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For The Record  

FTR #292 Power Corrupts

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1. The broadcast begins with discussion of the relationship between the father of Saudi-born terrorist Osama Bin Laden and King Ibn Saud, the monarch of, and founder of, Saudi Arabia. Significantly, Bin Laden’s father was a close friend and political ally of King Ibn Saud. “Bin Laden’s father, Mohammed Awad Bin Laden, emigrated from Southern Yemen’s Hadraamawt Valley in the 1920’s to Saudi Arabia, where he became a close friend of the country’s founder and first monarch, Abdul-Aziz Ibn Saud, whose example he followed by taking almost as many wives as the king. Like the king, Mohammed’s many children consolidated his strategic alliances through extended families.” (“Millionaire, Terrorist, Fugitive” by Robin Allen and Carola Hoyos; Financial Times; 4/14-4/15/2001; p. 10.) (It should be noted that Bin Laden’s father was killed in a plane crash in 1967. The “Sheik Bin Laden” represented by Bush associate James R. Bath was another member of the family, not Osama’s father.)

2. Interestingly (and, perhaps, significantly) Osama Bin Laden is credited with having engineered the successful ambush of U.S. troops in Somalia, an incident which helped to discredit Bill Clinton’s administration in its first months. “One of Bin Laden’s earliest actions was arguably one of his most successful. U.S. prosecutors claim that Al-Qaeda (The Base), the network he co-founded in Afghanistan allegedly to carry out terrorist attacks, trained those who ambushed and killed 18 U.S. servicemen stationed in Somalia in 1983.” (Idem.) It should be remembered that the elder George Bush committed U.S. troops to Somalia in the first place. In addition, elements of U.S. intelligence, Ronald Reagan and Richard Nixon were involved with the Stibam arms-for-drugs ring that helped to arm the Somali combatants in the first place.

3. King Ibn Saud was an ally of the Third Reich, British fascist Jack Philby and Bush family associate Allen Dulles, who helped George W.’s grandfather and great grandfather hide their investments on behalf of Nazi Germany. “Jack Philby has become an obscure footnote to the history of the Cold war. But his legacy was far from minor. He is one of the lesser-known but most influential persons in the modern history of the Middle East, the renegade British intelligence agent who plucked an obscure terrorist out of the desert and helped to make him the king of Saudi Arabia. Ibn Saud was very much his creation. Philby stole the information from British intelligence files that engineered Saudi control over the holiest shrines of the Moslem world. Jack Philby and Ibn Saud betrayed the British empire and made the American oil companies economic masters of the region. The man who helped them do it was Allen Dulles, an American spy who had befriended while he was coordinating American intelligence gathering in the Middle East in the first half of the 1920s. Between them, these three men built the very foundations of the modern Middle East. They were the architects of the oil weapon, the instigators of war, the manipulators of history. More important, Philby’s and Ibn Saud’s political and philosophical allegiance was to Nazi Germany, while much of Dulles’s profits came from the same source.” (The Secret War Against the Jews: How Western Espionage Betrayed the Jewish People; by John Loftus and Mark Aarons; Copyright 1994 [HC]; St. Martin’s Press; ISBN 0-312-11057-X; p. 21.)

4. Much of the first half of the broadcast consists of reading and analysis of an informative article by Sam Parry in Online Journal. (“Bush, Coal & the Internet” by Sam Parry; Online Journal; 10/9/2000.)

5. This article points out that Bush, in an address in September of 2000, foreshadowed the “electricity shortage” that has beset California and threatens to affect much of the rest of the country as well. “In a major address on energy policy, George W. Bush offered a surprising assessment of the Internet as a heavy drain on the nation’s electrical grid and factor forcing the United States toward a costly new round of power-plant construction, including more coal-fired generators and nuclear reactors. Bush’s comment about the Internet-as-fuel guzzler flew in the face of widespread scientific opinion that the Internet and other technological advances have eased the U.S. economy’s reliance on energy, not made it worse. Yet on September 29, the Republican presidential nominee said, ‘Today, the equipment needed to power the Internet consumes 8 percent of all the electricity produced in the United States.’ Bush cited this fast-growing energy demand as a justification for drilling in new oil fields, including Alaska’s Arctic National Wildlife Reserve, and for increased burning of coal.” (Ibid.; p. 1.)

