Biden concludes Mideast trip focused on US conflict with Russia, China

Jean Shaoul

US President Joe Biden rounded off his visit to the Middle East with a series of meetings with Arab leaders on Friday and Saturday. While the meetings repaired relations between Riyadh and Washington, no major breakthroughs were announced, with Biden widely seen as having paid a high price for little return.

The White House purpose was to reassert Washington’s standing with the region’s bloodthirsty dictators and line them up behind Washington’s proxy war against Russia in Ukraine. The war that Biden has sought to justify as a war for democracy and human rights against autocracy has met a decidedly cool response from leaders throughout the region, with neither the Saudis nor the United Arab Emirates (UAE) signing on to the US/NATO sanctions on Russia.

Biden is also seeking to cement an anti-Iran alliance that would connect air defence systems throughout the region, building on CENTCOM, the US combat command whose base is in Qatar and which covers the Middle East, parts of central Asia, Egypt and the Horn of Africa and has, since early 2021, included Israel.  

In this photo released by the Saudi Royal Palace, Saudi Crown Prince Mohammed bin Salman, right, welcomes President Joe Biden upon his arrival at Al-Salam palace in Jeddah, Saudi Arabia, Friday, July 15, 2022. (Bandar Aljaloud/Saudi Royal Palace via AP)

This line-up is not only directed against Russia. It is part of US imperialism’s broader efforts to limit China’s expanding economic and political influence in the energy-rich Middle East. 

Beijing has become the region’s largest trading and investment partner, outstripping both the US and Europe some years ago. According to the American Enterprise Institute, the last 16 years has seen total Chinese investments and construction projects reached $43.47 billion in Saudi Arabia, $36.16 billion in the United Arab Emirates (UAE), $30.05 billion in Iraq, $11.75 billion in Kuwait, $7.8 billion in Qatar, $6.62 billion in Oman, and $1.42 billion in Bahrain.

Saudi Arabia has agreed wide-ranging trade and investment deals with both China and Russia. In the context of oil, China already is the Kingdom’s largest customer, with the Saudis recently agreeing to import Russian oil in order to free up its own production, some of which is consumed domestically, particularly in its desalination plants, to increase exports.  

Egypt, likewise, has extensive agreements with Russia which has started constructing a $25 billion nuclear reactor, while China is playing a major role in the construction of Egypt’s new administrative capital 35 km outside Cairo and has occupied much of the new industrial zone being built along the Suez Canal.

Qatar, which has close economic relations with Iran, is negotiating with China over the development of what will be the world’s largest gas field and the multi-year export of its gas to China, while Iran’s deal with China includes major investment in infrastructure in exchange for cheaper oil and naval outposts in the Persian Gulf. Iraq has signed a deal with China to build 1,000 schools in the country over the next two years. 

At the NATO summit meeting a few weeks ago, Biden’s new “strategic concept” for the Western alliance recognized China as a systemic “challenge” and described its policies as coercive and its cyberoperations around the world as malicious. He said that along with Moscow, Beijing was trying to “subvert the rules-based international order.” In other words, they were opposed to Washington’s political and economic domination. 

It was this that led Biden to junk his election pledge to treat Saudi Arabia as a “pariah state” due to its crushing of all internal dissent with mass executions and Crown Prince Mohamed bin Salman’s signing off on the gruesome assassination of Saudi insider turned dissident Jamal Khashoggi in 2018 and grovel before the Saudi ruler. That the visit took place at all was seen as an achievement for the Saudis and above all for bin Salman. 

When the US president brought up Khashoggi’s murder with bin Salman on Friday afternoon, the prince accused Washington of hypocrisy for allowing the shocking abuse of inmates by their US guards at Iraq’s Abu Ghraib prison in 2004 and doing nothing about the killing of Palestinian-American journalist Shireen Abu Akleh, who was killed by Israel soldiers while covering an Israeli raid on the West Bank city of Jenin last May. Bin Salman could of course have itemized a far longer list of human rights crimes committed by US imperialism in the Middle East and beyond that more than match those of the barbaric House of Saud.

On Saturday, at a summit meeting with the leaders of the six Gulf sheikdoms and Egypt, Jordan and Iraq in Saudi Arabia’s western port city of Jeddah, Biden said, “We will not walk away and leave a vacuum to be filled by China, Russia or Iran,” adding “And we’ll seek to build on this moment with active, principled American leadership.” Such principles evidently include support for the ruthless suppression of all dissent as exemplified by bin Salman and Egypt’s military ruler General Abdel Fattah el-Sisi.

In effect, Biden gave the region’s tyrants, all of whom sit atop social volcanoes, a blank check guaranteeing Washington’s support against domestic opposition. It was the Obama administration’s failure to defend Egyptian dictator Hosni Mubarak against the mass opposition that brought about his ouster in 2011 that precipitated a sharp deterioration in relations between Washington and its Arab allies.    

In his first talks on the second leg of his trip on Friday afternoon, Biden met with bin Salman and Saudi leaders in Jeddah. Despite giving the nod to their client Bahrain to join the US-backed Abraham Accords with Israel, and years of back-channel talks between Riyadh and Jerusalem on security issues, intelligence sharing and trade deals, the Saudis refused to deal openly with Israel unless it agrees to the formation of a Palestinian mini-state as outlined in a 2002 Saudi initiative. 

However, the Biden administration did announce the finalization of the agreement to transfer the tiny islands of Tiran and Sanafir from Egypt to Saudi Arabia. The two islands control the maritime entrance to the Gulf of Aqaba and thus all shipping to Eilat, Israel’s only port with access to the Red Sea. Long claimed by Saudi Arabia, but controlled by Egypt, the islands were subject to the 1978-9 Camp David agreements between US, Egypt and Israel that called for stationing a small “peacekeeping” force there, including US soldiers. The US will pull out its forces by the end of the year.

In return, the Saudis have agreed to allow international flights to and from Israel to fly over Saudi airspace, including the Israeli airline El Al, as well as allowing Israel’s Arab Muslim citizens to fly direct to Saudi Arabia for religious visits to Mecca, thereby shortening journey times between Israel and the Middle East and Asia. 

