New Zealand sinks into recession

John Braddock

Figures released on June 14 show that New Zealand fell into a recession in the first quarter of 2023. Gross domestic product (GDP) fell 0.1 percent in the three months ending in March, following an economic contraction in the December quarter of 0.7 percent.

Reserve Bank of New Zealand in Wellington [Photo: Facebook]

The latest result was in line with most economists’ expectations, but at odds with a Reserve Bank (RBNZ) forecast of 0.3 percent growth. The December figure was considerably worse than expected, with predictions of a 0.2 percent drop and an RBNZ forecast of 0.7 percent growth.

Most parts of the economy slowed or contracted, offsetting a slight rise in construction. Business services—including management consulting, advertising, scientific, and engineering design—fell by 3.5 percent. Agriculture, forestry and fishing contracted 0.7 percent, manufacturing fell 1.1 percent, and education and training fell 1.9 percent.

On interest.co.nz, economist David Hargreaves wrote that the June quarter GDP will likely also be negative along with the September quarter. “We could very well now end up being ‘in recession’ or something like it for a year or more” he warned, noting it will inevitably impact the October 14 election.

The RBNZ admitted last November that it was seeking to deliberately engineer a recession. In May, the central bank raised the official cash rate by 25 basis points to 5.5 percent, the latest in 12 consecutive rate rises since October 2021.

As is the case internationally, the ruling class is responding to the economic crisis triggered by the pandemic and worsened by the US-NATO war with Russia in Ukraine by imposing the full burden on the working class. The RBNZ aims to drive up interest rates, increase unemployment and beat back a developing movement in the working class for substantial wage increases.

Wage growth lags behind inflation in many areas. Data from the job search firm Seek NZ released in March, covering 30 industry classifications, showed annual salaries rose 4.4 percent in the three months following a 4.3 percent increase in the December quarter, when annual inflation was 7.2 percent. Food inflation is currently running at 12.4 percent.

Warning the RBNZ may have done “too much to rein in inflation,” Kiwibank chief economist Jarrod Kerr told Radio NZ “the brunt of the slowdown is yet to come.” Weaker demand could push unemployment up from the current 3.4 percent to 5.5 percent in 2024, Kerr predicted.

According to Bloomberg on June 15, international authorities are closely watching New Zealand as a “possible harbinger of what lies ahead for others.” The country was “one of the first to begin raising rates when inflation surged after the pandemic… outpacing even the [US] Federal Reserve,” it said. “Now the impact is starting to be felt as households already grappling with soaring prices see mortgage repayments jump.”

The International Monetary Fund (IMF) has declared that the country is “living beyond its means,” and that the government must tightly control spending with the RBNZ ready to raise interest rates again if necessary. It expressed concern about the high current account deficit, at present $NZ33 billion or 8.5 percent of GDP.

The IMF praised New Zealand’s management of the COVID-19 pandemic as “exemplary” but said the economy had overheated because of “generous” financial and monetary support, and had entered a “necessary slowdown.”

In fact, the Labour-led government used the pandemic to transfer tens of billions of dollars to big business, in the form of tax relief, direct bailouts and so-called wage subsidies. During 2020–21 the RBNZ printed $53.5 billion ($US34 billion) to buy up government bonds from the commercial banks, boosting their profits to record levels and contributing to rampant inflation.

The “necessary slowdown” means an intensifying assault on the working class to recoup these vast sums. Working people are already tightening their belts with retail over the past two quarters falling by 2.9 percent. Spending on non-durables was down 3.4 percent in the last quarter alone.

Satish Ranchhod, Westpac senior economist, reported that in a recent survey more than 40 percent of households declared that their financial position went backwards over the past year, while only 14 percent said that it had improved. “Large increases in living costs, especially for necessities like food, are hitting every family in the country in the pocket,” he said.

RBNZ predicts that mortgage holders—nearly 40 percent of the population—will pay an average 22 percent of their income in interest payments this year, up from 9 percent in 2021. Households behind on repayments are up 26 percent on the same time last year, with 19,300 accounts overdue. Data from credit bureau Centrix showed mortgage arrears climbed for the eighth consecutive month in March.

Rents also reached a record national average high of $600 per week in February, according to Trade Me Property. Median rents were in the $500 bracket for nearly four years before they jumped last year. “With the rising cost of living on everyone’s minds, this will be tough news for tenants who will be having to dig deeper into their wallets to pay rent,” Trade Me’s Gavin Lloyd said.

The poorest sections of the working class are being hit hard. “One News” reported last week that to help household incomes many school students in South Auckland are also working, sometimes 40 to 50 hours a week. Soane from Tamaki College said: “I work to support my family with bills and groceries.” Chris sometimes works from 10 p.m. to 6 a.m. “I still come to school in the morning. I just go home and get changed then come here,” he said.

The NZ Food Network reported in May that the country’s food banks are now supporting over half a million people each month—165 percent more than at the start of 2020. The cost-of-living crisis is the main reason for those seeking food relief (88 percent), followed by low individual/household income (70 percent), and unemployment (65 percent).

Deep job cuts are underway. Retail giant, The Warehouse Group, expanded its layoffs in February with an additional 150 to go on top of 190 announced at the end of January, with the NZX-listed company citing “challenging market conditions.” Auckland Council has axed more than 500 jobs and is selling shares in the International Airport to address a $350 million budget shortfall.

The education sector is currently at the forefront of an onslaught on wages, jobs and services. The primary teachers’ union, the NZEI, recently pushed through a sellout deal for 30,000 teachers, which effectively cuts their wages.

Last week the national trades training institution Te Pūkenga announced 400 sackings to rein in a $63 million deficit. Hundreds of university jobs are also being axed, following 1,000 jobs lost during the height of the pandemic. Recent cuts include 230 at Victoria University of Wellington (VUW), announced Wednesday, over 200 at Otago, 170 at Auckland University of Technology and 37 at Massey University.

Morgan Godfery, a VUW academic and columnist for Stuff and the Guardian, wrote on Twitter that the Labour government is “passively presiding over the collapse of tertiary and vocational education, the slow degradation of primary and secondary education,” as well as health services.

