Green Party minister resigns from German cabinet after flood disaster

Elisabeth Zimmermann & Peter Schwarz

Destroyed cars and piles of rubble at the entrance to Walporzheim (Credit: WSWS)

Four months after taking office, Germany’s coalition government has lost its first member. On Monday afternoon, Green family minister Anne Spiegel announced via email that she had decided to step down “due to political pressure.”

This follows more and more details emerging about the complete irresponsibility with which she had reacted to the Ahr valley flood disaster, which claimed 134 lives last summer. As state environment minister of Rhineland-Palatinate, Spiegel failed to warn the valley's residents in time of the approaching flood wave, which could have prevented most of the deaths.

The “political pressure” Spiegel mentions in her resignation letter comes from her own party. The minister had become a liability for the Greens because her efforts to save herself through advancing ever new excuses and lies exposed the real character of the party. As newsweekly Der Spiegel put it, she had become a “symbolic figure for failures and blunders by the authorities and politicians before and during the deadly flood in the Ahr valley.”

Minister Spiegel embodies a social milieu whose world revolves only around their own sensitivities, prepared to walk over corpses to advance their careers, and with nothing but contempt for the less well off.

Although meteorologists had been warning of extreme flooding for days, Spiegel’s environment ministry did nothing to warn and evacuate the population. Even on the afternoon of July 14, when the responsible agency had long since reported the highest water level in living memory, the ministry sent out an email saying there was “no threat of extreme flooding.” The only correction Spiegel made to the email was to insist it use properly gendered language.

As the full extent of the disaster became apparent the following morning, the minister and her closest aides were more concerned with their media image than the victims and the flood damage. While the death toll rose hourly, Spiegel took care to use correct “wording” to cover up her responsibility.

Although Spiegel's misconduct during the flood disaster was well known, the leaders of the Green Party, Robert Habeck and Annalena Baerbock, brought her into the new federal cabinet at the end of last year as part of the three-party coalition with the Social Democrats (SPD) and Liberal Democrats (FDP). She fulfilled the necessary gender and internal party faction quota.

But the revelations about her reckless behaviour in the flood disaster did not stop.

In March, speaking before the investigative committee of the Rhineland-Palatinate state parliament, Spiegel and her state secretary, Erwin Manz, denied any responsibility. They claimed that the Environment Ministry was only tasked with converting precipitation reports into water levels and to report these values to the affected municipalities and district councils. Everything else had to happen “on site.” It was not the ministry's responsibility to issue warnings to the population, they claimed.

Finally, it became known that Spiegel had gone on a four-week holiday in France with her family ten days after the flood disaster, interrupting it only once for an on-site visit to the Ahr valley. She spoke with helpers there and had photos taken that gave the impression she cared about the flood victims.

At that time, the people in the Ahr valley were mourning their dead relatives. Tens of thousands stood in front of the ruins of their homes and lives, waiting for urgently needed help and the speedy reconstruction of the destroyed infrastructure. Spiegel claimed she had attended cabinet meetings online during her holiday, but this turned out to be a lie.

As calls for her resignation grew louder, Spiegel tried to save her job last Sunday by making a tearful appearance before the media. At a press conference called at short notice, she justified her holiday by citing her husband’s health problems. It was said he had been taking care of the children and should not be exposed to any more stress following a stroke in 2019, and that there was the added stress of the pandemic on her four children (three of primary school age, one of nursery age). For this, she would like to apologise.

While a bus driver who causes a serious accident through personal negligence is held responsible, even if he or she is under family stress, this should not apply to a minister with an annual salary of over €100,000 euros, apparently.

Moreover, hardly any family in Germany can afford to assign one parent to look after the children full-time and go on holiday to France for four weeks. Even the conservative Frankfurter Allgemeine Zeitungnoted, “Spiegel’s apology and the ensuing debate only show how far away Green politicians have become with their political-moral standards from the material everyday life of many families.”

Coronavirus stress also has political causes. Even two years after the start of the pandemic, the federal and state governments have failed to adequately equip schools to conduct proper online teaching and to supervise students. While they have pumped hundreds of billions in coronavirus aid into the corporations and banks, increased the arms budget by €100 billion and even subsidised electric cars with up to €10,000, there is a lack of internet connections, computers, and sufficient teaching staff.

The ruthless “profits before lives” policy of the state and federal governments, of which Spiegel herself was a member for six years, has also caused the number of infections to explode. Three quarters of the 23 million infections registered in Germany since the beginning of the pandemic fall into the four-month term of office of the “traffic light” coalition of the SPD, Greens and FDP. The political irresponsibility that finally forced Spiegel to resign can be found here on a large scale.

Spiegel is not an isolated case. Ursula Heinen-Esser, the state environment minister in North Rhine-Westphalia, where 49 people died because of the flood disaster, also resigned last Thursday. The Christian Democrat (CDU) politician had behaved in a similarly irresponsible manner as her Green colleague in Rhineland-Palatinate.

Heinen-Esser was on holiday in Mallorca at the time of the flood. She travelled back for an emergency meeting of the state cabinet but then returned to her Spanish holiday island the same day. She, too, tried to cover up her behaviour with lies and excuses.

First, she claimed she had only returned to Mallorca for four days to organise the return trip of her underage daughter and her friends. Later it turned out that she had stayed on the island for nine more days, celebrating her husband's 76th birthday with cabinet colleagues who were her friends.

These cabinet colleagues included Stephan Holthoff-Pförtner, Minister for European Affairs, Serap Güler, State Secretary for Integration, and Ina Scharrenbach, Minister of Domestic Affairs, who was responsible for the reconstruction of the flooded areas. Heinen-Esser had appointed Scharrenbach as her deputy for “cabinet affairs.” Now it turns out that one and a half weeks after the worst German flood disaster in decades, both were in Mallorca at the same time for three days for private reasons.

