Updated report shows poverty in Germany is higher than previously thought

Elisabeth Zimmermann

On March 10, the welfare charity umbrella organisation Paritätische Wohlfahrtsverband presented a second, updated edition of its 2022 Poverty Report. This in itself is a novelty. Even more explosive are the findings it contains—poverty in Germany has risen more sharply than previously assumed due to the coronavirus pandemic and inflation.

In 2021, it rose to 16.9 percent of the population, 0.3 percent higher than assumed when the initial results were published in June 2022. Compared with the previous year, poverty had thus risen by a full percent, to encompass 14.1 million people, reaching a sad peak in the second year of the pandemic. And it continues to rise: the effects of rampant inflation since 2022 have not even been considered in this updated report.

People collecting bottles to redeem the deposit are a common sight in Germany. [Photo by Sascha Kohlmann / CC BY-SA 2.0]

In 2021, the poverty threshold was €1,148 monthly for a single household, €1,492 for a single parent with one child, and €2,410 for household with two parents and two small children. Since the end of February 2023, new poverty figures are now available based on the final report of the 2021 micro census. They consistently point to higher poverty rates than previously assumed.

Among children and young people, more than one in five is affected in Germany, which is considered a high-income country. In this group, poverty amounted to 21.3 percent. Child poverty is also evident from the figures for large families and single parents: 42.3 percent of single-parent households and almost one in three couple households with three or more children (32.2 percent) were considered poor in 2021.

Old-age poverty has also continued to rise, with 18.2 percent of people living on pensions considered poor, female pensioners (19.5 percent) are significantly worse off than male pensioners (15.2 percent).

Old-age poverty is causing great and justifiable acrimony. One of those affected is quoted in the report as saying, “We old people have generally done our best in our careers to help this society move forward. We have developed skills, accumulated life experience and knowledge. Each to the best of his or her ability. I don’t think anyone deserves to be treated this way in their old age as a retiree.”

The impoverishment of large segments of the population did not start with the pandemic but follows a trend that has continued since 2006. Since then, poverty rates have steadily increased from 14 percent in 2005 to nearly 17 percent in 2021. Since the start of the pandemic, this increase has accelerated, and poverty rates rose by a full percentage point compared to the 2019 survey.

While poverty numbers increased, the number of unemployed decreased significantly, as shown in the graph. This indicates a large increase in the “working poor,” those people who are poor despite working. In the pandemic, the number of working poor increased by almost 1 percent, suggesting the economic impact of pandemic-related reduced hours. The self-employed were unusually hard hit during the pandemic, with their poverty rate rising to 13 percent in 2021.

As a result, the social gulf widened in the pandemic, and more than 14 million people—840,000 more than before the pandemic—have since been counted among the income poor. Compared to the situation in 2005 (11.5 million poor), there are 2.6 million more poor people today.

The impact of poverty varies in the different federal states. The lowest rates are in Bavaria (12.8 percent), Baden-Württemberg (14.1), Brandenburg (14.8) and Schleswig-Holstein (15.6 percent), although the poverty rate in Baden-Württemberg and Bavaria has recently jumped.

In Thuringia, North Rhine-Westphalia, Saxony-Anhalt, Berlin and Bremen, the poverty rate is above the national average, with Bremen having the highest poverty rate, at 28.2 percent. The new Paritätische report says: “The difference is thus quite remarkable, while in Bavaria one in eight is affected by poverty, in Saxony-Anhalt, North Rhine-Westphalia and Berlin it is one in five, in Bremen it is even more than one in four.”

The Ruhr, traditionally Germany’s industrial heartland, which already had been considered “poverty problem area No. 1,” is particularly affected by poverty. This region has a poverty rate of 22.1 percent and a welfare recipient rate of 14.4 percent. The report points out that “the Ruhr [is] Germany’s largest metropolitan area, with around 5.8 million inhabitants, 1.3 million of whom live in poverty.”

In terms of welfare recipient rates, the Ruhr is also well above the national average of 8.1 percent (and, with Bremen and Berlin, among the bottom three German states) at 14.4 percent. In cities such as Duisburg, Essen and Herne, the rate is over 18 percent, and in Gelsenkirchen it is as high as 25 percent. The situation is particularly bad for children, 22.9 percent of whom are dependent on “Hartz IV” welfare benefits—almost 30 percent in Duisburg, Dortmund, Hagen and Herne receiving the benefits. In Essen, just over 30 percent, and in Gelsenkirchen, 39 percent of all children and their families are dependent on Hartz IV payments.

Overall, it is noticeable that in three federal states the poverty figures have risen sharply, especially during the pandemic: Baden-Wuerttemberg (up 7.6 percent), North Rhine-Westphalia (up 9.1 percent) and Bavaria (up 10.3 percent). The report says: “If we keep in mind that half of the population lives in Bavaria, Baden-Württemberg and North Rhine-Westphalia alone, it becomes clear that it is primarily the very poor [economic] development in these three federal states that is causing the nationwide increase in poverty.”

