Oil price drop triggers sharp decline in Canadian economy

Roger Jordan

Canada’s economic output (GDP) fell 0.6 percent in the first quarter of 2015, its largest contraction in six years, Statistics Canada reported last Friday. The last time such a sharp contraction occurred was in the second quarter of 2009, the height of the global financial meltdown.

The figures took all economists by surprise. According to a survey carried out prior to the announcement, economists had reckoned growth would come in at around 0.3 percent for the quarter. The Bank of Canada still maintains the economy will pick up in the remainder of 2015, believing that low energy prices will enable manufacturing and other export industries to enjoy growth.

A significant contributor to Canada’s negative growth was the economic contraction announced the same day in the US, where the economy shrank by 0.7 percent during the first quarter. The US is the main destination for Canadian exports, which were down by over 1 percent for the quarter. Imports also declined.

Bank of Canada Governor Stephen Poloz justified his decision earlier last week to hold interest rates at 0.75 percent by citing hopes that a pickup in the US economy later in the year would boost growth in Canada.

The drop in business investment was even more pronounced, falling by 9.7 percent. Mining, quarrying, and oil and gas investment saw an annualized drop of 11 percent. Mining and oil and gas extraction was down 30 percent.

Meanwhile, activity in the financial sector continued to rise, reflecting the international trend which has seen companies turn to myriad forms of speculation and increased payouts to shareholders in the form of dividends and share buy-backs, rather than investment in productive activity.

Canada’s economy was hit hard by the decline in oil prices last summer. The crisis in the oil industry has already resulted in thousands of layoffs in the country’s main oil-producing regions, but the worst is likely still to come.

A study by the Petroleum Labour Market Information (PetroLMI) division of Enform published in May predicted that 185,000 jobs could go across the oil and gas sector and supporting industries. This would equate to approximately 25 percent of the 720,000 jobs in Canada that were dependent on oil and gas either directly or indirectly in 2014.

Around two-thirds of these layoffs would take place in Alberta, Canada’s largest oil-producing province, the study predicted. A further 20,000 would go in British Columbia and 14,000 in Ontario. In all, oil companies have announced over $30 billion in expenditure reductions for this year.

Significantly, the study predicted that the impact on the oil and gas industry would be much greater and more long-lasting than in 2008-09, when energy companies slashed investment by 39 percent. In 2009, this contributed minus 1.5 percent to Canada’s GDP. “The outlook for 2016 and beyond is still uncertain, and there are no indications that the industry will recover as quickly in 2016 as it did in 2010,” PetroLMI wrote in the study.

Faced with such a bleak outlook, oil industry figures have stepped up pressure on Alberta’s newly-elected New Democratic Party (NDP) government to lay out its plans for a review of the royalties paid by oil firms and its broader policy towards the energy sector. Canadian Natural Resources Limited (CNRL), the country’s largest oil producer, announced last Wednesday that it is putting new investment plans on hold and is cancelling an investors’ conference later this month that was to provide details on future projects.

In comments on the CNRL move, Jeremy McCrea, managing director of institutional research at AltaCorp Capital, stated, “There is legitimate concern. If a company has a budget and they are looking at the economics of a well, and there is some uncertainty what the (royalty) rate is, there is a higher level of risk … and so if they can have less risk in other jurisdictions, that is where the capital will be deployed.”

The oil companies are kicking at an open door. The NDP has repeatedly emphasized its readiness to collaborate closely with the industry and reassured investors that no steps will be taken that undermine their core interests.

Premier Rachel Notley announced that her government would not present its first budget until the fall, allowing it the time to coordinate its policies with the oil industry and big business as a whole. Notley has already stressed that she has been in close telephone consultation with oil company executives.

Speaking after the new government’s first cabinet meeting last Wednesday, Notley remarked on concerns expressed by industry about policy changes: “In order to deal with these issues, we’re going to take a thoughtful, considered, intelligent approach to moving forward and we are going to do it with a great deal of consultation and a great deal of dialogue and they’re not going to be surprised by anything.”

At the same press appearance, Notley claimed that the province’s financial position was much worse than she and her party colleagues had previously thought. She warned that this would affect some election promises. This is an unmistakable sign that the trade union-supported NDP government is preparing to unveil further attacks on workers in the name of financial stability and balancing the budget.

The Canadian Association of Petroleum Producers (CAPP) has expressed its full confidence in its ability to work closely with the NDP. “I think we share the same goal as the Alberta government right now and that’s keeping Albertans working,” stated Jeff Gaulin, communications vice president at CAPP. “We’re in this together and I think at the end of the day that if we recognize that it’s a very delicate and challenging time, we’ll make smart decisions about what policies are needed to keep the industry attractive.”

For years, the NDP has criticized the oil companies for their unwillingness to conduct more of their refining operations in Alberta and other oil-producing provinces.

Notley raised this again in the wake of her victory, commenting in a television interview that it was necessary to go beyond Albertans being “drawers of water and hewers of wood.” “Let’s make sure that we have more upgraded product and more upgrading here because the higher up the supply chain you get, the more a drop in oil prices helps those higher up in the supply chain,” she commented.

The nationalist framework of her outlook was made even more explicit in her remarks on the Keystone-XL pipeline, which she opposed on the basis of national interest rather than the adverse environmental consequences the project would have. “My concern about Keystone as it’s currently thought out, and of course, it doesn’t need to be exactly what it is right now, is that it’s going to ship a lot of jobs south of here,” she said.

The logical conclusion to reach from such comments is that the NDP government is preparing to offer big business additional incentives to encourage investment and activity in the province based on increased profits and lower wages so as to undercut locations in the United States.

The Alberta government’s determination to establish a close working relationship with big oil is not merely aimed at winning over the provincial ruling elite. At the federal level, the NDP is entering an election campaign with the polls showing that it has a chance of forming the next government in Ottawa, either as part of a coalition or on its own.

The NDP is therefore intent on demonstrating to the Canadian ruling elite that it would be a dependable instrument in enforcing its interests. Under conditions of a deteriorating Canadian economy, global economic slump and increased tensions between the major powers, this will inevitably mean a continuation and intensification of the austerity policies pursued by the Conservative Harper government at home and the assertion of Canadian imperialist interests abroad through military interventions and war.

Mexican elections overshadowed by political crisis

Don Knowland

Mexicans will vote Sunday June 7 in legislative elections for the lower house of the Mexican Congress—the Chamber of Deputies—along with governors in nine of Mexico’s 31 states, state legislators and municipal presidents. The vote is overshadowed by a profound crisis of rule for Mexico’s capitalist political establishment.

Eighty three million Mexicans are registered to vote. But the turnout will be far lower, likely well under 50 percent.

There is widespread and pervasive disgust in Mexico with a ruling class that is viewed as rotten and corrupt, from politicians and the state bureaucracy, to big business and financiers, along with the major media and the narcotics mafias.

Over the last year major scandals rocked Mexico, from the disappearance and likely brutal killing of 43 Ayotzinapa teaching college students in Guerrero state, to extrajudicial killings by the army in the state of Mexico, to corruption involving the financing by a business magnate close to the president of the first lady’s purchase of a mansion, and the involvement of his business group in awarding a contract to construct a high-speed bullet train.

