Steel tube manufacturer Vallourec closes plants in Germany, France and the UK

Elisabeth Zimmermann

Last Wednesday, the Vallourec steel pipe manufacturer announced what thousands of its workers had long feared. The multinational, which produces seamless tubes mainly for the gas and oil industry, is closing its plants in Düsseldorf-Rath and Mülheim/Ruhr, destroying about 2,400 jobs at these two sites alone.

Production of seamless pipes in Western Europe is to be halted completely. About 1,650 workers are affected in Düsseldorf and 750 in Mülheim. In addition, the closings will hit the many employees in subcontracting firms.

Seamless steel tubes from Vallourec [Photo by Mouliric/wikimedia / CC BY-SA 4.0] [Photo by Mouliric/wikimedia / CC BY-SA 4.0]

The two plants being closed in Germany used to belong to the Mannesmannröhren-Werke, which has a long history. The Düsseldorf plant in the Rath district has existed since 1899, while the Mülheim plant has existed since 1966 and is the second largest industrial employer in the city after the Siemens Energy plant.

The Mannesmann Group was taken over and broken up by Vodafone in 2000. A cooperation between the tube works and Vallourec has existed since 1997, when the joint venture Vallourec & Mannesmann Tubes (V&M Tubes) was formed. In 2005, Vallourec acquired the Mannesmann shares. In 2013, the German corporate unit became Vallourec Deutschland GmbH.

Vallourec is a classic multinational. The corporation owns 50 production facilities in over 20 countries with 20,000 employees; its headquarters are in France.

The closure of the factories and the destruction of many thousands more jobs in subcontracting firms are part of a worldwide rationalisation programme, as is currently being prepared and implemented in many corporations. Global corporations are reacting to the international economic crisis and the growing competition on the world market by lowering labour costs or relocating production to low-wage countries with the lowest social standards.

In the process, the international banks and big investors set the tone. Production is trimmed for profit and increasing shareholder value. The pandemic and NATO’s proxy war against Russia serve as a pretext for a frontal attack on the rights and living conditions of workers, who are paying with job losses and inflation for massive rearmament spending, war and the enormous enrichment of the corporations and the super-rich.

The trade unions have nothing to counter this attack except feigned indignation and toothless protests. They act as accomplices of corporate management and offer them “alternative rationalisation programmes.” They want to prove that, with their help, exploitation can also be drastically intensified on the home soil.

This can be seen all too clearly in the case of Vallourec. The closure of factories in Germany also means the closure of the plant in Saint-Saulve in northern France, with 100 jobs, where the tubes produced in Düsseldorf and Mülheim are reworked. Ten years ago, there were 1,000 jobs there, which were gradually cut with the help of the trade unions, employing the usual salami tactics.

One of the group’s sites, in Bellshill, Scotland, with 70 jobs, will also be closed. Production there is to be moved to Aulnoye in France, on condition that the company is then profitable and that appropriate sales markets are developed. Secondly, the company wants to introduce “additive manufacturing” and install robots to produce steel parts in small batches or, as with 3D printers, on a custom basis.

According to the French press, Vallourec also wants to rationalise its research and development department by merging it into one site in Aulnoye, cutting 100 jobs. About 60 other jobs are to be cut at the group’s headquarters near Paris. In total, 300 jobs will go in France as part of a plan to “safeguard employment.”

Worldwide, 2,950 jobs will be lost because of the measures now decided by the Vallourec board, mainly in Europe. The number of employees will drop from 17,000 to 14,000. In France, about 1,300 jobs will remain at Vallourec.

At the same time, the company is building a new production facility in Brazil to supply markets in the Middle East and a plant in Ohio in the US to supply drilling sites for the extraction of shale oil and gas (fracking) in the North American market.

Workers at the Vallourec plants have been concerned about their jobs and livelihoods for months. In November last year, management had announced the sale of the tube plants in Mülheim and Düsseldorf, which had accumulated losses of €700 million since 2015. Some financial investors had showed interest in the plants but did not want to pay anything for them. Instead, they demanded sums running into hundreds of millions of euros for the takeover, for example, for company pensions and other company commitments.

Vallourec CEO Philippe Guillemot justified the closures by saying they had not found a buyer for the plants with a sustainable plan; to avoid further losses, they therefore had to be closed. He claimed that sites in Western Europe were no longer profitable in the face of competition from Eastern European countries with much lower wage and production costs in the manufacture of pipes for the Middle East or other regions.

The role of the IG Metall union

Just two days before the closure was announced, IG Metall organised a convoy of about a thousand workers from Germany to Paris to protest in front of Vallourec headquarters.

Instead of organising joint action with French workers who are also losing their jobs, IG Metall officials delivered pathetic funeral speeches and bemoaned the owners’ profit lust and the king-of-the-castle stance of the decision-makers, with whom they closely collaborate. The union bureaucrats’ cowardly prattle is designed to spread hopelessness and demoralisation.

The globalisation of production and the systematic division and blackmail of the workers means the trade union policy of “social partnership” (i.e., collaborating with the employers) is proving completely bankrupt. To prevent the relocation of production, the works councils and trade union officials try to undercut the extreme exploitation in the low-wage countries by proposing their own rationalisation measures and social cuts. In this way, they set in motion a downward spiral in which the corporations and their shareholders earn handsomely.

At Vallourec, too, IG Metall and the works council had actively supported the downsizing plans from the start. They even commissioned a consultancy firm to draw up their own continuation concept for the plants, which they presented as an alternative to the sale planned by management. According to this concept, production at the German plants was to be oriented towards future markets around hydrogen, geothermal energy, offshore wind plants and solar technology.