The new edition of the 2022 Poverty Report contains a great deal of illustrative material, graphics, tables, and explanations. Based on figures from the micro census and the federal and state statistical offices, it presents the most up-to-date figures on poverty trends. The entire report is well worth reading and contains much valuable detailed information.

It harshly criticizes the federal government’s poverty policies, whose packages of measures benefited the poor and poorest in society the least of all—or did not reach them at all. This applies both to the height of the pandemic and more recently when war and sanctions policies have caused horrendous inflation in food and energy prices.

The report is inconsistent, however, because it ends by appealing yet again to the same government responsible for the spread of poverty, making toothless demands of it. It does not address the deeper causes of the development of such widespread poverty. It ignores the coincidence of the ever-increasing poverty since 2006 and the “labour market and social policy reforms” of the second Social Democrat (SPD)/Green federal government (2002–2005). That government’s “Agenda 2010,” and especially the “Hartz IV” measures, introduced “reforms” which have led to an unprecedented increase in the low-wage sector in Germany, and thus in poverty.

The policies of the Social Democrats (SPD) and the Greens will be forever associated with this frontal assault on the social gains of the working class and these parties’ contempt for workers and the poor, as well as with the hatred, anger and despair of millions of workers, the unemployed and pensioners towards these policies.

The first SPD-Green government (1998–2002) began its legislative period by approving NATO’s war of aggression against Serbia, sending German soldiers on a war mission for the first time since the end of World War II. The hypocrisy and falsification of history to justify this policy knew no bounds.

This is only surpassed by today’s massive rearmament spending, which is fueling the US/NATO war against Russia in Ukraine. The delivery of billions of dollars in weapons to Ukraine, the training of Ukrainian soldiers in Germany, and thus Berlin’s active participation in the escalation of war raises the associated danger of a new, nuclear world war. This is accompanied by unprecedented warmongering against Russia and unsurpassed war hysteria, especially on the part of the Greens.

The costs of rearmament and war are being imposed on the working class by the exploding cost of living crisis and high inflation, as well as the limitless social attacks.

Newfound DNA data indicates wild animals at Wuhan market were infected with SARS-Cov-2

Benjamin Mateus

The journal Science and The Atlantic magazine published accounts of a recent discovery of the DNA sequence from a SARS-CoV-2-infected wild animal at the Huanan wet market in Wuhan, the epicenter of the outbreak of early infections that led to the COVID pandemic. Dr. Florence Débarre, a senior researcher at the National Center for Scientific Research in France, and theoretician in evolutionary biology, uncovered the data.

The discovery deals a massive blow to the conspiracy theory that COVID-19 originated in a leak of genetically modified viruses from the Wuhan Institute of Virology (WIV). This has relied on, as one of its few science-based arguments, that none of the animals tested at the Wuhan market had been positive for SARS-CoV-2. Now one has.

Débarre has meticulously researched the origin question, posted her findings on her Twitter account and taken many advocates of the “lab-leak” conspiracy theory to task. She told Jon Cohen of Science that she “randomly” came across the “previously unknown sequence data” while doing research on GISAID, the Global Initiative on Sharing Avian Influenza Data, the Munich-based data bank that allows scientists to share research results on an open-access basis. She said it took several days to assess the implication of the sequences and recognize their importance.

These were sequences from swabs taken by the Chinese Centers for Disease Control in the wet market after closing the facility on January 1, 2020. The sequence was part of the DNA of a raccoon dog infected with SARS-CoV-2. These wild animals were known to have been illegally sold at the market and are possibly a suspect for intermediary host for the virus, between bats and humans. However, the data that was posted on GISAID was not part of the earlier data set provided to the WHO or other scientific bodies during the 2021 origin investigation and subsequent publication titled “Surveillance of SARS-CoV-2 in the environment and animal samples of the Huanan Seafood market.” 

A raccoon dog. [Photo by Nasser Halaweh / CC BY-SA 4.0]

Débarre initially contacted Kristian Andersen, evolutionary virologist at Scripps Clinic, California, and Michael Worobey, evolutionary biologist at the University of Arizona, to discuss the implications of the sequences. 

However, once these researchers attempted to contact former head of the Chinese CDC, George Gao, the data was removed from GISAID. It may very well be that the work being conducted by Gao and colleagues is pending review. In the arena of scientific authorship such high-impact topics are kept under wraps until the day of publication. 

As Jon Cohen notes, “The team’s [Gao] preprint recently had its status on Research Square—which is linked to the Nature family of journals—change from ‘posted’ to ‘under review.’ Journals often require data deposition before publication, so an imminent publication might originally have prompted Gao’s team to submit the data to GISAID.”

Still, given concerns that the sequences were removed and lack of disclosure on why they were placed there and not shared earlier with the WHO or in their subsequent publication in 2022, Débarre and colleagues contacted the lead scientist at WHO on COVID, Dr. Maria Van Kerkhove, and provided her with the bombshell report that wild animals at the Huanan market were infected with SARS-CoV-2. 

