Even as it intensifies its war against Russia in Ukraine, Washington is more and more openly and provocatively preparing for war with China over Taiwan. A New York Times (NYT) article last week entitled “US aims to turn Taiwan into giant weapons depot” reveals the extent of the military planning and preparations underway to transform Taiwan into a heavily-armed camp as the Biden administration goads Beijing into taking military action.
The Nimitz-class aircraft carrier USS Abraham Lincoln in formation during Rim of the Pacific exercises July 28, 2022. (Canadian Armed Forces photo by Cpl. Djalma Vuong-De Ramos) 220728-O-CA231-2003
For 50 years, following President Nixon’s trip to China in 1972, tensions in the narrow Taiwan Strait between the island and the Chinese mainland have been minimised through the One China policy—the tacit recognition by Washington and virtually every other country that Beijing was the legitimate government of all China, including Taiwan. When formal diplomatic relations between the US and China were established in 1979, Washington ended its military and diplomatic ties with Taipei, and withdrew all military forces from the island.
Now the Biden administration, following Trump, is more and more blatantly calling the One China policy into question, knowing full well that any declaration of formal independence by Taipei would provoke war with China. Biden has emphatically declared on four occasions that the US is committed to joining Taiwan in any war with China, effectively ending the policy of “strategic ambiguity,” designed to keep both Beijing and Taipei guessing as to any American military involvement.
Citing current and former US officials, the New York Times article points to high-level discussions in the White House and the Pentagon aimed at transforming the island into a huge armed camp. “American officials are intensifying efforts to build a giant stockpile of weapons in Taiwan,” it states, “after studying recent naval and air force exercises by the Chinese military around the island.”
The conclusion being drawn in American strategic circles is that any Chinese military action to reunify Taiwan with the mainland would begin with a military blockade. “Officials say Taiwan needs to become a ‘porcupine’ with enough weapons to hold out if the Chinese military blockades and invades it, even if Washington decides to send troops,” the NYT declares.
Buoyed by the advances against Russian forces in US-orchestrated operations in Ukraine, Washington is seeking to replicate similar tactics in any war in Taiwan to inflict maximum losses on the Chinese military. The NYT explained: “US officials are determining the quantity and types of weapons sold to Taiwan by quietly telling Taiwanese officials and American arms makers that they will reject orders for some large systems in favour of a greater number of smaller, more mobile weapons.”
The NYT noted that “shoot-and-scoot” types of armaments, including shoulder-fired anti-tank and anti-aircraft missiles, along with mobile HIMARS rocket launchers, provided to the Ukrainian military, had inflicted major losses on Russian forces. US officials are telling Taiwan that more of those weapons should be ordered to transform the island into a “porcupine” bristling with armaments. In other words, as in Ukraine, the US is pushing for and arming Taiwan for a war fought on the island with complete indifference to the resulting death and destruction.
US imperialism aims to weaken and destabilise China, encourage separatist movements in Tibet, Xinjiang and elsewhere, and undermine the Chinese Communist Party regime. Far from being a war to defend democracy or little Taiwan, the US is recklessly confronting another nuclear-armed power in its bid to break up both Russia and China and secure domination over the Eurasian landmass and its vast human and natural resources.
Washington last month announced a sixth arms sale to Taiwan involving more than $1.1 billion worth of weapons—the largest so far under the Biden administration. Drew Thomson, a former Pentagon employee, told the NYT that while some arms sales have been greater, the latest is aimed at ensuring that Taiwan will have “a larger supply of war reserve munitions on hand in advance of a conflict.” The package includes 60 Harpoon coastal anti-ship missiles.
The Taiwan Policy Act that was approved by the US Senate Committee on Foreign Relations last month would authorise a further expansion of arms sales to Taiwan—to the tune of $6.5 billion over the five years to 2027. Significantly, the legislation would also declare Taiwan—nominally still regarded by Washington as part of China—to be a non-NATO ally of the US, effectively ending the One China policy. The Act still has to pass Congress and receive presidential approval.
Commenting last week, the NYT voiced the concerns in US military circles that supplies to Taiwan could be held up given Washington has prioritised sending weapons to Ukraine. It noted that “arms makers are reluctant to open new production lines without a steady stream of long-term orders.” The very fact that the issue is under discussion signifies that an expansion of arms production is already being considered as the war in Ukraine expands and the US continues to provoke conflict over Taiwan.
The NYT article indicated that Washington was already considering how to speed up military supplies to Taiwan. Last week, a US State Department official was to address the annual US-Taiwan Defense Industry Conference—a three-day event held behind closed doors. Laura Cressey, director of the bureau overseeing arms sales to Taiwan, was joined by her counterpart in the US Defence Department.
The event underscored the escalation of high-level discussions between US and Taiwanese officials following the provocative visit to the island by US House Speaker Nancy Pelosi in August. A delegation from Taiwan to the defence industry conference was headed by the Deputy Minister of National Defense Wang Shin-lung. Biden, following Trump, has torn up longstanding diplomatic protocols under the One China policy that limited official contact between Taiwan and the US.
