NATO mobilizes troops as UK MPs, US congressmen call for air war against Russia

Andre Damon

Three days into the Russian invasion of Ukraine, the conflict is showing dangerous signs of spiraling into a much wider war.

Members of the 82nd Airborne Division of the U.S. Army prepare for deployment to Poland from Fort Bragg, N.C. on Monday, Feb. 14, 2022. They are among soldiers the Department of Defense is sending to Eastern Europe. (AP Photo/Nathan Posner)

As Russian forces entered the capital city of Kiev, Ukraine, the Ukrainian defense minister estimated that hundreds of Russian soldiers had died in the conflict so far. Ukraine has reported over 137 casualties, including civilians. A first attempt at holding talks between Kiev and Moscow failed on Friday. Ukraine’s President Volodymyr Zelensky has since appealed to Israel’s Prime Minister Naftali Bennett to mediate in the conflict.

On Friday, NATO Secretary-General Jens Stoltenberg announced the deployment, for the first time, of NATO’s 40,000-troop-strong rapid response force, created in 2003.

“Yesterday, NATO Allies activated our defense plans,” Stoltenberg said on Friday, adding that the alliance’s forces would be positioned “on land, at sea, and in the air.”

“The United States, Canada and European Allies have deployed thousands more troops to the eastern part of the Alliance,” Stoltenberg continued. “We have over 100 jets at high alert operating in over 30 different locations. And over 120 ships from the High North to the Mediterranean. Including three strike carrier groups.”

Stoltenberg added, “We speak about thousands of troops. We speak about air and maritime capabilities. They are only actually part of the standing naval groups. We have many planes operating in the eastern part of the Alliance. And then, several Allies have partly already assigned troops and forces to the NATO Response Force.”

Stoltenberg called Russia’s actions “the gravest threat to Euro-Atlantic security in decades,” declaring, “We will do whatever it takes to defend every ally and every inch of NATO territory.”

The announcement was hailed by advocates of confrontation with Russia. “Hearing now that NATO’s Very High Readiness Joint Task Force (VJTF) has been activated. Excellent news,” tweeted former US Ambassador to Russia and arch-warmonger Michael McFaul.

UK Defense Minister James Heappey announced that the UK would send armed forces to Estonia “earlier than planned,” with the Royal Welsh battle group arriving in the country shortly. A further 1,000 UK troops will be on standby “to support Hungary, Slovakia, Romania and Poland,” Heappey said.

But the defense minister warned of the dangers of an open engagement between NATO and Russia, observing that the conflict could quickly become “existential.”

Both in the UK and the US, significant forces within the political establishment are advocating for just such an “existential” conflict.

Heappey’s warnings were directed to MPs advocating for an establishment of a no-fly zone over Ukraine, meaning that NATO surface-to-air missiles and aircraft would engage and attempt to shoot down Russian combat planes.

The imposition of a no-fly zone “would be a significant and real help for the people of Ukraine,” said Tory MP Peter Bone.

In the United States, Congressman Adam Kinzinger demanded that the United States take this measure. “Declare a #NoFlyZone over Ukraine,” Kinzinger tweeted. “History teaches that taking a stand is inevitable and gets more costly with time. We own the skies, Russia cannot hold a candle to our Air power.  Do this. Putin is too dangerous to hope he is satisfied with ‘just Ukraine.’”

The claim that the United States “own(s) the skies” in Eastern Europe is false. Russia operates what is arguably the world’s most advanced Anti-Access and Area Denial (A2/AD) system, which would inflict significant losses on NATO aircraft that sought to engage Russian air forces. If Moscow’s aircraft were to come under attack from sites within NATO territory, Russia could respond with cruise missile strikes on the batteries, triggering NATO Article 5 and starting a world war.

This insane demand won support on both sides of the aisle, with Democratic Party operative Jon Cooper demanding, “The U.S. must declare a no-fly zone in Ukraine—NOW!!”

In an exchange on BBC’s Radio 4 Today, UK Defense Secretary Ben Wallace said that the imposition of a no-fly zone would be an act of war against Russia.

“To do a no-fly zone I would have to put British fighter jets against Russian; NATO would have to declare war on Russia.” This would “trigger a European war,” he said.

Any such war threatens the use of nuclear weapons. As CNN military analyst James “Spider” Marks said on live television Thursday, “I would hate to think that [Vladimir Putin] might think that he can get away with a tactical nuke, and that there wouldn’t be a concomitant response. That then begins the cascading effect of the end of times.”

On Thursday, US President Joe Biden said that 7,000 US troops would deploy to Germany. But the Pentagon clarified that some of them could be forward deployed to Russia’s borders as part of a NATO rapid response force.

Military.com reported, “The U.S. has already deployed about 12,000 troops and equipment such as F-35 Lightning II fighter jets and Apache attack helicopters to Germany, Poland, Romania and the Baltic states. The Pentagon has said more than 11,000 troops have been put on heightened alert for deployment since January, but it could not provide exact figures on Friday of those who remain on alert or have been deployed.”

These developments come as further measures have been taken to shut the Russian population off from the world economy. On Friday, Poland closed its airspace to Russian airlines, while British Airways and Virgin Atlantic have stopped using Russian airspace, Kommersant reported. S&P just downgraded the credit ratings of both Ukraine and Russia.

On Friday, California Democrat Eric Swalwell said that “kicking every Russian student out of the United States … should … be on the table.”

While the United States and NATO governments hope to benefit, for both domestic and geopolitical reasons, from a Russian invasion of Ukraine, the war threatens to have massive and incalculable consequences not only for the populations of that region but for all of humanity.

Credit Suisse revelations: The rot of the financial oligarchy and its banking system

Jean Shaoul

The leak of 30,000 bank accounts belonging to Credit Suisse has revealed the enormous wealth of dictators, criminals, officials and business tycoons involved in torture, drug trafficking, money laundering, corruption and other serious crimes. It confirms the financial parasitism, fraud and illegality that permeates the ruling elite in every capitalist country.

The revelations cover only a small proportion of the bank’s 1.5 million private clients and includes personal, shared and corporate bank accounts worth $108 billion. Nearly 200 accounts are worth more than $108 million, with a dozen or more worth billions. Some were opened in the 1940s, but more than two-thirds were opened after 2000. Many have since closed.

