1975

LaRouche Calls For Establishment of International Development Bank (IDB)

At a series of press conferences in April of 1975 in Bonn, Germany and in Milan, Italy, LaRouche presents his plan for “the immediate establishment of an International Development Bank as an agreement among the three principal world sectors—the industrialized capitalist sector, the so-called developing sector, and socialist countries.” He specifies that the immediate concentration of the investment thus made possible should be industrial development and expanded food production worldwide.

LaRouche predicts that the present, or then-existing, international monetary system of the I.M.F., would inevitably go bankrupt, and should be replaced by a different credit-creating institution, namely, an International Development Bank (I.D.B.), to facilitate long-term, low-interest credit for capital investment and capital-goods transfer from the industrialized sector to the so-called developing sector, in order to overcome the underdevelopment of Africa, Latin America, and large parts of Asia.

LaRouche issues a policy document for international circulation titled "IDB: How The International Development Bank Will Work" [PDF] in which he declared that two immediate, interconnected actions were imperative:

(1) The declaration of a commitment to sweeping financial reorganization of the world monetary system, involving an orderly process of debt moratoria and the establishment of an institution such as the proposed International Development Bank (IDB)

(2) Immediate commitment to enact, within each national sector of the capitalist world, these measures of emergency financial-reorganization legislation required to facilitate immediate economic recovery in conjunction with IDB efforts.

LaRouche Issues Call for an International Development Bank

Text of LaRouche's Press Conference in Bonn, Germany · April 1975 PDF We propose the immediate establishment of an International Development Bank as a three-way agreement among the three principal world sectors, the industrialized capitalist sector, the so-called development sector, and socialist countries. The Bank would discount letters of credit and bills of exchange authorized by treaty agreement among nations and self-constituted groups of nations, and would thus act as a rediscount bank for those other letters of credit and bills of exchange generated in the course of supplying needs of final commodities producers producing for bookings issued under relevant international development bank treaty agreements. For example, several key developing sector nations have demanded that the industrialized sector negotiate interlocking agreements concerning three items: energy, raw materials. and food. Our essential criticism of this agenda is that it included only three principal items, instead of the necessary four. The fourth item should be “development.” Our remarks concerning this example are not conjectural, provided that suitable initiative proposals are generated by significant forces of the industrialized sector, key forces within the so-called “Third World” will be prepared to immediately begin working negotiations along the lines of such a four-point form of general treaty agreement with the industrialized sector. On the basis of our own organization’s studies, and our discussions of these studies with governments and leading political forces within the “Third World,” we have determined to the point of certainty that the activities of an International Development Bank in connection with present wishes and consumption capabilities of the developing sector, would be sufficient to generate a higher rate of industrial expansion in the advanced sector than has been seen during the most prosperous intervals of the past quarter century. The feasibility of this proposed program demands understanding of certain often neglected ABC’s of Political Economy. Without understanding those principles, we should all be hopelessly caught in the worst disaster of human history. The basic fact on which all political economy depends is the characteristic feature of economy. That is, that a proper use of means of production and means of personal consumption generates levels of output in excess of the prime costs incurred. The second basic fact, essential to this solution, is that all general development, including industrial development depends upon creating a basis for growth in an abundant supply of adequate nutrition at relatively low social cost. To the extent that these two principles are observed in practice, and advancing technology emphasized to that end, it is feasible to generate very large amounts of long-term credit without inflationary effects. We emphasize that a combined concentration on both industrial development and expanded food production are the absolute imperatives for this period. To the extent that long-term development credit to the developing sector places priority emphasis on rapidly increasing the amount and social productivity of world food production, any amount of credit can be issued over a 10- to 15-year term ultimately payable in expanded food, in increased masses of productive labor, and in the social productivity of human labor generally. The immediate problem the new bank will face is this. In addition to the immediate potential for substantially increaing agricultural output and productivity generally, there are three regions of the developing sector which represent massive opportunities for increases in agricultural output. One of these, the Rio de la Plata region of South America, offers short-term major benefits for development as an agro-industrial region. The other two, the Sahel, and the India-Bangladesh-Pakistan region, represent potentially major world food-producing regions, but will require 10 to 15 years of massive engineering efforts and development to approach their enormous surplus potentials. Therefore, our problem is to provide a level of development equivalent to approximately a quarter trillion current transferable rubles annually, concentrated on low-interest loans and grants with a typical maturity in the order of 10 to 15 years required for loans. The apparent difficulty of conducting such programs is only apparent and not actual. To the extent that the industrialized sectors can generate large surpluses in excess of immediate reinvestment requirements within that sector, that portion of surplus can be issued as credits and grants without adverse economic effects. The only real problem involved is that of raising the gross level of industrial outputs to the scale the indicated undertaking requires. . . .

Excerpt from 'How the International Development Bank Will Work'

No competent professional financier should find it difficult to understand the merits and workings of all the principal short-term features of the International Development Bank. It is merely necessary to appropriately identify those points. It is the longer-term perspective and policies of the Bank which go beyond the financial specialist's education and experience. On that aspect, we are obliged to clarify the essential scientific points... Formally, the IDB comes into existence in a manner analogous to the effective financial reorganization of any major bank being rescued from illiquidity collapse. A new bank is created to continue the essential operations of the old, while major categories of unpayable carried-forward indebtedness are placed in a moratorium "deep freeze" and negotiations for future liquidation of that debt conducted separately from day-to-day operations of the new institution. There are two general approached to such a financial reorganization. In one approach, which we are rejected for the problem before us, the administrators strip the operations of the illiquid bank down to a hardcore of essentially sound categories and ranges of activities — an austerity policy of financial 'debridement.' In the second approach, which we are applying to the IDB policy, the object is to vastly expand the operations of the reorganized bank beyond the scope of the bankrupt predecessor, by focusing the activities upon development polices essentially free of the policy errors which led to the collapse of the former entity. The second approach is analogous to the case of the bankrupt manufacturing firm which is successfully reorganized for expanded operations by introducing a superior set of products to its existing productive capacities. Our core policy is this. The worldwide material preconditions from agricultural, mining and manufacturing are essentially sound. It is only the debt-ridden financial superstructure which prevents those potentialities from being realized in the form of rapidly expanded levels of output at progressively reduced net social cost of production per unit of output. In short, we reject the "Zero Growth" and "Limits to Growth" chimeras as dangerously disorienting fantasies concocted by charlatans and widely puffed by ignorant public relations agencies. To this end, we have already identified — in consultation with some of the world's leading professionals and relevant governmental agencies — several major specific development projects which can readily (over a five to ten year period of development) yield a massive increase in the output and social-productivity of world agriculture, and thereupon premise the infrastructural basis for massive industrial development. We have similarly determined the feasibility of controlled thermonuclear reaction technology within the horizon of such development programs, such that no long-term "energy crisis" could exist except through massive incompetence by leading agencies. Those two primary bases for development warrant a massive increase in levels of industrial output from the presently industrialized sectors. The realization of those combined objectives demands supporting activities in the form of both capital development of productive capacities and increasing the social productivity of the general population through improvements in material consumption, leisure and educational opportunities in households. Hence, credit issued for the realization of such programs is secure and liquid, since the margin of total production obtained through the mediation of credit will significantly exceed the margin of credit issued to effect such production. Although the decisive interconnections determining such results are international, the present mediating form of economic cooperation to such international ends is the form of de jure national economy. Moreover, the national economies principally to be considered are apportioned among states with capitalist and states with socialist constitutions. Hence, although the objectives to be realized are global, the mediation of the process of reaching those objectives must be treaties of economic cooperation to such ends among participating groups of states. To maintain a stable international trade as the means for implementing those treaties, such treaties among states and groups of states must be directly incorporated into a single international credit agency, through which world commodity prices can be rationally pegged to the exchange values of principal commodities in terms of the most stable major currencies. The proposed International Development Bank is therefore essentially an international treaty organization of the participating national economies (states). It acts as a planning forum for the negotiating of extended treaties of economic cooperation, and functions as a n international rediscount agency in connection with those letters of credit and bills of exchange in international trade authorized by treaty agreements. ROUTINE BANK OPERATIONS Each treaty negotiated within the purview of IDB operations directly subsumes corresponding "master letters of credit." For each unit of bookings and deliveries subsumed by such master letters of credit, specific letters of credit are automatically processed through the bank as the ultimate rediscount agency of international trade. Bills of exchange against those letters of credit are similarly routinely reprocessed. The global effect of this operation is to issue credit to the account of the produced and purchaser national sectors. This IDB international central bank credit provides the means for issuing domestic credit to relevant specific producers and purchasers within the national economies affected. Hence, provided the level of aggregate international trade is sufficiently high, the rates of production in all participating sectors are raised to levels above those prevailing in the high-points of the pre-depression period. Provided credit is restricted to commodities of the classes directly relevant to development and at non-inflationary prices, the aggregate operations of the bank are in balance except for one major category of long-term credit balances held by the advanced sector against the development of the developing sectors. Provided that this long-term credit does not exceed the aggregate exportable social surplus product of the industrialized sector, the enlargement of such balances has no adverse effect on the industrialized sector. Rather, from traditional baking viewpoints, this mass of credit has the form of 10-to-15-year investments in the developing sector, under the conditions in which initial repayment is postponed to a forward date of maturity 10 or 15 years hence... For full document, see How the International Development Bank Will Work

1976

Non-Aligned Movement Summit Calls for New International Economic Order

Within months, eighty-five nations, representing 2 billion people, meet in Colombo, Sri Lanka for the Fifth Summit of the Non-Aligned Movement and issue a unanimous declaration [pdf] calling for a new international economic order on August 19, 1976, identical in many regards to LaRouche's proposals spelled out in his policy document from the preceding year.