In fact, there is nothing “passive” about this historic assault, which is a deliberate class policy. The Labour government’s May budget cut funding for education and health, relative to inflation, and the government has entirely dismantled its COVID-19 public health measures. Billions, meanwhile, are being poured into the military as it collaborates with NATO in the war against Russia and cements its alliance with US imperialism against China.

Experts warned of potentially catastrophic problems with OceanGate submersible at extreme depths

Kevin Reed

Details have emerged that experts made many warnings about the unsafe condition of the OceanGate submersible that suffered an implosion in the North Atlantic and killed all five people on board shortly after it submerged last Sunday.

Major pieces of debris from the 22-foot-long Titan vessel, including the tail cone, were found on the ocean floor on Thursday morning about 1,600 feet from the bow of the steamship RMS Titanic, which sank to the bottom of the ocean in 1912 and was the subject of the OceanGate expedition.

The debris field of the OceanGate submersible was discovered by a remotely operated vehicle (ROV) and was “consistent with catastrophic loss of the pressure chamber,” according to Rear Admiral John Mauger of the US Coast Guard.

When asked about the possibility of recovering the bodies of the victims of the disaster, Admiral Mauger said he did not have an answer to the question but added, “This is an incredibly unforgiving environment down there on the sea floor.”

Following a Twitter post by the Coast Guard about the discovery by the ROV, OceanGate released a statement saying company co-founder and CEO Stockton Rush, 61; Pakistani businessman Shahzada Dawood, 48, and his son Suleman Dawood, 19; British billionaire and explorer Hamish Harding, 58; and deep sea explorer and Titanic expert Paul-Henri Nargeolet, 77, “have been sadly lost.”

The discovery of the debris ended a five-day, around-the-clock international rescue effort to find the vessel. The search for the submersible included the US Coast Guard, US Navy, the Canadian Coast Guard and numerous private entities that covered an area twice the size of Connecticut in water that was two and a half miles deep.

As of this writing, the website of OceanGate could not be accessed online and KPTV of Portland, Oregon, reported that the Pacific Northwest offices of the company in Everett, Washington, have been closed indefinitely, “while the staff copes with the tragic loss of their team member.”

While neither the Coast Guard nor OceanGate has provided details about the implosion of the vessel, experts on deep sea exploration and the impact of the water pressure at 12,500 feet below the surface where the Titanic wreck sits—which measures at approximately 400 atmospheres, or 6,000 pounds per square inch—have given statements to the media on what likely happened.

Bob Ballard, a professor of oceanography at the University of Rhode Island and member of the team that found the Titanic wreck in 1985, told ABC News, “I don’t think people can appreciate the amazing energy involved in the destructive process of an implosion. It just takes out and literally shreds everything.”

Eric Fusil, director of the Shipbuilding Hub at the University of Adelaide in Australia, also told ABC that the Titan had a composite hull with inbuilt sensors that could withstand high pressures near the seafloor, but any defect could result in a “near instantaneous implosion” in less than 40 milliseconds.

Questions have been raised about the unconventional cylinder-shaped design of the Titan, which is a departure from the sphere-shaped cabins used by most submersibles. The sphere is considered the perfect shape of a craft that must withstand the immense water pressure exerted equally on all areas of the vessel, while the elongated cabin space increases the pressure load in the midsection and increases fatigue and delamination of the hull material.

Additionally, the use of carbon-fiber with titanium endcaps in the construction of the vessel, which OceanGate promoted as a feature making it “more efficient to mobilize than other deep diving submersibles,” as opposed to complete titanium or other metals, has been pointed to as a significant source of the failure of the structure.

On Tuesday, the New York Times reported that experts inside and outside OceanGate began ringing alarm bells in January 2018 about the safety of the Titan just as the company was preparing to hand the vessel over to its crew for its initial voyages.

Around that time, OceanGate’s director of marine operations, David Lockridge, began working on a report “in which he said the craft needed more testing and stressed ‘the potential dangers to passengers of the Titan as the submersible reached extreme depths.”

Lockridge alleged in a counterclaim lawsuit against OceanGate that he was hired to ensure the safety of all crew and customers of the company during the operations of Titan, but when he expressed concerns about the submersible’s hull, his employment was terminated.

Meanwhile, in March 2018 a group of three dozen industry leaders, deep-sea explorers and oceanographers warned OceanGate CEO Rush that the experimental approach of the company and the decision to forgo a traditional assessment of the vessel could lead to potentially disastrous results.

In a letter from the Marine Technology Society, Rush was criticized for refusing to follow industry safety standards while at the same claiming in marketing material published to advertise the Titan that the vessel was compliant with “DNV-GL safety standards.”

The industry representatives wrote, “Your representation is, at minimum, misleading to the public and breaches an industry-wide professional code of conduct we all endeavor to uphold” and that “it is our unanimous view that this validation process by a third-party is a critical component in the safeguards that protect all submersible occupants.”

On Friday, the New York Times published the comments of submersible expert Karl Stanley, who was a passenger on OceanGate’s Titan with company CEO Rush off the coast of the Bahamas in April 2019.

Stanley said he heard a cracking noise that got progressively louder during the two hours it took for the submersible to plunge more than 12,000 feet during that trip. The following day, Stanley wrote an email to Rush and urged that future expeditions of the vessel be cancelled.

In his email, Stanley wrote, “A useful thought exercise here would be to imagine the removal of the variables of the investors, the eager mission scientists, your team hungry for success, the press releases already announcing this summer’s dive schedule.” Further he stated, “Imagine this project was self-funded and on your own schedule. Would you consider taking dozens of other people to the Titanic before you truly knew the source of those sounds??”

In another development which raises questions about what was known early on by the US government about the fate of the OceanGate vessel, the US Navy disclosed that a top secret military acoustic detection system first detected what it suspected was the implosion of Titan hours after the submersible began its voyage.

In response to questions from the Wall Street Journal, an unnamed senior Navy official said, “The U.S. Navy conducted an analysis of acoustic data and detected an anomaly consistent with an implosion or explosion in the general vicinity of where the Titan submersible was operating when communications were lost.”

The statement went on, “While not definitive, this information was immediately shared with the Incident Commander to assist with the ongoing search and rescue mission.” The Journal then reported that the Navy asked that “the specific system used not be named, citing national security concerns. It is normally used to detect enemy submarines.”