The investigation, known as Suisse Secrets, began with a leak by an anonymous whistleblower to the German newspaper Süddeutsche Zeitung and was coordinated with the Organized Crime and Corruption Reporting Project (OCCRP). It involved analyses by 160 journalists from media organisations around the world, including the Guardian, Le Monde, NDR, the Miami Herald and the New York Times.

Credit Suisse, Paradeplatz in Zürich, Switzerland (Photo credit: Roland zh)

Suisse Secrets shows that the bank allowed people to open accounts even after they had been convicted of serious crimes and failed to investigate or even ask about the source of many other clients’ wealth. It alleges that the bank knowingly managed hundreds of millions of dollars for suspected war criminals, corrupt autocrats and drug dealers. Credit Suisse denied this, saying it “strongly rejects the allegations and inferences about the bank’s purported business practices.”

The world’s best-known banks are little more than machines for laundering the ill-gotten gains of the filthy rich and protecting their owners from tax demands or accountability so they can salt their loot away for future use. They are accomplices to the rampant criminality of a parasitic ruling class that plunders and exploits the world’s inhabitants to the tune of trillions of dollars a year, while dodging taxes—variously estimated at between $400 billion and $800 billion a year—on their income and wealth.

According to the Guardian, the bank’s clients included a human trafficker in the Philippines, the former chair of the Hong Kong stock exchange who was jailed for bribery, a billionaire who ordered the murder of his Lebanese pop star girlfriend, executives who helped themselves to the revenues of Venezuela’s state-owned oil company, an Italian accused of laundering funds for the infamous ‘Ndrangheta criminal group, corrupt politicians and their families around the world, including in Egypt and Ukraine, and a Vatican-owned investment company currently involved in a criminal tribunal over an allegedly fraudulent €350 million investment in a London property.

Others include the sons of an Azerbaijani strongman, who deposited millions of laundered dollars from shell companies, and key figures from Central Asia’s elites, including oligarchs who made their wealth from natural resource extraction, ministers, and other top officials, some of whom have been convicted of massive corruption, as well as the children of two former presidents, Kazakhstan’s Nursultan Nazarbayev and Uzbekistan’s Islam Karimov.

People named in the investigation include:

· Helen Rivilla, a lawyer convicted in 1992 for helping to launder money for former Philippine dictator Ferdinand Marcos and his wife Imelda, who creamed off $10 billion during the decades of his presidency.

· King Abdullah of Jordan had six Swiss accounts, including one that held more than $224 million in 2015, while his wife, Queen Rania, held more than $40 million in an account in 2013, all of which were closed in 2015 and 2016.

· Saad Kheir, who headed Jordan’s intelligence agency from 2000 to 2005 that worked with the US on covert operations and counterterrorism operations, interrogating terrorism suspects. He opened an account in 2003 that would hold $21.6 million before his death in 2009.

· Close relatives of Omar Suleiman, the long-time head of Egyptian dictator Hosni Mubarak’s intelligence services that served as the CIA’s regional bureau, opened a joint account in 2003 that mushroomed to $52 million. Suleiman died in 2012 but the account wasn’t closed until 2016.

· Mubarak’s sons, Gamal and Alaa, held six accounts including a joint account that ballooned to about $196 million in 2003, while their fathers-in-law and other businessmen linked to the Mubarak family had accounts worth millions of dollars.

· Pavlo Lazarenko, the thoroughly corrupt prime minister of Ukraine between 1997 and 1998, is believed by Transparency International to have siphoned off $200 million from the public purse, demonstrating that Ukrainian politicians were no less corrupt than their Russian counterparts. One of his accounts was later valued at almost $8 million. In 2000, Lazarenko pleaded guilty to money laundering in Switzerland and was sentenced in 2006 to nine years in the US for bribery and corruption.

· Stephan Sederholm, a Swedish computer technician, was allowed to open an account in 2008 that was closed in 2013 after he was sentenced for life for human trafficking in the Philippines in 2011.

· Eduard Seidel, a German who headed Siemens’s operations in Nigeria and was convicted of industrial-scale bribery of corrupt politicians in 2008. His accounts were left open for several years, with one holding $54 million, after he had left Siemens. Credit Suisse has long been known for providing services for the sons of Nigeria’s brutal dictator Sani Abacha, believed to have looted as much as $5 billion from the country in just six years.

Credit Suisse, Switzerland’s second largest bank, manages more than $1.6 trillion in assets and employs almost 50,000 staff, including 3,500 “relationship managers” who recruit and serve the super-rich across the world. Its employees are rewarded with bonuses linked to how much “net new money” they bring in. The largest accounts are kept so secret that only a few senior executives know who owns them.

The OCCRP investigation confirms that the bank’s activities are shielded by the country’s notorious banking secrecy laws that have long made Switzerland a safe haven for kleptocrats’ illicit wealth. Article 47 of the Swiss banking laws effectively silences insiders or journalists trying to expose criminality, to the extent that the Swiss media group Tamedia was unable to take part in the Credit Suisse investigation for fear of criminal prosecution.

The bank has been beset by numerous scandals. A leaked 2017 report by FINMA, the Swiss financial regulator, revealed a culture where senior managers were prepared to “whitewash” and “turn a blind eye” to compliance failures when a star banker defrauded lucrative clients. The bank was involved in the collapse of Greensill Capital, the supply chain finance corporation, and the US hedge fund Archegos capital. In 2019, eight bank staff pleaded guilty to charges of money laundering and defrauding US and UK investors in loans to Mozambique, resulting in $475 million fines for the bank and $200 million in debt forgiveness to Mozambique. The bank is currently facing trial in Switzerland’s Federal Criminal Court over enabling Bulgarian cocaine smugglers to launder €146 million.

Suisse Secrets follows numerous other scandals in the wider banking sector, including the 2008-09 crash precipitated by the criminality of leading financial institutions, for which no top executives were ever sanctioned. It comes after a chain of International Consortium of Investigative Journalists’ (ICIJ) exposés: the LuxLeaks in 2014, Panama Papers in 2016, the Paradise Papers in 2017 and the Pandora Papers in 2021. These revealed the colossal extent of tax evasion and money laundering services provided by the world’s most well-known financial services companies, lawyers, registration agents and lobbyists via secretive trusts and off-shore tax-havens.