This concept, which was also supported by the German management, as Labour Director Herbert Schaaff told the WAZ, still envisaged the elimination of 700 to 800 jobs, while at the same time increasing turnover by 10 percent within the next five years!

The whining of the works councils, that “even this plan is now wastepaper,” is pure hogwash. It merely served as a stalling tactic to prevent a fight for the unconditional preservation of jobs. This is known from numerous similar cases in the past. The Opel plants in Bochum, which at their peak employed 20,000 workers, were shut down in a similar step-by-step method with the collaboration of IG Metall.

Anger boiled over at a works meeting of both plants held on Friday in the ISS Dome in Düsseldorf. The Vallourec management, which had travelled from Paris to justify the closure decision, was greeted with a sustained shrill chorus of whistles; the CEO’s speech was constantly interrupted by boos and heckling. Finally, the event was abandoned, and the management left the hall through the back exit under police protection.

“At the moment, it is completely unclear how production will continue at the two sites until the end of next year in this emotionally charged situation,” commented broadcaster WDR. “It seems possible that there will be a strike.”

Industrial action—a strike or occupation of the plants—is indeed the only way to defend jobs. But that requires a complete break with IG Metall and its works council representatives. Even if they feel forced to organise a few more symbolic protests, they will do everything to stifle any serious fight.

The Ruhr area—from Dortmund (Hoesch) to Bochum (Opel) to Duisburg-Rheinhausen (Krupp)—is full of industrial ruins where tens of thousands once worked. Many had fought bitterly to defend their jobs, but the IG Metall and its works council representatives sabotaged workers’ resistance each time.

For this they were handsomely rewarded. The most famous case is that of Oliver Burkhard, who headed the IG Metall district of North Rhine-Westphalia from 2007 to 2013 before moving to the board of steelmakers thyssenkrupp as personnel director on a salary of millions. Since May 1 this year, Burkhard has had another job: he remains a board member of thyssenkrupp and additionally now heads the defence company thyssenkrupp Marine Systems, Europe’s leading systems supplier for submarines and naval vessels, as CEO.

While workers were raging with anger, all that could be heard from union officials and politicians was the usual demoralised whining. The director of IG Metall Düsseldorf-Neuss, Karsten Kaus, told dpa that they had tried everything to follow the sales process. A continuation concept had also been developed with the works council and a consulting firm. “In the end, none of this came to fruition.”

The IG Metall secretary in Mülheim, Dirk Horstkamp, told WAZ: “There is a lot of consternation here. It’s really hard how Vallourec treats the people here,” he said, and the workforce had put everything on the line.

Germany’s Dax 40 companies enjoy record profits, while workers face record inflation

Ela Maartens

Despite the pandemic and the war in Ukraine, Germany’s largest companies listed on the Dax 40 share index enjoyed massive growth in the first quarter of 2022 alone, raking in whopping record profits. Both turnover and profits were higher than ever before, according to the auditing and consulting firm Ernst & Young (EY).

Overall, the turnover of the DAX companies rose by 14 percent to €444.7 billion compared to the same period last year. Operating profits also improved by 21 percent and totaled €52.4 billion. This is the highest profit level ever measured within a first quarter.

Compared to 2019, before the start of the coronavirus pandemic, there was a 27 percent increase in sales and profits were up 85 percent so far this year.

VW main plant in Wolfsburg

The “winners” are first and foremost the German auto manufacturers: with €8.3 billion, Volkswagen was able to generate the largest profit of all listed companies, about 73 percent more than in the same period the previous year. This is followed by Mercedes-Benz with €5.2 billion (in third place) and BMW with around €3.4 billion. Due to the microchip and parts shortages, many car manufacturers concentrated on the luxury segment, which is most lucrative for them, and were able to sell their cars at significantly higher prices.

With a profit of €6.3 billion, Deutsche Telekom landed in second place in the ranking behind Volkswagen. The pharmaceutical giant Bayer was also able to bring in a gain of €4.2 billion, putting it in fourth place. Airbus achieved the best result in percentage terms: the aerospace company tripled its profits compared to the same period last year to €1.4 billion.

The Frankfurter Allgemeine Zeitung (FAZ) commented: “Losses due to the pandemic and Ukraine war? Not for large German companies.” Whether the author is aware of the cynicism of his statement or not, he nevertheless gets to the heart of the contradictory developments.

While massively rich shareholders are raking in profits at dizzying levels, the pandemic has been raging worldwide for almost three years. In Germany alone, the virus will have claimed some 138,000 victims by the middle of this week. This is the result of the unscrupulous profits-before-lives policy of all the bourgeois parties, from the Social Democrats (SPD) to the Christian Democrats (CDU/CSU), Greens, Liberal Democrats (FDP), the Left Party and the far-right Alternative for Germany (AfD).

The new Infection Protection Act, passed in mid-March, reduced public health protection to a minimum. The 7-day incidence rate is still over 350 per 100,000 inhabitants, but this is deceptive since testing capacities have been systematically reduced and compulsory testing largely abolished. Now, the same politicians responsible for the deaths of countless people are demanding society prepare for another coronavirus wave in the autumn.

At the end of February, Russian President Vladimir Putin responded to the provocations of NATO, led by the US, with a reactionary invasion of Ukraine. The Ukrainian working class has become a pawn of the imperialists’ geostrategic interests, with Germany playing a central role in the NATO offensive against Russia. Berlin is now also supplying heavy weapons to Kiev. The war in Ukraine looks to escalate further and threatens a world war. Even the use of nuclear weapons is not ruled out by Germany’s ruling class.

