Australian central bank demands deeper cuts to wages and social spending

Mike Head

Addressing parliament’s economics committee for the first time since the election of the Labor government in May, Reserve Bank of Australia (RBA) governor Philip Lowe yesterday insisted that workers’ wages must be kept far below the soaring cost of living and that the government must slash social spending, including on aged and disability care.

Reserve Bank of Australia governor Philip Lowe. [AP Photo]

People could not keep using the “national credit card” to pay for such essential services, Lowe declared, as if workers and their families had access to too many benefits and must stop asking governments for them.

This is a message of class war—demanding that the workers must be made to pay for what they are not responsible for: The global inflationary spiral and economic crisis caused by the disastrous “live with the virus” COVID-19 policies, the pouring of billions of dollars in “support packages” into corporate coffers and the impact of the escalating US-NATO proxy war against Russia on world food and fuel prices.

The central bank chief declared: “I know it’s not a comfortable message for people that we’re going to have a decline in real wages this year. It’s tough. When interest rates are rising and real wages are declining it’s pretty tough, isn’t it?”

Lowe reiterated his earlier insistence that pay rises be kept below 3.5 percent per year, that is, about half the consumer price index of 7.75 percent predicted by the end of 2022.

In other words, despite this being “tough,” Prime Minister Anthony Albanese’s government and its trade union partners must keep suppressing workers’ pay demands by stifling or selling out strikes and imposing deals with employers that cut real wages, on top of a decade of declining real incomes for workers.

Lowe delivered a blunt threat. If wages were allowed to rise to give workers “full compensation” for inflation: “We will respond to that prospect with much higher interest rates and a marked downturn.”

That is, the central bank is quite prepared to hike interest rates so high that the economy crashes into recession with a wave of job cuts, in order to ensure that deeper income cuts are inflicted on working-class households. There was not a word of dissent from the members of the Labor-majority committee.

Lowe warned that Australia’s official inflation rate was still expected to rise from 6.1 percent to 7.75 percent by the end of the year, and the RBA, like other central banks internationally, would continue to raise interest rates in order to drive down household spending and real wages.

This is under conditions where five monthly interest rate hikes in succession and the soaring cost of living, particularly for food, petrol, electricity, gas and housing, is already having a brutal effect on working-class households. With mortgage repayments up by an average of nearly $1,000 a month so far, and rents sky-rocketing, millions face the danger of mortgage defaults or evictions.

Over the past year alone, as Lowe admitted, petrol prices have risen by 32 percent and the cost of building a new house by 20 percent. Electricity and gas bills are now rising by similar amounts. As the Australian Bureau of Statistics reported this week, a record 900,000 people are working multiple jobs—usually insecure or casualised—because their wages are not sufficient to make ends meet.

Despite raising the spectre of a wage-price “cycle,” Lowe conceded that wages have not been a “factor” driving inflation higher. He identified “profit margins” as an issue. That was a muffled reference to the price-gouging by which the energy giants have led the financial elite in reaping super-profits from the worldwide energy price hikes.

Nevertheless, workers had to bear the “tough” consequences. No wage growth could be permitted to reach anywhere near the levels that Lowe claimed were far too high in the US, UK and across Europe. In those countries, the central banks and governments “have to find a way to get that back down,” he insisted, even though for workers across North America and Europe, in reality, life is becoming intolerably more expensive by the day, driving workers into struggle.

Lowe claimed that if wages were cut this year, inflation would drop next year, clearing the way for real pay rises in 2023 and 2024. Such predictions, however, have always proven to be false in the past. Year after year, the RBA and successive governments, Labor and Liberal-National alike, have promised that relief lies just ahead, while the profit share of national income has doubled, at workers’ expense, since the 1980s.

By Lowe’s own admission, the RBA had “made big errors before and no doubt will make them again.” That was a reference to the central bank’s forecasts, up until the end of last year, that any inflation would be transitory and its promises to keep interest rates at record lows until 2024 at least—promises on which many now financially-distressed new homebuyers relied.

Lowe also conceded: “One important source of uncertainty at the moment is the global economy, where the outlook has deteriorated.” The situation in Europe was “very troubling, not least because of the extraordinary increase in energy prices,” in the US, the Federal Reserve had indicated that interest rates had to keep rising and “the Chinese economy is also facing major challenges.”

Lowe’s complaint about the “national credit card” was a declaration that the Labor government had to start, in its scheduled October 25 budget, to eliminate the budget deficits and public debt. These have been growing since massive corporate bailouts and the pouring of huge funds into the financial markets commenced in the global financial crisis of 2008–09—a process that reached vast new heights when the pandemic began in 2020.

The RBA governor said the “community” wanted governments to “provide a whole range of services,” such as “high-quality aged care, great education, world-class disability care, fantastic national defence, great infrastructure.” This was “understandable,” but “what we haven’t worked out as a community is how to pay for it.”

Lowe said there were only three “difficult” alternatives: raise taxes, cut services or grow the economic “pie” to pay for them. The latter required “hard choices on a whole bunch of structural reform issues.” With the Labor government due to hand down a second budget next May, Lowe said he hoped parliament would address these things during its current three-year term.

This is the voice of finance capital giving its orders to the government, and the trade unions on which Labor is relying to enforce the dictates of the ruling class, as they have done for decades, especially since the corporatist Accords between the unions and the Hawke-Keating Labor governments of 1983 to 1996.

There is no doubt about the determination of the Labor and union apparatuses to deliver the requirements of big business. Labor’s deceptive election promises of a “better future” have long given way to the government’s own talk of “tough medicine.” The unions have already imposed scores of pro-employer deals that keep yearly pay rises to 3.5 percent or even less, but this is fueling discontent and resistance, as seen in strikes by nurses, teachers, childcare educators, university staff and many others.

