Hedge fund buy-in heralds massive assault on Volkswagen workers

Dietmar Henning

The fallout from the exposure of the exhaust emissions fraud has made Volkswagen attractive to hedge funds for aggressive shareholder buy-ins. British hedge fund TCI has entered the scene as a shareholder in VW and is planning an unprecedented jobs massacre, slashing wages and worsening working conditions to satiate its profit hungry financiers.

In a letter to the board of directors, TCI founder and head Chris Hohn accused the VW directors and Supervisory Board of siphoning off 400 million euros over six years in personal remuneration, which in his eyes is money withheld from shareholders. "These are corporate excesses of epic proportions," he says in the letter. Despite the exhaust emissions scandal, Hohn stated, "the management has been rewarded for its failure".

Hohn is known for brutally enforcing shareholders' interests. Now he clearly senses good business opportunities at VW. At a management presentation in London, he said "the hostility of large institutional investors was palpable"; shareholders had suffered heavy losses.

"They will not remain eternally patient," writes Hohn. "The signs of mismanagement are numerous." At VW, the salaries of the managers and the wages of the employees always stood above the interests of shareholders. "This is no way to lead one of the largest companies in the world, and it is no longer acceptable for the minority shareholders."

According to the company, however, the hedge fund holds only two percent of the VW / Porsche group. Apparently, TCI has bought non-voting VW preference shares worth 1.2 billion euros, thus he needs to win allies. Whether other hedge funds soon buy in at VW and support him in his campaign is still unclear. It could be, however, that Hohn wins over the Qatari emirate to his side. The oil sheikhs hold 17 percent of VW’s shares, the third largest holding of ordinary shares. 52.2 percent is held by Porsche Automobil Holding on behalf of the owners, the Piëch and Porsche families, and 20 percent is held by the state of Lower Saxony.

The Supervisory Board representatives from Qatar have already demanded several times to be included in the presidium, the company’s highest controlling body. It is here that the actual decisions are made before then being discussed by the Supervisory Board and generally nodded through. The majority in the presidium, as on the Supervisory Board, is controlled by the IG Metall union, the VW works council and the state of Lower Saxony, represented by Social Democratic Party (SPD) state premier Stefan Weil. So far, this majority, along with the Piëch and Porsche families, has always repulsed the advances of Qatar.

Hohn's methods and those of TCI are well known. The fund buys into companies whose share price have fallen sharply, ensures that the yield and therefore the share price rises again by imposing mass layoffs and dismantling the entire concern, finally sucking out millions and billions of euros from the leftovers before moving on to look for new victims. What remains are tens of thousands of workers and their families who have been pushed into unemployment and poverty.

Last year, VW saw a record loss of at least 1.6 billion euros. At the beginning of May, VW shares were 45 percent below their high point over the last year. The yield on the core VW brand was only 2 percent. At comparable companies it is six to 12 percent.

Even the destruction or bankruptcy of VW can no longer be excluded. The well-known US lawyer Michael Hausfeld threatened VW with bankruptcy in an interview with Welt am Sonntag if the group did not "behave reasonably".

In the past, Hausfeld's law firm has represented forced labourers of the Nazi era, victims of the "Exxon Valdez" oil disaster and other plaintiffs, winning them billions in compensation.

Now his firm is aiming for a general settlement between VW and car owners, shareholders, environmental organizations and the authorities. In a letter to VW CEO Matthias Müller, Hausfeld has called for a meeting within two weeks. The Tubingen law firm Tilp has also lodged a billion-euro lawsuit against VW on behalf of 278 institutional investors.

Andreas Renschler, who heads the company's heavy goods vehicle division and receives 15 million euros a year, making him the best paid VW director, wants to merge the VW subsidiaries MAN, Scania and Volkswagen Commercial Vehicles and launch an IPO. The money could then be used to pay the billions in penalties the company faces as result of the emissions scandal.

In any case, the Executive Board, IG Metall and works council are preparing to launch enormous attacks on the workforce. Works Council leader Bernd Osterloh had already indicated that the payment of this year's "token of appreciation" bonus was uncertain for about 120,000 VW workers in Germany. The directors, who in the worst year in the company's history have pocketed 63 million euros, only want to pay the measly bonus if they obtain commitments to further cuts.

