Racially Motivated Attacks On Africans In India Rooted In Casteism

Subramani Mani

Over the last 2-3 years there have been a surge in targeted attacks on African nationals living in India, people from the North-Eastern provinces settled elsewhere in our country, people belonging to minority communities and members of backward castes particularly Dalits. Last year alone a Congolese teacher was attacked and killed in Delhi, a group of six Africans—two women, a priest and his family including a baby walking home was attacked with cricket bats in Delhi and a woman student from Tanzania was beaten and stripped in Bangalore simply because another African was involved in a car accident in the city. Much more recently there has been a spate of brutal attacks on Africans in Noida near Delhi. Also the killings of Muslims based on the mere suspicion of possession of beef or simply for transporting cows across state borders is fast becoming a sport and pastime for some Hindu fanatics. Likewise, the harassment and caste discrimination that pushed scholars Rohith Vemula and Muthu Krishnanbelonging to the Dalit community is still green in our memory.

Many African students have spoken out about the racism they face in their daily life in India but the Indian authorities including the extern affairs minister Sushama Swaraj are in denial mode.In Western societies racism gets manifested as white supremacy and hence white racism and the minorities are stereotyped and assigned an inferior role and status in society. For example, US as a country did not welcome immigration from Asian and African countries before the sixties of the last century. In India the racism being manifested against Africans and people of the North-East are an extension of the entrenched caste system of India.

The dominant forces of the independence movement in India under the leadership of Gandhi had religious revivalist overtones and failed to carry forward the secularization and democratization of Indian society. When Dr. Ambedkar proposed annihilation of the caste system Gandhi opposed it and instead propagated tolerance which boils down to providing equality before the law while preserving the caste hierarchy intact in social relations thereby perpetuating caste discrimination in society. There is a stunning similarity here to what the white supremacists and the Jim Crow south in the US preached during the civil rights movement—equal but separate and segregated spaces in society for education and civil relationships including marriages for blacks. When the BJP leader and former Member of Parliament Mr. Tarun Vijay talks about tolerating the black people from South India in his society the same supremacist and savarna (upper caste) mindset is exposed. Supremacists consider themselves superior but if cornered they will agree to tolerate or accommodate people of other races or castes even though they consider them inferior. The approach taken here is that of doing a favor to the disadvantaged folks.

The role of the Indian community in South Africa in the anti-apartheid struggle there was also convoluted. Though there were stalwarts such as Ahmed Kathrada who joined the anti-apartheid struggle along with the blacks as a teenager and spent 26 years in prison including 18 years in Robben Island, the majority of Indians were not active in the anti-apartheid struggle accepting the privileges offered to them in the classification of mixed-race and tried to remain in good graces with the apartheid regime. It is unfortunate that many in the Indian community embraced this pecking order and did not identify with the struggle of the black South Africans and join their struggle against the unjust white supremacist system of apartheid.

This is a time to introspect and ask ourselves the pertinent question—am I willing to accept a person as a full human being without any reservation as my friend, brother or sister not just in the eye of the law but from the heart irrespective of his or her skin color, facial features or country of origin. Am I ready to engage with him or her wholeheartedly not just professionally or for business purposes but socially, intellectually and in my personal day to day life and activities. Till that happens the prejudices, the mindset and the stereotyping will persist and get manifested in different ways including unleashing mindless attacks on innocent members of communities simply because they look different, have other food items on their plate, worship another god, play some other sport or listen to another type of music.

About 50,000 international students come to India for education every year while the number of Indian students going out of the country seeking educational opportunities is ten times more. There have been racially motivated attacks on Indian students in the US, UK, Australia and New Zealand and Indians have rightly condemned these attacks. Can we all rise up similarly to strongly raise our voice against the attacks on the African people living in India and reach out to them embracing them as brothers, sisters, friends and fellow human beings. That is the need of the hour.

Having said that the Government can and should take a stand recognizing these types of incidents as hate crimes and prosecute the perpetrators to the full extent of the law setting a standard of deterrence. This will help create an environment where members of other communities feel encouraged to pursue their profession, vocation and other activities of life without fear.

Operation Twilight: A Turning Point in Bangladesh

Angshuman Choudhury

On 28 March, the Bangladesh Army officially drew the curtains on ‘Operation Twilight’ – the longest and most complex counter-terror (CT) operation in the country’s history. The five-day episode took place from 24-28 March in a 30-apartment residential building in Shibbari neighbourhood in Sylhet city, northeastern Bangladesh. 

Four militants – three male and one female – belonging to the ‘Neo Jamaat-ul-Mujahideen (Neo-JMB)’ faction were neutralised during the operation jointly conducted by the 1st Para Commando Battalion and 17th Infantry Division of the Bangladesh Army with assistance from the paramilitary and the police. 78 civilians were successfully rescued from the building without any casualties. However, six (including two police officers) lost their lives in a diversionary suicide blast close to the operation site.

The template of the operation, including the armed response accorded by the militants, is indicative of two things: a qualitative progression of Bangladesh's CT agenda; and an apparent evolution of the militant profile in the country.  A closer look is imperative.

Tactical Restraint in a Difficult Situation

Operation Twilight was an unprecedented raid-and-rescue operation in itself, with respect to scope and design. Despite facing an extremely delicate scenario of heavy civilian presence in and around the operational area, the security forces managed to complete the operation without any civilian or troop casualties. This is notwithstanding the six people who died in a suicide attack on a crowd of onlookers standing near the target building.

Unlike in the previous raids, this time, the militants put up an aggressive response to the Bangladeshi security forces. The highly-trained militants had rigged the entire building with explosives, wore suicide vests, and were in possession of a vast cache of ammunition. This delayed the overall response time of the raid, which remained focused on avoiding a hostage situation and collateral damage.

It is notable that the core command of the operation was given to the army, and not the CT Police or the Rapid Action Battalion (RAB) – two units that have been involved in CT operations since July 2016. This was done due to the heavy civilian presence in the building. Furthermore, media personnel who arrived at the scene were barred from moving close to the building to restrict uncontrolled broadcast of operational details.

In meting out a graded and calculated response, the Bangladeshi authorities showed appreciable tact and strategic restraint. Crucially, by not resorting to an indiscriminate assault design, they made sure that no civilian lives were put at risk in a situation where overkill were a firm possibility.

What Does the Operation Indicate?

Since the July 2016 Gulshan attack, Bangladeshi security forces – particularly the CT Police and the RAB – have conducted approximately 24 raids in ‘hideouts’ across the country, resulting in deaths of nearly 60 suspects and arrests of 25 others. These raids can be divided into two phases: mid-July-23 to December 2016 and December 2016-April 2017. 