Bin Salman gave a vague undertaking to increase oil production by up to 1.5 million barrels a day. This is expected to be a short-term increase that will have little impact on global oil prices. As in 1973, the House of Saud is determined to take advantage of the oil price increases to refill its coffers after several lean years, fund development projects for the next decade, and assert its own political and economic agenda throughout the region. 

The US for its part signed a number of economic deals, including an agreement on cooperation on the development of next generation 5G and 6G mobile technology networks and on cybersecurity, in a bid to limit the economic reach of China’s giant Huawei telecoms corporation, which has developed a significant presence in the region.

On Saturday morning, Biden held one-on-one meetings with the leaders assembled for the summit of the Gulf Cooperation Council, including el-Sisi of Egypt, whom he thanked for “the incredible assistance” in Gaza, which Egypt has promised to help rebuild after Israel’s murderous assault on the besieged enclave in May last year. He did not mention el-Sisi’s atrocious human rights record that includes the imprisonment of 65,000 of his critics, many of whom have died in custody due to medical negligence, including the democratically elected President Mohamed Mursi. 

The summit itself made no substantive announcement on establishing a regional defence alliance nor did it set a schedule for further talks. There was no rush to cement an anti-Iran bloc with Israel by normalizing relations with Tel Aviv, in part because several Gulf States, along with Egypt and Jordan, already trade with Israel, buying its military, intelligence and agricultural technology, and have held joint military exercises via Centcom. Riyadh has already stated it doesn’t want to start a war with Iran and is engaged in talks, brokered by Iraq, which is hugely reliant on Iran for electricity and gas, to restore diplomatic relations with Tehran, as is the UAE.

While the participants are in the final analysis dependent upon Washington for their security, they view Russia and China as useful counterweights and bargaining chips in their relations with the US. 

German court sentences far-right army officer to 5½ years imprisonment

Peter Schwarz

On Friday, the Frankfurt Higher Regional Court sentenced German Army officer and neo-Nazi Franco Albrecht to five years and six months in prison for planning attacks on high-ranking politicians and public figures. The verdict is not yet final.

Franco Albrecht at the start of the trial in an interview with the television station RT deutsch

It is the first time that a German court has convicted a Bundeswehr officer of right-wing terrorism. But as in previous trials of far-right terrorists—such as Beate Zschäpe of the neo-Nazi National Socialist Underground (NSU) or Stefan Ernst, who murdered leading Christian Democrat Walter Lübcke—the court was primarily concerned with damage control.

Although Albrecht is a key figure in a wide-ranging right-wing extremist network that reaches deep into the German armed forces and security agencies, the trial focused exclusively on him as an individual. Leading members of the network remained unchallenged. They were not charged or received only a trivial sentence in other trials and remain free.

As recently as June 2018, the Frankfurt Higher Regional Court had refused to open the trial against Albrecht at all. Although all the essential findings that have now led to his conviction were already present at that time, it was justified by claiming there was insufficient suspicion of the preparation of a serious act of violence endangering the state.

It was not until the Kassel district President Walter Lübcke was assassinated by a neo-Nazi a year later and public outrage over the right-wing conspiracy in the state apparatus grew that the Federal Supreme Court ordered the Higher Regional Court to conduct the trial against Albrecht.

The trial began on May 20, 2021 and spanned 40 days. Albrecht, who had been temporarily detained in 2017, remained free for most of the time. Only in February of this year was he taken into custody again because he sought to dispose of evidence. When he was arrested, he was found to have numerous swastika insignia, cutting and stabbing weapons, machetes, and 21 mobile phones with 50 prepaid SIM cards.

Albrecht’s original arrest in February 2017 had focused public attention on the extent of right-wing extremist activity within the Bundeswehr. Significantly, the arrest was not made by German authorities but by the Austrian police. The latter arrested Albrecht when he picked up a pistol at Vienna International Airport which he had previously hidden there.

A fingerprint check revealed that he led a dual existence. He was a first lieutenant in the 291 Jäger Battalion of the Franco-German Brigade in Alsace and, although he did not speak a word of Arabic, had registered as a supposed Syrian asylum seeker “David Benjamin.” Apparently, he wanted to use the false identity to blame refugees for a terrorist attack.

Journalists now have begun to investigate, and it quickly became clear that Albrecht was part of an extensive right-wing conspiracy. He had hoarded several weapons and ammunition, supported by accomplices, and had drawn up lists of possible attack targets, including Green Party politician Claudia Roth, the then Justice Minister Heiko Maas (Social Democratic Party, SPD) and the founder of the anti-racist Amadeu Antonio Foundation, Anetta Kahane.

The attack plans on Kahane were the most advanced. Albrecht had visited the foundation’s premises in Berlin and produced photos of the underground parking garage, location sketches of the premises, plans for a weapons transfer and a suspected escape route.

Albrecht had confidantes and helpers in his unit, the 291 Jägerbataillon, where right-wing extremism was apparently tolerated. Hitler salutes and swastikas were observed again and again. His superiors knew about Albrecht’s right-wing extremist sentiments. As early as 2013, he had written a racist and anti-Semitic master’s thesis at the French Saint-Cyr Military Academy, which was covered up by the responsible Bundeswehr officers so that Albrecht could continue his career as an officer.

He was also a member of a network of elite soldiers, operational police and state officials that were preparing for an armed coup on “Day X,” hoarding weapons, and planning the detention and murder of politicians, civil rights activists and refugee workers. The head of this network is André S. (alias “Hannibal”), a former member of the Bundeswehr’s elite KSK military unit, with whom Franco Albrecht was in personal contact.

The discovery of the Hannibal network after Albrecht’s unmasking triggered hectic activity in state and political circles. In 2020, then Defence Minister Annegret Kramp-Karrenbauer (CDU) was forced to dissolve one of four companies of the KSK after more and more details about right-wing extremist activities became public. The KSK had “taken on a life of its own in parts,” there had been “a toxic leadership culture” and large quantities of weapons and ammunition had gone missing, she said, explaining the move.

