Sri Lankan pseudo-left dresses up US regime-change as a “democratic revolution”

K. Ratnayake

Wickremabahu Karunaratne, leader of the pseudo-left Nava Sama Samaja Party (NSSP), is engaged in a vile political campaign to present the election of Maithripala Sirisena as Sri Lankan president on January 9 as a “democratic revolution.”

The claim is absurd. Sirisena was until last November a senior minister in the previous government of President Mahinda Rajapakse and as such bears responsibility for all its crimes and attacks on the working class. Moreover, Sirisena is working arm-in-arm with Ranil Wickremesinghe, leader of the right-wing United National Party (UNP), who is now the prime minister. The whole regime-change operation was carried out with the backing of the United States, which has long been hostile, not to Rajapakse’s anti-democratic methods, but to his ties with China.

With a parliamentary election due in June and discontent with the new government growing, Karunaratne has become its apologist-in-chief. He sits on the National Executive Council (NEC), the government’s top advisory body, where he rubs shoulders with Sirisena and Wickremesinghe. A veteran of decades of opportunist alliances, Karunaratne has been handed the job of painting this right-wing, pro-US government in bright “democratic” colours as it prepares to attack the democratic and social rights of the working class.

As a general rule of thumb, the grubbier the political whitewash, the bigger the lies and historical falsifications. So it proves to be the case with Karunaratne.

In the press conference following his NEC appointment, Karunaratne likened the election victory of Sirisena to that of Sri Lanka Freedom Party (SLFP) leader S.W.R.D. Bandaranaike in 1956. Bandaranaike, he claimed, represented two bourgeois democratic trends in Sri Lanka—liberal democracy and village democracy.

Karunaratne declared: “Wickremesinghe brought liberal democracy. Sirisena clearly represented village councils, rural democracy. This is the unity that has come as a liberation force.”

These assertions are utterly false. Karunaratne has invented these tendencies—“liberal democracy” and “rural democracy”—out of thin air. They did not exist in 1956, nor do they exist today.

As Leon Trotsky demonstrated in his Theory of Permanent Revolution, the capitalist class in countries of a belated capitalist development such as Sri Lanka is organically incapable of carrying out the democratic tasks of the great bourgeois revolutions in the 18th and 19th centuries in Europe and America. The entire history of Sri Lanka is testimony to the correctness of Trotsky’s conclusion.

The NSSP leader spelt out his argument in greater detail in a column in the state-owned Ceylon Daily News: “Many people believe that in 1956 there was a change of government due to mass upsurge. It was not only a change of government but also a new democratic revolution where traditional villages gave a new lead to the revolution.”

In reality, there was nothing “democratic” or “progressive” about the coming to power of Bandaranaike in 1956. His anti-imperialist and socialistic demagogy was simply window-dressing for a reactionary nationalist program of Sinhala Buddhist supremacism aimed at dividing working people along communal lines.

Bandaranaike’s campaign was focused on making Sinhala the only official state language and giving a special status to Buddhism. The Sinhalese, Bandaranaike declared, were a “unique race.” On that basis, he mobilised support from layers of the Sinhalese petty bourgeoisie—Buddhist monks, indigenous doctors and small businessmen—who were looking to advance their interests.

It was no accident that Bandaranaike raised the banner of “Sinhala only.” In 1937, he formed the Sinhala Maha Sabha (Assembly of Sinhalese) to promote Sinhala communalism. At the time, Lanka Sama Samaja Party (LSSP) leader Colvin R. de Silva, as he turned toward Trotskyism, correctly warned that it was a “dangerously reactionary body” that had potential to become “local variant of brown Fascism.”

As part of the first UNP government after formal independence in 1948, Bandaranaike backed anti-democratic laws that stripped a million Tamil-speaking plantation workers of their citizenship rights. He quit the UNP to form the SLFP in 1951.

Far from being a “democratic revolution,” Bandaranaike’s election in 1956 had more the character of a counter-revolution directed against the working class. Sections of the ruling class swung their support behind Bandaranaike out of fear of the working class and the rural poor.

In 1953, a Hartal [a general strike and shop closures] called by the LSSP had shaken the bourgeoisie to the core and dealt a blow to the UNP government. What the LSSP planned as a one-day protest mushroomed into an island-wide uprising that forced the UNP cabinet to meet on a British warship in Colombo harbour.

After winning the 1956 election, Bandaranaike enacted his “Sinhala only” policy, stripping the country’s minorities of basic rights and provoking widespread protests by Tamils. The rural Sinhala petty bourgeoisie who Bandaranaike mobilised—Karunaratne’s so-called village democrats—mounted a series of anti-Tamil pogroms and eventually assassinated Bandaranaike when he baulked at implementing all their demands.

As proof of Bandaranaike’s “democratic revolution,” Karunaratne cites “the most important action” of his government—the signing of the Bandaranaike-Chelvanayagam Pact in 1957. The pact was a wretched deal with S.J.V. Chelvanayagam, leader of the Federal Party—the main party of the Tamil bourgeoisie—to establish regional councils for the island’s north and east and “reasonable status” to the Tamil language. Bandaranaike’s main aim was to quell the mounting Tamil protests.

Karunaratne blames the failure of the pact on the opposition of the LSSP and the Stalinist Communist Party. However, despite the backsliding of the LSSP in the 1950s from the principles of socialist internationalism, the party correctly opposed the poisonous and divisive “Sinhala only” policy and the Bandaranaike-Chelvanayagam Pact.

Karunaratne’s re-writing of the history of the 1956 election, and his embrace of a pact between the Sinhala and Tamil ruling elites at the expense of working people, demonstrate just how mired he and the NSSP are in the communal politics of the Sri Lankan establishment.

In opposing “Sinhala only,” the LSSP showed considerable foresight in warning that it would plunge the island into communal conflict. What it did not foresee is that its own actions in betraying the working class in 1964 by entering the bourgeois SLFP government of Bandaranaike’s widow—Sirima Bandaranaike—would open the door for such conflict.

In 1972, the LSSP was part of the SLFP-led government that brought in a new constitution enshrining Sinhala as the state language and Buddhism as the state religion, setting in train bitter communal divisions that were to erupt in 1983, under a UNP government, in a quarter century of civil war.

In his bid to invent an indigenous rural democratic tradition, Karunaratne drags in and falsifies Karl Marx. Like Bandaranaike, he declares, Wickremesinghe and Sirisena represent the unification of Western democracy and “Asiatic commune democracy.” He continues: “This Asiatic democratic heritage, as pointed out by Marx, was powerful enough to resist colonial powers and social restructuring imposed on villages.”

Marx and his co-thinker Frederick Engels did not speak of “an Asiatic democratic tradition” but an “Asiatic mode of production”—an “Asiatic despotism” that rested on primitive, self-contained villages or communes. This pre-capitalist economic formation proved to be highly resistant to change—a barrier to the development of the productive forces and social progress.

