Sri Lankan prime minister declares class war policies against workers and rural toilers

Deepal Jayasekera

Addressing parliament Tuesday, Sri Lankan Prime Minister Ranil Wickremesinghe reiterated demands that the working class and rural toilers bear the full burden of the unprecedented economic collapse which has been intensified in every country by COVID-19 and the US-NATO proxy war against Russia.

Ranil Wickremesinghe (Image: Ranil Wickremesinghe Facebook)

President Gotabhaya Rajapakse appointed Wickremesinghe prime minister after the former prime minister, Mahinda Rajapakse, was forced out on May 9 amid mass protests demanding the resignation of the president and his government over shortages, the skyrocketing prices of essentials and hours-long daily power outages. Wickremesinghe, who leads the United National Party (UNP) and is the right-wing party’s only parliamentarian, has no popular support.

Wickremesinghe highlighted the severe and worsening economic crisis confronting Sri Lanka and cited the country’s declining harvest of basic food crops in recent months.

“In a few months we will have to face serious difficulties and shortages in terms of our diets,” he said, referencing a Sri Lankan Central Bank forecast that the country’s economy will contract by 3.5 percent in 2022. Wickremesinghe went on to warn that “According to the International Monetary Fund, the situation is even worse. According to them, growth will be -6.5 percent.” He cited these figures in order to justify an intensification of the class-war policies that he and President Rajapakse are beginning to unleash against workers and the rural poor.

“Our traditional political ideologies,” must be set aside “for a short period” and “a concerted effort” made “to rebuild the country,” he declared. “The people of the whole country should play a role in this effort.”

In other words, Sri Lanka’s working masses are somehow responsible for the crisis facing the ruling class and therefore have to shoulder the burden of “rebuilding the country” and establishing “economic stability” in order to maintain the Rajapakse-Wickremesinghe government and bourgeois rule. “Our primary focus here is on economic stability but we cannot recover from this alone by creating economic stability. We need to revive the economy of our country,” Wickremesinghe said.

The International Monetary Fund (IMF) has made clear that implementation of harsh austerity measures is a pre-condition for an emergency loan facility he is attempting to secure in a desperate bid to temporarily avert the dire economic crisis confronting Sri Lanka. These measures include restructuring of public sector enterprises, increased taxes and drastic cuts of the fiscal deficit by slashing government sector jobs, wages, pensions and remaining subsidies.

As well as appointing Wickremesinghe prime minister, Rajapakse also made him finance minister with the specific responsibility of implementing these severe measures as quickly as possible.

On June 2, Wickremesinghe increased Value Added Tax (VAT) from 8 percent to 12 percent. The income tax net was also widened to encompass more sections of the working class, telecommunication taxes were hiked and new surcharges were imposed on certain goods.

Public sector institutions have been instructed to slash their expenditure by various means, including calling only “essential” staff to workplaces and limiting overtime payments. These moves are in preparation for cuts to jobs, wages and other limited benefits received by public sector workers.

Wickremesinghe held talks on Tuesday night with IMF Managing Director Kristalina Georgieva regarding Sri Lanka’s current economic situation. He requested a senior IMF delegation visit the country as soon as possible so that a staff-level agreement could be quickly finalised.

During his parliamentary address, Wickremesinghe also hinted at some of the economic factors driving future attacks on public sector workers. “In the current situation in our country,” he said, “the government is unable to provide funds to cover the losses of any state-owned enterprises. That debt burden can no longer be borne by the state or the state-owned banks.”

On May 29, Public Administration Ministry Secretary Priyantha Mayadunne told a meeting of his officials that public sector employees preparing to retire should not ask for pensions and gratuities “until the economy reaches $US10,000 [per capita income level].” He also complained that “the maximum bearable number of jobs in the public sector is 500,000 or at most 800,000” against the current level of 1.7 million. This means the destruction of between 50 and 70 percent of the existing public-sector workforce.

During his speech to parliament, Wickremesinghe called for the unity of all parties of the political establishment in order to impose the new austerity measures, inviting them to set aside tactical differences and support the government’s “economic, socio-political and public service reforms.”

“Let us build the country first. Let us protect our country from this crisis. Give your support to these efforts. After returning to normalcy in the country within the specified time frame, you may return to your traditional political activities,” he said.

In an attempt to counter any possible hesitation by any section of the ruling elite fearful of how the working class and rural poor will respond to these brutal social measures, Wickremesinghe referred to WWII British Prime Minister Winston Churchill.

“I would like to conclude my statement by quoting Winston Churchill. ‘The pessimist sees difficulty in every situation; the believer sees opportunity in every difficulty,’” Wickremesinghe declared. “We must take advantage of every opportunity that comes our way. We will use these opportunities to build the country with confidence. We will all take full responsibility to bring the country back to normalcy.”

In fact, all the Sri Lankan parties of the political establishment, including the Samagi Jana Balawegaya (SJB), the Janatha Vimukthi Peramuna (JVP) and the Tamil National Alliance (TNA), along with their pseudo-left hangers on like the Frontline Socialist Party (FSP), have already demonstrated their support for the already imposed IMF policies.

