p The Rockefellers had decided five years earlier, during the Vietnamese Tet Offensive of 1968, to wind up the failed strategy of globally confronting Bolshevism with armed force in favor of a live-and-let-live agenda with Socialism. They sent Nixon and Kissinger to Peking to make peace with the leader of the world socialist stage Mao Zedong in 1972.
p I was familiar with many of these details because high ranking Rockefeller US agents had asked my mentor Frank Pestana for his help in arranging this “sit down” between Kissinger (then Nixon and Kissinger the following year) and Chairman Mao. Frank was the head of his own organization now (the US-China People’s Friendship Association), having previously been, along with his wife Jean Kidwell, one of the principal attorneys for the CPUSA on the West Coast. These two having left the CPUSA when it began its long slide down the slope of modern revisionism. In China, Frank met with the Chairman and PRC government boss Chou En-lai, and followed their advice to return to the USA and continue his work; along the way to help the newly emerging Progressive Labor Party which would replace the renegade CPUSA (having been taken over by the gringo modern revisionists and siding with the Soviet New Class bosses) to become the revolutionary (real) communist party in the USA! Chairman Mao would later refer to Frank as “my outpost on the West Coast of the United States.”
601p As 1973 opened, and the US was exiting from Indochina, the Cold War began to take on a new shape. For our purposes let us continue to follow the petroleum thread in imperialism’s many colored coat.
p October 16, 1973: Exporters Set the Price
p Dr. Hammer had broken the companies’ ability to set the price of international crude and introduced tough negotiated bargaining over price and profit sharing. The Egyptian and Syrian attack on Israel in the Yom Kippur War of October 6th to 12th, 1973, had placed the Arab nations and Iran in the oil exporting position they had been angling for since their first fledgling attempts to establish a price setting cartel (OPEC) a decade earlier. Namely, they were now in position to set the price unilaterally themselves.
p Deep Battle 1973
p Israel Faces Annihilation
p At mid-day October 6, 1973, hundreds of Egyptian and Syrian fighter-bombers struck Israel everywhere behind the lines while nearly two thousand field pieces opened up on Israeli positions on both the Egyptian and Syrian borders. Deep battle had come to
p Arabia. One could see the clear influence of Soviet military doctrine (known also as Deep Operations) which apparently had been well learned by both the Egyptians and Syrians as they blasted Israel’s fixed positions to bits and broke up their rear into so many scenes of chaos it was a wonder they ever got a defense together at all. They did, but had to threaten Arabia with atomic attack in order get both the US and USSR to step in before Israel was obliterated from the face of the Earth.
p Israel had the ability to mobilize 250,000 men within 24 hours and excellent strategic positions ranging from the Suez Canal (they considered their bulwarks along the Canal to be invulnerable) to strategic dominance against Syria and Lebanon. That was on October 5th, 1973.
p The next morning, 100,000 Egyptian soldiers, with 1,000 tanks waited to cross the canal and get through openings to be created in the bulwarks and do it quickly. In the event it took 4 hours under fire for the Egyptians to get their first tanks across the Canal, through the blasted-out openings, and within another hour were miles into the Sinai.
p Israeli tanks a few miles away tried to plug the gap in the Canal wall but encountered new Soviet anti-tank missiles which could be steered by soldiers on the ground during their flight. The Israeli tank force was completely destroyed.
p Unbeknownst to the Israeli’s (and needless to say to the always “intelligence” challenged gringos) the Soviet Union had installed its most advanced SAM’s to cover the canal against Israeli warplanes. So, while Egyptian armies blasted away the canal bulwarks the Israeli’s had built, made of sand, with high pressure water hoses, the Israeli counter strike by air flew directly into a trap — a killing bottle.) In other words, when the Egyptians and Syrians launched their surprise attack on the 6th of October, the Israeli air force flew against them and was caught in the SAM trap where most of its best jet fighters were blown out of the air! Without adequate air cover Israel was finished and Arab troops began to blast their way through Sinai and into northern Israel and the Golan Heights (occupied Syrian territory). 1200 Syrian tanks and 60,000 Soldiers were attacking and breaking through all along the line. Israel called for total mobilization of all reservists as well as active duty personnel. It took two days to get reinforcements together in an organized fashion to enter the northern fight.
602p Golda Meir begged Washington to save them by restocking their armaments. But the fact was also that Israel could not win on both fronts at the same time. The northern fight was most strategically important because the massive Arab armies were only a few miles from Israel’s heartland. —And, then for reasons unknown the Syrians stopped. They lost the initiative at just the moment they could have struck the decisive lethal blow against their enemy. The Israeli’s fighting for their very existence now pushed everything they had into the northern fight and began to retake some land. Within a day the Israeli’s were within 30 miles of the Syrian capital of Damascus!
p Coming to the assistance of Syria, Egypt’s President Anwar Sadat launched a powerful, but high risk, attack against Israel. Now came the biggest tank battle of the war. As Egyptian tanks moved forward and out from under their SAM cover, they left themselves vulnerable to Israeli warplanes, which knocked out 260 Egyptian tanks while losing only 20 of their own.
p Within three days Washington landed thousands of tanks and warplanes in Israeli ports. Israel had bought enough time to rearm, reorganize, and frighten their population to
p death about the otherwise imminent destruction of their country, them personally, and their property.
p The Israeli’s had to do something fast if they had any hope of winning because Israel cannot win a war of attrition. It is the smallest country in the world and simply cannot militarily prevail surrounded by every people in its neighborhood, all of which hated them and every fiber of what they stood for. Thus, Israel launched their own attack across the Canal and succeeded in destroying the SAM air screen so that the newly US supplied warplanes could blast the Egyptian Army on the West Bank into total disarray. It was Deep Battle again, in reverse this time.
p This time the Soviet President Leonid Brezhnev said he would intervene unilaterally if the US did not join in a joint effort. The US went to full alert with its triad strike organization. But, the US told the Israeli’s to back off — “consider you won.” For their part, the Egyptians lost. In the end, the Arabs had insufficient strength to continue. The Syrians were ready to sue for peace. By surviving Israel won the war.
p But, Israel had been so badly beaten up in the War she was in no position to enforce any wishes of her European and American imperialist sponsors. The US was in no position to intervene militarily in Arabia or Persia due to its ongoing commitments to its lost war in Indochina and the concomitant rebellion of the North American people which was so powerful that even the Cap Congress had to go along. No more imperialist wars for the moment.
p The Soviet Union on the other hand had no such constraints and had proven its reliability in supplying and then resupplying both Syrian and Egyptian forces. Furthermore, the Soviets had prevented the Israeli’s from pulling their fat out of the fire, at the last minute, despite massive secret US airlift of war supplies and materiel to the Israeli’s, by threatening military intervention and having a Soviet parachute Army standing by to drop into the Canal Zone, as Soviet warships carrying nuclear weapons closed on the Mediterranean coast.
p Meanwhile
p In Kuwait City the oil ministers of the Arab World conferred — first with the Iranians present — then among themselves alone. Coming out of the meeting was the announcement that the price of oil would be raised by some 70% and companies could take it or leave it. OPEC (Organization of Petroleum Exporting Countries) had teeth.
p Embargo, Super-tankers, New World Petroleum Order
p The oil weapon — the Arab embargo - had been unsheathed first by Nasser and now by Sadat. All the imperialist oil monopolies were threatened immediately by the ability of the Arabs to cut off all of their oil by shutting down pipelines, or if necessary blocking the canal again, or in the last resort setting the oilfields ablaze. Contracts, pipelines, all this meant nothing in the new real world. One technological innovation however remained to the imperialists and that was the idea of the supertanker.
p Congenitally unable to think in any but the most short-sighted unintelligent way when it comes to matters of greed the imperialists had refused to invest in research, exploration or anything else that was capital intensive. With a few exceptions. We have seen one of those in the form of the Schlumberger monopoly worldwide on oilfield service and we were about to see a second. The Japanese invention of the supertanker.