Military debacle in northeastern Ukraine fuels infighting in Russian oligarchy

Clara Weiss

The collapse of Russian forces in the face of a counteroffensive by Ukraine the northeast of the country has brought to the fore bitter conflicts within the Russian oligarchy.

Over the past week, the Russian military has lost about a tenth of the territory it had previously occupied in Ukraine. The fleeing troops vacated almost all of the Russian-occupied parts of the Kharkiv province, including several strategically and logistically important towns like Izyum and Balakliya, leaving behind military equipment.

The military debacle has not only exposed the significant logistical and intelligence problems of Russia’s military, and the extremely low morale among its troops. Above all, it has dealt a severe blow to the strategy of the Putin regime. Having emerged out of the Stalinist destruction of the Soviet Union and the restoration of capitalism, the Putin regime has responded to decades of NATO encirclement and provocations with the invasion of Ukraine, hoping that it could force the imperialist powers to the negotiating table. A principal component of this strategy has been the effort to contain what is essentially a war with NATO.

But this strategy has been blown to pieces by the aggressive moves to escalate the war by the imperialist powers and the transformation of the Ukrainian army—the second largest in Europe after Russia’s—into a well-equipped fighting force. According to the New York Times, it was the Biden administration, which has pledged over $50 billion in weapons for Ukraine since February, that proposed the offensive to the Zelensky government. Moreover, the American media and military figures are openly bragging about the central role of US-delivered weapons and intelligence in the offensive, making it all but impossible to deny that the Russian military is fighting a NATO proxy army in Ukraine. 

Coming on the heels of a series of major provocations, including strikes on Crimea and the assassination of Daria Dugina, a prominent proponent of the war near Moscow, the offensive is clearly part of the efforts by the imperialist powers to goad the Kremlin into an expansion of the war and embolden the most hawkish elements within the Russian state and oligarchy.

Already, the military debacle has provoked an outcry even among the most loyal Putin supporters. Within the media and political establishment, there are ever more open calls for a general mobilization and a public acknowledgement that what is taking place is, in fact, a full-scale war.  

At a Duma (parliament) session on Tuesday, September 13, a deputy from the ruling United Russia Party, Mikhail Sheremetv, said, “Without a complete mobilization, the transition [of the entire country] into war mode, including of the economy, we will not achieve the necessary results [in Ukraine]. I am saying that society must now be consolidated as much as possible and be determined to achieve victory.”

Gennady Zyuganov, the head of the Stalinist Communist Party of the Russian Federation (KPRF), flat-out refused to speak of a “special military operation.” For the past six months, the Kremlin has insisted that what is taking place is only a “special military operation.” The term “war” is banned from the Russian media.

Zyuganov said, “How is a special military operation different from a war? A military operation can be stopped at any point. But you cannot stop a war, it either ends with victory or defeat. I am telling you that what is happening is a war, and we have no right to lose it. We must not panic now. What is needed is an all-out mobilization of the country, entirely different laws are required.” Zyuganov also called for an increase in military expenditures and more modern equipment for the army. 

Zyuganov’s statements are all the more significant as his party, which openly glorifies Joseph Stalin and the Great Terror, has functioned as the largest loyal opposition party to the Putin regime for over two decades, and has played a critical role in stifling and disorienting social opposition. 

The leaders of the other nominal opposition parties, including “Just Russia,” supported Zyuganov’s calls for a general mobilization and also insisted that the war should be named for what it is. 

Following the heated session at the Duma, the Kremlin’s spokesman Dmitry Peskov insisted that “at the moment there is no discussion” in the Russian government about a full or partial mobilization. 

Nevertheless, the Russian media continues to be filled with discussions about it, with many media outlets publishing extensive analyses of what a partial or general mobilization would look like. Based on Russian law, a mobilization can only be introduced in case of “aggression against Russia, the immediate threat of aggression or the emergence of armed conflicts that are directed against Russia.” In the case of a full mobilization, all male citizens aged 18 to 50 can be drafted and the entire economy would be refocused on war production. Much of everyday social and economic life would be regulated and surveilled, in one form or another, by the Ministry of Defense. Some media outlets speculate that a mobilization could also occur, initially at least, in a partial and even secret manner. 

Ramzan Kadyrov, the head of the North Caucasian republic, who has publicly fumed about “mistakes” by the Russian army, has spearheaded an effort to mobilize volunteers to strengthen the Russian troops. Several regional governors have supported his calls for a “self-mobilization” in the regions. 

At this point, the Russian military has deployed but a small fraction of its over 1 million men to Ukraine. Putin himself has insisted that only volunteers and no draftees are being deployed to Ukraine. 

The bitter conflicts within the Russian oligarchy can only be understood in light of the systematic intervention of imperialism in the Ukraine war and in Russian politics, as well as the class nature of the Russian oligarchy itself. Having emerged out of the Stalinist bureaucracy’s destruction of the Soviet Union and restoration of capitalism, it never had and never could have any independence from imperialism. All the different factions, if by starkly different means, ultimately seek an accommodation with one or another imperialist power, and fear nothing more than a movement in the working class. 

Despite constant efforts by the oligarchs find an “agreement” with imperialism, the imperialist powers have systematically encircled Russia since 1991, seeking to bring all the resources of the former Soviet Union under their direct control. The current war in Ukraine is the temporary culmination of this development. The ultimate aim lies not so much in Ukraine itself, but in the complete subjugation and carve-up of Russia.

The destabilization of the Putin regime is therefore a central component of the war strategy.

In a report from 2019, the RAND corporation, a leading US think tank, outlined a strategy of “overextending Russia” to destabilize the regime. According to RAND, the principal means to bring about such an economic “overextension,” apart from sanctions especially in the energy sector, was to force the Russian regime to invest more in its military. The report stressed that the Kremlin was reluctant to do so and that the US would therefore “find it hard to persuade Russia to substantially increase defense spending unless it convinces the Kremlin that new threats to Russian security demand a change to this policy.”

