China’s Evergrande crisis at a turning point

Nick Beams

The financial crisis of the highly indebted Chinese property developer Evergrande enters a new stage tomorrow when a 30-day grace period to settle a missed payment on a dollar-denominated bond on September 23 ends.

China Evergrande Centre [Wikimedia Commons]

If Evergrande, which has a total of $300 billion worth of liabilities, fails to pay the debt or come to some arrangement with bond holders it could be formally declared to be in default.

Evergrande’s attempt to raise cash to meet its debts suffered a blow on Wednesday when it was announced that a deal to sell a majority portion of a property services unit to another developer for 20 billion Hong Kong dollars ($US2.6 billion) had been terminated the previous week.

Since Evergrande missed its bond payment last month, two other property companies have followed suit. On Monday the Hong Kong-listed company Sinic announced it had failed to make payments on $246 million of dollar-denominated bonds following a default by the developer Fantasia Holdings on $205 million of bonds earlier this month.

In line with the policy of the government to rein in leverage in the real estate sector, the People’s Bank of China has pointedly refused to offer a bailout for Evergrande saying fallout effects from its crisis are “controllable.”

But the bigger issue is whether the government and financial authorities will be able to stave off the effects of the developing slump in real estate and property development on the broader economy. It has been estimated that property development and the industries that supply it account for upwards of 25 percent of the Chinese economy. There are a number of indications of a significant downturn in housing and property development.

It has been reported that home prices in China fell in September for the first time in six years. The latest GDP numbers showed a slowdown in the third quarter—growth was only up by 0.2 percent from the previous quarter—with property and construction industries contracting for the first time since the start of the COVID-19 pandemic.

Bloomberg reported that falling home prices could start a vicious cycle, worsening the cash shortage of builders and forcing them to offer bigger discounts. It cited one financial analyst who said the sector had entered a downward cycle and the priority “is to prevent a state of panic.”

Residential sales fell by 17 percent in September, normally a peak month for purchases and the rate of failed land auctions climbed to the highest level since 2018.

According to data compiled by China Real Estate Information, which tracks auctions across 128 Chinese cities, about 27 percent of land offered by local governments went unsold in September because there were no bidders. Proceeds from land sales dropped by 18 percent in August from a year earlier.

Last month, in a sign of tightening credit conditions and fears about the direction of the market, loans taken out by property developers from banks fell by 8.4 percent last month, the biggest fall since 2016.

Larry Hu, the head of China Economics at Macquarie Securities, told Bloomberg: “Developers are hoarding cash to avoid becoming the next Evergrande. The contagion risk is real.”

If this trend continues it will have far reaching effects. Local governments derive around $1 trillion of revenue, some 40 percent of their total, from land sales which is used to finance infrastructure projects.

The roots of the present crisis lie not in the Chinese economy per se but in the global financial system. The 2008 financial meltdown, triggered by the collapse of the Lehman Brothers investment bank, hit the Chinese economy very hard with the loss of 23 million jobs virtually overnight.

The Chinese regime concluded that the economic growth model, based on the supply of cheap consumer goods to Western markets, had run its course and a new economic strategy had to be developed.

In order to maintain economic growth and social stability the regime embarked on a massive stimulus package based on housing and infrastructure financed by the provision of very cheap credit. Land prices soared and developers used the land as collateral to finance construction. Local governments raked in increased revenue from land sales, which they used to finance infrastructure development, together with increased borrowings.

Rising property prices enabled the process to continue. In 1998, when the Chinese government loosened tight restrictions on the sale of land, only one third of the population lived in towns and cities. That proportion has now risen to two-thirds, with the addition of 480 million to the urban population.

The extent of the property and infrastructure boom is indicated by the estimate that in the three years 2011–2013 more concrete was used in China than in the US for the whole of the 20th century.

The rise of Evergrande was bound up with this development. Its founder Hui Ka Yan started his economic activity in Shenzhen as an exporter-importer but then moved into property development when he founded Evergrande in 1997. By 2016 Evergrande was the largest property developer by sales and Shenzhen, like many other small towns across China, had been transformed into a major city.

In a speech in 2018, Hui, now a prominent member of Chinese Communist Party, (CCP) delivered a speech in which he declared: “Everything for me and Evergrande is given by the Party, the state, and society.”

As a recent Bloomberg article noted: “Even making allowances for flattery, Hui wasn’t wrong: The forces that allowed Evergrande to grow so rapidly emanated, in large part, from Beijing.”

But now the winds from Beijing have started to blow in another direction. The CCP regime has concluded that the debt-fueled growth model, initiated in response to the 2008 global financial crisis, is unsustainable.

For the past several years it has tried to cut back on the debt growth, which now stands as 290 percent of GDP and has doubled since 2008.

After previous efforts had failed, it instituted tightened restrictions on credit, known as the three red lines in August 2020, which restricted debt accumulation by property developers. Evergrande, for example, failed to meet all three of the criteria.

The regime concluded that the rise of debt could lead to a financial crisis, with massive social consequences and the rise and of debt-fuelled wealth on the heights of society was producing a dangerous social polarisation.

In a speech delivered in August, the full text of which was published in a CCP theoretical journal Qishui earlier this month, President Xi Jinping, pointed to the rise of income inequality as a prominent issue around the world, declaring that “our country must resolutely guard against polarisation, drive common prosperity, and maintain social harmony and stability.”

And in indication of what is at stake, he said the drive for “common prosperity” was needed to “continuously consolidate the Party’s foundation for holding power over the long term.”

The speech had little specific to say on property development as such but Xi repeated earlier remarks that it was necessary to improve housing supply and “insist on the position that housing is for living in and not for [financial] speculation” and that “we must actively and steadily push forward property tax legislation and reform.”

But it appears that the proposed tax changes, which it is claimed will make it more expensive to speculate on property and help bring down prices, have run into significant opposition from within the upper ranks of the CCP.

According to an article published in the Wall Street Journal on Tuesday, citing “people with knowledge of government deliberations,” Xi is facing resistance for the new measures.

