Pakistan and the Nuclear Security Summit Process

Muhammad Faisal

The fourth nuclear security summit - the biennial conclave of heads of governments from around the world - concluded recently in Washington, DC. The final summit focused on securing nuclear materials, preventing nuclear terrorism, strengthening national and international nuclear security regimes, and charting a future course of action to ensure that nuclear security is accorded highest priority by states around the world.

The idea of the Nuclear Security Summit (NSS) was advanced by US President Barack Obama during his 2009 Prague speech, when he termed the danger of nuclear terrorism as one of the “most immediate and extreme threats to global security.” This assessment emerged from the sharp increase in the quantity of fissile materials in the world, and potential risk of non-state actors acquiring small quantities of radioactive and weapons-usable fissile material.

The three previous NSS have focused on reaffirming nuclear security as a national responsibility, while fulfilling international obligations, securing all nuclear and radioactive materials including nuclear-weapons-usable material, accounting for HEU and reprocessed plutonium, and converting HEU to LEU, where viable. Leaders have also looked at the global nuclear security system and the international safeguards to control spread of fissile materials.

Since 2012, seven states have removed nuclear materials from their territories and more than a dozen states have taken steps to reduce their stockpiles of fissile materials and strengthen security of the materials they possess. Today, only 25 states in the world have one kilogram or more of weapons-usable fissile materials. Thus, the number of states with sensitive and dangerous nuclear materials has decreased substantially. This is significant progress since the commencement of the NSS process.

During the Prague speech, President Obama had pledged to secure all vulnerable nuclear materials in the world within four years, but this goal has not been achieved yet. Primarily because critical international legal agreements that have the capacity to increase the security of potentially vulnerable fissile materials are not in force. The 2005 Amendment to the Convention on the Physical Protection of Nuclear Material (CPPNM) has not come into force yet. In the past few weeks, state parties have ratified the amended CPPNM. At the fourth NSS, the remaining states announced their willingness to ratify it at the earliest. As of 4 April 2016, two more adherences are required for entry into force, which will contribute to the strengthening of nuclear security around the world. These processes are expected to be completed in a few weeks.

Pakistan has also been an active participant during the NSS process. Pakistani Prime Ministers have led national delegations at the first three summits. However, in the wake of the tragic terrorist attack in Lahore, days prior to fourth Summit, PM Sharif had to stay back at home. A high-level delegation from Pakistan attended the Washington Summit, which reflects the level of attention being paid to issues related to nuclear security and challenge of nuclear terrorism.

In recent years, Pakistan has been confronted with a deteriorating internal security environment due to spill over of the war in Afghanistan. Challenges to secure nuclear facilities, materials and arsenal have grown manifold. In parallel, Pakistan has also invested in a rigorous nuclear security regime to ensure maximum security of its nuclear installations and materials. Guarding its nuclear facilities, weapons and materials is the supreme national interest of Pakistan. The security of these weapons and associated infrastructure has, therefore, been the top priority of the government.

Pakistan has invested in raising specialised divisions backed by a dedicated force equipped with high-end technologies to ensure physical protection, material control and accounting, transport security, and personnel reliability. It is an all-encompassing nuclear security regime. Pakistan has also deployed Special Nuclear Material Portals on major entry and exit points to check the illicit transportation of fissile materials. A specialised Centre for Excellence (CoE) to build a nuclear security culture and maintain consistency has also been set up.

At the Seoul Summit, Pakistan offered to open its Nuclear Security Training centre for other states, which would allow it to be a regional and global centre of learning and training. The International Atomic Energy Agency (IAEA), in collaboration with Pakistan, has conducted af ew expert-level training courses at Pakistan’s CoE. Pakistan has repeatedly expressed its resolve to enhance nuclear security and engage with the international community to promote nuclear safety and security.

The NSS process provided Pakistan an opportunity to engage with the international community at the highest political level. However, Pakistan maintains that institutionalising the NSS process is not advisable, as it considers nuclear security to be a national responsibility. As the 2016 NSS Summit marked the end of the NSS process, its Communique reaffirmed the “the essential responsibility and the central role of the International Atomic Energy Agency (IAEA) in strengthening the global nuclear security architecture…” IAEA will be the lead international organisation in implementing the Action Plans of the NSS process. Moreover, ministerial-level meetings will ensure continued “political momentum” on nuclear security.

States have also agreed to maintain an international network of experts who were part of the NSS process. It would have been prudent to institutionalise such a network with a permanent secretariat within the IAEA with the inclusion of the broader community of states. Such a secretariat would have institutionalised the NSS process at the diplomatic level for future engagements.

Pakistan, while seeking to broaden its engagement with IAEA on nuclear security, can also adopt international guidelines on nuclear security as its national law, after reviewing them according to Pakistan’s requirements. Legislation on nuclear security akin to the Strategic Export Control Act of 2004 (which also follows the NSG and other international guidelines) would go a long way towards addressing questions that are frequently raised. Nonetheless, Pakistan has engaged the international community at the highest political level to address apprehensions and to ensure the safety and security of its fissile materials at all cost. For Pakistan, nuclear security goes beyond the NSS process, and is directly linked to national security of the country.

Forecast 2016: Higher Risks Likely to Shape Global Responses

Kapil Narula

The World Economic Forum released the 11th edition of ‘The Global Risks Report 2016’ recently. The report highlights the key ‘risks’ that the world faces in terms of the ‘likelihood’ and the ‘impact’ of risks on a regional and on a global scale. A global risk has been defined as “an uncertain event or condition that, if it occurs, can cause significant negative impact for several countries or industries within the next 10 years.” 29 different risks have been placed under five different categories, viz. Economic (9), Environmental (5), Geopolitical (5), Societal (6), and Technological (4). A survey of 750 stakeholders, located across the world, was conducted in 2015 and the risks were evaluated based on their risk perception. Each global risk was evaluated on a scale of 1-7 with 1 representing ‘unlikely’ and 7 representing ‘most likely’. Similarly, for the impact criteria, a score of 1 was awarded to a risk with the ‘least impact’, while score of 7 was awarded to a risk with the ‘maximum impact’.

The top five risks that were most likely to occur in 2016, in decreasing order, were, ‘large-scale involuntary migration’, ‘extreme weather events’, ‘failure of climate-change mitigation and adaptation’, ‘interstate conflict’ and ‘natural catastrophes’. The risks ranked in terms of impact were, ‘failure of climate-change mitigation and adaptation’, ‘weapons of mass destruction’, ‘water crises’, ‘large-scale involuntary migration’, and ‘energy price shock’. The average score of impact of all risks was 4.76 and the likelihood from risks was 4.87, almost the same as the 2015 risk assessment report.

‘Large-scale involuntary migration’ entered the risk matrix for the first time directly at the top spot, signifying the high risk perception from the unprecedented influx of refugees from war-torn areas into Europe. The likelihood of inter-state conflict fell from the top spot in 2015 to the fourth position in 2016, possibly due to the international community accepting Russia’s annexation of Crimea and the relative stability on that front. The remaining three risks were environmental in nature, which suggested the possibility of high economic and human loss from natural disasters.

