40 MISTAKES MEN MAKE WHILE HAVING SEX WITH WOMEN.....

1) NOT KISSING FIRST.

Avoiding her lips and diving straight for the erogenous zones makes her feel like you're paying by the hour and trying to get your money's worth by cutting out nonessentials. A proper passionate kiss is the ultimate form of foreplay.

2) BLOWING TOO HARD IN HER EAR.

Admit it, some kid at school told you girls love this. Well, there's a difference between being erotic and blowing as if you're trying to extinguish the candles on your 50th birthday cake. That hurts.

3) NOT SHAVING.

You often forget you have a porcupine strapped to your chin which your rake repeatedly across your partner's face and thighs. When she turns her head from side to side, it's not passion, it's avoidance.

4) SQUEEZING HER BREAST.

Most men act like a housewife testing a melon for ripeness when they get their hand on a pair. Stroke, caress, and smooth them.

5) BITING HER NIPPLES.

Why do men fasten onto a woman's nipples, then clamp down like they're trying to deflate her body via her breasts? Nipples are highly sensitive. They can't stand up to chewing. Lick and suck them gently. Flicking your tongue across them is good. Pretending they're a doggie toy isn't.

6) TWIDDLING HER NIPPLES.

Stop doing that thing where you twiddle the nipples between finger and thumb like you're trying to find a radio station in a hilly area. Focus on the whole breasts, not just the exclamation points.

7) IGNORING THE OTHER PARTS OF HER BODY.

A woman is not a highway with just three turnoffs: Breastville East and West, and the Midtown Tunnel. There are vast areas of her body which you've ignored far too often as you go bombing straight into downtown Vagina. So start paying them some attention.

8) GETTING THE HAND TRAPPED.

Poor manual dexterity in the underskirt region can result in tangled fingers and underpants. If you're going to be that aggressive, just ask her to take the damn things off.

9) LEAVING HER A LITTLE PRESENT.

Condom disposal is the man's responsibility. You wore it, you store it.

10) ATTACKING THE CLITORIS.

Direct pressure is very unpleasant, so gently rotate your fingers alongside of the clitoris.

11) STOPPING FOR A BREAK.

Women, unlike men, don't pick up where they left off. If you stop, they plummet back to square one very fast. If you can tell she's not there, keep going at all costs, numb jaw or not.

12) UNDRESSING HER AWKWARDLY.

Women hate looking stupid, but stupid she will look when naked at the waist with a sweater stuck over her head. Unwrap her like an elegant present, not a kid's toy.

13) GIVING HER A WEDGIE DURING FOREPLAY.

Stroking her gently through her panties can be very sexy. Pulling the material up between her thighs and yanking it back and forth is not.

14) BEING OBSESSED WITH THE VAGINA.

Although most men can find the clitoris without maps, they still believe that the vagina is where it's all at. No sooner is your hand down there than you're trying to stuff stolen banknotes up a chimney. This is okay in principle, but if you're not careful, it can hurt so don't get carried away. It's best to pay more attention to her clitoris and the exterior other than vagina at first, then gently slip a finger inside her and see if she likes it.

15) MASSAGING TOO ROUGHLY.

You're attempting to give her a sensual, relaxing massage to get her in the mood. Hands and fingertips are okay; elbows and knees are not.

16) UNDRESSING PREMATURELY.

Don't force the issue by stripping before she's at least made some move toward getting your stuff off, even if it's just undoing a couple of buttons.

17) TAKING YOUR PANTS OFF FIRST.

A man in socks and underpants is a at his worst. Lose the socks first.

18) GOING TOO FAST.

When you get to the penis-in-vagina situation, the worst thing you can do is pump away like an industrial power tool - she'll soon feel like an assembly-line worker made obsolete by your technology. Build up

slowly, with clean, straight, regular thrusts.

19) GOING TOO HARD.

If you bash your great triangular hip bones into her thigh or stomach, the pain is equal to two weeks of horseback riding concentrated into a few seconds.

20) COMING TOO SOON.

Every man's fear. With reason. If you shoot before you see the whites of her eyes, make sure you have a backup plan to ensure her pleasure too.

21) NOT COMING SOON ENOUGH.

It may appear to you that humping for an hour without climaxing is the mark of a sex god, but to her it's more likely the mark of a numb vagina. At least buy some intriguing wall hangings, so she has something to hold her interest while you're playing Marathon Man.

22) ASKING IF SHE HAS COME.

You really ought to be able to tell. Most women make noise. But if you really don't know, don't ask.

23) PERFORMING ORAL SEX TOO GENTLY.

Don’t acts like a giant cat at a saucer of milk. Get your whole mouth down there, and concentrate on gently rotating or flicking your tongue on her clitoris.

24) NUDGING HER HEAD DOWN.

Men persist in doing this until she's eyeball-to-penis, hoping that it will lead very swiftly to mouth-to-penis. All women hate this. It’s about three steps from being dragged to a cave by their hair. If you want her to use her mouth, use yours; try talking seductively to her.

25) NOT WARNING HER BEFORE YOU CLIMAX.

Sperm tastes like sea water mixed with egg white. Not everybody likes it when she's performing oral sex, warn her before you come so she can do what's necessary.

26) MOVING AROUND DURING FELLATIO.

Don't thrust. She'll do all the moving during fellatio. You just lie there. And don't grab her head.

27) TAKING ETIQUETTE ADVICE FROM PORN MOVIES.

In X-rated movies, women seem to love it when men ejaculate over them. In real life, it just means more laundry to do.

28) MAKING HER RIDE ON TOP FOR AGES.

Asking her to be on top is fine. Lying there grunting while she does all the hard work is not. Caress her gently, so that she doesn't feel quite so much like the captain of a schooner. And let her have a rest.

29) ATTEMPTING ANAL SEX AND PRETENDING IT WAS AN ACCIDENT.

This is how men earn a reputatio n for not being able to follow directions. If you want to put it there, ask her first. And don't think that being drunk is an excuse.

30) TAKING PICTURES.

When a man says, "Can I take a photo of you?" she'll hear the words "__to show my buddies." At least let her have custody of them.

31) NOT BEING IMAGINATIVE ENOUGH.

Imagination is anything from drawing patterns on her back to pouring honey on her and licking it off. Fruit, vegetables, ice and feathers are all handy props; hot candle wax and permanent dye are a no no.

32) SLAPPING YOUR STOMACH AGAINST HERS.

There is no less erotic noise. It's as sexy as a belching contest.

33) ARRANGING HER IN STUPID POSES.

If she wants to do advanced yoga in bed, fine, but unless she's a Romanian gymnast, don't get too ambitious. Ask yourself if you want a sexual partner with snapped hamstrings.

34) LOOKING FOR HER PROSTATE.

Read this carefully: Anal stimulation feels good for men because they have a prostate. Women don't.

35) GIVING LOVE BITES.