On top of village social relations mired in backwardness, caste and religion, an oppressive state structure arose that rested on taxes and tributes extorted from the rural population. Engels explained in Anti-Duhring: “Where the ancient communities have continued to exist, they have for thousands of years formed the basis of the cruelest form of state, Oriental despotism, from India to Russia.”

Engels emphatically rejected the claims of the Russian populists, the Narodniks, that socialism could arise on the basis of the village communes. “The Russian commune has existed for hundreds of years without ever providing the impetus for the development of a higher form of common ownership out of itself,” he wrote.

Karunaratne’s attempt to concoct a rural democratic tradition is even more ridiculous than the Narodniks’ glorification of the Russian commune over a century ago. Just as the growth of capitalist relations in Russia in the 19th century shattered the Russian commune, the imposition of British colonial rule in Sri Lanka and India long ago destroyed pre-capitalist relations in these countries.

Today, the villages are thoroughly integrated into Sri Lankan and international capitalism. The global corporations and banks that dominate the Sri Lankan economy penetrate into the village through a multitude of means, including the predatory activities of middlemen and loan sharks. The social divide between better-off farmers and landless day labourers has deepened. The village councils that Karunaratne hails as the basis for “rural democracy” were in fact established by the British as a means of colonial administration. Their counterparts today are dominated by the wealthier layers of the rural petty bourgeoisie.

Karunaratne’s promotion of “rural democracy” is not only false, but reactionary and dangerous. Workers and youth should take a warning from his claim that in 1956 the “traditional village gave the lead to the working class,” as it represented “commune democracy, coming from ancient village culture.”

Trotsky repeatedly explained that the peasantry cannot play an independent political role, but is compelled to follow either the bourgeoisie or the proletariat. In the Russian Revolution of 1905, the Tsarist autocracy, backed by the liberal bourgeoisie, was able to mobilise the peasantry, in the form of the army, to crush the working class. In 1917, the working class, under the leadership of the Bolsheviks, was able to win over the peasantry and establish the first workers’ state in the world.

In 1956 in Sri Lanka, Bandaranaike mobilised layers of the Sinhala rural petty bourgeoisie as a base of support for his government against the working class. Amid a rising wave of strikes, he strengthened the anti-democratic Public Security Act in March 1958 and shortly after imposed a 10-month state of emergency.

Karunaratne is invoking this experience under conditions of a far deeper crisis of capitalism in Sri Lanka and internationally to subordinate working people to the Sirisena-Wickremesinghe faction of the ruling class and cultivate a base of support among the rural petty bourgeoisie that will be directed against workers and youth. It should not be forgotten that Wickremesinghe was part of the UNP government that gave the green light to military-backed death squads to massacre 60,000 rural youth in 1988–1990.

The Socialist Equality Party warns that the Sirisena-Wickremesinghe government will be just as ruthless as Rajapakse in imposing the austerity demands of international finance capital and suppressing the resistance of workers and the urban and rural poor. The SEP is confident that the working class can win broad layers of the oppressed peasantry to its side in a revolutionary struggle to establish a workers’ and peasants’ government as part of the broader fight for socialism in South Asia and internationally. This requires a relentless struggle for the political independence of the working class from all factions of the bourgeoisie and their pseudo-left apologists such as Karunaratne.

Canada’s Bill C-51: A sweeping assault on democratic rights and legal principles—Part 1

Roger Jordan & Keith Jones

Bill C-51, Canada’s ostensible new anti-terror legislation, contains provisions that attack a vast array of key democratic and constitutionally protected rights.

More than 600 pages long, it would amend numerous existing laws to give the state and its national-security apparatus vast new powers. Under a new “disruption power,” Canada’s premier intelligence agency, the Canadian Security Intelligence Service, or CSIS, is to be empowered to carry out a vast array of illegal acts, with any person or group deemed a threat or potential threat to “national security” a possible target. Other measures would expand the state’s power to make “preventive arrests”—i.e., hold persons without charge; create a nebulous new category of prohibited political speech; and effectively remove all limits on the state’s sharing of personal information in security investigations. And there is more, much more.

The legislation’s scope gives the lie to the claim of Stephen Harper and his Conservative government that the bill is an anti-terrorism law. Combating terrorism is merely the pretext to justify the adoption of repressive measures directed against the entire population and especially the threat of mass working class opposition to the Canadian elite’s agenda of imperialist war and austerity.

Bill C-51 builds on the already expansive anti-terrorism provisions of the 2001 Anti-Terrorism Act. Rushed through parliament in the immediate aftermath of the 9/11 attacks by the Chretien Liberal government, the 2001 Anti-Terrorism Act created a new category of political crimes—based on a definition of terrorism so broad that it could be invoked against a political general strike or mass social unrest—subject to special rules and harsher sentences. The 2011 law overturned long-standing democratic juridical principles, allowing the state in “exceptional” circumstances to make “preventive” arrests and set aside the right of silence.

The Conservatives are seeking to railroad Bill C-51 into law, restricting debate at every stage of the parliamentary process. Though the trade union-based New Democratic Party (NDP) has made a point of declaring its opposition to the law, it has failed to expose its fundamental anti-democratic character. The NDP, as epitomized by party leader Thomas Mulcair’s announcement that an NDP government would amend not rescind the Harper government’s legislation, accepts its bona fides as an anti-terrorism measure, and has made the lack of parliamentary oversight of the intelligence agencies virtually the exclusive focus of its opposition to Bill C-51.

Even this has proven too much for Stephen Harper and his Conservatives. They have denounced the NDP’s comments as “extremist” and “conspiracy theories,” and the Liberals have echoed the Conservative line, with party leader Justin Trudeau attacking the NDP for “not once in its history” supporting “strengthening anti-terror measures in this country.”

The extent of the assault on democratic rights and legal norms that Bill C-51 represents is thus largely being concealed from the public.

Several legal experts have produced detailed analyses of the bill’s content that do contain valuable explanations of how its provisions threaten core democratic rights. Though they are by no means opponents of the Canadian state or even the further expansion of its coercive powers, Craig Forcese and Kent Roach, law professors, respectively, at the University of Ottawa and University of Toronto, have published a series of briefing papers criticizing various aspects of Bill C-51. The Canadian Centre for Policy Alternatives (CCPA), a liberal-social democratic think tank, has released its own overview of the anti-terrorism bill, authored by well-known civil rights lawyer Clayton Ruby and criminal and constitutional lawyer Nader Hasan.

CSIS’s new “disruption” power

The expansion of the Canadian Security and Intelligence Service’s (CSIS) powers is one of Bill C-51’s most ominous features. In addition to its already vast mandate to spy on reputed opponents of the Canadian government and state, CSIS is now to be empowered to disrupt “threats to the security of Canada” and to violate both the Canadian constitution’s Charter of Rights and Freedom and the Criminal Code in so doing.

