 million
to register 1 9 and 20-year-o lds. The
H ouse h as a l ready passed the legis­
lation . The H ouse passage o ccurred
a fte r the H o use l eaders assured
mem bers t hat President Carter had
n o intention o f actually rei nstati ng
the dra ft.
Once the vote o n cloture was
c o m p l eted , the Senate began t o
a m e n d the registratio n b i l l . The
A p p r o p r i a t i o n s C o m m i ttee s u b ­
m itted an amendment that would
allow yo uth to l ist t hemselves as
co n scien tio us o bj ectors on thei r
reg i s trat i o n fo r m s . A fter m uch
hagg l i ng between the Senate and
the presiding officer o n this amend­
ment, Senator Sam N u n n ( D-Ga.)
added another amendment which
carried. It tran sfers t he conscien­
tious obj ector status to a classifica­
t i o n p r o cess t h a t sti l l h as t o be
created .
N ational 61
National News
Carter administration
hea p s coals on Venice
Recommendations came this week from
the U . S . Interagency Coal Export Task
Force, specifically mandated to imple­
ment the goals outlined in the recently
released M a s s a c h u s etts I n s tit ute o f
Technology world coal study. The M IT
report called for restructuring the world
energy-dependency map to institute a
"coal OPEC," consisting of the de facto
"British Empire"-the U . S . , Britain,
Canada, Australia, and South Africa .
The U . S . in particular would become
"the Saudi Arabia of coal," with $ 1
trillion invested worldwide in the next
20 years in mining and transport. The
administration is prepared to open fed­
eral lands for mining to meet its targets.
U . S . coal exports, according to the new
task force, should rise from a current 66
million tons to 266 million tons by the
year 2000.
The task force announced that Cart­
er will bring this plan to the Venice
summit and ask Europe to buy addi­
tional substantial amounts of U . S . coal.
While other Western nations are inter­
ested in developing high-technology use
of coal, it is doubtful whether they will
welcome a plan for a new energy cartel,
even if the U . S . became a reliable ex­
porter of strategic resources. The full­
fledged perspective smacks too m uch of
the "Bolton Plan" circulated privately
last year by Bank of England adviser Sir
George Bolton, whereby the English­
speaking nations and their Latin Amer­
ican appendages domi nate the world
economy through raw materials control
at Europe's expense.
Byrd says nomination
u p for grabs
Senate M aj ority Leader Robert Byrd
(D-W.Va.) has refused to concede the
Democratic nomination to President
Carter. Instead, this week Byrd declared
62 Nation a l
that the race was still open . Glancing at
a copy of Senate Procedures, Byrd told
the New York Times June 1 1 , "This
book tells me that a lot of things are
possible. That's why I ' m not stampeded
by arithmetic. The rules and precedents
are such that a rabbit can be pulled out
of the hat."
The most powerful Democratic Sen­
ator has openly criticized Jimmy Carter
at his Saturday morning news confer­
ences. On June 7 , Byrd criticized Carter
for attempting to keep independent
presidential candidate John Anderson
o ff the ballot in a number of states.
Byrd indicated that he felt Rep. Ander­
son would attract liberal Democrats to
vote for what Byrd described as "an
endangered species, " the 22 Democratic
S e n a t o r s see k i ng reelect i o n . A s k e d
whether he was saying that if Carter
headed up the Democratic ticket he
would hurt Democratic Senators, Byrd
declared, "Of course the head of the
ticket can affect Senate races."
"Senator Byrd is very angry at Pres­
ident Carter," declared one Democratic
Senator. " Bob Byrd is paranoid at the
thought that the Democrats are going
to lose the Senate," declared another.
White H o use advisors try to explain
away Byrd's statements by pointing to
his presidential ambitions. After all, they
hint, he tried for the post four years
ago .
Texas Democrats
p rotest farm ga p
At a June 1 2 Washington, D . C . session
of the Democratic Party's procedural
committee on the 1 980 electoral plat­
form, the Texas delegation complained
that during all the hearings held around
the country this spring to garner testi­
mony on the Democratic planks, there
had been no discussion of agriculture
and no testimony from farmers. Texas
spokesman Dan M o rgan stated that ag­
ricultural organizations and farm inter­
ests had been actively excluded from the
proceedings, despite the acute situation
of U . S . prod ucers, which he said was
never addressed .
