The State of East African Community

 H.E. Uhuru Kenyatta 

The people of East Africa are united. In their hearts and in their minds, our people are already integrated. It is our obligation as leaders to dedicate ourselves to ensuring that this unity and integration culminates in prosperity, stability and happiness throughout our region.

Our Community has continued to perform encouragingly. As a result, several critical milestones have been achieved in the integration process.  We continue to rise and meet the expectations envisaged in establishing our Community.

For instance, intra-EAC trade grew from 3.5 billion in 2009 to about 5.8 Dollars in 2013.  This points strongly to the possibility and opportunity for higher volumes of trade across our borders.  I commend our region’s business community for embracing the vast opportunities which come with integration, and encourage them to make greater use of them. This will create more wealth and deliver more jobs for our young population.

The impressive growth and promise of intra-Community trade has been accompanied and underpinned by greater regional connectivity through enabling infrastructure development.  Over the last 2 years, projects and programmes designed to promote intensive integration have been completed. Encouragingly, work has commenced on several cross-border roads.  The Voi-Taveta-Arusha road and numerous sections of the Northern and Central Corridors are notable examples.Feasibility studies are currently being conducted on a number of other roads.  These road projects are necessary to grow cross-border movement and trade.

Similarly, Partner States have made significant investments in the modernisation and expansion of the railway network throughout our Community.  Whilst such projects are inevitably capital-intensive, the region shares the awareness of their immense long-term benefits. Our unwavering commitment to this investment is therefore borne of a strong, visionary consensus.

To further facilitate movement and trade across our borders, we undertook to establish One-Stop Border Posts at our major boundary points.  There has been tremendous progress in putting these up, and a number are complete, awaiting official opening.  They include Lunga Lunga and Taveta on the Tanzania/Kenya border as well as Rusumo on the Uganda/Rwanda border.  Upon commencement of full operations, we expect these facilities to support efficient transactions in our Community by reducing clearance times by up to 40%.

We have acknowledged that the high cost of roaming calls across the region is an unnecessary impediment to trade and communication in our Community. It is unacceptable that in many instances, calling outside our continent is much cheaper than communicating within our region.  In the spirit of East African integration, therefore, innovative interventions leading to substantial reduction of calling charges are overdue. The implementation of a One-Area Network by Rwanda, Uganda and Kenya is an excellent beginning. 

Already, calls within this Network have reduced to about 12 US cents per minute, while there are no charges for incoming calls.  This tremendous benefit will be shared within the entire East African Community when the region adopts harmonized calling rates in July this year.

Without doubt, we have made progress in eliminating Non-Tariff Barriers to intra-Community trade. I am grateful for the cooperation and goodwill shown by Member States in demolishing these obstacles to integration.Even so, about 24 Non-Tariff Barriers still remain unresolved. This denies us the opportunity to unlock the immense promise of integration, and starves businesses of innumerable opportunities.  To grow intra-Community trade, we need to implement decisive solutions without delay. Intra-EAC Non Tariff Barriers ultimately translate to impediments to our region’s competitiveness as a global investment destination denying us uncountable golden opportunities. Non-Tariff Barriers must go. I am glad to note that our Council of Ministers has introduced a legal framework aimed at moving this agenda forward.

Our energy sector is a key factor of our region’s competitiveness. In particular, power supply is critical to the cost of production. Conscious of this imperative, we have undertaken substantial developments aimed at establishing sufficient, reliable and affordable power supply. Each Partner State has intensified investment in power generation and supply across our Community.In coming days, it will be vital for us to channel more investment into both power generation and cross-border inter-connection.  

To support these projects, a regulatory framework must be developed. This framework must promote higher investment in Oil &Gas to quickly unlock benefits of our resources for all our people. A people-centred Community integration process is the cornerstone of our Treaty. It is important to keep the people of East Africa aware of all the programmes connected with regional integration. 

I am encouraged to observe the various sensitisation efforts made by Partner States across our Community. The Community must enhance these activities and ensure that they go far in promoting accountability and public engagement.

Democracy is the other foundation stone of our Community’s integration process. It is an essential value of our Treaty.  I believe that there is no longer doubt that democracy has found a home in our Community, and is here to stay. Burundi and Tanzania will be holding their elections this year. We wish the two Partner States success in the elections.May they emerge from these elections stronger, more united and totally peaceful.Peace and stability are vital for our region and Community.  We deem peace to be essential to integration. Political stability is the foundation of all prosperity and aspiration.

It is our obligation as regional leaders to maintain our keen interest in initiatives and efforts to restore peace and stability in those countries of our region which have been troubled by conflict. Our investment in the restoration of peace and stability in Somalia and Sudan is inspired by this knowledge. I commend EAC Partner States for constantly and faithfully supporting our neighbour, Somalia. Our call remain, however, that the international community has a significant role to play, and must do their part in this cause.

As regards South Sudan, there has been notable progress in resolving the conflict which has haunted the young Republic.  This has been achieved under the aegis of IGAD. Whilst neighbouring States have continued to support peace-building in South Sudan, the two parties must remember that they hold the key to stabilising the country.  The parties therefore have an obligation to resolve any differences that may have caused the conflict in order to allow the people of South Sudan grow their homeland.

The progress made so far strongly points to the possibility of a lasting settlement and a return to the agenda of South Sudanese progress and self-determination.We appreciate the support our Community has received from various development partners. In the same vein, we must bear in mind that development and integration in East Africa is primarily and essentially our mandate.  The Community must therefore remain a priority investment for all of us.

I assure my brother, President Kikwete of my support, and trust that he will take the integration agenda even further in the coming 12 months.

Kenya: Why Banks Reject Mortgage Requests

Konstantinos Kioleoglou

Still Wondering why Kenyan Bankers Usually say NO to your Mortgage Request?

It is a life dream for every family to finally access the real estate market and purchase a home. Usually the only way to do that is to combine the family savings with finance from your bank.The same bank you have had a relationship with for many years is now holding your future dreams in its hands. Many Kenyans, approach their banker and after a rigorous process of evaluating a loan request, a very important phone call is expected, the one that the relationship officer calls to give you the bank’s decision; Loan Approved (but with what interest rate??) or Loan Declined.

The million dollar question is… what leads to that final decision?

There are several factors that influence mortgage lending decisions. All of them have to do with risk management. People seem to forget that banks don’t give money but lend money. The ability to repay the loan, as well as the securities provided determine the risk involved to a mortgage application.

