20 May 2023

Ecuador’s president dissolves Congress to halt impeachment

Andrea Lobo


With the support of the military and the police, Ecuador’s President Guillermo Lasso triggered on Wednesday a “mutual death” clause to dissolve Congress before it could vote to impeach him on corruption charges. 

The legislative building and the streets of downtown Quito were heavily militarized as the armed forces threatened to “act firmly” to defend the decision. Highlighting the authoritarian dangers posed by Lasso’s measures, the military high command had held a closed-door meeting with Defense Minister Luis Lara on Tuesday in the “War Room,” where Lasso’s next steps were discussed.

The military and police leadership issue statement endorsing Lasso's dissolution of Congress [Photo: @Presidencia_Ec]

The “mutual death” provision was enacted in the 2008 Constitution under the presidency of Rafael Correa, whose party Union for Hope (UNES) was leading the impeachment drive against Lasso. The clause allows the president to rule by decree for up to six months until a new administration takes office and sets a three-month deadline for presidential and congressional elections.

Lasso has sent an extensive package of long-planned economic decrees to the Constitutional Court, which takes over legislative powers and quickly approved Lasso’s “mutual death” on Thursday. The economic decrees reportedly include a regressive tax reform, a free trade zone project, an Investment Act, reforms to the Social Security Institute and measures related to oil extraction.

US Ambassador Michael J. Fitzpatrick backed Lasso’s actions, declaring: “The government of the United States respects the internal and constitutional processes of Ecuador.” 

This endorsement has again exposed US imperialism’s hypocritical pretensions to defend “democracy.” Just five months ago, when the pseudo-left Peruvian president Pedro Castillo shut down Congress citing similarly vague constitutional provisions in response to an impeachment drive based on corruption charges, the US ambassador, Lisa Kenna, a CIA veteran, gave a green light for ousting and arresting Castillo, as well as violently suppressing protests. 

Washington has consistently backed the authoritarian measures taken by the Ecuadorian government. The Trump administration supported the repression of mass anti-austerity demonstrations in October 2019 that forced then-president Lenín Moreno to temporarily relocate his government to the coastal city of Guayaquil, resulting in 11 dead. 

In 2021, Biden’s Secretary of State Antony Blinken visited Quito to proclaim that “exceptional measures” were “required” as the already beleaguered Lasso was resorting to dictatorial states of emergency and threatening to violently repress strikes in 2021. Amid mass protests and a national strike sparked by food and fuel price increases in 2022, the Biden administration defended Lasso after a crackdown that left at least seven dead and hundreds injured.

The opposition parties have insisted that there is no “grave political crisis or civil commotion”—the cause cited by Lasso as the grounds to trigger the “mutual death” clause—and that Lasso’s actions are illegal.

However, the UNES party has refused to call for protests, with Correa tweeting: “The measure is unconstitutional, but what is best for the Fatherland is to hold elections. The future is in your hands. Will you let them fool you again?”

The Indigenous federation CONAIE, which has led repeated anti-government protests and whose presidential candidate came third in 2021, also called off protests.

Even before Lasso’s announcement, CONAIE leader Leonidas Iza, who has been promoted by other indigenous leaders as a likely presidential candidate, sought to preempt a social eruption by calling off any demonstrations or “roadblocks” that were reportedly already being prepared.

“If the government makes the wrong decisions and provokes a social reaction… we will declare a national mobilization,” he said in a press conference. “We are standing by.”

Only the Stalinist-led “Popular Front,” including the Teachers Union UNE, organized a handful of roadblocks in Quito. The trade union federation FUT announced a convention in June to decide on a response to Lasso’s package of economic measures.

So far, there have not been any major demonstrations. However, Lasso’s attacks against democratic and social rights will inevitably provoke massive opposition. Workers and all oppressed sectors must conclude from the soporifics and stalling by the official leaderships that they are determined to isolate and suppress any struggles by channeling them behind empty electoral promises.

The Ecuadorian ruling class has been facing a decades-long political crisis involving repeated resignations and impeachments. Such political instability, including conflicts between the old banking and agro-export oligarchy and the newer finance-industrial bourgeoisie, has been the norm since the end of the military dictatorship in 1979. 

The 1971 and 1975 general strikes and growing union movement had rattled the ruling class as the urban working class had surpassed the rural population, demonstrating its enormous power. 

In response, the so-called “return to democracy” saw an attempt to integrate an elite of the still massive rural indigenous population into the bourgeois political establishment, beginning with 1979 provisions to expand the electoral participation of indigenous peoples. By 1986, the Confederation of Indigenous Nationalities of Ecuador (CONAIE) was formed to unite regional leaderships, and a decade later it formed its electoral wing, the Pachakutik party. Shortly after, basing its program on “land rights,” “anti-globalization” and “anti-neoliberalism,” the CONAIE gained control of dozens of provincial and municipal governments and won hundreds of municipal council posts. 

Along with the Stalinist-led trade union bureaucracy, the CONAIE repeatedly placed itself at the front of mass protests to channel opposition against austerity, environmental destruction and land rights abuses behind illusions in the election of one or another bourgeois politician, as well as in the capitalist constituent assemblies of 1997-98 and 2007-08. 

In 1998-2000, a pre-revolutionary crisis erupted that saw most banks collapse, a currency run leading to a chaotic dollarization of the economy, rampant inflation that sent over 70 percent of the population into poverty, and untenable debt levels. The CONAIE, the Stalinist Communist Party, along with the trade union bureaucracy and their pseudo-left apologists, scrambled to channel the resulting mass upheaval, ultimately backing the former colonel Lucio Gutierrez (2003-2005), who integrated several CONAIE and Pachakutik leaders into his cabinet. Gutierrez then defended the dollarization and agreed to another IMF structural program, which led to mass protests and his own downfall. 

Then these same forces of the official “left” backed the coalition Alianza País under Rafael Correa, a US-trained economist. By then, Chinese demand was driving up prices of commodities like oil and minerals, allowing the Ecuadorian economy to grow more than fivefold between 2000 and 2014. 