The Texas delegation-backed by
the Georgia contingent-proposed to
delay the scheduled June 2 1 platform
deliberations until June 22, so that the
new Texas representatives, who will not
be elected until the June 20 state con­
vention, can attend . This proposal was
voted down by the committee, which
chose former Detroit mayor Coleman
Young as o fficial chairman . The four
platform committee cochairmen elected
June 1 2 are M ichael Stead of California'
Johnsie Setzer, Democratic Nationa i
Committee member from North Caro­
lina; John Lyons, president of the inter­
national Ironworkers Union; and Ger­
trude Donahy, Ohio state party treas­
urer.
Administration defends
China p olicy
The Carter Administration has sent As­
sistant Secretary of State Robert Hol­
brooke scurrying off to Capitol Hill to
quell a growing disturbance that devel­
oped around its China policy.
One week ago , in public remarks
before the U . S . -China Trade Associa­
tion as well as at an "off the record"
briefing, Holbrooke declared that it was
now official U . S . policy to place a prior­
ity on relations with China, as against
relations with the Soviet Union. In re­
sponse, several conservative senators
have been hinting that the U . S . should
restore relations with the Nationalist
Chinese Government on Taiwan, a
move that would chill relations with
Peking.
Holbrooke told the House Foreign
Relations Committee that a move to
restore normal ties with Taiwan would
be "devastating" to the China- U . S . re­
lationship. Furthermore, it would jeop­
ardize U . S . strategic interests and so, be
"highly dangerous," said the Undersec­
retary of State.
Sources on Capitol Hill report that,
far from putting out the fires, the rabidly
pro-Chinese Holbrooke seems to have
developed the knack of strengthening
his opponents . "There is going to be
EIR J u n e 24, 1 980

one hell of a fight on the China policy,"
the sources said.
On June I I , the Senate Energy Com­
mittee, chaired by Sen. Henry Jackson,
voted 1 7- 1 (the dissenter being Demo­
crat Paul Tsongas, of Massachusetts) to
order the mandatory conversion of 80
thermal power plants from oil to coal
over the next three years, at a cost of
$4.2 billion . Three of the plants are in
New York City, eight in New Jersey,
and four in Connecticut. Some of Jack­
son's associates from the Committee for
a Democratic Maj ority view this as part
of a "coal and nuclear push," as rec­
ommended in the MIT study, with a
limited expansion of stalled U . S . n uclear
energy production accompanying the
mammoth expansion of coal use.
FEMA takes over
the disaster in
the White House
Jack Watson, who has earned the rep­
utation of being the Administration's
man on the scene at natural and man­
made disasters, last week assumed the
post of White House Chief of Staff.
Watson replaces H amilton Jordan , who
becomes chief political coordinator for
the Carter-Mondale campaign .
W a t s o n h a s been i d e n t i fi e d b y
spokesmen for t h e Federal Emergency
Management Agency (FEMA) as their
"pointman in the White House." For
the last several months he has met reg­
ularly with FEMA head John M acy to
plan strategy. He is said to have been
influential in getting the White House
to yield "crisis management powers" to
FEMA in several situations, including
the so-called Cuban refugee crisis .
H a m Jordan's redeployment w a s ex­
pected, following his recent clearing of
charges of cocaine use at New York's
Studio 54 discotheque. Jordan has the
reputation of being a "capable thug,"
say people familiar with his role in the
1 976 Carter campaign.
Carter and his backers feel that they
need Jordan 's services to secure the Au­
gust Democratic convention. Well-in-
EIR J u ne 24, 1 980
fo r m ed Dem o c rats r e p o r t that t h e
"Watson-Jordan" shuffle parallels a
major deployment of Carter forces into
the Democratic National Committee
(DNC). These sources report that what
amounts to a special plumbers' unit has
been set up under the new DNC Exec­
utive Director Les Francis, former op­
erations chief of the Carter campaign .
