Australian Labor Party helps push through “extraordinary” surveillance laws

Mike Head

Late last month, the opposition Labor Party again assisted the Liberal-National Coalition government to rush through parliament far-reaching bills that expand the already vast spying powers of the police and intelligence agencies.

AFP officers patrolling Australian airport (Credit: afp.gov.au)

In the space of several days, three bills were rammed through both the House of Representatives and the Senate, accompanied by guillotine motions to gag debate, in the same week that Labor and the Coalition combined to drive through anti-democratic electoral laws.

Under the misleading banner of fighting “serious crime,” the most extensive bill allows the police and intelligence forces to secretly hack into online devices, collect, alter or delete data, and take over social media accounts.

The Surveillance Legislation Amendment (Identify and Disrupt) Bill hands agencies, including the Australian Federal Police (AFP) and the Australian Criminal Intelligence Commission (ACIC), three new powers, which can be activated without informing those affected:

• Data disruption warrants give the police the ability to “disrupt data” by modifying, copying, adding or deleting it.
• Network activity warrants allow the police to collect intelligence from devices or networks.
• Account takeover warrants permit the police to take control of an online account (e.g., social media) to gather information.

Currently, agencies can only take over a person’s account with that person’s consent. This power facilitates covert and/or enforced takeovers.

None of these powers are confined to use against people alleged or suspected of committing an offence. They can be invoked against any “third party” whose accounts police say could generate material for investigation.

Such people and system administrators can be compelled to assist the hacking operations, including by accessing passwords and cracking open encryption programs. Anyone refusing to comply can be jailed for up to 10 years.

All the police have to assert is that they “suspect on reasonable grounds that” an offence is “likely to be” committed, and that the disruption of data “is likely to substantially assist in frustrating the commission of offences.”

No judicial approvals are required. Most warrants can be issued by an Administrative Appeals Tribunal member, even by “telephone, fax, email or any other means of communication.” An “emergency authorisation” procedure also allows these activities without any warrant at all.

During the token parliamentary sessions, both government and Labor representatives sought to justify the bills as intended to fight child exploitation and terrorism. But the bill authorises “disruption” of anyone linked to a suspected crime that is subject to imprisonment of three years. That covers a wide range of offences, notably “foreign interference” and other political offences, and even theft and tax evasion.

In effect, the legislation makes the expanded powers available to the entire Australian intelligence network and its US partners. The bill’s official explanatory memorandum notes that the AFP and ACIC share information and “facilitate joint operations” with “other members of the National Intelligence Community.”

Also, “it is anticipated that the Australian Signals Directorate (ASD) may provide assistance to the AFP and the ACIC in relation to data disruption.” The ASD is the electronic eavesdropping agency that operates in close partnership with the US National Security Agency, as part of the US-led “Five Eyes” global mass surveillance operation exposed by imprisoned WikiLeaks founder Julian Assange and NSA whistleblower Edward Snowden.

The bill adds to the immense online surveillance powers imposed over the past two decades in the name of the “war on terrorism,” contained in the Surveillance Devices Act and the Telecommunications (Interception and Access) Act.

The second law, the Foreign Intelligence Amendment Act, allows the domestic political spy agency, the Australian Security and Intelligence Organisation (ASIO), to intercept foreign communications and collect overseas intelligence on Australian residents who are suspected of “foreign interference.”

The third measure, the Counter-Terrorism Sunsetting Act, extends a range of police-state powers that were due to expire, including preventative detention, control orders and stop, search and seizure powers.

In parliament, Labor’s shadow home affairs minister, Senator Kristina Keneally, emphasised Labor’s determination to keep partnering with the Coalition on such measures, despite describing them as “extraordinary.”

Keneally said Labor’s backing for the bills “serves as another example of how seriously Labor takes its commitment to constructive, bipartisan cooperation on national security legislation in the national interest.” She publicly thanked Home Affairs Minister Karen Andrews for working with Labor “to deliver much-needed reforms and powers.”

The shadow minister professed to be concerned about the danger of “surveillance creep.” In reality, Labor has backed every law to permit mass political spying. That included the 2015 metadata retention legislation, which allows the agencies to collect and retain online data, such as a person’s email contacts and web searches; a 2018 law that forces internet companies to facilitate the cracking of encryption, passwords and other privacy-protected communications, including WhatsApp and iMessage conversations, and the 2018 “foreign interference” legislation that expands the scope and penalties of the secrecy laws, and criminalises links with China or other “foreign entities.”

Since the declaration of the “war on terrorism” in 2001, Labor has joined hands with the Coalition to pass more than 125 “national security” bills, containing over 14,500 amendments to previous laws.

Greens Senators voted against the “identify and disrupt” bill, but said they would be prepared to support it if the government accepted amendments to insert “safeguards.” Senator Lidia Thorpe said: “The Australian Greens will support it, in terms of keeping children safe and keeping our country safe, but there are innocent people who could be targeted through this bill.”

None of this legislation is about the “safety” of the population. The bipartisan drive to protect and bolster the police and intelligence apparatuses is aimed at preparing for political and class convulsions.

A 2017 “intelligence review” pointed to the global and domestic concerns wracking the ruling elite. It warned that Australia’s “national security environment” was being reshaped by the decline in the global influence of the US, “heightened tensions and instabilities” and “a growing sense of insecurity and alienation.”

That was before the COVID-19 pandemic, which has intensified these social and political tensions, and triggered growing working-class struggles.

These bills are part of a deepening assault on basic democratic rights, including privacy, free speech and the right to organise, especially against the corporate and political establishment. Their purpose is to suppress dissent and social unrest.

Ukrainian government looks to intensify exploitation of IT workers

Jason Melanovski

The Ukrainian government is moving forward with plans to exploit the country’s IT workers as it faces an uncertain economic future due to both the ongoing COVID-19 pandemic and the reorientation of American foreign policy.

A person working at a computer (hippopx.com)

Following his disappointing meeting with US President Joe Biden last Wednesday, Ukrainian President Voldymyr Zelensky headed west to San Francisco where he met with leading investors, representatives of venture funds and Silicon Valley accelerators in an attempt to attract foreign investment to Ukraine’s IT sector.

