Sri Lankan government to impose drastic austerity measures

Saman Gunadasa

Sri Lankan Finance Minister Basil Rajapakse has made clear that his 2022 budget will be ruthless. “The people will not gain anything. Instead, we will be taking from them,” he told the media on November 1.

The recently appointed finance minister, who is the younger brother of President Gotabhaya Rajapakse, will present the budget to parliament on Friday.

On November 2, Treasury Secretary S.R. Attygala told a media briefing that the government wants to drastically cut the fiscal deficit to 4.5–5 percent of gross domestic product (GDP), down from last year’s 14.7 percent.

Sri Lankans lining up to buy cooking gas [Source: WSWS Media]

Slashing the budget deficit by two-thirds means that the government will abolish its remaining meagre subsidies to small farmers and the poor and impose higher taxes that will drive up the price of all essential items. Since early last year, the government has printed close to three-trillion rupees to bridge the budget gap, triggering a sharp 27 percent devaluation of the rupee.

In the lead up to Friday’s budget announcement, the government continues to remove limited price controls. On November 3, the Consumer Affairs Authority lifted price controls on 14 essential food items, including dhal, sugar, sprats, green gram, potatoes, large onions, canned fish, chickpeas, wheat flour, full cream milk powder, dried fish, coconut, chicken and maize.

Sri Lanka’s official year-on-year food inflation hit almost 13 percent last month.

The decision followed the removal of controls on other essential food items in September, including rice and flour, which led to 10 to 40 percent increases respectively, and an 80 percent rise in the cost of cooking gas.

On August 30, President Rajapakse suddenly imposed a national state of emergency under the pretext of stopping the hoarding of food stocks and guaranteeing an uninterrupted supply of essentials at controlled prices.

Rajapakse appointed a retired Army officer as the commissioner general of essential services to undertake the relevant measures. Last week, however, the government abolished this position, indicating there will be no more price controls nor “uninterrupted” supplies of essentials.

In another indication of Sri Lanka’s deepening economic crisis, the media reported last week that over 900 shipping containers of essential goods were being held at Colombo Port. This included 350 shipping containers of sugar, which is already in short supply in the market. Importers said they were unable to clear the goods because they had not been issued the necessary foreign currency due to US dollar shortages in Sri Lanka.

The scarcity of essentials, such as cooking gas, milk powder, sugar, and kerosene, has created immense difficulties for working class and poor families who have to wait in long queues for dwindling supplies or return home empty-handed. The shortages and the skyrocketing prices mean that hunger and starvation is rising across the country.

Last week government authorities issued a circular telling pensioners about a plan to deduct 400 to 600 rupees ($US2 to $US3) from their monthly pensions. The measure has been introduced under the pretext of expanding a pensioner insurance scheme. It is, however, the beginning of cuts in current pension expenditure which is regarded as a burden on the state coffers.

In early October, Finance Minister Rajapakse released his total budget expenditure estimates for 2022 which constitute a reduction of about 173 billion rupees on the current year. The cuts will mainly apply to health, provincial councils, samurdhi (a small welfare allowance for the poor), water supply, women and child development, rural housing and labour spending.

Desperate for foreign direct investment, Colombo is now offering even more generous concessions to multinational companies (MNCs). Finance Minister Rajapakse recently held a closed door meeting with the heads of various MNCs operating in Sri Lanka to discuss what they expect from the budget. Companies in attendance included A. Baur and Company, AIA Insurance, CEAT Lanka, Dole Lanka, INSEE Cement, Itochu of Japan, Huawei Technologies, Standard Chartered Bank, and Ernst & Young.

According to the limited media reports, the finance minister assured the MNCs that the government would maintain “consistency in fiscal policy,” i.e., retain a low tax regime. In fact, corporate tax rates in Sri Lanka were reduced in the last budget to between 14 and 24 percent, the lowest in South Asia. The MNCs submitted a shopping list of “recommendations,” including fast government approvals of land for growing export crops and reduced government intervention on pricing. Rajapakse assured the meeting that he would consider their “recommendations” and attempt to resolve them.

Sri Lanka’s economic crisis has been exacerbated by the pandemic with dramatic falls in exports and foreign remittances and a collapse of the tourist industry, leading to major foreign debt repayment problems for the government.

Late last month, Moody’s Investors Service further downgraded Sri Lanka’s credit rating, putting it in the same league as Ethiopia, Laos and the Republic of Congo. The agency said the government was too reliant on “piecemeal funding such as swap lines and bilateral loans” and, “in the context of very low foreign exchange reserves,” this posed “default risks.”

Sri Lanka’s foreign exchange reserves fell to $2 billion at the end of September, sufficient for only around 1.3 months of imports. The country, however, needs to pay 4 to 5 billion rupees annually in international debt servicing until 2025. Moody’s also predicts that Sri Lanka will have to borrow a staggering 25–27 percent of GDP per year in 2022 and 2023.

Sri Lanka’s Central Bank angrily rejected Moody’s assessment, declaring that the downgrading was “untimely” because the forthcoming budget would “set the tone for policy initiatives and structural reforms that could help alleviate the external challenges.”

These “policy initiatives and structural reforms,” are already underway as the government intensifies its moves to privatise the state-owned power and petroleum sectors and the ports, in line other “structural reforms” dictated by the International Monetary Fund. These reforms are aimed at driving up the price of fuel, electricity and other utilities so existing government subsidies to state-owned sectors can be withdrawn and the industries turned into profitable investments for international finance capital.

The government privatisation agenda is deeply unpopular and led to nationwide protests by electricity, petroleum and port workers on November 3. This Friday’s austerity budget will further intensify social tensions and force the working class into struggle against the Rajapakse regime.