However, this is likely to be only the prelude to far greater cuts for the workers. This was sketched out four weeks ago in a short study by the Centre for Automotive Research (CAR) at the University of Duisburg-Essen. "It is not the exhaust scandal that represents the greatest threat to the future but the chronic low profitability of the core VW passenger vehicle brand," writes the head of CAR, Ferdinand Dudenhöffer. For each passenger vehicle sold, the VW brand earned only 475 euros in its car business in 2015. At rivals such as Toyota it was 1,862 euros, and almost 1,200 euros at Ford.

The main reason identified by Dudenhöffer is the too high costs at German factories. At the seven German plants, "productivity and profitability" were disproportionate. Personnel costs in the core VW plants lay significantly above those of comparable companies. VW workers in the company's west German plants enjoyed significant benefits.

While the competition at Daimler and BMW and even at the VW subsidiaries Audi and Porsche paid their employees according to the industry-wide collective agreement with IG Metall, VW core employees were paid in line with an in-house contract giving them what the Stuttgarter Zeitung described as a "cream topping".

In addition, VW had avoided outsourcing parts of the production process in recent years. "The depth of production at VW is enormous," the newspaper quoted Gerhard Wolf, head of automotive and mechanical engineering in the team of analysts at Landesbank Baden-Württemberg (LBBW). Production was carried out "often at a high cost."

Sale of assets, spin-offs, plant closures, job losses, wage cuts: This is what the hedge fund TCI will demand in order to enhance returns.

In an editorial Wednesday, the Süddeutsche Zeitung was jubilant. Under the headline, "At last, someone is telling it like it is", Karl-Heinz Büschemann wrote: "Finally, there is someone who does not hesitate to harshly criticize the corrupt company."

Hohn's attack on Volkswagen was the first indication that there still could be a fresh start at VW after months of a simmering exhaust emissions scandal. "The Britton with the bad reputation could become a benefactor for the German economy." The "uncompromising methods of an Anglo-Saxon investor" were a "suitable weapon" to make changes at Volkswagen.

That one of the largest companies in the world, with over 600,000 employees, is now the target of predatory hedge funds is an outcome of the cronyism between the works council, the trade union and management. No other company in Germany is so closely intertwined with the social democratic bureaucrats in politics and the unions as VW.

VW works council leader Osterloh has always sung the praise of the directors, as long as there was enough for the union and the works council representatives. In 2014, when CEO Martin Winterkorn resigned as a result of the emissions scandal, but still pocketed 17 million euros annual salary, Osterloh said he was worth every penny.

When VW was caught falsifying the nitrogen oxide emission results of VW diesel vehicles, the works council had nothing better to do than distribute tens of thousands of T-shirts bearing the slogan "VW: One Team--One family" to VW workers, lining them up behind the board of directors.

In the meantime, Osterloh has continued to work closely with the corporate heads behind the backs of the workforce. The Works Council, IG Metall and SPD representatives on the supervisory board agreed to a recent bonus orgy for the directors. Now they are proposing to the shareholders at the upcoming Annual General Meeting on June 22 in Hannover to absolve the entire Executive Board, which is responsible for the present situation. According to a VW statement, this decision expressed the confidence of the Supervisory Board in the current board of directors.

Shortly beforehand, Osterloh declared: "Money for penalties and compensation will be missing if the company is broken up. Unfortunately, that's the way it is." So now it was all the more important to become more efficient. "We have presented our proposals for this", the works council leader said, alluding to his own 400-page savings programme.

This conspiracy of the works council and trade union leaders with the VW Group must be smashed. But this must not be left to a robber baron like Hohn and his TCI hedge fund, for which workers would pay a bitter price.

Rather, workers must break politically and organizationally from the union and works council, establish their own independent rank and file committees at VW plants around the world and prepare to fight to defend their interests.

Air France announces pay cuts for pilots

Anthony Torres

After a ruling by the High Court in Bobigny and then a Paris appeals court permitting Air France to impose its Transform 2015 corporate strategy, the airline’s board authorised the company to start applying it on June 1, 2016.

The accord will slash pilot pay. The 50 percent bonus for night flying will be cut to 40 percent, work on the ground will be paid at a lower rate and instructors’ preparation time on the ground will be cut by half. Starting in 2017, the company will organise the pilots’ 12 rest days on an annualised basis.