Washington is not only conducting a huge arms build-up on Taiwan, but is also considering how to ferry military supplies to the island in the event of war and a Chinese blockade. Defence consultant Eric Wertheim told the NYT: “The sheer amount of materiel that would likely be needed in case of war is formidable, and getting them through would be difficult, though may be doable.”
However, any US attempt to breach a blockade threatens a direct clash between the United States and China with the potential to escalate into a war that would quickly involve US bases and allies throughout the region, including Japan, South Korea and Australia. Wertheim continued: “The question is: How much risk is China and the White House willing to take in terms of enforcing or breaking through a blockade, respectively, and can it be sustained?”
The Biden administration has already answered the question in deeds, if not in words. Even as it is recklessly plunging the world towards nuclear war in Europe, the US is deliberating inflaming tensions with China over Taiwan—arguably the most dangerous flashpoint in Asia. The escalating arms sales are just one of the many indications that the US is determined to prevent China challenging American global hegemony by every means, whatever the cost to humanity.
A chapter in the International Monetary Fund’s (IMF) Global Financial Stability Report prepared for this week’s semi-annual meeting in Washington has identified the source of a potential crisis for the global financial system.
It concerns the operation of open-ended investment funds (OEFs) which allow investors daily redemptions of their investments while the funds invest in long-term illiquid assets that cannot be turned quickly into cash.
Attendees walk inside an atrium at the 2022 Annual Meetings of the International Monetary Fund and the World Bank Group, Monday, Oct. 10, 2022, in Washington. [AP Photo/Patrick Semansky]
The mismatch between the conflicting short-term and long-term nature of investments is a permanent feature of financial markets and has always been a major factor in financial turmoil.
But the growth of OEF funds means they have become much more significant in the past decade and a half.
Summarising their expansion, the report said: “Since the global financial crisis, there has been a remarkable growth in the open-ended investment funds. The total value of their net assets has quadrupled since 2008, reaching $41 trillion in the first quarter of 2022 and accounting for approximately one-fifth of the assets of the nonbank financial sector.”
While such funds play an important role in financial markets, it said, “those that offer daily redemptions while holding illiquid assets can amplify the effects of adverse shocks by raising the likelihood of investor runs and asset fire sales. This contributes to volatility in asset markets and potentially threatens financial stability.”
The rise of these funds exemplifies a now well-established process in which attempts by governments and regulatory authorities to control one area of disruption leads to its re-emergence in another area as finance capital, ever involved in the search for profit, seeks new avenues for speculation.
Major banks were at the centre of the financial crisis of 2008 and measures were put in place to curb some of their more egregious speculative activities. But as the IMF report explained, the growth of OEFs “reflects the increasing shift in financial intermediation from banks to nonbank financial institutions, which can be attributed at least in part to the tighter regulations on banks as well as balance sheet deleveraging following the global financial crisis.”
It noted that OEFs generally invest in equities in the advanced economies but “the share of funds investing in relatively less liquid assets, such as corporate bonds or emerging market bonds and equities, has been rising rapidly.
Financial stability concerns about OEFs arose during the financial market turmoil in March 2020, at the start of the pandemic. The “resilience” of the sector “may be tested again if financial conditions tighten abruptly as central banks normalize the stance of monetary policy.”
Already the interest-rate hikes by the Fed and almost all other central banks, characterised by economic historian Adam Tooze as “the most comprehensive tightening of monetary policy the world has seen,” have resulted in large outflows from high-yield corporate bonds and emerging market equity and bond funds.
The IMF analysis noted that despite financial stability risks, “effective implementation of policy measures or regulatory authorities to mitigate the vulnerabilities associated with OEFs holding illiquid assets has been lacking.”
An existential problem facing any would-be reformers, however, is rooted in the very nature of this sector of the financial markets.
It was laid out by former Bank of England governor Mark Carney to a UK parliamentary hearing in June 2019—well before the pandemic and associated financial turmoil had appeared—into the collapse of a British equity fund.
The structure of such funds was a “big deal” and “you can see something that is systemic.”
“These funds are built on a lie, which is that you can have daily liquidity, and that for assets that fundamentally aren’t liquid.”
The lack of any adequate liquidity management by funds, the IMF report said, meant that “central banks have stepped in during episodes of severe markets stress to provide liquidity backstops to the financial sectors, including to OEFs.”
This phenomenon was again seen in the £65 billion bond buying program initiated by the Bank of England when UK pension funds were threatened with insolvency because of the collapse in bond prices, which they had used as collateral to obtain loans to finance operations in derivative markets.
There was the real prospect of a “doom loop” in which the funds had to sell long-dated government bonds, gilts, to meet margin calls from their lenders, threatening to send down bond prices even further and exacerbating the crisis.
The same scenario could play out in the OEF sector, the IMF report noted. Those holding illiquid assets may experience outflows in times of market stress forcing them to sell assets and putting further downward pressure on prices amid tightening financial conditions.
“Moreover, in the presence of herding by funds, trading activity in the same direction could exacerbate selling pressure” leading to depressed asset values, inducing “further redemptions and asset fire sales, amplifying the impact of the shocks.”
The liquidity of OEFs portfolios had “deteriorated dramatically during the March 2020 market turmoil and has been worsening in recent months.”