While the Gringo bosses and their Brit lapdogs went about trying to make excuses and disavow their alliance with Israel the Japanese had been doing something much more to the point. Namely building a super big oil tanker. They were taking the Nobel invention of cargo bulk oil shipping to its ultimate and final breathtaking step. Building ships of new steel so big they could carry enough oil to fund an entire market for an extensive period of time — furthermore these new super ships could pick oil up anywhere — meaning they were no longer directly dependent upon the exporting countries for anything.
p(Note how fast the Anglo-Saxon “supporters” of Israel were willing to abandon their “ally” when times got tough. Something the Israeli leaders had always known would happen; the reason they had prepared their defense in an atomic manner that in no way depended upon the same people who had let them be slaughtered in Europe before they had a homeland. Atom bombs are no joke and it is only Israel’s possession of those weapons — a product of their own initiative — which, in the end, saved them.)
p Today’s Israeli leaders should really take a long look at their alliance with US imperialism which is in precipitous decline and will be no more reliable to them now than it has been in the past. The Gringo dominated post-Yalta Middle East is dissolving overnight from Tunisia, to Egypt, the Gulf States, Yemen, Iraq, Iran, and even Saudi Arabia are all in play. Whatever comes out it will not be good for Israel. Israeli leaders have an alternative but they have to act fast. Failure to do so may lead them to the total destruction they almost suffered in the Arab attack of 1973. Fortunately the Jewish people will survive no matter what happens to Israel but Israel’s total destruction is not necessary and those with the ability should try and help their fellow religionists in avoiding annihilation which is the road Israel is currently on.)
603p US ship builders had been taking the position that supertankers could not be built because of the size and weight of the cargo and the insufficient strength of then available alloyed steels, since the onset of the Eisenhower Administration in 1953. However, Japanese ship builders were already building big super-big tankers and soon with the invention of super steel the entire project had taken on a new life. By the end of the Suez crisis in 1957 and 1958 the Japanese had the ships and the ability to travel to Iran and Arabia and just about anywhere else to pick up loads of oil and get it back to the industrial heartland of their new Empire. Within a decade Japan was creating supertankers with five times the capability of these early ones; furthermore, in 1968 six new Japanese tankers were getting ready to go on a permanent run from Iran to Japan — each with a capacity in excess of 300,000 tons of cargo — seven times the size of the first generation (1957) supertankers.
604p No longer would physical control of the oilfields be the key issue. Now it would be price.
p British Capital Gets Lucky
p Always preferring to steal rather than work to get what they want the Brit capitalists along with their French allies had lost Arabian oil to Nasser and the Arab Revolution. What happened to save them in the end was the huge oil strike in the North Sea.
p The same year as the Arabs almost liquidated Israel — 1973 — exploration offshore Norway and the UK had yielded evidence of enormous quantities of oil in the North Sea
p and at levels not even very deep. By 1975 Britain’s labor fakir Prime Minister Harold Wilson was able to see that by 1980 Britain might well be the head of OPEC.
p The Iranian Islamic Revolution
p The corrupt US puppet Iran Regime of their creation — the Government of the so-called “Shah” of Iran, Reva Pahlavi, was doomed to overthrow when his nincompoop son, the 1960’s Shah, inherited the Throne. It was inevitable he would be overthrown by a coalition led by Iranian capitalist farmers under the leadership of the extremely orthodox Shia spiritual boss Ayatollah Khomeini. —And the exit for the Americans was extremely messy as they had no leadership whatsoever on the ground in Persia or for that matter in the halls of government in Washington. Ken Follett’s book On the Wings of Eagles describes the situation about as well as I think it can be described. (This is the story of how H. Ross Perot organized and carried out an armed rescue and prison break for a number of his employees being held in Tehran. In the process they released all the prisoners in Tehran’s central jail.)
605p For our purposes we should note that Iranian Communists seized control of the oilfields establishing what they called the Committee of 60 which was composed primarily of the Party’s technocratic arm in alliance with the industrial workers in the oilfield plants and refineries. However, without a strong Party organization in other critical sectors of the working class and working farming masses the Party could not proceed to the seizure of state power and thus was cornered eventually by the ignorant Black Hundreds of the Islamic crackpots and liquidated.
p -And, for our purposes in following the petroleum thread in this new multi-colored coat of international imperialist expansion we should note the Islamic Revolution succeeded in bringing the cap classes of the world to their knees once again. Even though Iranian output was only about 6 percent of the world’s then total daily consumption it came on top of dislocations in supply already being experienced by the competing imperialist oil monopolies. (e.g., where the four Aramco partners had locked out others (like BP) from Saudi Arabia — the main Arab producer). Also, it came after the Japanese had increased their private take of Iranian production (with secret agreements on price much to the disadvantage of the other oil monopolies) to some 20% of their total daily consumption and so faced the dire fact of almost immediate industrial paralysis should the new Muslim bosses in Iran choose to cut it off. A collapse of the Japanese economy would trigger a global capitalist collapse!
606p At the time all of this was going on in the late 1970’s I had my hands full in South America so, like you, I have had to learn much about those years from the historical record. By the time I got back to the States in late September 1980, the future of the US in Persia had been settled once and for all. No more oil for gringolandia from Iran except as it suited the Ayatollahs.
p Venezuela Standing Up
p Meanwhile in Latin America the tide was turning in favor of the national patriotic bourgeoisie and the national comprador bourgeoisie too. The latter joining the former time and time again to expel Gringoism (US control of local economies) in favor of themselves taking command of their own working people and exploiting them on their own for their benefit not the benefit of the gringos. Thus, from the early days of Juan and
p Eva Peron in Argentina (1940’s and early 50’s) to the Viceroyalties of the Gringo Regime (of the 1970’s and 1980’s) in Peru, Colombia, Venezuela, and Ecuador, the cry was arising: Peron Si Yanqui No! Peru Si, Yanqui No! -And so on.
p Alongside, inspired by Cuban Socialism, patriotic bourgeois, working class and farmer leaders throughout Latin America were forming guerilla armies to overthrow the local fascist and comprador (of US imperialism) regimes by direct Castro and Guevara like action.
p In Venezuela, as we have seen, the US imperialist oil monopolies and the US Government had thoroughly tamed the all-too-willing to-be-corrupted regime of General Gomez. Subsequent regimes in Caracas had been just as corrupt. The end to all of this had to come, which is to say the end for the imperialists was inevitable, as the national bourgeoisie in Venezuela was chomping at the bit for a chance to get rich running their own country. Again, alongside, was a rapidly expanding communist movement, inspired by the success of Fidel Castro and Che Guevara.
p In 1948 the oil monopolies succeeded in a military coup in placing a Colonel in charge of the Venezuelan government. The Truman Administration with its new imperialist foreign policy (having shit-canned FDR’s within two weeks, the new fascist bosses were in full command) fully backed the new military tyranny. The Gringo’s new boss was Marco Perez Jimenez and he was of exactly the same type as good old General Gomez (the oil companies had liked so well) before he had been unseated by “local left wing trouble makers” (As referred to by the CIA station boss report in 1958) in 1936. This was the period of Gringolandia attempting and often succeeding in establishing fascism in its own image throughout the world but especially in Latin America as in their earlier adventures against democracy in Guatemala and Cuba (organizing the fascist military adventures of Castillo Armas and Fulgencio Batista, respectively).
607p The 1958 overthrow of oil monopoly stooge Perez Jimenez brought a temporary progressivism to Caracas. Among other things this resulted in the new bosses sending military and other support to Fidel Castro then fighting the final life and death battles for Cuba’s liberation in the Sierra Maestra Mountains of Cuba’s Oriente Province.
p The first change in oil policy came as the new regime in Caracas hired once again the man who more than any other would shape the democratic direction for PDVSA: his name was Jose Pablo Perez Alfonso. Perez Alfonso had been around a long time with a lot of scrapes with the oil companies and their Government stooges. Most of this time as a result had been spent in exile. Now he had the opportunity to reshape Venezuela’s oil policy so more of the money would actually (1) come to Venezuela under the never adhered to but always quoted 50/50 principle, and (2) be for the benefit of a broader social program for the people of Venezuela.
p PDVSA
p The first great change occurred in 1973. It centered around the creation of a Venezuelan form of PEMEX which they called PDVSA (Pay Day Vay is how these Spanish initials are pronounced in Spanish with SAW thrown in at the end — S.A. is the Spanish equivalent for Inc. or Incorporated.) Petroleo de Venezuelos would evolve exactly as had PEMEX in Mexico; which meant the focus of corruption would be on the relationship between the Oilfield Workers Union and the imperialist oil bosses directly. Just as it was and is in Mexico today.
p Remember, just because the oilfields are national property doesn’t mean private enterprise is not involved. It is, and always has been, heavily involved in every way in Mexico and then also in Venezuela. Most oilfield service contracting in Mexico has always been done by Mexican privateers (e.g., Armando Leiva Torres) and international oil service monopolies (Shlumberger, Halliburton, NL Industries.) So it would be in Venezuela. -And the labor leaders in Mexico and later in Venezuela were labor gangsters almost to a man! Trillions have been extorted from the oilfield in both countries by these gangsters. This is a special form of legal combined with illegal corruption so unique it has its own group of US oil scholars in several universities.
p Crisis in Mexico 1982
p -And, in Mexico all was not well for imperialism either. I happened to be there and lived through the crisis.
p I spent the years 1982 and 1983 as the Assistant Manager for NL Industries Mexican oilfield service operations (where we operated under the duked-in trade name of NL Shaffer de Mexico SA de CV.) Shaffer was an oilfield Blow Out Preventor company assimilated by the Borg-like expansion of NL as one of the world’s three biggest oilfield service conglomerates. It already had legal status in Mexico and so we used it to bring in all the other new NL divisions such as NL McCullough which was the real operator for NL in Mexico and where I was a Logging Engineer (the key technocratic position in that realm of oilfield service known in the industry as “wireline” — logging, perforating and pipe recovery) and Assistant Manager for Mexico. (See volume 7 in my autobiographical series: Amazon Empire.) (BOP stands for Blow Out Prevention in the oilfield and later I would learn it also stood for Bureau of Prisons in Gringolandia’s totally corrupt federal judicial system.)