The pay cut is the outcome of the betrayal of the 2014 Air France pilots strike, which shook France’s Socialist Party (PS) government and Air France management. The National Union of Airline Pilots (SNPL), with the support of pseudo-left parties like Workers Struggle (Lutte Ouvrière, LO) and the New Anti-capitalist Party (Nouveau parti anticapitaliste, NPA), ended the strike to block a victory by the pilots and stabilise the PS government.

According to AFP, the current measures “are worth 20 to 30 million euros [$US 22.6 to 33.9 million] yearly of improved competitiveness for the company, that is, 2 to 3 percent of the total pilot wage bill.” Air France management and the unions are also negotiating other measures. The airline’s CEO Gilles Gateau has announced he will “invite the recognised union organisations to determine how to proceed with these discussions.”

The director of human resources at Air France downplayed the risk of a strike against the new measures, declaring, “I have never heard anyone say that there might be a strike call over this agreement, which involves putting into effect a deal signed by the SNPL.” Air France management hopes the SNPL will be able to impose the pay cut on the pilots as it did at the ending of the strike two years ago.

In September 2014, the pilots struck against the company’s plan for Transavia, a low-cost Air France subsidiary that was seeking to employ pilots and other workers at lower wages. The 14-day pilots strike cost the airline tens of millions of euros, dented its bottom line and also threatened the government of President François Hollande, France’s most unpopular president since World War II.

The PS feared this strike, which was widely popular, would draw in wider layers of workers in France and across Europe, where air transport workers were in struggle in a number of locations, particularly at Lufthansa in defence of pensions.

Prime Minister Manuel Valls intervened to demand the shutting down of the strike, which the SNPL ended, on the grounds that it “is our duty to preserve the future of our company and bandage its wounds before irreversible damage is caused.”

The SNPL added at the time that the unions had a crucial role to play in persuading workers to accept the restructuring plan, arguing that “management cannot implement by itself the development of Transavia-France. Neither can it implement its project Perform 2020.”

At the time, the WSWS warned: “If Air France is confronted with ‘irreversible’ financial damage due to the strike, this means that the strikers are in a position of strength. This is precisely the moment at which the union declares that it wants to halt the strike and collaborate with management to plan attacks against workers that it abusively claims to represent... If pilots end the strike now, management will launch brutal attacks in order to recoup the hundreds of millions of euros they lost, make an example of the pilots, and discourage other layers of workers from striking.”

By bringing the strike to an ignominious end, the SNPL paved the way for the new attacks on basic social rights. Transavia workers’ salaries are 25 to 30 percent less than those at Air France, but with 30 to 40 percent more flying time. A year after the SNPL ended the strike, Air France announced thousands of job cuts.

The pseudo-left parties, for their part, hailed the ending of the strike. LO declared, “Despite the media outcry, despite the statements of Valls who tried to have the last word and use tough words to try to persuade people that he had not given in, the pilots made management back down on the Transavia Europe plan... Thank goodness sometimes there is a fightback.”

For its part, the NPA referred to Air France’s statement that it would eliminate plans for a Transavia Europe subsidiary as “a first victory to be saluted by all workers... This strike opens a new way forward to mobilise other sections of workers threatened by the Transavia plan: flight attendants, ground crew carrying out assistance duties in the airports and aircraft maintenance.”

A great deal of cynical praise was heaped on the SNPL to help cover up its abject betrayal of the pilots’ struggle and its rescue of Air France management and the PS government at the union members’ expense.

The attacks against Air France pilots are a warning for all workers and youth fighting the French labour law and austerity policies. All the leading organisations are closely tied to the PS, which they helped bring to power in the 2012 presidential elections by supporting Hollande, whose pro-war and austerity policies they subsequently aligned themselves with.

LO, the NPA and other organisations are now seeking to block the development of a broad political struggle of the working class and youth against the labour law, as they did during the 2014 strike, enabling management to carry out new attacks on the workers. Only a struggle against the PS and its pseudo-left supporters, based on a socialist and internationalist perspective, will make it possible for workers to defend their social rights.

Poland adopts new anti-communist law

Dorota Niemitz

The Polish parliament recently adopted a de-communization law, giving local governments one year to remove all symbols representing communism from the public space.