It is highly erotic to exert some gentle suction on the sides of the neck, if you do it carefully. No woman wants to have to wear turtlenecks and jaunty scarves for weeks on end.

36) BARKING INSTRUCTIONS.

Don't shout encouragement like a coach with a megaphone. It's not a big turn-on.

37) TALKING DIRTY.

It makes you sound like a lonely magazine editor calling a 1-900 line. If she likes nasty talk, she'll let you know

38) NOT CARING WHETHER SHE COMES.

You have to finish the job. Keep on trying until you get it right, and she might even do the same for you.

39) SQUASHING HER.

Men generally weigh more than women, so if you lie on her a bit too heavily, she will turn blue.

40) THANKING HER.

Never thank a woman for having sex with you. Your bedroom is not a soup kitchen.

Meeting in Moscow fails to produce agreement as US plots escalation in Ukraine

Niles Williamson

German Chancellor Angela Merkel and French President François Hollande met for approximately five hours with Russian President Vladimir Putin in Moscow on Friday in an attempt to hash out what has been described as a last-ditch effort to resolve the ongoing crisis in Ukraine.
The talks concluded Friday evening without any agreement, and the two European leaders left Moscow late at night without making a press statement. There were pledges of further discussions this weekend on a ceasefire between Ukrainian armed forces and pro-Russian separatists in the country’s eastern Donbass region.
Dmitry Peskov, a Kremlin spokesman, told reporters after the meeting that the leaders had agreed to continue working towards an agreement on implementing the lapsed ceasefire plan signed in Minsk last September. “At the moment joint work is under way on preparing the text of a possible joint document on implementation of the Minsk agreements—a document which would include proposals made by the president of Ukraine and proposals formulated today and added by Russian President Putin,” Peskov said.
Merkel, Hollande, Putin and Ukrainian President Petro Poroshenko are expected to discuss the possible framework by phone on Sunday.
Prior to Friday’s meeting Merkel told reporters that the European leaders were, “convinced there will be no military solution to the conflict.” She also sought to lower expectations for the meeting’s possible outcome, saying, “We know, however, that it remains completely open whether we will be able to reach a cease-fire through these talks.”
The meeting between the European leaders and Putin took place amidst threats by the US to directly arm the regime in Kiev that was installed in a right-wing coup one year ago. Ukraine has suffered a series of setbacks in the east and is facing a deepening economic crisis.
US Vice President Joe Biden and European Council President Donald Tusk, the former Prime Minister of Poland, made a joint appearance in Brussels on Friday ahead of the talks in Moscow, calling for unity between the US and EU in maintaining an aggressive stance towards Russia.
“Russia cannot be allowed to redraw the map of Europe,” Biden told reporters. In fact, it is the United States and the European powers that have utilized the coup in Ukraine as the basis for a vast militarization of all of Eastern Europe, including the doubling of NATO combat forces announced on Thursday. NATO will station six command and control units in Poland, Romania, Bulgaria and the Baltic states of Lithuania, Latvia, and Estonia.
Biden later cast aspersions on the trip by Merkel and Hollande to Moscow, “President Putin continues to call for new peace plans as his troops roll through the Ukrainian countryside, and he absolutely ignores every agreement his country has signed in the past.”
Tusk told reporters, “The European Union and the United States need to continue standing shoulder to shoulder, coordinating our efforts and uphold the pressure on Russia for as long as necessary.” He also warned against an agreement with Russia that would result in the partition of Ukraine, “We cannot compromise on Ukraine’s independence, sovereignty and territorial integrity.”
Ukrainian President Poroshenko announced on Ukrainian television Friday that his government would only accept an agreement in line with the cease-fire plan negotiated in Minsk in September of last year.
In addition to armored Humvees, drones, and radar equipment, the Obama administration is also considering delivering small arms and anti-armor missiles to aid in the bloody suppression of pro-Russian separatists. Direct military aid to Ukraine could be seen as an act of war by the US against Russia, provoking a Russian response and a possible direct confrontation between the two nuclear-armed powers.
Underlining the danger of the plan, NATO Commander General Phillip Breedlove issued a warning on Thursday that such a move must take into account a possible military reaction from Russia. It was reported earlier this week that Breedlove and other key figures had recently shifted their position in favor of providing Ukraine with weapons and other military equipment, opening the way for a final decision by US President Barack Obama this coming week.
There are indications of significant differences between Washington and European powers over the arming of Ukraine. German Defense Minster Ursula von der Leyen said in an interview with the Süddeustsche Zeitung that providing defensive weapons to the Kiev regime would “be a fire accelerant.” She warned that weapons deliveries might “give the Kremlin the excuse to openly intervene in this conflict.”
Rather than military aid, Germany and other European powers have indicated a preference for increasing economic sanctions against Russia as a means of forcing it to back down. The EU is set to consider such action next week.
These maneuvers take place amidst ongoing fighting in eastern Ukraine. The Kiev regime has suffered a series of embarrassing setbacks after launching a renewed offensive in recent weeks, with the separatists making territorial gains and pushing Ukrainian forces out of the strategic Donetsk airport.
The separatists have made significant advances on the city of Debaltseve, an important rail hub between Luhansk and Donetsk, where several thousand Ukrainian government troops are entrenched. The separatists have captured the village of Vuhlehirsk, which is approximately six miles to the west of the city.
Consistent artillery shelling from both sides has destroyed much of the town’s infrastructure, knocking out heat, running water and power. A brief ceasefire was agreed to by both sides on Friday allowing for the evacuation of the approximately 3,000 out of 25,000 residents who had remained amidst the fighting.

UK Conservatives set out “English Votes for English Laws”