“The liquidity of funds’ portfolios worsened again in the first half of 2022, especially for high-yield and emerging markets bond funds. In fact, for the latter, liquidity reached levels similar to that observed in March 2020.”
OEFs are by no means the only source of the mounting crisis in the global financial system. Another is private equity funds which are heavy investors in so-called junk bonds, those which have a less than investment-grade rating but bring a higher rate of return.
As Financial Times (FT) columnist Gillian Tett has commented, junk bond prices “have recently tumbled” and it was not possible to track the true values of the assets held by private funds. “Maybe they are marking these down correctly. But I doubt it, particularly given that they are increasingly selling assets to each other. Expect a future reckoning.”
This phenomenon was highlighted in an article published last month in the FT citing comment by a top executive of the largest Danish pension fund in which he compared the private equity market to a pyramid scheme.
According to the report: “Mikkel Svenstrup, chief investment officer at ATP, said he was concerned because last year more than 80 percent of the sales of portfolio companies by the private equity funds that ATP has invested in were either to another buyout group or were ‘continuation fund’ deals, where a private equity group passes it between two different funds that it controls.”
Svenstrup used measured language. But he said this was “potentially” the start of a “pyramid scheme” before going on to describe what is taking place. “Everybody’s selling to each other… Banks are lending against it. These are the concerns I’ve been sharing,” he said.
The FT report noted that similar comments were made back in June by the chief investment officer at Amundi Asset Management, Vincent Mortier. He told a private equity conference in Cannes, that parts of the sector “look like a pyramid scheme in a way.”
That description can increasingly be applied to the financial system as a whole.
The seven-month-old war between NATO and Russia in Ukraine escalated Monday, after Russia carried out a series of attacks against largely civilian infrastructures throughout Ukraine.
Some 14 people were killed and 97 injured in the strikes, according to Ukrainian officials, and power was disrupted in more than half the country’s regions. The Wall Street Journal reported that most strikes were “hitting electricity substations and other targets outside city centers, away from civilian homes.”
On Friday, the Ukrainian Special Forces orchestrated a terrorist suicide bombing on the Kerch Bridge, which connects Russia to Crimea. The move came after the former commanding general of the US Army in Europe, General Ben Hodges, urged Ukraine to “drop” the bridge, and current US officials publicly gave a green light to attack it.
Days after the attack, the aim of the Kerch Bridge bombing comes into sharper view. Its purpose was to provoke a military response by Russia against civilian infrastructure in Ukraine, which could then be used to justify a massive increase in US-NATO involvement in the conflict.
For months, US officials had been expressing concern that Russia had not been “provoked” into expanding the war into western Ukraine, which had been largely spared in recent months.
Last month, former US Ambassador to Ukraine William Taylor complained to The Hill that, despite the fact that the White House had provided “larger, more capable, longer-distance, heavier weapons to the Ukrainians,” the “Russians have not reacted.” Up to this point, Taylor said, the “Russians have kind of bluffed and blustered, but they haven’t been provoked.”
With Tuesday’s attack, Russian authorities had, in fact, allowed themselves to be “provoked,” setting the stage for an even more massive escalation of US-NATO involvement in the war.
The attack on the Kerch Bridge was timed to take place just days before the NATO defense ministers’ meeting on October 12 and 13, which is expected to expand the level of direct NATO involvement in the conflict.
A senior Biden administration official interviewed by the Washington Post called the escalation of the war a “turning point.”
The attacks, in the words of the Washington Post, raise the question of “whether the United States and its partners may have to move beyond the concept of helping Ukraine defend itself, and instead more forcefully facilitate a Ukrainian victory.”
The Post wrote: “So far, the US supply effort has been deliberative and process-oriented in the kinds of weapons it provides, and the speed at which it provides them, so as not to undercut its highest priority of avoiding a direct clash between Russia and the West. That strategy is likely to be part of the agenda at Tuesday’s emergency meeting of G7 leaders and a gathering of NATO defense ministers later in the week.”
In other words, dominant sections of the US political establishment will use the attacks as a pretext to carry out a long-planned escalation of the war.
In this way, the attacks on civilian infrastructure ordered by Putin play right into the hands of the US and NATO, which had hoped that by provoking Russia, they would be given a pretext to intervene more directly in the war and ensure Russia’s military defeat.
Ahead of the meeting, US officials are demanding an expansion of arms shipments to Ukraine. “I pledge to use all means at my disposal to accelerate support for the people of Ukraine and to starve Russia’s war machine,” said Senate Foreign Relations Committee Chairman Robert Menendez.
CIA Democrat Representative Elissa Slotkin tweeted that the dispatch of more air defense systems for Ukraine was “urgent,” adding, “Providing these systems is a defensive—not escalatory—step, and our European friends need to step up along with us to get the Ukrainians what they need.”
The Wall Street Journal in an editorial demanded that the United States “provide Ukraine with more weapons, including better air defenses,” declaring, “Mr. Putin won’t end his war until it becomes clear the cost of continuing it is too high.”
Speaking to Ukrainian President Volodymyr Zelensky on Monday, Biden “pledged to continue providing Ukraine with the support needed to defend itself, including advanced air defense systems,” according to a summary of the call from the White House.