There are three notable aspects about the first phase:

First, they were all conducted in the central and western parts of the country, mostly in and around Dhaka. Second, the militant suspects/targets either surrendered without a fight or mounted a weak counter-assault. Third, they were largely reactive and single-tier, i.e. the targets were selected on the basis of specific intelligence on the Gulshan attack and acted upon by either the CT Police or RAB.

However, the situation appears to be rapidly changing within the second phase:

First, a tactical escalation in the overall militant response appears emergent. The suicide blasts during a 23 December raid in Dhaka; the two failed suicide attacks on 17 and 24 March in a RAB facility and a police post near Dhaka International Airport; and the intricate counter-assault during Operation Twilight reflect this new prognosis. 

From a purely defensive posture, the militants seem to have moved to an offensive-defence calibration, wherein suicide attacks and Improvised Explosive Devices (IEDs) are being employed for a dual purpose of proactively attacking security forces and evading capture during raids. This counter-aggression is somewhat reminiscent of other high-intensity conflict theatres like Mosul (ongoing) and Grozny (1999-2000), but entirely new for Bangladesh.

Second, the Neo-JMB faction appears to be expanding to the northeastern and southeastern parts of the country. Since 8 March, there has been a sudden uptick in CT raids in and around Sylhet and Chittagong districts (six raids as of 1 April), with the latest being Operation Maximus in Moulvibazar district that ended with the eight militants and their kin blowing themselves up. Large amounts of IEDs, explosives, and ammunition have been recovered during these raids, some of which bear similarities with material found after the recent attacks in Dhaka. The Neo-JMB’s territorial expansion is a clear attempt to evade detection by the security apparatus, which has been largely focused on the central and western parts. However, the militants appear to be using their new bases in the east purely as strategic hideouts to plan attacks in Dhaka and other major cities westward.

Third, the Bangladeshi state’s response appears to be taking on a more sophisticated and proactive quality. This is reflected in the multi-tier, broad-spectrum nature of recent raids that have focused on flushing out the core leadership of the Neo-JMB from all quarters of the country through precision intelligence gathering and case-specific operational tactics, including use of drones for pre-assault surveillance. In this, Dhaka’s CT response has become far more comprehensive and contextual than it was a year ago.

For now, Bangladesh's security forces appear to be instrumentalising their experience of the past eight months in CT ops rather effectively. However, given the progressive adaptability and resilience demonstrated by militant groups like the Neo-JMB, Dhaka needs to constantly evaluate its CT agenda and tactics.

Trump's Strike Against Syria: International Implications

KP Fabian

Within 63 hours of reports about a chemical weapons attack on the rebel-held town of Khan Sheikhoun in the Syrian province of Idlib which killed approximately 80 people including children, on 4 April, US ships in the eastern Mediterranean sent 59 Tomahawk missiles aimed at the Shayrat air base from which, the US claims, the aircraft that carried out the attack took off. The Syrian government has claimed that six soldiers and nine civilians, including four children, were killed by the missiles.

The Pentagon, in accordance with the October 2015 ‘de-confliction’ agreement between the two militaries, had given warning to the Russian military about the attack. No Russian was hurt. It is logical to assume that Russia would have shared the information with Syria in which case it is difficult to explain why the Syrians, especially the children, were in the base or near about. The ‘deconfliction’ agreement to prevent collision between the aircraft of the two sides followed Russia’s military intervention, primarily air attacks, beginning on 30 September 2015.

US President Donald Trump’s action was a surprise as he deviated from his ‘America First’ policy. He had made it clear that it was not Washington's business to get involved in the quarrels elsewhere unless there was a direct threat to the US. The official line is that Trump acted because he was morally outraged when he saw the images of the children in pain.  “No child of God,” he said, “should ever suffer such horror.” However, such outrage alone cannot explain the strike, even given Trump’s reputation to act on instinct.

The key advisers were three generals and, of course, Trump's son-in-law, Jared Kushner. The generals are: Defense Secretary Gen (Retd) James Mattis, affectionately known as the Mad Dog among his friends and admirers; US Secretary of Homeland Security, Gen (Retd) John Kelly; and serving general and National Security Adviser, Lt Gen HR McMaster. The advisers would have known that such a strike would have spoilt the chances of ‘re-set’ of relations with Russian President Vladimir Putin that Trump wanted. Trump admires Putin who helped him to get elected by cracking into the emails of the Democratic Party to the embarrassment of the Democrat's presidential candidate, Hillary Clinton. Perhaps, the advisers wanted to prevent or at least delay a ‘re-set’.

Moscow’s response was sharp.  It called Trump’s action “an act of aggression against a sovereign state,” and based on “a far-fetched pretext.” It has suspended the ‘deconfliction’ agreement and strengthened air defence in the areas controlled by Syrian President Bashar al-Assad. Though Russia’s call for an international investigation to determine who carried out the attack is reasonable, it has poorly argued its case to absolve Damascus. The Russian military's Facebook page says that an aerial attack by the Syrian Air Force between 11.30 and 12.30 am (local time) on a rebel ammunition depot that contained chemical weapons might have released the toxic stuff. There is a clear discrepancy in the timing as the chemical weapons attack occurred in the morning around 6.30 am.

The US has accused Russia of incompetence or complicity as it maintains that Assad on his own would not have taken the decision without Russia's consent. That argument is plausible as Assad is virtually on a life-support system provided by Russia and Iran. However, it is difficult to figure out as to why Assad would have chosen to use chemical weapons when he was winning militarily, and especially after the US publicly said that its priority was to go after the Islamic State (IS) and not to topple Assad. Is it possible that Assad got emboldened with such a change in Washington’s position? Only a proper international investigation led by The Hague-based Organization for the Prohibition of Chemical Weapons (OPCW) can bring out the facts. Truth is the first casualty in war.

As expected, Washington got support from the West, Saudi Arabia, Jordan, Turkey, and a few others. China’s reaction was equivocal and Egypt urged Washington and Moscow to work together for a negotiated end to the crisis in Syria.

The key question is what as to the US will do next. Was it a one-off strike not to be repeated unless there is another nerve-agent attack? Or is there a willingness to get engaged in Syria, militarily too, if necessary, and seek an end to the crisis leading to the emergence of a Syria with its territorial integrity restored? One does not know, but it is difficult to believe that Trump will get engaged in Syria in a serious manner, especially given the limits to what the US can do even if it wanted to. If it supplies sophisticated weapons to rebels supported by it, the IS and other rebels might get hold of them eventually. Long drawn-out negotiations carried out by former US President Barack Obama’s then Secretary of State John Kerry with his Russian counterpart Sergei Lavrov proved to be utterly fruitless. It is good that incumbent Secretary of State Rex Tillerson is going ahead with his 12 April visit to Moscow. Perhaps, this shows that Trump has not given up on a ‘re-set’. Will the neo-cons let him?

Trump’s strike is unlikely to be a game-changer; Syria’s agony will, alas, continue. The country is de facto divided and any settlement might make the division virtually de jure. Assad is pursuing a mirage if he plans to recover militarily the territory he has lost.