The Fight to Ban Forever Chemicals

Eve Ottenberg

Photograph Source: Tim Fuller – CC BY 2.0

Forever chemicals are called forever for a reason. They take hundreds of years to disappear, and cancer-causing forever chemicals are everywhere. But mostly they’re in plastics, the water and certain no-stick products for food. PFAS – per- and polyfluoroalkyl substances – don’t break down, and since very tiny amounts of them cause multiple diseases and dangerous health conditions – kidney and testicular cancer, ulcerative colitis, thyroid disease, pregnancy-induced hypertension, infertility and high cholesterol – you’d think the federal government would be on the case. But you would be wrong.

People have known about the dangers of PFASs for a long time; it wasn’t until last March, however, that the Environmental Protection Agency finally proposed to limit six such chemicals. This is a pathetic track record, because there are another 5000 plus such chemicals, and who knows how many of those cause sickness? So any sane person should be relieved to learn, according to the Washington Post June 5, that the states have shot way ahead of the feds on this – even states where the GOP controls the legislature. Evidently this is a bipartisan issue.

Since Washington state restricted forever chemicals in food packaging and fire-fighting foam back in 2018, “at least 106 similar laws have been enacted in 24 states…This year alone, 195 new bills were introduced in dozens of state legislatures, seeking to require that an expanding list of products be PFAS-free.” Naturally chemical companies, represented by the American Chemistry Council, resisted. The ACC argues that most “of the 5,000-plus chemicals in the group are safe,” and has “successfully fought congressional bills to restrict PFAS.” Those successes are oxymorons – i.e., failures for human health. Besides, over 5000 is a big number. Even if “most” are safe, that conceivably leaves thousands that aren’t. And frankly, taking the ACC’s word about the safety of forever chemicals is not advisable.

Health risks of these chemicals, invented in the 1930s, didn’t get widely noticed until 2001, “when attorney Robert Bilott sent an open letter detailing potential hazards and asking the EPA to investigate disposal of the chemicals by E.I. du Pont de Nemours.” This was prior to Bilott’s class action lawsuit against the company that “awarded affected residents $70 million in damages and created a scientific panel…on PFAS exposure.” In 2011 and 2012, that panel linked exposure to numerous illnesses and bad health conditions.

 Nope, these things aren’t good for you. And their manufacturers knew it for 40 years before we did, according to the Lever June 7. Industry documents received by public health researchers at University of California San Francisco show that manufacturers knew since 1970 that forever chemicals were “highly toxic when inhaled and moderately toxic when ingested.” No wonder, the Lever says “the major manufacturers, 3M and DuPont, reported spending a combined total of more than $3.8 million lobbying on chemical issues including PFAS regulation last year.” These corporations have a problem. After all, forever chemicals are, according to the CDC, in the blood of 97 percent of Americans. That’s potentially a lot of law suits. Even worse, as people start dying from these things and it gets more publicity, the pressure to ban them outright will build.

That’s why chemical companies covered up their own research, which showed PFASs in substances like Teflon to be highly toxic. “But instead of reporting these findings to regulators,” the Lever notes, “as required by law, the company adopted a communications strategy equating the toxicity of the chemicals to common table salt. By 1980, employee surveys by DuPont and 3M found that pregnant workers exposed to the chemicals were giving birth to babies with abnormalities in their eyes and tear ducts.” As the evidence grew, the companies decided to use the EPA to help them, and “the EPA appears to have obliged, telling consumers in March 2006 that they did not need to stop using their nonstick products.” This was lousy advice, as we now know.

So the EPA clearly is not the place to go to solve this problem. Neither, of course, are the corporations that produce these poisons. As the UCSF research said of DuPont and 3M documents, they “reveal clear evidence that the chemical industry knew about the dangers of PFAS and failed to let the public, regulators, and even their own employees know about the risks.” Producers of a documentary about forever chemicals, “The Devil We Know,” donated industry documents to UCSF. Based on those, one researcher wrote that “DuPont had evidence of PFAS toxicity from internal animal and occupational studies that they did not publish in the scientific literature and failed to report their findings to the EPA as required under TSCA. These documents were marked as ‘confidential’ and in some cases, the industry executives are explicit that they ‘wanted this memo destroyed.’”

Also, to return to those more than 5000 other forever chemicals that their producers claim are harmless – given these chemical corporations’ mendacity about what they knew were very dangerous substances, we should take their assurances with a grain of salt. In other words, assume these other forever chemicals are toxic until they’re proven otherwise. In some circumstances, such skepticism might seem unfair to the companies, but not in these, because the companies’ track records stink. Exactly the way big tobacco and oil companies’ records stink. It’s no secret they knew of their products’ dangers and lied about them. Thus it would be foolish indeed to believe their claims that any of their deadly products are safe.

So quite luckily, the states have stepped in. New restrictions “have prompted major companies like McDonald’s, Ikea and Target to set deadlines for eliminating PFAS chemicals in all or most of their products,” according to the Post. Meanwhile consumers have ways to protect themselves. First, drink filtered water. Second, avoid fast food, whose wrappers are coated with these chemicals. Third, don’t refrigerate food in plastic containers; use glass or metal. Those three steps won’t eliminate the deadly forever chemicals already in our bloodstreams, but they, along with more state legislative regulation, can begin to limit future exposure.

The companies may be unhappy states have addressed this, but too bad. For consumers it’s undeniably, after all, a matter of life and death.

London’s Ukraine Recovery Conference plans imperialist looting operation

Thomas Scripps

The vultures are circling in London, picking over a Ukrainian economy devastated by the NATO-Russia war and readying the super-exploitation of the working class.

Billed the “Ukraine Recovery Conference”, the two-day meeting this Wednesday-Thursday was an opportunity for the NATO governments and their banks and corporations to further their predatory ambitions in Ukraine.

UK Foreign Secretary James Cleverly and European Commission President Ursula von der Leyen at the Ukraine Recovery Conference in London, June 21, 2023 [Photo by Foreign, Commonwealth & Development Office Flickr / CC BY-SA 2.0]

There was an air of the surreal to the events, with officials talking about Ukraine’s “significant economic potential” in a context where millions of Ukrainians have been forced to flee their homes, hundreds of thousands killed and $700 billion of damage done—shuttering businesses, destroying infrastructure and ruining agricultural land—by a war predicted to grind on for years.