This allowed Correa not only to pay back the public debts and provide massive profits for the local ruling elite and the transnationals, but also to increase spending on public education, health care and social assistance. At the same time, Correa used states of emergency and troop deployments to crush indigenous protests against the rapid expansion of natural resource extraction. In 2017, he handpicked his right-wing successor Lenín Moreno, who moved to implement austerity measures and regressive labor reforms to pay back new massive debts. He also withdrew the asylum granted WikiLeaks editor Julian Assange at the Ecuadorian Embassy in London, handing him over to the British police.

Moreno’s reactionary policies paved the way to the election of the right-wing multi-millionaire banker Lasso. Under Lasso and amid the COVID-19 pandemic, the eruption of war in Ukraine, a continued slowdown of the Chinese economy and growing US pressures against Chinese influence in Latin America, Ecuador has suffered an economic downturn. 

The Ecuadorian ruling class is desperate to impose social austerity and attack wages and job security to attract investments as its public debt has grown from 17 percent of its GDP in 2011 to 69 percent last year. The economy has effectively stagnated for almost a decade. 

Only about a third of workers in Ecuador have an “adequate job” (40 hours and a wage of at least $450 per month), but this falls to about 12.3 percent for indigenous people. Meanwhile, almost four out of every 10 Ecuadorians suffer multidimensional poverty, and this rate is more than twice as high for the indigenous rural communities. The indigenous leadership, now firmly integrated into the local and national governments, has demonstrated its inability to pursue an independent orientation. 

Across Latin America, whether it’s under openly right-wing forces like Lasso and Boluarte in Peru or governments associated with a second wave of the so-called “pink tide” like Lula in Brazil, Boric in Chile and Petro in Colombia, the same attacks against the working class and poor are rapidly discrediting the entire political establishment and preparing massive social eruptions.

Correa and his party UNES are no exception and have long reassured foreign capital and US imperialism that they will do their bidding. In an interview with the Spanish website CTXT in 2021, for example, Correa insisted that, “Under no circumstances do we believe that there could be attempts to destabilize or undermine democracy” by the Biden administration. 

While indicating that mechanisms “such as the National Endowment for Democracy” have been used to pressure governments, he said, “we hope that these mechanisms are now used for strengthening democracy.” Given the NED’s long history of use by the US State Department to sponsor coups all around the world, Correa statement amounted to an offer to sell his movement to the CIA.

Biden signals readiness to impose social cuts, work requirements in debt limit deal with Republicans

Barry Grey


President Joe Biden and the Democratic Party have made clear they will unite with House Speaker Kevin McCarthy and Republican lawmakers to impose massive cuts in social programs as part of a deal to raise the debt limit.

From left, Senate Minority Leader Mitch McConnell, Republican-Kentucky, Senate Majority Leader Chuck Schumer, Democratic-New York, and Speaker of the House Kevin McCarthy, Republican-California, at the Capitol in Washington, Wednesday, May 17, 2023. [AP Photo/J. Scott Applewhite]

Amidst a media-stoked atmosphere of impending “catastrophe” should the United States default on its $31.4 trillion debt, which, according to Treasury Secretary Janet Yellen, could occur as soon as June 1, the two big business parties are conspiring to impose the cost of the war against Russia in Ukraine and war preparations against China, plus trillions in bank bailouts, on the working class.

The “crisis talks” are part of a heavily stage-managed, bipartisan operation, including a manufactured default deadline, to enable “progressive” Democrats to cover for Biden and vote for massive cuts while concealing the corporate interests and imperialist war aims that are being served.

Virtually nothing is said about the sources of the spiraling national debt—including $113 billion in military aid to Ukraine and a record $1 trillion defense budget in 2022, combined with hundreds of billions to rescue failing banks and their wealthy depositors. The lying propaganda surrounding the debt crisis likewise ignores the fact that spending caps imposed by the Obama-Biden administration beginning in 2011 have already sharply cut outlays for essential social needs ranging from health care and education to food stamps, rent and home heating assistance, the environment and occupational health and safety.

Following Tuesday’s White House meeting between Biden and the top leaders from each party in the House and Senate, both sides praised the talks and declared their mutual commitment to avoiding a default and pushing a bipartisan budget deal through Congress before the debt exceeds the current legal limit.

Biden cut short his trip to Asia to attend the G-7 summit in Japan, skipping planned stops in Papua New Guinea and Australia, in order to return to Washington on Sunday. Before departing on Wednesday, he said, “I’m confident that we’ll get the agreement on the budget and America will not default.”

In previous remarks on Republican demands for tougher work requirements for low-income recipients of Medicaid, food stamps and what remains of the federal welfare program (Temporary Assistance for Needy Families—TANF), Biden noted that as a senator during the Clinton administration he had voted for work requirements for welfare and indicated he was open to tightening such requirements for those receiving food stamps.

Budget experts estimate that the Republican demands for work rules, apart from other major cuts resulting from spending caps and the rescinding of unspent COVID funds that include social assistance, will effectively cut off health care for 1.7 million low-income people and food stamps for 275,000 people.

The White House has let it be known that it is proposing a two-year cap on federal non-military discretionary spending as part of a debt limit deal, which would amount to hundreds of billions of dollars in social cuts. Biden is also indicating a readiness to accept the rescinding of $56 billion in unspent COVID funds, most of which would otherwise go toward rental assistance, community development and disaster relief programs, according to the Congressional Budget Office (CBO). “I have to take a hard look at it. It’s on the table,” Biden said.

He has also broadly hinted acceptance of Republican demands to loosen requirements for the launching of fossil fuel energy exploration and development projects.

House Speaker Kevin McCarthy said Thursday that negotiators could reach an agreement this weekend and he expected his chamber would be able to vote on a deal by next week. “Everyone’s working hard,” he told the press. He went out of his way to praise the negotiating team Biden appointed to continue the talks following Tuesday’s White House meeting, calling Biden presidential counselor Steve Ricchetti and Office of Management and Budget Director Shalanda Young “exceptionally smart.”