‘Failure of climate-change mitigation and adaptation’ jumped from the fifth position in 2015 to the top spot in 2016 in terms of impact, possibly due to the perceived importance of the Paris climate deal in end-2015 and the hype that accompanied the wide media coverage. ‘Severe energy price shock’ entered the matrix after a gap of four years, this time surprisingly due to the collapse of energy prices and the concerns from growing revenue deficits of energy exporter countries.

While the global risk landscape was charted, there were wide variations in the regional perspectives in terms of the most likely risks. Risk perception on a country-wide or a regional scale is important as it identifies the weakest link in the chain. Higher risk perception on a local scale has the potential to trigger off events that can have a large impact in a globalised world. The top three most likely risks identified for North America are cyber-attacks, extreme weather events and data theft while that for Latin America and the Caribbean are failure of national governments, un/under employment and social instability. Europe perceives large-scale involuntary migration as its most likely risk followed by un/under employment and fiscal crisis. Sub-Saharan Africa is most concerned about failure of national governments and critical infrastructure while water crisis emerges as the most likely risk for the Middle East and North Africa. The most likely risk for Central Asia (including Russia) is inter-state conflict followed by energy price shock and failure of national governments. South Asia faces high risk from water mismanagement and climate risks apart from economic risks from unemployment and lower economic growth and environmental risks are higher in East Asia and the Pacific.

Latin America and the Caribbean states are besieged with geopolitical, economic and societal risks. Political instability, high inflation and unemployment, poor oil revenues, financial mismanagement, risk of defaulting on sovereign loan repayments, and a spiralling black market economy continue to plague Venezuela. Brazil, with a high inflation and increasing fiscal deficit, is likely to see a contraction of its economy. A weakening local currency adds to the woes led by a decline in stock market and poor commodity prices. Corruption scandals have also dented the image of President Dilma leading to a loss of confidence in the government. Columbia on the other hand continues its fight with drug dealers and armed conflict with insurgent groups.

Europe is deeply divided on the intake of asylum-seekers, Greece is struggling to stay in the euro zone and the political entity of European Union (EU) is itself under threat with the UK voting on a referendum on staying in the EU on 23 June 2016 with ‘Brexit’ emerging as a strong possibility. The threat of unemployment, though reduced after the 2008 financial crisis, still continues to trouble the countries of the EU.

Economic and societal threats are more prominent in the Middle East and North Africa (MENA) region and armed conflict is plaguing Syria, Iraq, Libya and Yemen. Fragile states in the region include Jordan, Lebanon, Djibouti and Tunisia, while Egypt and Morocco are undergoing political transitions. Sub-Saharan Africa on the other hand faces high risks from political instability due to a large number of countries having authoritarian regimes, high levels of corruption and weak institutions.

While the ‘Global Risks Report 2016’ raises awareness about the perceived global risks and also gives insights into their potential interconnections, it does not discuss any actions to mitigate, adapt and to strengthen the resilience of countries to these risks. However, it does give a shared understanding to governments and helps various countries in aligning their strategies so that they can undertake multi-stakeholder collaboration to offset these risks. How the year 2016 pans out remains to be seen, but it is most likely that political risks which amplify societal risks will be the flavour of the year.

Japan’s New Security Laws: Context and Implications

Sandip Kumar Mishra


On 29 March 2016, Japan’s new security laws came into effect. The laws were passed in September 2015 despite not being favoured by the opposition parties and many Japanese people. The new laws allow the Japanese Self Defense Forces (SDF) to participate in foreign conflicts. In fact, it broadens the notion of ‘self defence’ of Japan to a ‘collective self defence for allies’. Effectively, the change to the country’s security laws is part of a broader strategy. Japanese Prime Minister Shinzo Abe has been trying to amend Article 9 and Article 96 of the ‘peace constitution’ to reorient the Japanese armed forces according to his aggressive postures. There are all probabilities that Abe would try to amend Article 9 after the July 2016 Upper House elections in Japan.

Following the incident wherein the Islamic State (IS) beheaded two Japanese nationals, the new security laws have been justified on the grounds that Japanese citizens abroad too must be protected. Abe’s other important motivation is the fact that in Japan’s contest with China vis-à-vis regional politics, it is important for Tokyo to have more seamless and close military cooperation with the US; and the erstwhile laws put several limitations to it. The third reason Japan opted for the new laws is its long quest to become a ‘normal state’, with an interpretation that Japan must have military capabilities equal to its economic might.

From the very beginning of his term in 2012, Abe has appeared to be clear that Japan needs to adjust its posture given the changing realities of regional and global politics. With an assertive China under President Xi Jinping in the East China Sea, the South China Sea and the neighbourhood, Abe got a valid excuse for his venture. Consistent North Korean provocations in the form of nuclear and missile tests as well as aggressive rhetoric further helps Abe in altering the country’s security posture which becomes palatable domestically as well as abroad.

Actually, Japan has been undergoing a transformation in which its ‘peace dividend’ that is earned by being a peace-loving country and a benefactor to many countries in the economic development via its Official Developmental Assistance (ODA) is considered insufficient. A stagnant economy with an increasing ageing population do not bring much hope to common people. There are opinions that since these limitations appear insurmountable in the near future, Japan needs a different strategy to maintain its regional and global stature. The new strategy indicates that Tokyo has been getting itself geared up to be a military power and is not satisfied with the stagnant economic or ‘peace dividend’. Last week, results of a survey conducted by Japan’s Kyodo news agency showed that around 39 per cent Japanese were in favour of the new security laws. Yet, a majority of the Japanese citizens feel the country should adhere to its peace constitution; but Abe’s popularity and the growing support for the Constitutional amendment indicate that irrespective of the justification, Japan is poised to be become a military power in the region.

As expected, China strongly objected to these security laws. China’s state-owned news agency, Xinhua, published several news items and opinions that condemned Japan for ‘lack of prudence’ and ‘violation of the country’s pacifist Constitution’. It was also urged that Japan should learn from its history. The Beijing-Tokyo bilateral – that was expected to improve following the November 2015 China-Japan-South Korea trilateral meeting – again appears to be an impossible proposition. At the 2016 Nuclear Security Summit, Abe and Xi avoided each other during photo sessions and had no bilateral meeting on the sidelines of the Summit.

In contrast, the US, Japan and South Korea had a trilateral meeting and discussed issues related to their common concerns. Throughout the process of the ongoing transformation in the Japanese posture, the US has not raised any objection. Instead, Washington feels that its regional allies becoming more active is better at a time when its own capabilities and reach are getting less assuring. Had Japan’s new security laws been implemented a few decades ago, the US would have viewed it rather differently. South Korea may have some historical memories to overcome before welcoming Japan’s new aggressive posture but it appears that gradually, Seoul’s Park Geun-hye administration is accepting it as fait accompli.