It said that “in internal debates, the feedback from his property-tax plan both from the party elites and rank-and-file members, has been overwhelmingly negative.”

Arguments against the tax plan have “flooded in” since the ministries of finance, housing and taxation started to seek feedback to the proposal in the spring. “Many officials contend that such a levy could crush housing prices, cause consumer spending to plunge and severely harm the overall economy.”

Apart from the expressed concern about the impact on the economy, there are immediate material interests at stake.

The article reported that some senior retired party members have also petitioned against the new tax saying they could not afford it.

According to one of those people familiar with the deliberations, cited by the Journal: “So many people, including party members own more than one property. The tax proposal is becoming a potential social-stability issue.”

The opposition from within the CCP appears to be having an effect as an initial proposal to trial the tax in 30 cities has been scaled back to 10.

There is an old political adage that there is no more dangerous situation for a bad regime than when it seeks to reform itself.

The economic re-orientation of the Xi regime is provoking divisions within the ruling apparatus and could well also lead to the eruption of a movement by the Chinese working class from below.

Strike wave in US continues to grow, sparking fear and repression from ruling class

Marcus Day

Corporate executives in boardrooms across the US are responding to a growing strike wave—set to become the largest in decades—with increasing fear and hostility. The longstanding policy of relying on the trade union bureaucracy to suppress the class struggle is failing to contain the outbreak of strikes and increasingly the corporate and political establishment is resorting to strikebreaking, court injunctions and threats of state repression.

Striking Kellogg's worker in Battle Creek, Michigan (WSWS Media)

Anger among broad sections of workers has begun to boil over, after being suppressed for four decades by the AFL-CIO. Placated as “heroes” and “essential” by companies’ public relations departments, workers in health care, manufacturing, transportation, logistics and warehousing, and other industries have suffered the brunt of the COVID-19 pandemic—working ever-longer hours at low wages and with inadequate protections against the virus. Meanwhile, workers have watched as corporate profits and the fortunes of the super-rich have skyrocketed since 2020, with the latest report by Forbes showing the wealth of US billionaires swelled 70 percent, a whopping $2.1 trillion.

With rents and prices in consumer goods surging, and companies struggling with an ongoing labor shortage, growing numbers of workers are walking out or pressing to strike to secure substantial increases in wages and benefits, both in the United States and internationally.

A strike tracker maintained by Cornell University’s School of Industrial and Labor Relations (ILR) has already recorded 180 strikes for the year, including 39 in October alone, involving approximately 24,000 workers.

Reflecting the growing concerns in ruling circles over the possibility of strike “contagion,” Kate Bronfenbrenner, director of labor education research and senior lecturer at the ILR, told Yahoo Finance: “What will happen is you’ll see more workers going on strike. Each time there’s a ripple effect with each one of those, if the John Deere strike isn’t settled, you’re going to see another big group go out. If companies don’t move, you’re going to see this spread from one group to another. Strikes are contagious.”

Wall Street investors and financial analysts are increasingly voicing similar worries. According to Canada’s Financial Post, a strategist for RBC (the Royal Bank of Canada) wrote in a note recently that strikes were the top supply-chain concern among 23 S&P 500 companies that reported earnings in the first two weeks of October, double the number that mentioned port bottlenecks and logistics problems. “Labor inflation is definitely a watch item for us,” said JPMorgan Chief Financial Officer Jeremy Barnum on a recent call.

Roughly 2,000 workers employed at health care giant Kaiser Permanente’s Hawaii locations were the latest to authorize a strike at the company by overwhelming margins, voting to approve a walkout by 93 percent this week. They join 35,000 Kaiser workers in California, Oregon and Washington who had earlier voted for strike action, and 700 Kaiser hospital engineers in the Bay Area who have already been on the strike for over a month. Thousands of other Kaiser workers, out of approximately 52,000 total whose contract expired September 30, are also taking strike authorization votes in the coming weeks.

In a move which is being replicated in contract negotiations at companies throughout the US, Kaiser has demanded that raises be limited to just 1 percent and that a new tier of lower wages for new hires be established, despite taking in over $2 billion in operating income in 2020. However, the trade unions have refused to set a strike date, keeping workers on the job for weeks without a contract.

Balloting for strike authorizations is also continuing in other industries. Teachers in school districts from Pennsylvania and Ohio to California have approved strikes in the past week. Several hundred flight attendants for Piedmont Airlines, a regional carrier for American Airlines, as well as SEPTA transit workers in Philadelphia are voting this week over whether to walk out.

Piedmont flight attendants in Philadelphia (AFA-CWA Twitter)

So far, the US ruling class has been largely relying upon its loyal assistants in the trade union bureaucracies—who for decades have enforced corporate attacks on wages and working conditions—in the hopes that they can contain and suppress the growing strike movement. The Biden administration has made the promotion of the trade unions central to its policies, viewing the unions as firewalls and enforcers of “labor peace.”

The biggest walkout threatened recently, that of 60,000 TV and film production workers in California, was called off at the last minute by the International Alliance of Theatrical Stage Employees (IATSE) union over the weekend. The initial details released by IATSE of its so-called “Hollywood ending” agreement, however, showed it would continue to sanction brutally long hours, provoking outpourings of anger from workers and denunciations of the deal as a sellout.

The old principle of “no contract, no work” has been increasingly transformed into “no contract, no strike” by the pro-corporate trade unions, as they work desperately to hold back workers as long as possible. At auto parts maker Dana Inc., the United Auto Workers and United Steelworkers unions have kept 3,500 workers on the job under day-to-day contract extensions for months, even after workers voted down a union-backed agreement by 90 percent. The UAW and USW are presently engaged in an effort to ram through largely identical deals at Dana, which again fail to meet workers’ demands for serious wage increases and an end to appalling sweatshop work schedules.

The UAW is hoping to secure a contract at Dana as quickly as possible, fearful over the growing support for the strike by 10,000 workers at John Deere, the multinational agricultural and construction equipment maker. Dana workers, who supply Deere with critical parts, have been demanding with increasing insistence to strike themselves.

