IMF demands “decisive action” on Sri Lankan austerity cuts

Saman Gunadasa

The International Monetary Fund (IMF) last week issued warnings about the impact of “external factors” on the Sri Lankan economy and said the government had to strictly follow commitments made in exchange for loans under a three-year Extended Fund Facility (EFF) agreement.

The comments followed a two-week IMF visit to assess the progress of the government’s austerity measures. The IMF is due to release $119.9 million, the third tranche of a $US1.5 billion concessionary loan, in mid-April.

An IMF statement noted that Sri Lanka’s international reserves had fallen short of projected targets. Progress on implementing “structural benchmarks” and some of the “reforms”—i.e., the sale of state owned enterprises—was “behind intended timelines.”

The IMF mission said it had met Sri Lankan authorities and “discussed decisive actions to maintain the reform momentum in light of the uncertain external environment.”

The “uncertain” environment is a reference to international recessionary conditions, concerns about the future of the European Union following last year’s Brexit vote in the UK and nervousness over the Trump administration’s “America first” program. Interest rate increases under Trump have severely affected the Sri Lankan capital market and seen an outflow of investment funds.

Franklin Templeton, a US hedge fund and one of the world’s largest investment management companies, has started withdrawing from Sri Lankan government bonds, and other investors have stopped trading rupee bonds. Over 64 billion rupees ($420 million) has been withdrawn from government bonds so far this year. Central Bank officials have responded with road-show promotions of Sri Lankan bonds in the US.

There has also been a drastic reduction in the country’s exports. The trade deficit increased from $7.5 billion in 2013 to over $9 billion last year. Foreign direct investment has halved, from $600 million in 2015 to $300 million in 2016. The government increasingly depends on unreliable sources of foreign currency, such as workers’ remittances, mainly from the Middle-East, and tourist income.

It is not clear whether last week’s IMF report will delay the third IMF tranche. The loan is crucial for the government, which has to pay $5.4 billion on loan instalments and interest this year.

Last week, Prime Minister Ranil Wickremesinghe told parliament the government has to settle $15 billion in loans from 2017 to 2020 and the country confronted a “global economic crisis.”

Local media openly speculated about whether the government would default on its loans. An editorial entitled “Sri Lanka in a catch-22 situation” in the March 6 edition of the Daily Mirror declared: “Since independence Sri Lanka has never defaulted on its repayments, but today a repayment default is staring the country in the face.”

IMF managing director Christine Lagarde was scheduled to visit Colombo on March 5. Her trip was cancelled, but the very fact that the IMF chief was planning to speak with government officials in person was another indication of the IMF’s concerns. Finance Minister Ravi Karunanayake has now been summoned to IMF head office in Washington before the release of the third tranche of the loan.

The IMF team instructed government officials to immediately sell six “non-strategic” assets to obtain funds. According to press reports, the sale of two ventures—Lanka Hospitals and Sri Lankan Air Lines—is being finalised.

The IMF directed the government to publish “statements of corporate intents” for the sale of the Hyatt Hotel, Water’s Edge, the Grand Oriental Hotel and the Colombo Hilton. The government hopes to obtain $1 billion from these sales.

Colombo is also attempting to sell a $1.4 billion long lease to China Merchants Port Holdings for an 80 percent stake in Hambantota Port, which was built with Chinese loans. Negotiations have stalled following local protests and disputes within the cabinet. Ports and Shipping Minister Arjuna Ranatunga opposes the proposed arrangement and has written a 15-point letter, voicing his disagreements. The government, however, has assured the IMF that the Hambantota Port deal will be finalised soon.

Colombo has said it will obtain funds for loan settlements through syndicated loans, international sovereign bonds and direct purchases in the market. The IMF mission, however, opposed these plans, warning they would drastically depreciate the rupee and not strengthen the country’s international reserves.

Instead of more loans, the bank wants more rapid imposition of social spending cuts and other austerity measures that will impact on the working class and the poor.

The IMF wants subsidies cut to state-owned enterprises, such as the Ceylon Petroleum Corporation, Ceylon Electricity Board and National Water Supply and Drainage Board, and new price formulas to match international supply costs and current overheads. State funds for education, health and other subsidies, such as for fertilisers and school uniforms, will be substantially cut.

Colombo has begun implementing these measures in successive budgets, seeking to reduce the budget deficit from 7 percent of gross domestic product in 2015 to 3.5 percent by 2020.

The IMF mission objected to the Central Bank using foreign reserves to try to prevent the rupee’s devaluation. Sri Lanka’s external reserves fell from $4.5 billion in 2016 to $3.5 billion at the end of January 2017. In the final six months of 2016, the Central Bank spent $109 million to prop up the rupee.

The depreciation of the currency pushes up the cost of imported goods, resulting in price increases in essentials needed by workers and the poor. The rupee fell by almost 4 percent in 2016, and 1.2 percent so far this year. Currency dealers estimate that it will depreciate by 6 to 8 percent this year.

The government of President Mahinda Sirisena and Prime Minister Wickremesinghe is already facing widespread strikes and protests by workers, students, farmers and the poor against its austerity measures. It has responded to the growing popular opposition by strengthening the police and armed forces.

Under the guise of fighting crime gangs and the illicit drugs business, Colombo is introducing new repressive laws to curb the struggles of the working class and poor. One of the planned laws will ban protests in public places and on roads.

Inflated prices and a dire shortage of new housing in London

Allison Smith

Southeast London council guilty of house fire deaths

Last month, London’s Southwark Council was found guilty of egregious safety breaches that led to the deaths by fire of six Lankanal House Council Estate residents. The court assessed a paltry sum of £300,000 for the violations.

The charges resulting from the 2009 inferno include a failure to carry out a suitable and sufficient risk assessment, failure to take general fire precautions—including in relation to safety of employees—and a failure to ensure that premises were subject to a suitable system of maintenance.

The deaths may have been prevented had appropriate fire safety measures been taken in a recent upgrade of the estate. Additionally, there is evidence that the property may not have had regular visits by London Fire Brigade (LFB), which meant that when LFB arrived on the scene of the blaze they had little knowledge of the property layout, including emergency exits and potential fire hazards. The residents that died were left trapped in their units.

