New whistleblower exposes Boeing's use of scrapped parts

Bryan Dyne

Merle Meyers, the latest in a string of Boeing whistleblowers that have emerged this year, has raised new allegations that the aerospace corporation knowingly used spare and defective parts in its 787 Dreamliner facility in Everett, Washington, to meet production quotas.

Meyers worked as a quality-control manager for 30 years, according to CNN which first broke the story. During the interview, Meyers told the outlet that since the early 2000s, Boeing took scrapped parts and put them into planes.

Boeing managers used an “elaborate off-the-books practice” that involved taking parts from the company’s internal scrap yards and putting them back on the production line, despite being marked with red paint as defective.

A Boeing 787-8 Dreamliner

Throughout the process, the defective parts were hidden from the Federal Aviation Administration in, as CNN described, “organized efforts designed to thwart quality control processes in an effort to keep up with demanding production schedules.”

In total, Meyers estimated that 50,000 parts “escaped” quality control and were put into aircraft now in use. Meyers noted, “It puts people’s lives at risk ... A lot of these are flight-critical parts.”

When asked, “Why Boeing would do this ... to make money?” Meyers responded, “Yeah.”

One of Meyers’ earliest internal complaints to Boeing management dates back to 2002, in which he noted how few investigations were being done regarding the use of the defective parts. “Their investigations are about analyzing excuses by process violators, and not taking action against those committing compliance violations,” he wrote.

Another email, 20 years later in 2022, warned that Boeing’s internal investigators routinely ignored, “eye witness observations and the hard work done to ensure the safety of future passengers and crew.”

Meyers’ allegations are among the most damning of the deluge that have been brought forth this year in the wake of a door plug blowing off of a 737 Max after takeoff in January. It makes clear that, for decades, every level of Boeing management has not merely been complicit but actively involved in making defective planes in pursuit of ever greater profit.

“I think they need to punish, to fire people that blatantly violate the process and endanger the flying public. It’s a huge problem,” Meyers said.

One can go further. Since 2002, there have been more than 60 fatal accidents of Boeing aircraft, killing hundreds of passengers, crew and bystanders on the ground. It is well documented that at least two of these crashes, the two MAX 8 crashes in 2018 and 2019, were the direct result of Boeing’s drive for profits at the expense of human lives.

In another complaint filed last week, whistleblower Richard Cuevas noted that, during his work as a contractor for Boeing and Spirit AeroSystems, workers were being forced to drill holes for fasteners larger than they should have been, “to speed up a slow process.”

Cuevas warns that larger holes means the plane’s forward pressure bulkhead isn’t as secure as it should be, and risks both depressurization and power failure.

He also alleges that he was fired from his job after bringing forward these warnings.

Meyers and Cuevas’ revelations, alongside those of all the other whistleblowers that have come forward, strongly suggest many of the other accidents were also engendered by the money interests of executives.

Whatever “punishment” Boeing suffers from either its own internal processes or the federal government, however, will be minimal at best. The Associated Press revealed Sunday that the Department of Justice is seeking a plea deal with Boeing for “criminal fraud” for the two MAX 8 crashes.

In other words, Boeing won’t be prosecuted for murdering 346 men, women and children who died in the two crashes. The federal government’s concern is merely that they were lied to by Boeing, and are content with letting the corporation off with a fine and no charges brought against any executives.

These include former CEO Dennis Muilenburg, who made more than $80 million in salary and benefits during his tenure, which oversaw the development and production of the deadly MAX 8 aircraft. It also includes David Calhoun, Muilenburg’s successor and also a Boeing executive during the MAX 8 crashes, who has made an estimated $76.5 million since he became CEO in 2021.

The subservience of the American government to Boeing was also demonstrated in a recent Senate hearing in June, in which Richard Blumenthal (Democrat-Connecticut) gave a stage-managed “reckoning” with Calhoun.

In reality, Blumenthal held the hearing in an attempt to restore Boeing’s credibility, “because we want Boeing to succeed.” He also added that the company had to be protected “for the sake of our military.”

Therein lies the real reason Boeing has been allowed to get off scot free with its murder of commercial passengers, because it is complicit in so many more crimes committed by American imperialism.

In 2023, Boeing was the fourth largest defense contractor in the US, receiving more than $14.8 billion to produce weapons for wars abroad. Boeing’s military pedigree includes making and maintaining F-15 fighters, V-22 attack helicopters, and B-52 strategic bombers.

Such aircraft are critical components of the US war drive internationally, including the ongoing genocide by Israel’s Zionist regime against Gaza, the US-NATO war against Russia in Ukraine, and the escalating war plans against Iran and China.

Any real change to the aerospace industry as a whole will not come from appeals to any “better natures” of corporate executives and the capitalist ruling elite but from the working class, the only social force opposed to sacrificing human lives for profits.

The ongoing contract talks between Boeing and the 32,000 machinists of the International Association of Machinists and Aerospace Workers (IAM) can play a significant part in this process. One of the key demands of the machinists is that the numerous safety and quality inspector positions that have been cut are restored. Boeing has so far refused such demands.

Landslide victory against Tories, but collapse in Labour’s popular vote heralds UK government of crisis

Chris Marsden

Sir Keir Starmer’s Labour Party has won a landslide election victory against the Tories, despite making almost no gain in its popular vote outside Scotland. While Labour won a 170-seat majority, with 412 seats against 121 seats for the Tories, Labour’s share of the national vote was just 33.8 percent.

Labour’s 170 seat majority is its largest since 1997 under Tony Blair, but its national share of the vote is up by just 2 percent since 2019, and five percent lower than under Jeremy Corbyn in 2017 when Labour lost narrowly on a much higher voter turnout of over 68 percent.