Polls show that eight out of ten voters say they do not trust the three major political parties. A recent poll showed that 85 percent of the population do not trust President Enrique Peña Nieto of the ruling Party of the Institutional Revolution (PRI), a plunge from a 51 percent favorable rating in August 2014. Such distrust has spread to supposedly left-leaning parties, such as the Party of the Democratic Revolution (PRD) and the National Regeneration Movement (Morena) of Andrés Manuel López Obrador, who was the PRD’s candidate in the last two presidential elections.

Opposition to Peña Nieto’s handling of the economy has risen to above 70 percent, in large part due to his so-called Pact for Mexico, which passed the Congress with the approval of the three major parties, the PRI, the previously ruling right-wing National Action Party (PAN) and the center-“left” PRD. The Pact has included historical reversals of workers’ rights. Its centerpiece has been the opening up of the Mexican economy to big foreign capital, most importantly the state-owned oil industry, which is still viewed by most Mexicans as part of their national patrimony.

The government’s program has done nothing to turn around Mexico’s $1.3 trillion economy. It continues to limp along, showing growth so far this year of only 2 percent, once again falling far below the predictions of major economic and financial analysts. This follows two years of growth under 2 percent. As a result, the Bank of Mexico has been forced to hold interest rates at a record low of 3 percent.

Earlier this year, the Mexican peso hit its lowest level against the dollar since the 1993 devaluation in the wake of the 1992 debt crisis. The peso’s fall reflects plunging oil prices and threats by the US Federal Reserve Bank to raise interest rates, which could cause investors to dump risky emerging market assets, especially debt denominated in dollars.

Mexico registers the second highest level of inequality amongst the 34 advanced economies that make up the Organization for Economic Cooperation and Development. Masses of workers continue to struggle to make ends meet, paying rising prices for basic goods and services.

While opinion polls show that the three major parties are, in the aggregate, polling upwards of 70 percent compared to other registered political parties (PRI-32 percent, PAN-22 percent and PRD-14 percent), rejection of the current political setup is taking various forms.

The candidate of the Citizen’s Movement Party (MC) for mayor of Mexico’s third most populous city, Guadalajara, is running neck and neck with the PRI candidate, even though the MC is only polling 3 percent nationally. MC, originally known as Convergence for Democracy and later just as Convergence, was founded in 1997 by Andrés Manuel López Obrador, before he joined the PRD. MC now holds power in the poor southern state of Oaxaca, which has seen struggles by teachers and social movements over the years. In the past, MC entered into national electoral alliances and fronts with the PRD and the Labor Party (PT), an originally Maoist organization that now claims a “democratic socialist” platform.

Jaime Rodriguez, an independent candidate, has a serious shot at winning the governorship of the northeast state of Nuevo León, which includes the major industrial city of Monterrey. Legislation passed last year allowed independent candidates for the first time in Mexico. Critics have charged that Rodriguez, who spent 33 years in the ruling PRI, broke with the party to take advantage of the new law and to ride the wave of anti-government and anti-party sentiments.

Rejection of the current setup also is taking the form of widespread calls to abstain from voting or to deface ballots.

The major party candidates shy away from public controversy, running their campaigns on empty rhetoric and platitudes, such as calls for “good governance” or “teamwork.”

Despite attempts to sanitize the election process, its ugly face is there for all to see.

The PRD and Morena are engaged in a furious battle for the powerful position of Mexico City mayor.

The National Electoral Institute recently fined Mexico’s Ecological Green Party (PVEM) around $21 million for campaign advertisements allegedly paid for illegally. PVEM says it is innocent and that the rules were changed due to pressure from other groups, including the ruling PRI, which itself was accused of widespread fraud by vote buying in the 2012 election. The Greens’ spokesperson said the party intended to file a complaint against Mexico’s government before the Inter-American Commission on Human Rights.

Mney from organized crime washes into candidates’ campaign war chests to buy their loyalty. All three of the major gubernatorial candidates in Michoacán, from the PRI, the PRD and López Obrador’s Morena, have accused each other of links to drug gangs.

Criminal groups favoring candidates who protect their interests have been using threats, kidnapping and violence against their rivals. There have been assassinations of mayoral candidates of the PRI, the PRD in Michoacán and Guerrero states, and of the Green Party in the poor southernmost state of Chiapas, where it holds state office.

Voters will elect 500 deputies to the Chamber of Deputies, 300 by party plurality vote and 200 by proportional representation. Under proportional representation parties such as Morena, the Green Party and PANAL, a party created by the corporatist National Union of Educational Workers (SNTE, the largest union in Latin America), polling nationally around 8, 7 and 4 percent respectively, can add seats up to 8 percent above their electoral showing.

The composition of the Chamber of Deputies will determine the size of the expenditure cuts in the 2016 national budget. The PRI, PAN and PRD will likely maintain their current majority. This will lead to further budgets cuts, mostly to spending on social programs, as opposed to infrastructure.

None of the political parties offers a way forward for the Mexican working class. The PRD has largely abandoned even its populist pretensions, joining the PRI and PAN in pushing the demands of the Mexican oligarchs and foreign capital.

The nationalist program of Morena’s López Obrador represents the interests of smaller sections of the Mexican bourgeoisie and the upper-middle-class, as does that of the Green Party and CM. All such parties claiming to pursue a social democratic program of reform—along the lines abandoned by socialist parties in Europe years ago—will succumb to the interests of the financial oligarchy at the end of the day, like Syriza in Greece.

Finally, whatever their rhetoric, the pseudo-Trotskyist Pabloite and Morenoite parties such as Socialist Convergence (CS), the Workers Revolutionary Party (PRT), the Socialist Workers Party (PTS) and Socialist Alliance (AS), to the extent they even continue to function, ultimately will join in electoral alliances with Morena and its ilk, preserving the present economic setup.

All the ills that beset Mexican society and its masses are the product of the crisis of international capitalism. None can be remedied outside of an international revolutionary socialist program. This requires the building of Marxist revolutionary parties, linking up the struggles of the working class throughout the Americas.

Australian Labor leader moves bill on same-sex marriage

Nick Beams

There is no question that the ability of same-sex couples to marry is a basic democratic right and that all legal impediments to it should be removed.

But equally there is no question that Australian Labor Party leader Bill Shorten’s private member’s bill, introduced into the federal parliament yesterday, to make that possible has nothing to do with any fight for principle.

Rather, it is an attempt by Labor to give itself a “progressive” gloss as it deepens its collaboration with the Abbott Liberal government in its far-reaching onslaught on democratic rights under the guise of national security and the bogus “war on terror.”

Shorten brought forward the bill following last month’s Irish referendum, which endorsed same-sex marriage in that country. Its aim is both to boost Labor’s stocks and head off a call by deputy Labor Party leader Tanya Plibersek to make support for same-sex marriage compulsory for all the party’s MPs, ending the present policy of allowing a conscience vote.

Plibersek has said she will raise the issue at the party’s national conference in July, arguing that Labor does not allow a conscience vote on other major issues of democratic rights and social policy, and nor should it on this question.