There is little question that the systematic provocations by NATO in the lead-up to the Russian invasion were aimed at bringing about precisely this “change” in Russian foreign policy. Since the invasion, NATO has conducted ever more overtly a de facto war against Russia on Ukrainian territory through an army and paramilitary forces that are principally armed and trained by the imperialist powers. 

The calculation is that, by goading Russia into an expansion of the war, including a general mobilization, the Putin regime can be fatally destabilized and overthrown by another faction of the oligarchy in a US-backed operation. The latest offensive and crisis in the Russian ruling class has raised hopes that this prospect may be realized sooner rather than later. One of the most vocal spokesmen of US imperialist policy vis-a-vis Russia, retired US general Ben Hodges, wrote in the Telegraph earlier this week, “it is a genuine possibility that Vladimir Putin’s exposed weaknesses are so severe that we might be witnessing the beginning of the end–not only of his regime, but of the Russian Federation itself.”

In this operation, the imperialist powers rely on a faction within the Russian oligarchy that is gathered around the pro-NATO misnamed “liberal opposition.” While their main figurehead, Alexei Navalny, continues to be imprisoned, almost as soon as news of the collapse of Russian offensive broke, municipal deputies from Petersburg that are associated with the liberal opposition launched a petition aimed at impeaching Putin based on allegations of “high treason.” These layers stand in the tradition of a faction of the Russian oligarchy that has advocated an integration of Russia into NATO. They are effectively calling for a whole-sale capitulation to imperialism, hoping that they would staff the puppet regimes that would emerged out of an imperialist carve-up of Russia.

Facing growing pressure from different factions of the oligarchy, the Putin regime’s main concern is the prospect that, much like World War I which was ended by the Bolshevik-led October revolution, the war will lead to a social revolution in Russia and internationally. In a recent piece for a Kremlin-aligned think tank, Sergei Karaganov, a leading foreign policy pundit, explicitly warned of a repetition of what he called “the disaster of 1917.” Even more so than the oligarchy’s delusionary belief in the possibility of an agreement with the imperialist powers, this is the main reason for Putin’s desperate efforts to contain the conflict and limit its impact on the home front.

After Russian debacle in Ukraine, US escalates conflict with Russia and China

Andre Damon

Following the collapse of Moscow’s northern front of Russia’s six-month-old invasion of Ukraine, the United States has responded by further intensifying its involvement in the war against Russia in Ukraine and preparations for war with China over Taiwan.

In the course of one week, Ukrainian forces advanced dozens of miles, capturing massive quantities of Russian weapons and ammunition, along with, according to Ukrainian officials, thousands of Russian soldiers.

On Thursday, the Biden administration announced an additional $600 million in weapons to Ukraine, adding to the more than $50 billion in armaments and other assistance that has been allocated to date.

The new arms shipment, the 21st such “drawdown” since the start of the war, includes ammunition for the HIMARS missile system, 36,000 rounds of 105mm artillery, counter-battery radar and a thousand precision-guided 155mm artillery rounds.

This adds to the tens of thousands of antitank missiles, hundreds of drones, 15 HIMARS missile launchers, and hundreds of vehicles, as well as the US’s most advanced anti-ship and anti-aircraft missiles, that have been delivered to date.

US Senators called for even more weapons to be provided to Ukraine, with US Senate Minority Leader Mitch McConnell demanding that the White House provide Ukraine with the long-range ATACMS missile capable of striking deep inside Russian territory.

“The Ukrainians need more weapons than what we’re giving them. They need to start getting them faster, and they need new capabilities like long-range ATACMS missiles, large drones and tanks,” McConnell said.

Senator Marco Rubio added, “I think the concern some would say is that the longer-range missiles could target deep inside of Russia and trigger a broader conflict. I’m not sure I’m as troubled by that.”

These demands for expanding the range of weapons delivered to Ukraine were accompanied by the most explicit declaration to date of US goals in the conflict.

“The momentum has really shifted in favour of Ukraine and they’re the ones that are literally calling the shots,” declared former US Army Europe Commander Ben Hodges.

He added that “we may be looking at the beginning of the collapse of the Russian Federation, adding, “ it’s a population that by and large is not truly let’s say ethnic Russian, I mean there’s 120 different ethnic groups out there…

“I think people out in Tuva and Siberia and Chechnya and others... may see opportunity… to to break away so… um i think that we... collectively the west need to be... thinking… about what are the implications for this?”

The statement by Hodges developed his declaration in April, in the aftermath of Russia’s retreat from Kiev and the allegations of Russian atrocities in Bucha, that the aim of the United States is “breaking the back of Russia’s ability to project power outside of Russia.”

As in April, the renewed escalation of US involvement in the war is accompanied by allegations that Russia systematically murdered civilians, this time in the outskirts of Izum.

These military moves have been accompanied by an escalation of the US-NATO economic war. On Friday, the German government took control of three refineries owned by Russian oil company Rosneft. “This is a far-reaching energy policy decision to protect our country,” German Chancellor Olaf Scholz said.

Alongside the escalation of the war with Russia, the US escalated its conflict with China in the wake of the Russian collapse.

On Wednesday, the Senate Foreign relations Committee voted to move forward the Taiwan Policy Act, a bill that would send $6.5 billion in weapons to Taiwan and effectively end the US’s One China Policy.

The Bill states that “Taiwan shall be treated as though it were designated a major non-NATO ally,” effectively implementing a military treaty with Taiwan, obliterating the US’s formal position that it has no diplomatic ties with Taiwan.

Critically, it replaces provisions that arms provided to Taiwan be used in a “defensive manner” with the declaration that the US will provide “arms conducive to deterring acts of aggression by the People’s Liberation Army,” raising the prospect that this weapons could be used in a “preemptive” conflict.