Britain's Labour Party Prime Minister Sir Keir Starmer makes speech 10 Downing Street in London, Friday, July 5, 2024. Labour leader Starmer won the general election on July 4, and was appointed Prime Minister by King Charles III at Buckingham Palace. [AP Photo/Kin Cheung]

Labour takes power with the lowest share of the popular vote of any incoming government in British history.

Its victory was won off the back of a mass anti-Tory vote. The Conservatives recorded their lowest ever vote. The party suffered a massive 20-point decline since 2019, with 11 senior ministers losing their seats, including former prime minister Lizz Truss, Defence Secretary Grant Shapps and prominent Brexiteer Jacob Rees-Mogg.

Outgoing prime minister Rishi Sunak, who retained his seat, has resigned as party leader.

Starmer made no voting gains in major urban centres, where there were significant victories for candidates opposing Labour over the Gaza genocide and huge abstentions of almost half the electorate with a national turnout of 60 percent, the second lowest since 1885.

Starmer has no popular mandate for his pro-business Tory continuity agenda, above all his plans to thrust Britain into a direct confrontation with Russia at the July 9 NATO summit in Washington D.C.

Far from heralding a Labour honeymoon, social and political tensions rooted in morbid levels of inequality and hardship presage explosive confrontation with the working class.

Amid a slew of headlines hailing Starmer’s victory, Channel 4’s political editor Gary Gibbon accurately described the result as a “loveless landslide”.

Labour’s main gains came via the collapse of the Scottish National Party (SNP), while also picking up several Tory seats. It secured a 17-point increase in Scotland, with the SNP’s vote down 15 points, losing almost 40 seats to Labour, including all six Glasgow seats.

Had Nigel Farage’s right-wing nationalist Reform party not taken a huge slice of the Conservative vote, the result would have been far narrower.

Reform won 14 percent of the vote. This gave the anti-immigrant party only four seats under Britain’s first-past-the-post constituency system, including Farage winning in Clacton. But in 98 constituencies they came second, beating the Tories and handing Labour the prize.

Labour suffered a 4 percent fall in Wales. Its overall vote in England saw no change except a six-point increase where it captured former Tory seats.

Starmer’s relentless pro-business, militarist and nationalist message won backing in the Tory shires, Murdoch’s The Sun and Times, and Financial Times, but only alienated workers.

The Financial Times reported: “In the 63 safest Labour seats heading into the election, the party’s average vote share decreased from 67 percent to 50 percent.”

The most significant electoral shifts in working class constituencies, especially those with Muslim populations over 10 percent and where Labour’s vote fell by 11 percent on average, was the vote for candidates opposing Starmer’s obscene support for Israel’s genocide on Gaza.

Four pro-Palestinian Independents beat Labour, while expelled leader Jeremy Corbyn trounced Labour in Islington North by 24,120 votes to 16,873—by around 50 percent.

In Dewsbury and Batley, Iqbal Mohamed beat Labour by almost 7,000 votes.

In Blackburn, Adnan Hussain beat Labour by around 200 votes, while Workers Party of Britain candidate Craig Murray came third with more than 7,000 votes.

In Leicester South, Jonathan Ashworth, Labour’s shadow Cabinet Office minister, with a massive majority of more than 22,000 votes at the last election, was beaten by Shockat Adam by around 1,000 votes.

In Birmingham Perry Barr, Labour lost to independent Ayoub Khan by 500 votes. Other leading Blairites were hammered including Jess Phillips, whose majority was slashed from over 13,000 to 693, by Workers Party candidate Jody McIntyre.

Independent Leanne Mohamad lost to Labour Shadow Health Secretary Wes Streeting by just over 500 votes, and Workers Party leader George Galloway lost Rochdale, the seat he won four months ago from Labour by 1,400 votes.

Keir Starmer’s own share of the vote fell by a massive 17,757 votes in Holborn and St Pancras, halving since 2019. Independent Andrew Feinstein came second with more than 7,000 votes or 19 percent of the vote, while the Greens won 4,000 votes. Turnout was just 54 percent.

This lent an air of unreality to Starmer’s victory speech, posturing as the herald of “change” and a new unified national purpose. He invoked his role in purging Corbyn and his thousands of supporters from the party, reciting Labour’s paean to national unity: “country first, party second”.

This, he said was “not a slogan—it’s the guiding principle of everything we have done and must keep on doing—on the economy, on national security, on protecting our borders.”

He made clear: “The changes we’ve made are permanent, irreversible and we must keep going. We ran as a changed Labour Party and we will govern as a changed Labour Party.”

Problems mount in Russian economy as government tries to finance war machine

Andrea Peters

The Russian government is facing mounting economic and social problems as a consequence of shifting the country onto a war footing. Last year, the state raised military and security expenditures to an unprecedented 40 percent of the federal budget for 2024. The Kremlin made various “guns and butter” promises, claiming that it would finance both the military and social programs. This is failing and inequality is mounting in Russia, in the face of an unsustainable budget that cannot survive the breakdown of the world order.

Russian Prime Minister Mikhail Mishustin, centre, arrives for an expanded meeting of Russia's Council for Strategic Development and National Projects and State Council's commissions at the Kremlin in Moscow, Russia, Wednesday, May 29, 2024. [AP Photo/Dmitry Astakhov]

The Kremlin is currently attempting to paint a rosy picture of the Russian economy. On June 28, President Putin announced that the country’s GDP is expected to grow by 5 percent this year. Real wages are also reportedly up, as is consumer spending. Official unemployment is just 2.6 percent. Thus far, as Moscow regularly notes, NATO has failed in its aim to destroy Russia’s economy through massive sanctions, asset freezes, and the ejection of the country from key global markets.

However, the Kremlin’s ability to maneuver in the context of the rapidly escalating world war is highly tenuous. Above all, it is predicated on a) making the Russian working class pay for the oligarchy’s struggle to survive and b) containing and suppressing mass opposition to the fratricidal war unleashed not just by NATO, but by the restoration of capitalism in the USSR by Stalinist bureaucrats, to which Putin is an heir.