The conference was in part dedicated to escalating that conflict, providing a platform for demands that Russia be made to pay reparations. President of the European Commission Ursula von der Leyen announced that Ukraine’s reconstruction would be financed “eventually with proceeds from the immobilized Russian assets.” The European Union (EU) is making plans to use the €200 billion of frozen Russian reserves held on the continent for that purpose, with the UK, the US and Canada holding similar discussions.

However wide the gap between rhetoric and reality, the event did at least showcase the real relationship between Ukraine and the NATO powers. Presenting itself as the saviour of Ukraine, its democracy and sovereignty, the imperialist alliance in fact sees the country only as a vassal state. Already being bled white militarily and demographically to weaken Russia, Ukraine faces the same fate economically at the hands of the US and European powers.

Opening the conference, British Prime Minister Rishi Sunak said, “Before this terrible war, Ukraine’s economy was becoming a huge investment opportunity,” adding, “the truth is, that opportunity is still there today. In fact, the war has only proved how much Ukraine has to offer.” Ukraine was “ready for investment”, and “President Zelenskyy’s government is determined to drive reforms to become more open, more transparent, and ready for investment”, said Sunak, a near billionaire and devotee of Thatcherism. Zelensky addressed the conference on Wednesday via video-link.

Sunak’s Conservative government issued a statement explaining, “The international community attending the conference wants to unlock the potential of the private sector to help Ukraine’s recovery.” Anna Bjerde of the World Bank commented that Ukraine “has a lot of potential to turn a lot of its assets into economic opportunity.”

These are polite ways of declaring open season on Ukraine’s working class, infrastructure and natural resources. Ukrainian Prime Minister Denys Shmyhal, representing the oligarchy in Kiev which expects to be well rewarded for facilitating this imperialist plunder, threw his arms wide in a series of opinion pieces in the European media.

He wrote in Politico: “At the moment, Ukraine has deposits of 21 of the 30 rare elements the EU classifies as critical raw materials;’ the second largest gas reserves in Europe; 41.3 million hectares of fine agricultural land; and one of the best developed digital ecosystems. It also has the most important thing—people—qualified, energetic and hard-working.

“All these factors, plus the recovery program worth hundreds of billions of dollars, open a window of opportunity for foreign investors.”

The World Socialist Web Site drew attention to the role played by Ukraine’s vast mineral wealth in the war earlier this month, explaining, “A global race for strategic sources of raw materials has long since begun, in the course of which the US and the leading EU powers are attempting to divide among themselves the mineral resources and other resources of the ‘weaker’ states.”

European Commission vice president Maroš Šefčovič salivated to Politico that Ukraine “could completely replace Russia’s supplies of critical raw materials to Europe.”

He went on, “Ukraine has the largest underground storage facilities for gas in Europe—33 billion cubic meters, just at the border of Slovakia. The potential there is enormous. It could be a very important strategic asset for the energy security of the European Union.”

The EU is acting on its ambitions, planning to invest up to €72 billion in Ukraine between 2024 and 2027. The United States has sent $26.4 billion in financial support. Britain used this week’s conference to announce $3 billion in World Bank loan guarantees. The International Monetary Fund (IMF) is providing $15 billion over four years.

While some of the funds are grants, most are loans, ladening Ukraine with debt—total foreign debt now exceeds $70 billion according to the country’s finance ministry. It will make payments of over $3 billion on that debt this year, despite an agreed two-year freeze on international debts worth $20 billion, and of an expected $10 billion in 2024.

The funds also come with the expectation that Ukraine will be opened for US and European businesses. US Under Secretary of State Jose Fernandez commented earlier this year, “The need for the bold and original ideas of the private sector will be more important in Ukraine than ever before.”

Speaking at the Recovery Conference, Sunak announced the Ukraine Business Compact “for the private sector to pledge their support for Ukraine’s recovery and reconstruction,” adding that “over 400 businesses from 38 countries, with a combined market cap of $4.9 trillion, have now signed up.”

Asset managers BlackRock, with significant holdings of Ukrainian debt, and bank JPMorgan Chase are working with the Ukrainian government to set up a “reconstruction bank” that “can attract hundreds of billions of dollars in private investment.” The Financial Times writes, “BlackRock and JPMorgan are donating their services, although the work will give them an early look at possible investments in the country.”

To encourage these investors, Ukraine has continued with a wave of privatisations and slashing of labour laws and protections begun before the NATO-Russia war, in particular in the aftermath of the 2014 Maidan Coup, as preparation for integrating itself into the EU market.

Speaking to the Guardian last October, Zelensky’s economic advisor Alexander Rodnyansky explained, in the newspaper’s words, “Ukraine needs to revamp its labour laws and redouble efforts to privatise thousands of companies to repair its economy.”

Rodnyansky identified “ease of hiring, ease of firing, severance pay, flexible hours and contracts and fixed-term contracts,” as well as scrapping the minimum wage: “We need to make sure it’s not too high because our economy is collapsing, and we need to make sure it does not push up unemployment.”

Laws have already been passed stripping back employees’ rights and introducing zero-hours contracts.

At last year’s Ukraine Recovery Conference in Lugano, Switzerland, officials announced Ukraine’s intention to corporatise the country’s biggest 15 state-owned firms, allowing the sale of up to 49 percent of their shares.

The government made record profits from the sale of small state assets in the first quarter of this year. Laws are being pushed to help the full sale of larger enterprises, including major chemical-industrial factories and energy companies. Head of the State Property Fund Rustem Umerov told Reuters this May of the legislation, “There is opposition, but this will be the last nail in communism’s coffin.”

Ukraine’s economic situation, just as much as its military one, confirms Leon Trotsky’s warning on the eve of the Second World War, in the article “A Fresh Lesson”, that “An imperialist war, no matter in what corner it begins, will be waged not for ‘national independence’ but for a redivision of the world in the interests of separate cliques of finance capital.”