“Our meeting here in Silicon Valley is a great opportunity to discuss the prospects for the development of the IT sector and innovations in Ukraine. Our country is rapidly transforming and adopting innovations. Over the past year, we have managed to make a real breakthrough in the digital sphere. At the same time, we still need to do a lot,” Zelensky said.

He went on to state that his government had hoped to raise the income of Ukraine’s IT sector from $6 billion to $16.5 billion per year within three to five years and expand the IT sector to account for 10 percent of the country’s GDP.

Ukraine’s IT sector currently employs approximately 200,000 workers and the Zelensky government is hoping to increase that number to approximately 450,000 by 2025.

For the Ukrainian ruling class, the country’s educated and talented IT workers—themselves a legacy of the Soviet Union’s educational emphasis on science and math—represent a potentially lucrative source of foreign exchange in an economy that saw its GDP decline by 4.4 percent and saw exports decline by 4.6 percent in 2020 due to the COVID-19 pandemic.

Further undermining the country’s economic situation, in July the Zelensky government learned via the press that the Biden administration had reached a deal with Germany not to oppose the completion of the Russian-German Nord Stream 2 gas pipeline. Its completion is expected to significantly undercut Ukraine’s importance to European energy markets and potentially deprive it of approximately $2 billion in annual gas transit fees.

Meanwhile, Ukraine’s IT exports grew by 20.4 percent in 2020, according to the National Bank of Ukraine. They now account for 8.3 percent of the country’s total exports.

Junior software engineers in Ukraine earn just $600 a month. While this exceeds the average Ukrainian’s poverty wages of approximately $350 a month, it is a pittance in comparison to the average salary of a junior software engineer in the United States of approximately $90,000 a year.

Like many IT workers globally, the bulk of Ukrainian IT workers are employed as independent contractors. As a result, they are not subject to the same labor laws regarding hours, conditions, vacation and benefits as workers employed as regular workers. IT workers all over the world are often forced to work exceedingly long hours to meet critical deadlines imposed upon them by employers.

Zelensky’s appeal to Silicon Valley coincides with his government’s ongoing attempts to undermine the country’s existing labor laws in favor of the capitalist Ukrainian oligarchy.

In March 2020, the Ukrainian parliament was forced to withdraw Draft Law No. 2708 after worker protests. Among other measures, the law’s passage would have allowed companies to fire workers without reason, reduced overtime payments and permitted companies to institute a 12-hour workday.

Since the draft labor law’s failure, such labor “reforms” have been introduced as separate incremental proposals in order to avoid a direct confrontation with the Ukrainian working class.

Zelensky’s moves to restructure the Ukrainian labor market in favor of foreign capital has elicited support from the imperialist powers, and especially from Washington. Speaking with the right-wing American think tank the Atlantic Council, the president of the American Chamber of Commerce in Ukraine, Andy Hunder, commented on Ukraine’s growing IT sector but urged further pro-market “reforms.”

“What helped achieve this year’s impressive results? Minimum red tape, the professionalism of Ukraine’s IT specialists, and a stable industry-wide tax policy,” Hinder stated. “It is vital to ensure sustainable and transparent conditions for the IT sector to stimulate further growth and development. Namely, this means preventing increased regulation. It is also essential to guarantee IT companies freedom of their activities, business models and forms of interaction with human capital. IT companies must be safeguarded from unlawful interference in legitimate business activities.”

While in California, Zelensky also met with Apple CEO Tim Cook. Apple is well known for its exploitation of workers all over the world, particularly through its partnership with the sweatshop electronics manufacturer Foxconn.

Zelensky spoke glowingly of being granted the privilege to meet the billionaire Apple CEO. Following the meeting, he tweeted: “Ukraine is already a global IT hub. We are interested in expanding Apple’s presence in Ukraine and implementing new ambitious joint projects.”

The attempts to intensify the exploitation of the working class, including IT workers, are the response of the Ukrainian the ruling class to the ongoing COVID-19 pandemic. The economic crisis has hit Ukraine particularly hard due to its large number of migrant workers and crumbling health care system.

Over 57,000 people have officially died from COVID-19 in Ukraine while hospitalization rates are climbing again due to the spread of the Delta variant and the low vaccination rate of just 10 percent of the country. With a population of less than 40 million, Ukraine has already officially recorded over 2.4 million COVID cases.

Throughout the pandemic, medical workers in Ukraine have worked in desperate conditions with outdated and missing supplies. To make matters worse, Ukrainian medical workers have often gone for months without receiving pay and the National Health Service has continued to cut hospital staff and wages.

Defying the Zelensky’s government push to both reform the labor market and push workers back to work, during the summer a number of medical workers went on strike, demanding unpaid wages and COVID-19 hazard pay. In August, doctors and nurses in the eastern city of Kupyansk went on strike despite intimidation and threats of layoffs from hospital administration. Earlier in the month, 150 medical workers in the city of Valkov went on strike and blocked a major highway over unpaid wages. Similar strikes took place throughout the summer in Kiev, L’viv, Suma and Slovyansk.

Biden, Democrats prepare to gut their own social welfare bill

Barry Grey

With deadlines looming this month on key items in the Biden administration’s domestic agenda, the $1 trillion bipartisan infrastructure bill and the $3.5 trillion “human infrastructure” package, the process of corporate manipulation and watering down of the already inadequate social welfare measure is moving into high gear.

Speaker of the House Nancy Pelosi, D-Calif., meets with reporters to discuss President Joe Biden's domestic agenda including passing a bipartisan infrastructure bill, at the Capitol in Washington, Wednesday, Sept. 8, 2021. (AP Photo/J. Scott Applewhite)

Last month, House Speaker Nancy Pelosi and Senate Majority Leader Charles Schumer set a September 15 deadline for the various committees in each chamber to draft their pieces of the budget bill, which, in its present outline form, modestly expands benefits for working people and increases taxes on corporations and the rich to partially offset the cost. Unlike the physical infrastructure bill, which is broadly backed by big business and passed the Senate with 19 Republican votes, there is no Republican support for the budget proposal, and corporate America is for the most part lined up against it.