On Tuesday, Zelensky will address a meeting of the G7, which is likewise expected to pledge more military support to the conflict. Zelensky will, according to the Guardian, “emphasize anti-aircraft systems, and repeat the longstanding demand for longer-range missiles.”
Ukrainian officials claimed that Russia conducted missile attacks against more than 20 cities, including the capital, Kiev. According to the Ukrainian General Staff, Russian forces launched more than 84 cruise missiles and 24 drone attacks.
The Institute for the Study of War reported that “Russian forces launched missiles from 10 strategic bombers operating in the Caspian Sea and from Nizhny Novgorod, Iskander short-range ballistic missile systems, and 6 missile carriers in the Black Sea.”
In a sober assessment of the military consequences of Monday’s strikes, the Institute for the Study of War wrote, “Ukrainian and Western intelligence have previously reported that Russia has spent a significant portion of its high-precision missiles, and Putin likely knows better than Medvedev or the milbloggers that he cannot sustain attacks of this intensity for very long.”
It continued, “The October 10 Russian attacks wasted some of Russia’s dwindling precision weapons against civilian targets, as opposed to militarily significant targets.”
It added that “Ukrainian air defenses also shot down half of the Russian drones and cruise missiles,” and noted that “Russia’s use of its limited supply of precision weapons in this role may deprive Putin of options to disrupt ongoing Ukrainian counter-offensives in Kherson and Luhansk Oblasts.”
“Throughout the war, the Russian military has had problems with target selection and the accuracy of their missiles,” Michael Kofman, director of Russia studies at CNA, told the New York Times. “As the war goes on, their supply of precision-guided weapons has dwindled, and they are using weapons that are not suited to land targets or that are old and unreliable.”
Meanwhile, Belarusian President Alexander Lukashenko said he had ordered troops to deploy together with Russian forces near the Ukrainian border. Lukashenko declared that “Strikes on the territory of Belarus are not just being discussed in Ukraine today, but are also being planned.”
Poland urged its citizens to leave Belarus “with available commercial and private means.”
March 1, 2023: Last day to submit completed application materials from applicants already enrolled in the graduate program and school for which their scholarship is intended.
April 1, 2023: Last day to submit completed application materials from applicants not yet enrolled in the graduate program or school for which the scholarship is intended. Last day to submit completed application materials for applicants who will be attending Cottey College
Offered Annually: Yes
About the PEO International Peace Scholarship: Members of P.E.O. believe that education is fundamental to world peace and understanding. The scholarship is based upon demonstrated need; however, the award is not intended to cover all academic or personal expenses.
Eligibility and Criteria
An applicant must be qualified for admission to full-time graduate study and working toward a graduate degree in an accredited college or university in the united States or canada.
A student who is a citizen or permanent resident of the United States or Canada is not eligible.
Scholarships are not given for research, internships, or practical training, unless it is combined with coursework. Awards are not to be used to pay past debts.
In order to qualify for her first scholarship, an applicant must have a full year of coursework remaining, be enrolled and in residence for the entire school year.
Doctoral students who have completed coursework and are working only on dissertations are not eligible as first-time applicants.
international students attending cottey college are eligible to apply for a scholarship.
Scholarship Worth
The maximum amount awarded to a student is $12,500. Lesser amounts may be awarded according to individual needs.
The scholarship is based upon demonstrated financial need; however, the award is not intended to cover all academic or personal expenses. At the time of application, the applicant is required to confirm additional financial resources adequate to meet her estimated expenses. Additional resources may include personal and family funds, tuition waivers, work scholarships, teaching assistantships, study grants and other scholarships.
Awards are announced in May. The amount of the PEO International scholarship will be divided into two payments to be distributed in August and December
Peru’s Ministry of Health (Minsa) recently announced that the mask mandate implemented at the start of the COVID-19 pandemic is ending. This was confirmed in detail by the government on September 29 in Supreme Decree 118-2022-PCM.
The decree provides that masking will only be mandatory in health establishments, on public ground transport, in closed places without ventilation, and for individuals presenting symptoms of COVID-19 infection.
COVID-19 vaccination cards will no longer be required for entry to shopping centers, markets, supermarkets, sports associations, entertainment venues (discotheques, salsódromos, pubs and the like), concerts, theaters, cinemas, gyms, churches, restaurants and similar crowded areas.
In treating the virus as “under control,” Minsa is bowing to the dictates of Peru’s bourgeoisie and foreign investors that Peru’s working class and rural masses must learn to “live with the virus” so profits can be assured.
Peruvian construction workers continue mask use despite lifting of government mandate. (WSWS Media)
Minsa’s flimsy justifications for these abrupt policy reversals consisted of a slight decrease in infections and deaths in September, and an increase in COVID vaccination numbers. According to Minsa, the number of people inoculated with at least one dose has reached 29,859,497, or 89 percent of the population, and those with two doses 28,203,284, or 84 percent.
But the number of citizens with three doses is significantly lower, 20,647,039, or only 62 percent. Meanwhile, less than 15 percent of the population in Peru, under five million, have received a fourth dose, which is widely advocated by the world scientific community for vulnerable people.