Raids against the “Nordkreuz” group, the northern offshoot of the Hannibal network with close ties to the far-right Alternative for Germany (AfD), brought to light large quantities of weapons, ammunition, explosives and death lists. The interior minister of Mecklenburg-Western Pomerania, Lorenz Caffier (CDU) had to resign because of his connections to “Nordkreuz.” But nothing happened to those responsible.

In 2019, the Böblingen District Court fined André S. (“Hannibal”) for violations of the Weapons and Explosives Act, against which he has appealed. He was transferred out of the KSK but not discharged from the Bundeswehr.

In the “Nordkreuz” case, the Federal Prosecutor General dropped the investigation against two leading members, lawyer Jan-Hendrik H. and criminal investigator Haik J., an AfD member. Marko G.—a former paratrooper, SEK (Special Tactical Unit) police officer and AfD member—was the only member of the group to receive a suspended sentence.

Bundeswehr Officer Maximilian T., who was arrested in 2017 along with Albrecht for helping him disguise his dual identity, hide weapons and maintain a hit list, was soon released. He was even given free access to the Bundestag (federal parliament), frequented by many of the targeted victims, as an employee of AfD Member of Parliament Jan Nolte. Maximilian T. is the brother of Franco Albrecht’s fiancée Sophia T., with whom he has three children.

In the five and a half years since Albrecht’s initial arrest, numerous articles and books have revealed the extent of the far-right networks inside the military and state apparatus. The Frankfurt Higher Regional Court felt compelled to convict Albrecht because of the overwhelming burden of proof. But there is no effort to dry up the right-wing swamp. On the contrary, if those in ruling circles have their way, the verdict is supposed to draw a line under the criticism of militarism and right-wing extremism.

Hundreds of billions of euros are being spent rearming the Bundeswehr, which is supposed to move back into the centre of society. Any criticism of militarism is declared a crime. Pacifism does not lead to good but cements “the dominance of the bad, the criminal and the inhuman,” ex-Federal President Joachim Gauck recently declared on the Markus Lanz talk show. The veneration of Nazi collaborators, such as Ukrainian fascist Stepan Bandera, is considered “understandable” and welcome.

100 million in the US weighed down by medical debt

Fred Mazelis

One hundred million people in the United States, including 41 percent of the adult population, are burdened by medical debt. These totals, in what remains the wealthiest capitalist nation, and one moreover which spends almost $1 trillion annually on its military machine, translate into severe sacrifice and suffering for families. They are forced to choose between food and paying medical and dental bills or driven into bankruptcy or out of their homes.

Orlando Regional Medical Center, in Orlando, Florida [Photo by Orlando Regional Medical Center]

The figures come from a major investigative project that is being carried out by Kaiser Health News (KHN), affiliated with the Kaiser Family Foundation, in association with National Public Radio (NPR). A report was posted on the KHN website last month. The investigation utilized a poll that looked into various means by which patients scrambled to meet medical bills. It studied credit bureau reports, credit card data and hospital billing data to get a more accurate picture of the crisis. Although the serious student loan crisis has received more recent media attention, the medical debt crisis affects a greater percentage of the population.

Under conditions where, according to a recent figure, half of the population does not have $500 to cover a sudden medical bill, 50 million people are paying medical bills in installments, 10 percent of those who owe have taken loans from friends of family, and 15 percent have put bills, often totaling thousands or even tens of thousands of dollars, on credit cards. One-quarter of those in debt owe more than $5,000. Twenty percent of the total do not ever expect to pay off these debts.

The medical debt emergency affects almost every section of the working class, and sections of the middle class as well. The KHN study finds that while 68 percent of households with an annual income of less than $40,000 have medical debt, the comparable figure for those with annual incomes above $90,000 also remains high, at 45 percent.

Millions have already lost their homes or declared bankruptcy, or both. According to the survey, 63 percent have cut back on food, clothing and other basic expenses, 48 percent have used up all or most of their savings, and 40 percent of the total have taken on second or third jobs. Equally revealing, one in seven of those surveyed have been denied access to medical care because of unpaid bills, and two-thirds have put off medical care because they are already dealing with bills they cannot pay.

Thus, the consequences of this mountain of debt must be measured, not just in financial hardship and the growth of poverty, but also in increased illness and death stemming from the lack of timely treatment—a situation which has certainly contributed to the US having the highest COVID-19 death toll in the world, well over 1 million dead and rising.

The KHN study provides some vivid examples of how this crisis has affected the working class.

Sherrie and Michael Foy retired to southwestern Virginia after Michael retired from the Con Edison utility company in New York. When Sherrie had to undergo complex colon surgery followed by complications, they wound up owing $775,000, and were sued by the University of Virginia Health System. The Foys, who continued to be insured through Michael’s employer, were forced to declare bankruptcy and lost everything, including savings accounts they had set up for their grandchildren.

Sam and Ariane Buck, from Arizona, were turned away from a doctor’s office because they owed medical bills and were forced to go to a hospital emergency room. The couple owes about $50,000 in medical bills. Buck himself sells health care plans. That has given him additional insight, even if no protection from his own medical debt. “I’ve had old people crying on the phone with me,” he told KHN. “It’s horrifying.”

Allyson Ward, a nurse practitioner, was forced to take on extra shifts, working nights as well as days, after the premature birth of her twins left her with unpaid medical bills of $80,000. And Elizabeth and Nick Woodruff, of Binghamton, New York, were sued for $10,000 after they were unable to pay large bills following the amputation of Nick’s infected leg.

Those desperate patients, workers who already have serious health and family issues to contend with, have in many cases been forced to pay off medical bills totaling thousands or tens of thousands of dollars by using credit cards, with punishingly high interest rates. Those who have not paid have faced sometimes daily harassment from collection agencies who have bought the debt from the hospitals and turned the medical debt into a new source of profit.

