Spain: PSOE-Podemos prepares new repressive laws against strikes, protests

Santiago Guilen & Alejandro López

The Socialist Party (PSOE)-Podemos government is preparing to review the penal code to criminalise protests and strikes, as the worst economic and social crisis in generations propels the working class in Spain and across the world into struggle, intensified by the NATO’s war against Russia in the Ukraine.

The PSOE-Podemos government is claiming that it is reviewing the sedition law, used by it and the previous right-wing Popular Party (PP) government to persecute the Catalan nationalists after the failed secessionist referendum in 2017, as a step to “defuse” the situation in Catalonia.

In words of Prime Minister Pedro Sánchez on LaSexta TV, “We have a criminal code which, when it comes to certain crimes, is not comparable with the main European democracies”. The offence would be renamed “aggravated public disorder” and would carry a maximum prison sentence of five years rather than the current 15.

The PP and neo-fascist Vox are mounting a campaign claiming that this measure is tantamount to treason. In a statement, the PP said that Sánchez was “using all the powers of state to pave the way for those who want to combat it”.

The campaign on both sides, however, obscures the real aim of the “review”: the criminalisation of protests and strikes. The new proposed wording of the crime of public disorder states: “Those who, acting in a group and threatening public peace, carry out acts of violence or intimidation will be punished with a prison sentence of between six months and three years if they act: a) against people or things or b) obstructing public roads causing a danger to the life or health of people; or c) invading facilities or buildings”.

This wording criminalises normal forms of protest—a picket that blocks the entrance to a factory, eviction protests, students occupying a university or college, and even changing the route of a demonstration not officially communicated to the authorities.

Sanctions may be extended to five years in prison if they occur in a mass demonstration, and workers, particularly civil servants, may face losing their jobs. The review initiative states the above acts “will be punished with a prison sentence of three to five years and special disqualification from employment or public office for the same time when they are committed by a crowd whose number, organization and purpose seriously affects public order.”

The change will have little effect on the persecution on Catalan nationalists, the alleged target of the reform. There are currently 3,000 defendants in 44 cases for participating in mobilisations in favor of the Catalan independence process or against its repression. None of them will benefit from this legal change.

Victor, one of these defendants, summed it up in an interview with El País: “I have been prosecuted for three years and the Generalitat [Catalan government controlled by the nationalists] throughout this process has been part of the prosecution. Today I am accused by the same ones whose rights I demonstrated for in 2019. They have left us stranded and I face seven years in prison?”

The nine Catalan political leaders, jailed for nine to 13 years convicted in 2019 in trumped-up charges and a show trial, have already been released after back-door negotiations between factions of the ruling class in Madrid, spearheaded by the PSOE-Podemos government, and in Barcelona, led by the Catalan nationalists, over the disbursement of billions of euros in European Union bailout funds.

The PSOE-Podemos government is arguing that its changes to the penal code will be interpreted in order to defend democratic rights. This is a lie. The Spanish judiciary has repeatedly given the most reactionary interpretation of the law to ram through attacks on democratic rights, while allowing police violence on protestors, strikers and migrants.

Riot police officer fires a rubber projectile towards protesters during a strike organized by metal workers in Cadiz, southern Spain, November 23, 2021. [AP Photo/Javier Fergo]

The judiciary follows in the footsteps of the growing attacks on democratic rights by the PSOE-Podemos government. Over the past three years, amid mounting opposition against austerity, its “let it rip” COVID-19 policy and rising inflation, it has jailed a rapper for criticising the police and the monarchy, the first musician imprisoned in Spain since the fall of the fascist regime led by Francisco Franco.

Earlier this year it deported Algerian whistleblower and activist Mohamed Benhalima, and worked with Polish authorities to detain Spanish journalist Pablo González—who continues to languish in prison after eight months in preventive detention in Poland on fraudulent accusations of spying for Russia. Against the working class, the PSOE-Podemos government has repeatedly used minimum service legislation to break strikes, most recently on health workers and airline crew, and deployed the police to crush strikes by truckers and metalworkers.

The attack on workers’ rights by the capitalist elite is a global phenomenon. In France, the “President of the rich” Emmanuel Macron requisitioned striking oil refinery workers to end a two-week strike. In Britain, the right-wing Conservative government is in the process of adopting legislation that will effectively illegalise strikes and protests. In the US, the Biden administration is conniving with the union bureaucracy and rail companies to block a strike by over 120,000 rail workers.

The abrogation of workers’ rights makes a mockery of the incessant claims by these very same governments to be engaged in a crusade for “democracy” and “human rights” against “Russian aggression” in Ukraine.