As the US escalated its involvement in the war against Russia and its conflict with China, Russian president Vladimir Putin and Chinese President Xi Jinping held their first in-person meeting since the start of the war at the Shanghai Cooperation Organization summit. The crisis triggered by Russia’s military debacle was on display.

“We highly appreciate the balanced position of our Chinese friends in connection with the Ukrainian crisis,” Putin said at the start of the meeting. “We understand your questions and concerns in this regard.”

Similar tensions were on display in Putin’s discussion with Indian President Narendra Modi. “I know that today’s era is not an era of war, and I have spoken to you on the phone about this,” Modi told Putin. “I know your position on the conflict in Ukraine, the concerns that you constantly express,” Putin said. “We will do everything to stop this as soon as possible.”

Despite the crisis triggered by the Russian military debacle, Russia and China are being objectively driven closer together by the escalating US war drive.

In a statement to the Financial Times, Alexander Gabuev, senior fellow at the Carnegie Endowment for International Peace, commented  “If Putin is that obsessed with Ukraine, what can [Xi] realistically do?” Gabuev said… “the departure of the Putin regime and the unlikely prospect of a pro-western government in Russia is a terrible nightmare for China.”

Emboldened by the Russian debacle in Northern Ukraine, the US is only escalating its preparations for a global military conflict that threatens all of humanity.

Luring Doctors from Poorer Countries is the UK’s Quiet Scandal

Patrick Cockburn

Photo by Ehimetalor Akhere Unuabona

The looting of artistic and religious objects from Africa and Asia by British invaders in the 19th century causes much rancorous debate about whether the artefacts should be returned to the countries they were originally stolen from. But discussion is much more muted about equally acquisitive expeditions launched by Britain today that may ultimately cause more suffering than those imperialist ventures long ago.

At issue is the policy of deliberately luring badly needed and expensively trained doctors and nurses from poor African and Asian countries to Britain. This happens because we train far too few doctors and nurses, offering only 7,500 medical school places when twice that number is needed. The shortage is made up by battening on the disintegrating health systems of poor and middle-income countries, mostly in Africa and Asia.

The exodus from there of medical professionals is high and getting higher. From the start, the National Health Service (NHS) has recruited from overseas. But within the last decade the influx has vastly increased, with the share of doctors recruited by the NHS from outside the UK and EU rising from 18 to 34 per cent and nurses from seven to 34 per cent between 2015 and 2021, according to statistics compiled by the BBC’s Shared Data Unit. The proportion of British-trained doctors in the health service has fallen from 69 to 58 per cent and nurses from 74 to 61 per cent over the same period.

On occasion, the scale of the loss of skilled medical staff has caused a scandal in their own country. In July 2020, for instance, Nigeria’s immigration service stopped 58 Nigerian doctors from flying out of Lagos international airport on a single plane bound for Britain. The Nigerian press protested that there were already 4,000 Nigerian doctors working in Britain, despite the fact that Nigeria has less than 15 per cent of the doctors needed by its 182 million people.

Syphoning off skilled medical workers from those who can least afford to lose them is not new, but the numbers involved have risen sharply. The NHS has always known that it is training too few doctors but the Treasury has refused to pay for more. Britain has tried to have a first-class health service on the cheap, but this has meant recurrent crises even before Covid-19 along with increasing reliance on medical expertise paid for by others.

Since Brexit the proportion of doctors and nurses coming from EU members has fallen and the numbers coming from poorer non-EU states has increased. Dr Alexia Tsigka, a consultant histopathologist at Norfolk and Norwich University Hospital, is quoted by the BBC Data Unit as saying that in her specialty only three per cent of UK departments are fully staffed.

“And I haven’t seen anyone European coming after Brexit, at least in our department,” says Dr Tsigka. “Doctors that have applied to our department mostly come from India, Egypt and some from Sri Lanka.”

In the past the NHS has denied or played down its dependence on poaching staff abroad. In August, the then Health Secretary Steve Barclay was reported as wanting to send NHS managers to countries like India and the Philippines to recruit thousands of nurses. A Department of Health and Social Care spokesman said the department would be “working with recruitment experts to examine how to recruit staff from overseas more effectively”.

“It is a ghastly development since most of the recruits will come from low and middle income countries that have a low proportion of doctors [to patients] and high infant and maternal mortality rates,” says Rachel Jenkins, professor emeritus of epidemiology and international mental health policy at King’s College London, who has previously emphasised the damage done to poor countries by lessening their already limited medical resources which they cannot afford to replace.

She is scornful about the British health authorities’ claim that they are only accessing a global pool of doctors and nurses, saying “there is no pool but a desert out there”.

Despite knowing that the biggest problem facing the health service is the lack of doctors and nurses, the Government makes clear that it will not train more of them in Britain. A letter to Jesse Norman MP from the Department of Health and Social Care says that it has increased the number of places in medical schools it funds each year from 6,000 to 7,500. “The Government currently has no plans to increase the number of places beyond this,” says the letter.

The parasitic dependence of the UK heath service on recruiting staff who would naturally prefer to work and live in a rich country than a poor one is set to grow rather than diminish. It is foreign aid in reverse, flowing from the poor to the rich and works too much to the advantage of the latter for them to give it up. Bogus claims made in justification for this include the claim that doctors go back to their countries of origin bringing back fresh expertise, but in reality there are few who return.

The real reason for sticking with the present toxic system is simply that the NHS would cease to function without foreign trained medical staff in huge numbers. Personal experience fully supports the statistics as in every medical facility I have been in in the last few years, foreign born staff have been in the majority.

When I broke my leg in 2009, the three doctors who carried out surgery were all from the Middle East. Impressed by their expertise, I wondered about the gap their departure must have left in Cairo or Beirut.

The impact on the NHS of its dependence on non-EU foreign staff is becoming greater, but the same thing has happened in other walks of life. This is strange since Brexit was in part propelled by the belief that Britain was being swamped by immigrants over whose inflow the British government had no control.