The Affordable Care Act (ACA) enacted in 2010, also known as Obamacare, is often lauded as a great success for having reduced the number of uninsured in the backward American medical system by about 40 percent, from 48 million to 28 million adults, as of 2016. The KHN study reports that newly-formed insurers, as well as older, more established companies, enjoyed years of “robust profits” after Obamacare. This, however, was no surprise. A main aim of the legislation was to create a new revenue stream for the insurance companies and the entire health care industry. As far as Obamacare’s supposed beneficiaries, most of them face huge deductibles, the amount that must be paid before coverage begins, and out-of-pocket maximums of up to $8,700 a year.

While 100 million face this mountain of health care debt, the nation’s hospitals reported their most profitable year in 2019, just before the COVID-19 pandemic, with a margin of 7.6 percent, and these figures have continued in the last two years. Hospital CEOs are often paid millions of dollars in annual salaries. Some sample figures, from three or four years ago, are $2.77 million at the Mayo Clinic, $2.58 million at the Cleveland Clinic, and $2.4 million at Massachusetts General Hospital. In New York City, with its proximity to Wall Street, these CEOs command even more stratospheric compensation: $13 million for the head of Montefiore Medical Center in the Bronx, and $10.4 million for New York Presbyterian in Manhattan.

It must be stressed that most medical insurance, including Medicare, is no protection from massive bills. The crisis is one of “underinsurance.” Deductibles have quadrupled for a single adult since 2006, to an average figure of $1,400 annually. For those on Medicare, only seniors who are prepared and able to spend several thousand dollars annually, and sometimes significantly more, to purchase supplemental insurance, are protected from huge bills if they become seriously ill. The monthly Medicare premiums, nearly $150 deducted from Social Security, do not provide comprehensive medical care and protection from these bills. Nor do the thousands of dollars that have been paid in Medicare taxes in the course of decades of work.

The US is virtually the only country whose population faces the issue of medical debt. In Britain, the National Health Service (NHS), underfunded as it is and facing enormous and growing crisis, still provides free medical care. In most of western Europe, universal health insurance of one kind or another, even where it imposes other costs, does not saddle its users with debt. In most of the rest of the world, especially in the poorer countries, medical care must be paid for in advance. This creates huge suffering of a different kind, resulting in untreated illness or dangerous medical care.

The medical debt crisis is bound up with the financialization of the US economy, and with the particularly savage anti-communism of the American ruling class, and the bipartisan onslaught on public services of all kinds in the past 40 years. As workers throughout the world can attest, these attacks are by no means unique to the US, but they take a particular form in the arena of US health care and public health.

Ruling class hysteria against any hint of “socialized medicine” continues today. No sooner was Medicare enacted in the 1960s than plotting began to undermine it from within, and privatization has accelerated in recent decades, in the form of the so-called Medicare Advantage Plans. Virtually all public services, even those run as non-profits, have been transformed along for-profit lines.

The health care system has been organized to provide new profit centers, to enrich the wealthy stockholders of the pharmaceutical firms as well as the credit card companies, a key part of the financial system, for whom the mushrooming debt is a bonanza. The KHN report quotes one physician as stating that, “Debt is no longer just a bug in our system. It is one of the main products.”

Medical debt is one of the countless ways in which the capitalist elite has engineered the gigantic transfer of wealth from the working class, which produces all profits, to the parasites who sit on top. This transfer of wealth, however, is now becoming a major ingredient in a revolutionary explosion, as millions of workers and their families become conscious of the fact that their lives are literally threatened by the continued existence of the profit system.

Significant economic slowdown as China battles COVID

Nick Beams

The world economy took another step towards recession with the announcement yesterday that China, the world’s second largest economy, had grown by only 0.4 percent year-on-year in the second quarter. This was below the 1.2 percent predicted by economists and well down from the 4.8 percent year-on-year growth recorded in the first quarter.

The main reason for the slowdown was the effect of the two-month lockdown of Shanghai as the government sought to implement its policy of Zero-COVID.

Workers labor near a construction site with cranes near the central business district skyline in Beijing, China, October 11, 2021. (AP Photo/Ng Han Guan)

Shanghai has re-opened but China is now facing the effects of the BA.5 variant of the virus which is rapidly spreading around the world because of the abandonment by all governments of even limited mitigation measures, let alone pursuing the necessary policy of global elimination.

According to an analysis made by the Japanese financial firm Nomura, 31 Chinese cities are under full or partial lockdown, affecting almost 248 million people and accounting for 17.5 percent of the country’s economic output.

The Chinese experience demonstrates two things: public health safety measures can bring the pandemic under control, but elimination is impossible solely on a national basis.

Besides the devastating health impact as millions are condemned to an unnecessary death, the refusal to adopt such an international strategy is not only fueling inflation, it is pushing the world economy into a slump.

On a quarter-by-quarter basis, the economy contracted by 2.6 percent in the three months to the end of June, compared with 1.4 percent growth in the first quarter. The June quarter contraction was well above predictions of a 1.5 percent shrinkage.

Unemployment is starting to rise with the level of youth joblessness rising to a record 19.3 percent.

Releasing the figures, a spokesperson for the National Bureau of Statistics, Fu Linghui, tried to put the best face on the situation at a press briefing yesterday morning.

“Generally speaking, with a series of policies to solidly stabilise the economy achieving notable results, the national economy has overcome the adverse impact of unexpected factors, demonstrating the momentum of stable recovery,” he said.

During a visit to Wuhan last month, Chinese president Xi Pinhg indicated that Zero-COVID would continue. While he acknowledged there were economic problems, he said it was better to “temporarily affect a little economic development rather than risk people’s health and safety.”

Chinese authorities have estimated that hundreds of thousands, if not millions, could die if the “let it rip” policy in the rest of the world were adopted.

But there are signs of cracks in the regime. In its report on the COVID-induced economic downturn, the Washington Post, one of the many media outlets around the world calling for the abandonment of Zero-COVID, eagerly seized on such indications.

It reported that when Chinese premier Li Keqiang visited the coastal city of Fuzhou to hold discussions with officials in the south-eastern industrial area about how to bring stability, he urged they steer the economy back on track.

