Reports document growing income inequality, declining manufacturing pay

Kate Randall

A new study from the Pew Research Center shows that more than four-fifths of US metropolitan areas have seen household incomes decline in the new century. The research is based on data from urban centers that are home to three-quarters of the US population.

Pew’s America’s shrinking middle class shows that middle-class household income has declined throughout the population, while at the same time the gap between low- and upper-income households has grown, demonstrating a significant increase in income inequality across the US. A major contributor to economic decline and inequality has been the plunge in manufacturing jobs and wages.

The study analyzed data from 229 of the 381 metropolitan areas in the US, as defined by the Office of Management and Budget (OMB). These areas accounted for 76 percent of the US population in 2014, those that could be identified in US Census Bureau data with statistics available for both 2000 and 2014.

Middle-income households are defined as those with incomes of about $42,000 to $125,000, adjusted for a household of three. Pew found that the share of middle-income households fell in 203 of 299 metropolitan areas from 2000 to 2014. With household income falling in the middle-income tier in these areas, the share of upper- and lower-income tiers have correspondingly grown.

Based on US Census figures, the share of middle-income adults also fell nationwide, while the shares in the lower- and upper-income tiers have increased. The national share of American adults decreased, from 55 percent in 2000 to 51 percent in 2014. At the other poles of society, the share of adults in the upper-income tier increased from 17 percent to 20 percent, and the share of adults in the lower-income tier increased from 28 percent to 29 percent.

US metropolitan areas with the lowest household incomes are mainly located in the South. Areas with the highest household incomes are concentrated along the Northeast corridor and mid-Atlantic, from Boston to the District of Columbia, and in Northern California, representing the proliferation and profits of the tech, insurance and finance industries, as well as high-paid government employees and politicians.

Midland, Texas, which benefited from the rise in oil prices from 2000 to 2014, saw both a shrinking middle class, which fell from 53 percent to 43 percent, as well as a decline in lower income households, falling from 28 percent to 21 percent. The recent drop in oil prices is not reflected in these figures.

In nearly half of the metropolitan areas studied, the lower-income share of households increased. The 10 metropolitan areas with the greatest losses in overall economic status—the change in the share of upper-income adults minus the change in the share who were lower-income—have one thing in common: a greater than average reliance on manufacturing.

These include the Rust Belt areas of Springfield, Ohio, and Detroit-Warren-Dearborn, Michigan, as well as two North Carolina areas: Rocky Mount and Hickory-Lenoir-Morgantown.

In Springfield, which saw the biggest decline in economic status, a 16 percent drop, the truck assembly plant owned by Navistar employs thousands fewer workers than it did in its heyday.

The Detroit metropolitan area has seen a dramatic decline in auto jobs, as well as a drastic drop in wages through two-tier systems introduced in large part as a result of the Obama administration’s auto bailout with the collaboration of the United Autoworkers Union.

The Hickory-Lenoir-Morgantown area, once a thriving center of furniture manufacturing, has seen the demise of this industry, with an accompanying decline in household incomes and an increase in poverty.

A brief from the UC Berkeley Labor Center documents the impact on incomes of declining manufacturing wages and the proliferation of temporary staffing agencies. Producing Poverty: The Public Cost of Low-Wage Production Jobs in Manufacturing charts the increasing numbers of manufacturing workers who are forced to rely on government programs, such as Medicaid and food stamps, to survive.

The study shows that wages in manufacturing are falling to the levels of those in the fast-food industry and at big-box retailers. In 2013, the typical manufacturing production worker made 7.7 percent below the median wage for all occupations. The median wage of these production workers was $15.66, with a quarter making $11.91 or less.

The National Employment Law Project (NELP) also found that since 1989 there has been a significant increase in the hiring of frontline production workers through temporary staffing agencies. Frontline workers are defined as non-supervisorial production workers who work at least 27 hours per week in the manufacturing industry or those highly associated with it.

The Berkeley study found that high utilization of government programs by manufacturing workers was primarily due to low wages as opposed to inadequate work hours. Economic Policy Institute researchers found that as manufacturing wages have declined, manufacturing labor productivity grew by an average of 3.3 percent a year from 1997 to 2012, nearly one-third greater than in the private, nonfarm economy as a whole.

This means that the manufacturing industry is sucking more and more productivity out of workers, while catapulting them out of the “middle class” and into poverty through low wages.

There has been a dramatic growth in low-paying temporary positions, which now account for 9 percent of frontline manufacturing jobs—a nine-fold increase from 25 years ago. Temporary workers earn a median wage of $10.88 an hour, compared to $15.03 for those hired directly by manufacturers.

Nearly half of all manufacturing workers hired through staffing agencies are enrolled in at least one public assistance program, just below the 52 percent of fast-food workers who rely on these programs.

Ken Jacobs, chair of the Labor Center and co-author of the report, told Berkeley News, “Manufacturing has long been thought of as providing high-paying, middle-class work, but the reality is the production jobs are increasingly coming to resemble fast-food or Walmart jobs, especially for those workers employed through temporary staffing agencies.”

FBI holds 80,000 pages of secret documents on Saudi-9/11 links

Patrick Martin

The American FBI has a secret cache of documents, more than 80,000 pages in all, concerning possible ties between the 9/11 hijackers and an upper-class Saudi family who lived in Florida and fled the United States two weeks before the suicide hijackings that killed nearly 3,000 people.

A federal judge in Tampa, Florida has been reviewing the documents for more than two years as a consequence of a Freedom of Information Act lawsuit brought by a trio of online reporters—Anthony Summers, Robbyn Swan and Dan Christensen. The review process has been extremely slow because of restrictive FBI rules on how many pages Judge William Zloch may access at any one time.

The existence of the document trove was revealed Friday in a front-page article in the US-based web publication the Daily Beast. The article identified the Saudi family as Abdulaziz al-Hijji and his wife Anoud, who was the daughter of Esam Ghazzawi, an adviser to a nephew of Saudi King Fahd. Ghazzawi owned the home in which they were staying in a gated community in Sarasota, Florida. The home was raided by the FBI after 9/11 but the residents had all departed in evident haste on August 30, 2001.

Visitor logs in the community, known as Prestancia, showed that the alleged ringleader of the 9/11 hijackers, Mohammad Atta, had visited al-Hijji, along with two other 9/11 hijackers, Ziad Jarrah and Marwan Al-Shehhi.

Former Senator Robert Graham, co-chair of the joint congressional committee that investigated the 9/11 attacks, told the Daily Beast that he had never known of the FBI documents on the Saratoga home until they were uncovered by the investigative journalists. He later viewed a portion of these records and confirmed that they identified the three 9/11 hijackers as visitors.

Throughout this period, the FBI had denied that the al-Hijji family had any connection to the 9/11 attackers. The agency changed its story only when Graham said he would testify under oath about what he had read in the file of documents. At this point the FBI conceded the existence of 35 pages of documents.