While the corporations and their political representatives are working closely with the trade union executives to restrain workers wherever they feel they can, they are simultaneously worried over workers’ growing defiance of and contempt for the unions’ orders. A business columnist for the Los Angeles Times recently noted, “After decades of abject somnolence, American labor seems to be stirring, but the Deere strike may be the best example just now of how fed up unionized workers have become with their leadership. The UAW allowed the Big Three automakers to impose two-tiered wage rates in 2007, a supine concession that quickly spread to other UAW contracts, including Deere.

Thus, when the unions prove unable to hold workers back from striking, as at Deere, the companies are quickly resorting to all the old methods of class war and state repression.

On Wednesday, Deere secured a temporary court injunction against striking workers in Davenport, Iowa, who had carried out mass pickets in recent days, and has requested another injunction against workers at its plant near Des Moines, the state capital. Scott County District Court Chief Judge Marlita Greve’s ruling unabashedly solidarized itself with Deere, complaining that because of workers’ picketing, the company “has suffered and will continue to suffer substantial and irreparable injury.”

The injunction attempts to facilitate Deere’s use of strikebreakers by severely constraining workers’ ability to picket, limiting them to just four individuals at each gate, while also provocatively barring their use of firewood barrels and chairs.

Predictably, the UAW has responded by ordering workers to comply with the injunction without offering a hint of protest, let alone seeking to mobilize opposition to it, indicating thereby its de facto support.

The UAW’s role in seeking to leave workers defenseless to corporate strikebreaking and attacks has been mirrored to a greater or lesser degree in other ongoing struggles. At food manufacturer Kellogg’s, where 1,400 workers have been striking across several states, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCTGM) has defended the Building and Construction Trades Council unions’ plans to force their members to cross picket lines in Omaha, Nebraska.

At St. Vincent Hospital in Worcester, Massachusetts, the Massachusetts Nurses Union has isolated the seven-month strike by 700 nurses, doing nothing to seriously oppose Tenet Healthcare’s use of permanent replacements, nor the company’s unilateral imposition of its contract demands. Strikebreakers have also been brought in to crush struggles by Heaven Hill distillery workers in Tennessee and Warrior Met Coal miners in Alabama. In the latter case, the United Mine Workers union has left miners open to the violence of the company’s scabs and armed thugs, with workers hit by strikebreakers’ cars and reportedly shot at.

Such resorts to outright repression and all the most vicious corporate tactics of the early 20th century present serious dangers to workers. However, it is not an indication of the powerful position of the capitalist ruling class, but rather of its weakness and desperation, as it lashes out against a growing rebellion by workers which threatens to erupt on a scale not seen in generations.

California public schools face massive budget cuts due to COVID-19 pandemic

David Benson

School districts across California are confronting the prospect of mass layoffs due to budget shortfalls accrued during the COVID-19 pandemic. Funding formulas are based on average daily attendance. While Democratic Governor Gavin Newsom has repeatedly bragged that public schools in the state have remained open, enrollment has fallen precipitously and chronic absenteeism in California schools has skyrocketed due to the pandemic, pushing districts to the point of collapse.

California K-12 enrollment in 2020-21 (Source: California Department of Education)

Statewide enrollment in K-12 education declined by 160,000 in the 2020-21 school year, or nearly three percent. This translates to millions of dollars cut to already strained school districts and the possibility of mass layoffs for chronically understaffed schools.

In September, Newsom staged a visit to Melrose Leadership Academy in Oakland to brag about his COVID-19 strategy. He stated, “We implemented the most robust school reopening and safety strategy in the entire country, and now California’s students are back in the classroom and schools are remaining open at nation-leading rates.”

Despite Newsom’s assurances, Oakland Unified School District (OUSD) reported 23 cases of students contracting COVID-19, four staff cases, and four classes fully quarantining in the last week alone. Chronic absenteeism has skyrocketed compared to pre-pandemic figures, with OUSD reporting a rate of 37 percent chronically absent among K-5 students, compared to 14 percent before the pandemic.

Three years ago, OUSD initiated the “Citywide Plan” which closed several schools and cut tens of millions of dollars from the budget. Now, with declining attendance, the budget shortfall will be greater, with a deficit of $58 million projected for the 2022-23 school year.

San Francisco Unified School District (SFUSD) also faces budget shortfalls as a result of a 6.6 percent decline in enrollment. A projected $100 million shortfall may result in the loss of 1,000 jobs. SFUSD also faces chronic absenteeism, with African American, Pacific Islander, and homeless students particularly hard hit. Students who do attend school risk their health; since August 16, when schools reopened in San Francisco, 393 students and staff have become infected with COVID-19.

The two largest California school districts are also in crisis. Los Angeles Unified School District (LAUSD) has lost 27,000 students since last year and presently has 893 active COVID-19 cases. Enrollment at San Diego Unified School District (SDUSD) is down by 7,500 students in the last four years.

EdSource has reported school districts with chronic absence rates tripling from two years ago. Some students miss school due to quarantines; others are afraid of contracting the disease, and many students and parents are unwilling to expose themselves to the harassment of fascistic anti-maskers. One of the worst-hit schools is Thermalito Union Elementary in the north central Butte County. This county has a poverty rate of 21 percent, with a median household income of $43,444, far below the state household income of $80,440 as well as the national income of $65,712.

Besides poverty, Butte County residents suffered from the devastating 2018 Camp Fire. This fire was caused by the negligence of Pacific Gas and Electricity (PG&E), for which the company agreed to pay merely $13.5 billion for the destruction of the entire town of Paradise and the deaths of 84 people. Two years after the settlement, lawyers have skimmed millions of dollars and the victims have received only a fraction of what they are owed. Only 10 percent of the burned homes have been rebuilt, and thousands of residents are living in shacks, motor homes or tents.

Butte County has also been hard hit by COVID-19, with 19,561 confirmed cases and 252 deaths from the virus. Despite claims by Democrats, Republicans and their media stooges that the pandemic has subsided, 53 cases were reported last week alone. At California State University Chico, also in Butte County, 312 students and employees have contacted COVID-19 since the school reopened in August. In Chico Unified School District, 56 students and 11 staff members have been confirmed as infected with COVID-19 in the last two weeks.