The declaration endorses both the establishment of a new international monetary and financial system to replace the International Monetary Fund and provide capital for Third World development through the creation of a Bank of the Developing Countries, as well as a debt moratorium for the least developed countries whose outstanding debts at the time made economic development for those nations impossible. The heads of state of the Non-Aligned nations declare that this summit represented:

"...a new step for the establishment of the new world economic order, and in particular, the essential element of such a new order, a new monetary and financial system."

In her keynote address to the summit, Sri Lankan Prime Minister Sirimavo Bandaranaike endorses the establishment of a development bank for the Third World:

"The developing countries are consistently denied the true value of their output by the vagaries of the international market and the manipulations of international finance. The developed countries have shaped the international financial system to suit their interests. Should we in the developing world sustain such a system? Should we not, instead attempt to develop a system all our own? ... One area of great promise, would be the establishment of a commercial bank — a Bank for the Third World — the bank of Asia, Africa, and Latin America. This would not be another non-aligned solidarity fund. It would be a genuine commercial bank and a truly multinational enterprise."

The Colombo Declaration of a New Economic Order

The New International Economic Order The Colombo Resolution declared: The institution of a new international financial order is of the highest political importance... The solution to the economic problems of the developing countries demand the establishment of a universal and equitable new monetary system... Only a complete restructuring of international economic relations, thanks the institution of a new world economic order, will put the developing countries in a position to attain an acceptable level of development. The Heads of State or Government of Non-Aligned Countries reaffirm that the struggle for political independence and the exercise of their sovereignty cannot be disassociated from the struggle for the attainment of economic emancipation... No lasting peace and security is possible internationally without the establishment of a just and fair society which provides its citizens the economic and social security which is an inalienable right of every citizen of this planet. Such a society should be established in the shortest possible time thus ushering in an era of prosperity and dignity for all mankind. The achievement of the full economic potential rests on the developing countries and entails the following factors: (a) individual self-reliance in order that developing countries may utilize their economic potential to cooperate among themselves to set up the New International Economic Order;

(b) intensification of economic cooperation between developing countries;

(c) strengthening of their solidarity and the coordination of the activities of the developing countries in a common front against all attempts of imperialists to sow division and to apply pressure. The heads of state or government of Non-Aligned Countries are firmly of the view that nothing short of a complete restructuring of the existing international economic relations will provide an enduring solution to the world's economic problems, particularly those of the developing countries. The inadequacy and recurring failure of the prevailing economic order have been demonstrated by the recent series of crises in the developed market economy countries... These crises have also dramatized the fundamentally interdependent character of the constituent elements of the world economy, and provided the necessary impetus for the world community to conceive of the new world economic order based on equity, sovereign equality, interdependence, common interest and cooperation among all States. Faced with this chaotic situation the world has witnessed an unprecedented solidarity among the developing countries and successful assertion of their basic, economic and political rights in the international scene. The establishment of the new international economic order calls for bold initiatives, demands new, concrete and global solutions, and is contrary to the piecemeal reforms and improvisations intended to resolve the present economic difficulties. The fundamental objective of the New Economic Order is to bring about in the international economic relations an equilibrium based on justice through cooperation and human dignity... The Non-Aligned Countries once more reaffirm the inalienable right of all countries to exercise full permanent sovereignty over their natural and human resources ad their economic activities including possession, use and disposal of such resources and their right to nationalization... The Heads of State of the Non-Aligned Countries reaffirm their view that nothing short of a complete restructuring of existing international economic relations will provide an enduring solution to world economic problems. They reaffirm their resolute determination to secure through collective action the establishment and implementation of the New International Economic Order. Such an order must consist, inter alia, of the following essential elements: (A) Fundamental restructuring of the entire apparatus of international trade so as to achieve an indexation, improving the terms of trade pf developing countries and ensuring fair and remunerative prices in real terms to primary export products and an appropriate share of world trade for developing countries through the expansion of processing, diversification and full participation in transport, marketing and distribution of their products... (B) Deep restructuring of world production on the basis of a new international division of labor through improved access to the markets of the developing countries for the manufactured products of developing countries, transfer of technology on favorable terms and conditions, redevelopment of industries from developed countries to developing countries... (C) Radical overhauling of the present international monetary arrangements, which are characterized by the absence of a rational, equitable and universal system, the anarchy of chaotic currency fluctuations, haphazard growth of international liquidity, widespread inflation, lack of responsiveness to the needs of developing countries and the domination of decision making by a few developed countries. The new system should remove the dominant role of international currencies in international reserves, ensure parity in decision-making as between developed and developing countries, prevent the domination of any single country over decision making, and forge a link between liquidity creation and development finance; (D) Guarantee an adequate transfer of resources for development on an assured, continuous, and predictable basis with respect to the criteria of independence and in a non-discriminatory manner not likely to create division among developing countries; (E) Urgently determine a satisfactory solution to the problem of public debt, particularly for the least developed and most seriously affected countries. (F) Providing adequate resources and appropriate technology on favorable terms for investment to ensure increased production of food agricultural inputs in the developing countries... CONCLUSION: The Colombo Summit in the view of Heads of State or Government heralds a new phase in which the growing economic potential of non-aligned and other developing countries, creates a momentum for the establishment of the New International Economic Order, with a particular emphasis upon the new international monetary and financial system that is an essential element of that order. In the words of the Chairman of the Conference, Hon. Mrs. Sirvimavo Bandaranaike, 'If we really and truly want to blunt the weapons of imperialism and colonialism, we must surely fashion countervailing weapons in the areas of international money and finance.' Full text of Colombo Declaration

The Establishment of a Bank of the Developing Countries

Resolution for a Bank of the Developing Countries The Conference of Heads of State and Government of Non-Aligned nations, Recognizing that financial and monetary cooperation among Non-Aligned and other developing countries is a necessary aspect of economic cooperation and a practical expression of the concept of collective self-reliance; Conscious that the present international monetary and financial system is controlled by and directed to serve the exclusive interests of the developed countries to the detriment of Non-Aligned and other developing countries, and that this system is the product of a colonial era and imperialist exploitation of the developing countries; Aware that monetary and financial activity in many Non-Aligned and other developing countries is still controlled by the transnational financial corporations of developed countries which generate and export excessive profits and control and distort the pattern of trade and economic activity of developing countries; Noting that Non-Aligned and other developing countries lacking the strong bargaining mechanism of a joint banking institution have been completely denied reciprocal access to banking and other financial business in developed countries; Aware that the Non-Aligned and other developing countries have the capacity and the political will to mobilize their collective strength to increase their control over the international monetary and financial system; Taking note that there are growing elements of financial and monetary cooperation sub-regionally, regionally, and intra-regionally among Non-Aligned and developing countries, through the mechanisms of clearing and payments arrangements, cooperation among Central Banks and the links among national commercial banks; Recognizing that economic cooperation among Non-Aligned and other developing countries must now move into the phase of implementing concrete proposals and that the national commercial banking systems of Non-Aligned and other developing countries provide a framework for the establishment of a multinational banking enterprise among developing countries; Mindful of the economic viability of the opportunities available in the developing world which such a multinational banking enterprise could help to realize in a wide range of cooperative economic activities such as the finance of direct trade among developing countries, the building up of merchant shipping fleets, industrial and agricultural projects, deposit banking in developing and developed countries, merchant banking, stocking of commodities, short-term balance of payments facilities, and in other areas; Mindful too of the role which such a multinational banking enterprise could play in the strengthening of developing countries' capacity to control the international monetary system and eventually in the evolution of new systems of international liquidity and reserve creation for the developing world; Decides that the feasibility of establishing a Bank of the Developing Countries should be studied and that a group of experts from Non-Aligned and other developing countries should be convened to examine and make recommendations on the measures and modalities required for its establishment and operation, including the proposed statutes for such a multinational banking enterprise, and its legal status within individual countries.

Frederick Wills Calls for International Development Bank at United Nations

Immediately following the Colombo Summit, the Foreign Minister of Guyana, Frederick Wills, addresses the United Nations General Assembly in New York, on September 27, 1976, and calls for the establishment of a new international economic order through the creation of an international development bank and a debt moratorium for the developing world. Wills declared that "there can be no meaningful economic advance without the implementation of the New International Economic Order."