Photographs in state media have shown Li in meetings where no one was wearing a mask, and these appearances “have been interpreted by some as a show of support… for a faster return to normalcy.”

It described the Zero-COVID policy as “increasingly controversial and economically damaging.” But apart from sections of the upper middle class, whose objections are eagerly seized on by the western media, the official policy enjoys wide public support, and the government fears it would face massive opposition were it abandoned.

The Chinese government is seeking to alleviate the COVID economic damage by loosening financial conditions and allowing local government authorities to issue additional bonds to finance new projects. But financial stimulus measures are restricted by the shift by major central banks to a higher interest rate regime. Authorities fear there will be a fall in the value of the renminbi and a capital outflow if monetary policy is relaxed too much.

The economic slowdown in China means that the three major economic regions of the world—the US, Europe and China—are moving closer to recession.

The escalation of inflation in the US—it jumped to 9.1 percent in June, up from 8.6 percent the previous month—means that the Fed is certain to again lift interest rates by 0.75 percentage points at the end of the month, and possibly by a full 1 percent.

This has fueled predictions of a recession under conditions where the US economy contracted by 1.6 percent on an annualised basis in the first quarter and a similar result appears likely for the second.

The present Fed rate is between 1.5 and 1.75 percent. But according to Jeffrey Lacker, a former president of the Richmond Fed, it would have to go to 6 percent to influence inflation. Such an escalation would virtually guarantee a recession under conditions where the financial system, as well as consumer and business spending, have become dependent on a low interest rate regime.

Former treasury secretary Lawrence Summers has said that an unemployment rate of 10 percent, lasting for a year, is necessary to bring inflation down.

The economic outlook in the euro zone is going from bad to worse. This week the value of the euro has fallen to parity with the US dollar—at one point it went below parity—amid fears that a cut-off of Russian gas supplies as a result of the US-NATO war in the Ukraine could induce a deep recession.

The European Central Bank (ECB) is committed to start lifting its interest rate when it meets later this month, but only by 0.25 percentage points, well below the rate rises in the US and this is driving down the value of the euro.

The falling euro adds to the cost of imports driving up inflation from its present level of 8.6 percent and adding to pressure on the ECB to move faster with rate hikes. But such moves threaten to lead to “fragmentation” in financial markets as the interest rates on the bonds of the more indebted countries of the south rise above those on the bonds of countries of the north.

In 2012, this divergence threatened the continuation of the single currency. The ECB has said it will develop measures to counter this threat when it meets next week.

Under what were once regarded as “normal” conditions, a fall in the currency would be regarded as having some benefits by making exports cheaper in world markets. But not in the present situation where currency falls drive up inflation.

“The extreme price increases in import and producer prices overshadow any profit that exporters can book for themselves due to a weaker currency,” Sonja Marten, head of foreign exchange and monetary policy at DZ Bank in Frankfurt told the Wall Street Journal.

Summing up the implications of the euro’s plunge, James Athey, investment director at Abrn, a major UK investment company told the Journal: “What it is indicative of is that this is a horrific situation for the eurozone.”

In the past, during periods of major currency misalignments, international agreements were reached—one recalls the Plaza and Louvre accords of the 1980s—to stabilise the situation. No longer.

Speaking after a meeting this week with the Japanese finance minister Shunichi Suzuki, where the rapid fall of the yen against the dollar was discussed, US treasury secretary Janet Yellen made it clear there would be no intervention to bring down the dollar and G7 countries should have market-determined exchange rates.

The position of the Biden administration is that a strong dollar is of assistance in bringing down inflation. Yellen did not use the words of Nixon’s treasury secretary John Connally in 1971, after the president closed the gold window, “the dollar is our currency but it’s your problem,” but she could well have.

In a world of growing recessionary trends, escalating inflation, financial turbulence, and currency storms, it is very much every man for himself and the devil take the hindmost.

Wickremesinghe threatens state repression following his formal installation as acting Sri Lankan president

Saman Gunadasa

Prime Minister Ranil Wickremesinghe was officially sworn in yesterday as Sri Lanka’s acting president by the chief justice, following the formal resignation of Gotabhaya Rajapakse, who fled the country on Wednesday amid the largest demonstrations and mass strikes in the country’s history.

Ranil Wickremesinghe [Source: United National Party Facebook]

Wickremesinghe, the sole parliamentarian from the right-wing United National Party, was initially appointed prime minister by President Gotabhaya Rajapakse on May 12 after his elder brother Mahinda Rajapakse was forced to resign from the premiership on May 9. Rajapakse then appointed Wickremesinghe acting president three days ago, on July 13, as he flew out of Sri Lanka early Wednesday morning.

Having been Sri Lankan prime minister six times since 1993, Wickremesinghe is a long-standing pro-US defender of bourgeois rule and committed supporter of International Monetary Fund austerity measures.

Soon after being sworn in, Wickremesinghe issued a media release threatening the ongoing protests centred around Galle Face Green in Colombo.

“I will take immediate steps to establish law and order in the country,” he declared, while claiming he was “not against the peaceful struggle.” It was, however, necessary, he added, “to identify the difference between the insurgents and protesters.”

Wickremesinghe then referred to recent clashes between army personal and anti-government protesters, during which 24 soldiers were injured and weapons of two soldiers were allegedly stolen. “These insurgents are trying to create unrest next week. We cannot allow it,” he said.

Referring to his earlier move to assign the military and police powers to crack down on protesters if they challenge bourgeois rule, Wickremesinghe said: “I have appointed a committee comprising service commanders and the IGP [Inspector General of Police]. They are in charge of maintaining law and order.” 

Wickremesinghe then cynically linked the “law and order” situation with the catastrophic economic crisis and the desperate situation facing millions of Sri Lankans. “A breakdown in law and order will impact the economy. Fuel, power and water supply and food supply can crumble,” he declared.

In other words, the ongoing protests by workers, youth and the rural masses over the skyrocketing price of food, fuel, cooking gas and other scarce essentials is worsening the crisis and state repression is required to supply essentials and “restore order.”