California has had 4,571,467 individuals officially infected with COVID-19, with 672,005 cases among the 0-17 age group, while the total number of deaths in the state has reached 70,150. In the past two weeks alone, there were 76,888 cases and 1,245 deaths among Californians.

In the last two weeks, 70 students were either confirmed or potentially positive for the virus and 158 students were quarantined in the Santa Monica-Malibu Unified School District (SMMUSD). In the foothill town of Jackson, the superintendent for the Amador County Unified School District, Torie Gibson, has been receiving death threats because of the mask mandate implemented by the district. Despite the mandate, 379 students and 11 staff members have tested positive for the virus and 376 students and 9 staff members are presently in quarantine.

Rocklin, in Placer County, had an infection rate of over 200 cases per 100,000 over the last two weeks. Approximately one out of 1,000 residents have died from COVID-19 and one out of every six people infected has been a child. School board meetings in Rocklin Unified School District have repeatedly been disrupted by fascists, including Proud Boys, Moms 4 Liberty, and White Rose members, who have attended and raised threats of violence against school board members and teachers for enforcing mask mandates.

Newsom has ended mask mandates for vaccinated individuals in businesses, threatening the further spread of COVID-19. Two months ago, the Centers for Disease Control and Prevention (CDC) released a report on the ability of vaccinated individuals to carry a viral load and infect others. As is already widely known, breakthrough infections among those vaccinated have already occurred.

Newsom also recently announced that students will be required to be vaccinated, but this should not be taken at face value. First, there is an immense loophole in that parents can refuse to vaccinate their children based on personal beliefs or medical waivers. The state legislature has not defined “personal beliefs,” so localities are free to interpret that as religious, political, or unscientific fears. Furthermore, the start date for the mandate could be as late as January 2023.

The statistics have made it perfectly clear that until COVID-19 cases are brought to zero, schools cannot be open without mass infections among children, which in turn spread to their families and communities. The only way that the health and safety of the public can be achieved is through a fight to eliminate COVID-19 in ever-broader geographic areas until all human-to-human transmission is brought to an end.

U.S. Billionaires are Now $2.1 Trillion Richer Than Before the Pandemic

Chuck Collins

America’s billionaires have grown $2.1 trillion richer during the pandemic, their collective fortune skyrocketing by 70 percent — from just short of $3 trillion at the start of the COVID crisis on March 18, 2020, to over $5 trillion on October 15 of this year, according to Forbes data analyzed by Americans for Tax Fairness (ATF) and the Institute for Policy Studies Program on Inequality (IPS). [A table of the top 15 billionaires is below and the full data set is here.]

Not only did the wealth of U.S. billionaires grow, but so did their numbers: in March of last year, there were 614 Americans with 10-figure bank accounts. Today there are 745.

The $5 trillion in wealth now held by 745 billionaires is two-thirds more than the $3 trillion in wealth held by the bottom 50 percent of U.S. households estimated by the Federal Reserve Board.

The great good fortune of these billionaires over the past 19 months is even starker when contrasted with the devastating impact of coronavirus on working people. Almost 89 million Americans have lost jobs, over 44.9 million have been sickened by the virus, and over 724,000 have died from it.

To put this extraordinary wealth growth in perspective, the $2.1 trillion gain over 19 months by U.S. billionaires is equal to:

+ 60 percent of the $3.5 trillion 10-year cost of President Biden’s Build Back Better plan.

+ The entire $2.1 trillion in new revenues over 10 years approved by the House Ways and Means Committee to help pay for President Biden’s Build Back Better (BBB) investment plan.

Sixty-seven national organizations have sent a letter to Congress expressing concern that neither the Ways and Means committee plan nor President Biden’s plan will adequately tax billionaires. They  recommend that Billionaires Income Tax (BIT) legislation under development by Sen. Ron Wyden, chairman of the Finance Committee be included in final BBB legislation. President Biden also supports this tax reform.

Most of these huge billionaires’ gains will go untaxed under current rules and will disappear entirely for tax purposes when they’re passed onto the next generation. Under Wyden’s BIT, billionaires will start paying taxes on their increased wealth each year just like workers pay taxes on their paychecks each year.

The tax will apply only to taxpayers whose wealth exceeds $1 billion: about 700 households. It will be assessed annually on tradable assets, such as stocks, where the value of the asset is known at the beginning and end of the year. For non-tradable assets, such as ownership in a business or real estate holdings, taxes will be deferred until the asset is sold.

Public support for the Billionaire Income Tax is very strong. When proposed as a way to pay for President Biden’s $3.5 trillion investment package, it increases support for that package by 20 to 40 points among voters in battleground districts and states.

Sources: March 18, 2020 data: Forbes, “Forbes Publishes 34th Annual List of Global Billionaires” March 18, 2020 October 15, 2021 data: Forbes, “The World’s Real-Time Billionaires, Today’s Winners and Losers,” accessed October 15, 2021.

Among the individual stories behind the big numbers:

Elon Musk of Tesla and SpaceX fame is not only beating Jeff Bezos in space, he has rocketed past him in the billionaires club. Nineteen months ago, Bezos was nearly five times richer than Musk. Now, after a meteoric eight-fold increase in his wealth, Musk is worth $209 billion and Bezos $192 billion. Bezos’s wealth still grew by a very large 70 percent over the period.

Google founders Sergei Brin and Larry Page are now worth $237 billion combined, a 137 percent increase from their combined wealth of $100 billion at the beginning of the pandemic.

Nike head Phil Knight has nearly doubled his fortune from $29.5 billion to almost $58 billion. Maybe that’s in part because Nike didn’t pay a dime of federal income taxes in 2020 on its $2.9 billion in profits; and between 2018 and 2020 the corporation paid just a 3.3 percent tax rate on $9 billion in profits.