Introducing the bill, Shorten tried to invoke the social reforms initiated by the Whitlam Labor government of 1972–75. He declared that “It’s time”—the slogan of the victorious 1972 campaign that ended 23 years of Liberal Party rule—for the legislation to be passed. “Let us delay no more. Let us make this a reality,” Shorten declared to a half-empty chamber, with most of the Liberals and a considerable number of Labor MPs not in attendance.

With Labor lacking the numbers to push the issue, and the Liberal Party refusing to allow a free vote on the question, the debate was quickly adjourned. There is a deal in the making, however. Government MP Warren Entsch, who has led the push for recognition of same-sex marriage within the Liberal Party, is negotiating with Labor for a cross-bench bill to enact marriage equality later in the year.

Labor’s attempt to drape its stance as support for democratic rights is another expression of the hypocrisy that has become its stock in trade. Despite having the opportunity to do so, Labor made no move to legalise same-sex marriage during the Rudd and Gillard governments of 2007–2013. Gillard specifically opposed such legislation.

Labor’s latest move comes in the face of the support it has given, first in government and now in opposition, to deep-going attacks on democratic rights.

Under the Rudd and Gillard governments, Australia became a world leader in the persecution of refugees, attacks that have intensified under the Liberal government, with Labor’s full support. Shorten has specifically refused to commit to any reversal of the Liberals’ “turn back the boats” policy, which Abbott insists is the “model” European governments should seek to emulate to stop African refugees seeking sanctuary.

The Labor Party has marched in lockstep with the Abbott government’s deployment of Australian troops to Iraq—with deputy leader Plibersek, the champion of the democratic right of same-sex marriage, insisting it bears no similarity to the 2003 invasion. The Labor opposition supported the government’s orchestration of terror raids last September, backed the elevation of the Sydney Lindt Café siege by the mentally-deranged Man Haron Monis last December into an “ISIS attack” and backed all its reactionary “anti-terror” legislation.

The Abbott government’s latest anti-democratic move, to revoke Australian citizenship for those who hold a dual nationality and possibly even for Australian-born citizens, was first mooted by the Greens-supported minority Labor government in 2013. Last week, Michelle Rowland, the party’s citizenship spokeswoman, said Labor was “absolutely committed to doing everything in a bipartisan way to keep our citizens safe.”

Appearing on the Australian Broadcasting Corporation program “Q&A” last night, Labor frontbencher Anthony Albanese refused to take a position on the government’s proposals, saying the party would need to see the legislation.

This bipartisanship goes beyond the issue of democratic rights. It extends to attacks being delivered against social rights, through the budget cutbacks to health, education, pensions and other social services. In his May 14 budget reply speech and in subsequent interviews, Shorten made clear that just as there was a “bipartisan approach on national security,” so there should be one on major economic issues.

In order to cover up its ever-closer collaboration with the Liberals, Shorten has seized on same-sex marriage to try and establish a Labor point of difference.

The exploitation of this issue for the most reactionary purposes does not stop with the Labor Party. Last Saturday, Sydney Morning Herald journalist Peter Hartcher published an article based on leaks from the cabinet discussion on the government’s sweeping proposals to remove citizenship status.

His conclusion, however, was at complete variance with the assault on democratic rights reported in the article. The Abbott government, he claimed, was an active agent in the furthering of rights in Australia. “Gay rights, and particularly the right of homosexual people to marry in the law, is on the cusp of recognition in Australia. Abbott has yielded to the inevitability,” he wrote.

Hartcher concluded by invoking a “rights revolution,” of which the legal recognition of same-sex marriage was a part, as a weapon in the “war on terror.” An Australia “united in advancing fairness and human rights,” in a profound “repudiation of the barbarians who call themselves Islamic State,” would truly be an “extraordinary proposition.”

Opinion polls record that 70 percent of the population are in favour of legalising same-sex marriage. That signifies an advance in social thinking and a decline in reactionary influences, such as the teachings of the churches. However marriage equality is far from a key question for large sections of the population; the attacks on jobs, health and other social right are of far greater importance.

However, same-sex marriage and questions of identity politics in general are of concern for relatively better-off sections of the upper-middle class. All sections of the political establishment would like to present themselves in “progressive” garb to these socio-economic layers. This is the underlying reason for the Pauline-like conversion of a number of MPs from both major parties on this issue, not any concern for democratic and social rights, which they are jointly attacking.

Former Israeli Premier Olmert sentenced to jail

Jean Shaoul

Former Israeli prime minister Ehud Olmert has received an eight-month jail sentence for fraud and breach of trust for actions taken when he was trade and industry minister in the early 2000s.

He also received an eight-month suspended sentence and a $26,000 fine. This is in addition to a six-year prison term for bribery in relation to another unrelated case, related to the Holyland development project in Jerusalem, which he is currently appealing.

If Olmert’s appeals are unsuccessful, he will be the first former Israeli Premier to be jailed.

The sentences highlight the pervasive and systemic corruption at the heart of Israeli state institutions. Olmert, a long-time member of the Likud Party, served as a cabinet minister in the 1980s and the mayor of Jerusalem between 1993 and 2003. He then entered the Likud-led cabinet of Ariel Sharon. He joined Sharon’s breakaway Kadima Party in 2005, becoming prime minister after Sharon suffered two strokes in January 2006.

Far from being a man of peace who came close to reaching a deal with the Palestinians, as he likes to claim, Olmert launched criminal and murderous wars on Lebanon and Gaza in 2006, imposed an illegal blockade on Gaza that continues to this day, and mounted a further military assault on Gaza in 2008-2009.

He remained in office until 2009, when he was forced to resign due to indictment for fraud in a case arising out of the Rishon Tours scandal that had occurred some years earlier. He was acquitted in 2012 but received a $19,000 fine and a suspended jail sentence for a breach of trust.

New evidence came to light during the Holyland trial that led Judge David Rozen to agree to a plea bargain with Olmert’s former secretary and confidante, Shula Zaken, for her involvement in a series of graft scandals surrounding Olmert. In exchange for a light prison sentence, she handed over diary entries and tape recordings of conversations with Olmert about illicitly receiving cash-stuffed envelopes from US businessman Morris Talansky when Olmert was mayor of Jerusalem and a cabinet minister.

The tapes reveal that Olmert told Zaken not to testify in the first trial so she would not incriminate him. Last March, the retrial revealed that Olmert had given Zaken some of the money to ensure her silence in the first trial, while keeping the rest for his own personal use without reporting it in violation of the law.

Olmert drafted his cronies, including former British prime minister Tony Blair and former Israeli Mossad chief Meir Dagan, as character witnesses, but to no avail. He was found guilty of illicitly receiving money, as well as charges of fraud and breach of trust.

Olmert’s name has long been synonymous with bribery and corruption scandals, including the events surrounding a ministry-run Investment Centre, the Talansky, Rishon Tours, Bank Leumi, and Cremieux Street affairs, and improper political appointments, with other bribery charges still under investigation. But he is only one of a long line of Israeli politicians in all the main political parties, going right to the top, who have been tainted, if not convicted, by corruption and other charges.

All Israel’s prime ministers after the first, David Ben Gurion, including the current prime minister, Benyamin Netanyahu, have been linked to corruption, although none of the allegations have resulted in jail sentences. In Ariel Sharon’s case, he had the good fortune to become incapacitated before any convictions.