6. His prescription is not altogether surprising in light of the fact that Bush’s figures are derived from a study by a coal industry lobbying organization. This same organization says that carbon dioxide produced by coal burning plants is good for the earth! “What Bush did not explain—and what the press did not deign to find out—was that Bush’s claim about the Internet’s energy use came from a study commissioned by a coal-industry group that endorses the view that more carbon dioxide in the atmosphere is good—not bad—for the earth. Also not mentioned by Bush was that the coal industry’s Internet study concluded that the United States must undertake a $1 trillion investment in new power plants to meet energy demands supposedly created by the internet and other new technologies. . . . Bush’s Internet energy figure can be traced to a 1999 study entitled ‘The Internet Begins with Coal,’ written by Mark Mills, president of Mills McCarthy & Associates Inc. Based on Mills’ personal calculations, the study states, ‘The electricity appetite of the equipment on the Internet has grown from essentially nothing 10 years ago to 8 percent of the total U.S. electricity consumption today.’ Mills goes on to predict that ‘now seems reasonable to forecast that in the foreseeable future, certainly within two decades, the direct and indirect needs of the Internet will consume 30-50 percent of the nation’s energy supply.” To meet that demand, Mills says, will require a $1 trillion investment ‘in a hard-power backbone to supply electricity.’ Mills warns that ‘while environmentalists want to substantially reduce coal use in making electricity, there is no chance of meeting future economically driven and Internet-accelerated electric demand without retaining and expanding the coal component.’ According to a summary of Mills’ report, published at the Web site, www.fossilfuels.org, the Internet project grew ‘out of an inquiry by greening Earth Society president Fred Palmer.’ Mills also is listed as a scientific adviser to the Greening Earth Society, a think tank dedicated to the proposition that the rising level of carbon dioxide in the atmosphere is beneficial to the earth, not the ‘greenhouse’ threat to the environment that many scientists see. The Greening Earth Society, however, is not a disinterested scientific body. It was established by the Western Fuels Association, a cooperative owned by seven coal-burning utilities mostly in the West and Midwest. According to the latest annual report, the Western Fuels Association delivered 22.7 million tons of coal to member utilities in 1999. Greening Earth Society president Palmer, who commissioned the Internet study, also is Western Fuel’s chief executive.” (Ibid.; pp. 1-2.)

7. The assertions by George W. (and the interests he represents) that the internet is causing the “energy crisis” are not borne out by fact. “Analysts for the Lawrence Berkeley National Labs and the Center for Energy and Climate Solutions calculate the Internet is drawing about one percent of U.S. electricity, while helping to achieve an historic shift toward energy conservation for the country. Traditionally, U.S. economic growth, as measured by the Gross Domestic Product (GDP), has tracked almost precisely the nation’s energy consumption. When the economy has grown, energy use has increased at about the same rate, a trend that has held until the Internet-dominated New Economy of the past several years. Advanced technology seems to have produced substantial energy savings, these studies found. For instance, in the immediate ‘pre-Internet era’ of 1993-1996, the U.S. GDP grew an average of 3.2 percent per year, while electricity demand grew 2.9 percent per year, a ratio of 1.1 to 1. In contrast, the ‘Internet era’ of 1997-2000 has averaged 4.2 percent economic growth per year while averaging 2.2 percent annual growth in electricity demand, a ratio of 1.9 to 1. These figures indicate that the economy achieved a near doubling of efficiency in terms of electricity use in the Internet era than in the pre-Internet period. What’s more, this analysis does not account for the fuel saved by people who now do their reading, shopping, and communicating online rather than traveling to the neighborhood library or local mall or sending regular mail through the postal service. Factoring in other types of energy, such as gasoline, the pre-Internet period of 1993-1996 saw a 2.3 percent increase in total energy demand while the 1997-2000 Internet period saw energy demand increase only 1 percent per year. All this while Americans were increasingly driving more time in traffic and using more home heating and cooling due to the extreme weather patterns of 1998 and 1999.” (Ibid.; p. 3.)