The current driver of Russian economic growth is massive state investments in war-related industries, which, while funneling profits to big business and a narrow layer of the population, are draining Russia’s coffers. Government spending in 2024 is now expected to significantly exceed what was previously approved, even as income from the energy sector is predicted to drop by 768 billion rubles this year. Meanwhile, the liquid assets of the country’s National Welfare Fund, an emergency financial reserve, fell by 44 percent between January 2022 and December 2023. Between $300 and $350 billion of Russian government assets are frozen in foreign accounts.

In response, the Duma is approving increases to deficit spending, with the legislature authorizing a boost in borrowing for 2024 of nearly 33 percent, up to 2.12 trillion rubles from the estimated 1.595 trillion rubles in the original budget. The Kremlin is simultaneously making changes to the tax structure, shifting the country from a flat-tax system to a progressive one, whereby as a person’s income increases, so does their tax burden.

This is expected to bring in an additional 2.5 to 2.7 trillion rubles ($28 to $35 billion at current exchange rates). The tax hikes for upper earners and corporations are being presented to the population as a sign that the government is committed to making the rich pay for the war and limited, although costly in budgetary terms, increases to pensions and welfare benefits authorized over the last year. The foreign press is also highlighting Putin’s alleged “assault on the wealthy.”

The reality is different. First of all, broad layers of the population, which are so poor that they fall in the bottom tax bracket, will see no relief from the reform. They will continue to be taxed at the extremely high rate of 13 percent. To the extent that wages are rising for some in Russia, as the lowest earners get a little bit more, they will move into a higher bracket and pay for their gains. Furthermore, the profit tax, which is levied on personal income derived from things like dividends, savings, and investment—assets held only by the well-to-do—will remain unchanged.

While corporate profits will be taxed at 25 percent, up from the 20 percent previously, Russian businesses reportedly lobbied in support of the reform because they see it as a way to evade one-time “windfall” taxes that the Kremlin imposed previously to fill the breach in the federal budget.

The social programs that the Kremlin says it will finance with the additional revenue—pensions indexed to inflation, payments to injured veterans, benefits for large families—even if they actually materialize, will not fundamentally change the social position of tens of millions of Russian workers whose living standards have been falling for years and whose salaries are being eaten up by inflation.

While the government and economists are highlighting the fact that, according to the official statistical agency Rosstat, as of March of this year real wages rose by 12.9 percent compared to the same time in 2023, this improvement is overwhelmingly concentrated in a handful of economic sectors—banking, oil, gas, and war-related industries. Furthermore, It does not make up for 10 years of falling real incomes in the country. In March, economist Yevgeny Suvorov at Centro Credit Bank described the period from 2014-2023 as “a lost decade” for the majority of Russian households.

Inflation, which the government claims it is getting under control, is currently running at about 7 percent. However, the everyday life of working class Russians is shaped overwhelmingly by the costs of essential products, not average inflation across the whole economy. According to a June 29 article in Novyie Izvestiia, in the last six months, the price of beets has risen by 95 percent, potatoes by 80 percent, carrots by 63 percent, onions by 32 percent, and apples by 29 percent. While costs for vegetables and fruit usually fall during the summer growing season, the current pattern is bucking this historical trend.

On July 1, utility rates went up across Russia. Households in the overwhelming majority of regions in the country will have bills that are 9 to 14 percent more than previously. The hike, approved by the federal government, will be in place for “three years,” states the official declaration. No sane person anticipates it will decrease afterwards.

To finance its spending on war and national security, the Russian government cut expenditures on healthcare and medicine in both relative and real terms in 2024. The cost of attending many of the countries most competitive universities and higher education programs is now on the rise, with some institutions jacking up fees by as much as 20 percent, reports the newspaper Vedomosti.

Efforts to substitute Russian-made products for cheaper foreign-produced goods that sanctions prevent from being sold in Russia is also placing many products outside of the reach of ordinary people. With great fanfare, the country’s auto industry released a number of new models in March. The cost of the Lada Iskra, presented as a triumph of domestic industry, far exceeds the average annual income in Russia.  

Domestic gasoline prices are also now going up, as the government ended limits on overseas exports of refined oil. While this has resulted in increased profits for the energy sector, which prefers to direct its product to foreign buyers who pay more, it is driving up costs on the Russian market.

A February study commissioned by the Russian central bank found that 28 percent of people report either not having enough money for food or can buy food but not clothes and shoes.

Late last year, Chairman of the Russian Constitutional Court Valeri Zorkin reported that the decile wage ratio—the gap between the top 10 percent and bottom 10 percent of earners—has grown substantially and is nearly 17:1. This official figure significantly understates the reality, he noted. According to TASS, he described inequality as “the main source of tension in Russian society at the present stage.” Earlier this year, Rosstat reported that the country’s gini coefficient, a measure of income inequality, grew to .403 from .395 over the course of 2022-2023.

Over half of respondents to a survey just conducted by the sociological research firms CSP Platforma and OnIn insisted that inequality has risen in Russia in the last five years. Thirty seven percent said that it was worse than at any other time in the country’s history—including the 18th and 19th centuries, when the vast majority of the population were enserfed peasants living in conditions of near slavery.

Fifty seven percent of those surveyed, overwhelmingly people from the working class, said they regard the very existence of inequality as wrong. “Sociologists note that the proportion of those who strive for complete equality is especially high among poorly educated people with low incomes,” reports RBC in a June 25 article about the survey’s results.

The squeeze of the Russian working class will only intensify, as the country’s ruling elite faces an increasingly precarious situation. Many signs indicate this is happening.

Over the course of June, news leaked that Chinese banks—the Bank of China, ICBC, China CITIC Bank, and most other financial institutions in the country—are now refusing to process yuan payments through their Russian affiliates. How trade between the two states can be sustained in this new context is unclear.  