Later that day, Wickremesinghe, accompanied by journalists, photographers and television crews, visited the injured 24 soldiers in hospital. He made no reference to the 84 protesters assaulted by police and army officers this week and now in hospital, or the young demonstrator killed during these clashes.

The corporate sector, civil society organisations and the religious establishment, along with the US and other embassies, have said the Constitution and the constitutional framework must be maintained—code words for capitalist rule.

The Sri Lankan Constitution includes the executive presidency, which allows Wickremesinghe to impose a range of repressive measures, including the Essential Services Act, Prevention of Terrorism Act, Public Security Ordinance and other anti-democratic actions, measures already used by former President Rajapakse.

On Thursday, US ambassador Julie Chung tweeted that “A peaceful transfer of power within SL’s democratic and constitutional framework is essential.”

While voicing these “concerns”—a reflection of her nervousness about the extreme political instability in Sri Lanka, Chung and various “quiet Americans” are maneouvring behind the scenes with the political opposition, the military and the police, offering advice about how to deal with the ongoing mass anti-government movement.

Defying threats to use the military and police in a broader crackdown, workers, youth and the rural masses are continuing their protests. Low flying helicopters threatened the protesters on Wednesday, while the media showed huge contingents of police and military being brought near the Galle Face Green protest site on Thursday.

US ambassador Julie Chung with Sri Lanka graduates of the US-funded International Military Education & Training program on July 6. The tweet says: "We discussed today’s many challenges and how our robust defense partnership bolsters efforts to ensure the military remains accountable to the people & upholds the country’s democratic ideals." (Image: Ambassador Julie Chan)

An article yesterday in the English-language Island headlined, “Nod given for use of lethal force,” reported that the Armed Forces had been ordered to “use lethal force if it is necessary to protect public property, key installations, vulnerable points and human lives.”

The intensifying political turmoil is driven by the worsening socio-economic crisis, exacerbated by the coronavirus pandemic and the US-led NATO proxy war against Russia in Ukraine.

Hundreds of thousands of distressed people are continuing to wait in fuel queues for several days at time. The number of deaths that have occurred on these lines rose to a total of 19 on Thursday.

Health services and public hospitals are breaking down due to shortages of medicines, equipment and staff, with health workers, including doctors, forced to wait in fuel queues. School closures continue and public transport is crippled due fuel shortages. Almost 75 percent of the population is skipping meals and starving due to skyrocketing food prices. Last month, the official annualized food inflation rate hit 80 percent.

Yesterday, Parliamentary Speaker Mahinda Yapa Abeywardena said a new president would be elected by parliament on July 20, but would hold that position only until the end of 2024.

A flurry of backroom wheeling and dealing between the political establishment and leading contenders for the presidency and premiership is underway.

Sagara Kariyawasam, general secretary of Rajapakse’s fractured Sri Lanka Podujana Peramuna (SLPP), which holds the largest number of parliamentary seats, announced that the SLPP would back Wickremesinghe for the presidency. However, SLPP Chairman G.L. Peiris declared that the party had to support its own candidate. SLPP parliamentarian Dullas Alahapperuma has announced his candidacy for the presidency.

Other presidential contenders include Sajith Premadasa, leader of the opposition Samagi Jana Balawegaya, a breakaway group from Wickremesinghe’s rump UNP. The suggestion has also been made to share the presidency and premiership between Premadasa and Alahapperuma. Other parliamentary parties, such as the Janatha Vimukthi Peramuna (JVP) and the Tamil National Alliance, have yet to issue a statement on the presidential elections.

The establishment of an interim all-party government, following the election of the prime minister and president, is crucial for Sri Lanka’s ruling elite to begin imposing the still under negotiation IMF austerity agenda. Its measures will only impose new burdens on the working masses, including through subsidy cuts, privatisations and increased and more broadly based taxes.

Giving voice to the nervousness within the ruling class, Central Bank Governor Nandalal Weerasinghe told the international media that unless a stable government is soon established in Sri Lanka, the country will come to a standstill.

The trade unions continue to play an utterly reactionary role. The response of the unions to the largest island-wide anti-government protest in Sri Lankan history on July 9, and the subsequent mass storming of the homes of the president and the prime minister, was to block all independent action by the working class.

The Trade Unions Coordination Centre and the Trade Unions and Mass Organisation Collective declared they would launch a general strike, along with a hartal (closure of businesses), on July 14 if Rajapakse and Wickremesinghe did not quit by July 13. When this did not happen, they declared they would organise action for July 18.

Even if this occurs, the walkout, like all the other one-day general strikes they were forced to call—on April 28, May 6 and May 10—will be used to let off steam and divert workers behind calls for an interim all-party government.

Australian government forced to reinstate “pandemic leave” as COVID-19 infections and deaths soar

Martin Scott

Amid a rapidly worsening pandemic disaster, Prime Minister Anthony Albanese announced today that the Labor government will temporarily reinstate meagre pandemic leave payments for those infected with, or exposed to, COVID-19.

Anthony Albanese addresses media after the National Cabinet meeting on July 16, 2021 (Screenshot: ABC)

At a meeting of the “National Cabinet” this morning, the same federal, state and territory leaders who have axed virtually all pandemic safety measures, allowing the virus to mutate, agreed to a 50-50 split for the reintroduced payments, which will be terminated again on September 30.

The payments, established by the former Liberal-National government, expired on June 30, provoking criticism of the federal Labor government by big business as well as anger among workers because of a massive surge in infections, hospitalisation and death, fuelled by the official profit-driven refusal to take any action to eliminate COVID-19.

Throughout the week, the Labor government had adamantly defended the scrapping of the payments, along with another of the few remaining scraps of pandemic policy, the provision of free rapid antigen tests (RATs) to pensioners and welfare recipients, over the objections of health authorities and medical experts.

Australian Medical Association president Omar Khorsid said: “The last thing you need when you have such huge numbers of cases around is for the government to pull its supports for people to do the right thing.”