Podemos is claiming that, given the current correlation of forces, it can do little about the review. Jaume Asens, one of the chief spokespersons of Podemos in parliament, declared, “The correlation of forces is what it is, and we are a party that has the strength it has compared to the PSOE”. He added, “Obviously, the occupation of facilities was put by the PSOE, not us.”

This is another lie. In fact, the PSOE depends on Podemos votes to pass its legislation through the Spanish Congress. This effectively gives Podemos veto power over the PSOE’s legislative agenda. However, it has deliberately decided not to exercise this power, instead ramming through social austerity, military spending increases, bank bailouts, and attacks on basic democratic rights.

Podemos is a pro-imperialist party, fully engaged in waging war against the working class at home and NATO’s proxy war against Russia in Ukraine. If Podemos had the upper hand in the coalition, it would act no differently than its PSOE partners. In Chile, workers have repeatedly been met with police repression by Podemos-backed Gabriel Boric’s government. Workers and migrants under the Podemos-backed SYRIZA government (2015-2019) in Greece likewise faced brutal repression at the hands of Prime Minister Alexis Tsipras.

Also complicit in this reform are the Catalan nationalists, who over the years have been the chief victims of Madrid’s crackdown. Catalan regional premier Pere Aragonès defended the review saying it is “an indispensable step” towards “dejudicialising” efforts to find a solution to Catalan question.

It confirms the repeated warnings made by the WSWS that the attacks against Catalan nationalists would later be deployed against the entire Spanish working class so as to press forward with rearmament, participation in imperialist wars, and the brutal austerity agenda that all sections of the Spanish establishment have implemented since 2008. Workers, as we warned, could not rely on the Catalan nationalists to defend democratic rights.

The trade union leaders have not even discussed how the new legal changes will directly threaten its own members. Instead, they too have participated in the charade, defending it as a way of “defusing” the Catalan situation.

General Secretary of the Podemos-linked Workers’ Commissions (CCOO), Unai Sordo, said, “It seems appropriate to us that obsolete legal forms be adapted and, in this case, crimes that are clearly obsolete with respect to comparative European legislation.” The general secretary of the UGT, Pepe Álvarez, described the changes as “brave”, adding, “It is not an issue thought for Catalonia, but thought for Spain and coexistence”.

One year since Omicron was declared a variant of concern: A balance sheet

Bryan Dyne

One year ago last Thursday, a new, highly-infectious and immune-resistant variant of the coronavirus was first reported to the World Health Organization (WHO) by the Network for Genomics Surveillance in South Africa after being detected in Botswana and South Africa. Two days later, the WHO declared it a “variant of concern” with the name Omicron, recognizing that it had the possibility of quickly becoming dominant globally.

The mortal danger of Omicron, however, was quickly suppressed by the world’s capitalist governments and corporate media. The warnings of scientists that Omicron could cause a wave of infection hitherto unseen during the pandemic were buried under proclamations that the new variant was “mild.”

The tone was set by US President Joe Biden, who attempted to foist responsibility onto those who were unvaccinated by using a partial truth, that “the unvaccinated have a significantly higher risk of ending up in a hospital or even dying,” and twisting it into the false claim that vaccinated people were all “protected from severe illness and death.”

US President Joe Biden giving a speech downplaying the dangers of Omicron three days after it was declared a variant of concern by the WHO. [AP Photo/Evan Vucci]

Such statements were repeated by world leaders throughout last winter, in a concerted effort to downplay the dangers of Omicron. The new variant was seized upon to falsely promote vaccines as the panacea to end the pandemic, to renounce lock-downs, masks and other basic public health measures as unnecessary, and to normalize ongoing infection and mass death.

A year of mass infection, death and debilitation

Over the course of the past year, the “herd immunity” strategy pioneered by the far-right in 2020 was adopted by nearly every world government outside China. This was epitomized in the statement by Dr. Anthony Fauci in January 2022 that Omicron would provide a “live-virus vaccination,” a false and pseudo-scientific conception that encouraged mass viral transmission.

The results of this policy shift have been catastrophic. According to official figures, over the past twelve months 1.4 million people have lost their lives globally to Omicron. Estimates of the real global death toll via excess deaths places the tally at 5.2 million, a quarter of all excess deaths during the pandemic.

[Photo by Our World In Data / CC BY 4.0]

One year later, the Biden administration is doubling down on the lies that cost millions of lives, including more than 297,000 in the US alone. In a press briefing on November 22, Fauci stated that “there’s a 14 times lower risk of dying” if one is vaccinated and boosted compared to one who is unvaccinated.

In fact, vaccinated people still get sick and die by the hundreds every day. A recent study of CDC data by the Kaiser Family Foundation, which the White House and the corporate media have covered up, found that as of August more than half of those that have died in the US have been vaccinated. In other words, at least 23,000 of the 46,000 Americans that have died from the coronavirus pandemic in the past fifteen weeks have been vaccinated. While the vaccines still provide relative protection against hospitalization and death, the danger of breakthrough infections, of the virus being able to evade immunity and kill, is real and present.