MacKenzie Scott, former wife of Amazon founder Jeff Bezos, has seen her wealth increase by $19.5 billion, or 54 percent, since the pandemic began, even after giving away $8.6 billion of her wealth to charity.

Chile Is at the Dawn of a New Political Era

Vijay Prashad

“It feels like we are at the end of an era,” Bárbara Sepúlveda tells me on October 12, 2021. Sepúlveda is a member of Chile’s Constitutional Convention and of the Communist Party of Chile. The era to which Sepúlveda refers is that of General Augusto Pinochet, who led the U.S.-backed coup in 1973 that overthrew the popularly elected government of President Salvador Allende. During the Pinochet era, the military acted with impunity, and the left was assassinated and sent into exile—while big business (both Chilean and foreign) received all the blessings of the dictatorship. That’s the era that has slowly been sputtering to a halt since Pinochet’s removal in 1990 and since the Chilean people voted to throw out the dictatorship’s Constitution of 1980 and write a new one.

Neoliberalism was born in Chile, as the popular slogan goes, and it will die in Chile. This slogan seems to have come true with the ending of the Pinochet era.

But Sepúlveda is not sure about what comes next. “Everybody knows everything is uncertain,” she says frankly. “That is an opportunity to begin a new era.” The first decade and a half after Pinochet’s removal seemed bleak. Then, in 2006, a cycle of student protests rattled the country. These were led by young students, whose black-and-white school uniforms gave the protests a name—La Revolución Pingüina, or the Penguin Revolution. The young people demanded a new national curriculum as well as a reduction in public transportation fares and examination fees. When the government failed to deliver on these demands, a second cycle of protests mobilized in 2011-2013 with the same demands. Their leaders—including Camila Vallejo of the Communist Party and Giorgio Jackson of the Democratic Revolution—are now important figures of the left project in Chile. Once more in 2011-2013, the students were met with a stalemate, with the Constitution of 1980 being a barricade to their ambitions.

A third cycle of student protests began in early October 2019 following a hike in public transportation fares. The “penguins” led a campaign of fare evasion (under the slogan ¡Evade!). The protesters were met with a harsh repression campaign including violent clashes with the Chilean police. On October 18, the right-wing government, led by President Sebastián Piñera, issued a two-week state of emergency, authorizing the deployment of the Chilean Army against the protests, which only intensified. The violence used to suppress the protests resulted in the emergence of the slogan Piñera Asesino (Piñera the assassin) among protesters and their supporters.

Sepúlveda says of the 2019 mobilization that the breaking point on “October 18 moved the axis [of Chilean politics] further to the left.” Although the third cycle of protests had initially been a response to the transportation fare hike, the government’s reaction made it clear that the country faced much deeper underlying structural issues including, Sepúlveda says, “overwhelming inequality” and corruption. Sepúlveda, a lawyer who co-founded Chile’s association of feminist lawyers (ABOFEM) in 2018 and was its executive director during the 2019 protests, saw at the time that changing these structural issues could not be done from within the existing system; at the very least, the country needed a new constitution and a more progressive government. And so the protest expanded to include the demands of the feminist movement and the Indigenous movement, pushing for broader economic and social changes to address the inequality at the root.

Two Sites of Struggle

The search for the new era in Chile has two important avenues: the writing of the new constitution, which is what the 155 members of the Constitutional Convention are doing, and the presidential election to be held on November 21, 2021.

The convention began work in July 2021 by voting in its president (Elisa Loncón) and vice president (Jaime Bassa); both Loncón and Bassa lean toward the left. So far, the convention has drafted its rules, which—Sepúlveda says—is more than half the work. Discussion about substantial issues began on the symbolic date of October 18, 2021, two years after the turning point of the third wave of protests. Sepúlveda is confident that agreements on social rights—for gender parity and for the environment—will happen. She says that “social changes of [these kinds] are inevitable”—even if there will be a fight from the calcified right wing to block them. The real dispute will take place around a new development model. Will the new constitution roll back the structural austerity program that the post-Pinochet period so far has not been able to undermine?

On October 14, I spent a few hours with Giorgio Jackson, one of the student leaders from the 2011-2013 protests, who is a member of Chile’s Chamber of Deputies and a close adviser to Gabriel Boric’s presidential campaign. Boric, a leader of the Frente Amplio (Broad Front) party and the Apruebo Dignidad (Approve Dignity) coalition, is the candidate of the left in the November presidential election. Jackson shared some elements of a new development model that a Boric administration would adopt, if Boric wins the presidential election. In the first year of the next presidency, the budget of Piñera would have to be followed, so only small changes can be made. From the start, Jackson told me, a priority for the Boric government would be to push to reform the health and pension systems, two arenas of great distress for Chile’s people. Building robust public health and pensions systems will require funds, which a left government would raise from royalties on copper extraction and by ensuring better prevention of tax evasion. Such an agenda would deepen a debate over a new development model, Jackson said.

But, Jackson admits, people are uneasy with the idea of having public provision of goods. Daniel Jadue, the communist leader and mayor of Recoleta, agrees that the real dispute will be over economic and social policy. He tells me that the answers to Chile’s problems could emerge from close cooperation between municipalities. If people have a positive experience with local public provision of social goods, it might change the general sentiment of suspicion surrounding the expansion of public health and pensions systems in the country, he noted. The work of mayors such as Jadue is crucial to the overall project for the construction of a new development model.

As far as the upcoming presidential election is concerned, Piñera cannot run for reelection, and besides, he is deeply unpopular. The open fascist in the race—José Antonio Kast—is popular, but he is being challenged by the center-right’s candidate Yasna Provoste for the right-wing votes. Meanwhile, capital has begun to flee Chile in anticipation of the introduction of a more progressive constitution and the potential ushering in of a Boric presidency after the November election.

In one corner of Bárbara Sepúlveda’s living room sits her collection of Rubik’s Cubes of varying difficulty. She’s a whiz at them. Sepúlveda picks one up and toys with it. “This one is easier to do,” she says of a cube that seems impossible to untangle. The cube is a great symbol for Chile. If people like Sepúlveda, Jadue, Jackson, and Boric can find a way to solve the puzzles before them, then perhaps there will be greater clarity on Chile’s new era.