Vladimir Chistyukhin, the first deputy chairman of the Bank of Russia, said his “export-dependent and import-dependent country” faces “ruiniation,” unless it can find a solution. 'Everything needs to be tried,' he said, according to press outlet RBC. Raising the prospect of turning to credit swaps and crypto currency, he declared that Russia had to do what 'seemed unpopular to us yesterday.'

China is Russia’s largest trading partner and the leading buyer of Russian energy resources. While Moscow regularly portrays Beijing as an economic ally, the relationship between the two countries is more of dependency and constant strain. China is currently demanding that it be able to purchase future gas deliveries through the planned “Power of Siberia 2” pipeline at heavily subsidized domestic rates. Beijing will also not give guarantees as to the amount it will buy.

Russia’s dependence on oil and gas, as well as China, continues, however, as Moscow’s non-resource-related exports are falling. The recent strengthening of the ruble, which means that goods that Russia sells overseas are less competitive and bring in fewer rubles, is creating additional complications. Economists are also now warning of a banking and debt crisis.

Argentina’s Milei launches assault on workers after pushing through sweeping legislation

Rafael Azul

The government of Argentina’s fascistic President Javier Milei has initiated a broad offensive against the working class in the wake last week’s congressional approval of the so-called Law of Bases (Ley de Bases). This sweeping package of counter-reforms decimates social rights, including job security, while boosting the profit interests of Argentine and international capital.

Javier Milei, February 12, 2024 [Photo by Quirinale / CC BY-SA 4.0]

Last Friday’s 136-116 vote in the Chamber of Deputies to approve the legislative package followed six months of parliamentary debate marked by threats and extortion along with a series of mass protests that met with unprecedented police repression. Among the measures included is the decimation of state restrictions on layoffs, price hikes and corporate criminality.

Milei’s administration is leading the way in what is becoming a jobs massacre. The Association of State Workers (ATE), Argentina’s largest federal employees’ union, has recorded at least 2,300 layoffs by the Milei regime as of June, with entire government agencies shut down or merged.

While the unions have failed to take any serious action to defend jobs and basic rights, workers who have taken to the streets to protest the layoffs have met with naked police violence. Workers at the National Institute of Industrial Technology (INTI) were attacked by helmeted riot police using shields, clubs and tear gas Tuesday when they took to the street to protest the firing of 288 of their colleagues at the agency.

Even while facing growing popular opposition among broad masses of working people in Argentina, Milei is continuing his globe-trotting, receiving a hero’s welcome from right-wing and big business audiences internationally.

Last week in speeches in Germany and the Czech Republic Milei, who describes himself as anarcho-capitalist and a follower of the anti-Marxist Austrian School of Economics, declared his intention to follow in the footsteps of President Carlos Menem, who ruled Argentina between 1989 and 1999 and imposed austerity measures and privatizations of industries that had been nationalized under previous administrations, including the railroads, telephones, and the national oil company YPF.

Milei assured his audience that the solution was to reduce government debt and regulations (Libertad carajo!), announcing that his “Chainsaw Plan” (Plan Motosierra) went far beyond Menem’s free market approach. While the Menem had imposed 20 liberalizing measures, Milei’s Ley de Bases has over 200 liberalizing measures. The earlier Decree of National Necessity, already in force, adds dozens of others. 

For Milei, the main enemy of Argentine capitalism is the working class, which he aims to isolate and control, divide and defeat, utilizing not only the support of finance and industrial capital, the agrarian oligarchy and the military, but also the complicity of the trade union bureaucracies and the petty bourgeois nationalist pseudo-left parties. His latest claim: that “the socialists,” meaning the working masses, are attempting to overthrow his government because they know that his measures are working, is in line with this ideology, that in one form or another has terrorized Argentine workers since 1972.

Both the Law of Bases and the DNU are intended to subordinate the state, and Argentine society, to the market—benefiting the agricultural and energy plutocracies, and the vulture funds that profit off of Argentina’s debt crisis.  Nationalized  companies are to be privatized. Price and rent controls are to be dismantled, together with measures that allow the government to “interfere with the decisions of Argentine businesses,” such as regulations aimed at preventing the scarcity of essential goods and guarantees that supermarkets will carry a minimum percentage of goods made by small businesses.

Already, as a result of the Milei’s policies, every week conditions of poverty and insecurity worsen for Argentine workers. Already, the share of the population living poverty exceeds that at the height of the 1998 depression (42 percent). Over 60 percent of the population of the country is in poverty, without the means of purchasing food, transportation, clothing and medicines—27 million out of a population of 45 million. Young workers are being pushed out, forced to emigrate by conditions of extreme poverty and lack of decent employment. 

The number of temporary and contingent workers on hunger wages in Argentina now exceeds 5 million, out of a total labor force of 21 million. Less than 40 percent of workers are organized in trade unions. 

By every measure, socioeconomic inequality has exploded in the last six months. Wages are unable to keep up with inflation—according to the National Catholic University (UCA), relative to 2023 the monthly household “bread basket” in January was 596,000 pesos (700 US dollars), the equivalent of 3.8 monthly minimum wages. Under those conditions, households have trouble reaching the end of the month and are being forced out of their homes. They are going without food, potable water, sewers and adequate housing, particularly in the northwestern provinces of the country. “Villas Miserias, shanty town encampments for the homeless, are expanding across Buenos Aires, and other urban areas.

The Madrid daily El País compared supermarket prices for milk and bread in Argentina with those in Spain, finding them equivalent. However, wages, on average, are eight times higher in Madrid than in Argentina, 1,220 versus 155 US dollars. Scenes that were once virtually unknown in Buenos Aires—of people, including children, diving into trash bins in search of food to sell or consume—are now common. More and more people are seen knocking on doors begging for money and food.