Not only has Omicron killed millions, it has infected billions, leaving numerous long-term health problems whether the virus’ victims had symptoms from the initial infection or not. These include but are not limited to asthma, diabetes, brain damage, muscular and skeletal weakness, multiple organ damage, increased risk of heart failure, stroke, and joint impairment.

By allowing the coronavirus to circulate and mutate in billions of hosts, new variants have evolved at an increasing pace. The Alpha, Beta, Gamma and Delta variants all produced their own waves of infection and death. Omicron is a step further, with surges of subvariants—including BA.1, BA.2, BA.5, BQ.1, and BQ.1.1—that have multiplied in their hundreds.

With each new immune-resistant Omicron subvariant, the immense risk of reinfection with COVID-19 has been heightened. A major study published November 10 in Nature Medicine made clear that each COVID-19 reinfection causes cumulative damage to one’s body, increasing their risk of all-cause mortality and Long COVID. It exposed the horrific reality of the “forever COVID” policy of the Biden administration, in which wave after wave of the pandemic will encircle the world, leaving behind increasing amounts of death and debilitation in its wake.

Long COVID is increasingly common and has essentially become a pandemic in its own right. An August report from the Brookings Institution found that 16 million working-age Americans (18-65 years old) suffer from the ailment, including up to 4 million so disabled that they can no longer work, numbers that will only increase as long as the country’s population continues to get infected and reinfected.

Extrapolated to the world’s population, the report suggests that as many as 400 million people internationally could now be afflicted with Long COVID and may have it for years to come, with tens of millions disabled to the point that they can no longer work.

The deepening COVID cover-up

Over the past year, the Biden administration has utilized the lie that “Omicron is mild” to completely dismantle the ability to track the pandemic in the US in an effort to cover up the extent to which the virus is spreading. The charge was led by the Department of Health and Human Services (HHS), which ended the requirement for hospitals to report their daily coronavirus death count to the federal department as Omicron was at its peak last January. What had been the centralized repository for recording those who died each day from the coronavirus was taken apart in one fell swoop.

Following the dictates of the Biden administration, the Centers for Disease Control and Prevention (CDC) has spent the past year repeatedly changing its guidelines to encourage the lifting of every mitigation measure, above all mask mandates. Most recently, the agency switched from daily to weekly reporting of COVID-19 infections and deaths, in order to cover up the coming winter surge.

Two maps of US zip codes from the CDC in late February 2022, showing actual rates of community transmission (left) versus the "Community Levels" (right) [Photo: CDC]

States have followed the lead of the CDC and HHS, gradually ending daily reporting of cases and deaths. Currently only two states, New York and Arkansas, as well as Puerto Rico, still report cases and deaths on a daily basis. Thirty-eight states only publish data on a weekly basis, and Nebraska, North Dakota and Washington D.C. have stopped reporting coronavirus deaths altogether. Eight states—Alaska, Florida, Nevada, Wyoming, Kansas, Oklahoma, Iowa and Illinois—no longer report testing, the first line of defense in hunting down the disease.

At the same time, the most recent wastewater data, one of the few remaining reliable ways to track the pandemic, show that even as official case counts are trending downward, the real number of cases is again increasing, potentially setting the stage for a third winter of death.

The lessons that must be learned

The experiences of the past year, and throughout the entire pandemic, demonstrate conclusively that capitalism is incompatible with the social interests of the working class. The drive for profits ultimately places a secondary value on human life. Workers are forced to labor in deadly conditions, with their exploitation funneling ever greater sums of wealth to the billionaires.

A critical lesson of the past year is that COVID-19 can still be eliminated globally, even the highly-infectious Omicron variant. At the beginning of June, China’s largest city, Shanghai, reopened after a two-month lockdown that successfully beat back an outbreak of the BA.2 subvariant. The lockdown was implemented when there were 3,662 cases a day in the city, a figure which peaked in April at just under 30,000 a day and reduced to essentially zero six weeks later. Fewer than 600 people lost their lives during the entire surge.

The Shanghai lockdown was a stunning example of the policy of Zero-COVID, which entails a genuine mobilization of public health measures—universal masking, mass testing, contact tracing, the safe isolation and quarantine of infected and exposed people, and temporary lockdowns—in a scientifically planned manner to crush the coronavirus.

Graph showing the elimination of Omicron BA.2 outbreak in China [Photo: WSWS]

The fundamental weakness of this policy, however, has always been the nationalist basis upon which it has been deployed, including by the governments of China and previously New Zealand, Vietnam and other countries. Zero-COVID cannot be sustained indefinitely in a single country as the virus continues to circulate and mutate everywhere else.