The Democrats are seeking to bypass a filibuster in the Senate which could be overcome only by obtaining the votes of 10 Republicans in the evenly divided chamber, by moving the bill under the budget reconciliation process, whereby the legislation can be passed by a simple majority. That means, however, the Democratic leadership has to secure the votes of all 50 Democratic senators. Vice President Kamala Harris would then cast the tie-breaking vote.

Last month, Pelosi agreed to bring the infrastructure bill up for a vote in the House by September 27. That was a concession to a group of right-wing Democrats, who said they would not vote to move forward on the budget reconciliation bill if Pelosi continued to insist that the House not act on the infrastructure bill until after the Senate had passed the broader measure. As a result, Schumer has been compelled to set a September 27 deadline for the Senate passage of the social spending bill.

The process of drastically shrinking the social improvements contained in the “human infrastructure” bill, slashing its cost and blocking any significant increase in corporate taxes began in earnest last week, when Democratic Senator Joe Manchin of West Virginia published a column in the Wall Street Journal headlined, “Why I Won’t Support Spending Another $3.5 Trillion.”

Manchin, a multimillionaire owner of coal companies in West Virginia, cited the former chairman of the Joint Chiefs of Staff, retired Admiral Mike Mullen, as his authority on the danger to national security from too much debt. The senator called for a “strategic pause” in consideration of the budget bill, in effect delinking passage of the corporate-backed infrastructure bill from passage of the broader social legislation.

An unabashed flack for the fossil fuel industry, Manchin has repeatedly opposed environmental regulations on mining and energy in general. He previously called certain provisions in the budget bill aimed at modestly restraining carbon emissions, such as repealing tax subsidies to the fossil fuel industry, “very disturbing.” He has also made it clear he is opposed to raising corporate taxes and would like to “means test” measures such as tuition-free community college, universal preschool, child care tax credits and an extension of the enhanced child tax credit.

Other Democratic senators who have publicly opposed the budget bill’s $3.5 trillion price tag (spread out over 10 years) include Kyrsten Sinema of Arizona, Jon Tester of Montana and Mark Warner of Virginia, a former tech entrepreneur worth $200 million and now chairman of the Intelligence Committee.

On Tuesday, press reports emerged that Manchin had let it be known he was prepared to support a bill costing from $1 billion to $1.5 billion. Back in June, Bernie Sanders, chairman of the Senate Budget Committee, was claiming he would oversee passage of $6 trillion in social welfare measures, calling it the most far-reaching reform since the New Deal. Sanders was chosen by Biden to lead the effort to pass his budget in order to give his conservative domestic economic agenda a “progressive” gloss.

The Vermont senator, who at times calls himself a “socialist” and is relentlessly promoted by the pseudo-left as “proof” that the Democratic Party can be pressured to carry out progressive and even socialist policies, has said nothing about Biden’s termination of federal jobless benefits in the midst of the widening COVID-19 pandemic, or the drive to reopen the schools amidst soaring infections, hospitalizations and deaths of children, teachers and school staff.

The response by the White House and the Democratic congressional leadership has made clear that the $3.5 trillion package of social measures will be drastically cut back before any bill is brought up for a vote. The same applies to Biden’s promise to increase taxes on corporations and the wealthy.

On Tuesday, Biden told the press, referring to Manchin, “Joe at the end has always been there. He’s always been with me. I think we can work something out, and I look forward to speaking with him.”

Pelosi has said she will only bring before the House a budget measure that can be passed in the Senate, i.e., one that accommodates the most right-wing factions in the Democratic Party.

Yahoo News cited a “lobbyist familiar with internal deliberations on Capitol Hill” as saying “there was optimism among congressional Democrats that a bill would get passed and sent to Biden for signing into law. But such a bill is likely to be in the range of about $2 trillion…”

The article continues: “While the various House committees are likely to approve bills that would total $3.5 trillion, that number would get whittled down before the legislation is sent to the full House for debate and passage, the source said. That could mean that any proposed tax increases on the wealthy and corporations would not have to be as steep as initially envisioned.”

Even were the infrastructure and budget bills passed with the current proposed spending levels, they would be hopelessly inadequate to address the catastrophic levels of poverty and social crisis and decades-long degradation of social infrastructure. This was revealed in the response of the ruling class to the pandemic and the social disaster unfolding in the Gulf Coast and New York City as a result of Hurricane Ida.

Capitalism is incapable of addressing these existential public health and environmental issues, both because of the total subordination of all questions to corporate profit and the accumulation of private wealth by the ruling elite, and the division of the world economy into rival nation states. The measures dictated by science and made possible by the development of technology to eradicate the coronavirus and resolve the climate change crisis are blocked by the economic and geo-political interests of a corporate-financial oligarchy that accounts for a miniscule portion of the world population.

The infrastructure bill includes only $550 billion in new money, spread out over eight years. The current funding figure in the budget bill, $350 billion per year, pales in comparison to the vast increase in wealth of the US financial elite just in the course of the pandemic.

According to a recent report from Americans for Tax Fairness and the Institute for Policy Studies Program on Inequality, US billionaires have seen their wealth surge $1.8 trillion in just the first 18 months of the pandemic. Their collective fortune has skyrocketed by nearly two-thirds (62 percent), from just short of $3 trillion at the start of the COVID crisis on March 18, 2020, to $4.8 trillion on August 17, 2021.

Elon Musk has seen his wealth increase by $150 billion during the pandemic, a gain of over 600 percent.

Meanwhile, the Federal Reserve continues to pump $120 billion every month into the financial markets and maintain near-zero interest rates to fuel the stock market frenzy.

The minor tax increases on corporations and the rich proposed by Biden and the Democrats, should they see the light of day, would do little to reverse the ongoing plundering of society by the oligarchy. Government tax revenues from US corporations have declined by 40 percent just since the enactment of the Republican tax bill in December of 2017, and Biden is only proposing to restore half the 14 percent cut in the 35 percent corporate tax rate that prevailed prior to Donald Trump’s “reform.”