Especially given the high rate of reinfection, the government is gambling with the lives of millions, particularly as to those who are unvaccinated or have received only one or two doses.
Camila Gianella Malca, a public policy researcher at the Pontifical Catholic University of Peru in Lima, told Bloomberg earlier in September, “Despite lockdowns, many Peruvians continued to venture out to shop and to work, and so transmission [has] remained stubbornly high.”
Dr. Malca's statement justifies fears of the worst from the new pandemic policies. The suppression of mask use and social distancing means that airborne transmission of the virus will find a breeding ground in stadiums, discotheques and restaurants where hundreds of thousands will be exposed to COVID-19.
The lifting of the minimum distancing measure is particularly pernicious. It endangers the lives of millions of civil construction workers, factory workers, miners and public employees forced to work in close proximity. Construction workers are already condemned to work for low wages and no benefits under the most precarious working conditions and in lower quality jobs.
If anything, recently released public information about the ravages of the pandemic is alarming, not comforting.
On July 20, the first case of a new variant of Omicron BA.5, nicknamed Centauro, BA.2.75, appeared in Peru. Infobae reported that Peru was one of “the first to develop [this] new variant known by many as the ‘son’ of Omicron.”
Peru’s Minister of Health Jorge López said that “many doubts are being raised regarding this new Omicron mutation ... [L]ocated in India, it represents at least 23 percent of the sequenced infections in India and grows at a rate of 17 percent per day faster than the rest of the variants of the BA.2 lineage.” In other words, BA.2.75 is highly transmissible.
Moreover, BA.2.75 is already of worldwide concern. On September 22, Infobae reported that “The ‘Centaur’ subvariant of COVID-19 arrived in Mexico. ... This new strain has been identified in more than 20 countries and is believed to be five times more contagious than previous variants.'
When the first case of BA.2.75 was detected in Peru, the president of the Public Health Committee of the Peruvian Medical Association (CMP), Cesar Portella, warned about the high risk of contagion from the new variant: “People with this Centaurus subvariant can become infected two or three times; vaccination does not prevent infection. There are people in other countries who are infected two, three or even four times, even if they are vaccinated.”
In July, Carlos Padilla, a molecular biologist at the Peruvian National Health Institute (INS), told Agencia Andina, “The SARS-CoV-2 virus is constantly changing, which is why it is important to carry out regular genomic surveillance. If the virus is mutating locally, then we need to determine what its mutations are and what characteristics it is acquiring over time.”
The pandemic is far from defeated. It continues to resurface with new mutations, which, as occurred in Peru with the June-August escalation of deaths, are likely to be more contagious and even more deadly.
The sudden elimination of almost all safety measures against COVID is nothing less than a criminal act by the government of President Pedro Castillo, designed to meet the demands of national businessmen, who face the threat of economic collapse, and foreign investors seeking to reap super-profits off Peru’s mineral wealth.
The Peruvian ruling class most of all fears a popular uprising from below. Urban and rural workers and peasants already struggle with skyrocketing food, gasoline and public transportation prices. The Peruvian masses have displayed their will to resist further oppression though a series of protests, demonstrations and strikes.
The increase of positive cases and death due to lifting the safety measures against COVID can only pour fuel onto these flames.
Recent developments related to Barrick Gold, by some measures the world’s largest gold mining corporation, highlight the heavy dependence of Canada’s mining companies on the imperialist thuggery of the Canadian state for their continued operations and profits.
In April, the Globe & Mail newspaper revealed that Barrick had been ordered to produce as many as 120,000 documents to defend itself in a London UK court. It is being sued by Tanzanian claimants in respect to the killings and injuries of local villagers by Tanzanian police and security forces—paid, fed, and housed by the company—at its North Mara mine. “The claimants,” reported RAID, an anti-corporate malfeasance NGO, “include the family of a nine-year-old girl killed by a mine vehicle driven by police, and four women who were fired upon while gathering around her body. Barrick’s subsidiaries deny liability.”
Over the years scores of villagers have been killed or injured, but leaked documents expose that the Canadian state accepted Barrick’s denials at face value, concerned only to cover up the violence, lest it get in the way of resolving Barrick’s enormous tax and export problems.
The following month the Globe reported some of the sordid details of Barrick’s $190 billion tax and export dispute with Tanzanian authorities, exposing the intimate involvement of Canadian officials and diplomats in Barrick’s negotiations with the Tanzanian government. The Globe, as the principal mouthpiece of Canada’s capitalist ruling class, was determined to obscure the political and historical context of its own reporting.
The truth is that Barrick’s profitable Tanzanian operations only exist due to decades of relentless pressure exerted on Tanzania by the Canadian state, which took full advantage of the political bankruptcy and greed of successive Tanzanian bourgeois nationalist governments.
The Canadian International Development Agency (CIDA) first threatened to withhold food aid in 1985 if Tanzania refused to open up its economy to Canadian mining investments. Canadian state pressure played a major role in bullying Tanzania away from its policy of Ujamaa or agrarian “African Socialism.” In reality Ujamaa had nothing whatsoever to do with socialism. It was a reactionary nationalist and backwards-looking development policy pursued disastrously by the Tanganyika African National Union, (TANU), and then its political successor, the Chama Chai Mapinduzi (Party of the Revolution) after independence from British colonialism in 1961.