At the same time, imperialist interests dominated by the US have long demanded that Zero COVID be dropped globally. Faced with a mounting economic crisis and the threat of an exodus by companies such as Apple, the Chinese Communist Party (CCP) finally gave in on November 11, and the results have already been disastrous.

Cases in China have jumped past 38,000 a day in a matter of weeks and threaten to infect the whole of China’s 1.4 billion inhabitants. Such a scenario would be catastrophic, potentially killing millions amid a complete collapse of the country’s healthcare system. It would also provide 1.4 billion more hosts in which the virus to evolve and mutate further into more infectious and deadly variants.

China pushes lifting of Zero-COVID after anti-lockdown protests

Peter Symonds

In the aftermath of last weekend’s protests in several Chinese cities, the country’s National Health Commission (NHC) held a press conference Tuesday calling for speeding up the implementation of the 20 measures announced on November 11 which initiated the lifting of the country’s Zero-COVID policy that has suppressed numerous outbreaks over the past three years.

Residents wearing face masks line up to get their routine COVID-19 throat swabs at a coronavirus testing site in Beijing, Thursday, Sept. 22, 2022. (AP Photo/Andy Wong)

An article in the state-owned Global Times notes, “anti-epidemic management should be lifted in a timely manner to minimize the inconvenience caused by the epidemic to people, said Mi Feng, spokesperson for the National Health Commission (NHC).”

Cheng insisted that the “20 measures” are “supported by sufficient scientific basis and evidence” and aim to fully suppress COVID-19 outbreaks, but the official figures speak for themselves. Over the past week, China has repeatedly set new daily records of COVID-19 infections, with a slight dip to 38,421 official new cases reported Tuesday.

While still low by international standards, the moves to ease previously effective measures—mass testing and contact tracing, isolation and quarantine guidelines, lockdowns and strict border management—pose the very real danger of escalating mass infections and deaths in a country of 1.4 billion people.

In a tacit recognition of the risks, the NHC is pushing for the vaccination of the elderly population, who are particularly vulnerable due to lower vaccination rates. However, vaccination alone has failed to halt the horrendous wave of infections and deaths in other countries around the world.

Significantly, the Global Times made no mention of the relatively small, middle class protests that took place over the weekend following an apartment fire last Thursday in the city of Urumqi, the capital of Xinjiang Province. The protests in as many as 18 cities numbered in the hundreds, possibly low thousands in some cases, and were in part fueled by demonstrably false claims that anti-COVID restrictions were responsible for the 10 tragic deaths in the fire.

While the protests had disparate elements, the dominant theme was the demand for “freedom” from COVID restrictions, which has been taken up in the US and Western media in a veritable avalanche of propaganda calling for an end to China’s Zero-COVID policy. The protests reflect an ongoing, reactionary campaign among largely middle-class layers on social media in China condemning Zero-COVID measures and pointing to their absence in the rest of the world, while ignoring the disastrous consequences and huge death tolls that have resulted.

The protests were clearly not spontaneous. For instance, one rally in Shanghai organised via Telegram on social media was clearly oriented to foreign media, with a pinned message encouraging its members to reach out to the New York Times, CNN and Associated Press, as well as the anti-communist Epoch Times and CIA-linked Radio Free Asia.

Far from being the voice of the Chinese people, videos of some of the protests show local residents denouncing the protesters and condemning their demands for an end to Zero-COVID restrictions.

Rather than mount a political defence of the Zero-COVID policy which has kept per capita rates of infections and deaths among the lowest in the world, the Chinese Communist Party (CCP) government and state-owned media has said nothing publicly on the protests. Nor has there been a response to the deluge of propaganda in the international press.

Asked about the protests at a Foreign Ministry briefing yesterday, spokesperson Zhao Lijian blandly declared that Chinese citizens enjoyed rights and freedoms, but these had to be “exercised within the framework of the law.”

The stony official silence on the protests is another indication, along with Tuesday’s NHC briefing, that the Chinese government is step by step adopting the same criminal “let it rip” policy as the US and other countries. As it shifts away from Zero-COVID, the last thing that the regime wants is a public debate about a policy that has been widely and patiently supported by the vast majority of the population despite its limitations and the personal difficulties involved.

The calls for “freedom” from affluent, self-centred middle-class layers are in marked contrast to the attitude of the working class. Last week’s protests by thousands of workers at Foxconn’s huge factory in Zhengzhou were driven not only by the company’s broken promises on pay and bonuses, as well as terrible working and living conditions, but its failure to adequately protect its employees against COVID-19 infections.

An article in yesterday’s Asia Times entitled, “Protests hasten Chinese exit from zero-Covid policy” cited unnamed Chinese sources stating that decisions to relax the Zero-COVID policy were taken prior to the CCP’s 20th Congress but “with omicron cases surging and protests threatening to get out of hand, the matter has become more urgent.”