Rise in US child COVID-19 cases foreshadows coming winter surge

Chase Lawrence

Across the globe, COVID-19 cases are continuing to rise as a result of the further relaxing of mitigation measures and the approach of winter in the Northern Hemisphere. In the US, the 14-day average in cases is now trending upwards after a brief decline. This includes children who have experienced the devastating impact from COVID-19 in 2021 due to the reopening of schools. The weekly American Association of Pediatrics (AAP) report released Monday found that for the first week since September 2 there was an increase in recorded childhood cases, as another 107,350 children officially tested positive for COVID-19, roughly 24 percent of all US cases recorded in the last week.

A teacher reaches her hand out to Pedro Garcia, 4, as he arrives for the first day of school at the Mosaic Pre-K Center in Queens, Monday, Sept. 21, 2020 in New York [Credit: AP Photo/Mark Lennihan]

The weekly child death toll continues to hover over 15 deaths per week. Mortality data in the AAP report shows 17 reported deaths this week in the following US states and territories: California (1), Colorado (1), Guam (1), Maryland (1), South Carolina (1), Tennessee (1), Texas (8), Virginia (1) and Washington (2). An online search for local or national news reports on these tragic deaths produces zero results.

For 13 straight weeks, the AAP has reported over 100,000 weekly new cases in children. Fourteen states reported that more than 12 out of every 100 children had contracted COVID-19, meaning that in a class of 25 children, three can be expected to have been infected with the virus. Significantly, a look at the regional data in the AAP report shows the biggest jump in infection rates has been seen in the West, Northeast and Midwest regions while the South has continued to decline.

Data from the AAP report showing official child COVID-19 cases in each region of the US

Recent data from the US Centers for Disease Control and Prevention (CDC) mimics this regional trend, with the centers of viral transmission switching from the South and Southeast regions on August 12 to the West and Northwest as of November 7. On Sunday, a tweet by Eric Topol, cardiologist and professor of molecular medicine in Southern California, went viral pointing out that the maps are “almost opposites.”

The AAP data offers only a glimpse into the monumental catastrophe that has been inflicted on children, with actual cases, hospitalizations and deaths far higher than the official figures.

For instance, Texas reports age distribution of cases for only 3 percent of the population on its state COVID-19 dashboard, resulting in a significant undercount of child cases on the AAP report. However, the state does report positive COVID-19 cases found among children in schools and data from the Texas Department of State Health Services which shows that at least 359,985 cases have been reported among children in schools since the start of the pandemic. Given the overall lack of testing in Texas schools, cases are undoubtedly much higher.

As cases have accelerated, safety measures such as mask wearing and testing are being repudiated by both Democratic and Republican state governments well before the majority of children are vaccinated. In Florida, Democrats capitulated to the state’s fascistic Republican Governor Ron DeSantis by lifting mask mandates in the state’s three largest school districts—Orange County, Broward County and Miami-Dade County—which serve a combined roughly 830,000 students.

In New York City, the largest school district in the US with roughly 1.1 million students, recently elected Democratic Mayor Eric Adams has promised to rescind mask mandates in city public schools once he becomes mayor in January. Los Angeles Unified School District, the second largest school district with over 600,000 students, plans to end their testing program for students by the end of the year.

According to a school opening tracker by Burbio, 68 percent of the top 500 school districts have mask policies in place. However, a recent investigative report by NBC News noted that based on Burbio’s data, more than a dozen of the 200 largest school districts in the country lifted mask mandates in recent weeks.

With the winter months swiftly approaching and another deadly surge clearly on the horizon, plans by major school districts to lift all restrictions well before most children are vaccinated will knowingly result in the mass infection, long-term illness and deaths of countless children.

Over the course of the pandemic, an average of 1,200 deaths has occurred every day. The ruling class has sought to ignore and normalize death, with horrific consequences. The Astroworld festival disaster, where eight people were crushed to death and hundreds injured in a crowd surge at a concert in Houston, Texas, typifies this process. Amid the raging pandemic, festival grounds were allowed to be severely overcrowded with no intervention from the police or the operators of the festival grounds. The whole arrangement echoes the ruling class policy of mass death: a mass reopening so that business can profit, without any regard for human life. The same state where this tragedy took place has experienced a horrific 109 child deaths from COVID-19, by far the highest number of any state.

In the face of escalating cases and mass deaths, the US has rescinded all restrictions on international flights and land travel that had been in place for 20 months, in advance of a surge in expected travel to the country. Delta Airlines is expecting a 50 percent increase in inbound flights in the coming weeks.

In countries across the world, remaining safety measures are being repudiated, with the disastrous model of the United States being used as an example elsewhere. According to the World Health Organization (WHO), Europe has experienced a more than 55 percent increase in cases over the past month, with record number of cases in Russia and Germany. Despite this catastrophic surge, Germany has declared that the pandemic is over and that most remaining protective measures will be eliminated on November 25. In Eastern Europe, cases are surging in Slovenia, Estonia and Georgia.

The WHO has warned of 500,000 new COVID-19 deaths in Europe and the former Soviet republics by February, beyond the 1.4 million who have already died. Last week, WHO Director for Europe Hans Kluge urged health authorities to act immediately to halt the spread of the virus and prevent another deadly winter, stating, “We must change our tactics from reacting to surges of COVID-19 to preventing them from happening in the first place.”

Countries in Asia, including Singapore and Vietnam, have abandoned their elimination strategy and experienced a surge in cases. In Japan, as cases have declined but not reached zero, government officials are loosening restrictions, with quarantine for business travel being reduced from 10 days to three.

The looming winter surge threatens to bring mass death and infections the world over, yet it is entirely preventable. Efforts being made by governments to lift any remaining mitigation measures accelerate the very real possibility for more virulent and vaccine-resistant variants to develop and spread.

As was explained in the October 24 webinar held by the World Socialist Web Site and International Workers Alliance of Rank-and-File Committees (IWA-RFC) “How to end the pandemic,” the only way to stop the pandemic is through a global elimination strategy. This requires the temporary closure of schools and nonessential businesses for a period of a few months, coupled with a massive investment in testing, quarantining, and contact tracing, a globally coordinated mass vaccination program, and full economic support to families and employees of businesses closed for health reasons.