On Friday, at the WHO press brief on COVID, Director-General Dr. Tedros Adhanom Ghebreyesus made it a focus of his opening remarks. He said, “Even as we become increasingly hopeful about the end of the pandemic, the question of how it began remains unanswered. Last Sunday, WHO was made aware of data published on the GISAID database in late January and taken down again recently. The data, from the Chinese Center for Disease Control and Prevention, relates to samples taken at the Huanan market in Wuhan, in 2020.”

Dr. Michael Worobey (left) and Dr. Kristian Andersen [Photo: Scripps Research, University of Arizona, WSWS]

He continued, “While it was online, scientists from a number of countries downloaded the data and analyzed it. As soon as we became aware of this data, we contacted the Chinese CDC and urged them to share it with WHO and the international scientific community so it can be analyzed. We also convened the Scientific Advisory Group for the Origins of Novel Pathogens, or SAGO, which met on Tuesday. We asked researchers from the Chinese CDC and the international group of scientists to present their analyses of the data to SAGO. These data do not provide a definitive answer to the question of how the pandemic began but every piece of data is important in moving us closer to that answer and every piece of data relating to studying the origins of COVID-19 needs to be shared with the international community immediately. These data could have and should have been shared three years ago.”

The question of a natural origin versus laboratory leak has been at the heart of political discussions since the publication by a renowned international team of virologists published the “proximal origin of SARS-CoV-2” report in March 2020 in Nature. All evidence since that pathbreaking study points to a zoonotic spillover into human populations while no data to date has pointed to a possible lab leak.

In fact, many of the scientists involved in the original research on COVID origin, including Drs. Débarre, Worobey and Andersen, had previously acknowledged they had initially believed the outbreak was caused by a lab leak until the weight of the accumulated evidence demanded they accept the alternative and most likely hypothesis, a natural origin.

Most important in these was the investigation conducted by the World Health Organization (WHO) and China in 2021 on the origin question which found that a significant number of early COVID cases who were attended at regional hospitals in December 2019 were linked to the market and not the WIV.

These were later corroborated by studies conducted by scientists Michael Worobey, Kristian Andersen and others in their epidemiologic and phylogenetic studies utilizing the WHO data. Most cases, both those with and those without personal links to anyone at the market, were nonetheless geographically linked to it. In other words, it was their proximity to the market that led to their infection.

Additionally, the two lineages of the virus (also both linked to the Huanan seafood market) that had been sequenced at that time had no preceding intermediary version, meaning that at least two separate spillovers must have occurred in and around the market that eventually led to achieving a sustained outbreak of infections that began to spread across Wuhan in late winter of 2019. 

It is telling, moreover, that there were no linkages between staff or employees of WIV and SARS-CoV-2 nor were any of the early cases geographically linked to the institute, which would have supported a lab-leak hypothesis. Perhaps an even more compelling question to ask the conspiracists: What is the probability that two different versions of the virus housed at the WIV somehow were leaked within a few weeks of each other to the middle of the same wet market that employs 1,500 people in a city of 11 million, the size of London. 

The identification of an infected raccoon dog at Huanan market comes with considerable political impact at the present moment.

On March 8, 2023, while Republican and Democratic Congress members were holding hearings on the origin of COVID to politically legitimize their lab-leak conspiracy claims, Dr. Michael Worobey’s opinion piece was published in the Los Angeles Times,  providing a lucid and thorough account on the scientific merits for the natural origin of COVID and its emergence at the Huanan Seafood Market. 

Worobey is a professor and the head of the department of ecology and evolutionary biology at the University of Arizona who has dedicated his recent work to the origin question. Near the end of his account, he wrote, “There is now a large body of peer-reviewed scientific research consistent with a zoonotic origin of this pandemic. However, there is no credible, peer-reviewed research pointing to a lab leak. Had the evidence gone in the other direction, I’d be reporting that. But it hasn’t. The ‘evidence’ in favor of a lab leak consists fundamentally of discredited talking points. The lack of a positive sample from an animal sold at the Huanan market, for example, supposedly undercuts the market-origin hypothesis. But not a single relevant live animal was tested there before the market was closed.”

In little more than a week after Worobey’s account, the sequence showing a wild animal was infected with SARS-CoV-2 has made the headlines.

Kroger-Albertsons grocery chain merger in US threatens job cuts as Wall Street eyes payday

Alex Findijs

Kroger headquarters in Cincinnati, Ohio [Photo: Derek Jensen]

The proposed $25 billion merger of Kroger and Albertsons, two of the largest grocery store chains in the United States, threatens potentially thousands of jobs. The merger is still up for review by regulators and there are legal challenges against it, but should it be approved, it will be a boon for large investors and a bloodbath for workers. With a purchase of Albertsons, Kroger will take control of nearly 5,000 grocery store locations in 35 states around the country with more than 700,000 employees.

Kroger’s argument in favor of the merger is that it will improve efficiency and lower prices, as well as enable chains of traditional grocery stores to compete with the rapid rise of Amazon as a major player in grocery sales. Amazon is predicted to reach more than $40 billion in grocery sales by 2024.

But with an increase in “efficiency”—that is, profit margins—also comes an increase in redundancy. In many parts of the country, Kroger brands like King Soopers and Fry’s compete directly with Albertsons brands like Safeway and Vons.