608p However, my knowledge of the Mexican oilfield went back to 1962, when, at the foot of Carlos Prieto, I learned about the STPRM (Oilfield Workers Union of the Republic of Mexico) and its then new boss Joaquin Galicia Hernandez known as La Quina, throughout the nation. His “closest comrade in arms” as described in the STPRM propaganda was then Senator from Tamaulipas, Barragan Camacho. Another labor gangster who had taken the number two spot next to La Quina in exchange for his oath of fealty and more down to earth self interest in exploiting every aspect of the oilfield workers union for personal benefit, as instructed by his new “closest comrade” La Quina.
p So I knew this and back then, twenty years earlier, in 1962, Carlos Prieto had told me how he had first personally encountered the new labor boss. Carlos had been on a trip to Tampico doing a documentary film for PEMEX. As they approached the refinery La Quina and his men had stopped the incoming caravan and La Quina personally mounted the cab carrying Carlos Prieto demanding money if they wished to enter and do their filming. Carlos told me he had almost lost his life without knowing it when he had refused. Upon telling this story to the local PEMEX manager of the refinery he said the manager became quite upset and left the room to pay La Quina himself and beg forgiveness for the ignorant intellectuals from Mexico City!
p Whereupon Carlos launched into a long diatribe about how the labor gangsters had killed off or bought off the communists (Plomo o Plata — Lead or Silver) and the sad state of labor relations in Mexico. I had this data under my belt by the time I arrived in Villahermosa, Tabasco, in September 1982 to take up the position of Assistant Manager
p for NL Industries with secret orders to shut down the entire Mexican operation when the word was given from Houston.
p The Gringo Regime had encouraged the Mexicans to borrow and borrow and borrow still more from the US oligarchy and its banks. That encouragement coming in the form of huge bribes. For the Mexican people, that borrowing being justified by the immense Mexican oil reserves and the assured annual income it produced, and for the social programs introduced and for which the Union claimed credit for itself. (These programs were important for the oilfield workers and their families but were a mere pittance compared to the billions being stolen outright by these union gangsters — many of whom I knew well in more ways than the obvious. See my book Third Crusade for the details.)
p The problem in 1982 flowed initially from collapsing oil prices globally and the subsequent inability of the Mexican government to pay its bills — lack of cash. Then it got complicated when the Mexican oil minister ran afoul of the PRI President Lopez Portillo (1976-1982). (The Pemex chief is considered a Minister despite the fact he is technically under the Energy Ministry.) The oil Minister was the Mexican aristocrat Jorge Diaz Serrano, a longtime partner of George Bush Sr. in a variety of US and Mexican offshore oilfield service and actual oil ventures including Zapata Petroleum in Texas and PERMARGO in Mexico. (PERMARGO was the Mexican government contracted Marine Drilling Company of Bush and Diaz Serrano. It gave these two capitalists everything every capitalist wants: which is no competition and assured governmental payment — this costs a lot in bribes in any country, including Mexico, and the USA.)
609p Diaz Serrano unilaterally made the decision to cut the price on Mexican oil to compete in the global collapse of oil prices. Every barrel of oil going out of Mexico has a designated dollar amount going directly to the bank account of the President (whoever he may be, then and now.) Thus, this cut in oil prices meant a cut in Lopez Portillo’s personal income! Lopez Portillo fired Diaz Serrano over this and more importantly removed “the finger”.
p What is “the finger”?
p When the PRI Mexican President announces his pick for successor, said pick is said to have received “the finger.” The PRI then proceeded to elect said person. His election was assured. Diaz Serrano had received it from Lopez Portillo and now it was gone.
p Lopez Portillo chose in his place another New Class type of technocrat named Miguel de la Madrid Hurtado (MMH). Before this was over Diaz Serrano would spend the next six years in prison. (That’s when I realized how duplicitous Bush Sr. was. If he wouldn’t help his friend and longtime business partner stay out of a Mexican jail when all it would have taken for a US Vice President was a phone call, I knew what kind of man he was — and his whole fucking family as it turned out.) Bush dumped Diaz Serrano because now he had locked up his “special relationship” with the Saud family and this would eventually make him into a trillionaire. Too bad and tough shit for “old friends.”
p On this date I arrived in Villahermosa with my formal assignment as Assistant Manager for all of NL Industries operations in this most important foreign NL district (even though we only made about $300,000 per month in Mexico it was still the biggest foreign operation for that conglomerate at that time. Surprisingly even more than we made in the North Sea at that time.) Of course I had my secret orders to prepare to shut
p down the entire operation when the word was given either from Houston (operational HQ for NL) or New York (where the rather parasitical Board of Directors for NL was sitting at the time. Their days were numbered too; although they didn’t know yet about Harold Simmons and his soon to come hostile takeover.)
p Lopez Portillo had appointed another famous Mexican aristocrat as Finance Minister in April (1982) and now came to depend upon him and his famous name to help in removing Diaz Serrano and the entire PEMEX bureaucracy that had sworn allegiance to him. The new Finance Minister Jesus Silva Herzog was himself also a very well trained technocrat. Furthermore his father had been involved in the original nationalization of the Mexican oilfield (1938) and was an early Director General for PEMEX. Together these two managed to get the nation to accept several things including the reorganizing of PEMEX under leadership agreed to by MMH, the incoming President, and the nationalization of all of Mexico’s banks!
p In the midst of this mess we (NL) were not getting paid and when I arrived had not been paid for nearly one year. It was for this reason the NL bosses wanted to shut down the Mexican operation. It wasn’t that the Mexican’s refused to pay; it was they didn’t have the money to pay us for the “tickets” we had written monthly for services and which they had signed and agreed to. There were many other more important people to be paid with what they had.
p What to do?
p After I saw how well run the Villahermosa district was thanks to the best manager I have ever known — E. King Freeland Jr. — I decided a wiser course was available and decided to pursue it.
p Of course the reality ignorant US bureaucrats in Houston and New York did not know how to get paid because they are the typical children of the US petit bourgeois New Class. Raised and educated in a fairy tale like way at ruling class prep schools like Andover these guys can barely get a hard-on, let alone figure out how to deal with the real world fucking they have to get into to work in a third world shit-hole like Mexico. If you want to get paid in these places you have to pay yourself! Yes you have to pay the paymaster to get at the front of the line. Anyone with any street knowledge of Latin America at all would have known this. Of course, those of you who have read my three Peruvian books know I had garnered plenty of that.
p So I put the paymaster at PEMEX on my personal payroll. Then not satisfied with that I went to BANAMEX now owned by the Government and told them they would extend us full credit against our tickets. Just to be sure these bankers (I went to Mexico City to do this and then came back to the local BANAMEX bank chief to implement it) understood the importance of this cooperation to their own healthy wellbeing, in both cases I took with me Luis Contreras — number one underboss of the STPRM in Mexico’s Zone Five! Needless to say we got all we asked for and in fact even more.
p As Mexican payments to foreign contractors collapsed (only NL was being paid for some reason, Schlumberger’s boss for Mexico told me) Mexico formally defaulted. The gringo Regime had no choice but to work things out with the Mexicans and after several years of in-fighting between them it was. Then the other oilfield service providers got paid too.
p The initial moratorium agreed to by the Yank bankers and political bosses in Washington was converted into a “roll-over” and Mexico given the time it would need to
p put its house in order. Rising oil prices later on would take care of that and Mexico would not collapse again until the Gringo economy itself collapsed in 2008, a quarter of a century later.