Julie Hyland

The Conservative government has outlined proposals to introduce legislation on “English Votes for English Laws” (EVEL), if it wins the May 7 General Election.
Under the measures set out by Conservative Party leader of the House William Hague, Members of Parliament representing constituencies in England will be given an effective veto over matters only affecting England, or, where appropriate, England and Wales. MPs representing Scottish seats at Westminster will be confined to a “residual debating” role on such matters.
The proposals flow from the pledge made by Prime Minister David Cameron following the referendum on Scottish independence on September 18 last year. The vote against separation was won by 55.3 percent to 44.7 percent, but the last week of the campaign caused fear that the “No” vote could lose.
Leading the “Yes” campaign, the Scottish National Party (SNP) was able to capitalise on widespread alienation from Westminster to posture as a progressive alternative to the “London-based” parties, a false claim assiduously promoted by the pseudo-left groups. With a poll showing that the 307-year union between England and Scotland was threatened, prompting a sharp fall on the London stock market, Cameron, Labour leader Ed Miliband and Liberal Democrat leader Nick Clegg pledged greater powers to the devolved Scottish parliament in the event of a “No” vote.
Their panicked vow effectively overturned the decision to rule an option on greater devolution (Devo Max) out of the referenda. Despite a “No” majority of some 10 percentage points, it helped ensure that the crisis of the British nation state would only deepen.
Immediately after the vote, Cameron poured petrol on the fire, insisting that it was now time to listen to the “millions of voices of England.” Greater powers for Scotland would be matched by the introduction of EVEL, he said, announcing the establishment of a cross-party commission, headed by Lord Robert Smith, to explore a new constitutional settlement.
The prime minister’s appeal to English nationalism is indicative of the utter recklessness and short-term calculations that constitute bourgeois politics, not only in Britain but internationally. Having effectively destroyed the social, democratic and political foundations of the UK over the preceding 30 years, and beholden entirely to the interests of the financial elite, the bourgeoisie is appealing to the most reactionary, grasping sentiments to try and shore up its rule.
Greater devolution, whether in its Scottish or English guise, is directed towards a layer of the upper middle class hostile to any semblance of redistributive economic measures. Through devolution, they hope to retain a greater share of their wealth and establish a direct political stake in the exploitation of the working class.
At breakneck speed, the Smith Commission drew up proposals for the greatest decentralisation of powers in the history of the Union. In just weeks, it recommended devolving control over income tax rates to the Scottish parliament, along with control over certain welfare benefits and workfare programmes, air passenger duty and the licensing of onshore oil and gas extraction (fracking) in Scotland.
Supposedly to ensure the constitutional integrity of the UK, it proposed that all MPs would “continue to decide the UK’s Budget, including Income Tax.” This clause was inserted on Labour’s insistence so as to thwart calls for a complete ban on Scottish MPs in Westminster from voting on “English” matters.
This demand was similarly determined by short-term expediency. Neither the Conservatives nor Labour look able to form a majority government after the May 7 poll. Currently polling only around 30 percent each, and with the Liberal Democrats flatlining, many are forecasting a hung parliament.
If, as expected, Labour loses a significant number of seats in Scotland, it would be dependent on forming a government in some form of coalition with the SNP. To this end, it is making a concerted appeal to woo the Scottish nationalists.
Miliband has promised Labour will place a Home Rule Bill for Scotland before parliament within 100 days should it win the election. Devolution “will be one of the first things on” his new government’s agenda, he said.
Former Labour Prime Minister Gordon Brown and Scottish Labour leader Jim Murphy have also taken to the stump to pledge a radical extension of Scotland’s power over welfare and that Labour will produce a separate Scottish manifesto for the election.
Brown attacked the proposal for EVEL, accusing Cameron of killing off the Union, likening him to Lord Fredrick North who, as prime minister between 1770 and 1782, led Britain through most of the American War of Independence.
As “North is remembered for only one thing—losing America,” he wrote in the Guardian, would Cameron be remembered for lighting the “fuse that eventually blew the union apart?”
In reality, it was Labour that piloted devolution in 1997 for Scotland and Wales, as part of its big business and tax-cutting agenda. It also sought to introduce greater devolution in England for the same purpose, proposing the introduction of regional assemblies, but had to retreat when this was overwhelmingly rejected in several local referenda. A number within Labour’s ranks are known to favour EVEL.
Hague tried to package the Conservative’s proposals as being in line with the Smith Commission’s recommendations and one that would maintain the union. Legislation affecting England would be considered in committee by English-only MPs until a third and final reading that would involve all MPs. Untangling just what constitutes “English-only” matters would be decided by the Speaker of the House.
This has not satisfied many in his own party who want a complete ban on Scottish MPs voting at Westminster. The right-wing 1922 committee of Conservative backbench MPs are demanding the party go further than EVEL to English Votes for English Issues (EVEI) and English votes for English needs (EVEN).
Virtually wiped out in Scotland, the Tories’ best chance of winning office is to win the majority of seats in England. Therefore, even if it were unable to win a majority across the whole of the UK, it would still have a determining influence in domestic policy. Failing that, EVEL has the advantage of potentially paralysing a Labour/SNP coalition.
But some amongst the Tories complain that by effectively provoking a larger vote for the SNP, they could be building up problems for a future Conservative administration.
For its part, the SNP is insisting that Scottish MPs must be allowed to vote on all legislation, including that only affecting England and Wales.
The SNP is a right-wing, bourgeois party indistinguishable in all essentials from the “London parties” it rails against. Its aim is to gain control over tax and fiscal policies so as to slash corporation tax and offer Scotland up as a cheap-labour, low-tax haven.
This was underscored in the remarks by SNP deputy leader Stewart Hosie, who stressed that “Until Income Tax—for example—is devolved in full, it is illogical and wrong for anyone to carve Scottish MPs out of important decision making.”
Hague’s proposals had only strengthened the case for “full fiscal devolution” in Scotland, he said.