Biden administration backs state of siege in Ecuador

Bill Van Auken

US Secretary of State Antony Blinken flew to Ecuador on October 19 to declare US support for the country’s beleaguered President Guillermo Lasso, one day after he imposed a state of emergency (estado de excepción), suspending constitutional rights and deploying heavily armed troops in the streets.

Appearing before the media alongside Ecuador’s foreign minister, Mauricio Montalvo, Blinken declared, “In extraordinary moments, democracies require exceptional measures.”

US Secretary of State Antony Blinken and President Guillermo Lasso at presidential palace in Quito. (Credit: @EmbajadaEcuUSA)

Referring directly to Lasso’s imposition of dictatorial measures, Blinken continued, “As I discussed with President Lasso, we understand that, support that, but know as well that these measures, of course, need to be taken pursuant to the constitution.”

Lasso announced the state of emergency on October 18, seizing as his pretext an incident in the coastal city of Guayaquil in which a 13-year-old boy was killed in the crossfire between police and gunmen.

While the Ecuadorian president claimed that his state of siege measures are aimed at suppressing crime and drug traffickers, his order allows the suspension of basic democratic rights, including freedom of movement, assembly and association.

They have been imposed under conditions in which his presidency has been plunged into deep political crisis.

Troops on the streets of Ecuador, October 20, 2021(Credit: @FFAAECUADOR)

Lasso, a right-wing multimillionaire ex-Coca Cola executive and banker, was elected president last April in what was seen as an upset victory in a second-round election. His path to power was paved by the failure of the so-called “Pink Tide” government of Rafael Correa, whose limited reforms were eroded with a fall in oil prices. Correa’s hand-picked successor, Lenin Moreno, initiated a sharp turn to the right, ingratiating his administration with US imperialism by expelling WikiLeaks founder Julian Assange from Ecuador’s embassy in London, turning him over to the British government to face extradition to the US on espionage charges.

Lasso’s party, however, holds only 12 of the 137 seats in the National Assembly, and, even with backing from other rightist parties, he has been unable to force through his free-market agenda.

He has sought to impose an IMF-dictated structural adjustment program that includes sharp cuts in social spending, a “labor reform” that would strip workers of job protections, tax cuts for capitalist investors and the lifting of restrictions on mining, oil drilling and foreign control over key sectors of Ecuador’s economy.

Lasso has seen his approval ratings plummet by more than 20 percent since the publication of the so-called Pandora Papers, which exposed his investments in at least 10 offshore shell companies located in Panama, South Dakota and Delaware.

Like other heads of state and top officials exposed by the Pandora Papers, Lasso insisted that his offshore holdings were all perfectly legal. The National Assembly, however, has launched an investigation, declaring that the right-wing president “may have breached” a statute that “prohibits candidates and public officials from having their resources or assets in tax havens.” Lasso has boycotted the probe, declaring himself the victim of a foreign conspiracy.

While Lasso was elected on promises that his policies would create jobs and raise living standards, some 6 million Ecuadorians—more than a third of the population—are living below a miserably low poverty line, with two and a half million barely surviving under conditions of extreme poverty. According to the government’s own figures, just three out of 10 Ecuadorians have formal employment, with the rest either unemployed, under-employed or eking out a living in the so-called informal sector.

His administration has also been rocked by violent prison revolts that have resulted in the deaths of about 230 inmates.

With growing popular opposition, the declaration of the state of emergency, imposed in the name of combating serious “internal unrest,” is a warning that Lasso intends to rely on naked force to remain in power and impose his right-wing agenda.

Lasso addressed a rally Wednesday, outside the Carondelet presidential palace, comprised of public employees, right-wing supporters and demonstrators who were paid by business interests. He denounced unions and indigenous organizations calling for an October 26 strike against his government’s policies as “conspirators” and “coup” supporters, vowing that he would defend Quito against them.

“With the support of the glorious Armed forces together with the National Police, we will give protection to the entire territory of Ecuador and the entire Ecuadorian family,” Lasso declared.

Earlier, he announced that his government is forming a legal defense body to defend any cop or soldier charged in connection with the state of emergency. “The law should intimidate the criminal, but not the police,” he said. He promised to pardon any member of the repressive forces charged with a crime, effectively granting them absolute impunity to carry out acts of violent and deadly repression against the population.

It is under these conditions that Secretary of State Blinken traveled to Quito to praise Lasso for “the strong pro-democracy voice that you have shared with the Ecuadorian people, but also with the people of our hemisphere.”

These statements, delivered on the first trip to Latin America by the Biden administration’s secretary of state, could be described as the “Blinken Doctrine.” Washington will support police state measures and dictatorship wherever they are required in the hemisphere to protect capitalist interests, sanctifying them as a defense of “democracy.”

Blinken’s second leg of his Latin American tour took him to Colombia, where he urged far-right President Iván Duque to “prevent rights abuses,” after his security forces gunned down dozens of protesters in nationwide demonstrations sparked by the government’s regressive tax policies. He proclaimed Duque “a very valued friend of the United States.”

In Bogota, Blinken met with foreign ministers from Chile, Brazil, Canada, Costa Rica, Honduras, Peru, Ecuador, Guatemala and El Salvador, among others, to secure collaboration in suppressing migration to the United States.

A central aim of the US Secretary of State’s first Latin American tour was also to shore up the support of the region’s right-wing regimes against the growing economic weight of China, which has displaced the United States as the region’s top trading partner, if Mexico is excluded from the equation.

Tram and subway workers strike in Izmir, Turkey’s third-largest city

Ulaş Ateşçi

Amid a sharp upsurge in the class struggle, 627 subway and tram workers at Metro AŞ, owned by the Izmir Metropolitan Municipality, are to go on strike Friday. A possible shutdown of the subway, used by approximately 2 million people per day, is expected to lock traffic in Izmir, Turkey’s third largest city.