Ricchetti and Young are right-wing Democrats. The former was the chair of Biden’s 2020 election campaign and headed up the effort to raise money from Wall Street financiers. At a Senate hearing on her nomination for deputy director of the OMB, Young was praised by Trump supporter Lindsey Graham. She was promoted for the post of OMB director by the Congressional Black Caucus and the New Democrat Coalition, a 100-member caucus in the House that advocates fiscal austerity, law-and-order and pro-corporate “reforms.”

McCarthy’s team is headed by Louisiana Congressman Garrett Graves, a long-time ally, and Rep. Patrick McHenry of North Carolina, a member of the Republican Study Committee, a “free market” caucus that advocates extreme austerity, the removal of virtually all regulations on business, militarism and law-and-order.

The main potential obstacle to a debt limit deal based on brutal austerity is not the White House or the Democratic Party, but the fascist-dominated House Freedom Caucus. On Thursday, it called on McCarthy to suspend the debt limit talks and instead focus on seeking passage in the Democratic-controlled Senate of the debt limit and budget bill narrowly passed last month by the House. That bill would raise the debt ceiling by $1.5 trillion or until next March 31, whichever comes first, and impose $4.5 trillion in total spending cuts over the next decade.

All of the cuts would come in non-military domestic discretionary programs. The bill would freeze discretionary spending at 2022 levels and impose an annual spending increase cap of 1 percent for the next decade. According to the CBO, this would result in a cut of $3.2 trillion, largely in social spending, over the next decade.

The Senate will not pass such a bill, so the House Freedom Caucus proposal amounts to acceptance of a default on the national debt, something advanced by Donald Trump in his town hall meeting last week on CNN.

In part to appease the fascist caucus in the House, Graves and McHenry walked out of the debt talks on Friday and declared a “pause” on the grounds that the White House team was being “unreasonable.” The BBC reported that the walkout was “widely regarded as a negotiating ploy on Capitol Hill,” part of the political posturing deemed necessary to push through the austerity measures demanded by Wall Street and the military/intelligence apparatus.

McCarthy duly altered his tone, saying, “We’ve got to get movement from the White House, and we don’t have any movement yet.”

A White House official responded to the pause by saying, “If both sides negotiate in good faith and recognize they won’t get everything they want, a deal is still possible.”

The so-called “progressives” within the Democratic Party are, as usual, responding to Biden’s acceptance of Republican demands by protesting on their knees, while preparing to ensure the implementation of a deal.

Rep. Pramila Jayapal of Washington State, chairwoman of the Congressional Progressive Caucus in the House, told the USA Today: “The president has been a great leader for the last two years and the American people have seen him fighting for them. And I want to make sure that’s the president that is in these negotiations—that he is fighting for regular people and that we are not caving in to things that are nonstarters.”

Ten Democratic senators plus the nominally independent Bernie Sanders sent a letter to Biden on Thursday urging him to invoke the 14th Amendment to the US Constitution to avert a government default without action by Congress. The letter cited section 4 of the amendment, which states that “the validity of the public debt of the United States… shall not be questioned.” Biden has ruled out such a maneuver. The group of senators includes Elizabeth Warren, Jeff Merkley, John Fetterman and other so-called “progressives.”

In fact, the new austerity drive—which is certain to extend in relatively short order to “entitlement” programs such as Social Security and Medicare—builds on the sweeping cuts enacted under the Budget Control Act of 2011, passed under the Obama administration, with Biden serving as the point man in negotiations with the Republicans. The Center on Budget and Policy Priorities published a paper this past March outlining the severe impact of the limits on annual appropriations set by the 2011 law for 2012 through 2021, in the aftermath of the 2008 financial crisis and massive bailout of the banks.

Among the report’s findings:

  • Overall 2023 funding for NDD (non-defense discretionary) programs other than veterans’ medical care remains 10 percent below its 2010 level after adjusting for inflation and population growth.
  • Excluding veterans’ medical care, NDD funding is 2.8 percent of GDP in 2023, compared with 3.4 percent in 2010 and an average of 3.3 percent since 1977.
  • Appropriations for aid to K-12 education decreased by 15 percent between 2010 and 2023 after adjusting for inflation.
  • Funding shortfalls for the Social Security Administration caused it to lose 13 percent of its staff since 2010, hampering its ability to perform basic services such as answering questions and processing applications for benefits in a timely and accurate way.
  • The Environmental Protection Agency’s budget was cut by 30 percent between 2010 and 2023, adjusted for inflation.
  • Other programs impacted include housing assistance, Head Start, Low-Income Home Energy Assistance (LIHEAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), and Older Americans Act programs, along with part of child care assistance.

US announces plans to send F-16 fighter jets to Ukraine

Andre Damon


On Friday, the White House announced the most reckless and dangerous escalation of its involvement in the war with Russia to date, that it has decided to train Ukrainian pilots to fly US-made F-16 fighter jets and send the nuclear-capable planes to the battlefield.

An Air Force F-16 Fighting Falcon fires an AIM-9M Sidewinder missile during training at Tyndall Air Force Base, Florida, March 10, 2021. [Photo: Department of Defense/Air Force 1st Lt. Savanah Bray ]

US National Security Advisor Jake Sullivan told reporters at the G7 summit in Japan that Biden “informed his G7 counterparts that the United States will support a joint effort to train Ukrainian pilots on fourth generation fighter aircraft including F-16s.” He added the US “will work with our allies to determine when planes will be delivered, who will be delivering them and how many.”

Facing a series of major military setbacks for its proxy forces in Ukraine, the United States is massively expanding its direct involvement in the war, with potentially catastrophic consequences for all of humanity.

Although first fielded decades ago, the F-16 has been continuously updated and remains one of the most capable, complex and deadly weapons systems in the world. With a range of more than 500 miles, it is capable of fielding the Joint Air-to-Surface Standoff Missile, with a range of up to 1,200 miles. These weapons threaten both Moscow and St. Petersburg.