Chancellor Scholz (SPD) held out the prospect of a gigantic increase in the German military budget and announced a “special fund for the Bundeswehr” amounting to €100 billion at the end of February. If the government has its way, the working class will pay for the biggest rearmament programme since Hitler with mass poverty and the loss of hundreds of thousands of jobs.

Here, too, shareholders are cashing in. The share price of Rheinmetall, Germany’s biggest arms manufacturer after Airbus, has risen from €83 to €200 since the beginning of the year. Workers in Germany and around the world, on the other hand, are feeling the dramatic effects of the growing global crisis more and more directly.

Germany’s annual inflation rate rose to 7.4 percent in April. Georg Thiel, president of the Federal Statistical Office, said in a press release, “The inflation rate thus reached a new high in united Germany for the second month in a row.” Compared to the previous month, inflation increased by 0.8 percent.

According to the Federal Statistical Office, the “above-average price increases for food” are particularly striking. In April they were 8.6 higher than a year ago. Price increases run through all food groups: edible fats and oils are 27.3 percent more expensive, prices for meat and fish products have risen by 11.8 percent. Dairy products and eggs are up by 9.4 percent and fresh vegetables by 9.3 percent.

The drastic nature of the situation is also expressed by the enormous demands that charity organisations are currently experiencing throughout Germany. In particular, “people who previously just managed to make ends meet now can no longer afford the high prices for food, fuel and energy,” according to tafel.de, and refugees from Ukraine are increasingly turning to these non-profit organisations for the first time.

Energy prices have also increased enormously: Within one year, there was a 35.3 percent increase with a 39.5 percent increase in March 2022 alone. Prices for heating oil almost doubled in April 2022 with a 98.6 percent increase, motor fuels saw a 38.5 percent increase and natural gas a 47.5 percent rise, making them barely affordable for many. Electricity saw a 19.3 percent price hike.

Many workers, especially those with families, can no longer cope with the supermarket price increases or those for energy and must choose between eating, heating or travelling to work.

At the same time, Henrik Ahlers, managing director of EY Germany, declares, “So far, Germany’s top corporations have been remarkably good at cushioning the impact of these various crises.” But, Ahlers continues, the general conditions remain extraordinarily difficult.

“Germany as an industrial location is faced with the major challenge of avoiding any serious consequences for industry when gas and oil supplies are restructured,” he continued. In addition to the effects of the war in Ukraine on the German economy, Ahlers particularly highlighted the coronavirus measures in China, which had “significantly dampened” economic expectations.

The experiences in China and other Asia-Pacific countries have shown that millions of lives could have been saved worldwide through a consistent zero-COVID strategy. Now, representatives of international corporations and their mouthpieces in the media are placing enormous pressure on China to lift its safeguards—at the cost of millions of lives.

Undoubtedly it will be the working class, not German industry, that will be the first to feel the effects of energy shortages: if not through cold apartments, then through being put on short-time working or job cuts.

Auditor Mathieu Meyer, a partner at EY, added this in the FAZ: “It is quite possible that things will get even more difficult for Germany’s top companies in the coming months.” More difficult? While workers are being forced to subsist, shareholders’ only concern is that their profits in the coming months and years might be smaller than they have been so far.

The record profits of the Dax 40 companies in Germany reveal what has become apparent, especially since the beginning of the pandemic in 2020, and have gained further momentum through the war in Ukraine. The financial oligarchy will continue to revel in its increasing wealth regardless of losses and will not shy away from imposing further suffering or death to ensure profits rise.

Biden’s summits in South Korea and Japan strengthen anti-China alliances

Ben McGrath

US President Joe Biden concludes his trip to Northeast Asia today, his first to the region since taking office. Holding summits with South Korean President Yoon Suk-yeol and Japanese Prime Minister Fumio Kishida on Saturday and Monday respectively, Biden’s goal has been to prepare allies for stepping up Washington’s confrontation with China.

His meetings in Seoul and Tokyo hit many of the same points, checking the many anti-China boxes, including demonizing Beijing over territorial disputes in the region and challenging Beijing over Taiwan. Though Biden’s joint statement with Yoon did not explicitly mention China, the target was clear. Biden and Kishida were far less restrained, however, criticizing Beijing over territorial disputes in the East and South China Seas and hypocritically expressing concerns over “human rights” in Hong Kong and Xinjiang.

U.S. President Joe Biden, left, Japanese Prime Minister Fumio Kishida and Indian Prime Minister Narendra Modi speak at the Indo-Pacific Economic Framework for Prosperity launch event at the Izumi Garden Gallery, Monday, May 23, 2022, in Tokyo. [AP Photo/Evan Vucci]

Washington also hopes that Biden’s trip will help facilitate better relations between Seoul and Tokyo. For more than a decade now, bilateral relations between South Korea and Japan have been bitter, with Seoul exploiting anti-Japanese sentiment to distract from deteriorating domestic conditions and Tokyo’s remilitarization also raising concerns. Yoon’s new administration has pledged to improve relations with Tokyo.

In Seoul, Biden and Yoon announced that they would take steps to expand military cooperation as “both leaders agree to initiate discussions to expand the scope and scale of combined military exercises and training on and around the Korean Peninsula.” Biden also made clear that “the US extended deterrence commitment” to South Korea, included “using the full range of US defense capabilities, including nuclear, conventional, and missile defense capabilities.”

In addition, Biden and Yoon agreed to restart the Extended Deterrence Strategy and Consultation Group “at the earliest date.” The group, which has not met since January 2018, is a forum for discussing strategic and policy issues regarding so-called extended deterrence, including the use of nuclear weapons. Within South Korean ruling circles, conservatives are calling for the return of US nuclear weapons to the country.