Wills asserts:

"The IMF and the Bretton Woods monetary system must give way to alternative structures like international development banks... The crippling problem of debt and the servicing of debt has assumed a special urgency. Developing countries cannot afford to depart from their basic and fundamental demand made in Colombo earlier this year calling for measures of cancellation, rescheduling, and the declaration of moratoria. We cannot afford to mortgage the future of unborn generations to the obligations of burdensome capital repayments and crushing debt servicing. The time has come for a debt moratorium."

Fred Wills to 31st Session of United Nations General Assembly

Frederick Wills at United Nations · Sept. 27, 1976 Mr. President, recently the Non-Aligned Movement held its Fifth Summit meeting at Colombo, Sri Lanka. in the Indian Ocean... At Colombo, the golden thread running through the resolutions and discussions was the determination of 85 countries not to sacrifice their sovereignty and independence of the altar of ideological nicety. Mr. President, we of the Non-Aligned Movement have in effect chosen not to be for one side or the other. We have chosen to be ourselves. At Colombo, Non-Aligned countries denounced all forms of interference and emphasized the need for unremitting vigilance in this regard. Here in New York, at this 31st Session of the General Assembly, I call on the international community to consider in earnest, measures to safeguard the integrity and sovereignty of small states and to discourage all attempts to interfere with their right to pursue the paths they have freely chosen for themselves. This, after all, is one of the fundamental principles enshrined in the Charter to which we all subscribe. But Mr. President, the security of developing states is inextricably linked with their economic survival and their economic advance. My delegation feels that there can be no meaningful economic advance without the implementation of the New International Economic Order as adopted at the Sixth Special Session. The Non-Aligned Movement and the Group of 77 have tirelessly sought to bring home to those in the developed world ever resistance to change, that the economic progress of the developing countries is in the security interests of the developed countries. The billions on this planet who live in the developing countries and whose existence is subjected to the constraints of the few who manipulate to their advantage the present-day economic system, have pinned their hopes on the modest program put forward in Nairobi [at the May 7, 1976 UN Conference on Trade and Development] and elsewhere. Their determination is adamant, inexorable, and relentless. The IMF and the Bretton Woods monetary system must give way to alternative structures like international development banks, which are not geared to the revival and reconstruction of Europe nor preferential arrangements for the developed market economies, but rather to the just distribution of the gains of an equitable global system.

The crippling problem of debt and the servicing of debt has assumed a special urgency. Developing countries cannot afford to depart from their basic and fundamental demand made in Colombo earlier this year calling for measures of cancellation, rescheduling, and the declaration of moratoria. We cannot afford to mortgage the future of unborn generations to the obligations of burdensome capital repayments and crushing debt servicing. The time has come for a debt moratorium...

Text of Full Speech

LaRouche Declares: The United States Must Integrate Itself Into The I.D.B.

In his capacity as a presidential candidate for the U.S. Labor Party in the 1976 Presidential elections, Lyndon LaRouche celebrates the historic decisions made by the Non-Aligned Movement at the Colombo Summit saying:

"We have succeeded in mobilizing 85 countries and 2 billion people around our program. That is what I have worked for all my life. Our small organization has accomplished what many termed impossible. We must use our victory at Colombo to organize the American working class behind our program. They want to do something but the average person lacks the sense of how to fight. Colombo changes this prescription. Colombo has shown these forces what can be done on a world scale with a cadre of a handful of people... The United States will have to integrate itself into the International Development Bank (IDB)."

How To Bring The U.S. Into The New World Economic Order

In the wake of the Colombo Summit, LaRouche defined what the United States must do to integrate itself into the emerging dynamic for a New International Economic Order. The statement issued from his campaign read: "Lyndon H. LaRouche, Jr., who authored the International Development Bank proposal on which the Colombo resolution was based, can assure you that the transition to an IDB economy will be smooth an orderly, as long as there is visible mass support for the IDB. Specifically, the U.S. working class must begin to mobilize around the particular pieces of legislation and industrial processes which will bring both the structure and productive capacity of the U.S. economy into compatibility with the goals of massive industrialization worldwide. The primary pieces of legislation are the National Banking Act and the Emergency Employment Act..." "The process we propose is best conceived as a national bankruptcy procedure. occurring under the declaration of a national emergency (provided for in the Emergency Employment Act legislation). Those banking institutions which have put most of their effort into speculating, will be those destructive parts of the firm who are lopped off and out of existence as so much cancerous wood. Following the necessary surgical operations, two processes must begin immediately and simultaneously. The first is the start of negotiations on treaty arrangements with the Third World, Comecon and European nations according to the foreign policy provisions outlined in the Emergency Employment Act: "The foreign economic policy of the United States is governed by the principle of increasing the nation's trade in raw materials and industrial commodities. with emphasis on capital goods exports, and entering into cooperation agreements with other nations, both industrialized and developing, to promote such general trade and the institutions of credit needed to facilitate it. To effect such results. the United States includes in its foreign economic policy a leading commitment to the internal and agricultural progress. using modern technology, by developing regions of the world, and pursues that policy in concert with both the developing nations and other industrialized nations. No one would deny that ample markets will be provided under such a policy... "The second process is the establishment of national economic development through the adoption of programs which stress the fostering of basic scientific research and its applications, the expansion of industrial power on the basis of emphasis on improved technologies and capital-intensive development. and upon the development of the national infrastructure to meet those goals. Such policies will require the rapid expansion of labor power. The ruling principle of national policy concerning the labor force is to provide the improved opportunities and conditions of employment, leisure, and essential social services which foster a rising material standard of living in households, improved health and fruitful longevity of the individual, and substantial advances in the cognitive powers of the population both as a deliberating political body and as a labor force emphasizing high proportions of scientists, engineers, skilled industrial operatives, and including farmers who are both producers and available skilled cadres for assisting the development of agriculture in other nations. "The net-result of such policies would be a growth rate of 25 per cent and above for the U.S. economy, a growth rate encouraged by a central government low-interest, high-liquidity credit regime. Because all issuance of credit will be tied to the direct production of tangible wealth in the form of expanded industrial and agricultural exports, high employment levels, and consumer goods including restoration of social services to pre-1971 levels, the very rapid expansion will be noninflationary."

1977

LaRouche Situates India's Role in New International Economic Order

In a two-part special report called "The Struggle For Indian Freedom: A New Program" [Part 1, Part 2], LaRouche states that India can lead the Non-Aligned Movement in declaring a debt moratorium as a "strategic weapon," as well as establishing the International Development Bank to promote world economic development: "The first contribution India must make in this battle is to lead the developing countries, in concert with leading Third World nations, in a declaration of moratoria on the payment of all debt to the bankrupt monetarist institutions of the IMF-World Bank and their aid consortia. The freezing of unpayable debts to the monetarists is not only morally imperative but is the strategic weapon we must wield to open the way to the establishment of a new monetary system. As the 1975 programmatic document, The International Development Bank, proposed, the central task of a New World Economic Order is to facilitate the greatest possible flow of technologies and industrial process from the advanced sector into the developing sector."

Excerpt from 'The Struggle for Indian Freedom'

Part 2

As far as the non-aligned world is concerned, the Indian leadership of that movement may rightfully claim that the fundamental conflict in the world arean at this time is not between capitalism and socialism, but between monetarism and its institutions such as the International Monetary Fund and the World Bank, and humanism as represented by both socialist republics and the workers movement and industrial capitalist factions committed to the idea of progress. India's special role in the fight for humanist goals must be one of contributing toward the formulation of a sound world monetary and commercial system that will replace the deadly and moribund monetarist monstrosity of Wall Street, the International Monetary Fund, and the World Bank. For full document, see 'The Struggle for Indian Freedom' Part 1 As far as the non-aligned world is concerned, the Indian leadership of that movement may rightfully claim that the fundamental conflict in the world arean at this time is not between capitalism and socialism, but between monetarism and its institutions such as the International Monetary Fund and the World Bank, and humanism as represented by both socialist republics and the workers movement and industrial capitalist factions committed to the idea of progress. India's special role in the fight for humanist goals must be one of contributing toward the formulation of a sound world monetary and commercial system that will replace the deadly and moribund monetarist monstrosity of Wall Street, the International Monetary Fund, and the World Bank. The first contribution India must make in this battle is to lead the developing countries, in convert with leading Third World nations, in a declaration of moratoria on the payment of all debt to the bankrupt monetarist institutions of the IMF-World Bank and their aid consortia. The freezing of unpayable debts to the monetarists is not only morally imperative but is the strategic weapon we must wield to open the way to the establishment of a new monetary system. As the 1975 programmatic document of the U.S. Labor Party, The International Development Bank, proposed, the central task of a New World Economic Order is to facilitate the greatest possible flow of technologies and industrial process from the advanced sector — both capitalist and socialist — into the developing sector. Such a new system ought to be designed to meet two primary requirements: 1) to facilitate the transfer of economic values among three generally distinct portions of the world economy, the socialist sector, the capitalist sector, and the developing sector, each of which, for historical reasons, adheres to different social-political determinations of wealth. It is therefore necessary to return gold to its historical monetary-exchange role for the final settlement of balances in exchanges among nations. 2) Such a new system must also establish criteria for short and long term credit issuance which will eliminate the practice of monetarism and fictitious money-lending and will meet the credit demands for an unprecedented drive for world industrialization. It can be done. The nature of credit is ultimately political. Whether credit will be used to promote world industrial development or monetarist looting depends exclusively on the program and moral content of the political leaderships who control the policies of credit-issuing institutions. Short of more detailed elaboration, what can by stated with respect to credit-issuing policies of such a future institution as, say the International Development Bank, is the following: The governing body of a bank of this sort, committed to playing the role of the central credit engine for a quarter-century world industrialization drive, must essentially represent the interests of the pro-industry and pro-progress governments and leading institutions of each of the three world sectors. The mutually agreed upon universal criteria for credit issuing policies must be the commitment of recipient nations to total mobilization of national material and human resources for technological, scientific, industrial, and agricultural progress. The policies of any national government can be judged only by those criteria of absolute profitability of the national economy which result from the mobilization of its resources. We, and any other nation, do not want charity, such as is bestowed upon the permanently immiserated. Rather than such degradation, we must demand of ourselves, a full effort toward self-sufficient development. This is the context in which India's national revival must be forged if that national revival is to meet with success and give to the people of our nation a rightful sense of human importance, accomplishment, and indispensability in the community of nations. The key task of the leadership that India needs now is to mobilize and harness this nation's resources for that great goal...