Last March, the Pentagon rejected a plan to send semi-obsolete Soviet-era MiG-29s to Ukraine, because it “may be mistaken as escalatory and could result in significant Russian reaction that might increase the prospects of a military escalation with NATO.”

The fact that these words are far more applicable to the decision to send F-16s points to the degree to which the war in Ukraine is spinning out of control.

To an even greater degree than the M1 Abrams battle tank, sending F-16 fighter jets to Ukraine would involve the deployment of logistical infrastructure and supply lines into Ukraine from the NATO countries, likely including the deployment of American civilian contractors to help maintain these sophisticated systems.

The F-16 is the workhorse of the United States’ “nuclear sharing” program. In the event of a full-scale nuclear war, atomic bombs based in Turkey, Germany and Poland, delivered from F-16 fighters, would be among the first to explode.

The announcement that NATO would send F-16 fighters to Ukraine takes place in flagrant defiance of multiple explicit promises made by the Biden administration to the public, aimed at reassuring the population that it was seeking to avoid an escalation of a full-scale war with nuclear-armed Russia.

In March 2022, Biden asserted, “the idea that we’re going to send in offensive equipment and have planes and tanks and trains going in with American pilots and American crews, just understand—and don’t kid yourself, no matter what you all say—that’s called World War Three.”

In May, Biden said, “We will not be directly engaged in this conflict, either by sending American troops to fight in Ukraine or by attacking Russian forces. We are not encouraging or enabling Ukraine to strike beyond its borders.”

One by one, Biden has crossed each of the “red lines” he set out to limit his administration’s involvement in the war.

In January, the Biden administration announced that it would send dozens of M1 Abrams main battle tanks to Ukraine, alongside hundreds of other main battle tanks from NATO countries.

In April, leaked documents revealed that 97 NATO special operations troops are deployed inside Ukraine, alongside 71 active-duty US military personnel. These troops, according to an article published this week in the in the Wall Street Journal, are “operating very close to the front lines” and are a “guiding influence on Ukrainian special-forces activity.”

Ukraine has received US authorization in private to carry out strikes inside Russia itself, and in February,  US Under Secretary of State for Political Affairs Victoria Nuland publicly endorsed Ukrainian strikes inside Crimea. “Those are legitimate targets,” Nuland said. “Ukraine is hitting them. We are supporting that.”

Now, with the sending of F-16 fighter jets, the United States has crossed the last of these self-proclaimed red lines.

But the war does not enjoy the support of the population. Only one in five Americans approves of expanding US involvement in the war, according to a University of Maryland poll.

It is for this reason that the Biden administration has systematically lied about its plans to escalate the war and sought to cloak its long-planned escalatory measures as improvised responses to public “pressure” from its NATO allies and members of Congress.

This was the narrative presented over and over in the US media. “For more than a year, getting F-16s into the skies above Ukraine for use against Russia has been Kyiv’s holy grail… Suddenly, President Biden has said yes,” wrote the Washington Post.

“The turnaround, according to US, European and Ukrainian officials, is the result of steady pressure from allies, Congress and Ukrainian President Volodymyr Zelensky, who just completed visits to European capitals.”

This narrative has just one wrinkle, namely the fact that the US has been working on plans to send F-16 fighters since at least July of 2022. That month, John Kirby, the National Security Council coordinator for strategic communications, confirmed that the Pentagon is discussing “providing fighter aircraft to the Ukrainians,” and Air Force Gen. Charles Q. Brown Jr., asserted that “discussions are ongoing” to send US-NATO fighters to Ukraine.

The announcement by the White House that it would send F-16 fighters to Ukraine, under the pressure of a series of military defeats, sets the stage for a further escalation of the war, threatening a full-scale conflict between the countries with the world’s two largest nuclear arsenals.

Chair of Ukraine’s Supreme Court arrested in bribery scandal

Jason Melanovski


Vsevolod Knyazev, the chief of Ukraine’s Supreme Court, was arrested and removed from his post on Tuesday amid accusations of accepting $2.7 million in bribes.

Earlier on Monday, the country’s National Anti-Corruption Bureau of Ukraine (NABU) released a photo of large amounts of American dollars lined up on a couch and stated it had “uncovered large-scale corruption in the Supreme Court, namely a scheme that allowed the leadership and judges to receive illicit profit.”

On Tuesday, at a joint news conference of both NABU and another anti-corruption agency called the Specialized Anti-Corruption Prosecutor’s Office (SAPO), prosecutor Oleksandr Omelchenko announced that the head of the Supreme Court had been detained and suggested other high-ranking officials were under investigation for “criminal activity” but did not mention Knyazev specifically.

Unnamed sources from NABU also told ZN.ua that investigators conducted searches at the properties of 18 other Supreme Court judges, suggesting a much larger purge of the top of the judicial system.

Later on Tuesday, the Supreme Court held a special session where judges voted to strip Knyazev of his role as chief justice and released a joint statement calling the arrest “a dark day in the history of the court.”

According to Ukrainian parliamentary member Oleksiy Goncharenko, Knyazev is the highest ranking official in the history of post-Soviet Ukraine to be arrested for bribery. 

The arrest of the highest judicial official in the country signals an intensifying struggle within the Ukrainian ruling class and a deepening crisis of the Zelensky regime. It comes just a few months after far-reaching purges over another “corruptions scandal” in Zelensky’s cabinet, among regional governors and the country’s military leadership. The procurement scam even nearly took down Ukraine’s Defense Minister Oleksii Reznikov, weeks after the top leadership of the country’s Interior Ministry died in a helicopter crash. 

It also comes as the Ukrainian military is on the verge of launching a “counter-offensive” against Russia with its imperialist backers warning that no great success can be expected from it. 

Semen Kryvonos, the recently appointed head of NABU, claimed the bribe was paid by oligarch Konstiantyn Zhevago, who led the now bankrupt Finance and Credit Bank. According to Kryvonos, the chief of Ukraine’s Supreme Court received the bribe in exchange for deciding a case over control of the shares of a mining company in Zhevago’s favor.