Biden made similar assurances to Kishida while in Tokyo, including “the US commitment to the defense of Japan under the Treaty of Mutual Cooperation and Security, backed by the full range of capabilities, including nuclear.” In addition, the ruling Liberal Democratic Party initiated a debate in March over the possibility of hosting US nuclear weapons.

These measures are not aimed at impoverished North Korea, as is so often claimed, but at China. Even as Washington escalates its proxy war in Ukraine against Russia, the US is making clear to its allies that military preparations targeting Beijing are continuing unabated.

In fact, while Biden and Yoon made their customary denunciations of Pyongyang, they also extended an offer of “humanitarian aid” to deal with the massive COVID-19 outbreak in North Korea. Washington hopes to entice North Korea out of China’s orbit with promises of economic aid, thereby neutralizing Pyongyang in the event of war with Beijing, or even bringing the North in on the side of US imperialism. For that reason, Biden expressed support for Yoon’s “audacious” plan to strengthen the North Korean economy.

On the other hand, the US has sought to ramp up tensions over Taiwan in Tokyo and Seoul by challenging the “One China” policy, which states that Taiwan is a part of China and is formally accepted in Washington.

During a joint press conference with Kishida on Monday, Biden, when asked if the US would intervene militarily over Taiwan, the US president responded, “Yes. That’s the commitment we made.”

The White House tried to downplay the comment, saying there is no change in US policy. However, it is clear that Washington, first under Trump and now under Biden, intends to chip away at the “One China” policy while accusing Beijing of planning an invasion of Taiwan without any evidence. The purpose is to goad Beijing into taking military action in much the same way Washington did in Ukraine with Russia.

In addition to Biden’s comment on Monday, the US president made sure to include references to Taiwan in the joint statements with Yoon and Kishida, calling for “peace and stability in the Taiwan Strait.” This is not an innocent remark, but a calculated inclusion meant to undermine the “One China” policy and Beijing’s legitimacy as the government of China.

Tokyo has also used the tensions instigated by Washington to justify remilitarization, with Tokyo declaring in the summit statement: “Prime Minister Kishida stated his determination to fundamentally reinforce Japan’s defense capabilities and secure substantial increase of its defense budget needed to effect it. President Biden strongly supported Prime Minister Kishida’s determination.”

Tokyo plans to further increase its military spending from the already record amounts to better project its military power overseas in the name of “collective self-defense,” the pretext used to override Article 9 of its constitution that nominally forbids Japan to maintain armed forces and use them to further its imperialist interests.

The economic aspect of Biden’s trip focused on securing supply chains is also part of Washington’s war preparations. While in South Korea, Biden toured a semiconductor plant, declaring afterwards that Washington would ensure “our economic and our national security are not dependent on countries that don’t share our values,” an obvious reference to China.

The Indo-Pacific Economic Framework (IPEF) launched on Monday is another component. Biden stated that 13 nations would initially take part in the plan, including both Japan and South Korea. The IPEF is meant to offset the economic influence of Beijing in the region and reduce reliance on the Chinese economy, facilitating the overall war drive. However, as Biden is pursuing the deal through executive orders so as not to risk opposition in Congress, any deal will be unable to offer access to US markets, making it far less attractive to join.

Biden will conclude his trip with a summit of the Quadrilateral Security Dialogue (Quad), a US-led quasi-military alliance aimed at China that includes Japan, Australia, and India. The purpose of Biden’s trip to Asia is to consolidate military alliances against China and reassure allies that the US/NATO proxy war in Ukraine is not a distraction from its preparations for war in Asia.

Sri Lanka defaults on foreign debts, prepares to implement IMF austerity

Saman Gunadasa

Sri Lanka missed its foreign debt repayments on May 18, amid a rapidly worsening economic and political crisis. The country was unable to pay $US78 million in interest on two sovereign bonds due on May 18, after one-month grace period.

Sri Lanka is the first country in the Asia-Pacific to default on its foreign debt in more than two decades since Pakistan defaulted in 1999. The Guardian warned: “Economists fear Sri Lanka could be first of several, with the IMF [International Monetary Fund] in talks with Egypt, Tunisia and Pakistan.”

Central Bank Governor Nandalal Weerasinghe [Image: CBSL Twitter]

Sri Lanka first declared its inability to make repayments on $51 billion foreign loans on their due dates on April 12, citing shortage of dollar reserves but insisting this was not a “hard default.” The Central Bank of Sri Lanka expected to establish a negotiated consensus with creditors for “debt restructuring” before the repayment dates.

However, the political crisis of the government led by President Gotabhaya Rajapakse has only intensified over the past month. Daily anti-government protests are widespread against unending price increases and shortages of essentials such as food, medicine, fuel, cooking gas as well as lengthy power cuts.

After a general strike on April 28, millions joined the general strike on May 6 that embraced every section of the working class. It was backed by the poor and oppressed and small businesses, shutting down almost the entire economy.

Then Prime Minister Mahinda Rajapakse was forced to resign on May 9 after his Sri Lanka Podujana Peramuna (SLPP) thugs physically assaulted the anti-government protesters including those occupying Galle Face Green in central Colombo, provoking retaliatory attacks.

After imposing a state of emergency on May 6 and deploying military on the streets with orders to shoot rioters on sight since May 10, President Rajapakse appointed United National Party leader Ranil Wickremesinghe to be prime minister and implement the IMF’s austerity demands.

A disparate cabinet of 19 ministers has been cobbled together, picking up MPs from the opposition parties and also Rajapakse’s SLPP. Of them, eight were sworn in only yesterday. However, Rajapakse and Wickremesinghe have failed as yet to fill the key post of finance minister.