As of April 1, the bill, fully titled “On the prohibition of propagation of communism or any other totalitarian system through the names of all public buildings, structures and facilities”, bans public display of names commemorating communism, including “people, organizations, events or dates symbolizing repressive, authoritarian and non-sovereign regime of 1944-1989 in Poland” and criminalizes any propaganda in their favor.

The Institute of National Remembrance (IPN), which serves as the historical police for the right-wing Law and Justice Party (PiS) government, has sent out letters to many local authorities with a list of over 1,300 of the “most flagrant examples that glorify the anti-Polish communist ideology” in their cities.

Among those organizations and individuals included on the IPN’s list of “cursed communists” are the volunteer members of the 13th International Brigade, known as the Dabrowski Brigade, who fought Franco’s fascist forces during the Spanish civil war of 1936-39; members of the revolutionary workers’ organization Proletariat II (1888-1893); the party of Rosa Luxemburg—the Social Democratic Party of Poland and Lithuania (SDKPiL, 1900-1918); the Polish Socialist Party-Left (PPS-L, 1906-1918); the Polish Communist Party and the Left Opposition in Poland (1918-1938); the anti-fascist partisans of the People’s Army (AL) and the People’s Guard (GL); the Polish People’s Armed Forces (AWP); officials of the former USSR and PRL (the Polish People’s Republic 1945-1989) and “leftist” writers including Julian Tuwim, Jan Brzechwa and Władysław Broniewski.

The list of names makes it clear that the law targets primarily the revolutionary leaders of the Polish socialist workers’ movement and pro-Soviet anti-fascists. To justify the attack on the legacy of the revolutionary Marxist movement in Poland and the Soviet Union, its most honorable leaders are lumped together with those responsible for crimes committed by the Stalinist agents and bureaucrats, as well as fascists and the Nazis.

Article 13 of Poland’s Constitution of 1997 as well as article 256 of the penal code already bans political parties and organizations that make a reference to totalitarian methods and practices of Nazism, fascism and communism as well as those propagating racial and ethnic hatred or violence. Nazism, fascism, communism and racism are intentionally mentioned in the same breath as if they were synonyms.

Equating communism with Nazism and fascism, and, subsequently, communism with Stalinism with the term “totalitarian communism”, is part of a deliberate effort. This perverted falsification of history aims at confusing the working class and preventing the development of a revolutionary socialist movement.

The crimes committed by Nazi Germany on the territory of Poland during WWII were of tremendous and unprecedented scope and scale. The Red Army was instrumental in crushing the Third Reich, the liberation of the Jewish people and other nations from extermination in concentration camps. That the USSR, despite the criminal rule of the Stalinist bureaucracy, was able to mobilize against the Nazi war machine and ultimately defeat it, was a reflection of the enormous strength of the 1917 October Revolution.

The harassment of leftist organizations and simultaneous promotion of nationalistic and fascistic forces by the Polish authorities reveals that the real target of all those allegedly “anti-totalitarian” legislations was never fascism or Nazism, but socialism and the legacy of the October Revolution.

On March 31 of this year four activists from the Stalinist Communist Party of Poland (KPP) were given 9 months of suspended prison sentence with forced labor and fines by the Regional Court in Dąbrowa Górnicza in Silesia for propagating communist ideology through the Internet and their newspaperBrzask. Around the same time, on April 16, around 400 neo-fascists were allowed with impunity to march to celebrate the 82nd anniversary of the establishment of the ONR party (the National-Radical Camp) in Białystok.

It is revealing to note how the reactionary anti-communist law was passed without a single parliament delegate objecting.

Introduced by the PiS, the bill was adopted unanimously with 438 votes in favor and only one abstention. Members of the opposition parties such as Civic Platform (PO), which co-authored the bill, and Nowoczesna (Modern) which ran to the defense of Lech Wałęsa after he was outed as a Stalinist spy, voted for the bill. So did members of the agrarian Polish People’s Party (PSL), which was active during the rule of the so-called “non-sovereign regime of 1944-1989” under the name of the United People’s Party (ZSL).

One of the main controversies surrounding the bill concerns war memorials honoring the struggle of the Red Army to liberate the territories of modern day Poland from the Nazi occupation during WWII. The IPN is currently proposing a removal and transfer of more than 500 Soviet monuments to a remote open-air museum park.

The law is yet another open provocation against Russia, adding fuel to already tense relations between both states. It met with a harsh response from the Russian authorities: the Civic Chamber of Russia appealed to the Organization for Security and Cooperation in Europe and UNESCO for international intervention.