Zhevago currently lives in France, where he fled in 2019 after he was accused of embezzling $113 million from the bank. 

From 1998 to 2019 Zhevago served in the Ukrainian parliament where he was allied with former Prime Minister Yulia Tymoshenko, herself a potential Zelensky rival.

On Wednesday, Ukraine’s State Bureau of Investigation announced it was working with Swiss authorities to retrieve the embezzled funds from Zhevago’s Swiss bank account. Earlier in December, Zhevago was arrested in France and then later released on $1 million bail after Ukrainian authorities had sought his extradition.

Significantly, the arrest of Knyazev has nothing to do with the reported widespread plundering of cash, weapons and resources by the Ukrainian ruling-class that have flooded the country since Russia’s 2022 invasion nor have any of Zelensky’s associates been implicated. Journalist Seymour Hersh has revealed that Zelensky and his regime had embezzled $400 million in US funds intended to purchase diesel gasoline.

No doubt that there is massive social and political discontent in Ukraine’s working population about the open theft and plunder in the country’s ruling elite, all the while hundreds of thousands are dying in the NATO proxy war against Russia, and tens of millions have been thrown into complete destitution.

However, workers must lend no credence to the phony “anti-corruption” campaign of the NATO-backed Zelensky regime. The truth is that Ukraine’s ruling oligarchy, which emerged out of the Stalinist bureaucracy’s destruction of the Soviet Union and the restoration of capitalism, is steeped in criminality. Whatever “corruption scandals” are surfacing only show a glimpse of the systematic theft of social resources that forms the basis for the very existence of this layer, and they are used above all to settle scores within rival factions of the ruling class. 

The imperialist powers and especially the US too are using the smokescreen of “corruption scandals” for their direct intervention in Ukraine’s oligarchic politics. 

Kryvonos was appointed in March as the head of NABU, with much fanfare that Zelensky and the Ukrainian government were finally getting tough on “corruption,” as demanded by the EU and US. Kryvonos reportedly possesses close ties to Zelensky’s Chief of Staff Andriy Yermak, one of the most influential figures in contemporary Ukrainian politics. 

NABU was set up in the wake of the 2014 coup in Kiev, in which a pro-Russian government was toppled with the assistance of far-right nationalist organizations, such as Svoboda and the Azov Battalion. The coup was organized and funded primarily by the US and EU and triggered an eight-year-long civil war in East Ukraine, leading up to Russia’s invasion in February 2022.

Founded in 2015 by the right-wing nationalist government of Petro Poroshenko, NABU is almost entirely created and directed by the US, and its staff was trained directly by the FBI and EU. 

In 2020, the former Prosecutor General of Ukraine, Viktor Shokin, complained that NABU was created by order of then US Vice President Joe Biden in order to undermine Ukraine’s own State Bureau of Investigation and “put there emissaries who listen to the United States.”

NABU has played a key role in the ongoing conflicts within the Ukrainian oligarchy and state apparatus. 

Earlier this month, Ukraine’s High Anti-Corruption Court ordered the arrest of Odessa Mayor Gennady Trukhanov for reportedly misusing city funds dating back to 2017. Again, the case is years old and conveniently does not concern corruption within Zelensky’s circles, and Trukhanov himself is tied to pro-Russian political forces that were banned in June of last year.

In 2022, the US gave Ukraine $48 billion in military, financial and humanitarian aid combined, while the EU gave $72 billion since the start of the war.

By arresting high-profile officials in years-old cases, Zelensky’s regime hopes to keep the money and weapons flowing while at the same time eliminating political enemies .

As Volodymyr Dubovyk, professor of international relations at Mechnikov National University in Odesa, Ukraine, told Al Jazeera in February amid the widely reported corruption scandals, “There is definitely a connection between the anti-corruption moves and Zelenskyy’s desire to keep Western military aid flowing.

“Ukraine’s worst fear is that the US and West will abandon them and that the flow of weapons will stop,” Dubovyk added.

In reality, the United States—where the majority of Congress members are millionaires—has no issues with corruption as long as it does not impede Ukraine’s ability to continue its disastrous war with Russia that has already killed hundreds of thousands of Ukrainian soldiers, destroyed the lives of millions and continues to threaten the outbreak of World War III.

Interest rate hikes, inflation, rent and financial parasitism

Nick Beams


Central banks around the world, including the Reserve Bank of Australia, have maintained that interest rates hikes instituted over the past year are necessary to bring down inflation, now at its highest level in four decades.

But according to a former member of the economic policy establishment, Professor Ross Garnaut, a one-time economic policy adviser to the Hawke-Keating Labor government, the opposite is the case.

Ross Garnaut speaking at the University of Melbourne in 2010. [Photo: Wikimedia Commons]

Interest rate hikes actually increase the rate of inflation because of changes in the structure of the Australian economy over the past several decades, above all the rise of monopolies which make their money not through productive activity but by the extraction of economic rents.

Garnaut’s analysis is set out in a public lecture he delivered earlier this month entitled “The economic public interest in a world of oligopoly.” That is a situation in which the economy does not operate according to the fables of the “free market” and “competition” but is dominated by a handful of powerful corporations.

He began his address by noting there had been “big changes” in the Australian economy over the course of this century that “greatly affect Australia’s capacity to deliver rising standards of living to most people in a growing population.”

“Most importantly,” he continued, “there has been a large increase in the rent component of total income. This has diminished growth in productivity and output, while reducing the share of income accruing to the general run of citizens. More recently, it has contributed to the decline in the real incomes of most Australians.”

The issue of rent does not generally figure in the official discussion of the economy based on the mythology of the “free market.” But it is assuming a dominant role in every area of economic life. It refers to a situation in which the income of corporations is derived from the appropriation of value because an asset is privately owned, rather than the creation of new value by productive activity.