Though Tillerson has hinted that a similar strike against North Korea is not to be ruled out, the situation there is far more complicated given the risk of the fall out of radiation on South Korea, and not to mention, China’s reaction.

Australian government revokes Palestinian activist’s visa

Oscar Grenfell 

The Liberal-National government of Malcolm Turnbull last week revoked the visa of Bassem Tamimi, a well-known Palestinian activist, in a flagrant attack on democratic rights aimed at preventing him from addressing public meetings in Australia.

Tamimi was granted a visa on April 4, but it was cancelled by the Department of Immigration and Border Protection (DIBP) within hours. He was about to begin a speaking tour at the end of this week, organised by the Friends of Palestine, the Social Research Institute, the Palestine Action Group and Socialist Alternative.

In its decision, the DIBP explicitly confirmed that Tamimi had been blocked from entering Australia because of his political views. It stated: “The department has recently been made aware of information that indicates there is a risk that members of the public will react adversely to Mr Tamimi’s presence in Australia regarding his views of the ongoing political tensions in the Middle East.”

When questioned by the Australian Broadcasting Corporation (ABC) about the specific grounds for withdrawing the visa, the DIBP refused to provide any details of the “information” it had “been made aware of.”

Instead, the DIBP elaborated on a deeply anti-democratic rationale for the ruling. Invoking draconian provisions of the Migration Act, it asserted: “The exercise of this freedom [of speech] does involve a responsibility to avoid vilification of, inciting discord in, or representing a danger to, the Australian community.”

In other words, voicing opposition to Israel’s oppression of the Palestinians is illegitimate, as it could “incite discord.”

The decision underscores the reactionary character of immigration laws set in place by successive Labor and Liberal-National governments.

The ruling, however, has broader implications. The logic of the government’s position is the suppression of dissenting and anti-war views, whether voiced by foreign nationals or Australian citizens. The grounds for the exclusion of Tamimi could be used against any opponents of Australia’s central role in the US wars in Syria and Iraq, Washington’s military build-up in the Asia-Pacific, or virtually any other government policy.

In comments to the Guardian on Saturday, Tamimi denounced the government ban, stating that it was an attack on freedom of speech. He pointed to the support of the Australian political establishment for Israel’s attacks on the Palestinians, and the influence of the pro-Israel lobby in Australian politics. “The decision is disappointing, [it] means that the Israeli occupation and the Zionist lobby succeed and their allies dominate the decision in all the world countries,” Tamimi said.

Petitions have been launched opposing Tamimi’s exclusion, with a number of Palestinian, Jewish and other political and civil liberties organisations opposing the ban.

Tamimi and the organisations that sponsored his tour, including the pseudo-left Socialist Alternative, are proponents of the Boycott, Divestment and Sanctions (BDS) campaign against Israel. The nationalist BDS perspective is for a boycott of Israeli companies and citizens to pressure Israel to recognise the unviable capitalist mini-state in the Palestinian territories, which has proven to be incapable of resolving any of the social or democratic issues facing the Palestinian masses. The BDS campaign cuts across the fight to unify the Jewish, Palestinian and Arab working class in a common struggle against imperialist domination and the ruling classes of the Middle East.

Tamimi has been particularly targeted for persecution by Israeli and US authorities for opposing Israel’s ongoing illegal expansions of Jewish settlements on Palestinian territory.

The activist has been arrested over a dozen times by Israeli authorities for his role in organising demonstrations, including in Nabi Saleh, a small West Bank village that has been subjected to years of Israeli police raids and attacks because of its residents’ opposition to the expansion of settlements.

In 2011, Tamimi was arrested by Israeli authorities and charged with “crimes” including “holding a march without a permit” and “incitement.” Detained for 13 months, he was labelled a “prisoner of conscience” by Amnesty International, which said he was being held solely for “organising peaceful protests.” Tamimi was again arrested for protesting in 2012 and detained for a number of months.

In March 2016, US authorities cancelled a visa for Tamimi, preventing him from addressing audiences there.

The attacks on Tamimi by the US and Israeli governments raise a number of questions about the Australian government’s revocation of his visa. The most obvious is whether US or Israeli authorities, or the intelligence agencies of the two countries, were involved in the backroom machinations that led to the rapid cancellation of Tamimi’s travel rights.

The government decision coincided with a marked escalation of the war drive in the Middle East by the US and its allies, including Australia.

Since being inaugurated in January, the US administration of Donald Trump has called into question the previous framework for the ongoing oppression of the Palestinians, the so-called “two-state solution.” The Trump administration’s move, accompanied by ever-closer ties between the US and Israel, was a signal of Washington’s unalloyed support for stepped-up attacks on the democratic rights of the Palestinians, including through the expansion of illegal settlements.

At the same time, the US has escalated its criminal wars in Iraq and Syria. Just days after the ruling against Tamimi, Washington launched airstrikes on a Syrian air base, in a reckless act of aggression that was also directed at Russia, Syria’s closest ally in the Middle East.

The Australian political establishment unanimously endorsed the US attack, with Turnbull declaring his “strong support” for the strikes and his government’s backing of plans for “regime-change” in Syria. Labor Party opposition leader Bill Shorten likewise labelled the missile attack as “appropriate and proportionate.”

The response was in line with Australia’s role as a central partner in all American imperialism’s wars and military preparations around the world, including in the Middle East, and in the Asia-Pacific region, against North Korea and China.

Tamimi’s exclusion is part of a broader attempt to suppress anti-war sentiment. Tim Anderson, an academic at the University of Sydney, is being subjected to a vicious witch-hunt by the Turnbull government and the Murdoch media for pointing to the fraudulent character of the official pretext for the US attack on Syria.

Anderson, a supporter of the nationalist Syrian regime, referred to the highly dubious character of claims that the Syrian government was responsible for chemical weapons attacks in Idlib last Tuesday. He suggested it was the Al Qaeda linked opposition forces, backed by the US, who had the most to gain from the attack, and the capabilities to orchestrate it.

Today, the Murdoch-owned Daily Telegraph published a front-page article attacking Anderson, while the federal government’s education minister, Simon Birmingham, called for the University of Sydney to “investigate” his posts—a signal that opposition to the predatory US operations in the Middle East will come under ever greater persecution.

Eleven percent of Chile marches against for-profit pension scheme

Armando Cruz & Cesar Uco

On March 26, approximately two million Chileans—over 11 percent of the country’s total population—took to the streets around the country to participate in a national day of protest against the system of privatized pension funds, known as Pension Fund Administrators (Administradoras de Fondos de Pensiones, AFP). AFPs, similar to 401k investment schemes in the US, are a cornerstone of the free-market measures imposed by the US-backed fascist dictatorship of General Augusto Pinochet, which ran Chile from 1973 to 1990.