None of them have opposed the VAT hikes and other massive tax increases announced last week or denounced the massive job cuts being prepared in the public sector. The SJB, JVP and TNA, moreover, have previously implemented or supported Sri Lankan governments implementing similar harsh austerity policies in the past. In fact, the SJB previously criticised the Rajapakse government for not going to the IMF sooner, while the JVP has signaled its tacit support by remaining silent over the latest IMF demands.

Workers, young people and the rural masses have already shown that they will not accept the sort of attacks on their social and democratic rights being prepared by the Rajapakse-Wickremesinghe government. The working class over the past two months has played a central role in the ongoing popular protests against the Rajapakse government, with millions of workers participating in two one-day general strikes on April 28 and May 6 and a later general strike, which began on May 9 in response to government-instigated goon attack on protesters and ended on May 11 when it was called off by the unions.

Unable to dampen down rising anger over the government’s public restructuring and privatisation measures, the Ceylon Electricity Board Engineers Union has called national industrial action, starting at midnight Wednesday, to protest changes to the Electricity Act that allow India’s Adani Group to establish wind-power projects in the north.

The Rajapakse-Wickremesinghe government has responded to the planned strike action by declaring the electricity supply and the health sectors essential services, making clear that it is on a collision course, not just with these workers but the entire working class.

Our Country is Trading Children’s Lives for Guns

Sonali Kolhatkar

Mass shootings are good for gun sales. In the days following the horrific massacre of 19 children and two teachers in Uvalde, Texas, firearm manufacturers’ stock prices predictably rose. Gun owners, who have been conditioned to purchase weapons out of fear of not being able to buy more guns, tend to run out and buy more weapons in anticipation of coming restrictions. That in turn boosts gun profits and stock prices. It is a macabre cycle that appears to be fueled by Republican-led fear-based culture wars.

Gun buyers behave in ways that suggest they logically anticipate that lawmakers will respond to a mass shooting by making it harder to buy a gun. After all, when consumer products are found to be a danger to humans, they are often regulated.

The federal government routinely recalls dangerous products—such as a line of children’s bunk beds whose defective ladder resulted in the death of a 2-year-old child from Ohio. In that case, nearly 40,000 units sold to the public were recalled. The U.S. Public Interest Research Group has a lengthy list of toys that the federal government has recalled that have posed choking hazards for kids.

It makes sense to regulate harmful products, especially where children’s health and safety are concerned. The government doesn’t sidestep the issue by saying that it was the fault of the child or the parents that a product caused harm. Instead, it acts on the assumption that only safe products should be available for purchase, and it punishes the manufacturer.

But, time and again, gun owners’ very rational fears remain unfounded as thousands of children are victims of gun violence each year, and yet firearms manufacturers are absolved of blame and weapons of war remain easily available for purchase. The Uvalde shooter reportedly bought two AR-15-style rifles legally from a federally licensed gun store just days before the massacre and used one of them to end 21 lives.

A group of pediatricians published a plea in Scientific American in response to the Uvalde shooting and to the fact that gun violence is now the leading cause of death among young people aged 1 to 19. The doctors wrote, “We must do better for our children,” and pointed to “the politicization of guns taking priority over public health.”

How else to explain the endless proliferation of deadly killing machines, when we won’t even tolerate a faulty ladder on a bunk bed?

It’s true that gun sales are big business, with millions of firearm sales each year. Some gun manufacturers with lucrative federal contracts are even using their profits to lobby the government against gun control. But the hold that guns have on the nation goes deeper than plain economics.

It’s also true that the National Rifle Association holds great sway in Washington via its political affiliates making large campaign donations to GOP politicians like Senator Ted Cruz (R-TX) to ensure inaction on gun control. But the NRA alone is not driving the tightened grasp on guns.

At the heart of the matter is how guns have become central to the right-wing culture wars in the U.S. today. They have become synonymous with “freedom,” or rather, with a perverse interpretation of the word. They are also associated with “defense,” a word that appears in the name of the manufacturer, Daniel Defense, whose rifle was used to kill the Uvalde elementary school victims.

The “freedom to defend” oneself has become a powerfully compelling cultural idea for a shrinking white population whose paranoia is being stoked incessantly by Fox News, the Republican Party, and gun manufacturers like Daniel Defense.

The gun-maker engages in aggressive marketing. In one commercial, founder Marty Daniel narrated, “There are two types of people in the world, good people and evil people.” He continued, “And just in case evil people get in charge, good people need to have the ability to fight back.”

While the language of “good versus evil” sounds simple and even benign, in fact, it is often coded language for good white heterosexual guys versus evil Black and Brown people. Or LGBTQ folks. Or undocumented immigrants. Or “woke” white folks.

What is often left unanswered is the question of guns offering the freedom to defend oneself from what, or from whom? It’s certainly not wild animals, in spite of Louisiana Senator Bill Cassidy’s recently ludicrous assertion that Americans need AR-15 rifles because of “feral pigs.”

There is a fear that “there are all these criminals out there; they’re going to break into your house in the middle of the night,” Michael Siegel, a visiting professor in the department of public health and community medicine at the Tufts University School of Medicine, told me in a recent interview. “It’s a racialized fear,” he added.