When Judge Zloch ordered a further search for records, the Tampa office of the FBI came back with 80,226 pages of files marked PENTTBOM, which stands for “Pentagon/Twin-Towers Bombing” in FBI jargon. Judge Zloch has been reviewing these since May 1, 2014 and has given no date by which he expects to finish.

The al-Hijji family exited its Sarasota home, leaving behind three cars, an open safe and disarray that suggested a hasty departure. The security guards at the gated community noted their departure, but did not consider it suspicious until the 9/11 attacks two weeks later.

The FBI initially made only a perfunctory response and did not open a formal investigation until eight months later, in April 2002, “based upon repeated citizen calls” about the conduct of the family during their stay in the United States. One of the few documents released said that this investigation “revealed many connections” between a member of the family “and individuals associated with the terrorist attacks.”

The Daily Beast report adds to recent revelations of evidence of Saudi regime ties to the 9/11 hijackers that has been covered up by the US government under both the Bush and Obama administrations.

Graham has actively campaigned for the release of 28 pages of material on the Saudi-9/11 connection comprising an entire chapter of the joint congressional committee report on the 9/11 attacks in which he participated. This material has been withheld for more than 13 years. On April 10, Graham was the main witness interviewed by the CBS program “60 Minutes” in a segment on the continuing cover-up of Saudi-9/11 connections.

In an op-ed column this week in the Washington Post, Graham reiterated his demand for release of the 28 pages, noting that President Obama had promised a decision on declassifying the material by next month. Graham denounced CIA Director John Brennan, who responded to the “60 Minutes” program by publicly opposing any release of the 28 pages.

Also Friday, the Guardian newspaper published an interview with a former member of the bipartisan 9/11 Commission appointed by President George W. Bush, who flatly declared that there was extensive Saudi involvement in supporting the hijackers. Of the 19 perpetrators, 15 were Saudi citizens, most of them having recently arrived in the United States when they seized control of four jetliners on September 11, 2001.

Former Navy Secretary John Lehman, a Republican, told the newspaper: “There was an awful lot of participation by Saudi individuals in supporting the hijackers, and some of those people worked in the Saudi government.” While only one Saudi consular official in Los Angeles, Fahad al-Thumairy, was implicated in supporting the hijackers, according to the official account, Lehman believes that at least five officials were involved.

Al-Thumairy was linked to the two hijackers who lived in San Diego before the 9/11 attacks, Nawaf al-Hazmi and Khalid al-Mihdhar, but he was deported rather than charged with a crime. The other five, whom Lehman did not name, “may not have been indicted, but they were certainly implicated. There was an awful lot of circumstantial evidence.”

Another former 9/11 commissioner, who spoke to the Guardian without direct attribution, recounted what the newspaper called “a mostly unknown chapter of the history of the 9/11 commission: behind closed doors, members of the panel’s staff fiercely protested the way the material about the Saudis was presented in the final report, saying it underplayed or ignored evidence that Saudi officials—especially at lower levels of the government—were part of an al-Qaida support network that had been tasked to assist the hijackers after they arrived in the US.”

The 9/11 Commission director, Philip Zelikow, who later served in the Bush administration as senior counselor to Secretary of State Condoleezza Rice, fired one staffer who protested over the suppression of the Saudi ties to 9/11 after she obtained a copy of the suppressed 28 pages of the joint congressional committee report. Zelikow and the commission members overruled staff protests on the soft-pedaling of the Saudi connection.

These press reports confirm what the World Socialist Web Site has long maintained: the official 9/11 investigations were a series of whitewashes aimed at concealing the role of the Saudi government and US intelligence agencies during the period leading up to the terrorist attacks.

There has long been evidence that sections of the US government were aware of the plot to hijack and suicide-crash airliners, but turned a blind eye because such an atrocity could be used to stampede American public opinion and provide a pretext for escalating US military interventions throughout the Middle East and Central Asia.

US Special Forces have been operating secretly in Libya for months

Thomas Gaist

Teams of United States Special Operations commandos have been active in Libya since last year, the Washington Post reported Thursday, citing statements from unnamed US military officers.

The American soldiers are operating from secret bases that were established last year, without any public disclosure, in eastern and western Libya, near Benghazi and Misurata. The US troops are scouting targets and recruiting proxy forces as part of “contact teams,” according to the Post.

Members of the American military “began making visits to Libya last spring and established twin outposts six months later,” military sources told the Post, and US personnel have been “cultivating relationships among forces that are mobilizing for a possible assault against the Islamic State in its Sirte stronghold.”

On Monday, Italy’s foreign ministry announced that Rome will lead talks, scheduled to begin in Vienna on Monday, aimed at shoring up commitments from a coalition of governments for a much larger NATO intervention in Libya, to include thousands of Italian ground forces.

A list of attendees for the Libyan summit has not been forthcoming, but Tunisia’s foreign minister assured media that “regional foreign ministers and other important figures will be there.”

The war preparations are being justified behind the lying slogans of “support for the unity government” and their “war against the Islamic State.”

In reality, the imperialist powers are seeking a fig leaf of legality for predatory operations aimed at securing various neocolonial interests and ambitions within the shattered country, which has descended into chaos and fratricidal violence since being utterly destroyed by the 2011 NATO war to topple the government of Muammar Gaddafi.

The claims of the US and European governments to be intervening for the purpose of combating IS is especially cynical. The 2011 smashing of Libya was carried out with the support of the same Islamist extremist militias who are now identified as the mortal enemy. These elements were mobilized first on behalf of the war first against Gaddafi, and then against the Assad regime in Syria, where US-backed proxy forces were massed and equipped as part of covert operations overseen from the US CIA station in Benghazi.

The revelation that US forces have been engaged in Libya for months comes just days after reports surfaced that American ground forces were secretly deployed to southern Yemen two weeks ago. Both operations have been launched without even a facade of public discussion or democratic process, and acknowledged only after the fact, through anonymous leaks to the media.

Behind a thick curtain of secrecy, the Obama administration and Pentagon leadership are carrying out a quantitative deepening of global US militarism and war-making, encompassing ever greater areas of Africa and Eurasia.

President Obama, having played up his African heritage during his 2008 presidential campaign, has presided over an explosive growth of US neocolonial garrisons and outposts stretching from Libya to the Congo and from Somalia to Senegal, bound together by a “hippo trench” of logistics hubs, bases and infrastructure that snakes through no less than 12 nominally sovereign African territories.

According to former US Defense Department Special Operations Senior Officer William Wechsler, the US operations in Libya, which were revealed publicly for the first time Thursday, are only one example of a growing number of undeclared US interventions and wars in countries referred to in the internal jargon of the Obama administration as “as areas outside of active hostilities.”

In Libya and through growing areas of West, Central and Northern Africa, US military and intelligence units are “mapping local networks both friendly and unfriendly,” Wechsler said.