According to the organizers, 800,000 marched in the capital Santiago, while the police gave a far lower estimate, with over a million demonstrating elsewhere across the country. The wide turnout is a reflection of the opposition and anger towards not only the current Michelle Bachelet government (whose approval rating is 22 percent), but the maintenance of the Pinochet-era framework.

The march followed three other mass demonstrations late last year that attracted mostly young people who are clearly concerned over the news that those who gave contributions to AFPs in their youth are getting a pension equivalent to only 22 percent of their wages during their last decade of work, according to the Fundacion Sol NGO.

Though last month’s march was peaceful, the November 2016 demonstration expressed the anger towards Bachelet´s socialist-led government’s refusal to comply with the Chilean people’s demand to scrap Pinochet´s AFPs, going beyond the cosmetic changes she implemented in the past trying to appease the frustration of AFP beneficiaries.

The November demonstration was marked by violent confrontations with the police, who responded by using tear gas and water cannon. Students occupied schools, and two buses were burnt by the demonstrators who also set up road blocks in Santiago and several other Chilean cities. The Santiago subway suspended service for several hours affecting the transport of millions of people.

Santiago and Valparaiso were the centers of the most violent acts, which have been increasing in size over several years of confrontations between students, workers and Chileans economically affected by the still prevailing Pinochet policies.

In spite of having a relatively high annual per capita income of US$ 22,000, Chile remains one of the most economic unequal countries in the region.

After violently overthrowing the bourgeois regime of Salvador Allende with the help of the CIA, Pinochet's reign of terror served as a testing ground for imperialism’s free market measures that, in the following decades, would be implemented in other countries in the region.

As with most of the economic measures enacted by Pinochet on behalf of his imperialist patrons, no government after the “transition to democracy” has had any serious intention of reforming, let alone eliminating, the AFP system. It is a major source of revenue for the Chilean bourgeoisie and, as one of the march organizers described it as, “covert banks for the wealthy and the multinationals so that they can expand their investments (…) and build real monopolies on assorted economic sectors.”

Luis Mesina, leader of the largest organization behind the marches, which is known as No+AFPs (No more AFPs), made statements regarding a possible alternative to the existing privatized AFPs. Mesina declared that No+AFPs – which orbits around the Nueva Mayoria coalition of Bachelet – would not support any candidate in the coming November elections that does not address the AFP problem. Other members of No+AFPs have voiced their support for a return to the pre-Pinochet system of state pensions that lasted until 1981.

“The demand is to turn towards a ‘Solidarity-based Sharing System’ with tripartite contributions, that is, with money from workers, the employers and the state, leaving behind the model of individual capitalization imposed by Finance Minister Jose Piñera and the “Chicago Boys”—followers of Milton Friedman—during the dictatorship,” declared Mesina.

The Spanish daily El País cited Fundacion Sol's findings on the present status of the AFP business: “In the century's last quarter AFPs paid in pensions just a third of its earnings (...) while in 2015, their earnings rose 68 percent.”

How do AFPs function?

Chileans deposit 10 percent of their monthly earnings into an AFP of their choice, in addition to paying an administrative cost. The amount workers will receive at retirement will depend on how well AFPs investment did in the national and world financial markets.

Under the pre-Pinochet system, workers made contributions deducted from their monthly pay to finance the pensions of retirees. The monthly pensions were constant and guaranteed. Today, retirement payments are at the mercy of the capitalist world finance markets, mainly stocks and bonds.

In 2015 Chileans savings in the AFP system were more than US$ 160 billion, most of which were reinvested in the national financial markets. In essence, the original idea was to use the savings of the Chilean workers and employees to fuel the so-called “Chilean miracle.”

Today, the system has 10 million beneficiaries, a very large number for a country with a population of 17.6 million – that is, an astonishing 60 percent of Chileans have their retirement money in the hands of AFP financial speculators. The military—which played a role in writing the law under the dictatorship of Pinochet—exempted itself and state officers from being forced onto the AFP scheme in 1981 when the law was enacted.

The modest returns to beneficiaries, meanwhile, are at risk due to Chile subservient position as a commodity exporter on the world market. With the recent drop of commodity prices in world markets, as well as transnational mining shares trending downward, AFP returns on investment are diminishing.

At retirement, the military today receive generous pensions, which are quite near to their monthly earnings while on active duty. In contrast, an unskilled worker on an AFP receives US$ 233 per month, just over half the US$ 400 minimum wage, while the companies in AFP portfolios are reaping large profits. According to researcher Gonzalo Duran of Fundacion Sol, AFP year-on-year profits grew by 71.4 percent in the first nine months of 2015.

The Bachelet government seeks to protect the Pinochet-era scheme and the Chilean stock market. With lower share returns due to the economic downturn, raising the retirement pay above the minimum wage would force the AFP to sell assets. As most portfolio assets are invested in the Chilean stock market, which by international standards is small, thus lacking the necessary liquidity, these assets would be sold at a heavy discount. The result is that AFP returns would collapse—with results not too different from those of the US housing bubble crash in 2008.

This could massively hurt the share value of Chilean companies, an outcome that goes against the purpose for which the AFPs were created in the first place. The “Chilean miracle” was established by draining the retirement savings of the Chilean workers through the AFPs to transfer billions of dollars to the Chilean capitalists.

Subprime auto loans threaten new crisis

J. Cooper

On April 3, the Detroit Free Press reported the liquidation of Valley State Credit Union, a small community credit union serving state employees in Saginaw, Michigan. The collapse of the credit union highlights the growing problem of ballooning auto debt and subprime vehicle loans that are rattling the banking and finance markets. This growth of auto loan debt is also an indication that the auto sales surge of recent years is heading for a collapse, threatening further layoffs in the industry.

The Saginaw credit union was acquired by ELGA Credit Union of Burton. Valley State had been taken into conservatorship last August, as it became clear that delinquent used-vehicle loans had caused it to be “operating in an unsafe and unsound condition.” In July 2015, delinquent vehicle loans between 30 and 59 days overdue at Valley State had mushroomed to $1.59 million from $57,222 the year prior.

Automotive industry analysts are expressing concern that the mushrooming of auto-related debt and the preponderance of subprime vehicle loans, fueled by investors looking for high yields, could be the next financial bubble. As of the fourth quarter of 2016, auto loan debt in the United States had reached $1.16 trillion—an increase of $93 billion over 2015—rivaling the enormous sums of student loan debt that now stands at $1.31 trillion.

Following the financial crash of 2008 and the subsequent recession, auto sales plummeted. But with the government bailout of Wall Street and interest rates near zero, by 2012 the banking industry saw their opportunity in the unregulated field of auto financing. The subprime mortgage debacle brought mortgage lending under federal regulation, but no one was looking at vehicle financing. Bankers seeking quick profits began offering products to less-qualified borrowers, much as they had done with mortgages prior to 2007. Sales of both new and used vehicles hit record numbers in 2016 for the seventh straight year. However, since the beginning of this year, sales are tumbling, heading for an annual decrease of more than 12 percent.