Central Bank Governor Nandalal Weerasinghe last Thursday said the default was announced in advance and claimed: “Our position is very clear. Until they [lenders] come and restructure, we can’t pay.”

On May 11, Weerasinghe was threatening to quit his post if there was no political stability. However, last Thursday he said he made the statement then because there was no prime minister or cabinet, and “there was a lot of violence and political instability.” Now, he claimed, “there is a significant improvement,” while acknowledging there was still no finance minister to sign a loan agreement with the IMF.

Weerasinghe did not reveal details of the IMF program. However, he admitted that inflation is expected to reach 40 percent during the next couple of months—up from 30 percent in April. In other words, there will be no end to the intolerable conditions facing workers and the poor, many of whom are now threatened with starvation.

Sri Lanka is expecting $3 to $4 billon from the IMF. The technical discussions with the IMF on a bailout loan are scheduled to conclude today. Its spokesman Gerry Rice Sunday said: “We remain committed to help Sri Lanka in line with the IMF policies …” However, finalizing the loan agreement will take another three months.

IMF Managing Director Kristalina Georgieva speaking to the BBC yesterday declared: “Governments need to subsidise the cost of food and energy for the poorest members of society and without the correct support, the protests seen in Sri Lanka could be repeated in other countries.”

However, the IMF prescription for the bailout loan will deepen the attacks on the social rights and living standards of working people, pushing many more into poverty.

As part of its demands for “debt sustainability,” the IMF has proposed among other things the privatisation of public enterprises; the reduction of public spending to curtail the budget deficit; and increased direct and indirect taxes to enhance the state revenue.

These measures will be translated into severe cuts to jobs, wages and pensions. Welfare programs will be slashed in the guise of providing targeted support for the most vulnerable.

Addressing the nation on May 16, Prime Minster Wickremesinghe warned of what was to come, saying: “The next couple of months will be the most difficult ones of our lives. We must prepare ourselves to make some sacrifices and face the challenges of this period.”

He proposed the privatization of Sri Lankan Airlines and hinted at further privatizations, saying the government “can no longer bear the losses” of the Petroleum Corporation or Electricity Board.

The economic crisis in Sri Lanka has been fueled by the global COVID-19 pandemic and compounded by the US-NATO proxy war in Ukraine against Russia. The increases in interest rates by the US Federal Reserve Bank and other central banks and sharply rising inflation are adding to the economic turmoil in Sri Lanka as in other countries.

In line with the IMF’s demands, the Central Bank doubled the interest rates. Since early March, Sri Lanka’s exchange rate has been allowed to float according to market forces leading to a devaluation of the rupee by about 80 percent.

According to the Central Bank annual report issued on April 30, Sri Lanka’s real gross domestic product (GDP) growth for 2022 is projected to decline to 1 percent, downgraded from an earlier estimate of 5.5 percent. Per capita gross domestic product was $3,815 in 2021 and is expected to decline to $3,041 this year.

Within ruling circles there is no opposition to the IMF’s austerity agenda. The opposition Samagi Jana Balawegaya has repeatedly criticized the government for failing to seek emergency finance from the IMF sooner. The Janatha Vimukthi Peramuna (JVP) has remained silent on the issue, but has not opposed the IMF negotiations or proposed any alternative.

The trade unions have sought to shut down any industrial action by the working class as soon as possible. Like the political establishment as a whole, the unions were terrified by the extent of support for the two general strikes. Over the past year, there have a series of major workers’ struggles demanding higher wages and improved conditions.

Significantly, not a single trade union has publicly opposed the planned IMF austerity program and its far-reaching attacks on the living conditions of workers and the poor.

Oxfam report: As millions face starvation food giants’ profits soar

Nick Beams

Hundreds of millions of people around the world are being hit by unprecedented food price inflation and shortages and are confronting outright starvation. But the giant companies that dominate food production and distribution are raking in money like never before.

Malnourished children wait for treatment in the pediatric department of Boulmiougou hospital in Ouagadougou, Burkina Faso. (AP Photo/Sophie Garcia) [AP Photo/Sophie Garcia]

The food crisis, resulting from total subordination of the means of life to capitalist profit, forms a centrepiece of the latest update on global inequality prepared by the UK-based aid agency Oxfam. This is in advance of the World Economic Forum meeting, the gathering of the world’s economic and financial elites, being held in Davos, Switzerland, this week.

The inflationary food crisis, set off as a result of the refusal of capitalist governments to take action to eliminate the COVID-19 pandemic, has been intensified by the US-led NATO proxy war against Russia in Ukraine.

Last week UN Secretary-General Antonio Guterres said global hunger levels were at a new high, with the number of food insecure people doubling from 135 million to 276 million in the past two years.

With the supplies of fertilisers and other agricultural inputs severely disrupted, the crisis has no end in sight.

The latest Oxfam report details how global agribusinesses, as well as the energy companies, are profiting out of this human misery.

Global food prices have risen by 33.5 percent in the past two years and are expected to rise by another 23 percent this year. March recorded the biggest leap in food prices since the UN began collecting food price data in 1990.

“Corporations and the billionaire dynasties who control so much of our food system are seeing their profits soar. the report said, noting that 62 food billionaires had been created in the last two years.

The report directed particular attention to the global food giant Cargill, one of the world’s largest private companies and one of four firms that control more than 70 percent of the global market for agricultural products.

The combined wealth of Cargill family members has increased by $14.4 billion since 2020, a rise of 65 percent. It grew by almost $20 million a day during the pandemic, driven by food price rises, especially for grains.