Japanese government pushes to revise US history text

Ben McGrath

The Japanese government of Prime Minister Shinzo Abe has extended its campaign to whitewash the crimes of the Japanese military in the 1930s and 1940s to the international level. Last week, Abe took issue with an American history textbook and its treatment of so-called “comfort women.”
“Comfort women” is a euphemism coined by the Japanese military for its practice of forcing women to act as sex slaves for soldiers prior to and during World War II. Approximately 200,000 women in Asian countries occupied by Japan were herded into “comfort stations” where the brutal conditions led many to commit suicide. Women were often lured with phony promises of work in factories.
Abe criticized history textbooks printed by McGraw-Hill Education dealing with the issue. “I just looked at a document, McGraw-Hill’s textbook, and I was shocked,” the prime minister said. “This kind of textbook is being used in the United States, as we did not protest the things we should have, or we failed to correct the things we should have.”
The Japanese government has demanded that McGraw Hill revise the books. Officials from Japan’s Consulate General in New York met with the publishing company in December to voice their complaints. The company rejected Tokyo’s objections saying, “Scholars are aligned behind the historical fact of ‘comfort women’ and we unequivocally stand behind the writing, research and presentation of our authors.”
A large number of the women forced to serve as sex slaves came from Korea, but others were from China, the Philippines, Indonesia, and other countries. Many were too ashamed to speak about their horrific experiences and only began coming forward in the early 1990s. In 1993, Japan’s Chief Cabinet Secretary Yohei Kono issued a formal but limited apology—known as the Kono Statement—to the victims.
Abe, who came to office in 2012, has been pressing for a revision of the Kono Statement. His government established a panel of so-called experts to examine the testimonies of former comfort women that formed the basis of the Kono Statement. Last June, the panel claimed that there was a lack of evidence that the women had been “forced” to serve as sex slaves. While not formally calling for the repeal of the Kono Statement, the purpose was clearly to cast doubt on the crimes of imperial Japan.
Right-wing apologists for the Japanese military have long claimed that the comfort women were not sex slaves, but were prostitutes. As a result, they conclude, the Japanese army was no different from other armed forces. In reality, the Japanese military organised and ran the “comfort stations.” Whether or not women were tricked or coerced into these hell-holes, they were not free to leave or to refuse to have sex with the soldiers.
Within Japan, extreme nationalists have targeted the liberal Asahi Shimbun over the issue. The newspaper last year retracted 18 articles published in the 1980s and 1990s dealing with comfort women. The articles were based on the testimony of Seiji Yoshida, a soldier who claimed to have rounded up women on Jeju Island in South Korea for the military brothels. Before his death in 2000, Yoshida admitted to changing certain aspects of his story.
The Abe government and its right-wing ideological allies have seized on the Asahi Shimbun’s retractions to claim all evidence of the crimes against comfort women is false. Led by Shoichi Watanabe, a professor at Sofia University, more than 10,000 have joined a lawsuit against the paper. Watanabe not only denies that women were forced into sexual slavery but also that the 1937 Rape of Nanking occurred, during which 300,000 Chinese soldiers and civilians were massacred by the Japanese army.
These attempts to justify the past crimes of Japanese imperialism are in order to prepare for future wars. Last summer, Abe’s cabinet approved the “reinterpretation” of the constitution to allow for “collective self-defense.” This would enable Japan to take part in US wars of aggression particularly aimed against China. The United States is pushing Japan to play a larger role in Asia as part of the US “pivot to Asia” which is aimed at subordinating China to Washington’s economic and strategic interests.
Abe’s cabinet is stacked with ultra-right wing officials with connections to Nippon Kaigi, or Japan Conference, which promotes the lie that Japan went to war in the 1930s to liberate Asia from Western imperialism. It intends to revise textbooks in Japan to promote “patriotic values,” opposes gender equality, and erase war crimes such as the Rape of Nanking.
To serve this agenda, Abe also stated last week that a new, litigation bureau in the Justice Ministry would be created to handle lawsuits against Japan, claiming that they “seriously affected the nation’s honor.” While former comfort women have filed lawsuits against Japan, people forced to work as unpaid laborers in factories have also filed suits against Japanese companies. In May 2013, the South Korean Supreme Court ruled that a 1965 treaty between Seoul and Tokyo did not bar individuals from filing compensation claims.
A study released in January by the South Korean government found that 7.82 million Koreans were forced to work in Japanese factories between 1931 and 1945 at companies like Mitsubishi Heavy Industries, Toyota, Nikon, and Nissan. In November 2013, the Gwangju Local Court in South Korea ruled against Mitsubishi Heavy Industries after several women filed compensation claims. Nippon Steel Corporation lost a similar case that year in Seoul and Busan high courts. Both companies have appealed.
South Korean governments regularly exploit Japanese war crimes to engage in its own historical revisionism to cover up the role of Korean leaders in collaborating with Imperial Japan. Many within the South Korean elite enjoy their positions today thanks to their families’ willingness to serve Japanese colonial rule, which lasted from 1910–1945. This includes President Park Geun-hye whose father, the military dictator Park Chung-hee, was an officer in Japan’s Kwantung Army.
South Korean politicians often attempt to paint their anti-Japanese denunciations in progressive terms, by claiming to be seeking justice for victims. In reality, there is nothing progressive about this campaign. Its purpose is to whip up anti-Japanese chauvinism to distract from declining economic conditions like growing unemployment, particularly amongst youth. It drives a wedge between Korean and Japanese workers who suffered and continue to suffer from the same assaults on their rights and working conditions.

Top US diplomat heaps praise on new Sri Lankan government

Deepal Jayasekera

The visit by US Assistant Secretary of State for South Asia Nisha Desai Biswal early to Sri Lanka this week has clearly demonstrated Washington’s changed attitude towards the Colombo government following the January 8 election that led to the ousting of Mahinda Rajapakse and the installation of Maithripala Sirisena as president.
The Obama administration had been deeply hostile to Rajapakse as a result of his government’s relations with China and supported Sirisena’s campaign. Former President Chandrika Kumaratunga, who has connections with the Obama administration via the Clinton Foundation, engineered Sirisena’s defection from the government and the support of opposition parties, including the pro-US United National Party (UNP), for his candidacy.
In the wake of the election, Sirisena has rapidly reoriented foreign policy away from Beijing and towards Washington and New Delhi. This is fully in line with Obama’s “pivot to Asia” which is aimed at undermining Chinese influence throughout the region and encircling it militarily.
During her visit, US Assistant Secretary of State Biswal met with President Sirisena, Prime Minister and UNP leader Ranil Wickremesinghe, Foreign Minister Mangala Samaraweera, Urban Development Minister Rauff Hakeem and representatives of the Tamil National Alliance (TNA), the island’s main Tamil bourgeois party.
Biswal was effusive in her praise for the new government, declaring: “It was a privilege to visit Colombo to witness for myself the sense of excitement and optimism that the Sri Lankan people have ushered in through the historic January 8 election.” She had come to inspect the results of the Washington-sponsored regime-change operation and to harness Colombo into the US war drive in Asia.
Biswal continued: “I am indeed excited to be in Sri Lanka and see for myself the energy that has the world talking about Sri Lanka and about Sri Lanka’s democracy and for all the right reasons.” The remarks about Sri Lankan democracy are entirely cynical. Washington’s opposition to Rajapakse was not because of his autocratic methods, but because of his orientation to China. In Sirisena, the US is embracing someone who was, until several months ago, a senior minister in the Rajapakse government and, as such, responsible for all its crimes and abuses.
Speaking alongside Foreign Minister Samaraweera, Biswal pledged full support for the new government. “Sri Lanka can count on the United States to be a partner and a friend in the way forward,” she declared. This is a complete about-face in the US attitude. Having fully backed his war against the separatist Liberation Tigers of Tamil Eelam (LTTE), Washington seized on the Sri Lankan military’s war crimes to put pressure on Rajapakse to break his ties with Beijing following the LTTE’s defeat in 2009.
The US pushed a series of resolutions through the UN Human Rights Council (UNHRC) calling for an investigation of human rights abuses during the civil war—a move that threatened war crimes charges against Sri Lankan political and military leaders. Now that Rajapakse has been removed, one can predict that the issue of “war crimes” will recede as the US embraces its new “partner and friend.” The US will maintain its “human rights” campaign only insofar as it is useful to prevent Rajapakse and his cronies from destabilising the new government and keeping Sirisena in line.
A US-sponsored resolution adopted by the UNHRC last March established an international inquiry into Sri Lankan war crimes that is due to report in March. The Sirisena government has called on the US and UNHRC to drop the international inquiry promising a “domestic inquiry” instead. In all this manoeuvring about “human rights,” none of those involved—the US, its various allies the European Union and Sri Lanka—has the slightest interest in the justice for the tens of thousands of civilians killed or the many other victims of the Sri Lankan security forces.
Biswal lauded the “many positive steps” already taken the Sirisena government while warning that “there is a lot of hard work ahead and some difficult challenges.” The “positive steps” she had in mind were above all in the arena of foreign policy. Sirisena appointed the pro-US UNP leader Wickremesinghe as prime minister and has already moved to mend strained relations with India, Washington’s key strategic partner in South Asia.
Foreign Minister Samaraweera visited India two weeks ago and Sirisena is due to visit New Delhi on February 16. Samaraweera will visit the US on February 12 to meet US Secretary of State John Kerry. The new government has already signaled its readiness to review Rajapakse’s policies of giving substantial economic and strategic concessions to Beijing.
Britain has also hailed the new Sri Lankan government. Junior foreign minister Hugo Swire concluded a two-day visit to Colombo on January 31 and met with Sirisena, Wickremesinghe and several other senior ministers. He praised the government’s policies, declaring: “It is also heartening to see such a renewed desire to reconcile communities and seek a long-term peace for Sri Lanka.”
The change of attitude towards Sri Lanka in the foreign policy establishment in Washington has been marked. In a “counseling article” to the Brookings Institute, former US ambassador to Colombo Teresita Schaffer called on the US State Department to “lower its voice” on human rights in Sri Lanka.
Schaffer declared: “His [Sirisena's] election presents an opportunity to reset Sri Lanka’s relations with India and the United States. To do this, he and his foreign friends will need tact and creativity, and he will need all his political skills to keep the coalition together. A good place to start would be to suspend action on the annual UN Human Rights Commission resolution on Sri Lanka while the new team gets its balance.”
Former US Deputy Secretary of State Richard Armitage co-authored a comment in the Wall Street Journal with Kara Bue, a former Deputy Assistant Secretary of State for Political Military Affairs, and Lisa Curtis, from the right-wing Heritage Foundation, that bluntly set out US motivations behind its support for Sirisena.
The article declared: “Now is the time for the U.S. to develop a roadmap for reviving ties with Sri Lanka that reflects the broad array of US interests, including respect for human rights, democracy and the rule of law, as well as enhancing trade and regional economic integration and securing the Indo-Pacific…
“Without plans for restoring US-Sri Lankan relations, Washington risks losing an opportunity to deepen ties with a strategically located island nation of 21 million people. Sri Lankans have taken a major step forward in re-establishing democracy. Under Mr. Sirisena, the country stands to remove itself from China’s Indian Ocean ‘string of pearls.’”
Biswal’s trip was precisely to restore US relations with Sri Lanka in order to secure the strategically located island. China has financed the construction of a new harbour in southern Sri Lanka as part of its “string of pearls”—port facilities designed to protect its crucial shipping routes across the Indian Ocean.
Under Sirisena, Sri Lanka is now being more closely integrated into the Pentagon’s war planning—which includes a US economic blockade of China by cutting off its essential supplies of energy and raw materials from Africa and the Middle East. This poses grave dangers to the working class and oppressed masses throughout South Asia and the world as a whole.