Thus, the implementation of Japan’s new security laws is not a one-off incident, and instead indicates a trend in Japan’s transformation. This transformation has its domestic and external contexts and justifications but will definitely have a bearing on the regional political equations. It would be a matter of judgment to state whether Japan is moving in the right direction or not. However, it could be safely said that in the contest in East Asia, none of the parties are ready to compromise and Japan is definitely not an exception.

Study warns of potentially catastrophic impacts from Antarctic ice melt

Daniel De Vries

The ongoing rise in greenhouse gas emissions may trigger a rapid, irreversible collapse in an Antarctic ice sheet the size of Mexico, with potentially catastrophic consequences, a study published last week in the journal Nature found.

Rob DeConto, a geoscientist at University of Massachusetts Amherst, and paleoclimatologist David Pollard, of Pennsylvania State University, suggest the West Antarctic ice sheet is far more unstable than previously appreciated by scientists. Its collapse may add more than a meter to the level of the world’s oceans as quickly as 2100, and more than 15 meters long-term. With ice melt from other regions, sea level could rise nearly 2 meters before the end of the century.

Such a rapid increase in the world’s oceans could permanently flood entire cities, necessitating mass migration and unleashing destruction on a scale not experienced outside of world war. Research compiled last year offered a conservative estimate of well over a hundred million people directly imperiled by sea level rise corresponding to 2 degrees Celsius warming, without accounting for West Antarctic collapse. If rising temperatures do trigger such a collapse, many of the world’s mega-cities, from New York to Shanghai to Rio, may be in jeopardy within the lifespans of children alive today.

DeConto and Pollard’s research examined how climate change affects the West Antarctic ice sheet, a vast region where much of the land mass is below sea level. Floating ice sheets, which extend for hundreds of kilometers, are subject to the dual forces of warming ocean currents and rising air temperatures. Meltwater flowing through cracks in the floating ice can trigger a domino effect of disintegration as instability mounts with each collapsing ice cliff. This is precisely what scientists have observed at the rapidly retreating Helheim Glacier in Greenland, and what may be in store for West Antarctica.

The researchers accounted for ice cliff collapse and other melting mechanisms in climate models for the first time, enabling them to more accurately reconstruct historic sea levels that have long puzzled scientists. While temperatures in polar regions over the past several million years have only slightly exceeded today’s, global sea level averages have been as much as 9 meters higher. The culprit, as DeConto and Pollard explain in their paper, is the sensitivity of melting Antarctic ice sheets to relatively small changes in temperature.

Having more accurately replicated the past, they ran their model to explore future scenarios of climate change. The study found that for a given amount of warming, the expected rate of ice loss in Antarctica, which holds approximately 90 percent of the earth’s fresh water, far exceeds the previously accepted estimate.

The relationship between warming global temperatures and sea level rise has long been one of the more controversial topics among climate scientists. While one of the primary mechanisms, thermal expansion due to rising water temperatures, is well understood, the potential impact of melting glaciers and ice sheets has been a source of substantial uncertainty. The Intergovernmental Panel on Climate Change in 2013 revised their assessment of projected sea level rise upward by about 60 percent from six years previous. The new study suggests a rise nearly double that of the 2013 estimate.

DeConto and Pollard’s study adds to a body of research that over the past few years has raised alarms over the potential for runaway sea level rise. Using satellite data, studies by Bert Wouters and colleagues, and separately Christopher Harig and Frederick Simons, for example, observed rapid melting in areas of Antarctica previously thought to be stable.

This emerging research is a grim warning about the severity of rising sea levels. Far from being written off as a problem hundreds of years distant, or one that may impact only a limited number of geographies such as low-lying islands and flood-prone settlements, a meters-large increase in global ocean levels within the next several decades would be catastrophic for wide stretches of humanity.

“This could spell disaster for many low-lying cities,” DeConto remarked to his university’s press office. He added that his study showed that aggressive action to reduce global carbon emissions can reduce the risk greatly.

However, this growing urgency to mitigate and adapt to climate change before disastrous and unstoppable consequences has been matched with little more than pretense by the ruling class. The Paris Agreement, signed last December, binds the world’s governments to little more than accounting paperwork. Their voluntary pledges, even if carried out, fall well short of limiting temperature increase to avoid catastrophe.

Canadian spy agency regularly using new “disruption” powers

Roger Jordan

Canada’s premier domestic spy agency, the Canadian Security Intelligence Service (CSIS), is making regular use of the new “disruption” powers it was given last year under a Conservative-authored, Liberal-supported police-state law, Bill C-51.

A strong advocate of the need for such powers, CSIS head Michel Coulombe recently told a Senate committee that CSIS has used its power to “disrupt” activities it deems potentially harmful to Canada’s public security close to two dozen times since last fall.

Coulombe refused to provide any details of the measures taken by CSIS agents, or to specify the nature of any of the threats they were intended to counter. He claimed that in making use of its new disruption powers, CSIS has not yet had to request a judicial warrant authorizing it to break the law or violate targets’ constitutional rights as spelled out in the Charter of Rights and Freedoms.

Such assurances are worth little given CSIS’s well-documented history of lying to the courts and arrogating new powers through patently unconstitutional interpretations of the law. For example, both CSIS and Canada’s signals intelligence agency, the Communications Security Establishment (CSE), have maintained that they have the right to collect the metadata of Canadians’ electronic communications—cell calls, emails, internet use, etc.—because it isn’t “constitutionally-protected communications,” merely an “envelope.”

Coulombe refused to answer reporters’ questions on whether CSIS had been successful in thwarting any “threats” through the use of its “disruption” powers. Instead, he sought to justify the vast powers CSIS has available it to by telling the Senate hearing that they are akin to those of spy agencies in allied countries.

Under Bill C-51, CSIS is empowered to use any means it can to “disrupt” suspected threats to public security. The only provisos are: it must obtain permission from a secret court, operating on the basis of secret jurisprudence, when it breaks the law or violates targets’ Charter rights; it cannot kill someone or cause them bodily harm, whether intentionally or by criminal negligence; it cannot pervert the course of justice, or violate someone’s “sexual integrity.”

Citing the need to protect national security, CSIS and the government have said next to nothing about how the spy agency might employ its disruption powers. But it has been widely noted in the media that it could illegally disrupt communications, detain people or impede their travel, and carry out break-ins to plant electronic bugging devices or steal money or information. CSIS could also press employers to fire targeted individuals and mount smear campaigns. Craig Forcese and Ken Roach, academics who have written extensively on Bill C-51, contend that under its new “disruption” powers CSIS, working in cahoots with secret courts, could even set up a secret detention facility and/or subject individuals to torture.

The Conservatives justified Bill C-51 in the name of fighting terrorism. But virtually all the new powers the legislation gives CSIS and Canada’s other intelligence-security agencies are applicable to anything those agencies deem a potential threat to either “public security” or to “national security,” including Canada’s “economic stability,” critical infrastructure and “territorial sovereignty,” diplomatic interests or constitutional order.

This is also true of CSIS’s disruption powers.