8. In connection with Bush’s affinity for fossil fuels and coal-generated power plants, in particular, the broadcast reviews a section of a very important article that was the focal point of FTR #281. (“Los Amigos de Bush” by Julie Reynolds; El Andar Magazine; Fall/2000 [Vol.11, #3].) One of Bush’s closest Latino associates is Ernesto Ancira, Junior. Related by marriage to the family of former President Raul Salinas, the Ancira family are pivotally involved with the Mexican energy generation industry.

9. One of the Ancira family ventures was the Carbon II power plant. “The Anciras had teamed up with an old school chum, pharmaceutical heir Xavier Autrey, during President Salinas’ privatization free-for-all of the late 1980’s. The ‘A’ kids maneuvered six million dollars of other peoples’ money into billions, buying up mining and energy companies as well as Mexico’s largest steel company, Altos Hornos de Mexico (AHMSA). Soon their companies were accused of being fronts for the drug trade, and were described as such by analyst R.C. Whalen at a 1993 U.S. congressional hearing. Together with a secretive bi-national strip-mining operation called Dos Republicas, the Anciras tried to get a Tex-Mex energy deal going by re-vamping a decrepit coal-burning power plant on the border, named Carbon II. They convinced the World Bank, Citibank and Southern California Edison to invest over $250 million in the project. It was a disaster. The Anciras reputation sank as fast as a rust-eaten bucket, and partners and investors began to look for ways out. The Ancira family was accused by shareholders of wasting extraordinary amounts of money on corporate jets, limousines and other luxuries. Not to mention their extensive purchases of San Antonio real estate. Just last year, while the company amassed nearly $2 billion in debt and had to suspend payments, the Anciras began quietly moving property titles to Cayman Island holding companies, with the help of their front man Marcelo Sanchez. Carbon II should have been the kind of project Governor Bush would have embraced: a model energy venture between Mexico and the U.S. But as environmentalists’ complaints about air pollution grew louder, Bush’s comments grew guarded. By the time of the project’s final demise in 1995—due to mismanagement as well as the fact that its approval by Salinas had been blatantly illegal—Bush was given credit for heeding environmental concerns.” (Ibid.; pp. 26-27.) To access the rest of the article (which Mr. Emory believes should have received a Pulitzer Prize), visit their Web Site at www.elandar.com.

10. As the global energy industry is deregulated, energy corporations are crossing national boundaries. One of the fastest growing electricity companies is the German giant Eon. The second largest electricity generating company in the world, it is currently expanding into the United States, where it plans to establish a significant presence.

11. “Britain’s second largest power generator yesterday became a mere stepping stone in the global ambitions of one of Europe’s biggest utilities. Eon, Germany’s second largest utility, finally launched its long-awaited $13.5bn bid for PowerGen, calling it the first stage in its drive to become one of the largest power companies in the U.S. ‘We are now getting ready for a double jump, across the [English] Channel and from there across the Atlantic Ocean,’ said Ulrich Hartmann, chief executive . . . .Instead, Eon decided to spare no cost and face severe U.S. regulatory scrutiny to set up its first power base in the U.S. PowerGen, which recently purchased LG& E, the Kentucky-based utility, offers expertise in the highly regulated and fragmented U.S. market. Eon gains access to PowerGen’s experience with the fully-liberalized U.K. electricity market.” (“PowerGen Is a Stepping Stone” by Uta Harnischfeger; Financial Times; 4/10/2001; p. 24.)

12. Whereas deregulation has obliged companies in the United Kingdom to divest themselves of corporate assets in order to maximize market competition, it has had the opposite effect in Germany. “In the UK, the dominant generating companies were forced to divest in order to promote competition. So in spite of PowerGen’s acquisition of L G & E of Kentucky, it is a relatively small power company in international terms, with only about 8 per cent of the U.K. market. In Germany, by contrast, deregulation has allowed consolidation of the regional monopolies into two main groups Eon and RWE. Eon, formed from Veba and Viag, is now set to become the second largest electric company in the world after Electricity de France. It plans to become bigger still by making U.S. acquisitions.” (“Bad Connection;” [editorial]; Financial Times; 4/11/2001; p. 16.)