The classical case, going back to the dawn of capitalism, is the rent extracted by the landowner. The landowner creates no additional value. That is the result of the production of agricultural commodities, either by the small farmer or the workers employed to till the land. From the profit so obtained, the landowner extracts a portion in the form of rent, which means that the price of the goods produced is higher than they would be otherwise.

Under “free market” conditions this would produce a movement of capital into this area, increasing agricultural production until the price came down and the rate of profit in this sector fell to the average in the economy as a whole.

But that is not possible in this case because the land on which to carry out such production is held by private owners, monopolised, and not freely available. So the price of agricultural products remains higher than it would otherwise be.

Rent appropriation has gone far beyond its beginnings in the private ownership of land and now extends to virtually all areas of the economy, not least intellectual property in communications and pharmaceuticals, as well as in areas where there are so-called natural monopolies such as the supply of electricity and water.

In the case of intellectual property, Apple is a case in point. But for its intellectual property rights, the price of an iPhone would be far lower than that charged. A great proportion of the price is the rent obtained by the company from its ownership of intellectual property. Its importance for such firms can be seen in the way in which they regularly sue each other for alleged theft of intellectual property.

Of course, firms appropriating such rent—phone companies, drug companies and others—seek to “justify” their super profits by claiming it is the reward for their research. They conveniently forget the fact that any limited advances they may make are the results of decades of scientific development, freely available and much of it publicly funded.

In his review of the Australian economy and the distribution of income between profits and wages, Garnaut noted that in the past, high terms of trade—higher export prices relative to import prices—had been associated with pressure for higher wages.

Australian terms of trade over the past year have been higher than ever before. Yet real wages in Australia have fallen more through last financial year and this than in any other two-year period in our history. The official forecasts anticipate continuation of real wage reductions through the next financial year.

“It is a striking fact that the profit share of income is decisively higher than ever, and the wages share lower.”

One of the sources of this disparity was rent and he examined two key areas, rent for houses and energy supply.

In the case of house rents, he pointed to what amounts to a self-reinforcing feedback loop.

“Higher rents feed into a higher CPI, which is interpreted by the RBA as a signal to raise interest rates again. Higher interest rates reduce investment in housing and after a time raise rents, and so strengthen the single-instrument case for even higher interest rates.”

Turning to the question of energy, he said electricity and gas increases, 15 percent and more than 26 percent respectively, had been the largest contributor to a higher CPI over the past year to which the RBA has responded by lifting interest rates. This had the effect of further increasing power charges.

This is because for many households “the charges for using poles and wires represent about half the power bill. Prices are regulated by arrangements that guarantee specified rates of return on past investment. The rates of return rise with higher interest rates, so higher interest rates feed directly into higher power prices.”

Furthermore, he continued, to the extent that higher interest rates reduced the demand for power [because working class families must cut back on their power consumption to meet their rising mortgage repayments, which have risen by more than $1,000 a month in many cases], “the reduced use of poles and wires requires a compensating increase in prices” because of the lower volumes of sales.

In pointing to the increasing role of economic rent more broadly in the accumulation of profit, he said returns to business investment were higher than ever in the developed world and particularly in Australia.

“Attempts have been made to rationalise the facts. The Business Council of Australia and the Governor of the Reserve Bank have said that mining profits (including petroleum extraction) are more than half the total and if you exclude them there has been no increase in the profit share.”

Garnaut denounced these efforts as “speaking power to truth,” rather than the reverse.

“Take mining out of the denominator as well as the numerator and the profit share is still historically high. This is at a time when the cost of capital in competitive markets is close to zero, and when low productivity growth demonstrates that high profits are not flowing exceptionally from innovation and entrepreneurship.”

However, his denunciations of the RBA interest rate hikes only raise a broader question: why is the central bank proceeding with them if they are inimical to its stated goal of bringing down inflation?

Here Garnaut is bereft of any analysis. The best he can come up with is that “good policy” would bring a different outcome. In other words, the problems he identifies come from a faulty mindset.

This is the classic response of all would-be reformers of the capitalist system.

They never care to probe too deeply into its class dynamics lest this raises many troubling questions, not least to the conclusion that Karl Marx, to whom they are organically hostile, was right and the essential logic of the capitalist system is the accumulation of fabulous wealth at one pole and poverty and misery at the other.

Any understanding of the reason for the interest rate hikes of the RBA and other major central banks begins with the recognition that, while it is advanced in the name of “fighting inflation,” this an ideological cover for the real agenda.

The RBA is concerned essentially with only one price—that of labour power, the commodity sold by the worker to the owner of the means of production and received in the form of wages. Under conditions of rising prices—the highest in 40 years—driving workers into struggles, it is imperative this movement is suppressed, if necessary, by driving the economy into recession.

One of the key driving forces for the RBA policy, aimed at lowering wages, is to be found in capitalist rent. This becomes apparent from a closer examination of its modus operandi.

Rent, as we previously noted, is not derived from the creation of new value. It is essentially parasitic, depending on the host for the supply of fresh blood into arteries. The value it strives to appropriate depends on the exploitation of the working class by other sections of capital. Enhancement of this flow of value depends on the suppression of wages.

Not only must wages be suppressed but social services, such as health and education, must be cut. This is because, in the final analysis, these expenditures are a deduction from the surplus value extracted from the working class available for appropriation by capital.

The more rent capital grows, the greater its significance in the economy, which, as Garnaut notes, has surged in recent decades. The more it grows the more strident become its demands that the value flow, which it has done nothing to produce but on which it parasitically feeds, must be increased.

Garnaut can offer no solution to the mounting social problems to which he points, at least partially, apart from a call for some regulations and increased competition.

Here it is necessary to recall that rent seeking is not some “bad” side of capitalism which should be curbed in favour of the “good.”

The logic of the capitalist system is not aimed at the production of goods and services to sustain the population.

Its driving force is the transformation of money into an even greater quantity of money, and this leads inexorably, as Marx drew out, to modes of accumulation—rent, share market trading and financial speculation—which completely bypass the production process.