“The intolerant policy of Poland in regards to the Soviet monuments is reminiscent of the actions of the ISIS fighters in Syrian Palmira”, Russian foreign ministry spokesperson Maria Zacharova stated. She announced that Moscow would not remain indifferent to actions bordering on barbarism, such as the demolition of monuments of generals and soldiers who fought to free Europe from fascism.

Russia’s foreign minister Sergei Lavrov stated that with the passage of the new law Poland reached top position among the countries crusading against Soviet monuments. Within the last year 30 monuments symbolizing the Red Army have been desecrated or illegally removed. The upkeep of war memorials and final resting places is guaranteed through the bilateral agreement of 1994 between the Polish Republic and the Russian Federation.

There are over 1,800 cemeteries, memorials and final resting places of Soviet soldiers in Poland. An estimated 600,000 Soviet troops lost their lives during military actions against the armies of Hitler on the country’s territory in the years 1944-1945, saving hundreds of thousands of Polish citizens from resettlement and almost certain death in the Nazi concentration camps. Fighting on the side of the Red Army, the Polish People’s Armed Forces lost an estimated 17,500 troops, 5,000 alone in battles for control of Pomerania Embankment fortifications. Now these soldiers are being treated as traitors who helped impose the Soviet occupation in Poland.

The spokesperson of the Polish foreign ministry stated in response to Lavrov’s criticisms that the 1994 agreement does not apply to the so-called symbolic monuments which are “a clear symbol of Soviet domination over Poland” and can be removed without violating provision stipulated in the agreement.

Such an interpretation is legally feasible thanks to the 1652 resolution of the Parliamentary Assembly of the Council of Europe of 2009, which distinguishes between “war graves and victory monuments erected to glorify totalitarian regimes or former occupation forces.” Dismantling the heritage of former “communist totalitarian systems” has been strongly advised by the Assembly.

In a step to revise history and undermine the role of the Soviet Union in defeating the Third Reich, the Polish parliament approved legislation last year replacing the May 9 holiday commemorating the capitulation of Nazi Germany to the USSR, with a May 8 V-E Day, the capitulation to the allied nations. By dismantling war memorials and changing dates of public holidays, the bourgeois regime hopes to tear out an inconvenient page in history: that it was the Soviet Red Army that liberated Poland from Nazism, and not its Western allies.

The first wave of de-communization swept the country soon after the reestablishment of capitalism in the early 1990s, when many names of streets, parks and buildings commemorating leaders of the Polish and international workers’ movement as well as events honoring the Red Army’s victory over the Nazis, were erased and replaced by the names of nationalistic ideologists, heads of imperialistic states, Catholic cardinals and pre-WWII authoritarian dictators, such as the anti-Semitic cardinal Stefan Wyszyński, the anti-communist pope John Paul II, the far-right nationalist Roman Dmowski and the authoritarian dictator Józef Piłsudski.

Local governments in charge of de-communization were not always in a hurry to carry out the changes due to high administrative costs as well as the protests of the local residents. With the passage of the latest law assigning new names for streets or buildings in question now becomes mandatory. The estimate for the project is calculated at 1.5 million zł (about €350,000).

The de-communization law was preceded by similar provisions adopted in various countries, such as Hungary, Moldova or Ukraine, and then found in some cases to be unconstitutional or in breach of the European Convention of Human Rights. In the case of Moldova, the Venice Commission stated that using symbols such as the hammer-and-sickle or the red star by individuals, including parties that do not display totalitarian ideologies, could not be treated as dangerous propaganda.

These reactionary and utterly anti-democratic laws need to be rejected by the working class in Poland and internationally. The cynical revision of 20th century history by the nationalistic ruling regime aims at justifying the drive towards war with Russia on behalf of the United States, NATO and the European imperialist powers. By falsely associating contemporary bourgeois Russia with the USSR, it aims at erasing the heritage of the Soviet Union and its victory over Nazism, the legacy of the socialist movement in Poland as well as the gains for the working class introduced after the establishment of pro-Soviet PRL in 1945.