So convinced are right-wing (mostly white, male) gun owners that they need to defend themselves against imagined evil “others” that in the hours after the Uvalde shooting, some went as far as speculating that since Border Patrol had killed the shooter, he must have been an “illegal alien.” Others were convinced the shooter was a transgender woman.

The facts about gun ownership and self-defense show just how ludicrous the idea of “freedom to defend” is. The polling company Gallup found that in 2000, 65 percent of Americans cited “protection against crime” as a reason for owning firearms. In 2021, that number jumped to 88 percent. At the same time, violent crime and property crime rates nationwide have dramatically fallen since the 1990s. Meanwhile, studies show that guns are extremely rarely used in self-defense and that it is far more common that they are used to commit assaults, homicides, or suicides or are accidentally discharged.

“This is a charade,” said Siegel of the self-defense trope. “This is not an issue of freedom. The Republicans who are refusing to support these laws, they’re not standing up for freedom.” If parents and children are justifiably afraid of school because of gun violence, “that’s not much of a free society,” he asserted.

Hollywood also bears some blame, using gun violence as a way to raise tension in the plotlines of movies and television shows in what amounts to a massive public relations campaign for gun manufacturers. Researchers Brad Bushman and Dan Romer writing in Quartz found that “acts of gun violence in PG-13 movies nearly tripled over the 30 years between 1985 (the year after the rating was introduced) and 2015.”

Furthermore, they write, “the gun industry pays production companies to place its products in their movies,” and “prominent placement in high-profile films can result in a significant bump in sales for gun models.” While Hollywood may not be feeding the same fantasy (“freedom to defend”) as the right wing does, it certainly makes guns appear “cool,” in the same way that the industry did for cigarette smoking.

A majority of Americans support various gun restrictions; but the Republican Party, which has spent years laying the groundwork for minority rule in anticipation of the coming demographic shift away from white conservative voters, need not listen to the will of the people. Instead, they have gerrymandered districts, enough seats in the undemocratic Senate, and a conservative majority on the Supreme Court to ensure they remain immune from popular will.

Ultimately, the white male Republican belief that guns are a way to defend oneself from imaginary evil people is a hate-filled fantasy—a direct outcome of cultural conditioning by right-wing media, gun lobbyists, Hollywood, and the GOP. The price we as a nation are paying for this fear-based fantasy is the lives of our children and their sense of safety at school.

UK set to deport asylum seekers to Rwanda on June 14

Robert Stevens

Britain’s Home Office is pressing ahead with its brutal policy of deporting asylum seekers to Rwanda. Exactly two months after announcing its Migration and Economic Development Partnership deal with the east Africa state—under which people arriving illegally in the UK are to be sent 4,500 miles to have their asylum claim “processed”—the first flight is scheduled to depart on June 14.

According to the agreement, anyone deemed to have arrived “irregularly” in the UK since January 1, 2022 may be relocated to Rwanda. Once in Rwanda, if an asylum application is deemed legitimate, the person will only be allowed to stay in Rwanda, not the UK. If not, they will be deported to a third country.

UK Home Secretary, Priti Patel, and Rwandan Minister for Foreign Affairs and International Co-Operation, Vincent Biruta sign the Migration and Economic Development Partnership (Credit: Priti Patel/Twitter)

On June 1, a Home Office statement said that it had begun “issuing formal removal direction letters to those who are set to go to Rwanda.” Among “those being relocated there” were “People who have taken dangerous, unnecessary, and illegal journeys, including crossing the Channel…”

Under Home Secretary Priti Patel’s New Plan for Immigration, it is expected that tens of thousands of people will be flown to Rwanda and eventually, other states the UK finalises outsourcing agreements with.

The flights are going ahead despite being condemned as illegal by human rights groups.

The UN High Commissioner for Refugees (UNHCR) is due to release its latest report, two days after the UK-Rwanda flight leaves, on the number of people who have suffered forced displacement globally. It estimates that the total number of asylum seekers worldwide is already at 100 million. UNHCR leader Filippo Grandi said that the Nationality and Borders Act under which the Johnson government developed its Rwanda policy “undermines the ability of people in danger to seek refuge in the UK and weakens refugee protection worldwide.”

None of this concerns the government. The Home Office statement quoted Patel threatening, “while we know attempts will now be made to frustrate the process and delay removals, I will not be deterred...” The Guardian noted that the first flight to Rwanda is set to align with a trip a week later by Prime Minister Boris Johnson to Kigali for the Commonwealth heads of government meeting. Patel’s comments followed the deliberately incendiary comments of Johnson, who told the Daily Mail that he was prepared to “dig in for the fight… We’ve got a huge flowchart of things we have to do to deal with it, with the Leftie lawyers.”

Steven Galliver-Andrew, a barrister working in immigration law, told the BBC last week that the government has set June 14 as the deportation date but “The law which allows the government to do this doesn’t appear to come into force until the 28th of June 2022.”