This program must be taken up by the working class, the only social force able to implement the necessary health measures which are objectively in their interests, in opposition to the financial elite who have seen their stock values increase to obscene levels as millions have perished from COVID-19. The global ruling elite is diametrically opposed to any comprehensive program aimed at eliminating COVID-19 as it impinges on their profits and threatens a collapse of the increasingly fragile stock market.

A program to end the pandemic requires mass education of the population, to arm the working class with the real science of how the virus spreads and a revolutionary socialist perspective to explain the underlying economic forces that are dictating policies worldwide.

COVID-19 infections continue to explode in Germany

Marianne Arens

Hardly any other country is currently recording such a rapid rise of COVID-19 infections than Germany. On Monday, the Robert Koch Institute (RKI) reported a record seven-day incidence rate of 201 infections per 100,000 inhabitants, which by far exceeds the previous high of 198 on December 22, 2020. On Tuesday it rose to 214 infections per 100,000 inhabitants. There were 20,800 confirmed COVID-19 infections on Monday, followed by 26,622 on Tuesday.

A medical worker carries out a Corona test in a shopping mall in Frankfurt, Germany, on November 8, 2021. (AP Photo/Michael Probst)

The highest seven-day incidence rates among Germany’s 16 states are in Saxony (491), Thuringia (427) and Bavaria (316). Districts like Sächsische Schweiz/Ost-Erzgebirge are already approaching an incidence rate of over 1,000, with the current rate standing at 924 infections per 100,000 residents over the past seven days. This means that almost one in 100 residents there was infected with COVID-19 in the last week. Only two federal states, Schleswig-Holstein (75) and Bremen (89) have incidence rates below the mark of 100 infections per 100,000 inhabitants.

Since the government scrapped the incidence rate of 50 as the benchmark for the reintroduction of stricter measures in early September, the number of infections has risen steadily. But cases have truly exploded over the past three weeks. The graphs expressing increased infection rates all point in only one direction: steeply upwards. On average, over 24,000 people are being infected every day, a figure that was last reached at Christmas time last year, shortly before the pandemic claimed its highest daily death tolls.

A quarter of a billion people worldwide have contracted COVID-19, and officially over 5 million, unofficially up to 17 million, have died. In Germany, according to the Worldometers website, the number of officially registered deaths is 97,073. At the current rate of fatalities, this figure will soon pass 100,000.

Many intensive care units are already overcrowded again. At the beginning of the week, 2,532 intensive care patients were counted, and 1,280 patients are currently on ventilators. The scientific director of the Divi intensive care register, Prof. Christian Karagiannidis, warned on Monday on WDR public television that the intensive care units nationwide were approaching 90 percent capacity.

In North Rhine-Westphalia (NRW), the situation is currently worrying, as the director of care at the Münster University Hospital, Thomas van den Hooven, reported on Monday. He remarked that he views the next few weeks with concern. There are currently only 640 free intensive care unit beds in NRW that could be used for COVID-19 patients. Health care workers are tired and at the limits of their capacities, he added.

Like last year, retirement homes are once again becoming death traps. The RKI reported 135 active outbreaks in nursing and elderly care homes in the last week alone.

Outbreaks in workplaces are also increasing, although many corporations and companies systematically suppress all information about them, and the media largely ignores the issue.

A fire department magazine reported on an example of such an outbreak. At the Hamburg fire station in Stellingen last Tuesday morning, before the start of the shift, a routine round of rapid tests came back negative for all colleagues. During the day, however, the entire team was ordered to take a PCR test because a colleague reported a suspected case in his family. By the evening it was announced that no fewer than 12 out of 31 men had tested positive.

Twelve construction workers also tested positive on a construction site in Sylt. Numerous outbreaks have likely occurred in the last few weeks in several slaughterhouses in Lower Saxony.

In the district of Cloppenburg, the incidence rate of 200 infections per 100,000 people was exceeded by the end of October. In the district with the highest incidence rates in Lower Saxony, the hospitals are overloaded. Without giving precise details, the district administration reports that “a particularly large number of Eastern European workers are infected,” for example “from slaughterhouses in Garrel, Essen and Emstek, but also from vegetable farms.” The politicians responsible have apparently learned nothing from the massive outbreaks among meatpacking and agricultural workers last summer.

Children and young people are particularly affected everywhere. The number of infections among these groups, which are particularly worthy of protection, are rising rapidly.

News4Teachers reported that one of the most dangerous COVID-19 hotspots is the Elbe-Elster district in Brandenburg, which has a rate of infection of 615 per 100,000 people. The incidence among 5- to 14-year-old children there is an incredible 2,421. In other words, almost 1 in 40 children living in the district were infected over the past week. The health department in question, to which over 100 new COVID-19 cases are reported every day, has stopped tracking the contacts of those who test positive. Despite all this, schools and day care centers remain open.

Outbreaks in schools have driven up the infection rate in Brandenburg. It has now reached 227 infections per 100,000 residents in the past seven days. Among the teachers in Brandenburg, 124 were infected with COVID-19, more than twice as many as in the previous week (56).

Politicians from every party are determined to prevent a new lockdown at any cost. The “epidemic state of emergency of national scope” will expire on November 25. Rapid tests, which were previously available free of charge to the public, were discontinued last month, and most mask mandates in schools have been abolished.

Leading politicians from the so-called “traffic light” coalition, the Social Democrats, Free Democrats and Greens, which appear set to form the new federal government, are determined to continue the murderous COVID-19 policy of the outgoing grand coalition. They have vehemently ruled out consistent public health measures and lockdowns. On the Tagesschau on public broadcaster ARD, Katrin Göring-Eckardt (Greens) said on Monday, “You will not legally be able to have a complete lockdown with so many people who have been vaccinated.”