Apart from gaining a judge’s consent in cases where CSIS deems its disruption will involve breaking the law or violating someone’s Charter rights, Bill C-51 contains only one other provision for mandatory “oversight” of CSIS’s “disruption” activities. CSIS must provide the minister of Public Safety with a periodic report on the number of “disruption” activities it has conducted.

In February, the Toronto Star reported that documents it had obtained reveal that CSE had told its ostensible political master, Liberal Defence Minister Harjti Sajjan, it can assist CSIS with its “disruption” activities without court authorization.

“This was the sleeper in (Bill) C-51,” legal scholar Forcese told the Star, “because CSE is barely mentioned in C-51.” Forcese compared CSE’s new role to that of a “hacker” for the domestic intelligence services. “CSE has been a watcher.. .. It has not been able to do things kinetically to people. But under the umbrella of CSIS assistance, it can now go kinetic.”

CSIS’s frequent use of its “disruption” powers confirms the warnings made by the World Socialist Web Site about the sinister character of Bill C-51. The legislation was rushed through parliament by the former Conservative government in the wake of the twin, October 2014 killings of Canadian Armed Forces’ personnel in St. Jean-sur-Richelieu, Quebec and Ottawa. Prime Minister Stephen Harper whipped up a climate of fear, casting Canada as a country under siege by jihadi terrorists so as to justify a vast expansion of the powers of the national security apparatus.

The Liberals, then only the third-largest party in the House of Commons, voted for Bill C-51 at every stage of its passage through parliament. They did so while claiming to have certain reservations, principally on the issue of parliamentary oversight of the security agencies, and promising to amend the legislation if they formed the government after the October 2015 election.

The Liberals’ support for the key features and thrust of the Conservatives’ authoritarian legislation was exemplified by Justin Trudeau’s denunciations of the New Democratic Party’s tepid criticism of the law as “fear-mongering.”

Having been sworn in as prime minister, Trudeau is now deepening intelligence collaboration with the United States, which leads a global spying network of unheard of proportions. At his meeting with President Obama in Washington March 10, Trudeau agreed that Canada and the US will share information on everyone entering and exiting their countries across their common land border. This will build on the comprehensive collaboration that already exists between the Canadian and US national security apparatuses, including through the US National Security Agency-led “five eyes” alliance.

Speaking in a CBC interview prior to Trudeau’s visit, US National Security Adviser Susan Rice said of information sharing between Ottawa and Washington, “Frankly, our concern is not that there is too much, but at times there’s been too little.”

Liberal Public Safety Minister Ralph Goodale, tasked by Prime Minister Trudeau with overseeing amendments to Bill C-51, has initiated a public “consultation,” but says no legislation should be expected before the fall. The major change to the legislation anticipated is the establishment of a parliamentary oversight committee for Canada’s spy agencies along the lines of the congressional committees in the United States and Britain’s parliamentary committee. Such bodies, staffed by trusted representatives of the ruling elite, have done absolutely nothing to prevent the emergence of a police-state apparatus in both countries, including mass surveillance of the population.

Yet even the Liberals’ proposal to make minor modifications to Bill C-51 has prompted pushback from the intelligence agencies. A week after Trudeau sent a ministerial-mandate letter to Goodale instructing him to repeal certain elements of Bill C-51, including the provision permitting CSIS to violate the Charter of Rights and Freedoms, CSIS head Coulombe arranged a private briefing with the public safety minister to argue against any changes to the legislation.

The Liberals’ attempt to pose as a party concerned with upholding the democratic rights of Canadians was always a fraud. In the wake of 9/11, the Liberal governments of Jean Chretien and Paul Martin dramatically expanded the powers and reach of Canada’s national security agencies. It was the Chretien Liberal government that launched an assault on core democratic rights, such as the right to remain silent and the presumption of innocence, and it was under Martin that CSE was secretly authorized to carry out the mass surveillance of Canadians’ electronic communications.

Australian government crisis intensifies over austerity agenda

Mike Head

Just over six months after Malcolm Turnbull was installed as prime minister in a backroom party coup, his Liberal-National Coalition government is showing signs of unraveling. Open rifts have emerged within the government over how to impose deep cuts to health, education and social spending, amid rising popular discontent and opposition.

Last Friday Turnbull suffered a humiliating defeat at a Council of Australian Governments (COAG) meeting. The state and territory leaders rejected out of hand his “big idea” to force them to levy their own income taxes to pay for public hospitals and schools. Since 1942 the federal government raised all income tax and provided grants to the states.

On the weekend Turnbull tried to save face, claiming that his grand plan to restructure the Australian federation was simply a political ploy—to publicly demonstrate that the state and territory leaders were not prepared to take responsibility for austerity measures.

Turnbull used the COAG outcome to argue that the states’ refusal to raise their own taxes justified the federal government’s decision not to provide extra funding for schools and hospitals. “We must live within our means,” Turnbull declared—a mantra now being endlessly repeated by government ministers and the media.

What this slogan signifies is that millions of working class people must be made to pay for the collapse of the two-decade mining boom and a rapidly worsening economic situation. The economic reversal has already stripped billions of dollars from federal and state government tax revenues, and triggered extensive job losses and sharp cuts to wages and working conditions.

After years of attacks on public health, education and welfare services by successive Labor and Coalition governments, chronically-underfunded hospitals and schools will be further starved of resources, with devastating consequences for patients and students, especially in working class and regional areas.

Last September, when Turnbull deposed his predecessor Tony Abbott, he initially sought to talk up the prospects of Australian capitalism. He tried to spur business investment and consumer spending in order to overcome the economic slump produced by the marked slowdown in China and the worsening global downturn.

Turnbull’s main catch phrase was: “It’s never been a more exciting time to be an Australian!” That “narrative,” which was always contemptuous of the intensifying hardship faced by ordinary people, is no longer sustainable.

The speculative housing bubble, which has partly offset the mining crash since 2011, is teetering on the edge of collapse. Record house prices, rents and building approvals are starting to fall. Saddled with huge mortgages, many people could lose their homes if they lost a job, took a pay cut, suffered a serious illness or were hit by a rise in record low interest rates.

Every day produces new indicators of the deepening impact of the economic slowdown. Australia’s second-largest telecommunications firm, Optus, yesterday announced nearly 500 job cuts. Various financial schemes to avert the closure of the Arrium steelworks in the South Australian regional city of Whyalla and the Queensland Nickel refinery in the northern city of Townsville have fallen through in recent days, directly threatening the jobs of over 2,000 more workers.

These developments have thrown further doubts over the viability of Australia’s four major banks, which are heavily exposed to the spreading closures and collapses of mining-related projects, as well as to any housing slump.

While welcoming Turnbull’s “live within our means” slogan, business leaders are insisting that this cannot be left in words, and that far deeper spending cuts are required. In the lead-up to the impending federal budget, now scheduled for May 3, they are also demanding a reduction in the company tax rate, in a bid to boost profits and investment, which has fallen dramatically since the mining boom ended.

Former Commonwealth Bank of Australia chief executive David Murray yesterday reiterated these demands, warning that “lacklustre growth in the global economy and currency wars” made “the Australian economy more vulnerable.” Without severe cuts in public spending and debt, the financial markets would strip the Australian government of its triple A-rating and “if we lose it, we could well see multiple downward re-ratings.”