In any event, corporate America will not tolerate any significant increase in its taxes or reduction in its profits, and these are the class interests that control both parties. The pharmaceutical giants (Pfizer, AbbVie, AstraZeneca), energy monopolies (ExxonMobil), entertainment monoliths (Walt Disney Company), tech titans, major retailers, manufacturers and banks are spending hundreds of millions of dollars to bribe lawmakers, target them with negative ads and mobilize right-wing organizations they have funded to determine the final shape of any spending bills that might emerge from this sordid process—which is carried out largely behind the backs of the American people.

The Washington Post reported last month that “the pharmaceutical industry has embarked on its own wide-ranging campaign to combat Democrats’ drug pricing proposals, another potential revenue source in the bill. Conservative outfits previously backed by the sector’s top trade group, known as PhRMA [Pharmaceutical Research and Manufacturers of America], have run recent ads claiming lawmakers’ plans would have worsened the coronavirus pandemic.”

The Post noted that the RATE Coalition (Reforming America’s Taxes Equitably), “which counts support from Capital One, Disney, FedEx, Lowe’s and Lockheed Martin,” is preparing a seven-figure digital ad campaign to oppose any increase in the corporate tax rate. One of its top spokesmen is Blanche Lincoln, a former Democratic senator from Arkansas who served with Biden in the Senate.

Why was the New Zealand stabbing attack not prevented?

Tom Peters

Over the past week, New Zealand’s Labour Party-led government has released more information regarding the perpetrator of the September 3 stabbing attack in the Countdown supermarket in New Lynn, Auckland. The material raises questions about why the attack was not prevented.

LynnMall in Auckland. (Source: Google Maps Streetview)

Seven people were injured when 32-year-old Ahamed Aathill Mohamed Samsudeen picked up a knife in the supermarket and began stabbing people indiscriminately. The horrific attack sparked panic among shoppers, who fled for safety. Within about two minutes, armed police who had been tailing Samsudeen and monitoring his movements, arrived on the scene and shot him dead.

On Wednesday, three victims remained in hospital in a stable condition.

Like many terrorists in Europe and the United States, Samsudeen, who was inspired by Islamic State (ISIS) propaganda, was well-known to police and the intelligence agencies. He first came to the attention of authorities in 2016 after posting extremist statements on social media. Prime Minister Jacinda Ardern and other politicians had been briefed on the risk he posed.

Ardern told the media immediately after the attack that everything possible had been done to try and keep Samsudeen in prison, and when this proved impossible he was put under “constant” police surveillance. The government was also in the process of trying to revoke his refugee status and deport him.

Samsudeen came to New Zealand in 2011 as a Tamil refugee from Sri Lanka. His family, who are still in Sri Lanka, issued a statement saying, “We are heartbroken by this terrible event… We are thinking of the injured, both mentally and physically.” They said Samsudeen’s “mental health got worse and worse during the last 10 years or so” and was not helped by spending time in prison. “The prisons and the situation was hard on him and he did not have any support. He told us he was assaulted there.”

The government has characterised Samsudeen as a “lone wolf” attacker, radicalised online, but his mother told a Sri Lankan TV station she believed he was “brainwashed” by neighbours in New Zealand, who were from Syria and Iraq. Deputy Prime Minister Grant Robertson told TVNZ there was no evidence to support this claim.

Samsudeen spent a total of four years on remand in prison, on various charges. In 2017 he was arrested and jailed after seeking to leave the country, apparently to fight for ISIS in Syria. The United States and its allies had fuelled the growth of ISIS by pouring weapons and funding into Syria in support of militias fighting to topple the Assad regime.

In June 2018 he pled guilty to several charges, including the distribution of objectionable ISIS material. He was later charged with possession of a hunting knife, with intent to use it in a violent attack.

In mid-2020 the Crown sought to charge Samsudeen with planning a terrorist attack, but a judge rejected this because there is currently no such offence in the law. The government is now seeking to rush an amendment to the Terrorism Suppression Act through parliament to make it a crime to plan a terror attack.

Media reports mention that Samsudeen spent his final year in prison in the same maximum security unit as the fascist terrorist Brenton Tarrant, who massacred 51 people at two Christchurch mosques on March 15, 2019. They do not say that the two had any contact with each other, but being in close proximity to the violent white supremacist may well have fuelled Samsudeen’s own extremist views.

Robertson said authorities had tried to address Samsudeen’s mental health issues but “none of those attempts have been able to change the state of mind.” In fact, reports indicate that authorities rejected offers to help with his rehabilitation.

At the time of the supermarket attack, Samsudeen was on bail for another charge of allegedly assaulting a prison guard. He had been released just seven weeks earlier to live in a flat next to Masjid-e-Bilal, a small Auckland mosque. Corrections department spokesperson Rachel Leota described him to Radio NZ (RNZ) as “a very, very difficult person to manage” who “was increasingly openly hostile and abusive toward probation staff.”

New Zealand Muslim Association (NZMA) president Ikhlaq Kashkari told RNZ on September 6 that the mosque, run by volunteers, was “not equipped to deal with someone like that.” He questioned whether the department had provided appropriate resources and assistance.

Kashkari said he was “baffled” that Corrections had turned down the NZMA’s offer to help rehabilitate Samsudeen. “I feel that they did not want to have formal accountability once he was out because what I was asking for was for formal accountability and responsibility,” he said.

Criminologist Dr Clarke Jones wrote in the Guardian that during Samsudeen’s trial in 2018, “his legal team and I offered to run a bespoke, community-led intervention program to support Samsudeen in his transition out of prison, with one of its aims to alter his extreme views.” The crown acknowledged that the program had been successful with Muslim youth in the past, but “the police opted for a different approach… choosing surveillance and monitoring over rehabilitation.”

Jones wrote that in 2018 “Samsudeen showed clear signs of depression and post-traumatic stress.” He had suffered “persecution, kidnapping and torture in Sri Lanka, being labelled a terrorist and held in solitary confinement with no professional support.” The problems were made worse by his isolation from his family. Jones had advised the courts at the time “that addressing his mental issues would be a critical factor for successful reintegration back into the community.”