The indifference to the needs of ordinary working people expressed in the behaviour of Spiegel and Heinen-Esser shows the real priorities of all the capitalist parties. This will not change even after their resignation.

The same contempt for human life is also expressed in foreign policy. The Greens, SPD, CDU, and all the other establishment parties are outdoing each other in demanding Germany supply heavy weapons to Ukraine, risking a nuclear third world war. In the process, it is becoming clearer by the day that NATO is waging a proxy war against Russia, in which the Ukrainian population serves merely as cannon fodder.

Leaked IRS data expose manipulation of US tax system by the ultra-wealthy

Kevin Reed

The nonprofit news organization ProPublica published on Wednesday an analysis of the top 400 income earners in the US. The report reveals how much income tax the wealthy elite pay and illustrates how the US tax system is itself structured to benefit the personal wealth of a handful of individual billionaires and multimillionaires.

Based on a trove of leaked IRS data, the ProPublica report shows that it took an average of $110 million in income per year between 2013 and 2018 to enter the top 400 list. The data confirm what many already know—that the tax laws in America are structured to benefit the super-rich and that this set-up is a contributing factor in the overall growth of social inequality in the US.

Billionaires Warren Buffett, Jeff Bezos, Michael Bloomberg, Elon Musk (All originals from Wikimedia Commons)

The report shows that the highest earning Americans do not pay the highest income tax. ProPublica notes, “On average, the rate of income tax that people pay does climb as incomes ascend into the top 1 percent, but when you get to the range of $2 million to $5 million, that trend stops. The group earning in this range, composed mostly of business owners and workers with extremely high salaries, paid an average income tax rate of 29 percent from 2013 to 2018. After that, average tax rates actually drop the further up in income you go.”

The analysis begins by pointing out that many billionaires “didn’t even come close” to making the top 400 list because they use write-offs to erase taxable income. “Other billionaires, like Warren Buffett, simply avoid income even as their wealth rises,” the report says.

Buffet’s average personal wealth was $70 billion across the six years of the ProPublica report— from 2013 to 2018–but his average income during that timeframe was just $27 million and he is not on the top income earners list.

The report also explains that billionaires often use the “Buy, Borrow, Die” method in which they “borrow against their wealth to avoid taxes, then their estates are able to skirt taxes after their deaths.”

While one aspect of the data published by ProPublica shows how the super-rich “work” the system to their significant advantage, the report also says “in the American system, there’s a huge difference between how we tax wages and how we tax investments. Income from financial assets is generally taxed at a lower rate.”

As in every country of the world, the extent of inequality in the US is difficult to comprehend due its sheer magnitude. The ProPublica report explains, for example, that it would take a typical American with an income of $40,000 per year “to work for 2,750 years to make what the lowest-earning person in this group made in one,” and the typical American “would have to work for 25,000 years to make $1 billion,” which was made on average by the top 11 individuals on the list.

Tech billionaires represent 10 of the top 15 income earners and most of their income came from selling stocks. Among the names on this list are Bill Gates (Microsoft, $2.85 billion), Larry Ellison (Oracle, $1.07 billion), Steve Balmer (Microsoft, $1.05 billion), Sergey Brin (Google, $1.04 billion), Larry Paige (Google, $990 million) and Jeff Bezos (Amazon, $832 million). These billionaires paid an average of 18 percent in taxes on their income over six years.

The largest group of super-wealthy income earners come from the hedge fund industry. Representing approximately one-fifth of the entire list (80 individuals), the income of the hedge fund managers comes directly from stock trades, options and the other financial instruments of their firms. While these individuals are less known to the public, the founder of Citadel, Kenneth Griffin, raked in an average of $1.68 billion per year from 2013 and 2018 and paid an effective 29.2 percent in taxes.

Founders of private equity firms were another group that ProPublica found stood out on the top 400 list. These individuals make their money by buying companies and reselling them at a profit. The top 10 income earners in this group paid an effective average tax rate of 20 percent between 2013 and 2018.

The greatest combination of highest incomes and lowest tax rates for the super-rich stemmed from those who made stock sales taxed at the lower rate that was established in 2013 during the Obama administration. The report says that since then, the “long-term capital gains rate has been 20 percent, about half the top rate on ordinary income (37 percent in 2018).”

Former Microsoft CEO Bill Gates benefited from this arrangement because his average yearly income of $2.85 billion came from sales of his former company’s stock and, as the report notes, “every penny of Gates’ taxable income was eligible for the lower rate” and this was generally true for the other tech billionaires as well.

Others who also benefited from the lower dividend tax rate enacted by the Democratic Party were the Walton (Walmart) and DeVos (Amway) family heirs. The report says that “the 11 Walton descendants in the top 400 saved $371 million a year due to this tax change.”

One individual who came in for specific mention in the ProPublica report is billionaire and former mayor of New York City, Michael Bloomberg. Bloomberg successfully achieved one of the lowest tax rates of anyone on the top 400 list. Bloomberg took annual income deductions of more than $1 billion, mostly through charitable contributions. The report says, “From 2013 to 2017, he also wrote off an average of $409 million each year from what he’d paid in state and local taxes.”

Although the Trump-era 2018 tax overhaul limited those deductions to $10,000, the bill introduced a new massive deduction that Bloomberg took advantage of. The Tax Cuts and Jobs Act was rushed through the legislative process and permitted so-called “pass through” profits to avoid taxation. For Bloomberg, this law enabled him to claim an income deduction of more the $183 million and reduce his taxes by nearly $68 million. On an average income of $2.05 billion, Bloomberg paid an effective tax rate of 4.1 percent, which is lower than the rate paid by an average American worker making $40,000 to $50,000 per year (5 percent).