The client’s history with the banking system is vital. Someone who has been issuing bouncing checks over the years, whose bank accounts are always in debit, shows a financial character without self-financial discipline. Such person cannot be expected to honor long term, frequent and consistent mortgage repayments on the long term. That is the main reason for any banking institution to refuse any type of credit to a client anywhere in the world.But even if you don’t belong to this category, a bank has to consider a lot of factors before the approval of any mortgage. It is its main aim to minimize the risk involved with the specific transaction and this is the reason all banks examine every application individually. This is done to ascertain the interest rate that they will offer for the specific client, the specific moment, for that specific time with that specific security (collateral).

So when you get a loan, you aren't the only one taking a risk. The lender is taking a risk on you. Interest rates are the cost of borrowing money, the risk involved, and a kind of insurance for the lender.

In general, the higher the risk, the higher the cost of borrowing money, the less chances for a loan to be approved. If you get slapped with a high interest rate, you shouldn't necessarily take it personally. The lending institution isn't just taking a risk on you, it is also taking a risk on the economy as a whole.  The lender has to consider such risk despite your stellar credit rating.

So, in simplistic terms, interest rates are determined based on how much of a risk the lender is taking on you, the economy and how “covered” is the loan from the securities you provide.

Mortgage rates, however, are more complex than this. (A mortgage is simply a loan on a house, and a mortgage rate is the interest rate on such a loan.)  When you follow the trail, you'll eventually find an intricate and interconnected web of factors that go into what determines mortgage rates.

Economic Factors that Help Determine Mortgage Rates

Ultimately, several factors, including the rate of inflation, stability of the Real Estate Market, how secure is the collateral ,risk, and applicant's credit ranking affect mortgage rates. That's because all these factors plus many more affect how much investors are willing to pay to invest in the mortgage-backed securities (MBSs).

Let's start with inflation, which is the phenomenon where the prices of common goods and services rise across the board. Consistent and moderate inflation is actually a sign of a healthy economy and should ideally result in a proportional rise in wages for workers as well. For lenders, inflation poses an inherent problem, it means that the money people borrow now will be worth less when they come to pay it back. If economists predict a rise in inflation, investors will insist on higher mortgage rates to make up for this loss.

Having many choices of where to invest their money, competition among other investments also determines mortgage rates for investors. Like with bonds and other financial instruments, investors often compare MBSs against government bonds. You might assume a 30-year fixed mortgage would compare to a 30-year bond. But in reality, borrowers in 30-year fixed mortgages are likely to refinance or move after only 10 years. So investors compare such mortgage investments to 10-year treasuries.

When the Central Bank adjusts certain interest rates, this indirectly affects mortgage rates as well. The Central bank rate is the interest rate banks use when making overnight loans to other banks (to meet end-of-day requirements).To raise this and make borrowing more expensive, effectively lowers the supply of available money, which can help stop a rise in inflation. The reverse is also true: lowering the Central Bank interest rate increases the supply of available money and encourages inflation. As you can probably guess, such adjustments have such wide ripple effects that they affect mortgage rates as well.

Economic and Real Estate Market stability are both very important factors that determine mortgage interest rates as well as the exposure of banks to this type of finance. In most of the cases, when we apply for a mortgage the bank will ask about the property that we are willing to buy as collateral. After evaluating the property, the bank then makes an offer on the amount of money we are requesting as well as the interest rate. If the real estate market is not risky and the value estimated has more probabilities to grow than to shrink, then the interest rates are smaller. The collateral we are using on the mortgage is covering most of the risk. If the market is closer to a "bubble" or the prices are soaring for no reason, which means that within a short period of time the market could go down or even collapse, then the interest rates increase. Actually this is a good and quick way to forecast a market before you invest in any real estate asset. If the banks consider the market to have high risk, then I believe we should think twice before we make any commitment.

Most retail investors, especially homeowners, focus on changing mortgage rates because they have a direct influence on real estate prices. However, interest rates also affect the availability of capital and the demand for investment. Such capital flows influence the supply and demand for property, as a result, they affect property prices. In addition, interest rates also affect returns on substitute investments and prices change to stay in line with the inherent risk in real estate investments. Such changes in required rates of return for real estate also vary during destabilization periods in the credit markets. As investors foresee increased variability in future rates or increase in risk, risk premiums widen, putting increased downward pressure on property prices.

As a conclusion, bank policies are procedures and regulations put in place to govern lending activities within the bank. They are broad guidelines and answer questions such as who the bank can lend to; where the bank can finance; how much the bank can finance; which properties the bank can finance; what kind of securities are acceptable to the bank; how much the bank has a set a limit for loans to the housing sector; and how lending activities will be conducted. Therefore, unless an exception can be granted, any application that is in contravention of the bank policy will be declined.

So, if your financial character is perfect, but still your mortgage was declined (or approved with a ridiculous 15+% interest rate), now you know that it is not your mistake. The real reason is that there is an unsustainable real estate market and an economy which is not as bright as people like to think. The banks will not be willing to take the risk of financing your property purchase as the risk involved in the market is very high. They always know better when they should be exposed and when they should simply keep distance from a very fragile market.

When financial institutions are not willing to take the risk of a market and if they do, they want to charge you with astronomical interest rates, maybe, you should think twice about that dream of buying a house today and wait till when the market will cool down. When real estate values will become reasonable and sustainable, then your mortgage will be approved with a reasonable interest rate below 10%.Then that is the time you should buy. Buying a house is a lifetime investment; you must not rush to take any decisions that could affect your family’s budget for the next decades, possibly in a very negative way.

If banks are not ready to finance the property…. Are you ready to buy it???

Mutembo Nchito: A Zambian Jesus?

Charles Mwewa

Jesus is the only man who ever lived who did not exercise his right and power to nolle prosequi: “Do you suppose that I cannot appeal to My Father, and He will immediately provide Me with more than 80,000 of angels?” he said in Matthew 26:53. He would have appealed to the highest authority (His Father) to stop his incriminators, but he chose not to. He had the power to silence his prosecutors, but he reserved the right and power because he had a mission that involved being wrongfully charged, unjustly prosecuted and maliciously killed. Mutembo Nchito is not Jesus Christ; he was not born to die for the hard core and legal rapists of the Zambian legal echelon.

In my last article published by the Zambian Watchdog and the Lusaka Times, I predicted rather presciently that Zambian politics is turning out to be zoo-like and its legal system jungle-like. In the light of the recent event where the Director of Public Prosecution (DPP), Mutembo Nchito, has entered into a nolle prosequi in his own case is unprecedented, but not insuperable. I do not intend to side with the DPP. As I have written before, he is neither innocent nor above the law. However, when those entrusted with national governance want to arbitrarily rise and rule above the law, the position taken by the DPP seems a lesser of the two evils. In some way, it is justified for three reasons.