Police have said that Samsudeen was extremely “paranoid” about being followed, indicating that he was aware of the state’s surveillance and this worsened his mental state.

The government has given no clear explanation for why multiple offers to help rehabilitate Samsudeen were rejected, and instead he was housed next to a mosque that could not deal with his extremely challenging issues. Ardern repeated to the media on September 6: “I’m confident that agencies did everything within their power to keep the community safe.”

Meanwhile, the government is responding to the attack, as it did with the Christchurch massacre, by increasing the state’s powers.

Ardern said the amendment to the Terrorism Suppression Act will be passed by the end of the month to make planning a terror attack a crime. Deputy PM Robertson has said the government will also review immigration laws to determine whether the process of deporting someone with refugee status can be made easier, and potentially increase the state’s power to detain someone while it seeks to deport them. The government is also seeking to pass “hate speech” laws, which could easily be used against left-wing and socialist criticism.

Major Chinese property developer on the brink of default

Nick Beams

The Chinese bond market and its financial system more broadly is coming under increasing pressure because of the crisis at Evergrande, one of the country’s largest property developers, with potential flow-on effects for international markets.

Residential buildings developed by Evergrande in Yuanyang. (Photo: Wikimedia Commons)

The company, which has more than $300 billion in debts, came under scrutiny in August when the government ordered it to take action to resolve its debt problems.

The company said that with the “coordination and support of the government” it was working with suppliers and construction companies to resume work on its property developments. It has 778 projects across 233 cities in China.

In its earnings report, issued at the end of last month, it reported a fall in net profits for the year and warned that if work did not resume there was a risk of “impairment” on the projects and problems for its liquidity.

Since then, the situation has gone from bad to worse. The company is engaged in a desperate scramble to sell off assets and raise cash while warning it faces the risk of default on bonds that are about to fall due.

In its report on the crisis the Financial Times warned that a default, exposing the perilous state of China’s property market, would be a “debacle that could cascade across global markets.”

This week shares in the company fell below their 2009 initial public offering, following downgrades by the major credit rating agencies and warnings of a debt default. Shares in the company have dropped by 76 percent this year and the price of many of its bonds has fallen to around 30 cents on the dollar.

Fitch Ratings has again cut the rating on Evergrande bonds to CC, warning of a default.

“The downgrade reflects our view that a default of some kind appears probable,” the Fitch statement said. “We believe credit risk is high given tight liquidity, declining contracted sales, pressure to address payments to suppliers and contractors, and limited progress on asset disposals.”

The day before the Fitch move, Moody’s cut Evergrande’s credit rating by three notches, its third downgrade of the property giant since June. It said its current rating implied that Evergrande was “likely in or very near default.”

The property developer, one of China’s biggest borrowers on international markets, has been one of the most prominent of the giant real estate firms that have emerged in the past two decades. It was founded in 1996 by Hui Ka Yan, who built a financial empire on massive borrowing and land acquisitions, with support from high officials in the government, and at one point became the richest man in the country.

But it has been heavily affected by moves initiated by Beijing to rein in speculation, particularly in real estate and property development, because of the dangers it poses to the financial system as a whole.

Financial authorities imposed new regulations, known as the three red lines that determined whether companies could take on additional debt, with stipulations covering cash reserves, equity and assets.

Evergrande is not the only property developer experiencing major problems. This week the bonds of Guangzhou fell by more than 20 percent in a single day and are now trading at 60 percent of their face value. The plunge came after Moody’s downgraded its credit rating and warned about the company’s ability to refinance itself.

Fantasia, another property developer, is also in financial difficulty and told the Hong Kong stock exchange earlier this week it had made purchases of $6 million of its own bonds.

The impact of the new regulations is widespread. According to a report in Bloomberg, Morgan Stanley has calculated that property firms defaulted on $6.2 billion worth of risky debt in the year to mid-August, about $1.3 billion more than the previous 12 years combined.

Economists at the Japanese financial giant, Nomura, have warned that the restrictions on property developers are going too far and are “unnecessarily aggressive.” They have even called it a “Volcker moment”––a reference to the high-interest rate regime introduced at the beginning of the 1980s by Fed chair Paul Volker that devastated the US economy and led to the highest unemployment rates since the 1930s.

The implications of the crackdown on property development borrowing for the Chinese economy were pointed to in an article by Wall Street Journal writer Jacky Wong published earlier this week.

Characterising property development as “arguably the most crucial industry in China,” he noted that when related businesses like construction material and housing appliances are included, “the sector accounted for 16.4 percent of China’s economy last year, according to Nomura.”

The tightening of restrictions by the Xi Jinping regime is being conducted under the banner “housing is for living, not for speculation.” This is part of efforts by the regime to be seen to be tackling the rise of inequality in China. But having promoted the very speculation that it is now seeking to curb the government is caught in a trap of its own making.

Its efforts to reduce speculation threaten to stifle one of key engines of Chinese economic growth over the past period. Developers are reported to have sold 21 percent fewer homes in August compared to a year before. The extent of the housing boom is reflected in the rise of household borrowing which is now 62 percent of gross domestic product compared to 44 percent just five years ago.

The problem for the government, as Wong’s article noted, is that “property is already so entwined with China’s economy that a sudden stop could be extremely dangerous” and if the regulatory “on” button were pressed for too long this could have “very serious consequences for financial stability and growth.”

Similar views are being voiced elsewhere. A note by two Bank of America economists on Tuesday warned that a rapid slowdown in the property market could have “significant spillover effects. While the motivation such credit tightening was to stabilise leverage and rebalance the economy, the risk is rising for growth instability amid fast deleveraging.”

A comment by Australian Financial Review columnist Karen Maley drew attention to the international ramifications of the Evergrande crisis. Foreign investors were becoming “fretful” that Beijing was preparing to separate out Evergrande’s real estate arm from any rescue operation, leaving the holding company, in which they are heavily invested, with the debt. This would mean they would incur substantial losses.