CSIS’s new “disruption” power applies, as do many of the new or enhanced powers, in Bill C-51 to a new, unprecedentedly expansive definition of “national security,” of which terrorism is only a small subset. It includes threats to Canada’s economic stability” or critical infrastructure and “territorial sovereignty,” as well as espionage or anything that could endanger Canada’s diplomatic interests or challenge its constitutional order.

Bill C-51 provides for only three limitations on the illegal actions CSIS can carry out: they must not kill someone or cause them bodily harm, intentionally or due to criminal negligence; their “disruptions” must not willfully pervert the course of justice; and they must not violate someone’s “sexual integrity.”

Other than that, CSIS is being given carte blanche to do what it likes. “Disrupting” groups and individuals could include seizing or confiscating documents or property, tampering with bank accounts, pressuring employers to discipline or fire individuals, conducting vandalism or urging venues to cancel meetings or public events. It opens virtually unlimited possibilities for CSIS to carry out dirty tricks operations and provocations aimed at dividing and bringing public discredit on government opponents.

In an effort to downplay the risks in handing over such powers to CSIS, the government has sought to claim that they would never be deployed against“lawful” dissent or advocacy and artistic expression. But as the World Socialist Web Site has already noted in previous articles, the state has increasingly sought to criminalize political opposition through anti-worker laws, court injunctions and police repression. The volley of laws illegalizing strikes, the police attack on the 2010 G-20 protests, and the police violence and legislation (Bill 78) employed against the 2012 Quebec student strike all demonstrate just how narrow is the scope of “lawful dissent” in Canada.

Under Bill C-51, CSIS would be empowered to use its “disruption” power against workers who strike in defiance of an anti-strike law or court injunction, environmental groups blocking highways or protesting against pipeline construction, student sit-ins, and other forms of civil disobedience. Moreover, CSIS would be free to disrupt those it believed “may” potentially engage in such “unlawful” activity at a future time.

In justifying its illegalization of Canada Post, railway, and other strikes, the Conservative government has repeatedly denounced them as threats to Canada’s “economic stability.” This same formulation is now included in Bill C-51’s expansive definition of threats to the country’s “national” security, underscoring that this legislation has been drafted very much with a view to preparing the state’s response to working class opposition.

Bill C-51 offers virtually no mechanism to monitor, let alone restrain CSIS’s use of its “disruption” powers. The requirement that CSIS obtain a warrant from a judge—that is from a government appointee sworn to the defence of the Canadian capitalist state—in a secret proceeding is more an open door than a hurdle.

Under Bill C-51, the judiciary is instructed to grant CSIS “disruption” warrants if there are reasonable grounds to believe that CSIS will be able “to reduce a threat to the security of Canada” and the measures it proposes are reasonable and commensurate with the threat.

In their review of Bill C-51 for CCPA, Ruby and Hasan correctly warn that such a determination is entirely subjective. Unlike a request for a search warrant, it cannot be determined on the basis of an objective review of evidence: “It amounts to asking judges to look into a crystal ball to determine if Canada will be safer in the future if a CSIS officer takes some measure.” Ultimately, warn Ruby and Hasan, the most likely outcome is that the intelligence agencies will be permitted to act as they see fit given that they are deemed to be the security “experts.”

Furthermore, the decision of whether to even apply for a warrant is left up to CSIS itself, meaning that they will be determining if a proposed action breaks the law. As is well known, Canada’s intelligence agencies, with the government’s support, have repeatedly sought to arrogate new powers—as in the Communication Security Establishment’s assertion that it has the right to systematically spy on the metadata of Canadians’ electronic communications.

Should CSIS deem it necessary to get judicial authorization, the system being proposed by the government for obtaining a warrant would take place behind closed doors, without the individual or group being targeted having an opportunity to defend themselves. As Forcese and Roach observe in their second background paper on Bill C-51, “all these weighty legal deliberations will be done in secret, with only the judge and the government side represented. The person affected by the illegal activity will not be there, in fact they will likely never know who visited the misfortune on them. They cannot defend their rights. No civil rights group will be able to weigh in.”

And the decisions once reached will, by law, remain secret on national security grounds, with at most in exceptional circumstances vetted summaries issued years after the fact. As Forcese and Roach go on to warn, “We risk a secret jurisprudence on when CSIS can act beyond the law.”

As these authors observe, these vast powers are being handed to an organization that has repeatedly displayed “a failure to be candid” in court proceedings. Indeed, CSIS lied to the courts over a period of several years in hearings where warrant applications were made to enable CSIS to collaborate with the Communication Security Establishment (CSE) and its partners within the US-led “Five Eyes” to intercept the electronic communications of Canadian terrorism suspects who had traveled abroad.

So “incredibly expansive” are the disruption powers CSIS would be granted under Bill C-51and so minimal the restraints on the illegal activities they could engage in, Ruby and Hasan contend that Canada’s secret police could “legally” engage in torture, “including water boarding, inflicting pain, torture or causing psychological harm to an individual.”

FCC ruling sides with tech companies on “net neutrality”

Mike Ingram

The 3-2 vote of the Federal Communications Commission (FCC) February 26, in favor of new telecommunications rules has been hailed as a landmark ruling that will ensure “net neutrality,” defined as equal access to the Internet for all content providers. The reality is more complex and far less positive.

The FCC’s latest proposal does bar broadband service providers—giant companies like Comcast and the major telecoms that control so-called last-mile access to the Internet—from discriminating between different forms of content, either by offering price discounts or faster traffic speeds.

But the other major set of corporate giants, technology companies like Google, Yahoo and Netflix, will retain their monopoly control of over search and content provision. And the most dangerous enemy of a genuinely free Internet, the US government, with its vast panoply of spy agencies vacuuming up all web content, may gain additional authority over the Internet via the FCC itself.

By reclassifying broadband Internet services as a “telecommunications service” under Title II of the Communications Act, the ruling puts Internet Service Providers (ISPs) under the same regulatory framework as telecommunications. Given the monopolization and price gouging that prevails in that industry, the hosannas over the FCC ruling by some advocates of net neutrality are both premature and exaggerated.

The exact language of the rules has not yet been made public, but from the statements issued by the FCC, the two main changes from an early decision in 2010—subsequently thrown out in a court challenge—were the reclassification under Title II, and the decision to apply the ruling to mobile as well as fixed-line broadband services.

Net neutrality is a set of principles designed to prevent restrictions by Internet Service Providers (ISPs) and governments on content, sites, platforms or the kinds of equipment that may be used to access the Internet. Legitimate concern over the monopoly of broadband giants such as Comcast has generated broad support for net neutrality among online activists. The issue has prompted several online protests over recent years, including the so-called Internet slowdown of September 10 last year, when over 40,000 web sites solicited calls to senators and over 4.7 million comments to the FCC.