First, the Pf government has not at any time revoked or dropped Mutembo Nchito from the DPP position. He remains, hitherto, the legitimate and constitutional holder of the office. You can’t break the law to enforce the law. That is what government or its cronies are attempting to do. Mutembo was DPP under Sata and President Lungu was then both Minister of Justice and Defence. Surely then, as Mutembo’s boss, did he not know that the one the Pf administration had entrusted the highest decencies of prosecuting criminals in Zambia was himself wanting? Why was Minister Lungu silent then? The arguments that Mutembo is behaving against the law are unfounded; the State cannot act above the law and expect its governed to act below it. That is a symptom of dictatorship.

Mutembo is a citizen who just happens to be a reigning DPP at the same time. Conflict of interest? Of course, and that is where the government got it all wrong. In a normal and working democracy where the charge is not instigated by malice and political witch-hunt, Mutembo’s behaviour would not be justified or even tolerated. But the government is in a hurry to replace Mutembo with a DPP who would fulfill Rupiah Banda’s election support for handing the presidency over to President Lungu. The gambit is backfiring.

Second, Zambia set precedence by removing immunities of presidents who had left office. Why didn’t Mutembo’s accusers first fire him before charging him? Anyone in Mutembo’s position would have done what he has done. He is not Zambia’s saviour. The lame move by Mutembo’s accusers has the potential to pre-empt further future charges on similar grounds. A nolle prosequi may prevent the laying of the same charges against Mutembo. It will be ironic because Mutembo may now be the most powerful individual in Zambia. He cannot now be removed with trumped up allegations. As a reigning DPP, he has the right to enter a nolle prosequi where he has cause to believe due process has not been followed.

Third, it is contended that by using the nolle prosequi powers vested in him by the constitution, the law against natural justice is violated. Mutembo has the chance to postulate that elements of natural justice themselves, the right to be heard and the right to an impartial and unbiased tribunal, may have been deranged. While the Nguni’s prosecutors will maintain that nolle prosequi has forestalled them of the right to be heard, the DPP would argue that the uninvestigated charges and the manner in which they could have been politically-motivated pre-empts the other salience of natural justice, namely, bias.

In summary, two things should be borne in mind in dealing with the issue of the DPP. As a position, the DPP has the power to stop a prosecution. As a person, a man may not be a judge in his own cause, but nothing prevents him from being his own defender. Mutembo is using the constitutional powers at his disposal to execute his own escape, though morally reprehensible, it is neither illegal nor unlawful. Last, Mutembo Nchito may be just what in religious devotion is termed “answer to prayer.” Under Sata the State did anything it wanted to do, almost at will. But it did one good thing; it appointed Mutembo as DPP, albeit, controversial, and Mutembo is turning out to be its thorn in the flesh. Although this government may have brought it upon itself, it is, nevertheless, good for democracy and may help to sanitize the bloated powers the Zambian president enjoys under the current laws.

Africa Land Grabs: Lessons for Somalia

 Bazi Bussuri Sheikh

“Aduunyo Jowhar Ka Joog, Aakhirana Janno” is one of the quotes Somalis use to describe the beauty of the country’s agricultural land. Today, Somalia’s farmland similar to its neighbouring countries is in danger of falling into the hands of transnational companies often in partnership with governments sometimes supported by the local elites. Many of these investors target low income countries with weak internal governance and their win-win language conceals the fact that most of the farmland acquisition occurs under bizarre and non-transparent circumstances making experts to warn of the consequences (Indirect Re-colonisation of Africa’s Resources) if the practice is not stopped.   

Many experts also challenged the myth that there is “unused” or “un-owned” land in Africa and most agricultural land deals target quality farmland, particularly land that is irrigated and offers good access to markets. Such discourses about empty land are deeply and dangerously misleading. This is not about anti private investment or belittling the contribution modern agriculture has made and continues to make, but a call for investments that do not harm and follow the ethical and sustainable business principles (Economics as if People matter).

Land grabbing is not new to the continent and for centuries, communities have been intimidated to abandon or forcibly removed their land by national and local authorities. However, the current land grab we are now witnessing is a new aggressive land grab driven by geopolitical arising from the 2008 food crisis, hedge fund bets on rising land prices. These led many including Gulf States, several East Asian Countries and Western multinational companies to re-evaluate their strategies and secure land and water elsewhere, essentially turning to “Offshore” food production to supply their growing populations. 

It seems implausible that the government of African country in a situation in which its own population was going hungry to preserve the right of a large scale agricultural land to export food to its lease-holding country. One might argue that African chiefs and tribal leaders in the Colonial era signed away their land not knowing what they were signing away. Today, unlike the African Chiefs in the colonial era, African leaders sign such contracts with the deliberation and calculation by performing the role of the gatekeepers of the rentier state.  

It is also ironic that these changes are underway at precisely the time that the African Union, among others has embraced a vision of smallholder-led agriculture commercialization and a “green revolution in Africa.” The current farmland deals also has its political ramification as the world has seen the case of the land deal in 2008 between African Nation of Madagascar and the South Korean firm Daewoo logistics to sign 99 year lease on 3.2 million acres of land, representing half of the country’s arable land. This deal generated more controversy and led to the toppling of Ravalomana’s government. 

Therefore, we urge our national, federal and local Somali leaders not to voluntarily make us colony again by renting out the agricultural land of the country that should be utilized for the benefit of the ordinary people. This is bad not only because it takes the land away, but also because it implements a casino agricultural economic model which is socially, economically, politically and ethically unsustainable and unacceptable. This trend is as predictable as it is regrettable. There is a growing grass-roots movement in the West against the dysfunctional food system in the Western countries that is now coined as “Foodoply.” They are campaigning for a complete structural shift to reshape the food system from seed to the table (The way the food is produced, marketed, distributed and sold). 

We should not be naïve about the importance of business and industry. We can all point to many worthy features of modern agriculture, but on the balance we find modern agriculture (that is controlled, top to bottom, by a few firms and that rewards only scale) wanting.  The Western corporations and investors from the South need to re-evaluate their dealings with poorer African countries and fill the areas of the deal that are mostly vacant, empty of moral and spiritual content. For example, the WTO that dictates that competition is good and will weed out the inefficient producer while farmers in the West continue to receive agricultural subsidies that give them a head start in the game and are able to out-price African farmers.