Kroger and Albertsons have said they will sell off several hundred stores to abide by antitrust legislation. These stores will most likely be ones in overlapping areas where the two chains have competing stores. Albertsons did the same thing with 150 stores when it bought rival grocery chain Safeway, divesting those stores into a spin-off chain called Haggen. After less than a year, every one of those stores went bankrupt and closed down.

There are strong financial interests behind the sale of Albertsons that are driving the response to the proposed merger.

Roughly 70 percent of Albertsons stock is owned by the investment firm Cerberus Capital Management. With a portfolio worth $60 billion, Cerberus is one of the largest financial firms in the United States with ties to major banks and industries around the world. Cerberus is a notorious corporate raider. One of its better-known ventures is its purchase of an 80 percent share in Chrysler from Daimler in 2007, which it later sold to Fiat after the Obama administration’s bailout of the industry, which was tied to massive cuts to wages (Fiat-Chrysler later merged with French automaker Peugeot to form Stellantis in 2021).

Cerberus was co-founded by Steve Feinberg, a billionaire and close ally of Donald Trump whose financial support for the former president almost earned him a presidential appointment as a top intelligence official. Feinberg brought in Don Quayle, former vice president under George Bush Sr., as head of global operations, and John Snow, former secretary of the treasury under George Bush Jr., as chairman. This cast of former top government officials grants Cerberus close ties to top industry, finance and government sectors.

Snow is a particularly well-connected member of Cerberus’ board, having served in the federal government with then-Labor Secretary Elaine Chao, who is the wife of Republican Senate Leader Mitch McConnell and a member of Kroger’s board of directors. He also was CEO of the railroad CSX during the 1980s and 1990s, where he implemented a policy of deferring the maintenance of railroad tracks, increasing profits but causing the rail lines to fall into disrepair.

Cerberus has held a stake in Albertsons for 17 years and now controls 73 percent of Albertsons stock when it financed the purchase of Safeway with $9 billion. If Cerberus sells all of its shares in Albertsons, it would take nearly $19 billion from the sale.

Federal Trade Commission (FTC) regulators are reviewing the proposed merger. However, they are not taking the typical measures of analyzing geography and competition to determine how the merger would affect local markets. Instead, the FTC is reportedly interviewing retailers and wholesalers for their views on the merger and are investigating data on product sourcing, shopper data and labor market trends in their decision-making on the merger. This somewhat unusual review suggests the FTC is more concerned with the broader economic impact of the merger than the general concerns over “competition.”

The union bureaucrats at both companies, meanwhile, are concerned solely with maintaining access to their incomes and privileges, regardless of how many jobs are slashed. The Teamsters bureaucracy has issued only few tersely worded statements, not even expressing pro forma opposition to the merger while advising both companies that “the only pathway to success for Kroger and Albertsons is through continued work with the Teamsters and organized labor.” The United Food and Commercial Workers Union has done little better, issuing only toothless statements opposing the merger.

Both bureaucracies have shown they are more than willing to give up one concession after another. In early 2022, the UFCW shut down a strike by King Soopers workers in Denver, Colorado, and rammed through a contract with wages only slightly above the city minimum wage. That April, the UFCW rammed through a deal to avert a strike at Albertsons in California which huge majorities had voted to authorize.

Darryl, an Albertsons warehouse worker in California, told the WSWS that when Safeway merged with Albertsons the company closed some warehouses and moved their work to the warehouse in Irvine. If the merger goes through, he predicted, “they’re [Kroger] not gonna absorb all of us because they don’t need all of us.

“There are gonna be job cuts. Especially the stores. They’re just gonna cull the stores, they’ll be gone.”

Darryl’s biggest concern was about automation in the warehouses. He noted that Albertsons and Kroger have been deploying machines that can fill warehouse orders. While they are still slower than a worker, he said that management didn’t care as long as it got the work done and was cheaper than human labor. “At the end of the day, if the merger never happens, Cerberus [owner of Albertsons] is going to sell no matter what. There will be way more jobs lost from this than the merger.”

Despite the threat to jobs, Darryl said the Teamsters had no plan to oppose job cuts or the merger. He said a union official simply asserted to him that there would be no job cuts. “He said, ‘That’s what everyone is telling me,’ but I don’t buy it. They just don’t want people to panic.

“[Teamsters President] Sean O’Brien said he’s against the merger but what does he have planned? He says he’s against it? That’s not good enough. You go down to your union hall and your union guys don’t care. I’ve been through six administrations and it’s all the same. Whatever union, whatever store, we got the same 50 cents. The union just said sign it and shut up. They [Albertsons] could close down the store now and the union wouldn’t do anything.”

Then-Teamsters president James Hoffa Jr. (center) with Sean O'Brien [Photo: Teamsters Local 25]

A significant role is being played by the Teamsters for a Democratic Union, an erstwhile “reform” caucus which played a key role in O’Brien’s election campaign for general president. O’Brien himself was known as a notorious thug and top ally of previous General President James Hoffa out of Boston, and was even briefly suspended a decade ago for threatening TDU candidates. But in exchange for their support, many TDU leaders now occupy top posts in the leadership of the union.