1978

Indira Gandhi Delivers Exclusive Interview To EIR Magazine

The year before her stunning comeback victory as Prime Minister of India, Indira Gandhi delivers the first of several exclusive interviews to LaRouche's Executive Intelligence Review magazine. In the interview, conducted at her home in New Delhi, Gandhi strongly defends a return to the non-aligned foreign policy of her father Jawaharlal Nehru, and insists that only a policy of aggressive government support for investment in science and technology can save India from crushing poverty:

"...Science and technology, this is essential to fight poverty. It is ridiculous to say that you can solve rural problems without science and without industry; you simply can't. In our scheme of things, there is no conflict between agriculture and industry; they complement one another."

In another interview with EIR immediately after her victory in the 1980 elections, Prime Minister Indira Gandhi elaborates on her development policy:

"India is a developing country, and development has been rather uneven. It is obvious that where there is industry it is much easier for that area to grow and for people to get more jobs. We have a program for developing backward areas and we have made progress in it... We have to encourage investment to increase production, we have to build up the distribution system for essential commodities... We have to take up again the special programs for the poorest and weaker sections of the population."

1979

LaRouche Defines Program For The Industrialization of Africa

The Fusion Energy Foundation, an international association of scientists founded by Lyndon LaRouche, holds an international conference in Paris titled "The Industrialization of Africa" on the subject of a New International Economic Order as the indispensable precondition for the development of the African continent. The proceedings of the conference are published in a book [pdf] whose preface declares: "The purpose of this present book is to make the ideas and conceptions accessible to a broader leadership and, thereby, to make it an active element in the present conflict over the New World Economic Order... The purpose is to demonstrate, in concrete form, a perspective for the development of the entirety of Africa as an alternative to Malthusian polices... to launch the industrialization of Africa in the context of the New World Economic Order in the 1980s."

Lyndon LaRouche authors a paper for the conference titled The Myth About Equilibrium Economics which contains a section called "The Hamiltonian New World Economic Order" in which he elaborates the Hamiltonian principles underlying his original IDB proposal. This document is a follow-up to a report LaRouche authored the previous year titled The Theory of the European Monetary Fund, in which he stated: "The success of the United States has been based on the same essential 'dirigist' policy outlined in the IDB proposal. This policy was articulated in Treasury Secretary Alexander Hamilton's 1791 Report on Manufactures... The crucial feature of Hamilton's Report on Manufactures is his proof that the sole source of wealth of nations is technological, capital-intensive advances in the productive powers of labor."

Excerpt from 'The Myth About Equilibrium Economics'

For full document, see The Myth About Equilibrium Economics For more than half a century, it has been well known that the application of twentieth-century science and technology can transform the semi-arid, starving region of the Sahel into the breadbasket of the African continent. President Franklin Delano Roosevelt outlined the main features of such a post-war effort to Prime Minister Winston Churchill during their war-time meeting at Casablanca. Each decade, governments, financial institutions, engineering firms, and others complete studies of new projects. To date, for Africa alone, we have a substantial accumulation of projects of investment which are not only technologically feasible beyond doubt, but which would produce a substantial contribution to the national surplus of the nations and the regions in which they are intended to be placed. Indeed, at this moment we have more sound projects to launch than the combined forces of the industrialized and developing nations have the present economic means to launch simultaneously. Our practical task for development is that of selecting a combination from among those proven projects. We must allocate limited capital resources for development to a combination of selected projects which, taken together, will have the optimal effect in raising per-capita output in the developing nations... I refer our attention on this point to the wartime policy-proposals of President Franklin D. Roosevelt. At the Atlantic and Casablanca meetings with Prime Minister Churchill, Roosevelt informed an understandably enraged Churchill that the United States was not going to fight a second world war for the purpose of once again saving the British Empire. Roosevelt added that under his policy for the post-war world, the United States would crush all efforts by the British and others to subject the international economy to "British eighteenth-century methods." Unfortunately, Roosevelt died on the brink of peace in Europe. To put the matter in the kindest possible terms, President Harry S. Truman was no Franklin Roosevelt. Excepting such cases as President Eisenhower's "Atoms for Peace" policy and the policies associated with Charles de Gaulle, the post-war Bretton woods monetary system has been a cancerous revival of what Roosevelt rightly denounced as "British eighteenth-century methods." This Bretton Woods system has meant leaving former colonial nations to carry independently their accumulated debts — independent of significant assistance from the industrialized nations. This is the phenomenon which developing nations often describe as "neocolonialism." On balance, since the death of President Roosevelt, the United States government has worked to perpetuate the old British Empire in thin disguises, and has done so by embracing what Roosevelt denounced as "British eighteenth-century methods." ...Without rejecting those methods, without junking those miserable varieties of political-economy, the New World Economic Order could not be brought into being. For such reasons, it is a wishful delusion to speak of the development of regions such as Africa without committing ourselves to the replacement and eradication of those kinds of economic doctrine associated with Cambridge and the London School of Economics. Since I began to gain public notice for my work on this matter, about five years ago, some important progress toward a New World Economic Order has been made. During the Spring of 1974, my associates and I proposed the immediate reorganization of the European Community's monetary structure into the form of what we termed then a "Golden Snake." We demanded the pricing of monetary gold at its price of production, not some fictitious gold valuation of the sort earlier used under Bretton Woods. We proposed that a gold-based EC currency-bloc would be made economically feasible through economic-cooperation agreements with the Comecon nations. Happily, that 1974 demand of ours has been satisfied on the initiation of President Giscard d'Estaing and Chancellor Helmut Schmidt. The establishment of the European Monetary System, combined with new accords among Moscow, Paris, and Bonn, has established the indispensable cornerstone for the new, needed world monetary system. During April 1975,1 announced a further proposal at a press conference in Bonn. This proposal was later publicized in a series of reports under the title of The International Development Bank... THE HAMILTONIAN NEW WORLD ECONOMIC ORDER The illustration I have just given I have emphasized because of its direct bearing on the New World Economic Order. The methods Roosevelt used for 1940-1945 war-mobilization in the United States are a model of reference for the methods by which I proposed to make the New World Economic Order a reality. Contrary to official U.S. government statistics, the U.S. economy as a whole is currently operating at a net loss. The statistical reports of economic growth and profitability are largely fictitious, they are based on including within Value Added items of revenue which involve non-productive or even outrightly wasteful purchases. The agricultural and industrial sectors of the U.S. economy, in particular, are in a cannibalistic phase, where a shrinking capacity is maintained by "triaging" part of output-capacity as a whole. Although the U.S. could secure export-contracts for capital-goods increasing the level of exports by about $100 billions annually, the U.S. economy has shrunk since 1966-1967 to the point that prompt delivery on such increased volumes of exports is presently doubtful. I emphasize the figure of $100 billions because that is the approximate level of increased annual exports of capital-goods the U.S. must contribute to launching the New World Economic Order during the course of the immediate four years ahead. Therefore, the problem of bringing the U.S. economy to the point it can deliver an additional $100 billions of capital-goods exports annually is a problem very much like the war-mobilization problem Roosevelt confronted in 1940. On condition that the European Monetary Fund is implemented in the way I have indicated earlier, and on condition that the United States and Japan are brought into support of the EMF, that will establish a new world monetary system, replacing the bankrupt and cancerous relics of the Bretton Woods System — the IMF, World Bank, and London financial market. This new system, being based on a true gold-reserve basis, can generate hundreds of billions of dollars-equivalent annually, provided that the credit issued is for sound projects, and that the credit is issued primarily for world-commerce either in capital goods or in commodities circulated in payment against capital-goods purchases. In other words, it is a world-wide, peaceful equivalent of a war-economy. On that basis, anticipating nuclear-energy plants to be a large component of total increased capital-goods exports, we are projecting levels of added world commerce in capital goods in the order of between two and three hundred billions dollars-equivalents annually, as soon as production-levels can be cranked-up to meet such requirements. East-West economic cooperation will be an essential part of this. For various reasons, the Comecon nations are not suited to become a significant part of the world division of labor in consumer products. Therefore, unless the Soviet Union, for example, were to meet its purchase obligations with a combination of gold bullion and primary commodities, there would appear to be important difficulties in the way of adequate expansion of East-West economic cooperation. However, the Comecon economies, especially the Soviet economy, have excellent potentials for producing high-quality capital goods for Third World use. Thus, the Comecon can increase its purchase of imported capital goods for its own internal development against the proceeds from supplying other capital goods exports for development of Third- World nations. Admittedly, this effort depends upon the subordination of old Third-World debt to the long-term credits of high-technology development. With a new, gold-based monetary system replacing the cancerous IMF, the suitable reorganization of old debt-structures can be accomplished without causing dislocations in the internal banking systems of industrialized nations... If those victimized regions of the world had lived under the hegemony of the "American System," rather than the British system, the hideous condition of much of the Third World would not exist to be remedied today... For full document, see The Myth About Equilibrium Economics.