The way Forward for Somali Agriculture

Agriculture is the foundation of civilization and any stable economy. The stewardship of the agricultural land is on the people on that land, country or a nation. One of our biggest shortcomings is our negative perception towards farming as a job and the farming community.  We have neglected the truth that a farmer is a craftsman of the highest order, a kind of artist who contributes to the welfare of society in more ways than society usually acknowledges, or even knows. Majority of Somalis do not show much interest in farming and consider it demeaning or dishonourable.We need to teach our children how to farm and feed themselves at early ages (Primary School) or fall into the danger of supposing that breakfast comes from the grocery.  Many Somali intellectuals especially the poets and artists have warned against failing to safeguard the farmland and not giving the Somali farmers the respect they deserve.  Among them was Maxamed Gacal Xaayow (Allaha u naxaariistee) whose poem “BEER HA LA OGAADO” listened to by many Somalis on YouTube called for a change on the negative attitude towards the farming profession and the farming communities. 

Land grabbing has hit the farming communities in Somalia hard. Firstly, they lost out on colonization. Secondly, they were victimized by many policies and practices of the Siyad Barre years in 1975 and 1980s, the liberalization prescriptions given by the IMF and finally the state collapse tragedies. The land grab by the Italians had been based on overt military force, even though translated into treaties and agreements. The second land grab of the Barre years proceeded under legal forms, but had force clearly behind it.  During the state collapse in the early nineties, the land grab was continued by naked force and the militia of different clan groupings who competed for control with far more lethal consequences. It is also worth mentioning that global geopolitics and late twentieth century political economic transformations (development aid as an arm of Cold War geopolitics, the arrogance of development wisdom and state agendas for maximizing control and elite efforts to accumulate wealth) contributed far more to Southern Somalia’s destruction than “ancestral clan tensions.” 

It is time we Somalis stop moaning about the past mistakes and get back on track to rediscover the way forward as we say ((Mindi calool gashay maxay u gashay lama yiraahdo, sideen u daaweynaa baa la yiraahdaa).  Therefore, Somali farmers are yearning for an effective and just agricultural land reform to short-circuit the cycle of negativity surrounding the continuing land tenure controversy. It is worthwhile to face a short term pain for the greater gain in the future. Below is a summary of recommendations and the readers with the knowledge of agriculture must contribute their ideas via commenting so that the future Somali generation can read:

Genuine reconciliation between those involved in internal agricultural land dispute via Qudhac tree based approach as the customary negotiations between elders had long kept the violence to a minimum in rural areas. For example, the current conflict in Lower Shabeele, no one side is getting any closer to achieving its goals and no one is happy with the situation (It is un-winnable). The only way forward is through face to face talk (Rag waxaad walaal uga waydid waran ugama heshid).  It is difficult to address the danger of agricultural land grab from outside if we are still indulging in political infighting and inability to get out of clannish self.

It is also important to note that Somalia had a long standing Customary Law in solving land related disputes in rural areas. Most of the laws have been derived from the Islamic law. In agriculture, Islam has not laid down any hard and fast rules to govern every affair so as to restrict the freedom of action of the people. Most of these matters have been left to the discretion of the people of each age and each place to decide the same according to their ever changing socio-economic situations. Only a few general instructions have been issued in the fields of land-ownership, land cultivation, reclamation of dead lands, peasant-landlord relationship, and irrigation. Many Somali intellectuals have made extensive research on Somali Customary law including (Alle ha u Naxriisto) Abdulkadir Aroma. He summaries his findings in an interview with Universal TV below: 
     
Establish land committees with full support from the government based on mass participation (rhetoric free) to constructively debate and discuss the way forward and come up with workable, fair and just land reform. For example, Taiwan’s reform that was hailed as a success, 5 of its eleven committees were tenants or small peasant farmers elected directly by other tenants and small peasant farmers. The remaining 6 spots consisted of two elected representatives from the landlords and the farm-owners, one land officer and the president of local farmer’s association. Somali farming communities, given the opportunity and capital can be as productive as the Taiwanese and there was a period the country was self-sufficient in food. Somalis are also able to set up a successful committee and have demonstrated this as shown by the successful Literacy Campaign that was launched on the seventh March 1974.

2. Set up goals, guidelines and principles to follow by the committees such as reducing poverty and inequality as well as achieving sustainability, stability and legitimacy.  Growing evidence links within-country asset inequality to slower growth and such inequality are not due to markets, but to inheritance and privileged access to the power to self-assign rewards and subsidies.

Finally, the aim of this piece of writing was to create awareness of the current land grab in Africa, to safeguard Somalia’s agricultural land and to encourage a constructive debate about the solutions and the future of the agricultural sector in Somalia and its farming communities.  Every childbirth has labour and Somalia has gone through a painful labour (the nightmare of collapse) and will eventually give birth to a healthy country that is centralized by heart and federalized by land. 

UK retail giant Tesco announces thousands of job losses

John Farmer

Thousands of jobs are threatened at major supermarket chain Tesco, the largest retailer in Britain. This follows the decision of new CEO David Lewis to embark on a £500 million cost-cutting drive and store-closure plan, in an effort to confront the decline in profits and marketshare since 2011.

Tesco is Britain’s biggest private-sector employer, with over 310,000 staff across its 3,300 stores. Forty-three stores are projected to be closed as well as its Welwyn Garden City head office in Herfordshire, Cheshunt, resulting in the loss of some 10,000 jobs. A recent 49-store expansion programme has also been abandoned.

A large percentage of job losses are expected to be management positions. Lewis, who is being drafted in from the Unilever Conglomerate where he earned the name “Drastic Dave” by cutting jobs and doing away with products, is said to be looking to remove an entire layer of management from Tesco stores.

Clive Black, an analyst at Shore Capital, told the Financial Times, “Labour is the biggest operating cost and if Tesco is serious about being a simplified business then you would expect further job reductions.”

Since the 2008 financial crash, all of the UK’s big four supermarket chains (Tesco, Asda, Sainsbury’s and Morrisons) have faced increased competition from the low-cost supermarket chains Aldi and Lidl. Competition from premier grocers Waitrose and Marks & Spencer has increased. The John Lewis-owned Waitrose expanded its marketshare by 6.6 percent.

The German-owned Aldi and Lidl increased their marketshare by 50 percent in that time period, gaining almost 10 percent of the total market, an all-time UK high. Aldi’s and Lidl’s sales were up by 22.3 percent and 18.3 percent respectively in the last quarter of 2014. Research group Kantar Worldpanel revealed that more than half of British households visited one of the two retailers over the Christmas trading period.