Francis's staff has deployed people into
several "problem states," including
Ohio, New York and M ichigan, where
Carter delegates are reported to be ready
to support opening up the Democratic
convention. This DNC strike force co­
ordinates with a beefed up Carter "del­
egate security" operation working out
of his campaign headquarters.
U.s. hit Jap an,
German bank hits
Chrysler
With auto sales sagging around the
world, protectionist i nitiatives are on the
rise. Two senators from the auto-pro­
ducing states, Sens. Carl Levin (D­
Mich.) and Richard Lugar (R-Ind.), in­
troduced legislation on June 10 that
would impose a $ 500 import fee on the
average Japanese automobile. The tax
is ostensibly to compensate for non-tar­
iff barriers-such as inspection costs and
commodity taxes-placed on American
cars when they are imported to Japan.
Industry analysts point out that this is
a very flimsy rationale for the p roposed
$500 auto tax, since sales of American
automobiles in Japan are negligible, and
penetrating the Japanese m arket is not
part of the corporate strategy of any of
the American automobile producers.
In a second international move last
week, one of Chrysler's lenders, the
Deutsche Genossenschaftsbank, seized
about $8 million of Chrysler's funds that
it was transfering from one of Chrysler's
European customers into a U . S . ac­
count, and is holding these funds as
"security" for an equal amount of credit
extended to Chrysler, which is in default.
Briefly
• JOHN ANDERSON, who
claims t o b e a born-again Chris­
tian, apparently has his moral
tastes influenced by the campaign
cash register. Some of his backers
are upset by a recent San Francis­
co fundraising event, attended by
the candidate. It seems that guests
were entertained by the Gary
Poole Dance Revue, whose act
was described by attendees as
"lewd," "sadomasochistic," and
fu l l of s uggestive s e x u a l a n d
mock-violent acts. Anderson's
son, John B . Jr., said that he
thought the performance was ap­
propriate for a San Francisco au­
dience, but not for Rockford, I I I . ,
Anderson's home town. He didn't
say which city's morality is An­
derson's.
• CLIFFORD Alexander, Secre­
tary of the Army, insisted at
congressional hearings June I I
that high-school graduates do not
m ake better soldiers than drop­
o uts . Alexander was responding
to a series of attacks from the
H o use Armed Services Commit­
tee, where Samuel Stratton (D­
N Y ) , R o b i n B e a r d ( R - Ten n ) ,
Sonny Montgomery (D-Miss) and
Dan Daniel (D-Va) denounced
the U . S . all-volunteer army as a
failure. Among other factual ma­
terials, the senators presented sta­
tistics showing that more officers
and NCOs are required to give
recruits remedial courses than are
engaged in training them .
• BILL BROCK, GOP national
chairman w o n ' t be d umped by
Ronald Reagan . So urces close to
the Reagan camp report that the
candidate is under p ressure from
his supporters to oust the former
Tennessee Congressman and re­
place him with a more conserva­
tive member of the Reagan entou­
rage. But only two weeks ago ·
Reagan publicly embraced Brock
and said that he would keep him
as GOP chairman thro ugh the
November election.
National 63
Facts Behind Terror
The Hispanic activation
The same apparatus under the Justice Department that is
producing black ghetto rioting has readied Chicano
radicals for a wave of terrorism .
I n San Diego, California M ay 24-
26, representatives from 80 H i s­
panic o rgan izati ons came together,
s upposedly fo r a c o n feren ce o n
Mexican-American imm igrati o n .
They all agreed t o "begi n an era
of violence."
The leading " militant" leaders
o f the C h i cago m ovement h a m ­
mered o u t a policy of violent con­
frontations and riots, targeting cit­
ies in the U nited States as well as
M exico . " W h a t happened i n
Miami was only the beginning,"
o n e spokesm a n a n n o unced . A l ­
ready t here h ave been C h i c a n o
c o n fro ntatio n s with p o l ice i n at
least nine Southwestern cities, in­
cluding Phoenix, Tucson, Douglas
and Bisbee, Arizona; Dallas and
San Antonio, Texas; Los A ngeles
a n d San I s i d r o , C a l i fo rn i a ; a n d
Denver, Co lorado .