People thought to be migrants disembark from a British Border Force patrol boat after being picked up from a dingy in the English Channel in Dover harbour, England, Thursday, Sept. 16, 2021. (AP Photo/Alastair Grant)

At least 100 people have been sent letters telling them they are being sent to Rwanda. The Care4Calais charity said this week it was “working with 80 out of 100 people in detention centres who have been sent ‘notices of intent’ to remove them to Rwanda. Seventeen have had notices to say their ‘deportation’, the term used by the group, is imminent, of which 10 have been given the date June 14. They are all in detention centres and they are all very scared.”

An article by Care4Calais notes, “Refugees will not be safe. Rwanda is a dictatorship that imprisons, tortures and murders people who speak out against the government. International human rights groups including Amnesty International, Human Rights Watch and UNHCR have raised serious concerns. It would be impossible to ensure the safety of people the UK intends to send there.”

Such is the fear over being sent to Rwanda that a group of asylum seekers detained at Brook House, near London’s Gatwick Airport, held a five-day hunger strike ending on June 3.

In their deportation letters, which are 20 pages long and only available in English, those selected for removal to Rwanda are told they have no right to appeal because of the way they arrived in Britain via a route not deemed legal. The Guardian listed the various nationalities of those being threatened with removal, including groups from war-torn countries Syria, Sudan, Afghanistan and Iraq. The UK will assist in sending them back to the warzones they have fled from. The letter declares: “You have the option to leave the UK voluntarily. However, should you be removed it will be to Rwanda.”

An excerpt of the document given to asylum seekers by the UK Home Office to inform them they will be flown to Rwanda on June 14, 2022. (Credit: Ioannis E Kolovos/Twitter)

Patel, assisted by tabloids and other media spewing out filth for years about immigrants “invading” the UK via the English Channel, pledged that her Nationality and Borders Act would end the journeys, with Britain “taking control” of its borders. The reality is that her deportation system will be used against anyone the government wants kicked out. The Guardian noted, “A significant number of those in the first group of 100 who have been targeted for offshoring to Rwanda are from Sudan.

“Sudanese are not the largest nationality group to arrive in the UK on small boats in the first quarter of this year where they ranked seventh with 137 arrivals between January and March of this year. They have a 92% grant rate for asylum claims.”

Signifying how brutal the Rwanda policy is, the Home Office’s pledge that only single men would be deported to Rwanda is being exposed as a lie. According to Care4Calais, “Two of the boys [to be flown to Rwanda] say that they are just 16 years old. The Home Office say they are 23 and 26 so it is essential that proper age assessments are done before any deportation takes place. One 16 year old saw his brother killed in front of him when his village was raided in Sudan. He escaped and went back later to find the whole village gone.”

The Guardian cited Daniel Sohege, campaigns manager for Love146 UK, who said, “We are seeing children as young as 14 being incorrectly age-assessed as 23. The number of children we have seen who have just had 1999 put down as their date of birth when they are clearly under 18 is highly concerning and putting young people at risk.”

For several weeks, and again after surviving a vote of confidence in his leadership on Monday, Johnson has insisted that the government now “move on” in order to enact its Brexit agenda. This is premised on an upscaling of the assault on the jobs, pay, conditions and pensions of the working class, to be enforced, as the immigration policy reveals, by tearing up democratic rights.

The Rwanda policy and overall anti-immigration agenda is supported by every faction of the Tory Party, including the backbenchers posing as born-again moral crusaders seeking Johnson’s removal.

The defence of immigrants, refugees and asylum seekers is being criminalised. Next month, three people are to be tried after they prevented last year, as part of a huge crowd, police in Glasgow from taking away two immigrants for deportation. The Crown Office, Scotland’s public prosecution service, said they were due in court on August 3/4. In a petition, the “Kenmure Street Three” demand that public order offence charges against them are dropped: “While resisting this alongside thousands of others, we were brutalised, locked up, and are now facing a repressive and distressing court process. We should not have to go through this.”

The disappearing of people thousands of miles away to a country which was the location of genocide on a vast scale less than three decades ago is only the latest salvo in the government’s assault on democratic norms. The government announced its intention in May’s Queen Speech to do away with the Human Right Act 1998, which incorporates the European Convention on Human Rights. A new Bill of Rights is aimed at overhauling the Act, with Justice Secretary Dominic Raab stating in March that among the “problematic areas” it will address are “the challenges in deporting foreign national offenders.”

Australian central bank’s “jumbo-sized” interest rate rise targets wage demands and home-buyers

Nick Beams

The Reserve Bank of Australia (RBA) yesterday lifted its base interest rate by what has been described as a “jumbo-sized” 0.5 percentage points. The biggest single hike in 22 years lifted the cash rate to 0.85 percent, compared to 0.1 percent until a month ago.

Reserve Bank of Australia building, Sydney (Photo: Danausi, via Wikimedia Commons)

The decision, taken in the face of market predictions that the rise would be 0.25 percentage points or at most 0.4, is aimed at suppressing wage demands in response to rampant inflation. It also cuts the disposable income of millions of working-class households by hundreds of dollars a month through increased mortgage payments.

Announcing the decision, RBA governor Philip Lowe made it clear more rises are to come. He said the hike was a “step” in the withdrawal of monetary support provided during the COVID-19 pandemic and that the central bank “expects to take further steps in the process of normalising monetary conditions over the months ahead.”