Following the February 25 vote, the site battleforthenet.com, which had played the major role in instigating the “slowdown,” proclaimed an “epic victory” stating, “Washington insiders said it couldn't be done. But the public got loud in protest, the FCC gave in, and we won Title II net neutrality rules. Now Comcast is furious. They want to destroy our victory with their massive power in Congress. You won net neutrality. Now, are you ready to defend it?”

Such an analysis ignores the equally “massive power” of the tech industry both in Congress and in the Obama administration. A lengthy article published by the Washington Post March 1 describes Silicon Valley as “the new revolving door for Obama staffers.”

The article notes that the FCC decision “marked a major win for Silicon Valley, an industry that has built a close relationship with the president and his staff over the last six years.” The tech industry has “enriched Obama's campaigns through donations” and “presented lucrative opportunities for staffers who leave for the private sector.”

The day of the FCC ruling, former White House press secretary Jay Carney joined Amazon as a senior vice president for global corporate affairs. Former Obama campaign manager David Plouffe now runs policy and strategy for car service start-up Uber. Facebook hired Marne Levine, chief of staff to former National Economic Council director Lawrence H. Summers. Airbnb has three former White House press staff on its books.

The revolving door goes both directions, with a large number of Silicon Valley executives heading to Washington for stints in the Obama administration. Facebook co-founder Chris Hughes helped create Obama's online campaign and Google's former vice president of global policy, Andrew McLaughlin worked on its tech policy agenda, according to the Post. McLaughlin later joined the Obama administration as a deputy to the chief technology officer. Obama's former deputy chief technology officer Nicole Wong was an executive at both Twitter and Google. Megan Smith, the current chief technology officer was previously at Google and the director of patent and trademark office Michelle K. Lee was an intellectual property lawyer for Google.

It is this relationship with the technology giants rather than any genuine concern for democratic rights on the Internet that explains Obama's intervention in net neutrality dispute. In November last year Obama called on the FCC to take up the “strongest possible rules” to protect net neutrality.

Obama’s real attitude to Internet freedom was exposed by the revelations of Edward Snowden, who documented the mandate of the National Security Agency to “collect it all”—in other words, capture the entire content of all the world’s Internet activity in order to analyze and profile all potential opponents of the American government, above all, political opposition from the working class.

Both tech companies such as Google and Yahoo, as well as telecommunications giants like Comcast and AT&T are deeply implicated in the mass spying on the US and global population by the NSA. They routinely hand over data when asked and only expressed any concern once the extent of this was made known by Snowden.

German government to increase its military budget

Philipp Frisch & Johannes Stern

The German government wants to raise the defence budget starting in 2017 and massively expand the armed forces. Finance Minister Wolfgang Schäuble made the announcement in an interview that appeared in the Sunday edition of Bild. “Naturally, in light of the crises and instability in the world, we will have to shoulder higher defence costs in the coming years,” said Schäuble, adding “in the short term, that is, in the coming year, we can only do very little to raise the defence budget, because industry cannot accommodate such an large arms project so quickly.” Starting in 2017, however, the defence budget will be raised, he said. Additional funds must be made available for development and domestic security.

The finance minister’s announcement that the defence budget will be increased and a “large arms projects” set in motion is the next step in the implementation of plans by the ruling elite to rebuild the military and prepare to wage war, in the face of overwhelming popular opposition. More than a year after the German government announced the “end of military restraint” at the Munich Security Conference 2014, and after months of campaigning by the media for more weapons and more military engagements abroad, the time has come to put this plan into action.

The first concrete step came Wednesday, when the German parliament (Bundestag) approved a multibillion-dollar contract with Airbus to supply 168 military helicopters to the German army, at a cost of €8.7 billion. Both the Christian Democratic Union and the Socialist Democrats backed the purchase. The opposition parties, which normally support military spending, voted against the deal, but only because the cost has increased significantly.

In an interview with the official magazine of the armed forces, Defence Minister Ursula von der Leyen (Christian Democratic Union, CDU) repeated her demand for a massive arms programme in line with the government’s new aggressive military doctrine.

She told the magazine that last year “the question justifiably arose repeatedly whether there is adequate deployable manpower and equipment.” The armed forces must “permanently modernise themselves and adapt to keep pace with changing parameters,” von der Leyen said.

“If one looks at the entire process of building up the armed forces, we’re talking about a total cost of 200 billion euros,” said the defence minister. Everyone can see “billions are needed every year along with continual planning in order to maintain and renew our inventory.” Her perception is that “the army has built up an enormous deficit in investment with regard to modern working conditions and equipment. We have to work on this.”

In the course of the interview, von der Leyen made it clear what she meant. As a NATO framework nation and in other alliances, the army must naturally “always maintain an appropriate breadth of military capabilities, such as for example as NATO spearhead, or in the leadership of the education missions in northern Iraq or in Afghanistan.”

It is important to her “that the armed forces is not just good on paper, but also that it can put its ability to achieve into practise and prove itself.” And this of course has “a lot to do with readiness.”

In other words, the armed forces needs more new weapon systems and must modernise the equipment already available. “The equipment that is available to the troops for practise and operations on the ground has clearly already been reduced in the past,” the minister complained. The army cannot be permitted to “slip into a state of bad management that increasingly undermines basic operations and training.”

Von der Leyen once again conjured up the catastrophe scenario that has been repeated tirelessly by a complicit media for months. News stories about the dilapidated equipment of the armed forces have appeared over and over again.

The minister pledged to “stop this downward trend. She questioned both the cap on the number of troops and the ceiling for “large equipment” with the corresponding estimate of 225 Leopard 2 battle tanks and 350 Puma armoured personnel carriers in 2011. And she announced concrete measures.

With regard to the tank battalions, for example: “instead of discarding and scrapping functional Leopard 2 tanks, we should consider whether we can integrate the available equipment into existing structures.”

At the Bergen army camp in Niedersachsen, a demobilised tank battalion is to be reactivated. Concretely, that means that after the withdrawal of the British armed forces in 2016, at least a thousand soldiers and 44 Leopard tanks of the tank battalion 414 will be stationed in Bergen. All together, the armed forces currently have more than four other active and another demobilised tank battalion at its disposal.

Von der Leyen drew a connection between the strengthening of the tank battalions and the mobilisation of NATO forces in eastern Europe for confrontation with Russia: “With the rapid spearhead, for example, we will have to make it possible to be ready for deployment in between two and five days. That is totally different from the 180 days time-frame we used to have.” For this reason, we need “more equipment, for example in the case of the tanks,” which have to be “available immediately.”