The fact that the de-communization law comes 27 years after the collapse of the PRL, amidst great disillusionment with capitalism and protests of the working class against worsening living conditions, exposes the true nature of the act. Above all it is a preventive measure to threaten and suppress all domestic opposition against capitalism. Revising the history and promoting heinous nationalism and Russophobia is directly aimed at preventing the unification of Polish and Russian workers, and blocking them from learning the lessons of a revolutionary international workers’ movement that so mightily threatened capitalism in the 20th century.

IMF warns against British exit from EU

Julie Hyland

The International Monetary Fund (IMF) entered into the campaign over Britain’s membership of the European Union on Friday, with dire predictions that a Leave vote in the June 23 referendum would cause recession and a slump in property values.

Speaking at the Treasury in London, IMF head Christine Lagarde warned, “We have done our homework and we haven’t found anything positive to say about a Brexit [British exit from the EU] vote.”

Every country she had visited in the last six months had expressed concerns about the outcome of the referendum, she explained. Given the “huge amount of anxiety” around the vote it was “entirely legitimate” for the IMF to make its position known, she said.

In the event of a Leave vote, Lagarde said the UK could enter into technical recession with its economy shrinking in two consecutive quarters. In anticipation, financial markets could see “sharp drops in equity and house prices, increased borrowing costs for households and businesses, and even a sudden stop of investment inflows into key sectors such as commercial real estate and finance.”

“The UK’s record-high current account deficit and attendant reliance on external financing exacerbates these risks,” she added.

On Wednesday, Conservative Chancellor George Osborne reported that the Treasury had begun contingency planning to shore up Britain’s financial system should the Leave vote win the referendum, to counter what he described could result in “extreme volatility.” UK manufacturing is already in recession. Figures from the Office for National Statistics released earlier this week showed that British industry had entered its third slump in a decade, with sharp falls in output at the start of 2016.

Lagarde’s predictions on the state of the UK economy following a Remain vote, however, were hardly reassuring for millions of working people. The IMF forecasts that even in this instance, growth was “likely to fall below 2% for the full year 2016, before returning to an average of around 2.25% over the medium term…”

The IMF’s concern is not with the fate of working families. It has been one of the main agencies for imposing austerity across Europe, most notably in Greece. It speaks on behalf of the global banks and corporations—such as Goldman Sachs and JP Morgan—which are playing a significant role in bankrolling the official Remain campaign led by the Conservative government of Prime Minister David Cameron.

Major property companies are especially opposed to a Leave vote, because of the impact it will have on their holdings. London in particular has become a magnet for the global super-rich looking to expand their fortunes through the capital’s property bubble.

The default response of the Leave campaign to such predictions is to rubbish them as “Project Fear”. However, the prospect of economic slump and instability has been welcomed by its main financial backer.

The day before Lagarde’s report, billionaire stockbroker Peter Hargreaves said that the financial insecurity caused by a Brexit would be “fantastic.”

Hargreaves is the co-founder of stockbroker Hargreaves Lansdown and one of Britain’s wealthiest men—describing himself as “rich as Croesus.” He is the largest single donor on either side of the campaign on EU membership, having given £3.2 million to the Leave camp.

Likening the consequences of a Leave vote to the forced retreat by British armed forces from Dunkirk in the Second World War, Hargreaves said, “It would be the biggest stimulus to get our butts in gear that we have ever had.”

“We will get out there and we will be become incredibly successful because we will be insecure again. And insecurity is fantastic,” he added. “All the people in the City of London who I rate and are intelligent and talk sense actually say it would be better if we left. All the government lackeys, all the bureaucrats and the people on the boards [who] haven’t got a clue what they are talking about want us to remain.”

Of particular significance was Hargreaves’ eulogy to the economy of Singapore, which he cited as the model for a Britain free from EU regulation. When Singapore became independent of Malaysia in 1965 it was “mosquito-infested swamp with no natural resources,” he said. Then Prime Minister Lee Kuan Yew (who died in 2015) had turned Singapore “into the best economy in the world. It’s a bit of a clinical place, but it shows what a small country with limited resources can do. And we are much bigger and have more resources. Britain will be far better off as an independent nation.”

Hargreaves’ paean to Lee Kuan Yew exposes the class motives driving the official Leave campaign. The establishment of Singapore as an “independent” city state on August 9, 1965 was the occasion for a relentless assault on the working class as Yew positioned the country as a magnet for foreign capital investment looking to penetrate the Asian region. He had a long alliance with Indonesia’s General Suharto who seized power in 1965, and carried through the massacre of one million members and supporters of the Communist Party of Indonesia and trade unionists.