While the owners and executives of tech monopolies, private equity and hedge fund businesses paid between 17 and 26 percent effective tax rates, the owners of manufacturing businesses paid on average 30 percent in taxes.

The publication of the income tax data by ProPublica comes amid a campaign for the Biden administration to push for a 20 percent minimum tax rate on all US households with net worth of $100 million or more. It is expected that this proposal will never make it to the floor of the US Senate given that Senator Joe Manchin (Democrat from West Virginia) has already said he will not support it and the entirety of congressional Republicans are opposed to it.

Certain elements within the ruling elite are concerned that the grotesque levels of social inequality—including the rigging of the tax system to nakedly benefit wealth accumulation by the ultra-rich—has primed the conditions for a social eruption in the US which threatens to overturn the entire capitalist order. A group called Patriotic Millionaires—a network of wealthy individuals who advocate raising taxes on their class—responded to the ProPublica report by saying that “it’s time to tax billionaires.”

Russian workers crushed by rising prices as GDP falls

Andrea Peters

People stand in line to withdraw U.S. dollars and Euros from an ATM in St. Petersburg, Russia, Friday, Feb. 25, 2022. (AP Photo/Dmitri Lovetsky, File)

As the United States and its allies continue to announce new economic sanctions against Russia on a near daily basis, the country’s working class is being hammered by rising prices and increasing wage arrears, as well as the pullout of ever-growing numbers of foreign corporations from the Russian market. While decrying Moscow’s assault on Ukraine’s innocent civilians—a population about whose well-being the US and EU have never had the slightest concern in the past 30 years—the West is working to drive ordinary Russians into destitution as part of the process of bringing down the Putin government.

According to the federal statistical agency Rosstat, annual inflation is now running at 16.9 percent, up from 9.15 percent a month prior. Alexei Kudrin, head of Russia’s Accounts Chamber, said yesterday that this number could easily reach 20 percent by the end of the year. He also predicted a fall of 10 percent in the country’s annual GDP, two points higher than experts anticipated just a month ago and the worst in nearly three decades. Speaking the same day, Russian Vice Premier Andrei Belusov reported that industrial production and trade has fallen by 11 percent since the Ukraine invasion.

The cost of basic foodstuffs and household items has risen dramatically since the start of 2022—cabbage (85 percent), onions (68 percent), sugar (53 percent), carrots (53 percent), laundry detergent (20 percent), diapers (20 percent), feminine products (24 percent). While the price of some of these products has stabilized or fallen slightly over the last week, the cost of other goods—such as margarine and rice—is now taking off.

А recent survey by polling agency VTsIOM found that 85 percent of Russians are stockpiling food driven by fears of further price hikes and empty store shelves. According to the Bank of Russia, real wages will fall 4 percent this year and real disposable income 7.2 percent.

While the federal government claims that the crisis surrounding another major consumer product—medicines—is not severe because costs have only increased by 4 to 12 percent depending on the category of the drug, doctors around the country are reporting widespread shortages. A study conducted by Vrachi.RF found that more than 80 types of medicines, including insulin, are no longer available in pharmacies.

In addition to treatments for diabetes, epilepsy and seizures, thyroid problems, depression, and psychosis, oral contraceptives, menopausal hormonal therapies, and children’s ibuprofen are broadly unavailable. According to a representative of the advocacy group Patient Control, it is also difficult to find drugs for COVID-19, which is infecting upwards of 10,000 people a day in Russia and has killed as many as 778,000 directly or indirectly.

State and local governments, anticipating further deficits, have gone on a drug-buying spree, spending 45 billion rubles in the last month alone to purchase medicines, in particular antibiotics, cancer treatments, and those that target respiratory illnesses. Drug prices are expected to increase during May-June, when cost agreements between the government and pharmaceutical companies come up for review.

Among the more than 800 hundred corporations that have halted all or some aspect of their activity in Russia are major food and drug companies, such as Danone, Nestle, Fazer, Bayer, Eli Lilly, Merck, Novartis, and Pfizer. Russia’s trade balance has actually now swung ever-more in its direction, because of the extraordinary pace at which foreign imports have fallen off.

Officially, unemployment numbers remain low in Russia, with the government claiming in March that so far just 59,000 workers have lost their jobs since the onset of the latest sanctions. This number has been kept artificially low, however, by multi-billion-ruble government bailouts that have enabled employers to keep workers on the books with reduced hours and wages or allowed localities to create low-paying public works positions for laid-off workers.

Furthermore, according to one estimate, about 30 percent of the labor force is employed in the black market. There is little data on what is happening in that sector.

Experts predict that even the official unemployment rate will rise substantially by the end of the year. The chief of the online job-seeking service HeadHunter, Mikhail Zhukov, said Thursday he expects joblessness to reach around 7.5 percent this year, a level last seen in 2009 after the world economic crisis.

The toll being taken on Russia’s working class expresses itself in a dramatic growth in wage arrears—that is, employers are not firing but are not paying their employees. As of February 1, according to state-run news agency TASS, workers in Russia were owed a total of 915 million rubles in unpaid wages, a 16.4 percent increase over the previous month. Of the 915 million rubles, 59.9 million were accumulated in January 2021 and the rest was left over from previous years.

However, in all of last year, there were just 272 million rubles added to the total sum of Russia’s wage arrears. In other words, if wage arrears in 2022 continue at the same rate as they are presently—that is, around 59.9 million rubles a month—by the end of 2022 they will have ballooned by more than 2.5 times what they were in 2021.