For the incoming government, vaccination remains practically the only countermeasure against the pandemic. This is criminal for several reasons. Firstly, the Delta variant, which now accounts for over 99 percent of infections, cannot be controlled by vaccines alone. Delta is about twice as contagious as the so-called “wild strain” of COVID-19. Second, due to the low vaccination rate, just 67 percent of the entire population, nearly 30 million people, including all children under the age of 12, are virtually without any protection against the virus. And third, a strategy that relies exclusively on vaccination while allowing the virus to run rampant creates the conditions for new, even more contagious virus mutations.

Germany’s federal and state governments are pursuing a deliberate policy of mass infection that places the protection of profits before human lives and endangers the health and lives of hundreds of thousands of people. Even the most elementary measures to protect the population have been dismantled with the cynical argument that the authorities are overwhelmed.

For example, the state of Baden-Württemberg has stopped tracking COVID-19 cases altogether. The Ärzteblatt reported on November 5, “In view of the skyrocketing number of COVID-19 cases in Baden-Württemberg, health authorities will no longer call most infected people and their contact persons directly in the future. The Ministry of Health announced today that an infected person would have to take care of this themselves. The so-called ‘individual case management’ will be discontinued in the entire southwest to relieve the authorities.”

Under these conditions, it is the task of the working class to seize the initiative and enforce the measures that are scientifically necessary to eliminate COVID-19. These include strict lockdown measures—above all, the closure of schools and universities and nonessential production with full compensation—combined with mass vaccinations, contact tracing and the isolation of infected people.

Brutal police killing of 18 year old Roma youth sparks protests in Greece

John Vassilopoulos

More details have emerged about the horrific police killing of an 18 year-old Roma youth in the Greek capital, Athens, in the early hours of October 23. The killing took place in the Perama neighbourhood, 16 kilometres west of the centre of Athens, following a 30 minute car chase.

The victim, Nikos Sambanis, was from the Roma settlement in Sofos, an area in the Aspropyrgos suburb of Athens, 19 kilometres north-west of the city centre. He leaves behind a pregnant wife and two small children.

According to reports, police fired a total of 36 bullets into the car Nikos was in. The sounds of the police’s sirens followed by the barrage of shots were captured by a local resident in a video uploaded on Greek daily’s Kathimerini YouTube channel the following day. A second passenger, a 16 year-old boy, was injured by the gunfire and hospitalised. Also in the car was a 14 year-old boy, reportedly the driver of the car, who fled the scene. All of them were unarmed.

The post-mortem report revealed that Nikos received two bullet wounds, one in the stomach and one fatally in his chest. He died instantly.

Protests broke out following the police murder in and around Athens, as well as in the cities of Corinth and Patras, with groups of Roma blocking highways. A main protest was held in Athens attended by around 1,000 people on October 25, which was viciously attacked by riot police using stun grenades and tear gas. Footage of the attack by the riot police can be viewed here .

Riot police attacking October 25 Athens protest against the Perama police killing (Credit: still from video from kwstasarvaniths Instagram account)

The initial police report stated that the chase was initiated by members of the DIAS motorcycle police squad in the Ayios Ioannis Rentis neighbourhood, 8 kilometres west of Athens city centre, because they suspected the vehicle had been stolen. The report claimed that they had acted in self-defence after the car allegedly rammed into police motorcycles, injuring seven of the officers.

By the next morning the official version of the events was already unravelling. In another video shot by a resident and uploaded on the Kathimerini YouTube channel, one of the police officers can be clearly heard saying that none of them were injured. This led to the seven police officers being taken into custody at the Central Police Headquarters in Athens (GADA).

Leaks have confirmed that the DIAS squad had been told to abort the pursuit partway through the chase. The bulk of the police briefings, however, continue demonising the three youths, and are parroted uncritically by sections of the media.

Over the next days, stories emerged that the dead youth was a wanted criminal. As it turned out, Nikos’ criminal record was clean while all claims of a criminal past centred on an accusation that he stole a moped when he was 14.

To bolster police claims of self-defence, media reports also claimed that Nikos was the driver of the car, even though it later emerged that he was seated in the back seat. Scores of media reports also claimed that Nikos’ was 20 years-old, two years older than he really was. Thanassis Kambayiannis, the lawyer representing the Sambanis family, said this was the police’s way of making the shooting appear more “palatable” by presenting the dead youth as a fully-fledged adult. It was meant to divert from the fact that the other youths in the car were also minors.

There are an estimated 350,000 Roma in Greece. One of the country’s most oppressed minorities, they have faced chronic social exclusion as well as historic prejudice from the Greek state. Α tweet by Spanish journalist Hibai Arbide Aza, who recently participated in an investigative report on the lives of Greek Roma, noted that only 16 percent of Roma in Greece make it to 75 years of age, compared with 51 percent of Roma in other European countries.

On October 29, a reporting team from newsbeast.gr visited the settlement in Sofos the dead youth was from. The team wrote, “The picture is brutal, the roads non-existent, while most shacks are made from aluminium sheets, two beams and plastic canvas—ready to fall down at the first sign of wind.”

Speaking to the reporters, the dead youth’s father, Yiannis Sambanis said, “We are around 300 people living here. We don’t have electricity or water. We are able to get a bit of light through cables that we connect to batteries… We carry water using containers from a tap downhill. They have occasionally come with buses to test us for COVID, but for the vaccine they have never come. No-one has told us what we need to do. We want to be vaccinated.”

Sambanis senior told the reporters that he works as a rag-and-bone man and is routinely harassed by the police for his papers, telling him he doesn’t have a legal trading license.

In an unprecedented move, senior government figures intervened to lend their support to the seven police officers. On the same day as the seven were taken into custody, October 24, the New Democracy government’s Citizen Protection Minister Takis Theodorikakos visited them at GADA where they were being held. In a statement the minister said, “My move was of an exclusively human and symbolic character, to psychologically support young people who are serving in the Greek Police.”