US military leaders speak openly in leading journals about a looming expansion of US-led commando wars throughout West Africa and the Lake Chad Basin.

US General Bolduc recently described the countries surrounding Lake Chad as “ground zero for the Islamic State in Africa.”

In April, US military officials warned that ISIS is deepening its relations with Boko Haram, the northeastern Nigeria-based Islamist faction which has served as the central pretext for the Pentagon’s buildup of US forces in and around Nigeria, now the continent’s leading oil producer and an economic powerhouse.

In the past year, Washington has orchestrated a proxy invasion of Nigeria, led by the Chadian and Cameroonian militaries. These forces are backed by US advisors and increasingly armed with high-tech US weapons. This is part of a steadily increasing US buildup that includes hundreds of US and NATO troops, some $200 million funds to train security forces in a handful of Central African states and $50 million for the construction of a drone base in Agadez, Niger.

American soldiers and intelligence personnel are active in every single country in Africa, and military contingents have been deployed to a laundry list of countries, including Somalia, Uganda, Cameroon, Nigeria, Niger, Democratic Republic of Congo, South Sudan, Mali and Burkina Faso.

The US military presence is complimented by deepening collaboration with the most reactionary dictatorships on the continent. The Obama administration has provided political leadership for the escalation, working to install the pro-imperialist former dictator Muhammad Buhuri in power in Nigeria and deepening ties with Chadian dictator President Idriss Deby, who received a personal visit from leading White House power-broker Samantha Powers last month.

The new carve-up of Africa is part of a general process of world reaction, through which the former colonial countries are being restored to conditions of direct rule by imperialist militaries, in league with far-right, openly pro-imperialist military dictatorships and satraps at the local level.

The original US-NATO war against Libya was planned as a means to “kick in the door” for the new imperialist redivision of Africa, and opening the way for a huge expansion of Western military operations stretching into the southern reaches of the continent. In the aftermath of the 2011 war, the Sahara and Sub-Saharan regions have been flooded with mercenaries and weaponry, closely followed by imperialist armies, which invaded Mali in a French-led intervention less than two years after the start of the Libyan war.

Thousands of French troops have subsequently established a permanent presence in the Sahel desert.

There can be little doubt that the plans being hatched in Vienna next week will involve further bloody depredations against Libya and the entire continent, to be carried out by the US and European militaries and intelligence services.

Brazil’s impeachment and the fall of the Workers Party

Bill Van Auken

Thursday’s vote by the Brazilian Senate to initiate the impeachment of President Dilma Rousseff on trumped-up charges of budgetary improprieties has effectively ended 13 years of rule by the Workers Party (Partido dos Trabalhadores--PT) over Latin America’s largest country, with over 200 million inhabitants and the world’s seventh largest economy.

The ouster of Rousseff is the outcome of an undemocratic conspiracy organized by decisive layers within the Brazilian ruling class and supported by international finance capital. It has been carried out with the aim of effecting a radical change in economic policy and class relations and poses an immense threat to the jobs, basic rights and living standards of masses of Brazilian workers.

What has been imposed by means of this conspiracy is the most right-wing government since the end of the country’s two-decade-long military dictatorship over 30 years ago. Rousseff is supposedly merely suspended from office for the duration of a trial that could last until October. The reality, however, is that under her vice president and erstwhile political ally, Michel Temer of the PMDB (Brazilian Democratic Movement Party), the entire government has been changed. Every minister has been replaced, entire departments are being liquidated and a wholesale purge of state officials is underway.

With his premier speech as “interim president,” Temer resurrected the language of authoritarianism and dictatorship. He called for a government of “national salvation” to “pacify” Brazil and invoked the slogan emblazoned on the country’s flag, “Ordem e Progresso” (Order and Progress), as the watchwords of the new regime.

An unelected government is preparing to implement what the new finance minister, former Bank of Boston CEO Henrique Meirelles, acknowledged Friday will be “hard” austerity measures designed to impose the full burden of Brazil’s economic crisis, the worst in a century, on the backs of the working class. Inevitably, the government will resort to state violence and repression to carry out this agenda.

The economic crisis, which has resulted in 11 million unemployed with no letup in mass layoffs in sight, is at the root of the debacle of the PT government. The economic breakdown that has gripped world capitalism since 2008 has found a sharp expression in Brazil and throughout Latin America in the collapse of the commodities and emerging markets booms that made possible the PT’s policies of providing limited social assistance programs for the poor, while creating the most profitable conditions in the country’s history for the corporate and financial oligarchy.

The same crisis is undermining all of the bourgeois governments associated with Latin America’s so-called turn to the left, from the ousted Peronists in Argentina to Nicolas Maduro, who faces a possible recall election under conditions of an economic meltdown in Venezuela.

The Rousseff government not only failed to carry out measures to ameliorate the conditions of mass unemployment and falling real wages, it initiated its own austerity measures aimed at winning the favor of world financial markets and Wall Street ratings agencies. Social inequality in this starkly polarized country is once again on the rise, and the gains made in reducing extreme poverty over the past decade are evaporating.

While the methods used to remove Rousseff from office are entirely undemocratic, the protests by the president and her supporters that she is the victim of a “coup” ring hollow, given that the collection of corrupt and right-wing capitalist politicians behind the impeachment were, until recently, the PT’s closest political allies. They were also partners in a succession of corrupt operations, from the mensalao congressional vote-buying affair to the contract kickback scandal at Petrobras. It is perhaps the greatest political indictment of the PT’s rule that it served to protect and incubate the reactionary political elements that are now being unleashed upon the working class.

The PT sought to save itself from impeachment by trying, on the one hand, to secure support from these same layers with offers of more positions and power, and, on the other, to convince the ruling establishment that the Workers Party was better equipped to carry through an austerity agenda by dint of its electoral “legitimacy” and its collaboration with the CUT union federation in suppressing working class struggles.

In the end, the PT, a thoroughly venal capitalist party, bears criminal responsibility for the “coup” it condemns, whose principal victims will be not Rousseff and her fellow politicians, but the masses of Brazil’s workers and oppressed.

Particular responsibility for the acute crisis now confronting Brazilian workers rests with the various pseudo-left groups that backed the Workers Party and sought to subordinate the working class to its leadership. Chief among them are various revisionist tendencies that split from the International Committee of the Fourth International, rejecting its struggle for the international unity and political independence of the working class based on a revolutionary socialist program in order to adapt themselves to Stalinism and various forms of bourgeois nationalism, chief among them, Castroism.

In Brazil, these forces promoted the Workers Party as a substitute for the building of a revolutionary Marxist party in the working class. The PT was portrayed as providing a new Brazilian parliamentary road to socialism. Its name notwithstanding, the PT was from its founding not a party of the working class, but rather a bourgeois party based on privileged sections of the middle class. Its purpose was to contain the class struggle and the immense social tensions of Brazilian society, while defending capitalism.