Today’s decision by the “National Cabinet” has nothing to do with criticism from health experts, however. It is primarily a response to the demands of business groups, which complained that the rapid growth of infections was exacerbating staff shortages throughout the supply chain.

Having ruthlessly demanded the axing of public health measures, the corporate elite now hopes that publicly-funded pandemic leave payments will limit the decimation of workforces through COVID-19 infection, while allowing employers to continue to refuse paid sick leave for workers.

Australian Chamber of Commerce and Industry chief Andrew McKellar said: “The last thing we need is an uncontrollable spread of illness that would put even more pressure on businesses already struggling with labour shortages.”

The real effect of the payment is to subsidise the dangerous operations of the same corporate interests that bear chief responsibility for the crisis itself. Increasingly throughout the pandemic, health policy has been dictated by big business, which has opposed mask mandates, lockdowns and other essential measures, allowing COVID-19 to run rampant.

The trade unions have been entirely complicit, ensuring workers remained on the job throughout the pandemic, whatever the danger, and opposing calls to shut down production.

Fully-paid pandemic leave, not just the $750 weekly allowances, is essential to keep infected workers out of financial straits and reduce the pressure on them to keep working, inevitably spreading the virus to their colleagues.

Under conditions where access to accurate polymerase chain reaction (PCR) testing has been slashed, infected people also have to resort to unreliable RATs to access potentially life-saving anti-viral treatments, and avoid spreading the virus to others. What remains of the free RAT program will now be left up to the states and territories, however.

The escalating COVID crisis is a direct result of the “let it rip” policies embraced by all Australian governments. While these homicidal policies are commonly associated with former Liberal-National Prime Minister Scott Morrison, Labor governments at state and federal level are now leading the charge.

Federal Health Minister Mark Butler declared on Wednesday: “There are going to be millions of people infected by COVID in this coming few weeks.” Butler has not called for a single measure to end the wave of infection. Throughout the week he refused to even extend pandemic leave payments and the free RAT program, insisting on the need for “fiscal responsibility.”

On Tuesday, Labor’s Victorian Health Minister Mary-Anne Thomas announced she had defied the recommendation of the state’s Chief Health Officer to implement a mask mandate, because it conflicted with the demands of big business.

Victoria has seen a 91 percent increase in hospitalisation over the past three weeks, with more than 800 people currently being treated for COVID-19, for the first time since February 2. Numerous hospitals across the state have been forced to cancel elective surgeries as a result of the influx of COVID-19 patients and growing staff shortages due to infection.

Labor Premier of Western Australia (WA), Mark McGowan, said on Thursday he would not set “hard and fast rules,” but “continue to monitor the situation.” The “situation” is that there are more than 35,000 active cases in the state and 333 people are hospitalised for COVID-19, the highest number during the pandemic.

McGowan was previously associated with maintaining a “hard border” that helped suppress COVID-19 in the state for almost two years. There was not a single COVID-19 death in the state between May 4, 2020 and February 2, 2022.

State governments are still slashing the few remaining restrictions. In Tasmania, mandated mask-wearing in health facilities was dropped on June 30. Since then, COVID-19 hospitalisations in the state have more than tripled to 138, far in excess of previous highs.

Governments are increasingly adopting the program of the extreme right: No lockdowns, no masks and no vaccine requirements.

In NSW, unvaccinated teachers will be allowed to return to work from Monday, while aged care facilities in the state will remove limits on visitor numbers and the requirement for visitors to be vaccinated.

Since December 16, 2021, despite 90 percent of people over the age of 16 having had two vaccine doses, 8.5 million infections have been reported in Australia and 8,533 people have died from COVID-19.

In NSW, in the week ending July 10, 59.4 percent of people hospitalised for COVID-19 had received at least three shots, close to state’s the three-dose vaccination rate of 64.8 percent. This reflects the minimal protection the vaccines afford against the now dominant Omicron BA.4 and BA.5 variants.

The refusal of capitalist governments throughout the world, with the exception of China, to suppress transmission of the virus continues to create the conditions for the development of new, more contagious and vaccine-evading variants.

More than 40,000 new infections are being reported each day across Australia, and the real figure is likely twice as high, according to health experts. There are 4,719 COVID-19 patients in hospitals, the highest number since February 2.

In the past week, 358 people have died from the virus, an average of more than 51 per day. Based on 2019 figures from the Australian Bureau of Statistics, this would make COVID-19 the leading cause of death in Australia, ahead of ischaemic heart diseases.

There have been at least 3,104 COVID-19 deaths in aged care since the start of the pandemic, including more than 2,187 this year and 132 in the past week.

Since the beginning of the pandemic, almost 67,000 aged care residents and 49,000 staff have been infected. Yesterday, there were 7,947 active COVID-19 cases in 857 ongoing outbreaks in residential aged care facilities.

Far from pouring in the necessary resources, Federal Aged Care Minister Anika Wells confirmed this week that a six-month deployment of 1,700 Australian Defence Force personnel to cover staff shortages in sector will end on August 12.

The refusal of all Australian governments, spearheaded by Albanese, to follow the advice of health experts guarantees that this horrific situation will worsen.

The working class cannot leave their health and lives in the hands of a ruling elite that is utterly unconcerned by the loss of more than 50 lives each day, as long as nothing stands in the way of corporate profits.

Workers must oppose this policy of mass infection and take up a fight for the elimination of COVID-19. This will require a break with Labor and the trade unions and the formation of rank-and-file committees in workplaces, schools and neighbourhoods, so that workers can take matters into their own hands.

Drought in the Horn of Africa: Worst in 40 Years

Graham Peebles

Image by Ninno JackJr.

The Horn of Africa (HoA) is once again being battered by climate change induced drought, with the UN report, over “20 million people, and at least 10 million children facing severe drought conditions.”

Desperately needed support from UN agencies (World Food Programme (WFP), UNHCR and UNICEF) is limited due to lack of donations from member states. WFP have been forced to halve food rations due to the “lowest levels of funding on record”. Leading to what UNICEF describe as a “humanitarian catastrophe……. Urgent aid is needed to prevent parts of the region sliding into famine.” The disruption caused to supply chains and food production by the war in Ukraine is adding to the crisis, dramatically increasing food prices and limiting availability.