The day after, October 25, Development Minister Adonis Georgiadis appeared on Skai TV’s morning news show explicitly justifying the actions of the police officers, stating, “a car being rammed is considered a deadly weapon, hence the way the DIAS squad handled the situation was entirely justified.”

Police claims that they acted in self-defence were demolished when the 14 year-old driver of the car came forward and appeared in a court hearing on October 27. Outside the court he told journalists, “We were scared in case they were going to kill us, which is why we didn’t stop in the first place. As soon as we stopped we put our hands up and they shot at us. They shot my friend and then I crashed the vehicle into their bikes, but there was no-one on them.”

On the same day as the young Roma appeared in court, all seven police officers were released without any restrictions until a trial date is set. They were charged with voluntary manslaughter, which all denied. Pleased that his intervention worked Theodorikakos stated that he was “satisfied” with the decision.

The police killing of Nikos Sambanis and its endorsement by the government should serve as a warning to Greek workers and youth. While Roma are disproportionate victims of police harassment and violence, with police raids in Roma settlement a common occurrence, police violence affects the entire working class. It is not only the efforts by the far-right to stoke prejudices against the Roma that must be resisted, but also the efforts by proponents of identity politics to present the issue of police brutality as a purely racial one.

In a written statement Kambayiannis drew attention to the fact that the police tactics that led to Kambanis’ killing were far from uncommon: “From the beginning of October, the systematic use of weapons by police in similar pursuits in the centre of Athens (e.g. on October 8 in Marni Street and on October 11 at Ayios Panteleimon) as well as in other cities (e.g. in Trikala on October 22 ), which is later justified by invoking a ‘vehicle-ramming incident’, shows beyond doubt that the orders come from above. The incidents are too many and common for them to be isolated.”

Ethiopia’s war on Tigray threatens broader civil war

Jean Shaoul

One year after Ethiopian Prime Minister Abiy Ahmed ordered the invasion of Tigray province, intensified fighting threatens an all-out civil war amid escalating ethnic conflicts around the country.

The breakup of Africa’s second-most populous country would destabilise the wider Horn of Africa region, including Somalia, the Republic of Sudan, South Sudan, and Eritrea. Ethiopia, the headquarters of the African Union, has long acted as the region’s anchor state on behalf of US imperialism.

Military conflict with the Tigray People’s Liberation Front (TPLF) has caused untold suffering and devastated the economy. Last week, Abiy declared a state of emergency, giving him powers to impose curfews and censor the media, issued a call to arms for Ethiopia’s citizens and ordered house-to-house searches for and arrests of ethnic Tigrayans and those accused of sympathizing with the TPLF.

Tigrayan women who fled from the town of Samre, roast coffee beans over a wood stove in a classroom where they now live in Mekele, in the Tigray region of northern Ethiopia (AP Photo/Ben Curtis, File)

He also announced the stepping up of recruitment into both the national and regional armed forces, amid reports of new arms purchases, with Eritrea set to send more troops at Ethiopia’s expense and Iran, Turkey and China bolstering Ethiopia’s arsenal. China is to supply four Chengdu J-20 fighter jets and Wing Loong drones, while Iran and Turkey are supplying attack drones.

Abiy has called the Tigrayan leaders, who were between 1991 and 2018 the leading political force in Ethiopia, “cancer” and “weeds”. This prompted Facebook and Twitter to remove one of Thursday’s posts urging Ethiopians to take up arms and “bury” the approaching rebel forces.

On Sunday, the government organized a pro-military, nationalist demonstration in Meskell Square, in the centre of the capital Addis Ababa, to rally support for the conflict and oppose “foreign interference” from the US and other countries calling for an end to the violence. While the public are generally supportive of the federal government, Al-Jazeera reported that many expressed dismay at the war itself.

Days earlier the TPLF announced it had formed an alliance with eight other opposition groups to oust Abiy, through political negotiation or military force if necessary, and install a transitional government. They are threatening to block the crucial road linking landlocked Ethiopia to the Red Sea port of Djibouti and advance on Addis Ababa. Getachew Reda, a TPLF spokesperson, said, “If marching to Addis is what it takes to break the siege [of Tigray], we will.” Tigray has for months been suffering from Abiy’s blockade that has cut off budget transfers and telecommunications, electricity and banking services.

The alliance brings together previously opposed ethnic groups, including the Oromo Liberation Army (OLA), a splinter from the Oromo Liberation Front, that is fighting for greater rights for the ethnic Oromos who make up 35 percent of Ethiopia’s 110 million people. The government has declared the OLA a terrorist entity and jailed many suspected supporters.

The alliance, the United Front of Ethiopian Federalist and Confederalist Forces, called on the Biden administration to support their efforts. Berhane Gebre-Christos, a former foreign minister and TPLF spokesperson, told a news conference at the National Press Club in Washington, “We are left with one option—changing the situation; otherwise, we’ll all be massacred,” and called for a resolution to the crisis “before Ethiopia implodes and affects the region.”

Abiy, an Oromian and former military intelligence officer backed by Washington, became prime minister in February 2018 following rising ethnic tensions incited by the elites in a bid to prevent a unified opposition to their free market reforms, including the sale of prize land for commercial, export-based agriculture and flower growing.

Touted as a “reformer” who would bring a “new beginning” to Ethiopia, Abiy disbanded the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF), a coalition of militia groups and parties dominated by the TPLF. He replaced it with his Prosperity Party (PP) which TPLF refused to join. Abiy retired Tigrayan military and government officials, launched corruption charges against some TPLF members and announced plans for the privatisation of the state-owned economy and liberalisation of the banks.