Reports of financial criminality have become so routine that a day later Suisse Secrets was old news. They demonstrate that it is impossible to clean out the Augean filth of the global political, economic and financial system.

Like the ICIJ’s previous exposés, the leaked accounts belong to the bank’s international clients, mostly in the middle and low-income countries, rather than in the US and Europe. US President Joe Biden has said he is committed to “fighting corruption as a core national security interest,” which is another way of saying that allegations of corruption will be used, like “fighting terror”—to justify political and economic intervention around the world, particularly in Central Asia, in pursuit of Washington’s imperialist interests.

Switzerland, too, is in the frame, with demands from three of the largest groups in the European parliament and from the US, seeking to bolster the position of New York as the world’s premier financial centre, for Switzerland to be placed on the list of high-risk countries for money laundering and financial crime.

The author of the Suisse Secrets investigation, the OCCRP—a consortium of NGOs, media organisations and journalists operating in Eastern Europe, the Caucasus, Central Asia and Central America—is funded by, among others, the United States Agency for International Development, the US State Department, the Ford Foundation, the United Kingdom’s Foreign, Commonwealth and Development Office, the US National Endowment for Democracy and the Rockefellers Brothers Fund.

Australia to send “lethal aid” to Ukrainian armed forces

Oscar Grenfell

With full bipartisan support from the Labor Party opposition, Prime Minister Scott Morrison substantially escalated Australia’s involvement in the unfolding war crisis in Europe, announcing yesterday that his Liberal-National Coalition government will send “lethal aid” to Ukrainian military forces.

Australia was already one of the most vociferous backers of the US-NATO attempts to exploit Russia’s reactionary invasion to intensify a longstanding confrontation with Moscow, and also China. With Morrison’s announcement, the country is now directly involved in a conflict that threatens to spiral out of control and ignite a European-wide or even a world war.

A Ukrainian soldier fires an NLAW anti-tank weapon during an exercise in the Joint Forces Operation, in the Donetsk region, eastern Ukraine, Tuesday, February 15, 2022. (AP Photo/Vadim Ghirda)

The timing makes clear the extent to which the Australian political establishment is marching in lockstep with the US administration of President Joe Biden. Morrison confirmed the expanded Australian intervention after the US announced it would send an extra $US350 million worth of US armaments to Ukrainian forces, while its NATO partner Germany pledged 1,000 anti-tank weapons and 500 Stinger surface-to-air missiles.

The flooding of the country with US-NATO arms is aimed at escalating the conflict. It is directed against any diplomatic resolution, ahead of talks between Russian and Ukrainian authorities in Belarus later today.

On Friday, Morrison had stated that Australia would send medical supplies to Ukraine, together with “non-lethal” military aid. This was combined with a series of expanding sanctions on the Russian state, leading politicians and business people. As the WSWS noted, in a shooting war, there is no such thing as “non-lethal” military supplies, given that whatever is sent will contribute to active hostilities. However, Morrison did rule out sending weaponry.

The turnaround, within the space of 72 hours, demonstrates the speed with which the US and its allies are intensifying their direct involvement in the conflict. It shows that Morrison’s previous assertions that Australian troops would not be sent in the event of a NATO ground intervention could also be dispensed with overnight. As he stated, the military aid was a signal that “nothing is off the table” in terms of Australian involvement.

The government has not released any details. Morrison did say that the weaponry would be provided “through our NATO partners, particularly the US and the United Kingdom.” In practice, this will mean the government handing over money to the American and British governments and their associated arms dealers.

As is the case with all of the NATO “military aid,” at least some of the Australian war materiel will likely end up in the hands of Ukraine’s fascist militias. Since the US-instigated coup in 2014, directed against a Ukrainian government that leaned towards Russia, forces such as the neo-Nazi Azov Battalion have been directly integrated into the country’s armed forces and have been the beneficiaries of a flood of NATO weaponry.

Morrison combined the announcement of military aid with direct sanctions against Russian President Vladimir Putin. The government has also not ruled out expelling the Russian ambassador from the country, stating only that it will follow the lead of its allies, i.e., the US. Morrison also spoke with Ukrainian President Volodymyr Zelenskyy this morning.

The Labor Party is not only extending its full support to every new announcement made by the government in relation to the Ukraine. It is effectively campaigning for even greater Australian involvement.

Labor’s shadow treasurer Jim Chalmers this morning called for a “step up.” “Whether that is support with weapons, on the cybersecurity front, whether it is tightening the screws on the Russian economy, all of these things should be stepped up if they can,” he declared. Chalmers was one of a series of senior Labor MPs exposed in documents published by WikiLeaks to be a “protected source” of the US embassy, i.e., an informant for the American government.

Notwithstanding its cynical references to the plight of Ukrainian civilians, Labor is exploiting the Ukraine crisis to burnish its “national security” and foreign policy credentials. It is seeking to turn the tide on a government campaign over the past month, alleging, without any basis, that Labor is “soft” on China and even an “appeaser” of its government.

On Saturday, Labor leader Anthony Albanese gave an extended interview to the Australian’s Greg Sheridan, who has close ties to the Australian and US security establishments. Albanese stressed that there was not a skerrick of difference between Labor and the government on any foreign policy issue, including participation in the US-led campaigns against Russia and also China.

Albanese emphasised Labor’s central role in the establishment last September of AUKUS, a military alliance of the US, Britain and Australia, explicitly directed towards preparing war with China. He criticised the government only for its “bungles” in defence procurement and invoked Labor’s record in leading the country during the Second World War, the first Gulf War and in 2011, when Australia aligned with a vast US military build-up directed against Beijing.

Together with the government, Labor leaders are enthusiastically playing the role of a regional deputy sheriff for the US in the current crisis. They are exploiting it to ratchet up pressure on Beijing, denouncing the Chinese Communist Party government for its refusal to condemn the Russian invasion. Labor and Coalition MPs have explicitly linked the Ukraine crisis to the need for the “democratic” powers to combat both Russia and China, in line with the US strategy for maintaining American imperialist hegemony.