Contract talks between the Social Democrat Public Employers Union (Sodem-Sen), representing the municipality, and the Demiryol-İş union, affiliated to the Türk-İş confederation, have continued since April. Declaring that no agreement could be reached on nine of 69 items, the union announced a strike on 1 October.

The impending subway strike in Izmir comes amid a surge of class struggle in Turkey and internationally, as the pandemic intensifies and workers’ living standards suffer unprecedented declines. Over 10,000 US workers are on strike at farm and construction equipment maker John Deere, and approximately 170,000 metal workers in South Africa have been striking for two weeks. In Brazil, 7,600 General Motors autoworkers voted overwhelmingly to continue their strike, defying the union and courts.

In Turkey, approximately 120 workers at the Mitsuba Otomotiv factory in Gebze, Kocaeli, stopped production and occupied the factory on October 9 after workers were dismissed for joining the Birleşik Metal-İş union.

Yesterday morning, hundreds of petrochemical workers at Petkim, one of Turkey’s largest industrial enterprises, started work two hours late to protest company policies that would endanger workers’ health. The workers marched in the refinery.

While workers from the Belediye-İş union (Türk-İş) in Bakırköy Municipality in Istanbul are preparing to go on strike on Monday, more than 1,000 workers at GAMAK Motor, also located in Istanbul, laid down tools for half an hour after management rejected to approve the proposed contract. If no agreement is reached within two months, GAMAK workers will go on strike.

As contract negotiations began for approximately 150,000 workers in the metal industry, production shutdowns in auto factories are increasing due to a global microchip supply crisis, leading to attacks on workers’ wages by management. The Renault factory in Bursa has announced that it will operate for a week and then stop production for a week, paying only 76 percent of workers’ wages.

Doctors of the Turkish Medical Association (TTB) are also organizing actions to protest the government’s criminal response to the pandemic and worsening working conditions.

These struggles show that the fight against the pandemic and the class struggle are closely linked, underlining the urgency of uniting them on a global scale by forming independent working-class committees, the International Workers Alliance of Rank-and-File Committees (IWA-RFC).

Over 30,000 people are officially infected with COVID-19 and more than 200 people die per day in Turkey, while the economic and social crisis, accelerated by the pandemic, continues to deepen.

While 518,000 people applied for unemployment insurance from July to September 2021, the grossly-understated annual inflation rate, as calculated by the official Turkish Statistical Institute (TÜIK), rose to 19.58 percent in September 2021. However, real annual inflation in September was 44.7 percent, according to a study by the independent Inflation Research Group. Millions of working people and their families can barely make ends meet.

According to research by Türk-İş, in September, “monthly food expenditure required for a family of four to have a healthy, balanced and adequate diet (the ‘hunger limit’)” rose to 3,049 Turkish liras. This sum “together with food expenditure, expenditures for clothing, housing (rent, electricity, water, fuel), transportation, education, health and the total amount of other mandatory monthly other needs (the ‘poverty line’)” has risen to 9,931 TL.

As the minimum wage is 2,825 TL (US$305; it corresponded US$385 just in May), most workers are employed for on the minimum wage or slightly above it. This also applies to subway and tram workers in Izmir. In August, a 5-year mechanic received only 3,175 TL, while a 21-year station operator got 3,800 TL, including benefits.

The subway workers, who for decades have suffered from union-sanctioned losses and had to work uninterruptedly during the pandemic, would no longer accept a new sellout contract and conditions of increasing misery. They forced the union to agree to a strike decision that it clearly did not want.

Demiryol-İş Union Izmir Branch President Hamdullah Giral made this clear on October 12, saying: “An agreement was reached on 60 items of our draft contract, which consists of 69 articles, and despite all our good faith efforts on the remaining 9 items, an agreement could not be reached.” He added, “We said give us our due to our employer, who forced us to take a strike decision on September 28, 2021 due to their non-agreement attitude, they did not hear!”

On October 15, the union repeated its anti-strike stance: “As the Demiryol-İş Union, we used all the legal time limits to reach an agreement at the table through peaceful means and in a conciliatory manner in the ongoing contract negotiations.”

The union tried to confuse workers by distinguishing between the management of Metro AŞ, which belongs to the municipality, and Tunç Soyer, the Mayor of the Metropolitan Municipality, whom it calls “worker-friendly.” Giray, who once again met with the company on Tuesday to prevent a strike, stated: “We reiterate our call for reconciliation. We do not want to make victims of our workers, the municipality or the people of İzmir. We demand a solution from our toiler president.”

In reality, this distinction is entirely artificial. Soyer, who was elected as mayor from the Republican People's Party (CHP) in the 2019 local elections with the support of various pseudo-left parties, has been chairman of Sodem-Sen since 2014.

The union’s statements are an admission of their complicity in condemning the workers to poverty wages. While union officials announced that “The subway workers, who have not gotten an honest wage for 21 years, do not want to be poor anymore,” they are covering up the fact that the union itself prevented strikes and signed eight sellout contracts in the last 21 years.

Demiryol-İş, which has approximately 21,000 members, is a significant example in Turkey of the international process of transformation of unions into an extension of the state and management. Overseeing the privatization of state railways and the erosion of railway workers’ wages and benefits, the union generates tens of millions of lira by selling properties previously purchased with workers’ dues.

The way unions help companies divide workers and stymie their collective strength is exemplified by the case of Izmir railway workers. Demiryol-İş signed a separate contract six months ago for the workers of the Izmir municipality’s İZBAN company, which operates the city’s suburban train.

When approximately 350 İZBAN workers struck in December 2018, the union isolated the workers, refusing to mobilize their members in other companies. The 2018 strike also revealed that the CHP was just as hostile to the workers as President Recep Tayyip Erdoğan’s Justice and Development Party (AKP) government. The CHP attacked the workers from the beginning of the strike, inciting Izmir’s population against them and accused the subway workers of serving the government, only to welcome Erdoğan’s presidential decree ending the strike a month later.