Additionally, auto leasing has reached record numbers, from 13.2 percent of the market in 2009, to 28 percent in 2015. While this has helped boost the sales and profits of the car manufacturers, those leased vehicles have begun flooding the used-car market, as most leases are between two and four years. The market glut is expected to drive down used car prices, cutting into new-car sales and corporate profits.

For both manufacturers as well as lenders, the future looks grim. According to the April 7 Automotive News, “With both bad loans and interest rates on the rise, financial institutions are becoming more selective in doling out credit for new-car purchases, adding to the pressure for automakers already up against the wall with sliding sales, swelling inventories and a used-car glut. ‘We’ve been having a party for a few years and it was fun,’ said Maryann Keller, an industry consultant in Stamford, Connecticut. ‘Now lenders are getting back to basics.’”

Wall Street is concerned that what happened to Valley State Credit Union could spread throughout the banking industry. Delinquencies on car loans over 30 days were up in December by 14 percent over 2015. By the end of 2016, over 6 million borrowers were more than 90 days late with their vehicle payments, also a new record.

Auto loan delinquencies of 30 days or more reached $23.27 billion in the fourth quarter of 2016, or 3.8 percent of all auto loan debt. The seriously delinquent portion, those more than 90 days past due, reached $8.4 billion.

Predatory lending practices relating to auto loans are now coming under some scrutiny. Santander Bank, known as the largest packager of subprime auto loans, just agreed to a settlement of $26 million with the states of Massachusetts and Delaware for issuing “unfair and unaffordable” loans, knowing the borrowers would default. According to AP, Massachusetts Attorney General Maura Healey said, “These predatory practices are almost identical to what we saw in the mortgage industry a few years ago.”

Recognizing that millions of auto loans may default this year, lenders are now looking to cast a wider net for struggling borrowers. According to a recent New York Times article, the credit bureaus that provide the scores that determine a borrower’s interest rate and credit limits are now looking at “alternative” criteria, such as cell phone payments, to entice those who have no credit history, or have previously defaulted on loans, to become the new victims of the predatory banks.

Auto finance companies are alarmed about looming defaults, but not to the extent they were with the collapse of mortgages in 2007 and 2008. The vehicles of borrowers with low credit scores and higher risk are often fitted with GPS technology and “kill switches” that can be activated if a loan is even one day past due. There are more than 2 million of these devices on the roads. The practice of “ignition interruption” has now become so widespread that the Federal Trade Commission is investigating the abuse of these tracking devices relating to privacy violations.

Tightening credit, swelling inventories and the glut in the used-car market point to more plant closures and layoffs on the horizon. Ford has already threatened layoffs in both Michigan and Mexico, while General Motors has announced 4,600 permanent job cuts since December.

Sales for Detroit-based US automakers made a weak showing in March. Fiat Chrysler sales were down 5 percent while Ford showed a 7.2 percent decline. GM sales were up just 1.6 percent. Meanwhile, Nissan sales rose 3 percent while Toyota sales fell 2.1 percent. Overall auto sales increased at an adjusted annual rate of 16.63 billion, lower than projections of 17.3 billion.

Super-rich in America live 15 years longer than the poorest 1 percent

Kate Randall

Rising income inequality in the United States means that wealthy Americans can now expect to live up to 15 years longer than their poorest counterparts, the Lancet finds in a new series, “America, all things not being equal.” The research follows a report from the Centers for Disease Control and Prevention (CDC) in December showing that overall life expectancy in the US fell between 2014 and 2015 for the first time since 1993.

In the first part of the Lancet series, “Inequality and the health-care system in the USA,” the British medical journal’s researchers found that these income-based disparities in US life expectancy are worsened by the for-profit US health care system itself, which relies on private insurers, pharmaceutical companies and health care chains. It is also the most expensive health system in the world.

The life expectancy gap between rich and poor has been widening since the 1970s. Since this time, the share of total income going to the top 1 percent has more than doubled, while the vast majority of workers have seen their incomes stagnate or decline in real terms.

Today women in the top 1 percent of income can expect to live 10.1 years longer than the bottom 1 percent of women earners; men in the top 1 percent can expect to live 14.6 years longer than the bottom 1 percent.

This dramatic contrast in life expectancy between the rich and poor is directly correlated to the growth of obscene wealth at the top among a tiny elite and entrenched poverty among growing numbers of people at the bottom. Since 1986, the top 0.1 percent—those with assets exceeding $20 million—has accumulated nearly half of all new wealth.

By comparison, more than 1.6 million US households, including 3.5 million children, struggle to survive on less than $2 per person per day, the World Health Organization’s definition of extreme poverty.

Health care costs

It is a cruel irony that the US health care system is one of the main drivers of poor health and low life expectancy, particularly burdening low-income households with rising costs. Many patients are unable to pay for the medical care they need, with some forgoing care altogether.

In 2014, after full implementation of the Affordable Care Act (ACA), 19 percent of non-elderly adults who received prescriptions could not afford to fill them. The Lancet research shows that health care costs—including insurance premiums, taxes and out-of-pocket payments—are forcing millions of Americans to cut back on food, heat, housing and other basic necessities.

Millions of middle class families have been driven to bankruptcy by illness and medical bills. Medical bills comprise more than half of all unpaid personal debts sent to collection agencies. Meanwhile, the super-rich are turning to “concierge practices” where they pay out of pocket to gain access to a wide-range of high-priced medical specialists.

Disparities in access to health care can be largely attributed to insurance status. Despite an increase in those insured under the ACA, largely due to the expansion of Medicaid (the insurance program jointly administered by the federal government and the states), 27 million Americans remain uninsured. These include people in those states that opted out of the Medicaid expansion, as well as an estimated 5-6 million undocumented immigrants who are excluded from coverage under what is popularly known as Obamacare.

The uninsured are far more likely to go without needed doctor visits, tests, treatments and medications due to cost. This is especially true for those with chronic conditions. The Lancet gives the example of uninsured individuals with diabetes, who spend on average $1,446 out of pocket on medical expenses each year.

Among patients who develop an acute myocardial infarction (heart attack), those who are uninsured are 38 percent more likely than the insured with low out-of-pocket costs to delay emergency care. Poor Americans under the age of 50 are also far less likely to receive recommended flu and pneumonia vaccinations and cancer screening tests than their wealthy counterparts.

In the private insurance market, which includes Obamacare plans, patient cost-sharing—including co-pays and deductibles—has increased substantially since the 2000s. ACA plans have some of the highest deductibles, averaging $3,064 for “silver” plans in 2016. More than 80 percent of employer-based plans now include an annual deductible, averaging $1,478 in 2016, 2.5 times more than the 2006 average.