Milei’s quest for economic “freedom”, i.e., his promises to dismantle state interference in the free-market economy—he describes himself as a mole, burrowing under the state in order to subvert it and weaken it—is enthusiastically backed by the International Monetary Fund (IMF). His fascist methods are applauded. 

In a press release issued in Washington, DC on June 13, 2024 reviewing for the eighth time the ‘Extended Arrangement for the Extended Fund for Argentina’, the IMF Executive Board declared Argentina’s brutal austerity program “firmly on track, with all quantitative performance criteria for end-March 2024 met with margins.”  It also announced the approval of $800 million to the Argentine government, “bringing the total disbursement under the arrangement (which refers to the 30-month $44 billion “extended arrangement” from March 2022) to US$41.4 billion. Praising the Law of Bases and the DNU, the document concludes:

Impressive progress has been made to achieve overall fiscal balance and priority should now be placed in further improving the quality of the adjustment. Efforts should continue to reform the personal income tax, rationalize subsidies and tax expenditures, and strengthen expenditure controls. Beyond this year, deeper reforms of the tax, pension, and revenue-sharing systems, including to unwind distortive taxes, will be critical.

Monetary and FX policies need to evolve to continue to entrench the disinflation process and further improve reserve coverage. To support the transition towards a new monetary regime, where price and financial stability remain prime objectives of the central bank and individuals are free to use currencies of their choice, the real policy rate should turn positive to support peso demand and disinflation. The exchange rate policy should also become more flexible to reflect fundamentals, and safeguard disinflation as well as reserve accumulation, particularly as capital flow management measures (CFMs) are gradually eased as conditions permit. Further steps are also needed to define the new monetary regime’s key underpinnings as well as to develop and begin to implement the framework for a conditions-based easing of FX controls and CFMs.

Greater focus on micro-level reforms will help support the recovery and boost potential growth. The proposed reforms aimed at improving competitiveness, increasing labor market flexibility, and improving the predictability of the regulatory framework for investment, are steps in the right direction, and their approval and careful implementation should be a priority. This should be complemented by reforms to enhance transparency and governance, including the AML/CFT framework.

Risks, although moderated, are still elevated, requiring agile policy making. Contingency planning will remain critical, and policies will need to continue to adapt to evolving outcomes to safeguard stability and ensure all program objectives continue to be met.

Milei’s attacks impose on the working class the weight of an entire epoch of massive capital flights by the bourgeoisie and Wall Street speculators, that took shape in 1980s and 1990s when Latin America as a whole was gripped by the debt crisis and passed through what was known as the “lost decade”.

As recent events in Sri Lanka and Kenya demonstrate, the resort to brutal and fascistic measures against the working class are not limited to Javier Milei and Argentina. In confronting a renewed worldwide debt crisis, the ruling classes see in the working class their biggest enemy and prepare the political and economic measures to attack it on every continent.

BIS report points to mounting economic and financial instability

Nick Beams

The annual report of the Bank for International Settlements (BIS), the umbrella organisation of the world’s central banks, issued on Sunday, has presented a relatively upbeat assessment of the state of the world economy and financial system, at least on the surface.

Bank for International Settlements (BIZ) in Basel, Switzerland [Photo by Wladyslaw Sojka (Free Art License 1.3)]

It said the world economy appeared to be finally leaving behind the legacy of the pandemic and the price shock of the war in Ukraine, noting that the “worst fears did not materialise” and a “smooth landing” appeared to be ahead,” which was a “great outcome.”

But the body of the report was replete with warnings of risks both on the economic and financial front.

Under conditions where central banks, including the US Federal Reserve, are contemplating interest rate cuts or have already made them, the BIS said policymakers should set a “high bar” for easing, warning of a surge in inflation in the services sector and an increase in wages.

“A premature easing could reignite inflationary pressures and force costly policy reversal—all the more costly because credibility would be undermined.”

It said central banks had to be alert to the risk of further significant price rises and not hesitate to “tighten again if inflation proves to be more stubborn and unresponsive than anticipated.”

In conditions where high interest rates are hitting the living standards of the working class as well as threatening to set off recessionary trends and unemployment, the BIS emphasised that the dictatorship of central banks over the economy must be maintained and even strengthened.

In the guarded language, which is always used when bankers raise the issue of opposition to their policies from the mass of the population, it said there was a “need to shield the central bank from political economy pressures.”

“Safeguards for central bank independence,” that is the ability to operate ruthlessly in the interests of finance capital whatever the social consequences, were “essential” and “may become even more important in the years ahead.”

While the assessment of the immediate situation was upbeat, the longer-term outlook was not.

“Financial vulnerabilities have not gone away. Fiscal positions [that is the growth of budget deficits and debt] cast a shadow as far as the eye can see. Subdued productivity growth clouds economic prospects. Beyond the near term, laying a more solid foundation for the future is as difficult as ever,” the review said.

The BIS breathed a sigh of relief over the impact of higher interest rates on the financial system, at least so far, saying the outcome had been surprisingly benign but warned that “tougher tests” may be ahead.

It said the significant strains in March 2023, when three large American banks collapsed, stemmed mainly from interest rate risk alone and did not lead to defaults. But what it called the “materialisation of credit risks” was still to come, the only question being when and how intense it would be.

It warned there were indications that financial cycles had started to turn, savings buffers were dwindling and “debts will have to be refinanced.”

One of the main areas of concern is commercial real estate. While this market is smaller than residential real estate it represents “a greater risk to financial stability.” It noted that the pandemic had created a “structural shift” in this area, due to the falling demand for office space which had been compounded by higher interest rates.

This had put downward pressure on prices, reduced valuations and created losses for lenders which had started to generate stress at some banks and other financial intermediaries.