While many of these tendencies were thrown out of the PT as it moved ever further to the right under the leadership of former metalworkers union leader Luiz Inacio Lula da Silva, they continue to play essentially the same role today, offering not trace of revolutionary leadership in the face of the impeachment crisis.

The Morenoite PSTU (Unified Socialist Workers Party) continues to advance the slogan “throw them all out,” essentially adapting to the right-wing conspiracy that produced the impeachment, while failing to provide any warning of the immense dangers confronting Brazilian workers. Having supported imperialist regime-change operations from Syria to Ukraine, it now is complicit in a domestic version of the same process.

The Pabloite tendencies organized around the group Insurgencia are part of PSOL (Socialism and Liberty Party), a party formed by legislators expelled from the PT. Their aim is to refurbish the original PT model in order to better subordinate the working class to the capitalist state.

The period in which these parties have been able to help suppress the class struggle is coming to an end, not only in Brazil, but internationally. As the present crisis demonstrates, the ruling class is no longer able to rule in the old way and it is becoming impossible for the working class to live in the old way, creating the conditions for revolutionary upheavals.

The most urgent political task is the formation of a new revolutionary leadership in the working class based on an assimilation of the bitter experience with the Workers Party and the long struggle of Trotskyism against revisionism. This means building a Brazilian section of the International Committee of the Fourth International.

New Zealand’s housing affordability crisis worsens

Tom Peters & Jeremy Lin

The Real Estate Institute of New Zealand (REINZ) released figures on April 12 showing the median Auckland house price rising above $NZ800,000 for the first time, to $820,000. Auckland home prices have more than doubled in the past decade and climbed 13.6 percent in the past year alone.

While this housing bubble is focused in Auckland, houses are overpriced throughout New Zealand. The national median price increased by 64 percent in the past decade to $495,000. With 70 percent of household net wealth held in housing, there are growing warnings from the Reserve Bank and economists that any sudden, significant drop in prices could endanger the economy.

Yet, while it lasts, the bubble is a bonanza for the small minority who own large amounts of property. This includes members of parliament, two-thirds of whom own two or more houses. None of the political parties are proposing substantial measures to address the lack of affordable housing.

The political establishment has instead scapegoated foreign buyers. Last month Prime Minister John Key, in response to pressure from the opposition parties, raised the possibility of imposing a land tax on overseas buyers if data, to be released in coming weeks, shows a significant level of sales to foreigners.

The opposition Labour Party has used the housing crisis to promote anti-Chinese xenophobia. In July 2015, Labour’s housing spokesman Phil Twyford told TV3 that a “tsunami of Chinese investment” was looming and called for a total ban on foreign buyers purchasing New Zealand homes. The Maori nationalist Mana Party and the anti-immigrant New Zealand First joined Labour in scapegoating Chinese immigrants and investors.

The claims by Labour and its allies are false. Official data released this week shows that in the first three months of 2016 only 3 percent of house sales were to overseas tax residents. Less than 1 percent were to Chinese residents. Some of these overseas-based buyers are likely to be New Zealand citizens who live abroad.

A ban on overseas-based buyers would simply reduce competition in favour of local capitalists. Bank lending restrictions on overseas buyers in Australia have done nothing to stop soaring house prices.

The attacks on foreigners are intended to divert legitimate anger over widening social inequality in a reactionary, nationalist direction. The singling out of Chinese investors is also an expression of Labour’s strategic alignment with Washington’s drive to war with China. The National Party government, while no less supportive of the alliance with US imperialism, has been wary of making direct attacks on China, which is New Zealand’s second largest trading partner.

There are more than enough resources to build high quality, affordable housing for all, but this cannot be done under the profit system. In response to the global economic breakdown that began in 2008, the ruling elites in every country have increasingly turned to parasitic means of wealth accumulation, including speculation on property markets.

According to housing researcher Philippa Howden-Chapman, 25 years ago “around 30 percent of new homes coming onto the market were priced in the lowest quartile.” Today, that figure is 5 percent. The proportion of households renting a home increased from 26.2 percent in 1991 to 35.2 percent in 2013.

A growing section of society is struggling to afford basic needs. Rents have increased amid a wave of job cuts and austerity measures, including cuts to healthcare and welfare. In the first quarter of 2016, the Salvation Army reported a 9 percent growth in demand for food parcels, compared with a year ago, which the charity blamed partly on rising housing costs. The charity estimates 300,000 children live in poverty.

The Accommodation Supplement, a welfare benefit paid by the government to around 300,000 people (60 percent of renters) to help meet housing costs, has not been adjusted since 2007, when its level was based on 2005 rents.

The Salvation Army states that in 2015, rents were 15 percent higher in real terms than in 2005. According to property management company Crockers, in the three years from 2012 to 2015 alone, the national median rent for one- and two-bedroom homes rose by 16 percent. In some urban areas the rise was over 20 percent. In Christchurch, both house prices and rents have risen approximately 50 percent since the 2011 earthquakes.

Hundreds of thousands of people live in overcrowded conditions, including 99,030 people in working class South Auckland, and one quarter of all Aucklanders aged 20 to 24, according to the 2013 census.

The quality of many rental homes is extremely poor. An estimated 12 percent of children live in houses with serious cold, damp and mould problems, leading to 40,000 child hospitalisations each year. Tenants are increasingly insecure and vulnerable to landlords’ discrimination. The average stay in rental property is reportedly between 11 months and two years, making it impossible for many households to put down roots in a community.

As part of its assault on the working class, the government plans to sell over 1400 state houses in Invercargill and Tauranga this year. In March, 2,800 Auckland state houses were transferred to the Tamaki Regeneration Company. This corporation is jointly owned by Auckland Council and the government, but works in partnership with private “development, investment and housing services partners.” Several tenants protested against the transfer, calling it a step toward privatisation.

Housing NZ properties are usually provided to tenants at income-related rents. Their occupants include some of the poorest and most vulnerable families. The latest attack on state housing began in 2014 with the ending of the long-standing “house for life” policy. The government has so far removed 600 state house tenants who were deemed to be earning enough to pay market rents, and 3,000 more tenancies are being reviewed. In 2014, several Glenn Innes state-house residents, many of whom lived there for decades, were evicted in line with moves to gentrify the harbourside Auckland suburb.

The government’s Social Housing Reform Programme aims to transfer up to one-third of Housing NZ houses to government-designated “community housing providers,” which can include charities, Maori tribal businesses and other for-profit businesses. While the government claims privatisation will benefit tenants, in reality it will provide a windfall for investors. They will buy state houses at below-market rates, and receive government payouts in the form of the Income Related Rent Subsidy.