Consequently, they are “stampeding towards the exits” and seeking to sell off their bonds. As she noted, the problem for Beijing is that “while it may be able to limit the damage that an Evergrande default inflicts on the local economy, it is powerless to limit the impact of the country’s $12 billion bond market.”

UK: Planned cut to Universal Credit heralds savage assault on workers’ living standards

Thomas Scripps

Yesterday, Britain’s Conservative government pulled a vote planned by the Labour Party on scrapping the £20-a-week increase to Universal Credit brought in last year. The uplift is due to end on October 6, on the final day of the Tory Party’s annual conference. Cabinet Minister Jacob Rees-Mogg will give an update on the decision to pull the vote today.

Universal Credit is a social security payment rolled out since 2013 as a combination and replacement of several different welfare benefits. It is set at such a pitifully low level that ending the £20 increase will plunge millions of people, including millions of children, into desperate financial circumstances overnight. The withdrawal is the largest one-off welfare spending cut in British history, outstripping the Tories’ 1988 slashing of housing benefits and even the 1931 cut to unemployment benefit during the Great Depression—carried out by the National Government under former Labour leader Ramsay MacDonald.

Ramsay MacDonald

Roughly six million people receive Universal Credit payments, in households containing 3.4 million children. The benefit is a punitive system, offering minimal support, often delayed, and reduced by a host of possible sanctions, reductions and caps. The standard monthly amount for a couple over 25 is £509.91, with an additional £237.08 for a first child. Someone with a disability or health condition which limits their capacity to work, a definition policed with abysmal cruelty, can claim an additional £342.63 a month.

The Joseph Rowntree Federation (JRF) estimates that the government’s £1,040 a year cut will immediately throw half a million people into poverty, including 300,000 children. In fact, families with children—especially single-parents—will be disproportionately impacted. The majority of those affected are working families.

In its statement, the JRF used the example of a typical family of five receiving Universal Credit—with three children, one parent in full-time work and one in part-time, living in a medium-cost area—to show the devastating effect of benefit cuts in recent years. In 2013/14, the family would have scraped through at £271 a month above the poverty line. Today, even with the £20 increase, they are below the poverty line. After the cut, they will be £150 a month below.

Action for Children has carried out a similar analysis and reports that the typical low to middle-income sole-earner family two children will be £1,800 a year poorer come October 6 than they were in 2010.

According to the Citizens Advice Bureau, 2.3 million people will be pushed into debt after October 6 in order to afford essential bills. Save the Children report that 47 percent of people are concerned they won’t be able to live on the money they have left, and another 18 percent were unsure.

One hundred different organisations, including charities, children’s doctors and public health experts, have written to the government opposing the cut, warning it will cause “immense, immediate and avoidable hardship”. Not only are the Tories proceeding, they have refused to publish the analysis of its impact, demanded in a Freedom of Information request by the Poverty Alliance, claiming it would not be in the public interest.

For huge numbers of people, the sudden withdrawal of vital support will come as a painful shock. Surveys have found that between 18 and 36 percent of recipients are not aware of the planned cut, rising to over 40 percent in Greater London and over half among young people.

The axe will fall just six days after the scrapping of the furlough job support scheme at the end of the September. The Resolution Foundation estimates than some 900,000 people will still be on the scheme when it ends and, if they do not find a job or leave the labour market altogether, will be moved onto Jobseeker’s Allowance at £74.70 a week for the over-25s and £59.20 a week for under-25s.

UK Jobcentre

The effect of these attacks could be far worse than predicted, coming amid a sharp rise in the cost of living. Rents outside London grew 5 percent in the year to the end of July, according to property website Zoopla, an increase of more than £450 a year for the average bill—the largest the site has seen. In areas like Wigan, Greater Manchester, Mansfield, Nottinghamshire, Hastings, East Sussex and Norwich, the figure is closer to 10 percent. Falls in already sky-high rents in London, as a result of the pandemic, have bottomed out and are expected to begin climbing again later this year.

More than 1.5 million households receiving Universal Credit in February 2021 were private renters, 55 percent of whom already did not receive enough housing support to make the rent.

Last month, the UK’s energy regulator Ofgem lifted the price cap on energy tariffs to its highest-ever level, leading to the biggest rise in energy bills in a decade for as many as 15 million customers and their families. Eon UK, Scottish Power, Ovo Energy, EDF Energy and British Gas all announced increases of 12 percent—roughly £139 a year.

Petrol prices reached their highest level since 2013 and diesel their highest since 2014 in July. RAC fuel spokesman Simon Williams commented, “Right now it’s hard to see what it will take for prices to start falling again.”

The cost of food is also expected to increase, with the Financial Times reporting, “UK retail trade signals prospect of higher food prices”, and Nestle, Procter and Gamble and Unilever all warning of hikes. Prior to the £20 increase, 43 percent of Universal Credit recipients were food insecure.

At the end of August, co-coordinator of the Independent Food Aid Network Sabine Goodwin wrote in the BMJ (formerly, British Medical Journal ) to warn “a perfect storm is brewing”. Food banks, she said, were preparing for “the busiest and most difficult winter on record” as result of the Universal Credit cut and price rises. “The scale of the disaster about to unfold cannot be overestimated.”

The Tories are pushing workers and their families over a financial cliff edge as a whip to enforce their herd immunity inspired return to work agenda and to create as exploitable a labour force as possible as the economy is fully reopened. Confronted with a manifold economic crisis due to COVID and Brexit, the ruling class is seeking to resolve it through a brutal assault on the working class.

Not a peep of opposition has been heard from the Labour Party. The party is a trusted pillar of British capitalism, but the degree to which it categorically refuses to associate itself, even rhetorically, with the slightest suggestion of a redistributive policy is remarkable. Through its efforts, political debate is kept wholly within the bounds set by Johnson’s Tory government—the most right-wing in British history.