Excerpt from 'Theory of The European Monetary Fund'

For full document, see The Theory of The European Monetary Fund ...The new monetary system is also the basis of a new world economic order, which will conform in every essential feature to this writer's International Development Bank proposal. That connection poses an intriguing and important problem. Although the writer's IDB proposal, first issued during the Spring of 1975, has performed a key contributing role in creating the climate for bringing the EMF into being, it would be incorrect to argue that the bulk of the persons influenced by the IDB and its side-effects have proceeded from the theoretical-economic principles embedded in that proposal. Rather, they have responded to their agreement with the policies embodied in the IDB, an agreement which is primarily pragmatic. As the new monetary system comes into operation, it will quickly become clear that those pragmatic premises of agreement with the IDB proposal are not adequate. The theoretical-economic basis for the IDB will then begin to appear in its true importance... What this writer accomplished in his theoretical-economic work embodies one of the most fundamental scientific breakthroughs of the present century. The mere fact that such a fundamental breakthrough is embedded in the basis for the IDB proposal properly suggests the nature of the difficulty the typically miseducated economist must experience in first encountering this theoretical work... For full document, see The Theory of The European Monetary Fund

1980

LaRouche Drafts Forty-Year Plan to Industrialize India

Lyndon LaRouche releases a program to transform India into an industrial superpower at a conference sponsored by Executive Intelligence Review and the Fusion Energy Foundation. Greetings to the conference are sent by Indian Prime Minister Indira Gandhi, who says:

"Since 1947 India has made considerable progress in science and technology. The world now recognizes the versatility and capability of our industries. Our aim is to make our country self-reliant... It is appropriate to assess our progress now and to look into the future. My good wishes to the conference on India's industrial development being held by the European Fusion Foundation and the Executive Intelligence Review."

1982

LaRouche Meets With Prime Minister Indira Gandhi in New Delhi, India

In April, Lyndon and Helga LaRouche travel to India where they meet with Prime Minister Indira Gandhi for the first time, along with several members of parliament, leading scientists, industrialists and economists. While in New Delhi, LaRouche addresses the Indian Council of World Affairs, as well as the Institute for Defense Studies and Analysis, and the Jawaharlal Nehru University School of International Studies. LaRouche then travels to Bombay to tour the Bhabha Atomic Research Center. LaRouche's speech to the Indian Council on World Affairs is titled "A New Approach to North-South Relations" in which he states that the program adopted at the Non-Aligned summit in Colombo must be the basic model for achieving a new world economic order, and declares: "I propose that the developing nations, and the spokesmen of them, make a unilateral statement to this effect: that there will be international cooperation on East-West/North-South development interrelatedly; that conditions of political stability and peace be premised upon the mutual self-interests of the parties in promoting economic development."

LaRouche's Speech to Indian Council on World Affairs

For full document, see A New Approach to North-South Relations Thank you, Mr. Chairman, members, and guests. I have been involved in a significant way in the question of North-South economic development since approximately the beginning of 1974, with the aid of Helga Zepp-LaRouche... What we've achieved is a general comprehensive agreement along broad policy planning lines, of project objectives, over a period of 25 to 50 years. We agree, North-South and East-West, that certain general things have to be accomplished in the way of economic development projects over the next two generations; that we will organize economic cooperation, both East-and-West and North-and-South, toward the point of fulfilling those objectives; that we will organize credit mechanisms to facilitate meeting those objectives; and that we predicate our political relations and the resolution of problems of military confrontation and other problems upon this combined East-West/North-South trade... THE ANGLO-AMERICAN STRANGLEHOLD First of all, the dominant institutions of Western Europe and the United States are controlled by what we might call Anglo-American forces centered around the Swiss Bank for International Settlements, the International Monetary Fund, etc. These forces are absolutely determined not only to crush the developing sector, but to significantly depopulate it,u sing economic means to facilitate the depopulation. Therefore, under no circumstances while these institutions have power — while they can determine the policies of the United States and Western European countries and can dominate the international monetary system — is there a peaceful means by which the developing sector could secure significant improvement in North-South relations. Any attempt to find a pathway under these conditions is merely the search for a pathway to failure... What we have to do is intervene in this process: a plunge toward confrontation, depression, and possible thermonuclear war. To prevent these things, then, we must situate the effort to achieve a New World Economic Order in the effort to avoid war. How do we propose to do that? ...What is the positive policy which would substantiate my proposal — the proposal, again, that we establish an East-West/ North-South three-way agreement on long-term economic development, and that we predicate political detente between and among the systems on the basis of that agreement to 20 to 50 years of development in the period ahead... History therefore shows that no nation can develop as an industrial power without looting other nations, except by following the mercantilist policies of Colbert and Leibniz, that is, what later became known as the American System. The American economy was developed under the American System, as laid out by Alexander Hamilton in a series of reports to the Congress from 17S9 to 1791, concluding with the December 1791 Report to the Congress on the Subject of Manufactures. Up to Lincoln's period, every period of successful economic development in the United States was done under the aegis and under the policies directly following from the American System... Let me just indicate to you what is the issue and what is the possibility of mobilizing for example, Americans, and people in Western Europe, for an American System economic policy as the internal feature of this East-West/North-South development effort. POTENTIAL RELATIVE POPULATION DENSITY In scientific economics, we start with only one metric. That metric is potential relative population density. By that we mean the average number of persons we can sustain per average square mile through the productive labor of that population alone. That is, what is the ability of the population to reproduce and to maintain itself? That's the fundamental measure of economics... We could sustain quite comfortably tens of billions of people on this earth, at standards of living in excess of those found in Western Europe and the United States today. We have the technology. The first thing we have to do is make sure that about 35,000 to 40,000 kilowatt hours of electricity is generated per capita. If we start with this energy supply, the developing sector can very quickly bring the standard of living up to that comparable to Western Europe and the United States. We have the technology-we just have to have a little nuclear energy, otherwise we can't do it. In the future, we can go into space. And with what we know now, we could build earth-habitable locations in space sometime during the next century, at social costs not in excess of the social costs of maintaining a person on earth today. So there are no limits to resources; there are no limits to population. The more creative people we have, the more creativity we're going to have, and the faster we're going to grow. Resources are not a problem. Our problem is to determine what policies will actively increase both the potential of the population density and the quality and opportunities of the individual in society. That's what economics ought to be concerned with. And the monetary side of the thing comes in as a secondary consideration. That is what I define as economic science. The way society achieves an increase in potential relative population density is chiefly by injection of new technologies, or advanced technologies, which represents man's mastery of the lawful ordering of the universe in a more perfect way. By injecting these more powerful ideas about the universe into the practice of production in high-technology industry and basic infrastructure, we increase the average person's power to produce, increase the number of persons we can sustain, and increase the standard of living which we are able to provide by means of that labor. The problem is to sustain this process of injecting technology. First of all it means we have to have institutions which make technological progress the efficient instrument of national policy. Technological progress is the first proper instrument of policy of any nation. Secondly, within that, we must promote education and science comparable to what that requires. We must educate to produce individuals in whom all creative potentialities are optimized, as citizen as well as producing persons. We must educate to the level that our technology and technological progress require. We must realize that progress results from investment and reinvestment. We must have policies under which the margin of wealth-which is comparable to pro fit measured on a national scale-is invested in improving the scale and quality of production. We must be dirigist, we must plan to cause this surplus to go into the areas which are of greatest benefit to the nation. This means technological progress in agriculture, in industry, and in basic economic infrastructure. The other investments will have to go tagging along at a lower priority... We insist that the power to create credit must be reserved to the government alone, the government of sovereign states. The government of a sovereign state prints money. It does not itself spend the money that it prints. Rather, it loans this money, in currency notes, to a well-regulated banking system, so that the capital is made available for a few categories of projects of public and private investment, so that the capital may be available on a medium- and long-term basis at low interest rates to meet those objectives which are agreed to be in the national interest and require capital. This arrangement must be' put on a gold-reserve basis, otherwise we would have trouble with international relations. We require gold-reserve issues of currency by the state through a regulated banking system to provide ample credit for medium- and long-term investment at reasonable interest rates for those categories of improvement of agriculture, industry, and infrastructure which we have agreed are in the national interest. If somebody wants to borrow for something else, that's their business, but they shall not use the funds of the state for that purpose. If somebody wants to loan their savings for that purpose, they may. These restrictions are necessary to prevent inflation and to maintain national priorities. This is not inflationary, contrary to what the British say. If I were the head of the government of the United States, I could print as much money as I chose, and by this system I could never inflate the economy. Because before any money is spent, it must be lent to utilize idle resources, or otherwise idle parts, labor, and capacity. And it is lent only to create economic infrastructure or to create improvements in agriculture and improvements in industry, all of which are beneficial to the economy. These improvements increase national productivity, which increases national wealth per capita. And that is our credit policy. The creation of a new economic system may be simply accomplished if those industrialized nations which either have or can have a large surplus capacity in high technology capital goods or production issue credit on a gold-reserve basis. Since they don't have to borrow from anybody, these nations can lend it at any price they choose. The new credit could be lent at 1 percent interest, it could be lent on deferred payment terms; it's no problem. If the state creates credit, that's not a problem. Then this created fund, which corresponds to the otherwise idled productive capacity of the industrialized countries, is lent for long-term and medium- term credit for investment by the developing countries. I estimate that the order of magnitude of this credit-generating capacity should be between $200 and $400 billion per year added to the present level of development. That means that the governments of the developing sector will, through their national banking systems, borrow part of this amount, which is essentially borrowing the currencies of the exporting country in order to purchase exports of the type that they require from these countries. This means that these imports will be over and above the purchases that the nation would make on the basis of its current balances. This mechanism, if it were agreed to, would ensure, I believe, an adequate level of investment. It is quite feasible in terms of the productive capacities of the industrialized countries. Adding $200 to $400 billion a year to the present level of capital goods exported from the industrialized to the developing nations I think would be adequate to reverse the pattern of the developing sector; if we are patient. In some cases it will take longer than others. Furthermore, this would cause an economic boom in the industrialized nations-not because of profits on sales to the developing sector, but because the increased turnover of capital goods in producing industries would accelerate productivity and generate great profitability through increased productivity. This becomes now — at a point when the present international monetary system is breaking apart in a depression — the only alternative for the industrialized countries, particularly the capitalist industrialized countries, to the depression, which if it is unleashed will be worse than that of the 1930s, and much longer. It also represents, if followed through, a basis for common interest in economic development and in peace among nations of East and West and North and South. The nations of the so-called South, or some of them, must make a unilateral statement on the nature of the crisis and what must be done to stop the world depression and to stop war. They must declare that the solution to the crisis is to be found not by peace negotiations, not by disarmament, but by creating the conditions under which peace negotiations are unnecessary and in which disarmament does not require negotiation, it simply happens. Therefore I propose that the developing nations, and the spokesmen of them, either official or unofficial, make a unilateral statement to this effect: that there be international cooperation on East-West/ North-South development interrelatedly; that conditions of political stability and peace be premised upon the mutual self-interests of the parties in promoting economic development. Because this is a time of crisis, that which I have been proposing since 1974, which has been suppressed, rejected, which used to make me a figure of attack precisely because of prevailing institutions, may now be proven the useful solution. Now that these institutions have weakened themselves in depression and crisis, perhaps we can intervene to appeal to the conscience of nations which now themselves may despise these institutions. And if you of the developing sector begin to give leadership in this matter, at this time when your intervention is needed, perhaps we can stop World War III. Perhaps your intervention will succeed where previous paths of negotiation have failed. Thank you. For full document, see A New Approach to North-South Relations