However, to implement these demands would place the government on a collision course with the majority of working people who are overwhelmingly hostile to the intensifying assault on jobs, basic services and social conditions.

Despite Turnbull’s efforts to “talk-up” the economy, there is growing awareness that the conditions of life are worsening in Australia. A survey by the National Australia Bank’s investment arm MLC, released yesterday, shows almost two-thirds of parents did not believe their children would achieve the same lifestyles as them. Around half the people surveyed did not think they could sustain their own standard of living in a decade’s time and two-thirds believed the next generation would never be able to buy their own homes.

Recent adverse media polling results have exacerbated recriminations within the Coalition. When Turnbull was installed as leader, he vowed to deliver “strong economic leadership” that would revive the government’s electoral fortunes after losing “30 Newspolls in a row.” A number of backbench Coalition members of parliament made media comments today, mostly anonymous, criticising Turnbull’s performance and voicing fears of losing their seats at the looming federal election, which must be held before next March.

The government confronts a predicament over Turnbull’s threat last month to call a July 2 “double dissolution” election of all members of both houses of parliament. His move was a bid to clear out of the Senate eight “independents” who have helped block some key austerity measures from the government’s 2014 budget. It was also a step to get an election out of the way before the economic situation deteriorates further, and pave the way for a post-election austerity offensive.

A long election campaign leading up to a July 2 poll could politically backfire. Not only could the government be defeated but an even greater number of “crossbenchers” could be elected to the Senate on the basis of opposing budget cuts. On the other hand, delaying the election beyond July, could lead to an even worse electoral debacle.

The mounting frustrations and fears within the corporate elite were underlined by today’s Australian editorial. It condemned both the Coalition and the opposition Labor Party for failing to “live up to” former Labor Prime Minister Kevin Rudd’s 2007 election vow to stop “reckless spending.”

The newspaper warned that government net debt was heading to a record high, “financed mainly by foreign borrowing.” It raised the spectre of another global crash hitting Australia’s precarious economy. “The financial crisis of recent memory should be reminder enough that public debt can suddenly explode in a crisis and global lenders can close their cheque books.”

IMF report points to sources of increasing financial turbulence

Nick Beams

The global financial system has become increasingly exposed to volatility and the risk of a meltdown emanating from what were once considered stable institutions, and national-based monetary authorities exercise a decreasing degree of control over the system.

This conclusion emerges from two analytical chapters of the Global Financial Stability report issued by the International Monetary Fund (IMF) on Monday in the lead-up to its spring meeting later this month.

One chapter deals with the impact of “spillover” effects of turbulence in so-called emerging markets resulting from their closer integration into the global financial system over the past two decades. The other examines the heightened risks posed by insurance companies as they confront increasing problems flowing from the global low-interest rate regime.

The IMF notes that “spillovers of emerging market shocks to equity prices and exchange rates in advanced and emerging market economies have risen substantially and now explain over a third of variation in asset returns in these countries.”

A spillover is defined as the impact of changes in domestic asset prices in one country on those in another. The impacts emanating from emerging markets have become “significantly stronger since the 2007–2009 global financial crisis.”

Underlying these effects is the growing significance of emerging markets in the global economy. As the IMF notes, they have contributed more than half of global growth over the past 15 years. Another indicator of increasing global integration, flowing from the establishment of global supply chains by major transnational corporations, is the 20-fold rise in trade between emerging market economies since the early 1990s.

The IMF pays particular attention to China, pointing out that the suspension of trading on Chinese markets on January 6 this year “reverberated across major asset markets globally.” When Chinese equities fell sharply on August 24, 2015, following a change in the exchange rate regime for the renminbi, the “subsequent plunge in Asian markets was significant.” US and European markets were also “adversely affected.”

While the IMF does not make this point, the analysis contained in the report is an exposure of the claim that the turn to the “free market” is the road to stability for the global financial system. In the case of China, the exact opposite is the case.

According to the IMF, the “impact of shocks to China’s fundamentals on global financial markets is expected to grow stronger and wider over time.” In addition to the growth of its economy, the size of Chinese financial market spillovers “is also likely to grow because of the transition to a more market-based financial system.”

“In both equity and bond markets, the inclusion of Chinese securities and global benchmarking indices will likely have a large global impact. As banking and market linkages rise, the use of the renminbi as a funding currency as well as a reserve currency will grow, which will also increase spillovers through foreign exchange markets.”

This analysis underscores one of the central features of the historic crisis of the capitalist economy—the ever-deepening contradiction between the global character of economic and financial activity and the nation-state system. Rather than exercising control, national-based central banks and monetary authorities—even the largest, such as the US Federal Reserve—increasingly have to react to, rather than direct, financial flows.

This lack of control has worsened since the 2008 global financial crisis, with various funds, rather than banks, playing a growing role in the intermediation of global capital flows. The result is that “close to two-thirds of dollar funding originates outside the United States,” increasingly dominated by investment funds.

The second chapter deals with the global life insurance industry and the “trends and systemic risk implications” of developments since the 2008 crisis.

It notes that “across the advanced economies the contribution of life insurers to systemic risk has increased in recent years,” while it still remained below that of banks. Systemic risk refers to a situation where the financial problems encountered by an individual company sweep through the money markets as a whole.

What the IMF disingenuously refers to as the “near collapse” of the American insurance giant AIG during the 2008 crisis “prompted a rethinking of the sector’s systemic risk contribution.” In fact, the firm went bankrupt and was only saved by a US government bailout.

By every measure, the insurance companies’ contribution to that systemic risk is rising. They hold some $24 trillion, or 12 percent of global financial assets.

As the IMF explains, this is a result of “common exposures to aggregate risks.” That is, insurance companies are affected by the same turbulence as other parts of the financial system. Furthermore, they are sensitive to interest rates. “Thus, in the event of an adverse shock, insurers are unlikely to fulfil their role as financial intermediaries precisely when other parts of the financial system are failing to do so as well.”

A particular problem for life insurance companies is the low-interest rate regime established by the world’s major central banks in the wake of the 2008 crisis. Their entire business model faces “challenges” because the promised rates of return on long-term contracts now exceed the returns that are available on “safe” assets such as government bonds and high-grade corporate bonds. This leads to a situation where the life insurers could undertake a search for higher yields in riskier assets and possibly “gamble for resurrection.”

This situation is set to worsen because there is little prospect of any major change in the current low-interest rate environment.

The IMF warns that smaller and weaker firms are more likely to take on excessive rises and the “solvency problems of [these] smaller entities may result in cascading effects that become systemic.”

As with the chapter on spillover effects, the IMF’s analysis of the insurance industry points to the increasing impotence of national-based regulatory institutions. It says authorities should take a more macro-prudential approach to the sector—that is, closer regulation of individual firms and tighter national standards. Such an approach, it says, would be complemented by “international adoption of capital and transparency standards for the sector,” indicating that in this global industry none exists at present.