Some of the most notorious cases that resulted in guilty verdicts include:

* President Moshe Katsav was forced to resign to face charges of rape. He is serving a seven-year prison sentence after being found guilty of obstructing justice.

* Aryeh Deri, the leader of the Shas Party, was convicted of bribery while serving as interior minister and given a three-year jail sentence. He went on to resume the leadership of the party until last December.

* Finance Minister Avraham Hirchson received a five-year jail sentence and a 450,000-shekel fine for embezzling millions from the Histadrut Labour Federation while he was its chairman.

* Justice Minister Haim Ramon was convicted of sexual assault for forcibly kissing a young soldier in the prime minister’s office and sentenced to community service.

* Shas legislator Shlomo Benizri was found guilty of accepting bribes, with his sentence increased by the Supreme Court to four years.

* Foreign Minister Avigdor Lieberman was found guilty of assaulting a 12-year-old boy, fined, and ordered to pay compensation.

At least 12 legislators have also been found guilty of serious crimes.

Last December, the police announced that they were investigating 30 public figures and politicians in a major corruption case relating to nepotism and the illegal transfer of funds. A number were from Avigdor Lieberman’s far-right Yisrael Beiteinu Party, including Faina Kirshenbaum, the former deputy interior minister, and her daughter, Ronit. As a result of the scandal, Yisrael Beiteinu won just 6 seats in the March elections, down from 15 in 2009.

Others arrested include the former presidents of the basketball and handball federations and several officials in charge of settlement operations in the West Bank and Golan Heights.

In April, one of the most serious public corruption cases in Israel came to light, involving Ruth David, a former Tel Aviv district prosecutor, senior police officers and Ronel Fisher, a top lawyer. The case involves the alleged systematic bribery of police officers to secure inside information on cases under investigation.

According to the OECD’s index of global corruption, Israel is consistently ranked in the bottom half of its 34 member countries, coming 24th in 2014. Last year, Israel stood 37th in Transparency International’s annual Corruption Perceptions Index, behind the United Arab Emirates (25) and Qatar (26). In both cases, this represented a fall of one place from the previous year.

Rampant corruption and criminality in Israel have become the norm, as politicians seek both personal gain and political power for themselves and their sponsors. Israel’s financial elite dominates much of Israel’s economy based on vast speculation, plunder and the upward redistribution of wealth through the impoverishment of the great majority of Israeli and Palestinian working people. This financial oligarchy controls all the levers of power—the media, courts, the police and the army—while the politicians are their bought and paid hirelings.

That some at least of these politicians are now being prosecuted and convicted testifies not to the pursuit of justice, but rather to the venomous relations that prevail within Israel’s ruling circles.

The corruption that Olmert epitomises is a symptom of the decay of Israeli democracy, which never even in principle encompassed the entire population, most notably Israel’s own Palestinian citizens and Palestinians living outside Israel’s internationally recognised borders.

In the final analysis, democracy is incompatible with the increasing pauperisation of working people, both Israeli and Palestinian, and the decades-long military suppression of the Palestinian people.

None of this goes unnoticed, in Israel or elsewhere. Last year, Transparency International reported a survey showing that nearly three quarters of Israelis believe the government is ruled by insiders promoting special interests. According to another survey cited by the Times of Israel, half of all Israelis say corruption is increasing and 79 percent say that Israel’s political parties are the most corrupt institutions in the country.

US farm income hit by collapse in grain demand

George Gallanis & Alexander Fangmann

According to the Wall Street Journal, American farmers are set to face a 50 percent decline in corn prices this year while the United States Department of Agriculture (USDA) is forecasting farmers across the country will earn a third less than last year. Farm income is expected to be at its lowest level in six years, and the downturn in income is expected to ripple across the entire US agricultural sector. Manufacturing and fertilizer companies, among others, expect to see demands for their products slump.

The price of corn has taken a fall, with corn futures trading at roughly $3.51 per bushel in May versus $4.65 per bushel a year ago. The value of farmland in the territories covered by the Federal Reserve Bank branches in St. Louis and Kansas City has fallen between 2.1 and 2.5 percent, while that in the Chicago territory, adjusted for inflation, has fallen by 1 percent, the first time it has fallen since 1986.

The US saw a record corn harvest in 2013, followed by another large harvest in 2014. This year’s crop will likely be smaller than last year’s based on planting estimates of 89.199 million acres, down 1.398 million acres from 2014. The large harvests have been met with less-than-expected demand from the ethanol industry and export markets, which is driving the falling price of corn.

Currently, 37 percent of all corn is used for making ethanol and biofuels. In 2014, 836 million gallons of ethanol worth $2.1 billion were exported. While this is an increase from 2013 and 2012, it is still below the approximately 1.2 billion gallons exported in 2011—the highest amount ever. The average price for ethanol in March of this year was $1.53 per gallon, a huge drop from the previous year, when it was $2.70 per gallon.

The Minneapolis Star Tribune reports ethanol companies have seen a steep decline in profits this year. Valero Energy Corp., the nation’s third-largest ethanol producer and owner of Minnesota’s largest biofuel plant in the city of Welcome, reported a 95 percent drop in quarterly ethanol operating profits. Ethanol producers have been hit hard by the fall in the price of oil, which competes with ethanol.

Lower demand is also being propelled by decreased corn exports. From March 2014 to March 2015, American corn exports diminished by 9 percent. While some of this is due to the ongoing currency war, which has caused resulted in a slight rise in the value of the US dollar, the most significant drop-off in demand was from China, which decreased its American corn imports by more than 92 percent. Last March, it imported 3,162,152 bushels of US corn, while in March of this year it only imported 240,521 bushels. China has instead relied upon Ukraine for filling its corn needs and has already booked more than 600,000 tons this year.

China’s declining interest in American corn has been linked to its public concerns over American farmers’ use of GMO (genetically modified organism) seeds, which China has seen as risky and potentially harmful, leading to a ban on specific varieties. At the same time, the Chinese agricultural sector is interested in developing its own GMO research and agricultural varieties and limiting its dependence on foreign imports. As Chinese agriculture minister Han Changfu stated in March 2014, “We can’t have such techniques monopolized by others.”

It cannot be ruled out either that the sharp reduction in corn imports from the United States may be a shot across the bow of the US in response to the escalating geo-political tensions, including the military brinksmanship by the US in the South China Sea.

Meanwhile, fertilizer and chemical companies are making adjustments to the fall in farm income. Jason Miner, a senior chemicals analyst, told the AgWeb online news agency, “The underlying story is that U.S. farm income is falling and that’s a reflection of lower crop prices. Farms are now more cautious about buying exactly what they need for fertilizer.” Consequently, Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, cut its full-year earnings forecast on expectations of lower average prices for its namesake crop nutrient.

As the farming sector faces losses in profits, workers will be billed for its decline. John Deere, one of the leading global manufacturers of farm equipment, saw a steep decline in first-quarter earnings, from $681.1 million during the same period last year to $386.8 million. More recently, Deere posted a 30 percent decrease in its fiscal second-quarter net income. Rajesh Kalathur, Deere’s chief financial officer, stated, “We’re facing the deepest downturn in North American large ag equipment in 25 years. We’re managing our inventories aggressively.”