Subsequent “market reforms” demanded and imposed by imperialism combined with colonialism and state-led post-colonial national capitalist development have restricted Tanzania to a very low level of economic development. Annual per capita GDP is $2,200, and half the population lives on less than $1.90 USD per day.
Mining investment is held up by Canadian imperialism as a “solution” to the problem of African development. But the problems of African development are due entirely to capitalism and imperialism. Despite making investors in imperialist countries obscenely wealthy, Tanzania’s entire mining sector accounted for only 6 percent of its meagre US $62 billion GDP in 2020, including investment, wages and taxes. To compare, Canada’s 40 largest mining companies had revenues of US $124 billion in 2020, equivalent to 7.5 percent of Canada’s GDP, with most of this revenue flowing into Canadian markets from foreign mining operations.
Canada is Tanzania’s single largest foreign investor, focused on the removal of billions of dollars of mineral wealth per year from the country, for which the Tanzanian state has historically received a pittance in royalty fees. Similar in many aspects to the political leaders of the former Soviet Stalinist republics, CCM party officials today preside over a corrupt gangster state, with factions battling over control of various rent-seeking and bribe-taking schemes connected to the mining sector and government contracts.
Canadian pressure has only intensified this corruption.
In 1996, in the aftermath of International Monetary Fund (IMF) “structural adjustment reforms,” and after the threat of the withdrawal of hundreds of millions in development loans, “exploration” at what is now Barrick’s Bulyanhulu gold mine was undertaken by a Canadian company, Sutton Resources. Little real “exploration” was required however, as the area was already being mined by more than one hundred thousand small-scale Tanzanian miners, who had been encouraged by the old Ujamaa policy.
Melania Baesi, member of the Shinyanga Region small-scale miners association, which obtained permission from the Tanzanian president for small scale miners to work at Bulyanhulu in 1993. (Image credit: Stephen Kerr, 2002)
Then Canadian High Commissioner to Tanzania, Verona Edelstein pressured the Tanzanian government via diplomatic channels, on Tanzanian television and in the press into evicting the small-scale miners from the area to allow the Canadian mine to be built. In the violent evictions that followed, as many as 60 artisanal miners were buried alive when bulldozers filled in their pits. Barrick subsequently purchased Sutton Resources and Bulyanhulu in 1999.
Barrick has enjoyed the constant support of the Canadian state ever since. Canadian Prime Minister Stephen Harper notably used a 2007 trip to Tanzania to visit Barrick’s operations while Barrick was using scabs to break a strike of more than one thousand Bulyanhulu mine workers.
More recently, Canadian mining industry profits were assisted by the Tanzanian government’s abandonment of any fight against the COVID pandemic. Reporting on any COVID cases or testing in Tanzania is illegal. Former president Magufuli declared the pandemic defeated in June 2020, due to “prayer,” but died of COVID himself in early 2021, along with tens of thousands of uncounted Tanzanian workers.
In 2020, as the pandemic raged, Canadian minerals and mining imports experienced 2.5 percent growth, while the value of all other imports save agriculture shrank dramatically. The value of Canadian mining assets abroad increased by 3.5 percent in 2020. Gold miner’s profit per ounce was a record-setting $828 in 2020.
According to a sub-secretary in a Latin American ministry of mines, “the Canadian ambassador here is a representative for Canadian mining companies.”
Canadian imperialism and mining
Canada has 0.48 percent of the global population but is home to 80 percent of the world’s mining companies. The total value of Canadian foreign mining investments stood at $273 billion in 2020, according to Natural Resources Canada. Latin America is the principal target of Canadian mining investment, followed by the US, and then Africa.
Global Canadian mining assets (Image credit: National Resources Canada, Government of Canada)
The dollar value of these capital investments is deceptive, however. The investments extract 50% of their value in revenue each year, ($143 billion in 2021), much of it from structurally impoverished countries with vast mineral wealth. It has been estimated that between 1990 and 2015, imperialist countries appropriated $242 trillion dollars from the former colonial and other historically oppressed countries.
If Canada’s foreign mining investments are often more profitable than many other sectors of the economy, they are so because of the financial support structures for mining corporations created by the imperialist Canadian state, and the pressure it exerts on various comprador bourgeois governments to repress their workers.
Lax rules for the establishment of mining joint stock companies on the Toronto and Vancouver stock exchanges require listed companies to have neither revenue nor profits. [4] Among mining investors, a saying goes that “a gold mine is simply a hole with a liar at the top.” 43 percent of the world’s mining companies are listed on the TSX (Toronto Stock Exchange).
Export Development Canada’s mining loan portfolio of state-backed credit stood at $6.5 billion in 2021. The Canada Pension Plan, which invests the state pension contributions of workers which are deducted from their every paycheque by law, holds major investments in Arnico Eagle, Barrick Gold, Fortis, ARC Resources, Ivanhoe Mines, Kinross Gold Corp, Lundin Mining, Nutrien (formerly Potash Corp) Tek Resources, and Wheaton Precious Metals Corp. There are more mining companies in its stock portfolio than from any other sector of the Canadian economy.