The Kremlin is undertaking extraordinary efforts to buoy the Russian economy. According to Vice Premier Belusov, expenditures from the federal budget in the first quarter of 2022 exceeded last year’s by 20 percent and the state has already made 1.3 trillion rubles of cheap credit available. It is preparing to inject nearly a trillion more into the economy.

The Kremlin has continued to announce a series of bailout measures—including as of yet unspecified increases in payments to pensioners and families with young children, as well as a credit holiday for people whose income has fallen by 30 percent or more and a moratorium on bankruptcies. Just a few days ago, Putin promised, rather improbably, that the government would lower the country’s levels of poverty and inequality. Despite the fact that the president’s popularity appears to have increased over the last month, there are deep fears within the ruling elite that a fall in Russians’ living standards will provoke an uncontrollable social and political crisis in the country.

According to a recent poll by the Levada Center, an independent public opinion agency in Russia, Putin’s approval rating has risen since the invasion to about 83 percent. While there is little love among the population for the destruction of Ukraine, the ferociousness of the US and NATO towards Russia, which has been long in the making, may have resulted in, at least for a time, a growth in support for Putin’s government.

The unavoidable fact that Washington and its allies are funneling massive amounts of arms to far-right psychopaths in the Ukrainian military who inscribe on their banner their desire to kill Russians is not lost on the Russian public, nor is the collective punishment being enacted against them. Russian workers in foreign firms are seeing their livelihoods disappear overnight and world-renowned Russian musicians are being canned simply because of where they happened to be born and the language they speak.

The demonization of whole peoples has always been a necessary preparation for war against them. The increase in support for the head of the Kremlin has been widely noted in the Western press. It is being highlighted in order to justify the US and NATO’s brutalization of the Russian people as whole. If, as has been repeatedly stated, Putin is a war criminal, then ordinary Russians are supporters of war crimes and deserve what they get.

Australian election features jobs fraud

Mike Head

Having begun with a lie about 40,000 lives being “saved” during the COVID-19 pandemic, the second day of the campaign for the May 21 federal election in Australia featured another fabrication: that of “jobs growth” and a record low unemployment rate.

Both Liberal-National Coalition Prime Minister Scott Morrison and Labor Party leader Anthony Albanese sought to hide the reality facing millions of workers, especially young workers, which will worsen as soon as the election is over.

That is, increasingly insecure and low-paid jobs, with growing numbers having to work multiple jobs to try to make ends meet, confronting soaring prices for petrol, rent, childcare, fresh food and other essentials, and rising mortgage interest rates on record levels of household debt.

Workers queuing at a Sydney Centrelink office in early 2020. (WSWS Media)

These are the kinds of jobs that Morrison intended when he promised to “create” 1.3 million jobs over the next five years. This is an even greater fraud than at the last election in 2019, when his government pledged to create 1.25 million jobs over five years. That claim was shattered by the pandemic.

The issue of unemployment came up at a press conference earlier this week, where Albanese could not name the 4 percent official unemployment rate, or the central bank’s interest cash rate of 0.1 percent, or the price of petrol.

His fumbling response undoubtedly expressed Labor’s indifference towards the conditions confronting working-class households. But the media is using such “fact checking” and trivia exercises as a diversion from the real issues.

The truth, covered up by Albanese, Morrison and the corporate media, is that the low jobless rate is false, the near-zero interest rates are about to be lifted and the price of petrol will go back over $2 a litre in a few months’ time, regardless of whether Labor or the Coalition heads the next government.

The 4 percent unemployment rate boasted by the government for February disguises the real situation. The Bureau of Statistics (ABS) counts only those not working more than an hour a fortnight. Another 6.6 percent of workers were classified as “underemployed”—that is actively seeking more hours of work. That took the total “underutilised” to around 1.5 million workers.

The government’s own statistics show that 949,940 people—nearly a million—were relying on sub-poverty line Newstart or Youth Allowance unemployment benefits in February. That is almost double the 563,300 counted as unemployed!

Even this hides the reality. The Roy Morgan polling company estimated the true jobless figure at 8.5 percent or 1.2 million workers in February, plus “underemployment” of 7.8 percent or 1.12 million workers. That totals 16.3 percent, or 2.35 million workers seeking work or more work.

Another factor in the artificially low official jobless data is the absence of overseas workers. Before COVID-19, more than 2 million temporary migrants accounted for up to 10 percent of the Australian workforce, mostly in sectors such as construction, healthcare and hospitality.

Morrison’s government, backed by the Labor Party, is reopening the international border to allow the return of this cheap labour force, together with international students, backpackers and Pacific labourers who have arrived in recent weeks, despite the resurgence of COVID-19 illnesses.

All the predictions, by the Coalition and Labor alike, of “recovery” and “jobs” are bogus. They are based on stifling workers’ opposition and wage demands, and pushing more workers into poorly-paid and insecure work, while intensifying the drive to “reopen” the economy by dismantling all pandemic safety measures.

This drive is already well underway. Other ABS data shows that the number of “multiple job holders”—those working at least two jobs to try to survive—rose by 13.1 percent to a new record of 867,000 in the last quarter of 2021. The number of these “secondary” jobs rose to a record 954,000, with some workers having to take three, four or more jobs. That is the reality of the “jobs growth” promised by both the Coalition and Labor.

This is only part of a wider picture. The Australian Council of Trade Unions (ACTU) released a report on Monday estimating that 4.15 million workers are in insecure work, including casual work, labour hire, gig economy workers and those on fixed-term contracts. That represents one worker in three.

But what the ACTU report did not say is how this has been imposed. That is because the trade unions, working closely with successive governments, have policed the employers’ offensive by straitjacketing workers in the enterprise bargaining system and its anti-strike laws.