The four major UK supermarket chains are responding with a price war combined with an assault on the jobs of their labour force.

Asda, the UK’s second-largest supermarket retailer, is reducing its labour force by 1,360 and Sainsbury, the third largest, is cutting 500 jobs at its offices as part of its new chief executive Mike Coupe’s “fightback plan”. Morrisons, the fourth largest retailer, pushed through a programme of management elimination last year with the loss of 2,600 jobs.

But the woes of Tesco—the third-largest retailer in the world measured by profits, after Wal-Mart and Carrefour—in recent years are in proportion to its global status.

Tesco lost £17.6 billion in its market value in the five years up to 2014. In 2013, its marketshare fell below 30 percent consistently for the first time in eight years. In October last year, it was revealed that Tesco had lost 50 percent of its market value in a year. For the first six months of 2014 pre-tax profits fell by a staggering 92 percent to £112 million while UK trading profit was down 55.9 percent to £499 million.

Eight senior executive positions have also recently been suspended relating to a fraud scandal that has engulfed the supermarket chain over the last four months. (Outgoing CEO Philip Clark was entitled to a final salary, share schemes and bonuses worth £9.6 million.) An investigation is ongoing by the Serious Fraud Squad into accounting anomalies showing over £250 million of overstated profits in 2014.

The government’s Groceries Code Adjudicator is carrying out an investigation into the possibility that Tesco broke laws in its dealings with its suppliers.

In January 2013, the British media reported that horsemeat had been found in some meat products sold by Tesco, along with other retailers, particularly beef burgers. Tesco was forced to withdraw 26 of its products in response, while more than 10 million burgers and other beef products were withdrawn across the affected chains.

As part of Tesco’s aggressive drive for market domination it made deals with willing local authorities to build stores incorporating housing and commercial development programmes. Protests against these deals mushroomed in the mid-1990s, often citing dubious relations between the private retailer and development strategy of local authorities. These practices were expanded to its overseas operations. The 49 abandoned projects, some in the process of development, have not been costed in the amount of job losses and effects on local authorities.

Tesco expected its expansion of stores in overseas markets would overcome the limitations of its market collapse in Britain but they have proven a disaster. Tesco expanded into Europe in 1996 going on to open stores in China in 2004, the US in 2006, and with operations in 13 different countries.

In April 2013, Tesco announced that it was pulling out of the US market (Fresh & Easy Stores), at a reported cost of £1.2 billion, failing to offload its stores. Tesco’s entry into China was a loss-making failure. In 2014 it struck up a joint enterprise of an 80 percent state-owned and 20 percent Tesco-owned company under the name of Chinese Resources Enterprise.

Tesco also failed in Japan and its enterprises in Europe are seeing dramatic declines in profit margins. Kantar Worldpanel’s report noted that, over Christmas, for the first time it recorded a decline in UK grocery sales by overall value since it began collecting data in 1994.

Tesco and its major global competitors have all been affected by the decline in living standards worldwide through the impact of austerity since the 2008 financial collapse.

Of Tesco’s 217,000 full-time employees, those that work on the shop floor are paid on average around the minimum wage of £6.50. The remaining 100,000 part-time workers are estimated to save Tesco around 14 percent per employer, or around a £100 million over the year.

These savings are made at the expense of government national insurance receipts which would normally go to state pensions and welfare payments. Tesco avoids paying these contributions by employing workers on a minimum four-hour contract. Although a worker can ask for an increase in hours these are held below the level of earnings of £150 a week after which amount the employer is liable to pay national insurance contributions. It estimated that varied government wage top-up schemes cost the UK taxpayers £90 billion a year.

The result of Tesco not paying employment contributions threatens to leave employees with a limited state pension or no pension at all, guaranteeing a retirement of severe poverty.

Employees at Tesco that maintain a pension will be switched from its defined benefit scheme to a career average plan. Tesco’s defined pension scheme was one of the largest in the UK’s private sector, encompassing all its employees. Today these schemes are regarded as a thing of the past.

In 2004, defined benefit plans were contributed to by 20 percent of FTSE 100 employers (100 largest employers in UK); today there are none.

The global economic crisis has resulting in a relentless assault by Tesco, Wal-Mart and the other major retail corporations on their workforces, as they seek to retain marketshare and profits in a cutthroat market.

Last year Wal-Mart, the world’s largest retailer and the largest employer in the US, announced in a blog post that it would eliminate health care benefits for 30,000 part-time workers and increase health care costs for all employees.

On November 23, protests were held at Wal-Mart stores around the country opposing management abuse, irregular working hours and the poverty wages the giant retailer pays its 1.4 million workers.

Irish police clamp down on water charge protesters

Dermot Quinn

Five anti-water charge protesters have been jailed for contempt of court in Ireland, following a crackdown by the Garda (police) and the state against any effective protest against the hated water charges.

Since Dublin’s Fine Gael/Labour Party government imposed water charges as part of the multi-billion-euro bailout programme concluded with the International Monetary Fund, European Union and European Central Bank in 2010, there has been widespread opposition from working people who correctly see the charge as yet another measure to make them pay for the economic crisis and the collapse of the banks.

On February 19 the High Court imposed a sentence of 28 days on three anti-water charge protesters for failing to maintain a 20-metre distance from water meters when they were being installed in housing estates. Two other protesters, who have since been refusing food (Derek Byrne from Donaghemede and Paul Moore from Kilbarrack), were jailed for 56 days.

The frustration and anger of many local communities has resulted in numerous water meter installations being blocked by residents, who have physically obstructed work being carried out by contract firms on behalf of Irish Water. Irish Water was the body set up by the government to collect the water charges from the population.

Following the arrests, more than 10,000 people, led by the families of the jailed anti-water charge protesters, marched to Mountjoy jail in Dublin calling for the release of the protesters.

The jailing of the protesters followed a general crackdown by the Garda and the courts on the right to protest. Twenty-three people were apprehended in dawn raids by the Garda recently and later released without charge. On February 9, Socialist Party TD (Teachta Dála—member of parliament) Paul Murphy, along with three other members of the Anti-Austerity Alliance, were arrested in the early hours of the morning and detained under section four of the Criminal Justice Act 1984. This act permits the detention of people for up to 24 hours for a wide range of offences against the state.