The activation of the Hispanic
m o v e m e n t fo r r i o t s c a n n o t be
viewed separately from the black
riot apparatus which was put in
place during the past year . Both
are under the control-umbrella es­
t a b l i s hed by Attorney Benj am i n
Civiletti. A t least fo ur of the or­
ganizations represented at the San
Diego conference, are also repre­
sented i n C i v i l etti ' s 1 7 m e m ber
H i spanic Advi sory Board, estab­
li shed in July 1 979. These organi­
zations are: the League of United
Latin A m erican C i tizens ( L U ­
LAC); the G I Fo rum i n Washing­
ton D . C . ; The Mexican-American
64 Facts Beh i nd Terror
by Jeffrey Steinberg
L eg a l D e fe n s e a n d E d u c a t i o n
Fund; and the Secretariat o f His­
panic A ffa i rs . A Department of
Justice press release i ssued on the
formation of the H i spanic Advi­
sory Board descri bes it as being
created to " advise" Civi letti on
h u m a n rights v i o l a t i o n s a g a i n s t
un documented aliens and Mexi­
can-Americans, and to help "cre­
ate civil rights enforcement units . "
T h e J ustice Department a l s o
intersects t h i s network on t h e level
of the Community Relations Serv­
ice (CRS). On Dec . 1 1 - 1 3 , 1 979 the
CRS, L U LAC and National Ur­
ban League cospon sored a confer­
ence on "excessive use of fo rce" by
law en forcement, one of the central
themes coordinating the build-up
o f the riot infrastructure. The C R S
Western region office i n San Fran­
cisco maintains close contact with
L U LAC to coordi n ate activities .
T h e S a n Diego c o n ference ' s
targeting of the U . S . Border Patrol
has also been b acked up by the
Department of Justice . Respond­
i ng to the "complaint" that the
Border Patrol violates the "human
rights" o f drug run ners and illegal
im m igrants , FBI agents are now
being sent across the border from
Mex ico , p o s i ng a s i l l egal i m m i­
grants, in hopes of entrapping
B order Patrol agents.
The final call to arm s of the
San Diego conference was given
by Ruben Sandoval, a representa­
tive o f LU LAC. The "truth is that
W a s h i ngto n authorities a n swer
only with vio lence . . . we are at
the point where patience has been
ex hausted and vio lence begi ns . . .
the hope o f settling things through
the j udicial system is i ncreasingly
dim . All talk of equality of rights
is pure bull . . . i n a word, enough
is enough , on to the streets, attack
anyone symbo lizing such racism . "
A n i n t e r v i e w w i t h R o d o l fo
"Corky" Go nzales, leader of the
Crusade for Justice in Denver, and
a spokesman for violence at the
San Diego conference, has been
provi ded to EIR. Gonzales com­
ments that Ruben Sandoval "is the
most pacifist of all of u s . "
Gonzales t a l k s of building u p
a terrorist movement, modeled o n
t h e " People's G uerri lla Army" of
Lucio Cabanas, a Mexican terror­
i st ki lled several years ago . "The
resistance has been growing; we
now need to i ncrease our commu­
nications across the border with
our brothers . . . then , we will be
able to take direct actio n s . "
Gonzales has been in t h e center
of support operations for terro rism
for over a decade . He has aided
the Weather U n dergro und, and is
in direct contact with the leader­
ship of the American I n dian
M oveme n t . He w a s one o f the
sponsors of a nationwide February
tour by the four Puerto Rican ter­
rorists whom Civiletti released in
Septem ber 1 97 9 .
F o u r days after t h e S a n Diego
con ference, armed rioting broke
out in the Southern Mexican state
of Chiapas, openly led by the Jesuit
order, with the stated purpose of
destabilizing the Mexican govern­
ment. U . S . law enforcem ent offi­
cials should closely monitor this
situation for its "p l ayback " dfects
in sparking U . S . terrorism .
EI R J u n e 24, 1 980