When cost-sharing forces patients to forgo care, in some cases doctors and hospitals fill their empty appointment slots and beds with patients who are less “price sensitive,” i.e., able to pay more out of pocket.

“Underinsurance” and access to care

The researchers refer to the growing phenomenon of “underinsurance,” writing: “Rising deductibles and other forms of cost sharing by patients have eroded the traditional definition of insurance: protection from the financial harms of illness.” In other words, while many people technically have insurance coverage, they often cannot afford to use it due to skyrocketing premiums and high out-of-pocket costs.

Geography is often an indicator of access to care, with those living in rural areas finding it difficult to obtain primary and specialty care. Many rural and Southern states also have a shortage of family planning resources. Women in Lubbock, Texas, for example, now live more than 250 miles away from the nearest abortion clinic, a result of reactionary anti-abortion restrictions imposed by the state.

Women overall are at a disadvantage in obtaining and paying for medical care compared to men, due to greater health care needs, including reproductive care. Although fewer women are uninsured, those who are insured have higher out-of-pocket costs, with these costs averaging $233 higher than men’s in 2013. While their costs are higher, women’s median incomes are 39 percent lower than men’s.

A Princeton University study presented last month showed a sharp rise in the mortality rate for white, middle-aged working class Americans driven by “deaths of despair,” those due to drug overdoses, complications from alcohol abuse and suicide. The Lancet research shows, however, that despite this crisis access to care for mental illness and substance abuse is woefully inadequate and underfunded.

Psychiatric providers, for substance abuse in particular, are in short supply on a national scale, especially in poor and rural areas. America’s bloated prison system, incarcerating more than 2.4 million in its prisons and jails nationwide, remains the largest “inpatient mental health” facilities in the US. “Treatments” afforded mentally ill patients often include segregation and solitary confinement.

Paradoxically, the US medical system, as the employer of nearly 17 million Americans, exacerbates health care inequality. While physicians and many nurses are generally well paid, many other health care workers are not. The health care system employs more than 20 percent of all black female workers, and more than a quarter of these women subsist on family incomes below 150 percent of the federal poverty line; 12.9 percent of them are uninsured.

While decreasing the official uninsured rate, mainly through the expansion of Medicaid, Obamacare has in fact exacerbated the US health care crisis. In 2017, millions of working and middle class Americans face higher premiums and out-of-pocket costs, less access to vital medical treatments and care, and resulting poorer health outcomes and lowered life expectancy.

This is by design. Based as it is on the profit system, the ACA was deliberately crafted to boost the profits of the private insurers while cutting costs for the government and large corporations. Employers, both public and private, have taken their cue from Obamacare, reducing coverage, raising premiums and costs, and eliminating coverage outright in some cases.

Any “replace and repeal” of Obamacare by Trump and the Republicans would only accelerate this process, in particular through gutting Medicaid through block-granting or other means, tossing tens of millions more into the ranks of the uninsured, and rationing medical services while further driving up costs.

China offers plan to ease trade tensions with US

Nick Beams

China has bowed to pressure from the US to reduce its American trade surplus, putting forward a 100-day plan for negotiations and trade deals.

The plan was agreed upon at the meeting last week between US President Donald Trump and Chinese President Xi Jinping at Trump’s residence in Mar-a-Lago, Florida.

Held in the midst of the US missile attack on Syria—the strike was launched while Trump and Xi were at dinner on Thursday—the meeting on trade was the occasion for US Commerce Secretary Wilbur Ross to advance a series of trade issues he wanted discussed. The Chinese response was the proposal for a 100-day plan for negotiations.

The Trump administration has threatened to impose tariffs on Chinese imports and even brand China a currency manipulator—measures that would set off a trade war between the two countries. Both Ross and Peter Navarro, the head of Trump’s National Trade Council, have made statements to the effect that they regard Chinese economic growth and its trade surplus with the US as among the main factors responsible for low American growth.

Before the meeting, Trump had tweeted that the discussion with his Chinese counterpart could prove to be “very difficult.”

The Chinese proposal is aimed not at reducing the country’s exports to the US, but offering concessions to expand markets for US goods in China. The goal is to reduce China’s $347 billion trade surplus with the US.

Details of the plan have yet to be worked out, but are expected to involve concessions on agriculture, starting with the lifting of a ban on American beef that has been in place since 2003 because of a disease scare in US herds. There may also be commitments by China to purchase more American grain products.

The other key area is finance, with the US seeking opportunities in China’s rapidly expanding financial markets. At present, foreign investors are not allowed to hold a majority stake in securities and insurance companies in China. Negotiations to allow majority foreign holdings had been under discussion during the Obama administration, but were put on hold when Trump won the presidency. They could now go ahead under the 100-day plan.

Speaking after the meeting, Ross said Chinese officials had agreed to what he called a more “balanced” trade relationship. “They expressed an interest in reducing their net trade balance because of the impact it’s having on money supply and inflation. That’s the first time I’ve heard them say that in a bilateral position,” he said.

Up to now, the Chinese position has been that while China enjoys a large trade surplus with the US, its overall trade surplus is not large, and the surplus with the US is a product of the international division of labour. China has also claimed that the trade surplus would be lower if the US lifted restrictions on the sale of certain high-tech products.

Ross said that trade discussions, especially between China and the US, normally involved years. Given the range of issues involved, the 100-day plan might be ambitious, “but it’s a very big sea change in the pace of discussions.”

News of the agreement was greeted with expressions of relief that an all-out trade war had been averted—at least for the present.

“The atmosphere at the talks was good,” Chu Shulong, professor of international relations at Tsinghua University in Beijing told the Financial Times. “Trade is the most worrying issue for the US and China. But it looks like a trade war can be averted for at least the next 100 days while the two sides negotiate.”

According to Andrew Nathan, a China specialist at Colombia University, US negotiators would be pushing on a door “that is relatively easy to open when they place a priority on improving the trade balance not by limiting Chinese exports to the US, but by increasing US exports to China.”

The latter route is more attractive to US business because any barriers against Chinese exports to the US would significantly disrupt the global supply chains of major US firms such as Apple, Microsoft, Walmart and others that depend on Chinese manufacturing. Such measures would not bring manufacturing back to the US, as claimed by Trump, but see the transfer of production to other cheap labour countries.

The US Treasury is expected to bring down its biennial currency report this week, in which it could label China a currency manipulator. This is considered very unlikely in light of the agreement last week. Moreover, China in the past few years has taken significant steps to maintain the value of the yuan.

Writing in the Financial Times yesterday, former US Treasury Secretary Lawrence Summers noted: “In terms of the volumes of reserves expended and the extent of capital controls imposed, few countries in recent years have done as much to try to prop up their currency as has China.”

While Ross adopted a seemingly conciliatory tone immediately after the meeting, a harder line could be seen in his comments over the weekend.