According to the Garda, the arrests were in response to a protest last November in the predominately working class estate of Jobstown, near Tallaght, Dublin in which angry protesters spontaneously surrounded the car of Tanaiste (Deputy Prime Minister) Joan Burton. Detaining her for over three hours, the protesters shouted defiant slogans against the introduction of water charges and Burton’s slashing of lone parents’ payments. Social Welfare cuts to be introduced in July this year will see 6,400 lone parents lose up to €36.50 per week; 4,500 will lose up to €57; and 800, who are also carers, will suffer €86 per week in cuts to payments.

Derek Byrne, one of the five protesters jailed for contempt in the latest crackdown, was also involved in a protest at the end of January. This received huge media coverage, as footage emerged in which he was heard calling President Michael D. Higgins a “midget parasite” as Higgins’ car left a visit to a Dublin school. In the footage, Higgins is also repeatedly described as a “sellout” and “traitor”. The media and the establishment went into overdrive to condemn all those involved in the protest, pointing out the sanctity of the presidency and the necessity to keep the position of president “above politics.” Labour TD John Lyons described the protest against Higgins as “thuggery.” Minister for Health Leo Varadkar even described the protest against Higgins as “an attack on the Constitution.”

As the anger and frustration against austerity and the continuing impoverishment of the majority of the population continue to grow, the pseudo-left Socialist Party and Socialist Workers Party’s front organisation People Before Profit (PBP) continue to bend over backwards to proclaim their loyalty to capitalism—seeking what many have described as the formation of new party styled on Syriza in Greece.

These groups secured a smooth transition for the establishment at the beginning of the Irish banking crisis by sending representatives to discuss the austerity measures with officials from the troika—the European Union, European Central Bank and International Monetary Fund—thus securing a sizeable amount of coverage from the media for their contribution to parliament and policies which differ little from the nationalist Sinn Fein.

Socialist Party TD Joe Higgins now contributes loyally to the inter-party banking inquiry which was set up last December by the government despite the fact that the dogs in the street know it is a farce and that the inquiry has ruled out any criminal procedures against the super-rich who crashed the economy through financial speculation.

As the Socialist Party has been co-opted over the past years by the ruling establishment and its state institutions, it finds itself having to walk a thin line between its radical face of organised protest and its pro-capitalist politics. When responding to the recent arrests, Higgins declared they were a “waste of Garda resources.” Paul Murphy stated, “It’s really blatant and disgusting in the context where policing resources are needed for things that make a difference for people.”

Although Murphy condemned the arrests as “political policing,” he made it clear on a TV talk show that protests needed to be confined within “official guidelines” and that protesting against the president was out of line and needed to be strongly condemned. When shown a video of the Michael D. Higgins protest, Murphy was emphatic in saying, “I have condemned it repeatedly. I wasn’t there, I don’t approve of it, I don’t agree with it, I condemned it repeatedly. They were wrong.”

In reference to the blocking of Joan Burton’s car in which he was accused of shouting through a megaphone, “Do we let her go if they withdraw the special units,” he went on to say, “The Garda had explicitly asked me to put that question to the crowd. The Garda wanted to deescalate the situation and they choose to talk to me. I was trying to play a role in having a disciplined protest. If I had orchestrated this protest this would not have happened. I arrive on the scene and what role do I play? I attempt to put a shape on the protest, to put a discipline on the protest.”

Poland increases military spending

Sonja Bach

By 2016, Poland will reserve two percent of its GDP for its defence budget, thereby fulfilling NATO’s minimum military spending requirement, Prime Minister Ewa Kopacz announced last week. As a close ally of Germany and the United States, it is evident that this military build-up is directed, above all, against Russia.

In total, an additional €33.6 billion is to be invested. Already in 2012, a plan for the technical modernisation of the armed forces from 2013 to 2022 was adopted. At that time, the increase was to be €25 billion.

The announcement of the increase came during talks over the latest ceasefire in Ukraine. President Bronislaw Komorowski told journalists on February 12, “The possibility of a lasting peace still remains remote.” In spite of the Minsk agreement, government officials declared that the risk of the conflict in eastern Ukraine heating up remained.

The additional billions will be used to purchase a missile and air defence system, armed drones, armoured vehicles and submarines armed with cruise missiles. A total of €2.5 billion alone is to be spent on the purchase of 70 military helicopters. Three producers are competing for the contract, the American manufacturer Sikorsky, Europe’s Airbus Helicopters and the British-Italian concern AgustaWestland.

Since the outbreak of the Ukraine crisis, the Polish ruling elite has been pushing ahead with the country’s militarisation. Only a few days after the overthrow of former Ukrainian President Yanukovych, the US stationed 12 F-16 fighters and 300 US troops in Poland at the request of the government. In April 2014, then Prime Minister Donald Tusk demanded NATO troops be sent. At the end of last year, it was decided to relocate the focus of the country’s military to its eastern border.

The Polish government’s claim that the military build-up is taking place on account of an alleged potential threat from Russia is a lie. In the first place, the plans to modernise the armed forces go back to 2012. Secondly, Poland bears considerable responsibility for the outbreak of the Ukraine crisis.

The government at the time, in particular Foreign Minister Radoslav Sikorski, backed the right-wing opposition of Vitaly Klitchko, Arseniy Yatseniuk and the fascist Oleg Tyahnibok. Prior to this, the Polish government was heavily involved in the drafting of the Association agreement between Ukraine and the European Union. Yanukovych’s refusal to sign the agreement became the trigger for the Maidan protests.

With the assistance of right-wing paramilitary groups like Right Sector, and with the backing of the imperialist powers, a pro-western government came to power in a coup a year ago. Since then, Kiev has been leading a bitter struggle against its own population in the east of the country and provoked conflict with Russia. A law was drafted to remove Russian as the country’s second official language.

Like its NATO allies, Poland seized on the crisis it helped provoke as a pretext to build up its military forces. At the NATO conference in Wales last September, a detailed action plan was presented. The centrepiece was the creation of a so-called spearhead, a rapid deployment force of between 3,000 and 5,000 soldiers, to be sent to a crisis region within hours. These troops will be commanded from NATO’s headquarters in eastern Europe, situated at NATO’s multi-national northeast corps in the Polish port city of Szczecin. Poland leads the corps, together with Germany and Denmark.

At this year’s Munich Security Conference, NATO Secretary General Jens Stoltenberg announced an increase in NATO combat forces from around 13,000 to 30,000 in eastern Europe. Six command-and-control units are to be established in the three Baltic states, along with Poland, Bulgaria and Romania.

At the same time, Stoltenberg warned all European governments of the need to increase their defence budgets to two percent of GDP. He said, “Last year, there was a further decline of about 3 percent. So the fact is that our security challenges are increasing. But our defence spending is decreasing. This is simply not sustainable. We cannot do more with less forever.”