13. As Eon began divesting itself of assets in order to comply with U.S. regulatory statutes, the nature of some of its businesses proved to be more than a little interesting. One of its main corporate subsidiaries was the Degussa chemical firm. “Eon the German utility pledged to sell its Degussa chemicals division yesterday after agreeing to buy PowerGen, the British electricity group, in a deal worth $13.8bn). U.S. regulations bar groups that generate less than 80 percent of their sales from electricity and gas supply from owning U.S. energy companies. To comply with the regulations, Eon will also sell its real estate activities. Chemical operations contributed 22 percent of Eon’s sales last year . . . . The acquisition of PowerGen will make eon the world’s largest power supplier behind Electricity de France, the state-owned power group, which would be 30 per cent bigger. The acquisition will give Eon footholds in both the UK and U.S. energy markets. Ulrich Hartmann, Eon’s chairman said: ‘We have had very constructive talks with the U.S. Securities and Exchange Commission and they will grant us three to five years after the closing of the deal to get these things done.'” (“Eon to sell Off assets to Smooth Deal on PowerGen” by Andrew Taylor and Uta Harnischfeger; Financial Times; 4/10/2001; p. 18.)

14. The Degussa firm is part of the old I.G. Farben complex of chemical firms that comprised the backbone of Hitler’s political, industrial and military support during World War II. (For more about I.G. Farben, see also: RFA#’s 1, 2, 24, Miscellaneous Archive Show M11, FTR#’s 87, 216, 278, 294.) Degussa, in which I.G. had a significant capital participation, was a dominant player in the Degesch firm.

15. Degesch (an I.G. subsidiary) manufactured the Zyklon B gas used in the gas chambers in the concentration camps. “Actually, Zyklon B, whose generic name is prussic acid, was new only in its application to human beings; its traditional, commercial use was as an insecticide. The result was a revelation of efficiency. Only one firm, Deutsche Gesellschaft Fuer Schaedlingsbekampfung (German Corporation for Pest Control), known in the trade as Degesch, supplied this lethal chemical. The firm and its most valuable asset, the monopoly of Zyklon B manufacture was owned 42.5 percent by I.G. Farbenindustrie; 42.5 percent by Deutsche Gold und Silbersceidenanstalt—known as Degussa (in which I.G. owned a third); and 15 percent by the Theo. Goldsdchmidt concern. That I.G. dominated Degesch was general knowledge in the chemical industry. In fact, in its official corporate pronouncements Degesch described itself as an exclusive selling agent for I.G. Moreover, I.G. dominated the Degesch supervisory board; of its eleven members five were from I.G., including the chairman, Wilhelm Mann . . . In the past, the S.S. had bought moderate amounts of Zyklon B from Degesch as a vermin control in its concentration camps. When the final solution added Jews to the S.S. extermination plans, Degesch profits reflected the new prosperity. I.G.’s dividends on its Degesch investment for the years 1942, 1943 and 1944 were double those of 1940 and 1941.” (The Crime and Punishment of I.G. Farben; by Joseph Borkin; Copyright 1978 [HC]; The Free Press; ISBN 0-02-904630-0; pp. 122-123.)

16. The rest of the broadcast deals with the relationship between the remarkable and deadly Bormann organization, the I.G. Farben company and its successor firms. The economic and political component of a Third Reich gone underground, the Bormann organization controls corporate Germany and much of the rest of the world. Created and run by Martin Bormann, the organizational genius who was the “the power behind the throne” in Nazi Germany, the Bormann group is a primary element of the analysis presented in the For the Record programs.

17. One of the factors that permitted the realization and perpetuation of the Bormann organization was the profound connection between the above-ground German corporate structure, the 750 flight capital corporate fronts established in neutral countries, and major corporate and political elements in Western nations. “Powerful friends of the Bormann organization in all Western countries, including those sprinkled in control points throughout the administration in Washington and in the financial and brokerage businesses of Wall Street, the City of London, and the Paris establishment, did not wish a coordinated drive to get at these external German assets. They had understandable reasons, if you overlook morality: the financial benefits for cooperation (collaboration had become an old-hat term with the war winding down) were very enticing, depending on one’s importance and ability to be of service to the organization and the 750 corporations they were secretly manipulating, to say nothing of the known multinationals such as I.G. Farben, Thyssen A.G., and Siemens; and, as a second reason, the philosophy of free enterprise and preservation of private property.” (Martin Bormann: Nazi in Exile; Paul Manning; Copyright 1981 [HC]; Lyle Stuart Inc.; ISBN 0-8184-0309-8; P. 156.)