A Leave voter might naturally have assumed that, once Britain had left the EU, that the flow of immigrants would be reduced. But instead the number has soared. The Home Office says that 1.1 million visas were issued to those coming to work or study in the UK in the last year, which is an 80 per cent increase on the year before.

This is all legal immigration and it completely dwarfs the 23,000 migrants who have crossed the Channel illegally so far this year. But it is the pictures of migrants being picked up at sea or landing on the beaches of south east Kent that dominate the newscasts about immigration.

So far, the arrival of great numbers of legal immigrants has had surprisingly little political effect. The Government is happy to point to its non-functional plan to deport migrants to Rwanda as its response to the boat people. Labour wants to keep away from the topic. The fact that many migrants are qualified and are being absorbed into big diverse cities makes them less of a rival for jobs in the eyes of poorly educated workers.

Unlike 2016, no political party or media outlet has whipped up anti-immigrant feelings. Nevertheless, I would be surprised if such a big demographic change will not create some sort of backlash.

Japan to further militarize the East China Sea

Ben McGrath

Japan is engaging in the militarization of the East China Sea while increasing the ability of its military to launch offensive, first-strike attacks amid preparations for war with China by the US and its allies.

US Secretary of Defense Lloyd Austin stands with Japan's Minister of Defense Yasukazu Hamada at the Pentagon, Wednesday, Sept. 14, 2022, in Washington. [AP Photo]

In an interview with Nikkei Asia on September 6, Japan’s Defense Minister Yasukazu Hamada stated that the ministry would “radically strengthen the defense capabilities we need, including our capacity for sustained and flexible deployment… To protect Japan, it’s important for us to have not only hardware such as aircraft and ships, but also enough ammunition for them.”

Tokyo intends to construct an ammunition depot on Amami Island in the Ryukyu Island chain that is part of Kagoshima Prefecture. The depot will be located at the current site of a Ground Self-Defense Force (GSDF) base. The GSDF is the formal name of Japan’s army. The government is also examining building additional port facilities and fuel tanks in the region, which also includes Okinawa Prefecture.

Hamada claimed in the interview that the decision is based on a potential crisis over Taiwan and the military’s need to shift resources into the region. At present, approximately 70 percent of the Japanese military’s ammunition is stored on Hokkaido, in the north, while only 10 percent is stored in Kyushu and Okinawa.

Tokyo also intends to conclude the scheduled deployment of surface-to-ship and surface-to-air missiles to islands in the region. The deployment of the missile batteries, with a range of 300 kilometers, was announced in 2016. They have subsequently been installed on Amami Island in 2019 and Miyako Island in 2020. A third deployment to Ishigaki Island will be completed by next March. Miyako and Ishigaki are further south of Amami and are a part of Okinawa Prefecture.

Tokyo also intends to send electronic warfare units to at least three locations in the Ryukyu Island chain, including Yonaguni Island next year. These units are used to jam an enemy’s communications and radar and would target Chinese vessels that use the sea routes around the islands to access the Pacific Ocean. Yonaguni Island lies just 110 kilometers to the east of Taiwan.

The Ryukyu Islands, also known as the Nansei Islands, stretch from Kyushu in an arc down to Taiwan. For the past decade, Tokyo has exploited and inflamed tensions over the disputed Senkaku/Diaoyu Islands—claimed by Tokyo and Beijing—in the East China Sea in order to justify militarizing the Ryukyus. In 2015, Tokyo also announced it would deploy hundreds of additional troops to the islands of Ishigaki, Yonaguni, Miyako, and Amami.

Hamada’s statement that Tokyo is planning for a “sustained and flexible deployment” violates Japan’s constitution, specifically Article 9, known as the pacifist clause. The article explicitly states “land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.”

However, Tokyo has exploited both the US/NATO proxy war against Russia in Ukraine as well as the US manufactured tensions over Taiwan to further dispense with the constitutional restraints on the Japanese military and to push through remilitarization in the face of widespread anti-war sentiment. Prime Minister Fumio Kishida has regularly stated that “Ukraine today may be East Asia tomorrow,” claiming that Beijing may invade Taiwan in the near future.

In reality, the United States, backed by allies like Japan and Australia, have denounced China over phony “human rights” concerns; accused Beijing of being responsible for the COVID-19 pandemic; and dangerously challenged the “One China” policy, which states Taiwan is a part of Chinese territory. Both Washington and Tokyo acknowledge the “One China” policy and have no formal diplomatic relations with Taipei. This has not stopped the US from agreeing to massive arms deals with Taipei and conducting provocative visits to the island, including a trip last month by US House Speaker Nancy Pelosi.

In line with this agenda, Japan’s Defense Ministry recently requested its largest-ever military budget for the 2023 fiscal year, surpassing last year’s record budget. The Defense Ministry submitted its request for 5.59 trillion yen ($US39.19 billion) on August 31, which will likely grow in the future when supplementary budgets are added. The latest increase, which is sure to pass with little to no opposition, comes as Tokyo plans to raise military spending over the next five years to two percent of GDP, a doubling of the current budget. This would make Japan the third-largest spender on the military in the world.

There are seven “pillars” to the new budget, which the Defense Ministry states are “necessary efforts to drastically strengthen Japan’s defense capabilities within five years.” This includes the development and mass production of longer-range missiles, which would give Japan the ability to launch offensive strikes on distant targets. Tokyo also intends to produce the upgraded Type-12 missile with a range of up to 1,000 kilometers that will also be deployed to the East China Sea region.

Another significant item includes additional funds to further modify Japan’s two “helicopter carriers,” JS Izumo and JS Kaga, to convert them into full-fledged aircraft carriers capable of handling F-35B fighter jets. In the past, Japan has avoided the acquisition of nakedly offensive weaponry such as aircraft carriers so as to maintain the presence of abiding by Article 9. The conversion of the Izumo and Kaga would make the two vessels the first new aircraft carriers in Japan’s fleet since World War II.