Behind the façade of democracy and “national unity”, Yew responded to social dissent with brutal repression. Migrant workers, which make up 44 percent of Singapore’s workforce, have no rights and can be forcibly repatriated at a moment’s notice for the slightest complaint at their conditions. This virtual slave labour force is used to depress wages, with the result that social inequality is among the highest in the developed world.

It is this that accounts for Singapore being listed as the second most “competitive” city in the world. It is also the world’s third largest financial centre, with its tax breaks and absence of regulation a magnet for hedge fund operations in particular. The country has the world’s highest concentration of millionaire households, at approximately 15.5 percent.

Hargreaves makes plain that for the Leave campaign, economic instability is welcomed as providing the whip hand for smashing up wages and conditions in the UK—all in the name of the national interest.

A sharp fall in sterling in the event of a Brexit would be the occasion for “whoopee-do”, Hargreaves said. Looking back nostalgically to 1992 when sterling was forced out of the European Exchange Rate Mechanism, causing a 20 percent fall in its value, the billionaire said this would be “positive for exporters and the market.”

Workers’ rights would have to suffer, Hargreaves said, complaining that EU legislation concerning limited social directives was a hindrance to employers. “It should be up to firms” to determine working conditions, “not governments.”

Hargreaves is not alone in his objectives. The Leave campaign is led overwhelmingly by right-wing Thatcherite forces, including many from hedge fund and asset-stripping operations with headquarters in London’s Mayfair. They include the multi-millionaire asset and fund manager Jim Mellon, billionaire Crispin Odey, founding partner of Odey Asset Management and Sir Michael Hintze, founder of the CQS hedge fund.

Last October, Paul Stephenson, former Conservative press officer turned Vote Leave’s communication director, boasted, “We are confident that hedge funds and many other financial firms will support ‘Vote Leave, take control’.”

Mellon has boasted that the success of his company, Charlemagne Capital, was directly bound up with the massive privatisation of state industries undertaken by the former Soviet bureaucracy after it liquidated the Soviet Union in 1991.

Earlier this week, Aaron Banks—a millionaire who leads the Leave.EU group and backs the UK Independence Party, said, “If it were up to me, I’d privatise the NHS.” He spoke during a visit to address the Cato Institute in Washington.

Such statements validate the Socialist Equality Party’s refusal to endorse a Leave vote in the referendum, despite its hostility to the EU. Advancing the call for an active boycott, the SEP explained that the referendum is the outcome of a reactionary faction fight within the British bourgeoisie over the best means to attack workers’ social conditions and democratic rights.

“The terms negotiated by [Prime Minister David] Cameron as the basis of the UK remaining in the EU sanction his government’s attacks on migrants and measures to protect the criminal activities of the UK’s banks and financial institutions”, its statement explains. “A Leave vote, however, would be seized on as an endorsement of demands for British ‘sovereignty’ and ‘independence’—euphemisms for removing all obstacles to the intensified exploitation of the working class and a more ruthless clampdown on immigration.”

New doping allegations against Russia ahead of summer Olympics

Barry Grey

The New York Times on Thursday posted an extensive article alleging that the Russian Ministry of Sports and the country’s internal intelligence service, the FSB, organized the systematic doping of Russian athletes, including at least 15 medal winners, at the 2014 Winter Olympics in the Black Sea resort town of Sochi.

The article appeared as the front-page lead story in the newspaper’s printed edition on Friday. It was accompanied by a separate article by “Sports of the Times” columnist Juliet Macur calling for Russia to be banned from this summer’s Olympic games in Rio de Janeiro, Brazil.

The charges in the article are based entirely on interviews conducted by the Times with Dr. Grigory Rodchenkov, who headed the Russian Sports Ministry’s anti-doping lab from 2005 until he was forced to resign at the end of 2015 following the release of a 325-page report by the World Anti-Doping Agency. The WADA report charged the Russian government with sponsoring the doping of Russian athletes at the 2012 summer games in London.

Following the release of that report, the International Association of Athletics Federations (IAAF) placed the Russian track and field federation under provisional suspension. The IAAF Council is expected to decide on Russia’s eligibility to participate in the Rio Olympics at a meeting next month.