The line-up extends beyond the major parties to the entire political and media establishment. Not a single critical voice has been raised, warning against Australian involvement, much less pointing to the hypocrisy of the US and its allies, who have themselves been at war for the past 30 years.

The Greens, who postured as opponents of the 2003 invasion of Iraq, long ago dispensed with any pretense of opposition to imperialist war. They issued a statement on February 25, which said nothing about the US-NATO role in provoking the conflict, blaming it exclusively on Putin. “We call upon our foreign minister to use Australia’s Autonomous Sanctions framework to respond to Russia’s actions,” the Greens declared.

The media, including the state-funded Australian Broadcasting Corporation, is full of wall-to-wall denunciations of Putin as a “new Hitler,” a “psychopath” etc.

As is the case in the US and elsewhere, the whipping up of a wartime atmosphere serves a domestic political function. It is aimed at diverting attention from the ongoing COVID crisis, resulting from bipartisan “let it rip” policies which unleashed an Omicron surge in December, as well as widespread anger over stagnant or declining wages and worsening workplace conditions amid a rising cost of living.

The government and Labor are turning to militarism to try and offset a deep-going crisis of the parliamentary set-up in the lead up to a federal election in May. Morrison’s ability to survive till then has been called into question by the Coalition’s plummeting support, and public infighting within his Liberal Party. Labor goes into the election having lost any substantial base of support in the working class as a result of its decades-long enforcement of a corporate onslaught on working-class jobs and social conditions.

Imperialist powers use “financial nuclear weapon” against Russia

Nick Beams

The major capitalist powers have stepped up the economic warfare against Russia by imposing a series of sanctions aimed at crippling its banking and financial system and potentially crashing its economy.

A joint meeting comprising representatives of the European Commission, France, Germany, Italy, the UK, Canada, and the US on Saturday announced sanctions aimed at cutting off “selected” Russian banks from the Swift international financial messaging system and halting the foreign exchange operations of the Russian central bank.

Central Bank of Russia located in Moscow. (Credit: Фотобанк Moscow-Live/ Flickr)

The ban on the central bank means its foreign reserves are effectively frozen. “We will paralyze the assets of the Russia’s central bank,” said European Commission President Ursula von der Leyen, at the conclusion of the meeting.

The meeting statement said the Swift measures would ensure that the targeted banks were “disconnected from the international financial system and harm their ability to operate globally.”

The agreement was only reached after resistance to the new measures from Italy and Germany, both of which are highly dependent on the supplies of natural gas, were overcome when it was agreed that Russian banks crucial in the financing of energy transactions would not be targeted.

The US pushed hard for the Swift sanctions, together with Canada and the UK, but imposing them was described as a “tough process,” not least because European Union trade with Russian amounts to €80 billion, an amount 10 times greater than that of the US.

A Wall Street Journal (WSJ) report on the agreement, citing a “senior Biden administration official,” said there was a selection process aimed at minimizing disruption of energy markets.

“We know where most of the energy flows occur, through which banks they occur,” the official told the WSJ. “And if we take that approach, we can simply choose the institutions where most of the energy flows do not occur.” Among those not sanctioned is the Gazprombank, Russia’s third largest, and a major channel for financial transactions involving oil and gas.

According to the WSJ report: “US officials say the exemptions were critical for winning political support for a coordinated and complementary pressure campaign from the broad range of economies, including the US, the UK, and the 27 members states of the EU.” If German objections had not been met, the measures could not have gone ahead because EU decisions must be unanimous.

Even with the exclusion of the banks financing energy transactions, the Swift decision will ratchet up tensions. In 2014, when there was consideration of excluding Russia from the global payments messaging system, Moscow said it would be the equivalent of a declaration of war.

In comments on Friday, the French finance minister, Bruno Le Maire, described cutting off Russian access to the Swift system as “the financial nuclear weapon.”

The decision to impose restrictions on Russia’s central bank was to prevent it from “deploying its international reserves in ways that undermine the impact of our actions,” the joint statement said.

Russia has around $600 billion in foreign currency reserves, in large part the result of its sales of oil and gas. The restrictions on the central banks will prevent it using some of these reserves to prop up the rouble and prevent a complete collapse.

Since the invasion of Ukraine began, masses of people have been queuing up at banks and ATMs trying to withdraw cash in both dollars and roubles, fearing a collapse in the national currency which has plunged in value on international markets.

The central bank has sought to calm those fears issuing a statement on Sunday that it would supply banks with liquidity and place no limit on the amounts they wished to borrow, as well as expanding the list of securities it would accept as collateral to cover their borrowing needs.

“The Russian banking system is stable, has sufficient capital reserves and liquidity to function without outages in any situation,” it said and that all client funds were secure. A domestic payments system that had been developed in case Russia was cut out of Swift would continue to work “in any scenario,” it said.

The Russia central bank may seek assistance from China, where 14 percent of its foreign currency reserves are held. But Chinese authorities are likely to be wary of proving overt assistance to Russia because of fears they could be the target of secondary sanctions imposed at the behest of the US.

The targeting of the Russian financial system is a major escalation in the global economic warfare which the US has increasingly practised in the past years, in combination with its military actions, to hit its opponents.

It can do this because almost half of all global payments are made in dollars, which are used to finance about 90 percent of trade finance. The US has used this domination to target Iran and Venezuela, but the move against Russia is a qualitatively new level of financial aggression.

Before the attack on the Russian central bank was announced, Josh Lipsky, who previously worked at the International Monetary Fund and is now director of the Atlantic Council’s Geoeconomics Center, said it would be an “extraordinary significant and damaging move” for Russia’s economy.

With GDP coming in its around $1.7 trillion, Russia is the world’s twelfth largest economy. “A G20 central bank has never been targeted before,” Lipsky said. “This is not Iran. This is not Venezuela.”

Edward Fishman, a former US official and now at the Center for a New American Security, told the Financial Times the move would be a “devastating blow” to the Russian economy and was more significant than the Swift decision because a “sizeable chunk” of Russia’s foreign currency reserves would be rendered “unusable overnight.”

The war crisis will have significant blowback effects for the world economy. The prices of oil and gas are rising, along with wheat and other grains as well as metals.