The Labour Party claims to oppose the privatisation plan. Successive Labour and National-led governments, however, are responsible for downsizing and under-funding public housing. The 1991–1999 National government sold about 11,000 state houses and introduced higher market-based rents for remaining tenants. The 1999–2008 Labour government re-instated income-related rents, but retained the corporatised structure of Housing NZ, requiring it to operate along business lines and deliver annual dividends to the government.

Labour increased the state housing supply by just 9,000 properties. Today there are only 68,000 houses owned or managed by Housing NZ, compared with 69,928 in 1992, prior to National’s sell-off, despite the population increasing from 3.5 to 4.5 million over that period.

Saudi Arabian regime gripped by factional infighting amid mounting economic crisis

Jean Shaoul

The ruling House of Saud recently [or has] issued a series of royal decrees unceremoniously dumping its longstanding oil minister Ali al-Naimi, central bank governor Fahad al-Mubarak, and other senior officials.

The wide-ranging shakeup of government bodies is part of an attempt to resolve the Kingdom’s growing economic crisis at the expense of the Saudi masses.

The sackings follow the removal last month of Abdullah al-Hasin, the water and electricity minister, in a bid to deflect popular anger over high water rates and new rules over the digging of wells and cuts in energy subsidies aimed at saving the ruling family collectively in excess of one and a half trillion dollars.

The shake-up is intended to concentrate power in the clique around Crown Prince Mohammed, the 30-year-old son of the aging King Salman. It will further exacerbate the enormous political, economic and social tensions wracking this semi-feudal regime that has, since 1945, constituted an essential prop for US imperialist policy in the region and a bulwark of reaction and repression in the Arab world.

The Saudi monarchy, threatened by the revolutionary overthrow of Egyptian President Hosni Mubarak and the subsequent political turmoil that threatened almost every regime in the region, moved rapidly to topple the elected Muslim Brotherhood-led government of President Mohammed Mursi, even at the risk of conflicting with Washington, and helped install and bankroll the brutal military dictator Abdul Fatah el-Sisi to suppress the Egyptian masses.

It sought—at the cost of tens of billions of dollars—to move against the Syrian regime of President Bashir al-Assad in Syria by funding an Islamist insurgency, and to shore up the rule of its regional allies in Yemen, Bahrain and Jordan. Accompanying its moves in Syria, it sought to undermine pro-Iranian governments in Iraq and Lebanon, through direct or covert military interventions, the use of Islamist fighters as proxies, or economic aid.

Its relations with its chief backer, US imperialism, are now at an all-time low. Riyadh was furious over Washington’s failure to sustain its support for Mubarak against the Egyptian masses in 2011.

The US-led interventions in Iraq and Syria to assert Washington’s hegemony over the Middle East’s vast energy resources have destabilised Saudi Arabia’s neighbours. Washington’s various pragmatic manoeuvres, its failure to intervene decisively in the war to overthrow Assad in Syria allowing Russia to intervene to shore up the regime, its deal with Iran and support for the Shi’ite government in Iraq, helped strengthened the influence of Saudi Arabia’s main regional rival, Tehran.

At home, Riyadh attempted to assuage popular opposition and protests in the Shia-dominated Eastern Province with a combination of violent suppression and a $350 billion package of benefits and social spending, a lifeline for the estimated 28 percent of the population who live in poverty. Between 2 million and 4 million Saudi citizens are believed to be living on less than $530 a month. With its thousands of princes, the parasitic Saudi monarchy deprives its citizens of basic democratic rights It has sought to ruthlessly suppress public discussion of social inequality, imprisoning bloggers who dare to raise such issues or criticise the regime.

This attempt at repression is being undermined by the precipitous fall in oil prices, the result of the Saudis’ political decision to maintain output in an attempt to undermine Russia and Iran. This has led to a $100 billion government deficit in 2015 (15 per cent of GDP). The new oil minister Khalid al-Falih is not expected to rein in oil production and thus boost oil prices because this would also boost the revenues of Saudi Arabia’s rivals.

With 70 percent of its revenue dependent on oil, the government has cut public spending for 2016 by 25 percent, slashing subsidies on fuel, power and water, with gas prices set to increase by 80 percent. It took the unprecedented step of introducing a tax on Saudi nationals—a 5 percent value added tax—in a bid to prevent the budget deficit soaring to $140 billion and to conserve its $600 billion in reserves.

Riyadh’s sponsorship of Islamist forces has led to the advance of ISIS, al-Qaeda and similar outfits with their own agendas in Saudi Arabia and the Arabian Peninsula. ISIS cells have launched dozens of attacks over the last two years and were alleged to have been behind a spate of bombings targeting the Kingdom’s Shia minority.

Last week, Saudi forces carried out an operation against ISIS in Mecca, killing four “wanted” men in a shootout, and another in the southwestern province of Bisha, killing two ISIS suspects and injuring another. It followed the arrest of Ukab Atibi, allegedly a member of the ISIS cell that carried out a suicide attack on a mosque used by members of a local security force in southwest Saudi Arabia in August 2015. Security forces carried out another raid on a house in Jeddah, arresting two suspects.

The ruling clique is torn with dissent over the succession to the ailing King Salman, who promoted his 30-year-old son Prince Mohammed bin Salman to the positions of deputy crown prince and minister of defence in charge of the murderous, but largely unsuccessful war in Yemen, sidelining other older claimants to the throne. Mohammed has overturned the Kingdom’s decades-long policy of buying political quiescence with a social contract that has provided some security—via low utility prices, social subventions and public sector jobs—for the Saudi population, and promoted a wave of Sunni-based Saudi nationalism.

Last month, in an announcement that the Economist described as “manic optimism,” Mohammed unveiled his Vision 2030, drawn up by the McKinsey & Company global consultants McKinsey and aimed at ending the Kingdom’s dependence on oil by 2030. He later declared on Saudi-owned Al-Arabiyanews channel an end to “any dependence on oil” by 2020. The measures include the public listing of 5 percent of Aramco, the world’s largest oil company valued at $2.5 trillion, the creation of a sovereign wealth fund with a potential value of $2 trillion to invest in assets, the development of non-oil industries, including a domestic arms industry; more private sector jobs and a new visa system to allow expatriate Muslims and Arabs to work long-term in Saudi Arabia.

Symptomatic of the insoluble contradictions of the Saudi economy was the announcement last week that one of the largest companies, the construction giant the Saudi Bin Laden Group (SBG) that has built most of the country’s public buildings, was unable to pay its workforce.

SBG fired 77,000 of its 200,000 workforce and issued them with exit visas. Immigrant workers, angry that they had not been paid for months, have held daily protests outside SBG’s offices, burnt company buses in Mecca and refused to leave the country until they are paid. The company also dismissed 12,000 of its 17,000 Saudi managerial and professional staff, calling on them to resign or wait for their wages and a two-month bonus worth $220 million.