A Freedom of Information request found there are 114 London tower blocks rated high risk by local councils, yet only four of these received the four annual familiarisation visits recommended by the LFB’s own guidelines. The information showed that 21 of the highest risk buildings received zero visits.

In recent years, London Fire Brigade has been gutted with relentless cuts, including the 2014 closure of 10 fire stations across London, which resulted in the loss of 552 firefighters and 14 fire engines.

London house prices second most overvalued in the world

According to UBS Wealth Management’s housing “bubble” Index—a report of 18 housing markets around the world—London is the second most bubble risk city in the world, after Vancouver, Canada, with a 50 percent price increase since 2011.

London is also the second least affordable city after Hong Kong when house prices are compared with average earnings. Houses in London are 15 percent higher than the market peak in 2007, while real incomes have fallen a staggering 10 percent over the past 10 years.

London’s inflated prices are likely to continue due to the dire shortage of new housing. The housing crisis is spreading beyond London with the North and Midlands becoming increasingly unaffordable. Home ownership in England stands at its lowest level since 1986.

London borough of Westminster tops homelessness hotspots

Analysis by the Shelter homeless charity found that more than 255,000 people are homeless in England and that the nation’s top homelessness hotspot is Westminster, the London borough in which the UK Parliament is located. Of the 50 homelessness hot spots identified, 32 are in London.

Westminster is the capital’s wealthiest borough, where a one bedroom apartment rents for an average £456 per week. 7,794 residents live in temporary accommodation and one in 25 residents is homeless. According to the Greater London Authority, the median income in London is £39,100, which means that most London boroughs are becoming completely unaffordable for the city’s workers.

Shelter’s analysis—based on government data and information from social services—does not include “hidden” homelessness such as staying with friends. Greater London Authority reports that rough sleeping has doubled in the past five years.

The Department for Communities and Local Government said the agency “does not recognise” Shelter’s figures,” before claiming that “the actual level of homelessness is less than half of what it was 2003.”

London medical student sleeps rough to raise awareness

Over Christmas last year, Aberdeen medical student James Beavis lived on the streets for 31 days to raise funds for homeless charity Crisis and to raise awareness about the conditions of homeless residents in the capital city.

More than 8,000 people sleep rough in London, with 80 percent of them reported to have some form of mental illness.

In his blog documenting the experience, Beavis observed “the reality is that society has dehumanised homeless people. They are seen as intimidating—but during my time on the streets, it’s not the homeless community I’ve felt afraid of; it’s some of the general public who have made me feel intimidated and vulnerable. I’ve been spat on, and endlessly ignored. There have been times when not a single person has looked at me for at least two hours.”

A recent study by Crisis found that the homeless are nearly 17 times more likely to be a victim of violence and 15 times more likely to suffer verbal abuse.

UK rents expected to rise 20 percent by 2022

The February United Kingdom Residential Markey Survey by the Royal Institution of Chartered Surveyors (RICS) reveals that rents are expected to rise by 20 percent over the next five years, further squeezing lower income tenants and potentially pushing homeless people and those on welfare benefits out of the rental market.

The survey shows a growing shortage of rental properties, with an increasing margin, for the 38th consecutive month.

One-third of the RICS survey respondents said they believe that rental access has fallen among tenants on housing benefits and 55 percent said they would consider letting properties to households on benefits and/or the homeless if the government guaranteed deposits and rent, as well as provided ongoing support for landlords and tenants. Some 29 percent of respondents cited housing benefit caps as the key reason those on lower incomes are being pushed out of the rental market.

Rents in London are by some distance the most expensive in the UK. According to HomeLet’s latest Rental Index, rents on new tenancies in Greater London rose by 2 percent over the year to December to reach an average of £1,508.

Top British state schools exclude working-class children

Alice Summers

Two recently released studies have shed further light on the extent to which social inequality impacts upon a child’s educational achievement.

According to the report by the educational charity Teach First, children from the richest families dominate the UK’s top state-run schools. Fully 43 percent of pupils at these schools, rated as “outstanding” by Ofsted (Office for Standards in Education, Children’s Services and Skills), the regulatory government body, come from the wealthiest 20 percent of families.

Poor pupils are less than half as likely to go to an outstanding school as their richer peers, with only 18 percent of children from the most deprived 20 percent of families attending these institutions.

Much of this difference is due to the lack of availability of outstanding or “good” schools in deprived areas. While 93 percent of secondary schools in the wealthiest areas are outstanding or good, only two-thirds of schools in poor areas attain this Ofsted ranking.

Low-income areas are five times as likely to be served by a secondary school that is rated less than good. While only one in 14, or 7 percent, of secondary schools in the most affluent areas are ranked as “requires improvement” or “inadequate,” the figure is as high as 36 percent in the poorest communities.

A similar study released by educational charity, the Sutton Trust, revealed that children eligible for Free School Meals (FSM)—an indicator of poverty-level family income—are roughly half as likely to attend one the top 500 state schools in England. 17.2 percent of secondary school pupils received FSM in the average state school, compared to only 9.4 percent at the top 500 schools.

Roughly half of this discrepancy is due to the fact that high performing schools are usually concentrated in affluent areas where few pupils from poor families can afford to live. However, even within these neighbourhoods, disproportionately few pupils on FSM are admitted, due to social selection, the report stated. Eighty-five percent of the schools ranking among the top 500 accept a smaller proportion of FSM pupils than they should in comparison to the number living in their catchment area. A quarter of these schools have a gap of five percentage points or more between the number of FSM pupils living in the area and the number they admit.

The social selectivity of a school is based on a combination of several main factors, including geographical proximity to a school, as well as schools giving priority to incoming students based on the primary school they attended, their previous academic attainment or their religious faith.

Among the top 500 schools, faith schools, which make up around a third of the list, have been shown to be the most socially selective. The proportion of FSM pupils at these schools—which are permitted to select up to 50 percent of their pupils based on religious faith—is 6 percent lower than the proportion living in the school’s catchment area compared with an average of 2 percent fewer among the top non-faith schools.