The infrastructure of the armed forces is also, according to von der Leyen, “literally a huge construction site.” Up to €4 billion will be invested in it already by the end of 2017. There is “an immediate action programme for the renovation of barracks, which will take care of the worst and most urgent inadequacies.”

South Korean president calls for Japanese apology

Ben McGrath

South Korean President Park Geun-hye delivered a speech last Sunday marking a key anniversary in Korea’s independence movement from Japan. Park renewed calls for Tokyo, which colonized Korea from 1910 to 1945, to admit to its past war crimes and issue apologies.

Sunday’s holiday commemorated the March 1 Movement of 1919, when mass protests erupted throughout the Korean Peninsula against Japanese rule. Two million people took part in demonstrations that lasted for several months. Japan cracked down heavily on the protests, killing 7,000 people and arresting 46,000.

Park criticized Prime Minister Shinzo Abe’s Japanese government for its campaign to rewrite history and whitewash the war crimes committed by the Japanese army in the 1930s and 1940s. She called in particular for Abe to apologize for the use of comfort women, a euphemism for sex slaves. During the war, the Japanese military, often with the aid of middlemen, forced or coerced approximately 200,000 women into “comfort stations,” where they were required to have sex with soldiers.

However, compared to previous speeches as president on the anniversary, Park seemed to pull her punches, offering a more conciliatory tone toward Tokyo. Pointing to Germany and France as examples, the South Korean leader said both countries “have in the past managed to surmount conflict and enmity and jointly lead the establishment of a new Europe,” adding: “I hope Japan will now accept the historical truth in a brave and honest manner and join hands with Korea to write a new history as partners for the 50 years ahead.”

Saying Tokyo and Seoul were “important neighbors that are endeavoring together to pursue peace and prosperity in Northeast Asia,” Park highlighted their bilateral trade, which last year surpassed $86 billion, as well as their cultural exchanges. All these points were left out of previous speeches.

The US government has been applying pressure behind the scenes, pushing Park to find common ground with Japan. According to a February 16 Wall Street Journal article, a South Korean diplomat stated that relations between South Korea and Japan were the worst he had seen in 40 years.

Washington has grown frustrated with the discord between its two key allies in northeast Asia. The tensions are cutting across the US “pivot to Asia,” which both South Korea and Japan have endorsed. The “pivot” is aimed at surrounding China, both economically and militarily, in order to isolate Beijing and force it to accept the US’s global hegemony. Washington views collaboration between Seoul and Tokyo as critical for its war preparations.

Speaking in Washington last Friday, Wendy Sherman, US Under Secretary of State for Political Affairs, indirectly chastised Seoul. “Nationalist feelings can still be exploited, and it’s not hard for a political leader anywhere to earn cheap applause by vilifying a former enemy,” she said. “But such provocations produce paralysis, not progress.”

Both major parties, the ruling Saenuri Party and main opposition New Politics Alliance for Democracy (NPAD), criticized Sherman’s remarks. “For stability and peace in Northeast Asia, the United States should abandon its vague stance and take a fundamental approach to conflict resolution,” the Saenuri Party’s Kim Eul-dong said. NPAD lawmaker Jeon Byeong-heon called Sherman’s comments “truly deplorable.”

Washington played down the remarks. At a March 2 briefing, State Department deputy spokeswoman Marie Harf said of Sherman’s comments: “It does not represent any change in US policy—her remarks in no way reflect a change in US policy—and were not intended to be about any one person or one country.”

Neither party truly cares about the victims of Japanese imperialism. Referring to the former comfort women, Park stated in her speech: “The human rights issue of the survivors is an historical task that must be resolved. There is little time left to restore the honor of victims because their average age is reaching 90.”

The truth is that South Korean governments regularly exploit the comfort women and other historical issues to whip up anti-Japanese sentiment to distract from declining conditions at home, like rising unemployment and a lack of quality jobs.

Last year, youth unemployment reached a record high, standing at 9 percent, although the real number is likely to be much higher. Statistics Korea last October announced that the “real” total unemployment rate was 10.1 percent. Officially, only 3.5 percent of workers are considered unemployed, but this does not count the under-employed or those who have given up looking for work.

Park’s condemnations of Japan also serve to obfuscate the roles of Koreans who willingly served Japanese imperialism. These include Park’s own father, the brutal dictator Park Chung-hee, who was in power from 1961 to 1979.

Korean police and other agents assisted the Japanese army to coerce women into the “comfort stations.” Others, like the elder Park, who served in Japan’s Kwantung Army in Manchuria, at the very least must have been aware of the sex-slave system but did nothing to help these women after World War II.

In the years following the war, Seoul not only turned a blind eye to, but actively encouraged, desperately poor young women to engage in prostitution with US soldiers. In 1962, Park Chung-hee designated red-light areas near US bases as “special tourism districts.”

Last June, 122 elderly women sued the South Korean government, saying that when they worked as prostitutes decades ago, police prevented them from leaving. They alleged that the US and South Korean governments regularly inspected the brothels, imprisoning anyone who contracted a sexually transmitted disease. Many of these women still live in poverty today, attempting to survive on government stipends of $300 to $400 a month.

US Ambassador to South Korea slashed in knife attack

Ben McGrath

US Ambassador to South Korea Mark Lippert was attacked by a solitary assailant wielding a knife in Seoul on Thursday. The ambassador suffered large cuts, but his wounds are not life threatening. The attack is being seized upon by the South Korean media to denounce “left-wing extremism.”

The attack occurred around 7:40 a.m., as Lippert was on his way to give a speech at the Sejong Center for the Performing Arts in downtown Seoul. The event was organized by the Korean Council for Reconciliation and Cooperation. Lippert received five cuts including an 11-cm gash on his cheek, which required 80 stitches to close, and another smaller wound on his left arm.

He was taken to nearby Severance Hospital where he underwent surgery and is in a stable condition. Following surgery, the ambassador posted on his Twitter account, “Will be back ASAP to advance US-ROK (Republic of Korea) alliance!”

Lippert is close to President Obama, having worked as a navy intelligence officer and as the National Security Council’s chief of staff. He took his position as ambassador last October.

South Korean President Park Geun-hye, who is currently in the Middle East, called Lippert to express her concern. She condemned what she called an “attack on the South Korea-US alliance.”

The attacker, an apparently unhinged man named Kim Gi-jong, was immediately arrested at the scene as he denounced ongoing war games by US and South Korean forces. Prior to assaulting Lippert, he shouted, “South and North Korea should be reunified!” After his arrest, he said, “I carried out the terror attack. I have prepared to disseminate leaflets to oppose the [South Korea-US] military exercise for a war.”

Kim apparently was referring to the Key Resolve and Foal Eagle exercises—annual war games by US, South Korean and allied forces aimed at North Korea, that take place in spring. They began this year on Monday and are a key part of Washington’s “pivot to Asia” aimed at isolating and threatening China.