p As the World Turns
p The Assassination of Miguel Zenteno
p As an interesting aside, MMH upon assuming the Presidency, had appointed in 1983, young, well-educated and oilfield experienced Mexican petroleum engineer Miguel Zenteno as the de facto number one, within the new oil ministry. MMH had given him complete authority to reorganize PEMEX contracting. Since this involved in Zenteno’s opinion the removal of the Union’s automatic 2% on all contracting and their guaranteed oilfield service contracting preference it was also a death sentence, as it would turn out!
p My principal Mexican partner was my girlfriend Leticia Mari whose former husband (Armando Leiva) had been Mexico’s biggest oilfield service privateer - drilling and bringing-on-line, hundreds of oil wells in Mexico’s major oilfields now in Zone Five (Tabasco and adjacent on and offshore drilling sites.) At the time I met her he had amassed 400 million dollars and was deriving many millions more per month in royalties! At my request she had organized a luncheon at Winston Churchill’s (a major ruling class watering hole in Mexico City) where our (NL’s) entrance into the Vera Cruz zone of Mexico’s oilfield had been agreed upon among the “wives.” Who in this case included the wife of Mexico’s oilfield paymaster, and the new wife of this new Pemex master engineer Miguel Zenteno. As a consequence Leticia and I had been invited to a get together in Poza Rica with PEMEX middle level engineers and Engineer Zenteno, his wife and children. We were to go there on a PEMEX Lear Jet the following Thursday.
610p What happened in fact was only minutes after she had returned from that luncheon with all this news we were telephoned by Don Andres Sanchez Solis, boss of Zone 5 for the STPRM (Oilfield Workers Union of the Republic of Mexico) whose wife’s home we were living in, in the Mexico City exclusive quarter called Polanco. He asked that I take them on an Opal hunting trip to Queretaro that Thursday and Leti thought it was the better choice for us than the trip with the Zenteno’s to Poza Rica, since we now had in hand the contract to expand NL’s interests in Mexico at Poza Rica.
p The night in question came and after a long day of recovering Opals we two couples danced the night away in Queretaro’s fanciest five-star hotel. A kind of super luxurious one-storied “Best Western Motel” like Hotel with full blown animal shrub sculptures (as in the movie The Shining). Upon returning to the room and turning on the TV we saw the news that Zenteno’s Lear Jet had blown up over Poza Rica killing all on board. The engineer, his new wife and their children, the pilot and co-pilot were all dead.
p Of course this was no accident. Not the explosion nor the fact I was not on the plane. Actually, I had been saved by accident. Doris Sanchez Solis was the best friend of my girlfriend. So the world turns.
p T. Boone Pickens, Michael Milken and Me‘
p In 1984 I struck out in an independent way in Mexico and brought NL to the negotiating table not as an employer but as a “target.” As I say all of this was happening
p in 1984, a quarter century ago, but the ramifications would last the better part of the remainder of my life.
p Again
p It all began for me when I met newly divorced Leticia Mari in Villahermosa, Tabasco, Mexico, that year. It was one of those cases of “fascination at first sight”. The woman for whom I had fallen was extraordinarily experienced in the real world of Mexican oil and the politics that go along with it. She had climbed the success ladder with her previous husband over a period of some fourteen years; as he climbed from being a company man to the richest privateer in the Mexican Oilfield with at least four hundred million dollars in cash and a monthly income (royalties paid on a permanent ongoing basis as part of the contract with PEMEX for his COPSA services) of commensurate size. To make this long story too short let me skip ahead to January 1985. (For the details of how I got into the oilfield service business and then into the oil business itself you are invited to read the forthcoming Volumes 6 and 7 of my autobiographical series which are entitled Third Crusade and The Eunuch Wars).
611p The following year, 1985, was a critical year because it was then I formed Jason Smith Petroleum Corporation (JSPC) in Los Angeles and proceeded to raise investor money and drill for oil in the Powder River Basin of Wyoming; specifically, in Weston County, near the small town of Upton. My strategy was simple. Search for oil in the cheapest way, which meant on land and in an area relatively well known geologically and simple to get equipment into, for less-than-deep total depth (TD.)
p Deep in the oilfield means over 14,000 feet and ultra-deep means beyond 20,000 feet. This has a technical component and most importantly a financial component, as oilfield service price book charges increase at both deep and ultra-deep frontiers by a factor of 100% or more. (Everything in the US is done by oilfield service companies as the Oil Companies themselves are simply financial entities without in-house expertise of any kind in geology and engineering let alone drilling and all the jobs that go along with it.)
p Some of the most important of these jobs and therefore the work of specific service companies are exploration, leasing, platform preparation and drilling, drilling mud, wireline (perforating, pipe recovery and well logging), fishing companies that specialize in recovering tools dropped down the hole, and many more.
p My first well in the Powder River Basin’s Wyoming province reached TD at about 8000 feet which made it the deepest well in Weston County. Here we hit considerable oil according to oil shows (as we later proved in federal court when the Gringo Regime’s prosecutors were pursuing their client’s (NL’s) desires in trying to put me out of business — which we also proved after I uncovered secret correspondence between the SEC flunkeys and Dock Parnell, NL’s so-called “security chief”.) That particular client being my former employer NL Industries. NL was scared to death I would put them out of Mexico and take that business for JSPC. They were right.
p I was the typical “small” oil man. Something akin perhaps to Dad Joiner in Texas we have reviewed above. My opponent — NL Industries — was one of the three biggest oilfield service companies in the world (Schlumberger and Halliburton being the other two at that time.) We reviewed Schlumberger’s origins in our discussion of the First Five Year Plan in Chapter 15.
p Halliburton was originally just a cementing company with a small wireline arm called Welex. Then it made a deal with Dick Cheney and this nothing politician jumped from being Wyoming’s only congressman to being Halliburton’s CEO. Along the way he and they would make billions as Cheney duplicated Bush I’s strategy as the fast way to the big time. Cheney’s new job as Bush II’s VP gave Halliburton everything every capitalist dreams of — no competition, guaranteed no bidding contracts, and the Iraq War to go along with it, which provided still more super profits via no bid contracting.
p Get Smith Forget About Madoff
p NL had one important asset and that was its ownership of the gringo SEC (Securities and Exchange Commission). They simply bought (bribed) SEC lawyers and some high officials in the LA US Attorney’s office. In other words the SEC had among their employee’s, many flunkeys in the US Attorney’s Office for Los Angeles and the US Securities and Exchange Commission (SEC), specifically at their local parasitical nest for the West, in Denver. Especially three scumbags named Dan O’Brien, Robert Fusfeld and David Abbot. Accordingly federal cops and prosecutors spent millions trying to put me out of business (and in jail) over several years (1985 — 1991).
p During that time, beginning in 1989, when numerous complaints about Madoff began to be filed with the SEC, they purposefully managed to miss this real con man (I was always a real oilman and the proof lay in the fact the totally corrupt US regime could never find an investor to testify against me) Bernie Madoff, altogether, even though he eventually made off with well over fifty billion dollars! Gosh I wonder if that was an accident?
p No, it wasn’t. It was the direct result of a direct order from the National Security Council! Why was I a greater danger to their system then Bernie Madoff?
p We have seen what NL was afraid of. What the US Government was deathly afraid of was another Armand Hammer — the US Communist we have reviewed above who by that time was untouchable, as a billionaire himself — and as President of Occidental Petroleum. We have reviewed some of Hammer’s successes in Chapter 26 foregoing.