As candidate pupils are assigned priority based on their proximity to nearby schools, many wealthy parents buy or rent a property based on a school’s catchment area. House prices in desirable catchment areas have acquired eye-watering premiums. According to the Sutton Trust, the catchment area of a top 500 school attracts a premium of around £45,700, or 20 percent more than house prices elsewhere in the same local authority.

Research released in September by Savills estate agent revealed that the effective wealth qualification for admission into a top state school has reached extraordinary and prohibitive heights: six of the country’s top 30 schools now have catchment areas in which house prices are more than £100,000 above the regional average. The overwhelming majority of the population are priced out of these areas. A child’s educational chances are therefore largely decided even before they enter school by being intimately linked with their family’s wealth.

The Sutton Trust noted that getting admitted “into a high attaining school can be the key to getting on in life.” The pupils that enter high performing schools are “more likely to go to a top university and succeed in getting into the best jobs. Yet the bottom line remains, your chances of gaining a place in those schools depends on your parents’ income.”

The study by Teach First further reveals that the social class is the defining factor in a child’s educational chances no matter where they attend school. School quality, in fact, accounted for only one fifth of the variation in a pupil’s achievement. “[The] remaining fourth-fifths is attributable to pupil-level factors, such as family background and the area in which they live—and family income makes a bigger difference than either the ethnicity gap or the gender gap.”

The report noted that even if every child went to a secondary school ranked as outstanding, the achievement gap between the poorest and wealthiest pupils would only be cut by a fifth.

The immense educational barriers facing poor children continue past secondary school and into further and higher education. Only 24 percent of children eligible for FSM go on to attend higher education, in comparison to 42 percent of non-free school meals pupils. The odds of a child who receives FSM at secondary school being admitted to one of the UK’s two most elite universities, Oxford and Cambridge, is only one in 1,500.

In response to the damning evidence of the social segregation of secondary school students, a Department of Education spokesperson released a statement announcing a set of reactionary proposals that will only further cement inequality.

The Conservative government is considering proposals to allow faith schools to admit a higher proportion of their students based on religion—further increasing social selection—and to hasten the privatisation of schools by further outsourcing to independent institutions. “We plan to create more good school places in more parts of the country by scrapping the ban on new grammar schools,” declared the spokesperson, “as well as harnessing the expertise and resources of our universities, and our independent and faith schools.”

In the government’s recent budget, Chancellor Philip Hammond announced plans to invest £320 million on “the creation of new academically selective free schools”—grammar schools in all but name.

There is overwhelming evidence that grammar schools do nothing to promote social mobility and primarily benefit the most privileged layers in society. Most recently, researchers at University College London and the Universities of Warwick and Bristol found that the most deprived 10 percent of families have only a 6 percent chance of attending a grammar school, compared to odds of 50 percent or more for those children coming from the wealthiest 10 percent. Children from the tiny elite of wealthy families in the top 1 percent have an 80 percent chance of going to a grammar.

AFRICOM spearheads escalation of US “scramble for Africa”

Eddie Haywood 

The chief of the US African Command (AFRICOM), General Thomas Waldhauser, warned last week in an annual report to Congress that resource constraints on his forces are threatening to undermine Washington’s influence over Africa.

Headquartered in Stuttgart, Germany, AFRICOM was created with the mission of exerting greater military influence over Africa in order to maintain and facilitate Western capitalism’s exploitation of the continent’s vast economic resources and its working masses.

In his testimony before the Senate Foreign Relations Committee, General Waldhauser warned that AFRICOM’s “inadequate surveillance, poor supply chain networks, and lack of personnel” are putting US interests at increased risk. “These constraints risk our soldiers, sailors, airmen, marines, Coast Guardsmen, and civilians executing activities on the African continent.” General Waldhauser stated.

Waldhauser testified further that AFRICOM’s capability restraints are most grave in relation to its support for the Department of State-led mission to protect US personnel and facilities.

Waldhauser also stated that only 20-30 percent of the command’s intelligence, surveillance, and reconnaissance requirements are being met, due to a lack of resources. To offset this shortfall, AFRICOM has relied primarily on private security contractors (mercenaries).

Further highlighting AFRICOM’s resource constraints, the US maintains one military base overseeing the entire continent, Camp Lemonnier, a base shared jointly with France in the tiny nation of Dijibouti on the Horn of Africa. Washington is keen to upscale its military presence on the continent.

Waldhauser outlined before the Senate committee potential problems for the United States exertion of power in Africa, specifically in relation to Washington’s military debacles in Somalia and Libya.

In Somalia, Washington is carrying out a bloody campaign for control of the Horn of Africa, which fronts the waterway for the flow of the world’s oil traffic through the Gulf of Aden originating in the Middle East. Somalia is currently experiencing the worst famine in its history, which is largely the result of Washington’s imperialist violence against the nation over several years.

In Libya, Washington in 2011 carried out a US-NATO campaign for regime change that left the country an apocalyptic wasteland with no central government, resulting in the rise of various rival tribal factions vying for control over the country’s vast oil reserves.

Waldhauser underscored the necessity for AFRICOM’s continuing role in perpetuating these crimes by appealing to the Senate committee for more resources and an escalation of militarism.

In a reflection of the crisis and divisions within the US ruling class over the direction of US foreign policy, Waldhauser invoked the threat of Russia’s influence in Libya: “Russia is trying to exert influence on the ultimate decision of who becomes, and what entity becomes, in charge of the government inside Libya.”

Addressing the committee’s Republican chairman Senator John McCain, Waldhauser stated that General Khalifa Haftar, head of the Libyan National Army, has been engaged in talks with various representatives from Moscow. “General Haftar has visited, as you said, on the carrier with the Russians. He’s also visited in the country of Russia. Also, this week it’s reported in the open press, Serraj from the Government of National Accord has also visited Russia,” Waldhauser said.