The article noted, “According to the sources, further relaxation is now scheduled to start in the course of January when Beijing will formally announce the end of the pandemic and classify COVID as an endemic infectious disease. That’s earlier than previously planned.”

Major Chinese cities, including Beijing, Guangzhou, Chongqing and Zhengzhou, are already advancing what NHC officials call “new optimised measures” that signify the ending of city-wide lockdowns that have effectively contained outbreaks in the past in favour of limited, localised lockdowns.

The lifting of Zero-COVID in China is not the result of the failure of this policy, as repeatedly declared by pundits in the Western media, but rather the limitations of the national framework within which it has been implemented.

The repeated waves of infections in China are the direct result of the virus being allowed to run rampant through populations in the rest of the world—infecting billions and killing millions, while providing the breeding ground for new, more infectious and immune-resistant variants.

The Chinese government is succumbing to the same enormous pressures to let the virus rip through the Chinese populations as has led other countries such as New Zealand and Vietnam to abandon policies that had effectively stopped viral transmission. The CCP, which has presided over decades of capitalist restoration, represents powerful corporate interests which insist that profits must take priority over the health and lives of working people.

It is significant that Zhengzhou, home of the Foxconn factory, as known as iPhone City, has been one of the first to further ease anti-COVID restrictions. As of today, the city will remove so-called mobility controls, i.e. lockdowns, and replace them with “normal COVD-combating measures”—in other words, the new limited “20 measures.” Apple, which has been desperate to overcome severe labour shortages at the Foxconn plant in order to boost the production of the latest iPhone model in time for the holiday shopping season, will undoubtedly be grateful.

How Has the Russia-Ukraine War Impacted Germany’s Renewable Revolution?

Sören Amelang

The energy crisis fueled by Russia’s war against Ukraine is dealing a heavy blow to Europe’s biggest economy Germany, due to its large dependence on Russian fossil fuels. Policymakers, businesses and households alike are struggling to cope with skyrocketing prices, which are fanning fears of irreparable damages to the country’s prized industries, economic hardships for its citizens, and social unrest. The long-term impact on the country’s landmark energy transition remains uncertain, as Germany redoubles efforts to roll out renewables, but also bets on liquefied natural gas (LNG), a temporary revival of coal plants and a limited runtime extension for its remaining nuclear plants to weather the storm. This article provides an overview of the state of play of Germany’s shift to climate neutrality, which is now dominated by its response to the crisis. It will be updated regularly. [UPDATE: Government earmarks 83 billion euros for gas and power price subsidies.]

What’s the energy crisis’ impact on the economy and households?

+ The energy crisis is set to push Germany into a recession, as rising energy prices put a damper on industrial production and inflation means citizens will buy less. Both the government and the country’s leading economic research institutes expect the economy to shrink in 2023. The government forecasts an inflation rate of 8 percent in 2022, and 7 percent in 2023.

+ Many German industrial companies have relied on cheap Russian pipeline gas, among them key producers of basic materials needed for many other products. These firms are particularly concerned about the energy crisis, as permanently higher gas prices threaten competitiveness and long-term survival.

+ The government has launched massive relief packages for citizens and companies (see below). Without these, many households would face additional energy costs running into thousands of euros per year, with retail gas prices multiplying for many citizens, and retail power prices also rising steeply.

+ Policymakers, consumer protection groups, and social care services have warned that the energy price hike could result in social hardships and even unrest if households are overburdened. But so far, protests have remained limited in scope and scale, and mainly limited to regions notorious for their rejection of government policies.

+ Most citizens blame the energy price hike on external factors such as the pandemic and the war on Ukraine, and generally approve of the government’s handling of the crisis, according to surveys. They also say that they are ready to contribute to energy savings. But rising prices have become the biggest concern for a vast majority of the population.

How has the government responded?

+ Germany has responded to the crisis with a whole series of relief packages for households and businesses, which have continuously grown in size and scope. The government presented a 200-bln euro “defence shield“ in September, which includes plans for reducing gas and electricity prices at a projected cost of 83 billion euros. Previously, it had already earmarked about 95 billion euros in support funds, spread out in three relief programmes, which included petrol tax cuts, a 9-euro flat-rate ticket for public transport, and a temporary freeze of the CO2-price for transport and buildings, which was meant to rise in early 2023.

+ The government urged citizens to save energy, ordered savings in public institutions, and helped to fill gas storages in order to avoid shortfalls in the winter. [The grid agency provides daily updates on the current status of Germany’s gas supply.]

+ To bring down the use of gas power plants, the country is temporarily reviving coal units that had already been retired, or were earmarked for decommissioning.