“Words are easy, discussions are easy, endless meetings are easy” he told Fox News on Sunday. “What’s hard is tangible results, and if we don’t get some tangible results within the first 100 days, I think we’ll have to re-examine whether it’s worthwhile continuing them.”

Trump struck a conciliatory tone, saying it had been an “honour” to host President Xi and his wife and that goodwill and friendship had been established. He added, however, that “only time will tell on trade.”

China fears US military attack on North Korea

Peter Symonds

Amid mounting tensions on the Korean Peninsula, the Chinese state-owned Global Times has warned of the rising danger of US attacks on North Korea in the wake of the Trump administration’s cruise missile strikes on Syria. An editorial entitled “After Syria strikes, will North Korea be next?” appeared in the wake of the Pentagon’s redirection of the aircraft carrier strike group led by the USS Carl Vinson to waters off the Korean Peninsula.

“Emboldened by its success in Syria,” the newspaper stated, “Washington will probably become more impatient with Pyongyang’s provocations. Destroying North Korea’s nuclear facilities with air raids is not considered an absurd idea by the Trump team any more, but is a serious option that is frequently talked about.”

The Trump administration has finalised a full review of US strategy toward North Korea. According to an NBC report last Friday, the options now under active consideration include returning US nuclear weapons to the Korean Peninsula, “decapitation raids” to kill North Korean leaders and covert military action to sabotage North Korean nuclear and military installations.

Trump’s national security adviser H.R. McMaster told Fox News on Sunday the US president had asked to be given “a full range of options” to remove the threat posed by North Korea. McMaster declared it “prudent” to redirect the Carl Vinson amid speculation that North Korea could stage a missile or nuclear test to coincide with this week’s birthday of the country’s late founding leader, Kim Il-sung.

The Global Times editorial, reflecting fears in the Chinese leadership, warned that any US strike on North Korea was “unlikely to be limited to nuclear facilities and related military infrastructure” and could provoke devastating retaliation on US ally, South Korea. “Thus, a military strike on the North will very likely evolve into large-scale bloody war on the Peninsula.”

According to an unconfirmed report by the South Korean Chosun news agency, the Chinese military has moved 150,000 troops to the border with North Korea to prepare for “unforeseen circumstances.” The units reportedly include medical and support units to train for an influx of North Korean refugees. The report was denied by the Chinese Foreign Affairs Ministry, and the US Defence Department told the Daily Caller there was “no evidence” of significant troop movements along the Chinese-North Korean border.

Nevertheless, the Chinese government is nervous about the prospect of US military action against North Korea triggering an all-out war in its backyard. In talks between Chinese President Xi Jinping and President Donald Trump last weekend, North Korea was high on the agenda. Trump effectively delivered an ultimatum to Xi to force Pyongyang to accept US demands or face the prospect of US strikes on North Korea. The fact that Trump authorised the US strikes on Syria in the midst of his meetings with Xi underscored the threat.

Beijing is caught in a dilemma. On the one hand, it has opposed North Korean missile and nuclear tests, which provide the US with a pretext for its military build-up in North East Asia. On the other, it does not want a collapse of the Pyongyang regime that could lead to a pro-US ally on its doorstep. China continues to call for negotiations, which the Trump administration has rejected unless its demands are met.

In comments to the Global Times, Lu Chao, from the Liaoning Academy of Social Sciences, said: “The US needs to take many things into consideration if it plans to launch a military attack on North Korea, especially whether its allies Japan and South Korea will fully cooperate and how Russia and China will respond. Otherwise, it will lead to unbearable consequences.”

The prospect of a US military attack on North Korea is also prompting concern in capitals around the world. Speaking on Radio 4’s “Today” program, the ex-chief of British intelligence M-I6 branch John Sawyers warned: “If you are looking for a world crisis which could bring about the dangers of a clash between great powers, then North Korea is a bigger concern than Syria.

“The move by the Americans to strengthen their forces in the Korean Peninsula, the demonstration to President Xi in Florida that the US was willing to use force against another state,” he said. “I think this is all part of a calculation that North Korea has to be treated very seriously, a very high priority and ultimately needs a joint US-Chinese approach to deal with this unless we are to avoid a further conflict on the peninsula.”

Sawyers added: “I think what the Chinese are beginning to understand is that if this can’t be solved peaceably through negotiations, through pressure, then there is a serious risk that the US will have only one option left, which is the military option.”

Beijing’s ability to apply pressure to Pyongyang, short of imposing crippling sanctions such as the cut off of oil supplies, is limited. China has already agreed to UN resolutions that impose heavy economic sanctions on North Korea and announced in February that it was suspending coal imports from its neighbour. China is by far North Korea’s largest trading partner and Chinese sanctions on North Korea have already provoked a sharp deterioration of relations between the two countries.

Whether the Trump administration will wait for China to bully North Korea into submission is unknown. The White House has already held discussions with its closest allies—Japan, South Korea and Australia—about the situation on the Korean Peninsula. The presence of the USS Carl Vinson and its strike group in adjacent waters is just the most obvious indication that the US military is being primed for an attack.

The Daily Telegraph in Sydney reported today that “Australia and its allies have been put on standby for the possibility of the United States shooting down test rockets launched by North Korea.” Citing intelligence sources, it suggested that such a test might occur on April 15, Kim Il-sung’s birthday, or sooner.

The Australian newspaper said the US “is understood to have notified Australia that it is fully prepared to shoot down these rockets. The Australian-United States joint facility at Pine Gap monitors North Korean missile launches, and is on standby.” The Pine Gap spy base in central Australia provides intelligence and targeting information to the US war machine for a broad sweep of the globe from the Middle East to North East Asia.

German trade unions at GM Opel hold secret talks with French auto boss

Marianne Arens

The sale of GM-Opel-Vauxhall to Peugeot Citroen PSA threatens at least 6,000 jobs and possibly several company facilities, according to industry experts. PSA chief executive Carlos Tavares wants to save €1.7 billion per year. A high-level meeting in Berlin last Wednesday confirmed that Tavares can rely on the cooperation of the IG Metall union and the Opel works council.

The content of the April 5 discussions at the economics ministry in Berlin remain top secret. In a conspiratorial manner, the so-called “workers’ representatives” met behind closed doors with the PSA boss and leading politicians to agree on measures to make Opel-Vauxhall competitive in the future. German Economics Minister Brigitte Zypries of the Social Democratic Party (SPD) and Matthias Machnig (SPD), her official responsible for Opel, had extended the invitation to the talks.

Alongside Tavares others taking part included IG Metall leader Jörg Hofmann, deputy Opel works council leader Lothar Sorger and the state premiers (or their deputies) of all the federal states containing Opel plants. Besides Malu Dreyer (SPD, Rhineland Palatinate) and the Hesse state Economics Minister Tarek Al-Wazir (Green Party), the Thuringia state premier Bodo Ramelow (Left Party) was also present.