One is reminded of the observation by Marx in the Communist Manifesto that modern bourgeois society, with its relations of production, of exchange and of property, “is like the sorcerer, who is no longer able to control the powers of the nether world whom he has called up by his spells.”

“Panama papers” tax evasion leak stokes political crises worldwide

Andrea Damon

On Sunday evening, a group of over 100 global newspapers, in collaboration with the International Consortium of Investigative Journalists (ICIJ), began releasing reports on corruption, money laundering and other fraudulent activities by leading global politicians and business people disclosed in what the ICIJ called the “biggest leak of inside information in history.”

The reports are based on 11.5 million confidential documents from the Panamanian corporate service provider Mossack Fonseca that provide detailed information on more than 214,000 offshore companies.

The documents, according to the ICIJ, “Reveal the offshore holdings of 140 politicians and public officials around the world—including 12 current and former world leaders. Among them: the prime ministers of Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia.”

The firm also set up accounts used by 29 billionaires listed in Forbesmagazine’s ranking of the world’s 500 richest people.

The release of the report triggered scandals and investigations in over a dozen countries, including Iceland, the UK, Chile, France, Russia, Ukraine, Argentina, the United States, Germany, Brazil, Canada, Norway and Sweden.

Up to 10,000 people participated in a demonstration in front of the parliament building in Reykjavík, the capital of Iceland, to demand flash elections after leaked documents showed that Prime Minister Sigmundur David Gunnlaugsson, of the center-right Progressive Party, hid assets in an offshore company that he failed to disclose while serving in the country’s parliament.

The documents also revealed that Ian Cameron, the father of the British prime minister, and other prominent members of the Conservative Party were clients of Mossack Fonseca. When asked whether the prime minister’s family had any more money invested in the funds, a spokeswoman for Cameron replied, “That is a private matter.”

Ukrainian lawmakers have demanded an investigation after the documents revealed that President Petro Poroshenko, who was brought into power after the 2014 US-backed coup, moved his assets to an offshore account to avoid paying taxes.

The investigation also indicated that Mauricio Macri, president of Argentina, had served as a director of an offshore company in the Bahamas.

US and British newspapers sought to put an anti-Russian spin on the revelations, with the British Guardian concentrating its reporting on claims that individuals with connections to Russian President Vladimir Putin were involved in multi-billion-dollar offshore deals. Reuters, in reporting the Guardian ’s claims, wrote that it “could not confirm those details.”

The documents, amounting to some 2.6 terabytes, were leaked to the German newspaper Süddeutsche Zeitung in August 2015 by an unnamed individual who said he wanted to expose criminal wrongdoing. The files were reviewed by a team of over 300 journalists over the course of a year prior to the coordinated publication of reports Sunday.

The documents reveal that Mossack Fonseca, far from being an aberration, was an integral part of the operations of leading global banks. As ICIJ put it, “The documents make it clear that major banks are big drivers behind the creation of hard-to-trace companies in the British Virgin Islands, Panama and other offshore havens. The files list nearly 15,600 paper companies that banks set up for clients who want to keep their finances under wraps, including thousands created by international giants UBS and HSBC.”

According to the ICIJ, among the services offered by the firm were the back-dating of corporate documents and the destruction of evidence to prevent criminal prosecution. The company has denied involvement in any criminal activity.

Sunday’s revelations follow a release of documents by the ICIJ in 2015 that showed that the Swiss private banking arm of HSBC, Europe’s largest bank, functioned for years as a tax evasion and money laundering firm. The company ran a branch that gave out “bricks” of hundreds of thousands of dollars in cash in foreign denominations and provided its wealthy clientele with advice on how to commit tax fraud, according to the reports.

The ICIJ report provides extensive documentation of the claims by University of California economist Gabriel Zucman, who has estimated that 8 percent of global financial wealth, amounting to some $7.6 trillion, is hidden in offshore tax havens. “These findings show how deeply ingrained harmful practices and criminality are in the offshore world,” Zucman said in response to the reports.

“One leak exposed a global web of over 200,000 offshore shell companies: Imagine what leaks at other well-placed law firms and banks would expose?”

Mark Williams, a lecturer at Boston University, told Bloomberg, “This leak is proof that despite explicit banking laws against tax evasion, criminal uses and money laundering, the global offshore shell game business remains open for the wealthy and well connected.”

While the US was the fourth-most popular country for the shell companies set up by Mossack Fonseca to operate, no high-profile individuals in the US were exposed as having had accounts. Some experts speculated that this was simply because of the fact that, with extremely limited financial regulation, particularly in some state and local jurisdictions, wealthly Americans wishing to hide their assets or launder money can easily do so at home.

Shima Baradaran Baughman, a law Professor University of Utah, College of Law, told Fusion, “Americans can form shell companies right in Wyoming, Delaware or Nevada. They have no need to go to Panama to form a shell company to use for illicit activities.”

German report confirms poor die younger

Dietmar Henning

Being poor makes you ill and leads to a premature death. That is the conclusion to be drawn from the latest statistics on life expectancy in Germany, as well as the comprehensive report by the Robert Koch Institute (RKI). This once again confirms “the central influence of socioeconomic status on the health of the population.”

Figures from the Federal Institute for Building, City and Spatial Research (BBSR) show that life expectancy in Germany is differentiated strongly by region. The national average of life expectancy for newborns is currently 78 years for men and 83 years for women.

Those with the statistically lowest life expectancy are newborn boys in the town and surrounding districts of Pirmasens (73 years), Hof (73.5) and Emden (73.6). The highest are those in Starnberg near Munich (81.3), in Munich itself (80.9), in Hochtaunuskreis near Frankfurt (80.9) and in Böblingen near Stuttgart (80.8).

On closer inspection, a clear picture emerges. Life expectancy in regions with lower incomes and weaker infrastructure lies far below the average. The map of life expectancy aligns with the map of social inequality. Above all, districts and towns with adverse living conditions can be found in the Ruhr Area, Saarland, some districts in Bavaria and in wider parts of east Germany, leading to premature death.

Pirmasens was once renowned for its shoe industry. Today nothing remains of it and the town is plagued by high unemployment and poverty. The same applies to Hof in Bavaria, where only a tiny fraction of its former textile industry remains, for the former coal and steel towns of the Ruhr Area, for Emden in East Frisia and whole swathes of East Germany.

The Robert Koch Institute also illuminates the causes for the different mortality rates. Its 516-page document, undertaken on behalf of the federal government, brings together all the current studies on the theme and shows why poor men die some 11 years (10.8) earlier than well-off men. For women, the difference is smaller, but is still 8.4 years.

As well as demographics—the German population is becoming older and smaller—another factor determines the development of “health and care provision in Germany quite substantially”—namely the “strong influence of the social situation.”

“For many illnesses, the clear influence of the social situation can be observed, especially for illnesses of the heart and circulation, and diabetes,” the researchers write. For example, women on low income suffering a heart attack have seven years’ lower life expectancy than their counterparts in higher income groups.