In fact, the biggest leap in this process began under the prices and incomes Accord partnership established by the unions with the Hawke and Keating Labor governments of 1983 to 1996. Between 1988 and 1996, casualisation rates jumped from 19 percent of workers to 26 percent, according to Parliamentary Library research.

The growth of insecure work continued under the Rudd and Gillard governments from 2007 to 2013, again enforced by the unions through the Fair Work Australia laws, which cemented the ban on nearly all industrial action. Over three decades, from 1992 to today, full-time permanent employment has fallen from 70.4 percent to 61 percent.

Labor, no less than the Liberal-Nationals, has ensured that the lives of those thrown onto the unemployment scrap heap a misery. Labor governments effectively froze the miserly unemployment payments for years while in office.

Andrew Leigh, Labor’s shadow assistant treasurer and himself a wealthy businessman, declared this week that Labor has no intention of lifting the sub-poverty JobSeeker rate. Leigh also walked back an earlier promise for an “independent inquiry” into the issue of an increase. His comments, unlike Albanese’s “gaffe” on the unemployment rate, hardly received any scrutiny in the press.

The record underscores the necessity for the socialist alternative being advanced by the Socialist Equality Party in this election. Labor and the unions do not represent the interests of the working class. They are pledged, in Albanese’s words, to pro-business “wealth creation” policies that mean ramping up the rate of exploitation of workers.

Macron, Le Pen court Mélenchon voters in second round of French election

Anthony Torres

A man arrives to attend a rally with a hologram of Jean-Luc Melenchon in Pau, southwestern France, Tuesday, April 5, 2022. (AP Photo/Bob Edme)

Ahead of the second round of the French elections, President Emmanuele Macron and Marine Le Pen are multiplying their cynical media appearances to win the votes needed to get elected. In a second round that is too close to call, the two candidates are turning to the voters of Unsubmissive France’s (LFI) Jean Luc Mélenchon, who came in third with 22 percent of the vote.

Against the two reactionary candidates, the Parti de l’égalité socialiste (PES) calls on workers and young people to reject both Macron and Le Pen and to fight to mobilize the working class around a boycott of the presidential run-off.

Elected by a wide margin against Marine Le Pen in 2017 with 66.1 percent of the vote against 33.9 percent, Macron is no longer certain to be re-elected. Unlike the last election in 2017, Macron does not have large reserves of support. The traditional parties that ruled during the Fifth Republic and called for a Macron vote, the Gaullists and the Socialist Party, collapsed with 4.8 percent and 1.8 percent, respectively. Even their few remaining voters may not vote for Macron.

Marine Le Pen is expected to get the votes of far-right media pundit Eric Zemmour, who obtained 7 percent in the first round.

In the media, the possibility of a victory for Marine Le Pen is being raised as the gap between the two candidates narrows ahead of the April 24 vote. On March 12, Macron stood at 58 percent in the polls; with just under two weeks to go until the second round, Macron has only 51.9 percent.

A Macron adviser before the first round feared that a Macron-Le Pen run-off “will be a difficult duel” as there will be no common “Republican front” formed by all the bourgeois parties opposed to the neo-fascists. Bernard Sananès, the head of the Elabe polling institute, said: “The Republican front was already in trouble in 2017, but it is now clinically dead.”

According to an Odoxa poll for L’Obs, more French people who will vote to block either of the two candidates now want to block Emmanuel Macron (19 percent) than Marine Le Pen (18 percent).

The victory of either candidate will depend on the electorate of Jean-Luc Mélenchon. He obtained 22 percent of the vote, especially among young people and workers who oppose war and austerity. Mélenchon finished first in Marseille and the Paris metropolitan area and performed well in Lyon, finishing second, well ahead of Le Pen and the ecologists who hold the mayor’s office.

Thirty-nine percent of Jean-Luc Mélenchon’s voters intend to vote for Macron in the second round, and 24 percent for Le Pen, according to one poll. The remaining 37 percent plan to abstain, vote blank or null.

Macron and Marine Le Pen understand this well and are launching their campaigns for the second time through appeals to Mélenchon’s electorate. Macron, who is planning a very unpopular pension cut that would raise the retirement age to 65, is cynically trying to present a more “caring” face, according to members of his government. On the sidelines of a trip to the north of France, he also said that he “would not rule out a referendum on any reform whatsoever,” including the pension cut.

Macron stressed that he intends to work closely with the unions. “There is a deadline on [raising the retirement age to] 65 in 2031, but if there is no agreement on that and I feel that the situation is too tense, I am ready to review it. I want to discuss this immediately with the political parties and with the trade unions.”

He will go to Marseille, the southern city which voted for Mélenchon in the first round. This Wednesday morning on France2, he attacked the remarks of Marine Le Pen on journalists of “Quotidien” and on the death penalty. He criticized Le Pen’s “method which consists of changing the Constitution under the pretext of consulting the people, which consists of choosing journalists, which consists of telling us on the same day: ‘Do I want to reintroduce the death penalty? I’m not against it, unless of course we put people in prison for life.’”

On Tuesday, Marine Le Pen said she wanted to “revitalize” France’s institutions and democratic functioning at a press conference at Vernon, proposing a “referendum revolution.” She added, “A referendum is not dangerous, giving the people a say is not dangerous, what is dangerous is not giving it to them.”

In front of the journalists she also criticised Macron’s pension reform and his manoeuvring to grab left-wing votes. “There is nothing to expect from Emmanuel Macron in this area. In reality, retirement at 65 is his obsession: it’s all he talks about, it’s all he plans, and he was very unhappy during the last five years that he couldn’t go through with this reform. All French people are extremely intelligent, all have understood that this is Emmanuel Macron’s manoeuvre to try to recover, or at least to attenuate, the opposition of left-wing voters.”