The statement expresses the fear of growing Russian involvement in Libya. Last week, there were reports that Moscow deployed special forces troops to Egypt near the Libyan border. Russian Ministry of Defense spokesman Igor Konashenkov denied the deployment, telling the RIA Novosti news agency , “Certain Western mass media have been stirring up the public for years with such false information from anonymous sources.”

When Senator Lindsey Graham asked General Waldhauser his thoughts on the importance of the involvement of Secretary of State and former Exxon-Mobil CEO Rex Tillerson in influencing the outcome of the AFRICOM’s mission, Waldhauser stressed, “Very important.”

Waldhauser’s testimony before the US Senate underscored the desire to escalate Washington’s military role in Africa under the new Trump administration. Washington’s aim is to neutralize China’s and Russia’s influence on the continent. Fueling the mounting concern within the US ruling class over Beijing’s influence on the continent, China is set to complete later this year the construction of a naval base in Djibouti, a mere four miles from the US/French base.

In recent years, China has massively increased its economic influence in Africa, with Beijing investing heavily in mining, infrastructure, oil and agriculture. Alongside this, European imperialism is also asserting itself on the continent, with Germany and France desperate to not be left behind in the “resource grab” in Africa.

The crisis of world capitalism has directly resulted in the explosive growth of militarism on the continent. Germany has constructed a military base in Niger, and has its troops deployed across the sub-Saharan region.

France not only maintains several military bases in Africa, but has an ongoing deployment of several thousand troops in Mali, Niger, Burkina Faso, Chad and Mauritania, where French forces are engaged in ongoing bloody conflicts. In 2015 in Burkina Faso, France played an influential role in the removal of President Blaise Compaoré. Underlying these developments, the two European nations are attempting to assert a greater imperial role on behalf of their national capitalist interests at the expense of their rivals.

The “Scramble for Africa” coincides with a resurgence of working class struggles across the continent.

In South Africa, strikes by the working class have increased exponentially, with 6,000 social workers going on strike against the government this week and both the National Union of Metalworkers and National Union of Mineworkers threatening to follow suit to oppose the shutting down of six power plants and the wiping out of 6,000 jobs. The mining sector has remained roiled by conflict since the 2012 Marikana massacre, which resulted in government forces killing dozens of striking miners.

In Kenya, doctors and medical personnel have been on a nearly four-month strike protesting low pay and deplorable working conditions; Kenyan university lecturers have also struck over similar conditions.

In February, five people were killed in Guinea’s capital of Conakry following a teachers’ strike against the government’s decision to cut salaries for educators.

In Egypt last week, hundreds took to the streets in protests over the military regime’s threat to end bread subsidies, upon which the mass of the poorest Egyptians rely.

Additionally, an historic famine is ravaging several African countries, including Somalia and South Sudan, areas that are most deeply affected by decades of US imperialist intervention.

For the African masses, already ravaged by war, poverty, and disease—intolerable social ills that are themselves the malodorous by-product of capitalism—the plans of US imperialism to escalate military intervention on the continent pose a grave new threat.

US Fed lifts interest rate and reassures markets

Nick Beams

The US Federal Reserve yesterday lifted its base interest rate by 0.25 percentage points and indicated that two further rises were likely this year.

There had been some belief in financial markets that four rises could occur this year but that now seems unlikely. The “dot plot”—the expectation of members of the Fed’s open market committee (FOMC) as to where interest rates will be over the next period—remained basically unchanged from last December.

The money markets, which had priced in the 0.25 percent increase, welcomed the decision. All the major indexes ended at just below their record highs after experiencing a rise for the day. The Dow closed near 21,000.

Bond market yields also fell marginally, as bond prices rose, because of the fading of the prospect of four rate rises this year, rather than three. (Bond prices and yields have an inverse relationship.)

Markets were reassured by the language of the decision, with most analysts concluding that Fed chairwoman Janet Yellen had “dovish” views on rate rises.

The FOMC said it expected economic conditions would evolve in a manner that would “warrant gradual increases in the federal funds rate.” That was a slightly more hawkish outlook because its previous statements referred to “only gradual” increases.

However, the statement indicated that the base interest rate was expected to remain for “some time” below levels that were expected to prevail in the longer run.

Two other phrases in the FOMC statement boosted the markets. It said the Fed would “carefully monitor” actual and expected inflation developments “relative to its symmetric inflation goal.” This was taken to mean that with inflation now approaching the Fed’s target rate of 2 percent, it would not move too sharply on lifting rates if the inflation rate went above that level.

The markets also took heart from the FOMC’s statement that the Fed would continue its policy of reinvesting principal payments from its massively expanded holdings of financial assets, including mortgage-backed securities and Treasury security holdings. As a result of its financial asset purchases under its previous “quantitative easing” program, the Fed now holds $4.5 trillion in financial assets, compared to $900 billion before the financial crisis of 2008.

The statement said the reinvesting policy would continue until “normalization of the federal funds rate is well under way.” Keeping the holdings of longer-term financial assets at “sizable levels” should help maintain “accommodative financial conditions.”

If the Fed started to sell off its financial holdings, this would push their prices down and lead to a significant rise in market interest rates, with a substantial impact on the stock market.

The Fed appears to be trying to tread a fine line. It is keeping rates at historically low levels in order to finance the ongoing rise in the stock market. At the same time, it is lifting interest rates in order to improve profit conditions for the banks and other lending institutions.

By lifting rates it is also signalling that it stands ready to put a clamp on the economy if there is any sign of a movement by workers on wage demands to try to reverse protracted cuts in real pay.

In her press conference, Yellen tried to give the impression of a US economy returning to “normal” conditions. Near-term risks to the economic outlook, she said, “appear roughly balanced” and the decision to “make another gradual reduction in the amount of policy accommodation reflects the economy’s continued progress.”

While there has been some improvement in economic conditions—sparking fears of a possible wages movement—the US economy is far from returning to conditions that prevailed before the 2008–09 financial crisis. The long-term growth rate continues to remain at around 2 percent, well below the level experienced in any post-war economic recovery.

According to the Atlanta Federal Reserve, US annualised gross domestic growth for the first quarter may be as low as 0.9 percent, following growth of only 1.6 percent in 2016, the worst result for five years.