In short, my problem was not just with low level scumbags like Assistant US Attorneys (e.g., O’Brien) or comical bureaucrats, (e.g., Fusfeld and Abbot.) If these had been all I had to confront we could have handled that. The problem came because it was the US National Security Council weighing in. These top spy bosses in Washington felt they had one communist oilman on their hands and did not want another! The National Security Advisor gave the Green Light to destroy JSPC and me.
p(This infuriated a few Special Agents with a sense of fair play in the FBI, because no matter how they may have felt about me and my politics, they saw the gross injustice being done to several hundred innocent investors by the Government’s actions. This helped me in ways I cannot yet divulge.)
p Additionally, and at exactly the same time, all the fattest of the fat US ruling families were scared to death of T. Boone Pickens who while much smaller than Hammer had proven that with the few hundred million dollars of value in Mesa Petroleum in Texas he could make himself into one of the most important “independent”, albeit small, among Middle-sized oilmen. (Superior Oil was valued over
p five billion at the time and the biggest of the Middle-sized oil companies, with about 25 times as much capital as Mesa.) Jason W. Smith was in the National Security Council’s view quite capable of raising a hundred million and that would put everyone into play and by a communist! They were, of course, right on all counts.
p Finance is the Gun in USA High Level Gangster Economics
p Politics is Knowing When to pull the Trigger
p The Gringo federal political system is simply a “regularized and fair” gangland system of the Meyer Lansky type — just on a much bigger scale. The gun behind Pickens, which terrified these fat cats, was not Mesa which was strictly “small potatoes”, but the financial genius Michael Milken down the street from us (so to speak, I was in Culver City, Howard Hughes Jr.’s old stomping grounds) in Beverly Hills (and no Hillbilly’s) where his Drexel Burnham Lambert financial operation was raising billions of dollars for Pickens who intended to take over “their” (Rockefeller, Morgan, Mellon etc.) oil companies by hostile stock buying. This was the death knell challenge for each and every one of the Seven Sisters.
p Milken had invented the idea of investors getting big returns (rather than tiny percentage offered by the ruling families and their banks) by buying into companies with scientifically derived real world values using an older, time-tested and tried instrument, usually associated with “penny-stock” offerings The cap press immediately dubbed these new instruments as “junk bonds.” Milken and I would both end up in a federal prison because the federal courts are totally corrupt, but along the way we kicked a lot of ass and did not go willingly! Remember US federal judges are just another category of corruptible federal bureaucrats. (Not just my opinion but judging by the number of them in federal prison, a fact agreed upon by the US oligarchs.)
p The mechanism was simple and worked in this fantastic new way because investors had confidence in the issuer. It derived from the fact Milken had proven over many years his ability to investigate a given company and when he found it well managed, with real potential, he would advise his private clients to buy its stock, perhaps putting one of their own on its Board of Directors just to be sure this potential was realized once injected with capital. The buy-in was done via the old penny-stock route where these “stocks” were now called “bonds” and as we have seen were considered a new instrument by pundits and their press which immediately dubbed them as “junk bonds.” In actuality the only difference between Milken’s instruments and those considered by the cap press to be non-junk was that Milken’s paper was not insured. (On the other hand neither was the stock of most of the Fortune 500’s listing.) Milken’s cadre of investors understood this and if one believed Milken’s financial advice was good, as they did, then said person would buy, and buy in amounts he recommended. It worked because (1) Milken’s track record was impeccable and (2) because the greedy cap bankers had forced wealthy investors to search for some place, other than these banks, to put their money.
612p When Milken met Pickens in 1983, Mesa was as I say a small entity (a minor independent, incredibly small compared to the Seven Sisters.) Thus, the fat cat directors of the Seven Sisters (who usually knew little or nothing about petroleum geology or engineering) laughed at the idea one of them could be “taken over” by this upstart out of
p Texas. That was before they realized Milken could raise in thirty days as many billions of dollars as Pickens would need in taking over each and every one of these companies as he proceeded one by one. The end of the Old Order was written on the wall.
p Cities Service
p Before Milken however, Pickens had experimented in 1982 in the take-over of big oil companies with a run at Cities Service. Cities Service was the original creation of Henry Doherty, and in 1982 was the number 19 oil company in the US and number 38 in the DOW listing of industrial concerns. In the end Armand Hammer stepped in and bought up Cities Service and Pickens cleared about 30 million dollars in this try out. By mid-1983 Pickens was deeply involved in offshore Gulf of Mexico drilling (with fifty one drilling rigs working simultaneously, which mean huge daily outflows of cash) and needed ten times that much ready cash just to stay afloat! (When I went into the oilfield in Louisiana in 1982 it was common to pay $250,000 per hour for a rig only working in shallow “inland waters.”) Thirty million dollars as an outcome would buy a little time but otherwise was like pissing into the wind when you had to have 300 million!
613p Gulf
p Pickens got into the big time when he next targeted Gulf Oil that dangerous year (1983) when Mesa and Pickens could have been bankrupt at any moment. Gulf was one of the Seven Sisters and originally the financial engine of the Mellon family in the US (after Spindletop) and Kuwait. But to take over Gulf would take a lot more than fooling around with stock purchases on the order of what Mesa had done with Cities Service. It would take billions — perhaps 14 billion to take a majority position at Gulf!
p Pickens had learned a lot about Gulf in his fight for Cities Service as Gulf had at first been his major competitor in the hostile takeover front. Armand Hammer had ended the fight when he bought all of Cities Service stock. Now Pickens would put his knowledge about Gulf to work. Gulf was terribly managed and had been for a long time and had not found a new barrel of oil anywhere in the world for well over a decade.
p None of this would matter of course unless someone even bigger than Hammer were to get involved. Who could that be? Gulf’s President Jimmy Lee, laughed “J.R. Ewing is just a TV show” Little did he know a real life J. R. Ewing (Dallas) was already taking aim at him and his bullshit Board of Directors. Their Achilles Heel was their investor base they had abused and misused for many years. Gulf was vulnerable precisely because its appraised value was three times its then current stock value. In December, 1983, Gulf’s management survived its stockholders meeting by the narrowest of margins (52 to 48% against Pickens).
p Enter Michael Milken. In January 1984 Gulf was in play and Pickens was the major threat to Gulf’s management once again. Gulf decided to go for a “friendly” cap buyer. They found one in Chevron (another Rockefeller Trust spin off, earlier named Standard Oil of Southern California -SOCAL) and sold out for cash to the tune of 13.2 billion dollars which meant shareholders, who had gone from $41 per share to $80 per share by this time, thanks to Pickens and his Gulf Investors Group and Mesa, made some 6.5 billion in profit! Mesa’s share was an after tax profit of about 300 million. Exactly the amount Pickens had to have to stay alive and continue in the Gulf of Mexico.
p Univision
p While this was going on NL Industries using their so-called security chief Dock Parnell suborned the SEC flunkeys in Denver and began a non-stop attack on me and JSPC in Los Angeles. I had to have money to survive that kind of attack and I decided to try a wild card much as Pickens had just done against Gulf to get the 300 million he had to have to stay afloat. I decided to go after the Azcarraga family press, radio and TV in the USA!
p This Azcarraga Mexican oligarch family had illegally owned newspapers, television and radio stations in the USA since at least 1940. US law forbids foreign ownership of the press above about 10 percent, but as long as it was just the Spanish media the gringo racists had let it go. (Rupert Murdoch circumvented the US law on foreign ownership by first becoming a US citizen and then bringing in his fascist poison onto our airwaves. The Azcarragas had too much self-respect to do the same thing.)
p Now however, the CIA had, surreptitiously, for its own anti-Mexican establishment reasons, brought a case against the Azcarragas, which had ended in a recent administrative judge’s decision in this FCC case against that ownership. What had resulted was the longest opinion in such a matter ever issued and the bottom line was a divestiture order. They had to sell out and get out by June 1, 1986. They had been busy arranging a friendly takeover (much as had Gulf with Chevron) when I stepped in just before 5:00 p.m. on the last day, with a formal and registered offer in Los Angeles of over a quarter of a billion dollars in cash and securities with my own takeover company led by my father, former Idaho Attorney General, Graydon W. Smith.
p I was aware of what was happening in this industry because the Azcarragas were involved and had temporarily become the enemy of the far fascist right in Washington under Reagan. It was my business to know what the enemies of the people were up too as you should have surmised by now. Now it was my self-appointed assignment to stop the CIA plot anyway possible.
p These Gringo nutballs (typical of the screwballs that inhabit the CIA) thought they could influence the US Mexican-American population away from what they considered to be the “left wing” line of the Mexican press if they could force out the Azcarragas. Then they would put the Spanish press, radio and TV in the US into play and they would buy it out and convert it into the servile pack of liars that constitute the entire US English press, radio and TV already under their control. (They got their way with Telemundo eventually.)
p The SEC acting on the new Azcarraga orders at the same time they were implementing the NL program and the NSC desires, this time launched an all-out attack against me and JSPC. We simply did not have the money to beat NL and Azcarraga with the US Government helping both of them against me. I had to make peace on one front and engage in total war on the other. Not yet strong enough to win a two-front war we decided we had no choice but to whip NL first and then we might or might not return to the Spanish press fight depending on where it had evolved by that time. Either way I had to beat the US Government also, so it didn’t matter that much in practical terms whether we took on one or the other. But it made a big difference to me in trying to build an independent oil company in the US and oilfield service company in Mexico.