The Canadian Government maintains 160 trade commissioners across the globe, whose job is to translate the demands of Canadian capital into local economic policies favorable to the maximization of Canadian capitalist profits. The Federal Ministry of Global Affairs enforces corporate demands with the full power of the Canadian state, demanding that any country where Canadian firms wish to invest tailor its laws to enable the maximum extraction of profits.
The recent history of Barrick Gold in Tanzania illustrates these relationships in stark detail.
Profits dependent on the Canadian state
When the Tanzanian government inspected Barrick’s “gold concentrate” shipments (a semi-processed ore requiring special refining techniques) bound for export in the port of Dar Es Salam in early 2017, it allegedly found that the quantity of gold and other minerals in the concentrates was much larger than the company’s officials had declared.
Barrick’s then-Tanzanian subsidiary Acacia Mining reported that each shipping container of gold concentrate contained 3kg of gold. But the Tanzanian government’s audit determined that the gold content was 7.3 kg per container.
Because the Tanzanian government’s agreement with Barrick and other gold miners levied a royalty of 4 percent of the gold value exported, long-term under-reporting of the gold content in “concentrates” would mean that the Tanzanian government was being cheated of significant royalties for decades; “significant” at least in terms of the pittances offered to it by its old contract with Barrick.
The Tanzanian audit determined that the total value of the gold in concentrate really being exported from the country by Barrick was in excess of $1.8 billion per year, as opposed to the $1.045 billion as declared by the company, and for which the Tanzanian government would have been paid approximately $72 million, instead of the $42 million it actually received. This came on top of ongoing tax disputes dating back to 2000 worth $500 million. Acacia had claimed to be “non-resident” in Tanzania for tax purposes, as it was incorporated in the UK, and that Tanzanian law therefore did not require it to pay any taxes.
In response to the findings of the audit, the Tanzanian government enacted a ban on the export of gold and copper concentrates, seeking to pressure the miners to establish gold smelting resources in Tanzania. There was then only a single gold smelter capable of refining .999 pure gold on the entire African continent, in South Africa.
The Tanzanian government next levied a bill of $190 billion in back taxes, royalties, and penalties on Acacia, causing Barrick’s stock value to plummet. This crisis for Barrick’s shareholders immediately became the business of the Canadian state. Email communications of Canadian government officials obtained by Ottawa-based researcher Ken Rubin, many highly redacted, document the relentless pressure applied by the Canadian government to force the Tanzanian government into compliance.
At each step, Canadian officials translated Barrick’s demands into their meetings with Tanzanian officials. Barrick Gold’s executives pointed Canadian trade officials towards the Canadian government’s foreign aid to Tanzania, including $2.9 million for the Minerals Audit Agency which had challenged Barrick’s claims. “The federal officials seemed ready to cite this funding in their discussions with the Tanzanian government, although the details are redacted from the released e-mails,” reports the Globe. The verb “cite” is more likely a polite euphemism for “threaten to cut off.”
The Canadian trade commissioner met about the matter with the Tanzanian Minerals Minister Sospeter Muhongo, who was himself fired only weeks later, accused of being party to a much larger tax evasion scheme together with Domenik Rwekaza, the head of the Tanzanian Minerals Audit Agency. Muhongo was previously dismissed in 2015 in connection with the embezzlement of up to $800 million from the Tanzanian Central Bank in the “Tegeta escrow scandal.”
“Talking points for the meeting, prepared by a Canadian trade commissioner, suggested the high commissioner could try to resolve the tax dispute by promoting Acacia’s offer to pay for a study of a possible copper smelter in Tanzania, and by urging the minister to consider using a Canadian-funded legal support facility to settle the tax issue,” according to the Globe. This refers to a 1997 tax treaty which favours Canadian investors.
Knowing the legacy of violence and state-repression against the local population at Barrick’s North Mara gold mine might come up, the trade commissioner also made the ridiculous assertion that the situation there “had normalized.”
Barrick President Kevin Dushinsky also met with Canadian deputy trade minister Timothy Sargent to plan a joint strategy. While the Globe & Mail article states: “Canadian officials said Mr. Sargent could suggest that Barrick should ‘spell out’ to Tanzania that the dispute might cause a loss of jobs and revenue and could damage Tanzania’s reputation as an investment destination,” this is another euphemism. What they were really referring to are Canadian government threats of an investment strike against Tanzania, and the cut-off of government aid. Canadian officials went all the way up to then Tanzanian President Magufuli, “to advocate on Acacia’s behalf.” Specific details of official Canadian government “advocacy” were redacted from the released documents.
The dispute took nearly four years to resolve, with Barrick agreeing to pay $300 million of the $190 billion tax claim, (0.15 percent) and to restructure its operations into a 50/50 joint venture with the Tanzanian government, which now operates Barrick’s three Tanzanian Mines as “Twiga Minerals.”
While the capitalist press in Canada has presented the Tanzanian push for a gold smelter simply as a question of jobs and “economic development,” this is another cover story.