Mexican government announces budget cuts in response to economic turmoil

Don Knowland

Mexico’s finance minister, Luis Videgaray, announced at a press conference on January 30 that the Mexican government will reduce spending for 2015 by $8.3 billion below the budget approved last year—a reduction of about 1 percent of gross domestic product (GDP).
Videgaray said the cut was due largely to expectations that the slump in oil prices will continue for years. The price of Mexican crude has tumbled 47 percent over the last year. The drop has cast in doubt Mexico’s plans to raise $250 billion by 2018 through selling off national oil assets to giant foreign oil companies.
Mexico normally relies on revenue from the state-owned oil company Pemex for a third of its revenue. While the government purchased hedges against falling oil prices, that protection will expire at the end of the year.
Videgaray also cited a downturn and deflation risks in the world economy, as well as the likelihood that the US Federal Reserve will tighten monetary policy this year, as further reasons for the cuts. Videragay said Mexico needed to take preventive measures to be in a position to convince international financial markets that it can withstand financial contagion.
Despite imposing these cuts, Videgaray declined to lower his November forecast of 3.2 to 4.2 percent growth in GDP, up from estimated growth of 2.1 to 2.6 percent in 2014.
These are fairy tale figures. With these cuts, the Mexican economy will likely grow no more than 2.5 percent in 2015, according to the director of Moody’s Analytics for Latin America, who pointed out that the reduced federal spending necessarily would have a negative impact on growth. Videgaray’s assertions also contradict the January 8 statement of Bank of Mexico governor Agustin Carstens that Mexico is likely to grow slowly for all of 2015 and for a “good part” of 2016.
The spending cuts announced include substantially lower expenditures by Pemex and by the national electricity company. A plan to build a high-speed train from Mexico City to the state of Querétero has also been suspended. The plan for the train was plagued by corruption in the initial award of the project to a consortium that included a Mexican company that sold or financed the sale of mansions to the wife of President Enrique Peña Nieto and to Videgaray himself. Other major infrastructure projects were also canceled.
Videgaray specified a reduction in the goal of incorporating new adult beneficiaries into the federal pension system as another important cut. He also mentioned unspecified cuts to “subsidies” and other “structural reforms” and “austerity” measures.
The budget cuts will fall heavily on the Mexican working class. They are part and parcel of the government’s privatization of the mineral sector of the economy, along with cuts imposed on educational and other workers, under Peña Nieto’s so-called Pact for Mexico.
Videgaray also announced that the government would work with the World Bank this year to completely reorganize the Mexican federal budget in line with these restructuring plans.
The downside risks to Mexico’s economy are in fact very substantial, especially given the pronounced instability in the global economy.
Consumer prices fell 0.19 percent in the first half of January, cutting the annual rate to a four-year low of 3.08 percent. This was the first January decline in over 27 years.
In January, the value of the peso also dropped to more than 15 to the dollar for the first time since the 2009 economic crisis. The drop occurred after lower GDP numbers for the US in the fourth quarter of 2014, and in the immediate wake of the Russian Central Bank’s move to cut its interest rate 2 percent to combat recession and a slide in the ruble. The drop in January was the biggest among 16 major counterparts after Brazil’s real, according to Bloomberg data.
Mexico’s central bank announced in late December that it was reviving an intervention program aimed at reducing foreign-exchange volatility, following a 12 percent decline in the peso over the prior six months.
According to some analysts, cutting back government expenditures provides more room for looser monetary policy. Last week, the bank said it would keep rates at a record low 3 percent in an effort to provide economic stimulus.
Carstens, the central bank head, said during the first week of January that there is a high probability that Mexico will need to lift rates if the US tightens later this year. But the resolve of Federal Reserve officials to raise rates is being tested by lower US growth estimates arising from the global economic slowdown.
Mexico’s economic turmoil will only deepen the intense social tensions that are present throughout the country, erupting in recent months in the mass protests over the 43 disappeared students in Iquala, Guerrero.