It has been estimated that if the bank increases its base rate to 2.5 percent by the end of the year, home buyers, already battling with the escalation of house prices, particularly over the past two years, on average will have to find an extra $1,000 a month on mortgage repayments. That is equivalent to a $250 per week cut in their disposable income.

The ostensible reason for the rate hike is the need to bring down inflation, now running officially at 5.1 percent and expected to go even higher in coming months. But the real reason is the determination of the central bank to drive down wage claims by workers, who face the highest inflation in 40 years under conditions where real wages have been cut over the past decade.

Lowe said inflation was higher than expected. While much of the increase was due to global factors, such as COVID-related disruptions to global supply chains and the war in Ukraine, domestic factors, including a tight labour market, were “contributing to the upward pressure on prices.”

Acknowledging one of the key sources driving the decision, Lowe said the RBA’s “business liaison program continues to point to a lift in wages growth from the low levels of recent years as firms compete for staff in a tight labour market.”

In fact, as a range of official statistics make clear, the standard of living for workers has fallen back to the level of 2011 because of stagnant or declining real wages. Lowe even noted this process himself, saying that “real household incomes are under pressure in many economies.”

While the rate hike has been touted as necessary to bring down inflation, it will do nothing to untangle global supply chains and will not reduce the price of petrol, which has escalated the cost of running a car as well as transport costs. Nor will it bring down electricity prices, set to rise by at least 18 percent, or resolve the natural gas supply crisis. 

After announcing the biggest single rate hike in more than two decades, the RBA decided not to hold a press conference on its decision, perhaps fearful that even the generally compliant mass media may raise some questions about the real reasons for the decision and the threat of recession it poses.

Yesterday’s decision alone will add $133 a month on a loan worth $500,000 over 25 years and $265 per month on one worth $1 million. In New South Wales (NSW), where the average 25-year loan is $786,000, the increase in monthly payments will be $211.

And if the bank’s base rate rises to 2.5 percent by the end of the year—and there are predictions it could be even higher—a borrower with a $500,000 loan would see monthly payments increase by $652.

Even these average figures do not reveal the full picture, especially in working-class areas.

Industry analyst Martin North, the principal of Digital Finance Analytics, told the Sydney-based Daily Telegraph yesterday that even a lift in the RBA’s rate to just 2 percent, would increase the proportion of households in mortgage stress from 44 percent to almost 50 percent.

While there is no official definition of mortgage stress, it is generally considered to set in when mortgage payments reach 30 percent of household income and there are problems in paying other bills.

North said more than four million households out of nearly 10 million “are already close to the edge—that’s an unprecedented situation.”

If the RBA added another 2 percent to its base rate, a further 400,000 to 500,000 would probably fall into the stress category, taking the total to nearly half of all households with a mortgage.

In some areas, particularly outer working-class suburbs, where first home-buyers predominate, the figure is even higher. According to North, in the outer southwestern Sydney suburb of Campbelltown over 10,000 households are in stress, that is, five in every six.

NSW, which has the highest house prices in the country—in Sydney the median price is now well over $1 million—has the largest number in stress, 459,000. But according to North, in percentage terms it is more common in Tasmania, Victoria and South Australia.

The class dynamic driving the rate rise and its implications for the recently-installed Labor government were set out by economics commentator Robert Gottliebsen in the Murdoch-owned Australian.

He said that yesterday was “one of the most important days in Australia’s recent history.” It sent a clear message to the two-week-old Albanese Labor government that it needed to “review” the policies it had sold to the electorate.

The government had to recognise that the Australian economy was over-stimulated, inflation was ballooning out of control and it “needed to be reined in by two or three sharp interest rate blows to contract the economy.”

The central bank, he continued, was saying that if unions tried to “transpose whatever Fair Work awards for low paid workers to the total community then that will be met with much higher interest rates and a recession.”

An Australian Financial Review editorial underscored that message today. It said that if politicians were honest then the public would “better understand” that the real message of the Albanese government’s submission to the Fair Work Commission that low-paid workers should not go backward was that “the bulk of the workforce will likely take a real wage cut.”

Australians, it added, had to understand that mortgage interest rates had to rise from their record lows, inflation would be above nominal wages and “Labor needs to make a start on serious budget repair”—that is, cuts to vital areas of social spending.

The RBA decision is part of a global offensive by the world’s central banks, acting as the spearhead for the demands of finance capital, for a coordinated drive to crush workers’ wage demands in the face of the highest global inflation in four decades.

It is being led by the US Federal Reserve which lifted rates by 0.5 percentage points at its last meeting with at least two, or possibly three, such rises in the pipeline. Fed officials, from chair Jerome Powell down, have made it clear their target is the “tight labour market” and the RBA has joined this class war.

The inflationary spiral has been set in motion by the policies of the central banks over the past 14 years. Their response to the global financial crisis of 2008 and the market meltdown of March 2020 at the start of the pandemic was to pump trillions of dollars into the financial system to prevent a collapse of the stock markets. One of the consequences was an escalation in housing prices.