The company had a net income of $5 billion during 2021, the biggest in its history, and paid out $1.13 billion in dividends largely to family members. It is expected to make record profits again this year.

Cargill is not the only one raking in the money. One of its main rivals, the agricultural trading firm Louis Dreyfus reported that its profits surged by 82 percent last year on the back of rising grain and oilseed prices.

At the other end of the food supply chain, Oxfam noted that the US supermarket chain Walmart paid out $16 billion last year in the form of dividends and share buybacks to holders of its stock. Just 5.9 percent of an average basket of groceries went to small-scale farmers.

The average annual salary for the Walmart employee is just $20,942 but if the money handed out to shareholders was devoted to the company’s 1.6 million employees average wages would rise to $30,904 per week.

The other major beneficiary of the inflation crisis, driving down the living conditions of workers all over the world, are the major oil companies which have doubled their profit margins in the two years of the pandemic. The price of crude oil has risen by 53 percent over the past year and natural gas by 148 percent. The energy price hikes are a significant contributor to the rise in food and transport costs.

“The companies that are part of the world’s energy supply chain are making a killing [quite literally in view of the threat of starvation] out of these prices increases. Over the past year, profits across the energy sector have increased by 45 percent… Billionaires in the oil, gas and coal sector have seen their wealth increase by $53.5 billion [24 percent] in real terms in the past two years,” the report said.

The same picture is revealed in the pharmaceutical industry where the pandemic has resulted in the creation of 43 new billionaires, “profiting from the monopolies their companies hold over vaccines, treatments, tests and personal protective equipment.”

When such issues are raised, the reply of the “free market” defenders is that this wealth is the justifiable “reward” for entrepreneurship and spending on research without which the development of new drugs and vaccines would not take place.

This has always been a lie and never more so. As the report noted, most of the fortunes of the new pharma billionaires “is thanks to billions in public funding—for instance, from R&D grants and procurement” by governments.

Moderna, whose only product is a COVID-19 vaccine, has a 70 percent profit margin. “It has been immensely successful in turning $10 billion government funding in the US… into around $12 billion vaccine profits to date.”

The company has created four vaccine billionaires with a combined personal wealth of $10 billion while just 1 percent of its vaccines have gone to poorer countries. At the same time, it has refused to cooperate with efforts to establish local manufacturing in low- and middle-income countries.

The story is the same at Pfizer. The profit margin on its vaccine is 43 percent and last year it paid out $8.7 billion in dividends. In order to protect its profit flow, Pfizer has joined with other pharmaceutical companies to prevent the waiver of intellectual property rights that would see vaccine prices fall sharply. Millions of dollars have been spent on lobbying operations to try to prevent this happening.

In its overall analysis of the inflationary crisis and the explosion of billionaire wealth, the report noted that billionaires have increased their wealth as much in 24 months as they did in the previous 23 years, with those in the food and energy sectors increasing their fortunes by a billion dollars every two days.

A new billionaire “has been minted on average every 30 hours during the pandemic,” while in the same amount of time one million people are being pushed into extreme poverty.

It noted that the increase in billionaire wealth has resulted from the injection of trillions of dollars into the financial system. On top of this, there has been a “profit bonanza” and the strengthening of monopoly control over the economy with estimates that in the US “expanding corporate profits are responsible for 60 percent of increases in inflation.”

The report continued Oxfam’s advocacy for a series of wealth taxes, noting that a progressive wealth tax starting at 2 percent for those with wealth above $5 million and rising to 5 percent for wealth above $1 billion could generate $2.52 trillion worldwide, enough to lift 2.3 billion people out of poverty and provide health care for 3.6 billion lower income countries.

Such calculations are valuable in as much as they demonstrate there are more than sufficient resources available to reconstruct the global economy on the basis of social equality. But the political perspective being presented, namely that reasonable measures can be advanced to convince the ruling elites to change course, is bankrupt.

In fact, it is refuted by some of the concluding comments in the report: “Oxfam is above all underlining that the rapid rise in billionaire wealth today and the cost-of-living crisis faced by billions of people are one and the same phenomenon. This is not something that is just happening on their watch but that has been deliberately crafted with their support.”

As it escalates war against Russia, Biden administration threatens war against China

Andre Damon

On Saturday, US President Joe Biden signed a bill authorizing $40 billion in spending, largely for weapons and other assistance to Ukraine.

One month ago, US military assistance to Ukraine under the Biden administration totaled $4 billion. With the stroke of a pen, Biden has expanded the US commitment to the conflict tenfold.

But with the ink barely dry on the latest weapons shipment, Washington went on to escalate the conflict further. On Monday, US Defense Secretary Lloyd Austin announced that the US would provide Ukraine with Harpoon anti-ship missiles via an intermediary, Denmark. The Harpoon is the standard anti-ship armament of the US Navy, capable of sinking large warships.

The USS Coronado (LCS 4) launches a Harpoon Block 1C missile.

On Friday, Ukrainian Ministry of Internal Affairs adviser Anton Gerashchenko tweeted that “The US is preparing a plan to destroy the [Russian] Black Sea Fleet” as part of a “plan to unblock the ports.” He continued, “Deliveries of powerful anti-ship weapons (Harpoon and Naval Strike Missile with a range of 250–300 km) are being discussed.”

The Pentagon responded by officially denying that the US is actively planning operations to destroy Russia’s navy in the Black Sea. However, Monday’s announcement makes clear that it is engaged in precisely such an operation. The US was already directly involved in the sinking of the flagship of the Russian fleet, Moskva, last month.

As usual, military escalation by the United States is accompanied by a propaganda barrage. In this case, the apologists of US imperialism are declaring that greater involvement in military operations in the Black Sea is dictated by the need to open the ports for global food shipments.