LaRouche Meets With President of Mexico López Portillo in Mexico City

Immediately after returning from his meeting with Indira Gandhi in India, Lyndon LaRouche travels to Mexico City to meet with President of Mexico López Portillo on May 27, 1982. At a press conference at the presidential palace Los Pinos following the meeting, LaRouche proposes that the nations of Ibero-America unite to deploy a "debt bomb" against the City of London to force a restructuring of the world economic system as the means to ushering in the New International Economic Order. Multiple leading Latin American newspapers publish stories on May 28 covering LaRouche's proposal.

Leading Mexican Newspaper Coverage of LaRouche & Portillo

Excélsior: "LaRouche affirmed that he and President López Portillo were on the same side — the side which defends peace and stability. He stressed that this is important in a moment of crisis. This alliance should also embrace India, the countries of Europe, and the Non-Aligned, since only a bloc of forces of that size could succeed, he commented. LaRouche stated the need for creating a Latin American Common Market which would give the countries belonging to it the possibility of defensing themselves in the conflicts stemming from the international economic crisis..." Avance: "As an economist and as a friend of the Mexican President who shares his positions and his ideologies since both are for peace and stability, LaRouche offered his skills to defend the Mexican peso which has been undervalued far below its real value .... 'The economic problem is really a highly technical one and a political conflict. Defending the value of the currency of Mexico or any other country is a task as precise as the planning of a war. This problem is suffered not only by Mexico, but by all the members of the Organization of American States.' He concluded by saying that 'undervaluing your currency is of no use.' He added that the interest of the United States is for Mexico 'to have absolute sovereignty even in its monetary and credit affairs. That is the Monroe Doctrine and that is the faith of my country and therefore I will fight like a tiger to defend the peso.'" EI Sol de Mexico: "Defense of Mexico's currency or any other country's that finds itself in this situation is a very detailed job, as detailed as planning a war, said the Democratic leader, indicating that he has spoken with various leaders of Latin American countries; and he has stated that 'this is a problem which cannot be resolved by each nation alone but requires that there be a unity among all, providing external support from those countries who are friends.' LaRouche, who formed the National Democratic Policy Committee, stated his friendship for López Portillo, 'I am an ally of the Mexican President in his positions and his ideology. We find ourselves on the same side, that is to say, the side of defending peace and stability. In these times, it becomes increasingly important that we bring together the peace sentiment in Mexico and the U.S.'"

LaRouche Issues "Operation Juárez" Proposal for Nations of South America

Immediately following his meeting with Mexican President José López Portillo, LaRouche issues a major policy document titled "Operation Juárez" [PDF] in which he develops on his original proposal for an International Development Bank in the context of the debt crisis facing South America. LaRouche proposes that the nations of Ibero-America to use their collective strategic leverage as debtor-nations to unite in a common bloc and unilaterally declare a restructuring of their debts and the establishment of a new monetary order. The formation of an international development bank among these nations, would serve "as a coordinating agency for planning investments and trade-expansion among the member-republics," LaRouche says. "This bank will soon become one of the most powerful financial institutions in the world." he declares. "If a sufficient portion of the Ibero-American nations enter into such an agreement, the result is the assembly of one of the most powerful economies in the world from an array of individually weak powers... The Ibero-American continent could rapidly emerge as a leading economic power of the world, an economic super-power."

Excerpt from LaRouche's 'Operation Juárez'