It is no surprise that Poland has met Stoltenberg’s request so rapidly. Its government has supported every initiative taken by US imperialism and its partners. In 2003, Poland supported the invasion of Iraq. Last year, it was revealed that torture prisons of the CIA had been established and run on Polish territory with the agreement of the Polish government. Today, Poland fully supports the aggressive policy of the United States against Russia.

Defence minister Tomasz Siemoniak recently gave his support to supplying Ukraine with weapons. In comments to the Financial Time s on February 9, he said, “Russia must take into account that the US, or the west in general, can make a decision to arm Ukraine and that it is a card that is held by the West, that can be used in the future, if not today. … The Polish position is that we should not say this card will never be played.”

In May 2014, the army decided to strengthen its reserves by up to 10,000 volunteers. From March 1, the first men and women will be able to register to receive military training. In 2016 and 2017, a further 15,000 volunteers are to be recruited.

Based on its aggressive policy towards Russia and its military build-up domestically, the Polish government is hoping to regain its role as a regional power. At the same time, its reactionary programme is encouraging right-wing extremist and nationalist forces.

In December 2014, the extreme right-wing Alliance for a National Movement (ruch narodowy) announced it planned to regroup as a party. The alliance is notorious for its anti-Semitic and anti-Russian agitation. On November 11, the day of Polish independence, the group provoked violent clashes in which 50 people were injured.

In the process, the rightists chanted slogans calling for the revival of “Greater Poland,” a concept that draws on Poland’s territorial power in the 17th century, when the country controlled the Baltic states and large sections of Belarus and Ukraine in partnership with the grand duchy of Lithuania.

Sri Lankan president’s visit to India highlights foreign policy shift

Deepal Jayasekera

Sri Lankan President Maithripala Sirisena’s visit to India last week further underscored the shift in Colombo’s orientation toward the US and India, and away from China, with which his predecessor Mahinda Rajapakse had developed close ties.

Sirisena’s election as president last month followed his defection from Rajapakse’s cabinet and the alignment of various parties, including the pro-US United National Party (UNP), around his campaign. It was a regime-change operation sponsored by Washington, with India’s involvement.

In a clear foreign policy signal, Sirisena selected India as the destination for his first presidential trip abroad, following Foreign Minister Mangala Samaraweera, who visited New Delhi on January 18 and joined Sirisena on last week’s visit.

Sirisena met with Indian Prime Minister Narendra Modi and President Pranab Mukherjee on February 16, then held a joint press conference with Modi. “We are at a moment of an unprecedented opportunity to take our bilateral relations to a new level,” Modi declared. India was deeply concerned about Rajapakse’s ties with China, as it considers Sri Lanka as a part of its own sphere of influence.

Modi accepted Sirisena’s invitation to visit Sri Lanka. He will arrive in Colombo on March 13, for the first state visit by an India prime minister since 1987, when Rajiv Gandhi came to sign the Indo-Lanka Accord. Prime Minister Manmohan Singh visited Sri Lanka in 2008, but only to participate in a South Asian Association for Regional Cooperation (SAARC) summit.

Four bilateral agreements were signed during Sirisena’s visit. The most significant was a civil nuclear cooperation pact, which Modi described as a “yet another demonstration of our mutual trust.” It was the first such deal signed by Sri Lanka with any foreign country.

Under the deal, India will help Sri Lanka develop infrastructure for nuclear power generation, including the “exchange of knowledge and expertise, sharing of resources, capacity building and training of personnel in peaceful uses of nuclear energy.”

For Modi, the agreement means a strategic advantage over China as it will help integrate Colombo into India’s orbit. Apart from New Delhi’s own geo-political interests, the deal also serves the interests of Washington, which wants India to play a more active role in the region as a partner in its “pivot to Asia” against China. During his visit to New Delhi in late January, US President Barack Obama asked India to help “the transition in Sri Lanka and Burma.”

The nuclear deal was signed on Sri Lanka’s behalf by Power and Energy Minister Champika Ranawaka. As a minister in Rajapakse’s government, he had raised safety concerns over nuclear power plants in Kudankulam on India’s south coast. Thus, his signing particularly highlighted the change in foreign policy orientation.

In a Daily Mirror interview on February 23, Ranawaka, while claiming to adhere to “our non-aligned foreign policy,” accused Rajapakse of making “a mistake by allowing the Colombo Port to be used for docking Chinese submarines and other military activities.” India publicly objected to last year’s Chinese submarine visits to Colombo.

The US signed a civil nuclear deal with India in 2008, which became a major plank of their strategic partnership. Accordingly, the Obama administration welcomed the India-Sri Lanka deal. US State Department spokesperson Jen Psaki commented on February 17: “We welcome regional cooperation on nuclear energy that is consistent with IAEA (International Atomic Energy Agency) safeguards and other international standards and practices.”

Other agreements signed during Sirisena’s visit covered cultural cooperation, education and agriculture.

Modi and Sirisena also discussed “expansion of cooperation in the energy sector, both conventional and renewable.” New Delhi wants access to potential Sri Lankan oil and gas exploration sites. According to Colombo media reports, a team from Cairn India, which discovered natural gas in the offshore Mannar basin between the island and the southern tip of India, will arrive in Sri Lanka this week for talks.

Another factor in the Indian calculations is Colombo’s attitude to the island’s Tamil elite. India has been pushing for a power-sharing arrangement between Sri Lanka’s Sinhala, Tamil and Muslim leaderships, which will allow limited devolution of powers to the country’s Tamil-majority north and east. The Hindu ’s editorial on January 22 noted: “India’s foremost expectation from the new government would be an early settlement of the Tamil question.”

New Delhi hopes to boost its influence via the Tamil elite that would share power in the north and east. The posturing of Indian governments over the conditions facing the island’s Tamils are aimed in part at containing discontent in the southern Indian state of Tamil Nadu, whose majority Tamil population has centuries-old cultural and family ties with Sri Lankan Tamils.

The public statement issued about Sirisena’s visit made no mention of any discussion on the Sri Lankan Tamil issue. This is an obvious concession to the Sirisena government in return for signing agreements that provide New Delhi with strategic advantages. Any reference to the power-sharing question could destabilise the government, which includes Sinhala chauvinist parties, and be exploited by its opponents in the lead-up to this year’s parliamentary election.