Rodchenkov left Russia at the beginning of 2016 with the assistance of Bryan Fogel, an American filmmaker who is working on a documentary on doping in international sport that is expected to be released in September. Fogel, who arranged for Rodchenkov to settle in Los Angeles, was the go-between in setting up the interviews with the Times.

In statements on Thursday and Friday, Russian officials denied the allegations by the Times of government-organized use of performance-enhancing drugs at the Sochi Games, and several of the athletes named in the article denounced the allegations and declared their innocence.

The Times article cites Rodchenkov as saying that he used the lab he headed in Sochi, which handled the testing of thousands of Olympians at the games, to conceal the use by dozens of Russian competitors of a three-drug cocktail of banned substances he had developed and used in the London summer games and was administering while the Sochi Winter games were in progress. The article alleges that Russian anti-doping experts and FSB agents secretly replaced urine samples tainted by the drugs with clean urine collected months earlier. It cites Rodchenkov as saying the FSB somehow developed a method to break into the supposedly tamperproof bottles long used at international competitions.

As many as 100 dirty urine samples were discarded in the course of the winter games, according to the article.

The Times acknowledged in the article that it had no independent verification of Rodchenkov’s story. Nevertheless, the newspaper’s sports commentator, Juliet Macur, wrote: “If that isn’t enough reason to deem Russian athletes a risk to the credibility of the Olympics, and reason enough to bar them from competing in this summer’s Rio Games, I don’t know what is. In fact, there are enough red flags that Olympic officials should consider barring the Russians from the 2018 Winter Games too… Russia has gone rogue. No more proof is needed.”

Referring to the unexpected deaths last February of two former anti-doping officials who had worked with Rodchenkov, Macur went so far as to suggest, without any evidence, that the Russian government had murdered them. She wrote: “There’s no telling what it will do—or, given the unexpected deaths of two high-ranking Russian antidoping officials within two weeks of each other, what it will not do—to make this all go away.”

The International Olympic Committee on Thursday called Rodchenkov’s account “very detailed and very worrying.” A spokesperson called on the World Anti-Doping Agency to investigate the charges “immediately.”

At stake is not only Russia’s participation in this summer’s games in Rio, but potentially its status as host of the 2018 World Cup.

Russian athletes won 33 medals at Sochi, including 13 gold medals, ten more than at the previous Winter Olympics in Vancouver. The Russian team far outdid the US, its closest competitor. Russian President Vladimir Putin personally oversaw much of the preparation for the games. His government allocated large sums to refurbish Sochi despite mounting economic and financial problems and the impact of sanctions imposed by the US and Europe as part of their aggressive drive to isolate and militarily threaten Russia in the aftermath of the Western-engineered right-wing coup in Ukraine. Putin, seeking to whip up Russian nationalism, hailed the success of the Russian Olympic team as proof of Russia’s reemergence as a world power.

It is entirely possible that the right-wing nationalist government of Putin has overseen a program of doping in an effort to promote the interests of the corrupt and semi-criminal capitalist oligarchy it represents. It is also clear that the Times, in presenting Rodchenkov’s account as fact without any independent substantiation and prior to any investigation, is promoting the reactionary geopolitical agenda of the United States, which wants to use the upcoming Olympics as another means of pressuring Russia, destabilizing its government, and justifying a further militarization of Eastern Europe.

Doping is pervasive in international sport, and sanctimonious claims by the Times that Russia is guilty of “undermining the integrity of one of the world’s most prestigious sporting events” are rife with hypocrisy. In every country, including the US, athletes are placed under tremendous pressure by the government and corporate sponsors to bend or break the rules in order to deliver medals. The US is, after all, the home of Lance Armstrong, whose elaborate doping regimen lasted for some 15 years and was systematically covered up by US authorities.

The Times itself, in a March 29 article on doping in international sports, wrote: “Russians appear to be among the worst and perhaps the most systemic dopers. By no means, however, are they the sole offenders. Six Australian cross-country skiers and biathletes were caught doping at the Olympics in Turin in 2006 and barred for life. Swedes, Latvians, Poles and Germans were caught at the Winter Olympics in Sochi in 2014. In 1987, a top American Nordic-combined skier, Kerry Lynch, was caught blood-doping with the approval of his coach, Jim Page.

“Page was suspended but later became a managing director at the United States Olympic Committee.”

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.