“O’Brien has also not spent any resources into stopping Kroger from buying Albertsons,” one Teamster said. “The merger will shut down Teamster warehouses and UFCW stores … but O’Brien hasn’t spent a penny. But TDU won’t publish anything in fear of being cut from the $30k they are receiving from the IBT per year to become their cheerleader.”

Economic devastation worsens as Sri Lankan government imposes IMF austerity

Saman Gunadasa

The disastrous situation facing the working class and toiling masses in Sri Lanka is worsening as the Wickremesinghe government continues to impose the austerity agenda of the International Monetary Fund (IMF). Implementation of these measures is the pre-condition for a $US2.9 billion IMF bailout loan to pay the country’s defaulted debts to international finance capital.

Sri Lankan President Ranil Wickremesinghe, left, arrives at the parliament to deliver austerity policy speech in Colombo, Sri Lanka, Wednesday, Feb. 8, 2023. In the center is Sri Lankan parliament speaker Mahinda Yapa Abeywardena. [AP Photo/Eranga Jayawardena]

Addressing parliament on March 7, President Ranil Wickremesinghe boasted that the government had fulfilled all IMF preconditions and expected to receive the Executive Board’s approval for the loan in the third or fourth week of March. He warned that, unlike the 16 previous occasions Sri Lanka had implemented IMF programs, the government could not sidestep the IMF’s directives. It was a clear threat to the working class that the government is determined to crush all popular opposition to its social assault.

The government expects the IMF bailout loan to be delivered over a four-year period. State Finance Minister Shehan Semesinghe announced that the government expects to secure $7 billion from financial institutions and bilateral lenders following approval of the IMF loan. Sri Lanka’s sovereign debt default last April prevented the government negotiating bilateral, multilateral and commercial loans.

Wickremesinghe told parliament that the IMF’s conditions included Central Bank “independence,” public enterprises “reform,” increasing public revenue and “controlling” public expenditure.

His reference to Central Bank “independence,” means that the bank should work as a direct agency of the IMF and continue raising interest rates independently of the Colombo government.

On March 12, Central Bank Governor Nandalal Weerasinghe warned that IMF austerity will be prolonged. “Sri Lanka was now transitioning to a new economic model, breaking away from the previous unsustainable model,” he said, adding: “However, this is not the end of the story. A lot of people think that things will be going back to normal. No, this is the start of a new journey.”

In line with the IMF conditions, the government has put exorbitant tax increases on working people while hiking the cost of electricity, fuel and cooking gas, and cutting subsidies, including for fertilisers. While pauperising working people, government is to offer a meagre “social safety net,” but only to the poorest of the poor.

Inflation is still over 50 percent as the Central Bank maintains high interest rates and allows the rupee to reflect market exchange rates. These measures have paved the way for a serious contraction of the economy, destroying jobs and the real value of workers’ wages. Imports of essentials, including pharmaceuticals have been curtailed, with foreign currency reserves used to pay foreign debts.

These measures have devastated the living conditions of workers and rural toilers.

A recent seminar organised by the US Soya Bean Export Council in Dubai reported that 59 percent of all families in Sri Lanka were unable to meet the required level of food due to the declining food production and inflation in 2022. Around 28 percent, or 6.3 million people, were facing a serious scarcity of food.

Last month, the Sri Lankan Medical Association warned that the country’s health sector is heading towards a “total breakdown,” because it lacked essential medicines and equipment.

Rural farmers confront disaster with the high cost of all inputs, including fertilisers and pesticides, and meagre prices—set by the government for the benefit of big business—for their produce.

Most small- and micro-businesses, including self-employed workers, have been swept away by rising interest rates, the scarcity of inputs and skyrocketing costs.

Early this month, the Sri Lanka United National Businesses Alliance warned that unless interest rates were reduced the country’s “consumer market will shrink by 60 percent by April.” In March, the Sri Lankan Central Bank, with IMF backing, raised the interest rates by 100 basis points.

According to one study, the incomes of working people must increase by 160 percent to maintain the level of consumption that prevailed in 2015. In other words, the living conditions of workers and their families have shrunk by 160 percent compared to 2015 levels.

According to recent figures, the overall economy shrank by close to 8 percent last year with this year’s contraction estimated to be 3 percent.

Interest rate hikes by the US Federal Reserve and other major central banks, the surging value of the US dollar, exorbitant import levies and other indirect taxes on essentials, have contributed to Sri Lanka’s economic contraction and ensured its spiraling inflation rates continue.

Contraction has seen a decline in demand for foreign currency and a recent marginal appreciation of the rupee against the US dollar. This was immediately seized on by the government as an indication of “economic recovery” and that its brutal austerity program was the “right path.”

Fitch Ratings, however, emphasised that the slight appreciation of the rupee was temporary. “The Sri Lankan rupee may also be pressured by tightening global monetary conditions,” Fitch said. It predicted that the currency would plummet by 20 percent by the end of the year.