US federal court hearing highlights widespread misconduct by prosecutors

Ed Hightower

In a revealing episode, three federal judges of the US Ninth Circuit Court of Appeals chastised a California prosecutor last month in a videotaped hearing about the validity of a murder conviction where prosecutors had offered perjured testimony from witnesses, one of whom was a Riverside County deputy district attorney at the time.
The case, Baca v. Adams, involves the 1995 killing of John Adair and his housemate and partner, John Mix. Defendant Johnny Baca was a friend of Adair’s son and worked as Adair and Mix’s housekeeper. Baca allegedly conspired with Adair’s son to kill the couple and split the financial proceeds with him. The Riverside District Attorney’s office brought no charges against Adair’s son, the alleged co-conspirator.
At trial, one convicted felon and prison inmate named Melendez testified against Baca, saying that the latter confessed his involvement in the crime to him while the two were incarcerated together. Deputy District Attorney Robert Spira also testified at Baca’s trial. Spira had previously prosecuted Melendez, and he testified at Baca’s trial that Melendez was not offered any reduction in sentencing or other consideration in exchange for his testimony against Baca.
Baca was ultimately convicted and granted a new trial, where he was convicted again. His petitions at the state court level, including at the California Supreme Court, were ultimately defeated.
In 2013, the US District Court for the Central District of California considered Baca’s habeas corpus petition. (Habeas corpus— Latin for “you may have the body”—is a centuries-old democratic right, allowing a prisoner to challenge the basis of his incarceration on a number of grounds, such as newly discovered evidence or the ineffective assistance of counsel.)
The District Court had assigned Magistrate Judge Patrick Walsh to evaluate various aspects of the case, including the testimony by Melendez and Spira. Judge Walsh unequivocally found that Spira, then a licensed attorney and prosecutor, lied under oath when he testified that he had offered nothing to Melendez in exchange for the latter’s testimony against Baca. Of course, lying under oath is the basis for the crime of perjury, and it is a violation of an attorney’s ethical obligations to knowingly present false evidence.
The District Court still denied Baca’s habeas petition, and the U.S. Ninth Circuit Court of Appeals reviewed this decision.
Under new court rules, the January 8th oral arguments were videotaped and posted to the court’s web site. All three judges at the hearing chastised the Riverside County District Attorney’s office for the blatant misconduct.
In the video, Judge William Flectcher notes that Melendez did receive a benefit for his testimony. “That’s why he got his 16 down to 14 [years].… He did very well by his jailhouse snitching.”
That Melendez did receive a benefit for his false testimony was confirmed in a transcript of his sentencing hearing, a document that, as the judges noted, the Riverside District Attorney’s office “fought tooth and nail” to conceal from Baca’s defense attorney.
Judge Kim Wardlaw underscored the sham character of Baca’s trials:
“The thing that’s so troubling about this case is it’s the kind of thing that makes you feel that the trial was fundamentally unfair. When you have a prosecutor get up, vouch for a witness, lying, the [California state] courts have said he lied…it just seems so fundamentally unfair,” she said.
Judge Alex Kozinski pointedly asked Deputy Attorney General Kevin Vienna if former deputy district attorney Robert Spira had been charged with perjury, to which he received a reply in the negative. Kozinski also asked if there had been any consequences for Baca’s prosecutor, former deputy attorney general Paul Vinegrad, to which Vienna replied that there had been no disciplinary action.
“What kind of encouragement does that give to young prosecutors about dealing with fabricated evidence like this?”
About the lack of disciplinary action against Vinegrad and Spira, he added, “the total silence on this suggests that this is the way it’s done. I mean they got caught this time but they’re going to keep doing it because they have state judges who are willing to look the other way.”
Over the course of several minutes, Kozinski criticized the District Attorney’s office, to the point of urging Vienna to immediately talk to his boss about dropping the Baca case altogether. Otherwise, the court would be forced to enter an order in Baca’s favor that would contain details embarrassing to the District Attorney’s office.
A 2010 report by the Northern California Innocence Project found 707 instances of prosecutorial misconduct in the state in the preceding 11 years. California state courts nonetheless upheld the convictions in these cases 80 percent of the time. Out of the 707 instances of misconduct, only six prosecutors were disciplined, less than 1 percent.
Statistics at the national level are similar. A 2013 study by the Center for Prosecutorial Integrity estimates that misconduct is publicly sanctioned less than 2 percent of the time.
At the same time, the consequences for criminal defendants are disastrous. According to the National Registry of Exonerations, prosecutorial misconduct contributes to 43 percent of all false convictions.
While careerism and zeal play a role in the ubiquity of prosecutorial misconduct, broader processes are at work. The most critical of these is the explosion of social inequality, which makes a massive police state apparatus necessary to defend the interests of a narrow financial elite. Like the police, prosecutors operate as a law unto themselves.