Kim was taken away on a stretcher after apparently having his ankle broken as he was being detained by security officials. He was denied medical attention for three hours as police questioned him. “We considered the gravity of the issue and that the act could be seen as terrorism,” an unnamed prosecution official stated.

Kim’s lawyer, Hwang Sang-hyeon stated yesterday, at the Seoul Jongno police station where Kim was held, that his client “was unaware of how deep Lippert’s injuries would be and that he had attacked the ambassador without any particular feelings towards Lippert himself.” He was “sounding an alarm in America,” Hwang said.

The Stalinist regime in North Korea issued a provocative statement hailing the attack as a “just punishment for US warmongers.”

Such individual acts of violence aimed at state officials are reactionary and have nothing to do with socialist politics. The comments both of the attacker and of the North Korean regime play right into the hands of the most aggressive factions in the US and South Korean governments.

Park’s government has already disbanded one political party, the Unified Progressive Party, in December while seeking the dissolution of other groups, all under the pretext that they support North Korea. Kim’s reactionary attack and North Korea’s approval of it will only allow Seoul to step up its anti-democratic campaign against political opposition.

Police and prosecutors are attempting to establish a connection between Kim and North Korea. Given Kim’s past and his ties to President Park’s conservative Saenuri party, however, it seems unlikely that Kim acted on the orders of the North Korean regime.

Kim was well-known to South Korean police and has a history of such acts. He carried out an attack on Japanese Ambassador Toshinori Shigeie in 2010. In that attack, he threw two pieces of concrete at the Japanese envoy, but struck an embassy interpreter instead. Kim received a two-year prison sentence which was suspended for three years.

He also attempted to erect a memorial to Kim Jong-il in 2011, after the North Korean leader’s death in December of that year. Kim’s home and offices have also been raided by police. Kim had previously visited North Korea six times between 2006 and 2007.

He reportedly has ties to the Korean Council for Reconciliation and Cooperation, an NGO with close ties to the South Korean government. The head of the group, Hong Sa-deok, resigned following the attack. Hong is a former Saenuri Party lawmaker and a close ally of President Park Geun-hye.

Speaking anonymously, a police official told the media that they did not think Kim would be present at Thursday’s event.

Kim also stated that he was the head of a nationalist group known as Woorimadang, or Our Land, which often protests against Japanese claims to the Dokdo Islets, a rock formation approximately half way between Japan and the Korean Peninsula in the Sea of Japan. The South Korean bourgeoisie regularly utilizes this dispute to whip up anti-Japanese sentiment to distract from the social crisis at home.

The United States government did not directly link the attack to North Korea, as South Korean media did. Marie Harf, the deputy spokeswoman for the State Department, released a statement saying, “The U.S.-ROK alliance is strong; we will not be deterred by senseless acts of violence.” She added, “We cannot speculate on a motive at this time.”

Washington appears to be treading carefully. While Kim’s actions are not supported by a majority of South Koreans, there is broad popular opposition to US military escalation in the region, as well as to the reactionary role of US imperialism in dividing the Korean peninsula after World War II.

The attack comes less than a week after Wendy Sherman, the Under Secretary of State for Political Affairs, seemed to chastise Seoul for earning “cheap applause by vilifying a former enemy”—a comment that many saw as blaming South Korea for its current tense relations with Japan, another key US ally in the region.

Greek debt crisis sharpens geostrategic tensions between US, Europe, Russia

John Vasilopoulos

The threats by eurozone officials to financially strangle Greece by cutting off credit it needs to finance its debt are heightening military and geostrategic rivalries between the major powers.

If credit were cut off, Greece would face either the risk of a collapse of its financial system or of a return to its national currency, the drachma, whose value would likely plunge on currency markets. Last month, Syriza responded by capitulating to EU demands for austerity and issuing a list of new budget cuts attacking the working class. Syriza’s capitulation reflects the consensus in the Greek capitalist class that, for now, it can best pursue its class interests and its austerity offensive against the working class within the framework of the EU, the euro, and the NATO alliance.

Amid the discrediting of EU austerity policies and continuing tensions inside the EU, however, the risk of a Greek default remains. This could compel Greece to seek hard currency—that is, dollars or euros, to import key products like oil and gas traded on international markets—from other sources such as the United States, but also possibly Russia or China.

In this fraught context, with wars spreading across areas of Eastern Europe and the Middle East near Greece, powerful geostrategic tensions between the major powers are coming to the fore. The Greek ruling class has sought to exploit the threat that Athens might develop closer ties to Russia or China, in a so far unsuccessful attempt to press for better terms for itself from the EU.

Last month, Panos Kammenos, leader of Syriza’s right-wing coalition partner, the Independent Greeks, said in a TV interview, “What we want is a deal. But if there is no deal—hopefully there will be—and if we see that Germany remains rigid and wants to blow apart Europe, then we have the obligation to go to Plan B. Plan B is to get funding from another source. It could be the United States at best, it could be Russia, it could be China or other countries.”

On February 20, as his government signed the austerity agreement, Greek Prime Minister Alexis Tsipras spoke aboard a Chinese warship visiting the Greek port of Piraeus, whose container docking terminal the China Ocean Shipping Company (Cosco) has acquired on a 35-year lease. With Cosco the lead contender in an upcoming bid to privatise the Piraeus Port Authority, Tsipras said: “We give special importance to the existing Chinese investments in Greece, including the important activities of Cosco at Piraeus Port.”

As NATO seeks to crush Russian influence amid bloody wars in nearby Ukraine and Syria, some in the Western media have openly raised that a Greek default could risk undermining the integrity of the NATO alliance.

In an article last month titled “Keeping Greece in the euro is about far more than money,” the Financial Times of London pointed to these concerns. “When European leaders talk about Greece, they speak the language of economics, no matter what their mother tongue,” the FT wrote, adding however that, “Geopolitics, far more than economics, is what is at stake. The cost of a blunder would be incalculable.”

Greece occupies a highly strategic location in the eastern Mediterranean. It controls the Aegean Sea, thus controlling transit between the Mediterranean and Black Seas, as well as islands close to Syria and to shipping lanes coming out of Egypt’s Suez Canal. The Aegean Sea is estimated to hold over four billion barrels of oil, fuelling the historic tensions between Greece and neighbouring Turkey.

Greece plays a central role in the military planning of the major NATO powers. Its proximity to the Black Sea and Ukraine make it integral to NATO's intervention in the Ukraine crisis, which has involved frequent US naval deployments to the Black Sea and a major build-up of NATO forces in Eastern Europe.

Greece also plays a significant role in NATO interventions in the Middle East. It “has more than 200 fighter jets and 1,000 tanks. NATO facilities include a military base in Crete that was used during the airstrikes on Libya in 2011,” according to Bloomberg News.