It said there were latent losses in the commercial real estate sector because of the “extend and pretend” policy of banks as they continue to supply credit “in the hope of a reprieve from lower interest rates in the future.”

But this only increased the risk of a “disorderly adjustment” in the future when losses and revaluations, in some cases upwards of 40 percent, had to be recognised.

As with other major financial institutions, including the International Monetary Fund, the BIS review pointed to the dangers of the growth of government debt, in the US and more broadly.

In his remarks on the review, BIS general manager Agustin Carstens said “fiscal outlooks” were even more concerning than financial problems created in areas such as commercial real estate.

“In the near and medium term, they pose the biggest threat to macroeconomic and financial stability.… Without consolidation, public debt ratios are set to climb, even if interest rates remain below economic growth rates. With mounting spending needs, markets could at some point question fiscal sustainability. High public debt issuance could raise the risk of bond market dysfunction, threatening financial stability.”

As with other reports on the financial system, the BIS review directed attention to the growth of private credit funds in the workings of the financial system noting that their assets under management had tripled in the past decade, rising by 50 percent in what it called the “post-pandemic period” to an estimated $2.1 trillion. It noted that due to the “opaqueness of the sector” it was difficult to assess the risks involved.

In its policy prescriptions, the BIS identified two targets—the wages of the working class and government spending.

The review acknowledged that “as inflation surged, real wages plummeted across most jurisdictions, and have yet to recover despite robust labour markets” and this may lead to “persistent wage demands.”

That is, the cut to workers wages resulting from the surge of inflation, which began in 2022 and has continued, must be maintained through the continuation of high interest rates and that if there was a significant wages push central banks may even have to raise them again.

In his remarks on the review, Carstens emphasised that “fiscal policy must consolidate.” Under conditions where military spending is expanding, this means major cuts in social spending on health, education and other services.

They will go across the board. As Carstens put it: “From the perspective of longer-term fiscal sustainability, the need to consolidate has never been greater. The end of low-for-long interest rate intensifies the need to put the fiscal house in order, and multi-pronged consolidation strategies should be considered.”

Supreme Court declares America a presidential dictatorship

Eric London & Tom Carter

The US Supreme Court’s decision Monday in Trump v. United States fundamentally alters the character of the American government as it has existed since the American Revolution, placing the president above the law and effectively transforming the “Commander-in-Chief” into a dictator, who can commit crimes with impunity.

The Supreme Court as composed June 30, 2022 to present. Front row, left to right: Associate Justice Sonia Sotomayor, Associate Justice Clarence Thomas, Chief Justice John G. Roberts, Jr., Associate Justice Samuel A. Alito, Jr., and Associate Justice Elena Kagan. Back row, left to right: Associate Justice Amy Coney Barrett, Associate Justice Neil M. Gorsuch, Associate Justice Brett M. Kavanaugh, and Associate Justice Ketanji Brown Jackson. [Photo: Fred Schilling, samling av USAs Høyesterett]

In an opinion authored by Chief Justice John Roberts, the far-right majority declared that a US president enjoys presumptive “immunity” for “official acts,” and that ex-President Donald Trump was therefore “immune” from prosecution for most of his acts in furtherance of his January 6, 2021 coup attempt. The court remanded the case to the lower court to consider whether other actions related to the coup—including Trump’s efforts to force Vice President Mike Pence to seat alternate slates of electors in states Trump lost—count as “official acts.” In practical terms this means that Trump cannot be convicted for the January 6 insurrection before the November 5 election.

In the words of dissenting Justice Sonia Sotomayor, the majority opinion “makes a mockery of the principle, foundational to our Constitution and system of Government, that no man is above the law.” 

While the word “dictator” does not appear anywhere in the majority or dissenting opinions, a chief executive who is “above the law” is called a dictator. This is what it means to have a presidential dictatorship.

“The Court effectively creates a law-free zone around the President, upsetting the status quo that has existed since the Founding,” Sotomayor wrote. “When the president uses his official powers in any way, under the majority’s reasoning, he now will be insulated from criminal prosecution. Orders the Navy’s Seal Team 6 to assassinate a political rival? Immune. Organizes a military coup to hold onto power? Immune. Takes a bribe in exchange for a pardon? Immune. Immune, immune, immune.

“The relationship between the President and the people he serves has shifted irrevocably,” Sotomayor wrote. “In every use of official power, the President is now a king above the law.”

In a separate dissent, Justice Ketanji Brown Jackson suggested that the president is now free to murder other government officials with impunity. “While the President may have the authority to decide to remove the Attorney General, for example,” she wrote, “the question here is whether the President has the option to remove the Attorney General by, say, poisoning him to death.”

Monday’s decision is without precedent in American history. In 1977, three years after resigning from the White House in disgrace, former President Richard Nixon told journalist David Frost that “when the president does it, that means that it is not illegal.” For decades, this declaration was treated not as a statement of American constitutional jurisprudence but as an expression of Nixon’s criminal character.

To make an appropriate historical analogy, it is necessary to reference fascist jurisprudence. The 1933 Enabling Act, for example, gave Hitler the power to unilaterally violate the Weimar constitution, without any accountability to other branches of government. Similarly, the Supreme Court majority Monday declared that the US president needs to enjoy legal immunity in order to be free to engage in “bold and unhesitating action.”

Under the new legal framework of presidential dictatorship announced by the Supreme Court, Augusto Pinochet would have enjoyed complete immunity from prosecution for his crimes, so long as he declared that the mass murder of left-wing political opponents was an “official act” to “combat terrorism and subversion” and “save the country from communism.”

To use a more immediate example, a bill proposed in the US House of Representatives in May by Tennessee Republican Andy Ogles authorizes the deportation of anti-genocide student demonstrators to Gaza. Under the Supreme Court’s decision Monday, a president who carried out such a policy would be immune so long as it was an “official act.”