Operation Juárez · 1982, Lyndon LaRouche For full document, see Operation Juárez If presently prevailing policies of the U.S.A. and Western Europe continue, it is presently just slightly less probable than certainty that there will be a general financial "crash" within the Bretton Woods system's remains during the month of September 1982... This crash might be prevented. That prevention would require a profound shift in U.S.A. monetary policy executed during the present month... The case of the Ibero-American external debt exemplifies an important aspect of the problem. We have a debt in the order of approximately one-quarter trillion dollars' denomination... COLLECTIVE NEGOTIATION OF DEBT-REORGANIZATION Unless the bankers of the United States of America are collectively insane or babbling imbeciles, they will joyously embrace a proper proposal for collective financial reorganization of the Ibero-American debt. However, they will probably resist such a proposal to the teeth unless it is made by collective action of several prominent nations of Ibero-America in concert... We now examine, one by one, the key aspects of such a debt-reorganization negotiation... It is sufficient to rewrite a new series of debts, and debt-payment schedules, to replace the previously-existing debts and payments schedules. The new issues of debt replace, or "buy up" the old... However, before we can determine what will be a feasible schedule of debt-repayments, we must design a new program of investments and operating policies for the enterprise. The reasonable performance of the enterprise under that new investment and operating program informs us what a reasonable debt-payment schedule would be. We design the debt-repayment schedule accordingly... "Common sense" may recommend to us that a great portion of the debt were better simply written off—a common condition among "least-developed nations" today. In negotiations of such matters, we must be guided by an eye to the principle of equity. Much of the post-1974 condition of finances of developing nations would not have occurred but for the virtual thuggery of Henry A. Kissinger and others, in enforcing the irresponsible and incompetent policies resolved at the 1975 Rambouillet conference and subsequent such conferences. Many of the debtor-nations were forced into refinancing debts at immorally usurious rates, and with other lunatic arrangements, at the point of a gun — sometimes, quite literally Kissinger's guns. Such features of the carried-forward debt of nations can not be considered exactly a debt contracted in good faith... The commercial banks of the U.S.A. (for example) heavily exposed in Ibero-American debts are frequently on the verge of technical bankruptcy themselves, because of margins of debt in their portfolios which are already or imminently in default. We propose to them, to help to save them from bankruptcy, if they will only be collectively reasonable, with suitable help from their federal government. We propose to establish a mutually agreed cut-off date for further accruals of existing contracts of indebtedness of Ibero-American republics. After that date, no further interest-payments will accrue on those contracts. Effective that same date, each of the debtor-nations will deliver to the creditor-banks a portfolio of bonds equivalent in total value to the accrued value of the previous debt-contracts up to the cut-off date. The old debt is thus "sold" for the new debt. Naturally, it is not quite so simple as that, but that is the crux of the matter. The portfolio of bonds delivered by each debtor to each creditor will have the following most notable features. 1. The interest-rates on the bonds will be nominal, approximately 2 percent per annum. 2. The final date of payment of principal on the total indebtedness will be significantly later than the schedule indicated by the canceled contracts. 3. In some cases, there will be a period of grace, before payments mature—a deferred-payment provision 4. Maturities of debt-payment will be determined by maturity-dates of each of a series of bonds issued. Unfortunately, more or less inevitably, some among the bankers of lesser intelligence will howl with protest: "We are being cheated out of the interest-income we would have received under the old contracts." Such imbecilic gentlemen need to have matters explained to them in very basic terms: "Try to collect the old contracts, and you force us to default, in which case your banks cease to exist." The advantages of the new arrangement may then begin to be apparent even to the most stupid among New York bankers... The new bonds will have low yield, but they will be discountable for certain categories of issuance of new medium-term to long-term loans. The new bonds will be a negotiable asset in that way, and should be a very high-grade variety of asset for these bankers, provided they behave sensibly. Through a combination of debt-rescheduling and correlated economic measures, the bankers involved will have a very important market for new lending on very sound terms throughout much of Ibero-America. This lending may not be significantly profitable in terms of income on the loans themselves; however, this lending will be very rewarding to the banks' clients among U.S.A. capital-goods exporters, and, consequently, to the banks themselves. Unfortunately, the rotted condition of both the U.S.A. dollar and the commercial banks is so advanced, that the commercial banks could not dispose of such a debt-reorganization by then-own independent resources. If the problem were merely need for debt-reorganization in foreign accounts of those banks, what is proposed could be accomplished through negotiations with them. What is proposed would work to the advantage of the banks and the U.S.A., as well as Ibero-American republics, but this would require coordinated implementation of an already overdue monetary and banking reorganization in the United States. We are not insisting that acceptance of these proposals by the United States, is the only hope for the Ibero-American economies. It is the best alternative to be considered, and by a wide margin. Were the U.S.A. to refuse, for a period of time, the tasks of Ibero-American republics would be much more difficult tasks, but the alternatives are both workable and indispensable. Moreover, as we shall show, the steps to be taken by those republics toward bringing about successful negotiation with the United States are the same steps to be followed should the U.S.A. refuse that proposed debt-reorganization... IBERO-AMERICA MONETARY ORDER The cooperating republics of Ibero-America, must each and collectively effect reforms of their credit, currency and banking institutions... (1) In no republic must any other issues of credit be permitted, as a matter of a punishable violation of the law against immoral usury, excepting: (a) Deferred payment credit between buyers and sellers of goods and services; (b) banking loans against combined lawful currency and bullion on deposit in a lawful manner; (c) loan of issues of credit created in the form of issues of national currency-notes of the treasury of the national government. (2) Loan of government-created credit (currency-notes) must be directed to those forms of investment which promote technological progress in realizing the fullest potentials for applying otherwise idled capital-goods, otherwise idled goods-producing capacities, and otherwise idled productive labor, to produce goods or to develop the basic economic infrastructure needed for maintenance and development of production and physical distribution of goods. This is, at once, an anti-inflationary policy, and also a steering of limited national resources into those choices of governmental and private-entrepreneurial ventures most beneficial to the nation as a whole. (3) In each republic, there must be a state-owned national bank, which rejects in its lawfully permitted functions those private-banking features of central banking associated with the Bank of England and the misguided practices of the U.S.A.'s Federal Reserve System over the period from the latter's establishment into the present date of writing. (4) No lending institution shall exist within the nation except as they are subject to standard of practice and auditing by the treasury of the government and auditors of the national bank. No foreign financial institution shall be permitted to do business within the republic unless its international operations meet lawful requirements for standards of reserves and proper banking-practices under the laws of the republic, as this shall be periodically determined by proper audit ("transparency" of foreign lending institutions). (5) The treasury and national bank, as a partnership, have continual authority to administer capital-controls and exchange-controls, and to assist this function by means of licensing of individual import-licenses and export-licenses, and to regulate negotiations of loans taken from foreign sources... (6) The policies of taxation of the national government must be designed to expropriate ground-rent and usury income, to foster well-being of households, and to give preferential treatment to those classes of ventures which are established to be in the relatively greater national interest. Economic-development policies must inform taxation policies (7) In a number of instances, it is simply desirable, or even indispensable, that a severe currency-reform be implemented immediately. (8) Sovereign valuation of the foreign exchange value of a nation's currency must be established for Ibero-American nations. The first approximation of the value of a nation's currency is the purchasing-power of that currency within the internal economy of that nation. What are the prices of domestically-produced goods and services, relative to the prices of the same quality of goods and services in other nations. The emphasis must be upon domestically produced categories, almost exclusively, at least for first-approximation. By this standard, many Ibero-American currencies are presently monstrously undervalued. The result of artificially depressed valuations of national currency, is that the nation is being massively, savagely looted by foreigners, especially foreign debt-holders. The determination of exchange-rates by the IMF, etc., has often represented, during recent years especially, nothing more nor less than pure and simple theft, on a massive scale, by foreign lending institutions and others. This commonplace swindle of developing nations is premised on the fallacious argument, that the value of a currency in international markets must be determined by "supply and demand" for that currency, rather than the intrinsic value of that currency as a medium of purchase of domestically-produced goods and services in its country of origin. By manipulating international exchange-markets, to artificially rig "supply and demand" in a currency, a "case" for devaluation is presented as a demand upon the targeted victim nation. How much less domestic purchasing power does the Mexican peso have today, at one-third its nominal exchange-rate valuation, than a short time ago, at 24 pesos to the U.S.A. dollar? The devaluation has been an outright swindle of the nation and people of Mexico, almost at the point of a gun. A nation must fight financial and economic warfare against those institutions which attempt to loot it and its people by such improper forced devaluations of currencies. A nation can fight such necessary warfare to defend its currency better, if it has faithful allies sharing the same enemy and the same cause for themselves. AN IBERO-AMERICAN "COMMON MARKET" We propose that, within the Organization of American States, such republics as may choose to do so, should form an Ibero-American "common market." This "common market" would be based chiefly upon these institutional features: (1) Bringing their respective, internal institutions of credit, currency and banking into order, as specified here, earlier. (2) Establishing a common banking institution to facilitate exchange of credit, currency and trade among them, and as an institution of common defense of the financial and economic interests of the member-nations and the continent as a whole. (3) To make more effective use of the limited resources at their common disposal, to the equitable advantage of each and all. Taken as a whole, Ibero-America represents a spectrum of existing and potentially-existing capabilities of natural resources, agriculture, capital-goods industries, and other economic resources. What is not immediately at the disposal of the republics taken individually, is in large part at the disposal of those republics taken as a whole. Given the limited means for creating technologically advanced industries of each and all, the attempt of the republics to meet their needs in parallel represents a costly duplication of investment, by comparison with the better use of limited resources if a rational division of labor were to be developed among those republics. What is required is: (1) Agreement to prefer to trade within the community, rather than trade without it; (2) Medium-term and long-term trading agreements, through which it will specialize for export to members of the community, thus assuring a medium-to long-term market for products produced by a corresponding investment. A nest of reciprocal, multi-national trading-agreements of this sort, are intended to foster the most efficient use of the limited capital and credit available to each and all. (3) Fair-pricing agreements, combined with cohering tariff agreements, which have the effect of establishing a customs union among the members of the agreement If a sufficient portion of the Ibero-American nations enter into such an agreement, the result is the assembly of one of the most powerful economies in the world from an array of individually weak powers... The keystone institution of the proposed customs union is the inter-republic bank. This bank is established by treaty, to function as the common facility of the national banks of the participating sovereign republics. Its functions are, categorically, inclusively, these: (1) Inter-Republic Banking Functions (a) To serve as a central clearing-bank among the participating republics' national banks. (b) To mediate exchange of credit and currency among the national banks. (c) To act as a clearing institution for settlement of multi-national agreements among members respecting tariffs and trade. (2) Monetary Functions More Generally To facilitate maintenance of parity of exchange-values among the currencies of the member republics, and to defend those currencies as a bloc against external manipulations. (3) A Development Bank (Investment Bank) The bank serves as a coordinating agency for planning investments and trade-expansion among the member-republics. To aid in implementation of such agreements, the bank coordinates the mobilization of money-capital needed to ensure that all aspects of the agreed programs are adequately supplied with investment-development capital. There are two principal sources of money-capital for expansion: intra-system, and foreign. We have specified a monopoly for creation of money-credit by sovereign governments, denying this power to any private agency. We have thus ensured that the otherwise idled, salable goods, goods-producing capacity, and labor of each and all nations shall be adequately employed, insofar as performance-worthy borrowers-entrepreneurs are willing to borrow at low interest-rates, to put those idle resources to work in a manner consistent with national priorities for categories of development. The establishment of a customs union of the type proposed, means that the currency-notes of each republic can be issued as medium-term to long-term export-loans-capital to fund exports of its capital-goods production within the customs union. We have eliminated the need for a third-party lender among those republics. We have established a greatly enlarged autarkical development-potential among the members of the customs union. This system of intra-bloc medium-term to long-term capital-goods-export lending will operate soundly, on condition that the payments for such loans are predefined in terms of the importing nations' repayment through earnings from its own capital-goods or other exports within the bloc. There is, therefore, an underlying, medium-term to long-term barter basis for these agreements. Furthermore, for this and related reasons, it is desirable that the member-republics should prefer to purchase their imports from within the bloc, rather than from without it. A sharp and growing reduction in relative volumes of imports from outside the bloc should occur relative to existing categories of imports. The extra-bloc purchasing and borrowing potential of the bloc's member-republics should be concentrated for purchases of high-technology capital goods. This is not a dilution of the sovereignty of the member-republics. In negotiations for lines of medium-term to long-term credit, to implement multi-member-republic projects, the representatives of each republic will negotiate sovereignly, but with backing from the common banking institution, and, thus, implicit backing from other member-republics of the bloc. However, respecting financial relations with nations outside the bloc, the sovereign member-republics seek to negotiate loans for capital-goods through the facilities of the common bank, and to clear payments against such loans through that same common bank. This strengthens the bank's power to maintain a common defense of the currencies and credit of the member-republics. Not only are the members better defended, but the creditworthiness of each nation is increased; the creditworthiness of each and every nation of the customs union is greater than it could be outside that customs union. To aid this, a common currency of account should be established for the customs union. Loans negotiated through the common bank will be denominated for payment in this common currency of account. However, the bank will not be responsible for the debt of sovereign republics. Rather, the sovereign republic will settle its debt through its account with that common bank, and will settle in denominations of the common currency of account. This bank will soon become one of the most powerful financial institutions in the world, especially in the opinion of capital-goods exporting nations. For full document, see Operation Juárez