While pledging to vote against the Universal Credit cut, Labour has done absolutely nothing to mobilise opposition. It’s alternative policy, set out by shadow work and pensions secretary Jonathan Reynolds last month, is to rename the benefit and tinker with the taper rate at which it is withdrawn as people earn more income. In Reynolds’s words, “We think the way the system operates, it interacts with people who are in low-paid work, does not work sufficiently well for them.”

Asked by how much Labour would reduce the taper rate, Reynolds did not answer, saying he would need to “cost that properly”. Asked whether Labour would reintroduce the paltry £20-a-week increase, he replied, “I can’t give a specific commitment on that at this stage.”

It should be remembered that this is the same party touted by pseudo-left groups like the Socialist Workers Party just a few years ago as having undergone a radical social democratic rebirth under former leader Jeremy Corbyn, whose manifesto offered “a glimpse of jobs, homes and public services for the 99%, protection for our environment—and making the capitalist class pay,” according to the Socialist Party.

The truth is that Corbyn did not change a spot on the Labour Party. His departure as leader has revealed what he, the SP and the SWP did their utmost to conceal—that he spent his tenure in close political collaboration with a party of Thatcherite monsters who cannot distinguish themselves from the likes of Boris Johnson.

Disease and death from COVID-19 accelerate throughout US as schools continue to reopen

Bryan Dyne

The spread of disease and death from the COVID-19 pandemic has accelerated as schools continue to reopen. Daily new cases in the United States are above 150,000, and daily new deaths remain above 1,100, both despite the drop-off in reporting over the Labor Day weekend. More than 41 million cases have been confirmed in the country, alongside more than 670,000 deaths since the pandemic began, including more than 240,000 dead since Biden took office in January.

New cases are particularly surging among children. The American Academy of Pediatrics reports that, as of the week ending September 2, an estimated one-quarter of new cases, a record of nearly 36,000 a day, are among those aged 0-17. The Coronavirus in Kids (COVKID) Project notes that this is up 28 percent from the previous week.

Students returning to school in Baltimore, Maryland on Monday Aug. 30, 2021. (AP Photo/David McFadden)

Data compiled by the Washington Post shows that over that same week, 2,400 children were hospitalized with COVID-19, with numerous states reporting high or record child hospitalizations. The Department of Health and Human Services reports that California is now at about 125 pediatric hospitalizations per day, approaching last winter’s peak of 200 per day. In South Carolina, Texas and Florida, states with governors openly pursuing the homicidal policy of herd immunity, pediatric hospitalizations have risen well above their winter peaks, at an estimated 35 per day, 350 per day and 250 per day, respectively.

Children also continue to die. Among the most recent of these tragedies are a 9-year-old boy and a 15-year-old girl, who both died on September 1 and were students in the Aiken County School District in South Carolina. In Mississippi, health officials have reported seven deaths among children since August 1, as well as the deaths of eight pregnant women. State Epidemiologist Paul Byers recently stated to the Mississippi State Medical Association that the current COVID-19 wave is “worse than anytime we’ve experienced in this pandemic.”

According to the cynical pundits in the corporate media, the rise in infections and deaths is the fault of those who failed to get their shots. It is, as the Democrats and President Biden endlessly claim, a “pandemic of the unvaccinated.” But there is no vaccine at all for children under 12, and only 37 percent of those aged 12-15 are fully vaccinated, rising to 46 percent for those aged 16-17. Are these children and teenagers to blame for contracting a deadly disease? No, it is a result of the ongoing drive by Biden and Democratic and Republican governors to reopen schools at any cost so they can force parents back into the workplace.

There are, moreover, no guarantees that the coronavirus cannot further mutate to fully evade the vaccine. In a press conference Tuesday by University of Florida (UF) health officials with local politicians in Jacksonville, Florida stated that the percentage of patients vaccinated against COVID-19 in the hospital has risen from 10 to 17 percent, a possible sign of growing vaccine resistance of the virus.

During the press conference, Dr. Mobeen Rathore, a pediatrician at UF Health and Wolfson Children’s Hospital, further warned, “Kids do get sick. Kids do get hospitalized. Kids do get sick and go to the ICU to get intubated, be on a ventilator and even be on (Extracorporeal Membrane Oxygenation) ECMO, which is a heart-lung machine, sort of a last-ditch effort to support these children. Unfortunately children do die.” Rathore continued, confirming that a recent reported death of a 17-year-old was caused by COVID-19.

The spread throughout schools has been sharply reflected in the number of students, teachers and staff that have had to be quarantined after possible exposure to the coronavirus. In Mississippi, more than 2,800 K-12 students tested positive last week, forcing nearly 16,000 students, teachers and staff into isolation. COVID-19 outbreaks last week also forced the closure of nearly four dozen school districts in Texas, which 42,000 students attend, according to the Texas Education Agency.

Despite the vast amount of community spread, school and state officials continue to push for schools to remain open. In Texas, the majority of schools that closed last week have reopened. In Mississippi and Florida, schools have remained open through their recent coronavirus outbreaks.

Deaths among teachers and staff continue to remain high. The Twitter account School Personnel Lost To Covid (@LostToCovid) has found that 1,661 educators have died since the pandemic began, including 200 since July 1, some as young as 24 years old. Those dying are not only teachers; they include numerous administrative staff, bus drivers, sports coaches, crossing guards and cafeteria workers. All of them leave devastated co-workers, friends and families in their wake.

Chief responsibility for the ongoing waves of death among teachers, staff and students lies with the Democratic Party. Since taking office, the Biden administration has promoted the lie that children do not get sick from the coronavirus and that schools are safe. Biden himself infamously lied in February to a second grader, who was concerned that she might catch the deadly virus and spread it to her parents, stating, “You’re not likely to be able to be exposed to something and spread it to mommy or daddy.”

Teachers unions have played an equally wretched role. At a town hall meeting hosted last week by the Philadelphia Federation of Teachers, union bureaucrats asserted that vaccinations were enough to keep children safe, despite the fact that those under 12 are unable to get the vaccine. At the national level, American Federation of Teachers President Randi Weingarten has spent the past month on a 20-state “Back to School for All” tour, promoting the false idea that schools can be made “safe, healthy and welcoming for all” amid a surge of the deadly pandemic.