These measures, coupled with the refusal of capitalist governments around the world to take the necessary public health measures to eliminate the pandemic, and now the US and NATO-led war in Ukraine, have created the supply chain crisis which has resulted in a global inflationary surge.

Under banner of “de-Sovietization,” Ukrainian government prepares deep assault on workers’ rights

Shannon Jones

As the war in Ukraine continues into its fourth month the Ukrainian parliament is set to enact a major revision of the country’s labor code that will severely undermine workers’ rights.

The Ukrainian parliament is threatening to set workers back to the tsarist era by tearing up existing minimal labor protections and giving companies a blank check to fire workers and impose substandard working conditions.

2019 march in Kiev against anti-labor laws (Source: European Trade Union Committee for Education)

Under the terms of Bill 5371, workers at companies employing 250 workers or less would be removed from the protection of existing labor laws, placed under individual contracts with management and be subject to termination for any reason. The changes would affect about 70 percent of the country’s workers.

Supporters of the legislation justify it under the banner of “de-sovietization,” that is, the elimination of any residual protections carried over from the old USSR. The existing labor code dates back to 1971 when Ukraine was part of the Soviet Union, which remained a workers state despite its extreme bureaucratic degeneration under Stalinism. The Ukrainian oligarchs, which like their counterparts in Russia, arose from the privatization of state property after the Stalinist liquidation of the USSR in 1991, are determined to dispense with the slightest protections for workers.

The perilous state of workers’ rights in Ukraine further exposes the democratic pretenses used by the United States and other NATO powers to justify the proxy war they are waging against Russia in Ukraine. Through the relentless eastward expansion of NATO and the massive arming of Ukraine, the US and European imperialist powers goaded Putin into the reactionary invasion, which has created millions of refugees and devastated wide areas of a country which was the poorest in Europe before the war.

In March, shortly after Russia began its invasion, the Ukrainian parliament passed a “suspension of employment” order under the current state of martial law where workers are not technically fired but they do not work or get paid. It also permitted companies to suspend collective bargaining agreements. Strikes were banned, and street demonstrations can be prohibited without a court ruling.

Under the martial law decree, the standard working hours can be raised to 60 hours per week instead of 40 hours and raised to 50 hours per week for special categories of employees for whom reduced working hours can be applied. “Weekends” can be cut to 24 hours off work.

In addition, the number of categories of workers barred from night work was reduced, and the list of employees who can be involved in heavy work, overtime work, etc. was expanded.

Among the employers that have “suspended” collective bargaining agreements are Nova Poshta (New Post), a private mail carrier, and the global steel giant ArcelorMittal. At Nova Poshta, management has revoked 30 provisions of the collective bargaining agreement covering some 11,500 workers. The changes involved working conditions and social benefits, such as the provision of uniforms, safety kits and working hours. Some 1,500 workers had their employment “suspended,” i.e., they were laid off.

In early May, the Trade Union of Metallurgists and Miners contacted management at the ArcelorMittal plant in Kryvyi Rih to complain that the company had suspended parts of the collective bargaining agreement, including the provision of social welfare benefits to workers.

According to a report on the media platform openDemocracy, the Social Movement, which is identified as a Ukrainian civic organization, has created a “black list of employers.” The list includes about two dozen companies that either suspended all or part of their collective bargaining agreements or changed working conditions in violation of Ukraine’s present labor laws. The list includes the Chernobyl nuclear power plant, Ukraine’s national railway company, Odessa Port and the Kyiv Metro.

The proposed changes to Ukraine’s labor code were first introduced in April 2021—that is, 10 months before the war started—but stalled in parliament. However, Ukrainian officials have used the war to move Bill 5371 forward. On May 12, 246 deputies voted in favor of the legislation, opening the way to enactment. It could still theoretically face a veto by President Zelensky.

The legislation was initially filed by Halyna Tretyakova, head of the parliamentary committee on social policy, and several members of Zelensky’s ruling Servant of the People party.

According to openDemocracy “The bill was developed by a Ukrainian NGO, the Office of Simple Solutions and Results, which was set up by former Georgian president Mikheil Saakashvili, together with Ukrainian employers’ associations and a USAID programme.”

Those calling for a veto by Zelensky argue that the legislation would violate European labor standards and the International Labor Organization conventions and thus could hold up Ukraine’s integration into the European Union.

One expert cited by openDemocracy said, “This is a rollback to the 19th century. By introducing civil law into labour relations, we can open Pandora’s box.”

In November 2021, openDemocracy had reported that the British Foreign Office had advised the Ukrainian Ministry of Economy on how to push through anti-worker changes to labor law. It stated, “A 2021 communication plan prepared by an international development consultancy and marked with the logo of the British Embassy in Kyiv recommends that the Ukrainian ministry should ‘stress’ that liberalising labour laws will bring ‘positive results’ for Ukrainian workers.”

A statement by the European Public Service Union on Bill 5371 remarked on Ukraine’s push to “desovietize” labor law. “But modernising the legislation by proposing to repeal the ILO Recommendations and Conventions, to violate the articles of the European Social Charter and the Association Agreements with the EU, looks more like the authors of the bill prefer the tsarist era.”