Marine Le Pen said on TF1 that she had “the most protective program” for the French people and praised the “overall coherence of her programme.” On Wednesday morning, she went to a cement factory and warned that France is “facing a wall of inflation that is coming. ... Prices are rising, will rise in the coming weeks. There is a form of denial by the government. Macron’s France is a France that is going to come to a halt.”

Workers and young people can expect nothing from either Macron or Marine Le Pen, regardless of Macron’s criticism of the far-right nature of Le Pen’s policies or Le Pen’s attacks on Macron’s social policies.

Macron has pursued a violently reactionary policy. By decree, he imposed the labour law that facilitates mass dismissals and slashed the wages of railway workers. Faced with his unpopularity, he has cultivated the far right, saluting the Nazi collaborationist dictator Philippe Pétain against the “yellow vest” movement. His Interior Minister Gérald Darmanin, a sympathiser of the far-right Action française made a law imposing discriminatory obligations on Muslim associations and even called Le Pen “soft” on Islam.

On the global COVID-19 pandemic, he pursued the European policy of “living with the virus,” which has led to 1.8 million deaths in Europe.

This filthy record now allows Le Pen to fraudulently pose as a defender of the population’s social rights. Le Pen is, however, a neo-fascist who, if elected, would pursue a policy as bloody as Macron’s, including drastic attacks on immigrants’ rights. Her policies, like Macron’s if re-elected, will be shaped above all by NATO’s push for war with Russia, global inflation and the appalling losses caused worldwide by the pandemic.

As it heads to the IMF, Sri Lankan government declares bankruptcy

Saman Gunadasa

The Sri Lankan government announced a “temporary” debt default from April 12, which is unprecedented in the country’s history. This announcement marks a new stage of the economic and political crisis in Sri Lanka.

At a media briefing on April 12, Central Bank Governor Nandalal Weerasinghe said: “We have lost the ability to repay foreign debt. It has come to a point that making debt payments are challenging and impossible.” Finance Ministry Secretary Mahinda Siriwardena declared that a “comprehensive restructuring of these (debt) obligations will be required.”

The announcement came while hundreds of thousands have been demonstrating in Colombo and throughout the country for more than a week demanding the Gotabhaya Rajapakse and his government resign immediately. These protests have attracted wide support amid unbearable price rises and scarcities of essentials such as fuel, medicines, cooking gas, electricity and necessary food items.

Central Bank Nandalal Weerasinghe [Image: CBSL Twitter]

The Sri Lankan economy has been hit hard—first by the pandemic and then the US-NATO conflict with Russia in Ukraine—leaving the country desperately short of foreign currency needed to pay for imports. In March, foreign reserves dropped to less than $US2 billion. The country has about $35 billion in foreign debt with $6 billion in repayments due during the rest of the year and a huge $25 billion by 2026.

The country’s banking sector has been adversely affected by the default with international rating agencies, such as Fitch, already putting Sri Lanka’s state and private banks on watch for downgrade.

The announcement of a temporary default on foreign loans is not a repudiation of foreign debt. The government has assured all creditors that debt repayments will be made, with interest for the delay period. It further guaranteed that debt “restructuring proposals can be presented to the creditors for their consideration,” and will be consistent with International Monetary Fund (IMF) recommendations.

Almost half of the country’s foreign debts are commercial borrowings, while others include loans from the World Bank, Asian Development Bank, China, Japan and India. The government is also promising “good faith” discussions with the countries that have lent money.

The IMF issued their assessment of the country at the end of last month, along with a draconian austerity program. It included raising income and value added taxes; increasing fuel prices and electricity rates; instituting a market-determined flexible exchange rate; the commercialisation and privatisation of state-owned enterprises; deep inroads into state expenditure; and the further slashing of price controls and subsidies.

The IMF will impose even harsher conditions in discussions for an emergency bailout package with the Sri Lankan delegation led by Finance Minister Ali Sabry which is due to leave on April 18. The package is to assure creditors and rescue Sri Lanka’s corporate and financial elites by imposing new burdens on working people.

Families join night protests at Galle Face Green in Colombo [WSWS Media]

While Sri Lanka’s economy is bankrupt, the timing of the announcement is a political decision aimed at pressuring the population into accepting the IMF’s terms. The government will claim it had no choice and that people have to swallow the bitter pill. All the parties—government and opposition alike—along with the trade unions will call on working people “to be patient” to allow the economy to turn around.

What is being prepared is social devastation in Sri Lanka on an unprecedented scale. When Greece declared bankruptcy in 2015, the “troika” of the EU Commission, the European Central Bank and the IMF dictated brutal terms that imposed by the pseudo-left Syriza regime and devastated the working class.

These included massive job destruction in the state sector, deep cuts to wages and pensions, a large hike in the Value Added Tax that slashed workers’ buying power, and the privatisation of energy, port and transport infrastructure. Large sections of the population were reduced to poverty in a matter of months.

Like the working class in Greece, Sri Lankan workers are not responsible for this crisis. Nor should they accept the burdens that the IMF, the government and the ruling class as a whole will try to impose. Why should hunger and starvation stalk the island to pay off the banks and protect the profits of the wealthy few!

The huge levels of debt can be traced to the reactionary communal war prosecuted by successive Colombo governments not only to defeat the separatist Liberation Tigers of Tamil Eelam but to crush any opposition by Tamils to blatant communal discrimination. Money was repeatedly borrowed to buy arms and to expand the military into one of the largest per capita in Asia.

Following the brutal end of the war in 2009, the government of then President Mahinda Rajapakse maintained the huge military and its occupation of the island’s North and East. The regime borrowed money, hand over fist, for a massive infrastructure upgrade in a bid to transform Colombo into a financial and commercial hub for South Asia. Local and foreign investors were handed substantial tax breaks, and businessmen and politicians cashed in, including through fraud and corruption, while more than 60,000 shanty dwellers were evicted from their homes.