Anyone tempted to buy into Garnaut’s call for policy changes should remember that, as the saying goes, he has “form” in this area.

He was one of the principal architects of the policies of the Hawke-Keating Labor government of 1983-96 which he holds up as providing a necessary transformation of the Australian economy.

Two key aspects of the Hawke-Keating agenda have played a critical role in shaping the present economic and social landscape.

The “free market” agenda, coupled with major privatisation of state-owned resources, carried out by this government with the fulsome support of Garnaut, cleared the way for the rapid growth of financial parasitism and rent seeking.

The successive Accords with the trade union bureaucracy, backed by the force of the courts and the military power of the capitalist state as in the case of the use of troops against the 1989 pilots’ strike, were pivotal in the transformation of the unions from limited defence organisations of the working class to the role they play today as the policemen for the suppression of wages.

19 May 2023

Why are Iran and China Executing Thousands?

Chloe Atkinson


Recorded executions in 2022 reached the highest figure in five years, as the Middle East and North Africa’s most notorious executioners carried out killing sprees, Amnesty International said Tuesday as it released its annual review of the death penalty.

“Countries in the Middle East and North Africa region violated international law as they ramped up executions in 2022, revealing a callous disregard for human life. The number of individuals deprived of their lives rose dramatically across the region; Saudi Arabia executed a staggering 81 people in a single day. Most recently, in a desperate attempt to end the popular uprising, Iran executed people simply for exercising their right to protest,” said Agnès Callamard, Amnesty International’s Secretary General.

Iran and China are at the top of the list. Just this month alone, Iran executed ten people. Iran Human Rights (IHR) said in a report that four people convicted of rape were hanged at the Rajai Shahr prison in Karaj, 36 kilometers (22 miles) west of Tehran, according to Al-Monitor. In a separate case, three other men were hanged at the Ghezal Hesar prison, also in Karaj, on drug charges.

At least 582 people were executed in 2022, up from 333 in 2021, a joint report by IRH and Paris-based Together Against the Death Penalty showed last month. The United Nations says more than 200 people have been executed this year so far.

The Amnesty numbers differ slightly from those by IRH and Together Against the Death Penalty. According to Amnesty, 90% of the world’s known executions outside China were carried out by just three countries in the region. Recorded executions in Iran soared from 314 in 2021 to 576 in 2022; figures tripled in Saudi Arabia, from 65 in 2021 to 196 in 2022 — the highest recorded by Amnesty in 30 years — while Egypt executed 24 individuals.

“On average so far this year, over ten people are put to death each week in Iran, making it one the world’s highest executors,” UN Human Rights Chief Volker Turk said recently.

While the precise number of those killed in China is unknown, it is clear that the country remained the world’s most prolific executioner, ahead of Iran, Saudi Arabia, Egypt and, apparently according to Amnesty, the USA.

This is not the first time Iran and China made it to the top of the list of global executioners. In 2016, they were also recognized as being the top executioners, with China executing more people than all the countries in the world put together. According to the Al-Jazeera report, “it is difficult to get a clear number as Beijing classifies most information related to the death penalty as ‘state secrets.’ It is estimated to be in the thousands each year.”

Iran is the world’s second-largest executioner after China, according to Amnesty International. Most of those executed — many belonging to minority groups — are charged with murder or drug-related offenses. Others are convicted of vaguely worded charges, including “spreading corruption on earth” and “enmity against God,” Amnesty said in a March report.

“The world must act now to pressure the Iranian authorities to establish an official moratorium on executions, quash unfair convictions and death sentences, and drop all charges related to the peaceful participation in protests,” said Diana Eltahawy, Amnesty International’s deputy regional director for the Middle East and North Africa.

As noted by the Al-Monitor article, the surge in death sentences and executions occurred concurrently with a countrywide uprising against the Iranian government, which began in September following the tragic death of 22-year-old Mahsa Amini while in police custody. The protest movement faced brutal suppression, as security forces resorted to violence, resulting in the deaths of numerous demonstrators and the arrest of thousands. According to a report by IHR in December, approximately 100 individuals received death sentences in connection with their involvement in the protests.

Rights groups accuse Iran of using the death sentence as a tool of repression and intimidation against the public.

“Iran’s authorities demonstrated how crucial the death penalty is to instill societal fear in order to hold on to power,” the joint IHR and ECPM report said.

Thousands of Iranian citizens have been jailed over the last year alone, and hundreds have been executed, usually by hanging – a notably tortuous death. The victims often do not have access to a lawyer or legal representation.

The fact that Amnesty places the United States in the category of top executioners around the globe is questionable since the US executed 18 people in 2021 by lethal injection –  a number quite distant from the thousands being executed in China. Still, each state in the US should review its policies with regard to executions as even 18 is a high number, is not morally justified, and does not deter crime.

While it is clear that some states in the US implement the death penalty as a punishment to the individual for his or her crimes, Iran and China utilize executions as a warning to the public; step out of line, and we will kill you. Amnesty’s reports have no effect on Iran and China. They continue to sit in United Nations bodies and their diplomats and leaders are welcomed in international fora. Iran and China use executions to control the population and ensure total authority. As long as they remain dictatorships, nothing will change and innocent people will continue to die.

Generic drug shortages in the US, particularly chemotherapy agents, reach historic highs

Benjamin Mateus


Dr. William Dahut, chief scientific officer for the American Cancer Society and professor of medicine at Uniformed Services University of the Health Sciences in Bethesda, Maryland, remarked on the ongoing dire shortage of critical chemotherapy agents, “If these drugs are not available, people are going to get inferior care. That’s the bottom line. These aren’t third- or fourth-line drugs where there are multiple other agents around. These are used up front for people you are trying to cure.”

In this Thursday, September 5, 2013 photo, chemotherapy is administered to a cancer patient at Duke Cancer Center in Durham, North Carolina. [AP Photo/Gerry Broome]

The US Food and Drug Administration has indicated that there are 295 active drug shortages in the US, a 30 percent increase since 2021. Twenty-three of these are chemotherapies, making them fifth in the top five drug classes with active shortages. 