The decision effectively abolishes what was once called the “American theory of government,” according to which there is no “sovereign” such as a king or prince. Instead, in the words of dissenting Justice Jackson, “the People are the sovereign, and the Rule of Law is our first and final security.”

American revolutionaries called the idea that anyone could be above the law “tyranny” and “despotism.” In the words of the Declaration of Independence, when a population is subjected to such a regime, “it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.”

Notwithstanding the opinions of the dissenting justices explaining the monumental historical significance of the decision, much of the establishment media in the US downplayed the decision Monday. The New York Times, a mouthpiece for the Democratic Party leadership, even suggested that the ruling had an upside because in lower court proceedings, prosecutors will be allowed “to detail much of their evidence against Donald Trump in front of a federal judge and the public.”

Biden made a brief media appearance Monday evening to denounce the ruling. “Any president, including Donald Trump, will now be free to ignore the law,” Biden said, calling the ruling “a fundamentally new principle and a dangerous precedent” because any limits on the president’s powers will now be “self-imposed by the president alone.” But in response to the ruling, Biden merely called for “the American people to render a judgment on Donald Trump’s behavior” by electing Biden instead of Trump in the 2024 elections.

Presidential dictatorship is not only in danger of happening if Trump is elected. It is already the “supreme law of the land,” thanks to the Supreme Court’s decision Monday, from which there is no appeal.

Biden essentially argues that the population should prevent a malevolent dictator from coming to power by electing another dictator instead, one who would assume the same powers but would supposedly exercise them in a more “responsible” way.

Biden offered no proposals for preventing the institution of a presidential dictatorship. In 1937, President Franklin D. Roosevelt at least threatened to overpower the opposition of the Supreme Court to the New Deal by appointing more justices, a measure that Biden could easily have justified under conditions of a historic corruption scandal on the court.

Five of the six justices who imposed a dictatorship on the 340 million inhabitants of the United States were appointed by presidents who lost the popular vote, including three appointed by Trump himself (Neil Gorsuch, Amy Coney Barrett and Brett Kavanaugh). At least two other justices, Samuel Alito and Clarence Thomas, are implicated in the coup themselves.

Biden and the Democrats share equal responsibility with the Republicans for the menace posed by Trump, having insisted on rehabilitating a “strong Republican Party” in the wake of the January 6 insurrection. Since the coup attempt, they have governed in an effective coalition with the Republicans to wage war and genocide abroad while suppressing strikes and dissent at home.

However, the danger of dictatorship does not come from Trump as an individual or even from the fascistic Republican Party in general. Likewise, the January 6 coup attempt was not an isolated incident, but an episode in a protracted and ongoing process.

This process has continued through both Democratic and Republican administrations, including the Supreme Court’s intervention in the 2000 elections to steal the election for George W. Bush—its infamous decision in Bush v. Gore—as well as the assertion by the Obama administration of the power to order the killing of US citizens in the assassination of Anwar Al-Awlaki in 2011, which Barrett cites approvingly in her concurring opinion.

The tendency towards dictatorship is inherent in the capitalist system in the imperialist epoch, which is characterized by the dominance of finance capital in the economy and by imperialist wars for the re-division of access to labor, markets and raw materials. The drive towards dictatorship is motivated in particular by expanding social inequality, war and the necessity, from the standpoint of the ruling class, of imposing fundamentally unpopular policies.

“Finance capital does not want liberty, it wants domination,” wrote Austrian Marxist Rudolf Hilferding, in a passage quoted by Lenin in Imperialism: The Highest Stage of Capitalism (1916). Democracy is inconsistent with a society in which oligarchs like Elon Musk can receive a $45 billion pay package, while hundreds of thousands of people are homeless and hungry.

Democracy is also incompatible with imperialist war, which requires the conscription of masses of youth to serve as cannon fodder, the diversion of public funds from social needs and the crushing of all opposition. While the US-NATO alliance claims to be warring for “freedom and democracy” against the “authoritarianism” of Russia and China, it is the American political establishment that is imposing authoritarian forms of rule at home.

Spreading protests demand Kenyan president “Ruto must go!”

Kipchumba Ochieng

Yesterday, Kenya’s anti-austerity protesters staged the #OccupyEverywhere shutdown of Nairobi and other major cities.

In Nairobi, where schools and most of the central business district remained closed, thousands of youth engaged in running battles with police while chanting “Ruto must go.” Early in the morning, protesters placed coffins along Moi Avenue to hold a vigil for those killed in last week’s protests.

Protesters block the busy Nairobi - Mombasa highway in the Mlolongo area, Nairobi, Kenya., July 2, 2024 [AP Photo/Brian Inganga]

Capital FM crew witnessed several demonstrators and bystanders being abducted by undercover police officers, who bundled them into unmarked cars.

The main highway between Nairobi and Mombasa, Kenya’s main port city, remained closed throughout the day. In Mombasa, thousands of protesters marched in the morning. The protest was disrupted by knife-wielding gangs infiltrating the crowd, attacking and robbing people in front of the police. According to The Standard, “three groups of knife-wielding gangs were ferried by a well-known woman political activist in Kisauni.” These gangs roamed freely, attacking people and businesses.

There is a widespread belief that Ruto and his allies are mobilizing goons.

In Kisumu, the largest city in Western Kenya, thousands of protesters marched to Kisumu State Lodge, the president’s official residence in the region. Outside the major cities, hundreds marched in Nakuru, Nyerti, Homa Bay, Kisii, Kajiado, Migori, Mlolongo and Rongo, cutting across tribal lines. In the southwestern town of Migori, protesters barricaded the Migori-Rongo highway and lit bonfires. In Nakuru police officers lobbed teargas.

One person was shot dead in Rongo and nine were admitted to hospital with gunshot wounds. One person died in Emali, Makueni County after slipping from a moving truck.