614p What emerged from the attempted SICC takeover was Univision. In effect the Azcarragas got some good advice and dropped the idea of direct ownership of all of the
p Spanish language newspapers, TV and radio stations, in favor of selling them to US buyers and supplying them with all of their content produced at the Azcarraga Televisa studios in Mexico City — as I say the result was Univision. In short, the Azcarragas sold the hardware and in the end made far more money on the software. The Gringo conspirators faded away as did we. The CIA plot foiled permanently.
p George H. W. Bush, Zapata Petroleum, Jorge Diaz Serrano and Me
p John D. Rockefeller had always kept a coterie of politicians at his beck and call. One of the stable had been Senator Bush from Connecticut. His son George Herbert Walker Bush (sometimes called Bush I after his presidency and that of his son Bush II) decided after World War II to give a shot at the oil business and accordingly moved to Midland Texas where he did the typical rich small oil man startup and eventually created along with a few pals Zapata Petroleum. Along the way he encountered the Mexican aristocracy.
p Chief new friend amongst Mexican New Class technocrats being Jorge Diaz Serrano, who became his partner in a new offshore drilling company called Permargo. This unholy combine of Rockefeller money and Diaz Serrano political power in Mexico gave these two what all capitalists want — namely, as we have mentioned before, the best of all capitalist worlds at its disposal — guaranteed Mexican Government contracts without competition.
p George H. W. Bush no longer needed to be in the oilfield. With Permargo he had the best deal any individual oilman in his position could have had. He decided to follow in his father’s footsteps. He had certainly learned as a child and as a youth from his father and from his ruling class prep school (Phillips Academy, Andover, Mass.) background (and Yale) the importance and potential great profitability of being at the seat of government in Washington when it came to making large amounts of money.
p Bush started as an oil industry congressman for Houston and then went through the obligatory steps starting with Gringo Ambassador to the United Nations, then Chairman of the Republican National Committee (at the critical time of Watergate), moving on to become the Gringo ambassador to the People’s Republic of China, and finally, boss of the Central Intelligence Agency. It was during these latter assignments his path and mine finally crossed.
p After a highly successful archaeological summer (1976) in La Jolla California (a northern suburb of San Diego) Richard S. MacNeish invited me to Andover (where he was Head of the Robert S. Peabody Foundation for Archaeology on the campus of this US ruling class prep school) to become his Assistant. While there he introduced me to the staff of the Anthropology Department at Harvard. I finally got to meet some of my hero’s in anthropology including Gordon Willey and others including Carleton Coon. Among the three bosses of the Peabody Foundation were Scotty (MacNeish), Gerald Piel (then publisher of Scientific American magazine) and George H. W. Bush.
p Mr. Bush was not terribly impressed with me (perhaps because of my obvious communist leanings) and did not deign to acknowledge receipt of a copy of my textbook Foundations of Archaeology when I sent him a copy (at his CIA office) hot off the press in 1976. Do you wonder why?
p Bush got back into big time oil after he became Vice President of the USA on the Republican ticket under Ronald Reagan (Reagan beat him for the Presidential nomination
p and he happily settled for this number two spot.) But Bush had bigger thing in his sights than a ceremonial position. He wanted Saudi money for himself and of course that meant he would get it by selling influence at the highest level to the trillionaire Saud family who certainly could afford him, and absolutely wanted to keep him close.
p In later years his son George W. Bush would use Saudi money to get what he wanted too, including a rich investor in his (what turned out to be) Mickey Mouse oil drilling projects in Texas and elsewhere. Why would a trillionaire family like the House of Saud, with the greatest oil production rate in the world and the world’s greatest then known reserves want to get involved in small time Texas oil drilling? Gosh I don’t know. What do you think?
p H. Ross Perot knew and it burned his ass! Perot had balls the size of church bells but he was also a little naïve all of his life. The blatant corruption of the Bush family with the Saudi’s violated his sense of fair play to the degree he could no longer stand it and jumped into the Presidential race against Bush and Carter and this gave Jimmy C. the election as it turned out. (Perot withdrew but not until he had permanently alienated twenty percent of the Republican vote from Bush.)
p Back at the Ranch
p Bush no longer needed Diaz Serrano and went on to prove it allowing the new Mexican President MMH to put his old friend and business partner Diaz Serrano in prison for six years beginning in 1983. I have reviewed how I arrived in Mexico for NL Industries at the end of the Lopez Portillo administration when the PRI had turned against Diaz Serrano. I have described some of the subsequent events above. In the end it would be my creation of Jason Smith Petroleum Corporation which moved me and it into the sights of the new regime in Washington and specifically into the sights of the experienced Gringo spy George H.W. Bush.
p All of this is perhaps of little direct interest to you readers but you should note one important thing. Namely, the ability of the Gringo Regime to force any capitalist out of business when it no longer is convenient for the Oligarchy for said person and entity to exist. These years were the final step in converting US imperialism into a private plaything for a small group of trillionaire and centi-billionaire families.
p The Soviet New Class
p Tyrannosaur Capitalism 1976 — 1990
p The New Class in Transformation: Phase II
p We have reviewed some details about Guanlong Capitalism but in its mildly predacious form it was not a clear and present danger. We should have seen that it was. Andropov believed it was and as KGB chief he had led a fight against it not only in the Party but in many government institutions in Russia and especially in the Trans-caucuses. Unfortunately, try as he did, he could not make the Party leaders as sure of the inherent danger it posed to the very socialist nature of Soviet society. In other words, it was not yet inevitable that the great Soviet experiment would succumb to capitalism. Yet because
p the Party failed to recognize the growing class structure based around the second economy the great tragedy of the 20th century did unfold. It came in the form of the monster of Tyrannosaur Capitalism.
p I cannot over emphasize the importance of your grasping the equally great historical irony that our side had withstood incredibly bad odds from Day One. In this Handbook you have seen how we defeated the Whites and their foreign capitalist interventionist allies; how we defeated all of the plots of the foreign capitalist regimes against us in the 1920’s and 1930’s. You have seen how the USSR led the fight worldwide for the destruction of Hitlerism by transforming Rapallo from a German-Soviet alliance into am English-speaking World-Soviet alliance, and then withstood the assault of gringo hegemonized world capital when the US picked up the gauntlet dropped by world fascism. The USSR not only withstood that imperialist assault it took the lead in every scientific and engineering area. All of this accomplishment of the first economy however was to be subverted by the newly emerging bourgeoisie within our own, (socialism’s own), homeland, via the second economy.
615As I say, in 1976 it would not yet have been too late to reverse the trajectory toward capitalist restoration except for three things. In the event (the 14 years, 1976-1990) these three factors weighed decisively against the ability of reformers (Andropov, et. al.) in the Soviet leadership to be able to get the USSR back onto the correct road.
First of all the capitalist second economy was largely denied by the very Party, its Government and State that would be required to excise it. Try as he did Andropov could not convince the Party that the second economy was a clear and present danger to the very Soviet experiment they were leading. Perhaps the reformers didn’t try hard enough. Perhaps the enemy had grown simply too all pervasive in class structure and was just better organized. But the lesson is that the Party must get capitalist economics out of the shadows and into the open world if it is to be contained. The PRC has led the way in this regard. Perhaps, therefore, what happened in the USSR was necessary in order to teach all of us this critical lesson. It did give China the time it needed to prevent the capitalist sector of their economy from duplicating its success in the PRC. Even a cursory glance at the many English language pages from Chinese publications on the internet will show any observer that China has a complete and total grip on the capitalist sector. Furthermore that the positive aspects of emerging capitalism have been harnessed to the needs of the proletarian Party and the classes it represents.
616Second, back to Russia and the Republics, the small exchange and service supply functions which had justified leaving the second economy in place all along continued to be important and it would require some approach to the organization or at least control of small exchange we had not yet seen, if the second economy as constituted was to be replaced. This was still the pre-computer era and the
option of computerized total planning and centralization in government large-scale planning was just being born in the most advanced capitalist countries. (For example, in the work of H. Ross Perot, and EDS, in Dallas.)
Thirdly, throughout the USSR, the mafia component of the second (capitalist) economy was prepared to push their plan through, and in fact did so. To counter our state apparatus they used their gangster tactics to eliminate opponents; that is to say those who indicated they might be prepared to take steps to liquidate the second economy.
p The Mafia Doctor’s Plot: the Assassination of Yuri Andropov
p Taking the last point first, the most dramatic example of mafia power came in the form of the case of General Secretary Andropov. The assassination of Andropov is the case in point.
p Yuri Andropov was by this time an Old Bolshevik, and following Brezhnev’s death in 1982 he was elevated to the General Secretaryship of the CPSU. There can no longer be any doubt but that his sudden illness (within three months of assuming his new position) was organized by the mafia. The medical plot worked and played out over the coming year like a spy movie thriller. The bottom line was that the plot reduced Andropov’s fifteen month tenure to one of constant illness before he finally succumbed. Thus history, in the event, records the “Andropov Year” (1982-1983) as the last chance the Soviet Party had to rectify the otherwise inevitable course of capitalist restoration the Soviet Union was unwittingly following. After that it was all over for Socialism as it had come to be known in the USSR, at least for the time being.