The unequal health outcomes associated with social status begin in childhood and adolescence and continue throughout life. They can be seen especially in health-related behaviour and health risk factors such as excess weight and the effects of passive smoking, as well as psychological problems. “For example, the proportion of children and adolescents at risk of psychological problems in families with low socioeconomic status is considerably heightened compared to families with a high socioeconomic status,” the report notes.

Over 29 percent of 3- to 17-year-old girls and 37 percent of similarly aged boys from poor families present with mental health problems. In comparison, 8 percent of girls and over 11 percent of boys from richer families are affected. The proportion of children and adolescents diagnosed with Attention Deficit Hyperactivity Disorder (ADHD) is largest in the lower income groups.

These health inequalities affect individuals throughout their lives. “Residential districts with a high proportion of socially disadvantaged are often characterised by poor living conditions and lower health outcomes.” These people are often found on busy main routes and crossroads.

“The world of work is the place in society where social differences are manifested particularly sharply,” the authors write. Skilled male and female workers more frequently admit to “facing greater health impacts from their jobs” than from academics. Correspondingly, workers with lower employment status are ill more often than those with higher status: “The unemployed and those with a precarious link to the labour market, such as the marginally employed, are ill nearly twice as often as those in full employment.

The link between income and “years lived in good health” is even clearer than the link between income and life expectancy. In this regard, the difference between the lowest and the highest income groups is 13.3 years for women and 14.3 years for men, according to the RKI.

Although health expenditure continuously rises—with expenditure of over 11 percent of GDP (approximately €315 billion), health provision was one of the strongest economic areas in 2013—working class and poor families do not particularly benefit.

The vast proportion of health expenditure is consumed by big pharma, hospitals and health insurance companies, as well as some doctors. The health provisions for the majority of the population, financed in Germany by social insurance, face continual cuts by the federal government. In contrast, private health expenditure has almost doubled in the last 20 years, to some €43 billion in 2013.

Despite the warnings regarding the health impact of social inequality, this is growing still further. Only recently, the details of the millions paid to top managers of Germany’s leading companies were published. On average, they earned nearly €6 million each last year. The board chairmen and chairwomen of the largest corporations received more than 180 times the average German salary.

Daimler Chairman Dieter Zetsche pocketed the most in 2015 (€14.37 million); about €1.2 million a month. Even a well-paid skilled worker at Daimler would have to work for 287 years to earn the equivalent; an average earner would need to work 429 years.

Ulf Schneider from the health care company Fresenius received only slightly less in 2015 (€13.9 million). Five other company chiefs received more than €9 million each last year. Former VW chief Martin Winterkorn, who topped the executive pay ladder last year, was probably rewarded similarly to Zetsche and Schneider, despite having to resign as a result of the exhaust emissions scandal. However, details of his earnings have not been published as Volkswagen has postponed declaring its results and presenting its annual report until the end of April.

Top managers are representative of an ever-smaller group that is enriching itself, while the vast majority of the population face stagnating pay and social cuts. The wages of the lowest fifth of income earners have fallen since the mid-1990s in real terms. In contrast, income for the owners of capital has risen between 2000 and 2014 by 33 percent in real terms.

The top 1 percent owns a third, the top 10 percent owns 60 percent of all wealth, while the bottom 30 percent of the population owns nothing, or has debt. For millions of workers and the unemployed in Germany, social inequality means a premature death.

Poverty among California seniors rising despite economic “recovery”

Adam Mclean

According to a recent Sacramento Bee review of US census data for the year 2014, the number of California seniors living in poverty has nearly doubled between 1999 and 2014, to a total of 520,000 in poverty today.

As of 2014, about 16 percent of Californians live under the federal poverty line ($11,880 in 2016). For a retired individual, the poverty line is as low as $11,400, qualifying some 520,000 seniors as living in poverty. However a newer measure, called the Supplemental Poverty Measure, first used by the US census for the year 2010, tracks additional factors such as prices and taxes and is generally considered to give a more realistic picture of the degree of economic hardship. The 2014 census found that the California poverty rate using this measure was 23.4 percent– around 1 in 4, the highest rate in the nation.

According to this measure, of California’s 39 million people, nearly 10 million are in poverty.

Most of the seniors in question live primarily off of social security income, sometimes with a small pension, and many are even homeless. But with a high cost of living in many areas, an income of less than several thousand dollars per month is often not enough to cover even basic necessities such as rent, food, and medication.

When she was growing up, Faye Duncan (80) told the Bee, “There never was a question whether you’re going to have a place to live.” Emphasizing the poor state of housing for the elderly, she reported having to wait “a year and a half to get in here,” referring to an affordable housing complex. Describing her quality of life, she said tearfully, “I’m in pain 90 percent of the time. And I mean pain.”

Shannon Stevens, an intake specialist at the Maryhouse women’s shelter in Sacramento, stressed, “There’s no housing available for them because of the lack of affordable housing.” Speaking of the vulnerable conditions for the elderly, she noted: “And then there’s also the issue of physical health issues that come with a great expense for prescription medications.”

Especially in the larger cities, rent in California is notoriously high. A full third of the seniors who live in rental units find themselves spending over half of their income on rent. It is no accident that poverty rates are greater in Los Angeles and San Francisco, where rents are higher.

Add to this the increasing price of food, plus, according to the AARP, an increase in real terms of common prescription drugs used by seniors by more than 100 percent since 2005, and it becomes nearly impossible to get by on many incomes. Given that increasing prices are among the more immediate sources of impoverishment, the figure of 520,000 seniors in poverty in California is likely a conservative estimate.

Gary Passmore, the director of the Congress of California Seniors, said, “People who are turning 65 over the next two decades are generally going to be worse off than people who are retired today. … The average 70-year-old today has fewer assets because of the recession and typically is less likely to have retirement income than their counterparts 15 years ago.”

Rather than implement measures to reverse these disastrous trends, Democrats and Republicans in California are pursuing policies aimed at codifying these conditions as the new normal.

In the aftermath of the 2008 financial crisis, the state pension fund CalPERS, the largest public pension fund in the US, registered losses. Unlike the major banks, which were promptly bailed out, CalPERS’ losses were used as a lever to further attack pensions. The administration of governor Arnold Schwarzenegger responded to the crisis by implementing a two-tier pension structure in which newer pensioners contribute more and receive less. His administration also cut employer and state contributions, putting more of the burden on workers.

A few years later, under the administration of Democrat Jerry Brown, new attacks on pensions came in the form of increasing the retirement age from 55 to 67 for the majority of new public employees. The Brown administration has also implemented cuts to food stamps and affordable housing programs. All of these measures doubtless contributed to rising poverty rates among California seniors.

Today, CalPERS does not have the funds needed to meet its pension obligations, and has unfunded liabilities of over $70 billion.

More recently, the Obama administration moved to slash defined benefit plans for the Teamsters Central States Pension Fund, a move that marks a dramatic escalation in the drive to dismantle pension benefits.