The GM-UAW profit-sharing fraud

Jerry White

In recent days executives from General Motors and the United Auto Workers union have hailed the $9,000 “profit-sharing” check GM is sending to each of its 48,000 hourly workers as proof of success of labor-management collaboration, and that the subordination of workers to the profit drive of big business can indeed lead to “rewards.”
“That really is recognizing the hard work that the entire team did in 2014 to support our core underlying performance,” said GM Chief Financial Officer Chuck Stevens. Not to be outdone, UAW President Dennis Williams gushed, “General Motors’ announcement today leaves no doubt about the strong, stable environment the GM/UAW collective bargaining agreement created. GM has demonstrated that the company can profit, shareholders can have value and our members can be rewarded for their hard work.”
Several things need to be said about these comments. First, the “stable environment the GM/UAW collective bargaining agreement created” included the abandonment of annual wage improvements, cost of living adjustments, paid holidays, the eight-hour day, current and future health and pension benefits and countless other hard-won gains. Compared to the tens of thousands of dollars each worker lost through these concessions, the $9,000 check at GM—or the $6,900 Ford or $2,700 Fiat-Chrysler Automotive checks—are a mere pittance.
This has allowed some “team members” to do a hell of a lot better than others. The company’s $6.6 billion in North American profits, for example, will allow Stevens and GM CEO Mary Barra to pocket at least $18 million in compensation for 2014. This is 303 times the annual earnings of older GM workers; 543 times the yearly wage of a new second-tier worker and 972 times more then contract workers earning as little as $9 an hour.
Then there are the Wall Street speculators who control GM and the rest of the auto industry. Billionaire hedge fund managers like Warren Buffett certainly saw the value of their shares sharply rise since the auto restructuring. Even after this week’s rally following GM’s announcement of record fourth-quarter profits, analysts estimate GM shares will rise 18 percent this year.
The company’s board of directors is increasing its dividend payments by 20 percent—raising its annual outlay by about $400 million to $2.4 billion, or six times what was paid out in “profit-sharing” checks. GM’s estimated cash hoard of $25 billion will not be spent on real wage increases in the coming UAW-GM contract, but on more dividend payments and stock buybacks to benefit financial speculators and corporate executives.
UAW President Williams neglected to mention the other “team members” who have done spectacularly well from the miserable wages and conditions paid to auto workers. These are the aspiring capitalists like Williams who run the UAW, the multi-billion-dollar business that falsely claims to represent auto workers.
With control of billions of dollars in GM, Ford and Fiat-Chrysler stock, VEBA health care retiree funds and joint real estate, investment and employee training ventures, the army of international, regional and local UAW businessmen have prospered from the greater exploitation of workers. They also managed to increase union dues by 25 percent.
Starting in the early 1980s, the UAW abandoned any struggle to improve the wages and living standards of the workers. On the contrary, in the name of defending corporate profits and improving the Detroit carmakers’ “competitiveness” against international rivals, the UAW collaborated in the shutdown of hundreds of factories, the layoff of more than a million auto workers and one wage and benefit cut after another.
Today, lump-sum payments and profit-sharing schemes account for between 20 percent and 25 percent of a worker’s annual pay. By contrast, 30 years ago the UAW regularly negotiated three-year contracts with a 3 percent annual improvement each year, plus cost-of-living adjustments to counter the effect of inflation.
The whole idea of “profit-sharing” has always been a fraud aimed at concealing the fundamental conflict between workers and the capitalist owners and, to preach class “unity.” Far from workers having the same interests as the capitalists, the enrichment of the capitalist class depends on the ever-greater exploitation and impoverishment of the working class. This social reality has been confirmed in the experiences of workers in every part of the globe.
American workers are living through the most prolonged stagnation of wages since the Great Depression, while the super-rich have accumulated levels of wealth that would put the Egyptian pharaohs to shame. Today, wages have been reduced to the smallest portion of yearly economic output since the end of World War II, while corporate profits have soared.
This state of affairs has begun to cause alarm for a section of the corporate and political establishment. Increasingly various think tanks are warning about a major “wage-push” by workers. Any successful fight to improve wages threatens to open up a floodgate of struggle.
This is the meaning of President Obama’s empty rhetoric about “middle class economics” and “more inclusive prosperity.” At the same time, UAW President Dennis Williams has declared that “general wage increases are important to our members, and it is important to us as a nation, to bring our standard of living up.”
In reality, Obama and the UAW used the 2009 restructuring of GM and Chrysler as the model for turning America into a cheap labor haven, to the point where they boast that corporations are shifting production from China and Mexico back to the US.
The larger-than-expected checks are a calculated ploy to dampen expectations for a genuine wage increase in the 2015 contract negotiations. Workers know they are not responsible for the criminal mismanagement of GM executives who covered up deadly defects and if they were forced to pay for them—in the form of lower profit-sharing checks—this could blow up UAW-GM plans to use performance-based schemes in the new contract to replace real wage increases.
Williams’ rhetoric about raising wages and ending the two-tier system is merely for mass consumption. The fact is, the UAW is just as opposed to any genuine increase in wages as the company and Wall Street. Any increase in “fixed costs” is seen as damaging to the flow of profits—to the company, Wall Street and the UAW—that has been assured by a staggering 35 percent reduction in labor costs since 2007.
Fiat-Chrysler boss Sergio Marchionne has recently said he is “hostile” to the idea that workers are “entitled” to regular raises. As he previously said, “We do need to provide real (financial) upside to our workers as long as organization continues to perform. (But) our people also have to share in the downside of this business, particularly the cyclical nature.”
In other words, as long as the automakers profit from the temporary boom in auto sales—fueled largely by lower gas prices, cheap credit and pent-up demand from the recession—workers might get a few crumbs. But if profits decline, as they inevitably will, due to the global economic crisis, a sudden collapse in consumer demand or the criminal and shortsighted decisions of corporate management over which workers have no control, it is the working class that must pay.
The slavish outlook promoted by the UAW should be rejected. The livelihoods of workers cannot depend on the anarchy of the capitalist market. Rather than “profit sharing” the struggles of the working class must be guided by a socialist strategy: the reorganization of economic life so the wealth created by workers can be used for the betterment of society, not the enrichment of the few.
Auto workers must begin now to build new organizations of struggle, controlled by the rank-and-file and independent of the UAW and both big business parties, to prepare a real fight to recoup the devastating losses they have incurred. We urge workers to contact the Socialist Equality Party to take up this fight.

US electronics retailer RadioShack files for bankruptcy

Evan Blake

Electronics retailer RadioShack filed for US bankruptcy protection Thursday, placing the future of its 27,000 employees in jeopardy. The retailer plans to sell 1,500 to 2,400 stores to its largest shareholder, Standard General, and has filed a motion to proceed with closing the remainder of its 4,000 U.S. stores.
Mobile phone company Sprint Corp plans to operate as many as 1,750 of the stores owned by Standard General. The deals made between RadioShack, Sprint and Standard General still require approval from the U.S. Bankruptcy Court in Delaware.
The announcement of its formal filing for bankruptcy came after the New York Stock Exchange (NYSE) suspended trading of RadioShack shares on Monday, as the company did not meet the minimum market value of $50 million required to be listed on the exchange. The same day, the company’s key lender, Salus Capital Partners, accused RadioShack of being in default on its loan and said it was considering legal action against the company.
The bankruptcy comes after 11 consecutive unprofitable quarters. The company has been squeezed by competition from Walmart and Amazon in particular, as well as Best Buy and other traditional electronics retailers.
Amazon has suggested that it is considering purchasing some of the RadioShack stores, as part of a move to supplement its online business with traditional retail stores.
RadioShack shares had lost ninety percent of their value in the last twelve months, and in its filing for bankruptcy the company listed $1.2 billion in assets and $1.39 billion of debt. The company said it has reached an agreement with a lender group led by DW Partners for a $285 million loan to operate while in bankruptcy.
The bankruptcy process will be utilized by the corporate owners and hedge fund directors to leach as much money as possible from what remains of the company while upending the lives of RadioShack employees. They have hired auction company Hilco Industrial to shutter under-performing stores. Hilco played a leading role in the recent auction of assets of the city of Detroit and is a major international player in the liquidation business.
Sprint and General Wireless are planning to establish co-branded stores that will exclusively sell mobile devices operated by Sprint, along with RadioShack products, services and accessories. Sprint CEO Marcelo Claure lavished praise on the deal, saying “We’ve proven that our products and new offers drive traffic to stores, and this agreement would allow Sprint to grow branded distribution quickly and cost-effectively in prime locations. Sprint and RadioShack expect to benefit from operational efficiencies and by cross-marketing to each other’s customers.”
If RadioShack does not end a large number of its leases soon, it is faced with the threat of liquidation, following in the wake of Loehmann’s Inc and Borders Group. RadioShack, which is being advised by law firm Jones Day, investment bank Lazard, and financial advisers at Maeva and FTI, is likely to rush through its remaining store closures as soon as possible to avoid this fate.
RadioShack has not provided its thousands of employees with a list of stores slated for closure, but in many locations the impending bankruptcy was felt well in advance. Last March, the company sought to close roughly 1,100 of its stores nationally, as part of an effort to stave off bankruptcy for at least another year. Their creditors, chiefly GE Capital, rejected this plan, limiting closures to 200 stores for each fiscal year.
Over the past year, under instruction from corporate headquarters in Fort Worth, Texas, managers at hundreds of “targeted store locations” have gradually cut their payrolls by firing workers, while stripping the stores of merchandise, essentially hollowing out hundreds of their store locations and closing roughly 200 throughout 2014.
This past Sunday, the first day of fiscal year 2016, RadioShack abruptly closed over 200 such nearly-empty stores. CNNMoney reports that “staff at several of those stores say they were given only hours notice last week before rental trucks arrived to haul away remaining inventory.”
An anonymous store manager, whose store shuttered on Sunday, told CNNMoney, “When they converted me to a clearance store, I knew that was a death knell. I feel the company has been mismanaged for at least the last decade.”
Also this week, IBM sought to dismiss rumors that it intends to slash roughly 100,000 jobs, or 26 percent of its workforce, the largest mass layoff of any U.S. corporation in at least 20 years. The IBM employees’ union says that is has collected reports of 5,000 jobs eliminated, and that this year could see as many as 10,000.
On Jan. 22, eBay Inc. announced its plan to cut 2,400 jobs in the first quarter of 2015, which amounts to roughly seven percent of the company’s 34,600-person workforce. The company justified this move by citing “weak holiday sales, revenues lower than expected, and restructuring ahead of its PayPal spin-off.”
American Express Co. reported Jan. 22 that it plans to fire 4,000 employees, or six percent of its 63,000-person workforce in the coming year.
The retailer JC Penney announced plans to lay off 2,250 workers by April, as part of its shuttering of 40 underperforming stores. Macy’s, another major retailer, is cutting 1,660 to 2,500 workers, with fourteen stores slated for closure.