These geostrategic interests are fuelling inter-imperialist tensions inside the NATO alliance, as well as between NATO and Russia. While there is agreement among Western powers that the burden of Greece’s debt to the banks must be borne by the working class, there are divisions on how this should be implemented.

Washington reportedly considers that Berlin’s intransigence against Greece underestimates the geopolitical fallout that could result from a Greek default. According to the Economist, “America has often put discreet pressure on its European allies to avoid a rift with Greece, as much because of geopolitics as economics.”

The confrontations between Washington and Moscow over wars in Syria and Ukraine are in fact only the most visible and bloodiest components of a power struggle between NATO and Russia throughout the entire region, including in Greece itself.

With Russia's economy crippled by Western sanctions and with oil prices at rock bottom, Moscow has for now ruled out giving financial aid to Greece. Nevertheless, ties between the two countries remain strong.

As Greek Foreign Minister Nikos Kotzias visited Moscow last month, his Russian counterpart Sergei Lavrov hailed “very good prospects” for Greek participation in the Turkish Stream pipeline, which will transport Russian gas across the Black Sea, through Turkey, and to the Greek border.

Russia recently renewed a defence agreement with Greek Cyprus, during a four-day visit by Cypriot President Nikos Anastasiades to Moscow. The agreement allows Russian warships to use Cypriot ports, offering an alternative to the port of Tartus in war-torn Syria, 205 kilometres east of the Cypriot port of Larnaca. Tartus is currently Russia’s only remaining military base outside of the former USSR and the Russian Navy’s only fuelling spot in the Mediterranean.

The agreement provoked the ire of Washington, with State Department spokesperson Marie Harf stating, “We stressed with our European allies and partners the importance of unity in pressing Russia to stop fuelling conflict in eastern Ukraine. That is certainly something we feel very strongly about.”

The Syriza-Independent Greeks government itself plays a reckless role in the region, stimulating tensions with Turkey, Greece’s historical antagonist in the region. Last month, Greek Defence Minister Panos Kammenos declared that Cyprus remains a subject of “invasion and occupation,” attacking the presence of the Turkish seismic vessel Barbaros in Greece’s Exclusive Economic Zone in the eastern Mediterranean as a “provocation.”

Kammenos said that Greece plans to conduct joint drills with the Greek Cypriot administration, Israel and possibly Egypt in the coming months.

This week protests by Greece led to a climbdown by Turkey over planned military manoeuvres in the Aegean Sea involving reserving airspace that would cut off the Greek islands of Skiros and Lemnos.

US Supreme Court hears challenge to Obamacare subsidies

Kate Randall

The US Supreme Court heard oral arguments Wednesday in a case challenging the provision of subsidies to purchase health care insurance under the Affordable Care Act (ACA) in at least 34 US states. The Court is expected to deliver its ruling in late June.

A ruling favoring the plaintiffs could cripple the law popularly known as Obamacare by causing up to 7.5 million people to lose the tax subsidies that help them purchase health care coverage on the federal exchange set up under the ACA.

At issue is a four-word phrase in the 900-page ACA legislation, which reads that subsidies are available to those buying insurance on exchanges “established by the State.” Only 13 states and the District of Columbia fully operate their own exchanges. The federal government controls 34, and three states that originally established exchanges later turned over enrollment to federal authorities.

The Obama administration contends that in the context of the law’s language the subsidies are available for those purchasing coverage on the federal exchange, not just the state exchanges.

Under the “individual mandate” of the ACA, those who are not insured through their employer or through a government program such as Medicare or Medicaid must obtain insurance. This provision forces individuals and families, under threat of substantial tax penalties, to purchase health insurance from private insurers on the Obamacare exchanges.

The suit before the high court, King v. Burwell, is financed by the Washington-based libertarian group Competitive Enterprise Institute. The plaintiffs, four residents of Virginia, one of the states utilizing the federal exchange, argue that they do not want to buy health insurance. If not for the subsidies, they would qualify for an economic hardship exemption from the tax penalty for failing to obtain health insurance—thus they would be able to not purchase insurance and not have to pay a penalty.

Two federal appellate courts have heard challenges to the subsidies. The D.C. Circuit ruled 2-1 in favor of the plaintiffs, and the Fourth Circuit ruled 3-0 in favor of the government. The Supreme Court will resolve the disagreement between the circuits.

This is the third major suit challenging aspects of the ACA brought before the high court. The court ruled 5-4 on June 28, 2012, to uphold key provisions of the health care legislation, including the reactionary individual mandate, while ruling that the federal government could not force states to expand Medicaid by withdrawing existing funding for the health care program for the poor.

In a 5-4 ruling striking a blow against First Amendment rights on June 30, 2014, the Court held that private corporations can deny their workers insurance for birth control, coverage otherwise required under the ACA, as long as the corporate owners claim their religious beliefs oppose contraception.

On Wednesday, the nine Supreme Court justices heard 85 minutes of arguments in King v. Burwell. Justice Anthony Kennedy, a conservative who often casts the deciding vote in close cases, raised concerns to lawyers on both sides about the possible negative impact on states if the Court rules against the government.

Addressing Michael Carvin, attorney for the plaintiffs, Kennedy asked whether, in the event that the subsidies were invalidated, the states would be told “either create your own exchange, or we’ll send your insurance market into a death spiral.” Lacking the subsidies, most of the 7.5 million people previously qualifying for them could not afford coverage. Without enough paying customers, the health insurers’ profit margin would be hit by the costs of insuring those who under the ACA can now buy insurance regardless of preexisting conditions.

While voicing some reservations about the challenge, Kennedy also said he was concerned by how the administration had implemented the law. He did not, however, make clear how he would rule in this case. Chief Justice John Roberts, who provided the key vote in the ruling upholding the ACA in 2012, said little to signal how he might vote.

The four “liberals” on the court—Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan—all appeared supportive of the Obama administration during questioning. Their statements were motivated in the main by the desire to uphold the pro-corporate character of Obamacare and fear that knocking down the subsidies would threaten the entire enterprise with collapse.

Breyer asked Carvin about the effect on the ACA more broadly if the language, “established by the State,” were interpreted to mean only state-based exchanges. Based on that reading, he suggested, no one in a federal exchange would be considered “qualified” to buy coverage. Kagan alluded to the possibility that “there will be no customers and, in fact, there will be no products” on the exchange.

Ultra conservatives Antonin Scalia and Samuel Alito asked questions generally sympathetic to the plaintiffs. In keeping with prior performances, Clarence Thomas had nothing to say. Alito asked Solicitor General Donald Verrilli, representing the Obama administration, whether the ACA might be rendered unconstitutionally coercive if it forced states to either set up exchanges or deny benefits to its citizens.