The prime minister launched his murderous “law-and-order” operation against Tigray in November 2020 in response to what he claimed was an attack on an army compound. That move followed the federal government’s efforts to bypass the TPLF after it rejected Abiy’s decision to postpone the 2020 elections due to the pandemic and went ahead with its own elections. While Tigrayans form just 6 percent of the population, they have long provided much of Ethiopia’s national army, seriously depleting Abiy’s forces on the ground.

The national elections went ahead last June, although voters in 125 out of the 547 parliamentary seats were unable to vote and two regions, Somali and Harar that voted in September, have yet to announce their results. Meeting few basic standards for a credible vote, Abiy and his Prosperity Party won 401 of the 422 seats contested in June, enabling him to claim a popular mandate for his policies, including greater powers for the federal government.

Contrary to Abiy’s expectation of a swift victory last year, the TPLF have retaken most of Tigray, including the capital Mekelle, and moved into the neighbouring Afar and Amhara regions. Fighting alongside allied ethnic Amhara militias opposed to Abiy, the TPLF have reportedly taken two key towns and are some 220 miles from Addis Ababa.

The military conflict in Tigray takes place amid ethnic strife and inter-communal violence across many parts of the country, with large swathes of Benishangul-Gumuz, Afar, Somali, Oromia, Amhara and the Southern Region under “Command Posts”—de facto military rule.

With the end of the rainy season, fighting will expand further beyond Tigray, adding to the terrible death toll of 100,000. The federal government’s blockade of the region has prevented food and medicine, including United Nations (UN) and international aid, reaching the Tigray where, according to UN estimates, 5.2 million people are in urgent need of help and 400,000 face starvation. The UN says that nearly 2 million Tigrayans have been displaced by the conflict, as well as 450,000 in Afar and Amhara provinces, with 70,000 fleeing to Sudan.

There have been accusations of massacres, sexual violence and horrific human rights abuses on both sides. Last week, a joint UN-Ethiopian report detailed first-hand accounts of numerous human rights violations, some of which Michelle Bachelet, the UN high commissioner for human rights, said “may amount to war crimes and crimes against humanity.” She added, “the majority of the violations” between November 2020 and June 2021 appeared to have been committed by Ethiopian forces and their Eritrean allies, but following the Tigrayan counter-offensive in June, there were “an increasing number of allegations of human rights abuses by Tigray forces.”

Last September, the Biden administration announced it was considering sanctions that could target military commanders, government officials, state institutions and the national carrier, Ethiopian Airlines, prompting Abiy to expel seven senior UN officials. The US government has also suspended security and some economic assistance, said it will not support International Monetary Fund and World Bank funds for Ethiopia and warned that Ethiopian exporters may lose their preferential access to the US market.

The UN Security Council has called for a ceasefire, while the African Union has appointed Nigeria’s former President Olusegun Obasanjo as its special envoy to the Horn to try and broker talks.

The US and other western countries have called on Abiy to begin talks with the rebels, advising their citizens to leave the country. On Thursday, Washington sent Jeffrey Feltman, its fixer for the Horn of Africa, to Addis Ababa, to try and persuade Abiy to step back from all-out war. Abiy reportedly rejected this as “external interference.”

The fighting in Ethiopia could draw Sudan into the war, under conditions where relations between Addis Ababa and Khartoum are at a low ebb, both over the Grand Ethiopian Renaissance Dam that could affect Sudan’s water supply and al-Fashaga, the disputed farmlands adjacent to western Tigray which Sudan occupied in December.

Having fallen out of Washington’s favour, Abiy hopes that he can profit from the increasing attention being paid to the Horn of Africa. Sited at the crossroads between Africa, the Middle East and the Mediterranean, it has become the focus of great power and regional rivalries, as Turkey, Saudi Arabia, Qatar, the United Arab Emirates, Russia, Israel and China, which paid for the Addis Ababa-Djibouti railway as part of its Belt and Road Initiative, jockey for position.

Polish government announces massive rearmament programme

Martin Nowak

Last week, Polish Defence Minister Mariusz Blaszczak, together with PiS party leader and Minister of National Security Jaroslaw Kaczynski, presented the “Plan for the Defence of the Fatherland.” This provides for an increase in the target strength of the Polish army to 250,000 professional soldiers. Currently, the Polish armed forces number about 110,000 soldiers.

In addition, there are the planned 53,000 volunteers of the Wojska Obrony Terytorialnej, or WOT (Territorial Defence Forces), whose strength is currently around 30,000. This paramilitary militia is directly subordinate to the Ministry of Defence and, in the style of the US National Guard, serves both to support the regular army and to provide “internal security.” The WOT also aims to “strengthen the patriotic and Christian foundations of the Polish system and armed forces,” and is considered a stomping ground for right-wing extremists.

Jaroslaw Kaczynski, right, leader of Poland’s ruling PiS party, and Defence Minister Mariusz Blaszczak presented plans Oct. 26 for the “Defense of the Fatherland” bill, which aims to massively upgrade the Polish military (AP Photo/Czarek Sokolowski)

Kaczynski justified this “radical strengthening of the armed forces” with a worsened security situation as a result of Russia’s “imperial ambitions” and the “ hybrid attacks ” by Belarus. The latter refers to the current situation on the Polish-Belarusian border, where hundreds of refugees are facing hunger, cold and death. The EU and the Polish government justify their brutal border regime by declaring themselves to be the victims. After Spain, Greece and Hungary, a border fence more than two meters high is now being erected on the Polish border.

In classic fashion, Kaczynski presented his orgy of rearmament as an act of defence and peacekeeping. He invoked the Latin proverb: “If you want peace, prepare for war.”

Not coincidentally, information about the Polish military exercise “Winter 20” leaked to the public earlier this year. The exercise simulated a surprise attack by Russia on Poland. In keeping with the rearmament doctrine, Polish forces were devastated, and Warsaw surrounded after only four days. Comparisons were drawn to the “Blitzkrieg” of Hitler’s Wehrmacht (army), with the conclusion: “Even worse than 1939.”