Colombo plans even harsher social measures. These include cutting the public sector wage and pension bill, and the commercialisation and privatisation of state-owned enterprises. The government has already frozen public sector recruitment, reduced the retirement age, introduced voluntary retirement schemes, and permitted public sector workers to take extended unpaid leave to work abroad or in the private sector.

According to Cabinet Spokesman and Ministerof Media, Transport and Highways, Dr Bandula Gunawardena, Sri Lanka will have to pay $2.6 billion of its foreign debt to multilateral lenders in the first six months of 2023.

Wickremesinghe has said that Sri Lanka will have to repay an average of $6 to $7 billion in foreign loan debts annually until 2029. This makes clear that the harsh social attacks on the working masses are being imposed by a regime that functions as a direct agent of global finance capital.

The main opposition parties—Samagi Jana Balavegaya (SJB), Janatha Vimukthi Peramuna (JVP) and the Tamil National Alliance (TNA)—demagogically criticise the government. Their denunciations are bogus and aimed at exploiting, and politically containing, the rising mass opposition.

Teachers demonstrate at Homagama on 15 March 2023 over government’s austerity measures. [Photo: WSWS]

Beginning late last year, the working class has come into struggle against government. On March 15, about half a million workers—public and private sectors from across the country—joined strikes and protests in opposition to the government’s austerity and in defiance of anti-strike essential service orders. This growing movement is part of a rising struggle of the international working class, as seen in France, the UK and the US.

While the trade unions have been forced to call strikes and protests, these are limited to one-day events. Like the opposition parliamentary parties, they have no fundamental differences with the IMF’s dictates and are attempting to chain workers to the electoral agenda of the opposition parliamentary parties.

The government, opposition parties and the trade unions all fear rising working-class anger could lead to the sort of movement that last year ousted Gotabhaya Rajapakse as president. Having drawn lessons from last year’s mass uprising against Rajapakse, Wickremesinghe is using the state apparatus—the police and military and draconian laws, including essential service orders—against demonstrations and strikes.

Some of the Sri Lankan army troops mobilised on 8 February 2023 near Colombo Fort protests. [Photo: Facebook Malainadu ]

Credit Suisse taken over amid fears of financial meltdown

Nick Beams

In an emergency action aimed at trying to prevent a meltdown of the European and global financial system, the Swiss government, the Swiss National Bank and the country’s financial authority, FINMA, organised the sale of the beleaguered bank Credit Suisse to UBS.

Credit Suisse bank headquarters in London, Thursday, March 16, 2023. [AP Photo/Frank Augstein]

The decision, in which it overrode through executive action a requirement that shareholders vote on any takeover, was announced by the government at a press conference Sunday evening before Asian markets opened today.

It came after a series of measures last week, including a $54 billion liquidity provision by the central bank for Credit Suisse, later extended to around $100 billion, failed to staunch the flow of money out of the bank, reported to be at least $10 billion per day last week.

Announcing the decision, under which UBS will take over Credit Suisse at a cost of $3.25 billion, Swiss president Alain Berset said: “On Friday the liquidity outflows and market volatility showed it was no longer possible to restore market confidence and a swift and stabilising solution was absolutely necessary.”

He warned that an “uncontrollable collapse of Credit Suisse would lead to incalculable consequences for the country and the international financial system.”

Under the deal, hammered out in series of crisis meetings over the weekend, the Swiss government will provide more than $9 billion to UBS to cover some of the losses it may incur as a result, and the central bank will make available $100 billion to UBS to facilitate it.

However, the Swiss finance minister, Karin Keller-Sutter, claimed it was not a bailout but a “commercial solution.”

In her press conference remarks she pointed to the global implications of the Credit Suisse crisis.

“The bankruptcy would have had huge collateral damage on the Swiss financial market and a risk of contagion internationally. The US and the UK were very grateful for this solution … they really feared a bankruptcy of Credit Suisse.”

The same message was delivered by the financial regulator FINMA. It said Credit Suisse had experienced a “crisis of confidence” and there was “a risk of the bank becoming illiquid, even if it remained solvent, and it was necessary for authorities to take action to prevent serious damage to the Swiss and international financial markets.”

The forced sale of Credit Suisse is the most significant in the banking system since the crisis of 2008 and it is far from clear that further ramifications have been averted. As the Financial Times noted in a comment, “whether it would halt European bank runs is unknowable. Reassurance is a dangerous game in a financial panic. It can easily confirm the fears of investors as allay them.”

While it had been weakened by the tens of billions of dollars in losses resulting from the collapse of Archegos Capital and the Greensill financial firm, as well as low profitability in some of its investment activities, the trigger for its demise did not emerge from within Credit Suisse itself.

Rather, its collapse is an expression of the vast shift in the financial landscape over the past year as central banks, led the US Fed, have rapidly raised interest rates after providing essentially free money for 15 years under various forms of “quantitative easing.”

It was set off by the collapse of the US Silicon Valley Bank, when it was taken over by the Federal Deposit Insurance Corporation on March 10 after a $40 billion bank run.

Credit Suisse then came under intense pressure last week after the Saudi National Bank, one of its backers with 10 percent of its shares, announced it was not going to put in any more capital. The Swiss central bank then offered a $50 billion credit, but this seems to have deepened the crisis rather than alleviating it, leading to the emergency meetings over the weekend.