Verilli responded that this was “another very powerful reason to read the statutory text our way” and that the plaintiffs’ restrictive view of who should receive subsidies would render the ACA “an incoherent statute that doesn’t work.” He also warned the Court that a ruling for the plaintiffs would have disastrous consequences, causing premiums to skyrocket and plunging many states’ individual insurance markets into chaos.

Scalia replied, “What about Congress? You really think that Congress is just going to sit there while all of these disastrous consequences ensue?” Republican Congressional leaders, in fact, have worked to convince the Court that they would come up with a remedy in the event that the justices rule against the subsidies.

Republican Sen. Orrin Hatch of Utah and Rep. Paul Ryan of Wisconsin—who were present in the courtroom—both recently published op-eds saying they would propose a fix allowing people to keep their coverage, possibly including a temporary extension of the Obamacare subsidies, if the Court rules against the subsidies.

The Republicans’ opposition to Obamacare from the right, and their posturing as the defenders of citizens’ rights against “big government” intervention into their health care decisions, is only possible due to the thoroughly reactionary character of Obama’s signature health care “reform.”

Among other notables present at Wednesday’s oral arguments were House Minority Leader Nancy Pelosi (Democrat of California), Health and Human Services Secretary Sylvia Burwell and former HHS secretary Kathleen Sebelius, who presided over the botched rollout of the HealthCare.gov web site. Leading Democrats fear a ruling for the plaintiffs in King v. Burwell would threaten a further unmasking of the Obama administration’s chief legislative achievement.

That Obamacare could be upended by the Supreme Court decision underscores the fact that the entire program is predicated on and subordinated to the profit interests of the giant insurance companies, who have control over who is insured and what they must pay for coverage.

This is an essential feature of the administration’s principal domestic initiative: a reactionary piece of legislation aimed at cutting costs for big business and the government, boosting the profits of the health care industry, rationing health care for the vast majority of ordinary Americans, and promoting an even more heavily class-based health care system.

China cuts growth forecast, warning of “deep-seated” economic problems

Nick Beams

The Chinese government has lowered its official projection for economic growth this year to “approximately 7 percent” following a year that saw the lowest economic expansion in a quarter of a century.

Chinese Premier Li Kequiang announced the target in his opening address to the annual National People’s Congress which began in Beijing yesterday.

Presenting a gloomy outlook for the world’s second largest economy, he said: “The downward pressure on China’s economy is intensifying. Deep-seated problems in the country’s economic development are becoming more obvious. The difficulties we are facing this year could be bigger than last year. The next year is a crucial year for deepening all-round reforms.”

In a further sign of economic problems, Li said the government planned this year to run its biggest deficit since the global financial crisis. The deficit will rise to 2.3 percent of gross domestic product this year, compared to 2.1 percent last year. Some of the additional money will be spent on railway, water and agricultural projects, but the chairman of the government’s economic planning agency Xu Shaoshi said it should not be seen as a “massive stimulus.”

Li said the new growth target was what was needed and what was possible, adding that China’s growth model was inefficient and that “difficult structural adjustments” were necessary in order to absorb the effects of previous stimulus measures.

As part of “restructuring,” the government is pushing ahead with measures to reduce its control of the giant state-owned enterprises that dominate much of the economy. It also plans to further open the country’s financial system. This is certain to intensify conflicts within the ruling elite. Significant economic and political power brokers, resting on state-owned enterprises, are the target of a corruption purge led by President Xi Jinping.

The new target of just 7 percent growth is considered by many commentators to be inflated, with real growth probably around 2 or 3 percentage points lower. It is politically significant given that the government has stated in the past that growth of at least 8 percent is needed to maintain “social stability.” The government fears that slowing growth and the consequent increase in unemployment will bring about major struggles by the working class.

Li alluded to these fears, at least obliquely, saying that in order to “defuse problems and risks” China relied on development that required an “appropriate growth rate.” However, at the same time, he continued, “China’s economic development has entered a ‘new normal.’”

The new target is also a reflection of major problems in the world economy as a whole. It underscores the fact that the massive quantitative easing programs of the world’s central banks, which will be further extended when the European Central Bank begins a bond-purchasing program next week, have done nothing to boost real growth. They have served only to fuel parasitism, currency wars and speculation.

Furthermore, it shows that far from providing a new platform for economic expansion, the Chinese economy is being afflicted by the same tendencies that have emerged on a global scale, expressed most sharply in deflationary pressures. Li said that the government was lowering its inflation target to around 3 percent from 3.5 percent in 2015.

Last weekend, in announcing a further cut in official interest rates, the second reduction in three months, the People’s Bank of China said that it was responding to a “deflationary risk” as well as to falling property prices. And in a sign of the growing excess capacity in the economy, factory gate prices of commodities showed a year-on-year decline of 4.3 percent in January.

A product of the deepening global malaise, the Chinese slowdown is, in turn, adding to it. This week iron, which comprise a major component of exports for countries such as Brazil and Australia, fell below $60 per tonne, just one third of the peak it reached four years ago. This fall parallels a similar slide in oil prices.

The Chinese economy is also being severely impacted by the fall in the value of the currencies of its major trading partners. Loosely tied to the rising US dollar, the yuan has risen 60 percent against the Japanese yen and 90 percent against Brazil’s real since the middle of 2012. In the past year it has risen 27 percent against the euro.

Any effort by China to push down the value of the yuan will intensify the incipient global currency war as major countries try to lower the value of their currencies to try to improve their competitive position internationally.

In response to the global financial crisis of 2008–2009, the Chinese government initiated a massive expansion of credit—an amount equivalent to the entire US banking system—in order to boost the economy after 23 million jobs were lost in 2009. Since then, Chinese growth has not been fuelled by expanding exports, as it was in the 1990s and in the years leading up to the financial crisis, but by investment in property and infrastructure financed by credit.

However, this road is now closed. Besides creating a potentially dangerous credit bubble, the additional growth generated by each yuan of new loans is estimated to be a ratio of just 0.2 percent, compared to 0.8 percent before 2008. Most of the additional credit is not being used to finance new investment projects, but rather to rollover existing debts owed by banks and local government authorities. They are being hit hard by the fall in inflation, which increases the real value of their debt exposure.

The revenues of both the central government and local authorities are contracting because of the slowdown in real estate developments, with land revenues reported to have fallen by 21 percent in the fourth quarter of 2014.

The ending of the credit-property bubble threatens major economic consequences. The Japanese finance house Nomura has warned investors that relying on the government to always provide a stimulus where needed could prove dangerous.

Nomura financial analyst Rob Subbaraman told the British Daily Telegraph: “We assign a one-in-three chance of a hard landing—growth averaging 5 percent or less over four quarters—starting within the next two years.”

Such a fall would not only have major consequences in China but would send a shock wave through the global economy and could set off a major financial crisis.