Israel’s settlers, army and far-right government attack the Palestinians on all fronts

Jean Shaoul

On Wednesday, hundreds of Israeli settlers, many armed and emboldened by the far-right government now in power, ran amok in the occupied West Bank, in a repeat of last February’s pogrom-like rampage in Huwara.

They did so with the full support of the Israel Defence Forces (IDF), which instead of protecting civilians, as required under international law, turned their guns on the Palestinians.

The classmates of 15-year-old Sadeel Naghniyeh carry her body during her funeral in the West Bank Jenin refugee camp Wednesday, June 21, 2023. Naghniyeh died from wounds sustained in an Israeli military raid on Monday. [AP Photo/Majdi Mohammed]

Settlers entered the town of Turmus Ayya, near Ramallah, torching scores of cars, houses and fields, firing live bullets as they went. They were followed by the IDF which shot and killed Omar Abu Katan, 27. A further 10 were wounded, some by live shots fired by settlers and others by soldiers.

It brings to more than 126 the number of Palestinians killed by Israeli police, soldiers and settlers in the West Bank so far this year or who have died as a result of injuries sustained previously, while about 25 Israelis have been killed in Israel and the West Bank as a result of Palestinian attacks. The former figure is more than double the number in the same period the previous year, which was the deadliest year for Palestinians in the West Bank since 2005.

Wednesday’s rampage was one of a series of vigilante attacks by settlers that have come in the wake of mounting violence by the IDF over the last 18 months.

With the fascistic forces in Prime Minister Benjamin Netanyahu’s coalition government stepping up their demands for the IDF to suppress the Palestinians, it presages the launching of a large-scale military operation—similar to its murderous assaults on the besieged Gaza Strip—in the West Bank, which Israel has occupied illegally since the 1967 Arab Israeli war. It would lead to mass killings and devastation. Israel’s siege of the Jenin refugee camp in April 2002 killed at least 52 Palestinians and left many homeless. Twenty-three Israeli soldiers lost their lives in the battle.

These far-right forces have repeatedly demanded the annexation of the West Bank—as has Netanyahu himself—in defiance of international law, in pursuit of their aim of establishing a Jewish Supremacist state in both Israel and the occupied Palestinian territories.

This latest cycle of violence began early on Monday when the IDF mounted yet another of its near-nightly raids on the northern West Bank cities of Jenin and Nablus to arrest two Hamas militants. Far from crushing Palestinian resistance, the raids have only intensified the conflict. Support for Hamas, the militant clerical group affiliated to the Muslim Brotherhood, has grown in the West Bank as opposition to the corrupt, Fatah-led Palestinian Authority under the leadership of the aging President Mahmoud Abbas has soared.

So unexpectedly fierce was the resistance they encountered—gunfire and explosive devices—that the IDF deployed Apache helicopter gunships to fire on the Palestinians, help extract soldiers whose armoured vehicle had been hit by explosives and seize the wanted militants. Seven Palestinians were killed and more than 90 injured in the 12-hour-long battle. Three IDF soldiers and five Israel Border Police officers were injured in the fighting.

The Palestinians killed included Qasam Faisal Abu Seriya, 29, and Qais Majdi Adel Jabareen, 21 (members of the Jenin Brigade, a Palestinian militant group linked to Palestinian Islamic Jihad), and Ahmad Khaled Faysal Draghma, 19 (a member of its Toubas Brigade), as well as Khalid Azam Asa’asa, 21, and a 15-year-old boy Ahmed Youssef Saqer, the Palestinian Health Ministry said. A 15-year-old Palestinian girl, Sadeel Naghniyeh, was critically wounded in the raid on Monday, reportedly from a bullet to her head by an Israeli sniper, while stood in the front yard of her home in the refugee camp. She died on Wednesday in a Jenin hospital from her injuries, bringing the total number of fatalities from Monday’s assault to seven.

In another incident, two soldiers were injured and two Palestinians were shot after the Palestinians allegedly drove their vehicle towards troops at a checkpoint near Jenin.

The IDF raid on Jenin coincided with a visit by a high-ranking Hamas delegation to Iran on Monday morning. Their visit follows that of Islamic Jihad leaders who went to Tehran last week and met with Iran’s Supreme Leader Ayatollah Ali Khamenei.

Also on Monday, Israeli troops shot and killed 20-year-old Zakarya al-Zaoul during clashes in the village of Husan, near the West Bank city of Bethlehem.

These attacks led to a shootout on Tuesday when two Palestinian gunmen shot dead four Israelis and injured another four at a petrol station and restaurant near the central West Bank settlement of Eli. The IDF said a “civilian”—meaning a settler—had “neutralised” one of the gunmen while security forces had “neutralised” another that fled in a stolen car. It said both of them were “affiliated” with Hamas. Netanyahu has made it clear that Israeli policy is to execute “suspects” rather than arrest them.

This in turn sparked a series of assaults by settlers on nearby towns overnight and on Wednesday. Yesh Din, an Israeli human right organisation that monitors settler violence, said that eight Palestinians were wounded in settler attacks in Luban Sharqiya, Qablan, Huwara, Baytin, Zaatra Junction and Yizhar Junction

In a late-night attack on Wednesday, an Israeli drone targeted a car in the northern West Bank, killing three Palestinians. The army justified its summary executions with the claim it had “identified a terrorist cell inside a suspicious vehicle” responsible for several recent shooting attacks on Israeli settlements.

During Monday’s raid, Bezalel Smotrich, finance minister and leader of the fascistic Religious Zionist party that demands the annexation of the West Bank, called on the government to launch a “broad operation” in the territory. He said Israel should “replace tweezer activity with a broad operation” in the north of the West Bank “to restore deterrence.” He tweeted, “The time has come to use air forces and armoured forces. I will demand an urgent cabinet meeting on the matter.”

On Tuesday, his co-thinker, Itamar Ben-Gvir, national security minister and leader of Jewish Power, called for a “military campaign” in the West Bank, saying, “We need a return to targeted killings from the air, bringing down buildings, setting up roadblocks, expelling terrorists, and to finish passing the death penalty for terrorists legislation.”