In a nationally-televised address on Monday, Mahinda Rajajpakse, currently the prime minister, cynically tried to pin the blame for the economic crisis on the protest movement, declaring that every second of protest on the street, “our country loses opportunities to receive potential dollars.” He denounced the protests as a “threat to democracy” and, in a thinly-veiled threat, recalled how previous government had used the military and death squads to crush opposition in the past.

Push for European Central Bank to tighten monetary policy

Nick Beams

Pressure is building on the European Central Bank to end its easy money policy and align itself with other major central banks by starting to lift interest rates as its governing council meets in Frankfurt today.

James Bullard, president of the St Louis branch of the US Federal Reserve and a voting member of its policy-making body, told Financial Times (FT) this week it was “fantasy” to think the US central bank could bring down inflation without raising interest rates to a point where they constrain the economy.

Christine Lagarde, president of the ECB, speaking at the European Parliament earlier this year (Credit: AP Photo/Jean-François Badias)

In another indication of central bank policies, the Reserve Bank of New Zealand yesterday lifted its base rate by 0.4 percentage points, the biggest single hike in 22 years.

The aim of this global agenda is not to bring down prices—no hike in interest rates will do that. Rather it is to impose recessionary conditions aimed at preventing workers from pushing for wage increases to compensate for falling living standards as prices race out of control.

The ECB has justified its easy money policy, which has made billions of euros available to finance capital, on the grounds that it has been necessary to try to lift the inflation rate to 2 percent. But this level has been well and truly surpassed, with no end to the price rises in sight.

In the euro zone, the annual rate of inflation rose to 7.5 percent in March, up from an annual rate of 5.9 percent the previous month. The ECB acknowledged at its previous meeting that “inflation was becoming more broad-based and more persistent.” Initially, in line with pronouncements by the US Federal Reserve, the ECB insisted inflation was “transitory.”

Speaking to the FT on the eve of today’s ECB meeting, Otmar Issing, its first chief economist when it was created in 1998, denounced the “misguided” response of the central bank to inflation.

Speaking for the more “hawkish” sections of financial policymakers in the northern European countries, in particular Germany and The Netherlands, Issing said the ECB had made a “misdiagnosis” of inflation and indicated that easy money policies were a significant factor.

“The ECB has contributed massively to this trap in which it is now caught because we are heading towards the risk of a stagflationary environment,” he said.

The ECB was too slow in raising interest rates. “Inflation was the sleeping dragon; this dragon has now awoken.”

He told the FT that ECB policy makers were relying on a forecasting model that no longer applied. This was because the pandemic and the disruption resulting from the war in Ukraine would keep inflation higher by reversing globalisation amid rising trade tensions.

Issing said the ECB had “lived in a fantasy” of continuing its easy money policy “without any negative consequences.” Now it was faced with a “stagflationary” situation of rising prices and slowing growth.

The FT also cited Christian Swing, the chief executive of Deutsche Bank, who said soaring inflation was “poison for the stability of our economy and society” and it was “urgent” the ECB act.

The push for higher wages is being fueled by real pay cuts. In the last three months of 2021 hourly wages in the euro zone were 1.5 percent higher than a year before, but the average rate of inflation was 4.7 percent. Since then, the gap has widened significantly, with inflation being driven by the sharp rise in energy costs.

Euro zone energy prices rose by 12.5 percent in March alone, and in February were 44 percent higher than a year before. The fear of all central bankers is that this becomes the driving force for a wages movement across the continent. Earlier this month, Greek workers held a national strike against rising prices and called for an increase in the minimum wage.

Inflation will continue to surge in the coming days and weeks. In the US, the headline rate of inflation for March was 8.5 percent, up from 7.9 percent in February. Seeking to turn inflation into US war propaganda, White House press secretary Jen Psaki said on Monday evening the inflation number would be “extraordinarily elevated due to Putin’s price hike.”

However, the inflation surge began well before the Russian invasion of the Ukraine, provoked by the refusal of the US and NATO to even consider, let alone negotiate on, Moscow’s calls for security guarantees and that Ukraine not become a member of NATO.

In a report on what it called “chaotic trading” in basic commodities such as oil, gas, metals and food, a Wall Street Journal article on Tuesday noted that the rise in commodity prices was “more intense that anything seen in the modern trading era.”

It made clear that while the price hikes have been accelerated by the Ukraine war, the inflationary surge began much earlier.

One of the first signs of the surge was in the timber market as futures contracts moved up so sharply that traders were unable to complete their deals.

“Other, larger commodity markets heated up in 2021 and began their own bouts of chaotic trading,” the article noted.

It cited comments by Tracey Allen, commodities strategist at JPMorgan Chase, who noted: “Inventories across energy, agricultural and metals are critically low everywhere” and it “doesn’t appear there’s silver bullet.”

One of the chief reasons for the crisis was the refusal of capitalist governments, particularly the US, to take any meaningful public health safety measures to deal with the pandemic. They increasingly pursued the murderous “let it rip” program, lest necessary public health measures adversely impacted on the stock market in the wake of the market crash in March 2020 at the start the pandemic.

This inaction, as the Fed supported finance capital by pouring an additional $5 trillion into the financial system, hit the real economy, leading to supply chain constrictions due to the rapid spread of COVID-19 infections around the world.

Having created an inflation crisis by their refusal to deal with COVID, the ruling classes and their central bankers are now determined to make the working class around the world pay by lifting interest rates to create recessionary tendencies aimed at suppressing wage demands.