+ The country will also postpone its exit from nuclear energy by around three months, by keeping its remaining three operating nuclear plants on the grid until April 2023.

+ Germany is going full steam ahead in building up its own import infrastructure for liquefied natural gas (LNG) and increase trading or make new deals with other suppliers in order to replace Russian pipeline gas.

How will the crisis affect Germany’s shift to climate neutrality?

+ Many experts and the government hope that while the crisis might result in a short-term increase in emissions, it will ultimately speed up the energy transition. Germany’s overall energy transition and emission reduction targets remain in place.

+ The war has re-energized efforts to shift away from fossil fuels towards renewables, which have been dubbed “freedom energies” because they allow the country a greater degree of independence from Russia. But the increase in raw material and financing costs also threatens to slow the renewables roll-out, as investors become more reluctant.

+ Despite the short-term increase of coal use, the government is still planning to pull the country’s coal exit forward, “ideally” to 2030, from the currently legislated end date of 2038. However, while some coal regions have committed to the 2030 phase-out goal, others have said an early exit is too ambitious.

+ Environmentalists warn the government’s large LNG infrastructure investments could cement fossil-fuel dependency.

+ German industry has said it plans to stick to its existing decarbonisation targets despite the challenges posed by the energy crisis.

+ Household demand for low emission heating systems such as heat pumps has risen strongly in response to the crisis, challenging the dominance of gas-fired heating systems in German homes.

What’s the overall status of Germany’s energy transition?

+ There is a broad consensus among policymakers, businesses, and climate activists that speeding up the rollout of renewables must currently be Germany’s top priority to advance the energy transition, because they will also be key to electrifying other sectors such as transport and heating, and the country’s plans for a hydrogen economy.

+ Renewables provided 49 percent of Germany’s electricity in the first half of 2022, but total emissions are forecast to rise slightly this year because of higher coal use.

+ There are concerns that a lack of skilled workers will become a major obstacle to rapid energy transition progress.

Could China Help Brazil to Overcome Its Economic Crisis?

Marco Fernandes

The election victory of Luiz Inácio Lula da Silva as the president of Brazil for a third term on October 30 is expected to revise the relations between Brasília and Beijing. Brazil is going through a serious economic, political, social, and environmental crisis. Fighting poverty, resuming economic growth with income redistribution, reindustrializing the country, and reversing environmental abuses are urgent tasks, which will demand unprecedented national and international finesse from the new government. The economic partnership between Brazil and China, which has advanced greatly in the last two decades, may be one of the keys to reversing the crisis that Brazil faces. But some challenges will need to be faced with diplomacy and strategic planning.

Despite the “insults” directed by the government under former Brazilian President Jair Bolsonaro toward China, especially during the pandemic, and the inevitable distancing of diplomatic relations between the two countries, bilateral trade between Brazil and China has increased. In 2021, bilateral trade between the two countries reached $135.4 billion with Brazil recording a trade surplus of $40 billion with China, which was only surpassed by the region of Taiwan and two countries, Australia and South Korea. China has been Brazil’s largest trading partner since 2009, accounting for almost double the trade volume that Brazil imported from its second largest partner in 2021, the U.S. ($70.5 billion), with which it recorded a deficit of $8.3 billion.

A Profitable, but Unbalanced Trade Relationship

Brazil’s export mix, however, is vulnerable in the long term: it is not very diversified and based on products of low aggregate value. The four main products it exports (iron ore, soy, crude oil, and animal protein) accounted for 87.7 percent of total exports to China in 2021. Meanwhile, the imports of Chinese products to Brazil are highly diversified, with a predominance of manufactured products, and with a high technological index. For example, the main import item from China to Brazil (telecommunications equipment) accounted for only 5.9 percent of imports.

The Brazilian commodities sector, which is an important component of the economy, represented 68.3 percent of exports by Brazil in the first half of 2022 and has contributed for years to the increase in international reserves. On the other hand, the commodities sector has a high concentration of wealth, pays few taxes, generates relatively few and low-skill jobs, is subject to cyclical price changes, and, in many cases, causes environmental damage, which needs to be better controlled by the state. In this sense, the initiative announced by COFCO International—the largest buyer of Brazilian food in China—to monitor and prohibit the purchase of soybeans planted in areas of illegal deforestation in Brazil beginning from 2023 was important.

But it will also require the Brazilian state—which has become notorious in recent years for encouraging deforestation and the invasion of Indigenous reserves—to guarantee the effectiveness of the initiative. China needs Brazil’s natural resources for its development, and Brazil needs the Chinese market for its commodities. But in the medium and long term, Brazil will need to seek greater balance in its trade agenda if it wants to return to being a solid economy. Let’s remember that in 2000, the main Brazilian export product was Embraer’s jet planes, while in 2021, the main exports were iron ore and soybeans. This is just one of the many symptoms of chronic deindustrialization.