After the meeting, the PSA boss said he was satisfied with the extremely close cooperation between the German trade unions and the auto bosses. In a statement on the website of the Economics Ministry, Tavares stated he was determined to “continue the valuable collaboration with employee representatives;” this cooperation was “a key factor for the success of the company.”

Neither the Opel works council chief, Wolfgang Schäfer Klug, nor the IG Metall chairman Jörg Hofmann revealed any details of the talks, which took the form of a conspiracy against the workers. In the run-up to the meeting, Schäfer-Klug had demanded that the works council representatives should be closely involved in the transition process.

Following the talks, all participants confirmed they had been held “in a very constructive atmosphere.” Rhineland Palatinate state premier Dreyer told the press,” We have agreed we will not give away too much to the outside world.”

At a factory staff meeting on Thursday, the works council provided more soporifics and repeated the stereotypical claim that the new owner, PSA, will abide by all existing labour contracts and not destroy jobs—at least until the end of next year. Nothing substantial was said to contradict the objections of a shop steward who had previously worked in Bochum, who said that the same phrases had been repeated before the closure of the Opel plant there.

Without providing any further details, the management said that Adam Opel AG was to be transformed into a limited company by the summer. Part of the development area was to remain with General Motors; however, it was not known whether this involved the research department in Turin, Italy, or whether it also affects Powertrain in Rüsselsheim in Germany. Powertrain is also developing transmissions and engines for GM models. Works council chief Schäfer-Klug has consistently refused to make any statements about the meeting in Berlin.

In early March, the PSA Group had agreed with General Motors to buy Opel-Vauxhall for €2.2 billion. The European company operates nine plants in Germany, Britain, Poland, Spain, Austria and Hungary, with around 35,000 employees. However, only representatives of the German sites were invited to the Berlin summit meeting, and the representatives from IG Metall and the works council evidently had no objections—for years they have pursued nationalist pro-German policies.

The acquisition by PSA takes place under conditions of a massive restructuring of global auto production. In Germany, one in seven jobs depends on the auto industry. Opel still maintains production facilities in the cities of Eisenach, Kaiserslautern and Rüsselsheim, where its research centre is based with more than 7,000 employees.

When the deal was concluded at the beginning of March, the PSA board had agreed to comply with all location guarantees until 2020 and make no compulsory redundancies until the end of 2018—albeit only in a verbal agreement. Business daily Handelsblatt described this as a “French pledge of allegiance for Opel with an uncertain shelf life.”

Auto industry expert Ferdinand Dudenhöffer has made it clear that Tavares’ verbal commitments were merely palliatives to keep the workforce quiet. Commenting on the Berlin meeting, Dudenhöffer told broadcaster n-tv, “All that is known so far is, yes, Tavares is a tough re-structurer, i.e. [he] cuts costs ... these prior commitments—one year or a bit more—are not worth the paper they are written on.”

Competition had forced the company to restructure rapidly, and “rapid restructuring means lower costs,” said Dudenhöffer. Opel now faced “hard cost reduction programmes.”

The Opel works council chairman Wolfgang Schäfer-Klug is already preparing for sharp attacks on the workers. On March 30, he gave a long interview to business weekly Wirtschaftswoche. In this he reaffirmed that he assumed that savings of €1.7 billion per year could be achieved. At the same time, he also threatened that the acquisition by PSA—which he supports—would jeopardize jobs.

This was based on changes throughout the entire auto industry, and especially the development of electric cars, Schäfer-Klug said. If these trends “prevail on the basis of the current regulatory requirements, it will cost the automotive industry a significant number of jobs.” He cynically stated, “We are still living under capitalism and money still has to be earned with autos in order to save jobs.”

Schäfer-Klug’s predecessor, the former “Mister Opel” Klaus Franz, also published his assessment of the deal in a business newspaper. In a long article, headlined “Opel’s shaky future under Peugeot rule,” in Manager Magazine, sounding like a business consultant, he recommended that PSA/Opel be transformed into a “European Company (SE) with a participation agreement on the German model.” He advised how PSA best achieve its market objectives, saying, “Until the final conclusion of the deal at the end of 2017, there must be a plan to return Opel to profitability from 2020, and which provides a 6 percent profit by 2026.”

There was currently “no alternative” to the merger with PSA, Franz said, since “Opel lacks the size, market share and profitability in order to exist alone.” Franz went on to state that both the engine plant in Kaiserslautern and the Spanish Opel factory in Zaragoza had poor future prospects. A hard Brexit could lead to shifting the supply industry to the UK: “This can lead to problems in the Kaiserslautern components plant.”

Moreover, if the synergies, “piece by piece in design, purchasing, administration and production carried out with each new model,” were followed through, this would lead to “enormous pressure on the Spanish plant in Zaragoza, starting from the Eastern European PSA level,” Franz said.

Undoubtedly, “as part of the turnaround ... employee contributions would be called for,” the former works council leader said. He proposed “safeguarding” the financial sacrifice demanded of the workers “in the form of an employee share ownership” scheme.

This proposal is not new. Already in 2009, when a takeover of Opel by Canadian-Austrian auto supplier Magna was planned, Klaus Franz had proposed such a “ workers equity investment scheme ”: A private corporation was to be supplied with capital from drastic cuts in workers’ pay and conditions, with the works council and some IG Metall officials exercising control—a vicious trap for the workers, who received no guarantees that they would able to dispose of their deposits.

At that time, Opel remained with General Motors, and Klaus Franz was recognized for his crisis management with the international award of “Communicator of the Year.” During this period of “crisis management,” the Opel general works supported the elimination of 15,000 jobs, the closure of the Opel plant in Bochum, along with 3,300 jobs, with the remaining staff subject to a merciless cuts programme.

Before this, the IG Metall and the Opel works council had already agreed to the closure of the factory in Antwerp, Holland, and the Saab factory in Trollhattan, Sweden. Since then, the Opel plant in St. Petersburg, Russia and the Holden production facility in Australia have been closed.

As reported by Manager Magazine on March 24, in the event of a successful sale to PSA, the Opel board can expect bonuses running to millions. General Motors has held out the prospect of €20-30 million for managers if the sale is actually completed. These premiums are regardless of whether the managers leave Opel or not. Current Opel CEO Karl-Thomas Neumann has already sold some of his GM shares in March, pocketing more than $4 million.

Whether the works council leadership also enjoys such premiums is not yet known. What is certain is that it stands completely on the side of the executive—whether under the Opel, General Motors or PSA badge. “We still live in capitalism,” as Schäfer-Klug pontificated in the media. In the current crisis of capitalism, the works council is willing to sacrifice the jobs and living standards of tens of thousands of workers throughout Europe in order to satiate the demands of shareholders.