President López Portillo Demands New International Economic Order at UN

In August of 1982, President Lopez Portillo acts on LaRouche's proposals as contained in Operation Juárez by adopting credit controls on Mexico's currency, nationalizing the Mexican banking system, and announcing a debt moratorium on Mexican debt. On October 1, he addresses the United Nations General Assembly, where he declares: "The most constant concern and activity of Mexico in the international arena, is the transition to a New Economic Order... It is imperative that the New International Economic Order establish a link between refinancing the development of countries that suffer capital flight, and the capital that has fled... Let us not continue in this vicious circle: it could be the beginning of a new medieval Dark Age, without the possibility of a Renaissance....We cannot fail. There is cause to be alarmist. Not only the heritage of civilization is at stake, but also the very survival of our children, of future generations and of the human species."

Text and Video of López Portillo's Address to United Nations

President López Portillo Addresses UN · October 1, 1982 (Video available here.) PORTILLO: The most constant concern and activity of Mexico in the international arena, is the transition to a New Economic Order.... We developing countries do not want to be subjugated. We cannot paralyze our economies or plunge our peoples into greater misery in order to pay a debt on which servicing tripled without our participation or responsibility, and with terms that are imposed upon us. We countries of the South are about to run out of playing chips, and were we not able to stay in the game, it would end in defeat for everyone. I want to be emphatic: We countries of the South have not sinned against the world economy. Our efforts to grow, in order to conquer hunger, disease, ignorance, and dependency, have not caused the international crisis... After major corrective efforts in economic affairs, my government decided to attack the evil at its root, and to extirpate it once and for all. There was obviously an inconsistency between internal development policies, and an erratic and restrictive international financial structure. A reasonable growth policy was irreconcilable with freedom to speculate in foreign exchange. That is why we established exchange controls. Given our 3,000 kilometer border with the United States, exchange controls can only function through a banking system that follows the policies of its country and government, and not its own speculative interests or the fluctuations of international financial chaos. That is why we nationalized the banks. We have been a living example of what occurs when an enormous, volatile, and speculative mass of capital goes all over the world in search of high interest rates, tax havens, and supposed political and exchange stability. It decapitalizes entire countries and leaves destruction in its wake. The world should be able to control this; it is inconceivable that we cannot find a formula that, without limiting necessary movements and flows, would permit regulation of a phenomenon that damages everyone. It is imperative that the New International Economic Order establish a link between refinancing the development of countries that suffer capital flight, and the capital that has fled. At least they should get the crumbs from their own bread... The reduction of available credit for developing countries has serious implications, not only for the countries themselves, but also for production and employment in the industrial countries. Let us not continue in this vicious circle: it could be the beginning of a new medieval Dark Age, without the possibility of a Renaissance... We cannot fail. There is cause to be alarmist. Not only the heritage of civilization is at stake, but also the very survival of our children, of future generations and of the human species. Let us make what is reasonable possible. Let us recall the tragic conditions in which we created this Organization, and the hopes that were placed in it. The place is here, and the time is now.

LaRouche in Rome: 'The Theory of the New World Economic Order'

Lyndon LaRouche delivers a speech on October 20 in Rome titled 'The Theory of the New World Economic Order' [PDF] in which he says "I shall summarize the scientific basis for the establishment of a New World Economic Order." LaRouche states: "My chief personal role in the effort to establish a just new world economic order has been to apply my special skills as an economist to design policy-structures of economic and monetary policies." LaRouche elaborates the scientific theory behind his Operation Juárez proposal, specifying "potential relative population density" as the necessary measure for the performance of economies, and states: "We define economic science as a study of the manner in which the use of technological progress maintains and increases this potential relative population density."

'The Theory of the New World Economic Order'

Lyndon LaRouche · Rome, October 1982 For text of full speech, see: The Theory of the New World Economic Order ECONOMIC SCIENCE I shall summarize the scientific basis for the establishment of a New World Economic Order. My chief personal role in the effort to establish a just new world economic order has been to apply my special skills as an economist, to design policy-structures of economic and monetary policies. through which the general objectives of Populorum Progressio can be brought into durable reality over the period of twenty-five to fifty years ahead. My standpoint in economic science is essentially the policy adopted by the young constitutional republic of the United States, the policy which Treasury Secretary Alexander Hamilton was first to name "the American System of political economy." This American System was based on the discovery of economic science by Gottfried Leibniz, and was channeled into the young United States... There was a noble effort to revive this American System policy by President Franklin D. Roosevelt. Prior to his premature death, President Roosevelt had committed himself to a post-war policy of ridding the world of the institutions and vestiges of colonialism, and what Roosevelt described as the continuing evil of British eighteenth-century methods in the world's economic and monetary affairs. He projected what was then called an "American Century" policy for the post-war world, a policy centered around a system of great infrastructural building projects, such as transforming the Sahel region into the breadbasket of Africa. After President Roosevelt's premature death, the United States discarded Roosevelt's policy, in favor of the policies demanded by Prime Minister Winston Churchill. With U.S. support and toleration, the post-war monetary order of Breton Woods became a thinly-disguised neocolonialist order... My own efforts, especially since my Bonn, West Germany press-conference of April 1975 on this subject, have been chiefly my own work as an economist, taking advantage of my success in developing a mathematical-analytical apparatus of the sort required for a more refined application of the American System. For example, with aid of numbers of my immediate collaborators, beginning November 1979, we have published a regular quarterly forecast for the U.S. economy. This forecast has been consistently correct, whereas all competing governmental and private forecasts published have been consistently wrong to the point of absurdity over the same period to date. It is of practical importance that I indicate my accomplishments in economic science over other currents of poliical-economists, since the points tha