According to one estimate from a forecasting firm, cited by the WSJ, if oil goes up to $110 a barrel, from its present level of around $100, this will push the US annual inflation rate to more than 10 percent. This poses a conundrum for the US Fed and another central banks because the price rises threaten to deliver a blow to global growth.

The Fed was on course for a 0.25 percentage point rise in its base interest rate at its meeting in mid-March followed by as many as six or even seven increases for the rest of the year. But it now faces a situation where it could be lifting rates under conditions of “stagflation”—rising prices and lower or even falling growth.

Bruce Kasman, chief economist at JPMorgan, told the WSJ: “We have not had such a large and broader based overshoot of inflation in decades.” A sustained shock could push inflation even higher, leaving the Fed with “some very difficult choices.”

Besides the immediate effects on the stock market—all the futures indexes for Wall Street were down at the time of this writing while Asian markets were stable—there could be other financial effects because of the weekend decisions by the major imperialist powers.

Global investors are certain to take a hit, including banks and hedge funds and other financial institutions that have invested in Russian financial markets searching for higher yields.

The Bank for International Settlements has estimated that foreign banks have around $121 billion owed to them by Russian entities. Of this, about $14.7 billion is owed to US banks with $25 billion owed to French and Italian banks.

The biggest Westerns holders of Russian sovereign debt included the German insurance firm Allianz and the US investment firm BlackRock. These giants are large enough to weather the immediate effects of a financial storm. But smaller firms may not, and they have been completely unprepared for the present crisis.

The FT cited the remarks of the head of one of these companies who said at the end of January that talk of “devastating” further sanctions on Russia seemed “rather fictional given the painful self-inflicted repercussions this would have on the global economy, and in particular Western Europe.”

It is worth recalling the demise of the $3 billion hedge fund Long Term Capital Management in September 1998, which had to be bailed out by the Fed because it had been heavily involved in Russian rouble bets and its collapse posed a threat posed a threat to the US financial system.

Surging inflation deepens social catastrophe in Sri Lanka

N. Rangesh

The National Consumer Price Index (NCPI) released by the Sri Lankan Central Bank early last week shows steep increases in the price of food and other essentials, pointing to the worsening social crisis confronting workers and the poor across the island.

Inflation hit 16.8 percent in January, calculated on a year-on-year basis, compared to December, which recorded 14 percent. In January 2021, the inflation rate was 3 percent, climbing to 6 percent in September, followed by steep rises since then.

Children from Colombo slums [WSWS Media]

Last month, prices in the NCPI’s food group increased to 24.4 percent, up from the 21.5 in December, with increases recorded in all essentials, including rice, infant and other milk powders, wheat flour, bread, vegetable, dhal, chillies, coconut and coconut oil, dried and fresh fish, and chicken. Increases were also recorded in non-food items such as housing, water, gas, transport fees, tuition fees, health, clothing and footwear.

Inflation is just one component of Sri Lanka’s economic and social problems that have been exacerbated by the COVID-19 pandemic. According to the island’s undercounted official figures on Sunday, total cases of COVID-19 are 644,090 and the death toll is 16,190.

The Rajapakse government, in line with big business demands and other governments internationally, has implemented the dangerous “living with the virus” policy ensuring a rapid spread of infections. Workers and the poor are paying the price of these criminal policies with deaths or long-term health impacts and unbearable economic hardship.

The last month’s Food and Agriculture Organization (FAO) report on Sri Lanka noted that the rising cost of essentials was “severely affecting access to food amid widespread income losses and reduced purchasing power related to the COVID-19 pandemic.”

It added: “As rice, wheat and sugar products account for about 40, 12 and 10 percent, respectively, of the average calories intake, vulnerable households have likely reduced their food consumption and/or switched to comparatively cheaper but less nutritious foods, with an overall negative effect on their food security, health and nutrition status.”

Shanties in Colombo city [WSWS Media]

The pandemic has drastically impacted Sri Lanka’s revenue from exports, tourism and remittances. Declining foreign reserves and the depreciation of the rupee have produced significant increases in the cost of imported food items. In January last year, a US dollar cost 187 rupees, by December it was 202 rupees. The real exchange rate in December was 250 rupees for a dollar, a 34 percent devaluation.

Citing Central Bank figures, the FAO noted that there had been a 50 percent increase in the price of rice, the country’s main staple food, over the past year.

The already high cost of rice and vegetables will increase further because of crop failures caused by President Rajapakse’s import ban last April on chemical fertilisers and pesticides. The bans, he claimed, would lead to 100 percent organic cultivation.

The bans have devastated paddy and vegetable cultivation, with some estimates indicating a 50 percent drop in the harvest. This will further hit poor farmers already on low incomes and see further price rises and food shortages. Facing massive opposition from farmers, the government lifted the fertiliser ban in November but withdrew previous subsidies.

The FAO report stated that the high cost of agricultural inputs “will likely result in their reduced application, with a negative impact on yield of the 2022 main season crop and that production costs are also anticipated to rise.”

The rising inflation and shortages come on top of the already dire conditions facing working people. As last year’s World Bank Group report entitled: The COVID-19 impact on livelihoods and the poverty in Sri Lanka noted: “The COVID-19 crisis increased international $3.20 poverty rate from 9.2 percent in 2019 to 11.7 percent in 2020; this change translates into over 500,000 new poor people.”

Tea estate line rooms in Hatton [Credit: WSWS Media]

The reports adds that many workers in Sri Lanka “do not have access to employment protection or other job-related social protection benefits, making them vulnerable during times of economic crisis.” Informal sector employment in Sri Lanka is estimated at 5.5 million, or 68 percent of the total work force, and includes 2.4 million temporary or casual employees. About 700,000 have no permanent employment. Price increases have been impacted on public sector employees' wage rates over the past year.

Rising inflation is a global phenomenon. In the US, inflation, on a year-on-year basis, increased to 7.5 percent in January, up from 7 percent in December. Inflation in the eurozone rose to 5.1 percent in January, the highest since 1997.

Since the pandemic began, the Sri Lankan government has bent over backwards to bolster big business with tax concessions, while the banks have maintained low interest rates and made available billions of rupees. This has translated into massive profits for the big companies and record prices on the Sri Lankan stock market, even as Colombo maintains multi-billion payments on foreign loans.