The Indian elite was elated over the Sri Lankan president’s visit. An editorial on February 18 in the Hindu, titled “New thrust in India-Sri Lanka ties,” noted: “Relations between India and Sri Lanka have not just been reinforced during the visit of President Maithripala Sirisena but have also gained new direction and momentum.” The newspaper was particularly pleased that “in a departure from the routine nature of such visits, both sides signed four substantive agreements.” The editorial hailed the nuclear agreement “as it imparts a new strategic element to bilateral relations.”

China responded cautiously to the close ties cemented between India and Sri Lanka during Sirisena’s visit. Chinese foreign ministry spokesperson Hua Chunying said: “We believe the sound relations among the three countries are conducive to the three countries and to the whole region. Therefore we are happy to see development of relations between Sri Lanka and India.”

China’s proposal for trilateral relationship between India, China and Sri Lanka seeks to woo India away from the US orbit and reassure the Indian ruling class that Beijing’s interests in Sri Lanka are not directed against India. Beijing clearly feels increasingly under pressure from Washington’s aggressive moves to integrate countries throughout the Indo-Pacific region into its “pivot” against China.

Australia: Aurizon workers confront deep assault on conditions

Terry Cook

Trade unions called limited industrial action in central Queensland over the past week at Australia’s largest rail freight haulage company, Aurizon, in a bid to contain widespread anger among workers over the former state-owned company’s attempt to dismantle long-standing working conditions and protections. Further strike action was called off this week, however, as the unions seek to reach agreements with Aurizon over its cost-cutting demands.

Rail, Tram and Bus Union (RTBU) members stopped work for 24 hours on Monday at depots near Mackay, while Australian Federated Union of Locomotive Employees (AFULE) members held stoppages at freight depots, including Rockhampton, Emerald, Maryborough, Mackay, Toowoomba and Goondiwindi.

RTBU members previously banned overtime at several Queensland coal depots from January 3 until January 7 and stopped work for 24 hours at Aurizon’s Jilalan coal depot on January 3–4.

Stoppages were scheduled across the Blackwater coal rail corridor later this week after being postponed due to cyclonic weather conditions in the region. But they were again called off by the RTBU, which claimed “progress” was made in negotiations with Aurizon over the weekend. The company hauls around 50 million tonnes coal a year from Blackwater area mines.

RTBU state president Bruce Mackie told the Australian Broadcasting Corporation: “Let’s be realistic, the best way for this agreement to be resolved is for the workplace delegates, RTBU officials and decision-makers from the business, sitting around the room and trying to come up with an agreement.”

Aurizon has made clear over 18 months of negotiations that it will not budge on its drive to abolish what it calls “legacy provisions that are not reflective of modern Australian workplace agreements.”

While offering 4 percent annual pay increases for four years in new enterprise agreements covering 3,400 of its employees, Aurizon is demanding sweeping changes to working conditions. These include reductions in notification times for rostering changes, changes to shift lengths and the scrapping of a number of allowances and entitlements, such as free train travel. Workers would be given as little as 24 hours’ notice for fluctuating start-times on shifts.

Most significantly, Aurizon is demanding the removal of restrictions on forced redundancies and relocations. This signals plans for widespread job destruction. Amid mine closures and plunging coal prices, Aurizon is seeking to drastically slash costs to boost profits at the expense of its workforce

Aurizon chief executive Lance Hockridge last week cited “a challenging operation environment” and declared the company was determined “to become “a simpler and leaner organisation.”

The company previously announced savings targets of $350 million by 2016 and driving down the operating costs-to-revenue ratio to 75 percent in order to produce a 25 percent profit margin. It then wants to cut the cost ratio to 70 percent by 2020.

This inevitably means further heavy job cuts. Since Aurizon took over the assets of QR National, which was privatised by the previous Queensland Labor government in 2010, it has cut its national freight workforce from 9,390 to 6,977.

Despite falling coal and iron ore haulage volumes, Aurizon still generated a $308 million profit for the six months to December 2014, up from $107 million for the corresponding period in 2013.

The company’s “transformation program” to reduce costs and drive up productivity contributed $69 million toward the profit. Another $40 million came from selling “surplus” maintenance facilities at Redbank, west of Brisbane. Aurizon shut down passenger train workshops in Redbank and Townsville destroying 480 jobs.

Aurizon is under increasing pressure from large mining companies to reduce haulage costs. In a submission to the Queensland Competition Authority last year, BHP-Billiton warned that high rail freight charges were “hurting coal miners”—that is, mining corporations.

Aurizon workers showed their determination to fight the company’s offensive by voting overwhelmingly for industrial action in ballots last December and by rejecting a company-drafted work agreement circulated by Aurizon last year.

While the rail unions have begun limited industrial action, past experience shows that such campaigns are designed to let off steam and give the unions time to come to an arrangement along the lines dictated by the company.

A similar modus operandi was used to contain and then dissipate the widespread opposition by rail workers to the Labor government’s privatisation of QR National and the job destruction that followed.

Last year, as the negotiations dragged on, Queensland RTBU branch secretary Owen Doogan complained that Aurizon “had been unwilling to seriously negotiate in order find a compromise on many of the key sticking points.” He did not elaborate on what he meant by “compromise.”

Over the past 12 months, rail unions have already signed off on regressive new work agreements covering Aurizon workers in New South Wales and Western Australia. An Aurizon spokesman boasted that about half of Aurizon employees nationally “are now on contemporary enterprise work agreements.”

Similar deals have been struck to cover Pacific National and BHP Mitsubishi Alliance rail workers in Queensland. “Both enjoy the kind of provisions that we are seeking,” Aurizon chief executive Hockridge told the Australian Financial Review .

Aurizon’s restructuring drive will be backed by the recently elected Queensland Labor government of Premier Annastacia Palaszczuk, which won office with the support of the trade unions. Last week, Palaszczuk met with leading business representatives to assure them of her government’s pro-business credentials, saying “our doors are open” and “we want to listen to you.”

Queensland Resources Council chief executive Michael Roche told the media he was “confident that a globally competitive resources sector will continue to enjoy bipartisan political support as an essential contributor to Queensland’s economy.”

In a front-page story on February 17, the Australian Financial Reviewhighlighted the potential impact of industrial action by Aurizon workers and declared that it was a “challenge” for Palaszczuk’s cabinet.

The government has not as yet intervened directly into the Aurizon dispute, preferring to rely at this stage on the ability of the unions to curtail any industrial action. That could rapidly change, however, given that big business has put the government on notice. Queensland Treasurer Curtis Pitt told the media: “We (the government) will continue to monitor developments.”