The stock market, however, is continuing to rise on the expectation of major cuts in corporate and personal tax rates by the Trump administration, the scrapping of regulations that inhibit profit making and an infrastructure spending program which will benefit corporations through massive tax write-offs.

Since Trump’s election on November 8, the stock market has surged, with the Dow up 17 percent, the S&P 500 14 percent and the tech-based NASDAQ 16 percent.

According to Yale economist and Nobel Prize winner Robert Shiller, the market is “way over-priced.” He told Bloomberg that investors may be valuing a narrative rather than economic fundamentals, as took place in the dot-com bubble at the turn of the century.

“They’re both revolutionary eras,” he said. “This time a ‘Great Leader’ has appeared. The idea is, everything is different.” A kind of herd mentality was developing in which everyone piled into the market because the cost of losing out on making gains was greater than staying out.

Another area of concern is the impact of rising US interest rates on global bond markets. There is now a divergence between the policies of the world’s three major central banks. While the Fed is lifting rates, the European Central Bank (ECB) is still buying €80 billion worth of bonds a month and has kept its base interest rate at minus 0.4 percent. The Bank of Japan is keeping the rate on its 10-year bonds at between zero and 0.1 percent.

With the rate on the US Treasuries hovering at around 2.6 percent, money is coming into US financial markets from Europe and Japan.

But that situation could change rapidly, according to long-time bond market trader Bill Gross. In an interview with the business channel CNBC yesterday, he said that “hell could break loose in terms of the bond market on a global basis” once ECB president Mario Draghi began to taper—probably not for a few months—the €80 billion a month purchases were reduced and restrictions on the Japanese rate were eliminated.

In comments reported by the Financial Times earlier this week, Gross warned that the US economy was like a “truckload of nitroglycerine on a bumpy road.” A mistake could “set off a credit implosion.”

European court rules in favour of headscarf ban at workplaces

Peter Schwarz

Corporate freedom stands higher than the freedom of religion: this is the key content of two judgments made Tuesday by the European Court of Justice (ECJ) on the Muslim headscarf, which will serve to strengthen the Islamophobic and xenophobic tendencies that are growing throughout Europe.

The court ruled that companies may prohibit Muslim women from wearing a headscarf at work, especially if they have contact with customers. However, companies cannot justify such a ban based on complaints from individual customers, or on the basis of prejudices against Muslims. Companies must adopt a method of work that projects the employer’s desire for “an image of neutrality towards both its public and private sector customers,” the judgment reads.

“That desire relates to the freedom to conduct a business, which is recognised in the Charter,” argues the ECJ. This objective justifies prohibitions of ideological symbols “notably where the only workers involved are those who come into contact with customers.”

In other words, religious discrimination is permitted if all religions are discriminated against. The court is quite aware that, in practice, it is Muslim women who are particularly affected by the judgment. It acknowledges that the commitment to neutrality can also conceal an “indirect discrimination” against Muslims. Nevertheless, the freedom of business stands higher than their rights.

A commentary in the Süddeutsche Zeitung recalls the famous phrase of Anatole France to the effect that, the law in its majestic equality prohibits “both the rich as well as the poor from sleeping under bridges, begging on streets and stealing bread.” The same sentiment is expressed in the ECJ rulings, i.e. “the law, in its majestic equality, forbids Christians, atheists and Muslims alike, from wearing a headscarf.”

If companies were to make broad use of this “corporate freedom,” it would exclude Muslim women from a wide range of professions, preventing them from working as salespeople, supermarket cashiers, and service counter employees.

The two judgments were based on the case of a software designer from France whose company called upon her to discard her headscarf, and a receptionist from Belgium, who had been dismissed because she had worn a headscarf.

The judgments of the European Court of Justice apply throughout the EU. They will serve to intensify attacks on religious freedom in many countries that have hitherto given priority to religious freedom in the workplace.

Thus, in 2002, the German Federal Labor Court ruled on a saleswoman who had been sacked by a department store because she had decided to wear a headscarf. The judgment contained a number of exception clauses. Thus, the court declared a ban on the headscarf to be admissible if there was a definite “disturbance of the working peace” or the turnover of the department store suffered. Nevertheless, a more liberal practice with regard to headscarves has prevailed in Germany since then.

In 2015, the German Federal Constitutional Court ruled that a headscarf ban in schools is only possible in exceptional cases. It thus raised the individual’s right to freedom of belief above the state’s commitment to neutrality. Now the ECJ has overturned this principle to the benefit of private companies.

Experts assume that German jurisprudence will quickly apply the new line and abolish religious freedom in the workplace. “The Federal Labor Court will take over the verdict from Luxembourg in identical form,” said Gregor Thüsing, Professor of Labor Law in Bonn.

The second-highest European court, the European Court of Human Rights, also recently ruled against religious freedom for Muslims. In 2014, it approved a general ban on burkas in France, a French ban on headscarves in public services in 2015, and in 2016 ruled against exempting Muslim girls from obligatory swimming lessons.

The right to freely choose and practice a religion is, like the right to freedom of opinion, a fundamental democratic right. It is not the task of the state to determine what someone should believe, think or do.

The restriction of this right by the supreme European court is an integral part of a shift to the right by the entire ruling class, which is reacting to growing social and international tensions by promoting militarism at home and abroad, and fostering right-wing, xenophobic sentiments.

German Left Party joins right-wing campaign against Turkey

Ulrich Rippert 

The conflict between the Turkish government and European governments has escalated in the past few days. In an unprecedented diplomatic affront, the Dutch government denied the Turkish Foreign Minister Mevlüt Cavusoglu entry to the country last weekend. The Turkish Family Minister Fatma Betul Sayan Kaya was then escorted back across the border to Germany by armed police units.

Both ministers had planned to address Turkish residents in the Turkish consulate in Rotterdam about the upcoming constitutional referendum. Following the ban on both politicians, the Dutch police used water cannons and batons to disperse a protest demonstration in front of the Turkish consulate.

In Germany the Left Party responded immediately, heartily welcoming these undemocratic measures. Left Party leader Sahra Wagenknecht called on the German government to learn from the “firm approach” of the Dutch government.