European Central Bank tightens its grip on Greece in response to Syriza “debt swap” proposal

Nick Beams

The “debt swap” menu proposed by Greek Finance Minister Yanis Varoufakis during his tour of European capitals this week has two central objectives.
It is aimed at ensuring that there is a continuous flow of money out of Greece, stretching into the indefinite future, in repayment of its €315 billion foreign debt, while at the same time giving some breathing space for the new government and creating the illusion that it has won some genuine concessions from the European banks.
Vourafakis’s plan followed the repudiation of the central plank of the program on which it was elected to government just two weeks ago—the writing off of the greater part of the public debt. Recognising that such a “hair cut” would not be accepted, Vourafakis crafted his proposals accordingly.
He proposed that Greek bonds owned by the European Central Bank be converted into perpetual bonds. Normally a bond stipulates that the issuer will redeem its face value at the end of its term. If the existing bonds were made perpetual they would never be redeemed and the Greek government would continue to pay interest on them indefinitely. This would have the effect of writing down the value of the debt owed by the Greek government, though in practice it would make little difference because the existing bonds are long term, extending over more than 30 years.
The other proposal was that interest payments on bonds held by European governments would be indexed to nominal economic growth. That is, if Greek growth increased, the payments would increase, and they would decline as growth fell.
Vourafakis also proposed that the stipulation that Greece should run a budget surplus, after interest payments, should be reduced from 4 percent of gross domestic product to between 1 and 1.5 percent. He insisted this requirement would be met even if it meant the Syriza government would not meet many of the public spending promises on which it was elected.
The proposals won initial support, with the Financial Times commenting in an editorial that as Vourafakis sought support for the new deal he deserved “a full and even sympathetic hearing.”
The Financial Times also indicated that, as most of the Greek debt is owed to other European governments, Vourafakis’s insistence that he talk directly to those governments, rather than to the troika—compromising the European Commission, the European Central Bank and the International Monetary Fund—may have some merit. It seems the Financial Times is of the belief that a Syriza government may be the best instrument for breaking up the power of the Greek oligarchs and opening up lucrative sections of its economy to access by international financial institutions.
But after winning some initial expressions of support, Vourafakis’s mission suffered a significant setback on Wednesday when the European Central Bank intervened.
Having, at least nominally, repudiated the existing bailout terms, the Syriza-led government is seeking €10 billion in “bridging” finance while a new agreement is worked out over the next three months.
However, the ECB put a spoke in its wheel when it withdrew the waiver on the use of Greek government bonds held by Greek banks as collateral for loans it provides.
Under its rules, the ECB should not accept Greek bonds as collateral as they are of sub-investment grade, essentially junk-rated. But the ECB had agreed to waive that stipulation, provided the Greek government remained compliant with the terms put in place by the troika. With the decision of the government to withdraw from that agreement, the ECB announced that it was ending the waiver.
The issue would have come up anyway at the end of the month, when the present agreement was due to run out. This would have required agreement for an extension which the Greek government has said it will not seek. Wednesday’s ECB decision has served to speed up the confrontation.
In its statement, the ECB said it had taken the decision “in line with existing Eurosystem rules since it is currently not possible to assume a successful conclusion of the program review.” However, it said that Greek banks would still be able to obtain funds from the country’s central bank “by means of emergency liquidity assistance (ELA) within the existing Eurosystem rules.”
The decision, while not completely undermining the Greek banks, has, nevertheless, dealt them a major blow because it has reduced the collateral they have available when seeking loans from the ECB. Consequently, shares fell sharply after the decision was announced.
The Greek banks are facing growing liquidity problems because of significant cash withdrawals in the recent period. According to a report in the Economist magazine, some €4.4 billion was withdrawn in December and more than double that amount in January.
Much of this money consists of funds being taken offshore by financial oligarchs seeking a “safe haven” in case capital controls or other government restrictions are imposed. Some of them will also have made the calculation that if the crisis deepens and Greece withdraws from the euro zone, they will be able to use offshore funds to pick up lucrative assets. These would be at rock-bottom prices as a result of the severe devaluation of a reinstated drachma as the national currency.
While the Greek banks will still have access to liquidity through the country’s central bank under the terms of the ELA, the ECB move is a significant tightening of its grip both on the Syriza-led government and the national banking system.
The ECB has the power both to determine the amount of ELA and can decide to withdraw it completely.
As the Economist noted, the “Greek banks’ growing dependence on ELA leaves the government at the ECB’s mercy as it tries to renegotiate the bailout.”
It also pointed out that the ECB has taken action previously. In 2013, the ECB announced that it would stop the authorisation of ELA to Cypriot banks within days unless the government agreed to its bailout terms, forcing it to accept. A similar threat was used to get agreement from the Irish government in 2010.