617p The Mafia had their candidates to be the new boss of the USSR. First there was Konstantin Chernenko, an ignorant and rather stupid person, who also passed rather quickly (two years, 1984-85) perhaps of natural causes. Then the evil genius himself was in position to do the final job of liquidating socialism (Mikhail Gorbachev 1985-1990). After all a system that had withstood all of international capitalism’s plots so far required a coup de grace that could only be administered by the CPSU itself. Whether Gorbachev knew at first he was to be the executioner or not is another matter altogether. At long last the Mafia had a Government as an equal partner as Hyman Roth (Meyer Lansky) would have said.
p Why was Yuri Andropov (1914 — 1983) so dangerous to the Mafia and the entire second economy class? (1) First because he was a highly prestigious Old Bolshevik. Although he had joined the Party nearly a generation after the October Revolution he had been mentored by some of Lenin’s top men beginning with Otto Kuusinen. (2) Second because Andropov embodied all the personal traits admired by the Party: austere living, dedication to work (a Stalin-like workaholic personality), constant self-education, and he
p had (3) an impressive history of having dealt successfully with the most difficult assignments the Party had to offer, including the 1956 mess in Hungary. (4) Fourth, because he had a proven record of policing effectively against the Second Economy as KGB chief over the previous fifteen years (1967-1982), and (5) most importantly as a danger to the mafia, and Fifth, because he had proposed the complete and final uprooting and liquidation of the entire second economy. As General Secretary he would have the power to do just that. Accordingly, as far as the Mafia was concerned, he had to die!
p Note (1) that the KGB, of which Andropov was boss for the preceding 15 years, was the structural equivalent in the Communist Party of the Jesuit Order in the Catholic Church. Also, note (2) Andropov’s close association with the theoretical purists of the Party from the date of his joining the Bolshevik Party in 1936. From these earliest days he had the good fortune to be directly mentored by the Old Bolshevik Otto Kuusinen, and his association with this group continued over the following fateful years, especially with Anastas Mikoyan and Mikhail Suslov. (3) He had an absolute personal hatred of the criminal element in the Soviet Republics and an outstanding record in breaking it up, in and out of the Party, in his years as KGB boss. Finally, (4) he was one of the few highly placed Politburo leaders who admitted, and in fact emphasized, the existence of the Mafia and the scope of its activities (meaning the entire second economy.)
618p “ as head of the KGB, Andropov took responsibility for the crackdown on dissident intellectuals, like Alexander Solzhenitsyn. Andropov’s willingness to defend these actions openly and to withstand the criticism of Western commentators and such Soviet intellectuals as Yevgeny Yevushenko, strongly suggested that Andropov would have avoided Gorbachev’s blunder of turning the media over to anti-socialist elements. (emphasis added, ed.) As head of the KGB, Andropov also showed courage and conviction by investigating corruption in high places. On his KGB watch, the entire Presidium (Politburo, ed.) and government of Azerbaijan were dismissed for corruption, bribery and embezzlement. Moreover, in 1981, Andropov’s deputy exposed and arrested some of the ‘black market-ridden la dolce vita crowd” that included Brezhnev’s daughter and son-in-law. Even investigating crime in the General Secretary’s family did not daunt Andropov.”’ (Socialism Betrayed, Behind the Collapse of the Soviet Union, Roger Keeran and Thomas Kenny, International Publishers, New York, 230 pp. this citation pg. 40).
619p Leading to the decision to elevate Andropov to the position of General Secretary had been the fact that the Politburo (Presidium) and the entire Party had been impressed with his theoretical preparation for tackling the problems of constructing Socialism in the USSR, which included liquidating the second economy. Belatedly many in the Party from the leadership on down were beginning to see the entire second economy phenomenon as a serious threat to Soviet socialism (or at least some of them had.) Those Politburo and Central Committee members who did not yet see the second economy as a clear and
p present danger still thought Andropov’s analysis of the problems of the first economy was correct, and that he could set things straight there. Andropov led the way in his call to reform the first and second economies in the following theoretical way:
p (1) The internal discussions among the High Priests of Soviet Socialism, Andropov had
p (2) Given three papers also delivered as speeches in
p (i) November 22, 1982 (“The Better We Work the Better We Will Live”);
p (ii) December 21, 1982 (again on the same topic); and
p (iii) On June 15, 1983 (“Analysis of the Existing Situation and Landmarks for the Future”). —And,
p (3) A longer treatise on the matter also in 1983 (“Karl Marx’s Teaching and some of the Problems of Building Socialism in the USSR”), the latter marking the Centennial of Marx’s death in 1883.)
The Mafia read these papers and listened to these speeches and if they had had any doubts, they now knew that their future depended on killing the man who proposed to do away with them (the organized crime element) and the very conditions they required (the second economy) to continue operating as the bosses of this real economy, now becoming bigger than the first economy as we shall see in a few statistics below. I recommend that serious students of this Handbook read the thorough summary discussion of Andropov’s analysis in pages 41 — 46 in Keeran and Kenny (2004).
p The New Class in Jurassic Park
Now let us look at the statistics relevant to the emergence of the New Class in its new Tyrannosaur form under, Brezhnev, Chernenko and Gorbachev. Note that with the death of the chief reformer (Andropov) not everything went immediately straight to hell. The institutionalization of study of the second economy was a continuing fact and one of its many forms was the Economic Research Institute of the USSR State Planning Commission. In her 1990 monograph “The Shadow Economy in the USSR”, a leading expert on the second economy Tatiana Koriagina, compared the total amounts of legal earned income to the total amount of money being expended (spent and/or saved.)
p
The Growth of the Monthly Salary of Workers Compared with the Growth of the Total Size of Money Spent on Goods and Services and Saved in the Savings Banks (S/S) in Billions of Rubles Monthly
p 1960 1970 1975 1980 1985 1988
p Salary 80.6 122 145.8 168.9 190.1 219.8
p % 1960 152 180 210 236 273
p Total S/S 103.2 223.2 329.9 464.6 590 718.4
p Overall Koriagina said that statistics for the entire economy showed that the second economy was growing at a much more rapid rate than the first economy, and faster than these selected area statistics indicated. The second economy had grown by a factor of 18 while the first economy had grown by only a factor of 4 or 5. The 1988 total of money spent and saved was nearly seven times greater than the total amount of money earned, in the first economy. How could that be?
p Obviously what Brezhnev said “none of us live on wages alone” was true. That excessive amount spent and saved had come from the only place it could come from and that is the second economy: legal and increasingly illegal. Class power, and thus political power, was shifting dramatically. The question of legality was now an academic one. Clearly the present was full of danger for capitalist restoration. By 1985 only the most determined Party police and propaganda assault could have saved the USSR. Instead the Soviet Union got the great traitor Mikhail Gorbachev who enabled the New Class form of capitalism we witnessed emerge in 1990 and himself was followed by another traitor (Boris Yeltsin) who outlawed the Communist Party itself!
p “Taken together, a variety of monographs provided a kaleidoscopic view of the second economy during the Brezhnev years. Private food vendors sold goods valued at 35.5 billion rubles a year (21). Soviet barbers in state owned barbershops customarily collected “very high” tips “in effect transporting the transaction into the SE [second economy] (22). The home production of grape and fruit wine and beer, the illegal resale of state beverages, and the sale of stolen ethanol, accounted for as much as 2.2 percent of the Gross Domestic Product in 1979. (23) By the late 1970’s, the black market sale of gasoline by drivers of state-owned cars and trucks allegedly accounted for between 33 and 65 percent of all gasoline sales in urban areas (24). Privately rented housing brought
620p illegal landlords an estimated 1.5 million rubles in 1977 (25). Tips, bribes and payments for private services (such as religious ceremonies) associated with funerals involved more than four times the amount of money spent on official funerals. (26) Prostitution and illegal drug sales constituted another part of the second economy. (27)” (Keeran and Kenny, 2004:57)
p Part of the changing nature of the class structure was the concomitantly changing nature of technology and the social organizational system extant. Even the perhaps 30% (1989) percentage of the population with income derived primarily from the second economy still had first economy jobs. The rest of the population (70%) whose primary income was from the first economy still participated at one level or another in the second economy, if in no other way with what Western capitalist economists call “disposable income.” (Of course, many persons within that 70% also operated small second economy businesses from home.)