George Sandul, a lawyer at Labor Initiatives, said by introducing individual contracts at small- and medium-sized businesses the pending legislation would mean “De facto, this regime assumes that literally anything can be entered into an employee’s employment contract, without reference to Ukrainian labour laws. For example, additional grounds for dismissal, liability, or even a 100-hour week.”

Until May there had not been enough parliamentary support to advance the bill, but that changed when supporting votes were provided by the Trust political party, as well as by former members of the pro-Russian party, Opposition Platform/For Life. The latter had been banned by parliament last month along with a threat to take away the mandates of its parliamentary representatives, perhaps intimidating them to switch their votes in favor of the legislation. The parliament is preparing for a second reading of the bill under an accelerated procedure.

In a post on the blog Cross Border Talks author Małgorzata Kulbaczewska-Figat notes that even under the existing labor code, the conditions of workers in Ukraine were atrocious.

“Before the Russian invasion, millions of Ukrainian workers migrated to EU countries (and not only), knowing well that even the poorest of them—Bulgaria and Romania—offered significantly better earnings to an average worker than their homeland.

“Low wages are virtually strangling our economy,” she continued. “In addition, some 20-30 percent of Ukrainian workers are employed ‘unofficially.’

“Even working in a state-owned enterprise, in a critical economy sector, does not guarantee a stable salary, allowing for a decent living.”

Miners, for example, faced delays in payment of wages. “The miners were regularly organizing spontaneous protest actions, including the most desperate move—an underground protest. Another huge underground protest action took place in 2020 in Kryvy Rih, the center of iron mining of transnational importance. A group of workers of KZRK, a formerly state-owned plant consisting of four iron mines and more associated factories, spent more than a month inside mines, demanding a pay rise.”

She cited an expert on labor law who warned that big companies may “artificially split into smaller 250-people entities so that maximum flexibility can be used even by the biggest and strongest employers.”

The fact that the war in Ukraine is being used to impose a brutal increase in exploitation on the already impoverished working class in the country is a further indication of the reactionary character of the conflict. Workers in Ukraine, as well as their brother workers in Russia and the NATO countries, have nothing to gain from this war, which contains the seeds of a world conflagration. Workers in all lands must unite in opposition to the war in Ukraine, which was instigated by US imperialism and its allies as part their drive for world hegemony.

Major Russian industries break down under weight of sanctions

Andrea Peters

Key sectors of Russian industry are breaking down under the weight of import and export bans, deficits of spare parts and materials, the closure of foreign markets and the freezing of financial transactions. Reports are emerging of problems in everything from trucking to the production of milk cartons, as companies struggle to sustain operations.

On Tuesday, Russian lead producers announced they are in danger of shuttering factories due to the absence of overseas buyers and a decline in domestic demand fueled in large part by a sharp contraction in the auto industry. Even with some enterprises having already cut production by 30 percent over the last several months, warehouses are full with unsold lead.

European consumers previously accounted for nearly 50 percent of all Russian lead sales, and they have effectively been absent from the market since March due to logistical and financial problems brought on by Western sanction. As of July 10, EU purchases of Russian lead will be entirely prohibited. Lead companies also say they are encountering major obstacles getting the government licenses necessary to divert production to Asian countries.

At an industry-wide conference held on June 7, Russian freight companies declared they are at risk of bankruptcy due to a steep decline in prices, high costs for replacement parts, and an inability to purchase new vehicles from foreign suppliers. In April, the EU barred the country’s trucks from entering its soil.

Domestic demand is down, too. Between March and June 1, corporations saw freight prices drop by 13.2 percent on average for the top 100 destinations, with some major routes experiencing two to three times that decline. The fee charged for transporting goods between Moscow and Saint Petersburg, Russia’s two largest cities, fell by 34.4 percent during those three months. Whereas previously, 1 million Russian trucks made 300,000 daily shipments, now 1.1 million trucks are making just 180,000. Air cargo is also down.

The government is aware of the problem, with the minister of transport acknowledging in May that sanctions “practically broke all the logistics in the country.” It has made grants and low-cost loans available, but companies say that is not enough. They need help with the cost of fuel, and they are overburdened by taxes. In addition, while the ministry of industry and trade has approved “parallel imports”—branded goods that are brought into the country without the permission of the trademark owner—of Scania and Volvo products, they have not done so for Mercedes, MAN, Iveco, DAF and Isuzu. As a result, the rubber necessary for truck repairs is, for instance, in short supply, reports news outlet RBK.

Russia’s ports are also in crisis. In March, cargo turnover in Saint Petersburg, one of the country’s largest harbors, fell by 41 percent in absolute volume. The government has responded by cutting rental rates that shippers have to pay for the use of port facilities, but experts say that without an increase in demand the problem cannot be overcome.

There are ongoing discussions over the creation of new maritime links between domestic and international ports, including some in Iran. But putting such plans into action requires significant investments, as well as time, because in many cases the infrastructure to send or receive the kinds of cargo that would be borne by Russian ships does not currently exist. A looming EU and UK ban on insuring Russian maritime transport will further complicate the situation.