Netanyahu has heeded their demands in the past, assassinating a number of senior Islamic Jihad figures in Gaza last month, leading to several days of intense cross-border fire and at least 33 Palestinian fatalities. He issued a statement saying that “all options are open,” adding, “We will continue to fight terrorism with full force and we will defeat it.” Such is the political crisis engulfing Israel, where protests against his judicial coup have continued, albeit somewhat smaller, that such a military operation in the West Bank would serve to divert attention from his deeply controversial judicial overhaul.

Since coming to power at the end of December, the Netanyahu government has approved the legalisation of nine settlement outposts previously deemed illegal under Israeli law. It has also announced plans for 7,000 new settlement housing units, 1,000 new homes in the Eli settlement “in response to Tuesday’s attack,” pledged billions of shekels for settlements and roads in the West Bank and transferred key powers over civilian life in the territory to Smotrich. This is tantamount to annexation. It also granted Smotrich the power to approve plans for settlement construction. Next week, it is expected to announce more than 4,000 new settlement housing units.

The government has also allowed settlers to build a religious seminary at Homesh, an illegal outpost overlooking Barqa, where a settlement was dismantled in 2005 as part of an agreement with the US in 2004 to evacuate the settlement and three others, alongside Israel’s withdrawal from the Gaza Strip in 2005. Restrictions already put in place by the military around Homesh mean that Barqa’s residents have been unable to access much of their land, prompting fears of further restrictions on movement, even greater difficulties reaching their fields and the destruction of their livelihoods.

Yonatan Mizrahi, of the Israeli advocacy group Peace Now, said that Homesh “is a game-changer. Rather than just closing their eyes to illegal work, like in the past, this government is supporting it. It’s a statement.”

Smotrich recently told government ministries to prepare for an additional 500,000 settlers in the West Bank, with all the necessary additional infrastructure and services in settlements and outposts set to cost billions of shekels, which he labelled a “fundamental task” for the government. This can only come at the expense of health, education and social welfare upon which millions of Israelis depend.

At the same time, the government is now pressing ahead unilaterally with its judicial overhaul, aimed at giving itself dictatorial powers by curbing the power of the Supreme Court. These plans will politicise the judiciary, give the Knesset power to overrule the court’s decisions and help Netanyahu evade prosecution in his corruption trial. While Netanyahu had agreed to pause the legislation and negotiate some compromise agreement with the opposition following the massive protests that followed his dismissal, since rescinded, of Defence Minister Yoav Gallant, the talks mediated by the largely ceremonial President Isaac Herzog have now been called off.

The government’s first step is to advance a bill restricting the Supreme Court’s ability to use the “reasonableness” standard for vetting ministerial appointments. This would enable Netanyahu to reappoint Shas leader Arye Dery as a government minister, whose appointment was previously ruled invalid under the “reasonableness” criterion due to his multiple convictions for fraud.

Pakistan on the brink of default as IMF pushes for still more austerity

Sampath Perera

The government of Pakistan, the world’s fifth most populous country, is desperately attempting to secure the release of at least a portion of the remaining $2.5 billion of a previously approved International Monetary Fund (IMF) bailout loan package, which expires June 30.

Prospects for an agreement suffered a major blow earlier this month, when the IMF sharply criticized the budget for the 2023/24 financial year that the government presented June 9, and demanded further austerity.

Esther Perez Ruiz, the IMF’s resident representative, said the budget “misses an opportunity to broaden the tax base in a more progressive way” and questioned the introduction of “a long list of new tax expenditures.” The widely hated financial institution, which demanded the government slash social spending even amid last summer’s catastrophic floods that impacted 30 million people and inflicted tens of billions of dollars in damages, feigned sympathy for the poor, saying the budget “undercuts the resources needed for greater support for the vulnerable.” 

Pakistani capitalism is being rocked by intersecting socio-economic, geopolitical, and political crisis. Last month, mass protests shook the country following the seizure-arrest of the former right-wing Islamic populist prime minister, Imran Khan. Here protesters clash with security forces in Peshawar, Pakistan, on May 10, 2023. [AP Photo/Muhammad Sajjad]

The Islamabad elite’s attitude to Pakistan’s workers and poor is characterized by indifference and contempt, which is confirmed by the latest budget proposal. However, the IMF’s long history of using the country’s perpetual economic crisis to demand brutal austerity measures, privatization and other pro-investor reforms is a crucial factor behind the unprecedented level of social crisis engulfing its 240 million, overwhelmingly impoverished inhabitants.

Negotiations on the loan tranche have been dragging on since November. Observers believe that the chances of an agreement with the IMF before the loan permanently expires at the end of this month are virtually nil. The government—a coalition of the Pakistan Muslim League (Nawaz) and the Pakistan People’s Party or PPP—has complained that the IMF has repeatedly shifted the “goal posts” for it accessing the bailout loan despite it agreeing to and imposing the US-dominated agency’s savage austerity diktats.

Pakistan’s bankrupt economy is surviving on increasing debt, but without the approval of the IMF any further financing options threaten to disappear. All that Finance Minister Ishaq Dar has said is that he has “a plan” should Islamabad prove unable to secure the release of the IMF funds.

An analyst at the credit rating agency Moody’s found “increasing risks” of Pakistan becoming “unable to complete the IMF programme,” and said the country’s “financing options beyond June are highly uncertain.” “Without an IMF programme, Pakistan could default given its very weak reserves,” the analyst said.

The country’s foreign currency reserves are currently hovering around $4 billion, barely enough for a month of imports. The government has already slashed import costs by halting the import of essential supplies, like some medicines, and even stopping the import of materials critical to export-oriented industries, causing thousands of job losses. In contrast, Pakistan’s loan commitments for the coming financial year alone are beyond $22 billion.

Finance Minister Dar has blamed “geopolitics” for the “unnecessary delay” in the IMF’s approval of the release of the final two loan tranches. Claiming that “foreign powers” want Pakistan to default like Sri Lanka, Dar declared, “IMF or no-IMF, Pakistan will stay, and will not default.”

While Dar did not directly accuse the US, which dominates the IMF, of using the negotiations to pressure Islamabad, he added “China realised the geopolitics behind the unnecessary delay, and its commercial banks agreed to roll over loans to Pakistan.”

The remaining financing options for Islamabad are the Gulf monarchies and its “all-weather ally” Beijing. China, Saudi Arabia and United Arab Emirates have provided loans to buoy the Pakistan economy, including during the present crisis, but are wary of continuing their support for fear of throwing good money after bad.