Strikes and protests by teachers, health workers and other public sector employees that erupted in Sri Lanka last year are continuing, fuelled by inflation and ongoing austerity measures. These struggles were isolated and betrayed by the trade unions without any winning any real gains.

The unions all claimed that the government, which imposed the Essential Public Service Act and no-strike bans on public sector workers, could be pressured into granting concessions. This is why workers need to build their own organisations—workplace action committees—to take their fight into their own hands.

Workers can only defend their living conditions and social rights in a unified struggle against the austerity policies of the government and big business. This must be based on a program that rallies the rural poor and fights for a workers’ and peasants’ government based on socialist policies and unity with the international working class against the war, inequality and the COVID-19 pandemic.

WSWS reporters spoke with workers this week about the dire economic situation they face.

Inthiran, 29, is a newspaper print worker from Jaffna, in the war-ravaged north. He earns about 22,000 rupees [$US98] a month.

“I am facing a very difficult situation trying to feed my family of seven people—my wife and child, my father and three sisters,” he said, and explained that he was struggling to earn enough to feed his family members and had to do odd jobs on his “free days.”

“The increasing price of goods is a grinding burden, not only for me but all people. We had to abandon using cooking gas and shift to a kerosene stove, but [because of shortages] we can’t even buy kerosene and now the price of firewood is also high. We’ve been pushed into a corner.

“We have another government that does not care about the people and the opposition parties, including the Tamil parties, are the same,” he said.

A MAS Holding garment worker in the Katunayake Free Trade Zone, originally from the rural Polonnaruwa district, had a similar story. Married with a kindergarten-aged son, he earns about 60,000 rupees a month with overtime, incentives and an attendance bonus.

“I could previously buy a five-kilo packet of nadu rice for 450 rupees. It is now 900 rupees and many essential items, including milk power, are frequently unavailable at nearby shops,” he said.

The worker also has a part-time job driving a three-wheeler taxi for additional income and spends his holidays running the vehicle.

Due to recent shortages of LPG cooking gas, his family has to use a firewood cooker but has difficulties getting any firewood. Disillusioned with the previous Sirisena-Wickremesinghe government, he decided to vote for President Gotabhaya Rajapakse and his government. He told the WSWS that he was disgusted with the government and the current situation.

Kamarajins, a former plantation worker, told WSWS reporters that the rising cost of living was unbearable.

“I left my job at our estate and went to Colombo looking for work because my wage was not enough. But the situation has not changed and the price of everything has gone up. Most plantation workers only have two meals a day,” he said.

“Plantation companies are imposing higher workloads and for less pay. A worker now has to pluck 18 kilograms of tea leaves a day to earn a 1,000-rupee wage—the previous target was 16 kilos—and if you fail to reach the estate’s target, the worker only gets half pay,” he said.

Canada imposes “severe” sanctions on Russia, puts 3,400 troops on stand-by for deployment to Europe

Roger Jordan

Canada’s Liberal government announced a package of “severe” sanctions against Russia Thursday in cooperation with the members of the G7: the United States, Britain, France, Germany, Italy and Japan. Lining up full-square behind the Biden administration’s aggressive war-mongering against Russia, Prime Minister Justin Trudeau and Defence Minister Anita Anand also announced that 3,400 Canadian army, navy and air force personnel have been placed on stand-by for possible rapid deployment to Europe.

Canada’s second tranche of anti-Russia sanctions this week will impose penalties on 58 financial institutions and other entities, including banks, the paramilitary Wagner Group, and leading oligarchs. Targeted measures were also introduced against the Defence Minister, Justice Minister and Finance Minister, who are members of the Russian Security Council. Ottawa has also banned the issuing of new export permits to Russia, and will cancel all the existing permits for the export of high-tech and possible dual-use products, said to be worth $700 million.

Canadian Prime Minister Justin Trudeau (AP Photo/Evan Vucci)

At a press conference held only hours after Russia’s Thursday Morning invasion of Ukraine, Trudeau was joined by Deputy Prime Minister Chrystia Freeland and other ministers. He attacked Russia for its “violation of the UN Charter, the principles of the rule of law internationally,” and added, “(W)e will respond forcefully to make sure that Russia fails.” Freeland, a fervent Ukrainian nationalist and anti-Russia hawk, implicitly compared Russian President Vladimir Putin to Hitler, declaring, “Today, he cements his place in the ranks of the reviled European dictators who caused such carnage in the 20th century.” Putin had invaded a “sovereign democracy,” Freeland stated, while Trudeau appealed for Ukrainians to have the right to “decide their future in a free and democratic state.”

This moral posturing, coming from the ruthless representatives of Canadian imperialism, is grotesque. Trudeau, Freeland and their pro-war lackeys in the media seem to think the population has forgotten that during the past three decades Washington has waged an almost uninterrupted series of wars of conquest and plunder, violating international law and the “sovereignty” of nations at will. And that it has done this with Ottawa’s full support and active participation. 

The actions of Putin’s reactionary oligarchic regime, whose response to imperialist aggression and provocation is military violence and Great Russian chauvinism, only increase the threat of a disastrous global conflagration and assist the predatory ambitions of the imperialist powers to dominate the Eurasian landmass by splitting workers throughout the region along nationalist lines.

The savage 1999 bombardment of Serbia, which killed thousands and destroyed the country’s infrastructure, was conducted by the NATO powers, Canada included, in flagrant breach of the UN Charter. For a decade beginning in 2001, Canadian troops played a leading role in the neo-colonial war that the US and its allies waged in Afghanistan, devastating that poverty-stricken Central Asian country. A Canadian general headed the western powers’ 2011 regime-change war in Libya, which laid waste to one of Africa’s most advanced societies, slaughtered tens of thousands of civilians, and triggered a bloody civil war that continues to this day. The Libya war was justified with lying propaganda about protecting “human rights.” Yet even a Canadian commander, in a moment of candour, acknowledged that the western powers had allied with reactionary Islamists and Canada’s military had served as “al-Qaida’s air force.”