In January, Deere announced approximately 910 employees would be placed indefinite layoff from facilities in Iowa and Illinois. Deere declared that the layoffs “reflect the economic forecast included in the company’s November 2014 earnings report as the company continues to align the size of its manufacturing workforce to market demand for products.”

In August 2014, Deere slashed 600 of its workers and placed them on indefinite layoff. It stated that demands for its products had decreased, and “to remain globally competitive, the company must align the size of its manufacturing workforce with market demand for products.” The two layoff announcements eliminated more than 1,000 jobs in Waterloo, Iowa, or 17 percent of its 6,000-member workforce in the metropolitan area.

On October 1, 2015, the labor agreement expires with the United Auto Workers (UAW) covering thousands of Deere workers in Waterloo and other factories in Iowa, Illinois and Kansas. The UAW has consistently imposed the demands of the corporation for layoffs and wage and benefit cuts in the name of keeping the company competitive.

As workers are losing their jobs, Deere CEO Samuel R. Allen continues to receive his annual compensation of roughly $10 million, and the company has continued to dutifully pay out dividends to its richest investors. The most recent quarterly dividend was announced at 60 cents per share, even as company revenues declined by 18 percent. On the strength of its cost-cutting measures, the company recorded $1.9 billion in profit and saw its stock price rise by 4 percent.

US Senate prepares to extend NSA spy powers

Thomas Gaist

The US Senate voted 77-17 Sunday to proceed with a second vote on the USA Freedom Act, legislation that would renew the USA Patriot Act while supposedly restraining collection of US telephone metadata by the National Security Agency. The chamber will likely vote to approve a final version of the Freedom Act on Tuesday or Wednesday, returning the legislation to the House of Representatives, where it was approved last month.

A main element of the USA Freedom Act is the reauthorization of surveillance powers stemming from Section 215 of the Patriotic Act that officially expired yesterday. During the past week, the American public had been subject to a barrage of hysterical warnings from the Obama administration that the Senate’s initial failure to pass the Freedom Act would hamstring the NSA’s surveillance efforts and expose the nation to deadly terror attacks.

The vehemence with which claims that NSA spying would be “wound down” have been advanced by the political and media establishment is a reflection of anxieties in the ruling class over growing mass opposition to the surveillance. Fully 65 percent of Americans believe that the US government has excessive power to collect electronic communications data, according to recently published data from the Pew Research Center. The figure rises to 74 percent among Americans who are well informed about the programs.

The main reforms advanced by the Freedom Act are the addition of a “privacy advocacy panel” to the Foreign Intelligence Surveillance Court (FISC), new requirements for the FISA court to publicly disclose any “novel” legal arguments and secret interpretations invoked by the NSA, and transfer of responsibility for collecting and storing telephone data to the companies.

The “freedom” legislation has won support from establishment “libertarians” of left and right flavorings alike, including Senators Rand Paul (Republican) and Ron Wyden (Democrat).

Senator Wyden cheered on the moves toward passage of the USA Freedom Act, saying Sunday that Congress “has the opportunity to build on this victory by making meaningful and lasting reforms to US surveillance laws.”

“We’re winning,” Senator Paul proclaimed. The Obama administration will “no longer be able to collect our records all the time.” On Sunday, Paul engaged in a political stunt that blocked final passage before the expiration at midnight, while at the same time backing the fraudulent “reform” supported by the Obama administration itself.

The legislation has also received strong backing from a number of privacy NGOs and other groups.

Celebrated by its supporters for supposedly ending the NSA’s mass collection and storage of telephone metadata, the Freedom Act provides for telecoms to efficiently transfer data to the NSA, including “a six-month transition period during which the NSA would work with phone companies to ensure that they can set up their systems to quickly search for records and send them to the agency,” as the Washington Post wrote.

The NSA, FBI and other government agencies have a long history of ignoring and subverting the law whenever doing so serves their purposes. Whatever the theatrics on Capitol Hill, one can be certain that the intelligence and security agencies are forging ahead with ever-more sophisticated spy programs regardless of the current vote tally in Congress.

Entire large-scale NSA programs, including Stellar Wind—which involved data mining of email and phone communications—were kept secret for years. Knowledge of Stellar Wind’s existence was withheld even from the secret and authoritarian FISA court system that was specifically created to monitor the spying.

Under Section 702 of the 2008 FISA Amendments Act (FAA), the NSA’s Prism program has received mass data transfers from Google, Yahoo, Facebook and a slate of other leading communications firms since 2007, in exchange for multimillion-dollar payments arranged through the NSA’s Special Source Operations (SSO) department. The NSA’s SSO has established contractual relations with more than 100 US companies since the 1970s.

Internal NSA documents leaked by whistleblower Edward Snowden in 2013 describe Section 702-based operations, principally the Prism program, as the agency’s “number one source of raw intelligence,” providing more than 90 percent of the NSA’s Internet-based data.

Documents released by Director of National Intelligence James Clapper last summer confirmed that the NSA, FBI and CIA all employ interpretations of FAA Section 702 to carry out “back door searches” of both content and metadata of US communications.

Neither these nor the many other illegal programs exposed by Snowden will be touched by the Freedom Act.

US government agencies have repeatedly devised new legal theories in order to justify programs that were held by Congress and the courts to be incompatible with existing laws. When the NSA was unable to gain Justice Department support for certain metadata collection operations during the George W. Bush administration, a new legal rationale was invented which “essentially gave NSA the same authority to collect bulk internet metadata,” according to internal NSA records from 2004.

Section 215 of the Patriot Act has itself been the basis for multiple reinterpretations aimed at authorizing indiscriminate collection of not just phone data but also Internet and personal financial information from US persons.

Attorneys with the NSA and DoJ first interpreted Section 215 as providing the basis for metadata spying in 2005, a position that the Second Circuit Court of Appeals rejected this May.

Defending the agency before the Senate this week, the NSA’s top in-house lawyer Stewart Baker acknowledged that the readings of Section 215 by NSA and DoJ lawyers from 2005 required some inventiveness. “The interpretation of 215 that supported the bulk collection program was creative,” admitted Baker.

Baker then proceeded to speak in favor of passage of the USA Freedom Act legislation, saying that such legal “creativity” would no longer be necessary should the law pass.

“I don’t think anyone at NSA is going to invest in looking for ways to defy congressional intent if USA Freedom is adopted,” Baker said, implying that the bill provides all the necessary leeway for the NSA to operate as it desires.

Baker’s testimony makes clear that for all the talk of “ending NSA spying” and “shutting down NSA servers,” what is emerging out of the USA Freedom Act saga is, in reality, a blank check for the spy agency to continue and expand its operations, which are targeting the entire US and world population.

Even assuming that constraints against telephone metadata were actually enforced, the USA Freedom Act in no way limits the NSA’s existing authority to conduct limitless dragnet surveillance against targets in foreign countries, against US persons who communicate with persons abroad, and against US data “incidentally” collected from servers located overseas.

The vast majority of domestic surveillance operations developed by the NSA, FBI, DEA and other agencies with increasing speed since 9/11 would also not be subject to any new constraints.