UK government refuses appeals for mitigations as COVID surge threatens to swamp hospitals

Robert Stevens

The UK’s Conservative government is refusing to make any change to its murderous policy of “learning to live with the virus”, amid warnings from National Health Service (NHS) leaders that a Plan B to stop the escalating spread of COVID must be put in place.

To avoid 'stumbling into a winter crisis', the NHS Confederation said that at least mandatory face coverings in crowded and enclosed spaces should be implemented. The body demanded that a Plan C be developed with tougher restrictions if those measures are insufficient, because hospitals already face being overwhelmed.

COVID-19 cases and deaths are surging in Britain, fueled by the reopening of schools in August and September.

Daily case numbers in Britain have averaged 45,000 over the last seven days and on Monday and Wednesday, hit 49,000—the highest level since July.

Britain's Health Secretary Sajid Javid speaks during a media briefing in Downing Street, London, Wednesday, Oct. 20, 2021. The U.K. recorded almost 50,000 new infections in a single day this week, and cases have risen 16% from a week earlier. Matthew Taylor, chief executive of health care umbrella group the NHS Confederation, said the health system risks being overwhelmed unless measures are introduced now. (Toby Melville/Pool Photo via AP)

More than 300,000 new cases (311,071) were recorded in the week to October 19—an increase of nearly 20 percent. Only the United States (546,319), with a population five times that of Britain had a higher number of cases over the same seven-day period. COVID cases in the US were 1,638 per million of the population and in Britain were 4,551.

COVID hospitalisations and deaths have also sharply increased, despite the suppressive impact of vaccinations. Monday saw 7,749 Covid patients in UK hospitals, a weekly rise of 11 percent, with 868 people per day taken into already overcrowded and overwhelmed NHS units. The 908 deaths recorded over the last week is a 15 percent increase and the 223 deaths Tuesday were the highest since March. Deaths were higher than on the same date in 2020, before the mass vaccination of most of the population was rolled out. Another 179 people were reported dead from COVID Wednesday.

UK cases now account for the bulk of those throughout the European continent. On Monday, the UK recorded more daily cases than France, Germany, Italy and Spain combined. Over the last week, Britain recorded almost 10 times the number of cases as France, despite both having similar sized populations. Compared to Germany, whose population is substantially larger than Britain’s, the UK recorded almost five times more cases.

A major factor in this case rate disparity is that the UK’s vaccination rollout, after being ahead of other countries in its initial phase, has virtually ground to a halt. Almost a third of Britain’s population is not vaccinated, with just 68 percent having had two jabs. Britain now stands at 13th place in Europe for full vaccinations and 22nd in the world.

Prime Minister Boris Johnson’s government refused to intervene to vaccinate children over the summer, allowing schools to become the major source of COVID infections today. Under 30 percent of children aged 12 to 17 have been vaccinated with a single dose, compared with over 60 percent in Italy, 70 percent in France and above 80 percent in Spain.

In addition, some limited mitigation measures are still in place in countries across Europe, whereas the UK abandoned all efforts to stem the pandemic on July 19, dubbed by the political criminal Johnson as “Freedom Day.” More than one in six of all UK cases have happened since then.

The Tories will not tolerate any impediment to the profit drive of the major corporations, no matter how many become sick or die.

The first response of government to the appeal for the most limited mitigation measures was for Business Secretary Kwasi Kwarteng to insist yesterday, “I don’t want to reverse back to a situation where we have lockdowns.”

Johnson knew very well that tens of thousands were being condemned to death when he first proclaimed Freedom Day. It was leaked that he had privately accepted that there would be at least a further 30,000 deaths in the UK over the next year. To quantify when “Plan B” restriction such as public mask wearing and urging people to work at home where possible might be introduced, it was suggested that a “sustained rate of death of around a 1,000 a week for two or three weeks”—50,000 a year, would “lead to discussion on restrictions being reimposed.”

With deaths already approaching a 1,000 a week, such a “discussion” has been rejected out of hand. Health Secretary Sajid Javid announced at a Downing Street press conference yesterday that “strengthening our vaccination programme” would be a “our primary line of defence” as “we learn to live with the virus.” This was even as he warned that cases could “go as high as 100,000 a day” in the weeks ahead. If the death rate remains unchanged, this would translate to around 2,000 deaths per week. But with winter and the flus season approaching this would be an optimistic prediction.

The fact that the surge in cases and deaths is being caused primarily by the reopening of schools underscores the criminality of the government’s response.

According to the Office for National Statistics, on October 14, 209,000 children were absent from school for COVID related reasons, including 111,000 confirmed cases. To indicate the explosive spread of the pandemic, the Leicestershire Live online news site reported Wednesday, “The number of Covid-19 cases among school pupils in [the city of] Leicester and [county of] Leicestershire has rocketed and is now around 11 times higher than before the peak of the third wave in June.”

The herd immunity policy of the Tory government has so far resulted in over 8.5 million people being infected with COVID and over 163,000 deaths. Moreover, its allowing the virus to spread unchecked in a partially vaccinated population has now led to the emergence of a yet more contagious and therefore deadly mutation of the still dominant Delta variant that has done so much to escalate the pandemic.

Javid acknowledged in his press conference that that Delta Plus (AY.4.2) is spreading throughout Britain. The Daily Mail reported Wednesday, “In just over three months it had reached almost every part of England. More than 2,500 cases of the subtype were detected across the country last week, meaning it now makes up almost 10 percent of all infections.”

It noted, “Scientists say the strain—thought to be 10-15 percent more transmissible than its ancestor—likely first emerged in the UK because of the high number of infections here compared to other countries, which gives the virus more chance to mutate.”

This murderous agenda must be opposed by class conscious workers in alliance with concerned scientists. They can expect no help from the Labour Party or the trade unions in this fight. Sir Keir Starmer spent yesterday boasting of his record in prosecuting terrorists, in response to the murder of Tory MP Sir David Amess, but had nothing to say about the 160,000 deaths from COVID resulting from his own collusion with Johnson. The National Education Union managed a single tweet calling for masks to be worn in secondary schools. Former Labour leader Jeremy Corbyn could not even manage such a mealy-mouthed tweet of protest.