Investing Is Necessary but so Is Diversifying

Chinese investments in Brazil have a similar profile to its exports: robust, but not very diversified. In 2021, Brazil received the most Chinese investments in the world, amounting to $5.9 billion (13.6 percent of the global total). Between 2005 and 2021, Brazil was the fourth-largest global recipient of Chinese investments (4.8 percent of the total), only behind the U.S. (14.3 percent), Australia (7.8 percent), and the United Kingdom (7.4 percent). These investments by China have resulted in a fundamental contribution of resources to the Brazilian economy but have not come without its set of challenges. From 2007 to 2021, 76.4 percent of the Chinese investments were concentrated in the energy sector (electricity, and oil and gas extraction), while only 5.5 percent went to the manufacturing industry and 4.5 percent went to infrastructure works, among other greatest needs of Brazil’s economy.

The Brazilian electricity sector was the largest destination for Chinese investments (45.5 percent of the total), but part of this corresponded to the purchase of Brazilian state-owned companies by Chinese state-owned companies. In 2017, the Chinese company State Grid acquired a controlling interest in CPFL Energia, a state-owned company in the state of São Paulo, and in 2021, CPFL Energia bought control of CEEE-Transmissão, a state-owned company in the state of Rio Grande do Sul. For Brazil, these were not good deals and demonstrated the irresponsibility of neoliberal state governments of the Brazilian Social Democratic Party (PSDB), which privatized strategic public assets. China—which would never sell a state-owned energy company to foreigners—took care of its own interests and took advantage of a business opportunity offered by the market. It was not a privatization package imposed by the International Monetary Fund. But would Beijing be willing to accept other investment models that would bring more benefits to both countries?

The Example of the Southern Hermanos

Since 2021, Buenos Aires and Beijing have entered into a series of strategic investment agreements. In February 2022, Argentina joined the Belt and Road Initiative, which is expected to attract $23 billion in Chinese investments for Argentina. Before that, other investments and projects by Chinese companies included the reform of the Argentine railway system ($4.69 billion), and, voluminous investments in the electric sector, such as 1) the expansion of the Cauchari Park, Latin America’s largest solar power plant, which was originally a Sino-Argentinian partnership, 2) the construction of the “Kirchner-Cepernic” hydroelectric complex in Patagonia (costing more than $4 billion), and 3) the construction of the “Atucha III” nuclear plant (costing $8.3 billion), whose financing has an approximately eight-year grace period and, most importantly, it provides for the transfer of Chinese Hualong nuclear technology—mastered in 2021—to the Argentine state, which will control the plant.

Brazil can propose partnerships similar to those by Argentina that are just as or even more strategic, with mutual benefits. Why not propose to exchange commodities (oil and gas) for infrastructure and technology with China, as countries like Iran have already proposed? Or the formation of more Sino-Brazilian joint ventures—which received only 6 percent of Chinese investments (2005-2020), while mergers and acquisitions received 70 percent—that provide for technology transfer to Brazil?

Brazil will need a gigantic effort to reindustrialize its economy at several levels, such as investment in research and development, training of skilled labor, financing, and technology transfer. No other country, such as China, has the financial, industrial, and technological conditions to cooperate with Brazil in numerous promising sectors, like electric vehicles, information technology, 5G, renewable energy, aerospace, biomedicine, and semiconductors. It is up to Brazil to propose a high-level strategic dialogue with China, which reaffirmed in the report of the 20th National Congress of the Communist Party of China that it is committed to helping to accelerate the development of Global South countries. “China is prepared to invest more resources in global development cooperation. It is committed to narrowing the North-South gap and supporting and assisting other developing countries in accelerating development,” President of China Xi Jinping said during the congress.

As the World Fixates on Ukraine, Another War is Brewing in the Middle East

Patrick Cockburn

Photograph Source: Darafsh – CC BY-SA 4.0

As war rages in Ukraine, another conflict is ready to explode in the Middle East as the US and its allies confront Iran over its nuclear programme, supply of drones to Russia, and repression of anti-government protests.

If the US or Israel were to attack the main Iranian nuclear facility producing weapons-grade nuclear fuel, Iran would most likely retaliate by using its drone and missile arsenal to close the Strait of Hormuz at the mouth of the Gulf, through which tankers daily carry almost a fifth of the world’s oil and gas.

The confrontation escalated sharply this week when Iran announced that it intended to make near bomb-grade nuclear fuel at its Fordow plant, located inside a mountain to protect it from bomb and missile attack. Iran decided to ramp up its nuclear programme after the failure of talks to revive the Joint Comprehensive Plan of Action (JCPOA) nuclear deal agreed in 2015 by President Barack Obama but denounced and dropped three years later by President Donald Trump.