However, it is becoming increasingly evident that the issues surrounding the IMF loan go beyond its demands for austerity and “pro-investment” measures. They are inseparably bound up with Pakistan’s deepening foreign policy crisis.

The US-dominated lender has been a tool in the hands of Washington to extract geopolitical and economic concessions in the past. While the IMF demanded to know the details of loans related to the strategic China-Pakistan Economic Corridor infrastructure development project, which Washington bitterly opposes, it maintains strict secrecy over its closed door negotiations with the government.

As the negotiations with the IMF dragged on, a prominent Pakistan senator demanded to know in March if Islamabad’s nuclear arsenal was “under pressure” and its strategic partnership with China “under threat.” In February, Pakistan issued a statement denying reports that it is supplying “defence items” to Ukraine, indicating the country is coming under pressure to become part of the weapons supply chain to the US-led NATO war against Russia in Ukraine—if it has not already done so covertly.

The coalition of big-business parties led by the Muslim League (PML-N) ousted former Prime Minister Imran Khan’s Tehreek-i-Insaf (PTI) government in April 2022, after the military withdrew its support for Khan. It and much of the Pakistani ruling class soured on Khan because, after imposing round after round of IMF-dictated austerity, he bowed to public pressure and restored some energy price subsidies. They were also concerned that he was jeopardizing what remains of the traditional US-Pakistan alliance by courting Russia at the outset of the Ukraine war.

The new government has sought to mend fences with Washington and the Biden administration has made some small gestures of encouragement. Nevertheless, as the stalled IMF negotiations indicate, Islamabad seems to have hit a brick wall as to any substantial improvement in its relations with a US intent on ratcheting up its all-rounded strategic offensive against China and using India as a main instrument to do so.

The budget for the 2023-24 fiscal year, which begins July 1, calls for total outlays of 14.46 trillion rupees or $50.45 billion.

More than half of the total budget or $25.4 billion is given over to repaying debts. This amid an unprecedented social crisis produced by the brutal austerity measures, last summer’s floods, raging inflation and the job losses triggered by the economic crisis as well as the global pandemic. 

The damages of last year’s climate-change linked floods were estimated at a staggering $30 billion. At least 9 million people out of the 33 million affected were pushed into poverty, if the conservative estimates of the agencies involved are to be believed. The utterly inadequate UN fund of $816 million set up in October was merely 30 percent funded as of March, indicating near non-existence of support for those affected. Pakistan was also named a hotspot in the global hunger risk ranking. According to another estimate, 42 percent of all children under 5 are stunted due to lack of nutrition.

The big-business government, however, insisted its priority is to meet its debt obligations. Dar assured that Pakistan is not seeking debt restructuring or a “haircut,” meaning a reduction of interest payments or other concessions, from the Paris Club of multilateral lenders. He said the government is talking to bilateral lenders to seek potential debt restructuring, which will include China, Saudi Arabia and United Arab Emirates.

As a result of the IMF driven policies, especially the elimination of energy subsidies, the inflation rate has risen to 38 percent as of May, making it increasingly difficult for many families to even provide for two meals per day. A second factor causing an increased cost of living is the devaluation of the rupee by at least 20 percent during this year alone. A mandatory condition of the IMF loans is free-floating exchange rates, regardless of their impact on the population.

The increased allocation to development projects and the pay hike between 30 and 35 percent for government employees and retirees contained in the budget are motivated by the fear of growing social opposition. Both the PML-N and PPP are projected to be routed in the general elections due by November, if they are actually held.

The IMF has indicated that these allocations will need to be curtailed, if not scrapped entirely, if Islamabad is to access the long-delayed next loan tranche in the emergency bailout program set to expire at the end of next week.

In an editorial statement, Dawn, which speaks for powerful sections of Pakistan’s capitalist elite, lamented, “The government has failed to turn a crisis into an opportunity.” It called for the privatization of “loss-making” state-owned enterprises and criticised the token social welfare and development measures. “If the government thinks it can revive the competitiveness of a broken economy and stimulate growth through large but borrowed development stimulus and the distribution of freebies,” declared the Dawn, “it is mistaken.”

The popularly despised military will also receive a big chunk of the budget—12.5 percent of the total outlay and what amounts to a 16 percent increase from the last budget. 

In recent weeks, the military and its intelligence arm have been busy denouncing the PTI for not playing according to the “rule book.” It has erected kangaroo-style military-run courts to try civilians who purportedly attacked military installations during the nationwide protests that erupted against the May 9 seizure-arrest of Khan by paramilitary personnel from the premises of the Islamabad High Court. Prominent government ministers are already arguing that Khan, who is currently on bail, should face a military court.

While the PTI is in disarray, a new party has been formed at the instigation of factions of the ruling elite, the Istehkam-i-Pakistan Party or Stable Pakistan Party. Its leading representative is Jahangir Khan Tareen, who was once regarded as something of a hero by the PTI and is one of the country’s powerful sugar barons. The new party is expected to attract many notables, including former supporters of the dictator Musharraf, who joined Khan’s PTI and quickly assumed leadership positions in the run-up to the 2018 elections. At the time, the military sent clear signals that it was intent on paving the way for Khan to take office, supplanting the PML (N) and PPP, the two parties that had dominated Pakistani electoral politics for the previous three decades.

Khan is a right-wing Islamist politician, hostile to the working class and rural poor. Indeed, he implemented two rounds of some of the toughest IMF austerity measures in Pakistan’s history prior to being removed from office. He also was seen as having generously rewarded the top generals for their widely acknowledged behind-the-scenes role in his 2018 electoral victory by granting them positions of economic power and conceding them further political authority.

In its June 15 editorial, Dawn warned the elections slated for this fall maybe delayed, as both the government and military fear a backlash against the political elite that will impede the quick implementation of their plans to increase the profitability of Pakistani capitalism through mass social spending cuts and privatization.

“Another factor complicating matters is the untouchable power that has taken over the wheels of the political omnibus from the current dispensation,” said the Dawn, referring to the military’s power as the final arbiter over government policies and personnel. According to the statement, the government is deliberating on a “workaround” to the constitutionally-mandated election schedule that involves imposing a “‘planned’ emergency.”