On Saturday, she wrote on Twitter: “In the Netherlands the Turkish Foreign Minister has been refused permission to land in the country for a planned election campaign, but so far, here in Germany, we have been waiting in vain for Chancellor Merkel and Foreign Minister Gabriel to show as much backbone. My proposal: combined pressure for a ban on all appearances.”

In a Monday morning post on the Facebook page of the Left Party parliamentary faction, she wrote: “Austria and the Netherlands have decided they will not allow Erdogan’s propaganda tour for dictatorship and the death penalty to take place on their territory. The determination to implement this decision could be witnessed yesterday in the Netherlands: the Turkish Foreign Minister did not receive landing permission for a planned election campaign! Unfortunately, the German government is still far removed from such a clear stance”.

The Left Party then proceeded to welcome the decision of the Federal Constitutional Court, which on Friday had “fortunately” provided legal backing for a ban on any appearances in Germany by Erdogan and his entourage. The court acknowledged that such a ban was a foreign policy decision, which the federal government could easily take. “With this, Merkel and Gabriel can no longer hide behind some spurious excuses”, concluded the Left Party.

The former head of the Left Party parliamentary faction, Gregor Gysi, also warned against “continuing to obey or cuddle up to the Turkish despots”. Instead, Chancellor Merkel and Foreign Minister Gabriel “would finally have to bring the Turkish regime and its campaign for dictatorship and the death penalty into line.” According to Gysi: “We cannot allow ourselves to be blackmailed on a daily basis by Turkey because of the refugee issue.”

The utterly reactionary consequences of the demand for a ban on appearances and speeches by Turkish politicians is shown by recent events in Holland. Just one day before parliamentary elections on Wednesday, Dutch Prime Minister Mark Rutte, a right-wing neo-liberal, is striving to whip up anti-Kurdish and anti-Muslim sentiments and outdo the right-wing extremist Geert Wilders, who was close to his heels in the pre-election polls.

Newspaper reports on the Dutch election make clear that Wilders is calling the shots in the campaign--with Rutte now seeking to outdo his main rival from the right. Prior to the latest ban, Wilders had accused Rutte of being “too weak” to prevent the appearance of Turkish politicians in the Netherlands.

Rather than posing any sort of defence of democracy and freedom of expression in Turkey, the Dutch ban on appearances by Turkish politicians serves to completely undermine democratic rights in the Netherlands. Rutte deliberately provoked the Turkish government in order to divert attention from the extreme social tensions in his country and to whip up racism. For his part, Turkey’s President Erdogan is using the Dutch offensive to whip up nationalist sentiments in Turkey and advance his own campaign for an authoritarian presidential system.

The fact that the Left Party now welcomes Rutte’s approach and praises it as a role model speaks volumes about the right-wing character of the party. It has long supported budget cuts and cuts to social gains and jobs, wherever it has assumed governmental responsibility. One example is the Berlin Senate led by former Mayor Klaus Wowereit (SPD). For 10 years, Wowereit ruled in a coalition with the Left Party, which became notorious for a ruthless policy of cuts.

However, with its support for a racist campaign, which is uniformly praised by the Christian Social Union, the far right the Alternative for Germany (AfD) and Wilders’ own PVV, the right-wing policy of the Left Party assumes a new quality. It thereby strengthens right-wing parties across Europe and clearly emerges as a xenophobic party of “law-and-order".

Declaring “Whoever abuses the laws of the host country has forfeited the right of hospitality,” Sahra Wagenknecht had already lined up with the right-wing campaign against refugees and demands for an authoritarian state. At the time, she was praised by the AfD. “Ms. Wagenknecht has summed up the situation very well,” responded AfD deputy chairman Alexander Gauland who repeated Wagenknecht’s demand: “Anyone who comes to us voluntarily has to behave as a guest or leave Germany.”

Today the right-wing extremist and opponent of the EU Geert Wilders can also register his approval when Wagenknecht celebrates the expulsion of Turkish politicians as a role model for the German government. The right wing of the CSU is also thrilled. When its foreign and security policy spokesman, Florian Hahn, demanded the withdrawal of the Bundeswehr from the Turkish military base of Incirlik in the Bild am Sonntag, Wagenknecht proclaimed her support: “In view of current developments in Turkey it is time to withdraw the Tornadoes and Bundeswehr soldiers from Incirlik and immediately stop arms deliveries to Turkey.”

The Left Party’s backing for the policy of the extreme right results from the bourgeois character of the party. Like all other bourgeois parties, it reacts to growing social divisions and tensions by moving to the right.

The rise of Trump in the US with his policy of “America first!” has accelerated this development. The German government has responded with a program of rapid military rearmament. This development is driven by the insoluble crisis of world capitalism. The ruling classes in every country respond to growing social and economic tensions with a fierce struggle for the global redistribution of economic and political power.

As in the thirties, the flare-up of militarism is linked to the spread of racist poison. At that time, anti-Semitism served to incite backward social strata; today anti-Islamism plays a similar role. The right-wing shift of the Left Party is an integral part of this reactionary development.

Dutch Prime Minister Rutte wins out against far-right challenger

Peter Schwarz

The far-right Party for Freedom (PVV) of Geert Wilders did not make the breakthrough that was long predicted in yesterday’s Dutch election. With 13.1 percent of the vote, it came in second behind the right-wing Liberals (VVD) of Prime Minister Mark Rutte, who won the election with 21.3 percent of the vote.

However, Wilders’ poorer than expected result by no means signals an end of the sharp shift to the right in European politics. Rutte’s VVD and the Christian Democrats (CDA), which came in third with 12.4 percent, have largely taken over the xenophobic, anti-Islamic rhetoric of Wilders, who set the tone for the entire election. Their only difference with Wilders is over the European Union. While Wilders is calling for a referendum on exiting the EU, Rutte’s VVD and most of the other bourgeois parties are strongly defending it.

Wilders will continue to play a major political role. While he did not meet the expectations raised by the polls, he improved his vote by 3 percent since the 2012 election. “PVV-voters, thank you! We have won seats! The first win is in. And Rutte is far from rid of me!!” read his first response to the result on Twitter.