The Washington Post published an editorial entitled “Putin is starving millions of people around the world.” It concludes, “with 20 million metric tons of grain and corn just sitting in storage at Ukrainian ports right now, there’s only so much the rest of the world can do. Mr. Putin’s war is on the verge of becoming Mr. Putin’s global famine.”

The Post’s hypocrisy is jaw-dropping. The United States is the world’s leading practitioner of using starvation as a “weapon” of foreign policy. In 1974, Secretary of Agriculture Earl Butz declared, “food is a weapon. It is now one of the principal tools in our negotiating kit.” In December 1980, John Block, Reagan’s secretary of agriculture, told reporters: “I believe food is the greatest weapon we have.”

The examples of the US using starvation as a weapon include withholding food aid to Chile in 1973 as part of a successful effort to overthrow the government of Salvador Allende and cutting food assistance to Bangladesh in 1974 during a massive famine to punish the country for trading with Cuba.

US sanctions on food and medicine imported by Iraq in the 1990s contributed to the preventable deaths of hundreds of thousands of people, while US sanctions against Iran led to runaway food price inflation, meaning that “following a healthy diet has become more difficult for most Iranians,” according to one study.

As for the present ongoing food crisis, fundamental responsibility lies with the US and NATO powers, which provoked the current conflict and have sought at every point to scuttle efforts at a negotiated solution to the war.

Establishing control over the Black Sea is a vital US war aim. This waterway connects Europe, Russia and the Middle East. It not only holds critical reserves of oil and gas, but serves as a nodal point for hydrocarbon pipelines connecting Europe and Asia.

Even as the United States was escalating its war with Russia, Biden openly threatened to go to war with China, the world’s most populous country and its second-largest economy.

Speaking at a press conference in Japan, Biden was asked, “Are you willing to get involved militarily to defend Taiwan if it comes to that?”

Biden replied, “Yes… That’s the commitment we made.”

Despite efforts by the media to present Biden’s comment as a misstatement or a “gaffe,” the reality is that Biden’s remark corresponds with the views of leading US foreign policy figures.

Richard Haass, president of the Council on Foreign Relations, wrote on Twitter, “This is the third time @potus has spoken out in favor of strategic clarity on Taiwan and third time WH [White House] staff has tried to walk it back. Better to embrace it as new US stance.”

Supporting Biden’s declaration that the US should go to war with China over Taiwan, Haass declared, “The ‘Ukraine model’ [is] inadequate for Taiwan. Taiwan [is] an island that cannot be easily resupplied. Plus local partners & allies in Asia want direct US intervention. Plus Taiwan not nearly as strong as Ukraine. So direct US military involvement would be essential for defense vs China.”

The US-provoked war against Russia in Ukraine has already killed tens of thousands of people and displaced millions. The war against China Biden is threatening would turn the entire Asia-Pacific region, the world’s most populous area, into a war zone, with devastating and incalculable consequences.

Far-reaching plans for military escalation were in place long before Biden even reached the White House. In 2020, Biden published an article entitled “Rescuing U.S. Foreign Policy After Trump” in Foreign Affairs.

Biden pledged, “to counter Russian aggression, we must keep the alliance’s military capabilities sharp.” At the same time, the United States needs to “get tough with China,” he wrote. The “most effective way to meet that challenge is to build a united front of U.S. allies and partners to confront China.”

These plans were limited to the specialist foreign policy press read by beltway insiders, and Biden’s plans to provoke war with Russia and China played virtually no part in his appeal to voters. Instead, Biden publicly pledged to end “forever wars.”

In reality, Biden’s withdrawal from Afghanistan was a repositioning of US forces in preparation for an escalation of the US conflict with Russia and China.

In 2020, the World Socialist Web Site warned: “A Biden/Harris administration will not inaugurate a new dawn of American hegemony. Rather, the attempt to assert this hegemony will be through unprecedented violence. If it is brought to power—with the support of the assemblage of reactionaries responsible for the worst crimes of the 21st century—it will be committed to a vast expansion of war.”

These warnings have been confirmed. For years, the United States military has systematically emphasized its plans to wage “great-power conflict” with these two countries. Now, a war with Russia has already broken out, and Biden’s comments make it clear that the administration is systematically preparing for a war with China.

These conflicts threaten to escalate into a world war, waged between nuclear-armed powers, threatening Europe, Asia, North America and, indeed, the whole of human civilization with destruction.

The Biden administration’s war plans express the relentless drive by US imperialism to reverse its relative economic decline through military means.

Papua New Guinea elections loom amid growing domestic and global crisis

John Braddock

National elections in Papua New Guinea (PNG), due in July, are already facing mounting difficulties. The issuing of writs was postponed for a week on May 12 following the death of Deputy Prime Minister Sam Basil in a car accident.

James Marape (light shirt in the centre) campaigning in Tari with supporters [Image: pmjamesmarape.com]

The delay was to allow for a state funeral and for Basil’s United Labour Party to reorganise itself. Basil was a longstanding MP and member of the country’s ruling elite. He had held major portfolios over his career and had ambitions to be prime minister following the election.

In November 2020, Basil was one of 12 cabinet ministers who defected from the James Marape-led coalition government, plunging it into turmoil. The manoeuvre, designed to force a no confidence vote, was stymied when Marape abruptly adjourned parliament for four months. Basil then returned to the fold.

Polling is due to start on July 9 and finish on July 22, with writs returned on July 29. Normally, several thousand potential candidates come forward to nominate in PNG elections seeking to access money and favours. This year, it is predicted the figure could be as high as 4,000 to contest the 118 seats.