Syriza’s Tsipras outlines concessions programme as Greece faces debt default

Robert Stevens

Monday evening German Chancellor Angela Merkel, French President Francois Hollande and European Union Commission President Jean-Claude Juncker held a meeting in Berlin to discuss the crisis in Greece. They were joined by European Central Bank (ECB) head Mario Draghi and International Monetary Fund (IMF) chief Christine Lagarde.

On the previous evening Merkel, Hollande and Greek Prime Minister Alexis Tsipras held a conference call as negotiations over Greece’s overall debt and austerity programme entered their fifth month. The meetings follow the failure, over recent days, of the latest round of “technical” talks between representatives of the EU, ECB, IMF and Athens.

As Monday evening’s talks began, speculation began to mount that an “endgame” had been reached. The Guardian noted, “Rumours are swirling that Athens is about to get a ‘take it or leave it’ offer”. In the event the meeting did not come to any agreement, with Merkel's office issuing a stateement saying they “agreed that work must now be continued with greater intensity”.

The Greek state owes more than €300 billion and its funds are now virtually exhausted. Athens must make a further payment of €300 million to the IMF on Friday and a further €1.2 billion in payments to it in the next two weeks. The austerity programme expires on June 30, with some officials stating that if no agreements were reached this week it would be the end of the road. Any agreement extending further funds to Greece must be voted in a number of national parliaments, including Germany’s, and there would not be sufficient time for this.

Greece is still due €7.2 billion, the last tranche of the loan from the troika that was conditional on the implementation of the final austerity agreement reached with the previous New Democracy/PASOK government and accepted by Syriza in February. Since last August, the troika has denied Greece any funds. Nothing has been given to Syriza, as they have been unable to reach a deal to impose the still deeper austerity measures demanded.

Billions of euros continue to flood out of Greece’s banks, with the rate increasing. In just two days last week, more than €800 million in savings were withdrawn. Since December’s election campaign, €31 billion (18.8 percent of total deposits) have been withdrawn, with private deposits now at the lowest level since 2004. Commenting on their perilous state, the Economist wrote, “The position of Greek banks is almost as untenable as the government’s; it is a moot point which will buckle first.”

Juncker, who recently pressed for an agreement with Greece, based on giving Athens more time to impose austerity, said in an article in Monday’s Süddeutsche Zeitung, “I don't share the idea that we will have fewer worries and restraints if Greece gives up the euro”. He warned if a country were to withdraw from the euro, "it would fix the idea in heads that the euro is not irreversible.”

Juncker expresses the concerns of sections of Europe’s ruling elite who fear a Greek exit from the euro zone under conditions of worsening economic and social conditions and continent-wide political instability. However, many other voices are demanding total capitulation from Athens. Should an agreement result from talks between Merkel, Hollande and Juncker, it will in reality be an edict containing the terms of Syriza’s surrender.

Despite the Greek government claiming just days ago that an agreement was close, Merkel’s spokesman Steffen Seibert told reporters Monday that Athens must agree to a “far-reaching reform package.”

German Finance Ministry spokesman Martin Jaeger said, “The aim of these individual measures is to restore Greece’s debt sustainability.”

Earlier Monday Le Monde published an article by Tsipras who complained, “The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance.”

The delay was instead “due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

The statement is a damning verdict on Syriza’s perspective, which claimed that following a mass rejection of austerity by the Greek population in the January elections, it was possible reach an amicable, negotiated settlement with the troika over Greece’s debt, based on Athens remaining in the euro zone.

Tsipras said Syriza’s aim was to end scenarios that “prevent the long-term stabilization of the European economy and may, at any given time, weaken the confidence of both citizens and investors in our common currency.”

Greece, he wrote, “has shown that it wants to meet its external obligations, having paid more than 17 billion in interest and amortizations (about 10% of its GDP) since August 2014 without any external funding.”

It should be noted that Syriza handed over the vast majority of this amount, more than €13 billion, to the troika and international banks.

Syriza had submitted proposals “with the intent to reach an agreement that will combine respect for the mandate of the Greek people with respect for the rules and decisions governing the Eurozone.”

On this basis, “we have also offered highly detailed and specific plans” in negotiations that have “bridged the distance between our respective positions that separated us a few months ago.”

These included concessions on pension rights, privatisations and the VAT sales tax, he said. Syriza intended to repeal “provisions that wrongly allow for early retirement, which increases the real retirement age.” As for collective bargaining, Syriza wants “nothing more than what is common practice in all Eurozone countries.”

In a crushing refutation of his own claims, Tsipras comments that a “split and the division of the Eurozone, and consequently of the EU” is underway.

Describing the events that have transpired in Greece since 2010 he writes, “The first step to accomplishing this is to create a two-speed Eurozone where the ‘core’ will set tough rules regarding austerity and adaptation and will appoint a ‘super’ Finance Minister of the EZ [euro zone] with unlimited power, and with the ability to even reject budgets of sovereign states that are not aligned with the doctrines of extreme neoliberalism.”

If this continues, “elections would need to be abolished in those countries” under austerity programs. “Namely, we would have to accept that the institutions should appoint the Ministers and Prime Ministers, and that citizens should be deprived of the right to vote until the completion of the Program.”

What this means, continued Tsipras, is “the complete abolition of democracy in Europe” and “the end of every pretext of democracy, and the beginning of disintegration and of an unacceptable division of United Europe.”

For anyone opposed to this course there will be, “[H]arsh punishment. Mandatory austerity. And even worse, more restrictions on the movement of capital, disciplinary sanctions, fines and even a parallel currency. Judging from the present circumstances, it appears that this new European power is being constructed, with Greece being the first victim.”

Syriza represents sections of the Greek ruling elite and the more affluent layers of the middle class. It is hostile to a resolution of the crisis based on the mobilisation of the strength of the working class in Greece, throughout Europe and internationally, in a fight for the overthrow of capitalism on the basis of a socialist perspective.

Tsipras’ prescription is that Merkel, Hollande and every other pro-austerity figure in Europe must now come to the rescue! Spelling out Syriza’s pro-capitalist orientation, he declares, “Following the serious concessions made by the Greek government, the decision is now not in the hands of the institutions, which in any case—with the exception of the European Commission—are not elected and are not accountable to the people, but rather in the hands of Europe’s leaders.” [Emphasis added]

The European Commission responded to Tsipras’ desperate entreaties with a withering statement from Juncker’s spokesperson Mina Andreeva, who told reporters, “What matters more than op-eds are concrete reform proposals.”

With US air war in 10th month, ISIS advances in Iraq and Syria

Bill Van Auken

With the US-led air war against the Islamic State of Iraq and Syria (ISIS) now in its 10th month, the Islamist militia continues to make territorial gains in both countries, inflicting serious losses on the military in Iraq as well as both government forces and rival Islamist “rebels” in Syria.

In its latest attack on Monday, ISIS launched a devastating suicide bombing against an army base just north of the Iraqi city of Fallujah, killing at least 45 members of the security forces and wounding scores more.

The attack was carried out using an armored Humvee fighting vehicle loaded with explosives. The attack detonated ammunition in a base depot, setting off explosions that continued for several hours.