The region’s agriculture has been decimated by year on year rising temperatures and decreasing rainfall. Food insecurity, in a region with some of the poorest people in the world, is intensifying with the threat of famine looming, and food prices have sky rocketed. Livestock has perished – in Ethiopia alone 2.1 million livestock have died and 22 million are at risk, emancipated with little or no milk production – the primary source of nutrition for young children.

Child malnutrition is increasing and huge numbers of people are being displaced. Ethiopia, Kenya, Somalia, Djibouti and Eritrea are all impacted by the most severe drought in forty years.

The effect on rural communities, and children specifically, is devastating. UNICEF estimate 2 million children are in need of treatment for “severe acute malnutrition,” particularly in Ethiopia and in the arid lands of Northern Kenya and Somalia, where the drought is most severe.

As well as decimating food production, drought is intensifying the water crisis in the area – with, the UN say, 8.5 million people (including 4.2 million children) facing water shortages. In Ethiopia, where around 60 per cent of the population (roughly 70 million) do not have access to clean drinking water with or without a drought, the situation is dire. Streams, wells and ponds, that people living in remote areas rely on, are either drying up or are completely parched. Such sterile water sources become contaminated by animal and human waste, increasing the risk of water borne diseases, cholera and diarrhea, which are the leading causes of death among children under five in the country; cases of measles have also been increasing at alarming rates in Ethiopia and Somalia, resulting in some case in deaths.

Desperate families are being driven to extreme measures to try to survive, with hundreds of thousands leaving their homes in search of food, water, fresh pasture for animals and assistance. This is creating and intensifying numerous issues: Access to health care, education and protection/reproductive services is made difficult, or impossible. Children are forced out of school – approximately 1.1 million; schools close (in a region overflowing with children where 15 million children are already not in school); girls and women are made more vulnerable to physical coercion, sexual/child labor and forced marriage; displacement of persons explodes. Already a massive problem throughout the region, specifically in Ethiopia, where, according to UNHCR (as of March 2022) “an estimated 5,582,000 persons” were internally displaced due to armed conflict and natural disasters.

“Natural” disaster no longer natural

As the world heats up due to greenhouse gas emissions (GHG) pouring into the lower atmosphere, the inevitability of extreme weather patterns including drought increases.

Like forest fires, heat waves and monsoon rains, drought was historically regarded as a “natural disaster”, but the frequency and intensity of such events is no longer “natural” and must now be understood to be man-made. Far from being freak happenings, such catastrophic climate explosions are becoming commonplace, and despite producing virtually none of the poisons that are driving climate change, those most affected are the poorest people in the poorest countries or regions.

The seed of the deadly drought in the HoA was planted and fed by the behavior of people in the US, in Europe, Japan and other rich countries. It is the materialistic lifestyles of wealthy developed nations (and disproportionately the richest people within such countries), rooted in irresponsible consumerism (including diets centered around animal food produce), that has caused and is perpetuating the environmental crisis. But to their utter shame the governments of such nations refuse to honor their debt, their responsibility to clean up the mess. On the contrary, because economic health is dependent on rapacious consumption, they continue to promote modes of living that are deepening the crisis.

Commitments made 12 years ago in 2009 by rich nations to give 100 billion USD a year to developing countries are yet to be fulfilled. In 2019 a high of 79.6 billion USD was reached, 71% of which was in the form of loans. Loans – for some of the poorest nations in the world, to mitigate the impact of climate change that they haven’t caused; loans that enable donor nations political and economic influence, perpetuating post-colonial exploitation and control, and ensuring Sub-Saharan Africa remains impoverished, and, more or less enslaved.

Imperial powers have outsourced the most severe effects of climate change; they either refuse to act at all or offer limited support with strings to countries and regions most at risk. At the V20 Climate Vulnerable Finance Summit in July 2021, heads of state demanded that higher income nations do more to meet their promises and called for grants not loans. UN Secretary General, António Guterres said that in order to “rebuild trust, developed countries must clarify now how they will effectively deliver $100 billion in climate finance annually to the developing world, as was promised over a decade ago.” But four months later at COP 26 in Glasgow, where climate finance was a primary issue under consideration, once again the rich nations failed. Failed to honor their word, failed to act responsibly in the interests of poorer nations, failed to stand for the collective good and the health of the planet. Shameful, but predictable. Politicians cannot be and in fact are not trusted; national and international climate pledges should be legally binding and enforceable.

Climate change and the environmental emergency more broadly is a global crisis; as such, it requires a global approach. This has been said many times, and yet national self-interest and political weakness continue to dominate the policies and priorities of western governments/politicians. If this crisis, which is the greatest issue humanity has ever faced, is to be met, and healing is to begin in earnest, this narrow nationalistic approach must change. As with other major areas of concern – armed conflict, inequality, displacement of persons, poverty – united, coordinated global policies and a powerful United Nations (UN) are urgently needed, but the single most significant change that is required is a fundamental shift in attitudes; a move away from tribalism, competition and division to cooperation and unity. A recognition, not intellectually or theoretically, but actually, that humanity is one, that we form part of a collective life that is the planet.

As the UN has said the men women and children in the Horn of Africa whose lives are being ravaged by drought need “the world’s attention and action, now.” Sustained action rooted in the realization of our individual and collective environmental responsibility. This requires governments to honor commitments: the $100m billion mitigation fund (as grants not loans), and making up the cumulative shortfall; it means funding the UN properly so emergency humanitarian aid can be supplied to those currently affected by drought in the HoA, it means supporting countries most at risk of man-made climate change in drawing up plans and initiating short and long term projects to minimize where possible the social and economic impact of extreme weather events; and individually, it means living thoughtful, conscious lives, in which the effect on the natural world is at the forefront of daily decisions, including diet, shopping and travel. It is our world, the people displaced by drought in Ethiopia and Somalia are our brethren, and we are all responsible for them.