With $30 billion in debts, SBG’s financial problems stem from the cutbacks in government spending and the crane collapse on a major expansion of the Grand Mosque in Mecca last year that killed 107 workers and pilgrims. It prompted an investigation of its government projects, many of which were reportedly being carried out without any signed contracts. The company was hit with a withholding of government payments and a ban on SBG tendering for further public building projects.

The impending collapse of SBG provoked such a crisis that the government agreed to allow it to bid for state contracts, said it would ensure that government payments would continue and urged other companies to honour their commitments and pay up on their contracts with SBG.

Trump signals backing for cuts to Social Security, Medicare

Patrick Martin

Billionaire Donald Trump, the presumptive Republican presidential nominee, shifted his position on cuts in Social Security and Medicare on the eve of his visit to Capitol Hill for meetings with Republican congressional leaders.

After claiming to reject such cuts throughout the Republican primary campaign—distancing himself from rivals who all backed one or another version of “entitlement reform”—Trump signaled Wednesday that he was reversing his position.

His top policy adviser Sam Clovis addressed a Washington DC conference hosted by the Peter G. Peterson Foundation, a group established by the billionaire former Nixon cabinet member to push for the dismantling of Medicare, Medicaid and Social Security in the name of cutting the federal budget deficit.

Even attending the conference was something of a signal, given the Peterson group’s identification with entitlement spending cuts. Clovis underscored the message, telling the conference, “I think after the administration’s been in place, then we will start to take a look at all of the programs, including entitlement programs like Social Security and Medicare.”

He added that Trump would not propose any changes in these programs during the election campaign, but wait until a new administration and Congress were elected. At that point, he said, “We’ll take a hard look at those to start seeing what we can do in a bipartisan way.”

As late as a Republican debate in March, Trump claimed that his economic policies, based on protectionism and trade warfare, would make the United States so rich that no changes would be needed in Social Security or Medicare. He also claimed, in keeping with the nostrums of supply-side economics, that his proposed trillions in tax cuts for the wealthy would cause economic growth to skyrocket, leading to a huge increase in federal tax revenue that would eliminate the federal budget deficit.

Clovis gave a more cautious undertaking to the Peterson group, which has forecast that Trump-sized tax cuts for the wealthy would produce $10 trillion in deficits, not a surplus. The Trump promise not to cut entitlements was conditional on tax cuts producing record economic growth, he said.

“Right now, we’re not going to touch anything because we can’t predict the growth,” Clovis said. “We have to start taking a look not just at Medicare and Social Security but every program we have out there, because the budgetary discipline that we’ve shown over the last 84 years has been horrible.”

Clovis also told the Wall Street Journal in an interview that Trump would support privatization of the Veterans Administration or its transformation into an insurance plan rather than a direct provider of health care services to veterans. “The VA’s a broken system now,” he said. “We can’t continue down that road.”

Trump’s well-publicized opposition to entitlement cuts, not his racist attacks on Muslims and other immigrants, were a major reason for the coolness towards his candidacy among congressional Republicans. House Speaker Paul Ryan, in particular, has long been identified with sweeping cuts in Medicare which he first proposed in 2011, after the Republican takeover of the House of Representatives installed him as chairman of the House Budget Committee.

Ryan has repeatedly pushed through budget resolutions in which privatization of Medicare, through converting it into a voucher program, was the centerpiece of massive cuts in federal spending on the entitlement program.

Trump not only criticized the Ryan budgets, he blamed them for the defeat of the Republican presidential campaign in 2012, when Ryan was on the ticket as Mitt Romney’s vice-presidential running mate.

Ryan’s declaration last week that he was “not there yet” in terms of an endorsement of Trump as the presumptive Republican nominee was aimed at securing assurances from Trump that his opposition to entitlement cuts was purely an electoral ploy, to be scrapped as soon as the votes are counted. Clovis’s appearance at the Peterson conference constituted such an assurance.

These maneuvers ensured that Thursday’s round of meetings on Capitol Hill between Trump and Republican congressional leaders would go smoothly. Trump and Ryan issued a joint statement that is remarkable for its cynical and reactionary character.

“While we were honest about our few differences, we recognize that there are also many important areas of common ground,” Trump and Ryan said. “We will be having additional discussions, but remain confident there’s a great opportunity to unify our party and win this fall, and we are totally committed to working together to achieve that goal.”

Ryan’s remarks to reporters after the meeting were just as effusive as the joint statement. “He’s a very warm and genuine person,” he said. “We really don’t know each other and we started to get to know each other.”

Trump responded in kind, indicating that he was satisfied with Ryan as the chairman of the Republican National Convention in Cleveland where he will be nominated. “I am happy to serve in this capacity at the Republican convention,” Ryan told reporters. “I would honor the decision of our presumptive nominee and he did express that preference.”

Every other top Republican congressional leader, in both the House and Senate, had already officially endorsed Trump before the Ryan-Trump meeting.

Whatever concerns there may be over the impact of Trump’s candidacy on the Republican Party’s electoral fortunes, there are no principled objections to his blatant anti-immigrant racism, encouragement of violence against protesters, or embrace of authoritarian methods of rule.

There remain significant differences between Trump and the congressional Republicans over foreign policy, where Trump has claimed opposition to the 2003 war in Iraq and to the current US saber-rattling against Russia. This is combined with advocacy of a huge increase in US military spending and escalation of the current war against the Islamic State in Iraq and Syria.

Nearly all the opposition to Trump within the Republican Party has been from the right—motivated by his supposed “isolationism” in foreign policy and his now-dropped opposition to entitlement cuts. Sections of the Republican Party have moved to explicitly or implicitly support Clinton, seeing her as a more reliable defender of American imperialism.

The Clinton campaign continues to send out regular updates on each Republican declaration of non-support for Trump, including an email Thursday portraying the Trump-Ryan meeting as a debacle for the Republican candidate, under the headline, “Ryan Again Refuses To Endorse Trump as Conservative Opposition To The GOP Nominee Grows.”

Obama and the bombing of Hiroshima

Andre Damon

Later this month, Barack Obama will become the first sitting US president to visit the city of Hiroshima, Japan. The dropping of an atomic bomb on Hiroshima by the American military on August 6, 1945, and the destruction three days later of the Japanese city of Nagasaki, rank among the greatest war crimes of the 20th century.

One would think that after 71 years, the United States would finally be prepared to acknowledge that the incineration of two defenseless Japanese cities, causing some 200,000 deaths, was a militarily unnecessary act.

Nothing of the sort will happen. Obama “will not revisit the decision to use the atomic bomb at the end of World War II,” declared the White House. No apology will be forthcoming.

For decades, the US government has insisted that it was right to carry out the nuclear attacks on Japan, declaring that the destruction of Hiroshima and Nagasaki was the only alternative to an invasion of Japan and the ensuing loss of American lives. Every attempt to question the legitimacy of the bombings has been met with frenzied and dishonest propaganda, such as that which forced the Smithsonian Institution to shutter its exhibit commemorating the 50th anniversary of the bombing in 1995.