The increasing use of US-made Humvees in such bombing attacks is the byproduct of the debacle suffered by the Iraqi regime and its US-armed and trained security forces with the fall of Mosul to ISIS last June. Iraqi army and police units fled the city abandoning massive stockpiles of US arms and ammunition that fell into the hands of the Islamist militia.

The scale of this debacle was underscored on Sunday with the admission by Iraq’s Prime Minister Haidar al-Abadi that “We lost 2,300 Humvees in Mosul alone.”

As an indication of the scale of this loss, the Guardian newspaper reported that the cost of 1,000 armored Humvees approved for sale to Iraq last year was estimated at $579 million.

In a separate attack Monday, ISIS ambushed an Iraqi army column in Seddiqiya in Anbar province, killing at least 33 troops and pro-Baghdad militia fighters.

The continued attacks come in the wake of last month’s fall of Ramadi, the capital of Anbar province, the most humiliating defeat for the US-backed government since the rout of Iraqi forces in Mosul a year ago.

The bitter recriminations over the fall of Ramadi, with US officials blaming a lack of Iraqi “will” to fight and countercharges that the US has done little to combat ISIS, have extended to within the Iraqi regime itself.

Salim al-Jabouri, the speaker of Iraq’s parliament and most prominent Sunni politician within the Baghdad regime, told CNN that Iraqi troops abandoned Ramadi to ISIS as the result of “a clear decision to give the order to pull out -- and after that Ramadi fell.”

Al-Jabouri said that Prime Minister Abadi, installed last year with Washington’s backing, had not been informed of the order to retreat from the city. The collapse of the security forces in Ramadi occurred, he added, after the so-called Golden Division -- a US-trained Special Forces unit -- suddenly pulled out.

“We feel that there were other hands involved in this that played a role in military decisions,” he told the US news network.

Tensions continue between Abadi and the former US-installed prime minister, Nouri al-Maliki, who has refused to move out of the prime minister’s palace in Baghdad’s heavily fortified “Green Zone” and is widely charged with seeking to undermine his successor. Maliki remains the leader of Abadi’s own Dawa party as well as the leader of the largest parliamentary bloc. He apparently continues to enjoy support from within top echelons of the security forces, as well as from Shia militias.

Following Ramadi’s fall, Abadi was compelled to allow Shia militias to take the leading role in a counter-offensive to retake the city. Washington, which had previously publicly opposed the participation of the militias, which are in most cases aligned with Iran, was forced to accept their role in the face of the rout of the government’s own forces.

In neighboring Syria, ISIS has also registered territorial gains against both the Syrian government and rival Islamist militias. According to an assessment by the Syrian Observatory for Human Rights, ISIS now controls half of Syria’s land mass, while the French Syria analyst and geographer Fabrice Balanche estimated that between Iraq and Syria, the Islamist militia now controls 115,000 square miles, roughly equivalent to the size of Italy. It has also taken over all of the border crossings between the two countries.

The most recent ISIS gains have come in the north, in the province of Aleppo. It overran the village of Suran on May 31, bringing its forces to within barely six miles of the Turkish border. And on Monday, according to the Syrian Observatory for Human Rights, its forces inflicted losses on rival “rebels,” advancing on the town of Marea, which controls a key supply route from Turkey, which has been the major source of arms for the forces backed by the West and the Sunni Gulf oil monarchies in their bid for regime change in Syria. These advances follow the May 21 ISIS overrunning of the ancient southern Syrian city of Palmyra in Homs province.

There has been no evident attempt by Washington to blunt the advance of ISIS in Syria or to dissuade its reactionary monarchical Arab allies from continuing to arm and fund the Islamist militias. ISIS, together with the Al Qaeda-affiliated Al Nusra Front, remains the principal fighting forces in the US-backed war to overthrow the government of President Bashar al-Assad.

The price paid by the peoples of both Syria and Iraq for a bloody war that is the direct outcome of US policies in the Middle East, from the invasion of Iraq in 2003 to the support of the Islamists in Syria a decade later, continues to grow.

May constituted the single bloodiest month since the outset of the Syrian conflict, according to the Syrian Observatory for Human Rights, with at least 6,657 killed. The largest single category of dead was that of Syrian government troops and other fighters supporting the Assad government, which accounted for 2,450 of those killed. This was followed by the Islamist militias, which reportedly lost 2,109 fighters and then civilians, 1,285 of whom lost their lives to the conflict last month.

Meanwhile, in Iraq, the UN Assistance Mission for Iraq counted the deaths of 1,031 Iraqis from the violence last month, with another 1,684 wounded.

US defense secretary signs joint military statement with Hanoi

Joseph Santolan

US Defense Secretary Ashton Carter traveled to Haiphong and Hanoi yesterday as part of his 11-day tour through the Asia-Pacific region, prosecuting Washington’s campaign toward war against China in the South China Sea. During his stay, Carter worked to further enmesh Vietnam in the imperialist military agenda of the United States.

Carter arrived in Vietnam from Singapore, where he delivered a plenary address at the Shangri-La Dialogue denouncing Beijing for its land-reclamation activity in the South China Sea, which he condemned as “out of step with international rules and norms.”

Washington has seized upon China’s minor construction activity as the pretext for the dramatic escalation of regional tensions, going so far as to deliberately provoke a military encounter in the disputed waters by deploying surveillance aircraft over territory occupied by the Chinese.

The recklessness of Washington is made all the more apparent by the flimsiness of the pretext. The Wall Street Journal admitted in an analysis published on Sunday that “the U.S. is constrained by the fact that China’s island-building doesn’t violate maritime law, and other claimants to the Spratlys, including Taiwan, Vietnam and the Philippines, have all expanded the geographical features they control … Nor has China threatened shipping in the South China Sea ... And although the U.S. accuses China of militarizing the islands, so far it has identified only two light motorized artillery pieces on one of them. Even after their expansion … the islands remain mere specks in the ocean and have limited military value … they are virtually indefensible.”

Carter sought to shore up Washington’s pretext of opposing “destabilizing reclamation activity” by calling on Hanoi to discontinue its own reclamation work on disputed islands. He told a joint press conference that the Vietnamese government was “considering” the request. His counterpart, Defense Minister Phung Quang Thanh, said the Vietnamese military was only engaged in maintenance against erosion, and not expansion activity. He added that the Vietnamese military occupied nine “floating islands” and twelve “submerged islands,” where they were shoring up existing structures.

Carter reportedly said he would like clearer distinctions drawn “between what is new construction that would be barred and what is maintenance that might be permitted.”

This rather friendly treatment of Vietnamese reclamation activity highlights the hypocrisy of Washington’s outrage at China’s so-called island building. Washington will not be publicly denouncing Vietnam for its “flagrant disregard for international norms,” nor will it be staging provocative military encounters against Hanoi. It is China that is in Washington’s crosshairs.

Carter and the Vietnamese government signed a Joint Vision Statement, underscoring the alignment of Hanoi’s military interests with those of Washington.

As part of this deal, Carter announced that the United States would begin training Vietnamese troops to participate in United Nations peacekeeping operations and would station a US peacekeeping trainer at the American embassy in Hanoi. This training will amount to preparation to carry water for US imperialist ventures around the globe.