In reality, the NATO powers are the aggressors. The military alliance has massively rearmed in recent years. This has been accompanied by a build-up of troops on NATO’s eastern flank, the border with Russia. The largest manoeuvrers were “ Trident Juncture ,” “Defender 2020,” “ Defender 2021 ” and “ Sea Breeze .”

Poland has a key role in NATO strategy as both a battlefield and a logistical hub. The PiS government is seeking to expand this role further and is seeking closer ties with US imperialism. Following the election of President Biden, however, relations have cooled considerably.

Nevertheless, at the inauguration of the 1st US Infantry Division’s Forward Command Post in Poznan, Poland, in early October, Defence Minister Blaszczak stressed that expanding the US troop presence was one of his priorities in office. It is part of the 2,000-soldier increase in the US troop presence in Poland under President Trump. Poznan serves as the command centre for all US units operating on NATO’s eastern flank as part of the “Atlantic Resolve” rotational deployment.

This rearmament initiative will also further exacerbate intra-European conflicts, both that between Germany or the EU and Poland, and the conflict between France and Britain. The latter has announced an alliance with the Visegrad Group (Poland, Czech Republic, Slovakia and Hungary) and the Baltic states against France.

Defence reform has long been announced and was described by Kaczynski as the crowning achievement of his ministerial tenure. Although no draft law has been published yet, and thus no details are known, the scope of the planned measures seems enormous. The legislative package is to consist of 720 articles and replace 14 key laws, first and foremost the law on the general duty to defend, which has been in force since 1967.

One goal is to ensure the enormous increase in the defence budget from various sources and to make it largely independent of the official state budget. A “support fund” is being set up at the national development bank BGK specifically for this purpose. Revenues from government bonds, BGK bonds, the state budget and the profits of the National Bank of Poland are to flow into the rearmament programme.

The official military budget has also been increasing for years. It currently stands at around $12 billion, or about 2.2 percent of GDP. The Ministry of Defence has already announced additional arms spending of around $33 billion for the next 11 years. It has already signed defence contracts worth $17.4 billion in the last three years, including for two Patriot missile defence batteries, four Black Hawk helicopters, 32 F-35 fighter jets, 250 Abrams main battle tanks and three Miecznik class frigates.

Another goal is to attract more soldiers to the armed forces. While there is to be no reintroduction of conscription—at least for now—there will be, among other things, a one-year voluntary military service and more financial incentives. Blaszczak has announced plans to increase pay by about €130. Another financial incentive is a full scholarship for those who commit to five years of military service after graduation. There are also plans to increase the size of the reserve forces, for example by requiring an oath be taken after completing voluntary military service, which will also be remunerated.

In addition, the “Wojska Obrony Cyberprzestrzeni,” or cyberspace forces, are to be established as a separate branch of the armed forces, and national crisis management is to be subordinated to the ultra-right WOT. As always when the ruling class speaks of “defending the fatherland,” the rearmament is thus directed both outward and inward.

The Civic Platform PO, the largest opposition party, invariably criticizes the rearmament plans from the right. On broadcaster TVN, Tomasz Siemoniak, deputy party leader and until 2015 defence minister, mocked that this inflating of the armed forces in terms of numbers was totally useless. Instead, he stressed the need for a qualitative upgrade—especially in air and missile defence. At the same time, Siemoniak also called for a reserve of several hundred thousand. This would go far beyond the PiS plans known so far.

In general, it is clear from all the comments in the Polish media that there is only disagreement about how to upgrade the military. The differences revolve around whether equipment should be purchased or whether Poland should increasingly develop its own defence industry. It is also about fundamental questions of foreign policy orientation. While the opposition PO is calling for better cooperation with the EU, Kaczynski justified the massive increase by saying that in the event of war, it would be necessary to hold out until the NATO allies arrived.

The unanimity between PiS and PO in their demand for rearmament underscores the class nature of both parties. For weeks, doctors and medical staff have mounted the “Białe miasteczko” (White City) protests for improvements in the ailing health care system, only to hear from the Ministry of Health that their demands could not be financed. On the other hand, there are apparently endless resources for military rearmament.

In view of a rapidly spreading new coronavirus wave in Poland, the unscrupulousness of the Polish bourgeoisie becomes particularly clear. Due to the dismantling of all protective measures, infection figures have risen by over 50 percent within a week, and the 7-day incidence rate has skyrocketed to over 140 per 100,000. Poland has already suffered over 70,000 victims of the pandemic, one of the highest death rates in the EU. Whether in the pandemic or war, recent developments show how willingly the Polish bourgeoisie sacrifices hundreds of thousands of lives for its class interests.

Mounting problems in global economy and financial system

Nick Beams

If there is one word to sum up assessments of the state of the world economy and the related question of the state of financial markets, it would be confusion.

No one has any clear estimate for the path of global growth, how long the present surge in inflation will extend as well as its impact and when supply chain problems will ease. Despite the much-vaunted insistence by central banks they provide “forward guidance,” there is no idea about where they are headed on crucial aspects of monetary policy, leading to turbulence in bond markets.

Federal Reserve Building on Constitution Avenue in Washington [Credit: AP Photo/J. Scott Applewhite, file]

On top of this there is the impact of the latest surge in COVID-19 infections in Eastern Europe, amid warnings from the World Health Organisation there could be another 500,000 more coronavirus deaths in Europe by February, on top of the 1.4 million who have already died.

A Wall Street Journal article last weekend pointed to the perplexity in ruling circles. It stated that the global economy’s “comeback” from the deep contraction last year was “approaching a delicate juncture, as policy markets and executives grapple with the bumpy transition from the post-pandemic reopening to a more normalized pace of growth.”

Central banks, it said, were trying to chart a path that will curb inflation but not choke off growth as they “navigate the process of weaning economies off the extraordinary measures—including rock-bottom interest rates and enormous bond-buying programs—deployed to support their economies.”