With inflation reaching new highs in the US, the Fed is almost certain to hike its base rate by 0.5 percentage points at its next meeting in May with further rises to follow. This will lay the basis for similar action by other central banks, including the ECB.

More severe measures could follow. Fed chair Jerome Powell and the nominee for the position of vice chair, the previously “dovish” Lael Brain, have both expressed their admiration for former Fed chair Paul Volcker. They have indicated that they are prepared to follow the road Volcker took in the 1980s when major interest hikes were used to create a deep recession to crush a movement of workers for higher wages.

The Three-Way Split of French Politics

Mathias Bernard

With the majority of the ballots counted on Monday morning, the official results of the first round of the French presidential election appear to confirm the power dynamics at work from the previous election.

Emmanuel Macron (La République en Marche, LREM) and Marine Le Pen (Rassemblement National, RN) have made it into the second round – in the same order as five years ago, making it the second time the duel will take place. The last and only time this happened in France was when Valéry Giscard d’Estaing (RPR) twice faced off against François Mitterrand (Socialist Party), first in 1974, when the right-wing candidate won and then again in 1981, when the socialist candidate triumphed.

Such stability is largely linked to the main candidates’ clout. Already in the game five years ago, Macron and Le Pen have been able to retain a loyal electoral base. Over the past weeks new voters have rallied around them, prioritising a so-called strategic vote (“vote utile”) over partisan considerations.

Strategic voting

Compared to 2017, Macron is up by nearly 4%. The rise is all the more notable given the incumbent president has abandoned the middle-ground stance between right and left that had ensured his initial success and adopted an agenda that clearly places him on the centre-right of the political spectrum.

The move alienated a fraction of his voters from the left, but attracted a larger part of the voters from the centre and the right – a testament of which is the very low score (4,7%) of Valérie Pécresse, candidate of Les Républicains (LR).

Le Pen has risen nearly as much, with a score never before achieved by the Front National (FN) and then RN within the context of a presidential election. She too benefited from calls to vote strategically and was thus able to largely outperform Éric Zemmour (Reconquête), the former Figaro journalist and far-right candidate. Having initially undermined her leadership, in the end Zemmour helped complete Le Pen’s decade-long effort to “normalise” her candidacy. By claiming the niche of the identity-based right, Zemmour enabled Le Pen to stress the bread-and-butter issues that appealed to the working classes.

On the left of the political spectrum, Jean-Luc Mélenchon of La France Insoumise (LFI) obtained his best score in his third presidential election, also benefiting from the in extremis support of an electorate of the moderate left concerned above all to avoid a second round opposing Emmanuel Macron to Marine Le Pen. Mélenchon came within less than 1.5 points of Le Pen’s score, yet wasn’t able to stop her and make it to the second round himself.

A French political field split into three

The momentum of the strategic vote, which picked up barely a month before the first round, appears to confirm the restructuring of the French political field around three major poles dating back to the 2017 election.

+ A liberal, centrist and European pole attracting, at every national election, a little more than a quarter of the voters but which, thanks to the mechanics of the majority vote, manages to dominate political life until now.

+ A populist and identity-based pole, today dominated by Le Pen and represented by two candidates whose cumulative score (over 30%) constitutes an all-time record for the extreme right and populist identity in a national election in France: it is therefore this pole that has recorded the strongest surge over the last five years.

+ A radical left-wing pole, dominated by the La France Insoumise. If we include the results of the communist and Trotskyist candidates, this totals just under 25% of the vote.

Such a three-way split results in the marginalisation of the two political parties that have structured French political life since the 1970s, the centre-right Les Republicains (formerly the UMP) and the centre-left Socialist Party.

The decline of the traditional parties: an air of déjà vu

With less than 2% of the vote, the Socialist Party sees a decline that could merely be circumstantial. Such a turn of events is not without reminding of the fate of the Radical Party at the beginning of the Fifth Republic: having dominated the left at the time, the party had fallen victim to the bipolarisation of the political landscape set in motion by President Charles de Gaulle and had survived only thanks to a large network of elected representatives, mainly present (like that of the Socialist Party today) in the southwest of France.

The decline of the traditional right is another significant fact of this election, with LR candidate Valérie Pécresse gaining just a quarter of the score achieved by her party five years earlier. The result appears as yet another blow to Les Républicains (LR), who recorded their lowest vote share in the 2019 European elections at 8.4%, in contrast to 20.1% in 2014. It also goes to show the narrowness of the political space now occupied by this party, wedged between Macron’s centre-right and Marine Le Pen’s populist far right.

Important developments since 2017

It’s important to not interpret the results of this first round as a repeat of the 2017 election. The apparent stability of the balance of power masks important changes. The political landscape continues to shift rightward. Testament to this is the emergence of Éric Zemmour’s identity-based platform and Emmanuel Macron’s renewed political offer. While Jean-Luc Mélenchon made gains, they were not enough to compensate for the Socialist Party’s precipitous decline.

Populism also continues to grow. In five years and under the effect of a certain number of social movements (the Yellow Jackets in particular), its rhetoric has become more radical. More than ever, the split between the people and the elite shows itself at the ballot box. This populist rise weakens Emmanuel Macron, whose position is less favourable than it may appear at first glance.

The incumbent president obtains scores comparable to some of his predecessors who were not re-elected for a second term: Giscard d’Estaing in 1981 (28% of the vote), Nicolas Sarkozy in 2012 (27% of the vote). Moreover, he cannot capitalise on the desire for change that largely explained his victory five years ago. The campaign between the two rounds will thus bring into play two antagonistic projects, two visions of society, but also a tension between the “dégagisme” (i.e., a political ideology based on the French verb dégager, “to oust”, calling for the rejection of the established political class) hostile to the outgoing president, and calls by most first round candidates for a collective front against the extreme right.