Credit Suisse has been a globally significant bank for decades, operating in Europe, Asia and the US. At the end of 2022, it had a balance sheet of half a trillion dollars and 50,000 employees around the world, thousands of whom will be laid off because of the USB takeover.

And there are clearly fears that its takeover and the crisis it expresses, will be manifested in other parts of the financial system. Coinciding with the Credit Suisse decision, the Fed and five other major central banks announced measures to increase the flow of dollars into global financial system to ensure adequate liquidity.

The FT reported that one of the concerns of European authorities is that the “heavy losses imposed on Credit Suisse shareholders, and bondholders” holding its debt could “increase stress in bank funding market this week.”

In a joint statement, the central banks said that from today they would hold daily auctions of dollars rather than weekly to “ease strains in global funding markets.”

On the other side of the Atlantic, there are indications that, far from abating, the crisis set off by the SVB collapse is intensifying. When markets open today attention will focus on the First Republic Bank, one of the first to suffer “contagion” from the demise of SVB.

Last week, 11 major banks, spearheaded by JPMorgan Chase and its CEO Jamie Dimon, with the collaboration of US treasury secretary Janet Yellen, decided to deposit $30 billion between them with First Republic to alleviate concerns that, like SVB, it would have problems meeting depositors’ withdrawals.

But so far, at least, the plan does not seem to be working. Despite the $30 billion inflow, shares in the bank plunged more than 30 percent on Friday bringing the total loss since the SVB collapse to more than 70 percent.

First Republic has the same problem as SVB. The market value of its holdings of US treasuries and other financial assets it invested in, when interest rates were near zero, is now below their book value because of the interest rate hikes initiated by the Fed. Meaning, it would incur significant losses if they had to be sold to meet the cash demands of depositors.

Financial analysts are giving First Republic the thumbs down. Julian Wellesley, global analyst at Loomis Sayles, told the Wall Street Journal: “It’s not clear whether its viable as a stand-alone entity.”

Analysts at KBW, a financial firm which monitors bank performance, said the changes in First Republic’s balance sheet over the past week were “staggering” and, together with its decision to suspend the dividend on common stock, painted a “very dire outlook” for the company and shareholders.

In a note on Friday, analysts at the financial firm Wedbush said there would be “minimal, if any” residual value left if the bank ended up being sold because of the markdown in the value of its loans and securities in any sale.

The crisis at SVB, which is clearly present throughout the banking system, especially among the thousands of smaller and middle-sized banks, has prompted calls for the lifting of the level of deposits which are automatically insured from $250,000.

It has found support from growing sections of the political establishment and from banking industry lobbyists.

Democratic Senator Elizabeth Warren, who likes to present herself as some kind of opponent of the ultra-wealthy who would benefit from such a move, told CBS on Sunday she thought lifting the $250,000 cap was a “good move.”

Posing the question of where the new limit should be she said “Is it $2 million? Is it $5 million? Is it $10 million?”

Warren attempted to cloak such a measure, benefiting ultra-wealthy investors (one of the depositors with SVB, the venture capitalist Peter Thiel stood to lose $5 million had the decision not been made to pay uninsured depositors in full), as giving support for small companies and non-profit organisations to pay wages and their utility bills.

Another aspect of the deepening financial crisis, not attracting the same kind of headlines as on the banks but no less significant, is the situation in the $22 billion US Treasury market, the bedrock of the global financial system.

An FT article at the weekend noted that last week the market for US government debt suffered its most volatile period since the crisis of 2008. Daily trading volumes more than doubled “as the failure of SVB sparked a headlong dash into the safety of Treasuries.” So far, analysts have said market functioning has by and large held up. But that could change at any time.

The article cited comments by Priya Misra, head of global rates research at TD Securities who said: “We’re one crisis away from a complete breakdown of Treasury market liquidity.”

French police step up crackdown on protests vs Macron’s imposition of pension cuts

Samuel Tissot

France’s major cites have seen a wave of protests since French President Macron announced his use of the anti-democratic article 49.3 to impose his government’s hated pension reform on Thursday. A wave of strikes is engulfing France’s major industries, including at refineries, airports, waste management facilities and railroads.

Macron rammed through his reform bill over concerns over how a lost vote would impact European financial markets. The reform is viewed as critical by the French bourgeoisie as it will fund a massive €413 billion rearmament of the French military before 2030 and arms deliveries for the war in Ukraine, without increasing tax on the wealthiest sections of society.

The explosive struggle against Macron, the capitalist state, and the war, comes as workers in in Sri Lanka, Greece, and the United Kingdom are engaged in massive strikes opposed to low wages and the impacts of decades of austerity.

Throughout Friday and Saturday major protests involving tens of thousands continued all over France. There were protests both nights in Rennes, Nantes, Bordeaux, Lyon, Nice, and Marseille. A planned protest in the Capitole de Toulouse Friday was cancelled as police blocked off all access to the square.