The plan of central banks and government authorities—insofar as they had one—was that after an initial surge of inflation, higher prices would prove to be “transitory” and the economy would move back to a “normal” path of development.

That happy scenario has been blown apart. Inflation in the US is running at 5 percent, with little sign of abating. In the UK it is predicted by the Bank of England to reach 5 percent next year and it is surging in the euro zone.

Speaking to reporters after the meeting of the US Federal Reserve last Wednesday, Fed chair Jerome Powell said it was “very, very difficult to forecast and not easy to set policy.”

“Inflation has come in higher than expected and bottlenecks have been more persistent and more prevalent. We see that they’re now on track to persist well into next year. That was not expected by us, not by other macro forecasters.”

The US growth rate slowed markedly in the third quarter, experiencing its lowest level since the start of the recovery from the pandemic recession.

In China, the world’s second largest economy, concerns over its growth rate mount as the problems in the real estate sector, one of key drivers in the economy, continue.

It was announced on Friday that shares in the property developer Kaisa Group Holdings had been suspended in Hong Kong after the company announced it had missed payments on debt. It pointed to “unprecedented pressure on its liquidity”—the same issue which caused the property giant Evergrande to miss payments on offshore debt.

The Japanese finance company Nomura has warned that Chinese growth will slow to an annual rate of 3 to 4 percent over the next few quarters. Kevin Lai, chief economist at Daiwa Capital Markets, told the Journal that the Chinese slowdown “is going to be bigger and longer than anyone has seen in the past 10 years.”

Germany, Europe’s biggest economy and the world’s fourth largest, “is expected to stall over the coming months as supply bottlenecks weigh on the nation’s powerful manufacturing sector, particularly in the auto industry.” Manufacturing output was 10 percent below pre-pandemic levels in September.

The highly uncertain outlook for Europe goes a long way to explaining why European Central Bank president Christine Lagarde has been so insistent that, despite pressure to tighten monetary policy due to increased inflation, a rate rise in 2022 is “off the chart.”

Lagarde’s comment points to the dilemma facing all central banks. On the one hand, inflation is pressuring them to tighten rates. On the other, they fear that if they do so lower growth combined with high levels of debt—the result of the quantitative easing policies over the past decade and more that have seen $23 trillion pumped into the financial system—will bring major economic and financial turbulence and even a crisis.

However, mixed messaging and rising inflation are causing major problems. Initially, major investors bought into the central banks’ scenario that price rises would be short-lived and made their speculative bets accordingly. But the persistence of inflation caused yields in the short end of the market to rise and bond prices to fall—the two have an inverse relationship.

This trend was fueled by comments from the governor of the Bank of England, Andrew Bailey, in October that the central bank would “have to act” if inflation proved to be stubbornly high. In the event, the BoE decided last week not to raise its rate, sparking violent moves in the other direction.

Some major hedge funds have lost large amounts of money, running into billions of dollars. While the movement in rates may be relatively small, the losses can be high because hedge funds borrow large amounts of money to make their bets.

According to reports in the financial press, the London-based hedge fund Rokos Capital, which manages $12.5 billion in assets and has been something of a market leader because of past successes, has lost 27 percent so far this year and 18 percent last month.

Amid the turbulence in the short end of the bond market last month—the Financial Times (FT) described it as an “inferno”—there is a longer-term issue. This concerns the operation of the $22 trillion Treasury market and the meltdown it suffered in March 2020 at the start of the pandemic.

This market, which forms the basis of the global financial system, is supposedly the most liquid and safest in the world. However, at the start the pandemic, it virtually froze when no buyers could be found for US government bonds. Rather than seeking a “safe haven” in purchases of government debt, there was a “dash for cash.”

The universal opinion in financial policy circles is that such an event, which had the potential to set off a crisis going beyond that of 2008, must never be allowed happen again.

There have been a series of investigations into the source of the crisis. It was only ended through the massive intervention of the Fed, which doubled its holdings of financial assets from $4 trillion to more than $8 trillion virtually overnight. But no definite diagnosis has emerged, much less a possible solution.

An article by FT columnist John Dizard at the weekend noted that the US Treasury market was “ill-equipped to finance” whatever spending packages are finally delivered by Congress. This was known by the administration and market regulators, and they have been working on developing a new market structure.

“The Treasury, the Fed and regulators like [Gary] Gensler [chairman of the Securities and Exchange Commission] are haunted by the Treasury market’s seize-up in March last year, which shook global markets,” he wrote.

But so far, no plan has been developed. One of the problems is the increased involvement of hedge funds.

A research paper published by the Fed in October noted that “hedge funds play an increasingly important role in the US Treasury market.” It found that the Treasury market exposure of large hedge funds “doubled from early 2018 to February 2020, reaching $1.45 trillion and $0.94 trillion in long and short exposure, respectively.”

The Fed paper reported that the doubling was driven by relative arbitrage trading supported by corresponding increases in repo borrowing.

Arbitrage trading refers to investors, largely hedge funds, taking advantage of small and fleeting differences in various parts of the market to make money with the financial bets financed by repurchase agreements (repos), essentially very short-term borrowings, either from the Fed or other banks and finance houses.

In normal times, such operations can assist the smooth functioning of the market, but under conditions of a sudden shock, such as the onset of the pandemic, they can become the source of a crisis.

Dizard reported that one of the plans under consideration is a clearing house mechanism which would simultaneously act as a seller to all buyers and a buyer to all sellers. But he cited a report from the Securities and Financial Markets Association which cast doubt on its efficacy.

In a note issued last March, the report said: “Even with most Treasury trades being centrally cleared, it is highly unlikely that sufficient capacity would have been freed up to absorb the ‘dash-for-cash’ by investors that occurred last year.”

The recent turbulence in bond markets, under conditions of completely unanticipated problems, such as inflation, supply chain problems and the continuation of the pandemic, is an indication that the crisis which erupted 20 months ago could be coming to the surface again.