The other “pillars” in the budget request include improving air and missile defense capabilities, the use of drones, the improvement of intelligence-related functions, “sustainability and resiliency,” deployment capability, and the improvement of capabilities in space, cyberspace, and electromagnetic fields.

In an indication of how far Japan may go in acquiring offensive weaponry, in February, former Prime Minister Shinzo Abe seized on the war in Ukraine to raise the possibility of Japan hosting US nuclear weapons as part of a weapons sharing program. Before his assassination in July, Abe had been one of the most belligerent anti-China voices in Tokyo. With the issue raised, it has already become an open debate in the Japanese establishment.

Fiji government prepares for another anti-democratic election

John Braddock

The Fiji government, led by prime minister and 2006 coup leader Frank Bainimarama, this month pushed through a controversial bill to ramp up powers of the Supervisor of Elections. The Electoral (Amendment) Bill 2022 was passed as parliament sat for its final session before general elections later this year.

FijiFirst election poster of Prime Minister Voreqe Bainimarama outside Fijian village, 2018. [AP Photo]

Introducing the bill, Attorney-General Aiyaz Sayed-Khaiyum, who is also the elections minister, claimed the changes to the Electoral Act were simply made “to reflect practical ways of implementing existing provisions of the Act.”

In fact, with Bainimarama facing his most serious challenge since elections were reinstituted in 2014, powerful sections of the ruling elite are clearly concerned about the possible outcome. The new law places extraordinary, sweeping and intrusive powers in the hands of the Supervisor of Elections (SoE) to intervene in the event of any disputes.

The amendments have three main parts. The first, and most contentious, gives the SoE the “power to direct a person, by notice in writing, to furnish any relevant information or document.” Existing laws relating to privacy are being overridden. Targeted individuals must comply with demands for information “notwithstanding the provisions of any other written law on confidentiality, privilege or secrecy.” Sayed-Khaiyum claims this power is required to allow for any inquiries into “allegations of breaches of campaign provisions.”

The second part entrenches the current opaque and complicated polling system, which uses numbers on ballot papers to replace candidates’ names. Each party may nominate up to 55 candidates, meaning with 10 parties there can be up to 550 numbers on the ballot. The amendment makes it possible for the number used by a candidate to be retained in future elections.

Finally, a new section empowers the Electoral Commission to adopt and publish “guidelines” on opinion polls, surveys and research. The pro-government Fiji Sun, which has previously been criticized by the Commission for its polling methods, immediately announced it would discontinue its monthly public opinion surveys due to the “onerous” new requirements.

Opposition parties voted against the amendment and the Fiji Law Society (FLS), Law Council of Australia and Citizens’ Constitutional Forum earlier all called for the bill to be withdrawn. Most criticism centred on the first amendment with the FLS declaring the SoE could compel any person to provide him with all or any information or documents on “virtually any pretext.”

FLS president Wylie Clarke claimed that the bill “unnecessarily attacks citizens’ rights to privacy, including the legal professional privilege.” People will not be able to appeal any decision except to the Electoral Commission whose ruling is final and cannot be appealed to or reviewed by any court.

Reacting to the widespread condemnation, on September 12 Bainimarama told the Fiji Sun the elections would be “free and fair.” “Rumours of unfair elections,” he said, “serve only to scare the general public and cause societal disruptions. I assure every Fijian that we will have elections before the cut-off date of January 2023.”

Bainimarama’s FijiFirst Party (FFP) currently rules with an extremely narrow majority, having been installed in 2018 with just over 50 percent the vote. The new law follows polls in recent months showing the FFP in some trouble, with support oscillating between 20 and 30-odd percent—roughly the same as the main opposition People’s Alliance.

Significantly, a majority of the nearly 690,000 registered voters are for the first time aged under 40, with a large cohort in the 21-30 age range.

Elections in Fiji are “democratic” in name only. Eight years of direct military rule followed Bainimarama’s 2006 coup before formal elections in 2014, won by the FFP and again in 2018. The US and its local allies, Australia and New Zealand, legitimised Bainimarama’s governments. They have supported coups in Fiji as long as the resulting regime lined up with their imperialist interests.

Fiji’s administrations, resting directly on the military, have all been authoritarian and anti-working class. The imposition of inequality and social misery—28 percent of the population lives below the poverty line—has been accompanied by harsh austerity measures, along with intimidation of opposition parties, repressive laws, media restrictions and rampant violence by the police and military.

Opposition by workers is ruthlessly suppressed. In March 2019 a stoppage by 33 air traffic controllers at Fiji Airports was declared unlawful. Shortly afterwards, the government banned two May Day protests and arrested over 30 workers and trade union officials, accusing them of breaches of “public order.” They included protesting workers who had been sacked and locked out by the Fiji Water Authority.

The deepening economic and social crisis of the past two years has undermined Bainimarama’s support. A COVID outbreak that began in April 2021 quickly spread, rising to 3,306 active cases in just eight weeks. For a considerable period, the country’s vaccination program proved inadequate and the health system faced collapse. Bainimarama repeatedly refused to implement a nationwide lockdown to control the escalating numbers, saying it would “destroy” the economy.

The pandemic sharply exacerbated the country’s social disaster. Fiji’s unemployment rate, which hovered around 6 percent before COVID hit, increased to 35 percent. The tourism industry, the main foreign exchange earner, collapsed with the loss of 100,000 jobs. Half the country’s 880,000 population experienced extreme financial hardship and food shortages.

According to the Economy Ministry’s Pre-election Economic and Fiscal Update, the COVID pandemic and a series of natural disasters had “devastating impacts” on the economy, jobs, public finance and social conditions. Fiji recorded its largest-ever economic contraction of 17.2 percent in 2020 with a further 4.1 percent contraction for 2021. Total debt is 88.6 percent of GDP. In line with global trends, Fiji now faces escalating inflation, forecast to hit 5 percent by the end of the year.