As for Ukraine itself, Canadian imperialism has played a significant role in providing political, military and financial support to far-right nationalist groups that are the descendants of Nazi collaborators during World War II. In 2014, Ottawa was a major player in the US-orchestrated and fascist-spearheaded Maidan coup, which toppled the democratically elected president, Viktor Yanukovych, and replaced his government with a pro-Western puppet regime under President Petro Poroshenko. The openly discriminatory measures the new government took against Russian speakers and the brutal acts of violence conducted by far-right nationalists against political opponents contributed to the support of the population in Crimea for Russia’s annexation of the peninsula and the growth of pro-Moscow separatist movements in Donetsk and Luhansk.

Canada has also joined the US and Britain as one of the leading states in NATO’s massive military build-up on Russia’s western border, which has seen the supposedly “defensive” military alliance expand its territory 800 miles to the east over the past 30 years. Since 2017, Ottawa has had 540 troops in Latvia where they lead one of NATO’s “Enhanced Forward Presence” battlegroups. It has also sent a squadron of fighter jets to Romania to help NATO’s “air policing” of Russia’s borders, and routinely deployed warships to the eastern Mediterranean and Black Sea region.

For the past five years, the Trudeau government has also deployed 200 Canadian Armed Forces personnel directly to Ukraine, where they have trained military and National Guard units known to be riddled with members of the Azov Battalion and other fascist groups. In recent weeks, as part of the NATO campaign of escalating military pressure on Moscow, the Trudeau government extended the training mission to 2025, increased the number of CAF trainers to as many as 400, and began shipments of “lethal aid,” including sniper rifles and other guns, to Kyiv.

Responding to Putin’s recognition Monday of the breakaway people’s republics of Donetsk and Luhansk, Trudeau announced Canada would be sending an additional 460 Canadian Armed Forces personnel to Eastern Europe. 120 artillery gunners will join the Canadian-led Latvia battlegroup. Canada will also send a second frigate, HMCS Halifax, to participate in NATO’s naval patrols against Russia, and a long-range CP-140 Aurora surveillance aircraft.

The Trudeau government’s rapid escalation of military operations against Russia has come amid and in the immediate aftermath of the far-right Freedom Convoy occupation of Ottawa, which was systematically built up and incited by the opposition Conservatives and right-wing media outlets to shift official politics sharply to the right. While the first target of the Convoy’s threats of political violence was all remaining COVID-19 restrictions, the very same politicians who cheered and emboldened the far-right mob have led the calls for Trudeau and his Liberal government to take an even more belligerent stance against Moscow.

The extent to which this campaign has succeeded was underscored by a tweet Thursday from Conservative leadership candidate Pierre Poilievre, one of the Convoy’s most vocal backers. “Deliver weapons Ukraine needs,” wrote Poilievre, “sanction Russian officials and entities, sanction Russian energy and natural resource sectors, fast-track Canadian LNG (liquified natural gas) to replace Russian gas in Europe, welcome Ukrainian refugees.” By the time Poilievre had posted his tweet, virtually all of these demands had already been realized or promised by the Liberal government.

Trudeau and other government officials have pledged to assist European governments to find “alternatives” to Russian gas, including by encouraging various proposals to build LNG export terminals on Canada’s Atlantic coast. Business circles are also urging Canada, the world’s fourth-largest producer of natural gas, develop such capabilities, noting Canadian east coast LNG export terminals would have a competitive advantage over those on the US Gulf Coast because of their closer proximity to Europe.

In pursuing escalation and confrontation with Russia, the Trudeau government has the full support of the cabal of hard-right premiers, including Alberta Premier Jason Kenney, who championed the far-right Convoy. Kenney released a statement Thursday urging the “democratic world” to “stand united with Ukraine.” His main demand, an immediate embargo on Russian oil and gas exports, underscored the economic interests behind his bogus “democratic” posturing. Alberta is the main source of Canada’s natural gas production and hopes to take advantage of the European market that would open up if Russian gas is excluded.

The establishment consensus on the need to prepare for war with Russia includes not just the Liberal government and the Conservatives official opposition, but also the ostensibly “left-wing” New Democrats (NDP) and Québec Solidaire (QS).

NDP leader Jagmeet Singh released a statement Thursday that denounced Russia’s “flagrant aggression” against Ukraine. He urged Canada and its “allies,” i.e., the very NATO powers that have incited the current conflict with their ever-escalating campaign, to militarily encircle and threaten Russia, “use all tools to deter Putin’s aggressive actions.” Singh went on to call for the Liberal government to go even further with its sanctions and exclude Moscow from the SWIFT payment system—an act of economic war meant to strangle Russia economically.

As for the pro-independence QS, it tabled a motion in the Quebec legislature, based on the western imperialist powers’ lying narrative about the Russia-Ukraine conflict that declared “solidarity” with Ukraine and denounced Russian “aggression.” The motion won unanimous support from the governing Quebec chauvinist CAQ and all the other parties in the Quebec National Assembly.

Unsurprisingly, the chorus of war-mongering politicians has been accompanied by pro-war propaganda from the corporate-controlled media. The Globe and Mail demanded in a Friday editorial that Canada provide Ukraine with “as much material support” “in the form of money, military advisers, weapons, and intelligence” “as possible.” Columnist John Ibbitson seized on the occasion to demand a major increase in military spending. He complained that Canada’s “fighter aircraft have become more obsolete and our Arctic border even more unguarded,” while “politicians have been debating the shape of … our health care and education systems.” For years, Canadian imperialist strategists have demanded Ottawa expand its military operations in the far north to more aggressively assert claim to the natural resource wealth of the Arctic and Arctic Ocean, where Russia is a direct geostrategic and economic competitor.

The Liberal-aligned Toronto Star echoed Singh’s call for Russia to be excluded from the SWIFT banking system. The refusal to take this step raises a “question mark” about how much the West is willing to “sacrifice,” the Star asserted.

Omicron surge in Indonesia tops record for daily cases

Owen Howell

A new record was set for daily COVID-19 infections in Indonesia, with 64,718 confirmed cases Wednesday last week. The Omicron variant, now the dominant strain in the archipelago nation, has fueled a precipitous rise in infection rates over the past five weeks, rapidly surpassing the peak of last year’s catastrophic Delta wave.