People are being delayed or denied these treatments, which means that they will not be cured and their lives cut short. In fact, one of the key predictors of how patients will do is if they get the right dose of drugs on the right schedule. A study published in the BMJ (formerly the British Medical Journal) in November 2020 found that a one-month delay increased the risk of dying by 6 to 13 percent. 

The American Cancer Society recently highlighted the important fact that innovations in cancer treatments have led to a 33 percent decline in cancer mortality since 1991. The organization estimates that the US can see around 1.9 million new cancer cases in 2023. Given the current shortages in cancer treatments have no foreseeable end, the question arises whether such trends will become of historic precedence.

Dr. Amanda Fader, president of the Society of Gynecologic Oncology, warned, “This is in my opinion a public health emergency because of the breadth of individuals it affects and the number of chemotherapy agents that are in shortage right now.”

Dr. Fader is speaking of agents like carboplatin and cisplatin, drugs discovered more than three decades ago that have continued to prove their resilience in the treatment of various cancer types, which include leukemias, lymphomas, colon, breast, lung and ovarian. They are also generic drugs that cost pennies to manufacture but generate razor-thin profit margins.

Generic drugs account for 90 percent of all drugs used domestically, but account for only 17 percent of drug spending, costing on average $9 per treatment. Generic drugs are also one of few areas where costs have not risen faster than inflation. The economic environment for nationally based manufacturing is so unappealing that life-saving drugs are being produced abroad by only one or two pharmaceuticals for world-wide consumption. When there are temporary halts to production, the social cost is incalculable.

As many in the industry have noted, given the costs associated with these generic drugs and their ultra-narrow profit margins, it is difficult to compete against pharmaceuticals based in countries such as India or China. Additionally, these lead to safety issues as regulatory oversight of the manufacturers is at times nonexistent. 

Resulting incidents include the discovery of industrial solvents and antifreeze agents in medications, which has led to deaths of the children receiving them. In March, the Centers for Disease Control and Prevention (CDC) released a health care-associated infections alert on an outbreak of an extensively drug-resistant strain of Pseudomonas aeruginosa traced back to EzriCare or Delsam Pharma’s artificial tears, affecting 68 people across 16 states. Three people died, some went blind and several had to have their eyeballs removed.

Much of the profits for these generic drugs goes to Pharmacy Benefit Managers or PBMs, middlemen who eat up almost 50 percent of the drug costs. The three largest PBMs—CVSHealth (including Caremark and Aetna), the Express Scripts business of Cigna, and the OptumRx business of UnitedHealth Group—control nearly 80 percent of all commercial drugs sales, constituting a veritable monopoly or cartel.

According to Commonwealth Fund, “PBMs are companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers. By negotiating with drug manufacturers and pharmacies to control drug spending, PBMs have a significant behind-the-scenes impact on determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid.” 

As such, these PBMs force generic drugmakers to accept their rates or stop production altogether due to lack of profitability because they are unable to compete with India, whose labor costs are far lower. Over the past 10 years, dozens of generic drug manufacturers have closed and the current generic manufacturing capacity is running at 50 percent of what could be produced.

Such was the case when in February Akorn Pharmaceuticals, an American generic pharmaceuticals manufacturer based in Lake Forest, Illinois, filed for Chapter 7 bankruptcy and summarily laid off around 450 employees at its plant in Decatur, with employees given a one-day notice to pack-up their belongings and vacate the premises. Such sudden disruptions in the availability of vital medications have had a far-reaching impact on patient care and distressed health care workers.

In a letter to the workers, Akorn CEO Douglas Boothe wrote, “Because the company has insufficient liquidity to continue its operations, continue to seek a buyer and continue to retain its workforce, the company will file cases under Chapter 7 of the US Bankruptcy Code. In connection with that filing, the company must shut down all operations and terminate all of its employees.”

On the growing crisis of the chronic drug shortages in the US, which have reached a five-year high, Bloomberg recently reported that the White House has assembled a “covert group” of experts led by the Domestic Policy Council and National Economic Council to supposedly tackle the problem. 

According to the sources speaking with Bloomberg on condition of anonymity, “[T]he agency [FDA] has been cooperating with the White House but can’t fix the supply problems alone because larger market forces are driving generic drugmakers out of business, contributing to shortages. The companies that buy drugs in bulk pit manufacturers against each other and drive down prices, which shrinks drugmakers’ margins.” 

Given the extremely narrow profit margins on such generic drugs, the logic of capitalist production means that the inherent value attributed to these medications in terms of lifesaving capacity is less than the pennies it costs to produce them. Accordingly, the White House is looking for market mechanisms that can introduce further efficiencies to entice some companies to undertake production while at the same time developing new regulations to improve quality control, including “announced FDA inspections.” 

In response to these potential changes, Teva Pharmaceutical Industries, one of the world’s major generic drug manufacturers with 2022 revenues of $14.9 billion, wrote on social media, “The security of the American generic drug supply can only be ensured by addressing the root cause of shortages and implementing sustainable economic and regulatory policies. Adding burdensome additional regulations on an already struggling industry facing tremendous downward pricing pressures, will only further exacerbate drug shortages.” 

Indeed, fragile global supply chains and the heavy reliance on China and India for active pharmaceutical ingredients (APIs) led the chairman of the Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, Rep. Morgan Griffith from Virginia, to declare last week during a hearing on the root causes of drug shortages “a national security risk.” 

In other words, these massive pharmaceuticals, whose stocks are held in the grip of the financial aristocracy, demand unlimited public funds from the US government and promises to fortify the supply chains secured through aggressive foreign policy, including military action to ensure profits continue to flow undisturbed. Simply put, the international working class is being held hostage by the corporations allowing these shortages of life-saving treatments to persist. 

The more than $110 billion that has been mustered to pursue the deadly NATO-led conflict in Ukraine against Russia confirms that these drug shortages are essentially driven by capitalist economic interests.