Bainimarama seized on the crisis to tighten his rule. Amid emerging protests, nine opposition MPs were arrested after criticizing a government land bill, while the foreign-born vice-chancellor of the University of the South Pacific was summarily deported for exposing corruption in the university’s FFP-linked administration.

The coming election is again shaping as a contest between two former coup leaders and military strong men. In 2018, Bainimarama’s main challenger was SODELPA, led by Sitiveni Rabuka, the instigator of two military coups in 1987, and prime minister following the 1992 election. Rabuka now leads a new party, the People’s Alliance (PA).

Rabuka is a former chair of the Great Council of Chiefs—which Bainimarama has since dissolved—and advocates for the traditional privileges of indigenous Fijian landholders. This has involved stirring up chauvinist politics aimed at the minority Indian population.

Under the proportional electoral system, it is possible that no party will get 50 percent of the vote. Bainimarama could well refuse to quit. The anti-democratic 2013 constitution, which empowers the military forces “to ensure at all times the security, defence, and well-being of Fiji and all Fijians,” could even be triggered, initiating yet another military intervention.

Washington and Canberra are not beyond playing a role. Fiji is pivotal in the escalating US-led geo-strategic confrontations in the Pacific against China. As chair of the Pacific Islands Forum, Bainimarama was instrumental in arranging a presentation by US Vice President Kamala Harris to the organisation’s summit in July, from which China had been excluded.

Harris used the speech to announce an expansion of US diplomatic and financial presence in the Pacific, including three new embassies. With Bainimarama emerging as a key ally, signing military agreements with both Australia and New Zealand and supporting the US over the Ukraine, Washington has earmarked Fiji as one of the main “hubs” of its upgraded engagement in the region.

German corporations use economic crisis to impose mass layoffs

Gregor Link

With the explosion of energy and commodity prices, an economic crisis is developing in Germany unprecedented since the end of World War II. It is the price that the working class is being asked to pay for the economic war being waged against Russia. It has been systematically provoked by the German ruling class and the European Union.

While German banks are profiting from a government credit glut, and the big energy and auto companies report record profits, small and medium-sized business are being driven into insolvency en masse and tens of thousands of workers are being laid off.

A detailed report in news weekly Der Spiegel speaks of a “systemic collapse” and quotes economists from the Kiel Institute for the World Economy (IfW), who most recently had to revise their growth forecasts for the coming year downward by four percentage points. The IfW researchers warn of a “massive recession” and put the additional national costs for energy imports at €123 billion this year and €136 billion next year. This would mean GDP shrinking by up to 1.4 percent.

In an interview with Der Spiegel, the Institute for Economic Research (Ifo) in Munich predicts inflation rates of up to 11 percent for the first months of 2023. The researchers noted that wage increases and the German government’s recently approved third “relief package” would “not compensate for this at all.” According to Der Spiegel, “Citizens are losing more purchasing power than at any time since modern national accounts began in 1970,” adding, “The energy cost shock is more severe than in the two oil crises. Natural gas currently costs five times as much wholesale in Europe as it did a year ago.”

To protect owners’ and shareholders’ profit incomes, companies are trying to pass on the price increases to consumers, making workers pay twice--even though they are already forced to pay higher electricity and gas bills as domestic consumers. Many companies are brazenly using the high energy prices as an excuse to pocket government funds and carry out restructuring at workers’ expense through mass layoffs and insolvency funds.

According to a survey by the Federation of German Industries (BDI), more than one in three small and medium-sized companies sees its existence at risk—an increase of 50 percent compared to February. In August alone, the number of insolvencies among joint-stock companies and partnerships, mostly medium-sized companies, grew by a quarter compared to the previous year. For next October, economists at the Leibniz Institute for Economic Research predict a one-third increase over 2021. Increased energy costs and inflation are not even reflected in this forecast.

Among small and medium-sized enterprises, 90 percent said they were facing a “strong” (58 percent) or “existential” (34 percent) challenge. 71 percent of all companies surveyed cited delivery problems and delays, and almost one in ten companies in Germany have currently curtailed or interrupted production. Industrial jobs account for 40 percent of those affected by insolvencies.

Energy-intensive companies, such as paper manufacturers, fertilizer producers and steel producers, are trying to pass high electricity and gas prices “down the line” and pocket government funds. For example, hygiene paper manufacturer Hakle—which has filed for self-administered insolvency—announced a “tough restructuring program” to “make much-needed adjustments to its business model possible.”

The century-old company, which consumes 60,000 megawatt-hours of natural gas and 40,000 megawatt-hours of electricity annually at its Düsseldorf plant alone, employs 225 people, whose situation will be uncertain from December at the latest. Hakle’s competitor Fripa, which consumes around 300,000 megawatt hours a year, employs 450 workers and reported to broadcaster Bayrischer Rundfunk a “very threatening” situation.

SKW Piesteritz, Central Europe’s largest fertilizer producer, completely halted production for more than three weeks, threatened all 860 employees with short-time working and demanded “massive support” from government officials. The diesel engine additive AdBlue produced by SKW is a urea product that is indispensable for modern diesel engines and is consumed daily in around 800,000 trucks in Germany.

Following this show of force, an SKW spokesman said Tuesday that they would restart one of the two plants but would not resume production until officials “send a reliable signal” and exempted the company from the gas surcharge. SKW produces urea and ammonia and competes in part with industry giant BASF, which had already reduced ammonia production last year due to high gas prices.

Speaking to Der Spiegel, the Georgsmarienhütte Group of Companies (GMH), which has 21 sites with its own foundries and forges and employs 6,000 people, threatened to raise steel prices by 50 percent, otherwise “energy-intensive industry in Germany will not survive.”