In Paris, on Friday and Saturday night, many thousands of protesters gathered at Place de la Concorde and Place d’Italie. On Friday morning, students gathered at the Tolbiac campus to defend striking garbage workers at Ivry-Sur-Seine. Demonstrations to demand the release of detained protesters continued in the capital across the weekend.

Protesters gather at Place d’Italie on Saturday evening:

Violent police repression Friday and Saturday night confirmed the PES’ warnings: the French ruling class has spent the last decade constructing a police state and normalizing state violence to violently crackdown on independent opposition to capitalist rule. So far at least 600 people have been arrested across Thursday, Friday, and Saturday’s protests. This includes Chloé Grace, a journalist from LeMediaTV who was arrested while covering Friday evening’s protest at the Place de la Concorde.

Macron and his fascistic interior minister Gérald Darmanin, have clearly instructed cops to crack down on protests with extreme violence. Footage captured by journalists on the ground show heavily-armed police suddenly and brutally assaulting peaceful, unarmed protesters. In every major city, cops with full body armor, gas, batons, riot shields and often assault rifles, have kettled protest groups before repeatedly charging and teargassing them.

After dispersing protests on Friday and Saturday, BRAV police motorcycle units scoured the streets of Paris for suspected protesters who had evaded initial arrests. Dozens of arrested protesters near the Place d’Italie on Saturday were lined up against a building with their hands on their heads. On Saturday night, water cannon were used again, while a canine police unit set dogs on protesters in Lyon.

On Saturday, Paris police released an order that all unregistered gatherings in the city would be “dispersed.” When protesters began gathering at Place d’Italie for a protest called by the CGT (General Confederation of Labor) union’s Île-de-France regional organization, a police statement was released to the media stating, “Due to the presence of many thugs, the organizer calls for dispersal.” This illustrates the traitorous role of the union bureaucracy: when called upon by the state, the bureaucracy blames its supporters and excuses their violent repression by the police.

By the end of the night, police had arrested 67 people on Saturday in Paris and 187 across the country.

Arrested protesters lined up:

BRAV-M units hunt protesters:

Popular outrage at Macron’s cuts and repression is continuing to grow and protesters are attacking offices of officials favorable to Macron’s cruts. On Friday, night protesters in Lyon entered and partially burned the Mayor’s office in the 4th district. On Saturday the offices of Eric Ciotti, president of The Republicans party (LR) who previously voted for the reform, were ransacked by protesters in Nice. In multiple cities, effigies of Macron, Prime Minister Elisabeth Borne, and other officials were burned.

Yesterday, the government announced it was stepping up police measures to protect parliamentarians and state officials who support the pension cuts.

The ruling class is scrambling to try to bring the situation back under control, using the services of the union bureaucracies and capitalist political parties. Today a vote of no confidence in the government will be debated in the National Assembly. The vote, whose outcome is expected to depend on whether the right-wing The Republicans votes against Macron’s government, is being promoted by the union bureaucracies and the pseudo-left parties as a way to defeat Macron without a struggle against the capitalist system.

Jean Luc Mélenchon’s Unsubmissive France (LFI) is showing its true colors as a party of order with extensive ties to the police and state. On Sunday, Mélenchon echoed the media’s denunciations of violence by protesters stating, “We who are fighting against this law have a message to send to our friends. Do not make the struggle invisible through practices that would turn against us.” He had nothing to say on the violent repression of the French police.

LFI parliamentary leader Michael Bompard called on LR deputies, the majority of whom have supported Macron’s pension reform, to vote for the motion of no confidence. He said, “Whatever you think of this reform, what we are asking you is: do you agree with the method [Macron’s use of the 49.3]?”

The union leaderships are trying to channel workers back behind bankrupt parliamentary manoeuvres criticizing Macron not for his reform and his release of violence police repression but for not working more closely with the unions and opposition parties to impose his reform.

Speaking to BFM-TV Sunday, CGT union leader Phillippe Martinez declared, “We played our warning role… I do not understand that the government and especially the President of the Republic do not take into account our alerts.” Martinez emphasized that he opposes calls to bring down the Macron government, declaring, “It is not a question of overthrowing the government, but of voting what the deputies could not do last Thursday.”

Laurent Berger the head of the CFDT union, ordered striking teachers and protesting students to cut their struggle short, insisting, “You must not interfere with the bac [end-of-high-school exams].”

The ruling class is terrified of the growing prospect of a rank-and-file revolt against the union bureaucracies and an uncontrollable social explosion of strikes and protests. On Sunday, Charles de Courson, a right-wing deputy and finance expert who is leading the motion of no-confidence targeting the Macron government in the National Assembly, warned, “Today, the trade unions tell us that they are not sure of being able to keep control of the troops for long, as we used to say. We began to see the first excesses last night. The risk is that the unions will no longer be able to keep control of the movement.”

Courson has been one of the most dedicated servants of capitalist rule in France for over a quarter of a century. Since first being elected in 1993, he has acted as a financial expert for debates over 30 government budget bills, making him one of the principal architects of austerity in France over the last three decades. That such a pillar of reaction as Courson is working with the union leaderships to try to contain and hold back the struggle illustrates the necessity for workers making a complete break with the bureaucracies.