The practice of exporting unrefined gold concentrates for refining offshore permits all gold miners in Africa–not just Barrick—to lowball their taxes and royalty payments on those exports. Refining all gold in the country where it was mined would make such practices much more difficult, if not impossible. That was likely not the entire focus of Tanzanian government officials however, as most gold concentrates are refined by copper smelters, not gold smelting facilities.
Further, virtually all the gold bullion banks which make up the London Bullion Market Association, and which purchase much of the world’s gold, including Credit Suisse, BNP Paribas, Citibank, Goldman Sachs, HSBC, ICBC, JPMorgan Chase, and Merrill Lynch, have been convicted in multiple tax avoidance, bribery and global money laundering schemes involving billions of dollars. Many of these scams have been connected to projects in the developing world. Tanzania’s demand for a .999 fine gold smelter needs to be seen in this context – Tanzanian government officials were likely making a bid to be “cut in” on yet another lucrative aspect of the global gold trade.
Canadian mining profits rely on savage political repression
The intense extraction of super-profits in Tanzania, and brutal competition for a share of the spoils at the top levels of the state, creates a climate of repression and violence at all levels of society, from the political opposition and journalists down to the level of the villagers who are displaced by its operations.
The violence at North Mara stems from the periodic incursions into the mine by impoverished and desperate local villagers, who attempt to find bits of gold, and also from social protests. The mine’s tailings pond has poisoned a local water supply.
Mining Watch Canada documented 22 killings and 69 injuries of locals at the North Mara mine between 2014 and 2016, and Acacia has acknowledged an additional 28 “intruder fatalities” from 2014 to 2017. A 2016 Tanzanian Parliamentary inquiry found 65 killed, and 270 injured. In released emails, Canadian officials simply repeated that Acacia “made a statement fully refuting the reported allegations…”
The allegations continue to pile up. The British aid group RAID (Rights and Accountability in Development) has documented four additional deaths and two injuries since 2019: “Three of those killed were attempting to leave, or had been chased from, the mine site. Two were shot with live ammunition while the third was struck with a large projectile, possibly a teargas canister or sound bomb, in the back of his head.”
According to the Globe, “A former security officer at North Mara, who worked at the mine for many years, said he often witnessed abuses by Tanzanian police against trespassers at the mine site. ‘On a regular basis, you’d see them beating up intruders with big long sticks, shooting them, just abusing them’ ... He said he witnessed dozens of incidents in which the police fired live ammunition at trespassers, including three shootings that caused deaths. The incidents were always reported to the mine’s management,” according to the former officer, who now fears for his own life.
Those who speak out against the operations of Canadian mining companies in Tanzania often have cause to fear for their lives. The Toronto Star reported in 2019 that reporters investigating numerous accusations of fraud related to Barrick’s Tanzanian activities received anonymous threats.
In July of 2017, Tanzanian newspaper Mawio was banned by the government the day after publishing an article suggesting that former Tanzanian Presidents Benjamin Mkapa and Jaya Kikwete were parties to fraud in various mining deals struck with foreign firms dating back to the 1990s. The ban on the paper was only lifted in February 2022, after the death of Magufuli and his replacement by President Samia Suluhu Hassan. Mining contracts in Tanzania signed before January 2021 have been treated as secret by successive Tanzanian governments and are often not even reviewed by Parliament.
Wikileaks’ exposure of US diplomatic cables also revealed that Tanzania’s Public Prosecutor Edward Hoseah also received death threats after his investigations into official corruption approached senior officials around former President Kikwete, and that the upper reaches of the CCM were “untouchable.” The UK’s Serious Fraud Office investigated Acacia in 2017 in response to whistleblowers who accused Acacia employees of bribing Tanzanian government officials.
Tundu Lissu speaks to international fact-finding mission at Bulyanhulu in 2002 (Photo Credit Stephen Kerr).
In September 2017, unknown assassins shot Tanzanian opposition leader Tundu Lissu with more than 32 machine gun rounds. Lissu, who has led multiple campaigns against Barrick Gold and other foreign miners for the last 25 years, survived but only after many surgeries. Lissu was forced to flee to exile in Belgium. Opposition politicians and activists are regular targets for beatings, outright murder, trumped up charges and imprisonment.
Emails from Canadian officials concerned with Barrick’s tax dispute expressed concern only about how to best cover all of this up: “If the Canada brand is to accompany this project, along with any other work we do on behalf of Barrick, we’ll need to do some serious work on the CSR [corporate social responsibility] front.”
Behold, the serious work:
Barrick Gold has now committed to spend $6 out of every gold ounce produced at North Mara and Bulyanhulu on “improving healthcare, education, infrastructure and access to potable water in their communities.” It has allocated $70 million for projects including training mine workers at Tanzanian universities. Barrick earned $488 million in Q2 2022, up from $411 million in Q1 2021.
In 2018, as it was busy advocating for Barrick’s Tanzanian profits, the Trudeau government pledged to create a new watchdog with the power to investigate the activities of Canadian mining companies abroad, in the form of the “Canadian Ombudsperson for Responsible Enterprise.” After receiving “an onslaught of mining industry lobbying,” the Trudeau government quietly gutted the office, which has no enforcement power. Established in 2019, it has received 15 complaints, all of which remain in the initial stages of investigation.