The auto industry also continues to suffer from the pullout of foreign car producers and a major shortfall of materials, particularly electronic components. Rosstat, Russia’s central statistical agency, announced Wednesday that auto production fell by nearly half between January and April. This is the steepest drop witnessed in any sector. In April of this year, Russian automakers produced 85.4 percent fewer cars than they did at the same time in 2021. “At the moment, only two enterprises produce cars more or less stably—the Ulyanovsk UAZ and the Tula plant Haval,” reported Izvestiia on June 6.

In an interview with Ridus.ru, industry expert Sergei Aslanyan explained the depth of the crisis. “We don’t have electronics factories, we don’t have anything to make an engine out of. We have ‘Niva,’ which is 45 years old, 20 percent consists of imports,” he said referring to one model produced by Russian manufacturer Lada. But, he added, “It has pistons and piston rings from the American corporation Federal Mogul. And now we will even have nothing to assemble the Niva from. What are we going to make air bag systems from? Who will present us with an airbag? Nobody. We don’t even have bearings.”

The prospect that a nationwide import substitution program, which the Kremlin is pushing, will fill the gaps is a pipedream, argue experts. “Even the Soviet archaic Moskvich [car model] cannot be revived today. Where can I get it? It disappeared a long time ago. I’m afraid that even the documentation can only be found in the museum. It is impossible to breathe life into the dead,” Yang Heitzeer, vice president of the National Automobile Union, told Ridus.ru. 

The data, computing, and telecommunications industries, which sustain all sectors of the economy, are now without the semiconductors, microchips and servers they need to operate and expand. Home-grown companies have not been able to match the memory, processing and bandwith capacities of foreign-made producers. These are in high demand because overseas corporations are no longer providing cloud services to Russian firms.

In Tatarstan, with a population of more than 3.8 million, the Ministry of Digital Development had to scrap plans to extend 4G/LTE to 61 cities and instead was only able to provide the service to 30 new places. It simply lacked the materials necessary. A similar problem occurred in Saratov Oblast, home to 2.4 million people.

In late May, the Russian Steel Association told the government that it is confronting difficulties due to a steep fall in domestic demand and the strength of the ruble. In addition, with the EU having banned imports, producers have been forced to “sell goods at a discount, and in some cases even below cost” to China and other Asian countries, Russian Steel’s head Alexei Sentyurin explained.

Its members will suffer major losses and have to cut production, the organization said, unless the government reduces its tax burden and works to devalue the ruble. “Ferrous metallurgy enterprises face serious risks of staff reductions,” adds news outlet RBK based on its discussion with Sentyurin.

Russian agriculture is facing problems too because of its heavy reliance on imported seeds, which in some cases account for the majority or even the entirety of the product it uses—for instance, sunflowers (70-77 percent) and sugar beets (100 percent). While experts say an immediate crisis has been forestalled because the industry built up seed reserves, what will happen next year is unclear.

Yevgenii Ivanov of the Institute for Agricultural Market Studies explained to Zol.ru, “As a rule, all companies in the world that deal with sugar beet seeds grow them in northern Italy and southern France. In Russia, only some areas near Sochi and in the Crimea are suitable for these purposes.” Crimea, however, is at the center of the war in Ukraine, and Kiev began cutting off water supplies to the region, which lacks adequate resources of its own, even prior to the Russian invasion. But, as Ivanov noted, “it is impossible to grow sugar beet there without irrigation.”

The forestry industry is also running into difficulties. The head of the Khanty-Mansi autonomous region has been receiving large numbers of complaints from timber companies about the fact that due to export bans they have nowhere to sell their goods. Former major markets, such as Uzbekistan, are now closed.

There are concerns over the supply of bacteria for the fermentation of goods like yogurt and kefir, because Russian milk-product producers import 80 percent of what they need. For some time, there was a deficit of milk in stores in parts of the country because the Finnish carton maker that Russian producers relied on pulled out. The elevator industry is also having manufacturing problems.

Even the Russian oil and gas industry, which is posting record profits despite EU and US import bans due to surging energy prices and increased demand from China, India and elsewhere, is limited by the fact that it has lost access to imported technology, software, and human capital that it needs to develop new wells and gas fields in previously untapped places, like, for instance, the Barents Sea. Without a solution to this, as well as the construction of new pipelines to Asian markets, it will struggle to sustain itself and grow.

The Russian government is trying to cover up the depth of the crisis, claiming that unemployment, allegedly at just 4 percent, is the lowest ever, that its programs will reduce poverty in 2022 and its economic policies secure the real incomes of the population. President Putin declared on Tuesday that inflation is being brought under control.

The Kremlin is deeply concerned that popular anger over the collapse of the economy will not just be directed against the West for its punishing sanctions, but at the state for its disastrous invasion of Ukraine and the miserable consequences of 30 years of capitalist restoration. But the manipulation of jobless numbers, raises for government employees that amount to a couple hundred dollars a year, and false claims about the prices of essentials goods and services cannot change the reality facing the Russian working class.

For its part, the US and its NATO allies are celebrating the destruction of Russia. Media accounts in the Western press generally note with barely suppressed delight the deepening crisis.