Given how many teachers and students have died during her tour as a result of the pandemic, one might be forgiven for wondering if Weingarten is in fact the president of the American Federation of Gravediggers.

The Democrats and unions are continuing the school reopening policy first pushed by former President Donald Trump. This makes clear that there is no constituency among the American ruling elite for a genuine plan to halt the pandemic. Under both parties, workers have died in their thousands day by day as a result of a preventable disease.

The only real solution is an eradication strategy to fight against COVID-19. This requires the immediate closure of schools, as well as nonessential businesses, to stop the spread of the disease, combined with travel restrictions, testing, contact tracing, isolation and the full extent of public health measures, combined with mass vaccination.

Chinese president presses corporate giants to be philanthropic

Peter Symonds

In a speech to the Central Committee for Financial and Economic Affairs last month, Chinese President Xi Jinping called for greater emphasis on “common prosperity” and the need to “regulate excessively high incomes” and “encourage high-income people and enterprises to return more to society.”

The remarks came in the wake of moves by the Chinese Communist Party (CCP) regime to rein in huge privately-owned corporations, including the tech giants Tencent and Alibaba, food delivery company Meituan, internet ride-hailing company Didi and online education companies TAL Education, New Oriental and Gaotu Techedu.

China's President Xi Jinping speaks during the BRICS Business Council prior the 11th edition of the BRICS Summit, in Brasilia, Brazil, Wednesday, Nov. 13, 2019. (AP Photo/Eraldo Peres)

Individuals such as Tencent’s Tony Ma and Alibaba’s Jack Ma have amassed huge personal fortunes—$US53.1 billion and $45.3 billion respectively—as their business empires have expanded. Their obscene levels of wealth stand in stark contrast to the 600 million Chinese earning just 1,000 yuan or $154 a month, who according to Chinese Premier Li Keqiang could not afford the rent, let alone other necessities, in a mid-sized Chinese city.

In response to Xi’s speech, Tencent Holdings has pledged $15 billion for various initiatives related to the environment, education and rural reform, saying the announcement was a response to “China’s wealth redistribution campaign.” It said half would be used for “sustainable social value innovation” and the rest for social charity programs to contribute to “common prosperity.”

Last week Alibaba promised to provide a similar amount by 2025 to “common prosperity” in China. Its statement said the money would be used to support micro, small- and medium-sized enterprises, help “the digitalisation of underdeveloped areas” and expand healthcare capability in less developed areas.

Bloomberg has reported that 73 of China’s listed firms, both private and state-run, have told their shareholders they will be making contributions to “common prosperity.”

The corporate announcements are clearly motivated by concerns of further state intervention in their businesses as well as being directed to areas that assist in their further expansion, rather than seriously addressing social inequality. The processes of capitalist restoration presided over by the CCP have opened up a huge and widening gulf between rich and poor in China.

According to the Credit Suisse Research Institute, China’s richest 1 percent own nearly 31 percent of the country’s wealth, up from 21 percent in 2000. An HSBC report put size of China’s middle classes, earning between $15,000 and $75,000, at 340 million people. While $15,000 is relatively modest income by Western standards, it is at least eight times the amount earnt by the 600 million people referred to last year by Premier Li.

President Xi’s call for “common prosperity”—a term he has increasingly used over the past year—reflects the deep fear in the CCP apparatus of the enormous social tensions being generated by the entrenched inequality. He told officials in January that “common prosperity” was not just an economic issue but “a major political matter bearing on the party’s foundation for rule,” adding: “We cannot let an unbridgeable gulf appear between the rich and the poor.”

As the figures show, however, the gulf is already unbridgeable. The hundreds of millions of people struggling to survive on less than 1,000 yuan a month live in a world far apart from the multi-billionaires. The very fact that Xi is compelled to call on the country’s super-wealthy oligarchs to sacrifice makes a mockery of the CCP’s threadbare but continuing claims to be socialist or communist.

Yao Yang, an economics professor at Peking University, indicated in an email to the New York Times that he supported Xi’s new orientation, saying China had to be “fair and just.” He admitted: “China is one of the worst countries in terms of redistribution, despite being a socialist country. Public spending is overly concentrated in cities, elite schools and so on.”

The pressures bearing down on working people have been heightened with China’s economic slowdown. The years of 10 percent GDP growth are no longer. Previously, the CCP regarded 8 percent annual growth as necessary to provide sufficient employment to ward off social tensions. Now, however, the growth rate has fallen to 6 percent and shows no sign of recovering.

Xi has no intention of reversing the processes of capitalist restoration initiated in 1978 with Deng Xiaoping’s pro-market agenda. Deng, who notoriously declared “to get rich is glorious,” argued that China had to let some get rich first to lift the economy.

According to the state-run Xinhua newsagency, last month’s meeting of Central Committee for Financial and Economic Affairs discussed “creating conditions that are more inclusive and fair for people to get better education and improve their development capabilities” and providing “chances for more people to become wealthy.”

Han Wenxiu, deputy director of the Central Financial and Economic Affairs Commission Office, reassured the wealthy that the government would not “rob the rich to help the poor.” He said the idea was not “egalitarianism” but “reducing the wealth distribution gap between the urban and rural areas and firmly preventing polarisation.”

Han’s comments were clearly aimed at heading off any panic among the corporate elite and foreign investors by signaling that the shift is largely cosmetic and no significant inroads will be made into their profits.

Pro-market political commentators have nevertheless hit back. The Hong Kong-based South China Morning Post, which is owned by Alibaba, last Friday featured Peking University economics professor Zhang Weiying who argued: “If we lose faith in market forces and rely on frequent government intervention, it will lead to common poverty.”

Xi has nominated the eastern coastal province of Zhejiang as a demonstration zone for his “common prosperity” program. Its recently released plan sets 2025 as the target for average disposable income per person to reach $11,500—up 40 percent from current levels. Economics professor Li Shi who advised provincial officials on the plan suggested in a newspaper article that the province could promote collective bargaining to give employees a stronger voice in wage negotiations.