Notwithstanding Rutte’s victory, the vote of the ruling coalition collapsed, almost halving the number of its seats in parliament from 79 to 42. This is far from the 76 seats needed to form a majority in the 150-seat parliament.

While Rutte’s right Liberals lost eight of their previous 41 seats, the biggest loser in the election was their coalition partner, the Labour Party (PvdA). Labour was punished for its support for austerity and its massive attacks on social welfare. Its vote collapsed from 25 percent to less than 6 percent. With only nine seats left, it is now in seventh place—behind the Greens and the ex-Maoist Socialist Party.

The vote of the Socialist Party, which supported the anti-immigrant drive of the main bourgeois parties, went slightly down from 9.6 to 9.1 percent. In contrast, the Green-Left vote quadrupled from 2.3 to 9 percent. Among voters under 34, it received more than a third of the vote, and in Amsterdam it was the strongest party, with almost a fifth of the vote.

The entire election campaign was highly polarized. This led to a large turnout of 82 percent, the highest for 31 years and 6 percent more than in the last election.

The Green Left, as well as other smaller parties and the left Liberals (D66), who increased their vote from 8 to 12.1 percent, clearly benefitted from the opposition to Wilders’ fascistic campaign, particularly among younger people. But both, the Greens and D66, seek to channel the opposition to Wilders behind staunch support for the EU and are quite prepared to back a right-wing government led by Rutte. Basing themselves on sections of the middle class, they play a similar role to those in the United States who try to divert the opposition against Trump into the dead end of the pro-Wall-Street and pro-war Democratic Party.

Governments all over Europe welcomed the Dutch election result with relief. German Foreign Minister Sigmar Gabriel said it was a “success for Europe.” He said he was now optimistic about the coming election in France. The head of Chancellor Angela Merkel’s office, Peter Altmaier, wrote on Twitter: “The Netherlands, oh the Netherlands you are a champion!... Congratulations on this great result.”

Paolo Gentiloni, the Italian prime minister, said the “anti-EU right has lost the elections,” and urged supporters to work to “revitalise the Union.”

French President François Hollande pontificated, “The values of openness, respect for others and a faith in Europe's future are the only true response to the nationalist impulses and isolationism that are shaking the world.”

However, Wilders is a symptom, not the cause, of the turn to the right in European politics. This turn is the response of the bourgeois parties to a profound crisis of capitalist society in the Netherlands and across the continent.

Neither the EU nor any of the European governments are opposed to Wilders’ xenophobic and anti-Islamic line. The maltreatment and rejection of refuges has become the official policy of the EU.

At the beginning of the month, Rutte published an open a letter to immigrants, telling them, “If you don’t like it here, you can leave.” And three days ago, he staged a calculated provocation against the Turkish government, banning its ministers from entering the Netherlands in an attempt to stir up nationalist hysteria and win the backing of a section of Wilders’ potential support.

The only concern of Merkel, Hollande, Gentiloni et al. is the defense of the EU as a basis for escalating militarism, including colonial-style interventions and hostile action against Russia, and for the development of repressive police state measures internally as well as even more sweeping austerity attacks on the working class.

The idea that, after Wilders was boosted by Brexit and the election of Donald Trump, his election setback will undermine the prospects of Marine le Pen of the National Front in the French presidential election does not stand up to scrutiny.

Le Pen’s party has much stronger organizational and historical roots than the PVV, which is very much a one-man band. The FN has been better able to capitalize on the betrayals of France’s Socialist Party government, the crisis of François Fillon and the Gaullist right, and the neo-liberal economic agenda of the candidate presently favoured to win, the independent Emmanuel Macron, to combine hostility to the EU with a claim to represent the interests of “working people” against the establishment.

For the Netherlands, the election opens what is likely to be a period of massive political instability and fierce political and class struggles. The small country of 17 million inhabitants is riven by deep social and cultural divisions. As a former colonial power, it has a huge immigrant community that has been hit very hard by growing social inequality. Liberal cities like Amsterdam stand in contrast to the religious “bible belt,” one of the most conservative areas in Europe.

In the post-war period, these contradictions were bridged by an elaborate culture of political consensus, which found its highest expression in the collaboration since the 1980s of the neoliberal right, the Labour Party and the trade unions in dismantling the previous social gains of the working class. This has led to sharp social polarization and the virtual collapse of the bourgeois “left.”

The political situation in the Netherlands is reminiscent of the conditions that existed in Weimar Germany between 1919 and 1933, where a parliament paralyzed by intense conflicts presided over conditions that gave rise to the coming to power of Hitler.

With hardly more than a fifth of the seats in a parliament of 14 or 15 parties, and the country deeply divided, Rutte needs at least three, if not four, coalition partners to form a viable government. It is expected that it will take weeks, if not months, of intense horse-trading and backroom deals to establish a new coalition.

Everything depends now on an independent intervention by the working class. This demands the establishment of a Dutch section of the International Committee of the Fourth International, opposed both to nationalism and the European Union and capable of working with co-thinkers across Europe and internationally to unite workers of all countries on the basis of a socialist program for the overthrow of capitalism.

Nepal: Local Body Elections amidst Uncertainty

Pramod Jaiswal

Nepal's major political parties - the Nepali Congress (NC); the Communist Party of Nepal (Unified Marxist Leninist (CPN-UML); and the Communist Party of Nepal (Maoist-Centre) - have agreed to hold local body elections on 14 May. Nepal will have a democratically elected local body after two decades if the election takes place as decided. However, Madhesi political parties have opposed it. But, Prime Minister Pushpa Kamal Dahal ‘Prachanda’ has stated that local body elections will be held under any circumstances. What are the possibilities of elections taking place on the announced date? What does the future course of Nepali politics look like? As per the provisions of the newly promulgated constitution, Nepal needs to hold three tier elections (local, provincial and federal) by January 2018. 