18. The vast international scope of the I.G. Farben firm and its various subsidiary operations was a principal element of the Bormann organization. I.G. Farben chief Hermann Schmitz discussed I.G.’s involvement with the Bormann program. “In testimony later given to Nuremberg investigators, Schmitz praised Bormann for the way he had directed the distribution of German assets around the world. His own Farben organization had, of course, contributed to the success of the operation. Every regional representative working for Hermann Schmitz was an exceptional businessman, or he would not have been with I.G. All had contributed sound advice in their areas of competence, the regions of the world where they represented Farben while keeping an eye on the subsidiaries of the parent concern and the 700 hidden corporations they controlled. They had provided assistance and continuing guidance in establishing the 750 new companies created on order of Bormann, who wanted more than hidden assets; Bormann wanted the money and patents and technicians put to work to create even greater assets that would bolster Germany in the postwar years. In their meeting in the chancellery, both men checked over the figures of sums disbursed, and they were accurate to the pfennig.” (Ibid.; pp. 157-158.)

19. Bormann and Schmitz then discussed I.G.’s prospects for the postwar period. The cozy relationship with powerful elements within the power elites of the Western allies was foreseen by Schmitz as boding well for the company’s future. “The Reichsleiter asked Schmitz his views of the future. Schmitz replied, ‘The occupation armies will be understanding in the West, but certainly not in the East. I have instructed all Farben administrators and technicians to come to the West, where they can be of use in resuming our operations once the disturbances of 1945 come to a halt.’ Schmitz added that, while general bomb damage to the I.G. plants was about 25 percent of capacity, some were untouched. He mentioned speaking with Field Marshal Model, who was commanding the defenses of the Ruhr. ‘Model had planned to turn our Bayer-Leberkusen pharmaceutical factory into an artillery base, but he agreed to make it an open, undefended factory. Hopefully, we will get it back untouched.’ ‘What about your board of directors and the essential executives? If they are held by the occupation authorities, can I.G. continue?’ Bormann asked. ‘We can continue. We have an operational plan for such a contingency, which everyone understands. However, I don’t believe our board members will be detained too long. Nor will I. But we must go through a procedure of investigation before release, so I have been told by our N.W. 7 people who have excellent contacts in Washington.'” (Ibid.; p. 158.) Schmitz’s predictions were relatively accurate. Neither Schmitz nor any of the I.G. Farben executives were severely punished and the firm’s three successor firms carried on effectively in the postwar period.

20. Even the postwar perpetuation of I.G.’s poison gas-producing firms was prepared. (Degussa, now a subsidiary of Eon, was obviously part of this nexus.) “Schmitz also told Bormann of his visit to Switzerland earlier in the month. ‘Germany will have a poor image problem this time. Much worse than after the First World War. It can all be placed on the doorsteps of Goering, Himmler, and Heydrich. Goering and Himmler thought up the Final Solution for the Jews, and Heydrich made it a fact.’ Bormann agreed, asking, ‘How does that affect I.G.?’ ‘We produced the poison gas on Himmler’s orders,’ Schmitz explained, ‘so I’ve been making some corporate name changes in Basel, which may help our overseas situation.'” (Ibid.; p. 159.)

21. The program concludes with another passage from the Manning text which analyzes the pivotal role of the Bormann organization in German heavy industry and, in turn, the influence of the Hermann Schmitz trust in the Bormann organization. “The Bormann organization continues to wield enormous economic influence. Wealth continues to flow into the treasuries of its corporate entities in South America, the United States, and Europe. Vastly diversified, it is said to be the largest land-owner in South America, and through stockholdings, controls German heavy industry and the trust established by the late Hermann Schmitz, former president of I.G. Farben, who held as much stock in Standard Oil of New Jersey as did the Rockefellers.” (Ibid.; p. 292.) The relationship between the Bormann organization, Degussa and Eon is one to be carefully considered.

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