Podemos electoral debacle in Spain exposes bankruptcy of Revolutionary Left (IR) group

Santiago Guillen

Spain’s regional and municipal elections have dealt a severe blow to the pseudo-left Podemos party. Podemos lost all its councillors in all major cities across Spain, including Madrid, Valencia, Zaragoza, Tenerife, Burgos, Valladolid, Vigo and Coruña. In Barcelona, Podemos-backed mayor Ada Colau, lost after eight years in office. At a regional level, Podemos fell from 47 regional lawmakers in 2019 to 15.

Spain's Prime Minister Pedro Sanchez (PSOE), second left, walks next to Podemos leader Pablo Iglesias, second right, and First Deputy Prime Minister Carmen Calvo, left, at the Moncloa Palace in Madrid, Spain, Tuesday, Jan. 14 2020. (Image Credit: AP Photo/Manu Fernandez)

Its electoral collapse endangers the survival of Podemos, which has ruled in a pro-war, pro-austerity government with the Socialist Party (PSOE) for nearly four years. After the government announced snap elections for July 23, Podemos joined its recently created rival Sumar in a pro-war platform led by acting Deputy Prime Minister Yolanda Diaz. Several leading figures in Podemos—including acting Minister of Equality Irene Montero and parliamentary spokesperson Pablo Echenique—were not even placed on electoral lists.

Recent polls released by El Pais show that the right-wing Popular Party (PP) and the neo-fascist Vox party could win most seats in parliament in next month’s national election, far ahead of the PSOE and Sumar. The poll estimated that a PP-Vox alliance would get more than the 176-seat absolute majority in parliament needed to rule.

The political collapse and discrediting of Podemos is a devastating exposure of its pseudo-left satellites, such as the Revolutionary Left (IR) group. IR is the former Spanish affiliate of the Committee for a Workers’ International (CWI), which has provided unconditional support to Podemos since it was founded in 2014 by a group of Stalinist professors around Pablo Iglesias, as well as by the Pabloite Anticapitalistas party.

Analysing the results, IR describes Podemos as “a mass political force to the left of the PSOE that could have ‘taken heaven by storm.’” The failure of Podemos, IR claims, was due to the wrong decisions of its leadership: it “opted for class collaboration. … They thought that by entering government hand in hand with the PSOE, they were going to change the lives of the people. The commitment to the ‘progressive’ management of capitalism has gone very wrong.”

Later, IR bemoans that “this government, in which [former Podemos leader] Pablo Iglesias and Podemos participated to force the PSOE to carry out left-wing policies, has done just the opposite.”

This is a political fraud with which IR tries to cover for its nearly decade-long support for Podemos. The leaders of Podemos did not agree to work with the PSOE, Spain’s main party of bourgeois rule since the end of the Franco era, by mistake. Its anti-working class policies at home and militarist-war policies abroad are not errors that can be solved by the “good” advice of IR, which consists in Podemos employing more pseudo-left rhetoric.

Quite the contrary, the leadership of Podemos acts consciously to implement its programme of austerity and its defense of imperialist war and capitalism. The PSOE-Podemos government has carried out reactionary reforms of the labor market and pensions, expanded military spending to record levels, while large Spanish corporations reaped record profits. This was not a mistake, but a deliberately planned and implemented policy.

As Podemos lawmaker, secretary of state and general secretary of the Communist Party of Spain, Enrique Santiago, explained, “[I]n the history of Spain there has not been such a large transfer of resources from the state to private companies as the one carried out by this government.”

In parallel, they have unconditional military and financial support to Ukraine in order to promote NATO’s imperialist war against Russia in Ukraine. All this is very similar to what a PP-Vox government could have done, had it been in power.

Following the call for early elections by Prime Minister Pedro Sánchez, which is a barely concealed strategy to transfer power to a PP-Vox government, PSOE and the Podemos-backed Sumar party have continued to defend Spanish imperialism. The acting government sent an addendum to the EU’s bailout fund to Brussels, the Plan of Recovery, to receive €94 billion for banks and large corporations. This money is not free. It will imply devastating austerity plans and spending cuts, all of which will be imposed on workers by the new government.

In order to receive these funds, a commission of EU Parliament lawmakers from Vox, PP, PSOE and Podemos traveled from Brussels to Spain to audit these funds to ensure that they were reaching the financial aristocracy. This is further proof that Podemos is not a “left-wing force” or one that can be pressured to the left. It is completely involved within the Spanish political establishment, forming a united front with the rest of the parties, including the neo-fascist Vox party.

The PSOE-Podemos government’s Defence Ministry has made it clear it will continue to escalate the war against Russia. Acting Defence Minister Margarita Robles has protested NATO for not including Spanish military-industry complex companies in its defense industry plans. Robles also demanded that the record spending by the army not be changed, irrespective of who rules Spain, declaring: “The armed forces belong to all Spaniards, they do not belong to any political party.”

IR now cynically claims that all this came as a surprise, when Podemos “decided to give up continuing the battle in the streets, organizing the working class into a militant, combative party with a revolutionary programme to advance class consciousness, and gave up breaking with a capitalist logic that has condemned them to complete impotence and to administer misery.”

The leaders of Podemos did not give up anything, because they never had any other intentions. Podemos arose after a strong period of strikes and struggles by the European working class after the 2008 global capitalist crisis, particularly acute in Southern Europe—Greece, Portugal, Italy and Spain. From the outset, Podemos aimed to derail this movement and channel it through the institutions of capitalist government, so as to strangle the possibility of revolutionary struggle.

Like its European partners—Syriza in Greece, the Left Party in Germany and Jean-Luc Mélenchon in France—the leaders of Podemos promote postmodernism and identity politics and are deeply hostile to Marxism and the revolutionary role of the working class. They do not aim to raise workers’ consciousness, but to suppress it to deceive the workers with pseudo-left rhetoric that the bourgeois media use to try to market them to voters.

IR claims in its article that it has the right to make friendly criticisms of Podemos, writing, “We are not sectarians, indeed, we have been criticized countless times by sects for critically supporting Podemos at the polls, for refusing to defend abstention or null voting, a position completely removed from Marxism and consistent Leninism.”