p Back to the Founding Fathers
In this sense the operation of the second economy brought ongoing stability to the Soviet Regime. As late as 1989 some 96% of the national population (the Party was constantly polling) were all in favor of the Soviet system. The most common comment being, to paraphrase, “what we have is the best system in the world despite all its problems and we could solve these if we went back to the founding fathers” (in this case meaning Lenin and Stalin.) Sound familiar?
p Seduction Enabled and Promoted
The second economy had always provided those consumer items the first economy could not provide (given the Party’s emphasis on heavy industry, steel, aluminum, electricity, etc., and then on light industry devoted to increasing overall production — e.g., trucks and tractors.) Furthermore the increasingly prosperous Soviet citizenry had more and more disposable income to get the second economy things it wanted. Why? Because the first economy guaranteed them a cradle-to-grave annual income, covered all medical and educational as well as communication and transportation expenses. What they had monthly was largely expendable (disposable) income! —And, as Gorbachev turned the press and media over to the most reactionary elements in the country the citizenry was being enticed with knowledge about consumer items many had never even heard of before. They had the money to get these things and anything one wanted could be obtained in the second economy after 1985, if not before.
621p The Party Succumbs to Corruption
p The statistics prove that the Party was inundated with every conceivable form of bribery, extortion, subornation, and as a result its high moral character was not only reduced but it was largely destroyed. “Believer’s” in the doctrine of Communism as developed by Karl Marx, Frederick Engels, V. I. Lenin, and Joseph Stalin were reduced to kids and Old Bolsheviks, much as Christianity had been reduced to children and old women in the cap countries. This affected the CPSU from the bottom to the very top as the corruption of General Secretary Brezhnev’s own family proved. Once the Party was thoroughly corrupted by the Tyrannosaur second economy it was only a hop skip and a jump until it could be used to pull the trigger in assassinating the Soviet Republic. That is exactly what happened in 1989-1990.
622p Coup de Grace
Finance is the gun in class politics. Politics is knowing when and how to pull the trigger. In the case of the assassination of Socialism in the USSR the financial (class) basis was the complete transformation of the Second Economy from an adjunct of the first into its driving component. The end of socialism (the first economy) was guaranteed when the now corrupt Party (CPSU) and its corrupted mode of production in the Soviet Union, as the gun, was placed in the hands of the pistolero Mikhail Gorbachev who fired the shots that did away with the last enemy Soviet capitalist mafia bosses confronted — i.e., the Soviet state and government itself. In so doing, Gorbachev did what Hitler had failed to do. In the meantime, for better or for worse, the lessons of the second economy and the traitors it spawned in and out of the Party, and how it and they succeeded in transforming socialism backwards into capitalism of an even more hellish form than had existed before Bolshevism would have to be learned elsewhere.
623p The International
p These lessons were not lost on the Chinese Party which had embarked upon a totally new road with regard to how to deal with the second economy in their own country ten years before Gorbachev took power in March of 1985. The Vietnamese, being as well led as they were, soon followed China’s lead. The Cuban’s in a much more dangerous geographical position vis a vis US imperialism had to take a slower road and only in 2011 did they make the big jump to the Chinese model. Korea was stuck in an increasingly dangerous stagnation as its own internal structure delayed its transition to the Chinese model even longer than the Cubans but as of this writing they seem to be about to make that move.
To the Soviet Party and to the International Communist Movement Gorbachev’s March 1985 assumption of power as General Secretary gave the outward appearance of everything was going to be alright after all.
p Gorbachev 1985-1986
p Starting out by referring to Andropov’s initial November 22, 1982 speech on the economic problems in the USSR Gorbachev initiated a series of economic policies which quickly showed an antithetical approach to what had been outlined by the great theoretician. What he called restructuring (perestroika) took the factor of centralization as the key problem facing the Government and his programs began dismantling what was in fact the most successful part of the Soviet system. Using anti-corruption measures as a cover (and some of the assaults on Party and Government bosses were correct and had been initiated by the Cheka under Andropov) to dismantle key bureaucratic institutions such as the Ministry of Instruments (where Gorbachev fired 1000 technical workers), fired 50,000 industrial managers, fired one third (50+) of the first and regional and district secretaries, fired 14 of the 25 Central Committee department heads along with their staffs and often obliterated their functions. 40% of the USSR’s ambassadors were fired. Over half of the Politburo’s full and candidate members were dismissed. Gorbachev had both disarmed his opponents and dismantled the Party and Government structure in his first three months.
624p Simultaneously, Gorbachev began to turn the media over to the worst enemies socialism could imagine within its own borders. Everything was wrong here not the least being the almost overnight introduction of capitalist concepts of “the good life” which most Soviet citizens were only vaguely aware of. This precisely at the time that the US imperialists had stepped up the massive radio broadcasting into the USSR encouraging all sorts of sedition, spreading all sorts of envy creating jealousy about living standards. Then Gorbachev enabled the entire US campaign by stopping jamming! Hitler in Moscow could not have been worse.
p Within the arena of international affairs at precisely the moment the Carter-Reagan offensive against the Socialist system was at its high point Gorbachev began making a series of concessions which only weakened the Soviet position. Under these two capitalist regimes the die-hard US ruling class strategy of rolling back Soviet socialism at any cost required a Stalin-like class struggle attitude — tit for tat — massive reinvestment in heavy industry and defense industry. Gorbachev did exactly the opposite. Let us look at what the capitalists did to subvert the Soviet Union.
p (1) As we will see in the chapters on US imperialism (23 through 28) the North American colossus had complete and total control over Saudi Arabia after World War II
p and this meant over most of the Arab World’s oil which also meant most of OPEC’s oil. Working with that tool in hand US imperialism drove down the world price of oil (being sure that the Saudi oil spigot was turned on at full production meaning low prices.) Overnight this cut Soviet foreign currency reserves by 50%. In hard dollar terms this meant that the 20+ billion dollars in annual foreign currency accumulated in the USSR was reduced by 10 billion.
p (2) Simultaneously the US imperialists picked up the gauntlet against Poland (with the CIA AFL-CIO Solidarity front organization) and Afghanistan (creating the Al-Qaida Jihadist movement it directed against the most progressive government Afghanistan had ever had or would ever have for generations to come) which required another ten billion US dollars or so equivalent in rubles to be sent to both of these countries. Suddenly the USSR was back in pre-collectivization (pre-1928) levels of financial capability. (See Chapter 15)
p (3) Also, simultaneously, the US ruling trillionaire oligarchy continued its policy of making relative peace with the PRC as the price of breaking up socialist solidarity with the USSR on its eastern front. The Chinese had no objection to being left alone. Undoubtedly they saw the gringo approach as a temporary rapprochement in pursuit of the Rockefeller et al overarching objective which was their decision to first bring down the Socialist country most competitive with them for global domination (as it had been since the end of World War II effectively preventing gringo imperialism from achieving its principal international objective of total global hegemony.) So, while China was no military or financial threat to the revisionist leaders of the USSR it was of no assistance either. The imperialists had succeeded in dividing the socialist camp in half with the majority of its population (the Chinese) unengaged.
625p (4) During all of this the international communist movement not to mention the even broader international working class movement went into stagnation, confusion, misdirection, as years of revisionist control resulted in a Party membership uneducated, unknowledgeable, with dishonest leadership, self-interested pandering bureaucrats for leaders. (The CPUSA being an archetype example of all of this. The contending parties such as Progressive Labor and the RCP confused and uneducated also went immediately off onto the naïve ultra-left path which initially took Madame Mao as their leader. Everywhere else the communist movement splintered into multiple parties so that Italy with what had been the largest West European party split into three parties. Again and again world-wide the same was true.)
626p (5) Economic direct sabotage of the USSR’s industrial plant by the US imperialists went on with the long, intricate and stupid naiveté of the Soviet’s Gorbachev leadership.
p (i) US imperialists purposely sold defective computer chips to the Soviets to sabotage everything those chips were to be inserted into.
p (ii) Faulty industrial equipment was purposely created and shipped to the USSR as part of the gringo collaboration in “opening up” the Soviet Union via “trade.”
(iii) Sabotaged blueprints for gas turbines were created by the imperialists (using the CIA) and sold to the Russians.
p Last Man Standing: Gorbachev 1987-1990
The final turn toward capitalist restoration began in January of 1987 and within three years it was completed
Notes
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