Rival ArcelorMittal recently announced that it would shut down two production plants in Hamburg and Bremen until further notice. In addition to the “exorbitant rise in energy prices,” there was “weak market demand,” the corporation said. Last week, the world’s second-largest steelmaker had already initially put all 500 workers at the plant in the port of Hamburg on short-time working. At the time, the company had given assurances that it intended to continue essential processes. Now, short-time working will also be introduced at production sites in Duisburg and Eisenhüttenstadt.

Overall, the German Engineering Federation (VDMA) forecasts a two percent decline in production in 2023, following a 14 percent drop in new orders in July.

Food production has also been hit hard by skyrocketing energy prices. The Franconian bakery chain Goldjunge, with 26 branches and 300 employees, had to file for insolvency at the end of August. Cologne-based bakery Schlechtrimen, with 40 long-standing employees, also recently announced the closure of its operations after flour and margarine prices doubled and monthly energy costs rose by €100,000.

The situation is also dire for suppliers to the automotive industry. For example, BIA, which produces chrome-plated plastic components used by all major car manufacturers in Europe, announced on Thursday that it would close its plant at Forst, meaning 150 workers will lose their jobs by the end of the year. The bankruptcy of automotive supplier Dr. Schneider affects all 2,000 employees, who are forced to draw insolvency benefits as part of an ongoing reorganization plan. Vitesco, which supplies drivetrain and power-train technologies, is cutting 810 jobs at its Nuremberg site over the next few years.

Carl Leipold, which produces around one billion precision turned parts a year, filed for insolvency earlier this month. According to management, the reason was “exploding energy costs as well as price increases for operating and auxiliary materials, which could only partly be passed on to customers and with a time lag.” This affects 300 employees in Germany.

Last week, the German Association of the Automotive Industry (VDA) revised its market forecast for Germany downward, from the previous three percent growth to minus six percent. VDA President Hildegard Müller complained that “our economic model is in question” and that only three out of five car manufacturers in Germany were able to “pass on energy costs to their customers.”

The automotive industry’s price increases are in fact part of an explicit “luxury strategy” designed to bring the industry astronomical profits and “EBIT [earnings before interest and taxes] margins of 35 percent per year.” Under the slogan “Luxury instead of volume, make hay with [luxury brand] Maybach,” financial websites report manufacturers such as Mercedes-Benz and its subsidiaries have long been profiting from higher prices.

For example, amid growing quarterly profits, Daimler Truck recently announced it would relocate 1,000 jobs in Mannheim to the Czech Republic and lay off 3,600 workers in Brazil. The company will not renew the temporary contracts of 1,400 workers at the São Bernardo plant from December and will lay off 2,200 more. In Germany, 600 current jobs are also to be cut at Evobus’ Neu-Ulm site. Daimler Trucks’ adjusted operating profit grew 15 percent to €1.01 billion in the latest quarter.

Carmaker Opel, part of the Stellantis Group, plans to cut up to 1,000 more jobs in Germany. Labour Director Ralph Wangemann announced Thursday in Rüsselsheim that the company plans to continue existing programs on partial retirement, early retirement, or severance payments, which could mean 1,000 jobs could be eliminated by the end of the year. Stellantis raked in record profits of €8 billion in the first half of 2022 and plans to become the most profitable car company in Europe.

Stellantis’ rival Volkswagen announced Friday it would close a distribution centre near Kassel by the end of 2024, affecting 300 employees. A crisis staff team at the VW group, DerSpiegel reports, “are also discussing with the works council how far down they may lower the temperature on factory floors to save on heating gas.” Volkswagen reported an operating profit of €4.7 billion in the second quarter.

Overall, the operating profits of the 16 largest international car companies in 2021 rose 168 percent year-on-year to a total of around €134 billion, despite the semiconductor crisis.

In the retail sector, shoe vendors Ludwig Görtz GmbH filed for insolvency on September 6, 2022. The company filed for protective bankruptcy for the parent company, as well as self-administered insolvency proceedings for its store and logistics subsidiaries. The insolvency affects 160 stores and 1,800 employees, who are to receive their salaries from the Federal Employment Agency until December. Addressing creditors, Görtz CEO Frank Revermann said they could “expect a successful future after the company reorganization.”

The Galeria Karstadt Kaufhof (GKK) retail group, owned by Austrian real estate multi-billionaire René Benko, has already gone through insolvency and has since been propped up by the federal government to the tune of €700 million. But as Der Spiegel reports, “reserves” are “melting away” as customers are running out of cash and energy costs at branches have increased tenfold in some cases in recent months.

“Consumer sentiment is as bad as never before in the history of the Federal Republic,” the news magazine notes. Millions of people were having to put purchases on hold and massively restrict consumption. The Ifo Institute warns that “private consumption is likely to fail as an economic engine in Germany for the rest of the year.” Meanwhile, according to the daily Süddeutsche Zeitung, the business climate in the cyclical construction industry was “cooling as sharply as it last did in the financial crisis of 2008.”

Triggered by the growing doubts of venture capitalists, unprecedented mass layoffs are now taking place even in the previously booming start-up and platform branches. A report by Business Insider cites planned and imminent layoffs of more than 20 percent of all employees in some cases—including at food delivery services Gorillas (300), Getir (4,480) and Zapp (200 to 300), payment services Klarna (700), Sumup (100) and Nuri (45), and 180 at Tier Mobility.

However, according to a report in Der Spiegel, there was a “gold-rush atmosphere” among the assembled managers at the world’s largest energy industry trade fair, Gastech, this year. European energy company Uniper—which received €15 billion worth of state aid from the German government and has applied for four billion more—sponsored the fair with €175,000 and financed a “prestigious dinner” in a posh Milan villa for another €175,000. Business Insider magazine quotes Uniper CEO Klaus-Dieter Maubach from a now-deleted tweet: “We definitely have a good crisis, so let’s not miss it!”