Carter committed the US to providing Vietnam with $18 million for the purchase of two US Metal Shark 75 Defiant patrol boats. He pointedly made this announcement after touring the Vietnamese coast guard vessel that Hanoi accused a Chinese navy ship of having rammed in May of last year.

The most crucial component of the Joint Vision Statement that has been announced was the intent to begin the co-production of weapons and defense supplies.

Vietnam currently buys more than 90 percent of its defense materiel from Russia. In October 2014, Washington lifted its ban on the sale of lethal maritime weaponry to Vietnam. The move toward co-producing weapons in Vietnam seeks to simultaneously curtail Russian military influence in the country and the region, and fully enmesh Vietnam in Washington’s imperial orbit.

Washington has already stepped up its pressure on Hanoi to end its military ties with Moscow. On March 11, Reuters reported that Washington asked Hanoi to stop letting Russian ships and aircraft use the military facilities at Cam Ranh Bay. The implementation of this request will no doubt be a prerequisite for increasing military ties with the United States.

Russia announced yesterday that it would conduct joint war games in the South China Sea with Beijing, although no date for these exercises has yet been announced.

In order for Washington to replace Moscow as the Vietnamese military’s chief supplier, Hanoi has requested the full removal of the US weapons sales restrictions. Currently Washington has only lifted the maritime weaponry ban. Defense Minister Thanh said lifting the ban would be “in line with the interests of both countries. And I think we should not attach that decision to the human rights issue.” Carter made no mention of human rights.

Carter’s visit was clothed in the hubris of imperialism. He visited Hanoi and Haiphong, both of which were devastated by the “Christmas bombing” of 1972 on the orders of President Richard Nixon. Carter officially inspected Vietnamese troops. A Vietnamese military band played the US national anthem. The US defense secretary then gave Thanh a belt and a diary that was stripped from a Vietnamese soldier’s corpse in 1972. Carter referred to them as tokens of “a shared past.”

Vietnamese Communist Party secretary general Nguyen Phu Trong is scheduled to visit the United States soon, possibly within the month. Further details of Hanoi’s military cooperation with Washington will no doubt be hammered out.

Vietnam’s economy was left in smoldering ruins in 1975, when the Vietnamese people succeeded in defeating the US military occupation of the country. As in China and the Soviet Union, the Vietnamese Stalinist bureaucracy’s nationalist program was incapable of keeping pace with the integrated world economy. In 1986, the Communist Party leadership opened up the country as cheap labor platform for the imperialist powers, on whose behalf they policed the working class. In 1995 Washington and Hanoi normalized relations.

Over the past five years, Washington has used tensions with China, which it has deliberately inflamed, to drive a wedge between Hanoi and its leading trade partner, Beijing. As the threat of war in the region has mounted at a breathtaking rate, driven by the policies of the Obama administration, so too has the process of converting Hanoi into a proxy of US interests in the region. Carter’s visit marked a further escalation of that process.

Parasitism and the economic crisis

Andre Damon

The US Commerce Department released figures Friday showing that the US economy contracted sharply, shrinking at an annualized rate of 0.7 percent in the first three months of this year.

Yet despite the disastrous condition of the real economy, all three major US stock indexes reached record highs during the three months covered in the report. In fact, less than 48 hours before the release of the data, the Nasdaq Index closed at an all-time high of 5,107.

While the US real economy has grown by only 13 percent since the depth of the recession in 2009, all three major American stock indices—the Dow Jones Industrial Average, the S&P 500 and the Nasdaq—have more than tripled, each hitting all-time highs.

Far from being mere coincidence, the run-up in stock values and economic slump represent two sides of the same process. They express the extent to which, seven years after the 2008 financial crisis, the whole world economy has become an object for unremitting plunder by the global financial aristocracy, with disastrous social and economic consequences.

This plunder manifests itself in the continual diversion of economic resources into the coffers of billionaire shareholders and corporate executives at the expense of productive activity. This was reflected in the Commerce Department report on the collapse of business investment, which fell at a rate of 2.8 percent in the first quarter of this year.

The sharp fall in investment came despite the fact that US corporations are holding a hoard of some $1.4 trillion in cash and similar assets, the largest such figure on record, amassed as a result of years of record profits amid falling wages and an influx of cheap money from the world’s central banks.

Instead of using this cash to hire workers and build factories, corporations are diverting it to raise dividends, buy back shares, hike executive pay and carry out mergers and acquisitions—all at record levels.

In the aftermath of the 1929 financial meltdown, caused by rampant Wall Street fraud, speculation and parasitism, bankers guilty of many of the greatest crimes that led to the crash were tried and convicted, while new financial regulations, including the Glass-Steagall Act that separated commercial and investment banking, put limits on the size and power of Wall Street. This was the response of the ruling class to immense revolutionary struggles of the time.

As the New York Times recently noted, “In the aftermath of the Great Depression, the nation’s finance industry shrank severely—and remained in a humbled state for most of the next four decades. The economy boomed in this period, with no major financial crises and less income inequality than in recent decades.”

In the aftermath of the 2008 financial crisis, on the other hand, none of the basic causes of the crash, including the enormous size of the global financial sector and its pervasive criminality, have been even remotely addressed. Rather, under the guidance of the Obama administration, the dominant position of Wall Street in economic, social and political life has only been entrenched and expanded.

The growth in financial parasitism is so pervasive that even mainstream economic institutions have been forced to warn of its dangers. Last month the International Monetary Fund, a bastion of the political establishment, declared in a research paper that economic growth “weakens at higher levels of financial development” and called on governments to take measures to rein in the size of the financial sector.

Despite these warnings, governments throughout the world have shown neither the will nor desire to rein in even the most brazen and criminal manifestations of financial parasitism.

In the US, the Obama Justice Department has ensured that the major banks have been given effective legal immunity for the crimes they have committed before, during and after the 2008 crash. This has been evidenced by one scandal after another—from selling fraudulent subprime mortgages, money laundering, and tax evasion, as well as rigging benchmark interest and foreign exchange rates—for which not a single bank executive has been prosecuted.

Meanwhile, led by the US Federal Reserve, the world’s central banks have responded to every sign of renewed weakness in the global economy by either expanding their money printing operations or scaling back their plans to “normalize” monetary policy.

Two interrelated processes find expression in the response to the 2008 crisis: 1) the long-term decline of American capitalism, and 2) the elevation of financial parasitism to the basic mode of operation of the ruling class. Even in the midst of the Great Depression of the 1930s, the United States was still a rising industrial power, which would establish its global hegemonic position following the Second World War.

The past four decades, however, have seen a relentless decay and decline, with entire industries wiped out, facilitated and demanded by the operations of finance capital. The process through which the ruling class acquires and maintains its wealth has become ever more divorced from the actual process of production.

The policies of the Obama administration are ultimately the expression of the domination of the financial oligarchy over all aspects of economic and political life in the US, the center of international finance. This social layer uses its political and economic leverage not only to promote its parasitic activities, but also to further the drive toward war and dictatorship throughout the world.

There exists no solution to the crisis gripping the global economy outside of the expropriation of the ill-gotten wealth of this oligarchy and the reorganization of society on an egalitarian and socialist basis.