Typical of these apologetics is a comment published in the Wall Street Journal by the Reverend Miscamble of Notre Dame University. Miscamble declares, “There’s zero reason to apologize for the atomic bombing,” because “[President Harry S.] Truman authorized the bombing of Hiroshima and Nagasaki, both major military-industrial targets, to help win the gruesome Pacific War as quickly as possible and with the loss of the fewest American lives—and, as it turned out, the loss of the fewest Japanese lives.”

Echoing these sentiments, the New York Times this week cited those who insist that the “decision to drop the bomb saved tens of thousands of American lives that would have been lost in an invasion of Honshu, Japan’s main island.”

These claims are without all credibility. They bear no relationship to the actual content of discussions taking place in Washington and the US military high command prior to the attacks.

By early 1945, the United States had gained total air supremacy over Japan and taken numerous islands within flying range of the Japanese mainland. Around the same time, the US switched from carrying out precision bombings of specific military targets to mass incendiary raids that ultimately leveled 67 Japanese cities, including the March 9–10 firebombing of Tokyo that killed some 100,000 people.

When General Curtis Lemay, the head of the US Strategic Air Command, was asked in 1945 how long he thought the war would last, he said, “We sat down and did some thinking about it, and it indicated that we would be pretty much out of targets around September 1, and with the targets gone, we couldn’t see much of any war going on at the time.”

The rationalizations for the bombing of Hiroshima and Nagasaki were challenged within the US high command itself, which insisted that the incineration of another pair of Japanese cities had little military significance.

General Dwight D. Eisenhower said that, upon learning of President Truman’s intention to use the bomb against a civilian population, he felt a feeling of “depression” and voiced “my grave misgivings, first on the basis of my belief that Japan was already defeated and that dropping the bomb was completely unnecessary, and secondly because I thought that our country should avoid shocking world opinion by the use of a weapon whose employment was, I thought, no longer mandatory as a measure to save American lives.”

Other high-ranking military officials subsequently made similar statements. Chester W. Nimitz, Commander in Chief of the US Pacific Fleet, said after the war, “The atomic bomb played no decisive part, from a purely military point of view, in the defeat of Japan.” President Truman’s Chief of Staff Admiral William D. Leahy, acknowledged, “Hiroshima and Nagasaki was of no material assistance in our war against Japan.”

President Franklin D. Roosevelt’s death on April 12, 1945, brought Harry S. Truman to the presidency. This limited and rather ignorant man was dubbed “The Senator from Pendergast” because of his connections with the convicted felon and gambling addict who ran the Missouri Democratic Party political machine.

Truman was completely indifferent to the moral implications of the use of nuclear weapons. One of his advisers later recalled that, when Truman learned of the bombing of Hiroshima, he “was tremendously pepped up by it and spoke to me of it again and again when I saw him.”

By the time Truman decided to use the bomb, the Japanese government had for months been sending strong indications that they were seeking to surrender, insisting only that they be allowed to retain their Emperor. The White House had by this time come to favor retaining the Emperor, but was divided over whether this fact should be communicated to the Japanese. President Truman ultimately decided to drop the bomb first, then let the Japanese government know the terms.

Why, then, did the United States government embark upon a course of action that, while having no military justification, would forever brand it with infamy in the eyes of the world?

As the war was reaching its end, the conflict between the United States and the Soviet Union was intensifying. In accordance with the terms of the Yalta agreement, the Soviet Union was about to invade Japan, laying claim to territories granted to it in that accord, and was seeking to play a role in post-war Europe commensurate with the losses it had endured during the war.

The use of the atomic bomb was, as two historians recently put it, “America’s first act of the Cold War.” It was intended to send a clear signal to the Soviet Union that, despite Soviet victory over Germany, the Americans were the masters of the world.

The destruction of Hiroshima and Nagasaki announced the entry of the United States as the world’s unchallenged imperialist hegemon, bullying and dictating terms to all humanity. Behind the thin veneer of democracy, the United States was signaling that it would do whatever was necessary for the preservation and expansion of its own interests, no matter the scale of the crime or how many people had to die.

In the more than seven decades since the bombing of Hiroshima, the determination of the American ruling class to use military force to defend its interests has only grown. Obama will make his appearance in Hiroshima as part of his participation in a Group of 7 meeting where he will seek to strengthen America’s alliance with Japan against China and facilitate Prime Minister Shinzo Abe’s re-militarization of the country.

Even as it demands “nuclear non-proliferation” from every other country, the White House is spending a trillion dollars to modernize the US nuclear stockpile and engaging in a continuous series of provocations against China and Russia that threaten war between nuclear-armed states.

In other words, Obama will go to Hiroshima not to apologize for past crimes, but to prepare new ones.

How can one expect the United States government, which since Hiroshima has been responsible for the deaths of millions of people in Korea and Vietnam—and, over the past quarter century, throughout the Middle East—to apologize for mass murder when it continues to practice it to this day?

But there will come a day in a socialist America, when the atrocities committed by the ruling class will be disavowed, and the bombings of Hiroshima and Nagasaki will be acknowledged for what they were: crimes against humanity.

Remembering Tagore in Turbulent Times

Asanga Abeyagoonasekera

“I have become my own version of an optimist. If I can't make it through one door, I'll go through another door - or I'll make a door. Something terrific will come no matter how dark the present.”

Rabindranath Tagore

One hundred and fifty five years ago, the greatest and most illustrious son of Asia, Gurudev Rabindranath Tagore, was born. Tagore’s work inspired many individuals around the world including many Sri Lankan scholars and musicians. Tagore believed in creating an enviroment of multiculturalism and tolerance. He spoke of the importance of world peace, dialogue and non-violence. This vision remains unfulfilled. The value of Tagore’s vision – the restoration of human values - is more relevant today than ever.

Had the essence of Tagore’s philosophy been practiced, Bangladesh, one of the countries he wrote the national anthem for, would not be going through its present crisis. There have been more than fifty terrorist attacks in the last few years and out of this, the Islamic State (IS) was responsible for 13 of these, including the recent killing of a Sufi Muslim spiritual leader.

The IS has clearly stated that the “soldiers” of its declared caliphate have also been murdering targets in Bangladesh, and that it would expand further in South Asia and would “continue to terrorise the crusaders [westerners] and their allies until the rule of Allah is established on the earth.”

The South Asian region has been devastated by terrorist attacks in Afghanistan, Pakistan and now, Bangladesh. Providing security to civilians has become the top priority for many countries around the world. From Sri Lanka, more than fifty individuals have joined the IS, according to experts. The government must invest in focused strategic and security initiatives to keep track of such activities and work closely with Muslim organisations, particularly Muslim youth, to prevent them from joining the IS.