Seven new seats have been created in the parliament. However, ballot papers were printed before the government formally established the new seats. The ballots had to be destroyed and reprinted, and there is ongoing uncertainty over the new districts which have not yet been budgeted for. There could well be a court challenge to their validity.

University of Papua New Guinea academic Okole Midelit told Radio NZ on May 16 that the election poses significant “security risks.” Under-resourced police, widespread availability of illegal firearms, and the politicisation of the security force will present major issues, he warned. Low COVID-19 vaccination rates are also a particular concern, Midelit noted, with less than 3 percent of the population of nearly nine million fully vaccinated.

More than 200 people died in violent clashes during the widely discredited 2017 election. The poll was mired in bribery and corruption, ballot rigging and the wholesale omission of names from the electoral roll. Protests erupted over accusations that vote counting was hijacked.

The narrow victory of then Prime Minister Peter O’Neill was regarded as illegitimate. Explosive social tensions produced by the government’s austerity policies in response to the deepening economic crisis, including the collapse in global energy prices, saw ongoing turmoil over the following year.

In 2019, O’Neill avoided a vote of no confidence by resigning his position and has since faced corruption charges. He was replaced as prime minister by former ally and finance minister Marape, leader of the Pangu Party, who has in turn fended off a series shifting allegiances from within the unstable and corrupt political establishment.

Marape has presided over an escalating economic and social disaster. His government has been criticised for its handling of the closure of the Porgera goldmine and alleged misuse of international funds for PNG’s COVID response. Budget shortfalls have resulted in government debt rising to 40 percent of GDP.

O’Neill, who leads the People’s National Congress Party (PNC), appears to be the main electoral threat to Marape. According to the Post-Courier, O’Neill told a pre-election crowd last week that the PNC is ready to return and “remove thieves, liars and false prophets that have mismanaged and critically run the economy of the country.”

O’Neill, however, remains deeply unpopular. In 2016, police opened fire and injured dozens of people at a protest demanding that O’Neill step down and face fraud charges.

The cynical manoeuvring between rival groups of parliamentarians highlights the vast gulf that separates the poverty-stricken PNG masses and the country’s corrupt and venal political elite. Trust in the government has disintegrated following decades of social deprivation and growing wealth inequality, buttressed by authoritarian military-police measures.

The crisis has been intensified by the COVID-19 pandemic. The government, which ditched national pandemic lockdowns in mid-2020, is responsible for an unfolding disaster. PNG has officially recorded 43,900 cases of COVID and 651 deaths but with testing all but abandoned the figures are meaningless. In March this year most remaining restrictions were removed, including the need for booster shots to be fully vaccinated.

Hospitals have been overwhelmed. Last October, health authorities organised a mass burial of 253 bodies, to relieve pressure on the Port Moresby General Hospital morgue, where bodies were stacked on top of each other as COVID-19 cases surged. Now, the country has begun grappling with a tuberculosis epidemic.

Tens of thousands of workers, estimated as high as 25 percent of the workforce, have meanwhile lost their jobs. Meagre government relief measures such as tax deferrals and loan repayment holidays have been woefully insufficient. According to UN figures, 39 percent of the people live below the poverty line of $US1.90 a day.

There is growing resistance in the working class. In March 2020, 600 nurses in Port Moresby held a sit-in over concerns about the lack of personal protective equipment. Four thousand nurses were then ready to strike over the lack of COVID preparedness, until the strike was called off by the union. More stoppages and sit-in protests took place late last year over nurses’ pay and working conditions.

Marape has appealed for “peace and order” during the elections, declaring there will be “zero tolerance” for any violence. Highlighting the fears within the ruling establishment, Police Commissioner David Manning felt it necessary to warn all candidates and supporters to refrain from violence. “Do not bribe your voters. Do not threaten them,” he said.

The election will be closely scrutinised by both Washington and Canberra. External interference by either or both powers to influence the outcome cannot be ruled out. Australia, the country’s colonial master until 1975, has a long and dirty history in PNG defending the interests of its multinational  mining companies and Canberra’s geo-strategic interests in the Asia-Pacific.

The PNG ruling elite has maintained a precarious balancing act between economic and diplomatic relations with China on the one hand, and the demands of the imperialist powers on the other. PNG’s involvement in China’s Belt and Road Initiative and Beijing’s funding for infrastructure projects has increasingly alarmed Washington and Canberra.

The Australian on Saturday cited unnamed sources saying that China is offering “security support” to help PNG prevent political and ethnic violence during the election. Chinese Foreign Minister Wang Yi is reportedly planning to visit PNG in June. The paper also noted that “Australia is providing about $30m in support towards the conduct of PNG’s elections, while Australian Defence Force aircraft and about 140 personnel will assist with logistics and planning.”

During his term of office, O’Neill turned towards Beijing for financial support, followed by Marape seeking to reduce reliance on Australian aid. Marape said regarding China that PNG is a “friend to all, enemy to none.” His government has meanwhile maintained strong security ties with the US, including holding joint military exercises in each of the last two years.

PNG was pushed more sharply into focus in April when China and the Solomon Islands signed a security pact allowing for Chinese presence. US Indo-Pacific coordinator Kurt Campbell was promptly dispatched to Honiara, to warn the Sogavare government Washington would “respond accordingly,” if China were to establish any basing arrangements.

Underscoring Washington’s wider intent to block any Chinese presence in the Pacific, the US delegation also visited Fiji and PNG and bluntly warned them against any similar treaties with China. The diplomatic intimidation included threats by then Australian Prime Minister Morrison, who said a Chinese base in the Solomons would be a “red line”—that is, a trigger for military intervention.