The protests were a determined rejection of Ruto’s “dialogue” initiative last Wednesday, repeated on Sunday in an interview at State House with questions from the country’s three main television stations, KTN News, NTV, and Citizen. The initiative involves the formation of a 100-member National Multi-Sectoral Forum to discuss unemployment, debt, and corruption. This was exposed as a cover for state repression and austerity the following day, when police gunned down three protesters in Rongai, including a child, and the Kenya Defence Forces (KDF) were deployed on the streets.

Ruto’s Sunday interview ignited mass anger. Showing indifference to the mass killings over the previous week, he expressed more concern for the loss and damage of private property than for human life: “I have no blood on my hands. According to the record I have from security agencies, nineteen people are dead. Very unfortunate. As a democracy, that should not be part of our conversation. 2.4 billion worth of property has been destroyed. The office of the Chief of Justice has been burned, City Hall has been burned, and parliament has been burned. This is the situation.”

According to the Kenya National Commission on Human Rights (KNCHR), at least 39 people have been killed, and another 361 injured in clashes with the police. KNCHR said this was not a final count.

Ruto defended the police and blamed the violence on “criminals”. He ludicrously argued that protesters were stealing weapons from the police and shooting at other protesters: “I have told you one situation where somebody accosted the police, took over their firearm, and started to shoot at people.”

He refused to acknowledge abductions, saying, “If there is any arrests by the police, that doesn’t amount to an abduction.” KNCHR has counted 32 cases of enforced or involuntary disappearances and 627 instances of arrests of protesters. Opposition party Azimio la Umoja claims over 40 abductions.

The protests, unlike those controlled by opposition parties over the past decades, are being coordinated primarily through social media by activists, tapping into broad anger against soaring prices, mass youth unemployment and corruption. Kenya’s economic turmoil is the sharp expression of a global economic crisis, exacerbated by the COVID-19 pandemic, the intensifying US-NATO war against Russia in Ukraine, and the imperialist backing of Israel’s genocidal war against the Palestinians.

The Ruto government is responding with a three-pronged strategy. First, Ruto withdrew the Finance Bill 2023, initially aimed at raising $2.7 billion through regressive tax hikes, to buy time. He plans to make equivalent austerity cuts, affecting education, healthcare, social welfare, housing, infrastructure, and county funding.

Ruto has utilised the East African Community (EAC)—an economic integration organisation composed of eight East African countries—to implement tax increases behind the backs of the population. New EAC-approved import duties yesterday will raise the price of crude oil, refined oils, baby diapers and mobile phones and will result in higher prices on many essential items.

Ruto and the Kenyan capitalist class intends to put the full burden of the International Monetary Fund (IMF) dictated austerity on the backs of workers and rural toilers.

Second, Ruto is attempting to channel political discontent back within the political establishment relying on the opposition coalition Azimio la Umoja and the trade union bureaucracy.

Yesterday, the Orange Democratic Movement (ODM) —the leading party in Azimio la Umoja—signaled its readiness to work with Ruto to impose austerity. After denouncing Ruto for police killings and abductions, calling him to expediate investigations, ODM Secretary General Edwin Sifuna said, “The ODM party will support credible austerity measures in the executive and parliament. These two institutions have been expressly indicted by the people as citadels of largesse and wastage.” ODM would support, Sifuna said, “measures to lessen the taxpayers burden.”

ODM said nothing about opposing the IMF, or demanding the withdrawal of the KDF from the streets. By focusing on the lavish expenses of the political class, ODM hopes to divert attention from the real austerity being demanded.

The Central Organisation of Trade Unions (COTU) Secretary General Francis Atwoli yesterday proposed to initiate dialogue from Kenya’s 47 county parliaments, rather than from the national government “so that this country remains peaceful”. Atwoli refused to oppose the IMF, or the military deployment.

Third, Ruto is continuing with the use of mass police state repression, including gunning down protesters, mass arrests, and abductions. The KDF remains deployed across Kenya, the first time the military has been deployed against unarmed protesters.

The repression has received the full backing of the United States and European Union. The deployment took place soon after a call with US Secretary of State Antony Blinken and days after the European Union announced it was providing €20million ($21.4 million) in military supplies and other support to the KDF. The major imperialist powers see Kenya as a dress rehearsal for their own repression of social and anti-war struggles.

The scale of protests were smaller than last week, reflecting a growing sense among youth involved that their protest is at an impasse, with nothing being advanced other than demands for Ruto to resign, appeals to revoke and substitute MPs, and to continue protests.

Ruto is only the ugly face of a corrupt and reactionary system that is organised to secure the wealth and interests of the capitalist class and perpetuate the exploitation and impoverishment of the workers and rural toilers.

Workers must turn to their class brothers internationally, where there is also overwhelming popular hostility to the IMF, the imperialist powers and the banks and corporations across Africa.

Calls for similar protests are already spreading. In neighbouring Uganda, youth are organising a protest for July 23 on social media platforms under the hashtags #March2Parliament, #StopCorruption, and #FreeAllPoliticalPrisonersInUganda. The Western-backed dictator, Yoweri Museveni, took the unusual step of declining to sign the 2024-25 budget, directing parliament to reassess 'irrational' spending. Last week, Museveni held an impromptu meeting with the newly appointed Inspector General of Police, Abbas Byakagaba, at State House Entebbe.

In Malawi, one of the poorest countries on earth, “Malawi shutdown demonstrations” against the high cost of living and currency devaluation have been called for July 10 in major cities of Lilongwe, Blantyre and others.

In all these struggles, the basic questions of programme and political perspective have to be addressed. What is posed above all is the necessity for the independent social and political mobilization of the urban working class and the salaried rural workers, together with them small-holder farmers and petty traders. Every factory, plantation, workplace and neighbourhood must become a centre of resistance to the policies of the IMF and its stooges in the ruling class and its political representatives.