The major political parties, especially the main opposition CPN-UML, demanded that the government call for the elections and rejected the idea of constitutional amendments. Conversely, Madhesi parties demanded that the government first address their concerns regarding Madhesi, Janajati and Tharus through constitutional amendments and then announce election. Meanwhile, the Election Commission of Nepal had asked the government to agree on election dates at the earliest for all three election processes to be completed within the stipulated time. The government was compelled to announce the poll dates due to these circumstances, in addition to the mounting pressure from the main opposition CPN-UML. The CPN-UML did not allow the House to discuss the Bill to amend the Constitution though the government had promised the Madhesi parties that they would announce the poll date only after addressing the issues of the Madhesi, Janajati and Tharu communities. 

Reaction of the Madhesi Parties 

Following the announcement of the election date, Madhesi parties announced a two-week long protest in Madhes in the form of torch processions and general strikes. They declared that they would not partake in the election and would instead foil the process unless their demands were addressed through a constitutional amendment. However, the Prachanda-led administration in Kathmandu has assured the Madhesi leaders that he would move ahead with the amendment tabled in the parliament. Several other political parties including Madhesis tabled their proposals - which contradict each other - making the amendment process complex. Hence, it near impossible to satisfy the Madhesis' demands. 

Will the Elections Take Place? 

Holding the election without the participation of Madhesi parties is not possible and neither does it serve any purpose. It will further increase the rift among the Madhesi parties and the government. There will be chaos, and increase the chances of serious clashes among the people of different communities amounting to massive instances of ethnocentric violence that will worsen the situation. As experienced in the past, it can further escalate with the mobilisation of security forces and the Nepal Army. There will be another possibility of disturbance at the India-Nepal border like the one that took place in 2015-16, in which Madhesi parties imposed a 135-days long blockade to force the government to address their demands. Frustration among the Madhesi, Tharus and Janajatis is already rising. The youth are getting radicalised and the voices of separatists such as CK Raut's group are becoming stronger. 

Looking Ahead 

With the announcement of election date, the demands of the main opposition, CPN-UML, has been realised. They need to soften their stance on the amendment bill so that an atmosphere conducive for elections would be created. They might do so as the Madhesi parties have tepidly warned that they would either boycott the polls or would create a disturbance if the polls are held before the endorsement of the amendment bill. The CPN-UML is also highly confident and is in rush for election. As per their calculations, they are expecting a massive upsurge in their support base because of their anti-Indian and ultra-nationalist image consolidated recently. This can be another factor that will push the CPN-UML to support the amendments and to hold election in a timely manner. In order for a free, fair and credible election to take place peacefully in the current situation, the government should create an environment conducive for Madhesi parties to join the process by addressing their demands through a constitutional amendment. 

Postponing the inevitable will only complicate the issues. It is in Nepal’s interest to once and for all resolve the issues through the amendment. The local body elections will set the stage for the other two elections - provincial and federal - that are crucial elements for a real and complete implementation of Nepal's newly promulgated constitution. The nation will again face constitutional hurdles if it fails to hold all the three elections before the January 2018 deadline. However, at present, conducting election across the country is not an easy task. 

The government is yet to decide on some important issues such as: whether the polls will be held in the older framework of the local units or in the new local units as fixed by the Local Bodies Restructuring Commission. Similarly, major political parties have demanded that the local body elections should be ‘party-less’, i.e., to be contested without the banner of their parties. However, all the political parties have to endorse it for that to become a reality. 

It is expected that all political parties would exercise prudence and resolve the issues so that election can take place on time, which will in turn fill-up the offices in the local bodies that have remained vacant for decades.

UCD, Michael Smurfit Masters Scholarships for International Students 2017/2018

Application Deadline: 31st March 2017

Offered annually? Yes

Eligible Countries: International

To be taken at (country): Ireland

Type: Masters

Eligibility: Scholarship winners will be selected on merit. To apply for a scholarship:

• candidates must have obtained a minimum score of 630 points in the GMAT test. The GMAT test result is the primary selection criteria for the scholarship.
• candidates must hold an offer of a place on an MSc programme in the Smurfit School.
• In addition to the overall score, the verbal component score must at least be 30/51 and the quantitative score no lower than 40/60.
• Candidates must also have obtained a first class honours degree (or equivalent) and, if applicable, achieved a minimum overall score of 7.0 in the IELTS test, a score of 100/120 in the TOEFL test (or equivalent).

Number of Awardees: Not specified

Value of Scholarship: Scholarship awards cover up to 50% of the tuition fees per candidate.

Duration of Scholarship: 2 years

How to Apply: 

Visit Scholarship Webpage for details

Award Provider: UCD, Michael Smurfit Graduate Business School.

African Graduate Fellowships at American University Cairo for Masters Students 2017/2018: Egypt

Application Deadline: 15th April, 2017

Offered annually? Yes

Eligible Countries: African countries except Egypt

To be taken at (country): Egypt

Type: Masters Fellowship

Eligibility: 

• Non-Egyptian African nationals
• Bachelor of Arts or Bachelor of Science degree with a minimum overall rating of very good, an overall grade point average of 3.2 on a 4.0 scale, or the equivalent
• Satisfy AUC graduate admissions requirements, including submission of AUC graduate application, additional documents and any required test scores (GMAT for MBA applicants, GRE for economics, economics in international development, and journalism and mass communication applicants)
• Submit an International TOEFL iBT exam score or an IELTS exam score meeting the cut-off scores for AUC graduate admissions.

Number of Awardees: Not specified

Value of Scholarship: 

• Tuition fees coverage
• Monthly stipend
• Student services and activities fee
• Medical service and health insurance fees
• A monthly housing allowance for non-residents of Cairo or accommodation in University Residences at AUC New Cairo
• In support of their professional training, fellows are assigned 12 hours per week of related academic or administrative work

Duration of Scholarship: Fellowships are awarded for two academic years and the intervening summer session.

How to Apply: 

• Step 1: Check how to apply and submit the online application
• Step 2: Submit the online fellowship application form

• Applications and all supporting documents should be submitted by February 15.
• Selection is made in April, fellowships begin the following September.

Visit Scholarship Webpage for details

Award Provider: AUC Cairo