The region indicates all clear variables for a geopolitical nightmare as states surrounding India show much instability. All South Asian countries face similar and in some cases common economic challenges. Weak institutions, weak political culture, unemployment and inequality are potent triggers for youth unrest. From Naxalism in India to other domiciled terrorist entities, it can be predicted that they will take the advantage provided by weak states.

Weak states surrounding India are a direct threat to Indian security. It is important to strengthen small and larger states in South Asia through economic and social revival and through regional cooperation and global integration to address problems, particularly those of poverty and deprivation.

President Sirisena of Sri Lanka delivered the Lalith Athulathmudali memorial lecture recently. The legacy of the Oxford and Harvard scholar-turned-politician who was brutally gunned down in 1993 remains. The President addressed the importance of intellectuals such as Lalith in today’s politics. Lalith was ethical and the yeomen service he rendered to Sri Lanka was immense.

He initiated “Mahapola,” a scholarship scheme to ignite many young minds from rural villages by giving them access to university education. Speaking at the event, Lalith’s only brother said, “Lalith was offered an important place by Prime Minister Lee Kuan Yew to serve Singapore but he declined to serve his own country.” Had he accepted this offer, his life would have not ended with assassin’s bullets - a clear explanation of Sri Lankan political culture.

President Sirisena was elected to change this culture. Dighting corruption and introducing transparent methods of governance remain top priority. This week in London, world leaders including Sri Lankan President and many economists will meet at the Anti-Corruption Summit to discuss measures to tackle corruption. This coincides with the revelations made by the Panama Papers, in which many global leaders including British Prime Minister David Cameron, the host of the landmark summit, feature. While large-scale initiatives are important, citizen-centric stakeholder movements have created better results, such as ipaidabribe.com in India, to quantify corruption data and educate the public.

All South Asian countries except Bhutan rank below the score 50 on the corruption scale – qualifying as ‘highly corrupt’ - according to Corruption Perception Index by Transparency International. Corruption increases the cost of doing business up to 10 per cent globally, says the World Bank. With corruption and the absence of transparency, market growth and sustainability cannot be attained.

Addressing another social issue, Prime Minister Wickremesinghe initiated a high level dialogue on Ragging and SGBV (sexual and gender-based violence) in Sri Lankan Universities. This is a very important step – a few days ago, another incident of ragging was reported at Kelaniya University. This is a violation of individual dignity and it is important to teach dignity at the school level and at universities. The Education Minister could introduce a programme such as Global Dignity, running in 65 countries, that teach values of dignity to school children.

With all these social implications, the much forgotten words of Tagore could help reinvigorate efforts to change society as it is now. No matter how dark the present, optimism is crucial.

WTO Verdict: A Roadblock to India’s National Solar Mission?

Ateetmani Brar

In February 2013, the US filed a complaint at the World Trade Organization’s (WTO) challenging the Indian government’s Domestic Content Requirements (DCR) for solar cells and modules under the latter’s ongoing National Solar Mission (NSM). On 24 February 2016, the WTO ruled in the US’ favour.

Why did the US challenge India’s DCRs? Given that the verdict is not in its favour, does New Delhi have to worry?

India’s NSM and DCRs: A Brief Overview

India’s NSM was launched on 11 January 2010 by the then Prime Minister, Manmohan Singh. Its main target is to ramp up India’s solar power capacity to 100GW by the year 2022 and to generate green energy at lower costs in order to meet the country's growing demand.

The DCRs, which the US objected to, were introduced to serve a two-pronged objective:

a. To provide a boost to the domestic manufacturing sector

b. To guarantee the rate of purchase of electricity manufactured for a long term

To this end, New Delhi’s DCRs authorised solar power developers to use certain types of solar cells and modules that were manufactured in India during different phases of the project. As an incentive, in 2014, the Indian government offered a subsidy of USD 0.15 million (Rs 10,000,000) per megawatt installed, to those solar power developers who would use domestic components. In return those developers and the government would agree on a fixed rate at which the electricity thus generated would be sold to state agencies for a long term.

The Dispute and the RulingIn February 2013, the US argued at the WTO that the Indian NSM’s DCRs denied global players a level playing field, and sought consultations with India on relevant matters. It also claimed that such DCRs nullify or impair the benefits the US could have otherwise gained – directly or indirectly – under the Agreement on Trade-related Investment Measures (TRIMs) and the 1994 General Agreement on Tariffs and Trade (GATT). In February 2014, the US raised expressed its concern again when India decided to include thin film technologies in Phase II of the NSM. The same year, First Solar, a US-based thin-film manufacturer that had previously dominated the market in India, missed out on projects during the second phase of the NSM, after thin-film modules were included in India’s DCR framework.

In its defence, India argued that the DCR measures were reasonable under Article XX(j) of the GATT. It stated that due to the low manufacturing capacity that exists in the solar-related components sector in the country, India will nonetheless be unable to supplant concerned US businesses with its own supply. New Delhi also argued that measures like the DCRs help secure India's compliance with “laws or regulations” requiring it to take steps to promote sustainable development. At the 2015 Paris Climate Conference, India had promised massive increases in the carbon efficiency of its economy.  A key portion of the commitment was the promise of large-scale investments in renewable technologies, including a considerable increase in solar power generation.

India negotiated with the US by agreeing to apply the DCRs only for solar panels purchased for government consumption. New Delhi even assured Washington that power generated from such subsidised panels would not be sold for commercial use.

The WTO panel ruled that India’s DCRs “are inconsistent with both Article III:4 of the GATT 1994 and Article 2.1 of the TRIMs Agreement” and that they “do accord “less favourable treatment” within the meaning of that provision.

This was not the first instance of such a ruling. In 2013, the Canadian province of Ontario too lost a similar case against the EU and Japan.

The Way ForwardWhile the key objectives of India’s NSMs include cost-effective energy efficiency along with environment protection, measures such as our DCRs are not entirely consumer friendly either.

Harnessing solar energy is expensive. The cost of producing and installing locally manufactured solar cells and modules is higher than the total cost incurred in producing solar energy through imported solar cells and modules. The use of imported equipment may benefit consumers by lowering rates.

Alternative ways – incentivising the production of solar cells and modules by pushing for traditional tools including tax breaks, low-interest long-term loans etc. – to encourage domestic production could be explored. These could help reducing manufacturing costs and thereby help make indigenous technology cheaper and provide for greater access to international markets.

New Delhi could also look at investing more in its research and development to improve domestic solar power technology and also collaborate on related efforts with international entities. Given how India launched an International Solar Alliance with over 120 countries to boost solar energy in developing countries in 2015, opportunities to do so are likely to present themselves. These measures will help India in its efforts towards meeting its NSM targets by 2022 while also being consistent with WTO terms.

The US’ key grievance at the WTO was regarding India’s DCRs and not the NSM itself. New Delhi should not feel disheartened with the recent ruling and continue to make efforts towards generating green energy with or without the DCRs.