After reaching its summit of 56,757 cases last July, the Delta outbreak gradually subsided until daily case numbers remained below 200 through November and December. With the eventual introduction and transmission of Omicron, which the Indonesian government openly refused to prevent, official cases began climbing in mid-January. Numbers leapt to the hundreds, thousands, and tens of thousands in a matter of days, in one instance more than doubling after just one day.

A further 61,488 cases were recorded on Wednesday, bringing the total to 5.3 million infections, the highest in Southeast Asia and 17th highest in the world.

UNICEF aid workers in Indonesia (Credit: UNICEF)

As Indonesia’s testing rate remains among the worst worldwide (around 286,000 tests per million people), the official tally can only provide a limited picture of the disease’s spread. The capital city Jakarta accounts for almost half the new cases, partly due to its relatively higher testing capacity compared with rural or remote regions. Other areas reporting numerous Omicron victims include provinces West Java, Banten, East Java, and Bali, although the infectious variant is suspected to have already spread far beyond the major island of Java.

Less than a week after the Omicron surge began, nearly 20,000 hospital beds out of a national capacity of 120,000 beds dedicated for COVID-19 handling had been filled. Occupancy rates at 140 coronavirus referral hospitals in Jakarta are currently at 60 percent, up from just 5 percent in early January. Over 50 percent of hospital beds for COVID-19 patients in Jakarta, Yogyakarta, and Bali were occupied as of Monday.

The death toll is also climbing fast, increasing to 257 deaths on Tuesday from single figures three weeks ago. Over 100 people died every day for the past two weeks, mostly in the capital.

The previous Delta surge last July made Indonesia the global epicentre for coronavirus deaths, peaking at over 2,000 deaths a day. This was the result of a complete collapse of the country’s healthcare system. People seeking medical treatment at overcrowded hospitals in both major cities and provinces were turned away at the doors, causing thousands to die at home without proper care. Government statistics were therefore a serious underestimate of the real toll on lives.

Health workers were compelled to erect plastic tents as makeshift intensive care units to cope with demand, but patients had to wait days before being admitted. Spare supplies of oxygen tanks quickly ran out as they were handed out to crowds of people outside hospitals needing urgent treatment.

Facing the prospect of a similar disaster, the national government continues to avoid lockdown measures and promotes a “COVID normal” policy.

On February 7, Investment Minister Luhut Pandjaitan, coordinator of the COVID-19 response in Java and Bali, finally announced minimal social restrictions to address the Omicron surge. By this time, daily cases had already skyrocketed from approximately 1,000 to 36,000 in three weeks. Viral transmission rates in Java and Bali, moreover, had already exceeded the highs of the Delta wave.

The restrictions include attendance caps of 50 percent on places of worship, and 60 percent on supermarkets, malls, and restaurants, which will also see a reduction in operation hours. These measures are confined to Jakarta, Bandung, Yogyakarta, and Bali. Reviews are held each week by a special committee to assess whether any restrictions can be eased.

However, government officials have admitted that they expect an explosion of cases and deaths due to Omicron in coming weeks. Health Minister Budi Gunadi Sadikin has estimated that cases during this wave may rise as high as 285,000 per day, five times the Delta peak, while deaths would not exceed 500, according to Associated Press.

“Please do not panic if you see the number of cases are [sic] increasing significantly,” he said at an online briefing. “The most important thing is the hospitalisation and fatality rates are lower [than the Delta wave] and remain under control.” He urged the government to adopt calm and confidence that Omicron will not overload the healthcare system due to its “milder” character.

The extreme reluctance of the Indonesian ruling elite to impose any hindrances on economic activity stems from its growing anxiety to resume profitmaking as soon as possible.

It is particularly eager to restart the tourist operations on which a substantial portion of Indonesian business depends. Preparations are being made to lift all quarantine requirements for international travelers as early as April, in a bid to draw visitors back to the resort island Bali and other popular destinations.

In Bali, where a full-scale reopening is already underway, international flights resumed earlier this month, while the quarantine period was shortened further from seven to five days. Interviewed by the South China Morning Post, Nia Niscaya, deputy of marketing at the Ministry of Tourism and Creative Economy, described Bali’s reopening as a “kind of pilot scheme,” or a trial run for the government’s plan to “live with the virus.”

While the government is keen to follow other countries and transition from “pandemic” to “endemic” status, only 51 percent of Indonesia’s 278 million population has been double vaccinated, according to Our World in Data. The country’s exceptionally slow vaccine campaign commenced on January 13 last year. Despite an announcement in December that Indonesia would start vaccinating children, the campaign has largely consisted of ineffectual public appeals to get vaccinated, undermined by the spread of misinformation about COVID-19 and the promotion of quack cures by politicians.

Medical studies have concluded that the Omicron variant, highly mutated and potentially vaccine-resistant, significantly reduces the efficacy of Pfizer and Sinovac vaccines, the two most commonly distributed across Indonesia. The country only started rolling out its booster program in mid-January, days before the recent surge erupted.

Initially, the government proposed that Indonesians should pay for their booster dose, a decision which was revoked amid widespread outrage from scientists and the public at large. Only 3.4 percent of the population has received a booster, rendering the vast majority of the Indonesian people virtually unprotected against Omicron.

Additionally, vaccine distribution has been largely concentrated in Jakarta and Bali, where almost the entire populations have received two doses. Areas such as Aceh and West Papua, on the other hand, have managed to vaccinate only 20 percent of residents, according to Health Ministry data.

As throughout the pandemic, epidemiologists are warning that the Indonesian government’s reckless pro-business actions will end in public health crisis. Dr Dicky Budiman, from Australia’s Griffith University, has expressed concern for the consequences of both the low vaccination rate and the concentration of vaccines in certain areas.

“During the Delta-driven second wave, 20 percent of patients were hospitalised, with five percent put into intensive care units. For Omicron, 10 percent of the patients are likely to be hospitalised, while the rest are likely to be asymptomatic or showing mild symptoms,” Dr Budiman said. “But 10 percent of Indonesians [in hospitals] is a lot. Due to a low patient-to-doctor ratio, even five percent of the population [being in hospital] could make our health system collapse.”