At local and municipal levels, the Democratic Party has been no less severe than the Republicans in the drive to dismantle pension and social programs. Chuck Reed, the ex-mayor of San Jose, and a Democrat, has twice proposed pension reform bills that would eliminate constitutional protections for pensioners in the state.

The cities of Stockton and San Bernardino have both been taken into Chapter 9 municipal bankruptcy proceedings, and the San Bernardino proceedings are still ongoing. As in the case of Detroit, municipal bankruptcies have been used to undermine obligations to pay retiree benefits such as pensions and health care.

The doubling of the poverty rate for California seniors exposes the claims by the Obama administration that the United States is in the midst of an “economic recovery.” Instead, the economic crisis is reflected in deteriorating conditions for the most vulnerable sections of society.

UK Tata Steel operation at centre of escalating trade war

Robert Stevens

Tata’s UK steel business is losing more than double the amount previously reported.

Last week the firm announced it planned to hive off its entire UK operation, threatening 15,000 jobs in Port Talbot, Wales and Scunthorpe and Rotherham in England, along with another 25,000 jobs in the supply chain.

It was widely reported that the company was losing around £1 million a day, but the Observer reported Sunday, “It is understood that Tata Steel is losing £2.5m a day in the UK… and that it will lose at least £100m in running a sales process until the end of April.”

Tata’s UK plants could be bought up by Germany’s ThyssenKrupp, which is also interested in buying other parts of Tata’s European operation, or even all of it. The Observer said ThyssenKrupp had not yet concluded a deal due to concerns about the losses being incurred by Tata in the UK, compounded by the fact that its pension fund has enormous liabilities. The Observer notes, “The British Steel Pension Scheme (BSPS), which was inherited by Tata when it bought Corus in 2007, has £14.5bn of liabilities, making it one of the biggest pension schemes in the UK.

“Accounts for the business show that last year Tata had to pump £129m into the scheme last year and will spend even more in 2016. The 130,000 members of the pension scheme, which has a deficit of £485m, face an uncertain future if Tata sells the business.”

The Guardian and its sister Observer are among the major newspapers supporting the campaign led by the Labour Party and the trade unions in support of protectionism and trade war. On Thursday, the Guardian editorialised that Tata’s decision to sell its plants represented “a national summons to get serious.” It complained, “After the US imposed anti-dumping tariffs on Chinese steel, the EU could have followed suit, but the UK appears not to have voted for them.”

On Saturday, a further editorial was headlined “Port Talbot matters more than China.”

The Observer stated that steel production in the UK was being decimated by the “flooding of the global market with cheap, state-subsidised Chinese steel, and the lack of government action to shield UK steel from these extraordinary global headwinds.”

Tariffs had to be imposed, even though “an escalation of punitive tariffs between China and the rest of the world would be bad for the global economy. But they were a necessary evil: a tool to be deployed… strategically against countries violating free trade principles.”

Sections of the ruling elite everywhere are responding to the escalating crisis of the global economy and stepped up competition with a turn to protectionism. British Labour Party leader Jeremy Corbyn has come forward as the spokesman for this strategy, which is portrayed as guaranteeing national interests as well as safeguarding jobs.

He visited Port Talbot March 30 and reiterated his earlier call for a state buyout “to protect our steel industry and not see it destroyed on the altar of global corporations that decided somewhere along the line Port Talbot is expendable.”

Even when answering a question, from Jon Snow on Channel Four News, on whether the steel industry should be exempt from environmental legislation, he turned the issue towards protectionism: “China doesn’t have any such demands on these issues,” he complained. “And if someone is importing goods from a country that doesn’t have very good standards then maybe we should do something about it and not allow those imports to come in.”

On Friday, trade unions including the Rail, Maritime and Transport (RMT) union, staged a protest against a takeover of the Northern Rail franchise by Germany’s Deutsche Bahn subsidiary Arriva, including raising the German flag over Manchester’s main Piccadilly station. Corbyn sent a letter of support, urging the renationalisation of the railways.

These demands were put forward in explicitly anti-communist terms by Tim Roache, the general secretary of the GMB trade union, who said Friday, “Never did we think the Tories would let the Chinese Communist Party dictate the fate of vital UK industries like steel. There was a time when the Tories sought to root out the reds under the bed. Now they want to get into bed with them.”

Aside from calls for a temporary nationalisation of Tata’s steel plants, until a new buyer is found, Labour is insisting that the “steel industry” must be the target of a vast multi-billion pound tax-payer funded subvention. The steel industry referred to is largely Tata—a giant transnational corporation with a combined market capitalisation of about $134 billion—or whichever corporate competitor takes over all or part of its operations.

Such measures only throw fuel on the fire of the intensifying trade war being waged between the major steel producing powers, under conditions of saturated global markets, and will lead to further job losses in the UK and internationally.

On Saturday, China announced it would impose import tariffs of 14.5 percent to 46.3 percent on some specialist, high-tech steel from the European Union (EU), South Korea and Japan. The flat-rolled electrical steel affected is the type of high-tech steel made by Tata’s Cogent subsidiary in Newport, Wales. The United States has already imposed tariffs of 266 percent on Chinese steel, and the EU has imposed sanctions in 37 cases of steel exported to Europe at dumped prices, 16 on products coming from China. The EU planned to levy higher tariffs against Chinese steel, but was blocked from doing so by the British government.

The ruling Tories’ position is dictated by key economic concerns. Britain has forged close economic links with China, culminating in the State Visit to Britain by Chinese President Xi Jinping last October. During the trip, it was announced that China would be involved in funding and constructing new nuclear reactors in Britain that could be worth up to £100 billion over the next decade. An estimated £30 billion in bilateral investment deals were also agreed. Earlier in the year, in the face of US opposition, Prime Minister David Cameron announced that Britain would become a founding member of the $50 billion China-backed Asian Infrastructure Investment Bank (AIIB).

However, protectionism offers no alternative to the rule of global corporations. Rather it ties the working class to the struggle between these corporations and heralds a stepped up struggle of each against all that will leave hundreds of thousands of economic casualties in its wake.

The amount of overproduction of steel globally is vast. China is being targeted because it produces just over half of the world’s steel and now has an overcapacity in the steel sector of 400 million tonnes—more than double the total annual EU steel production of around 170 million tonnes. But every country has equivalent levels of overcapacity.

The OECD states that the global steel industry’s capacity has more than doubled since the early 2000s, “resulting in over-supply, low prices, weak profitability, bankruptcies and localised job losses.” In 2013, crude steel demand stood at “1,648 mmt [million metric tonnes], or about 516 mmt below nominal capacity, representing one of the highest gaps in the history of the global steel industry.”

More than 328,000 workers are employed in the steel industry in the EU and 8 million globally, with these workers and those in related industries all now threatened with job losses, attacks on wages and pension rights. China itself is shedding 500,000 jobs in steel, 11 percent of the total. Some 1.3 million jobs are going in the coal industry, fully 20 percent.

Only a socialist struggle by the working class against the steel corporations and the governments and parties that defend the profit system, one that rejects all forms of nationalism and class collaboration, offers an alternative to the international race to the bottom now underway.