Escalating crisis

At the heart of the agreement was a far-reaching reduction in economic sanctions on Iran in return for international monitoring of a reduced Iranian nuclear programme, which Israeli and Western leaders say is aimed at producing a nuclear bomb.

The escalating crisis is a resumption of the confrontation three years ago between the US and Israel, on the one side, and Iran, on the other, that almost led to war. Under pressure from sanctions and threatened by military assault, Iran launched a highly successful drone and missile attack on Saudi oil facilities that briefly cut its oil output by half.

Iran was held responsible for explosions damaging oil tankers anchored at the mouth of the Gulf, and for guerrilla actions against US troops in Iraq. Trump retaliated by ordering the assassination of General Qasem Soleimani, in charge of covert Iranian operations abroad, who was killed in a drone strike in Iraq in early 2020.

Resurrecting the nuclear deal

The US-Iran military conflict came close to an all-out war, but de-escalated sharply with the replacement of the aggressively anti-Iranian Trump by President Joe Biden who reopened negotiations for resurrecting the nuclear deal. Attention was diverted away from Iran by the Covid-19 pandemic, the US competition with China, and the war in Ukraine. As recently as September, Iran appeared close to a new agreement on the JCPOA but asked for guarantees that the US would not unilaterally withdraw again.

Yet the failure to agree a nuclear deal is only one of a series of separate and unrelated events that have heated up the Iran crisis over the last two months, making it more explosive than ever. Israel’s Prime Minister, Benjamin Netanyahu, had been in the forefront under Trump, pressing for an attack on Iranian nuclear plant. After decisively winning a general election on 1 November, he is returning to power in Jerusalem at the head of the most hawkish and right-wing government in Israel’s history.

Always an opponent of the JCPOA, he is likely to put pressure on the US for military action against Iran. Israel and the US have both reportedly trained for an air strike against Iran and Netanyahu came close to ordering one.

A drone super-power

Two other coincidental developments are further poisoning relations between Tehran and Washington. Faced with the air superiority of the US and its allies in the Gulf, Iran turned itself into what has been described as “a drone super-power”, but the world only took on board the effectiveness of these cheap precision-guided missiles when Iran exported them to Russia for use against Ukraine.

Since October, they have partly destroyed Ukraine’s electrical system, depriving much of the country of heat and light. The surprise emergence of Iran as a significant player in the Ukraine war soured even further, if that were possible, its already toxic relations with the West.

A final ingredient super-charging the growing crisis is the protest movement in Iran, which shows no signs of dying away, despite extreme repression leading to the killing of 305 protesters including 41 children according to Amnesty International. The protests are more broadly based than in the past and the collective punishment of protesters serves only to produce more martyrs. The refusal of the Iranian football team to sing their national anthem in Qatar shows the extent and determination of the opposition.

Tanker traffic from the Gulf

But it is still too early to know if it is destabilising the regime and how far the government could successfully appeal to national solidarity in the event of a crisis with the US, and seek to demonise demonstrators as the proxies of foreign powers.

Vocal and irrepressible popular dissent will weaken the Iranian regime, but in other respects it is stronger than it was during the last near war. The price of oil and gas is high and the stoppage of supplies from the Gulf oil states on top of the loss of those from Russia would have a crippling effect on the world economy. Iran is better than before in stopping tanker traffic from the Gulf by the use of drones and missiles in large quantities against which there is no totally effective anti-aircraft defence.

Western and Israeli leaders have long argued that Iranian possession of a nuclear weapon would alter the balance of power in the Middle East. This is true enough, although US intelligence reportedly believes the Iranian leadership has not yet decided if it wants to build a nuclear weapon. So far, the mere threat of doing so has served it as a useful bargaining chip in negotiating with the US and its allies, whom Iran sees as irremediably hostile.

Air superiority

Paradoxically, the balance of power in the Middle East and the rest of the world has changed, but not because of the acquisition of nuclear weapons. As shown by attacks in the Gulf in 2019, and in Ukraine since October, middle ranking states like Iran and Turkey, and even very poor ones like Yemen, now enjoy a much more level military playing field with powerful states like the US, Britain or Israel. Air superiority no longer means control of the skies, which is a game-changing development.

But how far are those who decide on war or peace in the Middle East aware that the game really has changed? Gulf states like Saudi Arabia and UAE realised after the last US-Iran clashes under Trump that they were all too likely to be collateral damage in any American or Israeli attack on Iran. Biden already has his hands full with the war in Ukraine. Israel should know that Iran would find some asymmetric way of striking back at it.

As with Ukraine, the self-interest of all sides should prevent the crisis over Iran turning into a shooting war – but that does not mean it will not happen.